This excerpt taken from the BIG DEF 14A filed Apr 15, 2008.
Generally, Section 162(m) provides that we may not deduct more than $1,000,000 of compensation paid during any fiscal year to our covered employees (i.e., our CEO or our three other highest compensated executives (excluding the principal financial officer) employed at the end of the fiscal year). However, this limit does not apply to performance based compensation. Any Awards granted under the 2005 Incentive Plan may be granted in a form that qualifies for the performance based compensation exception under Section 162(m). Under Section 162(m), the terms of the Award must state, in terms of an objective formula or standard, the method of computing the amount of compensation payable under the Award, and must preclude discretion to increase the amount of compensation payable under the terms of the Award (but may give the Committee discretion to decrease the amount of compensation payable). The 2005 Incentive Plan specifies performance goals that the Committee must use when granting a performance-based Award. As described above, the 2005 Incentive Plan imposes certain limitations on the number and value of performance-based Awards to covered employees.
This excerpt taken from the BIG DEF 14A filed Apr 21, 2005.
10.1 Grant of Performance-Based Awards. Any Award may be granted in a form that qualifies as performance based compensation as defined under Code §162(m). As determined by the Committee, in its sole discretion, either the granting or vesting of Performance-Based Awards will be based on achieving one or more (or any combination of) performance objectives derived from the criteria listed below over the Performance Period established by the Committee. However, a particular Performance-Based Award Agreement shall not permit (1) the exercisability of a Performance-Based Option or Performance-Based SAR before the first anniversary date after its Grant Date, (2) the lapse of the Restriction Period in the case of a Restricted Stock Award or Restricted Stock Unit Award before the first anniversary date after its Grant Date, or (3) the vesting of a Performance-Based Performance Unit before the first anniversary date after its Grant Date.
10.2 Establishing Objectives. With respect to Performance-Based Awards, the Committee will establish in writing the performance objectives to be applied and the Performance Period (which may not be shorter than 12 fiscal periods (which may consist of a four or five week period) of the Company except for the inaugural Performance Period in the case of an employee who first becomes a Participant after the beginning of a fiscal year of the Company) over which their achievement will be measured, the method for computing the value of the Award that may be earned if (and to the extent that) those performance objectives are met and the Participants or class of Participants to which the performance objectives apply. Performance objectives will be established in writing no later than 90 days after the beginning of the applicable Performance Period (but in no event after 25 percent of the Performance Period has elapsed).
10.3 Performance Goals. Performance criteria imposed on Performance-Based Awards will be derived using the accounting principles generally accepted in the United States of America and will be reported or appear in the Companys periodic filings with the Securities Exchange Commission (including Forms 10-Q and 10-K) or the Companys annual report to shareholders and will be derived from one or more (or any combination of one or more) of the following:
(1) Income (Loss) per common share from continuing operations; or
(2) Income (Loss) per common share from income; or
(3) Operating profit (loss), Operating income (loss), or Income (Loss) from operations (as the case may be); or
(4) Income (Loss) from continuing operations before unusual or infrequent items; or
(5) Income (Loss) from continuing operations; or
(6) Income (Loss) from continuing operations before income taxes; or
(7) Income (Loss) from continuing operations before extraordinary item and/or cumulative effect of a change in accounting principle (as the case may be); or
(8) Income (Loss) before extraordinary item and/or cumulative effect of a change in accounting principle (as the case may be); or
(9) Net income (loss); or
(10) Income (Loss) before other comprehensive income (loss); or
(11) Comprehensive income (loss); or
(12) Income (Loss) before interest and income taxes (sometimes referred to as EBIT); or
(13) Income (Loss) before interest, income taxes, depreciation and amortization (sometimes referred to as EBITDA); or
(14) Any other objective and specific income (loss) category or non-GAAP financial measure that appears as a line item in the Companys periodic filings with the Securities and Exchange Commission or the annual report to shareholders; or
(15) Any of items (3) through (14) on a weighted average common shares outstanding basis; or
(16) Any of items (1) through (14) on a diluted basis as defined in the Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards (SFAS) No. 128 including authoritative interpretations or amendments thereof which may be issued from time to time as long as such interpretations or amendments are utilized on the consolidated statements of operations or statement of operations, as applicable, or in the notes to the consolidated financial statements; or
(17) Common stock price; or
(18) Total shareholder return expressed on a dollar or percentage basis as is customarily disclosed in the proxy statement accompanying the notice of annual meetings of shareholders; or
(19) Percentage increase in comparable store sales; or
(20) Gross profit (loss) or gross margin (loss) (as the case may be); or
(21) Economic value added; or
(22) Any of items (1) through (21) with respect to any subsidiary, Affiliate, business unit, business group, business venture or legal entity, including any combination thereof, or controlled directly or indirectly by the Company whether or not such information is included in the Companys annual report to shareholders, proxy statement or notice of annual meeting of shareholders; or
(23) Any of items (1) through (21) above may be determined before or after a minority interests share as designated by the Committee; or
(24) Any of items (1) through (21) above with respect to the period of service to which the performance goal relates whether or not such information is included in the Companys periodic filings, annual report to shareholders, proxy statement or notice of annual meetings of shareholders; or
(25) Total shareholder return ranking position meaning the relative placement of the Companys total shareholder return [as determined in (18) above] compared to those publicly held companies in the Companys peer group as established by the Committee prior to the beginning of a vesting period or such later date as permitted under the Code. The peer group shall be comprised of not less than eight and not more than sixteen companies, including the Company.
(26) With respect to items (1), (2), (15) and (16) above, other terminology may be used for income (loss) per common share (such as Basic EPS, earnings per common share, diluted EPS, or earnings per common share-assuming dilution) as contemplated by SFAS No. 128, as amended, revised or superseded;
The Committee in its sole discretion, in setting the performance goals in the time prescribed in Section 10.2 may provide for the making of equitable adjustments (including the income tax effects attributable thereto), singularly or in combination, to the goals/targets in recognition of unusual or non-recurring events or transactions for the following qualifying objective items:
(27) Asset impairments as described in SFAS No. 144, as amended, revised or superseded; or
(28) Costs associated with exit or disposal activities as described by SFAS No. 146, as amended, revised or superseded; or
(29) Amortization costs associated with the acquisition of goodwill or other intangible assets, as described by SFAS No. 142, as amended, revised or superseded; or
(30) Merger integration costs; or
(31) Merger transaction costs; or
(32) Any profit or loss attributable to the business operations of a reportable segment as described by SFAS No. 131 as amended, revised or superseded; or
(33) Any profit or loss attributable to a reportable segment as described by SFAS No. 131, as amended, revised or superseded or an entity or entities acquired during the period of service to which the performance goal relates; or
(34) Tax settlements; or
(35) Any extraordinary item, event or transaction as described in Accounting Principles Board Opinion (APB) No. 30, as amended, revised or superseded; or
(36) Any unusual in nature, or infrequent in occurrence items, events or transactions (that are not extraordinary items) as described in APB No. 30, as amended, revised or superseded; or
(37) Any other non-recurring items or other non-GAAP financial measures (not otherwise listed); or
(38) Any change in accounting as described in APB No. 20, as amended, revised or superseded; or
(39) Unrealized gains or losses on investments in debt and equity securities as described in SFAS No. 115, as amended, revised or superseded; or
(40) Any gain or loss recognized as a result of derivative instrument transactions or other hedging activities as described in SFAS No. 133, as amended, revised or superseded; or
(41) Stock-based compensation charges as described in SFAS No. 123, as amended, revised or superseded; or
(42) Any gain or loss as reported as a component of other comprehensive income as described in SFAS No. 130, as amended, revised or superseded; or
(43) Any gain or loss as a result of a direct or indirect guarantee, as described in FASB Interpretations (FIN) No. 45, as amended, revised or superseded; or
(44) Any gain or loss as the result of the consolidation of a variable interest entity as described in FIN No. 46, as amended, revised or superseded; or
(45) Any gain or loss as a result of litigation or lawsuit settlement (including class action lawsuits); or
(46) Any charges associated with the early retirement of debt obligations.
10.4 Certification of Performance Goals. Any Award intended to qualify as performance based compensation as defined under Code §162(m) shall not be paid until the Committee certifies in writing that the performance goals and any other material terms were in fact satisfied. In the manner required by Code §162(m), the Committee shall, promptly after the date on which the necessary financial and other information for a particular Performance Period becomes available, certify the extent to which performance goals have been achieved with respect to any Award intended to qualify as performance-based compensation under Code §162(m). In addition, the Committee may, in its discretion, reduce or eliminate the amount of any Award payable to any Participant, based on such factors as the Committee may deem relevant.
10.5 Limitation on Awards. The following limits, which are subject to automatic adjustment under Section 4.7, will apply to Performance-Based Awards:
(1) In no event may the number of Restricted Stock shares awarded to any Covered Employee for any fiscal year exceed 2,000,000 Common Shares.
(2) During any three consecutive calendar-year period, the maximum number of Common Shares for which Options and SARs, in the aggregate, may be granted to any Covered Employee may not exceed 3,000,000 Common Shares. If an Option is cancelled, the cancelled Option continues to be counted against the maximum number of shares for which Options may be granted to the Covered Employee under the Plan.
(3) For Performance Unit Awards that are intended to be performance-based compensation [as that term is used in Code §162(m)], no more than $6,000,000 may be subject to such Awards granted to any Covered Employee during any three consecutive calendar-year period.