Big Lots 2010 Annual Report Download - page 35

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• Personal Benefits/Perquisites
The following are the personal benefits and perquisites that are generally provided only to employees at or
above the vice president level: (i) coverage under the Big Lots Executive Benefit Plan (“Executive Benefit
Plan”); (ii) enhanced long-term disability insurance coverage; and (iii) use of an automobile or payment
of an automobile allowance. Mr. Fishman is also permitted to make limited non-business use of corporate
aircraft. We believe that these personal benefits and perquisites, although immaterial to us in amount, are
an important element of total compensation provided to our executives because of the value our executives
place on these benefits and the convenience of having these benefits when faced with the demands of their
positions. The Committee evaluates the personal benefits and perquisites received by named executive
officers during its annual review of our named executive officers’ total compensation.
We offer all full-time employees medical and dental benefits under the Big Lots Associate Benefit Plan
(“Benefit Plan”). We also offer employees at or above the vice president level, including our named
executive officers, the opportunity to participate in the Executive Benefit Plan, which reimburses
executives for health-related costs incurred but not covered under the Benefit Plan, up to an annual
maximum reimbursement of $40,000 per family. Amounts received by named executive officers under the
Executive Benefit Plan are treated as taxable income, and we reimburse each executive the approximate
amount of his or her income tax liability relating to the benefits received under the Executive Benefit Plan.
We offer short-term disability coverage to all full-time employees and long-term disability coverage
to all salaried employees. For our named executive officers, the benefits provided under the long-term
disability plan are greater than for employees below the vice president level. Under the long-term
disability coverage, a named executive officer may receive 67% of his or her monthly salary, up to
$25,000 per month, until the executive is no longer disabled or turns age 65, whichever occurs earlier.
We also pay the premiums for this long-term disability coverage and the amount necessary to hold our
named executive officer harmless from the income taxes resulting from such premium payments.
All employees at or above the vice president level have the option to use an automobile or accept a monthly
automobile allowance. The value of the automobile and the amount of the automobile allowance are
determined based on the employee’s level.
In fiscal 2010, the Compensation Committee authorized Mr. Fishman to use corporate aircraft for up to
120 hours of non-business flights, including any deadhead flights associated with his non-business use
of corporate aircraft. Given the delays associated with early check-in requirements, security clearances,
baggage claim and the need for additional time to avoid missing a flight due to possible delays at any
point in the process, commercial travel has become even more inefficient in recent years. Accordingly,
making the aircraft available to Mr. Fishman allowed him to efficiently and securely conduct business
during both business and non-business flights and to maximize his availability to conduct business
before and after his flights. In approving this benefit, the Compensation Committee took into account
Mr. Fishman’s extensive travel schedule, which, whether primarily for business or non-business
purposes, frequently included a business element (e.g., visits to our stores or potential store locations).
We also believe that the value of this benefit to Mr. Fishman, in terms of convenience and time savings
exceeded the aggregate incremental cost that we incurred to make the aircraft available to him and,
therefore, was an efficient form of compensation for him. We reported imputed income for income tax
purposes for the value of Mr. Fishman’s non-business use of corporate aircraft based on the Standard
Industry Fare Level in accordance with the Internal Revenue Code of 1986, as amended (“IRC”), and
the regulations promulgated thereunder. We did not reimburse or otherwise “gross-up” Mr. Fishman for
any income tax obligation attributed to his non-business use of corporate aircraft.
Employment Agreements
Each named executive officer is party to an employment agreement with us. The terms of the employment agreements
are substantially similar and are described collectively herein except where their terms materially differ.
We entered into the employment agreements because the agreements provide us with several protections (including
non-competition, confidentiality, non-solicitation and continuing cooperation provisions) in exchange for minimum
salary levels and target and stretch bonus payout percentages, potential severance and change in control payments
and other benefits. Further, we believe it is in our best interests and the best interests of our shareholders to enter
into the employment agreements to assure the undivided loyalty and dedication of our named executive officers.