Big Lots 2013 Annual Report Download - page 35

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the grant date; or (b) the first trading day following the executive’s termination of employment if such
termination of employment is the result of the executive’s (i) dismissal by us without cause (as defined in the
Retention Award Agreement) or (ii) death or disability (provided, however, if the executive dies or suffers
a disability, only 1/18th of the Retention Award will vest for each consecutive month that the executive
completed with us between the grant date and his or her termination).
The restricted stock awarded to the outside directors vests on the earlier of (a) the trading day immediately
preceding our annual meeting of shareholders in the fiscal year after the award or (b) the outside director’s
death or disability; provided, that the restricted stock will not vest if the outside director ceases to serve on
the Board before either vesting event occurs.
(3) All of these performance share units may be earned in one-third increments if the market price of our
common shares appreciates, for a period of 20 consecutive trading days, to at least 110%, 120% and 130% of
the grant date fair market value before the earlier to occur of the termination of the executives employment
and the lapsing of seven years after the grant date.
As of February 1, 2014; there were (1) 6,805,740 common shares available for grant under the 2012 LTIP;
(2) 1,441,088 common shares underlying awards outstanding under the 2012 LTIP (1,022,687 of which are
underlying stock options, 380,601 which are underlying restricted stock and 37,800 shares underlying a
performance share units award); (3) 2,567,336 common shares underlying awards outstanding under the 2005
LTIP (2,283,836 of which are underlying stock options and 283,500 of which are underlying restricted stock); and
(4) 58,325,322 outstanding common shares.
As of February 1, 2014: (1) the weighted average exercise price of the 3,377,303 outstanding stock options under our
equity compensation plans (including under those plans that previously terminated) was $34.88 and the weighted
average remaining term was 4.3 years; and (2) there were 701,901 restricted stock awards outstanding under our
equity compensation plans.
Federal Income Tax Treatment of Awards
The following summary discussion of the United States federal income tax implications of Awards under the 2012
LTIP is based on the provisions of the IRC as of the date of this Proxy Statement. This summary is not intended
to be exhaustive and does not, among other things, describe state, local or foreign tax consequences and such
tax consequences may not correspond to the federal income tax treatment described herein. The exact federal
income tax treatment of transactions could vary depending upon the specific facts and circumstances involved
and participants are advised to consult their personal tax advisors with regard to all consequences arising from the
grant, vesting or exercise of Awards and the disposition of any acquired common shares.
Incentive Stock Options
ISOs may only be granted to our employees. No taxable ordinary income to the participant or a deduction to us
will be realized at the time the ISO is granted or exercised. If the participant holds the common shares received
as a result of an exercise of an ISO for at least two years from the grant date and one year from the exercise date,
then (1) any gain realized on disposition of the common shares is treated as a long-term capital gain and any loss
sustained will be a long-term capital loss and (2) we are not entitled to a deduction. If the common shares acquired
by an exercise of an ISO are disposed of within either of these periods (i.e., a “disqualifying disposition”), then
the participant must include in his or her income, as taxable compensation for the year of the disposition, an
amount equal to the excess, if any, of the fair market value of the common shares upon exercise of the stock option
over the stock option exercise price (or, if less, the excess of the amount realized upon disposition over the stock
option exercise price). In such case, we will generally be entitled to a deduction, generally in the year of such a
disposition, for the amount includible in the participant’s income as taxable compensation. The participant’s basis
in the common shares acquired upon exercise of an ISO is equal to the stock option exercise price paid, plus any
amount includible in his or her income as a result of a disqualifying disposition. The rules that generally apply to
ISOs do not apply when calculating any alternative minimum tax liability. The rules affecting the application of the
alternative minimum tax are complex, and their effect depends on individual circumstances, including whether a
participant has items of adjustment other than those derived from ISOs.