DOLLAR GENERAL CORPORATION
Nashville, Tennessee
Telephone (615) 783-2000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 6, 1994
The Annual Meeting of Stockholders of Dollar General
Corporation will be held in the auditorium of Dollar General
Corporation, 427 Beech Street, Scottsville, Kentucky, on June 6,
1994, at 11:00 a.m., local time, for the following purposes:
1. To elect nine (9) directors to serve until the next
Annual Meeting of Stockholders and until their successors are
duly elected and qualified;
2. To ratify the appointment of Coopers & Lybrand as
independent accountants for the Company for the current fiscal
year; and
3. To transact such other business as properly may come
before the meeting or any adjournments thereof.
Only stockholders of record at the close of business on April
14, 1994 are entitled to notice of and to vote at the Annual
Meeting. Your attention is directed to the Proxy Statement
accompanying this notice for a more complete statement regarding
matters to be acted upon at the Annual Meeting.
By order of the Board of
Directors
/s/ Bob Carpenter
May 6, 1994 BOB CARPENTER,
Chief Administrative Officer and
Corporate Secretary <PAGE>
We urge you to attend the Annual Meeting. Whether you plan to
attend, please complete, date and sign the enclosed proxy card and
return it in the enclosed postage-paid envelope. You may revoke
the proxy at any time before it is voted.
<PAGE>1
DOLLAR GENERAL CORPORATION
Nashville, Tennessee
Telephone (615) 783-2000
Proxy Statement for
Annual Meeting of Stockholders
The enclosed proxy is solicited by the Board of Directors of
Dollar General Corporation (the "Company") for use at the Annual
Meeting of Stockholders to be held in the corporate auditorium at
Dollar General Corporation, 427 Beech Street, Scottsville,
Kentucky, on June 6, 1994, at 11:00 a.m., local time, and any
adjournment thereof. This proxy material was first mailed to
stockholders on or about May 6, 1994.
The mailing address of the principal executive office of the
Company is 104 Woodmont Boulevard, Suite 500, Nashville, Tennessee
37205. The Company also maintains a company operations office at
427 Beech Street, Scottsville, Kentucky 42164.
All valid proxies which are received will be voted in
accordance with the recommendations of the Board of Directors
unless otherwise specified thereon. Any stockholder giving a proxy
is entitled to revoke it by giving the Secretary of the Company
written notice of such revocation at any time before it has been
voted.
Only holders of Common Stock of record at the close of
business on April 14, 1994 are entitled to vote at the meeting. On
such date, the Company had 54,496,967 issued and outstanding shares
of Common Stock, the holders of which are entitled to one vote for
each share held and to cumulative voting in the election of
directors. The number of shares of Common Stock issued and
outstanding reflects the five-for-four stock split declared by the
Board of Directors paid April 15, 1994 to stockholders of record on
April 5, 1994. All references to shares of Common Stock have been
adjusted accordingly.
<PAGE>2
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information furnished
to the Company as of January 31, 1994 concerning persons who are
the beneficial owners of more than five percent (5%) of the
Company's Common Stock.
Amount and Nature
Name and Address of of Beneficial Percent
Beneficial Owner Ownership of Class
C.T.S., Inc. 8,578,710(1) 16.4%
427 Beech Street
Scottsville, KY 42164
Cal Turner, Jr. 11,124,109(2) 21.3
(1)C.T.S., Inc., a Kentucky corporation, owns an aggregate of
8,578,710 shares of the Company's Common Stock. Cal Turner, Jr.
and James Stephen Turner act as officers and directors of C.T.S.,
Inc. The 1980 Turner Children Trust, the Turner Family Foundation,
and the Turner Family Foundation for Lindsey Wilson College,
collectively own 100% of the outstanding voting stock of C.T.S.,
Inc. Cal Turner, Jr. and James Stephen Turner are co-trustees of
the 1980 Turner Children Trust and the Turner Family Foundation for
Lindsey Wilson College. Cal Turner, Jr. is Trustee of the Turner
Family Foundation.
(2)Includes 1,383,381 shares with respect to which he has sole
voting and investment rights, 1,765 shares held in the Employee
Stock Ownership Plan, 122,070 shares held by his wife and 201,287
shares held by his son. Cal Turner, Jr. and James Stephen Turner
act as co-trustees under various trusts in which they have shared
voting and investment rights to a total of 8,364,645 shares. As to
such shares, they are each deemed to be the beneficial owners.
Additionally, Cal Turner, Jr. acts as trustee for foundations and
various trusts in which he has voting and investment rights to
768,512 shares. Also includes 282,449 shares which may be acquired
through the exercise of options which are currently exercisable or <PAGE>
4131 Franklin Road
Nashville, TN 37204
James Stephen Turner 9,451,751(3) 18.1%
5836 Hillsboro Pike
Nashville, TN 37215
Firstar Corporation 3,172,480(4) 6.1%
777 E. Wisconsin Avenue
Milwaukee, WI 53202
exercisable within 60 days.
(3)Includes 178,976 shares with respect to which he has sole
voting and investment rights and 9,471 shares held by his wife,
217,201 shares held by each of his two children and 8,364,645
shares with respect to which he has shared voting and investment
rights as set forth in footnote 2. Additionally, James Stephen
Turner has sole voting and investment rights as trustee for various
trusts totaling 464,257 shares.
(4)Firstar Corporation, a Wisconsin corporation, owns an
aggregate of 3,172,480 shares of the Company's Common Stock to
which it reports to having sole voting power over 2,935,333 shares,
shared voting power over 96,732 shares, sole dispositive power over
3,075,481 shares, and shared dispositive power over 96,732 shares. <PAGE>
<PAGE>3
<TABLE>
<CAPTION>
SECURITY OWNERSHIP BY OFFICERS AND DIRECTORS
The following table contains certain information (furnished by the individuals named) concerning each of the nominees, the
executive officers named in the Summary Compensation Table and all executive officers and directors as a group.
Dir. Shares of Common
Nominee/Executive or Off. Stock Beneficially Percent of
Officers Age Principal Occupation Since Owned on Jan. 31, 1994(1)Class(2)
<S> <C> <C> <C> <C> <C>
James L. Clayton 60 Chairman and Chief Executive 1989 146,177(3) *
Officer of Clayton Homes, Inc.
James D. Cockman 61 Chairman and CEO, Ocean Fresh 1988 2,902 *
Express International, Inc.
Reginald D. Dickson 48 Chairman, New Age Bank Corp. and 1993 125(4) *
President Emeritus, Inroads, Inc.
John B. Holland 62 Chairman and Chief Operating 1988 80,695(5) *
Officer, Fruit of the Loom, Inc.
Wallace N. Rasmussen 79 Retired Chairman of the Board, 1990 13,697 *
Beatrice Foods, Inc.
Cal Turner 78 Chairman Emeritus of the Company 1955 1,222,002 2.3%
Cal Turner, Jr. 54 Chairman, President and Chief 1966 11,124,109(6) 21.3%
Executive Officer
David M. Wilds 53 Chairman, Cumberland Health 1991 31,010(7) *
(1)Unless otherwise noted in the following footnotes, the persons for whom information is provided had sole voting
and investment power over the shares of Common Stock shown as beneficially owned.
(2)Computation based upon 52,302,282 shares outstanding as of January 31, 1994.
(3)Includes options to acquire 39,068 shares of the Company's Common Stock which are currently exercisable or
exercisable within 60 days.
(4)Shares purchased March 9, 1994.
(5)Includes option to acquire 39,070 shares of the Company's Common Stock which are currently exercisable or
exercisable within 60 days.
(6)See footnote 2, on page 2.
(7)Includes options to acquire 22,955 shares of the Company's Common Stock which are currently exercisable or
exercisable within 60 days. <PAGE>
Systems, Inc.
William W. Wire, II 62 Retired Chairman of Genesco, Inc. 1989 25,638(8) *
<PAGE>4
Bob Carpenter 46 Vice President and Chief 1981 254,866(9) *
Administrative Officer
Mike Ennis 40 Vice President, Merchandising 1988 131,868(10) *
Operations
Tom Hartshorn 43 Vice President, Merchandising 1992 103,761(11) *
Operations
Leigh Stelmach 54 Executive Vice President, 1989 131,235(12) *
Operations
All directors and 13,508,925(13) 25.8%
executive officers
as a group (19
persons)
<PAGE>5
PROPOSAL NO. 1: ELECTION OF DIRECTORS
Directors are elected each year to hold office until the next
annual meeting of stockholders and until their successors are duly
elected and qualified. The Company's bylaws provide for a minimum
of three (3) and a maximum of fifteen (15) directors, the exact
(8)Includes options to acquire 22,955 shares of the Company's Common Stock which are currently exercisable or
exercisable within 60 days.
(9)Includes options to acquire 144,502 shares of the Company's Common Stock which are currently exercisable or
exercisable within 60 days. Also includes 93,457 shares for which Mr. Carpenter has shared voting and invest-
ment rights as a Co-Trustee of the Calister Turner, III 1994 Generation Skipping Trust.
(10)Includes options to acquire 65,618 shares of the Company's Common Stock which are currently exercisable or
exercisable within 60 days.
(11)Represents options to acquire shares of the Company's Common Stock which are currently exercisable or
exercisable within 60 days.
(12)Represents options to acquire shares of the Company's Common Stock which are currently exercisable or
exercisable within 60 days.
(13)Includes options to acquire 6,068,910 shares of the Company's Common Stock which are currently exercisable or
exercisable within 60 days.
</TABLE> <PAGE>
number to be set by the Board of Directors. The current Board of
Directors consists of nine members, and at its March 1994 meeting
the Board of Directors nominated those same nine individuals to
stand for election at the 1994 Annual Meeting of Stockholders.
In the election of directors, pursuant to the Kentucky
Business Corporation Act, each stockholder shall have the right to
cast as many votes in the aggregate as he shall hold shares of
Common Stock multiplied by the number of directors to be elected;
and each stockholder may cast the whole number of votes for any one
nominee or distribute such votes among two or more nominees.
Unless contrary instructions are received, the enclosed proxy will
be voted in favor of electing as directors the nominees listed
below. Each nominee has consented to be a candidate and to serve,
if elected. While the Board has no reason to believe that any
nominee will be unable to accept nomination or election as a
director, if such an event should occur, the proxies will be voted
with discretionary authority for a substitute or substitutes as
shall be designated by the current Board of Directors.
Cal Turner, founder of the Company, served as Chairman of
the Board from 1955 until December, 1988. He is currently a
consultant to the Company. See "Transactions with Management and
Others."
Cal Turner, Jr. joined the Company in 1965 and was elected
President and Chief Executive Officer in 1977. Mr. Turner has
served as Chairman of the Board since January, 1989. Mr. Turner is
a member of the board of directors of First American Corporation,
Nashville, Tennessee, a bank holding company, Thomas Nelson, Inc.,
a publishing company, and Shoney's Inc., a family restaurant chain.
James L. Clayton has served for more than the past five years
as Chairman and Chief Executive Officer of Clayton Homes, Inc.
Clayton Homes, Inc. produces, sells and finances manufactured
homes. Mr. Clayton served as Chairman of the Board and President
of Clayton Homes, Inc. from 1956 through 1993. Mr. Clayton has
served as Chairman of First Heritage Bank since 1992 and is a
director of ROC Communities, Inc., a manufactured homes company.
James D. Cockman, Chairman and Chief Executive Officer of
Ocean Fresh Express International, Inc., served as an executive
of the following divisions of Sara Lee Corporation: Chairman, Food
Service (1989 to September, 1992); Chairman, President and Chief
Executive Officer, PYA/Monarch, Inc. (1985 to 1989). Mr. Cockman
is also a member of the boards of directors of Clayton Homes, Inc.
and Ryan's Family Steak House, a family restaurant chain.
Reginald D. Dickson was appointed by the Board of Directors
in August, 1994, to fill the vacant position created by the
Board's decision to expand the number of Directors to nine from
eight. Mr. Dickson is Chairman of the New Age Bank Corp. and
President Emeritus of Inroads, Inc., a non-profit organization
supporting minority education. Mr. Dickson also serves as a
director of First American Corporation, Nashville, Tennessee.
John B. Holland has served since 1992 as President and Chief
Operating Officer of Fruit of the Loom, Inc., a manufacturer of
underwear and other soft goods. Mr. Holland has served since 1975
as Chairman and Chief Executive Officer of Union Underwear Co.,
Inc., a subsidiary of Fruit of the Loom, Inc. Mr. Holland is a
member of the board of directors of National City Bank Kentucky, a
bank holding company, and Fruit of the Loom, Inc.
<PAGE>6
Wallace N. Rasmussen served as Chairman of the Board and Chief
Executive Officer of Beatrice Foods, Inc. until his retirement in
June, 1979, at which time he became a consultant to that
corporation. He serves as a member of the board of directors of
Shoney's, Inc., a family restaurant chain, and NationsBank -
Tennessee, N.A.
David M. Wilds serves as Chairman of the Board of Cumberland
Health Systems, Inc., an owner and operator of psychiatric
hospitals. From 1969 until 1990, Mr. Wilds was a partner with J.
C. Bradford & Co., an investment banking company. Mr. Wilds is a
director of LDDS Communications, Inc.
William S. Wire, II served from 1986 until January 31, 1994 as
Chairman of the Board of Genesco, Inc., a manufacturer, wholesaler
and retailer of footwear and clothing. Mr. Wire served as Chief
Executive Officer of Genesco, Inc. from April, 1986 to January 31,
1993. Mr. Wire serves as a director of First American Corporation,
Nashville, Tennessee and Genesco, Inc.
COMMITTEES OF THE BOARD. The Company has a Compensation
Committee and an Audit Committee. The current members of the
Compensation Committee are Messrs. Wire (Chairman), Wilds and
Rasmussen. The functions of the Compensation Committee include
setting the total compensation of, and reporting to the Board of
Directors initial and proposed salary changes paid to all executive
officers and any employee whose annual compensation exceeds that of
the lowest paid executive officer. The Committee reviews the
compensation policies of the Company and compensation programs in
which officers may participate. In addition, the Committee
develops general criteria concerning the qualifications and
selection of Board members and officers, and recommends candidates
for such positions to the Board of Directors. The Committee will
consider persons recommended by stockholders as potential nominees
for directors, if the names of such persons are submitted in
writing to the Chairman of the Committee or the Secretary of the
Company. These recommendations must be accompanied by a full
statement of qualifications and an indication of the person's
willingness to serve.
The Compensation Committee also administers the Company's
stock option plans, excluding the 1988 Outside Directors' Plan and
the 1993 Outside Directors' Plan which are administered by Cal
Turner and Cal Turner, Jr. At least annually, the Committee
specifically reviews the standards of performance of the President
and Chief Executive Officer ("CEO") for compensation purposes.
(See "Report of the Compensation Committee of the Board of
Directors on Executive Compensation.") The Compensation Committee
met nine times during fiscal 1994. In March, 1994, the Board
renamed the Compensation Committee the "Corporate Governance and
Compensation Committee," and to expand the responsibilities of the
Committee to include reviewing and recommending policies and
practices for the Corporation's corporate governance profile.
The Audit Committee is composed of Messrs. Holland (Chairman),
Cockman, Clayton and Dickson. The functions of the Audit Committee
include providing advice and assistance regarding accounting,
auditing, and financial reporting practices of the Company. Each
year it will recommend to the Board a firm of independent certified
public accountants to serve as auditors. The Committee will review
with the auditors the scope and results of their annual audit, fees
in connection with their audit and nonaudit services, and the
independence of the Company's auditors. The Audit Committee met
three times during fiscal 1994.
During fiscal 1994, the Board of Directors held five meetings.
All directors attended more than 75% of the aggregate number of
meetings of the Board and committees on which they serve.
<PAGE>7
COMPENSATION OF DIRECTORS. Directors receive a $5,000
quarterly retainer, an additional $1,250 for attending each regular
meeting of the Board, and an additional $1,250 for members
attending each committee meeting. Committee Chairmen receive
$1,500 per meeting. Compensation for telephonic meetings is one-
half the above rates. Board members who are officers of the
Company do not receive any separate compensation for attending
Board or committee meetings. In addition, the directors who are
not employees of the Company are entitled to receive stock options
pursuant to the terms of the Company's 1988 Outside Directors'
Stock Option Plan and the 1993 Outside Directors' Stock Option
Plan.
DEFERRED COMPENSATION PLAN FOR DIRECTORS. In December, 1993,
the Board of Directors unanimously approved a voluntary,
nonqualified compensation plan for Director compensation. All
outside Directors are eligible to participate in the plan. Under
the plan, each Director may voluntarily defer receipt of all or a
part of any fees normally paid by the Company to the Director. The
fees eligible for deferral are defined as retainer, Board meeting
fees and committee meeting fees. The compensation deferred is
credited to a liability account which is increased quarterly at a
minimum rate of 6% per year. The benefits will be paid, upon
termination from the Board, as deferred compensation to the
Director as a lump sum of the accumulated account as follows:
(a) Upon attaining age 65 or any age thereafter; (b) In the
event of total disability; (c) In the event of death; or (d) In the
event of voluntary termination.
<PAGE>8
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION
The three-member Compensation Committee of the Board of
Directors prepared the following executive compensation report.
A. COMPENSATION PHILOSOPHY
The Company embraces the concept of pay-for-performance
linking management compensation, Company performance and
stockholder return. This strategy reflects the Company's desire to
pay for results that are consistent with the key goals of the
Company and the stockholders. The Committee and the Company
believe that combining variable, direct and indirect pay components
of its compensation program enables the Company to attract, retain
and motivate results-oriented employees to achieve higher levels of
performance.
1. VARIABLE COMPENSATION PHILOSOPHY
At nearly all levels of the Company, a significant portion of
pay is variable, being contingent upon Company (or store)
performance. The performance-based component, whether annual
incentive or long-term incentive (for middle and senior
management), is significant enough to serve as a strong incentive.
Additionally, performance-based compensation through the granting
of stock options to employees serves to increase employee ownership
of the Company.
2. DIRECT COMPENSATION PHILOSOPHY
Though performance-based compensation is to be emphasized,
base pay is competitive. The Company believes base pay should
relate to the skills required to perform a job and to the value of
each job performed relative to the market, industry, and strategic
importance to the Company. This method of valuation allows the
Company to respond to changes in its needs and changes in the labor
market. Increases in base pay require a satisfactory or better
level of performance as determined by the Compensation Committee.
3. INDIRECT COMPENSATION PHILOSOPHY
The Company's indirect-compensation programs protect its
employees from extreme financial hardship in the event of a
catastrophic illness or injury and provide limited income security
for retirement years. Health, life and disability benefit programs
should provide competitive levels of protection without
jeopardizing the Company's position as a low-cost retailer. The
Company manages health care costs aggressively and enlists employee
assistance in cost management. Employees have various
opportunities to share in health care cost- reductions and are
encouraged to adopt healthy lifestyles.
The Company's retirement benefit plans should provide limited
income security at retirement for the typical employee. The
Employee Stock Ownership Plan reflects the Company's commitment to
widespread stock ownership of the Company by employees at all
levels of employment. Employees are also invited to share in
ownership of the Company through participation in the Dollar
General Stock Purchase Plan.
<PAGE>9
B. EXECUTIVE OFFICER COMPENSATION
Under the supervision of the Compensation Committee, the
Company has developed compensation polices and programs designed to
provide competitive levels of compensation that integrate pay with
the Company's annual and long-term performance goals. The Company
is committed to creating an incentive for its employees to
contribute to the overall results of the Company thereby
encouraging a team approach toward accomplishment of corporate
objectives and creating value for stockholders.
The executive officers' compensation for fiscal 1994 reflected
the Company's increasing emphasis on tying pay to both short-term
and long-term performance goals. Over 92% of the total non-base-
salary compensation paid to the CEO and the other officers named in
the Summary Compensation Table in fiscal 1994, was comprised of
awards based on variable pay controlled by short-term and long-term
Company performance goals. While the Committee's approach to base
compensation is to offer competitive (although slightly lower-than-
average) salaries to the CEO and the other Named Executive Officers
in comparison with market practices, base salaries have become a
relatively smaller element in the total executive officer
compensation package as the Company's pay-for-performance component
plays a more significant role. The fiscal 1994 average base
salaries for the Named Executive Officers (not including the CEO)
increased 14%. The increase in base salaries in fiscal 1994 was
determined based upon recommendations made by the human resources
department to the Compensation Committee, a review of peer group
comparison data (using the peer group compensation survey published
by Management Compensation Services(1)) and the subjective analysis
of the Compensation Committee after evaluating the recommendations,
peer group data, the Company's overall performance and the res-
pective individual performance criteria of the Named Executive
Officers.
(1) The peer group compensation survey is published annually by
Management Compensation Services. The 1993 survey included the fol-
lowing mass-merchandising companies: Ames Department Stores, Bill's
Dollar Stores, Bradlees, CT Farm & Family Center, Consolidated Stores,
Kmart, Kohl's, Mac Frugal's Bargains/Closeouts, McCrory, Meijer,
Montgomery Ward, Pamida, Quality Stores, Roses's Stores, Ross Stores,
Sears Roebuck, Service Merchandise, ShopKo Stores, TJX Companies,
Venture Stores, Waban, and Wal-Mart Stores. The Committee has used
for the past four years this well-known peer-group annual salary
survey when reviewing and establishing the Company's executive com-
pensation policies. Because the Company uses this survey for execu-
tive compensation comparison and because the Company ties executive
compensation directly to Company performance, the same peer group,
with the exception of those companies that are not publicly traded
(and therefore stock comparison data is unavailable), is used for
Company performance comparison purposes.
1. ANNUAL CASH BONUSES
The Company's annual cash bonuses paid to the executive officers
make up the short-term incentive component of their fiscal 1994 comp-
ensation. The payment of annual cash bonuses is based on both
objective and subjective criteria.
Objective criteria include actual earnings per share results
versus target earnings per share results as established by the
Compensation Committee at the end of the prior fiscal year. The
Company uses earnings per share improvement for determining target
goals for the executive officer's variable pay for primarily two
reasons: First, it is a defined measure of total Company
performance and second, it can be easily identified and reviewed by
stockholders.
<PAGE>10
There are two earnings per share goals established by the
Committee, both of which exceed the prior year's performance. If
the Company reaches the first established or "target" goal, which
is considered by the Committee to be challenging, then 50% of the
total possible payout is awarded. If the Company reaches the
second or "stretch" goal, which is considered by the Committee to
be extremely challenging, then the total possible payout is
awarded.
Subjective performance criteria include the results of each
executive officer's performance review pursuant to the Company's
Performance Development Process ("PDP"). The Company's PDP is a
comprehensive program that focuses on total performance improvement
by concentrating on "Key Development Areas" ("KDA") and "Key Result
Areas" ("KRA"). KDAs emphasize skill enhancement, leadership
development, and career goal aspirations of employees. KRAs focus
on the key results required to actively pursue the Company's
mission. KDAs and KRAs are set annually for each management
employee by the employee's supervisor, and the payment of an annual
bonus is dependent upon each executive officer achieving his
individual goals. That is, Company performance is not the sole
criteria by which an executive officer's annual cash bonus payout
is determined. Two factors determine whether an executive officer
would receive an annual cash bonus: (1) the Company must achieve
an established earnings-per-share improvement goal; AND (2) the
individual must achieve a satisfactory performance evaluation based
upon the above-described PDP factors. Therefore, full weight is
given to each of these factors. For each executive officer, both
Company and individual goals for fiscal 1994 were met or exceeded.
Because the Company exceeded its stretch earnings-per-share
improvement goals for fiscal 1994, and because each executive
officer achieved his previously-established subjective performance
goals, the maximum cash bonus award was paid. This cash bonus
component represents 30% of the total cash compensation paid to
each executive officer.
2. EMPLOYEE STOCK INCENTIVE PLAN
The Company's 1993 Employee Stock Incentive Plan ("Plan")
awards non-qualified performance-based stock options to the
executive officers, department directors and other personnel
considered to be in key positions, as approved by the Compensation
Committee.
In fiscal 1991, the Stock Option Committee (now the
Compensation Committee) established three-year earnings-per-share
improvement goals as objective Company performance requirements for
vesting of stock options for fiscal years 1992, 1993 and 1994.
Because the Company exceeded its "stretch" earnings per share
improvement goals for fiscal 1994, and because each executive
officer achieved his previously-established subjective performance
goals, the maximum number of options previously granted became
fully vested. These grants do not provide for the power to
accelerate vesting by the Committee based upon the achievement of
only one of the two vesting criteria--each must be met or the
options designated for that year are canceled.
In determining the number of the shares subject to stock
options granted to the employees eligible to participate in the
Plan, the Committee takes into account the respective scope of
accountability, the strategic and operational responsibilities of
such employees, as well as the salary levels of such employees.
Compensation data from the Management Compensation Services
compensation survey reveals that annual stock grants (calculated as
grant price times the number of shares granted) are typically
expressed as a multiple of salary. For the CEO, annual grant
amounts fall within a range of one to three times the CEO's annual
salary, and executive officer's grant amount fall within a range
of one-half to one and one-half times the executive officer's
salary. Because the Committee has decided to place greater emphasis
on the performance-based
<PAGE>11
component of compensation, it pays lower- than-average salaries for
the CEO and executive officers but sets incentive compensation
multiples at or above the high end of the peer group survey ranges for
these positions. Specifically, the Committee has established an
incentive compensation multiple of approximately three to four and
one-half times salary for determining annual stock option grants for
the CEO and the other executive officers. These options are valued
by multiplying the option price (fair market value at the time of
grant) by the number of shares granted.
In fiscal 1994, the Committee granted performance-based stock
options that will vest annually over a three-year period (beginning
in fiscal 1995) provided corporate performance goals (as measured by
earnings per share improvement) and individual performance goals
(as measured by a comprehensive review process (PDP)) are met. To
further encourage outstanding performance, the Committee has tied
its stock option awards to "target" and "stretch" earnings per share
goals. If the Committee-established "target" earnings per share goal
is met and the individual performance goals are met, 67% of the total
possible stock option benefit (based on approximately three times salary)
will be earned. If the Committee- established "stretch" earnings per
share goal is met and the individual performance goals are met, 100%
of the total possible stock option benefit (based on approximately
four and one-half times salary) will be earned.
C. CHIEF EXECUTIVE OFFICER COMPENSATION
As with the other executive officers, the CEO's compensation
reflects the Company's increasing emphasis on tying compensation to
both short-term and long-term performance goals. When determining
the CEO's salary, the Committee considers the CEO's prior year
performance and expected future contributions to the Company as
well as the results of the peer industry survey published annually
by Management Compensation Services. As compared to the industry
comparison group, the CEO's salary was 22% less than the group
median. The CEO's total compensation was 9% less than the group
median. The Committee increased the CEO's salary 13% to reward him
for his leadership and the Company's outstanding performance as
measured by such factors, including, but not limited to, earnings
per share improvement, sales and profit increases and expense
reduction and to bring his salary closer to the industry average.
The Committee, believing that the CEO should have some
compensation at risk in order to encourage performance that
maximizes stockholder return, has created a significant opportunity
for additional compensation through performance-based incentives.
The performance-based compensation for which the CEO is eligible
takes the form of both short-term and long-term incentives. Like
the other executive officers, the CEO is eligible for a cash bonus-
-the short-term incentive--based on the attainment of individual
goals and earnings-per-share improvement goals. This incentive
links 33% of the CEO's total cash compensation to performance.
Also like the other executive officers, the CEO is eligible for
non-qualified performance-based stock options--the long-term
incentive--awarded upon the attainment of Committee-established
earnings-per-share improvement goals.
The Committee believes that in order to maximize the CEO's
performance, a substantial portion of the CEO's compensation should
be tied directly to overall Company performance. Consistent with
this philosophy, the Committee has established a lower-than-average
salary for the CEO (as compared to CEOs of the peer-group
compensation survey participants) while emphasizing the pay-for-
performance components of the CEO's total compensation package.
When considering the CEO's pay-for-performance component of his
compensation package, the Committee took into consideration prior
pay-for-performance awards. The Committee determined that based on
the CEO's individual performance and the performance of the
Company, it was important to continue its incentive compensation
program in a manner that is competitive in the industry and that
continues to motivate and reward outstanding performance.
Specifically, the
<PAGE>12
Committee has established for the CEO a short- term cash-bonus
incentive of up to 50% of his salary. To be eligible for this award,
the CEO must achieve personal performance goals established by the
Committee, and the Company must meet its earnings-per-share goals. If
the CEO meets his individual performance goal and the Company meets
its Committee-established "target" goal, the CEO will receive a cash
bonus equal to 25% of his annual salary. If the CEO's individual
goals and the Committee-established "stretch" earnings-per-share goal
is met, then the CEO will receive a cash bonus equal to 50% of his annual
salary.
The CEO is also eligible for stock option grants up to
approximately three to four and one-half times his annual salary.
If the Committee-established "target" earnings-per-share goals are
met and the CEO meets his individual performance goals, he will
earn 67% of the total possible payout (based on three
times his annual salary). If both individual and "stretch"
earnings per share goals are met, then the CEO will earn 100% of
the total possible stock option benefit (based on four and one-half
times his annual salary).
For fiscal 1994, the Company exceeded its established
performance goals with a 23.1% increase in total store sales, a
12.7% increase in same-store sales and a 36.5% increase in earnings
per share. Because the Company exceeded the Committee-established
"stretch" earnings-per-share improvement goals, and because the CEO
achieved previously-established subjective performance goals, he
received the maximum amount of the variable component.
D. DEDUCTIBILITY
Section 162(m) of the Internal Revenue Code is applicable for
1994 and thereafter. It was enacted as part of the 1993 Omnibus
Budget Reconciliation Act and generally disallows corporate
deduction for compensation over $1,000,000 paid to any executive
officer. The Committee is currently analyzing the potential impact
of the $1,000,000 limit on the deductibility of executive
compensation for federal income tax purposes. Under the
regulations proposed by the Department of Treasury, particularly
the transition rules, the executive compensation pursuant to the
Company's stock incentive plans would be qualifying "performance
based" compensation and therefore excluded form the $1,000,000
limit. Other forms of compensation provided by the Company,
however, may not be excluded from such limit. Because the
regulations are still in proposed form, and because the Company is
in no immediate danger of losing any deductions due to the fact
that currently no executive officer's applicable compensation
reaches the limit, no definitive determinations have been made by
the Committee as to whether the Committee will approve any
compensation arrangements that will cause the $1,000,000 limit to
be exceeded in the future.
William S. Wire, II - Compensation Committee Chairman
Wallace N. Rasmussen
David M. Wilds
<PAGE>13
COMMON STOCK PERFORMANCE
As a part of the executive compensation information presented
in this Proxy Statement, the Securities and Exchange Commission
requires the Company to prepare a performance graph that compares
its cumulative total shareholders' return during the previous five
years with a performance indicator of the overall stock market and
the Company's peer group. For the overall stock market performance
indicator, the Company has chosen to use the S&P Midcap 400 index.
For the peer group, the Company has chosen to use the publicly-held
participants of the compensation survey published by Management
Compensation Services(1) used by this Committee when reviewing and
establishing the Company's executive compensation policies.
Comparison of five-year cumulative total return(*) among Dollar
General Corporation, the S & P Midcap 400 Index and a peer group.
1/89 1/90 1/91 1/92 1/93 1/94
Dollar General
Corporation $100 $ 98 $106 $300 $456 $698
Peer Group $100 $109 $131 $207 $247 $236
S & P Midcap 400 $100 $116 $130 $184 $205 $233
<PAGE>14
SUMMARY COMPENSATION TABLE
The following table provides information as to annual, long-
term or other compensation during fiscal 1994, 1993 and 1992 for
the Company's Chief Executive Officer and the persons who, at the
end of fiscal 1994, were the other four most highly-compensated
executive officers of the Company. The Company awarded no SARs in
fiscal 1994, and no Named Executive Officer holds any SARs.
(Please see table notes on following page.)
(1)The peer group compensation survey is published annually by
Management Compensation Services. The 1993 survey included the
following mass-merchandising companies: Ames Department Stores,
Bill's Dollar Stores, Bradlees, CT Farm & Family Center,
Consolidated Stores, Dayton Hudson, Filene's Basement, Hills
Department Stores, Kmart, Kohl's, Mac Frugal's Bargains/Closeouts,
McCrory, Meijer, Montgomery Ward, Pamida, Quality Stores, Rose's
Stores, Ross Stores, Sears Roebuck, Service Merchandise, ShopKo
Stores,TJX Companies, Venture Stores, Waban, and Wal-Mart Stores.
(*)$100 invested on 1/31/89 in stock or index - including
reinvestment of dividends. Fiscal year ending January 31. <PAGE>
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
Awards Payouts
Re-
Other stricted Sec. All
Annual Stock Under- Other
Name and Principal Fiscal Salary Bonus Comp. Award(s) lying LTIP Comp.
Position Year ($) ($) ($) ($) Options Pays ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cal Turner, Jr. 1994 400,000 177,500 10,599 0 285,937 0 92,509
Chairman, President and 1993 355,000 177,500 12,133 0 0 0 86,838
Chief Executive Officer 1992 355,000 172,500 0 0 688,976 0 0
Bob Carpenter, Chief 1994 140,000 62,500 3,798 0 132,374 0 14,903
Administrative 1993 125,000 62,500 6,677 0 0 0 11,650
Officer, Corporate 1992 125,000 62,500 0 0 344,491 0 0
Secretary and Chief
Counsel
Mike Ennis, Vice 1994 125,000 44,800 2,636 0 96,499 0 15,148
President Merchandising 1993 112,000 44,800 1,146 0 0 0 9,830
Operations 1992 112,000 44,800 0 0 172,250 0 0
Tom Hartshorn, Vice 1994 117,500 42,000 44,771 0 96,499 0 8,254
President Merchandising 1993 100,752 40,301 37,000 0 103,760 0 0
Operations 1992 0 0 0 0 0 0
Leigh Stelmach 1994 175,000 75,000 8,851 0 132,374 0 8,254
Executive Vice 1993 150,000 75,000 3,858 0 0 0 8,010
President Operations 1992 150,000 75,000 0 0 344,491 0 0
</TABLE>
<PAGE>15
NOTES TO SUMMARY COMPENSATION TABLE
OTHER ANNUAL COMPENSATION - The amounts reported in this column
reflect gross-ups for tax reimbursements. The 1993 amount reported
for Mr. Hartshorn includes a $16,463 gross-up, the forgiveness of a
$27,621 relocation loan and $687 in other perquisites. The 1992
amount reported for Mr. Hartshorn reflects a $4,010 gross-up for
tax reimbursement and the forgiveness of a $32,990 moving-expenses
loan. <PAGE>
SECURITIES UNDERLYING OPTIONS - The options granted in fiscal 1994
are to be vested in three increments upon the attainment of
individual and Company performance (earnings-per-share improvement)
goals established for fiscal years 1995, 1996 and 1997.
RESTRICTED STOCK AWARDS - The Company granted no restricted stock
awards in fiscal 1994, fiscal 1993 or fiscal 1992. No exeucitive
officer holds any restricted stock awards.
LTIP PAYOUTS - None paid. The Company has no LTIP plan in place.
ALL OTHER COMPENSATION - Includes $8,254 contributed to each
executive officer's retirement account in fiscal 1993 and $8,010
contributed to each executive officer's retirement account in
fiscal 1992 (with the exception of Mr. Hartshorn who was ineligible
because of length of service to receive a contribution in fiscal
1992). Includes the Company's contribution to each executive
officer's Employee Stock Ownership Plan (ESOP) account for the
following fiscal years: Mr. Turner: 1994 - $8,965, 1993 - $3,836;
Mr. Carpenter: 1994 - $6,649, 1993 - $3,640; Mr. Ennis: 1994 -
$6,894, 1993 - $1,820; Mr. Hartshorn: 1994 - $2,071, 1993 - $-0-;
Mr. Stelmach: 1994 - $6,867, 1993 - $3,897. Includes for Mr.
Turner $75,290 paid as premiums on a split-dollar insurance policy
for each of 1994 and 1993.
<PAGE>16
OPTIONS GRANTED IN LAST FISCAL YEAR
The following table provides information as to options granted
to the Named Executive Officers during fiscal 1994. The Company
granted no SARs in fiscal 1994.
<TABLE>
<CAPTION>
% of Potential
Total Realizable Value
No. of Options at Assumed Annual
Securities Granted to Exercise Rates of Stock
Underlying Employees or Price Appreciation
Options in Fiscal Base Price Expiration for Option Term(1)
Name Granted(#)(2) Year 1994 ($/Sh) Date 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C>
Cal
Turner, Jr. 285,937 11.5% $19.20 12/01/03 $3,452,625 $8,749,630
Bob
Carpenter 132,374 5.3% $19.20 12/01/03 $1,598,387 $4,050,625
<PAGE>17
Mike Ennis 96,499 3.9% $19.20 12/01/03 $1,165,204 $2,952,855
Tom Hartshorn 96,499 3.9% $19.20 12/01/03 $1,165,204 $2,952,855
Leigh
Stelmach 132,374 5.3% $19.20 12/01/03 $1,598,387 $4,050,625
(1)Based on actual option term and annual compounding.
(2)These granted options are to be vested upon the attainment of
individual and Company performance (earnings per share improvement) goals.
The options granted in fiscal 1994 are non-qualified stock options granted
in amounts commensurate with the other executive officers. These grants
are performance-based and are tied to the objective performance criteria
of the Company and the subjective performance criteria of the executive
officer for fiscal years 1995, 1996, and 1997.
</TABLE>
<PAGE>18
OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table provides information as to options
exercised or held by the Named Executive Officers during fiscal
1994.
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Options at In-the-Money Options at
Fiscal Year-End(#) Fiscal Year-End($)
Shares
Acquired on Value
Name Exercise(#) Realized($)* Exercis. Unexercis. Exercis. Unexercis.*
<S> <C> <C> <C> <C> <C> <C>
Cal Turner, Jr. 229,657 $3,629,131 19,981 548,405 $335,840 $5,573,477
Bob Carpenter 101,563 $1,684,060 13,267 263,609 $244,144 $2,759,210
Mike Ennis 102,338 $1,633,120 0 162,117 0 $1,458,425
Tom Hartshorn 0 0 46,794 153,465 $708,705 $1,103,654
Leigh Stelmach 168,134 $2,793,500 0 263,609 0 $2,759,210
*Market value of underlying securities at exercise or year-end,
minus the exercise price.
</TABLE>
<PAGE>19
EMPLOYEE RETIREMENT PLAN
The Company has a non-contributory defined contribution plan
which covers substantially all employees, including the Named
Executive Officers. The plan provides retirement, disability,
termination and death benefits. Each year, as of December 31, the
Company contributes for the benefit of each eligible participating
employee 3-1/2% of calendar year gross wages to such participant's
retirement account under the plan. At least once each year, each
participating employee's retirement account is adjusted to reflect
investment gains or losses.
A participating employee will be paid the full value of his
account if the employee retires at the normal retirement age of 65,
dies while an active member of the plan, or becomes totally and
permanently disabled. If a participating employee leaves the
Company for reasons other than retirement, death or disability, the
employee will be entitled to the full value of his vested pension
account. The employee's right to all or part of the value of his
retirement account will depend on his years of service with the
Company as provided in the following chart:
Years of Credited Non-forfeitable
Service Percentage
Less than 4 0%
4 40%
5 or more 100%
As of January 31, 1994, Messrs. Cal Turner, Jr., Bob
Carpenter, Mike Ennis, Tom Hartshorn and Leigh Stelmach had 28, 13,
6, 2 and 4 years of credited service, respectively. The present
value of benefits under the plan as of January 31, 1994 was
$193,169 for Cal Turner, Jr., $65,269 for Bob Carpenter, $34,100
for Mike Ennis, $12,474 for Tom Hartshorn and $33,203 for Leigh
Stelmach. Upon retirement, each participant has the option of
taking a lump sum or an average annual payment over a ten-year
period.
OTHER EXECUTIVE BENEFIT PLANS
Since 1988, the Company has provided a salary continuation
plan for eligible employees (the "Salary Plan") which will continue
to operate in 1994. The Salary Plan generally provides for a
retirement benefit of 100% of the employee's salary on the date of
entry into the plan with adjustments based on certain subsequent
salary increases. The retirement benefit is payable over 10 years
commencing at age 65. The Salary Plan also provides that in the
event an employee dies while in the employ of the Company after
entering the Salary Plan but before retirement, his beneficiaries
will receive 50% of such employee's salary, for a period of 10
years. The Named Executive Officers are eligible to participate in
the Salary Plan, which is funded in part by life insurance
purchased by the Company and payable to the Company on the life of
the employee. Participants in the Salary Plan are vested only upon
reaching retirement age or, if retirement occurs prior to age 65,
the Compensation Committee may decide in its sole discretion
whether to pay benefits under the plan equal to a value no greater
than the cash value of the life insurance policy for such person.
Directors of the Company who are not also executive officers or
employees do not participate in the Salary Plan. If the annual
salary levels reported in the Summary Compensation Table for the
Named Executive Officers were applicable at retirement, the
estimated annual benefits payable over a ten-year period for
Messrs. Cal Turner, Jr., Bob Carpenter, Mike Ennis, Tom Hartshorn
and Leigh Stelmach are $400,000, $140,000, $125,000, $117,500, and
$175,000, respectively.
<PAGE>20
TRANSACTIONS WITH MANAGEMENT AND OTHERS
Cal Turner, Chairman Emeritus, is engaged as a consultant to
the Company and receives annual compensation of $60,000. This
amount is for consulting services unrelated to Mr. Turner's service
as a member of the Company's Board of Directors.
During fiscal 1994, the Company purchased from Allen Realty
Company, Incorporated ("Allen Realty") 15 store-site properties
primarily in small communities in Kentucky, Tennessee, Arkansas and
Illinois for $1,342,500. Previously, the Company leased from Allen
Realty buildings on these store-site properties. After reviewing a
property appraisal prepared by an independent property appraisal
company for each site property, the Audit Committee approved as
fair and beneficial to the Company the purchase of the 15
locations. This property purchase terminated the lease
arrangements previously in place between the Company and Allen
Realty Company--a company whose stock is 100% owned by members of
the Turner family. During fiscal 1994, prior to the purchase,
rental payments on these stores totaled approximately $336,335,
paid by the Company to Allen Realty Company.
John B. Holland, a director, is President and Chief Operating
Officer of Fruit of the Loom, Inc., a manufacturer of underwear and
other soft goods. In fiscal 1994, the Company purchased
approximately $19,000,000 in goods from Fruit of the Loom, Inc.
During 1986, the Company moved certain of its executive
personnel to Nashville, Tennessee. In connection with such
relocation, the Company agreed to make a loan to Cal Turner, Jr. to
assist in the purchase of a new home. The loan is in the form of a
junior mortgage secured by the mortgaged house. The mortgage will
be fully paid upon a 15-year amortization of the loan. The
borrower is liable for the unpaid balance of the mortgage at all
times. The Company will forgive a portion of the amortized
principal and interest annually, and such amount will be included
as income to the borrower. The Company's agreement to periodically
forgive mortgage amounts will terminate if the borrower leaves the
Company. In the opinion of management, the loan was made on
substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable
transactions with other persons, and does not involve more than the
normal risk of collectability or present other unfavorable
features. The outstanding loan carries an annual interest rate of
9.0% and the amount forgiven by the Company last year was $21,117.
On January 31, 1994, the current balance of this junior mortgage
was $93,333.
<PAGE>21
PROPOSAL NO. 2: RATIFICATION OF COOPERS & LYBRAND AS
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company has selected Coopers &
Lybrand to serve as its independent auditor for the current fiscal
year. Coopers & Lybrand has served as the Company's independent
auditor for more than the past 30 years. The Company has no
information that Coopers & Lybrand has any direct or material
indirect financial interest in the Company or any of its
subsidiaries, in the capacity of promoter, underwriter, voting
trustee, director, officer or employee.
Representatives of Coopers & Lybrand are expected to be
present at the annual meeting and will be given the opportunity to
make a statement if they desire to do so and to respond to
appropriate questions.
The Board of Directors recommends a vote FOR approval of this
appointment.
STOCKHOLDER PROPOSALS FOR 1995 ANNUAL MEETING
Stockholders' proposals intended for presentation at the 1995
Annual Meeting of Stockholders must be received by Bob Carpenter,
Chief Administrative Officer and Corporate Secretary, at 104
Woodmont Boulevard, Suite 500, Nashville, Tennessee 37205 not later
than December 29, 1994 for inclusion in the proxy statement and
form of proxy relating to that meeting. All such proposals must be
in writing and mailed by Certified Mail, Return Receipt Requested,
and must comply with Rule 14a-8 of Regulation 14A of the proxy
rules of the Securities and Exchange Commission.
OTHER MATTERS
The cost of soliciting proxies will be borne by the Company.
In addition to this solicitation by mail, proxies may be solicited
by officers, directors and regular employees of the Company,
without extra compensation, personally and by mail, telephone or
telegraph. Brokers, nominees, fiduciaries and other custodians
will be requested to forward soliciting material to the beneficial
owners of shares and will be reimbursed for their expenses. The
Company's regularly retained investor relations firm, Corporate
Communications, Inc., may also be called upon to solicit proxies by
telephone and mail.
The Board of Directors is not aware of any matter to be
submitted for consideration at the Annual Meeting other than those
set forth in the accompanying notice. If any other matter properly
comes before the meeting for action, proxies will be voted on such
matter in accordance with the best judgment of the persons named as
proxies.
The Annual Report of the Company is mailed herewith. A copy
of the Company's annual report to the Securities and Exchange
Commission on Form 10-K for the year ended January 31, 1994, is
available without charge to any stockholder on request. Requests
for the Company's annual report on Form 10-K should be directed by
Bob Carpenter, Chief Administrative Officer and Corporate
Secretary.
Whether or not you expect to be present at the meeting in
person, please sign, date and return the enclosed proxy promptly in
the enclosed business reply envelopment. No postage is necessary
if the proxy is mailed in the United States.
<PAGE>22
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act requires the
Company's officers and directors, and persons who own more than ten
percent of a registered class of the Company's equity securities,
to file reports of ownership and changes in ownership on Forms 3, 4
and 5 with the Securities and Exchange Commission (SEC) and the
Nasdaq National Market. Officers, directors and greater-than-ten-
percent stockholders are required by SEC regulation to furnish the
Company with copies of all Forms 3, 4 and 5 they file.
Based on the Company's review of such forms it has received
and based on written representations from certain reporting persons
that they were not required to file Forms 5 for specified fiscal
years, the Company believes that all its officers, directors, and
greater-than-ten-percent beneficial owners complied with all filing
requirements applicable to them with respect to transactions during
fiscal 1994 with the following exceptions: Cal Turner, Jr. did not
timely file on Form 4 a sale of 195,918 shares; outside director
Reginald D. Dickson did not timely report on Form 3 his status as a
statutory insider of the Company; outside director David M. Wilds
did not report on Form 4 the sale of 1,172 shares of stock sold by
his wife; officer, Ron Humphrys failed to report on Form 4 the
purchase of 323 shares in trust for his children; and the 1980
Turner Children Trust did not timely report on Form 3 its status as
a statutory insider of the Company (although all transactions of
this trust have been timely reported on forms filed by the Trust's
trustees). With respect to the inadvertent omissions, the required
forms have been filed.
METHOD OF COUNTING VOTES
Unless a contrary choice is indicated, all duly executed
proxies will be voted in accordance with the instructions set forth
on the back side of the proxy card. Abstentions and "non-votes"
are counted as present only for purposes of determining a quorum.
Abstentions and "non-votes" are treated as votes against proposals
presented to stockholders other than the election of directors. A
"non-vote" occurs when a nominee holding shares for a beneficial
owner votes on one proposal, but does not vote on another proposal
because the nominee does not have discretionary voting power and
has not received instruction from the beneficial owner.
