Dollar General 2012 Annual Report Download - page 44

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In addition, in March 2012 the Committee awarded Mr. Dreiling a retention grant of 326,037
performance-based restricted shares of our common stock which he can earn if certain earnings per
share (‘‘EPS’’) performance targets are met for fiscal years 2014 and 2015. This award is designed to
retain Mr. Dreiling, whose 2008 stock option award fully vested and whose transfer restrictions on
shares of our common stock expired in 2012, while simultaneously incenting him to continue to drive
superior financial performance. In structuring the award, the Committee reviewed retention grant
practices of the 2012 market comparator group and determined that a grant value equivalent to 1.5
times the value of the annual long-term incentive award would approximate the median range of
retention grants awarded by the market comparator group. The EPS goals were established by the
Committee on the grant date based upon EPS forecasts contained in our long-term strategic plan. Half
of the performance-based restricted stock will vest after the end of our 2014 fiscal year if the EPS goal
for that year is achieved, and the other half will vest after the end of our 2015 fiscal year if the EPS
goal for that year is achieved, in each case subject to continued employment with us and certain
accelerated vesting provisions. For purposes of calculating the achievement of the EPS targets for each
of 2014 and 2015, EPS shall be calculated as the quotient of (x) net income earned in the applicable
fiscal year (as calculated in accordance with generally accepted accounting principles applicable to the
Company at the relevant time), with such net income calculation to exclude the items identified below,
by (y) the weighted average number of shares of our common stock outstanding during the applicable
fiscal year. The net income calculation will exclude the impact of the items that are excluded from the
EBITDA calculation for Teamshare purposes identified above under ‘‘Short-Term Cash Incentive
Program’’ except that adjustments relating to any tax, legislation or accounting changes enacted after
the beginning of the 2012 fiscal year must be material and demonstrable and must not have been
contemplated in our 2012-2016 financial plan.
(c) 2013 Equity Awards. The Compensation Committee authorized additional long-term
equity incentive awards to our named executive officers in March 2013 on substantially similar terms as
those set forth above. However, the Committee changed the mix of the equity value to 50% options,
25% performance share units and 25% restricted stock units to more closely match the equity mix of
our market comparator group. The restricted stock units are time-based awards, payable in shares of
our common stock and vest in equal installments over 3 years from the date of grant, subject to
continued employment with us and certain accelerated vesting conditions. The Committee also
rebalanced the weighting of the performance measures for the performance share units to be evenly
weighted at 50% adjusted EBITDA and 50% ROIC to put greater emphasis on maintaining ROIC at a
consistent level since that will help ensure that capital invested is providing an appropriate return over
time.
Benefits and Perquisites. Along with certain benefits offered to named executive officers on the
same terms that are offered to all of our salaried employees (such as health and welfare benefits and
matching contributions under our 401(k) plan), we provide our named executive officers with certain
additional benefits and perquisites for retention and recruiting purposes, to promote tax efficiency for
such persons, and to replace benefit opportunities lost due to regulatory limits. We also provide named
executive officers with benefits and perquisites as additional forms of compensation that we believe to
be consistent and competitive with benefits and perquisites provided to executives with similar positions
in our market comparator group and in our industry.
The named executive officers have the opportunity to participate in the Compensation Deferral
Plan (the ‘‘CDP’’) and, other than Messrs. Sparks and Vasos, the defined contribution Supplemental
Executive Retirement Plan (the ‘‘SERP’’, and together with the CDP, the ‘‘CDP/SERP Plan’’). SERP
participation is not available to persons to whom employment offers are made after May 28, 2008,
including Messrs. Sparks and Vasos.
We provide each named executive officer a life insurance benefit equal to 2.5 times his or her
base salary up to a maximum of $3 million and a disability insurance benefit that provides income
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