Dollar General 2006 Annual Report Download - page 126

However, in anticipation of Mr. Perdue’ s employment contract expiration on March 31,
2007, in light of the plan to update all officer contracts effective April 1, 2006, in recognition of
his performance and in order to send Mr. Perdue a clear and early message of the Board’ s intent
to retain him, the Committee initiated discussions with Mr. Perdue concerning an early renewal
or extension of his contract. These discussions culminated in the Board’ s September 18, 2006
approval of an extension of Mr. Perdue’ s employment contract from March 31, 2007 to March
31, 2008. The details of the extended contract are described below in the section “What are the
terms of the extension of Mr. Perdue’ s employment contract?”
As a result of the decision to negotiate an extension of his employment contract, the
Committee postponed a decision regarding Mr. Perdue’ s base salary and long-term incentive
compensation at the regular executive compensation review session in March 2006. Rather, the
Committee decided to include those decisions in the negotiation process relating to the contract
extension discussed further below.
As described above, the net income performance level required to qualify for a minimum
incentive payout was not met, and Mr. Perdue did not receive a Teamshare payout for fiscal
2006. The Committee considered whether Mr. Perdue should receive a discretionary bonus
similar to the discretionary bonuses paid to other NEOs. As part of its deliberations, the
Committee gave particular weight to Mr. Perdue’ s request that he not receive a discretionary
bonus in 2006. Accordingly, the Committee recommended that Mr. Perdue not receive a
discretionary bonus, and the independent directors of the Board concurred.
What additional benefits or perquisites are provided to the CEO?
Mr. Perdue is eligible for all of the same benefits and perquisites and on the same basis
and in the same amounts as the other NEOs, except he is not eligible to participate in the SERP
described above due to his participation in an individual defined benefit SERP. Mr. Perdue’ s
SERP is a non-qualified, unfunded pension plan. The SERP was provided to Mr. Perdue as part
of his inducement package to join Dollar General in 2003 and was one of the components
necessary at that time in attracting him as our CEO in accordance with our objective to attract
persons with superior ability. Certain information regarding Mr. Perdue’ s SERP is reflected in
the Pension Benefits Table set forth in this report, which is followed by a description of the terms
of this SERP.
Effective January 25, 2006, the Board approved the establishment of a grantor trust to
hold certain assets in connection with Mr. Perdue’ s SERP. The grantor trust provides for assets
to be placed in the trust upon an actual or potential change-in-control (as defined in the grantor
trust). The assets of the grantor trust are subject to the claims of our creditors. In addition, the
grantor trust provides for a distribution to Mr. Perdue to pay certain taxes in the event he is taxed
in connection with the funding of the trust prior to the normal payment of his SERP benefit. The
Committee also deemed it appropriate in accordance with competitive practice to reimburse Mr.
Perdue for certain legal fees that he incurred as a result of the establishment of this grantor trust.
These fees are reported in the “All Other Compensation” column of the Summary Compensation
Table set forth in this report.
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