Dollar General 2006 Annual Report Download - page 78

expensed approximately $6.4 million, $5.8 million, and $4.9 million, respectively, for matching
contributions.
The Company also has a nonqualified supplemental retirement plan and compensation
deferral plan (called the Dollar General Corporation CDP/SERP Plan) for a select group of
management and highly compensated employees. The supplemental retirement plan is a
noncontributory defined contribution plan with annual Company contributions ranging from 2%
to 12% of base pay plus bonus depending upon age plus years of service and job grade. Under
the compensation deferral plan, participants may defer up to 65% of base pay and up to 100% of
bonus pay. An employee may be designated for participation in one or both of the plans,
according to the eligibility requirements of the plans. The Company matches base pay deferrals
at a rate of 100% of base pay deferral, up to 5% of annual salary, with annual salary offset by the
amount of match-eligible salary in the 401(k) plan. All participants are 100% vested in their
compensation deferral plan accounts. Supplemental retirement plan accounts vest at the earlier
of the participant’ s attainment of age 50, the participant’ s being credited with 10 or more “years
of service”, upon termination of employment due to death or “total and permanent disability”, or
upon a “change in control,” all as defined in the plan. The Company incurred compensation
expense for these plans of approximately $0.8 million in 2006 and $0.6 million in both 2005 and
2004.
The supplemental retirement plan and compensation deferral plan assets are invested at
the option of the participant in either an account that mirrors the performance of a fund or funds
selected by the Compensation Committee of the Company’ s Board of Directors or its delegate
(the “Mutual Funds Option”), or in an account which mirrors the performance of the Company’s
common stock (the “Common Stock Option”). Investments in the Common Stock Option cannot
be subsequently diversified and investments in the Mutual Funds Option cannot be subsequently
transferred into the Common Stock Option.
A participant’ s compensation deferral plan and supplemental retirement plan account
balances will be paid in accordance with the participant’s election by (a) lump sum, (b) monthly
installments over a 5, 10 or 15 year period or (c) a combination of lump sum and installments.
The vested amount will be payable at the time designated by the plan upon the participant’ s
termination of employment or retirement, except that participants may elect to receive an in-
service distribution or an “unforeseeable emergency hardship” distribution of vested amounts
credited to the compensation deferral account. Account balances deemed to be invested in the
Mutual Funds Option are payable in cash and account balances deemed to be invested in the
Common Stock Option are payable in shares of Dollar General common stock and cash in lieu of
fractional shares.
Asset balances in the Mutual Funds Option are stated at fair market value, which is based
on quoted market prices. The current portion of these balances are included in Prepaid expenses
and other current assets and the long term portion is included in Other assets, net in the
consolidated balance sheets. In accordance with EITF 97-14 “Accounting for Deferred
Compensation Arrangements Where Amounts Earned Are Held in a Rabbi Trust and Invested,”
the Company’ s stock is recorded at historical cost and included in Other shareholders’ equity.
The deferred compensation liability related to the Company stock for active plan participants is
included in shareholders’ equity and subsequent changes to the fair value of the obligation are
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