Big Lots 2010 Annual Report Download - page 37

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our best interests and the best interests of our shareholders to enter into the retention agreement to better assure
the continuing undivided loyalty and dedication of Mr. Fishman. Under the terms of the retention agreement,
Mr. Fishman received a performance-based restricted stock award in fiscal 2010 and, if he remains continuously
employed by us, Mr. Fishman is entitled to receive additional performance-based restricted stock awards in fiscal
2011 and fiscal 2012. The number of common shares underlying the restricted stock awards to be made in fiscal
2011 and fiscal 2012 is dependent on our performance relative to the prior fiscal year’s operating profit, subject to
collars established in the retention agreement. Each annual restricted stock award under the retention agreement
will vest if (i) we achieve a corporate financial goal established at the beginning of the fiscal year in which the
restricted stock award is granted and (ii) and Mr. Fishman is employed by us on March 7, 2012 (in the case of the
fiscal 2011 award) and March 31, 2013 (in the case of the fiscal 2012 award).
In the event that Mr. Fishman’s employment with us is terminated involuntarily without cause or he resigns
pursuant to a constructive termination, (i) any restricted stock award made pursuant to his retention agreement
that is outstanding at the time of such termination shall remain outstanding and, subject to achievement of the
applicable corporate financial goal, shall vest as if he had remained employed by us until the scheduled vesting
date, and (ii) if such termination occurs prior to his receipt of each of the three annual restricted stock awards
provided for by the retention agreement, then, in lieu of the restricted stock awards that have not been made, he
shall be eligible to receive one or more cash payments (each, an “Equity Value Payment”). Mr. Fishman’s rights
to each such Equity Value Payment shall be determined based on our achievement of the corporate performance
amount in the same manner that would have determined the grant and vesting of the restricted stock awards if
he had remained employed by us until March 31, 2013. The amount of each such Equity Value Payment shall be
equal to the product of (y) the fair market value of our common shares on the March 31 immediately preceding the
payment by (z) the number of common shares underlying the restricted stock award that would have been granted
to Mr. Fishman if he had remained employed by us until the relevant grant date.
Post-Termination and Change in Control Arrangements
The employment agreements with our named executive officers provide for potential severance and change
in control payments and other consideration, and the retention agreement with Mr. Fishman provides for the
accelerated vesting of outstanding restricted stock and other consideration upon a change in control, as described
below. The terms of these agreements were established through negotiation, during which we considered the
various factors discussed in the prior section. Our equity compensation plans also provide for the accelerated
vesting of outstanding stock options and restricted stock in connection with a change in control.
The severance provisions of the agreements are intended to address competitive concerns by providing the
executives with compensation that may alleviate the uncertainty associated with foregoing other opportunities
and, if applicable, leaving another employer. The change in control provisions of the employment agreements
dictate that the executive receives certain cash payments and other benefits only if there is a change in control and
the executive is terminated in connection with the change in control. This “double trigger” is intended to allow
us to rely upon each named executive officer’s continued employment and objective advice, without concern
that the named executive officer might be distracted by the personal uncertainties and risks created by an actual
or proposed change in control. These potential benefits provide our named executive officers with important
protections that we believe are necessary to attract and retain executive talent.
The change in control provisions of the retention agreement with Mr. Fishman dictates that all outstanding
restricted stock awards granted thereunder shall vest as of the date of a change in control. In the event that a
change in control occurs prior to Mr. Fishman’s receipt of each of the three grants provided for under the retention
agreement and he remains continuously employed by us until the change in control, in lieu of any of the grants that
have not yet been made, he shall be entitled to receive an amount in cash equal to the product of (i) the fair market
value per common share on the date of the change in control multiplied by (ii) 250,000 multiplied by (iii) the
number of fiscal years during which he is entitled to receive an annual restricted stock award under the retention
agreement but had not yet received the annual grant as of the date of the change in control. In the event of a change
in control that occurs following termination of Mr. Fishman’s employment without cause or through a constructive
termination, he shall be entitled to receive any unpaid Equity Value Payments. The amount of any such Equity
Value Payment shall be determined as described in the “Retention Agreement” section of this CD&A, provided
that (y) in the case of any restricted stock award that has been adjusted within the collars established by the
retention agreement prior to the change in control, the Equity Value Payment shall be equal to the product of (a) the