Big Lots 2014 Annual Report Download - page 34

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Comparative Compensation Data
The Committee reviews data regarding the compensation of executives at other companies in its annual review of
the compensation of the members of our Leadership Team. For fiscal 2014, the Committee reviewed compensation
data for a group of retailers similar to us with whom we believe we compete for talent (the “retailer comparator
group”). The factors the Committee considered in selecting companies for the retailer comparator group included
revenue (generally one-half to two times our revenue), gross profit margin (cost of goods sold divided by revenues;
generally within ten percentage points of our gross profit margin), geographic location (preference for companies
in the Columbus, Ohio area with whom we compete for talent), inventory turns (cost of goods sold divided by
average inventory turns; within approximately 50 points of our score), gross margin return on investment (gross
margin dollars divided by average inventory with no set range, but used as an additional reference point), market
capitalization, net income, earnings per share, price-to-earnings ratio and shareholder return. The companies
included in the retailer comparator group for fiscal 2014 were:
Abercrombie & Fitch Dollar Tree L Brands
Ascena Retail Group DSW RadioShack
Bed Bath & Beyond Family Dollar Ross Stores
Dick’s Sporting Goods Foot Locker Tractor Supply
Dollar General Kohl’s Williams – Sonoma
The Committee also reviewed aggregated executive compensation data regarding broader groups of companies
included in compensation surveys provided by Mercer, TowersWatson and Hay. These broader comparator
groups consisted of the Standard & Poor’s Retail Stores Index companies and other companies, including non-
retailers, with whom we believe we compete for talent and whose revenues or operations are similar to ours. We
believed it was prudent to consult both sets of information because the compensation surveys for the broader
groups include compensation information on more executives and provide a more extensive basis on which to
compare the compensation of the Leadership Team members, particularly those Leadership Team members whose
responsibilities, experience and other factors are not directly comparable to the executives included in the publicly-
available reports of the retailer comparator group. The comparator groups may vary from year to year based on the
Committee’s assessment of which companies compete with us for talent and are similar to us in terms of operations
or revenues and whether compensation information for the companies remains publicly available.
The Committee and our human resources department reviewed each Leadership Team member’s responsibilities
and compared, where possible, the total direct compensation levels for our Leadership Team members to the total
direct compensation of similarly situated executives within the comparator groups. For purposes of this evaluation,
no specific weight was given to one comparator group over the other and total direct compensation was comprised
of salary, annual incentive award at target and equity awards.
While we evaluate total direct compensation awarded to Leadership Team members against the total direct
compensation paid by the comparator groups, this evaluation merely provides a point of reference and market
check and is not a determinative factor for setting our executives’ compensation. As discussed in this CD&A,
compensation is subjectively determined based on numerous factors. We do not benchmark or target our
compensation at any particular level in relation to the compensation of the comparator groups. We believe that our
use of compensation data enables us to retain the flexibility necessary to make adjustments for performance and
experience, attract, retain and motivate top talent, and reward executives who we believe excel or take on greater
responsibility than executives at comparator companies.
Elements of our Executive Compensation for Fiscal 2014
The primary compensation elements we provide to our named executive officers are salary, bonus opportunities
under the 2006 Bonus Plan and equity awards under the 2012 LTIP. In addition, our named executive officers are
entitled to certain limited personal benefits and perquisites. We believe each of these individual elements and the
total mix of elements are necessary to provide a competitive executive compensation program and advance our
compensation philosophy and objectives.