SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to '240.14a-11(c) or '240.14a-12
DOLLAR GENERAL
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)and 0-11.
1) Title of each class of securities to which transaction applies:
N/A
2) Aggregate number of securities to which transaction applies: N/A
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on
which the filing fee is calculated and state how it was
determined): N/A
4) Proposed maximum aggregate value of transaction: N/A
5) Total fee paid: N/A
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid: N/A
2) Form, Schedule or Registration Statement No.: N/A
3) Filing Party: N/A
4) Date Filed: N/A
<PAGE>
Dollar General Corporation
100 Mission Ridge
Goodlettsville, Tennessee 37072
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 5, 2000
The Annual Meeting of Shareholders (the "Annual Meeting") of Dollar
General Corporation (the "Company") will be held in the Goodlettsville City Hall
Auditorium, 105 South Main Street, Goodlettsville, Tennessee, on June 5, 2000 at
10:00 a.m. local time, for the following purposes:
1. To elect nine directors to serve until the next Annual Meeting and
until their successors are duly elected and qualified;
2. To amend the Dollar General 1998 Stock Incentive Plan to increase the
number of shares available for issuance thereunder by twelve million
shares; and
3. To transact such other business as properly may come
before the meeting or any adjournments thereof.
Only shareholders of record at the close of business on April 6, 2000
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,
April 28, 2000 /s/ Robert C. Layne
-------------------
Robert C. Layne
Corporate Secretary
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Whether or not you expect to be present at the Annual Meeting, please vote your
proxy as soon as possible. You may vote your proxy electronically according to
the instructions on the enclosed card, or sign, date and return the enclosed
printed proxy card in the enclosed business reply envelope. No postage is
necessary if the proxy is mailed within the United States. You may revoke the
proxy at any time before it is voted.
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<PAGE>
DOLLAR GENERAL CORPORATION
100 Mission Ridge
Goodlettsville, Tennessee 37072
Telephone (615) 855-4000
Proxy Statement for
Annual Meeting of Shareholders
The enclosed proxy is solicited by the Board of Directors of Dollar
General Corporation (the "Company") for use at the Annual Meeting of
Shareholders (the "Annual Meeting") to be held in the Goodlettsville City Hall
Auditorium, 105 South Main Street, Goodlettsville, Tennessee, on June 5, 2000 at
10:00 a.m. local time, and any adjournment thereof. This proxy material was
first mailed to shareholders on or about April 28, 2000.
The mailing address of the principal executive office of the Company is
100 Mission Ridge, Goodlettsville, Tennessee 37072-2170.
All valid proxies which are received will be voted in accordance with
the recommendations of the Board of Directors unless otherwise specified on the
proxy. Any shareholder 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 or by duly executing a proxy bearing a later date.
Only holders of the Company's Common Stock, $.50 par value per share
(the "Common Stock"), of record at the close of business on April 6, 2000 (the
"Record Date"), are entitled to vote at the Annual Meeting. On such date, the
Company had 263,274,082 issued and outstanding shares of Common Stock, the
holders of which are entitled to one vote for each share held.
Throughout this statement: "1999" refers to the year ended January 28,
2000; "1998" refers to the year ended January 29, 1999; and "1997" refers to the
year ended January 30, 1998. All share amounts have been adjusted to reflect the
effects of all Common Stock splits declared on or before the Record Date.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information concerning persons,
who as of January 28, 2000, were known by management to be beneficial owners of
more than five percent (5%) of the Common Stock. Unless otherwise indicated, the
person for whom information is provided had sole voting and investment power
over the shares indicated.
<TABLE>
<CAPTION>
Name and Address of Percent of Shares
Beneficial Owner Shares Beneficially Owned Outstanding
-------------------------------------------- ------------------------------- ------------------------------
<S> <C> <C> <C>
Cal Turner, Jr. (1)
100 Mission Ridge 41,821,979 15.8
Goodlettsville, TN 37072-2170
James Stephen Turner (2) 38,775,689 14.7
138 Second Avenue
Nashville, TN 37201
Turner Children Trust 38,474,605 14.5
dated January 21, 1980,
Cal Turner, Jr. and James Stephen Turner,
Co-Trustees
100 Mission Ridge
Goodlettsville, TN 37072-2170
W. P. Stewart & Co., Ltd. 27,740,845 10.5
129 Front Street
Hamilton, HM12, Bermuda
</TABLE>
- --------------------
(1) Includes 39,480,569 shares held by various trusts and foundations for which
Cal Turner, Jr. has sole voting and investment power; 465,656 shares held
by Cal Turner, Jr.'s wife; 6,975 shares held in Company retirement and
deferred compensation plans; and direct ownership of 1,868,779 shares. Cal
Turner, Jr. disclaims ownership of the shares held by the various trusts
and foundations, except to the extent of his pecuniary interests.
(2) Includes 38,553,052 shares held by various trusts and foundations for which
James Stephen Turner has sole voting and investment power; and 45,156
shares held by James Stephen Turner's wife and direct ownership of 177,481
shares. James Stephen Turner disclaims ownership of the shares held by the
various trusts and foundations, except to the extent of his pecuniary
interests.
<PAGE>
SECURITY OWNERSHIP BY OFFICERS AND DIRECTORS
The following table sets forth certain information as of January 28,
2000, concerning all directors and nominees, the executive officers named in the
Summary Compensation Table (the "Named Executive Officers") and all executive
officers and directors as a group. Unless otherwise indicated, the persons for
whom information is provided had sole voting and investment power over the
shares of Common Stock beneficially owned. Computations are based on 264,655,400
shares of Common Stock outstanding as of January 28, 2000.
<TABLE>
<CAPTION>
Director or Percent of
Nominee/Executive Officers Officer Shares Beneficially Shares
Age Since Owned Outstanding (1)
--------------------------- -------- ------------- ---------------------- ------------------
<S> <C> <C> <C> <C> <C>
Dennis C. Bottorff 55 1998 6,389 (2) *
James L. Clayton 66 1988 373,293 (3) *
Reginald D. Dickson 54 1993 44,054 (2) *
John B. Holland 68 1988 424,253 (3) *
Barbara M. Knuckles 52 1995 10,673 (4) *
Cal Turner 84 1955 5,314,459 (5) 2.0
David M. Wilds 59 1991 205,937 (6) *
William S. Wire, II 68 1989 33,770 (7) *
Cal Turner, Jr. 60 1966 41,821,979 (8) 15.8
Brian Burr 43 1998 65,617 (9) *
Bob Carpenter 52 1981 776,411 (10) *
Stonie O'Briant 45 1995 214,061 (11) *
Leigh Stelmach 60 1989 471,519 (12) *
All directors and -- -- 50,831,551 (13) 19.2
executive officers as a
group (21 persons)
</TABLE>
- ---------------------------
(1) * Denotes less than 1% of class.
(2) Includes 5,139 shares issuable upon the exercise of outstanding options
currently exercisable or exercisable within 60 days.
(3) Includes 135,895 shares issuable upon the exercise of outstanding
options currently exercisable or exercisable within 60 days.
<PAGE>
(4) Includes 5,354 shares issuable upon the exercise of outstanding options
currently exercisable or exercisable within 60 days.
(5) Include 5,314,284 shares beneficially owned by trusts established for
the benefit of Mr. Turner's children for which Mr. Turner serves as
Trustee. Mr. Turner is the father of Cal Turner, Jr.
(6) Includes 157,847 shares issuable upon the exercise of outstanding
options currently exercisable or exercisable within 60 days.
(7) Includes 20,985 shares issuable upon the exercise of outstanding
options currently exercisable or exercisable within 60 days.
(8) See Note 1 on page 2. Cal Turner, Jr. is the son of Mr. Turner.
(9) Includes 51,476 shares of issuable upon the exercise of outstanding
options currently exercisable or exercisable within 60 days.
(10) Includes 402,910 shares for which Mr. Carpenter has shared voting and
investment rights as a Co-Trustee of the Calister Turner, III 1994
Generation Skipping Trust and 209,269 shares issuable upon the exercise
of outstanding options currently exercisable or exercisable within 60
days.
(11) Includes 148,499 shares issuable upon the exercise of outstanding
options currently exercisable or exercisable within 60 days.
(12) Includes 158,649 shares issuable upon the exercise of outstanding
options currently exercisable or exercisable within 60 days.
(13) Includes 1,734,832 shares issuable upon the exercise of outstanding
options currently exercisable or exercisable within 60 days.
<PAGE>
PROPOSAL NO. 1: ELECTION OF DIRECTORS
Directors are elected each year to hold office until the next Annual
Meeting and until their successors are duly elected and qualified. The current
Board of Directors consists of nine members. At its February 21, 2000, meeting
the Board of Directors nominated each of the current directors as nominees to
stand for election at the Annual Meeting.
In the election of directors, pursuant to Tennessee law, each share of
Common Stock entitles its holder to cast one vote for each director nominee.
Unless contrary instructions are received, the enclosed proxy will be voted in
favor of electing the nominees listed below. Each nominee has consented to be a
candidate and to serve, if elected. While the Board of Directors has no reason
to believe 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.
Certain information concerning each of the nominees is set forth below:
Dennis C. Bottorff has served as a director and Chairman of AmSouth
Bancorporation, a bank holding company since October 1999. Mr. Bottorff
previously served as Chairman and President of First American Corporation from
1991 to 1999. Mr. Bottorff is a director for Ingram Industries, a privately-held
provider of wholesale distribution, inland marine transportation, and insurance
services.
James L. Clayton has served as Chairman of Clayton Homes, Inc. since
1956 and as Chief Executive Officer from 1956 to 1999. Clayton Homes, Inc.
produces, sells and finances manufactured homes. In addition, Mr. Clayton is a
director of Chateau Communities, Inc., a property ownership and management
company in the manufactured housing industry.
Reginald D. Dickson has served as Chairman of Buford, Dickson, Harper &
Sparrow, Inc., investment advisors since 1996. Mr. Dickson also serves as
President Emeritus of Inroads, Inc., where he served ten years as President and
Chief Executive Officer. Inroads, Inc., is a non-profit organization supporting
minority education.
John B. Holland served as President and Chief Operating Officer of
Fruit of the Loom, Inc., a manufacturer of underwear and other soft goods, for
21 years until his retirement in February 1996, at which time he became a
consultant to that corporation. In 1999, Mr. Holland returned to Fruit of the
Loom as a director and Executive Vice President, Operations, Mr. Holland is a
director for Fruit of the Loom, Inc.
Barbara M. Knuckles has served as Director of Corporate and External
Relations for North Central College in Naperville, Illinois. From 1988 to 1992,
Ms. Knuckles was a private investor managing several family businesses. Ms.
Knuckles serves as a member of the board of directors of J. R. Short Milling
Company, a privately-held specialty corn-milling company, and Harris Bank of
Naperville, Illinois.
Cal Turner, the founder of the Company, served as President from 1955
until 1977 and as Chairman of the Board until December 1988. He is currently a
consultant to the Company.
Cal Turner, Jr. is the Chairman and Chief Executive Officer of the
Company. Mr. Turner joined the Company in 1955 and has held the office of Chief
Executive Officer since 1977. Mr. Turner became Chairman of the Board in 1989
and President in 1977.
<PAGE>
David M. Wilds is Managing Partner of 1st Avenue Partners, L.P., a
private equity partnership. From 1995 to 1998, Mr. Wilds was President of Nelson
Capital Partners III, L.P., a merchant banking company. From 1990 to 1995, Mr.
Wilds served as Chairman of the Board of Cumberland Health Systems, Inc., an
owner and operator of psychiatric hospitals.
William S. Wire, II served from 1986 until his retirement in 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 1986 to 1993. Mr. Wire is a director of Genesco, Inc. and American
Endoscopy Services, Inc.
COMMITTEES OF THE BOARD. The Company has a Corporate Governance and
Compensation Committee (the "CGC Committee") and an Audit Committee.
<PAGE>
In 1999, the CGC Committee consisted of Messrs. Bottorff, Wilds and
Wire (Chairman). The CGC Committee reviews and recommends policies and practices
for the Company's corporate governance profile, reviews the compensation
policies of the Company and compensation programs in which officers may
participate, 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 CGC Committee will consider persons
recommended by shareholders as potential nominees for directors if the names of
such persons are submitted in writing to the chairman of the CGC Committee or
the Secretary of the Company (as required by the bylaws). The recommendations
must be accompanied by a full statement of qualifications and an indication of
the person's willingness to serve. The CGC Committee also administers the
Company's stock option plans, excluding the 1993 Outside Directors' Stock Option
Plan and the 1995 Stock Option Plan for Outside Directors, which are
administered by Cal Turner and Cal Turner, Jr. At least once a year, the CGC
Committee specifically reviews the standards of performance of the Chief
Executive Officer ("CEO") for compensation purposes. (See "Report of the
Corporate Governance and Compensation Committee of the Board of Directors on
Executive Compensation.") The CGC Committee met four times during 1999.
The Audit Committee is composed of Messrs. Clayton, Dickson and Holland
(Chairman) and Ms. Knuckles. The functions of the Audit Committee include
providing advice and assistance regarding accounting, auditing, corporate
compliance and financial reporting practices of the Company. The Audit Committee
annually recommends to the Board of Directors a firm of independent certified
public accountants to serve as auditors. The Audit 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
internal auditors. The Audit Committee met five times during 1999.
During 1999, the Board of Directors held five meetings. All directors
attended more than 75% of the aggregate number of meetings of the Board of
Directors and committees on which they serve.
COMPENSATION OF DIRECTORS. Directors receive a $5,000 quarterly
retainer plus $1,250 for attending each regular meeting of the Board of
Directors or any committee. Committee chairmen receive an additional $250 for
each committee meeting attended. Compensation for telephonic meetings is
one-half the above rates. Directors who are officers of the Company do not
receive any separate compensation for attending Board or committee meetings if
requested by the committee to participate therein. In addition, directors who
are not employees of the Company are entitled to receive nondiscretionary
options for the purchase of Common Stock pursuant to the Company's 1998 Stock
Incentive Plan.
DEFERRED COMPENSATION PLAN FOR DIRECTORS. Directors may defer all or a
part of any fees normally paid by the Company to the director pursuant to a
voluntary, nonqualified compensation deferral plan. 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 of Directors, as deferred compensation to the
director in 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.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. During
1999, the CGC Committee was comprised of Messrs. Bottorff, Wilds and Wire. None
of these persons has at any time been an officer or employee of the Company or
<PAGE>
of any subsidiary of the Company. With the exception that Cal Turner, Jr. served
on the Board of Directors of First American Corporation, for which Dennis C.
Bottorff served as Chairman and Chief Executive Officer during 1999, no
executive officer of the Company served during 1999 as a member of a
compensation committee or as a director of any entity of which any of the
Company's directors served as an executive officer.
- --------------------------------------------------------------------------------
VOTE REQUIRED
The affirmative vote of a plurality of the votes cast by the shareholders
entitled to vote at the meeting is required for the election of directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
EACH OF THE NOMINEES LISTED ABOVE
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<PAGE>
PROPOSAL NO. 2: AMEND THE DOLLAR GENERAL 1998 STOCK INCENTIVE PLAN
The Dollar General 1998 Stock Incentive Plan (the "1998 Plan") was
originally approved for adoption by the shareholders of the Company in June 1998
and currently provides for a maximum of 9,375,000 shares (as adjusted to reflect
all stock splits declared on or before the Records Date) of Common Stock for
issuance thereunder. The stated purpose of the 1998 Plan is to enable the
Company to attract, retain and reward key employees of and consultants to the
Company and its subsidiaries and affiliates, and directors who are not also
employees of the Company, and to strengthen the mutuality of interests between
such key employees, consultants and directors by awarding them performance-based
stock incentives and/or other equity interests or equity-based incentives in the
Company, as well as performance-based incentives payable in cash. The Board of
Directors has determined that the 1998 Plan does not currently provide a
sufficient number of shares for issuance, and recommends for shareholder
approval an amendment to the 1998 Plan so that: (i) the text of Section 3(k) of
the 1998 Plan shall be amended to provide that the number of shares that may be
issued under the 1998 Plan shall be increased from 9,375,000 shares of Common
Stock to 21,375,000 shares of Common Stock; and (ii) Sections 3(k), 3(l) and
3(m) of the 1998 Plan shall be re-lettered to become Sections 3(a), 3(b) and
3(c), respectively, of the 1998 Plan. As of the record date 4,427,851 shares of
Common Stock remain available for granting under the 1998 Plan. If the amendment
is approved, the company will have an aggregate of 16,427,851 shares available
for grant pursuant to the 1998 Plan, which constitutes 8% of the 263,274,082
shares outstanding as of the Record Date. In connection with approval of the
amendment, the Board of Directors has authorized the termination of further
stock incentive grants under the Company's incentive plans will constitute 12%
of the shares outstanding as of the Record Date.
Summary of Material Provisions of the 1998 Plan, As Amended
The following summary of the material provisions of the Dollar General
1998 Stock Incentive Plan, as amended, is qualified in its entirety by reference
to the 1998 Plan as set forth in Exhibit A to this proxy statement.
Under the 1998 Plan, the CGC Committee has the authority to grant to
employees and consultants of the Company, and the Board of Directors has the
authority to grant to directors who are not employed by the Company ("Outside
Directors"), the following types of awards: (1) stock options; (2) stock
appreciation rights; and/or (3) restricted stock. The CGC Committee has the
power to delegate authority to the Company's CEO or to a committee composed of
officers of the Company to grant, on behalf of the CGC Committee, non-qualified
stock options, subject to such guidelines as the CGC Committee may determine
from time to time. Pursuant to the 1998 Plan, a maximum of 21,375,000 shares of
Common Stock are available for issuance, which may include authorized and
unissued shares or treasury shares.
The maximum number of shares of Common Stock for which awards may be
made under the 1998 Plan to any officer of the Company or other person whose
compensation may be subject to the limitations on deductibility under Section
162(m) of the Code is 500,000 during any single year. Any shares as to which an
option or other award expires, lapses unexpired, or is forfeited, terminated, or
canceled may become subject to a new option or other award. No grant under the
1998 Plan shall have an exercise period of more than ten years.
<PAGE>
The 1998 Plan also provides for automatic grants of non-qualified stock
options to Outside Directors pursuant to the following formula: (i) the annual
retainer for an Outside Director (determined with reference to the rate of
annual retainer in effect on the date the non-qualified stock option is
granted), divided by (ii) the fair market value of a share of Common Stock on
the date of the grant, multiplying the result (the quotient) by three, rounding
the resulting number of shares up to the nearest whole share. In the event an
Outside Director serves as Chairman of the Board, the multiplier in the
preceding sentence shall be four in lieu of three. The exercise price of each
non-qualified stock option granted hereunder shall be the fair market value on
the date of the grant. Such options will vest with respect to all shares on the
first anniversary of the date of grant, if such Outside Director is still
serving as a director on such date. All options automatically granted to an
Outside Director will enable the optionee to purchase shares of Common Stock at
the fair market value of the Common Stock on the date of grant. Outside
Directors will not be able to transfer or assign their options without the prior
written consent of the Board of Directors other than (i) transfers by the
optionee to a member of his or her immediate family or a trust for the benefit
of the optionee or a member of his or her immediate family, or (ii) transfers by
will or by the laws of descent and distribution. Options automatically granted
to Outside Directors will have a term of ten years from the date of grant. The
exercise price may be paid in cash, shares of Common Stock, or a combination
thereof.
<PAGE>
Incentive stock options ("ISOs") and non-qualified stock options may be
granted for such number of shares as the CGC Committee may determine and may be
granted alone, in conjunction with, or in tandem with other awards under the
1998 Plan or cash awards outside the 1998 Plan. A stock option will be
exercisable at such times and subject to such terms and conditions as the CGC
Committee will determine. In the case of an ISO, however, the term will be no
more than ten years after the date of grant (five years in the case of ISOs for
certain 10% shareholders). The option price for an ISO will not be less than
100% (110% in the case of certain 10% shareholders) of the fair market value of
the Common Stock as of the date of grant and for any non-qualified stock option
will not be less than 50% of the fair market value as of the date of grant. ISOs
granted under the 1998 Plan may not be transferred or assigned other than by
will or by the laws of descent and distribution. No ISOs may be granted on or
after the tenth anniversary of the earlier of the effectiveness of the 1998 Plan
or shareholder approval thereof. Non-qualified stock options and stock
appreciation rights may not be transferred or assigned without the prior written
consent of the CGC Committee other than (i) transfers by the optionee to a
member of his or her immediate family or a trust for the benefit of the optionee
or a member of his or her immediate family, or (ii) transfers by will or by the
laws of descent and distribution.
Stock appreciation rights ("SARS") may be granted under the 1998 Plan
in conjunction with all or part of a stock option and will be exercisable only
when the underlying stock option is exercisable. Once a stock appreciation right
has been exercised, the related portion of the stock option underlying the stock
option appreciation right will terminate. Upon the exercise of a stock
appreciation right, the Company will pay to the employee or consultant in cash,
Common Stock, or a combination thereof (the method of payment to be at the
discretion of the CGC Committee), an amount equal to the excess of the fair
market value of the Common Stock on the exercise date over the option price,
multiplied by the number of stock appreciation rights being exercised. No SARS
have been granted under the 1998 plan.
Restricted stock awards may be granted alone, in addition to, or in
tandem with, other awards under the 1998 Plan or cash awards made outside the
1998 Plan. The provisions attendant to a grant of restricted stock may vary from
participant to participant. In making an award of restricted stock, the CGC
Committee will determine the periods during which the restricted stock is
subject to forfeiture and may provide such other awards designed to guarantee a
minimum value for such stock. The CGC Committee may also impose such other
conditions and restrictions on the shares of restricted stock as it deems
appropriate, including the satisfaction of one or more of the following
performance criteria: (i) pre-tax income or after-tax income; (ii) operating
cash flow; (iii) operating profit; (iv) return on equity, assets, capital, or
investment; (v) earnings or book value per share; (vi) sales or revenues; (vii)
operating expenses; (viii) Common Stock price appreciation; and (ix)
implementation, management, or completion of critical projects or processes (the
"Performance Goals"). The Performance Goals may include a threshold level of
performance below which no payment will be made (or will occur), and a maximum
level of performance above which no additional payment will be made (or at which
full vesting will occur). Each of the Performance Goals will be determined, to
the extent applicable, in accordance with generally accepted accounting
principles and will be subject to certification by the CGC Committee; provided,
that the CGC Committee will have the authority to make equitable adjustments to
the Performance Goals in recognition of unusual or non-recurring events
affecting the Company. The CGC Committee may provide that such restrictions will
lapse with respect to specified percentages of the awarded shares of restricted
<PAGE>
stock on successive future dates. During the restriction period, the employee or
consultant may not sell, transfer, pledge, or assign the restricted stock but
will be entitled to vote the restricted stock and to receive, at the election of
the CGC Committee, cash or deferred dividends. No restricted stock awards will
be issued pursuant to the 1998 Plan in excess of 100,000 shares of Common Stock,
and no restricted stock awards have been issued pursuant to the 1998 plan.
If there is a change in control or a potential change of control of the
Company, stock appreciation rights and any stock options which are not then
exercisable, will become fully exercisable and vested and the restrictions and
deferral limitations applicable to restricted stock and other stock-based awards
may lapse and such shares and awards will be deemed fully vested. For purposes
of the 1998 Plan, a change of control is defined generally to include (i) any
person or entity, other than the Company or a wholly-owned subsidiary of the
Company, becoming the beneficial owner of the Company's securities having 35% or
more of the combined voting power of the then outstanding securities that may be
cast for the election of directors; (ii) in connection with a cash tender,
exchange offer, merger or other business combination, sale of assets or
contested election, less than a majority of the combined voting power of the
then outstanding securities of the Company entitled to vote generally in the
election of directors being held in the aggregate by the holders of the
Company's securities entitled to vote generally in the election of directors of
the Company immediately prior to such transaction; and (iii) during any period
of two consecutive years, individuals who at the beginning of any such period
constitute the Board ceasing to constitute at least a majority thereof, unless
the election of each director first elected during such period was approved by a
<PAGE>
vote of at least two-thirds of the directors of the Company then still in office
who were directors of the Company at the beginning of any such period. Stock
options, stock appreciation rights, and restricted stock will, unless otherwise
determined by the CGC Committee in its sole discretion, be cashed out on the
basis of the change in control price (as defined in the 1998 Plan and as
described below). The change in control price will be the highest price per
share paid in any transaction reported on the New York Stock Exchange ("NYSE")
or paid or offered to be paid in any bona fide transaction relating to a change
in control or potential change in control at any time during the immediately
preceding 60-day period, as determined by the CGC Committee.
The Board may amend, alter, or discontinue the 1998 Plan, provided that
no amendment may be made which would impair the rights of an optionee or
participant under an award made under the 1998 Plan without the participant's
consent. No award may be granted pursuant to the 1998 Plan on or after the tenth
anniversary of the effective date of the plan, but awards granted prior to such
tenth anniversary may be extended beyond that date.
<PAGE>
Grants Under the 1998 Plan
Because awards to employees under the 1998 Plan are at the discretion
of the CGC Committee and awards to non-employee directors under the 1998 Plan
are contingent upon the market price of Dollar General Common Stock, the
benefits that will be awarded under the 1998 Plan are not currently
determinable. For a description of how grants are awarded to officers, see
"Report of the Corporate Governance and Compensation Committee."
The following table presents information about grants under the 1998
Stock Incentive Plan as of the record date.
Shares Underlying Average Exercise
Options (1) Price Per Share
-----------------------------------------------------------------------
Named Executive Officers:
Cal Turner, Jr. 164,796 $27.78
Bob Carpenter 113,038 $23.28
Brian Burr 70,700 $28.11
Stonie O'Briant 59,327 $27.78
Leigh Stelmach 59,327 $27.78
Non-Employee Directors (2) 22,939 $18.31
Officers 1,084,788 $25.80
Employees
(Excluding Officers) 3,831,626 $26.05
-------------------------
(1) No grants of Incentive Stock Options, Restricted Stock or Stock
Appreciation Rights have been awarded under the 1998 Plan to date.
Options awarded under the 1998 Plan have various vesting schedules as
described in the "Report of the Corporate Governance and Compensation
Committee." These options must be exercised within ten years from the
grant date. The fair market value of shares underlying options
granted under the 1998 Plan was $26.44 per share as of the record
date.
(2) Non-qualified stock options are granted to non-employee directors
pursuant to a non-discretionary formula detailed in the 1998 Plan.
These options vest one year from the grant date and must be exercised
within ten years from the grant date.
Certain Federal Income Tax Consequences
The following is a brief summary of the federal income tax aspects of
awards made under the 1998 Plan based upon the federal income tax laws in effect
on the date hereof. This summary is not intended to be exhaustive and does not
describe state or local tax consequences.
Incentive Stock Options. No taxable income is realized by the
participant upon the grant or exercise of an ISO. If Common Stock is issued to a
participant pursuant to the exercise of an ISO, and if no disqualifying
disposition of the shares is made by the participant within two years of the
date of grant or within one year after the transfer of the shares to the
participant, then: (a) upon the sale of the shares, any amount realized in
excess of the option price will be taxed to the participant as a long-term
capital gain, and any loss sustained will be a capital loss, and (b) no
deduction will be allowed to the Company for Federal income tax purposes. The
exercise of an ISO will give rise to an item of tax preference that may result
in an alternative minimum tax liability for the participant unless the
participant makes a disqualifying disposition of the shares received upon
exercise.
If Common Stock acquired upon the exercise of an ISO is disposed of
<PAGE>
prior to the expiration of the holding periods described above, then generally:
(a) the participant will realize ordinary income in the year of disposition in
an amount equal to the excess, if any, of the fair market value of the shares at
exercise (or, if less, the amount realized on the disposition of the shares)
over the option price paid for such shares, and (b) the Company will be entitled
to deduct any such recognized amount. Any further gain or loss realized by the
participant will be taxed as short-term or long-term capital gain or loss, as
the case may be, and will not result in any deduction by the Company.
Subject to certain exceptions for disability or death, if an ISO is
exercised more than three months following the termination of the participant's
employment, the option will generally be taxed as a non-qualified stock option.
Non-Qualified Stock Options. Except as noted below, with respect to
non-qualified stock options: (a) no income is realized by the participant at the
time the option is granted; (b) generally upon exercise of the option, the
participant realizes ordinary income in an amount equal to the difference
between the option price paid for the shares and the fair market value of the
shares on the date of exercise and the Company will be entitled to a tax
deduction in the same amount; and (c) at disposition, any appreciation (or
depreciation) after date of exercise is treated either as short-term or
long-term capital gain or loss, depending upon the length of time that the
participant has held the shares. See "Restricted Stock" for tax rules applicable
where the spread value of an option is settled in an award of restricted stock.
Stock Appreciation Rights. No income will be realized by a participant
in connection with the grant of a stock appreciation right. When the stock
appreciation right is exercised, the participant will generally be required to
include as taxable ordinary income in the year of exercise, an amount equal to
the amount of cash and the fair market value of any shares received. The Company
will be entitled to a deduction at the time and in the amount included in the
participant's income by reason of the exercise. If the participant receives
Common Stock upon exercise of a stock appreciation right, the post-exercise
appreciation or depreciation will be treated in the same manner discussed above
under "Non-Qualified Stock Options."
Restricted Stock. A participant receiving restricted stock generally
will recognize ordinary income in the amount of the fair market value of the
restricted stock at the time the stock is no longer subject to forfeiture, less
the consideration paid for the stock. However, a participant may elect, under
Section 83(b) of the Internal Revenue Code within 30 days of the grant of the
stock, to recognize taxable ordinary income on the date of grant equal to the
excess of the fair market value of the shares of restricted stock (determined
without regard to the restrictions) over the purchase price of the restricted
stock. Thereafter, if the shares are forfeited, the participant will be entitled
to a deduction, refund, or loss, for tax purposes only, in an amount equal to
the purchase price of the forfeited shares regardless of whether he made a
Section 83(b) election. With respect to the sale of shares after the forfeiture
period has expired, the holding period to determine whether the participant has
long-term or short-term capital gain or loss generally begins when the
restriction period expires and the tax basis for such shares will generally be
based on the fair market value of such shares on such date. However, if the
participant makes an election under Section 83(b), the holding period will
commence on the date of grant, the tax basis will be equal to the fair market
value of shares on such date (determined without regard to restrictions), and
the Company generally will be entitled to a deduction equal to the amount that
is taxable as ordinary income to the participant in the year that such income is
taxable.
<PAGE>
Dividends and Dividend Equivalents. Dividends paid on restricted stock
generally will be treated as compensation that is taxable as ordinary income to
the participant, and will be deductible by the Company. If, however, the
participant makes a Section 83(b) election, the dividends will be taxable as
ordinary income to the participant but will not be deductible by the Company.
The 1998 Plan is not intended to be a "qualified plan" under Section
401(a) of the Code.
- --------------------------------------------------------------------------------
VOTE REQUIRED
The amendment will be approved if the votes cast for the
amendment exceed those cast against it.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" THE AMENDMENT TO THE PLAN
- --------------------------------------------------------------------------------
<PAGE>
REPORT OF THE CORPORATE GOVERNANCE AND COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The three-member Corporate Governance and Compensation Committee (the
"CGC Committee") prepared the following executive compensation report.
What is the Company's compensation philosophy?
The Company has adopted the concept of pay-for-performance, linking
management compensation, Company performance and shareholder return. This
strategy reflects the Company's desire to pay for results that are consistent
with the key goals of the Company and its shareholders. The CGC Committee and
the Company believe that combining the variable, direct and indirect pay
components of the Company's compensation program enables the Company to attract,
retain and motivate results-oriented employees to achieve higher levels of
performance.
What is the Company's variable compensation philosophy?
At nearly all levels of the Company, a significant portion of pay is
variable, being contingent upon Company (or store unit) performance. The
performance-based component, whether annual incentive or long-term incentive, is
significant enough to serve as a strong incentive for excellent performance.
Additionally, performance-based compensation through the granting of stock
options to employees increases employee ownership of the Company.
What is the Company's 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
industry, market and strategic importance to the Company. This method of
valuation allows the Company to respond to changes in its employment needs and
changes in the labor market. Increases in base pay require a satisfactory or
better level of performance as determined by the CGC Committee.
What is the Company's indirect compensation philosophy?
The Company's indirect compensation programs are intended to protect
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 plans should provide limited income security
at retirement for the typical employee. Employees are also invited to share in
ownership of the Company through participation in the Dollar General Direct
Stock Purchase Plan and the Company's 401(k) plan.
How are the Company's officers compensated?
Under the supervision of the CGC Committee, the Company has developed
compensation policies and programs designed to provide competitive levels of
compensation that integrate pay with the Company's annual and long-term
<PAGE>
performance goals. The Company is committed to creating an incentive for its
employees that encourages a team approach toward the accomplishment of corporate
objectives and creating value for shareholders.
The executive officers' compensation for 1999 reflected the Company's
increasing emphasis on tying pay to both short-term and long-term incentives.
The short-term incentive is an annual cash bonus based on a percentage of the
executive officer's salary. The long-term incentives are performance-accelerated
stock options. Incentive pay awarded to the CEO and the other Named Executive
Officers was controlled by Company performance goals that are established
annually. The CGC 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 component of the total executive
officer compensation package as compared with the Company's pay-for-performance
component. The 1999 average base salaries for the Named Executive Officers (not
including the CEO) increased 6% over 1998 base salaries.
<PAGE>
How does the Company determine the CEO's and Named Executive Officers' salary
increases?
The increase in base salaries in 1999 was determined based upon:
o a review of peer group comparison data (using the peer group
compensation survey published by Management Compensation
Services(1)); and
o the subjective analysis of the CGC Committee after evaluating the
recommendations, peer group data, the Company's overall performance
and the respective individual performance criteria of the Named
Executive Officers.
Please explain the Company's annual cash bonus program.
The Company's annual cash bonus opportunity for the executive officers
makes up the short-term incentive component of the officers' cash compensation.
The payment of annual cash bonuses is based on both objective and subjective
criteria. All full-time employees are eligible to receive a cash bonus.
Objective criteria for officers and corporate office employees include
actual earnings improvement goals established by the CGC Committee at the end of
the prior fiscal year. The Company uses earnings improvement for determining
target goals for the executive officers' variable pay for primarily two reasons:
first, it is a defined measure of total Company performance; and second, it is a
measure that can be easily identified and reviewed by shareholders. The
objective criteria for field-based employees is primarily based upon store
performance.
In order for an officer to receive a cash bonus under the cash bonus
incentive program effective for 1999, the Company had to meet
committee-established earnings improvement goals, each exceeding the prior
year's performance. If the Company reached the "target" goal, which was
considered by the CGC Committee to be challenging, then 25% of salary was to be
awarded to each executive officer as a cash bonus. If the Company reached the
"stretch" goal, which was considered by the Committee to be extremely
challenging, then 75% of salary was to be awarded to each executive officer as a
cash bonus. The percentage of salary awarded for earnings performance falling
between the "target" and "stretch" goals is on a graduated scale (from 26% of
salary to 74% of salary) commensurate with the Company's earnings improvement
over the prior year.
Subjective performance criteria include the results of each employee's
annual performance and development reviews. Each executive officer's performance
is reviewed pursuant to the Company's Development Review Process ("DR Process").
The DR Process is a comprehensive program that focuses on total performance
improvement by concentrating on "Key Development Areas" ("KDAs") and "Key Result
Areas" ("KRAs"). 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.
In other words, Company performance is not the sole criterion 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: (a)
The Company must achieve an established earnings goal; and (b) the individual
<PAGE>
must achieve a satisfactory performance evaluation based upon the
above-described DR Process factors. Therefore, equal weight is given to each of
these factors.
Based on performance during 1999, executive officers will receive 35%
of their annual salaries as cash bonuses (paid in 2000). Executive officers
received 67% of their annual salaries as cash bonuses for the prior year.
Please explain the Company's Employee Stock Incentive Program.
The Company grants non-qualified stock options under the 1993 Employee
Stock Incentive Plan ("1993 Plan"), the 1995 Employee Stock Incentive Plan
("1995 Plan") and the 1998 Stock Incentive Plan (the "1998 Plan"). Stock options
are awarded to executive officers, department directors, field management and
other personnel considered to be in key positions, as approved by the CGC
Committee. The Company uses stock options as an incentive for outstanding
performance and to encourage stock ownership.
- --------------------------
(1) The peer group compensation survey is published annually by Management
Compensation Services. The 1999 survey included the following
mass-merchandising companies: Ames Department Stores, Consolidated Stores,
Dayton Hudson, Garden Ridge, K-Mart Stores, Montgomery Ward, Pamida, Ross
Stores, Service Merchandise, ShopKo Stores, TJX Companies, Value City and
Wal-Mart Stores. For the past ten years, the Company has used this
well-known peer group annual salary survey when reviewing and establishing
the Company's executive compensation policies. Because the Company uses this
survey for executive compensation comparison, and because the Company ties
executive compensation directly to Company performance, the same peer group
survey, with the exception of those companies that are not publicly traded
(and for which stock comparison data is therefore unavailable), is used for
Company performance comparison purposes.
<PAGE>
Executive officers, department directors and other key employees
receive "performance-accelerated" stock options with annual accelerated-vesting
schedules tied to the achievement of corporate performance goals (as measured by
earnings improvement) and individual performance goals (as measured by the DR
Process).
What is a "performance-accelerated" stock option?
To further encourage outstanding performance, the CGC Committee adopted
a compensation program that ties the acceleration of stock option vesting to
earnings goals. Each executive officer receives stock option grants with a
nine-and-one-half year vesting schedule. However, if the executive officer meets
his or her individual goals and the Company meets or exceeds the CGC
Committee-established earnings goal, then the stock option grant tied to that
goal will vest earlier than nine-and-one-half years.
How does the Company determine how many stock options to grant?
In determining the number of the shares subject to stock options
granted to the employees eligible to participate in the stock incentive plans,
the CGC Committee takes into account the respective scope of accountability, the
strategic and operational responsibilities of such employees, and the salary
levels of such employees.
Compensation data from the Management Compensation Services
compensation survey reveals that annual stock grants (calculated by multiplying
the grant price by the number of shares granted) are typically expressed as a
multiple of salary. In that survey, annual grant amounts fall within a range of
one to three times the CEO's annual salary, and executive officers' grant
amounts fall within a range of one-half to one-and-one-half times the executive
officer's salary. Because the CGC Committee has decided to place greater
emphasis on the performance-based component of compensation, it pays at or below
the average base salaries for the CEO and other executive officers but sets
incentive compensation multiples at or above the high end of the peer group
survey ranges for these positions. Specifically, the CGC 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 exercise price (fair market value at the time of grant)
by the number of shares granted.
The CGC Committee also established a stock option program called the
Stock Plus Program. This program, which is composed of option grants under the
1993 Plan, the 1995 Plan and the 1998 Plan, awards executive officers and other
<PAGE>
key employees determined by the CGC Committee additional stock options as an
incentive for meeting Company stock ownership targets. Stock ownership targets
are generally equal to at least two-and-one-half times salary and must be
maintained for at least a year prior to receiving a Stock Plus Program grant.
The CEO is required to maintain ownership of four times his salary to be
eligible to participate in this program.
Each executive officer vested in the maximum number of options which
could vest on an accelerated basis or otherwise in both 1999 and 1998 because
(1) the Company met its stock option program earnings goals, (2) each executive
officer achieved his or her previously established performance goals and (3)
each executive officer met the ownership requirements of the Stock Plus Program.
How is the Chief Executive Officer compensated?
As with the Company's 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 CGC Committee considers the CEO's prior-year performance and expected future
contributions to the Company as well as peer industry survey results published
annually. The CEO's annual salary for 1999 was 13% lower than the median of the
industry comparison group.
<PAGE>
The CGC Committee believes the CEO should have some compensation at
risk in order to encourage performance that maximizes shareholder return;
therefore, it 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
Company earnings improvement goals. Also like the other executive officers, the
CEO is eligible for Stock Incentive Program non-qualified
performance-accelerated stock options and stock-ownership-based Stock Plus
Program stock options (the long-term incentive). The Stock Incentive Program
stock options, which have a nine-and-one-half year vesting schedule, can be
accelerated to an earlier vesting date if certain Committee-established Company
earnings improvement goals and individual performance goals are achieved.
The CGC Committee also 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
CGC Committee has established a salary for the CEO that is at or below the
salaries of CEOs of the peer group compensation survey participants and has
emphasized 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 CGC Committee took into consideration prior
pay-for-performance awards. The CGC 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.
Under the Company's short-term incentive program (cash bonus), the
CEO's total possible cash-bonus incentive is 100% of his salary. To be eligible
for a cash bonus, the CEO must achieve personal performance goals established by
the CGC Committee, and the Company must meet at least one of its earnings
improvement goals. If the CEO meets his individual performance goals and the
Company meets its Committee-established cash bonus program "target" goal, the
CEO will receive a cash bonus equal to 25% of his annual salary. If the CEO's
individual goals are met and the CGC Committee-established cash bonus program
"stretch" earnings goal is met, then the CEO will receive a cash bonus equal to
100% of his annual salary. The percentage of salary awarded for earnings
performance falling between the cash bonus "target" and "stretch" goals is on a
graduated scale (from 26% to 99% of salary) commensurate with the earnings
performance.
Because the Company exceeded its "target" earnings goal set for 1999,
but did not achieve its "stretch" earnings goal established for awarding cash
bonus, the CEO's short-term incentive compensation program rewarded the CEO with
a cash bonus (paid in 2000) of 84% of his annual salary. Because the Company
exceeded its "target" earnings goal set for 1998, but did not achieve its
"stretch" earnings goal established for awarding cash bonus, the CEO's
short-term incentive compensation program rewarded the CEO with a cash bonus
(paid in 1999) of 67% of his annual salary.
The CEO's long-term incentive compensation program effective for 2000
rewards the CEO with stock option grants up to approximately three to
four-and-one-half times his annual salary. If the CGC Committee-established
stock option program "target" earnings goal is met and the CEO meets his
individual performance standard, he will vest on an accelerated basis in stock
<PAGE>
options that represent approximately 67% of the total non-Stock-Plus stock
option benefit. If the CGC Committee-established stock option program "stretch"
earnings goal is met and the CEO meets his individual performance standard, he
will vest on an accelerated basis in 100% of the total non-Stock Plus stock
option benefit.
The CEO also participates in the Company's Stock Plus Program. This
program rewards the CEO with additional stock options if he maintains a level of
Company-stock ownership equal to at least four times his salary.
For 1999 and 1998, because the Company met or exceeded the
Committee-established stock option program earnings goals, the CEO met or
exceeded his performance standard and met or exceeded the Company stock
ownership requirement, the CEO vested, on an accelerated basis, in the maximum
number of the available stock option grants.
How is the Company addressing Internal Revenue Code limits on the deductibility
of executive compensation?
<PAGE>
The CGC Committee continues to analyze the potential impact of the
$1,000,000 limit on the deductibility of executive compensation for federal
income tax purposes enacted as part of the 1993 Omnibus Budget Reconciliation
Act. Under the regulations, compensation pursuant to the Company's stock plans
should qualify as "performance-based" and therefore, should be excluded from the
$1,000,000 limit. Other forms of compensation provided by the Company to its
executives, however, are not excluded from such limit.
William S. Wire, II - Committee Chairman
David M. Wilds
Dennis C. Bottorff
<PAGE>
COMMON STOCK PERFORMANCE
As a part of the executive compensation information presented in this
Proxy Statement, the Securities and Exchange Commission (the "SEC") 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 uses the S&P 500 Index. For the peer
group stock market performance indicator, the Company has chosen to use the
stock market results of the publicly-held participants of the compensation
survey published by Management Compensation Services used by the CGC Committee
when reviewing and establishing the Company's executive compensation policies.
See "Report of the Corporate Governance and Compensation Committee of the Board
of Directors on Executive Compensation."
[GRAPHIC - DATA POINTS LISTED BELOW]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Cumulative Total Return
-------------------------------------------------------------------------
1/31/95 1/31/96 1/31/97 1/31/98 1/29/99 1/28/00
DOLLAR GENERAL CORPORATION 100.00 97.11 152.33 280.88 302.18 316.62
PEER GROUP 100.00 88.92 115.11 191.85 375.74 444.03
S&P 500 100.00 138.67 175.20 222.34 294.58 342.26
</TABLE>
18
<PAGE>
EXECUTIVE COMPENSATION
The following table provides information as to annual, long-term or
other compensation paid or accrued during 1999, 1998 and 1997, for the Company's
CEO and the persons who, at the end of 1999, were the other four most highly
compensated executive officers of the Company (collectively the "Named Executive
Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-term
Annual Compensation Compensation Awards
---------------------------------------- ------------------------------- All Other
Other Annual Restricted Securities Compen-
Compensation Stock Underlying sation
Name and Principal Position Year Salary ($) Bonus ($) ($) (1) Awards ($) Options (#) (2) ($) (3)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Cal Turner, Jr., Chairman and Chief 1999 766,667 485,750 12,866 0 164,796 156,782
Executive Officer 1998 704,167 528,000 8,153 0 167,686 151,410
1997 599,129 600,000 9,076 0 286,098 64,315
- -----------------------------------------------------------------------------------------------------------------------------------
Brian Burr, Executive Vice President 1999 320,833 88,500 13,308 0 70,700 19,951
and Chief Financial Officer 1998 137,500 0 0 0 144,433 0
1997 0 0 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
Bob Carpenter, President and Chief 1999 270,833 147,500 13,664 0 59,327 39,219
Operating Officer(4) 1998 230,833 138,000 8,738 0 53,944 32,150
1997 195,000 135,000 8,169 0 97,270 6,350
- -----------------------------------------------------------------------------------------------------------------------------------
Stonie O'Briant, Executive Vice 1999 219,167 112,100 4,059 0 59,327 19,995
President, Merchandising(5) 1998 186,667 117,300 2,525 0 108,780 18,404
1997 165,000 105,000 2,506 0 71,636 6,350
- -----------------------------------------------------------------------------------------------------------------------------------
Leigh Stelmach, Executive Vice 1999 282,917 190,275 10,099 0 59,327 42,778
President, Operations 1998 318,750 207,000 9,128 0 53,944 44,091
1997 293,750 206,250 9,070 0 97,270 6,350
===================================================================================================================================
</TABLE>
- -------------------------
(1) The amounts reported in this column include gross-ups for tax
reimbursements and $6,773 reimbersed to Mr. Burr for relocation expense
in 1999. Includes $57,964 paid as premiums on a split-dollar life
insurance policy for Mr. Turner in 1997.
(2) Includes options granted under the Stock Plus Program, which awards
grants to key employees who maintain a specified level of stock
ownership, as well as options granted under the Stock Incentive Program
which are tied to employee and company performance. All share amounts
have been adjusted to reflect all common stock splits as of the date of
this report.
<PAGE>
(3) Includes contributions to retirement and deferred compensation plans in
1999, 1998, and 1997.
(4) Mr. Carpenter, formerly Executive Vice President, Chief Administrative
Officer and Chief Counsel, was named President and Chief Operating
Officer in January 2000.
(5) Mr. O'Briant, former Senior Vice President, Merchandising, was named
Executive Vice President, Merchandising in January 2000.
<PAGE>
OPTIONS GRANTED IN LAST FISCAL YEAR
The following table provides information as to options granted to the Named
Executive Officers during 1999. The Company granted no Stock Appreciation
Rights in 1999, and no Named Executive Officer holds any Stock Appreciation
Rights.
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of Stock Price
Appreciation for
Individual Grants Option Term
----------------- ----------------- ------------- -------------- ----------------- -------------------
Number of
Securities % of Total
Underlying Options Granted Exercise or
Options to Employees in Base Price
Granted(#)(1 ) 1999 (%) ($/Share) Expiration
Name Date 5% ($) 10% ($)
----------------------- ----------------- ----------------- ------------- -------------- ----------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Cal Turner, Jr. 87,893 3.55 $ 27.25 4/1/2009 2,878,583 7,294,895
43,943 $ 27.25 4/1/2009
32,960 $ 29.88 6/7/2009
----------------------- ----------------- ----------------- ------------- -------------- ----------------- -------------------
Brian Burr 31,643 1.52 $ 27.25 4/1/2009 1,249,977 3,167,687
15,818 $ 27.25 4/1/2009
23,239 $ 29.88 6/7/2009
----------------------- ----------------- ----------------- ------------- -------------- ----------------- -------------------
Bob Carpenter 31,643 1.28 $ 27.25 4/1/2009 1,036,298 2,626,184
15,818 $ 27.25 4/1/2009
11,866 $ 29.88 6/7/2009
----------------------- ----------------- ----------------- ------------- -------------- ----------------- -------------------
Stonie O'Briant 31,643 1.28 $ 27.25 4/1/2009 1,036,298 2,626,184
15,818 $ 27.25 4/1/2009
11,866 $ 29.88 6/7/2009
----------------------- ----------------- ----------------- ------------- -------------- ----------------- -------------------
Leigh Stelmach 31,643 1.28 $ 27.25 4/1/2009 1,036,298 2,626,184
15,818 $ 27.25 4/1/2009
11,866 $ 29.88 6/7/2009
======================= ================= ================= ============= ============== ================= ===================
</TABLE>
- -------------------------
(1) Options granted under the Stock Incentive Program will vest nine and
one-half years from the date of grant. These options may vest on an
accelerated basis upon the attainment of individual and Company stock
ownership requirement to receive Executive Officer are listed in the
followingt order: (1) Stock Incentive Program grants which, for
purposes of accelerated vesting are tied to earnings goal one. (2)
Stock Incentive Program grants which, for purposes of accelerated
vesting are tied to earnings goal two and (3) Stock Plus Program
grants. All share amounts and prices have been adjusted to refelect all
common stock splits as of the date of this report.
<PAGE>
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR AND YEAR-END VALUES
The following table provides information as to options exercised or
held by the Named Executive Officers during 1999.
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised Options at Fiscal Year In-the-Money
End Options at Fiscal Year-end ($)
- --------------------- ----------------- ----------------- ----------------------------------- ------------------------------------
Shares Value
Acquired Realized
Name on Exercise (#) ($)( 1) Exercisable Unexercisable Exercisable Unexercisable
- --------------------- ----------------- ----------------- ---------------- ------------------ ----------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Cal Turner, Jr. 459,793 8,789,421 0 846,560 0 6,055,153
- --------------------- ----------------- ----------------- ---------------- ------------------ ----------------- ------------------
Brian Burr 0 0 51,476 163,657 0 0
- --------------------- ----------------- ----------------- ---------------- ------------------ ----------------- ------------------
Bob Carpenter 175,000 4,130,603 209,069 279,375 2,852,507 1,935,833
- --------------------- ----------------- ----------------- ---------------- ------------------ ----------------- ------------------
Stonie O'Briant 0 0 148,499 255,360 1,478,353 1,294,886
- --------------------- ----------------- ----------------- ---------------- ------------------ ----------------- ------------------
Leigh Stelmach 0 0 158,649 279,375 2,125,163 1,935,833
===================== ================= ================= ================ ================== ================= ==================
</TABLE>
- -------------------------
(1) Market value of underlying securities at exercise, minus the exercise
price.
21
<PAGE>
EMPLOYEE RETIREMENT PLAN
In 1997, the Company combined its two retirement plans, the Dollar
General Money Purchase Retirement Plan and the Dollar General Employee Stock
Ownership Program, to create a new retirement program. The Dollar General
Corporation 401(k) Savings and Retirement Plan (the "401(k) Plan") became
effective on January 1, 1998. Balances in the two earlier plans were transferred
into the 401(k) Plan.
The Company makes an automatic annual contribution equal to two percent
of each eligible employee's compensation. Seventy-five percent of this automatic
contribution will be made in cash, while the remaining twenty-five percent will
be contributed in Common Stock. Eligible employees are not required to make any
additional contributions in order to receive this automatic contribution from
the Company. However, participants may elect to contribute between one and
fifteen percent of their annual salary, up to a maximum annual contribution of
$10,500. The Company will match 50% of employee contributions, up to six percent
of annual salary.
The 401(k) Plan covers substantially all employees including the Named
Executive Officers, subject to certain eligibility requirements. The 401(k) Plan
is subject to the Employee Retirement and Income Security Act ("ERISA").
A participant's right to claim a distribution of his or her account
balance is dependent on ERISA guidelines, Internal Revenue Service regulations
and the vesting schedule below:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Employee Contributions Immediately Vested
Dollar General Automatic Contribution (2%) Immediately Vested
Employer Matching Contribution At the end of the 1st - 3rd Years 0% Vested
At the end of the 4th Year 40% Vested
At the end of the 5th Year 100% Vested
</TABLE>
As of January 28, 2000, Messrs. Cal Turner, Jr., Bob Carpenter, Brian
Burr, Stonie O'Briant and Leigh Stelmach had 34, 18, 1, 9, and 11 years of
credited service, respectively. The estimated present value of benefits under
the plan as of January 28, 2000 was $746,146 for Mr. Turner, $321,772 for Mr.
Carpenter, $0 for Mr. Burr, $106,785 for Mr. O'Briant, and $185,119 for Mr.
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 BENEFITS
The Company offers the Supplemental Executive Retirement Plan (the
"SERP") and Compensation Deferral Plan (the "CDP") to certain key employees who
are determined to be eligible by the CGC Committee. Pursuant to the CDP,
participants make annual elections to defer up to 100% of base pay, reduced by
any deferrals to the qualified plan, and up to 100% of bonus. All participants
are 100% vested for all compensation deferrals. Pursuant to the SERP, the
Company makes an annual contribution to all participants who are actively
employed on December 31. The contribution percentage is based on age plus
service where:
<PAGE>
Age plus Service Percent of Base plus Bonus
---------------- --------------------------
Non-Officer Officers
----------- --------
<40 2.0% 3.0%
40-59 3.0% 4.5%
60-79 5.0% 7.5%
80 or more 8.0% 12.0%
SERP participants will be 100% vested at the earlier of ten years of
service or age 50. Death or total and permanent disability will also trigger
100% vesting. Under the CDP, participants may elect to have deferrals and
earnings for the current plan year paid out in a lump sum prior to retirement or
termination, but no sooner than five years following the end of the current plan
year.
22
<PAGE>
Participants have phantom investment funds to choose from which mirror
the investment options available in the 401(k) Plan. The SERP and CDP are
non-qualified plans and therefore not subject to ERISA..
The estimated present value of benefits under the SERP and CDP as of
January 1, 2000 was $3,768,756 for Mr. Turner, $437,947 for Mr. Carpenter,
$130,806 for Mr. Burr, $303,693 for Mr. O'Briant, and $557,285 for Mr. Stelmach.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
John B. Holland, a director of the Company, was a director and
executive officer of Fruit of the Loom, Inc., a manufacturer of underwear and
other soft goods during 1999. In 1999, the Company purchased approximately
$28,325,655 in goods from Fruit of the Loom, Inc.
SHAREHOLDER PROPOSALS FOR THE 2001 ANNUAL MEETING
Shareholder proposals intended for presentation at the 2001 annual
meeting of shareholders must be received by Robert C. Layne, Corporate
Secretary, at 100 Mission Ridge, Goodlettsville, Tennessee 37072-2170 not later
than December 29, 2000 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 SEC.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the 1934 Act and the disclosure requirements of Item
405 of Regulation S-K of the Rules and Regulations of the SEC require the
Company's executive officers and directors, and any person who owns 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 SEC,
the applicable market or exchange upon which the Company's shares are listed,
and the Company. Based solely on the Company's review of copies 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 1999.
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" will be counted as present for purposes
of determining a quorum, but will not be counted as votes in favor of or against
a particular proposal. If a broker or nominee holding shares in "street" name
indicates on the proxy that it does have discretionary authority to vote on a
particular matter, those shares will not be voted with respect to that matter
and will be disregarded for the purpose of determining the total number of votes
cast with respect to a proposal.
INDEPENDENT PUBLIC ACCOUNTANTS
Deloitte & Touche LLP has served as the Company's independent public
accounting firm since 1997. A representative of Deloitte & Touche LLP is
expected to be present at the Annual Meeting to respond to appropriate
questions.
23
<PAGE>
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 may also retain an investor relations firm to solicit proxies by
telephone or mail. Proxies may be voted by returning the printed proxy card, or
by voting via the telephone or Internet. For more information about how to vote
your proxy, please see the instructions on your proxy card.
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 Annual
Meeting for action, proxies will be voted on such matter in accordance with the
best judgment of the persons named as proxies. Each shareholder has the
unconditional right to revoke his or her proxy at any time prior to the voting
thereof by giving the Secretary of the Company written notice of such
revocation.
The Annual Report of the Company is mailed with this proxy statement. A
copy of the Company's Annual Report on Form 10-K for the year ended January 28,
2000 (as filed with the SEC) is available without charge to any shareholder upon
request. Requests for the Company's Annual Report on Form 10-K should be
directed to Robert C. Layne, Corporate Secretary.
- --------------------------------------------------------------------------------
Whether or not you expect to be present at the Annual Meeting of Shareholders,
please vote your proxy as soon as possible. You may vote your proxy
electronically according to the instructions on the enclosed card, or you may
sign, date and return the enclosed printed proxy card in the enclosed business
reply envelope. No postage is necessary if the proxy is mailed within the United
States.
- --------------------------------------------------------------------------------
<PAGE>
Options granted under the Stock Incentive Program will vest nine and
one-half years from the date of grant. These options may vest on an accelerated
basis upon the attainment of individual and Company performance goals. Each
Named Executive Officer met Company stock ownership requirements to receive
additional grants under the Stock Plus Program. Option grants for each Named
Executive Officer are listed in the following order: (1) Stock Incentive Program
grants which, for purposes of accelerated vesting are tied to earnings goal one,
(2) Stock Incentive Program grants which, for purposes of accelerated vesting
are tied to earnings goal two and (3) Stock Plus Program grants. All share
amounts and prices have been adjusted to reflect all common stock splits as of
the date of this report.
Market value of underlying securities at exercise, minus the exercise price.
<PAGE>
EXHIBIT A
DOLLAR GENERAL CORPORATION
1998 STOCK INCENTIVE PLAN
As Amended and Restated
SECTION 1. Purpose; Definitions.
The purpose of the Dollar General Corporation 1998 Stock Incentive Plan
(the "Plan") is to enable Dollar General Corporation (the "Corporation") to
attract, retain and reward key employees of and consultants to the Corporation
and its Subsidiaries and Affiliates, and directors who are not also employees of
the Corporation, and to strengthen the mutuality of interests between such key
employees, consultants, and directors by awarding such key employees,
consultants, and directors performance-based stock incentives and/or other
equity interests or equity-based incentives in the Corporation, as well as
performance-based incentives payable in cash. The provisions of the Plan are
intended to satisfy the requirements of Section 16(b) of the Exchange Act, and
shall be interpreted in a manner consistent with the requirements thereof, as
now or hereafter construed, interpreted, and applied by regulations, rulings,
and cases. The Plan is also designed so that awards granted hereunder intended
to comply with the requirements for "performance-based" compensation under
Section 162(m) of the Code may comply with such requirements. The creation and
implementation of the Plan will not diminish or prejudice other compensation
plans or programs approved from time to time by the Board.
For purposes of the Plan, the following terms shall be defined as set
forth below:
A. "Affiliate" means any entity other than the Corporation and its
Subsidiaries that is designated by the Board as a participating employer under
the Plan, provided that the Corporation directly or indirectly owns at least 20%
of the combined voting power of all classes of stock of such entity or at least
20% of the ownership interests in such entity.
B. "Board" means the Board of Directors of the Corporation.
C. "Cause" has the meaning provided in Section 5(j) of the Plan.
D. "Change in Control" has the meaning provided in Section 9(b) of the
Plan.
E. "Change in Control Price" has the meaning provided in Section 9(d)
of the Plan.
F. "Common Stock" means the Corporation's Common Stock, $.50 par
value per share.
G. "Code" means the Internal Revenue Code of 1986, as amended from time
to time, and any successor thereto.
H. "Committee" means the Committee referred to in Section 2 of the
Plan.
I. "Corporation" means Dollar General Corporation, a corporation
organized under the laws of the State of Tennessee, or any successor
corporation.
J. "Disability" means disability as determined under the Corporation's
Group Long Term Disability insurance Plan.
K. "Early Retirement" means retirement, for purposes of this Plan with
the express consent of the Corporation at or before the time of such retirement,
from active employment with the Corporation and any Subsidiary or Affiliate
prior to age 65, in accordance with any applicable early retirement policy of
the Corporation then in effect or as may be approved by the Committee.
<PAGE>
L. "Effective Date" has the meaning provided in Section 13 of the Plan.
M. "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor thereto.
<PAGE>
N. "Fair Market Value" means with respect to the Common Stock, as of
any given date or dates, unless otherwise determined by the Committee in good
faith, the reported closing price of a share of Common Stock on the NYSE or such
other market or exchange as is the principal trading market for the Common
Stock, or, if no such sale of a share of Common Stock is reported on Nasdaq or
other exchange or principal trading market on such date, the fair market value
of a share of Common Stock as determined by the Committee in good faith.
O. "Incentive Stock Option" means any Stock Option intended to be and
designated as an "Incentive Stock Option" within the meaning of Section 422 of
the Code.
P. "Immediate Family" means any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and shall include
adoptive relationships.
Q. "Non-Employee Director" means a member of the Board who is a
Non-Employee Director within the meaning of Rule 16b-3(b)(3) promulgated under
the Exchange Act and an outside director within the meaning of Treasury
Regulation Sec. 162-27(e)(3) promulgated under the Code.
R. "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
S. "Normal Retirement" means retirement from active employment with the
Corporation and any Subsidiary or Affiliate on or after age 65.
T. "NYSE" means the New York Stock Exchange.
U. "Outside Director" means a member of the Board who is not an officer
or employee of the Corporation or any Subsidiary or Affiliate of the
Corporation.
V. "Outside Director Option" means an award to an Outside Director
under Section 8 below.
W. "Performance Goals" means performance goals based on one or more of
the following criteria: (i) pre-tax income or after-tax income; (ii) operating
cash flow; (iii) operating profit; (iv) return on equity, assets, capital, or
investment; (v) earnings or book value per share; (vi) sales or revenues; (vii)
operating expenses; (viii) Common Stock price appreciation; and (ix)
implementation, management, or completion of critical projects or processes.
Where applicable, the Performance Goals may be expressed in terms of attaining a
specified level of the particular criteria or the attainment of a percentage
increase or decrease in the particular criteria, and may be applied to one or
more of the Corporation or any Subsidiary, or a division or strategic business
unit of the Corporation, or may be applied to the performance of the Corporation
relative to a market index, a group of other companies, or a combination
thereof, all as determined by the Committee. The Performance Goals may include a
threshold level of performance below which no payment will be made (or no
vesting will occur), levels of performance at which specified payments will be
made (or specified vesting will occur), and a maximum level of performance above
which no additional payment will be made (or at which full vesting will occur).
Each of the foregoing Performance Goals shall be determined, to the extent
applicable, in accordance with generally accepted accounting principles and
shall be subject to certification by the Committee; provided that the Committee
shall have the authority to make equitable adjustments to the Performance Goals
<PAGE>
in recognition of unusual or non-recurring events affecting the Corporation or
any Subsidiary or the financial statements of the Corporation or any Subsidiary,
in response to changes in applicable laws or regulations, or to account for
items of gain, loss, or expense determined to be extraordinary or unusual in
nature or infrequent in occurrence or related to the disposal of a segment of
business or related to a change in accounting principles.
X. "Plan" means this Dollar General Corporation 1998 Stock Incentive
Plan, as amended from time to time.
Y. "Restricted Stock" means an award of shares of Common Stock that is
subject to restrictions under Section 7 of the Plan.
Z. "Restriction Period" has the meaning provided in Section 7 of the
Plan.
AA. "Retirement" means Normal or Early Retirement.
<PAGE>
BB. "Section 162(m) Maximum" has the meaning provided in Section 3(a)
hereof.
CC. "Stock Appreciation Right" means the right pursuant to an award
granted under Section 6 below to surrender to the Corporation all (or a portion)
of a Stock Option in exchange for an amount equal to the difference between (i)
the Fair Market Value, as of the date such Stock Option (or such portion
thereof) is surrendered, of the shares of Common Stock covered by such Stock
Option (or such portion thereof), subject, where applicable, to the pricing
provisions in Section 6(b)(ii), and (ii) the aggregate exercise price of such
Stock Option (or such portion thereof).
DD. "Stock Option" or "Option" means any option to purchase shares of
Common Stock (including Restricted Stock, if the Committee so determines)
granted pursuant to Section 5 below.
EE. "Subsidiary" means any corporation (other than the Corporation) in
an unbroken chain of corporations beginning with the Corporation if each of the
corporations (other than the last corporation in the unbroken chain) owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain.
SECTION 2. Administration.
Except as provided below, the Plan shall be administered by a Committee
of not less than two Non-Employee Directors, who shall be appointed by the Board
and who shall serve at the pleasure of the Board. The functions of the Committee
specified in the Plan may be exercised by an existing Committee of the Board
composed exclusively of Non-Employee Directors. The initial Committee shall be
the Corporate Governance and Compensation Committee of the Board. In the event
there are not at least two Non-Employee Directors on the Board, the Plan shall
be administered by the Board and all references herein to the Committee shall
refer to the Board.
The Committee shall have the power to delegate authority to the
Corporation's Chief Executive Officer, or to a committee composed of executive
officers of the Corporation, to grant, on behalf of the Committee, Non-Qualified
Stock Options exercisable at Fair Market Value on the date of grant, subject to
such guidelines as the Committee may determine from time to time; provided,
however that (i) options may only be granted pursuant to such delegated
authority for the purposes specified by the Committee, which may include
attracting new employees, awarding outstanding performance, or retaining
employees, (ii) the Committee shall specify the maximum number of shares that
may be granted for purposes of attracting-any single new employee at any
specified level and the maximum number that may be granted to any other employee
for any other purpose, (iii) options to purchase no more than 100,000 shares may
be granted in any fiscal year pursuant to such delegated authority, and (iv) a
report of each grant of an option pursuant to such delegated authority shall be
presented to the Committee at the first meeting of the Committee following such
grant. Options granted pursuant to such delegated authority in accordance
herewith shall be deemed, to the extent permitted under applicable law, to have
been granted by the Committee for all purposes under the Plan.
The Committee shall have authority to grant, pursuant to the terms of
the Plan, to officers, other key employees and consultants eligible under
Section 4: (i) Stock Options, (ii) Stock Appreciation Rights, and/or (iii)
Restricted Stock.
<PAGE>
In particular, the Committee, or the Board, as the case may be, shall
have the authority, consistent with the terms of the Plan:
(a) to select the officers, key employees of and consultants
to the Corporation and its Subsidiaries and Affiliates to whom Stock
Options, Stock Appreciation Rights, and/or Restricted Stock may from
time to time be granted hereunder;
(b) to determine whether and to what extent Incentive Stock
Options, Non-Qualified Stock Options, Stock Appreciation Rights, and/or
Restricted Stock, or any combination thereof, are to be granted
hereunder to one or more eligible persons;
<PAGE>
(c) to determine the number of shares to be covered by each
such award granted hereunder;
(d) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder (including,
but not limited to, the share price and any restriction or limitation,
or any vesting acceleration or waiver of forfeiture restrictions
regarding any Stock Option or other award and/or the shares of Common
Stock relating thereto, based in each case on such factors as the
Committee shall determine, in its sole discretion); and to amend or
waive any such terms and conditions to the extent permitted by Section
10 hereof;
(e) to determine whether and under what circumstances a Stock
Option may be settled in cash or Restricted Stock under Section 5(l) or
(m), as applicable, instead of Common Stock;
(f) to determine whether, to what extent, and under what
circumstances Option grants and/or other awards under the Plan are to
be made, and operate, on a tandem basis vis-a-vis other awards under
the Plan and/or cash awards made outside of the Plan;
(g) to determine whether, to what extent, and under what
circumstances shares of Common Stock and other amounts payable with
respect to an award under this Plan shall be deferred either
automatically or at the election of the participant (including
providing for and determining the amount (if any) of any deemed
earnings on any deferred amount during any deferral period);
(h) to determine the terms, conditions, and restrictions of
any Performance Goals and the number of Options, Stock Appreciation
Rights, or shares of Restricted Stock subject thereto;
(i) to determine whether to require payment of tax withholding
requirements in shares of Common Stock subject to the award; and
(j) to impose any holding period required to satisfy Section
16 under the Exchange Act.
The Committee shall have the authority to adopt, alter, and repeal such
rules, guidelines, and practices governing the Plan as it shall, from time to
time, deem advisable; to interpret the terms and provisions of the Plan and any
award issued under the Plan (and any agreements relating thereto); and to
otherwise supervise the administration of the Plan; and, except as expressly set
forth herein or otherwise required by law, all decisions made by the Committee
pursuant to the provisions of the Plan shall be made in the Committee's sole
discretion and shall be final and binding on all persons, including the
Corporation and Plan participants.
SECTION 3. Shares of Common Stock Subject to Plan.
(a) As of the Effective Date, the aggregate number of shares
of Common Stock that may be issued under the Plan shall be 21,375,000
shares. The shares of Common Stock issuable under the Plan may consist,
in whole or in part, of authorized and unissued shares or treasury
shares. No officer of the Corporation or other person whose
compensation may be subject to the limitations on deductibility under
<PAGE>
Section 162(m) of the Code shall be eligible to receive awards pursuant
to this Plan relating to in excess of 500,000 shares of Common Stock in
any fiscal year (the "Section 162(m) Maximum").
(b) If any shares of Common Stock that have been optioned
cease to be subject to a Stock Option, or if any shares of Common Stock
that are subject to. any Restricted Stock granted hereunder are
forfeited prior to the payment of any dividends, if applicable, with
respect to such shares of Common Stock, or any such award otherwise
terminates without a payment being made to the participant in the form
of Common Stock, such shares shall again be available for distribution
in connection with future awards under the Plan.
(c) In the event of any merger, reorganization, consolidation,
recapitalization, extraordinary cash dividend, stock dividend, stock
split or other change in corporate structure affecting the Common
Stock, an appropriate substitution or adjustment shall be made in the
maximum number of shares that may be awarded under the Plan, in the
number and option price of shares subject to outstanding Options
granted under the Plan, in the Performance Goals, in the number of
<PAGE>
shares underlying Outside Director Options to be granted under Section
8 hereof, in the Section 162(m) Maximum, and in the number of shares
subject to other outstanding awards granted under the Plan as may be
determined to be appropriate by the Committee, in its sole discretion,
provided that the number of shares subject to any award shall always be
a whole number. An adjusted option price shall also be used to
determine the amount payable by the Corporation upon the exercise of
any Stock Appreciation Right associated with any Stock Option.
SECTION 4. Eligibility.
Officers, other key employees and Outside Directors of and consultants
to the Corporation and its Subsidiaries and Affiliates who are responsible for
or contribute to the management, growth and/or profitability of the business of
the Corporation and/or its Subsidiaries and Affiliates are eligible to be
granted awards under the Plan. Outside Directors are eligible to receive awards
pursuant to Section 8 and not pursuant to any other provisions of the Plan.
SECTION 5. Stock Options.
Stock Options may be granted alone, in addition to, or in tandem with
other awards granted under the Plan and/or cash awards made outside of the Plan.
Any Stock Option granted under the Plan shall be in such form as the Committee
may from time to time approve.
Stock Options granted under the Plan may be of two types: (i) Incentive
Stock Options and (ii) Non-Qualified Stock Options. Incentive Stock Options may
be granted only to individuals who are employees of the Corporation or any
Subsidiary of the Corporation. No Incentive Stock Option shall be granted on or
following the tenth anniversary of the earlier of(i) the effectiveness of the
Plan or (ii) the date of shareholder approval of the Plan.
The Committee shall have the authority to grant to any optionee
Incentive Stock Options, Non-Qualified Stock Options, or both types of Stock
Options (in each case with or without Stock Appreciation Rights).
Options granted to officers, key employees, Outside Directors and
consultants under the Plan shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable.
(a) Option Price. The option price per share of Common Stock
purchasable under a Stock Option shall be determined by the Committee
at the time of grant but shall be not less than 100% (or, in the case
of any employee who owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Corporation or of
any of its Subsidiaries, not less than 110%) of the Fair Market Value
of the Common Stock at grant, in the case of Incentive Stock Options,
and not less than 50% of the Fair Market Value of the Common Stock at
grant, in the case of Non-Qualified Stock Options.
(b) Option Term. The term of each Stock Option shall be fixed
by the Committee, but no Stock Option (Incentive or Non-Qualified)
shall be exercisable more than ten years (or, in the case of an
employee who owns stock possessing more than 10% of the total combined
voting power of all classes of stock of the Corporation or any of its
Subsidiaries or parent corporations, no Incentive Stock Option shall be
exercisable more than five years) after the date the Option is granted.
(c) Exercisability. Stock Options shall be exercisable at such
time or times and subject to such terms and conditions as shall be
determined by the Committee at or after grant. The Committee may
provide that a Stock Option shall vest over a period of future service
at a rate specified at the time of grant, or that the Stock Option is
exercisable only in installments. If the Committee provides, in its
sole discretion, that any Stock Option is exercisable only in
installments, the Committee may waive such installment exercise
provisions at any time at or after grant, in whole or in part, based on
such factors as the Committee shall determine in its sole discretion.
(d) Method of Exercise. Subject to whatever installment
exercise restrictions apply under Section 5(c), Stock Options may be
exercised in whole or in part at any time during the option period, by
giving written notice of exercise to the Corporation specifying the
number of shares to be purchased. Such notice shall be accompanied by
<PAGE>
payment in full of the purchase price, either by check, note, or such
other instrument as the Committee may accept. As determined by the
Committee, in its sole discretion, at or (except in the case of an
Incentive Stock Option) after grant, payment in full or in part may
also be made in the form of shares of Common Stock already owned by the
optionee or, in the case of a Non-Qualified Stock Option, shares of
Restricted Stock or shares subject to such Option or another award
hereunder (in each case valued at the Fair Market Value of the Common
Stock on the date the Option is exercised). If payment of the exercise
price is made in part or in full with Common Stock, the Committee may
award to the employee a new Stock Option to replace the Common Stock
which was surrendered. If payment of the option exercise price of a
Non-Qualified Stock Option is made in whole or in part in the form of
Restricted Stock, such Restricted Stock (and any replacement shares
relating thereto) shall remain (or be) restricted in accordance with
the original terms of the Restricted Stock award in question, and any
additional Common Stock received upon the exercise shall be subject to
the same forfeiture restrictions, unless otherwise determined by the
Committee, in its sole discretion, at or after grant. No shares of
Common Stock shall be issued until full payment therefor has been made.
An optionee shall generally have the rights to dividends or other
rights of a shareholder with respect to shares subject to the Option
when the optionee has given written notice of exercise, has paid in
full for such shares, and, if requested, has given the representation
described in Section 12(a).
(e) Transferability of Options. No Non-Qualified Stock Option
shall be transferable by the optionee without the prior written consent
of the Committee other than (i) transfers by the Optionee to a member
of his or her Immediate Family or a trust for the benefit of the
optionee or a member of his or her Immediate Family, or (ii) transfers
by will or by the laws of descent and distribution. No Incentive Stock
Option shall be transferable by the optionee otherwise than by will or
by the laws of descent and distribution and all Incentive Stock Options
shall be exercisable, during the optionee's lifetime, only by the
optionee.
(f) Bonus for Taxes. In the case of a Non-Qualified Stock
Option or an optionee who elects to make a disqualifying disposition
(as defined in Section 422(a)(1) of the Code) of Common Stock acquired
pursuant to the exercise of an Incentive Stock Option, the Committee in
its discretion may award at the time of grant or thereafter the right
to receive upon exercise of such Stock Option a cash bonus calculated
to pay part or all of the federal and state, if any, income tax
incurred by the optionee upon such exercise.
(g) Termination by Death. Subject to Section 5(k), if an
optionee's employment by the Corporation and any Subsidiary or (except
in the case of an Incentive Stock Option) Affiliate terminates by
reason of death, any Stock Option held by such optionee may thereafter
be exercised, to the extent such option was exercisable at the time of
death or (except in the case of an Incentive Stock Option) on such
accelerated basis as the Committee may determine at or after grant (or
except in the case of an Incentive Stock Option, as may be determined
in accordance with procedures established by the Committee) by the
legal representative of the estate or by the legatee of the optionee
under the will of the optionee, for a period of one year (or such other
period as the Committee may specify at or after grant) from the date of
such death or until the expiration of the stated term of such Stock
Option, whichever period is the shorter.
(h) Termination by Reason of Disability. Subject to Section
5(k), if an optionee's employment by the Corporation and any Subsidiary
or (except in the case of an Incentive Stock Option) Affiliate
terminates by reason of Disability, any Stock Option held by such
optionee may thereafter be exercised by the optionee, to the extent it
was exercisable at the time of termination or (except in the case of an
Incentive Stock Option) on such accelerated basis as the Committee may
determine at or after grant (or, except in the case of an incentive
Stock Option, as may be determined in accordance with procedures
established by the Committee), for a period of (i) three years (or such
other period as the Committee may specify at or after grant) from the
date of such termination of employment or until the expiration of the
stated term of such Stock Option, whichever period is the shorter, in
the case of a Non-Qualified Stock Option and (ii) one year from the
date of termination of employment or until the expiration of the stated
term of such Stock Option, whichever period is shorter, in the case of
an Incentive Stock Option; provided however, that, if the optionee dies
within the period specified in (i) above (or other such period as the
Committee shall specify at or after grant), any unexercised
Non-Qualified Stock Option held by such optionee shall thereafter be
exercisable to the extent to which it was exercisable at the time of
death for a period of twelve months from the date of such death or
until the expiration of the stated term of such Stock Option, whichever
period is shorter. In the event of termination of employment by reason
of Disability, if an Incentive Stock Option is exercised after the
expiration of the exercise period applicable to Incentive Stock
Options, but before the expiration of any period that would apply if
<PAGE>
such Stock Option were a Non-Qualified Stock Option, such Stock Option
will thereafter be treated as a Non-Qualified Stock Option.
(i) Termination by Reason of Retirement. Subject to Section
5(k), if an optionee's employment by the Corporation and any Subsidiary
or (except in the case of an Incentive Stock Option) Affiliate
terminates by reason of Normal or Early Retirement, any Stock Option
held by such optionee may thereafter be exercised by the optionee, to
the extent it was exercisable at the time of such Retirement or (except
in the case of an Incentive Stock Option) on such accelerated basis as
the Committee may determine at or after grant (or, except in the case
of an Incentive Stock Option, as may be determined in accordance with
procedures established by the Committee), for a period of (i) three
years (or such other period as the Committee may specify at or after
grant) from the date of such termination of employment or the
expiration of the stated term of such Stock Option, whichever period is
the shorter, in the case of a Non-Qualified Stock Option and (ii) three
months from the date of such termination of employment or the
expiration of the stated term of such Stock Option, whichever period is
the shorter, in the event of an Incentive Stock Option; provided
however, that, if the optionee dies within the period specified in (i)
above (or other such period as the Committee shall specify at or after
grant), any unexercised Non-Qualified Stock Option held by such
optionee shall thereafter be exercisable to the extent to which it was
exercisable at the time of death for a period of twelve months from the
date of such death or until the expiration of the stated term of such
Stock Option, whichever period is shorter. In the event of termination
of employment by reason of Retirement, if an Incentive Stock Option is
exercised after the expiration of the exercise period applicable to
Incentive Stock Options, but before the expiration of the period that
would apply if such Stock Option were a Non-Qualified Stock Option, the
option will thereafter be treated as a Non-Qualified Stock Option.
(j) Other Termination. Subject to Section 5(k), unless
otherwise determined by the Committee (or pursuant to procedures
established by the Committee) at or (except in the case of an Incentive
Stock Option) after grant, if an optionee's employment by the
Corporation and any Subsidiary or (except in the case of an Incentive
Stock Option) Affiliate is involuntarily terminated for any reason
other than death, Disability or Normal or Early Retirement, the Stock
Option shall thereupon terminate, except that such Stock Option may be
exercised, to the extent otherwise then exercisable, for the lesser of
three months or the balance of such Stock Option's term if the
involuntary termination is without Cause. For purposes of this Plan,
"Cause" means (i) a felony conviction of a participant or the failure
of a participant to contest prosecution for a felony, or (ii) a
participant's willful misconduct or dishonesty, which is directly and
materially harmful to the business or reputation of the Corporation or
any Subsidiary or Affiliate, in each case as determined by the
Committee, in its sole direction. Unless otherwise determined by the
Committee, if an optionee voluntarily terminates employment with the
Corporation and any Subsidiary or (except in the case of an Incentive
Stock Option) Affiliate (except for Disability, Normal or Early
Retirement), the Stock Option shall thereupon terminate; provided,
however, that the Committee at grant or (except in the case of an
Incentive Stock Option) thereafter may extend the exercise period in
this situation for the lesser of three months or the balance of such
Stock Option's term.
(k) Incentive Stock Options. Anything in the Plan to the
contrary notwithstanding, no term of this Plan relating to Incentive
Stock Options shall be interpreted, amended, or altered, nor shall any
discretion or authority granted under the Plan be so exercised, so as
to disqualify the Plan under Section 422 of the Code, or, without the
consent of the optionee(s) affected, to disqualify any Incentive Stock
Option under such Section 422. No Incentive Stock Option shall be
granted to any participant under the Plan if such grant would cause the
aggregate Fair Market Value (as of the date the Incentive Stock Option
is granted) of the Common Stock with respect to which all Incentive
Stock Options are exercisable for the first time by such participant
during any calendar year (under all such plans of the Company and any
Subsidiary) to exceed $100,000. To the extent permitted under Section
422 of the Code or the applicable regulations thereunder or any
applicable Internal Revenue Service pronouncement:
(i) if (x) a participant's employment is terminated
by reason of death, Disability, or Retirement and (y) the
portion of any Incentive Stock Option that is otherwise
exercisable during the post-termination period specified under
Section 5(g), (h) or (i), applied without regard to the
$100,000 limitation contained in Section 422(d) of the Code,
is greater than the portion of such Option that is immediately
exercisable as an "Incentive Stock Option" during such
post-termination period under Section 422, such excess shall
be treated as a Non-Qualified Stock Option; and
<PAGE>
(ii) if the exercise of an Incentive Stock Option is
accelerated by reason of a Change in Control, any portion of
such Option that is not exercisable as an Incentive Stock
Option by reason of the $100,000 limitation contained in
Section 422(d) of the Code shall be treated as a Non-Qualified
Stock Option.
(l) Buyout Provisions. The Committee may at any time offer to
buy out for a payment in cash, Common Stock, or Restricted Stock an
Option previously granted, based on such terms and conditions as the
Committee shall establish and communicate to the optionee at the time
that such offer is made.
(m) Settlement Provisions. If the option agreement so provides
at grant or (except in the case of an Incentive Stock Option) is
amended after grant and prior to exercise to so provide (with the
optionee's consent), the Committee may require that all or part of the
shares to be issued with respect to the spread value of an exercised
Option take the form of Restricted Stock, which shall be valued on the
date of exercise on the basis of the Fair Market Value (as determined
by the Committee) of such Restricted Stock determined without regard to
the forfeiture restrictions involved.
(n) Performance and Other Conditions. The Committee may
condition the exercise of any Option upon the attainment of specified
Performance Goals or other factors as the Committee may determine, in
its sole discretion. Unless specifically provided in the option
agreement, any such conditional Option shall vest six months prior to
its expiration if the conditions to exercise have not theretofore been
satisfied.
SECTION 6. Stock Appreciation Rights.
(a) Grant and Exercise. Stock Appreciation Rights may be
granted in conjunction with all or part of any Stock Option granted
under the Plan. In the case of a Non-Qualified Stock Option, such
rights may be granted either at or after the time of the grant of such
Stock Option. In the case of an Incentive Stock Option, such rights may
be granted only at the time of the grant of such Stock Option. A Stock
Appreciation Right or applicable portion thereof granted with respect
to a given Stock Option shall terminate and no longer be exercisable
upon the termination or exercise of the related Stock Option, subject
to such provisions as the Committee may specify at grant where a Stock
Appreciation Right is granted with respect to less than the full number
of shares covered by a related Stock Option. A Stock Appreciation Right
may be exercised by an optionee, subject to Section 6(b), in accordance
with the procedures established by the Committee for such purpose. Upon
such exercise, the optionee shall be entitled to receive an amount
determined in the manner prescribed in Section 6(b). Stock Options
relating to exercised Stock Appreciation Rights shall no longer be
exercisable to the extent that the related Stock Appreciation Rights
have been exercised.
(b) Terms and Conditions. Stock Appreciation Rights shall be
subject to such terms and conditions, not inconsistent with the
provisions of the Plan, as shall be determined from time to time by the
Committee, including the following:
(i) Stock Appreciation Rights shall be exercisable
only at such time or times and to the extent that the Stock
Options to which they relate shall be exercisable in
accordance with the provisions of Section 5 and this Section 6
of the Plan.
(ii) Upon the exercise of a Stock Appreciation Right,
an optionee shall be entitled to receive an amount in cash
and/or shares of Common Stock equal in value to the excess of
the Fair Market Value of one share of Common Stock over the
option price per share specified in the related Stock Option
multiplied by the number of shares in respect of which the
Stock Appreciation Right shall have been exercised, with the
Committee having the right to determine the form of payment.
When payment is to be made in shares, the number of shares to
be paid shall be calculated on the basis of the Fair Market
Value of the shares on the date of exercise. When payment is
to be made in cash, such amount shall be calculated on the
basis of the Fair Market Value of the Common Stock on the date
of exercise.
<PAGE>
(iii) Stock Appreciation Rights shall be transferable
only when and to the extent that the underlying Stock Option
would be transferable under Section 5(e) of the Plan.
(iv) Upon the exercise of a Stock Appreciation Right,
the Stock Option or part thereof to which such Stock
Appreciation Right is related shall be deemed to have been
exercised for the purpose of the limitation set forth in
Section 3 of the Plan on the number of shares of Common Stock
to be issued under the Plan.
(v) The Committee, in its sole discretion, may also
provide that, in the event of a Change in Control and/or a
Potential Change in Control, the amount to be paid upon the
exercise of a Stock Appreciation Right shall be based on the
Change in Control Price, subject to such terms and conditions
as the Committee may specify at grant.
(vi) The Committee may condition the exercise of any
Stock Appreciation Right upon the attainment of specified
Performance Goals or other factors as the Committee may
determine, in its sole discretion.
SECTION 7. Restricted Stock.
(a) Administration. Shares of Restricted Stock may be issued
either alone, in addition to, or in tandem with other awards granted
under the Plan and/or cash awards made outside the Plan. The Committee
shall determine the eligible persons to whom, and the time or times at
which, grants of Restricted Stock will be made, the number of shares of
Restricted Stock to be awarded to any person, the price (if any) to be
paid by the recipient of Restricted Stock (subject to Section 7(b)),
the time or times within which such awards may be subject to
forfeiture, and the other terms, restrictions and conditions of the
awards in addition to those set forth in Section 7(c). The Committee
may condition the grant of Restricted Stock upon the attainment of
specified Performance Goals or such other factors as the Committee may
determine, in its sole discretion. The provisions of Restricted Stock
awards need not be the same with respect to each recipient.
(b) Awards and Certificates. The prospective recipient of a
Restricted Stock award shall not have any rights with respect to such
award, unless and until such recipient has executed an agreement
evidencing the award and has delivered a fully executed copy thereof to
the Corporation, and has otherwise complied with the applicable terms
and conditions of such award.
(i) The purchase price for shares of Restricted Stock
shall be established by the Committee and may be zero.
(ii) Awards of Restricted Stock must be accepted
within a period of 60 days (or such shorter period as the
Committee may specify at grant) after the award date, by
executing a Restricted Stock Award Agreement and paying
whatever price (if any) is required under Section 7(b)(i).
(iii) Each participant receiving a Restricted Stock
award shall be issued a stock certificate in respect of such
shares of Restricted Stock. Such certificate shall be
registered in the name of such participant (or a transferee
permitted by Section 12(h) hereof), and shall bear an
appropriate legend referring to the terms, conditions, and
restrictions applicable to such award.
(iv) The Committee shall require that the stock
certificates evidencing such shares be held in custody by the
Corporation until the restrictions thereon shall have lapsed,
and that, as a condition of any Restricted Stock award, the
participant shall have delivered a stock power, endorsed in
blank, relating to the shares of Common Stock covered by such
award.
(v) The maximum number of shares eligible for
issuance pursuant to this Section 7 shall be 100,000.
<PAGE>
(c) Restrictions and Conditions. The shares of
Restricted Stock awarded pursuant to this Section 7 shall be
subject to the following restrictions and conditions:
(i) In accordance with the provisions of this Plan
and the award agreement, during a period set by the Committee
commencing with the date of such award (the "Restriction
Period"), the participant shall not be permitted to sell,
transfer, pledge, assign, or otherwise encumber shares of
Restricted Stock awarded under the Plan. Within these limits,
the Committee, in its sole discretion, may provide for the
lapse of such restrictions in installments and may accelerate
or waive such restrictions, in whole or in part, based on
service, the attainment of Performance Goals, or such other
factors or criteria as the Committee may determine in its sole
discretion.
(ii) Except as provided in this paragraph (ii) and
Section 7(c)(i), the participant shall have, with respect to
the shares of Restricted Stock, all of the rights of a
shareholder of the Corporation, including the right to vote
the shares, and the right to receive any cash dividends. The
Committee, in its sole discretion, as determined at the time
of award, may permit or require the payment of cash dividends
to be deferred and, if the Committee so determines,
reinvested, subject to Section 12(e), in additional Restricted
Stock to the extent shares are available under Section 3, or
otherwise reinvested. Pursuant to Section 3 above, stock
dividends issued with respect to Restricted Stock shall be
treated as additional shares of Restricted Stock that are
subject to the same restrictions and other terms and
conditions that apply to the shares with respect to which such
dividends are issued. If the Committee so determines, the
award agreement may also impose restrictions on the right to
vote and the right to receive dividends.
(iii) Subject to the applicable provisions of the
award agreement and this Section 7, upon termination of a
participant's employment with the Corporation and any
Subsidiary or Affiliate for any reason during the Restriction
Period, all shares still subject to restriction will vest, or
be forfeited, in accordance with the terms and conditions
established by the Committee at or after grant.
(iv) If and when the Restriction Period expires
without a prior forfeiture of the Restricted Stock subject to
such Restriction Period, certificates for an appropriate
number of unrestricted shares shall be delivered to the
participant (or a transferee permitted by Section 12(h)
hereof) promptly.
(d) Minimum Value Provisions. In order to better ensure that
award payments actually reflect the performance of the Corporation and
service of the participant, the Committee may provide, in its sole
discretion, for a tandem performance-based or other award designed to
guarantee a minimum value, payable in cash or Common Stock to the
recipient of a restricted stock award, subject to such performance,
future service, deferral, and other terms and conditions as may be
specified by the Committee.
SECTION 8. Awards to Outside Directors.
(a) The provisions of this Section 8 shall apply only to
awards to Outside Directors in accordance with this Section 8. The
Committee shall have no authority to determine the timing of or the
terms or conditions of any award under this Section 8. No awards shall
be made hereunder until awards are no longer made pursuant to the 1995
Outside Directors Stock Option Plan.
(b) A Non-Qualified Stock Option will be awarded hereunder
pursuant to the following formula: Each Outside Director shall receive
an annual Non-Qualified Stock Option for the purchase of shares of
Common Stock determined by dividing (i) the annual retainer for an
Outside Director (determined with reference to the rate of annual
retainer in effect on the date the Non-Qualified Stock Option is
granted) by (ii) the Fair Market Value of a share of Common Stock on
the date of the grant, multiplying the result (the quotient) by three,
rounding the resulting number of shares up to the nearest whole share.
In the event an Outside Director serves as Chairman of the Board, the
multiplier in the preceding sentence shall be four in lieu of three.
The exercise price of each Non-Qualified Stock Option granted hereunder
shall be the Fair Market Value on the date of grant.
<PAGE>
(c) Each Outside Director Option shall vest and become
exercisable on the first anniversary of the date of grant if the
grantee is still a member of the Board on such date, but shall not be
exercisable before such date except as provided in Section 9.
(d) No Outside Director Option shall be exercisable prior to
vesting. Each Outside Director Option shall expire, if unexercised, on
the tenth anniversary of the date of grant. The exercise price may be
paid in cash or in shares of Common Stock, including shares of Common
Stock subject to the Outside Director Option.
(e) Outside Director Options shall not be transferable without
the prior written consent of the Board other than (i) transfers by the
optionee to a member of his or her Immediate Family or a trust for the
benefit of optionee or a member of his or her Immediate Family, or (ii)
transfers by will or by the laws of descent and distribution.
(f) Recipients of Outside Director Options shall enter into a
stock option agreement with the Corporation setting forth the exercise
price and other terms as provided herein.
(g) Upon termination of an Outside Director's service as a
director of the Corporation, (i) all Outside Director Options shall be
governed by the provisions of Sections 5(g), 5(i), and 5(j) hereof as
if Outside Directors were employees of the Corporation, except that
there shall be no discretion to accelerate the vesting of any Outside
Director Options in connection with the termination of service of any
individual Outside Director.
(h) Outside Director Options shall be subject to Section 9.
The number of shares and the exercise price per share of each Outside
Director Option theretofore awarded shall be adjusted automatically in
the same manner as the number of shares and the exercise price for
Stock Options under Section 3(c) hereof at any time that Stock Options
are adjusted as provided in Section 3(c). The number of shares
underlying Outside Director Options to be awarded in the future shall
be adjusted automatically in the same manner as the number of shares
underlying outstanding Stock Options are adjusted under Section 3(c)
hereof at any time that Stock Options are adjusted under Section 3(c)
hereof.
(i) Any applicable withholding taxes shall be paid in shares
of Common Stock subject to the Outside Director Option valued as the
Fair Market Value of such shares unless the Corporation agrees to
accept payment in cash in the amount of such withholding taxes.
(j) The Board, in its sole discretion, may determine to reduce
the size of any Outside Director Option prior to grant or to postpone
the vesting and exercisability of any Outside Director Option prior to
grant.
SECTION 9. Change in Control Provisions.
(a) Impact of Event. In the event of:
(1) a "Change in Control" as defined in Section 9(b);
or
(2) a "Potential Change in Control" as defined in
Section 9(c), but only if and to the extent so
determined by the Committee or the Board at or
after grant (subject to any right of approval
expressly reserved by the Committee or the Board
at the time of such determination);
(i) subject to the limitations set forth below in
this Section 9(a), the following acceleration provisions shall
apply:
(a) Any Stock Appreciation Right, Stock
Option or Outside Director Option awarded under the
Plan not previously exercisable and vested shall
become fully exercisable and vested.
<PAGE>
(b) The restrictions applicable to any
Restricted Stock in each case to the extent not
already vested under the Plan, shall lapse and such
shares and awards shall be deemed fully vested.
(ii) subject to the limitations set forth below in
this Section 9(a), the value of all outstanding Stock Options,
Stock Appreciation Rights, Restricted Stock and Outside
Director Options in each case to the extent vested, shall,
unless otherwise determined by the Board or by the Committee
in its sole discretion prior to any Change in Control, be
cashed out on the basis of the "Change in Control Price" as
defined in Section 9(d) as of the date such Change in Control
or such Potential Change in Control is determined to have
occurred or such other date as the Board or Committee may
determine prior to the Change in Control.
(iii) The Board or the Committee may impose
additional conditions on the acceleration or valuation of any
award in the award agreement.
(b) Definition of Change in Control. For purposes of Section
9(a), a "Change in Control" - means the happening of any of the
following:
(i) any person or entity, including a "group" as
defined in Section 13(d)(3) of the Exchange Act, other than
the Corporation or a wholly-owned subsidiary thereof or any
employee benefit plan of the Corporation or any of its
Subsidiaries, becomes the beneficial owner of the
Corporation's securities having 35% or more of the combined
voting power of the then outstanding securities of the
Corporation that may be cast for the election of directors of
the Corporation (other than as a result of an issuance of
securities initiated by the Corporation in the ordinary course
of business); or
(ii) as the result of, or in connection with, any
cash tender or exchange offer, merger or other business
combination, sales of assets or contested election, or any
combination of the foregoing transactions, less than a
majority of the combined voting power of the then outstanding
securities of the Corporation or any successor corporation or
entity entitled to vote generally in the election of the
directors of the Corporation or such other corporation or
entity after such transaction are held in the aggregate by the
holders of the Corporation's securities entitled to vote
generally in the election of directors of the Corporation
immediately prior to such transaction; or
(iii) during any period of two consecutive years,
individuals who at the beginning of any such period constitute
the Board cease for any reason to constitute at least a
majority thereof, unless the election, or the nomination for
election by the Corporation's shareholders, of each director
of the Corporation first elected during such period was
approved by a vote of at least two-thirds of the directors of
the Corporation then still in office who were directors of the
Corporation at the beginning of any such period.
(c) Definition of Potential Change in Control. For purposes of
Section 9(a), a "Potential
Change in Control" means the happening of any one of the following:
(i) The approval by shareholders of an agreement by
the Corporation, the consummation of which would result in a
Change in Control of the Corporation as defined in Section
9(b); or
(ii) The acquisition of beneficial ownership,
directly or indirectly, by any entity, person or group (other
than the Corporation or a Subsidiary or any Corporation
employee benefit plan (including any trustee of such plan
acting as such trustee)) of securities of the Corporation
representing 5% or more of the combined voting power of the
Corporation's outstanding securities and the adoption by the
Committee of a resolution to the effect that a Potential
Change in Control of the Corporation has occurred for purposes
of this Plan.
(d) Change in Control Price. For purposes of this Section 9,
"Change in Control Price" means the highest price per share paid in any
transaction reported on the New York Stock Exchange or such other
exchange or market as is the principal trading market for the Common
Stock, or paid or offered in any bona fide transaction related to a
<PAGE>
Potential or actual Change in Control of the Corporation at any time
during the 60 day period immediately preceding the occurrence of the
Change in Control (or, where applicable, the occurrence of the
Potential Change in Control event), in each case as determined by the
Committee except that, in the case of Incentive Stock Options and Stock
Appreciation Rights relating to Incentive Stock Options, such price
shall be based only on transactions reported for the date on which the
optionee exercises such Stock Appreciation Rights or, where applicable,
the date on which a cash out occurs under Section 9(a)(ii).
SECTION 10. Amendments and Termination.
The Board may at any time amend, alter or discontinue the Plan without
shareholder approval to the fullest extent permitted by the Exchange Act and the
Code; provided, however, that no amendment, alteration, or discontinuation shall
be made which would impair the rights of an optionee or participant under a
Stock Option, Stock Appreciation Right, Restricted Stock or Outside Director
Option theretofore granted, without the participant's consent.
The Committee may amend the terms of any Stock Option or other award
theretofore granted, prospectively or retroactively, but, subject to Section 3
above, no such amendment shall impair the rights of any holder without the
holder's consent. The Committee may also substitute new Stock Options for
previously granted Stock Options (on a one for one or other basis), including
previously granted Stock Options having higher option exercise prices. Solely
for purposes of computing the Section 162(m) Maximum, if any Stock Options or
other awards previously granted to a participant are canceled and new Stock
Options or other awards having a lower exercise price or other more favorable
terms for the participant are substituted in their place, both the initial Stock
Options or other awards and the replacement Stock Options or other awards will
be deemed to be outstanding (although the canceled Stock Options or other awards
will not be exercisable or deemed outstanding for any other purposes).
SECTION 11. Unfunded Status of Plan.
The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
participant or optionee by the Corporation, nothing contained herein shall give
any such participant or optionee any rights that are greater than those of a
general creditor of the Corporation. In its sole discretion, the Committee may
authorize the creation of trusts or other arrangements to meet the obligations
created under the Plan to deliver Common Stock or payments in lieu of or with
respect to awards hereunder; provided, however, that, unless the Committee
otherwise determines with the consent of the affected participant, the existence
of such trusts or other arrangements is consistent with the "unfunded" status of
the Plan.
SECTION 12. General Provisions.
(a) The Committee may require each person purchasing shares
pursuant to a Stock Option or other award under the Plan to represent
to and agree with the Corporation in writing that the optionee or
participant is acquiring the shares without a view to distribution
thereof. The certificates for such shares may include any legend which
the Committee deems appropriate to reflect any restrictions on
transfer. All certificates for shares of Common Stock or other
securities delivered under the Plan shall be subject to such
stop-transfer orders and other restrictions as the Committee may deem
advisable under the rules, regulations, and other requirements of the
Commission, any stock exchange upon which the Common Stock is then
listed, and any applicable Federal or state securities law, and the
Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
(b) Nothing contained in this Plan shall prevent the Board
from adopting other or additional compensation arrangements, subject to
shareholder approval if such approval is required; and such
arrangements may be either generally applicable or applicable only in
specific cases.
(c) The adoption of the Plan shall not confer upon any
employee of the Corporation or any Subsidiary or Affiliate any right to
<PAGE>
continued employment with the Corporation or a Subsidiary or Affiliate,
as the case may be, nor shall it interfere in any way with the right of
the Corporation or a Subsidiary or Affiliate to terminate the
employment of any of its employees at any time.
(d) No later than the date as of which an amount first becomes
includable in the gross income of the participant for Federal income
tax purposes with respect to any award under the Plan, the participant
shall pay to the Corporation, or make arrangements satisfactory to the
Committee regarding the payment of, any Federal, state, or local taxes
of any kind required by law to be withheld with respect to such amount.
The Committee may require withholding obligations to be settled with
Common Stock, including Common Stock that is part of the award that
gives rise to the withholding requirement. The obligations of the
Corporation under the Plan shall be conditional on such payment or
arrangements and the Corporation and its Subsidiaries or Affiliates
shall, to the extent permitted by law, have the right to deduct any
such taxes from any payment of any kind otherwise due to the
participant.
(e) The actual or deemed reinvestment of dividends or dividend
equivalents in additional Restricted Stock (or other types of Plan
awards) at the time of any dividend payment shall only be permissible
if sufficient shares of Common Stock are available under Section 3 for
such reinvestment (taking into account then outstanding Stock Options
and other Plan awards).
(f) The Plan and all awards made and actions taken thereunder
shall be governed by and construed in accordance with the laws of the
State of Tennessee.
(g) The members of the Committee and the Board shall not be
liable to any employee or other person with respect to any
determination made hereunder in a manner that is not inconsistent with
their legal obligations as members of the Board. In addition to such
other rights of indemnification as they may have as directors or as
members of the Committee, the members of the Committee shall be
indemnified by the Corporation against the reasonable expenses,
including attorneys' fees actually and necessarily incurred in
connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be
a party by reason of any action taken or failure to act under or in
connection with the Plan or any option granted thereunder, and against
all amounts paid by them in settlement thereof (provided such
settlement is approved by independent legal counsel selected by the
Corporation) or paid by them in satisfaction of a judgment in any such
action, suit or proceeding, except in relation to matters as to which
it shall be adjudged in such action, suit or proceeding that such
Committee member is liable for negligence or misconduct in the
performance of his duties; provided that within 60 days after
institution of any such action, suit or proceeding, the Committee
member shall in writing offer the Corporation the opportunity, at its
own expense, to handle and defend the same.
(h) In addition to any other restrictions on transfer that may
be applicable under the terms of this Plan or the applicable award
agreement, no Stock Option, Stock Appreciation Right, Restricted Stock
Award or other right issued under this Plan is transferable by the
participant without the prior written consent of the Committee, or, in
the case of an Outside Director, the Board, other than (i) transfers by
an optionee to a member of his or her Immediate Family or a trust for
the benefit of the optionee or a member of his or her Immediate Family
or (ii) transfers by will or by the laws of descent and distribution.
The designation of a beneficiary will not constitute a transfer.
(i) The Committee may, at or after grant, condition the
receipt of any payment in respect of any award or the transfer of any
shares subject to an award on the satisfaction of a six-month holding
period, if such holding period is required for compliance with Section
16 under the Exchange Act.
SECTION 13. Effective Date of Plan.
The Plan shall be effective as of the date of approval of the Plan by a
majority of the votes cast by the holders of the Corporation's Common Stock (the
"Effective Date").
<PAGE>
SAMPLE PROXY CARD (FOR EDGAR FILING)
------------------------------------
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions. Have your
voting instruction card in hand when you call. You will be prompted to enter
your 12 digit Control Number which is located below and the follow the simple
instructions Vote Voice provides you.
VOTE BY INTERNET - www. proxyvote.com
Use the internet to transmit your voting instructions. Have your voting
instruction card in hand when you access the web site. You will be prompted to
enter your 12 digit Control Number which is located below to obtaib your records
and create an electronic voting form.
VOTE BY MAIL -
Mark, sign and date your voting instruction card and return it in the postage
- -paid envelope we've provided or return to Dollar General Corporation, c/o ADP,
51 Mercedes Way, Edgewood, NY 11717
TO VOTE, MARK BLOCKS BELOW IN
BLUE BLACK INK AS FOLLOWS: DOLLAR KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
<PAGE>
DOLLAR GENERAL CORPORATION
Proposal 1 - Election of Directors
1. To elect nine directors to serve for the ensuing year and until their
successors are elected. 01) Dennis C. Bottorff, 02) James l. Clayton, 03)
Reginald D. Dickson, 04) John B. Holland, O5) Barbara M. Knuckles, 06) Cal
Turner, Jr., 08) David M. Wilds and 09) William S. Wire, II.
Proposal 2 - Amend the Dollar General 1998 Stock Incentive Plan
For Against Abstain
[ ] [ ] [ ]
THIS PROXY WILL BE VOTED AS DIRECTED, OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND AGAINST PROPOSALS 2 AND 3 AND AS
SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE
THE MEETING.
For Withold For all To withhold authority to vote, mark "For All Except"
All All Except and write the nominee's number on the line below
[ ] [ ] [ ] ----------------------------------------------------
<PAGE>
DOLLAR GENERAL CORPORATION
1999 ANNUAL MEETING OF THE SHAREHOLDERS
The undersigned shareholder of Dollar General Corporation, a Tennessee
corporation (the "Company"), hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders and Proxy Statement, each dated April 30, 1999, and
hereby appoints Cal Turner, Jr. and Robert C. Layne, or either of them, proxies
and attorneys-in-fact, with full power to each of substitution, on behalf and in
the name of the undersigned, to represent the undersigned at the 1999 Annual
Meeting of Shareholders of Dollar General Corporation to be held on June 7,
1999, at 10:00 a.m. local time, at the Goodlettsville City Hall Auditorium, 105
South Main Street, Goodlettsville, Tennessee and at any adjournment(s) therof,
and to vote all ahares of Common Stock (or Series A Convertible Junior Preferred
Stock, on an as converted basis) which the undersigned would be entitled to vote
if then and there personally present, on the matters set forth below
- ------------------------------ ------------------
Signature Date
