8-KLeadership ChangesMaterial AgreementsCorporate Changes+1

DOLLAR GENERAL CORP 8-K Report, Material Agreement (Nov 18, 2009)

Filed November 18, 2009For Securities:DG

Summary

Dollar General Corporation (DG) filed an 8-K on November 18, 2009, detailing significant corporate actions following its initial public offering (IPO). The report outlines the entry into a Shareholders' Agreement, primarily between investment funds affiliated with Kohlberg Kravis Roberts & Co. (KKR) and GS Capital Partners VI Fund (GS Investors). This agreement grants KKR consent rights on major corporate decisions and establishes director appointment rights for both KKR and GS Investors. Additionally, the company terminated its monitoring agreement with Goldman Sachs & Co. and KKR, incurring a termination fee of approximately $64 million, which included a transaction fee related to the IPO. The filing also announces the appointment of two new directors, Warren F. Bryant and William C. Rhodes, III, to the Board of Directors. It further details the adoption of an Amended and Restated 2007 Stock Incentive Plan, increasing the authorized shares for awards, and an Amended and Restated Annual Incentive Plan (AIP) with a $5 million per fiscal year earning cap for covered employees. Amendments to Management Stockholder's Agreements were made to exempt shares acquired in the open market or through the IPO's directed share program from transfer restrictions. Finally, the company's Amended and Restated Charter and Bylaws were filed, detailing the authorized capital stock, director removal provisions, and requiring an 80% shareholder vote for certain amendments.

Key Highlights

  • 1Dollar General entered into a Shareholders' Agreement with KKR and GS Investors, granting them significant governance rights including consent on certain corporate actions and board representation.
  • 2The company terminated its monitoring agreement with KKR and Goldman Sachs for approximately $64 million, including a transaction fee related to the IPO.
  • 3Two new directors, Warren F. Bryant and William C. Rhodes, III, were appointed to the Board of Directors.
  • 4An Amended and Restated 2007 Stock Incentive Plan was adopted, increasing authorized shares and modifying award parameters.
  • 5An Amended and Restated Annual Incentive Plan (AIP) was established with a maximum annual incentive payout of $5 million per covered employee.
  • 6Management Stockholder's Agreements were amended to remove transfer restrictions for shares acquired post-IPO through open market or directed share programs.
  • 7Amended and Restated Charter and Bylaws were filed, increasing authorized common stock to 1 billion shares and introducing higher voting thresholds for certain amendments and director removal.

Frequently Asked Questions

The Shareholders' Agreement, effective November 18, 2009, formalizes the relationship between Dollar General and major shareholders, investment funds affiliated with KKR and GS Investors. It grants KKR significant oversight through consent rights on certain material corporate actions and provides both KKR and GS Investors with rights to appoint directors to the board and its committees, ensuring their continued influence on the company's strategic direction.

Dollar General terminated its monitoring agreement with Goldman Sachs & Co. and KKR, which was established in connection with the 2007 merger. This termination, effective in connection with the IPO, cost the company approximately $64 million. This amount included a 1% transaction fee on the IPO's gross proceeds (around $5 million) and roughly $59 million for the termination itself.

The Amended and Restated 2007 Stock Incentive Plan increased the total authorized shares for stock-based awards to 31,142,858, with specific limits on options, SARs, and other awards per participant annually. The Amended and Restated Annual Incentive Plan (AIP) sets a maximum annual incentive payout of $5 million for 'covered employees' (including executive officers) under Section 162(m) of the Internal Revenue Code, contingent upon achieving performance targets.

The Amended and Restated Charter increases authorized capital stock to 1 billion shares of common stock and 1 million shares of preferred stock. Key governance changes include requiring an 80% shareholder vote for amendments to certain charter and bylaw provisions, and allowing director removal only 'for cause' by a majority of voting shares or a majority of the board. The bylaws also restrict the ability of shareholders to call special meetings, with that power reserved for the board, chairman, or CEO.