Big Lots 2013 Annual Report Download - page 46

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2013 Annual Meeting Results and Shareholder Engagement
At our 2013 annual meeting of shareholders, we held an advisory vote of our shareholders regarding the fiscal
2012 compensation of our named executive officers as disclosed in our 2013 Proxy Statement (the “2013 say-
on-pay vote”). Of the shares voted on our 2013 say-on-pay vote, a majority voted not to approve the fiscal 2012
compensation. This outcome was extremely disappointing to us, our Board and the Committee. In response to
this outcome, the Committee directed our senior management to extend invitations to our largest shareholders to
discuss our executive compensation program. We contacted 24 shareholders who beneficially owned approximately
62% of our outstanding common shares and two major proxy advisory firms. Six shareholders elected to schedule
calls with us in response to our invitation and three other shareholders deferred to the proxy advisory firms, with
that combined group representing approximately 27% of our outstanding common shares.
In our discussions with our shareholders we sought to:
• understand why they did not approve our fiscal 2012 compensation;
• better understand their views regarding our executive compensation generally so that we can better
align our compensation programs with shareholder interests; and
• discuss any other views or concerns of our shareholders.
The shareholders who chose to participate in calls provided both criticism of the compensation paid to our
executives in fiscal 2012, as well as support for changes that we made to our compensation program in fiscal 2013.
The criticism of our fiscal 2012 compensation program principally related to the compensation of our former CEO,
Mr. Fishman. Shareholders stated that Mr. Fishman’s compensation package was too large and that the performance
metric tied to the vesting of Mr. Fishman’s fiscal 2012 restricted stock award was too easily achievable. At the same
time, shareholders voiced support for the Committee’s efforts to change the compensation mix awarded to our
executives in fiscal 2013, particularly the smaller compensation package awarded to our new CEO, Mr. Campisi,
compared to Mr. Fishman. Shareholders also noted our elimination of the excise tax reimbursement payments and
the addition of a clawback provision in our executives’ employment agreements. In addition, several shareholders
were pleased that we separated our CEO and Chairman of the Board positions and that we continued to work with
Exequity LLP (“Exequity”), an independent compensation consultant, to improve our compensation programs.
After considering the 2013 say-on-pay vote and the feedback we received from shareholders and proxy advisory
firms, the Committee decided to make significant additional changes to our compensation program for fiscal 2014,
as discussed in the “Our Executive Compensation Program for Fiscal 2014” section of this CD&A. In addition, the
Committee retained Exequity to present an overview of executive compensation trends that may be important to
our shareholders and to advise the Committee on all principal aspects of executive compensation for fiscal 2014.
Also at our 2013 annual meeting of shareholders, Mr. Solt, the Committee’s Chairman, received less than a
majority of the shareholder votes for his reelection. As a result, Mr. Solt offered to resign from the Board in
accordance with our Corporate Governance Guidelines. After carefully considering the recommendation of the
Nominating / Corporate Governance Committee and other relevant factors (including shareholder feedback), the
Board determined not to accept Mr. Solt’s resignation. The Board considered Mr. Solt’s experience as the CFO
of other publically traded retailers, his background in investor relations, and his knowledge of compensation
best practices and comparator group policies, in determining that Mr. Solt is ideally suited to continue leading
our efforts to further improve our executive compensation program. Mr. Solt did not participate in the Board or
the Nominating / Corporate Governance Committee’s evaluation or in its decision to reject his offer to resign.
As part of the shareholder engagement effort described above, we also sought to understand the concerns that
led a majority of shareholders to withhold votes from Mr. Solt in May 2013. These concerns appear not to have
been directed at Mr. Solt personally, but were principally related to previous compensation practices adopted
before Mr. Solt was appointed the Committee’s Chairman. Under Mr. Solt’s leadership as the Committee’s
Chairman, several key compensation practices were modified in May 2013, including, reducing the overall CEO
compensation package, aligning the equity compensation awarded to our new CEO with shareholder return
metrics, eliminating certain excise tax reimbursement payments and adding a clawback provision to our executive
employment agreements.