Big Lots 2011 Annual Report Download - page 54

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Pursuant to the terms of the retention agreement with Mr. Fishman, in order for his fiscal 2011 performance-
based restricted stock award of 250,000 common shares to vest, (1) he had to remain employed by us through the
first anniversary of the award and, (2) we had to achieve in fiscal 2011 at least 90% of the corporate performance
amount that we achieved in fiscal 2010, as calculated for purposes of determining whether bonuses were payable
under the 2006 Bonus Plan. Our operating profit, as adjusted to remove the effect of unusual or non-recurring
events, transactions and accruals and any negative discretion exercised by the Committee, was used to determine
the corporate performance amount. See the “Bonus for Fiscal 2011” section of this CD&A for more information
regarding the calculation of the corporate performance amount. The corporate performance amount attained in
fiscal 2010 was $357,900,213. Accordingly, in order for Mr. Fishman’s fiscal 2011 restricted stock award to vest,
we had to achieve a fiscal 2011 corporate performance amount of at least $322,110,191. Because the corporate
performance amount for fiscal 2011 was $364,271,946 and Mr. Fishman remained employed beyond the first
anniversary of the award, Mr. Fishman’s 2011 restricted stock award vested on the first trading day after we filed
with the SEC our Form 10-K for fiscal 2011.
The restricted stock awarded to our named executive officers, other than Mr. Fishman, in fiscal 2011 vests upon
attaining the first trigger and the first to occur of (1) attaining the second trigger, (2) the lapsing of five years
after the grant date while continuously employed, or (3) the grantee’s death or disability (which results in the
vesting of a prorated portion of the award). The financial measure applied to the restricted stock awards granted
to the non-CEO named executive officers in fiscal 2011 was the greater of (A) earnings per common share –
diluted from continuing operations and (B) earnings per common share – diluted from continuing operations
before extraordinary item and/or cumulative effect of a change in accounting principle (as the case may be). If
neither of these amounts appear on the consolidated statement of operations included in our Form 10-K for the
applicable fiscal year, then the financial measure to be used is the greater of earnings per common share – diluted
and (ii) earnings per common share – diluted before extraordinary item and/or cumulative effect of a change in
accounting principle (as the case may be) as it appears in the Form 10-K for the applicable fiscal year. After each
financial measure is calculated for purposes of our financial statements, it is adjusted, for purposes of the restricted
stock award calculations, to remove the effect of any gain or loss as a result of litigation or lawsuit settlement that
is specifically disclosed, reported or otherwise appears in our periodic filings with the SEC or our annual report
to shareholders. These financial measures were selected because the Committee and the other outside directors
believe they provide a good indication of our profitability, ongoing operating results and financial condition.
The first trigger for the fiscal 2011 restricted stock awards to our named executive officers other than Mr. Fishman
is $1.50 under the applicable financial measure and the second trigger is $3.52 under the applicable financial
measure. While the first trigger was met (under the earnings per common share – diluted from continuing
operations financial measure) for those fiscal 2011 restricted stock awards, the second trigger was not met in fiscal
2011. Having met the first trigger, if the named executive officer remains employed by us, the restricted stock will
vest upon the earliest of: (1) the first trading day after we file with the SEC our Form 10-K for the year in which the
second trigger is met; (2) the opening of our first trading window that is five years after the grant date; and (3) the
death or disability of the named executive officer, in which case 20% of the award will vest for each consecutive
year of employment completed from the grant date to the date of death or disability. The restricted stock will be
forfeited if the named executive officer’s employment with us terminates prior to vesting (except as described
above in the case of death or disability).
The Committee and the other outside directors believed that the financial measures and corporate performance
amount applicable to the second trigger that they approved in March 2011 represented a strong, but reasonable,
level of performance that would be a challenge to achieve. The second trigger for restricted stock awarded in
fiscal 2011 was approximately 19.7% greater than the second trigger for restricted stock awarded in fiscal 2010.
The Committee and other outside directors believe the selected corporate performance amount was appropriate in
light of our high levels of performance in fiscal 2010, our projected multi-year operating plan and our objectives to
motivate our executives, reward superior performance and align the interests of our executives and shareholders,
while balancing the uncertainty around the general economic conditions in the United States at the time in which
the awards were made.
The stock options awarded to our named executive officers in fiscal 2011 have an exercise price equal to the fair
market value of our common shares on the grant date (i.e., $41.12), vest incrementally in equal portions over four
years, and expire seven years after the grant date. Additionally, if a named executive officer dies or becomes
disabled before the last scheduled vesting date, the then-remaining unvested portion of the stock option award will
vest on the day such event occurred, provided such event occurred at least six months following the grant date.