Big Lots 2013 Annual Report Download - page 90

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Results in an Inexperienced, Fragmented and Unstable Board. Proxy access may lead to an inexperienced,
fragmented and unstable Board that is less efficient and less focused on creating long-term value for our
shareholders. With proxy access, contested director elections may become an annual event. The Board believes
that the divisive proxy contests that may result from contested director elections (1) would distract the Board
and management from their duties and responsibilities, (2) may encourage management to employ a more short-
term focus and (3) would cause high annual turnover on the Board. High turnover on the Board could produce
an inexperienced Board that lacks the sufficient knowledge and understanding of our current and past business
necessary to provide meaningful and effective oversight of our operations and long-term strategies. Similarly, our
management and directors would be required to divert their attention from managing and overseeing our business
to focusing on proxy contests in the election of directors. Moreover, a director elected by one shareholder group in
one year may face successful opposition from a director nominated by another shareholder group in a subsequent
year, which would further destabilize the Board. Any disruption in the cohesiveness of the Board could result in
additional director turnover and discourage highly qualified individuals from serving on the Board.
Increases and Inequitably Allocates Proxy Expenses. The proponents’ proxy access proposal would create an
uneven playing field by facilitating expensive and disruptive proxy contests in which we would bear substantial
additional expense while shareholders would need to expend little resources to promote their nominee(s). Big Lots
already bears the significant expense of filing and distributing its own proxy materials. Proxy access would require
Big Lots to also include shareholder nominee(s) in its proxy materials. This requirement would enable shareholders
to impose on Big Lots a substantial portion (if not all) of the expenses associated with soliciting proxies for
their nominee(s). Additionally, in a proxy contest, the Board would likely undertake an additional and expensive
campaign to support its nominees and inform shareholders why the shareholder nominee(s) should not be elected.
The United States Court of Appeals for the District of Columbia invalidated the SEC’s proxy access rule precisely
because the Court determined that the SEC did not adequately assess the expenses and distractions resulting from
proxy contests.
In the absence of proxy access, the playing field is level, as shareholders also need to undertake the expense
of soliciting proxies for their nominee(s). The Board believes that the current SEC proxy rules more equitably
allocate proxy solicitation expenses. Furthermore, the Board does not believe there is any legitimate reason why
shareholders holding three percent (3%) of our outstanding Common Shares (which would constitute more than
$66,067,089 in value as of the record date for the Annual Meeting) should not bear the expense of soliciting proxies
for their nominee(s).
Our Corporate Governance Structure Provides a Means for Significant Shareholder Input
The Board believes that our existing corporate governance structure and applicable laws provide the means for
significant shareholder input, and thus eliminate the need for the proponents’ proxy access proposal. The various
means by which shareholders may provide input include:
• the procedures that allow our shareholders to propose to our Nominating / Corporate Governance
Committee nominees for election as directors (see the “Governance — Selection of Nominees by the
Board” section of this Proxy Statement for a description of these procedures);
• a process that enables our shareholders to communicate directly with the Board and individual
directors and requires the Board to review correspondence it receives from our shareholders (see the
“Governance — Communications with the Board” section of this Proxy Statement for a description of
this process);
• the SEC’s proxy rules provide shareholders with the opportunity to solicit proxies for their own
nominees for election as directors;
• the SEC’s proxy rules provide shareholders with the ability to present proposals at our annual meeting
of shareholders and include shareholder proposals in the proxy materials for our annual meeting of
shareholders (see the “Shareholder Proposals” section of this Proxy Statement for a description of the
requirements of these rules);
• the annual election of all of our directors; and
• an annual advisory vote on executive compensation, which provides our shareholders with the
opportunity each year to express their views regarding our executive compensation program.