8-KLeadership ChangesMaterial AgreementsRegulation FD

DOLLAR TREE, INC. 8-K Report, Material Agreement (Mar 20, 2007)

Filed March 20, 2007For Securities:DLTR

Summary

This Form 8-K filing from Dollar Tree Stores, Inc. (DLTR) dated March 20, 2007, primarily details updates to executive compensation and the adoption of new agreements. Key developments include the establishment of executive base salaries for fiscal year 2007, the authorization of fiscal year 2006 bonuses and the establishment of targets and performance goals for fiscal year 2007 bonuses. The company also addressed equity awards, confirming prior year performance-based restricted stock units vested and announcing new grants of stock options and restricted stock units for fiscal year 2007. Furthermore, the filing announces the adoption of "Change in Control Retention Agreements" for most named executive officers, designed to provide severance payments contingent on a change in control event and subsequent termination of employment. These agreements aim to retain key leadership during potential transition periods. The company also enhanced executive life insurance coverage. Lastly, a press release regarding the company's participation in the Merrill Lynch Retailing Leaders Conference was furnished.

Key Highlights

  • 1Dollar Tree Stores, Inc. adopted "Change in Control Retention Agreements" for key executives on March 14-15, 2007.
  • 2These agreements provide severance benefits (up to 2.5x salary/bonus for CEO, 1.5x for others) triggered by a change in control and subsequent termination without cause or resignation for good cause ("double trigger").
  • 3Executive base salaries for fiscal year 2007 were established, with the CEO (Bob Sasser) set at $750,000.
  • 4Fiscal year 2006 bonuses were authorized, and targets for fiscal year 2007 bonuses were set at 100% of salary for the CEO and 50% for other named executive officers.
  • 5Performance-based restricted stock units from fiscal years 2005 and 2006 met their performance requirements and were authorized for issuance.
  • 6New grants of stock options and restricted stock units were approved for key executives, effective March 30, 2007.
  • 7Company-paid executive term life insurance coverage was enhanced to one times salary (up to $700,000) in addition to existing coverage.

Frequently Asked Questions

These agreements are designed to provide financial incentives and severance payments to key executives in the event of a change in control of Dollar Tree Stores, Inc., coupled with their subsequent termination of employment under specific conditions (a "double trigger"). They were adopted as part of a year-long review of executive compensation programs to help retain executive talent during periods of potential corporate transition or acquisition.

For fiscal year 2007, executive bonuses are structured with a target bonus potential of 100% of salary for the CEO and 50% of salary for other named executive officers. The actual bonus payout is primarily based on the company's earnings per share (85%) and the executive's achievement of personal performance goals (15%).

The filing indicates that previously awarded performance-based restricted stock units from fiscal years 2005 and 2006 met their performance targets and were approved for issuance. Additionally, new grants of stock options and restricted stock units were approved for key executives, effective March 30, 2007. Specific numbers vary by executive.

Yes, the company agreed to provide additional company-paid term life insurance coverage for officers, including the named executives, equivalent to one times their annual salary, capped at $700,000. This is in addition to the existing $50,000 company-paid life insurance.