Big Lots 2013 Annual Report Download - page 65

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Minimum Share Ownership Requirements and Hedging Prohibition
The Board has adopted minimum share ownership requirements for all outside directors and Leadership Team
members. These requirements are designed to align the long-term interests of our outside directors and executives
with those of our shareholders. Under the requirements, the outside directors and Leadership Team members must,
at a minimum, own common shares having an aggregate value equal to the following multiple of his or her Board
retainer or salary (as is in effect at the time compliance with the requirements is evaluated), as applicable:
Title Multiple of Retainer or Salary
Director 4x
Chief Executive Officer 4x
Executive Vice President 2x
Senior Vice President 1x
Shares counted toward these requirements include common shares held directly or through a broker, common
shares held under the Savings Plan or Supplemental Savings Plan, unvested restricted stock, and vested but
unexercised in-the-money stock options. Each outside director that served on the Board when these requirements
were adopted in March 2008 was required to meet the requirements on the date of the 2013 annual meeting of
shareholders and thereafter at each subsequent annual meeting. Each Executive Officer that was an Executive
Officer when these requirements were adopted was required to meet the requirements on the date that adjustments
to annual executive compensation were made in 2013 and thereafter on each subsequent annual adjustment
date. Directors elected and executives hired or promoted after the adoption of the requirements must meet the
requirements on the first testing date for directors or executives following the fifth anniversary of their election,
hire or promotion, as applicable. As of March 21, 2014, each outside director and executive who has been on
the Board or a Leadership Team member for at least five years complied with our minimum share ownership
requirements. In addition to the minimum share ownership requirements, we do not allow our directors or
Leadership Team members to enter into any hedging or monetization transactions involving our common shares.
Equity Grant Timing
Pursuant to the terms of the 2005 LTIP and 2012 LTIP, the grant date of equity awards must be the later of the date
the terms of the award are established by corporate action or the date specified in the award agreement. Consistent
with prior years, in fiscal 2013, the outside directors, after consultation with the Committee, specified that the
grant date of the equity awards made in connection with the annual performance reviews of the Leadership Team
members was the second trading day following our release of fiscal 2012 results. This future date was established
to allow the market to absorb and react to our release of material non-public information, and to avoid any
suggestion that the Board, the Committee or any employee manipulated the terms of the equity awards. For equity
awards made throughout the fiscal year, which generally are made as a result of a hiring or promotion, the grant
date is the date of the related event (i.e., the first day of employment or effective date of promotion). We have no
policy of timing the grant date of these mid-year equity awards with the release of material non-public information,
and we have not timed the release of material non-public information for the purpose of affecting the value of any
equity awards.
Tax and Accounting Considerations
The Committee reviews and considers the impact that tax laws and accounting regulations may have on the
executive compensation awards, including the deductibility of executive compensation under Section 162(m) of the
IRC. In doing so, the Committee relies on guidance from members of our finance and legal departments, as well as
outside accountants and attorneys.
Section 162(m) of the IRC generally limits the tax deductions for compensation expense in excess of $1 million
paid to our CEO and our three other highest compensated executives (excluding the principal financial officer).
Compensation in excess of $1 million may be deducted if it is “qualified performance-based compensation” within
the meaning of Section 162(m) of the IRC. Except as discussed below, we believe that compensation paid under
our equity and bonus compensation plans is fully deductible for federal income tax purposes. However, in certain
situations, the Committee may approve compensation that will not meet these requirements in order to ensure