Big Lots 2010 Annual Report Download - page 33

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- 17 -
Following the end of each fiscal year, we calculate and review the “at-risk incentive compensation”
awarded to each named executive officer in that fiscal year as a percentage of the “total executive
compensation awarded” to our named executive officer in that fiscal year to evaluate how effectively
our incentive compensation programs address our objective of aligning executive compensation with the
interests of our shareholders. We compute this calculation as follows:
At-Risk
Incentive
Compensation
as a
Percentage of
Total
Executive
Compensation
Awarded
=
At-Risk
Incentive
Compensation
=
Grant date
fair value of
stock
awards
+Grant date fair value
of option awards +Maximum possible payout under
non-equity incentive plan awards
Total
Executive
Compensation
Awarded
=Salary +
Change in pension
value and
nonqualified
deferred
compensation
earnings
+All other
compensation +
At-Risk
Incentive
Compensation
The components of at-risk incentive compensation are the potential values to our named executive
officer upon award, as reflected in the Grants of Plan-Based Awards in Fiscal 2010 table following
this CD&A. The components of the total executive compensation awarded (other than at-risk incentive
compensation) are the amounts actually earned by the named executive officer, as reflected in the
Summary Compensation Table following this CD&A.
For fiscal 2010, the percentage of the total executive compensation awarded that was derived from at-
risk incentive compensation for our named executive officers was as follows:
Name
Fiscal 2010 At-Risk Incentive Compensation
as a Percentage of
Total Executive Compensation Awarded (%)
Mr. Fishman 88.2
Mr. Cooper 80.7
Ms. Bachmann 80.4
Mr. Martin 74.8
Mr. Haubiel 80.8
All non-CEO named executive officers as a group 79.2
All named executive officers as a group 84.5
We believe the significant portion of total executive compensation awarded to our named executive
officers as at-risk incentive compensation exemplifies the emphasis of our executive compensation
program on “pay for performance.” In rewarding performance through at-risk incentive compensation,
we believe we align the interests of our executives with those of our shareholders.
• Manage executive compensation costs.
As we discuss in greater detail in the “Comparative Compensation Data” section of this CD&A, we
compare the compensation paid to our executives with the compensation paid to similarly-situated
executives at companies within our peer groups. While this comparison is not a determinative factor for
setting compensation for our executives, we believe our review of the peer group data provides a market
check and supports our belief that we do not overpay our executives and we effectively manage our
executive compensation costs.
• Focus on corporate governance.
Although the compensation committee at some companies makes all compensation decisions with
respect to their executives, we believe it is consistent with best practices in corporate governance to
reach a consensus among all outside directors when establishing executive compensation each year.
While the Committee takes the lead in formulating executive compensation, we seek the approval of
our five additional outside directors before finalizing annual executive compensation to provide an
additional check on the appropriateness of the amounts awarded.