Big Lots 2013 Annual Report Download - page 60

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Equity for Fiscal 2013
All equity awards granted to our named executive officers in fiscal 2013 were made under the 2012 LTIP and
are reflected in the Grants of Plan-Based Awards in Fiscal 2012 table. In February 2013, while the Committee
was establishing executive compensation for fiscal 2013, our search for a new CEO was ongoing. In light of our
continuing recruiting efforts, the Committee determined it was most appropriate to maintain the structure of our
long-term incentive program from fiscal 2012 to fiscal 2013 in order to allow the new CEO to provide input into
the program, thereby avoiding the possibility of modifying the program in consecutive years. Therefore, the equity
compensation awarded to our named executive officers for fiscal 2013 consisted of time-vested restricted stock,
non-qualified stock options and, with the respect to Mr. Campisi, performance share units. Mr. Fishman did not
receive an equity award for fiscal 2013. The Committee believes that granting a significant amount of equity to our
named executive officers further aligns their interests with the interests of our shareholders and provides us with
an important retention and motivation tool. The Committee does not utilize a particular formula to determine the
size of the equity awards granted to our named executive officers. The Committee instead uses its discretion to
grant equity awards and may consider the various factors discussed below in connection with its determination.
The Committee undertook the following process to determine the size of the equity awards granted to our named
executive officers for fiscal 2013:
• The Committee reviewed an estimate prepared by management of the number of common shares to be
granted through equity awards during fiscal 2013 to all recipients other than Mr. Fishman. This estimate
was based on historical grant information, anticipated future events, and Mr. Fishman’s evaluation of
the other Leadership Team members’ individual performance and his recommendations.
• In executive session, the Committee evaluated and approved Mr. Fishman’s recommendations for
equity awards for the other Leadership Team members. In each case, the Committee made these
determinations based on historical grant information and the Committee’s subjective views of
comparative compensation data, retention factors, corporate performance (particularly operating profit,
income from continuing operations, selling and administrative expenses and earnings per share against
planned and prior performance), individual performance, the executive’s level of responsibility, the
potential impact that the executive could have on our operations and financial condition and the market
price of our common shares. See the introduction to the “Our Executive Compensation Program for
Fiscal 2013” section and the “Performance Evaluation” section of this CD&A for a discussion regarding
how our CEO and the Committee evaluate performance.
This process was used to ensure that executive equity compensation is commensurate with corporate and
individual performance and remains consistent with our policy that incentive compensation should increase as
a percentage of total compensation as the executive’s level of responsibility and the potential impact that the
particular executive could have on our operations and financial condition increases. Specifically, the items of
corporate and individual performance were the most significant factors in determining the size of the equity
awards made to our named executive officers in fiscal 2013.
The time-vested restricted stock awarded to our named executive officers in fiscal 2013 vests in five years from
the grant date provided the recipient is continuously employed and we attain the first trigger. The vesting of the
award may be accelerated if we attain the first trigger and the first of the following occurs (1) we attain the second
trigger or (2) the grantee dies or becomes disabled (which results in the vesting of a prorated portion of the award).
The financial measure applied to the time-vested restricted stock awards granted to our named executive officers
in fiscal 2013 was our earnings per diluted common share, as it appears in our Form 10-K for the applicable
fiscal year. After the financial measure is calculated for purposes of our financial statements, it is adjusted, for
purposes of the time-vested restricted stock award calculations, to remove the effect of any gain or loss as a result
of litigation or lawsuit settlement that is specifically disclosed, reported or otherwise appears in our periodic filings
with the SEC or our annual report to shareholders. This financial measure was selected because the Committee and
the other outside directors believe it provides a good indication of our profitability, ongoing operating results and
financial condition.
The first trigger and the second trigger for the fiscal 2013 time-vested restricted stock awards are $1.50 and $3.98
respectively, under the applicable financial measure. We structured the restricted stock awards vesting to be
dependent upon achieving the first trigger to ensure their deductibility under Section 162(m) of the IRC for federal
tax purposes. While the first trigger for fiscal 2013 time-vested restricted stock awards was met, the second trigger