1、2006 Annual ReportSteven S.Fishman Chairman,CEO,and President About Our CompanyHeadquartered in Columbus,Ohio,Big Lots(NYSE:BIG)is a Fortune 500 company with over 1,350 stores nationwide.For more thanthree decades,weve delighted our customerswith a vibrant mix of exciting brands,uniqueproducts,and c
2、loseout prices.Big Lots offers new merchandise every week at substantial savings over traditional discount retailers,on average 20 to 40 percent less.Shoppers love our unexpected deals.We also carry attractive,affordable furniture,home furnishings,seasonal merchandise,and hundreds of everyday items
3、consumers want and need.Through excellent relationships with manufacturers,high-volume purchases,and strict expense control,we pass tremendous savings on to our customers.Fiscal Year2006 2005 2004($in thousands,except per share amounts and salesper selling square foot)Earnings Data(a)Net sales$4,743
4、,048$4,429,905$4,149,252Net sales increase 7.1%6.8%5.2%Income from continuing operations$112,618$15,725$31,432Income from continuing operations increase(decrease)616.2%(50.0)%(61.2)%Income from continuing operations per share-diluted$1.01$0.14$0.27Income from continuing operations per share -diluted
5、 increase(decrease)621.4%(48.1)%(60.3)%Average diluted common shares outstanding111,930 113,677 114,801Gross margin-%of net sales39.9%39.1%40.7%Selling and administrative expenses-%of net sales 34.2%36.0%36.6%Depreciation expense-%of net sales2.1%2.5%2.4%Operating profit-%of net sales3.5%0.6%1.7%Net
6、 interest expense(income)-%of net sales(0.1)%0.1%0.6%Income from continuing operations-%of net sales 2.4%0.4%0.8%Balance Sheet Dataand Financial Ratios Cash equivalents and short-term investments$269,430$-$-Inventories 758,185 836,092 895,016Property and equipment-net505,647 584,083 648,741Total ass
7、ets1,720,526 1,625,497 1,733,584Long-term obligations-5,500 159,200Shareholders equity1,129,703 1,078,724 1,075,490Working capital$674,815$557,231$622,269Current ratio2.4 2.3 2.5Inventory turnover(a)3.4 3.0 2.8Long-term obligations to total capitalization 0.0%0.5%12.9%Return on assets-continuing ope
8、rations(a)6.7%0.9%1.8%Return on shareholders equity -continuing operations(a)10.2%1.5%2.9%Cash Flow Data(a)Cash provided by operating activities(b)$381,477$212,965$71,261Cash used in investing activities(c)(30,421)(66,702)(127,756)Cash flow(d)$351,056$146,263$(56,495)Store DataStores open at end of
9、the fiscal year 1,375 1,401 1,502Gross square footage(000s)40,770 41,413 42,975Selling square footage(000s)29,376 29,856 30,943Increase(decrease)in selling square footage(1.6)%(3.5)%6.6%Average selling square footage per store21,364 21,310 20,601 Other Sales Data Comparable store sales growth 4.6%1.
10、8%0.0%Average sales per store(a)$3,377$3,028$2,951Sales per selling square foot(a)$158$146$144Financial Highlights(Unaudited Results)Big Lots,Inc.2006 Annual Report 1(a)The results for fiscal year 2006 include 53 weeks,while the results for fiscal years 2005 and 2004 include 52 weeks.(b)Includes dep
11、reciation and amortization of$95,613,$114,617,and$101,917,respectively for fiscal years 2006,2005,and 2004.(c)Includes capital expenditures of$35,878,$68,503,and$135,291,respectively for fiscal years 2006,2005,and 2004.(d)Cash flow is calculated as cash provided by operating activities less cash use
12、d in investing activities.$400,000$300,000$200,000$100,000$0($100,000)Cash flow(a)(d)(56,495)146,26304 0506351,05604 05063.63.22.82.42.0Inventory turnover(a)2.83.03.404 0506$1.25$1.00$0.75$0.50$0.25$0.00Income from continuing operationsper share-diluted(a)0.270.141.0104 05064.0%3.0%2.0%1.0%0.0%Opera
13、ting profit-%of net sales(a)1.70.63.5Our success is more than coincidence.These achievements are the early results of a strategy I outlined in my last letter called WIN,or Whats Important Now.WIN is focused on three key areas of the business:merchandising,operating expenses,and real estate.The strat
14、egy has involved three phases:discovery,testing,and execution.We completed discovery in 2005,and at that time we made some difficult decisions in rightsizing our company and lowering our inventory levels.We said 2006 would be about testing and learning.And I firmly believe our learnings from the yea
15、r will help fuel our growth well into the future.Let me give you a brief progress report:We learned that the majority of our customers are treasure hunters who are looking for great value,and we have a tremendous opportunity to capture more of their wallet or weekly spend.We learned that if we deliv
16、er a great assortment of branded closeout products,our customers are not inhibited by price.We learned we can drive business during the back-to-school period.Typically this time is reserved for retailers that are heavy in apparel.We enjoyed success in several back-to-school related categories such a
17、s stationery,basic denim,furniture,and domestics.We learned how to execute better onbig deals.Our major drugstore liquidation We made Big Lots aSTRONGERcompany in 2006.2 Big Lots,Inc.2006 Annual ReportDear Shareholders:Quarter by quarter,we improvedour execution and surpassed ourfinancial goals.We i
18、ncreasedcomp store sales,strengthenedour balance sheet,and reinvestedin our business.The bottom line:We made more money in 2006than we have in any single yearsince 1997 and generated morecash than any single year incompany history.Steven S.FishmanChairman,CEO,and Presidentcontributed significant vol
19、ume to the company due to better deal acquisition,product allocation,and inventory management.We learned we could restore growth in our seasonal business.After making some merchandise assortment changes and adding some resources and talent in this area,our seasonal business finished the year on a po
20、sitive trend.We learned how to leverage the power of in-store presentation and multimedia marketing.Better displays,a new clearance area presentation,redesigned print circulars,targeted marketing and television ad campaigns,and the relaunch of a more consumer-focused Web site made our merchandise mo
21、re interesting and helped turnthe goods.Overall we made incredible progress on our WIN strategy.The Big Lots team,working together with the support of our Board of Directors,is executing a dramatic repositioning of our business.But as proud as we are of our accomplishments,we know that the path to s
22、uccess is marked by continuous improvement and learning.In this context,a significant CEO lesson was reinforced for me last year:the importance of driving change.As a student of retail,which I guess I could call myself with 30 years of experience under my belt,I can tell you that its not remotely th
23、e same business today as it was a decade ago.Big Lots must look different.think different.buy different.to continue to excel in the years ahead.Focusing on our key priorities,I want to describe a few of the changes we are driving to build a company that continues to WIN in the future.Merchants first
24、Deep in the heart of Big Lots is the simple idea that our associates are merchants first loyal customer advocates,savvy buyers,efficient administrators,and skilled shopkeepers who take pride in our business.Since joining the company,Ive challenged everyone,no matter who they are or what they do,to t
25、hink creatively about how they can impact our merchant-centered culture.I go to the cafeteria in the morning to get a cup of coffee.I dont need to I could stay in my office and do that.But in the cafeteria,I can run into 25 or 30 people who are getting breakfast and talk about what theyre doing.Our
26、associates know that when I see them at a Town Hall meeting or during a store visit,I want to hear about whats going on in their corner of the business.We are creating a culture of accountability.And everybody feels like theyre a part of whats going on whether they source products,process orders,shi
27、p goods,run a register,recruit talent,or design ads.Together were aggressively pursuing new ideasand business relationships that will help us deliverthe brand-name deals our customers know and love.For example,we know that many manufacturershave the ability to engineer closeouts just forBig Lots.Tha
28、ts why were focused on turning ourtransactions with vendors into relationships.After avery successful Vendor Summit in January 2006 atour Columbus headquarters,we turned our sightsto the world.In October,we hosted our first Big LotsGlobal Sourcing Summit in Hong Kong with nearly200 business professi
29、onals to explore unique optionsfor working together.In addition,we established anexclusive relationship with a sourcing office in Chinato strengthen our import business from Asia.We also added fabulous items to our merchandisemix through our captive label brands products exclusive to Big Lots such a
30、s Rival dog food and Dakin plush toys.We source the product,negotiate the deal,develop packaging,set the quality standards and price then we offer a tremendous value toour customers.Were also collaborating with severalof the nations leading brands to develop exciting engineered closeouts.By working
31、closely with vendorstoward well-defined goals,captive labels and engineered closeouts are a great complement toour merchandise selection.DisciplineDiscipline is integral to our continued growth in earnings and the creation of shareholder value.Discipline plays a key role in our ability to control ex
32、penses and offer incredible deals to our customers.It means that every facet of our organization is focused on becoming a selling organization.Even as a closeout retailer,its not enough to focus only on the buy-side of our business.Pricing strategies,pre-ticketing,pallet quantities,packaging,ease of
33、 Big Lots,Inc.2006 Annual Report 34 Big Lots,Inc.2006 Annual Report executing the deal in the store all these factors must come into play in determining if a buy is right for us from the very beginning.Our Raise the Ring strategy is a perfect example of how our buying and selling processes are worki
34、ng hand in hand.Raise the Ring is a merchandising strategy that generally results in slightly higher average item retail.Higher average item retail not only impacts the top line,but also leads to fewer cartons of merchandise to process and handle in order to achieve sales dollars.The end result:reco
35、rd inventory turns,more efficient stores,cleaner back rooms,easier to navigate selling floors,and the lowest level of expenses as a percent of sales in the last eight years!Improved operating performance,coupled withgreater accountability and discipline around expenses,has resulted in a strong balan
36、ce sheet and cash position.This financial strength gives us the ability to capitalize on opportunities as they present themselves.For instance,in 2006 we executed a$150 millionshare repurchase program at an average price of$15.90 not bad considering where our stock price finished the year.At the sam
37、e time,we were investing in our business and maintaining our assets.We began to invest in a new store register system that was piloted in a group of stores.We also made capital investments in several locations to test new store layouts,marketing ideas,and visual merchandising concepts.LeadershipWe n
38、ever lose sight of the fact that our success depends on the investments we make in our people.With the right combination of human resources and sound fiscal management,we have the ability to do almost anything we can imagine.New talent and key organizational changes are creating an environment in wh
39、ich the proven expertise of our veteran executives is complemented by fresh ideas from newly hired leaders.In turn,our new team members learn from our seasoned veterans.We are already seeing the results of these relationships in the form of closer collaboration,innovative approaches,and more effecti
40、ve business strategies.As we grow,we will continue to cultivate our unique culture and entrepreneurial spirit.We promote an environment where all our associates can use their ingenuity and creativity to take their work to the highest level.Great growth companies have great people.They attract talent
41、,they retain talent,and they give talented people the opportunity to excel.Profitable growthAside from inventory,real estate is the biggest capital decision we make.We have implemented a new market-focused strategy,opening new stores more selectively,primarily in our most successful areas ofthe coun
42、try.At Big Lots,we source our real estate like we source our merchandise always looking for value.Its our opinion that right now real estate is not a value.Landlords are looking for retailers to pay a premium.With our cash position,we could open a significant number of stores.But I absolutely will n
43、ot overpay for real estate.When the market softens and our offers begin to look more appealing to landlords,we will be ready.But for now,we are focused on improving the performance in our existing fleet of stores.After talking with hundreds of store managers,associates,and company leaders,Im convinc
44、ed we have the resources and talent to grow sales from existing stores acrossthe chain.ExecutionOur organization has worked extremely hard over the last 12 months,and Im very pleased with what weve been able to accomplish in a short period of time.I firmly believe the WIN strategy is working,and wer
45、e seeing the benefits of our efforts in our results.But we are still early in the game and eager to take our business to the next level.We worked diligently during 2006 to test and learn,and our executive team has reviewed every aspect of our business in order to develop a long-range outlook for wha
46、t the operating profit potential of this business could be over the next three years.We believe that Big Lots is an operating profit growth story,creating core growth from within.Our strategy will not hinge on a large number of store openings.In fact,our store count will likely contract.We recognize
47、 at the outset that there will be some camps that do not like this approach.However,we believe this is a much more risk-averse way to develop strategy and stretch the business.Big Lots,Inc.2006 Annual Report 5Our future growth will be driven by:?Comp sales we see a clear path to increaseour sales pe
48、r square foot while steadily improvinginventory turnover.?Gross margin dollars growing at a rate similarto sales.?Continued SG&A leverage weve identifiedseveral new initiatives through process changesor investments in technology that should allow usto continue to generate SG&A leverage well intothe
49、future.?Ongoing programs to improve store performance,targeted marketing,and continued emphasis onmerchandising(brand-name closeouts,engineeredcloseouts,captive brands,and global sourcing).Special thanksThe accomplishments Ive described for you heremerely scratch the surface of what is happening atB
50、ig Lots today.But I hope they give you a flavor ofjust how ingrained the spirit of change is and how the drive for innovation and learning has permeatedour organization.Perhaps most relevant to you,our shareholders,is that even with our solid trends in salesand earnings,our management team believes
51、the best is yet to come.Our optimism is built on the dedication and commitment of our nearly 40,000 associates.I am grateful for their hard work and tireless spirit.Each day,in thousands of ways large and small,theyre transforming our company across every dimension,all focused on creating a powerful
52、 merchant-driven culture.After all,thats what were about:finding great treasures and doing great deals all the time.Thank you for your ongoing investment and confidence in Big Lots.Sincerely,Steven S.FishmanChairman,CEO,and President6 Big Lots,Inc.2006 Annual Report Company ExecutivesChairman,Chief
53、ExecutiveOfficer&PresidentSteven S.FishmanExecutive Vice PresidentsJohn C.MartinMerchandisingDonald A.MierzwaStore OperationsBrad A.WaiteHuman Resources,Loss Prevention,Real Estate&Risk ManagementSenior Vice PresidentsLisa M.BachmannMerchandise Planning/Allocation&Chief Information OfficerRobert C.C
54、laxtonMarketingJoe R.CooperChief Financial OfficerCharles W.Haubiel IIGeneral Counsel&Corporate SecretaryNorman J.RankinGeneral Merchandise ManagerHarold A.WilsonDistribution&Transportation ServicesVice PresidentsTimothy C.AndersonStore ControlLoyd R.BarronStore OperationsWilliam ConeyStore Operatio
55、nsKevin R.DayReal EstateCharles H.EllisGlobal SourcingRoger D.ErwinStore OperationsRichard L.FanninTechnology&Data Center ServicesCharles C.FreidenbergDivisional Merchandise Manager Mollie M.HallStore OperationsCraig A.HartMerchandise PlanningKim K.HornerMerchandisingVice Presidents(Continued)Charle
56、s H.HowzeStore OperationsGary E.HuberStore Projects Kathleen R.HupperReal Estate AdministrationTimothy A.JohnsonStrategic Planning&Investor RelationsKathryn A.KeaneTransportation ServicesStephen B.MarcusWholesaleSeth L.MarksBig Lots CapitalRichard J.Marsan,Jr.Marketing&Merchandise PresentationTodd A
57、.NoethenDistribution Support ServicesJudith A.PanoffDivisional Merchandise ManagerJared A.PoffTreasurerJo L.RoneyHuman Resources ServicesShelley L.RubinAdvertisingMichael A.SchlonskyAssociate Relations&Risk ManagementPaul A.SchroederControllerRobert S.SegalDivisional Merchandise ManagerSteven R.Smar
58、tDivisional Merchandise ManagerSharon A.SmithMerchandise AllocationWayne W.StocktonDivisional Merchandise ManagerL.Michael WattsTaxCrystal L.WearyDivisional Merchandise ManagerStewart W.WenerstromMerchandise Support Gregory W.WilmerInformation Technology Development Kevin R.WolfeLoss PreventionDirec
59、tors and ExecutivesJeffrey P.BergerPresident&Chief Executive OfficerHeinz North America FoodserviceExecutive Vice PresidentGlobal FoodserviceSheldon M.BermanChairman,Chief ExecutiveOfficer&PresidentXtreem Creative,Inc.Steven S.FishmanChairman,Chief ExecutiveOfficer&PresidentBig Lots,Inc.David T.Koll
60、atPresident&Founder22,Inc.Brenda J.Lauderbackformer President,Wholesale GroupNine West Group,Inc.Philip E.Mallottformer Vice President&Chief Financial OfficerIntimate Brands,Inc.Russell Soltformer ExecutiveVice President&Chief Financial OfficerWest Marine,Inc.James R.Tenerformer President&Chief Oper
61、ating OfficerBrook Mays Music CompanyDennis B.TishkoffChairman&Chief Executive OfficerDrew Shoe CorporationBoard of DirectorsBig Lots,Inc.300 Phillipi RoadColumbus,Ohio 43228 April 12,2007 Dear Shareholder:You are cordially invited to attend the Annual Meeting of Shareholders of Big Lots,Inc.,which
62、will be held at our corporate offices located at 300 Phillipi Road,Columbus,Ohio,on May 31,2007,beginning at 9:00 a.m.EDT.The following pages contain the formal Notice of Annual Meeting of Shareholders and the Proxy Statement.You should review this material for information concerning the business to
63、 be conducted at the Annual Meeting of Shareholders.Your vote is important.Whether or not you plan to attend the Annual Meeting of Shareholders,you are urged to complete,date and sign the enclosed proxy card and return it in the enclosed envelope or vote online as soon as possible.If you attend the
64、Annual Meeting of Shareholders,you may revoke your proxy and vote in person if you wish,even if you have previously returned your proxy card or voted online.On behalf of the Board of Directors,we would like to express our appreciation for your continued interest in the affairs of Big Lots,Inc.STEVEN
65、 S.FISHMAN Chairman,Chief Executive Officer and PresidentBig Lots,Inc.300 Phillipi RoadColumbus,Ohio 43228 NOTICE OF ANNUAL MEETING OF SHAREHOLDERSTO BE HELD MAY 31,2007 Notice is hereby given that the Annual Meeting of Shareholders of Big Lots,Inc.will be held at our corporate offices located at 30
66、0 Phillipi Road,Columbus,Ohio,on May 31,2007,beginning at 9:00 a.m.EDT.At the Annual Meeting of Shareholders,the holders of outstanding Big Lots,Imon shares will act on the following matters:1.The election of nine directors of Big Lots,Inc.;2.The ratification of the appointment of Deloitte&Touche LL
67、P as our independent auditor for the fiscal year ending February 2,2008;and3.The transaction of such other business as may properly come before the meeting.Only shareholders of record at the close of business on April 2,2007 are entitled to notice of and to vote at the Annual Meeting of Shareholders
68、 and any postponement or adjournment thereof.By Order of the Board of Directors,CHARLES W.HAUBIEL II Senior Vice President,General Counsel and Corporate SecretaryApril 12,2007Columbus,Ohio _Your vote is important.Shareholders are urged to vote online or complete,date and sign the enclosed proxy card
69、 and return it in the enclosed envelope to which no postage need be affixed if mailed in the United States.If you attend the Annual Meeting of Shareholders,you may revoke your proxy and vote in person if you wish,even if you have previously returned your proxy or voted online.iBIG LOTS,INC.PROXY STA
70、TEMENT TABLE OF CONTENTS ABOUT THE ANNUAL MEETING .1Purpose of the Annual Meeting .1Shareholder Voting Rights .1Registered Shareholders and Beneficial Shareholders .1Attendance at the Annual Meeting .2How to Vote .2Householding .2Electronic Delivery of Proxy Materials and Annual Report.2Tabulation o
71、f the Votes .3Boards Recommendation.3Vote Required to Approve a Proposal .3 Proposal One.3 Other Matters .3Quorum .3PROPOSAL ONE:ELECTION OF DIRECTORS .4GOVERNANCE OF BIG LOTS.5Current Members of the Board of Directors .5Board Meetings in Fiscal 2006 .5Role of the Boards Committees.5 Audit Committee
72、.5 Compensation Committee.6 Nominating/Corporate Governance Committee .6Presiding Member of the Board.6Determination of Director Independence .6Selection of Nominees by the Board.7Compensation Committee Interlocks and Insider Participation.7Other Directorships.8Code of Business Conduct and Ethics&Co
73、de of Ethics for Financial Professionals.8Related Person Transactions.8Communications with the Board.9DIRECTOR COMPENSATION.9Retainers and Fees.9Stock Options.9Director Compensation Table.10ii STOCK OWNERSHIP .11Ownership of Our Common Shares by Certain Beneficial Owners and Management .11Section 16
74、(a)Beneficial Ownership Reporting Compliance.13EXECUTIVE COMPENSATION.13Compensation Committee Report.13Compensation Discussion and Analysis.14Compensation Committee.14Compensation Philosophy and Objectives.14Executive Compensation Practices and Policies.15Benchmarking.15Individual Performance Evalu
75、ation.16Linking Equity Awards with Performance.16Compensation Policies.16Compensation Consultant.17Role of Executives in Establishing Compensation.17Elements of In-Service Executive Compensation.17Salary.18Bonus.18Equity.18Personal Benefits and Perquisites.20Employment Agreements.20Change in Control
76、.22Retirement Plans.22Pension Plan and Supplemental Pension Plan.23Savings Plan and Supplemental Savings Plan.24Minimum Share Ownership and Retention.24Elements of Post-Termination Executive Compensation.25Compensation Committee Activity.26Impact of Performance on Compensation.27Compensation for the
77、 Named Executive Officers in Fiscal 2006.28Impact of Tax and Accounting Treatments.29Internal Revenue Code Section 162(m).29Internal Revenue Code Section 409A.29Statement of Financial Accounting Standards No.123(R).30Conclusion.30Summary Compensation Table.30Grants of Plan-Based Awards.33Outstanding
78、 Equity Awards at Fiscal Year-End.34Option Exercises and Stock Vested.35Pension Benefits.35Nonqualified Deferred Compensation.36iii Potential Payments Upon Termination or Change in Control.36 Steven S.Fishman.37 Joe R.Cooper.38 Brad A.Waite.38 John C.Martin.39 Lisa M.Bachmann.39AUDIT COMMITTEE DISCL
79、OSURE.40General Information.40Independent Auditor.40Audit and Non-Audit Services Pre-Approval Policy.41Fees Paid to Independent Auditor.41Audit Committee Report.41PROPOSAL TWO:RATIFICATION OF THE APPOINTMENT OF DELOITTE&TOUCHE LLP AS BIG LOTS INDEPENDENT AUDITOR FOR FISCAL 2007.42SHAREHOLDER PROPOSA
80、LS .42ANNUAL REPORT ON FORM 10-K .42PROXY SOLICITATION COSTS .42OTHER MATTERS.43-1-Big Lots,Inc.300 Phillipi RoadColumbus,Ohio 43228 PROXY STATEMENTThis Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors(“Board”)of Big Lots,Inc.,an Ohio corporation(
81、“we,”“us,”“our”and“Big Lots”),for use at the Annual Meeting of Shareholders to be held on May 31,2007(“Annual Meeting”),at our corporate offices located at 300 Phillipi Road,Columbus,Ohio.The Notice of Annual Meeting of Shareholders,this Proxy Statement and the accompanying proxy card,together with
82、our Annual Report to Shareholders for the fiscal year ended February 3,2007(“fiscal 2006”),are first being mailed to shareholders on or about April 12,2007.ABOUT THE ANNUAL MEETING Purpose of the Annual Meeting At the Annual Meeting,shareholders will act upon the matters outlined in the Notice of An
83、nual Meeting included with this Proxy Statement.Specifically,the shareholders will be asked to elect our directors,ratify the appointment of Deloitte&Touche LLP as our independent registered public accounting firm(“independent auditor”)for the fiscal year ending February 2,2008(“fiscal 2007”),and tr
84、ansact such other business as may properly come before the Annual Meeting.Shareholder Voting Rights Only those shareholders of record at the close of business on April 2,2007,the record date for the Annual Meeting,are entitled to receive notice of and to vote at the Annual Meeting.At the record date
85、,we had outstanding 112,659,836 common shares,$0.01 par value per share.Each of the outstanding common shares entitles the holder to one vote on each matter to be voted upon at the Annual Meeting,or any postponement or adjournment thereof.The holders of common shares have no cumulative voting rights
86、 in the election of directors.All voting shall be governed by our Code of Regulations and the General Corporation Law of the State of Ohio.Registered Shareholders and Beneficial Shareholders If your common shares are registered in your name directly with our transfer agent,National City Bank,you are
87、 considered,with respect to those common shares,a registered shareholder.We have sent directly to registered shareholders the Notice of Annual Meeting of Shareholders,this Proxy Statement,the accompanying proxy card and our Annual Report to Shareholders for fiscal 2006.If our common shares are held
88、for you in a brokerage account or by a bank or other holder of record,you are considered the beneficial shareholder of the common shares held in street name.The Notice of Annual Meeting of Shareholders,this Proxy Statement,the accompanying proxy card,and our Annual Report to Shareholders for fiscal
89、2006 have been forwarded to you by your broker,bank or other holder of record who is considered,with respect to those common shares,the registered shareholder.As the beneficial shareholder,you have the right to direct your broker,bank or other holder of record on how to vote your common shares by us
90、ing the voting instruction card included in the mailing,or by following the instructions for voting electronically,you received from your broker,bank or other holder of record.-2-Attendance at the Annual Meeting All of our shareholders as of the record date,or their duly appointed proxies,may attend
91、 the Annual Meeting.Registration and seating will begin at 8:30 a.m.EDT,and the Annual Meeting will begin at 9:00 a.m.EDT.If you attend,please note that you may be asked to present valid picture identification,such as a drivers license or passport.Cameras,recording devices and other electronic devic
92、es will not be permitted at the Annual Meeting.Please also note that if you hold your common shares as a beneficial shareholder,you will need to bring to the Annual Meeting a copy of a brokerage statement reflecting your stock ownership as of the record date and to check in at the registration desk.
93、How to Vote If you are a registered shareholder,you may vote your shares by completing,dating and signing the accompanying proxy card and returning it in the enclosed envelope.You may also vote online at until May 30,2007 at 11:59 p.m.EDT.If you wish to vote online,you will need your proxy card and
94、you must follow the instructions posted on the website.If you complete,date,sign and return your proxy card or you properly complete your proxy online,your shares will be voted as you direct.If you are a registered shareholder and attend the Annual Meeting,you may deliver your completed proxy card i
95、n person.Beneficial shareholders who wish to vote at the Annual Meeting will need to obtain a completed proxy form from the broker,bank or other holder of record who is the registered holder of the common shares.Additionally,beneficial shareholders may be able to instruct the broker,bank or other ho
96、lder of record how to vote by telephone or electronically,so please contact your broker,bank or other holder of record to determine availability and applicable deadlines.A proxy may be revoked at any time before it is exercised by filing with our Corporate Secretary a notice of revocation or a duly
97、executed proxy bearing a later date.A proxy may also be revoked by attending the Annual Meeting and giving notice of revocation to the secretary of the meeting,either in writing or in open meeting.Attendance at the Annual Meeting will not by itself revoke a previously granted proxy.Householding The
98、rules of the Securities and Exchange Commission(“SEC”)allow multiple shareholders residing at the same address the convenience of receiving a single copy of annual reports,proxy statements,notices of shareholder meetings,and other documents if they consent to do so(“householding”).Householding is pe
99、rmitted only in certain circumstances,including when you have the same last name and address as another shareholder.If the required conditions are met,and SEC regulations allow,your household may receive a single copy of annual reports,proxy statements,notices of shareholder meetings,and other docum
100、ents.You may revoke your consent for householding at any time by contacting Automatic Data Processing,Inc.(“ADP”),either by calling 1-800-542-1061,or by writing to:ADP,Householding Department,51 Mercedes Way,Edgewood,New York 11717.You will be removed from the householding program within 30 days of
101、receipt of your instructions,at which time you will receive a separate copy of our disclosure documents.Beneficial shareholders can request more information about householding from their brokers,banks or other holders of record.Electronic Delivery of Proxy Materials and Annual Report In lieu of rece
102、iving paper copies of next years proxy materials and annual report in the mail,shareholders may elect to receive these documents electronically via e-mail or the Internet.By opting to access these documents electronically,you will save us the cost of producing and mailing documents,reduce the amount
103、 of mail you receive,and help preserve environmental resources.To enroll in the electronic delivery service for future annual meetings of shareholders,use your proxy card information to register online at by indicating that you agree to receive or access shareholder communications electronically in
104、future years.-3-Tabulation of the Votes Tabulation of the votes cast at the Annual Meeting will be performed by ADP,as inspected by our duly appointed inspectors of election.Boards Recommendation Unless you give other instructions on your proxy card(excluding broker non-votes),the persons named as p
105、roxy holders on the proxy card will vote the common shares in accordance with the recommendations of the Board.The Boards recommendation is set forth together with the description of each proposal in this Proxy Statement.In summary,the Board recommends a vote FOR election of the nominated slate of d
106、irectors(see Proposal One)and FOR the ratification of Deloitte&Touche LLP as our independent auditor for fiscal 2007(see Proposal Two).If any other matter properly comes before the Annual Meeting,or if a director nominee named in the Proxy Statement is unable to serve or for good cause will not serv
107、e,the proxy holders will vote on such matter or for a substitute nominee as recommended by the Board.Vote Required to Approve a Proposal Proposal OneFor purposes of Proposal One,the nine director nominees receiving the greatest number of votes cast shall be elected as directors.A properly executed p
108、roxy marked“withhold authority”with respect to the election of one or more nominees for director will not be voted with respect to the nominee or nominees for director indicated,although it will be counted for purposes of determining whether there is a quorum.If you are a beneficial shareholder,your
109、 broker,bank or other holder of record who is the registered holder of your common shares is permitted to vote your shares for the election of directors even if the broker,bank or other holder of record does not receive voting instructions from you.Other MattersFor purposes of Proposal Two and any o
110、ther matters that may properly come before the Annual Meeting,the affirmative vote of the holders of a majority of the common shares represented in person or by proxy and entitled to vote on each such matter will be required for approval.A properly executed proxy marked“abstain”with respect to any s
111、uch matter will not be voted with respect to such matter,although it will be counted for purposes of determining whether there is a quorum.Accordingly,an abstention will have the effect of a negative vote.If no voting instructions are given(excluding broker non-votes),the persons named as proxy hold
112、ers on the proxy card will vote the common shares in accordance with the recommendation of the Board.If you are a beneficial shareholder,your broker,bank or other holder of record may not be permitted to exercise discretionary voting power with respect to some of the matters to be acted upon.Thus,if
113、 you do not give your broker,bank or other holder of record specific voting instructions,your common shares may not be voted on those matters and will not be counted in determining the number of common shares necessary for approval.Common shares represented by such“broker non-votes”will,however,be c
114、ounted in determining whether there is a quorum.Quorum The presence,in person or by proxy,of the holders of a majority of the outstanding common shares entitled to be voted at the Annual Meeting will constitute a quorum,permitting us to conduct our business at the Annual Meeting.Proxies received but
115、 marked as abstentions and broker non-votes will be included in the calculation of the number of common shares considered to be represented at the Annual Meeting for purposes of establishing a quorum.-4-PROPOSAL ONE:ELECTION OF DIRECTORS At the Annual Meeting,the common shares of Big Lots represente
116、d by proxies will be voted,unless otherwise specified,for the election of the nine director nominees named below.All nine nominees are currently directors of Big Lots.Proxies cannot be voted at the Annual Meeting for more than nine persons.Set forth below is certain information relating to the direc
117、tor nominees.Directors are elected to serve until the next annual meeting of shareholders and until their respective successors are elected and qualified,or until their earlier death,resignation,or removal.NameAgePrincipal Occupationfor the Past Five or More YearsDirectorSince Jeffrey P.Berger57Exec
118、utive Vice President,Global Foodservice,and President and Chief Executive Officer,Heinz North America Foodservice(manufacturer and marketer of processed food products).2006Sheldon M.Berman66Chairman,Chief Executive Officer and President,Xtreem Creative,Inc.(business planning,marketing planning,and a
119、dvertising services).1994Steven S.Fishman56Chairman,Chief Executive Officer and President of Big Lots;former President,Chief Executive Officer and Chief Restructuring Officer,Rhodes,Inc.(furniture retailer)Rhodes,Inc.filed for bankruptcy on November 4,2004;former Chairman and Chief Executive Officer
120、,Franks Nursery&Crafts,Inc.(lawn and garden specialty retailer)Franks Nursery&Crafts,Inc.filed for bankruptcy on September 8,2004;former President and Founder,SSF Resources,Inc.(investment and consulting).2005David T.Kollat68President and Founder,22,Inc.(research and management consulting).1990Brend
121、a J.Lauderback56Former President Wholesale Group,Nine West Group,Inc.(retail and wholesale footwear);former President Footwear Wholesale,U.S.Shoe Corporation(retail and wholesale footwear);former Vice President,General Merchandise Manager,Dayton Hudson Corporation(retail stores).1997Philip E.Mallott
122、49Independent financial consultant;retail stock analyst,Coker&Palmer(securities brokerage services);former Vice President and Chief Financial Officer,Intimate Brands,Inc.(retail stores).2003Russell Solt59Former Director of Investor Relations,West Marine,Inc.(specialty retailer and catalog company);f
123、ormer Executive Vice President and Chief Financial Officer,West Marine,Inc.2003James R.Tener57Former President and Chief Operating Officer,Brook Mays Music Company(retail and wholesale music)Brook Mays Music Company filed for bankruptcy on July 11,2006;former Chief Operating Officer,The Sports Autho
124、rity(sporting goods retailer).2005Dennis B.Tishkoff63Chairman and Chief Executive Officer,Drew Shoe Corporation(footwear manufacturer,importer,exporter,retailer and wholesaler);President,Tishkoff and Associates,Inc.(retail consultant);former President and Chief Executive Officer,Shoe Corporation of
125、America(footwear retailer).1991THE BOARD RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF EACH OF THE NOMINEES LISTED ABOVE.-5-GOVERNANCE OF BIG LOTS Current Members of the Board of Directors The members of the Board as of the date of this Proxy Statement,and the committees of the Board on which they se
126、rve,are identified below.The Board has standing Audit,Compensation,and Nominating/Corporate Governance Committees.Each committee reports on its activities to the Board.DirectorAuditCommitteeCompensationCommitteeNominating/CorporateGovernance CommitteeJeffrey P.Berger Sheldon M.Berman*Steven S.Fishma
127、n David T.Kollat*Brenda J.Lauderback*Philip E.Mallott*Russell Solt*James R.Tener*Dennis B.Tishkoff*Committee Member*Committee ChairBoard Meetings in Fiscal 2006 Five meetings of the Board were held during fiscal 2006.During the period for which he or she was a director in fiscal 2006,each director a
128、ttended at least 75%of all meetings of the Board and the committees on which he or she served.It is our policy that each director nominee standing for election be present at the annual meeting of shareholders.Each director listed above attended the most recent annual meeting of shareholders held in
129、May 2006,except for Mr.Berger,who did not become a director until August 15,2006 when he was appointed to fill the vacancy created by Ned Mansours health-related resignation.Under our Corporate Governance Guidelines,each director is expected to dedicate sufficient time and attention to ensure the di
130、ligent performance of his or her duties,including attending meetings of the shareholders,the Board,and the committees of which he or she is a member.Role of the Boards Committees Audit CommitteeThe primary function of the Audit Committee is to assist the Board in fulfilling its oversight responsibil
131、ity with respect to:(1)the integrity of the financial reports and other financial information provided by us to our shareholders and others;(2)our compliance with legal and regulatory requirements;(3)the engagement of our independent auditor and the evaluation of the independent auditors qualificati
132、ons,independence and performance;(4)the performance of our system of internal controls;and(5)our audit,accounting and financial reporting processes generally.All members of the Audit Committee are independent as required by the Audit Committees charter and by the applicable New York Stock Exchange(“
133、NYSE”)and SEC rules.The Board has determined that Mr.Mallott and Mr.Solt each satisfies the standards for an“audit committee financial expert,”as required by the SEC under the Sarbanes-Oxley Act of 2002.Each member of the Audit Committee is“financially literate,”as required by NYSE rules.The functio
134、ns of the Audit Committee are further described in its charter,which is available in the Investors section of our website()under the“Corporate Governance”caption.A copy may also be obtained,without charge,upon written request to our Corporate Secretary.The Audit Committee met 11 times during fiscal
135、2006.-6-Compensation CommitteeThe Compensation Committee discharges the responsibilities of the Board relating to the administration of our compensation programs.The Compensation Committee is involved in establishing our general compensation philosophy,reviewing and implementing executive compensati
136、on and overseeing the development of our compensation programs.All members of the Compensation Committee are independent as required by the Committees charter and NYSE rules.The functions of the Compensation Committee are further described in its charter,which is available in the Investors section o
137、f our website()under the“Corporate Governance”caption.A copy may also be obtained,without charge,upon written request to our Corporate Secretary.The Compensation Committee met two times during fiscal 2006.Nominating/Corporate Governance CommitteeThe Nominating/Corporate Governance Committee is respo
138、nsible for recommending individuals to the Board for nomination as members of the Board and its committees and taking a leadership role in shaping our corporate governance policies and practices,including recommending to the Board changes to our Corporate Governance Guidelines and monitoring complia
139、nce with such guidelines.All members of the Nominating/Corporate Governance Committee are independent as required by the Committees charter and NYSE rules.The functions of the Nominating/Corporate Governance Committee are further described in its charter,which is available in the Investors section o
140、f our website()under the“Corporate Governance”caption.A copy may also be obtained,without charge,upon written request to our Corporate Secretary.The Nominating/Corporate Governance Committee met three times during fiscal 2006.Presiding Member of the Board The Board has a presiding director whose pri
141、mary responsibility is to preside over executive sessions of the Board in which management directors and other members of management are not present.The role of presiding director is rotated among the non-management directors(“outside directors”).The presiding director is responsible for establishin
142、g an agenda for the session over which he or she presides and,upon the conclusion of an executive session of the Board,meeting with our chief executive officer(“CEO”)to address any issues raised during the executive session.Determination of Director Independence The Corporate Governance Guidelines w
143、ere initially adopted by the Board in August 2003 and were amended in November 2005 and November 2006.The Corporate Governance Guidelines comply with NYSE rules.The Corporate Governance Guidelines can be found in the Investors section of our website()under the“Corporate Governance”caption.A copy may
144、 also be obtained,without charge,upon written request to our Corporate Secretary.Pursuant to the Corporate Governance Guidelines,the Board undertook its most recent annual review of director independence in March 2007.During this annual review,the Board considered transactions and relationships betw
145、een each director,his or her affiliates,and any member of his or her immediate family and Big Lots,its subsidiaries and members of senior management.The purpose of this review was to determine whether any such transactions or relationships were inconsistent with a determination that the director is
146、independent in accordance with NYSE rules.As a result of this review,the Board affirmatively determined that all of the directors nominated for election at the Annual Meeting,with the exception of Mr.Fishman,are independent of Big Lots and its management under the standards set forth by NYSE rules a
147、nd no director nominee has a material relationship with Big Lots or its management aside from his or her service as a director.Mr.Fishman is not an independent director due to his employment with Big Lots.-7-In determining that each of the directors other than Mr.Fishman is independent,the Board con
148、sidered that,in the ordinary course of business,transactions may occur between Big Lots or its subsidiaries and companies at which some of our directors are or have been executive officers.In each such case,the amount of transactions with these companies in each of the last three years did not appro
149、ach the disqualifying thresholds set forth in the NYSE rules.The Board also considered charitable contributions to not-for-profit organizations of which our directors or immediate family members are executive officers or directors,none of which approached the thresholds set forth in the NYSE rules.T
150、he Board determined that each of the relationships it considered was immaterial and did not impair the independence of any of the directors.Selection of Nominees by the Board The Nominating/Corporate Governance Committee has oversight over a broad range of issues surrounding the composition and oper
151、ation of the Board.The Nominating/Corporate Governance Committee is responsible for recommending to the Board the appropriate skills and qualifications required of Board members,based on our needs from time to time.The Nominating/Corporate Governance Committee also evaluates prospective director nom
152、inees against the standards and qualifications set forth in the Corporate Governance Guidelines.Although the Nominating/Corporate Governance Committee has not approved any specific minimum qualifications that must be met by a nominee for director recommended by the Committee,the Committee does consi
153、der factors such as the prospective nominees relevant experience,character,intelligence,independence,commitment,judgment,prominence,diversity,age,and compatibility with our CEO and other members of the Board.The Nominating/Corporate Governance Committee also considers such other relevant factors as
154、it deems appropriate,including the current composition of the Board,the balance of management and independent directors,and the need for committee expertise.The Nominating/Corporate Governance Committee confers with the Board as to the criteria it intends to apply before the search for a new directo
155、r nominee is commenced.In identifying potential candidates for Board membership,the Nominating/Corporate Governance Committee considers recommendations from the Board,shareholders and management.A shareholder who wishes to recommend a prospective director nominee to the Board must send written notic
156、e to:Chair of the Nominating/Corporate Governance Committee,300 Phillipi Road,Columbus,Ohio 43228.The written notice must include the prospective nominees name,age,business address,principal occupation,beneficial ownership of Big Lots common shares,information that would be required under the rules
157、of the SEC in a proxy statement soliciting proxies for the election of such prospective nominee as a director,and any other information that is deemed relevant by the recommending shareholder.Shareholder recommendations that comply with these procedures and that meet the factors outlined above will
158、receive the same consideration that the recommendations of the Board and management receive.Pursuant to its written charter,the Nominating/Corporate Governance Committee also has the authority to retain consultants and search firms to assist in the process of identifying and evaluating director cand
159、idates and to approve the fees and other retention terms for any such consultant or search firm.In fiscal 2006,an outside search firm was retained to assist in identifying and evaluating prospective Board members.After completing the evaluation of a prospective nominee,the Nominating/Corporate Gover
160、nance Committee may make a recommendation to the Board that the targeted individual be nominated by the Board,and the Board would then decide whether to approve a nominee after considering the recommendation and report of the Nominating/Corporate Governance Committee.Any invitation to join the Board
161、 is extended to a prospective nominee through the chair of the Nominating/Corporate Governance Committee and our CEO,after approval by the Board.Compensation Committee Interlocks and Insider ParticipationDuring fiscal 2006,Mr.Kollat,Ms.Lauderback and Mr.Tishkoff served on our Compensation Committee.
162、No member of our Compensation Committee serves or has served at any time as one of our officers or employees or is a party to any related party transaction.None of our executive officers serve as a member of the board of directors or compensation committee of any other company that has an executive
163、officer serving as a member of our Board or Compensation Committee.-8-Other Directorships Mr.Kollat is a director of Limited Brands,Inc.,Select Comfort Corporation,and Wolverine World Wide,Inc.Mr.Kollat serves on the finance committee at Limited Brands,Inc.,the corporate governance and nominating co
164、mmittee and the audit committee at Select Comfort Corporation,and the compensation committee and the audit committee at Wolverine World Wide,Inc.,where he is the chair of the audit committee.Ms.Lauderback is a director of Select Comfort Corporation,Irwin Financial Corporation,Wolverine World Wide,In
165、c.and Dennys Corporation.Ms.Lauderback is a member of the audit committee at Wolverine World Wide,Inc.,and serves on both the audit and compensation committees at Irwin Financial Corporation.Mr.Mallott is a director of Tween Brands,Inc.,where he also serves on the nominating and governance committee
166、 and as the chair of the audit committee.Mr.Tishkoff is a director of Drew Shoe Corporation.Code of Business Conduct and Ethics&Code of Ethics for Financial Professionals We have a Code of Business Conduct and Ethics,which is applicable to all of our directors and employees,including the principal e
167、xecutive officer,the principal financial officer,and the principal accounting officer.We also have a separate Code of Ethics for Financial Professionals which is applicable to our CEO and all other senior financial officers(as that term is defined therein).Both the Code of Business Conduct and Ethic
168、s and the Code of Ethics for Financial Professionals are available in the Investors section of our website()under the“Corporate Governance”caption.A copy may also be obtained,without charge,upon written request to our Corporate Secretary.We intend to post amendments to or waivers from the Code of Bu
169、siness Conduct and Ethics(to the extent applicable to our directors and executive officers)and to the Code of Ethics for Financial Professionals,if any,at this location on our website.Related Person TransactionsThe Board and the Nominating/Corporate Governance Committee have the responsibility for m
170、onitoring compliance with our corporate governance policies,practices and guidelines applicable to our directors,nominees for director,officers and employees.The Board and the Nominating/Corporate Governance Committee have also enlisted the assistance of our General Counsel and human resources manag
171、ement to fulfill this duty.The Corporate Governance Guidelines,Code of Business Conduct and Ethics,Code of Ethics for Financial Professionals,and various human resources policies prohibit,without the consent of the Board or the Nominating/Corporate Governance Committee,directors,officers and employe
172、es from engaging in transactions that conflict with the interests of Big Lots or that otherwise usurp corporate opportunities.On an annual basis,each director,nominee for director and executive officer is obligated to complete a questionnaire which requires disclosure of any transaction in which Big
173、 Lots was or is to be a participant in which the director,nominee or executive officer,or any member of his or her immediate family,has a direct or indirect material interest.These questionnaires are reviewed by the Nominating/Corporate Governance Committee and our General Counsel to identify any po
174、tential conflicts of interest or other transactions that the Board should review in light of the SEC rules regarding the disclosure of transactions with related persons.Based on our most recent review in the first quarter of fiscal 2007,we believe that no such disclosure is required.As necessary,the
175、 Board also reviews proposed transactions in which Big Lots and any other related person(e.g.,a holder of more than five percent of our common shares)are participants.In the first quarter of fiscal 2007,the Board reviewed and approved a structured share repurchase transaction with Goldman Sachs&Co.(
176、“GS&Co.”),an affiliate of Goldman Sachs Asset Management,L.P.,whose beneficial ownership of our common shares is described in the“Stock Ownership”section of this Proxy Statement.In connection with this transaction,which is part of a$600 million publicly-announced common share repurchase program,we p
177、aid$100 million to GS&Co.in exchange for our common shares.We may also,from time to time,engage GS&Co.as a broker to repurchase our common shares in connection with the$600 million program.-9-Communications with the Board Shareholders and other parties interested in communicating directly with the B
178、oard,with specified individual directors or with the outside directors as a group,may do so by choosing one of the following options:Call the Board at:(866)834-7325 Write to the Board at:Big Lots Board of Directors,300 Phillipi Road,Columbus,Ohio 43228-5311 E-mail the Board at:www.ci- a process appr
179、oved by the Nominating/Corporate Governance Committee for handling correspondence received by Big Lots and addressed to outside directors,our General Counsel reviews all such correspondence and forwards to the Board or appropriate members of the Board a summary and/or copies of any such corresponden
180、ce that deals with the functions of the Board,members or committees thereof or otherwise requires their attention.Directors may at any time review a log of all correspondence received by Big Lots and directed to members of the Board and may request copies of any such correspondence.Concerns relating
181、 to our accounting,internal accounting controls or auditing matters will be referred to members of the Audit Committee.Concerns relating to the Board or members of senior management will be referred to the members of the Nominating/Corporate Governance Committee.Parties submitting communications to
182、the Board may choose to do so anonymously or confidentially.Except when communications are sent anonymously or confidentially,parties sending written communications to the Board will receive a written acknowledgement upon our receipt of the communication.DIRECTOR COMPENSATIONRetainers and Fees Under
183、 the Big Lots,Inc.Non-Employee Director Compensation Package,each outside director is compensated for Board and committee participation.Prior to August 15,2006,the retainers and fees for outside directors in fiscal 2006 consisted of:(1)an annual retainer of$36,000;(2)an additional annual retainer of
184、$4,000 for the chair of the Audit Committee;(3)an additional annual retainer of$2,000 for the chair of each of the Boards other committees;(4)$1,500 for each Board meeting attended in person;(5)$1,000 for each committee meeting attended in person;(6)$500 for each Board or committee meeting attended
185、telephonically;and(7)the ability to nominate a charity to receive a donation of up to$10,000 from Big Lots.Effective August 15,2006,the annual retainer for each outside director increased to$45,000,the annual retainer for the chair of the Audit Committee increased to$10,000,and the annual retainer f
186、or the chairs of the Compensation Committee and the Nominating/Corporate Governance Committee increased to$5,000.During fiscal 2006,Messrs.Berger(beginning on August 15,2006),Berman,Kollat,Mallott,Mansour(until August 15,2006),Solt,Tener and Tishkoff,and Ms.Lauderback qualified as outside directors
187、and,thus,received compensation for their Board service.Due to his employment with Big Lots,Mr.Fishman did not qualify as an outside director and did not receive compensation for his service as a director.The compensation received by Mr.Fishman as an employee is shown in the Summary Compensation Tabl
188、e included in this Proxy Statement.Stock Options In addition to the retainers and fees,outside directors receive an annual stock option grant under the Big Lots,Inc.Amended and Restated Director Stock Option Plan(“Director Stock Option Plan”).During fiscal 2006,each of the outside directors received
189、 an option to acquire 10,000 common shares of Big Lots pursuant to the Director Stock Option Plan.The number of common shares available under the Director Stock Option Plan initially consisted of the original allocation of 500,000 common shares(781,250 shares as adjusted to account for the five-for-
190、four stock splits which occurred in December 1996 and June 1997).The Director Stock Option Plan is administered by the Compensation Committee.Neither the Board nor the Compensation Committee exercises any discretion in administering the Director Stock Option Plan,and the administration performed by
191、the Compensation Committee is ministerial in nature.The formula which governs the grant of stock options to eligible participants may be amended by the Board,but not more frequently than-10-once in any six-month period.Under the current formula,each outside director is granted annually an option to
192、acquire 10,000 Big Lots common shares at an exercise price equal to the closing price of our common shares on the NYSE on the grant date.Except as discussed below,stock options granted under the Director Stock Option Plan become exercisable over three years beginning upon the first anniversary of th
193、e grant date,whereby the stock option becomes exercisable for 20%of the shares on the first anniversary,60%on the second anniversary,and 100%on the third anniversary.Stock options automatically terminate 10 years and one month following the grant date.A director may dispose of the common shares unde
194、rlying a stock option only during defined quarterly trading periods.Stock options granted under the Director Stock Option Plan are not transferable other than by will or the laws of descent and distribution.In December 2004,the Financial Accounting Standards Board issued Statement of Financial Accou
195、nting Standards No.123(R),Share-Based Payment(“SFAS No.123(R)”),which requires an entity to measure the cost of services received in exchange for an award of equity instruments based on the grant date fair value of the award.On November 21,2005,we announced that the Compensation Committee,after disc
196、ussion with the Board,approved accelerating the vesting of stock options awarded on or before February 21,2005 under the Director Stock Option Plan and the Big Lots,Inc.1996 Performance Incentive Plan(“1996 Incentive Plan”).The Compensation Committee did not,however,accelerate the vesting of stock o
197、ptions granted after February 21,2005.Additionally,the Compensation Committee imposed a holding period that requires all directors to refrain from selling net shares acquired upon any exercise of these accelerated options until the date on which the exercise would have been permitted under the optio
198、ns original vesting terms or,if earlier,the directors death,disability or termination.In addition to the perceived positive effect on morale and retention,the decision to accelerate vesting of stock options was made primarily to reduce non-cash compensation expense that would have been recorded foll
199、owing the adoption of SFAS No.123(R)in fiscal 2006.Director Compensation TableThe following table summarizes the compensation earned by each outside director for his or her Board service in fiscal 2006.Name(1)(a)Fees Earned orPaid inCash($)(b)StockAwards($)(c)OptionAwards($)(2)(3)(d)Non-EquityIncent
200、ive PlanCompensation($)(e)Change inPensionValue andNonqualifiedDeferredCompensationEarnings($)(f)All OtherCompensation($)(4)(g)Total($)(h)Mr.Berger23,2509,37832,628Mr.Berman49,25023,6885,00077,938Mr.Kollat53,50023,68810,00087,188Ms.Lauderback48,25023,68810,00081,938Mr.Mallott59,75023,68810,00093,438
201、Mr.Mansour30,5004,82210,00045,322Mr.Solt54,75023,68810,00088,438Mr.Tener52,75023,68876,438Mr.Tishkoff50,00023,68810,00083,688(1)Mr.Berger joined the Board on August 15,2006,and Mr.Mansour resigned from the Board on August 15,2006 for health-related reasons.(2)Amounts in this column reflect the dolla
202、r amount recognized for financial statement reporting purposes for fiscal 2006 in accordance with SFAS 123(R),excluding any estimate of forfeitures related to service-based vesting conditions,and thus may include amounts from awards granted in and prior to fiscal 2006.-11-The full grant date fair va
203、lue of the fiscal 2006 stock option award made to each nominee for director,computed in accordance with SFAS 123(R),was$79,900.See Note 7(Stock Plans)to the consolidated financial statements and the Critical Accounting Policies and Estimates Stock-Based Compensation section of Managements Discussion
204、 and Analysis of Financial Condition and Results of Operations(“MD&A”)in our Annual Report on Form 10-K for fiscal 2006(“Form 10-K”)regarding the assumptions underlying the valuation of equity awards.(3)As of February 3,2007,each director had the following number of common shares underlying outstand
205、ing stock options:Mr.Berger:10,000;Mr.Berman:75,000;Mr.Kollat:75,000;Ms.Lauderback:75,000;Mr.Mallott:40,000;Mr.Mansour:0;Mr.Solt:40,000;Mr.Tener:20,000;and Mr.Tishkoff:60,000.(4)Amounts in this column reflect payments made by us during fiscal 2006 to charitable organizations nominated by the specifi
206、ed directors pursuant to the Big Lots,Inc.Non-Employee Director Compensation Package.STOCK OWNERSHIPOwnership of Our Common Shares by Certain Beneficial Owners and Management The following table sets forth certain information with regard to the beneficial ownership of our common shares by each holde
207、r of more than 5%of such common shares,each director,each of the executive officers named in the Summary Compensation Table,and all our executive officers and directors as a group.The assessment of holders of more than 5%of Big Lots common shares is based on a review of and reliance upon filings wit
208、h the SEC.Except as otherwise indicated,all information is as of April 2,2007.Name of Beneficial Owner or Identity of GroupAmount andNature of BeneficialOwnership(1)(2)Percent ofOutstandingCommon Shares Lisa M.Bachmann 121,701*Jeffrey P.Berger0*Sheldon M.Berman(3)71,749*Joe R.Cooper 81,324*Steven S.
209、Fishman 325,000*David T.Kollat 96,065*Brenda J.Lauderback 57,300*Philip E.Mallott 24,500*John C.Martin 128,226*Russell Solt 10,000*James R.Tener 7,000*Dennis B.Tishkoff 44,609*Brad A.Waite 117,668*State Street Bank and Trust Company(4)12,834,55811.70%Goldman Sachs Asset Management,L.P.(5)10,129,0499
210、.30%Barclays Global Investors,NA.(6)7,151,6046.54%Cooke&Bieler,L.P.(7)6,535,3606.00%Westport Asset Management,Inc.(8)6,112,7575.58%American Century Companies,Inc.(9)5,915,4605.40%AMVESCAP PLC(10)5,758,1315.26%Putnam,LLC.(11)5,511,5315.00%All directors and executive officers as a group(20 persons)1,6
211、35,8661.45%*Represents less than 1.0%of the outstanding common shares.-12-(1)Each person named in the table has sole voting power and sole dispositive power with respect to all Big Lots common shares shown as beneficially owned by such person,except as otherwise stated in the footnotes to this table
212、.The amounts set forth in the table include common shares that may be acquired within 60 days of the record date under stock options exercisable within that period.The number of common shares that may be acquired within 60 days of the record date under stock options exercisable within that period ar
213、e as follows:Ms.Bachman:86,000;Mr.Berger:0;Mr.Berman:57,000;Mr.Cooper:42,000;Mr.Fishman:0;Mr.Kollat:57,000;Ms.Lauderback:57,000;Mr.Mallott:22,000;Mr.Martin:65,375;Mr.Solt:8,000;Mr.Tener:2,000;Mr.Tishkoff:42,000;Mr.Waite:70,000;and all directors and executive officers as a group:927,475.(2)The amount
214、s reported in the table above include Big Lots common shares that we hold in connection with our obligation to match a portion of the named executive officers respective contributions to the Big Lots Supplemental Savings Plan.The number of common shares held by us in connection with this obligation
215、is as follows:Ms.Bachmann:579;Mr.Cooper:2,082;Mr.Fishman:0;Mr.Martin:887;and Mr.Waite:0.The named executive officers do not have voting or dispositive power with respect to the common shares that we hold in connection with the Big Lots Supplemental Savings Plan.(3)Includes 5,468 common shares owned
216、by Xtreem Creative,Inc.,of which Mr.Berman serves as Chairman,Chief Executive Officer and President.(4)In its Schedule 13G filed on February 12,2007,State Street Bank and Trust Company,Trustee,225 Franklin Street,Boston,MA 02110,stated that it beneficially owned the number of common shares reported
217、in the table as of December 31,2006,had sole voting power and shared dispositive power over all of the shares,and had no shared voting power or sole dispositive power over the shares.(5)In its Schedule 13G filed on February 12,2007,Goldman Sachs Asset Management,L.P.,32 Old Slip,New York,NY 10005,st
218、ated that it beneficially owned the number of common shares reported in the table as of December 31,2006,had sole voting power over 8,547,353 of the shares,had sole dispositive power over all of the shares,and had no shared voting power or shared dispositive power over the shares.(6)In its joint sta
219、tement on Schedule 13G filed on January 23,2007,Barclays Global Investors,NA.,45 Fremont Street,San Francisco,CA 94105,stated that it and the other reporting persons named therein collectively beneficially owned the number of common shares reported in the table as of December 31,2006,had sole voting
220、 power over 6,460,305 of the shares,had sole dispositive power over all of the shares,and had no shared voting power or shared dispositive power over the shares.Of the aggregate amounts reported,the following beneficial ownership was reported by the various reporting persons named in the Schedule 13
221、G:(i)Barclays Global Investors,NA.stated that it beneficially owned 4,938,022 of the shares,had sole voting power over 4,246,723 of the shares,had sole dispositive power over 4,938,022 of the shares,and had no shared voting power or shared dispositive power over the shares;(ii)Barclays Global Fund A
222、dvisors,45 Fremont Street,San Francisco,CA 94105,stated that it beneficially owned 2,096,955 of the shares,had sole voting power and sole dispositive power over 2,096,955 of the shares,and had no shared voting power or shared dispositive power over the shares;and(iii)Barclays Global Investors,Ltd.,M
223、urray House,1 Royal Mint Court,London EC3N 4HH,England,stated that it beneficially owned 116,627 of the shares,had sole voting power and sole dispositive power over 116,627 of the shares,and had no shared voting power or shared dispositive power over the shares.(7)In its Schedule 13G/A filed on Febr
224、uary 13,2007,Cooke&Bieler,L.P.,1700 Market Street,Philadelphia,PA 19103,stated that it beneficially owned the number of common shares reported in the table as of December 31,2006,had no sole voting power or sole dispositive power over the shares,had shared voting power over 3,756,120 of the shares,a
225、nd had shared dispositive power over 5,983,360 of the shares.(8)In its Schedule 13G/A filed on February 14,2007,Westport Asset Management,Inc.,23 Riverside Avenue,Westport,CT 06880,stated that it beneficially owned the number of common shares reported in the table as of December 31,2006,had sole vot
226、ing power and sole dispositive power over 1,313,056 of the shares,had shared voting power over 4,534,164 of the shares,and had shared dispositive power over 4,799,701 of the shares.Westport Asset Management,Inc.owns 50%of Westport Advisors LLC,an investment advisor with whom it shares voting power o
227、ver 4,534,164 of the shares.-13-(9)In its joint statement on Schedule 13G filed on February 13,2007,American Century Companies,Inc.and its wholly-owned subsidiary,American Century Investment Management,Inc.,4500 Main Street,9th Floor,Kansas City,MO 64111,stated that they collectively beneficially ow
228、ned the number of common shares reported in the table as of December 31,2006,had sole voting power over 5,521,026 of the shares,had sole dispositive power over all of the shares,and had no shared voting power or shared dispositive power over the shares.(10)In its joint statement on Schedule 13G file
229、d on February 14,2007,AMVESCAP PLC,30 Finsbury Square,London EC2A 1AG,England,stated that it and the other reporting persons named therein collectively beneficially owned the number of common shares reported in the table as of December 31,2006,had sole voting power and sole dispositive power over al
230、l of the shares,and had no shared voting power or shared dispositive power over the shares.Of the aggregate amounts reported,the following beneficial ownership was reported by the reporting persons named in the Schedule 13G:(i)INVESCO Institutional(N.A.),Inc.stated that it had sole voting power and
231、sole dispositive power over 5,231,346 of the shares;(ii)PowerShares Capital Management LLC stated that it had sole voting power and sole dispositive power over 176,360 of the shares;(iii)INVESCO Asset Management Deutschland GmbH stated that it had sole voting power and sole dispositive power over 20
232、4,225 of the shares;(iv)INVESCO Asset Management Limited stated that it had sole voting power and sole dispositive power over 66,400 of the shares;and(v)INVESCO Management S.A.stated that it had sole voting power and sole dispositive power over 79,800 of the shares.(11)In its joint statement on Sche
233、dule 13G filed on February 13,2007,Putnam,LLC.d/b/a Putnam Investments,One Post Office Square,Boston,MA 02109,stated that it and the other reporting persons named therein collectively beneficially owned the number of common shares reported in the table as of December 31,2006,had no sole voting power
234、 or sole dispositive power over the shares,had shared voting power over 170,318 of the shares,and had shared dispositive power over all of the shares.Of the aggregate amounts reported,the following beneficial ownership was reported by the reporting persons named in the Schedule 13G:(i)Putnam Investm
235、ent Management,LLC.stated that it beneficially owned 4,349,620 of the shares,had no sole voting power or sole dispositive power over the shares,and had shared dispositive power over 4,349,620 of the shares;and(ii)The Putnam Advisory Company,LLC.stated that it beneficially owned 1,161,911 of the shar
236、es,had no sole voting power or sole dispositive power over the shares,had shared voting power over 90,198 of the shares,and had shared dispositive power over 1,161,911 of the shares.Putnam Investment Management,LLC.and The Putnam Advisory Company,LLC.are subsidiaries,and share the address,of Putnam,
237、LLC.Section 16(a)Beneficial Ownership Reporting Compliance Section 16(a)of the Securities Exchange Act of 1934,as amended(“Exchange Act”)requires our directors and executive officers,and persons who beneficially own more than 10%of our outstanding common shares,to file with the SEC and the NYSE init
238、ial reports of ownership and reports of changes in ownership of our common shares.Executive officers,directors and greater than 10%shareholders are required by the regulations of the SEC to furnish us with copies of all Section 16(a)reports they file.Based upon a review of filings with the SEC and w
239、ritten representations that no other reports were required,we believe that all of our directors and executive officers and greater than 10%shareholders complied during fiscal 2006 with the reporting requirements of Section 16(a)of the Exchange Act.EXECUTIVE COMPENSATIONCompensation Committee Report
240、The Compensation Committee has reviewed and discussed the following Compensation Discussion and Analysis(“CD&A”)with management and,based on such review and discussions,the Compensation Committee recommended to the Board that the CD&A be included in this Proxy Statement.Members of the Compensation C
241、ommittee Dennis B.Tishkoff,ChairBrenda J.LauderbackDavid T.Kollat-14-Compensation Discussion and AnalysisCompensation CommitteeThe membership of the Compensation Committee of the Board(which we refer to as the“Committee”throughout this CD&A)is determined by the Board.In order to be eligible for memb
242、ership,a prospective Committee member must,in the judgment of the Board,be:(1)a“non-employee director”for purposes of Rule 16b-3 under the Exchange Act;(2)an“outside director”for purposes of Section 162(m)of the Internal Revenue Code of 1986,as amended(“IRC”);and(3)“independent”in accordance with NY
243、SE listing standards.Each of the Committee members meets these requirements.The Committee is currently composed of three outside directors Mr.Tishkoff,Ms.Lauderback and Mr.Kollat.Mr.Tishkoff serves as the Committees chair and establishes the Committees meeting agendas.The purpose of the Committee is
244、 to discharge the responsibilities of the Board relating to the administration of our compensation programs,including establishing and implementing the philosophy,practices and policies applicable to the executive compensation program for the members of our executive management committee(“EMC”).The
245、EMC is currently comprised of 10 employees the five executives named in the Summary Compensation Table(“named executive officers”)and all other executive vice presidents and senior vice presidents.Specific Committee responsibilities include reviewing and recommending to the Board the compensation fo
246、r the EMC members,administering our equity-based compensation plans,and reporting on the entirety of the executive compensation program to the Board.The Committees scope of authority is dictated by its charter.The charter,which was adopted by the Board and may be revised only by the Board,is reviewe
247、d by the Committee annually and by the Board as it deems necessary.The Committee has the authority to retain counsel and other experts.The Committee also possesses the sole authority to select,retain and terminate a compensation consultant,including the sole authority to approve the consultants fees
248、 and other retention terms.In discharging its responsibilities,the Committee has full access to all relevant records and may also request that any officer,employee or consultant of Big Lots,including our human resources executives and our outside counsel,meet with any member of,or consultant to,the
249、Committee.The Committee may,in its discretion,delegate all or a portion of its duties and responsibilities to a subcommittee of the Committee.Our human resources department and a management working group support the Committees efforts and,in some cases,act pursuant to delegated authority to fulfill
250、various functions in administering our employee benefit and compensation plans.Such delegation is permitted by the Committees charter and each such plan.Those groups to whom the Committee has delegated certain responsibilities are each required to periodically report their activities to the Committe
251、e.Compensation Philosophy and ObjectivesOur general compensation philosophy is that total compensation should vary based on our achievement of financial and non-financial objectives,and any incentive compensation should be closely aligned with shareholder interests.This philosophy applies to all of
252、our full-time,salaried employees,with a more significant level of variability and compensation at risk as an employees level of responsibility increases.Our goal is to develop compensation programs that have an appropriate mix of fixed and variable,short-term and long-term,and cash and equity compen
253、sation linked to individual and our corporate performance to align executive compensation with the interests of shareholders and to attract,retain and motivate highly-qualified employees.We feel that incentive-based compensation should be implemented with a high degree of responsiveness to our perfo
254、rmance.To achieve this responsiveness,executive compensation in the form of equity incentives and bonus opportunities is based upon our performance.The Committee annually reviews the total compensation paid to or earned by all EMC members.Total compensation is evaluated in light of our performance,t
255、he performance of areas of the business for which the executive is responsible,our projected future performance,the projected future performance of the areas of the business for which the executive is responsible,and the relationship between total compensation and shareholder return.-15-In fiscal 20
256、04,the Committee engaged in a review of our executive compensation program and the philosophy driving the program.The Committee has continued this review,with the goal of refining,if warranted,the appropriate mix of compensation linked to individual and corporate performance.In the course of this re
257、view,the Committee has sought the advice of management and outside compensation consultants.The Committee also identified several key strategic compensation design priorities:(1)align executive compensation with shareholder interests;(2)inspire and reward superior performance by executives and us;(3
258、)retain executives by paying them competitively;(4)motivate executives to contribute to our success and reward them for their performance;(5)manage executive compensation costs;and(6)continue to focus on corporate governance.While our compensation philosophy has not materially changed in recent year
259、s,the Board and the Committee regularly review whether these strategic priorities are being met,the merits of our philosophy,and factors that may influence a change in our philosophy.Based in part on our assessment of investor sentiment in recent years,we believe that our philosophy of tying a signi
260、ficant portion of executive compensation to our performance has been validated.We further believe that we have been able to attract and retain quality executives in recent years by providing candidates and existing executives with competitive compensation packages.The adherence to and execution of o
261、ur compensation philosophy is reviewed at least twice annually.At the first regularly scheduled Committee meeting of each year,the Committee meets with our CEO to review the performance of the EMC members(other than the CEO,whose performance is reviewed in his absence)and to consider our CEOs recomm
262、endations with respect to the EMC members compensation(excluding the CEOs compensation).The Committee,in the absence of the CEO,then formulates recommended annual compensation packages for each EMC member and presents those recommendations to all of the outside directors.Following a discussion of th
263、e Committees recommendations and making adjustments where the outside directors believe they are appropriate,the outside directors approve the annual compensation packages for the EMC members.At the final regularly scheduled Committee meeting of each year,the Committee reviews the types of equity aw
264、ards that have been made historically(i.e.,stock options and restricted stock),the executive compensation benchmarking survey data,the trends in equity compensation among our competitors,and the impact that any changes in laws and/or accounting standards may have on our equity awards to determine if
265、 the same types of equity awards should be used in the coming year or if we should explore the use of the other forms of equity compensation available under the Big Lots 2005 Long-Term Incentive Plan(“2005 Incentive Plan”).Executive Compensation Practices and PoliciesThe Committees executive compens
266、ation practices and policies have been in place for several years,but are regularly reviewed by the Board,the Committee(at least annually)and management to ensure that they remain effective means of satisfying our compensation philosophy of aligning total compensation with shareholder interests,vary
267、ing compensation with performance,and maintaining a competitive compensation program that enables us to attract,retain and motivate talented employees.BenchmarkingAnnually,the Committee obtains from independent compensation consultants executive compensation benchmarking surveys of selected Standard
268、&Poors Retail Stores Index companies and other companies with revenues similar to ours,including discount retailers,dollar stores,deep discount drugstore chains,traditional retailers and specialty retailers.The Committees practice generally is to target total direct compensation levels for our EMC m
269、embers at the fiftieth to seventy-fifth percentile when compared with total direct compensation of this compensation peer group,adjusted to the Columbus,Ohio market when possible.We believe that the application of a range is appropriate to provide flexibility for heightened compensation levels for t
270、hose employees that excel and to attract top talent.For purposes of this evaluation,total direct compensation is comprised of salary,bonus at the targeted level and equity incentives.For fiscal 2006,the compensation peer group was comprised of 96 companies who responded to one of several compensatio
271、n surveys that we have obtained from independent compensation consultants.This group varies from year to year based on the Committees assessment of which companies compete with us for talent and are similar to us in terms of industry or revenues and which companies participate in the compensation su
272、rveys that we receive from independent compensation consultants.-16-Individual Performance EvaluationWhile the Committee does not rely solely on predetermined formulas when it evaluates the performance of the EMC members,the Committee generally measures overall individual performance of the executiv
273、es against the following factors,although the factors considered may vary as required by business conditions:?long-term strategic goals;?short-term business goals;?revenue and profit goals;?improving operating margins;?revenue growth versus the industry;?earnings-per-share growth;?continued optimiza
274、tion of organizational effectiveness and productivity;?the development of talent and leadership;and?the fostering of teamwork and other Big Lots values.In selecting individual and corporate performance factors for each EMC member and measuring an executives performance against those factors,the Comm
275、ittee also considers the performance of our competitors and general economic and market conditions.None of the factors used by the Committee are assigned a specific weight.Instead,the Committee recognizes that the relative importance of these factors may change in order to adapt our operations to sp
276、ecific business challenges and to reflect the changing economic and marketplace conditions.Linking Equity Awards with PerformanceIn determining the size of the equity awards for EMC members,the Committee and the Board undertake a two-step process.Initially,corporate performance is considered to esta
277、blish the total pool of common shares that will be made available for equity awards to be granted to all EMC members collectively.Then,individual performance and the executive compensation benchmarking surveys are considered to determine the percentage of the total pool to be granted to each EMC mem
278、ber.We believe this process assists in ensuring that executive equity compensation is commensurate with corporate and individual performance.Compensation PoliciesThe Committee believes that its policies should be tailored to ensure that each executives total compensation is properly aligned with our
279、 philosophy.Accordingly,the Committee requires management to prepare and provide tally sheets that set forth the total compensation awarded to each EMC member for the immediately preceding two fiscal years,as well as estimated post-employment compensation that may be payable to such executives follo
280、wing certain events.These tally sheets also include an estimate of the amount of total value accumulated,and that will be accumulated,by each EMC member through prior equity awards(assuming employment continues,awards vest and the market price of our common shares fluctuates through the life of the
281、awards).While the Committee considers the accumulated total value as a factor in setting future compensation levels and making future equity awards,this information is not a primary consideration.The Committee believes that its objectives of motivating executives to achieve short-term and long-term
282、goals,rewarding executives for achieving those goals,and providing incentives for executives to continue their employment with us would not be adequately served if the accumulated total value of an EMC members equity awards was the sole or a driving factor in awarding future compensation.The Committ
283、ee also requires that it be provided an opportunity to review and comment on early drafts of this CD&A,so it may ensure that its philosophy,practices,polices and actions are accurately reflected.-17-Compensation ConsultantPursuant to the authority granted to the Committee by its charter,the Committe
284、e from time-to-time retains independent compensation consultants and subscribes to executive compensation benchmarking surveys as it deems necessary.The benchmarking surveys are also shared with our human resources department.The Committee approves the scope of services to be performed by and the am
285、ount of compensation to be paid to independent compensation consultants.In fiscal 2006,the Committee did not retain a compensation consultant for specialized advice,but did subscribe to multiple benchmarking surveys.In fiscal 2007,the Committee expects to subscribe to benchmarking surveys and to eng
286、age an independent compensation consultant to provide specific advice regarding the compensation of the EMC members and to consider various other compensation issues.Role of Executives in Establishing CompensationAs described above,at the first regularly scheduled Committee meeting of each fiscal ye
287、ar,our CEO provides a review of the performance of the EMC members(other than the CEO,whose performance is reviewed by the Committee)and a report reflecting his recommendations as to the form and amount of equity and non-equity compensation for the other members of the EMC.The Committee and the othe
288、r outside directors take into account the recommendations of the CEO when determining the compensation of the other EMC members.Additionally,the Committee consults with our CEO and executives from our human resources and legal departments regarding the design and administration of our compensation p
289、rograms,plans and awards for executives and directors.These executives provide advice regarding the competitive nature of existing and proposed compensation programs and the impact of accounting rules,laws and regulations on existing and proposed compensation programs.While these executives and our
290、CEO attend general meetings of the Committee,and the CEO also participates in the Committees discussions regarding the compensation of the other EMC members,they do not participate in executive sessions of the Committee or when executive compensation determinations are made by the Committee or the o
291、ther outside directors.Elements of In-Service Executive CompensationGuided by our pay-for-performance philosophy,the primary compensation components for the named executive officers consist of salary,bonus opportunities under the Big Lots 2006 Bonus Plan(“2006 Bonus Plan”),and equity awards made und
292、er the 2005 Incentive Plan.The Committee believes these components properly align the financial interests and success of our executives with those of our shareholders.In addition,the named executive officers are entitled to certain benefits according to our policies and under our health,insurance an
293、d retirement plans.Each element of compensation has been selected to make sure that our compensation program is competitive with those of other companies with whom we compete for talent,to attract,retain and motivate highly-qualified employees and to incentivize our named executive officers.We belie
294、ve each of these elements and the mix of elements is appropriate as they are consistent with our compensation philosophy,further our compensation objectives,and are consistent with our compensation peer group.The Committee reviews each element at least annually.Individual and corporate performance d
295、irectly impacts the elements and amount of compensation paid to our named executive officers.For instance,a named executive officers failure to meet individual goals may lead to his or her failure to receive compensation increases,a reduction in his or her compensation,or the termination of his or h
296、er employment.Additionally,excellent corporate performance may lead to greater bonus payouts and,possibly,to the achievement of financial performance objectives that accelerate restricted stock vesting.The Committee and the other outside directors also have discretion,subject to the limitations cont
297、ained in the executives employment agreements,in setting named executive officers salary,bonus opportunities and equity awards.-18-SalarySalary is cash compensation and is established annually for each named executive officer based on the executives job responsibilities,overall individual performanc
298、e,experience and qualifications,and by the competitive market.A minimum salary for each named executive officer is set forth in his or her respective employment agreement,as described below.BonusThe 2006 Bonus Plan provides for cash compensation to be paid annually when we achieve certain performanc
299、e measures(“performance criteria”).In the case of the named executive officers,the performance criteria are based on certain corporate financial measures permitted to be used under the 2006 Bonus Plan.No right to a minimum bonus exists under the named executive officers employment agreements or the
300、2006 Bonus Plan.The specific dollar amount that must be achieved to qualify for bonus payments under the performance criteria is proposed by the Committee and approved by the outside directors at the start of the fiscal year in conjunction with the Boards approval of our annual corporate financial o
301、perating plan.The Committee and the other outside directors also establish“performance goals”at the beginning of each fiscal year.The performance goals equate to a percentage of salary.Performance goals are established at three levels:(1)the lowest percentage of salary that will be paid if the thres
302、hold performance criteria are met but the targeted performance criteria are not fully achieved(“floor”);(2)the percentage of salary that will be paid if the targeted performance criteria are met but not exceeded(“target”);and(3)the percentage of salary that will be paid if the targeted performance c
303、riteria are exceeded,subject to a maximum(“stretch”).The bonus awards that may be earned under the 2006 Bonus Plan range from the floor to the stretch performance goals,and include all amounts in between.The target and stretch performance goals for the named executive officers have been established
304、in their respective employment agreements.The floor performance goal is set annually and has historically been one-half of the target performance goal.Subject to the terms of the employment agreements,the Committee and the other outside directors retain the right to adjust the performance goals and,
305、in the past,have generally done so only as deemed necessary to realign an executives bonus opportunity with our compensation philosophy.EquityThe 2005 Incentive Plan replaced the 1996 Incentive Plan,which expired on December 31,2005.Since January 1,2006,all employee equity awards have been issued un
306、der the 2005 Incentive Plan.The 2005 Incentive Plan authorizes the grant of incentive and nonqualified stock options,stock appreciation rights(“SARs”),restricted stock,restricted stock units and performance unit awards,any of which may be granted on a stand alone,combination or tandem basis.While th
307、e 2005 Incentive Plan allows various forms of equity compensation to be granted,to date,we have granted only stock options and restricted stock.The purpose of the 2005 Incentive Plan is to provide a flexible,long-term vehicle that encourages the creation of long-term value for our shareholders and e
308、quity ownership by our named executive officers and other participants and,at the same time,helps to attract,retain and motivate highly-qualified employees.Awards under the 2005 Incentive Plan may be made to any salaried employee,consultant or advisor of Big Lots or its affiliates.The Committee dete
309、rmines:(1)the individuals to whom equity awards are made;(2)the number of common shares underlying each award;(3)the term of the award;(4)the awards vesting schedule,exercise period or settlement;(5)the type of consideration,if any,to be paid to us upon exercise of an award;and(6)all other terms and
310、 conditions of the awards.If equity compensation is granted to the named executive officers,such grants are made at the Committees discretion within the limitations set forth in the 2005 Incentive Plan and are based on competitive market conditions,the responsibilities of the executive,and individua
311、l and corporate performance.In fiscal 2006 and fiscal 2007,the outside directors have approved the form and size of the CEOs equity awards after reviewing the Committees recommendations.The number of common shares available for issuance under the 2005 Incentive Plan consists of:(1)an initial allocat
312、ion of 1,250,000 common shares;(2)2,001,142 common shares,the common shares that were available under the 1996 Incentive Plan upon its expiration;and(3)an annual increase equal to 0.75%of the total number-19-of issued common shares(including treasury shares)as of the start of each fiscal year during
313、 which the 2005?of all common shares may be issued in the form of restricted stock,restricted stock units and performance units and no more than 5,000,000 common shares may be issued pursuant to grants of incentive stock options.A participant may receive multiple awards under the 2005 Incentive Plan
314、.Awards intended to qualify as“qualified performance-based compensation”under Section 162(m)of the IRC(“Section 162(m)”)are limited to:(1)2,000,000 shares of restricted stock per participant annually;(2)3,000,000 common shares underlying stock options and SARs per participant during any three consec
315、utive calendar years;and(3)$6,000,000 cash through performance units per participant during any three consecutive calendar years.Also,the 2005 Incentive Plan provides that the total number of common shares underlying outstanding awards granted under the 2005 Incentive Plan,the 1996 Incentive Plan,th
316、e Big Lots,Inc.Executive Stock Option and Stock Appreciation Rights Plan(“ESO Plan”),and the Director Stock Option Plan may not exceed 15%of the Companys issued and outstanding common shares(including treasury shares)as of any date.The 1996 Incentive Plan and the ESO Plan have expired,and there are
317、no awards outstanding under the ESO Plan.Pursuant to the terms of the 2005 Incentive Plan,the grant date of equity awards must be the later of the date the terms of the award are established by corporate action or the date specified in the award agreement.In fiscal 2006 and fiscal 2007,the outside d
318、irectors,after consultation with the Committee,specified that the grant date of the equity awards was the second trading day following our release of results from our last completed fiscal year.This future date was established to allow the market to absorb and react to our release of material nonpub
319、lic information,and to avoid even the appearance that any employee,the Committee or the Board manipulated the terms of the equity awards.For equity awards made throughout the fiscal year,generally as a result of a hiring or promotion,the grant date is the date of the related event(i.e.,the first day
320、 of employment or effective date of promotion).Each stock option grant allows the recipient to acquire our common shares,subject to the completion of a vesting period and continued employment with us.Once vested,these common shares may be acquired at a fixed exercise price per share and they remain
321、exercisable for the term set forth in the award agreement approved by the Committee.Pursuant to the terms of the 2005 Incentive Plan,the exercise price of a stock option may not be less than 100%of the volume-weighted average trading price of our common shares on the grant date or,if the grant date
322、occurs on a day other than a trading day,on the next trading day.We believe this method is preferable to using the closing market price on the grant date as it is less vulnerable to market activity that may have only an instantaneous effect,positively or negatively,on the price of our common shares.
323、Under the restricted stock grants made pursuant to the 2005 Incentive Plan,if we meet a threshold financial performance objective established by the Committee and the other outside directors(as set forth in the award agreement)and the recipient remains employed by Big Lots,the restricted stock will
324、vest at the opening of our first trading window that is five years after the grant date.For fiscal 2006,if we meet a higher financial performance objective(also established by the Committee and the other outside directors and set forth in the award agreement)and the recipient remains employed by Big
325、 Lots,the restricted stock will vest at the opening of our first trading window after we file with the SEC our Annual Report on Form 10-K for the year in which the higher financial performance objective is met.The restricted stock will also vest fully if there is a change in control of Big Lots(as d
326、efined in the 2005 Incentive Plan and as discussed generally in the“Change in Control”section of this CD&A),and will vest on a prorated basis in the event that the recipient dies or becomes disabled after the attainment of the threshold financial performance objective but before the lapse of the fiv
327、e year term.The restricted stock will be forfeited,in whole or in part,as applicable,if the recipients employment with us terminates.Upon a change in control(as defined in the applicable plan and as discussed generally in the“Change in Control”section of this CD&A),all awards outstanding under the 1
328、996 Incentive Plan and the 2005 Incentive Plan automatically become fully vested.The Board may,from time to time,at its discretion,amend or terminate the 2005 Incentive Plan,except that no such amendment or termination may impair any rights under any award made prior to the amendments effective date
329、 without the consent of the award recipient.Given that several years must pass in order for named executive officers to realize the full value of equity awards,subject to acceleration when we exceed certain performance levels,we believe that our equity compensation awards greatly assist us in meetin
330、g our goal to retain and motivate the named executive officers.-20-Personal Benefits and PerquisitesWhile it is possible that other personal benefits and perquisites may be offered to named executive officers during the course of the year,the following are the personal benefits and perquisites that
331、are generally provided only to employees at or above the vice president level:(1)coverage under the Executive Benefit Plan(as defined below);(2)enhanced long-term disability insurance coverage;and(3)use of an automobile or automobile allowance.The Committee evaluates and determines the personal bene
332、fits and perquisites received by named executive officers during its annual review of the named executive officers total compensation.Our practice is to offer employees protection from catastrophic healthcare-related events by offering medical and dental benefits under the Big Lots Associate Benefit
333、 Plan(“Benefit Plan”)and by making vision and disability coverage available.During fiscal 2006,we offered medical and dental benefits to the named executive officers that were generally available to our other employees under the Benefit Plan,plus the opportunity to participate in the Big Lots Executive Benefit Plan(“Executive Benefit Plan”).The Executive Benefit Plan is a supplemental benefit plan
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