Big Lots 2009 Annual Report Download - page 35

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• the skills and past and anticipated future performance of the executive;
• the degree to which we believe the executive will be able to help improve our business;
• the compensation being paid to similarly-situated executives at peer group companies;
• the relationship between the compensation being offered to the executive and that being paid to the
other EMC members;
• our perception of our bargaining power and the executive’s bargaining power; and
• to the extent applicable, the elements and amounts of compensation being offered or being paid to the
executive by another employer.
Under the terms of their employment agreements, the named executive officers are each entitled to receive at
least the following salaries, which amounts are not subject to automatic increases: Mr. Fishman: $1,200,000;
Mr. Cooper: $440,000; Mr. Waite: $550,000; Mr. Martin: $520,000; and Ms. Bachmann: $440,000. The terms
of each named executive officer’s employment agreement also establish the minimum payout percentages that
may be set annually for his or her target and stretch bonus levels. The payout percentages set by the employment
agreements for target bonus and stretch bonus, respectively, are as follows (expressed as a percentage of the
executive’s salary): Mr. Fishman: 100% and 200%; Mr. Cooper: 60% and 120%; Mr. Waite: 75% and 150%;
Mr. Martin: 60% and 120%; and Ms. Bachmann: 60% and 120%. The employment agreements also provide each
named executive officer with an automobile or automobile allowance.
Upon our entry into the original employment agreements with the named executive officers, we believed the
executives’ salaries and payout percentages were commensurate with each executive’s job responsibilities,
overall individual performance, experience, qualifications and salaries and the payout percentages provided to
similarly-situated executives at peer companies. When the employment agreements were revised in fiscal 2008,
the Committee and each named executive officer agreed to update the salary and payout percentages to reflect
the awards made by the Committee and other outside directors in March 2008. The Committee believed these
actions were appropriate because the annual executive compensation review that it completed in fiscal 2008 before
entering into the revised employment agreements included a review of the factors we considered when we initially
entered into an employment agreement with each executive. Updating the salary and payout percentages in each
employment agreement was also offered by the Committee in consideration of the named executive officers’
entry into the amended employment agreements. Because the various factors considered when evaluating each
named executive officer’s salary and payout percentages change, the Committee reviews the salaries and payout
percentages annually and adjustments are made if warranted. See the “Salary for Fiscal 2009” and “Bonus for
Fiscal 2009” sections of this CD&A for a further discussion of the salaries and payout percentages for the named
executive officers for fiscal 2009.
Each employment agreement requires the named executive officer to devote his or her full business time to our
affairs and prohibits the named executive officer from competing with us during his or her employment. Each
named executive officer’s employment agreement also includes several restrictive covenants that survive the
termination of his or her employment, including confidentiality (infinite), non-solicitation (two years), non-
disparagement (infinite), non-competition (one year but reduced to six months following a change in control), and
continuing cooperation (three years for Mr. Fishman and infinite for the other named executive officers).
Unless the executive and we mutually agree to amend or terminate his or her employment agreement, its terms
will remain unchanged and it will remain effective as long as we employ the executive. The consequences of
termination of employment under the employment agreements depend on the circumstances of the termination of
employment.
Post-Termination and Change in Control Arrangements
The employment agreements with the named executive officers provide for potential severance and change
in control payments and other consideration. The terms of these employment agreements were set through
negotiation, during which we considered the various factors discussed in the prior section. Our equity
compensation plans also provide for the accelerated vesting of outstanding stock options and restricted stock in
connection with a change in control.