Dollar General 2011 Annual Report Download - page 31

Proxy
EXECUTIVE COMPENSATION
We refer to the persons included in the Summary Compensation Table below as our ‘‘named
executive officers.’’ References to the ‘‘merger’’ or the ‘‘2007 merger’’ mean our merger that occurred
on July 6, 2007 as a result of which substantially all of our common stock became owned by Buck
Holdings, L.P. (‘‘Buck LP’’), a Delaware limited partnership controlled by investment funds affiliated
with KKR. Buck LP continues to own a substantial percentage of our outstanding common stock.
Compensation Discussion and Analysis
Executive Overview
The overarching goal of our executive compensation program is to serve the long-term interests
of our shareholders. A competitive executive compensation package is critical for us to attract, retain
and motivate persons who we believe have the ability and desire to deliver superior shareholder
returns. We strive to balance the short-term and long-term components of our executive compensation
program to incent achievement of both our annual and long-term business strategies, to pay for
performance and to maintain our competitive position in the market in which we compete for executive
talent. We believe the success of our program is evidenced by the following key financial and operating
results for 2011 (2011 was a 53-week year and 2010 was a 52-week year):
• Total sales increased 13.6% over 2010. Sales in same-stores increased 6.0% following a 4.9%
increase in 2010.
• Operating profit increased 17.0% to $1.49 billion, or 10.1% of sales, compared to
$1.27 billion, or 9.8% of sales, in 2010.
• We reported net income of $767 million, or $2.22 per diluted share, compared to net income
of $628 million, or $1.82 per diluted share, in 2010.
• We generated approximately $1.05 billion of cash flows from operating activities, an increase
of over 27% compared to 2010.
• We opened 625 new stores, remodeled or relocated 575 stores, and closed 60 stores, resulting
in a store count of 9,937 on February 3, 2012.
• Adjusted EBITDA, as defined and calculated for purposes of both our annual Teamshare
bonus program and our outstanding performance-based stock option awards, was
$1.85 billion versus $1.56 billion in 2010.
• Adjusted ROIC, as defined and calculated for purposes of our annual Teamshare bonus
program, was 22.07%.
For the first time, in 2011 our shareholders voted on an advisory basis with respect to our
compensation program for named executive officers. Of the total votes cast (excluding abstentions and
broker non-votes), 96.5% were cast in support of the program. We view this vote as supportive of our
compensation policies and decisions and, accordingly, do not believe the results required consideration
of changes to our compensation program.
The most significant compensation-related actions or achievements in 2011 pertaining to our
named executive officers include:
• We continued to develop a new long-term equity incentive program that is more in line with
the equity grant practices of our market comparator group and that we believe will further
our recruiting and retention objectives. The program was launched in March 2012 for eligible
employees, including the eligible named executive officers.
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