Big Lots 2009 Annual Report Download - page 50

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Big Lots 2005 Long-Term Incentive Plan
Since January 1, 2006, all employee equity awards, including those made to the named executive officers, have
been granted under the 2005 Incentive Plan. The 2005 Incentive Plan authorizes the grant of nonqualified stock
options (“NQSOs”), incentive stock options, as defined in Section 422 of the IRC (“ISOs”), stock appreciation
rights (“SARs”), restricted stock, restricted stock units and performance unit awards, any of which may be granted
on a stand-alone, combination or tandem basis. To date, we have granted only stock options and restricted stock
under the 2005 Incentive Plan.
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 predecessor Big Lots, Inc. 1996 Performance Incentive Plan (“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 “qualified 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 our 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 the 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, which are discussed in the “Director Compensation” section of this Proxy Statement, and Mr. Fishman’s
fiscal 2010 restricted stock award, which is discussed in the “Our Executive Compensation Program for Fiscal
2010” section of the CD&A), 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 on the first trading day 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 2009 – Equity for Fiscal
2009” 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 2009. See Proposal Two for a description of the proposed
amendments to the 2005 Incentive Plan.
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.