Big Lots 2010 Annual Report Download - page 38

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fair market value per common share as of the date of the change in control multiplied by (b) the adjusted number
of common shares underlying the restricted stock awards that would have been granted to Mr. Fishman, and (z) in
the case of any Equity Value Payment that has not been adjusted prior to the change in control, the Equity Value
Payment shall be equal to the product of (a) the fair market value per common share as of the date of the change in
control multiplied by (b) 250,000.
While the Committee considers the potential payments upon termination or change in control annually when it
establishes compensation for the applicable year, this information is not a primary consideration in setting salary,
bonus payout percentages or equity compensation. We believe that the objectives of attracting and retaining
qualified executives and providing incentives for executives to continue their employment with us would not be
adequately served if potential payments to a named executive officer upon termination or change in control were a
determinative factor in awarding current compensation.
See the “Potential Payments Upon Termination or Change in Control” narrative disclosure and tables following
this CD&A for a discussion of compensation that may be paid to our named executive officers in connection with a
change in control or the termination of their employment with us.
Indemnification Agreements
Each named executive officer is party to an indemnification agreement with us. Each indemnification agreement
provides the named executive officer with a contractual right to indemnification from us in the event the executive
becomes subject to a threatened or actual claim or lawsuit arising out of his or her service to us, unless the act
or omission of the executive giving rise to the claim for indemnification was occasioned by his or her intent to
cause injury to us or by his or her reckless disregard for our best interests, and, in respect of any criminal action
or proceeding, he or she had reasonable cause to believe his or her conduct was unlawful. The indemnification
agreements are intended to allow us to rely upon each named executive officer’s objective advice, without concern
that the named executive officer might be distracted by the personal uncertainties and risks created by a threatened
or actual claim or lawsuit. We believe that providing our named executive officers with the important protections
under the indemnification agreements is necessary to attract and retain qualified executives.
Retirement Plans
We maintain four retirement plans: (i) a tax-qualified defined contribution plan (“Savings Plan”); (ii) a non-qualified
supplemental defined contribution plan (“Supplemental Savings Plan”); (iii) a tax-qualified, funded noncontributory
defined benefit pension plan (“Pension Plan”); and (iv) a non-qualified, unfunded supplemental defined benefit
pension plan (“Supplemental Pension Plan”). We believe that the Savings Plan and Supplemental Savings Plan are
generally commensurate with the retirement plans provided by companies in our peer groups, and that providing
these plans allows us to better attract and retain qualified executives. See the narrative disclosure accompanying
the Nonqualified Deferred Compensation tables following this CD&A for a discussion of Savings Plan and
Supplemental Savings Plan. Participation in the Pension Plan and Supplemental Pension Plan, which we do not
believe are material elements of our executive compensation program, is limited to certain employees whose hire
date precedes April 1, 1994. None of our named executive officers are eligible to participate in the Pension Plan or
Supplemental Pension Plan.
Our Executive Compensation Program for Fiscal 2010
The Committee takes the lead in establishing executive compensation annually, but seeks approval of compensation
decisions from the other outside directors. The Committee believes having all outside directors approve executive
compensation is consistent with best practices in corporate governance. The Committee also requests from our
CEO performance evaluations and recommendations on the compensation of the other EMC members because of
his direct knowledge of the performance and contributions of each of the other EMC members. Additionally, as
discussed in more detail below in the “Role of Management” and “Independent Compensation Consultant” sections
of this CD&A, the Committee consults with management and may engage independent compensation consultants
to take advantage of their specialized expertise.
The process of evaluating our executives begins at our Board meeting in the second quarter of the fiscal year before
compensation adjustments will be made (e.g., in May 2009 for adjustments made in fiscal 2010) and continues
quarterly through updates that our CEO delivers to the outside directors to keep them apprised of the performance