Big Lots 2009 Annual Report Download - page 72

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Proposed Amendments
The primary amendments reflected in the amended and restated 2006 Bonus Plan include:
• Authorizing the Committee to determine whether a participant in the 2006 Bonus Plan must be
employed by us on the day an earned bonus is paid to be eligible to receive a bonus payment. As
originally approved by our shareholders, the 2006 Bonus Plan generally requires a participant to be
employed by us on the day an earned bonus is actually paid to receive the bonus payment. We believe
the Committee should possess the flexibility to reevaluate and alter this policy from time to time. For
example, this proposed amendment would enable the Committee to authorize the payment of bonuses
to participants who only remain employed by us through the end of the applicable performance period
rather than on the day bonuses are actually paid, which typically occurs one to two months after the end
of the performance period.
• Increasing the maximum permitted annual bonus payable to a participant in the 2006 Bonus Plan to
$4,000,000. As originally approved by our shareholders, the maximum aggregate bonus payable under
the 2006 Bonus Plan to a participant for a particular fiscal year is limited to $3,000,000. We believe that
increasing this annual limit to $4,000,000 is necessary for us to continue to attract, retain and motivate
our executives, and to preserve the deductibility of bonus payments made under the 2006 Bonus Plan.
Without this amendment, a bonus payable to certain executive officers in excess of $3,000,000 may
not be deductible by us. Although we strive to preserve the deductibility of payments, to maintain
flexibility in compensating executive officers in a manner consistent with our compensation philosophy,
the Committee has not adopted a policy that all compensation must be deductible under Section 162(m).
• Updating and clarifying certain other provisions of the 2006 Bonus Plan. The other proposed
amendments to the 2006 Bonus Plan principally consist of (i) updates to the accounting standard
references in the appendix of the 2006 Bonus Plan, (ii) clarifications to the performance criteria and
adjustment categories set forth in the appendix of the 2006 Bonus Plan, and (iii) additional revisions
that we believe would improve the clarity of the 2006 Bonus Plan. We believe these amendments
would facilitate a better understanding of the 2006 Bonus Plan’s terms by participants, shareholders,
administrators and us.
The following summary describes the material features of the amended and restated 2006 Bonus Plan and is
qualified in its entirety by reference to the complete text of the amended and restated 2006 Bonus Plan attached to
this Proxy Statement as Appendix C.
Administration and Description of Bonus Awards
The 2006 Bonus Plan will be administered by the Committee. Each Committee member is an outside director
within the meaning of Section 162(m). As plan administrator, the Committee is charged with the responsibility for
designating eligible participants and selecting the performance goals – including the applicable financial measures,
corporate performance amounts and payout percentages – used to calculate the bonus award, if any.
The corporate performance amounts necessary to earn a bonus may be based on one or more financial measures
calculated in accordance with accounting principles generally accepted in the United States of America, as the
same appear in our filings with the SEC and/or our annual report to shareholders, and as may be adjusted in
recognition of unusual or non-recurring events, transactions and accruals. Annually, the Committee, in its sole
discretion, will select the corporate performance amounts, financial measures and equitable adjustments applicable
to the performance period, which is generally a full fiscal year. The financial measures include, without limitation,
operating profit, net income, income from continuing operations and earnings per share. The financial measures
and equitable adjustments are described in their entirety in the appendix to the 2006 Bonus Plan.
The Committee also defines the payout percentages at the time that the financial measures and corporate
performance amounts are established. The minimum payout percentages for target and stretch bonus opportunities
for the named executive officers have been established in their respective employment agreements, and the payout
percentage for a floor bonus opportunity is set annually by the Committee. For executives other than the named
executive officers, the payout percentages approved by the Committee are set by position level. Subject to the terms
of the employment agreements, the Committee retains the right to adjust the payout percentages.