Dollar General (DG) 10-Q 2007 Q1 Quarterly report

2006

TEAMSHARE

Serve your Customers, Simplify Processes, Control Expenses, Work Smart. . .

TEAMSHARE is an annual incentive program designed to encourage high performance, while rewarding employees for their commitment to Dollar General’s success. It’s called TEAMSHARE because itrequires teamwork. . .our TEAMSHARE goals can only be met through the effort of every DG employee. Reaching our goals requires dedication to establishing cost efficiencies, simplifying processes and focusing on customers.Strive for excellence in 2006!

Your 2006 TEAMSHARE Plan

Fiscal Year-end Total Net Income	Bonus Level	Your Bonus
$____________	3	_____%
$____________	2	_____%
$____________	1	_____%
* Plan information is non-public and confidential.

How Does it Work?

Your TEAMSHARE bonus is based on the Company’s total net income at fiscal year-end.  That means if Dollar General’s year-end net income is $______________, you will receive a “1^st Level” TEAMSHARE bonus. If the year-end net income is $_______________, you will receive a “2^nd Level” TEAMSHARE bonus. Payout opportunities between “levels” are possible.

You can calculate your bonus using the following formula:

Base Pay x Bonus Payout Opportunity x mos. of service

12 months

Please refer to program guidelines (on back of page) for more details.

What is Net Income?

Net Income = Gross Margin – Operating Expenses, Interest Expense & Taxes

Note:  May exclude unusual items as approved from time to time by the Compensation Committee of the Board of Directors.

·

Operating Expenses = Payroll, Supplies, Operating Costs, Utilities, etc.

Strive for excellence in 2006!

GUIDELINES

Who’s Eligible?  

An employee must meeteach of the following criteria:

1.

Regular, full-time or part-time Store Support or DC employee during the fiscal year.

2.

Actively employed with Dollar General on the date of bonus payout.*

*Except where prohibited by state law.

3.

Receive a year-end performance rating of “meets standard” (1.75) or greater.

Months of Service

Bonuses are prorated based on the number of months employed during the fiscal year.An employee must be hired/rehired on or before the 15^th of the month to receive credit for the month.

Example

Jane Doe hired on June 20, 2006.

Jane will not receive credit for June as the majority of the month is over.

Jane will receive credit for July, 2006 – January, 2007.

Jane will receive a prorated bonus for seven months = 7/12

Rehired Employees

Employees who leave the company and arerehired during the same fiscal year will be bonus eligible from the date of rehireunless rehired within 30 days from the date of termination. Service will be bridged for persons who are away from the Company less than 30 days. Persons who are rehired after 30 days forfeit any bonus amount earned during the fiscal year prior to termination.

Transfers/Promotions

Employees who also worked in a retail position during the fiscal year are eligible for a prorated bonus from each bonus plan.Note: Eligibility requirements must be met in each respective plan to receive a bonus from that plan.

Example

Division Manager from Feb. 4, 2006 – June 12, 2006 = 4/12 Division bonus plan

Corporate employee from June 13, 2006 – Feb 2, 2007 = 8/12 Store Support bonus plan

Employees on Leave of Absence

Employees onleave are eligible for a prorated bonus based on the number of months worked during the fiscal year (provided employment has not terminated before bonus checks are issued).

Bonus Payout

If theCompany meets its performance goals andyou meet the eligibility guidelines, you will be eligible for a TEAMSHARE bonus! Please note that the IRS considers a bonus to be supplemental income. Therefore, the minimum federal tax, as well as FICA and any other applicable state taxes, are deducted as required.

Your bonus will be paid as soon as possible after the Company year-end performance results are available. Generally, checks are issued in April.

* Dollar General reserves the right to adjust, amend or suspend the TEAMSHARE program at any time.

The individual 2006 TEAMSHARE Bonus Program document for each of the Company’s named executive officers is substantially identical to the form of 2006 TEAMSHARE Bonus Program document shown here, except for the bonus percentages set forth on the first page.  The applicable bonus percentages for each of the Company’s named executive officers are set forth below.

Name	Bonus at Bonus Level 1	Bonus at Bonus Level 2	Bonus at Bonus Level 3
David A. Perdue	50%	100%	200%
David M. Tehle	32.5%	65%	130%
Beryl J. Buley	32.5%	65%	130%
Kathleen R. Guion	32.5%	65%	130%