ABOUT
Dollar General Corporation has been delivering value to
shoppers for nearly 80 years. Dollar General helps shoppers
Save time. Save money. Every day!® by off ering products that
are frequently used and replenished, such as food, snacks,
health and beauty aids, cleaning supplies, basic apparel,
housewares and seasonal items at everyday low prices in
convenient neighborhood locations. Dollar General operated
15,370 stores in 44 states as of February 1, 2019. In addition
to high-quality private brands, Dollar General sells products
from America’s most-trusted manufacturers such as Clorox,
Energizer, Procter & Gamble, Hanes, Coca-Cola, Mars, Unilever,
Nestle, Kimberly-Clark, Kellogg’s, General Mills, and PepsiCo.
Learn more about Dollar General and shop online at:
www.dollargeneral.com
52
22
216
11
47
26
52
123
134
169
236
511
235
516
544
520
792
242
524
116
99
440
772
430
559
510
757
866
1,474
36
36
55
45
15
56
132
45
137
461
735
418
814
541
849
CAUTIONARY DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS & WEBSITE DISCLAIMER: All forward-looking information in this report
should be read with, and is qualifi ed in its entirety by, the Cautionary Disclosure Regarding Forward-Looking Statements and the Risk Factors disclosures set forth
in the Introduction and in Item 1A, respectively, of the Form 10-K included elsewhere in this report. The information contained on or connected to our Internet
website is not incorporated by reference into this report and should not be considered part of this or any other report that we fi le with or furnish to the SEC.
TO OUR FELLOW SHAREHOLDERS,
CUSTOMERS & EMPLOYEES:
In 2018, we kept our customer at the center of everything
we do, remained focused on our operating priorities and
advanced our strategic initiatives. And, we believe our
customers, employees and shareholders have reaped
the benefits. For our customers, we offered a shopping
experience with even more value and convenience. For our
employees, we provided new jobs and numerous career
progression opportunities. Finally, for our shareholders,
we delivered strong operating and financial results that
demonstrated the strength of our business model. On the
heels of a strong 2018, we look forward to continuing to build
on our leading position in small-box discount retail, capturing
additional market share and continuing to use innovation to
support future growth. We are excited about the future.
Highlights of 2018 Compared to 2017:
• Net sales increased 9.2% to $25.6 billion and same-
increased 3.2%, marking our 29th
store sales
consecutive year of same-store sales growth.
• Net
income grew to $1.6 billion, or $5.97 per
diluted share.
• Cash flows from operations were $2.1 billion, an
increase of 18.9%.
• We returned $1.3 billion to our shareholders through
share repurchases and dividends.
• We opened 900 new stores, remodeled 1,050 stores
and relocated 115 stores.
In 2018 we relentlessly focused on execution and innovation,
which resulted in continued growth. In 2019, we are piloting
two new transformational strategic initiatives – DG Fresh,
a multi-phase shift to self-distribution of perishable goods
(primarily fresh and frozen) to our stores, and Fast Track, a
two-pronged approach to increasing labor productivity in
our stores and enhancing customer convenience. We expect
these investments to drive sales and improve our operating
margin over the long term.
We will also continue to execute on our Digital strategic
initiative by using technology to further enhance the in-
store experience. In addition, we intend to build on the
success of our 700-store pilot of our Non-Consumables
strategic initiative, which is our bold, new and expanded
assortment of value-priced products in key categories,
by offering the innovative product set in a total of 2,400
stores by the end of 2019.
Our goal is to sustain compelling sales growth while
maintaining a disciplined approach to capital allocation,
and delivering consistent, strong financial performance to
our shareholders. To achieve this goal, we focus on four
key operating priorities:
door expansion, healthier food options at affordable
prices and new private label products for health and
beauty, cosmetics and baby. We expect to improve
gross margins over the long term through many
actions, such as adding Electronic Article Surveillance
units, optimizing our supply chain, and diversifying
and growing foreign sourcing penetration.
2. Capturing growth opportunities: Our proven high-
return, low-risk real estate growth model has enabled
us to successfully open hundreds of stores that meet
our strict return thresholds and invest in new formats,
store growth and a remodel program. We expect our
innovation to drive further improvements in store
formats that will support our runway for growth. In
2019 we plan to open 975 new stores, remodel 1,000
mature stores and relocate 100 stores to better serve
our customers across the country.
3. Leveraging and reinforcing our position as a low cost
operator: We have an established, clear and defined
process to control spending across the organization.
We are managing expenses by optimizing product
assortment,
reducing operating complexity and
decreasing product movement within stores, and we are
optimistic about the benefits our Fast Track program
will provide in the coming years.
4.
Investing in our people as a competitive advantage: In
2018, we expanded our benefits to include paid parental
leave, adoption assistance, and day-one access to
healthcare benefits for store managers. Our investment
in our employees has continued to pay dividends, and
in 2018, we finished the year with our lowest store
manager turnover rate on record. Being an employer of
choice is a priority for us, and we will continue to seek
out opportunities to enhance our employee experience.
We are very proud to continue our legacy of service.
Serving our communities and helping our neighbors is
the backbone of who we are. Through the end of 2018,
Dollar General and its Foundations have awarded nearly
$20 million to individuals and non-profit organizations
to help improve the lives of people across the U.S., in the
communities we call home.
I want to thank every one of our approximately 135,000
employees who work hard each day to fulfill our mission
of Serving Others. I am confident that we can continue to
deliver value to customers, employees and shareholders,
and I am excited to see what we can accomplish in 2019.
RESPECTFULLY,
1. Driving profitable sales growth: We have a robust
portfolio of initiatives in both consumable and non-
consumable products that is driving impressive sales
growth. These initiatives include our ongoing cooler
TODD J. VASOS
CHIEF EXECUTIVE OFFICER
April 4, 2019
PROXY STATEMENT
& MEETING NOTICE
DEAR FELLOW
SHAREHOLDER,
The 2019 Annual Meeting of Shareholders of Dollar General
Corporation will be held on Wednesday, May 29, 2019, at
9:00 a.m., Central Time, at Goodlettsville City Hall
Auditorium, 105 South Main Street, Goodlettsville,
Tennessee. All shareholders of record at the close of
business on March 21, 2019 are invited to attend the annual
meeting. For security reasons, however, to gain admission to
the meeting you may be required to present photo
identification and comply with other security measures.
At this year’s meeting, you will have an opportunity to vote
on the matters described in our accompanying Notice of
Annual Meeting of Shareholders and Proxy Statement. Our
2018 Annual Report also accompanies this letter.
Your interest in Dollar General and your vote are very
important to us. We encourage you to read the Proxy
Statement and vote your proxy as soon as possible so your
vote can be represented at the annual meeting. You may
vote your proxy via the Internet or telephone, or if you
received a paper copy of the proxy materials by mail, you
may vote by mail by completing and returning a proxy card.
On behalf of the Board of Directors, thank you for your
continued support of Dollar General.
SINCERELY,
MICHAEL M. CALBERT
CHAIRMAN OF THE BOARD
APRIL 4, 2019
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
DATE
TIME
PLACE
Wednesday
May 29, 2019
9:00 a.m.
Central Time
Goodlettsville City Hall Auditorium
105 South Main Street
Goodlettsville, Tennessee
ITEMS OF BUSINESS:
• To elect as directors the 8 nominees listed in the proxy statement
• To hold an advisory vote to approve our named executive officer compensation as disclosed in the
proxy statement
• To ratify the appointment of our independent registered public accounting firm for fiscal 2019
• To transact any other business that may properly come before the annual meeting and any
adjournments of that meeting
WHO MAY VOTE:
Shareholders of record at the close of business on March 21, 2019
By Order of the Board of Directors,
Goodlettsville, Tennessee
April 4, 2019
Christine L. Connolly
Corporate Secretary
Please vote your proxy as soon as possible even if you expect to attend the annual meeting in person.
You may vote your proxy via the Internet or by phone by following the instructions on the notice of
internet availability or proxy card, or if you received a paper copy of these proxy materials by mail, you
may vote by mail by completing and returning the enclosed proxy card in the enclosed reply envelope.
No postage is necessary if the proxy is mailed within the United States. You may revoke your proxy by
following the instructions listed on page 2 of the proxy statement.
PROXY STATEMENT SUMMARY
This summary highlights information contained elsewhere in the proxy statement or about Dollar General.
This summary does not contain all of the information that you should consider, and you should review all of
the information contained in the proxy statement before voting.
HOW TO VOTE (p. 2)
MAIL
PHONE
INTERNET
IN PERSON
Mail your completed,
signed, and dated
proxy card or voting
instruction form
1-800-690-6903
www.proxyvote.com
May 29, 2019
9:00 a.m., CT
Goodlettsville
City Hall Auditorium
105 South Main Street
Goodlettsville, TN
VOTING MATTERS (pp. 4, 45, and 47)
2019 PROPOSALS
Proposal 1: Election of Directors
Proposal 2: Advisory Vote to Approve Named Executive Officer Compensation
Proposal 3: Ratification of Appointment of Auditors
Board
Recommends
BOARD OF DIRECTORS GROUP DIVERSITY(pp 4-9)
AGE
59
DIRECTOR
AVERAGE
AGE
TENURE
4
3
DIVERSITY
(Race & Gender)
6
YEARS
AVERAGE
1
62.5%
Blended
Non-Diverse
1-5
6-10
11+
37.5%
Blended
Diverse
PROXY STATEMENT SUMMARY
PAY FOR PERFORMANCE (pp. 20 and 21)
Consistent with our philosophy,
and as illustrated to the right, a
significant portion of
annualized target total direct
compensation for our named
executive officers in 2018 was
performance-based and linked
to changes in our stock price.
16%
STI
11%
Salary
CEO
VARIABLE/
AT-RISK
89%
73%
LTI
19%
STI
OTHER
NEOs
(Average)
VARIABLE/
AT-RISK
75%
56%
LTI
25%
Salary
LTI — Long-Term Equity Incentive (stock options and performance share units)
STI — Short-Term Cash Incentive (Teamshare bonus program)
96.55%
SHAREHOLDER
SUPPORT
The most recent shareholder advisory vote on our
named executive officer compensation was held on
May 30, 2018. Excluding abstentions and broker non-
votes, 96.55% of total votes were cast in support of
the program.
DOLLAR GENERAL AT-A-GLANCE*
~135,000
EMPLOYEES
15,000+
STORES
$25.6
BILLION
IN SALES
In fiscal
year 2018
MULTIPLE STORE FORMATS
TO SERVE OUR CUSTOMERS
LOW-PRICED PRODUCT MODEL
~23%
OF PRODUCTS
PRICED AT $1 OR LESS
123rd
RANKING ON THE
FORTUNE 500 LIST
* Data as of March 21, 2019 unless otherwise noted.
at 2018 fiscal year end
TABLE OF CONTENTS
SOLICITATION, MEETING, AND VOTING
INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PROPOSAL 1:
Election of Directors . . . . . . . . . . . . . . . . . . . . . . . .
1
4
Potential Payments upon Termination or
Change in Control . . . . . . . . . . . . . . . . . . . . . . . . .
35
Compensation Committee Interlocks and
Insider Participation . . . . . . . . . . . . . . . . . . . . . . . 42
Compensation Risk Considerations . . . . . . . 42
Pay Ratio Disclosure . . . . . . . . . . . . . . . . . . . . . . 42
CORPORATE GOVERNANCE . . . . . . . . . . . . . . . .
11
DIRECTOR COMPENSATION . . . . . . . . . . . . . . . .
15
DIRECTOR INDEPENDENCE . . . . . . . . . . . . . . . . .
17
TRANSACTIONS WITH MANAGEMENT AND
OTHERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EXECUTIVE COMPENSATION . . . . . . . . . . . . . . .
Compensation Discussion and Analysis . . .
18
19
19
Compensation Committee Report . . . . . . . . 28
SECURITY OWNERSHIP . . . . . . . . . . . . . . . . . . . . 43
Security Ownership of Certain Beneficial
Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Security Ownership of Officers and
Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 16(a) Beneficial Ownership
Reporting Compliance . . . . . . . . . . . . . . . . . . . . 44
PROPOSAL 2:
Advisory Vote to Approve Named Executive
Officer Compensation . . . . . . . . . . . . . . . . . . . . . . 45
Summary Compensation Table . . . . . . . . . . . . 29
AUDIT COMMITTEE REPORT . . . . . . . . . . . . . . . . 46
Grants of Plan-Based Awards in Fiscal
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31
Outstanding Equity Awards at 2018 Fiscal
Year-End . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Option Exercises and Stock Vested
During Fiscal 2018 . . . . . . . . . . . . . . . . . . . . . . . . . 34
Pension Benefits Fiscal 2018 . . . . . . . . . . . . . . 34
Nonqualified Deferred Compensation
Fiscal 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
PROPOSAL 3:
Ratification of Appointment of Auditors . . . . . 47
FEES PAID TO AUDITORS . . . . . . . . . . . . . . . . . . 48
SHAREHOLDER PROPOSALS FOR 2020
ANNUAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . 49
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
SHAREHOLDER MEETING TO BE HELD ON MAY 29, 2019
This Proxy Statement, our 2018 Annual Report and a form of proxy card are available at www.proxyvote.com. You will need
your Notice of Internet Availability or proxy card to access the proxy materials.
As permitted by rules adopted by the Securities and Exchange Commission (“SEC”), we are furnishing our proxy
materials over the Internet to some of our shareholders. This means that some shareholders will not receive paper
copies of these documents but instead will receive only a Notice of Internet Availability containing instructions on how
to access the proxy materials over the Internet and how to request a paper copy of our proxy materials, including the
Proxy Statement, our 2018 Annual Report, and a proxy card. Shareholders who do not receive a Notice of Internet
Availability will receive a paper copy of the proxy materials by mail, unless they have previously requested delivery of
proxy materials electronically.
PROXY STATEMENT
This document is the proxy statement of Dollar General Corporation that we use to solicit your proxy to vote upon certain
matters at our Annual Meeting of Shareholders to be held on Wednesday, May 29, 2019. We will begin mailing printed
copies of this document and the form of proxy or the Notice of Internet Availability to shareholders on or about April 4,
2019.
SOLICITATION, MEETING, AND VOTING INFORMATION
What is Dollar General Corporation and
where is it located?
Dollar General (NYSE: DG) has been delivering value to
shoppers for nearly 80 years through its mission of
Serving Others. Dollar General helps shoppers Save time.
Save money. Every day!® by offering products that are
frequently used and replenished, such as food, snacks,
health and beauty aids, cleaning supplies, basic apparel,
housewares and seasonal items at everyday low prices
in convenient neighborhood locations. Dollar General
operates 15,472 stores in 44 states as of March 1, 2019.
Our principal executive offices are located at 100
Mission Ridge, Goodlettsville, Tennessee 37072. Our
telephone number is 615-855-4000.
We refer to our company as “we,” “us” or “Dollar
General.” Unless otherwise noted or required by context,
“2019,” “2018,” “2017,” and “2016” refer to our fiscal years
ending or ended January 31, 2020, February 1, 2019,
February 2, 2018, and February 3, 2017, respectively.
What is a proxy, who is asking for it, and who
is paying for the cost to solicit it?
A proxy is your legal designation of another person,
called a “proxy,” to vote your stock. The document that
designates someone as your proxy is also called a proxy
or a proxy card.
Our directors, officers, and employees are soliciting your
proxy on behalf of our Board of Directors and will not
receive additional remuneration for doing so except
reimbursement for any related out-of-pocket expenses.
We may reimburse custodians and nominees for their
expenses in sending proxy materials to beneficial
owners. Solicitation of proxies by mail may be
supplemented by telephone, email and other electronic
means, advertisements and personal solicitation, or
otherwise. Dollar General will pay all expenses of this
solicitation.
Who may attend the annual meeting?
Only shareholders, their proxy holders, and our invited
guests may attend the meeting. If your shares are
registered in the name of a broker, trust, bank, or other
nominee, you will need to bring a proxy or a letter from
that record holder or your most recent brokerage
account statement that confirms your ownership of
those shares as of March 21, 2019. For security reasons,
we also may require photo identification for admission.
Where can I find directions to the annual
meeting?
Directions to Goodlettsville City Hall, where we will hold
the annual meeting, are posted on the “Investor
Information” section of our website located at
www.dollargeneral.com.
Will the annual meeting be webcast?
Yes. You are invited to visit the “News and Events—
Events and Presentations” section of the “Investor
Information” page of our website located at
www.dollargeneral.com at 9:00 a.m., Central Time, on
May 29, 2019 to access the live webcast of the annual
meeting. An archived copy of the webcast will be
available on our website for at least 60 days. The
information on our website, however, is not
incorporated by reference into, and does not form a part
of, this proxy statement.
How many votes must be present to hold the
annual meeting?
A quorum, consisting of the presence in person or by
proxy of the holders of a majority of shares of our
common stock outstanding on March 21, 2019, must
exist to conduct any business at the meeting. If a
quorum is not present at the meeting, any officer
entitled to preside at or to act as Secretary of the
meeting shall have power to adjourn the meeting from
time to time until a quorum is present.
2019 Proxy Statement
1
SOLICITATION, MEETING, AND VOTING INFORMATION
What if I receive more than one Notice of
Internet Availability or proxy card?
You will receive multiple Notices of Internet Availability
or proxy cards if you hold shares in different ways (e.g.,
joint tenancy, trusts, custodial accounts, etc.) or in
multiple accounts. Street name holders will receive the
Notice of Internet Availability or proxy card or other
voting information, along with voting instructions, from
their brokers. Please vote the shares represented by
each Notice of Internet Availability or proxy card you
receive to ensure that all your shares are voted.
How will my proxy be voted?
The persons named on the proxy card will vote your
proxy as you direct or, if you return a signed proxy card or
complete the Internet or telephone voting procedures but
do not specify how you want to vote your shares: “FOR”
all nominees listed in this proxy statement; “FOR”
approval, on an advisory basis, of the compensation of our
named executive officers as disclosed in this proxy
statement pursuant to the SEC’s compensation disclosure
rules; and “FOR” ratification of Ernst & Young LLP as our
independent auditor for 2019.
Can I change my mind and revoke my proxy?
Yes. A shareholder of record may revoke a proxy given
pursuant to this solicitation by:
• signing a valid, later-dated proxy card and submitting
it so that it is received before the annual meeting in
accordance with the instructions included in the proxy
card;
• at or before the annual meeting, submitting to our
Corporate Secretary a written notice of revocation
dated later than the date of the proxy;
• submitting a later-dated vote by telephone or Internet
no later than 11:59 p.m., Eastern time, on May 28, 2019;
or
• attending the annual meeting and voting in person.
Your attendance at the annual meeting, by itself, will not
revoke your proxy.
A street name holder may revoke a proxy given
pursuant to this solicitation by following the instructions
of the bank, broker, trustee, or other nominee who holds
his or her shares.
What am I voting on?
You will be asked to vote on:
• the election of the 8 nominees listed in this proxy
statement;
• the approval on an advisory basis of our named
executive officer compensation as disclosed in this
proxy statement; and
• the ratification of the appointment of our independent
registered public accounting firm (the “independent
auditor”) for 2019.
We are unaware of other matters to be acted upon at
the meeting. Under Tennessee law and our governing
documents, no other non-procedural business may be
raised at the meeting unless proper notice has been
given to shareholders. If other business is properly
raised, your proxies have authority to vote as they think
best, including to adjourn the meeting.
Who is entitled to vote at the annual
meeting?
You may vote if you owned shares of Dollar General
common stock at the close of business on March 21, 2019.
As of that date, there were 259,178,169 shares of Dollar
General common stock outstanding and entitled to vote.
Each share is entitled to one vote on each matter.
What is the difference between a
“shareholder of record” and a “street name”
holder?
You are a “shareholder of record” if your shares are
registered directly in your name with EQ Shareowner
Services, our transfer agent. You are a “street name”
holder if your shares are held in the name of a brokerage
firm, bank, trust, or other nominee as custodian.
How do I vote?
If you are a shareholder of record, you may vote your
proxy over the telephone or Internet or, if you received
printed proxy materials, by marking, signing, dating, and
returning the printed proxy card in the enclosed
envelope. Please refer to the instructions on the Notice
of Internet Availability or proxy card, as applicable.
Alternatively, you may vote in person at the meeting.
If you are a street name holder, your broker, bank, or
other nominee will provide materials and instructions for
voting your shares. You may vote in person at the
meeting if you obtain and bring to the meeting a legal
proxy from your broker, banker, trustee, or other
nominee giving you the right to vote the shares.
2
2019 Proxy Statement
SOLICITATION, MEETING, AND VOTING INFORMATION
How many votes are needed to elect
directors?
To be elected at the annual meeting, a nominee must
receive the affirmative vote of a majority of votes cast
by holders of shares entitled to vote at the meeting.
Under our Amended and Restated Charter, the
“affirmative vote of a majority of votes cast” means that
the number of votes cast in favor of a nominee’s election
exceeds the number of votes cast against his or her
election. You may vote in favor of or against the election
of each nominee, or you may elect to abstain from
voting your shares.
What happens if a director fails to receive
the required vote for election?
An incumbent director who does not receive the
required vote for election at the annual meeting must
promptly tender a resignation as a director for
consideration by our Board of Directors pursuant to our
Board-approved director resignation policy outlined in
our Corporate Governance Guidelines. Each director
standing for re-election at the annual meeting has
agreed to resign, effective upon the Board’s acceptance
of such resignation, if he or she does not receive a
majority vote. If the Board rejects the offered
resignation, the director will continue to serve until the
next annual shareholders’ meeting and until his or her
successor is duly elected or his or her earlier resignation
or removal in accordance with our Bylaws. If the Board
accepts the offered resignation, the Board, in its sole
discretion, may fill the resulting vacancy or decrease the
size of the Board.
How many votes are needed to approve
other matters?
The proposal to approve on an advisory basis the
compensation of our named executive officers and the
proposal to ratify the appointment of our independent
auditor for 2019 will be approved if the votes cast in
favor of the applicable proposal exceed the votes cast
against it. The vote on the compensation of our named
executive officers is advisory and, therefore, not binding
on Dollar General, our Board of Directors, or its
Compensation Committee. With respect to these
proposals, and any other matter properly brought
before the annual meeting, you may vote in favor of or
against the proposal, or you may elect to abstain from
voting your shares.
What are broker non-votes?
Although your broker is the record holder of any shares
that you hold in street name, it must vote those shares
pursuant to your instructions. If you do not provide
instructions, your broker may exercise discretionary
voting power over your shares for “routine” items but
not for “non-routine” items. All matters described in this
proxy statement, except for the ratification of the
appointment of our independent auditor, are considered
to be non-routine matters.
“Broker non-votes” occur when shares held of record by
a broker are not voted on a matter because the broker
has not received voting instructions from the beneficial
owner and either lacks or declines to exercise the
authority to vote the shares in its discretion.
How will abstentions and broker non-votes
be treated?
Abstentions and broker non-votes, if any, will be treated
as shares that are present and entitled to vote for
purposes of determining whether a quorum is present
but will not be counted as votes cast either in favor of or
against a particular proposal and will have no effect on
the outcome of a particular proposal.
2019 Proxy Statement
3
PROPOSAL 1: Election of Directors
What is the structure of the Board of
Directors?
Our Board of Directors must consist of 1 to 15 directors,
with the exact number set by the Board. The Board size
is currently fixed at 8. All directors are elected annually
by our shareholders.
How are directors identified and nominated?
The Nominating and Governance Committee (the
“Nominating Committee”) is responsible for identifying,
evaluating, and recommending director candidates,
including the director slate to be presented to
shareholders for election at the annual meeting, to our
Board of Directors, which makes the ultimate election or
nomination determination, as applicable. The Nominating
Committee may use a variety of methods to identify
potential director candidates, such as recommendations
by our directors, management, shareholders or third-
party search firms (see “Can shareholders recommend or
nominate directors?” below). The Nominating Committee
has retained a third-party search firm to assist in
identifying potential Board candidates who meet our
qualification and experience requirements and, for any
such candidate identified by such search firm, to compile
and evaluate information regarding the candidate’s
qualifications, experience, and potential conflicts of
interest, and to verify the candidate’s education.
Does the Board consider diversity when
identifying director nominees?
Yes. We have a written policy to endeavor to achieve a
mix of Board members that represent a diversity of
background and experience in areas that are relevant to
our business. To implement this policy, the Nominating
Committee considers each candidate’s individual
qualifications in the context of how that candidate would
relate to the Board as a whole and is intentional about
including in the candidate pool persons with diverse
attributes such as gender, race, and age. The Committee
and the Board periodically assess this policy’s
effectiveness by considering whether the Board as a
whole represents such diverse experience and
composition and by updating the criteria for selection of
new directors as appropriate. The matrix included below
illustrates the diverse experience and composition of our
Board.
Board of Directors Matrix
Retail Industry Experience
Senior Leadership (C-Suite) Experience
Strategic Planning/M&A Experience
Public Board Experience
Financial Expertise
General Independence
Global/International Experience (Sourcing or Operations)
Branding/Marketing/Consumer Behavior Experience
Human Capital Experience
E-commerce/Digital Experience
Risk Management Experience
Racial/Gender Diversity
4
2019 Proxy Statement
Total
7
8
6
4
4
7
5
5
1
2
8
3
How are nominees evaluated; what are the
threshold qualifications?
The Nominating Committee is charged with
recommending to our Board of Directors only those
candidates that it believes are qualified to serve as
Board members consistent with the criteria for selection
of new directors adopted from time to time by the
Board and who have not achieved the age of 76, unless
the Board has approved an exception to this limit on a
case by case basis. If a waiver is granted, it will be
reviewed annually.
The Nominating Committee assesses a candidate’s
independence, background, and experience, as well as
our current Board’s skill needs. With respect to
incumbent directors considered for re-election, the
Committee also assesses each director’s meeting
attendance record and suitability for continued service.
In addition, the Committee determines that all nominees
are in a position to devote an adequate amount of time
to the effective performance of director duties and
possess the following threshold characteristics: integrity
and accountability, informed judgment, financial literacy,
a cooperative approach, a record of achievement,
loyalty, and the ability to consult with and advise
management. The Committee recommends candidates,
including those submitted by shareholders, only if it
PROPOSAL 1: ELECTION OF DIRECTORS
believes a candidate’s knowledge, experience, and
expertise would strengthen the Board and that the
candidate is committed to representing the long-term
interests of all Dollar General shareholders.
Who are the nominees this year?
All nominees for election as directors at the annual
meeting, consisting of the 8 incumbent directors who
were elected at the 2018 annual meeting of
shareholders, were nominated by the Board of Directors
for election by shareholders at the annual meeting upon
the recommendation of the Nominating Committee. Our
Board believes that each of the nominees can devote an
adequate amount of time to the effective performance
of director duties and possesses all of the threshold
qualifications identified above.
If elected, each nominee would hold office until the
2020 annual meeting of shareholders and until his or her
successor is elected and qualified, subject to any earlier
resignation or removal.
The following lists the nominees, their ages at the date
of this proxy statement, and the calendar year in which
they first became a director, along with their biographies
and the experience, qualifications, attributes, or skills
that led the Board to conclude that each nominee
should serve as a director of Dollar General.
Biography:
Mr. Bryant served as the President and Chief Executive Officer of Longs Drug Stores Corporation
from 2002 through 2008 and as its Chairman of the Board from 2003 through his retirement in 2008.
Prior to joining Longs Drug Stores, he served as a Senior Vice President of The Kroger Co. from 1999
to 2002. Mr. Bryant has served as a director of Loblaw Companies Limited of Canada since May 2013
and served as a director of OfficeMax Incorporated from 2004 to 2013 and Office Depot, Inc. from
November 2013 to July 2017.
Specific Experience, Qualifications, Attributes, and Skills:
Mr. Bryant has over 40 years of retail experience, including experience in marketing,
merchandising, operations, and finance. His substantial experience in leadership and policy-
making roles at other retail companies, together with his current and former experience as a
board member for other retailers, provides him with an extensive understanding of our industry,
as well as with valuable executive management skills, global, strategic planning, and risk
management experience, and the ability to effectively advise our CEO.
WARREN
F. BRYANT
Age: 73
Director Since:
2009
2019 Proxy Statement
5
PROPOSAL 1: ELECTION OF DIRECTORS
Biography:
Mr. Calbert has served as our Chairman of the Board since January 2016. He joined the private equity
firm KKR & Co. L.P. (“KKR”) in January 2000 and was directly involved with several KKR portfolio
companies until his retirement in January 2014. Mr. Calbert led the Retail industry team within KKR’s
Private Equity platform prior to his retirement and served as a consultant to KKR from his retirement
until June 2015. Mr. Calbert joined Randall’s Food Markets beginning in 1994 and served as the Chief
Financial Officer from 1997 until it was sold in September 1999. Mr. Calbert also previously worked as a
certified public accountant and consultant with Arthur Andersen Worldwide from 1985 to 1994, where
his primary focus was the retail and consumer industry. He previously served as our Chairman of the
Board from July 2007 until December 2008 and as our lead director from March 2013 until his
re-appointment as our Chairman of the Board in January 2016.
Specific Experience, Qualifications, Attributes, and Skills:
Mr. Calbert has considerable experience in managing private equity portfolio companies and is
experienced with corporate finance and strategic business planning activities. As the former head
of KKR’s Retail industry team, Mr. Calbert has a strong background and extensive experience in
advising and managing companies in the retail industry, including evaluating business strategies,
financial plans and structures, risk, and management teams. His former service on various private
company boards in the retail industry further strengthens his knowledge and experience within
our industry. Mr. Calbert also has a significant financial and accounting background evidenced by
his prior experience as the chief financial officer of a retail company and his 10 years of practice
as a certified public accountant.
Biography:
Ms. Cochran has served as a director and as President and Chief Executive Officer of Cracker Barrel
Old Country Store, Inc., a restaurant and retail concept with locations throughout the United States,
since September 2011. She joined Cracker Barrel in April 2009 as Executive Vice President and Chief
Financial Officer, and was named President and Chief Operating Officer in November 2010. She was
previously Chief Executive Officer at Books-A-Million, Inc. from February 2004 to April 2009. She also
served as that company’s President (August 1999 – February 2004), Chief Financial Officer
(September 1993 – August 1999) and Vice President of Finance (August 1992 – September 1993).
Ms. Cochran has served as a director of Lowe’s Companies, Inc. since January 2016.
Specific Experience, Qualifications, Attributes, and Skills:
Ms. Cochran brings over 25 years of retail experience to Dollar General as a result of her current
and former roles at Cracker Barrel Old Country Store and her former roles at Books-A-Million.
This experience allows her to provide additional support and perspective to our CEO and our
Board. In addition, Ms. Cochran’s industry, executive, and other public company board experience
provides leadership, consensus-building, strategic planning, risk management, and budgeting
skills. Ms. Cochran also has significant financial experience, having served as the chief financial
officer of two public companies and as vice president, corporate finance of SunTrust Securities,
Inc., and our Board has determined that she qualifies as an audit committee financial expert.
MICHAEL
M. CALBERT
Age: 56
Director Since:
2007
SANDRA
B. COCHRAN
Age: 60
Director Since:
2012
6
2019 Proxy Statement
PATRICIA
D. FILI-KRUSHEL
Age: 65
Director Since:
2012
TIMOTHY
I. MCGUIRE
Age: 58
Director Since:
2018
PROPOSAL 1: ELECTION OF DIRECTORS
Biography:
Ms. Fili-Krushel has served as Chief Executive Officer of the Center for Talent Innovation, a non-profit
think tank that focuses on helping global corporations leverage talent across the divides of culture,
gender, geography, and generation, since January 2019 after serving as the organization’s Interim Chief
Executive Officer since September 2018. She is the former Executive Vice President for NBCUniversal,
one of the world’s leading media and entertainment companies, where she served as a strategist and
key advisor to the CEO of NBCUniversal from April 2015 to November 2015. She served as Chairman of
NBCUniversal News Group, a division of NBCUniversal Media, LLC, composed of NBC News, CNBC and
MSNBC, from July 2012 until April 2015. She previously served as Executive Vice President of
NBCUniversal (January 2011 – July 2012) with a broad portfolio of functions reporting to her, including
operations and technical services, business strategy, human resources and legal. Prior to NBCUniversal,
Ms. Fili-Krushel was Executive Vice President of Administration at Time Warner Inc. (July 2001 –
December 2010) where her responsibilities included oversight of philanthropy, corporate social
responsibility, human resources, worldwide recruitment, employee development and growth,
compensation and benefits, and security. Before joining Time Warner in July 2001, Ms. Fili-Krushel had
been Chief Executive Officer of WebMD Health Corp. since April 2000. From July 1998 to April 2000,
Ms. Fili-Krushel was President of the ABC Television Network. Ms. Fili-Krushel has served as a director
of Chipotle Mexican Grill, Inc. since March 2019.
Specific Experience, Qualifications, Attributes, and Skills:
Ms. Fili-Krushel’s background increases the breadth of experience of our Board as a result of her
extensive executive experience overseeing the business strategy, philanthropy, corporate social
responsibility, human resources, recruitment, employee growth and development, compensation
and benefits, and legal functions, along with associated risks, at large public companies in the
media industry. She also brings valuable oversight experience in diversity-related workplace
matters from her leadership position at the Center for Talent Innovation, as well as digital and e-
commerce experience gained while serving as CEO of WebMD Health Corp. In addition, her
understanding of consumer behavior based on her knowledge of viewership patterns and
preferences provides additional perspective to our Board in understanding our customer base,
and her other public company board experience will bring additional perspective to our Board.
Biography:
Mr. McGuire has served as a director and Chief Executive Officer of Mobile Service Center Canada, Ltd.
(d/b/a Mobile Klinik), a chain of professional smartphone repair stores specializing in professional
“while you wait” repair and care of smartphones and tablets, since October 2018. He also served as
Mobile Klinik’s Chairman of the Board from June 2017 until October 2018. He retired from McKinsey &
Company, a worldwide management consulting firm, in August 2017 after serving as a leader of its
global retail and consumer practice for almost 28 years, including leading the Americas retail practice
for five years. While at McKinsey, Mr. McGuire led consulting efforts with major retail,
telecommunications, consumer service, and marketing organizations in Canada, the United States, Latin
America, Europe, and Australia. He also co-founded McKinsey Analytics, a global group of consultants
bringing advanced analytics capabilities to clients to help make better business decisions. Mr. McGuire
began his career with Procter & Gamble in 1983 where he served in various positions until October
1989, with his final role being Marketing Director for the Canadian Food & Beverage division.
Specific Experience, Qualifications, Attributes, and Skills:
Mr. McGuire brings almost 30 years of valuable retail experience to our company, recently as
Chief Executive Officer of Mobile Klinik and having served as a leader of McKinsey’s global retail
and consumer practice for almost 28 years. He has expertise in strategy, new store/concept
development, marketing and sales, operations, international expansion, big data and advanced
analytics, as well as risk management experience. In addition, Mr. McGuire’s focus while at
McKinsey on use of advanced analytics in retail, developing and implementing growth strategies
for consumer services, food, general-merchandise and multi-channel retailers, developing new
retail formats, the application of lean operations techniques, the redesign of merchandise flows,
supply-chain optimization efforts, and the redesign of purchasing and supplier-management
approaches, brings new and extensive relevant perspectives to our Board as it seeks to consult
and advise our CEO and to shape our corporate strategy.
2019 Proxy Statement
7
PROPOSAL 1: ELECTION OF DIRECTORS
WILLIAM
C. RHODES, III
Age: 53
Director Since:
2009
RALPH
E. SANTANA
Age: 51
Director Since:
2018
Biography:
Mr. Rhodes was elected Chairman of AutoZone, Inc., a specialty retailer and distributor of automotive
replacement parts and accessories, in June 2007. He has served as President and Chief Executive
Officer and as a director of AutoZone since 2005. Prior to his appointment as President and Chief
Executive Officer, Mr. Rhodes was Executive Vice President – Store Operations and Commercial. Prior
to 2004, he had been Senior Vice President – Supply Chain and Information Technology since 2002,
and prior thereto had been Senior Vice President – Supply Chain since 2001. Prior to that time, he
served in various capacities with AutoZone since 1994, including Vice President—Stores in 2000,
Senior Vice President – Finance and Vice President – Finance in 1999, and Vice President – Operations
Analysis and Support from 1997 to 1999. Prior to 1994, Mr. Rhodes was a manager with Ernst &
Young LLP.
Specific Experience, Qualifications, Attributes, and Skills:
Mr. Rhodes has nearly 25 years of experience in the retail industry, including extensive experience in
operations, supply chain, and finance, among other areas. This background serves as a strong
foundation for offering invaluable perspective and expertise to our CEO and our Board. In addition, his
experience as a board chairman and chief executive officer of a public retail company provides
leadership, consensus-building, strategic planning, and budgeting skills, as well as international
experience and an extensive understanding of both short- and long-term issues confronting the retail
industry. Mr. Rhodes also has a strong financial background, and our Board has determined that he
qualifies as an audit committee financial expert.
Biography:
Mr. Santana has served as Executive Vice President and Chief Marketing Officer of Harman
International Industries, a wholly-owned subsidiary of Samsung Electronics Co., Ltd. focused on
designing and engineering connected products and solutions for automakers, consumers and
enterprises worldwide, since April 2013, with responsibility for all aspects of Harman’s worldwide
marketing strategy. He is also responsible for Harman’s e-commerce business and runs its global
design group which entails 6 design studios around the world and full P&L accountability. Before
joining Harman, Mr. Santana served as Senior Vice President and Chief Marketing Officer, North
America, for Samsung Electronics Co., Ltd. from June 2010 to September 2012. In that role, he was
responsible for launching Samsung’s U.S. e-commerce business and building out branding strategies to
drive visibility. Mr. Santana also served 16 years at PepsiCo Inc. from June 1994 to May 2010, holding
positions spanning multiple international and domestic leadership roles in marketing. In his last
assignment at PepsiCo, Mr. Santana served as Vice President of Marketing, North American Beverages,
Pepsi-Cola, where he spearheaded a creative overhaul and re-launch of Pepsi-Cola. While at PepsiCo,
Inc. he also held positions with its Frito-Lay’s international and North America operations. Mr. Santana
began his career as a Senior Marketing Associate at Beverage Marketing Corporation (July 1989-June
1992).
Specific Experience, Qualifications, Attributes, and Skills:
Mr. Santana has over 25 years of marketing experience spanning multiple technology and food &
beverage consumer packaged goods categories. His deep understanding of digital marketing
and retail shopper marketing, particularly in the area of consumer packaged goods, and his
extensive experience in shaping multi-cultural strategy, executing marketing programs, and
making brands culturally relevant further enhances our Board’s ability to provide oversight and
thoughtful counsel to management in these important and evolving areas of our business. His
executive position also provides risk management experience.
8
2019 Proxy Statement
PROPOSAL 1: ELECTION OF DIRECTORS
Biography:
Mr. Vasos has served as Chief Executive Officer and a member of our Board since June 2015. He joined
Dollar General in December 2008 as Executive Vice President, Division President and Chief
Merchandising Officer. He was promoted to Chief Operating Officer in November 2013. Prior to joining
Dollar General, Mr. Vasos served in executive positions with Longs Drug Stores Corporation for
seven years, including Executive Vice President and Chief Operating Officer (February 2008 –
November 2008) and Senior Vice President and Chief Merchandising Officer (2001 – 2008), where he
was responsible for all pharmacy and front-end marketing, merchandising, procurement, supply chain,
advertising, store development, store layout and space allocation, and the operation of three
distribution centers. He also previously served in leadership positions at Phar-Mor Food and Drug Inc.
and Eckerd Corporation.
Specific Experience, Qualifications, Attributes, and Skills:
Mr. Vasos has extensive retail experience, including over 10 years with Dollar General. His experience
overseeing the merchandising, operations, marketing, advertising, global procurement, supply chain,
store development, store layout and space allocation functions of other retail companies bolsters
Mr. Vasos’s thorough understanding of all key areas of our business. In addition, Mr. Vasos’s service in
leadership and policy-making positions of other retail companies has provided him with the
necessary leadership skills to effectively guide and oversee the direction of Dollar General and with
the consensus-building skills required to lead our management team.
TODD
J. VASOS
Age: 57
Director Since:
2015
Can shareholders recommend or nominate directors?
Yes. Shareholders may recommend candidates to our
Nominating Committee by providing the same information
within the same deadlines required for nominating
candidates pursuant to the advance notice provisions in
our Bylaws discussed below. Our Nominating Committee
is required to consider such candidates and to apply the
same evaluation criteria to them as it applies to other
director candidates. Shareholders also can go a step
further and nominate directors for election by
shareholders by following the advance notice procedures
in our Bylaws summarized below.
In short, whether recommending a candidate for our
Nominating Committee’s consideration or nominating a
director for election by shareholders, a written notice
must be received by our Corporate Secretary at 100
Mission Ridge, Goodlettsville, Tennessee 37072 no
earlier and no later than the close of business on the
120th day and the 90th day, respectively, prior to (1) the
first anniversary of the prior year’s annual meeting or
(2) the date of the annual meeting, if the meeting is held
more than 30 days before or more than 60 days after
the anniversary of the prior year’s annual meeting,
unless the first public announcement of the annual
meeting date is less than 100 days prior to such meeting
date, in which case we must receive the notice by the
10th day following the public announcement. The notice
must contain all information required by our Bylaws
about the shareholder proposing the nominee and about
the nominee, which generally includes:
• the nominee’s name, age, business and residence
addresses, and principal occupation or employment;
• the class and number of shares of Dollar General
common stock beneficially owned by the nominee and
by the shareholder proposing the nominee;
• any other information relating to the nominee that is
required to be disclosed in proxy solicitations with
respect to nominees for election as directors pursuant
to Regulation 14A of the Securities Exchange Act of
1934 (including the nominee’s written consent to
being named in the proxy statement as a nominee and
to serving as a director, if elected);
• the name and address of the shareholder proposing
the nominee as they appear on our record books, and
the name and address of the beneficial holder (if
applicable);
• any other interests of the proposing shareholder or his
or her immediate family in Dollar General securities,
including interests the value of which is based on
increases or decreases in the value of Dollar General
securities or our payment of dividends;
• a description of all compensatory arrangements or
understandings between the proposing shareholder
and each nominee; and
• a description of all arrangements or understandings
between the proposing shareholder and each nominee
and any other person pursuant to which the
nomination is to be made.
We have a “proxy access” provision in our Bylaws
whereby eligible shareholders may nominate candidates
for election to our Board and such candidates will be
2019 Proxy Statement
9
PROPOSAL 1: ELECTION OF DIRECTORS
included in our proxy statement and ballot subject to
the terms, conditions, procedures and deadlines set
forth in Article I, Section 12 of our Bylaws. Our proxy
access bylaw provides that holders of at least 3% of our
outstanding shares, held by up to 20 shareholders,
holding the shares continuously for at least 3 years, can
nominate up to 20% of our Board for election at an
annual shareholders’ meeting. For more specific
information regarding these deadlines in respect of the
2020 annual meeting of shareholders, see “Shareholder
Proposals for 2020 Annual Meeting” below.
You should consult our Bylaws, posted on the “Investor
Information—Corporate Governance” section of our
website located at www.dollargeneral.com, for more
detailed information regarding the processes
summarized above. No shareholder nominees have been
submitted for this year’s annual meeting.
What if a nominee is unwilling or unable to
serve?
That is not expected to occur. If it does, the persons
designated as proxies on the proxy card are authorized
to vote your proxy for a substitute designated by our
Board of Directors.
Are there any family relationships between
any of the directors, executive officers or
nominees?
There are no family relationships between any of our
directors, executive officers or nominees.
FOR
The Board of Directors unanimously recommends that Shareholders vote
FOR the election of each of the 8 nominees named in this proposal.
10
2019 Proxy Statement
CORPORATE GOVERNANCE
What governance practices are in place to promote effective independent Board leadership?
The Board of Directors has adopted a number of governance practices to promote effective independent Board
leadership, such as:
Independent Board Chairman
Mr. Calbert, an independent director, serves as our Chairman of the Board. In this role,
Mr. Calbert serves as a liaison between the Board and our CEO, approves Board meeting
agendas, leads the annual Board self-evaluation, and participates with the Compensation
Committee in the annual CEO performance evaluation. This decision affords our CEO the
opportunity to focus his time and energy on managing our business, while our Chairman
devotes his time and attention to matters of Board oversight and governance. The Board,
however, recognizes that no single leadership model is right for all companies and at all times,
and the Board will review its leadership structure as appropriate to ensure it continues to be in
the best interests of Dollar General and our shareholders.
Annual Self-Evaluations and Board Succession Planning
The Board and each standing committee annually perform self-evaluations using a process
approved by the Nominating Committee. In addition, directors are asked to provide candid
feedback on individual Board members to the Chairperson of the Nominating Committee or
the Chairman of the Board, who then meet to discuss individual director performance and
succession considerations and any necessary follow-up actions.
Regularly Scheduled Independent Director Sessions
Opportunity is available at each regularly scheduled Board meeting for executive sessions of
the non-management directors (all of whom are currently independent). Mr. Calbert, as
Chairman, presides over all executive sessions of the non-management and the independent
directors.
Annual CEO Performance Evaluations
Each year, the Compensation Committee meets to evaluate the CEO’s performance prior to
making CEO compensation decisions. All independent directors, including the Chairman of the
Board, are invited to provide input into this discussion.
What is the Board’s role in risk oversight?
Our Board of Directors and its committees have an
important role in our risk oversight process. We identify
and manage our key risks using our enterprise risk
management program. This framework evaluates internal
and external business, financial, legal, reputational, and
other risks, identifies mitigation strategies, and assesses
any residual risk. The program employs interviews with
senior management and our Board and reviews of
strategic initiatives, recent or potential legislative or
regulatory changes, certain internal metrics, and other
information. The Audit Committee oversees our
enterprise risk management program, reviewing
enterprise risk evaluation results at least annually and
high residual risk categories, along with their mitigation
strategies, quarterly. In addition, as part of its regular
review of progress versus the strategic plan, our Board
reviews related material risks as appropriate. Our General
Counsel also periodically provides information to the
Board regarding our insurance coverage and programs
as well as litigation and other legal risks.
In addition to consideration as part of the enterprise risk
management program, cybersecurity risk is further
evaluated through various internal cybersecurity audits
as well as periodic engagements of third parties to
perform unannounced cybersecurity assessments and to
benchmark our cybersecurity program and assess how
any identified vulnerabilities in the industry might impact
our company as well as the sufficiency of our response.
Management develops action plans to address select
identified opportunities for improvement, and the Audit
Committee quarterly reviews metrics and information
pertaining to cybersecurity risks and mitigation.
2019 Proxy Statement
11
CORPORATE GOVERNANCE
Our Compensation Committee is responsible for
overseeing the management of risks relating to our
executive compensation program. As discussed under
“Executive Compensation—Compensation Risk
Considerations” below, the Compensation Committee
also participates in periodic assessments of the risks
relating to our overall compensation programs. In
addition, our Nominating Committee reviews detailed
information regarding corporate governance trends and
practices within our company’s industry as well as
across industries to inform governance-related
recommendations to the Board. For more information
regarding the role of each standing committee, see
“What functions are performed by the Audit,
Compensation, and Nominating Committees?” below.
The entire Board is regularly informed about risks
through the committee reporting process, as well as
through special reports and updates from management
and advisors. This enables the Board and its committees
to coordinate the risk oversight role, particularly with
respect to risk interrelationships. Our Board believes this
division of risk management responsibilities effectively
addresses the material risks facing Dollar General. Our
Board further believes that our leadership structure,
described above, supports the risk oversight function of
the Board as it allows our independent directors, through
the three fully independent Board committees and in
executive sessions of independent directors, to exercise
effective oversight of management’s actions in
identifying risks and implementing effective risk
management policies and controls.
What functions are performed by the Audit, Compensation, and Nominating Committees?
Our Board of Directors has a standing Audit Committee,
Compensation Committee, and Nominating Committee,
each with a Board-adopted written charter available on
the “Investor Information—Corporate Governance” section
of our website located at www.dollargeneral.com. Current
information regarding these committees is set forth below.
In addition to the functions outlined below, each such
committee performs an annual self-evaluation, periodically
reviews and reassesses its charter, and evaluates and
makes recommendations concerning shareholder
proposals that are within the committee’s expertise.
Name of
Committee & Members
AUDIT:
Mr. Rhodes, Chairperson
Mr. Bryant
Ms. Cochran
12
2019 Proxy Statement
Committee Functions
• Selects the independent auditor
• Annually evaluates the independent auditor’s qualifications, performance, and
independence, as well as the lead audit partner; periodically considers the
advisability of audit firm rotation; and reviews the annual report on the
independent auditor’s internal quality control procedures and any material issues
raised by its most recent review of internal quality controls
• Pre-approves audit engagement fees and terms and all permitted non-audit
services and fees, and discusses the audit scope and any audit problems or
difficulties
• Sets policies regarding the hiring of current and former employees of the
independent auditor
• Discusses the annual audited and quarterly unaudited financial statements with
management and the independent auditor
• Reviews CEO/CFO disclosures regarding any significant deficiencies or material
weaknesses in our internal control over financial reporting, and establishes
procedures for receipt, retention and treatment of complaints regarding
accounting or internal controls
• Discusses the types of information to be disclosed in earnings press releases and
provided to analysts and rating agencies
• Discusses policies governing the process by which risk assessment and risk
management are undertaken
• Reviews internal audit activities, projects and budget
• Discusses with our general counsel legal matters having an impact on financial
statements
• Furnishes the committee report required in our proxy statement
Name of
Committee & Members
COMPENSATION:
Ms. Fili-Krushel, Chairperson
Mr. Bryant
Mr. McGuire
CORPORATE GOVERNANCE
Committee Functions
• Reviews and approves corporate goals and objectives relevant to CEO
compensation
• Determines executive officer compensation (with an opportunity for the
independent directors to ratify CEO compensation) and recommends Board
compensation for Board approval
• Oversees overall compensation philosophy and principles
• Establishes short-term and long-term incentive compensation programs for
senior officers and approves all equity awards
• Oversees share ownership guidelines and holding requirements for Board
members and senior officers
• Oversees the performance evaluation process for senior officers
• Reviews and discusses disclosure regarding executive compensation, including
Compensation Discussion and Analysis and compensation tables (in addition to
preparing the report on executive compensation for our proxy statement)
• Selects and determines fees and scope of work of its compensation consultant
• Oversees and evaluates the independence of its compensation consultant and
other advisors
NOMINATING AND GOVERNANCE:
• Develops and recommends criteria for selecting new directors
Ms. Cochran, Chairperson
Ms. Fili-Krushel
Mr. Rhodes
Mr. Santana
• Screens and recommends to our Board individuals qualified to serve on our
Board
• Recommends Board committee structure and membership
• Recommends persons to fill Board and committee vacancies
• Develops and recommends Corporate Governance Guidelines and corporate
governance practices
• Oversees the process governing annual Board, committee and director
evaluations
Does Dollar General have an audit committee
financial expert serving on its Audit
Committee?
What is Dollar General’s policy regarding
Board member attendance at the annual
meeting?
Yes. Our Board has determined that each of Ms. Cochran
and Mr. Rhodes is an audit committee financial expert
who is independent as defined in NYSE listing standards
and in our Corporate Governance Guidelines. The SEC
has determined that designation as an audit committee
financial expert will not cause a person to be deemed to
be an “expert” for any purpose.
How often did the Board and its committees
meet in 2018?
During 2018, our Board, Audit Committee,
Compensation Committee, and Nominating Committee
met 5, 5, 6, and 3 times, respectively. Each incumbent
director attended at least 75% of the total of all
meetings of the Board and committees on which he or
she served which were held during the period for which
he or she was a director and a member of each
applicable committee.
Our Board of Directors has adopted a policy that all
directors should attend annual shareholders’ meetings
unless attendance is not feasible due to unavoidable
circumstances. All persons serving as Board members at
the time attended the 2018 annual shareholders’ meeting.
Does Dollar General have a management
succession plan?
Yes. Our Board of Directors ensures that a formalized
process governs long-term management development
and succession. Our Board formally reviews our
management succession plan at least annually. Our
comprehensive program encompasses not only our CEO
and other executive officers but all employees through
the front-line supervisory level. The program focuses on
key succession elements, including identification of
potential successors for positions where it has been
determined that internal succession is appropriate,
2019 Proxy Statement
13
CORPORATE GOVERNANCE
assessment of each potential successor’s level of
readiness, and preparation of individual growth and
development plans. With respect to CEO succession
planning, our long-term business strategy is also
considered. In addition, we maintain and review with the
Board periodically a confidential procedure for the
timely and efficient transfer of the CEO’s responsibilities
in the event of an emergency or his sudden
incapacitation or departure.
Are there share ownership guidelines and
holding requirements for Board members
and senior officers?
Yes. Details of our share ownership guidelines and
holding requirements for Board members and senior
officers are included in our Corporate Governance
Guidelines. See “Compensation Discussion and Analysis—
Share Ownership Guidelines and Holding Requirements”
and “Director Compensation” for more information on
such ownership guidelines and holding requirements.
Administrative details pertaining to these matters are
established by the Compensation Committee.
How can I communicate with the Board of
Directors?
We describe our Board-approved process for security
holders and other interested parties to contact the
entire Board, a particular director, or the
non-management directors or independent directors as
a group on www.dollargeneral.com under “Investor
Information—Corporate Governance.”
Where can I find more information about
Dollar General’s corporate governance
practices?
Our governance-related information is posted on
www.dollargeneral.com under “Investor Information—
Corporate Governance,” including our Corporate
Governance Guidelines, Code of Business Conduct and
Ethics, the charter of each of the Audit Committee, the
Compensation Committee, and the Nominating
Committee, and the name(s) of the person(s) chosen to
lead the executive sessions of the non-management
directors and, if different, of the independent directors.
This information is available in print to any shareholder
who sends a written request to: Investor Relations,
Dollar General Corporation, 100 Mission Ridge,
Goodlettsville, Tennessee 37072.
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2019 Proxy Statement
DIRECTOR COMPENSATION
The following table and text summarize the compensation earned by or paid to each person who served as a
non-employee member of our Board of Directors during all or part of fiscal 2018. Mr. Vasos was not separately
compensated for his service on the Board, and his executive compensation is discussed under “Executive
Compensation” below. In addition, we will reimburse directors for certain fees and expenses incurred in connection
with continuing education seminars and for travel and related expenses related to Dollar General business. We have
omitted the columns pertaining to non-equity incentive plan compensation and change in pension value and
nonqualified deferred compensation earnings because they are inapplicable.
Fiscal 2018 Director Compensation
Name
Fees Earned or
Paid in Cash
($)(2)
Stock
Awards
($)(3)
Option
Awards
($)(4)
All Other
Compensation
($)(5)
Total
($)
Warren F. Bryant
95,500
150,475
Michael M. Calbert
95,000
352,804
Sandra B. Cochran
112,063
150,475
Patricia D. Fili-Krushel
114,500
150,475
Timothy I. McGuire(1)
92,625
150,475
Paula A. Price(1)
30,638
—
William C. Rhodes, III
112,500
150,475
David B. Rickard(1)
38,575
—
Ralph E. Santana(1)
92,625
150,475
—
—
—
—
—
—
—
—
—
1,915
247,890
4,375
452,179
1,915
264,453
1,915
266,890
1,360
244,460
185,160
215,798
1,915
264,890
185,160
223,735
1,360
244,460
(1) Messrs. McGuire and Santana joined our Board on February 12, 2018. Ms. Price and Mr. Rickard served on our Board until May 30, 2018.
(2) In addition to the annual Board retainer, Messrs. Bryant, Rhodes, and Rickard and Mss. Cochran and Fili-Krushel also earned pro-rated annual
retainers for service as committee chairpersons during fiscal 2018.
(3) Represents the grant date fair value of restricted stock units (“RSUs”) awarded to Mr. Calbert on February 5, 2018 ($202,330) for his annual
Chairman of the Board retainer, as well as to each director (including Mr. Calbert) other than Ms. Price and Mr. Rickard on May 30, 2018 ($150,475),
in each case computed in accordance with FASB ASC Topic 718. Information regarding assumptions made in the valuation of these awards is
included in Note 8 of the annual consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended February 1, 2019,
filed with the SEC on March 22, 2019 (our “2018 Form 10-K”). As of February 1, 2019, each of the persons listed in the table above had the following
total unvested RSUs outstanding (including additional unvested RSUs credited as a result of dividend equivalents earned with respect to such
RSUs): each of Messrs. Bryant, McGuire, Rhodes, and Santana and Mss. Cochran and Fili-Krushel (1,572); Mr. Calbert (3,707); and each of Ms. Price
and Mr. Rickard (0).
(4) There were no stock options awarded to any director listed in the table above during fiscal 2018, as the Board chose to eliminate stock option
awards as part of director compensation beginning in fiscal 2015. As of February 1, 2019, each of the persons listed in the table above had the
following total unexercised stock options outstanding (whether or not then exercisable): Mr. Bryant (16,207); each of Messrs. Calbert and Rhodes
(21,756); Ms. Cochran (13,120); Ms. Fili-Krushel (12,892); and each of Messrs. McGuire, Santana, and Rickard and Ms. Price (0).
(5) Represents the dollar value of dividends paid, accumulated, or credited on unvested RSUs and, for each of Ms. Price and Mr. Rickard: (a) $182,905,
which is the fair market value of the accelerated vesting of RSUs upon ceasing to serve as directors, as determined based on the closing stock
price on the vesting acceleration date, and (b) cash reimbursement of $1,700 to offset the estimated federal income tax obligation on a retirement
gift. Perquisites and personal benefits, if any, totaled less than $10,000 per director and therefore are not included in the table.
2019 Proxy Statement
15
DIRECTOR COMPENSATION
Each non-employee director receives payment (prorated as applicable) for a fiscal year in quarterly installments of
the following cash compensation, as applicable, along with an annual award of RSUs, payable in shares of our
common stock, under our Amended and Restated 2007 Stock Incentive Plan (our “Stock Incentive Plan”) having the
estimated value listed below:
Fiscal
Year
Board
Retainer
($)
Audit
Committee
Chairman
Retainer
($)
Compensation
Committee
Chairman
Retainer
($)
Nominating
Committee
Chairman
Retainer
($)
Estimated
Value of
Equity
Award
($)
2018
95,000
25,000
20,000
17,500
150,000
The RSUs are awarded annually to each non-employee
director who is elected or re-elected at the annual
shareholders’ meeting and to any new director
appointed thereafter but before February 1 of a given
year. The RSUs are scheduled to vest on the first
anniversary of the grant date subject to certain
accelerated vesting conditions. Directors generally may
defer receipt of shares underlying the RSUs.
In addition to the fees outlined above, the Chairman of
the Board receives an annual retainer delivered in the
form of RSUs, payable in shares of our common stock
under our Stock Incentive Plan and scheduled to vest on
the first anniversary of the grant date, subject to certain
accelerated vesting conditions, having an estimated
value of $200,000.
The forms and amounts of director compensation as
outlined above were recommended by the
Compensation Committee, and approved by the Board,
after taking into account market data, recommendations
of the Committee’s compensation consultant, and, for
the additional equity award to the Chairman, his further
responsibilities to the Company.
Up to 100% of cash fees earned for Board services in a
fiscal year generally may be deferred under the
Non-Employee Director Deferred Compensation
Plan. Benefits are payable upon separation from service
in the form, as elected by the director at the time of
deferral, of a lump sum distribution or monthly
payments for 5, 10, or 15 years. Participating directors
can direct the hypothetical investment of deferred fees
into funds identical to those offered in our 401(k) Plan
and will be credited with the deemed investment gains
and losses. The amount of the benefit will vary
depending on the fees the director has deferred and the
deemed investment gains and losses. Benefits upon
death are payable to the director’s named beneficiary in
a lump sum. In the event of a director’s disability (as
defined in the Non-Employee Director Deferred
Compensation Plan), the unpaid benefit will be paid in a
lump sum. Participant deferrals are not contributed to a
trust, and all benefits are paid from Dollar General’s
general assets.
Our non-employee directors are subject to share
ownership guidelines, expressed as a multiple of the
annual cash retainer payable for service on our Board,
and holding requirements. The current ownership
guideline is 5 times and should be acquired within 5
years of election to the Board. When the ownership
guideline is increased, incumbent non-employee
directors are allowed an additional year to acquire the
incremental multiple. Each non-employee director is
required to retain ownership of 50% of all net after-tax
shares granted by Dollar General until reaching the
share ownership target.
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2019 Proxy Statement
DIRECTOR INDEPENDENCE
Is Dollar General subject to the NYSE
governance rules regarding director
independence?
Yes. A majority of our directors must satisfy the
independence requirements set forth in the NYSE listing
standards. The Audit Committee, the Compensation
Committee, and the Nominating Committee also must
consist solely of independent directors to comply with
NYSE listing standards and, in the case of the Audit
Committee, with SEC rules. The NYSE listing standards
define specific relationships that disqualify directors
from being independent and further require that the
Board affirmatively determine that a director has no
material relationship with Dollar General in order to be
considered “independent.” The SEC’s rules and NYSE
listing standards contain separate definitions of
independence for members of audit committees and
compensation committees, respectively.
How does the Board of Directors determine
director independence?
The Board of Directors determines the independence of
each director and director nominee in accordance with
guidelines it has adopted, which include all elements of
independence set forth in the NYSE listing standards
and SEC rules as well as certain Board-adopted
categorical independence standards. These guidelines
are found in our Corporate Governance Guidelines,
which are posted on the “Investor Information—
Corporate Governance” section of our website located
at www.dollargeneral.com.
The Board first considers whether any director or
nominee has a relationship covered by the NYSE listing
standards that would prohibit an independence finding
for Board or committee purposes. The Board then
analyzes any relationship of the remaining eligible
directors and nominees with Dollar General or our
management that falls outside the parameters of the
Board’s separately adopted categorical independence
standards to determine if that relationship is material.
The Board may determine that a person who has a
relationship outside such parameters is nonetheless
independent because the relationship is not considered
to be material. Any director who has a material
relationship with Dollar General or its management is not
considered to be independent. Absent special
circumstances, the Board does not consider or analyze
any relationship that management has determined to fall
within the parameters of the Board’s separately adopted
categorical independence standards.
Are all of the directors and nominees
independent?
Our CEO, Todd J. Vasos, is the only non-independent
director. Our Board has affirmatively determined that each
of Warren F. Bryant, Michael M. Calbert, Sandra B.
Cochran, Patricia D. Fili-Krushel, Timothy I. McGuire,
William C. Rhodes, III, and Ralph E. Santana, as well as
former Board members Paula A. Price and David B.
Rickard who served for part of 2018, is independent under
both the NYSE listing standards and our additional
independence standards. Except as described below, any
relationship between an independent director and Dollar
General or our management fell within the Board-adopted
categorical standards and, accordingly, was not reviewed
or considered by our Board in making independence
decisions. The Board also has determined that each
person who currently serves or who served in 2018 on the
Audit Committee, the Compensation Committee, and the
Nominating Committee meets or met, as applicable, the
NYSE independence requirements for membership on
those committees, our additional standards and, as to the
Audit Committee, SEC rules.
In reaching the determination that Ms. Cochran is
independent, the Board considered that Ms. Cochran’s
brother has been employed by the Company since 2009
and currently serves as Vice President of Government
and Public Relations, a non-executive officer position, as
described in more detail under “Transactions with
Management and Others.” Ms. Cochran does not serve
on the Compensation Committee which approves
decisions pertaining to Mr. Brophy’s compensation, and
she does not participate in his performance evaluations.
Mr. Brophy’s cash compensation and equity awards are
approved by the Compensation Committee pursuant to
our related-party transactions approval policy.
2019 Proxy Statement
17
TRANSACTIONS WITH MANAGEMENT AND OTHERS
Does the Board of Directors have a related-
party transactions approval policy?
• Transactions where the rates or charges are
determined by competitive bid.
Yes. Our Board of Directors has adopted a written policy
for the review, approval, or ratification of “related party”
transactions. A “related party” for this purpose includes
our directors, director nominees, executive officers, and
greater than 5% shareholders, and any of their
immediate family members, and a “transaction” includes
one in which (1) the total amount may exceed $120,000,
(2) Dollar General is a participant, and (3) a related party
will have a direct or indirect material interest (other than
as a director or a less than 10% owner of another entity,
or both).
The policy requires prior Board approval for known
related party transactions, subject to certain exceptions
identified below. In addition, at least annually after
receiving a list of immediate family members and
affiliates from our directors and executive officers,
relevant internal departments determine if any
transactions were unknowingly entered into with a
related party and the Board is presented with a list of
any such transactions, subject to the exceptions
identified below, for review. The related party may not
participate in any approval of the transaction and must
provide to the Board all material information concerning
the transaction.
Each of our Chairman and our CEO is authorized to
approve a related party transaction in which he is not
involved if the total anticipated amount is less than
$1 million and he informs the Board of the transaction. In
addition, the transactions below are deemed
pre-approved without Board review or approval:
• Transactions involving a total amount that does not
exceed the greater of $1 million or 2% of the entity’s
annual consolidated revenues (total consolidated
assets in the case of a lender) if no related party who
is an individual participates in the actual provision of
services or goods to, or negotiations with, us on the
entity’s behalf or receives special compensation or
benefit as a result.
• Charitable contributions if the total amount does not
exceed 2% of the recipient’s total annual receipts and
no related party who is an individual participates in
the grant decision or receives any special
compensation or benefit as a result.
• Transactions where the interest arises solely from share
ownership in Dollar General and all of our shareholders
receive the same benefit on a pro rata basis.
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2019 Proxy Statement
• Transactions for services as a common or contract
carrier or public utility at rates or charges fixed in
conformity with law or governmental authority.
• Transactions involving services as a bank depositary
of funds, transfer agent, registrar, trustee under a trust
indenture, or similar services.
• Compensatory transactions available on a
nondiscriminatory basis to all salaried employees
generally, ordinary course business travel expenses
and reimbursements, or compensatory arrangements
to directors, director nominees or officers or any other
related party that have been approved by the Board
or an authorized committee.
What related-party transactions existed in
2018 or are planned for 2019?
Ms. Cochran’s brother, Stephen Brophy, has been
employed by the Company since 2009. He served in a
non-officer role during substantially all of 2018 and was
promoted to Vice President of Government and Public
Relations, a non-executive officer position, effective
February 1, 2019. For 2018, Mr. Brophy earned from
Dollar General total cash compensation (comprised of
his base salary and bonus compensation) of less than
$295,000 and received an annual equity award
consisting of 1,287 non-qualified stock options and 335
RSUs. In March 2019, Mr. Brophy received an annual
equity award consisting of 1,926 non-qualified stock
options, 256 RSUs, and 256 PSUs, in each case on terms
consistent with the annual equity awards received by all
Dollar General employees at the same job grade level as
Mr. Brophy and on terms substantially similar to the
forms of award agreements on file with the SEC. We
expect Mr. Brophy’s total cash compensation for 2019 to
not exceed $335,000. Mr. Brophy also is eligible to
participate in employee benefits plans and programs
available to our other full-time employees.
Ms. Cochran does not serve on the Compensation
Committee which approves decisions pertaining to
Mr. Brophy’s compensation, and she does not participate
in his performance evaluations. Mr. Brophy’s cash
compensation and equity awards are approved by the
Compensation Committee pursuant to our related-party
transactions approval policy.
EXECUTIVE COMPENSATION
This section provides details of fiscal 2018 compensation for our named executive officers: Todd J. Vasos, Chief
Executive Officer; John W. Garratt, Executive Vice President and Chief Financial Officer; Jeffery C. Owen, Executive
Vice President, Store Operations; Robert D. Ravener, Executive Vice President and Chief People Officer; and Jason S.
Reiser, Executive Vice President and Chief Merchandising Officer.
Compensation Discussion and Analysis
Overview
Our executive compensation program is designed to serve the long-term interests of our shareholders. To deliver
superior shareholder returns, we believe it is critical to offer a competitive compensation package that will attract, retain,
and motivate experienced executives with the requisite expertise. Our program is designed to balance the short-term
and long-term components and thus incent achievement of our annual and long-term business strategies, to pay for
performance, and to maintain our competitive position in the market in which we compete for executive talent.
Compensation Best Practices
We strive to align our executives’ interests with those of our shareholders and to follow sound corporate governance
practices.
Compensation Practice
Dollar General Policy
Pay for performance
A significant portion of targeted direct compensation is linked to the financial
performance of key metrics. All of our annual bonus compensation and equity
incentive compensation is performance based. See “Pay for Performance.”
Robust share ownership guidelines and
holding requirements
Our share ownership guidelines and holding requirements create further alignment
with shareholders’ long-term interests. See “Share Ownership Guidelines and
Holding Requirements.”
Clawback policy
Beginning with the 2017 annual equity awards and Teamshare bonus program, the
clawback of performance-based incentive compensation paid or awarded to a
named executive officer is allowed in the case of a material financial restatement
of our consolidated financial statements resulting from fraud or intentional
misconduct on the part of the executive officer.
No hedging or pledging Dollar General
securities or holding Dollar General
securities in margin accounts
Our policy prohibits executive officers and Board members from hedging their
ownership of our stock, pledging our securities as collateral, and holding our
securities in a margin account. See “Hedging and Pledging Policies.”
No excise tax gross-ups and minimal
income tax gross-ups
We do not provide tax gross-up payments to named executive officers other than
on relocation-related items.
Double-trigger provisions
All equity awards granted to named executive officers since March 2016 include a
“double-trigger” vesting provision upon a change in control.
No repricing or cash buyout of
underwater stock options without
shareholder approval
Our equity incentive plan prohibits repricing underwater stock options, reducing
the exercise price of stock options or replacing awards with cash or another award
type, without shareholder approval.
Annual compensation risk assessment
At least annually, our Compensation Committee assesses the risk of our
compensation program.
2019 Proxy Statement
19
EXECUTIVE COMPENSATION
Pay for Performance
Consistent with our philosophy, and as illustrated to the
right, a significant portion of annualized target total
direct compensation for our named executive officers in
2018 was performance-based and linked to changes in
our stock price.
In addition, the following financial performance was
achieved in accordance with our short-term and long-
term incentive plans:
• Teamshare Bonus Program
In connection with our 2018 Teamshare bonus program,
we achieved 2018 adjusted EBIT (as defined and
calculated for purposes of the Teamshare bonus
program) of $2.189 billion, or 99.72% of the adjusted EBIT
target (see “Short-Term Cash Incentive Plan”).
• Performance Share Units
The portion of the awards granted in March 2018 subject
to 2018 adjusted EBITDA performance was earned at
98.1% of target, based on achieving adjusted EBITDA of
$2.637 billion, or 99.6% of the adjusted EBITDA target,
and the portion of the awards granted in March 2017
subject to 2017-2018 adjusted ROIC performance was
earned at 152.0% of target based on achieving adjusted
ROIC of 18.44%, or 101.4% of the adjusted ROIC two-year
2017-2018 target, in each case as defined and calculated
in the PSU award agreements (see “Long-Term Equity
Incentive Program”).
16%
STI
11%
Salary
CEO
VARIABLE/
AT-RISK
89%
73%
LTI
19%
STI
OTHER
NEOs
(Average)
VARIABLE/
AT-RISK
75%
56%
LTI
25%
Salary
LTI — Long-Term Equity Incentive
(stock options and performance share units)
STI — Short-Term Cash Incentive
(Teamshare bonus program)
Significant Compensation-Related Actions
The most significant recent compensation-related actions pertaining to our named executive officers include:
To further increase the focus on
multi-year performance as a
counterbalance to short-term
incentives, beginning with the
March 2018 equity grant,
one-half of the vesting of
performance share units is
based upon the achievement of
a three-year financial
performance goal.
Beginning in 2018, our annual
Teamshare bonus program
allows for the Committee to
adjust payments upward or
downward within certain
limitations depending upon the
named executive officer’s
performance rating (in prior
years, only downward
adjustments were allowed
within certain limitations).
In 2018, we entered into new
employment agreements with
our named executive officers,
each of which have a three-year
term and are subject to certain
automatic extensions. We have
employment agreements with
the named executive officers to
promote executive continuity,
aid in retention, and secure
valuable protections for Dollar
General, such as non-compete,
non-solicitation, and
confidentiality obligations, as
well as to facilitate
implementation of our clawback
policy.
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2019 Proxy Statement
Shareholder Response
The most recent shareholder advisory vote on our
named executive officer compensation was held on
May 30, 2018. Excluding abstentions and broker
non-votes, 96.55% of total votes were cast in support of
the program. Because we view this outcome as
overwhelmingly supportive of our compensation policies
and practices, we do not believe the vote requires
consideration of changes to the program. Nonetheless,
because market practices and our business needs
continue to evolve, we continually evaluate our program
and make changes when warranted.
At our annual meeting of shareholders held on May 31,
2017, our shareholders expressed a preference that
advisory votes on executive compensation occur every
year. Consistent with this preference, our Board
implemented an annual advisory vote on executive
compensation until the next advisory vote on the
frequency of shareholder votes on executive
compensation, which will occur no later than our 2023
annual meeting of shareholders.
EXECUTIVE COMPENSATION
• We promote share ownership to align the interests of
our named executive officers with those of our
shareholders.
• In approving compensation arrangements, we
consider recent compensation history, including
special or unusual compensation payments.
Oversight and Process
Oversight
The Compensation Committee of our Board of Directors,
or a subcommittee thereof, in each case consisting
entirely of independent directors, determines and
approves the compensation of our named executive
officers. Throughout this “Compensation Discussion and
Analysis” section, the use of the term compensation
committee means either the entire committee or a
subcommittee thereof, as applicable. The independent
members of our Board are provided the opportunity to
ratify the Committee’s determinations pertaining to the
level of CEO compensation.
Philosophy and Objectives
Use of Outside Advisors
We strive to attract, retain, and motivate persons with
superior ability, to reward outstanding performance, and
to align the long-term interests of our named executive
officers with those of our shareholders. The material
compensation principles applicable to the compensation
of our named executive officers are outlined below:
• In determining total compensation, we consider a
reasonable range of the median of total compensation
of comparable positions at companies within our peer
group, while accounting for distinct circumstances not
reflected in the market data such as unique job
descriptions as well as our particular niche in the retail
sector and the impact that a particular officer may
have on our ability to meet business objectives. For
competitive or other reasons, our levels of total
compensation or any component of compensation
may exceed or be below the median range of our peer
group.
• We set base salaries to reflect the responsibilities,
experience, performance, and contributions of the
named executive officers and the salaries for
comparable positions, while maintaining an
appropriate balance between base salary and
incentive compensation.
• We reward named executive officers who enhance our
performance by linking cash and equity incentives to
the achievement of our financial goals.
The Compensation Committee has selected Pearl Meyer
to serve as its compensation consultant and has
determined that Pearl Meyer is independent and that its
work has not raised any conflicts of interest. When
requested by the Committee, a Pearl Meyer
representative attends Committee meetings and
participates in private sessions with the Committee, and
Committee members are free to consult directly with
Pearl Meyer as desired.
The Committee (or its Chairman) determines the scope of
Pearl Meyer’s services and has approved a written
agreement that details the terms under which Pearl Meyer
will provide independent advice to the Committee. The
approved scope of Pearl Meyer’s work generally includes
the performance of analyses and provision of independent
advice related to our executive and non-employee
director compensation programs and related matters in
support of the Committee’s decisions, and more
specifically, includes performing preparation work
associated with Committee meetings, providing advice in
areas such as compensation philosophy, compensation
risk assessment, peer group, incentive plan design,
executive compensation disclosure, emerging best
practices and changes in the regulatory environment, and
providing competitive market studies. Pearl Meyer, along
with management, also prepares market data for
consideration by the Committee in making decisions on
items such as base salary, the Teamshare bonus program,
and the long-term incentive program.
2019 Proxy Statement
21
EXECUTIVE COMPENSATION
Management’s Role
Our executive management team prepares and
recommends our annual financial plan to our Board of
Directors for approval and establishes a 3-year financial
plan. The financial performance targets used in our
incentive compensation programs typically are derived
from such financial plans, with assistance from our CFO
and members of our finance department, and are
approved by our Compensation Committee. Messrs.
Vasos and Ravener and non-executive members of the
human resources group provide assistance to the
Compensation Committee and Pearl Meyer regarding
executive compensation matters, including conducting
research, compiling data and/or making
recommendations regarding compensation amount,
compensation mix, incentive program structure
alternatives, peer group composition, and
compensation-related governance practices, as well as
providing information to and coordinating with Pearl
Meyer as requested. Additionally, Rhonda Taylor,
Executive Vice President and General Counsel, may
provide legal advice to the Committee regarding
executive compensation and related governance and
legal matters and contractual arrangements from time
to time. Although these recommendations may impact
each of such officers’ compensation to the extent they
participate in the plans and programs, none of such
officers make recommendations to the Committee
regarding their specific compensation. For the role of
management in named executive officers’ performance
evaluations, see “Use of Performance Evaluations”
below. Although the Committee values and solicits
management’s input, it retains and exercises sole
authority to make decisions regarding named executive
officer compensation.
Performance ratings serve as an eligibility threshold for
base salary increases and directly impact the amount of
a named executive officer’s annual base salary increase.
The Committee starts with the percentage base salary
increase that equals the overall budgeted increase for
our U.S.-based employee population and approves
differing merit increases to base salary based upon each
named executive officer’s individual performance rating.
The Committee then considers whether additional
adjustments are necessary to reflect performance,
responsibilities or qualifications; to bring pay within a
reasonable range of the peer group; due to a change in
role or duties; to achieve a better balance between base
salary and incentive compensation; or for other reasons
the Committee believes justify a variance from the merit
increase.
Performance evaluation results have the potential to
affect the amount of Teamshare bonus payout because
the Committee is allowed to adjust payments upward or
downward within certain limitations depending upon the
named executive officer’s performance rating.
An unsatisfactory performance rating will reduce the
number of, or completely eliminate, stock options
awarded to the named executive officer in the following
year. None of the named executive officers received an
unsatisfactory performance rating for 2017 or 2018. In
addition, to allow for differentiation among performance
levels of the named executive officers, individual
performance, along with other factors including
company performance, department performance,
retention, and succession, are used as part of a
subjective assessment to determine whether each
named executive officer’s equity award value should be
increased or decreased from the baseline target that is
derived from market data.
Use of Performance Evaluations
Use of Market Data
The Compensation Committee, together with the
Chairman of the Board, assesses the performance of the
CEO, and the CEO evaluates and reports to the
Committee on the performance of each of the other
named executive officers, in each case versus previously
established goals. The Committee also has input into
each named executive officer’s performance evaluation.
These evaluations are subjective; no objective criteria or
relative weighting is assigned to any individual goal or
factor.
The Compensation Committee approves, periodically
reviews, and utilizes a peer group when making
compensation decisions (see “Philosophy and
Objectives”). The peer group data typically is considered
annually for base salary adjustments, target equity
award values, Teamshare target bonus opportunities,
and total direct compensation, and periodically when
considering structural changes to our executive
compensation program.
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2019 Proxy Statement
EXECUTIVE COMPENSATION
Our peer group consists of companies selected according to their similarity to our operations, services, revenues,
markets, availability of information, and any other information the Committee deems appropriate. Such companies
are likely to have executive positions comparable in breadth, complexity, and scope of responsibility to ours. Thus,
our peer group for 2018 compensation decisions consisted of:
Aramark
AutoZone
Bed, Bath & Beyond
Best Buy
Dicks Sporting Goods
Dollar Tree
Kohl’s
L Brands
Office Depot
Rite Aid
Ross Stores
Staples
Starbucks
Sysco
TJX Companies
Tractor Supply
Yum! Brands
Pearl Meyer annually provides market data for the CEO,
to ensure that the Committee is aware of any significant
movement in CEO compensation levels within the peer
group, and biennially for each named executive officer
position below CEO. In alternating years, the Committee
uses the prior year data for non-CEO compensation
decisions after applying an aging factor recommended
by Pearl Meyer. Thus, for 2018 non-CEO compensation
decisions, the Committee considered data provided by
Pearl Meyer from the peer group for 2017 compensation
decisions, but aged by 3% as recommended by Pearl
Meyer as aligning with market practices.
The Committee most recently updated our peer group
in May 2018 in order to improve its industry and size
comparability, but this new peer group was not used for
any 2018 compensation decisions.
Elements of Named Executive Officer
Compensation
We provide compensation in the form of base salary,
short-term cash incentives, long-term equity incentives,
benefits, and limited perquisites. We believe each of
these elements is a necessary component of the total
compensation package and is consistent with
compensation programs at companies with whom we
compete both for business and talent.
Mr. Vasos’s 2018 Compensation Generally
The Compensation Committee considered the base
salary, short-term incentive, and long-term incentive
components of Mr. Vasos’s compensation, as well as his
total compensation, in each case in comparison to the
peer group (see “Use of Market Data”). After considering
the peer group market data, as well as Mr. Vasos’s and
the Company’s fiscal 2017 performance (see “Use of
Performance Evaluations”), Mr. Vasos’s experience and
tenure in the CEO role, and the Committee’s desire to
further align Mr. Vasos’s interests with shareholders and
long-term value creation, the Committee determined to
increase Mr. Vasos’s 2018 target equity grant value and
base salary and to make no change to his target short-
term incentive bonus percentage opportunity from 2017.
The Committee believed that such actions placed each
component of Mr. Vasos’s 2018 compensation as well as
his 2018 total target compensation within a reasonable
range of the median of the peer group data.
2018 Compensation of Named Executive Officers
Other than Mr. Vasos Generally
The Compensation Committee considered the base salary,
short-term incentive, and long-term incentive
components, and total compensation of the non-CEO
named executive officers, in each case in comparison to
the peer group (see “Use of Market Data”), as well as each
such officer’s performance (see “Use of Performance
Evaluations”). The Committee approved base salary merit
increases in accordance with each such officer’s 2017
performance rating within the limitations of the overall U.S.
merit budget increase for 2018 of 3.0%, and after
reviewing the proposed total target compensation,
excluding the long-term incentive grant value adjustments
based on performance, of each such officer against the
peer group data, the Committee determined that total
compensation for each such officer other than Mr. Garratt
remained within a reasonable range of the peer group
median and reflected the responsibilities of the position
and the experience and contributions of the individual.
The Committee approved an additional base salary
adjustment for Mr. Garratt to better reflect the
responsibilities of his position, experience and
contributions, and to more closely align his total target
compensation with the peer group median. For each
non-CEO named executive officer, the Committee made
no change from the prior year’s short-term incentive
target percentage of base salary, which remained
reasonably aligned with the peer group market data, or to
the prior year’s long-term incentive grant value target,
before adjustments based on individual performance, in
light of our established process of obtaining new market
data every two years. However, in order to allow for
differentiation among individual performance levels of
such officers, the Committee approved adjustments to the
$1.5 million target long-term incentive grant value based
on each such officer’s subjective performance evaluation
results which took into account a variety of factors,
including company performance, department
performance, individual performance, retention, and
succession (see “Use of Performance Evaluations”).
2019 Proxy Statement
23
EXECUTIVE COMPENSATION
Base Salary
Base salary promotes our recruiting and retention
objectives by reflecting the salaries for comparable
positions in the competitive marketplace, rewarding
strong performance, and providing a stable and
predictable income source for our executives. Our
employment agreements set forth minimum base salary
levels, which the Compensation Committee retains sole
discretion to increase from time to time. The Committee
routinely considers annual base salary adjustments in
March.
(a) Salary Adjustment for Mr. Vasos
For the reasons outlined above under “Mr. Vasos’s 2018
Compensation Generally,” the Compensation Committee
approved a base salary of $1,200,000 for Mr. Vasos
effective April 1, 2018, representing a 5.91% increase from
his prior year’s base salary.
(b) Salary Adjustments for Named Executive
Officers Other than Mr. Vasos
For the reasons outlined above under “2018
Compensation of Named Executive Officers Other than
Mr. Vasos Generally,” the Compensation Committee
approved the following base salary increases effective
April 1, 2018: Mr. Garratt, 18.10%; each of Messrs. Owen
and Ravener, 3.67%; and Mr. Reiser, 2.67% (see “Use of
Performance Evaluations” and “Use of Market Data”).
Short-Term Cash Incentive Plan
Our short-term cash incentive plan, called Teamshare,
provides an opportunity to receive a cash bonus
payment equal to a certain percentage of base salary
based upon Dollar General’s achievement of one or
more pre-established financial performance targets.
Accordingly, Teamshare fulfills an important part of our
pay for performance philosophy while aligning the
interests of our named executive officers and our
shareholders.
(a) 2018 Teamshare Structure
The Compensation Committee uses adjusted EBIT as the
Teamshare financial performance measure because it is
a comprehensive measure of corporate performance
that the Committee believes aligns with our
shareholders’ interests. For purposes of the 2018
Teamshare program, adjusted EBIT is defined as our
operating profit as calculated in accordance with U.S.
generally accepted accounting principles, but excludes
the impact of (a) costs, fees and expenses directly
related to the consideration, negotiation, preparation, or
consummation of any transaction that results in a
24
2019 Proxy Statement
Change in Control (within the meaning of our Stock
Incentive Plan) or to any securities offering; (b) disaster-
related charges; (c) gains or losses associated with our
LIFO computation; and (d) unless the Committee
disallows any such item, (i) any unbudgeted loss as a
result of the resolution of a legal matter or (ii) any
unplanned loss(es) or gain(s) related to the
implementation of accounting or tax legislative changes
or (iii) any unplanned loss(es) or gain(s) of a
non-recurring nature, provided that in the case of each
of (i), (ii) and (iii) such amount equals or exceeds
$1 million for a single loss or gain, as applicable, and
$10 million in the aggregate.
The Committee set the 2018 adjusted EBIT performance
goal at approximately $2.195 billion, which was the
adjusted EBIT target amount set forth in our 2018 annual
financial plan previously approved by our Board of
Directors. The Committee retained the threshold (below
which no bonus may be earned) and maximum (above
which no further bonus may be earned) performance
levels at 90% and 120% of the target level, respectively,
as they appropriately align pay and performance and
are reasonably consistent with the practices of our peer
group. Payouts for financial performance are based on
actual results and are interpolated on a straight-line
basis between threshold and target and between target
and maximum.
The bonus payable to each named executive officer
upon achieving the target level of financial performance
is equal to the applicable percentage of base salary
shown in the table below, subject to the Committee’s
exercise of discretion based on the individual’s
performance (see “Use of Performance Evaluations”).
These percentages for each named executive officer
remained the same as those in effect at the end of the
prior year for the reasons outlined under “Mr. Vasos’s
2018 Compensation Generally” and “2018 Compensation
of Named Executive Officers Other than Mr. Vasos
Generally.”
Name
Mr. Vasos
All other named executive officers
Target % of
Base Salary*
150
75
*
Payout percentages at the threshold and maximum performance
levels are calculated at 50% and 300%, respectively, of the
applicable target percentage of base salary.
(b) 2018 Teamshare Results
The Compensation Committee certified the adjusted
EBIT performance result at $2.189 billion (99.72% of the
adjusted EBIT target) which, after applying negative
discretion as allowed by the Teamshare program (see
“Use of Performance Evaluations”), resulted in 2018
Teamshare payouts to each of the named executive
officers of 95.39% of the target percentages set forth in
the table above. Such amounts are reflected in the
“Non-Equity Incentive Plan Compensation” column of
the Summary Compensation Table.
Long-Term Equity Incentive Program
Long-term equity incentives are an important part of
our pay for performance philosophy and are designed to
motivate named executive officers to focus on long-
term success for shareholders while rewarding them for
a long-term commitment to us. The Compensation
Committee considers annual equity awards each March
at its regular quarterly meeting and considers special
equity awards as necessary in connection with one-time
events such as a new hire, promotion, or special
performance. Equity awards are made under our
shareholder-approved Stock Incentive Plan.
(a) 2018 Equity Award for Mr. Vasos
For the reasons outlined under “Mr. Vasos’s 2018
Compensation Generally,” the Compensation Committee
established an $8.0 million target grant value for
Mr. Vasos’s 2018 equity award. The Committee further
determined to deliver Mr. Vasos’s annual equity award
via a mix of 50% stock options and 50% PSUs to incent
a long-term focus and to align the interests of
management with those of shareholders, and the
Committee approved the award in accordance with the
terms outlined in “2018 Annual Equity Awards for
Named Executive Officers Other than Mr. Vasos” below.
(b) 2018 Annual Equity Awards for Named
Executive Officers Other than Mr. Vasos
Each year, the Compensation Committee determines a
targeted equity award value for each named executive
officer derived from market data information and the
appropriate mix of vehicles in which to deliver such
targeted value (see “Use of Market Data”), but then
adjusts that value up or down based on a subjective
assessment of a variety of factors as outlined above
under “Use of Performance Evaluations”. In 2018, the
equity mix was delivered 50% in options and 50% in
PSUs, as the Committee believed that this mix remained
appropriate to incent a long-term focus and to align the
interests of management with those of shareholders. For
the reasons outlined above in “2018 Compensation of
Named Executive Officers Other than Mr. Vasos
Generally,” the grant value target for each such officer,
before adjustments based on individual performance,
was $1.5 million, and then the Committee approved
individual adjustments to the $1.5 million target (see
“Use of Performance Evaluations”). As a result, the
EXECUTIVE COMPENSATION
non-CEO named executive officers received the
following targeted grant values: Mr. Garratt
($1.4 million), each of Messrs. Owen and Ravener
($1.5 million), and Mr. Reiser ($1.3 million).
The options are granted with a per share exercise price
equal to the fair market value of one share of our
common stock on the grant date. The options vest 25%
annually on April 1 of each of the four fiscal years
following the fiscal year in which the grant is made,
subject to the named executive officer’s continued
employment with us and certain accelerated vesting
provisions, and have a term of ten years. The PSUs can
be earned if specified performance goals are achieved
during the applicable performance periods and if certain
additional vesting requirements are met as discussed
more specifically below.
For PSUs the Committee selects and sets targets for
financial performance measures, then establishes
threshold and maximum levels of performance derived
from those targets. The number of PSUs earned
depends on the level of financial performance achieved
versus the goals. The Committee selected adjusted
EBITDA and adjusted ROIC as the financial performance
measures for the 2018 PSUs. Half of the award is subject
to adjusted EBITDA performance and half of the award
is subject to adjusted ROIC performance. The
Committee believes that these financial measures and
the mix between them appropriately balance the
emphasis placed upon earnings performance as well as
rigorous capital management over the long-term.
For the 2018 PSU awards, a one-year performance period
corresponding to our 2018 fiscal year was established for
the PSUs which are subject to the adjusted EBITDA
performance measure. The adjusted EBITDA performance
goal of approximately $2.647 billion was the target
amount set forth in our 2018 annual financial plan
previously approved by our Board of Directors. In order to
further increase the focus on multi-year performance as a
counterbalance to short-term incentives, the PSUs which
are subject to the adjusted ROIC performance measure
are subject to a three-year performance period beginning
the first day of our 2018 fiscal year and extending through
the last day of our 2020 fiscal year. The adjusted ROIC
performance goal of 19.30% is the average of the adjusted
ROIC goals for each fiscal year within the performance
period as set forth in our three-year financial plan as it
existed at the time the PSUs were awarded.
Adjusted EBITDA is calculated as income (loss) from
continuing operations before cumulative effect of
change in accounting principles plus interest and other
financing costs, net, provision for income taxes, and
depreciation and amortization, but excludes the impact
of all items excluded from the 2018 Teamshare program
adjusted EBIT calculation outlined above.
2019 Proxy Statement
25
EXECUTIVE COMPENSATION
Adjusted ROIC for the three-year performance period is
calculated as (a) the result of (x) the sum of (i) our
operating income, plus (ii) depreciation and
amortization, plus (iii) minimum rentals for 2018 and
single lease cost for 2019 and 2020, minus (y) taxes,
divided by (b) the result of (x) the sum of the averages
of: (i) total assets, excluding any assets associated with
the adoption of new lease accounting standards in 2019,
plus (ii) accumulated depreciation and amortization,
minus (y) (i) cash, minus (ii) goodwill, minus
(iii) accounts payable, minus (iv) other payables, minus
(v) accrued liabilities, plus (vi) 8x minimum rentals for
2018 and 8x single lease cost for 2019 and 2020 (with all
of the foregoing terms determined per our financial
statements for each fiscal year within the performance
period) but excludes the impact of all items excluded
from the 2018 Teamshare program adjusted EBIT
calculation outlined above.
The following tables show the amount (as a percent of
target) of such PSUs that could be earned at each of the
threshold, target, and maximum performance levels for
each applicable performance period, as well as the 2018
adjusted EBITDA performance result and the number of
PSUs earned by each named executive officer as a result
of such performance.
Level*
Below Threshold
Threshold
Target
Maximum
2018 Results
Adjusted EBITDA (2018)
Result v.
Target (%)
EBITDA
Result ($)
(in billions)
PSUs Earned
(% of Target)
<90
90
100
120
99.6
<2.383
2.383
2.647
3.177
2.637
0
50
100
300
98.1
*
PSUs earned for performance between threshold, target, and maximum levels are interpolated in a manner similar to that used for our 2018
Teamshare bonus program.
Name
Mr. Vasos
Mr. Garratt
Mr. Owen
Mr. Ravener
Mr. Reiser
Level*
Below Threshold
Threshold
Target
Maximum
2018 PSUs Earned
(Adjusted EBITDA)
20,073
3,513
3,764
3,764
3,262
Adjusted ROIC (2018-2020)
Result v.
Target (%)
ROIC
Result (%)
PSUs Earned
(% of Target)
<94.8
94.8
100.0
105.2
<18.30
18.30
19.30
20.30
0
50
100
300
*
PSUs earned for performance between threshold, target, and maximum levels are interpolated in a manner similar to that used for our 2018
Teamshare bonus program.
The PSUs earned by each named executive officer for
fiscal 2018 adjusted EBITDA performance will vest in
equal one-third installments on April 1, 2019, April 1,
2020, and April 1, 2021, subject to such officer’s
continued employment with us and certain accelerated
vesting provisions. Subject to certain pro-rata vesting
conditions, the PSUs earned, if any, by each named
executive officer for adjusted ROIC performance during
the three-year performance period will vest on April 1,
2021, subject to such officer’s continued employment
with us and certain accelerated vesting provisions. All
vested PSUs will be settled in shares of our common
stock.
26
2019 Proxy Statement
EXECUTIVE COMPENSATION
(c) 2017 PSU Awards – Completed 2017-2018
Performance Period
Certain of the PSUs awarded in 2017 were subject to an
adjusted ROIC performance measure for a two-year
performance period beginning on the first day of our
2017 fiscal year and extending through the last day of
our 2018 fiscal year, based on the average adjusted
ROIC for each fiscal year within the two-year period. The
average adjusted ROIC was derived from our three-year
financial plan in place at the time of the award and
generally is defined in the same way as adjusted ROIC
for the 2018 PSU awards except that it does not exclude
unplanned loss(es) or gain(s) related to the
implementation of accounting or tax legislative changes.
The following tables show the amount (as a percent of
target) of such PSUs that could be earned at each of the
applicable threshold, target and maximum performance
levels, as well as the actual performance result and the
number of such PSUs earned by each named executive
officer who received a 2017 PSU award. When
calculating the performance result, the Committee
exercised negative discretion to adjust ROIC for the
material positive impact of the Tax Cuts and Jobs Act
driven by both the benefit associated with the
remeasurement of deferred tax assets and liabilities in
2017 and for the ongoing federal corporate tax rate
reduction in 2017 and 2018.
Level*
Below Threshold
Threshold
Target
Maximum
2017-2018 Results
Adjusted ROIC (2017-2018)
Result v.
Target (%)
ROIC
Result (%)
PSUs Earned
(% of Target)
<94.5
94.5
100.0
105.5
101.4
<17.18
17.18
18.18
19.18
18.44
0
50
100
300
152.0
*
PSUs earned for performance between threshold, target, and maximum levels are interpolated in a manner similar to that used for our 2018
Teamshare bonus program.
Name
Mr. Vasos
Mr. Garratt
Mr. Owen
Mr. Ravener
2017-2018 PSUs Earned (Adjusted ROIC)
10,207
2,380
2,380
2,551
(d) Share Ownership Guidelines and Holding Requirements
Our senior officers are subject to share ownership guidelines and holding requirements. The share ownership guideline
is a multiple of annual base salary as in effect from time to time and is to be achieved within a five-year time period.
Officer Level
CEO
EVP
SVP
Multiple of Base Salary
6X
3X
2X
Each senior officer is required to retain ownership of
50% of all net after-tax shares issuable upon vesting or
exercise of compensatory awards until the target
ownership level is achieved.
(e) Hedging and Pledging Policies
Our policy prohibits Board members and executive
officers from (1) pledging Dollar General securities as
collateral, (2) holding Dollar General securities in a
margin account, and (3) hedging against any decrease in
the market value of equity securities issued by Dollar
General and held by them, such as entering into or
trading prepaid variable forward contracts, equity swaps,
collars, puts, calls, options, exchange funds or other
derivative instruments related to Dollar General stock.
Benefits and Perquisites
Our named executive officers participate in certain
benefits on the same terms that are offered to all of our
2019 Proxy Statement
27
EXECUTIVE COMPENSATION
salaried employees. We also provide them with limited
additional benefits and perquisites for retention and
recruiting purposes, to replace benefit opportunities lost
due to regulatory limits, and to enhance their ability to
focus on our business. We do not provide tax gross-up
payments for named executive officers on any benefits
and perquisites other than relocation-related items. The
primary additional benefits and perquisites include the
following:
• We provide a compensation deferral plan (the “CDP”)
as discussed in more detail under “Nonqualified
Deferred Compensation Fiscal 2018”.
• We pay the premiums for a life insurance benefit equal
to 2.5 times base salary up to a maximum of
$4 million.
• We provide a salary continuation program that
provides income replacement for up to 26 weeks at
100% of base salary for the first three weeks and 70%
of base salary thereafter. In addition to the income
replacement benefit, we pay administrative fees
associated with the program. We also pay the
premiums under a group long-term disability plan that
provides 60% of base salary up to a maximum
monthly benefit of $20,000.
• We provide a relocation assistance program under a
policy applicable to officer-level employees.
• We provide personal financial and estate planning and
tax preparation services through a third party.
Severance Arrangements
As noted above, we have an employment agreement
with each of our named executive officers that, among
other things, provides for such executive’s rights upon a
termination of employment in exchange for valuable
business protection provisions for us. We believe that
reasonable severance benefits are appropriate to
protect the named executive officer against
circumstances over which he does not have control and
as consideration for the promises of non-disclosure,
non-competition, non-solicitation, and non-interference,
as well as the clawback rights that we require in our
employment agreements. A change in control, by itself
(“single trigger”), does not trigger any severance
provision applicable to our named executive officers,
except for the provisions related to outstanding equity
awards granted prior to 2016. Equity awards granted in
or after 2016 do not provide for single trigger vesting
acceleration but rather require a termination event
within a certain period of time following a change in
control to accelerate vesting of such equity awards.
28
2019 Proxy Statement
Considerations Associated with
Regulatory Requirements
Under Section 162(m) of the Internal Revenue Code, we
generally may not take a tax deduction for individual
compensation over $1 million paid in any taxable year to
each of the persons that meet the definition of a
covered employee under Section 162(m). For fiscal 2018,
covered employees include anyone who was a covered
employee for any taxable year beginning after
December 31, 2016, anyone who held the position of
CEO or Chief Financial Officer (“CFO”) at any time
during the fiscal year and the three most highly
compensated employees who acted as executive
officers (other than as CEO or CFO) at any time during
the fiscal year. Prior to U.S. tax law changes in 2017,
certain performance-based compensation was exempt
from the Section 162(m) deduction limit. However, for
tax years beginning after December 31, 2017, the
performance-based compensation exemption was
eliminated unless the compensation qualifies for
transition relief applicable to certain arrangements in
place as of November 2, 2017.
The Compensation Committee continues to view the tax
deductibility of executive compensation as one of many
factors to be considered in the context of its overall
compensation philosophy and therefore reserves the
right to approve compensation that may not be
deductible in situations it deems appropriate.
Compensation Committee
Report
The Compensation Committee of our Board of Directors
reviewed and discussed with management the
Compensation Discussion and Analysis required by
Item 402(b) of Regulation S-K and, based on such
review and discussions, the Compensation Committee
recommended to the Board that the Compensation
Discussion and Analysis be included in this document.
This report has been furnished by the members of the
Compensation Committee:
• Patricia D. Fili-Krushel, Chairperson
• Warren F. Bryant
• Timothy I. McGuire
The above Compensation Committee Report does not
constitute soliciting material and should not be deemed
filed or incorporated by reference into any other Dollar
General filing under the Securities Act of 1933 or the
Securities Exchange Act of 1934, except to the extent
Dollar General specifically incorporates this report by
reference therein.
Summary Compensation Table
The following table summarizes compensation paid to or earned by our named executive officers in each of the 2018,
2017, and 2016 fiscal years. We have omitted from this table the columns for “Bonus” and “Change in Pension Value
and Nonqualified Deferred Compensation Earnings” because they are inapplicable.
EXECUTIVE COMPENSATION
Salary
($)(2)
Stock
Awards
($)(3)
Option
Awards
($)(4)
Non-Equity
Incentive Plan
Compensation
($)(5)
All Other
Compensation
($)(6)
Name and Principal Position(1)
Todd J. Vasos,
Chief Executive Officer
Year
2018
2017
John W. Garratt,
Executive Vice President &
Chief Financial Officer
Jeffery C. Owen,
Executive Vice President,
Store Operations
Robert D. Ravener,
Executive Vice President &
Chief People Officer
Jason S. Reiser,
Executive Vice President &
Chief Merchandising Officer
1,188,879
3,805,114
3,793,604
1,717,068
1,127,543
2,847,697
2,827,461
1,921,028
2016
1,083,375
2,317,164
4,194,777
915,411
2018
2017
2016
2018
2017
2016
2018
2017
2016
706,511
665,923
663,893
597,256
664,463
659,739
511,603
637,226
655,955
518,698
520,441
277,981
652,662
713,436
711,314
469,697
630,529
664,463
659,739
613,924
637,226
655,955
578,875
713,436
711,314
558,365
711,960
706,865
538,841
637,226
655,955
536,861
333,578
416,595
476,167
293,012
Total
($)
10,602,517
8,806,409
8,593,288
2,618,341
2,502,535
2,130,012
2,607,376
2,556,339
2,296,546
2,477,377
2,511,397
2,175,768
97,852
82,680
82,561
63,316
60,636
47,247
60,267
64,747
55,863
57,157
58,040
50,734
2018
664,488
618,317
616,472
477,456
168,661
2,545,394
(1) Mr. Reiser joined Dollar General in July 2017 but was not a named executive officer for 2017.
(2) Each named executive officer deferred under the CDP and contributed to our 401(k) Plan a portion of salary earned in each of the fiscal years for
which salaries are reported above for the applicable named executive officer. The amounts of the fiscal 2018 salary deferrals under the CDP are
included in the Nonqualified Deferred Compensation Table.
(3) The amounts reported represent the aggregate grant date fair value of PSUs awarded in each fiscal year for which compensation is required to be
reported in the table for each named executive officer, in each case computed in accordance with FASB ASC Topic 718. The PSUs are subject to
performance conditions, and the reported value at the grant date is based upon the probable outcome of such conditions on such date. The values
of the PSUs at the grant date assuming that the highest level of performance conditions will be achieved are as follows for each fiscal year
required to be reported for each applicable named executive officer:
Fiscal
Year
2018
2017
2016
Mr. Vasos
($)
11,415,341
8,543,092
6,951,492
Mr. Garratt
($)
1,997,768
1,993,388
1,911,679
Mr. Owen
($)
2,140,307
1,993,388
1,911,679
Mr. Ravener
($)
2,140,307
2,135,879
1,911,679
Mr. Reiser
($)
1,854,951
—
—
Information regarding the assumptions made in the valuation of these awards is set forth in Note 8 of the annual consolidated financial statements
in our 2018 Form 10-K.
(4) The amounts reported represent the aggregate grant date fair value of stock options awarded in each fiscal year for which compensation is
required to be reported in the table for each named executive officer, in each case computed in accordance with FASB ASC Topic 718. Information
regarding assumptions made in the valuation of these awards is set forth in Note 8 of the annual consolidated financial statements in our 2018
Form 10-K.
(5) Represents amounts earned pursuant to our Teamshare bonus program for each fiscal year reported. See the discussion of the “Short-Term Cash
Incentive Plan” in “Compensation Discussion and Analysis” above. Messrs. Vasos, Garratt and Reiser deferred 5%, 5% and 7%, respectively, of his
fiscal 2018 Teamshare bonus payment reported above under the CDP. Mr. Vasos deferred 5% of his fiscal 2017 Teamshare bonus payment reported
above under the CDP. Messrs. Vasos and Garratt each deferred 5% of his fiscal 2016 Teamshare bonus payment reported above under the CDP.
2019 Proxy Statement
29
EXECUTIVE COMPENSATION
(6) Includes the following amounts for each named executive officer:
Name
Mr. Vasos
Mr. Garratt
Mr. Owen
Mr. Ravener
Mr. Reiser
Company Match
Contributions–
CDP
($)
Company Match
Contributions–
401(k)
($)
Premiums for
Life Insurance
Program
($)
Tax Gross-Ups
Related to
Relocation
($)
Aggregate Incremental
Cost of Providing
Perquisites/Personal
Benefits*
($)
45,665
21,363
19,036
15,358
22,101
14,015
14,190
13,842
13,832
10,567
2,491
1,488
1,368
1,213
1,392
—
—
—
—
5,645
35,681
26,275
26,021
26,754
128,956
*
Except for Mr. Reiser, whose aggregate incremental cost of providing perquisites and personal benefits included $106,290 for costs associated
with relocation, none of the named executive officers received any perquisite or personal benefit for which the aggregate incremental cost
individually equaled or exceeded the greater of $25,000 or 10% of total perquisites. The aggregate incremental cost of providing perquisites
and personal benefits related to: (1) for each named executive officer, financial and estate planning services, entertainment events,
miscellaneous gifts, premiums paid under our group long-term disability program and our accidental death and dismemberment policy, and an
administrative fee for coverage under our short-term disability program; (2) for Messrs. Garratt, Owen, Ravener, and Reiser, an executive
physical medical examination; (3) for Messrs. Vasos, Garratt, Owen, and Ravener, one or more directed charitable donations; (4) for Messrs.
Vasos, Owen, and Ravener, limited personal travel expenses, most often associated with a guest’s attendance at business events; and (5) for
Mr. Vasos, a security assessment. We also provide each named executive officer with certain perquisites and personal benefits at no aggregate
incremental cost to Dollar General, including access to participation in a group umbrella liability insurance program through a third party
vendor at a group rate paid by the executive and coverage under our business travel accident insurance for which Dollar General pays a flat
fee for the eligible employee population. The aggregate incremental cost associated with Mr. Reiser’s relocation included expenses associated
with physical movement of his household goods (including automobile), costs incurred in connection with the sale of his former home (such as
appraisals, inspections, pre-title expenses, title and deed costs, broker’s commission, document preparation fees, recording fees and legal
fees), and final move expenses.
30
2019 Proxy Statement
EXECUTIVE COMPENSATION
Grants of Plan-Based Awards in Fiscal 2018
The table below shows each named executive officer’s fiscal 2018 Teamshare bonus opportunity under “Estimated
Possible Payouts Under Non-Equity Incentive Plan Awards.” Actual amounts earned under the fiscal 2018 Teamshare
program are shown in the Summary Compensation Table and, for those who received such payments, represent
prorated payment on a graduated scale for financial performance between the threshold and target performance
levels. See “Short-Term Cash Incentive Plan” in “Compensation Discussion and Analysis” for discussion of such
Teamshare program.
The table below also shows information regarding equity awards made to our named executive officers for fiscal
2018, all of which were granted pursuant to our Stock Incentive Plan. The awards listed under “Estimated Future
Payouts Under Equity Incentive Plan Awards” include the threshold, target, and maximum number of PSUs which
could be earned by each named executive officer based upon the level of achievement of the applicable financial
performance measures. The awards listed under “All Other Option Awards” include non-qualified stock options that
vest over time based upon the applicable named executive officer’s continued employment by Dollar General. See
“Long-Term Equity Incentive Program” in “Compensation Discussion and Analysis” above for further discussion of
these awards. We have omitted from this table the column for “All Other Stock Awards” because it is inapplicable.
Estimated Possible Payouts
Under Non-Equity Incentive Plan
Awards
Estimated Future Payouts
Under Equity Incentive Plan
Awards
Grant
Date
Threshold
($)
Target
($)
Maximum
($)
Threshold
(#)
Target
(#)
Maximum
(#)
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
Exercise
or Base
Price of
Option
Awards
($/Sh)(1)
Grant
Date Fair
Value of
Stock
and
Option
Awards
($)(2)
— 900,000 1,800,000 5,400,000
—
—
—
—
—
—
—
—
—
157,197
92.98
3,793,604
—
03/21/18
03/21/18
—
—
—
—
— 20,462
40,924
122,772
Name
Mr. Vasos
Mr. Garratt
—
271,875
543,750
1,631,250
03/21/18
03/21/18
—
—
—
—
—
—
Mr. Owen
—
246,191
492,383
1,477,148
03/21/18
03/21/18
—
—
—
—
—
—
Mr. Ravener
—
218,358
436,716
1,310,148
03/21/18
03/21/18
—
—
—
—
—
—
Mr. Reiser
— 250,258
500,516
1,501,549
03/21/18
03/21/18
—
—
—
—
—
—
—
—
—
—
—
—
3,581
7,162
21,486
—
—
—
—
—
—
3,837
7,673
23,019
—
—
—
—
—
—
3,837
7,673
23,019
—
—
—
—
—
—
—
—
—
—
3,805,114
—
27,510
92.98
663,893
—
—
—
—
29,475
92.98
—
—
—
—
29,475
92.98
—
—
—
—
665,923
—
711,314
713,436
—
711,314
713,436
—
25,545
92.98
616,472
3,325
6,650
19,950
—
—
618,317
(1) The per share exercise price was calculated based on the closing market price of one share of our common stock on the date of grant as reported
by the NYSE.
(2) Represents the aggregate grant date fair value of each equity award, computed in accordance with FASB ASC Topic 718. For equity awards that
are subject to performance conditions, the value at the grant date is based upon the probable outcome of such conditions. For information
regarding the assumptions made in the valuation of these awards, see Note 8 of the annual consolidated financial statements included in our 2018
Form 10-K.
2019 Proxy Statement
31
EXECUTIVE COMPENSATION
Outstanding Equity Awards at 2018 Fiscal Year-End
The table below sets forth information regarding awards granted under our Stock Incentive Plan and held by our
named executive officers as of the end of fiscal 2018. We have omitted from this table the column for “Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options” because it is inapplicable. All
awards included in the table, to the extent they have not vested, are subject to certain accelerated vesting provisions
as described in “Potential Payments upon Termination or Change in Control.” PSUs reported in the table are payable
in shares of our common stock on a one-for-one basis.
Option Awards
Stock Awards
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
Name
Grant Date
Mr. Vasos
03/20/2012
37,440(1)
03/18/2013
27,492(1)
12/03/2013
2,880(1)
03/18/2014
37,926(1)
—
—
—
—
Option
Exercise
Price
($)
Option
Expiration
Date
45.25
03/20/2022
48.11
03/18/2023
56.48
12/03/2023
57.91
03/18/2024
03/17/2015
33,590(2)
11,196(2)
74.72
03/17/2025
06/03/2015
85,562(3)
171,120(3)
76.00
06/03/2025
03/16/2016
59,801(2)
59,798(2)
84.67
03/16/2026
03/16/2016
—
85,759(3)
84.67
03/16/2026
03/22/2017
40,378(2)
121,134(2)
70.68
03/22/2027
03/21/2018
03/16/2016
03/22/2017
03/21/2018
Mr. Garratt
12/03/2014
03/17/2015
12/02/2015
—
—
—
—
5,031(1)
7,502(2)
5,872(1)
157,197(2)
92.98
03/21/2028
—
—
—
—
—
—
—
—
—
—
66.69
12/03/2024
2,500(2)
1,957(1)
74.72
65.35
03/17/2025
12/02/2025
03/16/2016
16,446(2)
16,444(2)
84.67
03/16/2026
03/22/2017
9,423(2)
28,263(2)
70.68
03/22/2027
03/21/2018
03/16/2016
03/22/2017
03/21/2018
—
—
—
—
27,510(2)
92.98
03/21/2028
—
—
—
—
—
—
—
—
—
Mr. Owen
08/25/2015
26,778(1)
8,925(1)
73.73
08/25/2025
03/16/2016
16,446(2)
16,444(2)
84.67
03/16/2026
03/22/2017
9,423(2)
28,263(2)
70.68
03/22/2027
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(9)
Equity
Incentive Plan
Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
(#)
Equity
Incentive Plan
Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
($)(9)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
8,119(4)
934,010
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
24,737(5)
2,845,744
20,073(7)
2,309,198
20,145(6)
61,386(8)
2,317,481
7,061,845
—
—
—
—
—
—
—
—
—
—
—
—
2,232(4)
256,769
—
—
—
—
—
—
—
—
—
—
—
—
—
—
5,770(5)
663,781
4,698(6)
540,458
3,513(7)
404,136
10,743(8)
1,235,875
29,475(2)
92.98
03/21/2028
—
—
—
—
—
—
—
—
—
2,232(4)
256,769
5,770(5)
663,781
3,764(7)
433,011
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
4,698(6)
11,508(8)
540,458
433,011
03/21/2018
03/16/2016
03/22/2017
03/21/2018
—
—
—
—
32
2019 Proxy Statement
Option Awards
Stock Awards
EXECUTIVE COMPENSATION
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
Option
Exercise
Price
($)
Option
Expiration
Date
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(9)
Name
Grant Date
Mr. Ravener
03/18/2014
27,812(1)
—
57.91
03/18/2024
03/17/2015
24,633(2)
8,210(2)
74.72
03/17/2025
03/16/2016
16,446(2)
16,444(2)
84.67
03/16/2026
03/22/2017
10,096(2)
30,282(2)
70.68
03/22/2027
—
—
—
—
—
—
—
—
—
—
29,475(2)
92.98
03/21/2028
—
—
—
—
—
—
—
—
—
2,232(4)
256,769
6,183(5)
711,292
3,764(7)
433,011
Mr. Reiser
08/29/2017
11,516(1)
34,545(1)
76.89
08/29/2027
25,545(2)
92.98
03/21/2028
—
—
—
—
03/21/2018
03/16/2016
03/22/2017
03/21/2018
—
—
—
—
03/21/2018
03/21/2018
—
—
Equity
Incentive Plan
Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
(#)
Equity
Incentive Plan
Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
($)(9)
—
—
—
—
—
—
5,034(6)
11,508(8)
—
—
—
—
—
—
—
—
579,111
433,011
—
—
—
—
—
3,262(7)
375,260
9,975(8)
1,147,524
(1) Part of a time-based options grant with a vesting schedule of 25% per year on each of the first four anniversaries of the grant date.
(2) Part of a time-based options grant with a vesting schedule of 25% per year on each of the first four anniversaries of the April 1 following the grant
date.
(3) Part of a time-based options grant with a vesting schedule of 33 1/3% per year on each of the third, fourth, and fifth anniversaries of the grant date.
(4) Part of PSUs earned as a result of our fiscal 2016 adjusted EBITDA and adjusted ROIC performance and scheduled to vest on April 1, 2019.
(5) Part of a PSU grant, 59% of which were earned as a result of our fiscal 2017 adjusted EBITDA performance and are scheduled to vest 50% per year
on each of April 1, 2019 and April 1, 2020 and 41% of which were earned as a result of our fiscal 2017-2018 adjusted ROIC performance and are
scheduled to vest on April 1, 2019.
(6) Part of a PSU grant that is scheduled to vest on April 1, 2020 if the adjusted ROIC performance goal is achieved for fiscal years 2017-2019. The
number of PSUs reported in this column assumes achievement of the maximum level of adjusted ROIC performance for the performance period.
The actual number of PSUs earned, if any, will be determined based on the actual level of adjusted ROIC performance achieved for the
performance period.
(7) Part of a PSU grant that was earned as a result of our fiscal 2018 adjusted EBITDA performance and is scheduled to vest 33 1/3% per year on each
of the first three anniversaries of the April 1 following the grant date.
(8) Part of a PSU grant that is scheduled to vest on April 1, 2021 if the adjusted ROIC performance goal is achieved for fiscal years 2018-2020. The
number of PSUs reported in this column assumes achievement of the maximum level of adjusted ROIC performance for the performance period.
The actual number of PSUs earned, if any, will be determined based on the actual level of adjusted ROIC performance achieved for the
performance period.
(9) Computed by multiplying the number of shares or units by the closing market price of one share of our common stock on February 1, 2019 as
reported by the NYSE.
2019 Proxy Statement
33
EXECUTIVE COMPENSATION
Option Exercises and Stock Vested During Fiscal 2018
Name
Mr. Vasos
Mr. Garratt
Mr. Owen
Mr. Ravener
Mr. Reiser
Option Awards
Stock Awards
Number of
Shares
Acquired on
Exercise
(#)(1)
Value Realized
on Exercise
($)(2)
Number of
Shares
Acquired on
Vesting
(#)(3)
Value Realized
on Vesting
($)(4)
—
—
—
—
—
—
87,107
5,659,045
—
—
32,770
3,065,634
7,949
7,127
10,179
—
743,629
666,731
952,245
—
(1) Represents the gross number of option shares exercised, without deduction for shares that may have been surrendered or withheld to satisfy the
exercise price or applicable tax withholding obligations.
(2) Value realized is calculated by multiplying the gross number of options exercised by the difference between the market price of our common
stock at exercise as reported by the NYSE and the exercise price.
(3) Represents the gross number of shares acquired upon vesting of PSUs and RSUs, as applicable, without deduction for shares that may have been
withheld to satisfy applicable tax withholding obligations.
(4) Value realized is calculated by multiplying the gross number of shares vested by the closing market price of our common stock on the vesting date
as reported by the NYSE.
Pension Benefits Fiscal 2018
We have omitted the Pension Benefits table because it is inapplicable.
Nonqualified Deferred Compensation Fiscal 2018
Information regarding each named executive officer’s participation in our CDP is included in the following table. The
material terms of the CDP are described after the table. Please also see “Benefits and Perquisites” in “Compensation
Discussion and Analysis” above. We have omitted from this table the column pertaining to “Aggregate Withdrawals/
Distributions” during the fiscal year because it is inapplicable.
Name
Mr. Vasos
Mr. Garratt
Mr. Owen
Mr. Ravener
Mr. Reiser
Executive
Contributions
in Last FY
($)(1)
Registrant
Contributions
in Last FY
($)(2)
Aggregate
Earnings
in Last FY
($)(3)
Aggregate
Balance at
Last FYE
($)(4)
155,495
45,665
2,251
1,231,374
35,326
32,633
28,944
33,224
21,363
(2,090)
169,431
19,036
(2,852)
166,067
15,358
22,101
(4,716)
595,322
(316)
60,356
(1) Of the reported amounts, the following are reported in the Summary Compensation Table as “Salary” for 2018: Mr. Vasos ($59,444); Mr. Garratt
($35,326); Mr. Owen ($32,633); Mr. Ravener ($28,944); and Mr. Reiser ($33,224).
(2) Reported as “All Other Compensation” in the Summary Compensation Table.
(3) The amounts shown are not reported in the Summary Compensation Table because they do not represent above-market or preferential earnings.
(4) Of the amounts reported, the following were previously reported as compensation for years prior to 2018 in a Summary Compensation Table:
Mr. Vasos ($836,633); Mr. Garratt ($99,643); Mr. Owen ($97,556); Mr. Ravener ($112,887); and Mr. Reiser ($0).
34
2019 Proxy Statement
Pursuant to the CDP, each named executive officer may
annually elect to defer up to 65% of his base salary if his
compensation exceeds the limit set forth in
Section 401(a)(17) of the Internal Revenue Code, and up
to 100% of his bonus pay if his compensation equals or
exceeds the highly compensated limit under
Section 414(q)(1)(B) of the Internal Revenue Code. We
currently match base pay deferrals at a rate of 100%, up
to 5% of annual salary, with annual salary offset by the
amount of match-eligible salary under the 401(k) Plan.
All named executive officers are 100% vested in
compensation and matching deferrals and earnings on
those deferrals.
The amounts deferred or contributed to the CDP are
credited to a liability account, which is then invested at
the participant’s option in an account that mirrors the
performance of a fund or funds selected by the
Compensation Committee or its delegate. These funds
are identical to the funds offered in our 401(k) Plan.
For a participant who ceases employment with at least
10 years of service or after reaching age 50 and whose
CDP account balance exceeds certain dollar thresholds,
the account balance will be paid by (a) lump sum,
(b) monthly installments over a 5, 10 or 15-year period or
(c) a combination of lump sum and installments,
pursuant to the participant’s election. Otherwise,
payment is made in a lump sum. The vested amount will
be payable at the time designated by the CDP upon the
participant’s termination of employment. A participant’s
CDP benefit normally is payable in the following
February if employment ceases during the first
6 months of a calendar year or is payable in the
following August if employment ceases during the last
6 months of a calendar year. However, participants may
elect to receive an in-service lump sum distribution of
vested amounts credited to the CDP account, provided
that the date of distribution is no sooner than 5 years
after the end of the year in which the amounts were
deferred. In addition, a participant who is actively
employed may request an “unforeseeable emergency
hardship” in-service lump sum distribution of vested
amounts credited to the participant’s CDP account.
Account balances are payable in cash.
As a result of our change in control which occurred in
2007, the CDP liabilities through July 6, 2007 were fully
funded into an irrevocable rabbi trust. We also funded
into the rabbi trust deferrals into the CDP between
July 6, 2007 and October 15, 2007. All CDP liabilities
incurred on or after October 15, 2007 are unfunded.
EXECUTIVE COMPENSATION
Potential Payments upon
Termination or Change in
Control
Our agreements with our named executive officers and
certain plans and programs in which such officers
participate, in each case as in effect at the end of our
2018 fiscal year, provide for benefits or payments upon
certain employment termination or change in control
events. We discuss these benefits and payments below
except to the extent they are available generally to all
salaried employees and do not discriminate in favor of
our executive officers or to the extent already discussed
under “Nonqualified Deferred Compensation Fiscal 2018”
above. The discussion of equity awards in each scenario
below includes nonqualified stock options outstanding
as of the end of our 2018 fiscal year, as well as PSUs
awarded in 2016 (“2016 PSUs”), 2017 (“2017 PSUs”), and
2018 (“2018 PSUs”) to each named executive officer
employed by us at the time of the applicable award.
Payments Upon Termination Due to
Death or Disability
Equity Awards
If a named executive officer’s employment with us
terminates due to death or disability (as defined in the
governing agreement):
• Stock Options. Any outstanding unvested stock
option shall become immediately vested and
exercisable with respect to 100% of the underlying
shares immediately prior to such event, and such
vested options may be exercised until the 1st
anniversary of the termination date but no later than
the 10th anniversary of the grant date.
• Performance Share Units. Except as described below,
any unearned or unvested PSUs shall be forfeited and
cancelled on the termination date or the last day of
the performance period, as applicable.
✓ 2016 PSUs. Any remaining earned but unvested
2016 PSUs shall become vested and nonforfeitable
as of the termination date and shall be paid within
30 days thereafter.
✓ 2017 PSUs. Any earned but unvested 2017 PSUs
subject to the one-year goal (the “2017 Adjusted
EBITDA PSUs”) shall become vested and
nonforfeitable as of the termination date but shall
be paid at the same time as if no termination had
occurred. The remaining portion of the 2017 PSUs
subject to the Adjusted ROIC goals (the “2017
Adjusted ROIC PSUs”) are allocated to a two-year
and a three-year performance period (each an
2019 Proxy Statement
35
EXECUTIVE COMPENSATION
“ROIC performance period”). For the 2017
Adjusted ROIC PSUs allocated to each such ROIC
performance period, if the termination occurs
before the end of the applicable ROIC
performance period, a pro-rata portion (based on
months employed during the applicable ROIC
performance period) of the 2017 Adjusted ROIC
PSUs earned based on performance during the
entire applicable ROIC performance period shall
become vested and nonforfeitable as of the
applicable April 1 vesting date and shall be paid at
the same time as if no termination had occurred. If
the termination occurs on or after the end of the
applicable ROIC performance period, any
remaining earned but unvested 2017 Adjusted
ROIC PSUs attributable to such ROIC performance
period shall become vested and nonforfeitable as
of the termination date but shall be paid at the
same time as if no termination had occurred.
✓ 2018 PSUs. If the termination occurs before the
end of the applicable one-year or three-year
performance period, a pro-rata portion (based on
months employed during the one-year
performance period) of one-third of the 2018 PSUs
subject to the one-year goal (the “2018 Adjusted
EBITDA PSUs”) and a pro-rata portion (based on
months employed during the three-year
performance period) of the 2018 PSUs subject to
the three-year goal (the “2018 Adjusted ROIC
PSUs”), in each case earned based on performance
during the entire applicable performance period,
shall become vested and nonforfeitable as of the
end of the applicable performance period and shall
be paid at the same time as if no termination had
occurred. If the termination occurs on or after the
end of the applicable one-year or three-year
performance period but before an applicable
vesting date, any earned but unvested 2018 PSUs
shall become vested and nonforfeitable as of the
termination date but shall be paid at the same time
as if no termination had occurred.
Other Payments
In the event of death, a named executive officer’s
beneficiary will receive payments under our group life
insurance program in an amount, up to a maximum of
$4 million, equal to 2.5 times such officer’s annual base
salary. In addition, in the event of disability (as defined in
the governing document), a named executive officer
would receive 60% of covered monthly earnings up to a
$20,000 monthly benefit under our long-term disability
insurance program. In the event of death or disability (as
defined in the CDP), a named executive officer’s CDP
benefit will be payable in a lump sum within 60 days
after the end of the calendar quarter in which such
termination event occurs, provided that we may delay
payment in the event of disability until as soon as
reasonably practicable after receipt of the disability
36
2019 Proxy Statement
determination by the Social Security Administration.
Dependent upon the cause of death or loss suffered, a
named executive officer may also be eligible to receive
payment of up to $50,000 under our group accidental
death & dismemberment program. Additionally, in the
event of death on or after the last day of a fiscal year, a
named executive officer will receive payment for his
incentive bonus earned for that fiscal year under the
terms of our Teamshare program (which otherwise
generally requires that a participant remain employed
on the payment date to be entitled to any incentive
bonus earned for that fiscal year).
Payments Upon Termination Due to
Retirement
Except as provided immediately below with respect to
equity awards, retirement (as defined in the applicable
governing document) is not treated differently from any
other voluntary termination without good reason (as
defined in the relevant agreements, and as discussed
below under “Payments Upon Voluntary Termination”)
under any of our plans or agreements for named
executive officers.
In the event a named executive officer retires:
• Stock Options. The portion of the outstanding unvested
stock options that would have become vested and
exercisable within the one-year period following the
retirement date if such officer had remained employed
with us shall remain outstanding for a period of one year
following the retirement date and shall become vested
and exercisable on the anniversary of the grant date
that falls within the one-year period following the
retirement date. However, if during such one-year
period the officer dies or incurs a disability or, for
options granted prior to 2016, a change in control
occurs, such portion shall instead become immediately
vested and exercisable upon such death, disability or
change in control. Otherwise, any option which is
unvested and unexercisable on the termination date
shall immediately expire without payment. The officer
may exercise the option to the extent vested and
exercisable any time prior to the 5th anniversary of the
retirement date, but no later than the 10th anniversary of
the grant date.
• Performance Share Units. Except as described below,
any unearned or unvested PSUs shall be forfeited and
cancelled on the retirement date or the last day of the
performance period, as applicable.
✓ 2016 PSUs. Any remaining earned but unvested
2016 PSUs would become vested and
nonforfeitable and would be paid on the
retirement date.
✓ 2017 PSUs. If the retirement occurs before the
next April 1 vesting date, one-third of the earned
2017 Adjusted EBITDA PSUs that would have
become vested on the next vesting date shall
become vested and nonforfeitable as of the
retirement date but shall be paid at the same time
as if no retirement had occurred. The vesting and
payment of the 2017 Adjusted ROIC PSUs in a
retirement scenario is identical to the vesting and
payment in the death and disability scenarios
discussed above for the 2017 Adjusted ROIC PSUs.
✓ 2018 PSUs. With the exception outlined below, the
vesting and payment of the 2018 PSUs in a
retirement scenario before the end of the
applicable one-year or three-year performance
period and on or after the end of such periods is
identical to the vesting and payment in the death
and disability scenarios discussed above for the
2018 PSUs during these respective time periods.
However, if the retirement occurs on or after the
end of the one-year performance period but
before an applicable vesting date, one-third of the
2018 Adjusted EBITDA PSUs that would have
become vested on the next vesting date shall
become vested and nonforfeitable as of the
retirement date but shall be paid at the same time
as if no retirement had occurred.
✓ See “Payments After a Change in Control” for a
discussion of treatment of the 2017 PSUs and the
2018 PSUs if a named executive officer terminates
employment due to retirement within two years
following a change in control.
Payments Upon Voluntary
Termination
The payments to be made to a named executive officer
upon voluntary termination vary depending upon
whether the resignation occurs with or without “good
reason” (as defined in the applicable governing
agreement) or after our failure to offer to renew, extend
or replace the applicable employment agreement under
certain circumstances.
Voluntary Termination with Good Reason or After
Failure to Renew the Employment Agreement
If a named executive officer resigns with good reason
(as defined in the applicable equity award agreement),
he will forfeit all then unvested equity awards and
generally may exercise any outstanding vested options
up to 90 days following the resignation date, but no
later than the 10th anniversary of the grant date. Solely
with respect to the special stock option awards granted
to Mr. Vasos on June 3, 2015 and March 16, 2016,
Mr. Vasos will be required to hold any net shares
acquired upon exercise for a period of time ending on
EXECUTIVE COMPENSATION
the 5th anniversary of the applicable grant date. If a
named executive officer resigns under the
circumstances described in (2) below, his equity will be
treated as described under “Voluntary Termination
without Good Reason” below. See “Payments After a
Change in Control” for a discussion of treatment of
equity awards if a named executive officer resigns with
good reason within two years following a change in
control.
If a named executive officer resigns (1) with good reason
(as defined in the applicable employment agreement)
after giving 30 days (90 days in the case of Mr. Vasos)
written notice within 30 days after the event purported
to give rise to the claim for good reason and
opportunity for us to cure any such claimed event within
30 days after receiving such notice, or (2) within
60 days (90 days in the case of Mr. Vasos) of our failure
to offer to renew, extend, or replace his employment
agreement before, at, or within 6 months (1 year in the
case of Mr. Vasos) after the end of the agreement’s term
(unless we enter into a mutually acceptable severance
arrangement or the resignation is a result of the named
executive officer’s retirement or termination other than
for good reason), then in each case the named executive
officer will receive the following benefits generally on or
beginning on the 60th day after termination of
employment but contingent upon the execution and
effectiveness of a release of certain claims against us
and our affiliates in the form attached to the
employment agreement:
• Continuation of base salary, generally as in effect
immediately before the termination, for 24 months
payable in accordance with our normal payroll cycle
and procedures.
• A lump sum payment of: (1) for Mr. Vasos, two times
the amount of his annual target bonus under our
annual bonus program for officers in respect of the
fiscal year in which his termination occurs; and (2) for
each other named executive officer, two times the
amount of the average percentage of target bonus
paid to the named executive officer under our annual
bonus program for officers with respect to our two
most recently completed fiscal years (not including a
fiscal year for which the Compensation Committee has
not yet certified financial performance) for which
annual bonuses have been paid to executives under
such program multiplied by such officer’s (A) target
bonus level and (B) base salary (in each case, as
applicable as of the date immediately preceding the
employment termination or, if the termination is for
good reason due to the reduction of such officer’s
target bonus level or base salary, then his target
bonus level and base salary applicable immediately
2019 Proxy Statement
37
EXECUTIVE COMPENSATION
prior to such reduction). If no bonus was paid to such
officer with respect to one or both of the applicable
fiscal years due to Dollar General’s performance or
individual performance (as opposed to ineligibility due
to length of employment), then such bonus amount
shall be zero in calculating the average.
The named executive officer will forfeit any unpaid
severance amounts, and we retain any other rights we
have available under law or equity, upon a material
breach of any continuing obligation under the applicable
employment agreement or the release, which include
the following business protection provisions:
• Mr. Vasos also will receive a lump sum payment,
• The named executive officer must maintain the
payable when annual bonuses are paid to our other
senior executives, of a pro-rata portion of the annual
bonus, if any, that he would have been entitled to
receive for the fiscal year of termination, if such
termination had not occurred, based on our
performance for the fiscal year in which his
employment terminates, multiplied by a fraction, the
numerator of which is the number of days during
which he was employed by us in the fiscal year and
the denominator of which is 365.
• A lump sum payment of two times our annual
contribution that would have been made in respect of
the plan year in which such termination occurs for the
named executive officer’s participation in our
pharmacy, medical, dental, and vision benefits
programs.
• Reasonable outplacement services until the earlier of
one year or subsequent employment.
Note that any amounts owed to a named executive
officer in the form of salary continuation that would
otherwise have been paid during the 60-day period
after termination will instead be payable in a single lump
sum on the 60th day after such termination and the
remainder will be paid in the form of salary continuation
payments over the remaining 24-month period as set
forth above.
In certain cases, some or all of the payments and
benefits provided on termination of employment may be
delayed for six months following termination to comply
with the requirements of Section 409A of the Internal
Revenue Code. Any payment required to be delayed
would be paid at the end of the six-month period in a
lump sum, and any payments due after the six-month
period would be paid at the normal payment date
provided for under the applicable employment
agreement.
To the extent permitted by applicable law, in the event
we reasonably believe that the named executive officer
engaged in conduct during employment that would
have resulted in his termination for cause, any unpaid
severance amounts under the applicable employment
agreement may be forfeited and we may seek to
recover such portion of any severance amounts paid
under the applicable employment agreement.
38
2019 Proxy Statement
confidentiality of, and refrain from disclosing or using,
our (a) trade secrets for any period of time as the
information remains a trade secret under applicable
law and (b) confidential information for a period of
two years following the termination date.
• For a period of two years after the termination date,
the named executive officer may not accept or work
in a “competitive position” within any state in which
we maintain stores at the time of his termination date
or any state in which we have specific plans to open
stores within six months of that date. For this purpose,
“competitive position” means any employment,
consulting, advisory, directorship, agency,
promotional, or independent contractor arrangement
between the named executive officer and any person
engaged wholly or in material part in the business in
which we are engaged (including, but not limited to,
those entities identified in the applicable employment
agreement), or any person then planning to enter the
discount consumable basics retail business, if such
officer is required to perform services which are
substantially similar to those he provided or directed
at any time while employed by us.
• For a period of two years after the termination date,
the named executive officer may not actively recruit
or induce any of our exempt employees to cease
employment with us.
• For a period of two years after the termination date,
the named executive officer may not solicit or
communicate with any person or entity who has a
business relationship with us and with whom such
officer had contact while employed by us, if it would
likely interfere with our business relationships or result
in an unfair competitive advantage over us.
In addition, each named executive officer’s rights,
payments, and benefits with respect to any incentive
compensation (in the form of cash or equity) shall be
subject to any reduction, cancellation, forfeiture, or
recoupment, in whole or in part, upon the occurrence of
certain specified events, as may be required by any
applicable law, rule or regulation, by any applicable
national exchange, or by a separate Dollar General
clawback or recoupment policy.
Voluntary Termination without Good Reason
Payments After a Change in Control
EXECUTIVE COMPENSATION
If a named executive officer resigns without good
reason, he will forfeit all then unvested equity awards
and generally may exercise any outstanding vested
options up to 90 days following the resignation date,
but no later than the 10th anniversary of the grant date.
Solely with respect to the special stock option awards
granted to Mr. Vasos on June 3, 2015 and March 16, 2016,
Mr. Vasos will be required to hold any net shares
acquired upon exercise for a period of time ending on
the 5th anniversary of the applicable grant date.
Payments Upon Involuntary
Termination
The payments to be made to a named executive officer
upon involuntary termination vary depending upon
whether termination is with or without “cause” (as
defined in the applicable governing agreement).
Involuntary Termination with Cause
Upon an involuntary termination with cause, a named
executive officer will forfeit all unvested equity awards,
all vested but unpaid PSUs and all vested but
unexercised options.
Involuntary Termination without Cause
Upon an involuntary termination without cause, a named
executive officer:
• Will forfeit all then unvested equity awards.
• Generally may exercise any outstanding vested
options up to 90 days following the termination date,
but no later than the 10th anniversary of the grant date.
Solely with respect to the special stock option awards
granted to Mr. Vasos on June 3, 2015 and March 16,
2016, Mr. Vasos will be required to hold any net shares
acquired upon exercise for a period of time ending on
the 5th anniversary of the applicable grant date.
• Will receive the same severance payments and
benefits on the same terms and conditions (except for
the notice and cure provisions) as described under
“Voluntary Termination with Good Reason or After
Failure to Renew the Employment Agreement” above.
See “Payments After a Change in Control” for a
discussion of the treatment of equity awards if a named
executive officer is involuntarily terminated without
cause within two years following a change in control.
Upon a change in control (as defined under the
applicable governing document), regardless of whether
the named executive officer’s employment terminates:
• All outstanding unvested options awarded prior to
2016 will vest and become immediately exercisable as
to 100% of the underlying shares immediately prior to
the change in control.
• If the change in control occurs on or before the end of
the applicable performance period, and the named
executive officer has remained continuously employed
until the change in control, the target number of the
applicable unvested PSUs shall be deemed earned but
otherwise continue to be subject to the service and
payment provisions, including applicable pro-ration
requirements, of the applicable award agreement.
A named executive officer will have one year from the
termination date (but no later than the 10th anniversary
of the grant date) in which to exercise outstanding
vested options that were granted prior to 2016 if he
resigns or is involuntarily terminated within two years
following the change in control under any scenario other
than retirement or involuntary termination with cause, in
which respective cases, he will have five years from the
retirement date (but no later than the 10th anniversary of
the grant date) to exercise such vested options and will
forfeit any vested but unexercised options held at the
time of the termination with cause.
Upon the named executive officer’s “qualifying
termination,” which includes involuntary termination
without cause or resignation with good reason (unless
cause to terminate exists), in each case as defined in the
applicable equity award agreement, as well as voluntary
resignation due to retirement (unless cause to terminate
exists) as defined in the applicable equity award
agreement in the case of 2017 PSUs and 2018 PSUs, in
each case within two years following a change in control
(provided that the officer was continuously employed
by us until the change in control) and in the case of 2017
PSUs and 2018 PSUs if the termination also constitutes a
“separation from service” within the meaning of
Section 409A of the Internal Revenue Code: (1) all of his
outstanding unvested options awarded after 2015 will
immediately vest and become exercisable as to 100% of
the shares underlying such options on the termination
date and the officer may exercise any outstanding
vested options up to three years following the
termination date, but no later than the 10th anniversary
of the grant date; and (2) all of his previously earned, or
deemed earned, but unvested PSUs that have not been
previously forfeited will immediately vest, become
nonforfeitable, and be paid
2019 Proxy Statement
39
EXECUTIVE COMPENSATION
on the termination date subject, in the case of the 2017
PSUs and 2018 PSUs, to a six-month delay if applicable
to comply with Section 409A of the Internal Revenue
Code. To qualify as a resignation with good reason for
this purpose, the officer must have provided written
notice of the existence of the circumstances providing
grounds for resignation with good reason within 30 days
of the initial existence of such grounds and must have
given Dollar General at least 30 days from receipt of
such notice to cure such condition. In addition, the
resignation must have become effective no later than
one year after the initial existence of the condition
constituting good reason.
Except as otherwise described above with respect to
equity awards, upon an involuntary termination without
cause or a resignation with good reason following the
change in control, a named executive officer will receive
the same severance payments and benefits as described
above under “Voluntary Termination with Good Reason
or After Failure to Renew the Employment Agreement.”
In the event of a change in control as defined in
Section 280G of the Internal Revenue Code, each named
executive officer’s employment agreement provides for
capped payments (taking into consideration all
payments and benefits covered by such Section 280G)
of $1 less than the amount that would trigger the
“golden parachute” excise tax under federal income tax
rules (the “excise tax”) unless he signs a release and the
after-tax benefit would be at least $50,000 more than it
would be without capping the payments. In such case,
such officer’s payments and benefits would not be
capped and he would be responsible for the excise tax
payment. We would not pay any additional amount to
cover the excise tax. The table below reflects the
uncapped amounts, subject to reduction in the
circumstances described in this paragraph.
The following table reflects potential payments to each
named executive officer in various termination and
change in control scenarios based on compensation,
benefit, and equity levels in effect on, and assuming the
scenario was effective as of, February 1, 2019. For stock
valuations, we have used the closing price of our stock
on the NYSE on February 1, 2019 ($115.04). The table
below reports only amounts that are increased,
accelerated, or otherwise paid or owed as a result of the
applicable scenario and, as a result, exclude earned but
unpaid base salary through the employment termination
date and equity awards and CDP benefits that had
vested prior to the event. For more information
regarding the CDP benefits, see “Nonqualified Deferred
Compensation Fiscal 2018” above. The table also
excludes any amounts that are available generally to all
salaried employees and do not discriminate in favor of
our executive officers. The amounts shown are merely
estimates. We cannot determine actual amounts to be
paid until a termination or change in control scenario
occurs.
40
2019 Proxy Statement
Potential Payments to Named Executive Officers Upon Occurrence of
Various Termination Events or Change in Control as of February 1, 2019
EXECUTIVE COMPENSATION
Name/Item
Mr. Vasos
Death
($)(3)
Disability
($)(3)
Retirement
($)(4)
Equity Vesting Due to
Event(1)
28,297,377 28,297,377
Cash Severance
Health Payment
Outplacement(2)
1,717,068
n/a
n/a
Life Insurance Proceeds 3,000,000
n/a
n/a
n/a
n/a
Total
Mr. Garratt
33,014,445 28,297,377
Equity Vesting Due to
Event(1)
4,260,312
4,260,312
Cash Severance
Health Payment
Outplacement(2)
518,698
n/a
n/a
Life Insurance Proceeds
1,813,000
n/a
n/a
n/a
n/a
Total
Mr. Owen
6,592,010 4,260,312
Equity Vesting Due to
Event(1)
4,512,962
4,512,962
Cash Severance
Health Payment
Outplacement(2)
469,697
n/a
n/a
Life Insurance Proceeds
1,642,000
n/a
n/a
n/a
n/a
Total
Mr. Ravener
6,624,659 4,512,962
Equity Vesting Due to
Event(1)
4,629,512
4,629,512
Cash Severance
Health Payment
Outplacement(2)
416,595
n/a
n/a
Life Insurance Proceeds
1,456,000
n/a
n/a
n/a
n/a
Total
Mr. Reiser
6,502,107 4,629,512
Equity Vesting Due to
Event(1)
2,384,139
2,384,139
Cash Severance
Health Payment
Outplacement(2)
477,456
n/a
n/a
Life Insurance Proceeds
1,669,000
n/a
n/a
n/a
n/a
Total
4,530,595
2,384,139
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Involuntary
Without
Cause or
Voluntary
With Good
Reason
($)
Change in
Control
Without
Qualifying
Termination
($)
Change in
Control With
Qualifying
Termination
($)
Involuntary
With Cause
($)
Voluntary
Without Good
Reason
($)
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
7,717,068
13,060
8,500
n/a
7,738,628
n/a
2,517,132
21,639
8,500
n/a
2,547,271
n/a
2,279,341
21,639
8,500
n/a
2,309,480
n/a
2,021,649
21,639
8,500
n/a
2,051,789
n/a
2,466,226
21,639
8,500
n/a
2,496,365
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
7,131,948
27,425,489
n/a
n/a
n/a
n/a
7,717,068
13,060
8,500
n/a
7,131,948
35,164,117
198,043
4,054,390
n/a
n/a
n/a
n/a
2,517,132
21,639
8,500
n/a
198,043
6,601,661
368,692
4,307,615
n/a
n/a
n/a
n/a
2,279,341
21,639
8,500
n/a
368,692
6,617,095
331,027
4,408,866
n/a
n/a
n/a
n/a
2,021,649
21,639
8,500
n/a
331,027
6,460,654
n/a
n/a
n/a
n/a
n/a
2,391,387
2,466,226
21,639
8,500
n/a
n/a
4,887,752
(1) For the portion of the 2017 and 2018 PSUs that are subject to performance for periods ending after February 1, 2019, the value included in the Death
and Disability columns assumes a maximum payout of 300%, prorated for a death or disability termination scenario occurring on February 1, 2019.
(2) Estimated based on information provided by our outplacement services provider.
(3) In addition to the amounts reported above, dependent upon the cause of death or the loss suffered, a named executive officer also may be eligible
to receive payment of up to $50,000 under our group accidental death & dismemberment program.
(4) None of the named executive officers were eligible for retirement on February 1, 2019.
2019 Proxy Statement
41
EXECUTIVE COMPENSATION
Compensation Committee
Interlocks and Insider
Participation
None of Ms. Fili-Krushel or Messrs. Bryant, Rhodes, and
McGuire, each of whom was a member of our
Compensation Committee during all or a portion of
2018: (1) was at any time during 2018 an officer or
employee, or was at any time prior to 2018 an officer, of
Dollar General or any of our subsidiaries; or (2) had any
relationship requiring disclosure under “Transactions
with Management and Others.” Also, none of our
executive officers serves, or in the past fiscal year has
served, as a director or compensation committee (or
equivalent committee) member of any entity that has an
executive officer serving as a Dollar General director or
Compensation Committee member.
Compensation Risk
Considerations
In March 2019, our Compensation Committee, with input
from its compensation consultant and management,
conducted a risk assessment of our compensation
program for employees, including executive officers. The
assessment included a review of our compensation
programs for certain design features which could
potentially encourage excessive risk-taking or otherwise
create risk to Dollar General. The Committee concluded,
after considering the degree to which risk-aggravating
factors were offset by risk-mitigating factors, that the
net risks created by our overall compensation program
are not reasonably likely to have a material adverse
effect on Dollar General.
Pay Ratio Disclosure
As required by Item 402(u) of Regulation S-K, we are
providing the following information about the
relationship of the annual total compensation of our
employees and our Chief Executive Officer (our “CEO”).
This pay ratio is a reasonable estimate calculated in a
manner consistent with SEC rules based on our payroll
and employment records and the methodology
described below.
The 2018 annual total compensation of the median
compensated employee (a part-time store associate) of
our temporary, part-time, and full-time employee base
who were employed as of the last day of our 2018 fiscal
year (February 1, 2019), other than our CEO, was $13,773;
our CEO’s 2018 annual total compensation was
$10,602,517; and the ratio of these amounts is 1:770.
As of February 1, 2019, our total population consisted of
130,094 compensated employees, of which 73 were
located in non-U.S. jurisdictions as follows: Hong Kong
(21); China (50); Mexico (1); and Turkey (1). Pursuant to
SEC rules, we excluded all such 73 non-U.S. employees.
After applying this exemption, the employee population
used to identify the median employee consisted of
130,021 temporary, part-time, and full-time employees
located solely in the U.S.
To identify the median compensated employee, we used
W-2 Box 5 Medicare wages for the period from
February 3, 2018 (the first day of our 2018 fiscal year)
through February 1, 2019 (the last day of our 2018 fiscal
year), with such amounts annualized for those
permanent employees who did not work for the full
year.
The SEC rules for identifying the median compensated
employee and calculating the pay ratio based on that
employee’s annual total compensation allow companies
to adopt a variety of methodologies, to apply certain
exclusions, and to make reasonable estimates and
assumptions that reflect their compensation practices.
As such, the pay ratio reported by other companies may
not be comparable to the pay ratio reported above, as
other companies may have different employment and
compensation practices and may utilize different
methodologies, exclusions, estimates, and assumptions
in calculating their own pay ratios.
42
2019 Proxy Statement
SECURITY OWNERSHIP
The following tables show the amount of our common stock beneficially owned by the listed persons as of March 21,
2019. For purposes of such tables, a person “beneficially owns” a security if that person has or shares voting or
investment power or has the right to acquire beneficial ownership within 60 days. Unless otherwise noted, to our
knowledge these persons have sole voting and investment power over the shares listed. Percentage computations
are based on 259,178,169 shares of our common stock outstanding as of March 21, 2019.
Security Ownership of Certain Beneficial Owners
The following table pertains to beneficial ownership by those known by us to beneficially own more than 5% of our
common stock.
Name and Address of Beneficial Owner
T. Rowe Price Associates, Inc.(1)
BlackRock, Inc.(2)
The Vanguard Group(3)
Barrow, Hanley, Mewhinney & Strauss, LLC(4)
Amount and Nature of
Beneficial Ownership
Percent of Class
25,102,029
22,207,042
19,414,565
14,226,902
9.7%
8.6%
7.5%
5.5%
(1) T. Rowe Price Associates, Inc. has sole power to vote or direct the vote of 9,222,624 shares and sole power to dispose or direct the disposition of
25,102,029 shares. The address of T. Rowe Price Associates, Inc. is 100 E. Pratt Street, Baltimore, Maryland 21202. All information is based solely on
Amendment No. 3 to Statement on Schedule 13G filed on February 14, 2019.
(2) BlackRock, Inc., through various subsidiaries, has sole power to vote or direct the vote of 19,842,840 shares and sole power to dispose or direct the
disposition of 22,207,042 shares. The address of BlackRock, Inc. is 55 East 52nd Street, New York, New York 10055. All information is based solely
on Amendment No. 4 to Statement on Schedule 13G filed on February 4, 2019.
(3) The Vanguard Group has sole power to vote or direct the vote of 322,416 shares, shared power to vote or direct the vote of 77,325 shares, sole
power to dispose or direct the disposition of 19,018,878 shares, and shared power to dispose or direct the disposition of 395,687 shares. Vanguard
Fiduciary Trust Company, a wholly owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 241,241 shares as a result of its serving
as investment manager of collective trust accounts, and Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of The Vanguard Group,
Inc., is the beneficial owner of 232,500 shares as a result of its serving as investment manager of Australian investment offerings. The address of
The Vanguard Group is 100 Vanguard Blvd., Malvern, Pennsylvania 19355. All information is based solely on Amendment No. 5 to Statement on
Schedule 13G filed on February 11, 2019.
(4) Barrow, Hanley, Mewhinney & Strauss, LLC has sole power to vote or direct the vote of 5,194,706 shares, shared power to vote or direct the vote
of 9,032,196 shares, and sole power to dispose or direct the disposition of 14,226,902 shares. The address of Barrow, Hanley, Mewhinney & Strauss,
LLC is 2200 Ross Avenue, 31st Floor, Dallas, Texas 75201-2761. All information is based solely on Statement on Schedule 13G filed on February 11,
2019.
2019 Proxy Statement
43
SECURITY OWNERSHIP
Security Ownership of Officers and Directors
The following table pertains to beneficial ownership of our current directors and our named executive officers
individually and to our current directors and all of our current executive officers as a group. These persons may be
contacted at our executive offices.
Amount and Nature of
Beneficial Ownership
Percent of Class
Name of Beneficial Owner
Warren F. Bryant(1)(2)
Michael M. Calbert(1)(2)(3)
Sandra B. Cochran(1)(2)
Patricia D. Fili-Krushel(1)(2)(4)
Timothy I. McGuire(1)(2)
William C. Rhodes, III(1)(2)(5)
Ralph E. Santana
Todd J. Vasos(1)
John W. Garratt(1)
Jeffery C. Owen(1)
Robert D. Ravener(1)
Jason S. Reiser(1)
37,009
103,065
24,867
23,434
3,847
59,076
—
588,160
87,178
92,911
143,182
18,991
*
*
*
*
*
*
—
*
*
*
*
*
*
All current directors and executive officers as a group (16 persons)(1)(2)(3)(4)(5)
1,427,961
*
Denotes less than 1% of class.
(1) Includes the following number of shares (1) underlying RSUs (including RSUs credited, where applicable, as a result of dividend equivalents earned
with respect to the RSUs) and earned PSUs that are or could be settleable within 60 days of March 21, 2019 over which the person will not have
voting or investment power until the applicable RSUs and PSUs are settled, and (2) subject to options exercisable either currently or within 60
days of March 21, 2019 over which the person will not have voting or investment power until exercised: Mr. Bryant (3,574 RSUs; 16,207 options);
Mr. Calbert (15,356 RSUs; 21,756 options); Ms. Cochran (1,572 RSUs; 13,120 options); Ms. Fili-Krushel (1,572 RSUs; 12,892 options); Mr. McGuire (1,572
RSUs); Mr. Rhodes (1,572 RSUs; 21,756 options); Mr. Vasos (32,282 PSUs; 474,429 options); Mr. Garratt (7,478 PSUs; 71,296 options); Mr. Owen
(7,563 PSUs; 77,661 options); Mr. Ravener (7,855 PSUs; 112,884 options); Mr. Reiser (1,088 PSUs; 17,903 options); and all current directors and
executive officers as a group (27,444 RSUs; 66,983 PSUs; 1,041,651 options). Such shares are considered outstanding for computing the
percentage owned by each named person and by the group but not for any other person.
(2) Share totals have been rounded to the nearest whole share.
(3) Mr. Calbert shares voting and investment power over 51,000 shares with his spouse, Barbara Calbert, as co-trustee of The Michael and Barbara
Calbert 2007 Joint Revocable Trust.
(4) Ms. Fili-Krushel shares voting and investment power over 2,500 shares with her spouse, Kenneth Krushel.
(5) Mr. Rhodes shares voting and investment power over 23,597 shares with his spouse, Amy Rhodes, as power of attorney of The Amy Plunkett
Rhodes Revocable Living Trust, dated July 30, 2014.
Section 16(a) Beneficial Ownership Reporting Compliance
The U.S. securities laws require our executive officers,
directors, and greater than 10% shareholders to file reports
of ownership and changes in ownership on Forms 3, 4, and
5 with the SEC. Based solely upon a review of these reports
furnished to us during and with respect to 2018, or written
representations that no Form 5 reports were required, we
believe that each of those persons filed, on a timely basis,
the reports required by Section 16(a) of the Exchange Act.
44
2019 Proxy Statement
PROPOSAL 2: Advisory Vote to Approve Named Executive
Officer Compensation
In accordance with Section 14A of the Securities
Exchange Act of 1934, as amended, we provide our
shareholders each year with an opportunity to vote on
an advisory basis on compensation paid to our named
executive officers as disclosed in this proxy statement
pursuant to Item 402 of Regulation S-K. Accordingly, we
are asking our shareholders to provide an advisory,
nonbinding vote to approve the compensation of such
officers as we have described it in “Compensation
Discussion and Analysis” and in the accompanying
compensation tables and related narrative discussion in
the “Executive Compensation” section of this proxy
statement.
As discussed in detail in the “Compensation Discussion
and Analysis” section above, the Compensation
Committee actively oversees our executive
compensation program, adopting changes to the
program and awarding compensation as appropriate to
reflect Dollar General’s circumstances and to promote
the main objectives of the program. Our compensation
programs are designed to attract, retain, and motivate
persons with superior ability, to reward outstanding
performance, and to align the long-term interests of our
named executive officers with those of our shareholders.
Under these programs, our named executive officers are
rewarded for the achievement of specific annual and
long-term goals and the realization of increased
shareholder value. We firmly believe that the information
we have provided in this proxy statement demonstrates
that our executive compensation program was designed
appropriately and is working to ensure that
management’s interests are aligned with our
shareholders’ interests to support long-term value
creation.
Our Board of Directors is asking our shareholders to
indicate their support for our named executive officer
compensation as described in this proxy statement in
accordance with SEC rules by voting for this proposal.
Because the vote on this proposal is advisory in nature,
it will not affect any compensation already paid or
awarded to any such officer and will not be binding on
or overrule any decisions by the Compensation
Committee or the Board. Nonetheless, our Board and
the Compensation Committee value our shareholders’
views and intend to consider the outcome of the vote,
along with other relevant factors, when making future
compensation decisions for our named executive
officers. This vote is not intended to address any specific
item of compensation, but rather the overall
compensation of our named executive officers. This
advisory vote is not a vote on the compensation of our
Board, as described under “Director Compensation,” or
on our compensation policies as they relate to risk
management, as described under “Compensation Risk
Considerations” in the “Executive Compensation”
section above.
FOR
The Board of Directors unanimously recommends that Shareholders vote FOR
the approval of the compensation of our named executive officers as disclosed
in this proxy statement.
2019 Proxy Statement
45
AUDIT COMMITTEE REPORT
The Audit Committee of our Board of Directors has:
• reviewed and discussed with management the audited
financial statements for the fiscal year ended
February 1, 2019,
• discussed with Ernst & Young LLP, our independent
registered public accounting firm, the matters
required to be discussed by the Statement on
Auditing Standards No. 1301, Communications with
Audit Committees, as adopted by the Public Company
Accounting Oversight Board,
• received the written disclosures and the letter from
Ernst & Young LLP 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
• discussed with Ernst & Young LLP its independence
from Dollar General and its management.
Based on these reviews and discussions, the Audit
Committee unanimously recommended to the Board of
Directors that Dollar General’s audited financial
statements be included in the Annual Report on Form
10-K for the fiscal year ended February 1, 2019 for filing
with the SEC.
While the Audit Committee has the responsibilities and
powers set forth in its charter, the Audit Committee
does not have the duty to plan or conduct audits or to
determine that Dollar General’s financial statements are
complete, accurate, or in accordance with generally
accepted accounting principles. Dollar General’s
management and independent auditor have this
responsibility.
This report has been furnished by the members of the
Audit Committee:
• William C. Rhodes, III, Chairman
• Warren F. Bryant
• Sandra B. Cochran
The above Audit Committee Report does not constitute
soliciting material and should not be deemed filed or
incorporated by reference into any other Dollar General
filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent Dollar
General specifically incorporates this report by reference
therein.
46
2019 Proxy Statement
PROPOSAL 3: Ratification of Appointment of Auditors
Who is responsible for the selection of the
independent auditor?
The Audit Committee is directly responsible for the
appointment, compensation, retention, and oversight of
the independent auditor that is retained to audit our
financial statements.
Was the Audit Committee involved in the
lead audit partner selection process?
Yes. Prior to the selection of the current lead audit
partner, the Chairman of the Audit Committee
interviewed the lead audit partner candidates, and the
Audit Committee discussed with management such
candidates’ qualifications and experience.
Does the Audit Committee evaluate the
independent auditor and the lead audit
partner?
Yes. The Audit Committee annually evaluates the lead
audit partner, as well as the independent auditor’s
qualifications, performance, and independence. The
evaluation, which includes the input of management,
entails consideration of a broad range of factors,
including the quality of services and sufficiency of
resources that have been provided; the skills,
knowledge, and experience of the firm and the audit
team; the effectiveness and sufficiency of
communications and interactions; independence and
level of objectivity and professional skepticism;
reasonableness of fees; and other factors.
Who has the Audit Committee selected as
the independent registered public
accounting firm?
After conducting the evaluation process discussed
above, the Audit Committee selected Ernst & Young
LLP as our independent auditor for the 2019 fiscal year.
Ernst & Young LLP has served in that capacity since
October 2001. The Audit Committee and the Board of
Directors believe that the continued retention of Ernst &
Young LLP is in the best interests of Dollar General and
our shareholders.
Will representatives of Ernst & Young LLP
attend the annual meeting?
Representatives of Ernst & Young LLP have been
requested and are expected to attend the annual
meeting. These representatives will have the
opportunity to make a statement if they so desire and
are expected to be available to respond to appropriate
questions.
What if shareholders do not ratify the
appointment?
The Audit Committee is not bound by a vote either for
or against the firm. If the shareholders do not ratify this
appointment, our Audit Committee will consider that
result in selecting our independent auditor in the future.
FOR
The Board of Directors unanimously recommends that Shareholders vote FOR the
ratification of Ernst & Young LLP as our independent auditor for the 2019 fiscal
year.
2019 Proxy Statement
47
FEES PAID TO AUDITORS
The table below lists the aggregate fees for professional
audit services rendered to us by Ernst & Young LLP for
the audit of our consolidated financial statements for
the past two fiscal years and fees billed for other
services rendered by Ernst & Young LLP during the past
two fiscal years. Information related to audit fees for
2018 includes amounts billed through February 1, 2019,
and additional amounts estimated to be billed for the
2018 period for audit services rendered.
Service
Audit Fees(1)
Audit-Related Fees(2)
Tax Fees(3)
All Other Fees(4)
2018 Aggregate Fees Billed ($)
2017 Aggregate Fees Billed ($)
2,898,361
35,000
2,431,222
7,120
2,743,085
35,000
1,804,562
1,995
(1) Represents for each fiscal year the aggregate fees billed for professional services for the audit of our annual financial statements and review of
financial statements included in our Forms 10-Q and services that are normally provided in connection with statutory and regulatory filings or
engagements. 2017 fees increased from the prior year’s disclosure by $67,961 due to invoices received subsequent to the filing of the proxy
statement that were greater than the original amount estimated.
(2) Represents for each fiscal year the aggregate fees billed for assurance and related services that are reasonably related to the performance of the
audit or review of our financial statements. The fees for each year relate to the employee benefit plan audit.
(3) 2018 and 2017 fees relate primarily to tax compliance services, which represented $2,181,222 and $1,649,562 in 2018 and 2017, respectively, for work
related to work opportunity tax credit assistance, foreign sourcing offices’ tax compliance, state tax credit assistance, and, for 2018 only, for long-
term unemployed credits and hurricane zone credit assistance. The remaining tax fees for each such year are for tax advisory services related to
inventory, and, for 2018 only, for tax reform advisory services.
(4) 2018 and 2017 fees are for a subscription fee to an on-line accounting research tool.
The Audit Committee pre-approves all audit and
permissible non-audit services provided by our
independent auditor. Where feasible, the Committee
considers and, when appropriate, pre-approves services
at regularly scheduled meetings after disclosure by
management and the independent auditor of the nature
of the proposed services, the estimated fees (when
available), and their opinions that the services will not
impair the independence of the independent auditor.
The Committee’s Chairman (or any Committee member
if the Chairman is unavailable) may pre-approve such
services between Committee meetings, and must report
to the Committee at its next meeting with respect to all
services so pre-approved. The Committee pre-approved
100% of the services provided by Ernst & Young LLP
during 2018 and 2017.
48
2019 Proxy Statement
SHAREHOLDER PROPOSALS FOR 2020 ANNUAL MEETING
All shareholder proposals and notices discussed below
must be mailed to Corporate Secretary, Dollar General
Corporation, 100 Mission Ridge, Goodlettsville,
Tennessee 37072. Shareholder proposals and director
nominations that are not included in our proxy materials
will not be considered at any annual meeting of
shareholders unless such proposals have complied with
the requirements of our amended and restated Bylaws.
Shareholder Proposals
To be considered for inclusion in our proxy materials
relating to the 2020 annual meeting of shareholders (the
“2020 Annual Meeting”), eligible shareholders must
submit proposals that comply with Rule 14a-8 under the
Exchange Act and other relevant SEC regulations for
our receipt by December 6, 2019.
New Business at 2020 Annual Meeting
To introduce other new business, including the
nomination of directors (other than a proxy access
nomination, which is described below) at the 2020
Annual Meeting, you must deliver written notice to us no
earlier than the close of business on January 30, 2020
and no later than the close of business on February 29,
2020, and comply with the advance notice provisions of
our amended and restated Bylaws. If we do not receive
a properly submitted shareholder proposal by
February 29, 2020, then the proxies held by our
management may provide the discretion to vote against
such shareholder proposal even though the proposal is
not discussed in our proxy materials sent in connection
with the 2020 Annual Meeting.
Proxy Access
Our amended and restated Bylaws contain proxy access
provisions that permit a shareholder, or a group of up to
20 shareholders, owning 3% or more of our stock
continuously for at least three years, to nominate and
include in our proxy materials candidates for election as
directors. Such shareholder or group may nominate up
to 20% of our Board, provided that the shareholder or
group and the nominee(s) satisfy the requirements
specified in our amended and restated Bylaws. In order
to be properly brought before our 2020 Annual Meeting,
an eligible shareholder’s notice of nomination of a
director candidate pursuant to the proxy access
provisions of our amended and restated Bylaws must be
received by us no earlier than the close of business on
November 6, 2019 and no later than the close of
business on December 6, 2019, and comply with the
other relevant provisions of our amended and restated
Bylaws pertaining to proxy access nominees.
2019 Proxy Statement
49
10-K
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 February 1, 2019
Commission file number: 001-11421
DOLLAR GENERAL CORPORATION
(Exact name of registrant as specified in its charter)
TENNESSEE
(State or other jurisdiction of
incorporation or organization)
61-0502302
(I.R.S. Employer
Identification No.)
100 MISSION RIDGE
GOODLETTSVILLE, TN 37072
(Address of principal executive offices, zip code)
Registrant’s telephone number, including area code: (615) 855-4000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, par value $0.875 per share
Name of the exchange on which registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the
Act. Yes No
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. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be
submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was
required to submit such files). Yes No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or 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
Non-accelerated filer
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 is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes No
The aggregate fair market value of the registrant’s common stock outstanding and held by non-affiliates as of
August 3, 2018 was $23.2 billion calculated using the closing market price of our common stock as reported on the NYSE on such
date ($98.23). For this purpose, directors, executive officers and greater than 10% record shareholders are considered the affiliates of
the registrant.
The registrant had 259,518,801 shares of common stock outstanding as of March 18, 2019.
DOCUMENTS INCORPORATED BY REFERENCE
Certain of the information required in Part III of this Form 10-K is incorporated by reference to the Registrant’s definitive
proxy statement to be filed for the Annual Meeting of Shareholders to be held on May 29, 2019.
INTRODUCTION
PART I
TABLE OF CONTENTS
ITEM 1. BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
ITEM 1A. RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9
ITEM 1B. UNRESOLVED STAFF COMMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ITEM 2. PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ITEM 3. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ITEM 4. MINE SAFETY DISCLOSURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
EXECUTIVE OFFICERS OF THE REGISTRANT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES . . . . . . . . . . . . . . . . . . . . . . 22
ITEM 6. SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK . 40
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . . . . . . . . . . . . . 41
Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS . . 42
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
SHAREHOLDERS' EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
CASH FLOWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
ITEM 9A. CONTROLS AND PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
ITEM 9B. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE . . . . . 73
ITEM 11. EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS . . . . . . . . . . . . . . . . . . . . . . . 74
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . 74
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES . . . . . . . . . . . . . . . . . . . . 75
ITEM 16 FORM 10-K SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
2
2018 Form 10-K
General
INTRODUCTION
This report contains references to years 2019, 2018, 2017, 2016, 2015, and 2014, which represent fiscal
years ending or ended January 31, 2020, February 1, 2019, February 2, 2018, February 3, 2017, January 29, 2016,
and January 30, 2015, respectively. Our fiscal year ends on the Friday closest to January 31. Our 2016 fiscal year
consisted of 53 weeks, while each of the remaining years listed consists of 52 weeks. All of the discussion and
analysis in this report should be read with, and is qualified in its entirety by, the Consolidated Financial Statements
and related notes.
Solely for convenience, our trademarks and tradenames may appear in this report without the ® or TM
symbol which is not intended to indicate that we will not assert, to the fullest extent under applicable law, our rights
or the right to these trademarks and tradenames.
Cautionary Disclosure Regarding Forward-Looking Statements
We include “forward-looking statements” within the meaning of the federal securities laws throughout this
report, particularly under the headings “Business,” “Management’s Discussion and Analysis of Financial Condition
and Results of Operations,” and “Note 6 – Commitments and Contingencies,” among others. You can identify these
statements because they are not limited to historical fact or they use words such as “may,” “will,” “should,”
“could,” “can,” “would,” “believe,” “anticipate,” “project,” “plan,” “expect,” “estimate,” “goal,” “seek,” “ensure,”
“potential,” “opportunity,” “objective,” “intend,” “predict,” “committed,” “likely,” “continue,” “strive,” “aim,”
“scheduled,” “focused on,” or “subject to” and similar expressions that concern our strategies, plans, initiatives,
intentions or beliefs about future occurrences or results. For example, all statements relating to, among others, our
estimated and projected expenditures, cash flows, results of operations, financial condition and liquidity; our plans
and objectives for, and expectations regarding future operations, economic and competitive market conditions,
growth or initiatives, including but not limited to the number of planned store openings, remodels and relocations,
store formats, progress of merchandising and other initiatives, trends in sales of consumable and non-consumable
products, and level of future costs and expenses; potential future stock repurchases and cash dividends; anticipated
borrowing under our unsecured revolving credit agreement and commercial paper program; potential impact of
legal or regulatory changes and our responses thereto, including the potential impact of tariffs by the U.S.
government; anticipated impact of new accounting standards; efforts to improve distribution and transportation
efficiencies, including self-distribution, and anticipated timing of distribution center openings; or expected outcome
or effect of pending or threatened litigation or audits are forward-looking statements.
All forward-looking statements are subject to risks, uncertainties and other factors that may cause our
actual results to differ materially from those which we expected. Many of these statements are derived from our
operating budgets and forecasts, which are based on many detailed assumptions that we believe are reasonable.
However, it is very difficult to predict the effect of known factors, and we cannot anticipate all factors that could
affect future results.
Important factors that could cause actual results to differ materially from the expectations expressed or
implied in our forward-looking statements are disclosed under “Risk Factors” in Part I, Item 1A and elsewhere in
this document (including, without limitation, in conjunction with the forward-looking statements themselves and
under the heading “Critical Accounting Policies and Estimates”). All forward-looking statements are qualified in
their entirety by these and other cautionary statements that we make from time to time in our other SEC filings and
public communications. You should evaluate forward-looking statements in the context of these risks and
uncertainties and are cautioned not to place undue reliance on such statements. These factors may not contain all of
the factors that are important to you. We cannot assure you that we will realize the results or developments we
expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our
operations in the way we expect. Forward-looking statements in this report are made only as of the date hereof. We
undertake no obligation, and specifically disclaim any duty, to update or revise any forward-looking statement as a
result of new information, future events or otherwise, except as may be required by law.
2018 Form 10-K
3
ITEM 1. BUSINESS
General
PART I
We are among the largest discount retailers in the United States by number of stores, with 15,472 stores
located in 44 states as of March 1, 2019, with the greatest concentration of stores in the southern, southwestern,
midwestern and eastern United States. We offer a broad selection of merchandise, including consumable items,
seasonal items, home products and apparel. Our merchandise includes national brands from leading
manufacturers, as well as our own private brand selections with prices at substantial discounts to national brands.
We offer our customers these national brand and private brand products at everyday low prices (typically $10 or
less) in our convenient small-box locations.
Our History
J.L. Turner founded our Company in 1939 as J.L. Turner and Son, Wholesale. We were incorporated as a
Kentucky corporation under the name J.L. Turner & Son, Inc. in 1955, when we opened our first Dollar General
store. We changed our name to Dollar General Corporation in 1968 and reincorporated in 1998 as a Tennessee
corporation. Our common stock was publicly traded from 1968 until July 2007, when we merged with an entity
controlled by investment funds affiliated with Kohlberg Kravis Roberts & Co. L.P., or KKR. In November 2009
our common stock again became publicly traded, and in December 2013 the entity controlled by investment funds
affiliated with KKR sold its remaining shares of our common stock.
Our Business Model
Our long history of profitable growth is founded on a commitment to a relatively simple business model:
providing a broad base of customers with their basic everyday and household needs, supplemented with a variety
of general merchandise items, at everyday low prices in conveniently located, small-box stores. We continually
evaluate the needs and demands of our customers and modify our merchandise selections and pricing accordingly,
while remaining focused on increasing profitability, cash generation and returns for our shareholders.
Our long-term operating priorities remain: 1) driving profitable sales growth, 2) capturing growth
opportunities, 3) enhancing our position as a low-cost operator, and 4) investing in our people as a competitive
advantage. For more information on these operating priorities, see the “Executive Overview” section of
Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in Part II,
Item 7 of this report.
In 2018, we achieved our 29th consecutive year of positive same-store sales growth. We believe that this
growth, which has taken place in a variety of economic conditions, is a result of our compelling value and
convenience proposition, although no assurances can be given that we will achieve positive same-store sales
growth in any given year.
Compelling Value and Convenience Proposition. Our ability to deliver highly competitive prices in
convenient locations and our easy “in and out” shopping format create a compelling shopping experience that we
believe distinguishes us from other discount retailers as well as convenience, drug, grocery, online and mass
merchant retailers. Our slogan “Save time. Save money. Every day!” summarizes our appeal to customers. We
believe our ability to effectively deliver both value and convenience allows us to succeed in small markets with
limited shopping alternatives, as well as in larger and more competitive markets. Our value and convenience
proposition is evidenced by the following attributes of our business model:
•
Everyday Low Prices on Quality Merchandise. Our research indicates that we offer a price
advantage over most food and drug retailers and that our prices are competitive with even the
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2018 Form 10-K
•
•
largest discount retailers. Our ability to offer everyday low prices on quality merchandise is
supported by our low-cost operating structure and our strategy to maintain a limited number of
items per merchandise category, which we believe helps us maintain strong purchasing power.
We offer nationally advertised brands at these everyday low prices in addition to offering our
own private brands at substantially lower prices.
Convenient Locations. Our stores are conveniently located in a variety of rural, suburban and
urban communities. We seek to locate our stores in close proximity to our customers, which
helps drive customer loyalty and trip frequency and makes us an attractive alternative to large
discount and other large-box retail and grocery stores.
Time-Saving Shopping Experience. We strive to provide customers with a highly convenient,
easy to navigate shopping experience. Our small-box stores make it easier to get in and out
quickly. Our product offering includes most necessities, such as basic packaged and refrigerated
food and dairy products, cleaning supplies, paper products, health and beauty care items,
tobacco products, greeting cards and other stationery items, basic apparel, housewares, hardware
and automotive supplies, among others. Our convenient hours and broad merchandise offering
allow our customers to fulfill their requirements for basic goods and minimize their need to shop
elsewhere.
Substantial Growth Opportunities. We believe we have substantial long-term growth potential in the
U.S. We have identified significant opportunities to add new stores in both existing and new markets. In addition,
we have opportunities to relocate or remodel locations within our existing store base to better serve our customers.
Our attractive store economics, including a relatively low initial investment and simple, low-cost operating model
have allowed us to grow our store base to current levels and provide us significant opportunities to continue our
profitable store growth strategy.
Our Merchandise
We offer a focused assortment of everyday necessities, which we believe helps to drive frequent
customer visits, and key items in a broad range of general merchandise categories. Our product assortment
provides the opportunity for our customers to address most of their basic shopping needs with one trip. We offer a
wide selection of nationally advertised brands from leading manufacturers. Additionally, our private brand
products offer even greater value with options to purchase products that we believe to be of comparable quality to
national brands as well as value items, each at substantial discounts to the national brands.
Consumables is our largest merchandise category and has become a larger percentage of our total sales in
recent years as indicated in the table below. Consumables include paper and cleaning products (such as paper
towels, bath tissue, paper dinnerware, trash and storage bags, laundry and other home cleaning supplies);
packaged food (such as cereals, canned soups and vegetables, condiments, spices, sugar and flour); perishables
(such as milk, eggs, bread, refrigerated and frozen food, beer and wine); snacks (such as candy, cookies, crackers,
salty snacks and carbonated beverages); health and beauty (such as over-the-counter medicines and personal care
products including soap, body wash, shampoo, cosmetics, dental hygiene and foot care products); pet (such as pet
supplies and pet food); and tobacco products.
Seasonal products include decorations, toys, batteries, small electronics, greeting cards, stationery,
prepaid phones and accessories, gardening supplies, hardware, automotive and home office supplies.
Home products include kitchen supplies, cookware, small appliances, light bulbs, storage containers,
frames, candles, craft supplies and kitchen, bed and bath soft goods.
Apparel includes casual everyday apparel for infants, toddlers, girls, boys, women and men, as well as
socks, underwear, disposable diapers, shoes and accessories.
2018 Form 10-K
5
The percentage of net sales of each of our four categories of merchandise for the fiscal years indicated
below was as follows:
Consumables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77.5 % 76.9 % 76.4 %
Seasonal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.9 % 12.1 % 12.2 %
5.9 % 6.0 % 6.2 %
Home products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.7 % 5.0 % 5.2 %
Apparel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018 2017 2016
Our seasonal and home products categories typically account for the highest gross profit margins, and the
consumables category typically accounts for the lowest gross profit margin.
The Dollar General Store
The typical Dollar General store is operated by a store manager, one or more assistant store managers,
and three or more sales associates. Our stores generally feature a low-cost, no frills building with limited
maintenance capital, low operating costs, and a focused merchandise offering within a broad range of categories,
allowing us to deliver low retail prices while generating strong cash flows and capital investment returns. Our
stores average approximately 7,400 square feet of selling space and approximately 75% of our stores are located
in towns of 20,000 or fewer people. We generally have had good success in locating suitable store sites in the past,
and we believe that there is ample opportunity for new store growth in existing and new markets. In addition, we
believe we have significant opportunities available for our relocation and remodel programs.
Our store growth over the past three years is summarized in the following table:
Year
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,483
900
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,320 1,315
900
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,534
Stores at
of Year Opened Closed Increase End of Year
13,320
63
14,534
15,370
837
101 1,214
836
Stores Stores
64
Store
Stores at
Beginning
Net
Our Customers
Our customers seek value and convenience. Depending on their financial situation and geographic
proximity, customers’ reliance on Dollar General varies from fill-in shopping, to making periodic trips to stock up
on household items, to making weekly or more frequent trips to meet most essential needs. We generally locate
our stores and plan our merchandise selections to best serve the needs of our core customers, the low and fixed
income households often underserved by other retailers, and we are focused on helping them make the most of
their spending dollars. At the same time, however, Dollar General shoppers from a wide range of income brackets
and life stages appreciate our quality merchandise as well as our attractive value and convenience proposition.
Our Suppliers
We purchase merchandise from a wide variety of suppliers and maintain direct buying relationships with
many producers of national brand merchandise. Despite our broad offering, we maintain only a limited number of
items per category, allowing us to keep our average costs low. Our three largest suppliers each accounted for
approximately 8% of our purchases in 2018. Our private brands come from a diversified supplier base. We
directly imported approximately 6% of our purchases at cost in 2018.
We have consistently managed to obtain sufficient quantities of core merchandise and believe that, if one
or more of our current sources of supply became unavailable, we generally would be able to obtain alternative
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2018 Form 10-K
sources; however, such alternative sources could increase our merchandise costs and supply chain lead time, result
in a temporary reduction in store inventory levels, reduce our selection, or reduce the quality of our merchandise,
and an inability to obtain alternative sources could adversely affect our sales.
Distribution and Transportation
Our stores are currently supported by distribution centers for non-refrigerated merchandise located
strategically throughout our geographic footprint. We also have a distribution center in Amsterdam, New York
under construction which is expected to be completed in 2019. We lease additional temporary warehouse space as
necessary to support our distribution needs. We also have purchased a cold storage facility, and we are testing the
self-distribution of fresh and frozen products, an initiative which we call “DG Fresh.” We continually analyze and
rebalance the network to ensure that it remains efficient and provides the service levels our stores require. See “—
Properties” below for additional information pertaining to our distribution centers.
Most of our merchandise flows through our distribution centers and is delivered to our stores by third-
party trucking firms, utilizing our trailers. We also own approximately 200 semi-trailer trucks with which we
transport our merchandise. In addition, vendors or third-party distributors deliver or ship certain food items and
other merchandise directly to our stores.
Seasonality
Our business is somewhat seasonal. Generally, our most profitable sales mix occurs in the fourth quarter,
which includes the Christmas selling season. In addition, our quarterly results can be affected by the timing of
certain holidays, and the timing of new store openings and store closings, and the amount of sales contributed by
new and existing stores. We typically purchase substantial amounts of inventory and incur higher shipping and
payroll costs in the third quarter in anticipation of increased sales activity during the fourth quarter. See Note 11 to
the consolidated financial statements for additional information.
Our Competition
We operate in the basic discount consumer goods market, which is highly competitive with respect to
price, customers, store location, merchandise quality, assortment and presentation, service offerings, in-stock
consistency, customer service, promotional activity, employees, and market share. We compete with discount
stores and many other retailers, including mass merchandise, warehouse club, grocery, drug, convenience, variety,
online, and certain specialty stores. These other retail companies operate stores in many of the areas where we
operate, and many of them engage in extensive advertising and marketing efforts. Our direct competitors include
Family Dollar, Dollar Tree, Big Lots, Fred’s, 99 Cents Only and various local, independent operators, as well as
Walmart, Target, Kroger, Aldi, Lidl, Walgreens, CVS, and RiteAid, among others. Certain of our competitors
have greater financial, distribution, marketing and other resources than we do and may be able to secure better
arrangements from suppliers than we can. Competition has intensified and we believe it will continue to do so as
competitors move into or increase their presence in our geographic and product markets and increase the
availability of mobile, web-based and other digital technology to facilitate a more convenient and competitive
customer online and in-store shopping experience.
We believe that we differentiate ourselves from other forms of retailing by offering consistently low
prices in a convenient, small-store format. We believe that we are able to maintain competitive prices due in part
to our low-cost operating structure and the relatively limited assortment of products offered. Purchasing large
volumes of merchandise within our focused assortment in each merchandise category allows us to keep our
average costs low, contributing to our ability to offer competitive everyday low prices to our customers. See “—
Our Business Model” above for further discussion of our competitive situation.
2018 Form 10-K
7
Our Employees
As of March 1, 2019, we employed approximately 135,000 full-time and part-time employees, including
divisional and regional managers, district managers, store managers, other store personnel and distribution center
and administrative personnel. We have increasingly focused on recruiting, training, motivating and retaining
employees, and we believe that the quality, performance and morale of our employees continue to be an important
part of our success in recent years. We believe our overall relationship with our employees is good.
Our Trademarks
We own marks that are registered with the United States Patent and Trademark Office and are protected
under applicable intellectual property laws. We attempt to obtain registration of our trademarks whenever
practicable and to pursue vigorously any infringement of those marks. Our trademark registrations have various
expiration dates; however, assuming that the trademark registrations are properly renewed, they have a perpetual
duration. We also hold an exclusive license to the Rexall brand through at least March 5, 2026.
Available Information
Our Internet website address is www.dollargeneral.com. The information on our website is not
incorporated by reference into, and is not a part of, this Form 10-K. We file with or furnish to the Securities and
Exchange Commission (the “SEC”) annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports
on Form 8-K, and amendments to those reports, proxy statements and annual reports to shareholders, and, from
time to time, registration statements and other documents. These documents are available free of charge to
investors on or through the Investor Information section of our website as soon as reasonably practicable after we
electronically file them with or furnish them to the SEC. The SEC maintains an internet site that contains reports,
proxy and information statements and other information regarding issuers, such as Dollar General, that file
electronically with the SEC. The address of that website is http://www.sec.gov.
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2018 Form 10-K
ITEM 1A. RISK FACTORS
Investment in our Company involves risks. You should carefully consider the risks described below and
the other information in this report and other filings that we make from time to time with the SEC, including our
consolidated financial statements and accompanying notes. Any of the following risks could materially and
adversely affect our business, financial condition, results of operations or liquidity. These risks are not the only
risks we face. Our business, financial condition, results of operations or liquidity could also be adversely affected
by additional factors that apply to all companies generally or by risks not currently known to us or that we
currently view to be immaterial. We can provide no assurance and make no representation that our risk mitigation
efforts, although we believe they are reasonable, will be successful.
Economic factors may reduce our customers’ spending, impair our ability to execute our strategies
and initiatives, and increase our costs and expenses, which could result in materially decreased sales or
profitability.
Many of our customers have fixed or low incomes and limited discretionary spending dollars. Any factor
that could adversely affect their disposable income could decrease our customers’ spending or cause them to shift
their spending to our lower margin product choices, which could result in materially decreased sales and
profitability. Factors that could reduce our customers’ disposable income include but are not limited to high
unemployment or underemployment levels; inflation; higher fuel, energy, healthcare and housing costs, interest
rates, consumer debt levels, and tax rates; tax law changes that negatively affect credits and refunds; lack of
available credit; and decreases in, or elimination of, government subsidies such as unemployment and food
assistance programs.
Many of the economic factors listed above, as well as commodity rates; transportation, lease and
insurance costs; wage rates; foreign exchange rate fluctuations; measures that create barriers to or increase the
costs of international trade (including increased import duties or tariffs); changes in applicable laws and
regulations; and other economic factors, also could impair our ability to successfully execute our strategies and
initiatives, as well as increase our cost of goods sold and selling, general and administrative expenses (including
real estate costs), and may have other adverse consequences that we are unable to fully anticipate or control, all of
which may materially decrease our sales or profitability.
Our plans depend significantly on strategies and initiatives designed to increase sales and profitability
and improve the efficiencies, costs and effectiveness of our operations, and failure to achieve or sustain these
plans could materially affect our results of operations.
We have short-term and long-term strategies and initiatives (such as those relating to merchandising, real
estate and new store development, store formats, digital, shrink, sourcing, private brand, inventory management,
supply chain, store operations, expense reduction, and technology) in various stages of testing, evaluation, and
implementation, which are designed to continue to improve our results of operations and financial condition. The
effectiveness of these initiatives is inherently uncertain, even when tested successfully, and is dependent on
consistency of training and execution, workforce stability, ease of execution, and the absence of offsetting factors
that can influence results adversely. Many of these factors are made even more challenging by the diverse
geographic locations of our stores and distribution centers and our decentralized field management. Other risk
factors described herein also could negatively affect general implementation. Failure to achieve successful or cost-
effective implementation of our initiatives could materially adversely affect our business, results of operations and
financial condition.
The success of our merchandising initiatives, particularly our non-consumable initiatives and efforts to
increase sales of higher margin products within the consumables category, further depends in part upon our ability
to predict the products that our customers will demand and to identify and timely respond to evolving trends in
demographic mixes in our markets and consumer preferences. If we are unable to select and timely obtain
2018 Form 10-K
9
products that are attractive to customers and at costs that allow us to sell them at an acceptable profit, or to
effectively market such products, it could result in materially decreased sales and profitability.
We are currently testing a cold chain self-distribution initiative, which we refer to as our DG Fresh
initiative, and also testing an initiative we refer to as Fast Track, which is designed to enhance our in-store labor
productivity, on-shelf availability, and customer convenience. The success of our DG Fresh initiative further
depends in part on our ability to effectively transition these distribution operations from our current service
providers without business disruption, as well as on the availability of certain supply chain resources, including
temperature-controlled distribution centers, refrigerated transportation equipment, and drivers. The success of our
Fast Track initiative further depends in part on vendor cooperation, successful implementation and maintenance of
the necessary technology, customer interest and adoption, and our ability to gain cost efficiencies and control
shrink levels from the initiative.
If we cannot timely and cost-effectively execute our real estate projects and meet our financial
expectations, or if we do not anticipate or successfully address all of the challenges imposed by our expansion,
including into new states or metro areas, it could materially impede our planned future growth and our
profitability.
Delays in or failure to complete any of our real estate projects, or failure to meet our financial
expectations for these projects, could materially adversely affect our growth and our profitability. Our ability to
timely open, relocate and remodel profitable stores and expand into additional market areas is a key component of
our planned future growth and may depend in part on: the availability of suitable store locations and capital
funding; the absence of entitlement process or occupancy delays; the ability to negotiate acceptable lease and
development terms, to cost-effectively hire and train new personnel, especially store managers, and to identify and
accurately assess sufficient customer demand; and general economic conditions.
We also may not anticipate or successfully address all of the challenges imposed by the expansion of our
operations, including into new states or metro areas where we have limited or no meaningful experience or brand
recognition. Those areas may have different competitive and market conditions, consumer tastes and discretionary
spending patterns than our existing markets, as well as higher cost of entry and operating costs. These factors may
cause our new stores to be less profitable than stores in our existing markets, which could slow future growth in
these areas. In addition, many new stores will be located in areas where we have existing stores, which may result
in inadvertent oversaturation and temporarily or permanently divert customers and sales from our existing stores,
thereby adversely affecting our overall financial performance.
We face intense competition that could limit our growth opportunities and materially adversely affect
our results of operations, financial condition and liquidity.
The retail business is highly competitive with respect to price, customers, store location, merchandise
quality, product assortment and presentation, service offerings, in-stock consistency, customer service,
promotional activity, employees, and market share. We compete with discount stores and many other retailers,
including mass merchandise, warehouse club, grocery, drug, convenience, variety, online retailers, and certain
specialty stores. To maintain our competitive position, we may be required to lower prices, either temporarily or
permanently, and may have limited ability to increase prices in response to increased costs, resulting in lower
margins and reduced profitability. Certain of our competitors have greater financial, distribution, marketing and
other resources, and may be able to secure better arrangements with suppliers, than we.
Competition has intensified, and is expected to continue to do so, as competitors enter or increase their
presence in our geographic and product markets and expand availability of mobile, web-based and other digital
technologies. We remain vulnerable to the risk that our competitors or others could enter our industry in a
significant way, including through the introduction of new store formats. Further, consolidation or other business
combinations or alliances within the retail industry could significantly alter the competitive dynamics of the retail
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2018 Form 10-K
marketplace and result in competitors with greatly improved competitive positions, as well as competitors
providing a wider variety of products and services at competitive prices, which could materially affect our
financial performance. Our ability to effectively compete will depend substantially upon our continued ability to
develop and execute compelling and cost-effective strategies and initiatives. If we fail to respond effectively to
competitive pressures and industry changes, it could materially affect our results of operations, financial condition
and liquidity.
Inventory shrinkage may negatively affect our results of operations and financial condition.
We experience significant inventory shrinkage. Although some level of inventory shrinkage is an
unavoidable cost of doing business, if we were to experience higher rates of inventory shrinkage or incur
increased security or other costs to combat inventory theft, our results of operations and financial condition could
be affected adversely. There can be no assurance that we will be successful in our efforts to reduce inventory
shrinkage.
Our cash flows from operations, profitability and financial condition may be negatively affected if we
are not successful in managing our inventory balances.
Our inventory balance represented approximately 53% of our total assets exclusive of goodwill and other
intangible assets as of February 1, 2019. Efficient inventory management is a key component of our business
success and profitability. We must maintain sufficient inventory levels and an appropriate product mix to meet our
customers’ demands without allowing those levels to increase to such an extent that the costs to store and hold the
goods unduly impacts our financial results or that increases the risk of inventory shrinkage. If we do not
accurately predict customer trends or spending levels, or if we inappropriately price products, we may have to take
unanticipated markdowns to dispose of the excess inventory, which also can adversely affect our financial results.
We continue to focus on ways to reduce these risks, but we cannot make assurances that we will be successful in
our inventory management. If we are not successful in managing our inventory balances, our cash flows from
operations and financial condition may be negatively affected.
Failure to maintain the security of our business, customer, employee or vendor information could
expose us to litigation, government enforcement actions and costly response measures, and could materially
harm our reputation and affect our business and financial performance.
In connection with sales, we transmit confidential credit and debit card information which is encrypted
using point-to-point encryption. We also have access to, collect or maintain certain private or confidential
information regarding our customers, employees and their dependents, and vendors, as well as our business. Some
of this information is stored electronically in connection with our e-commerce and mobile applications, some of
which may leverage third-party service providers. Additionally, we may share information with select vendors that
assist us in conducting our business. While we have implemented procedures and technology intended to protect
such information and require appropriate controls of our service providers, cyberattackers could compromise such
controls and obtain such information, as cyberattacks are becoming increasingly sophisticated and do not always
immediately produce signs of intrusion. Moreover, employee error or malfeasance or other irregularities could
result in a defeat of security measures and compromise our or our third-party vendors’ information systems. If
cyberattackers obtain customer, employee or partner passwords through unrelated third-party breaches, these
passwords could be used to gain access to their information or accounts with us.
Because we accept debit and credit cards for payment, we are subject to industry data protection
standards and protocols, such as the Payment Card Industry Data Security Standards, issued by the Payment Card
Industry Security Standards Council. Nonetheless, we may be vulnerable to, and unable to detect and
appropriately respond to, data security breaches and data loss, including cybersecurity attacks or other breaches of
cardholder data.
2018 Form 10-K
11
A significant security breach of any kind experienced by us or one of our vendors, which could be
undetected for a period of time, or a significant failure by us to comply with applicable privacy and information
security laws, regulations and standards could expose us to risks of data loss, litigation, government enforcement
actions, fines or penalties, credit card brand assessments, negative publicity and reputational harm, business
disruption and costly response measures (for example, providing notification to, and credit monitoring services
for, affected individuals, as well as further upgrades to our security measures) which may not be covered by or
may exceed the coverage limits of our insurance policies, and could materially disrupt our operations. Any
resulting negative publicity could significantly harm our reputation which could cause us to lose market share as a
result of customers discontinuing the use of our e-commerce and mobile applications or debit or credit cards in our
stores or not shopping in our stores altogether and could materially adversely affect our business and financial
performance.
A significant disruption to our distribution network, the capacity of our distribution centers or the
timely receipt of inventory could adversely affect sales or increase our transportation costs, which would
decrease our profitability.
We rely on our distribution and transportation network to provide goods to our stores timely and
cost-effectively. Using various transportation modes, including ocean, rail, and truck, we and our vendors move
goods from vendor locations to our distribution centers and our stores. Any disruption, unanticipated or unusual
expense or operational failure related to this process (for example, delivery delays or increases in transportation
costs, including increased fuel costs, carrier or driver wages as a result of driver shortages; a decrease in
transportation capacity for overseas shipments; labor shortages; or work stoppages for slowdowns) could
negatively impact sales and profits. Labor shortages or work stoppages in the transportation industry or
disruptions to the national and international transportation infrastructure that lead to delivery delays or that
necessitate our securing alternative labor or shipping suppliers could also increase our costs or otherwise
negatively affect our business.
We maintain a network of distribution facilities and are moving forward with plans to build or lease new
facilities to support our growth objectives and strategic initiatives. Delays in opening such facilities could
adversely affect our financial performance by slowing store growth, which may in turn reduce revenue growth, or
by increasing transportation costs. In addition, distribution-related construction or expansion projects entail risks
that could cause delays and cost overruns, such as: shortages of materials or skilled labor; work stoppages;
unforeseen construction, scheduling, engineering, environmental or geological problems; weather interference;
fires or other casualty losses; and unanticipated cost increases. For these reasons, the completion date and ultimate
cost of these projects could differ significantly from initial expectations, and we cannot guarantee that any project
will be completed on time or within established budgets.
Risks associated with or faced by our suppliers could adversely affect our financial performance.
We source our merchandise from a wide variety of domestic and international suppliers, and we depend
on them to supply merchandise in a timely and efficient manner. In 2018, our three largest suppliers each
accounted for approximately 8% of our purchases. If one or more of our current sources of supply became
unavailable, we believe we would generally be able to obtain alternative sources, but it could increase our
merchandise costs and supply chain lead time, result in a temporary reduction in store inventory levels, and reduce
the quality of our merchandise. An inability to obtain alternative sources could materially decrease our sales.
Additionally, if a supplier fails to deliver on its commitments, we could experience merchandise out-of-stocks that
could lead to lost sales and reputational harm. Further, failure of suppliers to meet our compliance protocols could
prolong our procurement lead time, resulting in lost sales and adverse margin impact.
We directly imported approximately 6% of our purchases (measured at cost) in 2018, but many of our
domestic vendors directly import their products or components of their products. Changes to the prices and flow
of these goods for any reason, such as political unrest, acts of war, currency fluctuations, disruptions in maritime
lanes, port labor disputes, and economic conditions and instability in countries in which foreign suppliers are
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2018 Form 10-K
located, the financial instability of suppliers, failure to meet our standards, issues with our suppliers’ labor
practices or labor problems they may experience (such as strikes, stoppages or slowdowns, which could also
increase labor costs during and following the disruption), the availability and cost of raw materials to suppliers,
increased import duties, merchandise quality or safety issues, transport availability and cost, increases in wage
rates and taxes, transport security, inflation, and other factors relating to suppliers and the countries in which they
are located or from which they import, often are beyond our control and could adversely affect our operations and
profitability. While we are working to diversify our sources of imported goods, a substantial amount of our
imported merchandise comes from China, and thus, a change in the Chinese leadership, economic and market
conditions, internal economic stimulus actions, or currency or other policies, as well as trade relations between
China and the United States and increases in costs of labor and wage taxes, could negatively impact our
merchandise costs. In addition, the United States’ foreign trade policies, duties, tariffs and other impositions on
imported goods, trade sanctions imposed on certain countries (particularly China), import limitations on certain
types of goods or of goods containing certain materials from other countries and other factors relating to foreign
trade and port labor agreements are beyond our control. These and other factors affecting our suppliers and our
access to products could adversely affect our business and financial performance. If we increase our product
imports from foreign vendors, the risks associated with these imports also will increase, and we may be exposed to
additional or different risks as we increase imports of goods produced in countries other than China.
Product liability, product recall or other product safety or labeling claims could adversely affect our
business, reputation and financial performance.
We are dependent on our vendors to ensure that the products we buy from them comply with applicable
product safety and labeling laws and regulations and to inform us of all applicable restrictions on the sale of such
products. Nonetheless, product liability, personal injury or other claims may be asserted against us relating to
product contamination, tampering, expiration, mislabeling, recall and other safety or labeling issues, including
those relating to products that we may self-distribute through our DG Fresh initiative.
We seek but may not be successful in obtaining contractual indemnification and insurance coverage from
our vendors. If we do not have adequate contractual indemnification or insurance available, such claims could
materially adversely affect our business, financial condition and results of operations. Our ability to obtain
indemnification from foreign vendors may be hindered by our ability to obtain jurisdiction over them to enforce
contractual obligations. Even with adequate insurance and indemnification, such claims could significantly harm
our reputation and consumer confidence in our products and we could incur significant litigation expenses, which
also could materially affect our results of operations even if a product liability claim is unsuccessful or not fully
pursued.
A significant change in governmental regulations and requirements could materially increase our cost
of doing business, and noncompliance with governmental regulations could materially adversely affect our
financial performance.
We routinely incur significant costs in complying with numerous and frequently changing laws and
regulations. The complexity of this regulatory environment and related compliance costs are increasing due to
additional legal and regulatory requirements, our expanding operations, and increased enforcement efforts. New or
revised laws, regulations, policies and related interpretations and enforcement practices, particularly those dealing
with environmental compliance, product and food safety or labeling, information security and privacy, labor and
employment, employee wages, and those governing the sale of products, may significantly increase our expenses
or require extensive system and operating changes that could materially increase our cost of doing business.
Violations of applicable laws and regulations or untimely or incomplete execution of a required product recall can
result in significant penalties (including loss of licenses, eligibility to accept certain government benefits such as
SNAP or significant fines), class action or other litigation, and reputational damage. Additionally, changes in tax
laws, the interpretation of existing laws, or our failure to sustain our reporting positions on examination could
adversely affect our overall effective tax rate.
2018 Form 10-K
13
Litigation may adversely affect our reputation, business, results of operations and financial condition.
Our business is subject to the risk of litigation by employees, consumers, suppliers, competitors,
shareholders, government agencies and others through private actions, class actions, multi-district litigation,
administrative proceedings, regulatory actions or other litigation. The outcome of litigation, particularly class
action or multi-district litigation and regulatory actions, is difficult to assess or quantify. Plaintiffs in these types
of lawsuits may seek recovery of very large or indeterminate amounts, and the magnitude of the potential loss may
remain unknown for lengthy periods of time. In addition, certain of these lawsuits, if decided adversely to us or
settled by us, may result in liability material to our financial statements as a whole or may negatively affect our
operating results if changes to our business operations are required. The cost to defend litigation may be
significant, and adverse publicity could harm our reputation, regardless of the validity of the allegations. As a
result, litigation may adversely affect our business, results of operations and financial condition. See also Note 6
to the consolidated financial statements.
Our current insurance program may expose us to unexpected costs and negatively affect our financial
performance.
Our insurance coverage reflects deductibles, self-insured retentions, limits of liability and similar
provisions that we believe are prudent based on our operations. However, there are types of losses we may incur
but against which we cannot be insured or which we believe are not economically reasonable to insure, such as
losses due to acts of war, certain crimes, including employee crime, certain wage and hour and other employment-
related claims and litigation, actions based on certain consumer protection laws, and some natural and other
disasters or similar events. If we incur material uninsured losses, our financial performance could suffer. Certain
material events may result in sizable losses for the insurance industry and adversely affect the availability of
adequate insurance coverage or result in excessive premium increases. To offset negative insurance market trends,
we may elect to self-insure, accept higher deductibles or reduce the amount of coverage. In addition, we self-
insure a significant portion of expected losses under our workers’ compensation, automobile liability, general
liability (including claims made against certain of our landlords) and group health insurance programs. Significant
changes in actuarial assumptions and management estimates underlying our recorded liabilities for these losses,
including expected increases in medical and indemnity costs, could result in materially different expenses than
expected under these programs, which could materially adversely affect our results of operations and financial
condition. Although we maintain property insurance for catastrophic events at our store support center and
distribution centers, we are effectively self-insured for other property losses. If we experience a greater number of
these losses than we anticipate, our financial performance could be adversely affected.
Natural disasters and unusual weather conditions (whether or not caused by climate change),
pandemic outbreaks, terrorist acts, and global political events could disrupt business and result in lower sales
and otherwise adversely affect our financial performance.
The occurrence of one or more natural disasters, such as hurricanes, fires, floods, tornadoes and
earthquakes, unusual weather conditions, pandemic outbreaks, terrorist acts or disruptive global political events,
such as civil unrest in countries in which our suppliers are located, or similar disruptions could adversely affect
our business and financial performance. Unseasonal or significant weather conditions can affect consumer
shopping patterns or prevent customers from reaching our stores, which could lead to lost sales or higher
markdowns. If these events result in the closure of one or more of our distribution centers, a significant number of
stores, or our corporate headquarters or impact one or more of our key suppliers, our operations and financial
performance could be materially adversely affected through an inability to make deliveries or provide other
support functions to our stores and through lost sales. These events also could result in increases in fuel or other
energy prices, a fuel shortage, store opening delays, the temporary lack of an adequate work force in a market, the
temporary or long-term disruption of product availability in our stores, and disruption of our utility services or
information systems. These events may also increase the costs of insurance if they result in significant loss of
property or other insurable damage.
14
2018 Form 10-K
Material damage or interruptions to our information systems as a result of external factors, staffing
shortages or challenges in maintaining or updating our existing technology or developing or implementing new
technology could materially adversely affect our business and results of operations.
We depend on a variety of information technology systems, including systems owned and managed by
third-party vendors, for the efficient functioning of our business, including, without limitation, transaction
processing and the management of our employees, facilities, logistics, inventories, stores and customer-facing
digital applications and operations. Our technology initiatives may not deliver desired results or may do so on a
delayed schedule. Additionally, such systems are subject to damage or interruption from power surges and
outages, facility damage, computer and telecommunications failures, malicious code (including computer viruses,
worms, ransomware, or similar), cyberattacks (including account compromise; phishing; denial of service attacks;
and application, network or system vulnerability exploitation), software upgrade failures or code defects, natural
disasters and human error. Design defects or damage or interruption to these systems may require a significant
investment to fix or replace, disrupt our operations, result in the loss or corruption of critical data, and harm our
reputation, all of which could materially adversely affect our business or results of operations.
We also rely heavily on our information technology staff. Failure to meet these staffing needs may
negatively affect our ability to fulfill our technology initiatives while continuing to provide maintenance on
existing systems. We rely on third parties to maintain and periodically upgrade many of these systems so that they
can continue to support our business. We license the software programs supporting many of our systems from
independent software developers. The inability of these vendors, developers or us to continue to maintain and
upgrade these systems and software programs could disrupt or reduce the efficiency of our operations if we were
unable to convert to alternate systems in an efficient and timely manner and could expose us to greater risk of a
cyberattack. In addition, costs and delays associated with the implementation of new or upgraded systems and
technology or with maintenance or adequate support of existing systems could also disrupt or reduce the
efficiency of our operations and adversely affect our profitability.
Failure to attract, train and retain qualified employees while controlling labor costs, as well as other
labor issues, could adversely affect our financial performance.
Our future growth and performance, positive customer experience and legal and regulatory compliance
depends on our ability to attract, train, retain and motivate qualified employees, many of whom are in positions
with historically high rates of turnover. Our ability to meet our labor needs, while controlling our labor costs, is
subject to many external factors, including competition for and availability of qualified personnel, unemployment
levels, wage rates, minimum wage laws, health and other insurance costs, changes in employment and labor laws
or other workplace regulations (including changes in employee benefit programs such as health insurance and paid
leave programs), employee activism, and our reputation and relevance within the labor market. If we are unable to
attract, train and retain adequate numbers of qualified employees, our operations, customer service levels, legal
and regulatory compliance, and support functions could suffer. In addition, to the extent a significant portion of
our employee base unionizes, or attempts to unionize, our labor costs could increase. Our ability to pass along
labor costs to our customers is constrained by our everyday low price model, and we may not be able to offset
such increased costs elsewhere in our business.
Our success depends on our executive officers and other key personnel. If we lose key personnel or are
unable to hire additional qualified personnel, our business may be harmed.
Our future success depends to a significant degree on the skills, experience and efforts of our executive
officers and other key personnel. The unexpected loss of the services of any of such persons could adversely affect
our operations. There can be no assurance that our executive succession planning, retention or hiring efforts will
be successful. Competition for skilled and experienced management personnel is intense, and our future success
will also depend on our ability to attract and retain qualified personnel, and a failure to attract and retain new
qualified personnel could adversely affect our operations.
2018 Form 10-K
15
Our private brands may not be successful in improving our gross profit rate and may increase certain
of the risks we face.
The sale of private brand items is an important component of our sales growth and gross profit rate
enhancement plans. Broad market acceptance of our private brands depends on many factors, including pricing,
quality, customer perception, and timely development and introduction of new products. We cannot give
assurance that we will achieve or maintain our expected level of private brand sales. The sale and expansion of
these offerings also subjects us to or increases certain risks, such as: product liability claims and product recalls;
disruptions in raw material and finished product supply and distribution chains; inability to successfully protect
our proprietary rights; claims related to the proprietary rights of third parties; and other risks generally
encountered by entities that source, sell and market exclusive branded offerings for retail. Failure to appropriately
address these risks could materially adversely affect our private brand initiatives, reputation, results of operations
and financial condition.
Because our business is somewhat seasonal, adverse events during the fourth quarter could materially
affect our financial statements as a whole.
Primarily because of sales of Christmas-related merchandise, our most profitable sales mix generally
occurs in the fourth quarter. In anticipation of this holiday, we purchase substantial amounts of seasonal
inventory, and if sales fall below seasonal norms or expectations it could result in unanticipated markdowns.
Adverse events, such as deteriorating economic conditions, high unemployment rates, high gas prices, public
transportation disruptions, or unusual or unanticipated adverse weather could result in lower-than-planned sales
during the Christmas selling season, which in turn could reduce our profitability and otherwise adversely affect
our financial performance and operating results.
Deterioration in market conditions or changes in our credit profile could adversely affect our business
operations and financial condition.
We rely on the positive cash flow we generate from our operating activities and our access to the credit
and capital markets to fund our operations, growth strategy, and return of cash to our shareholders through share
repurchases and dividends. Changes in the credit and capital markets, including market disruptions, limited
liquidity and interest rate fluctuations, may increase the cost of financing or restrict our access to these potential
sources of future liquidity. Our continued access to liquidity sources on favorable terms depends on multiple
factors, including our operating performance and credit ratings. Our debt securities currently are rated investment
grade, and a downgrade of this rating likely would negatively impact our access to the debt capital markets and
increase our cost of borrowing. As a result, disruptions in the debt markets or any downgrade of our credit ratings
could adversely affect our business operations and financial condition and our ability to return cash to our
shareholders. We can make no assurances that our ability to obtain additional financing through the debt markets
will not be adversely affected by economic conditions or that we will be able to maintain or improve our current
credit ratings.
New accounting guidance or changes in the interpretation or application of existing accounting
guidance could adversely affect our financial performance.
The implementation of new accounting standards could require certain systems, internal process and
controls and other changes that could increase our operating costs, and will result in changes to our financial
statements. For example, the implementation of accounting standards related to leases, as issued by the Financial
Accounting Standards Board, required us to make significant changes to our lease management and other
accounting systems, and will result in a material impact to our consolidated financial statements.
U.S. generally accepted accounting principles and related accounting pronouncements, implementation
guidelines and interpretations with regard to a wide range of matters that are relevant to our business involve
16
2018 Form 10-K
many subjective assumptions, estimates and judgments by our management. Changes in these rules or their
interpretation or in underlying management assumptions, estimates or judgments could significantly change our
reported or expected financial performance. The outcome of such changes could include litigation or regulatory
actions which could adversely affect our financial condition and results of operations.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
As of March 1, 2019, we operated 15,472 retail stores located in 44 states as follows:
State
Alabama. . . . . . . . . . . . . .
Arizona . . . . . . . . . . . . . .
Arkansas . . . . . . . . . . . . .
California . . . . . . . . . . . . .
Colorado . . . . . . . . . . . . .
Connecticut . . . . . . . . . . .
Delaware . . . . . . . . . . . . .
Florida . . . . . . . . . . . . . . .
Georgia . . . . . . . . . . . . . .
Illinois . . . . . . . . . . . . . . .
Indiana . . . . . . . . . . . . . . .
Iowa . . . . . . . . . . . . . . . . .
Kansas . . . . . . . . . . . . . . .
Kentucky . . . . . . . . . . . . .
Louisiana . . . . . . . . . . . . .
Maine . . . . . . . . . . . . . . . .
Maryland . . . . . . . . . . . . .
Massachusetts . . . . . . . . .
Michigan . . . . . . . . . . . . .
Minnesota . . . . . . . . . . . .
Mississippi . . . . . . . . . . . .
Missouri . . . . . . . . . . . . . .
Number of Stores State
760
118
433
220
47
56
45
856
872
547
525
242
235
530
559
55
137
45
519
136
512
518
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
West Virginia
Wisconsin
Number of Stores
123
22
36
133
100
464
817
26
798
442
52
738
16
542
52
780
1,485
11
36
419
242
171
Most of our stores are located in leased premises. Individual store leases vary as to their terms, rental
provisions and expiration dates. Many stores are subject to build-to-suit arrangements with landlords, which
typically carry a primary lease term of up to 15 years with multiple renewal options. We also have stores subject
to shorter-term leases and many of these leases have renewal options. A significant portion of our new stores are
subject to build-to-suit arrangements.
2018 Form 10-K
17
As of March 1, 2019, we operated the following distribution centers for non-refrigerated merchandise:
Footage
Year Approximate Square Number of
Stores Served
Location
Opened
776
Scottsville, KY . . . . . . . . . . . . . . . . . . . . . . . . . . . 1959
1,070
Ardmore, OK . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1994
1,065
South Boston, VA . . . . . . . . . . . . . . . . . . . . . . . . . 1997
907
Indianola, MS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1998
1,272
Fulton, MO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1999
991
Alachua, FL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2000
1,189
Zanesville, OH . . . . . . . . . . . . . . . . . . . . . . . . . . . 2001
1,019
Jonesville, SC . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2005
1,194
Marion, IN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2006
1,138
Bessemer, AL . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2012
444
Lebec, CA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2012
1,115
Bethel, PA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014
995
San Antonio, TX . . . . . . . . . . . . . . . . . . . . . . . . . . 2016
883
Janesville, WI . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016
905
Jackson, GA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2017
Longview, TX . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2018
509
720,000
1,310,000
1,250,000
820,000
1,150,000
980,000
1,170,000
1,120,000
1,110,000
940,000
600,000
1,000,000
920,000
1,000,000
1,000,000
1,020,000
We lease the distribution centers located in California, Oklahoma, Mississippi and Missouri and own the
remaining distribution centers in the table above. Approximately 7.25 acres of the land on which our Kentucky
distribution center is located is subject to a ground lease. As of February 1, 2019, we owned a cold storage and
distribution facility of approximately 148,000 square feet and leased approximately 1,070,000 square feet of
additional space to support our distribution needs.
Our executive offices are located in approximately 302,000 square feet of owned buildings and
approximately 42,000 square feet of leased office space in Goodlettsville, Tennessee.
ITEM 3. LEGAL PROCEEDINGS
The information contained in Note 6 to the consolidated financial statements under the heading “Legal
proceedings” contained in Part II, Item 8 of this report is incorporated herein by this reference.
ITEM 4. MINE SAFETY DISCLOSURES
None.
18
2018 Form 10-K
EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding our current executive officers as of March 21, 2019 is set forth below. Each of our
executive officers serves at the discretion of our Board of Directors and is elected annually by the Board to serve
until a successor is duly elected. There are no familial relationships between any of our directors or executive
officers.
Name
Todd J. Vasos . . . . . . . . . . .
John W. Garratt . . . . . . . . .
Michael J. Kindy . . . . . . . .
Jeffery C. Owen . . . . . . . . .
Robert D. Ravener . . . . . . .
Jason S. Reiser . . . . . . . . . .
Rhonda M. Taylor . . . . . . .
Carman R. Wenkoff . . . . . .
Anita C. Elliott . . . . . . . . . .
Age
57
50
53
49
60
50
51
51
54
Position
Chief Executive Officer and Director
Executive Vice President and Chief Financial Officer
Executive Vice President, Global Supply Chain
Executive Vice President, Store Operations
Executive Vice President and Chief People Officer
Executive Vice President and Chief Merchandising Officer
Executive Vice President and General Counsel
Executive Vice President and Chief Information Officer
Senior Vice President and Chief Accounting Officer
Mr. Vasos has served as Chief Executive Officer and a member of our Board since June 2015. He joined
Dollar General in December 2008 as Executive Vice President, Division President and Chief Merchandising
Officer. He was promoted to Chief Operating Officer in November 2013. Prior to joining Dollar General,
Mr. Vasos served in executive positions with Longs Drug Stores Corporation for seven years, including Executive
Vice President and Chief Operating Officer (February 2008 – November 2008) and Senior Vice President and
Chief Merchandising Officer (2001 – 2008), where he was responsible for all pharmacy and front-end marketing,
merchandising, procurement, supply chain, advertising, store development, store layout and space allocation, and
the operation of three distribution centers. He also previously served in leadership positions at Phar-Mor Food and
Drug Inc. and Eckerd Corporation.
Mr. Garratt has served as Executive Vice President and Chief Financial Officer since December 2015.
He joined Dollar General in October 2014 as Senior Vice President, Finance & Strategy and subsequently served
as Interim Chief Financial Officer from July 2015 to December 2015. Prior to joining Dollar General, Mr. Garratt
held various positions of increasing responsibility with Yum! Brands, Inc., one of the world’s largest restaurant
companies, between May 2004 and October 2014, holding leadership positions in corporate strategy and financial
planning. He served as Vice President, Finance and Division Controller for the KFC division and earlier for the
Pizza Hut division and for Yum Restaurants International between October 2013 and October 2014. He also
served as the Senior Director, Yum Corporate Strategy, from March 2010 to October 2013, reporting directly to
the corporate Chief Financial Officer and leading corporate strategy as well as driving key cross-divisional
initiatives. Mr. Garratt served in various other financial positions at Yum from May 2004 to March 2010. He
served as Plant Controller for Alcoa Inc. between April 2002 and May 2004, and held various financial
management positions at General Electric from March 1999 to April 2002. He began his career in May 1990 at
Alcoa, where he served for approximately nine years.
Mr. Kindy has served as Executive Vice President, Global Supply Chain since August 2018. He joined
Dollar General as Vice President, Distribution Centers in December 2008, became Vice President, Transportation
in May 2013, and was promoted to Senior Vice President, Global Supply Chain in June 2015. Prior to joining
Dollar General, Mr. Kindy had 14 years of grocery distribution management and 5 years of logistics and
distribution consulting experience. He served as Senior Director, Warehouse Operations, for ConAgra Foods from
November 2007 to December 2008. Since beginning his career in July 1989, Mr. Kindy also held various
distribution and warehouse leadership positions at Safeway, Inc., Crum & Crum Logistics, and Specialized
Distribution Management, Inc., and served as a principal consultant for PricewaterhouseCoopers.
2018 Form 10-K
19
Mr. Owen returned to Dollar General in June 2015 as Executive Vice President of Store Operations, with
over 21 years of previous employment experience with the Company. Prior to his departure from Dollar General
in July 2014, he was Senior Vice President, Store Operations. Prior to August 2011, Mr. Owen served as Vice
President, Division Manager. From November 2006 to March 2007, he served as Retail Division Manager. Prior
to November 2006, he was Senior Director, Operations Process Improvement. Mr. Owen served the Company in
various operations roles of increasing importance and responsibility from December 1992 to September 2004.
Mr. Owen has served as a director of Kirkland’s Inc. since March 2015.
Mr. Ravener joined Dollar General as Senior Vice President and Chief People Officer in August 2008.
He was promoted to Executive Vice President in March 2010. As previously announced, Mr. Ravener plans to
retire from Dollar General effective May 27, 2019. Prior to joining Dollar General, he served in human resources
executive roles with Starbucks Corporation from September 2005 until August 2008 as the Senior Vice President
of U.S. Partner Resources and, prior to that, as the Vice President, Partner Resources—Eastern Division. As the
Senior Vice President of U.S. Partner Resources at Starbucks, Mr. Ravener oversaw all aspects of human
resources activity for more than 10,000 stores. Prior to serving at Starbucks, Mr. Ravener held Vice President of
Human Resources roles for The Home Depot Inc. at its Store Support Center and a domestic field division from
April 2003 to September 2005. Mr. Ravener also served in executive roles in both human resources and operations
at Footstar, Inc. and roles of increasing leadership at PepsiCo, Inc.
Mr. Reiser has served as Executive Vice President and Chief Merchandising Officer since July 2017.
Prior thereto, he served as the Executive Vice President and Chief Operating Officer of Vitamin Shoppe, Inc., a
multi-channel specialty retailer and contract manufacturer of vitamins, minerals, herbs, specialty supplements,
sports nutrition and other health and wellness products, from July 2016 to July 2017, where he was responsible for
leading merchandising, operations, end-to-end supply chain, information technology, real estate and construction,
planning, pricing and merchandising operations. He also previously served as Executive Vice President, Chief
Merchandising Officer from January 2014 to June 2016 and as Senior Vice President, Hardlines Merchandising
from July 2013 to January 2014, for discount retailer Dollar Tree, Inc. (successor to Family Dollar Stores, Inc.).
Prior to his employment with Family Dollar, Mr. Reiser was employed by Walmart Stores, Inc. for 17 years in a
variety of roles, including Vice President, Merchandising, Health & Family Care of Sam’s Club from November
2010 to June 2013; Vice President, Operations & Compliance, Health & Wellness of Sam’s Club from May 2010
to November 2010; Divisional Merchandise Manager, Wellness, from May 2009 to May 2010; Senior Buyer
Pharmacy/OTC of Sam’s Club from November 2006 to May 2009; Director, Government Relations and
Regulatory Affairs from August 2002 to November 2006; Pharmacy District Manager from August 2000 to
August 2002; and Pharmacy Manager from October 1995 to August 2000.
Ms. Taylor has served as Executive Vice President and General Counsel since March 2015. She joined
Dollar General as an Employment Attorney in March 2000 and was subsequently promoted to Senior
Employment Attorney in 2001, Deputy General Counsel in 2004, Vice President and Assistant General Counsel in
March 2010, and Senior Vice President and General Counsel in June 2013. Prior to joining Dollar General, she
practiced law with Ogletree, Deakins, Nash, Smoak & Stewart, P.C., where her practice was focused on labor law
and employment litigation. She has also held attorney positions with Ford & Harrison LLP and Stokes
Bartholomew.
Mr. Wenkoff has served as Executive Vice President and Chief Information Officer since July 2017.
Prior thereto, he served as the Chief Information Officer (May 2012 – June 2017) and Chief Digital Officer
(June 2016 – June 2017) of Franchise World Headquarters, LLC (“Subway”), the largest string of sandwich shops
in the world, where he was responsible for global technology and digital strategy, execution and operations for the
Subway brand and all of its restaurants. He also owned a Subway franchise in Southport, Connecticut from July
2015 until October 2017. Prior to joining Subway, he served as the Chairman of the Board and Co-President of
Retail Gift Card Association, a member organization of diverse, closed loop gift card retailers committed to
promoting and protecting the use of gift cards, from February 2008 to May 2012. He also served as the Deputy
Chief Information Officer for Independent Purchase Cooperative, Inc., an independent Subway franchisee-owned
and operated purchasing and services cooperative, from May 2005 to May 2012, and as President of its subsidiary,
20
2018 Form 10-K
Value Pay Services LLC, from May 2005 to February 2011. He was the founder and President of Stored Value
Management, Inc., an independently owned program and consulting company, from January 2004 to May 2005
and the Vice President, Operations and Finance, as well as General Counsel of Ontain Corporation, a technology
company focused on providing turn-key retail merchant solutions, from January 2000 to December 2004.
Mr. Wenkoff began his career in 1993 as an articled student, and then attorney with Douglas Symes & Brissenden
and served in various legal positions, including General Counsel, with Pivotal Corporation from 1997 to 2000.
Ms. Elliott has served as Senior Vice President and Chief Accounting Officer since December 2015. She
joined Dollar General as Senior Vice President and Controller in August 2005. Prior to joining Dollar General, she
served as Vice President and Controller of Big Lots, Inc. from May 2001 to August 2005, where she was
responsible for accounting operations, financial reporting and internal audit. Prior to serving at Big Lots, she
served as Vice President and Controller for Jitney-Jungle Stores of America, Inc. from April 1998 to March 2001.
At Jitney-Jungle, Ms. Elliott was responsible for the accounting operations and the internal and external financial
reporting functions. Prior to serving at Jitney-Jungle, she practiced public accounting for 12 years, 6 of which
were with Ernst & Young LLP.
2018 Form 10-K
21
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our common stock is traded on the New York Stock Exchange under the symbol “DG.” On
March 18, 2019, there were approximately 2,556 shareholders of record of our common stock.
Dividends
We resumed the payment of quarterly cash dividends in 2015. Our Board of Directors most recently
increased the amount of the quarterly cash dividend to $0.32 beginning with the dividend payable on
April 23, 2019. While our Board of Directors currently expects to continue regular quarterly cash dividends, the
declaration and amount of future cash dividends are subject to the Board’s sole discretion and will depend upon,
among other things, our results of operations, cash requirements, financial condition, contractual restrictions and
other factors that the Board may deem relevant in its sole discretion.
Issuer Purchases of Equity Securities
The following table contains information regarding purchases of our common stock made during the
quarter ended February 1, 2019 by or on behalf of Dollar General or any “affiliated purchaser,” as defined by
Rule 10b-18(a)(3) of the Securities Exchange Act of 1934:
Period
11/03/18-11/30/18 . . . . . . . . . . . . . . . . . . . . . . . . . .
12/01/18-12/31/18 . . . . . . . . . . . . . . . . . . . . . . . . . .
01/01/19-02/01/19 . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Number
of Shares
Purchased
Approximate
Dollar Value
of Shares that May
as Part of Publicly Yet Be Purchased
Price Paid Announced Plans Under the Plans
per Share or Programs(a)
or Programs(a)
Total Number Average
of Shares
Purchased
—
— $
3,027,556 $ 104.04
407,492 $ 110.45
3,435,048 $ 104.80
— $ 706,116,000
3,027,556 $ 391,132,000
407,492 $ 346,124,000
3,435,048 $ 346,124,000
(a) On September 5, 2012, the Company announced a program permitting the Company to repurchase a portion
of its outstanding shares not to exceed a dollar maximum established by the Company’s Board of Directors.
The program was most recently amended on March 13, 2019 to increase the repurchase authorization by
$1.0 billion, bringing the total value of authorized share repurchases under the program to $7.0 billion. Under
the authorization, purchases may be made in the open market or in privately negotiated transactions from time
to time subject to market and other conditions. This repurchase authorization has no expiration date.
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected consolidated financial and operating information of Dollar
General Corporation as of the dates and for the periods indicated. The selected historical statement of income data
and statement of cash flows data for the fiscal years ended February 1, 2019, February 2, 2018, and
February 3, 2017, and balance sheet data as of February 1, 2019 and February 2, 2018, have been derived from
our historical audited consolidated financial statements included elsewhere in this report. The selected historical
statement of income data and statement of cash flows data for the fiscal years ended January 29, 2016 and
January 30, 2015 and balance sheet data as of February 3, 2017, January 29, 2016, and January 30, 2015 presented
in this table have been derived from audited consolidated financial statements not included in this report.
The information set forth below should be read in conjunction with, and is qualified by reference to, the
Consolidated Financial Statements and related notes included in Part II, Item 8 of this report and the
22
2018 Form 10-K
Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Part II,
Item 7 of this report. Certain financial disclosures relating to prior periods have been reclassified to conform to the
current year presentation.
(Amounts in millions, excluding per share data,
number of stores, selling square feet, and net
sales per square foot)
Statement of Income Data:
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 25,625.0
Cost of goods sold . . . . . . . . . . . . . . . . . . . 17,821.2
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . 7,803.9
Selling, general and administrative
February 1,
2019
expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 5,687.6
Operating profit . . . . . . . . . . . . . . . . . . . . . 2,116.3
99.9
Interest expense . . . . . . . . . . . . . . . . . . . . .
Other (income) expense . . . . . . . . . . . . . . .
1.0
Income before income taxes . . . . . . . . . . . 2,015.4
425.9
Income tax expense . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,589.5
5.99
Earnings per share—basic . . . . . . . . . . . . . $
5.97
Earnings per share—diluted . . . . . . . . . . .
1.16
Dividends per share . . . . . . . . . . . . . . . . . .
Statement of Cash Flows Data:
Net cash provided by (used in):
Operating activities . . . . . . . . . . . . . . . . $ 2,143.6
Investing activities . . . . . . . . . . . . . . . .
(731.6)
Financing activities . . . . . . . . . . . . . . . . (1,443.9)
(734.4)
Total capital expenditures . . . . . . . . . . . . .
Other Financial and Operating Data:
Same store sales growth(2) . . . . . . . . . . . .
Same store sales(2) . . . . . . . . . . . . . . . . . . $ 23,854.0
Number of stores included in same store
February 2,
2018
Year Ended
February 3,
2017(1)
January 29,
2016
January 30,
2015
$ 23,471.0 $ 21,986.6
15,204.0
16,249.6
6,782.6
7,221.4
$ 20,368.6
14,062.5
6,306.1
$ 18,909.6
13,107.1
5,802.5
5,213.5
2,007.8
97.0
3.5
1,907.3
368.3
4,719.2
2,063.4
97.8
—
1,965.6
714.5
$ 1,539.0 $ 1,251.1
4.45
$
4.43
1.00
5.64 $
5.63
1.04
4,365.8
1,940.3
86.9
0.3
1,853.0
687.9
$ 1,165.1
3.96
$
3.95
0.88
4,033.4
1,769.1
88.2
—
1,680.9
615.5
$ 1,065.3
3.50
$
3.49
—
$ 1,802.1 $ 1,605.0
(550.9)
(1,024.1)
(560.3)
(645.0)
(1,077.6)
(646.5)
$ 1,391.7
(503.4)
(1,310.2)
(504.8)
$ 1,326.9
(371.7)
(880.9)
(374.0)
3.2 %
2.7 %
0.9 %
2.8 %
2.8 %
$ 21,871.6 $ 20,348.1
$ 19,254.3
$ 17,818.7
sales calculation . . . . . . . . . . . . . . . . . . .
Number of stores (at period end) . . . . . . .
Selling square feet (in thousands at
14,283
15,370
13,150
14,534
12,383
13,320
11,706
12,483
11,052
11,789
107,821
period end) . . . . . . . . . . . . . . . . . . . . . . . . 113,755
231
$
77.5 %
11.9 %
5.9 %
4.7 %
Net sales per square foot(3) . . . . . . . . . . . . $
Consumables sales . . . . . . . . . . . . . . . . . . .
Seasonal sales . . . . . . . . . . . . . . . . . . . . . . .
Home products sales . . . . . . . . . . . . . . . . .
Apparel sales . . . . . . . . . . . . . . . . . . . . . . .
Rent expense . . . . . . . . . . . . . . . . . . . . . . . $ 1,159.1
Balance Sheet Data (at period end):
Cash and cash equivalents and short-
227 $
76.9 %
12.1 %
6.0 %
5.0 %
$ 1,081.5 $
98,943
229
$
76.4 %
12.2 %
6.2 %
5.2 %
$
942.4
92,477
226
$
75.9 %
12.4 %
6.3 %
5.4 %
$
856.9
87,205
223
75.7 %
12.4 %
6.4 %
5.5 %
785.2
term investments . . . . . . . . . . . . . . . . . . . $
235.5
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . 13,204.0
Long-term debt(4) . . . . . . . . . . . . . . . . . . . 2,864.7
Total shareholders’ equity . . . . . . . . . . . . . 6,417.4
267.4 $
$
12,516.9
3,006.0
6,125.8
187.9
11,672.3
3,211.5
5,406.3
(1) The fiscal year ended February 3, 2017 was comprised of 53 weeks.
$
157.9
11,257.9
2,970.6
5,377.9
$
579.8
11,208.6
2,725.1
5,710.0
2018 Form 10-K
23
(2) Same-store sales are calculated based upon stores that were open at least 13 full fiscal months and remain
open at the end of the reporting period. We include stores that have been remodeled, expanded or relocated in
our same-store sales calculation. Changes in same-store sales are calculated based on the comparable
52 calendar weeks in the current and prior years.
(3) Net sales per square foot was calculated based on total sales for the preceding 12 months as of the ending date
of the reporting period divided by the average selling square footage during the period, including the end of
the fiscal year, the beginning of the fiscal year, and the end of each of our three interim fiscal quarters.
(4) Debt issuance costs are reflected as a deduction from the corresponding debt liability for all periods
presented.
24
2018 Form 10-K
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This discussion and analysis should be read with, and is qualified in its entirety by, the Consolidated
Financial Statements and the notes thereto. It also should be read in conjunction with the Cautionary Disclosure
Regarding Forward-Looking Statements and the Risk Factors disclosures set forth in the Introduction and in
Item 1A of this report, respectively.
Executive Overview
We are among the largest discount retailers in the United States by number of stores, with 15,472 stores
located in 44 states as of March 1, 2019, with the greatest concentration of stores in the southern, southwestern,
midwestern and eastern United States. We offer a broad selection of merchandise, including consumable products
such as food, paper and cleaning products, health and beauty products and pet supplies, and non-consumable
products such as seasonal merchandise, home decor and domestics, and basic apparel. Our merchandise includes
national brands from leading manufacturers, as well as our own private brand selections with prices at substantial
discounts to national brands. We offer our customers these national brand and private brand products at everyday
low prices (typically $10 or less) in our convenient small-box locations.
We believe our convenient store formats, locations, and broad selection of high-quality products at
compelling values have driven our substantial growth and financial success over the years and through a variety of
economic cycles. We are mindful that the majority of our customers are value-conscious, and many have low
and/or fixed incomes. As a result, we are intensely focused on helping our customers make the most of their
spending dollars. Our core customers are often among the first to be affected by negative or uncertain economic
conditions and among the last to feel the effects of improving economic conditions particularly when trends are
inconsistent and of an uncertain duration. The primary macroeconomic factors that affect our core customers
include the unemployment and underemployment rates, wage growth, fuel prices, changes in U.S. and global trade
policy (including price increases from tariffs), and changes to certain government assistance programs, such as the
Supplemental Nutrition Assistance Program. Additionally, our customers are impacted by increases in those
expenses that generally comprise a large portion of their household budget, such as rent and healthcare. Finally,
significant unseasonable or unusual weather patterns can impact customer shopping behaviors.
We remain committed to the following long-term operating priorities as we consistently strive to improve
our performance while retaining our customer-centric focus: 1) driving profitable sales growth, 2) capturing
growth opportunities, 3) enhancing our position as a low-cost operator, and 4) investing in our people as a
competitive advantage.
We seek to drive profitable sales growth through initiatives aimed at increasing customer traffic and
average transaction amount. As we work to provide everyday low prices and meet our customers’ affordability
needs, we remain focused on enhancing our margins through effective category management, inventory shrink
reduction initiatives, private brands penetration, distribution and transportation efficiencies (including a test to
self-distribute fresh and frozen products, which we call “DG Fresh”), global sourcing, and pricing and markdown
optimization. Several of our sales-driving initiatives are also designed to capture growth opportunities and are
discussed in more detail below.
Historically, our sales of consumables, which tend to have lower gross margins, have been the key
drivers of net sales and customer traffic, while sales of non-consumables, which tend to have higher gross
margins, have contributed to more profitable sales growth and an increase in average transaction amount.
Throughout 2018, our sales mix continued to shift slightly toward consumables, and, within consumables, slightly
toward lower margin departments such as perishables and tobacco. While we expect some sales mix challenges to
persist, certain of our initiatives are intended to address these trends, although there can be no assurance we will
be successful in reversing them.
2018 Form 10-K
25
We continue to make progress on and invest in certain strategic initiatives that we believe will help drive
profitable sales growth and capture long-term growth opportunities. Such opportunities include leveraging
existing and developing new digital tools and technology to provide our customers with additional shopping
access points and even greater convenience. Following an in-depth analysis, in 2018 we began testing a refreshed
approach to our non-consumable product offerings. This non-consumables initiative is a merchandising strategy
that offers a new, differentiated and limited assortment that will change throughout the year. As we look to roll out
this initiative more broadly in 2019, our goal for this initiative is to continue to improve the shopping experience
while delivering exceptional value within key areas of our non-consumable categories. In 2019, we also are testing
two initiatives aimed at driving sales and enhancing our position as a low-cost operator, as discussed further
below.
Tariffs currently in effect on products from China, as applied to both our direct imports and domestic
purchases, did not have a material impact on our financial results in fiscal 2018. The recently postponed increase
in tariff rates applicable to products from China, if ultimately implemented, as well as any other future increase in
tariff rates or the expansion of products subject to tariffs, may have a more significant impact on our business and
on our customers’ budgets. We continue to work to minimize price increases to our customers and to mitigate the
potential sales and margin impact of current and potential future tariffs through various merchandising efforts.
There can be no assurance we will be successful in our efforts to mitigate these impacts in whole or in part.
To support our other operating priorities, we remain focused on capturing growth opportunities. In 2018,
we opened 900 new stores, remodeled 1,050 stores, and relocated 115 stores. For 2019, we plan to open
approximately 975 new stores, remodel approximately 1,000 stores, and relocate approximately 100 stores for an
approximate total of 2,075 real estate projects.
We continue to innovate within our channel and are able to utilize the most productive of our various
store formats based on the specific market opportunity. We expect that our traditional 7,300 square foot store
format will continue to be the primary store layout for new stores, relocations and remodels in 2019. We expect
approximately 500 of the planned 1,000 remodels in 2019 to use the higher-cooler-count store format that enables
us to offer an increased selection of perishable items. In addition, our smaller format store (less than 6,000 square
feet) allows us to capture growth opportunities in metropolitan areas as well as in rural areas with a low number of
households. We continue to incorporate lessons learned from our various store formats and layouts into our
existing store base with a goal of driving increased customer traffic, average transaction amount, same-store sales
and overall store productivity.
To support our new store growth and drive productivity, we continue to make investments in our
traditional distribution center network for non-refrigerated merchandise. Most recently, we began shipping from
our distribution center in Longview, Texas in January 2019. In addition, our distribution center in Amsterdam,
New York is currently under construction, and we expect to begin shipping from this facility later in 2019.
We have established a position as a low-cost operator, always seeking ways to reduce or control costs
that do not affect our customers’ shopping experiences. We plan to continue enhancing this position over time
while employing ongoing cost discipline to reduce certain expenses as a percentage of sales. Nonetheless, we seek
to maintain flexibility to invest in the business as necessary to enhance our long-term profitability.
In 2019, we will be testing “DG Fresh”, a self-distribution model for fresh and frozen products that is
designed to enhance sales, reduce product costs, improve our in-stock position and enhance item assortment; and
Fast Track, an initiative aimed at further enhancing our convenience proposition and in-stock position as well as
increasing labor productivity within our stores. These and certain other strategic initiatives will require us to incur
upfront expenses for which there may not be an immediate return in terms of sales or enhanced profitability.
Certain operating expenses such as wage rates and occupancy costs have continued to increase in recent
years. While we expect these increases to persist, certain of our initiatives and plans are intended to help offset
these challenges, although there can be no assurance we will be successful in mitigating them.
26
2018 Form 10-K
Our employees are a competitive advantage, and we proactively seek ways to continue investing in them.
Our goal is to create an environment that attracts and retains talented personnel, particularly at the store level,
because employees who are promoted from within our company generally have longer tenures and are greater
contributors to improvements in our financial performance. We believe our investments in compensation and
training for our store managers have contributed to improved customer experience scores, higher sales and
improved turnover metrics.
To further enhance shareholder return, we repurchased shares of our common stock and paid quarterly
cash dividends throughout 2018. In 2019, we intend to continue our share repurchase activity, and to pay quarterly
cash dividends, subject to Board discretion and approval.
A continued focus on our four operating priorities as discussed above, coupled with strong cash flow
management and share repurchases resulted in solid overall operating and financial performance in 2018 as
compared to 2017, as set forth below. Basis points, as referred to below, are equal to 0.01% as a percentage of net
sales.
•
•
•
•
•
•
•
•
•
Net sales in 2018 increased 9.2% over 2017. Sales in same-stores increased 3.2%, primarily due
to an increase in average transaction amount. Average sales per square foot in 2018 were $231
compared to $227 in 2017.
Our gross profit rate decreased by 32 basis points due primarily to higher markdowns, a greater
proportion of sales of consumables compared to non-consumables, and increased transportation
costs.
SG&A decreased by 1 basis point and was impacted by reduced repairs and maintenance
expenses offset by increases in occupancy costs and depreciation expenses.
Operating profit increased 5.4% to $2.12 billion in 2018 compared to $2.01 billion in 2017.
The increase in the effective income tax rate to 21.1% in 2018 from 19.3% in 2017 was due
primarily to the remeasurement of deferred tax assets and liabilities in 2017 related to tax
reform.
We reported net income of $1.59 billion, or $5.97 per diluted share, for 2018 compared to net
income of $1.54 billion, or $5.63 per diluted share, for 2017.
We generated approximately $2.14 billion of cash flows from operating activities in 2018, an
increase of 18.9% compared to 2017 as described in detail below. We primarily utilized our cash
flows from operating activities to invest in the growth of our business, repurchase our common
stock, and pay quarterly cash dividends.
Inventory turnover was 4.6 times on a rolling four-quarter basis. Inventories increased 7.3% on a
per store basis compared to 2017.
We repurchased approximately 9.9 million shares of our outstanding common stock for
$1.0 billion.
Readers should refer to the detailed discussion of our operating results below for additional comments on
financial performance in the current year as compared with the prior years presented.
2018 Form 10-K
27
Results of Operations
Accounting Periods. The following text contains references to years 2018, 2017, and 2016, which
represent fiscal years ended February 1, 2019, February 2, 2018, and February 3, 2017, respectively. Our fiscal
year ends on the Friday closest to January 31. Fiscal years 2018 and 2017 were 52-week accounting periods and
fiscal year 2016 was a 53-week accounting period.
Seasonality. The nature of our business is somewhat seasonal. Primarily because of sales of Christmas-
related merchandise, operating profit in our fourth quarter (November, December and January) has historically
been higher than operating profit achieved in each of the first three quarters of the fiscal year. Expenses, and to a
greater extent operating profit, vary by quarter. Results of a period shorter than a full year may not be indicative of
results expected for the entire year. Furthermore, the seasonal nature of our business may affect comparisons
between periods.
The following table contains results of operations data for fiscal years 2018, 2017 and 2016, and the
dollar and percentage variances among those years.
2018
3,050.3
(amounts in millions, except
per share amounts)
Net sales by category:
Consumables . . . . . . . . . . . . . . . . . . $ 19,865.1
% of net sales . . . . . . . . . . . . . . . . . .
Seasonal . . . . . . . . . . . . . . . . . . . . . .
% of net sales . . . . . . . . . . . . . . . . . .
Home products . . . . . . . . . . . . . . . . .
% of net sales . . . . . . . . . . . . . . . . . .
Apparel . . . . . . . . . . . . . . . . . . . . . .
% of net sales . . . . . . . . . . . . . . . . . .
Net sales . . . . . . . . . . . . . . . . . . . . . . $ 25,625.0
Cost of goods sold . . . . . . . . . . . . . .
17,821.2
% of net sales . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . .
% of net sales . . . . . . . . . . . . . . . . . .
Selling, general and administrative
1,506.1
7,803.9
1,203.6
5,687.6
2,116.3
expenses . . . . . . . . . . . . . . . . . . . .
% of net sales . . . . . . . . . . . . . . . . . .
Operating profit . . . . . . . . . . . . . . . .
% of net sales . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . .
% of net sales . . . . . . . . . . . . . . . . . .
Other (income) expense . . . . . . . . . .
% of net sales . . . . . . . . . . . . . . . . . .
Income before income taxes . . . . . .
% of net sales . . . . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . .
% of net sales . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . $ 1,589.5
% of net sales . . . . . . . . . . . . . . . . . .
Diluted earnings per share . . . . . . . . $
2,015.4
1.0
22.20 %
8.26 %
99.9
0.39 %
0.00 %
7.87 %
425.9
1.66 %
69.55 %
30.45 %
2018 vs. 2017
Amount %
2017 vs. 2016
Amount %
2017
2016
Change Change
Change
Change
$ 18,054.8
$ 16,798.9
$ 1,810.3
10.0 % $ 1,255.9
7.5 %
77.52 %
11.90 %
5.88 %
4.70 %
76.92 %
76.41 %
2,837.3
2,674.3
213.0
7.5
163.0
6.1
12.09 %
12.16 %
1,400.6
1,373.4
105.4
7.5
27.2
2.0
5.97 %
6.25 %
1,178.3
1,140.0
25.4
2.2
38.3
3.4
5.02 %
5.18 %
$ 23,471.0
16,249.6
$ 21,986.6
15,204.0
$ 2,154.1
1,571.6
9.2 % $ 1,484.4
1,045.6
9.7
6.8 %
6.9
69.23 %
69.15 %
7,221.4
6,782.6
582.5
8.1
438.7
6.5
30.77 %
30.85 %
5,213.5
4,719.2
474.0
9.1
494.4
10.5
22.21 %
21.46 %
2,007.8
2,063.4
108.5
5.4
(55.6)
(2.7)
8.55 %
97.0
0.41 %
3.5
9.39 %
97.8
0.44 %
2.8
2.9
(0.8)
(0.8)
—
(2.5)
—
3.5
—
0.01 %
0.00 %
1,907.3
1,965.6
108.1
5.7
(58.3)
(3.0)
8.13 %
8.94 %
714.5
57.6
15.6
(346.2)
(48.5)
368.3
1.57 %
$ 1,539.0
$ 1,251.1
3.25 %
$
5.69 %
$
4.43
6.20 %
$
5.97
6.56 %
$
5.63
50.5
3.3 % $ 287.8
23.0 %
0.34
6.0 % $
1.20
27.1 %
Net Sales. The net sales increase in 2018 reflects a same-store sales increase of 3.2% compared to 2017.
Same-stores include stores that have been open for at least 13 months and remain open at the end of the reporting
period. Changes in same-store sales are calculated based on the comparable calendar weeks in the prior year, and
include stores that have been remodeled, expanded or relocated. In 2018, our 14,283 same-stores accounted for
sales of $23.9 billion. The increase in same-store sales primarily reflects an increase in average transaction amount
28
2018 Form 10-K
relative to 2017. The increase in average transaction amount was driven by higher average item retail prices and to
a lesser extent, an increase in average items per transaction, while customer traffic was essentially unchanged.
Same-store sales in 2018 increased in the consumables, seasonal and home products categories, and declined in
the apparel category, compared to 2017. Same-store sales results in 2018 for the three non-consumables
categories, when aggregated, were positive. The 2018 net sales increase was positively affected by new stores,
modestly offset by sales from closed stores.
The net sales increase in 2017 reflects a same-store sales increase of 2.7% compared to 2016. In 2017,
our 13,150 same-stores accounted for sales of $21.9 billion. The increase in same-store sales was due to increases
in average transaction amount and customer traffic relative to 2016. Same-store sales in 2017 increased in the
consumables and seasonal categories, and declined in the home products and apparel categories, compared to
2016. Same-store sales results in 2017 for the three non-consumables categories, when aggregated, were positive.
Net sales for the 53rd week of 2016 totaled $398.7 million. The 2017 net sales increase was positively affected by
new stores, modestly offset by sales from closed stores.
Of our four major merchandise categories, the consumables category, which generally has a lower gross
profit rate than the other three categories, has grown most significantly over the past several years. Because of the
impact of sales mix on gross profit, we continually review our merchandise mix and strive to adjust it when
appropriate.
Gross Profit. For 2018, gross profit increased by 8.1%, and as a percentage of net sales decreased by
32 basis points to 30.5% compared to 2017. Higher markdowns, a greater proportion of sales of consumables,
which generally have a lower gross profit rate than our other product categories, and sales of lower margin
products comprising a higher proportion of consumables sales, as well as increases in transportation costs and an
increased LIFO provision reduced the gross profit rate. These factors were partially offset by an improved rate of
inventory shrinkage and higher initial markups on inventory purchases.
For 2017, gross profit increased by 6.5%, and as a percentage of net sales decreased by 8 basis points to
30.8% compared to 2016. A greater proportion of sales of consumables, which generally have a lower gross profit
rate than our other product categories, and sales of lower margin products comprising a higher proportion of
consumables sales, reduced the gross profit rate. Higher markdowns, which were primarily for promotional
activities, and increases in transportation costs also reduced the gross profit rate, and these factors were partially
offset by higher initial markups on inventory purchases and an improved rate of inventory shrinkage.
SG&A. SG&A as a percentage of sales decreased by 1 basis point, rounding to 22.2% in both 2018 and
2017. The 2018 amounts reflect a reduction in repairs and maintenance expenses which were offset by occupancy
costs and depreciation expenses, each of which increased at a rate greater than the increase in net sales. The 2018
amounts reflect an increase in hurricane and other disaster-related expenses of approximately $14.3 million
compared to 2017. The 2017 amounts include costs of $24.0 million related to the closure of 35 underperforming
stores, primarily expenses for remaining lease liabilities.
SG&A as a percentage of sales was 22.2% in 2017 compared to 21.5% in 2016, an increase of 75 basis
points. The 2017 amounts reflect increased retail labor expenses, which includes our investment in store manager
compensation, increased occupancy costs, and higher incentive compensation, each of which increased at a rate
greater than the increase in net sales. Partially offsetting these increased expenses were reduced advertising costs,
and costs that increased at a rate less than the increase in net sales, including utilities and waste management costs
primarily resulting from our recycling efforts. The 2017 amounts include costs related to the closure of
35 underperforming stores discussed above. The 2017 amounts also reflect an increase in hurricane and other
disaster-related expenses of approximately $18.0 million compared to 2016. SG&A as a percentage of sales was
favorably impacted in 2016 by increased sales including the 53rd week discussed above, among other factors.
Interest Expense. Interest expense increased $2.8 million to $99.9 million in 2018 compared to 2017
primarily due to higher average interest rates which was partially offset by a decrease in average debt outstanding.
2018 Form 10-K
29
Interest expense decreased $0.8 million to $97.0 million in 2017 compared to 2016. See the detailed discussion
under “Liquidity and Capital Resources” regarding the financing of various long-term obligations.
We had consolidated outstanding variable-rate debt of $373.3 million and $612.5 million as of
February 1, 2019 and February 2, 2018, respectively, and the remainder of our outstanding indebtedness as of
each of those dates was fixed rate debt.
Other (income) expense. Other (income) expense in 2018 reflects expenses associated with the voluntary
prepayment of our senior unsecured term loan facility, and in 2017 reflects expenses associated with the issuance
and refinancing of long-term debt.
Income Taxes. The effective income tax rates for 2018, 2017, and 2016 were expenses of 21.1%, 19.3%,
and 36.3%, respectively.
Under accounting standards for income taxes, the impact of new tax legislation must be taken into
account in the period in which the new legislation is enacted, including the remeasurement of deferred tax assets
and liabilities at the tax rates at which such items are expected to reverse in future periods. Subsequent to the
signing of the Tax Cuts and Jobs Act (the “Act”), the Securities and Exchange Commission staff issued Staff
Accounting Bulletin No. 118 (“SAB 118”), which allows companies to record provisional amounts during a
measurement period not to extend beyond one year after the enactment date while the accounting impact is still
under analysis. Our 2017 provision for income taxes reflected such estimates due to the changes in income tax
law, including a provisional tax benefit of $335 million. The provisional tax benefit consisted of $310.8 million
related to the one-time remeasurement of the federal portion of our deferred tax assets and liabilities at the
21% rate and $24.2 million related to the reduced statutory tax rate of 33.7%, compared to 35% in prior years. We
concluded our analysis of the accounting impact of the Act pursuant to SAB 118 and recorded immaterial
adjustments related to our 2017 provision for income taxes in 2018.
The effective income tax rate for 2018 was 21.1% compared to a rate of 19.3% for 2017 which represents
a net increase of 1.8 percentage points. The effective income tax rate was higher in 2018 primarily due to the one-
time remeasurement of the deferred tax assets and liabilities at 21% in 2017, which was offset by the reduction in
the current federal tax rate from 33.7% in 2017 to 21% in 2018.
The effective income tax rate for 2017 was 19.3% compared to a rate of 36.3% for 2016 which represents
a net decrease of 17.0 percentage points. The effective income tax rate was lower in 2017 primarily due to the
one-time remeasurement of the federal portions of our deferred tax assets and liabilities at 21%, accompanied by
the changes in the federal income tax laws pursuant to the Act that lowered our statutory federal tax rate to 33.7%
for the 2017 fiscal year, compared to 35% in 2016.
Off Balance Sheet Arrangements
We are not party to any material off balance sheet arrangements.
Effects of Inflation
In 2018, we experienced increases in certain product costs due in part to tariffs on certain items imported
from China. We experienced minimal overall commodity cost inflation or deflation in 2017. In 2016, we
experienced product cost deflation reflecting reductions in commodity costs primarily related to food products.
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2018 Form 10-K
Liquidity and Capital Resources
Current Financial Condition and Recent Developments
During the past three years, we have generated an aggregate of approximately $5.6 billion in cash flows
from operating activities and incurred approximately $1.9 billion in capital expenditures. During that period, we
expanded the number of stores we operate by 2,887, representing growth of approximately 23%, and we
remodeled or relocated 2,835 stores, or approximately 23% of the stores we operated as of the beginning of the
period. In 2019, we intend to continue our current strategy of pursuing store growth, remodels and relocations.
At February 1, 2019, we had a $1.25 billion unsecured revolving credit agreement (the “Revolving
Facility”), $2.5 billion aggregate principal amount of senior notes, and a commercial paper program that may
provide borrowing availability of up to $1.0 billion. At February 1, 2019, we had total consolidated outstanding
debt (including the current portion of long-term obligations) of $2.9 billion, which includes commercial paper
borrowings (“CP Notes”) and senior notes, all of which are described in greater detail below. Our borrowing
availability under the Revolving Facility may be effectively limited by our CP Notes as further described below.
The information contained in Note 4 to the consolidated financial statements contained in Part II, Item 8 of this
report is incorporated herein by reference.
We believe our cash flow from operations, and our existing cash balances, combined with availability
under the Revolving Facility, CP Notes and access to the debt markets, will provide sufficient liquidity to fund our
current obligations, projected working capital requirements, capital spending and anticipated dividend payments
for a period that includes the next twelve months as well as the next several years. However, our ability to
maintain sufficient liquidity may be affected by numerous factors, many of which are outside of our control.
Depending on our liquidity levels, conditions in the capital markets and other factors, we may from time to time
consider the issuance of debt, equity or other securities, the proceeds of which could provide additional liquidity
for our operations.
For fiscal 2019, we anticipate potential combined borrowings under the Revolving Facility and CP Notes
to be a maximum of approximately $800 million outstanding at any one time, including any anticipated
borrowings to fund repurchases of common stock.
Revolving Credit Facility
On February 22, 2017, we entered into the Revolving Facility of which up to $175.0 million is available
for the issuance of letters of credit and which is scheduled to mature on February 22, 2022.
Borrowings under the Revolving Facility bear interest at a rate equal to an applicable interest rate margin
plus, at our option, either (a) LIBOR or (b) a base rate (which is usually equal to the prime rate). The applicable
interest rate margin for borrowings as of February 1, 2019 was 1.10% for LIBOR borrowings and 0.10% for base-
rate borrowings. We must also pay a facility fee, payable on any used and unused commitment amounts of the
Revolving Facility, and customary fees on letters of credit issued under the Revolving Facility. As of
February 1, 2019, the commitment fee rate was 0.15%. The applicable interest rate margins for borrowings, the
facility fees and the letter of credit fees under the Revolving Facility are subject to adjustment from time to time
based on our long-term senior unsecured debt ratings.
The Revolving Facility contains a number of customary affirmative and negative covenants that, among
other things, restrict, subject to certain exceptions, our (including our subsidiaries’) ability to: incur additional
liens; sell all or substantially all of our assets; consummate certain fundamental changes or change in our lines of
business; and incur additional subsidiary indebtedness. The Revolving Facility also contains financial covenants
that require the maintenance of a minimum fixed charge coverage ratio and a maximum leverage ratio. As of
February 1, 2019, we were in compliance with all such covenants. The Revolving Facility also contains
customary events of default.
2018 Form 10-K
31
As of February 1, 2019, under the Revolving Facility, we had no outstanding borrowings, outstanding
letters of credit of $7.6 million, and borrowing availability of $1.2 billion that, due to our intention to maintain
borrowing availability related to the commercial paper program described below, could contribute incremental
liquidity of $689.5 million at February 1, 2019. In addition, as of February 1, 2019 we had outstanding letters of
credit of $32.9 million which were issued pursuant to separate agreements.
Commercial Paper
As of February 1, 2019, our consolidated balance sheet reflected outstanding unsecured CP Notes of
$366.9 million classified as long-term obligations due to our intent and ability to refinance these obligations as
long-term debt. An additional $186.0 million of outstanding CP Notes were held by a wholly-owned subsidiary
and are therefore not reflected on the consolidated balance sheet. Under this program, we may issue the CP Notes
from time to time in an aggregate amount not to exceed $1.0 billion outstanding at any time. The CP Notes may
have maturities of up to 364 days from the date of issue and rank equal in right of payment with all of our other
unsecured and unsubordinated indebtedness. We intend to maintain available commitments under the Revolving
Facility in an amount at least equal to the amount of CP Notes outstanding at any time. As of February 1, 2019,
the consolidated outstanding CP Notes had a weighted average borrowing rate of 2.7%.
Senior Notes
In April 2013 we issued $900.0 million aggregate principal amount of 3.25% senior notes due 2023 (the
“2023 Senior Notes”) at a discount of $2.4 million, which are scheduled to mature on April 15, 2023. In October
2015 we issued $500.0 million aggregate principal amount of 4.150% senior notes due 2025 (the “2025 Senior
Notes”) at a discount of $0.8 million, which are scheduled to mature on November 1, 2025. In April 2017 we
issued $600.0 million aggregate principal amount of 3.875% senior notes due 2027 (the “2027 Senior Notes”) at a
discount of $0.4 million, which are scheduled to mature on April 15, 2027. In April 2018 we issued $500.0 million
aggregate principal amount of 4.125% senior notes due 2028 (the “2028 Senior Notes”) at a discount of
$0.5 million, which are scheduled to mature on May 1, 2028. Collectively, the 2023 Senior Notes, 2025 Senior
Notes, 2027 Senior Notes and 2028 Senior Notes comprise the “Senior Notes”, each of which were issued
pursuant to an indenture as supplemented and amended by supplemental indentures relating to each series of
Senior Notes (as so supplemented and amended, the “Senior Indenture”). Interest on the 2023 Senior Notes and
the 2027 Senior Notes is payable in cash on April 15 and October 15 of each year. Interest on the 2025 and 2028
Senior Notes is payable in cash on May 1 and November 1 of each year. Interest payments on the 2028 Senior
Notes commenced on November 1, 2018.
We may redeem some or all of the Senior Notes at any time at redemption prices set forth in the Senior
Indenture. Upon the occurrence of a change of control triggering event, which is defined in the Senior Indenture,
each holder of our Senior Notes has the right to require us to repurchase some or all of such holder’s Senior Notes
at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any,
to, but excluding, the repurchase date.
The Senior Indenture contains covenants limiting, among other things, our ability (subject to certain
exceptions) to consolidate, merge, or sell or otherwise dispose of all or substantially all of our assets; and our
ability and the ability of our subsidiaries to incur or guarantee indebtedness secured by liens on any shares of
voting stock of significant subsidiaries.
The Senior Indenture also provides for events of default which, if any of them occurs, would permit or
require the principal of and accrued interest on our Senior Notes to become or to be declared due and payable, as
applicable.
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2018 Form 10-K
Rating Agencies
Our senior unsecured debt is rated “Baa2,” by Moody’s with a stable outlook and “BBB” by Standard &
Poor’s with a stable outlook, and our commercial paper program is rated “P-2” by Moody’s and “A-2” by
Standard and Poor’s. Our current credit ratings, as well as future rating agency actions, could (i) impact our ability
to finance our operations on satisfactory terms; (ii) affect our financing costs; and (iii) affect our insurance
premiums and collateral requirements necessary for our self-insured programs. There can be no assurance that we
will maintain or improve our current credit ratings.
Contractual Obligations
The following table summarizes our significant contractual obligations and commercial commitments as
of February 1, 2019 (in thousands):
Payments Due by Period
Total
Contractual obligations
Long-term debt obligations . . . . . . . . . . $ 2,873,260 $ 367,425 $
Capital lease obligations . . . . . . . . . . . .
Interest(a) . . . . . . . . . . . . . . . . . . . . . . . .
Self-insurance liabilities(b) . . . . . . . . . .
Operating lease obligations(c). . . . . . . .
1,135 $ 901,245 $ 1,603,455
4,852
1,964
2,736
199,511
165,256
188,700
15,362
30,090
84,780
4,518,502
1,933,113
2,209,060
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . $ 13,626,298 $ 1,766,537 $ 2,486,411 $ 3,031,668 $ 6,341,682
1,425
104,549
107,530
1,185,608
10,977
658,016
237,762
9,846,283
3 - 5 years
5+ years
1 - 3 years
< 1 year
Commercial commitments(d)
Letters of credit . . . . . . . . . . . . . . . . . . . $
Purchase obligations(e) . . . . . . . . . . . . .
Total
11,642 $
11,642 $
1,006,783
1,006,783
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . $ 1,018,425 $ 1,018,425 $
— $
—
— $
— $
—
— $
—
—
—
Commitments Expiring by Period
< 1 year
1 - 3 years
3 - 5 years
5+ years
Total contractual obligations and
commercial commitments(f) . . . . . . . . . . . . . . $ 14,644,723 $ 2,784,962 $ 2,486,411 $ 3,031,668 $ 6,341,682
(a) Represents obligations for interest payments on long-term debt and capital lease obligations, and includes
projected interest on variable rate long-term debt, using 2018 year end rates and balances. Variable rate long-
term debt includes the Revolving Facility (although such facility had a balance of zero as of February
1, 2019), the CP Notes (which had a balance of $366.9 million as of February 1, 2019, which amount is net of
$186 million held by a wholly-owned subsidiary), and the balance of an outstanding tax increment financing
of $6.4 million.
(b) We retain a significant portion of the risk for our workers’ compensation, employee health, general liability,
property loss, automobile, and third-party landlord claims exposures. As these obligations do not have
scheduled maturities, these amounts represent undiscounted estimates based upon actuarial assumptions.
Substantially all amounts are reflected on an undiscounted basis in our consolidated balance sheets.
(c) Operating lease obligations are inclusive of amounts included in deferred rent in our consolidated balance
sheets.
(d) Commercial commitments include information technology license and support agreements, supplies, fixtures,
letters of credit for import merchandise, and other inventory purchase obligations.
(e) Purchase obligations include legally binding agreements for software licenses and support, supplies, fixtures,
and merchandise purchases (excluding such purchases subject to letters of credit).
2018 Form 10-K
33
(f) We have potential payment obligations associated with uncertain tax positions that are not reflected in these
totals. We are currently unable to make reasonably reliable estimates of the period of cash settlement with the
taxing authorities for the $6.7 million of reserves for uncertain tax positions.
Share Repurchase Program
Our existing common stock repurchase program had a total remaining authorization of approximately
$346 million at February 1, 2019. Our Board of Directors increased by $1.0 billion the authorization available
under this common stock repurchase program on March 13, 2019. Under the authorization, purchases may be
made in the open market or in privately negotiated transactions from time to time subject to market and other
conditions. The authorization has no expiration date and may be modified or terminated from time to time at the
discretion of our Board of Directors. For more detail about our share repurchase program, see Note 10 to the
consolidated financial statements.
Other Considerations
On March 13, 2019, the Board of Directors declared a quarterly cash dividend of $0.32 per share which
is payable on or before April 23, 2019 to shareholders of record of our common stock on April 9, 2019. We paid
quarterly cash dividends of $0.29 per share in 2018. Although the Board currently expects to continue regular
quarterly cash dividends, the declaration and amount of future cash dividends are subject to the Board’s sole
discretion and will depend upon, among other factors, our results of operations, cash requirements, financial
condition, contractual restrictions and other factors that our Board may deem relevant in its sole discretion.
Our inventory balance represented approximately 53% of our total assets exclusive of goodwill and other
intangible assets as of February 1, 2019. Our ability to effectively manage our inventory balances can have a
significant impact on our cash flows from operations during a given fiscal year. Inventory purchases are often
somewhat seasonal in nature, such as the purchase of warm-weather or Christmas-related merchandise. Efficient
management of our inventory has been and continues to be an area of focus for us.
As described in Note 6 to the consolidated financial statements, we are involved in a number of legal
actions and claims, some of which could potentially result in material cash payments. Adverse developments in
those actions could materially and adversely affect our liquidity.
Cash Flows
Cash flows from operating activities. Cash flows from operating activities were $2.1 billion in 2018,
which represents a $341.4 million increase compared to 2017. Changes in accounts payable resulted in a
$375.2 million increase in 2018 compared to a $427.9 million increase in 2017, due primarily to the timing of
receipts and payments which was partially impacted by certain changes in payment terms. In addition, net income
increased by $50.5 million in 2018 over 2017. These items were offset by changes in merchandise inventories
which resulted in a $521.3 million decrease in 2018 as compared to a decrease of $348.4 million in 2017. Changes
in income taxes in 2018 compared to 2017 are primarily due to the reduction in the federal income tax rate to 21%
from 35% and the timing of payments for income taxes.
Cash flows from operating activities were $1.8 billion in 2017, which represents a $197.1 million
increase compared to 2016. Net income increased by $287.8 million in 2017 over 2016, offset by changes in
merchandise inventories which resulted in a $348.4 million decrease in 2017 as compared to a decrease of
$171.9 million in 2016. Changes in accounts payable resulted in a $427.9 million increase in 2017 compared to a
$56.5 million increase in 2016, due primarily to the timing of receipts and payments which was partially impacted
by certain changes in payment terms.
On an ongoing basis, we closely monitor and manage our inventory balances, and they may fluctuate
from period to period based on new store openings, the timing of purchases, and other factors. Merchandise
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2018 Form 10-K
inventories increased by 14% in 2018, by 11% in 2017 and by 6% in 2016. Inventory levels in the consumables
category increased by $320.9 million, or 14%, in 2018, by $322.9 million, or 16%, in 2017, and by $54.5 million,
or 3% in 2016. The seasonal category increased by $108.4 million, or 17%, in 2018, by $14.9 million, or 2%, in
2017, and by $79.5 million, or 15%, in 2016. The home products category increased by $24.0 million, or 7%, in
2018, by $10.6 million, or 3%, in 2017, and by $40.8 million, or 14%, in 2016. The apparel category increased by
$34.7 million, or 10%, in 2018, by $1.9 million, or 1%, in 2017, and by $9.9 million, or 3%, in 2016.
Cash flows from investing activities. Significant components of property and equipment purchases in
2018 included the following approximate amounts: $289 million for improvements, upgrades, remodels and
relocations of existing stores; $242 million for distribution and transportation-related projects; $138 million for
new leased stores, primarily for leasehold improvements, fixtures and equipment; and $47 million for information
systems upgrades and technology-related projects. The timing of new, remodeled and relocated store openings
along with other factors may affect the relationship between such openings and the related property and equipment
purchases in any given period. During 2018, we opened 900 new stores and remodeled or relocated 1,165 stores.
Significant components of property and equipment purchases in 2017 included the following
approximate amounts: $231 million for improvements, upgrades, remodels and relocations of existing stores;
$203 million for new leased stores, primarily for leasehold improvements, fixtures and equipment; $176 million
for distribution and transportation-related projects; and $30 million for information systems upgrades and
technology-related projects. During 2017, we opened 1,315 new stores and remodeled or relocated 764 stores.
Significant components of property and equipment purchases in 2016 included the following
approximate amounts: $201 million for distribution and transportation-related projects; $168 million for
improvements, upgrades, remodels and relocations of existing stores; $120 million for new leased stores,
primarily for leasehold improvements, fixtures and equipment; $38 million for stores purchased or built by us; and
$26 million for information systems upgrades and technology-related projects. During 2016, we opened 900 new
stores and remodeled or relocated 906 stores.
Capital expenditures during 2019 are projected to be in the range of $775 million to $825 million. We
anticipate funding 2019 capital requirements with a combination of some or all of the following: existing cash
balances, cash flows from operations, availability under our Revolving Facility and/or the issuance of additional
senior notes or CP Notes. We plan to continue to invest in store growth and development of approximately 975
new stores and approximately 1,100 stores to be remodeled or relocated. Capital expenditures in 2019 are
anticipated to support our store growth as well as our remodel and relocation initiatives, including capital outlays
for leasehold improvements, fixtures and equipment; the construction of new stores; costs to support and enhance
our supply chain initiatives including new and existing distribution center facilities and our private fleet;
technology initiatives; as well as routine and ongoing capital requirements.
Cash flows from financing activities. In 2018, we had net proceeds from the issuance of the 2028 Senior
Notes of $499.5 million, redeemed the 2018 Senior Notes for $400.0 million, and made a principal payment on the
Term Facility of $175.0 million. We had a net decrease in consolidated commercial paper borrowings in 2018 of
$63.3 million and had no borrowings or repayments under the Revolving Facility. We repurchased 9.9 million
outstanding shares of our common stock in 2018 at a total cost of $1.0 billion, and paid cash dividends of
$306.5 million.
In 2017, we had net proceeds from the issuance of the 2027 Senior Notes of $599.6 million, redeemed
the 2017 Senior Notes for $500.0 million, and made a principal payment on the Term Facility of $250.0 million.
We had a net decrease in consolidated commercial paper borrowings in 2017 of $60.3 million and had no
borrowings or repayments under the Revolving Facility. We repurchased 7.1 million outstanding shares of our
common stock in 2017 at a total cost of $579.7 million, and paid cash dividends of $282.9 million.
2018 Form 10-K
35
In 2016, we had net commercial paper borrowings of $490.5 million and net repayments under the
Revolving Facility of $251.0 million. We repurchased 12.4 million outstanding shares of our common stock at a
total cost of $1.0 billion, and paid cash dividends of $281.1 million.
Accounting Standards
In February 2016, the FASB issued new guidance related to lease accounting, which requires a dual
approach for lessee accounting under which a lessee will account for leases as finance leases or operating leases.
Both finance leases and operating leases will result in the lessee recognizing a right-of-use asset and a
corresponding lease liability on its balance sheet, with differing methodology for income statement recognition.
This guidance is effective for public business entities for fiscal years, and interim periods within those years,
beginning after December 15, 2018, and early adoption is permitted. In July 2018, the FASB issued additional
guidance which allows companies to record the cumulative effect of applying the new standard as an adjustment
to the opening balance of retained earnings in the year of adoption, which we will apply. We formed a project
team to assess and implement the standard and an executive steering committee to provide oversight. The project
team has completed its internal evaluation of existing contractual arrangements for embedded leases, has
successfully tested computations in our lease administration system, and has developed a process to compute the
rates to discount the lease liabilities as required by the standard. In addition, the project team has identified and
implemented new processes and controls to ensure compliance with the new standard, and has evaluated and
documented our accounting conclusions related to the new standard. We will utilize transition practical expedients
under which we will not be required to reassess (i) whether expired or existing contracts are or contain leases as
defined by the new standard, (ii) the classification of such leases, and (iii) whether previously capitalized initial
direct costs would qualify for capitalization under the new standard. We have identified our store leases as the
area in which we will be most affected by the new guidance, and the most significant impact that adoption will
have on our consolidated financial statements is to our consolidated balance sheet. We expect to record
consolidated right of use assets and consolidated lease liabilities of approximately $8.0 billion each upon
transition to the new guidance.
In January 2017, the FASB issued amendments to existing guidance related to the subsequent
measurement of goodwill. These amendments modify the concept of impairment from the condition that exists
when the carrying amount of goodwill exceeds its implied fair value to the condition that exists when the carrying
amount of a reporting unit exceeds its fair value. Subsequent to adoption, an entity will perform its annual, or
interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and
recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair
value. This guidance is effective for public business entities for fiscal years, and interim periods within those
years, beginning after December 15, 2019, and early adoption is permitted for interim or annual goodwill
impairment tests performed on testing dates after January 1, 2017. The amendments should be applied on a
prospective basis. An entity is required to disclose the nature of and reason for the change in accounting principle
upon transition. We currently do not anticipate a material effect on our consolidated results of operations,
financial position or cash flows to result from the adoption of this guidance.
Critical Accounting Policies and Estimates
The preparation of financial statements in accordance with generally accepted accounting principles in
the United States (“U.S. GAAP”) requires management to make estimates and assumptions that affect reported
amounts and related disclosures. In addition to the estimates presented below, there are other items within our
financial statements that require estimation, but are not deemed critical as defined below. We believe these
estimates are reasonable and appropriate. However, if actual experience differs from the assumptions and other
considerations used, the resulting changes could have a material effect on the financial statements taken as a
whole.
Management believes the following policies and estimates are critical because they involve significant
judgments, assumptions, and estimates. Management has discussed the development and selection of the critical
36
2018 Form 10-K
accounting estimates with the Audit Committee of our Board of Directors, and the Audit Committee has reviewed
the disclosures presented below relating to those policies and estimates. See Note 1 to the consolidated financial
statements for a detailed discussion of our principal accounting policies.
Merchandise Inventories. Merchandise inventories are stated at the lower of cost or market (“LCM”)
with cost determined using the retail last in, first out (“LIFO”) method. We use the retail inventory method
(“RIM”) to calculate gross profit and the resulting valuation of inventories at cost, which are computed utilizing a
calculated cost-to-retail inventory ratio at an inventory department level. We apply the RIM to these departments,
which are groups of products that are fairly uniform in terms of cost, selling price relationship and turnover. The
RIM will result in valuing inventories at LCM if permanent markdowns are currently taken as a reduction of the
retail value of inventories. Inherent in the retail inventory method calculation are certain management judgments
and estimates that may impact the ending inventory valuation at cost, as well as the gross profit recognized. These
judgments include ensuring departments consist of similar products, recording estimated shrinkage between
physical inventories, and timely recording of markdowns needed to sell inventory.
We perform an annual LIFO analysis whereby all merchandise units are considered for inclusion in the
index formulation. An actual valuation of inventory under the LIFO method is made at the end of each year based
on the inventory levels and costs at that time. In contrast, interim LIFO calculations are based on management’s
annual estimates of sales, the rate of inflation or deflation, and year-end inventory levels. We also perform
analyses for determining obsolete inventory, adjusting inventory on a quarterly basis to an LCM value based on
various management assumptions including estimated below cost markdowns not yet recorded, but required to
liquidate such inventory in future periods.
Factors considered in the determination of markdowns include current and anticipated demand based on
changes in competitors’ practices, consumer preferences, consumer spending, significant weather events and
unseasonable weather patterns. Certain of these factors are outside of our control and may result in greater than
estimated markdowns to entice consumer purchases of excess inventory. The amount and timing of markdowns
may vary significantly from year to year.
We perform physical inventories in virtually all of our stores on an annual basis. We calculate our shrink
provision based on actual physical inventory results during the fiscal period and an accrual for estimated shrink
occurring subsequent to a physical inventory through the end of the fiscal reporting period. This accrual is
calculated as a percentage of sales at each retail store, at a department level, based on the store’s most recent
historical shrink rate. To the extent that subsequent physical inventories yield different results than the estimated
accrual, our effective shrink rate for a given reporting period will include the impact of adjusting to the actual
results.
We believe our estimates and assumptions related to the application of the RIM results in a merchandise
inventory valuation that reasonably approximates cost on a consistent basis.
Goodwill and Other Intangible Assets. The qualitative and quantitative assessments related to the
valuation and any potential impairment of goodwill and other intangible assets are each subject to judgments
and/or assumptions. The analysis of qualitative factors may include determining the appropriate factors to
consider and the relative importance of those factors along with other assumptions. If required, judgments in the
quantitative testing process may include projecting future cash flows, determining appropriate discount rates,
correctly applying valuation techniques, correctly computing the implied fair value of goodwill if necessary, and
other assumptions. Future cash flow projections are based on management’s projections and represent best
estimates taking into account recent financial performance, market trends, strategic plans and other available
information, which in recent years have been materially accurate. Changes in these estimates and assumptions
could materially affect the determination of fair value or impairment, however, such a conclusion is not indicated
by recent analyses. Future indicators of impairment could result in an asset impairment charge. If these judgments
or assumptions are incorrect or flawed, the analysis could be negatively impacted.
2018 Form 10-K
37
Our most recent evaluation of our goodwill and indefinite lived trade name intangible assets was
completed during the third quarter of 2018. No indicators of impairment were evident and no assessment of or
adjustment to these assets was required. We are not currently projecting a decline in cash flows that could be
expected to have an adverse effect such as a violation of debt covenants or future impairment charges.
Property and Equipment. Property and equipment are recorded at cost. We group our assets into
relatively homogeneous classes and generally provide for depreciation on a straight-line basis over the estimated
average useful life of each asset class, except for leasehold improvements, which are amortized over the lesser of
the applicable lease term or the estimated useful life of the asset. Certain store and warehouse fixtures, when fully
depreciated, are removed from the cost and related accumulated depreciation and amortization accounts. The
valuation and classification of these assets and the assignment of depreciable lives involves judgments and the use
of estimates, which we believe have been materially accurate in recent years.
Impairment of Long-lived Assets. Impairment of long-lived assets results when the carrying value of the
assets exceeds the estimated undiscounted future cash flows generated by the assets. Our estimate of undiscounted
future store cash flows is based upon historical operations of the stores and estimates of future profitability which
encompasses many factors that are subject to variability and are difficult to predict. If our estimates of future cash
flows are not materially accurate, our impairment analysis could be impacted accordingly. If a long-lived asset is
found to be impaired, the amount recognized for impairment is equal to the difference between the carrying value
and the asset’s estimated fair value. The fair value is estimated based primarily upon projected future cash flows
(discounted at our credit adjusted risk-free rate) or other reasonable estimates of fair market value. Although not
currently anticipated, changes in these estimates, assumptions or projections could materially affect the
determination of fair value or impairment.
Insurance Liabilities. We retain a significant portion of the risk for our workers’ compensation, employee
health, general liability, property loss, automobile and third-party landlord claim exposures. These represent
significant costs primarily due to our large employee base and number of stores. Provisions are made for these
liabilities on an undiscounted basis. Certain of these liabilities are based on actual claim data and estimates of
incurred but not reported claims developed using actuarial methodologies based on historical claim trends, which
have been and are anticipated to continue to be materially accurate. If future claim trends deviate from recent
historical patterns, or other unanticipated events affect the number and significance of future claims, we may be
required to record additional expenses or expense reductions, which could be material to our future financial
results.
Contingent Liabilities – Income Taxes. Income tax reserves are determined using the methodology
established by accounting standards relating to uncertainty in income taxes. These standards require companies to
assess each income tax position taken using a two-step process. A determination is first made as to whether it is
more likely than not that the position will be sustained, based upon the technical merits, upon examination by the
taxing authorities. If the tax position is expected to meet the more likely than not criteria, the benefit recorded for
the tax position equals the largest amount that is greater than 50% likely to be realized upon ultimate settlement of
the respective tax position. Uncertain tax positions require determinations and liabilities to be estimated based on
provisions of the tax law which may be subject to change or varying interpretation. If our determinations and
estimates prove to be inaccurate, the resulting adjustments could be material to our future financial results.
Contingent Liabilities - Legal Matters. We are subject to legal, regulatory and other proceedings and
claims. We establish liabilities as appropriate for these claims and proceedings based upon the probability and
estimability of losses and to fairly present, in conjunction with the disclosures of these matters in our financial
statements and SEC filings, management’s view of our exposure. We review outstanding claims and proceedings
with external counsel, as needed, to assess probability and estimates of loss, which includes an analysis of whether
such loss estimates are probable, reasonably possible, or remote. We re-evaluate these assessments on a quarterly
basis or as new and significant information becomes available to determine whether a liability should be
established or if any existing liability should be adjusted. The actual cost of resolving a claim or proceeding
ultimately may be substantially different than the amount of the recorded liability. In addition, because it is not
38
2018 Form 10-K
permissible under U.S. GAAP to establish a litigation liability until the loss is both probable and estimable, in
some cases there may be insufficient time to establish a liability prior to the actual incurrence of the loss (upon
verdict and judgment at trial, for example, or in the case of a quickly negotiated settlement).
Lease Accounting and Excess Facilities. Many of our stores are subject to build-to-suit arrangements
with landlords, which typically carry a primary lease term of up to 15 years with multiple renewal options. We
also have stores subject to shorter-term leases and many of these leases have renewal options. Certain of our stores
have provisions for contingent rentals based upon a percentage of defined sales volume. We recognize contingent
rental expense when the achievement of specified sales targets is considered probable. We record minimum rental
expense on a straight-line basis over the base, non-cancelable lease term commencing on the date that we take
physical possession of the property from the landlord, which normally includes a period prior to store opening to
make necessary leasehold improvements and install store fixtures. When a lease contains a predetermined fixed
escalation of the minimum rent, we recognize the related rent expense on a straight-line basis and record the
difference between the recognized rental expense and the amounts payable under the lease as deferred rent. Tenant
allowances, to the extent received, are recorded as deferred incentive rent and amortized as a reduction to rent
expense over the term of the lease. We reflect as a liability any difference between the calculated expense and the
amounts actually paid. Improvements of leased properties are amortized over the shorter of the life of the
applicable lease term or the estimated useful life of the asset.
Share-Based Payments. Our stock option awards are valued on an individual grant basis using the Black-
Scholes-Merton closed form option pricing model. We believe that this model fairly estimates the value of our
stock option awards. The application of this valuation model involves assumptions that are judgmental in the
valuation of stock options, which affects compensation expense related to these options. These assumptions
include the term that the options are expected to be outstanding, the historical volatility of our stock price,
applicable interest rates and the dividend yield of our stock. Other factors involving judgments that affect the
expensing of share-based payments include estimated forfeiture rates of share-based awards. Historically, these
estimates have been materially accurate; however, if our estimates differ materially from actual experience, we
may be required to record additional expense or reductions of expense, which could be material to our future
financial results.
Fair Value Measurements. Accounting standards for the measurement of fair value of assets and
liabilities establish a fair value hierarchy that distinguishes between market participant assumptions based on
market data obtained from sources independent of the reporting entity (observable inputs that are classified within
Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions
(unobservable inputs classified within Level 3 of the hierarchy). Therefore, Level 3 inputs are typically based on
an entity’s own assumptions, as there is little, if any, related market activity, and thus require the use of significant
judgment and estimates. Currently, we have no assets or liabilities that are valued based solely on Level 3 inputs.
Our fair value measurements are primarily associated with our outstanding debt instruments. We use
various valuation models in determining the values of these liabilities. We believe that in recent years these
methodologies have produced materially accurate valuations.
2018 Form 10-K
39
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Financial Risk Management
We are exposed to market risk primarily from adverse changes in interest rates, and to a lesser degree
commodity prices. To minimize this risk, we may periodically use financial instruments, including derivatives. All
derivative financial instrument transactions must be authorized and executed pursuant to approval by the Board of
Directors. As a matter of policy, we do not buy or sell financial instruments for speculative or trading purposes,
and any such derivative financial instruments are intended to be used to reduce risk by hedging an underlying
economic exposure. Our objective is to correlate derivative financial instruments and the underlying exposure
being hedged, so that fluctuations in the value of the financial instruments are generally offset by reciprocal
changes in the value of the underlying economic exposure.
Interest Rate Risk
We manage our interest rate risk through the strategic use of fixed and variable interest rate debt and,
from time to time, derivative financial instruments. Our principal interest rate exposure relates to outstanding
amounts under our unsecured revolving credit facility as well as our commercial paper program. As of
February 1, 2019, we had consolidated borrowings of $366.9 million under our commercial paper program and no
borrowings outstanding under our Revolving Facility. In order to mitigate a portion of the variable rate interest
exposure under the credit facilities, in prior years we have entered into various interest rate swaps. As of
February 1, 2019, no such interest rate swaps were outstanding and, as a result, we are exposed to fluctuations in
variable interest rates under the Revolving Facility and our commercial paper program. For a detailed discussion
of our Revolving Facility and our commercial paper program, see Note 4 to the consolidated financial statements.
A change in interest rates on variable rate debt impacts our pre-tax earnings and cash flows; whereas a
change in interest rates on fixed rate debt impacts the economic fair value of debt but not our pre-tax earnings and
cash flows. Based on our variable rate borrowing levels as of February 1, 2019 and February 2, 2018, the
annualized effect of a one percentage point increase in variable interest rates would have resulted in a pretax
reduction of our earnings and cash flows of approximately $3.7 million in 2018 and $6.1 million in 2017.
40
2018 Form 10-K
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of
Dollar General Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Dollar General Corporation and
subsidiaries (the Company) as of February 1, 2019 and February 2, 2018, the related consolidated statements of
income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period
ended February 1, 2019, and the related notes (collectively referred to as the “consolidated financial statements”).
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position
of the Company at February 1, 2019 and February 2, 2018, and the results of its operations and its cash flows for
each of the three years in the period ended February 1, 2019, in conformity with U.S. generally accepted
accounting principles.
We also have 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 February 1, 2019,
based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework), and our report dated March 22, 2019, expressed
an unqualified opinion thereon.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on the Company’s consolidated 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.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2001.
Nashville, Tennessee
March 22, 2019
2018 Form 10-K
41
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
February 1,
February 2,
2019
2018
ASSETS
Current assets:
235,487 $
267,441
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
3,609,025
Merchandise inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
108,265
Income taxes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
263,121
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,247,852
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,701,282
Net property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,338,589
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,200,428
Other intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28,760
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 13,204,038 $ 12,516,911
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
4,097,004
57,804
272,725
4,663,020
2,970,806
4,338,589
1,200,217
31,406
Current portion of long-term obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commitments and contingencies
Shareholders’ equity:
1,950 $
2,385,469
618,405
10,033
3,015,857
2,862,740
609,687
298,361
401,345
2,009,771
549,658
4,104
2,964,878
2,604,613
515,702
305,944
—
—
Preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock; $0.875 par value, 1,000,000 shares authorized, 259,511 and
268,733 shares issued and outstanding at February 1, 2019 and February 2,
2018, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
235,141
3,196,462
2,698,352
(4,181)
6,125,774
Total liabilities and shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 13,204,038 $ 12,516,911
227,072
3,252,421
2,941,107
(3,207)
6,417,393
The accompanying notes are an integral part of the consolidated financial statements.
42
2018 Form 10-K
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
February 1,
For the Year Ended
February 2,
February 3,
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses . . . . . . . . . . . . . . . . .
Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other (income) expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Earnings per share:
2019
2017
2018
$ 25,625,043 $ 23,470,967 $ 21,986,598
15,203,960
16,249,608
17,821,173
6,782,638
7,221,359
7,803,870
4,719,189
5,213,541
5,687,564
2,063,449
2,007,818
2,116,306
97,821
97,036
99,871
3,502
—
1,019
1,965,628
1,907,280
2,015,416
714,495
368,320
425,944
$ 1,589,472 $ 1,538,960 $ 1,251,133
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
5.99 $
5.97 $
5.64 $
5.63 $
4.45
4.43
Weighted average shares outstanding:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
265,155
266,105
272,751
273,362
281,317
282,261
Dividends per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
1.16 $
1.04 $
1.00
The accompanying notes are an integral part of the consolidated financial statements.
2018 Form 10-K
43
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
For the Year Ended
February 1, February 2, February 3,
2018
2017
2019
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,589,472 $ 1,538,960 $ 1,251,133
Unrealized net gain (loss) on hedged transactions, net of related
income tax expense (benefit) of $344, $509 and $527, respectively . .
817
Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,590,446 $ 1,539,769 $ 1,251,950
809
974
The accompanying notes are an integral part of the consolidated financial statements.
44
2018 Form 10-K
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In thousands except per share amounts)
Common
Stock
Shares
Common
Stock
Additional
Paid-in
Capital
Retained Comprehensive
Earnings
Loss
Total
Accumulated
Other
—
—
—
36,967
—
10,356
—
—
—
—
(12,354)
872
—
—
—
—
(10,810)
766
1,251,133
(281,147)
—
—
(979,664)
—
Balances, January 29, 2016 . . . . . . . . . . . . . . . . . . . 286,694 $ 250,855 $ 3,107,283 $ 2,025,545 $
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends paid, $1.00 per common share . . . . . . . . .
Unrealized net gain (loss) on hedged transactions . . .
Share-based compensation expense . . . . . . . . . . . . .
Repurchases of common stock . . . . . . . . . . . . . . . . .
Other equity and related transactions . . . . . . . . . . . .
Balances, February 3, 2017 . . . . . . . . . . . . . . . . . . . 275,212 $ 240,811 $ 3,154,606 $ 2,015,867 $
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends paid, $1.04 per common share . . . . . . . . .
Unrealized net gain (loss) on hedged transactions . . .
Share-based compensation expense . . . . . . . . . . . . .
Repurchases of common stock . . . . . . . . . . . . . . . . .
Other equity and related transactions . . . . . . . . . . . .
Balances, February 2, 2018 . . . . . . . . . . . . . . . . . . . 268,733 $ 235,141 $ 3,196,462 $ 2,698,352 $
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends paid, $1.16 per common share . . . . . . . . .
Unrealized net gain (loss) on hedged transactions . . .
Share-based compensation expense . . . . . . . . . . . . .
Repurchases of common stock . . . . . . . . . . . . . . . . .
Transition adjustment upon adoption of accounting
1,538,960
(282,941)
—
—
(573,534)
—
1,589,472
(306,562)
—
—
(998,839)
—
—
—
34,323
—
7,533
—
—
—
—
(6,178)
508
—
—
—
—
(7,060)
581
—
—
—
40,879
—
—
—
—
—
(8,655)
—
—
—
—
(9,891)
standard (see Note 1) . . . . . . . . . . . . . . . . . . . . . .
Other equity and related transactions . . . . . . . . . . . .
Balances, February 1, 2019 . . . . . . . . . . . . . . . . . . . 259,511 $ 227,072 $ 3,252,421 $ 2,941,107 $
(41,316)
—
—
15,080
—
669
—
586
—
—
817
—
—
—
(5,807) $ 5,377,876
1,251,133
(281,147)
817
36,967
(990,474)
11,122
(4,990) $ 5,406,294
1,538,960
(282,941)
809
34,323
(579,712)
8,041
(4,181) $ 6,125,774
1,589,472
(306,562)
974
40,879
(1,007,494)
—
—
809
—
—
—
—
—
974
—
—
—
—
(41,316)
15,666
(3,207) $ 6,417,393
The accompanying notes are an integral part of the consolidated financial statements.
2018 Form 10-K
45
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
February 1,
For the Year Ended
February 2,
February 3,
2019
2018
2017
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,589,472 $ 1,538,960 $ 1,251,133
Adjustments to reconcile net income to net cash from operating
activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on debt retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncash share-based compensation . . . . . . . . . . . . . . . . . . . . . .
Other noncash (gains) and losses . . . . . . . . . . . . . . . . . . . . . . . . .
Change in operating assets and liabilities:
454,134
52,325
1,019
40,879
41,851
404,231
(137,648)
3,502
34,323
11,088
379,931
12,359
—
36,967
(3,625)
Merchandise inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . .
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by (used in) operating activities . . . . . . . . . . . . .
Cash flows from investing activities:
Purchases of property and equipment . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sales of property and equipment . . . . . . . . . . . . . . .
Net cash provided by (used in) investing activities . . . . . . . . . . . . .
Cash flows from financing activities:
Issuance of long-term obligations . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayments of long-term obligations . . . . . . . . . . . . . . . . . . . . . . . .
Net increase (decrease) in commercial paper outstanding . . . . . . .
Borrowings under revolving credit facilities . . . . . . . . . . . . . . . . . .
Repayments of borrowings under revolving credit facilities . . . . .
Costs associated with issuance and retirement of debt . . . . . . . . . .
Repurchases of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments of cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other equity and related transactions . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by (used in) financing activities . . . . . . . . . . . . .
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . .
Cash and cash equivalents, beginning of period . . . . . . . . . . . . . . .
Cash and cash equivalents, end of period . . . . . . . . . . . . . . . . . . . . . $
Supplemental cash flow information:
Cash paid for:
(521,342)
(12,097)
375,214
65,857
56,390
(152)
2,143,550
(348,363)
(49,406)
427,911
75,647
(156,504)
(1,633)
1,802,108
(171,908)
(25,046)
56,477
42,937
26,316
(500)
1,605,041
(734,380)
2,777
(731,603)
(646,456)
1,428
(645,028)
(560,296)
9,360
(550,936)
499,495
(577,321)
(63,300)
—
—
(4,384)
(1,007,494)
(306,523)
15,626
(1,443,901)
(31,954)
267,441
235,487 $
599,556
(752,676)
(60,300)
—
—
(9,524)
(579,712)
(282,931)
8,033
(1,077,554)
79,526
187,915
267,441 $
—
(3,138)
490,500
1,584,000
(1,835,000)
—
(990,474)
(281,135)
11,110
(1,024,137)
29,968
157,947
187,915
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
98,012 $
313,457 $
88,749 $
660,510 $
92,952
679,633
Supplemental schedule of noncash investing and financing
activities:
Purchases of property and equipment awaiting processing for
payment, included in Accounts payable . . . . . . . . . . . . . . . . . . . . $
63,662 $
63,178 $
38,914
The accompanying notes are an integral part of the consolidated financial statements.
46
2018 Form 10-K
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of presentation and accounting policies
Basis of presentation
These notes contain references to the years 2018, 2017, and 2016, which represent fiscal years ended
February 1, 2019, February 2, 2018, and February 3, 2017, respectively. The Company’s 2018 and 2017
accounting periods were comprised of 52-weeks, while 2016 was a 53-week accounting period. The Company’s
fiscal year ends on the Friday closest to January 31. The consolidated financial statements include all subsidiaries
of the Company, except for its not-for-profit subsidiary which the Company does not control. Intercompany
transactions have been eliminated.
The Company sells general merchandise on a retail basis through 15,370 stores (as of February 1, 2019)
in 44 states with the greatest concentration of stores in the southern, southwestern, midwestern and eastern United
States. The Company owns distribution centers for non-refrigerated merchandise (“DCs”) in Scottsville,
Kentucky; South Boston, Virginia; Alachua, Florida; Zanesville, Ohio; Jonesville, South Carolina; Marion,
Indiana; Bessemer, Alabama; Bethel, Pennsylvania; San Antonio, Texas; Janesville, Wisconsin; Jackson, Georgia,
and Longview, Texas, and leases DCs in Ardmore, Oklahoma; Fulton, Missouri; Indianola, Mississippi; and
Lebec, California. The Company also owns a cold storage and distribution facility in Pottsville, Pennsylvania.
Cash and cash equivalents
Cash and cash equivalents include highly liquid investments with insignificant interest rate risk and
original maturities of three months or less when purchased. Such investments primarily consist of money market
funds, bank deposits, certificates of deposit, and commercial paper. The carrying amounts of these items are a
reasonable estimate of their fair value due to the short maturity of these investments.
Payments due from processors for electronic tender transactions classified as cash and cash equivalents
totaled approximately $99.5 million and $90.4 million at February 1, 2019 and February 2, 2018, respectively.
Investments in debt and equity securities
The Company accounts for investments in debt and marketable equity securities as held-to-maturity,
available-for-sale, or trading, depending on their classification. Debt securities categorized as held-to-maturity are
stated at amortized cost. Debt and equity securities categorized as available-for-sale are stated at fair value, with
any unrealized gains and losses, net of deferred income taxes, reported as a component of Accumulated other
comprehensive loss. Trading securities are stated at fair value, with changes in fair value recorded as a component
of Selling, general and administrative (“SG&A”) expense. The cost of securities sold is based upon the specific
identification method.
Merchandise inventories
Inventories are stated at the lower of cost or market (“LCM”) with cost determined using the retail last-
in, first-out (“LIFO”) method as this method results in a better matching of costs and revenues. Under the
Company’s retail inventory method (“RIM”), the calculation of gross profit and the resulting valuation of
inventories at cost are computed by applying a calculated cost-to-retail inventory ratio to the retail value of sales at
a department level. The use of the RIM will result in valuing inventories at LCM if markdowns are currently taken
as a reduction of the retail value of inventories. Costs directly associated with warehousing and distribution are
capitalized into inventory.
2018 Form 10-K
47
The excess of current cost over LIFO cost was approximately $103.7 million and $78.5 million at
February 1, 2019 and February 2, 2018, respectively. Current cost is determined using the RIM on a first-in, first-
out basis. Under the LIFO inventory method, the impacts of rising or falling market price changes increase or
decrease cost of sales (the LIFO provision or benefit). The Company recorded a LIFO provision (benefit) of
$25.2 million in 2018, $(2.2) million in 2017, and $(12.2) million in 2016, which is included in cost of goods sold
in the consolidated statements of income.
The Company purchases its merchandise from a wide variety of suppliers. The Company’s three largest
suppliers each accounted for approximately 8% of the Company’s purchases in 2018.
Vendor rebates
The Company accounts for all cash consideration received from vendors in accordance with applicable
accounting standards pertaining to such arrangements. Cash consideration received from a vendor is generally
presumed to be a rebate or an allowance and is accounted for as a reduction of merchandise purchase costs as
earned. However, certain specific, incremental and otherwise qualifying SG&A expenses related to the promotion
or sale of vendor products may be offset by cash consideration received from vendors, in accordance with
arrangements such as cooperative advertising, when earned for dollar amounts up to but not exceeding actual
incremental costs.
Prepaid expenses and other current assets
Prepaid expenses and other current assets include prepaid amounts for rent, maintenance, business
licenses, advertising, and insurance, and amounts receivable for certain vendor rebates (primarily those expected
to be collected in cash) and coupons.
Property and equipment
In 2007, the Company’s property and equipment was recorded at estimated fair values as the result of a
merger transaction. Property and equipment acquired subsequent to the merger has been recorded at cost. The
Company records depreciation and amortization on a straight-line basis over the assets’ estimated useful lives. The
Company’s property and equipment balances and depreciable lives are summarized as follows:
Life
Depreciable February 1, February 2,
2019
214,632 $
85,093
2018
(In thousands)
212,033
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Indefinite $
Land improvements . . . . . . . . . . . . . . . . . . . . . . . . .
79,597
20
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 - 40 1,219,852 1,116,872
Leasehold improvements . . . . . . . . . . . . . . . . . . . . .
507,894
583,531
Furniture, fixtures and equipment . . . . . . . . . . . . . .
3 - 10 3,298,594 3,186,406
Construction in progress . . . . . . . . . . . . . . . . . . . . . .
72,490
117,275
5,518,977 5,175,292
2,548,171 2,474,010
$ 2,970,806 $ 2,701,282
Less accumulated depreciation and amortization . .
Net property and equipment . . . . . . . . . . . . . . . . . . .
(a)
(a) Amortized over the lesser of the life of the applicable lease term or the estimated useful life of the asset.
Depreciation expense related to property and equipment was approximately $454.1 million,
$403.3 million and $378.3 million for 2018, 2017 and 2016, respectively. Amortization of capital lease assets is
included in depreciation expense. Interest on borrowed funds during the construction of property and equipment is
capitalized where applicable. Interest costs of $3.7 million, $2.0 million, and $1.4 million were capitalized in
2018, 2017 and 2016, respectively.
48
2018 Form 10-K
Impairment of long-lived assets
When indicators of impairment are present, the Company evaluates the carrying value of long-lived
assets, excluding goodwill and other indefinite-lived intangible assets, in relation to the operating performance and
future cash flows or the appraised values of the underlying assets. Generally, the Company’s policy is to review
for impairment stores open more than three years for which current cash flows from operations are negative.
Impairment results when the carrying value of the assets exceeds the undiscounted future cash flows expected to
be generated by the assets. The Company’s estimate of undiscounted future cash flows is based upon historical
operations of the stores and estimates of future store profitability which encompasses many factors that are subject
to variability and difficult to predict. If a long-lived asset is found to be impaired, the amount recognized for
impairment is equal to the difference between the carrying value and the asset’s estimated fair value. The fair
value is estimated based primarily upon estimated future cash flows over the asset’s remaining useful life
(discounted at the Company’s credit adjusted risk-free rate) or other reasonable estimates of fair market value.
Assets to be disposed of are adjusted to the fair value less the cost to sell if less than the book value.
The Company recorded impairment charges included in SG&A expense of approximately $4.1 million in
2018, $7.8 million in 2017 and $6.3 million in 2016, to reduce the carrying value of certain of its stores’ assets.
Such action was deemed necessary based on the Company’s evaluation that such amounts would not be
recoverable primarily due to insufficient sales or excessive costs resulting in the carrying value of the assets
exceeding the estimated undiscounted future cash flows generated by the assets at these locations.
Goodwill and other intangible assets
If not deemed indefinite, the Company amortizes intangible assets over their estimated useful lives.
Goodwill and intangible assets with indefinite lives are tested for impairment annually or more frequently if
indicators of impairment are present. Definite lived intangible assets are tested for impairment if indicators of
impairment are present. Impaired assets are written down to fair value as required. No impairment of intangible
assets has been identified during any of the periods presented.
In accordance with accounting standards for goodwill and indefinite-lived intangible assets, an entity has
the option first to assess qualitative factors to determine whether events and circumstances indicate that it is more
likely than not that goodwill or an indefinite-lived intangible asset is impaired. If after such assessment an entity
concludes that the asset is not impaired, then the entity is not required to take further action. However, if an entity
concludes otherwise, then it is required to determine the fair value of the asset using a quantitative impairment
test, and if impaired, the associated assets must be written down to fair value as described in further detail below.
The quantitative goodwill impairment test is a two-step process that would require management to make
judgments in determining what assumptions to use in the calculation. The first step of the process consists of
estimating the fair value of an entity’s reporting units based on valuation techniques (including a discounted cash
flow model using revenue and profit forecasts) and comparing that estimated fair value with the recorded carrying
value, which includes goodwill. If the estimated fair value is less than the carrying value, a second step is
performed to compute the amount of the impairment by determining an “implied fair value” of goodwill. The
determination of the implied fair value of goodwill would require the entity to allocate the estimated fair value of
its reporting unit to its assets and liabilities. Any unallocated fair value would represent the implied fair value of
goodwill, which would be compared to its corresponding carrying value.
The quantitative impairment test for intangible assets compares the fair value of the intangible asset with
its carrying amount. If the carrying amount of an intangible asset exceeds its fair value, an impairment loss is
recognized in an amount equal to that excess.
The Company’s goodwill balance has an indefinite life and is not expected to be deductible for tax
purposes. Substantially all of the Company’s other intangible assets are trade names and trademarks which have
an indefinite life.
2018 Form 10-K
49
Other assets
Noncurrent Other assets consist primarily of qualifying prepaid expenses for maintenance, beer and wine
licenses, and utility, security and other deposits.
Accrued expenses and other liabilities
Accrued expenses and other consist of the following:
February 1, February 2,
(In thousands)
Compensation and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 121,375 $ 118,755
96,277
Self-insurance reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
164,451
Taxes (other than taxes on income) . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
170,175
$ 618,405 $ 549,658
107,380
183,941
205,709
2018
2019
Included in other accrued expenses are liabilities for freight expense, interest, utilities, and maintenance.
Insurance liabilities
The Company retains a significant portion of risk for its workers’ compensation, employee health,
general liability, property, automobile, and third-party landlord liability claim exposures. Accordingly, provisions
are made for the Company’s estimates of such risks. The undiscounted future claim costs for the workers’
compensation, general liability, landlord liability, and health claim risks are derived using actuarial methods and
are recorded as self-insurance reserves pursuant to Company policy. To the extent that subsequent claim costs
vary from those estimates, future results of operations will be affected as the reserves are adjusted.
Ashley River Insurance Company (“ARIC”), a Tennessee-based wholly owned captive insurance
subsidiary of the Company, charges the operating subsidiary companies premiums to insure the retained workers’
compensation, medical stop-loss, and non-property general liability exposures. Pursuant to Tennessee insurance
regulations, ARIC maintains certain levels of cash and cash equivalents related to its self-insured exposures.
Operating leases and related liabilities
Rent expense is recognized over the term of the lease. The Company records minimum rental expense on
a straight-line basis over the base, non-cancelable lease term commencing on the date that the Company takes
physical possession of the property from the landlord, which normally includes a period prior to the store opening
to make leasehold improvements if necessary and install store fixtures. When a lease contains a predetermined
fixed escalation of the minimum rent, the Company recognizes the related rent expense on a straight-line basis and
records the difference between the recognized rental expense and the amounts payable under the lease as deferred
rent. Tenant allowances, to the extent received, are recorded as deferred incentive rent and are amortized as a
reduction to rent expense over the term of the lease. The difference between the calculated expense and the
amounts paid result in a liability classified in other long-term liabilities in the consolidated balance sheets, and
totaled approximately $70.1 million and $65.9 million at February 1, 2019 and February 2, 2018, respectively.
The Company recognizes contingent rental expense when the achievement of specified sales targets is
considered probable. The amount expensed but not paid as of February 1, 2019 and February 2, 2018 was
approximately $2.4 million and $2.7 million, respectively, and is included in Accrued expenses and other in the
consolidated balance sheets.
50
2018 Form 10-K
Other liabilities
Noncurrent Other liabilities consist of the following:
February 1, February 2,
(In thousands)
Self-insurance reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 130,022 $ 134,256
65,856
Deferred rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred gain on sale leaseback . . . . . . . . . . . . . . . . . . . . . . . . . . . .
44,781
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
61,051
$ 298,361 $ 305,944
70,139
40,303
57,897
2019
2018
Fair value accounting
The Company utilizes accounting standards for fair value, which include the definition of fair value, the
framework for measuring fair value, and disclosures about fair value measurements. Fair value is a market-based
measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined
based on the assumptions that market participants would use in pricing the asset or liability. As a basis for
considering market participant assumptions in fair value measurements, fair value accounting standards establish a
fair value hierarchy that distinguishes between market participant assumptions based on market data obtained
from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the
hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs
classified within Level 3 of the hierarchy).
Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that
the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that
are directly or indirectly observable for the asset or liability. Level 2 inputs may include quoted prices for similar
assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than
quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly
quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are based on an entity’s
own assumptions, as there is little, if any, observable market activity. In instances where the fair value
measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value
hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant
to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to
the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.
Other comprehensive income
The Company previously recorded a loss on the settlement of treasury locks associated with the issuance
of long-term debt in 2013 which was deferred to other comprehensive income and is being amortized as an
increase to interest expense over the 10-year period of the debt’s maturity.
Revenue and gain recognition
The Company recognizes retail sales in its stores at the time the customer takes possession of
merchandise. All sales are net of discounts and are presented net of taxes assessed by governmental authorities
that are imposed concurrent with those sales. The Company records gain contingencies when realized.
The Company recognizes gift card sales revenue at the time of redemption. The liability for gift cards is
established for the cash value at the time of purchase of the gift card. The liability for outstanding gift cards was
approximately $5.2 million and $4.2 million at February 1, 2019 and February 2, 2018, respectively, and is
recorded in Accrued expenses and other liabilities. Estimated breakage revenue, a percentage of gift cards that will
never be redeemed based on historical redemption rates, is recognized over time in proportion to actual gift card
2018 Form 10-K
51
redemptions. The Company recorded breakage revenue of $0.8 million, $0.6 million and $0.5 million in 2018,
2017 and 2016, respectively.
Advertising costs
Advertising costs are expensed upon performance, “first showing” or distribution, and are reflected in
SG&A expenses net of earned cooperative advertising amounts provided by vendors which are specific,
incremental and otherwise qualifying expenses related to the promotion or sale of vendor products for dollar
amounts up to but not exceeding actual incremental costs. Advertising costs were $70.5 million, $68.8 million and
$82.7 million in 2018, 2017 and 2016, respectively. These costs primarily include promotional circulars, targeted
circulars supporting new stores, television and radio advertising, in-store signage, and costs associated with the
sponsorships of certain automobile racing activities in 2016. Vendor funding for cooperative advertising offset
reported expenses by $35.0 million, $33.8 million and $35.9 million in 2018, 2017 and 2016, respectively.
Share-based payments
The Company recognizes compensation expense for share-based compensation based on the fair value of
the awards on the grant date. Forfeitures are estimated at the time of valuation and reduce expense ratably over the
vesting period. This estimate may be adjusted periodically based on the extent to which actual forfeitures differ, or
are expected to differ, from the prior estimate. The forfeiture rate is the estimated percentage of share-based
awards granted that are expected to be forfeited or canceled before becoming fully vested. The Company bases
this estimate on historical experience or estimates of future trends, as applicable. An increase in the forfeiture rate
will decrease compensation expense.
The fair value of each option grant is separately estimated and amortized into compensation expense on a
straight-line basis between the applicable grant date and each vesting date. The Company has estimated the fair
value of all stock option awards as of the grant date by applying the Black-Scholes-Merton option pricing
valuation model. The application of this valuation model involves assumptions that are judgmental and highly
sensitive in the determination of compensation expense.
The Company calculates compensation expense for restricted stock, share units and similar awards as the
difference between the market price of the underlying stock or similar award on the grant date and the purchase
price, if any. Such expense is recognized on a straight-line basis for time-based awards and generally on an
accelerated basis for performance awards over the period in which the recipient earns the awards.
Store pre-opening costs
Pre-opening costs related to new store openings and the related construction periods are expensed as
incurred.
Income taxes
Under the accounting standards for income taxes, the asset and liability method is used for computing the
future income tax consequences of events that have been recognized in the Company’s consolidated financial
statements or income tax returns. Deferred income tax expense or benefit is the net change during the year in the
Company’s deferred income tax assets and liabilities.
The Company includes income tax related interest and penalties as a component of the provision for
income tax expense.
Income tax reserves are determined using a methodology which requires companies to assess each
income tax position taken using a two-step process. A determination is first made as to whether it is more likely
than not that the position will be sustained, based upon the technical merits, upon examination by the taxing
52
2018 Form 10-K
authorities. If the tax position is expected to meet the more likely than not criteria, the benefit recorded for the tax
position equals the largest amount that is greater than 50% likely to be realized upon ultimate settlement of the
respective tax position. Uncertain tax positions require determinations and estimated liabilities to be made based
on provisions of the tax law which may be subject to change or varying interpretation. If the Company’s
determinations and estimates prove to be inaccurate, the resulting adjustments could be material to the Company’s
future financial results.
Management estimates
The preparation of financial statements and related disclosures in conformity with accounting principles
generally accepted in the United States requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.
Accounting standards
In May 2014, the Financial Accounting Standards Board (“FASB”) issued comprehensive new
accounting standards related to the recognition of revenue and in August 2015, the FASB deferred the effective
date to annual reporting periods beginning after December 15, 2017. The Company adopted this guidance using
the modified retrospective approach effective February 3, 2018, and such adoption had no effect on the
Company’s consolidated results of operations, financial position or cash flows.
In February 2016, the FASB issued new guidance related to lease accounting, which requires a dual
approach for lessee accounting under which a lessee will account for leases as finance leases or operating leases.
Both finance leases and operating leases will result in the lessee recognizing a right-of-use asset and a
corresponding lease liability on its balance sheet, with differing methodology for income statement recognition.
This guidance is effective for public business entities for fiscal years, and interim periods within those years,
beginning after December 15, 2018, and early adoption is permitted. In July 2018, the FASB issued additional
guidance which allows companies to record the cumulative effect of applying the new standard as an adjustment
to the opening balance of retained earnings in the year of adoption, which the Company intends to apply. The
Company will adopt the new standard effective February 2, 2019. The Company formed a project team to assess
and implement the standard and an executive steering committee to provide oversight. The project team has
completed its internal evaluation of existing contractual arrangements for embedded leases, has successfully tested
computations in the Company’s lease administration system, and has developed a process to compute the rates to
discount the lease liabilities as required by the standard. In addition, the project team has identified and
implemented new processes and controls to ensure compliance with the new standard, and has evaluated and
documented the Company’s accounting conclusions related to the new standard. The Company will utilize
transition practical expedients under which the Company will not be required to reassess (i) whether expired or
existing contracts are or contain leases as defined by the new standard, (ii) the classification of such leases, and
(iii) whether previously capitalized initial direct costs would qualify for capitalization under the new standard. The
Company has identified its store leases as the area in which it will be most affected by the new guidance, and the
most significant impact that adoption will have on the Company’s consolidated financial statements is to its
consolidated balance sheet. The Company expects to record consolidated right of use assets and consolidated lease
liabilities of approximately $8.0 billion each upon transition to the new guidance.
In October 2016, the FASB issued amendments to existing guidance related to accounting for intra-entity
transfers of assets other than inventory, which affects the Company’s historical accounting for intra-entity
transfers of certain intangible assets. This guidance is effective for public business entities for fiscal years, and
interim periods within those years, beginning after December 15, 2017. The amendments are applied on a
modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the
beginning of the period of adoption. The Company adopted this guidance effective February 3, 2018 which
resulted in an increase in deferred income tax liabilities and a decrease in retained earnings of $41.3 million.
2018 Form 10-K
53
In January 2017, the FASB issued amendments to existing guidance related to the subsequent
measurement of goodwill. These amendments modify the concept of impairment from the condition that exists
when the carrying amount of goodwill exceeds its implied fair value to the condition that exists when the carrying
amount of a reporting unit exceeds its fair value. Subsequent to adoption, an entity will perform its annual, or
interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and
recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair
value. This guidance is effective for public business entities for fiscal years, and interim periods within those
years, beginning after December 15, 2019, and early adoption is permitted for interim or annual goodwill
impairment tests performed on testing dates after January 1, 2017. The amendments should be applied on a
prospective basis. An entity is required to disclose the nature of and reason for the change in accounting principle
upon transition. The Company currently does not anticipate a material effect on its consolidated results of
operations, financial position or cash flows to result from the adoption of this guidance.
Reclassifications
Certain financial disclosures relating to prior periods have been reclassified to conform to the current
year presentation where applicable.
2. Earnings per share
Earnings per share is computed as follows (in thousands except per share data):
Basic earnings per share . . . . . . . . . . . . . . . . . . . . . $ 1,589,472
Effect of dilutive share-based awards . . . . . . . . . .
Diluted earnings per share . . . . . . . . . . . . . . . . . . . $ 1,589,472
Basic earnings per share . . . . . . . . . . . . . . . . . . . . . $ 1,538,960
Effect of dilutive share-based awards . . . . . . . . . .
Diluted earnings per share . . . . . . . . . . . . . . . . . . . $ 1,538,960
Net
Income
Net
Income
Net
Income
2018
Weighted
Average
Shares
265,155 $
950
266,105 $
Per Share
Amount
5.99
5.97
2017
Weighted
Average
Shares
272,751 $
611
273,362 $
Per Share
Amount
5.64
5.63
2016
Weighted
Average
Shares
281,317 $
944
282,261 $
Per Share
Amount
4.45
4.43
Basic earnings per share . . . . . . . . . . . . . . . . . . . . . $ 1,251,133
Effect of dilutive share-based awards . . . . . . . . . .
Diluted earnings per share . . . . . . . . . . . . . . . . . . . $ 1,251,133
Basic earnings per share is computed by dividing net income by the weighted average number of shares
of common stock outstanding during the year. Diluted earnings per share is determined based on the dilutive effect
of share-based awards using the treasury stock method.
54
2018 Form 10-K
Share-based awards that were outstanding at the end of the respective periods, but were not included in
the computation of diluted earnings per share because the effect of exercising such options would be antidilutive,
were 0.8 million, 2.1 million and 1.7 million in 2018, 2017 and 2016, respectively.
3. Income taxes
The provision (benefit) for income taxes consists of the following:
(In thousands)
Current:
2018
2017
2016
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 320,361 $ 426,933 $ 613,009
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
135
88,990
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
702,134
105
79,011
506,049
159
53,091
373,611
Deferred:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
48,262
(38)
4,109
52,333
11,053
—
1,308
12,361
$ 425,944 $ 368,320 $ 714,495
(159,728)
(22)
22,021
(137,729)
A reconciliation between actual income taxes and amounts computed by applying the federal statutory
rate to income before income taxes is summarized as follows:
(Dollars in thousands)
U.S. federal statutory rate on earnings
2018
2017
2016
before income taxes . . . . . . . . . . . . . . . . . . . $ 423,237 21.0 % $ 643,326 33.7 % $ 687,969 35.0 %
Impact of tax rate changes . . . . . . . . . . . . . . . .
State income taxes, net of federal income
tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . .
Jobs credits, net of federal income taxes . . . .
Increase (decrease) in valuation allowances,
(12,222)
(0.6)
(310,756)
(16.3)
—
—
44,584
(27,506)
2.2
(1.4)
61,201
(26,759)
3.2
(1.4)
60,168
(18,952)
3.1
(1.0)
net of federal taxes . . . . . . . . . . . . . . . . . . . .
Stock-based compensation programs . . . . . . .
Increase (decrease) in income tax reserves . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(3,682)
3,952
(2,419)
$ 425,944
4,435
—
(2,227)
(0.2)
(1,837)
0.2
(0.1)
937
21.1 % $ 368,320
(1,474)
0.2
(9,915)
(0.1)
(2,161)
(0.1)
0.1
(1,140)
19.3 % $ 714,495 36.3 %
(0.1)
(0.5)
(0.1)
(0.1)
On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was signed into law. Among other
changes, the Act reduces the federal corporate tax rate to 21% from 35% effective January 1, 2018, including a
reduction in the Company’s current year federal corporate tax rate for 2017 to 33.7% as a result of the Company’s
2017 fiscal year ending approximately one month after the effective date of the Act.
Under accounting standards for income taxes, the impact of new tax legislation must be taken into
account in the period in which the new legislation is enacted, including the remeasurement of deferred tax assets
and liabilities at the tax rates that such items are expected to reverse in future periods. Subsequent to the Act, the
Securities and Exchange Commission staff issued Staff Accounting Bulletin No. 118 (“SAB 118”), allowing
companies to record provisional amounts during a measurement period not to exceed one year after the enactment
date while the accounting impact remains under analysis. The Company’s 2017 provision for income taxes
reflected such estimates due to the changes in income tax law, including a provisional tax benefit of $335 million.
The provisional tax benefit consisted of $310.8 million related to the one-time remeasurement of the federal
portion of the Company’s deferred tax assets and liabilities at the 21% rate and $24.2 million related to the
reduced statutory tax rate of 33.7%, compared to 35% in prior years. The Company concluded its analysis of the
2018 Form 10-K
55
accounting impact of the Act pursuant to SAB 118 and recorded immaterial adjustments related to its 2017
provision for income taxes in 2018.
The effective income tax rate for 2018 was 21.1% compared to a rate of 19.3% for 2017 which represents
a net increase of 1.8 percentage points. The effective income tax rate was higher in 2018 primarily due to the one-
time remeasurement of the deferred tax assets and liabilities at 21% in 2017, which was offset by the reduction in
the current federal tax rate from 33.7% in 2017 to 21% in 2018.
The effective income tax rate for 2017 was 19.3% compared to a rate of 36.3% for 2016 which represents
a net decrease of 17 percentage points. The effective income tax rate was lower in 2017 primarily due to the one-
time remeasurement of the federal portion of the Company’s deferred tax assets and liabilities at 21%, and the
changes in the federal income tax laws pursuant to the Act that lowered the Company’s federal statutory tax rate
to 33.7% for 2017, compared to 35% in 2016.
The 2016 effective tax rate was an expense of 36.3%. This expense was greater than the federal statutory
tax rate of 35% due primarily to the inclusion of state income taxes in the total effective tax rate. The effective
income tax rate was lower in 2016 as compared to 2015 due principally to the adoption of a change in accounting
guidance related to employee share-based payments, requiring the recognition of excess tax benefits in the
statement of income rather than in the balance sheet, as reported in prior years.
Deferred taxes reflect the effects of temporary differences between carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components
of the Company’s deferred tax assets and liabilities are as follows:
(In thousands)
Deferred tax assets:
February 1, February 2,
2019
2018
Deferred compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued incentive compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest rate hedges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax benefit of income tax and interest reserves related to uncertain tax positions .
Deferred gain on sale-leaseback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State tax net operating loss carry forwards, net of federal tax . . . . . . . . . . . . . . . . . .
State tax credit carry forwards, net of federal tax . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less valuation allowances, net of federal income taxes . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities:
6,490 $
3,278
22,668
6,869
15,219
15,713
1,421
472
11,649
3,942
598
8,245
96,564
(4,433)
92,131
6,522
3,324
23,418
8,630
6,394
13,442
1,765
365
12,847
3,900
602
8,350
89,559
(4,435)
85,124
Property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(255,215)
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(46,244)
Trademarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(269,820)
Prepaid insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(22,875)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6,672)
(600,826)
Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (609,687) $ (515,702)
(322,575)
(56,221)
(308,793)
(12,639)
(1,590)
(701,818)
56
2018 Form 10-K
The Company has state tax credit carryforwards of approximately $8.2 million that will expire beginning
in 2022 through 2028 and the Company has approximately $17.2 million of state apportioned net operating loss
carryforwards, which will begin to expire in 2033 and will continue through 2039.
The Company established a valuation allowance for the state tax credit carryforwards, in the amount of
$4.4 million (net of federal benefit) increasing income tax expense in 2017. In 2018, management continues to
believe that results from operations will not generate sufficient taxable income to realize certain state tax credits
before they expire. In 2016, the Company reversed all of the previously recorded valuation allowance for state tax
credit carryforwards in the amount of $1.5 million, which was recorded as a reduction in income tax expense.
Based upon expected future income, management believes that it is more likely than not that the results
of operations will generate sufficient taxable income to realize the remaining deferred tax assets.
The Company’s 2014 and earlier tax years are not open for further examination by the Internal Revenue
Service (“IRS”). The IRS, at its discretion, may choose to examine the Company’s 2015 through 2017 fiscal year
income tax filings. The Company has various state income tax examinations that are currently in progress.
Generally, with few exceptions, the Company’s 2015 and later tax years remain open for examination by the
various state taxing authorities.
As of February 1, 2019, accruals for uncertain tax benefits, interest expense related to income taxes and
potential income tax penalties were $5.0 million, $0.8 million and $0.9 million, respectively, for a total of
$6.7 million. This total amount is reflected in noncurrent Other liabilities in the consolidated balance sheet.
As of February 2, 2018, accruals for uncertain tax benefits, interest expense related to income taxes and
potential income tax penalties were $1.0 million, $0.7 million and $0.8 million, respectively, for a total of
$2.5 million. This total amount is reflected in noncurrent Other liabilities in the consolidated balance sheet.
The Company’s reserve for uncertain tax positions will not be reduced in the coming twelve months as a
result of expiring statutes of limitations. As of February 1, 2019, approximately $5.0 million of the uncertain tax
positions would impact the Company’s effective income tax rate if the Company were to recognize the tax benefit
for these positions.
The amounts associated with uncertain tax positions included in income tax expense consists of the
following:
(In thousands)
Income tax expense (benefit) . . . . . . . . . . . . . . . . . . . . . $ 3,919 $ (2,076) $ (3,795)
(31)
Income tax related interest expense (benefit) . . . . . . . .
Income tax related penalty expense (benefit) . . . . . . . .
50
(123)
(9)
133
33
2018
2017
2016
A reconciliation of the uncertain income tax positions from January 29, 2016 through February 1, 2019 is
as follows:
2018
(In thousands)
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,041 $ 3,117 $ 6,964
41
Increases—tax positions taken in the current year . . . .
Increases—tax positions taken in prior years . . . . . . . .
52
Decreases—tax positions taken in prior years . . . . . . .
(1,435)
Statute expirations . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2,453)
Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(52)
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,960 $ 1,041 $ 3,117
66
27
—
(2,169)
—
95
3,914
—
—
(90)
2017
2016
2018 Form 10-K
57
4. Current and long-term obligations
Consolidated current and long-term obligations consist of the following:
(In thousands)
Senior unsecured credit facilities
February 1, February 2,
2019
2018
Term Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Revolving Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.875% Senior Notes due April 15, 2018 (net of discount of $16) . . . . . . . . . . . . . .
3.250% Senior Notes due April 15, 2023 (net of discount of $1,084 and $1,322) . .
4.150% Senior Notes due November 1, 2025 (net of discount of $562 and $632) . .
3.875% Senior Notes due April 15, 2027 (net of discount of $375 and $413) . . . . .
4.125% Senior Notes due May 1, 2028 (net of discount of $471) . . . . . . . . . . . . . . .
Unsecured commercial paper notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax increment financing due February 1, 2035 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt issuance costs, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
175,000
—
399,984
898,678
499,368
599,587
—
430,200
12,321
7,335
(16,515)
3,005,958
Less: current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(401,345)
Long-term portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,862,740 $ 2,604,613
— $
—
—
898,916
499,438
599,625
499,529
366,900
10,977
6,360
(17,055)
2,864,690
(1,950)
At February 1, 2019, the Company’s maintained a $1.25 billion senior unsecured revolving credit facility
(the “Revolving Facility”) that provides for the issuance of letters of credit up to $175.0 million and is scheduled
to mature on February 22, 2022.
Borrowings under the Revolving Facility bear interest at a rate equal to an applicable interest rate margin
plus, at the Company’s option, either (a) LIBOR or (b) a base rate (which is usually equal to the prime rate). The
applicable interest rate margin for borrowings as of February 1, 2019 was 1.10% for LIBOR borrowings and
0.10% for base-rate borrowings. The Company is also required to pay a facility fee, payable on any used and
unused commitment amounts of the Revolving Facility, and customary fees on letters of credit issued under the
Revolving Facility. As of February 1, 2019, the commitment fee rate was 0.15%. The applicable interest rate
margins for borrowings, the facility fees and the letter of credit fees under the Revolving Facility are subject to
adjustment from time to time based on the Company’s long-term senior unsecured debt ratings.
The Revolving Facility contains a number of customary affirmative and negative covenants that, among
other things, restrict, subject to certain exceptions, the Company’s ability to: incur additional liens; sell all or
substantially all of the Company’s assets; consummate certain fundamental changes or change in the Company’s
lines of business; and incur additional subsidiary indebtedness. The Revolving Facility also contains financial
covenants which require the maintenance of a minimum fixed charge coverage ratio and a maximum leverage
ratio. As of February 1, 2019, the Company was in compliance with all such covenants. The Revolving Facility
also contains customary events of default.
On June 11, 2018, the Company voluntarily prepaid the entire $175.0 million outstanding balance of its
senior unsecured term loan facility and recognized an associated loss of $1.0 million which is reflected in Other
(income) expense in the consolidated statement of income for the year ended February 1, 2019. As of
February 1, 2019, the Company had no outstanding borrowings, outstanding letters of credit of $7.6 million, and
borrowing availability of $1.2 billion under the Revolving Facility that, due to its intention to maintain borrowing
availability related to the commercial paper program described below, could contribute incremental liquidity of
$689.5 million. In addition, the Company had outstanding letters of credit of $32.9 million which were issued
pursuant to separate agreements.
As of February 1, 2019, the Company had a commercial paper program under which the Company may
58
2018 Form 10-K
issue unsecured commercial paper notes (the “CP Notes”) from time to time in an aggregate amount not to exceed
$1.0 billion outstanding at any time. The CP Notes have maturities of up to 364 days from the date of issue and
rank equal in right of payment with all of the Company’s other unsecured and unsubordinated indebtedness. The
Company intends to maintain available commitments under the Revolving Facility in an amount at least equal to
the amount of CP Notes outstanding at any time. As of February 1, 2019, the Company’s consolidated balance
sheet reflected outstanding CP notes of $366.9 million, which were classified as long-term obligations due to the
Company’s intent and ability to refinance these obligations as long-term debt. An additional $186.0 million of
outstanding CP Notes were held by a wholly-owned subsidiary of the Company and are therefore not reflected on
the consolidated balance sheet. As of February 1, 2019, the outstanding CP Notes had a weighted average
borrowing rate of 2.7%.
On April 10, 2018, the Company issued $500.0 million aggregate principal amount of 4.125% senior
notes due 2028 (the “2028 Senior Notes”), net of discount of $0.5 million, which are scheduled to mature on
May 1, 2028. Interest on the 2028 Senior Notes is payable in cash on May 1 and November 1 of each year, and the
first interest payment commenced on November 1, 2018. The Company incurred $4.4 million of debt issuance
costs associated with the issuance of the 2028 Senior Notes.
Effective April 15, 2018, the Company redeemed $400.0 million aggregate principal amount of
outstanding 1.875% senior notes due 2018 (the “2018 Senior Notes”). There was no gain or loss associated with
the redemption. The Company funded the redemption price for the 2018 Senior Notes with proceeds from the
issuance of the 2028 Senior Notes.
On April 11, 2017, the Company issued $600.0 million aggregate principal amount of 3.875% senior
notes due 2027 (the “2027 Senior Notes”), at a discount of $0.4 million, which are scheduled to mature on
April 15, 2027. Interest on the 2027 Senior Notes is payable in cash on April 15 and October 15 of each year, and
commenced on October 15, 2017. The Company incurred $5.2 million of debt issuance costs associated with the
issuance of the 2027 Senior Notes.
On April 27, 2017, the Company redeemed $500.0 million aggregate principal amount of outstanding
4.125% senior notes due 2017 (the “2017 Senior Notes”), resulting in a pretax loss of $3.4 million which is
reflected in Other (income) expense in the consolidated statement of income for the year ended February 2, 2018.
Collectively, the 2028 Senior Notes, the 2027 Senior Notes and the Company’s other Senior Notes due
2023 and 2025 as reflected in the table above comprise the “Senior Notes”, each of which were issued pursuant to
an indenture as supplemented and amended by supplemental indentures relating to each series of Senior Notes (as
so supplemented and amended, the “Senior Indenture”). The Company may redeem some or all of its Senior Notes
at any time at redemption prices set forth in the Senior Indenture. Upon the occurrence of a change of control
triggering event, which is defined in the Senior Indenture, each holder of the Senior Notes has the right to require
the Company to repurchase some or all of such holder’s Senior Notes at a purchase price in cash equal to 101% of
the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the repurchase date.
The Senior Indenture contains covenants limiting, among other things, the ability of the Company and its
subsidiaries to (subject to certain exceptions): consolidate, merge, sell or otherwise dispose of all or substantially
all of the Company’s assets; and to incur or guarantee indebtedness secured by liens on any shares of voting stock
of significant subsidiaries.
The Senior Indenture also provides for events of default which, if any of them occurs, would permit or
require the principal of and accrued interest on the Senior Notes to become or to be declared due and payable, as
applicable.
Scheduled debt maturities at February 1, 2019, including capital lease obligations, for the Company’s
fiscal years listed below are as follows (in thousands): 2019 - $368,850; 2020 - $1,958; 2021 - $1,913; 2022 -
$1,791; 2023 - $901,418; thereafter - $1,608,307.
2018 Form 10-K
59
5. Assets and liabilities measured at fair value
The following table presents the Company’s assets and liabilities required to be measured at fair value as
of February 1, 2019, aggregated by the level in the fair value hierarchy within which those measurements are
classified.
(In thousands)
Liabilities:
Quoted Prices
in Active
Markets
for Identical
Assets and
Liabilities
(Level 1)
Significant
Other
Significant
Observable Unobservable
Inputs
(Level 2)
Inputs
(Level 3)
Total Fair
Value at
February 1,
2019
Long-term obligations (a) . . . . . . . . . . . . . . . . . . . . . . . . $ 2,480,044 $ 384,236 $
Deferred compensation (b) . . . . . . . . . . . . . . . . . . . . . . .
24,896
—
— $ 2,864,280
24,896
—
(a) Included in the consolidated balance sheet at book value as Current portion of long-term obligations of $1,950
and Long-term obligations of $2,862,740.
(b) Reflected at fair value in the consolidated balance sheet as a component of Accrued expenses and other
current liabilities of $2,043 and a component of noncurrent Other liabilities of $22,853.
The carrying amounts reflected in the consolidated balance sheets for cash, cash equivalents, short-term
investments, receivables and payables approximate their respective fair values. The Company does not have any
recurring fair value measurements using significant unobservable inputs (Level 3) as of February 1, 2019.
6. Commitments and contingencies
Leases
As of February 1, 2019, the Company was committed under operating lease agreements for most of its
retail stores. Many of the Company’s stores are subject to build-to-suit arrangements with landlords which
typically carry a primary lease term of up to 15 years with multiple renewal options. The Company also has stores
subject to shorter-term leases and many of these leases have renewal options. Certain of the Company’s leased
stores have provisions for contingent rent based upon a specified percentage of defined sales volume.
The land and buildings of the Company’s DCs in Missouri, Mississippi and California are subject to
operating lease agreements and the leased DC in Oklahoma is subject to a financing arrangement. Certain leases
contain restrictive covenants, and as of February 1, 2019, the Company is not aware of any material violations of
such covenants.
The Company is accounting for its DC in Oklahoma as a financing obligation as a result of, among other
things, the lessor’s ability to put the property back to the Company under certain circumstances. The property and
equipment, along with the related lease obligation associated with this transaction are recorded in the consolidated
balance sheets. The Company is the owner of a secured promissory note (the “Ardmore Note”) which represents
debt issued by the third party entity from which the Company leases the DC in Oklahoma and therefore the
Company holds the debt instrument pertaining to its lease financing obligation. Because a legal right of offset
exists, the Company is accounting for the Ardmore Note as a reduction of its outstanding financing obligation in
its consolidated balance sheets.
60
2018 Form 10-K
Future minimum payments as of February 1, 2019 for operating leases are as follows:
(In thousands)
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,185,608
1,135,292
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,073,768
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,004,124
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
928,989
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,518,502
Total minimum payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,846,283
As of February 1, 2019, total future minimum payments for capital leases were $13.3 million, with a
present value of $11.0 million. The gross amount of property and equipment recorded under capital leases and
financing obligations at each of February 1, 2019 and February 2, 2018, was $36.2 million. Accumulated
depreciation on property and equipment under capital leases and financing obligations at February 1, 2019 and
February 2, 2018, was $14.3 million and $12.4 million, respectively.
Rent expense under all operating leases is as follows:
(In thousands)
Minimum rentals . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,154,429 $ 1,075,984 $ 935,663
6,748
Contingent rentals . . . . . . . . . . . . . . . . . . . . . . . . .
$ 1,159,085 $ 1,081,516 $ 942,411
4,656
5,532
2017
2016
2018
Legal proceedings
From time to time, the Company is a party to various legal matters in the ordinary course of business,
including actions by employees, consumers, suppliers, government agencies, or others. The Company has
recorded accruals with respect to these matters, where appropriate, which are reflected in the Company’s
consolidated financial statements. For some matters, a liability is not probable or the amount cannot be reasonably
estimated and therefore an accrual has not been made.
Except as described below, the Company believes, based upon information currently available, that such
matters, both individually and in the aggregate, will be resolved without a material adverse effect on the
Company’s consolidated financial statements as a whole. However, litigation and other legal matters involve an
element of uncertainty. Future developments in such matters, including adverse decisions or settlements or
resulting required changes to the Company’s business operations, could affect our consolidated operating results
when resolved in future periods or could result in liability or other amounts material to the Company’s
consolidated financial statements.
Wage and Hour/Employment Litigation
California Wage/Hour Litigation: The Company is defending a number of wage and hour lawsuits filed
by California employees, including store employees (both key carriers and non-key carriers) as well as distribution
center employees. The plaintiffs in these lawsuits allege, on behalf of themselves and other similarly situated
current and former California employees, that the Company failed to comply with California law in some or all of
the following respects: failure to pay for all time worked, failure to provide meal and rest periods, failure to
reimburse business-related expenses, failure to provide accurate wage statements, and failure to pay timely wages
and provide appropriate termination pay. Plaintiffs seek to recover some or all of the following: alleged unpaid
wages, injunctive relief, consequential damages, pre- and post-judgment interest, penalties under the Private
Attorney General Act (the “PAGA”), and attorneys’ fees and costs.
Pennsylvania Wage/Hour Litigation: Plaintiff alleges that he and other similarly situated current and
former hourly distribution center employees were subjected to unlawful policies and practices and were denied
2018 Form 10-K
61
regular and overtime wages in violation of federal and Pennsylvania law. Plaintiff seeks to proceed on a
nationwide collective basis under federal law and a statewide class basis under Pennsylvania law and to recover
alleged unpaid wages, liquidated damages, statutory damages, and attorneys’ fees and costs.
Tennessee Wage/Hour Litigation: Plaintiffs allege that they and other similarly situated current and
former “key holders” were not paid for all hours worked in violation of federal, Illinois and Tennessee law.
Plaintiffs seek to proceed on a nationwide collective basis under federal law and a statewide class basis under
Illinois and Tennessee law and to recover alleged unpaid wages, statutory and common law damages, liquidated
damages, pre-judgment and post-judgment interest and attorneys’ fees and costs. The Company has reached a
preliminary agreement with plaintiffs, which must be submitted to and approved by the Court, to resolve this
matter for an amount not material to the Company’s financial statements as a whole.
California Suitable Seating Litigation: Plaintiff alleges that the Company failed to provide her and other
current and former California store employees with “suitable seats” in violation of California law and seeks to
recover penalties under the PAGA, injunctive relief, and attorneys’ fees and costs. The Company has reached a
preliminary agreement with the plaintiff, which must be submitted to and approved by the Court, to resolve this
matter for an amount not material to the Company’s financial statements as a whole.
California Credit Reporting Litigation: In addition to certain of the claims outlined in “California
Wage/Hour Litigation” above, the plaintiff in this lawsuit alleges, on behalf of a nationwide class under federal
law and a statewide class under California law, that the Company failed to provide applicants with adequate
disclosures and summary of rights relating to certain background checks. With the exception of the claims
outlined in “California Wage/Hour Litigation” above, the plaintiff has agreed to voluntarily dismiss his claims,
and the Company does not expect these claims to have a material impact on its financial statements as a whole.
EEOC Litigation: The United States Equal Employment Opportunity Commission (“EEOC”) alleges
that the Company’s use of post-offer, pre-employment physical assessments, as applied to candidates for the
general warehouse position in the Bessemer, Alabama distribution center, violates the Americans with Disabilities
Act (“ADA”) and the Genetic Information Nondiscrimination Act (“GINA”). The EEOC seeks the following:
back pay, front pay, pre-judgment interest, compensatory damages, punitive damages and injunctive relief.
The Company is vigorously defending the Wage and Hour/Employment Litigation and believes that its
policies and practices comply with federal and state laws and that these actions are not appropriate for class or
similar treatment. At this time, it is not possible to predict whether these matters ultimately will be permitted to
proceed as a class or other similar action, or the size of any putative class or classes. Likewise, except as to the
resolution of the Tennessee Wage/Hour Litigation, the California Suitable Seating Litigation and the California
Credit Reporting Litigation, at this time it is not possible to estimate the value of the claims asserted, and no
assurances can be given that the Company will be successful in its defense of these matters on the merits or
otherwise. For these reasons, except as to the resolution of the Tennessee Wage/Hour Litigation, the California
Suitable Seating Litigation and the California Credit Reporting Litigation, the Company is unable to estimate any
potential loss or range of loss in these matters; however, if the Company is not successful in its defense efforts, the
resolution of these actions could have a material adverse effect on the Company’s consolidated financial
statements as a whole.
Consumer/Product Litigation
In December 2015 the Company was first notified of several lawsuits in which plaintiffs allege violation
of state law, including state consumer protection laws, relating to the labeling, marketing and sale of certain Dollar
General private-label motor oil. Each of these lawsuits, as well as additional, similar lawsuits filed after
December 2015, was filed in, or removed to, various federal district courts of the United States (collectively “the
Motor Oil Lawsuits”).
On June 2, 2016, the United States Judicial Panel on Multidistrict Litigation (“JPML”) granted the
Company’s motion to centralize the Motor Oil Lawsuits in a matter styled In re Dollar General Corp. Motor Oil
62
2018 Form 10-K
Litigation, Case MDL No. 2709, before the United States District Court for the Western District of Missouri
(“Motor Oil MDL”). Subsequently, plaintiffs in the Motor Oil MDL filed a consolidated amended complaint, in
which they seek to certify two nationwide classes and multiple statewide sub-classes and for each putative class
member some or all of the following relief: compensatory damages, injunctive relief, statutory damages, punitive
damages and attorneys’ fees. The Company’s motion to dismiss the allegations raised in the consolidated
amended complaint was granted in part and denied in part. To the extent additional consumer lawsuits alleging
violation of laws relating to the labeling, marketing and sale of Dollar General private-label motor oil have been
or will be filed, the Company expects that such lawsuits will be transferred to the Motor Oil MDL.
In May 2017, the Company received a Notice of Proposed Action from the Office of the New Mexico
Attorney General (the “New Mexico AG”) which alleges that the Company’s labeling, marketing and sale of
certain Dollar General private-label motor oil violated New Mexico law (the “New Mexico Motor Oil Matter”).
The State is represented in connection with this matter by counsel for plaintiffs in the Motor Oil MDL.
On June 20, 2017, the New Mexico AG filed an action in the First Judicial District Court, County of
Santa Fe, New Mexico pertaining to the New Mexico Motor Oil Matter. (Hector H. Balderas v. Dolgencorp,
LLC, Case No. D-101-cv-2017-01562). The Company removed this matter to New Mexico federal court on
July 26, 2017, and filed a motion to dismiss the action. The matter was transferred to the Motor Oil MDL and the
New Mexico AG has moved to remand it to state court. (Hector H. Balderas v. Dolgencorp, LLC, D.N.M., Case
No. 1:17-cv-772). The Company’s and the New Mexico AG’s above-referenced motions are pending. The
Company’s action for declaratory judgment enjoining the New Mexico AG from pursuing the New Mexico Motor
Oil Matter was dismissed on September 28, 2018. (Dollar General Corporation v. Hector H. Balderas, D.N.M.,
Case No. 1:17-cv-00588).
On September 1, 2017, the Mississippi Attorney General (the “Mississippi AG”), who also is represented
by the counsel for plaintiffs in the Motor Oil MDL, filed an action in the Chancery Court of the First Judicial
District of Hinds County, Mississippi in which the Mississippi AG alleges that the Company’s labeling, marketing
and sale of certain Dollar General private-label motor oil violated Mississippi law. (Jim Hood v. Dollar General
Corporation, Case No. G2017-1229 T/1) (the “Mississippi Motor Oil Matter”). The Company removed this matter
to Mississippi federal court on October 5, 2017, and filed a motion to dismiss the action. The matter was
transferred to the Motor Oil MDL and the Mississippi AG moved to remand it to state court. (Jim Hood v. Dollar
General Corporation, N.D. Miss., Case No. 3:17-cv-801-LG-LRA). The Company’s and the Mississippi AG’s
above-referenced motions are pending.
On January 30, 2018, the Company received a Civil Investigative Demand (“CID”) from the Office of
the Louisiana Attorney General requesting information concerning the Company’s labeling, marketing and sale of
certain Dollar General private-label motor oil (the “Louisiana Motor Oil Matter”). In response to the CID, the
Company filed a petition for a protective order on February 20, 2018 in the 19th Judicial District Court for the
Parish of East Baton Rouge, Louisiana seeking to set aside the CID. (In re Dollar General Corp. and Dolgencorp,
LLC, Case No. 666499). The Company’s petition is pending.
A mediation held in the Motor Oil MDL on February 26, 2018, was unsuccessful. On August 20, 2018,
plaintiffs moved to certify two nationwide classes relating to their claims of alleged unjust enrichment and breach
of implied warranties. In addition, plaintiffs moved to certify a multi-state class relating to their claims of breach
of implied warranties and multiple statewide classes relating to their claims of alleged unfair trade
practices/consumer fraud statutory claims, unjust enrichment and breach of implied warranties. The Company
opposed the plaintiffs’ certification motion. On March 21, 2019, the court granted the plaintiffs’ certification
motion as to 16 statewide classes regarding claims of unjust enrichment and 16 statewide classes regarding state
consumer protection laws. The court denied plaintiffs’ motion in all other respects.
The Company is vigorously defending these matters and believes that the labeling, marketing and sale of
its private-label motor oil comply with applicable federal and state requirements and are not misleading. The
Company further believes that these matters are not appropriate for class or similar treatment. At this time,
however, it is not possible to predict whether these matters will be permitted to proceed as a class or in a similar
fashion, whether on a statewide or nationwide basis, or the size of any putative class or classes. Likewise, at this
2018 Form 10-K
63
time, it is not possible to estimate the value of the claims asserted, and no assurances can be given that the
Company will be successful in its defense of these matters on the merits or otherwise. For these reasons, the
Company is unable to estimate the potential loss or range of loss in these matters; however, if the Company is not
successful in its defense efforts, the resolution of the Motor Oil MDL, the New Mexico Motor Oil Matter, the
Mississippi Motor Oil Matter and/or the Louisiana Motor Oil Matter could have a material adverse effect on the
Company’s consolidated financial statements as a whole.
7. Benefit plans
The Dollar General Corporation 401(k) Savings and Retirement Plan, which became effective on
January 1, 1998, is a safe harbor defined contribution plan and is subject to the Employee Retirement and Income
Security Act (“ERISA”).
A participant’s right to claim a distribution of his or her account balance is dependent on the plan, ERISA
guidelines and Internal Revenue Service regulations. All active participants are fully vested in all contributions to
the 401(k) plan. During 2018, 2017 and 2016, the Company expensed approximately $20.2 million, $17.5 million
and $16.0 million, respectively, for matching contributions.
The Company also has a nonqualified supplemental retirement plan (“SERP”) and compensation deferral
plan (“CDP”), known as the Dollar General Corporation CDP/SERP Plan, for a select group of management and
other key employees. The Company incurred compensation expense for these plans of approximately $0.7 million
in each of 2018, 2017 and 2016, respectively.
The deferred compensation liability associated with the CDP/SERP Plan is reflected in the consolidated
balance sheets as further disclosed in Note 5.
8. Share-based payments
The Company accounts for share-based payments in accordance with applicable accounting standards,
under which the fair value of each award is separately estimated and amortized into compensation expense over
the service period. The fair value of the Company’s stock option grants are estimated on the grant date using the
Black-Scholes-Merton valuation model. The application of this valuation model involves assumptions that are
judgmental and highly sensitive in the determination of compensation expense. The fair value of the Company’s
other share-based awards discussed below are estimated using the Company’s closing stock price on the grant
date. Forfeitures are estimated at the time of valuation and reduce expense ratably over the vesting period.
On July 6, 2007, the Company’s Board of Directors adopted the 2007 Stock Incentive Plan, which plan
was subsequently amended and restated on several occasions (as so amended and restated, the “Plan”). The Plan
allows the granting of stock options, stock appreciation rights, and other stock-based awards or dividend
equivalent rights to key employees, directors, consultants or other persons having a service relationship with the
Company, its subsidiaries and certain of its affiliates. The number of shares of Company common stock
authorized for grant under the Plan is 31,142,858.
Since May 2011, most of the share-based awards issued by the Company have been in the form of stock
options, restricted stock units and performance share units, and unless noted otherwise, the disclosures that follow
refer to such awards. With limited exceptions, stock options and restricted stock units granted to employees
generally vest ratably on an annual basis over four-year and three-year periods, respectively. Awards granted to
board members generally vest over a one-year period. The number of performance share units earned are based on
performance criteria measured over a period of one to three years, and such awards generally vest over a three-
year period. With limited exceptions, the performance share unit and restricted stock unit awards are payable in
shares of common stock on the vesting date.
64
2018 Form 10-K
The weighted average for key assumptions used in determining the fair value of all stock options granted
in the years ended February 1, 2019, February 2, 2018, and February 3, 2017, and a summary of the methodology
applied to develop each assumption, are as follows:
February 1, February 2,
2019
2018
February 3,
2017
Expected dividend yield . . . . . . . . . . . . . . .
Expected stock price volatility . . . . . . . . . .
Weighted average risk-free interest rate . .
Expected term of options (years) . . . . . . . .
1.2 %
25.0 %
2.7 %
6.3
1.3 %
25.5 %
2.1 %
6.3
1.3 %
25.4 %
1.6 %
6.3
Expected dividend yield - This is an estimate of the expected dividend yield on the Company’s stock. An
increase in the dividend yield will decrease compensation expense.
Expected stock price volatility - This is a measure of the amount by which the price of the Company’s
common stock has fluctuated or is expected to fluctuate. An increase in the expected volatility will increase
compensation expense.
Weighted average risk-free interest rate - This is the U.S. Treasury rate for the week of the grant having a
term approximating the expected life of the option. An increase in the risk-free interest rate will increase
compensation expense.
Expected term of options - This is the period of time over which the options granted are expected to
remain outstanding. The Company has estimated the expected term as the mid-point between the vesting date and
the contractual term of the option. An increase in the expected term will increase compensation expense.
A summary of the Company’s stock option activity during the year ended February 1, 2019 is as follows:
Options
Issued
Average Remaining
Exercise Contractual
Term in Years
Price
Intrinsic
Value
(Intrinsic value amounts reflected in thousands)
Balance, February 2, 2018 . . . . . . . . . . . 3,076,913 $ 71.31
93.72
Granted . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . .
65.74
Canceled . . . . . . . . . . . . . . . . . . . . . . . . .
81.61
Balance, February 1, 2019 . . . . . . . . . . . 3,257,250 $ 76.76
Exercisable at February 1, 2019 . . . . . . . 1,219,179 $ 67.17
764,783
(419,842)
(164,604)
7.3 $ 124,674
5.9 $ 58,356
The weighted average grant date fair value per share of options granted was $24.37, $17.66 and $20.06
during 2018, 2017 and 2016, respectively. The intrinsic value of options exercised during 2018, 2017 and 2016,
was $15.4 million, $7.3 million and $17.3 million, respectively.
The number of performance share unit awards earned is based upon the Company’s financial
performance as specified in the award agreement. A summary of performance share unit award activity during the
year ended February 1, 2019 is as follows:
Units
Issued
(Intrinsic value amounts reflected in thousands)
209,090
Balance, February 2, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
115,619
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Converted to common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (105,613)
Canceled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(8,107)
Balance, February 1, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
210,989 $ 24,272
Intrinsic
Value
2018 Form 10-K
65
The balance of performance share unit awards at February 1, 2019 includes 53,813 unvested awards, the
number of which was computed based upon the performance targets specified in the awards. The number of such
awards which will ultimately vest will be based in part on the Company’s financial performance in 2019 and
2020. The weighted average grant date fair value per share of performance share units granted was $92.98,
$70.68 and $84.67 during 2018, 2017 and 2016, respectively.
A summary of restricted stock unit award activity during the year ended February 1, 2019 is as follows:
Units
Issued
(Intrinsic value amounts reflected in thousands)
491,968
Balance, February 2, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
261,550
Converted to common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (233,053)
Canceled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(70,426)
Balance, February 1, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
450,039 $ 51,772
Intrinsic
Value
The weighted average grant date fair value per share of restricted stock units granted was $93.16, $70.90
and $84.56 during 2018, 2017 and 2016, respectively.
At February 1, 2019, an additional 3,264 options issued prior to June 2011 were outstanding, all of which
were exercisable, with an aggregate intrinsic value of $0.3 million. The intrinsic value of such options exercised
during 2018, 2017 and 2016 was $3.5 million, $6.9 million and $10.8 million, respectively.
At February 1, 2019, the total unrecognized compensation cost related to unvested stock-based awards
was $65.1 million with an expected weighted average expense recognition period of 2.1 years.
The fair value method of accounting for share-based awards resulted in share-based compensation
expense (a component of SG&A expenses) and a corresponding reduction in income before and net of income
taxes as follows:
(In thousands)
Year ended February 1, 2019
Stock
Performance Restricted
Options Share Units Stock Units Total
Pre-tax . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,556 $
Net of tax . . . . . . . . . . . . . . . . . . . . . . . . $ 10,902 $
8,597 $ 17,726 $ 40,879
6,439 $ 13,277 $ 30,618
Year ended February 2, 2018
Pre-tax . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11,599 $
Net of tax . . . . . . . . . . . . . . . . . . . . . . . . $ 7,223 $
6,159 $ 16,565 $ 34,323
3,835 $ 10,315 $ 21,373
Year ended February 3, 2017
Pre-tax . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,008 $
Net of tax . . . . . . . . . . . . . . . . . . . . . . . . $ 7,325 $
7,258 $ 17,701 $ 36,967
4,427 $ 10,798 $ 22,550
9. Segment reporting
The Company manages its business on the basis of one reportable operating segment. See Note 1 for a
brief description of the Company’s business. As of February 1, 2019, all of the Company’s operations were
located within the United States with the exception of certain subsidiaries in Hong Kong and China, which
collectively are not material with regard to assets, results of operations or otherwise, to the consolidated financial
66
2018 Form 10-K
statements. The following net sales data is presented in accordance with accounting standards related to
disclosures about segments of an enterprise.
(in thousands)
Classes of similar products:
2018
2017
2016
Consumables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 19,865,086 $ 18,054,785 $ 16,798,881
2,674,319
Seasonal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Home products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,373,397
1,140,001
Apparel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 25,625,043 $ 23,470,967 $ 21,986,598
3,050,282
1,506,054
1,203,621
2,837,310
1,400,618
1,178,254
10. Common stock transactions
On August 29, 2012, the Company’s Board of Directors authorized a common stock repurchase program,
which the Board has since increased on several occasions. On March 13, 2019, the Company’s Board of Directors
authorized a $1.0 billion increase to the existing common stock repurchase program and as of such date, a
cumulative total of $7.0 billion had been authorized under the program since its inception. The repurchase
authorization has no expiration date and allows repurchases from time to time in the open market or in privately
negotiated transactions. The timing and number of shares purchased depends on a variety of factors, such as price,
market conditions, compliance with the covenants and restrictions under the Company’s debt agreements and
other factors. Repurchases under the program may be funded from available cash or borrowings including under
the Company’s Revolving Facility and issuance of CP Notes discussed in further detail in Note 4.
During the years ended February 1, 2019, February 2, 2018, and February 3, 2017, the Company
repurchased approximately 9.9 million shares of its common stock at a total cost of $1.0 billion, approximately
7.1 million shares of its common stock at a total cost of $0.6 billion, and approximately 12.4 million shares of its
common stock at a total cost of $1.0 billion, respectively, pursuant to its common stock repurchase program.
The Company paid quarterly cash dividends of $0.29 per share in 2018. On March 13, 2019, the
Company’s Board of Directors declared a quarterly cash dividend of $0.32 per share, which is payable on or
before April 23, 2019 to shareholders of record on April 9, 2019. The amount and declaration of future cash
dividends is subject to the sole discretion of the Company’s Board of Directors and will depend upon, among
other things, the Company’s results of operations, cash requirements, financial condition, contractual restrictions
and other factors that the Board may deem relevant in its sole discretion.
2018 Form 10-K
67
11. Quarterly financial data (unaudited)
The following is selected unaudited quarterly financial data for the fiscal years ended February 1, 2019
and February 2, 2018. Each quarterly period listed below was a 13-week accounting period. The sum of the four
quarters for any given year may not equal annual totals due to rounding.
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
(In thousands)
2018:
Net sales . . . . . . . . . . . . . . . . . . $ 6,114,463 $ 6,443,309 $ 6,417,462 $ 6,649,809
Gross profit . . . . . . . . . . . . . . . .
2,071,689
Operating profit . . . . . . . . . . . . .
638,503
483,241
Net income . . . . . . . . . . . . . . . .
Basic earnings per share . . . . . .
1.85
Diluted earnings per share . . . .
1.84
1,895,059
442,143
334,142
1.26
1.26
1,862,249
490,184
364,852
1.36
1.36
1,974,873
545,476
407,237
1.53
1.52
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
(In thousands)
2017:
Net sales . . . . . . . . . . . . . . . . . . $ 5,609,625 $ 5,828,305 $ 5,903,606 $ 6,129,431
Gross profit . . . . . . . . . . . . . . . .
1,965,398
Operating profit . . . . . . . . . . . . .
623,446
712,155
Net income . . . . . . . . . . . . . . . .
Basic earnings per share . . . . . .
2.63
Diluted earnings per share . . . .
2.63
1,766,456
417,431
252,533
0.93
0.93
1,698,983
473,795
279,489
1.02
1.02
1,790,522
493,146
294,783
1.08
1.08
The Company purchased 15 retail store locations and assumed the lease obligations on approximately
300 retail store locations in 2017, and relocated certain of its existing stores to the acquired locations. As a result,
the Company incurred expenses, primarily related to costs for remaining lease liabilities, of $7.3 million
($4.4 million net of tax, or $0.02 per diluted share), which was recognized in Selling, general and administrative
expense in the second quarter of 2017.
In the fourth quarter of 2017, the Company closed an incremental 35 stores as result of a strategic review
process. The Company incurred $28.3 million of costs ($17.6 million net of tax, or $0.07 per diluted share) related
to these store closings, most of which was in the form of SG&A expenses for remaining lease liabilities.
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2018 Form 10-K
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
ITEM 9A. CONTROLS AND PROCEDURES
(a) Disclosure Controls and Procedures. Under the supervision and with the participation of our
management, including our principal executive officer and principal financial officer, we conducted an evaluation
of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) or 15d-15(e) promulgated
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on this evaluation, our
principal executive officer and our principal financial officer concluded that our disclosure controls and
procedures were effective as of the end of the period covered by this report.
(b) Management’s Annual Report on Internal Control Over Financial Reporting. Our management
prepared and is responsible for the consolidated financial statements and all related financial information
contained in this report. This responsibility includes establishing and maintaining adequate internal control over
financial reporting as defined in Rule 13a-15(f) or 15d-15(f) under the Exchange Act. Our internal control over
financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with United States generally accepted
accounting principles.
To comply with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, management
designed and implemented a structured and comprehensive assessment process to evaluate the effectiveness of its
internal control over financial reporting. Such assessment was based on criteria established in Internal Control—
Integrated Framework (2013 Framework) issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Because of its inherent limitations, a system of internal control over financial reporting can provide
only reasonable assurance and may not prevent or detect misstatements. Management regularly monitors our
internal control over financial reporting, and actions are taken to correct any deficiencies as they are identified.
Based on its assessment, management has concluded that our internal control over financial reporting is effective
as of February 1, 2019.
Ernst & Young LLP, the independent registered public accounting firm that audited our consolidated
financial statements, has issued an attestation report on our internal control over financial reporting. Such
attestation report is contained below.
2018 Form 10-K
69
(c) Attestation Report of Independent Registered Public Accounting Firm.
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of
Dollar General Corporation
Opinion on Internal Control over Financial Reporting
We have audited Dollar General Corporation and subsidiaries’ internal control over financial reporting as
of February 1, 2019, based on criteria established in Internal Control—Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In
our opinion, Dollar General Corporation and subsidiaries (the Company) maintained, in all material respects,
effective internal control over financial reporting as of February 1, 2019, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States) (PCAOB), the 2018 consolidated financial statements of the Company and our report dated
March 22, 2019, expressed an unqualified opinion thereon.
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 Annual 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
70
2018 Form 10-K
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
Nashville, Tennessee
March 22, 2019
/s/ Ernst & Young LLP
(d) Changes in Internal Control Over Financial Reporting. There have been no changes during the
quarter ended February 1, 2019 in our internal control over financial reporting (as defined in Exchange Act
Rule 13a-15(f) or Rule 15d-15(f)) that have materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
Long-Term Incentive Program: 2019 Annual Equity Grants
On March 20, 2019, the Company’s Compensation Committee (the “Committee”) awarded 128,398 non-
qualified stock options (“Options”) and 34,124 performance share units (“PSUs”) to Mr. Vasos, 21,667 Options
and 5,758 PSUs to Messrs. Garratt and Reiser, and 24,877 Options and 6,611 PSUs to Mr. Owen on the terms and
subject to the conditions set forth in the form of Option award agreement (“Form Option Agreement”) and form of
PSU award agreement (“Form PSU Agreement”) attached hereto as Exhibit 10.7 and Exhibit 10.15, respectively
(collectively, the “Form Award Agreements”), and subject to the terms and conditions of the previously filed
Dollar General Corporation Amended and Restated 2007 Stock Incentive Plan.
The Options, which were granted on terms substantially similar to the prior year, have a term of ten years
and, subject to earlier forfeiture or accelerated vesting under certain circumstances described in the Form Option
Agreement, generally will vest in four equal annual installments beginning on April 1, 2020.
The PSUs represent a target number of units that can be earned if certain performance measures are
achieved during the applicable performance periods and if certain additional vesting requirements are met. Fifty
percent of the target number of PSUs is subject to an adjusted EBITDA performance measure with a performance
period of the Company’s fiscal year 2019. The other fifty percent of the target number of PSUs is subject to an
adjusted ROIC performance measure which is the average of adjusted ROIC for the Company’s fiscal years 2019,
2020 and 2021. All performance measures were established by the Committee on the grant date. The number of
PSUs earned will vary between 0% and 300% of the target amount based on actual performance compared to
target performance on a graduated scale, with performance at the target level resulting in 100% of the target
number of PSUs being earned. At the conclusion of each applicable performance period, the Committee will
determine the level of achievement of each performance goal measure and the corresponding number of PSUs
earned by each grantee. Subject to certain pro-rata vesting conditions, one-third of the PSUs earned by each
grantee for adjusted EBITDA performance will vest in equal installments on April 1, 2020, April 1, 2021 and
April 1, 2022, in each case subject to the grantee’s continued employment with the Company and certain
accelerated vesting provisions described in the Form PSU Agreement. Subject to certain pro-rata vesting
conditions, the PSUs earned by each grantee for adjusted ROIC performance will vest on April 1, 2022, subject to
the grantee’s continued employment with the Company and certain accelerated vesting provisions described in the
Form PSU Agreement.
The foregoing descriptions of all Options and PSU awards and the Form Award Agreements are
summaries only, do not purport to be complete, and are qualified in their entirety by reference to the filed Form
Option Agreement and Form PSU Agreement attached hereto as Exhibit 10.7 and Exhibit 10.15, respectively.
2018 Form 10-K
71
Short-Term Incentive Program: 2019 Teamshare
On March 20, 2019, the Committee approved the Company’s 2019 short-term incentive bonus program
applicable to the Company’s named executive officers (“2019 Teamshare”) on the terms and subject to the
conditions set forth in the 2019 Teamshare bonus program document attached hereto as Exhibit 10.34.
The Committee again selected adjusted EBIT as the Company-wide performance measure for 2019
Teamshare and established the target level of adjusted EBIT consistent with adjusted EBIT in the Company’s
fiscal year 2019 financial plan previously approved by the Board of Directors in January 2019. The Committee
determined that adjusted EBIT shall mean the Company’s Operating Profit as calculated in accordance with
United States generally accepted accounting principles, but shall exclude the impact of (a) any costs, fees and
expenses directly related to the consideration, negotiation, preparation, or consummation of any asset sale, merger
or other transaction that results in a Change in Control (within the meaning of the Dollar General Corporation
Amended and Restated 2007 Stock Incentive Plan) of the Company or any offering of Company common stock or
other security; (b) disaster-related charges; (c) any gains or losses associated with the Company’s LIFO
computation; and (d) unless the Committee disallows any such item, (i) any unbudgeted loss as a result of the
resolution of a legal matter or (ii) any unplanned loss(es) or gain(s) related to the implementation of accounting or
tax legislative changes or (iii) any unplanned loss(es) or gain(s) of a non-recurring nature, provided that in the
case of each of (i), (ii) and (iii) such amount equals or exceeds $1 million from a single loss or gain, as applicable,
and $10 million in the aggregate. The Committee established the threshold below which no bonus may be paid
under 2019 Teamshare at 90% of the target level of the adjusted EBIT performance measure and the maximum
above which no additional bonus may be paid at 120% of the target level of the adjusted EBIT performance
measure. The amount of bonus paid to named executive officers will vary between 0% and 300% of the target
bonus payment amount based on actual Company performance compared to target performance on a graduated
scale, with performance at the target level resulting in 100% of the target bonus amount being earned, subject to
individual eligibility requirements and additional individual performance factors. If a named executive officer is
determined to be eligible to receive a 2019 Teamshare bonus payout in accordance with the eligibility rules,
adjustments to bonus payouts may be made upward or downward based upon individual performance or other
factors. Mr. Vasos’s target percentage of base salary payout for 2019 Teamshare is 150%, and Messrs. Garratt,
Owen, Ravener and Reiser’s target percentage of base salary payout for 2019 Teamshare is 75%.
The foregoing description of 2019 Teamshare is a summary only, does not purport to be complete, and is
qualified in its entirety by reference to the filed 2019 Teamshare Bonus Program document attached hereto as
Exhibit 10.34.
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2018 Form 10-K
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
(a) Information Regarding Directors and Executive Officers. The information required by this Item 10
regarding our directors and director nominees is contained under the captions “Who are the nominees this year”
and “Are there any family relationships between any of the directors, executive officers or nominees,” in each
case under the heading “Proposal 1: Election of Directors” in our definitive Proxy Statement to be filed for our
Annual Meeting of Shareholders to be held on May 29, 2019 (the “2019 Proxy Statement”), which information
under such captions is incorporated herein by reference. Information required by this Item 10 regarding our
executive officers is contained in Part I of this Form 10-K under the caption “Executive Officers of the
Registrant,” which information under such caption is incorporated herein by reference.
(b) Compliance with Section 16(a) of the Exchange Act. Information required by this Item 10 regarding
compliance with Section 16(a) of the Exchange Act is contained under the caption “Section 16(a) Beneficial
Ownership Reporting Compliance” under the heading “Security Ownership” in the 2019 Proxy Statement, which
information under such caption is incorporated herein by reference.
(c) Code of Business Conduct and Ethics. We have adopted a Code of Business Conduct and Ethics that
applies to all of our employees, officers and Board members. This Code is posted on the Investor Information
section of our Internet website at www.dollargeneral.com. If we choose to no longer post such Code, we will
provide a free copy to any person upon written request to Dollar General Corporation, c/o Investor Relations
Department, 100 Mission Ridge, Goodlettsville, TN 37072. We intend to provide any required disclosure of an
amendment to or waiver from such Code that applies to our principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar functions, on our Internet website located
at www.dollargeneral.com promptly following the amendment or waiver. We may elect to disclose any such
amendment or waiver in a report on Form 8-K filed with the SEC either in addition to or in lieu of the website
disclosure. The information contained on or connected to our Internet website is not incorporated by reference into
this Form 10-K and should not be considered part of this or any other report that we file with or furnish to the
SEC.
(d) Procedures for Shareholders to Recommend Director Nominees. There have been no material
changes to the procedures by which security holders may recommend nominees to the registrant’s Board of
Directors.
(e) Audit Committee Information. Information required by this Item 10 regarding our audit committee
and our audit committee financial experts is contained under the captions “What functions are performed by the
Audit, Compensation, and Nominating Committees” and “Does Dollar General have an audit committee financial
expert serving on its Audit Committee,” in each case under the heading “Corporate Governance” in the 2019
Proxy Statement, which information pertaining to the audit committee and its membership and audit committee
financial experts under such captions is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item 11 regarding director and executive officer compensation, the
Compensation Committee Report, the risks arising from our compensation policies and practices for employees,
pay ratio disclosure, and compensation committee interlocks and insider participation is contained under the
captions “Director Compensation” and “Executive Compensation” in the 2019 Proxy Statement, which
information under such captions is incorporated herein by reference.
2018 Form 10-K
73
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
(a) Equity Compensation Plan Information. The following table sets forth information about securities
authorized for issuance under our compensation plans (including individual compensation arrangements) as of
February 1, 2019:
Number of
securities remaining
available for future
issuance under
plans (excluding
securities reflected
in column (a))
(c)
Number of securities
to be issued upon
exercise of
Weighted-average equity compensation
exercise price of
Plan category
Equity compensation plans approved by security
outstanding options, outstanding options,
warrants and rights warrants and rights
(a)
(b)
holders(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,043,349 $
76.72
15,930,280
Equity compensation plans not approved by security
holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
4,043,349 $
—
76.72
—
15,930,280
(1) Column (a) consists of shares of common stock issuable upon exercise of outstanding options and upon
vesting and payment of restricted stock units, performance share units and deferred shares, including dividend
equivalents accrued thereon, under the Amended and Restated 2007 Stock Incentive Plan. Restricted stock
units, performance share units, deferred shares and dividend equivalents are settled for shares of common
stock on a one-for-one basis and have no exercise price. Accordingly, they have been excluded for purposes
of computing the weighted-average exercise price in column (b). Column (c) consists of shares reserved for
issuance pursuant to the Amended and Restated 2007 Stock Incentive Plan, whether in the form of stock,
restricted stock, restricted stock units, performance share units or other stock-based awards or upon the
exercise of an option or right.
(b) Other Information. The information required by this Item 12 regarding security ownership of certain
beneficial owners and our management is contained under the caption “Security Ownership” in the 2019 Proxy
Statement, which information under such caption is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
The information required by this Item 13 regarding certain relationships and related transactions is
contained under the caption “Transactions with Management and Others” in the 2019 Proxy Statement, which
information under such caption is incorporated herein by reference.
The information required by this Item 13 regarding director independence is contained under the caption
“Director Independence” in the 2019 Proxy Statement, which information under such caption is incorporated
herein by reference.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by this Item 14 regarding fees we paid to our principal accountant and the pre-
approval policies and procedures established by the Audit Committee of our Board of Directors is contained under
the caption “Fees Paid to Auditors” in the 2019 Proxy Statement, which information under such caption is
incorporated herein by reference.
74
2018 Form 10-K
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
PART IV
(a) Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Consolidated Statements of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Consolidated Statements of Shareholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
(b) All schedules for which provision is made in the applicable accounting regulations of the SEC are not
required under the related instructions, are inapplicable or the information is included in the
Consolidated Financial Statements and, therefore, have been omitted.
(c) Exhibits:
EXHIBIT INDEX
3.1 Amended and Restated Charter of Dollar General Corporation (complete copy as amended for SEC
filing purposes only) (incorporated by reference to Exhibit 3.1 to Dollar General Corporation’s
Quarterly Report on Form 10-Q for the quarter ended May 3, 2013, filed with the SEC on June 4, 2013
(file no. 001-11421))
3.2 Bylaws of Dollar General Corporation (as amended and restated on March 23, 2017) (incorporated by
reference to Exhibit 3.2 to Dollar General Corporation’s Annual Report on Form 10-K for the fiscal
year ended February 3, 2017, filed with the SEC on March 24, 2017 (file no. 001-11421))
4.1 Form of Stock Certificate for Common Stock (incorporated by reference to Exhibit 4.1 to Dollar
General Corporation’s Registration Statement on Form S-1 (file no. 333-161464))
4.2 Form of 3.250% Senior Notes due 2023 (included in Exhibit 4.7) (incorporated by reference to
Exhibit 4.2 to Dollar General Corporation’s Current Report on Form 8-K dated April 8, 2013, filed
with the SEC on April 11, 2013 (file no. 001-11421))
4.3 Form of 4.150% Senior Notes due 2025 (included in Exhibit 4.8) (incorporated by reference to
Exhibit 4.1 to Dollar General Corporation’s Current Report on Form 8-K dated October 15, 2015, filed
with the SEC on October 20, 2015 (file no. 001-11421))
4.4 Form of 3.875% Senior Notes due 2027 (included in Exhibit 4.9) (incorporated by reference to
Exhibit 4.1 to Dollar General Corporation’s Current Report on Form 8-K dated April 11, 2017, filed
with the SEC on April 11, 2017 (file no. 001-11421))
4.5 Form of 4.125% Senior Notes due 2028 (included in Exhibit 4.10) (incorporated by reference to
Exhibit 4.1 to Dollar General Corporation’s Current Report on Form 8-K dated April 10, 2018, filed
with the SEC on April 10, 2018 (file no. 001-11421))
4.6 Indenture, dated as of July 12, 2012, between Dollar General Corporation, as issuer, and U.S. Bank
National Association, as trustee (incorporated by reference to Exhibit 4.1 to Dollar General
Corporation’s Current Report on Form 8-K dated July 12, 2012, filed with the SEC on July 17, 2012
(file no. 001-11421))
2018 Form 10-K
75
4.7 Fourth Supplemental Indenture, dated as of April 11, 2013, between Dollar General Corporation, as
issuer, and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.2 to
Dollar General Corporation’s Current Report on Form 8-K dated April 8, 2013, filed with the SEC on
April 11, 2013 (file no. 001-11421))
4.8 Fifth Supplemental Indenture, dated as of October 20, 2015, between Dollar General Corporation, as
issuer, and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to
Dollar General Corporation’s Current Report on Form 8-K dated October 15, 2015, filed with the SEC
on October 20, 2015 (file no. 001-11421))
4.9 Sixth Supplemental Indenture, dated as of April 11, 2017, between Dollar General Corporation and
U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to Dollar General
Corporation’s Current Report on Form 8-K dated April 11, 2017, filed with the SEC on April 11, 2017
(file no. 001-11421))
4.10 Seventh Supplemental Indenture, dated as of April 10, 2018, between Dollar General Corporation and
U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to Dollar General
Corporation’s Current Report on Form 8-K dated April 10, 2018, filed with the SEC on April 10, 2018
(file no. 001-11421))
4.11 Amended and Restated Credit Agreement, dated as of February 22, 2017, among Dollar General
Corporation, as borrower, Citibank, N.A., as administrative agent, and the other credit parties and
lenders party thereto (incorporated by reference to Exhibit 4.1 to Dollar General Corporation’s Current
Report on Form 8-K dated February 22, 2017, filed with the SEC on February 22, 2017 (file
no. 001-11421))
4.12 Amendment No. 1 to Amended and Restated Credit Agreement, dated as of February 4, 2019, among
Dollar General Corporation, as borrower, Citibank, N.A., as administrative agent, and the other credit
parties and lenders party thereto
10.1 Dollar General Corporation Amended and Restated 2007 Stock Incentive Plan (adopted November 30,
2016 and approved by shareholders on May 31, 2017) (incorporated by reference to Exhibit 10.2 to
Dollar General Corporation’s Quarterly Report on Form 10-Q for the fiscal quarter ended October 28,
2016, filed with the SEC on December 1, 2016 (file no. 001-11421))*
10.2 Form of Stock Option Award Agreement (approved May 24, 2011) for awards made prior to December
2014 to certain newly hired and promoted employees of Dollar General Corporation pursuant to the
Amended and Restated 2007 Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to Dollar
General Corporation’s Quarterly Report on Form 10-Q for the fiscal quarter ended April 29, 2011,
filed with the SEC on June 1, 2011 (file no. 001-11421))*
10.3 Form of Stock Option Award Agreement (approved March 20, 2012) for annual awards beginning
March 2012 and prior to March 2015 to certain employees of Dollar General Corporation pursuant to
the Amended and Restated 2007 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to
Dollar General Corporation’s Current Report on Form 8-K dated March 20, 2012, filed with the SEC
on March 26, 2012 (file no. 001-11421))*
10.4 Form of Stock Option Award Agreement (approved August 26, 2014) for annual awards beginning
March 2015 and prior to March 2016 to certain employees of Dollar General Corporation pursuant to
the Amended and Restated 2007 Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to
Dollar General Corporation’s Quarterly Report on Form 10-Q for the fiscal quarter ended October 31,
2014, filed with the SEC on December 4, 2014 (file no. 001-11421))*
76
2018 Form 10-K
10.5 Form of Stock Option Award Agreement (approved March 16, 2016) for awards beginning March
2016 and prior to March 2017 to certain employees of Dollar General Corporation pursuant to the
Amended and Restated 2007 Stock Incentive Plan (incorporated by reference to Exhibit 10.5 to Dollar
General Corporation’s Annual Report on Form 10-K for the fiscal year ended January 29, 2016, filed
with the SEC on March 22, 2016 (file no. 001-11421))*
10.6 Form of Stock Option Award Agreement (approved March 22, 2017) for awards beginning March
2017 and prior to March 2018 to certain employees of Dollar General Corporation pursuant to the
Dollar General Corporation Amended and Restated 2007 Stock Incentive Plan (incorporated by
reference to Exhibit 10.7 to Dollar General Corporation’s Annual Report on Form 10-K for the fiscal
year ended February 3, 2017, filed with the SEC on March 24, 2017 (file no. 001-11421))*
10.7 Form of Stock Option Award Agreement (approved March 21, 2018) for awards beginning March
2018 to certain employees of Dollar General Corporation pursuant to the Dollar General Corporation
Amended and Restated 2007 Stock Incentive Plan (incorporated by reference to Exhibit 10.7 to Dollar
General Corporation’s Annual Report on Form 10-K for the fiscal year ended February 2, 2018, filed
with the SEC on March 23, 2018 (file no. 001-11421))*
10.8 Form of Stock Option Award Agreement (approved August 26, 2014) for awards beginning December
2014 and prior to May 2016 to certain newly hired and promoted employees of Dollar General
Corporation pursuant to the Amended and Restated 2007 Stock Incentive Plan (incorporated by
reference to Exhibit 10.3 to Dollar General Corporation’s Quarterly Report on Form 10-Q for the fiscal
quarter ended October 31, 2014, filed with the SEC on December 4, 2014 (file no. 001-11421))*
10.9 Form of Stock Option Award Agreement (approved May 24, 2016) for awards beginning May 2016
and prior to March 2017 to certain newly hired and promoted employees of Dollar General
Corporation pursuant to the Amended and Restated 2007 Stock Incentive Plan (incorporated by
reference to Exhibit 10.3 to Dollar General Corporation’s Quarterly Report on Form 10-Q for the fiscal
quarter ended April 29, 2016, filed with the SEC on May 26, 2016 (file no. 001-11421))*
10.10 Form of Stock Option Award Agreement (approved March 22, 2017) for awards beginning March
2017 and prior to December 2017 to certain newly hired and promoted employees of Dollar General
Corporation pursuant to the Dollar General Corporation Amended and Restated 2007 Stock Incentive
Plan (incorporated by reference to Exhibit 10.10 to Dollar General Corporation’s Annual Report on
Form 10-K for the fiscal year ended February 3, 2017, filed with the SEC on March 24, 2017 (file
no. 001-11421))*
10.11 Form of Stock Option Award Agreement (approved December 5, 2017) for awards beginning
December 2017 to certain newly hired and promoted employees of Dollar General Corporation
pursuant to the Dollar General Corporation Amended and Restated 2007 Stock Incentive Plan
(incorporated by reference to Exhibit 10.2 to Dollar General Corporation’s Quarterly Report on Form
10-Q for the fiscal quarter ended November 3, 2017, filed with the SEC on December 7, 2017 (file
no. 001-11421))*
10.12 Form of Performance Share Unit Award Agreement (approved March 16, 2016) for 2016 awards to
certain employees of Dollar General Corporation pursuant to the Amended and Restated 2007 Stock
Incentive Plan (incorporated by reference to Exhibit 10.10 to Dollar General Corporation’s Annual
Report on Form 10-K for the fiscal year ended January 29, 2016, filed with the SEC on March 22,
2016 (file no. 001-11421))*
2018 Form 10-K
77
10.13 Form of Performance Share Unit Award Agreement (approved March 22, 2017) for 2017 awards to
certain employees of Dollar General Corporation pursuant to the Dollar General Corporation Amended
and Restated 2007 Stock Incentive Plan (incorporated by reference to Exhibit 10.13 to Dollar General
Corporation’s Annual Report on Form 10-K for the fiscal year ended February 3, 2017, filed with the
SEC on March 24, 2017 (file no. 001-11421))*
10.14 Form of Performance Share Unit Award Agreement (approved March 21, 2018) for 2018 awards to
certain employees of Dollar General Corporation pursuant to the Dollar General Corporation Amended
and Restated 2007 Stock Incentive Plan (incorporated by reference to Exhibit 10.15 to Dollar General
Corporation’s Annual Report on Form 10-K for the fiscal year ended February 2, 2018, filed with the
SEC on March 23, 2018 (file no. 001-11421))*
10.15 Form of Performance Share Unit Award Agreement (approved March 20, 2019) for 2019 awards to
certain employees of Dollar General Corporation pursuant to the Dollar General Corporation Amended
and Restated 2007 Stock Incentive Plan*
10.16 Form of Restricted Stock Unit Award Agreement (approved March 16, 2016) for awards beginning
March 2016 and prior to March 2017 to certain employees of Dollar General Corporation pursuant to
the Amended and Restated 2007 Stock Incentive Plan (incorporated by reference to Exhibit 10.13 to
Dollar General Corporation’s Annual Report on Form 10-K for the fiscal year ended January 29, 2016,
filed with the SEC on March 22, 2016 (file no. 001-11421))*
10.17 Form of Restricted Stock Unit Award Agreement (approved March 22, 2017) for awards beginning
March 2017 and prior to March 2018 to certain employees of Dollar General Corporation pursuant to
the Dollar General Corporation Amended and Restated 2007 Stock Incentive Plan (incorporated by
reference to Exhibit 10.16 to Dollar General Corporation’s Annual Report on Form 10-K for the fiscal
year ended February 3, 2017, filed with the SEC on March 24, 2017 (file no. 001-11421))*
10.18 Form of Restricted Stock Unit Award Agreement (approved March 21, 2018) for awards beginning
March 2018 to certain employees of Dollar General Corporation pursuant to the Dollar General
Corporation Amended and Restated 2007 Stock Incentive Plan (incorporated by reference to
Exhibit 10.19 to Dollar General Corporation’s Annual Report on Form 10-K for the fiscal year ended
February 2, 2018, filed with the SEC on March 23, 2018 (file no. 001-11421))*
10.19 Form of Restricted Stock Unit Award Agreement for awards prior to May 2011 to non-employee
directors of Dollar General Corporation pursuant to the Amended and Restated 2007 Stock Incentive
Plan (incorporated by reference to Exhibit 10.15 to Dollar General Corporation’s Registration
Statement on Form S-1 (file no. 333-161464))
10.20 Form of Restricted Stock Unit Award Agreement (approved May 24, 2011) for awards beginning May
2011 and prior to May 2014 to non-employee directors of Dollar General Corporation pursuant to the
Amended and Restated 2007 Stock Incentive Plan (incorporated by reference to Exhibit 10.3 to Dollar
General Corporation’s Quarterly Report on Form 10-Q for the fiscal quarter ended April 29, 2011,
filed with the SEC on June 1, 2011 (file no. 001-11421))
10.21 Form of Restricted Stock Unit Award Agreement (approved May 28, 2014) for awards beginning
May 2014 and prior to February 2015 to non-employee directors of Dollar General Corporation
pursuant to the Amended and Restated 2007 Stock Incentive Plan (incorporated by reference to
Exhibit 10.4 to Dollar General Corporation’s Quarterly Report on Form 10-Q for the fiscal quarter
ended May 2, 2014, filed with the SEC on June 3, 2014 (file no. 001-11421))
78
2018 Form 10-K
10.22 Form of Restricted Stock Unit Award Agreement (approved December 3, 2014) for awards beginning
February 2015 and prior to May 2016 to non-employee directors of Dollar General Corporation
pursuant to the Amended and Restated 2007 Stock Incentive Plan (incorporated by reference to
Exhibit 10.7 to Dollar General Corporation’s Quarterly Report on Form 10-Q for the fiscal quarter
ended October 31, 2014, filed with the SEC on December 4, 2014 (file no. 001-11421))
10.23 Form of Restricted Stock Unit Award Agreement (approved May 24, 2016) for awards beginning
May 2016 and prior to May 2017 to non-employee directors of Dollar General Corporation pursuant to
the Amended and Restated 2007 Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to
Dollar General Corporation’s Quarterly Report on Form 10-Q for the fiscal quarter ended
April 29, 2016, filed with the SEC on May 26, 2016 (file no. 001-11421))
10.24 Form of Restricted Stock Unit Award Agreement (approved May 30, 2017) for awards beginning
May 2017 to non-employee directors of Dollar General Corporation pursuant to the Dollar General
Corporation Amended and Restated 2007 Stock Incentive Plan (incorporated by reference to
Exhibit 10.2 to Dollar General Corporation’s Quarterly Report on Form 10-Q for the fiscal quarter
ended May 5, 2017, filed with the SEC on June 1, 2017 (file no. 001-11421))
10.25 Form of Restricted Stock Unit Award Agreement (approved January 26, 2016) for awards beginning
February 1, 2016 and prior to November 28, 2018 to non-executive Chairmen of the Board of Directors
of Dollar General Corporation pursuant to the Amended and Restated 2007 Stock Incentive Plan
(incorporated by reference to Exhibit 10.20 to Dollar General Corporation’s Annual Report on
Form 10-K for the fiscal year ended January 29, 2016, filed with the SEC on March 22, 2016 (file
no. 001-11421))
10.26 Form of Restricted Stock Unit Award Agreement (approved November 28, 2018) for awards beginning
after November 28, 2018 to non-executive Chairmen of the Board of Directors of Dollar General
Corporation pursuant to the Dollar General Corporation Amended and Restated 2007 Stock Incentive
Plan (incorporated by reference to Exhibit 10.3 to Dollar General Corporation’s Quarterly Report on
Form 10-Q for the fiscal quarter ended November 2, 2018, filed with the SEC on December 4, 2018
(file no. 01-11421))
10.27 Form of Stock Option Award Agreement for awards to non-employee directors of Dollar General
Corporation pursuant to the Amended and Restated 2007 Stock Incentive Plan (incorporated by
reference to Exhibit 10.16 to Dollar General Corporation’s Registration Statement on Form S-1 (file
no. 333-161464))
10.28 Dollar General Corporation CDP/SERP Plan (as amended and restated effective December 31, 2007)
(incorporated by reference to Exhibit 10.10 to Dollar General Corporation’s Registration Statement on
Form S-4 (file no. 333-148320))*
10.29 First Amendment to the Dollar General Corporation CDP/SERP Plan (as amended and restated
effective December 31, 2007) (incorporated by reference to Exhibit 10.11 to Dollar General
Corporation’s Registration Statement on Form S-4 (file no. 333-148320))*
10.30 Second Amendment to the Dollar General Corporation CDP/SERP Plan (as amended and restated
effective December 31, 2007), dated as of June 3, 2008 (incorporated by reference to Exhibit 10.6 to
Dollar General Corporation’s Quarterly Report on Form 10-Q for the quarter ended August 1, 2008,
filed with the SEC on September 3, 2008 (file no. 001-11421))*
10.31 Dollar General Corporation Non-Employee Director Deferred Compensation Plan (approved
December 3, 2014) (incorporated by reference to Exhibit 10.6 to Dollar General Corporation’s
Quarterly Report on Form 10-Q for the fiscal quarter ended October 31, 2014, filed with the SEC on
December 4, 2014 (file no. 001-11421))
2018 Form 10-K
79
10.32 Amended and Restated Dollar General Corporation Annual Incentive Plan (adopted November 30,
2016 and approved by shareholders on May 31, 2017) (incorporated by reference to Exhibit 10.1 to
Dollar General Corporation’s Quarterly Report on Form 10-Q for the fiscal quarter ended
October 28, 2016, filed with the SEC on December 1, 2016 (file no. 001-11421))*
10.33 Dollar General Corporation 2018 Teamshare Bonus Program for Named Executive Officers
(incorporated by reference to Exhibit 10.35 to Dollar General Corporation’s Annual Report on
Form 10-K for the fiscal year ended February 2, 2018, filed with the SEC on March 23, 2018 (file
no. 001-11421))*
10.34 Dollar General Corporation 2019 Teamshare Bonus Program for Named Executive Officers*
10.35 Summary of Dollar General Corporation Life Insurance Program as Applicable to Executive Officers
(incorporated by reference to Exhibit 10.36 to Dollar General Corporation’s Annual Report on
Form 10-K for the fiscal year ended February 2, 2018, filed with the SEC on March 23, 2018 (file
no. 001-11421))*
10.36 Dollar General Corporation Executive Relocation Policy, as amended (effective March 21, 2018)
(incorporated by reference to Exhibit 10.37 to Dollar General Corporation’s Annual Report on
Form 10-K for the fiscal year ended February 2, 2018, filed with the SEC on March 23, 2018 (file
no. 001-11421))*
10.37 Summary of Non-Employee Director Compensation effective February 3, 2018 (incorporated by
reference to Exhibit 10.1 to Dollar General Corporation’s Quarterly Report on Form 10-Q for the fiscal
quarter ended November 3, 2017, filed with the SEC on December 7, 2017 (file no. 001-11421))
10.38 Employment Agreement, effective June 3, 2018, between Dollar General Corporation and Todd J.
Vasos (incorporated by reference to Exhibit 99 to Dollar General Corporation’s Current Report on
Form 8-K dated May 31, 2018, filed with the SEC on May 31, 2018 (file no. 001-11421))*
10.39 Form of Stock Option Award Agreement between Dollar General Corporation and Todd J. Vasos for
June 3, 2015 award (incorporated by reference to Exhibit 99.2 to Dollar General Corporation’s Current
Report on Form 8-K dated May 27, 2015, filed with the SEC on May 28, 2015 (file no. 001-11421))*
10.40 Form of Stock Option Award Agreement between Dollar General Corporation and Todd J. Vasos
(approved March 16, 2016) (incorporated by reference to Exhibit 10.38 to Dollar General
Corporation’s Annual Report on Form 10-K for the fiscal year ended January 29, 2016, filed with the
SEC on March 22, 2016 (file no. 001-11421))*
10.41 Form of Executive Vice President Employment Agreement with attached Schedule of Executive Vice
Presidents who have executed the Executive Vice President Employment Agreement (incorporated by
reference to Exhibit 99 to Dollar General Corporation’s Current Report on Form 8-K dated
April 5, 2018, filed with the SEC on April 11, 2018 (file no. 001-11421))*
10.42 Amended Schedule of Executive Vice Presidents who have executed an Executive Vice President
Employment Agreement in the form filed as Exhibit 10.41 (incorporated by reference to Exhibit 10.1
to Dollar General Corporation’s Quarterly Report on Form 10-Q for the fiscal quarter ended
November 2, 2018, filed with the SEC on December 4, 2018 (file no. 001-11421))*
10.43 Form of Senior Vice President Employment Agreement with attached Schedule of Senior Vice
President-level Executive Officers who have executed the Senior Vice President Employment
Agreement (incorporated by reference to Exhibit 10.1 to Dollar General Corporation’s Quarterly
Report on Form 10-Q for the fiscal quarter ended May 4, 2018, filed with the SEC on May 31, 2018
(file no. 001-11421))*
80
2018 Form 10-K
10.44 Amended Schedule of Senior Vice President-level Executive Officers who have executed a Senior
Vice President Employment Agreement in the form filed as Exhibit 10.43 (incorporated by reference to
Exhibit 10.2 to Dollar General Corporation’s Quarterly Report on Form 10-Q for the fiscal quarter
ended November 2, 2018, filed with the SEC on December 4, 2018 (file no. 01-11421))*
10.45 Omnibus Limited Waiver by Dollar General Corporation to the Employment Agreement and
Employment Transition Agreement with certain employees of Dollar General Corporation, effective
January 28, 2016 (incorporated by reference to Exhibit 10.52 to Dollar General Corporation’s Annual
Report on Form 10-K for the fiscal year ended January 29, 2016, filed with the SEC on March 22,
2016 (file no. 001-11421))*
10.46 Employment Agreement, effective August 7, 2015, between Dollar General Corporation and James W.
Thorpe (incorporated by reference to Exhibit 10.6 to Dollar General Corporation’s Quarterly Report on
Form 10-Q for the fiscal quarter ended October 30, 2015, filed with the SEC on December 3, 2015 (file
no. 001-11421))*
21 List of Subsidiaries of Dollar General Corporation
23 Consent of Independent Registered Public Accounting Firm
24 Powers of Attorney (included as part of the signature pages hereto)
31 Certifications of CEO and CFO under Exchange Act Rule 13a-14(a)
32 Certifications of CEO and CFO under 18 U.S.C. 1350
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB XBRL Taxonomy Extension Labels Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
* Management Contract or Compensatory Plan
ITEM 16. FORM 10-K SUMMARY
None
2018 Form 10-K
81
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.
DOLLAR GENERAL CORPORATION
Date: March 22, 2019
By:
/s/ Todd J. Vasos
Todd J. Vasos,
Chief Executive Officer
We, the undersigned directors and officers of the registrant, hereby severally constitute Todd J. Vasos,
John W. Garratt and Anita C. Elliott, and each of them singly, our true and lawful attorneys with full power to
them and each of them to sign for us, and in our names in the capacities indicated below, any and all amendments
to this Annual Report on Form 10-K filed with the Securities and Exchange Commission.
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 and on the dates indicated.
Date
March 22, 2019
March 22, 2019
March 22, 2019
March 22, 2019
March 22, 2019
March 22, 2019
March 22, 2019
March 22, 2019
March 22, 2019
March 22, 2019
Name
Title
/s/ Todd J. Vasos
TODD J. VASOS
Chief Executive Officer & Director
(Principal Executive Officer)
/s/ John W. Garratt
JOHN W. GARRATT
/s/ Anita C. Elliott
ANITA C. ELLIOTT
Executive Vice President & Chief Financial
Officer
(Principal Financial Officer)
Senior Vice President & Chief Accounting
Officer
(Principal Accounting Officer)
/s/ Warren F. Bryant
WARREN F. BRYANT
Director
/s/ Michael M. Calbert
MICHAEL M. CALBERT
Director
/s/ Sandra B. Cochran
SANDRA B. COCHRAN
Director
/s/ Patricia D. Fili-Krushel
PATRICIA D. FILI-KRUSHEL
Director
/s/ Timothy I. McGuire
TIMOTHY I. MCGUIRE
Director
/s/ William C. Rhodes, III
WILLIAM C. RHODES, III
Director
/s/ Ralph E. Santana
RALPH E. SANTANA
Director
82
2018 Form 10-K
DIRECTORS
Michael M. Calbert (1)
Retired Member
KKR & Co. L.P.
Patricia D. Fili-Krushel (3)*(4)
Chief Executive Officer
Center for Talent Innovation
Ralph E. Santana (4)
Executive Vice President & Chief
Marketing Officer
Harman International Industries
Warren F. Bryant (2)(3)
Retired Chairman, President &
Chief Executive Officer
Longs Drug Stores Corporation
Timothy I. McGuire (3)
Chief Executive Officer
Mobile Service Center Canada, Ltd.
(d/b/a Mobile Klinik)
Todd J. Vasos†
Chief Executive Officer
Dollar General Corporation
Sandra B. Cochran (2)(4)*
President & Chief Executive Officer
Cracker Barrel Old Country Store, Inc.
William C. Rhodes, III (2)*(4)
Chairman, President & Chief
Executive Officer
AutoZone, Inc.
(1) Chairman of the Board (2) Audit Committee (3) Compensation Committee (4) Nominating & Governance Committee (*) Committee Chairperson
SENIOR OFFICERS
Todd J. Vasos†
Chief Executive Officer
EXECUTIVE VICE PRESIDENTS
John W. Garratt†
Chief Financial Officer
Michael J. Kindy†
Global Supply Chain
Jeffery C. Owen†
Store Operations
Robert D. Ravener†
Chief People Officer
Jason S. Reiser†
Chief Merchandising Officer
Rhonda M. Taylor†
General Counsel
SENIOR VICE PRESIDENTS
Carman R. Wenkoff†
Chief Information Officer
Steven R. Deckard
Corporate Store Operations
Daniel J. Nieser
Real Estate & Store Development
Bryan D. Wheeler
General Merchandise Manager
Anita C. Elliott†
Chief Accounting Officer
Kathleen A. Reardon
Human Resources
Antonio Zuazo
Inventory & Transportation
Lawrence J. Gatta
General Merchandise Manager
Steven G. Sunderland
Store Operations
Tracey N. Herrmann
Store Operations
Emily C. Taylor
General Merchandise Manager
† Indicates persons designated as the Company’s executive officers
CORPORATE INFORMATION
TRANSFER AGENT
EQ Shareowner Services
PO Box 64854, St. Paul, MN 55164-0854
www.shareowneronline.com
Inquiries regarding stock transfers, lost certificates or address
changes should be directed to the transfer agent at the
address or website noted above or by calling (866) 927-3314.
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
Ernst & Young LLP, Nashville, Tennessee
the fiscal year ended February 1, 2019, which includes as
exhibits the Chief Executive Officer and Chief Financial
Officer Certifications required to be filed with the SEC
pursuant to Section 302 of the Sarbanes-Oxley Act, is
available on our website at www.dollargeneral.com in the
Investor Information section or on the SEC’s website.
A printed copy of the Form 10-K, and a list of all its exhibits,
will be supplied without charge to any shareholder upon
written request. Exhibits to the Form 10-K are available
for a reasonable fee. For a printed copy of the Form 10-K,
please contact:
FORM 10-K; SEC CERTIFICATIONS
A copy of the Form 10-K filed by the Company with the
Securities and Exchange Commission (the “SEC”) for
DOLLAR GENERAL CORPORATION INVESTOR RELATIONS
100 Mission Ridge, Goodlettsville, TN 37072
(615) 855-4000
ANNUAL MEETING
Dollar General Corporation’s annual meeting of
shareholders is scheduled for 9 a.m. Central Time on
Wednesday, May 29, 2019, at:
Goodlettsville City Hall Auditorium
105 South Main Street, Goodlettsville, TN 37072
Shareholders of record as of March 21, 2019 are entitled
to vote at the meeting.
NYSE: DG
The common stock of Dollar General Corporation is
traded on the New York Stock Exchange under the
trading symbol “DG.” The number of shareholders of
record as of March 21, 2019 was 2,556.
.
STOCK PERFORMANCE GRAPH
The graph below compares Dollar General Corporation’s
cumulative total shareholder return on common stock
with the cumulative total returns of the S&P 500 index
and the S&P Retailing index. The graph tracks the
performance of a $100 investment in our common
stock and in each index (with the reinvestment of all
dividends) from January 31, 2014 to February 1, 2019.
COMPARISON OF CUMULATIVE
TOTAL RETURN
$350
$300
$250
$200
$150
$100
1/31/14
1/30/15
1/29/16
2/3/17
2/2/18
2/1/19
Dollar General Corporation
S&P 500 Index
S&P Retailing Index
1/31/14
1/30/15
1/29/16
2/3/17
2/2/18
2/1/19
Dollar General
$100
$119.07
$134.88 $133.09
$183.39
$214.57
S&P 500 Index
$100
$114.22 $113.46
$136.20
$172.17
$168.19
NET SALES (IN BILLIONS)
$25.6
$23.5
$22.0
$20.4
$18.9
2014
2015
2016
2017
2018
ENDING STORE COUNT
15,370
14,534
13,320
12,483
11,789
2014
2015
2016
2017
2018
SAME STORE
SALES GROWTH
2.8% 2.8%
2.7%
0.9%
3.2%
2014
2015
2016
2017
2018
CASH FROM OPERATIONS
(IN MILLIONS)
$2,144
$1,802
$1,605
$1,392
$1,327
S&P Retailing Index
$100
$119.10
$140.73
$167.11
$241.08
$256.26
2014
2015
2016
2017
2018
The stock price performance included in this graph is not
necessarily indicative of future stock price performance.
Fiscal 2016 includes 53 weeks, while all other
years presented contain 52 weeks. Sales in the 2016
53rd week were approximately $399 million.
ADDRESS
100 MISSION RIDGE
GOODLETTSVILLE, TN 37072
PHONE
615-855-4000
WEB
WWW.DOLLARGENERAL.COM