Big Lots 2012 Annual Report Download - page 47

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x Counterbalancing factors: It is not permissible, and may not be cost-effective to us, to grant all equity
awards in the form of restricted stock. Although it may be more efficient and less dilutive to provide
equity awards in the form of restricted stock, the: (1) 2005 LTIP prohibited us from awarding more than
one-third of all awards granted pursuant to the plan in the form of restricted stock, restricted stock units
and performance units; (2) financial statement expense to us associated with restricted stock is generally
greater on a per share basis than the expense to us associated with stock options; and (3) Committee
and other outside directors believe stock options also provide a strong incentive to increase shareholder
value, because stock options provide value to the executive only if the market price of our common
shares increases.
Pursuant to the terms of the retention agreement with Mr. Fishman, in order for his fiscal 2012 performance-
based restricted stock award of 240,000 common shares to vest, (1) he had to remain employed by us through the
first anniversary of the award and, (2) we had to achieve in fiscal 2012 at least 90% of the corporate performance
amount that we achieved in fiscal 2011, as calculated for purposes of determining whether bonuses were payable
under the 2006 Bonus Plan. Our operating profit, as adjusted to remove the effect of unusual or non-recurring
events, transactions and accruals and any negative discretion exercised by the Committee, was used to determine
the corporate performance amount. See the “Bonus for Fiscal 2012” section of this CD&A for more information
regarding the calculation of the corporate performance amount. The corporate performance amount achieved in
fiscal 2011 was $364,271,946. Accordingly, in order for Mr. Fishman’s fiscal 2012 performance-based restricted
stock award to vest, we had to achieve a fiscal 2012 corporate performance amount of at least $327,844,751.40.
Because the corporate performance amount for fiscal 2012 was $297,820,557, Mr. Fishman’s 2012 performance-
based restricted stock award did not vest and was forfeited in its entirety.
The performance-based restricted stock awarded to our named executive officers, other than Mr. Fishman, in fiscal
2012 vests upon attaining the first trigger and the first to occur of (1) attaining the second trigger, (2) the lapsing
of five years after the grant date while continuously employed, or (3) the grantee’s death or disability (which
results in the vesting of a prorated portion of the award). The financial measure applied to the performance-based
restricted stock awards granted to the non-CEO named executive officers in fiscal 2012 was the greater of
(A) earnings per common share – diluted from continuing operations and (B) earnings per common share – diluted
from continuing operations before extraordinary item and/or cumulative effect of a change in accounting principle
(as the case may be). If neither of these amounts appear on the consolidated statement of operations included in
our Form 10-K for the applicable fiscal year, then the financial measure to be used is the greater of earnings per
common share – diluted and (ii) earnings per common share – diluted before extraordinary item and/or cumulative
effect of a change in accounting principle (as the case may be) as it appears in the Form 10-K for the applicable
fiscal year. After each financial measure is calculated for purposes of our financial statements, it is adjusted, for
purposes of the restricted stock award calculations, to remove the effect of any gain or loss as a result of litigation
or lawsuit settlement that is specifically disclosed, reported or otherwise appears in our periodic filings with the
SEC or our annual report to shareholders. These financial measures were selected because the Committee and the
other outside directors believe they provide a good indication of our profitability, ongoing operating results and
financial condition.
The first trigger for the fiscal 2012 performance-based restricted stock awards to our named executive officers
other than Mr. Fishman is $1.50 under the applicable financial measure and the second trigger is $3.95 under the
applicable financial measure. While the first trigger for fiscal 2012 performance-based restricted stock awards was
met (under the earnings per common share – diluted from continuing operations financial measure), the second
trigger was not met in fiscal 2012. Having met the first trigger, if the named executive officer remains employed
by us, the restricted stock will vest upon the earliest of: (1) the first trading day after we file with the SEC our
Form 10-K for the year in which the second trigger is met; (2) the opening of our first trading window that is
five years after the grant date of the restricted stock award; and (3) the death or disability of the named executive
officer, in which case 20% of the award will vest for each consecutive year of employment completed from the
grant date to the date of death or disability. The restricted stock will be forfeited if the named executive officer’s
employment with us terminates prior to vesting (except as described above in the case of death or disability).
The Committee and the other outside directors believed that the financial measures and corporate performance
amount applicable to the second trigger that they approved in March 2012 represented a strong, but reasonable,
level of performance that would be a challenge to achieve. The second trigger for restricted stock awarded in
fiscal 2012 was approximately 12.2% greater than the second trigger for restricted stock awarded in fiscal 2011.