Dollar General 2012 Annual Report Download - page 25

Proxy
The Compensation Committee is responsible for recommending the form and amount of
director compensation for consideration and approval by our Board. The Committee may consult with
Meridian Compensation Partners, its independent consultant (‘‘Meridian’’), regarding the form and
amount of director compensation and also welcomes the input of our CEO and our Chief People
Officer, but the Committee and the Board retain and exercise ultimate decision-making authority
regarding director compensation. We do not compensate for Board service any director who also serves
as our employee. We will reimburse directors for certain fees and expenses incurred in connection with
continuing education seminars and for travel and related expenses related to Dollar General business.
For 2012, each non-employee director received quarterly payment (prorated as applicable) of
the following cash compensation, as applicable:
• $75,000 annual retainer for service as a Board member;
• $17,500 annual retainer for service as chairman of the Audit Committee;
• $17,500 annual retainer for service as chairman of the CNG Committee; and
• $1,500 for each Board or committee meeting in excess of an aggregate of 12 that a director
attends during each fiscal year.
In addition, except as provided below, each non-employee director received an annual equity
award under our Amended and Restated 2007 Stock Incentive Plan with an estimated value of $125,000
on the grant date, as determined by Meridian using economic variables such as the trading price of our
common stock, expected volatility of the stock trading prices of similar companies, and the terms of the
awards. Sixty percent of this value consisted of non-qualified stock options to purchase shares of our
common stock (‘‘Options’’) and 40% consisted of restricted stock units payable in shares of our
common stock (‘‘RSUs’’). The Options will vest as to 25% of the Options and the RSUs will vest as to
331⁄3% of the award on each of the first four and three anniversaries of the grant date, respectively, in
each case subject to the director’s continued service on our Board. Directors may elect to defer receipt
of shares underlying the RSUs. Ms. Cochran received her annual equity award in March 2013
consistent with these terms and parameters.
We anticipate granting similar equity awards annually to those non-employee directors who are
elected or reelected at each applicable shareholders’ meeting. Any new director appointed after the
annual shareholders’ meeting but before February 1 of a given year, as was the case with Mss. Cochran
and Fili-Krushel, will receive a full equity award no later than the first regularly scheduled
Compensation Committee meeting following the date on which he or she is appointed. Any new
director appointed on or after February 1 of a given year but before the next annual shareholders’
meeting shall be eligible to receive the next regularly scheduled annual award.
The compensation program described above was similar to that in place in 2011 but was
slightly revised for 2012 as a result of a market benchmarking review. In 2011, after reviewing with
Meridian our Board compensation program relative to our market comparator group, the
Compensation Committee determined that 2011 total compensation was approximately 29% below the
market median, with the shortfall in the equity component. Accordingly, the Committee recommended,
and the Board approved, a $50,000 increase in the estimated value of the equity component of Board
compensation (from $75,000 to $125,000) effective June 2012.
Effective April 1, 2013, we separated our CNG Committee into a Compensation Committee
and a Nominating and Governance Committee. We also named a lead director effective March 19,
2013. The Compensation Committee Chairman, the Nominating and Governance Committee Chairman,
and the lead director will receive an annual retainer of $15,000, $10,000, and $17,500, respectively.
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