Big Lots, Inc.
4900 E. Dublin-Granville Road
Columbus, Ohio 43081
April 13, 2022
Dear Big Lots Shareholder:
We cordially invite you to attend the 2022 Annual Meeting of Shareholders of Big Lots, Inc. The
Annual Meeting will be held at our corporate offices located at 4900 E. Dublin-Granville Road, Columbus,
Ohio 43081 on Tuesday, May 24, 2022, beginning at 10:00 a.m., Eastern Time.
The following pages contain the Notice of Annual Meeting of Shareholders and the Proxy Statement.
You should review this material for information concerning the business to be conducted at the Annual
Meeting.
Your vote is important and we encourage you to attend the Annual Meeting. For additional information
regarding how to attend the Annual Meeting, please see “Attendance at the Annual Meeting” on page 2 of
the Proxy Statement. Whether or not you plan to attend the Annual Meeting, we urge you to vote as soon as
possible. If you attend the Annual Meeting and wish to participate by voting electronically during the
Annual Meeting, you may revoke your previously submitted proxy as described in the Proxy Statement.
Thank you for your ongoing support of, and continued interest in, Big Lots, Inc.
Respectfully submitted,
JAMES R. CHAMBERS
Chair
BRUCE K. THORN
President and Chief Executive Officer
NOTICE OF 2022 ANNUAL MEETING OF SHAREHOLDERS
Tuesday, May 24, 2022
10:00 a.m., Eastern Time
4900 E. Dublin-Granville Road
Columbus, Ohio 43081
Notice is hereby given that the 2022 Annual Meeting of Shareholders of Big Lots, Inc. will be held at
our corporate offices located at 4900 E. Dublin-Granville Road, Columbus, Ohio 43081 on Tuesday, May 24,
2022, beginning at 10:00 a.m., Eastern Time.
The Annual Meeting is being held for the following purposes:
1. To elect as directors the eleven nominees named in our accompanying Proxy Statement;
2. To approve, on an advisory basis, the compensation of our named executive officers;
3. To ratify the appointment of Deloitte & Touche LLP as our independent registered public
accounting firm for fiscal 2022; and
4. To transact such other business as may properly come before the Annual Meeting.
Only shareholders of record at the close of business on the record date, March 29, 2022, are entitled to
notice of and to vote at the Annual Meeting and any postponement or adjournment thereof. Further
information regarding voting rights and matters to be voted upon is presented in the accompanying Proxy
Statement.
On or about April 13, 2022, we began mailing to our shareholders of record at the close of business on
March 29, 2022 a Notice of Internet Availability of Proxy Materials containing instructions on how to access
this Notice of Annual Meeting of Shareholders, the Proxy Statement and our Annual Report to
Shareholders for our fiscal year ended January 29, 2022 (“fiscal 2021”), as well as instructions on how to
request a paper copy of the proxy materials.
By Order of the Board of Directors,
Ronald A. Robins, Jr.
Executive Vice President, Chief Legal and Governance Officer,
General Counsel and Corporate Secretary
April 13, 2022
Columbus, Ohio
Your vote is important. Shareholders are urged to vote online. If you attend the Annual Meeting, you may
revoke your previously submitted proxy as described in the Proxy Statement. For additional information
regarding how to attend the Annual Meeting, please see “Attendance at the Annual Meeting” on page 2 of the
Proxy Statement.
BIG LOTS, INC.
PROXY STATEMENT
TABLE OF CONTENTS
ABOUT THE ANNUAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PROPOSAL ONE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GOVERNANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DIRECTOR COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
STOCK OWNERSHIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PROPOSAL TWO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
AUDIT COMMITTEE DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PROPOSAL THREE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SHAREHOLDER PROPOSALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PROXY SOLICITATION COSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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PROXY STATEMENT
The Board of Directors (“Board”) of Big Lots, Inc., an Ohio corporation (“we,” “us,” “our,” the
“Company” or “Big Lots”), is furnishing you this proxy statement (this “Proxy Statement”) to solicit
proxies for use at the 2022 Annual Meeting of Shareholders of Big Lots to be held at our corporate offices
located at 4900 E. Dublin-Granville Road, Columbus, Ohio 43081 on Tuesday, May 24, 2022 beginning at
10:00 a.m., Eastern Time (including any adjournments, postponements or continuations thereof, the
“Annual Meeting”).
This Proxy Statement is dated April 13, 2022, and on or about April 13, 2022, we began mailing to our
shareholders of record at the close of business on March 29, 2022 a Notice of Internet Availability of Proxy
Materials containing instructions on how to access the Notice of Annual Meeting of Shareholders, this
Proxy Statement and our Annual Report to Shareholders for our fiscal year ended January 29, 2022 (“fiscal
2021”).
ABOUT THE ANNUAL MEETING
Purpose of the Annual Meeting
At the Annual Meeting, shareholders will act upon the matters outlined in the Notice of Annual
Meeting included with this Proxy Statement. Specifically, our shareholders will be asked to:
(1) elect eleven directors to serve until the 2023 Annual Meeting of the Shareholders of the Company;
(2) approve, on an advisory basis, the compensation of our named executive officers, as disclosed in
this Proxy Statement pursuant to Item 402 of Regulation S-K, including the Compensation
Discussion and Analysis, compensation tables and the narrative discussion accompanying the
tables (“say-on-pay resolution”);
(3)
ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting
firm for our fiscal year ending January 28, 2023 (“fiscal 2022”); and
(4)
transact such other business as may properly come before the Annual Meeting.
Under our governing documents, no other business may be raised by shareholders at the Annual
Meeting unless proper and timely notice has been given to us by the shareholders seeking to bring such
business before the meeting.
Shareholder Voting Rights
Only those shareholders of record at the close of business on March 29, 2022, the record date for the
Annual Meeting (“Record Date”), are entitled to receive notice of, and to vote at, the Annual Meeting. At
the Record Date, the Company had 28,557,532 common shares, $0.01 par value per share (“Common Shares”)
outstanding. Each of the outstanding Common Shares entitles the holder thereof to one vote on each
matter to be voted upon at the Annual Meeting or any postponement or adjournment thereof. The holders
of our Common Shares have no cumulative voting rights in the election of directors. All voting at the Annual
Meeting will be governed by our Amended Articles of Incorporation, our Amended Code of Regulations
and the Ohio General Corporation Law.
Registered Shareholders and Beneficial Shareholders
If your Common Shares are registered in your name directly with our transfer agent, Computershare
Investor Services, LLC, you are considered a holder of record (which we also refer to as a registered
shareholder). If you hold our Common Shares in a brokerage account or through a bank or other holder of
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record, you are considered the beneficial shareholder of the Common Shares, which shares are often
referred to as being held in “street name.”
Internet Availability of Proxy Materials
In accordance with rules adopted by the Securities and Exchange Commission (“SEC”), instead of
mailing a printed copy of our proxy materials to each shareholder of record, we are permitted to furnish
our proxy materials, including the Notice of Annual Meeting of Shareholders, this Proxy Statement and our
Annual Report to Shareholders, by providing access to such documents on the Internet. Generally,
shareholders will not receive printed copies of the proxy materials unless they request them. We believe
furnishing proxy materials to our shareholders on the Internet will allow us to provide our shareholders with
the information they need, while reducing the costs of delivery of our proxy materials and the environmental
impact of the Annual Meeting.
A Notice of Internet Availability of Proxy Materials that provides instructions for accessing our proxy
materials on the Internet was mailed directly to registered shareholders. The Notice of Internet Availability
of Proxy Materials also provides instructions regarding how registered shareholders may vote their Common
Shares on the Internet. Registered shareholders who prefer to receive a paper or email copy of our proxy
materials should follow the instructions provided in the Notice of Internet Availability of Proxy Materials for
requesting such paper or email copies.
A notice that directs our beneficial shareholders to the website where they can access our proxy
materials should be forwarded to each beneficial shareholder by the broker, bank or other holder of record
that is considered the registered shareholder with respect to the Common Shares of the beneficial shareholder.
Such broker, bank or other holder of record should also provide to the beneficial shareholders instructions
on how the beneficial shareholders may request a paper or email copy of our proxy materials. Beneficial
shareholders have the right to direct their broker, bank or other holder of record on how to vote their
Common Shares by following the voting instructions they receive from their broker, bank or other holder of
record.
To enroll in the electronic delivery service for future shareholder meetings, use your Notice of Internet
Availability of Proxy Materials (or proxy card, if you received printed copies of the proxy materials) to
register online at www.proxyvote.com and, when prompted, indicate that you agree to receive or access
shareholder communications electronically in future years.
Attendance at the Annual Meeting
All of our shareholders as of the record date, or their duly appointed proxies, may attend the Annual
Meeting. Registration and seating will begin at 9:30 a.m., Eastern Time, and the Annual Meeting will begin
at 10:00 a.m., Eastern Time. If you attend the Annual Meeting, you may be asked to present valid photo
identification, such as a driver’s license or passport. Cameras, recording devices and other electronic devices
will not be permitted at the Annual Meeting. If you hold your Common Shares as a beneficial shareholder,
you may also be asked to present a copy of a brokerage or bank statement reflecting your beneficial ownership
of our Common Shares as of the record date. An audio recording of the entire Annual Meeting will be
available in the Investor Relations section of our website (www.biglots.com) after the meeting.
How to Vote and Revoke Your Vote
Registered Shareholders
After receiving your Notice of Internet Availability of Proxy Materials (or proxy card, if you received
printed copies of the proxy materials), registered shareholders are urged to visit www.proxyvote.com to
access our proxy materials.
If you are a registered shareholder, there are several ways for you to vote your Common Shares:
• Vote By Internet Before the Date of the Annual Meeting. You will have the opportunity to vote your
Common Shares online at www.proxyvote.com until May 23, 2022 at 11:59 p.m., Eastern Time.
When voting online before the date of the Annual Meeting, you must have the control number included
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on your Notice of Internet Availability of Proxy Materials (or proxy card, if you received printed
copies of the proxy materials) and follow the instructions.
• Vote at the Annual Meeting. You may also vote your Common Shares at the Annual Meeting.
• Vote By Telephone. You may vote your Common Shares by telephone by calling 1-800-690-6903
from any touch-tone telephone until May 23, 2022 at 11:59 p.m., Eastern Time. When voting by
telephone, you must have the control number included on your Notice of Internet Availability of Proxy
Materials (or proxy card, if you received printed copies of the proxy materials) and follow the
instructions.
• Vote By Mail.
If you received a printed copy of the proxy materials, you may submit your vote by
completing, signing and dating your proxy card and returning it in the prepaid envelope provided with
the proxy materials to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, New York 11717.
Proxy cards submitted by mail must be received no later than May 23, 2022 to be voted at the
Annual Meeting.
If you vote via the Internet or by telephone, your electronic vote authorizes the named proxy holders in
the same manner as if you signed, dated and returned your proxy card. If you vote via the Internet or by
telephone, do not return your proxy card.
Beneficial Shareholders
Beneficial shareholders have the right to direct the broker, bank or other holder of record that is the
registered holder of their Common Shares on how to vote their Common Shares by following the voting
instructions included in the materials they receive from their registered holder. Beneficial shareholders should
follow the procedures and directions set forth in such voting instructions to instruct their registered holder
how to vote those Common Shares or revoke or change previously given voting instructions (including how
to vote at the Annual Meeting). Beneficial shareholders should contact their broker, bank or other holder
of record to determine the applicable deadlines.
Brokers, banks and other holders of record who hold Common Shares for beneficial shareholders in
street name may vote such Common Shares on “routine” matters (as determined under New York Stock
Exchange (“NYSE”) rules), such as Proposal Three, without specific voting instructions from the beneficial
owner of such Common Shares. Such brokers, banks and other holders of record may not, however, vote
such Common Shares on “non-routine” matters, such as Proposal One and Proposal Two, without specific
voting instructions from the beneficial owner of such Common Shares. Proxies submitted by such brokers,
banks and other holders of record that have not been voted on “non-routine” matters are referred to as
“broker non-votes.” Broker non-votes will not be counted for purposes of determining the number of
Common Shares necessary for approval of any matter to which broker non-votes apply (i.e., broker non-
votes will have no effect on the outcome of such matter).
How to Revoke or Change Your Vote
If you are a registered shareholder, you may revoke or change your vote at any time before the final
vote at the Annual Meeting by:
• signing and returning a new proxy card with a later date (only your latest completed, signed and
dated proxy card received by May 23, 2022 will be counted);
• submitting a later-dated vote by telephone or via the Internet (only your latest telephone or Internet
voting instructions received by 11:59 p.m., Eastern Time, on May 23, 2022, will be counted);
• attending and participating in the Annual Meeting and voting again (attending the Annual Meeting
will not by itself revoke a previously submitted proxy); or
• delivering a written revocation to our Corporate Secretary at 4900 E. Dublin-Granville Road,
Columbus, Ohio 43081, received no later than May 23, 2022.
Beneficial shareholders should follow the procedures and directions set forth in the voting instructions
they receive from their registered holder to instruct their registered holder how to revoke or change previously
given voting instructions.
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What is a “proxy”?
A proxy is your legal designation of another person to vote the stock you own. That other person is
called a proxy. If you designate someone as your proxy in a written document, that document is also called
a proxy or a proxy card.
Householding
SEC rules allow multiple shareholders residing at the same address the convenience of receiving a
single copy of the Notice of Internet Availability of Proxy Materials (or the Annual Report to Shareholders
and Proxy Statement, if requested) if they consent to do so (we refer to this process as “householding”).
Householding is permitted only in certain circumstances, including when you have the same last name and
address as another shareholder. If the required conditions are met, and SEC rules allow, your household may
receive a single copy of the Notice of Internet Availability of Proxy Materials or, if requested, the Annual
Report to Shareholders and Proxy Statement. Upon request, we will promptly deliver a separate copy of the
Annual Report to Shareholders and Proxy Statement or Notice of Internet Availability of Proxy Materials,
as applicable, to a shareholder at a shared address to which a single copy of the document(s) was delivered.
Such a request should be made in the same manner as a revocation of consent for householding.
You may revoke your consent for householding at any time by contacting Broadridge Financial
Solutions, Inc. (“Broadridge”), either by calling 1-866-540-7095, or by writing to: Broadridge, Householding
Department, 51 Mercedes Way, Edgewood, New York 11717. You will be removed from the householding
program within 30 days of receipt of your instructions at which time you will be sent separate copies of the
Annual Report to Shareholders and Proxy Statement or Notice of Internet Availability of Proxy Materials,
as applicable.
Beneficial shareholders can request more information about householding from their brokers, banks or
other holders of record.
Board’s Recommendations
Subject to revocation, all proxies that are properly completed and timely received will be voted in
accordance with the instructions contained therein. If no instructions are given (excluding broker non-votes),
the persons named as proxy holders will vote the Common Shares in accordance with the recommendations
of the Board. The Board’s recommendations are set forth together with the description of each proposal
in this Proxy Statement. In summary, the Board recommends a vote:
(1) FOR the election of the director nominees identified in Proposal One;
(2) FOR the approval, on an advisory basis, of the compensation of our named executive officers, as
disclosed in this Proxy Statement pursuant to Item 402 of Regulation S-K, including the
Compensation Disclosure and Analysis, compensation tables and the narrative discussion
accompanying the tables (see Proposal Two); and
(3) FOR the ratification of Deloitte & Touche LLP as our independent registered public accounting
firm for fiscal 2022 (see Proposal Three).
If any other matter properly comes before the Annual Meeting, or if a director nominee named in this
Proxy Statement is unable to serve or for good cause will not serve, the proxy holders will vote on such matter
or for a substitute nominee as recommended by the Board.
Quorum
The presence, in person or by proxy, of the holders of a majority of the outstanding Common Shares
entitled to vote at the Annual Meeting will constitute a quorum and permit us to conduct our business at
the Annual Meeting. Proxies received but marked as abstentions and broker non-votes will be included in the
calculation of the number of Common Shares considered to be present at the Annual Meeting for purposes
of establishing a quorum.
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Vote Required to Approve a Proposal
Proposal One
Our Amended Articles of Incorporation impose a majority vote standard in uncontested elections of
directors and our Corporate Governance Guidelines contain a majority vote policy applicable to uncontested
elections of directors. Specifically, Article Eighth of our Amended Articles of Incorporation provides that
if a quorum is present at the Annual Meeting, a director nominee in an uncontested election will be elected to
the Board if the number of votes cast for such nominee’s election exceeds the number of votes cast against
such nominee’s election. In all director elections other than uncontested elections, plurality voting will apply
and the director nominees receiving the greatest number of votes cast for their election will be elected as
directors. An “uncontested election” generally means an election of directors at a meeting of shareholders
in which the number of nominees for election does not exceed the number of directors to be elected. Broker
non-votes will not be considered votes cast for or against a director nominee’s election at the Annual
Meeting.
See the “Governance — Majority Vote Standard and Policy” section of this Proxy Statement for more
information about our majority vote policy and standard.
Other Matters
For purposes of Proposal Two and Proposal Three, the affirmative vote of the holders of a majority of
the outstanding Common Shares, present in person or by proxy, and entitled to vote on the proposal, will
be required for approval. The votes received with respect to Proposal Two and Proposal Three are advisory
and will not bind the Board or the Company. A properly executed proxy marked “abstain” with respect to
Proposal Two and Proposal Three will not be voted with respect to such matter, although it will be counted
for purposes of determining the number of Common Shares necessary for approval of Proposal Two and
Proposal Three. Accordingly, an abstention will have the same effect as a vote against Proposal Two and
Proposal Three. If no voting instructions are given (excluding broker non-votes), the persons named as proxy
holders on the proxy card will vote the Common Shares in accordance with the recommendation of the
Board.
Tabulation
Votes will be counted by an independent inspector of election appointed for the Annual Meeting by the
Board.
Appraisal or Dissenters’ Rights
Shareholders of the Company will not have rights of appraisal or similar dissenters’ rights with respect
to any of the matters identified in this Proxy Statement to be acted upon at the Annual Meeting.
Results
We will announce preliminary results promptly once they are available and will report final results in a
filing with the SEC on a Current Report on Form 8-K. You can access both Form 8-Ks and our other reports
we file with the SEC at our website at https://www.biglots.com/corporate/investors/sec-filings or at the
SEC’s website at www.sec.gov. The information provided on these websites is for informational purposes
only and is not incorporated by reference into this Proxy Statement.
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PROPOSAL ONE: ELECTION OF DIRECTORS
In accordance with the Company’s Amended Code of Regulations, the current size of the Board is set
at eleven directors. The Board has nominated the eleven persons identified in the biographies set forth below
for election as directors at the Annual Meeting, who include all of the incumbent directors. At the Annual
Meeting, the Common Shares represented by proxies will be voted, unless otherwise specified, for the election
of the eleven director nominees named below. Proxies cannot be voted at the Annual Meeting for more
than eleven persons. Directors are elected to serve until the next annual meeting of shareholders and until
their respective successors are elected and qualified, or until their earlier death, resignation or removal.
All of the nominees set forth below have consented to being named in this Proxy Statement and to
serve as directors of the Company if elected. It is expected that all nominees proposed by the Board will be
able to serve on the Board if elected. However, if before the Annual Meeting one or more of the Board’s
nominees are unable to serve or for good cause will not serve (a situation that we do not anticipate), the
proxy holders will vote the proxies for the remaining nominees and for substitute nominees chosen by the
Board. If any substitute nominees are designated, we will file an amended proxy statement that, as applicable,
identifies the substitute nominees, discloses that such nominees have consented to being named in the
revised proxy statement and to serve as directors if elected, and includes certain biographical and other
information about such nominees required by the rules of the SEC, but, should any of them decline or be
unable to serve, proxies may be voted for another person nominated as a substitute by the Board. There are
no family relationships, of first cousins or closer, among the Company’s directors and executive officers,
by blood, marriage or adoption.
Set forth below is certain information related to the nominees.
Director Independence
Tenure
1
3
10
8
Independent Directors
Executive Officer
3-10 years
< 3 years
3
3
Age
1
4
< 55
55-60 years old
61-65 years old
66-70 years old
Gender Diversity
Racial Diversity
1
1
6
5
Men
Women
9
White
Black
Hispanic
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Summary of Director Nominee Core Experiences and Skills
Our Board possesses a deep and broad set of experiences and skills that facilitate strong oversight and strategic direction for a
leading retailer. The following chart summarizes the competencies of each director nominee to be represented on our Board.
EXPERIENCE/SKILLS
Campos Chambers DiGrande Gottschalk
Jamison Kingsbury McCormick Newton Reardon Schoppert Thorn
Retail Industry
Operating or managerial experience with retailers.
Customer Experience/Omnichannel and Digital
Strategies
Experience developing and deploying retail (or
adjacent sector) customer experience programs
across physical and digital mediums.
Public Company CEO/COO/CFO/CHRO
Prior public company C-suite experience.
Finance/Accounting/Audit
Understanding of finance, accounting, financial
reporting and/or audit processes.
Legal/Risk Management
Governmental/public policy, legal/regulatory and
risk management experience.
Strategy, Innovation and Business Transformation
Experience successfully ideating and executing
transformative business strategies.
Human Capital/Talent Management
Experience in human resources, talent and
leadership development and/or executive
compensation.
Other Public Company Board
Prior public company board experience to assist in
enhancing board form and function.
Environmental, Social and Governance
Significant experience with ESG strategies and
programs.
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
The lack of an “X” for a particular item does not mean that the director does not possess that qualification, characteristic,
skill or experience. Each of our board members have experience and/or skills in the enumerated areas. However, the “X” indicates
that a director has a particular strength in that area.
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The following information is furnished with respect to each of the nominees of the Company, including
information regarding their business experience, director positions held currently or at any time during the
last five years, involvement in certain legal or administrative proceedings, if applicable, and the experiences,
qualifications, attributes or skills that caused the Nominating / Corporate Governance Committee and the
Board to determine that the nominees should serve as our directors. Other than as set forth in this Proxy
Statement, no principal occupation of any of the Board’s nominees has been at any corporation or
organization that is a parent, subsidiary or other affiliate of the Company.
Age: 55
Director since: 2021
Committees:
• Audit
• Capital Allocation
Planning
Age: 64
Director since: 2012
Committees:
• None
SANDRA Y. CAMPOS
Ms. Campos is the Chief Executive Officer of Project Verte Inc. (a retail
technology and supply chain solutions provider). Ms. Campos served as the
Chief Executive Officer of DVF (Diane von Furstenberg) (a luxury fashion
brand) from 2018 to 2020. Prior to joining DVF, she was the Co-President,
Women’s Apparel of Global Brands Group Holding Limited (a branded
apparel, footwear and brand management company) from 2015 to 2018,
which included the Juicy Couture, Bebe, Buffalo, Tretorn, BCBG and Herve
Leger brands. Ms. Campos also held leadership roles with apparel
companies Polo Ralph Lauren and Nautica International.
Ms. Campos also founded Fashion Launchpad (a continuing education
platform for retail and fashion professionals). She is also a member of the
advisory board of Athena Technology Acquisition Corp. (a special purpose
acquisition company).
Qualifications: Ms. Campos’ qualifications to serve on the Board include her
extensive executive experience in the retail, technology and consumer
products industries, global brand building, and omnichannel development.
JAMES R. CHAMBERS
Chair of the Board of Big Lots, Inc. (see “Governance — Board Leadership
and Independent Chair of the Board”).
Mr. Chambers served as President and Chief Executive Officer and director
of Weight Watchers International, Inc. (weight management services
provider) from 2013 to late 2016. Since his retirement from Weight Watchers
International, Inc. in 2016, he has been serving as a professional director.
Mr. Chambers previously served as President of the US Snacks and
Confectionery business unit and General Manager of the Immediate
Consumption Channel of Kraft Foods Inc. (food manufacturer) until 2011.
Mr. Chambers also served as President and CEO of Cadbury Americas
(confectionery manufacturer) until 2010 and as the President and Chief
Executive Officer of Remy Amerique, Inc. (spirits manufacturer). Prior to
his employment with Remy Amerique, Inc., Mr. Chambers served as the
Chief Executive Officer of Paxonix, Inc. (online branding and packaging
process solutions business), the Chief Executive Officer of Netgrocer.com
(online grocery retailer) and the Group President of Information Resources,
Inc. (global market research provider). Mr. Chambers spent the first
17 years of his career at Nabisco (food manufacturer), where he held
leadership roles in sales, distribution, marketing and information
technology, culminating in the role of President, Refrigerated Foods.
Mr. Chambers previously served as a director of B&G Foods (food
manufacturer) for seven years where he served on the nominating and
governance committee and the compensation committee and as a director of
Weight Watchers International, Inc.
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Qualifications: Mr. Chambers’ qualifications to serve on the Board include
his extensive cross-functional packaged goods industry experience, his
extensive leadership experience as a chief executive officer, his 20-year track
record in general management and his experience serving on the boards of
other public companies.
Other Directorships: TIAA Board of Trustees since 2015, where he serves as
chair and on the human resources committee, the nominating and
governance committee and the risk and compliance committee.
SEBASTIAN J. DIGRANDE
Mr. DiGrande is the Chief Executive Officer of Plastic Credit Exchange (a
facilitator of funding of plastic waste clean-up, recycling and reprocessing
activities). Mr. DiGrande served as a professional director from 2019 until
April 2022.
Mr. DiGrande served as Executive Vice President of Strategy and Chief
Customer Officer for Gap Inc. (apparel retailer) from May 2016 until 2019,
where he led the company’s strategy, consumer and market insights,
customer data and analytics, digital and customer marketing, payments,
loyalty, and franchise teams. Prior to joining Gap, Inc., Mr. DiGrande was a
Senior Partner and Managing Director for The Boston Consulting Group
from 1996 to April 2016. He was also a leader in BCG’s Technology,
Marketing and Digital Innovation efforts.
Qualifications: Mr. DiGrande’s qualifications to serve on the Board include
his extensive experience in senior management roles in strategy, analytics,
marketing and technology, his extensive consulting background and his
qualification as an “audit committee financial expert,” as defined by
applicable SEC rules.
MARLA C. GOTTSCHALK
Ms. Gottschalk is the former Chief Executive Officer of The Pampered
Chef, Ltd. (marketer of kitchen tools, food products and cookbooks), where
she also previously served as President and Chief Operating Officer. Since
her retirement from The Pampered Chef, Ltd. in 2013, she has been serving
as a professional director.
Ms. Gottschalk served as Senior Vice President of Financial Planning and
Investor Relations for Kraft Foods, Inc. (food manufacturer), where she also
previously served as Executive Vice President and General Manager of the
Post Cereal division and Vice President of Marketing and Strategy of the
Kraft Cheese division.
Qualifications: Ms. Gottschalk’s qualifications to serve on the Board include
her extensive experience in operations and strategic management, her
qualification as an “audit committee financial expert,” as defined by
applicable SEC rules, her extensive leadership experience as a chief executive
officer, her expertise in the food industry and her experience serving on the
boards of other public companies.
Other Directorships: US Foods, Inc. (Food wholesaler) since 2022, where she
serves on the nominating and governance committee; Potbelly Corporation
(food retailer) since 2009, where she is chair of the audit committee and a
9
Age: 55
Director since: 2018
Committees:
• Audit
• Nominating /Corporate
Governance
Age: 61
Director since: 2015
Committees:
• Audit (Chair)
• Human Capital and
Compensation
member of the compensation committee; Reynolds Consumer Products Inc.
(consumer products) since 2020, where she is chair of the audit committee;
and Underwriter Laboratories Inc. (global safety certification company)
since 2009, where she is chair of the compensation committee and serves on
the nominating and governance committee. Ms. Gottschalk is not standing
for re-election to the board of Potbelly Corporation but will remain on its
board through Potbelly’s annual meeting on May 19, 2022.
CYNTHIA T. JAMISON
Chair-elect of the Board of Big Lots, Inc. (see “Governance — Board
Leadership and Independent Chair of the Board”).
Ms. Jamison served as Chief Financial Officer or Chief Operating Officer of
several companies during her tenure from 1999 to 2009 at Tatum, LLC
(executive services firm). From 2005 to 2009, she led the CFO services
practice and was a member of the firm’s operating committee. After retiring
from Tatum, Ms. Jamison subsequently served as Chief Financial Officer of
AquaSpy, Inc. from 2009 to 2012 (provider of soil moisture sensors to
monitor soil moisture levels). Since her retirement from AquaSpy Inc. in
2012, she has been serving as a professional director.
Ms. Jamison has also served as Chief Financial Officer of Chart House
Enterprises (food retailer) and held various financial positions at Allied
Domecq Retailing USA, Kraft General Foods and Arthur Anderson LLP.
Ms. Jamison previously served as a director of B&G Foods, Inc. (food
manufacturer and distributor) from 2004 to 2015, where she served as chair
of the audit committee. She previously held board seats at Horizon Organic
Holdings from 2001 to 2003 and Cellu Tissue, Inc.
Qualifications: Ms. Jamison’s qualifications to serve on the Board include
her extensive experience in financial and accounting matters, including
public company reporting, as well as strategy and capitalization expertise,
her qualification as an “audit committee financial expert,” as defined by
applicable SEC rules, and her key management, leadership, financial and
strategic planning, corporate governance and public company executive and
board experience.
Other Directorships: Tractor Supply Company (farm and ranch retailer)
since 2002, where she has served as chair since 2014; Darden, Inc. (food
retailer) since 2014, where she serves as chair of the audit committee and a
member of the compensation committee; and The ODP Corporation (office
supply retailer) since 2013, where she is chair of the audit committee and a
member of the compensation and talent committee.
THOMAS A. KINGSBURY
Mr. Kingsbury served as President, Chief Executive Officer and a member
of the Board of Directors of Burlington Stores, Inc. (discount clothing
retailer) from 2008 to 2019. He also served as Executive Chair of the Board
of Directors of Burlington Stores, Inc. from October 2019 to February 2020
and as Chair of the Board of Directors of Burlington Stores, Inc. from
September 2014 to September 2019. Since 2020, he has been serving as a
professional director.
Mr. Kingsbury previously served as Senior Executive Vice President of
Information Services, E-Commerce, Marketing and Business Development
of Kohl’s Corporation (department store retailer) from August 2006 to
December 2008. Mr. Kingsbury also held various management positions
10
Age: 62
Director since: 2015
Committees:
• Human Capital and
Compensation
• Nominating /Corporate
Governance (Chair)
• Capital Allocation
Planning
Age: 69
Director since: 2020
Committees:
• Human Capital and
Compensation
• Nominating /Corporate
Governance
Age: 66
Director since: 2018
Committees:
• Human Capital and
Compensation
• Capital Allocation
Planning
Age: 49
Director since: 2021
Committees:
• Audit
• Nominating /Corporate
with The May Department Stores Company (department store retailer)
commencing in 1976, including President and Chief Executive Officer of the
Filene’s/Kaufmann’s division from 2000 to 2006.
Qualifications: Mr. Kingsbury’s qualifications to serve on the board include
his valuable perspectives and unique insights developed from more than
40 years of experience in the retail industry, providing him with a
comprehensive understanding of customer dynamics and shifting consumer
preferences, his broad-based retail experience and extensive experience in
senior leadership positions, including his service as a former president and
chief executive officer and as a current director of a publicly traded retail
company and his qualification as an “audit committee financial expert,” as
defined by applicable SEC rules.
Other Directorships: Tractor Supply Company (farm and ranch retailer)
since 2017, where he serves on the corporate governance and nominating
committee and the compensation committee; B.J.’s Wholesale Club, Inc.
(mass merchant club retailer) since 2020, where he serves on the
compensation committee; and Kohl’s Corporation since 2021, where he
serves on the audit committee and finance committee.
CHRISTOPHER J. MCCORMICK
Mr. McCormick is the former President and Chief Executive Officer of L.L.
Bean, Inc. (clothing and outdoor recreation equipment retailer). He joined
L.L. Bean, Inc. in 1983 and held a number of leadership positions in
Advertising and Marketing prior to his tenure as President and Chief
Executive Officer from 2001 until March 2016. Since his retirement from
L.L. Bean, Inc. in 2016, he has been serving as a professional director.
Mr. McCormick previously served as a director of Sun Life Financial, Inc.
(financial services company) from 2017 to 2019, where he served as a
member of the compensation committee and nominating corporate
governance committee.
Qualifications: Mr. McCormick’s qualifications to serve on the Board
include his extensive leadership experience as a chief executive officer of a
retail company, his service on the boards of other public companies and his
qualification as an “audit committee financial expert,” as defined by
applicable SEC Rules.
Other Directorships: Levi Strauss & Co. (clothing retailer) since 2016, where
he is a member of the audit committee and the nominating and governance
committee.
KIMBERLEY A. NEWTON
Ms. Newton is the founder and Chief Executive Officer of Alexis
Enterprises, LLC, which includes the Intentional Pause Project (media,
product, and experiential platform aimed at empowering women to expand
the impact of their leadership). Ms. Newton is the former Senior Vice
President Consumer Experience of Hallmark Cards, Inc. (greeting card
manufacturer) from 2017 to 2019. Ms. Newton joined Hallmark Cards, Inc.
in 1996 and held a number of leadership positions in marketing and strategy
before serving as Vice President North America Strategy and Planning from
2011 to 2015 and Vice President Corporate Strategy and Business
Development from 2015 to 2017.
During her more than 20 years with Hallmark Cards, Inc., she influenced
global corporate strategy and led transformation across a diversified
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Governance
Age: 69
Director since: 2015
Committees:
• Human Capital and
Compensation (Chair)
• Nominating /Corporate
Governance
Age: 55
Director since: 2015
Committees:
• Audit
• Nominating /Corporate
Governance
portfolio of top brands by reimagining strategies and capabilities through a
future-looking, digitally-enabled, and customer-focused lens. Ms. Newton
has been recognized as a top African American in corporate America and is
an active investor in and advisor to several female-led businesses.
Qualifications: Ms. Newton’s qualifications to serve on the Board include
her extensive experience in consumer marketing, corporate strategy, business
development, omnichannel consumer experience, P&L management and
digital transformation.
NANCY A. REARDON
Ms. Reardon is the former Senior Vice President and Chief Human
Resources and Communications Officer of Campbell Soup Company (food
manufacturer). Since her retirement from Campbell Soup Company in 2012,
she has been serving as a professional director.
Additionally, Ms. Reardon served as Executive Vice President of Human
Resources for Comcast Cable Communications, Inc. (telecommunications
provider) from 2002 to 2004. Prior to that, Ms. Reardon served as Partner
and Executive Vice President, Human Resources and Corporate Affairs for
Borden Capital Management Partners (consumer products retailer) from
1997 to 2002, where she developed financial and merger and acquisition
skills through her involvement in multiple transactions for a portfolio of
operating companies. Ms. Reardon previously served as a director of
Warnaco Group, Inc. (apparel retailer) where she served as a member of the
audit committee and the compensation committee.
Qualifications: Ms. Reardon’s qualifications to serve on the Board include
her extensive experience in senior management roles, her experience on the
boards of other public companies and private and charitable organizations,
her experience leading human resources departments and in
communications and public affairs, her leadership skills and her skills in
human capital management, talent development and succession planning.
Other Directorships: Signet Jewelers Limited (jewelry retailer) since 2018,
where she chairs the human capital management and compensation
committee and serves on the corporate citizenship and sustainability
committee.
WENDY L. SCHOPPERT
Ms. Schoppert is the former Executive Vice President and Chief Financial
Officer of Sleep Number Corporation (bedding retailer and manufacturer)
from June 2011 to February 2014, where she also served as Chief
Information Officer and led Marketing, Digital, International, and New
Channel Development. Since her retirement from Sleep Number
Corporation in 2014, she has been serving as a professional director.
Prior to joining Sleep Number, Ms. Schoppert led US Bank’s Private Asset
Management (financial services company) team from 2004 to 2005 and
served as Head of Product, Marketing & Corporate Development for U.S.
Bank’s Asset Management division from 2002 to 2004. Ms. Schoppert began
her career in the airline industry, serving in various financial, strategic and
general management leadership positions at American Airlines, Northwest
Airlines and America West Airlines. Ms. Schoppert also previously served as
a director of Gaia, Inc. (formerly Gaiam, Inc.) (an alternative media video
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• Capital Allocation
Planning (Chair)
Age: 55
Director since: 2018
Committees:
• Capital Allocation
Planning (nonvoting
member)
streaming service) from 2013 to 2018.
Qualifications: Ms. Schoppert’s qualifications to serve on the Board include
her qualification as an “audit committee financial expert,” as defined by
applicable SEC Rules, her extensive retail experience across finance,
information technology, digital and marketing, and her significant financial
leadership and expertise with respect to the oversight of financial reporting
and disclosure for public companies.
Other Directorships: The Hershey Company (a global confectionery
company) since 2017, where she chairs the audit committee and serves on
the finance & risk management committee, The ODP Corporation (an office
supply retailer), since 2020, where she chairs the compensation and talent
committee and serves on the audit committee, and Bremer Financial
Corporation (a financial services firm) since 2017, where she serves on the
audit committee and the compensation committee.
BRUCE K. THORN
Mr. Thorn is our President and Chief Executive Officer. Before joining Big
Lots in September 2018, he served as President (since 2017) and Chief
Operating Officer (since 2015) of Tailored Brands, Inc. (a leading specialty
retailer of men’s tailored clothing and formalwear) until 2018. Mr. Thorn
also previously held various enterprise-level roles with PetSmart, Inc. (a pet
supply retailer), most recently as Executive Vice President, Store Operations,
Services and Supply Chain, as well as leadership positions with The Gap,
Inc., Cintas Corp, LESCO, Inc. and The United States Army.
Qualifications: Mr. Thorn’s qualifications to serve on the Board include his
day-to-day leadership as President and Chief Executive Officer of Big Lots,
strong leadership skills, proven management capabilities and more than
25 years of diverse retail and services experience.
Other Directorships: Caleres, Inc. (a footwear company) since 2022, where he
serves on the compensation committee.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF EACH NOMINEE
LISTED ABOVE.
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The following table sets forth some of our key governance policies and practices we have implemented
to advance the objectives and long term interests of our shareholders:
GOVERNANCE
Governance Highlights
• Ten of our eleven current directors are independent
• Six of our ten independent director nominees are
women
• Annual election of all directors and Majority
• Annual board and committee self-evaluations
Voting Standard
• Proxy access for our shareholders
• Executive session of non-employee directors at all
• We have a non-executive chair
• Director orientation and continuing education
regularly scheduled board meetings
• All committees composed of independent directors
• Limit of 4 public company directorships Board
members may hold
• Annual shareholder engagement
• Mandatory Board retirement at age 72
Board Leadership and Independent Chair of the Board
The Board is currently composed of the individuals identified in Proposal One. Each of the director
nominees (other than Mr. Thorn, our Chief Executive Officer (“CEO”) and President), qualifies as an
independent (as defined by the applicable NYSE rules) non-employee director (“non-employee directors”).
Mr. Chambers, a non-employee director, currently serves as non-executive Chair of the Board (“Chair”).
Mr. Chambers, who became the chair of TIAA in July 2021, has informed the Board that, with a view
toward good corporate governance, he will resign from his position as Chair effective immediately after the
Annual Meeting. As a result, the Board has elected Ms. Jamison to serve as Chair, effective immediately after
the Annual Meeting, subject to her re-election to the Board at the Annual Meeting. The Board believes it
should have the flexibility to establish a leadership structure that works best for us at a particular time, and
it reviews that structure from time to time, including in the context of a change in leadership. The Chair works
with management to plan the agendas for meetings of the Board, chairs the Board meetings, and is
responsible for briefing our CEO, as needed, concerning executive sessions of the independent members of
the Board. The Chair also determines when additional meetings of the Board are needed. Additionally, the
Chair communicates informally with other directors between meetings of the Board to foster free and
open dialogue among directors.
Board Meetings in Fiscal 2021
The Board held five meetings during fiscal 2021. During fiscal 2021, each director attended at least
75% of the aggregate of the total number of meetings of the Board and the committees on which he or she
served (in each case, held during the periods that he or she served). All of our directors attended our 2021
annual meeting of shareholders, which was held virtually, as required by our Corporate Governance
Guidelines. In addition, the non-employee directors met in executive session at each of the Board’s regularly
scheduled meetings.
Role of the Board’s Committees
The Board has standing Audit, Human Capital and Compensation, Nominating / Corporate
Governance and Capital Allocation Planning Committees. Each of these committees reports its activities to
the Board.
Audit Committee
The primary function of the Audit Committee is to assist the Board in fulfilling its oversight
responsibility with respect to:
(1)
the integrity of the financial reports and other financial information provided by us to our
shareholders and others;
14
(2) our compliance with legal and regulatory requirements;
(3)
the engagement of our independent registered public accounting firm and the evaluation of the
firm’s qualifications, independence and performance;
(4)
the performance of our system of internal controls;
(5)
the oversight of the performance of the internal audit function;
(6) our audit, accounting and financial reporting processes generally; and
(7)
the evaluation of enterprise risk issues.
During fiscal 2021, Mses. Campos, Gottschalk, Newton and Schoppert and Messrs. DiGrande,
Kingsbury and McCormick served on our Audit Committee. All members of the Audit Committee are
independent as required by the Audit Committee’s charter and by the applicable NYSE and SEC rules. The
Board has determined that each member of the Audit Committee is “financially literate,” as required by
NYSE rules, and is an “audit committee financial expert,” as defined by applicable SEC rules.
The functions of the Audit Committee are further described in its charter, which is available in the
Investor Relations section of our website (www.biglots.com) under the “Corporate Governance” caption.
The Audit Committee met six times during fiscal 2021.
Human Capital and Compensation Committee
The Human Capital and Compensation Committee discharges the responsibilities of the Board
relating to the administration of our compensation programs, including the compensation program for our
executive leadership team (“Leadership Team”), and provides input on our policies and strategies relating to
human capital management. Our Leadership Team is composed of the current executives named in the
Summary Compensation Table (“named executive officers”) and other executives reporting to our CEO.
The responsibilities of the Human Capital and Compensation Committee include:
(1) establishing our general compensation philosophy;
(2) overseeing the development of our compensation programs;
(3) approving goals and objectives for the incentive compensation awarded to the Leadership Team;
(4)
(5)
reviewing and recommending to the Board the other compensation for our CEO and the Leadership
Team;
reviewing plans for the leadership, development, retention and succession of the CEO’s direct
reports;
(6) administering our compensation programs;
(7) overseeing our policies and strategies relating to the management of our human capital; and
(8)
reporting on the entirety of the executive compensation program to the Board.
The Human Capital and Compensation Committee annually conducts a compensation risk assessment.
The purpose of the assessment is to identify risks arising from the Company’s compensation policies,
practices and programs and the controls in place to mitigate any such risks. The Human Capital and
Compensation Committee determined that our compensation policies are consistent with our overall risk
structure. Because a significant portion of the incentive compensation we award is subject to performance
goals based on operating profit, we believe our associates are encouraged to take a balanced approach that
focuses on corporate profitability and performance. If the Company is not profitable at a reasonable level,
there are limited payouts under the bonus programs and restricted stock units may not vest.
The Company has internal controls over the measurement and calculation of the performance
measures, including operating profit, earnings per share, return on invested capital, sales and net income.
15
These controls, and the auditing of the Company’s financial statements by an independent registered public
accounting firm, are designed to keep the Company, including its compensation programs, from being
susceptible to manipulation by associates. In addition, our associates are subject to the Company’s Code of
Business Conduct and Ethics which covers, among other things, accuracy of books and records.
During fiscal 2021, Mses. Gottschalk, Jamison and Reardon and Messrs. Kingsbury and McCormick
served on our Human Capital and Compensation Committee. All members of the Human Capital and
Compensation Committee are independent as required by the Human Capital and Compensation Committee’s
charter and NYSE rules.
The functions of the Human Capital and Compensation Committee are further described in its
charter, which is available in the Investor Relations section of our website (www.biglots.com) under the
“Corporate Governance” caption. The Human Capital and Compensation Committee met five times during
fiscal 2021.
Nominating / Corporate Governance Committee
The responsibilities of the Nominating / Corporate Governance Committee include:
(1)
(2)
recommending individuals to the Board for nomination as members of the Board and its
committees;
taking a leadership role in shaping our corporate governance policies and practices, including
recommending to the Board changes to our Corporate Governance Guidelines and monitoring
compliance with such guidelines;
(3) developing and recommending to the Board appropriate criteria for determining director
independence;
(4)
in coordination with the Human Capital and Compensation Committee, monitoring issues
associated with CEO succession planning and management development;
(5) overseeing the evaluation of the Board and CEO; and
(6)
reviewing the compensation of the members of the Board and recommending any changes to such
compensation to the Board for its approval.
During fiscal 2021, Mses. Jamison, Newton, Reardon and Schoppert, Andrew Clarke, and Mr. DiGrande
served on our Nominating / Corporate Governance Committee. All members of the Nominating / Corporate
Governance Committee are independent as required by the Committee’s charter and NYSE rules.
The functions of the Nominating / Corporate Governance Committee are further described in its charter,
which is available in the Investor Relations section of our website (www.biglots.com) under the “Corporate
Governance” caption. The Nominating / Corporate Governance Committee met six times during fiscal 2021.
Capital Allocation Planning Committee
The responsibilities of the Capital Allocation Planning Committee include:
(1)
reviewing, at least annually, the Company’s three-year capital expenditure outlook and expected
returns, current year capital expenditure plan and associated returns and three-year liquidity
outlook;
(2) periodically reviewing the Company’s current year actual capital expenditures versus the current
year capital expenditure plan, the Company’s rolling twelve-month liquidity outlook, debt ratio and
other ratios required for compliance with the Company’s credit facilities and management’s
estimate of the Company’s weighted-average cost of capital;
(3)
reviewing management recommendations on the Company’s declaration and payment of quarterly
or special dividends on our Common Shares;
16
(4)
reviewing management recommendations on the establishment and, upon establishment, execution
of a share repurchase program;
(5) periodically reviewing the Company’s capital allocation strategy in comparison to peers and
industry benchmarks; and
(6)
reviewing the Company’s short-term investment policy.
During fiscal 2021, Mses. Campos, Jamison and Schoppert and Messrs. Clarke, McCormick and
Thorn (as a non-voting member) served on our Capital Allocation Planning Committee. All voting
members of the Capital Allocation Planning Committee meet the NYSE independence requirements.
The functions of the Capital Allocation Planning Committee are further described in its charter, which
is available in the Investor Relations section of our website (www.biglots.com) under the “Corporate
Governance” caption. The Capital Allocation Planning Committee met four times during fiscal 2021.
Selection of Nominees by the Board
The Nominating / Corporate Governance Committee has oversight over a broad range of issues
relating to the composition and operation of the Board. The Nominating / Corporate Governance Committee
is responsible for recommending to the Board the appropriate skills and qualifications required of Board
members, based on our needs from time to time. The Nominating / Corporate Governance Committee also
evaluates prospective director nominees against the standards and qualifications set forth in the Corporate
Governance Guidelines. Although the Nominating / Corporate Governance Committee has not approved
any specific minimum qualifications that must be met by a nominee for director recommended by the
Nominating / Corporate Governance Committee and has not adopted a formal policy with regard to the
consideration of diversity in identifying director nominees, the Nominating / Corporate Governance
Committee considers factors such as the prospective nominee’s relevant experience, character, intelligence,
independence, commitment, judgment, prominence, age, and compatibility with our CEO, senior management
and other members of the Board. The Nominating / Corporate Governance Committee also considers
other relevant factors that it deems appropriate, including the current composition of the Board, the
alignment of the Board members’ skills and experiences with our strategic plan, diversity, experience with
succession planning, crisis management, the balance of management and independent directors, public
company experience and the need for committee expertise. Before commencing a search for a new director
nominee, the Nominating / Corporate Governance Committee confers with the Board regarding the factors
it intends to consider in its search.
In identifying potential candidates for Board membership, the Nominating / Corporate Governance
Committee considers recommendations from the Board, shareholders and management, as well as proxy
access candidates. Any shareholder who wishes to recommend a prospective director nominee to the Board
must send written notice to: Chair of the Nominating / Corporate Governance Committee, Big Lots, Inc.,
4900 E. Dublin-Granville Road, Columbus, Ohio 43081. The written notice must include the prospective
nominee’s name, age, business address, principal occupation, ownership of our Common Shares, information
that would be required under the rules of the SEC in a proxy statement soliciting proxies for the election of
such prospective nominee as a director, and any other information that is deemed relevant by the
recommending shareholder. Shareholder recommendations that comply with these procedures and that
meet the factors outlined above will receive the same consideration that the recommendations of the Board
and management receive.
Pursuant to its written charter, the Nominating / Corporate Governance Committee has the authority
to retain consultants and search firms to assist in the process of identifying and evaluating director candidates
and to approve the fees and other retention terms for any such consultant or search firm.
Director Vote Standard and Policy
Our Amended Articles of Incorporation impose a majority vote standard in uncontested elections of
directors and our Corporate Governance Guidelines contain a majority vote policy applicable to uncontested
elections of directors. Article Eighth of our Amended Articles of Incorporation provides that if a quorum
17
is present at the Annual Meeting, a director nominee in an uncontested election will be elected to the Board
if the number of votes cast for such nominee’s election exceeds the number of votes cast against and/or
withheld from such nominee’s election. The majority vote policy contained in our Corporate Governance
Guidelines requires any nominee for director who does not receive more votes cast for such nominee’s election
than votes cast against and/or withheld as to his or her election to deliver his or her resignation from the
Board to the Nominating / Corporate Governance Committee. Broker non-votes have no effect in determining
whether the required affirmative majority vote has been obtained. Upon its receipt of such resignation, the
Nominating / Corporate Governance Committee will promptly consider the resignation and recommend to
the Board whether to accept the resignation or to take other action. The Board will act on the
recommendation of the Nominating / Corporate Governance Committee no later than 100 days following
the certification of the shareholder vote. The Nominating / Corporate Governance Committee, in making its
recommendation, and the Board, in making its decision, will evaluate such resignation in light of the best
interests of Big Lots and our shareholders and may consider any factors and other information they deem
relevant; provided, however, that if the nominee for director who delivered such resignation also failed to
receive more votes cast for such nominee’s election than votes cast against and/or withheld as to his or her
election at the immediately preceding meeting of shareholders involving the election of directors, the Board
must accept the resignation. We will promptly publicly disclose the Board’s decision in a periodic or
current report to the SEC.
Determination of Director Independence
The Board affirmatively determined that all of the directors nominated for election at the Annual
Meeting other than Mr. Thorn are independent of Big Lots, its subsidiaries and its management under the
standards set forth in the NYSE rules, and no director nominee other than Mr. Thorn has a material
relationship with Big Lots, its subsidiaries or its management aside from his or her service as a director.
In determining that each of the director nominees other than Mr. Thorn is independent, the Board
considered charitable contributions to not-for-profit organizations of which these director nominees or
their immediate family members are executive officers or directors and determined that each of the
transactions and relationships it considered was immaterial and did not impair the independence of any of
the directors.
In addition, all members of the Board’s standing Audit Committee meet the independence standards
required by the Audit Committee’s charter and by the applicable NYSE and SEC rules. All members of the
Human Capital and Compensation Committee meet the independence standards required by the Human
Capital and Compensation Committee’s charter and NYSE rules.
Related Person Transactions
Our Corporate Governance Guidelines, Code of Business Conduct and Ethics, Code of Ethics for
Financial Professionals, and human resources policies prohibit (without the consent of the Board or the
Nominating / Corporate Governance Committee) directors, officers and employees from engaging in
transactions that conflict with our interests or that otherwise usurp corporate opportunities.
Pursuant to our written related person transaction policy, the Nominating / Corporate Governance
Committee evaluates “related person transactions.” Consistent with SEC rules, we consider a related person
transaction to be any transaction, arrangement or relationship (or any series of similar transactions,
arrangements or relationships) in which Big Lots or a subsidiary thereof is, was or will be a participant:
(1)
involving more than $120,000; and
(2)
in which any of our directors, nominees for director, executive officers, holders of more than
five percent of our Common Shares or their respective immediate family members had, has or will
have a direct or indirect material interest.
Under our policy, our directors, executive officers and other members of management are responsible
for bringing all transactions, whether proposed or existing, of which they have knowledge and which they
believe may constitute related person transactions to the attention of our General Counsel. If our General
Counsel determines that the transaction constitutes a related person transaction, our General Counsel will
18
notify the chair of the Nominating / Corporate Governance Committee. Thereafter, the Nominating /
Corporate Governance Committee will review the related person transaction, considering all factors and
information it deems relevant, and either approve or disapprove the transaction in light of what the Committee
believes to be the best interests of Big Lots and our shareholders. If advance approval is not practicable or
if a related person transaction that has not been approved is discovered, the Nominating / Corporate
Governance Committee will promptly consider whether to ratify the related person transaction. Where
advance approval is not practicable or we discover a related person transaction that has not been approved
and the Committee disapproves the transaction, the Committee will, taking into account all of the factors and
information it deems relevant (including the rights available to us or other parties under the transaction),
determine whether we should amend, rescind or terminate the transaction in light of what it believes to be the
best interests of Big Lots and its shareholders.
Examples of factors and information that the Nominating / Corporate Governance Committee may
consider in its evaluation of a related person transaction include:
(1) our reasons for entering into the transaction;
(2)
the terms of the transaction;
(3)
the benefits of the transaction to us;
(4)
the comparability of the transaction to similar transactions with unrelated third parties;
(5)
the materiality of the transaction to each party;
(6)
the nature of the related person’s interest in the transaction;
(7)
the potential impact of the transaction on the status of an independent director; and
(8)
the alternatives to the transaction.
Additionally, each director, nominee for director and executive officer must complete an annual
questionnaire that requires written disclosure of any related person transaction.
Oversight of Corporate Strategy
The Board actively oversees management’s establishment and execution of corporate strategy, including
major business and organizational initiatives, annual budget and long-term strategic plans, capital allocation
priorities and potential corporate development opportunities. At the Board and committee meetings and
throughout the year, the Board regularly receives information and formal updates from our management and
actively engages with the Leadership Team with respect to our corporate strategy, oversight of corporate
culture and human capital management. The Board’s independent directors also hold regularly scheduled
executive sessions at which strategy is discussed.
Board’s Role in Risk Oversight
The Board and its committees play an important role in overseeing the identification, assessment and
mitigation of risks that are material to us. In fulfilling this responsibility, the Board and its committees
regularly consult with management to evaluate and, when appropriate, modify our risk management
strategies. While each committee is responsible for evaluating certain risks and overseeing the management
of such risks, the entire Board is regularly informed about such risks through committee reports. The Board
oversees the conduct of our business and the assessment of our business and other enterprise risks to
evaluate whether the business is being properly managed. The Board also oversees the processes for
maintaining our integrity with regard to our financial statements and other public disclosures, and compliance
with law and ethics.
The Audit Committee assists the Board in fulfilling its oversight responsibility relating to the
performance of our system of internal controls, legal and regulatory compliance, cybersecurity matters, our
audit, accounting and financial reporting processes, and the evaluation of enterprise risk issues, particularly
those risk issues not overseen by other committees. The Human Capital and Compensation Committee is
19
responsible for overseeing the management of risks relating to our compensation programs, human capital
management (including diversity, equity and inclusion) and succession planning. The Nominating / Corporate
Governance Committee manages risks associated with corporate governance, related person transactions,
CEO and Board succession planning, and business conduct and ethics. The Capital Allocation Planning
Committee is responsible for overseeing risks related to our liquidity and allocation of capital. The Public
Policy and Environmental Affairs Committee, a management committee that reports to the Nominating /
Corporate Governance Committee, oversees management of risks associated with public policy, environmental
affairs and social matters that may affect our operations, performance or public image.
Environmental, Social and Governance Practices
Our Public Policy and Environmental Affairs Committee takes a leadership role in shaping the policies
and practices of the Company relating to current and emerging public policy, environmental and social trends
and issues that may affect the operations, performance or public image of the Company, including,
without limitation, corporate social responsibility, climate change and related environmental matters,
diversity and philanthropic activities. The Public Policy and Environmental Affairs Committee is comprised
of our Chief Legal and Governance Officer, Chief Financial Officer and a senior investor relations
representative. The functions of the Public Policy and Environmental Affairs Committee are further described
in its charter, which is available in the Investor Relations section of our website (www.biglots.com) under
the “Corporate Governance” caption.
In addition, the Company maintains a Diversity, Equity and Inclusion (DEI) Executive Advisory
Committee comprised of six senior leaders that provide guidance, strategic influence and direction for our
company-wide DEI efforts. The Committee solicits ideas from our DEI Council, a group of associates with
varied dimensions of difference, from all levels, locations and business areas of the Company that serve as
the voice of all our associates. In 2022, the Company intends to focus on advancing its DEI strategy to drive
our aim of increasing associate diversity through best practices, and external partnerships that are aligned
to our community, and recruiting efforts in order to further promote a diverse and inclusive workplace.
In 2021, we also published our inaugural corporate social responsibility report, titled “BIG Cares,”
which addresses our environmental, social and governance policies, initiatives and achievements. A copy of
the corporate social responsibility report is available on our website (www.biglots.com). Information on our
website, including the corporate social responsibility report, is not incorporated by reference in or otherwise
considered a part of this Proxy Statement.
Corporate Governance Guidelines
Our Corporate Governance Guidelines comply with applicable NYSE rules and can be found in the
Investor Relations section of our website (www.biglots.com) under the “Corporate Governance” caption.
Code of Business Conduct and Ethics & Code of Ethics for Financial Professionals
We have a Code of Business Conduct and Ethics, which applies to all of our directors, officers and
employees. We also have a Code of Ethics for Financial Professionals which applies to our principal executive
officer, principal financial officer, principal accounting officer, controller and other persons performing
similar functions. Both the Code of Business Conduct and Ethics and the Code of Ethics for Financial
Professionals are available in the Investor Relations section of our website (www.biglots.com) under the
“Corporate Governance” caption. We intend to post amendments to or waivers from any applicable provision
(related to elements listed under Item 406(b) of Regulation S-K) of the Code of Business Conduct and
Ethics and the Code of Ethics for Financial Professionals (in each case, to the extent applicable to our
principal executive officer, principal financial officer, principal accounting officer, controller or persons
performing similar functions), if any, in the Investor Relations section of our website (www.biglots.com)
under the “Corporate Governance” caption.
Human Capital and Compensation Committee Interlocks and Insider Participation
During fiscal 2021, Mses. Gottschalk, Jamison and Reardon and Messrs. Kingsbury and McCormick
served on our Human Capital and Compensation Committee. No member of our Human Capital and
20
Compensation Committee serves, or at any time has served, as one of our officers or employees or has, or
during fiscal 2021, had a material interest in any related person transaction, as defined in Item 404 of
Regulation S-K. None of our executive officers serves or, during fiscal 2021, served as a member of the
board of directors or compensation committee of any other company that has or had an executive officer
serving as a member of the Board or our Human Capital and Compensation Committee.
Communications with the Board
Shareholders and other parties interested in communicating directly with the Board, with specified
individual directors or with the non-employee directors as a group, may do so by choosing one of the
following options:
Call:
Write:
Online Message:
(866) 834-7325
Big Lots Board of Directors, 4900 E. Dublin-Granville Road, Columbus, Ohio 43081
http://biglotsbigvoice.com
Under a process approved by the Nominating / Corporate Governance Committee for handling
correspondence received by us and addressed to non-employee directors, our General Counsel reviews all
such correspondence and forwards to the Board or appropriate members of the Board a summary and/or
copies of any such correspondence that deals with the functions of the Board, members or committees thereof
or otherwise requires their attention. Directors may at any time review a log of all correspondence received
by us and directed to members of the Board and may request copies of any such correspondence. Concerns
relating to our accounting, internal accounting controls or auditing matters will be referred to the Audit
Committee. Concerns relating to the Board or members of senior management will be referred to the
Nominating / Corporate Governance Committee. Parties submitting communications to the Board may
choose to do so anonymously or confidentially.
21
DIRECTOR COMPENSATION
Under the Big Lots, Inc. Non-Employee Director Compensation Package established by the Board,
each non-employee director is compensated for Board and committee participation in the form of retainers
and fees and a restricted stock unit award. In May 2021, the Board increased the annual retainer and the
grant date fair value of the restricted stock unit award for our non-executive chair from $170,000 and
$210,000 to $185,000 and $245,000, respectively, upon the recommendation of the Nominating / Corporate
Governance Committee. In making its recommendation, the Nominating / Corporate Governance
Committee reviewed competitive data provided by Meridian Compensation Partners, LLC (“Meridian”)
regarding non-executive chair compensation for companies in our Peer Group and considered the time
commitment required of our non-executive chair to his Board duties and responsibilities.
Retainers and Charitable Contributions
During fiscal 2021, Messrs. Chambers, Clarke, DiGrande, Kingsbury and McCormick and Mses.
Campos, Gottschalk, Jamison, Newton, Reardon and Schoppert qualified as non-employee directors and,
as a result, received compensation for their Board service. Due to our employment of Mr. Thorn in fiscal 2021,
he did not qualify as a non-employee director and did not receive compensation for his services as a
director. The compensation received by Mr. Thorn as an employee is shown in the Summary Compensation
Table included in this Proxy Statement.
We pay our non-employee directors retainers and fees on a quarterly basis. For fiscal 2021, the annual
retainers we paid to non-employee directors consisted of: (1) an annual retainer of $85,000 for each
non-employee director other than the nonexecutive chair; (2) an annual retainer of $170,000 for the
nonexecutive chair from the beginning of fiscal 2021 through May 25, 2021 and $185,000 from May 25,
2021 through the end of fiscal 2021; (3) an additional annual retainer of $35,000 for the chair of the Audit
Committee; (4) an additional annual retainer of $25,000 for the chair of the Human Capital and Compensation
Committee; (5) an additional annual retainer of $20,000 for the chair of the Nominating / Corporate
Governance Committee and the chair of the Capital Allocation Planning Committee; (6) an additional
annual retainer of $17,500 for each other member of the Audit Committee; (7) an additional annual retainer
of $12,500 for each other member of the Human Capital and Compensation Committee; and (8) an
additional annual retainer of $10,000 for each other member of the Nominating / Corporate Governance
Committee and each other member of the Capital Allocation Planning Committee.
Each term during which our non-employee directors serve on the Board, we donate an aggregate
annual amount of up to $15,000 to charitable organizations nominated by the non-employee director and
make matching charitable donations in an aggregate annual amount of up to $15,000 to charitable
organizations to which the non-employee director makes contributions.
Restricted Stock Units
In May 2021, our nonexecutive chair received a restricted stock unit award having a grant date fair
value equal to approximately $245,000 (3,730 Common Shares) and our other non-employee directors
received a restricted stock unit award having a grant date fair value equal to approximately $145,000
(2,208 Common Shares). The restricted stock unit awards were made under the terms of the Big Lots 2020
Long-Term Incentive Plan (“2020 LTIP”) and will be settled in our Common Shares on the earlier to occur of
(1) the trading day immediately preceding the Annual Meeting or (2) the non-employee director’s death or
disability (as defined in the 2020 LTIP). The non-employee director will forfeit the restricted stock units if the
non-employee director ceases to serve on the Board before either settlement event occurs. Our non-
employee directors may defer all or any portion of their restricted stock unit award until the earlier to occur
of (1) the date specified by the non-employee director, (2) the non-employee director’s death or disability
or (3) the date the non-employee director ceases to serve as a member of the Board. The non-employee
directors must make any deferral election on or before December 31 of the year preceding the grant of the
restricted stock unit award (e.g., December 31, 2020 for awards granted in 2021) or, in the case of a newly
elected director, within thirty days of the date they become eligible to participate in the 2020 LTIP.
22
Director Compensation Table for Fiscal 2021
The following table summarizes the total compensation for fiscal 2021 for each of our non-employee
directors.
Name
(a)
Fees
Earned or
Paid in
Cash
($)
(b)
Stock
Awards
($)(1)(2)
(c)
Option
Awards
($)
(d)
Non-Equity
Incentive Plan
Compensation
($)
(e)
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)
(f)
All
Other
Compensation
($)(3)
(g)
Total
($)
(h)
33,750
Ms. Campos . . . . . . . . . . . . .
84,375 144,999 —
Mr. Chambers . . . . . . . . . . . . 181,250 244,949 —
Mr. Clarke(4) . . . . . . . . . . . . .
0 —
Mr. DiGrande . . . . . . . . . . . . 112,500 144,999 —
Ms. Gottschalk . . . . . . . . . . . 132,500 144,999 —
Ms. Jamison . . . . . . . . . . . . . 127,500 144,999 —
Mr. Kingsbury . . . . . . . . . . . . 111,250 144,999 —
Mr. McCormick . . . . . . . . . . 111,250 144,999 —
Ms. Newton . . . . . . . . . . . . .
84,375 144,999 —
Ms. Reardon . . . . . . . . . . . . . 120,000 144,999 —
Ms. Schoppert . . . . . . . . . . . . 132,500 144,999 —
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
15,000
35,000
11,500
30,000
16,250
15,000
30,000
30,000
244,374
461,199
45,250
287,499
293,749
287,499
286,249
286,249
— 229,374
295,249
295,957
30,250
18,458
(1) Amounts in this column reflect the aggregate grant date fair value of the restricted stock unit awards
granted to the non-employee directors in fiscal 2021 as computed in accordance with Financial
Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC 718”). The full
grant date fair value of the fiscal 2021 restricted stock unit award granted to our nonexecutive chair and
each non-employee director was based on individual awards of 3,730 and 2,208 Common Shares,
respectively, at a per Common Share value of $65.67 on the grant date. In accordance with ASC 718
and the 2020 LTIP, the per Common Share grant date value is the closing price of our Common Shares
on the NYSE on the grant date.
(2) As of January 29, 2022, Mr. Chambers held 3,730 restricted stock units and Mses. Campos, Gottschalk,
Jamison, Newton, Reardon and Schoppert and Messrs. DiGrande, Kingsbury and McCormick held
2,208 restricted stock units.
(3) Amounts in this column reflect both matching contributions and payments made by us during fiscal
2021 to charitable organizations nominated by the specified directors.
(4) Mr. Clarke’s tenure on the board ended on May 26, 2021 and, as a result, he did not receive a restricted
stock unit award in fiscal 2021.
23
STOCK OWNERSHIP
Ownership of Our Common Shares by Certain Beneficial Owners and Management
The following table sets forth certain information with regard to the beneficial ownership of our
Common Shares by each holder of more than five percent of our Common Shares, each director, each
director nominee, each of the current and former executive officers named in the Summary Compensation
Table, and all executive officers, directors and director nominees as a group. The assessment of holders of
more than five percent of our Common Shares is based on a review of and reliance upon their respective
filings with the SEC. Except as otherwise indicated, all information is as of April 1, 2022.
Name and Address of Beneficial
Owner or Identity of Group(1)
Amount and Nature of
Beneficial Ownership(2)
Percent of Outstanding
Common Shares
Sandra Y. Campos . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
James R. Chambers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sebastian J. DiGrande . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marla C. Gottschalk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cynthia T. Jamison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thomas A. Kingsbury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Christopher J. McCormick . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kimberley A. Newton . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Jack A. Pestello . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Jonathan E. Ramsden . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nancy A. Reardon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ronald A. Robins, Jr. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Michael A. Schlonsky . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Wendy L. Schoppert
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruce K. Thorn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
BlackRock, Inc.(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Vanguard Group, Inc.(4) . . . . . . . . . . . . . . . . . . . . . . . . . .
FMR LLC(5)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dimensional Fund Advisors LP(6) . . . . . . . . . . . . . . . . . . . . . .
LSV Asset Management(7)
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Mill Road Capital III, L.P.(8) . . . . . . . . . . . . . . . . . . . . . . . . . .
All directors, nominees and executive officers as a group
2,208
29,075
14,886
24,106
17,756
6,402
14,886
2,208
5,939
71,063
22,256
65,363
90,051
15,002
280,047
5,212,867
4,037,723
3,211,540
1,796,953
1,738,020
1,462,851
(19 persons) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
766,536
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
18.1%
14.0%
11.2%
6.2%
6.0%
5.1%
2.7%
* Represents less than 1.0% of the outstanding Common Shares.
(1) Unless otherwise indicated, the address for each director and officer is c/o Big Lots, Inc., 4900 E. Dublin-
Granville Road, Columbus, Ohio, 43081.
(2) Each person named in the table has sole voting power and sole dispositive power with respect to all
Common Shares shown as beneficially owned by such person, except as otherwise stated in the footnotes
to this table. The amounts set forth in the table include Common Shares that may be acquired within
60 days of March 29, 2022 through the vesting of restricted stock unit awards as follows: Ms. Campos:
2,208; Mr. Chambers: 3,730; Mr. DiGrande: 2,208; Ms. Gottschalk, 2,208; Ms. Jamison: 2,208;
Mr. Kingsbury: 2,208; Mr. McCormick: 2,208; Ms. Newton: 2,208; Mr. Ramsden: 13,692; Ms. Reardon:
2,208; Mr. Robins: 9,780; Mr. Schlonsky: 10,046; Ms. Schoppert: 2,208; and Mr. Thorn: 38,251.
In its Schedule 13G/A filed on February 7, 2022, BlackRock, Inc., 55 East 52nd Street, New York,
NY 10055, stated that it beneficially owned the number of Common Shares reported in the table as of
(3)
24
(4)
(5)
(6)
(7)
(8)
December 31, 2021, had sole voting power over 5,119,900 of the shares and sole dispositive power over
5,212,867 of the shares, and had no shared voting power or shared dispositive power over any of the
reported shares.
In its Schedule 13G/A filed on February 9, 2022, The Vanguard Group, Inc., 100 Vanguard Blvd.,
Malvern, PA 19355, stated that it beneficially owned the number of Common Shares reported in the
table as of December 31, 2021, had sole dispositive power over 3,981,354 of the shares, had shared
dispositive power over 56,369 of the shares, had shared voting power over 32,444 of the shares and had
no sole voting power over any of the reported shares.
In its Schedule 13G/A filed on March 10, 2022, FMR LLC and Abigail P. Johnson (a director and
Chair and Chief Executive Officer of FMR LLC), 245 Summer Street, Boston, Massachusetts 02210,
stated that they beneficially owned the number of Common Shares reported in the table as of
February 28, 2022, had sole voting power over 3,211,433 of the shares and sole dispositive power over
3,211,540 of the shares, and had no shared voting power or shared dispositive power over any of the
reported shares.
In its Schedule 13G/A filed on February 8, 2022, Dimensional Fund Advisors LP, 6300 Bee Cave
Road, Building One, Austin, TX 78746, stated that it beneficially owned the number of Common Shares
reported in the table as of December 31, 2021, had sole voting power over 1,751,066 of the shares and
sole dispositive power over 1,796,953 of the shares, and had no shared voting power or shared dispositive
power over any of the reported shares.
In its Schedule 13G filed on February 11, 2022, LSV Asset Management, 155 North Wacker Drive,
Suite 4600, Chicago, IL 60606, stated that it beneficially owned the number of Common Shares reported
in the table as of December 31, 2021, had sole voting power over 1,179,220 of the shares and sole
dispositive power over 1,738,020 of the shares, and had no shared voting power or shared dispositive
power over any of the reported shares.
In its Schedule 13D filed on March 15, 2022, Mill Road Capital III, L.P., Mill Road Capital III GP LLC
and Thomas E. Lynch, 382 Greenwich Avenue, Suite One, Greenwich, CT 06830, stated that it
beneficially owned the number of Common Shares reported in the table as of March 15, 2022, had sole
voting power over 1,462,851 of the shares and sole dispositive power over 1,462,851 of the shares,
and had no shared voting power or shared dispositive power over any of the reported shares.
25
Compensation Discussion and Analysis
EXECUTIVE COMPENSATION
This Compensation Discussion and Analysis, or CD&A, describes the compensation program for our
named executive officers for fiscal 2021, who are listed below:
Jonathan E. Ramsden
Executive Vice President, Chief Financial and
Administrative Officer
Michael A. Schlonsky
Executive Vice President, Chief Human Resources
Officer
Bruce K. Thorn
President and Chief Executive Officer
Jack A. Pestello
Executive Vice President, Chief Merchandising
Officer
Ronald A. Robins, Jr.
Executive Vice President, Chief Legal and
Governance Officer, General Counsel and
Corporate Secretary
EXECUTIVE SUMMARY
Company Performance in Fiscal 2021
The ongoing COVID-19 pandemic continued to present challenges to and disrupt our business during
fiscal 2021 and may continue to disrupt our business in the future. Despite the challenges and disruptions
presented by COVID-19 during fiscal 2021, including unprecedented global and domestic supply chain issues,
out net sales exceeded $6 billion for the second year in a row and the second time in our history. In addition,
we returned approximately $460 million to our shareholders through share repurchases and dividends in
fiscal 2021. We also continued to implement Operation North Star, our transformative restructuring strategy,
which is focused on growing our net sales, reducing our costs and creating long-term shareholder value.
The following charts set forth our (1) net sales, (2) net income, (3) adjusted net income, (4) diluted
earnings per common share, (5) adjusted diluted earnings per common share, (6) increase in comparable
sales for stores open at least fifteen months plus our e-commerce operations, and (7) return on invested capital
for fiscal 2019, fiscal 2020 and fiscal 2021 (reconciliations of adjusted net income and adjusted diluted
earnings per common share (each a non-GAAP financial measure) to net income and diluted earnings per
share (the most directly comparable GAAP financial measures), respectively, are attached to this Proxy
Statement on Appendix A).
Net Sales
$7,000,000,000
$6,199,186,000
$6,150,603,000
$6,000,000,000
$5,323,180,000
$5,000,000,000
$4,000,000,000
$3,000,000,000
$2,000,000,000
$1,000,000,000
$-
2019
2020
2021
$700,000,000
$600,000,000
$500,000,000
$400,000,000
$300,000,000
$200,000,000
$100,000,000
$-
Net Income
$629,191,000
$242,464,000
$177,778,000
2019
2020
2021
26
Adjusted Net Income
Diluted Earnings Per Common Share
$287,288,000
$144,413,000
$181,560,000
$300,000,000
$200,000,000
$100,000,000
$-
$16.11
$6.16
$5.33
$18.00
$16.00
$14.00
$12.00
$10.00
$8.00
$6.00
$4.00
$2.00
$-
2019
2020
2021
2019
2020
2021
Adjusted Diluted Earnings Per Share
Comparable Sales Change
$10.00
$9.00
$8.00
$7.00
$6.00
$5.00
$4.00
$3.00
$2.00
$1.00
$-
100%
80%
60%
40%
20%
0%
$7.35
$5.44
$3.67
20%
15%
10%
5%
0%
-5%
16.1%
0.3%
-2.5%
2019
2020
2021
2019
2020
2021
Return on Invested Capital
48.4%
21.2%
14.9%
2019
2020
2021
The following table sets forth the one-, two- and three-year median annualized total shareholder return
of our peer group, the S&P 500, the S&P 500 Retailing Index and the Company.
Comparator Group
Peer Group . . . . . . . . . . . . . . . . . . . . . . . . . .
Big Lots Percent Rank vs. Peer Group . . . . . . . .
S&P 500 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Big Lots Percent Rank vs. S&P 500 . . . . . . . . . .
S&P 500 Retailing . . . . . . . . . . . . . . . . . . . . .
Big Lots Percent Rank vs. S&P 500 Retailing . . .
Big Lots, Inc. . . . . . . . . . . . . . . . . . . . . . . . . .
Key Executive Compensation Actions in Fiscal 2021
Median Annualized TSR
1 Year
(2/1/2021 – 1/31/2022)
2 Year
(2/1/2020 – 1/31/2022)
3 Year
(2/1/2019 – 1/31/2022)
8.0%
14%
20.2%
2%
30.2%
0%
-23.1%
34.1%
43%
16.5%
76%
29.7%
49%
29.0%
14.3%
50%
16.9%
45%
23.4%
21%
14.4%
• Return to More Customary Executive Compensation Program Structure. Although the COVID-19
pandemic was ongoing and the potential effect of the pandemic on the Company’s business remained
somewhat unclear when the Human Capital and Compensation Committee (referred to as the
Committee in this CD&A) conducted its annual evaluation of the executive compensation program
in March 2021, the Committee determined to return to a more customary mix of base salary merit
increases, annual cash incentive awards based entirely on annual Company financial goals, and
27
long-term equity incentive awards consisting of PSUs (weighted 60%) and RSUs (weighted 40%) for
our named executive officers in fiscal 2021.
• Payouts on Annual Cash Incentive Awards. Each of our named executive officers earned a payout
under their respective annual cash incentive award for fiscal 2021 between the target and maximum
award amounts levels as a result of the Company’s achievement of adjusted operating profit and total
annual sales of $244,868,174 and $6,150,603,000, respectively, for fiscal 2021.
• Vesting of Long-Term Equity Incentive Awards. Based on the Company’s adjusted earnings per
share — diluted (“EPS”) and adjusted return on invested capital (“ROIC”) over the past three years,
the PSUs we granted in fiscal 2019 vested at 144.5% of the target performance level. In addition,
based on the Company’s operating profit in fiscal 2021, one-third of the RSUs we granted in fiscal
2021 vested and the remaining two-thirds will vest ratably over the next two years.
Key Executive Compensation Actions in Fiscal 2022
• The Committee decided to continue the current executive compensation program for the 2022 fiscal
year, subject to certain revisions intended to (1) reinforce our strategy to drive total sales through
new store growth, merchandising initiatives and e-commerce growth and (2) further align the
interests of our executives with the interests of our shareholders. These revisions are described in
more detail in the table below:
Compensation Component
Annual Cash Incentive Awards
Long-Term Equity Incentive Awards
Modification
Increased the weight of the total annual sales
performance measure for the annual cash incentive
award for fiscal 2022 from 25% to 35%.
Decreased the weight of the adjusted operating
profit performance measure for the annual cash
incentive award for fiscal 2022 from 75% to 65%.
Included relative total shareholder return (weighted
20%) as a performance measure for the PSUs
awarded in fiscal 2022 in addition to ROIC (40%)
and EPS (40%).
Executive Compensation Program Objectives and Components
Compensation Objectives
Our executive compensation program is designed to:
• Pay for superior results by rewarding executives for achieving short- and long-term performance
goals and creating long-term shareholder value;
• Align the interests of our executives with the interests of our shareholders through performance-
and equity-based compensation; and
• Attract and retain talented executives by paying compensation that is competitive with the
compensation paid by the companies in our peer group.
28
Compensation Components
The following table summarizes the primary components of our executive compensation program and
the primary purposes each component serves in furthering the objectives of our executive compensation
program:
Component
Base Salary
Characteristics
Primary Purposes
Annual fixed cash compensation
Attract and retain talented
executives through an annual
salary that reflects the executive’s
performance, experience and
scope of responsibilities.
Mitigate pressure to take
unnecessary or excessive risks or
unduly focus on the price of our
Common Shares.
Motivate executives to achieve
performance objectives that
directly relate to our annual
operating and strategic goals.
Align the interests of our
executives with the interests of
our shareholders.
Motivate executives to achieve
multi-year financial and strategic
goals and create long-term
shareholder value.
Retain talented executives for the
long-term.
Annual Cash Incentive Awards
Annual variable performance-
based cash compensation
Long-Term Equity Incentive
Awards
Long-term variable equity awards
granted annually as a
combination of performance-
based awards and RSUs
29
Pay-for Performance
Pay-for-performance is the fundamental objective of our executive compensation philosophy. As a
result, the Committee believes that a majority of each named executive officer’s total compensation should
be at risk or variable based on our performance and/or stock price (i.e., performance-based). The following
graphs show the percentage of the total compensation awarded to Mr. Thorn and our other named
executive officers for fiscal 2021 that was performance-based as disclosed in the Summary Compensation
Table.
2021 COMPENSATION AWARDED
MR. THORN
OTHER NEOS
70%
Performance-Linked
Incentive Compensation
17%
30%
83%
Performance-Linked
Incentive Compensation
22%
17%
61%
53%
Salary and Other Compensation
Performance Share Units Award & Restricted Stock Units Award
Annual Bonus Incentive Award
Executive Compensation and Governance Practices and Policies
The following table sets forth executive compensation and governance practices and policies we have
implemented to advance the objectives of our executive compensation program and to align our practices
and policies with industry-leading standards.
Practice
Pay-for-Performance Philosophy
Stock Ownership Requirements
Clawback Policy
Independent Compensation Consultant
Big Lots Policy
✓
A majority of the total target compensation opportunity of
each of our named executive officers is at risk or variable
based on our performance and/or stock price.
✓
✓
✓
All of our executive officers and outside directors are
subject to stock ownership requirements. In 2021, the
Board increased the stock ownership requirements
applicable to our CEO and executive vice presidents from
5x and 2.5x to 6x and 3x, respectively.
All of our executive officers are subject to a compensation
clawback policy.
The Committee engages an independent compensation
consultant that reviews and advises the Committee on
executive compensation. The consultant performs services
solely for the Committee.
Independent Board Chair
✓ We maintain separate CEO and Chair of the Board
positions.
30
Practice
Anti-Hedging and Pledging Policy
Excise Tax Gross-Ups
Dividends on Unearned Awards
“Double-Trigger” Requirements
Big Lots Policy
✓ We do not allow our directors or Leadership Team
members to enter into any hedging or pledging
transactions relating to our Common Shares.
✓ We do not pay excise tax gross-ups under our severance
agreements in the event of a change in control.
✓ We do not pay dividends on unearned performance awards.
✓
The 2020 LTIP and our severance agreements only provide
certain cash payments and other benefits upon a change in
control if the participant is terminated in connection with
the change in control.
2021 Say-on-Pay Advisory Vote and Shareholder Engagement
At our 2021 annual meeting of shareholders, our shareholders approved the compensation of our
named executive officers with approximately 94.5% of votes cast in favor of our say-on-pay resolution. The
Committee considers this vote a positive endorsement of our executive compensation program. Our
shareholders’ support of our 2021 say-on-pay resolution and discussions with our shareholders before our
2021 annual meeting contributed to the Committee’s decision to not make significant changes to our current
executive compensation program, other than returning to the more customary structure of our executive
compensation program that was in place before the onset of the COVID-19 pandemic.
EXECUTIVE COMPENSATION PROCESS
Roles in Executive Compensation Process
The principal roles of the Committee, our outside directors, our CEO and members of management in
our executive compensation process are as follows:
Responsible Party
Role
Human Capital and Compensation
Committee
Lead the process for establishing our annual executive
compensation program and approve or recommend that the
Board approve compensation actions.
Consult with management and the Committee’s compensation
consultant regarding employee benefit and compensation
programs, plans and awards.
All Outside Directors
Conduct comprehensive evaluation of CEO performance.
CEO
Management
Approve annual executive compensation program and finalize
compensation awards for the members of our Leadership
Team.
Provide the Committee and other outside directors with an
annual performance evaluation and compensation
recommendation for each of the other members of our
Leadership Team in the first quarter of each fiscal year based
on the CEO’s direct knowledge of their respective
performance and contributions.
Make recommendations to the Committee and our CEO
regarding the design and administration of our employee
benefit and compensation programs, plans and awards in
accordance with the Committee’s charter and the terms of our
compensation plans.
31
Responsible Party
Role
Advise the Committee and our CEO regarding the
competitiveness of existing and proposed compensation
programs and the impact of accounting rules, laws and
regulations on existing and proposed compensation programs.
Fiscal 2021 Executive Compensation Process
The Committee maintains an annual calendar for reviewing and approving the compensation elements
described above for our named executive officers. The Committee took the following key actions at its
March 3, 2021 meeting to establish our executive compensation program for fiscal 2021:
• Reviewed management’s proposed recommendations for annual cash incentive awards and long-term
equity incentive awards;
• Determined to return to the mix of compensation elements in place for the CEO and Leadership
Team before the onset of the COVID-19 pandemic consisting of base salary merit increases, annual
cash incentive awards based entirely on annual Company financial goals, and long-term equity incentive
awards consisting of PSUs (weighted 60%) and RSUs (weighted 40%);
• Reviewed and approved performance goals for the 2021 annual cash incentive awards based 75% on
adjusted operating profit and 25% on total annual sales;
• Reviewed and approved performance goals for the 2019 PSUs and 2021 PSUs based 50% on EPS
and ROIC and increased the maximum vesting opportunity for the 2021 PSUs from 150% of the target
number of PSUs (which applied to PSUs awarded in 2019 and prior years) to 200% of the target
number of PSUs; and
• Reviewed and approved base salary, target annual cash incentive levels, and long-term equity
incentive award levels for fiscal 2021 for the CEO and Leadership Team (including the named executive
officers).
Performance Evaluation Process
The Committee and our outside directors generally consider the following objective and subjective
factors when evaluating the performance of the members of our Leadership Team:
• long-term strategic goals
• expense goals
• capital efficiency metrics
• leadership and the
development of talent
• specific business challenges and
general economic and market
conditions
• short-term business goals
• operating margin improvement
• fostering teamwork and other
corporate values
• profit and revenue goals
• earnings per share growth
• optimization of organizational
effectiveness and productivity
• the performance of our
• comparable store and
competitors
ecommerce sales growth of the
Company compared to the
industry
The Committee and the other outside directors do not assign any of these performance factors a
specific weight and may consider different factors for each executive.
Independent Compensation Consultant
The Committee has the authority, in its sole discretion, to retain compensation consultants. In
establishing executive compensation for fiscal 2021, the Committee retained Meridian as its compensation
consultant based on its independence, expertise and past service to the Committee. Meridian provided
research, data analyses, survey information and design expertise in developing compensation programs for
32
executives and incentive programs for eligible employees. Meridian kept the Committee apprised of
regulatory developments and market trends related to executive compensation practices. Meridian does not
determine or recommend the exact amount or form of executive compensation for any of the named
executive officers. Representatives of Meridian attended meetings of the Committee.
Peer Compensation Data
During the course of establishing our fiscal 2021 executive compensation program, the Committee
reviewed compensation data for a group of retailers similar to us with whom we believe we compete for
talent (the “Retailer Peer Group”). In selecting the Retailer Peer Group, the Committee considered revenue,
gross profit margin, geographic location, market capitalization and number of stores. The companies
included in the Retailer Peer Group for fiscal 2021 compensation decisions were:
• Abercrombie & Fitch
• Advance Auto Parts
• American Eagle Outfitters
• Bed Bath & Beyond
• Burlington Stores
• Designer Brands
• Dick’s Sporting Goods
• Foot Locker
• L Brands
• Michaels
• Ollie’s Bargain Outlet
• RH
• Tractor Supply
• Urban Outfitters
• Williams — Sonoma
As a secondary reference, the Committee also reviewed executive compensation data regarding a
broader group of retail companies included in a compensation survey provided by Equilar. We believe it is
important to consult both sets of information because the compensation survey for the broader group includes
compensation information on more executives and provides a more extensive basis on which to compare
the compensation of the Leadership Team members, particularly those Leadership Team members whose
responsibilities, experience and other characteristics are not directly comparable to the executives included in
the publicly-available reports of the Retailer Peer Group.
The Committee and our human resources department reviewed each Leadership Team member’s
responsibilities and compared, where possible, the total direct compensation (which includes salary, annual
incentive award at target and equity awards) levels for our Leadership Team members to the total direct
compensation of similarly situated executives within the peer groups.
As discussed in this CD&A, we determine compensation subjectively based on numerous factors. We
do not benchmark or target our compensation at any particular level in relation to the compensation of the
peer groups. Rather, the peer group data provides a point of reference and market check.
COMPONENTS OF OUR 2021 EXECUTIVE COMPENSATION PROGRAM
Base Salary
The Committee annually reviews and establishes the base salary for each named executive officer. The
Committee determines adjustments to the base salaries of our named executive officers based on each
executive’s performance, experience, scope of responsibilities and base salary in comparison to our other
employees and similarly positioned executives in our Retailer Peer Group and the anticipated future
contributions of the executive. For fiscal 2021, the Committee approved the following salaries for the named
executive officers.
Name
Fiscal 2021 Salary
($)
Mr. Thorn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,200,000
Mr. Ramsden . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 714,000
Mr. Pestello . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 652,800
Mr. Schlonsky . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 523,872
Mr. Robins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 510,000
33
Annual Cash Incentive Awards
Each of our named executive officers participates in our annual cash incentive award program.
Historically, the amount of the annual cash incentive award earned by each named executive officer has
been based entirely on our annual corporate performance. In fiscal 2020, as a result of the lack of business
visibility resulting from the COVID-19 pandemic and our related inability to establish realistic performance
goals until the second half of fiscal 2020, the Committee bifurcated the annual cash incentive award into a
discretionary award based on effective management and leadership through the pandemic and an objective
corporate performance-based award similar to the annual cash incentive awards we granted to our
executives in previous fiscal years. In fiscal 2021, the Committee, with the input of the other outside directors,
reverted to our historic practice and based the annual cash incentive award earned by each named executive
officer entirely on our annual corporate performance.
On an annual basis with respect to our annual cash incentive award program, the Committee (1) selects
one or more performance measures, (2) establishes threshold, target and maximum performance goals for
each performance measure and (3) establishes for each named executive officer a percentage of base salary
that is earned at the threshold, target and maximum performance levels (with linear interpolation between the
specified payout percentages). No annual cash incentive award is earned for a performance measure if we
do not meet the applicable threshold performance goal. See the “Bonus and Equity Plans” discussion following
the Summary Compensation Table for more information regarding our annual cash incentive awards.
In March 2021, the Committee selected adjusted operating profit (weighted 75%) and total annual sales
(weighted 25%) as the performance measures for the annual cash incentive award for fiscal 2021. The
Committee selected adjusted operating profit as the primary performance measure because they believe it
represents a key indicator of the strength of our operating results and financial condition and incentivizes the
participants in our annual cash incentive award program to achieve strong earnings growth. The Committee
selected total annual sales as the other performance measure because the Committee believes it captures
the full impact of our growth initiatives, including new store growth, merchandising initiatives and e-commerce
growth.
The Committee established the performance goals for the adjusted operating profit and total annual
sales performance measures in March 2021 based on management’s projected results for fiscal 2021 which
considered, among other things, the impacts of (1) stimulus payments on fiscal 2020 sales, (2) anticipated
capital expenditures and initiatives on fiscal 2021 sales, (3) anticipated increases in merchandise purchases for
the fiscal 2021 Holiday season and (4) the distribution center sale and leaseback transactions, as well as the
continued additional unknown impacts of the COVID-19 pandemic. The Committee set the target adjusted
operating profit performance goal for fiscal 2021 at a level that would represent a decline in our adjusted
operating profit in fiscal 2021 of 36.7% compared to fiscal 2020, and an increase in our adjusted operating
profit in fiscal 2021 of 25.5% compared to fiscal 2019. The Committee set the target annual sales performance
goal for fiscal 2021 at a level that would represent a decline in our total annual sales in fiscal 2021 of 4.4%
compared to fiscal 2020, and an increase in our total annual sales in fiscal 2021 of 11.3% compared to fiscal
2019.
The following table sets forth for fiscal 2021 the adjusted operating income performance goal established
for each performance level and the payout percentage (as a percentage of base salary) established for each
named executive officer for each performance level:
Fiscal 2021 Performance Levels
Payout Percentage (% of salary)
Performance
Goal ($)
Thorn
Ramsden
Pestello
Schlonsky
Robins
Below Threshold . . . . . . . . . . . . . . . . . . .
0-221,000,000
0
0
0
0
0
Threshold . . . . . . . . . . . . . . . . . . . . . . . .
221,000,000
56.25% 28.125% 22.5% 22.5% 22.5%
Target . . . . . . . . . . . . . . . . . . . . . . . . . . .
260,000,000
112.5% 56.25%
Maximum . . . . . . . . . . . . . . . . . . . . . . . .
299,000,000
225% 112.5%
45%
90%
45%
90%
45%
90%
34
The following table sets forth for fiscal 2021 the total annual sales performance goal established for
each performance level and the payout percentage (as a percentage of base salary) established for each
named executive officer for each performance level:
Fiscal 2021 Performance Levels
Payout Percentage (% of salary)
Performance
Goal ($)
Thorn
Ramsden
Pestello
Schlonsky
Robins
Below Threshold . . . . . . . . . . . . . . . . . .
Threshold . . . . . . . . . . . . . . . . . . . . . . .
Target
. . . . . . . . . . . . . . . . . . . . . . . . .
Maximum . . . . . . . . . . . . . . . . . . . . . . .
0-5,650,000,000
5,650,000,000
5,925,000,000
6,050,000,000
0
0
0
9.375% 4.6875% 3.75% 3.75% 3.75%
15%
15%
37.5% 18.75%
30%
30%
75% 37.5%
15%
30%
0
0
To calculate the amount of the annual cash incentive award earned for fiscal 2021, if any, we first
calculate the applicable financial measure for purposes of our financial statements. We then adjust the
measure to eliminate the effect of selective events, transactions or accrual items. The Committee approves
such adjustments at the same time it establishes the corporate performance goals and annual incentive award
payout percentages applicable to the award. These adjustments may increase or decrease the corporate
performance amount achieved. Consistent with prior years, the Committee exercised negative discretion to
reduce the corporate performance amounts achieved with respect to the annual cash incentive awards to
exclude certain accrual items, which would have otherwise increased such amount. The Committee decided
to exclude these accrual items principally because they were either anticipated as part of the corporate
operating plan for fiscal 2021 upon which the financial measure and performance goals were established or
because of their potential outsized effect on the financial measure, and not because of any corporate or
individual performance factors. Notwithstanding the exercise of such negative discretion, each of our
named executive officers earned a payout under the annual cash incentive award for fiscal 2021 between the
target and maximum award amounts as a result of the Company’s achievement of adjusted operating
profit and total annual sales of $244,868,174 and $6,150,603,000, respectively, for fiscal 2021.
The following table sets forth the payout percentage achieved and the annual cash incentive award
earned by each named executive officer for fiscal 2021:
Name
Mr. Thorn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mr. Ramsden . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mr. Pestello . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mr. Schlonsky . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mr. Robins . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-Term Equity Incentive Compensation
Payout Percentage (% of salary)
Annual Cash Incentive Award
($)
166%
83%
66%
66%
66%
$1,988,100
$ 591,460
$ 432,611
$ 347,170
$ 337,977
In connection with its equity award process for fiscal 2021, the Committee decided to revert to our
historic equity grant practices and granted PSUs and RSUs to each of our named executive officers in
March 2021. In fiscal 2020, the Committee granted performance restricted stock unit awards (“PRSUs”)
and RSUs to our named executive officers due to the lack of business visibility resulting from the COVID-19
pandemic, and our related inability to establish realistic performance goals until the second half of fiscal
2020. Each named executive officer received 60% of their equity awards in fiscal 2021 in the form of PSUs
and 40% in the form of RSUs. The Committee determined the value of the equity awards granted to our
named executive officers, and the allocation of the equity awards between PSUs and RSUs, based on:
• management’s estimate of the number of Common Shares underlying the equity awards to be
granted during fiscal 2021;
• comparative compensation data;
• individual performance;
35
• the executive’s level of responsibility;
• the potential impact that the executive could have on our operations and financial condition;
• the market price of our Common Shares; and
• the recommendations for the value of the equity awards granted to the other named executive
officers.
The Committee did not utilize a particular formula in making these determinations, although individual
performance and the executive’s role and responsibility were the most significant factors in determining the
value of the equity awards granted to our named executive officers in fiscal 2021. See “Performance
Evaluation Process” above for more information regarding how we evaluate performance.
PSUs and RSUs are settled in our Common Shares. Any PSUs or RSUs that do not vest will be
forfeited. The PSUs and RSUs do not have voting rights. PSUs and RSUs include a dividend-equivalent
right, which represents the right to receive the equivalent of any cash dividends payable with respect to our
Common Shares underlying the awards. Any cash dividends will accrue without interest and will vest and be
paid only at the time the corresponding PSUs or RSUs vest. Any accrued cash dividends relating to PSUs
or RSUs that do not vest will be forfeited.
PSU Award Process for Fiscal 2021 and Fiscal 2019
In fiscal 2021 and fiscal 2019, the Committee awarded a target number of PSUs to our named executive
officers subject to (1) the attainment of performance goals applicable to specified performance measures
during a three-year performance cycle consisting of three annual service periods and (2) the named executive
officer’s continued employment through the end of the performance cycle. To calculate the attainment of
the performance goals, we first calculate the applicable performance measures derived from our financial
statements and then adjust the performance measures to eliminate the effect of selected events, transactions
or accrual items described in the 2017 LTIP and the 2020 LTIP and approved by the Committee when it
establishes the performance goals. These adjustments may increase or decrease the amount achieved for the
performance measure.
The Committee establishes the performance measures for each performance cycle at the beginning of
each performance cycle (EPS and ROIC in the case of both the Fiscal 2021 PSU awards and the Fiscal 2019
PSU awards) and has historically established the performance goals for each service period at the beginning
of the service period. However, the Committee did not establish the performance goals applicable to the
second service period of the Fiscal 2019 PSU award performance cycle until August 2020 due to the lack
of business visibility resulting from the COVID-19 pandemic and our related inability to establish realistic
performance goals until the second half of fiscal 2020. In fiscal 2021, the Committee reverted to its historic
practice and established the performance goals applicable to the first service period of the Fiscal 2021
PSU award performance cycle and the last service period of the Fiscal 2019 PSU award performance cycle
at the beginning of the service period. The following table sets forth the performance goals established by the
Committee for each performance measure for fiscal 2021 and the actual amount of each performance
measure in fiscal 2021:
Performance Measure
Weighting
Target
Actual
EPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
50% $5.59
$5.24
ROIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
50%
15.5% 15.2%
Fiscal 2021 PSU Awards
For the fiscal 2021 PSU awards, a percentage of the target number of PSUs (i.e., the vesting factor)
vests based on our average attainment of the performance goals applicable to the performance measures
during the three-year performance cycle (with linear interpolation between the performance levels) as
described in the following chart:
Performance Level
3-Year Average Performance Attainment
Vesting Factor
Threshold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Target . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Maximum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
80%
100%
120%
50%
100%
200%
36
The following table sets forth the target number and grant value of the PSUs awarded to the named
executive officers in fiscal 2021 and the performance attained for each performance measure during each
completed service period in the fiscal 2021 PSU award performance cycle:
Name
Target Number of PSUs Grant Value of PSUs
Mr. Thorn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mr. Ramsden . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mr. Pestello . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mr. Schlonsky . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mr. Robins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
46,617
13,350
12,206
9,795
9,536
$3,300,317
$ 945,047
$ 864,063
$ 693,388
$ 675,053
Fiscal 2021 PSU Award Performance Cycle Attainment
(2021 – 2023)
EPS
ROIC
Actual Results
Target Performance Goal
Performance%
Actual Results
Target Performance Goal
Performance%
Fiscal
2021
$5.24
$5.59
93.7%
15.2%
15.5%
97.9%
Fiscal
2022
TBD
TBD
TBD
TBD
TBD
TBD
Fiscal
2023
TBD
TBD
TBD
TBD
TBD
TBD
Fiscal 2019 PSU Awards
For the fiscal 2019 PSU awards, a percentage of the target number of PSUs (i.e., the vesting factor)
vests based on our average attainment of the performance goals applicable to the performance measures
during the three-year performance cycle (with linear interpolation between the performance levels) as
described in the following chart:
Performance Level
3-Year Average Performance
Attainment
Vesting Factor
Threshold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Target
Maximum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
80%
100%
120%
50%
100%
150%
The following table sets forth the target number and grant value of the PSUs awarded to the named
executive officers in fiscal 2019 (Mr. Pestello was not employed by the Company during fiscal 2019), the
number and value (calculated based on the closing price of our Common Shares on the last trading day of
fiscal 2021) of the PSUs actually earned by the named executive officer under such awards, the vesting factor
applicable to such awards and the performance attained for each performance measure during each service
period in the fiscal 2019 PSU award performance cycle:
Name
Target Number of
PSUs
Grant Value of
PSUs
Number of PSUs
Earned
Value of PSUs
Earned
Vesting Factor
Mr. Thorn . . . . . . . . . . . . . .
Mr. Ramsden . . . . . . . . . . . .
Mr. Schlonsky . . . . . . . . . . .
Mr. Robins . . . . . . . . . . . . . .
72,528
20,770
19,049
17,573
$2,640,019
$ 756,028
$ 693,384
$ 639,657
104,802
30,012
27,525
25,392
$4,228,761
$1,210,984
$1,110,634
$1,024,567
144.5%
144.5%
144.5%
144.5%
37
Fiscal 2019 PSU Award Performance Cycle Attainment
(2019 – 2021)
EPS
Actual Results
Target Performance Goal
Performance %
EPS 3-year average performance: 127.0% (75.0% vesting factor)
ROIC
Actual Results
Target Performance Goal
Performance %
ROIC 3-year average performance: 115.6% (69.5% vesting factor)
Fiscal 2021 RSU Awards
Fiscal
2019
$3.69
$3.72
99.2%
13.9%
14.7%
94.8%
Fiscal
2020
$7.64
$4.06
188.2%
23.6%
15.3%
154.3%
Fiscal
2021
$5.24
$5.59
93.7%
15.2%
15.5%
97.9%
The RSUs awarded to our named executive officers vest ratably over three years from the grant date of
the award and are subject to (1) the participant remaining employed by us through each annual vesting date
and (2) an operating profit performance component that requires us to earn at least one dollar in operating
profit for the fiscal year in which the grant date occurs or in either of the two fiscal years immediately thereafter.
As a result of our performance in fiscal 2021, the performance requirement for the fiscal 2021 RSU awards
was met. Accordingly, one-third of the RSU awards for fiscal 2021 vested on the first anniversary of the grant
date.
The following table sets forth the number and grant value of the RSUs awarded to the named executive
officers in fiscal 2021.
Name
Number of
RSUs
Grant Value of
RSUs
Mr. Thorn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mr. Ramsden . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mr. Pestello . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mr. Schlonsky . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mr. Robins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31,077
8,899
8,136
6,529
6,356
$2,199,941
$ 629,960
$ 575,947
$ 462,188
$ 449,941
Personal Benefits and Perquisites
We provide our named executive officers with certain benefits that are available to nearly all salaried
employees, including paid group term life insurance equal to one and a half times base salary, matching
contributions to our Savings Plan, and medical and dental insurance. We generally provide the following
limited personal benefits and perquisites to employees at or above the vice president level: (1) coverage under
the Big Lots Executive Benefit Plan (“Executive Benefit Plan”); (2) enhanced long-term disability insurance
coverage; and (3) payment of an automobile allowance. We believe these personal benefits and perquisites,
although immaterial to us in amount, are an important element of total compensation because of the value
our executives place on these benefits.
Our Executive Benefit Plan reimburses executives for health-related costs incurred but not covered
under our Big Lots Associate Benefit Plan, up to an annual maximum reimbursement of $40,000 per family.
Amounts received by named executive officers under the Executive Benefit Plan are treated as taxable
income, and we reimburse each executive the approximate amount of his or her income tax liability relating
to the benefits received under the Executive Benefit Plan.
We offer short-term disability coverage to all full-time employees and long-term disability coverage to
all salaried employees. The benefits provided under the long-term disability plan are greater for our named
executive officers than for employees below the vice president level. Under the enhanced long-term disability
38
coverage, a named executive officer may receive 67% of his or her monthly salary, up to $25,000 per month,
until the executive is no longer disabled or turns 65, whichever occurs earlier. We pay the premiums for
this long-term disability coverage and also reimburse our named executive officers for any income taxes
resulting from our payment of such premiums.
In June 2020, in light of concerns regarding commercial travel during the COVID-19 pandemic and the
fact that Mr. Thorn maintained a residence in Arizona, where members of his immediate family continued
to reside, the Board resolved to strongly encourage Mr. Thorn to use the Company’s business relationship
with NetJets during the pandemic and agreed to cover up to three round-trip domestic trips on NetJets
during such period. The total incremental cost of Mr. Thorn’s personal use of NetJets in fiscal 2021 was
$25,325.
Post-Termination and Change in Control Arrangements
The senior executive severance agreements described below in “Agreements with Named Executive
Officers” provide our named executive officers with potential severance and change in control payments and
benefits. Our equity compensation plans and related award agreements also provide for the accelerated
vesting of outstanding equity awards, including PSUs and RSUs, in connection with certain termination
events. The change in control provisions of the severance agreements provide the named executive officer
certain cash payments and other benefits upon a change in control only if the executive is terminated in
connection with the change in control (including a constructive termination). The Committee believes that
this “double trigger” structure incentivizes our executive officers to remain objective in connection with,
and not be distracted by the personal uncertainties and risks created by, an actual or proposed change in
control.
While the Committee considers the potential payments upon termination or change in control annually
when it establishes compensation for the applicable year, this information is not a primary consideration in
setting salary, bonus payout percentages or equity compensation amounts.
See “Potential Payments Upon Termination or Change in Control” below for a discussion of the
compensation that may be paid to our named executive officers in connection with a change in control or
the termination of employment.
AGREEMENTS WITH NAMED EXECUTIVE OFFICERS
Senior Executive Severance Agreements
We have entered into a senior executive severance agreement with each of Messrs. Thorn, Ramsden,
Pestello, Schlonsky, and Robins and several other key officers who are not parties to an employment
agreement. The senior executive severance agreements expire on the first anniversary of the date of execution
and automatically renew for an additional year unless we provide the executive at least 30 days’ notice of non-
renewal. The senior executive severance agreements provide for the following severance benefits if, within
24 months after a change in control, the executive is terminated by us (other than for cause) or as a result of
a constructive termination: (1) a lump-sum payment equal to 200% of the executive’s then current annual
salary and target annual incentive award; (2) a lump-sum payment equal to executive’s target bonus prorated
for the number of days the executive worked during the applicable performance period prior to the
executive’s termination; and (3) for a period of two years, the executive is entitled to participate in any
group life, hospitalization or disability insurance plan, health program or other executive benefit plan
generally available to similarly titled executive officers. The executives are also entitled to reimbursement of
legal fees and expenses they incur in seeking to enforce their rights under the agreement.
The senior executive severance agreements do not provide a gross-up payment to any participants to
offset any excise tax.
Severance Plan
The Board adopted the Severance Plan, which covers each of our named executive officers and several
of our other key executives, to provide more uniform severance payments and benefits to our executives,
39
avoid the use of individual severance agreements and ensure that restrictive covenants apply to our key
executives. The payments and benefits to which our named executive officers would be entitled to under the
Severance Plan (collectively, the “Severance Benefits”) if they are terminated without Cause (as defined in
the Severance Plan) or as a result of a Constructive Termination (as defined in the Severance Plan) are
described below in the “Potential Payments Upon Termination or Change in Control — Involuntary
Termination Without Cause.”
The Severance Plan also imposes confidentiality, non-competition, non-solicitation, non-disparagement
and post-termination cooperation obligations on participants. The non-competition and non-solicitation
obligations apply during the period of employment and continue until the end of the restriction period set
forth in the Severance Plan.
The Severance Plan does not provide a gross-up payment to any participants to offset any excise tax.
Retirement Plans
We maintain a tax-qualified defined contribution plan (“Savings Plan”). We believe that the Savings
Plan is generally commensurate with the retirement plans provided by companies in our peer groups and
that providing this plan enhances our ability to attract and retain qualified executives. In December 2020, the
Board approved the termination of our non-qualified supplemental defined contribution plan (“Supplemental
Savings Plan”). The balances under the Supplemental Savings Plan were distributed to participants in
December 2021 and January 2022. See the “Nonqualified Deferred Compensation — Supplemental Savings
Plan” section of this Proxy Statement for a discussion of our retirement plans.
OTHER EXECUTIVE COMPENSATION POLICIES AND PRACTICES
Minimum Share Ownership Requirements and Hedging and Pledging Prohibition
The Board has adopted minimum share ownership requirements for all outside directors and Leadership
Team members. These requirements are designed to align the long-term interests of our outside directors
and executives with those of our shareholders. Under the requirements, the outside directors and Leadership
Team members must own Common Shares having an aggregate value equal to at least the following
multiple of his or her Board retainer or salary (as is in effect at the time compliance with the requirements is
evaluated), as applicable:
Title
Multiple of
Retainer or Salary
Outside Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Chief Executive Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Executive Vice President
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Senior Vice President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5x
6x
3x
2x
Shares counted toward these requirements include Common Shares held directly or through a broker,
Common Shares held under the Savings Plan, unvested restricted stock, unvested RSUs, and deferred
stock units. Each member of senior management that is required to meet the minimum share ownership
requirements is required to hold 50% of any net (after-tax) shares received until his or her minimum share
ownership requirements are met or whenever his or her minimum share ownership requirements are not met.
Outside directors and executives must meet the requirements on the first annual testing date for outside
directors or executives following the fifth anniversary of their election, hire or promotion, as applicable. Each
outside director and executive is in compliance with our minimum share ownership requirements.
In addition to the minimum share ownership requirements, we do not allow our outside directors or
Leadership Team members to enter into any hedging, pledging or monetization transactions involving our
Common Shares.
Anti-Hedging Policy
Our insider trading policies prohibit our Leadership Team and members of the Board from engaging
in hedging and monetization transactions relating to Company securities, including through the use of
40
financial instruments such as prepaid variable forwards, equity swaps, collars and exchange funds. Our
insider trading policies also prohibit our Leadership Team and members of the Board from holding Company
securities in a margin account or otherwise pledging Company securities as collateral for a loan.
The Committee has adopted an incentive compensation recoupment policy, commonly referred to as a
clawback policy, which applies to all cash and equity incentive-based compensation paid or awarded to an
associate (including our named executive officers) on or after March 2017. Under the policy, if we determine
that we must prepare an accounting restatement due to material noncompliance with any financial reporting
requirement under the U.S. federal securities laws, we will seek to recover, at the discretion of the
Committee after it has reviewed the facts and circumstances that led to the requirement for the restatement,
the amount of erroneously awarded cash and equity incentive-based compensation received by the associate
during the three-year period immediately preceding the date on which we are required to prepare the
restatement.
Equity Grant Timing
Pursuant to the terms of the 2017 LTIP and the 2020 LTIP, the grant date of equity awards must be
the later of the date the terms of the award are established by corporate action or the date specified in the
award agreement. In fiscal 2021, the outside directors, after consultation with the Committee, specified that
the grant date of the annual equity awards was March 22, 2021. The Board set the grant date on such
future date to allow the market to absorb and react to our release of material non-public information, and
to avoid any suggestion that the Board, the Compensation Committee or any employee manipulated the terms
or timing of the equity awards. For equity awards made throughout the fiscal year, which generally are
made as a result of a hiring or promotion, the grant date is the 15th day of the month following the month
of the hire or promotion date. We have no policy of timing the grant date of equity awards with the release of
material non-public information, and we have not timed the release of material non-public information for
the purpose of affecting the value of any equity awards.
Tax and Accounting Considerations
The Committee reviews and considers the impact that tax laws and accounting regulations may have
on the executive compensation awards, including the deductibility of executive compensation under
Section 162(m) of the Internal Revenue Code of 1986, as amended (the “IRC”). In doing so, the Committee
relies on guidance from members of our finance and legal departments, as well as outside accountants and
attorneys.
Section 162(m) generally does not allow a tax deduction to publicly-held companies for compensation
over $1 million paid in any fiscal year to certain current and former executive officers of the Company.
However, prior to December 2017, when the Tax Cuts and Jobs Act (“Tax Act”) was enacted into
law,Section 162(m) exempted qualified performance-based compensation from this $1 million limit if
certain requirements were met. Historically, the Committee had structured the annual cash incentives and
performance-based compensation awarded to covered employees in a manner intended to meet the exception
from Section 162(m)’s deduction limits.
The Tax Act eliminated the qualified performance-based exception to the $1 million deduction limit
and subjects all compensation paid to the chief executive officer, the chief financial officer and the next
three highest paid officers whose compensation is required to be reported in the Summary Compensation
Table of the proxy statement for 2018 and beyond (each, a “Covered Employee”). Once an individual becomes
a Covered Employee, that individual will remain a Covered Employee for all subsequent years. The Tax
Act includes a grandfathering provision for compensation paid pursuant to a written binding contract in
effect on or before November 2, 2017 that has not been modified in any material way since that date. Based
on current guidance, we believe our equity awards granted on and prior to November 2, 2017 comply with the
grandfathering provision and will remain deductible. However, equity awards granted after November 2,
2017 will likely be subject to the limitations on deductibility under Section 162(m).
Prior to 2019, we granted short-term annual cash incentive awards to our named executive officers
under the 2006 Bonus Plan. Beginning with the 2019 fiscal year, we granted short-term annual cash incentive
awards to our named executive officers under the 2019 Bonus Plan. Historically, we intended annual cash
41
incentive awards issued to covered employees under the 2006 Bonus Plan to qualify for the performance-
based compensation deduction allowed by Section 162(m). Although we still intend to grant performance-
based annual compensation opportunities, amounts paid pursuant to the 2019 Bonus Plan are subject to the
limitations on deductibility under Section 162(m).
COMPENSATION COMMITTEE REPORT
The Human Capital and Compensation Committee reviewed and discussed the above CD&A with
management and, based on such review and discussion, the Human Capital and Compensation Committee
recommended to the Board that the CD&A be included in this Proxy Statement and our Annual Report
on Form 10-K for fiscal 2021 (“Form 10-K”).
Members of the Human Capital and Compensation Committee
Nancy A. Reardon (Chair)
Cynthia T. Jamison
Thomas A. Kingsbury
Marla C. Gottschalk
Christopher J. McCormick
42
Summary Compensation Table for Fiscal 2021
Name and
Principal Position(1)
(a)
Bruce K. Thorn,
President and Chief Executive
Officer
Jonathan E. Ramsden,
Executive Vice President, Chief
Financial and Administrative
Officer(7)
Jack A. Pestello,
Executive Vice President, Chief
Merchandising Officer(8)
Michael A. Schlonsky,
Executive Vice President, Chief Human
Resources Officer
Ronald A. Robins, Jr.,
Executive Vice President, Chief Legal
and Governance Officer, General
Counsel and Corporate Secretary
Year
(b)
Salary
($)(2)
(c)
Bonus
($)
(d)
Stock
Awards
($)(3)
(e)
Non-Equity
Incentive Plan
Compensation
($)(4)
(g)
2021 1,182,692 — 5,499,958
1,988,100
2020 1,072,500 — 3,667,424
2,750,000
2019 1,100,000 — 4,399,996
2021
2020
2019
2021
2020
2021
2020
2019
2021
2020
2019
711,577 — 1,575,007
682,500 — 1,312,775
336,539 —
937,506
650,585 — 1,440,010
320,000 — 1,129,979
522,094 — 1,155,576
500,760 —
963,184
513,600 — 1,155,591
508,269 — 1,124,994
487,500 —
937,684
481,358 — 1,066,047
976,113
591,460
840,000
177,519
432,611
396,659
347,170
616,320
218,763
337,977
600,000
212,970
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
(h)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
All Other
Compensation
($)(5)(6)
(i)
Total
($)
(j)
371,437
9,042,187
235,716
7,725,640
71,721
6,547,830
146,063
3,024,107
87,007
28,997
60,199
43,485
2,922,282
1,480,561
2,583,405
1,890,123
219,477
2,244,317
133,396
2,213,660
139,672
2,027,626
190,406
2,161,646
115,152
2,140,336
96,540
1,856,915
(1) We are a party to a senior executive severance agreement with Mr. Thorn, Mr. Ramsden, Mr. Pestello,
Mr. Schlonsky, and Mr. Robins, the material terms of which are described in the “Agreements with
Named Executive Officers — Senior Executive Severance Agreements” section of the CD&A. We are
a party to an executive severance plan with each of our named executive officers, the material terms of
which are described in the “Agreements with Named Executive Officers — Severance Plan” section
of the CD&A.
(2) The amounts in this column reflect the salary earned by each named executive officer for fiscal 2021,
fiscal 2020 and fiscal 2019.
(3) The amounts in this column reflect the sum of (i) the grant date fair value of the RSUs, as determined
in accordance with ASC 718, awarded to the named executive officers in fiscal 2021 and Mr. Pestello in
fiscal 2020 under the 2020 LTIP and to the other named executive officers in fiscal 2020 and fiscal
2019 under the 2017 LTIP and (ii) the estimated fair value of the PSUs awarded to the named executive
officers in fiscal 2021 under the 2020 LTIP and fiscal 2019 under the 2017 LTIP and the PRSUs
awarded to the named executive officers in fiscal 2020 under the 2017 LTIP. These amounts do not
represent the actual amounts that will be realized by the Named Executive Officers with respect to such
awards. Assumptions used in the calculation of these amounts are included in Note 7 to the Company’s
audited consolidated financial statements for the fiscal year ended January 29, 2022, included in the
Form 10-K.
(4) The amounts in this column reflect annual incentive awards earned by each named executive officer
under the 2019 Bonus Plan for performance during fiscal 2021, fiscal 2020 and fiscal 2019.
(5) For fiscal 2021, the amounts in this column include the following compensation for the named
executive officers, as more fully described in the table included with this footnote:
i.
The reimbursement of taxes related to our payment of healthcare costs, including costs covered by
the Executive Benefit Plan, long-term disability insurance premiums, and relocation expenses;
43
ii. Matching contributions made by Big Lots pursuant to the Savings Plan, which is described in the
narrative disclosure accompanying the Nonqualified Deferred Compensation table below;
iii. Healthcare costs paid by Big Lots pursuant to the Executive Benefit Plan, which is described in
the “Components of our Executive Compensation Program — Personal Benefits and Perquisites”
section of the CD&A;
iv. Premiums paid by Big Lots for life insurance, which is generally available to all full-time employees;
v.
Premiums paid by Big Lots for long-term disability insurance, which is described in the
“Components of our Executive Compensation Program — Personal Benefits and Perquisites”
section of the CD&A;
vi. The cost to Big Lots associated with the executive’s receipt of a cash allowance in lieu of an
automobile;
vii. Matching charitable contributions made by Big Lots;
viii. Dividends paid on vested RSU, PRSU and PSU awards;
ix. The aggregate incremental cost to Big Lots associated with non-business use of non-commercial
x.
aircraft by Mr. Thorn; and
Payments made to Mr. Pestello to reimburse him for expenses he incurred in connection with his
relocation to Columbus, Ohio.
Name
Mr. Thorn Mr. Ramsden Mr. Pestello Mr. Schlonsky Mr. Robins
Reimbursement of Taxes ($)
. . . . . . . . . . . . . . . . . .
5,952
10,703
7,757
12,737
8,043
Big Lots Contributions to Defined Contribution
Plans ($)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11,600
11,600
11,600
11,600
11,600
Big Lots Paid Health Care under Executive Benefits
Plans ($)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,178
10,520
Big Lots Paid Life Insurance Premiums ($) . . . . . . . . .
891
638
Big Lots Paid Long-Term Disability Insurance
Premiums ($)
. . . . . . . . . . . . . . . . . . . . . . . . . .
1,994
Use of Automobile or Automobile Allowance ($) . . . . .
13,200
Matching Charitable Contributions ($) . . . . . . . . . . . .
—
Dividend Payments ($) . . . . . . . . . . . . . . . . . . . . . . 307,297
Personal Use of Company Aircraft ($) . . . . . . . . . . . .
25,325
Relocation Expenses ($) . . . . . . . . . . . . . . . . . . . . .
—
1,994
13,200
15,000
82,408
—
—
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 371,437
146,063
5,324
585
1,994
13,200
2,500
8,939
—
8,300
60,199
13,356
472
1,994
13,200
15,000
7,698
460
1,994
13,200
15,000
151,118
132,411
—
—
—
—
219,477
190,406
(6) We purchase tickets to entertainment and sporting venues for the primary purpose of allowing
employees to use such tickets in furtherance of our business. Because we incur no incremental cost if a
named executive officer uses such tickets for purposes other than our business, such tickets are not
included in the amounts in this column.
(7) Mr. Ramsden joined Big Lots as our Executive Vice President, Chief Financial and Administrative
Officer on August 5, 2019 and did not serve in any other capacity with Big Lots prior to such date.
(8) Mr. Pestello joined Big Lots as our Executive Vice President, Chief Merchandising Officer on July 27,
2020 and did not serve in any other capacity with Big Lots prior to such date.
Bonus and Equity Plans
The amounts reported in the Summary Compensation Table above include awards granted to the
named executive officers under the 2019 Bonus Plan, the 2017 LTIP and the 2020 LTIP. Below is a description
of the material terms of each plan and the awards made under those plans to our named executive officers,
as reflected in the following Grants of Plan-Based Awards in Fiscal 2021 table.
Big Lots 2019 Bonus Plan
The 2019 Bonus Plan provides for cash compensation paid annually when we meet or exceed pre-
established minimum corporate performance amounts under one or more financial measures approved by
44
the Human Capital and Compensation Committee and other non-employee directors at the start of the
fiscal year. Whether we achieve the minimum corporate performance amounts is substantially uncertain at
the time the corporate performance amounts and financial measures are established. No right to a minimum
annual incentive award exists under the 2019 Bonus Plan, and the Human Capital and Compensation
Committee has the discretion to cancel or decrease an annual incentive award calculated under the 2019
Bonus Plan. Payments made with respect to a fiscal year were made in the first quarter of the following fiscal
year. The annual incentive awards that may be earned under the 2019 Bonus Plan range from the threshold
to the maximum annual incentive award payout percentages, and include all amounts in between. The
threshold annual incentive award payout percentage is pre-established annually by the Human Capital and
Compensation Committee and the other non-employee directors. The Human Capital and Compensation
Committee and the other non-employee directors retain the right to adjust the payout percentages and, in
the past, have generally done so as deemed necessary to realign an executive’s annual incentive award
opportunity with our compensation philosophy. See the “Components of our Executive Compensation
Program — Annual Cash Incentive Awards” section of the CD&A for more information regarding the 2019
Bonus Plan and the awards made under that plan for fiscal 2021.
Big Lots 2017 Long-Term Incentive Plan
From May 25, 2017 through June 10, 2020, all equity awards granted to our employees and non-
employee directors were granted under the 2017 LTIP. The 2017 LTIP authorized the grant of (1) NQSOs,
(2) ISOs, (3) SARs, (4) restricted stock, (5) RSUs, (6) deferred stock units, (7) performance shares, (8) PSUs,
(9) performance units, (10) cash-based awards, and (11) other stock-based awards. All of our and our
affiliates’ employees, outside directors and consultants were eligible to receive Awards under the 2017 LTIP.
The RSUs awarded to our named executive officers in fiscal 2020 and fiscal 2019 pursuant to the 2017
LTIP covered a fixed number of RSUs. The RSUs will vest, if at all, ratably over three years from the grant
date of the award if the participant remains employed by us through each annual vesting date (except in
the case of death, disability, retirement, involuntary termination or constructive termination). These RSUs
are also subject to an operating profit performance component that requires us to earn at least one dollar in
operating profit for the fiscal year in which the grant date occurs or in either of the two fiscal years
immediately thereafter. The performance requirement for the fiscal 2020 RSU awards and the fiscal 2019
RSU awards was met as a result of our performance in fiscal 2020 and fiscal 2019, respectively.
The PRSUs awarded to our named executive officers in fiscal 2020 pursuant to the 2017 LTIP covered
a fixed number of PRSUs. The PRSUs vested 33-1/3% upon the closing price of our Common Shares
equaling or exceeding the following thresholds for 20 consecutive trading days on or before the third
anniversary of the grant date: (1) $17.00; (2) $21.00; and (3) $25.00. The closing price of our Common Shares
subsequently exceeded each of the thresholds in fiscal 2021 and, as a result, all of the PRSUs vested in
April 2021 on the first anniversary of the grant date although the underlying Common Shares may not be
sold until the third anniversary of the grant date.
The PSUs awarded to our named executive officers in fiscal 2019 pursuant to the 2017 LTIP covered a
target number of PSUs. The PSUs will vest, if at all, after the completion of a three-year performance period,
based: (1) 50% on our average EPS performance, excluding selected plan-defined items, for each of the
three service periods during the performance period; (2) 50% on our average ROIC performance (net
operating profit after-tax divided by invested capital for the fiscal year), excluding selected plan-defined items,
for each of the three service periods during the performance period; and (3) on the named executive
officer’s continued employment through the end of the performance period (except in the case of death,
disability or retirement). The actual number of PSUs that will vest will increase to 150% of the target number
if we achieve the maximum performance levels for both of the EPS and ROIC performance goals, and
decrease to zero if we fail to meet the minimum performance levels for both of the performance goals. If we
achieve the minimum performance levels for both of the EPS and ROIC performance goals, 50% of the
target number of PSUs will vest. The percentage of the target number of PSUs that will vest for performance
between the threshold and maximum performance levels will increase proportionately from 50% to 150%
based on our actual performance.
Upon a change in control (as defined in the 2017 LTIP), all awards outstanding under the 2017 LTIP
automatically become fully vested. For a discussion of the change in control provisions in our senior executive
45
severance agreements and the 2017 LTIP, see the “Potential Payments Upon Termination or Change in
Control — Rights Under Post-Termination and Change in Control Arrangements” section below.
Big Lots 2020 Long-Term Incentive Plan
All equity awards granted to our employees and non-employee directors since June 10, 2020 have been
granted under the 2020 LTIP. The 2020 LTIP authorized the grant of (1) NQSOs, (2) ISOs, (3) SARs,
(4) restricted stock, (5) RSUs, (6) deferred stock units, (7) performance shares, (8) PSUs, (9) performance units,
(10) cash-based awards, and (11) other stock-based awards. All of our and our affiliates’ employees,
outside directors and consultants were eligible to receive Awards under the 2020 LTIP.
The RSUs awarded to our named executive officers in fiscal 2020 (which consisted of the RSUs
awarded to Mr. Pestello in connection with his hiring) and fiscal 2021 pursuant to the 2020 LTIP covered a
fixed number of RSUs. The RSUs will vest, if at all, ratably over three years from the grant date of the award
if the participant remains employed by us through each annual vesting date (except in the case of death,
disability, retirement, involuntary termination or constructive termination). The performance requirement
for the fiscal 2020 RSU awards and the fiscal 2021 RSU awards was met as a result of our performance in
fiscal 2020 and fiscal 2021, respectively.
The PSUs awarded to our named executive officers in fiscal 2021 pursuant to the 2020 LTIP covered a
target number of PSUs. The PSUs will vest, if at all, after the completion of a three-year performance period,
based: (1) 50% on our average EPS performance, excluding selected plan-defined items, for each of the
three service periods during the performance period; (2) 50% on our average ROIC performance (net
operating profit after-tax divided by invested capital for the fiscal year), excluding selected plan-defined items,
for each of the three service periods during the performance period; and (3) on the named executive
officer’s continued employment through the end of the performance period (except in the case of death,
disability or retirement). The actual number of PSUs that will vest will increase to 200% of the target number
if we achieve the maximum performance levels for both of the EPS and ROIC performance goals, and
decrease to zero if we fail to meet the minimum performance levels for both of the performance goals. If we
achieve the minimum performance levels for both of the EPS and ROIC performance goals, 50% of the
target number of PSUs will vest. The percentage of the target number of PSUs that will vest for performance
between the threshold and maximum performance levels will increase proportionately from 50% to 200%
based on our actual performance.
In the event of a change in control (as defined in the 2020 LTIP) where the participant incurs a
separation of service (as defined in Section 409A of the IRC) within the 30 days before or 24 months
following the change in control, all awards outstanding under the 2020 LTIP automatically become fully
vested. For a discussion of the change in control provisions in our senior executive severance agreements and
the 2020 LTIP, see the “Potential Payments Upon Termination or Change in Control — Rights Under Post-
Termination and Change in Control Arrangements” section below. See the “Components of our Executive
Compensation Program — Long-Term Equity Incentive Compensation” section of the CD&A and the
“Potential Payments Upon Termination or Change in Control — Rights Under Post-Termination and
Change in Control Arrangements” section below for more information regarding the equity awards made
under the 2020 LTIP in fiscal 2021.
46
Grants of Plan-Based Awards in Fiscal 2021
The following table sets forth each award made to our named executive officers in fiscal 2021 under the
2019 Bonus Plan and the 2020 LTIP.
Estimated Possible
Payouts Under
Non-Equity
Incentive Plan
Awards(2)
Estimated Future
Payouts Under
Equity
Incentive Plan
Awards(3)
Name
(a)
Grant
Date(1)
(b)
Board
Approval
Date(1)
Threshold
($)
(c)
Target
($)
(d)
Maximum
($)
(e)
Threshold
(#)
(f)
Target
(#)
(g)
Maximum
(#)
(h)
Mr. Thorn . . . . . .
—
— 112,500 1,800,000 3,600,000
—
—
—
All Other
Stock
Awards:
Number
of Shares
of Stock
or Units
(#)(4)
(i)
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
(j)
Exercise
or Base
Price of
Option
Awards
($/Sh.)
(k)
Grant
Date Fair
Value of
Stock
and
Option
Awards
($/
Shr.)(5)
(l)
Mr. Ramsden . . . . .
—
— 33,469
535,500 1,071,000
3/22/21 3/15/21
3/22/21 3/15/21
—
—
—
—
3/22/21 3/15/21
3/22/21 3/15/21
—
—
—
—
3/22/21 3/15/21
3/22/21 3/15/21
—
—
—
—
Mr. Pestello . . . . . .
—
— 24,480
391,680
783,360
Mr. Schlonsky . . . .
—
— 19,645
314,323
628,646
3/22/21 3/15/21
3/22/21 3/15/21
—
—
—
Mr. Robins . . . . . .
—
— 19,125
306,000
612,000
— 11,654
46,617
93,234
—
—
—
—
— 31,077
—
—
—
—
— 3,338
13,350
26,700
—
—
—
—
—
—
— 3,052
12,206
24,412
—
—
—
—
—
—
2,449
9,795
19,590
—
—
—
—
—
—
—
—
—
—
8,899
—
—
8,136
—
—
6,529
—
3/22/21 3/15/21
3/22/21 3/15/21
—
—
—
—
— 2,384
9,536
19,072
—
—
—
—
6,356
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
— 3,300,317
— 2,199,941
—
—
—
—
—
—
—
—
—
—
—
—
—
945,047
629,960
—
864,063
575,947
—
693,388
462,188
—
675,053
449,941
(1) As discussed in the “Compensation Policies & Practices — Equity Grant Timing” section of the
CD&A, in fiscal 2021, the Board set the grant date for the RSU awards and the service inception date
for the PSU awards on such future date to allow the market to absorb and react to our release of material
non-public information, and to avoid any suggestion that the Board, the Compensation Committee or
any employee manipulated the terms or timing of the equity awards.
(2) The amounts in columns (c), (d) and (e) represent our named executive officers’ threshold, target and
maximum annual incentive award levels, respectively, for fiscal 2021 pursuant to the 2019 Bonus Plan.
These awards are further described in the “Components of our Executive Compensation Program —
Annual Cash Incentive Awards” section of the CD&A.
(3) The amounts in columns (f), (g) and (h) represent the threshold, target and maximum number of PSUs
awarded pursuant to the 2020 LTIP that each named executive officer is eligible to earn depending on
the level of achievement of the applicable performance metrics over the three-year performance period.
For more information on PSUs, see the narrative discussion preceding this table and the “Components
of our Executive Compensation Program — Long-Term Equity Incentive Compensation” section of the
CD&A.
(4) The amounts in column (i) represent RSUs awarded pursuant to the 2020 LTIP, which awards are
described in the narrative discussion preceding this table and the “Components of our Executive
Compensation Program — Long-Term Equity Incentive Compensation” section of the CD&A.
(5) This column represents the full grant date fair value of the RSUs as calculated in accordance with
ASC 718 and the estimated fair value of the PSUs as of the issuance date based on the probable outcome
of the performance conditions.
47
Outstanding Equity Awards at 2021 Fiscal Year-End
The following table sets forth, as of the end of fiscal 2021, all equity awards outstanding under our
equity compensation plans for each named executive officer.
Option Awards
Stock Awards
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
(b)
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
(c)
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
(d)
Number of
Shares or
Units of
Stock
That Have
Not
Vested
(#)(1)
(g)
Market
Value of
Shares
or Units
of Stock
That
Have Not
Vested
($)(3)
(h)
Option
Exercise
Price
($)
(e)
Option
Expiration
Date
(f)
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#)(2)
(i)
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
($)(3)
(j)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
125,178
4,990,847 119,145 4,750,311
43,648
1,740,246
34,120 1,360,364
23,264
927,536
12,206
486,653
31,244
1,245,698
28,844 1,150,010
30,196
1,203,915
27,109 1,080,836
Name
(a)
Mr. Thorn . . . . .
Mr. Ramsden . . .
Mr. Pestello . . . .
Mr. Schlonsky . .
Mr. Robins . . . .
(1) The awards reported in column (g) reflect the unvested RSUs awarded to Mr. Pestello in fiscal 2021
and fiscal 2020 under the 2020 LTIP and the unvested RSUs awarded to our other named executive
officers in fiscal 2021 under the 2020 LTIP and in fiscal 2020 and fiscal 2019 under the 2017 LTIP. The
first third of the fiscal 2020 RSU awards and the second third of the fiscal 2019 RSU awards vested
during fiscal 2021. For additional information regarding the fiscal 2021 RSU awards, including the
vesting terms, see the narrative discussion preceding the Grants of Plan-Based Awards in Fiscal 2021
table and the “Components of our Executive Compensation Program — Long-Term Equity Incentive
Compensation” section of the CD&A.
(2) The awards reported in column (i) reflect the following: (1) for Mr. Pestello, a PSU award under the
2020 LTIP in fiscal 2021 (at target amount); and (2) for Mr. Thorn, Mr. Ramsden, Mr. Schlonsky and
Mr. Robins, a PSU award in fiscal 2021 under the 2020 LTIP and in fiscal 2019 under the 2017 LTIP (each
at the target amount). If we achieve the maximum performance levels applicable to the PSU awards in
fiscal 2021, the total number of PSUs that would vest and be earned for such PSU awards would be:
(1) 93,234 for Mr. Thorn; (2) 26,700 for Mr. Ramsden; (3) 24,412 for Mr. Pestello; (4) 19,590 for
Mr. Schlonsky; and (5) 19,072 for Mr. Robins. The actual number of PSUs awarded to our named
executive officers in fiscal 2021 and fiscal 2019 that will vest and be earned (if any) by each named
executive officer is determined after the three-year performance period based: (1) 50% on our average
EPS performance, excluding plan-defined items, for each of the three service periods during the
performance period; (2) 50% on our average ROIC performance (net operating profit after-tax divided
by invested capital for the fiscal year), excluding plan-defined items, for each of the three service
periods during the performance period; and (3) on the named executive officer’s continued employment
through the end of the performance period (except in the case of death, disability or retirement).
(3) The market value was computed by multiplying the number of units or shares by $39.87, the closing
price of our Common Shares on January 28, 2022 (the last trading day of fiscal 2021). If we achieve the
maximum performance levels applicable to the PSU awards in fiscal 2021, the aggregate market value
for such PSU awards would be: (1) $3,717,240 for Mr. Thorn; (2) $1,064,529 for Mr. Ramsden;
(3) $973,306 for Mr. Pestello; (4) $781,053 for Mr. Schlonsky; and (5) $760,401 for Mr. Robins. The
fiscal 2019 PSU awards vested on March 30, 2022. For additional information on the fiscal 2021 PSU
awards and the fiscal 2019 PSU awards, see the narrative discussion in the “Components of our Executive
Compensation Program — Long-Term Equity Incentive Compensation” section of the CD&A.
48
Option Exercises and Stock Vested in Fiscal 2021
The following table reflects all stock option exercises and the vesting of restricted stock held by each of
our named executive officers during fiscal 2021.
Name
(a)
Option Awards
Stock Awards
Number of Shares
Acquired on Exercise
(#)
(b)
Value Realized
on Exercise
($)
(c)
Number of Shares
Acquired on Vesting
(#)
(d)
Value Realized
on Vesting
($)(1)
(e)
Mr. Thorn . . . . . . . . . . . . . . . . . . . . .
Mr. Ramsden . . . . . . . . . . . . . . . . . . .
Mr. Pestello . . . . . . . . . . . . . . . . . . . .
Mr. Schlonsky . . . . . . . . . . . . . . . . . .
Mr. Robins . . . . . . . . . . . . . . . . . . . . .
—
—
—
—
—
—
—
—
—
—
193,453
61,928
7,449
68,637
62,929
12,975,616
4,195,171
431,521
4,761,597
4,370,347
(1) The amounts shown reflect the number of Common Shares issued to the named executive officer in
settlement of the vesting of stock awards multiplied by the closing price of our Common Shares on
trading day before the vesting date.
Nonqualified Deferred Compensation
All of our named executive officers, as well as substantially all other employees, are eligible to participate
in the Savings Plan, our “401(k) plan.” Historically, we also maintained a Supplemental Savings Plan for those
executives participating in the Savings Plan who desired to contribute more than the amount allowable
under the Savings Plan. The Supplemental Savings Plan constituted a contract to pay deferred compensation
and limited deferrals in accordance with prevailing tax law. The Supplemental Savings Plan was designed
to pay the deferred compensation in the same amount as if contributions had been made to the Savings Plan.
We had no obligation to fund the Supplemental Savings Plan, and all assets and amounts payable under
the Supplemental Savings Plan were subject to the claims of our general creditors. In December 2020, the
Board approved the termination of the Supplemental Savings Plan. The balances under the Supplemental
Savings Plan were distributed to participants in December 2021 and January 2022.
In order to participate in the Savings Plan, an eligible employee must satisfy applicable service
requirements and must make contributions to such plans (“Participant Contributions”). Participant
Contributions are made through authorized payroll deductions to one or more of the several investment
funds available under the Savings Plan and selected at the discretion of the participant. All Participant
Contributions are matched by us (“Registrant Contributions”) at a rate of 100% for the first 3% of salary
contributed and 50% for the next 2% of salary contributed. Additionally, the amount of the Registrant
Contribution is subject to the maximum annual compensation that may be taken into account for benefit
calculation purposes under the IRC ($290,000 for calendar year 2021). Accordingly, the maximum aggregate
Registrant Contribution that could be made to a named executive officer participating in the Savings Plan
was $11,600 for fiscal 2021.
Prior to fiscal 2017, under the Savings Plan and the Supplemental Savings Plan, 25% of the Registrant
Contributions vested annually beginning on the second anniversary of the employee’s hiring. Under the
Savings Plan, a participant who has terminated employment with us is entitled to all funds in his or her
account, except that if termination is for a reason other than retirement, disability or death, then the
participant is entitled to receive only the Participant Contributions and the vested portion of the Registrant
Contributions. Under the Supplemental Savings Plan, a participant who has terminated employment with
us for any reason was entitled to receive the Participant Contributions and only the vested portion of the
Registrant Contributions. Under both plans, all other unvested accrued benefits pertaining to Registrant
Contributions will be forfeited. In fiscal 2017, the Savings Plan and Supplemental Savings Plan were
amended and all Registrant Contributions in fiscal 2017 and, in the case of the Savings Plan, in the future
will vest immediately and a participant in the Savings Plan and Supplemental Savings Plan who has terminated
employment will be entitled to all funds in his or her account.
49
Nonqualified Deferred Compensation Table for Fiscal 2021
The following table reflects the contributions to, earnings in and balance of each named executive
officer’s account held under the Supplemental Savings Plan.
Name
(a)
Executive
Contributions
in Last FY
($)
(b)
Registrant
Contributions
in Last FY
($)
(c)
Mr. Thorn . . . . . . . . . . . . . . . . . . . . . . .
Mr. Ramsden . . . . . . . . . . . . . . . . . . . .
Mr. Pestello . . . . . . . . . . . . . . . . . . . . . .
Mr. Schlonsky . . . . . . . . . . . . . . . . . . . .
Mr. Robins . . . . . . . . . . . . . . . . . . . . . .
—
—
—
—
—
—
—
—
—
—
Aggregate
Earnings
in Last FY
($)(1)
(d)
—
—
—
204,157
40,987
Aggregate
Withdrawals/
Distributions
($)
(e)
Aggregate
Balance
at Last FYE
($)
(f)
—
—
—
1,545,617
290,954
—
—
—
—
—
(1) The amounts in this column are not included in the Summary Compensation Table as these amounts
reflect only the earnings on the investments designated by the named executive officer in his or her
Supplemental Savings Plan account in fiscal 2021 (i.e., appreciation or decline in account value). The
amounts in this column do not include any above-market or preferential earnings, as defined by
Item 402(c)(2)(viii) of Regulation S-K and the instructions thereto.
Potential Payments Upon Termination or Change in Control
The “Rights Under Post-Termination and Change in Control Arrangements” section below summarizes
the rights of our named executive officers under their employment agreements and other compensation
arrangements upon a change in control or in the event their employment with us is terminated.
The “Estimated Payments if Triggering Event Occurred at 2021 Fiscal Year End” section below sets
forth the payments that would have been received by each executive (or his or her beneficiaries, as applicable)
upon a change in control or in the event the executive’s employment with us terminated on January 29,
2022: (1) voluntarily or for cause; (2) involuntarily without cause (including a constructive termination (as
defined in the Severance Plan)); (3) in connection with the executive’s disability; (4) upon the executive’s death;
(5) upon the executive’s retirement (none of the named executive officers was retirement eligible at the end
of fiscal 2021 other than Mr. Schlonsky and Mr. Robins); or (6) in connection with a change in control.
Rights Under Post-Termination and Change in Control Arrangements
Termination for Cause
If a named executive officer is terminated for cause or due to his or her voluntary resignation, we have
no obligation to pay any unearned compensation or to provide any future benefits to the executive.
Involuntary Termination Without Cause
If a named executive officer is involuntarily terminated without cause (including a constructive
termination), the Severance Plan would entitle the named executive officer to:
• a cash payment equal to the product of (1) the named executive officer’s annualized base salary in
effect on the date of termination and (2) a multiple thereof;
• a cash payment equal to a prorated portion of the annual incentive award that the named executive
officer would have earned for the fiscal year in which the termination occurred had such termination
not occurred;
• a cash payment for outplacement assistance;
• continued coverage for the named executive officer under our health plans until the last day of the
calendar month in which the post-termination restriction period applicable to the named executive
50
officer elapses, plus the amount necessary to reimburse the named executive officer for the taxes he
would be liable for as a result of such continued coverage; and
• prorated vesting of all unvested, outstanding RSU awards granted to the named executive officer
upon achievement of the applicable performance trigger.
Termination due to Disability or Death
If a named executive officer is terminated as a result of his or her disability or death:
• the Severance Plan would entitle the named executive officer to a cash payment equal to a prorated
portion of the annual incentive award that the named executive officer would have earned for the fiscal
year in which the termination occurred had such termination not occurred;
• a prorated portion of the unvested PSUs granted under the 2017 LTIP and the 2020 LTIP that the
named executive officer would have earned had the named executive officer remained employed for the
entire performance period would vest upon the certification of the applicable performance condition;
and
• a prorated portion of the unvested RSUs granted under the 2017 LTIP and the 2020 LTIP would
vest on the termination date.
Termination Upon Retirement
If a named executive officer is terminated as a result of his or her retirement (as defined in the
applicable award agreement):
• a prorated portion of the unvested PSUs granted under the 2017 LTIP and the 2020 LTIP that the
named executive officer would have earned had the named executive officer remained employed for the
entire performance period would vest upon the certification of the applicable performance condition;
and
• a prorated portion of the unvested RSUs granted under the 2017 LTIP and the 2020 LTIP would
vest on the termination date.
Termination in connection with Change in Control
If terminated without cause (including a constructive termination) within 24 months after a change in
control, the senior executive severance agreements would entitle the named executive officers to (1) a lump-
sum payment equal to 200% of the executive’s then current annual base salary and target annual incentive
award, (2) a lump-sum payment equal to executive’s target bonus prorated for the number of days the executive
worked during the applicable performance period prior to the executive’s termination and (3) continued
coverage under our health plans for up to two years after the date of termination.
In addition, upon a change in control:
• if the change in control occurs before the third anniversary of the grant date, all unvested RSUs
granted to the named executive officer under the 2017 LTIP would vest;
• if the change in control occurs before the third anniversary of the grant date and the named
executive officer incurs a separation of service (as defined in Section 409A of the IRC) within the
30 days before or 24 months following the change in control, all unvested RSUs granted to the named
executive officer under the 2020 LTIP would vest; and
• if the change in control occurs before the end of the applicable performance period, the greater of
(1) the target number of PSUs and (2) a number of PSUs calculated based on the satisfaction of the
applicable performance conditions before the change in control, would vest for each named
executive officer.
51
Change in Control Described
Under the 2017 LTIP, the 2020 LTIP and the Severance Plan, a change in control generally occurs
upon: (i) certain acquisitions of 20% or more of our outstanding voting securities; (ii) an unapproved
change in the majority of the Board during any two-year period; or (iii) certain corporate transactions,
including certain mergers, consolidations or the sale of substantially all of the Company’s assets.
Under the senior executive severance agreements and the 2019 Bonus Plan, a change in control generally
occurs upon: (i) certain acquisitions of more than 50% of the total fair market value or voting power in our
outstanding voting securities; (ii) certain acquisitions during a one-year period of 30% or more of our
outstanding voting securities; (iii) an unapproved change in the majority of the Board during any one-year
period; or (iv) the disposition, during any one-year period, of 40% or more of the total gross fair market value
of all of our assets.
Estimated Payments if Triggering Event Occurred at 2021 Fiscal Year-End
The amounts in the following tables are approximations based on various assumptions and estimates.
The actual amounts to be paid can only be determined at the time of the change in control or termination
of employment, as applicable. In the tables that follow, we have made the following material assumptions,
estimates and characterizations:
• Except as otherwise provided in the tables below, the amounts are calculated based on compensation
levels and benefits effective at January 29, 2022, the last day of fiscal 2021.
• We have not taken into account the possibility that a named executive officer may be eligible to
receive healthcare benefits from another source following his or her termination. Therefore, the
amounts shown in the “Healthcare Coverage” row in the tables below reflect, consistent with the
assumptions that would be used to estimate the cost of these benefits for financial reporting purposes
under generally accepted accounting principles, the current monthly cost to provide continued
healthcare coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”)
applied to each month these benefits would be provided to the named executive officer. Included in
the amounts shown in the “Healthcare Coverage” row in the tables below are the related tax gross-up
amounts. The amounts shown in the “Long-Term Disability Benefit” row in the tables below
represent 67% of the named executive officer’s monthly salary, up to a maximum of $25,000 per
month in accordance with the long-term disability insurance we maintain for our named executive
officers. This benefit is payable until the named executive officer is no longer disabled or age 65,
whichever occurs earlier. Due to the speculative nature of estimating the period of time during which
a named executive officer may be disabled, we have presented only one month of disability benefits
in the tables below.
• The amounts in the “Accelerated Equity Awards” row under the “Termination upon Disability,”
“Termination upon Death” and “Retirement” columns in the tables below represent the value (as of
the final trading day on the NYSE during fiscal 2021) of (1) a prorated portion of the unvested RSUs
granted under the 2017 LTIP and the 2020 LTIP, (2) a prorated portion of the unvested PSUs
granted under the 2020 LTIP in fiscal 2021, assuming that the applicable performance goals will be
achieved at the target level, and (3) the PSUs granted under the 2017 LTIP in fiscal 2019, that vested
based on our actual performance.
• The amounts in the “Accelerated Equity Awards” row under the “Termination in Connection with a
Change in Control” and “Change in Control (without termination)” columns in the tables below
include all unvested RSUs and PSUs that would have vested on an accelerated basis had a change in
control occurred as of the end of fiscal 2021. These amounts do not reflect any equity awards that
vested in fiscal 2021.
• The closing market price of our Common Shares on the final trading day on the NYSE during fiscal
2021 was $39.87 per share.
52
Bruce K. Thorn
The following table reflects the payments that would have been due to Mr. Thorn in the event of a
change in control and/or the termination of his employment on January 29, 2022.
Event Occurring at January 29, 2022
Voluntary
Termination/
For Cause
($)
Involuntary
Termination
without
Cause ($)
Termination
upon
Disability
($)
Termination
upon
Death ($)
Retirement
($)
Termination in
Connection
with a
Change in
Control ($)
Change in
Control
(without
termination)
($)
Salary/Salary Continuation ($) . . . . . . .
Non-Equity Incentive
Plan Compensation ($) . . . . . . . . . .
Healthcare Coverage ($) . . . . . . . . . . .
Long-Term Disability Benefit ($) . . . . .
Outplacement Benefits ($) . . . . . . . . . .
Accelerated Equity Awards ($) . . . . . . .
Total ($) . . . . . . . . . . . . . . . . . . . . . .
—
—
—
—
—
—
—
Jonathan E. Ramsden
2,400,000 —
—
— 2,400,000
—
59,536 —
— —
40,000 —
1,988,100 — 1,988,100 1,988,100
—
—
—
—
—
—
—
2,347,642 — 7,535,157 7,535,157 11,870,852 8,703,267
6,835,278 — 9,548,257 9,523,257 19,730,388 8,703,267
5,400,000
59,536
—
—
—
25,000
—
The following table reflects the payments that would have been due to Mr. Ramsden in the event of a
change in control and/or the termination of his employment with us on January 29, 2022.
Event Occurring at January 29, 2022
Voluntary
Termination/
For Cause
($)
Involuntary
Termination
without
Cause ($)
Termination
upon
Disability
($)
Termination
upon
Death ($)
Retirement
($)
Termination in
Connection
with a
Change in
Control ($)
Change in
Control
(without
termination)
($)
Salary/Salary Continuation ($) . . . . . . .
Non-Equity Incentive Plan
Compensation ($) . . . . . . . . . . . . . .
Healthcare Coverage ($) . . . . . . . . . . .
Long-Term Disability Benefit ($) . . . . .
Outplacement Benefits ($) . . . . . . . . . .
Accelerated Equity Awards ($) . . . . . . .
Total ($) . . . . . . . . . . . . . . . . . . . . . .
—
—
—
—
—
—
—
1,428,000 —
—
— 1,428,000
—
591,460 —
84,468 —
— —
25,000 —
591,460
—
—
—
700,724 — 2,159,231 2,159,231
2,829,652 — 2,775,691 2,750,691
591,460
—
25,000
—
1,606,500
84,468
—
—
3,695,946
6,814,914
—
—
—
—
2,788,854
2,788,854
53
Jack A. Pestello
The following table reflects the payments that would have been due to Mr. Pestello in the event of a
change in control and/or the termination of his employment with us on January 29, 2022.
Event Occurring at January 29, 2022
Voluntary
Termination/
For Cause
($)
Involuntary
Termination
without
Cause ($)
Termination
upon
Disability
($)
Termination
upon
Death ($)
Retirement
($)
Termination in
Connection
with a
Change in
Control ($)
Change in
Control
(without
termination)
($)
Salary/Salary Continuation ($) . . . . . . .
Non-Equity Incentive Plan
Compensation ($) . . . . . . . . . . . . . .
Healthcare Coverage ($) . . . . . . . . . . .
Long-Term Disability Benefit ($) . . . . .
Outplacement Benefits ($) . . . . . . . . . .
Accelerated Equity Awards ($) . . . . . . .
Total ($) . . . . . . . . . . . . . . . . . . . . . .
—
—
—
—
—
—
—
1,305,600 —
—
— 1,305,600
432,611 —
84,468 —
— —
25,000 —
242,628 —
2,090,307 —
432,611
—
25,000
—
408,032
865,643
432,611
—
—
—
408,032
840,643
1,175,040
84,468
—
—
1,459,727
4,024,835
—
—
—
—
—
—
—
Michael A. Schlonsky
The following table reflects the payments that would have been due to Mr. Schlonsky in the event of a
change in control and/or the termination of his employment with us on January 29, 2022.
Event Occurring at January 29, 2022
Voluntary
Termination/
For Cause
($)
Involuntary
Termination
without
Cause ($)
Retirement
($)
Termination
upon
Disability
($)
Termination
upon
Death ($)
Termination in
Connection
with a
Change in
Control ($)
Change in
Control
(without
termination)
($)
Salary/Salary Continuation ($) . . . . . .
Non-Equity Incentive
Plan Compensation ($)
. . . . . . . . .
Healthcare Coverage ($)
. . . . . . . . . .
Long-Term Disability Benefit ($) . . . .
Outplacement Benefits ($) . . . . . . . . .
Accelerated Equity Awards ($) . . . . . .
. . . . . . . . . . . . . . . . . . . . .
Total ($)
—
—
—
—
—
—
—
1,047,744
—
—
— 1,047,744
—
347,170
84,468
—
25,000
347,170
347,170
—
—
— 25,000
—
—
347,170
—
—
—
597,469 1,793,980 1,926,727 1,926,727
2,101,851 2,141,150 2,298,897 2,273,897
942,969
84,468
—
—
2,951,363
5,026,544
—
—
—
—
2,285,834
2,285,834
54
Ronald A. Robins, Jr.
The following table reflects the payments that would have been due to Mr. Robins in the event of a
change in control and/or the termination of his employment with us on January 29, 2022.
Event Occurring at January 29, 2022
Voluntary
Termination/
For Cause
($)
Involuntary
Termination
without
Cause ($)
Retirement
($)
Termination
upon
Disability
($)
Termination
upon
Death ($)
Termination in
Connection
with a
Change in
Control ($)
Change in
Control
(without
termination)
($)
Salary/Salary Continuation ($) . . . . . .
Non-Equity Incentive
Plan Compensation ($)
. . . . . . . . .
. . . . . . . . . .
Healthcare Coverage ($)
Long-Term Disability Benefit ($) . . . .
Outplacement Benefits ($) . . . . . . . . .
Accelerated Equity Awards ($) . . . . . .
. . . . . . . . . . . . . . . . . . . . .
Total ($)
—
—
—
—
—
—
—
1,020,000
—
—
— 1,020,000
—
337,977
84,468
—
25,000
337,977
337,977
—
—
— 25,000
—
—
337,977
—
—
—
573,072 1,676,862 1,806,062 1,806,062
2,040,517 2,014,839 2,169,039 2,144,039
918,000
84,468
—
—
2,800,282
4,822,750
—
—
—
—
2,152,365
2,152,365
55
PROPOSAL TWO: APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF OUR
NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN THIS PROXY STATEMENT PURSUANT TO
ITEM 402 OF REGULATION S-K, INCLUDING THE CD&A, COMPENSATION TABLES AND
THE NARRATIVE DISCUSSION ACCOMPANYING THE TABLES
Section 14A of the Exchange Act requires that we provide our shareholders with the opportunity to
vote to approve, on a nonbinding, advisory basis, the compensation of our named executive officers as
disclosed in this Proxy Statement in accordance with the compensation disclosure rules of the SEC. The
following summary of our executive compensation program describes our compensation philosophy and the
key objectives identified by our Human Capital and Compensation Committee to implement our
compensation philosophy.
Our executive compensation program is designed to: (1) pay for superior results by rewarding executives
for achieving short- and long-term performance goals and creating long-term shareholder value; (2) align
the interests of our executives with the interests of our shareholders through performance- and equity-
based compensation; and (3) attract and retain talented executives by paying compensation that is competitive
with the compensation paid by the companies in our peer group. We use a balanced mix of salary, annual
cash incentive awards and equity awards to promote these objectives. For a more detailed discussion of how
our executive compensation program promotes these objectives and our executive compensation
philosophy, including information about the fiscal 2021 compensation of our named executive officers, we
encourage you to read the CD&A as well as the Summary Compensation Table and other compensation
tables in this Proxy Statement and the narrative discussion accompanying the tables.
The ongoing COVID-19 pandemic continued to present challenges to and disrupt our business during
fiscal 2021 and may continue to disrupt our business in the future. Although the COVID-19 pandemic was
ongoing and the potential effect of the pandemic on the Company’s business remained somewhat unclear
when the Human Capital and Compensation Committee conducted its annual evaluation of the executive
compensation program in March 2021, the Committee determined to return to a more customary mix of base
salary merit increases, annual cash incentive awards based entirely on annual Company financial goals, and
long-term equity incentive awards consisting of PSUs and RSUs for our named executive officers in fiscal
2021.
• Annual Cash Incentive Awards. Each named executive officer was eligible to receive a cash
performance bonus based on our operating profit (weighted 75%) and total annual sales (weighted
25%). The Human Capital and Compensation Committee selected adjusted operating profit as the
primary performance measure because they believe it represents a key indicator of the strength of our
operating results and financial condition and incentivizes the participants in our annual cash
incentive award program to achieve strong earnings growth. The Human Capital and Compensation
Committee selected total annual sales as the other performance measure because the Committee
believes it captures the full impact of our growth initiatives, including new store growth, merchandising
initiatives and e-commerce growth. The Human Capital and Compensation Committee established
the performance goals for the adjusted operating profit and total annual sales performance measures
in March 2021 based on management’s projected results for fiscal 2021 which considered, among
other things, the impacts of (1) stimulus payments on fiscal 2020 sales, (2) anticipated capital
expenditures and initiatives on fiscal 2021 sales, (3) anticipated increases in merchandise purchases
for the fiscal 2021 Holiday season and (4) the distribution center sale and leaseback transactions, as
well as the continued additional unknown impacts of the COVID-19 pandemic. Based on our adjusted
operating profit and total annual sales in fiscal 2021, our named executive officers earned an annual
incentive award between target and maximum for fiscal 2021.
• Performance Share Unit Awards. All of our named executive officers received a significant portion
(60%) of their equity awards in the form of PSUs. The PSUs awarded to our named executive officers
in fiscal 2021 will vest, if at all, after the completion of a three-year performance period based:
(1) 50% on our average EPS performance, excluding plan-defined items, for each of the three service
periods during the performance period; (2) 50% on our average ROIC performance, excluding plan-
defined items, for each of the three service periods during the performance period; and (3) on the
named executive officer’s continued employment through the end of the performance period. The
Compensation Committee and other outside directors selected EPS and ROIC as the financial
56
measures applicable to the PSUs to incentivize our named executive officers to achieve long-term
financial results that we believe will create shareholder value. Based on EPS of $5.24 and ROIC of
15.2%, as adjusted, we achieved 93.7% of the targeted goal for EPS and 97.9% of the targeted goal for
ROIC for the first service period of the performance period applicable to the PSUs awarded to our
named executive officers in fiscal 2021.
• Restricted Stock Unit Awards. All of our named executive officers received the remaining portion
(40%) of their equity awards in the form of RSUs. RSUs are primarily intended to align the interests
of our named executive officers and our shareholders and help retain and motivate our named
executive officers. The RSUs will vest ratably over three years from the grant date of the award if the
participant remains employed by us through each annual vesting date and are subject to an operating
profit performance component. Based on the Company’s operating profit in fiscal 2021, one-third of
the RSUs we granted in fiscal 2021 vested on the first anniversary of the grant and the remaining
two-thirds will vest ratably over the next two years.
We request that our shareholders indicate their support for the compensation of our named executive
officers as disclosed in this Proxy Statement pursuant to Item 402 of Regulation S-K by approving the
following resolution:
“RESOLVED, that the shareholders of Big Lots approve, on an advisory basis, the compensation of the
named executive officers of Big Lots, as disclosed in Big Lots’ Proxy Statement for the 2022 Annual Meeting
of Shareholders pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and
Analysis, compensation tables and the narrative discussion accompanying the tables.”
The vote on the approval of the compensation of our named executive officers is advisory, which
means that the vote is not binding on the Board, the Human Capital and Compensation Committee or us.
If a majority of the votes are cast against the approval of the compensation of our named executive officers,
the Board and the Human Capital and Compensation Committee will evaluate whether to take any actions
to address the concerns of the shareholders with respect to our executive compensation program.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF THE COMPENSATION
OF OUR NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN THIS PROXY STATEMENT
PURSUANT TO ITEM 402 OF REGULATION S-K, INCLUDING THE CD&A, COMPENSATION
TABLES AND THE NARRATIVE DISCUSSION ACCOMPANYING THE TABLES.
2021 CEO PAY RATIO
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act
and Item 402(u) of Regulation S-K, the Company is disclosing the following information about the
relationship of the annual total compensation of our CEO and the median of the annual total compensation
of our employees (other than the CEO) for our 2021 fiscal year:
• The annual compensation of our CEO (Bruce K. Thorn) was $9,042,187.
• The annual total compensation of our median employee, a part-time store associate, was $9,085.
• The ratio of the annual total compensation of our CEO to the annual total compensation of our
median employee was 995 to 1.
We identified our median employee for our 2021 fiscal year using the following methodology and
material assumptions and adjustments. To identify the median of the annual total compensation of our
active employees as of January 29, 2022, including any full-time, part-time, temporary or seasonal employees
but excluding our CEO, we used total wages from our payroll records as reported to the Internal Revenue
Service on Form W-2 for 2021. In making this determination, we did not annualize compensation for any full-
time or part-time permanent employees who were employed on January 29, 2022 but did not work for us
the entire year or make any full-time equivalent adjustments for part-time employees. We consistently applied
this compensation measure and methodology to all of our employees included in the calculation.
We determined the annual total compensation for fiscal year 2021 of our median employee (who was
calculated to be a part-time store associate) in the same manner that we determine the total compensation
57
of our named executive officers for purposes of the Summary Compensation Table. With respect to the
annual total compensation of our CEO for fiscal 2021, we used the amount for fiscal 2021 reported in the
“Total” column of the Summary Compensation Table.
This information is being provided for compliance purposes. Neither the Human Capital and
Compensation Committee nor management of the Company used the pay ratio measure in making
compensation decisions.
AUDIT COMMITTEE DISCLOSURE
General Information
The Audit Committee consists of five non-employee directors of the Board. The members of the Audit
Committee have been reviewed by the Board and determined to be independent within the meaning of all
applicable SEC regulations and NYSE listing standards.
The charter of the Audit Committee states that the purpose of the Audit Committee is to assist the
Board in its oversight of:
• the integrity of our financial statements and financial reporting process, and our systems of internal
accounting and financial controls;
• our compliance with legal and regulatory requirements, including our disclosure controls and
procedures;
• the annual independent audit of our financial statements, the engagement of our independent
registered public accounting firm, and the evaluation of the firm’s qualifications, independence and
performance;
• the performance of our internal audit function;
• the evaluation of enterprise risk issues; and
• the fulfillment of other responsibilities set forth in its charter.
The full text of the Audit Committee’s charter is available in the Investor Relations section of our
website (www.biglots.com) under the “Corporate Governance” caption. The Audit Committee regularly
reviews its responsibilities as outlined in its charter, prepares an annual agenda that addresses all of its
responsibilities and conducts a self-assessment and review of the charter annually. The Audit Committee
believes it fulfilled its responsibilities under the charter in fiscal 2021.
The Audit Committee schedules its meetings with a view towards ensuring that it devotes appropriate
attention to all of its responsibilities. The Audit Committee’s meetings include, whenever appropriate,
executive sessions with the independent registered public accounting firm, the Company’s Vice President,
Internal Audit and our Chief Financial Officer, in each case without the presence of management. The Audit
Committee also meets in executive session without the presence of anyone else, whenever appropriate.
During fiscal 2021, our management completed an assessment of our system of internal control over
financial reporting in accordance with the requirements set forth in Section 404 of the Sarbanes-Oxley Act
of 2002 and related regulations. The Audit Committee was apprised of the progress of the assessment and
provided oversight and advice to management during the process. In connection with its oversight, the
Audit Committee received periodic updates provided by management and the independent registered public
accounting firm at each regularly scheduled Audit Committee meeting. The Audit Committee also reviewed
the report of management contained in our Form 10-K, as well as the independent registered public
accounting firm’s Report of Independent Registered Public Accounting Firm included in our Form 10-K
related to its audit of (1) our financial statements and (2) the effectiveness of our internal control over
financial reporting. The Audit Committee continues to oversee efforts related to our system of internal control
over financial reporting and management’s preparations for the assessment thereof in fiscal 2021. The
Audit Committee has also reviewed key initiatives and programs aimed at strengthening the effectiveness of
our internal and disclosure control structure.
58
Independent Registered Public Accounting Firm
The Audit Committee engaged Deloitte & Touche LLP as our independent registered public accounting
firm to audit our financial statements for fiscal 2021. Deloitte & Touche LLP has served as our independent
registered public accounting firm since October 1989. The Audit Committee annually selects and evaluates
our independent registered public accounting firm and reviews the scope of and plans for the audit by the
independent registered public accounting firm. Some of the factors the Audit Committee considers in its
evaluation include the independent auditor’s qualifications, performance, independence and tenure. Based on
its evaluation and review, the Audit Committee believes that it is in the best interest of the Company to
retain Deloitte & Touche LLP as our independent registered public accounting firm for fiscal 2022.
Audit and Non-Audit Services Pre-Approval Policy
Pursuant to the Audit Committee’s Audit and Non-Audit Services Pre-Approval Policy, all audit and
non-audit services rendered by Deloitte & Touche LLP in fiscal 2021 and fiscal 2020, including the related
fees, were pre-approved by the Audit Committee. Under the policy, the Audit Committee is required to
pre-approve all audit and permissible non-audit services performed by the independent registered public
accounting firm to assure that the provision of those services does not impair the firm’s independence.
Pre-approval is detailed as to the particular service or category of service and is subject to a specific
engagement authorization. The Audit Committee requires the independent registered public accounting
firm and management to report on the actual fees incurred for each category of service at Audit Committee
meetings throughout the year.
During the year, it may become necessary to engage the independent registered public accounting firm
for additional services that have not been pre-approved. In those instances, the Audit Committee requires
specific pre-approval before engaging the independent registered public accounting firm. The Audit
Committee may delegate pre-approval authority to one or more of its members for those instances when
pre-approval is needed prior to a scheduled Audit Committee meeting. The member or members to whom
pre-approval authority is delegated must report any pre-approval decisions to the Audit Committee at its next
scheduled meeting.
Fees Paid to Independent Registered Public Accounting Firm
The fees billed to us for the professional services rendered by Deloitte & Touche LLP during the two
most recently completed fiscal years were as follows:
($ in thousands)
Fiscal 2020
($)
Fiscal 2021
($)
Audit Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Audit-Related Fees(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All Other Fees(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,440
92
90
2
1,450
8
44
2
1,624
1,504
(1) For fiscal 2020 and fiscal 2021, the audit-related fees principally related to implementation of new
accounting standards and significant non-routine transactions.
(2) For fiscal 2020 and fiscal 2021, the other fees include fees related to online subscription fees for
technical support.
Audit Committee Report
The Audit Committee has reviewed and discussed the audited financial statements for fiscal 2021 with
management and the independent registered public accounting firm. The Audit Committee has discussed
with the independent registered public accounting firm the matters required to be discussed by Auditing
Standard No. 1301, as adopted by the Public Company Accounting Oversight Board. The Audit Committee
59
has received the written communications from the independent registered public accounting firm required
by applicable requirements of the Public Company Accounting Oversight Board regarding the independent
registered public accounting firm’s communications with the Audit Committee concerning independence,
and has discussed with the independent registered public accounting firm its independence. Based on these
reviews and discussions, the undersigned members of the Audit Committee recommended to the Board that
the audited consolidated financial statements for fiscal 2021 be included in our Form 10-K for filing with
the SEC.
Members of the Audit Committee:
Marla C. Gottschalk, Chair
Sandra Y. Campos
Sebastian J. DiGrande
Kimberley A. Newton
Wendy L. Schoppert
60
PROPOSAL THREE: RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP
AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL 2022
At its February 25, 2022 meeting, the Audit Committee appointed Deloitte & Touche LLP as our
independent registered public accounting firm for fiscal 2022, subject to our entry into a mutually agreed
upon services contract with Deloitte & Touche LLP. The submission of this matter for approval by
shareholders is not legally required; however, we believe that such submission is consistent with best practices
in corporate governance and is another opportunity for shareholders to provide direct feedback on an
important issue of our corporate governance. If the shareholders do not ratify the appointment of Deloitte &
Touche LLP, the selection of such firm as our independent registered public accounting firm will be
reconsidered by the Audit Committee.
A representative of Deloitte & Touche LLP will be present at the Annual Meeting to respond to
appropriate questions and to make a statement if so desired.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO
RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS OUR INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL 2022.
SHAREHOLDER PROPOSALS
Any proposals of shareholders that are intended to be presented at our 2023 annual meeting of
shareholders must be received by our Corporate Secretary at our corporate offices on or before December 14,
2022 to be eligible for inclusion in our 2023 proxy statement and form of proxy. Such proposals must be
submitted in accordance with Rule 14a-8 of the Exchange Act. If a shareholder intends to present a proposal
at our 2023 annual meeting of shareholders without inclusion of that proposal in our 2023 proxy materials
and written notice of the proposal is not received by our Corporate Secretary at our corporate offices on or
before February 27, 2023, or if we meet other requirements of the SEC rules, proxies solicited by the
Board for our 2023 annual meeting of shareholders will confer discretionary authority on the proxy holders
named therein to vote on the proposal at the meeting.
Our Amended Code of Regulations permits a shareholder, or a group of shareholders, who has
continuously owned at least 3% of our outstanding Common Shares for at least 3 years, to nominate and
include in our proxy statement candidates for the Board, subject to certain requirements. Each eligible
shareholder, or group of shareholders that together is an eligible shareholder, may nominate candidates for
director, up to a limit of 25% of the number of directors on the Board. Any nominee must meet the
qualification standards set forth in our Amended Code of Regulations. Any such notice and nomination
materials must be delivered to, or mailed to and received by, our Corporate Secretary no earlier than 150 days
and no later than 120 days before the anniversary of the date that the Company issued its proxy statement
for the previous year’s annual meeting of shareholders; provided however, that if the date of the annual
meeting has changed by more than 30 calendar days from the previous year, then the eligible shareholder
must deliver the notice and nomination materials to our Corporate Secretary a reasonable time before we issue
our proxy materials. Based on the anticipated one-year anniversary of the date that we issued our proxy
statement for the 2022 annual meeting, an eligible shareholder wishing to nominate a candidate for election
to the Board at the 2023 annual meeting must provide such notice no earlier than November 14, 2022 and
no later than December 14, 2022. Any such notice and accompanying nomination materials must meet the
requirements set forth in our Amended Code of Regulations, which is available in the Investor Relations
section of our website (www.biglots.com) under the “Corporate Governance” caption.
PROXY SOLICITATION COSTS
This solicitation of proxies is made by and on behalf of the Board. In addition to mailing the Notice of
Internet Availability of Proxy Materials (or, if applicable, paper copies of this Proxy Statement, the Notice
of Annual Meeting of Shareholders and the proxy card) to shareholders of record on the Record Date, the
brokers and banks holding our Common Shares for beneficial shareholders must, at our expense, provide
our proxy materials to persons for whom they hold our Common Shares in order that such Common Shares
may be voted. Solicitation of proxies may also be made by our officers and regular employees personally
or by telephone, mail or electronic mail. Officers and employees who assist with the solicitation will not receive
61
any additional compensation. The cost of the solicitation will be borne by us. We have also retained
Georgeson LLC to aid in the solicitation of proxies for a fee estimated to be $10,500, plus reasonable
out-of-pocket expenses.
OTHER MATTERS
As of the date of this Proxy Statement, we know of no business that will be presented for consideration
at the Annual Meeting other than as referred to in Proposal One, Proposal Two and Proposal Three above.
If any other matter is properly brought before the Annual Meeting for action by shareholders, Common
Shares represented by proxies returned to us and not revoked will be voted on such matter in accordance
with the recommendations of the Board.
By order of the Board of Directors,
Ronald A. Robins, Jr.
Executive Vice President, Chief Legal and
Governance Officer, General Counsel and
Corporate Secretary
April 13, 2022
62
Appendix A
BIG LOTS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)
The following tables reconcile net income and diluted earnings per share (GAAP financial measures) to
adjusted net income and adjusted diluted earnings per share (non-GAAP financial measures) for fiscal 2021,
fiscal 2020 and fiscal 2019.
Fiscal 2021
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings per share . . . . . . . . . . . . . . . . . . .
As Reported
$177,778
5.33
$
Adjustment to exclude store asset
impairment charges
As Adjusted
(non-GAAP)
$3,782
$ 0.11
$181,560
5.44
$
The above adjusted net income and adjusted diluted earnings per share are “non-GAAP financial
measures” as that term is defined by Rule 101 of Regulation G (17 CFR Part 244) and Item 10 of
Regulation S-K (17 CFR Part 229). These non-GAAP financial measures exclude from the most directly
comparable financial measures calculated and presented in accordance with accounting principles generally
accepted in the United States of America (“GAAP”) store asset impairment charges of $5,033 ($3,782,
net of tax).
Fiscal 2020
Net income . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings per share . . . . . . . . . . . . . . .
As Reported
$629,191
16.11
$
Adjustment to exclude gain on sale of
distribution centers and related expenses
As Adjusted
(non-GAAP)
$(341,903)
(8.75)
$
$287,288
7.35
$
The above adjusted net income and adjusted diluted earnings per share are “non-GAAP financial
measures” as that term is defined by Rule 101 of Regulation G (17 CFR Part 244) and Item 10 of
Regulation S-K (17 CFR Part 229). These non-GAAP financial measures exclude from the most directly
comparable financial measures calculated and presented in accordance with GAAP a gain resulting from the
sale of our Columbus, OH; Durant, OK; Montgomery, AL; and Tremont, PA distribution centers and the
related expenses of $459,097 ($341,903, net of tax).
Fiscal 2019
Net income . . .
Diluted earnings
per share . . .
Impact to exclude
department exit
inventory
impairment
Impact to exclude
transformational
restructuring costs
Adjustment to
exclude legal
settlement loss
contingencies
Adjustment to
exclude gain on
sale of distribution
center
As Adjusted
(non-GAAP)
As Reported
$242,464
$4,497
$28,502
$5,554
$(136,604)
$144,413
$
6.16
$ 0.11
$
0.72
$ 0.14
$
(3.47)
$
3.67
The above adjusted net income and adjusted diluted earnings per share are “non-GAAP financial
measures” as that term is defined by Rule 101 of Regulation G (17 CFR Part 244) and Item 10 of
Regulation S-K (17 CFR Part 229). These non-GAAP financial measures exclude from the most directly
comparable financial measures calculated and presented in accordance with GAAP: (1) an inventory
impairment amount of $6,050 ($4,497, net of tax) as a result of a merchandise department exit; (2) the
costs associated with a transformational restructuring initiative of $38,338 ($28,502, net of tax); (3) a pretax
charge related to estimated legal settlement of employee class actions of $7,250 ($5,554, net of tax); and
(4) a gain resulting from the sale of our Rancho Cucamonga, CA distribution center of $178,534 ($136,604, net
of tax).
63
Our management believes that the disclosure of these non-GAAP financial measures provides useful
information to investors because the non-GAAP financial measures present an alternative and more relevant
method for measuring our operating performance, excluding special items included in the most directly
comparable GAAP financial measures, which management believes is more indicative of our on-going
operating results and financial condition. Our management uses these non-GAAP financial measures, along
with the most directly comparable GAAP financial measures, in evaluating our operating performance.
64
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 29, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
☑
☐
Commission File Number 001-08897
BIG LOTS, INC.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
Ohio
06-1119097
4900 E. Dublin-Granville Road, Columbus, Ohio
(Address of principal executive offices)
43081
(Zip Code)
(614) 278-6800
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Shares $0.01 par value
Trading Symbol(s)
BIG
Name of each exchange on which registered
New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files).
Yes ☑ No ☐
Yes ☐ No ☑
Yes ☑ No ☐
Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and
"emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☑ Accelerated filer ☐
Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b))
by the registered public accounting firm that prepared or issued its audit report.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
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Yes ☐ No ☑
The aggregate market value of the Common Shares held by non-affiliates of the Registrant (assuming for these purposes that all executive officers
and directors are “affiliates” of the Registrant) was $1,858,279,426 on July 30, 2021, the last business day of the Registrant’s most recently
completed second fiscal quarter (based on the closing price of the Registrant’s Common Shares on such date as reported on the New York Stock
Exchange).
The number of the Registrant’s common shares, $0.01 par value, outstanding as of March 25, 2022, was 28,557,532.
Documents Incorporated by Reference
Portions of the Registrant’s Proxy Statement for its 2022 Annual Meeting of Shareholders are incorporated by reference into Part III of this Annual
Report on Form 10-K.
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BIG LOTS, INC.
FORM 10-K
FOR THE FISCAL YEAR ENDED JANUARY 29, 2022
TABLE OF CONTENTS
Part I
Item 1. Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2.
Properties
Item 3.
Legal Proceedings
Item 4. Mine Safety Disclosures
Supplemental Item. Information about our Executive Officers
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Part II
Equity Securities
[Reserved]
Item 6.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8.
Financial Statements and Supplementary Data
Report of Independent Registered Accounting Firm (PCAOB ID No. 34)
Consolidated Statements of Operations and Comprehensive Income
Consolidated Balance Sheets
Consolidated Statements of Shareholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Part III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accountant Fees and Services
Item 15. Exhibits and Financial Statement Schedules
Item 16. Form 10-K Summary
Signatures
Part IV
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Item 1. Business
The Company
Part I
Big Lots, Inc., an Ohio corporation, through its wholly owned subsidiaries is a home discount retailer operating in the United
States (“U.S.”). At January 29, 2022, we operated a total of 1,431 stores and an e-commerce platform. Our mission is to help
people Live BIG and Save LOTS. Our vision is to be the BIG difference for a better life by delivering exceptional value to
customers, building a “best places to grow” culture, rewarding shareholders with consistent growth and top tier returns, and
doing good in local communities.
Our principal executive offices are located at 4900 E. Dublin-Granville Road, Columbus, Ohio 43081, and our telephone
number is (614) 278‑6800.
Unless this Annual Report on Form 10-K (“Form 10-K”) otherwise indicates or the context otherwise requires, the terms the
“Company,” “we,” “us,” and “our” refer to Big Lots, Inc. and its subsidiaries.
Similar to many other retailers, our fiscal year ends on the Saturday nearest to January 31, which results in some fiscal years
consisting of 52 weeks and some fiscal years consisting of 53 weeks. Unless otherwise stated, references to years in this Form
10-K relate to fiscal years rather than to calendar years. The following table summarizes our fiscal year calendar and the
number of weeks in each fiscal year:
Fiscal Year
2022
Number of Weeks
52
2021
2020
2019
2018
2017
52
52
52
52
53
Year Begin Date
January 30, 2022
January 31, 2021
February 2, 2020
February 3, 2019
February 4, 2018
January 29, 2017
Year End Date
January 28, 2023
January 29, 2022
January 30, 2021
February 1, 2020
February 2, 2019
February 3, 2018
We manage our business on the basis of one segment: discount retailing. Our seven merchandise categories, which match our
internal management and reporting of merchandise net sales are: Food; Consumables; Soft Home; Hard Home; Furniture;
Seasonal; and Apparel, Electronics, & Other. The Food category includes our beverage & grocery; specialty foods; and pet
departments. The Consumables category includes our health, beauty and cosmetics; plastics; paper; and chemical departments.
The Soft Home category includes our home décor; frames; fashion bedding; utility bedding; bath; window; decorative textile;
and area rugs departments. The Hard Home category includes our small appliances; table top; food preparation; stationery;
home maintenance; home organization; and toys departments. The Furniture category includes our upholstery; mattress; ready-
to-assemble; and case goods departments. The Seasonal category includes our lawn & garden; summer; Christmas; and other
holiday departments. The Apparel, Electronics, & Other department includes our apparel; electronics; jewelry; hosiery; and
candy & snacks departments, as well as the assortments for The Lot and the Queue Line (see the discussion under the caption
“Operating Strategy - Shopping Experience” in Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations for more information regarding The Lot and Queue Line).
In 2021, we realigned certain departments within select merchandise categories to be consistent with the realignment of our
merchandising team and changes to our management reporting. In order to provide comparative information, we have
reclassified our results into the new alignment for all periods presented. See the reclassifications section of Note 1 to the
consolidated financial statements for further discussion.
2
Merchandising
We focus our merchandising strategy on (1) the bargain hunt, by seeking to deliver unmatched value in all of our merchandise
categories; (2) the treasure hunt, by seeking to surprise and delight our customers with our unique product assortment; and (3)
convenience, by seeking to offer a reliable assortment of simple to shop essentials. We utilize traditional sourcing methods in
purchasing both imported and domestic products and, in certain merchandise categories, we also take advantage of closeout
channels to enhance our ability to offer outstanding value and bring surprise and delight into our product offerings. Closeouts
are generally sourced from production overruns, packaging changes, discontinued products, order cancellations, liquidations,
returns, and other disruptions in the supply chain of manufacturers, but can also include engineered closeouts and other
sourcing options.
We evaluate our product offerings to ensure we are providing quality and exceptional value, and meeting our customer’s
expectations. We believe that focusing on our customers’ expectations has improved our ability to provide a more relevant and
desirable assortment of offerings in our merchandise categories.
In 2021, we introduced the concept of “Big Buys” to our merchandising strategy. Big Buys include closeouts and other one-
time product offerings that fit into the bargain hunt facet of our merchandising strategy.
We curate our assortment by focusing on delivering (1) Big Buys, deals where customers can realize exceptional value; (2)
seasonal and trendy items that serve to continually refresh our assortment; and (3) everyday essentials that provide consistency
and convenience in our staple product offerings. We have increased our sourcing and purchasing of quality closeout
merchandise directly from manufacturers and other vendors, typically at prices lower than those paid by traditional discount
retailers, to accelerate our ability to deliver Big Buys. We believe that our strong vendor relationships and our strong credit
profile support this sourcing model, and we intend to grow our Big Buys merchandise offerings during 2022.
Our global sourcing team and overseas vendor relationships continue to represent important components of our merchandising
strategy. We expect our import partners to responsibly source goods that our merchandising teams identify as having our
desired mix of quality and value. During 2021, we purchased approximately 24% of our merchandise, at cost, directly from
overseas vendors, including approximately 15% from vendors located in China. Additionally, a significant amount of our
domestically-purchased merchandise is manufactured abroad. As a result, a significant portion of our merchandise supply is
subject to certain risks described in “Item 1A. Risk Factors” of this Form 10-K.
Advertising and Marketing
We believe that our brand image is an important part of why our customers choose to shop Big Lots. We also believe our brand
image is important to the value proposition that we convey through all of our customer touchpoints. We employ an integrated
approach for our marketing touchpoints and investments consisting of (1) paid media, including television, print, digital, social
media, internet, e-mail, and payment card-linked marketing; (2) earned media, including public relations and organic social
media; and (3) owned media, including our website, customer loyalty programs, and in-store signage. Total advertising expense
as a percentage of total net sales was 1.6%, 1.7%, and 1.8% in 2021, 2020, and 2019, respectively.
In 2021, we conducted extensive consumer research to enhance our understanding of why customers shop us and barriers for
those individuals that do not shop us. We have used this research to refine our brand positioning and implement changes to our
messaging across all marketing touchpoints. Through this research, we learned that our customers believe we excel in four key
areas or brand pillars: exceptional value, surprising products, easy shopping, and a delightful experience. Accordingly, our
marketing strategy is grounded in these brand pillars. Our marketing tactics are intended to: (1) create a community of bargain
hunters and treasure seekers; (2) drive incremental visits from new and existing customers; (3) increase our brand awareness,
brand consideration and purchasers; and (4) drive personalized marketing based on our customer data platform. Our consumer
research also influences how we merchandise our stores, invest in omnichannel capabilities, design our shopping experience,
and invest in our business.
In 2021, we introduced our “Be a BIGionaire” advertising campaign, featuring three household-name celebrities to spread our
message, that tells our customers they can feel like a million bucks by finding the best deals at Big Lots and decorating their
homes with our products.
Our customer data is an important marketing tool that allows us to communicate with our customers in a cost-effective,
personalized, and relevant manner, including through e-mail delivery of our circulars, announcement of flash sales, and
product-specific promotions. At January 29, 2022, our customer loyalty program, which we call the “BIG Rewards Program,”
included approximately 22 million active members who had made a purchase in our stores in the last 12 months, compared to
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approximately 21 million members at January 30, 2021. In addition to the customer communications mentioned above, our BIG
Rewards Program rewards our customers for making frequent and/or high-ticket purchases and offers a special birthday reward.
We utilize insights gained through the BIG Rewards Program to evaluate the effectiveness of our promotions, tailor promotions
to our customers’ shopping habits, and gain consumer insights. Our research shows that membership in the BIG Rewards
Program is a driver of net sales, and we incentivize our store associates to encourage customer enrollment into the program.
We believe our approach to retailing differentiates us from the competition and allows us to make a difference in the
communities we serve. Our community-oriented approach to retailing includes “doing good as we do well,” which means
supporting both local and national causes that aid the communities in which we do business. In our local markets, we invest in
point of sale campaigns in each of our geographic regions, the beneficiaries of which are selected based on their impacts on
local customers and associates. We serve the community on a national level through our Big Lots Foundation, which focuses on
healthcare, housing, hunger, and education. In addition, we are pleased to support our local community in Columbus, OH
through our partnership with Nationwide Children’s Hospital, to which the Company committed $40 million and the Big Lots
Foundation committed $10 million to open the Big Lots Behavioral Health Pavilion, a state-of-the-art medical facility dedicated
to child and adolescent mental and behavioral health, in 2020.
Competition
We operate in the highly competitive retail industry. We face strong sales competition from other general merchandise,
discount, home, food, furniture, arts and crafts, and dollar store retailers, which operate in traditional brick and mortar stores
and/or online. Additionally, we compete with a number of companies for retail site locations, for distribution site locations, to
attract and retain quality employees, and to acquire our broad merchandising assortment from vendors. We operate an e-
commerce platform which faces additional competition from a wider range of retailers in a highly competitive marketplace,
where we compete for customers, fulfillment capabilities, and technological innovation.
Real Estate
The following table compares the number of our stores in operation at the beginning and end of each of the last five fiscal
years:
Stores open at the beginning of the year
Stores opened during the year
Stores closed during the year
Stores open at the end of the year
2021
2020
2019
2018
2017
1,408
50
(27)
1,431
1,404
24
(20)
1,408
1,401
54
(51)
1,404
1,416
32
(47)
1,401
1,432
24
(40)
1,416
For additional information regarding our real estate strategy, see the discussion under the caption “Operating Strategy - Real
Estate” in the accompanying “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations” (“MD&A”) in this Form 10-K.
4
The following table details our U.S. stores by state at January 29, 2022:
Alabama
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
29
34
11
149
18
14
5
106
50
6
34
44
3
7
40
20
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
6
27
23
47
1
14
24
3
3
13
6
29
11
67
74
1
101
18
15
71
1
36
47
115
7
4
42
27
16
10
2
Total stores
Number of states
1,431
47
Of our 1,431 stores, 33% operate in four states: California, Texas, Florida, and Ohio, and net sales from stores in these states
represented 33% of our 2021 net sales. We have a concentration in these states based on their size, population, and customer
base.
Warehouse and Distribution
While certain of our merchandise vendors deliver directly to our stores, the large majority of our inventory is staged and
delivered from our distribution centers to facilitate prompt and efficient distribution and transportation of merchandise to our
stores and help maximize our sales and inventory turnover.
The majority of our merchandise offerings are processed for retail sale and distributed to our stores from five regional
distribution centers located in Alabama, California, Ohio, Oklahoma, and Pennsylvania.
We selected the locations of our regional distribution centers to help manage transportation costs and to minimize the distance
from our distribution centers to our stores.
In addition to our regional distribution centers that handle store merchandise, we operate two other warehouses within our Ohio
distribution center. One warehouse distributes fixtures and supplies to our stores and our five regional distribution centers and
the other warehouse serves as our fulfillment center for our e-commerce operations. To supplement our e-commerce fulfillment
center, we also fulfill direct-ship e-commerce orders from 65 of our store locations, which we strategically selected based on
geographic location, size, and other relevant factors. We also fulfill some of our e-commerce orders using supplier direct
fulfillment, a process in which the customer purchases merchandise through our e-commerce platform, but the merchandise is
shipped directly from the supplier to the customer. Supplier direct fulfillment is primarily used for bulky items that are more
costly to warehouse and ship. We continue to evaluate our e-commerce fulfillment capabilities to reduce shipping times.
In 2021, we opened two small-format forward distribution centers to divert processing and logistics for bulk goods out of our
regional distribution centers into our forward distribution centers, thereby increasing the efficiency of our regional distribution
centers, which were designed to most efficiently process cartons as opposed to bulk goods. Our two forward distribution centers
are operated by a third-party logistics services provider and are located in Georgia and Pennsylvania. Our forward distribution
centers also diversified our distribution center labor force, which reduced the impact of COVID-19 related absences on our
supply chain. We believe further expansion of our distribution network with forward distribution centers is necessary to grow
our net sales and store count over the next several years. In 2022, we intend to open two additional forward distribution centers,
and we will continue to evaluate whether we need to open additional forward distribution centers in the future.
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For additional information regarding our warehouses and distribution facilities and related initiatives, see the discussion under
the caption “Warehouse and Distribution” in “Item 2. Properties” of this Form 10-K.
Seasonality
We have historically experienced seasonal fluctuations in our sales and profitability, with a larger percentage of our net sales
and operating profit realized in our fourth fiscal quarter, which includes the Christmas holiday selling season. Our quarterly net
sales and operating profits can be affected by the timing of new store openings and store closings, advertising, and certain
holidays. We historically receive a higher proportion of merchandise, carry higher inventory levels, and incur higher outbound
shipping and payroll expenses as a percentage of sales in our third fiscal quarter in anticipation of increased sales activity
during our fourth fiscal quarter. Performance during our fourth fiscal quarter typically reflects a leveraging effect which has a
favorable impact on our operating results because net sales are higher and certain of our costs, such as rent and depreciation, are
fixed and do not vary as sales levels escalate. If our sales performance is significantly better or worse during the Christmas
holiday selling season, we would expect a more pronounced impact on our annual financial results than if our sales performance
is significantly better or worse in a different season.
Our net sales in the second quarter of 2020 as a percentage of full year were disproportionately higher as a result of increased
demand arising from the onset of the COVID-19 pandemic and related government stimulus payments. Similarly, our net sales
in the first quarter of 2021 as a percentage of full year were disproportionately higher as demand increased due to government
stimulus payments related to the COVID-19 pandemic.
While uncertainty related to the COVID-19 pandemic persists, we believe the seasonality of our 2022 results will more closely
resemble the historical seasonality of our business, including the seasonality we experienced in 2019 (excluding the one-time
gain on sale of distribution center in 2019 discussed in a footnote to the table below).
The following table sets forth the seasonality of net sales and operating profit (loss) for 2021, 2020, and 2019 by fiscal quarter:
Fiscal Year 2021
Net sales as a percentage of full year
Operating profit (loss) as a percentage of full year
Fiscal Year 2020
Net sales as a percentage of full year
Operating profit as a percentage of full year (a)
Fiscal Year 2019
Net sales as a percentage of full year
Operating profit as a percentage of full year (b)
First
Second
Third
Fourth
26.4 %
51.1
23.2 %
8.7
24.3 %
7.7
23.7 %
22.5
26.5 %
71.0
23.5 %
3.9
21.7 %
(1.7)
22.2 %
5.0
21.9 %
50.9
28.2 %
28.1
28.1 %
15.3
30.3 %
37.5
(a) The second quarter of 2020 included a gain on sale of distribution centers and related expenses of $459.1 million related to
the sale and leaseback of four distribution centers, which significantly increased second quarter operating profit as a
percentage of full year in comparison to 2019 and 2021.
(b) The third quarter of 2019 included a gain on sale of distribution center of $178.5 million, which significantly increased
third quarter operating profit as a percentage of full year in comparison to 2020 and 2021.
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Human Capital
At January 29, 2022, we had approximately 36,200 active associates comprised of 10,500 full-time and 25,700 part‑time
associates. Approximately 71% of the associates we employed during 2021 were employed on a part-time basis. Temporary
associates hired for the holiday selling season increased the total number of associates to a peak of approximately 37,200 in
2021. We are not a party to any labor agreements. We require all of our associates to adhere to our code of ethics and workplace
safety protocols.
We believe our associates are among our most important resources. We evaluate our human capital management at our stores,
distribution centers, and corporate headquarters on the basis of associate engagement, diversity, equity, and inclusion,
compensation and benefits, and talent development.
Associate Engagement
We send an associate engagement survey to each of the associates in our corporate headquarters and to our field and
distribution center leadership on an annual basis to assess our associate engagement and ask those associates their thoughts on
manager effectiveness, performance enablement, and our diversity and inclusion efforts. In 2021, 93% of the associates
surveyed responded to the survey with an 82% favorable engagement rate. Based on results of the annual survey, our leaders
create action plans to address areas where our associates have told us we can improve.
Diversity, Equity, and Inclusion
We recognize the value of creating a diverse, equitable, and inclusive workplace. As a result, diversity, equity, and inclusion
(“DEI”) is a significant component of our human capital management. In 2020, we established our Diversity, Equity, and
Inclusion Council (“DEI Council”), which is comprised of associates from our stores, distribution centers, and corporate
headquarters who represent various job levels, locations, ages, genders, languages, work shifts, races, sexual orientations, and
leadership styles. The DEI Council’s mission is to lead the development and advancement of our DEI strategy. Additionally, we
formed a Diversity, Equity, and Inclusion Executive Advisory Committee, which is comprised of senior leaders who provide
guidance to the DEI Council, as well as approve our DEI strategy and promote its achievement throughout our organization. In
2021, our corporate associates, field leaders, and distribution center leaders participated in a five-part conscious inclusion
program taking place over the course of five months to build awareness, educate our associates on how we can improve DEI,
and ultimately engrain DEI in the culture of the Company. This conscious inclusion program has been converted to online
training and will be part of our onboarding process for all of our new associates.
Compensation and Benefits
We offer a competitive compensation and benefits package to our eligible associates including, among other benefits, incentive
compensation, performance-based merit pay, paid holidays, paid vacation, 401(k) match, and healthcare coverage, including
medical, dental, and vision insurance with health savings account and flexible savings account options. Our compensation and
benefits packages are designed to attract and retain high-performing talent. Additionally, we provide our associates with a
company discount on our merchandise and our associates redeemed over $30 million in corporate discounts in 2021.
Talent Development
Talent development is critical to developing the high-performance culture that we seek to foster. Each of our associates
participates in an annual goal-setting process and completes an annual performance review, which is followed by periodic
discussions throughout the year to assess progress. Each of our managers also completes an individual development plan on an
annual basis to set and track long-term goals. Additionally, our business leaders participate in a succession planning process
that serves as a tool for identifying and developing high-potential individuals within our organization as well as ensuring
business continuity. We also offer a robust catalog of training and development programs to our associates through our Big Lots
University training tool, which covers topics including, but not limited to, workplace harassment, safety, ethics, and job skills.
Health and Safety
The health and safety of our associates is of the utmost importance. We have implemented comprehensive safety protocols in
each of our stores, distribution centers, and corporate offices to ensure the safety of associates, customers, and other visitors in
each facility. We require each of our associates to complete safety training courses relevant to their jobs, which we track using
e-learning tools to ensure compliance. In addition to traditional safety training, we require all of our associates to participate in
aggressor/active shooter training and we require our store associates to participate in argumentative and de-escalating
conversations training. We reinforce safety standards with re-training requirements and regular, engaging communications. To
provide a safe working environment for our associates and customers during the COVID-19 pandemic, we increased
sanitization protocols, secured personal protective equipment for our associates, installed plexiglass at all registers,
implemented social distancing and mask protocols at our stores and distribution centers, and implemented daily health screens
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and temperature checks for all associates. We have adjusted, and continue to adjust, our COVID-19-related safety protocols
based on the advice of medical experts and federal, state, and local guidelines.
Available Information
We make available, free of charge, through the “Investors” section of our website (www.biglots.com) under the “SEC Filings”
caption, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments
to those reports filed or furnished pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended
(“Exchange Act”), as well as our definitive proxy materials filed pursuant to section 14 of the Exchange Act, as soon as
reasonably practicable after we file such material with, or furnish it to, the Securities and Exchange Commission (“SEC”).
These filings are also available on the SEC’s website at http://www.sec.gov. In April 2021, we published a Corporate Social
Responsibility Report, titled Big Cares, which is available on our website. The contents of our website, including the Big Cares
report, are not incorporated into, or otherwise made a part of, this Form 10-K.
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Item 1A. Risk Factors
The statements in this item describe material risks to our business and should be considered carefully. In addition, these
statements constitute cautionary statements under the Private Securities Litigation Reform Act of 1995.
This Form 10-K contains forward-looking statements that set forth anticipated results based on management’s plans and
assumptions. From time to time, we also provide forward-looking statements in other materials we release to the public and in
oral statements that may be made by us. Such forward-looking statements give our current expectations or forecasts of future
events. They do not relate strictly to historical or current facts. Such statements are commonly identified by using words such as
“anticipate,” “estimate,” “approximate,” “expect,” “objective,” “goal,” “project,” “intend,” “plan,” “believe,” “will,” “should,”
“may,” “target,” “forecast,” “guidance,” “outlook,” and similar expressions in connection with any discussion of future
operating or financial performance. In particular, forward-looking statements include statements relating to future actions,
future performance, or results of current and anticipated products, sales efforts, expenses, interest rates, the outcome of
contingencies, such as legal proceedings, and financial results.
We cannot guarantee that any forward-looking statement will be realized. Achievement of future results is subject to risks,
uncertainties, and potentially inaccurate assumptions. If known or unknown risks or uncertainties materialize, or should
underlying assumptions prove inaccurate, actual results could differ materially from past results or those anticipated, estimated,
or projected results set forth in the forward-looking statements. You should bear this in mind as you consider forward-looking
statements made or to be made by us.
You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date made. We
undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events, or
otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our future Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the SEC.
The following cautionary discussion of material risks, uncertainties, and assumptions relevant to our businesses describes
factors that, individually or in the aggregate, we believe could cause our actual results to differ materially from expected and
historical results. Additional risks not presently known to us or that we presently believe to be immaterial also may adversely
impact us. Should any risks or uncertainties develop into actual events, these developments could have material adverse effects
on our business, financial condition, results of operations, and liquidity. Consequently, all forward-looking statements made or
to be made by us are qualified by these cautionary statements, and there can be no assurance that the results or developments we
anticipate will be realized or that they will have the expected effects on our business or operations. This discussion is provided
as permitted by the Private Securities Litigation Reform Act of 1995.
Our ability to achieve the results contemplated by forward-looking statements is subject to a number of factors, any one or a
combination of which could materially affect our business, financial condition, results of operations, or liquidity. These factors
may include, but are not limited to:
Operational and Supply Chain Risks
If we are unable to successfully refine and execute our operating strategies, our operating performance could be
significantly impacted.
We may not meet or exceed our operating performance targets and goals if our strategies and initiatives are unsuccessful. Our
ability to execute and/or refine our operating and strategic plans, as necessary, including cost savings initiatives, could impact
our ability to meet our operating performance targets. Additionally, we must effectively adjust our operating and strategic plans
over time to adapt to the evolving marketplace. See the MD&A in this Form 10-K for additional information concerning our
operating strategy.
Disruption to our distribution network, the capacity of our distribution centers, and our timely receipt of merchandise
inventory could adversely affect our operating performance.
We rely on our ability to replenish depleted merchandise inventory through deliveries to our distribution centers and from the
distribution centers to our stores by various means of transportation, including shipments by sea, rail and truck carriers. A
decrease in the capacity of carriers and/or labor strikes, disruptions or shortages in the transportation industry could negatively
affect our distribution network, our timely receipt of merchandise and/or our transportation costs. In addition, disruptions to the
U.S. and international transportation infrastructure from wars, political unrest, terrorism, natural disasters, pandemic diseases,
governmental budget constraints and other significant events that lead to delays or interruptions of service could adversely
9
affect our business. Also, a fire, earthquake, or other disaster at one of our distribution centers could disrupt our timely receipt,
processing and shipment of merchandise to our stores which could adversely affect our business. Additionally, as we seek to
expand our operation through store count growth, advancement of our online retail capabilities, and our addition of forward
distribution centers to our network, we may face increased or unexpected demands on distribution center operations, as well as
new demands on our distribution network. Lastly, global pandemics, such as the COVID-19 pandemic, could lead to the
shutdown of parts, or all, of our distribution network and generally disrupt our ability to receive, process, and ship merchandise
to our stores and meet the demand of our customers.
We rely on manufacturers located in foreign countries, including China, for significant amounts of merchandise, including
a significant amount of our domestically-purchased merchandise. Our business may be materially adversely affected by risks
associated with international trade, including the impact of tariffs and/or sanctions imposed by the U.S. with respect to
certain consumer goods imported from China, and the impact of the COVID-19 pandemic.
Global sourcing of many of the products we sell is an important factor in driving higher operating profit. During 2021, we
purchased approximately 24% of our products, at cost, directly from overseas vendors, including 15% from vendors located in
China. Additionally, a significant amount of our domestically-purchased merchandise is manufactured abroad. Our ability to
identify qualified vendors and to access products in a timely and efficient manner is a significant challenge, especially with
respect to goods sourced outside of the U.S. Global sourcing and foreign trade involve numerous risks and uncertainties beyond
our control, including increased shipping costs, increased import duties, more restrictive quotas, loss of most favored nation
trading status, currency and exchange rate fluctuations, work stoppages, transportation delays, economic uncertainties such as
inflation, foreign government regulations, political unrest, pandemic diseases, natural disasters, war, terrorism, trade restrictions
and tariffs (including retaliation by the U.S. against foreign practices or by foreign countries against U.S. practices), the
financial stability of vendors, or merchandise quality issues. U.S. policy on trade restrictions frequently changes and may result
in new laws, regulations, or treaties that increase the costs of importing goods and/or limit the scope of available foreign
vendors. These and other issues affecting our international vendors could materially adversely affect our business and financial
performance.
The majority of our products and components of our products imported from China are currently subject to tariffs and proposed
tariffs. As a result, we are continually evaluating the potential impact of the effective and proposed tariffs on our supply chain,
costs, sales, and profitability, and are considering strategies to mitigate such impact, including reviewing sourcing options,
exploring first sale valuation strategies, filing requests for exclusion from the tariffs with the U.S. Trade Representative for
certain product lines, and working with our vendors and merchants. Given the volatility and uncertainty regarding the scope and
duration of these tariffs, as well as the potential for additional trade actions by the U.S. or other countries, the impact on our
operations and results is uncertain and could be significant. We can provide no assurance that any strategies we implement to
mitigate the impact of such tariffs or other trade actions will be successful. To the extent that our supply chain, costs, sales, or
profitability are negatively affected by the tariffs or other trade actions, our business, financial condition and results of
operations may be materially adversely affected.
The COVID-19 pandemic has led to general manufacturing and supply chain disruption in the U.S. and globally, including
manufacturers and supply chains that produce our retail merchandise, supplies, and fixtures. To the extent our manufacturers,
supply chain and associated costs are negatively affected by the COVID-19 pandemic, including delayed shipment of
seasonally sensitive product offerings, our business, financial condition, results of operations, and liquidity may be materially
adversely affected.
Our inability to properly manage our inventory levels and offer merchandise that meets changing customer demands may
materially impact our business and financial performance.
We must maintain sufficient inventory levels to successfully operate our business. However, we also must seek to avoid
accumulating excess inventory to maintain appropriate in-stock levels based on evolving customer demands. We obtain
approximately 24% of our merchandise directly from vendors outside of the U.S. These foreign vendors often require us to
order merchandise and enter into purchase order contracts for the purchase of such merchandise well in advance of the time we
offer these products for sale. As a result, we may experience difficulty in rapidly responding to a changing retail environment,
which makes us vulnerable to changes in price and in consumer preferences. In addition, we attempt to maximize our operating
profit and operating efficiency by delivering proper quantities of merchandise to our stores in a timely manner. If we do not
accurately anticipate future demand for a particular product or the time it will take to replenish inventory levels, our inventory
levels may not be appropriate and our results of operations may be negatively impacted.
10
If we are unable to retain existing and/or secure suitable new store locations under favorable lease terms, our financial
performance may be negatively affected.
We lease almost all of our stores, and a significant number of these leases expire or are up for renewal each year, as noted
below in “Item 2. Properties” and in MD&A in this Form 10-K. Our strategy to improve our financial performance includes
increasing sales while managing the occupancy cost of each of our stores. A primary component of our sales growth strategy is
increasing our comparable store sales, which requires renewing many leases each year. Additional components of our sales
growth strategy include opening new store locations, either as an expansion in an existing market or as an entrance into a new
market, and relocating certain existing stores to new locations within existing markets. If the commercial real estate market
does not allow us to negotiate favorable lease renewals and new store leases, our financial position, results of operations, and
liquidity may be negatively affected.
If we are unable to maintain or upgrade our computer systems or if our information technology or computer systems are
damaged or cease to function properly, our operations may be disrupted or become less efficient.
We depend on a variety of information technology and computer systems for the efficient functioning of our business. We rely
on certain hardware, telecommunications and software vendors to maintain and periodically upgrade many of these systems so
that we can continue to support our business. Various components of our information technology and computer systems,
including hardware, networks, and software, are licensed to us by third party vendors. We rely extensively on our information
technology and computer systems to process transactions, summarize results, and manage our business, including management
and distribution of our inventory. Our information technology and computer systems are subject to damage or interruption from
power outages, computer and telecommunications failures, computer viruses, cyberattacks or other security breaches,
obsolescence, catastrophic events such as fires, floods, earthquakes, tornados, hurricanes, acts of war or terrorism, and usage
errors by our employees or our contractors. In recent years, we have begun using vendor-hosted solutions for certain of our
information technology and computer systems, which are more exposed to telecommunication failures.
If our information technology or computer systems are damaged or cease to function properly, we may have to make a
significant investment to fix or replace them, and we may suffer loss of critical data and interruptions or delays in our
operations as a result. Any material interruption experienced by our information technology or computer systems could
negatively affect our business and results of operations. Costs and potential interruptions associated with the implementation of
new or upgraded systems and technology or with maintenance or adequate support of our existing systems could disrupt or
reduce the efficiency of our business.
Shareholder activism could result in potential operational disruption, divert our resources and management’s attention and
have an adverse effect on our business.
Shareholder activism, which may arise in various forms and situations, could divert management’s attention from its current
strategies, require us to incur substantial legal, consulting, and public relations fees, and could result in potential operational
disruption. Further, any perceived uncertainties as to our future direction and control could result in the loss of potential
business opportunities and may make it more difficult to attract and retain qualified employees, any of which could adversely
affect our business and operating results. Any perceived uncertainties could also adversely affect the price and volatility of our
stock.
Market and Competitive Risks
If we are unable to compete effectively in the highly competitive discount retail industry, our business and results of
operations may be materially adversely affected.
The discount retail industry, which includes both traditional brick and mortar stores and online marketplaces, is highly
competitive. As discussed in Item 1 of this Form 10-K, we compete for customers, products, employees, real estate, and other
aspects of our business with a number of other companies. Some of our competitors have broader distribution (e.g., more stores
and/or a more established online presence), and/or greater financial, marketing, and other resources than us. It is possible that
increased competition, significant discounting, improved performance by our competitors, an inability to distinguish our brand
from our competitors, or failure to effectively promote our brand image to younger generations may reduce our market share,
gross margin, and operating margin, and may materially adversely affect our business and results of operations.
11
If we are unable to compete effectively in the omnichannel retail marketplace, our business and results of operations may be
materially adversely affected.
Competition from other retailers in the online retail marketplace is intense and growing. Certain of our competitors, including
several pure online retailers, have established online operations that we compete against for customers and products. It is
possible that the competition in the online retail space may reduce our market share, gross margin, and operating margin, and
may materially adversely affect our business and results of operations in other ways. Our operations include an e-commerce
platform with multiple fulfillment options to enhance our omnichannel experience. Operating an e-commerce platform is a
complex undertaking and there is no guarantee that the resources we have applied to this effort will increase revenues or
improve operating performance. If our online retailing initiatives do not meet our customers’ expectations, the initiatives may
reduce our customers’ desire to purchase goods from us both online and at our brick and mortar stores and may materially
adversely affect our business and results of operations.
Deterioration in general economic conditions, disposable income levels, and other conditions, such as unseasonable
weather, pandemic diseases, inflation, or global events, such as the war between Russia and Ukraine, could lead to reduced
consumer demand for our merchandise, and materially adversely affect our revenues and gross margin.
Our results of operations can be directly impacted by the health of the U.S. economy. Our business and financial performance
may be adversely impacted by current and future economic conditions, including factors that may restrict or otherwise
negatively impact consumer financing, disposable income levels, unemployment levels, energy costs, interest rates, recession,
and inflation, and other matters, such as tax reform, natural disasters, climate change, pandemic diseases, wars, or terrorist
activities, that influence consumer spending. Specifically, our Soft Home, Hard Home, Furniture and Seasonal merchandise
categories may be threatened when disposable income levels are negatively impacted by economic conditions. In 2021 and
continuing into 2022, the U.S. experienced its highest level of inflation in decades, which we expect to negatively impact
disposable income levels and discretionary spending. Additionally, the net sales of cyclical product offerings in our Seasonal
category may be threatened when we experience extended periods of unseasonable weather, including unseasonable weather
caused by climate change. Inclement weather can also negatively impact our Furniture category, as many customers transport
the product home personally. In particular, the economic conditions and weather patterns of four states (California, Texas,
Florida, and Ohio) are important as approximately 33% of our current stores operate and 33% of our 2021 net sales occurred in
these states.
Fluctuation in commodity prices, including but not limited to diesel fuel and other fuels used by utilities to generate power,
could materially adversely impact our gross margin and operating profit.
Transporting merchandise, supplies, fixtures, and other materials to and from our distribution centers and stores requires
significant volumes of diesel fuel and other fuels. As a result, fluctuations in the prices of diesel fuel and other fuels, including
increases in fuel prices resulting from the war between Russia and Ukraine, directly impact the carrying cost of inventory, the
cost of outbound transportation from our distribution centers to our stores, and the cost to transport other materials and supplies.
Additionally, we consume significant volumes of electricity and natural gas to heat, cool, and operate equipment in our stores.
Our utility providers depend on various fuels to generate and transport electricity and natural gas, the cost of which is typically
passed through to us as the consumer. A rise in the cost of fuels used to generate and transport electricity and natural gas could
materially adversely impact our operating profit.
Cybersecurity Risks
If we are unable to secure customer, employee, vendor and company data, our systems could be compromised, our
reputation could be damaged, and we could be subject to penalties or lawsuits.
In the normal course of business, we process and collect relevant data about our customers, employees and vendors. The
protection of our customer, employee, vendor and company data and information is critical to us. We have implemented
procedures, processes and technologies designed to safeguard our customers’ debit and credit card information and other
private data, our employees’ and vendors’ private data, and our records and intellectual property. We utilize third-party service
providers in connection with certain technology related activities, including credit card processing, website hosting, data
encryption and software support. We require these providers to take appropriate measures to secure such data and information
and assess their ability to do so.
Despite our procedures, technologies and other information security measures, we cannot be certain that our information
technology systems or the information technology systems of our third-party service providers are preventing, containing, or
detecting, or will be able to prevent, contain or detect all cyberattacks, cyberterrorism, or security breaches. As evidenced by
12
other retailers who have suffered serious security breaches, we may be vulnerable to data security breaches and data loss,
including cyberattacks. A material breach of our security measures or our third-party service providers’ security measures, the
misuse of our customer, employee, vendor and company data or information or our failure to comply with applicable privacy
and information security laws and regulations could result in the exposure of sensitive data or information, attract a substantial
amount of negative media attention, damage our customer or employee relationships and our reputation and brand, distract the
attention of management from their other responsibilities, subject us to government enforcement actions, private litigation,
penalties and costly response measures, and result in lost sales and a reduction in the market value of our common
shares. While we have taken action to mitigate our financial risk, in the event we experience a material data or information
security breach, our protection may not be sufficient to cover the impact to our business.
In addition, the regulatory environment surrounding data and information security and privacy is increasingly demanding, as
new and revised requirements are frequently imposed across our business. Compliance with more demanding privacy and
information security laws and standards may result in significant expense due to increased investment in technology and the
development of new operational processes.
Human Capital Risks
If we are unable to attract, train, and retain highly qualified associates while also controlling our labor costs, our financial
performance may be negatively affected.
Our customers expect a positive shopping experience, which is driven by a high level of customer service from our associates
and a quality presentation of our merchandise. Additionally, our customers expect merchandise to be in stock in our stores and
online, which is partially driven by the timely delivery of merchandise from our distribution centers to our stores. To grow our
operations and meet the needs and expectations of our customers, we must attract, train, and retain a large number of highly
qualified associates, while also controlling labor costs. We compete with other retail businesses for many of our associates and
many of our store and distribution center positions have historically had high turnover rates, which can increase training and
retention costs. In addition, our ability to control labor costs is subject to numerous external factors, including prevailing wage
rates, the impact of federal, state, or local minimum wage legislation, the impact of legislation or regulations governing labor
relations or benefits, and health insurance costs.
The loss of key personnel may have a material impact on our future business and results of operations.
We believe that we benefit substantially from the leadership and experience of our senior executives. The loss of the services of
these individuals could have a material adverse impact on our business and results of operations. Competition for key personnel
in the retail industry is intense, and our future success will depend on our ability to recruit, train, and retain our senior
executives and other qualified personnel.
Regulatory and Legal Liability Risks
Changes in federal or state legislation and regulations, including the effects of legislation and regulations on product safety
and hazardous materials, could increase our cost of doing business and adversely affect our operating performance.
New federal or state legislation, including new product safety and hazardous material laws and regulations, may negatively
impact our operations, increase our cost of doing business and adversely affect our operating performance. Changes in product
safety legislation or regulations may lead to product recalls and the disposal or write-off of merchandise, as well as fines or
penalties and reputational damage. If our merchandise and food products do not meet applicable governmental safety standards
or our customers’ expectations regarding quality or safety, we could experience lost sales, increased costs, reputational damage,
and increased legal risk.
In addition, if we discard or dispose of our merchandise, particularly merchandise which is non-salable, inconsistently with
applicable waste management standards, we could expose ourselves to certain fines and litigation costs related to hazardous
material regulations. Our inability to comply on a timely basis with regulatory requirements, execute product recalls in a timely
manner, or consistently implement waste management standards, could result in fines or penalties which could have a material
adverse effect on our financial results. In addition, negative customer perceptions regarding the safety of the products we sell
could cause us to lose market share to our competitors. If this occurs, it may be difficult for us to regain lost sales.
13
We are subject to periodic litigation and regulatory proceedings, including Fair Labor Standards Act, state wage and hour,
and shareholder class action lawsuits, which may adversely affect our business and financial performance.
From time to time, we are involved in litigation and regulatory actions, including various collective, class action or shareholder
derivative lawsuits that are brought against us for alleged violations of the Fair Labor Standards Act, state wage and hour laws,
sales tax and consumer protection laws, False Claims Act, federal securities laws and environmental and hazardous waste
regulations. Due to the inherent uncertainties of litigation, we may not be able to accurately determine the impact on us of any
future adverse outcome of such proceedings. The ultimate resolution of these matters could have a material adverse impact on
our financial condition, results of operations, and liquidity. In addition, regardless of the outcome, these proceedings could
result in substantial cost to us and may require us to devote substantial attention and resources to defend ourselves. For a
description of certain current legal proceedings, see Note 9 to the accompanying consolidated financial statements.
Our current insurance program may expose us to unexpected costs and negatively affect our financial performance.
Our insurance coverage is subject to deductibles, self-insured retentions, limits of liability and similar provisions that we
believe are prudent based on our overall operations. We may incur certain types of losses that we cannot insure or which we
believe are not economically reasonable to insure, such as losses due to acts of war, employee and certain other crime, some
natural disasters, and pandemic diseases. If we incur these losses and they are material, our business could suffer. Certain
material events may result in sizable losses for the insurance industry and adversely impact the availability of adequate
insurance coverage or result in excessive premium increases. To offset negative cost trends in the insurance market, we may
elect to self-insure, accept higher deductibles or reduce the amount of coverage in response to these market changes. In
addition, we self-insure a significant portion of expected losses under our workers’ compensation, general liability, including
automobile, and group health insurance programs. Unanticipated changes in any applicable actuarial assumptions and
management estimates underlying our recorded liabilities for these self-insured losses, including potential increases in medical
and indemnity costs, could result in significantly different expenses than expected under these programs, which could have a
material adverse effect on our financial condition and results of operations. Although we continue to maintain property
insurance for catastrophic events, we are self-insured for losses up to the amount of our deductibles. If we experience a greater
number of self-insured losses than we anticipate, our financial performance could be adversely affected.
Financial Risks
If we are unable to comply with the terms of the 2021 Credit Agreement, our capital resources, financial condition, results of
operations, and liquidity may be materially adversely effected.
We may need to borrow funds under our $600 million five-year unsecured credit facility (“2021 Credit Agreement”) from time
to time, depending on operating or other cash flow requirements. The 2021 Credit Agreement contains financial and other
covenants, including, but not limited to, limitations on indebtedness, liens, and investments, as well as the maintenance of a
leverage ratio and a fixed charge coverage ratio. Additionally, we are subject to cross-default provisions under the synthetic
lease agreement (the “Synthetic Lease”) that we entered in connection with our distribution center in California. A violation of
any of these covenants may permit the lenders to restrict our ability to borrow additional funds, provide letters of credit under
the 2021 Credit Agreement and may require us to immediately repay any outstanding loans. Our failure to comply with these
covenants may have a material adverse effect on our capital resources, financial condition, results of operations, and liquidity.
A significant decline in our operating profit may impair our ability to realize the value of our long-lived assets.
We are required by accounting rules to periodically assess our property and equipment, operating lease right-of-use assets, and
intangible assets for impairment and recognize an impairment loss, if necessary. In performing these assessments, we use our
historical financial performance to determine whether we have potential impairments or valuation concerns and as evidence to
support our assumptions about future financial performance. A significant decline in our financial performance could negatively
affect the results of our assessments of the recoverability of our property and equipment, operating lease right-of-use assets,
deferred tax assets, and our intangible assets and trigger the impairment of these assets. Impairment charges taken against
property and equipment, operating lease right-of-use assets, and intangible assets could be material and could have a material
adverse impact on our capital resources, financial condition, results of operations, and liquidity.
14
Other Risks
We also may be subject to a number of other factors which may, individually or in the aggregate, materially adversely affect
our business, capital resources, financial condition, results of operations and liquidity. These factors include, but are not
limited to:
•
•
•
•
•
Changes in governmental laws, case law and regulations, including changes that increase our effective tax rate,
comprehensive tax reform, or other matters related to taxation;
Changes in accounting standards, including new interpretations and updates to current standards;
Events or circumstances could occur which could create bad publicity for us or for the types of merchandise offered in
our stores which may negatively impact our business results including our sales;
Infringement of our intellectual property, including the Big Lots trademarks, could dilute their value; and
Other risks described from time to time in our filings with the SEC.
Item 1B. Unresolved Staff Comments
None.
15
Item 2. Properties
Retail Operations
All of our stores are located in the U.S., predominantly in strip shopping centers, and have an average store size of
approximately 32,900 square feet, of which an average of 22,900 is selling square feet. For additional information about the
properties in our retail operations, see the discussion under the caption “Real Estate” in “Item 1. Business” and under the
caption “Operating Strategy - Real Estate” in MD&A in this Form 10-K.
The average capital expenditures invested to open a new store in a leased facility during 2021 was approximately $1.1 million,
which includes the cost of construction and fixtures, excludes any landlord-provided funding, and reflects the benefit of lower
capital expenditures at certain of our stores where construction was completed by our landlord. All of our stores are leased,
except for the 50 stores we own in the following states:
State
California
Colorado
Florida
Louisiana
Michigan
New Mexico
Ohio
Texas
Total
Stores Owned
36
3
3
1
1
2
1
3
50
Additionally, we own two closed sites which we are not currently operating and one of those sites is available for sale. Since
these owned sites are no longer operating as active stores, they have been excluded from our store counts at January 29, 2022.
Store leases generally obligate us for fixed monthly rental payments plus the payment, in most cases, of our applicable portion
of real estate taxes, common area maintenance costs (“CAM”), and property insurance. Some leases require the payment of a
percentage of sales in addition to minimum rent. Such payments generally are required only when sales exceed a specified
level. Our typical store lease is for an initial minimum term of approximately ten years with multiple five-year renewal options.
Twenty store leases have sales termination clauses that allow us to exit the location at our option if we do not achieve certain
sales volume results. An additional thirteen store leases have generic early termination clauses that allow us to exit the location
upon providing sufficient notice to the landlord.
The following table summarizes the number of store lease expirations in each of the next five fiscal years and the total
thereafter. As stated above, many of our store leases have renewal options. The table also includes the number of leases that are
scheduled to expire each year that do not have a renewal option. The table includes leases for stores with more than one lease
and leases for stores not yet open and excludes eight month-to-month leases and 50 owned locations.
Fiscal Year:
2022
2023
2024
2025
2026
Thereafter
Expiring Leases
184
230
Leases Without
Options
48
47
197
204
240
322
29
28
42
17
Warehouse and Distribution
At January 29, 2022, we leased and operated approximately 9.0 million square feet of distribution center and warehouse space
in five regional distribution facilities strategically located across the United States. The regional distribution centers utilize
warehouse management technology, which we believe enables accurate and efficient processing of merchandise from vendors
16
to our retail stores. The combined output of our regional distribution centers was approximately 2.4 million merchandise
cartons per week in 2021. Certain vendors deliver merchandise directly to our stores when it supports our operational goal to
deliver merchandise from our vendors to the sales floor in the most efficient manner. We operate an e-commerce fulfillment
center out of our Columbus, OH warehouse. In recent years, to supplement our Columbus, OH e-commerce fulfillment center,
we began fulfilling direct-ship e-commerce orders from 65 of our store locations, which we strategically selected based on
geographic location, size, and other relevant factors.
Distribution centers and warehouse space, and the corresponding square footage of the regional distribution centers, by location
at January 29, 2022, were as follows:
Location
Year Opened
Total Square Footage
Number of Stores Served
(Square footage in thousands)
Columbus, OH
Montgomery, AL
Tremont, PA
Durant, OK
Apple Valley, CA
Total
1989
1996
2000
2004
2019
3,559
1,411
1,295
1,297
1,416
8,978
331
317
308
257
218
1,431
At January 29, 2022, we also leased two small-format forward distribution centers, which are operated by a third-party logistics
service provider. The forward distribution centers divert processing and logistics for bulk goods from our regional distribution
centers into the forward distribution centers, thereby increasing the efficiency of our regional distribution centers, which are
designed to most efficiently process cartons as opposed to bulk goods. The locations and respective square footage of the
forward distribution centers at January 29, 2022, were as follows:
Location
Year Opened
Total Square Footage
(Square footage in thousands)
McDonough, GA
Bethel, PA
Total
2021
2021
485
587
1,072
In 2022, we intend to open two additional forward distribution centers and we will continue to evaluate whether we need to
open additional forward distribution centers in the future to support our net store count and net sales growth targets over the
next several years.
Corporate Office
We own a facility in Columbus, Ohio that serves as our corporate headquarters.
Item 3. Legal Proceedings
For information regarding certain legal proceedings to which we have been named a party or are subject, see Note 9 to the
accompanying consolidated financial statements.
Item 4. Mine Safety Disclosures
None.
17
Supplemental Item. Information about our Executive Officers
Our executive officers at March 29, 2022 were as follows:
Name
Bruce K. Thorn
Gene Eddie Burt
Andrej Mueller
Age Offices Held
54
President and Chief Executive Officer
56 Executive Vice President, Chief Supply Chain Officer
45 Executive Vice President, Strategy and Chief Customer Officer
Nicholas E. Padovano
58 Executive Vice President, Chief Stores Officer
Jack A. Pestello
52 Executive Vice President, Chief Merchandising Officer
Jonathan E. Ramsden
57 Executive Vice President, Chief Financial Officer and Chief
Administrative Officer
Officer Since
2018
2020
2019
2014
2020
2019
Ronald A. Robins, Jr.
58 Executive Vice President, Chief Legal and Governance Officer, General
2015
Counsel and Corporate Secretary
Michael A. Schlonsky
55 Executive Vice President, Chief Human Resources Officer
Gurmeet Singh
53 Executive Vice President, Chief Technology Officer
2000
2021
Bruce K. Thorn is our President and Chief Executive Officer. Before joining Big Lots in September 2018, he served as
President and Chief Operating Officer of Tailored Brands, Inc., a leading specialty retailer of men’s tailored clothing and
formalwear, from 2015 to 2018. Mr. Thorn also held various enterprise-level roles with PetSmart, Inc., most recently as
Executive Vice President, Store Operations, Services and Supply Chain, as well as leadership positions with Gap, Inc., Cintas
Corp, LESCO, Inc. and The United States Army. Mr. Thorn also serves on the board of directors of Caleres, Inc.
Gene Eddie Burt is responsible for our supply chain and logistics. He was promoted to Executive Vice President, Chief Supply
Chain Officer in January 2021 after serving as our Senior Vice President, Supply Chain since joining us in March 2019. Prior to
joining us, Mr. Burt served as the Executive Vice President of Merchandising and Supply Chain at GNC Holdings, a specialty
nutrition retailer. Additionally, Mr. Burt spent eight years with PetSmart, Inc., in multiple Vice President and Senior Vice
President roles focusing on distribution, transportation, supply chain, and real estate development. His experience also includes
logistics and supply chain roles with Tuesday Morning Corporation and Home Depot, Inc. Mr. Burt also serves on the board of
directors of Boot Barn Holdings, Inc.
Andrej Mueller is responsible for business strategy and marketing. Mr. Mueller was promoted to Executive Vice President,
Strategy and Chief Customer Officer in May 2020. Mr. Mueller joined us in October 2019 as Executive Vice President,
Business Strategy. Prior to joining us, Mr. Mueller spent 18 years at Boston Consulting Group, an international management
consulting firm, where he most recently was a partner and managing director. He has over 15 years of experience in the
consumer products sector across a broad range of categories including personal care, snacks, beverages, cheese and dairy, and
durable goods. He has worked in both developed and developing trade environments in Western and Eastern Europe, Russia,
the Middle East, South Africa, and Latin America.
Nicholas E. Padovano is responsible for store operations and customer engagement. He was promoted to Executive Vice
President, Chief Stores Officer in March 2021. Mr. Padovano joined us in 2014 as Senior Vice President, Store Operations.
Prior to joining us, Mr. Padovano was an executive at the Hudson Bay Company, a department store retailer, where he was
responsible for store operations of the Bay and Zellers brands. Additionally, Mr. Padovano served as Head of Stores,
Distribution and Supply Chain for Lowes Canada, a home improvement retailer.
Jack A. Pestello is responsible for merchandising and global sourcing, merchandise presentation, and merchandise planning and
allocation. Mr. Pestello joined us in July 2020 as Executive Vice President, Chief Merchandising Officer following seven years
in leadership roles at Walmart Inc., an international retailer, where he most recently served as Senior Vice President and
General Merchandise Manager for Walmart Inc.’s grocery business, after having served as Senior Vice President, Private
Brands and Vice President of Walmart Inc’s International Division. Additionally, Mr. Pestello has previously served in
leadership roles with Woolworths Group Ltd., an international retailer, and Daymon Worldwide, Inc., an international retail
branding and sourcing consultant.
Jonathan E. Ramsden is responsible for financial reporting and controls, financial planning and analysis, treasury, risk
management, tax, internal audit, investor relations, real estate, and asset protection. Mr. Ramsden joined us in August 2019 as
Executive Vice President, Chief Financial Officer and Chief Administrative Officer. Prior to joining us, Mr. Ramsden served
for over seven years with Abercrombie & Fitch Co., an apparel retailer, as Chief Financial Officer and then later Chief
18
Operating Officer. Additionally, Mr. Ramsden spent 10 years as Chief Financial Officer of TBWA Worldwide, a global
marketing services group, after having served as Controller of TBWA’s parent, Omnicom Group Inc.
Ronald A. Robins, Jr. is responsible for legal affairs, corporate governance and related matters. Mr. Robins was promoted to
Executive Vice President in September 2019, and now serves as the Chief Legal and Governance Officer. Prior to that, Mr.
Robins served as Senior Vice President, General Counsel and Corporate Secretary since joining us. Prior to joining us, Mr.
Robins was a partner at Vorys, Sater, Seymour and Pease LLP and also previously served as General Counsel, Chief
Compliance Officer, and Secretary of Abercrombie & Fitch Co., an apparel retailer.
Michael A. Schlonsky is responsible for talent management and oversight of human resources. He was promoted to Executive
Vice President in August 2015, and now serves as the Chief Human Resources Officer. He was promoted to Senior Vice
President, Human Resources in August 2012 and promoted to Vice President, Associate Relations and Benefits in 2010. Prior
to that, Mr. Schlonsky was promoted to Vice President, Associate Relations and Risk Management in 2005. Mr. Schlonsky
joined us in 1993 as Staff Counsel and was promoted to Director, Risk Management in 1998, and to Vice President, Risk
Management and Administrative Services in 2000.
Gurmeet Singh is responsible for technology development, technology platforms, technology infrastructure, and information
security. Dr. Singh joined us in 2021 as Executive Vice President, Chief Technology Officer. Prior to joining us, Dr. Singh
served at Al-Futtaim Group as President, Group Chief Digital Officer covering Digital, Technology and Data. Additionally, Dr.
Singh previously served as Executive Vice President, Chief Digital, Information, and Marketing Officer for 7-Eleven Inc. and
served in similar digital, technology and data roles at BCG, CapitalOne, Intuit Inc. and FedEx. Dr. Singh is also on the board of
directors of Focus Brands, LLC.
19
Part II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Our common shares are listed on the New York Stock Exchange (“NYSE”) under the symbol “BIG.”
The following table sets forth information regarding our repurchase of common shares during the fourth fiscal quarter of 2021:
(In thousands, except price per share data)
(a) Total
Number of
Shares
Purchased (1)(2)
4
825
1,239
2,068
(b) Average
Price Paid per
Share (1)(2)
$
$
48.30
43.13
44.41
43.91
(c) Total Number
of Shares
Purchased as Part
of Publicly
Announced Plans
or Programs
(d) Approximate
Dollar Value of
Shares that May
Yet Be Purchased
Under the Plans or
Programs
— $
825
1,239
2,064 $
—
214,419
159,425
159,425
Period
October 31, 2021 - November 27, 2021
November 28, 2021 - December 25, 2021
December 26, 2021 - January 29, 2022
Total
(1)
On December 1, 2021, our Board of Directors authorized the repurchase of up to $250.0 million of our common shares
(“2021 Repurchase Authorization”). During the fourth quarter of 2021, we purchased 2.1 million of our common
shares for $90.6 million under the 2021 Repurchase Authorization. The 2021 Repurchase Authorization has no
scheduled termination date.
(2)
In November 2021 and December 2021, in connection with the vesting of certain outstanding restricted stock units, we
acquired 4,072 and 290 of our common shares, respectively, which were withheld to satisfy minimum statutory
income tax withholdings.
At the close of trading on the NYSE on March 25, 2022, there were approximately 867 registered holders of record of our
common shares.
20
The following graph and table compares, for the five fiscal years ended January 29, 2022, the cumulative total shareholder
return for our common shares, the S&P 500 Index, and the S&P 500 Retailing Index. Measurement points are the last trading
day of each of our fiscal years ended February 3, 2018, February 2, 2019, February 1, 2020, January 30, 2021 and January 29,
2022. The graph and table assume that $100 was invested on January 28, 2017, in each of our common shares, the S&P 500
Index, and the S&P 500 Retailing Index and reinvestment of any dividends. The stock price performance on the following
graph and table is not necessarily indicative of future stock price performance.
Indexed Returns
Years Ended
Base Period
January
January
January
January
January
January
2017
2018
2019
2020
2021
2022
$
100.00 $
121.05 $
67.72 $
61.04 $
141.38 $
100.00
122.83
122.76
149.23
174.97
96.56
211.72
276.14
Company / Index
Big Lots, Inc.
S&P 500 Index
S&P 500 Retailing Index
$
100.00 $
141.30 $
152.92 $
184.44 $
260.77 $
Item 6. [Reserved]
21
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
The discussion and analysis presented below should be read in conjunction with the accompanying consolidated financial
statements and related notes. Please refer to “Item 1A. Risk Factors” of this Form 10-K for a discussion of forward-looking
statements and certain risk factors that may have a material adverse effect on our business, financial condition, results of
operations, and/or liquidity.
Our fiscal year ends on the Saturday nearest to January 31, which results in some fiscal years with 52 weeks and some with 53
weeks. Fiscal years 2021, 2020, and 2019 were comprised of 52 weeks. Fiscal year 2022 will also be comprised of 52 weeks.
Operating Results Summary
The following are the results from 2021 that we believe are key indicators of our financial condition and results of operations
when compared to 2020.
•
•
•
•
•
•
•
Net sales decreased $48.6 million, or 0.8%.
Comparable sales for stores open at least fifteen months, plus our e-commerce operations, decreased $152.2 million, or
2.5%.
Gross margin dollars decreased $100.4 million and gross margin rate decreased 130 basis points to 39.0% of net sales.
Selling and administrative expenses increased $49.1 million, which included $5.0 million of store asset impairment
charges. As a percentage of net sales, selling and administrative expenses increased 110 basis points to 32.8% of net
sales.
Operating profit decreased $616.7 million to $239.8 million.
Diluted earnings per share decreased 66.9% to $5.33 per share, compared to $16.11 per share in 2020.
In 2020 we recorded a pre-tax gain on sale of distribution centers of $463.1 million and consulting and other expenses
of $4.0 million related to the sale and leaseback of our four owned distribution centers. The absence of the gain on sale
of distribution centers and associated consulting and other expenses decreased our operating profit in 2021 by $459.1
million and decreased our diluted earnings per share by approximately $8.75 per share.
Our return on invested capital decreased to 14.9% from 48.4%.
Inventory of $1,237.8 million represented a $297.5 million increase, or 31.6%, from 2020.
•
•
• We acquired a total of 7.7 million of our outstanding common shares for $417.7 million under our share repurchase
authorizations in 2021 compared to 3.8 million of our outstanding common shares for $172.8 million under share
repurchase authorizations in 2020.
• We declared and paid four quarterly cash dividends in the amount of $0.30 per common share, for a total paid amount
of $41.7 million.
The following table compares components of our consolidated statements of operations as a percentage of net sales:
Net sales
Cost of sales (exclusive of depreciation expense shown separately
below)
Gross margin
Selling and administrative expenses
Depreciation expense
Gain on sale of distribution centers
Operating profit
Interest expense
Other income (expense)
Income before income taxes
Income tax expense
Net income
2021
2020
2019
100.0 %
100.0 %
100.0 %
61.0
39.0
32.8
2.3
0.0
3.9
(0.2)
0.0
3.8
0.9
59.7
40.3
31.7
2.2
(7.5)
13.8
(0.2)
(0.0)
13.6
3.5
60.3
39.7
34.3
2.5
(3.4)
6.3
(0.3)
(0.0)
6.0
1.4
2.9 %
10.1 %
4.6 %
22
See the discussion below under the caption “2021 Compared To 2020” for additional details regarding the specific components
of our operating results. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations” included in our Form 10-K for the year ended January 30, 2021 for a comparison of our operating results for 2020
to our operating results for 2019, which was filed with the SEC on March 30, 2021.
In 2021, we recognized non-cash store asset impairments of $5.0 million related to underperforming stores in our chain, which
included impairments of both operating lease right-of-use assets and property and equipment. The store asset impairment
charges decreased our operating profit by $5.0 million and decreased our diluted earnings per share by approximately $0.11 per
share. See Note 2 and Note 5 to the accompanying consolidated financial statements for additional information on the store
asset impairment charges.
In 2020, we recognized a gain on sale of distribution centers of $463.1 million related to the sale and leaseback of four
distribution centers. Additionally, our selling and administrative expenses include $4.0 million of consulting and other costs
associated with the sale and leaseback transactions. The combined gain on sale of distribution centers and associated consulting
and other expenses increased our operating profit by $459.1 million and increased our diluted earnings per share by
approximately $8.75 per share. See Note 10 to the accompanying consolidated financial statements for additional information
on the sale and leaseback transactions.
In 2019, our cost of sales included a $6.0 million charge for impairment of inventory in our greeting cards department, which
we chose to exit in the first quarter of 2019. Additionally, our selling and administrative expenses included $38.3 million of
costs associated with our transformational restructuring initiative, which we refer to as “Operation North Star,” announced in
the first quarter of 2019 and $7.3 million in estimated costs associated with employee wage and hour claims brought against us
in the state of California. We also recognized a gain on sale of distribution center of $178.5 million related to the sale of our
Rancho Cucamonga, CA distribution center which increased our 2019 operating profit by $178.5 million and increased our
diluted earnings per share by approximately $3.47 per share. See Note 10 to the accompanying consolidated financial
statements for additional information on this sale transaction.
Operating Strategy
In 2019, the Company completed a comprehensive review of its operating strategy. The outcome of the review was a multi-year
plan for a strategic transformation, which we refer to as “Operation North Star.” While the core objectives of Operation North
Star have remained the same, Operation North Star continues to evolve as our business progresses.
Operation North Star
Operation North Star has three primary objectives:
•
•
•
Drive profitable long-term growth;
Fund the journey; and
Create long-term shareholder value.
Drive profitable long-term growth
The “drive profitable long-term growth” objective of Operation North Star is focused on growing our net sales, which includes:
•
•
Growing our store count by:
◦
◦
◦
Adding at least 50 net new stores in 2022;
Accelerating annual net new store growth beyond 2022 to 80 or more per year; and
Reducing store closures through our store intervention program for underperforming stores.
Increasing our sales productivity by:
◦
◦
Optimizing our assortments through category discipline and space planning;
Introducing a new Furniture associate program, which we refer to as NextGen Furniture Sales, to accelerate
Furniture net sales growth;
Growing Furniture net sales with modern Broyhill® brand assortments;
◦
◦ Winning with year-round Seasonal assortments;
Expanding our rapidly-growing apparel offering;
◦
Growing our own brands, especially our Broyhill® and Real Living® brands; and
◦
Driving our merchandising innovation pipeline by responsibly investing in store presentation initiatives,
◦
including “The Lot,” the “Queue Line,” and Project Refresh (described below).
•
Accelerating our e-commerce sales by:
◦
◦
◦
Removing friction points to provide an easier shopping experience;
Increasing website personalization with product recommendations;
Accelerating supplier direct fulfillment and extending our assortment;
23
◦
◦
Growing site traffic through targeted marketing and brand growth; and
Improving shipping options to include nationwide same-day and two-day delivery options.
•
Activating our brand and growing our customer base by:
◦
◦
◦
◦
Creating a community of bargain hunters and treasure seekers;
Driving incremental visits from new and existing customers;
Increasing brand awareness, brand consideration, and customers; and
Driving personalized marketing based on our customer data platform.
Fund the journey
The “fund the journey” objective of Operation North Star is focused on reducing costs so we can invest these savings generated
by the cost reduction initiatives in the growth areas of our business. Our initiatives include:
•
•
•
•
•
Expanding our gross margin rate;
Increasing store efficiency and productivity;
Increasing organizational efficiency;
Encouraging a culture of frugality; and
Continuously analyzing our purchasing habits and vendor agreements to ensure we are maximizing our buying power
and making cost-effective decisions.
Create long-term shareholder value
The “create long-term shareholder value” objective represents the culmination of our “drive profitable long-term growth” and
“fund the journey” objectives. If we effectively execute the first two objectives of Operation North Star, we believe that we will
deliver value to our shareholders through earnings growth over time. We continue to optimize our capital allocation to support
Operation North Star initiatives while returning capital to our shareholders though share repurchases and dividends, when
appropriate.
Enablers
In recognition of the importance of having the appropriate technology and processes in place to achieve our “drive profitable
long-term growth” and “fund the journey” objectives, we have established several enabler work streams with the following
objectives:
•
•
•
•
Improve our customer experience;
Improve and scale our supply chain capabilities;
Upgrade and enhance our data and technology foundation; and
Elevate our talent acquisition and performance management.
Operation North Star Progress
In 2021, we successfully completed the following under our Operation North Star strategy:
•
•
•
•
•
•
•
•
•
•
•
•
Grew our Broyhill® brand offerings to account for over $700 million of net sales in 2021;
Increased our net store count by 23 stores, which is our third consecutive year of net store growth;
Expanded our presentation initiatives, The Lot and Queue Line, to nearly all stores in our chain;
Implemented a space planning tool, which improved our merchandising analytics and insights;
Launched Project Refresh, a multi-year store investment to update the shopping experience and appearance of our
older stores in a cost efficient manner, with approximately 50 stores completed in 2021;
Opened two small-format forward distribution centers to expand our supply chain capabilities;
Launched a new transportation management system for outbound shipments;
Achieved an 82% favorable associate engagement rate, which exceeds our retail industry benchmark;
Expanded our accepted payment methods to include Apple Pay, Google Pay, PayPal, and Pay in 4;
Expanded our e-commerce distribution network by implementing ship-from-store capabilities in 18 additional stores;
Invested in e-commerce analytics tools, which improved our testing capabilities and customer insights; and
Returned approximately $460 million to shareholders in the form of share repurchases and dividends.
Next Steps
In 2022, we plan to implement the following initiatives to achieve our Operation North Star goals:
•
•
•
•
Grow our store count by at least 50 net new stores;
Execute Project Refresh remodels in approximately 200 additional stores;
Implement our NextGen Furniture Sales model in approximately 500 additional stores, which is intended to enhance
staffing and incentive compensation to grow Furniture sales;
Implement a new “Lots under $5” presentation initiative, which will provide incremental assortment at a highly-
attractive price point;
24
•
•
•
•
•
Expand shrink reduction programs, including cart locking systems and apparel tagging;
Open two additional forward distribution centers and assess the need for additional forward distribution centers;
Launch a multi-year project to overhaul our order management system to enable future growth opportunities;
Implement buy online, ship to store capabilities; and
Enhance e-commerce supply chain with last mile carrier capabilities and an improved ship from store network.
Merchandising
We focus our merchandising strategy on (1) the bargain hunt, by seeking to deliver unmatched value in all of our merchandise
categories; (2) the treasure hunt, by seeking to surprise and delight our customers with our unique product assortment; and (3)
convenience, by seeking to offer a reliable assortment of simple to shop essentials. In 2021, we introduced the concept of “Big
Buys” to our merchandising strategy. Big Buys include closeouts and other one-time product offerings that fit into the bargain
hunt facet of our merchandising strategy.
One of the focuses of Operation North Star is driving growth in our own brands, particularly the Broyhill® brand, an iconic
brand that we acquired in 2018. We launched the Broyhill® brand of product offerings in late 2019 with initial product offerings
in our Furniture, Seasonal, Soft Home, and Hard Home merchandise categories. We expanded the Broyhill® line in 2021 to also
include housewares and kitchen textiles. Available both in-store and online, we believe the Broyhill® assortment strengthens
our Home assortment with a high-quality product offering at a value-based price that customers find attractive. Our Broyhill®-
related net sales exceeded $700 million in 2021 compared to over $400 million in 2020. In 2022, we intend to focus on
improving the availability of Broyhill® merchandise, which was negatively impacted by global supply chain issues in 2021 that,
in turn, negatively impacted the growth of our Broyhill®-related net sales.
We believe our merchandising strategies for Furniture, Seasonal, and Soft Home position us to surprise and delight our
customers with our home product offerings:
•
•
•
Our Furniture category primarily focuses on being a destination for our core customer’s home furnishing needs, such
as upholstery, mattresses, case goods, and ready-to-assemble. In Furniture, we believe our competitive advantage is
attributable to our sourcing relationships, our in-store availability, our delivery options, and everyday value offerings.
A significant majority of our offerings in this category consist of replenishable products sold under our own brands or
sourced from recognized brand-name manufacturers. Within our own brands portfolio, the Broyhill® branded product
offerings feature elevated quality and value, which continues to attract new furniture customers as well as provide
existing customers with an incentive to step up to the higher-end offering. Our long-standing relationships with brand-
name manufacturers, most notably in our mattresses and upholstery departments, allow us to work directly with the
manufacturers to create product offerings exclusively for us, which enables us to provide a high-quality product at a
competitive price. Additionally, we believe our “buy today, take home today” practice of carrying in-stock inventory
of our core furniture offerings, which allows our customer to take home their purchase at the end of their shopping
experience, positively differentiates us from our competition. As an omnichannel retailer, we also encourage our
customer to shop and buy our products online anytime and anywhere, and we invite customers into our stores to touch
and feel the quality and comfort of our products. Additionally, customers can have furniture delivered to their door
same-day through PICKUP®, our national delivery partner. We believe that offering a focused assortment, which is
displayed in furniture vignettes, provides customers a solution for decorating their home when combined with our
home décor offerings. Supplementing our merchandising and presentation strategies, we provide multiple third-party
financing options for our customers, including options for those who may be more challenged for approval in
traditional credit channels. Our financing partners are solely responsible for the credit approval decisions and carry the
financial risk.
Our Seasonal category strengthens our home offerings with our patio furniture, gazebos, Christmas trim, and other
holiday departments. We believe we have a competitive advantage in this category by offering trend-right products
with a strong value proposition in our own brands. Our stores focus on displaying assembled seasonal product to
showcase our quality and value, with boxed stock located nearby, so it is easy for our customers to purchase and take
home. Much of this merchandise is sourced on an import basis, which allows us to maintain our competitive pricing.
Additionally, our Seasonal category offers surprise and delight through a mix of departments and products that meet
our customer’s outdoor experience and holiday decorating desires. We continually work with our vendors to expand
the product assortment in our Seasonal category to respond to our customers’ evolving wants and needs.
Our Soft Home category complements our Furniture and Seasonal categories in making our stores a destination for a
broader range of home needs. Over the past several years, we have enhanced our assortment in Soft Home by
allocating more selling space to the category to support a wider range of replenishable, fashion-based products. We
25
have also grown our assortments of closeouts in Soft Home to bring exceptional value and unique finds to our
customers. We believe that we have a competitive advantage in Soft Home as a result of our trend-right, focused
assortment with improved quality and perceived value, and our ability to furnish our customers' homes with décor that
complements an in-store furniture purchase. We have worked to develop a “solutions” approach to complete a room
through our cross-merchandising efforts, particularly color palette coordination, when combining our Soft Home
offerings with our Furniture and Seasonal categories. We believe that this approach helps our customers envision how
the product can work in their homes and enhances our brand image.
We believe the Food, Consumables, Hard Home, and Apparel, Electronics, & Other are categories where we offer convenience
and exceptional value:
•
Our Food and Consumables categories focus primarily on providing everyday essentials with a consistent and
convenient assortment and exceptional value through Big Buys, closeouts, and opening price point offerings. We
believe we possess a competitive advantage in the Food and Consumables categories based on our sourcing
capabilities for closeout merchandise. Manufacturers and vendors have closeout merchandise for a variety of different
reasons, including other retailers canceling orders or going out of business, production overruns, or marketing or
packaging changes. We believe our vendor relationships, along with our size and financial strength, afford us the
opportunity to consistently source and deliver Big Buys. To supplement our closeout business, we have focused on
improving and expanding our brand name, “never out” product assortment to offer more consistency in those
convenience areas where our customers desire consistently available everyday product offerings, such as over-the-
counter medications. We believe that we have added top brands to our “never out” programs in Consumables and that
our assortment and value proposition will continue to differentiate us in this highly competitive industry. In 2020, we
reallocated space from the Food category to the Consumables category through our “Pantry Optimization” initiative,
which right-sized our food assortment, including reducing our refrigerated foods, and allowed us to expand the “never
out” Consumables assortment that our customer considers an every day essential. In 2021, we focused on providing
surprise and delight by expanding our holiday Food and Consumables assortments, as well as launching a one dollar
opening price point program, which we promoted as “Onederland.”
• We believe that our Hard Home and Apparel, Electronics, & Other categories serve as convenient adjacencies to our
other merchandise categories. Over the past several years, with the exception of apparel, we have intentionally
narrowed our assortments in these categories and reallocated space from these categories to our home products
categories. These categories focus on value, and savings in comparison to competitors, in areas such as food prep,
table top, home maintenance, small appliances, and electronics. In 2021, following a successful test and expansion in
2020, we rolled out apparel to the full chain and tested a successful presentation concept at the front of the store. In
2022, we continue to test and learn in our apparel presentation with a focus on sourcing closeouts and delivering Big
Buys.
Our merchandising management team is aligned with our merchandise categories, and their primary goal is to increase our total
company comparable sales (“comp” or “comps”), which includes stores open at least fifteen months, plus our e-commerce
operations. Our review of the performance of the members of our merchandise management team focuses on comps by
merchandise category, as we believe it is the key metric that will drive our long-term net sales. By focusing on strengthening
our home product offerings, and managing our convenience categories, we believe our merchandise management team can
effectively address the changing shopping behaviors of our customers and implement more focused offerings within each
merchandise category, which we believe will lead to long-term comp growth.
Marketing
See the “Advertising and Marketing” discussion in Item 1. Business for a discussion on our Marketing strategy.
Shopping Experience
One of the core objectives of Operation North Star is to drive our merchandising innovation pipeline by responsibly investing in
store presentation initiatives that create an easy shopping experience for our customers.
We have implemented a presentation solution called “The Lot” in nearly all of our stores over the past two years. We designed
The Lot to display items from various merchandise categories placed in vignettes to promote life’s occasions, such as Fall
tailgating. The Lot offers a treasure hunt by surprising and delighting our customers with the breadth and value of products that
we offer in one convenient experience. The continually rotating product assortment offered by The Lot provides us with a
unique testing ground for new products at varying price points that we have not historically offered.
26
We have also implemented a streamlined checkout experience in nearly all of our stores called the “Queue Line,” which
features a reconfigured checkout design. The Queue Line both enhances the customer experience and builds a bigger basket as
our customers walk by new and expanded convenience offerings as they check out. The Queue Line’s smaller overall footprint
compared to our previous checkout configuration also creates additional selling space for our Furniture merchandise category.
In 2022, we will introduce a supplement to The Lot and Queue Line called “Lots Under $5,” which will sit in the front of our
stores and is comprised of items priced less than $5 each that we expect will appeal to our bargain hunt and treasure hunt
shoppers.
In 2021, we launched a multi-year project called Project Refresh, which is intended to make cosmetic improvements to older
stores in our fleet and align branding across our stores. The investment for a Project Refresh remodel is expected to be less than
$150,000 per store and includes updated exterior signage, vestibules, flooring, bathrooms, interior wall graphics, and paint. We
completed approximately 50 Project Refresh remodels in 2021 in a successful test and we expect to remodel an additional 200
stores under Project Refresh in 2022. We expect to complete Project Refresh remodels in approximately 800 of our stores over
the next several years, including the 50 completed in 2021 and the 200 planned in 2022.
In addition to our efforts to improve our in-store shopping experience, Operation North Star focuses on improving our e-
commerce shopping experience and growing e-commerce net sales by removing barriers, creating a fun and easy experience,
and expanding the items available for purchase online. Over the last few years, we have increased our “extended aisle”
assortments on our e-commerce platform, which offer additional fabric and color options on products in our Furniture and
Seasonal categories, including items only available online. In 2019, we launched our buy online, pick up in store (“BOPIS”)
program nationwide, which has nearly doubled our merchandise offerings available online. Following the launch of our BOPIS
program, we launched curbside pickup to supplement our BOPIS service, reduced shipping times by expanding our distribution
network to include ship-from-store capabilities at 65 stores around the country, and introduced same-day delivery of all items
available in our stores through our partnerships with Instacart® and PICKUP®. In 2021, we launched new payment types on our
website including Apple Pay, Google Pay, PayPal, and “Pay in 4”. In 2022, we plan to further enhance our e-commerce
shopping experience by removing friction at checkout, enhancing personalization with product recommendations, expanding
our online product assortment, accelerating our use of supplier direct fulfillment, and implementing buy online, ship to store
fulfillment capabilities.
Lastly, we continue to offer a private label credit card and our Easy Leasing lease-to-own solutions for customer financing, as
well as protection plans on merchandise across stores and online. Our private label credit card provides access to revolving
credit, through a third party, for use on both larger ticket items and daily purchases. Our Easy Leasing lease-to-own program
provides a single use opportunity for access to third-party financing. Our protection plan program provides a method for
obtaining multi-year warranty coverage for furniture, seasonal, mattresses, small appliances, large area rugs, and electronics
purchased in-store or online.
Real Estate
Real estate development is a critical component of our Operation North Star strategy, which includes our objective of growing
our store count. The following table compares the number of our stores in operation at the end of each of the last five fiscal
years, and the associated square footage:
(In thousands, except store counts and average store size)
2021
2020
2019
2018
2017
Stores open at end of the fiscal year
Total gross square footage
Total selling square footage
Average store size - selling square feet
1,431
47,120
32,736
22,876
1,408
46,008
32,016
22,739
1,404
45,453
31,705
22,582
1,401
44,500
31,217
22,282
1,416
44,638
31,399
22,174
In 2021, we grew our net store count by 23 stores, which marks our third consecutive year of net store growth. Additionally,
the average size of stores that we have opened or relocated over the past several years exceeds our existing average. As a result,
our overall average selling square footage has increased. In 2022, we expect to open at least 50 net new stores. Looking beyond
2022, we anticipate accelerating our net new store growth to 80 or more stores per year. Our real estate team has identified
more than 500 location opportunities in markets across the U.S. where we believe we can successfully open stores. Over the
next several years, we plan to actively pursue those locations with the goal of significantly increasing our net sales and
operating profit. Our new store selection process includes a thorough review of proforma estimated results prior to entering a
27
lease to help ensure the economic quality of our store openings, as well as a post-opening review that we use to improve our
proforma development.
Part of our plan to grow net store count includes reducing our store closures. To reduce store closures, we have organized and
implemented a store intervention program over the last two years that assesses underperforming stores. The store intervention
program reviews various store performance metrics to identify underperforming stores for review, develops action plans for
improvement, and then works with various business leaders and teams to implement the action plans. Action plans most often
include changes in merchandising, marketing, staffing, and training, but can also include working with landlords and/or local
officials to renegotiate rents or improve conditions surrounding the store, such as ingress/egress issues that have materialized
since the store opened.
As discussed in “Item 2. Properties,” of this Form 10-K, we have 184 store leases that will expire in 2022. The majority of our
2022 closings will result from relocation of stores to improved locations within the same local market, with the balance of
closings resulting from a lack of renewal options or from our belief that a location’s sales and operating profit volume are not
strong enough to warrant additional investment in the location. As part of our evaluation of potential store closings, we consider
our ability to transfer sales from a closing store to other nearby locations and generate a better overall financial result for the
geographic market.
28
2021 COMPARED TO 2020
Net Sales
Net sales by merchandise category (in dollars and as a percentage of total net sales), net sales change (in dollars and
percentage), and comps in 2021 compared to 2020 were as follows:
(In thousands)
Furniture
Seasonal
Soft Home
Food
Hard Home
Consumables
Apparel, Electronics, & Other
2021
2020
Change
Comps
$ 1,684,393
27.4 % $ 1,736,932
28.0 % $
(52,539)
(3.0) %
(5.2) %
954,165
822,559
746,415
675,041
665,732
602,298
15.5
13.4
12.1
11.0
10.8
9.8
815,378
887,743
823,420
700,186
737,630
497,897
13.2
14.3
13.3
11.3
11.9
8.0
138,787
17.0
(65,184)
(7.3)
(77,005)
(9.4)
(25,145)
(3.6)
(71,898)
(9.7)
104,401
21.0
15.3
(9.0)
(10.7)
(4.9)
(10.8)
19.0
Net sales
$ 6,150,603
100.0 % $ 6,199,186
100.0 % $
(48,583)
(0.8) %
(2.5) %
We periodically assess and make minor adjustments to our product hierarchy, which can impact the roll-up of our merchandise
categories. In 2021, we realigned our merchandise categories and renamed our Electronics, Toys, & Accessories merchandise
category as Apparel, Electronics, & Other. See the reclassifications discussion in Note 1 to the accompanying consolidated
financial statements for additional information. In order to provide comparative results, we have reclassified our net sales into
the revised merchandise category alignment for all periods presented.
Net sales decreased $48.6 million, or 0.8%, to $6,150.6 million in 2021, compared to $6,199.2 million in 2020. The decrease in
net sales was primarily driven by an overall comp decrease of 2.5%, which decreased net sales by $152.2 million. This decrease
was partially offset by a $103.6 million increase in net sales from our non-comparable stores, driven by the net increase of 23
stores in 2021 and increased net sales in our new and relocated stores compared to our closed stores. Our comps and net sales
decreased in 2021 in comparison to 2020 primarily due to a decreased impact of nesting trends and government stimulus funds
on consumer behavior, and the negative impact of global and domestic supply chain constraints in 2021.
Net sales and comps in all of our merchandise categories were negatively impacted by global and domestic supply chain issues
in 2021. These supply chain challenges impacted both imported products and domestically-sourced products, as our domestic
vendors have faced similar supply chain challenges in sourcing raw materials. Domestically, our supply chain has also been
impacted by labor challenges in certain of our distribution centers, with the majority of the impact in the northeast U.S. In
response to labor challenges in our distribution centers, we increased wages and implemented attendance and retention
programs to improve overall productivity. In the third quarter of 2021, we opened two small-format forward distribution centers
(“FDCs”), which are designed to process bulky and full-pallet shipments, which have begun to relieve pressure from our
regional distribution centers most impacted by labor challenges.
Our Seasonal category experienced increased comps and net sales in 2021 due to an increase in demand for our Seasonal
category which we believe was initially driven by government stimulus and unemployment funds in the first quarter of 2021,
together with the continuation of similar nesting trends to those we experienced in 2020 as a result of customers investing more
time and discretionary funds in their home. Nesting trends in 2021 were skewed toward patio furniture, outdoor products, and
seasonal decor, which drove increased net sales and comps in the lawn & garden and summer departments of our Seasonal
merchandise category. Nesting trends abated in the second quarter of 2021 as COVID-19 vaccines became widely available and
more consumers began traveling or spending more time outside their home compared to 2020. Despite the decrease in overall
nesting behaviors, our Seasonal category continued to benefit from high demand in the third quarter of 2021 for outdoor
furniture and seasonal decor late into the summer season and fall, which we were able to meet with higher inventory levels
compared to 2020. The positive Seasonal trends continued into the fourth quarter as we experienced an increase in net sales and
comps in our Christmas department, which was primarily driven by increased inventory levels in our Christmas products in
2021 compared to 2020. During the early phases of the COVID-19 pandemic in 2020, we intentionally reduced our Christmas
inventory purchases due to demand uncertainty, which led to lower Christmas inventory levels in the fourth quarter of 2020.
Despite the increased performance of our Seasonal category in 2021 compared to 2020, the Seasonal category was challenged
by global and domestic supply chain issues throughout 2021 (discussed above), which resulted in delayed receipts of
seasonally-sensitive merchandise.
Our Apparel, Electronics, & Other category also experienced increased comps and net sales in 2021 driven by our strategic
initiatives, particularly The Lot and Queue Line, the product assortments of which fall into the Apparel, Electronics, & Other
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category. We believe our product assortment in the Apparel, Electronics, & Other category is aligned with customer demand
and that this category is a significant growth opportunity for us.
Our Furniture, Soft Home, and Hard Home categories experienced decreased net sales and comps in 2021 compared to 2020.
While these categories benefited from government stimulus funds released in the first quarter of 2021, decreased nesting trends
and supply chain impacts caused the decline in net sales and comps in the balance of 2021 compared to 2020. In the second half
of 2021, our Furniture, Soft Home, and Hard Home categories were significantly impacted by out-of-stocks and low inventory
levels in certain historically popular items due to global and domestic supply chain constraints. In particular, temporary factory
shutdowns were a significant contributor to out-of-stocks that drove the decrease in our Furniture net sales and comps in 2021
compared to 2020. While our customers continue to respond well to our Broyhill® branded products and we grew our net sales
and comps in the Broyhill® brand, these higher-price point items were impacted by supply chain challenges and low inventory
levels.
Our Food and Consumables categories experienced decreases in net sales and comps in 2021 compared to 2020, due to a
decrease in demand for essential products (which we define as food, consumables, health products, and pet supplies) and lower
availability of name-brand product and closeout merchandise. Demand for essential products surged in the first quarter of 2020
as customers stocked up on these products at the onset of the COVID-19 pandemic. Our customers did not stock up on these
products to the same extent in 2021. Due to the aforementioned supply chain challenges, the availability of name-brand
merchandise that drives our Food and Consumables net sales and comps was limited and there were fewer closeout
opportunities. In addition, we reallocated linear square footage from our Food category to our Consumables category in the
third quarter of 2020 as part of our Pantry Optimization initiative. We continue to refine and adjust our Food and Consumables
assortments to provide convenience and consistency to our customers.
Gross Margin
Gross margin dollars decreased $100.4 million, or 4.0%, to $2,397.0 million in 2021, compared to $2,497.4 million in
2020. The decrease in gross margin dollars was primarily due to a decrease in gross margin rate, which decreased gross margin
dollars by $80.8 million, and a decrease in net sales, which decreased gross margin dollars by $19.6 million. Gross margin as a
percentage of net sales decreased approximately 130 basis points to 39.0% in 2021 compared to 40.3% in 2020. The gross
margin rate decrease was primarily due to higher inbound freight costs, a higher shrink rate, and a lower initial markup
compared to 2020. The decrease was partially offset by lower markdowns. Freight costs increased primarily due to higher ocean
carriage rates, domestic transportation rates, and fuel costs, and detention and demurrage charges resulting from delayed receipt
of inventory related to supply chain constraints. The shrink rate increased as a result of an increase in theft in our stores and the
decreased sales compared to 2020. The lower initial markup compared to 2020 was due primarily to the aforementioned
increase in freight costs. The lower markdowns was driven by less promotional activity in 2021 compared to 2020.
Selling and Administrative Expenses
Selling and administrative expenses were $2,014.7 million in 2021, compared to $1,965.6 million in 2020. The increase of
$49.1 million, or 2.5%, was primarily due to increases in distribution and transportation costs of $59.4 million, share-based
compensation expense of $13.4 million, store occupancy costs of $9.4 million, and health benefit costs of $9.3 million, as well
as store asset impairment charges of $5.0 million, partially offset by decreases in bonus expense of $26.2 million, store-related
payroll of $13.7 million, and advertising expense of $5.1 million, as well as the absence of $4.0 million of sale and leaseback
related expenses and $3.7 million of proxy contest-related costs. The increase in distribution and transportation costs was driven
by higher transportation costs, higher labor costs in our regional distribution centers, higher inbound and outbound volume as
we worked to increase our inventory levels from the end of 2020 to the end of 2021, rent on our leased distribution centers, four
of which were sold and leased back in the second quarter of 2020, the addition of two FDCs, and the addition of “pop-up”
bypass distribution centers in the fourth quarter of 2021, partially offset by the absence of a $2 per hour wage increase that was
implemented for most of our non-exempt workforce beginning in March 2020 through June 2020 in the early stages of the
COVID-19 pandemic. The increase in share-based compensation expense was primarily due to a higher grant date fair value on
the 2019 performance share units for which the grant date was established in 2021 compared to the 2018 performance share
units for which the grant date was established in 2020 and performance share units granted in 2020. Our store occupancy costs
increased primarily due to an increased store count in 2021, new stores opened in the last twelve months, which have higher
rents than the stores closed, and normal rent increases resulting from lease renewals. Health benefit expense increased driven by
an increase in health benefit claims in 2021 compared to the 2020, as many medical providers postponed elective care
procedures in 2020 during the height of the COVID-19 pandemic. The store asset impairment charges are comprised of
operating lease right-of-use asset and property and equipment impairments for eight underperforming stores as a result of our
store impairment review. The decrease in accrued bonus expense was driven by decreased performance in 2021 relative to our
bonus targets as compared to our performance in 2020 relative to our bonus targets, as well as the absence of a one-time
discretionary bonus granted in the second quarter of 2020 to recognize our non-exempt associates in our stores and distribution
30
centers during the COVID-19 pandemic. The decrease in store-related payroll was primarily due to the absence of the
aforementioned $2 per hour wage increase. Advertising expense decreased due to decreased investments in video media as we
have taken a more targeted approach to our advertising spend. The sale and leaseback transaction-related expenses, which
included consulting costs, were incurred in completing the sale and leaseback of our distribution centers in the second quarter of
2020. The proxy contest-related costs were comprised of legal, public relations, and advisory fees, and settlement costs incurred
to resolve a proxy contest in the first quarter of 2020.
As a percentage of net sales, selling and administrative expenses increased by 110 basis points to 32.8% in 2021 compared to
31.7% in 2020.
Depreciation Expense
Depreciation expense increased $4.3 million to $142.6 million in 2021 compared to $138.3 million in 2020. The increase was
primarily driven by investments in our strategic initiatives, new stores, and supply chain improvements, partially offset by a
decrease resulting from the sale of four distribution centers in the second quarter of 2020.
Depreciation expense as a percentage of net sales increased by 10 basis points compared to 2020.
Gain on Sale of Distribution Centers
Gain on sale of distribution centers decreased $463.1 million to $0 in 2021. The gain on sale of distribution centers in 2020 was
attributable to the sale and leaseback of our distribution centers in Durant, OK; Tremont, PA; Montgomery, AL; and Columbus,
OH during the second quarter of 2020.
Operating Profit
Operating profit was $239.8 million in 2021 compared to $856.5 million in 2020. The decrease in operating profit was
primarily driven by the items discussed in the “Net Sales,” “Gross Margin,” “Selling and Administrative Expenses,”
“Depreciation Expense,” and “Gain on Sale of Distribution Centers” sections above. In summary, the decrease in operating
profit was driven by the absence of a gain on the sale of distribution centers, a decrease in net sales and gross margin rate, and
increases in selling and administrative expenses and depreciation expense.
Interest Expense
Interest expense decreased $1.7 million, to $9.3 million in 2021 compared to $11.0 million in 2020. The decrease in interest
expense was driven by lower total average borrowings (including finance leases and the sale and leaseback financing liability).
We had total average borrowings of $148.5 million in 2021 compared to total average borrowings of $257.6 million in 2020.
The decrease in total average borrowings was driven by our repayment of all outstanding debt under our revolving credit
facility following the sale and leaseback transactions completed in the second quarter of 2020, and our prepayment of our $70
million term note agreement (the “2019 Term Note”) in the second quarter of 2021, partially offset by the establishment of the
financing liability in connection with the sale and leaseback transactions in the second quarter of 2020. In 2021, we experienced
a higher average interest rate due to the higher rate on the sale and leaseback financing liability.
Other Income (Expense)
Other income (expense) was $1.3 million in 2021, compared to $(0.9) million in 2020. The change was primarily driven by
gains on our diesel fuel derivatives in 2021 compared to losses on diesel fuel derivatives in 2020. The gains on diesel fuel
derivatives in 2021 were partially offset by a $0.5 million loss on debt extinguishment recognized in 2021 related to the
prepayment of the 2019 Term Note.
Income Taxes
Our effective income tax rate in 2021 and 2020 was 23.3% and 25.5%, respectively. The decrease in the effective income tax
rate was primarily attributable to the net tax benefit associated with settlement of share-based payment awards during 2021,
partially offset by an increase in nondeductible executive compensation compared to 2020.
Known Trends and 2022 Guidance
We continue to face significant challenges as the global supply chain works to recover from the factory and port shutdowns in
2021 and as domestic labor shortages persist. We are facing a highly competitive domestic labor market, which we expect to
result in increased payroll expenses for our stores and distribution centers in 2022. Additionally, in late 2021 and early 2022,
the U.S. economy experienced its highest inflationary period in decades, which has adversely impacted costs in our business
and adversely impacted the buying power of our customers. However, the U.S. has started to resume more normal day-to-day
life as COVID-19 cases have subsided, which we expect will result in improved traffic in our stores. We have incorporated the
expected impact of these trends into our guidance below.
31
At March 3, 2022, excluding consideration of potential share repurchase activity, we expected the following in the first quarter
of 2022 as compared to the first quarter of 2021:
•
•
•
•
Comparable sales decrease in the low double digits;
Gross margin rate decrease of approximately 50 bps;
Selling and administrative expenses slightly above last year; and
Diluted earnings per share in the range of $1.10 to $1.20.
Capital Resources and Liquidity
On September 22, 2021, we entered into the 2021 Credit Agreement, which provides for a $600 million five-year unsecured
credit facility. The 2021 Credit Agreement expires on September 22, 2026. The 2021 Credit Agreement replaced the 2018
Credit Agreement, a $700 million five-year unsecured credit facility which we entered into on August 31, 2018 and was
scheduled to expire on August 31, 2023, but was terminated concurrent with our entry into the 2021 Credit Agreement. The
2021 Credit Agreement includes a $50 million swing loan sublimit, a $75 million letter of credit sublimit, a $75 million
sublimit for loans to foreign borrowers, and a $200 million optional currency sublimit. The 2021 Credit Agreement also
contains an environmental, social and governance (“ESG”) provision, which may provide favorable pricing and fee adjustments
if we meet ESG performance criteria to be established by a future amendment to the 2021 Credit Agreement. Under the 2021
Credit Agreement, we have the option to establish incremental term loans and/or increases in the revolving credit limits in an
aggregate amount of up to $300 million, subject to the lenders agreeing to increase their commitments. Additionally, the 2021
Credit Agreement includes two options to extend the maturity date of the 2021 Credit Agreement by one year each, subject to
each lender agreeing to extend the maturity date of its respective loans. The interest rates, pricing and fees under the 2021
Credit Agreement fluctuate based on our debt rating or leverage ratio, whichever results in more favorable pricing to us. The
2021 Credit Agreement allows us to select our interest rate for each borrowing from multiple interest rate options. The interest
rate options are generally derived from the prime rate or LIBOR for loans denominated in U.S. dollars or the Euro Short Term
Rate (€STR) for loans denominated in Euros. The 2021 Credit Agreement updated the LIBOR fallback language to implement
fallback provisions, pursuant to which the interest rate on the loans will transition to an alternative rate upon the occurrence of
certain LIBOR cessation events. Loans made under the 2021 Credit Agreement may be prepaid without penalty. The 2021
Credit Agreement contains financial and other covenants, including, but not limited to, limitations on indebtedness, liens and
investments, as well as the maintenance of two financial ratios – a leverage ratio and a fixed charge coverage ratio. The
covenants of the 2021 Credit Agreement do not restrict our ability to pay dividends. Additionally, we are subject to cross-
default provisions associated with any default on indebtedness that is greater than $50 million, including with respect to our
synthetic lease for our distribution center in Apple Valley, CA, which was also amended concurrent with our entry into the
2021 Credit Agreement to conform to the covenants of the 2021 Credit Agreement. A violation of any of the covenants could
result in a default under the 2021 Credit Agreement that would permit the lenders to restrict our ability to further access the
2021 Credit Agreement for loans and letters of credit and require the immediate repayment of any outstanding loans under the
2021 Credit Agreement. At January 29, 2022 we were in compliance with the covenants of the 2021 Credit Agreement. At
January 29, 2022, we had $3.5 million of borrowings outstanding under the 2021 Credit Agreement, and the borrowings
available under the 2021 Credit Agreement were $594.1 million, after taking into account the reduction in availability resulting
from outstanding letters of credit totaling $2.4 million.
On August 7, 2019, we entered into the 2019 Term Note, a $70 million term note agreement, which was secured by the
equipment at our Apple Valley, CA distribution center and carried a fixed interest rate of 3.3%. In light of our strong liquidity
and market conditions at the time, we prepaid the remaining $44.3 million principal balance under the 2019 Term Note in the
second quarter of 2021. In connection with the prepayment, we incurred a $0.4 million prepayment fee and recognized a $0.5
million loss on debt extinguishment in the second quarter of 2021.
The primary source of our liquidity is cash flows from operations and borrowings under our credit facility, as necessary. Our
net income and, consequently, our cash provided by operations are impacted by net sales volume, seasonal sales patterns, and
operating profit margins. Our cash provided by operations typically peaks in the fourth quarter of each fiscal year due to net
sales generated during the holiday selling season. Generally, our working capital requirements peak late in our third fiscal
quarter or early in our fourth fiscal quarter as we build our inventory levels prior to the holiday selling season. We have
historically funded those requirements with cash provided by operations and borrowings under our credit facility. We expect to
periodically borrow under the 2021 Credit Agreement during 2022 to fund our cash requirements. Cash requirements include
among other things, capital expenditures, working capital needs, interest payments, and other contractual commitments.
At January 29, 2022 our material cash requirements, which are comprised of written purchase orders, cancellable and
noncancellable contractual commitments, and other obligations, were $1,683.7 million for the upcoming fiscal year and
$4,654.7 million in total. Excluding operating lease and finance lease obligations disclosed in the Note 5 to the accompanying
consolidated financial statements, our material cash requirements at January 29, 2022 were $1,359.3 million for the upcoming
fiscal year and $2,408.5 million in total. The material cash requirements disclosed above include merchandise purchase orders
32
of $769.0 million. The cancellable and noncancellable contractual commitments include purchase commitments related to
distribution and transportation, information technology, advertising, energy procurement, and store security, supply, and
maintenance commitments. At January 29, 2022, our noncancellable commitments were immaterial.
In August 2020, our Board of Directors authorized the repurchase of up to $500 million of our common shares (“2020
Repurchase Authorization”). The 2020 Repurchase Authorization was exhausted in the third quarter of 2021. During 2021, we
purchased 5.6 million of our common shares for $327.2 million under the 2020 Repurchase Authorization, at an average price
of $58.48.
In December 2021, our Board of Directors authorized the 2021 Repurchase Authorization, which provides for the repurchase of
$250 million of our common shares. Pursuant to the 2021 Repurchase Authorization, we are authorized to repurchase shares in
the open market and/or in privately negotiated transactions at our discretion, subject to market conditions and other factors. The
2021 Repurchase Authorization has no scheduled termination date. During 2021, we purchased 2.1 million of our common
shares for $90.6 million under the 2021 Repurchase Authorization, at an average price of $43.90.
Common shares acquired through share repurchase authorizations are available to meet obligations under our equity
compensation plans and for general corporate purposes.
In 2021, we declared and paid four quarterly cash dividends of $0.30 per common share for a total paid amount of $41.7
million. While the per-share cash dividends declared and paid in 2021 were consistent with the per-share cash dividends
declared and paid in 2020, dividends declared decreased $6.5 million and dividends paid decreased $5.3 million to $41.5
million and $41.7 million, respectively, in 2021. The decrease in both was driven by a lower number of common shares
outstanding as a result of our share repurchases.
On March 1, 2022, our Board declared a quarterly cash dividend of $0.30 per common share payable on April 1, 2022 to
shareholders of record as of the close of business on March 18, 2022.
The following table compares the primary components of our cash flows from 2021 to 2020:
(In thousands)
Net cash provided by operating activities
Net cash (used in) provided by investing activities
Net cash used in financing activities
2021
2020
Change
$
$
193,762
$
399,349
$
(159,686)
(539,910)
$
452,987
(345,501)
$
(205,587)
(612,673)
(194,409)
Cash provided by operating activities decreased by $205.6 million to $193.8 million in 2021 compared to $399.3 million in
2020. The decrease was primarily driven by the combined increase in cash outflows from inventories and decrease in accounts
payable, which were driven by increased inventory levels at the end of 2021 compared to 2020, an increase in cash outflows
from current income taxes, driven by the payment of taxes on the sale of our distribution centers since the end of 2020, and an
increase in cash outflows from current liabilities, which was driven by bonus accruals and payment of FICA taxes that were
deferred under the CARES Act of 2020. These decreases were partially offset by an increase in net income after accounting for
non-cash activities such as non-cash share-based compensation expense, non-cash lease expense, and the add-back for (loss)
gain on disposition of equipment and property.
Cash (used in) provided by investing activities decreased $612.7 million to cash used in investing activities of $159.7 million in
2021 compared to cash provided by investing activities of $453.0 million in 2020. The decrease was driven by the decrease in
cash proceeds from sale of property and equipment, due to the sale and leaseback transactions completed in the second quarter
of 2020, as well as an increase in capital expenditures.
Cash used in financing activities increased by $194.4 million to $539.9 million in 2021 compared to $345.5 million in cash
used in financing activities in 2020. The increase was driven by the repurchase of a total of $417.7 million of our common
shares under share repurchase authorizations during 2021 compared to the repurchase of $172.8 million of our common shares
under share repurchase authorizations during 2020. Additionally, the increase was driven by the absence of financing proceeds
from sale and leaseback transactions completed in the second quarter of 2020. The increase was partially offset by a decrease in
net repayments of long-term debt due to the repayment of all outstanding borrowings under the 2018 Credit Agreement in 2020
compared to repayment of all outstanding borrowings under the 2019 Term Note in 2021, which carried a lower balance at the
time of repayment compared to the 2018 Credit Agreement at the time of repayment.
33
Based on historical and expected financial results, we believe that we have or, if necessary, have the ability to obtain, adequate
resources to fund our cash requirements, including ongoing and seasonal working capital requirements, proposed capital
expenditures, new projects, and currently maturing obligations.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of
America (“GAAP”) requires management to make estimates, judgments, and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the
reporting period, as well as the related disclosure of contingent assets and liabilities at the date of the financial statements. The
use of estimates, judgments, and assumptions creates a level of uncertainty with respect to reported or disclosed amounts in our
consolidated financial statements or accompanying notes. On an ongoing basis, management evaluates its estimates, judgments,
and assumptions, including those that management considers critical to the accurate presentation and disclosure of our
consolidated financial statements and accompanying notes. Management bases its estimates, judgments, and assumptions on
historical experience, current trends, and various other factors that management believes are reasonable under the
circumstances. Because of the inherent uncertainty in using estimates, judgments, and assumptions, actual results may differ
from these estimates.
Our significant accounting policies, including the recently adopted accounting standards and recent accounting standards -
future adoptions, if any, are described in Note 1 to the accompanying consolidated financial statements. We believe the
following estimates, assumptions, and judgments are the most critical to understanding and evaluating our reported financial
results. Management has reviewed these critical accounting estimates and related disclosures with the Audit Committee of our
Board of Directors.
Merchandise Inventories
Merchandise inventories are valued at the lower of cost or market using the average cost retail inventory method. Market is
determined based on the estimated net realizable value, which generally is the merchandise selling price at or near the end of
the reporting period. The average cost retail inventory method requires management to make judgments and contains estimates,
such as the amount and timing of markdowns to clear slow-moving inventory and the allowance for shrinkage, which may
impact the ending inventory valuation and current or future gross margin. These estimates are based on historical experience
and current information.
When management determines the salability of merchandise inventories is diminished, markdowns for clearance activity and
the related cost impact are recorded at the time the price change decision is made. Factors considered in the determination of
markdowns include current and anticipated demand, customer preferences, the age of merchandise, and seasonal trends. Timing
of holidays within fiscal periods, weather, and customer preferences could cause material changes in the amount and timing of
markdowns from year to year.
The allowance for shrinkage is recorded as a reduction to inventories, charged to cost of sales, and calculated as a percentage of
sales for the period from the last physical inventory date to the end of the reporting period. Such estimates are based on both our
current year and historical inventory results. Independent physical inventory counts are typically taken at each store once a year.
During calendar 2021, the majority of physical counts occurred between January and June and we expect a similar cadence to
physical counts during calendar 2022. As physical inventories are completed, actual results are recorded and new go-forward
allowance for shrinkage rates are established based on historical results at the individual store level. Thus, the allowance for
shrinkage rates is adjusted throughout the January to June inventory cycle based on actual results. The allowance for shrinkage
at January 29, 2022 and January 30, 2021 was $53.7 million and $40.7 million, respectively. The increase of $13.0 million was
driven by a higher estimated shrinkage rate for 2021 compared to 2020, partially offset by lower aggregate sales since the last
physical inventory count for each store. At January 29, 2022, a 10% difference in our shrink accrual would have affected gross
margin, operating profit and income before income taxes by approximately $5.4 million. While it is not possible to quantify the
impact from each cause of shrinkage, we have asset protection programs and policies aimed at minimizing shrinkage.
Insurance and Insurance-Related Reserves
We are self-insured for certain losses relating to property, general liability, workers’ compensation, and employee medical,
dental, and prescription drug benefit claims, a portion of which is funded by employees. We purchase stop-loss coverage from
third party insurance carriers to limit individual or aggregate loss exposures in these areas. Accrued insurance liabilities and
related expenses are based on actual claims reported and estimates of claims incurred but not reported. The estimated loss
accruals for claims incurred but not paid are determined by applying actuarially-based calculations taking into account
historical claims payment results and known trends such as claims frequency and claims severity. Management makes
estimates, judgments, and assumptions with respect to the use of these actuarially-based calculations, including but not limited
34
to, estimated health care cost trends, estimated lag time to report and pay claims, average cost per claim, network utilization
rates, network discount rates, and other factors. Our insurance and insurance-related reserves at January 29, 2022 and
January 30, 2021 were $99.3 million and $92.1 million, respectively. The increase of $7.2 million was driven by workers'
compensation reserves due to rising medical costs and our reserve for self-insured matters that have exceeded stop-loss
thresholds, for which we carry an equal receivable from our stop-loss insurers. A 10% change in our self-insured liabilities at
January 29, 2022 would have affected selling and administrative expenses, operating profit, and income before income taxes by
approximately $8.2 million.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
We are subject to market risk from exposure to changes in interest rates on investments and on borrowings under the 2021
Credit Agreement that we make from time to time. We had $3.5 million in borrowings under the 2021 Credit Agreement at
January 29, 2022. An increase of 1% in our variable interest rate on our investments and estimated future borrowings would not
materially affect our financial condition, results of operations, or liquidity.
Risks Associated with Derivative Instruments
We are subject to market risk from exposure to changes in our derivative instruments, associated with diesel fuel. At
January 29, 2022, we had outstanding derivative instruments, in the form of collars, covering 1.2 million gallons of diesel fuel.
The below table provides further detail related to our current derivative instruments, associated with diesel fuel.
Calendar Year of
Maturity
Diesel Fuel Derivatives
Fair Value
Puts
Calls
Asset (Liability)
2022
Total
(Gallons, in thousands)
(In thousands)
1,200
1,200
1,200
1,200
$
$
856
856
Additionally, at January 29, 2022, a 10% difference in the forward curve for diesel fuel prices could affect unrealized gains
(losses) in other income (expense) by approximately $0.5 million.
35
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Big Lots, Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Big Lots, Inc. and subsidiaries (the “Company”) as of January
29, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of January 29, 2022, based on criteria established in Internal
Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated financial statements as of and for the year ended January 29, 2022, of the Company and our report
dated March 29, 2022, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report
on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control
over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ DELOITTE & TOUCHE LLP
Columbus, Ohio
March 29, 2022
36
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Big Lots, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Big Lots, Inc. and subsidiaries (the “Company”) as of
January 29, 2022 and January 30, 2021, the related consolidated statements of operations and comprehensive income,
shareholders' equity, and cash flows, for each of the three years in the period ended January 29, 2022, and the related notes
(collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material
respects, the financial position of the Company as of January 29, 2022 and January 30, 2021, and the results of its operations
and its cash flows for each of the three years in the period ended January 29, 2022, in conformity with accounting principles
generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company's internal control over financial reporting as of January 29, 2022, based on criteria established in
Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission and our report dated March 29, 2022, expressed an unqualified opinion on the Company's internal control over
financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on
the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that
were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and
we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on
the accounts or disclosures to which they relate.
Measurement of Inventory Valuation Reserves - Refer to Note 1 to the financial statements
Critical Audit Matter Description
Merchandise inventories are valued at the lower of cost or market using the average cost retail inventory method. The average
cost retail inventory method requires management to make judgments and contains estimates, including the amount and timing
of markdowns to clear slow-moving inventory and an estimated allowance for shrinkage, which may impact ending inventory
valuation. The balance of ending inventory was $1,237.8 million at January 29, 2022.
When management determines the salability of merchandise inventories is diminished, markdowns for clearance activity and
the related cost impact are recorded at the time the price change decision is made. Factors considered in the determination of
markdowns include current and anticipated demand, and customer preferences.
The inventory allowance for shrinkage is recorded as a reduction to inventories, charged to cost of sales, and calculated as a
percentage of sales for the period from the last physical inventory date to the end of the reporting period.
37
Given the significant estimates and assumptions management utilizes to quantify inventory reserves which includes markdowns
and the allowance for shrinkage, a high degree of auditor judgment and an increased extent of effort is required when
performing audit procedures to evaluate the methodology and reasonableness of the estimates and assumptions. For
markdowns, such estimates are based on the timing and completeness of recorded markdowns. For the allowance for shrinkage,
such estimates are based on a combination of historical shrinkage experience and current year physical inventory results.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the measurement of the valuation of inventory reserves included the following, among others:
• We tested the effectiveness of controls over the completeness and measurement of inventory reserves.
• We evaluated the methods and assumptions used by management to estimate markdowns by:
◦
◦
◦
Evaluating management’s estimate for markdowns by reviewing management’s approved permanent
markdowns at year end and comparing markdowns recorded after period end to the markdowns reserve at
year end.
Performing an analysis comparing monthly markdown expense and the markdown reserve to historical
results.
Comparing inventory sell through for the first period subsequent to year end to historical sell through results
to evaluate the salability of merchandise inventories at year end.
• We evaluated the methods and assumptions used by management to estimate the allowance for shrinkage by:
◦
◦
◦
Attending a selection of store physical inventories and recalculating the shrink for locations using the results
of the store physical inventory.
Performing an analysis comparing the methodology and inputs used by management to historical results and
trends in the prior years and current year.
Comparing management’s prior-year assumptions of expected shrink activity to actual activity incurred
during the current year to evaluate the appropriateness of the shrinkage inventory allowance.
Measurement of Insurance Valuation Reserves - Refer to Notes 1 and 9 to the financial statements
Critical Audit Matter Description
The Company is self-insured for certain losses relating to general liability and workers’ compensation. Accrued insurance
liabilities, $99.3 million at January 29, 2022, are based on actual claims reported and estimates of claims incurred but not
reported. The estimated loss accruals for claims incurred but not paid are determined by applying actuarially-based calculations
taking into account historical claims payment results and known trends such as claims frequency and claims severity.
Given the significant estimates and assumptions in determination of the selected actuarial models management utilizes to
quantify insurance reserves, a high degree of auditor judgment and increased extent of effort is required, including the need to
involve our actuarial specialists, when performing audit procedures to evaluate whether insurance reserves were appropriately
valued.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the general liability and workers’ compensation self-insurance reserves included the following,
among others:
• We tested the effectiveness of controls related to general liability and workers’ compensation self-insurance reserves.
• We evaluated the methods and assumptions used by management to estimate the self-insurance reserves by:
◦
Testing the underlying data that served as the basis of the actuarial analysis, including historical claims, to test
that the inputs to the actuarial estimate were reasonable.
Comparing management’s prior-year assumptions of expected loss to actuals incurred during the current year
to evaluate the appropriateness of assumptions used to determine the insurance reserves.
• With the assistance of our actuarial specialists, we developed independent estimates of the insurance reserves,
◦
including loss and industry claim development factors, and compared our estimates to management’s estimates.
Further, the actuarial specialists:
◦
Assessed the actuarial models used by the Company for consistency with the generally accepted actuarial
standards;
38
◦
◦
Evaluated the Company’s ability to estimate the insurance liabilities by comparing its historical estimates
with actual loss payments;
Evaluated the key assumptions underlying the Company’s actuarial estimates used to determine the insurance
reserves.
/s/ DELOITTE & TOUCHE LLP
Columbus, Ohio
March 29, 2022
We have served as the Company’s auditor since 1989.
39
BIG LOTS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations and Comprehensive Income
(In thousands, except per share amounts)
Net sales
2021
2020
2019
$
6,150,603 $
6,199,186 $
5,323,180
Cost of sales (exclusive of depreciation expense shown separately below)
3,753,596
3,701,800
3,208,498
Gross margin
Selling and administrative expenses
Depreciation expense
Gain on sale of distribution centers
Operating profit
Interest expense
Other income (expense)
Income before income taxes
Income tax expense
2,397,007
2,497,386
2,114,682
2,014,682
1,965,555
1,823,409
142,572
138,336
134,981
—
(463,053)
(178,534)
239,753
(9,281)
1,339
231,811
54,033
856,548
(11,031)
(911)
844,606
215,415
334,826
(16,827)
(451)
317,548
75,084
Net income and comprehensive income
$
177,778 $
629,191 $
242,464
Earnings per common share:
Basic
Diluted
$
$
5.43 $
5.33 $
16.46 $
16.11 $
6.18
6.16
The accompanying notes are an integral part of these consolidated financial statements.
40
BIG LOTS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except par value)
ASSETS
Current assets:
Cash and cash equivalents
Inventories
Other current assets
Total current assets
Operating lease right-of-use assets
Property and equipment - net
Deferred income taxes
Other assets
Total assets
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable
Current operating lease liabilities
Property, payroll, and other taxes
Accrued operating expenses
Insurance reserves
Accrued salaries and wages
Income taxes payable
Total current liabilities
Long-term debt
Noncurrent operating lease liabilities
Deferred income taxes
Insurance reserves
Unrecognized tax benefits
Other liabilities
Shareholders’ equity:
Preferred shares - authorized 2,000 shares; $0.01 par value; none issued
Common shares - authorized 298,000 shares; $0.01 par value; issued 117,495
shares; outstanding 28,476 shares and 35,535 shares, respectively
Treasury shares - 89,019 shares and 81,960 shares, respectively, at cost
Additional paid-in capital
Retained earnings
Total shareholders’ equity
January 29, 2022
January 30, 2021
$
53,722
$
1,237,797
119,449
1,410,968
1,731,995
735,826
10,973
37,491
559,556
940,294
85,939
1,585,789
1,649,009
717,216
16,329
68,914
$
3,927,253
$
4,037,257
$
587,496
$
242,275
90,728
120,684
36,748
45,762
894
1,124,587
3,500
1,569,713
21,413
62,591
10,557
127,529
398,433
226,075
109,694
138,331
34,660
49,830
43,601
1,000,624
35,764
1,465,433
7,762
57,452
11,304
181,187
—
—
1,175
(3,121,602)
640,522
3,487,268
1,007,363
1,175
(2,709,259)
634,813
3,351,002
1,277,731
4,037,257
Total liabilities and shareholders’ equity
$
3,927,253
$
The accompanying notes are an integral part of these consolidated financial statements.
41
BIG LOTS, INC. AND SUBSIDIARIES
Consolidated Statements of Shareholders’ Equity
(In thousands)
Balance - February 2, 2019
Comprehensive income
Dividends declared ($1.20 per share)
Adjustment for ASU 2016-02
Purchases of common shares
Exercise of stock options
Restricted shares vested
Performance shares vested
Other
Share-based employee compensation expense
Balance - February 1, 2020
Comprehensive income
Dividends declared ($1.20 per share)
Purchases of common shares
Exercise of stock options
Restricted shares vested
Performance shares vested
Other
Common
Treasury
Shares
Amount
Shares
Amount
Additional
Paid-In
Capital
Retained
Earnings
Total
40,042 $
1,175 77,453 $ (2,506,086) $ 622,685 $ 2,575,267 $ 693,041
—
—
—
(1,474)
6
202
261
— —
— —
— —
—
—
—
— 1,474
(55,347)
—
(6)
202
—
—
—
—
(2)
—
(202)
6,545
(6,545)
—
(261)
8,459
(8,459)
—
—
— —
— —
(5)
—
(2)
13,051
242,464
242,464
(48,286)
(48,286)
348
348
—
—
—
—
—
—
(55,347)
200
—
—
(7)
13,051
39,037
1,175 78,458 (2,546,232)
620,728 2,769,793
845,464
—
—
(3,890)
13
309
65
1
— —
— —
—
—
— 3,890
(175,642)
—
(13)
429
—
—
—
64
—
(309)
10,034
(10,034)
—
—
(65)
(1)
2,107
(2,107)
45
—
7
26,155
629,191
629,191
(47,982)
(47,982)
—
(175,642)
—
—
—
—
—
493
—
—
52
26,155
Share-based employee compensation expense
—
— —
Balance - January 30, 2021
Comprehensive income
Dividends declared ($1.20 per share)
Purchases of common shares
Restricted shares vested
Performance shares vested
Other
Share-based employee compensation expense
35,535
1,175 81,960 (2,709,259)
634,813 3,351,002 1,277,731
—
—
(8,076)
482
535
—
—
— —
— —
—
—
— 8,076
(446,374)
—
—
—
177,778
177,778
(41,512)
(41,512)
—
(446,374)
—
(482)
16,140
(16,140)
—
(535)
17,879
(17,879)
— —
— —
12
—
127
39,601
—
—
—
—
—
—
139
39,601
Balance - January 29, 2022
28,476 $
1,175 89,019 $ (3,121,602) $ 640,522 $ 3,487,268 $ 1,007,363
The accompanying notes are an integral part of these consolidated financial statements.
42
BIG LOTS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
Operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
2021
2020
2019
$
177,778
$
629,191
$
242,464
Depreciation and amortization expense
Non-cash lease expense
Deferred income taxes
Non-cash share-based compensation expense
Non-cash impairment charge
Loss (gain) on disposition of property and equipment
Unrealized (gain) loss on fuel derivatives
Loss on extinguishment of debt
Change in assets and liabilities:
Inventories
Accounts payable
Operating lease liabilities
Current income taxes
Other current assets
Other current liabilities
Other assets
Other liabilities
Net cash provided by operating activities
Investing activities:
Capital expenditures
Cash proceeds from sale of property and equipment
Other
143,713
265,401
19,007
39,601
6,096
342
(1,593)
535
(297,503)
189,063
(233,057)
(76,429)
32,154
(56,220)
(785)
(14,341)
193,762
(160,804)
1,155
(37)
138,848
246,442
(52,415)
26,155
1,792
135,686
229,143
52,374
13,051
3,986
(462,916)
(177,996)
(294)
—
346
—
(19,028)
20,193
48,295
(18,662)
(250,131)
(215,956)
56,564
(10,238)
55,775
(90)
19,501
399,349
(135,220)
588,258
(51)
(4,442)
(5,836)
36,962
(5,499)
5,054
338,970
(265,203)
190,741
(18)
(74,480)
Net cash (used in) provided by investing activities
(159,686)
452,987
Financing activities:
Net repayments of long-term debt
Net financing proceeds from sale and leaseback
Payment of finance lease obligations
Dividends paid
Proceeds from the exercise of stock options
Payment for treasury shares acquired
Payments for debt issuance costs
Payments to extinguish debt
Other
Net cash used in financing activities
(Decrease) increase in cash and cash equivalents
Cash and cash equivalents:
Beginning of year
End of year
(46,764)
(243,227)
(80,609)
—
(3,654)
(41,653)
—
123,435
(3,648)
(46,964)
493
(446,374)
(175,642)
(1,167)
(438)
140
(539,910)
(505,834)
—
—
52
(345,501)
506,835
559,556
52,721
$
53,722
$
559,556
$
—
(73,469)
(48,421)
200
(55,347)
(150)
—
(7)
(257,803)
6,687
46,034
52,721
The accompanying notes are an integral part of these consolidated financial statements.
43
BIG LOTS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business
We are a home discount retailer in the United States (“U.S.”). At January 29, 2022, we operated 1,431 stores in 47 states and an
e-commerce platform. Our mission is to help people Live BIG and Save LOTS. Our vision is to be the BIG difference for a
better life by delivering exceptional value to customers, building a “best places to grow” culture, rewarding shareholders with
consistent growth and top tier returns, and doing good in local communities.
Basis of Presentation
The consolidated financial statements include Big Lots, Inc. and all of its subsidiaries, have been prepared in accordance with
accounting principles generally accepted in the United States of America (“GAAP”), and include all of our accounts. We
consolidate all majority-owned and controlled subsidiaries. All intercompany accounts and transactions have been eliminated.
Management Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates, judgments, and
assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period, as well as the related disclosure of contingent assets and
liabilities at the date of the financial statements. The use of estimates, judgments, and assumptions creates a level of uncertainty
with respect to reported or disclosed amounts in our consolidated financial statements and accompanying notes. On an ongoing
basis, management evaluates its estimates, judgments, and assumptions, including those that management considers critical to
the accurate presentation and disclosure of our consolidated financial statements and accompanying notes. Management bases
its estimates, judgments, and assumptions on historical experience, current trends, and various other factors that it believes are
reasonable under the circumstances. Because of the inherent uncertainty in using estimates, judgments, and assumptions, actual
results may differ from these estimates.
Fiscal Periods
Our fiscal year ends on the Saturday nearest to January 31, which results in fiscal years consisting of 52 or 53 weeks. Unless
otherwise stated, references to years in this report relate to fiscal years rather than calendar years. Fiscal year 2021 (“2021”)
was comprised of the 52 weeks that began on January 31, 2021 and ended on January 29, 2022. Fiscal year 2020 (“2020”) was
comprised of the 52 weeks that began on February 2, 2020 and ended on January 30, 2021. Fiscal year 2019 (“2019”) was
comprised of the 52 weeks that began on February 3, 2019 and ended on February 1, 2020.
Segment Reporting
We manage our business based on one segment, discount retailing. Our entire operation is located in the U.S.
Cash and Cash Equivalents
Cash and cash equivalents primarily consist of amounts on deposit with financial institutions, outstanding checks, credit and
debit card receivables, and highly liquid investments, such as money market funds, treasury bills, and commercial paper, which
are unrestricted to withdrawal or use and which have an original maturity of three months or less. We review cash and cash
equivalent balances on a bank by bank basis in order to identify book overdrafts. Book overdrafts occur when the aggregate
amount of outstanding checks and electronic fund transfers exceed the cash deposited at a given bank. We reclassify book
overdrafts, if any, to accounts payable on our consolidated balance sheets. Amounts due from banks for credit and debit card
transactions are typically settled in less than three days, and at January 29, 2022 and January 30, 2021, totaled $30.3 million and
$34.7 million, respectively.
Investments
Investment securities are classified as available-for-sale, held-to-maturity, or trading at the date of purchase. Investments are
recorded at fair value as either current assets or non-current assets based on the stated maturity or our plans to either hold or sell
the investment. Unrealized holding gains and losses on trading securities are recognized in earnings. Unrealized holding gains
and losses on available-for-sale securities are recognized in other comprehensive income until realized. We did not own any
held-to-maturity or available-for-sale securities as of January 29, 2022 and January 30, 2021.
44
Merchandise Inventories
Merchandise inventories are valued at the lower of cost or market using the average cost retail inventory method. Cost includes
any applicable inbound shipping and handling costs associated with the receipt of merchandise into our distribution centers (see
the discussion below under the caption “Selling and Administrative Expenses” for additional information regarding outbound
shipping and handling costs to our stores). Market is determined based on the estimated net realizable value, which generally is
the merchandise selling price. Under the average cost retail inventory method, inventory is segregated into classes of
merchandise having similar characteristics at its current retail selling value. Current retail selling values are converted to a cost
basis by applying an average cost factor to each specific merchandise class’s retail selling value. Cost factors represent the
average cost-to-retail ratio computed using beginning inventory and all fiscal year-to-date purchase activity specific to each
merchandise class.
Under the average cost retail inventory method, permanent sales price markdowns result in cost reductions in inventory. Our
permanent sales price markdowns are typically related to end of season clearance events and are recorded as a charge to cost of
sales in the period of management’s decision to initiate sales price reductions with the intent not to return the price to regular
retail. Promotional markdowns are recorded as a charge to net sales in the period the merchandise is sold. Promotional
markdowns are typically related to specific marketing efforts with respect to products maintained continuously in our stores or
products that are only available in limited quantities but represent substantial value to our customers. Promotional markdowns
are principally used to drive higher sales volume during a defined promotional period.
We record a reduction to inventories and charge to cost of sales for an allowance for shrinkage. The allowance for shrinkage is
calculated as a percentage of sales for the period from the last physical inventory date to the end of the reporting period. Such
estimates are based on a combination of our historical experience and current year physical inventory results.
We record a reduction to inventories and charge to cost of sales for any excess or obsolete inventory. The excess or obsolete
inventory is estimated based on a review of our aged inventory and takes into account any items that have already received a
cost reduction as a result of the permanent markdown process discussed above. We estimate the reduction for excess or obsolete
inventory based on historical sales trends, age and quantity of product on hand, and anticipated future sales.
Property and Equipment - Net
Depreciation and amortization expense of property and equipment are recorded on a straight‑line basis using estimated service
lives. The estimated service lives of our depreciable property and equipment by major asset category were as follows:
Land improvements
Buildings
Leasehold improvements
Store fixtures and equipment
Distribution and transportation fixtures and equipment
Office and computer equipment
Computer software costs
Company vehicles
15 years
40 years
5 - 10 years
2 - 7 years
5 - 15 years
3 - 5 years
3 - 8 years
3 years
Leasehold improvements are amortized on a straight-line basis using the shorter of their estimated service lives or the lease
term.
Assets acquired under leases which meet the criteria of a finance lease are capitalized in property and equipment - net and
amortized over the estimated service life of the asset or the applicable lease term, whichever is shorter.
Depreciation estimates are revised prospectively to reflect the remaining depreciation or amortization of the asset over the
shortened estimated service life when a decision is made to dispose of property and equipment prior to the end of its previously
estimated service life. The cost of assets sold or retired and the related accumulated depreciation are removed from the accounts
with any resulting gain or loss included in selling and administrative expenses. Major repairs that extend service lives are
capitalized. Maintenance and repairs are charged to expense as incurred. Capitalized interest was not significant in any period
presented.
45
Long-Lived Assets
Our long-lived assets primarily consist of property and equipment - net and operating lease right-of-use assets. In order to
determine if impairment indicators are present for store property and equipment and operating lease right-of-use assets, we
review historical operating results at the store level. Generally, all other property and equipment and operating lease right-of-
use assets are reviewed for impairment at the enterprise level. If the net book value of a store’s long-lived assets is not
recoverable by the expected undiscounted future cash flows of the store, we estimate the fair value of the store’s assets and
recognize an impairment charge for the excess net book value of the store’s long-lived assets over their fair value. Our
assumptions related to estimates of undiscounted future cash flows are based on historical results of cash flows adjusted for
management projections for future periods. We estimate the fair value of our long-lived assets using expected cash flows,
including salvage value, which is based on readily available market information for similar assets.
Intangible Assets
In 2018, we acquired the Broyhill® trademark and trade name. This trademark and trade name have indefinite lives. We test the
trademark and trade name for impairment annually or whenever circumstances indicate that the carrying value of the asset may
not be recoverable. We estimate the fair value of these intangible assets based on an income approach. We perform our annual
impairment testing during our fourth fiscal quarter of each year.
Savings Plans
We have a savings plan with a 401(k) deferral feature and we provide matching contributions, which are subject to Internal
Revenue Service (“IRS”) regulations, based on a percentage of employee contributions. For 2021, 2020, and 2019, we expensed
$9.2 million, $9.2 million, and $8.3 million, respectively, related to our matching contributions. We previously had a
nonqualified deferred compensation plan with a similar deferral feature for eligible employees. In 2021, we terminated the
nonqualified deferred compensation plan and distributed all account balances to plan participants. In connection with our
nonqualified deferred compensation plan, we had liabilities of $0.0 and $33.0 million at January 29, 2022 and January 30, 2021,
respectively, which were recorded in other liabilities.
Income Taxes
We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements.
Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement
basis and tax basis of assets and liabilities using enacted law and tax rates in effect for the year in which the differences are
expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the
period that includes the enactment date.
We assess the adequacy and need for a valuation allowance for deferred tax assets. In making such assessment, we consider all
available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable
income, tax planning strategies and recent financial operations. We have established a valuation allowance to reduce our
deferred tax assets to the balance that is more likely than not to be realized.
We recognize interest and penalties related to unrecognized tax benefits within the income tax expense line in the
accompanying consolidated statements of operations and comprehensive income. Accrued interest and penalties are included
within the related tax liability line in the accompanying consolidated balance sheets.
The effective income tax rate in any period may be materially impacted by the overall level of income (loss) before income
taxes, the jurisdictional mix and magnitude of income (loss), changes in the income tax laws (which may be retroactive to the
beginning of the fiscal year), subsequent recognition, de-recognition and/or measurement of an uncertain tax benefit, changes in
a deferred tax valuation allowance, and adjustments of a deferred tax asset or liability for enacted changes in tax laws or rates.
Insurance and Insurance-Related Reserves
We are self-insured for certain losses relating to property, general liability, workers’ compensation, and employee medical,
dental, and prescription drug benefit claims, a portion of which is paid by employees. We purchase stop-loss coverage to limit
significant exposure in these areas. Accrued insurance-related liabilities and related expenses are based on actual claims filed
and estimates of claims incurred but not reported and are reliably determinable. The accruals are determined by applying
actuarially-based calculations.
46
Fair Value of Financial Instruments
The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy, as defined
below, gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest
priority to unobservable inputs.
Level 1, defined as observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2, defined as observable inputs other than Level 1 inputs. These include quoted prices for similar assets or liabilities
in an active market, quoted prices for identical assets and liabilities in markets that are not active, or other inputs that
are observable or can be corroborated by observable market data for substantially the full term of the assets or
liabilities.
Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its
own assumptions.
Revenue Recognition
We recognize sales revenue at the time the customer takes possession of the merchandise (i.e., the point at which we transfer
the goods). Sales are recorded net of discounts (i.e., the amount of consideration we expect to receive for the goods) and
estimated returns and exclude any sales tax. The reserve for merchandise returns is estimated based on our prior return
experience.
We sell gift cards in our stores, online, and through third-party retailers, and issue merchandise credits, typically as a result of
customer returns, on stored value cards. We do not charge administrative fees on unused gift card or merchandise credit
balances and our gift cards and merchandise credits do not expire. We recognize sales revenue related to gift cards and
merchandise credits (1) when the gift card or merchandise credit is redeemed in a sales transaction by the customer or (2) as
breakage occurs. We recognize gift card and merchandise credit breakage when we estimate that the likelihood of the card or
credit being redeemed by the customer is remote and we determine that we do not have a legal obligation to remit the value of
unredeemed cards or credits to the relevant regulatory authority. We estimate breakage based upon historical redemption
patterns. The liability for the unredeemed cash value of gift cards and merchandise credits is recorded in accrued operating
expenses in our consolidated balance sheets.
We offer price hold contracts and buy now pick up later arrangements on merchandise. Revenue for price hold contracts and
buy now pick up later arrangements is recognized when the customer makes the final payment and takes possession of the
merchandise. Amounts paid by customers under price hold contracts and buy now pick up later arrangements are recorded in
accrued operating expenses in our consolidated balance sheets until a sale is consummated.
We recognize sales revenue for direct-to-customer transactions on our e-commerce platform at the time the merchandise is
shipped (i.e., the point at which we transfer the goods). We also offer buy online, pick up in store services on our e-commerce
platform. Revenue for buy online, pick up in store transactions is recognized when the customer takes possession of the
merchandise at the store.
Cost of Sales
Cost of sales includes the cost of merchandise, net of cash discounts and rebates, markdowns, and inventory shrinkage, and the
cost of shipping direct-to-customer e-commerce orders. Cost of merchandise includes related inbound freight to our distribution
centers, duties, and commissions. We classify warehousing, distribution and outbound transportation costs to our stores as
selling and administrative expenses. Due to this classification, our gross margin rates may not be comparable to those of other
retailers that include warehousing, distribution and outbound transportation costs to stores in cost of sales.
Selling and Administrative Expenses
Selling and administrative expenses include store expenses (such as payroll and occupancy costs) and costs related to
warehousing, distribution, outbound transportation to our stores, advertising, purchasing, insurance, non-income taxes,
accepting credit/debit cards, and overhead. Our selling and administrative expense rates may not be comparable to those of
other retailers that include warehousing, distribution, and outbound transportation costs to stores in cost of sales. Distribution
and outbound transportation costs included in selling and administrative expenses were $310.4 million, $251.0 million, and
$191.8 million for 2021, 2020, and 2019, respectively.
Leases and Rent Expense
We determine if an arrangement contains a lease at inception of the agreement. Our leased property consists of our retail stores,
distribution centers, store security, and other office equipment. Certain of our store and distribution center leases have rent
escalations and/or have tenant allowances or other lease incentives, which are fixed in nature and included in our calculation of
right-of-use assets and lease liabilities. Certain of our store leases provide for contingent rents, which are recorded as variable
47
costs and not included in our calculation of right-of-use assets and lease liabilities. Many of our leases obligate us to pay for our
applicable portion of real estate taxes, common area maintenance costs (“CAM”), and property insurance, which are recorded
as variable costs and not included in our calculation of right-of-use assets and lease liabilities, except for certain fixed CAM and
insurance charges that are not variable. Many of our leases contain provisions for options to renew, extend the original term for
additional periods, or terminate the lease if certain sales thresholds are not attained. We have assessed the reasonable certainty
of these provisions to determine the appropriate lease term. Our lease agreements do not contain material residual value
guarantees, restrictions, or covenants.
We have established a short-term lease exception policy, permitting us to not apply lease recognition requirements to leases
with terms of 12 months or less. We recognize a lease liability and right-of-use asset at commencement of the lease when
possession of the property is taken from the lessor, which, for stores, normally includes a construction or set-up period prior to
store opening. We begin recognizing rent expense at commencement of the lease. Rent expense for operating leases is
recognized on a straight-line basis over the lease term and is included in selling and administrative expenses. We account for
lease and non-lease components as a single component for our real estate class of assets.
Advertising Expense
Advertising costs, which are expensed as incurred, consist primarily of television and print advertising, digital, social media,
internet and e-mail marketing and advertising, payment card-linked marketing and in-store point-of-purchase signage and
presentations. Advertising expenses are included in selling and administrative expenses. Advertising expenses were $97.7
million, $102.8 million, and $95.2 million for 2021, 2020, and 2019, respectively.
Share-Based Compensation
Share-based compensation expense is recognized in selling and administrative expense in our consolidated statements of
operations and comprehensive income for all awards that we expect to vest.
Non-vested Restricted Stock Units
We expense our non-vested restricted stock units (“RSUs”) with graded vesting as a single award with an average estimated life
over the entire term of the award. The expense for the non-vested restricted stock units is recorded on a straight-line basis over
the vesting period.
Performance Share Units
Compensation expense for performance share units (“PSUs”) is recorded based on fair value of the award on the grant date and
the estimated achievement of financial performance objectives. From an accounting perspective, the grant date is established
once all financial performance targets have been set. We monitor the estimated achievement of the financial performance
objectives at each reporting period and will potentially adjust the estimated expense on a cumulative basis. The expense for
PSUs is recorded on a straight-line basis from the grant date through the end of the performance period.
In 2020, we awarded performance share units with a restriction feature to certain members of senior management, which vested
based on the achievement of share price performance goals and a minimum service requirement of one year (“PRSUs”). The
PRSUs had a contractual term of three years. The grant date fair value and estimated vesting period of the PRSUs was
determined by a third party using a Monte Carlo simulation. The awards were expensed over their estimated vesting period on a
straight-line basis.
Earnings per Share
Basic earnings per share is based on the weighted-average number of shares outstanding during each period. Diluted earnings
per share is based on the weighted-average number of shares outstanding during each period and the additional dilutive effect of
stock options, RSUs, PRSUs, and PSUs, calculated using the treasury stock method.
Derivative Instruments
We use derivative instruments to mitigate the risk of market fluctuations in diesel fuel prices. We do not enter into derivative
instruments for speculative purposes. Our derivative instruments may consist of collar or swap contracts. Our current derivative
instruments do not meet the requirements for cash flow hedge accounting. Instead, our derivative instruments are marked-to-
market to determine their fair value and any gains or losses are recognized currently in other income (expense) on our
consolidated statements of operations and comprehensive income.
48
Supplemental Cash Flow Disclosures
The following table provides supplemental cash flow information for 2021, 2020, and 2019:
(In thousands)
Supplemental disclosure of cash flow information:
2021
2020
2019
Cash paid for interest
$
8,066
$
6,366
$
Cash paid for income taxes, excluding impact of refunds
Gross proceeds from long-term debt
Gross payments of long-term debt
Gross financing proceeds from sale and leaseback
Gross repayments of financing from sale and leaseback
Cash paid for operating lease liabilities
Non-cash activity:
Assets acquired under finance leases
Accrued property and equipment
Operating lease right-of-use assets obtained in exchange for
operating lease liabilities
111,206
55,600
102,364
—
—
341,341
1,080
19,303
217,308
514,500
757,727
133,999
10,564
340,747
—
17,791
17,446
29,375
1,811,000
1,891,609
—
—
292,048
70,831
17,632
$
354,066
$
694,811
$
1,493,888
Reclassifications
In 2021, we realigned select merchandise categories to be consistent with the realignment of our merchandising team and
changes to our management reporting. To better suit the new alignment, we renamed our Electronics, Toys, & Accessories
category as Apparel, Electronics, & Other. We moved our pet department from our Consumables category to our Food
category; our home organization department from our Soft Home category to our Hard Home category; our toys department
from our Apparel, Electronics, & Other category to our Hard Home category; our candy & snacks from our Food category to
our Apparel, Electronics, & Other category; and added new departments for the merchandise assortments for The Lot, our
cross-category presentation solution, and the Queue Line, our streamlined checkout experience, to the Apparel, Electronics, &
Other category.
Our seven merchandise categories, which match our internal management and reporting of merchandise net sales are now as
follows: Food; Consumables; Soft Home; Hard Home; Furniture; Seasonal; and Apparel, Electronics, & Other. The Food
category includes our beverage & grocery; specialty foods; and pet departments. The Consumables category includes our
health, beauty and cosmetics; plastics; paper; and chemical departments. The Soft Home category includes our home décor;
frames; fashion bedding; utility bedding; bath; window; decorative textile; and area rugs departments. The Hard Home category
includes our small appliances; table top; food preparation; stationery; home maintenance; home organization; and toys
departments. The Furniture category includes our upholstery; mattress; ready-to-assemble; and case goods departments. The
Seasonal category includes our lawn & garden; summer; Christmas; and other holiday departments. The Apparel, Electronics,
& Other department includes our apparel; electronics; jewelry; hosiery; and candy & snacks departments, as well as the
assortments for The Lot and the Queue Line.
In order to provide comparative information, we have reclassified our results into the new alignment for all periods presented.
Recently Adopted Accounting Standards
In the third quarter of 2021, the Company adopted Accounting Standards Update (“ASU”) 2020-04 Reference Rate Reform.
This ASU provides optional expedients and exceptions for applying generally accepted accounting principles to contracts,
hedging relationships, leases, and other transactions affected by the potential fallback of LIBOR. The Company adopted ASU
2020-04 in connection with its entry into a new credit facility (see Note 3 to the consolidated financial statements) that includes
language to address LIBOR fallback and in connection with an amendment to the lease for our Apple Valley, CA distribution
center including similar LIBOR fallback language. The impact of the adoption was immaterial to the consolidated financial
statements.
In August 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-15 Intangibles - Goodwill and Other -
Internal-Use Software. This update evaluates the accounting for costs paid by a customer to implement a cloud computing
arrangement. The new guidance aligns cloud computing arrangement implementation cost accounting with the capitalization
requirements for internal-use software development, while leaving the accounting for service elements unchanged. On February
2, 2020, we adopted ASU 2018-15 on a prospective basis. The impact of the adoption was immaterial to the consolidated
financial statements.
49
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The update requires a lessee to recognize, on the
balance sheet, a liability to make lease payments and a right-of-use asset representing a right to use the underlying asset for the
lease term. Additionally, this guidance expanded related disclosure requirements. On February 3, 2019, we adopted the new
standard and elected the optional transition method, as allowed by ASU 2018-11, Leases (Topic 842), Targeted Improvements,
to apply the new standard as of the effective date. Therefore, we have not applied the new standard to the comparative prior
periods presented in the consolidated financial statements. The impact of the adoption was immaterial to the consolidated
statements of shareholders’ equity. For further discussion on our leases, see Note 5 to the accompanying consolidated financial
statements.
There are currently no new accounting pronouncements with a future effective date that are of significance, or potential
significance, to us.
Subsequent Events
We have evaluated events and transactions subsequent to the balance sheet date. Based on this evaluation, we are not aware of
any events or transactions that occurred subsequent to the balance sheet date but prior to filing that would require recognition or
disclosure in our consolidated financial statements.
NOTE 2 – PROPERTY AND EQUIPMENT - NET
Property and equipment - net consist of:
(In thousands)
Land and land improvements
Buildings and leasehold improvements
Fixtures and equipment
Computer software costs
Construction-in-progress
Property and equipment - cost
Less accumulated depreciation and amortization
Property and equipment - net
January 29, 2022
January 30, 2021
$
$
48,849 $
828,179
940,921
187,190
25,394
2,030,533
1,294,707
735,826 $
48,862
779,104
870,074
213,042
27,455
1,938,537
1,221,321
717,216
Property and equipment - cost includes $25.3 million and $25.8 million at January 29, 2022 and January 30, 2021, respectively,
to recognize assets from finance leases. Accumulated depreciation and amortization includes $23.6 million and $22.2 million at
January 29, 2022 and January 30, 2021, respectively, related to finance leases.
During 2021, 2020, and 2019, respectively, we invested $160.8 million, $135.2 million, and $265.2 million of cash in capital
expenditures and we recorded $142.6 million, $138.3 million, and $135.0 million of depreciation expense.
In 2020, we disposed of $123.8 million of property and equipment - cost in connection with the sale of four distribution centers
in sale and leaseback transactions (see Note 10 to the accompanying consolidated financial statements for additional
information on the sale and leaseback transactions).
We incurred $0.9 million, $0.9 million, and $0.4 million in asset impairment charges, excluding impairment of right-of-use
assets (see Note 5 to the accompanying consolidated financial statements), in 2021, 2020, and 2019, respectively. In 2021, we
impaired the value of property and equipment assets at eight stores as a result of our store impairment review, of which the
majority of the impairment value was attributable to five stores. In 2020, we impaired the value of property and equipment
assets at four stores as a result of our store impairment review. In 2019, we impaired the value of property and equipment assets
at two stores as a result of our store impairment review.
Asset impairment charges are included in selling and administrative expenses in our accompanying consolidated statements of
operations and comprehensive income. We perform impairment reviews of our long-lived assets at the store level. When we
perform the impairment reviews, we first determine which stores had impairment indicators present. We generally use actual
historical cash flows to determine if stores had negative cash flows within the past two years. For each store with negative cash
flows, we estimate future cash flows based on operating performance estimates specific to each store’s operations that are based
on assumptions currently being used to develop our company level operating plans. If the net book value of a store’s long-lived
50
assets is not recoverable by the expected future cash flows of the store, we estimate the fair value of the store’s assets and
recognize an impairment charge for the excess net book value of the store’s long-lived assets over their fair value.
NOTE 3 – DEBT
Bank Credit Facility
On September 22, 2021, we entered into a $600 million five-year unsecured credit facility (“2021 Credit Agreement”) that
expires on September 22, 2026. The 2021 Credit Agreement replaced the $700 million five-year unsecured credit facility
entered into on August 31, 2018 (“2018 Credit Agreement”). The 2018 Credit Agreement was scheduled to expire on August
31, 2023, but was terminated concurrent with our entry into the 2021 Credit Agreement. We did not incur any early termination
penalties in connection with the termination of the 2018 Credit Agreement. In connection with our entry into the 2021 Credit
Agreement, we paid bank fees and other expenses in the aggregate amount of $1.2 million, which are being amortized over the
term of the 2021 Credit Agreement.
Borrowings under the 2021 Credit Agreement are available for general corporate purposes, working capital, and to repay
certain indebtedness. The 2021 Credit Agreement includes a $50 million swing loan sublimit, a $75 million letter of credit
sublimit, a $75 million sublimit for loans to foreign borrowers, and a $200 million optional currency sublimit. The 2021 Credit
Agreement also contains an environmental, social and governance (“ESG”) provision, which may provide favorable pricing and
fee adjustments if we meet ESG performance criteria to be established by a future amendment to the 2021 Credit Agreement.
Under the 2021 Credit Agreement, we have the option to establish incremental term loans and/or increases in the revolving
credit limits in an aggregate amount of up to $300 million, subject to the lenders agreeing to increase their commitments.
Additionally, the 2021 Credit Agreement includes two options to extend the maturity date of the 2021 Credit Agreement by one
year each, subject to each lender agreeing to extend the maturity date of its respective loans. The interest rates, pricing and fees
under the 2021 Credit Agreement fluctuate based on our debt rating or leverage ratio, whichever results in more favorable
pricing to us. The 2021 Credit Agreement allows us to select our interest rate for each borrowing from multiple interest rate
options. The interest rate options are generally derived from the prime rate or LIBOR for loans denominated in U.S. dollars or
the Euro Short Term Rate (€STR) for loans denominated in Euros. The 2021 Credit Agreement updated the LIBOR fallback
language to implement fallback provisions, pursuant to which the interest rate on the loans will transition to an alternative rate
upon the occurrence of certain LIBOR cessation events. Loans made under the 2021 Credit Agreement may be prepaid without
penalty. The 2021 Credit Agreement contains financial and other covenants, including, but not limited to, limitations on
indebtedness, liens and investments, as well as the maintenance of two financial ratios – a leverage ratio and a fixed charge
coverage ratio. The covenants of the 2021 Credit Agreement do not restrict our ability to pay dividends. Additionally, we are
subject to cross-default provisions associated with any default on indebtedness that is greater than $50 million, including with
respect to the synthetic lease for the distribution center in Apple Valley, CA, which was amended concurrent with our entry into
the 2021 Credit Agreement to conform to the covenants of the 2021 Credit Agreement. A violation of any of the covenants
could result in a default under the 2021 Credit Agreement that would permit the lenders to restrict our ability to further access
the 2021 Credit Agreement for loans and letters of credit and require the immediate repayment of any outstanding loans under
the 2021 Credit Agreement. At January 29, 2022, we had $3.5 million of borrowings outstanding under the 2021 Credit
Agreement, while $2.4 million was committed to outstanding letters of credit, leaving $594.1 million available under the 2021
Credit Agreement.
Secured Equipment Term Note
On August 7, 2019, we entered into a $70 million term note agreement (“2019 Term Note”), which was secured by the
equipment at our Apple Valley, CA distribution center and carried an interest rate of 3.3%. In connection with our entry into the
2019 Term Note, we paid debt issuance costs of $0.2 million. In light of our strong liquidity and market conditions, on June 7,
2021, we prepaid the remaining $44.3 million principal balance under the 2019 Term Note. In connection with the prepayment,
we incurred a $0.4 million prepayment fee and recognized a $0.5 million loss on debt extinguishment, which was recorded in
Other income (expense) in the consolidated statements of operations and comprehensive income, in the second quarter of 2021.
51
Debt was recorded in our consolidated balance sheets as follows:
Instrument (In thousands)
2019 Term Note
2018 Credit Agreement & 2021 Credit Agreement
Total debt
Less current portion of long-term debt (included in
Accrued operating expenses)
Long-term debt
$
$
$
$
NOTE 4 – FAIR VALUE MEASUREMENTS
January 29, 2022
January 30, 2021
—
$
3,500
3,500
—
3,500
$
$
$
50,264
—
50,264
(14,500)
35,764
At January 30, 2021, we held investments in money market funds, which were recorded in our consolidated balance sheets at
their fair value. These highly liquid investments were recorded in cash and cash equivalents in our consolidated balance sheets
at their fair value. The fair values of the money market fund investments were Level 1 valuations under the fair value hierarchy
because each fund’s quoted market value per share was available in an active market.
At January 30, 2021, in connection with our nonqualified deferred compensation plan, we had mutual fund investments, which
were recorded in other assets. These investments were classified as trading securities and were recorded at their fair value. The
fair values of mutual fund investments were Level 1 valuations under the fair value hierarchy because each fund’s quoted
market value per share was available in an active market. In 2021, we terminated the nonqualified deferred compensation plan,
liquidated the mutual fund investments, and distributed the proceeds to plan participants.
As of January 29, 2022, we had no investments recorded in our consolidated balance sheets. As of January 30, 2021, the fair
value of our investments were recorded in our consolidated balance sheets as follows:
(In thousands)
Assets:
Balance Sheet Location
January 30, 2021
Level 1
Money market funds
Mutual funds - deferred compensation plan
Cash and cash equivalents
Other Assets
$
$
175,113 $
32,484 $
175,113
32,484
The fair values of our long-term obligations under the 2021 Credit Agreement are estimated based on quoted market prices for
the same or similar issues and the current interest rates offered for similar instruments. These fair value measurements are
classified as Level 2 within the fair value hierarchy. The carrying value of these instruments was $3.5 million as of January 29,
2022.
The carrying value of accounts receivable and accounts payable approximates fair value because of the relatively short maturity
of these items.
52
NOTE 5 – LEASES
Our leased property consists of our retail stores, distribution centers, store security, and other office equipment.
In the second quarter of 2020, we completed sale and leaseback transactions for our distribution centers located in Columbus,
OH; Durant, OK; Montgomery, AL; and Tremont, PA. The leases for the Columbus, OH and Montgomery, AL distribution
centers each have an initial term of 15 years and multiple five-year extension options. The leases for the Durant, OK and
Tremont, PA distribution centers each have an initial term of 20 years and multiple five-year extension options. At lease
commencement, we determined that none of the extension options were reasonably certain to be exercised. Therefore, none of
the extension options were included in the computation of the operating lease liabilities and operating lease right-of-use assets.
At commencement of the leases, we recorded aggregate operating lease liabilities of $466.1 million and aggregate operating
lease right-of-use assets of $466.1 million. The weighted average discount rate for the leases was 6.2%. All of the leases are
absolute net. Additionally, all of the leases include a right of first refusal beginning after the fifth year of the initial term which
allows us to purchase the leased property if the buyer-lessor receives a bona fide purchase offer from a third-party. For
additional information on the sale and leaseback transactions, see Note 10 to the accompanying consolidated financial
statements.
Leases were recorded in our consolidated balance sheets as follows:
Leases (In thousands)
Balance Sheet Location
January 29, 2022 January 30, 2021
Assets
Operating
Finance
Total right-of-use assets
Liabilities
Current
Operating
Finance
Noncurrent
Operating
Finance
Total lease liabilities
Operating lease right-of-use assets
Property and equipment - net
Current operating lease liabilities
Accrued operating expenses
Noncurrent operating lease liabilities
Other liabilities
$
$
$
$
1,731,995 $
1,686
1,733,681 $
1,649,009
3,667
1,652,676
242,275 $
869
226,075
3,190
1,569,713
955
1,813,812 $
1,465,433
1,242
1,695,940
The components of lease costs were as follows:
Lease cost (In thousands)
Operating lease cost
Finance lease cost
Statements of Operations and
Comprehensive Income Location
2021
2020
2019
Selling and administrative expenses $
355,021 $
326,780
295,810
Amortization of leased assets Depreciation
Interest on lease liabilities
Interest expense
Selling and administrative expenses
Selling and administrative expenses
Short-term lease cost
Variable lease cost
Total lease cost
3,024
104
5,152
84,940
448,241 $
3,800
274
4,728
88,074
423,656 $
4,373
948
5,671
81,666
388,468
$
In 2021, 2020, and 2019, our operating lease cost above included $1.1 million, $0.9 million and $3.6 million, respectively, of
right-of-use asset impairment charges related to store closures prior to lease termination date. In 2021, our operating lease cost
above included $4.1 million of right-of-use asset impairment charges related to our store impairment review for
underperforming stores.
53
Maturity of our lease liabilities at January 29, 2022, was as follows:
Fiscal Year (In thousands)
Operating Leases
Finance Leases
2022
2023
2024
2025
2026
Thereafter
Total lease payments
Less amount to discount to present value
Present value of lease liabilities
$
323,514
$
333,551
291,943
252,124
208,701
834,427
$
$
$
2,244,260
(432,272)
1,811,988
$
$
$
929
330
261
229
185
—
1,934
(110)
1,824
Lease term and discount rate for our operating leases were as follows:
Weighted average remaining lease term (years)
Weighted average discount rate
8.3
4.3 %
8.7
4.5 %
January 29, 2022
January 30, 2021
Our weighted average discount rate represents our estimated incremental borrowing rate, assuming a secured borrowing, based
on the remaining lease term at the time of adoption of the standard, lease commencement, or the period in which the lease term
expectation was modified. Our finance leases, and the associated remaining lease term and discount rate, are insignificant.
NOTE 6 – SHAREHOLDERS’ EQUITY
Earnings per Share
There were no adjustments required to be made to weighted-average common shares outstanding for purposes of computing
basic and diluted earnings per share and there were no securities outstanding in any year presented, which were excluded from
the computation of earnings per share other than antidilutive RSUs, PSUs, and PRSUs. The RSUs, PSUs, and PRSUs that were
antidilutive, as determined under the treasury stock method, were 0.2 million for 2021, immaterial for 2020 and 0.3 million for
2019.
A reconciliation of the number of weighted-average common shares outstanding used in the basic and diluted earnings per share
computations is as follows:
(In thousands)
Weighted-average common shares outstanding:
Basic
Dilutive effect of share-based awards
Diluted
2021
2020
2019
32,723
632
33,355
38,233
834
39,067
39,244
107
39,351
Share Repurchases
On December 1, 2021, our Board of Directors authorized the repurchase of up to $250 million of our common shares (“2021
Repurchase Authorization”). Pursuant to the 2021 Repurchase Authorization, we may repurchase shares in the open market
and/or in privately negotiated transactions at our discretion, subject to market conditions and other factors. The 2021
Repurchase Authorization has no scheduled termination date.
On August 27, 2020, our Board of Directors authorized the repurchase of up to $500 million of our common shares (“2020
Repurchase Authorization”). Pursuant to the 2020 Repurchase Authorization, we may repurchase shares in the open market
and/or in privately negotiated transactions at our discretion, subject to market conditions and other factors. The 2020
Repurchase Authorization was exhausted in the third quarter of 2021.
54
The share repurchases under the 2020 Repurchase Authorization and 2021 Repurchase Authorization in 2021 were as follows:
2021:
2020 Repurchase Authorization
2021 Repurchase Authorization
Total
Number of
Shares
Repurchased
Amount of
Repurchased
Shares
Remaining
Authorization
(In thousands)
(In thousands)
(In thousands)
5,594
2,064
7,658
$
$
327,167
$
90,575
417,742
$
—
159,425
159,425
Common shares acquired through repurchase authorizations are held in treasury at cost and are available to meet obligations
under equity compensation plans and for general corporate purposes.
In addition to shares repurchased under the repurchase authorizations, purchases of common shares reported in the consolidated
statements of shareholders’ equity include shares repurchased to satisfy income tax withholdings associated with the vesting of
share-based awards.
Dividends
The Company declared and paid cash dividends per common share during the periods presented as follows:
2020:
First quarter
Second quarter
Third quarter
Fourth quarter
Total
2021:
First quarter
Second quarter
Third quarter
Fourth quarter
Total
Dividends
Per Share
Amount
Declared
Amount Paid
(In thousands)
(In thousands)
$
$
$
$
0.30
0.30
0.30
0.30
1.20
0.30
0.30
0.30
0.30
1.20
$
$
$
$
11,905
12,335
11,993
11,749
47,982
$
11,206
$
10,611
10,209
9,486
$
41,512
$
12,478
11,807
11,540
11,139
46,964
12,460
10,204
9,890
9,099
41,653
The amount of dividends declared may vary from the amount of dividends paid in a period due to the vesting of restricted stock
units and performance share units, which accrue dividend equivalent rights that are paid when the award vests. The payment of
future dividends will be at the discretion of our Board of Directors and will depend on our financial condition, results of
operations, capital requirements, compliance with applicable laws and agreements and any other factors deemed relevant by our
Board of Directors.
NOTE 7 – SHARE-BASED PLANS
Our shareholders approved the Big Lots 2020 Long-Term Incentive Plan (“2020 LTIP”) in June 2020. The 2020 LTIP
authorizes the issuance of incentive and nonqualified stock options, restricted stock, restricted stock units, deferred stock units,
performance shares, PSUs, performance units, stock appreciation rights, cash-based awards, and other share-based awards. We
have issued restricted stock units and PSUs under the 2020 LTIP. The number of common shares available for issuance under
the 2020 LTIP consists of an initial allocation of 3,600,000 common shares plus any common shares subject to the 1,360,943
outstanding awards as of February 1, 2020 under the Big Lots 2017 Long-Term Incentive Plan (“2017 LTIP”) that, on or after
February 1, 2020, cease for any reason to be subject to such awards (other than by reason of exercise or settlement). The
Compensation Committee of our Board of Directors (“Committee”), which is charged with administering the 2020 LTIP, has
the authority to determine the terms of each award.
55
Our former equity compensation plan, the 2017 LTIP, approved by our shareholders in May 2017, was terminated on June 10,
2020. The 2017 LTIP authorized the issuance of incentive and nonqualified stock options, restricted stock, restricted stock
units, deferred stock awards, PSUs, stock appreciation rights, cash-based awards, and other share-based awards. We have issued
restricted stock units, PSUs, and PRSUs under the 2017 LTIP.
Share-based compensation expense was $39.6 million, $26.2 million, and $13.1 million in 2021, 2020, and 2019, respectively.
Non-vested Restricted Stock
The following table summarizes the non-vested restricted stock awards and restricted stock units activity for fiscal years 2019,
2020, and 2021:
Outstanding non-vested restricted stock at February 2, 2019
Granted
Vested
Forfeited
Outstanding non-vested restricted stock at February 1, 2020
Granted
Vested
Forfeited
Outstanding non-vested restricted stock at January 30, 2021
Granted
Vested
Forfeited
Outstanding non-vested restricted stock at January 29, 2022
Weighted
Average
Grant-Date
Fair Value
Per Share
Number of
Shares
483,182 $
440,014
(202,101)
(72,585)
648,510 $
1,031,213
(308,797)
(156,714)
1,214,212 $
255,071
(481,689)
(78,307)
909,287 $
46.50
33.54
46.26
39.89
38.52
18.18
40.65
22.80
22.71
68.71
25.12
28.19
33.87
The non-vested restricted stock units granted in 2019, 2020, and 2021 generally vest, and are expensed, on a ratable basis over
three years from the grant date of the award, if a threshold financial performance objective is achieved and the grantee remains
employed by us through the vesting dates.
Performance Share Units
In 2021 and prior to 2020, we awarded PSUs to certain members of management, which will vest if certain financial
performance objectives are achieved over a three-year performance period and the grantee remains employed by us through that
performance period. The financial performance objectives for each fiscal year within the three-year performance period are
generally approved by the Committee during the first quarter of the respective fiscal year.
As a result of the process used to establish the financial performance objectives, we will only meet the requirements of
establishing a grant date for the PSUs when we communicate the financial performance objectives for the third fiscal year of the
award to the award recipients, which will then trigger the service inception date, the fair value of the awards, and the associated
expense recognition period. If we meet the applicable threshold financial performance objectives over the three-year
performance period and the grantee remains employed by us through the end of the performance period, the PSUs will vest on
the first trading day after we file our Annual Report on Form 10-K for the last fiscal year in the performance period.
In 2020, we awarded 413,022 PRSUs to certain members of senior management, which were subject to vesting based on the
achievement of share price performance goals and a minimum service requirement of one year. The PRSUs had a contractual
term of three years. Shares issued in connection with vested PRSUs are generally restricted from sale, transfer, or other
disposition prior to the third anniversary of the grant date except under certain circumstances, including death, disability, or
change in control. In 2021, based on attainment of the share price performance goals and fulfillment of the minimum service
requirement, 339,568 PRSUs vested. At January 29, 2022, there were no PRSUs outstanding.
56
We have begun, or expect to begin, recognizing expense related to PSUs as follows:
Issue Year
2019
2021
Total
Outstanding PSUs
at
January 29, 2022
240,110
174,904
415,014
Actual Grant Date
March 2021
Expected Valuation
(Grant) Date
Actual or Expected
Expense Period
March 2023
Fiscal 2021
Fiscal 2023
The number of shares to be distributed upon vesting of the PSUs depends on our average performance attained during the three-
year performance period as compared to the targets defined by the Committee, and may result in the distribution of an amount
of shares that is greater or less than the number of PSUs granted, as defined in the award agreement. At January 29, 2022, we
estimate the attainment of an average performance that is substantially greater than the average targets established for the PSUs
issued in 2019. In 2021, 2020, and 2019, we recognized $25.2 million, $14.2 million and $1.2 million, respectively, in share-
based compensation expense related to PSUs and PRSUs.
The following table summarizes the activity related to PSUs and PRSUs for fiscal years 2019, 2020, and 2021:
Outstanding PSUs and PRSUs at February 2, 2019
Granted
Vested
Forfeited
Outstanding PSUs and PRSUs at February 1, 2020
Granted
Vested
Forfeited
Outstanding PSUs and PRSUs at January 30, 2021
Granted
Vested
Forfeited
Outstanding PSUs and PRSUs at January 29, 2022
Weighted
Average
Grant-Date
Fair Value
Per Share
Number of
Shares
282,083 $
217,518
(282,083)
(35,596)
181,922 $
580,285
(181,062)
(107,114)
474,031 $
263,787
(474,031)
(23,677)
240,110 $
55.67
31.89
55.67
31.89
31.89
24.53
31.89
25.56
24.31
70.24
24.31
70.24
70.24
Board of Directors’ Awards
In 2019 and 2020, we granted (1) the chairman of our Board of Directors an annual restricted stock unit award having a grant
date fair value of approximately $210,000, and (2) the remaining non-employee directors an annual restricted stock unit award
having a grant date fair value of approximately $145,000. In 2021, we granted (1) the chairman of our Board of Directors an
annual restricted stock unit award having a grant date fair value of approximately $245,000, and (2) the remaining non-
employee directors an annual restricted stock unit award having a grant date fair value of approximately $145,000. These
awards vest on the earlier of (1) the trading day immediately preceding the annual meeting of our shareholders following the
grant of such awards or (2) the death or disability of the grantee. However, the non-employee directors will forfeit their
restricted stock units if their service on the Board terminates before either vesting event occurs. Additionally, we allow our non-
employee directors to defer all or a portion of their restricted stock unit award until the earlier of the first to occur of: (1) the
specified date by the non-employee director in the deferral agreement, (2) the non-employee director’s death or disability, or (3)
the date the non-employee director ceases to serve as a member of the Board of Directors.
57
During 2021, 2020, and 2019, the following activity occurred under our share-based compensation plans:
(In thousands)
Total intrinsic value of stock options exercised
Total fair value of restricted stock vested
Total fair value of PSU and PRSUs vested
2021
2020
2019
$
$
— $
31,954
37,387 $
161 $
7,102
924 $
42
6,452
9,849
The total unearned compensation cost related to all share-based awards outstanding, excluding PSUs issued in 2021, at
January 29, 2022 was approximately $17.4 million. This compensation cost is expected to be recognized through January 2025
based on existing vesting terms with the weighted-average remaining expense recognition period being approximately 1.8 years
from January 29, 2022.
NOTE 8 – INCOME TAXES
The provision for income taxes was comprised of the following:
(In thousands)
Current:
U.S. Federal
U.S. State and local
Total current tax expense
Deferred:
U.S. Federal
U.S. State and local
Total deferred tax expense
Income tax provision
2021
2020
2019
$
26,888 $
8,138
35,026
13,651
5,356
19,007
206,883 $
60,947
267,830
(40,848)
(11,567)
(52,415)
$
54,033 $
215,415 $
15,495
7,215
22,710
48,613
3,761
52,374
75,084
Reconciliation between the statutory federal income tax rate and the effective income tax rate was as follows:
Statutory federal income tax rate
Effect of:
State and local income taxes, net of federal tax benefit
Executive compensation limitations - permanent difference
Work opportunity tax and other employment tax credits
Excess tax (benefit) detriment from share-based compensation
Other, net
Effective income tax rate
Income tax payments and refunds were as follows:
2021
2020
2019
21.0 %
21.0 %
21.0 %
4.6
1.8
(1.4)
(2.3)
(0.4)
23.3 %
4.6
0.2
(0.3)
0.2
(0.2)
25.5 %
2.7
0.4
(0.8)
0.4
(0.1)
23.6 %
(In thousands)
Income taxes paid
Income taxes refunded
Net income taxes paid
2021
2020
2019
$
$
111,206 $
(546)
110,660 $
217,308 $
(1,522)
215,786 $
29,375
(2,313)
27,062
58
Deferred taxes reflect the net tax effects of temporary differences between carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax, including income tax uncertainties. Significant components
of our deferred tax assets and liabilities were as follows:
January 29, 2022
January 30, 2021
$
474,584 $
449,058
(In thousands)
Deferred tax assets:
Lease liabilities, net of lease incentives
Depreciation and fixed asset basis differences
Sale and leaseback financing liability
Uniform inventory capitalization
Workers’ compensation and other insurance reserves
Compensation related
Accrued payroll taxes related to CARES Act
Accrued state taxes
State tax credits, net of federal tax benefit
Accrued operating liabilities
Other
Valuation allowances, net of federal tax benefit
Total deferred tax assets
Deferred tax liabilities:
Right-of-use assets, net of amortization
Accelerated depreciation and fixed asset basis differences
Synthetic lease obligation
Deferred gain on like-kind exchange
Lease construction reimbursements
Prepaid expenses
Workers’ compensation and other insurance reserves
Other
Total deferred tax liabilities
Net deferred tax (liabilities) assets
$
40,302
33,508
22,734
22,097
12,703
4,674
2,557
2,285
2,145
13,740
(2,093)
629,236
441,786
120,224
38,582
14,476
8,333
5,143
4,493
6,639
639,676
(10,440) $
37,117
32,263
24,050
20,692
20,171
9,367
4,045
2,470
4,011
14,500
(2,105)
615,639
421,801
111,427
34,438
14,809
9,216
4,539
3,591
7,251
607,072
8,567
Our deferred tax assets and deferred tax liabilities, netted by tax jurisdiction, are summarized in the table below:
(In thousands)
U.S. Federal
U.S. State and local
Net deferred tax (liabilities) assets
January 29, 2022
January 30, 2021
$
$
(21,413) $
10,973
(10,440) $
(7,762)
16,329
8,567
We have the following income tax loss and credit carryforwards at January 29, 2022 (amounts are shown net of tax excluding
the federal income tax effect of the state and local items):
(In thousands)
U.S. State and local:
State net operating loss carryforwards
California enterprise zone credits
Other state credits
$
28 Expires predominately during fiscal year 2041
2,748 Predominately expires fiscal year 2023
144 Expires fiscal years through 2025
Total income tax loss and credit carryforwards
$
2,920
59
The following is a tabular reconciliation of the total amounts of unrecognized tax benefits for 2021, 2020, and 2019:
(In thousands)
2021
2020
2019
Unrecognized tax benefits - beginning of year
$
9,465 $
10,760 $
Gross increases - tax positions in current year
Gross increases - tax positions in prior period
Gross decreases - tax positions in prior period
Settlements
Lapse of statute of limitations
410
1,864
(1,039)
(125)
(713)
728
745
(1,871)
(20)
(877)
11,986
976
1,031
(2,333)
(484)
(416)
Unrecognized tax benefits - end of year
$
9,862 $
9,465 $
10,760
At the end of 2021 and 2020, the total amount of unrecognized tax benefits that, if recognized, would affect the effective
income tax rate is $7.2 million and $7.1 million, respectively, after considering the federal tax benefit of state and local income
taxes of $1.5 million and $1.3 million, respectively. Unrecognized tax benefits of $1.3 million and $1.1 million in 2021 and
2020, respectively, relate to tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty
about the timing of such deductibility. The uncertain timing items could result in the acceleration of the payment of cash to the
taxing authority to an earlier period.
We recognized an expense (benefit) associated with interest and penalties on unrecognized tax benefits of approximately $(1.1)
million, $(0.4) million, and $(1.1) million during 2021, 2020, and 2019, respectively, as a component of income tax expense.
The amount of accrued interest and penalties recognized in the accompanying consolidated balance sheets at January 29, 2022
and January 30, 2021 was $2.8 million and $3.9 million, respectively.
We are subject to U.S. federal income tax, and income tax of multiple state and local jurisdictions. The statute of limitations for
assessments on our federal income tax returns for periods prior to 2018 has lapsed. In addition, the state income tax returns filed
by us are subject to examination generally for periods beginning with 2006, although state income tax carryforward attributes
generated prior to 2006 and non-filing positions may still be adjusted upon examination. We have various state returns in the
process of examination or administrative appeal.
We have estimated the reasonably possible expected net change in unrecognized tax benefits through January 28, 2023, based
on expected cash and noncash settlements or payments of uncertain tax positions and lapses of the applicable statutes of
limitations for unrecognized tax benefits. The estimated net decrease in unrecognized tax benefits for the next 12 months is
approximately $4.0 million. Actual results may differ materially from this estimate.
NOTE 9 – COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS
California Wage and Hour Matters
We currently are defending several wage and hour matters in California. The cases were brought by various current and/or
former California associates alleging various violations of California wage and hour laws. Upon further consideration of these
matters, including outcomes of cases against other retailers, during the first quarter of 2019, we determined a loss from these
matters was probable and we increased our accrual for litigation by recording a $7.3 million charge as our best estimate for
these matters in aggregate. Since the end of the first quarter of 2019, we have settled and/or reached settlement agreements,
including final approval by the courts, in each wage and hour class action that was pending against the Company and a
substantial portion of the amount accrued in the first quarter of 2019 has been paid. We intend to defend ourselves vigorously
against the allegations levied in the remaining individual and representative lawsuits. We believe the existing accrual for
litigation remains appropriate.
Other Matters
We are involved in other legal actions and claims arising in the ordinary course of business. We currently believe that each such
action and claim will be resolved without a material effect on our financial condition, results of operations, or liquidity.
However, litigation involves an element of uncertainty. Future developments could cause these actions or claims to have a
material effect on our financial condition, results of operations, and liquidity.
We are self-insured for certain losses relating to property, general liability, workers’ compensation, and employee medical,
dental, and prescription drug benefit claims, a portion of which is paid by employees, and we have purchased stop-loss
coverage in order to limit significant exposure in these areas. Accrued insurance liabilities are actuarially determined based on
60
claims filed and estimates of claims incurred but not reported. We use letters of credit, which amounted to $31.5 million at
January 29, 2022, as collateral to back certain of our self-insured losses with our claims administrators.
At January 29, 2022, our noncancellable commitments were immaterial.
NOTE 10 - GAIN ON SALE OF DISTRIBUTION CENTER
In the second quarter of 2020, we completed sale and leaseback transactions for our distribution centers located in Columbus,
OH; Durant, OK; Montgomery, AL; and Tremont, PA. The aggregate sale price for the transactions was $725.0 million. Due to
sale-leaseback accounting requirements, the proceeds received in the transactions were allocated between proceeds on the sale
of the distribution centers and financing proceeds. Accordingly, aggregate net proceeds, before income taxes, on the sales of the
distribution centers were $586.9 million and the aggregate gain on the sales was $463.1 million. Additionally, we incurred $4.0
million of additional selling and administrative expenses in connection with the transaction, which primarily consisted of
consulting services. The remainder of consideration received was financing liability proceeds of $134.0 million. The current
portion of the financing liability was recorded in accrued operating expenses in our consolidated balance sheets. The noncurrent
portion of the financing liability was recorded in other liabilities in our consolidated balance sheets. Interest expense will be
recognized on the financing liability using the effective interest method and the financing liability will be accreted over the
duration of the lease agreements. Future payments to the buyer-lessor will be allocated between the financing liability and the
lease liabilities. See Note 5 to the accompanying consolidated financial statements for information on the lease agreements.
In the third quarter of 2019, we completed the sale of our distribution center located in Rancho Cucamonga, CA. Net proceeds
from the sale of the distribution center were $190.3 million and our gain on the sale was $178.5 million.
NOTE 11 – BUSINESS SEGMENT DATA
We use the following seven merchandise categories, which are consistent with our internal management and reporting of
merchandise net sales: Food; Consumables; Soft Home; Hard Home; Furniture; Seasonal; and Apparel, Electronics, & Other.
The Food category includes our beverage & grocery; specialty foods; and pet departments. The Consumables category includes
our health, beauty and cosmetics; plastics; paper; and chemical departments. The Soft Home category includes our home décor;
frames; fashion bedding; utility bedding; bath; window; decorative textile; and area rugs departments. The Hard Home category
includes our small appliances; table top; food preparation; stationery; home maintenance; home organization; and toys
departments. The Furniture category includes our upholstery; mattress; ready-to-assemble; and case goods departments. The
Seasonal category includes our lawn & garden; summer; Christmas; and other holiday departments. The Apparel, Electronics,
& Other department includes our apparel; electronics; jewelry; hosiery; and candy & snacks departments, as well as the
assortments for The Lot and Queue Line.
In 2021 we realigned our merchandise categories and renamed our Electronics, Toys, & Accessories merchandise category as
Apparel, Electronics, & Other. See the reclassifications section of Note 1 to the consolidated financial statements for further
discussion.
The following table presents net sales data by merchandise category:
(In thousands)
Furniture
Seasonal
Soft Home
Food
Hard Home
Consumables
Apparel, Electronics, & Other
Net sales
2021
2020
2019
$
1,684,393 $
954,165
1,736,932 $
815,378
1,427,129
773,720
822,559
746,415
675,041
665,732
602,298
887,743
823,420
700,186
737,630
497,897
721,840
780,970
589,332
624,145
406,044
$
6,150,603 $
6,199,186 $
5,323,180
61
NOTE 12 – RESTRUCTURING COSTS
In March 2019, we announced a transformational restructuring initiative, referred to as “Operation North Star,” to both drive
growth in our net sales and reduce costs within our business. The goal of the initiative was to generate costs savings from this
initiative through improved markdown and merchandise management, reduced management layers, optimization of store labor,
improved efficiencies in our supply chain, and reduced central and other costs. With the initial implementation of this initiative
in 2019, we incurred upfront costs, including employee severance costs and consultancy fees, and made payments to execute
the initiative of $38.3 million.
62
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Principal Executive Officer and Principal Financial Officer, has evaluated the
effectiveness of our disclosure controls and procedures, as that term is defined in Rules 13a-15(e) and 15d-15(e) of the
Securities Exchange Act of 1934, as amended (“Exchange Act”), as of the end of the period covered by this report. Based on
that evaluation, our Principal Executive Officer and Principal Financial Officer have each concluded that such disclosure
controls and procedures were effective as of the end of the period covered by this report.
Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act) for us. Our internal control over financial reporting is designed to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in
accordance with accounting principles generally accepted in the United States of America.
Management assessed the effectiveness of our internal control over financial reporting as of January 29, 2022. In making its
assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission in Internal Control - Integrated Framework (2013 Framework). Based on this assessment, management, including
our Principal Executive Officer and Principal Financial Officer, concluded that we maintained effective internal control over
financial reporting as of January 29, 2022.
Our independent registered public accounting firm, Deloitte & Touche LLP, has issued an attestation report on our internal
control over financial reporting. The report appears in the Financial Statements and Supplementary Data section of this Form
10-K.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that
have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
63
Item 10. Directors, Executive Officers and Corporate Governance
Part III
The information contained under the captions “Proposal One: Election of Directors,” “Governance,” and “Stock Ownership” in
our definitive Proxy Statement for our 2022 annual meeting of shareholders (“2022 Proxy Statement”), with respect to
directors, shareholder nomination procedures, the code of ethics, the Audit Committee, our audit committee financial experts,
and Section 16(a) beneficial ownership reporting compliance, is incorporated herein by reference in response to this item. The
information contained in Part I of this Form 10-K under the caption “Supplemental Item. Information about our Executive
Officers,” with respect to executive officers, is incorporated herein by reference in response to this item.
In the “Investors” section of our website (www.biglots.com) under the “Corporate Governance” and “SEC Filings” captions,
the following information relating to our corporate governance may be found: Corporate Governance Guidelines; charters of
our Board of Directors’ Audit, Capital Allocation Planning, Compensation, and Nominating/Corporate Governance
Committees, and our Public Policy and Environmental Affairs Committee; Code of Business Conduct and Ethics; Code of
Ethics for Financial Officers; Chief Executive Officer and Chief Financial Officer certifications related to our SEC filings; the
means by which shareholders may communicate with our Board of Directors; and transactions in our securities by our directors
and executive officers. The Code of Business Conduct and Ethics applies to all of our associates, including our directors and
our principal executive officer, principal financial officer, and principal accounting officer. The Code of Ethics for Financial
Professionals applies to our Chief Executive Officer and all other Senior Financial Officers (as that term is defined therein) and
contains provisions specifically applicable to the individuals serving in those positions. We intend to satisfy the requirement
under Item 5.05 of Form 8-K regarding disclosure of any amendments to, and any waivers from, our Code of Business Conduct
and Ethics (to the extent applicable to our directors and executive officers (including our principal executive officer, principal
financial officer, and principal accounting officer)) and our Code of Ethics for Financial Professionals in the “Investors” section
of our website (www.biglots.com) under the “Corporate Governance” caption. We will provide any of the foregoing
information without charge upon written request to our Corporate Secretary addressed to our principal executive offices at 4900
E. Dublin-Granville Road, Columbus, Ohio 43081.
Item 11. Executive Compensation
The information contained under the caption “Governance” with respect to Compensation Committee interlocks and insider
participation and under the captions “Director Compensation,” “Executive Compensation” and “Compensation Committee
Report” in the 2022 Proxy Statement is incorporated herein by reference in response to this item.
64
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Equity Compensation Plan Information
The following table summarizes information as of January 29, 2022, relating to our equity compensation plans pursuant to
which our common shares may be issued.
Number of securities
to be issued upon
exercise of
outstanding options,
warrants, and rights
(#)
Weighted-average
exercise price of
outstanding options,
warrants, and
rights ($)
Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in column
(a)) (#)
Plan Category
Equity compensation plans approved by
security holders
Equity compensation plans not approved
by security holders
Total
(a)
(b)
(c)
1,324,301 (1)
—
1,324,301
— (2)
—
— (2)
3,309,243 (3)
—
3,309,243
(1)
Includes performance share units and restricted stock units granted under the 2020 LTIP and the 2017 LTIP.
(2) The weighted average exercise price does not take into account the performance share units and the restricted stock
units granted under the 2020 LTIP and 2017 LTIP.
(3) The common shares available for issuance under the 2020 LTIP are limited to 3,309,243 common shares. There are
no common shares available for issuance under any of the other shareholder-approved plans.
The 2017 LTIP was approved in May 2017 and was terminated in June 2020. The 2020 LTIP was approved in June 2020. See
Note 7 to the accompanying consolidated financial statements.
The information contained under the caption “Stock Ownership” in the 2022 Proxy Statement, with respect to the security
ownership of certain beneficial owners and management, is incorporated herein by reference in response to this item.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information contained under the caption “Governance” in the 2022 Proxy Statement, with respect to the determination of
director independence and related person transactions, is incorporated herein by reference in response to this item.
Item 14. Principal Accountant Fees and Services
The information contained under the captions “Audit Committee Disclosure” in the 2022 Proxy Statement, with respect to our
audit and non-audit services pre-approval policy and the fees paid to our independent registered public accounting firm,
Deloitte & Touche LLP, is incorporated herein by reference in response to this item.
65
Item 15. Exhibits and Financial Statement Schedules
Index to Consolidated Financial Statements, Financial Statement Schedules and Exhibits
Part IV
(a)
(1)
Documents filed as part of this report:
Financial Statements
Reports of Independent Registered Public Accounting Firm
Consolidated Statements of Operations and Comprehensive Income
Consolidated Balance Sheets
Consolidated Statements of Shareholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
36
40
41
42
43
44
All other financial statements not listed in the preceding index are omitted because they are not required or are not applicable or
because the information required to be set forth therein either was not material or is included in the consolidated financial
statements or notes thereto.
(2)
Financial Statement Schedules
All schedules are omitted because they are not required or are not applicable or because the information required to be set forth
therein either was not material or is included in the consolidated financial statements or notes thereto.
(3)
Exhibits. Exhibits marked with an asterisk (*) are filed herewith. The Exhibit marked with two asterisks (**) is
furnished electronically with this Annual Report. Certain portions of the exhibits marked with a pound sign (#) have been
excluded from the exhibit pursuant to Item 601(b)(10)(iv) of Regulation S-K. Copies of exhibits will be furnished upon written
request and payment of our reasonable expenses in furnishing the exhibits. Exhibits 10.1 through 10.24 are management
contracts or compensatory plans or arrangements.
Exhibit No.
2
3.1
3.2
3.3
4.1
4.2
10.1
10.2
10.3
10.4
Document
Agreement of Merger (incorporated herein by reference to Exhibit 2 to our Form 10-Q for the quarter ended
May 5, 2001) (File No. 1-8897).
Amended Articles of Incorporation (incorporated herein by reference to Exhibit 3(a) to our Form 10-Q for
the quarter ended May 5, 2001) (File No. 1-8897).
Amendment to the Amended Articles of Incorporation of Big Lots, Inc. (incorporated herein by reference to
Exhibit 3.1 to our Form 8-K dated May 27, 2010) (File No. 1-8897).
Amended Code of Regulations of Big Lots, Inc. (incorporated herein by reference to Exhibit 4.3 to our
Form S-8 dated June 10, 2020).
Specimen Common Share Certificate (incorporated herein by reference to Exhibit 4(a) to our Form 10-K for
the year ended February 2, 2002) (File No. 1-8897).
Description of Big Lots, Inc.’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act
of 1934 (Incorporated herein by reference to Exhibit 4.2 to our Form 10-K for the year ended January 30,
2021).
Big Lots 2017 Long-Term Incentive Plan (incorporated herein by reference to Appendix A to our definitive
proxy statement on Schedule 14A relating to the 2017 Annual Meeting of Shareholders filed April 11,
2017).
Form of Big Lots 2017 Long-Term Incentive Plan Restricted Stock Units Award Agreement (incorporated
herein by reference to Exhibit 10.1 to our Form 10-Q for the quarter ended April 29, 2017).
Form of Big Lots 2017 Long-Term Incentive Plan Performance Share Units Award Agreement
(incorporated herein by reference to Exhibit 10.2 to our Form 10-Q for the quarter ended April 29, 2017).
Form of Big Lots 2017 Long-Term Incentive Plan Restricted Stock Units Retention Award Agreement
(incorporated herein by reference to Exhibit 10.1 to our Form 10-Q for the quarter ended August 4, 2018).
66
Exhibit No.
10.5
Document
Form of Big Lots 2017 Long-Term Incentive Plan Deferral Election Form and Deferred Stock Units Award
for Non-Employee Directors (incorporated herein by reference to Exhibit 10.1 to our Form 10-Q for the
quarter ended October 28, 2017).
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14*
10.15
10.16
10.17
10.18
10.19
10.20
10.21
10.22
10.23
10.24
10.25
10.26
10.27
10.28
10.29
10.30
Form of Big Lots 2017 Long-Term Incentive Plan Performance Share Units Award Agreement
(incorporated herein by reference to Exhibit 10.1 to our Form 8-K dated April 3, 2020).
Big Lots 2020 Long-Term Incentive Plan (incorporated herein by reference to Appendix A to the
Registrant’s definitive proxy statement on Schedule 14A relating to the 2020 Annual Meeting of
Shareholders of the Registrant filed with the Commission on May 1, 2020 (File No. 1-8897)).
Form of Big Lots 2020 Long-Term Incentive Plan Restricted Stock Units Award Agreement for Non-
Employee Directors (incorporated herein by reference to Exhibit 10.3 to our Form 10-Q for the quarter
ended May 2, 2020).
Form of Big Lots 2020 Long-Term Incentive Plan Restricted Stock Units Award Agreement (incorporated
herein by reference to Exhibit 10.4 to our Form 10-Q for the quarter ended May 2, 2020).
Form of Big Lots 2020 Long-Term Incentive Plan Deferral Election Form and Deferred Stock Unit Award
Agreement for Non-Employee Directors (incorporated herein by reference to Exhibit 10.5 to our Form 10-Q
for the quarter ended May 2, 2020).
Form of Big Lots 2020 Long-Term Incentive Plan Restricted Performance Share Units Award Agreement
(incorporated herein by reference to Exhibit 10.6 to our Form 10-Q for the quarter ended May 2, 2020).
Form of Big Lots 2020 Long-Term Incentive Plan Performance Share Units Award Agreement
(incorporated herein by reference to Exhibit 10.1 to our Form 8-K dated March 9, 2021).
Form of Big Lots 2020 Long-Term Incentive Plan Restricted Stock Units Award Agreement (incorporated
herein by reference to Exhibit 10.2 to our Form 8-K dated March 9, 2021).
Form of Big Lots 2020 Long-Term Incentive Plan Performance Share Units Award Agreement.
Big Lots 2019 Bonus Plan (incorporated herein by reference to Exhibit 10.1 to our Form 8-K dated March
5, 2019).
Big Lots Savings Plan (incorporated herein by reference to Exhibit 10.8 to our Form 10-K for the year
ended January 29, 2005) (File No. 1-8897).
Big Lots Supplemental Savings Plan, as amended and restated effective December 31, 2015 (incorporated
herein by reference to Exhibit 10.25 to our Form 10-K for the year ended January 30, 2016).
Big Lots Executive Benefit Plan (incorporated herein by reference to Exhibit 10(m) to our Form 10-K for
the year ended January 31, 2004) (File No. 1-8897).
First Amendment to Big Lots Executive Benefit Plan (incorporated herein by reference to Exhibit 10.11 to
our Form 10-Q for the quarter ended November 1, 2008) (File No. 1-8897).
Offer Letter with Bruce Thorn (incorporated herein by reference to Exhibit 10.1 to our Form 8-K dated
August 21, 2018).
Second Amended and Restated Employment Agreement with Lisa M. Bachmann (incorporated herein by
reference to Exhibit 10.2 to our Form 8-K dated April 29, 2013).
Form of Indemnification Agreement (incorporated herein by reference to Exhibit 10.12 to our Form 10-Q
for the quarter ended November 1, 2008) (File No. 1-8897).
Big Lots Executive Severance Plan (incorporated herein by reference to Exhibit 10.1 to our Form 8-K dated
August 28, 2014).
Form of Big Lots Executive Severance Plan Acknowledgment and Agreement (incorporated by reference to
Exhibit 10.2 to our Form 8-K dated August 28, 2014).
Credit Agreement, dated August 31, 2018, by and among Big Lots, Inc. and Big Lots Stores, Inc., as
borrowers, the Guarantors named therein, and the Banks named therein (incorporated herein by reference to
Exhibit 10.1 to our Form 8-K dated August 29, 2018).
Security Agreement between Big Lots Stores, Inc. and Big Lots Capital, Inc. (incorporated herein by
reference to Exhibit 10.2 to our Form 8-K dated October 29, 2004) (File No. 1-8897).
Stock Purchase Agreement between KB Acquisition Corporation and Consolidated Stores Corporation
(incorporated herein by reference to Exhibit 2(a) to our Form 10-Q for the quarter ended October 28, 2000)
(File No. 1-8897).
Acquisition Agreement between Big Lots, Inc. and Liquidation World Inc. (incorporated herein by
reference to Exhibit 10.1 to our Form 8-K dated May 26, 2011) (File No. 1-8897).
AVDC Participation Agreement incorporated herein by reference to Exhibit 10.40 to our Form 10-K for the
year ended February 3, 2018) (File No. 1-8897).
AVDC Lease Agreement (Real Property) (incorporated herein by reference to Exhibit 10.41 to our Form
10-K for the year ended February 3, 2018) (File No. 1-8897).
67
Exhibit No.
10.31
10.32
10.33#
10.34#
10.35
10.36
10.37*
21*
23*
24*
31.1*
31.2*
32.1*
32.2*
101.Def*
101.Pre*
101.Lab*
101.Cal*
101.Sch
101.Ins
104
Document
AVDC Construction Agency Agreement (incorporated herein by reference to Exhibit 10.42 to our Form 10-
K for the year ended February 3, 2018) (File No. 1-8897).
Settlement Agreement dated April 22, 2020, by and among Big Lots, Inc., Ancora Advisors, LLC, Ancora
Merlin Institutional, LP, Ancora Merlin, LP, Ancora Catalyst Institutional, LP, Ancora Catalyst, LP, Ancora
Catalyst SPV I LP, Ancora Catalyst SPV I SPC Ltd. - Segregated Portfolio C, Macellum Advisors GP,
LLC, Macellum Management, LP, and Macellum Opportunity Fund LP. (incorporated herein by reference
to Exhibit 10.1 to our Form 8-K dated April 22, 2020).
Agreement for Purchase and Sale of Real Property, as amended, between Durant DC, LLC and
BIGDUOK001 LLC relating to the registrant’s distribution center located in Durant, Oklahoma.
(incorporated herein by reference to Exhibit 10.1 to our Form 10-Q for the quarter ended August 1, 2020).
Lease Agreement, as amended, between Big Lots Stores, Inc. and BIGCOOH002, LLC relating to the
registrant’s distribution center located in Columbus, OH (incorporated herein by reference to Exhibit 10.1 to
our Form 10-Q for the quarter ended October 31, 2020).
Second Amended and Restated Credit Agreement, dated September 22, 2021, by and among Big Lots, Inc.
and Big Lots Stores, Inc., as borrowers, the Guarantors named therein, and the Banks named therein
(incorporated by reference to Exhibit 10.3 to our Form 10-Q for the quarter ended November 1, 2021).
Third Amendment to Operative Documents, dated September 22, 2021, by and among AVDC, Inc., as
lessee, the guarantors thereto, Wachovia Service Corporation, as lessor, Wells Fargo Bank, N.A., as agent,
and the lease participant parties thereto (incorporated by reference to Exhibit 10.2 to our Form 8-K dated
September 27, 2021).
First Amendment to Second Amended and Restated Credit Agreement, dated December 16, 2021, by and
among Big Lots, Inc. and Big Lots Stores, Inc., as borrowers, the Guarantors named therein, and the Banks
named therein.
Subsidiaries.
Consent of Deloitte & Touche LLP.
Power of Attorney for James R. Chambers, Sandra Y. Campos, Sebastian J. DiGrande, Marla C. Gottschalk,
Cynthia T. Jamison, Thomas A. Kingsbury, Christopher J. McCormick, Kimberley A. Newton, Nancy A.
Reardon, and Wendy L. Schoppert.
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
XBRL Taxonomy Definition Linkbase Document
XBRL Taxonomy Presentation Linkbase Document
XBRL Taxonomy Labels Linkbase Document
XBRL Taxonomy Calculation Linkbase Document
XBRL Taxonomy Schema Linkbase Document
XBRL Taxonomy Instance Document - the instance document does not appear in the Interactive Date File
because its XBRL tags are embedded within the Inline XBRL document
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
Item 16. Form 10-K Summary
None.
68
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 29th day of March 2022.
BIG LOTS, INC.
By: /s/ Bruce K. Thorn
Bruce K. Thorn
President and Chief Executive Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities indicated on the 29th day of March 2022.
By: /s/ Bruce K. Thorn
Bruce K. Thorn
President and Chief Executive Officer
(Principal Executive Officer)
By: /s/ Jonathan E. Ramsden
Jonathan E. Ramsden
Executive Vice President, Chief Financial and
Administrative Officer
(Principal Financial Officer, Principal Accounting Officer
and Duly Authorized Officer)
/s/ Sandra Y. Campos *
Sandra Y. Campos
Director
/s/ James R. Chambers *
James R. Chambers
Director
/s/ Sebastian J. DiGrande *
Sebastian J. DiGrande
Director
/s/ Marla C. Gottschalk *
Marla C. Gottschalk
Director
/s/ Cynthia T. Jamison *
Cynthia T. Jamison
Director
/s/ Thomas A. Kingsbury *
Thomas A. Kingsbury
Director
/s/ Christopher J. McCormick *
Christopher J. McCormick
Director
/s/ Kimberly A. Newton *
Kimberley A. Newton
Director
/s/ Nancy A. Reardon *
Nancy A. Reardon
Director
/s/ Wendy L. Schoppert *
Wendy L. Schoppert
Director
* The above named Directors of the Registrant execute this report by Ronald A. Robins, Jr., their attorney-in-fact, pursuant
to the power of attorney executed by the above-named Directors all in the capacities indicated and on the 1st day of March
2022, and filed herewith.
By: /s/ Ronald A. Robins, Jr.
Ronald A. Robins, Jr.
Attorney-in-Fact
69
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BIG LOTS 2020 LONG-TERM INCENTIVE PLAN
PERFORMANCE SHARE UNITS AWARD AGREEMENT
Exhibit 10.14
Grantee:
Grant Date:
Target Number of PSUs:
Performance Period:
______________________________
______________________________
______________________________
______________________________
In accordance with the terms of the Big Lots 2020 Long-Term Incentive Plan, as may be amended (“Plan”), this
Performance Share Units Award Agreement (“Agreement”) is entered into as of the Grant Date by and between you,
the Grantee, and Big Lots, Inc., an Ohio corporation (“Company”), in connection with the Company’s grant of these
Performance Share Units (“PSUs”) and related Dividend-Equivalent Rights (“DERs”) to you. The PSUs and DERs
are subject to the terms and conditions of this Agreement and the Plan. Except as otherwise expressly provided
herein, capitalized terms used but not defined in this Agreement (including Exhibit A and Exhibit B) shall have the
respective meanings ascribed to them in the Plan.
This Agreement describes the PSUs and DERs you have been granted and the conditions that must be met before the
PSUs vest and you become entitled to receive the Shares underlying the PSUs and any cash accrued under the
DERs. To ensure that you fully understand these terms and conditions, you should carefully read the Plan and this
Agreement.
Description of the PSUs
The PSUs represent a right to receive one Share for each Performance Share Unit that vests based on the
performance achieved under the Performance Metrics during the Performance Period. The Company shall transfer to
you one Share for each PSU that vests, provided you comply with the terms of this Agreement and the Plan.
However, you shall forfeit any rights to the PSUs and the underlying Shares (i.e., no Shares will be transferred to
you) to the extent the PSUs do not vest or you do not comply with the terms of this Agreement and the Plan.
No portion of the PSUs that has not vested or been settled nor any underlying Shares that have not yet been
transferred to you may be sold, transferred, assigned, pledged, encumbered or otherwise disposed of by you in any
way (including a transfer by operation of law); and any attempt by you to make any such sale, transfer, assignment,
pledge, encumbrance or other disposition shall be null and void and of no effect.
Vesting of the PSUs
Subject to the terms and provisions of this Agreement and the Plan, if you are continuously employed by the
Company or an Affiliate from the Grant Date through the end of the Performance Period (or the date of your death,
Disability or Retirement or the date of a Change in Control, as applicable and described in sections B, C or D
below), then your PSUs shall vest (if at all) and the underlying Shares shall be transferred to you as indicated below:
A. If at least the threshold vesting level of the attainment of the Performance Metric set forth in Exhibit B is
satisfied, and the Committee has certified attainment of that Performance Metric, the PSUs shall vest, based
on the Vesting Table set forth in Exhibit B, on the trading day1 after the Company files an Annual Report
on Form 10-K with the U.S. Securities and Exchange Commission reporting the Applicable Financial
Statement for the final fiscal year of the Performance Period. The number of PSUs that vest
1 As used in this Agreement, a "trading day" shall be as determined by the New York Stock Exchange or other national securities
exchange or market that regulates the Shares.
for each applicable Performance Metric, shall be equal to the product of: (i) the target number of PSUs
granted under this Award and (ii) the Performance Metric Weighting for such Performance Metric;
multiplied by (iii) the applicable Performance Vesting Factor determined under the Vesting Table based on
the level of attainment for such Performance Metric (such product to be rounded down to the nearest whole
unit).
B. If you die or incur a Disability before the end of the Performance Period, a fraction of your PSUs shall vest
based on the following formula: (i) the total number of PSUs that would have vested (if any, based on
actual performance as certified, reported and calculated in accordance with section A above) if you had
remained employed for the full Performance Period (or the number of PSUs determined in accordance with
section D below if a Change in Control occurs after your death or Disability but before the end of the
Performance Period); multiplied by (ii) a fraction, the numerator of which is the number of days of service
or employment that you have completed with the Company or its Affiliates since the beginning of the
Performance Period as of the date of your death or Disability and the denominator of which is _____ (such
product to be rounded down to the nearest whole unit).
C. If your Retirement occurs before the end of the Performance Period, a fraction of your PSUs shall vest based
on the following formula: (i) the total number of PSUs that would have vested (if any, based on actual
performance as certified, reported and calculated in accordance with section A above) if you had remained
employed for the full Performance Period (or the number of PSUs determined in accordance with Section D
below if a Change in Control occurs after your Retirement but before the end of the Performance Period);
multiplied by (ii) a fraction, the numerator of which is the number of days of service or employment that
you have completed with the Company or its Affiliates since the beginning of the Performance Period as of
the date of your Retirement and the denominator of which is _____ (such product to be rounded down to
the nearest whole unit).
D. If a Change in Control occurs before the Outside Date and where the Participant incurs a separation from
service (as defined in Code Section 409A) within the thirty (30) days preceding or the twenty-four (24)
months following the Change in Control, then any PSUs subject to this Award Agreement that have not
vested prior to the later of the date of the separation from service or the date of the Change in Control shall
vest upon the later of the date of the separation from service and the date of the Change in Control in an
amount equal to the greater of (i) the target number of PSUs or (ii) the Performance Earned PSUs.
E. If threshold performance is not achieved during the Performance Period (unless a Change in Control occurs
before the end of the Performance Period), then this Agreement will expire and all of your rights in the
PSUs will be forfeited.
F. If your employment or service terminates before the end of the Performance Period (other than as described
in sections B, C or D above), then this Agreement will expire and all of your rights in the PSUs will be
forfeited.
Shares underlying PSUs that vest pursuant to this Agreement shall be transferred to you as soon as administratively
practicable after the date the PSUs vest after the Performance Period has ended and the Performance Metrics have
been certified, as described above.
Your Rights in the PSUs
Subject to the Company’s insider trading policies and applicable laws and regulations, after any underlying Shares
are delivered to you in respect of vested PSUs, you shall be free to deal with and dispose of such underlying Shares.
You have no rights in the Shares underlying unvested PSUs. You shall have none of the rights of a shareholder
(including,
2
without limitation, the right to vote or receive dividends) with respect to any Shares underlying these PSUs until
such time as you become the record holder of such Shares.
Notwithstanding the foregoing, for each PSU granted under this Agreement you have been granted ____ DERs.
Each DER represents the right to receive the equivalent of all of the cash dividends that would be payable with
respect to a Share. The cash dividends shall accrue without interest and all or a portion of the accrued dividends
shall vest and be paid in cash at the time any PSUs vest, calculated by multiplying (i) the total accrued cash
dividends by (ii) a fraction, the numerator of which is the number of PSUs that vest and the denominator of which is
the maximum number of PSUs that could vest if the Maximum Performance Level is attained for all Performance
Metrics. Any accrued cash dividends that do not vest pursuant to this section shall be forfeited.
Tax Treatment of the PSUs
You should consult with a tax or financial adviser to ensure you fully understand the tax ramifications of your PSUs.
This brief discussion of the federal tax rules that affect your PSUs is provided as general information (not as
personal tax advice) and is based on the Company’s understanding of federal tax laws and regulations in effect as of
the Grant Date. Article 21 of the Plan further describes the manner in which withholding may occur.
Under normal federal income tax rules, the grant of PSUs is a nontaxable event. However, you will be required to
pay income taxes (at ordinary income tax rates) when, if and to the extent your PSUs and DERs vest. The amount of
ordinary income you will recognize is the value of your PSUs and the cash value accrued under the DERs when the
PSUs and DERs vest.
You may elect to allow the Company to withhold, upon settlement of the PSUs a number of shares sufficient to
satisfy the withholding obligation, from the Shares to be issued pursuant to your vested PSUs that would satisfy at
least the required statutory minimum (or you may elect such higher withholding provided that such higher amount
would not have a negative accounting impact on the Company) with respect to the Company’s tax withholding
obligation. If you wish to make the withholding election permitted by this paragraph, you must give notice to the
Committee in the manner then prescribed by the Committee. All such elections by you shall be irrevocable, made by
you in a manner approved by the Committee, and shall be subject to any restrictions or limitations that the
Committee, in its sole discretion, deems appropriate. If you have not made an election to satisfy the withholding
requirement by paying the taxes in cash or making the withholding election permitted by this paragraph, you shall be
deemed to have elected to have the Company withhold a number of Shares that would satisfy the minimum statutory
total tax that could be imposed on the transaction.
Any appreciation of the Shares you receive in connection with vested PSUs may be eligible to be taxed at capital
gains rates when you sell the Shares. If your PSUs do not vest, your PSUs and DERs shall expire and no taxes will
be due.
This Award is intended to comply with the applicable requirements of Code Section 409A and shall be administered
in accordance with Code Section 409A. Refer to Section 23.13 of the Plan for more information on compliance with
Code Section 409A, including the applicability of a six (6) month delay on the settlement of the PSUs for “specified
employees,” within the meaning of Code Section 409A.
No Section 83(b) Election
Because the PSUs are not property under the Code, you may not make an election under Section 83(b) of the Code
with respect to your PSUs.
3
General Terms and Conditions
Nothing contained in this Agreement obligates the Company or an Affiliate to continue to employ you in any
capacity whatsoever or prohibits or restricts the Company or an Affiliate from terminating your employment at any
time or for any reason whatsoever; and this Agreement does not in any way affect any employment agreement that
you may have with the Company.
This Agreement shall be governed by and construed in accordance with the internal laws, and not the laws of
conflicts of laws, of the State of Ohio.
If any provision of this Agreement is adjudged to be unenforceable or invalid, then such unenforceable or invalid
provision shall not affect the enforceability or validity of the remaining provisions of this Agreement, and the
Company and you agree to replace such unenforceable or invalid provision with an enforceable and valid
arrangement which in its economic effect shall be as close as possible to the unenforceable or invalid provision.
You represent and warrant to the Company that you have the full legal power, authority and capacity to enter into
this Agreement and to perform your obligations under this Agreement and that this Agreement is a valid and binding
obligation, enforceable in accordance with its terms, except that the enforcement of this Agreement may be subject
to bankruptcy, insolvency, reorganization, moratorium, or other similar laws now or hereinafter in effect relating to
creditors’ rights generally and to general principles of equity. You also represent and warrant to the Company that
you are aware of and agree to be bound by the Company’s trading policies and the applicable laws and regulations
relating to the receipt, ownership and transfer of the Company’s securities. The Company represents and warrants to
you that it has the full legal power, authority and capacity to enter into this Agreement and to perform its obligations
under this Agreement and that this Agreement is a valid and binding obligation, enforceable in accordance with its
terms, except that the enforcement of this Agreement may be subject to bankruptcy, insolvency, reorganization,
moratorium, or other similar laws now or hereinafter in effect relating to creditors’ rights generally and to general
principles of equity.
Acceptance
By accepting your PSUs, you acknowledge receipt of a copy of the Plan, as in effect on the Grant Date, and agree
that your PSUs are granted under and are subject to the terms and conditions described in this Agreement and in the
Plan. You further agree to accept as binding, conclusive and final all decisions and interpretations of the Committee
upon any issues arising under this Agreement or the Plan. You also represent and warrant to the Company that you
are aware of and agree to be bound by the Company’s insider trading policies and the applicable laws and
regulations relating to the receipt, ownership and transfer of the Company’s securities.
___________________________________
Chair, Compensation Committee
Date: ___________________________
4
EXHIBIT A
As used in this Agreement, the following terms shall have the meanings set forth below:
Applicable Financial Statement shall mean a particular fiscal year’s or a particular fiscal quarter’s (as the
calculation may require) financial statements that appear in the Company’s Annual Report on Form 10-K or
Quarterly Report on Form 10-Q filed with the U.S. Securities and Exchange Commission.
Performance Earned PSUs shall mean the number of PSUs equal to the rTSR Vesting Factor attained based on the
relative TSR measured based on the average of the closing stock price for the 30 calendar days immediately before
and including the effective date of the Change in Control instead of the relative TSR measured based on the average
of the closing stock price for the 30 calendar days immediately before and including the last day of the Performance
Period, multiplied by the target number of PSUs for the rTSR Performance Metric.
Comparator Group shall mean the companies in the Standard & Poor’s 600 Specialty Retail Index.
Performance Metrics shall mean rTSR.
Performance Metric Weighting shall mean one-hundred percent (100%) for the rTSR Vesting Factor.
Performance Period shall mean a period of three consecutive fiscal years beginning at the start of the fiscal year in
which the Grant Date occurs, with each such fiscal year comprised of a service period.
Performance Vesting Factor shall mean the rTSR Vesting Factor, each as set forth in the Vesting Table on Exhibit
B.
Relative Total Shareholder Return or rTSR shall be calculated comparing the Company’s TSR to the TSR for the
Comparator Group.
Retirement shall be deemed to have occurred upon the Termination of Employment or Service of a Grantee who,
upon the effective date of his or her Termination of Employment or Service, has: (i) attained the age of 55 years or
older; (ii) completed at least five years of employment with or service to the Company or its Affiliates; (iii)
submitted a written request, in a form satisfactory to the Company, to the Committee or the Company’s human
resources department requesting retirement under the terms of this Agreement; and (iv) had such written request
approved in writing by a member of the Committee or an authorized officer of the Company.
Total Shareholder Return or TSR shall be measured using an average of the closing stock price for the 30
calendar days immediately before the first day of the Performance Period and an average of the closing stock price
for the 30 calendar days immediately before and including the last day of the Performance Period. Total shareholder
return shall assume dividend reinvestment on the ex-dividend date.
5
EXHIBIT B
The following shall be the Vesting Table referenced in this Agreement:
Except as set forth in this Agreement or the Plan, the portion of the target number of PSUs that do not vest in
accordance with the tables set forth below shall be forfeited to the Company.
Linear interpolation shall be used to determine the applicable Performance Vesting Factor between threshold and
target and between target and maximum rTSR Performance Level in the table below.
rTSR Performance Goal
After the end of the Performance Period, the rTSR for the Performance Period will be determined. The
percentage of the target number of PSUs that shall vest will be determined in accordance with the
applicable Performance Metric Weighting and the rTSR Vesting Factor from the following table:
rTSR Performance Level
Threshold
Target
Maximum
rTSR Attainment
____
____
____
rTSR Vesting Factor
___%
___%
___%
No fractional Shares shall be issued or delivered pursuant to this Agreement. If the calculations under this
Agreement would otherwise result in the vesting of less than a whole number of Shares, the result shall be rounded
down to the nearest whole Share.
6
EXHIBIT 10.37
FIRST AMENDMENT TO SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
THIS FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT
AGREEMENT (this “Amendment”) is dated as of December 16, 2021 (the “Effective Date”)
(subject to Paragraph 7 below) and is made by and among Big Lots Stores, Inc., an Ohio
corporation (“BLS”), Big Lots, Inc., an Ohio corporation (the “Parent”) (BLS, Parent and the
Designated Borrowers from time to time party to the Agreement (defined below) are each a
“Borrower” and collectively, the “Borrowers”), the Guarantors, the Banks and PNC BANK,
NATIONAL ASSOCIATION, in its capacity as the Administrative Agent (in such capacity, the
“Administrative Agent”) under the Agreement (as hereinafter defined).
RECITALS
WHEREAS, the Borrowers, the Guarantors, the Banks and the Administrative Agent are
parties to that certain Second Amended and Restated Credit Agreement, dated as of September
22, 2021 (as amended, supplemented, modified or restated prior to the date hereof, the “Existing
Agreement”, and as amended hereby and as may be further amended, supplemented, modified or
restated from time to time, the “Agreement”);
WHEREAS, certain loans and/or other extensions of credit under the Existing Agreement
(“Loans”) denominated in Euros incur or are permitted to incur interest, fees, commissions or
other amounts based on the London Interbank Offered Rate administered by the ICE Benchmark
Administration (“LIBOR”) in accordance with the terms and conditions of the Existing
Agreement;
WHEREAS, applicable parties under the Existing Agreement have determined that loans
made, continued or converted under the Existing Agreement denominated in Euros on or after
the Effective Date that would otherwise bear interest based on LIBOR (including, without
limitation, any such rate provided on a changed methodology (or “synthetic”) basis), shall be
replaced with a successor rate for all purposes under the Agreement and under any other Loan
Document, subject to the terms and conditions set forth in this Amendment; and
WHEREAS, the Borrowers and the Guarantors are not related to the Banks and the
Administrative Agent within the meaning of Section 267(b) or 707(b)(1) of the Internal Revenue
Code of 1986 and have determined, based on bona fide, arm’s length negotiations between the
parties, that the fair market value of the Agreement before giving effect to this Amendment is
substantially equivalent to its fair market value after giving effect hereto.
NOW, THEREFORE, in consideration of their mutual covenants and agreements
hereinafter set forth and intending to be legally bound hereby, the parties hereto covenant and
agree as follows:
1.
Incorporation of Recitals. The foregoing recitals are incorporated herein by
reference as if fully set forth herein.
2.
Certain Definitions. Capitalized terms used herein but not otherwise defined
herein (including on Appendix A attached hereto) shall have the meanings assigned to such
terms in the Existing Agreement.
3.
Amendments. Notwithstanding any provision of the Existing Agreement or any
Loan Document to the contrary, the parties hereto hereby agree that the terms set forth on
Appendix A shall apply solely to Loans made, continued or converted in Euros from and after
the Effective Date. For the avoidance of doubt, to the extent provisions in the Existing
Agreement apply to Loans made in Euros and such provisions are not specifically addressed by
Appendix A, such provisions in the Existing Agreement shall continue to apply to Loans made in
Euros from and after the Effective Date. In the event of a conflict between the terms of this
Amendment and the terms of the Existing Agreement or any other Loan Document, the terms of
this Amendment shall control with respect to Loans denominated in Euros. For the avoidance of
doubt, the provisions of this Amendment will supersede and govern any provisions of the
Existing Agreement relating to the unavailability of or inability to ascertain rates or benchmark
replacements as they apply to the Euros on and after the Effective Date, and the execution and
delivery of this Amendment by the Borrowers and/or the Guarantors shall be deemed to satisfy
and discharge any and all requirements under the Existing Agreement for notices to be furnished
to the Borrowers or Guarantors in connection with the replacement of any benchmark applicable
to Loans denominated in Euros, as contemplated by this Amendment. For the avoidance of
doubt, nothing in this Agreement shall affect or modify any provisions of the Existing
Agreement applying to any Loans other than Loans made in Euros.
4.
Representations and Warranties. Each Borrower and each Guarantor hereby
represent and warrant that: (a) no Potential Default or Event of Default (or similar defined term)
exists or will exist immediately after giving effect to the transactions contemplated hereby,
(b) the execution, delivery and performance of this Amendment by such party have been duly
authorized by all necessary corporate or other organizational action, and (c) this Amendment has
been duly executed and delivered by such party.
5.
Limitation; Effect of Amendment. No provision of the Existing Agreement or
any other Loan Document is amended or waived in any way other than as provided herein.
Except as set forth expressly herein, all terms of the Existing Agreement and the other Loan
Documents shall be and remain in full force and effect and are hereby ratified and confirmed,
and shall constitute the legal, valid, binding, and enforceable obligations of the parties thereto.
As of the date hereof, each reference in the Existing Agreement to “this Agreement,”
“hereunder,” “hereof,” “herein,” or words of like import, and each reference in the other Loan
Documents to the Existing Agreement (including, without limitation, by means of words like
“thereunder,” “thereof”, “therein” and words of like import), shall mean and be a reference to the
Existing Agreement as amended by this Amendment. This Amendment constitutes a Loan
Document.
6.
No Novation or Mutual Departure. Each Borrower and each Guarantor expressly
acknowledge and agree that there has not been, and this Amendment does not constitute or
establish, a novation with respect to the Existing Agreement or any of the Loan Documents, or a
mutual departure from the strict terms, provisions, and conditions thereof other than with respect
to the amendments in Section 3 of this Amendment.
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7.
Counterparts; Effectiveness.
(a)
This Amendment may be executed in counterparts (and by different
parties hereto in different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. The Effective Date of this
Amendment, as set forth above, shall be completed by the Administrative Agent as of the date
when this Amendment shall have been executed by the Administrative Agent and when the
Administrative Agent shall have received counterparts of this Amendment, properly executed by
the Borrowers, and each Guarantor; provided that the Administrative Agent has not received,
prior to 5:00 p.m. (New York City time) on the fifth (5th) Business Day after providing this
Amendment to the Banks, written notice of objection to this Amendment from Banks comprising
the Required Banks.
(b)
The words “execution,” “signed,” “signature,” and words of like import in
this Amendment shall be deemed to include electronic signatures or the keeping of records in
electronic form, each of which shall be of the same legal effect, validity or enforceability as a
manually executed signature or the use of a paper-based recordkeeping system, as the case may
be, to the extent and as provided for in any applicable Law, including the Federal Electronic
Signatures in Global and National Commerce Act, the New York State Electronic Signatures and
Records Act, or any other similar state Laws based on the Uniform Electronic Transactions Act.
The parties hereto agree that this Amendment may, at the Administrative Agent’s option, be in
the form of an electronic record and may be signed or executed using electronic signatures. For
the avoidance of doubt, the authorization under this paragraph may include, without limitation,
use or acceptance by the Administrative Agent of a manually signed paper signature page which
has been converted into electronic form (such as scanned into PDF format) for transmission,
delivery and/or retention.
8.
Section Headings. Section headings used in this Amendment are for convenience
of reference only and shall not govern the interpretation of any of the provisions of this
Amendment.
9.
Severability. The provisions of this Amendment are intended to be severable. If
any provision of this Amendment shall be held invalid or unenforceable in whole or in part in
any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such
invalidity or unenforceability without in any manner affecting the validity or enforceability
thereof in any other jurisdiction or the remaining provisions hereof in any jurisdiction.
10.
Fees and Costs. Borrowers will pay on demand all reasonable out-of-pocket fees,
costs, and expenses of Administrative Agent, including but not limited to the reasonable fees and
expenses of one law firm, in connection with the preparation, execution, and delivery of this
Amendment.
11.
Governing Law, Etc. The terms of the Existing Agreement relating to governing
law, submission to jurisdiction, waiver of venue and waiver of jury trial are incorporated herein
by reference, mutatis mutandis, and the parties hereto agree to such terms.
12.
Construction. Reference to this Amendment means this Amendment, together
with Appendix A attached hereto.
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[Signature Pages Follow]
4
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly authorized,
have executed this Amendment as of the day and year first above written.
ATTEST:
BORROWERS:
BIG LOTS STORES, INC.
By: /s Jason N. Judd
Name: Jason N. Judd
Title: Senior Vice President, Corporate
Finance and Treasurer
By: /s Jonathan E. Ramsden
Name: Jonathan E. Ramsden
Title: Executive Vice President, Chief
Financial and Administrative Officer
ATTEST:
BIG LOTS, INC.
By: /s/ Jason N. Judd
Name: Jason N. Judd
Title: Senior Vice President, Corporate
By: /s/ Jonathan E. Ramsden
Name: Jonathan E. Ramsden
Title: Executive Vice President, Chief
Finance and Treasurer
Financial and Administrative Officer
ATTEST:
GUARANTORS:
AVDC, INC.
Big Lots eCommerce LLC
BIG LOTS F&S, INC.
CLOSEOUT DISTRIBUTION, INC.
C.S. ROSS COMPANY
CSC DISTRIBUTION, LLC
DURANT DC, LLC
GREAT BASIN LLC
PNS STORES, INC.
By: /s/ Jason N. Judd
Name: Jason N. Judd
Title: Senior Vice President, Corporate
Finance and Treasurer
By: /s/ Jonathan E. Ramsden
Name: Jonathan E. Ramsden
Title:
Executive Vice President, Chief Financial
and Administrative Officer
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WITNESS:
GUARANTORS (Continued):
BLHQ LLC
By:/s/ Jason N. Judd
Name: Jason N. Judd
Title: Senior Vice President, Corporate
By:/s/ Jonathan E. Ramsden
Name: Jonathan E. Ramsden
Title: Executive Vice President, Chief Financial
Finance and Treasurer
and Administrative Officer
WITNESS:
BROYHILL, LLC
By:/s/ Jason N. Judd
Name: Jason N. Judd
Title: Senior Vice President, Corporate
By:/s/ Jonathan E. Ramsden
Name: Jonathan E. Ramsden
Title: Executive Vice President, Chief Financial
Finance and Treasurer
and Administrative Officer
WITNESS:
PAFDC LLC
By:/s/ Jason N. Judd
Name: Jason N. Judd
Title: Senior Vice President, Corporate
By:/s/ Jonathan E. Ramsden
Name: Jonathan E. Ramsden
Title: Executive Vice President, Chief Financial
Finance and Treasurer
and Administrative Officer
WITNESS:
GAFDC LLC
By:/s/ Jason N. Judd
Name: Jason N. Judd
Title: Senior Vice President, Corporate
By:/s/ Jonathan E. Ramsden
Name: Jonathan E. Ramsden
Title: Executive Vice President, Chief Financial
Finance and Treasurer
and Administrative Officer
WITNESS:
CONSOLIDATED PROPERTY HOLDINGS, INC.
By:/s/ Jason N. Judd
Name: Jason N. Judd
Title: Vice President and Treasurer
By:/s/ Jonathan E. Ramsden
Name: Jonathan E. Ramsden
Title: President
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[SIGNATURE PAGE TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT]
ADMINISTRATIVE AGENT, SYNDICATION
AGENTS, CO-DOCUMENTATION AGENTS
AND BANKS:
PNC BANK, NATIONAL ASSOCIATION, as a
Bank and Administrative Agent
By:/s/ Anthony E. Irwin
Name: Anthony E Irwin
Title: Vice President
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Appendix A
1.
Section References. Unless otherwise specified, section references contained in
this Appendix A shall be deemed to refer to sections of this Appendix A.
2.
Definitions. The following terms shall have the following meanings for purposes
of this Amendment, including this Appendix A and the provisions contained herein:
“Affected Currency” means Euros.
“Available Tenor” means, as of any date of determination and with respect to the
then-current Benchmark for the Affected Currency, as applicable, (x) if the then-current
Benchmark for such Affected Currency is a term rate or is based on a term rate, any tenor for
such Benchmark that is or may be used for determining the length of an Interest Period or
(y) otherwise, any payment period for interest calculated with reference to such Benchmark for
such Affected Currency, as applicable, pursuant to this Agreement as of such date. For the
avoidance of doubt, the Available Tenor for the Daily Simple RFR is one month.
“Benchmark” means, initially, with respect to any Obligations, interest, fees,
commissions, or other amounts denominated in, or calculated with respect to Affected
Currencies the Daily Simple RFR or Term RFR applicable for such Affected Currency, and
includes any replacement for such Benchmark implemented in accordance with the provisions of
the Agreement.
“Benchmark Replacement” means, with respect to the Affected Currency for any
Available Tenor for the applicable Benchmark Replacement Date: the sum of (A) the alternate
benchmark rate that has been selected by the Administrative Agent and the Borrowers as the
replacement for the then-current Benchmark for the applicable Available Tenor giving due
consideration to any evolving or then-prevailing market convention, including any applicable
recommendations made by the Relevant Governmental Body, for syndicated credit facilities
denominated in the Affected Currency at such time and (B) the related Benchmark Replacement
Adjustment (if any); provided, that if the Benchmark Replacement as determined above would
be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the
purposes of the Agreement and the other Loan Documents; and provided further, that any such
Benchmark Replacement shall be administratively feasible as determined by the Administrative
Agent in its sole discretion; and provided further, that with respect to a Term RFR Transition
Event for the Affected Currency, on the Term RFR Transition Date the “Benchmark
Replacement” shall be the Term RFR for such Affected Currency.
“Benchmark Replacement Adjustment” means, with respect to any replacement of
the then-current Benchmark relating to the Affected Currency with an Unadjusted Benchmark
Replacement for any applicable Available Tenor for any setting of such Unadjusted Benchmark
Replacement, the spread adjustment, or method for calculating or determining such spread
adjustment, (which may be a positive or negative value or zero) that has been selected by the
Administrative Agent and the Borrowers for the applicable Corresponding Tenor giving due
consideration to any evolving or then-prevailing market convention, including any applicable
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recommendations made by the Relevant Governmental Body, for syndicated credit facilities
denominated in the Affected Currency at such time; provided that, if the then-current Benchmark
is a term rate, more than one tenor of such Benchmark is available as of the applicable
Benchmark Replacement Date and the applicable Unadjusted Benchmark Replacement will not
be a term rate, the Available Tenor of such Benchmark for purposes of this definition of
“Benchmark Replacement Adjustment” shall be deemed to be the Available Tenor that has
approximately the same length (disregarding business day adjustments) as the payment period
for interest calculated with reference to such Unadjusted Benchmark Replacement.
“Benchmark Replacement Date” means, with respect to the Affected Currency, a
date and time determined by the Administrative Agent, which date shall be at the end of an
Interest Period, if applicable, and no later than the earliest to occur of the following events with
respect to the then-current Benchmark of the Affected Currency:
(1) in the case of clause (1) or (2) of the definition of “Benchmark
Transition Event,” the later of (A) the date of the public statement or publication of
information referenced therein and (B) the date on which the administrator of such
Benchmark for the Affected Currency (or the published component used in the
calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of
such Benchmark (or such component thereof);
(2)
in the case of clause (3) of the definition of “Benchmark Transition
Event,” the date determined by the Administrative Agent, which date shall promptly
follow the date of the public statement or publication of information referenced therein;
or
(3) in the case of a Term RFR Transition Event, the date that is set forth in
the Term RFR Notice provided to the Banks and the Borrowers pursuant to this Section
titled “Benchmark Replacement Setting”, which date shall be at least 30 days from the
date of the Term RFR Notice.
For the avoidance of doubt, (i) if the event giving rise to the Benchmark
Replacement Date for the Affected Currency occurs on the same day as, but earlier than, the
Reference Time in respect of any determination, the Benchmark Replacement Date will be
deemed to have occurred prior to the Reference Time for the Affected Currency for such
determination and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in
the case of clauses (1), (2) or (3) of this definition with respect to any Benchmark upon the
occurrence of the applicable event or events set forth therein with respect to all then-current
Available Tenors of such Benchmark (or the published component used in the calculation
thereof).
“Benchmark Transition Event” means the occurrence of one or more of the
following events, with respect to any then-current Benchmark for the Affected Currency:
(1)
a public statement or publication of information, by or on behalf of
the administrator of such Benchmark for such Affected Currency (or the published
component used in the calculation thereof), announcing that such administrator has
ceased or will cease to provide all Available Tenors of such Benchmark for such Affected
Currency (or such component thereof), permanently or indefinitely; provided that, at the
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time of such statement or publication there is no successor administrator that will
continue to provide any Available Tenor of such Benchmark for such Affected Currency
(or component thereof);
(2)
a public statement or publication of information by an Official
Body having jurisdiction over the Administrative Agent, the regulatory supervisor for the
administrator of such Benchmark for such Affected Currency (or the published
component used in the calculation thereof), the Board of Governors of the Federal
Reserve System, the Federal Reserve Bank of New York, an insolvency official with
jurisdiction over the administrator for such Benchmark for such Affected Currency (or
such component), a resolution authority with jurisdiction over the administrator for such
Benchmark for such Affected Currency (or such component) or a court or an entity with
similar insolvency or resolution authority over the administrator for such Benchmark for
such Affected Currency (or such component), which states that the administrator of such
Benchmark for such Affected Currency (or such component) has ceased or will cease to
provide all Available Tenors of such Benchmark for such Affected Currency (or such
component thereof) permanently or indefinitely; provided that, at the time of such
statement or publication, there is no successor administrator that will continue to provide
any Available Tenor of such Benchmark for such Affected Currency (or such component
thereof); or
(3)
a public statement or publication of information by the regulatory
supervisor for the administrator of such Benchmark for such Affected Currency (or the
published component used in the calculation thereof) or an Official Body having
jurisdiction over the Administrative Agent announcing that all Available Tenors of such
Benchmark for such Affected Currency (or such component thereof) are no longer
representative.
“Benchmark Unavailability Period” means, with respect to any Benchmark and
with respect to the Affected Currency, the period (if any) (x) beginning at the time that a
Benchmark Replacement Date pursuant to clauses (1) or (2) of that definition has occurred if, at
such time, no Benchmark Replacement for the Affected Currency has replaced the then-current
Benchmark for such Affected Currency for all purposes under the Agreement and under any
Loan Document in accordance with Section 4(k) [Benchmark Replacement Setting for Affected
Currencies] and (y) ending at the time that a Benchmark Replacement for the Affected Currency
has replaced the then-current Benchmark for all purposes under the Agreement and under any
Loan Document in accordance with Section 4(k) [Benchmark Replacement Setting for Affected
Currencies].
“Borrowing Tranche” shall mean specified portions of the Loans outstanding as
follows: any Loans to which a Daily Simple RFR Option applies which are in the same Affected
Currency shall constitute one Borrowing Tranche.
“Business Day” means any day other than a Saturday or Sunday or a legal holiday
on which commercial banks are authorized or required to be closed for business in Pittsburgh,
Pennsylvania and if the applicable Business Day relates to any direct or indirect calculation or
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determination of, or is used in connection with any interest rate settings, fundings,
disbursements, settlements, payments, or other dealings with respect to any RFR Loan, the term
“Business Day” means any such day that is also an RFR Business Day.
“Conforming Changes” means, with respect to Daily Simple RFR, Term RFR, or
any Benchmark Replacement for the Affected Currency, any technical, administrative or
operational changes (including changes to the definition of “Base Rate,” the definition of
“Business Day,” the definition of “Interest Period,” timing and frequency of determining rates
and making payments of interest, timing of borrowing requests or prepayment, conversion or
continuation notices, the applicability and length of lookback periods, the applicability of
breakage provisions, and other technical, administrative or operational matters) that the
Administrative Agent decides may be appropriate to reflect the adoption and implementation of
any Daily Simple RFR, Term RFR, or Benchmark Replacement for the Affected Currency and to
permit the administration thereof by the Administrative Agent in a manner substantially
consistent with market practice (or, if the Administrative Agent decides that adoption of any
portion of such market practice is not administratively feasible or if the Administrative Agent
determines that no market practice for the administration of Daily Simple RFR, Term RFR, or
any Benchmark Replacement for the Affected Currency exists, in such other manner of
administration as the Administrative Agent decides is reasonably necessary in connection with
the administration of the Agreement and the other Loan Documents).
“Corresponding Tenor” with respect to any Available Tenor means, as applicable,
either a tenor (including overnight) or an interest payment period having approximately the same
length (disregarding business day adjustment) as such Available Tenor.
“Daily Simple RFR” means, for any day (an “RFR Day”), a rate per annum
determined by the Administrative Agent, for any Obligations, interest, fees, commissions or
other amounts denominated in, or calculated with respect to any applicable Daily Simple RFR
below by dividing (the resulting quotient rounded upwards, at the Administrative Agent’s
discretion, to the nearest 1/100 of 1%) (a) the applicable Daily Simple RFR set forth below by
(b) a number equal to 1.00 minus the RFR Reserve Percentage:
(a) with respect to the Euro, €STR for the day (such day, adjusted as
applicable as set forth herein, the “€STR Lookback Day”) that is two (2) Business Days
prior to (A) if such RFR Day is a Business Day, such RFR Day or (B) if such RFR Day is
not a Business Day, the Business Day immediately preceding such RFR Day, in each
case, as such €STR is published by the €STR Administrator on the €STR Administrator’s
Website;
provided that if the sum of the adjusted rate as determined above plus the applicable RFR
Adjustment would be less than the Floor, such rate shall be deemed to be the Floor for purposes
of the Agreement. The adjusted Daily Simple RFR rate for each outstanding RFR Loan shall be
adjusted automatically as of the effective date of any change in the RFR Reserve Percentage.
The Administrative Agent shall give prompt notice to the Borrowers of the adjusted Daily
Simple RFR as determined or adjusted in accordance herewith, which determination shall be
conclusive absent manifest error.
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If by 5:00 pm (local time for the applicable RFR) on the second (2nd) Business Day
immediately following any Daily Simple RFR Lookback Day, the RFR in respect of such Daily
Simple RFR Lookback Day has not been published on the applicable RFR Administrator’s
Website and a Benchmark Replacement for the applicable Daily Simple RFR has not been
instituted in accordance with the provisions of the Agreement, then the RFR for such Daily
Simple RFR Lookback Day will be the RFR as published in respect of the first preceding
Business Day for which such RFR was published on the RFR Administrator’s Website; provided
that any RFR determined pursuant to this sentence shall be utilized for purposes of calculation of
Daily Simple RFR for no more than three (3) consecutive RFR Days. Any change in Daily
Simple RFR due to a change in the applicable RFR shall be effective from and including the
effective date of such change in the RFR without notice to the Borrowers.
“Daily Simple RFR Lookback Days” means, €STR Lookback Day
“Daily Simple RFR Option” means the option of the Borrowers to have Loans
bear interest at the rate and under the terms specified in Section 4(e)(i)(B) [Daily Simple RFR
Option] or Section 4(e)(ii)(B) [Daily Simple RFR Option], as applicable.
“Dollar Equivalent” means, for any amount, at the time of determination thereof,
(a) if such amount is expressed in the Affected Currency, the equivalent of such amount in
Dollars determined by using the rate of exchange for the purchase of Dollars with the Affected
Currency last provided (either by publication or otherwise provided to the Administrative Agent
or the Issuing Bank, as applicable) by the applicable Bloomberg source (or such other publicly
available source for displaying exchange rates as determined by the Administrative Agent or the
Issuing Bank, as applicable, from time to time) on the date that is the applicable Daily RFR
Lookback Day (for amounts relating to RFR Loans and Letters of Credit denominated in an
Affected Currency to which a Daily Simple RFR would apply) immediately preceding the date
of determination, or otherwise on the date which is two (2) Business Days immediately
preceding the date of determination or otherwise with respect to Loans to which any other
Interest Rate Option applies, the lookback date applicable thereto (or if such service ceases to be
available or ceases to provide such rate of exchange, the equivalent of such amount in Dollars as
determined by the Administrative Agent or the Issuing Bank, as applicable using any method of
determination it deems appropriate in its sole discretion) and (b) if such amount is denominated
in any other currency, the equivalent of such amount in Dollars as determined by the
Administrative Agent or the Issuing Bank, as applicable, using any reasonable method of
determination it deems appropriate. Any determination by the Administrative Agent or the
Issuing Bank pursuant to this definition shall be conclusive absent manifest error.
€STR Administrator.
“€STR” means a rate equal to the Euro Short Term Rate as administered by the
“€STR Administrator” means the European Central Bank (or any successor
administrator of the Euro Short Term Rate).
“€STR Administrator’s Website” means the European Central Bank’s website,
currently at http://www.ecb.europa.eu, or any successor source for the Euro Short Term Rate
identified as such by the €STR Administrator from time to time.
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“Euro” or “€” mean the single currency of the Participating Member States.
“Floor” means a rate of interest equal to 0%.
the International Organization of Securities
Commissions’ (IOSCO) Principles for Financial Benchmarks, as the same may be amended or
supplemented from time to time.
“IOSCO Principles” means
“Participating Member State” means any member state of the European Union
that has the euro as its lawful currency in accordance with legislation of the European Union
relating to Economic and Monetary Union.
“Reference Time” means, with respect to any setting of the then-current
Benchmark for the Affected Currency, the time determined by the Administrative Agent in its
reasonable discretion.
“Relevant Governmental Body” means with respect to a Benchmark Replacement
in respect of Loans denominated in the Affected Currency, (1) the central bank for the Affected
Currency in which such Benchmark Replacement is denominated or any central bank or other
supervisor which is responsible for supervising either (A) such Benchmark Replacement or
(B) the administrator of such Benchmark Replacement or (2) any working group or committee
officially endorsed or convened by (A) the central bank for the Affected Currency in which such
Benchmark Replacement is denominated, (B) any central bank or other supervisor that is
responsible for supervising either (i) such Benchmark Replacement or (ii) the administrator of
such Benchmark Replacement, (C) a group of those central banks or other supervisors or (D) the
Financial Stability Board or any part thereof.
denominated in, or calculated with respect to, Euro, €STR.
“RFR” means, for any Obligations, interest, fees, commissions or other amounts
“RFR Adjustment” means with respect to RFR Loans or Term RFR Rate Loans,
the adjustment set forth in the table below corresponding to the Affected Currency for the
corresponding Daily Simple RFR Option or Term RFR Option:
Currency
Euros
Adjustment to
Daily Simple RFR
0.0456%
Adjustment to
Term RFR
0.0456%
“RFR Administrator” means the €STR Administrator.
“RFR Administrator’s Website” means the €STR Administrator’s Website.
“RFR Business Day” means as applicable, for any Obligations, interest, fees,
commissions or other amounts denominated in, or calculated with respect to Euro, a TARGET
Day.
RFR or, after the replacement of the then-current Benchmark for the Affected Currency for all
“RFR Loan” means a Loan that bears interest at a rate based on a Daily Simple
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purposes hereunder or under any Loan Document with a Term RFR pursuant to Section 4(n)
[Term RFR Transition Event], the Term RFR for such Affected Currency, as the context may
require.
“RFR Reserve Percentage” means as of any day, the maximum effective
percentage in effect on such day, if any, as prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for determining the reserve requirements (including, without
limitation, supplemental, marginal and emergency reserve requirements) with respect to RFR
Loans.
“TARGET2” means the Trans-European Automated Real-time Gross Settlement
Express Transfer payment system which utilizes a single shared platform and which was
launched on November 19, 2007.
“TARGET Day” means any day on which TARGET2 is open for the settlement
of payments in Euros.
“Term RFR” means, with respect to the Affected Currency for any Interest
Period, a rate per annum determined by the Administrative Agent, for any Obligations, interest,
fees, commissions or other amounts denominated in, or calculated with respect to any applicable
Term RFR Forward Looking Rate by dividing (the resulting quotient rounded upwards, at the
Administrative Agent’s discretion, to the nearest 1/100 of 1%) (a) the applicable Term RFR
Forward Looking Rate by (b) a number equal to 1.00 minus the Term RFR Reserve Percentage;
provided that if the sum of the adjusted rate as determined above plus the applicable RFR
Adjustment would be less than the Floor, such rate shall be deemed to be the Floor for purposes
of this Agreement. The adjusted Term RFR rate for each outstanding Term RFR Rate Loan shall
be adjusted automatically as of the effective date of any change in the Term RFR Reserve
Percentage. The Administrative Agent shall give prompt notice to the Borrowers of the adjusted
Term RFR Rate as determined or adjusted in accordance herewith, which determination shall be
conclusive absent manifest error.
“Term RFR Forward Looking Rate” means, with respect to the Affected Currency
for any Interest Period, the forward-looking term rate for a period comparable to such Interest
Period based on the RFR for the Affected Currency that is published by an authorized benchmark
administrator and is displayed on a screen or other information service, each as identified or
selected by the Administrative Agent in its reasonable discretion at approximately a time and as
of a date prior to the commencement of such Interest Period determined by the Administrative
Agent.
“Term RFR Notice” means a notification by the Administrative Agent to the
Banks and the Borrowers of the occurrence of a Term RFR Transition Event.
“Term RFR Option” means the option of the Borrowers to have Loans bear
interest at the rate and under the terms specified in Section 4(e)(i)(A) [Term RFR Option] or
Section 4(e)(ii)(A) [Term RFR Option], as applicable.
at a rate based on Term RFR.
“Term RFR Rate Loan” means a Loan in the Affected Currency that bears interest
A-10
“Term RFR Transition Date” means, in the case of a Term RFR Transition Event,
the date that is set forth in the Term RFR Notice provided to the Banks and the Borrowers
pursuant to Section 4(n) [Term RFR Transition Event], which date shall be at least 30 (thirty)
calendar days from the date of the Term RFR Notice.
“Term RFR Transition Event” means, with respect to the any Loans denominated
in the Affected Currency for any Interest Period, the determination by the Administrative Agent
that (a) the applicable Term RFR for such Affected Currency is determinable for each Available
Tenor, (b) the administration of such Term RFR is administratively feasible for the
Administrative Agent, (c) the RFR Administrator publishes, publicly announces or makes
publicly available that such Term RFR is administered in accordance with the IOSCO Principles,
(d) such Term RFR is used as a benchmark rate in at least five currently outstanding syndicated
credit facilities denominated in the applicable Affected Currency (and such syndicated credit
facilities are identified and are publicly available for review), and (e) such Term RFR is
recommended for use by a Relevant Governmental Body.
“Unadjusted Benchmark Replacement” means the applicable Benchmark
Replacement excluding the related Benchmark Replacement Adjustment.
3.
Effect of Definitions. The Existing Agreement is hereby amended and modified
to incorporate the definitions set forth in Section 2, mutatis mutandis, to the extent used in the
Agreement, including as a result of the effectiveness of this Amendment. If the Existing
Agreement as in effect immediately prior to giving effect to the provisions of this Amendment
already defines any term defined in Section 2, the corresponding definition in Section 2 shall
(y) to the extent that such definition also relates to Loans other than those denominated in the
Affected Currency, supplement such definition in the Existing Agreement (but, for the avoidance
of doubt, shall not affect any definition to the extent applicable to any other Loan) and (z) to the
extent that such definition relates solely to Loans denominated in the Affected Currency,
supersede such definition in the Existing Agreement, in each case, solely with respect to Loans
denominated in an Affected Currency, for the purpose and solely for the purpose of the
definitions and provisions contained in this Amendment.
4.
Terms Applicable to Loans in Affected Currencies.
(a)
Affected Currencies. Notwithstanding anything to the contrary herein or
in any other Loan Document, effective as of the Effective Date, (i) the Euro-currency
Rate Option shall not be available for any Loan denominated in the Affected Currency,
and (ii) any request for a new Loan denominated in the Affected Currency, or to continue
or convert an existing Loan denominated in the Affected Currency, shall be deemed to be
a request for a new RFR Loan denominated in such Affected Currency; provided, that to
the extent any Loan denominated in the Affected Currency and bearing interest at the
Eurocurrency Rate is outstanding on the Effective Date, such Loan shall continue to bear
interest at the Eurocurrency Rate until the end of the current Interest Period or payment
period applicable to such Loan; provided that, in the case of a Loan that bears interest at a
daily floating rate with no Interest Period, such Loan shall be deemed to be an RFR Loan
immediately upon the Effective Date.
A-11
(b)
References to Eurocurrency Rate, Eurocurrency Rate Option, and Interest
Period in the Agreement and Loan Documents.
(i)
(ii)
References to the Eurocurrency Rate and Eurocurrency Rate Option in
provisions of the Agreement and the other Loan Documents that are not
specifically addressed herein
the definitions of
“Eurocurrency Rate” and “Eurocurrency Rate Option”) shall be deemed
to mean, with respect to the Affected Currency, the Daily Simple RFRs,
Term RFRs, Daily Simple RFR Option and Term RFR Option, as
applicable, for the Affected Currency.
(other
than
For purposes of any requirement for the Borrowers to compensate the
Banks for losses in the Agreement resulting from any continuation,
conversion, payment or prepayment of any Loan that bears interest
based upon the Eurocurrency Rate on a day other than the last day of
any Interest Period, references to the Interest Period shall be deemed to
include any relevant interest payment date or payment period for a
Term RFR Rate Loan.
(c)
Interest Rates. The Administrative Agent does not warrant or accept
responsibility for and shall not have any liability with respect to the administration,
submission or any other matter related to the rates in the definition of “RFR”, “Daily
Simple RFR” or “Term RFR”, or with respect to any alternative or successor rate thereto,
or replacement rate therefor, or of any Conforming Changes.
(d)
Conforming Changes. With respect to any Daily Simple RFR, Term RFR,
or any Benchmark Replacement, the Administrative Agent will have the right to make
Conforming Changes from time to time and, notwithstanding anything to the contrary
herein, in the Agreement or in any other Loan Document, any amendments implementing
such Conforming Changes will become effective without any further action or consent of
any other party to this Amendment, the Agreement or any other Loan Document;
provided that with respect to any such amendment effected, the Administrative Agent
shall provide notice to the Borrowers and the Banks of each such amendment
implementing such Conforming Changes promptly after such amendment becomes
effective.
(e)
Interest Rate Options. Subject to the provisions of the Existing Agreement
relating to default interest and numbers of Borrowing Tranches, the Borrowers shall pay
interest in respect of the outstanding unpaid principal amount of the Loans denominated
in Affected Currencies as selected by it from the applicable Interest Rate Options
specified below applicable to the Revolving Credit Loans, it being understood that,
subject to the provisions of the Agreement, the Borrowers may select different Interest
Rate Options and different Interest Periods to apply simultaneously to the Loans
denominated in Affected Currencies comprising different Borrowing Tranches and may
renew one or more Interest Rate Options with respect to all or any portion of the Loans
denominated in Affected Currencies comprising any Borrowing Tranche; provided that if
an Event of Default or Potential Default exists and is continuing, the Borrowers may not
request or renew any Term RFR Option or Daily Simple RFR Option for any Loans and
the Required Banks
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may demand that all existing Borrowing Tranches denominated in the Affected Currency
shall either (i) (x) in relation to Term RFR Rate Loans, be converted to the Base Rate
Option denominated in Dollars (in an amount equal to the Dollar Equivalent of such
Affected Currency) at the end of the Interest Period therefor; and (y) in relation to Daily
Simple RFR Loans, be converted immediately to the Base Rate Option denominated in
Dollars (in an amount equal to the Dollar Equivalent of such Affected Currency), subject
in all cases to the obligation of the Borrowers to pay any indemnity under Section 5.10 of
the Agreement in connection with any such conversion. If at any time the designated rate
applicable to any Loan made by any Bank exceeds such Bank’s highest lawful rate, the
rate of interest on such Bank’s Loan shall be limited to such Bank’s highest lawful rate.
The applicable Base Rate, Daily Simple RFR or Term RFR shall be determined by the
Administrative Agent, and such determination shall be conclusive absent manifest error.
Interest on the principal amount of each Loan denominated in the Affected Currency shall
be paid by the Borrowers in such Affected Currency.
(i)
Revolving Credit Interest Rate Options. The Borrowers shall have the
right to select from the following Interest Rate Options applicable to the
Revolving Credit Loans denominated in the Affected Currency:
(A)
(B)
Term RFR Option: On and after the Term RFR Transition Date
with respect to the Affected Currency, in the case of Loans
denominated in the Affected Currency that bear interest based on a
Term RFR, a rate per annum (computed on the basis of a year of
360 days and actual days elapsed, except that interest on Loans
denominated in the Affected Currency as to which market practice
differs from the foregoing shall be computed in accordance with
market practice for such Loans) equal to the Term RFR for such
Affected Currency as determined for each applicable Interest
Period plus the RFR Adjustment plus the Applicable Margin.
Daily Simple RFR Option: Prior to the Term RFR Transition Date
with respect to Loans that bear interest at a rate based on a Daily
Simple RFR denominated in the Affected Currency, a fluctuating
rate per annum (computed on the basis of a year of 360 days and
actual days elapsed, except that interest on Loans denominated in
the Affected Currency as to which market practice differs from the
foregoing shall be computed in accordance with market practice
for such Loans) equal to the Daily Simple RFR for such Affected
Currency plus the RFR Adjustment plus the Applicable Margin,
such interest rate to change automatically from time to time
effective as of the effective date of each change in the applicable
Daily Simple RFR.
(f)
Interest Payment Dates. Interest on Loans denominated in Affected
Currencies to which the Term RFR Option applies shall be due and payable on the last
day of each Interest Period for those Loans and, if such Interest Period is longer than
three (3) months, also on the 90th day of such Interest Period, and at such other times as
may be
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specified in the Agreement. Interest on Loans denominated in Affected Currencies to
which the Daily Simple RFR Option applies shall be due and payable in arrears on each
Payment Date applicable thereto.
(g)
Interest Periods. At any time when the Borrowers shall select any RFR
Loan, or convert to or renew a Term RFR Option with respect to Revolving Credit Loans
denominated in Affected Currencies, the Borrowers shall notify the Administrative Agent
thereof at least four (4) Business Days prior to the effective date of (y) the selection of
such Daily Simple RFR Option or such Term RFR Option, or (z) the conversion to or
renewal of such Term RFR Option, in each case, by delivering a Loan Request. If
applicable, the notice shall specify an Interest Period during which such Interest Rate
Option shall apply. Notwithstanding the preceding sentence, the following provisions
shall apply to any selection of, renewal of, or conversion to a Term RFR Option:
(i)
(ii)
(iii)
Amount of Borrowing Tranche. Each Borrowing Tranche of Loans
under the Term RFR Option shall be in integral multiples of, and not
less than, the respective amounts set forth in Section 2.5.1 [Revolving
Credit Loan Requests].
Renewals. In the case of the renewal of a Term RFR Option at the end
of an Interest Period, the first day of the new Interest Period shall be the
last day of the preceding Interest Period, without duplication in
payment of interest for such day.
No Conversion of Affected Currency Loans. No Loan denominated in
the Affected Currency may be converted into a Loan with a different
Interest Rate Option, or a Loan denominated in a different currency,
unless otherwise permitted in the Agreement.
(h)
Selection of Interest Rate Options. If the Borrowers fail to select a new
Interest Period to apply to any Borrowing Tranche of Loans in the Affected Currency
under any Term RFR Option at the expiration of an existing Interest Period applicable to
such Borrowing Tranche in accordance with the provisions of Section 4(g) [Interest
Periods] above, then, unless such Borrowing Tranche is repaid as provided herein, the
Borrowers shall be deemed to have selected that such Borrowing Tranche shall
automatically be continued under the applicable Term RFR Option in its original
Affected Currency with an Interest Period of one (1) month at the end of such Interest
Period. If on and after the Term RFR Transition Date with respect to the Affected
Currency, the Borrowers provide any Loan Request related to a Loan at the Term RFR
Option for such Affected Currency, but fails to identify an Interest Period therefor, such
Loan Request shall be deemed to request an Interest Period of one (1) month. Any Loan
Request that fails to select an Interest Rate Option shall be deemed to be a request for the
Base Rate Option. If no election as to currency is specified in the applicable Loan
Request, then the requested Loans shall be made in Dollars and, for the avoidance of
doubt, subject to the provisions of the Agreement applicable to Loans that are not
denominated in any Affected Currencies.
A-14
(i)
Computations of Dollar Equivalent Amounts of Loans in Affected
Currencies. With respect to any amount of any Loan denominated in the Affected
Currency, the Administrative Agent may determine the Dollar Equivalent in accordance
with the terms of the Agreement.
(j)
Rate Unascertainable; Increased Costs; Deposits Not Available; Illegality.
(i)
Unascertainable; Increased Costs; Deposits Not Available. If at any
time:
(A)
(B)
(C)
shall have determined
(which
the Administrative Agent
determination shall be conclusive and binding absent manifest
error) that (x) the Daily Simple RFR or Term RFR applicable to a
Loan denominated in the Affected Currency cannot be determined
pursuant to the definition thereof, including, without limitation,
because such rate for the Affected Currency is not available or
published on a current basis or (y) a fundamental change has
occurred in the foreign exchange or interbank markets with respect
to such Affected Currency or with respect to such rate (including,
without limitation, changes in national or international financial,
political or economic conditions or currency exchange rates or
exchange controls), or
the Administrative Agent determines (which determination shall be
conclusive and binding absent manifest error) that (x) prior to the
Term RFR Transition Date with respect to any Loans that bear
interest based on a Daily Simple RFR denominated in the Affected
Currency, the Daily Simple RFR with respect to such Affected
Currency cannot be determined pursuant to the definition thereof
or (y) on and after the Term RFR Transition Date with respect to
any Loans that bear interest based on a Term RFR denominated in
the Affected Currency, the Term RFR for such Affected Currency
cannot be determined pursuant to the definition thereof on or prior
to the first day of any Interest Period, or
the Required Banks determine that for any reason in connection
with any request for a Term RFR Rate Loan denominated in the
Affected Currency or a conversion thereto or a continuation thereof
that (A) deposits in the Affected Currency are not available to any
Bank in connection with such Term RFR Rate Loan, or are not
being offered to banks in the market for the Affected Currency,
amount, and Interest Period of such Term RFR Rate Loan, or
(B) the Term RFR Option for the Affected Currency or Interest
Period with respect to a proposed Term RFR Rate Loan, as
applicable, does not adequately and fairly reflect the cost to such
Banks of funding, establishing or maintaining such Loan.
A-15
then the Administrative Agent shall have the rights specified in Section 4(j)(iii) [Administrative
Agent’s and Bank’s Rights] below.
(ii)
Illegality. If at any time any Bank shall have determined, or any
Official Body shall have asserted, that the making, maintenance or
funding of any Loan denominated in the Affected Currency to which
any Interest Rate Option applies, or the determination or charging of
interest rates based upon any Interest Rate Option for any Loan
denominated in an Affected Currency has been made impracticable or
unlawful, by compliance by such Bank in good faith with any Law or
any interpretation or application thereof by any Official Body or with
any request or directive of any such Official Body (whether or not
having the force of Law), or any Official Body has imposed material
restrictions on the authority of such Bank to purchase, sell, or take
deposits of the Affected Currency in the applicable interbank market for
the Affected Currency,
then the Administrative Agent shall have the rights specified in Section 4(j)(iii) [Administrative
Agent’s and Bank’s Rights] of this Appendix A.
(iii)
Administrative Agent’s and Bank’s Rights. In the case of any event
specified in Section 4(j)(i) [Unascertainable; Increased Costs; Deposits
Not Available] above, the Administrative Agent shall promptly so
notify the Banks and the Borrowing Agent thereof, and in the case of an
event specified in Section 4(j)(ii) [Illegality] above, such Bank shall
promptly so notify the Administrative Agent and endorse a certificate to
such notice as to the specific circumstances of such notice, and the
Administrative Agent shall promptly send copies of such notice and
certificate to the other Banks and the Borrowing Agent.
(A)
Upon such date as shall be specified in such notice (which shall not
be earlier than the date such notice is given), the obligation of
(i) the Banks, in the case of such notice given by the
Administrative Agent, or (ii) such Bank, in the case of such notice
given by such Bank, to allow the Borrowers to select, convert to or
renew a Loan denominated in an Affected Currency under the
affected Interest Rate Option in each such Affected Currency shall
be suspended (to the extent of the affected Interest Rate Option, or
the applicable Interest Periods) until the Administrative Agent
shall have later notified the Borrowing Agent, or such Bank shall
have later notified the Administrative Agent, of the Administrative
Agent’s or such Bank’s, as the case may be, determination that the
circumstances giving rise to such previous determination no longer
exist.
(B)
If at any time the Administrative Agent makes a determination
under Section 4(j)(i) [Unascertainable; Increased Costs; Deposits
Not Available] above, (i) if the Borrowers have previously notified
the Administrative Agent of its selection of, conversion to or
renewal of
A-16
an affected Interest Rate Option, and such Interest Rate Option has
not yet gone into effect, such notification shall with regard to any
such pending request for Loans denominated in an Affected
Currency, be deemed ineffective (in each case, to the extent of the
affected Interest Rate Option, or the applicable Interest Periods),
(ii) any outstanding Term RFR Rate Loans shall be deemed to
have been converted to Base Rate Loans at the end of the
applicable Interest Period, and (iii) any outstanding affected Loans
denominated in an Affected Currency shall, at the Borrower’s
election, either be converted into Base Rate Loans denominated in
Dollars (in an amount equal to the Dollar Equivalent of such
Affected Currency) immediately or, in the case of Term RFR Rate
Loans, at the end of the applicable Interest Period or prepaid in full
immediately or, in the case of Term RFR Rate Loans, at the end of
the applicable Interest Period; provided, however that absent notice
from the Borrowers of conversion or prepayment, such Loans shall
automatically be converted to Base Rate Loans (in an amount
equal to the Dollar Equivalent of such Affected Currency).
If any Bank notifies the Administrative Agent of a determination
under Section 4(j)(ii) [Illegality] above, the Borrowers shall,
subject to the Borrowers’ indemnification Obligations under
Section 5.10 of the Agreement, as to any Loan of the Banks to
which an Affected Currency and affected Interest Rate Option for
an Affected Currency applies, on the date specified in such notice
either convert such Loan to the Base Rate Option otherwise
available with respect to such Loan (which shall be, with respect to
Loans denominated in the Affected Currency, in an amount equal
to the Dollar Equivalent of such Affected Currency) or prepay such
Loan in accordance with Section 5.6 of the Agreement. Absent
due notice from the Borrowers of conversion or prepayment, such
Loan shall automatically be converted to the Base Rate Option
otherwise available with respect to such Loan (which shall be, with
respect to Loans denominated in the Affected Currency, in an
amount equal to the Dollar Equivalent of such Affected Currency)
upon such specified date.
(C)
(k)
Setting
Benchmark
Replacement
for Affected
Currencies.
Notwithstanding anything to the contrary herein or in any other Loan Document (and any
agreement executed in connection with an Interest Rate Hedge shall be deemed not to be
a “Loan Document” for purposes of this Section 4(k)), if a Benchmark Transition Event
has occurred prior to the Reference Time in respect of any setting of the then-current
Benchmark for the Affected Currency, then such Benchmark Replacement will replace
such Benchmark for all purposes hereunder and under any Loan Document in respect of
any Benchmark setting at or after 5:00 p.m. (New York City time) on the fifth (5th)
Business Day after the date notice of such Benchmark Replacement is provided to the
Banks without any amendment to, or further action or consent of any other party to, the
Agreement or any
A-17
other Loan Document so long as the Administrative Agent has not received, by such
time, written notice of objection to such Benchmark Replacement from Banks comprising
the Required Banks.
(l)
Notices; Standards for Decisions and Determinations. The Administrative
Agent will promptly notify the Borrowers and the Banks of (A) any occurrence of a
Benchmark Transition Event and its related Benchmark Replacement Date, (B) the
implementation of any Benchmark Replacement, (C)
the effectiveness of any
Conforming Changes, (D) the removal or reinstatement of any tenor of a Benchmark
pursuant to Section 4(m) [Unavailability of Tenor of Benchmark] below and (E) the
commencement of any Benchmark Unavailability Period. Any determination, decision,
or election that may be made by the Administrative Agent or, if applicable, any Bank (or
group of Banks) pursuant to this Section 4(l), including any determination with respect to
a tenor, rate, or adjustment or of the occurrence or non-occurrence of an event,
circumstance, or date and any decision to take or refrain from taking any action or any
selection, will be conclusive and binding absent manifest error and may be made in its or
their sole discretion and without consent from any other party to the Agreement or any
other Loan Document except, in each case, as expressly required pursuant to this
Section 4(l).
(m)
Unavailability of Tenor of Benchmark. Notwithstanding anything to the
contrary herein or in any other Loan Document, at any time (including in connection with
the implementation of a Benchmark Replacement) and only with respect to any then-
current Benchmark for the Affected Currency, (i) if the then-current Benchmark is a term
rate and either (A) any tenor for such Benchmark is not displayed on a screen or other
information service that publishes such rate from time to time as selected by the
Administrative Agent in its reasonable discretion or (B) the regulatory supervisor for the
administrator of such Benchmark has provided a public statement or publication of
information announcing that any tenor for such Benchmark is or will no longer be
representative, then the Administrative Agent may modify the definition of “Interest
Period” (or any similar or analogous definition) for any Benchmark settings at or after
such time to remove such unavailable or non-representative tenor and (ii) if a tenor was
removed pursuant to clause (i) above either (x) is subsequently displayed on a screen or
information service for a Benchmark (including a Benchmark Replacement) or (y) is not,
or is no longer, subject to an announcement that it is or will no longer be representative
for a Benchmark, then Administrative Agent may modify the definition of “Interest
Period” (or any similar or analogous definition) for all Benchmark settings at or after
such time to reinstate such previously removed tenor.
(n)
Term RFR Transition Event. Notwithstanding anything to the contrary in
this Amendment, the Existing Agreement or in any other Loan Document and subject to
the proviso below in this paragraph, if a Term RFR Transition Date has occurred prior to
the Reference Time in respect of any setting of the then-current Benchmark consisting of
a Daily Simple RFR for the Affected Currency, then the Term RFR, if any, will replace
such Benchmark for all purposes hereunder or under any Loan Document in respect of
such Benchmark for the Affected Currency setting and subsequent Benchmark settings,
without any amendment to, or further action or consent of any other party to, the
Agreement or any other Loan Document; provided that this clause (n) shall not be
effective unless the
A-18
Administrative Agent has delivered to the Banks and the Borrowers a Term RFR Notice
with respect to the Term RFR Transition Event. For the avoidance of doubt, the
Administrative Agent shall not be required to deliver a Term RFR Notice after a Term
RFR Transition Event and may elect or not elect to do so in its sole discretion.
A-19
Name
Big Lots F&S, LLC
Big Lots Stores, LLC
Closeout Distribution, LLC
Consolidated Property Holdings, Inc.
CSC Distribution, LLC
Big Lots Stores - CSR, LLC
Durant DC, LLC
Great Basin, LLC
Big Lots Stores - PNS, LLC
Big Lots eCommerce LLC
AVDC, LLC
Big Lots Management, LLC
Broyhill, LLC
GAFDC LLC
PAFDC LLC
WAFDC, LLC
INFDC, LLC
SUBSIDIARIES
EXHIBIT 21
Jurisdiction
OH
OH
PA
NV
AL
OH
OH
DE
CA
OH
OH
OH
OH
OH
OH
OH
OH
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the Registration Statements listed below on Form S-8 of our reports dated
March 29, 2022, relating to the consolidated financial statements of Big Lots, Inc. and subsidiaries (the “Company”) and the
effectiveness of the Company’s internal control over financial reporting, appearing in this Annual Report on Form 10-K for the
year ended January 29, 2022.
EXHIBIT 23
1)
2)
3)
4)
Post-Effective Amendment No. 1 to Registration Statement No. 33-42692 on Form S-8 pertaining to Big Lots,
Inc. Supplemental Savings Plan;
Post-Effective Amendment No. 2 to Registration Statement No. 33-19309 on Form S-8 pertaining to Big Lots,
Inc. Savings Plan;
Registration Statement No. 333-218262 on Form S-8 pertaining to the Big Lots 2017 Long-Term Incentive Plan;
and
Registration Statement No. 333-239066 on Form S-8 pertaining to the Big Lots 2020 Long-Term Incentive Plan;
/s/ DELOITTE & TOUCHE LLP
Columbus, Ohio
March 29, 2022
POWER OF ATTORNEY
EXHIBIT 24
Each director of Big Lots, Inc. (the “Company”) whose signature appears below hereby appoints Ronald A. Robins, Jr. as the
undersigned’s attorney-in-fact to sign, in the undersigned’s name and on behalf of each such director and in any and all
capacities stated below, and to cause to be filed with the Securities and Exchange Commission (the “Commission”), the
Company’s Annual Report on Form 10-K (the “Form 10-K”) for the 2021 fiscal year ended January 29, 2022, and likewise to
sign and file with the Commission any and all amendments thereto, including any and all exhibits and other documents required
to be included therewith, and the Company hereby also appoints Ronald A. Robins, Jr. as its attorney-in-fact with like authority
to sign and file the Form 10-K and any amendments thereto, granting to such attorneys-in-fact full power of substitution and
revocation, and hereby ratifying all that any such attorneys-in-fact or their substitutes may do by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has executed this instrument to be effective as of March 1, 2022.
Signature
/s/ Sandra Y. Campos
Sandra Y. Campos
/s/ James R. Chambers
James R. Chambers
/s/ Sebastian J. DiGrande
Sebastian J. DiGrande
/s/ Marla C. Gottschalk
Marla C. Gottschalk
/s/ Cynthia T. Jamison
Cynthia T. Jamison
/s/ Thomas A. Kingsbury
Thomas A. Kingsbury
/s/ Christopher J. McCormick
Christopher J. McCormick
/s/ Kimberly A. Newton
Kimberley A. Newton
/s/ Nancy A. Reardon
Nancy A. Reardon
/s/ Wendy L. Schoppert
Wendy L. Schoppert
Title
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 31.1
I, Bruce K. Thorn, certify that:
1.
I have reviewed this annual report on Form 10-K of Big Lots, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
c)
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or
persons performing the equivalent functions):
a)
all significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
b)
any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant's internal control over financial reporting.
Dated: March 29, 2022
By: /s/ Bruce K. Thorn
Bruce K. Thorn
President and Chief Executive Officer
(Principal Executive Officer)
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 31.2
I, Jonathan E. Ramsden, certify that:
1.
I have reviewed this annual report on Form 10-K of Big Lots, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
c)
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or
persons performing the equivalent functions):
a)
all significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
b)
any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant's internal control over financial reporting.
Dated: March 29, 2022
By: /s/ Jonathan E. Ramsden
Jonathan E. Ramsden
Executive Vice President, Chief Financial and
Administrative Officer
(Principal Financial Officer)
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 32.1
This certification is provided pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, and accompanies the annual report on Form 10-K (the “Report”) for the year
ended January 29, 2022, of Big Lots, Inc. (the “Company”). I, Bruce K. Thorn, President and Chief Executive Officer of the
Company, certify that:
(i)
the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934 (15 U.S.C. 78m or 78o(d)); and
(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
Dated: March 29, 2022
By: /s/ Bruce K. Thorn
Bruce K. Thorn
President and Chief Executive Officer
(Principal Executive Officer)
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 32.2
This certification is provided pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, and accompanies the annual report on Form 10-K (the “Report”) for the year
ended January 29, 2022, of Big Lots, Inc. (the “Company”). I, Jonathan E. Ramsden, Executive Vice President, Chief Financial
and Administrative Officer of the Company, certify that:
(i)
the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934 (15 U.S.C. 78m or 78o(d)); and
(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
Dated: March 29, 2022
By: /s/ Jonathan E. Ramsden
Jonathan E. Ramsden
Executive Vice President, Chief Financial and
Administrative Officer
(Principal Financial Officer)
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