Exhibit 10.1

 

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2011 Teamshare Incentive Program

(established under the Amended and Restated Dollar General Corporation Annual
Incentive Plan)

 

I.            Definitions

 

As used in this document:

 

“Committee” shall mean the Compensation Committee of the Board or any
subcommittee thereof which meets the requirements of Section 162(m)(4)(C) of the
Internal Revenue Code of 1986, as amended.

 

“Management” refers to an individual Teamshare participant’s direct supervisor
and/or the Company’s executive officers up to and including the CEO.

 

“Merit Effective Date” shall mean April 1 of the applicable performance period
or, if later, the applicable date of the annual merit increase (e.g., for the
2011 Teamshare program, the Merit Effective Date is April 1, 2011).

 

“Teamshare” shall mean this Teamshare Incentive Program, as established under
the Amended and Restated Annual Incentive Plan, as amended from time to time.

 

II.          Teamshare Overview

 

The Committee establishes the terms of Teamshare, which provides each eligible
employee with an opportunity to receive a cash bonus payment equal to a certain
percentage of his or her base salary based upon Dollar General’s achievement of
one or more pre-established financial performance measures for a specified
performance period (typically, our fiscal year).  When more than one financial
performance measure is selected, the Committee determines the applicable weight
to be assigned to each of the selected measures.

 

Threshold and target performance levels are established for each of the selected
performance measures. No Teamshare payout may be made unless the threshold
performance level is achieved. The amount payable to each eligible employee if
the Company reaches the target performance level(s) is equal to a specified
percentage of the eligible employee’s salary, subject to adjustment for
performance discussed below under IV (except in the case of executive
officers).  Teamshare payments for financial performance below or above the
applicable target levels are prorated on a graduated scale commensurate with
performance.

 

III.         2011 Teamshare Program

 

For the 2011 Teamshare program, the Committee selected financial performance
measures based upon earnings before interest, taxes, depreciation and
amortization, as

 

March 17, 2011

Teamshare

 

 

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adjusted for certain items (“Adjusted EBITDA”) and return on invested capital
(“ROIC”).  The Adjusted EBITDA measure and the ROIC measure are weighted 90% and
10%, respectively, of the total Teamshare pool.  If, for example, the Company
achieves the target Adjusted EBITDA performance level but does not achieve the
threshold ROIC performance level, the Teamshare pool will fund at 90%. In
determining the level of performance the Company has achieved for each
performance measure at year end, certain categories of items previously
identified by the Committee may be excluded from the calculation.  Threshold
performance results for both Adjusted EBITDA and ROIC coincide with potential
Teamshare payout levels equal to 50% of individual payout targets (as a
percentage of the eligible employee’s base salary).

 

IV.         Determination of Bonuses

 

(a)   If the Company achieves at least the threshold financial performance
levels, each employee who participates in Teamshare will become eligible to
receive a Teamshare payout if he or she receives at least a satisfactory
individual performance review.

 

(b)   Management (or the Committee in the case of non-executive officers;
executive officers may not have an upward adjustment to the Teamshare bonus
payout) may adjust upward or downward, or entirely eliminate, the Teamshare
payout to any eligible employee based upon personal performance, provided the
total funded amount of the Teamshare pool is not exceeded.

 

V.          Individual Eligibility

 

(a)   To be eligible for a Teamshare payout, an employee must:

1.     Be an active regular, full-time or part-time store support center (SSC)
or distribution center (DC) employee during the performance period (for
Teamshare program, the Company’s 2011 fiscal year).

 

2.     Be hired by January 15 of the performance period.

 

3.     Be employed with the Company through the end of the performance period
and on the date on which the Teamshare payment is made (unless otherwise
required by state law).

 

4.     Have received a year-end performance rating of “Needs Improvement” or
better (for officers, any Teamshare payment is in the Committee’s discretion if
the officer receives a “needs improvement” performance rating). Employees rated
“Unsatisfactory” are ineligible.

 

(b)   Bonuses for the estates of eligible employees will be eligible to receive
the Teamshare payment if the employee’s death occurs on or after the end of the
performance period.

 

VI.         Administrative Rules

 

(a)   Bonuses for eligible employees classified as exempt (below the executive
officer level) are calculated based on the Company financial performance, with
20% pooled

 

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for allocation on individual performance. At year-end, Management will use the
following guidelines in determining an adjustment:

 

Performance Rating

 

Total Bonus Opportunity

O

 

105% - 115%

VG

 

100% - 110%

G

 

90% - 100%

NI

 

40% - 80%

U

 

0%

 

(b)   At year-end, the guidelines above will also be provided to Management for
adjusting any Teamshare payouts for eligible non-exempt or hourly employees
rated “Needs Improvement”.

 

(c)   Any adjustments to Teamshare payouts for officers are determined by the
Committee.

 

(d)   Each eligible employee’s Teamshare payout is computed as a percentage of
the applicable base salary (or day of pay if hourly) plus any shift
differential.

 

(e)   Teamshare payouts are calculated for eligible employees from the beginning
of the performance period to the Merit Effective Date based on the eligible
employee’s salary (or day of pay if hourly) as of the Merit Effective Date.

 

(f)    Teamshare payouts will be prorated for changes to an eligible employee’s
position, salary, individual target, shift differential or, status that occur
between the Merit Effective Date and the end of the performance period based on
the number of days the applicable element applies.

 

(g)   Teamshare payouts are prorated to exclude leaves of absence during the
performance period.

 

(h)   Teamshare payouts will be made no later than April 15 of the year
following the fiscal year in which financial performance is measured (e.g., for
the 2011 Teamshare program, payouts, if any, will be made no later than
April 15, 2012).

 

(i)    Teamshare information is proprietary and confidential. Employees are
reminded that they may not disclose Teamshare information relating to the
Company’s financial goals or performance. Such disclosure may result in
disciplinary action, up to and including termination. The Company reserves the
right to adjust, amend or suspend Teamshare at any time for any reason,
including, but not limited to, unforeseen events.

 

VII.       Tax and Other Withholding Information

 

The IRS considers incentive payments as supplemental wages.  In accordance with
IRS guidelines, Dollar General will withhold federal income taxes at the
supplemental rate

 

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(currently established at 25%).  In addition, this payment will be subject to
applicable social security, Medicare, state and local taxes. Voluntary
deductions (e.g. health insurance, 401k, etc.) will not be deducted from this
amount.  Where required by law, specific garnishments (e.g., child support) may
be deducted, as appropriate, from this amount.  Certain state laws require
incentive payments be held for up to 30 days after the check date pending review
of applicable child support garnishments.  After the Company receives
notification from the state child support agencies regarding whether part or all
of the impacted employee’s incentive payment should be paid toward child
support, the Company will pay any remaining incentive funds with the next
regular payroll.

 

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Supplement to Teamshare Program Description

 

For purposes of the 2011 Teamshare program, adjusted EBITDA is computed in
accordance with the Company’s credit agreements, and ROIC is calculated as total
return (calculated as the sum of operating income, depreciation and amortization
and minimum rentals, less taxes) divided by average invested capital of the most
recent five quarters (calculated as the sum of total assets and accumulated
depreciation and amortization, less cash, goodwill, accounts payable, other
payables, accrued liabilities, plus 8x minimum rentals).  Each of adjusted
EBITDA and ROIC calculations shall:

 

·      exclude the impact of (a) certain costs, fees and expenses related to our
acquisition and related financing by Kohlberg Kravis Roberts & Co., any
refinancings, any related litigation or settlements of such litigation, and the
filing and maintenance of a market maker registration statement; (b) any costs,
fees and expenses directly related to any transaction that results in a Change
in Control (within the meaning of the Company’s Amended and Restated 2007 Stock
Incentive Plan) or related to any primary or secondary offering of the Company’s
common stock or other security; (c) share-based compensation charges (for
adjusted EBITDA only); (d) any gain or loss recognized as a result of derivative
instrument transactions or other hedging activities; (e) any gains or losses
associated with the early retirement of debt obligations; (f) charges resulting
from significant natural disasters; and (g) any significant gains or losses
associated with our LIFO computation; and

 

·      unless the Committee disallows any such item, also exclude (a) non-cash
asset impairments; (b) any significant loss as a result of an individual
litigation, judgment or lawsuit settlement (including a collective or class
action lawsuit and security holder lawsuit, among others); (c) charges for
business restructurings; (d) losses due to new or modified tax or other
legislation or accounting changes enacted after the beginning of the 2011 fiscal
year; (e) significant tax settlements; and (f) any significant unplanned items
of a non-recurring or extraordinary nature.

 

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