Big Lots 2012 Annual Report Download - page 37

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The Committee reviews each element at least annually. Individual and corporate performance directly impacts
the elements and amount of compensation paid to our named executive officers. For instance, a named executive
officer’s failure to meet individual goals may lead to a reduction in his or her compensation, a failure to receive
equity awards or the termination of his or her employment. Conversely, excellent corporate performance may lead
to greater bonus payouts and, possibly, to the achievement of financial goals that accelerate restricted stock vesting.
The Committee and the other outside directors also have discretion, subject to the limitations contained in our
bonus and equity plans and the executives’ employment agreements, in setting named executive officers’ salary,
bonus opportunities and equity awards.
x Salary
Salary is cash compensation and is established annually for each named executive officer. A minimum
salary for each named executive officer, except for Mr. Johnson and Mr. Wurl, who are not a party to
an employment agreement, is set forth in his or her respective employment agreement, as described
below in the “Elements of In-Service Executive Compensation – Employment Agreements” section
of this CD&A. Salary adjustments are subjectively determined and are not formally tied to specific
performance criteria. The Committee has not adopted any specific schedule of salary increases and
makes adjustments to our named executive officers’ respective salaries without regard to adjustments in
the salaries of other executives.
x Bonus
Each named executive officer has the opportunity to earn an annual cash bonus under the 2006 Bonus
Plan. Bonus payouts correspond to a percentage of each named executive officer’s salary (“payout
percentage”) and are based on whether we achieve certain corporate performance amounts under one or
more financial measures. The corporate performance amounts and financial measures are set annually
at the discretion of the Committee and the other outside directors in connection with the Board’s
approval of our annual corporate operating plan, subject to the terms of the 2006 Bonus Plan and our
named executive officers’ employment agreements.
The lowest level at which we will pay a bonus under the 2006 Bonus Plan is referred to as the
“threshold.” A bonus is not paid under the 2006 Bonus Plan if we do not achieve at least the
corporate performance amount that earns a threshold bonus. The level at which we generally plan our
performance and the associated payout under the 2006 Bonus Plan is referred to as the “target.” The
maximum level at which we will pay a bonus under the 2006 Bonus Plan is referred to as the “stretch.”
If our performance in a fiscal year exceeds the minimum corporate performance amount that earns
a threshold bonus, there is a corresponding increase in the amount of the bonus (up to a maximum at
the stretch bonus level). Bonuses paid to our named executive officers under the 2006 Bonus Plan are
considered “Non-Equity Incentive Plan Compensation” in the Summary Compensation Table. See
the “Bonus and Equity Plans” disclosure that follows the Summary Compensation Table for more
information concerning the 2006 Bonus Plan.
x Equity
All equity awards granted to our named executive officers from January 1, 2006 through May 23, 2012
were issued under the 2005 LTIP and all equity awards granted to our named executive officers since
May 23, 2012 have been issued under the 2012 LTIP. Although the 2005 LTIP and 2012 LTIP allow us
to issue various types of equity awards, we have granted only stock options and restricted stock under
the 2005 LTIP and 2012 LTIP. The stock options vest based on the passage of time or, if earlier, upon
the executive’s death or disability (provided such event occurs at least six months after the grant date).
The performance-based restricted stock awarded to Mr. Fishman pursuant to his retention agreement
vests based on the achievement of a corporate financial goal. The restricted stock awarded to the other
named executive officers vests based on the achievement of the first trigger and then the achievement of
the second trigger, the passage of time, or the executive’s death or disability. See the “Bonus and Equity
Plans” disclosure that follows the Summary Compensation Table for more information concerning the
2005 LTIP and 2012 LTIP and the terms under which we have granted equity awards.