Big Lots 2011 Annual Report Download - page 63

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financial measures are established. No right to a minimum bonus exists, and the Compensation Committee has
the discretion to cancel or decrease a bonus (but may not increase a bonus for a covered employee (as that term is
used within Section 162(m)) calculated under the 2006 Bonus Plan. Any payments made with respect to a fiscal
year are made in the first quarter of the following fiscal year. The bonus awards that may be earned under the 2006
Bonus Plan range from the floor to the stretch bonus payout percentages, and include all amounts in between. The
smallest target and stretch bonus payout percentages that may be set annually for our named executive officers are
set forth in their respective employment agreements. The floor bonus payout percentage is pre-established annually
by the Compensation Committee and other outside directors and has historically been one-half of the target bonus
payout percentage. Subject to the terms of the employment agreements, the Compensation Committee and the
other outside directors retain the right to adjust the payout percentages and, in the past, have generally done so as
deemed necessary to realign an executive’s bonus opportunity with our compensation philosophy. Pursuant to the
terms of the 2006 Bonus Plan, the maximum bonus payable under the plan to a participant in a single fiscal year is
$4,000,000. See the “Overview of our Executive Compensation Program – Elements of In-Service Compensation
– Bonus,” “Overview of our Executive Compensation Program – Employment Agreements” and “Our Executive
Compensation Program for Fiscal 2011 – Bonus for Fiscal 2011” sections of the CD&A for more information
regarding the 2006 Bonus Plan and the awards made under that plan for fiscal 2011.
Big Lots 2005 Long-Term Incentive Plan
Since January 1, 2006, all employee equity awards, including those made to our named executive officers, have
been granted under the 2005 LTIP. The 2005 LTIP authorizes the grant of NQSOs, ISOs, SARs, restricted stock,
restricted stock units and performance unit awards, any of which may be granted on a stand-alone, combination or
tandem basis. To date, we have granted only stock options and restricted stock under the 2005 LTIP.
Awards under the 2005 LTIP may be granted to any salaried employee, consultant or advisor of Big Lots or its
affiliates. The number of common shares available for grant under the 2005 LTIP consists of: (1) an initial allocation
of 1,250,000 common shares; (2) 2,001,142 common shares, the common shares that were available under the
predecessor 1996 LTIP upon its expiration; (3) 2,100,000 common shares approved by our shareholders in May 2008;
and (4) an annual increase equal to 0.75% of the total number of issued common shares (including treasury shares)
as of the start of each fiscal year during which the 2005 LTIP is in effect. We believe the decision to provide for
the annual increase in the common shares available for issuance under 2005 LTIP is beneficial to our shareholders,
because, as compared to obtaining at the inception of the 2005 LTIP authorization for all common shares that are
anticipated to be needed during its term, the annual increase provides an additional control in that it prevents the
issuance in any one year of all of the common shares that will eventually be available to be granted under the 2005
LTIP. No more than one-third of all common shares awarded under the 2005 LTIP may be granted in the form of
restricted stock, restricted stock units and performance units, and no more than 5,000,000 common shares may be
granted as ISOs. A participant may receive multiple awards under the 2005 LTIP. Awards intended to qualify as
“qualified performance-based compensation” under Section 162(m) are limited to: (1) 2,000,000 shares of restricted
stock per participant annually; (2) 3,000,000 common shares underlying stock options and SARs per participant
during any three consecutive calendar years; and (3) $6,000,000 in cash through performance units per participant
during any three consecutive calendar years. Also, the 2005 LTIP provides that the total number of common shares
underlying outstanding awards granted under the 2005 LTIP, the 1996 LTIP, the Big Lots, Inc. Executive Stock Option
and Stock Appreciation Rights Plan (“ESO Plan”), and the Director Stock Option Plan may not exceed 15% of our
issued and outstanding common shares (including treasury shares) as of any date. The 1996 LTIP, the ESO Plan and
the Director Stock Option Plan have terminated, and there are no awards outstanding under the ESO Plan.
Each stock option granted under the 2005 LTIP allows the recipient to acquire our common shares, subject to the
completion of a vesting period and continued employment with us through the applicable vesting date. Once vested,
these common shares may be acquired at a fixed exercise price per share and they remain exercisable for the term
set forth in the award agreement. Stock option awards made under the 2005 LTIP vest on the anniversary of the
grant date at a rate of 25% per year over the first four years of the seven year option term. Pursuant to the terms of
the 2005 LTIP, the exercise price of a stock option may not be less than the average trading price of our common
shares on the grant date or, if the grant date occurs on a day other than a trading day, on the next trading day.
Under the restricted stock awards granted pursuant to the 2005 LTIP (other than those made to the outside
directors, which are discussed in the “Director Compensation” section of this Proxy Statement, and those made
to Mr. Fishman pursuant to his retention agreement, which are discussed in the “Overview of Our Executive