Document:

Annual Incentive Plan

DOLLAR GENERAL CORPORATION

ANNUAL INCENTIVE PLAN 

SECTION 1

PURPOSE

The purpose of the Dollar General Corporation Annual Incentive Plan is to permit Dollar General Corporation (the “Company”), through awards of annual incentive compensation that satisfy the requirements for performance-based compensation under Section 162(m) of the Internal Revenue Code, to attract and retain executives and to motivate these executives to promote the profitability and growth of the Company.

SECTION 2

DEFINITIONS

“Award” shall mean the amount granted to a Participant by the Committee for a Performance Period. 

“Board” shall mean the Board of Directors of the Company, or the successor thereto. 

“Code” shall mean the Internal Revenue Code of 1986, as amended. 

“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 Code. 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended. 

“Executive” shall mean any “covered employee” (as defined in Section 162(m) of the Code) and, in the discretion of the Committee, any other executive officer of the Company or its Subsidiaries. 

“Participant” shall mean, for each Performance Period, each Executive who has been selected by the Committee to participate in the Plan. 

“Performance Period” shall mean the Company’s fiscal year or any other period designated by the Committee with respect to which an Award may be granted. Performance Periods may not overlap. 

“Plan” shall mean this Dollar General Corporation Annual Incentive Plan, as amended from time to time. 

“Qualified Performance-Based Award” means an Award that is intended to qualify for the Section 162(m) Exemption and is made subject to performance goals based on Qualified Performance Measures.

“Qualified Performance Measures” means one or more of the performance measures listed below upon which performance goals for certain Qualified Performance-Based Awards may be 

1

established from time to time by the Committee within the time period prescribed by Section 162(m) of the Code:

(a)

Net earnings or net income (before or after taxes); 

(b)

Earnings per share; 

(c)

Net sales or revenue growth; 

(d)

Gross or net operating profit; 

(e)

Return measures (including, but not limited to, return on assets, capital, invested capital, equity, sales, or revenue); 

(f)

Cash flow (including, but not limited to, operating cash flow, free cash flow, and cash flow return on capital); 

(g)

Earnings before or after taxes, interest, depreciation, and/or amortization; 

(h)

Gross or operating margins; 

(i)

Productivity ratios; 

(j)

Share price (including, but not limited to, growth measures and total shareholder return); 

(k)

Expense targets; 

(l)

Margins; 

(m)

Operating efficiency; 

(n)

Customer satisfaction; 

(o)

Working capital targets; 

(p)

Economic Value Added; 

(q)

Volume; 

(r)

Capital expenditures; 

(s)

Market share; 

(t)

Costs; 

(u)

Regulatory ratings; 

(v)

Asset quality; 

(w)

Net worth; and 

(x)

Safety

“Section 162(m) Cash Maximum” means $2,500,000. 

“Section 162(m) Exemption” means the exemption from the limitation on deductibility imposed by Section 162(m) of the Code that is set forth in Section 162(m)(4)(C) of the Code or any successor provision thereto.

SECTION 3

ADMINISTRATION 

The Plan shall be administered by the Committee, which shall have full authority to interpret the Plan, to establish rules and regulations relating to the operation of the Plan, to select Participants, to determine the maximum Awards and the amounts of any Awards and to make all determinations and take all other actions necessary or appropriate for the proper administration of the Plan. The Committee’s interpretation of the Plan, and all actions taken within the scope of its authority, shall be final and binding on the Company, its shareholders and Participants, Executives, former Executives and their respective successors and assigns. No member of the Committee shall be eligible to participate in the Plan.

2

SECTION 4

DETERMINATION OF AWARDS 

(a)

Prior to the beginning of each Performance Period, or at such later time as may be permitted by applicable provisions of the Code (which, in the case of any Qualified Performance-Based Award, currently is not later than the earlier of (i) 90 days after the beginning of the period of service to which the performance goal(s) relate or (ii) the first 25% of the period of service), the Committee shall establish: (1) the Executives or class of Executives who will be Participants in the Plan; (2) for each Participant a maximum Award, which shall be less than the Section 162(m) Cash Maximum; and (3) the performance goal(s) and Qualified Performance Measure(s) applicable to, and the method for computing the amount payable upon achievement of such performance goal(s) in connection with, any Qualified Performance-Based Award.

(b)

Following the end of each Performance Period, and before any payments are made under the Plan, the Committee shall certify in writing the satisfaction of the performance goal(s) for any Qualified Performance Measure(s) applicable to any Qualified Performance-Based Award. 

(c)

The Committee may reduce or eliminate the Award granted to any Participant based on factors determined by the Committee, including but not limited to, performance against budgeted financial goals and the Participant’s personal performance, provided, however, that any such reduction or elimination shall not operate to increase a Qualified Performance-Based Award, or amount payable thereunder, to any Participant who is Executive.  The Committee may not increase a Qualified Performance-Based Award, or amount payable thereunder, granted to a Participant who is an Executive.  

SECTION 5 

PAYMENT OF AWARDS 

Each Participant shall be eligible to receive, as soon as practicable after the amount of such Participant’s Award for a Performance Period has been determined, payment of the Award in cash.  Payment of the award may be deferred in accordance with a written election by the Participant in accordance with the terms of the Company’s CDP/SERP Plan, as such Plan may be amended and/or restated from time to time. 

SECTION 6 

AMENDMENTS

The Committee may amend the Plan at any time and from time to time, provided that no such amendment that would require the consent of the shareholders of the Company pursuant to Section 162(m) of the Code, NYSE listing rules or the Exchange Act, or any other applicable law, rule or regulation, shall be effective without such consent. No amendment which adversely affects a Participant’s rights to, or interest in, an Award granted prior to the date of the amendment shall be effective unless the Participant shall have agreed thereto in writing. 

3

SECTION 7 

TERMINATION 

The Committee may terminate this Plan at any time but in no event shall the termination of the Plan adversely affect the rights of any Participant to a previously granted Award without such Participant’s written consent. 

SECTION 8 

OTHER PROVISIONS

(a)

No Executive or other person shall have any claim or right to be granted an Award under this Plan until such Award is actually granted. Neither the establishment of this Plan, nor any action taken hereunder, shall be construed as giving any Executive any right to be retained in the employ of the Company. Nothing contained in this Plan shall limit the ability of the Company to make payments or awards to Executives under any other plan, agreement or arrangement. 

(b)

The rights and benefits of a Participant hereunder are personal to the Participant and, except for payments made following a Participant’s death, shall not be subject to any voluntary or involuntary alienation, assignment, pledge, transfer, encumbrance, attachment, garnishment or other disposition. 

(c)

Awards under this Plan shall not constitute compensation for the purpose of determining participation or benefits under any other plan of the Company unless specifically included as compensation in such plan. 

(d)

The Company shall have the right to deduct from Awards any taxes or other amounts required to be withheld by law. 

(e)

All questions pertaining to the construction, regulation, validity and effect of the provisions of the Plan shall be determined in accordance with the laws of the State of Tennessee without regard to principles of conflict of laws. 

(f)

No member of the Committee or the Board, and no officer, employee or agent of the Company shall be liable for any act or action hereunder, whether of commission or omission, taken by any other member, or by any officer, agent, or employee, or, except in circumstances involving bad faith, for anything done or omitted to be done in the administration of the Plan. 

SECTION 9

EFFECTIVE DATE

The Plan shall be effective as of March 16, 2005, subject to approval by the shareholders of the Company in accordance with Section 162(m) of the Code.

42005 TEAMSHARE

2005 Store Support & DC

 TEAMSHARE

Serve your Customers, Simplify Processes, Control Expenses, Work Smart. . .

TEAMSHARE is an annual incentive program designed to encourage high performance, while rewarding employees for their commitment to Dollar General’s success. It’s called TEAMSHARE because it requires teamwork. . .our TEAMSHARE goals can only be met through the effort of every DG employee. Reaching our goals requires dedication to establishing cost efficiencies, simplifying processes, and focusing on customers. Strive for excellence in 2005!

Your 2005 TEAMSHARE Plan

	Fiscal Year-end Total Net Income

	Bonus Level

	Your Bonus

	 	 	 
	$____________

	3

	_____%

	$____________

	2

	_____%

	$____________

	1

	_____%

	* Plan information is non-public and confidential.

	 

How Does it Work?

Your TEAMSHARE bonus is based on the Company’s total net income at fiscal year-end.  That means if Dollar General’s year-end net income is $______________, you will receive a “1st Level” TEAMSHARE bonus. If the year-end net income is $_______________, you will receive a “2nd Level” TEAMSHARE bonus. Payout opportunities between “levels” are possible.

You can calculate your bonus using the following formula:

Base Pay x Bonus Payout Opportunity x mos. of service

12 months

Please refer to program guidelines (on back of page) for more details.

What is Net Income?

Net Income = Gross Margin – Operating Expenses, Interest Expense and Taxes

Note:  May exclude unusual items as approved from time to time by the Compensation Committee of the Board of Directors.

·

Operating Expenses = Payroll, Supplies, Operating Costs, Utilities, etc.

Strive for excellence in 2005!

GUIDELINES

Who’s Eligible?  

An employee must meet each of the following criteria:

1.

Regular, full-time or part-time Store Support or DC employee during the fiscal year.

2.

Actively employed with Dollar General on March 15, 2006.  An employee terminated for gross misconduct after March 15, 2006 will forfeit his/her bonus.

3.

Receive a year-end performance rating of “meets standard” (1.75) or greater.

Months of Service

Bonuses are pro-rated based on the number of months employed during the fiscal year. An employee must be hired/rehired on or before the 15th of the month to receive credit for the month.

Example

Jane Doe hired on June 20, 2005.

Jane will not receive credit for June as the majority of the month is over.

Jane will receive credit for July, 2005 – January, 2006.

Jane will receive a pro-rated bonus for seven months = 7/12

Rehired Employees

Employees who leave the company and are rehired during the same fiscal year will be bonus eligible from the date of rehire unless rehired within 30 days from the date of termination. Service will be bridged for persons who are away from the Company less than 30 days. Persons who are rehired after 30 days forfeit any bonus amount earned during the fiscal year prior to termination.

Transfers/Promotions

Employees who also worked in a retail position during the fiscal year are eligible for a pro-rated bonus from each bonus plan. Note: Eligibility requirements must be met in each respective plan to receive a bonus from that plan.

Example

District Manager from Jan 29, 2005 – June 12, 2006 = 4/12 District bonus plan

Corporate employee from June 13, 2005 – Feb 3, 2006 = 8/12 Store Support bonus plan

Employees on Leave of Absence

Employees on leave are eligible for a pro-rated bonus based on the number of months worked during the fiscal year (provided employment has not terminated before March 15, 2006).

Bonus Payout

If the Company meets its performance goals and you meet the eligibility guidelines, you will be eligible for a TEAMSHARE bonus! Please note that the IRS considers a bonus to be supplemental income. Therefore, the minimum federal tax, as well as FICA and other applicable state taxes, are deducted as required.

Your bonus will be paid as soon as possible after the Company year-end performance results are available. Generally, checks are issued in April.

* Dollar General reserves the right to adjust, amend or suspend the TEAMSHARE program at any time.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00090-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00090-of-00352.parquet"}]]