Big Lots 2010 Annual Report Download - page 48

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- 32 -
the market to absorb and react to our release of material non-public information, and to avoid any suggestion that
the Board, the Committee or any employee manipulated the terms of the equity awards. For equity awards made
throughout the fiscal year, which generally are made as a result of a hiring or promotion, the grant date is the date
of the related event (i.e., the first day of employment or effective date of promotion). We have no policy of timing
the grant date of these mid-year equity awards with the release of material non-public information, and we have not
timed the release of material non-public information for the purpose of affecting the value of any equity awards.
Tax and Accounting Considerations
The Committee reviews and considers the impact that tax laws and accounting regulations may have on the
executive compensation awards, including the deductibility of executive compensation under Section 162(m) of
the IRC (“Section 162(m)”). In doing so, the Committee relies on guidance from members of our finance and legal
departments, as well as outside accountants and attorneys.
Section 162(m) generally limits the tax deductions for compensation expense in excess of $1 million paid to our
CEO and our three other highest compensated executives (excluding the principal financial officer). Compensation
in excess of $1 million may be deducted if it is “qualified performance-based compensation” within the meaning
of Section 162(m). Except as discussed below, we believe that compensation paid under our equity and bonus
compensation plans is generally fully deductible for federal income tax purposes. However, in certain situations,
the Committee may approve compensation that will not meet these requirements in order to ensure competitive
levels of total compensation for our executives or to otherwise further our executive compensation philosophy and
objectives. When considering whether to award compensation that will not be deductible, the Committee compares
the cost of the lost deduction against the competitive market for executive talent and our need to attract, retain and
motivate the executive, as applicable.
For fiscal 2010, the Committee believes it has taken the necessary actions to preserve the deductibility of all
payments made under our executive compensation program, with the exception of a portion of the compensation
paid to Mr. Fishman. If the IRC or the related regulations change, the Committee intends to take reasonable steps
to ensure the continued availability of deductions for payments under our executive compensation program, while
at the same time considering our executive compensation philosophy and objectives and the competitive market for
executive talent.
Our Executive Compensation Program for Fiscal 2011
At its meeting in March 2011, the Committee: (i) certified that a bonus was payable for fiscal 2010 under the 2006
Bonus Plan; (ii) reviewed the tally sheets and compensation history for all EMC members; (iii) reviewed internal
pay equity information and comparative compensation data from our retailer-only and broader peer groups; (iv)
reviewed the at-risk incentive compensation as a percentage of the total executive compensation awarded for fiscal
2010 for each named executive officer; and (v) formulated its recommendations to the other outside directors for
fiscal 2011 executive compensation (including the financial measure, corporate performance amounts and payout
percentages for bonuses, the amount of common shares underlying stock option and restricted stock awards, and
the first and second triggers for restricted stock awards). The Committee also reviewed drafts of this CD&A
and the other compensation disclosures required by the SEC. At the subsequent Board meeting, the Committee
recommended, and the outside directors approved, the following fiscal 2011 salaries, payout percentages for the
target bonus level (with floor being one-half of the target payout percentage and stretch being double the target
payout percentage) and equity awards for our named executive officers:
Name
Fiscal 2011
Salary
($)
Fiscal 2011
Target Bonus
Payout Percentage
(%)
Common Shares Underlying
Stock Option Award
(#)
Common Shares Underlying
Restricted Stock Award
(#)
Mr. Fishman 1,400,000 120 0 250,000
Mr. Cooper 535,000 60 40,000 30,000
Ms. Bachmann 535,000 60 40,000 30,000
Mr. Martin 575,000 60 35,000 25,000
Mr. Haubiel 440,000 60 40,000 30,000