Big Lots 2012 Annual Report Download - page 41

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Mr. Fishman’s equity award which consisted solely of performance-based restricted stock and in fiscal 2012 there
were only 240,000 common shares underlying Mr. Fishman’s equity award which consisted solely of performance-
based restricted stock. Accordingly, the revised equity award structure established by the retention agreement
provided an annual reduction of 280,000 common shares, or 52.8% for fiscal 2010 and fiscal 2011 and 290,000
common shares, or 54.7% for fiscal 2012, compared to Mr. Fishman’s fiscal 2009 equity award.
Mr. Fishman’s fiscal 2010 and fiscal 2011 performance-based restricted stock awards have vested, as we achieved
the corporate financial goals established at the beginning of each of those fiscal years and he remained employed
by us through the first anniversary of the grant dates of those awards. Mr. Fishman’s fiscal 2012 performance-
based restricted stock award did not vest, as we did not achieve the corporate performance goal established at the
beginning of fiscal 2012. As a result, Mr. Fishman’s fiscal 2012 performance-based restricted stock award was
forfeited in its entirety.
Senior Executive Severance Agreements and Severance Arrangements
We maintain senior executive severance agreements with many of our key officers. Mr. Johnson is and Mr. Wurl
was, a party to such an agreement. Messrs. Fishman, Martin, Cooper, and Haubiel and Ms. Bachmann are not
a party to such a senior executive severance agreement, but post-termination and change in control provisions
are contained in each of their respective employment agreements (as discussed in see the following section). The
senior executive severance agreements expire on the anniversary of the date of execution and are automatically
extended for an additional year unless we provide at least 30 days notice that the agreement will not be extended.
The senior executive severance agreements provide for severance benefits if, within 24 months after a change
in control (as defined in the agreements and in the “Change in Control Described” section of this CD&A), the
executive is terminated by us, other than for cause or a constructive termination, as such terms are defined in the
agreements. The senior executive severance agreements provide for the following severance benefits: (i) a lump-
sum payment equal to 200% of the executive’s then current annual salary and stretch bonus and (ii) for a period
of one year, the executive is entitled to participate in any group life, hospitalization or disability insurance plan,
health program, or other executive benefit plan that is generally available to similarly titled executive officers. The
executive will become entitled to reimbursement of legal fees and expenses incurred by the executive in seeking
to enforce their rights under the agreement. Additionally, to the extent that payments to the executive pursuant to
the senior executive severance agreement (together with any other amounts received by the executive in connection
with a change in control) would trigger the provisions of Sections 280G and 4999 of the IRC, payments under
the agreement shall be increased to the extent necessary to place the executive in the same after-tax position as
the executive would have been if no such excise tax or assessment had been imposed on any such payment to the
executive under the agreement or any other payment that the executive may receive as a result of such change in
control. The compensation payable on account of a change in control may be subject to the deductibility limitations
of Sections 162(m) and/or 280G of the IRC.
On August 23, 2012, we announced that Mr. Wurl resigned as Executive Vice President, Merchandising. On
September 14, 2012, we entered into severance agreement with Mr. Wurl. The severance agreement provides that
we pay Mr. Wurl his base salary, car allowance, and medical and dental benefits, less all applicable deductions
for federal, state, and local taxes, social security, wage withholding and other taxes, through August 22, 2013. All
payments to Mr. Wurl are made in the same manner as made during Mr. Wurl’s employment with us.
Post-Termination and Change in Control Arrangements
The employment agreements with our named executive officers provide for potential severance and change
in control payments and other consideration, and the retention agreement with Mr. Fishman provides for the
accelerated vesting of outstanding restricted stock and other consideration upon a change in control. The terms
of these agreements were established through negotiation, during which we considered the various factors
discussed above in the “Employment Agreements” and “Retention Agreement” sections of this CD&A. Our equity
compensation plans also provide for the accelerated vesting of outstanding stock options and restricted stock in
connection with a change in control.
The severance provisions of the employment agreements, Mr. Fishman’s retention agreement and the senior
executive severance agreements are intended to address competitive concerns by providing the executives with
compensation that may alleviate the uncertainty associated with foregoing other opportunities and, if applicable,