NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held on
Thursday, June 13, 2019
To Our Shareholders:
We will hold the annual meeting of shareholders of Dollar Tree, Inc. (the "Company", "us", "our" or "we") at the Hilton Norfolk The
Main, 100 East Main Street, Norfolk, Virginia 23510, on Thursday, June 13, 2019 at 8:00 a.m. local time, for the following purposes:
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To elect thirteen director nominees to the Company's Board of Directors ("Board") as identified in the attached proxy statement, each to serve
as a director for a one-year term;
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To approve, by a non-binding advisory vote, the compensation of the Company's named executive officers;
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To ratify the selection of KPMG LLP as the Company's independent registered public accounting firm for the fiscal year 2019; and
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To act upon any other business that may properly come before the meeting or any adjournments or postponements thereof.
Shareholders
of record at the close of business on April 9, 2019 will receive notice of and be allowed to vote at the meeting.
We
have elected to distribute our proxy materials primarily over the Internet rather than mailing paper copies of those materials to each shareholder. We believe this will increase
shareholder value by decreasing our printing and distribution costs, reducing the potential for environmental impact by
conserving natural resources, and allowing for convenient access to and delivery of materials in an easily searchable format. If you would prefer to receive paper copies of our proxy materials, please
follow the instructions included in the Notice of Internet Availability of Proxy Materials that is being mailed to our shareholders on or about April 29, 2019.
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Your vote is important to us.
We encourage you to read the proxy statement and then vote by Internet, by phone or by signing, dating and
returning your proxy card (if you request a paper copy) at your earliest convenience. Sending in your proxy card will not prevent you from voting your shares at the meeting, if you desire to do so.
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By Order of the Board of Directors
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WILLIAM A. OLD, JR.
Corporate Secretary
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Chesapeake, Virginia
April 22, 2019
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IMPORTANT NOTICE ABOUT THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 13, 2019
The Company's proxy statement and annual report to shareholders for the fiscal year ended February 2, 2019 are available at
https://www.dollartreeinfo.com/investors/financial/annuals.
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OUR BOARD AND CORPORATE GOVERNANCE
The Work of the Board
Our Board of Directors is highly engaged and focused on strategy and the best use of capital to maximize shareholder value. It has the right
mix of experience, skills and perspectives to accomplish that goal. In the last twelve months, the Board met nine (9) times, the Nominating and Corporate Governance Committee met nine
(9) times, the Audit Committee met nine (9) times and the Compensation Committee met five (5) times.
Each
year, strategy and capital allocation are a primary focus of the Board. In the last year, the Board asked J.P.Morgan, The Boston Consulting Group and Dollar Tree's Strategy
Department to undertake a comprehensive strategic review, with J.P.Morgan presenting at the October 2018, December 2018 and February 2019 Board meetings. The Board reviewed a wide array of strategic
choices at the December Board meeting and concluded that the Company's strategic plan provided the best option for maximizing shareholder value. The strategic plan was outlined in the March 2019
earnings release and the related materials and was well-received by shareholders.
Board Self-Assessment and Skills Matrix
The Board is committed to ensuring it has a relevant diversity of skills and experience to oversee the Company, its management, its strategic
plan and the execution of that plan. Expertise in retail investments, retail operations, retail merchandising, retail supply chain, change and risk management, capital markets, finance, accounting,
technology, marketing, human resource and talent development are important to our Board oversight. This expertise can be gained in a variety of ways, such as being the chief executive officer of a
public retailer, serving as a member of the board or in the "C" suite, or managing private equity investments. We regularly evaluate candidates that can provide new voices and additional
perspectives which will be relevant to the Company as its strategic plan continues to evolve.
The
Board's annual self-evaluation led by the Nominating and Corporate Governance Committee is the foundation of our skills assessment process. Through the evaluation, the Board
assesses its composition, processes, committee structure and composition, meetings and overall effectiveness. The directors provide feedback on the Board and its committees through questionnaires, and
the results were discussed at the March 2019 Committee and Board meetings. This year, SpencerStuart, a leading board consulting and director search firm, was engaged by the Nominating and Corporate
Governance Committee to review the questionnaire results, interview each Board
member, and provide an updated skills matrix and Board analysis. SpencerStuart then met with the Committee and Board in March 2019.
Director Refreshment and Tenure
As a result of its assessment, the Board has determined that our director nominees exhibit an effective mix of skills, experiences, diversity
and fresh perspectives. As the chart below summarizes, our Board members' skills and experiences cover the areas we believe are most important to sustaining our success. In addition, our Board has
been steadily refreshed over the last four years.
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In
2018, the Board identified several needs: directors with deep and relevant experience as a public company retail Chief Executive Officer and as a partner in a large private equity
firm with extensive retail investments. We were also targeting directors with a diverse perspective. As a result, we added Thomas Dickson to our Board on December 31, 2018, who served as Chief
Executive Officer of Harris Teeter, has import and other merchandise experience and M&A experience, and has served on other public retail boards with the support of long-term shareholders as well as
activist shareholders. In the next twelve months, we expect to add one more director with experience as a Chief Executive Officer of a public retailer. In March 2019, we satisfied our other top need
by adding Carrie Wheeler to the Board. Ms. Wheeler was a former partner in TPG and headed their retail and consumer group, with an extensive retail investment track record, relevant retail
board experience and significant M&A experience. Two of the last four directors added to our Board are women. We expect to improve our Board diversity further within the next twelve months.
The
tenure profile of our Board currently resembles a barbell, with five (5) directors having two (2) years or less in tenure, six (6) with over ten years and only
two (2) directors in between. With five (5) relatively new directors learning a complicated and unique business like Dollar Tree as well as a challenging and high-potential business like
Family Dollar, our Board consulted with SpencerStuart. The Board concluded that now was not the time to lose additional experienced directors. Instead, we adopted a waterfall strategy: each year
beginning in 2020, as our newer members continue to gain needed experience, we expect to engage thoughtfully in additional Board refreshment. Our goal is to reach and thereafter maintain a relatively
balanced mix of short, medium and long-term tenured directors.
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SKILLS AND EXPERIENCE
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DIRECTOR TENURE
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Independent
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>10 years
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6-10 years
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Leadership
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3-5 years
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Public company boards
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0-2 years
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Senior public company executive experience
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Public company CEO experience
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Average tenure
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8.3 years
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Financial Expertise
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Inv. banking / PE / M&A / capital markets
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CFO / audit / accounting
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DIVERSE DIRECTORS
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Public company CFO experience
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Other professional expertise
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Consumer / retail industry
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DIRECTOR AVERAGE AGE
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65
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Marketing / advertising / communications
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Strategic planning
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Operations
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Human resources
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Information technology
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Risk management
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Global sourcing / supply chain
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PATH TO ENHANCED GOVERNANCE AND BOARD REFRESHMENT
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2015
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Adopted Majority Voting Standard
For uncontested director elections
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Howard Levine leaves Board
Non-independent Director
Former Chairman & CEO of Family Dollar
J. Douglas Perry leaves Board
Non-independent Director
Former Chairman, founder of Dollar Tree,
30 years on Board
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2016
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Gregory Bridgeford appointed to Board
Independent Director
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Macon Brock leaves Board
Non-independent Director
Former Chairman, founder of Dollar Tree,
31 years on Board
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2017
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Adopted Proxy Access Bylaw
Facilitates shareholder nominations
Gary Philbin appointed CEO & Director
Completed long-planned executive succession
Bob Sasser becomes Executive Chairman
Stephanie Stahl appointed to Board
Independent Director
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H. Ray Compton leaves Board
Non-independent Director
Founder of Dollar Tree, 32 years on Board
Mary Ann Citrino leaves Board
Independent Director
14 years on Board
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2018
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Jeffrey Naylor appointed to Board
Independent Director
Thomas Dickson appointed to Board
Independent Director
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Tom Saunders steps down as Lead Director and NCG Committee Chair
1% beneficial owner of Dollar Tree,
served 12 years as Lead Director
Arnold Barron steps down as Compensation Committee Chair
Served 8 years in the role
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2019
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Carrie Wheeler appointed to Board
Independent Director
Gregory Bridgeford elected as
new Lead Director and Compensation Committee Chair
Stephanie Stahl elected as NCG Committee Chair
Enhanced Corporate Governance Guidelines adopted
Executive compensation program revised
Augmenting performance metrics and emphasizing at-risk elements of compensation
Enhanced long-standing commitment to Sustainability
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CORPORATE GOVERNANCE HIGHLIGHTS
As the Company grows and evolves, our Board of Directors is engaged in a multi-year effort to enhance its membership and refine
its governance policies and practices. The Board seeks to further increase its effectiveness as well as its alignment with and transparency to shareholders. These changes include:
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Board refreshment.
Just since the end of 2018, two new members, Mr. Dickson and
Ms. Wheeler, have joined the Board, where they will apply their deep experience in fields critical to the needs of the Company. They represent the latest additions to a "fit for purpose" Board
of Directors. Over several years, the Board has thoughtfully increased the diversity of perspectives and voices within the boardroom, ensuring the Board has the right skills and experience to guide
Dollar Tree through its next phase of development. Since 2015:
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Five (5) independent directors have joined the Board,
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Five (5) directors have left the Board, four (4) of them non-independent, including the three Dollar
Tree co-founders Macon F. Brock, Jr., H. Ray Compton and J. Douglas Perry,
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Two (2) women have joined the Board (with one prior director, Mary Anne Citrino, retiring on
December 31, 2018),
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Gary M. Philbin, our Chief Executive Officer, was appointed to the Board, and
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Bob Sasser became Executive Chairman, replacing founder Macon Brock.
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New Board leadership.
Led by its independent members, in 2019 the
Board:
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Elected a new Lead Independent Director, Gregory M. Bridgeford, who has robust authority to oversee the
Board's operations and relationship with management, and
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Appointed Gregory M. Bridgeford as Chair of our Compensation Committee and appointed Stephanie Stahl as
Chair of our Nominating and Corporate Governance Committee.
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Enhanced governance best practices.
The Board previously adopted best practices such
as a declassified board, a majority voting standard for uncontested elections of directors and proxy access, which are intended to increase accountability to shareholders. Building on these actions,
the Board recently:
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Formalized an enhanced Shareholder Engagement Policy with guidelines promoting direct interactions between
independent directors and shareholders,
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Determined to set Board tenure goals with a waterfall approach annually to foster an on-going mix of directors
with short-, medium- and longer-term tenures,
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Engaged independent outside consultants to evaluate the performance of the Board and make recommendations with
respect to Board governance and composition, and
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Enhanced already robust Corporate Governance Guidelines.
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DIRECTOR BIOGRAPHIES
Biographical and other information for our directors is provided below.
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ARNOLD S. BARRON
DIRECTOR SINCE MARCH 2008
AGE: 71
BOARD
COMMITTEES:
Compensation Committee
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Mr. Barron
served as the Senior Executive Vice President, Group President of The TJX Companies, Inc. from 2004 until his retirement in January 2009. His employment with The TJX Companies began in 1979.
PREVIOUS WORK AND BOARD EXPERIENCE
2000 to 2004: Executive
Vice President, Chief Operating Officer, The Marmaxx Group (the combined entity of T.J. Maxx and Marshalls)
1996 to 2000: Senior Vice President, Group Executive, The TJX Companies
1993 to 1996: Senior Vice President, General Merchandising Manager,
T.J. Maxx
1979 to 1993:
held several other executive positions within The TJX Companies, Inc.
2009 to 2013: served as a director on the Board of rue21 (Chair of the Compensation Committee, Chair of the Corporate Governance and Nominating Committee)
EDUCATION
Received a B.A. in Mathematics from Boston University.
EXPERTISE
With more than thirty years of retail experience in senior
management, operations, merchandising, supply chain, strategic planning, human resources and systems in the United States, Canada, United Kingdom and Europe, Mr. Barron brings a combination of skills and experience spanning areas key to our
business.
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GREGORY M. BRIDGEFORD
DIRECTOR SINCE MAY
2016
AGE: 64
LEAD INDEPENDENT DIRECTOR
BOARD COMMITTEES:
Compensation Committee, Chair
Nominating and Corporate Governance Committee
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Mr. Bridgeford
served as the Chief Customer Officer of Lowe's Companies, Inc. from 2012 to 2014 until his retirement. His employment with Lowe's began in 1982 where he held various senior level positions.
PREVIOUS WORK AND BOARD EXPERIENCE
2004 to 2012: Executive
Vice President of Strategy and Business Development, Lowe's
1999 to 2004: Senior Vice President of Strategy and Business Development, Lowe's
1998 to 1999: Senior Vice President of Marketing, Lowe's
1994 to 1998: Senior Vice
President and General Merchandising Manager, Lowe's
1989 to 1994: Vice President of Merchandising, Lowe's
1986 to 1989: Vice President of Corporate Development, Lowe's
1982 to 1986: Director of Corporate Development, Lowe's
EDUCATION
Graduated with a B.A. from the University of Virginia and received a
MBA from Wake Forest University.
EXPERTISE
Mr. Bridgeford brings to our Board more than thirty years of retail experience in the areas of customer experience, merchandising, real estate, international, marketing, advertising and communications, strategic planning and business
process improvement.
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THOMAS W. DICKSON
DIRECTOR SINCE DECEMBER 2018
AGE: 63
BOARD COMMITTEES:
Compensation Committee
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Mr. Dickson
served as the Chief Executive Officer of Harris Teeter Supermarkets, Inc., a leading regional supermarket chain located primarily in the Southeastern and Mid-Atlantic United States, from February 1997
until his retirement in January 2014. He currently serves on the Board of Brixmor Property Group, Inc. where he is a member of the Compensation Committee.
PREVIOUS WORK AND BOARD EXPERIENCE
February 1996 to February 1997: Executive Vice President, Harris
Teeter
February 1994 to
February 1996: President of American & Efird, Inc., a wholly-owned subsidiary of Harris Teeter
February 1991 to February 1994: Executive Vice President, American & Efird, Inc.
1989 to 1991: Senior Vice President, Marketing and International,
American & Efird, Inc.
1987 to 1989: Vice President, International Operations, American & Efird, Inc.
December 2016 to September 2018: Board of Directors of Conagra Brands, Inc. (Nominating, Governance and Public Affairs Committee)
March 2016 to June 2017:
Board of Directors of CST Brands, Inc. (Nominating and Corporate Governance)
April 2014 to March 2015: Chair of the Board of The Pantry, Inc.
March 2006 to January 2014: Chair of the Board of Harris Teeter
EDUCATION
Mr. Dickson graduated with a B.A. from the
University of Virginia and an MBA from the University of Virginia Darden School of Business.
EXPERTISE
Mr. Dickson brings to our Board more than thirty years of executive leadership with extensive experience in the retail and consumer products industries, a broad real
estate knowledge, and substantial public board experience. He also brings extensive knowledge in strategic planning and international experience in managing foreign operations and sourcing.
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CONRAD M. HALL
DIRECTOR SINCE JANUARY 2010
AGE: 75
BOARD COMMITTEES:
Audit Committee
Nominating and Corporate
Governance Committee
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Mr. Hall
served as the President and Chief Executive Officer of Dominion Enterprises, a leading media and marketing information services company from 2006 until his retirement in January 2009, after nearly forty years in
the broadcasting, news and information industry. He currently serves on the Board of Landmark Media Enterprises, LLC.
PREVIOUS
WORK AND BOARD EXPERIENCE
April 1991 to 2006: President and Chief Executive Officer of Trader Publishing Company
1989 to 1991: President of Landmark Target Media, Inc.
1985 to 1989: Executive
Vice President and Chief Financial Officer of Landmark Communications, Inc. Held various senior positions since 1970, including Vice President of The Virginian-Pilot and The Ledger-Star division of Landmark from 1977 to 1981.
2006 to 2009: Director, Board of
Dominion Enterprises and Landmark Communications, Inc.
1991 to 2006: Director, Board of Trader Publishing Company
EDUCATION
Mr. Hall graduated with a BS in Engineering from the Virginia Military Institute and an MBA from the University of Virginia Darden School
of Business.
EXPERTISE
Mr. Hall's experience
as a former Chief Executive Officer and his demonstrated success in new business development is of immense value to the Board, especially as we continue to evaluate growth opportunities. He also brings to the Board more than thirty years of
operational expertise, extensive experience in information technology, strategic planning and human resources, and a solid financial background.
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LEMUEL E. LEWIS
DIRECTOR SINCE JULY 2007
AGE: 72
BOARD
COMMITTEES:
Audit Committee
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Mr. Lewis
served as the Executive Vice President and Chief Financial Officer of Landmark Communications, Inc. from 2000 until his retirement in 2006. He currently serves on the Board of Directors of Markel
Corporation (Audit Committee, Chair), and Owens & Minor, Inc. (Audit Committee Chair)
PREVIOUS WORK AND BOARD
EXPERIENCE
1981 to 2000: held various senior level positions, including President of The News Channel 5 Network from 1992 to 1999, and President of KLAS TV from 1986 to 1990
2008 to 2010: Chair of
the Board of the Federal Reserve Bank of Richmond
2005 to 2008: Chair of the Audit Committee for the Federal Reserve Bank of Richmond
2006 to 2008: Director, Board of Landmark Communications
2002 to 2006: Director, Board of The Weather Network
EDUCATION
Mr. Lewis graduated with a B.A. in Economics from the
University of Virginia and an MBA from the University of Virginia Darden School of Business.
EXPERTISE
Mr. Lewis brings to the Board many years of experience in accounting, finance, human resources, marketing, mergers and acquisitions and business unit operations. The Board
also benefits from his valuable financial experience as a former Chief Financial Officer and his service on other Boards. In addition, our Board has determined that Mr. Lewis qualifies as an Audit Committee financial expert.
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JEFFREY G. NAYLOR
DIRECTOR SINCE MARCH 2018
AGE: 60
BOARD
COMMITTEES:
Audit Committee
Nominating and Corporate Governance
Committee
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Mr. Naylor
is a former Chief Financial Officer and Senior Executive of The TJX Companies. He is the Managing Director of his consulting firm, Topaz Consulting LLC, where he advises private equity firms on potential
transactions and provides services in the area of strategy and finance. In addition, he currently serves on the Board of Directors of Synchrony Financial (Chair, Audit Committee; Compensation Committee), Emerald Expositions Events, Inc. (Chair,
Nominating and Corporate Governance Committee; Compensation Committee), and Wayfair, Inc. (Audit Committee), as well as two private companies (Save-a-Lot and Bargain Hunt).
PREVIOUS WORK AND BOARD EXPERIENCE
February 2013 to April 2014: Senior Corporate Advisor, TJX Companies,
Inc.
January 2012
to February 2013: Senior Executive Vice President and Chief Administrative Officer, TJX Companies, Inc.
February 2009 to January 2012: Senior Executive Vice President, Chief Financial and Administrative Officer, TJX Companies, Inc.
June 2007 to February 2009: Senior Executive Vice
President, Chief Administrative and Business Development Officer, TJX Companies, Inc.
September 2006 to June 2007: Senior Executive Vice President, Chief Financial and Administrative Officer, TJX Companies, Inc.
February 2004 to September 2006: Chief Financial Officer, TJX
Companies, Inc.
2001
to 2004: Chief Financial Officer, Big Lots, Inc.
Held senior level positions with Limited Brands, Sears, Roebuck and Co., and Kraft Foods, Inc.
Mr. Naylor began his career as a Certified Public Accountant
with Deloitte Haskins & Sells.
2010 to 2016: Board Member (Audit Committee), Fresh Market, Inc.
EDUCATION
Mr. Naylor graduated with a B.A. in Economics from Northwestern University and a MBA from J.L. Kellogg School of Management.
EXPERTISE
Mr. Naylor brings to our Board an extensive financial and
accounting background as well as significant leadership and retail experience. In addition, our Board has determined that Mr. Naylor qualifies as an Audit Committee financial expert.
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GARY M. PHILBIN
President and Chief Executive Officer
DIRECTOR SINCE SEPTEMBER 2017
AGE: 62
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Mr. Philbin
has been the President and Chief Executive Officer of Dollar Tree since September 2017, and has more than forty years of progressive retail experience.
PREVIOUS WORK AND BOARD EXPERIENCE
December 2016 to September 2017:
Enterprise President, Dollar Tree
July 2015 to December 2016: President and Chief Operating Officer, Family Dollar Stores
June 2013 to July 2015: President and Chief Operating Officer, Dollar Tree
March 2007 to June 2013: Chief Operating Officer, Dollar Tree
December 2001 to March
2007: Senior Vice President of Stores, Dollar Tree
1997 to 2001: held several executive level positions, including Chief Executive Officer of Grand Union, prior to the company's sale
1996 to 1997: Executive Vice President of Operations and
Merchandising for Cub Foods, a division of SuperValu
1993 to 1996: Senior Vice President of Merchandising for Walbaum's, a division of A&P
1973 to 1993: held increasing positions of responsibility in Store Operations and Merchandising, Kroger Company
EDUCATION
Mr. Philbin graduated with a BS in Accounting from Miami
University and received an MBA from Xavier University.
EXPERTISE
Mr. Philbin's forty plus year career in retail spans store operations and merchandising, including executive leadership across multiple formats in the grocery industry.
His business acumen has driven development of private brands, customer research and marketing, and operational excellence into store focused initiatives. He has been deeply involved in the evolution of the Dollar Tree store format and business model
over the past eighteen years. His work with the Family Dollar team has led to the H2 format initiative. His work across both banners brings a broad knowledge base to the Board.
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BOB SASSER
Executive Chairman
DIRECTOR SINCE JUNE 2004
AGE: 67
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Mr. Sasser
is the Executive Chairman of Dollar Tree Board of Directors. He previously served as the Chief Executive Officer of Dollar Tree from 2004 to September 2017.
PREVIOUS WORK AND BOARD EXPERIENCE
2004 to 2017: Chief Executive Officer,
Dollar Tree
2004 to 2013:
President and Chief Executive Officer, Dollar Tree
2001 to 2003: President and Chief Operating Officer, Dollar Tree
1999 to 2000: Chief Operating Officer, Dollar Tree
1997 to 1998: Senior Vice President, Merchandise and Marketing, Roses Stores, Inc.
1994 to 1996: Vice President, General Merchandise Manager, Michaels
Stores, Inc.
Prior
to 1994: Managed areas of increasing responsibility, primarily at Roses Stores, Inc. in field operations, corporate sales promotion and marketing, buying, global sourcing, merchandising and executive management.
2012 to 2016: Board Member (Audit Committee), Fresh
Market, Inc.
EDUCATION
Mr. Sasser graduated
with a BS in Marketing from Florida State University.
EXPERTISE
Mr. Sasser's demonstration of outstanding leadership skills, business acumen, commitment to excellence, and his major contributions to the Company's growth and success as
the former Chief Executive Officer of Dollar Tree provides essential insight and guidance to our Board. During his thirteen year tenure as Chief Executive Officer, shareholder value increased 733%, as compared to the S&P 500 increase of 125%
during the same timeframe. In addition, the Board benefits from Mr. Sasser's forty-six years of discount retail leadership experience across all areas of corporate and field operations, including merchandising, marketing, sales promotion,
advertising, branding, and customer engagement. He brings to the Board expertise in the areas of merchandising, global sourcing, supply chain, buying, allocation and replenishment, real estate and retail technology.
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THOMAS A. SAUNDERS III
DIRECTOR SINCE 1993
AGE: 82
BOARD
COMMITTEES:
Nominating and Corporate Governance Committee
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Mr. Saunders
is the CEO of Ivor & Co., LLC, a private investment firm. He is a founder of Saunders Karp & Megrue, a private equity firm that owned 50% of Dollar Tree at the time of its IPO and
whose retail companies included Ollie's Bargain Outlet, Bob's Discount Furniture, Marie Callender's, Café Rio, Mimi's Café, Miller's Ale House, Children's Place, rue21, Charlotte Russe, Tommy Bahama, Hat World, Targus and Norcraft
Companies. He is a Senior Advisor to numerous private equity firms and serves as Trustee and Chairman of the Finance Committee of the New York Historical Society, Trustee of the Marine Corps University Foundation, and Trustee of Cold Spring Harbor
Laboratory.
PREVIOUS WORK AND BOARD EXPERIENCE
2013 to
Present: Lead Director and Chairman of the Nominating and Corporate Governance Committee of VitalConnect
1996 to 2016: Director for Hibbett Sports serving on the Audit, Nominating and Corporate Governance, and Compensation Committees
2005 to 2018: Trustee and Chairman of the Heritage
Foundation
2011 to 2012:
Chairman of the Nominating and Corporate Governance Committee for Teavana Holdings
2001 to 2005: Member of the Board of Visitors of the University of Virginia; Chairman of the Finance Committee
1974 to 1989: Managing Director of Morgan
Stanley & Co., leading its Capital Markets Group, managing its Syndicate Department and serving as Chairman of its Leveraged Equity Fund II ("MSLEF II")
2007 to 2019: Lead Independent Director, Dollar Tree
2001 to 2019: Nominating and Corporate
Governance Committee, and Chair from 2001 to 2007 and 2009 to 2019, Dollar Tree
2001 to 2007: Chair of the Audit Committee, Dollar Tree
EDUCATION
Mr. Saunders holds a BSEE from Virginia Military Institute and an MBA from the University of Virginia Darden School of Business.
EXPERTISE
Mr. Saunders is a financial expert with preeminent
experience in investment banking and domestic and global capital markets. He worked closely with Morgan Stanley clients managing IPOs, equity and debt financings and advising on capital structures. His innovation led to the implementation of new
public offering techniques still used in today's equity markets. Mr. Saunders has extensive experience with retail company strategy, operations and corporate governance. He drove investment and valuation analysis to maximize equity value across
a portfolio of over 50 retail, industrial and healthcare companies, and he has a deep understanding of the Dollar Tree business.
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STEPHANIE P. STAHL
DIRECTOR SINCE JANUARY 2018
AGE: 52
BOARD COMMITTEES:
Nominating and Corporate Governance Committee, Chair
Compensation Committee
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Ms. Stahl
owns and operates Studio Pegasus, LLC, an investment and advisory company focused on consumer sector digital start-ups, which she founded in 2015. She currently serves on the Board of Directors of Knoll,
Inc. (Nominating and Corporate Governance; Audit Committee), and Chopt Creative Salad Company.
PREVIOUS WORK AND BOARD
EXPERIENCE
2012 to 2015: Executive Vice President, Global Marketing & Strategy, Coach, Inc.
2010 to 2011: Chief Executive Officer, Tracy Anderson
Mind & Body, LLC
2003 to 2006: Executive Vice President, Chief Marketing Officer, Revlon, Inc.
1998 to 2003: Partner and Managing Director, The Boston Consulting Group, Inc.
1997: Vice President, Strategy & New Business Development,
Toys "R" Us, Inc.
Ms. Stahl began her career as a Financial Analyst for Morgan Stanley & Co.
EDUCATION
Ms. Stahl graduated with a B.S. in Quantitative Economics from Stanford University and an MBA (with distinction) from Harvard University.
EXPERTISE
Ms. Stahl brings to our Board significant experience in
marketing, digital, brand building and strategic development. Ms. Stahl has spent her career focused on the retail/consumer sector with extensive experience in developing, executing and optimizing major change initiatives including mergers and
acquisitions, post-merger integration and fundamental strategic redirection.
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CARRIE A. WHEELER
DIRECTOR SINCE MARCH 2019
AGE: 47
BOARD
COMMITTEES:
Audit Committee
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Ms. Wheeler
is a former Partner and Head of Consumer and Retail Investing at TPG Global, a global private equity firm. She currently serves on the Board of Directors of J. Crew Group, where she is the Chair of the Audit
and Compensation Committees.
PREVIOUS WORK AND BOARD EXPERIENCE
1996 to 2017: Various roles of increasing responsibility over 21 years of service; former Partner and Head of Consumer and Retail Investing, TPG Global
1993 to 1996: Analyst, Goldman,
Sachs & Co.
2013 to 2017: Director, Board of Gelson's (Compensation Committee Chair)
2012 to 2016: Director, Board of Savers Inc. (Compensation)
2006 to 2015: Director, Board of PETCO Animal Supplies (Audit Chair)
2005 to 2013: Director, Board of Neiman Marcus Group (Audit)
2000 to 2004; Director,
Board of Denbury Resources
EDUCATION
Ms. Wheeler
graduated with a Bachelor of Commerce (Honors), from Queens University.
EXPERTISE
Ms. Wheeler is an accomplished Wall Street leader with significant investment and board experience. She brings to our Board broad experience evaluating, valuing and
managing investments with a focus on retail and consumer sectors. She has substantial experience in business assessment, evaluating and executing major acquisitions, structuring debt financing, raising private capital and guiding IPO and public
market transactions. In addition, our Board has determined that Ms. Wheeler qualifies as an Audit Committee financial expert.
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THOMAS E. WHIDDON
DIRECTOR SINCE DECEMBER 2003
AGE: 66
BOARD COMMITTEES:
Audit Committee, Chair
Nominating and
Corporate Governance Committee
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Mr. Whiddon
retired from Berkshire Partners, LLC as an Advisory Director in 2005. He currently serves on the Board of Directors of Sonoco Products Company, Inc., (Audit Committee Chair, Corporate Governance and
Nominating Committee, Executive Compensation Committee, Financial Policy Committee) and Carter's Inc. (Audit Committee, Nominating and Corporate Governance Committee).
PREVIOUS WORK AND BOARD EXPERIENCE
2004 to 2013: Advisory Director, Berkshire Partners, LLC
2004 to 2006: Interim
Executive Operating Roles, Berkshire Partners, LLC
2000 to 2003: Executive Vice President of Logistics and Technology, Lowe's Companies, Inc.
1996 to 2000: Executive Vice President, and Chief Financial Officer,
Lowe's Companies, Inc.
1994 to 1996: Chief Financial Officer and Treasurer, Zale Corporation
1986 to 1993: Treasurer, Eckerd Corporation
1984 to 1986: Tax Partner, KPMG
EDUCATION
Mr. Whiddon graduated with a BS from the University of Alabama.
EXPERTISE
Having served as Chief Financial Officer and Treasurer of successful
large public retail companies, coupled with his many years of experience in public accounting, Mr. Whiddon brings to our Board extensive financial expertise. In addition, our Board has determined that Mr. Whiddon qualifies as an Audit
Committee financial expert. His service on the Board and a number of Committees of Carter's Inc. and Sonoco Products Company, Inc. further enhances his contributions to our Board. He also brings a fresh perspective to Dollar Tree's
logistics and technology focus.
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CARL P. ZEITHAML
DIRECTOR SINCE JULY 2007
AGE: 69
BOARD
COMMITTEES:
Compensation Committee
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Dr. Zeithaml
is the Dean of the McIntire School of Commerce at the University of Virginia. Over the past 20 years, Dean Zeithaml led the implementation of McIntire's strategy to achieve a position of global
preeminence in business education. He is also a Professor in the Management Area specializing in strategic management, and marketing.
PREVIOUS WORK AND BOARD EXPERIENCE
1986 to 1997: Faculty,
Kenan-Flagler Business
School at the University of North Carolina-Chapel Hill.
EDUCATION
Dr. Zeithaml graduated with a B.A. in Economics from University of Notre Dame, a MBA in Health and Hospital Management from University of Florida, and a Doctor of Business
Administration in Strategic Management from University of Maryland.
EXPERTISE
Dr. Zeithaml provides the Board with expertise in strategic management, executive leadership, and marketing, with an emphasis on competitive strategy, corporate governance
and global strategy. He brings to the Board extensive educational experience and a strong understanding of change management and risk management.
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THE BOARD AND ITS COMMITTEES
The Board of Directors has three standing committees, each comprised solely of independent directors: the Audit Committee, the
Compensation Committee and the Nominating and Corporate Governance Committee.
The
charters of our Board committees are available on our corporate website, www.dollartreeinfo.com/investors/corporate.
Current
committee assignments are as follows:
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Director
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Independent
Director(1)
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Audit
Committee(2)
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Compensation
Committee
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NCG
Committee
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Arnold S. Barron
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Gregory M. Bridgeford
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Thomas W. Dickson
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Conrad M. Hall
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Lemuel E. Lewis
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Jeffrey G. Naylor
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Gary Philbin
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Bob Sasser
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Thomas A. Saunders III
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Stephanie P. Stahl
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Carrie A. Wheeler
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Thomas E. Whiddon
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Carl P. Zeithaml
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Lead
Director
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Committee
chair
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(1)
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Our
Board reviewed the composition of each committee and determined that the independence and other qualifications of its members meet the listing
standards of the NASDAQ Stock Market and SEC regulations.
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(2)
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The
Board, after review of each individual's employment experience and other relevant factors, has determined that Lemuel Lewis, Jeffrey Naylor,
Carrie Wheeler and Thomas Whiddon are qualified as audit committee financial experts within the meaning of SEC regulations.
Audit Committee
At each regular meeting, the Audit Committee meets in executive sessions with the Company's independent auditors, Chief Legal Officer, Vice
PresidentInternal Audit, Chief Financial Officer and Senior Vice PresidentPrincipal Accounting Officer to discuss accounting principles, financial and accounting controls,
the scope of the annual audit,
internal controls, regulatory compliance and other matters. The independent auditors have complete access to the Audit Committee without management present to discuss the results of their audits and
their opinions on the adequacy of internal controls, quality of financial reporting and other accounting and auditing matters.
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Key
functions of this committee include:
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reviewing management's assessment of our internal control over the financial reporting process;
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reviewing results of internal control testing related to Section 404 of the Sarbanes-Oxley Act of 2002;
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reviewing our quarterly and annual financial statements;
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reviewing the audit efforts of our independent auditors and internal audit department;
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reviewing related party transactions; and
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selecting the independent auditors and any independent counsel or other advisers it deems necessary.
The
Audit Committee met nine (9) times in 2018. In addition, the Chair of the Committee conducted periodic updates with the independent auditors and/or financial management.
All
members of the Audit Committee during 2018 met the independence requirements and of the NASDAQ Stock Market and regulations of the Securities and Exchange Commission. The report of
the Committee can be found beginning on page 98.
Compensation Committee
The Compensation Committee sets all elements of compensation for our named executive officers based upon consideration of their contributions
to the development and operating performance of the Company, and is primarily responsible for monitoring risks relating to the Company's compensation policies and practices to determine whether they
create risks that are reasonably likely to have a material adverse effect on the Company.
Key
functions of this Committee include:
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overseeing our compensation and benefit practices;
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establishing the compensation arrangements for our executive officers;
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administering our executive compensation plans and Employee Stock Purchase Plan;
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administering and considering awards under our equity-based compensation plans; and
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reviewing annually executives' stock ownership levels to ensure compliance with the Company's executive ownership policy.
The
Compensation Committee met four (4) times in 2018. In addition, the Chair separately engaged in numerous in-depth discussions with members of management.
All
members of the Compensation Committee during 2018 met the independence requirements of the NASDAQ Stock Market and regulations of the Securities and Exchange Commission. The report
of the Committee, together with our Compensation Discussion and Analysis and information regarding executive compensation, can be found beginning on page 39.
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Nominating and Corporate Governance Committee
The purpose of the Nominating and Corporate Governance Committee is to advise the Board of Directors on the composition, organization and
effectiveness of the Board and its committees and on other issues relating to the corporate governance of the Company. The Committee's primary duties and responsibilities
include:
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recommending candidates to be nominated by the Board, including the re-nomination of any currently serving director, to be placed on the ballot
for shareholders to consider at the annual shareholders' meeting;
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if the Chairman of the Board is not independent, recommending an independent director to be elected as Lead Director;
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recommending nominees to be appointed by the Board to fill interim director vacancies;
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reviewing periodically the membership and Chair of each committee of the Board and recommending committee assignments to the Board, including
rotation or reassignment of any Chair or committee member;
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reviewing and resolving requests for waivers from directors of any provision of the Company's Code of Conduct;
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monitoring current developments in regulations and best practices concerning corporate governance and the duties and responsibilities of each
director;
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reviewing and assessing the adequacy of our Corporate Governance Guidelines and recommend changes to the Board;
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conducting an annual performance self-evaluation of the corporate governance and nominating functions of the Committee, establishing criteria
and processes for, and leading the Board in, the Board's annual performance self-evaluation, and conducting an annual review of each of the directors on the Board;
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overseeing and reviewing the Shareholder Engagement Policy and reporting and recommending any proposed changes to such policy to the Board for
approval, monitoring the process for shareholders to communicate with the Board, and assessing and recommending action on any matters raised in such communications relating to governance topics;
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overseeing the Company's strategy on social responsibility and sustainability and developing and recommending to the Board policies and
procedures relating to the Company's corporate social responsibility and sustainability activities;
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reviewing and overseeing our governance structure and other facets of the Company's corporate governance, including the structure of the Board,
provisions of the Company's articles and bylaws, arrangements containing provisions that become operative in the event of a change in control of the Company and other documents, policies and
procedures in the governance framework;
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recommending policies for compensation and equity ownership guidelines for Board members who are not executive officers, as well as expense
reimbursement policies;
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reviewing annually the directors' stock ownership levels to ensure compliance with our director target ownership policy; and
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monitoring annually the education of Board members on matters related to their service on the Board.
The
Nominating and Corporate Governance Committee met on six (6) occasions in 2018, and met nine (9) times in the last twelve months. During 2018 and into 2019, the
Committee continued to review potential candidates for Board seats in order to further enhance the Board's effectiveness, and two new directors were appointed during this period. Two new Chairs were
appointed as well as a new Lead Director. For further information on the Committee, please see "How Nominees to our Board are Selected" beginning on page 32.
Meetings of the Board of Directors
The Board of Directors has scheduled four regular meetings in 2019 and will hold special meetings when Company business requires. During 2018,
the Board held eight (8) meetings. Informational update calls are periodically conducted during the year. Each member of the Board attended more than 75% of all Board meetings and meetings of
committees of which he or she was a member.
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BOARD GOVERNANCE
Our Board operates within a strong set of governance principles and practices, including:
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Governance Practice
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Dollar Tree's Governance Policies and Actions
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All directors elected annually upon majority vote, except where contested
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YES
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Our Board is not classified, and in uncontested elections our directors are elected by the vote of a majority of the votes cast. See "Proposal No. 1-Election of Directors" on page 95.
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Independent Lead Director with robust powers
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YES
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When our Board Chairman is not independent, a Lead Director is elected from among the independent directors. Our Corporate Governance Guidelines enumerate the robust authority and responsibilities of the Lead Director
in managing Board matters. See "Board Leadership Structure" on page 23.
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Enhanced director stock ownership guidelines
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YES
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Increased the director stock ownership requirement so that each director must hold Dollar Tree stock worth no less than four times the annual cash retainer. See "Director Stock Holding Requirements" on
page 24.
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Enhanced shareholder engagement program
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YES
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We formalized our policy to facilitate shareholder access to senior management and independent directors. See "Engagement with Shareholders" on page 26.
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A strong corporate commitment to sustainability
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YES
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Dollar Tree has made a commitment to good corporate stewardship. We strongly support policies that benefit our customers, our associates, our communities and our environment. See "Sustainability" on
page 25.
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Thoughtful approaches to director tenure and board diversity
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YES
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We endeavor to include women and minority candidates in the pool from which Board nominees are chosen and to consider diverse directors for leadership positions on the Board. While directors have no term limit, the
Board finds benefit in having Board members represent an on-going mix of short-, medium- and longer-term tenures. See "Board Diversity" and "Board Tenure" on page 32 and page 33, respectively.
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Independence
Dollar Tree is committed to principles of good corporate governance and the independence of a majority of our Board of Directors from the
management of our Company. The following eleven directors have been determined by our Board to be independent directors within the applicable listing standards of the NASDAQ Stock Market throughout
2018 (or since Board appointment in the case of
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Mr. Dickson
and Ms. Wheeler): Arnold S. Barron, Gregory M. Bridgeford, Thomas W. Dickson, Conrad M. Hall, Lemuel E. Lewis, Jeffrey G. Naylor, Thomas A. Saunders III, Stephanie P. Stahl,
Carrie A. Wheeler, Thomas E. Whiddon and Carl P. Zeithaml.
All
members of our Audit Committee, our Compensation Committee and our Nominating and Corporate Governance Committee are independent under NASDAQ listing standards. Our Board has
reviewed the various relationships between members of our Board and the Company and has affirmatively determined that none of our directors or nominees has material relationships with Dollar Tree,
other than Messrs. Philbin and Sasser, who are members of management. See "Certain Relationships and Related Transactions" on page 87 for further information.
If
the slate of directors proposed to be elected at the 2019 annual meeting of shareholders is elected, all committees of our Board will continue to be comprised solely of independent
directors. The basis for an independence determination by our Board is either that the director has no business relationship other than his or her service on our Board, or that while a director may
have some involvement with a Company or firm with which we do business, our Board has determined that such involvement is not material and does not violate any part of the definition of "independent
director" under NASDAQ listing standards. None of our current executives sit on any of our committees.
At
the regular meetings of our Board of Directors, a private session, without management present, is conducted by the non-management members of our Board.
Board Leadership Structure
As we have successfully done in the past, our executive leadership succession plan calls for the former Chief Executive Officer to spend a
period as Chairman, supporting and guiding the new Chief Executive Officer. Because our Executive Chairman is thus not independent, our independent directors elect an independent Lead Director, as
required under our Corporate Governance Guidelines. Thomas Saunders held the position from 2007 until March 2019, when Gregory M. Bridgeford was elected by the independent directors. Under our
guidelines, the Lead Director has clearly defined and robust leadership authority and responsibilities, including:
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conferring regularly with the Chief Executive Officer and Executive Chairman;
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supporting a strong Board culture and encouraging director participation by fostering an environment of open dialogue and constructive feedback
among the directors and facilitating communication across Board committees and among the Executive Chairman, the Chief Executive Officer, the Board as a whole and Board committees;
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communicating feedback from the Board regarding the Chief Executive Officer's performance;
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setting the agenda for and presiding over executive sessions of solely independent directors, and with the power to call meetings of the
independent directors, with the expectation that the Lead Director will also coordinate feedback and follow-up as appropriate with the Executive Chairman and Chief Executive Officer, the chairpersons
of relevant Board committees and other directors, as appropriate, concerning matters discussed among the independent directors;
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advising the Executive Chairman and Chief Executive Officer as to the Board's information needs and work with the Executive Chairman and Chief
Executive Officer as needed to coordinate and provide direction, feedback, changes, input and approval regarding Board meeting agendas, schedules and materials in order to support Board deliberations
and enable sufficient time for discussion of all agenda items;
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assisting the Chief Executive Officer and Executive Chairman with issues that concern the Board;
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remaining well-informed about senior management and succession plans;
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facilitating director input and discussion regarding the Company's strategy, performance and risks to the business;
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facilitating as appropriate the responsibilities of the Board, the committees of the Board and senior management, and
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being available, consistent with the Shareholder Engagement Policy described beginning on page 26, for consultation and direct
communication with shareholders when appropriate.
After
careful consideration, the Board determined that its current leadership structure is the most appropriate for Dollar Tree and its shareholders. As part of the Company's ongoing
commitment to corporate governance, the Board periodically considers its leadership structure and the role of the Lead Director.
Director Stock Holding Requirements
In March 2019, the Board enhanced its stock ownership guidelines to require that each director should hold Dollar Tree stock worth no less than
four (4) times the annual cash retainer paid to directors, valued on the date such director acquired the stock. Vested stock or stock units beneficially owned by the director, including stock
or stock units held in the 2013 Director Deferred Compensation Plan, are counted in meeting the guidelines.
As
of April 2019, all of our directors owned shares in excess of the amount required by the new guidelines, with the exception of our newest members: Gregory M. Bridgeford, Thomas W.
Dickson, Jeffrey G. Naylor, Stephanie P. Stahl and Carrie A. Wheeler. Under our policy, each director has a grace period to meet the director stock holding requirements. Consistent with prior years,
despite the directors owning shares in excess of this guideline, a majority of the directors have consistently chosen to defer a meaningful portion of their annual cash retainer as shares of common
stock or as options, ranging from 60% to 100% of total compensation for participating directors during 2018.
Majority Voting in Uncontested Election of Directors
In 2015, the Board of Directors adopted amendments to our bylaws to implement a majority voting standard in uncontested director elections.
Consequently, a
director-nominee will be elected by a majority of votes cast in uncontested director elections and by the plurality in contested elections.
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In
addition, our Corporate Governance Guidelines also set forth our procedure if a director-nominee does not receive a majority of the votes cast in an uncontested election. Prior to an
election, each director-nominee submits a resignation letter, contingent upon such individual failing to receive more than 50% of the votes cast in an uncontested election. In such event, the
resignation would be considered by the Nominating and Corporate Governance Committee, which would recommend to the Board what action to take with respect to the resignation.
Board's Role in Risk Oversight
The Board of Directors is actively involved in overseeing enterprise risk, primarily through the assistance of its Audit Committee whose
charter requires that its members be knowledgeable of and inquire about risk related to the Company's business. The Company's Internal Audit Department conducts an annual investigation and evaluation
of enterprise risk, which focuses on areas that are essential to the successful operation of the Company, and reports its findings to the Audit Committee. The Audit Committee also engages in dialogue
and receives updates at or between its meetings from the Vice President of Internal Audit, the Chief Financial Officer, Chief Legal Officer and the Chief Executive Officer on matters related to risk.
The Audit Committee shares appropriate information with the Board, either at its next meeting or by other more immediate communication.
In
addition, to more effectively prevent, detect and respond to information security threats, the Company has a dedicated Chief Information Security Officer whose team is responsible
for leading enterprise-wide information security and risk mitigation. The Audit Committee and the Board receive regular reports on, among other things, the Company's cyber risks and threats, the
status of projects to strengthen the Company's information security systems, assessments of the Company's security program and the emerging threat landscape.
In
addition, the Company's Disclosure Committee meets at least quarterly and monitors internal controls over financial reporting and ensures that the Company's public filings contain
discussions about risks our business faces, all of which is reported to the Board. In addition to the Audit
Committee, other committees of the Board consider risk within their areas of responsibility. In setting executive compensation, the Compensation Committee considers risks that may be implicated by our
compensation programs and endeavors to set executive compensation at a level that creates incentives to achieve long-term shareholder value without encouraging excessive risk-taking to achieve
short-term results. The Nominating and Corporate Governance Committee annually reviews the Company's Corporate Governance Guidelines and their implementation. Each committee reports its findings to
the full Board.
Sustainability
Dollar Tree is committed to product safety and sustainability and continues to enhance its efforts in these areas. From its beginning over
thirty years ago, Dollar Tree has operated its business with integrity and concern for others. The Company is focused each day on promoting a welcoming and safe environment for its customers and its
associates. The principles that guide Dollar Tree are ingrained in its people and its operations. From the safety of the products it sells to its concern for the individuals who make them, Dollar Tree
strives to stay focused on these values.
Under
its charter, the Nominating and Corporate Governance Committee has the lead role in overseeing the Company's strategy on social responsibility and sustainability and develop and
recommend to the Board policies and procedures relating to the Company's corporate social responsibility and sustainability activities.
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Dollar
Tree audits its suppliers' factories overseas to assure compliance with labor, health and safety, human trafficking, discrimination and other legal requirements. Dollar Tree will
not do business with factories that do not respect basic human rights.
The
Company continues to make measurable improvements to its facilities and equipment to help protect and sustain the environment. We recycle materials, have converted to LED lighting
and use efficient transportation systems. Locally, we have worked on efforts to restore wetlands and protect our shorelines.
For
product safety, Dollar Tree utilizes independent and certified companies to test products that it imports to assure that they meet or exceed all regulatory, legal or industry
standards. It has one of the most robust testing programs for children's products, assuring that testing is done using random sample collection, often multiple times on each production run. Dollar
Tree utilizes the services of the WERCSmart® program by Underwriters Laboratory to help the Company manage ingredient formulations for chemical containing products purchased. The Company
has recently broadened and strengthened its efforts to eliminate chemicals of concern in its products by taking part in a program called the Chemical Footprint Project. This will allow the Company to
identify opportunities for improvement, measure its progress and reduce chemical risk.
Code of Ethics
Our Board has adopted a Code of Ethics for all our employees, officers and directors, including our Chief Executive Officer and senior
financial officers, which was recently reviewed and approved by the Board on December 6, 2018. A copy of this code may be viewed at our corporate website,
www.dollartreeinfo.com/investors/corporate. In addition, a printed copy of our Code of Ethics will be provided to any shareholder upon request submitted to the Corporate Secretary at the address on
page 91.
Engagement with Shareholders
Dollar Tree believes that effective corporate governance includes regular, constructive conversations with our shareholders. We strive for a
collaborative approach to shareholder outreach and value the variety of investors' perspectives received, which helps deepen our understanding of their interests and priorities. Throughout the year,
we seek opportunities to connect with our investors to gain and share valuable insights and receive feedback on the matters most important to them. The insights and feedback we receive is shared with
the Board and its relevant committees.
During
2018, we continued our outreach to shareholders to understand their views on issues important to them. The Vice President, Corporate Governance together with the office of the
Corporate Secretary leads this shareholder engagement process on matters of corporate governance, incorporating other executives and members of the Board where appropriate or as requested by
individual shareholders. We contacted holders of approximately 53% of outstanding shares to invite them into the process. A number of those we contacted indicated they did not feel an engagement call
was necessary in 2018, given their comfort with the evidence of the Board's
attentiveness and stewardship. Some shareholders indicated that while they appreciated the Company's outreach and valued the opportunity to engage, they did not feel there were issues with the
Company's governance or the Board's oversight which would necessitate their engagement annually.
Consistent
with that feedback, every director received shareholder support of at least 95.8% of votes cast at our 2018 annual meeting, and the advisory vote on our executive
compensation
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program
("Say on Pay") received support from 97.7% of votes cast. In our 2018 shareholder outreach, no shareholders expressed concerns about executive compensation.
To
further our commitment to shareholder engagement, in March 2019 the Board of Directors adopted an enhanced Shareholder Engagement Policy. The Board believes that fostering long-term,
open and institution-wide relationships with shareholders and maintaining their trust and goodwill is a core objective of our shareholder outreach program. Under the policy, our senior executive
officers and the investor relations department are primarily responsible for our communications and engagement with shareholders and the investment community. Management is responsible for promptly
reporting to the Board all material shareholder comments and feedback it receives.
Our
Corporate Secretary and our Vice President, Corporate Governance serve as liaisons with our shareholders on governance matters. We authorized these positions to provide a more
direct channel for communications with shareholders, to ensure an open dialogue on an ongoing basis and to promote increased understanding of industry standards for best practices in corporate
governance as they evolve.
Although
shareholder outreach is primarily a function of management, our Board also believes that in appropriate cases, Board-level participation in dialogue with shareholders on
matters of significance can be an effective means of promoting mutual understanding and enabling the Board to be informed as to shareholder perspectives. In addition to the engagement that is expected
to occur by the Chief Executive Officer and the Executive Chairman, the Board expects that the Lead Director will generally be the primary independent director who would participate in such
discussions, with the understanding that on certain matters, the Chairs of relevant Board committees or in certain cases other directors may also be asked by the Executive Chairman, the Lead Director
or the Board to participate. Accordingly, directors may also from time to time participate in an organized and coordinated manner with management in one-on-one meetings or investor events to elicit
shareholder views.
Shareholders
may direct a request for a meeting with independent directors to the attention of the Lead Director who will consider such request, in consultation with the Corporate
Secretary. The request should:
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Explain whether the person(s) making the request is (are) a shareholder or a representative of the Company's shareholders and the level of
shareholdings held or represented;
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Identify the persons wishing to attend the meeting;
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Provide a description of the topics to be discussed; and
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Describe any intention or arrangements for communicating the nature and results of the meeting to other persons, recognizing that private,
constructive dialogues are most conducive to productive discussion.
The
Board has the right to decline requests for any meetings requested by shareholders for any reason it deems appropriate, including where the proposed topics are not appropriate and
in order to limit the number of such meeting requests to a reasonable level and prioritize acceptances based on the interests of all shareholders.
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Where
a meeting request is granted, the Corporate Secretary will either directly contact the person(s) making the request to confirm arrangements for the meeting or be informed of the
arrangements by the Lead Director of the Board. The Company's Chief Legal Officer or the Investor Relations Department may be asked to attend the meeting in order to confirm compliance with the
Company's obligations respecting fair disclosure and the maintenance and assessment of disclosure controls and procedures. In certain cases, directors (and management) may adopt primarily a
"listen-only" approach at meetings, and shareholders should recognize that in addition to Board input, the input of management will often be sought as to matters discussed with shareholders.
COMMUNICATING WITH OUR BOARD MEMBERS
Our shareholders may communicate directly with our Board of Directors. You may contact any member of our Board, any Board
committee or any chair of any such committee by mail. To do so, correspondence may be addressed to any individual director, the non-management directors as a group, any Board committee or any
committee chair by either name or title. Shareholders should direct a request for a meeting with independent directors to the attention of the Lead Director. All such mailings are to be sent in care
of "Corporate Secretary" at our corporate headquarters address, which is 500 Volvo Parkway, Chesapeake, VA 23320. To communicate with our directors electronically, emails may be sent to
CorpSecy@DollarTree.com.
Mail
received as set forth in the preceding paragraph may be examined by the Corporate Secretary for security purposes and for the purpose of determining whether the contents actually
represent messages from shareholders to our directors. Depending upon the facts and circumstances outlined in the correspondence, the Corporate Secretary will forward the communication to the Board,
or any director or directors, provided that the contents are not in the nature of advertising, promotions of a product or service, or patently offensive material.
In
addition, any person who desires to communicate financial reporting or accounting matters specifically to our Audit Committee may contact the Audit Committee by addressing a letter
to the Chair of the Audit Committee at our corporate headquarters address, noted above, or electronically to AuditChair@DollarTree.com. Communications to our Audit Committee may be submitted
anonymously, if sent by mail, addressed to the Audit Committee Chair. All correspondence will be examined by the Corporate Secretary and/or Internal Audit from the standpoint of security and depending
upon the facts and circumstances outlined in the correspondence, the communications will be forwarded to our Audit Committee or Audit Committee Chair for review and follow-up action as deemed
appropriate.
We
expect each of our directors to attend the annual meeting of our shareholders. All of the then incumbent directors were in attendance at the 2018 annual meeting of our shareholders.
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Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee is a former officer of Dollar Tree or any of our subsidiaries. In addition, none of the
members of the Compensation Committee has or had any relationship with the Company during fiscal 2018 that requires disclosure in accordance with the applicable rules of the Securities and Exchange
Commission relating to compensation committee interlocks and insider participation.
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COMPENSATION DISCUSSION AND ANALYSIS
The following Compensation Discussion and Analysis ("CD&A") describes our executive compensation program and philosophy, our
compensation-setting process, the elements of our executive compensation program, the compensation decisions made in 2018 and certain changes we have made to our compensation program for 2019. This
CD&A should be read together with the compensation tables and related disclosures that immediately follow, which provide further historical compensation information for our Named Executive Officers
("NEOs") as identified below.
Named Executive Officers
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Name
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Title
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Gary Philbin
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President and Chief Executive Officer
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Kevin Wampler
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Chief Financial Officer
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Bob Sasser
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Executive Chairman
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Duncan Mac Naughton
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President, Family Dollar Stores
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Michael Witynski
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President and COO, Dollar Tree Stores
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Executive Summary
Highlights for Fiscal Year 2018
Dollar Tree is North America's leading operator of discount variety stores, operating more than 15,000 discount variety retail stores under the
names of Dollar Tree, Family Dollar and Dollar Tree Canada. Highlights for fiscal 2018 include:
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Consolidated net sales for the 52-week fiscal 2018 increased 2.6% to $22.82 billion from
$22.25 billion in the 53-week fiscal 2017. Excluding $406.6 million of sales from the prior year's 53rd week, consolidated net sales increased 4.5%. Enterprise same-store sales
increased 1.7%. Same-store sales for the Dollar Tree banner increased 3.3%. Same-store sales for the Family Dollar banner increased 0.1%.
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Adjusted operating income targets for fiscal 2018 were $2,063.3 million for the combined
enterprise, $1,471.0 million for the Dollar Tree US banner and $587.0 million for the Family Dollar banner. For 2018, the enterprise achieved 87.29% of its adjusted operating income
target, the Dollar Tree US banner achieved 99.2% of its target and the Family Dollar banner achieved 56.87% of its target. For a description of the adjustments to GAAP operating income that were used
by the Company for purposes of the 2018 performance targets, please see page 57 below.
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The Company opened 546 new stores during fiscal 2018, ending the fiscal year with 15,237 stores.
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Nearly all systems, functions and departments at Family Dollar and Dollar Tree were substantially
integrated in fiscal 2018, with the exceptions of merchandising, store operations and loss prevention, resulting in annual savings to date exceeding $50.0 million.
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The Company substantially completed the development and testing in 2018 of its new H2 store
optimization model for both new and renovated Family Dollar stores, which in test stores produced increased traffic, provided an average comparable store sales lift in excess of 10% over control
stores and significantly improved merchandise offerings, including Dollar Tree $1.00 merchandise sections, throughout the stores. The Company plans to renovate at least 1,000 Family Dollar stores to
the new H2 model in fiscal 2019.
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The Company began the consolidation of store support centers in Matthews, North Carolina and
Chesapeake, Virginia to optimize operational efficiencies, an initiative that is expected to be completed in the middle of 2019. The Company utilizes a shared services model, leveraging its back
office functions to support both the Dollar Tree and Family Dollar banners.
To
continue our success going forward, it is critical that we motivate and retain our highly talented executive team to execute our corporate strategic vision, business
plans and initiatives. To do so, our Compensation Committee has thoughtfully developed incentive programs to reward executives for superior performance versus goals that align the interests of
executives with the interests of our long-term shareholders.
Compensation Best Practices
We seek to align our executives' interests with those of our long-term shareholders and to follow sound corporate governance practices.
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Compensation Practice
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Dollar Tree's Compensation Policies and Actions
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Pay for Performance
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YES
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A significant portion of targeted direct compensation is linked to the financial performance of key metrics. Approximately 87% of our Chief Executive Officer's pay in 2018 was variable and at risk. In 2019, we changed
the performance metric of our LTPP awards from adjusted operating income to adjusted EBITDA to provide a second performance metric, and increased the performance thresholds for vesting of our long-term incentive awards. We also revised our annual
incentive bonus program to increase the corporate performance component from 85% to 100%. As a result, beginning in 2019, 100% of our annual bonus compensation and equity incentive compensation is based on corporate performance. See "Compensation
Updates for 2019" "Target Pay Mix" and "Alignment of Pay for Performance."
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Compensation Practice
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Dollar Tree's Compensation Policies and Actions
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Clawback policy
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YES
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In 2018, the Board adopted a more robust clawback policy that requires mandatory reimbursement of excess incentive compensation from any executive officer if the Company's financial statements are restated due to
material noncompliance with financial reporting requirements under the securities laws. This policy is in addition to our existing clawback policy covering the Company's Chief Executive Officer and Chief Financial Officer under the Omnibus Incentive
Plan. See "Recoupment ("Clawback") Policy."
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Robust stock ownership guidelines
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YES
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Our executive stock ownership guidelines were revised in 2017 to increase the number of shares to be held by executives so as to create further alignment with shareholders' long-term interests. See "Executive Stock
Ownership Guidelines."
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No hedging or pledging of Dollar Tree securities or holding Dollar Tree securities in margin accounts
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YES
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Our policy prohibits executive officers and Board members from hedging their ownership of our stock and holding our stock in a margin account. None of our executive officers and directors engaged in transactions
involving the pledging of Company stock during fiscal 2018. See "Policy Against Hedging of Company Stock" and "No Pledges of Company Stock."
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No excise tax gross-ups
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YES
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We do not provide excise tax gross-up payments.
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Double-trigger provisions
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YES
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Equity awards under our equity incentive plan and all change in control Retention Agreements with executive officers include a "double-trigger" vesting provision upon a change in control. See "Termination or Change in
Control Arrangements."
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No repricing or cash buyout of underwater stock options without shareholder approval
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YES
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Our equity incentive plan prohibits modifications to stock options and stock appreciation rights to reduce the exercise price of the awards, or replacing awards with cash or another award type, without shareholder
approval.
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Compensation Updates for 2019
In March 2019, the Compensation Committee approved changes to our annual and long-term incentive compensation program for executive officers,
including our NEOs. As described below, the Committee eliminated the consideration of individual performance goals for purposes of our annual cash bonus incentive awards, increased the performance
metric thresholds for vesting of long-term awards and began the use of two performance metrics, adjusted operating income and adjusted EBITDA, for long-term awards.
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2018 Performance Program
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2019 Changes
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Annual Cash Bonus Incentives
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Annual cash bonus
dependent on achievement of at least 85% of the corporate adjusted operating income target with a steep performance payout curve
Bonuses weighted 85% to adjusted operating income target and 15% to
individual performance goals
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Based on feedback from shareholders, we eliminated the individual performance component for purposes of calculating the annual bonus; bonuses are now weighted 100% on a corporate adjusted operating
income target in order to completely align the cash bonus of our named executive officers with an objective measure of Company performance
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Performance-Based Restricted Stock Unit Awards (RSUs and PSUs)
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Performance-based
restricted stock units ("RSUs") vest after first year achievement of at least 80% of adjusted operating income target, with time-based vesting of one-third of the award on the first three anniversaries of the grant date
Amount of payout does not vary providing the target is met
RSUs settled in stock
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The minimum level of adjusted operating income performance required to earn a payout was raised from 80% to 85%; if performance does not reach 85%, there is no payout
The adjusted operating income performance that can earn a payout ranges from 85% up to a maximum of
115%
In order to increase the at-risk elements of the award, the percentage of a targeted
award that may be earned by an executive ranges from 75% of the award for performance of 85% up to a cap of 150% of the award for performance of 115%
The purpose of the change was to decrease compensation if 100% of the target was not met, but provide an incentive by increasing compensation if more than
100% of the target was achieved
Awards are
designated as performance stock units ("PSUs") and settled in stock
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2018 Performance Program
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2019 Changes
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Long-Term Performance Plan Awards ("LTPP")
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Performance-based vesting
on three-year cumulative achievement of at least 83% of target adjusted operating income
The percentage of a targeted award that may be earned by an executive
ranges from 25% of the award for performance of 83% of target adjusted operating income up to a cap of 200% of the award for performance of 125% of target adjusted operating income
Award is paid 50%
in cash and 50% in grant date RSUs settled in stock
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Based on comments we received from shareholders, we changed the performance metric for LTPP awards from adjusted operating income to adjusted EBITDA to give us a second performance metric; we also
believe that adjusted EBITDA can be forecast more fairly over a three year period than adjusted operating income
The minimum level of three year cumulative performance required to earn a payout was raised to 85%
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Note: To evaluate performance in a manner consistent with how management evaluates our operating results, the financial metrics in our annual and long-term incentive plans are measured on a non-GAAP basis.
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March 2019, the Compensation Committee also determined that, notwithstanding Mr. Sasser's continued responsibilities as Executive Chairman, a reduction in Mr. Sasser's
compensation for 2019 would be appropriate. This reduction in compensation was made in accordance with the Compensation Committee's longstanding transition plan. As a result, Mr. Sasser's base
salary will decrease from $1.7 million in 2018 to $1.0 million in 2019, and he will no longer participate in our annual incentive bonus plan or receive LTPP incentive awards.
Mr. Sasser will continue to receive a performance-based RSU award (now called "PSU"), but the target amount to be earned will decrease from $7.0 million in 2018 to $5.5 million in
2019. Mr. Sasser's total target compensation decreased 48.3% as a result of the changes described above. For additional information on Mr. Sasser's role, responsibilities and
compensation, please see "Executive Compensation Principles."
2018 Executive Compensation Overview
We are committed to an executive compensation program that ties pay to performance. The program is also designed to focus executives on the
long-term growth and profitability of our business, without encouraging excessive risk-taking. A significant portion of pay is performance-based and therefore, variable and at risk. In determining the
components of compensation, we seek to appropriately balance fixed and variable, short- and long-term and cash and equity components of the program, and to mitigate risks in the program with stock
ownership guidelines that apply to our executive officers. Our compensation program is designed to reward our executive officers for achieving performance goals, which included both Company and
individual goals in 2018. When we do not achieve the performance goals, our executive officers' compensation reflects that performance.
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Key 2018 Compensation Decisions
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Base Salaries
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The Compensation Committee made adjustments to base salaries based on various factors, including job performance and the salaries of executives in similar positions at peer companies.
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Annual Cash Incentive Bonus Opportunity
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There were no changes in the percentage of base salary that represented the target annual incentive opportunity for the Chief Executive Officer and the NEOs. The target
percentages were set based on external and internal factors applicable to the new positions held by these individuals, among other things.
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Annual Cash Incentive Performance Goals
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There was a rigorous process to set corporate performance goals for the combined enterprise, the Dollar Tree US banner and the Family Dollar banner. Corporate performance accounted for 85% of the annual incentive performance goals; individual
performance goals accounted for the remaining 15%. The program had a threshold performance level of 85% of the applicable target level of adjusted operating income, which must be met or exceeded in order for any payout to be earned, with a maximum
performance level of 115% of target.
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Annual Cash Incentive Payouts
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In 2018, the Company achieved enterprise adjusted operating income of $1,801.0 million, which was 87.29% of the target amount; the Dollar Tree banner achieved
adjusted operating income of $1,459.3 million, which was 99.2% of the target amount; and the Family Dollar banner achieved adjusted operating income of $333.8 million, which was 56.87% of the target amount. This resulted in payouts of
36.44% of the target amount to the executive officers of the combined enterprise, 96.01% of the target amount to the executive officers of the Dollar Tree banner and 0% of the target amount to the executive officers of the Family Dollar
banner.
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Long-Term Incentives
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Performance-based RSUs were granted, as well as grants of RSUs and cash under the 2018-2020 LTPP. The performance metric was adjusted operating income for both types of award.
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2016-2018 LTPP Payout
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Based on the Company's three-year adjusted operating income goal from 2016 to 2018, the Company achieved adjusted operating income of $5,540.3 million, which was
95.94% of the target amount. This resulted in a payout of 71.0% of the target amount to our named executive officers.
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Proration of LTPP Awards Upon Retirement
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The provisions of LTPP awards have been changed to provide for forfeiture of an award upon the retirement of an executive if the executive has worked less than 12 months of the three-year performance period. If an executive retires after
working 12 months or more of the performance period, the awards are prorated based on the number of months of service. Previously, the LTPP awards had not been prorated.
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Target Pay Mix
Consistent with our desire to align pay and performance, our Compensation Committee takes our primary pay elements (base salary, annual
incentives and long-term incentives) and develops a target pay package for each executive that is more heavily weighted towards variable or at-risk pay. Although our Compensation Committee does not
target a specific allocation for each pay element, the Committee is nevertheless cognizant of delivering an appropriate balance between fixed and variable elements, as well as short- and long-term
incentives, as evidenced here in the following 2018 target pay mix allocation charts:
Compensation Governance
Our pay-for-performance philosophy and compensation practices provide an appropriate framework for our executives to achieve our financial and
strategic goals without encouraging them to take excessive risks in their business decisions. Some of our core practices include:
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Alignment of Pay and Performance
Our compensation program is grounded in a pay-for-performance philosophy. Performance goals in both our short- and long-term incentive plans
are set at challenging levels, with the ultimate goal that achievement will drive long-term, sustainable shareholder value growth. When financial targets and performance goals are not met, pay
outcomes for our executives should reflect this reality.
Our
analysis of the link between pay and performance indicates that when performance goes up, pay rises. Conversely, when performance goals are not achieved, pay declines. While there
are certainly other factors to consider, including a lag effect due to the timing of award grants, a
snapshot of our Chief Executive Officer's pay (as reported in the Summary Compensation Table) over the past five years is indicative of this directional pay and performance alignment.
Note:
Due to the Chief Executive Officer transition in September 2017, total pay for the two Chief Executive Officers was prorated and summed based on days serving as CEO during the fiscal year.
Say on Pay Votes
At our 2018 annual shareholders' meeting, our annual non-binding advisory vote on executive compensation was overwhelmingly approved by our
shareholders, receiving approximately 98% support. The Compensation Committee reviewed these final vote results, which we believe reinforce shareholder support for our pay for performance philosophy
and the appropriateness of our compensation structure. The Compensation Committee determined that the structure of our executive compensation program continues to be appropriately aligned to the
achievement of Company goals and objectives and in the best interests of our shareholders.
The
Compensation Committee regularly reviews the executive compensation program to determine if adjustments are needed to remain competitive and aligned with our shareholders'
interests. Further, the Compensation Committee and management recognize the value of engaging in a dialogue with our shareholders and receiving feedback on an ongoing basis to ensure alignment between
our executive officers' compensation, our business objectives and the interests of our shareholders. In 2018, we contacted holders of approximately 53% of our outstanding shares concerning executive
compensation or governance matters to invite them into the process.
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In
response to feedback received from our shareholders in 2018, the Compensation Committee approved the use of an additional performance metric for our incentive plans in March 2019.
The performance metric for the LTPP was changed from adjusted operating income to adjusted EBITDA while we continue to use adjusted operating income as the performance metric for annual cash incentive
bonus and non-LTPP performance awards. We also eliminated the individual performance component of the annual cash incentive bonus calculation, which is now based 100% on adjusted operating income as a
performance metric. In addition, we increased the thresholds for vesting of our LTPP and non-LTPP awards to 85% of the applicable target performance goal.
Executive Compensation Setting Process
Our Compensation Program Philosophy and Objectives
The Compensation Committee has adopted a pay-for-performance policy for executive officers that balances each executive's total compensation
between cash and non-cash, and current and long-term, components. The principal objectives of our compensation policies are to:
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align executive pay with shareholders' interests with a dominant pay-for-performance design;
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provide executive pay that is competitive among our peer group;
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recognize and reward achievement of corporate performance goals;
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attract, motivate and retain highly qualified executives; and
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unite the executive management team to a common objective.
The
Compensation Committee begins its work each year with the determination of the peer group. The goal is to select as many as 20 public retailers with revenues, market capitalization
and qualitative factors similar to Dollar Tree. When we are unable to identify a sufficient number of retailers that satisfy our requirements, we expand our pool to include retail-related public
companies. For example, in 2018 Sysco Corporation and Aramark Corporation were included in the peer group as retail-related public companies.
Although
the Compensation Committee does not mandate a specific percentile of the peer group for total direct compensation of any executive, to ensure our compensation is competitive
among our peer group, we use the 50th percentile as a point of reference in setting total direct compensation. To align pay with shareholder interests, we target the Chief Executive Officer's
at-risk compensation to be more than 85% of his total compensation (87% in 2018), and the other named executive officer's at more than 80% (81% in 2018). To further align compensation with long-term
shareholder value, we also believe that the Chief Executive Officer's long-term incentive compensation should be a substantial majority of his total at-risk pool (69% of total compensation in 2018),
and a slightly higher percentage than the other named executive officers (63% of total compensation in 2018).
To
unite the executive management team in pursuit of a common objective, we chose to use adjusted operating income in 2018 as the performance metric for at-risk compensation. We have
used other metrics in the past, but believe that adjusted operating income is the best objective metric to align performance with shareholder value.
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We
believe that the adjusted operating income goal for the cash bonus and RSU (now PSU) grant should be difficult but not impossible to achieve. For example, in 2018, a strong
performance year, the Dollar Tree US banner achieved 99.2% of its adjusted operating income target for a 96.01% of target payout for our annual cash bonus awards. The Family Dollar banner did not
achieve 85% of its adjusted operating income target, which was the threshold to earn a bonus, so its payout was 0.00%. The enterprise (which is both banners) achieved 87.29% of its target adjusted
operating income so the payout was 36.44%. Because it is much more difficult to forecast the performance of a retailer over three years because of factors beyond management's control (the economy,
weather, trade wars, etc.), we try to set the three-year adjusted operating income target for our LTPP awards at a more realistic level. We also believe that the pay and performance curve for the
annual cash bonus and LTPP awards should be relatively steep, giving the executives meaningful downside risk and upside benefit if performance falls short of or exceeds the target. This approach again
aligns the executive's pay with shareholder return. In 2019, we adopted this approach for the PSU grant as well.
Use of Peer Group
The Compensation Committee, with the assistance of Aon Consulting, Inc. ("Aon Consulting"), approved a new peer group of 19 companies
that we believe are similarly situated to Dollar Tree and are representative of the markets in which we compete for executive talent.
The
peer group was developed based primarily upon Dollar Tree's industry and size. Revenue growth and market capitalization were selected as the appropriate size filters. The Committee
also considered qualitative factors such as retail presence, price points and/or customer base. Aon Consulting assisted the Compensation Committee with identifying executive positions comparable to
those of our named executive officers and providing the Committee with benchmarking data for both total direct compensation and each element of total direct compensation within the peer group. This
analysis provided the Committee with a perspective on Dollar Tree's pay-for-performance relationship relative to its peers.
Using
these criteria, the Compensation Committee determined that 17 companies from the 2017 peer group would continue to be included in the 2018 peer group. Two companies,
Staples, Inc. and YUM! Brands, Inc., were removed from the peer group because Staples is no longer a public company for which reliable compensation information is available and YUM!
Brands did not meet the Committee's revenue criteria. The two companies removed from the peer group were replaced with Aramark, a global provider of food, facilities and uniform services to clients in
various industries, and Tractor Supply Company, a large rural lifestyle retailer in the United States,
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following
a review of the annual revenue, market capitalization and qualitative factors of each company. As a result, the following 19 companies constituted our peer group for 2018:
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Aramark Corporation
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Macy's Inc.
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Bed Bath & Beyond, Inc.
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McDonalds Corporation
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Best Buy Co. Inc.
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Nordstrom, Inc.
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CarMax, Inc.
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Rite Aid Corporation
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Dollar General Corporation
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Ross Stores, Inc.
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Gap, Inc.
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Starbucks Corporation
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Genuine Parts Company
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Sysco Corporation
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Kohl's Corporation
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TJX Companies, Inc.
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L Brands, Inc.
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Tractor Supply Company
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Lowe's Companies, Inc.
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The
Committee does not target a specific market data percentile for total direct compensation or individual components of compensation but rather reviews data from the peer group
companies as a point of reference to help ensure that our overall compensation remains competitive.
Executive Compensation Principles
We selected the components of compensation to achieve our stated executive compensation objectives. Our executive compensation program consists
of base salaries, annual cash incentives and long-term incentives generally in the form of cash and RSUs. These components of executive compensation are used together to strike an appropriate balance
between cash and stock compensation and between short-term and long-term incentives. We expect a significant portion of an executive's total compensation to be at risk, tied both to our annual and
long-term performance as well as to the creation of sustainable shareholder value. In particular, we believe that both short-term and long-term incentive compensation should be tied directly to the
achievement of corporate performance goals. In addition, we believe that long-term incentive compensation should reward an executive for his or her contribution to our long-term corporate performance
and shareholder value creation. Under our policy, performance above the targeted goal results in increased total compensation, and performance below the targeted goal results in decreased total
compensation.
We
differentiate compensation to executives based on the principle that total compensation should be commensurate with an executive's position and responsibility, while at the same
time, a greater percentage of total compensation should be tied to corporate performance, and therefore be at risk, as position and responsibility increases. Thus, executives with greater roles and
responsibilities associated with achieving our performance targets should bear a greater proportion of the risk if those goals are not achieved and should receive a greater proportion of the reward if
our performance targets are met or surpassed. In addition, as an executive's position and responsibility increase, the use of long-term incentive compensation should increase as a percentage of total
compensation because our senior executives have the greatest influence on our strategic performance over time.
50
Table of Contents
The
compensation of our named executive officers in 2018 was based on the application of the executive compensation principles described above in light of their respective roles and
responsibilities in the Company. The compensation of our President and Chief Executive Officer, Mr. Philbin, is based on his primary responsibility as the principal executive officer overseeing
the business, management and operations of the Company. Mr. Philbin has a unique role as primary architect of the Company's strategic vision and is responsible for the planning and
implementation of the Company's strategic and operational initiatives and goals.
Mr. Sasser
serves as our Executive Chairman with primary responsibilities for Board leadership and engagement with our management team. As the former Chief Executive Officer of
the Company, Mr. Sasser is uniquely qualified to serve in these capacities. Mr. Sasser's Board leadership responsibilities include, among other things, mentoring the Chief Executive
Officer, developing the new store support center and assisting in integration, overseeing the general functioning of the Board and its committees, assessing the composition of the Board, recruiting
potential candidates for the Board as necessary, consulting regularly with the Lead Director to discuss matters that concern the Board, leading the Board's annual review of the Company's business
strategy, financial plans and capital resources, and leading the Board's role in succession planning for executive officers.
Mr. Sasser's
management responsibilities include providing advice and support to the President and Chief Executive Officer on critical Company initiatives and shareholder
communications, the perpetuation of the Company's successful business culture and the maintenance of market and customer relevance through development of long-term strategic plans. In addition,
Mr. Sasser is responsible for challenging and holding management accountable, as appropriate, and transferring his institutional knowledge and principles to the organization. As liaison between
the Board and management, Mr. Sasser is responsible for providing opportunities for the Board and management to engage in open discussions of strategic initiatives, opportunities and industry
outlook, for ensuring that management understands and carries out the Board's decisions and for helping the Board remain connected to the individual managers who are executing the Company's business
plans.
As
Executive Chairman, Mr. Sasser does not receive director compensation for carrying out his duties under the Company's bylaws. Such duties include presiding at meetings of the
shareholders and of the Board of Directors, managing the business and affairs of the Company as directed from time to time by the Board of Directors and seeing that all orders and resolutions of the
Board are carried into effect.
In
2018, in comparison to our other executive officers, our President and Chief Executive Officer and Executive Chairman received higher base salaries, higher annual bonus incentives
and higher
long-term equity incentives as a result of their greater authority, responsibility and oversight. As noted above, Mr. Sasser's compensation has been significantly reduced for 2019 in light of
his changing role at the Company.
Role of the Compensation Committee
The Compensation Committee consists entirely of non-employee, independent members of our Board of Directors and operates under a written
charter approved by the Board. The Compensation Committee has the direct responsibility to review and determine the compensation of all named executive officers, including the determination of
performance metrics and goals and the achievement of performance goals.
51
Table of Contents
The
Compensation Committee considers shareholder feedback and other factors as it seeks to align the objectives and operation of our executive compensation program with the interests of
our shareholders. The Compensation Committee has historically consulted, and expects to continue to consult, with the Chief Executive Officer and senior management, as well as an independent external
compensation consultant retained by the Compensation Committee when deemed appropriate, in the exercise of its duties. Notwithstanding such consultation, the Compensation Committee retains absolute
discretion over all compensation decisions with respect to the named executive officers.
In
determining the compensation of our executive officers, the Compensation Committee evaluates total overall compensation, as well as the mix of salary, cash bonus incentives and
equity incentives, using a number of factors including:
-
-
our financial and operating performance, measured by attainment of specific strategic objectives and operating results;
-
-
the compensation practices of our peer group; and
-
-
our historical cash and equity compensation levels.
Role of the Chief Executive Officer in Compensation Decision-Making
In general, at the Compensation Committee's request, our Chief Executive Officer may review and recommend to the Compensation Committee or its
consultants the compensation structure and awards for the other named executive officers. The Chief Executive Officer participates in the development of business plans and annual budgets, and
corresponding performance metric goals. The Chief Executive Officer also provides information to the Compensation Committee and its consultants regarding the job performance and overall
responsibilities of the other named executive officers. He makes no recommendations concerning his own compensation to the Compensation Committee or its consultants. The Chief Executive Officer does
not vote on executive compensation matters nor is he present when his compensation is being discussed or approved.
Role of the Compensation Consultant
Pursuant to its written Charter, the Compensation Committee has the authority to engage the services of outside independent advisers. Aon
Consulting was retained beginning in the spring of 2010 to assist the Compensation Committee in determining the appropriateness and competitiveness of our executive compensation program. The
Compensation Committee continues to engage Aon Consulting on an ad hoc basis for executive compensation consulting services. No executive officer had the authority to direct the work of Aon Consulting
with regards to its work with the Compensation Committee. The Compensation Committee bears ultimate responsibility for approving the compensation of all named executive officers.
In
fiscal 2018, the Compensation Committee engaged Aon Consulting to provide executive compensation consulting services. The Company paid $81,460 to Aon Consulting for these services.
With respect to additional services, Aon Risk Services, Inc. ("Aon Risk"), an affiliate of Aon Consulting, provided insurance brokerage services to the Company for which it received
commissions. The Company paid $1,376,898 for the insurance brokerage services in fiscal 2018.
The
decision to engage Aon Risk for these additional services to the Company was made by management and the approval of the Compensation Committee or Board of Directors was not
52
Table of Contents
required
or requested. However, the Compensation Committee has reviewed its relationship with the consultant, taking into consideration the six independence factors set forth in Rule 10C-1
under the Securities Exchange Act of 1934. The Committee also reviewed the internal guidelines adopted by Aon Consulting to guard against any potential conflict of interest and ensure its consultants
provide only independent advice, regardless of fees paid to the firm. Based on its review, the Compensation Committee has identified no conflicts of interest and believes the additional services
provided to management by Aon Risk do not impair the objectivity of the advice rendered by Aon Consulting to the Compensation Committee on executive compensation matters.
Assessment of Risk
The Compensation Committee has responsibility for establishing our compensation philosophy and objectives, determining the structure,
components and other elements of our programs and reviewing and approving the compensation of our NEOs. In addition, an important objective of our overall executive compensation program is to reduce
any incentives that may influence executives to take imprudent risks that might harm the Company or our shareholders. At least annually, the Compensation Committee assesses the risk of our
compensation program. The Compensation Committee has overseen the establishment of a number of controls that address compensation-related risk and serve to mitigate such risk, including stock
ownership guidelines for executive officers and maintaining prohibitions on the hedging of Dollar Tree stock or holding Company stock in a margin account. As a result, we have reviewed our
compensation policies and practices for all employees and concluded that such policies and practices are not reasonably likely to have a material adverse effect on our Company.
Components of Executive Compensation
The executive compensation program consists of three principal components: base salary, annual cash bonus incentives and
long-term incentives. The Compensation Committee considers these components individually and reviews the overall distribution between them but does not target specific allocation percentages or
amounts.
|
|
|
|
|
Element
|
|
Term
|
|
Strategic Role
|
|
|
|
|
|
Base Salary
|
|
Short Term
|
|
Helps attract and retain
executives through market-competitive base pay
Based on individual performance,
experience and scope of responsibility
|
|
|
|
|
|
Annual Cash Bonus Incentive
|
|
Short Term (cash)
|
|
Encourages achievement of
short-term strategic and financial performance metrics that create shareholder value
In 2018, cash bonus incentives
were based 85% on adjusted operating income goals and 15% on individual performance; in 2019, cash bonus incentives are based 100% on adjusted operating income goals
|
|
|
|
|
|
Long-Term Incentive Awards
|
|
Long Term (equity and cash)
|
|
Aligns executives'
interests with those of shareholders
Motivates executives to deliver
long-term sustained performance
Creates a retention incentive
through multi-year vesting and robust stock ownership guidelines
In 2018, long-term awards
consisted of performance-based RSUs and cash awards and were 100% based on Company performance goals
|
53
Table of Contents
In addition, we also provide our executives with the benefits that are commonly available to our full-time associates, including participation in our
retirement
savings plan, employee stock purchase plan, health, dental and vision plans and various insurance plans, including disability and life insurance.
Base Salary
Our base salary philosophy is to provide reasonable current income to our named executive officers in amounts that will attract and retain
individuals with a broad, proven track record of performance. To accomplish this objective, we provide base salaries that are intended to be competitive relative to similar positions at comparable
companies. Base salaries are reviewed
annually and adjustments are made as required to recognize outstanding individual performance, expanded duties or changes in the competitive marketplace.
The
Compensation Committee, with the assistance of Aon Consulting, determined during its March 2018 meeting that certain of our named executive officers would receive annual base salary
increases in order to keep salaries at competitive levels. In determining the base salaries for 2018, the Compensation Committee reviewed market data from its peer group, Aon Consulting's data on
salary increases for executives and other relevant internal factors such as individual performance and internal pay equity.
|
|
|
|
|
|
|
Executive
|
|
2017
Base Salary
|
|
2018
Base Salary
|
|
Year over Year
Change
|
Gary Philbin
|
|
$1,400,000
|
*
|
$1,400,000
|
|
0%
|
Kevin Wampler
|
|
$750,000
|
|
$800,000
|
|
6.6%
|
Bob Sasser
|
|
$1,700,000
|
|
$1,700,000
|
|
0%
|
Duncan Mac Naughton
|
|
$1,000,000
|
|
$1,050,000
|
|
5%
|
Michael Witynski
|
|
$600,000
|
|
$700,000
|
|
16.7%
|
*Reflects Mr. Philbin's base salary upon his appointment as Chief Executive Officer.
Annual Cash Bonus Incentives
We provide our executive officers, including the named executive officers, with the opportunity to annually earn cash incentives under the
Management Incentive Compensation Plan ("MICP"). These incentives are designed to encourage the achievement of corporate and individual objectives and to reward those individuals who significantly
impact our corporate results.
54
Table of Contents
Executive bonus opportunities are set as a percentage of salary. For 2018, the executive bonus opportunities were as follows:
|
|
|
|
|
|
|
Executive
|
|
Bonus Incentive
Opportunity
(as a % of base salary)
|
|
Gary Philbin
|
|
|
140
|
%
|
|
Kevin Wampler
|
|
|
70
|
%
|
|
Bob Sasser
|
|
|
140
|
%
|
|
Duncan Mac Naughton
|
|
|
100
|
%
|
|
Michael Witynski
|
|
|
100
|
%
|
|
At
the executive level, annual incentives are weighted more heavily toward the achievement of corporate performance measures, thereby more closely aligning executives' interests with
the interests of shareholders. The 2018 incentive targets, as in prior years, were set using the market data provided from the peer group and our assessment of appropriate targets within our
management structure.
The
Company performance goals are generally derived from operating income targets defined by the annual budget as approved by the Board of Directors at the beginning of the fiscal year.
Thus, these performance goals are consistent with the Board's overall outlook of the Company's potential performance over a one year horizon. For executive compensation purposes, the Compensation
Committee adjusts the operating income targets for the enterprise and the Dollar Tree and Family Dollar banners to exclude, among other things, items such as currency fluctuations, various expenses
and non-cash goodwill and intangible impairment charges. In addition to adjusted operating income, the Compensation Committee considers alternative metrics for corporate performance as well as the use
of multiple metrics in the design of the Company's compensation program.
In
March 2018, the Compensation Committee determined that the use of adjusted operating income as the sole performance metric in fiscal 2018 for the annual and long-term incentive plans
was appropriate because it encourages achievement of strategic and financial performance metrics that create sustainable shareholder value, it is something over which executive officers have control
and it is an important metric for evaluating the performance of retail companies. The performance targets are intended to be challenging but achievable, and serve to focus our management team on a
common goal while aligning efforts with shareholder interests.
For
2018, the Compensation Committee determined that executives' bonuses would be linked 85% to an adjusted operating income target for fiscal 2018 and 15% to individual performance. In
order for an executive to receive any bonus, however, we must achieve at least
55
Table of Contents
85%
of the adjusted operating income target. Annual incentive awards in 2018 were determined as follows:
The Compensation Committee establishes the MICP corporate performance target, which is derived from the annual budget approved by the Board of
Directors at the beginning of the fiscal year. For 2018, the corporate performance target was determined to be adjusted operating income, with a target set at $2,063.3 million for the combined
enterprise, $1,471.0 million for the Dollar Tree US banner and $587.0 million for the Family Dollar banner. These targets reflect the adjusted operating income underlying the annual
budget approved by the Board of Directors.
The
Compensation Committee used 2018 adjusted operating income as the performance metric because it encourages achievement of strategic and financial performance metrics that create
sustainable shareholder value, it is something over which executive officers have control and it is an important metric for evaluating the performance of retail companies.
The corporate performance measure for Messrs. Philbin, Wampler and Sasser relates to the adjusted operating income target for the
combined corporate enterprise which was set at $2,063.3 million in 2018. The performance measure for Mr. Witynski relates to the adjusted operating income target for the Dollar Tree US
banner which was set at $1,471.0 million.
The
following table summarizes the potential earned awards based on the percentage of the applicable corporate performance target attained.
|
|
|
|
|
|
|
% of Corporate
Performance Target
Attained
|
|
Portion of Executive's
Corporate
Performance Bonus
Deemed Earned
|
|
Below 85.0%
|
|
|
0
|
%
|
|
85%
|
|
|
25
|
%
|
|
90%
|
|
|
50
|
%
|
|
95%
|
|
|
75
|
%
|
|
100%
|
|
|
100
|
%
|
|
105%
|
|
|
137.50
|
%
|
|
110%
|
|
|
175
|
%
|
|
115.0% or above
|
|
|
212.50
|
%
|
|
|
|
|
|
56
Table of Contents
The
corporate performance measure for Mr. Mac Naughton, as President of Family Dollar Stores, relates to the adjusted operating income target for that banner. Maximum bonus for
the corporate performance component is earned with performance achieved at 145% of target for the Family Dollar banner. For 2018, the adjusted operating income target was set at $587.0 million
for the Family Dollar banner, which reflected our strategic plan.
The
following table illustrates Mr. Mac Naughton's potential payouts:
|
|
|
|
|
|
|
% of Corporate
Performance Target
Attained
|
|
Portion of Executive's
Corporate
Performance Bonus
Deemed Earned
|
|
Below 85.0%
|
|
|
0
|
%
|
|
85%
|
|
|
25
|
%
|
|
90%
|
|
|
50
|
%
|
|
100%
|
|
|
100
|
%
|
|
110%
|
|
|
125
|
%
|
|
120%
|
|
|
150
|
%
|
|
130%
|
|
|
175
|
%
|
|
140%
|
|
|
200
|
%
|
|
145.0% or above
|
|
|
212.50
|
%
|
|
|
|
|
|
The
MICP bonuses relating to performance in a given fiscal year are paid in the following year when annual results are available, upon approval by the Compensation Committee, generally
in March or April. The Compensation Committee may revise the target amount to account for unusual factors. Any modification is carefully considered by the Committee and applied only in special
circumstances that warrant the modification. The Compensation Committee did not exercise such discretion with respect to the 2018 bonus payments.
The
definition of adjusted operating income approved by the Compensation Committee for purposes of measuring the 2018 target performance under the MICP excluded the effects relating to
or resulting from: (i) Canadian currency fluctuations; (ii) severance, relocation and reduction in workforce expenses and other expenses incurred to consolidate workforces;
(iii) changes in accounting policies, practices and pronouncements; (iv) unreimbursed costs for unwinding the arrangement with Sycamore Partners (Dollar Express) for the divested stores;
(v) non-cash goodwill and intangible impairment charges; (vi) expenses incurred with respect to future mergers, acquisitions, or divestitures; and (vii) any loss, cost or expense
due to Family Dollar litigation filed prior to the merger date that was not included in the 2018 Fiscal Budget; and (viii) changes in the manner shared services are allocated based upon the
methodology used in the 2018 fiscal budget approved by the Board of Directors.
57
Table of Contents
As described earlier, 85% of the annual incentive bonus is based on corporate performance while 15% of the annual incentive bonus is based on
individual performance. At the beginning of each fiscal year, individual goals are established and approved for each named executive officer.
|
|
|
Role
|
|
Individual Performance Goals
|
|
|
|
President and Chief Executive Officer
|
|
Primary responsibility for executive management of the Company and achievement of the Company's strategic and operational goals, including developing and implementing strategies and initiatives for improving the sales, operating income and margins
of the Family Dollar banner, driving the Company's initiative to develop the new H2 store model for both new and renovated Family Dollar stores, implementing new methods to manage and reduce shrink, increasing incremental sales through installation
in stores of additional Snack Zones, reducing store manager turnover, planning, managing and executing the Company's campus consolidation initiative with a minimum of business interruption, planning and executing the future organization design and
developing and implementing an efficient alignment of resources between shared services and each of the banners.
|
Chief Financial Officer
|
|
Primary responsibility for oversight of financial management, including improving the Company's financial reporting processes, reviewing SG&A expenses to assess potential cost savings and
evaluating the Company's capital structure.
|
Executive Chairman
|
|
Primary responsibility for Board leadership and engagement with management, including mentoring the Chief Executive Officer, developing the new store support center and assisting in integration, overseeing the general functioning of the Board and
its committees, assessing the composition of the Board, recruiting potential candidates for the Board as necessary, consulting regularly with the Lead Director to discuss matters that concern the Board, leading the Board's annual review of the
Company's business strategy, financial plans and capital resources, leading the Board's role in succession planning for senior executive officers, providing advice and support to the President and Chief Executive Officer on critical Company
initiatives and shareholder communications, perpetuating the Company's successful business culture, maintaining market and customer relevance through development of long-term strategic plans, challenging management and holding them accountable as
appropriate, transferring his institutional knowledge and principles to the organization, providing opportunities for the Board and management to engage in open discussions on strategic initiatives, opportunities and industry outlook, ensuring that
management understands and carries out the Board's decisions and helping the Board remain connected to the individual managers who are executing the Company's business plans.
|
President of Family Dollar
|
|
Primary responsibility for executive management of the Family Dollar banner, including driving comparable store sales growth, total sales growth and operating margin to reach specified target
percentages, improving personnel planning and talent development, delivering on strategic initiatives to improve performance of the Family Dollar banner, completing 500 renovations of Family Dollar stores, lowering cost of goods sold and improving
gross margin.
|
President and Chief Operating Officer of Dollar Tree Stores
|
|
Primary responsibility for executive management of the Dollar Tree banner, including driving comparable store sales growth, total sales growth and operating margin to reach specified target percentages, improving personnel planning and talent
development and improving the operations of shared services.
|
58
Table of Contents
During its March 2019 meeting, the Compensation Committee certified the following Company and banner performance for fiscal 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metric
|
|
2018 Target
|
|
2018 Achievement
|
|
% of Target
|
|
Payout %
|
|
Enterprise adjusted operating income
|
|
$2,063.3 million
|
|
|
$1,801.0 million
|
|
|
|
87.29
|
%
|
|
|
36.44
|
%
|
|
Dollar Tree adjusted operating income
|
|
$1,471.0 million
|
|
|
$1,459.3 million
|
|
|
|
99.2
|
%
|
|
|
96.01
|
%
|
|
Family Dollar adjusted operating income
|
|
$587.0 million
|
|
|
$333.8 million
|
|
|
|
56.87
|
%
|
|
|
0
|
%
|
|
In
March 2019, individual performance evaluations for each executive were reviewed and accepted by the Compensation Committee, with input from the Chief Executive Officer. Based upon
the performance calculation described above, the Compensation Committee authorized payouts for the executives as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
Bonus
Target
as % of
Base
Salary
|
|
Total
Amount
Available
for Bonus
(1)
|
|
Amount
Allocated to
Corporate
Performance
(85% of
Total)
|
|
Corporate
Performance
Bonus
Earned (2)
|
|
Amount
Allocated to
Individual
Performance
(15% of
Total)
|
|
Individual
Performance
Bonus
Earned (3)
|
|
Total
Incentive
Award
Earned for
2018
|
|
Gary Philbin
|
|
|
140
|
%
|
|
$1,960,000
|
|
|
$1,666,000
|
|
|
|
$607,090
|
|
|
|
$294,000
|
|
|
|
$220,500
|
|
|
|
$827,590
|
|
|
Kevin Wampler
|
|
|
70
|
%
|
|
$560,000
|
|
|
$476,000
|
|
|
|
$173,454
|
|
|
|
$84,000
|
|
|
|
$69,720
|
|
|
|
$243,174
|
|
|
Bob Sasser
|
|
|
140
|
%
|
|
$2,380,000
|
|
|
$2,023,000
|
|
|
|
$737,181
|
|
|
|
$357,000
|
|
|
|
$303,450
|
|
|
|
$1,040,631
|
|
|
Duncan Mac Naughton (4)
|
|
|
100
|
%
|
|
$1,050,000
|
|
|
$892,500
|
|
|
|
$0
|
|
|
|
$157,500
|
|
|
|
$0
|
|
|
|
$0
|
|
|
Michael Witynski
|
|
|
100
|
%
|
|
$700,000
|
|
|
$595,000
|
|
|
|
$571,260
|
|
|
|
$105,000
|
|
|
|
$86,100
|
|
|
|
$657,360
|
|
|
-
(1)
-
Represents
the base salary of the named executive officer multiplied by the target percentage of base salary.
-
(2)
-
Represents
the amount allocated to corporate performance multiplied by the applicable payout percentage from the previous table. The applicable payout percentage in
2018 was 36.44% for Messrs. Philbin, Wampler and Sasser, 96.01% for Mr. Witynski and 0% for Mr. Mac Naughton.
-
(3)
-
Represents
the amount allocated to individual performance multiplied by a percentage derived from the individual performance evaluations.
-
(4)
-
Mr. Mac
Naughton did not receive a cash incentive bonus for fiscal 2018 because the performance for the Family Dollar banner fell below the threshold level
of adjusted operating income.
In
March 2019, the Compensation Committee determined that future annual incentive bonus awards would be based 100% on corporate performance beginning in fiscal 2019. As described above,
the Compensation Committee in the past had determined that 85% of the annual incentive bonus would be based on corporate performance while 15% of the annual incentive bonus would be based on
individual performance. The Compensation Committee believes that the change to providing annual incentive bonus awards based solely on corporate performance will assist in driving improved corporate
performance and better align the interests of executives with those of shareholders.
59
Table of Contents
Long-Term Incentives
The largest component of our executive compensation program has been long-term incentive awards in the form of performance-based RSU awards and
performance-based LTPP awards (50% in RSUs and 50% in cash) pursuant to our 2011 Omnibus Incentive Plan. We believe that long-term performance-based equity and cash incentives provide our executives
with a strong link to our long-term performance and create an ownership culture to help align the interests of our executives with those of our shareholders. The Committee structured the long-term
performance-based equity and cash incentives portion of executive officer compensation to be "at risk" in order to directly align our executives with the interests of shareholders. The long-term
incentive awards are set at levels generally at market based upon the peer data.
The
Compensation Committee's objective in granting long-term performance-based equity and cash incentives as part of the overall compensation for executives is to achieve alignment with
shareholder interests through stock ownership while also focusing on retention. Restricted stock and RSUs provide more immediate value to executives, even in advance of stock price appreciation, with
the opportunity for increased value as the stock price increases. In addition, we believe that long-term performance-based equity and cash awards that vest over multiple years focus executives on
consistent long-term growth in shareholder value and promote executive retention because the executives will only realize the value of the equity or cash if they remain in our employment during the
vesting period. Multiple year performance goals also promote consistent growth in shareholder value across a longer time horizon.
The
Compensation Committee generally has approved two distinct types of long-term incentive awards. The first type of award has been a performance-based RSU that vests after achievement
of a percentage of a target performance metric in the first year after grant, with time-based vesting of one-third of the award on successive anniversaries of the grant date. Once the performance
threshold has been met, the amount of the payout typically has not increased to correspond with increasing levels of corporate performance. These awards are settled in stock and there is no cash
component. The second type of award has been a combination of performance-based RSUs and a performance cash bonus award made under our three-year LTPP program. The program provides for vesting upon
the achievement of a cumulative performance goal that is measured over a three-year performance period. Once the performance threshold has been met, the LTPP award is settled in both stock and cash.
The Committee has historically used Company adjusted operating income as its performance metric for both types of awards because it encourages achievement of strategic and financial performance
metrics that create sustainable shareholder value, it is something over which executive officers have control and it is an important metric for evaluating the performance of retail companies.
The
Compensation Committee generally grants equity-based awards and long-term cash on an annual basis, and at other times as the Committee deems appropriate, including for newly hired
or promoted executive officers or due to special retention needs. The Compensation Committee determines the aggregate monetary grant value of executive officers' equity-based awards taking into
account, among other things, our pay mix targets, the desired mix of equity-based vehicles, the executive officer's contribution to Company performance, competitive compensation levels and dilution or
pool limits. The target number of RSUs is determined by dividing the target RSU award value by the fair market value of a share of Dollar Tree stock on the date of grant.
In
2018, the Compensation Committee made awards of performance-based RSUs with vesting upon achievement of at least 80% of target adjusted operating income for fiscal 2018, coupled with
time-based vesting of one-third of the award on each successive anniversary of the
60
Table of Contents
grant
date. In addition, the Committee made awards of performance-based RSUs and performance cash bonus awards under the LTPP with vesting based on a three-year cumulative achievement of at least 83%
of target adjusted operating income.
In
March 2019, the Compensation Committee approved changes to our long-term incentive compensation program for executive officers, including our NEOs. Beginning in 2019, LTPP awards
will vest based on the three-year cumulative achievement of at least 85% of target adjusted EBITDA (a change from the three-year cumulative achievement of at least 83% of target adjusted operating
income). Non-LTPP awards will vest upon achievement of at least 85% of target adjusted operating income (an increase from 80%) during a one year performance period, coupled with time-based vesting of
one-third of the award on each successive anniversary of the grant date. All non-LTPP awards will be designated as performance stock units ("PSUs") beginning in 2019. The Committee also changed the
design of non-LTPP awards to incorporate a "payout curve" that determines the amount of the award from threshold achievement of target adjusted operating income (75% payout) to target goal (100%
payout) to maximum award (150% payout). The payout curve was added to the non-LTPP awards to incentivize performance above the threshold level of performance. The prior design of the non-LTPP awards
provided a payout upon reaching the threshold level of performance, but the payout amount did not vary based on increasing levels of performance exceeding the threshold. As a result of these changes
by the Committee, our long-term performance-based incentive program for executive officers now features increased vesting thresholds to 85% of the target corporate performance metric and different
performance metrics (adjusted EBITDA for the LTPP and adjusted operating income for non-LTPP awards). Within this long-term incentive framework, the Committee also reviewed the relative weightings of
the LTPP and non-LTPP awards and determined that it should move toward an increase in the LTPP awards relative to the non-LTPP awards in the future in order to focus compensation on sustained
long-term growth.
In 2018, the Compensation Committee made awards of performance-based RSUs with vesting upon achievement of at least 80% of target adjusted
operating income for fiscal 2018, coupled with time-based vesting of one-third of the award on each successive anniversary of the grant date.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
Target RSUs (#)
|
|
Grant Date
Fair Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gary Philbin
|
|
|
63,220
|
|
|
|
$5,999,578
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin Wampler
|
|
|
13,695
|
|
|
|
$1,299,656
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bob Sasser
|
|
|
73,760
|
|
|
|
$6,999,824
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Duncan Mac Naughton
|
|
|
23,180
|
|
|
|
$2,199,782
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Witynski
|
|
|
12,640
|
|
|
|
$1,199,536
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Metric.
The Compensation Committee used 2018 adjusted operating income
as the performance metric because it encourages
achievement of strategic and financial performance metrics that create sustainable shareholder value, it is something over which executive officers have control and it is an important metric for
evaluating the performance of retail companies.
For
purposes of the 2018 performance-based RSU grants, adjusted operating income excludes the effects relating to or resulting from: (i) Canadian currency fluctuations;
(ii) severance, relocation and reduction in workforce expenses and other expenses incurred to consolidate
61
Table of Contents
workforces;
(iii) changes in accounting policies, practices and pronouncements; (iv) unreimbursed costs for unwinding the arrangement with Sycamore Partners (Dollar Express) for the
divested stores; (v) non-cash goodwill and intangible impairment charges; (vi) expenses incurred with respect
to future mergers, acquisitions, or divestitures; (vii) any loss, cost or expense due to Family Dollar litigation filed prior to the merger date that is not included in the 2018 Fiscal Budget;
and (viii) changes in the manner shared services are allocated based upon methodology used in 2018 Fiscal Budget previously approved by the Board of Directors.
Performance Goal.
The Compensation Committee set separate target levels of 2018
adjusted operating income for the Company as a
combined enterprise, the Dollar Tree banner and the Family Dollar banner. The target levels were intended to be rigorous and challenging, based on a review of the 2018 business plan and taking into
account the market environment, past and expected future performance of peer companies and various risks. The Compensation Committee also set the threshold level of performance at 80% of the
applicable target. Performance above the threshold level did not result in an increased payout.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Metric
|
|
Threshold
Amount at 80%
of Target
($ in millions)
|
|
Actual
Results
($ in millions)
|
|
Performance Metric
Achieved
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 Enterprise adjusted operating income
|
|
|
$1,650.6
|
|
|
|
$1,801.0
|
|
|
|
Yes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 Dollar Tree adjusted operating income
|
|
|
$1,176.8
|
|
|
|
$1,459.3
|
|
|
|
Yes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 Family Dollar adjusted operating income
|
|
|
$469.6
|
|
|
|
$333.8
|
|
|
|
No
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance-Based RSUs Earned.
The Compensation Committee certified in
March 2019 that the performance goal established for the performance-based RSUs granted to each of our named executive officers was met with the exception of Mr. Mac Naughton.
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
RSUs Earned (#)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gary Philbin
|
|
|
63,220
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin Wampler
|
|
|
13,695
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bob Sasser
|
|
|
73,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Duncan Mac Naughton
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Wytinski
|
|
|
12,640
|
|
|
|
|
|
|
|
|
|
|
In addition, the Compensation Committee made grants of performance-based RSUs under the LTPP. The Compensation Committee established the target
value of the LTPP opportunity for each of our named executive officers. The target value of the award was divided between a potential cash amount and a target number of RSUs. The target number of RSUs
was determined by dividing
62
Table of Contents
the
target RSU award value (which represents fifty percent of the total target award value) by the fair market value of a share of Dollar Tree stock on the date of grant.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
Target RSUs
($)
|
|
Target RSUs
(#)
|
|
Target Long-Term
Cash Opportunity
($)
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gary Philbin
|
|
|
$750,000
|
|
|
|
7,903
|
|
|
|
$750,000
|
|
|
|
$1,500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin Wampler
|
|
|
$450,000
|
|
|
|
4,741
|
|
|
|
$450,000
|
|
|
|
$900,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bob Sasser
|
|
|
$750,000
|
|
|
|
7,903
|
|
|
|
$750,000
|
|
|
|
$1,500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Duncan Mac Naughton
|
|
|
$500,000
|
|
|
|
5,268
|
|
|
|
$500,000
|
|
|
|
$1,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Wytinski
|
|
|
$375,000
|
|
|
|
3,951
|
|
|
|
$375,000
|
|
|
|
$750,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Target Opportunities.
The Compensation Committee defined a payout curve which
determines the amount to be paid depending on actual
performance. The Compensation Committee set the payout for achieving the threshold level of performance at 25%, with the payout increasing from 25% for threshold performance to 100% of the target
opportunity for achieving target performance. Similarly, the payout for achieving between target and maximum performance ranges from 100% of the target opportunity to 200% of the target opportunity,
also with the payout increasing in a straight-line manner.
Performance Metric.
The Compensation Committee used three-year cumulative adjusted
operating income (2018-2020) as the performance
metric because it is a long-term goal and for the reasons set forth above.
Performance Goal.
The Compensation Committee set the three-year cumulative adjusted
operating income target at a level requiring
significant effort, based on the Company's annual budget and long-term plan. The Compensation Committee also set the threshold level at 83% of the target. This award will not vest, if at all, until
the completion of the 2020 fiscal year.
In 2016, the Compensation Committee made grants of performance-based RSUs and cash opportunity awards under the LTPP. The target values of the
awards were divided between a target number of RSUs and a potential cash amount. The target number of RSUs was determined by dividing the target RSU award value by the fair market value of a share of
Dollar Tree stock on the date of grant.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
Target RSUs
($)
|
|
Target RSUs
(#)
|
|
Target Long-Term
Cash Opportunity
($)
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gary Philbin
|
|
|
$500,000
|
|
|
|
6,248
|
|
|
|
$500,000
|
|
|
|
$1,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin Wampler
|
|
|
$350,000
|
|
|
|
4,373
|
|
|
|
$350,000
|
|
|
|
$700,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bob Sasser
|
|
|
$500,000
|
|
|
|
6,248
|
|
|
|
$500,000
|
|
|
|
$1,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Witynski
|
|
|
$150,000
|
|
|
|
1,874
|
|
|
|
$150,000
|
|
|
|
$300,000
|
|
|
Performance Metric.
The Compensation Committee used three-year cumulative adjusted
operating income as the performance metric. For
purposes of the 2016 LTPP Grants, adjusted
63
Table of Contents
operating
income excludes the effects relating to or resulting from: (i) Canadian currency fluctuations; (ii) severance, relocation and reduction in workforce expenses and other expenses
incurred to consolidate workforces; (iii) changes in accounting policies, practices and pronouncements; (iv) unreimbursed costs for unwinding the arrangement with Sycamore Partners
(Dollar Express) for the divested stores; (v) non-cash goodwill and intangible impairment charges; (vi) expenses incurred with respect to future mergers, acquisitions, or divestitures;
and (vii) any changes to federal or state exemption requirements to, among other things, increase the minimum salary requirement for exempt (non-hourly) employees.
Performance-Based RSUs and Cash Earned.
In March 2019, the Compensation Committee
determined the Company's actual performance and
the corresponding performance achievement percentage relative to the 2016-2018 performance goal.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Metric
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Actual
Results
|
|
|
|
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Year adjusted operating income (2016-2018)
|
|
|
$4,793.3
|
|
|
$5,775.0
|
|
|
$7,218.8
|
|
|
|
$5,540.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of Target
|
|
|
83
|
%
|
|
100
|
%
|
|
125
|
%
|
|
|
95.94
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
This
three-year performance achievement percentage was then converted to an earning percentage as set forth below. If the overall performance achievement percentage was below the
threshold, then the earning percentage would be zero (and the individual would not receive any shares in respect of the RSUs granted or performance cash). If the overall performance achievement
percentage was between the threshold and maximum, the earning percentage would vary based on the level of achievement. If the earning percentage was above the maximum, the maximum earning percentage
would be applied.
|
|
|
|
|
|
Achievement
Level
|
|
Performance
Achievement %
|
|
Earning %
|
|
|
|
|
|
|
Threshold
|
|
83%
|
|
25%
|
|
|
|
|
|
|
|
|
|
|
Target
|
|
100%
|
|
100%
|
|
|
|
|
|
|
|
|
|
|
Maximum
|
|
125%
|
|
200%
|
|
|
|
|
|
The
Compensation Committee and the Board approved the performance achievement relative to target performance measures, the calculation of the earning percentage and the determination of
the number of RSUs and the amount of cash earned. The overall three-year performance achievement percentage of 95.94% resulted in an earned percentage of 71.0%. Based
64
Table of Contents
on
this outcome, the NEOs earned RSUs and cash in respect of their 2016-2018 LTPP awards as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
Earned %
|
|
Cash Earned
|
|
RSUs Earned (#)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gary Philbin
|
|
|
71.0
|
%
|
|
|
$355,000
|
|
|
|
4,436
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin Wampler
|
|
|
71.0
|
%
|
|
|
$248,500
|
|
|
|
3,104
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bob Sasser
|
|
|
71.0
|
%
|
|
|
$355,000
|
|
|
|
4,436
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Witynski
|
|
|
71.0
|
%
|
|
|
$106,500
|
|
|
|
1,330
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In
March 2016, in light of Mr. Philbin's contributions and his critical role in positioning Family Dollar and the combined enterprise for further growth and improvements, the
Compensation Committee granted him 62,484 performance-based RSUs. The award was designed to cliff vest 100% in 2021, on the fifth anniversary of the grant date, provided that Mr. Philbin
satisfied the three-year adjusted operating income performance criteria and remained continuously employed with the Company through the vesting date. The Compensation Committee determined in March
2019 that the three-year performance goal had not been met and the award was cancelled.
Timing of Long-Term Incentive Awards
Our grant policy for equity awards establishes April 1 as the date of the annual grant each year. Awards of equity incentives to new
officers are made on the last business day of the Company's fiscal month which follows the month that includes the hire date. The Compensation Committee may, in its discretion, make grants that vary
from these guidelines if there is a compelling
business reason, but in every case the Committee is required to complete its approval of the equity awards prior to the date of the grant.
The
Compensation Committee will not award equity incentives when in possession of potentially material non-public information. We believe that the beginning of April is an appropriate
time during the year to make grants of equity awards and that a consistent application of our granting practices from year to year regardless of other events is also appropriate. The awards granted by
the Compensation Committee are designed to create incentives for the creation of long-term shareholder value and contain delayed vesting provisions that prevent recipients from taking advantage of
short-term fluctuations in the market price of our common stock. We have not planned in the past, nor do we plan in the future, to time the release of material non-public information for the purpose
of affecting the value of executive compensation.
Other Compensation Policies and Practices
Recoupment ("Clawback") Policy
On April 15, 2018, the Compensation Committee recommended, and the Board adopted, a more robust clawback policy. Under the expanded
policy, the Company will require mandatory reimbursement of excess incentive compensation from any executive officer if the Company's financial statements are restated due to material noncompliance
with financial reporting requirements under the securities laws. The amount to be recovered will be the excess of incentive compensation paid to the executive based on the erroneous data over the
incentive compensation that would have been paid to the executive had it been based on the restated results. Recoupment would cover any excess compensation received during the three completed fiscal
years immediately preceding the
65
Table of Contents
date
of which the Company is required to prepare the accounting restatement. This policy is in addition to our existing clawback policy covering the Company's Chief Executive Officer and Chief
Financial Officer under the Omnibus Incentive Plan.
Executive Stock Ownership Guidelines
On March 8, 2017, the Compensation Committee revised its executive stock ownership guidelines to make them more robust. The stock
ownership guidelines were established for executive officers to encourage them to have a long-term equity stake in Dollar Tree, align their interests with shareholders and mitigate potential
compensation-related risk. The executive stock ownership program encourages and expects our executive officers to attain designated stock ownership levels over a five-year period. The stock ownership
guidelines for each of our named executive officers is as follows:
|
|
|
|
Current Position
|
|
No. of Shares
|
|
|
|
|
President and Chief Executive Officer
|
|
125,000
|
|
|
|
|
|
|
Executive Chairman
|
|
125,000
|
|
|
|
|
|
|
Chief Financial Officer
|
|
30,000
|
|
|
|
|
|
|
President and Chief Operating Officer of Dollar Tree Stores
|
|
40,000
|
|
|
|
|
|
|
President of Family Dollar Stores
|
|
40,000
|
|
|
|
The
types of stock ownership that qualify toward the ownership guideline under our policy include direct stock ownership, unvested RSUs and unvested restricted stock. As of
February 2, 2019, all of our named executive officers had stock ownership levels that exceeded the stock ownership guidelines. For additional information regarding the number of shares of stock
beneficially owned by our named executive officers, see "Ownership of Common Stock" on page 88.
Policy Against Hedging Company Stock
To further the corporate governance objective of encouraging alignment of the interests of our executive officers and directors with
shareholders' interests in the long-term performance of the Company, the Company's Insider Trading Policy prohibits executive officers and directors from entering into hedging transactions and from
engaging in short sales related to the Company's stock. The Policy also prohibits engaging in or trading any publicly-traded puts, calls or other derivative instruments involving the Company's
securities.
No Pledges of Company Stock
Our Insider Trading Policy prohibits executive officers and directors from holding Dollar Tree stock in a margin account. In addition, none of
our executive officers and directors engaged in transactions involving the pledging of Company stock during fiscal 2018.
66
Table of Contents
Impact of Accounting and Tax Treatments on Compensation Program Design
The Compensation Committee considers the accounting and tax impact of its overall compensation programs in order to balance the cost to the
Company with the potential benefits as compensation tools.
Section 162(m)
of the Internal Revenue Code imposes a limitation on the deductibility of non-performance-based compensation in excess of $1 million paid to "covered
employees" in any fiscal year. Our "covered employees" include our Chief Executive Officer, our Chief Financial Officer, and the three other most highly compensated named executive officers. For
fiscal 2017 and prior fiscal years, an exception to Section 162(m) allowed certain compensation that qualified as "performance-based" to be deducted notwithstanding the $1 million
limitation. As noted above, the Compensation Committee has adopted a policy of pay-for-performance, and the Compensation Committee took appropriate steps in the past to cause the performance-based
compensation of covered executive officers to qualify for deductibility under Section 162(m) to the extent consistent with our best interests and the interests of our shareholders.
The
Tax Cuts and Jobs Act ("2017 Tax Reform Act"), enacted in December 2017, eliminated the performance-based compensation exception under Section 162(m) for fiscal 2018 and
subsequent fiscal years, other than with respect to certain "grandfathered" compensation that is paid pursuant to a written binding contract which was in effect on November 2, 2017 and which
was not materially modified after that date. Thus, performance-based awards outstanding on November 2, 2017 pursuant to a binding written agreement may be exempt from the deduction limit if
applicable requirements are met. In addition, the 2017 Tax Reform Act expanded the group of "covered employees" under Section 162(m) to include our Chief Financial Officer (under prior law, the
Chief Financial Officer was not a "covered employee") and mandated that once an individual is treated as a covered employee for a given year, that individual will be treated as a covered employee for
all subsequent years. As a result of these changes in the tax laws, any compensation paid to our covered executive officers in excess of $1 million beginning with fiscal 2018 generally will not
be deductible unless the qualified compensation arrangements were in place as of November 2, 2017.
In
fiscal 2018, the Committee considered the anticipated tax treatment to the Company and the covered executive officers in its review and establishment of compensation programs and
payments. While the Compensation Committee considers the deductibility of awards as one factor in
determining executive compensation, the Compensation Committee also looks at other factors in making its decisions, as noted above, and retains the flexibility to award compensation that it determines
to be consistent with the goals of our executive compensation program even if the compensation is not deductible for tax purposes. Further, the Compensation Committee may determine to make changes or
amendments to the Company's existing compensation programs, consistent with the Compensation Committee's overall compensation program philosophy, in order to revise aspects of our executive
compensation programs that were initially designed to comply with Section 162(m) but that may no longer serve as an appropriate incentive measure for our executive officers.
Finally,
interpretations of and changes in applicable tax laws and regulations, as well as other factors beyond the control of the Compensation Committee, may affect deductibility of
compensation, and there can be no assurance that compensation payable to our executive officers who are covered by Section 162(m) will be deductible in the future. The Compensation Committee
will continue to monitor and assess the impact of the amendments to Section 162(m) included in the 2017 Tax Reform Act to determine what adjustments to our executive compensation practices, if
67
Table of Contents
any,
it considers appropriate and to maintain, to the extent desired, deductibility for grandfathered performance-based awards.
The
Compensation Committee also reviews the accounting impact of the various forms of compensation, with the goal of ensuring that our compensation practices remain competitive while
also being cost-effective.
Retirement, Deferred Compensation and Pension Plans
We do not have any defined benefit or pension plans that provide for payments based on an executive's salary and/or years of service. In
addition, we have not adopted a supplemental executive retirement plan or other "excess plan" that pays benefits to highly compensated executives. Instead, we offer the following two alternatives to
allow executives to actively participate in funding their retirement plans.
Executives
are eligible to participate in the Dollar Tree Retirement Savings Plan. At the end of the year, the Board may approve a discretionary profit-sharing contribution to be made
to all eligible employees, including executive officers. In addition, executives may elect to defer a portion of their cash compensation into 401(k) retirement accounts. As of January 1, 2019,
the Board has authorized us to match 100% of 401(k) deferrals up to 5% of an individual's cash compensation.
The
Dollar Tree and Family Dollar Supplemental Deferred Compensation Plan allows certain officers and executives, including our named executive officers, the ability to defer receipt of
up to 50% of their base salary and up to 100% of their bonus payments. The plan is a nonqualified plan and the Company does not fund, make any contributions to, or provide any interest rate subsidy
for the plan. The plan allows executives to save for retirement in a tax-effective way at a minimal cost to us. Plan participants may invest their deferred compensation in any one or a combination of
the plan's investment funds. The deferred amounts and earnings thereon are payable to participants, or designated beneficiaries, at either specified future dates, or upon separation of service or
death. The future payment obligations under the plan are our general unsecured obligations. Although the amounts deferred are deposited into a trust, the trust belongs to us, rather than the
executives, and is subject to the claims of our creditors.
Termination or Change in Control Arrangements
We have change in control Retention Agreements with our executive officers, including the named executive officers. The Compensation
Committee's intent with these agreements is to take reasonable steps to retain key management personnel and to minimize disruption to the Company in the event of a potential change in control. Under
these agreements, severance benefits are payable only upon the occurrence of both a change in control of the Company and the executive's termination without "cause" or resignation for "good reason,"
as defined in the agreements (commonly known as a "double trigger"). The Compensation Committee believes it is appropriate to provide double-trigger severance benefits because it aligns executives'
interests with the interests of shareholders without providing an undue benefit to executives who continue to be employed following a change-in control transaction.
We
also have Executive Agreements with our executive officers, except the Executive Chairman. The Executive Agreements provide for a release and restrictive covenants to protect the
Company, including a covenant not to compete, in consideration for which the Company agreed to provide a base salary continuation benefit and reimbursement of monthly health insurance premiums for a
period of up to twelve months (or until the executive becomes employed if less than the
68
Table of Contents
applicable
salary continuation period) in the event the executive's employment is terminated without "cause" (as defined in the agreement) or on account of the executive's death or disability.
In
addition, we have equity compensation plans that contain provisions that may convey benefits to our executive officers and other plan participants upon termination or a change in
control. Generally, the provisions address the treatment of awards upon separation from the Company due to death, disability or retirement (age 59
1
/
2
with seven years of service), or
due to a change in control, as defined within the plans.
The
overall structure of our change in control arrangements and other post-termination benefits is consistent with our compensation objectives to attract, motivate and retain highly
talented executives. We believe these arrangements preserve morale and productivity, provide a long-term commitment to job stability and financial security, and encourage retention in the face of the
potential disruptive impact of an actual or potential change in control. For additional information on our termination and change in control arrangements, and the potential payments that may be made
to our named executive officers upon termination or a change in control, see "Potential Payments Upon Termination or Change in Control" beginning on page 78.
Annual Compensation of Executive Officers
In the following table, we summarize the compensation earned during fiscal years 2018, 2017 and 2016 by our Chief Executive
Officer, our Chief Financial Officer, each of our three other most highly compensated executive officers who earned more than $100,000 in total compensation for services rendered in all capacities
during 2018, 2017 and 2016. We refer to these five individuals in this proxy statement as the named executive officers or NEOs.
The
compensation that we pay to our named executive officers is determined as described above in our "Compensation Discussion and Analysis" section and in the tables that follow.
69
Table of Contents
Summary Compensation Table
(For the Fiscal Years ended February 2, 2019, February 3, 2018 and January 28, 2017)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and
Principal
Position
|
|
Year
|
|
Salary
($)
(1)
|
|
Bonus
($)
(2)
|
|
Stock
Awards
($)
(3)
|
|
Option
Awards
($)
(4)
|
|
Non-Equity
Incentive
Plan
Compensation
($)
(1)(5)
|
|
All Other
Compensation
($)
(6)
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gary Philbin
|
|
2018
|
|
$
|
1,400,000
|
|
$
|
|
|
$
|
6,749,573
|
|
$
|
|
|
$
|
1,182,590
|
|
$
|
66,679
|
|
$
|
9,398,842
|
|
|
|
|
President and
Chief Executive
Officer
|
|
2017
|
|
$
|
1,290,384
|
|
|
|
4,104,687
|
|
|
|
2,280,740
|
|
59,093
|
|
7,734,904
|
|
|
|
|
|
|
2016
|
|
1,121,154
|
|
|
|
7,314,789
|
|
|
|
1,165,777
|
|
59,185
|
|
9,660,905
|
|
|
|
|
Kevin Wampler
|
|
2018
|
|
792,308
|
|
|
|
1,749,576
|
|
|
|
491,674
|
|
45,492
|
|
3,079,050
|
|
|
|
|
Chief Financial
Officer
|
|
2017
|
|
769,230
|
|
|
|
1,599,642
|
|
|
|
977,488
|
|
45,485
|
|
3,391,845
|
|
|
|
|
|
|
2016
|
|
690,385
|
|
|
|
1,449,802
|
|
|
|
661,667
|
|
53,126
|
|
2,854,980
|
|
|
|
|
Bob Sasser
|
|
2018
|
|
1,700,000
|
|
|
|
7,749,819
|
|
|
|
1,395,631
|
|
142,876
|
|
10,988,326
|
|
|
|
|
Executive
Chairman
|
|
2017
|
|
1,765,385
|
|
|
|
7,749,808
|
|
|
|
3,068,160
|
|
139,953
|
|
12,723,306
|
|
|
|
|
|
|
2016
|
|
1,680,769
|
|
|
|
6,499,865
|
|
|
|
2,288,489
|
|
112,915
|
|
10,582,038
|
|
|
|
|
Duncan
Mac Naughton
|
|
2018
|
|
1,061,539
|
|
|
|
2,699,715
|
|
|
|
|
|
23,229
|
|
3,784,483
|
|
|
|
|
President
|
|
2017
|
|
1,019,230
|
|
|
|
2,499,893
|
|
|
|
505,800
|
|
220,884
|
|
4,245,807
|
|
|
|
|
Family Dollar
Stores
|
|
2016
|
|
61,538
|
|
500,000
|
|
999,971
|
|
3,999,980
|
|
1,000,000
|
|
1,004
|
|
6,562,493
|
|
|
|
|
Michael Witynski
|
|
2018
|
|
684,615
|
|
|
|
1,574,486
|
|
|
|
763,860
|
|
45,363
|
|
3,068,324
|
|
|
|
|
President and
Chief Operating
Officer
|
|
2017
|
|
589,423
|
|
|
|
1,299,790
|
|
|
|
778,345
|
|
41,162
|
|
2,708,720
|
|
|
|
|
Dollar Tree Stores
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Footnotes
to the Summary Compensation Table:
-
-
Our
annual bonus plan qualifies as a "non-equity incentive plan" for purposes of this table. Earnings under our deferred compensation plan result from
the executives' investments in mutual funds commonly available to investors generally. The "Change in Pension Value and Non-Qualified Deferred Compensation Earnings" columns are omitted as all amounts
are zero.
-
(1)
-
Executives
may defer up to 50% of their salaries and up to 100% of their annual incentive bonus under the Dollar Tree and Family Dollar Supplemental Deferred
Compensation Plan. Any such deferrals are included in the appropriate column of this table and shown in the Deferred Compensation table.
-
(2)
-
This
column includes a signing bonus paid to Duncan Mac Naughton in 2016 connection with his employment offer. This bonus payment is subject to repayment in whole
or in part if Mr. Mac Naughton leaves the Company within two years of such payment.
-
(3)
-
Pursuant
to SEC rules, this column represents the aggregate grant date fair value during the last three fiscal years of restricted stock units and performance-based
restricted stock units
70
Table of Contents
("RSUs")
computed in accordance with FASB ASC Topic 718 related to the annual spring grant ("RSU awards"), Long-Term Performance Plan ("LTPP") awards with a three-year cumulative performance cycle
("LTPP awards") and out-of-cycle grants made in connection with a promotion. The Compensation Committee determined that the LTPP awards would be made 50% in cash and 50% in performance-based
restricted stock units. We are required to report the equity portion of the award at the beginning of the LTPP cycle even though, should it be earned, it will not be paid until the end of the cycle.
The cash portion of the LTPP award is not reported until earned at the end of the cycle. Both the cash and equity portions of the LTPP awards are earned only if performance conditions are met and the
final payment amount, if any, will range from 0% to 200% of the stated target. The amounts shown in this column assume performance at target. Fair value for the RSU awards is calculated using the
closing price of our stock on the date of grant. In the event the highest level of performance is achieved, the aggregate grant date fair value for the fiscal year 2018 awards would be as follows:
$1,799,618 for Kevin Wampler and $1,699,973 for Michael Witynski. For the other named executives officers (who are retirement-eligible), the fair market values of their stock awards remain the same as
those included in this column in the event of maximum performance.
-
-
Amounts
shown in this column do not correspond to the actual value that will be realized by the named executives. Additional information regarding FASB
ASC Topic 718 calculations related to these awards is included in footnote 10 of our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended
February 2, 2019. See the Grants of Plan-Based Awards Table for information on awards made in 2018.
-
(4)
-
Pursuant
to SEC rules, this column represents the aggregate grant date fair value of stock options computed in accordance with FASB ASC Topic 718, as determined
based on the Black-Scholes Valuation Model and using the following assumptions:
|
|
|
Pricing Term in Years
|
|
6.50
|
Risk Free Interest Rate
|
|
2.09%
|
Expected Volatility
|
|
24.51%
|
Annual Dividend Yield
|
|
0%
|
Option Value
|
|
22.10
|
-
-
Amounts
shown in this column do not correspond to the actual value that will be realized by the named executives. Additional information regarding FASB
ASC Topic 718 calculations related to these awards is included in footnote 10 of our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended
February 2, 2019.
-
(5)
-
The
amounts in this column represent the annual bonus that we pay under our Management Incentive Compensation Plan ("MICP") and the cash bonus that we pay under our
LTPP awards conditioned upon achieving a three-year performance goal, as discussed in the Compensation Discussion and Analysis section. The amounts listed were earned in the years shown, but paid
after the end of the fiscal year, upon approval by the Compensation Committee. The amounts paid under the MICP to Messrs. Philbin, Wampler, Sasser, Mac Naughton and Witynski were $827,590,
$243,174, $1,040,631, $0 and $657,360, respectively. Cash bonuses paid under the 2016 LTPP awards to Messrs. Philbin, Wampler, Sasser and Witynski were $355,000, $248,500, $355,000 and
$106,500, respectively.
71
Table of Contents
-
(6)
-
"All
Other Compensation" includes the amounts paid to named executives shown in the following table. Perquisites include car allowances related to travel, financial
and tax planning, executive physicals, executive term life insurance, relocation and imputed income related to personal use of the corporate aircraft, none of which individually exceeded $25,000 in
either 2018, 2017 or 2016, except the value of Mr. Sasser's personal use of the corporate aircraft which was imputed to him as personal income in the amount of $84,980, $84,817 and $45,248,
respectively, and relocation expenses for Mr. Mac Naughton in the amount of $185,258 in 2017. The Company discontinued tax gross-ups on all perquisites, except for business-related relocation
expenses (however there was no tax gross up amount on the amount that Mr. Mac Naughton received for relocation in 2017). Car allowance is intended to compensate executives for the use of their
personal vehicles in conducting Company business. However, as we do not require our executives to account for their business or personal use, we include the entire amounts in our disclosures. Pursuant
to our corporate aircraft policy approved by the Board of Directors, Mr. Sasser and Mr. Philbin are permitted use Dollar Tree's aircraft for non-business purposes for up to
80 hours each per fiscal year. In exceptional circumstances, they may, in their discretion offer available seating to others. The Company, in turn, will impute to Mr. Sasser and
Mr. Philbin the value of such personal use as taxable income. This value shall be determined under the Standard Industry Fare Level formula (or other method) approved by the Internal Revenue
Service. In December 2016, Mr. Mac Naughton was authorized to use the aircraft for personal use for up to 35 hours per fiscal year, the value of which was treated as imputed income.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEO
|
|
Perquisites
|
|
Profit Sharing &
401k Match
|
|
Total
|
|
|
|
|
Gary Philbin
|
|
$
|
50,668
|
|
$
|
16,011
|
|
$
|
66,679
|
|
|
|
|
Kevin Wampler
|
|
28,027
|
|
$
|
17,465
|
|
45,492
|
|
|
|
|
Bob Sasser
|
|
124,839
|
|
$
|
18,037
|
|
142,876
|
|
|
|
|
Duncan Mac Naughton
|
|
22,590
|
|
$
|
639
|
|
23,229
|
|
|
|
|
Michael Witynski
|
|
28,096
|
|
$
|
17,267
|
|
45,363
|
|
|
72
Table of Contents
Grants of Plan-Based Awards Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
|
|
Estimated Future Payouts
Under Non-Equity Incentive
Plans
|
|
Estimated Future Payouts
Under Equity Incentive
Plans
|
|
All Other
Stock
Awards:
Number of
Shares of
|
|
All Other
Option
Awards:
Number of
Securities
|
|
Exercise
or Base
Price of
|
|
Grant Date
Fair Value
of Stock
|
|
Name
|
|
Grant
Date
|
|
Committee
Action
Date
(1)
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
Threshold
(#)
|
|
Target
(#)
|
|
Maximum
(#)
|
|
Stock or
Units
(#)
|
|
Underlying
Options
(#)
|
|
Option
Awards
($/Sh)
|
|
and Option
Awards
($)
(6)
|
|
Gary Philbin
|
|
|
|
(2)
|
|
$
|
416,500
|
|
$
|
1,960,000
|
|
$
|
3,834,250
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
(3)
|
|
187,500
|
|
750,000
|
|
1,500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/30/2018
|
|
3/14/2018
|
|
|
|
|
|
|
|
|
|
63,220
(4)
|
|
63,220
(4)
|
|
|
|
|
|
|
|
5,999,578
|
|
|
|
3/30/2018
|
|
3/14/2018
|
|
|
|
|
|
|
|
1,975
(5)
|
|
7,903
(5)
|
|
15,806
(5)
|
|
|
|
|
|
|
|
749,995
|
|
Kevin
|
|
|
|
(2)
|
|
119,000
|
|
560,000
|
|
1,095,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wampler
|
|
|
|
(3)
|
|
112,500
|
|
450,000
|
|
900,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/30/2018
|
|
3/14/2018
|
|
|
|
|
|
|
|
|
|
13,695
(4)
|
|
13,695
(4)
|
|
|
|
|
|
|
|
1,299,656
|
|
|
|
3/30/2018
|
|
3/14/2018
|
|
|
|
|
|
|
|
1,185
(5)
|
|
4,741
(5)
|
|
9,482
(5)
|
|
|
|
|
|
|
|
449,921
|
|
Bob Sasser
|
|
|
|
(2)
|
|
505,750
|
|
2,380,000
|
|
4,655,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
|
187,500
|
|
750,000
|
|
1,500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/30/2018
|
|
3/14/2018
|
|
|
|
|
|
|
|
|
|
73,760
(4)
|
|
73,760
(4)
|
|
|
|
|
|
|
|
6,999,824
|
|
|
|
3/30/2018
|
|
3/14/2018
|
|
|
|
|
|
|
|
1,975
(5)
|
|
7,903
(5)
|
|
15,806
(5)
|
|
|
|
|
|
|
|
749,995
|
|
Duncan
|
|
|
|
(2)
|
|
223,125
|
|
1,050,000
|
|
2,054,063
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mac Naughton
|
|
|
|
(3)
|
|
125,000
|
|
500,000
|
|
1,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/30/2018
|
|
3/14/2018
|
|
|
|
|
|
|
|
|
|
23,180
(4)
|
|
23,180
(4)
|
|
|
|
|
|
|
|
2,199,782
|
|
|
|
3/30/2018
|
|
3/14/2018
|
|
|
|
|
|
|
|
1,317
(5)
|
|
5,268
(5)
|
|
10,536
(5)
|
|
|
|
|
|
|
|
499,933
|
|
Michael
|
|
|
|
(2)
|
|
148,750
|
|
700,000
|
|
1,369,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Witynski
|
|
|
|
(3)
|
|
93,750
|
|
375,000
|
|
750,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/30/2018
|
|
3/14/2018
|
|
|
|
|
|
|
|
|
|
12,640
(4)
|
|
12,640
(4)
|
|
|
|
|
|
|
|
1,199,536
|
|
|
|
3/30/2018
|
|
3/14/2018
|
|
|
|
|
|
|
|
988
(5)
|
|
3,951
(5)
|
|
7,902
(5)
|
|
|
|
|
|
|
|
374,950
|
|
Footnotes to the Grants of Plan-Based Awards Table:
-
(1)
-
The
date of grant for the relevant award is established by the Compensation Committee during a regularly scheduled meeting or by written consent.
-
(2)
-
Our
Management Incentive Compensation Plan is considered a "non-equity incentive plan." MICP targets are established by the Compensation Committee early in the
fiscal year and amounts payable are determined and paid in the following year, when annual results are available, upon approval by the Compensation Committee. For 2018, bonuses were targeted at 140%
of salary for the President and Chief Executive Officer, 140% of base salary for Executive Chairman, 100% of salary for the President of Family Dollar and the President and Chief Operating Officer of
Dollar Tree Stores and 70% for other named executive officers, with corporate performance representing 85% of the goal. Earned amounts, to the extent not otherwise deferred under our Dollar Tree and
Family Dollar Supplemental Deferred Compensation Plan, are paid after the end of the relevant fiscal year. See "Annual Bonus Incentives" in our Compensation Discussion and Analysis for a detailed
discussion of our MICP.
-
(3)
-
The
Compensation Committee approved LTPP awards with three-year performance-based total target award values for each of our named executive officers. The LTPP award
was divided equally between a performance cash bonus and restricted stock units. The amounts included in this row represent the fifty percent (50%) granted as a cash performance bonus. The percentage
of the target performance cash bonus earned will be based on the level at which the Company achieves its three-year cumulative performance goal for the performance period from February 4, 2018
to January 30, 2021. The amount of payment, if earned, will range from 0% to 200% of the stated target and will be paid in 2021, when the achievement level is available and certified by the
Committee.
73
Table of Contents
-
(4)
-
Represents
awards of performance-based RSUs that will vest in approximately three equal installments over three years only upon the certification by the
Compensation Committee that the Company achieved its fiscal 2018 performance target goal and upon the executives remaining with the Company through the vesting dates, unless vesting is accelerated due
to death, disability or retirement. The Compensation Committee certified in March 2019 that the RSUs awarded in 2018 achieved the established performance goal for the fiscal year ended
February 2, 2019, except for the award to Mr. Mac Naughton.
-
(5)
-
Represents
the performance-based equity portion of the award granted under the LTPP that is based on a three-year performance period from February 4, 2018
through January 30, 2021 and will cliff vest in fiscal year 2021 only upon certification by the Compensation Committee that the Company achieved its performance goal.
-
(6)
-
This
column shows the full grant date fair value under FASB ASC Topic 718 of performance-based RSUs and LTPP awards. For the performance-based RSUs and LTPP awards
awarded on March 30, 2018, the fair value is calculated using the closing price of our stock on the grant date which was $94.90. Additional information regarding FASB ASC Topic 718 calculations
related to these awards is included in footnote 10 of our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended February 2, 2019.
Outstanding Equity Awards at Fiscal Year End Table
The
following table provides information on the holdings of stock option and stock awards by the named executives at the end of the fiscal year. This table includes unexercised and
unvested option awards, unvested performance-based RSU awards and unvested LTPP awards. Each equity grant is shown separately for each named executive. The vesting schedule for each grant is shown in
the footnotes following this table, based on the award date. The market value of the stock awards is based on the closing market price of our stock as of February 2, 2019, which was $96.69. For
additional information about the option awards and stock awards, see the description of equity incentive compensation in the Compensation Discussion and Analysis.
74
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
(1)
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Award
Date
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
|
Equity
Incentive
Plan Awards:
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
|
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)
|
|
Equity Incentive
Plan Awards:
Number of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested
(#)
|
|
Equity Incentive
Plan Awards:
Market or
Payout Value of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested
($)
|
|
Gary Philbin
|
|
3/18/2016
|
|
|
|
|
|
|
|
|
|
|
|
7,560
(2)
|
|
730,976
|
|
|
|
|
|
|
|
3/18/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,248
(3)
|
|
604,119
|
|
|
|
3/18/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,484
(2)
|
|
6,041,578
|
|
|
|
3/31/2017
|
|
|
|
|
|
|
|
|
|
|
|
19,330
(2)
|
|
1,869,018
|
|
|
|
|
|
|
|
3/31/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,372
(3)
|
|
616,109
|
|
|
|
9/18/2017
|
|
|
|
|
|
|
|
|
|
|
|
8,654
(2)
|
|
836,755
|
|
|
|
|
|
|
|
9/18/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,005
(3)
|
|
290,554
|
|
|
|
3/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63,220
(2)
|
|
6,112,742
|
|
|
|
3/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,903
(3)
|
|
764,141
|
|
Kevin
|
|
3/18/2016
|
|
|
|
|
|
|
|
|
|
|
|
4,582
(2)
|
|
443,034
|
|
|
|
|
|
Wampler
|
|
3/18/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,373
(3)
|
|
422,825
|
|
|
|
3/31/2017
|
|
|
|
|
|
|
|
|
|
|
|
10,194
(2)
|
|
985,658
|
|
|
|
|
|
|
|
3/31/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,098
(3)
|
|
492,926
|
|
|
|
3/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,695
(2)
|
|
1,324,170
|
|
|
|
3/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,741
(3)
|
|
458,407
|
|
Bob Sasser
|
|
3/18/2016
|
|
|
|
|
|
|
|
|
|
|
|
24,994
(2)
|
|
2,416,670
|
|
|
|
|
|
|
|
3/18/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,248
(3)
|
|
604,119
|
|
|
|
3/31/2017
|
|
|
|
|
|
|
|
|
|
|
|
59,477
(2)
|
|
5,750,831
|
|
|
|
|
|
|
|
3/31/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,559
(3)
|
|
924,260
|
|
|
|
3/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
73,760
(2)
|
|
7,131,854
|
|
|
|
3/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,903
(3)
|
|
764,141
|
|
Duncan
|
|
1/27/2017
|
|
|
|
180,991
|
|
|
|
74.05
|
|
1/27/2027
|
|
|
|
|
|
|
|
|
|
Mac Naughton
|
|
3/31/2017
|
|
|
|
|
|
|
|
|
|
|
|
16,994
(2)
|
|
1,643,150
|
|
|
|
|
|
|
|
3/31/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,372
(3)
|
|
616,109
|
|
|
|
3/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,180
(2)
|
|
2,241,274
|
|
|
|
3/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,268
(3)
|
|
509,363
|
|
Michael
|
|
3/18/2016
|
|
|
|
|
|
|
|
|
|
|
|
2,499
(2)
|
|
241,628
|
|
|
|
|
|
Witynski
|
|
3/18/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,874
(3)
|
|
181,197
|
|
|
|
3/31/2017
|
|
|
|
|
|
|
|
|
|
|
|
6,797
(2)
|
|
657,202
|
|
|
|
|
|
|
|
3/31/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,911
(3)
|
|
184,775
|
|
|
|
7/28/2017
|
|
|
|
|
|
|
|
|
|
|
|
1,857
(2)
|
|
179,553
|
|
|
|
|
|
|
|
7/28/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,089
(3)
|
|
201,985
|
|
|
|
3/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,640
(2)
|
|
1,222,162
|
|
|
|
3/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,951
(3)
|
|
382,022
|
|
Footnotes to Outstanding Equity Awards Table:
-
(1)
-
The
options awarded to Duncan Mac Naughton in fiscal 2016 will vest in 25% increments on the second, third, fourth and fifth anniversaries of the grant date,
provided he remains continuously employed through the vesting dates. The options awarded to Mr. Mac Naughton in fiscal 2016 will expire ten years from date of grant, or earlier for reasons
other than death, disability or retirement.
75
Table of Contents
-
(2)
-
The
performance-based RSUs awarded during the 2018 fiscal year are based on the achievement of certain performance goals for the fiscal year ending
February 2, 2019 and will vest in three approximately equal installments over three years upon the Compensation Committee certification in March 2019 that performance was met and provided the
named executive officers remain continuously employed with the Company through the vesting dates, unless vesting is accelerated due to death, disability or retirement. The Compensation Committee
certified in March 2019 that the performance-based RSUs awarded in 2018 achieved the established performance goal for the fiscal year ended February 2, 2019, except for the award to
Mr. Mac Naughton.
The
Compensation Committee certified in March 2018 and March 2017 that the performance-based RSUs awarded in 2017 and 2016 achieved the established performance goal in fiscal years ended
February 3, 2018 and January 28, 2017, respectively. These awards will vest in three approximately equal installments over three years provided the named executive officers remain
continuously employed with the Company through the vesting dates, unless vesting is accelerated due to death, disability or retirement.
The
award of 62,484 performance-based RSUs granted to Mr. Philbin on March 18, 2016 provided for cliff vesting in full in 2021, on the fifth anniversary of the grant date, only upon
certification by the Compensation Committee that the applicable three-year performance criteria was satisfied and Mr. Philbin remains continuously employed with the Company through the vesting
date. The Compensation Committee determined in March 2019 that the three-year performance goal had not been met and the award was cancelled.
-
(3)
-
The
LTPP awards granted on March 30, 2018 are based on the achievement of a three-year cumulative performance goal based on adjusted operating income for the
performance period beginning on February 4, 2018 and ending on January 30, 2021. The amount of payment, if earned, will range from 0% to 200% of stated target and will be paid in 2021,
when the achievement level is available and certified by the Committee. The equity award granted on September 18, 2017 to Mr. Philbin under the LTPP is based on performance against a
two-year cumulative adjusted operating income goal for the period beginning February 4, 2018 and ending on February 1, 2020 and will cliff vest in fiscal year 2020 upon the certification
of goal achievement by the Compensation Committee.
The
LTPP awards granted on March 31, 2017 are based on the achievement of a three-year cumulative performance goal based on adjusted operating income for the performance period beginning on
January 29, 2017 and ending on February 1, 2020. The amount of payment, if earned, will range from 0% to 200% of stated target and will be paid in 2020, when the achievement level is
available and certified by the Committee. The LTPP awards granted on March 18, 2016 are based on the achievement of a three-year cumulative performance goal based on adjusted operating income
for the performance period beginning on January 31, 2016 and ending on February 2, 2019. The amount of payment, if earned, will range from 0% to 200% of stated target and will be paid in
2019, when the achievement level is available and certified by the Committee.
76
Table of Contents
Option Exercises and Stock Vested Table
In the table below, we list information on the exercise of options and the vesting of restricted stock units during the fiscal year ended
February 2, 2019. The value realized on exercise of options represents the spread between the sale price and the option strike price at the time of exercise. The value realized on vesting of
RSUs reflects the fair market value of the shares at time of vesting.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Number of Shares
Acquired on
Exercise
(#)
|
|
Value Realized
on Exercise
($)
|
|
Number of Shares
Acquired on
Vesting
(#)
|
|
Value Realized
on Vesting
($)
|
|
|
|
|
|
|
|
|
|
|
|
Gary Philbin
|
|
|
|
$
|
|
|
36,299
|
|
$
|
3,390,552
|
|
Kevin Wampler
|
|
|
|
|
|
20,337
|
|
1,920,339
|
|
Bob Sasser
|
|
|
|
|
|
86,148
|
|
8,156,790
|
|
Duncan Mac Naughton
|
|
|
|
|
|
22,000
|
|
2,115,078
|
|
Michael Witynski
|
|
|
|
|
|
9,860
|
|
927,569
|
|
Non-Qualified Deferred Compensation
Named executive officers may elect to defer up to 50% of their base salary and up to 100% of their annual incentive bonus to the Dollar Tree
and Family Dollar Supplemental Deferred Compensation Plan, an unfunded, non-qualified deferred compensation plan ("NQDC"). Elections to defer amounts earned during the next calendar year are due by
December 31 of each year and are irrevocable. Deferred amounts are held for each participant in separate individual accounts in an irrevocable rabbi trust. Executives' accounts are credited
with earnings or losses based on the rate of return of mutual funds selected by the executive, which he or she may change at any time. A deferral period and payment date must be irrevocably specified
at election for each separate annual deferral. This deferral period must be at least two years in length and the payment date can be any date on or after that point. Alternately, the payment can be
tied to termination of employment, including retirement. The executive must also make an irrevocable election regarding payment terms, which may be either a lump sum, or in specified annual
installments. Hardship withdrawals are available for unforeseeable emergency financial hardship situations, such as for an unexpected illness, accident or property loss. If a participant dies before
receiving the full value of the deferral account balances, the designated beneficiary would receive the remainder of that benefit in the same payment form as originally specified (i.e., lump
sum or installments). Executives are fully vested in their accounts and in the event the NQDC Plan is terminated upon a change in control of the Company, the executives' entire account balances will
be distributed.
Prior
to January 1, 2017, the Dollar Tree banner executives had the ability to defer a portion of their base compensation and bonuses under the Dollar Tree, Inc.
Supplemental Deferred Compensation Plan. The plan continues to exist going forward and retains all contributions and earnings previously allocated to it. Participants can continue to make investment
and distribution election changes. All contributions earned on or after January 1, 2017 are allocated to the Dollar Tree and Family Dollar Supplemental Deferred Compensation Plan.
77
Table of Contents
In
the following table, we provide detailed information regarding accumulated amounts for our executives under our NQDC Plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Executive
Contributions
in Last FY
($)
(1)
|
|
Registrant
Contributions
in Last FY
($)
(2)
|
|
Aggregate
Earnings in
Last FY
($)
(3)
|
|
Aggregate
Withdrawals/
Distributions
($)
|
|
Aggregate
Balance at
Last FYE
($)
|
|
Gary Philbin
|
|
$
|
1,260,179
|
|
$
|
|
|
$
|
(6,691
|
)
|
$
|
|
|
$
|
2,602,241
|
|
Kevin Wampler
|
|
133,358
|
|
|
|
(36,666
|
)
|
(237,445
|
)
|
872,927
|
|
Bob Sasser
|
|
|
|
|
|
|
|
|
|
|
|
Duncan Mac Naughton
|
|
|
|
|
|
|
|
|
|
|
|
Michael Witynski
|
|
|
|
|
|
|
|
|
|
|
|
Footnotes
to the Non-Qualified Deferred Compensation Table:
-
(1)
-
Executives
may defer up to 50% of their base salary and up to 100% of their annual incentive bonus into the NQDC Plan. The amounts contributed are included in their
respective columns in the Summary Compensation Table.
-
(2)
-
We
have not provided a match or other Company-funded contribution, although the NQDC Plan allows us to do so.
-
(3)
-
Amounts
deferred into the NQDC Plan are invested into select mutual funds, according to the instructions of the participating executive. Earnings shown reflect
market gains and losses and may vary from year to year depending on the performance of the underlying funds.
Potential Payments upon Termination or Change in Control
Our Executive and Retention Agreements with certain of our named executive officers and certain awards, plans and programs in which our named
executive officers participate provide for benefits or payments upon certain employment termination events, including in connection with a change in control.
Retention Agreements.
In October 2018, the Compensation Committee approved revisions to the Company's form
of change in control
Retention Agreement, which was originally adopted by the Compensation Committee in March 2007, to update the tax provisions applicable to severance payments under the agreement and make certain other
non-material clarifying and technical changes. The revised change in control Retention Agreement is offered to Company officers with the position of Chief, President or Executive Chairman, including
the named executive officers.
Under
the original and revised agreements, severance benefits are payable only upon the occurrence of both a change in control of the Company and the executive's termination without
"cause" or resignation for "good reason," as defined in the agreements (commonly known as a "double trigger"). These agreements provide for a severance payment of 2.5 times the reference salary and
reference bonus (as defined in the agreements) for our President and Chief Executive Officer, Gary Philbin and our Executive Chairman, Bob Sasser, and 1.5 times for other executives,
including Kevin Wampler, Mike Witynski and Duncan Mac Naughton. These agreements also contain a clawback provision and certain restrictive covenants which apply under certain circumstances.
78
Table of Contents
Executive Agreements.
In October 2018, the Compensation Committee approved the Company's entry into an
Executive Agreement with
certain Company officers, including the named executive officers. The Executive Agreement provides for a release and restrictive covenants to protect the Company, including a covenant not to compete,
in consideration for which the Company agreed to provide a base salary continuation benefit and reimbursement of monthly health insurance premiums for a period of up to twelve months (or until the
executive becomes employed if less than the applicable salary continuation period) in the event the executive's employment is terminated without "cause" (as defined in the agreement) or on account of
the executive's death or disability. An executive is not entitled to the benefits provided by the Executive Agreement if the executive retires, voluntarily resigns for any reason or receives payments
under the change in control Retention Agreements. Each of our named executive officers, other than the Executive Chairman, has an Executive Agreement.
Equity Plans.
Our equity compensation plans contain provisions that may convey benefits to our executives
and other plan participants
upon a change in control. Generally, the provisions address the treatment of awards upon separation from the Company due to death, disability or retirement, or due to a change in control, as defined
within the plans. The Company's Omnibus Incentive Plan, the principal plan under which we currently make awards, provides that in the event of a change in control, awards do not automatically vest,
although the Compensation Committee may accelerate the vesting or exercisability of a stock award in its sole discretion. In addition, the Omnibus Incentive Plan provides that, unless otherwise set
forth in an award agreement, separate employment agreement or retention agreement, in the event of the involuntary termination of an employee's service with the Company without "cause" within
twenty-four months after a change in control of the Company, the following will occur: (i) all of the employee's outstanding options and stock appreciation rights become vested and exercisable,
(ii) all restrictions and conditions of all restricted stock awards and RSUs held by the employee lapse and (iii) all performance units and any other awards held by such employee are
deemed to be fully earned at the participant's target level.
The
benefits and payments arising under these agreements and plans are discussed below, except to the extent a benefit or payment is available generally to all salaried employees and
does not discriminate in favor of our executive officers or to the extent already discussed under "Nonqualified Deferred Compensation" above.
-
►
-
Payments Upon Termination Due to Death or Disability
If a named executive officer's employment with us terminates due to death or disability (as defined in the applicable agreements):
Salary Continuation.
Under the Executive Agreement, the executive receives a base salary continuation benefit together with reimbursement
of monthly medical insurance premiums (if elected by the executive) for a twelve-month period.
Annual bonus.
The annual cash bonus under the Management Incentive Compensation Plan ("MICP") will not be paid.
Stock options.
Options become fully vested and generally may be exercised for a period of one year from termination of employment due to
death or disability (as defined in the applicable award agreement) unless such options have expired earlier.
79
Table of Contents
Performance-based restricted stock units (including PSUs) & LTPP awards.
Service-based vesting requirements shall be deemed
satisfied, but no payment is made until performance-based criteria are certified by the Compensation Committee.
Life Insurance.
In the event of death, a named executive officer's beneficiary will receive payments under our executive life insurance
program.
-
►
-
Payments Upon Termination Due to Retirement
In the event of the retirement (as defined in the applicable governing documents) of a named executive officer:
Annual bonus.
The annual cash bonus under the MICP will not be paid.
Stock options.
Options become fully vested and generally may be exercised for a period of three months from termination of employment for
retirement unless such options have expired earlier.
Performance-based restricted stock units (including PSUs) & LTPP awards.
Service-based vesting requirements shall be deemed
satisfied, but no payment is made until performance-based criteria are certified by the Compensation Committee. In addition, for LTPP awards, upon retirement there shall be a pro rata payout based on
months elapsed in the performance period at the time of retirement, with no payout at all if retirement occurs during the first year of the performance period.
-
►
-
Payments Upon a Voluntary Termination by the Executive
In the event of voluntary termination by a named executive officer, the annual MICP bonus will not be paid and
unvested stock
options, unvested performance-based restricted stock units and unvested LTPP awards are cancelled. Options that have vested prior to termination remain exercisable for three months after termination,
but not beyond the normal expiration date. As noted above, special provisions apply to equity awards if the voluntary termination qualifies as a retirement.
See
"Payments After a Change in Control" for a discussion of resignation by a named executive officer for good reason in connection with a change in control.
-
►
-
Payments Upon Involuntary Termination by the Company
The payments to be made to a named executive officer upon involuntary termination vary depending upon whether termination is with or without "cause"
(as defined in the applicable agreements).
Involuntary Termination with Cause.
Upon an involuntary termination with cause, a named executive officer receives no benefits under the
Executive Agreement or the change in control Retention Agreement. Vested but unexercised options and unvested performance-based restricted stock units and LTPP awards are immediately forfeited.
80
Table of Contents
Involuntary Termination without Cause.
Upon an involuntary termination without cause, the following applies to a named executive officer
(unless the termination is in connection with a change in control, which is discussed below):
-
-
The annual cash bonus under the MICP will not be paid.
-
-
A base salary continuation benefit, together with reimbursement of monthly medical insurance premiums (if elected by the executive) for twelve
months, will be paid under the Executive Agreement.
-
-
The following treatment for incentive awards:
-
o
-
Stock options. Unvested options shall be forfeited while vested options
generally may be exercised for a period of three months from termination of employment unless such options have expired earlier.
-
o
-
Performance-based restricted stock units & LTPP awards. Unearned
and unvested awards shall be forfeited and cancelled.
See
"Payments After a Change in Control" for a discussion of termination without cause of a named executive officer in connection with a change in control.
-
►
-
Payments After a Change in Control
The Company has no agreement, plan or arrangement that provides for payments to a named executive officer in connection with a change in control of the
Company unless the named executive officer's employment with us is also terminated. This is known as a "double trigger."
If
the employment of a named executive officer is:
-
-
involuntarily terminated by the Company without cause or
-
-
the executive resigns with good reason
in
each case within two years following a change in control (or in certain cases during the six months before a change in control), then in addition to earned but unpaid salary, the named executive
officer shall receive the following:
Annual Bonus.
Any earned but unpaid bonus under the MICP will be paid. In addition, for the year in which termination
occurs for which no MICP bonus will have been certified a pro rata annual bonus calculated from the three-year average of previously earned cash
bonuses is paid.
Severance Payment.
An amount equal to the sum of Reference Salary and Reference Bonus (as defined in the change in control Retention Agreement) times a
multiplier (2.5x for both the President and Chief Executive Officer and the Executive Chairman and 1.5x for all other named executive officers) will be paid.
Benefit Continuation.
Continued participation in the medical, dental, health and life insurance plans for an applicable period.
81
Table of Contents
Stock options, performance-based restricted stock units (including PSUs) and LTPP equity awards.
All service-based conditions shall be deemed to have
been satisfied, but no payment is made on such equity awards until performance-based criteria are certified by the Compensation Committee, except that for Messrs. Philbin, Sasser and Wampler,
the performance-based criteria shall be deemed met at the target level under grandfathered Retention Agreements.
LTPP Performance Cash Award.
The performance bonus cash portion of outstanding LTPP awards shall become vested and payable at the target amount.
However,
the benefits described above are capped to the extent any would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code. In that case, the
present value of the aggregate amount of all such Payments shall not exceed 2.99 times the named executive officer's "base amount" (as defined in Section 280G(b)(3) of the Code).
Please
note: The occurrence of a change in control does not otherwise impact payments to be made, if any, upon a termination of employment due to death, disability, retirement or
voluntary termination by the employee (other than for good reason) or involuntary termination for cause. See the applicable sections above for an explanation of payments, if any, in those scenarios.
Potential Payout Amounts Assuming Termination as of Fiscal Year End
The following tables reflect potential payments to each named executive officer in various termination and change in control scenarios. The
following additional conditions and assumptions apply:
-
-
Amounts are based on compensation, benefit and equity levels in effect on, and assuming the applicable termination event occurred as of, the
end of our fiscal year, Saturday, February 2, 2019.
-
-
For stock valuations, we have used the closing price of our stock on the NASDAQ Global Market on Friday, February 1, 2019 ($96.69).
-
-
The tables below report only amounts that are increased, accelerated or otherwise paid or owed as a result of the applicable scenario and thus
exclude earned but unpaid base salary through the employment termination date and stock options, performance-based restricted stock units, LTPP awards that had vested prior to the event and any
deferred compensation plan benefits. For more information, see "Nonqualified Deferred Compensation" above.
-
-
Where applicable, the tables assume that performance-based criteria in relevant awards are ultimately certified by the Compensation Committee.
None of the tables include the one-time special award granted to Mr. Philbin on March 18, 2016, as the Compensation Committee determined in March 2019 that the three-year performance
criteria had not been met and the award was cancelled.
-
-
Please note that among the named executive officers only Mr. Mac Naughton has outstanding stock options, originally granted in fiscal
year 2016, with solely service-based vesting. (See the Outstanding Equity Awards at Fiscal Year End Table above.)
-
-
The tables also exclude any amounts that are available generally to all salaried employees and do not discriminate in favor of our executive
officers.
The
amounts shown are merely estimates. We cannot determine actual amounts to be paid until a termination or change in control scenario occurs.
82
Table of Contents
Potential Payments to Named Executive Officers Upon Occurrence
of Various Termination Events, as of February 2, 2019
(excluding Change in Control)
Below are amounts payable upon various termination events
excluding
certain terminations in
connection with a change in control (which are shown on the table on page 84). There are no payouts upon voluntary termination by the executive or involuntary termination for cause. Please note
that the table below assumes, in each applicable case, that performance-based criteria of applicable awards are ultimately certified by the Compensation Committee at the target level.
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Death
($)
|
|
Disability
($)
|
|
Retirement
($)
|
|
Involuntary
Termination without
Cause
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gary Philbin
|
|
|
|
|
|
|
|
|
|
|
Salary continuation
(1)
|
|
1,413,248
|
|
1,413,248
|
|
n/a
|
|
1,413,248
|
|
|
Award vested due to event:
(2)
|
|
|
|
|
|
|
|
|
|
|
Performance-based RSUs
|
|
9,549,491
|
|
9,549,491
|
|
9,549,491
|
|
|
|
|
LTPP awards (RSUs)
|
|
2,274,923
|
|
2,274,923
|
|
1,463,275
|
|
|
|
|
LTPP awards (cash bonus)
|
|
2,000,000
|
|
2,000,000
|
|
1,250,000
|
|
|
|
|
Life insurance proceeds
(3)
|
|
700,000
|
|
n/a
|
|
n/a
|
|
n/a
|
|
|
Total
|
|
15,937,662
|
|
15,237,662
|
|
12,262,766
|
|
1,413,248
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin Wampler
|
|
|
|
|
|
|
|
|
|
|
Salary continuation
(1)
|
|
816,456
|
|
816,456
|
|
n/a
|
|
816,456
|
|
|
Award vested due to event:
(2)
|
|
|
|
|
|
|
|
|
|
|
Performance-based RSUs
|
|
2,752,862
|
|
2,752,862
|
|
2,752,862
|
|
|
|
|
LTPP awards (RSUs)
|
|
1,374,158
|
|
1,374,158
|
|
904,245
|
|
|
|
|
LTPP awards (cash bonus)
|
|
1,200,000
|
|
1,200,000
|
|
766,667
|
|
|
|
|
Life insurance proceeds
(3)
|
|
700,000
|
|
n/a
|
|
n/a
|
|
n/a
|
|
|
Total
|
|
6,843,476
|
|
6,143,476
|
|
4,423,774
|
|
816,456
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bob Sasser
|
|
|
|
|
|
|
|
|
|
|
Salary continuation
(1)
|
|
|
|
|
|
n/a
|
|
|
|
|
Award vested due to event
(2)
|
|
|
|
|
|
|
|
|
|
|
Performance-based RSUs
|
|
15,299,355
|
|
15,299,355
|
|
15,299,355
|
|
|
|
|
LTPP awards (RSUs)
|
|
2,292,520
|
|
2,292,520
|
|
1,475,006
|
|
|
|
|
LTPP awards (cash bonus)
|
|
2,000,000
|
|
2,000,000
|
|
1,250,000
|
|
|
|
|
Life insurance proceeds
(3)
|
|
700,000
|
|
n/a
|
|
n/a
|
|
n/a
|
|
|
Total
|
|
20,291,875
|
|
19,591,875
|
|
18,024,361
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Duncan Mac Naughton
|
|
|
|
|
|
|
|
|
|
|
Salary continuation
(1)
|
|
1,075,000
|
|
1,075,000
|
|
n/a
|
|
1,075,000
|
|
|
Award vested due to event:
(2)
|
|
|
|
|
|
|
|
|
|
|
Stock options
|
|
4,097,636
|
|
4,097,636
|
|
4,097,636
|
|
|
|
|
Performance-based RSUs
|
|
1,643,150
|
|
1,643,150
|
|
1,643,150
|
|
|
|
|
LTPP award (RSUs)
|
|
1,125,472
|
|
1,125,472
|
|
580,527
|
|
|
|
|
LTPP award (cash bonus)
|
|
1,000,000
|
|
1,000,000
|
|
500,000
|
|
|
|
|
Life insurance proceeds
(3)
|
|
|
|
n/a
|
|
n/a
|
|
n/a
|
|
|
Total
|
|
8,941,258
|
|
8,941,258
|
|
6,821,313
|
|
1,075,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Witynski
|
|
|
|
|
|
|
|
|
|
|
Salary continuation
(1)
|
|
716,456
|
|
716,456
|
|
n/a
|
|
716,456
|
|
|
Award vested due to event:
(2)
|
|
|
|
|
|
|
|
|
|
|
Performance-based RSUs
|
|
2,300,545
|
|
2,300,545
|
|
2,300,545
|
|
|
|
|
LTPP award (RSUs)
|
|
949,979
|
|
949,979
|
|
566,378
|
|
|
|
|
LTPP award (cash bonus)
|
|
825,000
|
|
825,000
|
|
475,000
|
|
|
|
|
Life insurance proceeds
(3)
|
|
500,000
|
|
n/a
|
|
n/a
|
|
n/a
|
|
|
Total
|
|
5,291,980
|
|
4,791,980
|
|
3,341,923
|
|
716,456
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Represents
the aggregate amount of the base salary continuation benefit and reimbursement of monthly medical insurance premiums during the salary continuation
period assuming the executive elected to receive such reimbursement for its maximum duration. The severance benefit is not payable upon retirement.
83
Table of Contents
-
(2)
-
Under
the terms of our outstanding award agreements, unvested stock options vest in full in the event of the executive's death, disability or retirement. Under
performance-based restricted stock units & LTPP awards, service-based vesting requirements shall be deemed satisfied, but no payment is made until performance-based criteria are certified by
the Compensation Committee. In addition, in the case of retirement, the LTPP payout is pro rata with the time elapsed under the performance period, with no payout for a retirement before the end of
the first year of the performance period. Since this table assumes termination on the last day of the fiscal year, we have assumed that no named executive officer retired before the end of the first
year of the performance period.
-
(3)
-
In
the event of death, a named executive officer's beneficiary will receive payments under our executive life insurance program.
Potential Payments to Named Executive Officers Upon Occurrence
of "Double Trigger" / Change in Control, as of February 2, 2019
Where a named executive officer is involuntarily terminated by the Company without cause or resigns with good reason, in each case within two
years following a change in control (or in certain cases during the six months before a change in control), then the named
executive officer shall receive the following amounts. Please note that the table assumes that (i) a qualifying change in control has occurred and (ii) performance-based criteria of
applicable awards are ultimately certified by the Compensation Committee at the target amount.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonus
(2)
|
|
Award Vested Due to Event
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Severance
Payment
(1)
|
|
Earned but
Unpaid
MICP
|
|
Pro-Rata
Calculated
Bonus
|
|
Options &
Perf-based
RSUs
|
|
LTPP
Award
(RSUs)
|
|
LTPP
Award
(cash bonus)
|
|
Total
|
|
|
Gary Philbin
|
|
$ 6,316,504
|
|
$ 827,590
|
|
$
|
|
$ 9,549,491
|
|
$ 2,274,923
|
|
$ 2,000,000
|
|
$ 20,968,508
|
|
|
Kevin Wampler
|
|
1,768,887
|
|
243,174
|
|
|
|
2,752,862
|
|
1,374,158
|
|
1,200,000
|
|
7,339,081
|
|
|
Bob Sasser
|
|
8,602,717
|
|
1,040,631
|
|
|
|
15,299,355
|
|
2,292,520
|
|
2,000,000
|
|
29,235,223
|
|
|
Duncan Mac Naughton
|
|
2,346,363
|
|
|
|
|
|
5,740,786
|
|
1,125,472
|
|
1,000,000
|
|
10,212,621
|
|
|
Michael Witynski
|
|
1,881,135
|
|
657,360
|
|
|
|
2,300,545
|
|
949,979
|
|
825,000
|
|
6,614,019
|
-
(1)
-
The
Retention Agreement provides severance in the amount of 1.5x to 2.5x the sum of the reference salary and reference bonus amounts. This column also includes the
cost of continued health benefits provided under the agreement.
-
(2)
-
Under
the Retention Agreement, if there are amounts earned but unpaid under our MICP, then these shall be paid out, together with a pro rata calculated bonus for
the fiscal year in which termination occurs. Because this table assumes termination occurs as of the last day of the fiscal year, it shows actual MICP amounts earned for the completed fiscal year. At
such date, there would be no pro rata bonus allocable to the new fiscal year, but the full reference bonus amounts for the duration of such new fiscal year would be $1,114,542, $368,976, $1,720,573,
$501,933 and $544,323, respectively.
-
(3)
-
These
three columns reflect the value of unvested options, performance-based RSUs, and LTPP awards that become payable under the scenario described.
84
Table of Contents
Equity Compensation Plans
The following table summarizes information regarding shares issuable as of February 2, 2019, under our equity
compensation plans, including the number of shares of common stock subject to options, restricted stock units, deferred shares and other rights granted to employees, consultants and members of our
Board of Directors; the weighted-average exercise price of outstanding options; and the number of shares remaining available for future award grants under these plans. Additional information regarding
our equity compensation plans can be found in footnote 10 of our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended February 2, 2019.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plan category
|
|
Number of
securities to be
issued upon
exercise of
outstanding
options, warrants
and rights
(a)
|
|
Weighted-average
exercise price of
outstanding
options, warrants
and rights
(b)
|
|
Number of
securities remaining
available for future
issuance under
equity
compensation plans
(excluding
securities reflected
in column(a))
(c)
|
|
|
|
Plans approved by security holders
(1)
|
|
|
1,836,906
|
|
|
|
$
|
75.64
|
|
|
|
20,728,817
|
|
|
|
|
Plans not approved by security holders
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(a)
-
Amounts
represent outstanding options, restricted stock units and deferred ("phantom") shares as of February 2, 2019.
-
(b)
-
Not
included in the calculation of weighted-average exercise price are (i) 1,446,100 restricted stock units and (ii) 178,906 deferred shares.
-
(c)
-
Amounts
represent shares remaining available for future awards under all of our equity-based plans, including shares remaining under our qualified Employee Stock
Purchase Plan and our 2013 Director Deferred Compensation Plan. Out of the 20,728,817 shares remaining available for future issuance, 2,963,098 represent the number of shares remaining available for
future issuance under our Employee Stock Purchase Plan as of February 2, 2019.
-
(1)
-
Equity-based
plans approved by our shareholders include: the 2003 Non-Employee Director Stock Option Plan, the 2013 Director Deferred Compensation Plan, the 2015
Employee Stock Purchase Plan (which replaced a predecessor plan) and the Omnibus Incentive Plan (which replaced the 2003 Equity Incentive Plan and the 2004 Executive Officer Equity Plan.
-
(2)
-
Does
not include 155,296 shares to be issued upon the exercise of options with a weighted-average exercise price of $76.89 that were granted under the 2006
Incentive Plan assumed by us in connection with our merger with Family Dollar.
85
Table of Contents
PAY RATIO DISCLOSURE
Pursuant to Item 402(u) of Regulation S-K and Section 953(b) of the Dodd-Frank Act, we present below the
required ratio of the annual total compensation of our Chief Executive Officer for fiscal 2018, as reported in the Summary Compensation Table of this proxy statement, to the annual total compensation
of our median employee (excluding the Chief Executive Officer). In addition, we are providing a supplemental pay ratio that excludes part-time, temporary and seasonal employees, which we believe
provides a more representative comparison of the Chief Executive Officer's annual total compensation to the median employee's annual total compensation.
Pay Ratio Methodology
In determining the median employee, we included all U.S. employees who were employed by the Company on February 2, 2019, the date we
selected to identify our employees for purposes of the pay ratio calculation. We excluded all 3,395 associates who are employed in Canada, as they represent less than five percent (5%) of our total
workforce. We then compiled compensation information for the period beginning on February 4, 2018 through February 2, 2019. Out of a total population of 178,760 employees, 112,006 were
part-time employees and 10,069 were either temporary or seasonal workers.
The
SEC's rules for identifying the median employee and calculating the pay ratio based on that employee's annual total compensation allow companies to adopt a variety of methodologies,
to apply certain exclusions and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. Therefore, we chose to use regular salary and wages, as
reflected in our payroll records, as our consistently applied compensation measure. We excluded bonuses and equity from our calculation, as these compensation components are not widely distributed
among our workforce.
We
annualized the compensation for all permanent employees who worked for the Company less than the full year (such as new hires during the year and employees on an unpaid leave of
absence during the measurement period). We did not annualize the compensation for temporary or seasonal positions and we did not make full-time equivalent adjustments for employees. With respect to
part-time workers who worked less than the measurement period, we calculated wages using the hourly rate for each associate and a reasonable estimate of the average number of hours worked by our
part-time workforce. We did not make any cost-of-living adjustments in identifying the median employee.
Based
on our methodology, we determined that our median employee in fiscal 2018 was a part-time hourly store associate located in the United States with annual total compensation in the
amount of $11,250.
Required Pay Ratio
The Chief Executive Officer's total annual compensation for fiscal 2018, as reported in the Summary Compensation Table on page 70 of
this proxy statement, was $9,398,842 and the median employee's total annual compensation for fiscal 2018 was $11,250, resulting in an estimated pay ratio of 835:1.
The
pay ratio reported by other companies may not be comparable because companies have different employee populations and compensation practices and may utilize different methodologies,
exclusions, estimates and assumptions in calculating their own ratios. We consider
86
Table of Contents
both
the required and supplemental pay ratios to be reasonable estimates based on the methodology we used to determine our median employee.
Supplemental Pay Ratio
In addition to the pay ratio required by the SEC's rules, we are also providing a supplemental pay ratio that excludes all part-time, temporary
and seasonal employees of the Company from the determination of our median employee and the calculation of the annual total compensation of our median employee. Our large population of 122,075
part-time, temporary and seasonal workers out of a total population of 178,760 employees of the Company has the effect of lowering the annual total compensation for our median employee. We believe
that a pay ratio that uses only full-time employees as of February 2, 2019 (excluding the Chief Executive Officer) for purposes of determining our median employee provides a more representative
comparison of the Chief Executive Officer's annual total compensation to the median employee's annual total compensation.
We
identified the median employee for purposes of the supplemental pay ratio using the same methodology as the required pay ratio. Applying this methodology to our full-time employees
at February 2, 2019, we determined that our median employee in fiscal 2018 was a full-time, hourly Assistant Manager located in the United States with total annual compensation in the amount of
$28,188. As a result, the ratio of the total annual compensation of the Chief Executive Officer for fiscal 2018, as reported in the Summary Compensation Table, to the median full-time employee's total
annual compensation for fiscal 2018, was estimated to be 333:1.
We
are committed to good corporate governance practices and we believe our compensation program and philosophy are designed to attract and retain good talent, motivate our associates
and recognize individual achievements.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Review of Transactions with Related Parties
Under our Code of Ethics, directors, officers and employees are required to disclose for approval any transactions, activities, interests or
relationships that may create a conflict of interest (including financial transactions, investments and receipt of corporate gifts). The Audit Committee annually reviews related party transactions
involving directors and executive officers, matters relating to possible conflicts of interest and other issues related to ethical business practices. The Company adheres to the foregoing policy for
potential related party transactions, but such policy is not in written form. Approval of any related party transactions is evidenced by Audit Committee resolutions in accordance with our practice of
approving transactions in this manner.
Related Party Transactions
Since February 4, 2018, the beginning of our last fiscal year, there have been no transactions, or any currently proposed transaction,
between the Company and its officers, directors or other related persons that require disclosure under Item 404(a) of Regulation S-K, as adopted by the Securities and Exchange
Commission.
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Table of Contents
OWNERSHIP OF COMMON STOCK
The table below shows the number of shares of our common stock beneficially owned on March 22, 2019
by:
-
-
each of the directors and nominees for director;
-
-
each of the named executive officers;
-
-
all directors and executive officers as a group; and
-
-
each other person who has reported beneficial ownership of more than five percent of the outstanding common stock.
The
address of each director and executive officer of Dollar Tree is c/o Dollar Tree, Inc., 500 Volvo Parkway, Chesapeake, Virginia 23320. Percentage computations are based on
238,203,647 shares of our stock outstanding as of March 22, 2019.
|
|
|
|
|
|
|
|
|
|
Beneficial Ownership
(1)
|
|
|
|
|
|
|
|
Directors and Named Executive Officers
|
|
Shares
|
|
Percent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arnold S. Barron
|
|
41,083
|
(2)
|
*
|
|
Gregory M. Bridgeford
|
|
9,330
|
(3)
|
*
|
|
Thomas W. Dickson
|
|
|
|
|
|
Conrad M. Hall
|
|
114,182
|
(4)
|
*
|
|
Lemuel E. Lewis
|
|
74,942
|
(5)
|
*
|
|
Jeffrey G. Naylor
|
|
12,703
|
(6)
|
*
|
|
Gary M. Philbin
|
|
106,526
|
(7)
|
*
|
|
Bob Sasser
|
|
208,784
|
(8)
|
*
|
|
Thomas A. Saunders III
|
|
2,491,768
|
(9)
|
1.0%
|
|
Stephanie P. Stahl
|
|
3,167
|
(10)
|
*
|
|
Carrie A. Wheeler
|
|
|
|
*
|
|
Thomas E. Whiddon
|
|
27,003
|
|
*
|
|
Carl P. Zeithaml
|
|
28,594
|
(11)
|
*
|
|
Duncan Mac Naughton
|
|
14,425
|
(12)
|
*
|
|
Kevin S. Wampler
|
|
143,518
|
(13)
|
*
|
|
Michael A. Witynski
|
|
15,062
|
(14)
|
*
|
|
All current directors and executive officers as a group (23 persons)
|
|
3,333,947
|
|
1.4%
|
|
Other 5% Shareholders
|
|
|
|
|
|
|
|
|
|
|
|
The Vanguard Group, Inc.
100 Vanguard Blvd.
Malvern, Pennsylvania 19355
|
|
24,520,245
|
(15)
|
10.3%
|
|
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Table of Contents
|
|
|
|
|
|
|
|
|
|
Beneficial Ownership
(1)
|
|
|
|
|
|
|
|
Other 5% Shareholders
|
|
Shares
|
|
Percent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FMR LLC
245 Summer Street
Boston, Massachusetts 02210
|
|
20,352,346
|
(16)
|
8.5%
|
|
T. Rowe Price Associates, Inc.
100 E. Pratt Street
Baltimore, Maryland 21202
|
|
19,240,220
|
(17)
|
8.0%
|
|
BlackRock, Inc.
55 East 52nd Street
New York, New York 10055
|
|
18,317,336
|
(18)
|
7.7%
|
|
-
*
-
less
than 1%
-
(1)
-
As
used in this table, "beneficial ownership" means the sole or shared power to vote or direct the voting or to dispose or direct the disposition of any security. A
person is deemed as of any date to have "beneficial ownership" of any security that such person has a right to acquire within 60 days after such date. Any security that any person named above
has the right to acquire within 60 days is deemed to be outstanding for purposes of calculating the ownership percentage of such person, but is not deemed to be outstanding for purposes of
calculating the ownership percentage of any other person. Deferred shares acquired by our directors through a deferred compensation plan are assumed to be issuable in a lump sum within 60 days
if the director were to terminate service within such time.
-
(2)
-
Includes
23,913 deferred shares acquired through a deferred compensation plan which are assumed to be issuable if he were to conclude his Board service within
60 days. Includes 2,170 owned by a family member, over which Mr. Barron may indirectly exercise investment or voting power.
-
(3)
-
Includes
8,531 deferred shares acquired through a deferred compensation plan which are assumed to be issuable if he were to conclude his Board service within
60 days.
-
(4)
-
Includes
10,000 shares owned by a private foundation over which Mr. Hall has the power to vote and dispose of the shares on behalf of the foundation and
28,383 deferred shares acquired through a deferred compensation plan which are assumed to be issuable if he were to conclude his Board service within 60 days.
-
(5)
-
Includes
53,828 deferred shares acquired through a deferred compensation plan which are assumed to be issuable if he were to conclude his Board service within
60 days.
-
(6)
-
Includes
1,699 issuable upon the exercise of stock options and 2,004 deferred shares acquired through a deferred compensation plan which are assumed to be issuable
if he were to conclude his Board service within 60 days.
-
(7)
-
Includes
38,736 held in a GRAT. Excludes 108,484 shares underlying unvested restricted stock units.
-
(8)
-
Excludes
150,699 shares underlying unvested restricted stock units.
-
(9)
-
Includes
63,756 shares owned by irrevocable trusts for the benefit of certain Saunders family members, of which Mr. Saunders is a trustee, and 29,210 shares
issuable upon exercise of stock options.
-
(10)
-
Includes
3,167 deferred shares acquired through a deferred compensation plan which are assumed to be issuable if she were to conclude her Board service within
60 days.
89
Table of Contents
-
(11)
-
Includes
27,795 deferred shares acquired through a deferred compensation plan which are assumed to be issuable if he were to conclude his Board service within
60 days.
-
(12)
-
Excludes
180,991 shares underlying unvested stock options and 28,634 shares underlying unvested restricted stock units.
-
(13)
-
Includes
20,470 shares held in a GRAT and excludes 33,728 shares underlying unvested restricted stock units.
-
(14)
-
Excludes
29,245 shares underlying unvested restricted stock units.
-
(15)
-
Includes
shares held or controlled by The Vanguard Group, Inc. and its subsidiaries, Vanguard Fiduciary Trust Company and Vanguard Investments
Australia, Ltd. Based on a Schedule 13G/A filed on February 11, 2019 by The Vanguard Group, Inc. for the period ended December 31, 2018. The Vanguard Group reported
sole voting power with respect to 277,695 shares, shared voting power with respect to 61,617 shares, sole dispositive power with respect to 24,185,986 shares and shared dispositive power with respect
to 334,259 shares.
-
(16)
-
Includes
shares held or controlled by FMR LLC and its affiliates, including FIAM LLC, Fidelity Institutional Asset Management Trust Company, Fidelity
Management & Research Company, FMR CO., INC. and Strategic Advisers LLC. Based on a Schedule 13G/A filed on February 13, 2019 by FMR LLC for the period
ended December 31, 2018, FMR reported sole voting power with respect to 2,129,996 shares and sole dispositive power with respect to 20,352,346 shares.
-
(17)
-
Based
on a Schedule 13G filed on February 14, 2019 by T. Rowe Price Associates, Inc. for the period ended December 31, 2018. The
Schedule 13G reported that T. Rowe Price Associates is an investment advisor to individual and institutional clients, including affiliated registered investment companies, and has sole voting
power with respect to 7,279,619 shares and sole dispositive power as to 19,240,220 shares.
-
(18)
-
Includes
shares held or controlled by BlackRock, Inc. and its subsidiaries, including BlackRock Life Limited, BlackRock International Limited, BlackRock
Advisors, LLC, BlackRock (Netherlands) B.V., BlackRock Institutional Trust Company, National Association, BlackRock Asset Management Ireland Limited, BlackRock Financial
Management, Inc., BlackRock Japan Co., Ltd., BlackRock Asset Management Schweiz AG, BlackRock Investment Management, LLC, BlackRock Investment Management (UK) Limited,
BlackRock Asset Management Canada Limited, BlackRock Asset Management Deutschland AG, BlackRock (Luxembourg) S.A., BlackRock Investment Management (Australia) Limited, BlackRock Advisors (UK)
Limited, BlackRock Fund Advisors, BlackRock Asset Management North Asia Limited, BlackRock (Singapore) Limited and BlackRock Fund Managers Ltd. Based on a Schedule 13G/A filed on
February 4, 2019 by BlackRock, Inc. for the period ended December 31, 2018. BlackRock reported sole voting power with respect to 16,478,817 shares and sole dispositive power with
respect to 18,317,336 shares.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires our directors, officers and persons who own more than 10% of our stock to
file reports of ownership and changes in ownership of our stock with the Securities and Exchange Commission and NASDAQ, and to provide us with copies of these reports.
SEC
regulations require us to identify anyone who filed a required report late during the most recent fiscal year. Based solely on our review of the reports and written representations
furnished to us, we believe that all of these reporting persons complied with their filing requirements for 2018, except Robert H. Rudman and Duncan Mac Naughton, each of whom had one late
Form 4 that was inadvertently filed late, and Thomas A. Saunders III who had two late Form 4 filings that were inadvertently late.
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Table of Contents
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
Dollar Tree's Board of Directors is soliciting your proxy to vote your shares at the 2019 annual meeting of shareholders. This
proxy statement summarizes the information you need to know to vote at the meeting.
We
are providing access to our proxy materials primarily over the Internet rather than mailing paper copies of those materials to each shareholder. A Notice of Internet Availability of
Proxy Materials is being mailed on or about April 29, 2019, to all shareholders entitled to vote at the annual meeting. The Notice tells you how to:
-
-
View our proxy materials for the annual meeting, including this proxy statement and the Dollar Tree 2018 Annual Report, on the Internet and
vote; and
-
-
Instruct us to send proxy materials to you by mail or email.
The
principal executive offices of Dollar Tree are located at, and our mailing address is, 500 Volvo Parkway, Chesapeake, Virginia, 23320; telephone: (757) 321-5000.
When and where is the annual meeting?
As shown in the Notice of Annual Meeting, the 2019 annual meeting of shareholders of Dollar Tree, Inc. will be held at the Hilton
Norfolk The Main, 100 East Main Street, Norfolk, Virginia 23510, on Thursday, June 13, 2019 at 8:00 a.m. local time.
Who is entitled to vote at the meeting?
You are entitled to vote if you were a shareholder of record of our common stock as of the close of business on April 9, 2019. Holders of
record have one vote for each share held at the close of business on the record date. At that time, there were 238,521,992 shares of Dollar Tree, Inc. common stock outstanding. Votes will be
tabulated by our transfer agent, Computershare.
What is the difference between a shareholder of record and a beneficial owner of shares held in "street
name?"
If your shares are registered directly in your name with the Company's transfer agent, Computershare, you are a shareholder of record. If your
shares are held in an account at a brokerage firm, bank or similar institution, then you are the beneficial owner of shares held in "street name." The institution holding your account is considered
the shareholder of record for purposes of voting at the annual meeting. As the beneficial owner, you have the right to instruct the institution on how to vote the shares held in your account.
How can I cast my vote?
Shareholder of Record
If you are a shareholder of record, you may vote in person at the annual meeting, by mail (if you request a paper copy of our proxy materials)
or over the telephone or the Internet.
-
-
To vote in person, we will give you a ballot to vote your shares when you arrive at the meeting.
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Table of Contents
-
-
To vote by mail using the proxy card (if you request a paper copy), simply complete, sign, date and return the proxy card promptly in the
postage-paid envelope provided.
-
-
To vote by Internet, go to www.investorvote.com/DLTR and follow the steps outlined on the secured website.
-
-
To vote by telephone, dial toll free, 1-800-652-VOTE (8683) within the US, US territories and Canada any time on a touch tone telephone. Follow
the instructions provided by the recorded message.
-
-
If you vote your shares more than one time by any method, your shares will be voted in accordance with the vote that is received on the latest
date.
|
|
|
|
|
Internet
|
|
Telephone
|
|
Mail
|
|
|
|
|
|
www.investorvote.com/DLTR
Vote 24/7
|
|
1-800-652-VOTE (8683)
|
|
Cast your ballot, date and sign your proxy card and send by pre-paid mail
|
Visit www.investorvote.com/DLTR
|
|
Call 1-800-652-VOTE (8683)
|
|
Return your dated and signed proxy card in the postage-paid envelope provided.
|
You will need the 15 digit identification number included in your proxy card or notice.
|
|
You will need the 15 digit identification number included in your proxy card or notice.
|
|
|
Beneficial Owner
If your shares are held in a stock brokerage account or by a bank or other similar institution,
follow the voting instructions on the voting instruction form that you receive from them.
Shareholders
who hold their shares in a
stock brokerage account or by a bank or other nominee
are not able to vote at the annual meeting unless they
have a legal proxy from the recordholder of the shares confirming that they are the beneficial owner of those shares.
-
-
To vote by mail, simply complete, sign, date and promptly return the voting instruction form in the envelope provided by your bank, broker or
other nominee.
-
-
To vote by Internet or by telephone, please follow the instructions on the voting instruction form that you received.
-
-
If you vote your shares more than one time by any method, your shares will be voted in accordance with the vote that is received on the latest
date.
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Table of Contents
What are the Board's voting recommendations?
|
|
|
|
|
|
|
|
|
|
PLEASE VOTE
|
|
BOARD
RECOMMENDATION
|
1
|
|
The Company's thirteen director nominees for the Board of Directors
|
|
For
all nominees
|
2
|
|
Approval, on an advisory basis, of the compensation of our named executive officers
|
|
For
|
3
|
|
Ratification of the selection of KPMG LLP as our independent registered accounting firm for the fiscal year 2019
|
|
For
|
|
|
|
|
|
How will my shares be voted if I submit a proxy card but do not specify how I want to vote?
If you submit a validly executed proxy card or voting instruction form but do not specify how you want to vote your shares with respect to a
particular proposal, then your shares will be voted in line with the Board's recommendation with respect to the proposal, i.e., (i) "FOR" the election of your Board's thirteen nominees,
(ii) "FOR" the advisory resolution approving the compensation paid to the Company's named executive officers and (iii) "FOR" the ratification of KPMG LLP as the Company's
independent registered accounting firm. Should any of our Board's nominees be unable or unwilling to stand for election at the time of the annual meeting, the proxies named on the proxy card may vote
for a replacement nominee recommended by the Board of Directors, or the Board may reduce the number of directors to be elected at the annual meeting. At this time, the Board knows of no reason why any
of the Board's nominees would not be able to serve as a director if elected.
As
of the date of this proxy statement, the Board of Directors knows of no business other than that set forth above to be transacted at the annual meeting, but if other matters
requiring a vote do arise, it is the intention of the proxies named on the proxy card to vote in accordance with their best judgment on such matters.
Can I change my voting instructions before the meeting?
You may revoke your proxy by sending in a signed proxy card with a later date, providing subsequent telephone or Internet voting instructions,
providing a written notice of revocation to the Corporate Secretary of Dollar Tree, Inc. at the address on page 91 prior to the annual meeting or attending the annual meeting to cast
your vote in person. If your shares are held in "street name," please follow the directions given by the institution that holds your shares to change or revoke your voting instructions.
What constitutes a quorum?
A quorum is necessary for the transaction of business at the annual meeting. A quorum exists when holders of a majority of the total number of
issued and outstanding shares of common stock that are entitled to vote at the annual meeting are present in person or by proxy.
Who will count the votes?
A representative of Computershare, our transfer agent, will act as the Inspector of Election, determine the presence of a quorum and tabulate
the votes.
93
Table of Contents
What is the effect of abstentions and broker non-votes?
The inspector will treat valid proxies marked "abstain" or proxies required to be treated as broker "non-votes" as present for purposes of
determining whether there is a quorum at the annual meeting. A broker "non-vote" occurs when you fail to provide your broker with voting instructions on a particular proposal and the broker does not
have discretionary authority to vote your shares on that particular proposal because the proposal is not a "routine" matter under the applicable rules. Abstentions and broker "non-votes" with respect
to the matters to be voted on at the 2019 annual meeting will have no effect on the outcome of the vote on such matters.
Unless
your broker receives appropriate instructions from you, your broker may not use discretionary authority to vote your shares on any of the matters to be considered at the 2019
annual meeting
other than the ratification of our independent registered public accounting firm. Therefore, we strongly urge you to vote your shares.
How can I obtain an additional proxy card?
If you lose, misplace or otherwise need to obtain a proxy card and you are a shareholder of record, you should contact Computershare
at 1-800-622-6757 (US, Canada, Puerto Rico) or 781-575-4735 (non-US).
If
you hold your shares of common stock in "street name" and therefore are not a shareholder of record, contact your account representative at the broker, bank or similar institution
through which you hold your shares.
Where and when will I be able to find the voting results?
You can find the official voting results on our Form 8-K filed with the Securities and Exchange Commission within four business days after the
annual meeting.
Who pays for the costs of the proxy solicitations?
The cost of soliciting proxies will be borne by us. Proxies may be solicited by officers, directors and regular employees of our Company or our
affiliates, none of whom will receive any additional compensation for their services. Such solicitations may be made personally, or by mail, facsimile, telephone, electronic means, telegram or
messenger. We will reimburse banks, brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses incurred by them in sending proxy material and annual reports to the
beneficial owners of shares in accordance with the schedule of charges approved by the National Association of Securities Dealers, Inc. We have engaged Innisfree M&A Incorporated to assist with
the solicitation of proxies for the annual meeting for a fee not to exceed $20,000, plus reimbursement for out-of-pocket expenses. We have also agreed to indemnify Innisfree M&A Incorporated against
certain liabilities relating to, or arising out of, its engagement.
|
|
|
|
|
YOUR VOTE IS EXTREMELY IMPORTANT. Even if you plan to attend the annual meeting, please vote your shares by completing, signing and dating the proxy card or voting instruction form and returning it in the postage-prepaid envelope or vote by telephone
or the Internet by following the instructions provided on the proxy card or voting instruction form. For additional information, see "How can I cast my vote?" above.
|
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Table of Contents
|
|
|
|
|
|
|
|
|
|
|
PROPOSAL NO. 1
ELECTION OF DIRECTORS
|
|
|
Directors and Nominees
At the 2019 annual meeting of shareholders, the terms of all thirteen directors are expiring: Arnold S. Barron, Gregory M. Bridgeford, Thomas
W. Dickson, Conrad M. Hall, Lemuel E. Lewis, Jeffrey G. Naylor, Gary M. Philbin, Bob Sasser, Thomas A. Saunders III, Stephanie P. Stahl, Carrie A. Wheeler, Thomas E. Whiddon and Carl P.
Zeithaml. Following the retirement of former Board member Mary Anne Citrino effective December 31, 2018, the Board appointed Thomas W. Dickson as a new member of the Board, effective
December 31, 2018, and Carrie A. Wheeler as a new member, effective March 5, 2019.
The
Board has re-nominated all current directors for appointment as directors to serve for a one-year term. All nominees have indicated their willingness to serve as directors. If a
nominee becomes
unable to stand for re-election, the persons named in our proxy will vote for any substitute nominee proposed by the Board of Directors.
Pursuant
to the Company's bylaws, a director nominee will be elected by a majority of votes cast in uncontested director elections. In contested elections, the plurality voting standard
will apply.
In
addition, we have a corporate governance policy requiring each director nominee to submit a resignation letter contingent in part on his or her failure to receive a majority of the
votes cast. See "Majority Voting in Uncontested Election of Directors" beginning on page 24 for more on this policy.
Vote Required
Our directors are elected by a "majority" vote in uncontested elections such as this election. Each director nominee shall be elected by a vote
of the majority of the votes cast with respect to the director nominee. A majority of votes cast means that the number of shares cast "FOR" a director's election must exceed the number of votes cast
"AGAINST" such director's election. Abstentions and broker non-votes will have no effect on the outcome of the election.
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THE BOARD RECOMMENDS THAT YOU VOTE "FOR" EACH OF THE COMPANY'S NOMINEES FOR DIRECTOR.
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PROPOSAL NO. 2
ADVISORY VOTE ON COMPENSATION
OF NAMED EXECUTIVE OFFICERS
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As
described in the Compensation Discussion and Analysis, the Company is committed to a pay-for-performance policy. To that end, our executive compensation program is designed to:
(1) align executive pay with shareholders' interests; (2) recognize individual initiative and achievements; (3) attract, motivate and retain highly qualified executives; and
(4) unite the executive management team to a common objective. We expect a significant portion of an executive's total compensation to be at risk, tied to both our annual and long-term
performance.
Please
read our Compensation Discussion and Analysis beginning on page 40 and the tables and narrative that follow for additional details about our executive compensation
program.
This
proposal, commonly known as a "Say on Pay" proposal, gives our shareholders the opportunity to express their views on the compensation paid to our named executive officers. This
vote is not intended to address any specific item of compensation, but rather the overall compensation of the Company's named executive officers and the philosophy, policies and practices as disclosed
in this proxy statement. Accordingly, the Company is asking its shareholders to vote "FOR" the following resolution at the annual meeting:
"RESOLVED, that the Company's shareholders approve, on an advisory basis, the compensation of our named executive officers, as disclosed pursuant to the
compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables and related narrative discussion set forth in this
proxy statement."
Vote Required
The advisory vote on the executive compensation program will be passed if the votes cast "FOR" the proposal exceed the votes cast "AGAINST" it.
The vote is advisory and will not be binding upon our Board of Directors. However, the Board of Directors and the Compensation Committee value the opinions that our shareholders express in their votes
and to the extent there is any significant vote against the proposal, we will consider the shareholders' concerns in making future executive compensation decisions.
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THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE ADVISORY APPROVAL OF OUR EXECUTIVE COMPENSATION PROGRAM.
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PROPOSAL NO. 3
RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
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Our
Audit Committee, which consists entirely of independent directors, has selected KPMG LLP ("KPMG") to serve as our independent registered public accounting firm for fiscal
year 2019. KPMG has served as our independent registered public accounting firm since 1987. You are being asked to ratify the appointment by our Audit Committee of KPMG as our independent registered
public accounting firm for fiscal year 2019.
As
a matter of good governance, the Board is submitting the selection of KPMG to its shareholders for ratification. If our shareholders do not ratify the selection of KPMG, the Audit
Committee will reconsider whether or not to retain KPMG in the future. However, the Audit Committee is not bound by a vote either for or against the firm. A representative of KPMG will be present at
the 2019 annual meeting of shareholders. The representative will have the opportunity to make a statement and will be available to respond to appropriate questions.
Independent Registered Public Accounting Firm Fees
The table below shows the aggregate fees billed by KPMG for professional services rendered in connection with the audit of our annual financial
statements set forth in our Annual Report on Form 10-K for the fiscal years ended February 2, 2019 and February 3, 2018; the audit of our internal control over financial reporting
as of February 2, 2019 and February 3, 2018; and the review of our unaudited quarterly financial statements set forth in our Quarterly Reports on Form 10-Q for each of our fiscal
quarters during 2018 and 2017, as well as fees paid to KPMG for audit-related work and other services:
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Fiscal 2018
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Fiscal 2017
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Audit fees
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$
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3,309,664
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$
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3,273,328
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Audit-related fees
(a)
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25,000
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41,000
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Tax fees
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All other fees
(b)
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13,000
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Total fees
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3,334,664
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3,327,328
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(a)
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Audit-related
fees consist of fees for services related to the audit of financial statements of our employee benefit plans for Dollar Tree and Family
Dollar.
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(b)
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Fees
related to agreed-upon procedures.
We
did not engage our principal accountants to provide any professional services in connection with operating our information systems or designing or implementing hardware or software
that aggregates source data underlying the financial statements or generates information.
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All
audit work performed by KPMG is approved in advance by our Audit Committee, including the amount of fees due and payable to them for such work. In addition, our Audit Committee also
approves all non-audit related work performed by KPMG in advance of the commencement of such work. Our Audit Committee has delegated to the Chair of the Committee the right to approve such non-audit
related assignments between meetings of the Committee, and the Chair then reports on all such approvals at the next meeting of the Committee, which considers ratification of such approvals by the
Committee Chair. In 2018, all services provided by KPMG were approved by our Audit Committee in advance of the performance of work by KPMG.
The
Audit Committee of our Board has determined that the non-audit services rendered by our independent accountants during our most recent fiscal year are compatible with maintaining
their independence.