Big Lots 2009 Annual Report Download - page 45

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Minimum Share Ownership Requirements
We have Board-adopted minimum share ownership requirements for all outside directors and EMC members.
These requirements are designed to ensure that outside directors’ and executives’ long-term interests are closely
aligned with those of our shareholders. Under the requirements, the outside directors and EMC members must, at
a minimum, own common shares having an aggregate value equal to the following multiple of his or her Board
retainer or salary (as is in effect at the time compliance with the requirements is evaluated), as applicable:
Title Multiple of Retainer or Salary
Director 4x
Chief Executive Officer 4x
Executive Vice President 2x
Senior Vice President 1x
Shares counted toward these requirements include common shares held directly or through a broker, common
shares held under the Savings Plan or Supplemental Savings Plan, unvested restricted stock, and vested but
unexercised in-the-money stock options. Each outside director that served on the Board when these requirements
were adopted in March 2008 must meet the requirements on the date of the 2013 annual meeting of shareholders
and at subsequent annual meetings. Each EMC member that was an EMC member when these requirements were
adopted must meet the requirements on the date that adjustments to annual executive compensation are made
in 2013 and on subsequent annual adjustment dates. Directors elected and executives hired or promoted after
the adoption of the requirements must meet the requirements on the first testing date for directors or executives
following the fifth anniversary of their election, hire or promotion, as applicable.
Equity Grant Timing
Pursuant to the terms of the 2005 Incentive Plan, the grant date of equity awards must be the later of the date
the terms of the award are established by corporate action or the date specified in the award agreement. In fiscal
2009, the outside directors, after consultation with the Committee, specified that the grant date of the equity
awards made in connection with the annual performance reviews of the EMC members was the second trading day
following our release of fiscal 2008 results. This future date was established to allow the market to absorb and react
to our release of material non-public information, and to avoid any suggestion that the Board, the Committee or any
employee manipulated the terms of the equity awards. For equity awards made throughout the fiscal year, which
generally are made as a result of a hiring or promotion, the grant date is the date of the related event (i.e., the first
day of employment or effective date of promotion). We have no policy of timing the grant date of these mid-year
equity awards with the release of material non-public information, and we have not timed the release of material
non-public information for the purpose of affecting the value of any equity awards.
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 “qualified 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.