Big Lots 2010 Annual Report Download - page 46

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- 30 -
Our CEO and some of these members of management attend general meetings of the Committee, and the CEO
participates in the Committee’s discussions regarding the compensation of the other EMC members. However,
these individuals do not participate in executive sessions of the Committee or when executive compensation
determinations are made by the Committee and the other outside directors.
Independent Compensation Consultant
Pursuant to the authority granted to the Committee by its charter, the Committee may retain independent
compensation consultants as it deems necessary. In establishing executive compensation for fiscal 2010, the
Committee did not retain an independent compensation consultant, but did reference (as discussed below)
non-customized compensation surveys provided by multiple independent compensation consultants at the request
of our human resources department.
Comparative Compensation Data
The Committee uses data regarding the compensation paid to executives at other companies in its annual review
of the compensation paid to EMC members. For fiscal 2010, the Committee evaluated a group of retailers that we
believe is similarly situated to us and with whom we compete for talent. When considering the composition of the
retailer-only peer group, the Committee selected retail companies that have median and average financial measures
similar to ours. Among the financial measures considered were revenues, market capitalization, net income,
earnings per share, price-to-earnings ratio and shareholder return. Our human resources department provided the
Committee with comparative executive compensation data it obtained from the proxy statements and other reports
made public by the companies in the retailer-only peer group. Additionally, the Committee reviewed executive
compensation data from a broader base of companies that was aggregated in one or more of the non-customized
compensation surveys obtained from Mercer, TowersWatson, Hewitt Associates and Hay Group. This broader
peer group was comprised of Standard & Poor’s Retail Stores Index companies and other companies, including
non-retailers, with whom we believe we also compete for talent and whose revenues or operations are similar to
ours. We believed it was prudent to consult both sets of information, because the compensation surveys for the
broader group include compensation information on more executives, including executives who are not included in
publicly-available documents. The broader peer group also provides a more extensive basis on which to compare
the compensation of the EMC members, particularly EMC members whose responsibilities, experience and other
factors are not directly comparable to those executives included in the publicly-available reports of the retailer-
only group. These peer groups vary from year to year based on the Committee’s assessment of which companies
we believe compete with us for talent and are similar to us in terms of operations or revenues and the continued
availability of compensation information from companies previously included in either peer group. For a list of the
companies included in the peer groups, refer to Appendix A of this Proxy Statement.
The Committee and our human resources department reviewed each EMC member’s responsibilities and
compared, where possible, the compensation of each executive to the compensation awarded to similarly-situated
executives at peer group companies. The Committee compared the total direct compensation levels for our EMC
members to the total direct compensation of similarly situated executives within the peer groups. For purposes of
this evaluation, no specific weight was given to one peer group over the other and total direct compensation was
comprised of salary, bonus at the targeted level and equity awards.
While we often award total direct compensation in the range of the fiftieth to seventy-fifth percentile of total direct
compensation paid by the peer groups, this range merely provides a point of reference and market check and is not
a determinative factor for setting our executives’ compensation and, as discussed in this CD&A, compensation
is subjectively determined based on numerous factors. We believe this approach to the use of compensation data
enables us to retain the flexibility necessary to make adjustments for performance and experience, to attract,
retain and motivate top talent, and to reward executives who we believe excel or take on greater responsibility than
executives at peer group companies.
Tally Sheets and Wealth Accumulation
The Committee reviewed tally sheets that set forth the total and each element of compensation awarded to each
EMC member for the immediately preceding two fiscal years, as well as estimated post-employment and change
in control compensation that may be payable to such executives. The purpose of the tally sheets is to consolidate