Dick's Sporting Goods (DKS)

 

The current economic downturn has and will continue to have a major impact on executive compensation. In the face of increased financial and operational challenges, the Company remains committed to a performance pay approach in determining executive officer pay. During this period of economic volatility, the challenge is to balance realistic performance expectations while at the same time preserving the incentive to focus on our core philosophy of “relentless improvement in everything we do”. In addition, it is now more critical than ever to ensure that we attract and retain the most capable and competent leaders for our Company. To achieve the appropriate balance with respect to these varying elements, the Compensation Committee considers the pay mix between base and variable compensation in setting executive officer pay to align with stockholder interests and to be flexible enough to react to changing economic conditions.

 

The Hay Group, a nationally known consulting company with a strong emphasis in the retail sector, was originally engaged by the Company’s management in the fall of 2007 to conduct a comprehensive market analysis for use in evaluating and establishing executive compensation. In 2008 management engaged the Hay Group to assist in developing a comprehensive review of our executive officer total direct compensation. This data was utilized by our Chairman and Chief Executive Officer to assist him in developing recommendations to the Compensation Committee regarding executive officer compensation. Each direct pay component utilized by the Company was analyzed using the Hay Group 2008 Retail Industry Total Remuneration Report (referred to in this proxy statement as the “Hay Retail Survey”), which includes 97 companies and provides data by job title (controlling for differences in responsibility and revenue). The Hay Group provides no other services to the Company and the Compensation Committee believes the work performed by The Hay Group for management does not in any way impact the independence of the Compensation Committee members.

 

In addition, at the request of the Compensation Committee, management in 2008 utilized the Hay Group to conduct a review of the direct compensation components for our named executive officers against a benchmark retail group, which we refer to as the “Peer Analysis”. The Peer Analysis focused on base pay, annual bonus and stock-based compensation. The Compensation Committee approved the establishment of an “Executive Compensation Retail Peer Group” using the following general criteria for purposes of conducting the Peer Analysis:

 

 

The decision to include companies with up to double annual revenues of the Company aligns with the aspirational nature of our growth strategy, thereby reflecting the appropriate recruitment universe from which we desire to attract executive officer talent to support that strategy. Additionally, the broader criteria ensures a sufficient number of companies are included in our peer group to provide meaningful benchmarks. Since the current economic conditions have affected most, if not all, of these companies in a similar manner, the Compensation

 

The Hay Group, a nationally known consulting company with a strong emphasis in the retail sector, was engaged by the Company’s management in the fall of 2007 to conduct a comprehensive market analysis for use in evaluating and establishing executive compensation. Each direct pay component utilized by the Company was analyzed against the Hay Group 2007 Retail Industry Total Remuneration Report (referred to in this proxy statement as the “Hay Retail Survey”), which includes 100 companies and provides data by job title (controlling for differences in responsibility and revenue).

 

In addition, at the request of the Compensation Committee, management in 2007 conducted a review of the direct compensation components for our named executive officers against a benchmark retail group, which we refer to as the “Peer Analysis”. The Peer Analysis focused on base pay, annual bonus and stock-based compensation.

 

The Compensation Committee approved the establishment of an “Executive Compensation Retail Peer Group” using the following general criteria for purposes of conducting the Peer Analysis:

 

 

In addition to the above criteria, the Peer Analysis considered the Company’s financial and operational performance against that of the peer group, in areas such as Total Shareholder Return, Sales and Net Income Growth, Return on Invested Capital and Return on Equity. This peer group will be reviewed periodically by the Compensation Committee and may change from time to time based on each retailer’s continued relevance to the