Big Lots 2009 Annual Report Download - page 41

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fiscal year. After each financial measure is calculated for purposes of our financial statements, it is adjusted, for
purposes of the restricted stock award calculations, to remove the effect of any gain or loss as a result of litigation
or lawsuit settlement that is specifically disclosed, reported or otherwise appears in our periodic filings with the
SEC or our annual report to shareholders. These financial measures were selected because the Committee and the
other outside directors believe they provide a good indication of our profitability, ongoing operating results and
financial condition.
The first trigger for the fiscal 2009 restricted stock awards is $0.25 under the applicable financial measure. The
second trigger for the fiscal 2009 restricted stock awards is $2.18 under the applicable financial measure. As a
result of our strong performance in fiscal 2009, both of the fiscal 2009 restricted stock award triggers were met
(under the earnings per common share – diluted from continuing operations financial measure). Accordingly, the
restricted stock vested on the first trading day after we filed with the SEC our Annual Report on Form 10-K for
fiscal 2009.
When the Committee and the other outside directors approved the financial measures and corporate performance
amount applicable to the second trigger in March 2009, they believed those measures and the amount represented
strong, but reasonable, levels of performance that would be a challenge to achieve. The second trigger for restricted
stock awarded in fiscal 2009 was approximately 7.4% greater than the second trigger for restricted stock awarded
in fiscal 2008 (which had not been met when the fiscal 2009 restricted stock was awarded). The Committee and
other outside directors believe the selected corporate performance amount was appropriate in light of our high
levels of performance in fiscal 2008, our projected multi-year operating plan and our objectives to motivate our
executives, reward superior performance and align the interests of our executives and shareholders, while balancing
the uncertainty around the general economic conditions in the United States at the time in which the awards
were made.
Performance Evaluation
Our CEO, the Committee and the outside directors do not rely solely on predetermined formulas when they
evaluate corporate performance or individual performance. Performance is generally evaluated against the
following objective and subjective factors, although the factors considered may vary for each executive and as
dictated by business conditions:
• long-term strategic goals;
• short-term business goals;
• profit and revenue goals;
• expense goals;
• operating margin improvement;
• revenue growth versus the industry;
• earnings-per-share growth;
• continued optimization of organizational effectiveness and productivity;
• leadership and the development of talent; and
• fostering teamwork and other corporate values.
Our CEO, the Committee and the outside directors may each consider different factors and may value the same
factors differently. In selecting individual and corporate performance factors for each EMC member and measuring
an executive’s performance against those factors, our CEO, the Committee and the other outside directors also
consider the performance of our competitors and general economic and market conditions. None of the factors are
assigned a specific weight. Instead, our CEO, the Committee and the other outside directors recognize that the
relative importance of these factors may change as a result of specific business challenges and changing economic
and marketplace conditions. So although the Committee and the other outside directors consider our CEO’s
recommendations, the Committee and the other outside directors may not follow, and are not bound by, our CEO’s
recommendations on executive compensation.