Dollar General 2011 Annual Report Download - page 36

Proxy
Elements of Named Executive Officer Compensation
We provide compensation in the form of base salary, short-term cash incentives, long-term
equity incentives, benefits and perquisites. We believe that each of these elements is a necessary
component of the total compensation package and is consistent with compensation programs at
competing companies.
Base Salary. Base salary promotes the recruiting and retention functions of our compensation
program by reflecting the salaries for comparable positions in the competitive marketplace, rewarding
strong performance, and providing a stable and predictable income source for our executives. Because
we likely would be unable to attract or retain quality named executive officers in the absence of
competitive base salary levels, this component constitutes a significant portion of the total
compensation package. Our employment agreements with the named executive officers set forth
minimum base salary levels, but the Committee retains sole discretion to increase these levels from
time to time.
(a) Named Executive Officers Other than Mr. Dreiling. In each of 2011 and 2012, the
Committee determined, with Mr. Dreiling’s recommendation, that the named executive officers’
performance assessments relative to other executives supported a percentage increase equal to that
which was budgeted for our entire U.S.-based employee population (see ‘‘Use of Performance
Evaluations’’). Accordingly, each of the named executive officers received the budgeted 2.5% and 2.7%
annual base salary increase in 2011 and 2012, respectively, except that Ms. Guion did not receive a base
salary increase in 2012 as a result of her pending retirement. In 2011, Ms. Lanigan received an
additional 9.57% annual base salary increase, for a total increase of 12.07%, as a result of a market
adjustment arising from a review of the benchmarking data (see ‘‘Use of Market Benchmarking Data’’)
in order to more closely align her total cash compensation to the median of the market comparator
group. All such increases were effective as of April 1 of the applicable year.
(b) Mr. Dreiling. In each of 2011 and 2012, the Committee took into account Mr. Dreiling’s
performance assessment, the amount budgeted for our entire U.S.-based employee population (see
‘‘Use of Performance Evaluations’’), and the benchmarking data of the market comparator group (see
‘‘Use of Market Benchmarking Data’’). The benchmarking data used in connection with decisions
pertaining to Mr. Dreiling’s 2011 compensation indicated that Mr. Dreiling’s total cash compensation
was below the median of the market comparator group. Accordingly, the Committee approved a 5%
annual base salary increase effective as of April 1, 2011, which consisted of the budgeted 2.5% increase
and an additional 2.5% market adjustment. Mr. Dreiling’s target bonus percentage for the 2011
short-term cash incentive plan was also increased as discussed further below. With respect to
Mr. Dreiling’s 2012 base salary increase, the Committee determined that Mr. Dreiling should receive
the same 2.7% increase that was awarded to each of the other named executive officers which, along
with the other components of Mr. Dreiling’s 2012 compensation, maintained his total compensation at
the median range of the market comparator group.
Short-Term Cash Incentive Plan. Our short-term cash incentive plan, called Teamshare,
provides an opportunity for each named executive officer to receive a cash bonus payment equal to a
certain percentage of base salary based upon Dollar General’s achievement of one or more
pre-established financial performance measures. This Teamshare program is established pursuant to our
Annual Incentive Plan, under which certain employees, including our named executive officers, may
earn up to $5 million ($10 million after 2012 if the amended Annual Incentive Plan is approved by
shareholders at this meeting) in respect of a given fiscal year, subject to the achievement of certain
performance targets based on any of the performance measures listed in the Annual Incentive Plan
described in Proposal 3.
28