ABOUT DOLLAR GENERAL
Dollar General Corporation has been delivering
value to shoppers for more than 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 16,278 stores in 44 states
as of January 31, 2020. 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.
Visit www.dollargeneral.com
to learn more about Dollar General
and shop online.
16,278
STORES IN 44 STATES
AS OF 1/31/2020
STORES
DISTRIBUTION CENTER
FRESH DISTRIBUTION FACILITY
57
22
226
11
40
57
41
55
127
161
190
257
569
37
494
778
51
246
544
574
563
856
561
249
435
50
19
64
146
47
139
120
99
460
812
449
573
536
789
912
1,542
863
563
894
NET SALES (IN BILLIONS)
ANNUAL MEETING
Dollar General Corporation’s annual meeting of
shareholders is scheduled for 9 a.m. Central Time on
Wednesday, May 27, 2020, at:
$27.8
$25.6
Goodlettsville City Hall Auditorium
105 South Main Street, Goodlettsville, TN 37072
$23.5
$22.0
$20.4
2015
2016
2017
2018
2019
ENDING STORE COUNT
16,278
15,370
14,534
13,320
12,483
2015
2016
2017
2018
2019
SAME STORE
SALES GROWTH
3.9%
3.2%
2.8%
2.7%
0.9%
2015
2016
2017
2018
2019
CASH FROM OPERATIONS
(IN MILLIONS)
$2,238
$2,144
$1,802
$1,605
$1,392
Shareholders of record as of March 19, 2020 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 19, 2020 was 2,617.
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 30, 2015 to January 31, 2020.
COMPARISON OF CUMULATIVE
TOTAL RETURN
$250
$200
$150
$100
1/30/15
1/29/16
2/3/17
2/2/18
2/1/19
1/31/20
Dollar General Corporation
S&P 500 Index
S&P Retailing Index
1/30/15
1/29/16
2/3/17
2/2/18
2/1/19
1/31/20
Dollar General
$100
$113.28
$111.77 $154.02
$180.21
$242.48
S&P 500 Index
$100
$99.33 $119.24
$150.73
$147.24
$179.17
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, unless we specifi cally provide otherwise.
2015
2016
2017
2018
2019
S&P Retailing Index
$100
$118.07
$140.38
$203.32
$216.05
$253.36
Fiscal 2016 includes 53 weeks, while all other
years presented contain 52 weeks. Sales in the 2016
53rd week were approximately $399 million.
The stock price performance included in this graph is not
necessarily indicative of future stock price performance.
TO OUR FELLOW SHAREHOLDERS,
CUSTOMERS & EMPLOYEES:
At Dollar General, our value and convenience proposition,
coupled with our unique and growing real estate footprint,
has allowed us to serve customers for more than 80 years. In
2019, we made significant progress advancing key strategic
initiatives to provide a better life for our customers and
employees, and strong returns for our shareholders.
As a mature retailer in growth mode, we achieved several notable
milestones in our 80th year of business. We completed 2,099
real estate projects, including the opening of our 16,000th store,
while also delivering our 30th consecutive year of same-store
sales growth. We continue to focus on execution and innovation
to capture additional market share, while further solidifying our
position as a leader in the small-box discount retail channel.
Highlights of 2019 Compared to 2018:
• Net sales increased 8.3% to $27.8 billion and same-
store sales increased 3.9%.
• Operating profit increased 8.8% to $2.3 billion.
• Net income grew to $1.7 billion, and diluted earnings
per share increased 11.2% to $6.64.
•
Cash flows from operations were $2.2 billion.
• We returned $1.5 billion to our shareholders through
share repurchases and dividends.
• We opened 975 new stores, remodeled 1,024 stores and
relocated 100 stores.
We are pleased with our strong results this year, in addition
to the important steps taken in advancing our long-
term strategic initiatives. In 2019, we expanded our Non-
Consumables initiative to approximately 2,400 stores, as we
look to improve both sales and margin while enhancing the
treasure-hunt experience for our customers.
DG Fresh, which is our strategic multi-phased shift to self-
distribution of frozen and refrigerated goods, is primarily aimed at
reducing overall product costs, while driving on-shelf availability
and providing for greater product assortment over time. We
began serving more than 6,000 stores in 2019 from four new DG
Fresh facilities, and we are very pleased with the early results.
Our Digital initiative continues to focus on deploying and
leveraging technology to further enhance our customers’ in-
store experience. The DG app now offers customers a wide
variety of options to augment their shopping experience,
and we will continue to seek ways to leverage technology
to offer even greater convenience to our customers, while
driving customer traffic to our stores.
Fast Track is focused on increasing labor productivity in
our stores, enhancing customer convenience, and further
improving on-shelf availability. We completed our rolltainer
optimization efforts and launched the pilot of self-checkout
in 2019. We are excited about the early results, and believe
we can drive even greater convenience for our customers
and efficiency in our stores in 2020.
2019 was a pivotal year for these long-term strategic
initiatives, and we believe they will continue to strengthen
our position as we look to drive sales and improve operating
margin over the long term.
In addition to our strategic initiatives, we remain focused on
our four key operating priorities:
1.
sales-driving
Driving profitable sales growth: We are continuing to
pursue balanced and profitable sales growth through
many
and gross margin-enhancing
initiatives. In 2020, these planned efforts will include
further cooler door expansion, private brand enhancements,
global sourcing penetration and diversification, and
distribution and transportation efficiencies.
2. Capturing growth opportunities: Our proven high-return,
low-risk real estate growth model, coupled with ongoing
format innovation, continues to drive growth that is
unmatched in our channel. We have successfully executed
thousands of real estate projects in recent years, and in
2020, we plan to open 1,000 new stores, remodel 1,500
mature stores and relocate 80 stores as we seek to continue
serving both new and existing customers across the country.
3. Leveraging and reinforcing our position as a low
cost operator: Our Save to Serve discipline continues
to deliver savings across the organization. We are
continually pursuing opportunities to drive greater
efficiencies and reduce costs, while keeping the
customer at the center of everything we do.
4.
Investing in our people as a competitive advantage:
The investments we have made in our people delivered
benefits again in 2019 as we saw our lowest store
manager turnover on record. We continue to provide
world-class training opportunities for our people, and
we believe the opportunity to start and develop a career
with a growing retailer is a competitive advantage.
Our mission of Serving Others is foundational to everything
we do at Dollar General. In 2019, Dollar General and its
Foundations awarded more than $17 million to charitable
efforts that extend hope and opportunity to individuals and
nonprofit organizations in the communities we call home.
I want to thank our team of approximately 143,000 employees
who work hard every day to deliver value and convenience
for our customers. I am excited about the opportunities we
are pursuing, and I believe we are well-positioned to continue
delivering value to our customers, employees and shareholders.
RESPECTFULLY,
TODD J. VASOS
CHIEF EXECUTIVE OFFICER
APRIL 2, 2020
PROXY STATEMENT
& MEETING NOTICE
br
DEAR FELLOW
SHAREHOLDER,
The 2020 Annual Meeting of Shareholders of Dollar
General Corporation will be held on Wednesday, May 27,
2020, 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 19, 2020 are invited to attend the
annual meeting. For security reasons, however, to gain
admission to the meeting you must present certain
identification and documentation described in the Proxy
Statement.
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 2019 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 2, 2020
* We are sensitive to public health and travel concerns related to the coronavirus (COVID-19) and accordingly may announce alternative
arrangements for the annual meeting, including holding the annual meeting solely by means of remote communication. If we take this step, we
will announce the change(s) in advance, and details on how to participate will be issued by press release, posted on our website
(investor.dollargeneral.com) and filed with the Securities and Exchange Commission as additional proxy materials.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
DATE
TIME
PLACE*
27
Wednesday
May 27, 2020
9:00 a.m.
Central Time
Goodlettsville City Hall Auditorium
105 South Main Street
Goodlettsville, Tennessee
* We are sensitive to public health and travel concerns related to the coronavirus (COVID-19) and accordingly may announce alternative
arrangements for the annual meeting, including holding the annual meeting solely by means of remote communication. If we take this
step, we will announce the change(s) in advance, and details on how to participate will be issued by press release, posted on our
website (investor.dollargeneral.com) and filed with the Securities and Exchange Commission as additional proxy materials.
ITEMS OF BUSINESS:
• To elect as directors the 9 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 2020
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
• To consider and approve amendments to our amended and restated charter, as amended, to replace the
supermajority voting requirements with a majority voting requirement described in the Proxy Statement
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
• To consider and approve an amendment to our amended and restated bylaws to replace the
supermajority voting requirement with a majority voting requirement described in the Proxy Statement
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
• 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 19, 2020
By Order of the Board of Directors,
Goodlettsville, Tennessee
April 2, 2020
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 (pp. 1 - 2)
MAIL
PHONE
INTERNET
IN PERSON*
1-800-690-6903
www.proxyvote.com
Mail your
completed,
signed, and dated
proxy card or voting
instruction form
May 27, 2020
9:00 a.m., CT
Goodlettsville
City Hall Auditorium
105 South Main Street
Goodlettsville, TN
* We are sensitive to public health and travel concerns related to the coronavirus (COVID-19) and accordingly may announce alternative
arrangements for the annual meeting, including holding the annual meeting solely by means of remote communication. If we take this
step, we will announce the change(s) in advance, and details on how to participate will be issued by press release, posted on our website
(investor.dollargeneral.com) and filed with the Securities and Exchange Commission as additional proxy materials.
VOTING MATTERS (pp. 1 - 10, 46, 48, 50 and 51)
2020 PROPOSALS
Proposal 1: Election of Directors
Proposal 2: Advisory Vote to Approve Named Executive Officer Compensation
Proposal 3: Ratification of Appointment of Auditors
Proposal 4: Vote to Approve Charter Amendments
Proposal 5: Vote to Approve Bylaws Amendment
Board
Recommends
BOARD OF DIRECTORS GROUP DIVERSITY(pp. 4 - 9)
AGE
60
DIRECTOR
AVERAGE
AGE
TENURE
4
4
6
YEARS
AVERAGE
1
0-5
6-10
11+
DIVERSITY
(Race & Gender)
44.4%
Blended
Diverse
PROXY STATEMENT SUMMARY
PAY FOR PERFORMANCE (pp. 21 - 22)
Consistent with our philosophy,
and as illustrated to the right, a
significant portion of
annualized total target
compensation for our named
executive officers in 2019 was
variable/at-risk as a result of
being either performance-based,
linked to changes in our stock
price, or both.
17%
STI
12%
Salary
CEO
VARIABLE/
AT-RISK
88%
71%
LTI
21%
STI
25%
Salary
OTHER
NEOs
(Averaged)
VARIABLE/
AT-RISK
75%
54%
LTI
LTI — Long-Term Equity Incentive (stock options and performance share units)
STI — Short-Term Cash Incentive (Teamshare bonus program)
95.4%
SHAREHOLDER
SUPPORT
The most recent shareholder advisory vote on our
named executive officer compensation was held on
May 29, 2019. Excluding abstentions and broker
non-votes, 95.4% of total votes were cast in support of
the program.
DOLLAR GENERAL AT-A-GLANCE*
~143,000
EMPLOYEES
16,000+
STORES
$27.8
BILLION
IN SALES
MULTIPLE STORE FORMATS
TO SERVE OUR CUSTOMERS
LOW-PRICED PRODUCT MODEL
~22%
OF PRODUCTS
PRICED AT $1 OR LESS
119th
RANKING ON THE
FORTUNE 500 LIST
* Data as of February 28, 2020 unless otherwise noted.
TABLE OF CONTENTS
SOLICITATION, MEETING AND VOTING
INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PROPOSAL 1:
Election of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CORPORATE GOVERNANCE . . . . . . . . . . . . . . . . . . .
1
4
11
DIRECTOR COMPENSATION . . . . . . . . . . . . . . . . . . . .
15
DIRECTOR INDEPENDENCE . . . . . . . . . . . . . . . . . . . .
17
TRANSACTIONS WITH MANAGEMENT AND
OTHERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18
SHAREHOLDER ENGAGEMENT . . . . . . . . . . . . . . . .
19
EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . .
Compensation Discussion and Analysis . . . .
Compensation Committee Report . . . . . . . . .
Summary Compensation Table . . . . . . . . . . . . .
Grants of Plan-Based Awards in Fiscal
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding Equity Awards at 2019 Fiscal
Year-End . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Option Exercises and Stock Vested During
Fiscal 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension Benefits Fiscal 2019 . . . . . . . . . . . . . . .
Nonqualified Deferred Compensation
Fiscal 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Potential Payments upon Termination or
Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . .
20
20
29
30
32
33
35
35
35
36
Compensation Committee Interlocks and
Insider Participation . . . . . . . . . . . . . . . . . . . . . . . . 43
Compensation Risk Considerations . . . . . . . . 43
Pay Ratio Disclosure . . . . . . . . . . . . . . . . . . . . . . . . 43
SECURITY OWNERSHIP . . . . . . . . . . . . . . . . . . . . . . . . 44
Security Ownership of Certain Beneficial
Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Security Ownership of Officers and
Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Delinquent Section 16(a) Reports . . . . . . . . . . 45
PROPOSAL 2:
Advisory Vote to Approve Named Executive
Officer Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
AUDIT COMMITTEE REPORT . . . . . . . . . . . . . . . . . . . 47
PROPOSAL 3:
Ratification of Appointment of Auditors . . . . . . 48
FEES PAID TO AUDITORS . . . . . . . . . . . . . . . . . . . . . . 49
PROPOSAL 4:
Vote to Approve Charter Amendments to
Replace the Supermajority Voting
Requirements Contained Therein with a
Majority Voting Requirement . . . . . . . . . . . . . . . . . . .
PROPOSAL 5:
Vote to Approve Bylaws Amendment to
Replace the Supermajority Voting
Requirement Contained Therein with a
Majority Voting Requirement . . . . . . . . . . . . . . . . . . .
SHAREHOLDER PROPOSALS FOR 2021
ANNUAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
50
51
52
APPENDIX A:
Proposed Charter Amendments . . . . . . . . . . . . . . . . A-1
APPENDIX B:
Proposed Bylaws Amendment . . . . . . . . . . . . . . . . . . B-1
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER
MEETING TO BE HELD ON MAY 27, 2020
This Proxy Statement, our 2019 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 2019 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 27, 2020. We will begin
mailing to shareholders printed copies of this document and the form of proxy or the Notice of Internet Availability
on or about April 2, 2020.
SOLICITATION, MEETING AND VOTING INFORMATION
What is Dollar General Corporation and
where is it located?
What am I voting on?
You will be asked to vote on:
Dollar General (NYSE: DG) has been delivering value to
shoppers for more than 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 operated 16,368 stores in 45 states as of
February 28, 2020. Our principal executive offices are
located at 100 Mission Ridge, Goodlettsville,
Tennessee 37072.
We refer to our company as “we,” “us” or “Dollar
General.” Unless otherwise noted or required by
context, “2020,” “2019,” “2018” and “2017” refer to our
fiscal years ending or ended January 29, 2021,
January 31, 2020, February 1, 2019, and February 2,
2018, 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
designating someone as a 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 be specially paid for doing so. Solicitation of
proxies by mail may be supplemented by telephone,
email and other electronic means, advertisements,
personal solicitation, news releases issued by Dollar
General, postings on our website, or otherwise. Dollar
General will pay all expenses of this solicitation.
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 19,
2020 (the “Record Date”). As of that date, there were
251,515,048 shares of Dollar General common stock
outstanding and entitled to vote. Each share is entitled
to one vote on each matter.
• the election of the 9 nominees listed in this proxy
statement;
• the approval on an advisory basis of our named
executive officer compensation as disclosed in this
proxy statement;
• the ratification of the appointment of our
independent registered public accounting firm (the
“independent auditor”) for 2020;
• the approval of amendments to our amended and
restated charter, as amended (our “Charter”), to
replace supermajority voting requirements with a
majority vote requirement as described in this proxy
statement; and
• the approval of an amendment to our amended and
restated bylaws (our “Bylaws”) to replace the
supermajority voting requirement with a majority
vote requirement as described in this proxy
statement.
We are unaware of other matters to be acted upon at
the annual 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.
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 the Record Date, must
exist to conduct business at the annual meeting. If a
quorum is not present, the presiding officer at the
meeting may adjourn the meeting from time to time
until a quorum is present.
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
2020 Proxy Statement
1
SOLICITATION, MEETING AND VOTING INFORMATION
of Internet Availability or proxy card, as applicable.
Alternatively, you may vote in person at the annual
meeting.
• at or before the annual meeting, submitting to our
Corporate Secretary a written notice of revocation
dated later than the date of the proxy;
If you are a street name holder, your broker, trustee,
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.
In either case, shareholders wishing to attend the
meeting must follow the procedures described below
under “Who may attend the annual meeting.”
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.
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. 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,
the persons named on the proxy card will vote your
shares in accordance with the recommendations of our
Board of Directors. If business other than that
described in this proxy statement is properly raised,
your proxies have authority to vote as they think best,
including to adjourn the meeting.
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;
2
2020 Proxy Statement
• submitting a later-dated vote by telephone or
Internet no later than 11:59 p.m., Eastern time, on
May 26, 2020; or
• attending the annual meeting and voting in person.
Note that 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.
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 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. Each
director standing for 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 Board’s size.
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 2020 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.
SOLICITATION, MEETING AND VOTING INFORMATION
Each of the proposals to approve the amendments to
our Charter and to our Bylaws, in each case to replace
supermajority voting provisions with majority voting
provisions as described in this proxy statement, will be
approved if the applicable proposal receives affirmative
votes from the holders of at least eighty percent (80%)
of the voting power of all outstanding shares of Dollar
General entitled to vote generally in the election of
directors.
With respect to each of 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.
How will abstentions and broker non-votes
be treated?
Abstentions and broker non-votes 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. Abstentions and
broker non-votes will have no effect on the outcome of
proposals 1, 2 or 3, but will have the effect of votes
against proposals 4 and 5.
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
beneficial owner has not provided voting instructions
and the broker either lacks or declines to exercise the
authority to vote the shares in its discretion.
Who may attend the annual meeting?
Only shareholders as of the Record Date, their proxy
holders and our invited guests may attend the annual
meeting. To be admitted to the annual meeting, you
must present a government-issued photo identification,
such as a driver’s license, state-issued ID card, or
passport, and proof of share ownership as of the
Record Date. To prove ownership, shareholders of
record will be verified against our list of registered
shareholders, while beneficial shareholders must
present an account statement showing the share
ownership as of the Record Date; a copy of the voting
instruction form provided by, or a valid legal proxy
from, the broker, trustee, bank or nominee holding the
shares; a letter from a broker, trustee, bank or nominee
holding the shares confirming the beneficial owner’s
ownership as of the Record Date; or other similar
evidence of ownership. We reserve the right to deny
admittance to anyone who does not comply with
these requirements.
We will decide in our sole discretion whether your
documentation meets the admission requirements. If
you hold shares in a joint account, both owners can be
admitted to the meeting if proof of joint ownership is
provided and you both provide identification.
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 may 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 27, 2020 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.
What happens if a change to the annual
meeting is necessary due to exigent
circumstances?
We are sensitive to public health and travel concerns
related to the coronavirus (COVID-19) and accordingly
may announce alternative arrangements for the annual
meeting, including holding the annual meeting solely by
means of remote communication. If we take this step,
we will announce the change(s) in advance, and details
on how to participate will be issued by press release,
posted on our website (investor.dollargeneral.com) and
filed with the SEC as additional proxy materials. A
meeting held solely by means of remote communication
will have no impact on shareholders’ ability to provide
their proxy by using the internet or telephone or by
completing, signing, dating and mailing their proxy card,
each as explained in this proxy statement. As always, we
encourage you to vote your shares prior to the annual
meeting.
2020 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 9. All directors are elected annually
by our shareholders.
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. Ms. Debra Sandler, a
nominee for election at the annual meeting, was
identified as a candidate by the third party search firm.
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 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
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 represents 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 periodically assesses this
policy’s effectiveness as part of its annual
self-evaluation. The matrix included below illustrates
the diverse experience and composition of our Board.
Board of Directors Experience and Composition Matrix
Total
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/Technology Experience
Risk Management Experience
Racial/Gender Diversity
4
2020 Proxy Statement
8
9
7
6
5
8
5
6
1
3
8
4
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 director selection
criteria established by the Board and who have not
reached 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, experience, and time
commitments, as well as our Board’s skill needs. With
respect to incumbent directors, the Committee also
assesses the meeting attendance record and suitability
for continued service. The Committee determines that
each nominee is in a position to devote adequate time
to the effective performance of director duties and
possesses 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 believes a candidate’s knowledge, experience
and expertise would strengthen the Board and that the
candidate is committed to representing our
shareholders’ long-term interests.
PROPOSAL 1: ELECTION OF DIRECTORS
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 2019 annual meeting of
shareholders and Ms. Sandler who was appointed to
our Board effective April 1, 2020, 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
2021 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.
WARREN
F. BRYANT
Age: 74
Director Since:
2009
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.
2020 Proxy Statement
5
PROPOSAL 1: ELECTION OF DIRECTORS
MICHAEL
M. CALBERT
Age: 57
Director Since:
2007
Biography:
Mr. Calbert has served as our Chairman of the Board since January 2016. He joined the
private equity firm KKR & Co. L.P. in January 2000 and was directly involved with several
KKR portfolio companies until his retirement in January 2014, after which he served as a
consultant to KKR until June 2015. Mr. Calbert led KKR’s Retail industry team prior to his
retirement. He also served as the Chief Financial Officer of Randall’s Food Markets from 1997
until it was sold in September 1999 and 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. Mr. Calbert has served as a director of AutoZone, Inc. since
May 2019. 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, as well as his
current service on the board of another public retail company, 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.
.........................................................................................................................................................................
SANDRA
B. COCHRAN
Age: 61
Director Since:
2012
Biography:
Ms. Cochran has served as a director and President and Chief Executive Officer of Cracker
Barrel Old Country Store, Inc., a restaurant and retail concept, 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 also held
several positions at Books-A Million, Inc., including Chief Executive Officer (February 2004 to
April 2009), President (August 1999 to February 2004), Chief Financial Officer
(September 1993 to August 1999) and Vice President of Finance (August 1992 to
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.
6
2020 Proxy Statement
PATRICIA
D. FILI-KRUSHEL
Age: 66
Director Since:
2012
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 global talent strategies, since September 2018. She
previously was Executive Vice President (April 2015 to November 2015) of NBCUniversal,
serving as a strategist and key advisor to the CEO; Chairman of NBCUniversal News Group
(July 2012 to April 2015); and Executive Vice President of NBCUniversal (January 2011 to
July 2012) overseeing the operations and technical services, business strategy, human
resources and legal functions. She was Executive Vice President of Administration at Time
Warner Inc. (July 2001 to December 2010) overseeing philanthropy, corporate social
responsibility, human resources, worldwide recruitment, employee development and growth,
compensation and benefits, and security; Chief Executive Officer of WebMD Health Corp.
(April 2000 to July 2001); and President of ABC Television Network (July 1998 to April
2000). 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 brings
additional perspective to our Board.
.........................................................................................................................................................................
TIMOTHY
I. MCGUIRE
Age: 59
Director Since:
2018
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, since
October 2018 and as its Chairman of the Board (June 2017 to 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 also held various
positions with Procter & Gamble (1983 to 1989), including Marketing Director for the
Canadian Food & Beverage division.
Specific Experience, Qualifications, Attributes, and Skills:
Mr. McGuire brings 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 extensive relevant perspectives to
our Board as it seeks to consult and advise our CEO and to shape our corporate strategy.
2020 Proxy Statement
7
PROPOSAL 1: ELECTION OF DIRECTORS
Biography:
Mr. Rhodes was named Chairman of AutoZone, Inc., a specialty retailer and distributor of
automotive replacement parts and accessories, in June 2007 and has served as its President
and Chief Executive Officer and a director since 2005. He also previously held various other
key management positions with AutoZone since joining the company in 1994. Prior to 1994,
Mr. Rhodes was a manager with Ernst & Young LLP.
Specific Experience, Qualifications, Attributes, and Skills:
Mr. Rhodes has 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.
WILLIAM
C. RHODES, III
Age: 54
Director Since:
2009
.........................................................................................................................................................................
DEBRA
A. SANDLER
Age: 60
Director Since:
2020
Biography:
Ms. Sandler has served as President and Chief Executive Officer of La Grenade Group, LLC, a
marketing consultancy that serves packaged goods companies operating in the health and
wellness space, since September 2015. She also has served as Chief Executive Officer of
Mavis Foods, LLC, a startup she founded that makes and sells Caribbean sauces and
marinades, since April 2018. Ms. Sandler previously served seven years with Mars, Inc.,
including Chief Health and Wellbeing Officer (July 2014 to July 2015); President, Chocolate
North America (April 2012 to July 2014); and Chief Consumer Officer, Chocolate (November
2009 to March 2012). She also held senior leadership positions with Johnson & Johnson from
1999 to 2009, where her last position was Worldwide President for McNeil Nutritionals LLC, a
fully integrated business unit within the Johnson & Johnson Consumer Group of Companies.
She began her career in 1985 with PepsiCo, Inc., where she served for 13 years in a variety of
marketing positions of increasing responsibility. Ms. Sandler has served as a director of
Archer Daniels Midland Company since May 2016 and Gannett Co., Inc. since June 2015.
Specific Experience, Qualifications, Attributes, and Skills:
Ms. Sandler has strong marketing and operating experience and a proven record of creating,
building, enhancing, and leading well-known consumer brands as a result of the leadership
positions she has held with Mars, Johnson & Johnson, and PepsiCo. These positions have
required an extensive understanding of consumer behavior and the evolving retail
environment. In addition, her launch of Mavis Foods has provided her with valuable
e-commerce and strategic planning experience, and her other public company board
experience will bring additional perspective to our Board.
8
2020 Proxy Statement
PROPOSAL 1: ELECTION OF DIRECTORS
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., since
April 2013, with responsibility for Harman’s worldwide marketing strategy and global design
group. Mr. Santana previously served as Senior Vice President and Chief Marketing Officer of
Samsung Electronics North America (June 2010 to September 2012), where he was
responsible for launching Samsung’s U.S. e-commerce business. He also served 16 years at
PepsiCo, Inc. (June 1994 to May 2010) in multiple international and domestic leadership roles
in marketing, including Vice President of Marketing, North American Beverages, Pepsi-Cola,
and held positions with its Frito-Lay’s international and North America operations.
Mr. Santana began his career at Beverage Marketing Corporation (July 1989 to June 1992)
where he served as a beverage industry consultant designing market entry and expansion
strategies.
Specific Experience, Qualifications, Attributes, and Skills:
Mr. Santana has over 25 years of marketing experience spanning multiple technology and
food and 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.
RALPH
E. SANTANA
Age: 52
Director Since:
2018
.........................................................................................................................................................................
TODD
J. VASOS
Age: 58
Director Since:
2015
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 and 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 to November 2008) and Senior Vice President and Chief
Merchandising Officer (2001 to 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.
2020 Proxy Statement
9
PROPOSAL 1: ELECTION OF DIRECTORS
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. 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.
Whether recommending a candidate for our
Nominating Committee’s consideration or nominating a
director for election by shareholders, you must submit
a written notice for receipt by our Corporate Secretary
at the address and within the deadlines disclosed under
“Shareholder Proposals for 2021 Annual Meeting.” The
notice must contain all information required by our
Bylaws about the shareholder proposing the nominee
and about the nominee.
We also have a “proxy access” provision in our Bylaws
which allows eligible shareholders to nominate
candidates for election to our Board and include such
candidates 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 2021 annual meeting of
shareholders, see “Shareholder Proposals for 2021
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 9 nominees named in this proposal.
10
2020 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 review of the Board’s annual self-evaluation, and participates with the
Compensation Committee in the annual CEO performance evaluation. This decision allows
our CEO 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, each standing committee, and each individual director are evaluated annually
using a process approved by the Nominating Committee. Mr. Calbert, as Chairman of both
the Board and the Nominating Committee, discusses the results of the individual
evaluations, as well as succession considerations, with each director. The Board and each
committee review and discuss the results of the Board and applicable committee
evaluations, all with the goal of enhancing Board leadership, effectiveness and oversight.
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
The CEO is annually evaluated under the leadership of the Compensation Committee and
the Chairman of the Board. All independent directors 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 various levels of 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 audits as well as
engagements of third parties to perform cybersecurity
assessments, benchmark our cybersecurity program,
and assess how any identified vulnerabilities in the
industry might impact our company and would be
prevented and/or detected by of our controls and
procedures. Management develops action plans to
address select identified opportunities for
improvement, and the Audit Committee quarterly
reviews metrics pertaining to cybersecurity risks and
mitigation.
2020 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 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 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
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2020 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
Mr. Calbert, Chairperson
Ms. Fili-Krushel
Ms. Sandler
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
• Evaluates shareholder proposals relating to corporate governance, director
nominations, social responsibility or sustainability or other matters unless
within the subject matter jurisdiction or expertise of another independent
Board committee
Does Dollar General have an audit
committee financial expert serving on its
Audit Committee?
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 2019?
During 2019, 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.
What is Dollar General’s policy regarding
Board member attendance at the annual
meeting?
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 2019 annual shareholders’
meeting.
2020 Proxy Statement
13
CORPORATE GOVERNANCE
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, 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 these guidelines and holding
requirements. The Compensation Committee
establishes the related administrative details.
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.
14
2020 Proxy Statement
DIRECTOR COMPENSATION
Our director compensation program is designed to fairly pay directors for their time and efforts and to align their
interests with the long-term interests of our shareholders. The Compensation Committee reviews at least once
every two years the form and amount of director compensation in light of these goals and makes
recommendations to the Board of Directors for approval. In developing its recommendations, the Committee
considers peer group market data as the primary market reference point, industry survey data for a general
understanding of compensation practices in the broader market context, and directional recommendations, all as
presented by its independent compensation consultant, Pearl Meyer. More information about our peer group and
the Pearl Meyer engagement can be found under “Use of Market Data” and “Use of Outside Advisors,” respectively,
in “Compensation Discussion and Analysis.”
Management serves in an administrative and support role for the Compensation Committee and Pearl Meyer,
conducting research, compiling data, providing necessary Company-specific information, or otherwise assisting as
requested. The Committee also may seek management’s viewpoint on Pearl Meyer’s analysis and
recommendations.
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 2019. Ms. Sandler is not included in the table
below because she did not serve on our Board during 2019 and accordingly did not earn or receive compensation
for 2019. Mr. Vasos, whose executive compensation is discussed under “Executive Compensation” below, was not
separately compensated for his service on the Board. 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 2019 Director Compensation
Name
Fees Earned or
Paid in Cash
($)(1)
Stock
Awards
($)(2)
Option
Awards
($)(3)
All Other
Compensation
($)(4)
Total
($)
Warren F. Bryant
95,000
144,701
Michael M. Calbert
97,837
360,835
Sandra B. Cochran
109,633
144,701
Patricia D. Fili-Krushel
115,000
144,701
Timothy I. McGuire
95,000
144,701
William C. Rhodes, III
120,000
144,701
Ralph E. Santana
95,000
144,701
—
—
—
—
—
—
—
1,678
241,379
4,058
462,730
1,678
256,012
1,678
261,379
1,678
241,379
1,678
266,379
1,678
241,379
(1)
In addition to the annual Board retainer, Mss. Cochran and Fili-Krushel and Messrs. Calbert and Rhodes earned annual retainers, pro-rated as
applicable, for service as committee chairpersons during all or part of fiscal 2019.
(2) Represents the grant date fair value of restricted stock units (“RSUs”) awarded to Mr. Calbert on February 4, 2019 ($216,134) for his annual
Chairman of the Board retainer, as well as to each director (including Mr. Calbert) on May 29, 2019 ($144,701), 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 9 of the
annual consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended January 31, 2020, filed with the SEC on
March 19, 2020 (our “2019 Form 10-K”). As of January 31, 2020, 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 (1,229); and Mr. Calbert (3,098).
(3) The Board eliminated the use of stock option awards as part of director compensation beginning in fiscal 2015. As of January 31, 2020, each of
the persons listed in the table above had the following total unexercised stock options outstanding (whether or not then exercisable): Each of
Messrs. Bryant, Calbert and Rhodes (16,207); Ms. Cochran (13,120); Ms. Fili-Krushel (12,892); and each of Messrs. McGuire and Santana (0).
(4) Represents the dollar value of dividends paid, accumulated or credited on unvested RSUs. Perquisites and personal benefits, if any, totaled less
than $10,000 per director and therefore are not included in the table.
2020 Proxy Statement
15
DIRECTOR COMPENSATION
Each non-employee director receives payment (prorated as applicable) for a fiscal year in quarterly installments of
the following cash compensation, as applicable, along with an annual award of RSUs, payable in shares of our
common stock, under our Amended and Restated 2007 Stock Incentive Plan (our “Stock Incentive Plan”) having
the estimated value listed below:
Board
Retainer
($)
Audit
Committee
Chairperson
Retainer
($)
Compensation
Committee
Chairperson
Retainer
($)
Nominating
Committee
Chairperson
Retainer
($)
Estimated
Value of
Equity
Award
($)
95,000
25,000
20,000
17,500
150,000(1)
Fiscal
Year
2019
(1)
For annual equity awards granted in fiscal year 2020, the estimated value of equity awards has been increased to $165,000 as a result of the
Committee’s review of market data and the recommendations of the Committee’s compensation consultant.
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, Pearl Meyer, and, for the additional equity
award to the Chairman of the Board, 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 100% of all net after-tax
shares granted by Dollar General until reaching the
share ownership target. As of January 31, 2020, each of
our Board members was in compliance with our share
ownership and holding requirement policy either
because he or she met the guideline or was within the
allotted grace period.
16
2020 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. All members of the Audit Committee,
the Compensation Committee and the Nominating
Committee also must be independent 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 using guidelines
it has adopted, which include all elements of
independence in the NYSE listing standards and SEC
rules as well as certain Board-adopted categorical
independence standards. You may find these guidelines
within our Corporate Governance Guidelines 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 falls
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, Debra A. Sandler, and Ralph E.
Santana is independent under both the NYSE listing
standards and our additional independence standards.
Except as described below, any relationship between
an independent director or nominee 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. There is no person currently
serving or who served in 2019 on the Audit Committee,
the Compensation Committee or the Nominating
Committee that does or did not meet, 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 her 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.
2020 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.
• 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 otherwise have been
approved by the Board or an authorized committee.
What related-party transactions existed in
2019 or are planned for 2020?
Ms. Cochran’s brother, Stephen Brophy, has been
employed by the Company since 2009 and currently
serves as our Vice President of Government and Public
Relations, a non-executive officer position. For 2019,
Mr. Brophy earned from Dollar General total cash
compensation (comprised of his base salary and bonus
compensation) of less than $360,000 and received an
annual equity award consisting of 1,926 non-qualified
stock options, 256 RSUs and 256 PSUs. In March 2020,
Mr. Brophy received an annual equity award consisting
of 1,783 non-qualified stock options, 190 RSUs, and 190
PSUs, in each case on terms consistent with annual
equity awards received by all Dollar General employees
at Mr. Brophy’s job grade level 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 2020 to not exceed $370,000.
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.
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
listed below. In addition, at least annually using 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 reviews a list of any such transactions, subject to
the exceptions listed below. The related party may not
participate in 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 providing the 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
Dollar General share ownership and all of our
shareholders receive the same benefit on a pro rata
basis.
18
2020 Proxy Statement
SHAREHOLDER ENGAGEMENT
Does the Board of Directors engage with
shareholders?
Yes. Our Board of Directors values shareholder
feedback and seeks to build and maintain relationships
with shareholders to ensure that shareholder
perspectives are incorporated into the Board decision-
making process. In furtherance of this goal, we conduct
year-round outreach through our senior management,
investor relations and legal teams to ensure that we
understand and consider issues of importance to our
shareholders. We further enhanced our shareholder
engagement efforts in 2019 with a focus on
environmental, social and governance (“ESG”) matters,
inviting shareholders representing in the aggregate
more than 66% of our outstanding shares to share their
perspectives on these matters with our Board.
In general, shareholders that elected to participate in
this ESG outreach program expressed strong support
for our governance and executive compensation
practices. Shareholders also generally appreciated our
efforts and initiatives on environmental and social
issues, including the publication of the “Serving Others”
report that details the numerous ways in which Dollar
General strives to serve our customers, employees,
communities, and ultimately shareholders, in
responsible and sustainable ways. Feedback from these
meetings was provided to our Board and informed
decisions with respect to our next iteration of our
“Serving Others" report and committee memberships.
These discussions also were part of the data that
helped inform the Board’s decision to recommend the
corporate governance proposals (proposals 4 and 5 in
this proxy statement) to replace the supermajority vote
requirements in our Charter and Bylaws with a majority
of outstanding shares vote requirement.
2020 Proxy Statement
19
EXECUTIVE COMPENSATION
This section provides details of fiscal 2019 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, Chief
Operating Officer; Jason S. Reiser, Executive Vice President and Chief Merchandising Officer; and Rhonda M. Taylor,
Executive Vice President and General Counsel.
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 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
Our annual equity awards and Teamshare bonus program allow for the
clawback of performance-based incentive compensation paid or awarded to a
named executive officer 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 (and certain of their
family members, entities and trusts) from hedging against any decrease in the
market value of Dollar General equity securities awarded by our company and
held by them, and from pledging as collateral or holding in a margin account
any securities issued by Dollar General. 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.
20
2020 Proxy Statement
Pay for Performance
Consistent with our philosophy, and as illustrated to the
right, a significant portion of annualized total target
compensation for our named executive officers in 2019
was variable/at-risk as a result of being either
performance-based, linked to changes in our stock
price, or both.
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 2019 Teamshare bonus
program, we achieved 2019 adjusted EBIT (as defined
and calculated for purposes of the Teamshare bonus
program) of $2.373 billion, or 103.89% of the adjusted
EBIT target, which resulted in a 2019 Teamshare
payout to each named executive officer of 138.92% of
his or her target Teamshare bonus percentage
opportunity (see “Short-Term Cash Incentive Plan”).
• Performance Share Units
The portion of the awards granted in March 2019
subject to 2019 adjusted EBITDA performance was
earned at 123.7% of target, based on achieving
adjusted EBITDA of $2.873 billion, or 102.4% of the
adjusted EBITDA target, and the portion of the
awards granted in March 2017 subject to 2017-2019
adjusted ROIC performance was earned at 162.0% of
target based on achieving adjusted ROIC of 18.49%,
or 101.7% of the adjusted ROIC three-year 2017-2019
target, in each case as defined and calculated in the
PSU award agreements (see “Long-Term Equity
Incentive Program”).
EXECUTIVE COMPENSATION
17%
STI
12%
Salary
CEO
VARIABLE/
AT-RISK
88%
71%
LTI
21%
STI
25%
Salary
OTHER
NEOs
(Averaged)
VARIABLE/
AT-RISK
75%
54%
LTI
LTI — Long-Term Equity Incentive
(stock options and performance share units)
STI — Short-Term Cash Incentive
(Teamshare bonus program)
Shareholder Response
Philosophy and Objectives
The most recent shareholder advisory vote on our
named executive officer compensation was held on
May 29, 2019. Excluding abstentions and broker
non-votes, 95.4% 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.
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
2020 Proxy Statement
21
EXECUTIVE COMPENSATION
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.
• 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 if required for tax
or other reasons, in each case consisting entirely of
independent directors, determines and approves the
compensation of our named executive officers.
Throughout this “Compensation Discussion and
Analysis,” the use of the term Compensation
Committee (or Committee) means either the entire
committee or a subcommittee thereof if required for
tax or other reasons, 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.
Use of Outside Advisors
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 Chairperson) 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
22
2020 Proxy Statement
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.
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 are the same as
those in such financial plans and approved by our
Compensation Committee. Our CEO and our Chief
People Officer, as well as non-executive members of
the human resources group, provide assistance to the
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, our 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.
Use of Performance Evaluations
Each member of the Board of Directors is asked to
provide feedback to the Chairman of the Board
regarding the CEO’s overall performance. The Chairman
of the Board shares such information with the
Compensation Committee. The Compensation
Committee, together with the Chairman of the Board,
then 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.
Performance ratings serve as an eligibility threshold for
annual base salary increases and may directly impact
the amount of such increases. 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 depending upon the named executive
officer’s individual performance or other factors.
An unsatisfactory performance rating will reduce the
number of, or completely eliminate, stock options
awarded to the named executive officer in the following
year. In addition, individual performance and other
factors, such as company and department
performance, tenure, retention, and succession, are
used as part of a subjective assessment to determine
each named executive officer’s equity award value
within a previously determined range of values.
Use of Market Data
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 target compensation, and
periodically when considering structural changes to our
executive compensation program.
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. The peer group used for 2019
compensation decisions consisted of:
Aramark
AutoZone
Best Buy
CarMax
Dollar Tree
Genuine Parts
Kohl’s
L Brands
Lowe’s
Ross Stores
Starbucks
Sysco
Target
TJX Companies
Tractor Supply
Yum! Brands
EXECUTIVE COMPENSATION
Pearl Meyer annually provides peer group 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. In 2019,
Pearl Meyer provided peer group data for all 2019 CEO
and non-CEO 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. Decisions
regarding each named executive officer’s 2019
compensation are discussed below, followed by a
description of each element of compensation and the
related applicable programs, as well as applicable
financial performance results certified with respect to
performance periods that ended in 2019.
2019 Compensation Generally
The Compensation Committee considered the annual
compensation of each named executive officer in
March 2019 and later determined Mr. Owen’s additional
compensation upon his promotion to Chief Operating
Officer in August 2019.
(a) 2019 Compensation Decisions for Mr. Vasos
In March 2019, 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 target compensation,
in each case in comparison to the peer group data (see
“Use of Market Data”). After considering the peer
group data, as well as Mr. Vasos’s and the Company’s
fiscal 2018 performance (see “Use of Performance
Evaluations”), and Mr. Vasos’s experience and tenure in
the CEO role, the Committee determined to increase
Mr. Vasos’s base salary to $1,300,000, effective April 1,
2019 (8.33% increase from his prior year’s base salary),
and to maintain his target short-term incentive
bonus percentage opportunity (150% of base salary)
and his 2019 equity grant value ($8.0 million) at his
2018 levels. The Committee believed that such actions
placed each component of Mr. Vasos’s 2019
compensation as well as his 2019 total target
compensation within a reasonable range of the median
of the peer group data. See “Short-Term Cash Incentive
Plan” and “Long-Term Equity Incentive Program” for a
description of such programs.
2020 Proxy Statement
23
EXECUTIVE COMPENSATION
(b) 2019 Compensation Decisions for Other
Named Executive Officers
In March 2019, the Compensation Committee
considered the base salary, short-term incentive, and
long-term incentive components, as well as total target
compensation of the non-CEO named executive
officers, in each case in comparison to the peer group
data (see “Use of Market Data”), as well as each such
officer’s performance (see “Use of Performance
Evaluations”). The Committee made no change to any
such officer’s target short-term incentive
bonus percentage opportunity (in each case, 75% of
base salary) from the prior year’s level, which the
Committee concluded remained reasonably aligned
with the peer group data. See “Short-Term Cash
Incentive Plan” for a description of the bonus program.
However, beginning in 2019, the Committee
incorporated the use of an equity grant value range to
determine each non-CEO named executive officer’s
equity grant value level, rather than using the same
target value for all non-CEO named executive officer
positions, to achieve better market alignment at the
individual position level while continuing to allow for
subjective performance differentiation and sufficiently
incenting and retaining such officers. The Committee
determined the equity grant value range based on the
peer group data and then determined each such
named executive officer’s actual grant value within the
range based on a subjective assessment of a variety of
factors outlined above under “Use of Performance
Evaluations.” Each such named executive officer’s
March 2019 equity grant values were: each of Messrs.
Garratt and Reiser ($1.35 million), Mr. Owen
($1.55 million), and Ms. Taylor ($1.4 million). See
“Long-Term Equity Incentive Program” for a description
of the equity awards.
In addition, the Committee approved base salary merit
increases in accordance with each such officer’s 2018
performance rating within the limitations of the 3%
overall U.S. merit budget increase for 2019, resulting in
a base salary increase of 2.82% for each non-CEO
named executive officer, effective April 1, 2019. The
Committee determined that each such named
executive officer’s total target compensation for 2019
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
and thus no additional base salary adjustments were
made. See “Use of Performance Evaluations.”
(c) 2019 Compensation Decisions for Mr. Owen’s
Promotion to Chief Operating Officer
In August 2019, our Board created the new position of
Chief Operating Officer and promoted Mr. Owen from
Executive Vice President, Store Operations, to such
new position. In determining Mr. Owen’s related
compensation, the Compensation Committee
24
2020 Proxy Statement
considered the peer group data, Mr. Owen’s existing
level of compensation, prior equity awards (including
the size of such awards compared to other executive
officers), level of experience and qualifications, as well
as the responsibilities of the position, and increased his
base salary to $800,000 (19% increase from his prior
2019 base salary), increased his target short-term
incentive bonus percentage opportunity from 75% to
100% of base salary (prorated for the portion of 2019
that he served as Chief Operating Officer), and
awarded equity with a grant value of $300,000
delivered in the form of stock options (consistent with
the vehicle the Committee uses to deliver other
employees’ promotion equity awards), all effective on
August 27, 2019. The options were granted with a per
share exercise price equal to the fair market value of
one share of our common stock on the grant date.
These options vest 25% annually on each of the first
four anniversaries of the grant date, subject to
Mr. Owen’s continued employment with us and certain
accelerated vesting provisions, and have a ten-year
term. The Committee determined that Mr. Owen’s total
compensation after promotion was within a reasonable
range of the market median given his experience, the
position and his qualifications.
Base Salary
Base salary promotes our recruiting and retention
objectives by reflecting the salaries for comparable
positions in the competitive marketplace, recognizing
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.
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 level of 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) 2019 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 2019
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
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 2019 adjusted EBIT
performance goal at approximately $2.284 billion,
which was the adjusted EBIT target amount in our
Board-approved 2019 annual financial plan. The
threshold (below which no bonus may be earned) and
maximum (above which no further bonus may be
earned) performance levels are 90% and 120% of the
target level, respectively, as the Committee believes
such levels appropriately align pay and performance
and are reasonably consistent with the practices of our
peer group. Payouts for financial performance are
based on actual adjusted EBIT results and are
interpolated on a straight-line basis between the
threshold and target levels and between the target and
maximum levels.
The bonus payable to each named executive officer
upon achieving the target level of financial
performance is equal to the officer’s applicable
percentage of base salary disclosed under “2019
Compensation Generally,” unless the Committee elects
to consider other factors as allowed under the program
as described above under “Use of Performance
Evaluations”. 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) 2019 Teamshare Results
The Compensation Committee certified the adjusted
EBIT performance result at $2.373 billion (103.89% of
the adjusted EBIT target) which resulted in 2019
Teamshare payouts to each of the named executive
officers of 138.92% of each named executive officer’s
target Teamshare bonus percentage opportunity. Such
amounts are reflected in the “Non-Equity Incentive
Plan Compensation” column of the Summary
Compensation Table.
EXECUTIVE COMPENSATION
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) 2019 Annual Equity Award Structure
The Compensation Committee delivers the annual
equity awards to named executive officers 50% in
options and 50% in PSUs, believing that this mix
appropriately incents a long-term focus while aligning
the interests of management with those of
shareholders.
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, 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
continued employment with us and certain accelerated
vesting provisions, and have a ten-year term. The PSUs
can be earned if specified financial 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 such targets. The Committee selected adjusted
EBITDA and adjusted ROIC as the financial
performance measures for the 2019 PSUs. Half of the
award is subject to adjusted EBITDA performance and
half of the award is subject to adjusted ROIC
performance. The Committee continues to believe 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 2019 PSU awards, a one-year performance
period corresponding to our 2019 fiscal year was
established for the PSUs which are subject to the
adjusted EBITDA performance measure. The adjusted
EBITDA performance goal of approximately
$2.807 billion was the target amount set forth in our
Board-approved 2019 annual financial plan. Further
increasing the focus on multi-year performance as a
counterbalance to short-term incentives, the PSUs
2020 Proxy Statement
25
EXECUTIVE COMPENSATION
which are subject to the adjusted ROIC performance
measure are subject to a three-year performance
period beginning the first day of our 2019 fiscal year
and extending through the last day of our 2021 fiscal
year. The adjusted ROIC performance goal of 20.68% 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 2019 Teamshare program
adjusted EBIT calculation outlined above.
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) single lease cost, minus (y) taxes,
divided by (b) the result of (x) the sum of the averages
of: (i) total assets, including any assets associated with
the adoption of new lease accounting standards in
2019 not otherwise reflected in our balance sheet, 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, but excludes the impact of all items excluded
from the 2019 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
2019 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
2019 Results
Adjusted EBITDA (2019)
Result v.
Target (%)
EBITDA
Result ($)
(in billions)
PSUs Earned
(% of Target)
<90
90
100
120
102.4
<2.526
2.526
2.807
3.368
2.873
0
50
100
300
123.7
*
PSUs earned for performance between threshold, target, and maximum levels are interpolated in a manner similar to that used for our 2019
Teamshare bonus program.
Name
Mr. Vasos
Mr. Garratt
Mr. Owen
Mr. Reiser
Ms. Taylor
Level*
Below Threshold
Threshold
Target
Maximum
2019 PSUs Earned
(Adjusted EBITDA)
21,106
3,561
4,090
3,561
3,694
Adjusted ROIC (2019-2021)
Result v.
Target (%)
ROIC
Result (%)
PSUs Earned
(% of Target)
<95.2
95.2
100.0
104.8
<19.68
19.68
20.68
21.68
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 2019
Teamshare bonus program.
The PSUs earned by each named executive officer for
fiscal 2019 adjusted EBITDA performance will vest in
equal one-third installments on April 1, 2020, April 1,
2021, and April 1, 2022, 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,
2022, 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
2020 Proxy Statement
(b) 2017 PSU Awards – Completed 2017-2019
Performance Period
Certain of the PSUs awarded in 2017 were subject to an
adjusted ROIC performance measure for a three-year
performance period beginning on the first day of our
2017 fiscal year and extending through the last day of
our 2019 fiscal year, based on the average adjusted
ROIC for each fiscal year within the three-year period.
The average adjusted ROIC was derived from our
three-year financial plan in place at the time of the
award and 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 2017 and
2018 and single lease cost for 2019, 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 2017 and 2018 and 8x single lease cost for
2019 (with all of the foregoing terms as determined per
our financial statements for each fiscal year), but
excluding the impact of (a) any costs, fees and
expenses directly related to the consideration,
negotiation, preparation or consummation of any
EXECUTIVE COMPENSATION
transaction that results in a change in control (within
the meaning of our Stock Incentive Plan) or any
security offering; (b) disaster-related charges; (c) any
gains or losses associated with our LIFO computation;
(d) in 2019, impacts related to lease accounting rules;
and (e) unless the Compensation 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), net of related unplanned gains, of a
non-recurring nature, provided that in the case of each
of (i) and (ii) such amount equals or exceeds $1 million
for a single loss or net loss, as applicable, and
$10 million in the aggregate.
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, 2018 and 2019.
Level*
Below Threshold
Threshold
Target
Maximum
2017-2019 Results
Adjusted ROIC (2017-2019)
Result v.
Target (%)
ROIC
Result (%)
PSUs Earned
(% of Target)
<94.5
94.5
100.0
105.5
101.7
<17.18
17.18
18.18
19.18
0
50
100
300
18.49
162.0
*
PSUs earned for performance between threshold, target, and maximum levels are interpolated in a manner similar to that used for our 2019
Teamshare bonus program.
Name
Mr. Vasos
Mr. Garratt
Mr. Owen
Ms. Taylor
2017 – 2019 PSUs Earned (Adjusted ROIC)
10,878
2,537
2,537
2,628
2020 Proxy Statement
27
EXECUTIVE COMPENSATION
(c) 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
COO
EVP
SVP
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. As of January 31, 2020,
each of our named executive officers was in
compliance with our share ownership and holding
requirement policy either because he or she met the
guideline or was within the allotted grace period.
(d) Hedging and Pledging Policies
Our policy prohibits Board members, executive officers,
and their Controlled Persons 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 awarded 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 (also known as swap funds) or
other derivative instruments related to Dollar General
equity securities. All other employees, as well as their
Controlled Persons are strongly discouraged from
entering into these types of transactions. Controlled
Persons include the Board member’s, executive
officer’s or employee’s respective spouses, immediate
family members sharing their home or that are
economically dependent on them, entities that they
control, and trusts in which they serve as a trustee or
are a beneficiary.
Benefits and Perquisites
Our named executive officers participate in certain
benefits on the same terms that are offered to all of our
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”)
and, for named executive officers hired or promoted
28
2020 Proxy Statement
Multiple of Base Salary
6X
4X
3X
2X
prior to May 28, 2008, a defined contribution
Supplemental Executive Retirement Plan (the “SERP,”
and together with the CDP, the “CDP/SERP Plan”) as
discussed in more detail under “Nonqualified
Deferred Compensation Fiscal 2019”.
• 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.
Employment Agreements and
Severance Arrangements
We have an employment agreement with each of our
named executive officers, each of which has a
three-year term and is subject to certain automatic
extensions. These agreements promote executive
continuity, aid in retention, and, in return for granting
such executives certain severance and other rights
upon a termination of employment, secure valuable
protections for Dollar General, such as non-compete,
non-solicitation, and confidentiality obligations, and
facilitate implementation of our clawback policy.
We believe that reasonable severance benefits are
appropriate to protect the named executive officer
against circumstances over which he or she 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
both a termination event and a change in control to
accelerate vesting of such equity awards.
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
2019, 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
EXECUTIVE COMPENSATION
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.
2020 Proxy Statement
29
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table summarizes compensation paid to or earned by our named executive officers in each of the
2019, 2018 and 2017 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.
Name and Principal Position(1)
Todd J. Vasos,
Chief Executive Officer
John W. Garratt,
Executive Vice President &
Chief Financial Officer
Jeffery C. Owen,
Chief Operating Officer
Jason S. Reiser,
Executive Vice President &
Chief Merchandising Officer
Rhonda M. Taylor,
Executive Vice President &
General Counsel
Salary
($)(2)
Year
2019 1,283,383 3,996,944
Stock
Awards
($)(3)
Option
Awards
($)(4)
3,927,168
Non-Equity
Incentive Plan
Compensation
($)(5)
2,708,936
All Other
Compensation
($)(6)
91,628
2018 1,188,879
2017
3,805,114 3,793,604
2,827,461
1,127,543 2,847,697
2019
2018
2017
2019
2018
2017
2019
2018
2019
2018
2017
742,091
674,435
662,705
706,511
597,256
665,923
664,463
663,893
659,739
725,972
774,346
1,058,485
652,662
713,436
711,314
630,529
664,463
659,739
683,087
674,435
662,705
664,488
618,317
616,472
585,150
699,500
687,265
569,217
665,923
663,893
554,396
688,211
683,302
1,717,068
1,921,028
776,709
518,698
520,441
880,443
469,697
536,861
714,953
477,456
612,447
409,001
472,039
97,852
82,680
66,524
63,316
60,636
65,770
60,267
64,747
60,331
168,661
104,940
117,030
92,365
Total
($)
12,008,059
10,602,517
8,806,409
2,922,464
2,618,341
2,502,535
3,505,016
2,607,376
2,556,339
2,795,511
2,545,394
2,689,302
2,425,064
2,490,313
(1) Mr. Owen served as Executive Vice President, Store Operations, from June 2015 until his promotion to Chief Operating Officer in August 2019.
Mr. Reiser joined Dollar General in July 2017 but was not a named executive officer for 2017.
(2) Each named executive officer deferred under the CDP and contributed to our 401(k) Plan a portion of salary earned in each of the fiscal years
for which salaries are reported above for the applicable named executive officer. The amounts of the fiscal 2019 salary deferrals under the CDP
are included in the Nonqualified Deferred Compensation Table.
(3) The amounts reported represent the aggregate grant date fair value of PSUs awarded in each fiscal year for which compensation is required to
be reported in the table for each named executive officer, in each case computed in accordance with FASB ASC Topic 718. The PSUs are
subject to performance conditions, and the reported value at the grant date is based upon the probable outcome of such conditions on such
date. The values of the PSUs at the grant date assuming that the highest level of performance conditions will be achieved are as follows for
each fiscal year required to be reported for each applicable named executive officer:
Fiscal
Year
2019
2018
2017
Mr. Vasos
($)
11,990,832
11,415,341
8,543,092
Mr. Garratt
($)
2,023,304
1,997,768
1,993,388
Mr. Owen
($)
2,323,039
2,140,307
1,993,388
Mr. Reiser
($)
2,023,304
1,854,951
—
Ms. Taylor
($)
2,098,501
1,997,768
2,064,633
Information regarding the assumptions made in the valuation of these awards is set forth in Note 9 of the annual consolidated financial
statements in our 2019 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 9 of the annual consolidated financial statements
in our 2019 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 and Ms. Taylor deferred 5%, 5%, 7%
and 25%, respectively, of his or her fiscal 2019 Teamshare bonus payment reported above under the CDP. 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.
30
2020 Proxy Statement
(6)
Includes the following amounts for each named executive officer:
EXECUTIVE COMPENSATION
Company Match
Contributions –
401(k)
($)
Company Match
Contributions –
CDP
($)
Company Match
Contributions –
SERP
($)
Premiums for
Life Insurance
Program
($)
Aggregate Incremental
Cost of Providing
Perquisites/Personal
Benefits*
($)
14,396
14,081
14,568
13,860
14,064
49,753
23,019
21,701
20,076
15,190
—
—
—
—
74,460
2,690
1,555
1,521
1,431
1,226
24,789
27,869
27,980
24,964
—
Name
Mr. Vasos
Mr. Garratt
Mr. Owen
Mr. Reiser
Ms. Taylor
*
Perquisites and personal benefits for Ms. Taylor totaled less than $10,000 and accordingly the incremental cost is not included in the
table or detailed in this footnote. 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 to Messrs. Vasos, Garratt, Owen and Reiser related to: (1) for each
such named executive officer, financial and estate planning services, entertainment events, miscellaneous gifts, limited personal
travel expenses associated with a guest’s attendance at business events, 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. Owen and Reiser, an executive physical medical examination; and (3) for Messrs. Garratt and Owen, one or
more directed charitable donations. 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.
2020 Proxy Statement
31
EXECUTIVE COMPENSATION
Grants of Plan-Based Awards in Fiscal 2019
The table below shows each named executive officer’s fiscal 2019 Teamshare bonus opportunity under “Estimated
Possible Payouts Under Non-Equity Incentive Plan Awards.” Actual amounts earned under the fiscal 2019
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 target and maximum
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
2019, 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)
—
— 975,000 1,950,000 5,850,000
—
—
— 17,062
—
—
—
—
03/20/19
03/20/19
— 279,553
—
—
03/20/19
03/20/19
— 316,889
—
—
—
03/20/19
03/20/19
08/27/19
559,106
—
—
633,778
—
—
—
1,677,319
—
—
1,901,334
—
—
—
— 257,326
—
—
03/20/19
03/20/19
514,652 1,543,955
—
—
—
—
— 220,432
—
—
03/20/19
03/20/19
440,864
—
—
1,322,591
—
—
—
—
2,879
—
—
3,306
—
—
—
2,879
—
—
2,986
—
—
34,124
—
—
5,758
—
—
6,611
—
—
—
5,758
—
—
5,972
—
—
102,372
—
128,398
—
—
117.13
—
3,927,168
— 3,996,944
—
—
17,274
—
—
19,833
—
—
—
17,274
—
—
17,916
—
21,667
—
—
24,877
—
9,632
—
21,667
—
—
22,470
—
—
117.13
—
—
117.13
—
138.75
—
117.13
—
—
117.13
—
—
662,705
674,435
—
760,885
774,346
297,600
—
662,705
674,435
—
687,265
699,500
Name
Mr. Vasos
Mr. Garratt
Mr. Owen
Mr. Reiser
Ms. Taylor
(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 9 of the annual consolidated financial statements
included in our 2019 Form 10-K.
32
2020 Proxy Statement
EXECUTIVE COMPENSATION
Outstanding Equity Awards at 2019 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 2019. 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
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)
Name
Grant Date
Mr. Vasos
03/20/2012
03/18/2013
12/03/2013
37,440(1)
27,492(1)
2,880(1)
03/18/2014
37,926(1)
03/17/2015
44,786(2)
06/03/2015
171,122(3)
03/16/2016
89,700(2)
03/16/2016
03/22/2017
28,587(3)
80,756(2)
03/21/2018
39,300(2)
03/20/2019
03/22/2017
03/21/2018
03/20/2019
—
—
—
—
Mr. Garratt
12/03/2014
5,031(1)
03/17/2015
10,002(2)
12/02/2015
7,829(1)
03/16/2016
24,668(2)
03/22/2017
03/21/2018
03/20/2019
03/22/2017
03/21/2018
03/20/2019
18,844(2)
6,879(2)
—
—
—
—
Mr. Owen
08/25/2015
35,703(1)
03/16/2016
24,668(2)
03/22/2017
18,844(2)
03/21/2018
7,371(2)
03/20/2019
08/27/2019
03/22/2017
03/21/2018
03/20/2019
—
—
—
—
—
Option
Exercise
Price
($)
Option
Expiration
Date
45.25
03/20/2022
48.11
03/18/2023
56.48
12/03/2023
57.91
03/18/2024
74.72
03/17/2025
76.00
06/03/2025
84.67
03/16/2026
84.67
03/16/2026
70.68
03/22/2027
92.98
03/21/2028
128,398(2)
117.13
03/20/2029
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
18,143(4)
2,783,318
13,382(5)
2,052,933
21,106(7)
3,237,871
66.69
12/03/2024
74.72
03/17/2025
65.35
12/02/2025
84.67
03/16/2026
70.68
03/22/2027
92.98
03/21/2028
117.13
03/20/2029
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
4,232(4)
2,342(5)
649,231
359,286
3,561(7)
546,293
—
—
—
—
—
85,560(3)
29,899(2)
57,172(3)
80,756(2)
117,897(2)
—
—
—
—
—
—
8,222(2)
18,842(2)
20,631(2)
21,667(2)
—
—
—
—
8,222(2)
18,842(2)
22,104(2)
24,877(2)
73.73
08/25/2025
84.67
03/16/2026
70.68
03/22/2027
92.98
03/21/2028
117.13
03/20/2029
—
—
—
—
—
—
—
—
—
—
—
—
9,632(1)
138.75
08/27/2029
—
—
—
—
—
—
—
—
—
4,232(4)
2,508(5)
649,231
384,752
4,090(7)
627,447
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
61,386(6)
51,186(8)
9,417,226
7,852,444
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
10,743(6)
8,637(8)
1,648,084
1,325,002
—
—
—
—
—
—
—
—
—
—
—
—
—
—
11,508(6)
9,915(8)
1,765,442
1,521,060
2020 Proxy Statement
33
EXECUTIVE COMPENSATION
Option Awards
Stock Awards
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
Option
Exercise
Price
($)
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
($)(9)
Equity
Incentive Plan
Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
(#)
Equity
Incentive Plan
Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
($)(9)
23,031(1)
6,387(2)
—
—
—
8,470(1)
32,843(2)
24,668(2)
19,516(2)
6,879(2)
—
—
—
—
23,030(1)
76.89
08/29/2027
19,158(2)
21,667(2)
92.98
03/21/2028
117.13
03/20/2029
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
8,222(2)
19,516(2)
20,631(2)
22,470(2)
—
—
—
—
—
—
—
2,174(5)
3,561(7)
333,513
546,293
9,975(6)
8,637(8)
1,530,265
1,325,002
57.91
03/18/2024
74.72
03/17/2025
84.67
03/16/2026
70.68
03/22/2027
92.98
03/21/2028
117.13
03/20/2029
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
4,384(4)
672,549
2,342(5)
359,286
3,694(7)
566,697
—
—
—
—
—
—
—
—
—
—
—
—
—
—
10,743(6)
8,958(8)
1,648,084
1,374,247
Name
Grant Date
Mr. Reiser
08/29/2017
03/21/2018
03/20/2019
03/21/2018
03/20/2019
Ms. Taylor
03/18/2014
03/17/2015
03/16/2016
03/22/2017
03/21/2018
03/20/2019
03/22/2017
03/21/2018
03/20/2019
(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 a PSU grant, 40% of which were earned as a result of our fiscal 2017 adjusted EBITDA performance and 60% of which were earned as a
result of our fiscal 2017-2019 adjusted ROIC performance, and in each case are scheduled to vest on April 1, 2020.
(5) Part of a PSU grant that was earned as a result of our fiscal 2018 adjusted EBITDA performance and is scheduled to vest 50% per year on each
of April 1, 2020 and April 1, 2021.
(6) 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.
(7) Part of a PSU grant that was earned as a result of our fiscal 2019 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, 2022 if the adjusted ROIC performance goal is achieved for fiscal years 2019-2021. 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 January 31, 2020 as
reported by the NYSE.
34
2020 Proxy Statement
Option Exercises and Stock Vested During Fiscal 2019
EXECUTIVE COMPENSATION
Name
Mr. Vasos
Mr. Garratt
Mr. Owen
Mr. Reiser
Ms. Taylor
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)
—
—
—
—
—
—
—
—
14,636
1,015,992
32,282
3,819,929
7,478
7,563
1,088
7,624
884,872
894,930
128,743
902,148
(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, 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 2019
We have omitted the Pension Benefits table because it is inapplicable.
Nonqualified Deferred Compensation Fiscal 2019
Information regarding each named executive officer’s participation in our CDP/SERP Plan is included in the
following table. The material terms of the CDP/SERP Plan 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. Reiser
Ms. Taylor
Executive
Contributions
in Last FY
($)(1)
Registrant
Contributions
in Last FY
($)(2)
Aggregate
Earnings
in Last FY
($)(3)
Aggregate
Balance at
Last FYE
($)(4)
150,023
63,039
36,299
67,576
29,258
49,753
23,019
21,701
20,076
89,651
104,408
1,535,557
25,917
29,984
16,586
89,079
281,407
254,051
164,594
829,209
(1) Of the reported amounts, the following are reported in the Summary Compensation Table as “Salary” for 2019: Mr. Vasos ($64,169); Mr. Garratt
($37,105); Mr. Owen ($36,299); Mr. Reiser ($34,154); and Ms. Taylor ($29,258).
(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 2019 in a Summary Compensation Table:
Mr. Vasos ($1,027,595); Mr. Garratt ($182,267); Mr. Owen ($149,225); Mr. Reiser ($88,747); and Ms. Taylor ($268,187).
2020 Proxy Statement
35
EXECUTIVE COMPENSATION
Pursuant to the CDP, each named executive officer may
annually elect to defer up to 65% of his or her base
salary if his or her compensation exceeds the limit set
forth in Section 401(a)(17) of the Internal Revenue
Code, and up to 100% of his or her bonus pay if his or
her 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.
Pursuant to the SERP, we make an annual contribution
equal to a certain percentage of a participant’s annual
salary and bonus to eligible participants who are
actively employed in an eligible job grade on January 1
and continue to be employed as of December 31 of a
given year. The contribution percentage is based on
age, years of service, and job grade. Persons hired after
May 27, 2008 are not eligible to participate in the SERP.
The fiscal 2019 contribution percentage was 7.5% for
Ms. Taylor, and she is 100% vested in her SERP account.
No other named executive officer was eligible to
participate in the SERP in 2019.
The amounts deferred or contributed to the CDP/SERP
Plan 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 or SERP 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/SERP Plan upon the
participant’s termination of employment. A
participant’s CDP/SERP Plan 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
36
2020 Proxy Statement
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/SERP Plan liabilities through July 6,
2007 were fully funded into an irrevocable rabbi trust.
We also funded into the rabbi trust deferrals into the
CDP/SERP Plan between July 6, 2007 and October 15,
2007. All CDP/SERP Plan liabilities incurred on or after
October 15, 2007 are unfunded.
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
2019 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 2019” above. The discussion of equity awards in
each scenario below includes nonqualified stock
options outstanding as of the end of our 2019 fiscal
year, as well as PSUs awarded in 2017 (“2017 PSUs”),
2018 (“2018 PSUs”) and 2019 (“2019 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.
✓ 2017 PSUs. Any earned but unvested 2017 PSUs
subject to the one-year Adjusted EBITDA
performance 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.
If the termination occurs before the end of the
three-year performance period, a pro-rata
portion (based on months employed during the
three-year performance period) of any 2017
PSUs subject to the three-year Adjusted ROIC
performance goal (the “2017 Adjusted ROIC
PSUs”) that are earned as a result of Adjusted
ROIC performance versus the three-year
Adjusted ROIC performance goal 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
three-year performance period, any remaining
earned but unvested 2017 Adjusted ROIC PSUs
attributable to the three-year 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 and 2019 PSUs. If the termination
occurs on or after the end of the applicable
one-year or three-year performance period
associated with each of the 2018 PSUs and the
2019 PSUs but before an applicable vesting date,
any earned but unvested 2018 PSUs and 2019
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. For
the 2019 PSUs, if the termination occurs before
the end of the one-year performance period, a
pro-rata portion (based on months employed
during such performance period) of one-third of
the 2019 PSUs subject to the one-year Adjusted
EBITDA performance goal (the “2019 Adjusted
EBITDA PSUs”) earned based on performance
during such performance period shall become
vested and nonforfeitable as of the end of such
performance period and shall be paid at the
same time as if no termination had occurred. For
the 2018 PSUs and the 2019 PSUs, if the
termination occurs before the end of the
applicable three-year performance period, a
pro-rata portion (based on months employed
during such applicable performance period) of
the 2018 PSUs subject to the three-year
Adjusted ROIC performance goal (the “2018
Adjusted ROIC PSUs”) and of the 2019 PSUs
subject to the three-year Adjusted ROIC
performance goal (the “2019 Adjusted ROIC
PSUs”) earned based on performance during
such applicable performance period shall
become vested and nonforfeitable as of the end
of such applicable performance period and shall
be paid at the same time as if no termination
had occurred.
EXECUTIVE COMPENSATION
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 and, in the event of death on or after the last day
of a fiscal year, payment for such officer’s incentive
bonus earned for that fiscal year under the terms of our
Teamshare program (which otherwise generally
requires a participant to remain employed on the
payment date to receive any such bonus). In addition,
in the event of disability (as defined in the governing
document), a named executive officer will 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/SERP Plan), a named executive officer’s
CDP/SERP Plan 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 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 and dismemberment program.
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 one-year period following the retirement date
and shall become vested and exercisable on the
anniversary of the grant date that falls within such
one-year period. 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
2020 Proxy Statement
37
EXECUTIVE COMPENSATION
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.
✓ 2017 PSUs. If the retirement occurs before the
next April 1 vesting date, the remaining earned
but unvested 2017 Adjusted EBITDA PSUs 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 and 2019 PSUs. With the exception
outlined below, the vesting and payment of the
2018 PSUs and the 2019 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 and the 2019 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 PSUs subject to the
Adjusted EBITDA goals (the “2018 Adjusted
EBITDA PSUs”) and the 2019 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, 2018
PSUs and 2019 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.
38
2020 Proxy Statement
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
the 5th anniversary of the applicable grant date. If a
named executive officer resigns under the
circumstances described in (2) below, his or her 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 or
her 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 or her
target bonus level and base salary applicable
immediately 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.
• Mr. Vasos also will receive a lump sum payment,
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
EXECUTIVE COMPENSATION
have resulted in his or her 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.
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:
• The named executive officer must maintain the
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 or her
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
2020 Proxy Statement
39
EXECUTIVE COMPENSATION
national exchange, or by a separate Dollar General
clawback or recoupment policy.
Voluntary Termination without Good Reason
If a named executive officer otherwise resigns without
good reason, he or she 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.
40
2020 Proxy Statement
Payments After 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 or
she 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 or
she 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 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 if the termination
also constitutes a “separation from service” within the
meaning of Section 409A of the Internal Revenue
Code: (1) all of his or her 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 or her previously earned, or deemed earned, but
unvested PSUs that have not been previously forfeited
will immediately vest, become nonforfeitable and be
paid on the termination date subject 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
EXECUTIVE COMPENSATION
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, January 31, 2020. For
stock valuations, we have used the closing price of our
stock on the NYSE on January 31, 2020 ($153.41). The
table below reports only amounts that are increased,
accelerated or otherwise paid or owed as a result of the
applicable scenario and, as a result, exclude earned but
unpaid base salary through the employment
termination date and equity awards and CDP/SERP
Plan benefits that had vested prior to the event. For
more information regarding the CDP/SERP Plan
benefits, see “Nonqualified Deferred Compensation
Fiscal 2019” above. The table also excludes any
amounts that are available generally to all salaried
employees and do not discriminate in favor of our
executive officers. The amounts shown are merely
estimates. We cannot determine actual amounts to be
paid until a termination or change in control scenario
occurs.
2020 Proxy Statement
41
EXECUTIVE COMPENSATION
Potential Payments to Named Executive Officers Upon Occurrence of
Various Termination Events or Change in Control as of January 31, 2020
Death
($)(3)
Disability
($)(3)
Retirement
($)(4)
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
($)
48,041,953 48,041,953
n/a
2,708,936
n/a
n/a
n/a
n/a
n/a
3,250,000
54,000,889 48,041,953
7,251,989
776,709
n/a
n/a
1,864,000
9,892,698
7,251,989
n/a
n/a
n/a
n/a
7,251,989
7,848,878 7,848,878
n/a
880,443
n/a
n/a
n/a
n/a
2,000,000
n/a
10,729,321 7,848,878
6,047,703 6,047,703
n/a
n/a
n/a
n/a
8,478,656 6,047,703
714,953
n/a
n/a
1,716,000
7,397,019
7,397,019
n/a
612,447
n/a
n/a
n/a
n/a
n/a
1,470,000
9,479,466 7,397,019
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
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
9,208,936
22,325
8,350
n/a
9,239,611
n/a
2,656,282
14,817
8,350
n/a
2,679,449
n/a
3,267,421
23,005
8,350
n/a
3,298,776
n/a
2,445,080
23,005
8,350
n/a
2,476,435
n/a
2,094,517
22,386
8,350
n/a
2,125,253
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
6,623,200
n/a
n/a
n/a
n/a
41,491,039
9,208,936
22,325
8,350
n/a
6,623,200 50,730,650
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
6,120,437
2,656,282
14,817
8,350
n/a
8,799,886
6,605,950
3,267,421
23,005
8,350
n/a
9,904,726
4,968,617
2,445,080
23,005
8,350
n/a
7,445,051
6,250,432
2,094,517
22,386
8,350
n/a
8,375,685
Name/Item
Mr. Vasos
Equity Vesting Due to
Event(1)
Cash Severance
Health Payment
Outplacement(2)
Life Insurance Proceeds
Total
Mr. Garratt
Equity Vesting Due to
Event(1)
Cash Severance
Health Payment
Outplacement(2)
Life Insurance Proceeds
Total
Mr. Owen
Equity Vesting Due to
Event(1)
Cash Severance
Health Payment
Outplacement(2)
Life Insurance Proceeds
Total
Mr. Reiser
Equity Vesting Due to
Event(1)
Cash Severance
Health Payment
Outplacement(2)
Life Insurance Proceeds
Total
Ms. Taylor
Equity Vesting Due to
Event(1)
Cash Severance
Health Payment
Outplacement(2)
Life Insurance Proceeds
Total
(1)
For the portion of the 2018 and 2019 PSUs that are subject to performance for periods ending after January 31, 2020, 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
January 31, 2020.
(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 January 31, 2020.
42
2020 Proxy Statement
Compensation Committee
Interlocks and Insider
Participation
None of Ms. Fili-Krushel or Messrs. Bryant and McGuire,
each of whom was a member of our Compensation
Committee during all or a portion of 2019: (1) was at
any time during 2019 an officer or employee, or was at
any time prior to 2019 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 2020, 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.
EXECUTIVE COMPENSATION
The 2019 annual total compensation of the median
compensated employee (a store associate who was
promoted from part-time to full-time during our 2019
fiscal year) of our temporary, part-time and full-time
employee base who were employed as of the last day
of our 2019 fiscal year (January 31, 2020), other than
our CEO, was $14,571; our CEO’s 2019 annual total
compensation was $12,008,059; and the ratio of these
amounts is 1:824.
As of January 31, 2020, our total population consisted
of 137,357 compensated employees, of which 85 were
located in non-U.S. jurisdictions as follows: Hong
Kong (15); China (68); Mexico (1); and Turkey (1).
Pursuant to SEC rules, we excluded all such 85 non-U.S.
employees. After applying this exemption, the
employee population used to identify the median
employee consisted of 137,272 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 2, 2019 (the first day of our 2019 fiscal year)
through January 31, 2020 (the last day of our 2019
fiscal year), with such amounts annualized for those
permanent employees who did not work for the full
year. Our determination of the median compensated
employee yielded two potential median compensated
employees because the median population we used
had an even number of employees. From the two
employees, we selected as the median compensated
employee the employee who worked more of the year
than the other.
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.
2020 Proxy Statement
43
SECURITY OWNERSHIP
The following tables show the amount of our common stock beneficially owned by the listed persons as of
February 28, 2020. 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 251,941,230 shares of our common stock outstanding as of February 28, 2020.
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
BlackRock, Inc.(1)
T. Rowe Price Associates, Inc.(2)
The Vanguard Group(3)
Amount and Nature of
Beneficial Ownership
Percent of Class
25,304,398
25,260,085
19,923,621
10.0%
10.0%
7.9%
(1) BlackRock, Inc., through various subsidiaries, has sole power to vote or direct the vote of 22,357,630 shares and sole power to dispose or direct
the disposition of 25,304,398 shares. The address of BlackRock, Inc. is 55 East 52nd Street, New York, New York 10055. All information is based
solely on Amendment No. 5 to Statement on Schedule 13G filed on February 5, 2020.
(2) T. Rowe Price Associates, Inc. has sole power to vote or direct the vote of 9,599,409 shares and sole power to dispose or direct the disposition
of 25,260,085 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. 5 to Statement on Schedule 13G filed on February 14, 2020.
(3) The Vanguard Group has sole power to vote or direct the vote of 395,838 shares, shared power to vote or direct the vote of 80,048 shares,
sole power to dispose or direct the disposition of 19,471,593 shares, and shared power to dispose or direct the disposition of 452,028 shares.
Vanguard Fiduciary Trust Company, a wholly owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 304,065 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 235,258 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. 6 to Statement on Schedule 13G filed on February 12, 2020.
44
2020 Proxy Statement
Security Ownership of Officers and Directors
The following table pertains to beneficial ownership of our current directors, nominees and 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.
SECURITY OWNERSHIP
Name of Beneficial Owner
Warren F. Bryant
Michael M. Calbert(3)
Sandra B. Cochran
Patricia D. Fili-Krushel(4)
Timothy I. McGuire
William C. Rhodes, III(5)
Debra A. Sandler
Ralph E. Santana
Todd J. Vasos
John W. Garratt
Jeffery C. Owen
Jason S. Reiser
Rhonda M. Taylor
All current directors and executive officers
as a group (18 persons)(3)(4)(5)
Amount and Nature of
Beneficial Ownership(1)(2)
Percent of Class
38,259
106,299
26,099
24,713
5,079
60,308
—
—
863,149
123,363
137,611
44,320
149,324
1,804,054
*
*
*
*
*
*
—
—
*
*
*
*
*
*
*
(1)
(2)
Denotes less than 1% of class.
Share totals have been rounded to the nearest whole share.
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 February 28, 2020 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 February 28, 2020 over which the person will not have voting or investment power until exercised: Mr. Bryant (3,249 RSUs;
16,207 options); Mr. Calbert (18,590 RSUs; 16,207 options); Ms. Cochran (1,229 RSUs; 13,120 options); Ms. Fili-Krushel (1,229 RSUs; 12,892
options); Mr. McGuire (1,229 RSUs); Mr. Rhodes (1,229 RSUs; 16,207 options); Mr. Vasos (31,870 PSUs; 730,252 options); Mr. Garratt (6,590 PSUs;
103,192 options); Mr. Owen (6,850 PSUs; 117,817 options); Mr. Reiser (2,274 PSUs; 41,223 options); Ms. Taylor (6,787 PSUs; 122,852 options); and
all current directors and executive officers as a group (29,908 RSUs; 60,397 PSUs; 1,382,710 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. Excludes shares underlying RSUs
that are vested but deferred at the election of Ms. Fili-Krushel and Mr, Santana, but over which such persons will not have voting or investment
power until the applicable RSUs are settled on a date that is later than 60 days of February 28, 2020.
(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 2,528 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.
Delinquent Section 16(a) Reports
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 2019, 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, except
that Ms. Fili-Krushel filed a Form 4 in 2019 for six late
Forms 4 (representing a total of 12 transactions during
2015 and 2016) that were not reported on a timely
basis.
2020 Proxy Statement
45
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 the compensation paid to our
named executive officers as disclosed in this proxy
statement pursuant to Item 402 of Regulation S-K.
Accordingly, you may vote on the following resolution
at the annual meeting: “RESOLVED, that the
shareholders approve, on an advisory basis, the
compensation of Dollar General’s named executive
officers as disclosed in the Compensation Discussion
and Analysis, the accompanying compensation tables,
and the related narrative disclosures in this proxy
statement.”
this proxy statement demonstrates that our executive
compensation program was designed appropriately
and is working to ensure alignment of management’s
and shareholders’ interests to support long-term value
creation. At our 2019 annual meeting of shareholders,
over 95% of shareholder votes were cast in support of
our executive compensation program.
This vote is not intended to address any specific item
of compensation, but rather the overall compensation
of our named executive officers. This vote also is not a
vote on director compensation, 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.
As discussed in detail in the “Compensation Discussion
and Analysis” section, the Compensation Committee
actively oversees our executive compensation program,
adopting changes 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
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 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 named executive
officer compensation decisions.
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.
46
2020 Proxy Statement
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
January 31, 2020,
• discussed with Ernst & Young LLP, our independent
registered public accounting firm, the matters
required to be discussed by the applicable
requirements of the Public Company Accounting
Oversight Board and the SEC,
• 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 the independence
of Ernst & Young LLP.
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 January 31, 2020
for filing with the SEC.
While the Audit Committee has the responsibilities 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.
2020 Proxy Statement
47
PROPOSAL 3: Ratification of Appointment of Auditors
Who is responsible for the selection of the
independent auditor?
Who has the Audit Committee selected as
the independent auditor?
The Audit Committee is directly responsible for the
appointment, compensation, retention and oversight of
the independent auditor.
Is the Audit Committee involved in the lead
audit partner selection process?
Yes. Prior to the selection of a lead audit partner, the
Chairperson of the Audit Committee, typically one
additional Audit Committee member, and the Chairman
of the Board interview the candidates. Following the
interviews, the Audit Committee discusses each
candidate’s credentials, experience level and
independence prior to making the final selection.
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.
After conducting the evaluation process discussed
above, the Audit Committee selected Ernst & Young
LLP as our independent auditor for the 2020 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 2020 fiscal year.
48
2020 Proxy Statement
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
Service
Audit Fees(1)
Audit-Related Fees(2)
Tax Fees(3)
All Other Fees(4)
during the past two fiscal years. Information related to
audit fees for 2019 includes amounts billed through
January 31, 2020, and additional amounts estimated to
be billed for the 2019 period for services rendered.
2019 Aggregate Fees Billed ($)
2018 Aggregate Fees Billed ($)
2,700,625
—
1,563,430
7,100
2,898,361
35,000
2,431,222
7,120
(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.
(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 2018 relate to the employee benefit plan audit.
(3) Represents for each fiscal year the aggregate fees billed for professional services for tax compliance, tax advice, and tax planning. 2019 and
2018 fees relate primarily to tax compliance services, which represented $1,438,430 and $2,181,222 in 2019 and 2018, respectively, for work
related to work opportunity tax credit assistance, foreign sourcing offices’ tax compliance, state tax credit assistance, long-term unemployed
credits and, for 2018 only, hurricane zone credit assistance. The remaining tax fees for each such year are for tax advisory services related to
inventory, as well as income tax advisory services for 2019 only and tax reform advisory services for 2018 only.
(4) Represents for each fiscal year the aggregate fees billed for other products and services, which in each year consisted solely of subscription
fees 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 Chairperson (or
any Committee member if the Chairperson 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 2019 and 2018.
2020 Proxy Statement
49
PROPOSAL 4: VOTE TO APPROVE CHARTER
AMENDMENTS TO REPLACE THE SUPERMAJORITY
VOTING REQUIREMENTS CONTAINED THEREIN WITH A
MAJORITY VOTING REQUIREMENT
What are Shareholders Being Asked to
Approve?
After careful consideration and upon the
recommendation of the Nominating Committee, our
Board of Directors voted to approve, and to
recommend that our shareholders approve,
amendments to our Charter to remove existing
supermajority voting standards required for our
common stock and to replace them with the majority
voting standard described below.
Why is the Board of Directors
Recommending the Amendments?
In evaluating the current voting requirements contained
in our Charter, the Nominating Committee and our
Board of Directors considered, among other matters,
certain of the principal positions for and against the
current voting standards imposed by our Charter and
the viewpoints regarding supermajority voting
provisions expressed by our shareholders, and reviewed
trends and best practices in corporate governance, as
well as the corporate governance practices and policies
of a number of other corporations. Supermajority
voting requirements like those contained in our Charter
are intended to facilitate corporate governance stability
and provide protection against self-interested action by
large shareholders by requiring broad shareholder
consensus to make certain fundamental changes.
However, while such protection can be beneficial to
shareholders, the Board is aware that some
shareholders oppose these provisions, viewing
supermajority provisions as limiting the Board’s
accountability to shareholders and the ability of
shareholders to participate in corporate governance.
What are the Proposed Amendments?
Currently, Article 9 of our Charter provides that the
affirmative vote of holders of eighty percent (80%) of
the voting power of the shares entitled to vote at an
election of directors, voting together as a single class,
is required to amend or repeal Article 9 of our Charter
or to amend, alter, change or repeal, or to adopt any
provisions of our Charter or of our Bylaws in a manner
that is inconsistent with the purpose and intent of
Article 9 of our Charter. Article 9 of our Charter deals
with matters relating to our Board, including the
method of fixing the size of the Board and the terms of
directors, authority to fill director vacancies, and
authority to remove directors from office.
Similarly, Article 14 of our Charter currently provides
that the affirmative vote of holders of eighty percent
(80%) of the voting power of the shares entitled to
vote at an election of directors, voting together as a
single class, is required to amend or repeal Article 14 of
our Charter or to amend, alter, change or repeal, or to
adopt any provisions of our Charter or of our Bylaws in
a manner that is inconsistent with the purpose and
intent of Article 14 of our Charter. Article 14 of our
Charter deals with authority to call special meetings of
our shareholders.
If this Proposal is approved by a sufficient number of
shareholders, only a majority of the voting power of all
outstanding shares of the Company entitled to vote at
an election of directors, voting together as a single
class, would be required to approve any future
(1) amendment or repeal of Article 9 and Article 14 of
our Charter; and (2) amendment, alteration, change,
repeal or adoption of any provision of our Charter or of
our Bylaws in a manner that is inconsistent with the
purpose and intent of Article 9 or Article 14 of our
Charter.
The summary of the proposed amendments to our
Charter set forth above is qualified in its entirety by the
text of the proposed amendments, which are attached
as Appendix A to this proxy statement. Additions of
text to our Charter contained in Appendix A are
indicated by underlining and deletions of text are
struck through.
When Would the Amendments Become
Effective?
If the required shareholder approval is obtained, we
would file promptly with the Secretary of State of the
State of Tennessee the amendments to our Charter
following the annual meeting. If such approval is not
obtained, our Charter will not be so amended.
FOR
The Board of Directors unanimously recommends that Shareholders vote
FOR the approval of the amendments to the Charter to replace the
supermajority voting requirements contained therein with the majority
voting requirement described in this proxy statement.
50
2020 Proxy Statement
PROPOSAL 5: VOTE TO APPROVE BYLAWS AMENDMENT
TO REPLACE THE SUPERMAJORITY VOTING
REQUIREMENT CONTAINED THEREIN WITH A MAJORITY
VOTING REQUIREMENT
What are Shareholders Being Asked to
Approve?
After careful consideration and upon the
recommendation of the Nominating Committee, our
Board of Directors voted to approve, and to
recommend that our shareholders approve, an
amendment to our Bylaws to remove the existing
supermajority voting standard required for our
common stock and to replace it with the majority
voting standard described below.
Why is the Board of Directors
Recommending the Amendment?
In evaluating the current voting requirement contained
in our Bylaws, the Nominating Committee and our
Board of Directors considered, among other matters,
certain of the principal positions for and against the
current voting standard imposed by our Bylaws and
the viewpoints regarding supermajority voting
provisions expressed by our shareholders, and reviewed
trends and best practices in corporate governance, as
well as the corporate governance practices and policies
of a number of other corporations. Supermajority
voting requirements like that contained in our Bylaws
are intended to facilitate corporate governance stability
and provide protection against self-interested action by
large shareholders by requiring broad shareholder
consensus to make certain fundamental changes.
However, while such protection can be beneficial to
shareholders, the Board is aware that some
shareholders oppose these provisions, viewing
supermajority provisions as limiting the Board’s
accountability to shareholders and the ability of
shareholders to participate in corporate governance.
What is the Proposed Amendment?
Currently, Article V, Section 4 of our Bylaws provides
that the affirmative vote of holders of at least
eighty percent (80%) of the voting power of all the
outstanding shares of the Company entitled to vote
generally in an election of directors, voting together as
a single class, is required to alter, amend, or repeal, or
to adopt new, Bylaws.
If this Proposal is approved by a sufficient number of
shareholders, only a majority of the voting power of all
outstanding shares of the Company entitled to vote in
an election of directors, voting together as a single
class, would be required to approve any future
(1) adoption of new Bylaws; and (2) alteration,
amendment or repeal of our Bylaws.
The summary of the proposed amendment to our
Bylaws set forth above is qualified in its entirety by the
text of the proposed amendment, which is attached as
Appendix B to this proxy statement. Additions of text
to our Bylaws contained in Appendix B are indicated
by underlining, and deletions of text are struck through.
When Would the Amendment Become
Effective?
If the required shareholder approval is obtained, the
amendment to our Bylaws would become effective
immediately following the annual meeting. If such
approval is not obtained, our Bylaws will not be so
amended.
FOR
The Board of Directors unanimously recommends that Shareholders vote
FOR the approval of the amendment to the Bylaws to replace the
supermajority voting requirement contained therein with the majority
voting requirement described in this proxy statement.
2020 Proxy Statement
51
SHAREHOLDER PROPOSALS FOR 2021 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 Bylaws.
Shareholder Proposals
To be considered for inclusion in our proxy materials
relating to the 2021 annual meeting of shareholders
(the “2021 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 3, 2020.
New Business at 2021 Annual Meeting
To introduce new business outside of the Rule 14-8
process or to nominate directors (other than a proxy
access nomination, which is described below) at the
2021 Annual Meeting, or to recommend a candidate for
our Nominating Committee’s consideration, you must
deliver written notice to us no earlier than the close of
business on January 27, 2021 and no later than the
close of business on February 26, 2021, and comply
with the advance notice provisions of our Bylaws. If we
do not receive a properly submitted shareholder
proposal by February 26, 2021, 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 2021 Annual Meeting.
Proxy Access
Our 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
Bylaws. In order to be properly brought before our 2021
Annual Meeting, an eligible shareholder’s notice of
nomination of a director candidate pursuant to the
proxy access provisions of our Bylaws must be received
by us no earlier than the close of business on
November 3, 2020 and no later than the close of
business on December 3, 2020, and comply with the
other relevant provisions of our Bylaws pertaining to
proxy access nominees.
52
2020 Proxy Statement
Appendix A
Proposed Charter Amendments
Article 9:
The business and affairs of the corporation shall be managed by a Board of Directors. The number of Directors and
their terms shall be established in accordance with the Bylaws of the corporation. A director shall hold office until
the annual meeting of shareholders for the year in which his or her term expires and until his or her successor shall
be elected and shall qualify; subject, however, to prior death, resignation, retirement, disqualification, or removal
from office. Any vacancy on the Board of Directors, including a vacancy that results from an increase in the number
of directors or a vacancy that results from the removal of a director with cause, may be filled only by the Board of
Directors.
Subject to the rights of any voting group established either in the corporation’s Bylaws or by any applicable
shareholders’ agreement, any director may be removed from office but only for cause and only by (a) the
affirmative vote of the holders of a majority of the voting power of the shares entitled to vote in the election of
directors, considered for this purpose as one class, or (b) the affirmative vote of a majority of the entire Board of
Directors then in office.
Notwithstanding any other provision of this Charter, the affirmative vote of holders of a majority eighty percent
(80%) of the voting power of the shares entitled to vote at an election of directors, voting together as a single
class, shall be required to amend or repeal this Article 9 of this Charter, or to amend, alter, change or repeal, or to
adopt any provisions of this Charter or of the corporation’s Bylaws in a manner that is inconsistent with the
purpose and intent of this Article 9.
Article 14:
Special meetings of shareholders may be called at any time, but only by the Chairman of the Board of Directors,
the Chief Executive Officer of the corporation, or upon a resolution by or affirmative vote of the Board of Directors,
and not by the shareholders.
Notwithstanding any other provision of this Charter, the affirmative vote of holders of a majority eighty percent
(80%) of the voting power of the shares entitled to vote at an election of directors, voting together as a single
class, shall be required to amend or repeal this Article 14 of this Charter, or to amend, alter, change or repeal, or to
adopt any provisions of this Charter or of the corporation’s Bylaws in a manner that is inconsistent with the
purpose and intent of this Article 14.
2020 Proxy Statement
A-1
Appendix B
Proposed Bylaws Amendment
Article V
General Provisions
.
.
.
Section 4. Amendment of Bylaws. Subject to the provisions of the Charter of the Corporation, these Bylaws may
be altered, amended, or repealed or new bylaws may be adopted by the majority vote of the entire Board of
Directors at any regular or special meeting of the Board of Directors. Subject to the provisions of the Charter of the
Corporation and notwithstanding any other provisions of these Bylaws or any provision of law which might
otherwise permit a lesser vote of the shareholders, these Bylaws may be altered, amended, or repealed or new
bylaws may be adopted by the affirmative vote of the holders of at least a majority80% of the voting power of all
the then outstanding shares of stock of the Corporation entitled to vote generally in the election of directors,
voting together as a single class.
2020 Proxy Statement
B-1
10-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒
☐
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended January 31, 2020, or
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from ________ to ________
Commission file number: 001-11421
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
Trading Symbol(s)
DG
Name of each 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 whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and
“emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒
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 market value of the registrant’s common stock outstanding and held by non-affiliates as of August 2, 2019 was $34.3 billion
calculated using the closing market price of the registrant’s common stock as reported on the NYSE on such date ($133.69). For this purpose,
directors, executive officers and greater than 10% record shareholders are considered the affiliates of the registrant.
The registrant had 251,941,312 shares of common stock outstanding as of March 12, 2020.
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 27, 2020.
INTRODUCTION
PART I
TABLE OF CONTENTS
ITEM 1. BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ITEM 1A. RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ITEM 1B. UNRESOLVED STAFF COMMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ITEM 2. PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ITEM 3. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ITEM 4. MINE SAFETY DISCLOSURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
INFORMATION ABOUT OUR EXECUTIVE OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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 . . 39
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . . . . . . . . . . . . . . 40
Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS . . . 43
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
SHAREHOLDERS' EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
CASH FLOWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
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 . . . . . . 74
ITEM 11. EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . 75
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES . . . . . . . . . . . . . . . . . . . . . . . . . . 76
ITEM 16 FORM 10-K SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
2
2019 Form 10-K
General
INTRODUCTION
This report contains references to years 2020, 2019, 2018, 2017, 2016, and 2015, which represent fiscal
years ending or ended January 29, 2021, January 31, 2020, February 1, 2019, February 2, 2018, February 3, 2017,
and January 29, 2016, 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 7 – 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 imposed by the U.S.
government; potential impact of the COVID-19 outbreak; anticipated impact of new accounting standards; efforts
to improve distribution and transportation efficiencies, including self-distribution; efforts to improve our in-stock
position, customer convenience proposition and store labor productivity; or expected outcome or effect of pending
or threatened legal disputes, 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.
2019 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 16,368 stores
located in 45 states as of February 28, 2020, 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 on the New York Stock Exchange under the symbol “DG”, 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 2019, we achieved our 30th 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 continue to 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
4
2019 Form 10-K
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
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
or frozen 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., and 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 both products that are of comparable quality to national
brands as well as opening price point items, each at substantial discounts to the national brands.
Consumables is our largest merchandise category and has continued to become a larger percentage of our
total sales as indicated in the table below. Consumables include paper and cleaning products (such as paper
towels, bath tissue, paper dinnerware, trash and storage bags, and laundry); 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 holiday items, toys, batteries, small electronics, greeting cards, stationery,
prepaid phones and accessories, gardening supplies, hardware, automotive and home office supplies.
2019 Form 10-K
5
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.
The percentage of net sales of each of our four categories of merchandise for the fiscal years indicated
below was as follows:
Consumables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78.0 % 77.5 % 76.9 %
Seasonal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.7 % 11.9 % 12.1 %
5.8 % 5.9 % 6.0 %
Home products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.5 % 4.7 % 5.0 %
Apparel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 2018 2017
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
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,320 1,315
900
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,534
975
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,370
Stores at
of Year Opened Closed Increase End of Year
14,534
15,370
16,278
101 1,214
836
908
Stores Stores
64
67
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 two largest suppliers each accounted for
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2019 Form 10-K
approximately 8% of our purchases in 2019. Our private brands come from a wide variety of suppliers. We
directly imported approximately 6% of our purchases at cost in 2019.
We consistently have been able 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
sources; however, such alternative sources could increase our merchandise costs and supply chain lead time and
expenses, 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 lease additional temporary warehouse space as necessary to
support our distribution needs. In addition to our traditional distribution centers, we now operate multiple
temperature-controlled distribution facilities in support of “DG Fresh”, our strategic, multi-phased shift to self-
distribution of frozen and refrigerated goods, such as dairy, deli and frozen products. We regularly 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 more than 300 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, new store openings, remodels, relocations and store closings. 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 12 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, 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 is intense and we believe it will continue to be so, with certain
competitors reducing their store locations while others 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 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 product
2019 Form 10-K
7
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.
Our Employees
As of February 28, 2020, we employed approximately 143,000 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 and the Believe
Beauty brand through at least March 23, 2022.
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 also 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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2019 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 or decline in real wages; 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 number and
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
2019 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.
The success of our DG Fresh initiative, our cold chain self-distribution 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, which is designed to enhance our in-store labor productivity, on-shelf availability and customer
convenience, further depends in part on customer interest and adoption of self-checkout, our ability to gain cost
efficiencies and control shrink levels from the initiative, vendor cooperation, and successful implementation and
maintenance of the necessary technology.
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 the challenges imposed by our expansion,
including into new states or urban areas, it could materially impede our planned future growth and our
profitability.
Delays in or failure to complete a significant portion 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, including zoning restrictions and
moratoria on small box discount retail development passed by local governments; the ability to negotiate
acceptable lease and development terms (for example, real estate development requirements and cost of building
materials and labor), 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 urban 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
inadvertently may temporarily or permanently divert a larger than anticipated number of 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 and financial condition.
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, ease of
shopping experience, 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
can.
Competition is intense, and is expected to continue to be so, with certain competitors reducing their store
locations while others enter or increase their presence in our geographic and product markets (including through
the expansion of availability of delivery services) and expand availability of mobile, web-based and other digital
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2019 Form 10-K
technologies to facilitate a more convenient and competitive online and in-store shopping experience. If our
competitors or others were to enter our industry in a significant way, including through alliances or other business
combinations, it could significantly alter the competitive dynamics of the retail marketplace and result in
competitors with greatly improved competitive positions, 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 anticipate or respond effectively to
competitive pressures and industry changes, it could materially affect our results of operations and financial
condition.
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, higher rates of inventory shrinkage or increased security or other costs to
combat inventory theft could adversely affect our results of operations and financial condition. 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 55% of our total assets exclusive of goodwill,
operating lease assets, and other intangible assets as of January 31, 2020. 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 such that the
costs to store and hold the goods unduly impacts our financial results or increases the risk of inventory shrinkage.
If we do not accurately predict customer trends, spending levels, or price sensitivity, 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 or to
comply with privacy laws 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, inadvertent or malicious employee actions could result in a
defeat of security measures and compromise our or our third-party vendors’ information systems. Like other
retailers, we and our vendors have experienced threats to data and systems, including by perpetrators of attempted
random or targeted malicious cyberattacks, computer viruses, worms, bot attacks or other destructive or disruptive
software and attempts to misappropriate our information and cause system failures and disruptions. If
cyberattackers obtain customer, employee or vendor 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
2019 Form 10-K
11
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.
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 or one of our vendors 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.
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, physical theft, computer and telecommunications failures, inadequate or ineffective
redundancy, 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, including the migration of applications to the cloud, or with maintenance or adequate support of
existing systems also could disrupt or reduce the efficiency of our operations, fail to operate as designed, result in
the potential loss or corruption of data or information, disrupt operations and affect our ability to meet business
and reporting requirements and adversely affect our profitability.
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2019 Form 10-K
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, including as a result of
pandemic outbreaks, or increases in transportation costs, including increased fuel costs, import freight 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. The recent outbreak of the strain of
COVID-19 has led various governments to take precautionary measures to limit the spread of the virus, including
port closures and other restrictions, which could disrupt the global transportation and distribution of goods
resulting in product delivery delays or higher delivery prices. As of the date of this filing, we do not anticipate
that supply chain disruptions either known or experienced to date as a result of the COVID-19 outbreak are likely
to have a material impact on our financial results in 2020. However, the extent to which the COVID-19 outbreak
may impact our distribution network, results of operations (including sales) or business in the future is uncertain
as the situation continues to evolve, and such impact could be more significant.
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 or the rollout of certain strategic initiatives
such as our DG Fresh initiative, which may in turn reduce revenue growth, or by increasing transportation and
product 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 2019, our two 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 generally would 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 selection and
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 2019, 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, economic conditions and instability in countries in which foreign suppliers are 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, pandemic outbreaks,
merchandise quality or safety issues, transport availability and cost, increases in wage rates and taxes, transport
2019 Form 10-K
13
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, the effects of pandemic outbreaks
including COVID-19, 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. We currently expect delays in the receipt of certain goods
as a result of the COVID-19 outbreak, but as of the date of this filing, we do not anticipate that these known
supply chain disruptions experienced to date as a result of the COVID-19 outbreak are likely to have a material
impact on our financial results in 2020. However, the extent to which the COVID-19 outbreak may impact our
supply chain, results of operations (including sales) or business in the future is uncertain as the situation continues
to evolve, and such impact could be more significant. 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 regulatory scrutiny and
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,
14
2019 Form 10-K
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.
Legal proceedings may adversely affect our reputation, business, results of operations and financial
condition.
Our business is subject to the risk of litigation or other legal proceedings by employees, consumers,
suppliers, competitors, shareholders, government agencies and others through private actions, class actions, multi-
district litigation, arbitrations, derivative actions, administrative proceedings, regulatory actions or other litigation.
For example, we are involved in certain legal proceedings as discussed in Note 7 to the consolidated financial
statements. The outcome of legal proceedings, particularly class action or multi-district litigation or mass
arbitrations and regulatory actions, can be 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. In addition, certain of these matters, 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, and sometimes these developments are unanticipated. Legal
proceedings in general, and class actions, multi-district litigation and derivative actions in particular, can be
expensive and disruptive, and adverse publicity could harm our reputation, regardless of the validity of the
allegations. As a result, legal proceedings may adversely affect our business, results of operations and financial
condition. See also Note 7 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 or other health crises, acts of violence or terrorism, 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 or other health crises (including but not limited to
the COVID-19 outbreak), acts of violence or terrorism (including within our stores, distribution centers or other
Company property), or disruptive global political events, such as civil unrest in countries in which our suppliers
are located, or similar disruptions could adversely affect our reputation, business and financial performance. If
any of 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
2019 Form 10-K
15
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 affect consumer shopping patterns
or prevent customers from reaching our stores, which could lead to lost sales and higher markdowns, or result in
increases in fuel or other energy prices, a fuel shortage, store or distribution center 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, the temporary or long-term inability to obtain technology needed to effectively run our business, 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.
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 while operating in an industry
challenged by historically high rates of employee 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 and other related
costs could increase. Our ability to pass along labor and other related 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.
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.
16
2019 Form 10-K
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 our expectations it could result in unanticipated markdowns.
Adverse events, such as deteriorating economic conditions, high unemployment rates, high gas prices,
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. In 2019 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 resulted 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
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.
2019 Form 10-K
17
ITEM 2. PROPERTIES
As of February 28, 2020, we operated 16,368 retail stores located in 45 states as follows:
Number of Stores State
State
Alabama. . . . . . . . . . . .
Arizona . . . . . . . . . . . .
Arkansas . . . . . . . . . . .
California . . . . . . . . . . .
Colorado . . . . . . . . . . .
Connecticut . . . . . . . . .
Delaware . . . . . . . . . . .
Florida . . . . . . . . . . . . .
Georgia . . . . . . . . . . . .
Illinois . . . . . . . . . . . . .
Indiana . . . . . . . . . . . . .
Iowa . . . . . . . . . . . . . . .
Kansas . . . . . . . . . . . . .
Kentucky . . . . . . . . . . .
Louisiana . . . . . . . . . . .
Maine . . . . . . . . . . . . . .
Maryland . . . . . . . . . . .
Massachusetts . . . . . . .
Michigan . . . . . . . . . . .
Minnesota . . . . . . . . . .
Mississippi . . . . . . . . . .
Missouri . . . . . . . . . . . .
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 . . . . . . . . . .
Wyoming . . . . . . . . . .
Number of Stores
22
40
148
99
495
870
42
858
461
57
781
20
564
55
815
1,552
11
37
435
249
192
1
796
121
452
226
51
64
47
900
915
578
566
264
247
565
574
58
140
50
574
163
538
547
128
Most of our stores are located in leased premises. Individual store leases vary as to their terms, rental
provisions and expiration dates. Many stores, including a significant portion of our new 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.
As of February 28, 2020, we operated 17 distribution centers for non-refrigerated merchandise with
approximately 16.9 million square feet, four of which are leased and the remainder of which are owned.
Approximately 7.25 acres of the land for one of the distribution centers is subject to a ground lease. We also
leased approximately 1.1 million square feet of warehouse space in support of our distribution network for non-
refrigerated merchandise. In addition, we operated five cold storage distribution centers with approximately 1.1
million square feet, four of which are leased and one of which is owned, and we have executed leases for two
additional cold storage distribution centers with approximately 0.7 million square feet, which are expected to be
operational later in 2020.
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 7 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.
18
2019 Form 10-K
ITEM 4. MINE SAFETY DISCLOSURES
None.
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
Information regarding our current executive officers as of March 19, 2020 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 . . . . . . . . .
Jeffery C. Owen . . . . . . . . .
Michael J. Kindy . . . . . . . .
Jason S. Reiser . . . . . . . . . .
Steven G. Sunderland . . . .
Rhonda M. Taylor . . . . . . .
Carman R. Wenkoff . . . . . .
Anita C. Elliott . . . . . . . . . .
Kathleen A. Reardon . . . . .
Age
58
51
50
54
51
56
52
52
55
48
Position
Chief Executive Officer and Director
Executive Vice President and Chief Financial Officer
Chief Operating Officer
Executive Vice President, Global Supply Chain
Executive Vice President and Chief Merchandising Officer
Executive Vice President, Store Operations
Executive Vice President and General Counsel
Executive Vice President and Chief Information Officer
Senior Vice President and Chief Accounting Officer
Senior Vice President and Chief People 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 and 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 to November 2008) and Senior Vice President and
Chief Merchandising Officer (2001 to 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. Mr. Garratt previously held various
positions of increasing responsibility in corporate strategy and financial planning with Yum! Brands, Inc., one of
the world’s largest restaurant companies, between May 2004 and October 2014, including Vice President, Finance
and Division Controller for the KFC division and earlier for the Pizza Hut division and for Yum Restaurants
International (October 2013 to October 2014); Senior Director, Yum Corporate Strategy (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; and various other financial positions. He previously held financial management
positions at Alcoa Inc. (April 2002 to May 2004) and General Electric (March 1999 to April 2002), after
beginning his career with Alcoa in May 1990. Mr. Garratt has served as a director of Humana Inc. since February
2020.
Mr. Owen has served as Chief Operating Officer since August 27, 2019. He 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, and
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 also served the Company in various operations
2019 Form 10-K
19
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. 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.
Mr. Reiser has served as Executive Vice President and Chief Merchandising Officer since July 2017. He
previously served as Executive Vice President and Chief Operating Officer of Vitamin Shoppe, Inc., a multi-
channel specialty retailer and contract manufacturer of health and wellness products, from July 2016 to July 2017,
where he led 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 (January 2014 to June 2016) and as Senior Vice President, Hardlines
Merchandising (July 2013 to January 2014) for discount retailer Dollar Tree, Inc. (successor to Family Dollar
Stores, Inc.) and 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 (November 2010 to June 2013); Vice President,
Operations & Compliance, Health & Wellness of Sam’s Club (May 2010 to November 2010); Divisional
Merchandise Manager, Wellness (May 2009 to May 2010); Senior Buyer Pharmacy/OTC of Sam’s Club
(November 2006 to May 2009); Director, Government Relations and Regulatory Affairs (August 2002 to
November 2006); Pharmacy District Manager (August 2000 to August 2002); and Pharmacy Manager (October
1995 to August 2000).
Mr. Sunderland has served as Executive Vice President, Store Operations, since August 2019. He joined
Dollar General as Senior Vice President, Store Operations, in September 2014. Mr. Sunderland previously served
as Senior Vice President, Retail Operations, of Office Depot, Inc. (November 2013 to January 2014); Senior Vice
President, Retail Operations, of OfficeMax Incorporated (May 2012 to November 2013); Chief Operating Officer
of Bally Total Fitness Holding Corporation (2011 to April 2012); and World Kitchen, LLC’s President of Retail
(2009 to 2011). Mr. Sunderland began his career with Sears in 1987, holding various positions of increasing
responsibility, including Vice President of Strategic Operations for Sears Holdings Corporation from 2007 until
2009.
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. He
previously served as the Chief Information Officer (May 2012 to June 2017) and Chief Digital Officer (June 2016
to June 2017) of Franchise World Headquarters, LLC (“Subway”), a restaurant chain, where he was responsible
for global technology and digital strategy, execution and operations for the Subway brand and all of its
restaurants. He owned a Subway franchise from July 2015 until October 2017. He also previously served as
Chairman of the Board and Co-President of Retail Gift Card Association (February 2008 to May 2012); Deputy
Chief Information Officer for Independent Purchase Cooperative, Inc. (May 2005 to May 2012) and President of
its subsidiary, Value Pay Services LLC (May 2005 to February 2011); founder and President of Stored Value
Management, Inc. (January 2004 to May 2005); and Vice President, Operations and Finance, and General Counsel
20
2019 Form 10-K
of Ontain Corporation (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,
where she 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.
Ms. Reardon has served as Senior Vice President and Chief People Officer since May 2019. She joined
Dollar General as Director, Human Resources in September 2009 and was promoted to Vice President, Talent
Management in October 2012. She became Vice President, Retail Human Resources in October 2014 and was
promoted to Senior Vice President, Human Resources in March 2019. Prior to joining Dollar General, Ms.
Reardon held several positions of increasing responsibility at Centex from August 2005 until September 2009,
serving as Director of Human Resources from October 2007 until September 2009. Since beginning her career in
May 1998, Ms. Reardon also held various roles with Carrier Corporation, including Manager of Human Resources
from August 2003 until August 2005, and was also a Career Consultant at the Darden Graduate School of
Business Administration, University of Virginia, from August 2001 until August 2003.
2019 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 12,
2020, there were approximately 2,613 shareholders of record of our common stock.
Dividends
We have paid quarterly cash dividends since 2015. Our Board of Directors most recently increased the
amount of the quarterly cash dividend to $0.36 beginning with the dividend payable on April 21, 2020. 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 January 31, 2020 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:
Total Number Average
Total Number
Approximate
Dollar Value
of Shares that May
as Part of Publicly Yet Be Purchased
of Shares
Purchased
Period
11/02/19-11/30/19 . . . . . . . . . . . . . . . . . . . . . . . . . .
12/01/19-12/31/19 . . . . . . . . . . . . . . . . . . . . . . . . . .
01/01/20-01/31/20 . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
or Programs(a)
of Shares
Purchased
Price Paid Announced Plans
per Share
—
— $
1,940,912 $ 154.87
745,100 $ 153.66
2,686,012 $ 154.53
Under the Plans
or Programs(a)
560,822,000
1,940,912 $ 1,260,241,000
745,100 $ 1,145,749,000
2,686,012 $ 1,145,749,000
— $
(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 December 3, 2019 to increase the repurchase authorization by
$1.0 billion, bringing the cumulative total value of authorized share repurchases under the program since its
inception to $8.0 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 January 31, 2020, February 1, 2019, and February 2,
2018, and balance sheet data as of January 31, 2020 and February 1, 2019, 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 February 3, 2017 and January 29, 2016
and balance sheet data as of February 2, 2018, February 3, 2017, and January 29, 2016 presented in this table have
been derived from audited consolidated financial statements not included in this report.
22
2019 Form 10-K
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
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 January 31,
per square foot)
Statement of Income Data:
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 27,754.0 $ 25,625.0 $ 23,471.0
16,249.6
Cost of goods sold . . . . . . . . . . . . . . . . . . . 19,264.9
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . 8,489.1
7,221.4
Selling, general and administrative
Year Ended
February 2,
2018
17,821.2
7,803.9
February 1,
2019
2020
5,213.5
expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 6,186.8
2,007.8
Operating profit . . . . . . . . . . . . . . . . . . . . . 2,302.3
97.0
100.6
Interest expense . . . . . . . . . . . . . . . . . . . . .
3.5
—
Other (income) expense . . . . . . . . . . . . . . .
1,907.3
Income before income taxes . . . . . . . . . . . 2,201.7
Income tax expense . . . . . . . . . . . . . . . . . .
368.3
489.2
Net income . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,712.6 $ 1,589.5 $ 1,539.0
5.64
Earnings per share—basic . . . . . . . . . . . . . $
5.63
Earnings per share—diluted . . . . . . . . . . .
Dividends per share . . . . . . . . . . . . . . . . . .
1.04
Statement of Cash Flows Data:
Net cash provided by (used in):
5,687.6
2,116.3
99.9
1.0
2,015.4
425.9
6.68 $
6.64
1.28
5.99 $
5.97
1.16
Operating activities . . . . . . . . . . . . . . . . $ 2,238.0 $ 2,143.6 $ 1,802.1
(645.0)
Investing activities . . . . . . . . . . . . . . . .
(782.5)
(1,077.6)
Financing activities . . . . . . . . . . . . . . . . (1,450.7)
(646.5)
(784.8)
Total capital expenditures . . . . . . . . . . . . .
Other Financial and Operating Data:
Same store sales growth(2) . . . . . . . . . . . .
Same store sales(2) . . . . . . . . . . . . . . . . . . $ 26,374.0 $ 23,854.0 $ 21,871.6
Number of stores included in same store
(731.6)
(1,443.9)
(734.4)
3.9 %
3.2 %
February 3,
2017(1)
January 29,
2016
$ 21,986.6 $ 20,368.6
14,062.5
15,204.0
6,306.1
6,782.6
4,719.2
2,063.4
97.8
—
1,965.6
714.5
4,365.8
1,940.3
86.9
0.3
1,853.0
687.9
$ 1,251.1 $ 1,165.1
3.96
$
3.95
0.88
4.45 $
4.43
1.00
$ 1,605.0 $ 1,391.7
(503.4)
(1,310.2)
(504.8)
(550.9)
(1,024.1)
(560.3)
2.7 %
0.9 %
2.8 %
$ 20,348.1 $ 19,254.3
sales calculation . . . . . . . . . . . . . . . . . . .
Number of stores (at period end) . . . . . . .
Selling square feet (in thousands at period
15,209
16,278
14,283
15,370
13,150
14,534
12,383
13,320
11,706
12,483
end) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,342
113,755
Net sales per square foot(3) . . . . . . . . . . . . $
Consumables sales . . . . . . . . . . . . . . . . . . .
Seasonal sales . . . . . . . . . . . . . . . . . . . . . . .
Home products sales . . . . . . . . . . . . . . . . .
Apparel sales . . . . . . . . . . . . . . . . . . . . . . .
Balance Sheet Data (at period end):
Cash and cash equivalents and short-term
237 $
78.0 %
11.7 %
5.8 %
4.5 %
investments . . . . . . . . . . . . . . . . . . . . . . . $
240.3 $
107,821
227
$
76.9 %
12.1 %
6.0 %
5.0 %
231 $
77.5 %
11.9 %
5.9 %
4.7 %
98,943
229 $
76.4 %
12.2 %
6.2 %
5.2 %
92,477
226
75.9 %
12.4 %
6.3 %
5.4 %
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . 22,825.1
Long-term debt(4) . . . . . . . . . . . . . . . . . . . 2,912.0
Total shareholders’ equity . . . . . . . . . . . . . 6,702.5
13,204.0
2,864.7
6,417.4
235.5 $
267.4
12,516.9
3,006.0
6,125.8
187.9 $
$
11,672.3
3,211.5
5,406.3
157.9
11,257.9
2,970.6
5,377.9
(1) The fiscal year ended February 3, 2017 was comprised of 53 weeks.
2019 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
2019 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 16,368 stores
located in 45 states as of February 28, 2020, 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, 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, healthcare and fuel
prices. 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, 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. Our
sales mix has continued to shift slightly toward consumables, and, within consumables, slightly toward lower
margin departments such as perishables. 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.
2019 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. Additionally, our refreshed approach to our non-consumable product
offerings has been implemented in approximately 2,400 stores as of the end of 2019. This merchandising strategy,
which is continuing to evolve and help shape our approach to non-consumable categories throughout the chain,
offers a new, differentiated and limited assortment that will change throughout the year. As we extend this
initiative more broadly, as well as incorporate certain related merchandising efforts throughout our chain, our goal
is to continue to improve the shopping experience while delivering exceptional value within key areas of our non-
consumable categories.
We are continuing our rollout of the “DG Fresh” initiative, 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. We currently operate five DG Fresh distribution facilities, which served more than 6,000 stores as of
February 28, 2020.
Tariffs on products from China, as applied to both our direct imports and domestic purchases, did not
have a net material impact on our financial results in 2019. We believe we can mitigate the potential sales and
margin impact of such increased tariffs on our financial results in 2020 through various sourcing, merchandising
and pricing efforts. However, as noted above, changes in trade policy that result in higher prices for our customers
may negatively impact their budgets, and consequently, their spending, and additional increases in tariff rates or
expansion of products subject to tariffs may have a more significant impact on our future business. There can be
no assurance we will be successful in our efforts to mitigate the impacts of existing or future tariffs in whole or in
part, including but not limited to any impacts on customer spending.
We have limited insight into the extent to which our business may be impacted by the COVID-19
coronavirus outbreak, and there are many unknowns. While we currently expect delays in the receipt of certain
goods in 2020 as a result of this outbreak, we do not currently anticipate a material impact to our financial results
in 2020 due to these delays. Further delays in the receipt of goods, or other unanticipated impacts to our supply
chain, including on direct imports or goods purchased domestically, our stores or our customers, could have a
more significant impact on our future business (including sales), and we are continuing to monitor this evolving
situation.
To support our other operating priorities, we remain focused on capturing growth opportunities. In 2019,
we opened 975 new stores, remodeled 1,024 stores, and relocated 100 stores. For 2020, we plan to open
approximately 1,000 new stores, remodel approximately 1,500 stores, and relocate approximately 80 stores for a
total of 2,580 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 in 2020. We expect approximately 1,125 of the
planned 1,500 remodels in 2020 to use a higher-cooler-count store format that enables us to offer an increased
selection of perishable items, with the traditional store format the primary store layout for the remainder of the
real estate projects. Additionally, the majority of both new stores and remodels will incorporate higher-capacity
coolers. The acceleration of remodels in 2020 and the increased usage of the higher-cooler-count formats is
expected to allow us to capture additional growth opportunities within our existing markets. In addition, our
smaller format store (less than 6,000 square feet) is expected to allow us to capture growth opportunities in urban
areas. 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.
26
2019 Form 10-K
To support our new store growth and drive productivity, we have continued to make investments in our
traditional distribution center network for non-refrigerated merchandise. We began shipping from our distribution
centers in Longview, Texas and Amsterdam, New York in January 2019 and December 2019, respectively.
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.
We also have launched “Fast Track”, an initiative aimed at further enhancing our convenience
proposition and in-stock position as well as increasing labor productivity within our stores. The first phase of Fast
Track involved sorting process optimization within our distribution centers, as well as increased shelf-ready
packaging, to allow for greater store-level stocking efficiencies, followed by the second-phase pilot of a self-
checkout option in a limited number of stores. We have completed the sorting process optimization at all of our
non-refrigerated distribution centers. Additionally, we have launched the self-checkout pilot in a select number of
stores. These and certain other strategic initiatives will require us to incur upfront expenses for which, in some
respects, there may not be an immediate or acceptable return in terms of sales or enhanced profitability.
Certain of our operating expenses, such as wage rates and occupancy costs, have continued to increase in
recent years, due primarily to market forces. 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.
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 returns, we repurchased shares of our common stock and paid quarterly
cash dividends throughout 2019. In 2020, we intend to continue our share repurchase activity, and to pay quarterly
cash dividends, subject to Board discretion and approval.
We utilize key performance indicators (“KPIs”) in the management of our business. Our KPIs include
same-store sales, average sales per square foot, and inventory turnover. 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. Net
sales per square foot is 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. Inventory turnover is
calculated based on total cost of goods sold for the preceding four quarters divided by the average inventory
balance as of the ending date of the reporting 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. Each of these measures is commonly used by
investors in retail companies to measure the health of the business. We use these measures to maximize
profitability and for decisions about the allocation of resources.
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 2019 as
2019 Form 10-K
27
compared to 2018, as set forth below. Basis points, as referred to below, are equal to 0.01% as a percentage of net
sales.
•
•
•
•
•
•
•
•
•
Net sales in 2019 increased 8.3% over 2018. Sales in same-stores increased 3.9%, primarily due
to increases in average transaction amount and customer traffic. Average sales per square foot in
2019 were $237 compared to $231 in 2018.
Our gross profit rate increased by 14 basis points due primarily to higher initial markups on
inventory purchases.
SG&A increased by 9 basis points primarily reflecting our estimate for the settlement of certain
legal matters.
Operating profit increased 8.8% to $2.30 billion in 2019 compared to $2.12 billion in 2018.
The increase in the effective income tax rate to 22.2% in 2019 from 21.1% in 2018 was due
primarily to changes in state income tax laws and income tax benefits arising from the Tax Cuts
and Jobs Act in 2018 that did not reoccur in 2019.
We reported net income of $1.71 billion, or $6.64 per diluted share, for 2019 compared to net
income of $1.59 billion, or $5.97 per diluted share, for 2018.
We generated approximately $2.24 billion of cash flows from operating activities in 2019, an
increase of 4.4% compared to 2018.
Inventory turnover was 4.4 times, and inventories increased 7.8% on a per store basis compared
to 2018.
We repurchased approximately 8.3 million shares of our outstanding common stock for $1.2
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.
Results of Operations
Accounting Periods. The following text contains references to years 2019, 2018, and 2017, which
represent fiscal years ended January 31, 2020, February 1, 2019, and February 2, 2018, respectively. Our fiscal
year ends on the Friday closest to January 31. Fiscal years 2019, 2018 and 2017 were each 52-week accounting
periods.
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.
28
2019 Form 10-K
The following table contains results of operations data for fiscal years 2019, 2018 and 2017, and the
dollar and percentage variances among those years.
2019
3,258.9
(amounts in millions, except
per share amounts)
Net sales by category:
Consumables . . . . . . . . . . . . . . . . . . . $ 21,635.9
% of net sales . . . . . . . . . . . . . . . . . . .
Seasonal . . . . . . . . . . . . . . . . . . . . . . .
% of net sales . . . . . . . . . . . . . . . . . . .
Home products . . . . . . . . . . . . . . . . . .
% of net sales . . . . . . . . . . . . . . . . . . .
Apparel . . . . . . . . . . . . . . . . . . . . . . .
% of net sales . . . . . . . . . . . . . . . . . . .
Net sales . . . . . . . . . . . . . . . . . . . . . . . $ 27,754.0
Cost of goods sold . . . . . . . . . . . . . . . 19,264.9
% of net sales . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . .
% of net sales . . . . . . . . . . . . . . . . . . .
Selling, general and administrative
1,611.9
1,247.3
8,489.1
77.96 %
11.74 %
5.81 %
4.49 %
69.41 %
30.59 %
22.29 %
2,302.3
6,186.8
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 . . . . . . . . . . . . . . . . . . . . . $ 1,712.6
% of net sales . . . . . . . . . . . . . . . . . . .
Diluted earnings per share . . . . . . . . . $
2,201.7
489.2
8.30 %
100.6
0.36 %
—
0.00 %
6.17 %
$
6.64
1.76 %
7.93 %
2019 vs. 2018
Amount %
2018 vs. 2017
Amount %
2018
2017
Change Change
Change
Change
$ 19,865.1
$ 18,054.8
$ 1,770.8
8.9 % $ 1,810.3
10.0 %
77.52 %
76.92 %
3,050.3
2,837.3
208.6
6.8
213.0
7.5
11.90 %
12.09 %
1,506.1
1,400.6
105.8
7.0
105.4
7.5
5.88 %
5.97 %
1,203.6
1,178.3
43.7
3.6
25.4
2.2
4.70 %
5.02 %
$ 25,625.0
17,821.2
$ 23,471.0
16,249.6
$ 2,128.9
1,443.7
8.3 % $ 2,154.1
1,571.6
8.1
9.2 %
9.7
69.55 %
69.23 %
7,803.9
7,221.4
685.2
8.8
582.5
8.1
30.45 %
30.77 %
5,687.6
5,213.5
499.2
8.8
474.0
9.1
22.20 %
22.21 %
2,116.3
2,007.8
186.0
8.8
108.5
5.4
8.26 %
99.9
0.39 %
1.0
8.55 %
97.0
0.41 %
3.5
0.00 %
0.01 %
0.7
0.7
2.8
2.9
(1.0)
—
(2.5)
—
2,015.4
1,907.3
186.3
9.2
108.1
5.7
7.87 %
425.9
1.66 %
8.13 %
368.3
63.2
14.8
57.6
15.6
1.57 %
$ 1,589.5
$ 1,539.0
$ 123.1
7.7 % $
50.5
3.3 %
6.20 %
$
5.97
6.56 %
$
5.63
0.67
11.2 % $
0.34
6.0 %
Net Sales. The net sales increase in 2019 reflects a same-store sales increase of 3.9% compared to 2018.
In 2019, our 15,209 same-stores accounted for sales of $26.4 billion. The increase in same-store sales primarily
reflects an increase in average transaction amount and customer traffic compared to 2018. The increase in average
transaction amount was driven by higher average item retail prices. Same-store sales in 2019 increased in each of
the consumables, seasonal and home products and apparel categories, compared to 2018. The 2019 net sales
increase was positively affected by new stores, modestly offset by sales from closed stores.
The net sales increase in 2018 reflects a same-store sales increase of 3.2% compared to 2017. 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 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.
Of our four major merchandise categories, the consumables category, which generally has a lower gross
profit rate than the other three categories, is our largest category and has continued to become a larger percentage
2019 Form 10-K
29
of our total sales. 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. In 2019, gross profit increased by 8.8%, and as a percentage of net sales increased by 14
basis points to 30.6% compared to 2018. Higher initial markups on inventory purchases and a lower LIFO
provision contributed to the increase in the gross profit rate. These factors were partially offset by increased
distribution and transportation costs, 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 a higher rate of inventory shrinkage.
In 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.
SG&A. SG&A as a percentage of sales was 22.3% in 2019 compared to 22.2% in 2018, an increase of 9
basis points. We recorded expenses of $31.0 million in 2019 reflecting our estimate for the settlement of
significant legal matters discussed in Note 7 to the consolidated financial statements. SG&A in 2019 included a
decrease of approximately $22.8 million in hurricane and other disaster-related expenses compared to 2018 as
well as an increase in retail labor costs at a rate less than the increase in net sales.
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.
Interest Expense. Interest expense increased $0.7 million to $100.6 million in 2019 compared to 2018,
and increased $2.8 million to $99.9 million in 2018 compared to 2017. 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 $430.1 million and $373.3 million as of January
31, 2020 and February 1, 2019, 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 rate for 2019 was 22.2% compared to a rate of 21.1% for 2018
which represents a net increase of 1.1 percentage points. The effective income tax rate was higher in 2019
primarily due to an increase in income taxes resulting from changes in state income tax laws and a federal income
tax benefit arising from the Tax Cuts and Jobs Act (the “TCJA”) in 2018 that did not reoccur in 2019.
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 federal portion of our 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.
30
2019 Form 10-K
Our 2017 provision for income taxes reflected an estimate due to the changes in the federal income tax
law arising from the TCJA, signed into law on December 22, 2017. 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. Subsequent to the signing of the TCJA, the Securities and Exchange Commission staff issued Staff
Accounting Bulletin No. 118 (“SAB 118”), which allowed 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. In 2018, we concluded our analysis of the accounting impact of the TCJA pursuant to SAB 118
and recorded immaterial adjustments related to our 2017 provision for income taxes.
Off Balance Sheet Arrangements
We are not party to any material off balance sheet arrangements.
Effects of Inflation
In 2019 and 2018, we experienced increases in product costs due in part to tariffs on certain items
imported from China. We experienced minimal overall commodity cost inflation or deflation in 2017.
Liquidity and Capital Resources
Current Financial Condition and Recent Developments
During the past three years, we have generated an aggregate of approximately $6.2 billion in cash flows
from operating activities and incurred approximately $2.2 billion in capital expenditures. During that period, we
expanded the number of stores we operate by 2,958, representing growth of approximately 22%, and we
remodeled or relocated 3,053 stores, or approximately 23% of the stores we operated as of the beginning of the
three-year period. In 2020, we intend to continue our current strategy of pursuing store growth, remodels and
relocations.
At January 31, 2020, 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 January 31, 2020, 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 5 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 2020, 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.
2019 Form 10-K
31
Revolving Credit Facility
On September 10, 2019, we entered into the Revolving Facility consisting of a $1.25 billion senior
unsecured revolving credit facility of which up to $175.0 million is available for the issuance of letters of credit
and which is scheduled to mature on September 10, 2024.
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 January 31, 2020 was 1.015% for LIBOR borrowings and 0.015% 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 January
31, 2020, the facility fee rate was 0.11%. 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
January 31, 2020, we were in compliance with all such covenants. The Revolving Facility also contains
customary events of default.
As of January 31, 2020, under the Revolving Facility, we had no outstanding borrowings, outstanding
letters of credit of $5.4 million, and borrowing availability of $1.24 billion that, due to our intention to maintain
borrowing availability related to the commercial paper program described below, could contribute incremental
liquidity of $638.4 million at January 31, 2020. In addition, as of January 31, 2020 we had outstanding letters of
credit of $41.4 million which were issued pursuant to separate agreements.
Commercial Paper
As of January 31, 2020, our consolidated balance sheet reflected outstanding unsecured CP Notes of
$425.2 million classified as long-term obligations due to our intent and ability to refinance these obligations as
long-term debt. An additional $181.0 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 January 31, 2020,
the consolidated outstanding CP Notes had a weighted average borrowing rate of 1.7%.
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
32
2019 Form 10-K
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.
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.
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 January 31, 2020 (in thousands):
Payments Due by Period
Contractual obligations
Long-term debt obligations . . . . . . . . . . $ 2,930,095 $
Interest(a) . . . . . . . . . . . . . . . . . . . . . . . .
Self-insurance liabilities(b) . . . . . . . . . .
Operating lease obligations(c). . . . . . . .
901,300 $ 1,601,850
133,966
135,422
16,813
29,370
4,806,744
2,185,022
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . $ 14,497,681 $ 1,947,858 $ 2,739,336 $ 3,251,114 $ 6,559,373
< 1 year
425,755 $
101,257
106,911
1,313,935
558,518
238,254
10,770,814
187,873
85,160
2,465,113
3 - 5 years
5+ years
1,190 $
1 - 3 years
Total
Commercial commitments(d)
Letters of credit . . . . . . . . . . . . . . . . . . . $
Purchase obligations(e) . . . . . . . . . . . . .
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . $
Total
13,405 $
790,215
803,620 $
< 1 year
1 - 3 years
3 - 5 years
5+ years
13,405 $
790,215
803,620 $
— $
—
— $
— $
—
— $
—
—
—
Total contractual obligations and commercial
commitments(f) . . . . . . . . . . . . . . . . . . . . . . $ 15,301,301 $ 2,751,478 $ 2,739,336 $ 3,251,114 $ 6,559,373
Commitments Expiring by Period
(a) Represents obligations for interest payments on long-term debt and includes projected interest on variable rate
long-term debt using 2019 year end rates and balances. Variable rate long-term debt includes the Revolving
Facility (although such facility had a balance of zero as of January 31, 2020), the CP Notes (which had a
2019 Form 10-K
33
balance of $425.2 million as of January 31, 2020, which amount is net of $181 million held by a wholly-
owned subsidiary), and the balance of an outstanding tax increment financing of $4.9 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) Commercial commitments include information technology license and support agreements, supplies, fixtures,
letters of credit for import merchandise, and other inventory purchase obligations.
(d) Purchase obligations include legally binding agreements for software licenses and support, supplies, fixtures,
and merchandise purchases (excluding such purchases subject to letters of credit).
(e) 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 $5.1 million of reserves for uncertain tax positions.
Share Repurchase Program
Our existing common stock repurchase program had a total remaining authorization of approximately
$1.1 billion at January 31, 2020. 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 11 to the consolidated financial
statements.
Other Considerations
On March 11, 2020, the Board of Directors declared a quarterly cash dividend of $0.36 per share which
is payable on or before April 21, 2020 to shareholders of record of our common stock on April 7, 2020. We paid
quarterly cash dividends of $0.32 per share in 2019. 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 55% of our total assets exclusive of goodwill,
operating lease assets, and other intangible assets as of January 31, 2020. 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 7 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 $2.24 billion in 2019,
which represents a $94.4 million increase compared to 2018. Changes in accounts payable resulted in a $428.6
million increase in 2019 compared to a $375.2 million increase in 2018, 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 $123.1 million in 2019 over 2018. These items were offset by changes in merchandise inventories
34
2019 Form 10-K
which resulted in a $578.8 million decrease in 2019 as compared to a decrease of $521.3 million in 2018. Changes
in income taxes in 2019 compared to 2018 are primarily due to the timing of payments for income taxes.
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.
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
inventories increased by 14% in 2019, by 14% in 2018 and by 11% in 2017. Inventory levels in the consumables
category increased by $371.9 million, or 14%, in 2019, by $320.9 million, or 14%, in 2018, and by $322.9
million, or 16% in 2017. The seasonal category increased by $127.3 million, or 17%, in 2019, by $108.4 million,
or 17%, in 2018, and by $14.9 million, or 2%, in 2017. The home products category increased by $82.8 million, or
23%, in 2019, by $24.0 million, or 7%, in 2018, and by $10.6 million, or 3%, in 2017. The apparel category
decreased by $2.1 million, or 1%, in 2019, and increased by $34.7 million, or 10%, in 2018, and by $1.9 million,
or 1%, in 2017.
Cash flows from investing activities. Significant components of property and equipment purchases in
2019 included the following approximate amounts: $338 million for improvements, upgrades, remodels and
relocations of existing stores; $217 million for distribution and transportation-related projects; $149 million for
new leased stores, primarily for leasehold improvements, fixtures and equipment; and $59 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 2019, we opened 975 new stores and remodeled or relocated 1,124 stores.
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. 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.
Capital expenditures during 2020 are projected to be in the range of $925 million to $975 million. We
anticipate funding 2020 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 1,000
new stores and approximately 1,580 stores to be remodeled or relocated. Capital expenditures in 2020 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.
2019 Form 10-K
35
Cash flows from financing activities. In 2019, we had a net increase in consolidated commercial paper
borrowings of $58.3 million and had no borrowings or repayments under the Revolving Facility. We repurchased
8.3 million outstanding shares of our common stock in 2019 at a total cost of $1.2 billion, and paid cash dividends
of $327.6 million.
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.
Accounting Standards
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 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
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
36
2019 Form 10-K
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 RIM 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.
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.
2019 Form 10-K
37
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.
Lease Accounting. We adopted new accounting guidance related to leases as of February 2, 2019, using
the modified retrospective approach. Under this approach, existing leases were recorded at the adoption date, and
comparative periods were not restated and are presented under previously existing guidance. Adoption of the
leasing standard resulted in right of use operating lease assets and operating lease liabilities of approximately $8.0
billion each as of February 2, 2019. Significant judgments and estimates were utilized in calculating these initial
balances, including the determination of appropriate lease discount rates.
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 single lease expense on a straight-line basis over the
lease term including any option periods that are reasonably certain to be renewed, 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, the related lease expense is recognized on a straight-line basis. Tenant
allowances, to the extent received, are recorded as a reduction of the right of use asset. 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.
38
2019 Form 10-K
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 Revolving Facility as well as our commercial paper program. As of January 31, 2020, we had
consolidated borrowings of $425.2 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 January 31, 2020, 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 5 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 January 31, 2020 and February 1, 2019, 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 $4.3 million in 2019 and $3.7 million in 2018.
2019 Form 10-K
39
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 January 31, 2020 and February 1, 2019, the related consolidated statements of income,
comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended January
31, 2020, 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 January 31, 2020 and February 1, 2019, and the results of its operations and its cash flows for each of
the three years in the period ended January 31, 2020, 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 January 31, 2020, 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 19, 2020, expressed
an unqualified opinion thereon.
Adoption of New Accounting Standard
As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting
for lease contracts on February 2, 2019, due to the adoption of ASU 2016-02 Leases (ASC 842). See below for
discussion of our related critical audit matter.
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.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial
statements that were communicated or required to be communicated to the audit committee and that: (1) relate to
accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective, or complex judgments. The communication of critical audit matters does not alter in any way our
40
2019 Form 10-K
opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical
audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to
which they relate.
Description of the
Matter
Estimate of Workers’ Compensation and General Liability Reserves
The Company records expenses and reserves for workers’ compensation matters
related to alleged work-related employee accidents and injuries, as well as general
liability matters related to alleged non-employee incidents and injuries. At
January 31, 2020, the Company’s reserves for self-insurance risks were $240.6
million, which includes workers’ compensation and general liability reserves. As
discussed in Note 1 of the consolidated financial statements, the Company retains a
significant portion of risk related to its workers’ compensation and general liability
exposures. Accordingly, provisions are recorded for the Company’s estimates of
such losses. The undiscounted future claim costs for the workers’ compensation and
general liability exposures are estimated using actuarial methods.
Auditing management’s assessment of the recorded self-insurance exposure reserves
was complex and judgmental due to the significant assumptions required in
projecting the exposure on incurred claims (including those which have not been
reported to the Company). In particular, the estimate was sensitive to significant
assumptions such as loss development factors, trend factors, pure loss rates, and
projected claim counts.
How We Addressed
the Matter in Our
Audit
We obtained an understanding, evaluated the design, and tested the operating
effectiveness of controls over the Company’s accounting for these self-insurance
exposures. For example, we tested controls over the appropriateness of the
assumptions management used in the calculation and the completeness and accuracy
of the data underlying the reserves.
To test the Company’s determination of the estimated required self-insurance
reserves, we performed audit procedures that included, among others, assessing the
actuarial valuation methodologies utilized by management, testing the significant
assumptions discussed above, testing the completeness and accuracy of the
underlying data used by the Company in its evaluation, and testing the mathematical
accuracy of the calculations. We also compared the significant assumptions used by
management to industry accepted actuarial assumptions, reassessed the accuracy of
management’s historical estimates utilized in prior period evaluations, and utilized
an actuarial valuation specialist to assist in assessing the valuation methodologies
and significant assumptions used in the valuation analysis, as well as to compare the
Company’s recorded reserve to an independently developed range of actuarial
reserves.
2019 Form 10-K
41
Description of the
Matter
Adoption of New Lease Accounting Standard
As described above and in Note 1 to the consolidated financial statements, the
Company adopted ASU 2016-02, Leases (ASC 842), on February 2, 2019. The
adoption of ASC 842 resulted in the recognition of right-of-use operating lease
assets and lease liabilities of approximately $8.0 billion as of February 2, 2019. The
cumulative effect of adopting the standard resulted in an adjustment to retained
earnings of $28.8 million at the same date. Among the elements of management
estimation in connection with the adoption was the determination of incremental
borrowing rates (“IBR”) which were used to calculate its operating right-of-use
assets and lease liabilities. Management estimates certain adjustments to observed
borrowing rates in order to derive the IBRs that are representative of the rate the
lessee would have to borrow on a collateralized basis over a similar term as the
subject lease.
Auditing the Company’s adoption of ASC 842 was complex and involved subjective
auditor judgement because the Company is party to a significant number of lease
contracts, and certain aspects of adopting ASC 842 required management to exercise
significant judgment in applying ASC 842 to its portfolio of lease contracts. In
particular, auditing management’s estimate of the IBRs used to determine the
operating right-of-use assets and lease liabilities was especially challenging and
required the evaluation of the significant assumptions utilized by management
including the selection of appropriate yield curves and adjustments for
collateralization.
How We Addressed
the Matter in Our
Audit
We obtained an understanding, evaluated the design, and tested the operating
effectiveness of controls over the Company’s accounting for the adoption of ASC
842. For example, we tested controls over management’s review of the application
of accounting policy elections to its portfolio of leases and over management’s
review of the estimation of the IBRs.
To test the Company’s adoption of ASC 842, we performed audit procedures that
included, among others, evaluating the completeness of the population of contracts
that meet the definition of a lease under ASC 842, testing the accuracy of lease terms
by agreement of such terms to the original lease contract, and testing the accuracy of
the Company’s calculations of initial right-of-use assets and lease liabilities. We
involved our specialist to assist in our evaluation of the Company’s methodology,
model and significant assumptions utilized in developing the IBRs. We also
compared the Company’s IBRs to ranges developed by our specialists based on
independently observed data.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2001.
Nashville, Tennessee
March 19, 2020
42
2019 Form 10-K
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
January 31,
February 1,
2020
2019
ASSETS
Current assets:
235,487
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
4,097,004
Merchandise inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
57,804
Income taxes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
272,725
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,663,020
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,970,806
Net property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Operating lease assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,338,589
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,200,217
Other intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31,406
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 22,825,084 $ 13,204,038
4,676,848
76,537
184,163
5,177,868
3,278,359
8,796,183
4,338,589
1,200,006
34,079
240,320 $
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Current portion of operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commitments and contingencies
Shareholders’ equity:
555 $
964,805
2,860,682
709,156
8,362
4,543,560
2,911,438
7,819,683
675,227
172,676
1,950
—
2,385,469
618,405
10,033
3,015,857
2,862,740
—
609,687
298,361
—
—
Preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock; $0.875 par value, 1,000,000 shares authorized, 251,936 and
259,511 shares issued and outstanding at January 31, 2020 and February 1,
2019, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
227,072
3,252,421
2,941,107
(3,207)
6,417,393
Total liabilities and shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 22,825,084 $ 13,204,038
220,444
3,322,531
3,162,660
(3,135)
6,702,500
The accompanying notes are an integral part of the consolidated financial statements.
2019 Form 10-K
43
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
January 31,
2020
For the Year Ended
February 1,
February 2,
2019
2018
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 27,753,973 $ 25,625,043 $ 23,470,967
16,249,608
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,264,912
7,221,359
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,489,061
5,213,541
Selling, general and administrative expenses . . . . . . . . . . . . . . . . . . . 6,186,757
2,007,818
Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,302,304
97,036
100,574
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,502
—
Other (income) expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,907,280
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,201,730
368,320
489,175
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,712,555 $ 1,589,472 $ 1,538,960
Earnings per share:
17,821,173
7,803,870
5,687,564
2,116,306
99,871
1,019
2,015,416
425,944
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
6.68 $
6.64 $
5.99 $
5.97 $
5.64
5.63
Weighted average shares outstanding:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
256,553
258,053
265,155
266,105
272,751
273,362
Dividends per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1.28 $
1.16 $
1.04
The accompanying notes are an integral part of the consolidated financial statements.
44
2019 Form 10-K
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
For the Year Ended
January 31, February 1, February 2,
2019
2018
2020
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,712,555 $ 1,589,472 $ 1,538,960
Unrealized net gain (loss) on hedged transactions, net of related income
tax expense (benefit) of $345, $344, and $509, respectively . . . . . . . . .
809
Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,713,528 $ 1,590,446 $ 1,539,769
973
974
The accompanying notes are an integral part of the consolidated financial statements.
2019 Form 10-K
45
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
Earnings
Accumulated
Other
Comprehensive
Loss
Total
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
—
—
—
—
(7,060)
581
—
—
—
—
(6,178)
508
—
—
—
40,879
—
—
—
—
—
(9,891)
—
—
—
—
(8,655)
—
—
809
—
—
—
(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)
—
—
974
—
—
—
669
standard (see Note 1) . . . . . . . . . . . . . . . . . . . . . .
Other equity and related transactions . . . . . . . . . . . .
Balances, February 1, 2019 . . . . . . . . . . . . . . . . . . . 259,511 $ 227,072 $ 3,252,421 $ 2,941,107 $
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends paid, $1.28 per common share . . . . . . . . .
Unrealized net gain (loss) on hedged transactions . . .
Share-based compensation expense . . . . . . . . . . . . .
Repurchases of common stock . . . . . . . . . . . . . . . . .
Transition adjustment upon adoption of accounting
1,712,555
(327,578)
—
—
(1,193,155)
—
—
—
48,589
—
—
—
—
—
(8,252)
—
—
—
—
(7,221)
(41,316)
—
—
15,080
—
586
standard (see Note 1) . . . . . . . . . . . . . . . . . . . . . .
Other equity and related transactions . . . . . . . . . . . .
Balances, January 31, 2020 . . . . . . . . . . . . . . . . . . . 251,936 $ 220,444 $ 3,322,531 $ 3,162,660 $
28,830
901
—
21,521
—
677
—
593
—
—
(41,316)
15,666
(3,207) $ 6,417,393
1,712,555
(327,578)
973
48,589
(1,200,376)
—
—
973
—
—
—
(901)
28,830
22,114
(3,135) $ 6,702,500
The accompanying notes are an integral part of the consolidated financial statements.
46
2019 Form 10-K
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
January 31,
For the Year Ended
February 1,
February 2,
2020
2019
2018
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,712,555 $ 1,589,472 $ 1,538,960
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:
504,804
55,407
—
48,589
8,293
454,134
52,325
1,019
40,879
41,851
404,231
(137,648)
3,502
34,323
11,088
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 . . . . . . .
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:
(578,783)
(14,453)
428,627
100,322
(20,404)
(6,959)
2,237,998
(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
(784,843)
2,358
(782,485)
(734,380)
2,777
(731,603)
(646,456)
1,428
(645,028)
—
(1,465)
58,300
(1,675)
(1,200,376)
(327,568)
22,104
(1,450,680)
4,833
235,487
240,320 $
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
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
100,033 $
457,119 $
98,012 $
313,457 $
88,749
660,510
Supplemental noncash investing and financing activities:
Right of use assets obtained in exchange for new operating lease
liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,705,988
Purchases of property and equipment awaiting processing for
payment, included in Accounts payable . . . . . . . . . . . . . . . . . . . . $
110,248 $
63,662 $
63,178
The accompanying notes are an integral part of the consolidated financial statements.
2019 Form 10-K
47
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 2019, 2018, and 2017, which represent fiscal years ended
January 31, 2020, February 1, 2019, and February 2, 2018, respectively. The Company’s 2019, 2018 and 2017
accounting periods were each comprised of 52-weeks. 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 16,278 stores (as of January 31, 2020)
in 44 states with the greatest concentration of stores in the southern, southwestern, midwestern and eastern United
States. The Company owns 13 and leases four distribution centers for non-refrigerated merchandise. At
January 31, 2020, the Company also operated one owned and four leased cold storage and distribution facilities.
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 $101.9 million and $99.5 million at January 31, 2020 and February 1, 2019, 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.
The excess of current cost over LIFO cost was approximately $110.7 million and $103.7 million at
January 31, 2020 and February 1, 2019, 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
48
2019 Form 10-K
$7.0 million in 2019, $25.2 million in 2018, and $(2.2) million in 2017, 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 two largest
suppliers each accounted for approximately 8% of the Company’s purchases in 2019.
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 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 January 31, February 1,
2020
220,228 $
86,636
2019
(In thousands)
214,632
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Indefinite $
Land improvements . . . . . . . . . . . . . . . . . . . . . . . .
85,093
20
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 - 40 1,290,673 1,219,852
583,531
Leasehold improvements . . . . . . . . . . . . . . . . . . . .
656,234
3 - 10 3,782,016 3,298,594
Furniture, fixtures and equipment . . . . . . . . . . . . .
117,275
Construction in progress . . . . . . . . . . . . . . . . . . . . .
6,097,970 5,518,977
2,819,611 2,548,171
$ 3,278,359 $ 2,970,806
Less accumulated depreciation and amortization .
Net property and equipment . . . . . . . . . . . . . . . . . .
62,183
(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 $500.4 million, $454.1
million and $403.3 million for 2019, 2018 and 2017, respectively. Interest on borrowed funds during the
construction of property and equipment is capitalized where applicable. Interest costs of $2.7 million, $3.7
million, and $2.0 million were capitalized in 2019, 2018 and 2017, respectively.
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
2019 Form 10-K
49
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 $3.6 million in
2019, $4.1 million in 2018 and $7.8 million in 2017, 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.
Other assets
Noncurrent Other assets consist primarily of qualifying prepaid expenses for maintenance, beer and wine
licenses, and utility, security and other deposits.
50
2019 Form 10-K
Accrued expenses and other liabilities
Accrued expenses and other consist of the following:
January 31, February 1,
(In thousands)
Compensation and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 135,492 $ 121,375
107,380
Self-insurance reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
183,941
Taxes (other than taxes on income) . . . . . . . . . . . . . . . . . . . . . . . . .
205,709
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 709,156 $ 618,405
109,291
192,656
271,717
2020
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 which are recorded as self-insurance reserves pursuant to
Company policy. The undiscounted future claim costs for the workers’ compensation, general liability, landlord
liability, and health claim risks are derived using actuarial methods which are sensitive to significant assumptions
such as loss development factors, trend factors, pure loss rates, and projected claim counts. To the extent that
subsequent claim costs vary from the Company’s 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.
Leases
Effective in 2019, the Company records right of use lease assets and lease liabilities on its balance sheet.
Lease liabilities are recorded at a discount based upon the Company’s estimated collateralized incremental
borrowing rate. Factors incorporated into the calculation of lease discount rates include the valuations and yields
of the Company’s senior notes, their credit spread over comparable U.S. Treasury rates, and an index of the credit
spreads for all North American investment grade companies by rating. To determine an indicative secured rate, the
Company uses the estimated credit spread improvement that would result from an upgrade of one ratings
classification by tenor.
Also effective in 2019, the Company records single lease cost 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 may include a period prior to the opening of a store or other facility to make any necessary
leasehold improvements and install fixtures. Any tenant allowances received are recorded as a reduction of the
right of use asset. Leases with an initial term of 12 months or less are not recorded on the balance sheet and lease
expense for such leases is recognized on a straight-line basis over the lease term. The Company combines lease
and nonlease components. Many leases include one or more options to renew, and the exercise of lease renewal
options is at the Company’s sole discretion. The Company’s lease agreements do not contain any material residual
value guarantees or material restrictive covenants.
For periods prior to 2019, rent expense was recognized over the term of the lease. The Company
recorded minimum rental expense on a straight-line basis over the base, non-cancelable lease term commencing
2019 Form 10-K
51
on the date that the Company took physical possession of the property from the landlord. When a lease contained
a predetermined fixed escalation of the minimum rent, the Company recognized the related rent expense on a
straight-line basis and recorded the difference between the recognized rental expense and the amounts payable
under the lease as deferred rent. Tenant allowances, to the extent received, were recorded as deferred incentive
rent and were 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 which was classified in other long-term liabilities in
the consolidated balance sheet, totaling approximately $70.1 million at February 1, 2019.
The Company recognizes contingent rental expense when the achievement of specified sales targets is
considered probable. The amount expensed but not paid as of January 31, 2020 and February 1, 2019 was
approximately $2.3 million and $2.4 million, respectively, and is included in Accrued expenses and other in the
consolidated balance sheets.
Other liabilities
Noncurrent Other liabilities consist of the following:
January 31, February 1,
(In thousands)
Self-insurance reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 131,281 $ 130,022
70,139
Deferred rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
40,303
Deferred gain on sale leaseback . . . . . . . . . . . . . . . . . . . . . . . . . . . .
57,897
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 172,676 $ 298,361
—
—
41,395
2020
2019
The deferred rent balance was reclassified and the deferred gain on sale leaseback balance was eliminated
on February 2, 2019 as a result of the adoption of a new lease accounting standard discussed in greater detail in
Note 1 and Note 4 below.
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.
52
2019 Form 10-K
Other comprehensive income
The Company previously recorded a loss on the settlement of derivatives 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 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 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 $6.0 million and $5.2 million at January 31, 2020 and February 1, 2019, 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
redemptions. The Company recorded breakage revenue of $1.0 million, $0.8 million and $0.6 million in 2019,
2018 and 2017, 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 $91.0 million, $70.5 million and
$68.8 million in 2019, 2018 and 2017, respectively. These costs primarily include promotional circulars, targeted
circulars supporting new stores, television and radio advertising, and in-store signage. Vendor funding for
cooperative advertising offset reported expenses by $34.7 million, $35.0 million and $33.8 million in 2019, 2018
and 2017, 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 on an accelerated or
straight-line basis for performance awards depending on the period over which the recipient earns the awards.
2019 Form 10-K
53
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
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
The Company adopted new accounting guidance related to leases as of February 2, 2019, using the
modified retrospective approach. Under this approach, existing leases were recorded at the adoption date, and
comparative periods were not restated and are presented under previously existing guidance. In addition, the
Company elected the package of practical expedients permitted under the transition guidance in the standard,
which among other things, allowed the carry forward of historical conclusions for lease identification, lease
classification, and initial direct costs. The Company is accounting for leases with a term of less than one year
under the short-term policy election. The Company also elected the practical expedient to not separate lease
components from the nonlease components (typically fixed common-area maintenance costs at its retail store
locations) for all classes of leased assets. The Company chose not to elect the hindsight practical expedient.
Factors incorporated into the calculation of lease discount rates include the valuations and yields of the
Company’s senior notes, their credit spread over comparable U.S. Treasury rates, and an index of the credit
spreads for all North American investment grade companies by rating. To determine an indicative secured rate, the
Company uses the estimated credit spread improvement that would result from an upgrade of one ratings
classification by tenor.
Adoption of the leasing standard resulted in right of use operating lease assets and operating lease
liabilities of approximately $8.0 billion each as of February 2, 2019. The cumulative effect of applying the
standard resulted in an adjustment to retained earnings of $28.8 million at February 2, 2019, primarily for the
54
2019 Form 10-K
elimination of deferred gain on a 2013 sale-leaseback transaction. Because the standard was adopted under the
modified retrospective approach, it did not impact the Company’s historical consolidated net income or cash
flows.
In February 2018, the FASB issued new accounting guidance for the reclassification of certain tax effects
from accumulated other comprehensive income which gives entities the option to reclassify to retained earnings
tax effects related to items that have been stranded in accumulated other comprehensive income as a result of the
Tax Cuts and Jobs Act (“TCJA”). An entity that elects to reclassify these amounts must reclassify stranded tax
effects related to the TCJA’s change in US federal tax rate for all items accounted for in other comprehensive
income. These entities can also elect to reclassify other stranded effects that relate to the TCJA but do not directly
relate to the change in the federal tax rate. The Company adopted this standard in the first quarter of 2019 and
recorded a transition adjustment of $0.9 million, which is reflected as a reclassification from accumulated other
comprehensive loss to retained earnings in the accompanying consolidated financial statements.
In October 2016, the FASB issued amendments to existing guidance related to accounting for intra-entity
transfers of assets other than inventory, which affected the Company’s historical accounting for intra-entity
transfers of certain intangible assets. This guidance was effective for the Company in 2018. The amendments were
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.
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 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.
2019 Form 10-K
55
2.
Earnings per share
Earnings per share is computed as follows (in thousands except per share data):
Basic earnings per share . . . . . . . . . . . . . . . . . . . . . $ 1,712,555
Effect of dilutive share-based awards . . . . . . . . . .
Diluted earnings per share . . . . . . . . . . . . . . . . . . . $ 1,712,555
Basic earnings per share . . . . . . . . . . . . . . . . . . . . . $ 1,589,472
Effect of dilutive share-based awards . . . . . . . . . .
Diluted earnings per share . . . . . . . . . . . . . . . . . . . $ 1,589,472
Net
Income
Net
Income
Net
Income
2019
Weighted
Average
Shares
256,553 $
1,500
258,053 $
Per Share
Amount
6.68
6.64
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
Basic earnings per share . . . . . . . . . . . . . . . . . . . . . $ 1,538,960
Effect of dilutive share-based awards . . . . . . . . . .
Diluted earnings per share . . . . . . . . . . . . . . . . . . . $ 1,538,960
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.
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 0.3 million, 0.8 million and 2.1 million in 2019, 2018 and 2017, respectively.
3.
Income taxes
The provision (benefit) for income taxes consists of the following:
(In thousands)
Current:
2019
2018
2017
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 368,451 $ 320,361 $ 426,933
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
105
79,011
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
506,049
159
53,091
373,611
102
65,215
433,768
Deferred:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
45,966
(15)
9,456
55,407
(159,728)
48,262
(22)
(38)
22,021
4,109
(137,729)
52,333
$ 489,175 $ 425,944 $ 368,320
56
2019 Form 10-K
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
2019
2018
2017
before income taxes . . . . . . . . . . . . . . . . . . $ 462,364 21.0 % $ 423,237 21.0 % $ 643,326 33.7 %
Impact of federal tax rate changes . . . . . . . .
State income taxes, net of federal income
—
—
(12,222)
(0.6)
(310,756) (16.3)
tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . .
60,936
Jobs credits, net of federal income taxes . . . (27,768)
Increase (decrease) in valuation allowances,
2.8
(1.3)
44,584
(27,506)
2.2
(1.4)
61,201
(26,759)
3.2
(1.4)
net of federal taxes . . . . . . . . . . . . . . . . . . .
Stock-based compensation programs . . . . . .
Increase (decrease) in income tax reserves .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(356)
(6,177)
(513)
689
$ 489,175
—
(0.0)
(3,682)
(0.3)
3,952
(0.0)
0.0
(2,419)
22.2 % $ 425,944
4,435
—
(2,227)
(0.2)
(1,837)
0.2
937
(0.1)
21.1 % $ 368,320
0.2
(0.1)
(0.1)
0.1
19.3 %
The effective income tax rate for 2019 was 22.2% compared to a rate of 21.1% for 2018 which represents
a net increase of 1.1 percentage points. The effective income tax rate was higher in 2019 primarily due to an increase
in income taxes resulting from changes in state income tax laws and a federal income tax benefit arising from the
Tax Cuts and Jobs Act (the “TCJA”) in 2018 that did not reoccur in 2019.
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.
On December 22, 2017, the TCJA was signed into law. Among other changes, the TCJA reduced the
federal corporate tax rate to 21% from 35% effective January 1, 2018, including a reduction in the Company’s
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 TCJA.
The Company’s 2017 provision for income taxes reflected an estimate due to the changes in the federal
income tax law arising from the TCJA. 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. Subsequent to the
signing of the TCJA, the Securities and Exchange Commission staff issued Staff Accounting Bulletin No. 118
(“SAB 118”), which allowed 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. In 2018, the
Company concluded its analysis of the accounting impact of the TCJA pursuant to SAB 118 and recorded
immaterial adjustments related to its 2017 provision for income taxes.
2019 Form 10-K
57
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:
January 31,
February 1,
2020
2019
Deferred compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,556 $
16,788
401
2,167,780
5,895
16,721
16,321
1,076
164
—
3,702
555
7,534
2,244,493
(4,077)
2,240,416
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
Less valuation allowances, net of federal income taxes . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities:
Property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trademarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(389,080)
(2,143,996)
(59,075)
(310,862)
(11,933)
(697)
(2,915,643)
(322,575)
—
(56,221)
(308,793)
(12,639)
(1,590)
(701,818)
(675,227) $ (609,687)
In the year ended January 31, 2020, the Company recorded a deferred tax asset related to its operating
lease liabilities and a deferred tax liability related to its operating lease assets pursuant to the adoption of a new
lease accounting standard as described in Note 1 above.
The Company has state tax credit carryforwards of approximately $7.5 million (net of federal benefit)
that will expire beginning in 2022 through 2028 and the Company has approximately $15.6 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 2019, the Company updated its
projections, releasing $0.4 million of valuation allowance (net of federal benefit), but management continues to
believe that results from operations will not generate sufficient taxable income to realize the remaining state tax
credits before they expire.
Management believes that it is more likely than not that the Company’s results of operations and its
existing deferred tax liabilities will generate sufficient taxable income to realize the remaining deferred tax assets.
The Company’s 2015 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 2016 through 2018 fiscal year
income tax filings. The Company has various state income tax examinations that are currently in progress.
58
2019 Form 10-K
Generally, with few exceptions, the Company’s 2016 and later tax years remain open for examination by the
various state taxing authorities.
As of January 31, 2020, accruals for uncertain tax benefits, interest expense related to income taxes and
potential income tax penalties were $5.1 million, $0.4 million and $0.0 million, respectively, for a total of $5.5
million. 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. These totals are reflected in noncurrent Other liabilities in the consolidated balance sheets.
The Company’s reserve for uncertain tax positions is not expected to be reduced in the coming twelve
months as a result of expiring statutes of limitations. As of January 31, 2020 and February 1, 2019, approximately
$5.1 million and $5.0 million, respectively, 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) . . . . . . . . . . . . . . . . . . . . . $
Income tax related interest expense (benefit) . . . . . . . .
Income tax related penalty expense (benefit) . . . . . . . .
2019
2018
2017
130 $ 3,919 $ (2,076)
(123)
133
(406)
(9)
33
(882)
A reconciliation of the uncertain income tax positions from February 4, 2017 through January 31, 2020 is
as follows:
2019
(In thousands)
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,960 $ 1,041 $ 3,117
66
Increases—tax positions taken in the current year . . . .
27
Increases—tax positions taken in prior years . . . . . . . .
Decreases—tax positions taken in prior years . . . . . . .
—
(2,169)
Statute expirations . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,090 $ 4,960 $ 1,041
—
1,239
(1,109)
—
—
95
3,914
—
—
(90)
2017
2018
4.
Leases
As of January 31, 2020, the Company’s primary leasing activities were real estate leases for most of its
retail store locations and certain of its distribution facilities. Many of the Company’s store locations are subject to
build-to-suit arrangements with landlords which typically carry a primary lease term of up to 15 years. The
Company does not control build-to-suit properties during the construction period. Store locations not subject to
build-to-suit arrangements are typically shorter-term leases. Certain of the Company’s leased store locations have
variable payments based upon actual costs of common area maintenance, real estate taxes and property and
liability insurance. In addition, some of the Company’s leased store locations have provisions for variable
payments based upon a specified percentage of defined sales volume. The Company’s lease agreements generally
do not contain material restrictive covenants.
Most of the Company’s leases include one or more options to renew and extend the lease term. The
exercise of lease renewal options is at the Company’s sole discretion. Generally, a renewal option is not deemed to
be reasonably certain to be exercised until such option is legally executed. The Company’s leases do not include
purchase options or residual value guarantees on the leased property. The depreciable life of leasehold
improvements is limited by the expected lease term.
2019 Form 10-K
59
All of the Company’s leases are classified as operating leases and the associated assets and liabilities are
presented as separate captions in the consolidated balance sheet. At January 31, 2020, the weighted-average
remaining lease term for the Company’s leases is 10.1 years, and the weighted average discount rate is 4.2%. For
2019, operating lease cost of $1.27 billion and variable lease cost of $0.23 billion were reflected as selling, general
and administrative expenses in the consolidated statement of income. Cash paid for amounts included in the
measurement of operating lease liabilities of $1.28 billion was reflected in cash flows from operating activities in
the consolidated statement of cash flows for 2019.
The scheduled maturity of the Company’s operating lease liabilities is as follows:
(In thousands)
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,312,605
1,264,655
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,200,056
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,132,968
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,052,032
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,806,745
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,769,061
Total lease payments (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less imputed interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,984,573)
Present value of lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,784,488
a) Excludes approximately $0.6 billion of legally binding minimum lease payments for leases signed which have
not yet commenced.
Rent expense under all operating leases prior to the adoption of new lease accounting guidance in 2019 is
as follows:
(In thousands)
Minimum rentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,154,429 $ 1,075,984
5,532
Contingent rentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 1,159,085 $ 1,081,516
4,656
2017
2018
5.
Current and long-term obligations
Consolidated current and long-term obligations consist of the following:
January 31, February 1,
2020
2019
(In thousands)
Revolving Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
3.250% Senior Notes due April 15, 2023 (net of discount of $837 and $1,084) . . . .
4.150% Senior Notes due November 1, 2025 (net of discount of $489 and $562) . .
3.875% Senior Notes due April 15, 2027 (net of discount of $336 and $375) . . . . .
4.125% Senior Notes due May 1, 2028 (net of discount of $428 and $471) . . . . . . .
Unsecured commercial paper notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt issuance costs, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
898,916
499,438
599,625
499,529
366,900
17,337
(17,055)
2,864,690
Less: current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,950)
Long-term portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,911,438 $ 2,862,740
899,163
499,511
599,664
499,572
425,200
4,895
(16,012)
2,911,993
(555)
— $
60
2019 Form 10-K
At January 31, 2020, the Company 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 September 10, 2024.
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 January 31, 2020 was 1.015% for LIBOR borrowings and
0.015% 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 January 31, 2020, the facility fee rate was 0.11%. 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 January 31, 2020, 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 January 31, 2020, the Company had no outstanding borrowings, outstanding letters of credit of
$5.4 million, and borrowing availability of $1.24 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 $638.4 million. In addition, the Company had outstanding letters of credit of $41.4 million
which were issued pursuant to separate agreements.
As of January 31, 2020, the Company had a commercial paper program under which the Company may
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 January 31, 2020, the Company’s consolidated balance
sheet reflected outstanding CP notes of $425.2 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 $181.0 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 January 31, 2020, the outstanding CP Notes had a weighted average
borrowing rate of 1.7%.
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. 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.
2019 Form 10-K
61
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. 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 January 31, 2020 for the Company’s fiscal years listed below are as follows
(in thousands): 2020 - $425,755; 2021 - $580; 2022 - $610; 2023 - $900,635; 2024 - $665; thereafter - $1,601,850.
6.
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 January 31, 2020, 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
January 31,
2020
Long-term obligations (a) . . . . . . . . . . . . . . . . . . . . . . . . $ 2,711,924 $ 430,095 $
Deferred compensation (b) . . . . . . . . . . . . . . . . . . . . . . .
28,862
—
— $ 3,142,019
28,862
—
(a) Included in the consolidated balance sheet at book value as Current portion of long-term obligations of $555
and Long-term obligations of $2,911,438.
(b) Reflected at fair value in the consolidated balance sheet as a component of Accrued expenses and other
current liabilities of $1,644 and a component of noncurrent Other liabilities of $27,218.
62
2019 Form 10-K
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 January 31, 2020.
7.
Commitments and contingencies
Legal proceedings
From time to time, the Company is a party to various legal matters in the ordinary course of its 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. In 2019, the Company recorded an accrual of $31.0 million
for losses the Company believes are both probable and reasonably estimable relating to certified class actions and
associated matters, including certain wage and hour litigation as well as the matters discussed below under
Consumer/Product Litigation.
Except as described below and based on information currently available, the Company believes that its
pending legal 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. Adverse decisions and settlements, including any required changes to the Company’s
business, or other developments in such matters could affect our consolidated operating results in future periods or
result in liability or other amounts material to the Company’s annual consolidated financial statements.
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 “Motor Oil
Lawsuits”).
On June 2, 2016, the Motor Oil Lawsuits were centralized in a matter styled In re Dollar General Corp.
Motor Oil Litigation, Case MDL No. 2709, before the United States District Court for the Western District of
Missouri (“Motor Oil MDL”). In their consolidated amended complaint, the plaintiffs in the Motor Oil MDL
sought 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 on August 3, 2017. 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’s motion to dismiss the action is pending.
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 alleging that the Company’s labeling, marketing and sale of certain Dollar
2019 Form 10-K
63
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). On May 7, 2019, the Mississippi AG renewed its motion to remand. 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 (the “Louisiana AG”) 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). On February 7, 2020, the Company reached an agreement with
the Louisiana AG to resolve this matter for an amount that is immaterial to the Company’s consolidated financial
statements as a whole.
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 alleged unfair
trade practices/consumer fraud, unjust enrichment and breach of implied warranty claims. 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. Subsequently, the court certified an additional class, bringing the total to 17 statewide classes.
The court denied plaintiffs’ certification motion in all other respects. On June 25, 2019, the United States Court of
Appeals for the Eighth Circuit granted the Company’s Petition to Appeal the lower court’s certification rulings.
The Company’s appeal is pending.
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, except as to the Louisiana Motor Oil Matter, it is not possible to predict whether these matters ultimately
will be permitted to proceed as a class or in a similar fashion or the size of any putative class or classes. Likewise,
except as to the Louisiana Motor Oil Matter, no assurances can be given that the Company will be successful in its
defense of these matters on the merits or otherwise. Based on its belief that a loss in these matters is both probable
and reasonably estimable, during 2019, the Company recorded an accrual for an amount that is immaterial to the
Company’s consolidated financial statements as a whole.
8.
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 2019, 2018 and 2017, the Company expensed approximately $25.0 million, $20.2 million
and $17.5 million, respectively, for matching contributions.
The Company also has a compensation deferral plan (“CDP”) and a nonqualified supplemental
retirement plan (“SERP”), 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 $0.8 million in 2019, and $0.7 million in each of 2018 and 2017, respectively.
The deferred compensation liability associated with the CDP/SERP Plan is reflected in the consolidated
balance sheets as further disclosed in Note 6.
64
2019 Form 10-K
9.
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.
Generally, share-based awards issued by the Company are 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.
The weighted average for key assumptions used in determining the fair value of all stock options granted
in the years ended January 31, 2020, February 1, 2019, and February 2, 2018, and a summary of the methodology
applied to develop each assumption, are as follows:
January 31, February 1,
2020
2019
February 2,
2018
Expected dividend yield . . . . . . . . . . . . . . .
Expected stock price volatility . . . . . . . . . .
Weighted average risk-free interest rate . .
Expected term of options (years) . . . . . . . .
1.1 %
25.3 %
2.3 %
6.2
1.2 %
25.0 %
2.7 %
6.3
1.3 %
25.5 %
2.1 %
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. An increase in the expected term will increase compensation expense.
2019 Form 10-K
65
A summary of the Company’s stock option activity during the year ended January 31, 2020 is as follows:
Options
Issued
Average Remaining
Exercise Contractual
Term in Years
Price
Intrinsic
Value
(Intrinsic value amounts reflected in thousands)
Balance, February 1, 2019 . . . . . . . . . . . 3,257,250 $ 76.76
119.05
Granted . . . . . . . . . . . . . . . . . . . . . . . . . .
71.33
Exercised . . . . . . . . . . . . . . . . . . . . . . . .
Canceled . . . . . . . . . . . . . . . . . . . . . . . . .
90.13
Balance, January 31, 2020 . . . . . . . . . . . 3,319,719 $ 85.34
Exercisable at January 31, 2020 . . . . . . 1,533,231 $ 72.81
649,139
(470,777)
(115,893)
6.9 $ 225,983
5.6 $ 123,582
The weighted average grant date fair value per share of options granted was $30.67, $24.37 and $17.66
during 2019, 2018 and 2017, respectively. The intrinsic value of options exercised during 2019, 2018 and 2017,
was $26.6 million, $15.4 million and $7.3 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 January 31, 2020 is as follows:
(Intrinsic value amounts reflected in thousands)
Balance, February 1, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210,989
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108,584
Converted to common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (89,562)
Canceled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12,563)
Balance, January 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217,448 $ 33,359
Units
Issued
Intrinsic
Value
All performance share unit awards at January 31, 2020 are unvested, and the number of such awards
which will ultimately vest will be based in part on the Company’s financial performance in future years. The
weighted average grant date fair value per share of performance share units granted was $117.13, $92.98 and
$70.68 during 2019, 2018 and 2017, respectively.
A summary of restricted stock unit award activity during the year ended January 31, 2020 is as follows:
Units
Issued
(Intrinsic value amounts reflected in thousands)
450,039
Balance, February 1, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
230,577
Converted to common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (211,511)
(50,436)
Canceled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
418,669 $ 64,228
Balance, January 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intrinsic
Value
The weighted average grant date fair value per share of restricted stock units granted was $117.20,
$93.16 and $70.90 during 2019, 2018 and 2017, respectively.
At January 31, 2020, the total unrecognized compensation cost related to unvested stock-based awards
was $76.1 million with an expected weighted average expense recognition period of 2.1 years.
66
2019 Form 10-K
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 January 31, 2020
Stock
Performance Restricted
Options Share Units Stock Units Total
Pre-tax . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 16,128 $ 13,343 $ 19,118 $ 48,589
9,994 $ 14,319 $ 36,393
Net of tax . . . . . . . . . . . . . . . . . . . . . . . . $ 12,080 $
Year ended February 1, 2019
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
10.
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 January 31, 2020, 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
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:
2019
2018
2017
Consumables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 21,635,890 $ 19,865,086 $ 18,054,785
2,837,310
Seasonal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,400,618
Home products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,178,254
Apparel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 27,753,973 $ 25,625,043 $ 23,470,967
3,050,282
1,506,054
1,203,621
3,258,874
1,611,899
1,247,310
11.
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 December 3, 2019, the Company’s Board of
Directors authorized a $1.0 billion increase to the existing common stock repurchase program and a cumulative
total of $8.0 billion has 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 5.
During the years ended January 31, 2020, February 1, 2019, and February 2, 2018, the Company
repurchased approximately 8.3 million shares of its common stock at a total cost of $1.2 billion, approximately 9.9
million shares of its common stock at a total cost of $1.0 billion, and approximately 7.1 million shares of its
common stock at a total cost of $0.6 billion, respectively, pursuant to its common stock repurchase program.
The Company paid quarterly cash dividends of $0.32 per share in 2019. On March 11, 2020, the
Company’s Board of Directors declared a quarterly cash dividend of $0.36 per share, which is payable on or
before April 21, 2020 to shareholders of record on April 7, 2020. 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
2019 Form 10-K
67
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.
12.
Quarterly financial data (unaudited)
The following is selected unaudited quarterly financial data for the fiscal years ended January 31, 2020
and February 1, 2019. 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)
2019:
Net sales . . . . . . . . . . . . . . . . . . $ 6,623,185 $ 6,981,753 $ 6,991,393 $ 7,157,642
2,272,763
Gross profit . . . . . . . . . . . . . . . .
720,875
Operating profit . . . . . . . . . . . . .
535,437
Net income . . . . . . . . . . . . . . . .
2.11
Basic earnings per share . . . . . .
2.10
Diluted earnings per share . . . .
2,002,276
512,237
385,013
1.49
1.48
2,148,936
577,775
426,555
1.65
1.65
2,065,086
491,417
365,550
1.43
1.42
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
2,071,689
Gross profit . . . . . . . . . . . . . . . .
638,503
Operating profit . . . . . . . . . . . . .
483,241
Net income . . . . . . . . . . . . . . . .
1.85
Basic earnings per share . . . . . .
1.84
Diluted earnings per share . . . .
1,862,249
490,184
364,852
1.36
1.36
1,974,873
545,476
407,237
1.53
1.52
1,895,059
442,143
334,142
1.26
1.26
In the second quarter of 2019, the Company incurred expenses for losses the Company believes are both
probable and reasonably estimable relating to certified class actions and associated legal matters totaling $31.0
million ($24.1 million net of tax, or $0.09 per diluted share), which was recognized in Selling, general and
administrative expense in the second quarter of 2019.
68
2019 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 January 31, 2020.
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.
2019 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 January 31, 2020, 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 January 31, 2020, 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 2019 consolidated financial statements of the Company and our report dated
March 19, 2020, 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
2019 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 19, 2020
/s/ Ernst & Young LLP
(d) Changes in Internal Control Over Financial Reporting. There have been no changes during the
quarter ended January 31, 2020 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: 2020 Annual Equity Grants
On March 17, 2020, the Company’s Compensation Committee (the “Committee”) awarded 133,723 non-
qualified stock options (“Options”) and 28,494 performance share units (“PSUs”) to Mr. Vasos, 32,688 Options
and 6,965 PSUs to Mr. Owen, 23,773 Options and 5,066 PSUs to Mr. Garratt and 20,058 Options and 4,274 PSUs
to Mr. Reiser on the terms and subject to the conditions set forth in the form of Option award agreement (as
applicable, the “Form Option Agreement”) and form of PSU award agreement (as applicable, the “Form PSU
Agreement”) attached hereto respectively as Exhibit 10.38 and Exhibit 10.39 for Mr. Vasos and as Exhibit 10.6
and Exhibit 10.14 for Messrs. Owen, Garratt and Reiser (collectively and as applicable, 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 to each such officer on terms substantially similar to the prior year with
the exceptions described below for Mr. Vasos, 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, 2021. The Form Option Agreement applicable to Mr. Vasos
includes additional expiration, forfeiture and accelerated vesting conditions in the event he terminates employment
with the Company due to an Early Retirement after April 1, 2021.
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 2020. 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 2020,
2021 and 2022. 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, 2021, April 1, 2022 and April 1, 2023, in each
case subject to the grantee’s continued employment with the Company (except as noted below for Mr. Vasos) and
certain accelerated vesting provisions described in the Form PSU Agreement. The Form PSU Agreement
applicable to Mr. Vasos includes additional vesting, forfeiture and termination provisions in the event he
2019 Form 10-K
71
terminates employment with the Company due to an Early Retirement after April 1, 2021. Subject to certain pro-
rata vesting conditions, the PSUs earned by each grantee for adjusted ROIC performance will vest on April 1,
2023, subject to the grantee’s continued employment with the Company and certain accelerated vesting provisions
described in the Form PSU Agreement.
For purposes of Mr. Vasos’s Form Award Agreements, Early Retirement means the voluntary
termination of his employment with the Company after April 1, 2021, but prior to Normal Retirement (as defined
in the applicable Form Award Agreement); provided that: (a) he has provided notice of voluntary termination in
writing to the Board within a reasonable period of time prior to the date of his voluntary termination; (b) he has
agreed in writing to provide reasonable transition services to the Board and his successor for up to twelve
(12) months following his voluntary termination; (c) he agrees in writing to extend the “Restricted Period” of the
business protection provisions, including his agreement not to compete and not to solicit, contained in his
employment agreement with the Company (the “Business Protection Provisions”) from two (2) years to three
(3) years from the date of voluntary termination; and (d) there is no basis for the Company to terminate him with
Cause (as defined in the applicable Form Award Agreement) at the time of his voluntary termination.
In the event of Mr. Vasos’s Early Retirement after April 1, 2021, the Option shall remain outstanding and
become vested and exercisable on the vesting dates described above, subject, however to immediate forfeiture in
the event of a violation of any of the Business Protection Provisions following Early Retirement, and to
accelerated vesting if he dies or incurs a Disability or there is a Change in Control (each as defined in his Form
Option Agreement) following Early Retirement. Subject to such earlier forfeiture, Mr. Vasos will have five
(5) years from the date of his termination of employment with the Company due to Early Retirement to exercise
vested Options. Notwithstanding the foregoing, if the Company becomes aware of his violation following Early
Retirement of any of the Business Protection Provisions, any portion of the Option that vested following Early
Retirement shall immediately be forfeited and subject to clawback by the Company and the unvested portion of
any Option shall immediately be forfeited.
In the event of Mr. Vasos’s Early Retirement after April 1, 2021 (which is after the end of the applicable
performance period), any unvested PSUs subject to the adjusted EBITDA performance measure shall remain
outstanding and become vested and paid, to the extent earned based on all applicable performance requirements,
on the vesting dates described above, subject, however to accelerated vesting if he dies or becomes Disabled or
there is a Change in Control (each as defined in his Form PSU Agreement) following Early Retirement but
payment shall not be accelerated and shall continue to be made on the vesting dates described above.
Notwithstanding the foregoing, if the Company becomes aware of his violation following Early Retirement of any
of the Business Protection Provisions, any portion of the PSUs that vested following Early Retirement shall
immediately be forfeited and subject to clawback by the Company and any unvested portion of the PSUs shall
immediately be forfeited. In the event of Mr. Vasos’s Early Retirement after April 1, 2021 (which is after the end
of the applicable performance period) and within two (2) years following a Change in Control (as defined in his
Form PSU Agreement) and provided such Early Retirement also constitutes a “separation from service” within the
meaning of Section 409A of the Internal Revenue Code, any unvested PSUs subject to the adjusted EBITDA
performance measure shall become immediately vested, to the extent earned based on all applicable performance
requirements, on his Early Retirement date and shall be paid six months later, subject to immediate forfeiture and
clawback by the Company of any PSUs that became vested as a result of such Early Retirement if the Company
becomes aware of his violation following Early Retirement of any of the Business Protection Provisions.
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
Award Agreements attached hereto as Exhibits 10.6, 10.14, 10.38 and 10.39.
72
2019 Form 10-K
Short-Term Incentive Program: 2020 Teamshare
On March 17, 2020, the Committee approved the Company’s 2020 short-term incentive bonus program
applicable to the Company’s named executive officers (“2020 Teamshare”) on the terms and subject to the
conditions set forth in the 2020 Teamshare bonus program document attached hereto as Exhibit 10.31.
The Committee again selected adjusted EBIT as the Company-wide performance measure for 2020
Teamshare and established the target level of adjusted EBIT consistent with adjusted EBIT in the Company’s
fiscal year 2020 financial plan previously approved by the Board of Directors. 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 2020
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 2020 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. The target
percentage of base salary payout for 2020 Teamshare for Mr. Vasos, Mr. Owen, Mr. Garratt and Mr. Reiser is
150%, 100%, 75% and 75%, respectively.
The foregoing description of 2020 Teamshare is a summary only, does not purport to be complete, and is
qualified in its entirety by reference to the filed 2020 Teamshare Bonus Program document attached hereto as
Exhibit 10.31.
2019 Form 10-K
73
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 27, 2020 (the “2020 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 “Information About Our Executive
Officers,” 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 “Delinquent Section 16(a)
Reports” under the heading “Security Ownership” in the 2020 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 2020
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 2020 Proxy Statement, which
information under such captions is incorporated herein by reference.
74
2019 Form 10-K
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
January 31, 2020:
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) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,122,704 $
85.34
15,173,424
Equity compensation plans not approved by security
holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
4,122,704 $
—
85.34
—
15,173,424
(1) Column (a) consists of shares of common stock issuable upon exercise of outstanding options and upon
vesting and payment of outstanding 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 2020 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 2020 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 2020 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 2020 Proxy Statement, which information under such caption is
incorporated herein by reference.
2019 Form 10-K
75
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
PART IV
(a) Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Consolidated Statements of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Consolidated Statements of Shareholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
(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 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))
4.2 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))
4.3 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))
4.4 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))
4.5 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))
4.6 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))
76
2019 Form 10-K
4.7 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))
4.8 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))
4.9 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))
4.10 Amended and Restated Credit Agreement, dated as of September 10, 2019, 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 September 10, 2019, filed with the SEC on September 13, 2019 (file
no. 001-11421))
4.11 Material terms of outstanding securities registered under Section 12 of the Exchange Act of 1934 as
required by Item 202(a)-(d) and (f) of Regulation S-K
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 March 20, 2012) for 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))*
10.3 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))*
10.4 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))*
10.5 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))*
2019 Form 10-K
77
10.6 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))*
10.7 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))*
10.8 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))*
10.9 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))*
10.10 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))*
10.11 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))*
10.12 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))*
10.13 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 (incorporated by reference to Exhibit 10.15 to Dollar General
Corporation’s Annual Report on Form 10-K for the fiscal year ended February 1, 2019, filed with the
SEC on March 22, 2019 (file no. 001-11421))*
10.14 Form of Performance Share Unit Award Agreement (approved March 17, 2020) for 2020 awards to
certain employees of Dollar General Corporation pursuant to the Dollar General Corporation Amended
and Restated 2007 Stock Incentive Plan*
78
2019 Form 10-K
10.15 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))*
10.16 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))*
10.17 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))
10.18 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))
10.19 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))
10.20 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))
10.21 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))
10.22 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))
10.23 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))
2019 Form 10-K
79
10.24 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))
10.25 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))
10.26 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))*
10.27 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))*
10.28 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))*
10.29 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))
10.30 Dollar General Corporation 2019 Teamshare Bonus Program for Named Executive Officers
(incorporated by reference to Exhibit 10.34 to Dollar General Corporation’s Annual Report on Form
10-K for the fiscal year ended February 1, 2019, filed with the SEC on March 22, 2019 (file no. 001-
11421))*
10.31 Dollar General Corporation 2020 Teamshare Bonus Program for Named Executive Officers*
10.32 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))*
10.33 Dollar General Corporation Executive Relocation Policy, as amended (effective August 27, 2019)
(incorporated by reference to Exhibit 10.1 to Dollar General Corporation’s Quarterly Report on Form
10-Q for the fiscal quarter ended August 2, 2019, filed with the SEC on August 29, 2019) (file no. 001-
11421))*
10.34 Summary of Non-Employee Director Compensation effective February 1, 2020 (incorporated by
reference to Exhibit 10.4 to Dollar General Corporation’s Quarterly Report on Form 10-Q for the fiscal
quarter ended November 1, 2019, filed with the SEC on December 5, 2019 (file no. 001-11421))*
10.35 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))*
80
2019 Form 10-K
10.36 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))*
10.37 Form of Stock Option Award Agreement between Dollar General Corporation and Todd J. Vasos
(approved March 16, 2016) for March 16, 2016 award (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))*
10.38 Form of Stock Option Award Agreement between Dollar General Corporation and Todd J. Vasos
(approved March 17, 2020)*
10.39 Form of Performance Share Unit Award Agreement between Dollar General Corporation and Todd J.
Vasos (approved March 17, 2020)*
10.40 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))*
10.41 Amended Schedule of Executive Officers who have executed an employment agreement in the form of
Executive Vice President Agreement filed as Exhibit 10.40 (incorporated by reference to Exhibit 10.2
to Dollar General Corporation’s Quarterly Report on Form 10-Q for the fiscal quarter ended November
1, 2019, filed with the SEC on December 5, 2019 (file no. 001-11421))*
10.42 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))*
10.43 Amended Schedule of Senior Vice President-level Executive Officers who have executed a Senior
Vice President Employment Agreement in the form filed as Exhibit 10.42 (incorporated by reference to
Exhibit 10.1 to Dollar General Corporation’s Quarterly Report on Form 10-Q for the fiscal quarter
ended May 3, 2019, filed with the SEC on May 30, 2019 (file no. 01-11421))*
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 Interactive data files for Dollar General Corporation’s Annual Report on Form 10-K for the year ended
January 31, 2020, formatted in Inline XBRL: (i) the Consolidated Balance Sheets; (ii) the Consolidated
Statements of Income; (iii) the Consolidated Statements of Comprehensive Income; (iv) the
Consolidated Statements of Shareholders’ Equity; (v) the Consolidated Statements of Cash Flows; and
(vi) the Notes to Consolidated Financial Statements
104 The cover page from Dollar General Corporation’s Annual Report on Form 10-K for the year ended
January 31, 2020 (formatted in Inline XBRL and contained in Exhibit 101)
* Management Contract or Compensatory Plan
2019 Form 10-K
81
ITEM 16. FORM 10-K SUMMARY
None
82
2019 Form 10-K
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 19, 2020
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.
Name
Title
/s/ Todd J. Vasos
TODD J. VASOS
Chief Executive Officer & Director
(Principal Executive Officer)
/s/ John W. Garratt
JOHN W. GARRATT
Officer
(Principal Financial Officer)
Executive Vice President & Chief Financial
/s/ Anita C. Elliott
ANITA C. ELLIOTT
Officer
(Principal Accounting Officer)
Senior Vice President & Chief Accounting
/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
Date
March 19, 2020
March 19, 2020
March 19, 2020
March 19, 2020
March 19, 2020
March 19, 2020
March 19, 2020
March 19, 2020
March 19, 2020
March 19, 2020
2019 Form 10-K
83
DIRECTORS
Michael M. Calbert (1)(4)*
Retired Member
KKR & Co. L.P.
Patricia D. Fili-Krushel (3)*(4)
Chief Executive Officer
Center for Talent Innovation
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)
Sandra B. Cochran (2)
President & Chief Executive Officer
Cracker Barrel Old
Country Store, Inc.
William C. Rhodes, III (2)*
Chairman, President &
Chief Executive Officer
AutoZone, Inc.
Debra A. Sandler (4)
President & Chief Executive Officer
La Grenade Group, LLC
Chief Executive Officer
M avis Foods, LLC
Ralph E. Santana (4)
Executive Vice President &
Chief Marketing Officer
Harman International Industries
Todd J. Vasos†
Chief Executive Officer
Dollar General Corporation
(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
Jeffery C. Owen†
Chief Operating Officer
EXECUTIVE VICE PRESIDENTS
John W. Garratt†
Chief Financial Officer
Michael J. Kindy†
Global Supply Chain
Jason S. Reiser†
Chief Merchandising Officer
Rhonda M. Taylor†
General Counsel
Steven G. Sunderland†
Store Operations
Carman R. Wenkoff†
Chief Information Officer
SENIOR VICE PRESIDENTS
Johanna M. Blankush
General Merchandise Manager
Anita C. Elliott†
Chief Accounting Officer
Kathleen A. Reardon†
Chief People Officer
Steven R. Deckard
Corporate Store Operations
Brian T. Hartshorn
General Merchandise Manager
Emily C. Taylor
Channel Innovation
Kelly M. Dilts
Finance
Connie V. Droge
Store Operations
Tracey N. Herrmann
Store Operations
Bryan D. Wheeler
General Merchandise Manager
Daniel J. Nieser
Real Estate & Store Development
Antonio Zuazo
Inventory & Transportation
† 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
fiscal year ended January 31, 2020, 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 the
DOLLAR GENERAL CORPORATION INVESTOR RELATIONS
100 Mission Ridge, Goodlettsville, TN 37072
(615) 855-4000
ABOUT DOLLAR GENERAL
Dollar General Corporation has been delivering
value to shoppers for more than 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 16,278 stores in 44 states
as of January 31, 2020. 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.
Visit www.dollargeneral.com
to learn more about Dollar General
and shop online.
16,278
STORES IN 44 STATES
AS OF 1/31/2020
STORES
DISTRIBUTION CENTER
FRESH DISTRIBUTION FACILITY
57
22
226
11
40
57
41
55
127
161
190
257
569
37
494
778
51
246
544
574
563
856
561
249
435
50
19
64
146
47
139
120
99
460
812
449
573
536
789
912
1,542
863
563
894
NET SALES (IN BILLIONS)
ANNUAL MEETING
Dollar General Corporation’s annual meeting of
shareholders is scheduled for 9 a.m. Central Time on
Wednesday, May 27, 2020, at:
$27.8
$25.6
Goodlettsville City Hall Auditorium
105 South Main Street, Goodlettsville, TN 37072
$23.5
$22.0
$20.4
2015
2016
2017
2018
2019
ENDING STORE COUNT
16,278
15,370
14,534
13,320
12,483
2015
2016
2017
2018
2019
SAME STORE
SALES GROWTH
3.9%
3.2%
2.8%
2.7%
0.9%
2015
2016
2017
2018
2019
CASH FROM OPERATIONS
(IN MILLIONS)
$2,238
$2,144
$1,802
$1,605
$1,392
Shareholders of record as of March 19, 2020 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 19, 2020 was 2,617.
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 30, 2015 to January 31, 2020.
COMPARISON OF CUMULATIVE
TOTAL RETURN
$250
$200
$150
$100
1/30/15
1/29/16
2/3/17
2/2/18
2/1/19
1/31/20
Dollar General Corporation
S&P 500 Index
S&P Retailing Index
1/30/15
1/29/16
2/3/17
2/2/18
2/1/19
1/31/20
Dollar General
$100
$113.28
$111.77 $154.02
$180.21
$242.48
S&P 500 Index
$100
$99.33 $119.24
$150.73
$147.24
$179.17
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, unless we specifi cally provide otherwise.
2015
2016
2017
2018
2019
S&P Retailing Index
$100
$118.07
$140.38
$203.32
$216.05
$253.36
Fiscal 2016 includes 53 weeks, while all other
years presented contain 52 weeks. Sales in the 2016
53rd week were approximately $399 million.
The stock price performance included in this graph is not
necessarily indicative of future stock price performance.