Dollar General 2011 Annual Report Download - page 33

Proxy
• We set base salaries to reflect the responsibilities, experience, performance and contributions
of the named executive officers and the salaries for comparable benchmarked positions,
subject to minimums set forth in employment agreements.
• We reward named executive officers who enhance our performance by linking cash and
equity incentives to the achievement of our financial goals.
• We promote share ownership to align the interests of our named executive officers with
those of our shareholders.
We utilize employment agreements with the named executive officers which, among other
things, set forth minimum levels of certain compensation components. We believe such arrangements
are a common protection offered to named executive officers at other companies and help to ensure
continuity and aid in retention. The employment agreements also provide for standard protections to
both the executive and to Dollar General should the executive’s employment terminate.
Named Executive Officer Compensation Process
Oversight. Our Board of Directors has delegated responsibility for executive compensation to
a Board committee which we will refer to throughout this Compensation Discussion and Analysis as
our ‘‘Compensation Committee’’ or the ‘‘Committee.’’ The Compensation Committee approves the
compensation of our named executive officers, while its subcommittee consisting entirely of
independent directors (the ‘‘162(m) Subcommittee’’) approves any portion that is intended to qualify as
‘‘performance-based compensation’’ under Section 162(m) of the Internal Revenue Code or that is
intended to be exempt for purposes of Section 16(b) of the Securities Exchange Act of 1934.
Messrs. Calbert, Agrawal, Jones, Rhodes, and Bryant serve on our Compensation Committee, and
Messrs. Rhodes and Bryant make up the 162(m) Subcommittee. In January 2012 the Compensation
Committee was combined with the Nominating and Corporate Governance Committee to form the
CNG Committee, which has assumed the Compensation Committee’s responsibilities.
Use of Outside Advisors. The Compensation Committee has selected Meridian Compensation
Partners (‘‘Meridian’’), a spin-off of Hewitt Associates, to serve as its independent compensation
consultant. Meridian (including its predecessor Hewitt Associates) has served as the Committee’s
consultant since our 2007 merger. The written agreement with Meridian details the terms and
conditions under which Meridian will provide independent advice to the Committee in connection with
matters pertaining to executive and director compensation. Under the agreement, the Committee (or its
chairman) shall determine the scope of Meridian’s services. The approved scope generally includes
attendance at select Committee meetings and associated preparation work, risk assessment assistance,
guiding the Committee’s decision making with respect to executive and Board of Directors
compensation matters, providing advice on our executive pay philosophy, compensation peer group,
incentive plan design and employment agreement design, providing competitive market studies, and
apprising the Committee about emerging best practices and changes in the regulatory and governance
environment. In 2012, the Committee intends to decrease the amount of work performed by its
consultant, primarily with respect to benchmarking and risk assessment assistance, which work will
instead be performed by management.
Meridian did not provide any other services to the Company in 2011 unrelated to executive
compensation.
A Meridian representative attends such Committee meetings and private sessions as requested
by the Committee. The Committee’s members also are authorized to consult directly with the
consultant at other times as desired. During 2011, the Committee’s Chairman periodically consulted
directly with Meridian, as did Mr. Dreiling and Mr. Bob Ravener, our Executive Vice President and
Chief People Officer, and other non-executive members of our human resources group, in connection
25