8-KMaterial AgreementsExhibits & Filings

DOLLAR GENERAL CORP 8-K Report, Material Agreement (Apr 5, 2006)

Filed April 5, 2006For Securities:DG

Summary

Dollar General Corporation (DG) filed an 8-K on April 5, 2006, to report the entry into new, material definitive employment agreements with two key executive officers: David M. Tehle, Executive Vice President and Chief Financial Officer, and Kathleen R. Guion, Division President, Store Operations & Store Development. These agreements, effective April 1, 2006, replace prior employment agreements and are set for a term of three years. The new agreements outline specific base salaries, bonus participation, stock incentive plan eligibility, vacation time, expense reimbursement, and various benefits. Significantly, they also detail severance provisions for different termination scenarios, including termination without cause, for good reason, or within two years of a change in control, with provisions for base salary continuation, bonus payments, and benefit continuation. The filing also formally notes the termination of the previous employment agreements for these officers.

Key Highlights

  • 1Dollar General entered into new 3-year employment agreements with CFO David M. Tehle and Division President Kathleen R. Guion, effective April 1, 2006.
  • 2The agreements establish minimum base salaries of $580,000 for Mr. Tehle and $500,000 for Ms. Guion.
  • 3Both executives are eligible for participation in the Company's bonus program based on performance criteria.
  • 4The agreements include provisions for equity awards under the Company's stock incentive plan.
  • 5Substantial severance packages are detailed for various termination events, including "for cause," "good reason," and "change in control" scenarios.
  • 6Severance upon termination without cause or for good reason includes 24 months of base salary continuation and a lump sum payment equal to two times the target incentive bonus.
  • 7Severance related to a change in control provides for double the base salary and target incentive bonus, along with potential excise tax gross-up payments.

Frequently Asked Questions

The primary purpose of this 8-K filing is to disclose the execution of new, three-year employment agreements with two key executives, David M. Tehle (CFO) and Kathleen R. Guion (Division President), effective April 1, 2006. It also formally reports the termination of their previous employment agreements.

The new agreements include specific minimum base salaries ($580,000 for Mr. Tehle, $500,000 for Ms. Guion), eligibility for performance-based bonuses, stock incentive plan awards, vacation time, benefits, and detailed severance provisions in case of termination under various circumstances.

Severance is detailed for termination without cause or by the officer for good reason, including 24 months of base salary continuation and a lump sum payment equal to twice the target incentive bonus. Special provisions are in place for terminations within two years of a change in control, which include double the base salary and target incentive bonus, plus potential excise tax gross-up payments to ensure the executive receives the intended net benefit.

The agreements define "cause" by actions such as fraud, dishonesty, material breach of law or company policy, prejudice to the company's reputation, intoxication, violence, or certain felony convictions. "Good reason" for an executive to resign typically includes a significant reduction in duties or title, salary or bonus reduction, failure to continue significant compensation plans, relocation of executive offices outside of middle-Tennessee, material breach of the agreement by the company, or failure of a successor to assume the agreement.