Big Lots 2012 Annual Report Download - page 40

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share in fiscal 2009. In addition, as the TSR chart below shows, we returned value to our shareholders through our
stock price performance shortly before entering into the retention agreement with Mr. Fishman. The TSR figures
below show the annualized rates of return reflecting the price appreciation of our common shares over a one-year,
three-year and five-year period, ending in fiscal 2009.
Annualized TSR as of the end of fiscal 2009 (January 30, 2010)
1-Year TSR 3-Year TSR 5-Year TSR
111% 3% 20%
Due to our record growth and shareholder return during Mr. Fishman’s tenure with Big Lots and his vision for
our future, the Committee and the other outside directors determined that Mr. Fishman’s continued leadership
was important to our future performance. Upon the recommendation of the Committee and the approval of the
other outside directors, we entered into a retention agreement with Mr. Fishman in March 2010. The Committee
and the other outside directors believed it was in the best interests of Big Lots and our shareholders to enter into
the retention agreement to (1) better assure the continuing undivided loyalty and dedication of Mr. Fishman,
(2) establish a more efficient manner for delivering compensation to Mr. Fishman and (3) provide tax deductible
qualified performance-based compensation. The Committee and the other outside directors desired to address
their retention objective by delivering additional compensation to Mr. Fishman in an efficient manner (see the
“Equity for Fiscal 2012” section of this CD&A below for more details on our efficient use of common shares). In
order to accomplish this goal, the Committee considered increasing Mr. Fishman’s cash compensation, but instead
elected to provide in the retention agreement that his equity awards for fiscal 2010, fiscal 2011 and fiscal 2012
would be made solely in the form of performance-based restricted stock, which also allowed us to benefit from
the favorable tax treatment applicable to qualified performance-based compensation (see the “Tax and Accounting
Considerations” section of this CD&A for a further discussion of the deductibility of qualified performance
based compensation).
The number of common shares underlying each performance-based restricted stock award is dependent on our
performance relative to the prior fiscal year’s corporate performance amount as calculated to determine whether
bonuses were earned for the prior fiscal year under the 2006 Bonus Plan, subject to the requirements set forth in
the retention agreement. Our operating profit, as adjusted to remove the effect of unusual or non-recurring events,
transactions and accrual items and any negative discretion exercised by the Committee, was used to determine
the corporate performance amount for Mr. Fishman’s performance-based restricted stock awards in fiscal 2010,
fiscal 2011 and fiscal 2012. See the “Bonus for Fiscal 2012” section of this CD&A for more information regarding
the calculation of the corporate performance amount. Under the terms of the retention agreement, in the event that
the corporate performance amount in fiscal 2011 was less than the threshold level corporate performance amount
established by the Committee for fiscal 2011, Mr. Fishman’s fiscal 2012 performance-based restricted stock award
was to be reduced by 5,000 common shares underlying the performance-based restricted stock award for each
one percent by which the corporate performance amount was less than the threshold level. In the event that our
corporate performance amount for fiscal 2011 was greater than the full stretch level corporate performance amount
established by the Committee for such fiscal year, Mr. Fishman’s fiscal 2012 performance-based restricted stock
award was to be increased by 5,000 common shares underlying the performance-based restricted stock award for
each one percent by which the corporate performance amount was above the stretch level. In addition, as long as
Mr. Fishman was entitled to an annual equity award under the retention agreement, the number of common shares
underlying the fiscal 2012 equity award could not be less than 225,000 or greater than 275,000. For fiscal 2011,
the threshold level corporate performance amount established by the Committee was $375,211,000. Because the
corporate performance amount for fiscal 2011 of $364,271,946 was two percent below the corporate performance
threshold level, Mr. Fishman’s fiscal 2012 performance-based restricted stock award consisted of 240,000 common
shares, a reduction of 10,000 common shares from his fiscal 2011 performance-based restricted stock award.
Structuring Mr. Fishman’s fiscal 2010, fiscal 2011 and fiscal 2012 equity awards solely in the form of performance-
based restricted stock substantially reduced the total number of common shares underlying those awards compared
to the total number of common shares underlying the equity awards made to him in prior years. For example,
there were 530,000 common shares underlying Mr. Fishman’s fiscal 2009 equity award, which consisted of
200,000 common shares underlying his restricted stock award and 330,000 common shares underlying his stock
option award. In each of fiscal 2010 and fiscal 2011, however, there were only 250,000 common shares underlying