Big Lots 2012 Annual Report Download - page 33

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x Mr. Fishman notified our Board in December 2012 that he intends to retire upon the appointment of his
successor. Therefore, Mr. Fishman did not receive a base salary increase or bonus opportunity increase
for fiscal 2013, and he was not granted any new equity awards as part of our review of executive
compensation in March 2013.
Committee Consideration of the Company’s 2012 Shareholder Vote on Executive Compensation
At our 2012 Annual Meeting of Shareholders, we held a shareholder advisory vote on the compensation of our
named executive officers, as disclosed in our 2012 Proxy Statement (the “2012 say-on-pay vote”). A majority of our
shareholders who voted on our 2012 say-on-pay vote voted against the proposal. We did not modify any component
of our executive compensation program for fiscal 2012 in response to the 2012 say-on-pay vote, as the vote
occurred after the Committee had established the elements of our executive compensation program for fiscal 2012.
However, before setting executive compensation for fiscal 2012, the Committee had directed our management to
extend invitations to discuss our executive compensation program to 14 shareholders representing the beneficial
ownership of nearly half of our outstanding common shares as of December 31, 2011. Four of the shareholders
elected to schedule calls with us in response to our invitation. The reason most often cited by the shareholders
who declined our invitation was that they had no outstanding concerns or questions regarding our executive
compensation program. The shareholders who chose to participate in calls did not suggest specific changes to our
executive compensation program. The Committee was briefed on the feedback received during management’s calls
with shareholders and after considering the shareholder vote as well as the shareholder feedback, the Committee
decided to make a significant change to our 2012 LTIP, as presented in the 2012 Proxy Statement and approved
at the 2012 Annual Meeting, by removing the evergreen provision, which was contained in the 2005 LTIP. In
addition, the Committee engaged Towers Watson, an independent compensation consultant, to present an overview
of executive compensation trends that may be important to our shareholders and to advise the Committee on all
principal aspects of executive compensation for fiscal 2012.
In response to the 2012 say-on-pay vote, the Committee engaged Exequity LLP, an independent compensation
consultant, to (1) assist the Committee in evaluating the design of our equity awards and the compensation of both
our Board and our EMC members and (2) provide market information and analysis for both the structure of equity
awards and compensation for both our peer group and our peer group as established by a proxy advisory service.
Philosophy and Objectives of our Executive Compensation Program
We believe it is important to provide competitive compensation to attract and retain talented executives to lead
our business. We also believe an executive compensation program should encourage high levels of corporate and
individual performance by motivating executives to continually improve our business in order to promote sustained
profitability and enhanced shareholder value. This philosophy drives our executive compensation program.
Consistent with our philosophy, each of our named executive officer’s total compensation varies based on his or
her performance, leadership, responsibilities, experience and the achievement of financial and business goals. To
better ensure that our executive compensation program advances the interests of our shareholders, the value of
bonus opportunities and equity awards under the program depends upon our financial performance and/or the price
of our common shares. As a named executive officer’s level of responsibility and the potential impact that a named
executive officer could have on our operations and financial condition increase, the percentage of our named
executive officer’s compensation that is at risk through bonus and equity incentive compensation also increases.
The Board and the Committee periodically review our executive compensation philosophy and consider factors that
may influence a change in our executive compensation philosophy. Consistent with our executive compensation
philosophy, the Committee has identified the following key objectives for our executive compensation program:
x Attract and retain executives by paying them amounts and offering them elements of compensation that
are competitive with and comparable to those paid and offered by most companies in our peer groups.
We believe a key factor in attracting and retaining qualified executives is to provide total compensation
that is competitive with the total compensation paid by companies in our compensation “peer groups”
discussed in the “Comparative Compensation Data” section of this CD&A. In addition, we believe
most executives who consider changing their employer expect to receive amounts and elements of
compensation that are comparable to those offered by most companies in our peer groups and/or their