This excerpt taken from the PTRY DEF 14A filed Jan 23, 2009.
Competitive benchmarking. When making compensation decisions, we compare the compensation of our named executive officers against compensation paid to similarly-situated executives at companies that we consider to be our peers. The CO Committee undertakes a comprehensive review of the executive compensation program when it deems appropriate. The last such review was during our fiscal year ended September 28, 2006 when it engaged Hewitt to conduct a market comparison of our executive compensation programs. This analysis is referred to as the 2006 Analysis. Since benchmarking is not performed annually, the data from the 2006 Analysis was aged based on the average market movement information for the retail sector provided to us by Hewitt.
As no peer group exists solely within the convenience store industry, the CO Committee approved the inclusion of companies that operate in the convenience store, grocery and general retail industries. The companies generally were selected from among participants in Hewitt’s executive pay database; and were supplemented by including two companies that did not then participate in Hewitt’s database (using publicly-available pay data).
At the time of the 2006 Analysis, average and median revenues for this peer group were $5.5 billion and $4.8 billion, respectively. Market pay levels for our executive positions were benchmarked on a size-adjusted basis using our total revenue of $4.4 billion for our fiscal year which ended September 29, 2005. The following is a list of companies used in the 2006 Analysis:
As noted, the CO Committee used the aged results of the 2006 Analysis as one factor in making its fiscal 2008 executive compensation decisions. When it next decides to conduct a market comparison, the CO Committee plans to re-evaluate the peer companies to ensure they remain appropriate for comparison, and anticipates that changes in the peer group will occur from time to time based on the above criteria as well as the availability of pay data. The CO Committee also expects to consider the appropriate revenue scope for benchmarking purposes and what other criteria should be used to select the benchmark companies.
We believe that benchmarking provides a useful point of reference when making compensation decisions, but do not rely on it solely. In addition, we consider other quantitative and qualitative factors such as overall company performance, individual performance, internal pay alignment and retention concerns, to name a few.
In implementing our executive compensation program for fiscal 2008, we targeted total compensation opportunities for our named executive officers between the 25th and 50th percentiles of the market for comparable retail companies on a size-adjusted basis. For this purpose, “total compensation” is defined as the sum of base salary, target annual incentives and long-term equity incentives valued as of the grant date. We believe this range provides us with the appropriate flexibility to attract and retain the quality of executives we need to successfully manage our business.
We do not target a specific mix of executive pay by allocating total pay amounts across cash and non-cash pay, between current and long-term pay, or among different types of long-term incentive awards. The composition of our executive compensation is driven by decisions made for each component of pay separately, which we intend to be appropriately market-competitive, as well as the impact of our decisions on total compensation.