Big Lots 2011 Annual Report Download - page 46

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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 2011, 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 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 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.