Use these links to rapidly review the documentTABLE OF CONTENTS
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant | ||
Filed by a Party other than the Registrant | ||
Check the appropriate box: | ||
☐ Preliminary Proxy Statement | ||
☐Confidential, for Use of the Commission Only (as permitted by Rule14a-6(e)(2)) | ||
☒ Definitive Proxy Statement | ||
☐ Definitive Additional Materials | ||
☐ Soliciting Material under§240.14a-12 | ||
Dollar General Corporation |
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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☐ Fee computed on table below per Exchange Act Rules14a-6(i)(1)and 0-11. |
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(4) | Date Filed: |
DEAR FELLOW SHAREHOLDER,
The 2019 Annual Meeting of Shareholders of Dollar General Corporation | ||
Dear Fellow Shareholder:
The 2017 Annual Meeting of Shareholders of Dollar General Corporation will be held on Wednesday, May 31, 2017, at 9:00 a.m., Central Time, at Goodlettsville City Hall Auditorium, 105 South Main Street, Goodlettsville, Tennessee. All shareholders of record at the close of business on March 23, 2017 are invited to attend the annual meeting. For security reasons, however, to gain admission to the meeting you may be required to present photo identification and comply with other security measures.
At this year's meeting, you will have an opportunity to vote on the matters described in our accompanying Notice of Annual Meeting of Shareholders and Proxy Statement. Our 2016City Hall Auditorium, 105 South Main Street, Goodlettsville, Tennessee. All shareholders of record at the close of business on March 21, 2019 are invited to attend the annual meeting. For security reasons, however, to gain admission to the meeting you may be required to present photo identification and comply with other security measures.
At this year’s meeting, you will have an opportunity to vote on the matters described in our accompanying Notice of Annual Meeting of Shareholders and Proxy Statement. Our 2018 Annual Report also accompanies this letter.
Your interest in Dollar General and your vote are very important to us. We encourage you to read the Proxy Statement and vote your proxy as soon as possible so your vote can be represented at the annual meeting. You may vote your proxy via the Internet or telephone, or if you received a paper copy of the proxy materials by mail, you may vote by mail by completing and returning a proxy card.
On behalf of the Board of Directors, thank you for your continued support of Dollar General.
On behalf of the Board of Directors, thank you for your continued support of Dollar General.SINCERELY, MICHAEL M. CALBERT CHAIRMAN OF THE BOARD APRIL 4, 2019 |
April 12, 2017
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TIME | PLACE | |||
Wednesday May 29, 2019 | 9:00 a.m. Central Time | |||
Goodlettsville City Hall Auditorium 105 South Main Street Goodlettsville, Tennessee | ||||
ITEMS OF BUSINESS:
• To elect as directors the 8 nominees listed in the proxy statement | ||||||
• To hold an advisory vote to approve our named executive officer compensation as disclosed in | ||||||
• To ratify the appointment of our independent registered public accounting firm for fiscal | ||||||
• To transact any other business that may properly come before the annual meeting and any adjournments of that meeting |
WHO MAY VOTE:
Shareholders of record at the close of business on March 21, 2019
By Order of the Board of Directors, | ||||
Goodlettsville, Tennessee April 4, 2019 | Christine L. Connolly | |||
Corporate Secretary |
Please vote your proxy as soon as possible even if you expect to attend the annual meeting in person. You may vote your proxy via the Internet or by phone by following the instructions on the notice of internet availability or proxy card, or if you received a paper copy of these proxy materials by mail, you may vote by mail by completing and returning the enclosed proxy card in the enclosed reply envelope. No postage is necessary if the proxy is mailed within the United States. You may revoke your proxy by following the instructions listed on page 2 of the proxy statement. |
Please vote your proxy as soon as possible even if you expect to attend the annual meeting in person. You may vote your proxy via the Internet or by phone by following the instructions on the notice of internet availability or proxy card, or if you received a paper copy of these proxy materials by mail, you may vote by mail by completing and returning the enclosed proxy cardPROXY STATEMENT SUMMARY
This summary highlights information contained elsewhere in the enclosed reply envelope. No postage is necessary ifproxy statement or about Dollar General. This summary does not contain all of the information that you should consider, and you should review all of the information contained in the proxy is mailed within the United States. You may revoke your proxy by following the instructions listed on pagestatement before voting.
HOW TO VOTE(p. 2)
PHONE | INTERNET | IN PERSON | ||||
Mail your completed, signed, and dated proxy card or voting instruction form | 1-800-690-6903 | www.proxyvote.com | May 29, 2019 9:00 a.m., CT Goodlettsville City Hall Auditorium 105 South Main Street Goodlettsville, TN |
VOTING MATTERS(pp. 4, of the proxy statement.45, and 47)
2019 PROPOSALS | Board Recommends | |||
Proposal 1: Election of Directors | ||||
Proposal 2: Advisory Vote to Approve Named Executive Officer Compensation | ||||
Proposal 3: Ratification of Appointment of Auditors |
BOARD OF DIRECTORS GROUP DIVERSITYTable of Contents(pp 4-9)
PROXY STATEMENT SUMMARY
PAY FOR PERFORMANCE(pp. 20 and 21)
DOLLAR GENERAL CORPORATION
Proxy Statement for2017 Annual Meeting of Shareholders
The most recent shareholder advisory vote on our named executive officer compensation was held on May 30, 2018. Excluding abstentions and broker non-votes, 96.55% of total votes were cast in support of the program. |
DOLLAR GENERAL AT-A-GLANCE*
* Data as of March 21, 2019 unless otherwise noted.
1TABLEOF CONTENTS
SOLICITATION, MEETING, AND VOTING INFORMATION | 1 | ||||
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CORPORATE GOVERNANCE
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DIRECTOR COMPENSATION
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DIRECTOR INDEPENDENCE
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TRANSACTIONS WITH MANAGEMENT AND OTHERS
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EXECUTIVE COMPENSATION
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Compensation Discussion and Analysis | 19 | ||||
Compensation Committee Report | 28 | ||||
Summary Compensation Table | 29 | ||||
Grants of Plan-Based Awards in Fiscal | 31 | ||||
Outstanding Equity Awards at | 32 | ||||
Option Exercises and Stock Vested During Fiscal | 34 | ||||
Pension Benefits Fiscal | 34 | ||||
Nonqualified Deferred Compensation Fiscal | 34 |
Potential Payments upon Termination or Change in Control | 35 | ||||
Compensation Committee Interlocks and Insider Participation | 42 | ||||
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SECURITY OWNERSHIP
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Security Ownership of Certain Beneficial Owners | 43 | ||||
Security Ownership of Officers and Directors | 44 | ||||
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Section 16(a) Beneficial Ownership Reporting Compliance | 44 | ||||
Advisory Vote to Approve Named Executive Officer Compensation | 45 | ||||
AUDIT COMMITTEE REPORT | 46 | ||||
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FEES PAID TO AUDITORS
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SHAREHOLDER PROPOSALS FOR 2020 ANNUAL MEETING
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IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON MAY 31, 201729, 2019
This Proxy Statement, our 20162018 Annual Report and a form of proxy card are available at www.proxyvote.com. You will need your Notice of Internet Availability or proxy card to access the proxy materials.
As permitted by rules adopted by the Securities and Exchange Commission ("SEC"(“SEC”), we are furnishing our proxy materials over the Internet to some of our shareholders. This means that some shareholders will not receive paper copies of these documents. Instead, these shareholdersdocuments but instead will receive only a Notice of Internet Availability containing instructions on how to access the proxy materials over the Internet. The Notice of Internet Availability also contains instructions onand how each of those shareholders canto request a paper copy of our proxy materials, including the Proxy Statement, our 20162018 Annual Report, and a proxy card. Shareholders who do not receive a Notice of Internet Availability will receive a paper copy of the proxy materials by mail, unless they have previously requested delivery of proxy materials electronically. If you received only
PROXY STATEMENT
This document is the proxy statement of Dollar General Corporation that we use to solicit your proxy to vote upon certain matters at our Annual Meeting of Shareholders to be held on Wednesday, May 29, 2019. We will begin mailing printed copies of this document and the form of proxy or the Notice of Internet Availability and would like to receive a paper copy of the proxy materials, the notice contains instructionsshareholders on how you can request copies of these documents.
or about April 4, 2019.
SOLICITATION, MEETING, AND VOTING INFORMATION
What is Dollar General Corporation and where is it located?
Dollar General (NYSE: DG) has been delivering value to shoppers for over 75nearly 80 years through its mission ofServing Others. Dollar General helps shoppers Save time. Save money. Every day!® by offering products that are frequently used and replenished, such as food, snacks, health and beauty aids, cleaning supplies, clothing for the family,basic apparel, housewares and seasonal items at everyday low everyday prices in convenient neighborhood locations. Dollar General operates 13,42915,472 stores in 44 states as of March 3, 2017.1, 2019. Our principal executive offices are located at 100 Mission Ridge, Goodlettsville, Tennessee 37072. Our telephone number is615-855-4000.
Where is Dollar General common stock traded?
Our stock is traded on the New York Stock Exchange ("NYSE") under the symbol "DG."
What is this document?
This document is the proxy statement of Dollar General Corporation for the Annual Meeting of Shareholders to be held on Wednesday, May 31, 2017. We will begin mailing printed copies of this document or the Notice of Internet Availability to shareholders on or about April 12, 2017. We are providing this document to solicit your proxy to vote upon certain matters at the annual meeting.
We refer to our company as "we," "us"“we,” “us” or "Dollar“Dollar General."” Unless otherwise noted or required by context, "2017," "2016," "2015," "2014,"“2019,” “2018,” “2017,” and "2013"“2016” refer to our fiscal years ending or ended January 31, 2020, February 1, 2019, February 2, 2018, and February 3, 2017, January 29, 2016, January 30, 2015, and January 31, 2014, respectively.
What is a proxy, who is asking for it, and who is paying for the cost to solicit it?
A proxy is your legal designation of another person, called a "proxy,"“proxy,” to vote your stock. The document that designates someone as your proxy is also called a proxy or a proxy card.
Dollar General will pay all solicitation expenses. Our directors, officers, and employees are soliciting your proxy on behalf of our Board of Directors and will not receive additional remuneration for doing so except reimbursement for any relatedout-of-pocket expenses they may incur. We also have retained Innisfree M&A Incorporated to assist in the solicitation of proxies and to separately prepare a shareholder vote analysis of certain proposals for an aggregate fee of approximately $20,000, plus customary costs and expenses. We may reimburse custodians and nominees for their expenses in sending proxy materials to beneficial owners. Solicitation of proxies by mail may be supplemented by telephone, email and other electronic means, advertisements and personal solicitation, or otherwise. Dollar General will pay all expenses of this solicitation.
Who may attend the annual meeting?
Only shareholders, their proxy holders, and our invited guests may attend the meeting. If your shares are registered in the name of a broker, trust, bank, or other nominee, you will need to bring a proxy or a letter from that record holder or your most recent brokerage account statement that confirms your ownership of those shares as of March 23, 2017.21, 2019. For security reasons, we also may require photo identification for admission.
Where can I find directions to the annual meeting?
Directions to Goodlettsville City Hall, where we will hold the annual meeting, are posted on the "Investor Information"“Investor Information” section of our website located at www.dollargeneral.com.
Will the annual meeting be webcast?
Yes. You are invited to visit the "News“News and Events—Events and Presentations"Presentations” section of the "Investor Information" section“Investor Information” page of our website located at www.dollargeneral.com at 9:00 a.m., Central Time, on May 31, 201729, 2019 to access the live webcast of the annual meeting. An archived copy of the webcast will be available on our website for at least 60 days. The information on our website, however, is not incorporated by reference into, and does not form a part of, this proxy statement.
How many votes must be present to hold the annual meeting?
A quorum, consisting of the presence in person or by proxy of the holders of a majority of shares of our common stock outstanding on March 23, 2017,21, 2019, must exist to conduct any business at the meeting.
What if a quorum is not present at the annual meeting?
If a quorum is not present at the meeting, any officer entitled to preside at or to act as Secretary of the meeting shall have power to adjourn the meeting from time to time until a quorum is present.
What am I voting on?
You will be asked to vote:
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SOLICITATION, MEETING, AND VOTING INFORMATION
What am I voting on?
You will be raised at the annual meeting?asked to vote on:
We are unaware of other matters to be acted upon at the meeting. Under Tennessee law and our governing documents, no othernon-procedural business may be raised at the meeting unless proper notice has been given to shareholders. If other business is properly raised, your proxies have authority to vote as they think best, including to adjourn the meeting.
Who is entitled to vote at the annual meeting?
You may vote if you owned shares of Dollar General common stock at the close of business on March 23, 2017.21, 2019. As of that date, there were 274,892,175259,178,169 shares of Dollar General common stock outstanding and entitled to vote. Each share is entitled to one vote on each matter.
What is the difference between a "shareholder“shareholder of record"record” and a "street name"“street name” holder?
You are a "shareholder“shareholder of record"record” if your shares are registered directly in your name with Wells FargoEQ Shareowner Services, our transfer agent. You are a "street name"“street name” holder if your shares are held in the name of a brokerage firm, bank, trust, or other nominee as custodian.
How do I vote?
If you are a shareholder of record, you may vote your proxy over the telephone or Internet or, if you received printed proxy materials, by marking, signing, dating, and returning the printed proxy card in the enclosed envelope. Please refer to the instructions on the Notice of Internet Availability or proxy card, as applicable. Alternatively, you may vote in person at the meeting.
If you are a street name holder, your broker, bank, or other nominee will provide materials and instructions for voting your shares. You may vote in person at the meeting if you obtain and bring to the meeting a legal proxy from your broker, banker, trustee, or other nominee giving you the right to vote the shares.
What if I receive more than one Notice of Internet Availability or proxy card?
You will receive multiple Notices of Internet Availability or proxy cards if you hold shares in different ways (e.g., joint tenancy, trusts, custodial accounts, etc.) or in multiple accounts. Street name holders will receive the Notice of Internet Availability or proxy card or other voting information, along with voting instructions, from their brokers. Please vote the shares represented by each Notice of Internet Availability or proxy card you receive to ensure that all your shares are voted.
How will my proxy be voted?
The persons named on the proxy card will vote your proxy as you direct or, if you return a signed proxy card or complete the Internet or telephone voting procedures but do not specify how you want to vote your shares: "FOR"“FOR” all directors nominatednominees listed in this proxy statement; "FOR" the approval of the matters pertaining to the Stock Incentive Plan; "FOR" the approval of the matters pertaining to the Annual Incentive Plan; "FOR"“FOR” approval, on an advisory basis, of the compensation of our named executive officers as disclosed in this proxy statement pursuant to the SEC'sSEC’s compensation disclosure rules; on an advisory basis, for a frequency of once every "3 YEARS" for future advisory votes on our named executive officer compensation; and "FOR"“FOR” ratification of Ernst & Young LLP as our independent auditor for 2017.2019.
Can I change my mind and revoke my proxy?
Yes. A shareholder of record may revoke a proxy given pursuant to this solicitation by:
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Your attendance at the annual meeting, by itself, will not revoke your proxy.
A street name holder may revoke a proxy given pursuant to this solicitation by following the instructions of the bank, broker, trustee, or other nominee who holds his or her shares.
2 2019 Proxy Statement |
SOLICITATION, MEETING, AND VOTING INFORMATION
How many votes are needed to elect directors?
To be elected at the annual meeting, a nominee must receive the affirmative vote of a majority of votes cast by holders of shares entitled to vote at the meeting. Under our Amended and Restated Charter, the "affirmative“affirmative vote of a majority of votes cast"cast” means that the number of votes cast in favor
of a nominee'snominee’s election exceeds the number of votes cast against his or her election. You may vote in favor of or against the election of each nominee, or you may elect to abstain from voting your shares.
What happens if a director fails to receive the required vote for election?
An incumbent director who does not receive the required vote for election at the annual meeting must promptly tender a resignation as a director for the Board's consideration by our Board of Directors pursuant to our Board-approved director resignation policy outlined in our Corporate Governance Guidelines. Each director standing forre-election at the annual meeting has agreed to resign, effective upon the Board'sBoard’s acceptance of such resignation, if he or she does not receive a majority vote. If the Board rejects the offered resignation, the director will continue to serve until the next annual shareholders'shareholders’ meeting and until his or her successor is duly elected or his or her earlier resignation or removal in accordance with our Bylaws. If the Board accepts the offered resignation, the Board, in its sole discretion, may fill the resulting vacancy or decrease the size of the Board.
How many votes are needed to approve other matters?
The proposals pertaining to the Stock Incentive Plan and to the Annual Incentive Plan, the proposal to approve on an advisory basis the compensation of our named executive officers and the
proposal to ratify the appointment of our independent auditor for 20172019 will be approved if the votes cast in favor of the applicable proposal exceed the votes cast against it. The vote on the compensation of our named executive officers is advisory and, therefore, not binding on Dollar General, our Board of Directors, or its Compensation Committee. With respect to these proposals, and any other matter properly brought before the annual meeting, you may vote in favor of or against the proposal, or you may elect to abstain from voting your shares.
For the advisory vote on the frequency of future advisory votes on our named executive officer compensation, the option of 1 year, 2 years or 3 years that receives the highest number of votes cast by shareholders will be the frequency that has been selected by shareholders. However, because this vote is advisory and not binding on Dollar General or our Board of Directors in any way, our Board may decide that it is in the best interests of our shareholders and Dollar General to hold such advisory votes more or less frequently than the option selected by our shareholders. With respect to this proposal, you may vote by choosing the option of 1 year, 2 years, or 3 years, or you may elect to abstain from voting your shares.
What are brokernon-votes?
Although your broker is the record holder of any shares that you hold in street name, it must vote those shares pursuant to your instructions. If you do not provide instructions, your broker may exercise discretionary voting power over your shares for "routine"“routine” items but not for "non-routine"“non-routine” items. All matters described in this proxy statement, except for the ratification of the appointment of our independent auditor, are considered to benon-routine matters.
"Broker non-votes"“Brokernon-votes” occur when shares held of record by a broker are not voted on a matter because the broker has not received voting instructions from the beneficial owner and either lacks or declines to exercise the authority to vote the shares in its discretion.
How will abstentions and brokernon-votes be treated?
Abstentions and brokernon-votes, if any, will be treated as shares that are present and entitled to vote for purposes of determining whether a quorum is present but will not be counted as votes cast either in favor of or against a particular proposal and will have no effect on the outcome of a particular proposal.
2019 Proxy Statement 3 |
PROPOSAL 1:ELECTION OF DIRECTORS
Election of Directors
What is the structure of the Board of Directors?
Our Board of Directors must consist of 1 to 15 directors, with the exact number currently fixed at 8, set by the Board. The Board size is currently fixed at 8. All directors are elected annually by our shareholders.
Who are the nominees this year?
The nominees for the Board of Directors consist of the 8 current directors. If elected, each nominee would hold office until the 2018 annual meeting of shareholders and until his or her successor is elected and qualified, subject to any earlier resignation or removal. These nominees, their ages at the date of this proxy statement and the calendar year in which they first became a director are listed in the table below.
| | Name | | Age | | Director Since | | |
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| Warren F. Bryant | | 71 | | 2009 | | ||
| Michael M. Calbert | | 54 | | 2007 | | ||
| Sandra B. Cochran | | 58 | | 2012 | | ||
| Patricia D. Fili-Krushel | | 63 | | 2012 | | ||
| Paula A. Price | | 55 | | 2014 | | ||
| William C. Rhodes, III | | 51 | | 2009 | | ||
| David B. Rickard | | 70 | | 2010 | | ||
| Todd J. Vasos | | 55 | | 2015 | |
What are the backgrounds of this year's nominees?
Mr. Bryant served as the President and Chief Executive Officer of Longs Drug Stores Corporation, a retail drugstore chain on the West Coast and in Hawaii, from 2002 through 2008 and as its Chairman of the Board from 2003 through his retirement in 2008. Prior to joining Longs Drug Stores, he served as a Senior Vice President of The Kroger Co., a retail grocery chain, from 1999 to 2002. Mr. Bryant has served as a director of Office Depot, Inc. since November 2013 and Loblaw Companies Limited of Canada since May 2013 and served as a director of OfficeMax Incorporated from 2004 to 2013.
Mr. Calbert has served as our Chairman of the Board since January 30, 2016. He joined KKR & Co. L.P. ("KKR") in January 2000 and was directly involved with several KKR portfolio companies until his retirement in January 2014. Mr. Calbert led the Retail industry team within KKR's Private Equity platform prior to his retirement and served as a consultant to KKR from his retirement until June 2015. Mr. Calbert joined Randall's Food Markets beginning in 1994 and served as the Chief Financial Officer from 1997 until it was sold in September 1999. Mr. Calbert also previously worked as a certified public accountant and consultant with Arthur Andersen Worldwide from 1985 to 1994, where his primary focus was the retail and consumer industry. He previously served as our Chairman of the Board from July 2007 until December 2008 and as our lead director from March 2013 until his re-appointment as our Chairman of the Board in January 2016.
Ms. Cochran has served as a director and as President and Chief Executive Officer of Cracker Barrel Old Country Store, Inc. since September 2011. She joined Cracker Barrel in April 2009 as Executive Vice President and Chief Financial Officer, and was named President and Chief Operating Officer in November 2010. She was previously Chief Executive Officer at book retailer Books-A-Million, Inc. from February 2004 to April 2009. She also served as that company's President (August 1999—February 2004), Chief Financial Officer (September 1993—August 1999) and Vice President of Finance (August 1992—September 1993). Ms. Cochran has served as a director of Lowe's Companies, Inc. since January 2016.
Ms. Fili-Krushel is the former Executive Vice President for NBCUniversal where she served as a strategist and key advisor to the CEO of NBCUniversal from April 2015 to November 2015. She served as Chairman of NBCUniversal News Group, a division of NBCUniversal Media, LLC, composed of NBC News, CNBC, MSNBC and the Weather Channel, from July 2012 until April 2015. She previously served as Executive Vice President of NBCUniversal (January 2011—July 2012) with a broad portfolio of functions reporting to her, including operations and technical services, business strategy, human resources and legal. Prior to NBCUniversal, Ms. Fili-Krushel was Executive Vice President of Administration at Time Warner Inc. (July 2001—December 2010) where her responsibilities included oversight of philanthropy, corporate social responsibility, human resources, worldwide recruitment, employee development and growth, compensation and benefits, and security. Before joining Time Warner in July 2001, Ms. Fili-Krushel had been Chief Executive Officer of WebMD Health Corp. since April 2000. From July 1998 to April 2000, Ms. Fili-Krushel was President of the ABC Television Network, and from 1993 to 1998 she served as President of ABC Daytime. Before joining ABC, she had been with Lifetime Television since 1988. Prior to Lifetime, Ms. Fili-Krushel held several positions with Home Box Office. Before joining HBO, Ms. Fili-Krushel worked for ABC Sports in various positions.
Ms. Price has been Senior Lecturer at Harvard Business School in the Accounting and Management Unit since July 2014. She was Executive Vice President and Chief Financial Officer of Ahold USA from May 2009 until January 2014. At Ahold, which operates more than 700 supermarkets under the Stop & Shop, Giant and Martin's names as well as the Peapod online grocery delivery service, Ms. Price was responsible for finance, accounting and shared services, strategic planning, real estate development, store format and construction, and information technology. Before joining Ahold, she was the Senior Vice President, Controller and Chief Accounting Officer at CVS Health Corporation (formerly CVS Caremark Corporation) from July 2006 until August 2008. Earlier in her career, Ms. Price served as the Chief Financial Officer for the Institutional Trust Services division of JPMorgan Chase (from August 2002 until September 2005) and held several other senior management positions in the U.S. and the U.K. in the financial services and consumer packaged goods industries. A certified public accountant, she began her career at Arthur Andersen & Co. Ms. Price also has served as a director of Accenture plc since May 2014 and Western Digital Corporation since July 2014 and served as a director of Charming Shoppes, Inc. (Lane Bryant, Catherine's, Fashion Bug, Cacique and Figi's brands) from March 2011 until it was sold in June 2012.
Mr. Rhodes was elected Chairman of AutoZone, Inc., a specialty retailer and distributor of automotive replacement parts and accessories, in June 2007. He has served as President and Chief Executive Officer and as a director of AutoZone since 2005. Prior to his appointment as President and Chief Executive Officer, Mr. Rhodes was Executive Vice President—Store Operations and Commercial. Prior to 2004, he had been Senior Vice President—Supply Chain and Information Technology since 2002, and prior thereto had been Senior Vice President—Supply Chain since 2001. Prior to that time, he served in various capacities with AutoZone since 1994, including Vice President—Stores in 2000, Senior Vice President—Finance and Vice President—Finance in 1999, and Vice President—Operations Analysis and Support from 1997 to 1999. Prior to 1994, Mr. Rhodes was a manager with Ernst & Young LLP.
Mr. Rickard served as the Executive Vice President, Chief Financial Officer and Chief Administrative Officer of CVS Health Corporation (formerly CVS Caremark Corporation), a retail pharmacy chain and provider of healthcare services and pharmacy benefits management, from September 1999 until his retirement in December 2009. Prior to joining CVS, Mr. Rickard was the Senior Vice President and Chief Financial Officer of RJR Nabisco Holdings Corporation from March 1997 to August 1999. Previously, he was Executive Vice President of International Distillers and Vintners Americas. Mr. Rickard was a director of Jones Lang LaSalle Incorporated from July 2007 to May 2016 and a director of Harris Corporation from October 2001 until October 2016.
Mr. Vasos has served as Chief Executive Officer and a member of our Board since June 2015. He joined Dollar General in December 2008 as Executive Vice President, Division President and Chief Merchandising Officer. He was promoted to Chief Operating Officer in November 2013. Prior to joining Dollar General, Mr. Vasos served in executive positions with Longs Drug Stores Corporation for seven years, including Executive Vice President and Chief Operating Officer (February 2008 through November 2008) and Senior Vice President and Chief Merchandising Officer (2001—2008), where he was responsible for all pharmacy and front-end marketing, merchandising, procurement, supply chain, advertising, store development, store layout and space allocation, and the operation of three distribution centers. He also previously served in leadership positions at Phar-Mor Food and Drug Inc. and Eckerd Corporation.
How are directors identified and nominated?
All nominees for election as directors at the annual meeting currently serve on our Board of Directors and were nominated by the Board for re-election upon the recommendation of theThe Nominating and Governance Committee (the "Nominating Committee"“Nominating Committee”). The Nominating Committee is responsible for identifying, evaluating, and recommending director candidates, while our Board is responsible for nominatingincluding the director slate to be presented to shareholders for election at the annual meeting.
meeting, to our Board of Directors, which makes the ultimate election or nomination determination, as applicable. The Nominating Committee's charter and our Corporate Governance Guidelines require the Nominating Committee to consider candidates recommended by our shareholders, if such recommendations are submitted within the same deadlines and provide the same information that is required for nominating candidates pursuant to the advance notice provisions of our Bylaws (see "Can shareholders nominate or recommend directors?" below), and to apply the same criteria to the evaluation of those candidates as it applies to other director candidates. The Nominating Committee also may use a variety of other methods to identify potential director candidates, such as recommendations by our directors, management, shareholders or third-party search firms.firms (see “Can shareholders recommend or nominate directors?” below). The Nominating Committee has retained a third-party search firm to assist in identifying potential Board candidates who meet our qualification and experience requirements and, for any
such candidate identified by such search firm, to compile and evaluate information regarding the candidate’s qualifications, experience, and potential conflicts of interest, and to verify the candidate’s education.
Our employment agreement with Mr. Vasos requiresDoes the Board consider diversity when identifying director nominees?
Yes. We have a written policy to endeavor to achieve a mix of Board members that we nominate himrepresent a diversity of background and experience in areas that are relevant to serveour business. To implement this policy, the Nominating Committee considers each candidate’s individual qualifications in the context of how that candidate would relate to the Board as a memberwhole and is intentional about including in the candidate pool persons with diverse attributes such as gender, race, and age. The Committee and the Board periodically assess this policy’s effectiveness by considering whether the Board as a whole represents such diverse experience and composition and by updating the criteria for selection of new directors as appropriate. The matrix included below illustrates the diverse experience and composition of our Board each year that he is slated for re-election by our shareholders. Our failure to do so could give rise to a claim for breach of contract and may constitute good reason for employment termination by Mr. Vasos under the employment agreement.Board.
Board of Directors Matrix | Total | |||||||||||||||||||
Retail Industry Experience | 7 | |||||||||||||||||||
Senior Leadership (C-Suite) Experience | 8 | |||||||||||||||||||
Strategic Planning/M&A Experience | 6 | |||||||||||||||||||
Public Board Experience | 4 | |||||||||||||||||||
Financial Expertise | 4 | |||||||||||||||||||
General Independence | 7 | |||||||||||||||||||
Global/International Experience (Sourcing or Operations) | 5 | |||||||||||||||||||
Branding/Marketing/Consumer Behavior Experience | 5 | |||||||||||||||||||
Human Capital Experience | 1 | |||||||||||||||||||
E-commerce/Digital Experience | 2 | |||||||||||||||||||
Risk Management Experience | 8 | |||||||||||||||||||
Racial/Gender Diversity | 3 |
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PROPOSAL 1: ELECTION OF DIRECTORS
How are nominees evaluated; what are the minimumthreshold qualifications?
Subject to Mr. Vasos's employment agreement discussed above, theThe Nominating Committee is charged with recommending to theour Board of Directors only those candidates that it believes are qualified to serve as Board members consistent with the criteria for selection of new directors adopted from time to time by the Board and who have not achieved the age of 76, unless the Board has approved an exception to this limit on a case by case basis. If a waiver is granted, it will be reviewed annually.
We have a written policy to endeavor to achieve a mix of Board members that represent a diversity of background and experience in areas that are relevant to our business. To implement this policy, the Committee assesses diversity by evaluating each candidate's individual qualifications in the context of how that candidate would relate to the Board as a whole and also considers more traditional concepts of diversity. The Committee periodically assesses the effectiveness of this policy by considering whether the Board as a whole represents such diverse experience and composition and by recommending to the Board changes to the criteria for selection of new directors as appropriate. The Committee recommends candidates, including those submitted by shareholders, only if it believes the candidate's knowledge, experience and expertise would strengthen the Board and that the candidate is committed to representing the long-term interests of all Dollar General shareholders.
The Nominating Committee assesses a candidate'scandidate’s independence, background, and experience, as well as theour current Board'sBoard’s skill needs and diversity.needs. With respect to incumbent directors considered forre-election, the Committee also assesses each director'sdirector’s meeting attendance record and suitability for continued service. In addition, the Committee determines that all nominees are in a position to devote an adequate amount of time to the effective performance of director duties and possess the following threshold characteristics: integrity and accountability, informed judgment, financial literacy, a cooperative approach, a record of achievement, loyalty, and the ability to consult with and advise management. The Committee recommends candidates, including those submitted by shareholders, only if it
believes a candidate’s knowledge, experience, and expertise would strengthen the Board and that the candidate is committed to representing the long-term interests of all Dollar General shareholders.
What particular experience, qualifications, attributes or skills ledWho are the nominees this year?
All nominees for election as directors at the annual meeting, consisting of the 8 incumbent directors who were elected at the 2018 annual meeting of shareholders, were nominated by the Board of Directors to conclude that each nominee should serve as a directorfor election by shareholders at the annual meeting upon the recommendation of Dollar General?
the Nominating Committee. Our Board of Directors believes that each of the nominees can devote an adequate amount of time to the effective performance of director duties and possesses all of the minimumthreshold qualifications identified above.
If elected, each nominee would hold office until the 2020 annual meeting of shareholders and until his or her successor is elected and qualified, subject to any earlier resignation or removal.
The Board has determined thatfollowing lists the nominees, astheir ages at the date of this proxy statement, and the calendar year in which they first became a whole, complementdirector, along with their biographies and the experience, qualifications, attributes, or skills that led the Board to conclude that each other, meet the Board's skill needs, and represent diverse experience at policy-making levels in areas relevant to our business. The Board also considered the following in determining that the nomineesnominee should serve as directorsa director of Dollar General:General.
WARREN F. BRYANT Age: 73 Director Since: 2009 | Biography: Mr. Bryant served as the President and Chief Executive Officer of Longs Drug Stores Corporation from 2002 through 2008 and as its Chairman of the Board from 2003 through his retirement in 2008. Prior to joining Longs Drug Stores, he served as a Senior Vice President of The Kroger Co. from 1999 to 2002. Mr. Bryant has served as a director of Loblaw Companies Limited of Canada since May 2013 and served as a director of OfficeMax Incorporated from 2004 to 2013 and Office Depot, Inc. from November 2013 to July 2017. | |
Specific Experience, Qualifications, Attributes, and Skills: Mr. Bryant has over 40 years of retail experience, including experience in marketing, merchandising, operations, and finance. His substantial experience in leadership and policy-making roles at other retail companies, together with his current and former experience as a board member for other retailers, provides him with an extensive understanding of our industry, as well as with valuable executive management skills, global, strategic planning, and risk management experience, and the ability to effectively advise our CEO. | ||
Mr. Bryant has over 40 years of retail experience, including experience in marketing, merchandising, operations and finance. His substantial experience in leadership and policy-making roles at other retail companies, together with his current and former experience as a board member for certain other retailers, provides him with an extensive understanding of our industry, as well as with valuable executive management skills and the ability to effectively advise our CEO.
Mr. Calbert
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PROPOSAL 1: ELECTION OF DIRECTORS
Ms. Cochran brings over 20 years of retail experience to Dollar General as a result of her current and former roles at Cracker Barrel Old Country Store and her former roles at Books-A-Million. This experience allows her to provide additional support and perspective to our CEO and our Board. In addition, Ms. Cochran's industry and executive experience provides leadership, consensus-building, strategic planning, risk management and budgeting skills. Ms. Cochran also has significant financial experience, having served as the chief financial officer of two public companies and as vice president, corporate finance of SunTrust Securities, Inc., and our Board has determined that she qualifies as an audit committee financial expert.
Ms. Fili-Krushel's background increases the breadth of experience of our Board as a result of her extensive executive experience overseeing the business strategy, philanthropy, corporate social responsibility, human resources, recruitment, employee growth and development, compensation and benefits, and legal functions at large public companies in the media industry. In addition, her understanding of consumer behavior based on her knowledge of viewership patterns and preferences provides additional perspective to our Board in understanding our customer base.
Ms. Price brings broad experience across finance, general management and strategy gained from her service in senior executive and management positions at major corporations across several industries, including as Chief Financial Officer of Ahold USA before her retirement in 2014. Ms. Price's numerous years of experience as a certified public accountant, former chief financial officer and former chief accounting officer provide our Board with valuable experience and insight into accounting and finance matters, and consequently, our Board has determined that Ms. Price is an audit committee financial expert. She also brings to our Board a valuable perspective as a member of the faculty at the Harvard Business School and from her service as a board member of several public companies.
MICHAEL M. CALBERT Age: 56 Director Since: 2007 | Biography: Mr. Calbert has served as our Chairman of the Board since January 2016. He joined the private equity firm KKR & Co. L.P. (“KKR”) in January 2000 and was directly involved with several KKR portfolio companies until his retirement in January 2014. Mr. Calbert led the Retail industry team within KKR’s Private Equity platform prior to his retirement and served as a consultant to KKR from his retirement until June 2015. Mr. Calbert joined Randall’s Food Markets beginning in 1994 and served as the Chief Financial Officer from 1997 until it was sold in September 1999. Mr. Calbert also previously worked as a certified public accountant and consultant with Arthur Andersen Worldwide from 1985 to 1994, where his primary focus was the retail and consumer industry. He previously served as our Chairman of the Board from July 2007 until December 2008 and as our lead director from March 2013 until hisre-appointment as our Chairman of the Board in January 2016. | |
Specific Experience, Qualifications, Attributes, and Skills: Mr. Calbert has considerable experience in managing private equity portfolio companies and is experienced with corporate finance and strategic business planning activities. As the former head of KKR’s Retail industry team, Mr. Calbert has a strong background and extensive experience in advising and managing companies in the retail industry, including evaluating business strategies, financial plans and structures, risk, and management teams. His former service on various private company boards in the retail industry further strengthens his knowledge and experience within our industry. Mr. Calbert also has a significant financial and accounting background evidenced by his prior experience as the chief financial officer of a retail company and his 10 years of practice as a certified public accountant. | ||
SANDRA B. COCHRAN Age: 60 Director Since: 2012 | Biography: Ms. Cochran has served as a director and as President and Chief Executive Officer of Cracker Barrel Old Country Store, Inc., a restaurant and retail concept with locations throughout the United States, since September 2011. She joined Cracker Barrel in April 2009 as Executive Vice President and Chief Financial Officer, and was named President and Chief Operating Officer in November 2010. She was previously Chief Executive Officer atBooks-A-Million, Inc. from February 2004 to April 2009. She also served as that company’s President (August 1999 – February 2004), Chief Financial Officer (September 1993 – August 1999) and Vice President of Finance (August 1992 – September 1993). Ms. Cochran has served as a director of Lowe’s Companies, Inc. since January 2016. | |
Specific Experience, Qualifications, Attributes, and Skills: Ms. Cochran brings over 25 years of retail experience to Dollar General as a result of her current and former roles at Cracker Barrel Old Country Store and her former roles at Books-A-Million. This experience allows her to provide additional support and perspective to our CEO and our Board. In addition, Ms. Cochran’s industry, executive, and other public company board experience provides leadership, consensus-building, strategic planning, risk management, and budgeting skills. Ms. Cochran also has significant financial experience, having served as the chief financial officer of two public companies and as vice president, corporate finance of SunTrust Securities, Inc., and our Board has determined that she qualifies as an audit committee financial expert. |
Mr. Rhodes has over 20 years of experience in the retail industry, including extensive experience in operations, supply chain and finance, among other areas. This background serves as a strong foundation for offering invaluable perspective and expertise to our CEO and our Board. In addition, his experience as a board chairman and chief executive officer of a public retail company provides leadership, consensus-building, strategic planning and budgeting skills, as well as extensive understanding of both short- and long-term issues confronting the retail industry. Mr. Rhodes also has a strong financial background.
Mr. Rickard held senior management and executive positions for much of his 38 years in the corporate world. He has significant retail experience and a diverse retail industry background, including previous experience serving on the board of another retail company. He also has an extensive financial and accounting background, having served as the chief financial officer of two public companies, including a large retailer. As a result, our Board has determined that Mr. Rickard is an audit committee financial expert and has elected him to serve as the Chairman of the Audit Committee. Mr. Rickard's financial experience within the retail industry also brings expertise and perspective to our Board's discussions regarding strategic planning and budgeting.
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PROPOSAL 1: ELECTION OF DIRECTORS
Mr. Vasos has extensive retail experience, including over 8 years with Dollar General. His experience overseeing the merchandising, operations, marketing, advertising, procurement, supply chain, store development, store layout and space allocation functions of other retail companies bolsters Mr. Vasos's thorough understanding of all key areas of our business. In addition, Mr. Vasos's service in leadership and policy-making positions of other retail companies has provided him with the necessary leadership skills to effectively guide and oversee the direction of Dollar General and with the consensus-building skills required to lead our management team.
Acting upon the Nominating Committee's recommendation, and after concluding that these nominees possess the appropriate experience, qualifications, attributes and skills, our Board has unanimously nominated these individuals to be elected by our shareholders at our annual meeting.
PATRICIA D. FILI-KRUSHEL Age: 65 Director Since: 2012 | Biography: Ms. Fili-Krushel has served as Chief Executive Officer of the Center for Talent Innovation, anon-profit think tank that focuses on helping global corporations leverage talent across the divides of culture, gender, geography, and generation, since January 2019 after serving as the organization’s Interim Chief Executive Officer since September 2018. She is the former Executive Vice President for NBCUniversal, one of the world’s leading media and entertainment companies, where she served as a strategist and key advisor to the CEO of NBCUniversal from April 2015 to November 2015. She served as Chairman of NBCUniversal News Group, a division of NBCUniversal Media, LLC, composed of NBC News, CNBC and MSNBC, from July 2012 until April 2015. She previously served as Executive Vice President of NBCUniversal (January 2011 – July 2012) with a broad portfolio of functions reporting to her, including operations and technical services, business strategy, human resources and legal. Prior to NBCUniversal, Ms. Fili-Krushel was Executive Vice President of Administration at Time Warner Inc. (July 2001 – December 2010) where her responsibilities included oversight of philanthropy, corporate social responsibility, human resources, worldwide recruitment, employee development and growth, compensation and benefits, and security. Before joining Time Warner in July 2001, Ms. Fili-Krushel had been Chief Executive Officer of WebMD Health Corp. since April 2000. From July 1998 to April 2000, Ms. Fili-Krushel was President of the ABC Television Network. Ms. Fili-Krushel has served as a director of Chipotle Mexican Grill, Inc. since March 2019. | |
Specific Experience, Qualifications, Attributes, and Skills: Ms. Fili-Krushel’s background increases the breadth of experience of our Board as a result of her extensive executive experience overseeing the business strategy, philanthropy, corporate social responsibility, human resources, recruitment, employee growth and development, compensation and benefits, and legal functions, along with associated risks, at large public companies in the media industry. She also brings valuable oversight experience in diversity-related workplace matters from her leadership position at the Center for Talent Innovation, as well as digital and e-commerce experience gained while serving as CEO of WebMD Health Corp. In addition, her understanding of consumer behavior based on her knowledge of viewership patterns and preferences provides additional perspective to our Board in understanding our customer base, and her other public company board experience will bring additional perspective to our Board. | ||
TIMOTHY I. MCGUIRE Age: 58 Director Since: 2018 | Biography: Mr. McGuire has served as a director and Chief Executive Officer of Mobile Service Center Canada, Ltd. (d/b/a Mobile Klinik), a chain of professional smartphone repair stores specializing in professional “while you wait” repair and care of smartphones and tablets, since October 2018. He also served as Mobile Klinik’s Chairman of the Board from June 2017 until October 2018. He retired from McKinsey & Company, a worldwide management consulting firm, in August 2017 after serving as a leader of its global retail and consumer practice for almost 28 years, including leading the Americas retail practice for five years. While at McKinsey, Mr. McGuire led consulting efforts with major retail, telecommunications, consumer service, and marketing organizations in Canada, the United States, Latin America, Europe, and Australia. He alsoco-founded McKinsey Analytics, a global group of consultants bringing advanced analytics capabilities to clients to help make better business decisions. Mr. McGuire began his career with Procter & Gamble in 1983 where he served in various positions until October 1989, with his final role being Marketing Director for the Canadian Food & Beverage division. | |
Specific Experience, Qualifications, Attributes, and Skills: Mr. McGuire brings almost 30 years of valuable retail experience to our company, recently as Chief Executive Officer of Mobile Klinik and having served as a leader of McKinsey’s global retail and consumer practice for almost 28 years. He has expertise in strategy, new store/concept development, marketing and sales, operations, international expansion, big data and advanced analytics, as well as risk management experience. In addition, Mr. McGuire’s focus while at McKinsey on use of advanced analytics in retail, developing and implementing growth strategies for consumer services, food, general-merchandise and multi-channel retailers, developing new retail formats, the application of lean operations techniques, the redesign of merchandise flows, supply-chain optimization efforts, and the redesign of purchasing and supplier-management approaches, brings new and extensive relevant perspectives to our Board as it seeks to consult and advise our CEO and to shape our corporate strategy. |
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PROPOSAL 1: ELECTION OF DIRECTORS
WILLIAM C. RHODES, III Age: 53 Director Since: 2009 | Biography: Mr. Rhodes was elected Chairman of AutoZone, Inc., a specialty retailer and distributor of automotive replacement parts and accessories, in June 2007. He has served as President and Chief Executive Officer and as a director of AutoZone since 2005. Prior to his appointment as President and Chief Executive Officer, Mr. Rhodes was Executive Vice President – Store Operations and Commercial. Prior to 2004, he had been Senior Vice President – Supply Chain and Information Technology since 2002, and prior thereto had been Senior Vice President – Supply Chain since 2001. Prior to that time, he served in various capacities with AutoZone since 1994, including Vice President—Stores in 2000, Senior Vice President – Finance and Vice President – Finance in 1999, and Vice President – Operations Analysis and Support from 1997 to 1999. Prior to 1994, Mr. Rhodes was a manager with Ernst & Young LLP. | |
Specific Experience, Qualifications, Attributes, and Skills: Mr. Rhodes has nearly 25 years of experience in the retail industry, including extensive experience in operations, supply chain, and finance, among other areas. This background serves as a strong foundation for offering invaluable perspective and expertise to our CEO and our Board. In addition, his experience as a board chairman and chief executive officer of a public retail company provides leadership, consensus-building, strategic planning, and budgeting skills, as well as international experience and an extensive understanding of both short- and long-term issues confronting the retail industry. Mr. Rhodes also has a strong financial background, and our Board has determined that he qualifies as an audit committee financial expert. | ||
RALPH E. SANTANA Age: 51 Director Since: 2018 | Biography: Mr. Santana has served as Executive Vice President and Chief Marketing Officer of Harman International Industries, a wholly-owned subsidiary of Samsung Electronics Co., Ltd. focused on designing and engineering connected products and solutions for automakers, consumers and enterprises worldwide, since April 2013, with responsibility for all aspects of Harman’s worldwide marketing strategy. He is also responsible for Harman’s e-commerce business and runs its global design group which entails 6 design studios around the world and full P&L accountability. Before joining Harman, Mr. Santana served as Senior Vice President and Chief Marketing Officer, North America, for Samsung Electronics Co., Ltd. from June 2010 to September 2012. In that role, he was responsible for launching Samsung’s U.S.e-commerce business and building out branding strategies to drive visibility. Mr. Santana also served 16 years at PepsiCo Inc. from June 1994 to May 2010, holding positions spanning multiple international and domestic leadership roles in marketing. In his last assignment at PepsiCo, Mr. Santana served as Vice President of Marketing, North American Beverages, Pepsi-Cola, where he spearheaded a creative overhaul andre-launch of Pepsi-Cola. While at PepsiCo, Inc. he also held positions with itsFrito-Lay’s international and North America operations. Mr. Santana began his career as a Senior Marketing Associate at Beverage Marketing Corporation (July 1989-June 1992). | |
Specific Experience, Qualifications, Attributes, and Skills: Mr. Santana has over 25 years of marketing experience spanning multiple technology and food & beverage consumer packaged goods categories. His deep understanding of digital marketing and retail shopper marketing, particularly in the area of consumer packaged goods, and his extensive experience in shaping multi-cultural strategy, executing marketing programs, and making brands culturally relevant further enhances our Board’s ability to provide oversight and thoughtful counsel to management in these important and evolving areas of our business. His executive position also provides risk management experience. |
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PROPOSAL 1: ELECTION OF DIRECTORS
TODD J. VASOS Age: 57 Director Since: 2015 | Biography: Mr. Vasos has served as Chief Executive Officer and a member of our Board since June 2015. He joined Dollar General in December 2008 as Executive Vice President, Division President and Chief Merchandising Officer. He was promoted to Chief Operating Officer in November 2013. Prior to joining Dollar General, Mr. Vasos served in executive positions with Longs Drug Stores Corporation for seven years, including Executive Vice President and Chief Operating Officer (February 2008 – November 2008) and Senior Vice President and Chief Merchandising Officer (2001 – 2008), where he was responsible for all pharmacy andfront-end marketing, merchandising, procurement, supply chain, advertising, store development, store layout and space allocation, and the operation of three distribution centers. He also previously served in leadership positions atPhar-Mor Food and Drug Inc. and Eckerd Corporation. | |
Specific Experience, Qualifications, Attributes, and Skills: Mr. Vasos has extensive retail experience, including over 10 years with Dollar General. His experience overseeing the merchandising, operations, marketing, advertising, global procurement, supply chain, store development, store layout and space allocation functions of other retail companies bolsters Mr. Vasos’s thorough understanding of all key areas of our business. In addition, Mr. Vasos’s service in leadership and policy-making positions of other retail companies has provided him with the necessary leadership skills to effectively guide and oversee the direction of Dollar General and with the consensus-building skills required to lead our management team. |
Can shareholders recommend or nominate or recommend directors?
Yes. Shareholders can nominate directors by following the advance notice procedures outlined in our Bylaws. In addition, shareholders canmay recommend candidates for consideration byto our Nominating Committee by submitting such recommendationsproviding the same information within the same deadlines and providing the same information that is required for nominating candidates pursuant to the advance notice provisions in our Bylaws. Bylaws discussed below. Our Nominating Committee is required to consider such candidates and to apply the same evaluation criteria to them as it applies to other director candidates. Shareholders also can go a step further and nominate directors for election by shareholders by following the advance notice procedures in our Bylaws summarized below.
In short, the shareholder must deliverwhether recommending a candidate for our Nominating Committee’s consideration or nominating a director for election by shareholders, a written notice tomust be received by our Corporate Secretary at 100 Mission Ridge, Goodlettsville, Tennessee 37072 for receipt no earlier and no later than the close of business on the 120th day and not later than the close of business on the 90th day, respectively, prior to (1) the first anniversary of the prior year'syear’s annual meeting. However,meeting or (2) the date of the annual meeting, if the meeting is held more than 30 days before or more than 60 days after suchthe anniversary date,of the notice must be received no earlier than the close of business on the 120th day and not later than the close of business on the 90th day prior to the date of suchyear’s annual meeting. Ifmeeting, unless the first public announcement of the annual meeting date is less
than 100 days prior to thesuch meeting date, of such annual meeting,in which case we must receive the notice must be received by the 10th day following the public announcement date.
announcement. The notice must contain all information required by our Bylaws about the shareholder proposing the nominee and about the nominee, which generally includes:
In addition, weWe have a "proxy access"“proxy access” provision in our Bylaws that, beginning with our 2018 annual meeting of shareholders, permitswhereby eligible shareholders tomay nominate candidates for election to our Board. Proxy accessBoard and such candidates will be
2019 Proxy Statement 9 |
PROPOSAL 1: ELECTION OF DIRECTORS
included in our proxy statement and ballot subject to the terms, conditions, procedures and conditionsdeadlines set forth in Article I, Section 12 of our Bylaws. TheOur proxy access provision in our Bylawsbylaw provides that holders of at least 3% of our outstanding shares, held by up to 20 shareholders, holding the shares continuously for at least 3 years, can nominate up to 20% of our Board for election at an annual shareholders'shareholders’ meeting. A shareholder who wishes to formally nominate a proxy access candidate must follow the procedures and comply with the deadlines described in Article I, Section 12 of our Bylaws. For more specific information regarding these deadlines in respect of the 20182020 annual meeting of shareholders, see "Shareholder“Shareholder Proposals for 20182020 Annual Meeting"Meeting” below.
You should consult our Bylaws, posted on the "Investor“Investor Information—Corporate Governance"Governance” section of our website located at www.dollargeneral.com, for more detailed information regarding the processes described above by which shareholders may nominate directors, as the information above is a summary only.summarized above. No shareholder nominees have been submitted for this year'syear’s annual meeting.
What if a nominee is unwilling or unable to serve?
That is not expected to occur. If it does, the persons designated as proxies on the proxy card are authorized to vote your proxy for a substitute designated by our Board of Directors.
Are there any familialfamily relationships between any of the directors, executive officers or nominees?
There are no familialfamily relationships between any of the nomineesour directors, executive officers or between any of the nominees and any of our executive officers.nominees.
What does the Board of Directors recommend?
Our Board unanimously recommends that you voteFOR the election of each of the director nominees.
The Board of Directors unanimously recommends that Shareholders vote FOR the election of each of the 8 nominees named in this proposal. | ||||
Does the Board of Directors have standing Audit, Compensation and Nominating Committees?
Yes. Our Board of Directors has a standing Audit Committee, Compensation Committee and Nominating Committee. The Board has adopted a written charter for each of these committees, which are available on the "Investor Information—Corporate Governance" section of our website located at www.dollargeneral.com. Current information regarding these committees is set forth below. In addition to the committee functions outlined below, each such committee performs an annual self-evaluation, periodically reviews and reassesses its charter, and evaluates and makes recommendations concerning shareholder proposals that are within the committee's expertise.
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Does Dollar General have an audit committee financial expert serving on its Audit Committee?
Yes. Our
What governance practices are in place to promote effective independent Board has determined that each of Mr. Rickard, Ms. Cochran and Ms. Price is an audit committee financial expert who is independent as defined in NYSE listing standards and in our Corporate Governance Guidelines. The SEC has determined that designation as an audit committee financial expert will not cause a person to be deemed to be an "expert" for any purpose.leadership?
How often did the Board and its committees meet in 2016?
During 2016, our Board, Audit Committee, Compensation Committee and Nominating Committee met 7, 6, 6 and 3 times, respectively. Each incumbent director attended at least 75% of the total of all meetings of the Board and all committees on which he or she served which were held during the period for which he or she was a director and a member of each applicable committee.
What is Dollar General's policy regarding Board member attendance at the annual meeting?
OurThe Board of Directors has adopted a policy that all directors should attend annual shareholders' meetings unless attendance is not feasible duenumber of governance practices to unavoidable circumstances. All persons serving as Board members at the time attended the 2016 annual shareholders' meeting.
Does Dollar General separate the positions of Chairman and CEO?
Yes. Mr. Calbert, an independent director, serves as our Chairman of the Board. This decision affords our CEO the opportunity to focus his time and energy on managing our business and allows our Chairman to devote his time and attention to matters of Board oversight and governance. The Board, however, recognizes that no single leadership model is right for all companies and at all times, and the Board will review its leadership structure as appropriate to ensure it continues to be in the best interests of Dollar General and our shareholders.
To further promote effective independent Board leadership, the Board has adopted a number of additional governance practices, including:
Does the Board of Directors evaluate the performance of Board members?as:
Yes. As part of its responsibility for overseeing the evaluation of the Board of Directors, the Nominating Committee approves an evaluation process to be followed by the Board and each standing committee and encourages our directors to provide candid feedback on any Board member to the Chairman of the Nominating Committee or the Chairman of the Board. Such chairmen meet at least annually to review any such feedback and any other information related to individual director performance and to discuss what, if any, response or follow-up action is appropriate and in Dollar General's best interests.
Independent Board Chairman Mr. Calbert, an independent director, serves as our Chairman of the Board. In this role, Mr. Calbert serves as a liaison between the Board and our CEO, approves Board meeting agendas, leads the annual Board self-evaluation, and participates with the Compensation Committee in the annual CEO performance evaluation. This decision affords our CEO the opportunity to focus his time and energy on managing our business, while our Chairman devotes his time and attention to matters of Board oversight and governance. The Board, however, recognizes that no single leadership model is right for all companies and at all times, and the Board will review its leadership structure as appropriate to ensure it continues to be in the best interests of Dollar General and our shareholders. | ||
Annual Self-Evaluations and Board Succession Planning The Board and each standing committee annually perform self-evaluations using a process approved by the Nominating Committee. In addition, directors are asked to provide candid feedback on individual Board members to the Chairperson of the Nominating Committee or the Chairman of the Board, who then meet to discuss individual director performance and succession considerations and any necessaryfollow-up actions. | ||
Regularly Scheduled Independent Director Sessions Opportunity is available at each regularly scheduled Board meeting for executive sessions of the non-management directors (all of whom are currently independent). Mr. Calbert, as Chairman, presides over all executive sessions of the non-management and the independent directors. | ||
Annual CEO Performance Evaluations Each year, the Compensation Committee meets to evaluate the CEO’s performance prior to making CEO compensation decisions. All independent directors, including the Chairman of the Board, are invited to provide input into this discussion. |
What is the Board of Director'sBoard’s role in risk oversight?
Our Board of Directors and its committees have an important role in our risk oversight process. OurWe identify and manage our key risks using our enterprise risk management program. This framework evaluates internal and external business, financial, legal, reputational, and other risks, identifies mitigation strategies, and assesses any residual risk. The program employs interviews with senior management and our Board regularlyand reviews of strategic initiatives, recent or potential legislative or regulatory changes, certain internal metrics, and other information. The Audit Committee oversees our enterprise risk management program, reviewing enterprise risk evaluation results at least annually and high residual risk categories, along with managementtheir mitigation strategies, quarterly. In addition, as part of its regular review of progress versus the strategic plan, our financial and business strategies, including relevantBoard
reviews related material risks as appropriate. Our General Counsel also periodically provides information to the Board regarding our insurance coverage and programs as well as litigation and other legal risks.
The Audit Committee discusses our risk assessment and risk management procedures, primarily through oversightIn addition to consideration as part of ourthe enterprise risk management program. Our Internal Audit department coordinates that program, which entails reviewcybersecurity risk is further evaluated through various internal cybersecurity audits as well as periodic engagements of third parties to perform unannounced cybersecurity assessments and documentationto benchmark our cybersecurity program and assess how any identified vulnerabilities in the industry might impact our company as well as the sufficiency of our comprehensive risk management practices. The program evaluates internalresponse. Management develops action plans to address select identified opportunities for improvement, and external risks, identifies mitigation strategies, and assesses any remaining residual risk. The program is updated through interviews with senior management and our Board, review of strategic initiatives, review of upcoming legislative or regulatory changes, review of certain internal metrics and review of other outside information concerning business, financial, legal, reputational, and other risks. The results are presented to the Audit Committee at least annually, and categories with high residual risk, along with their mitigation strategies, are reviewed quarterly. Our Audit Committee also quarterly reviews metrics and information pertaining to information securitycybersecurity risks and mitigation.
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CORPORATE GOVERNANCE
Our Compensation Committee is responsible for overseeing the management of risks relating to our executive compensation program. As discussed under "Executive“Executive Compensation—Compensation Risk Considerations"Considerations” below, the Compensation Committee also participates in periodic assessments of the risks relating to our overall compensation programs.
While In addition, our Nominating Committee reviews detailed information regarding corporate governance trends and practices within our company’s industry as well as across industries to inform governance-related recommendations to the Board. For more information regarding the role of each standing committee, see “What functions are performed by the Audit, CommitteeCompensation, and the Compensation Committee oversee the risk areas identified above, theNominating Committees?” below.
The entire Board is regularly informed about risks through the committee reporting process.process, as well as through special reports and updates from management and advisors. This
enables the Board and its committees to coordinate the risk oversight role, particularly with respect to risk interrelationships. Our Board believes this division of risk management responsibilities effectively addresses the material risks facing Dollar General. Our Board further believes that our leadership structure, described above, supports the risk oversight function of the Board as it allows our independent directors, through the three fully independent Board committees and in executive sessions of independent directors, led by our independent Chairman of the Board, to exercise effective oversight of themanagement’s actions of management in identifying risks and implementing effective risk management policies and controls.
What functions are performed by the Audit, Compensation, and Nominating Committees?
Our Board of Directors has a standing Audit Committee, Compensation Committee, and Nominating Committee, each with a Board-adopted written charter available on the “Investor Information—Corporate Governance” section of our website located at www.dollargeneral.com. Current information regarding these committees is set forth below.
In addition to the functions outlined below, each such committee performs an annual self-evaluation, periodically reviews and reassesses its charter, and evaluates and makes recommendations concerning shareholder proposals that are within the committee’s expertise.
Name of Committee & Members | Committee Functions | |
AUDIT: Mr. Rhodes, Chairperson Mr. Bryant Ms. Cochran | • Selects the independent auditor • Annually evaluates the independent auditor’s qualifications, performance, and independence, as well as the lead audit partner; periodically considers the advisability of audit firm rotation; and reviews the annual report on the independent auditor’s internal quality control procedures and any material issues raised by its most recent review of internal quality controls • Pre-approves audit engagement fees and terms and all permittednon-audit services and fees, and discusses the audit scope and any audit problems or difficulties • Sets policies regarding the hiring of current and former employees of the independent auditor • Discusses the annual audited and quarterly unaudited financial statements with management and the independent auditor • Reviews CEO/CFO disclosures regarding any significant deficiencies or material weaknesses in our internal control over financial reporting, and establishes procedures for receipt, retention and treatment of complaints regarding accounting or internal controls • Discusses the types of information to be disclosed in earnings press releases and provided to analysts and rating agencies • Discusses policies governing the process by which risk assessment and risk management are undertaken • Reviews internal audit activities, projects and budget • Discusses with our general counsel legal matters having an impact on financial statements • Furnishes the committee report required in our proxy statement |
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CORPORATE GOVERNANCE
Name of Committee & Members | Committee Functions | |
COMPENSATION: Ms. Fili-Krushel, Chairperson Mr. Bryant Mr. McGuire | • Reviews and approves corporate goals and objectives relevant to CEO compensation • Determines executive officer compensation (with an opportunity for the independent directors to ratify CEO compensation) and recommends Board compensation for Board approval • Oversees overall compensation philosophy and principles • Establishes short-term and long-term incentive compensation programs for senior officers and approves all equity awards • Oversees share ownership guidelines and holding requirements for Board members and senior officers • Oversees the performance evaluation process for senior officers • Reviews and discusses disclosure regarding executive compensation, including Compensation Discussion and Analysis and compensation tables (in addition to preparing the report on executive compensation for our proxy statement) • Selects and determines fees and scope of work of its compensation consultant • Oversees and evaluates the independence of its compensation consultant and other advisors | |
NOMINATING AND GOVERNANCE: Ms. Cochran, Chairperson Ms. Fili-Krushel Mr. Rhodes Mr. Santana | • Develops and recommends criteria for selecting new directors • Screens and recommends to our Board individuals qualified to serve on our Board • Recommends Board committee structure and membership • Recommends persons to fill Board and committee vacancies • Develops and recommends Corporate Governance Guidelines and corporate governance practices • Oversees the process governing annual Board, committee and director evaluations |
Does Dollar General have an audit committee financial expert serving on its Audit Committee?
Yes. Our Board has determined that each of Ms. Cochran and Mr. Rhodes is an audit committee financial expert who is independent as defined in NYSE listing standards and in our Corporate Governance Guidelines. The SEC has determined that designation as an audit committee financial expert will not cause a person to be deemed to be an “expert” for any purpose.
How often did the Board and its committees meet in 2018?
During 2018, our Board, Audit Committee, Compensation Committee, and Nominating Committee met 5, 5, 6, and 3 times, respectively. Each incumbent director attended at least 75% of the total of all meetings of the Board and committees on which he or she served which were held during the period for which he or she was a director and a member of each applicable committee.
What is Dollar General’s policy regarding Board member attendance at the annual meeting?
Our Board of Directors has adopted a policy that all directors should attend annual shareholders’ meetings unless attendance is not feasible due to unavoidable circumstances. All persons serving as Board members at the time attended the 2018 annual shareholders’ meeting.
Does Dollar General have a management succession plan?
Yes. Our Corporate Governance Guidelines require our Board of Directors to coordinate with our CEO to ensureensures that a formalized process governs long-term management development and succession. Our Board formally reviews our management succession plan at least annually. Our comprehensive program encompasses not only our CEO and other executive officers but all employees through the front-line supervisory level. The program focuses on key succession elements, including identification of potential successors for positions where it has been determined that internal succession is appropriate,
2019 Proxy Statement 13 |
CORPORATE GOVERNANCE
assessment of each potential successor'ssuccessor’s level of readiness, and preparation of individual growth and development plans. With respect to CEO succession planning, our long-term business strategy is also considered. In addition, we maintain at all times, and review with the Board periodically a confidential procedure for the timely and efficient transfer of the CEO'sCEO’s responsibilities in the event of an emergency or his sudden incapacitation or departure.
Are there share ownership guidelines and holding requirements for Board members and senior officers?
Yes. Details of our share ownership guidelines and holding requirements for Board members and senior officers are included in our Corporate Governance Guidelines. See "Compensation“Compensation Discussion and Analysis"Analysis—Share Ownership Guidelines and "Director Compensation"Holding Requirements” and “Director Compensation” for more information on such ownership guidelines and holding requirements for senior officers and Board members, respectively.requirements. Administrative details pertaining to these matters are established by the Compensation Committee.
How can I communicate with the Board of Directors?
OurWe describe our Board-approved process for security holders and other interested parties to contact the entire Board, of Directors, a particular director, or thenon-management directors or the independent directors as a group is described on www.dollargeneral.com under "Investor“Investor Information—Corporate Governance."”
Where can I find more information about Dollar General'sGeneral’s corporate governance practices?
Our governance-related information is posted on www.dollargeneral.com under "Investor“Investor Information—Corporate Governance,"” including our Corporate Governance Guidelines, Code of Business Conduct and Ethics, the charter of each of the Audit Committee, the Compensation Committee, and the Nominating Committee, and the name(s) of the person(s) chosen to lead the executive sessions of thenon-management directors and, if different, of the independent directors. This information is available in print to any shareholder who sends a written request to: Investor Relations, Dollar General Corporation, 100 Mission Ridge, Goodlettsville, Tennessee 37072.
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The following table and text summarize the compensation earned by or paid to each person who served as anon-employee member of our non-employee directors for 2016.Board of Directors during all or part of fiscal 2018. Mr. Vasos was not separately compensated for his service on the Board;Board, and his executive compensation is discussed under "Executive Compensation"“Executive Compensation” below. We have omitted the columns pertaining to non-equity incentive plan compensation and change in pension value and nonqualified deferred compensation earnings because they are inapplicable.
Fiscal 2016 Director Compensation
Name | | Fees Earned or Paid in Cash ($)(1) | | Stock Awards ($)(2) | | Option Awards ($)(3) | | All Other Compensation ($)(4) | | Total ($) | | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Warren F. Bryant | | | 109,500 | | | 136,206 | | | — | | | | 1,782 | | | 247,488 | | |||||
Michael M. Calbert | | | 85,000 | | | 351,055 | | | — | | | | 1,782 | | | 437,837 | | |||||
Sandra B. Cochran | | | 85,000 | | | 136,206 | | | — | | | | 1,782 | | | 222,988 | | |||||
Patricia D. Fili-Krushel | | | 85,000 | | | 136,206 | | | — | | | | 1,782 | | | 222,988 | | |||||
Paula A. Price | | | 85,000 | | | 136,206 | | | — | | | | 1,776 | | | 222,982 | | |||||
William C. Rhodes, III | | | 100,000 | | | 136,206 | | | — | | | | 1,782 | | | 237,988 | | |||||
David B. Rickard | | | 107,500 | | | 136,206 | | | — | | | | 1,782 | | | 245,488 | |
We do not compensate for Board service any director who also serves as our employee. Wewe 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. We have omitted the columns pertaining tonon-equity incentive plan compensation and change in pension value and nonqualified deferred compensation earnings because they are inapplicable.
Fiscal 2018 Director Compensation
Name | Fees Earned or ($)(2) | Stock Awards ($)(3) | Option Awards ($)(4) | All Other Compensation ($)(5) | Total ($) | |||||||||||||||
Warren F. Bryant | 95,500 | 150,475 | — | 1,915 | 247,890 | |||||||||||||||
Michael M. Calbert | 95,000 | 352,804 | — | 4,375 | 452,179 | |||||||||||||||
Sandra B. Cochran | 112,063 | 150,475 | — | 1,915 | 264,453 | |||||||||||||||
Patricia D. Fili-Krushel | 114,500 | 150,475 | — | 1,915 | 266,890 | |||||||||||||||
Timothy I. McGuire(1) | 92,625 | 150,475 | — | 1,360 | 244,460 | |||||||||||||||
Paula A. Price(1) | 30,638 | — | — | 185,160 | 215,798 | |||||||||||||||
William C. Rhodes, III | 112,500 | 150,475 | — | 1,915 | 264,890 | |||||||||||||||
David B. Rickard(1) | 38,575 | — | — | 185,160 | 223,735 | |||||||||||||||
Ralph E. Santana(1) | 92,625 | 150,475 | — | 1,360 | 244,460 | |||||||||||||||
(1) | Messrs. McGuire and Santana joined our Board on February 12, 2018. Ms. Price and Mr. Rickard served on our Board until May 30, 2018. |
(2) | In addition to the annual Board retainer, Messrs. Bryant, Rhodes, and Rickard and Mss. Cochran and Fili-Krushel also earnedpro-rated annual retainers for service as committee chairpersons during fiscal 2018. |
(3) | Represents the grant date fair value of restricted stock units (“RSUs”) awarded to Mr. Calbert on February 5, 2018 ($202,330) for his annual Chairman of the Board retainer, as well as to each director (including Mr. Calbert) other than Ms. Price and Mr. Rickard on May 30, 2018 ($150,475), in each case computed in accordance with FASB ASC Topic 718. Information regarding assumptions made in the valuation of these awards is included in Note 8 of the annual consolidated financial statements in our Annual Report on Form10-K for the fiscal year ended February 1, 2019, filed with the SEC on March 22, 2019 (our “2018 Form10-K”). As of February 1, 2019, each of the persons listed in the table above had the following total unvested RSUs outstanding (including additional unvested RSUs credited as a result of dividend equivalents earned with respect to such RSUs): each of Messrs. Bryant, McGuire, Rhodes, and Santana and Mss. Cochran and Fili-Krushel (1,572); Mr. Calbert (3,707); and each of Ms. Price and Mr. Rickard (0). |
(4) | There were no stock options awarded to any director listed in the table above during fiscal 2018, as the Board chose to eliminate stock option awards as part of director compensation beginning in fiscal 2015. As of February 1, 2019, each of the persons listed in the table above had the following total unexercised stock options outstanding (whether or not then exercisable): Mr. Bryant (16,207); each of Messrs. Calbert and Rhodes (21,756); Ms. Cochran (13,120); Ms. Fili-Krushel (12,892); and each of Messrs. McGuire, Santana, and Rickard and Ms. Price (0). |
(5) | Represents the dollar value of dividends paid, accumulated, or credited on unvested RSUs and, for each of Ms. Price and Mr. Rickard: (a) $182,905, which is the fair market value of the accelerated vesting of RSUs upon ceasing to serve as directors, as determined based on the closing stock price on the vesting acceleration date, and (b) cash reimbursement of $1,700 to offset the estimated federal income tax obligation on a retirement gift. Perquisites and personal benefits, if any, totaled less than $10,000 per director and therefore are not included in the table. |
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DIRECTOR COMPENSATION
Eachnon-employee director receives payment (prorated as applicable) for a fiscal year in quarterly installments of the following cash compensation, as applicable, along with an annual award of RSUs, payable in shares of our common stock, under our Amended and Restated 2007 Stock Incentive Plan (our “Stock Incentive Plan”) having the estimated value listed below:
Fiscal Year | Board ($) | Audit ($) | Compensation ($) | Nominating ($) | Estimated ($) | |||||||||||||||
2018 | 95,000 | 25,000 | 20,000 | 17,500 | 150,000 |
| | Board Retainer ($) | | Audit Committee Chairman Retainer ($) | | Compensation Committee Chairman Retainer ($) | | Nominating Committee Chairman Retainer ($) | | Per Meeting Fee for Meetings Attended in Excess of 16 During FY ($) | | Estimated Value of Equity Award ($) | | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | 85,000 | | | | 22,500 | | | | 20,000 | | | | 15,000 | | | | 1,500 | | | | 135,000 | | |
The RSUs are awarded annually to those eachnon-employee directors director who areis elected orre-elected at the annual shareholders'shareholders’ meeting and to any new director appointed after such meetingthereafter but before February 1 of a given year. The RSUs are scheduled to vest on the first anniversary of the grant date subject to certain accelerated vesting conditions. Directors generally may elect to defer receipt of shares underlying the RSUs.
In addition to the fees outlined above, the Chairman of the Board receives an annual retainer delivered in the form of RSUs, payable in shares of our common stock under our Stock Incentive Plan and scheduled to vest on the first anniversary of the grant date, subject to certain accelerated vesting conditions, having an estimated value of $200,000.
The formforms and amountamounts of director compensation as outlined above were recommended by the Compensation Committee, and approved by the Board, after taking into account market benchmarking data, recommendations of the Committee'sCommittee’s compensation consultant, and, for the additional equity award to the Chairman, the amount of time anticipated to be devoted to serviceshis further responsibilities to the Company.
In addition, our Board has recommended that shareholders approve a $750,000 annual limit on total non-employee director compensation as set forth in our Stock Incentive Plan. See "Proposal 2" below.
Up to 100% of cash fees earned for Board services in a fiscal year generally may be deferred under theNon-Employee Director Deferred Compensation Plan. Benefits are payable upon separation from service in the form, as elected by the director at the time of
deferral, of a lump sum distribution or monthly payments for 5, 10, or 15 years. Participating directors can direct the hypothetical investment of deferred fees into funds identical to those offered in our 401(k) Plan and will be credited with the deemed investment gains and losses. The amount of the benefit will vary depending on the fees the director has deferred and the deemed investment gains and losses. Benefits upon death are payable to the director'sdirector’s named beneficiary in a lump sum. In the event of a director'sdirector’s disability (as defined in theNon-Employee Director Deferred Compensation Plan), the unpaid benefit will be paid in a lump sum. Participant deferrals are not contributed to a trust, and all benefits are paid from Dollar General'sGeneral’s general assets.
Ournon-employee directors are subject to share ownership guidelines, expressed as a multiple of the annual cash retainer payable for service on our Board, and holding requirements. The current ownership guideline is 5 times and should be acquired within 5 years of election to the Board. When the ownership guideline is increased, incumbentnon-employee directors are allowed an additional year to acquire the incremental multiple. Eachnon-employee director is required to retain ownership of 50% of all netafter-tax shares granted by Dollar General until reaching the share ownership target is reached. Please see our Corporate Governance Guidelines for additional information. Administrative details pertaining to these matters are established by the Compensation Committee.target.
16 2019 Proxy Statement |
Is Dollar General subject to the NYSE governance rules regarding director independence?
Yes. A majority of our directors must satisfy the independence requirements set forth in the NYSE listing standards. The Audit Committee, the Compensation Committee, and the Nominating Committee also must consist solely of independent directors to comply with NYSE listing standards and, in the case of the Audit Committee, with SEC rules. The NYSE listing standards define specific relationships that disqualify directors from being independent and further require that the Board affirmatively determine that a director has no material relationship with Dollar General in order to be considered "independent."“independent.” The SEC'sSEC’s rules and NYSE listing standards contain separate definitions of independence for members of audit committees and compensation committees, respectively.
How does the Board of Directors determine director independence?
The Board of Directors determines the independence of each director and director nominee in accordance with guidelines it has adopted, which include all elements of independence set forth in the NYSE listing standards and SEC rules as well as certain Board-adopted categorical independence standards. These guidelines are found in our Corporate Governance Guidelines, which are posted on the "Investor“Investor Information—Corporate Governance"Governance” section of our website located at www.dollargeneral.com.
The Board first considers whether any director or nominee has a relationship covered by the NYSE listing standards that would prohibit an independence finding for Board or committee purposes. The Board then analyzes any relationship of the remaining eligible directors and nominees with Dollar General or our management that falls outside the parameters of the Board'sBoard’s separately adopted categorical independence standards to determine if that relationship is material. The Board may determine that a person who has a relationship outside such parameters is nonetheless independent because the relationship is not considered
to be material. Any director who has a material relationship with Dollar General or its management is not considered to be independent. Absent special circumstances, the Board does not consider or analyze any relationship that fallsmanagement has determined to fall within the parameters of the Board'sBoard’s separately adopted categorical independence standards.
Are all of the directors and nominees independent?
No.Our CEO, Todd J. Vasos, is the onlynon-independent director. Our Board of Directors consistshas affirmatively determined that each of Warren F. Bryant, Michael M. Calbert, Sandra B. Cochran, Patricia D. Fili-Krushel, Timothy I. McGuire, William C. Rhodes, III, and Ralph E. Santana, as well as former Board members Paula A. Price William C. Rhodes,and David B. Rickard and Todd J. Vasos. Messrs. Rickard and Bryant and Mss. Cochran and Price serve on our Audit Committee, Messrs. Bryant and Rhodes and Ms. Fili-Krushel serve on our Compensation Committee, and Mr. Rhodes and Mss. Cochran and Fili-Krushel serve on our Nominating Committee.
Our Board has affirmatively determined that Messrs. Bryant, Calbert, Rhodes and Rickard and Mss. Cochran, Fili-Krushel and Price, but not Mr. Vasos, arewho served for part of 2018, is independent from our management under both the NYSE listing standards and our additional independence standards. Except as described below, any relationship between an independent director and Dollar General or our management fell within the Board-adopted categorical standards and, accordingly, was not reviewed or considered by our Board in making independence decisions. The Board also has determined that the current members ofeach person who currently serves or who served in 2018 on the Audit Committee, the Compensation Committee, and the Nominating Committee meetmeets or met, as applicable, the NYSE independence requirements for membership on those committees, set forth in the NYSE listing standards, our additional standards and, as to the Audit Committee, SEC rules.
In reaching the determination that Ms. Cochran is independent, the Board considered that Ms. Cochran'sCochran’s brother Stephen Brophy, has been employed by the Company since 2009 and currently
Table serves as Vice President of ContentsGovernment and Public Relations, anon-executive
serves officer position, as described in a non-officer position. For 2016, Mr. Brophy earned from Dollar General total cash compensation (comprised of his base salarymore detail under “Transactions with Management and bonus compensation) of less than $270,000 and received an annual equity award consisting of 1,958 non-qualified stock options, a target award of 224 performance share units, or "PSUs" (199 PSUs were ultimately earned as a result of our adjusted EBITDA and adjusted ROIC performance), and 224 RSUs. In March 2017, Mr. Brophy received an annual equity award consisting of 1,763 non-qualified stock options and 440 RSUs. All equity awards were granted on terms consistent with the annual equity awards received by all Dollar General employees at the same job grade level as Mr. Brophy and on terms substantially similar to the forms of award agreements on file with the SEC. We expect Mr. Brophy's total cash compensation for 2017 to not exceed $280,000.
Mr. Brophy also is eligible to participate in employee benefits plans and programs available to our other full-time employees.Others.” Ms. Cochran does not serve on the Compensation Committee which approves decisions pertaining to Mr. Brophy'sBrophy’s compensation, and she does not participate in his performance evaluations. Mr. Brophy'sBrophy’s cash compensation and equity awards wereare approved by the Compensation Committee pursuant to our related-party transactions approval policy.
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TRANSACTIONS WITH MANAGEMENT AND OTHERS
Does the Board of Directors have a related-party transactions approval policy?
Yes. Our Board of Directors has adopted a written policy for the review, approval, or ratification of "related party"“related party” transactions. A "related party"“related party” for this purpose includes our directors, director nominees, executive officers, and greater than 5% shareholders, and any of their immediate family members, and a "transaction"“transaction” includes one in which (1) the total amount may exceed $120,000, (2) Dollar General is a participant, and (3) a related party will have a direct or indirect material interest (other than as a director or a less than 10% owner of another entity, or both).
The policy requires prior Board approval for known related party transactions, subject to certain exceptions identified below. In addition, at least annually after receiving a list of immediate family members and affiliates from our directors and executive officers, relevant internal departments determine if any transactions were unknowingly entered into with a related party and the Board is presented with a list of any such transactions, subject to the exceptions identified below, for review. The related party may not participate in any discussion or approval of the transaction and must provide to the Board all material information concerning the transaction.
OurEach of our Chairman and our CEO each is authorized to approve a related party transaction in which he is not involved if the total anticipated amount is less than $1 million and he informs the Board of the transaction. In addition, the transactions below are deemedpre-approved without Board review or approval:
What related-party transactions existed in 20162018 or are planned for 2017?2019?
OtherMs. Cochran’s brother, Stephen Brophy, has been employed by the Company since 2009. He served in anon-officer role during substantially all of 2018 and was promoted to Vice President of Government and Public Relations, anon-executive officer position, effective February 1, 2019. For 2018, Mr. Brophy earned from Dollar General total cash compensation (comprised of his base salary and bonus compensation) of less than $295,000 and received an annual equity award consisting of 1,287non-qualified stock options and 335 RSUs. In March 2019, Mr. Brophy received an annual equity award consisting of 1,926non-qualified stock options, 256 RSUs, and 256 PSUs, in each case on terms consistent with the annual equity awards received by all Dollar General employees at the same job grade level as Mr. Brophy and on terms substantially similar to the forms of award agreements on file with the SEC. We expect Mr. Brophy’s total cash compensation paid orfor 2019 to be paid during 2016not exceed $335,000. Mr. Brophy also is eligible to participate in employee benefits plans and 2017programs available to one of our non-officer employees who is a family member of other full-time employees.
Ms. Cochran as discussed further under "Director Independence" above, theredoes not serve on the Compensation Committee which approves decisions pertaining to Mr. Brophy’s compensation, and she does not participate in his performance evaluations. Mr. Brophy’s cash compensation and equity awards are noapproved by the Compensation Committee pursuant to our related-party transactions that have occurred since the beginning of 2016, or any currently proposed transactions, that involve Dollar General and exceed $120,000 and in which a related party had or has a direct or indirect material interest.approval policy.
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This section provides details of thefiscal 2018 compensation for fiscal 2016 for our named executive officers: Todd J. Vasos, Chief Executive Officer; John W. Garratt, Executive Vice President and Chief Financial Officer; Jeffery C. Owen, Executive Vice President, Store Operations; Rhonda M. Taylor,Robert D. Ravener, Executive Vice President and General Counsel;Chief People Officer; and James W. Thorpe,Jason S. Reiser, Executive Vice President and Chief Merchandising Officer.
Compensation Discussion and Analysis
Overview
Our executive compensation program is designed to serve the long-term interests of our shareholders. To deliver superior shareholder returns, we believe it is critical to offer a competitive compensation package that will attract, retain, and motivate experienced executives with the requisite expertise. Our program is designed to balance the short-term and long-term components and thus incent achievement of our annual and long-term business strategies, to pay for performance, and to maintain our competitive position in the market in which we compete for executive talent.
Compensation Best Practices.Practices
We strive to align our executives'executives’ interests with those of our shareholders and to follow sound corporate governance practices.
Compensation Practice | Dollar General Policy | |||
Pay for | A significant portion of targeted direct compensation is linked to the financial performance of key metrics. All of our annual bonus compensation and equity incentive compensation is performance based. See | |||
Robust share ownership guidelines and holding requirements | Our share ownership guidelines and holding requirements create further alignment with | |||
Clawback policy | Beginning with the 2017 annual equity awards and Teamshare bonus program, the clawback of performance-based incentive compensation paid or awarded to | |||
No hedging or pledging Dollar General securities or holding Dollar General securities in margin accounts | Our policy prohibits executive officers and Board members from hedging their ownership of our stock, pledging our securities as collateral, and holding our securities in a margin account. See | |||
No excise taxgross-ups and minimal income taxgross-ups | We do not provide taxgross-up payments to named executive officers other than on relocation-related items. | |||
Double-trigger provisions | All equity awards granted to named executive officers since March 2016 |
No repricing or cash buyout of underwater stock options without shareholder approval | Our equity incentive plan prohibits repricing underwater stock options, reducing the exercise price of stock options or replacing awards with cash or another award type, without shareholder approval. | ||||
Annual compensation risk assessment | At least annually, our Compensation Committee assesses the risk of our compensation program. |
EXECUTIVE COMPENSATION
Pay for Performance.Performance
Consistent with our philosophy, and as illustrated below,to the right, a significant portion of annualized target total direct compensation for our named executive officers in 20162018 was performance basedperformance-based and linked to changes in our stock price.
In addition, the following financial performance was achieved in accordance with our short-term and long-term incentive plans:
STI—Short-Term Cash Incentive (Teamshare bonus program)LTI—Long-Term Equity Incentive (stock options and performance share units)
The following payouts were earned as a result of performance versus the financial targets used for our 2016 performance-based compensation:
In connection with our annual2018 Teamshare bonus program, of 83.22% of his or her target payout level based on achievingwe achieved 2018 adjusted EBIT (as defined and calculated for purposes of the Teamshare bonus program) of $2.083$2.189 billion, or 96.64%99.72% of the adjusted EBIT target (see "Short-Term“Short-Term Cash Incentive Plan"Plan”).
The portion of the awards granted in March 2016 were2018 subject to 2018 adjusted EBITDA performance was earned at 89.0%98.1% of target, based on achieving adjusted EBITDA of $2.498$2.637 billion, or 96.8%99.6% of the adjusted EBITDA target, and the portion of the awards granted in March 2017 subject to 2017-2018 adjusted ROIC performance was earned at 152.0% of target based on achieving adjusted ROIC of 19.10%18.44%, or 99.4%101.4% of the adjusted ROICtwo-year 2017-2018 target, in each case as defined and calculated in the PSU award agreements (see "Long-Term“Long-Term Equity Incentive Program"Program”).
Significant Compensation-Related Actions.Actions
The most significant recent compensation-related actions pertaining to our named executive officers include:
To further increase the focus on multi-year performance as a counterbalance to short-term incentives, beginning with the March 2018 equity grant,one-half of the vesting of performance share units is based upon the achievement of a three-year financial performance goal. | Beginning in 2018, our annual Teamshare bonus program allows for the Committee to adjust payments upward or downward within certain limitations depending upon the named executive officer’s performance rating (in prior years, only downward adjustments were allowed within certain limitations). | In 2018, we entered into new employment agreements with our named executive officers, each of which have a three-year term and are subject to certain automatic extensions. We have employment agreements with the named executive officers to promote executive continuity, aid in retention, and secure valuable protections for Dollar General, such asnon-compete,non-solicitation, and confidentiality obligations, as well as to facilitate implementation of our clawback policy. |
20 2019 Proxy Statement |
Table of ContentsEXECUTIVE COMPENSATION
Shareholder Response.Response
The most recent shareholder advisory vote on our named executive officer compensation was held in 2014, based on the three-year frequency approved by our shareholders in 2011.May 30, 2018. Excluding abstentions and brokernon-votes, 96.0% 96.55% of total votes were cast in support of the program. Because we viewedview this outcome as overwhelmingly supportive of our compensation policies and practices, we diddo not believe the vote requiredrequires consideration of changes to the program. Nonetheless, because market practices and our business needs continue to evolve, we continually evaluate our program and make changes when warranted. A shareholder advisory vote on
At our named executive officer compensation will be held at our 2017 annual meeting of shareholders and the timing ofheld on May 31, 2017, our shareholders expressed a preference that advisory votes on executive compensation occur every year. Consistent with this preference, our Board implemented an annual advisory vote on executive compensation until the next suchadvisory vote on the frequency of shareholder votes on executive compensation, which will depend upon the Board's decision after considering the resultsoccur no later than our 2023 annual meeting of the say on pay frequency vote discussed in Proposal 4 below.shareholders.
Philosophy and Objectives
We strive to attract, retain, and motivate persons with superior ability, to reward outstanding performance, and to align the long-term interests of our named executive officers with those of our shareholders. The material compensation principles applicable to the compensation of our named executive officers are outlined below:
We have employment agreements with the named executive officers to promote executive continuity, aid in retention and secure valuable protections for Dollar General, such as non-compete, non-solicitation and confidentiality obligations.
Oversight and Process
Oversight.Oversight
The Compensation Committee of our Board of Directors, or a subcommittee thereof, in each case consisting entirely of independent directors, determines and approves the compensation of our named executive officers. Beginning in 2016,Throughout this “Compensation Discussion and Analysis” section, the use of the term compensation committee means either the entire committee or a subcommittee thereof, as applicable. The independent members of our Board are provided the opportunity to ratify the Committee'sCommittee’s determinations pertaining to the level of CEO compensation.
Use of Outside Advisors.Advisors
The Compensation Committee has selected Pearl Meyer servesto serve as the current independentits compensation consultant to the Compensation Committee. Prior to the Committee's selection ofand has determined that Pearl Meyer in May 2016, Meridian Compensation Partners ("Meridian") or its predecessor served as the Committee's compensation consultant since 2007. In each case, the Committee determined that each consultant wasis independent and that its work didhas not raiseraised any conflicts of interest. When requested by the Committee, a Pearl Meyer representative of the Committee's consultant attends Committee meetings and participates in private sessions ofwith the Committee, members, and Committee members are free to consult directly with the Committee's consultantPearl Meyer as desired.
The Committee (or its Chairman) determines the scope of Pearl Meyer’s services to be provided by the Committee's consultant and approveshas approved a written agreement that details the terms under which such consultantPearl Meyer will provide independent advice to the Committee. The approved scope of the consultant's (both Meridian previously, and Pearl Meyer currently)Meyer’s work generally includes the performance of analyses and provision of independent advice related to our executive andnon-employee director compensation programs and related matters in support of the Committee'sCommittee’s decisions, and more specifically, includes performing preparation work associated with Committee meetings, providing advice in areas such as compensation philosophy, compensation risk assessment, market comparatorpeer group, incentive plan design, executive compensation disclosure, emerging best practices and changes in the regulatory environment, and providing competitive market studies. The Committee's consultant,Pearl Meyer, along with management, also prepares benchmarkingmarket data for consideration by the Committee in making decisions on items such as base salary, the Teamshare bonus program, and the long-term incentive program.
2019 Proxy Statement 21 |
EXECUTIVE COMPENSATION
Management’s Role
Our executive management team prepares and recommends our annual financial plan to our Board of Directors for approval and establishes a Management's Role.3-year Financial financial plan. The financial performance targets used in our incentive compensation programs typically are derived from such financial plans, with assistance from our annual financial plan prepared byCFO and members of our executive management teamfinance department, and reviewed andare approved by our Board of Directors. Mr.Compensation Committee. Messrs. Vasos Mr. Boband Ravener (Executive Vice President and Chief People Officer), and non-executive members of the human resources group provide assistance to the Compensation Committee and the Committee's consultantPearl Meyer regarding executive compensation matters, including conducting research, compiling data andand/or making recommendations regarding compensation amount, compensation mix, andincentive program structure alternatives, market comparatorpeer group composition, and compensation-related governance practices, as well as providing information to and coordinating with the Committee's consultantPearl Meyer as requested. Additionally, Ms.Rhonda Taylor, Executive Vice President and General Counsel, may provide legal advice to the Committee regarding executive compensation and related governance and legal matters and contractual arrangements from time to time. Although these recommendations may impact each of such officers'officers’ compensation to the extent they participate in the plans and programs, none of such officers make recommendations to the Committee regarding their specific compensation. For the role of management in named executive officers'officers’ performance evaluations, see "Use“Use of Performance Evaluations"Evaluations” below. Although the Committee values and solicits management'smanagement’s input, it retains and exercises sole authority to make decisions regarding named executive officer compensation.
Use of Performance Evaluations.Evaluations
The Compensation Committee, together with the Chairman of the Board, assesses the performance of the CEO, and the CEO evaluates and reports to the
Committee on the performance of each of the other named executive officers, in each case versus previously established goals. The Committee also has input into each named executive officer’s performance evaluation. These evaluations are subjective; no objective criteria or relative weighting is assigned to any individual goal or factor.
The Committee historically used the overall performance rating as an eligibility threshold for a Teamshare bonus payment. Although an unsatisfactory rating generally would preclude a Teamshare bonus payment, performance ratings were not used to determine the amount of such payment for a named executive officer rated satisfactory. Rather, such amount has been determined solely based upon the level of achievement of the applicable financial measure. However, beginning with the 2016 Teamshare bonus program, performance evaluation results have the potential to affect the amount of Teamshare bonus payout because the Committee is allowed to adjust payments downward within certain limitations depending upon the named executive officer's performance rating. The Committee did not exercise any such negative discretion for the 2016 Teamshare payouts to named executive officers.
Performance ratings historically have servedserve as an eligibility threshold for base salary increases and beginning with the 2016 base salary adjustments, also directly impactedimpact the amount of a named executive officer'sofficer’s annual base salary increase. The Committee starts with the percentage base salary increase that equals the overall budgeted increase for our U.S.-based employee population and approves differing merit increases to base salary based upon each named executive officer'sofficer’s individual performance rating. The Committee then considers whether additional adjustments are necessary to reflect performance, responsibilities or qualifications; to bring pay within a reasonable range of the market comparatorpeer group; due to a change in role or duties; to achieve a better balance between base salary and incentive compensation; or for other reasons the Committee believes justify a variance from the merit increase.
Performance evaluation results have the potential to affect the amount of Teamshare bonus payout because the Committee is allowed to adjust payments upward or downward within certain limitations depending upon the named executive officer’s performance rating.
An unsatisfactory performance rating also wouldwill reduce the number of, or completely eliminate, stock options awarded to the named executive officer in the following year. None of the named executive officers received an unsatisfactory performance rating for 20152017 or 2016. Beginning in 2017,2018. In addition, to allow for differentiation among performance levels of the named executive officers, individual performance, along with other factors may beincluding company performance, department performance, retention, and succession, are used as part of a subjective assessment to determine whether each named executive officer'sofficer’s equity award value should be increased or decreased from the baseline target that is derived from benchmarking information.market data.
Use of Market Benchmarking Data.Data
The Compensation Committee approves, periodically reviews, and utilizes a market comparatorpeer group when making compensation decisions (see "Philosophy“Philosophy and Objectives"Objectives”). The market comparatorpeer group data typically is considered annually for base salary adjustments, target equity award values, Teamshare target bonus opportunities, and total direct compensation, and periodically when considering structural changes to our executive compensation program. The Committee most recently updated our market comparator group in December 2015 to include several retail and distribution companies with a broad range of products and to exclude certain companies focused on apparel. However, consistent with the cycle of purchasing and aging market data discussed below, the Committee continued to use our previous market comparator group for 2016 non-CEO compensation decisions.
Each market comparator
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Our peer group consists of companies selected according to their similarity to our operations, services, revenues, markets, availability of information, and any other information the Committee deems appropriate. Such companies are likely to have executive positions comparable in
breadth, complexity, and scope of responsibility to ours. Thus, our market comparatorpeer group for 2016 CEO2018 compensation decisions consisted of:
Aramark | Dollar Tree | Rite Aid | Sysco | ||||
AutoZone | Ross Stores | TJX Companies | |||||
Bed, Bath & Beyond | L Brands | Staples | Tractor Supply | ||||
Best Buy | Office Depot | Starbucks | Yum! Brands | ||||
Dicks Sporting Goods |
Our market comparator group for 2016 non-CEO compensation decisions consisted of:
The Committee's consultant
Pearl Meyer annually provides market data for the CEO, to ensure that the Committee is aware of any significant movement in CEO compensation levels within the market comparator group. Forpeer group, and biennially for each named executive officer position below CEO, the Committee biennially considers market comparator group data provided by the Committee's consultant.CEO. In alternating years, the Committee uses the prior year data fornon-CEO compensation decisions after applying an aging factor recommended by the Committee's consultant. For 2016 CEOPearl Meyer. Thus, for 2018non-CEO compensation decisions, the Committee considered proxy data provided by MeridianPearl Meyer from the 2016 market comparator group. For the 2016 non-CEO named executive officerpeer group for 2017 compensation decisions, the Committee considered market data provided by Meridian in 2015 using Aon Hewitt data. For non-CEO named executive officers other than Mr. Owen, data reviewed were from the market comparator group. For Mr. Owen, for whom insufficient market comparator group data was available, the data reviewed were from a broader group of retailers comprising a subset of companies included within the Aon Hewitt Total Compensation MeasurementTM (TCM) database (see list of companies included asAppendix A attached to this proxy statement). For all non-CEO named executive officers, the market data werebut aged per Meridian's recommendation, by 3% as recommended by Pearl Meyer as aligning with market practices.
The Committee most recently updated our peer group in May 2018 in order to keep pace with the marketimprove its industry and size comparability, but this new peer group was not used for 2016.any 2018 compensation decisions.
In setting base salary levels for named executive officers positions below the CEO, the Committee considers the market values for individual positions. In determining the short-term cash and long-term equity targets for named executive officer positions below the CEO, the Committee considers blended market values for comparable positions, rather than values for individual positions.
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 limited perquisites. We believe each of these elements is a necessary component of the total compensation package and is consistent with compensation programs at companies with whom we compete both for business and talent.
Mr. Vasos's 2016Vasos’s 2018 Compensation Generally.Generally
The Compensation Committee considered the base salary, short-term incentive, and long-term incentive components of Mr. Vasos'sVasos’s compensation, as well as his total compensation, in each case in comparison to the market comparatorpeer group (see "Use“Use of Market Benchmarking Data"Data”) and in light of both his fiscal 2015 performance and experience level,. After considering the peer group market data, as well as our pay forMr. Vasos’s and the Company’s fiscal 2017 performance philosophy, considerations relating to equitable pay among(see “Use of Performance Evaluations”), Mr. Vasos’s experience and tenure in the CEO and all other senior officers,role, and the other relevant compensation principles (see "PhilosophyCommittee’s desire to further align Mr. Vasos’s interests with shareholders and Objectives"). As a result of such considerations,long-term value creation, the Committee approved andetermined to increase in Mr. Vasos'sVasos’s 2018 target equity grant value and base salary and to make no change to his target short-term incentive bonus percentage opportunity from 2017. The Committee believed that such actions placed each
component of Mr. Vasos’s 2018 compensation as well as his 2018 total target compensation within a reasonable range of the median of the peer group data.
2018 Compensation of Named Executive Officers Other than Mr. Vasos Generally
The Compensation Committee considered the base salary, short-term incentive, and long-term incentive components, and total compensation of thenon-CEO named executive officers, in each case in comparison to the peer group (see “Use of Market Data”), as well as each such officer’s performance (see “Use of Performance Evaluations”). The Committee approved base salary merit increases in accordance with each such officer’s 2017 performance rating within the limitations of the overall U.S. merit budget increase for 2018 of 3.0%, and after reviewing the proposed total target compensation, excluding the long-term incentive grant value adjustments based on performance, of each such officer against the peer group data, the Committee determined that total compensation for 2016.each such officer other than Mr. Garratt remained within a reasonable range of the peer group median and reflected the responsibilities of the position and the experience and contributions of the individual. The Committee agreed that these changes resultedapproved an additional base salary adjustment for Mr. Garratt to better reflect the responsibilities of his position, experience and contributions, and to more closely align his total target compensation with the peer group median. For eachnon-CEO named executive officer, the Committee made no change from the prior year’s short-term incentive target percentage of base salary, which remained reasonably aligned with the peer group market data, or to the prior year’s long-term incentive grant value target, before adjustments based on individual performance, in a 2016 target total compensation opportunity that was appropriately market aligned, reflectivelight of our pay-for-performance philosophy and equitable with respectestablished process of obtaining new market data every two years. However, in order to allow for differentiation among individual performance levels of such officers, the Committee approved adjustments to the compensation$1.5 million target long-term incentive grant value based on each such officer’s subjective performance evaluation results which took into account a variety of our other executive officers.factors, including company performance, department performance, individual performance, retention, and succession (see “Use of Performance Evaluations”).
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EXECUTIVE COMPENSATION
Base Salary.Base salary promotes our recruiting and retention objectives 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. Our employment agreements with the named executive officers set forth minimum base salary levels, butwhich the Compensation Committee retains sole discretion to increase these levels from time to time. The Committee routinely considers annual base salary adjustments in March.
(a) Salary Adjustment for Mr. Vasos. TheVasos
For the reasons outlined above under “Mr. Vasos’s 2018 Compensation Generally,” the Compensation Committee determined thatapproved a base salary of $1,200,000 for Mr. Vasos should receive a 10.0% base salary increase, effective on April 1, 2016. The primary considerations with respect to Mr. Vasos's2018, representing a 5.91% increase from his prior year’s base salary increase were his strong performance since becoming CEO in May 2015 while still recognizing his limited experience in the CEO role compared to the experience level of the CEO market comparator group, the sizable base salary increase he had received upon his promotion in May 2015, and equitability as compared to the base salary increases of the other executive officers.salary.
(b)
(b) | Salary Adjustments for Named Executive Officers Other than Mr. Vasos |
For the reasons outlined above under “2018 Compensation of Named Executive Officers Other than Mr. Vasos. In lightVasos Generally,” the Compensation Committee approved the following base salary increases effective April 1, 2018: Mr. Garratt, 18.10%; each of the market benchmarking data and each named executive officer's 2015 performance rating, Messrs. Garratt, Owen and Thorpe received a 2.78% base salary increase,Ravener, 3.67%; and Ms. Taylor received a 3.28% base salary increaseMr. Reiser, 2.67% (see "Use“Use of Performance Evaluations"Evaluations” and "Use“Use of Market Benchmarking Data"Data”). Along with the named executive officers' other 2016 compensation, these salary adjustments maintained each of their total compensation within a reasonable range of the market comparator group median in light of the responsibilities of the position and experience of each named executive officer. In each case, the salary adjustment became effective on April 1, 2016.
Short-Term Cash Incentive Plan.Plan
Our short-term cash incentive plan, called Teamshare, is established under our shareholder-approved Annual Incentive Plan. The Teamshare program provides an opportunity to receive a cash bonus payment equal to a certain percentage of base salary based upon Dollar General'sGeneral’s achievement of one or morepre-established financial performance targets. Accordingly, Teamshare fulfills an important part of our pay for performance philosophy while aligning the interests of our named executive officers and our shareholders.
(a) 2016 2018 Teamshare Structure.Structure
The Compensation Committee uses adjusted EBIT as the Teamshare financial performance measure because it is a comprehensive measure of our corporate performance that the Committee believes aligns with our shareholders'shareholders’ interests. For purposes of the 20162018 Teamshare program, adjusted EBIT is defined as our operating profit as calculated in accordance with U.S. generally accepted accounting principles, but excludes:
Change in Control (within the meaning of our Stock Incentive Plan) or to any securities offering; (b) gain or loss recognized as a result of derivative instrument transactions or hedging activities;disaster-related charges; (c) any gains or losses associated with the early retirement of debt obligations; (d) charges resulting from significant natural disasters; and (e) significant gains or losses associated with our LIFO computation; and
The Committee used our 2016 annual financial planset the 2018 adjusted EBIT performance goal at approximately $2.195 billion, which was the adjusted EBIT target amount set forth in our 2018 annual financial plan previously approved by our Board of $2.155 billion as the target for the 2016 Teamshare program andDirectors. The Committee retained the threshold (below which no bonus may be earned) and maximum (above which no further bonus may be earned) performance
levels at 90% and 120% of the target level, respectively. These threshold and maximum performance levels were again used,respectively, as they continue to reflectappropriately align pay and performance and are reasonably consistent with the practices of our market comparatorpeer group. Payouts for financial performance are based on actual results and are interpolated on a straight-line basis between threshold and target and between target and maximum.
The bonus payable to each named executive officer upon achieving the target level of financial performance is equal to the applicable percentage of base salary shown in the table below, subject to the Committee'sCommittee’s exercise of negative discretion based on the individual'sindividual’s performance (see "Use“Use of Performance Evaluations"Evaluations”). These percentages for each non-CEO named executive officer remained unchanged fromthe same as those in effect at the end of the prior year based on the Committee's review of the market comparator group data in light of the named executive officer's total compensation and the responsibilities of the position and experience level of each non-CEO named executive officer in his or her position. Mr. Vasos's percentage also remained unchanged for the reasons outlined above under "Mr. Vasos's 2016“Mr. Vasos’s 2018 Compensation Generally” and “2018 Compensation of Named Executive Officers Other than Mr. Vasos Generally."”
Name | Target % of Base Salary* | ||||||
| |||||||
Mr. Vasos | 150 | ||||||
All other named executive officers |
* | Payout percentages at the threshold and maximum performance levels are calculated at 50% and 300%, respectively, of the applicable target percentage of base salary. |
(b) 2016 2018 Teamshare Results.Results
The Compensation Committee certified the adjusted EBIT performance result at $2.083$2.189 billion (96.64%(99.72% of the adjusted EBIT target) resultingwhich, after applying negative discretion as allowed by the Teamshare program (see
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“Use of Performance Evaluations”), resulted in 20162018 Teamshare payouts to each of the named executive officers of 83.22%95.39% of the target percentages set forth in the table above. Such amounts are reflected in the "Non-Equity“Non-Equity Incentive Plan Compensation"Compensation” column of the Summary Compensation Table.
Long-Term Equity Incentive Program.Program
Long-term equity incentives are an important part of our pay for performance philosophy and are designed to motivate named executive officers to focus on long-term success for shareholders while rewarding them for a long-term commitment to us. The Compensation Committee considers annual equity awards each March at its regular quarterly meeting and considers special equity awards as necessary in connection withone-time events such as a new hire, promotion, or special performance. Equity awards are made under our shareholder-approved Stock Incentive Plan.
(a) 2016 2018 Equity AwardsAward for Mr. Vasos. After consideringVasos
For the market comparator group data pertaining to long-term incentive compensation,reasons outlined under “Mr. Vasos’s 2018 Compensation Generally,” the Compensation Committee established an $8.0 million target grant value for Mr. Vasos’s 2018 equity award. The Committee further determined to providedeliver Mr. Vasos with a $5.5 million estimated value for his 2016 equity grants. Specifically, the Committee determined that Mr. Vasos'sVasos’s annual equity grant should reflectaward via a mix of 50% stock options and 50% PSUs to more closely align to market practicesincent a long-term focus and to alleviate tax deductibility concerns relating to RSUs which previously represented 25%align the interests of management with those of shareholders, and the annualCommittee approved the award mix, and approved a $4.0 million equity grant value award to Mr. Vasos in accordance with the terms outlined in "2016“2018 Annual Equity Awards for Named Executive Officers Other than Mr. Vasos"Vasos” below. In further recognition of his 2015 performance, to incent his continued performance and to aid in his retention, in March 2016, the Committee approved an additional non-qualified stock option award to Mr. Vasos having an approximate value of $1.5 million to purchase 85,759 shares of our common stock. Subject to certain limited vesting acceleration events, such options are scheduled to vest ratably in installments of 331/3% on each of the third, fourth and fifth anniversaries of the March 16, 2016 grant date, subject to Mr. Vasos's continued employment with us and holding requirements through the fifth anniversary of the grant date. The options will terminate no later than ten years from the grant date. The Committee
believed the $5.5 million estimated combined value of these equity awards was within a reasonable range of the market comparator group data in light of Mr. Vasos's time in the CEO role as compared to other CEOs in the market comparator group and in light of his total compensation given his 10.0% base salary increase for 2016.
(b) | 2018 Annual Equity Awards for Named Executive Officers Other than Mr. Vasos |
(b) 2016 Annual Equity Awards for Named Executive Officers Other than Mr. Vasos.Each year, the Compensation Committee determines a targeted equity award value for each named executive officer derived from benchmarkingmarket data information and the appropriate mix of vehicles in which to deliver such targeted value (see "Use“Use of Market Benchmarking Data"Data”), but then adjusts that value up or down based on a subjective assessment of a variety of factors as outlined above under “Use of Performance Evaluations”. In 2016, with the exception of Mr. Garratt, the targeted value for each non-CEO named executive officer was unchanged from the prior year's targeted value for such job level based on the Committee's review of the market comparator group data. Mr. Garratt's targeted value was increased from $335,000 in 2015 to $1.1 million in 2016 as a result of his promotion in December 2015 and a review of the market comparator group data. In addition,2018, the equity mix was delivered 50% in options and 50% in PSUs, foras the Committee believed that this mix remained appropriate to incent a long-term focus and to align the interests of management with those of shareholders. For the reasons outlined above in "2016 Equity Awards“2018 Compensation of Named Executive Officers Other than Mr. Vasos Generally,” the grant value target for each such officer, before adjustments based on individual performance, was $1.5 million, and then the Committee approved individual adjustments to the $1.5 million target (see “Use of Performance Evaluations”). As a result, the
non-CEO named executive officers received the following targeted grant values: Mr. Vasos" above.Garratt ($1.4 million), each of Messrs. Owen and Ravener ($1.5 million), and Mr. Reiser ($1.3 million).
The options are granted with a per share exercise price equal to the fair market value of one share of our common stock on the grant date. The options vest 25% annually on April 1 of1of each of the four fiscal years following the fiscal year in which the grant is made, subject to the named executive officer'sofficer’s continued employment with us and certain accelerated vesting provisions.provisions, and have a term of ten years. The PSUs can be earned if specified performance goals are achieved during the applicable performance period (which was fiscal year 2016)periods and if certain additional vesting requirements are met.met as discussed more specifically below.
For PSUs the Committee selects and sets targets for financial performance measures, then establishes threshold and maximum levels of performance derived from those targets. The number of PSUs earned depends on the level of financial performance achieved versus the goals. The Committee selected adjusted EBITDA (weighted 50%) and adjusted ROIC (weighted 50%) as the 2016 financial performance measures for the PSUs,2018 PSUs. Half of the award is subject to adjusted EBITDA performance and set target performance levels equalhalf of the award is subject to our 2016 financial plan. Theseadjusted ROIC performance. The Committee believes that these financial measures and weightings have been used for the PSUs since 2013 tomix between them appropriately balance the emphasis placed upon earnings performance as well as rigorous capital management over the long-term.
For the 2018 PSU awards, aone-year performance period corresponding to our 2018 fiscal year was established for the PSUs which are subject to the adjusted EBITDA performance measure. The adjusted EBITDA performance goal of approximately $2.647 billion was the target amount set forth in our 2018 annual financial plan previously approved by our Board of Directors. In order to further increase the focus on multi-year performance as a counterbalance to short-term incentives, the PSUs which are subject to the adjusted ROIC performance measure are subject to a three-year performance period beginning the first day of our 2018 fiscal year and extending through the last day of our 2020 fiscal year. The adjusted ROIC performance goal of 19.30% is computedthe average of the adjusted ROIC goals for each fiscal year within the performance period as set forth in our three-year financial plan as it existed at the time the PSUs were awarded.
Adjusted EBITDA is calculated as income (loss) from continuing operations before cumulative effect of change in accounting principles plus interest and other financing costs, net, provision for income taxes, and depreciation and amortization, but excludes the impact of all items excluded from the 20162018 Teamshare program adjusted EBIT calculation outlined above, as well as share-based compensation charges. The adjustedabove.
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Adjusted ROIC for the three-year performance targetperiod is calculated as (a) the result of (x) the sum of (i) our operating income, plus (ii) depreciation and amortization, plus (iii) minimum rentals for 2018 and single lease cost for 2019 and 2020, minus (y) taxes, divided by (b) the result of (x) the sum of the averages of: (i) total assets, excluding any assets associated with the adoption of new lease accounting standards in 2019, plus (ii) accumulated depreciation and amortization, minus (y) (i) cash, minus (ii) goodwill, minus (iii) accounts payable, minus (iv) other payables, minus (v) accrued liabilities, plus (vi) 8x minimum rentals for 2018 and 8x single lease cost for 2019 and 2020 (with all
of the foregoing terms determined per our financial statements for each fiscal year within the performance period) but excludes the impact of all items excluded from the 20162018 Teamshare program adjusted EBIT calculation outlined above.
The following table shows howtables show the amount (as a percent of target) of such PSUs wouldthat could be earned at each of the threshold, target, and maximum performance levels. PSUs earnedlevels for financialeach applicable performance between these levels are interpolated in a manner similar to that used for our 2016 Teamshare bonus program,period, as well as the 2018 adjusted EBITDA performance result and the number of PSUs earned could vary between 0% and 300%by each named executive officer as a result of the target award. The following tables also show the actual results of the 2016 financial performance measures and the actual number of PSUs earned.such performance.
| | | | Adjusted EBITDA | | Adjusted ROIC | | | | | |||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Level | | Result v. Target (%) | | EBITDA Result ($) (in millions) | | Units Earned (% of Target) | | Result v. Target (%) | | ROIC Result (%) | | Units Earned (% of Target) | | Total Units Earned (% of Target) | | | |||||||||||||||||||||
| Below Threshold | | | <90 | | | | <2,323 | | | | 0 | | | | <94.80 | | | | <18.22 | | | | 0 | | | | 0 | | | |||||||||
| Threshold | | | 90 | | | | 2,323 | | | | 25 | | | | 94.80 | | | | 18.22 | | | | 25 | | | | 50 | | |
| ||||||||
| Target | | | 100 | | | | 2,582 | | | | 50 | | | | 100.00 | | | | 19.22 | | | | 50 | | | | 100 | | | |||||||||
| Maximum | | | 120 | | | | 3,098 | | | | 150 | | | | 110.41 | | | | 21.22 | | | | 150 | | | | 300 | | |
| ||||||||
| 2016 Results | | | 96.8 | | | | 2,498 | | | | 42.0 | | | | 99.4 | | | | 19.10 | | | | 47.0 | | | | 89.0 | | |
Adjusted EBITDA (2018) | ||||||||||||
Level* | Result v. Target (%) | EBITDA (in billions) | PSUs Earned (% of Target) | |||||||||
Below Threshold | <90 | <2.383 | 0 | |||||||||
Threshold | 90 | 2.383 | 50 | |||||||||
Target | 100 | 2.647 | 100 | |||||||||
Maximum | 120 | 3.177 | 300 | |||||||||
2018 Results | 99.6 | 2.637 | 98.1 |
* | PSUs earned for performance between threshold, target, and maximum levels are interpolated in a manner similar to that used for our 2018 Teamshare bonus program. |
| (Adjusted EBITDA) | ||||||
Mr. Vasos | 20,073 | ||||||
| | ||||||
Mr. Owen | 3,764 | ||||||
Mr. Ravener | 3,764 | ||||||
Mr. Reiser | 3,262 |
One-third of the
Adjusted ROIC (2018-2020) | ||||||||||||
Level* | Result v. Target (%) | ROIC Result (%) | PSUs Earned (% of Target) | |||||||||
Below Threshold | <94.8 | <18.30 | 0 | |||||||||
Threshold | 94.8 | 18.30 | 50 | |||||||||
Target | 100.0 | 19.30 | 100 | |||||||||
Maximum | 105.2 | 20.30 | 300 |
* | PSUs earned for performance between threshold, target, and maximum levels are interpolated in a manner similar to that used for our 2018 Teamshare bonus program. |
The PSUs earned PSUs vested on the last day of the one-yearby each named executive officer for fiscal 2018 adjusted EBITDA performance period, and the remaining two-thirds will vest equallyin equalone-third installments on each of April 1, 20182019, April 1, 2020, and April 1, 2019,2021, subject to such officer’s continued employment with us and certain accelerated vesting provisions. Subject to certainpro-rata vesting conditions, the PSUs earned, if any, by each named
executive officer'sofficer for adjusted ROIC performance during the three-year performance period will vest on April 1, 2021, subject to such officer’s continued employment with us and certain accelerated vesting provisions. All vested PSUs will be settled in shares of our common stock.
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(c) | 2017 PSU Awards – Completed 2017-2018 Performance Period |
Certain of the PSUs awarded in 2017 were subject to an adjusted ROIC performance measure for a (c)two-year performance period beginning on the first day of our 2017 fiscal year and extending through the last day of our 2018 fiscal year, based on the average adjusted ROIC for each fiscal year within thetwo-year period. The average adjusted ROIC was derived from our three-year financial plan in place at the time of the award and generally is defined in the same way as adjusted ROIC for the 2018 PSU awards except that it does not exclude unplanned loss(es) or gain(s) related to the
implementation of accounting or tax legislative changes. The following tables show the amount (as a percent of target) of such PSUs that could be earned at each of the applicable threshold, target and maximum performance levels, as well as the actual performance result and the number of such PSUs earned by each named executive officer who received a 2017 PSU award. When calculating the performance result, the Committee exercised negative discretion to adjust ROIC for the material positive impact of the Tax Cuts and Jobs Act driven by both the benefit associated with the remeasurement of deferred tax assets and liabilities in 2017 and for the ongoing federal corporate tax rate reduction in 2017 and 2018.
Adjusted ROIC (2017-2018) | ||||||||||||
Level* | Result v. Target (%) | ROIC Result (%) | PSUs Earned (% of Target) | |||||||||
Below Threshold | <94.5 | <17.18 | 0 | |||||||||
Threshold | 94.5 | 17.18 | 50 | |||||||||
Target | 100.0 | 18.18 | 100 | |||||||||
Maximum | 105.5 | 19.18 | 300 | |||||||||
2017-2018 Results | 101.4 | 18.44 | 152.0 |
* | PSUs earned for performance between threshold, target, and maximum levels are interpolated in a manner similar to that used for our 2018 Teamshare bonus program. |
Name | 2017-2018 PSUs Earned (Adjusted ROIC) | |||
Mr. Vasos | 10,207 | |||
Mr. Garratt | 2,380 | |||
Mr. Owen | 2,380 | |||
Mr. Ravener | 2,551 |
(d) Share Ownership Guidelines and Holding Requirements. As shown below,Requirements
Our senior officers are subject to share ownership guidelines and holding requirements. The share ownership guideline is a multiple of annual base salary as in effect from time to time and is to be achieved within a five-year time period.
Officer Level | Multiple of Base Salary | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
CEO | |||||||||||||
EVP | |||||||||||||
SVP | 2X |
Each senior officer is required to retain ownership of 50% of all netafter-tax shares issuable upon vesting or exercise of compensatory awards until he or she reaches the target ownership level. Administrative details pertaining to these matters are established by the Compensation Committee.level is achieved.
(d) Policy Against(e) Hedging and Pledging Transactions.Policies
Our policy prohibits Board members and executive officers from (1) pledging Dollar General securities as collateral, (2) holding Dollar General securities in a
margin account, and (3) hedging their ownershipagainst any decrease in the market value of equity securities issued by Dollar General stock,and held by them, such as entering into or trading prepaid variable forward contracts, equity swaps, collars, puts, calls, options, (other than those granted by us)exchange funds or other derivative instruments related to Dollar General stock.
Benefits and Perquisites.Perquisites
Our named executive officers participate in certain benefits on the same terms that are offered to all of our
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EXECUTIVE COMPENSATION
salaried employees. We also provide them with limited additional benefits and perquisites for retention and recruiting purposes, to replace benefit opportunities lost due to regulatory limits, and to enhance their ability to focus on our business. We do not provide taxgross-up payments for named executive officers on any benefits and perquisites other than relocation-related items. The primary additional benefits and perquisites include the following:
70% of base salary thereafter. In addition to the income replacement benefit, we pay administrative fees associated with the program. We also pay the premiums under a group long-term disability plan whichthat provides 60% of base salary up to a maximum monthly benefit of $20,000.
Severance Arrangements
As noted above, we have an employment agreement with each of our named executive officers that, among other things, provides for such executive'sexecutive’s rights upon a termination of employment in exchange for valuable business protection provisions for us. We believe that reasonable severance benefits are appropriate to protect the named executive officer against circumstances over which he or she does not have control and as consideration for the promises ofnon-disclosure,non-competition,non-solicitation, andnon-interference, as well as the clawback rights that we require in our employment agreements. A change in control, by itself ("(“single trigger"trigger”), does not trigger any severance provision applicable to our named executive officers, except for the provisions related to outstanding long-term equity awards granted prior to 2016. TheEquity awards granted in or after 2016 annual equity awards do not provide for single trigger vesting acceleration but rather require a termination event within a certain period of time following a change in control to accelerate vesting of such equity awards.
Considerations Associated with Regulatory Requirements
Under Section 162(m) of the Internal Revenue Code, we generally may not take a tax deduction for individual compensation over $1 million paid in any taxable year to each of the persons that meet the definition of a covered employee under Section 162(m). For fiscal 2018, covered employees include anyone who were,was a covered employee for any taxable year beginning after December 31, 2016, anyone who held the position of CEO or Chief Financial Officer (“CFO”) at the end ofany time during the fiscal year our CEO or one ofand the other namedthree most highly compensated employees who acted as executive officers (other than our Chief Financial Officer). As a result, we may not deductas CEO or CFO) at any salary, signing bonus or other annual compensation paid or imputedtime during the fiscal year. Prior to such covered officers that causes non-performance-based compensation to exceed the $1 million limit. CertainU.S. tax law changes in 2017, certain performance-based compensation iswas exempt from the deduction limit.
We believe that our Stock Incentive Plan and our Annual Incentive Plan currently satisfy, and if Proposals 2 and 3 are approved, will continue to satisfy the requirements of Section 162(m) such that we may deductdeduction limit. However, for tax years beginning after December 31, 2017, the performance-based compensation expense realizedexemption was eliminated unless the compensation qualifies for transition relief applicable to certain arrangements in connection with any (1) payments made under our Teamshare program, (2) stock options and stock appreciation rights, and (3) performance-based restricted stock and RSU awards. However, restricted stock or RSUs that solely vest over time are not "performance-based compensation" under Section 162(m), and we will be unable to deduct compensation expense realized in connection with those time-vested awards to persons covered by Section 162(m) to the extent their non-performance-based compensation exceeds $1 million. Our policies do not restrict theplace as of November 2, 2017.
The Compensation Committee from exercising discretioncontinues to view the tax deductibility of executive compensation as one of many factors to be considered in the context of its overall compensation philosophy and therefore reserves the right to approve compensation packages that may resultnot be deductible in certain non-deductible compensation expenses but that the Committee nonetheless determines to be in our shareholders' best interests.situations it deems appropriate.
The Committee administers our executive compensation program with the good faith intention of complying with Section 409A of the Internal Revenue Code, which relates to the taxation of nonqualified deferred compensation arrangements.
The Compensation Committee of our Board of Directors reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of RegulationS-K and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this document.
This report has been furnished by the members of the Compensation Committee:
The above Compensation Committee Report does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Dollar General filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent Dollar General specifically incorporates this report by reference therein.
28 2019 Proxy Statement |
EXECUTIVE COMPENSATION
The following table summarizes compensation paid to or earned by our named executive officers in each of the 2016, 20152018, 2017, and 20142016 fiscal years. We have omitted from this table the columns for "Bonus"“Bonus” and "Change“Change in Pension Value and Nonqualified Deferred Compensation Earnings"Earnings” because they are inapplicable.
Name and Principal Position(1) | Year | Salary ($)(2) | Stock Awards ($)(3) | Option Awards ($)(4) | Non-Equity Incentive Plan Compensation ($)(5) | All Other Compensation ($)(6) | Total ($) | |||||||||||||||||||||
Todd J. Vasos, | 2018 | 1,188,879 | 3,805,114 | 3,793,604 | 1,717,068 | 97,852 | 10,602,517 | |||||||||||||||||||||
2017 | 1,127,543 | 2,847,697 | 2,827,461 | 1,921,028 | 82,680 | 8,806,409 | ||||||||||||||||||||||
2016 | 1,083,375 | 2,317,164 | 4,194,777 | 915,411 | 82,561 | 8,593,288 | ||||||||||||||||||||||
John W. Garratt, | 2018 | 706,511 | 665,923 | 663,893 | 518,698 | 63,316 | 2,618,341 | |||||||||||||||||||||
2017 | 597,256 | 664,463 | 659,739 | 520,441 | 60,636 | 2,502,535 | ||||||||||||||||||||||
2016 | 511,603 | 637,226 | 655,955 | 277,981 | 47,247 | 2,130,012 | ||||||||||||||||||||||
Jeffery C. Owen, | 2018 | 652,662 | 713,436 | 711,314 | 469,697 | 60,267 | 2,607,376 | |||||||||||||||||||||
2017 | 630,529 | 664,463 | 659,739 | 536,861 | 64,747 | 2,556,339 | ||||||||||||||||||||||
2016 | 613,924 | 637,226 | 655,955 | 333,578 | 55,863 | 2,296,546 | ||||||||||||||||||||||
Robert D. Ravener, | 2018 | 578,875 | 713,436 | 711,314 | 416,595 | 57,157 | 2,477,377 | |||||||||||||||||||||
2017 | 558,365 | 711,960 | 706,865 | 476,167 | 58,040 | 2,511,397 | ||||||||||||||||||||||
2016 | 538,841 | 637,226 | 655,955 | 293,012 | 50,734 | 2,175,768 | ||||||||||||||||||||||
Jason S. Reiser, | 2018 | 664,488 | 618,317 | 616,472 | 477,456 | 168,661 | 2,545,394 |
(1) | Mr. Reiser joined Dollar General in July 2017 but was not a named executive officer for 2017. |
(2) | Each named executive officer deferred under the CDP and contributed to our 401(k) Plan a portion of salary earned in each of the fiscal years for which salaries are reported above for the applicable named executive officer. The amounts of the fiscal 2018 salary deferrals under the CDP are included in the Nonqualified Deferred Compensation Table. |
(3) | The amounts reported represent the aggregate grant date fair value of PSUs awarded in each fiscal year for which compensation is required to be reported in the table for each named executive officer, in each case computed in accordance with FASB ASC Topic 718. The PSUs are subject to performance conditions, and the reported value at the grant date is based upon the probable outcome of such conditions on such date. The values of the PSUs at the grant date assuming that the highest level of performance conditions will be achieved are as follows for each fiscal year required to be reported for each applicable named executive officer: |
Fiscal | Mr. Vasos ($) | Mr. Garratt ($) | Mr. Owen ($) | Mr. Ravener ($) | Mr. Reiser ($) | |||||||||||||||
2018 | 11,415,341 | 1,997,768 | 2,140,307 | 2,140,307 | 1,854,951 | |||||||||||||||
2017 | 8,543,092 | 1,993,388 | 1,993,388 | 2,135,879 | — | |||||||||||||||
2016 | 6,951,492 | 1,911,679 | 1,911,679 | 1,911,679 | — |
Information regarding the assumptions made in the valuation of these awards is set forth in Note 8 of the annual consolidated financial statements in our 2018 Form10-K. |
(4) | The amounts reported represent the aggregate grant date fair value of stock options awarded in each fiscal year for which compensation is required to be reported in the table for each named executive officer, in each case computed in accordance with FASB ASC Topic 718. Information regarding assumptions made in the valuation of these awards is set forth in Note 8 of the annual consolidated financial statements in our 2018 Form10-K. |
(5) | Represents amounts earned pursuant to our Teamshare bonus program for each fiscal year reported. See the discussion of the “Short-Term Cash Incentive Plan” in “Compensation Discussion and Analysis” above. Messrs. Vasos, Garratt and Reiser deferred 5%, 5% and 7%, respectively, of his fiscal 2018 Teamshare bonus payment reported above under the CDP. Mr. Vasos deferred 5% of his fiscal 2017 Teamshare bonus payment reported above under the CDP. Messrs. Vasos and Garratt each deferred 5% of his fiscal 2016 Teamshare bonus payment reported above under the CDP. |
2019 Proxy Statement 29 |
Name and Principal Position(1) | | Year | | Salary ($)(2) | | Stock Awards ($)(3) | | Option Awards ($)(4) | | Non-Equity Incentive Plan Compensation ($)(5) | | All Other Compensation ($) | | Total ($) | | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Todd J. Vasos, | | 2016 | | 1,083,375 | | 2,317,164 | | 4,194,777 | | | 915,411 | | | | 82,561 | (6) | | 8,593,288 | | |||||||
Chief Executive Officer | | 2015 | | 926,605 | | 808,022 | | 5,932,285 | | | 956,548 | | | | 99,541 | | | 8,723,001 | | |||||||
| | 2014 | | 765,342 | | 821,048 | | 653,913 | | | 521,486 | | | | 67,422 | | | 2,829,211 | | |||||||
| | | | | | | | | | | | | | | | |||||||||||
John W. Garratt, | | 2016 | | 511,603 | | 637,226 | | 655,955 | | | 277,981 | | | | 47,247 | (7) | | 2,130,012 | | |||||||
Executive Vice President & | | 2015 | | 339,405 | | 180,374 | | 303,694 | | | 199,223 | | | | 66,150 | | | 1,088,846 | | |||||||
Chief Financial Officer | | | | | | | | | | | | | ||||||||||||||
| | | | | | | | | | | | | | | | |||||||||||
Jeffery C. Owen, | | 2016 | | 613,924 | | 637,226 | | 655,955 | | | 333,578 | | | | 55,863 | (8) | | 2,296,546 | | |||||||
Executive Vice President, | | | | | | | | | | | | | ||||||||||||||
Store Operations | | | | | | | | | | | | | ||||||||||||||
| | | | | | | | | | | | | | | | |||||||||||
Rhonda M. Taylor, | | 2016 | | 539,371 | | 637,226 | | 655,955 | | | 293,300 | | | | 95,609 | (9) | | 2,221,461 | | |||||||
Executive Vice President & | | 2015 | | 515,645 | | 592,530 | | 599,657 | | | 362,026 | | | | 66,702 | | | 2,136,560 | | |||||||
General Counsel | | | | | | | | | | | | | ||||||||||||||
| | | | | | | | | | | | | | | | |||||||||||
James W. Thorpe, | | 2016 | | 649,736 | | 637,226 | | 655,955 | | | 353,036 | | | | 55,073 | (10) | | 2,351,026 | | |||||||
Executive Vice President & | | | | | | | | | | | | | ||||||||||||||
Chief Merchandising Officer | | | | | | | | | | | | |
EXECUTIVE COMPENSATION
(6) | Includes the following amounts for each named executive officer: |
Name | Company Match CDP ($) | Company Match 401(k) ($) | Premiums for ($) | Tax Gross-Ups ($) | Aggregate Incremental ($) | |||||||||||||||
Mr. Vasos | 45,665 | 14,015 | 2,491 | — | 35,681 | |||||||||||||||
Mr. Garratt | 21,363 | 14,190 | 1,488 | — | 26,275 | |||||||||||||||
Mr. Owen | 19,036 | 13,842 | 1,368 | — | 26,021 | |||||||||||||||
Mr. Ravener | 15,358 | 13,832 | 1,213 | — | 26,754 | |||||||||||||||
Mr. Reiser | 22,101 | 10,567 | 1,392 | 5,645 | 128,956 |
* | Except for Mr. Reiser, whose aggregate incremental cost of providing perquisites and personal benefits included $106,290 for costs associated with relocation, none of the named executive officers received any perquisite or personal benefit for which the aggregate incremental cost individually equaled or exceeded the greater of $25,000 or 10% of total perquisites. The aggregate incremental cost of providing perquisites and personal benefits related to: (1) for each named executive officer, financial and estate planning services, entertainment events, miscellaneous gifts, premiums paid under our group long-term disability program and our accidental death and dismemberment policy, and an administrative fee for coverage under our short-term disability program; (2) for Messrs. Garratt, Owen, Ravener, and Reiser, an executive physical medical examination; (3) for Messrs. Vasos, Garratt, Owen, and Ravener, one or more directed charitable donations; (4) for Messrs. Vasos, Owen, and Ravener, limited personal travel expenses, most often associated with a guest’s attendance at business events; and (5) for Mr. Vasos, a security assessment. We also provide each named executive officer with certain perquisites and personal benefits at no aggregate incremental cost to Dollar General, including access to participation in a group umbrella liability insurance program through a third party vendor at a group rate paid by the executive and coverage under our business travel accident insurance for which Dollar General pays a flat fee for the eligible employee population. The aggregate incremental cost associated with Mr. Reiser’s relocation included expenses associated with physical movement of his household goods (including automobile), costs incurred in connection with the sale of his former home (such as appraisals, inspections,pre-title expenses, title and deed costs, broker’s commission, document preparation fees, recording fees and legal fees), and final move expenses. |
30 2019 Proxy Statement |
Fiscal Year | | Mr. Vasos ($) | | Mr. Garratt ($) | | Mr. Owen ($) | | Ms. Taylor ($) | | Mr. Thorpe ($) | | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2016 | | | 6,951,492 | | | | 1,911,679 | | | | 1,911,679 | | | | 1,911,679 | | | | 1,911,679 | | | |||||
2015 | | | 1,212,033 | | | | 270,561 | | | | N/A | | | | 888,794 | | | | N/A | | | |||||
2014 | | | 1,234,699 | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | |
Information regarding the assumptions made in the valuation of these awards is set forth in Note 9 of the annual consolidated financial statements in our 2016 Form 10-K.EXECUTIVE COMPENSATION
Grants of Plan-Based Awards in Fiscal 2016
2018
The table below shows each named executive officer'sofficer’s fiscal 20162018 Teamshare bonus opportunity under "Estimated“Estimated Possible Payouts UnderNon-Equity Incentive Plan Awards."” Actual amounts earned under the fiscal 20162018 Teamshare program are shown in the Summary Compensation Table and, for those who received such payments, represent prorated payment on a graduated scale for financial performance between the threshold and target performance levels. See "Short-Term“Short-Term Cash Incentive Plan"Plan” in "Compensation“Compensation Discussion and Analysis"Analysis” for discussion of such Teamshare program.
The table below also shows information regarding equity awards made to our named executive officers for fiscal 2016,2018, all of which were granted pursuant to our Stock Incentive Plan. The awards listed under "Estimated Possible“Estimated Future Payouts Under Equity Incentive Plan Awards"Awards” include the threshold, target, and maximum number of PSUs which could be earned by each named executive officer based upon the level of achievement of fiscal 2016the applicable financial performance measures. The awards listed under "All“All Other Option Awards"Awards” includenon-qualified stock options that vest over time based upon the applicable named executive officer'sofficer’s continued employment by Dollar General. See "Long-Term“Long-Term Equity Incentive Program"Program” in "Compensation“Compensation Discussion and Analysis"Analysis” above for further discussion of these awards. We have omitted from this table the column for All“All Other Stock AwardsAwards” because it is inapplicable.
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh)(1) | Grant Date Fair Value of Stock and Option Awards ($)(2) | ||||||||||||||||||||||||||||||||||||
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||||||||
Mr. Vasos | — | 900,000 | 1,800,000 | 5,400,000 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
03/21/18 | — | — | — | — | — | — | 157,197 | 92.98 | 3,793,604 | |||||||||||||||||||||||||||||||
03/21/18 | — | — | — | 20,462 | 40,924 | 122,772 | — | — | 3,805,114 | |||||||||||||||||||||||||||||||
Mr. Garratt | — | 271,875 | 543,750 | 1,631,250 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
03/21/18 | — | — | — | — | — | — | 27,510 | 92.98 | 663,893 | |||||||||||||||||||||||||||||||
03/21/18 | — | — | — | 3,581 | 7,162 | 21,486 | — | — | 665,923 | |||||||||||||||||||||||||||||||
Mr. Owen | — | 246,191 | 492,383 | 1,477,148 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
03/21/18 | — | — | — | — | — | — | 29,475 | 92.98 | 711,314 | |||||||||||||||||||||||||||||||
03/21/18 | — | — | — | 3,837 | 7,673 | 23,019 | — | — | 713,436 | |||||||||||||||||||||||||||||||
Mr. Ravener | — | 218,358 | 436,716 | 1,310,148 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
03/21/18 | — | — | — | — | — | — | 29,475 | 92.98 | 711,314 | |||||||||||||||||||||||||||||||
03/21/18 | — | — | — | 3,837 | 7,673 | 23,019 | — | — | 713,436 | |||||||||||||||||||||||||||||||
Mr. Reiser | — | 250,258 | 500,516 | 1,501,549 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
03/21/18 | — | — | — | — | — | — | 25,545 | 92.98 | 616,472 | |||||||||||||||||||||||||||||||
03/21/18 | — | — | — | 3,325 | 6,650 | 19,950 | — | — | 618,317 |
(1) | The per share exercise price was calculated based on the closing market price of one share of our common stock on the date of grant as reported by the NYSE. |
(2) | Represents the aggregate grant date fair value of each equity award, computed in accordance with FASB ASC Topic 718. For equity awards that are subject to performance conditions, the value at the grant date is based upon the probable outcome of such conditions. For information regarding the assumptions made in the valuation of these awards, see Note 8 of the annual consolidated financial statements included in our 2018 Form10-K. |
2019 Proxy Statement 31 |
| | | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards | | Estimated Possible Payouts Under Equity Incentive Plan Awards | | | | | | | | ||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | All Other Option Awards: Number of Securities Underlying Options (#) | | | | | | ||||||||||||||||||||||||||||||||||||||
| | | | Exercise or Base Price of Option Awards ($/Sh)(1) | | Grant Date Fair Value of Stock and Option Awards ($)(2) | | ||||||||||||||||||||||||||||||||||||||||
Name | | Grant Date | | Threshold ($) | | Target ($) | | Maximum ($) | | Threshold (#) | | Target (#) | | Maximum (#) | | ||||||||||||||||||||||||||||||||
Mr. Vasos | | — | | | 550,000 | | | 1,100,000 | | | 3,300,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | ||||||||||
| 3/16/16 | | | — | | | — | | | — | | | | — | | | | — | | | | — | | | | 119,599 | | | | 84.67 | | | | 2,385,270 | | | |||||||||||
| 3/16/16 | | | — | | | — | | | — | | | | — | | | | — | | | | — | | | | 85,759 | | | | 84.67 | | | | 1,809,506 | | | |||||||||||
| 3/16/16 | | | — | | | — | | | — | | | | 13,684 | | | | 27,367 | | | | 82,101 | | | | — | | | | — | | | | 2,317,164 | | | |||||||||||
| | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||
Mr. Garratt | | — | | | 167,018 | | | 334,035 | | | 1,002,105 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | ||||||||||
| 3/16/16 | | | — | | | — | | | — | | | | — | | | | — | | | | — | | | | 32,890 | | | | 84.67 | | | | 655,955 | | | |||||||||||
| 3/16/16 | | | — | | | — | | | — | | | | 3,763 | | | | 7,526 | | | | 22,578 | | | | — | | | | — | | | | 637,226 | | | |||||||||||
| | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||
Mr. Owen | | — | | | 200,421 | | | 400,842 | | | 1,202,526 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | ||||||||||
| 3/16/16 | | | — | | | — | | | — | | | | — | | | | — | | | | — | | | | 32,890 | | | | 84.67 | | | | 655,955 | | | |||||||||||
| 3/16/16 | | | — | | | — | | | — | | | | 3,763 | | | | 7,526 | | | | 22,578 | | | | — | | | | — | | | | 637,226 | | | |||||||||||
| | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||
Ms. Taylor | | — | | | 176,222 | | | 352,443 | | | 1,057,329 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | ||||||||||
| 3/16/16 | | | — | | | — | | | — | | | | — | | | | — | | | | — | | | | 32,890 | | | | 84.67 | | | | 655,955 | | | |||||||||||
| 3/16/16 | | | — | | | — | | | — | | | | 3,763 | | | | 7,526 | | | | 22,578 | | | | — | | | | — | | | | 637,226 | | | |||||||||||
| | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||
Mr. Thorpe | | — | | | 212,112 | | | 424,224 | | | 1,272,673 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | ||||||||||
| 3/16/16 | | | — | | | — | | | — | | | | — | | | | — | | | | — | | | | 32,890 | | | | 84.67 | | | | 655,955 | | | |||||||||||
| 3/16/16 | | | — | | | — | | | — | | | | 3,763 | | | | 7,526 | | | | 22,578 | | | | — | | | | — | | | | 637,226 | | |
EXECUTIVE COMPENSATION
Outstanding Equity Awards at 20162018 FiscalYear-End
The table below sets forth information regarding awards granted under our Stock Incentive Plan and held by our named executive officers as of the end of fiscal 2016.2018. We have omitted from this table all columnsthe column for "Equity“Equity Incentive Plan Awards"Awards: Number of Securities Underlying Unexercised Unearned Options” because they areit is inapplicable. All awards included in the table, to the extent they have not vested, are subject to certain accelerated vesting provisions as described in "Potential“Potential Payments upon Termination or Change in Control."” PSUs and RSUs reported in the table are payable in shares of our common stock on aone-for-one basis.
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(9) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(9) | |||||||||||||||||||||||||||
Mr. Vasos | 03/20/2012 | 37,440 | (1) | — | 45.25 | 03/20/2022 | — | — | — | — | ||||||||||||||||||||||||||
03/18/2013 | 27,492 | (1) | — | 48.11 | 03/18/2023 | — | — | — | — | |||||||||||||||||||||||||||
12/03/2013 | 2,880 | (1) | — | 56.48 | 12/03/2023 | — | — | — | — | |||||||||||||||||||||||||||
03/18/2014 | 37,926 | (1) | — | 57.91 | 03/18/2024 | — | — | — | — | |||||||||||||||||||||||||||
03/17/2015 | 33,590 | (2) | 11,196 | (2) | 74.72 | 03/17/2025 | — | — | — | — | ||||||||||||||||||||||||||
06/03/2015 | 85,562 | (3) | 171,120 | (3) | 76.00 | 06/03/2025 | — | — | — | — | ||||||||||||||||||||||||||
03/16/2016 | 59,801 | (2) | 59,798 | (2) | 84.67 | 03/16/2026 | — | — | — | — | ||||||||||||||||||||||||||
03/16/2016 | — | 85,759 | (3) | 84.67 | 03/16/2026 | — | — | — | — | |||||||||||||||||||||||||||
03/22/2017 | 40,378 | (2) | 121,134 | (2) | 70.68 | 03/22/2027 | — | — | — | — | ||||||||||||||||||||||||||
03/21/2018 | — | 157,197 | (2) | 92.98 | 03/21/2028 | — | — | — | — | |||||||||||||||||||||||||||
03/16/2016 | — | — | — | — | 8,119 | (4) | 934,010 | — | — | |||||||||||||||||||||||||||
03/22/2017 | — | — | — | — | 24,737 | (5) | 2,845,744 | 20,145 | (6) | 2,317,481 | ||||||||||||||||||||||||||
03/21/2018 | — | — | — | — | 20,073 | (7) | 2,309,198 | 61,386 | (8) | 7,061,845 | ||||||||||||||||||||||||||
Mr. Garratt | 12/03/2014 | 5,031 | (1) | — | 66.69 | 12/03/2024 | — | — | — | — | ||||||||||||||||||||||||||
03/17/2015 | 7,502 | (2) | 2,500 | (2) | 74.72 | 03/17/2025 | — | — | — | — | ||||||||||||||||||||||||||
12/02/2015 | 5,872 | (1) | 1,957 | (1) | 65.35 | 12/02/2025 | — | — | — | — | ||||||||||||||||||||||||||
03/16/2016 | 16,446 | (2) | 16,444 | (2) | 84.67 | 03/16/2026 | — | — | — | — | ||||||||||||||||||||||||||
03/22/2017 | 9,423 | (2) | 28,263 | (2) | 70.68 | 03/22/2027 | — | — | — | — | ||||||||||||||||||||||||||
03/21/2018 | — | 27,510 | (2) | 92.98 | 03/21/2028 | — | — | — | — | |||||||||||||||||||||||||||
03/16/2016 | — | — | — | — | 2,232 | (4) | 256,769 | — | — | |||||||||||||||||||||||||||
03/22/2017 | — | — | — | — | 5,770 | (5) | 663,781 | 4,698 | (6) | 540,458 | ||||||||||||||||||||||||||
03/21/2018 | — | — | — | — | 3,513 | (7) | 404,136 | 10,743 | (8) | 1,235,875 | ||||||||||||||||||||||||||
Mr. Owen | 08/25/2015 | 26,778 | (1) | 8,925 | (1) | 73.73 | 08/25/2025 | — | — | — | — | |||||||||||||||||||||||||
03/16/2016 | 16,446 | (2) | 16,444 | (2) | 84.67 | 03/16/2026 | — | — | — | — | ||||||||||||||||||||||||||
03/22/2017 | 9,423 | (2) | 28,263 | (2) | 70.68 | 03/22/2027 | — | — | — | — | ||||||||||||||||||||||||||
03/21/2018 | — | 29,475 | (2) | 92.98 | 03/21/2028 | — | — | — | — | |||||||||||||||||||||||||||
03/16/2016 | — | — | — | — | 2,232 | (4) | 256,769 | — | — | |||||||||||||||||||||||||||
03/22/2017 | — | — | — | — | 5,770 | (5) | 663,781 | 4,698 | (6) | 540,458 | ||||||||||||||||||||||||||
03/21/2018 | — | — | — | — | 3,764 | (7) | 433,011 | 11,508 | (8) | 433,011 |
32 2019 Proxy Statement |
| | | | Option Awards | | Stock Awards | | |||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | | Grant Date | | Number of Securities Underlying Unexercised Options (#) Exercisable | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | Option Exercise Price ($) | | Option Expiration Date | | Number of Shares or Units of Stock That Have Not Vested (#) | | Market Value of Shares or Units of Stock That Have Not Vested ($)(10) | | |||||||||||||||||||
Mr. Vasos | | 03/20/12 | | | 37,440 | (1) | | | — | | | | 45.25 | | | | 03/20/2022 | | | | — | | | | — | | | |||||||
| 03/18/13 | | | 20,619 | (1) | | | 6,873 | (1) | | | 48.11 | | | | 03/18/2023 | | | | — | | | | — | | | ||||||||
| 12/03/13 | | | 2,160 | (1) | | | 720 | (1) | | | 56.48 | | | | 12/03/2023 | | | | — | | | | — | | | ||||||||
| 03/18/14 | | | 18,964 | (1) | | | 18,962 | (1) | | | 57.91 | | | | 03/18/2024 | | | | — | | | | — | | | ||||||||
| 03/17/15 | | | 11,198 | (2) | | | 33,588 | (2) | | | 74.72 | | | | 03/17/2025 | | | | — | | | | — | | | ||||||||
| 06/03/15 | | | — | | | | 256,682 | (3) | | | 76.00 | | | | 06/03/2025 | | | | — | | | | — | | | ||||||||
| 03/16/16 | | | — | | | | 119,599 | (2) | | | 84.67 | | | | 03/16/2026 | | | | — | | | | — | | | ||||||||
| 03/16/16 | | | — | | | | 85,759 | (3) | | | 84.67 | | | | 03/16/2026 | | | | — | | | | — | | | ||||||||
| 03/18/14 | | | — | | | | — | | | | — | | | | — | | | | 2,253 | (4) | | | 164,784 | | | ||||||||
| 03/17/15 | | | — | | | | — | | | | — | | | | — | | | | 3,766 | (5) | | | 275,445 | | | ||||||||
| 03/16/16 | | | — | | | | — | | | | — | | | | — | | | | 16,238 | (6) | | | 1,187,647 | | | ||||||||
| 03/18/14 | | | — | | | | — | | | | — | | | | — | | | | 2,357 | (7) | | | 172,391 | | | ||||||||
| 03/17/15 | | | — | | | | — | | | | — | | | | — | | | | 3,604 | (8) | | | 263,597 | | | ||||||||
| | | | | | | | | | | | | | | | |||||||||||||||||||
Mr. Garratt | | 12/03/14 | | | 2,517 | (1) | | | 2,514 | (1) | | | 66.69 | | | | 12/03/2024 | | | | — | | | | — | | | |||||||
| 03/17/15 | | | 2,502 | (2) | | | 7,500 | (2) | | | 74.72 | | | | 03/17/2025 | | | | — | | | | — | | | ||||||||
| 12/02/15 | | | 1,958 | (1) | | | 5,871 | (1) | | | 65.35 | | | | 12/02/2025 | | | | — | | | | — | | | ||||||||
| 03/16/16 | | | — | | | | 32,890 | (2) | | | 84.67 | | | | 03/16/2026 | | | | — | | | | — | | | ||||||||
| 03/17/15 | | | — | | | | — | | | | — | | | | — | | | | 840 | (5) | | | 61,438 | | | ||||||||
| 03/16/16 | | | — | | | | — | | | | — | | | | — | | | | 4,464 | (6) | | | 326,497 | | | ||||||||
| 03/17/15 | | | — | | | | — | | | | — | | | | — | | | | 804 | (8) | | | 58,805 | | | ||||||||
| | | | | | | | | | | | | | | | |||||||||||||||||||
Mr. Owen | | 08/25/15 | | | 8,928 | (1) | | | 26,775 | (1) | | | 73.73 | | | | 08/25/2025 | | | | — | | | | — | | | |||||||
| 03/16/16 | | | — | | | | 32,890 | (2) | | | 84.67 | | | | 03/16/2026 | | | | — | | | | — | | | ||||||||
| 03/16/16 | | | — | | | | — | | | | — | | �� | | — | | | | 4,464 | (6) | | | 326,497 | | | ||||||||
| | | | | | | | | | | | | | | | |||||||||||||||||||
Ms. Taylor | | 03/24/10 | | | 7,926 | (9) | | | — | | | | 25.25 | | | | 03/24/2020 | | | | — | | | | — | | | |||||||
| 03/20/12 | | | 4,729 | (1) | | | — | | | | 45.25 | | | | 03/20/2022 | | | | — | | | | — | | | ||||||||
| 03/18/13 | | | 2,250 | (1) | | | 749 | (1) | | | 48.11 | | | | 03/18/2023 | | | | — | | | | — | | | ||||||||
| 05/28/13 | | | 5,181 | (1) | | | 1,727 | (1) | | | 54.48 | | | | 05/28/2023 | | | | — | | | | — | | | ||||||||
| 03/18/14 | | | 4,236 | (1) | | | 4,234 | (1) | | | 57.91 | | | | 03/18/2024 | | | | — | | | | — | | | ||||||||
| 03/17/15 | | | 8,213 | (2) | | | 24,630 | (2) | | | 74.72 | | | | 03/17/2025 | | | | — | | | | — | | | ||||||||
| 03/16/16 | | | — | | | | 32,890 | (2) | | | 84.67 | | | | 03/16/2026 | | | | — | | | | — | | | ||||||||
| 03/18/14 | | | — | | | | — | | | | — | | | | — | | | | 503 | (4) | | | 36,789 | | | ||||||||
| 03/17/15 | | | — | | | | — | | | | — | | | | — | | | | 2,762 | (5) | | | 202,013 | | | ||||||||
| 03/16/16 | | | — | | | | — | | | | — | | | | — | | | | 4,464 | (6) | | | 326,497 | | | ||||||||
| 03/18/14 | | | — | | | | — | | | | — | | | | — | | | | 526 | (7) | | | 38,472 | | | ||||||||
| 03/17/15 | | | — | | | | — | | | | — | | | | — | | | | 2,642 | (8) | | | 193,236 | | | ||||||||
| | | | | | | | | | | | | | | | |||||||||||||||||||
Mr. Thorpe | | 08/25/15 | | | 14,189 | (1) | | | 42,561 | (1) | | | 73.73 | | | | 08/25/2025 | | | | — | | | | — | | | |||||||
| 03/16/16 | | | — | | | | 32,890 | (2) | | | 84.67 | | | | 03/16/2026 | | | | — | | | | — | | | ||||||||
| 03/16/16 | | | — | | | | — | | | | — | | | | — | | | | 4,464 | (6) | | | 326,497 | | |
EXECUTIVE COMPENSATION
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(9) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(9) | |||||||||||||||||||||||||||
Mr. Ravener | 03/18/2014 | 27,812 | (1) | — | 57.91 | 03/18/2024 | — | — | — | — | ||||||||||||||||||||||||||
03/17/2015 | 24,633 | (2) | 8,210 | (2) | 74.72 | 03/17/2025 | — | — | — | — | ||||||||||||||||||||||||||
03/16/2016 | 16,446 | (2) | 16,444 | (2) | 84.67 | 03/16/2026 | — | — | — | — | ||||||||||||||||||||||||||
03/22/2017 | 10,096 | (2) | 30,282 | (2) | 70.68 | 03/22/2027 | — | — | — | — | ||||||||||||||||||||||||||
03/21/2018 | — | 29,475 | (2) | 92.98 | 03/21/2028 | — | — | — | — | |||||||||||||||||||||||||||
03/16/2016 | — | — | — | — | 2,232 | (4) | 256,769 | — | — | |||||||||||||||||||||||||||
03/22/2017 | — | — | — | — | 6,183 | (5) | 711,292 | 5,034 | (6) | 579,111 | ||||||||||||||||||||||||||
03/21/2018 | — | — | — | — | 3,764 | (7) | 433,011 | 11,508 | (8) | 433,011 | ||||||||||||||||||||||||||
Mr. Reiser | 08/29/2017 | 11,516 | (1) | 34,545 | (1) | 76.89 | 08/29/2027 | — | — | — | — | |||||||||||||||||||||||||
03/21/2018 | — | 25,545 | (2) | 92.98 | 03/21/2028 | — | — | — | — | |||||||||||||||||||||||||||
03/21/2018 | — | — | — | — | 3,262 | (7) | 375,260 | 9,975 | (8) | 1,147,524 |
(1) | Part of a time-based options grant with a vesting schedule of 25% per year on each of the first four anniversaries of the grant date. |
(2) | Part of a time-based options grant with a vesting schedule of 25% per year on each of the first four anniversaries of the April 1 following the grant date. |
(3) | Part of a time-based options grant with a vesting schedule of 33 1/3% per year on each of the third, fourth, and fifth anniversaries of the grant date. |
(4) | Part of PSUs earned as a result of our fiscal 2016 adjusted EBITDA and adjusted ROIC performance and scheduled to vest on April 1, 2019. |
(5) | Part of a PSU grant, 59% of which were earned as a result of our fiscal 2017 adjusted EBITDA performance and are scheduled to vest 50% per year on each of April 1, 2019 and April 1, 2020 and 41% of which were earned as a result of our fiscal 2017-2018 adjusted ROIC performance and are scheduled to vest on April 1, 2019. |
(6) | Part of a PSU grant that is scheduled to vest on April 1, 2020 if the adjusted ROIC performance goal is achieved for fiscal years 2017-2019. The number of PSUs reported in this column assumes achievement of the maximum level of adjusted ROIC performance for the performance period. The actual number of PSUs earned, if any, will be determined based on the actual level of adjusted ROIC performance achieved for the performance period. |
(7) | Part of a PSU grant that was earned as a result of our fiscal 2018 adjusted EBITDA performance and is scheduled to vest 33 1/3% per year on each of the first three anniversaries of the April 1 following the grant date. |
(8) | Part of a PSU grant that is scheduled to vest on April 1, 2021 if the adjusted ROIC performance goal is achieved for fiscal years 2018-2020. The number of PSUs reported in this column assumes achievement of the maximum level of adjusted ROIC performance for the performance period. The actual number of PSUs earned, if any, will be determined based on the actual level of adjusted ROIC performance achieved for the performance period. |
(9) | Computed by multiplying the number of shares or units by the closing market price of one share of our common stock on February 1, 2019 as reported by the NYSE. |
2019 Proxy Statement 33 |
EXECUTIVE COMPENSATION
Option Exercises and Stock Vested During Fiscal 2016
2018
| | Option Awards | | Stock Awards | | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | | Number of Shares Acquired on Exercise (#)(1) | | Value Realized on Exercise ($)(2) | | Number of Shares Acquired on Vesting (#)(3) | | Value Realized on Vesting ($)(4) | | ||||||||||||
Mr. Vasos | | | — | | | | — | | | | 17,558 | | | | 1,392,973 | | | ||||
Mr. Garratt | | | — | | | | — | | | | 2,637 | | | | 198,581 | | | ||||
Mr. Owen | | | — | | | | — | | | | 2,234 | | | | 163,395 | | | ||||
Ms. Taylor | | | 2,358 | | | | 140,985 | | | | 4,916 | | | | 393,116 | | | ||||
Mr. Thorpe | | | — | | | | — | | | | 2,234 | | | | 163,395 | | |
Option Awards | Stock Awards | |||||||||||||||||
Name | Number of Shares Acquired on Exercise (#)(1) | Value Realized on Exercise ($)(2) | Number of Shares Acquired on Vesting (#)(3) | Value Realized on Vesting ($)(4) | ||||||||||||||
Mr. Vasos | — | — | 32,770 | 3,065,634 | ||||||||||||||
Mr. Garratt | — | — | 7,949 | 743,629 | ||||||||||||||
Mr. Owen | — | — | 7,127 | 666,731 | ||||||||||||||
Mr. Ravener | 87,107 | 5,659,045 | 10,179 | 952,245 | ||||||||||||||
Mr. Reiser | — | — | — | — |
(1) | Represents the gross number of option shares exercised, without deduction for shares that may have been surrendered or withheld to satisfy the exercise price or applicable tax withholding obligations. |
(2) | Value realized is calculated by multiplying the gross number of options exercised by the difference between the market price of our common stock at exercise as reported by the NYSE and the exercise price. |
(3) | Represents the gross number of shares acquired upon vesting of PSUs and RSUs, as applicable, without deduction for shares that may have been withheld to satisfy applicable tax withholding obligations. |
(4) | Value realized is calculated by multiplying the gross number of shares vested by the closing market price of our common stock on the vesting date as reported by the NYSE. |
Pension Benefits
Fiscal 2016
2018
We have omitted the Pension Benefits table because it is inapplicable.
Nonqualified Deferred Compensation
Fiscal 2016
2018
Information regarding each named executive officer'sofficer’s participation in our CDP/SERP PlanCDP is included in the following table. The material terms of the CDP/SERP PlanCDP are described after the table. Please also see "Benefits“Benefits and Perquisites"Perquisites” in "Compensation“Compensation Discussion and Analysis"Analysis” above. We have omitted from this table the column pertaining to "Aggregate“Aggregate Withdrawals/Distributions"Distributions” during the fiscal year because it is inapplicable.
Name | Executive Contributions in Last FY ($)(1) | Registrant Contributions in Last FY ($)(2) | Aggregate Earnings in Last FY ($)(3) | Aggregate Balance at Last FYE ($)(4) | ||||||||||||
Mr. Vasos | 155,495 | 45,665 | 2,251 | 1,231,374 | ||||||||||||
Mr. Garratt | 35,326 | 21,363 | (2,090 | ) | 169,431 | |||||||||||
Mr. Owen | 32,633 | 19,036 | (2,852 | ) | 166,067 | |||||||||||
Mr. Ravener | 28,944 | 15,358 | (4,716 | ) | 595,322 | |||||||||||
Mr. Reiser | 33,224 | 22,101 | (316 | ) | 60,356 |
(1) | Of the reported amounts, the following are reported in the Summary Compensation Table as “Salary” for 2018: Mr. Vasos ($59,444); Mr. Garratt ($35,326); Mr. Owen ($32,633); Mr. Ravener ($28,944); and Mr. Reiser ($33,224). |
(2) | Reported as “All Other Compensation” in the Summary Compensation Table. |
(3) | The amounts shown are not reported in the Summary Compensation Table because they do not represent above-market or preferential earnings. |
(4) | Of the amounts reported, the following were previously reported as compensation for years prior to 2018 in a Summary Compensation Table: Mr. Vasos ($836,633); Mr. Garratt ($99,643); Mr. Owen ($97,556); Mr. Ravener ($112,887); and Mr. Reiser ($0). |
34 2019 Proxy Statement |
Name | | Executive Contributions in Last FY ($)(1) | | Registrant Contributions in Last FY ($)(2) | | Aggregate Earnings in Last FY ($)(3) | | Aggregate Balance at Last FYE ($)(4) | | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mr. Vasos | | | 101,996 | | | | 40,502 | | | | 102,514 | | | | 778,627 | | | ||||
Mr. Garratt | | | 25,580 | | | | 12,272 | | | | 2,505 | | | | 42,466 | | | ||||
Mr. Owen | | | 30,696 | | | | 17,377 | | | | 3,191 | | | | 53,797 | | | ||||
Ms. Taylor | | | 26,969 | | | | 81,144 | | | | 29,216 | | | | 345,506 | | | ||||
Mr. Thorpe | | | 422,328 | | | | 19,163 | | | | 29,917 | | | | 506,176 | | |
EXECUTIVE COMPENSATION
Pursuant to the CDP, each named executive officer may annually elect to defer up to 65% of his base salary if his compensation exceeds the limit set forth in Section 401(a)(17) of the Internal Revenue Code, and up to 100% of his bonus pay if his compensation equals or exceeds the highly compensated limit under Section 414(q)(1)(B) of the Internal Revenue Code. We currently match base pay deferrals at a rate of 100%, up to 5% of annual salary, with annual salary offset by the amount of match-eligible salary under the 401(k) Plan. All named executive officers are 100% vested in all compensation and matching deferrals and earnings on those deferrals.
Pursuant to the SERP, we make an annual contribution equal to a certain percentage of a participant's annual salary and bonus to eligible participants who are actively employed in an eligible job grade on January 1 and continue to be employed as of December 31 of a given year. The contribution percentage is based on age, years of service and job grade. Persons hired after May 27, 2008 are not eligible to participate in the SERP. The fiscal 2016 contribution percentage was 7.5% for Ms. Taylor, and she is 100% vested in her SERP account. No other named executive officer was eligible to participate in the SERP in 2016.
The amounts deferred or contributed to the CDP/SERP PlanCDP are credited to a liability account, which is then invested at the participant'sparticipant’s option in an account that mirrors the performance of a fund or funds selected by the Compensation Committee or its delegate. Beginning on August 2, 2008, theseThese funds are identical to the funds offered in our 401(k) Plan.
For a participant who ceases employment with at least 10 years of service or after reaching age 50 and whose CDP account balance or SERP account balance exceeds certain dollar thresholds, the account balance will be paid by (a) lump sum, (b) monthly installments over a 5, 10 or15-year period or (c) a combination of lump sum and installments, pursuant to the participant'sparticipant’s election. Otherwise, payment is made in a lump sum. The vested amount will be payable at the time designated
by the CDP/SERP PlanCDP upon the participant'sparticipant’s termination of employment. A participant's CDP/SERPparticipant’s CDP benefit normally is payable in the following February if employment ceases during the first 6 months of a calendar year or is payable in the following August if employment ceases during the last 6 months of a calendar year. However, participants may elect to receive anin-service lump sum distribution of vested amounts credited to the CDP account, provided that the date of distribution is no sooner than 5 years after the end of the year in which the amounts were deferred. In addition, a participant who is actively employed may request an "unforeseeable“unforeseeable emergency hardship" hardship”in-service lump sum distribution of vested amounts credited to the participant'sparticipant’s CDP account. Account balances are payable in cash.
As a result of our change in control which occurred in 2007, the CDP/SERP PlanCDP liabilities through July 6, 2007 were fully funded into an irrevocable rabbi trust. We also funded into the rabbi trust deferrals into the CDP/SERP PlanCDP between July 6, 2007 and October 15, 2007. All CDP/SERP PlanCDP liabilities incurred on or after October 15, 2007 are unfunded.
Potential Payments upon Termination or Change in Control
Our agreements with our named executive officers and certain plans and programs in which our named executivesuch officers participate, in each case as in effect at the end of our 20162018 fiscal year, provide for benefits or payments upon certain employment termination or change in control events. TheseWe discuss these benefits and payments are discussed below except to the extent a benefit or payment isthey are available generally to all salaried employees and doesdo not discriminate in favor of our executive officers or to the extent already discussed under "Nonqualified“Nonqualified Deferred Compensation Fiscal 2016"2018” above. The discussion of equity awards in each scenario below includes nonqualified stock options outstanding as of the end of our 2018 fiscal year, as well as PSUs awarded in 2016 (“2016 PSUs”), 2017 (“2017 PSUs”), and 2018 (“2018 PSUs”) to each named executive officer employed by us at the time of the applicable award.
Payments Upon Termination Due to Death or Disability
Pre-2012 Equity Awards.Awards Ms. Taylor has options outstanding that were granted prior to 2012. All such options are fully vested and generally may be exercised for a period of one year from termination of employment due to death or disability (as defined in the applicable award agreement) unless such options have expired earlier.
Post-2011 Equity Awards.If a named executive officer'sofficer’s employment with us terminates due to death or disability (as defined in the applicable awardgoverning agreement):
• | Stock Options. Any outstanding unvested stock option shall become immediately vested and exercisable with respect to 100% of the underlying shares immediately prior to such event, and such vested options may be exercised until the 1st anniversary of the termination date but no later than the 10th anniversary of the grant date. |
• | Performance Share Units. Except as described below, any unearned or unvested PSUs shall be forfeited and cancelled on the termination date or the last day of the performance period, as applicable. |
✓ | 2016 PSUs. Any remaining earned but unvested 2016 PSUs shall become vested and nonforfeitable as of the termination date and shall be paid within 30 days thereafter. |
✓ | 2017 PSUs. Any earned but unvested 2017 PSUs subject to theone-year goal (the “2017 Adjusted EBITDA PSUs”) shall become vested and nonforfeitable as of the termination date but shall be paid at the same time as if no termination had occurred. The remaining portion of the 2017 PSUs subject to the Adjusted ROIC goals (the “2017 Adjusted ROIC PSUs”) are allocated to atwo-year and a three-year performance period (each an |
date of such event and shall be paid within 30 days thereafter. Otherwise, any earned but unvested PSUs from such awards shall be forfeited and cancelled on the date of the termination of employment.
2019 Proxy Statement 35 |
EXECUTIVE COMPENSATION
“ROIC performance period”). For the 2017 Adjusted ROIC PSUs allocated to each such ROIC performance period, if the termination occurs before the end of the applicable ROIC performance period, apro-rata portion (based on months employed during the applicable ROIC performance period) of the 2017 Adjusted ROIC PSUs earned based on performance during the entire applicable ROIC performance period shall become vested and nonforfeitable as of the applicable April 1 vesting date and shall be paid at the same time as if no termination had occurred. If the termination occurs on or after the end of the applicable ROIC performance period, any remaining earned but unvested 2017 Adjusted ROIC PSUs attributable to such ROIC performance period shall become vested and nonforfeitable as of the termination date but shall be paid at the same time as if no termination had occurred. |
✓ | 2018 PSUs. If the termination occurs before the end of the applicableone-year or three-year performance period, apro-rata portion (based on months employed during theone-year performance period) ofone-third of the 2018 PSUs subject to theone-year goal (the “2018 Adjusted EBITDA PSUs”) and apro-rata portion (based on months employed during the three-year performance period) of the 2018 PSUs subject to the three-year goal (the “2018 Adjusted ROIC PSUs”), in each case earned based on performance during the entire applicable performance period, shall become vested and nonforfeitable as of the end of the applicable performance period and shall be paid at the same time as if no termination had occurred. If the termination occurs on or after the end of the applicableone-year or three-year performance period but before an applicable vesting date, any earned but unvested 2018 PSUs shall become vested and nonforfeitable as of the termination date but shall be paid at the same time as if no termination had occurred. |
Other Payments.Payments
In the event of death, a named executive officer'sofficer’s beneficiary will receive payments under our group life insurance program in an amount, up to a maximum of $3$4 million, equal to 2.5 times such officer'sofficer’s annual base salary. In addition, in the event of disability (as defined in the governing document), a named executive officer would receive 60% of covered monthly earnings up to a $20,000 per monthmonthly benefit under our long-term disability insurance program. In the event of death or disability (as defined in the CDP/SERP Plan)CDP), a named executive officer's CDP/SERP Planofficer’s CDP benefit will be payable in a lump sum within 60 days after the end of the calendar quarter in which such termination event occurs, provided that we may delay payment in the event of disability until as soon as reasonably practicable after receipt of the disability
determination by the Social Security Administration. Dependent upon the cause of death or loss suffered, a named executive officer may also be eligible to receive payment of up to $50,000 under our group accidental death & dismemberment program. Additionally, in the event of death on or after the last day of a fiscal year, a named executive officer will receive payment for his or her incentive bonus earned for that fiscal year under the terms of our Teamshare program (which otherwise generally requires that a participant remain employed on the payment date to be entitled to any incentive bonus earned for that fiscal year).
Payments Upon Termination Due to Retirement
Except as provided immediately below with respect to stock options, PSUs and RSUs awarded after 2011,equity awards, retirement (as defined in the applicable governing document) is not treated differently from any other voluntary termination without good reason (as defined in the relevant agreements, and as discussed below under "Payments“Payments Upon Voluntary Termination"Termination”) under any of our plans or agreements for named executive officers.
In the event a named executive officer retires:
• | Stock Options. The portion of the outstanding unvested stock options that would have become vested and exercisable within theone-year period following the retirement date if such officer had remained employed with us shall remain outstanding for a period of one year following the retirement date and shall become vested and exercisable on the anniversary of the grant date that falls within theone-year period following the retirement date. However, if during suchone-year period the officer dies or incurs a disability or, for options granted prior to 2016, a change in control occurs, such portion shall instead become immediately vested and exercisable upon such death, disability or change in control. Otherwise, any option which is unvested and unexercisable on the termination date shall immediately expire without payment. The officer may exercise the option to the extent vested and exercisable any time prior to the 5th anniversary of the retirement date, but no later than the 10th anniversary of the grant date. |
• | Performance Share Units. Except as described below, any unearned or unvested PSUs shall be forfeited and cancelled on the retirement date or the last day of the performance period, as applicable. |
✓ | 2016 PSUs. Any remaining earned but unvested 2016 PSUs would become vested and nonforfeitable and would be paid on the retirement date. |
PSUs in the death and disability scenarios discussed above for the 2016 PSUs during these respective time periods.
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✓ | 2017 PSUs. If the retirement occurs before the next April 1 vesting date,one-third of the earned 2017 Adjusted EBITDA PSUs that would have become vested on the next vesting date shall become vested and nonforfeitable as of the retirement date but shall be paid at the same time as if no retirement had occurred. The vesting and payment of the 2017 Adjusted ROIC PSUs in a retirement scenario is identical to the vesting and payment in the death and disability scenarios discussed above for the 2017 Adjusted ROIC PSUs. |
✓ | 2018 PSUs. With the exception outlined below, the vesting and payment of the 2018 PSUs in a retirement scenario before the end of the applicableone-year or three-year performance period and on or after the end of such periods is identical to the vesting and payment in the death and disability scenarios discussed above for the 2018 PSUs during these respective time periods. However, if the retirement occurs on or after the end of theone-year performance period but before an applicable vesting date,one-third of the 2018 Adjusted EBITDA PSUs that would have become vested on the next vesting date shall become vested and nonforfeitable as of the retirement date but shall be paid at the same time as if no retirement had occurred. |
✓ | See “Payments After a Change in Control” for a discussion of treatment of the 2017 PSUs and the 2018 PSUs if a named executive officer terminates employment due to retirement within two years following a change in control. |
Payments Upon Voluntary Termination
The payments to be made to a named executive officer upon voluntary termination vary depending upon whether the resignation occurs with or without "good reason"“good reason” (as defined in each named executive officer's employment agreement or equity award agreement, as applicable)the applicable governing agreement) or after our failure to offer to renew, extend or replace the applicable employment agreement under certain circumstances.
Voluntary Termination with Good Reason or After Failure to Renew the Employment Agreement.Agreement
If a named executive officer resigns with good reason (as defined in the applicable equity award agreement), he or she will forfeit all then unvested equity awards and generally may exercise any outstanding vested options up to 90 days following the resignation date, but no later than the 10th anniversary of the grant date. Solely with respect to the special stock option awards granted to Mr. Vasos on June 3, 2015 and March 16, 2016, Mr. Vasos will be required to hold any net shares acquired upon exercise for a period of time ending on
the fifth5th anniversary of the applicable grant date. If a named executive officer resigns under the circumstances described in (2) below, his or her equity will be treated as described under "Voluntary“Voluntary Termination without Good Reason"Reason” below. See "Payments“Payments After a Change in Control"Control” for a discussion of treatment of equity awards if a named executive officer resigns with good reason within two years following a change in control.
If a named executive officer resigns (1) with good reason (as defined in the applicable employment agreement) after giving 30 days (90 days in the case of Mr. Vasos) written notice within 30 days after the event purported to give rise to the claim for good reason and opportunity for us to cure any such claimed event within 30 days after receiving such notice, or (2) within 60 days (90 days in the case of Mr. Vasos) of our failure to offer to renew, extend, or replace his or her employment agreement before, at, or within 6 months (one(1 year in the case of Mr. Vasos) after the end of the agreement'sagreement’s term (unless we enter into a mutually acceptable severance arrangement or the resignation is a result of the named executive officer'sofficer’s retirement or termination other than for good reason), then in each case the named executive officer will receive the following benefits generally on or beginning on the 60th day after termination of employment but contingent upon the execution and effectiveness of
a release of certain claims against us and our affiliates in the form attached to the employment agreement:
A lump sum payment ofof: (1) for Mr. Vasos, two times the average percentageamount of the named executive officer'shis annual target bonus paid or to be paid to employees at the same job grade level as the named executive officer (if any) under theour annual bonus program for officers for the two fiscal years immediately preceding the fiscal year in which the termination date occurs (for Mr. Vasos, such lump sum payment instead will equal two times his annual target bonus in respect of the fiscal year in which his termination occurs)occurs; and (2) for each other named executive officer, two times the amount of the average percentage of target bonus paid to the named executive officer under our annual bonus program for officers with respect to our two most recently completed fiscal years (not including a fiscal year for which the Compensation Committee has not yet certified financial performance) for which annual bonuses have been paid to executives under such program multiplied by such officer’s (A) target bonus level and (B) base salary (in each case, as applicable as of the date immediately preceding the employment termination or, if the termination is for good reason due to the reduction of such officer’s target bonus level or base salary, then his target bonus level and base salary applicable immediately
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EXECUTIVE COMPENSATION
prior to such reduction). If no bonus was paid to such officer with respect to one or both of the applicable fiscal years due to Dollar General’s performance or individual performance (as opposed to ineligibility due to length of employment), then such bonus amount shall be zero in calculating the average. |
Note that any amounts owed to a named executive officer in the form of salary continuation that would otherwise have been paid during the 60 day60-day period after employment termination will instead be payable in a single lump sum on the 60th day after such termination date and the remainder will be paid in the form of salary continuation payments over the remaining 24 month24-month period as set forth above.
However, inIn certain cases, some or all of the payments and benefits provided on termination of employment may be delayed for six months following termination to comply with the requirements of Section 409A of the Internal Revenue Code. Any payment required to be delayed would be paid at the end of thesix-month period in a lump sum, and any payments due after thesix-month period would be paid at the normal payment date provided for under the applicable employment agreement.
To the extent permitted by applicable law, in the event we reasonably believe that the named executive officer engaged in conduct during employment that would have resulted in his termination for cause, any unpaid severance amounts under the applicable employment agreement may be forfeited and we may seek to recover such portion of any severance amounts paid under the applicable employment agreement.
The named executive officer will forfeit any unpaid severance amounts, and we retain any other rights we have available under law or equity, upon a material breach of any continuing obligation under the applicable employment agreement or the release, which include the following business protection provisions:
position"“competitive position” means any employment, consulting, advisory, directorship, agency, promotional, or independent contractor arrangement between the named executive officer and any person engaged wholly or in material part in the business in which we are engaged (including, but not limited to, those entities identified in the applicable employment agreement), or any person then planning to enter the discount consumable basics retail business, if the named executivesuch officer is required to perform services which are substantially similar to those he or she provided or directed at any time while employed by us.
In addition, each named executive officer’s rights, payments, and benefits with respect to any incentive compensation (in the form of cash or equity) shall be subject to any reduction, cancellation, forfeiture, or recoupment, in whole or in part, upon the occurrence of certain specified events, as may be required by any applicable law, rule or regulation, by any applicable national exchange, or by a separate Dollar General clawback or recoupment policy.
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Voluntary Termination without Good Reason.Reason
If a named executive officer resigns without good reason, he or she will forfeit all then unvested equity awards as well as all vested but unexercised options that were granted prior to 2012. The named executive officerand generally may exercise any outstanding vested options that were granted after 2011 up to 90 days following the resignation date, but no later than the 10th anniversary of the grant date. Solely with respect to the special stock option awards granted to Mr. Vasos on June 3, 2015 and March 16, 2016, Mr. Vasos will be required to hold any net shares acquired upon exercise for a period of time ending on the fifth5th anniversary of the applicable grant date.
Payments Upon Involuntary Termination
The payments to be made to a named executive officer upon involuntary termination vary depending upon whether termination is with or without "cause"“cause” (as defined in each named executive officer's employment agreement or equity award agreement, as applicable)the applicable governing agreement).
Involuntary Termination with Cause.Cause
Upon an involuntary termination with cause, a named executive officer will forfeit all unvested equity grants,awards, all vested but unpaid PSUs and all vested but unexercised options.
Involuntary Termination without Cause.Cause
Upon an involuntary termination without cause, a named executive officer:
• | Generally may exercise any outstanding vested options up to 90 days following the termination date, but no later than the 10th anniversary of the grant date. Solely with respect to the special stock option awards granted to Mr. Vasos on June 3, 2015 and March 16, 2016, Mr. Vasos will be required to hold any net shares acquired upon exercise for a period of time ending on the 5th anniversary of the applicable grant date. |
See "Payments“Payments After a Change in Control"Control” for a discussion of the treatment of equity awards if a named executive officer is involuntarily terminated without cause within two years following a change in control.
Payments After a Change in Control
Upon a change in control (as defined under the applicable governing document), regardless of whether the named executive officer'sofficer’s employment terminates:
A named executive officer will have one year from the termination date (but no later than the 10th anniversary of the grant date) in which to exercise outstanding vested options that were granted prior to 2016 shall vest, become nonforfeitable and be paid upon the change in control.
Upon the named executive officer's "qualifyingofficer’s “qualifying termination,"” which includes involuntary termination without cause or resignation with good reason (unless cause to terminate exists), in each case as defined in the applicable equity award agreement, as well as voluntary resignation due to retirement (unless cause to terminate exists) as defined in the applicable equity award agreement in the case of 2017 PSUs and 2018 PSUs, in each case within two years following a change in control (provided that the officer was continuously employed by us until the change in control) and as each is defined in the applicable equity award agreement,case of 2017 PSUs and 2018 PSUs if the termination also constitutes a “separation from service” within the meaning of Section 409A of the Internal Revenue Code: (1) all of his or heroutstanding unvested options awarded after 2015 will immediately vest and become exercisable as to 100% of the shares subject tounderlying such options on the termination date (but only to the extent such options have not otherwise terminated) and the officer may exercise any outstanding vested options up to three years following the termination date, but no later than the 10th anniversary of the grant date; and (2) all of his or her previously earned, or deemed earned, but unvested PSUs awarded after 2015 that have not been previously forfeited will immediately vest, become nonforfeitable, and be paid
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EXECUTIVE COMPENSATION
on the termination date.date subject, in the case of the 2017 PSUs and 2018 PSUs, to asix-month delay if applicable to comply with Section 409A of the Internal Revenue Code. To qualify as a resignation with good reason for this purpose, the officer must have provided written notice of the existence of the circumstances providing grounds for resignation with good reason within 30 days of the initial existence of such grounds and must have given Dollar General at least 30 days from receipt of such notice to cure such condition. In addition, the resignation must have become effective no later than one year after the initial existence of the condition constituting good reason.
Except as otherwise described above with respect to equity awards, granted after 2015, upon an involuntary termination without cause or a resignation with good reason following the change in control, a named executive officer will receive the same severance payments and benefits as described above under "Voluntary“Voluntary Termination with Good Reason or After Failure to Renew the Employment Agreement." However, a named executive officer will have one year from the termination date (but no later than the 10th anniversary of the grant date) in which to exercise vested options that were granted after 2011 but prior to 2016 if he or she resigns or is involuntarily terminated within two years following the change in control under any scenario other than retirement or involuntary termination with cause (in which respective cases, he or she will have five years from the retirement date (but no later than the 10th anniversary of the grant date) to exercise vested options and will forfeit any vested but unexercised options held at the time of the termination with cause).”
In the event of a change in control as defined in Section 280G of the Internal Revenue Code, each named executive officer'sofficer’s employment agreement provides for capped payments (taking into consideration all payments and benefits covered by such Section 280G280G) of the Internal Revenue Code) of
$1$1 less than the amount that would trigger the "golden parachute"“golden parachute” excise tax under federal income tax rules (the "excise tax"“excise tax”) unless he or she signs a release and the
after-tax benefit would be at least $50,000 more than it would be without capping the payments being capped.payments. In such case, such officer'sofficer’s payments and benefits would not be capped and such officerhe would be responsible for the payment of the excise tax.tax payment. We would not pay any additional amount to cover the excise tax. The table below reflects the uncapped amounts, subject to reduction in the circumstances described in this paragraph.
The following table reflects potential payments to each named executive officer in various termination and change in control scenarios based on compensation, benefit, and equity levels in effect on, and assuming the scenario was effective as of, February 3, 2017.1, 2019. For stock valuations, we have used the closing price of our stock on the NYSE on February 3, 20171, 2019 ($73.14)115.04). The table below reports only amounts that are increased, accelerated, or otherwise paid or owed as a result of the applicable scenario and, as a result, exclude earned but unpaid base salary through the employment termination date and equity awards and CDP/SERP PlanCDP benefits that had vested prior to the event. For more information regarding the CDP/SERP PlanCDP benefits, see "Nonqualified“Nonqualified Deferred Compensation Fiscal 2016"2018” above. The table also excludes any amounts that are available generally to all salaried employees and do not discriminate in favor of our executive officers. The amounts shown are merely estimates. We cannot determine actual amounts to be paid until a termination or change in control scenario occurs.
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EXECUTIVE COMPENSATION
Potential Payments to Named Executive Officers Upon Occurrence of
Various Termination Events or Change in Control as of February 3, 2017
1, 2019
Name/Item | Death ($)(3) | Disability ($)(3) | Retirement ($)(4) | Voluntary ($) | Involuntary ($) | Involuntary With Cause ($) | Change in Control ($) | Change in Control With Qualifying Termination ($) | ||||||||||||||||||||||||
Mr. Vasos | ||||||||||||||||||||||||||||||||
Equity Vesting Due to Event(1) | 28,297,377 | 28,297,377 | n/a | n/a | n/a | n/a | 7,131,948 | 27,425,489 | ||||||||||||||||||||||||
Cash Severance | 1,717,068 | n/a | n/a | n/a | 7,717,068 | n/a | n/a | 7,717,068 | ||||||||||||||||||||||||
Health Payment | n/a | n/a | n/a | n/a | 13,060 | n/a | n/a | 13,060 | ||||||||||||||||||||||||
Outplacement(2) | n/a | n/a | n/a | n/a | 8,500 | n/a | n/a | 8,500 | ||||||||||||||||||||||||
Life Insurance Proceeds | 3,000,000 | n/a | n/a | n/a | n/a | n/a | n/a | n/a | ||||||||||||||||||||||||
Total | 33,014,445 | 28,297,377 | n/a | n/a | 7,738,628 | n/a | 7,131,948 | 35,164,117 | ||||||||||||||||||||||||
Mr. Garratt | ||||||||||||||||||||||||||||||||
Equity Vesting Due to Event(1) | 4,260,312 | 4,260,312 | n/a | n/a | n/a | n/a | 198,043 | 4,054,390 | ||||||||||||||||||||||||
Cash Severance | 518,698 | n/a | n/a | n/a | 2,517,132 | n/a | n/a | 2,517,132 | ||||||||||||||||||||||||
Health Payment | n/a | n/a | n/a | n/a | 21,639 | n/a | n/a | 21,639 | ||||||||||||||||||||||||
Outplacement(2) | n/a | n/a | n/a | n/a | 8,500 | n/a | n/a | 8,500 | ||||||||||||||||||||||||
Life Insurance Proceeds | 1,813,000 | n/a | n/a | n/a | n/a | n/a | n/a | n/a | ||||||||||||||||||||||||
Total | 6,592,010 | 4,260,312 | n/a | n/a | 2,547,271 | n/a | 198,043 | 6,601,661 | ||||||||||||||||||||||||
Mr. Owen | ||||||||||||||||||||||||||||||||
Equity Vesting Due to Event(1) | 4,512,962 | 4,512,962 | n/a | n/a | n/a | n/a | 368,692 | 4,307,615 | ||||||||||||||||||||||||
Cash Severance | 469,697 | n/a | n/a | n/a | 2,279,341 | n/a | n/a | 2,279,341 | ||||||||||||||||||||||||
Health Payment | n/a | n/a | n/a | n/a | 21,639 | n/a | n/a | 21,639 | ||||||||||||||||||||||||
Outplacement(2) | n/a | n/a | n/a | n/a | 8,500 | n/a | n/a | 8,500 | ||||||||||||||||||||||||
Life Insurance Proceeds | 1,642,000 | n/a | n/a | n/a | n/a | n/a | n/a | n/a | ||||||||||||||||||||||||
Total | 6,624,659 | 4,512,962 | n/a | n/a | 2,309,480 | n/a | 368,692 | 6,617,095 | ||||||||||||||||||||||||
Mr. Ravener | ||||||||||||||||||||||||||||||||
Equity Vesting Due to Event(1) | 4,629,512 | 4,629,512 | n/a | n/a | n/a | n/a | 331,027 | 4,408,866 | ||||||||||||||||||||||||
Cash Severance | 416,595 | n/a | n/a | n/a | 2,021,649 | n/a | n/a | 2,021,649 | ||||||||||||||||||||||||
Health Payment | n/a | n/a | n/a | n/a | 21,639 | n/a | n/a | 21,639 | ||||||||||||||||||||||||
Outplacement(2) | n/a | n/a | n/a | n/a | 8,500 | n/a | n/a | 8,500 | ||||||||||||||||||||||||
Life Insurance Proceeds | 1,456,000 | n/a | n/a | n/a | n/a | n/a | n/a | n/a | ||||||||||||||||||||||||
Total | 6,502,107 | 4,629,512 | n/a | n/a | 2,051,789 | n/a | 331,027 | 6,460,654 | ||||||||||||||||||||||||
Mr. Reiser | ||||||||||||||||||||||||||||||||
Equity Vesting Due to Event(1) | 2,384,139 | 2,384,139 | n/a | n/a | n/a | n/a | n/a | 2,391,387 | ||||||||||||||||||||||||
Cash Severance | 477,456 | n/a | n/a | n/a | 2,466,226 | n/a | n/a | 2,466,226 | ||||||||||||||||||||||||
Health Payment | n/a | n/a | n/a | n/a | 21,639 | n/a | n/a | 21,639 | ||||||||||||||||||||||||
Outplacement(2) | n/a | n/a | n/a | n/a | 8,500 | n/a | n/a | 8,500 | ||||||||||||||||||||||||
Life Insurance Proceeds | 1,669,000 | n/a | n/a | n/a | n/a | n/a | n/a | n/a | ||||||||||||||||||||||||
Total | 4,530,595 | 2,384,139 | n/a | n/a | 2,496,365 | n/a | n/a | 4,887,752 |
(1) | For the portion of the 2017 and 2018 PSUs that are subject to performance for periods ending after February 1, 2019, the value included in the Death and Disability columns assumes a maximum payout of 300%, prorated for a death or disability termination scenario occurring on February 1, 2019. |
(2) | Estimated based on information provided by our outplacement services provider. |
(3) | In addition to the amounts reported above, dependent upon the cause of death or the loss suffered, a named executive officer also may be eligible to receive payment of up to $50,000 under our group accidental death & dismemberment program. |
(4) | None of the named executive officers were eligible for retirement on February 1, 2019. |
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EXECUTIVE COMPENSATION
| | Name/Item | | Death ($) | | Disability ($) | | Retirement ($)(1) | | Voluntary Without Good Reason ($) | | Involuntary Without Cause or Voluntary With Good Reason ($) | | Involuntary With Cause ($) | | Change in Control Without Qualifying Termination ($) | | Change in Control With Qualifying Termination ($) | | | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Mr. Vasos | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||
| Equity Vesting Due to Event | | 1,942,859 | | | 1,942,859 | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | 1,349,035 | | | | 2,536,682 | | | ||||||||||
| Cash Severance | | 915,411 | | | n/a | | | | n/a | | | | n/a | | | | 5,315,411 | | | | n/a | | | | — | | | | 5,315,411 | | | ||||||||||
| Health Payment | | n/a | | | n/a | | | | n/a | | | | n/a | | | | 10,632 | | | | n/a | | | | — | | | | 10,632 | | | ||||||||||
| Outplacement(2) | | n/a | | | n/a | | | | n/a | | | | n/a | | | | 8,500 | | | | n/a | | | | — | | | | 8,500 | | | ||||||||||
| Life Insurance Proceeds | | 2,750,000 | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | — | | | | n/a | | | ||||||||||
| Total | | 5,608,270 | | | 1,942,859 | | | | n/a | | | | n/a | | | | 5,334,543 | | | | n/a | | | | 1,349,035 | | | | 7,871,225 | | | ||||||||||
| | |||||||||||||||||||||||||||||||||||||||||
| Mr. Garratt | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||
| Equity Vesting Due to Event | | 345,587 | | | 345,587 | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | 182,193 | | | | 508,690 | | | ||||||||||
| Cash Severance | | 277,981 | | | n/a | | | | n/a | | | | n/a | | | | 1,675,960 | | | | n/a | | | | — | | | | 1,675,960 | | | ||||||||||
| Health Payment | | n/a | | | n/a | | | | n/a | | | | n/a | | | | 21,060 | | | | n/a | | | | — | | | | 21,060 | | | ||||||||||
| Outplacement(2) | | n/a | | | n/a | | | | n/a | | | | n/a | | | | 8,500 | | | | n/a | | | | — | | | | 8,500 | | | ||||||||||
| Life Insurance Proceeds | | 1,285,000 | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | — | | | | n/a | | | ||||||||||
| Total | | 1,908,568 | | | 345,587 | | | | n/a | | | | n/a | | | | 1,705,520 | | | | n/a | | | | 182,193 | | | | 2,214,210 | | | ||||||||||
| | |||||||||||||||||||||||||||||||||||||||||
| Mr. Owen | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||
| Equity Vesting Due to Event | | 163,395 | | | 163,395 | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | — | | | | 326,497 | | | ||||||||||
| Cash Severance | | 333,578 | | | n/a | | | | n/a | | | | n/a | | | | 1,671,094 | | | | n/a | | | | — | | | | 1,671,094 | | | ||||||||||
| Health Payment | | n/a | | | n/a | | | | n/a | | | | n/a | | | | 21,060 | | | | n/a | | | | — | | | | 21,060 | | | ||||||||||
| Outplacement(2) | | n/a | | | n/a | | | | n/a | | | | n/a | | | | 8,500 | | | | n/a | | | | — | | | | 8,500 | | | ||||||||||
| Life Insurance Proceeds | | 1,542,000 | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | — | | | | n/a | | | ||||||||||
| Total | | 2,038,973 | | | 163,395 | | | | n/a | | | | n/a | | | | 1,700,655 | | | | n/a | | | | — | | | | 2,027,152 | | | ||||||||||
| | |||||||||||||||||||||||||||||||||||||||||
| Ms. Taylor | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||
| Equity Vesting Due to Event | | 749,361 | | | 749,361 | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | 585,967 | | | | 912,464 | | | ||||||||||
| Cash Severance | | 293,300 | | | n/a | | | | n/a | | | | n/a | | | | 1,768,319 | | | | n/a | | | | — | | | | 1,768,319 | | | ||||||||||
| Health Payment | | n/a | | | n/a | | | | n/a | | | | n/a | | | | 19,829 | | | | n/a | | | | — | | | | 19,829 | | | ||||||||||
| Outplacement(2) | | n/a | | | n/a | | | | n/a | | | | n/a | | | | 8,500 | | | | n/a | | | | — | | | | 8,500 | | | ||||||||||
| Life Insurance Proceeds | | 1,356,000 | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | — | | | | n/a | | | ||||||||||
| Total | | 2,398,661 | | | 749,361 | | | | n/a | | | | n/a | | | | 1,796,648 | | | | n/a | | | | 585,967 | | | | 2,709,111 | | | ||||||||||
| | |||||||||||||||||||||||||||||||||||||||||
| Mr. Thorpe | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||
| Equity Vesting Due to Event | | 163,395 | | | 163,395 | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | — | | | | 326,497 | | | ||||||||||
| Cash Severance | | 353,036 | | | n/a | | | | n/a | | | | n/a | | | | 1,768,575 | | | | n/a | | | | — | | | | 1,768,575 | | | ||||||||||
| Health Payment | | n/a | | | n/a | | | | n/a | | | | n/a | | | | 19,109 | | | | n/a | | | | — | | | | 19,109 | | | ||||||||||
| Outplacement(2) | | n/a | | | n/a | | | | n/a | | | | n/a | | | | 8,500 | | | | n/a | | | | — | | | | 8,500 | | | ||||||||||
| Life Insurance Proceeds | | 1,632,000 | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | — | | | | n/a | | | ||||||||||
| Total | | 2,148,431 | | | 163,395 | | | | n/a | | | | n/a | | | | 1,796,184 | | | | n/a | | | | — | | | | 2,122,681 | | | ||||||||||
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| (1) None of the named executive officers were eligible for retirement on February 3, 2017. | |
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| (2) Estimated based on information provided by our outplacement services provider. | |
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Compensation Committee Interlocks and Insider Participation
EachNone of Ms. Fili-Krushel or Messrs. Bryant, and Rhodes, and Ms. Fili-KrushelMcGuire, each of whom was a member of our Compensation Committee during 2016. Noneall or a portion of these persons2018: (1) was at any time during 20162018 an officer or employee, of Dollar General or any of our subsidiaries; (2) was at any time prior to 20162018 an officer, of Dollar General or any of our subsidiaries; or (3)(2) had any relationship requiring disclosure under the section of this document entitled "Transactions“Transactions with Management and Others."” Also, none of our executive officers serves, or in the past fiscal year has served, as a director of, or as a member of the compensation committee (or other board committee performing equivalent functions)committee) member of any entity that has one or more of itsan executive officersofficer serving as a director of Dollar General director or as a member of our Compensation Committee.Committee member.
Compensation Risk Considerations
In November 2016,March 2019, our Compensation Committee, with input from its compensation consultant and management, reviewedconducted a risk assessment of our compensation policies and practicesprogram for all employees, including executive officers, to assess the risks that may arise from our compensation programs.officers. The assessment included a review of our compensation programs for certain design features which could potentially encourage excessive risk-taking or otherwise generatecreate risk to Dollar General. As a result of that assessment, the CompensationThe Committee concluded, after considering the degree to which identified risk-aggravating factors were offset by risk-mitigating factors, that the net risks created by our overall compensation program wereare not reasonably likely to have a material adverse effect on Dollar General.
As required by Item 402(u) of RegulationS-K, we are providing the following information about the relationship of the annual total compensation of our
employees and our Chief Executive Officer (our “CEO”). This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described below.
The Compensation Committee rolled forward2018 annual total compensation of the median compensated employee (a part-time store associate) of our temporary, part-time, and full-time employee base who were employed as of the last day of our 2018 fiscal year (February 1, 2019), other than our CEO, was $13,773; our CEO’s 2018 annual total compensation was $10,602,517; and the ratio of these amounts is 1:770.
As of February 1, 2019, our total population consisted of 130,094 compensated employees, of which 73 were located innon-U.S. jurisdictions as follows: Hong Kong (21); China (50); Mexico (1); and Turkey (1). Pursuant to SEC rules, we excluded all such 73non-U.S. employees. After applying this assessmentexemption, the employee population used to identify the median employee consisted of 130,021 temporary, part-time, and full-time employees located solely in March 2017the U.S.
To identify the median compensated employee, we usedW-2 Box 5 Medicare wages for the period from February 3, 2018 (the first day of our 2018 fiscal year) through February 1, 2019 (the last day of our 2018 fiscal year), with such amounts annualized for those permanent employees who did not work for the full year.
The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to consider any changesadopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices. As such, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation program since November 2016practices and reached the same conclusion as it reachedmay utilize different methodologies, exclusions, estimates, and assumptions in November 2016.calculating their own pay ratios.
42 2019 Proxy Statement |
The following tables show the amount of our common stock beneficially owned by the listed persons as of March 21, 2019. For purposes of thesuch tables, below, a person is a "beneficial owner" of“beneficially owns” a security over whichif that person has or shares voting or investment power or which that person has the right to acquire beneficial ownership within 60 days. Unless otherwise noted, to our knowledge these persons have sole voting and investment power over the shares listed. Percentage computations are based on 274,892,175259,178,169 shares of our common stock outstanding as of March 23, 2017.21, 2019.
Security Ownership of Certain Beneficial Owners
The following table shows the amount of our common stock beneficially owned as of March 23, 2017pertains to beneficial ownership by those known by us to beneficially own more than 5% of our common stock.
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class | ||||||
T. Rowe Price Associates, Inc.(1) | 25,102,029 | 9.7 | % | |||||
BlackRock, Inc.(2) | 22,207,042 | 8.6 | % | |||||
The Vanguard Group(3) | 19,414,565 | 7.5 | % | |||||
Barrow, Hanley, Mewhinney & Strauss, LLC(4) | 14,226,902 | 5.5 | % |
(1) | T. Rowe Price Associates, Inc. has sole power to vote or direct the vote of 9,222,624 shares and sole power to dispose or direct the disposition of 25,102,029 shares. The address of T. Rowe Price Associates, Inc. is 100 E. Pratt Street, Baltimore, Maryland 21202. All information is based solely on Amendment No. 3 to Statement on Schedule 13G filed on February 14, 2019. |
(2) | BlackRock, Inc., through various subsidiaries, has sole power to vote or direct the vote of 19,842,840 shares and sole power to dispose or direct the disposition of 22,207,042 shares. The address of BlackRock, Inc. is 55 East 52nd Street, New York, New York 10055. All information is based solely on Amendment No. 4 to Statement on Schedule 13G filed on February 4, 2019. |
(3) | The Vanguard Group has sole power to vote or direct the vote of 322,416 shares, shared power to vote or direct the vote of 77,325 shares, sole power to dispose or direct the disposition of 19,018,878 shares, and shared power to dispose or direct the disposition of 395,687 shares. Vanguard Fiduciary Trust Company, a wholly owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 241,241 shares as a result of its serving as investment manager of collective trust accounts, and Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 232,500 shares as a result of its serving as investment manager of Australian investment offerings. The address of The Vanguard Group is 100 Vanguard Blvd., Malvern, Pennsylvania 19355. All information is based solely on Amendment No. 5 to Statement on Schedule 13G filed on February 11, 2019. |
(4) | Barrow, Hanley, Mewhinney & Strauss, LLC has sole power to vote or direct the vote of 5,194,706 shares, shared power to vote or direct the vote of 9,032,196 shares, and sole power to dispose or direct the disposition of 14,226,902 shares. The address of Barrow, Hanley, Mewhinney & Strauss, LLC is 2200 Ross Avenue, 31st Floor, Dallas, Texas 75201-2761. All information is based solely on Statement on Schedule 13G filed on February 11, 2019. |
2019 Proxy Statement 43 |
Name and Address of Beneficial Owner | | Amount and Nature of Beneficial Ownership | | Percent of Class |
---|---|---|---|---|
T. Rowe Price Associates, Inc.(1) | | 30,616,623 | | 11.1% |
GIC Private Limited(2) | | 24,086,726 | | 8.8% |
BlackRock, Inc.(3) | | 21,672,311 | | 7.9% |
The Vanguard Group(4) | | 16,869,920 | | 6.1% |
SECURITY OWNERSHIP
Security Ownership of Officers and Directors
The following table shows the amountpertains to beneficial ownership of our common stock beneficially owned as of March 23, 2017 by our current directors and our named executive officers individually and byto our current directors and all of our current executive officers as a group. Unless otherwise noted, theseThese persons may be contacted at our executive offices.
Name of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class | |||||||||||||||||||
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Warren F. Bryant(1)(2) | * | ||||||||||||||||||||
Michael M. Calbert(1)(2)(3) | * | ||||||||||||||||||||
Sandra B. Cochran(1)(2) | * | ||||||||||||||||||||
Patricia D. Fili-Krushel(1)(2)(4) | * | ||||||||||||||||||||
| * | ||||||||||||||||||||
William C. Rhodes, III(1)(2) | * | ||||||||||||||||||||
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Todd J. Vasos(1) | * | ||||||||||||||||||||
John W. Garratt(1) | * | ||||||||||||||||||||
Jeffery C. Owen(1) | * | ||||||||||||||||||||
| * | ||||||||||||||||||||
| * | ||||||||||||||||||||
All current directors and executive officers as a group | * |
* | Denotes less than 1% of class. |
(1) | Includes the following number of shares (1) underlying RSUs (including |
(2) | Share totals have been rounded to the nearest whole share. |
(3) | Mr. Calbert shares voting and investment power over 51,000 shares with his spouse, Barbara Calbert, asco-trustee of The Michael and Barbara Calbert 2007 Joint Revocable Trust. |
(4) | Ms. Fili-Krushel shares voting and investment power over 2,500 shares with her spouse, Kenneth Krushel. |
(5) | Mr. Rhodes shares voting and investment power over 23,597 shares with his spouse, Amy Rhodes, as power of attorney of The Amy Plunkett Rhodes Revocable Living Trust, dated July 30, 2014. |
Section 16(a) Beneficial Ownership Reporting Compliance
The U.S. securities laws require our executive officers, directors, and greater than 10% shareholders to file reports of ownership and changes in ownership on Forms 3, 4, and 5 with the SEC. Based solely upon a review of these reports
furnished to us during and with respect to the RSUs)2018, or written representations that are or could be settleable within 60 days of March 23, 2017 over which the person will not have voting or investment power until the RSUs are settled: Mr. Bryant (3,285); Mr. Calbert (6,500); Mss. Cochran and Fili-Krushel and Mr. Rhodes (1,634); Ms. Price (3,337); Mr. Rickard (5,821); Mr. Vasos (1,802); Mr. Garratt (402); Ms. Taylor (1,321); and all current directors and executive officers as a group (30,002). Also includes the following number of shares subject to options either currently exercisable or exercisable within 60 days of March 23, 2017 over which the person will not have voting or investment power until the options are exercised:no Form 5 reports were required, we believe that each of Messrs. Bryant, Calbert and Rhodes (18,340); Ms. Cochran (9,704); Ms. Fili-Krushel (9,476); Ms. Price (2,399); Mr. Rickard (18,097); Mr. Vasos (147,833); Mr. Garratt (17,701); Mr. Owen (17,152); Ms. Taylor (51,835); Mr. Thorpe (22,413); and all current directors and executive officers asthose persons filed, on a group (597,318). Further includestimely basis, the following number of shares underlying earned PSUs that are or could be settleable within 60 days of March 23, 2017 over which the person will not have voting or investment power until the PSUs are settled: Mr. Vasos (10,002); Mr. Garratt (2,654); Mr. Owen (2,234); Ms. Taylor (3,615); Mr. Thorpe (2,234); and all current directors and executive officers as a group (25,604). The shares described in this note are considered outstanding for the purpose of computing the percentage of outstanding stock ownedreports required by each named person and by the group but not for the purpose of computing the percentage ownership of any other person.
PROPOSAL 2:VOTE REGARDING THE AMENDED AND RESTATED2007 STOCK INCENTIVE PLAN
What are shareholders being asked to approve?
Our Board of Directors is asking you to approve the material termsSection 16(a) of the performance goals under our Dollar General Corporation Amended and Restated 2007 Stock Incentive Plan (the "Stock Incentive Plan") for purposes of compensation deductibility under Internal Revenue Code Section 162(m) and an annual limit on non-employee director compensation set forth in the Stock Incentive Plan.For the avoidance of doubt, approval of this Proposal 2 will not in any way impact or increase the number of shares available for awards under the Stock Incentive Plan, will not expand the types of awards available under or the types of individuals eligibleExchange Act.
44 2019 Proxy Statement |
PROPOSAL 2:Advisory Vote to participate in the plan, and will not extend the term of the plan.
On November 30, 2016, upon the recommendation of our Compensation Committee, our Board of Directors approved a revision to the performance goals and the addition of an annual limit on non-employee director compensation (subject to exception approved by the Board in extraordinary circumstances), in each case as set forth in the Stock Incentive Plan and described in this proposal, subject to shareholder approval at the annual meeting, neither of which shall be effective unless and until such shareholder approval is obtained. A copy of the Stock Incentive Plan, including the changes being submitted to shareholders at the annual meeting, is attached asAppendix B to this proxy statement.
Why are shareholders being asked to approve the material terms of the performance goals under the Stock Incentive Plan?
Section 162(m) of the Internal Revenue Code limits our ability to deduct from our U.S. federal corporate income taxes compensation in excess of $1 million per year paid to "covered employees" (generally consisting of each of the persons who were, at the end of each fiscal year, our ChiefApprove Named Executive Officer or one of the other named executive officers other than our Chief Financial Officer) unless the compensation qualifies as "performance-based." Compensation cannot qualify as "performance-based" unless the material terms of the performance goals are disclosed to and approved by shareholders every five years. For purposes of Section 162(m), material terms include (i) the employees eligible to receive compensation, (ii) a description of the business criteria on which the performance goals may be based and (iii) the maximum amount of compensation that can be paid to an employee under the plan if the performance goals are achieved. Each of these material terms as they relate to the Stock Incentive Plan is discussed below, and shareholder approval of this Proposal 2 will be deemed to constitute approval of the material terms of the performance goals under the Stock Incentive Plan for purposes of the shareholder approval requirements of Section 162(m).
The Stock Incentive Plan was established in 2007 and is designed to permit Dollar General to grant awards that qualify as performance-based compensation for purposes of satisfying the requirements of Section 162(m). Shareholders last approved the material terms of the performance goals under the Stock Incentive Plan in 2012. Shareholder approval of the material terms of the performance goals under the Stock Incentive Plan is only one of several requirements for amounts paid under the Stock Incentive Plan to qualify for the "performance-based compensation" exemption, and any such approval should not be viewed as a guarantee that we will be able to deduct any or all compensation under the Stock Incentive Plan. In addition, nothing in this proposal or in the Stock Incentive Plan precludes us or the Compensation Committee from making any payment or granting any awards that are not intended to qualify for tax deductibility under Section 162(m).
Why are shareholders being asked to approve the annual limit on non-employee director compensation set forth in the Stock Incentive Plan?
The Stock Incentive Plan imposes a maximum $750,000 limit on the compensation, measured as the sum of any cash compensation and the grant date fair value of awards granted under the Stock Incentive Plan, which may be paid and awarded to a non-employee director for such service during any fiscal year. Our Board of Directors adopted this provision in order to place a reasonable limit on the aggregate amount of cash and equity compensation that may be awarded to each non-employee director during each fiscal year. In setting this limit, our Board, on the recommendation of the Compensation Committee and based on the input provided by the Compensation Committee's independent compensation consultant, considered the effectiveness and reasonableness of the cash and equity compensation that we offer to our non-employee directors along with industry benchmarks, the current and future responsibilities of our non-employee directors, and whether such a limit provides sufficient flexibility to adjust non-employee director compensation in the future if such changes are advisable to remain competitive with our peers. We believe that such a limit allows us to stay within reasonable bounds of what the market requires in a competitive environment, while also placing meaningful restrictions on the amount of compensation that may be awarded to our non-employee directors.
Why should shareholders approve this proposal?
We believe the Stock Incentive Plan is important to our continued growth and success. Its purpose is to attract and retain management and other personnel and key service providers, to motivate management personnel by means of growth-related incentives to achieve long-range goals, and to further align the interests of plan participants with those of our shareholders.
Approval of this proposal will, among other things, preserve what we believe is an essential tool to provide an incentive for management and other personnel and key service providers to contribute to our future growth and success and will provide a meaningful limit within which our Board of Directors and the Compensation Committee, along with its independent compensation consultant, can determine non-employee director compensation.
What happens if shareholders do not approve this proposal?
If this proposal is not approved at the annual meeting:
How does the Stock Incentive Plan compare to compensation best practices?
The Stock Incentive Plan includes a number of important provisions, summarized below, that are designed to protect our shareholders' interests and that reflect our commitment to best practices and effective management of equity compensation:
How does the Stock Incentive Plan work?
A description of the Stock Incentive Plan's provisions is set forth below. This summary is qualified in its entirety by reference to the Stock Incentive Plan attached asAppendix B.
Administration. The Stock Incentive Plan is administered by the Compensation Committee, which may delegate some or all of its authority to a subcommittee consisting solely of at least two directors who qualify as "non-employee directors" for purposes of Rule 16b-314A of the Securities Exchange Act of 1934, (or any successor rule), "independent directors" within the meaning of NYSE listing standards, and "outside directors" within the meaning of Section 162(m) (or any successor
section). If at any time Dollar General has not appointed such a committee, the Board itself may administer the Stock Incentive Plan. We referas amended, we provide our shareholders each year with an opportunity to the individuals administering the Stock Incentive Plan as the "Committee." Subjectvote on an advisory basis on compensation paid to the terms of the Stock Incentive Plan, the Committee may select participants to receive awards, determine the types, terms and conditions of awards, adopt rules for the plan's administration, and interpret plan provisions.
Shares of Common Stock Reserved for Issuance under the Stock Incentive Plan. This proposal does not increase the number of shares available for issuance under the Stock Incentive Plan. Subject to adjustment in connection with certain significant corporate events, the maximum number of shares that may be issued under the Stock Incentive Plan is 31,142,858. As of March 23, 2017, awards relating to 14,941,885 shares have been issued or are subject to outstanding awards granted under the Stock Incentive Plan, and 16,200,973 shares remain available for awards under the Stock Incentive Plan. As of March 23, 2017, the closing price per share of our common stock as reported on the NYSE was $68.90.
The common stock issued or to be issued under the Stock Incentive Plan consists of authorized but unissued shares or issued shares that we have reacquired. The issuance of shares or the payment of cash in consideration of the substitution, cancellation or termination of an award will reduce the total number of shares available under the Stock Incentive Plan to the extent of the number of shares subject to such substituted, cancelled or terminated award, provided that shares subject to awards that are either repurchased by Dollar General or withheld or tendered to satisfy tax withholding obligations, the exercise price of a stock option or the purchase price for any other award will immediately become available for new awards to be granted under the Stock Incentive Plan. In addition, if any shares covered by an award under the Stock Incentive Plan are forfeited, or if an award expires unexercised, then the number of shares relating to such forfeited or expired awards will, to the extent of any such forfeiture or expiration, immediately become available for new awards to be granted under the Stock Incentive Plan.
Eligibility. Awards may be made under the Stock Incentive Plan to any of our employees, non-employee members of our Board of Directors, any consultant or other person having a service relationship with Dollar General and any of our subsidiaries and affiliates. On March 23, 2017, there were 8named executive officers 7 non-employee members of our Board of Directors, 1,730 employees and no consultants or other service providers eligible to participateas disclosed in the Stock Incentive Plan.
Stock Options and Stock Appreciation Rights. The Stock Incentive Plan permits the grant of stock options that are intended to qualify, as well as stock options that are not intended to qualify, as incentive stock options under the Internal Revenue Code.
The per share exercise price of a stock option may not be less than 100% of the fair market value of one share of our common stock on the grant date. The fair market value is generally determined as the closing price of our common stock on the grant date. In the case of shareholders who own 10% or more of our outstanding common stock and who receive incentive stock options, the per share exercise price may not be less than 110% of the fair market value of one share of our common stock on the grant date.
The Committee determines the term of each stock option, which may not exceed ten years from the grant date. If the grantee owns 10% or more of our outstanding common stock, a stock option intended to be an incentive stock option must expire five years following the grant date. Subject to these limitations, the Committee determines when each stock option may be exercised, vesting requirements, and such other terms, conditions or restrictions on the grant or the option exercise as the Committee deems appropriate, including whether a participant will receive dividend equivalent rights on vested stock options.
In general, a participant may pay the exercise price of a stock option in cash, through the withholding of shares underlying the option, or, with the Committee's consent, by delivering shares that
the participant has held for such period of time, if any, as determined by the Committee to avoid adverse accounting consequences, or by a combination of these methods that complies with the terms of the Stock Incentive Plan, the award agreement, and any applicable Committee guidelines in effect at the time.
The Stock Incentive Plan permits the Committee to grant stock appreciation rights, either independent of or in connection with stock options, and to determine their terms. A stock appreciation right entitles the participant to receive an amount equal to the product of (i) the excess of the fair market value of one share of our common stock on the exercise date over the exercise price of the stock appreciation right, multiplied by (ii) the number of shares covered by the stock appreciation right. The per share exercise price of a stock appreciation right granted independent of a stock option may not be less than the fair market value of one share of our common stock on the grant date. The per share exercise price of a stock appreciation right granted in connection with a stock option will be the per share exercise price of the related stock option. The exercise of a stock appreciation right granted in connection with a stock option shall cause a reduction in the number of shares subject to the stock option equal to the number of shares with respect to which the stock appreciation right is exercised. Conversely, the exercise of a related stock option shall cause a reduction in the number of shares subject to the stock appreciation right equal to the number of shares with respect to which the related option is exercised. A participant may pay the exercise price of a stock appreciation right in shares, in cash, or in a combination of shares and cash, all as the Committee shall determine.
No amendment or modification may be made to an outstanding stock option or stock appreciation right if it would be treated as a repricing under the rules of the stock exchange on which the shares of our common stock are listed (currently the NYSE), including replacement with cash or another award type, without the prior approval of our shareholders.
Unless the Committee provides otherwise, stock options and stock appreciation rights granted under the Stock Incentive Plan may not be sold, transferred, pledged or assigned other than by will or under applicable laws of descent and distribution.
Subject to adjustment in connection with certain significant corporate events, the maximum number of shares of our common stock that can be awarded in the form of stock options and stock appreciation rights under the Stock Incentive Plan to any participant is 4.5 million per fiscal year.
Other Stock-Based Awards. The Committee may also grant or sell to participants unrestricted shares; restricted shares; and awards that are valued by reference to the fair market value, or a number of shares, of our common stock, awards that are otherwise based on the fair market value, or a number of shares, of our common stock, and awards that are payable in the form of shares of our common stock (which may include, without limitation, restricted stock units, performance shares, performance share units, and bonus stock). In this proxy statement we sometimes refer to these awards as "Other Stock-Based Awards."
The Committee will determine the form, terms and conditions of Other Stock-Based Awards, including vesting provisions and whether such awards will be settled in shares, in cash, or in a combination of shares and cash. Other Stock-Based Awards may be granted alone or in connection with any other awards under the Stock Incentive Plan, and may provide for vesting upon the completion of a specified period of service, the occurrence of an event, and/or the attainment of performance objectives.
Other Stock-Based Awards may be granted in a manner intended to qualify as performance-based compensation meeting the requirements of Section 162(m). To qualify as performance-based:
Under the Internal Revenue Code, a director is an "outside director" if he or she is not a current employee of Dollar General; is not a former employee who receives compensation for prior services (other than under a qualified retirement plan); has not been an officer of Dollar General; and does not receive, directly or indirectly (including amounts paid to an entity that employs the director or in which the director has at least a 5% ownership interest), remuneration from Dollar General in any capacity other than as a director.
Under the Stock Incentive Plan, the Committee may base the objective performance goals on one or more of the following business criteria, which may relate to Dollar General, to one or more of our affiliates, to one or more of our or our affiliates' divisions or units, or to any combination of the foregoing:
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The criteria listed above may be measured on an absolute basis, on a basis relative to one or more peer group companies or indices, or any combination of the foregoing, as determined by the Committee. In addition, to the extent consistent with Section 162(m) (or any successor section), the performance goals may be calculated without regard to non-recurring items, as the Committee may determine in its sole discretion.
Subject to adjustment in connection with certain significant corporate events, the maximum number of shares of our common stock that can be awarded under the Stock Incentive Plan in the form of Other Stock-Based Awards to any participant is 1.5 million per fiscal year. In addition, Other Stock-Based Awards granted in a manner intended to qualify for the exemption from the compensation deductibility limitation imposed by Section 162(m) are considered "performance-based awards." The maximum amount of a "performance-based award" denominated in shares of our common stock that may be granted during a calendar year to any participant is 24 million.
The list of objective performance goals on which "performance-based awards" may be based under the Stock Incentive Plan must be approved by our shareholders at least every five years (or earlier if the list is changed) in order for compensation based on these goals to be considered performance-based compensation under Section 162(m). Approval of the material terms of the performance goals in this Proposal 2 will restart the five-year period for re-approval.
The foregoing notwithstanding, in its discretion, the Committee also may use other performance goals for awards under the Stock Incentive Plan that are not intended to qualify as performance-based compensation under Section 162(m).
Dividend Equivalent Rights. The Committee may grant to participants, either alone or in connection with the grant of another award (other than unearned performance shares), and determine the terms of, dividend equivalent rights. A dividend equivalent right is the right to receive a payment in respect of one share of our common stock that is equal to the amount of any dividend paid in respect of one share of our common stock held by a Dollar General shareholder.
Amendment or Termination of the Stock Incentive Plan. The Board of Directors generally may terminate the Stock Incentive Plan at any time and for any reason and may amend the plan. Shareholder approval is required for any such amendment to become effective if (1) required by the Internal Revenue Code or other applicable law, rule or regulation; or (2) the amendment increases the aggregate number of shares available for awards under the plan, decreases the exercise price of outstanding stock options or stock appreciation rights, changes the requirements relating to the Committee or extends the term of the Stock Incentive Plan. No Stock Incentive Plan termination or amendment may, without the participant's consent, adversely affect a participant in more than a minimal manner with respect to any awards then outstanding.
Amendments of Awards. The Committee may amend the terms and conditions of any outstanding awards consistent with the terms of the Stock Incentive Plan, except that a participant's consent would be required to modify an outstanding award in a manner that adversely impacts, other than in a de minimis manner, a participant, unless such modification is provided for or contemplated in the terms of the award agreement or the Stock Incentive Plan.
Effect of Certain Corporate Transactions. In the event of a change in control of Dollar General, the Committee may accelerate the vesting of any outstanding awards, cancel outstanding awards for fair value (as determined in its sole discretion), substitute new awards that will substantially preserve the otherwise applicable terms and value of the awards being substituted, or provide for a period of at least 10 business days prior to the change in control in which any stock option or stock appreciation right will be fully exercisable and then shall terminate upon the change in control. The Committee may take any of the foregoing actions with respect to any given outstanding award or group or types of awards, and shall not be required to take any of the foregoing actions uniformly with respect to all outstanding awards.
Adjustments for Share Dividends, Share Splits and Similar Events. Upon any share dividend, share split, spin-off, share combination, reclassification, recapitalization, liquidation, dissolution, reorganization, merger, change in control of Dollar General, payment of a dividend (other than a cash dividend paid as part of a regular dividend program), exchange of shares or other corporate exchange, equity restructuring, or other similar transaction or occurrence that affects our equity securities or the value of our equity securities, the Committee must adjust the number and kind of shares subject to and available for issuance under the Stock Incentive Plan, including participant maximums, adjust awards then outstanding under the plan (including the number and kind of securities subject to the award and, if applicable, the share and/or exercise price), and/or take such other action (including, without limitation, providing for the payment of a cash amount to holders of outstanding awards), in each case
as it deems reasonably necessary to address, on an equitable basis, the effect of the applicable corporate event on the Stock Incentive Plan and any outstanding awards.
What are the federal income tax consequences of awards granted under the Stock Incentive Plan?
Incentive Stock Options. The grant of an incentive stock option will not be a taxable event for the participant or for Dollar General. A participant will not recognize taxable income upon exercise of an incentive stock option (except that the alternative minimum tax may apply), and any gain realized upon a disposition of our common stock received pursuant to the exerciseItem 402 of an incentive stock option will be taxed as long-term capital gain if the participant holds the shares of common stock for at least two years after the grant date and for one year after the exercise date (the "holding period requirement"). Dollar General will not be entitled to any business expense deduction with respect to the exercise of an incentive stock option, except as discussed below.
For the exercise of an option to qualify for the foregoing tax treatment, the participant generally must be our employee or an employee of one of our subsidiaries from the option grant date through a date within three months before the option exercise date.
If all of the foregoing requirements except the holding period requirement are met, the participant will recognize ordinary income upon the disposition of the common stock in an amount generally equal to the excess of the fair market value of our common stock at the time the option was exercised over the option exercise price (but not in excess of the gain realized on the sale). The balance of the realized gain, if any, will be capital gain. Dollar General will be allowed a business expense deduction to the extent the participant recognizes ordinary income, subject to our compliance with Section 162(m) and to certain reporting requirements.
Special rules govern the tax treatment of the use of common stock to pay the exercise price of an option. Accordingly, to the extent any award agreement permits the use of our common stock to pay for the exercise price, special rules apply.
Non-Qualified Stock Options. The grant of a non-qualified stock option will not be a taxable event for the participant or Dollar General. Upon exercising a non-qualified option, a participant will recognize ordinary income in an amount equal to the difference between the exercise price and the fair market value of our common stock on the option exercise date. Upon a subsequent sale or exchange of shares acquired pursuant to the exercise of a non-qualified option, the participant will have taxable capital gain or loss, measured by the difference between the amount realized on the disposition and the tax basis of the shares of common stock (generally, the amount paid for the shares plus the amount treated as ordinary income at the time the option was exercised).
If Dollar General complies with applicable reporting requirements and with the restrictions of Section 162(m), Dollar General will be entitled to a business expense deduction in the same amount and generally at the same time as the participant recognizes ordinary income.
If the Committee permits such a transfer, a participant who has transferred a non-qualified stock option to a family member by gift will realize taxable income at the time the non-qualified stock option is exercised by the family member. The participant will be subject to withholding of income and employment taxes at that time. The family member's tax basis in the shares of common stock will be the fair market value of the shares of common stock on the option exercise date. The transfer of vested non-qualified stock options will be treated as a completed gift for gift and estate tax purposes. Once the gift is completed, neither the transferred options nor the shares acquired on exercise of the transferred options will be includable in the participant's estate for estate tax purposes.
Special rules govern the tax treatment of the use of common stock to pay the exercise price of an option. Accordingly, to the extent any award agreement permits the use of common stock to pay for the exercise price, special rules apply.
Stock Appreciation Rights. There are no immediate tax consequences of receiving an award of stock appreciation rights under the Stock Incentive Plan. Upon exercising a stock appreciation right, a participant will recognize ordinary income in an amount equal to the difference between the exercise price and the fair market value of our common stock on the exercise date. If Dollar General complies with applicable reporting requirements and with the restrictions of Section 162(m), Dollar General will be entitled to a business expense deduction in the same amount and generally at the same time as the participant recognizes ordinary income.
Other Stock-Based Awards. The Committee may grant or sell to participants Other Stock-Based Awards, the form and terms of which will be determined by the Committee. The federal income tax consequences of Other-Stock Based Awards will depend on the form and terms of those awards. The summary below describes the federal income tax consequences of some of the Other-Stock Based Awards the Committee has granted or sold or may be likely to grant or sell to participants.
Unrestricted Shares. Participants who are awarded unrestricted shares of common stock will be required to recognize ordinary income in an amount equal to the fair market value of the shares of our common stock on the grant date, reduced by the amount, if any, paid for such shares. If Dollar General complies with applicable reporting requirements and with the restrictions of Section 162(m), Dollar General will be entitled to a business expense deduction in the same amount and generally at the same time as the participant recognizes ordinary income.
Restricted Shares. A participant who is awarded restricted shares of common stock will not recognize any taxable income for federal income tax purposes in the year of the award, provided that the shares of common stock are subject to restrictions (that is, the restricted stock is nontransferable and subject to a substantial risk of forfeiture). However, the participant may elect under Section 83(b) of the Internal Revenue Code to recognize compensation income in the year of the award in an amount equal to the fair market value of the common stock on the grant date (less the purchase price, if any), determined without regard to the restrictions. If the participant does not make such a Section 83(b) election, the fair market value of the common stock on the date the restrictions lapse (less the purchase price, if any) will be treated as compensation income to the participant and will be taxable in the year the restrictions lapse and dividends paid while the common stock is subject to restrictions will be subject to withholding taxes. If Dollar General complies with applicable reporting requirements and with the restrictions of Section 162(m), Dollar General will be entitled to a business expense deduction in the same amount and generally at the same time as the participant recognizes ordinary income.
Restricted Stock Units. There are no immediate tax consequences of receiving an award of restricted stock units under the Stock Incentive Plan. A participant who is awarded restricted stock units will be required to recognize ordinary income in an amount equal to the fair market value of shares issued to such participant at the end of the restriction period or, if later, the payment date. If Dollar General complies with applicable reporting requirements and with the restrictions of Section 162(m), Dollar General will be entitled to a business expense deduction in the same amount and generally at the same time as the participant recognizes ordinary income.
Performance Share Units. There are no immediate tax consequences of receiving an award of performance share units under the Stock Incentive Plan. A participant who is awarded performance share units will be required to recognize ordinary income in an amount equal to the fair market value of shares issued to such participant on the payment date. If Dollar General complies with applicable reporting requirements and with the restrictions of Section 162(m), Dollar General will be entitled to a
business expense deduction in the same amount and generally at the same time as the participant recognizes ordinary income.
Dividend Equivalent Rights. A participant generally will not recognize taxable income when a dividend equivalent right is granted. The participant, however, will generally recognize ordinary income upon receiving payment of cash and/or shares for the dividend equivalent right. The amount included in the participant's income will equal the amount of cash and the fair market value of the shares received. Dollar General generally will be entitled to a corresponding tax deduction at the time the participant recognizes ordinary income with respect to a dividend equivalent right.
Section 280G. To the extent payments that are contingent on a change in control are determined to exceed certain Internal Revenue Code limitations, they may be subject to a 20% nondeductible excise tax, and Dollar General's deduction with respect to the associated compensation expense may be disallowed in whole or in part.
Section 409A. The Stock Incentive Plan is intended to comply with Section 409A of the Internal Revenue Code to the extent that such section would apply to any award under the plan. Section 409A governs the taxation of deferred compensation. Any participant granted an award that is deemed to be deferred compensation, such as a grant of restricted stock units, that does not qualify for an exemption from Section 409A, and does not comply with Section 409A, could be subject to immediate taxation on the award as soon as the award is no longer subject to a substantial risk of forfeiture (even if the award is not exercisable) and an additional 20% tax (and a further additional tax based upon an amount of interest determined under Section 409A) on the value of the award.
What new plan benefits will be awarded under the Stock Incentive Plan?
Future participation and the types of awards that may be granted under the Stock Incentive Plan are subject to the discretion of the Committee and have not been established. As a result, the specific benefits and amounts payable in the future to any participant or groups of participants if this proposal is approved are not currently determinable.
What awards have been granted under the Stock Incentive Plan?
The following table sets forth the shares of common stock underlying awards that have been granted or shares of common stock that have been issued to the listed individuals under the Stock Incentive Plan through March 23, 2017:
Name and Principal Position | | Number of Shares Underlying Restricted Stock/ Stock Units(1) | | Number of Shares Underlying Options(2) | | Number of Shares of Purchased Stock(3) | | Number of Shares of Common Stock(4) | | | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Todd J. Vasos, | | | 185,637 | | | | 1,274,076 | | | | 74,286 | | | | — | | | |||||
| | | | | | | | | | | ||||||||||||
John W. Garratt, | | | 37,369 | | | | 93,438 | | | | — | | | | — | | | |||||
| | | | | | | | | | | ||||||||||||
Jeffery C. Owen, | | | 41,076 | | | | 283,031 | | | | 11,429 | | | | — | | | |||||
| | | | | | | | | | | ||||||||||||
Rhonda M. Taylor, | | | 48,909 | | | | 189,583 | | | | 6,114 | | | | — | | | |||||
| | | | | | | | | | | ||||||||||||
James W. Thorpe, | | | 34,901 | | | | 366,537 | | | | — | | | | — | | | |||||
| | | | | | | | | | | ||||||||||||
All current executive officers as a group (8 persons) | | | 445,862 | | | | 3,141,620 | | | | 154,532 | | | | — | | | |||||
| | | | | | | | | | | ||||||||||||
All current non-employee directors as a group (7 persons) | | | 57,759 | | | | 117,588 | | | | — | | | | — | | | |||||
| | | | | | | | | | | ||||||||||||
All employees, including all current officers who are not executive officers, as a group(5) | | | 3,450,229 | | | | 20,124,453 | | | | 884,005 | | | | 173,039 | | |
What does the Board of Directors recommend?
Our Board unanimously recommends that shareholders voteFOR approval of the $750,000 annual limit on compensation, measured as the sum of cash compensation and the grant date fair value of any equity awards, granted under the Stock Incentive Plan during any fiscal year to a non-employee director as compensation for such services (subject to exception approved by our Board in extraordinary circumstances) and of the material terms of the performance goals under the Stock Incentive Plan for purposes of compensation deductibility under Section 162(m), including (i) the participants eligible to receive such compensation, (ii) the business criteria that may be used as performance goals for awards, and (iii) the maximum amount of compensation which may be paid to any participant if the performance goals are achieved.
Equity Compensation Plan Table
The following table sets forth information about securities authorized for issuance under our compensation plans (including individual compensation arrangements) as of February 3, 2017:
Plan category | | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | | Weighted-average exercise price of outstanding options, warrants and rights (b) | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | | | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity compensation plans approved by security holders(1) | | | 3,531,759 | | | | $ | 67.81 | | | | 17,691,607 | | | |||
Equity compensation plans not approved by security holders | | | — | | | | — | | | | — | | | ||||
| | | | | | | | | |||||||||
Total(1) | | | 3,531,759 | | | | $ | 67.81 | | | | 17,691,607 | | | |||
| | | | | | | | | |||||||||
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| | | | | | | | |
PROPOSAL 3:VOTE REGARDING THE AMENDED AND RESTATEDANNUAL INCENTIVE PLAN
What are shareholders being asked to approve?
Our Board of Directors is asking you to approve the material terms of the performance goals under our Amended and Restated Dollar General Corporation Annual Incentive Plan (the "Annual Incentive Plan"), to preserve our ability under Section 162(m) of the Internal Revenue Code to deduct compensation associated with future performance-based incentive awards to be made under the Annual Incentive Plan, such as those made to our executive officers under our Teamshare bonus program. The disclosure below is a summary only. For a full description, you should read the entire text of the Annual Incentive Plan which is attached asAppendix C.
Why should shareholders approve the material terms of the performance goals under the Annual Incentive Plan?
Section 162(m) of the Internal Revenue Code limits our ability to deduct from our U.S. federal corporate income taxes compensation in excess of $1 million per year paid to "covered employees" (generally consisting of each of the persons who were, at the end of each fiscal year, our Chief Executive Officer or one of the other named executive officers other than our Chief Financial Officer) unless the compensation qualifies as "performance-based." Compensation cannot qualify as "performance-based" unless the material terms of the performance goals are disclosed to and approved by shareholders every five years. For purposes of Section 162(m), material terms include (i) the employees eligible to receive compensation, (ii) a description of the business criteria on which the performance goals may be based and (iii) the maximum amount of compensation that can be paid to an employee under the plan if the performance goals are achieved. Each of these material terms as they relate to the Annual Incentive Plan is discussed below, and shareholder approval of this Proposal 3 will be deemed to constitute approval of the material terms of the performance goals under the Annual Incentive Plan for purposes of the shareholder approval requirements of Section 162(m).
The Annual Incentive Plan was established in 2005 and is designed to permit Dollar General to grant compensation that qualifies as performance-based compensation for purposes of satisfying the requirements of Section 162(m). Shareholders last approved the material terms of the performance goals under the Annual Incentive Plan in 2012. Shareholder approval of the material terms of the performance goals under the Annual Incentive Plan is only one of several requirements for amounts paid under the plan to qualify for the "performance-based compensation" exemption, and any such approval should not be viewed as a guarantee that we will be able to deduct any or all compensation under the Annual Incentive Plan. In addition, nothing in this proposal precludes us or the Compensation Committee from granting or paying incentive awards that are not intended to qualify for tax deductibility under Section 162(m).
What happens if shareholders do not approve this proposal?
If this Proposal 3 is not approved at the annual meeting, then no more awards will be granted under the Annual Incentive Plan after the annual meeting unless shareholders approve the material terms of the performance goals under the plan at a subsequent meeting. As a result, any bonuses granted to our "covered employees" after the date of the annual meeting and prior to any future shareholder approval of the material terms of the performance goals under the plan or a similar plan will not qualify as "performance-based compensation" and therefore may not be fully deductible by Dollar General due to the compensation limit imposed by Section 162(m). If this Proposal 3 is not
approved at the annual meeting, any bonus awards granted with respect to fiscal 2017 will continue in accordance with their terms and will be deductible under Section 162(m) based on shareholder approval of the plan in 2012.
Who is eligible to participate in the Annual Incentive Plan?
The Compensation Committee of our Board of Directors, or any subcommittee thereof which meets the requirements of Section 162(m)(4)(C) of the Internal Revenue Code, determines who is eligible to participate in the Annual Incentive Plan, including any of our "covered employees" under Section 162(m), any of our executive officers and any other of our employees. A total of 8 persons, all of whom are executive officers, are participating in the Annual Incentive Plan as of March 23, 2017 with respect to fiscal 2017. We have no plans to significantly change the scope of the group who is eligible to earn incentive compensation awards under the Annual Incentive Plan.
How does the Annual Incentive Plan work?
The Annual Incentive Plan is designed to attract and retain executives and to motivate them to promote our profitability and growth by means of performance-based annual cash bonuses. The Annual Incentive Plan authorizes the payment of cash bonuses based on our actual performance measured against established business and/or financial performance measures. Prior to the beginning of each performance period, or at a later time as may be permitted by applicable provisions of the Internal Revenue Code (which currently is not later than the earlier of (1) 90 days after the beginning of the period of service to which the performance goals(s) relate or (2) the first 25% of the period of service), the Compensation Committee determines the participants in the Annual Incentive Plan, establishes for each participant a maximum award, and establishes the performance goal(s) and the performance measures applicable to, and the method for computing the amount payable upon achievement of, such performance goal(s). No participant can receive a bonus under the Annual Incentive Plan in excess of $10 million in any fiscal year. The Compensation Committee can base performance goals on one or more of the following performance measures which may relate to Dollar General, one or more of our affiliates or one or more of our or our affiliates' divisions or units, or any combination thereof, and may be applied on an absolute basis and/or be relative to one or more peer group companies or indices, or any combination thereof:
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To the extent allowable under Section 162(m), the performance goals may be calculated without regard to non-recurring items, as the Compensation Committee may determine in its sole discretion.
No award can be paid under the Annual Incentive Plan unless and until the Compensation Committee certifies in writing that the previously established performance goal(s) have been satisfied. The Compensation Committee may reduce or eliminate any award in its discretion despite achievement of the performance goal(s) but may not increase the amount of bonus payable to any participant. The Annual Incentive Plan allows a participant to elect in writing to defer the payment of his or her award in accordance with the terms of our CDP/SERP Plan as it exists from time to time. For a description of our CDP/SERP Plan, please see "Executive Compensation—Nonqualified Deferred Compensation." The Annual Incentive Plan does not limit our ability to make payments or awards to employees (including executive officers) under any other plan or arrangement.
What are the Federal income tax consequences of payments under the Annual Incentive Plan?
Payments made under the Annual Incentive Plan will be taxable to the recipients when paid as ordinary compensation income. If a participant properly elects to defer receipt of all or a portion of the bonus award under our CDP/SERP Plan, or any successor plan, the participant will generally be entitled to defer the recognition of income. As described above, we intend payments under the Annual Incentive Plan to qualify as "performance-based" compensation under Section 162(m). As a result, we will generally be entitled to a Federal income tax deduction corresponding to the amount of income recognized by the participant. Any bonuses payable under the Annual Incentive Plan that may be deferred under the CDP/SERP Plan must be deferred in a manner that complies with Section 409A of the Internal Revenue Code. Section 409A provides specific rules for deferral elections, distributions and funding mechanisms under non-qualified deferred compensation plans. Failure to comply would result in significant penalties and interest for the individual but would not impact our tax deduction for deferred compensation.
Who administers the Annual Incentive Plan?
The Compensation Committee administers the Annual Incentive Plan. The Compensation Committee has full authority to interpret the Annual Incentive Plan, to establish rules and regulations relating to the plan's operation, to select the plan's participants, to determine amounts of awards under the plan and to make all other determinations with respect to the plan. The Compensation Committee may terminate or amend the Annual Incentive Plan at any time. However, any amendment that would require shareholder approval pursuant to Section 162(m), the NYSE listing rules, or any other applicable law, rule or regulation will not be effective without shareholder approval. No amendment or termination of the Annual Incentive Plan shall adversely affect a participant's rights to or interest in an award granted prior to the date of the amendment without the participant's written consent.
What kind of benefits will be paid under the Annual Incentive Plan?
The amount that would be paid in the future under the Annual Incentive Plan will be at the discretion of the Compensation Committee and dependent upon our future performance. As a result, the benefits or amounts to be received by or allocated to participants under the Annual Incentive Plan in future years are not determinable. Information regarding our recent practices with respect to annual incentive awards under the Annual Incentive Plan, including for 2016, is presented in "Compensation Discussion and Analysis—Elements of Named Executive Officer Compensation—Short-Term Cash Incentive Plan" and in the "Summary Compensation Table," in each case under "Executive Compensation" above. In recent years, the Compensation Committee has selected an EBIT-based performance measure upon which to base the performance goals in connection with the Annual
Incentive Plan. The Compensation Committee has again selected such performance measure for 2017 awards under the Annual Incentive Plan.
What does the Board of Directors recommend?
Our Board unanimously recommends that shareholders voteFOR approval of the material terms of the performance goals under the Annual Incentive Plan for purposes of compensation deductibility under Section 162(m), including (i) the participants eligible to receive such compensation, (ii) the business criteria that may be used as performance goals for awards, and (iii) the maximum amount of compensation which may be paid to any participant if the performance goals are achieved.
PROPOSAL 4:ADVISORY VOTE ON EXECUTIVE COMPENSATION
In accordance with SEC rules, we ask shareholders for advisory approval of our executive compensation every three years, which is the time interval last approved by our shareholders on a nonbinding basis.Regulation S-K. Accordingly, we are asking our shareholders to provide an advisory, nonbinding vote to approve the compensation of our named executivesuch officers as we have described it in "Compensation“Compensation Discussion and Analysis"Analysis” and in the accompanying compensation tables and related narrative discussion in the "Executive Compensation"“Executive Compensation” section of this proxy statement.
As discussed in detail in the "Compensation“Compensation Discussion and Analysis"Analysis” section above, the Compensation Committee actively oversees our executive compensation program, adopting changes to the program and awarding compensation as appropriate to reflect Dollar General'sGeneral’s circumstances and to promote the main objectives of the program. Our compensation programs are designed to attract, retain, and motivate persons with superior ability, to reward outstanding performance, and to align the long-term interests of our named executive officers with those of our shareholders. Under these programs, our named executive officers are rewarded for the achievement of specific annual and long-term goals and the realization of increased shareholder value. We firmly believe that the information
we have provided in this proxy statement demonstrates that our executive compensation program was designed appropriately and is working to ensure that management'smanagement’s interests are aligned with our shareholders'shareholders’ interests to support long-term value creation.
Our Board of Directors is asking our shareholders to indicate their support for our named executive officer compensation as described in this proxy statement in accordance with SEC rules by voting for this proposal. Because the vote on this proposal is advisory in nature, it will not affect any compensation already paid or awarded to any such officer and will not be binding on or overrule any decisions by the Compensation Committee or the Board. Nonetheless, our Board and the Compensation Committee value our shareholders’ views and intend to consider the outcome of the vote, along with other relevant factors, when making future compensation decisions for our named executive officers. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers. This advisory vote is not a vote on the compensation of our Board, of Directorsas described under “Director Compensation,” or on our compensation policies as they relate to risk management, as described under "Compensation“Compensation Risk Considerations"Considerations” in the "Executive Compensation"“Executive Compensation” section above.
Although the vote we are asking shareholders to cast is advisory and is not binding, our Board and the Compensation Committee value the views of our shareholders and intend to consider the outcome of the vote, along with other relevant factors, when making future compensation decisions for our named executive officers.
The Board of Directors unanimously recommends that Shareholders vote FOR the approval of the compensation of our named executive officers as disclosed in this proxy statement. | ||||
Our Board unanimously recommends that you voteFOR the approval of the compensation of our named executive officers as disclosed in this proxy statement pursuant to the SEC's compensation disclosure rules, including the "Compensation Discussion and Analysis" and the accompanying compensation tables and related narrative discussion in the "Executive Compensation" section of this proxy statement.
PROPOSAL 5:ADVISORY VOTE ON THE FREQUENCY OF HOLDING FUTUREADVISORY VOTES ON EXECUTIVE COMPENSATION
2019 Proxy Statement 45 |
The 2017 annual meeting of shareholders is the second annual meeting at which we are required by SEC rules to hold an advisory, non-binding vote concerning whether future shareholder advisory votes on our named executive officer compensation should occur every 1, 2 or 3 years. At our 2011 annual meeting of shareholders, our shareholders voted to hold these future advisory votes on named executive officer compensation every 3 years (triennially). Our Board of Directors asks that shareholders again support a frequency period of every 3 years (which would mean that the next advisory vote on named executive officer compensation would occur at our 2020 annual meeting of shareholders).
Our Board believes that our executive compensation program directly ties compensation to our financial performance and serves to align the interests of our executive officers with those of our shareholders to support long-term value creation. Our Board believes a three-year period for holding this advisory vote on named executive officer compensation is the most advisable vote frequency for the following reasons:
Our Board believes that anything less than a 3-year frequency period will yield a short-term mindset, detract from our long-term interests and goals, and would not allow for changes to our
executive compensation program to be in place long enough to evaluate whether the changes were effective. Furthermore, our Board welcomes input from shareholders with respect to our executive compensation program even in years when the advisory vote does not occur.
Although the vote we are asking you to cast is advisory and is not binding, our Board and the Compensation Committee value the views of our shareholders and will consider the outcome of the vote when determining the frequency of future say-on-pay votes. Our next advisory vote on the frequency of holding future advisory votes on named executive officer compensation will occur at our 2023 annual meeting of shareholders.
Our Board unanimously recommends that you vote for the option of3 YEARS as the frequency of holding future advisory votes on named executive officer compensation.
The Audit Committee of our Board of Directors has:
• | discussed with Ernst & Young LLP, our independent registered public accounting firm, the matters required to be discussed by the Statement on Auditing Standards No. 1301,Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board, |
Based on these reviews and discussions, the Audit Committee unanimously recommended to the Board of Directors that Dollar General’s audited financial statements be included in the Annual Report on Form10-K for the fiscal year ended February 1, 2019 for filing with the SEC.
While the Audit Committee has the responsibilities and powers set forth in its charter, the Audit Committee does not have the duty to plan or conduct audits or to determine that Dollar General’s financial statements are complete, accurate, or in accordance with generally accepted accounting principles. Dollar General’s management and independent auditor have this responsibility.
This report has been furnished by the members of the Audit Committee:
The above Audit Committee Report does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Dollar General filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent Dollar General specifically incorporates this report by reference therein.
46 2019 Proxy Statement |
PROPOSAL 3:Ratification of Appointment of Auditors
Who is responsible for the selection of the independent auditor?
The Audit Committee is directly responsible for the appointment, compensation, retention, and oversight of the independent auditor that is retained to audit our financial statements.
Was the Audit Committee involved in the lead audit partner selection process?
Yes. Prior to the selection of the current lead audit partner, the Chairman of the Audit Committee interviewed the lead audit partner candidates, and the Audit Committee discussed with management such candidates’ qualifications and experience.
Does the Audit Committee evaluate the independent auditor and the lead audit partner?
Yes. The Audit Committee annually evaluates the lead audit partner, as well as the independent auditor’s qualifications, performance, and independence. The evaluation, which includes the input of management, entails consideration of a broad range of factors, including the quality of services and sufficiency of resources that have been provided; the skills, knowledge, and experience of the firm and the audit team; the effectiveness and sufficiency of communications and interactions; independence and level of objectivity and professional skepticism; reasonableness of fees; and other factors.
Who has the Audit Committee selected as the independent registered public accounting firm?
After conducting the evaluation process discussed above, the Audit Committee selected Ernst & Young LLP as our independent auditor for the 2019 fiscal year. Ernst & Young LLP has served in that capacity since October 2001. The Audit Committee and the Board of Directors believe that the continued retention of Ernst & Young LLP is in the best interests of Dollar General and our shareholders.
Will representatives of Ernst & Young LLP attend the annual meeting?
Representatives of Ernst & Young LLP have been requested and are expected to attend the annual meeting. These representatives will have the opportunity to make a statement if they so desire and are expected to be available to respond to appropriate questions.
What if shareholders do not ratify the appointment?
The Audit Committee is not bound by a vote either for or against the firm. If the shareholders do not ratify this appointment, our Audit Committee will consider that result in selecting our independent auditor in the future.
The table below lists the aggregate fees for professional audit services rendered to us by Ernst & Young LLP for the audit of our consolidated financial statements for the past two fiscal years and fees billed for other services rendered by Ernst & Young LLP during the past
two fiscal years. Information related to audit fees for 2018 includes amounts billed through February 1, 2019, and additional amounts estimated to be billed for the 2018 period for audit services rendered.
Service | 2018 Aggregate Fees Billed ($) | 2017 Aggregate Fees Billed ($) | ||||||
Audit Fees(1) | 2,898,361 | 2,743,085 | ||||||
Audit-Related Fees(2) | 35,000 | 35,000 | ||||||
Tax Fees(3) | 2,431,222 | 1,804,562 | ||||||
All Other Fees(4) | 7,120 | 1,995 |
(1) |
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(2) | Represents for each fiscal year the aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements. The fees for each year relate to the employee benefit plan audit. |
(3) | 2018 and |
(4) | 2018 and 2017 fees are for a subscription fee to anon-line accounting research tool. |
The Audit Committeepre-approves all audit and permissiblenon-audit services provided by our independent auditor. Where feasible, the Committee considers and, when appropriate,pre-approves services at regularly scheduled meetings after disclosure by management and the independent auditor of the nature of the proposed services, the estimated fees (when available), and their opinions that the services will not
impair the independence of the independent auditor. The Committee’s Chairman (or any Committee member if the Chairman is unavailable) maypre-approve such services between Committee meetings, and must report to the Committee at its next meeting with respect to all services sopre-approved. The Committeepre-approved 100% of the services provided by Ernst & Young LLP during 2018 and 2017.
48 2019 Proxy Statement |
SHAREHOLDER PROPOSALS FOR 2020 ANNUAL MEETING
All shareholder proposals and notices discussed below must be mailed to Corporate Secretary, Dollar General Corporation, 100 Mission Ridge, Goodlettsville, Tennessee 37072. Shareholder proposals and director nominations that are not included in our proxy materials will not be considered at any annual meeting of shareholders unless such proposals have complied with the requirements of our amended and restated Bylaws.
Shareholder Proposals
To be considered for inclusion in our proxy materials relating to the 2020 annual meeting of shareholders (the “2020 Annual Meeting”), eligible shareholders must submit proposals that comply with Rule14a-8 under the Exchange Act and other relevant SEC regulations for our receipt by December 6, 2019.
New Business at 2020 Annual Meeting
To introduce other new business, including the nomination of directors (other than a proxy access nomination, which is described below) at the 2020 Annual Meeting, you must deliver written notice to us no earlier than the close of business on January 30, 2020 and no later than the close of business on February 29, 2020, and comply with the advance notice provisions of our amended and restated Bylaws. If we do not receive
a properly submitted shareholder proposal by February 29, 2020, then the proxies held by our management may provide the discretion to vote against such shareholder proposal even though the proposal is not discussed in our proxy materials sent in connection with the 2020 Annual Meeting.
Proxy Access
Our amended and restated Bylaws contain proxy access provisions that permit a shareholder, or a group of up to 20 shareholders, owning 3% or more of our stock continuously for at least three years, to nominate and include in our proxy materials candidates for election as directors. Such shareholder or group may nominate up to 20% of our Board, provided that the shareholder or group and the nominee(s) satisfy the requirements specified in our amended and restated Bylaws. In order to be properly brought before our 2020 Annual Meeting, an eligible shareholder’s notice of nomination of a director candidate pursuant to the proxy access provisions of our amended and restated Bylaws must be received by us no earlier than the close of business on November 6, 2019 and no later than the close of business on December 6, 2019, and comply with the other relevant provisions of our amended and restated Bylaws pertaining to proxy access nominees.
2019 Proxy Statement 49 |
IF YOU ARE NOT VOTING BY INTERNET OR PHONE, TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | E55603-P16936 KEEP THIS PORTION FOR YOUR RECORDS | |||||
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DETACH AND RETURN THIS PORTION ONLY | ||||
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
DOLLAR GENERAL CORPORATION | ||||||||||||||||
The Board of Directors recommends you vote FOR each of the listed nominees. | ||||||||||||||||
1. | Election of Directors | |||||||||||||||
Nominees: | For | Against | Abstain | |||||||||||||
1a. Warren F. Bryant | ☐ | ☐ | ☐ | |||||||||||||
1b. Michael M. Calbert | ☐ | ☐ | ☐ | |||||||||||||
1c. Sandra B. Cochran | ☐ | ☐ | ☐ | |||||||||||||
1d. Patricia D. Fili-Krushel | ☐ | ☐ | ☐ | |||||||||||||
1e. Timothy I. McGuire | ☐ | ☐ | ☐ | |||||||||||||
1f. William C. Rhodes, III | ☐ | ☐ | ☐ | |||||||||||||
1g. Ralph E. Santana | ☐ | ☐ | ☐ | |||||||||||||
1h. Todd J. Vasos | ☐ | ☐ | ☐ |
The Board of Directors recommends you vote FOR Proposals 2 and 3. | ||||||||||||||||||
For | Against | Abstain | ||||||||||||||||
2. | To approve, on an advisory (non-binding) basis, the compensation of Dollar General | ☐ | ☐ | ☐ | ||||||||||||||
3. | To ratify the appointment of Ernst | ☐ | ☐ | ☐ | ||||||||||||||
In the discretion of the proxies named herein, such other business as may properly come before the meeting or any adjournment(s) thereof. | ||||||||||||||||||
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. |
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
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E55604-P16936
| DOLLAR GENERAL CORPORATION Proxy solicited by and on behalf of the Board of Directors for the Annual Meeting of Shareholders to be held on May The undersigned This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted FOR each of the nominees for director in Proposal 1, FOR Proposals 2 | |||||||||||
Continued and to be signed on reverse side
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