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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.           )

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Filed by a Party other than the Registrant o

Check the appropriate box:

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Preliminary Proxy Statement

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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

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Definitive Proxy Statement

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Definitive Additional Materials

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Soliciting Material under §240.14a-12

 

DOLLAR TREE, INC.

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

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No fee required.

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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

 

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LOGO

JOINT LETTER FROM
OUR EXECUTIVE CHAIRMAN AND
OUR LEAD INDEPENDENT DIRECTOR

Dear Fellow Shareholders,

              You are cordially invited to join us for our 2020 virtual annual meeting of shareholders, which will be held on Thursday, June 11, 2020, at 8:00 a.m. Eastern Time. As part of our precautions regarding the COVID-19 coronavirus pandemic, the 2020 annual meeting of shareholders of Dollar Tree, Inc. will be held exclusively online via webcast. You will be able to attend the 2020 annual meeting, vote your shares electronically, and submit questions during the meeting by visiting

www.virtualshareholdermeeting.com/DLTR2020

              The Notice of Annual Meeting of Shareholders and the Proxy Statement that follow describe the business to be conducted at the meeting.

              As we look forward to our 2020 annual meeting of shareholders, we wanted to write to you to share the Board's perspective on the year just completed.

COMPANY PERFORMANCE & BUSINESS STRATEGY

              2019 represented an important year for the Dollar Tree organization as the Company further developed its foundation and fundamentals to grow and improve its business. Among the Company's accomplishments included the successful consolidation of its store support centers, a material acceleration in the Family Dollar store optimization initiative, and the initial launch of Dollar Tree Plus!—a multi-price point test initiative at Dollar Tree stores. While accomplishing these projects, both of the Company's business segments delivered positive same-store sales for the year: +2.3% at Dollar Tree and +1.4% at Family Dollar.

              As we enter 2020, the Company is well-positioned to further develop and strengthen its brand for delivering great value and convenience to millions of customers on a daily basis. The Company has a strong balance sheet and financial flexibility, an aligned and experienced leadership team, and a proven business model that can be part of the solution for customers, especially through times of uncertainty. Our Board is aligned, and supportive, of the management team's strategies for growth and improvement.

              As an essential retailer providing essential products to the country, our mission has never been more vital. We have not lost sight of our need to protect the safety of our associates and customers while carrying out our mission.

              Our Board has been engaged with management and has been briefed on the Company's actions in response to COVID-19 and its impact on the Company and its stakeholders. To assist in minimizing exposure to COVID-19, the Company has taken numerous proactive, precautionary steps, including communicating and adhering to Centers for Disease Control and Prevention (CDC) recommendations; equipping stores, distribution centers and its store support center with necessary


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supplies for enhanced cleaning protocol; activating its Business Response Team to meet daily to communicate, assess and address potential exposure throughout the organization; eliminating all non-essential air travel; utilizing technology options for all large group meetings; prohibiting external visitors access to its store support center; and enabling the majority of its support teams to work remotely.

ADDRESSING SUSTAINABILITY RISKS

              It is our strong belief, shared with the rest of the Board, that safeguarding shareholder value requires that Dollar Tree carefully assess and address the risks inherent in our business. In particular, our Board and management recognize the importance of planning for the potential impact of climate change and other sustainability risks, and we are taking action to evaluate how our long-term business strategy may be adapted to address these potential challenges. The Board intends to be guided by this assessment in its ongoing strategic planning and to use it as a focal point for engaging with our shareholders on matters of corporate sustainability. We are at the beginning of a months-long engagement with shareholders on this topic, which will culminate in an expanded sustainability report that will be available to you before next year's annual shareholder meeting.

              A word about how the Board monitors and evaluates the Company's environmental, social and governance ("ESG") risks generally: The Nominating and Corporate Governance Committee plays an important, ongoing role in helping the Board assess the Company's sustainability risks while ensuring the Company has policies and procedures in place to mitigate those risks. Working with management, the Committee develops and recommends to the Board policies and procedures relating to the environment, human rights, labor, health and safety, workforce diversity, supply chain, governance and similar matters affecting our stakeholders. Dollar Tree is focused on pursuing meaningful initiatives that minimize sustainability risks while reducing costs and driving efficiency, which we believe ultimately ensures the creation of sustainable shareholder value. Finally, the Board is committed to ensure transparency into the Company's approach to sustainability risks, and you can read much more about this topic later in this Proxy Statement.

CORPORATE GOVERNANCE & BOARD REFRESHMENT

              Board governance is also a major focus of our activities and last year's letter described how the Board continually reviews its own governance and composition to ensure effective oversight of management and the business. Because we believe the Company benefits from a diversity of perspectives amid a demonstrably independent Board, whose skills and experience are "fit for purpose" in overseeing the Company's progress and unique challenges, the Board has added five highly qualified independent directors, two of them women, since 2016. The new directors bring a wealth of highly relevant and complimentary experience and help satisfy needs on the skills matrix identified by our Nominating and Corporate Governance Committee.

              This significant change in Board composition was the result of a thoughtful, evolutionary process which sought to balance our continual need for fresh perspectives and additional relevant skillsets with the institutional and industry knowledge of our seasoned directors. With the tenure profile of our Board resembling a barbell, having five directors with two years or less in tenure, six directors with over ten years and two directors in between, we have adopted a waterfall strategy: beginning this year, as our newer members continue to gain needed experience, we expect to engage thoughtfully in additional Board refreshment. Our goal is to reach and thereafter maintain a relatively balanced mix of short, medium and long-term tenured directors.

              As anticipated by this waterfall approach, Conrad Hall has decided to step down after 10 years as a valued member of the Board of Directors. Our refreshment strategy calls for us to engage now in a thoughtful process of assessing the experience, skills and attributes that another


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candidate can bring to the Board. The Board, through its Nominating and Corporate Governance Committee, has launched a formal search for a diverse candidate who will replace Mr. Hall on the Board. We have made significant progress in our search and expect to appoint a new director later this year. But as Mr. Hall departs, we want to extend our personal thanks to Conrad for his service and dedication and for his many contributions to the work of the Board and wish him all the best.

              Whether or not you plan to attend the virtual annual meeting, your vote is important, and we encourage you to vote your shares promptly. You may vote your shares using a toll-free telephone number or the Internet. If you received a paper copy of the proxy card by mail, you may sign, date, and mail the proxy card in the envelope provided. Instructions regarding the three methods of voting are contained on the Notice of Internet Availability of Proxy Materials and the proxy card.

              We also want to thank all of you for your confidence in the Board as we continue to execute our strategy for long-term value creation while reacting responsibly to the health concerns and economic challenges presented by the coronavirus pandemic. We wish you good health and look forward to engaging with you in the months and years ahead.

              Sincerely yours,

    SIG TO COME   GRAPHIC

 

 

Bob Sasser
Executive Chairman

 

Greg Bridgeford
Lead Independent Director

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QUICK INFORMATION

              The following charts provide quick information about Dollar Tree's 2020 annual meeting and our corporate governance and executive compensation practices. These charts do not contain all of the information provided elsewhere in the proxy statement; therefore, you should read the entire proxy statement carefully before voting.

  Annual Meeting Information
            

GRAPHIC

 

GRAPHIC

 

GRAPHIC

DATE & TIME

 

VIRTUAL MEETING

 

RECORD DATE
            
     
Thursday, June 11, 2020
at 8:00 a.m., Eastern Time

 
The 2020 annual meeting will be held in a virtual meeting format. Shareholders can access the meeting online through   April 9, 2020
www.virtualshareholdermeeting.com/DLTR2020.

 

 


 

 

Proposals That Require Your Vote
 
                
Proposal   Voting Options   Board
Recommendations
  More
Information
                
                
Proposal No. 1
Election of Directors

 
FOR, AGAINST, or ABSTAIN for each Director Nominee   FOR each Nominee on the proxy card   Page 103
                
Proposal No. 2
Advisory Vote on NEO Compensation
  FOR, AGAINST, or ABSTAIN   FOR   Page 104
                
Proposal No. 3
Ratification of Appointment of Independent Auditors

 
FOR, AGAINST, or ABSTAIN   FOR   Page 105
                
Proposal No. 4
Shareholder Proposal on Greenhouse Gas Emissions Goals
  FOR, AGAINST, or ABSTAIN   AGAINST   Page 108
                

See "Information About the Annual Meeting and Voting" beginning on page 98 for the various ways available for submitting your vote.


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Corporate Governance & Compensation Quick Facts

     
    Governance or Compensation Item   Dollar Tree's Practice
     
            
Board Composition, Leadership and Operations

(excludes Mr. Hall who is retiring at the 2020 annual meeting)
            
            
    Number of directors   12
            
            
    Director independence   83%
            
            
    Standing Board committee independence   100%
            
            
    Separate Chairman of Board and Chief Executive Officer   Yes
            
            
    Robust Independent Lead Director Role   Yes
            
            
    Majority Voting standard in director elections   Yes
            
            
    Resignation policy   Yes
            
            
    Board oversight of company strategy and risks   Yes
            
            
    Annually-elected Board   Yes
            
            
    Average director age   65
            
            
    Average director tenure   9.2
            
            
    Directors attending fewer than 75% of meetings   None
            
            
    Annual Board, committee and individual director self-evaluation process   Yes
            
            
    Independent directors meet without management present   Yes
            
            
    Number of Board meetings held in 2019   8
            
            
    Total number of Board and committee meetings held in 2019   35
            
            
Sustainability and Corporate Responsibility
            
            
    Expanded Board oversight of sustainability   Yes
            
            
    Environmental Policy   Yes
            
            
    Human Rights Policy   Yes
            
            
    Occupational Health and Safety Policy   Yes
            
            
    Political Contribution and Expenditure Policy Statement   Yes
            
            
    Corporate Sustainability Report   Yes
            
            
    Strategic report on impact of climate change   In progress
            
            
    Vendor code of conduct   Yes
            

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    Governance or Compensation Item   Dollar Tree's Practice
     
            
Other Governance Practices
            
            
    Codes of conduct for directors, officers and associates   Yes
            
            
    Shareholder engagement policy   Yes
            
            
    Anti-hedging policy   Yes
            
            
    Robust stock ownership policies   Yes
            
            
    Shares pledged by officers and directors   None
            
            
    Material related party transactions with directors   None
            
            
    Family relationships   None
            
            
    Independent auditor   KPMG LLP
            
            
            
Compensation Practices
            
            
    Executive compensation programs designed to reward performance, incentivize growth and drive long-term shareholder value   Yes
            
            
    Robust Clawback policy   Yes
            
            
    Employment agreements for executive officers   No
            
            
    Incentive awards based on challenging performance targets   Yes
            
            
    Percentage of incentive compensation at risk   100%
            
            
    Annual risk assessment of compensation policies and practices   Yes
            
            
    Frequency of say on pay advisory vote   Annual
            
            
    Shareholder votes in favor of say on pay proposal in 2019   95%
            
            
    Independent compensation consultant   Korn Ferry
            
            
    Double-trigger change-in-control provisions   Yes
            
            
    Policy for timing of annual grant of incentive awards   Yes
            
            
    Repricing of underwater options   No
            
            
    Excessive perks   No
            

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LOGO

DOLLAR TREE, INC.
500 Volvo Parkway
Chesapeake, Virginia 23320

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held on
Thursday, June 11, 2020

To Our Shareholders:

              In light of the public health impact of the Coronavirus disease (COVID-19) pandemic, we have decided to hold our annual meeting this year in a virtual format to avoid the need for in-person shareholder attendance, as we are committed to the health and well-being of our employees and shareholders. As a result, the entire meeting will be held online and there will be no physical location for shareholders to attend. Shareholders may participate in the annual meeting by logging in at

www.virtualshareholdermeeting.com/DLTR2020

on Thursday, June 11, 2020 at 8:00 a.m. Eastern Time. Shareholders will be afforded the same rights and opportunities to participate as they would at an in-person meeting. During the meeting, shareholders will be able to listen, vote and submit questions from any location using any internet-connected device. To be admitted to the annual meeting, you must enter the control number found on your proxy card, voting instruction form or notice.

              The following items of business are on the agenda for the annual meeting:

              Shareholders of record at the close of business on April 9, 2020 will receive notice of and be allowed to vote at the annual meeting.


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              We have elected to distribute our proxy materials primarily over the Internet rather than mailing paper copies of those materials to each shareholder. We believe this will increase shareholder value by decreasing our printing and distribution costs, reducing the potential for environmental impact by conserving natural resources, and allowing for convenient access to and delivery of materials in an easily searchable format. If you would prefer to receive paper copies of our proxy materials, please follow the instructions included in the Notice of Internet Availability of Proxy Materials that is being mailed to our shareholders on or about May 1, 2020.

              Your vote is important to us. To ensure the presence of a quorum at the annual meeting, we encourage you to read the proxy statement and then vote your shares promptly by Internet, by phone or by signing, dating and returning your proxy card (if you request a paper copy). Sending in your proxy card will not prevent you from voting your shares at the annual meeting, as your proxy is revocable at your option.

       By Order of the Board of Directors

    

 

GRAPHIC

    

 

WILLIAM A. OLD, JR.
Corporate Secretary

    

 

Chesapeake, Virginia
April 24, 2020

IMPORTANT NOTICE ABOUT THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 11, 2020

The Company's proxy statement and annual report to shareholders for the fiscal year ended February 1, 2020 are available at https://www.dollartreeinfo.com/investors/financial/annuals.


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TABLE OF CONTENTS

 
  Page

 

 

 

OUR BOARD AND CORPORATE GOVERNANCE

  1

The Work of the Board

  1

Board Self-Assessment and Skills Matrix

  1

Director Refreshment and Tenure

  2

PATH TO ENHANCED GOVERNANCE AND BOARD REFRESHMENT

  4

CORPORATE GOVERNANCE HIGHLIGHTS

  5

DIRECTOR BIOGRAPHIES

  7

THE BOARD AND ITS COMMITTEES

  20

Audit Committee

  21

Compensation Committee

  21

Nominating and Corporate Governance Committee

  22

Meetings of the Board of Directors

  24

BOARD GOVERNANCE

  25

Independence

  26

Board Leadership Structure

  26

Director Stock Holding Requirements

  27

Majority Voting in Uncontested Election of Directors

  28

Board's Role in Risk Oversight

  28

Sustainability

  29

Board and Management Oversight of Sustainability

  29

Enhanced Sustainability Reporting

  29

Environmental Sustainability Initiatives

  30

Product Safety and Sustainability

  30

Human Rights

  31

Human Capital Management

  31

Code of Ethics

  31

Engagement with Shareholders

  31

COMMUNICATING WITH OUR BOARD MEMBERS

  34

DIRECTOR COMPENSATION

  35

HOW NOMINEES TO OUR BOARD ARE SELECTED

  38

Board Diversity

  38

Board Tenure

  39

Shareholder Nominations for Election of Directors

  39

Proxy Access

  40

EXECUTIVE OFFICERS

  41

Executive Officer Biographies

  41

COMPENSATION OF EXECUTIVE OFFICERS

  44

Compensation Committee Report on Executive Compensation

  44

Compensation Committee Interlocks and Insider Participation

  44

COMPENSATION DISCUSSION AND ANALYSIS

  45

Executive Summary

  45

Highlights for Fiscal Year 2019

  45

Organizational Leadership Changes for Fiscal 2019

  46

Compensation Best Practices

  47

Executive Compensation Overview

  48

2019 Changes to Compensation Program

  49

Key 2019 Compensation Decisions

  51

Key 2020 Compensation Decisions

  53

Target Pay Mix

  53

Compensation Governance

  54

Alignment of Pay and Performance

  54

Say on Pay Votes

  55

Executive Compensation Setting Process

  56

Our Compensation Program Philosophy and Objectives

  56

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  Page

 

 

 

Use of Peer Group

  57

Executive Compensation Principles

  58

Role of the Compensation Committee

  59

Role of the Chief Executive Officer in Compensation Decision-Making

  60

Role of the Compensation Consultant

  60

Assessment of Risk

  61

Components of Executive Compensation

  62

Base Salary

  63

Annual Cash Bonus Incentives

  63

Long-Term Incentives

  68

Timing of Long-Term Incentive Awards

  74

Other Compensation Policies and Practices

  74

Recoupment ("Clawback") Policy

  74

Executive Stock Ownership Guidelines

  75

Policy Against Hedging Company Stock

  75

No Pledges of Company Stock

  75

Impact of Accounting and Tax Treatments on Compensation Program Design

  75

Retirement, Deferred Compensation and Pension Plans

  76

Termination or Change in Control Arrangements

  77

Annual Compensation of Executive Officers

  78

Summary Compensation Table

  79

Grants of Plan-Based Awards Table

  81

Outstanding Equity Awards at Fiscal Year End Table

  82

Option Exercises and Stock Vested Table

  85

Non-Qualified Deferred Compensation

  85

Potential Payments upon Termination or Change in Control

  86

Potential Payout Amounts Assuming Termination as of Fiscal Year End

  90

PAY RATIO DISCLOSURE

  93

Pay Ratio Methodology

  93

Required Pay Ratio

  93

Supplemental Pay Ratio

  94

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

  94

Review of Transactions with Related Parties

  94

Related Party Transactions

  94

OWNERSHIP OF COMMON STOCK

  95

INFORMATION ABOUT THE ANNUAL MEETING AND VOTING

  98

PROPOSAL NO. 1: ELECTION OF DIRECTORS

  103

Directors and Nominees

  103

Vote Required

  103

PROPOSAL NO. 2: ADVISORY VOTE ON COMPENSATION OF NAMED EXECUTIVE OFFICERS

  104

Vote Required

  104

PROPOSAL NO. 3: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS

  105

Independent Registered Public Accounting Firm Fees

  105

Report of the Audit Committee

  106

Vote Required

  107

PROPOSAL NO. 4: SHAREHOLDER PROPOSAL ON GREENHOUSE GAS EMISSIONS GOALS

  108

Shareholder Proposal

  108

Statement from Dollar Tree's Board with Respect to the Shareholder Proposal

  109

Vote Required

  110

FORWARD-LOOKING STATEMENTS

  111

OTHER MATTERS

  111

Director Nominations and Shareholder Proposals for the 2021 Annual Meeting

  111

Shareholders Sharing the Same Address

  112

Copies of Form 10-K Available

  112

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OUR BOARD AND CORPORATE GOVERNANCE

The Work of the Board

              Our Board of Directors is highly engaged and focused on strategy and the best use of capital to maximize shareholder value. It has the right mix of experience, skills and perspectives to accomplish that goal. In fiscal 2019, the Board met eight (8) times, the Nominating and Corporate Governance Committee met nine (9) times, the Audit Committee met eight (8) times and the Compensation Committee met ten (10) times.

              Each year, strategy and capital allocation are a primary focus of the Board, which regularly reviews a wide array of strategic choices. The Board continues to have robust discussions regarding the Company's long-term strategic plans, most recently in 2020, and believes that the existing strategic plan provides the foundation for long term sustainable growth and shareholder value.

              Additionally, the Board plays a critical role in overseeing enterprise risk, primarily through the work of its committees, which report matters relating to their areas of responsibility back to the full Board. Our Board has been engaged with management and has been briefed on the Company's actions in response to COVID-19 and its impact on the Company and its stakeholders. To assist in minimizing exposure to COVID-19, the Company has taken numerous proactive, precautionary steps, including communicating and adhering to Centers for Disease Control and Prevention (CDC) recommendations; equipping stores, distribution centers and its store support center with necessary supplies for enhanced cleaning protocol; activating its Business Response Team to meet daily to communicate, assess and address potential exposure throughout the organization; eliminating all non-essential air travel; utilizing technology options for all large group meetings; prohibiting external visitors access to its store support center; and enabling the majority of its support teams to work remotely.

              Over the past year, the Board enhanced the Nominating and Corporate Governance Committee's existing oversight of risks relating to corporate social responsibility and sustainability. In carrying out its expanded role, the Committee is responsible for developing and recommending policies and procedures relating to the environment, human rights, labor, health and safety, workforce diversity, supply chain, governance and similar matters affecting Company stakeholders and increasing stakeholder transparency into such policies.

              More particularly, in March 2020, the Board determined that it would be in the best interest of the Company and its stakeholders to prepare a report evaluating the challenges posed by climate change to our continued ability to create sustainable shareholder value. The Company intends to engage with shareholders on this topic over the next months and will provide an expanded sustainability report before next year's annual shareholder meeting.

Board Self-Assessment and Skills Matrix

              The Board is committed to ensuring it has a relevant diversity of skills and experience to oversee the Company, its management, its strategic plan and the execution of that plan. Expertise in retail investments, retail operations, retail merchandising, retail supply chain, change and risk management, capital markets, finance, accounting, technology, marketing, human resource and talent development are important to our Board oversight. This expertise can be gained in a variety of ways, such as being the chief executive officer of a public retailer, serving as a member of the board or in the "C" suite, or managing private equity investments. We regularly evaluate candidates that

1


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can provide new voices and additional perspectives which will be relevant to the Company as its strategic plan continues to evolve.

              The Board's annual self-evaluation led by the Nominating and Corporate Governance Committee is the foundation of our skills assessment process. Through the evaluation, the Board assesses its composition, processes, committee structure and composition, meetings and overall effectiveness. The directors provide feedback on the Board and its committees through questionnaires, and the results are aggregated on an anonymous basis to encourage candor among the directors. The Nominating and Corporate Governance Committee presented a summary of the results to the Board and key insights from the assessment were discussed during the March 2020 Committee and Board meetings.

Director Refreshment and Tenure

              As a result of its assessment, the Board has determined that our director nominees, as a group, represent an effective mix of skills, experiences, diversity and fresh perspectives. As the chart below summarizes, our Board members' skills and experiences cover the areas we believe are most important to sustaining our success. In addition, our Board has been steadily refreshed since 2016 and the Board made progress on its waterfall strategy in 2020 with the announcement of Conrad Hall's retirement at the annual meeting and the anticipated addition of a new director.

              In 2018, the Board identified several needs: directors with deep and relevant experience as a public company retail Chief Executive Officer and as a partner in a large private equity firm with extensive retail investments. We were also targeting directors with a diverse perspective. As a result, we added Thomas Dickson to our Board on December 31, 2018, who served as Chief Executive Officer of Harris Teeter, has import and other merchandise experience and M&A experience, and has served on other public retail boards with the support of long-term shareholders as well as activist shareholders. In March 2019, we continued to build a "fit for purpose" Board by adding Carrie Wheeler to the Board. Ms. Wheeler was a former partner in TPG and headed their retail and consumer group, with an extensive retail investment track record, relevant retail board experience and significant M&A experience. Two of the last four directors added to our Board are women. We expect to improve our Board diversity further in 2020.

              Upon Mr. Hall's retirement at the annual meeting, the tenure profile of our Board will continue to resemble a barbell, with five (5) directors having two (2) years or less in tenure, six (6) with over ten years and only one (1) director in between. With five (5) relatively new directors learning a complicated and unique business like Dollar Tree as well as a challenging and high-potential business like Family Dollar, our Board consulted with SpencerStuart. In 2019, the Board concluded that it was not the time to lose additional experienced directors. Instead, we adopted a waterfall strategy: each year beginning in 2020, as our newer members continue to gain needed experience, we expect to engage thoughtfully in additional Board refreshment. Our goal is to reach and thereafter maintain a relatively balanced mix of short, medium and long-term tenured directors. As part of our continued commitment to the waterfall strategy and measured approach to director retirements, Conrad Hall plans to retire from the Board at the 2020 annual meeting. The Board, through its Nominating and Corporate Governance Committee, has launched a formal

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director search for a diverse candidate who will replace Mr. Hall. The Board is making progress in its search and anticipates the appointment of a new director to the Board later this year.

             

SKILLS AND EXPERIENCE*

 

 

 

DIRECTOR TENURE

 

 

 

 

 

 

 

 

 
Independent   §§§§§§§§§§   >10 years   §§§§§§
Leadership
      3-5 years   §
Public company boards   §§§§§§§§§   0-2 years   §§§§§
Senior public company executive experience   §§§§§§§§§        
Public company CEO experience   §§§   Average tenure   9.2 years

Financial Expertise

 

 

 

 

 

 
Inv. banking / PE / M&A / capital markets   §§§§§§        
CFO / audit / accounting   §§§§   DIVERSE DIRECTORS
  §§§
Public company CFO experience   §§        

Other professional expertise

 

 

 

 

 

 
Consumer / retail industry   §§§§§§§§§   DIRECTOR AVERAGE AGE
  65
Marketing / advertising / communications   §§§§§        
Strategic planning   §§§§§§§§§§        
Operations   §§§§§§        
Human resources   §§§§        
Information technology   §§        
Risk management   §§§        
Global sourcing / supply chain   §§§§        

*The skills matrix illustrated above does not include Mr. Hall who plans to retire at the 2020 annual meeting.

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PATH TO ENHANCED GOVERNANCE AND BOARD REFRESHMENT

    2015

â
    
    
Adopted Majority Voting Standard
For uncontested director elections
          
 
Howard Levine leaves Board
Non-independent Director
Former Chairman & CEO of Family Dollar
  
J. Douglas Perry leaves Board
Non-independent Director
Former Chairman, founder of Dollar Tree,
30 years on Board
  2016

â
   
Gregory Bridgeford appointed to Board
Independent Director
          
    


Macon Brock leaves Board
Non-independent Director
Former Chairman, founder of Dollar Tree,
31 years on Board
  2017

â
    
Adopted Proxy Access Bylaw
Facilitates shareholder nominations
  
Gary Philbin appointed CEO & Director
Completed long-planned executive succession

Bob Sasser becomes Executive Chairman

Stephanie Stahl appointed to Board
Independent Director
          
  
H. Ray Compton leaves Board
Non-independent Director
Founder of Dollar Tree, 32 years on Board
  
Mary Ann Citrino leaves Board
Independent Director
14 years on Board
  2018

â
    
Jeffrey Naylor appointed to Board
Independent Director
  
Thomas Dickson appointed to Board
Independent Director
          
 
Tom Saunders steps down as Lead Director and NCG Committee Chair
1% beneficial owner of Dollar Tree,
served 12 years as Lead Director

Arnold Barron steps down as Compensation Committee Chair
Served 8 years in the role
  2019

â
   
Carrie Wheeler appointed to Board
Independent Director

Gregory Bridgeford elected as new Lead Director
and Compensation Committee Chair

Stephanie Stahl elected as NCG Committee Chair

Enhanced Corporate Governance Guidelines adopted

Executive compensation program revised
Augmenting performance metrics and emphasizing at-risk elements of compensation

Enhanced long-standing commitment to Sustainability
          
 
Conrad M. Hall leaves Board
Independent Director
10 years on Board
  2020

â
   
Launched formal search for a diverse board
candidate to replace Mr. Hall


Board enhanced ESG oversight
Enhanced ESG oversight through the Nominating and Corporate Governance Committee's lead role in the oversight of sustainability and ESG risks

Executive compensation program enhanced
Strengthened our long-term incentive program to create further alignment between pay and performance
          

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CORPORATE GOVERNANCE HIGHLIGHTS

              As the Company grows and evolves, our Board of Directors is engaged in a multi-year effort to enhance its membership and refine its governance policies and practices. The Board seeks to further increase its effectiveness as well as its alignment with and transparency to shareholders. These changes include:

Board refreshment.    Just since the end of 2018, two new members, Mr. Dickson and Ms. Wheeler, have joined the Board, and they have applied their deep experience in fields critical to the needs of the Company. They represent the latest additions to a "fit for purpose" Board of Directors. Over several years, the Board has thoughtfully increased the diversity of perspectives and voices within the boardroom, ensuring the Board has the right skills and experience to guide Dollar Tree through its next phase of development. Since 2015:
New Board leadership.    Led by its independent members, in 2019 the Board:
Strengthened ESG oversight.    Over the last year the Board has enhanced ESG oversight through the Nominating and Corporate Governance Committee and undertaken to increase transparency about the Company's sustainability and ESG risks. Among other things, the Board:

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Enhanced governance best practices.    The Board previously adopted best practices such as a declassified board, a majority voting standard for uncontested elections of directors and proxy access, which are intended to increase accountability to shareholders. Building on these actions, the Board recently:

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DIRECTOR BIOGRAPHIES

              Biographical and other information for our directors is provided below.

GRAPHIC
ARNOLD S. BARRON

                                                     

DIRECTOR SINCE MARCH 2008

AGE: 72

BOARD COMMITTEES:

Compensation Committee

Mr. Barron served as the Senior Executive Vice President, Group President of The TJX Companies, Inc. from 2004 until his retirement in January 2009. His employment with The TJX Companies began in 1979.

PREVIOUS WORK AND BOARD EXPERIENCE

2000 to 2004: Executive Vice President, Chief Operating Officer, The Marmaxx Group (the combined entity of T.J. Maxx and Marshalls)

1996 to 2000: Senior Vice President, Group Executive, The TJX Companies

1993 to 1996: Senior Vice President, General Merchandising Manager, T.J. Maxx

1979 to 1993: held several other executive positions within The TJX Companies, Inc.

2009 to 2013: served as a director on the Board of rue21 (Chair of the Compensation Committee, Chair of the Corporate Governance and Nominating Committee)

EDUCATION

Received a B.A. in Mathematics from Boston University.

EXPERTISE

With more than thirty years of retail experience in senior management, operations, merchandising, supply chain, strategic planning, human resources and systems in the United States, Canada, United Kingdom and Europe, Mr. Barron brings a combination of skills and experience spanning areas key to our business.

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GRAPHIC
GREGORY M. BRIDGEFORD

                                                     

DIRECTOR SINCE MAY 2016

AGE: 65

LEAD INDEPENDENT DIRECTOR

BOARD COMMITTEES:

Compensation Committee, Chair

Nominating and Corporate Governance Committee

Mr. Bridgeford served as the Chief Customer Officer of Lowe's Companies, Inc. from 2012 to 2014 until his retirement. His employment with Lowe's began in 1982 where he held various senior level positions.

PREVIOUS WORK AND BOARD EXPERIENCE

2004 to 2012: Executive Vice President of Strategy and Business Development, Lowe's

1999 to 2004: Senior Vice President of Strategy and Business Development, Lowe's

1998 to 1999: Senior Vice President of Marketing, Lowe's

1994 to 1998: Senior Vice President and General Merchandising Manager, Lowe's

1989 to 1994: Vice President of Merchandising, Lowe's

1986 to 1989: Vice President of Corporate Development, Lowe's

1982 to 1986: Director of Corporate Development, Lowe's

EDUCATION

Graduated with a B.A. from the University of Virginia and received an MBA from Wake Forest University.

EXPERTISE

Mr. Bridgeford brings to our Board more than thirty years of retail experience in the areas of customer experience, merchandising, real estate, international, marketing, advertising and communications, strategic planning and business process improvement.

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GRAPHIC
THOMAS W. DICKSON

                                                     

DIRECTOR SINCE DECEMBER 2018

AGE: 64

BOARD COMMITTEES:

Compensation Committee

Mr. Dickson served as the Chief Executive Officer of Harris Teeter Supermarkets, Inc., a leading regional supermarket chain located primarily in the Southeastern and Mid-Atlantic United States, from February 1997 until his retirement in January 2014. He currently serves on the Board of Brixmor Property Group, Inc. where he is a member of the Compensation Committee.

PREVIOUS WORK AND BOARD EXPERIENCE

February 1996 to February 1997: Executive Vice President, Harris Teeter

February 1994 to February 1996: President of American & Efird, Inc., a wholly-owned subsidiary of Harris Teeter

February 1991 to February 1994: Executive Vice President, American & Efird, Inc.

1989 to 1991: Senior Vice President, Marketing and International, American & Efird, Inc.

1987 to 1989: Vice President, International Operations, American & Efird, Inc.

December 2016 to September 2018: Board of Directors of Conagra Brands, Inc. (Nominating, Governance and Public Affairs Committee)

March 2016 to June 2017: Board of Directors of CST Brands, Inc. (Nominating and Corporate Governance)

April 2014 to March 2015: Chair of the Board of The Pantry, Inc.

March 2006 to January 2014: Chair of the Board of Harris Teeter

EDUCATION

Mr. Dickson graduated with a B.A. from the University of Virginia and an MBA from the University of Virginia Darden School of Business.

EXPERTISE

Mr. Dickson brings to our Board more than thirty years of executive leadership with extensive experience in the retail and consumer products industries, a broad real estate knowledge, and substantial public board experience. He also brings extensive knowledge in strategic planning and international experience in managing foreign operations and sourcing.

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GRAPHIC
CONRAD M. HALL*

                                                     

DIRECTOR SINCE JANUARY 2010

AGE: 76

BOARD COMMITTEES:

Audit Committee

Nominating and Corporate Governance Committee

*MR. HALL IS RETIRING AT THE
2020 ANNUAL MEETING

Mr. Hall served as the President and Chief Executive Officer of Dominion Enterprises, a leading media and marketing information services company from 2006 until his retirement in January 2009, after nearly forty years in the broadcasting, news and information industry. He currently serves on the Board of Landmark Media Enterprises, LLC.

PREVIOUS WORK AND BOARD EXPERIENCE

April 1991 to 2006: President and Chief Executive Officer of Trader Publishing Company

1989 to 1991: President of Landmark Target Media, Inc.

1985 to 1989: Executive Vice President and Chief Financial Officer of Landmark Communications, Inc. Held various senior positions since 1970, including Vice President of The Virginian-Pilot and The Ledger-Star division of Landmark from 1977 to 1981.

2006 to 2009: Director, Board of Dominion Enterprises and Landmark Communications, Inc.

1991 to 2006: Director, Board of Trader Publishing Company

EDUCATION

Mr. Hall graduated with a BS in Engineering from the Virginia Military Institute and an MBA from the University of Virginia Darden School of Business.

EXPERTISE

Mr. Hall's experience as a former Chief Executive Officer and his demonstrated success in new business development is of immense value to the Board, especially as we continue to evaluate growth opportunities. He also brings to the Board more than thirty years of operational expertise, extensive experience in information technology, strategic planning and human resources, and a solid financial background.

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GRAPHIC
LEMUEL E. LEWIS

                                                     

DIRECTOR SINCE JULY 2007

AGE: 73

BOARD COMMITTEES:

Audit Committee

Mr. Lewis served as the Executive Vice President and Chief Financial Officer of Landmark Communications, Inc. from 2000 until his retirement in 2006. He currently serves on the Board of Directors of Markel Corporation (Audit Committee, Chair).

PREVIOUS WORK AND BOARD EXPERIENCE

1981 to 2000: held various senior level positions, including President of The News Channel 5 Network from 1992 to 1999, and President of KLAS TV from 1986 to 1990

2011 to 2019: Director, Owens & Minor, Inc. (Audit Committee Chair from 2014-2019)

2008 to 2010: Chair of the Board of the Federal Reserve Bank of Richmond

2005 to 2008: Chair of the Audit Committee for the Federal Reserve Bank of Richmond

2006 to 2008: Director, Board of Landmark Communications

2002 to 2006: Director, Board of The Weather Network

EDUCATION

Mr. Lewis graduated with a B.A. in Economics from the University of Virginia and an MBA from the University of Virginia Darden School of Business.

EXPERTISE

Mr. Lewis brings to the Board many years of experience in accounting, finance, human resources, marketing, mergers and acquisitions and business unit operations. The Board also benefits from his valuable financial experience as a former Chief Financial Officer and his service on the Board of the Federal Reserve Bank of Richmond. In addition, our Board has determined that Mr. Lewis qualifies as an Audit Committee financial expert.

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GRAPHIC
JEFFREY G. NAYLOR

                                                     

DIRECTOR SINCE MARCH 2018

AGE: 61

BOARD COMMITTEES:

Audit Committee

Nominating and Corporate Governance Committee

Mr. Naylor is a former Chief Financial Officer and Senior Executive of The TJX Companies. He is the Managing Director of his consulting firm, Topaz Consulting LLC, where he advises private equity firms on potential transactions and provides services in the area of strategy and finance. In addition, he currently serves on the Board of Directors of Synchrony Financial (Chair, Audit Committee; Compensation Committee), Emerald Expositions Events, Inc. (Chair, Nominating and Corporate Governance Committee; Compensation Committee), and Wayfair, Inc. (Audit Committee).

PREVIOUS WORK AND BOARD EXPERIENCE

February 2013 to April 2014: Senior Corporate Advisor, TJX Companies, Inc.

January 2012 to February 2013: Senior Executive Vice President and Chief Administrative Officer, TJX Companies, Inc.

February 2009 to January 2012: Senior Executive Vice President, Chief Financial and Administrative Officer, TJX Companies, Inc.

June 2007 to February 2009: Senior Executive Vice President, Chief Administrative and Business Development Officer, TJX Companies, Inc.

September 2006 to June 2007: Senior Executive Vice President, Chief Financial and Administrative Officer, TJX Companies, Inc.

February 2004 to September 2006: Chief Financial Officer, TJX Companies, Inc.

2001 to 2004: Chief Financial Officer, Big Lots, Inc.

Held senior level positions with Limited Brands, Sears, Roebuck and Co., and Kraft Foods, Inc.

Mr. Naylor began his career as a Certified Public Accountant with Deloitte Haskins & Sells.

2010 to 2016: Board Member (Audit Committee), Fresh Market, Inc.

EDUCATION

Mr. Naylor graduated with a B.A. in Economics from Northwestern University and a MBA from J.L. Kellogg School of Management.

EXPERTISE

Mr. Naylor brings to our Board an extensive financial and accounting background as well as significant leadership and retail experience. In addition, our Board has determined that Mr. Naylor qualifies as an Audit Committee financial expert.

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GRAPHIC
GARY M. PHILBIN

Chief Executive Officer

                                                     

DIRECTOR SINCE SEPTEMBER 2017

AGE: 63

Mr. Philbin is the Chief Executive Officer of Dollar Tree and has served in this role since September 2017. He has more than forty years of progressive retail experience.

PREVIOUS WORK AND BOARD EXPERIENCE

September 2017 to December 2019: President and Chief Executive Officer, Dollar Tree

December 2016 to September 2017: Enterprise President, Dollar Tree

July 2015 to December 2016: President and Chief Operating Officer, Family Dollar Stores

June 2013 to July 2015: President and Chief Operating Officer, Dollar Tree

March 2007 to June 2013: Chief Operating Officer, Dollar Tree

December 2001 to March 2007: Senior Vice President of Stores, Dollar Tree

1997 to 2001: held several executive level positions, including Chief Executive Officer of Grand Union, prior to the company's sale

1996 to 1997: Executive Vice President of Operations and Merchandising for Cub Foods, a division of SuperValu

1993 to 1996: Senior Vice President of Merchandising for Walbaum's, a division of A&P

1973 to 1993: held increasing positions of responsibility in Store Operations and Merchandising, Kroger Company

EDUCATION

Mr. Philbin graduated with a BS in Accounting from Miami University and received an MBA from Xavier University.

EXPERTISE

Mr. Philbin's forty plus year career in retail spans store operations and merchandising, including executive leadership across multiple formats in the grocery industry. His business acumen has driven development of private brands, customer research and marketing, and operational excellence into store focused initiatives. He has been deeply involved in the evolution of the Dollar Tree store format and business model over the past nineteen years. His work with the Family Dollar team has led to the H2 format initiative. His work across both banners brings a broad knowledge base to the Board.

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GRAPHIC
BOB SASSER

Executive Chairman

                                                     

DIRECTOR SINCE JUNE 2004

AGE: 68

Mr. Sasser is the Executive Chairman of Dollar Tree Board of Directors. He previously served as the Chief Executive Officer of Dollar Tree from 2004 to September 2017.

PREVIOUS WORK AND BOARD EXPERIENCE

2004 to 2017: Chief Executive Officer, Dollar Tree

2004 to 2013: President and Chief Executive Officer, Dollar Tree

2001 to 2003: President and Chief Operating Officer, Dollar Tree

1999 to 2000: Chief Operating Officer, Dollar Tree

1997 to 1998: Senior Vice President, Merchandise and Marketing, Roses Stores, Inc.

1994 to 1996: Vice President, General Merchandise Manager, Michaels Stores, Inc.

Prior to 1994: Managed areas of increasing responsibility, primarily at Roses Stores, Inc. in field operations, corporate sales promotion and marketing, buying, global sourcing, merchandising and executive management.

2012 to 2016: Board Member (Audit Committee), Fresh Market, Inc.

EDUCATION

Mr. Sasser graduated with a BS in Marketing from Florida State University.

EXPERTISE

Mr. Sasser's demonstration of outstanding leadership skills, business acumen, commitment to excellence, and his major contributions to the Company's growth and success as the former Chief Executive Officer of Dollar Tree provides essential insight and guidance to our Board. During his thirteen year tenure as Chief Executive Officer, shareholder value increased 733%, as compared to the S&P 500 increase of 125% during the same timeframe. In addition, the Board benefits from Mr. Sasser's forty-seven years of discount retail leadership experience across all areas of corporate and field operations, including merchandising, marketing, sales promotion, advertising, branding, and customer engagement. He brings to the Board expertise in the areas of merchandising, global sourcing, supply chain, buying, allocation and replenishment, real estate and retail technology.

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GRAPHIC
THOMAS A.
SAUNDERS III

                                                     

DIRECTOR SINCE 1993            

AGE: 83

BOARD COMMITTEES:

Nominating and Corporate Governance Committee

Mr. Saunders is the CEO of Ivor & Co., LLC, a private investment firm. He is a founder of Saunders Karp & Megrue, a private equity firm that owned 50% of Dollar Tree at the time of its IPO and whose retail companies included Ollie's Bargain Outlet, Bob's Discount Furniture, Marie Callender's, Café Rio, Mimi's Café, Miller's Ale House, Children's Place, rue21, Charlotte Russe, Tommy Bahama, Hat World, Targus and Norcraft Companies. He is a Senior Advisor to numerous private equity firms and serves as Trustee and Chairman of the Finance Committee of the New York Historical Society, Trustee of the Marine Corps University Foundation, and Trustee of Cold Spring Harbor Laboratory.

PREVIOUS WORK AND BOARD EXPERIENCE

2013 to Present: Lead Director and Chairman of the Nominating and Corporate Governance Committee of VitalConnect

1996 to 2016: Director for Hibbett Sports serving on the Audit, Nominating and Corporate Governance, and Compensation Committees

2005 to 2018: Trustee and Chairman of the Heritage Foundation

2011 to 2012: Chairman of the Nominating and Corporate Governance Committee for Teavana Holdings

2001 to 2005: Member of the Board of Visitors of the University of Virginia; Chairman of the Finance Committee

1974 to 1989: Managing Director of Morgan Stanley & Co., leading its Capital Markets Group, managing its Syndicate Department and serving as Chairman of its Leveraged Equity Fund II ("MSLEF II")

2007 to 2019: Lead Independent Director, Dollar Tree

2001 to 2019: Nominating and Corporate Governance Committee, and Chair from 2001 to 2007 and 2009 to 2019, Dollar Tree

2001 to 2007: Chair of the Audit Committee, Dollar Tree

EDUCATION

Mr. Saunders holds a BSEE from Virginia Military Institute and an MBA from the University of Virginia Darden School of Business.

EXPERTISE

Mr. Saunders is a financial expert with preeminent experience in investment banking and domestic and global capital markets. He worked closely with Morgan Stanley clients managing IPOs, equity and debt financings and advising on capital structures. His innovation led to the implementation of new public offering techniques still used in today's equity markets. Mr. Saunders has extensive experience with retail company strategy, operations and corporate governance. He drove investment and valuation analysis to maximize equity value across a portfolio of over 50 retail, industrial and healthcare companies, and he has a deep understanding of the Dollar Tree business.

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GRAPHIC
STEPHANIE P. STAHL

                                                     

DIRECTOR SINCE JANUARY 2018

AGE: 53

BOARD COMMITTEES:

Nominating and Corporate Governance Committee, Chair

Compensation Committee

Ms. Stahl owns and operates Studio Pegasus, LLC, an investment and advisory company focused on consumer sector digital start-ups, which she founded in 2015. She currently serves on the Board of Directors of Knoll,  Inc. (Chair, Nominating and Corporate Governance Committee; Audit Committee), and Chopt Creative Salad Company.

PREVIOUS WORK AND BOARD EXPERIENCE

2012 to 2015: Executive Vice President, Global Marketing & Strategy, Coach, Inc.

2010 to 2011: Chief Executive Officer, Tracy Anderson Mind & Body, LLC

2003 to 2006: Executive Vice President, Chief Marketing Officer, Revlon, Inc.

1998 to 2003: Partner and Managing Director, The Boston Consulting Group, Inc.

1997: Vice President, Strategy & New Business Development, Toys "R" Us, Inc.

Ms. Stahl began her career as a Financial Analyst for Morgan Stanley & Co.

EDUCATION

Ms. Stahl graduated with a B.S. in Quantitative Economics from Stanford University and an MBA (with distinction) from Harvard University.

EXPERTISE

Ms. Stahl brings to our Board significant experience in marketing, digital, brand building and strategic development. Ms. Stahl has spent her career focused on the retail/consumer sector with extensive experience in developing, executing and optimizing major change initiatives including mergers and acquisitions, post-merger integration and fundamental strategic redirection.

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GRAPHIC
CARRIE A. WHEELER

                                                     

DIRECTOR SINCE MARCH 2019

AGE: 48

BOARD COMMITTEES:

Audit Committee

Ms. Wheeler is a former Partner and Head of Consumer and Retail Investing at TPG Global, a global private equity firm. She currently serves on the Board of Directors of APi Group Corporation (Audit Committee; Compensation Committee).

PREVIOUS WORK AND BOARD EXPERIENCE

1996 to 2017: Various roles of increasing responsibility over 21 years of service; former Partner and Head of Consumer and Retail Investing, TPG Global

1993 to 1996: Analyst, Goldman, Sachs & Co.

2010 to 2018: Director, J. Crew Group (Audit Chair; Compensation Committee Chair)

2013 to 2017: Director, Board of Gelson's (Compensation Committee Chair)

2012 to 2016: Director, Board of Savers Inc. (Compensation Committee)

2006 to 2015: Director, Board of PETCO Animal Supplies (Audit Committee Chair)

2005 to 2013: Director, Board of Neiman Marcus Group (Audit Committee)

2000 to 2004; Director, Board of Denbury Resources

EDUCATION

Ms. Wheeler graduated with a Bachelor of Commerce (Honors), from Queens University.

EXPERTISE

Ms. Wheeler is an accomplished Wall Street leader with significant investment and board experience. She brings to our Board broad experience evaluating, valuing and managing investments with a focus on retail and consumer sectors. She has substantial experience in business assessment, evaluating and executing major acquisitions, structuring debt financing, raising private capital and guiding IPO and public market transactions. In addition, our Board has determined that Ms. Wheeler qualifies as an Audit Committee financial expert.

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GRAPHIC
THOMAS E. WHIDDON

                                                     

DIRECTOR SINCE DECEMBER 2003

AGE: 67

BOARD COMMITTEES:

Audit Committee, Chair

Nominating and Corporate Governance Committee

Mr. Whiddon retired from Berkshire Partners, LLC as an Advisory Director in 2013. He currently serves on the Board of Directors of Sonoco Products Company, Inc., (Audit Committee Chair, Corporate Governance and Nominating Committee, Executive Compensation Committee, Financial Policy Committee) and Carter's Inc. (Audit Committee).

PREVIOUS WORK AND BOARD EXPERIENCE

2005 to 2013: Advisory Director, Berkshire Partners, LLC

2004 to 2006: Interim Executive Operating Roles, Berkshire Partners, LLC

2000 to 2003: Executive Vice President of Logistics and Technology, Lowe's Companies, Inc.

1996 to 2000: Executive Vice President, and Chief Financial Officer, Lowe's Companies, Inc.

1994 to 1996: Chief Financial Officer and Treasurer, Zale Corporation

1986 to 1993: Treasurer, Eckerd Corporation

1984 to 1986: Tax Partner, KPMG

EDUCATION

Mr. Whiddon graduated with a BS from the University of Alabama.

EXPERTISE

Having served as Chief Financial Officer and Treasurer of successful large public retail companies, coupled with his many years of experience in public accounting, Mr. Whiddon brings to our Board extensive financial expertise. In addition, our Board has determined that Mr. Whiddon qualifies as an Audit Committee financial expert. His service on the Board and a number of Committees of Carter's Inc. and Sonoco Products Company, Inc. further enhances his contributions to our Board. He also brings a fresh perspective to Dollar Tree's logistics and technology focus.

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GRAPHIC
CARL P. ZEITHAML

                                                     

DIRECTOR SINCE JULY 2007

AGE: 70

BOARD COMMITTEES:

Compensation Committee

Dr. Zeithaml is the Dean of the McIntire School of Commerce at the University of Virginia. Over the past 22 years, Dean Zeithaml led the implementation of McIntire's strategy to achieve a position of global preeminence in business education. He is also a Professor in the Management Area specializing in strategic management, and marketing.

PREVIOUS WORK AND BOARD EXPERIENCE

1986 to 1997: Faculty, Kenan-Flagler Business School at the University of North Carolina-Chapel Hill.

EDUCATION

Dr. Zeithaml graduated with a B.A. in Economics from University of Notre Dame, a MBA in Health and Hospital Management from University of Florida, and a Doctor of Business Administration in Strategic Management from University of Maryland.

EXPERTISE

Dr. Zeithaml provides the Board with expertise in strategic management, executive leadership, and marketing, with an emphasis on competitive strategy, corporate governance and global strategy. He brings to the Board extensive educational experience and a strong understanding of change management and risk management.

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THE BOARD AND ITS COMMITTEES

              The Board of Directors currently consists of 13 directors who are elected annually. The Board has re-nominated all current directors for appointment as directors to serve for a one-year term, except for Conrad M. Hall who is retiring from the Board when his term expires at the 2020 annual meeting of shareholders. The size of the Board will be reduced from 13 directors to 12 directors effective as of the annual meeting, but may be increased at any time thereafter upon the Board finding a suitable candidate to replace Mr. Hall.

              The Board of Directors has three standing committees, each comprised solely of independent directors: the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee.

              The charters of our Board committees are available on our corporate website, www.dollartreeinfo.com/investors/corporate.

              Current committee assignments are as follows:

    Director

Independent
Director(1)


Audit
Committee(2)


Compensation
Committee


NCG
Committee


 

 

 

Arnold S. Barron

 


 


 


 


 

 

 

 

Gregory M. Bridgeford

 

LD

 

 

 

C

 


 

 


 

Thomas W. Dickson

 


 


 


 


 

 

 

 

Conrad M. Hall*

 


 


 

 

 


 

 


 

Lemuel E. Lewis

 


 


 


 


 

 

 

 

Jeffrey G. Naylor

 


 


 

 

 


 

 


 

Gary Philbin

 

 

 

 

 

 

 

 

 

 

 

 

Bob Sasser

 

 

 

 

 

 

 

 

 

 


 

Thomas A. Saunders III

 


 


 


 


 

 

 

 

Stephanie P. Stahl

 


 

 

 


 

C

 

 


 

Carrie A. Wheeler

 


 


 


 


 

 

 

 

Thomas E. Whiddon

 


 

C

 

 

 


 

 


 

Carl P. Zeithaml

 


 


 


 


 

 
*
Retiring at the 2020 annual meeting of shareholders

LD
Lead Director

C
Committee chair

(1)
Our Board reviewed the composition of each committee and determined that the independence and other qualifications of its members meet the listing standards of the NASDAQ Stock Market and SEC regulations.

(2)
The Board, after review of each individual's employment experience and other relevant factors, has determined that Lemuel Lewis, Jeffrey Naylor, Carrie Wheeler and Thomas Whiddon are qualified as audit committee financial experts within the meaning of SEC regulations.

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Audit Committee

              At each regular meeting, the Audit Committee meets in executive sessions with the Company's independent auditors, Chief Legal Officer, Vice President—Internal Audit, Chief Financial Officer and Senior Vice President—Principal Accounting Officer to discuss accounting principles, financial and accounting controls, the scope of the annual audit, internal controls, regulatory compliance and other matters. The independent auditors have complete access to the Audit Committee without management present to discuss the results of their audits and their opinions on the adequacy of internal controls, quality of financial reporting and other accounting and auditing matters.

              Key functions of this committee include:

              The Audit Committee met eight (8) times in 2019. In addition, the Chair of the Committee conducted periodic updates with the independent auditors and/or financial management.

              All members of the Audit Committee during 2019 met the independence requirements and of the NASDAQ Stock Market and regulations of the Securities and Exchange Commission. The report of the Committee can be found beginning on page 106.

Compensation Committee

              The Compensation Committee sets all elements of compensation for our named executive officers based upon consideration of their contributions to the development and operating performance of the Company, and is primarily responsible for monitoring risks relating to the Company's compensation policies and practices to determine whether they create risks that are reasonably likely to have a material adverse effect on the Company.

              Key functions of this Committee include:

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              The Compensation Committee met ten (10) times in 2019. In addition, the Chair separately engaged in numerous in-depth discussions with members of management.

              All members of the Compensation Committee during 2019 met the independence requirements of the NASDAQ Stock Market and regulations of the Securities and Exchange Commission. The report of the Committee, together with our Compensation Discussion and Analysis and information regarding executive compensation, can be found beginning on page 44.

Nominating and Corporate Governance Committee

              The purpose of the Nominating and Corporate Governance Committee is to advise the Board of Directors on the composition, organization and effectiveness of the Board and its committees and on other issues relating to the corporate governance of the Company. The Committee is also responsible for monitoring and evaluating the Company's sustainability and ESG risks affecting its stakeholders. The Committee's primary duties and responsibilities include:

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              The Committee's primary duties and responsibilities in the area of sustainability and corporate social responsibility are to oversee the Company's strategy on social responsibility and sustainability and develop and recommend to the Board policies and procedures relating to the Company's corporate social responsibility and sustainability activities, including authorizing and directing the Chief Executive Officer and other members of management as he shall select to:

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              The Nominating and Corporate Governance Committee met on nine (9) occasions in 2019. During 2019 and into 2020, the Committee continued to review potential candidates for Board seats in order to further enhance the Board's effectiveness, and one new director was appointed during this period. During 2019, two new Chairs were appointed as well as a new Lead Director. For further information on the Committee, please see "How Nominees to our Board are Selected" beginning on page 38.

Meetings of the Board of Directors

              The Board of Directors has scheduled four regular meetings in 2020 and recently held one of these meetings in March 2020. The Board will hold special meetings when Company business requires. During 2019, the Board held eight (8) meetings. Informational update calls are periodically conducted during the year. Each member of the Board attended more than 75% of all Board meetings and meetings of committees of which he or she was a member.

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BOARD GOVERNANCE

              Our Board operates within a strong set of governance principles and practices, including:

    Governance Practice       Dollar Tree's Governance Policies and Actions    

 

 

All directors elected annually upon majority vote, except where contested

 

YES

 

Our Board is not classified, and in uncontested elections our directors are elected by the vote of a majority of the votes cast. See "Proposal No. 1-Election of Directors" on page 103.

 

 

 

 

Robust Independent Lead Director position

 

YES

 

When our Board Chairman is not independent, a Lead Director is elected from among the independent directors. Our Corporate Governance Guidelines enumerate the robust authority and responsibilities of the Lead Director in managing Board matters. See "Board Leadership Structure" on page 26.

 

 

 

 

Enhanced director stock ownership guidelines

 

YES

 

Increased the director stock ownership requirement so that each director must hold Dollar Tree stock worth no less than four times the annual cash retainer. See "Director Stock Holding Requirements" on page 27.

 

 

 

 

Enhanced shareholder engagement program

 

YES

 

We formalized our policy to facilitate shareholder access to senior management and independent directors. See "Engagement with Shareholders" on page 31.

 

 

 

 

A strong corporate commitment to sustainability

 

YES

 

We have made a commitment to good corporate stewardship and are pursuing meaningful strategies and initiatives that address the sustainability risks associated with our business. We strongly support policies that benefit our customers, our associates, our communities and our environment. See "Sustainability" on page 29.

 

 

 

 

Thoughtful approach to director tenure and board diversity

 

YES

 

We endeavor to include women and minority candidates in the pool from which Board nominees are chosen and to consider diverse directors for leadership positions on the Board. While directors have no term limit, the Board finds benefit in having Board members represent an on-going mix of short-, medium- and longer-term tenures. See "Board Diversity" and "Board Tenure" on page 38 and page 39, respectively.

 

 

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Independence

              Dollar Tree is committed to principles of good corporate governance and the independence of a majority of our Board of Directors from the management of our Company. The following eleven directors have been determined by our Board to be independent directors within the applicable listing standards of the NASDAQ Stock Market throughout 2019: Arnold S. Barron, Gregory M. Bridgeford, Thomas W. Dickson, Conrad M. Hall, Lemuel E. Lewis, Jeffrey G. Naylor, Thomas A. Saunders III, Stephanie P. Stahl, Carrie A. Wheeler, Thomas E. Whiddon and Carl P. Zeithaml.

              All members of our Audit Committee, our Compensation Committee and our Nominating and Corporate Governance Committee are independent under NASDAQ listing standards. Our Board has reviewed the various relationships between members of our Board and the Company and has affirmatively determined that none of our directors or nominees has material relationships with Dollar Tree, other than Messrs. Philbin and Sasser, who are members of management. See "Certain Relationships and Related Transactions" on page 94 for further information.

              If the slate of directors proposed to be elected at the 2020 annual meeting of shareholders is elected, all committees of our Board will continue to be comprised solely of independent directors. The basis for an independence determination by our Board is either that the director has no business relationship other than his or her service on our Board, or that while a director may have some involvement with a Company or firm with which we do business, our Board has determined that such involvement is not material and does not violate any part of the definition of "independent director" under NASDAQ listing standards. None of our current executives sit on any of our committees.

              At the regular meetings of our Board of Directors, a private session, without management present, is conducted by the non-management members of our Board.

Board Leadership Structure

              As we have successfully done in the past, our executive leadership succession plan calls for the former Chief Executive Officer to spend a period as Chairman, supporting and guiding the new Chief Executive Officer. Because our Executive Chairman is thus not independent, our independent directors elect an independent Lead Director, as required under our Corporate Governance Guidelines. In March 2019, Gregory M. Bridgeford was elected as independent Lead Director by the independent directors. Under our guidelines, the Lead Director has clearly defined and robust leadership authority and responsibilities, including:

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              After careful consideration, the Board determined that its current leadership structure is the most appropriate for Dollar Tree and its shareholders. As part of the Company's ongoing commitment to corporate governance, the Board periodically considers its leadership structure and the role of the Lead Director.

Director Stock Holding Requirements

              In March 2019, the Board enhanced its stock ownership guidelines to require that each director should hold Dollar Tree stock worth no less than four (4) times the annual cash retainer paid to directors, valued on the date such director acquired the stock. Vested stock or stock units beneficially owned by the director, including stock or stock units held in the 2013 Director Deferred Compensation Plan, are counted in meeting the guidelines.

              As of April 2020, all of our directors owned shares in excess of the amount required by the new guidelines, with the exception of certain of our newer members: Thomas W. Dickson, Stephanie P. Stahl and Carrie A. Wheeler. Under our policy, each director has a grace period of five (5) years after he or she is first elected to the Board to meet the director stock holding requirements. Consistent with prior years, despite the directors owning shares in excess of this guideline, a majority of the directors have consistently chosen to defer a meaningful portion of their annual cash retainer as shares of common stock or as options, ranging from 60% to 100% of total compensation for participating directors during 2019.

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Majority Voting in Uncontested Election of Directors

              Our bylaws provide for majority voting in uncontested director elections. Consequently, a director-nominee will be elected by a majority of votes cast in uncontested director elections and by a plurality of votes in contested elections.

              In addition, our Corporate Governance Guidelines also set forth our procedure if a director-nominee does not receive a majority of the votes cast in an uncontested election. Prior to an election, each director-nominee submits a resignation letter, contingent upon such individual failing to receive more than 50% of the votes cast in an uncontested election. In such event, the resignation would be considered by the Nominating and Corporate Governance Committee, which would recommend to the Board what action to take with respect to the resignation.

Board's Role in Risk Oversight

              The Board of Directors is actively involved in overseeing enterprise risk, primarily through the assistance of its committees, which address the risks within their areas of responsibility as provided in the committee charters or otherwise delegated by the Board to those committees. Each committee reports matters relating to risk to the full Board.

              The Audit Committee has a key role in the assessment of risks related to our business. The Company's Internal Audit Department conducts an annual investigation and evaluation of enterprise risk, which focuses on areas that are essential to the successful operation of the Company, and reports its findings to the Audit Committee. The Audit Committee engages in dialogue and receives updates at or between its meetings from the Vice President of Internal Audit, the Chief Financial Officer, Chief Legal Officer and the Chief Executive Officer on matters related to risk. The Audit Committee shares appropriate information with the Board, either at its next meeting or by other more immediate communication.

              In addition, to more effectively prevent, detect and respond to information security threats, the Company has a dedicated Chief Information Security Officer whose team is responsible for leading enterprise-wide information security and risk mitigation. The Audit Committee and the Board receive regular reports on, among other things, the Company's cyber risks and threats, the status of projects to strengthen the Company's information security systems, assessments of the Company's security program and the emerging threat landscape.

              The Nominating and Corporate Governance Committee oversees the Company's risks relating to corporate social responsibility and sustainability, including the environment, human rights, labor, health and safety, workforce diversity, supply chain, governance and similar matters affecting Company stakeholders. In carrying out its oversight role, the Committee is responsible for developing and recommending to the Board policies and procedures relating to sustainability risks. The Chief Executive Officer and other members of management are responsible for assessing on an ongoing basis the Company's sustainability risks and providing regular reports to the Nominating and Corporate Governance Committee and/or the Board on the identification, evaluation, management and mitigation of those sustainability risks.

              The Compensation Committee, in setting executive compensation, considers risks that may be implicated by our compensation programs and endeavors to set executive compensation at a level that creates incentives to achieve long-term shareholder value without encouraging excessive risk-taking to achieve short-term results.

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Sustainability

              Dollar Tree is concerned about and committed to environmental sustainability, product safety, human rights and human capital management, and continues to enhance its efforts in these areas. From its beginning over thirty years ago, we have operated our business with integrity and concern for others. We are focused each day on promoting a welcoming and safe environment for our customers and associates. The principles that guide us are ingrained in our people and our operations. From the global impact of climate change to the safety of the products we sell to our concern for the individuals who make them, Dollar Tree strives to stay focused on these values.

Board and Management Oversight of Sustainability

              Our Board and management recognize the importance of assessing and planning for the potential impact of climate change and other sustainability risks on our business. This is an important part of the Board's enhanced ESG oversight that was implemented over the last year, including formalizing the responsibilities of the Nominating and Corporate Governance Committee in monitoring and evaluating the Company's sustainability and ESG risks affecting our stakeholders.

              Under its charter, the Nominating and Corporate Governance Committee has the lead role in overseeing the Company's risks and reporting related to ESG matters and sustainability. One of the Committee's primary duties and responsibilities is to at least semi-annually, evaluate, discuss, and, as appropriate, direct the disclosure of the Company's risks relating to corporate social responsibility and sustainability, including the environment, human rights, labor, health and safety, workforce diversity, supply chain, governance and similar matters affecting our stakeholders. The Committee also is responsible for developing and recommending to the Board policies and procedures relating to the Company's corporate social responsibility and sustainability activities. This includes, among other things, directing senior management to assess on an ongoing basis the Company's sustainability risks, drafting or revising policies and procedures to prevent and mitigate sustainability risks, increasing transparency into the Company's policies on sustainability risks for all Company stakeholders, and providing regular reports to the Nominating and Corporate Governance Committee and/or the Board on the identification, evaluation, management and mitigation of sustainability risks including any which may arise in the future.

              In addition, as part of our commitment to sustainability, the Company formed a management Sustainability Committee in 2020 that includes leaders from various key departments in the organization who will assist senior management and the Board in focusing our efforts on the sustainability issues that affect the Company.

Enhanced Sustainability Reporting

              We recognize that sustainability reporting is an area of interest for our stakeholders. The Board has determined that it would be in the best interest of the Company and its stakeholders to prepare a report evaluating how our long-term business strategy could be threatened by, and may be adapted to address, the potential challenges posed by climate change to our continued ability to create and build sustainable shareholder value. The Board anticipates that this assessment will be valuable both for ongoing Board discussions of strategic matters and as a focal point for engaging with our shareholders on matters of corporate sustainability and Board oversight. The Company intends to engage with shareholders on this topic over the next months and will provide an expanded sustainability report before next year's annual shareholder meeting. We anticipate that the report should describe our strategy development process, summarize related tasks, and discuss long-term goals.

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Environmental Sustainability Initiatives

              Dollar Tree is focused on pursuing meaningful initiatives that minimize our environmental impact while reducing costs and driving efficiency, which we believe reduces risk and ultimately ensures the creation of sustainable shareholder value.

              Unlike a manufacturer, Dollar Tree's most significant environmental impact is from energy use in conducting our retail operations. Our most significant points of energy consumption are operation of the HVAC and lighting systems in our retail stores and distribution centers, and our use of trucking to deliver merchandise to our distribution centers and stores. To combat these and other environmental impacts, we have implemented several initiatives, including:

              Beyond these initiatives, we have taken other steps to reduce the environmental impact of our business. Since 2013, we have participated in the U.S. Environmental Protection Agency's SmartWay Shipper Performance Program that seeks to reduce transportation-related carbon emissions by creating incentives for transportation providers to improve fuel efficiency. This program enhances our supply chain sustainability by measuring, benchmarking and improving freight transportation efficiency. In addition, our new store support center, comprised of a 320,000 square foot tower, completed in 2018, and our 189,000 square foot fully-renovated "Legacy" building, completed in 2019, use energy efficient systems and materials, including a cooling tower and condenser water open loop system, an aluminum curtain wall glazing system, electrical building controls, and LED overhead lighting. We also work with a vendor that operates modern recycling and reprocessing centers that purchase products that have reached the end of their useful life, thereby keeping those products out of landfills and the environment. We also partner with a professional hazardous waste disposal company, which reuses waste to create industrial soaps for natural disaster cleanups worldwide.

Product Safety and Sustainability

              We are committed to providing our customers with safe and sustainable products. We utilize independent and certified companies to test products that we import to assure that they meet or exceed all regulatory, legal or industry standards. We have one of the most robust testing programs for children's products, assuring that testing is done using random sample collection, often multiple times on each production run. We have also adopted a chemical policy to identify and reduce chemicals of high concern in our products, including without limitation lead, BPA and asbestos in children's products, cadmium and cadmium compounds, certain flame retardants, formaldehyde and various other chemicals we have identified as a priority concern. Our chemical policy exceeds regulatory requirements, and in 2019, Dollar Tree became the third retailer to join Clean Production

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Action's Chemical Footprint Project, in an effort to identify and further reduce our use of chemicals of high concern.

              In addition, we are committed to providing environmentally and socially conscious products to our customers. For example, key clothing suppliers are part of the Sustainable Apparel Coalition, whose members are committed to measuring and improving social and environmental impacts within the apparel, footwear and textile industry.

Human Rights

              We audit most of our suppliers' factories overseas to assure compliance with labor, health and safety, human trafficking, discrimination and other legal requirements, and are working to expand those audits to all of our suppliers' factories. We will not do business with factories that do not respect basic human rights.

Human Capital Management

              We continue to build a rewarding, engaging, diverse and inclusive work environment. In 2019, we established the "Women of One, Power of One," a resource group to help lead efforts to broaden diversity and awareness in the workplace. This group focuses on engaging, inspiring and developing all associations to drive consistent profitable growth and cultivate a collaborative and inclusive workplace that strengthens our position as a great place to work. Internally, 2019 was known as the "Year of the Manager," which focused on leadership and encouraged progression in the areas of hiring and staffing, problem solving, developing direct reports and planning and prioritizing. We are a pay for performance organization, and performance-based compensation opportunities exist at almost all levels of the organization. Both Dollar Tree and Family Dollar have implemented a Store Manager Bonus Program, which rewards store managers for strong performance. We also offer benefits to eligible associates such as participation in our 401(k) plan and Employee Stock Purchase Plan in order to help our associates plan for their retirement.

              For more information regarding our commitment to sustainability, please see our Corporate Sustainability Report available on our corporate website at https://www.dollartreeinfo.com/investors/corporate.

Code of Ethics

              Our Board has adopted a Code of Ethics for all our employees, officers and directors, including our Chief Executive Officer and senior financial officers, which was recently reviewed and approved by the Board on December 5, 2019. A copy of this code may be viewed at our corporate website, www.dollartreeinfo.com/investors/corporate. In addition, a printed copy of our Code of Ethics will be provided to any shareholder upon request submitted to the Corporate Secretary at our corporate headquarters address, which is 500 Volvo Parkway, Chesapeake, VA 23320.

Engagement with Shareholders

              Dollar Tree believes that effective corporate governance includes regular, constructive conversations with our shareholders. We strive for a collaborative approach to shareholder outreach and value the variety of investors' perspectives received, which helps deepen our understanding of their interests and priorities. Throughout the year, we seek opportunities to connect with our investors to gain and share valuable insights and receive feedback on the matters most important to them. The insights and feedback we receive is shared with the Board and its relevant committees.

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              During 2019, we continued our outreach to shareholders to understand their views on issues important to them. The Vice President, Corporate Governance together with the office of the Corporate Secretary leads this shareholder engagement process on matters of corporate governance, incorporating other executives and members of the Board where appropriate or as requested by individual shareholders. We contacted holders of approximately 64% of outstanding shares to invite them into the process. We engaged with our shareholders on topics related to board refreshment, executive compensation, long-term business strategy, social issues that affect our business and environmental impact and sustainability matters. A number of those we contacted indicated they did not feel an engagement call was necessary in 2019, given their comfort with the evidence of the Board's attentiveness and stewardship. Some shareholders indicated that while they appreciated our outreach and valued the opportunity to engage, they did not feel there were issues with the Company's governance or the Board's oversight which would necessitate their engagement annually.

              The Board reviewed feedback from these conversations to better understand our shareholders' priorities and perspectives. In response to feedback from shareholders, we are taking steps to increase our transparency and reporting on sustainability matters, including our commitment to prepare a report evaluating how our long-term business strategy could be threatened by, and may be adapted to address, the potential challenges posed by climate change to our continued ability to create and build sustainable shareholder value. The Company intends to engage with shareholders on this topic over the next months and will provide an expanded sustainability report before next year's annual shareholder meeting. We anticipate that the report should describe our strategy development process, summarize related tasks, and discuss long-term goals.

              Consistent with that feedback, every director received shareholder support of at least 96% of votes cast at our 2019 annual meeting, and the advisory vote on our executive compensation program ("Say on Pay") received support from 95% of votes cast. In our 2019 shareholder outreach, no shareholders expressed concerns about executive compensation.

              To further our commitment to shareholder engagement, in March 2019 the Board of Directors adopted an enhanced Shareholder Engagement Policy. The Board believes that fostering long-term, open and institution-wide relationships with shareholders and maintaining their trust and goodwill is a core objective of our shareholder outreach program. Under the policy, our senior executive officers and the investor relations department are primarily responsible for our communications and engagement with shareholders and the investment community. Management is responsible for promptly reporting to the Board all material shareholder comments and feedback it receives.

              Our Corporate Secretary and our Vice President, Corporate Governance serve as liaisons with our shareholders on governance matters. We authorized these positions to provide a more direct channel for communications with shareholders, to ensure an open dialogue on an ongoing basis and to promote increased understanding of industry standards for best practices in corporate governance as they evolve.

              Although shareholder outreach is primarily a function of management, our Board also believes that in appropriate cases, Board-level participation in dialogue with shareholders on matters of significance can be an effective means of promoting mutual understanding and enabling the Board to be informed as to shareholder perspectives. In addition to the engagement that is expected to occur by the Chief Executive Officer and the Executive Chairman, the Board expects that the Lead Director will generally be the primary independent director who would participate in such discussions, with the understanding that on certain matters, the Chairs of relevant Board committees

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or in certain cases other directors may also be asked by the Executive Chairman, the Lead Director or the Board to participate. Accordingly, directors may also from time to time participate in an organized and coordinated manner with management in one-on-one meetings or investor events to elicit shareholder views.

              Shareholders may direct a request for a meeting with independent directors to the attention of the Lead Director who will consider such request, in consultation with the Corporate Secretary. The request should:

              The Board has the right to decline requests for any meetings requested by shareholders for any reason it deems appropriate, including where the proposed topics are not appropriate and in order to limit the number of such meeting requests to a reasonable level and prioritize acceptances based on the interests of all shareholders.

              Where a meeting request is granted, the Corporate Secretary will either directly contact the person(s) making the request to confirm arrangements for the meeting or be informed of the arrangements by the Lead Director of the Board. The Company's Chief Legal Officer or the Investor Relations Department may be asked to attend the meeting in order to confirm compliance with the Company's obligations respecting fair disclosure and the maintenance and assessment of disclosure controls and procedures. In certain cases, directors (and management) may adopt primarily a "listen-only" approach at meetings, and shareholders should recognize that in addition to Board input, the input of management will often be sought as to matters discussed with shareholders.

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COMMUNICATING WITH OUR BOARD MEMBERS

              Our shareholders may communicate directly with our Board of Directors. You may contact any member of our Board, any Board committee or any chair of any such committee by mail. To do so, correspondence may be addressed to any individual director, the non-management directors as a group, any Board committee or any committee chair by either name or title. Shareholders should direct a request for a meeting with independent directors to the attention of the Lead Director. All such mailings are to be sent in care of "Corporate Secretary" at our corporate headquarters address, which is 500 Volvo Parkway, Chesapeake, VA 23320. To communicate with our directors electronically, emails may be sent to CorpSecy@DollarTree.com.

              Mail received as set forth in the preceding paragraph may be examined by the Corporate Secretary for security purposes and for the purpose of determining whether the contents actually represent messages from shareholders to our directors. Depending upon the facts and circumstances outlined in the correspondence, the Corporate Secretary will forward the communication to the Board, or any director or directors, provided that the contents are not in the nature of advertising, promotions of a product or service, or patently offensive material.

              In addition, any person who desires to communicate financial reporting or accounting matters specifically to our Audit Committee may contact the Audit Committee by addressing a letter to the Chair of the Audit Committee at our corporate headquarters address, noted above, or electronically to AuditChair@DollarTree.com. Communications to our Audit Committee may be submitted anonymously, if sent by mail, addressed to the Audit Committee Chair. All correspondence will be examined by the Corporate Secretary and/or Internal Audit from the standpoint of security and depending upon the facts and circumstances outlined in the correspondence, the communications will be forwarded to our Audit Committee or Audit Committee Chair for review and follow-up action as deemed appropriate.

              We expect each of our directors to attend the annual meeting of our shareholders. All of the then incumbent directors were in attendance at the 2019 annual meeting of our shareholders.

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DIRECTOR COMPENSATION

              Director compensation is established by the Board of Directors and periodically reviewed. The Board determined that each non-employee director (i.e. all directors except for Bob Sasser and Gary Philbin) will receive an annual cash retainer of $180,000. In addition, the Audit Committee chair will receive $30,000 and Audit Committee members will receive $20,000; the Compensation Committee chair will receive $30,000 and Compensation Committee members will receive $15,000; the Nominating and Corporate Governance Committee chair will receive $20,000 and the Nominating and Corporate Governance Committee members will receive $10,000. The Lead Director will receive an additional $35,000. The Board approved in fiscal 2016 an annual equity grant with a value of $75,000 to be paid annually to each non-employee director in the form of shares of Dollar Tree common stock. The Board may also authorize additional fees for ad hoc committees, if any. Fees are paid quarterly in advance. We do not offer non-equity incentives or pension plans to non-employee directors.

              Under our shareholder-approved 2013 Director Deferred Compensation Plan, directors may elect to defer receipt of all or a portion of their Board and committee fees to be paid at a future date in either cash or shares of common stock, or to defer all or a portion of their fees into non-statutory stock options. Deferral elections must be made by December 31 for the deferral of fees in the next calendar year and must state the amount or portion of fees to be deferred; whether and to what extent fees are to be deferred in cash or shares or paid in the form of options; in the case of deferral into cash or shares, whether the payout shall be in installments or lump sum; and the date on which such payout will commence. In the case of deferrals into options, the number of options to be credited is calculated by dividing the deferred fees by 33% of the closing price on the first day of each calendar quarter, which is the date of grant. The options bear an exercise price equal to the closing price on the date of grant and are immediately exercisable. Deferrals into cash or stock are recorded in unfunded and unsecured book-entry accounts. Deferred shares to be credited are calculated by dividing the deferred fees by the closing price on the first day of each calendar quarter. If cash dividends are declared, deferred share accounts are credited with a corresponding number of deferred shares, based on the market price on the dividend date. In the case of deferrals into a deferred cash account, interest is credited to the account at the beginning of each quarter based on the 30-year Treasury Bond rate then in effect. See the Director's Compensation Table below for a description of deferrals in the most recent fiscal year.

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              The following table shows compensation paid to each person who served as a director during fiscal year 2019 (compensation information for Bob Sasser and Gary Philbin can be found beginning on page 79).

Name






Fees Earned
or
Paid in Cash
($)(1)






Stock Awards
($)(2)





All Other
Compensation
($)





Total
($)
 

Arnold S. Barron

  $ 194,301   $ 75,000   $   $ 269,301  

Gregory M. Bridgeford

    258,589     75,000         333,589  

Thomas W. Dickson

  196,890   75,000     271,890  

Conrad M. Hall

    210,000     75,000         285,000  

Lemuel E. Lewis

  200,000   75,000     275,000  

Jeffrey G. Naylor

    211,260     75,000         286,260  

Thomas A. Saunders III

  187,904   75,000     262,904  

Stephanie P. Stahl

    216,726     75,000         291,726  

Carrie A. Wheeler

  213,753   75,000     288,753  

Thomas E. Whiddon

    221,260     75,000         296,260  

Carl P. Zeithaml

  195,000   75,000     270,000  

(1)
This column shows amounts earned for retainers and fees, including fees paid for service on standing and ad hoc committees, not reduced for deferrals.

(2)
This column includes the grant date fair value of shares granted to non-employee directors on July 1, 2019. The number of shares were determined by dividing the value of the equity award by the Company's closing share price of $110.09 on the date of grant, resulting in 681 shares of common stock for each of the non-employee directors.

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              The following table shows, for each of our non-employee directors, amounts deferred in fiscal year 2019 under our 2013 Director Deferred Compensation Plan, the number of shares underlying those deferrals and the aggregate number, as of February 1, 2020, of outstanding stock options, including options obtained through deferral of fees (all of which are fully vested), and deferred shares:

Name


Amounts
Deferred in
2019
($)(1)




Shares
Underlying
Amounts
Deferred in
2019
(#)(2)






Total
Deferred
Shares (#)



Options
Outstanding,
including
Options
acquired
through
Deferral of
Fees (#)








Total Shares
Underlying
Options
and Deferred
Amounts (#)

Arnold S. Barron

$ 191,581 1,794 25,708 25,708

Gregory M. Bridgeford

333,589 3,150 11,682 11,682

Thomas W. Dickson

123,750 1,200 1,200 1,200

Conrad M. Hall

285,000 2,686 31,070 31,070

Lemuel E. Lewis

275,000 2,591 56,419 56,419

Jeffrey G. Naylor

220,320 2,794 3,694 2,803 6,497

Thomas A. Saunders III

187,904 5,433 7,092 7,092

Stephanie P. Stahl

170,000 1,588 4,756 4,756

Carrie A. Wheeler

75,000 681 681 681

Thomas E. Whiddon

75,000 681 681 681

Carl P. Zeithaml

192,000 1,798 29,593 29,593

(1)
This column shows the dollar amount of retainers and fees deferred in 2019 under the 2013 Director Deferred Compensation Plan. Directors may choose to defer a portion or all of their fees into a deferred cash account, common stock equivalents (which we call "deferred shares") or options, as more fully described in the narrative in this section.

(2)
Shares in this column represent deferred shares and in the case of Mr. Saunders, deferral into options. Based on Mr. Naylor's deferral election, his account was credited with 1,690 shares of common stock and 1,104 stock options. Compensation expense related to these options, valued by the same method as that used for option grants to employees, is recorded upon grant; $56,735 and $268,746 was recorded in 2019 for Mr. Naylor and Mr. Saunders, respectively.

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HOW NOMINEES TO OUR BOARD ARE SELECTED

              Candidates for election to our Board of Directors are recommended by our Nominating and Corporate Governance Committee and ratified by our full Board of Directors for consideration by the shareholders. The Nominating and Corporate Governance Committee operates under a charter, which is available on our corporate website at https://www.dollartreeinfo.com/investors/corporate. A copy of the charter is also available to all shareholders upon request, addressed to our Corporate Secretary at the address on page 34. All members of the Committee are independent under the standards established by the NASDAQ Stock Market.

              In addition, our bylaws enable eligible shareholders to have their own qualifying director nominee(s) included in the Company's proxy materials, along with candidates nominated by our Board of Directors, as described in further detail under "Proxy Access" on page 40.

              Our Nominating and Corporate Governance Committee also considers candidates recommended by shareholders. Shareholders may recommend candidates for Nominating and Corporate Governance Committee consideration by submitting such recommendation using the methods described under the "Shareholder Nominations for Election of Directors" section on page 34 and "Communicating with our Board Members" on page 39. In making recommendations, shareholders should be mindful of the discussion of minimum qualifications set forth in the following paragraph. Although a recommended individual may meet the minimum qualification standards, it does not imply that the Nominating and Corporate Governance Committee necessarily will nominate the person so recommended by a shareholder.

              In evaluating candidates for election to the Board, our Nominating and Corporate Governance Committee takes into account the qualifications of the individual candidate as well as the composition of the Board as a whole.

              Among other things, the Committee considers:

Board Diversity

              The Board values diversity, in its broadest sense, reflecting, but not limited to, geography, gender, ethnicity and life experience and is committed to a policy of inclusiveness. The Nominating and Corporate Governance Committee seeks to include women and minority candidates in the qualified pool from which Board candidates are chosen, and has included such candidates in its formal search for a new director occasioned by the retirement of Conrad M. Hall at the 2020 annual meeting. If elected by our shareholders, the Committee will consider such directors for leadership

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positions on the Board and its committees. Two of the last four directors added to our Board are women.

Board Tenure

              The Board does not believe it should formally limit the number of terms for which an individual may serve as a director at the outset of a director appointment. Directors who have served on the Board for an extended period of time can provide valuable insight into the operations and future of the Company and matters of Board oversight based on their experience with and understanding of the Company's history, policies and objectives. Nevertheless, the Board strongly values fresh insight and novel approaches provided by new or recently appointed directors. The Board therefore believes that, as an alternative to term limits, it should endeavor to nominate Board candidates representing an on-going mix of short-, medium- and longer-term tenures.

              Upon the retirement of Mr. Hall, the tenure profile of our Board will continue to resemble a barbell, with five (5) directors having two (2) years or less in tenure, six (6) with over ten years and only one (1) director in between. With five (5) relatively new directors learning a complicated and unique business like Dollar Tree as well as a challenging and high-potential business like Family Dollar, our Board consulted with SpencerStuart, a leading board consulting and director search firm. In the beginning of 2019, the Board concluded that it was not the time to lose additional experienced directors. Instead, we adopted a waterfall strategy: each year beginning in 2020, as our newer members continue to gain needed experience, we expect to engage thoughtfully in additional Board refreshment and director departures. Our goal is to reach and thereafter maintain a relatively balanced mix of short, medium and long-term tenured directors. Consistent with our strategy, Conrad Hall, who has been a director since January 2010, plans to retire at the 2020 annual meeting of shareholders. The Board launched a formal search process, led by its Nominating and Corporate Governance Committee, to appoint a diverse candidate to replace Mr. Hall on the Board. This process is well underway and the Board anticipates appointing a new director to the Board later in the year. The Nominating and Corporate Governance Committee from time to time engages search firms to assist the Committee in identifying potential Board nominees, and we pay such firms a fee for conducting such searches. With the assistance of independent third-party consultants, the Nominating and Corporate Governance Committee conducts significant amounts of due diligence to ensure that a nominee possesses the qualifications, qualities and skills outlined above.

Shareholder Nominations for Election of Directors

              Shareholders generally can nominate persons to be directors by following the procedures set forth in our bylaws. In short, these procedures require the shareholder to deliver a written notice containing certain required information in a timely manner to our Corporate Secretary at our corporate headquarters address, which is located at 500 Volvo Parkway, Chesapeake, VA 23320. To be timely, the notice must be sent either by personal delivery or by United States certified mail, postage prepaid, and received no later than 120 days and no sooner than 150 days in advance of the anniversary date of the proxy statement for the previous year's annual meeting. If no annual meeting was held in the previous year, or the date of the applicable annual meeting has been changed by more than 30 days from the date contemplated at the time of the previous year's proxy statement, notice must be sent not less than 90 days before the date of the applicable annual meeting. The notice must contain the information required by our bylaws about the shareholder proposing the nominee and about the nominee. A copy of our bylaws can be found online at https://www.dollartreeinfo.com/investors/corporate.

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              Each shareholder's notice to the Corporate Secretary must include, among other things:

              For each person nominated, the notice to the Corporate Secretary must also include, among other things:

Proxy Access

              Under the Company's proxy access bylaw, a shareholder, or a group of up to 20 shareholders, owning at least three percent (3%) of the Company's outstanding common stock continuously for at least three years, may nominate and include in our proxy materials director nominees not to exceed the greater of two (2) directors or twenty percent (20%) of the Board (rounded down), provided that the shareholders and nominees have complied with the requirements to be set forth in our bylaws and applicable law. Among other things, shareholders who wish to include director nominations in our proxy statement must follow the instructions in our bylaws as described in the "Shareholder Nominations for Election of Directors" section above.

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EXECUTIVE OFFICERS

              Our executive officers as of April 1, 2020 are as follows:

 
    NAME

AGE

POSITION
 
                
  Bob Sasser   68   Executive Chairman
                
                
    Gary M. Philbin   63   Chief Executive Officer
                
                
  Betty Click   57   Chief Human Resources Officer
                
                
    David Jacobs   51   Chief Strategy Officer
                
                
  Joshua Jewett   50   Chief Information Officer
                
                
    Richard McNeely   61   Enterprise Chief Merchandising Officer
                
                
  Thomas R. O'Boyle, Jr.   50   Enterprise Chief Operating Officer
                
                
    William A. Old, Jr.   66   Chief Legal Officer, Corporate Secretary
                
                
  Kevin S. Wampler   57   Chief Financial Officer
                
                
    Michael A. Witynski   57   Enterprise President

              Our executive officers are appointed by the Board and serve at the discretion of the Board. Although we do not have employment agreements with our executive officers, we have entered into change in control Retention Agreements and Executive Agreements with certain of our executive officers by which, in consideration for certain restrictive covenants, including a covenant not to compete, the Company has agreed to provide payments and benefits under certain circumstances following termination of employment. See "Termination or Change in Control Arrangements" and "Potential Payments upon Termination or Change in Control" beginning on pages 77 and 86, respectively.

Executive Officer Biographies

              Biographical information for Mr. Sasser and Mr. Philbin is provided in the "Director Biographies" section beginning on page 7. Biographical information for our other executive officers is provided below.

     
BETTY CLICK
Chief Human Resources Officer
Dollar Tree, Inc.
  Ms. Click, age 57, has served as the Chief Human Resources Officer of Dollar Tree since June 2017. Ms. Click is responsible for all Human Resource departments for Dollar Tree, Family Dollar and Dollar Tree Canada. Prior to joining Dollar Tree, Ms. Click spent fifteen years (2002 to 2017) in Senior Management Positions (approximately nine of those years as the Senior Vice President of Human Resources for Payless ShoeSource Holdings and Collective Brands, a footwear retailer with multiple brands and thousands of stores). Prior to Collective Brands, Ms. Click served in multiple Human Resources leadership roles at Verizon and GTE from 1981 to 2002.
     

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DAVID JACOBS
Chief Strategy Officer
Dollar Tree, Inc.
  Mr. Jacobs, age 51, has been the Chief Strategy Officer of Dollar Tree since 2012. He was the Senior Vice President of Strategic Planning from 2009 to 2012, and Vice President of Strategic Planning from 2006 to 2009. From 1996 to 2006, he held a number of positions with The Boston Consulting Group, a leading global strategic management consulting firm, including Partner from 2003 to 2006. From 1994 to 1996, he was an attorney at Weil, Gotshal & Manges, LLC.
     
     
JOSHUA JEWETT
Chief Information Officer
Dollar Tree, Inc.
  Mr. Jewett, age 50, has been the Chief Information Officer of Dollar Tree since March 2016 and has strategic and operational responsibility for all aspects of Information Technology. From August 2002 to February 2016, he served as the Senior Vice President-Chief Information Officer of Family Dollar Stores, Inc. Prior to his employment with Family Dollar, he served as the Senior Director for Answerthink, Inc., an international management consulting firm.
     
     
RICHARD McNEELY
Enterprise Chief Merchandising Officer
Dollar Tree, Inc.
  Mr. McNeely, age 61, has been the Enterprise Chief Merchandising Officer of Dollar Tree since December 2019 and has responsibility for leading the merchandising, marketing and global sourcing functions for the Dollar Tree and Family Dollar business segments. From May 2017 to December 2019, he served as the Chief Merchandising Officer of Dollar Tree Stores. He previously served as Senior Vice President of Merchandising of Dollar Tree Stores from April 2008 to May 2017. Prior to joining Dollar Tree, Mr. McNeely spent the first 28 years of his retail career in roles of increasing responsibility within merchandising, marketing, global sourcing, and store operations with several retail companies, including Dollar General, Rose's Stores and Fred's, Inc.
     
     
THOMAS R. O'BOYLE, JR.
Enterprise Chief Operating Officer
Dollar Tree, Inc.
  Mr. O'Boyle, age 50, has been the Enterprise Chief Operating Officer of Dollar Tree since December 2019 and has responsibility for leading the store operations and real estate functions for the Dollar Tree and Family Dollar business segments. Previously, he served as the Chief Operating Officer of Family Dollar from October 2017 to December 2019. Mr. O'Boyle is a broad-based retail executive with substantial leadership experience, supplemented with functional experience in operations, merchandising, marketing, supply chain and logistics. Prior to joining Family Dollar, Mr. O'Boyle served as Chief Executive Officer of Marsh Supermarkets for five years and prior to that time served as President of the Food, Drug and Pharmacy business at Sears/Kmart. Mr. O'Boyle spent the first 22 years of his career in many executive leadership positions at Albertsons/American Stores (Jewel-Osco).
     

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WILLIAM A. OLD, JR.
Chief Legal Officer
Dollar Tree, Inc.
  Mr. Old, age 66, joined Dollar Tree as the Chief Legal Officer in 2013. Prior to joining Dollar Tree, he was the Vice President and Director at Williams Mullen, P.C. from 2004 to 2013 representing public companies in mergers and acquisitions, corporate governance and securities matters. Prior to becoming a licensed attorney, Mr. Old practiced as a certified public accountant in the Commonwealth of Virginia.
     
     
KEVIN S. WAMPLER
Chief Financial Officer
Dollar Tree, Inc.
  Mr. Wampler, age 57, has been the Chief Financial Officer of Dollar Tree since December 2008. Prior to joining Dollar Tree, he served as Executive Vice President, Chief Financial Officer and Assistant Secretary for The Finish Line, Inc. from October 2003 to November 2008. Mr. Wampler held various other senior positions during his fifteen-year career at The Finish Line, including Senior Vice President, Chief Accounting Officer and Assistant Secretary from 2001 to 2003. Mr. Wampler, a Certified Public Accountant, was employed by Ernst and Young LLP from 1986 to 1993.
     
     
MICHAEL A. WITYNSKI
Enterprise President
  Mr. Witynski, age 57, has been the Enterprise President of Dollar Tree since December 2019 and is responsible for leading the merchandising, store operations, and supply chain functions for the Dollar Tree and Family Dollar business segments. Previously, he served as the President and Chief Operating Officer of Dollar Tree Stores from June 2017 to December 2019. He previously served as the Chief Operating Officer from July 2015 to June 2017. He served as the Senior Vice President of Stores from August 2010 to July 2015. Prior to joining Dollar Tree, he held senior leadership roles in Merchandising, Marketing, Private Brands and Operations at Shaw's Supermarkets and Supervalu, Inc. during his 29-year career in the grocery industry.
     

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COMPENSATION OF EXECUTIVE OFFICERS

Compensation Committee Report on Executive Compensation

              The Compensation Committee of our Board of Directors is responsible for developing, overseeing and implementing our pay-for-performance compensation program for executive officers. In carrying out its responsibilities, each year the Compensation Committee reviews, determines and recommends to the independent members of the Board the approval of the compensation of our Chief Executive Officer and Executive Chairman. The Committee also approves the compensation of our other executive officers.

              The Compensation Committee is committed to structuring compensation for our executives that rewards actions that support the Company's focus on annual and long-term growth and sustainable long-term shareholder value. To achieve this objective, we conducted a review of our compensation programs in 2019 with the assistance of Aon Consulting, Inc., our then independent compensation consultant, to ensure that those programs incentivize growth and drive long-term shareholder value. In October 2019, the Compensation Committee retained Korn Ferry to assist the Committee in determining the appropriateness and competitiveness of our executive compensation program. During this process, we listened to feedback from our executives and shareholders.

              Our review of the Company's executive compensation programs in 2019 focused on determining the appropriate level and mix of compensation to motivate and incentivize our executives to achieve our growth and performance goals and be accountable for the results. As a result of this process, we provided a mix of annual and long-term compensation that was designed to align the short and long-term interests of our executives with those of our shareholders. Specifically, the Compensation Committee reviewed and established base salaries, approved targets and awards under our annual cash incentive plan and made long-term incentive awards, the vesting of which are subject to our achieving a specified level of corporate performance.

              A further discussion of the principles, objectives, components and determinations of the Compensation Committee is included in the Compensation Discussion and Analysis that follows this Compensation Committee report. The specific decisions of the Compensation Committee regarding the compensation of named executive officers are reflected in the compensation tables and narrative that follow the Compensation Discussion and Analysis.

              The Compensation Committee has reviewed the Compensation Discussion and Analysis and discussed it with our management. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company's proxy statement for the 2020 annual meeting of shareholders.

SUBMITTED BY THE COMPENSATION COMMITTEE

Arnold S. Barron    Gregory M. Bridgeford    Thomas W. Dickson    Stephanie P. Stahl    Carl P. Zeithaml

Compensation Committee Interlocks and Insider Participation

              No member of the Compensation Committee is a former officer of Dollar Tree or any of our subsidiaries. In addition, none of the members of the Compensation Committee has or had any relationship with the Company during fiscal 2019 that requires disclosure in accordance with the applicable rules of the Securities and Exchange Commission relating to compensation committee interlocks and insider participation.

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COMPENSATION DISCUSSION AND ANALYSIS

              The following Compensation Discussion and Analysis ("CD&A") describes our executive compensation program and philosophy, our compensation-setting process, the elements of our executive compensation program, and the compensation decisions and certain changes we made to our compensation program in 2019. This CD&A should be read together with the compensation tables and related disclosures that immediately follow, which provide further historical compensation information for our Named Executive Officers ("NEOs") as identified below.


Named Executive Officers

Name

Title
Gary Philbin Chief Executive Officer

 


Kevin Wampler


 


Chief Financial Officer

 


Bob Sasser




Executive Chairman

 


Michael Witynski


 


Enterprise President

 


William Old, Jr.




Chief Legal Officer

 


Duncan Mac Naughton


 


Former President, Family Dollar Stores

Executive Summary

Highlights for Fiscal Year 2019

              We are North America's leading operator of discount variety stores, operating more than 15,200 discount variety retail stores under the names of Dollar Tree, Family Dollar and Dollar Tree Stores Canada. Highlights for fiscal 2019 include:

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Organizational Leadership Changes for Fiscal Year 2019

              These leadership changes are designed to enhance the execution of our business strategy and improve the operational performance of the Dollar Tree and Family Dollar business segments. To continue our success going forward, it is critical that we motivate and retain our highly talented executive team to execute our corporate strategic vision, business plans and initiatives. To do so, our Compensation Committee has thoughtfully developed incentive programs to reward executives for superior performance versus goals that align the interests of executives with the interests of our long-term shareholders.

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Compensation Best Practices

              We seek to align our executives' interests with those of our long-term shareholders and to follow sound corporate governance practices.


 


Compensation Practice


 


Dollar Tree's Compensation Policies and Actions


 

 


Pay for Performance


YES


A significant portion of targeted direct compensation is linked to the financial performance of key metrics. Approximately 88% of our Chief Executive Officer's pay in 2019 was variable and at risk. In 2019, we changed the performance metric of our LTPP awards from adjusted operating income to adjusted EBITDA to provide a second performance metric, and increased the performance thresholds for vesting of our long-term incentive awards. We also revised our annual incentive bonus program to increase the corporate performance component from 85% to 100%. As a result, beginning in 2019, 100% of our annual bonus compensation and equity incentive compensation is based on corporate performance. See "Compensation Updates for 2019" "Target Pay Mix" and "Alignment of Pay for Performance."
  
Beginning in 2020, our LTPP awards will consist solely of performance-based restricted stock units ("RSUs") rather than our historical practice of providing LTPP awards in the form of 50% RSUs and 50% cash. The threshold performance level was increased from 85% to 90%. We also changed the performance metric of our non-LTPP equity awards from adjusted operating income to adjusted EBITDA. Our annual incentive bonus program will continue to use adjusted operating income as the performance metric in 2020.


 

 


 


 


 


 

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Compensation Practice


 


Dollar Tree's Compensation Policies and Actions


 

 


Clawback policy


YES


In 2018, the Board adopted a more robust clawback policy that requires mandatory reimbursement of excess incentive compensation from any executive officer if the Company's financial statements are restated due to material noncompliance with financial reporting requirements under the securities laws. This policy is in addition to our existing clawback policy covering the Company's Chief Executive Officer and Chief Financial Officer under the Omnibus Incentive Plan. See "Recoupment ("Clawback") Policy."


 

 


Robust stock ownership guidelines


YES


Our executive stock ownership guidelines were revised in 2017 to increase the number of shares to be held by executives so as to create further alignment with shareholders' long-term interests. See "Executive Stock Ownership Guidelines."


 

 


No hedging or pledging of Dollar Tree securities or holding Dollar Tree securities in margin accounts


YES


Our policy prohibits executive officers and Board members from hedging their ownership of our stock and holding our stock in a margin account. None of our executive officers and directors engaged in transactions involving the pledging of Company stock during fiscal 2019. See "Policy Against Hedging of Company Stock" and "No Pledges of Company Stock."


 

 


No excise tax gross-ups


YES


We do not provide excise tax gross-up payments.


 

 


Double-trigger provisions


YES


Equity awards under our equity incentive plan and all change in control Retention Agreements with executive officers include a "double-trigger" vesting provision upon a change in control. See "Termination or Change in Control Arrangements."


 

 


No repricing or cash buyout of underwater stock options without shareholder approval


YES


Our equity incentive plan prohibits modifications to stock options and stock appreciation rights to reduce the exercise price of the awards, or replacing awards with cash or another award type, without shareholder approval.


 

 


 


 


 


 

Executive Compensation Overview

              We are committed to an executive compensation program that ties pay to performance. The program is also designed to focus executives on the long-term growth and profitability of our business, without encouraging excessive risk-taking. A significant portion of pay is performance-based and therefore, variable and at risk. In determining the components of compensation, we seek to appropriately balance fixed and variable, short- and long-term and cash and equity components of the program, and to mitigate risks in the program with stock ownership guidelines that apply to our executive officers. Our compensation program is designed to reward our executive officers for achieving Company performance goals on metrics that we believe create sustainable shareholder value. When we do not achieve the performance goals, our executive officers' compensation reflects that performance.

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2019 Changes to Compensation Program

              In March 2019, as part of a multi-year plan to better align the interests of executives with those of long-term shareholders, the Compensation Committee approved changes to our annual and long-term incentive compensation program for executive officers, including our NEOs. As described below, to enhance the performance linkage of incentives, the Committee eliminated the consideration of individual performance goals for purposes of our annual cash bonus incentive awards, increased the performance metric thresholds for vesting of long-term awards and began the use of two performance metrics, adjusted operating income and adjusted EBITDA, for long-term awards.

 
  2018 Performance Program
  Changes Implemented in 2019

 

 

 

 

 
Annual Cash Bonus Incentives  

Annual cash bonus dependent on achievement of at least 85% of the corporate adjusted operating income target with a steep performance payout curve

Bonuses weighted 85% to adjusted operating income target and 15% to individual performance goals

 

Based on feedback from shareholders, we eliminated the individual performance component for purposes of calculating the annual bonus; bonuses are now weighted 100% on a corporate adjusted operating income target in order to completely align the cash bonus of our named executive officers with an objective measure of Company performance


 

 

 

 

 
Performance-Based Restricted Stock Unit Awards (RSUs and PSUs)  

Performance-based restricted stock units ("RSUs") vest after first year achievement of at least 80% of adjusted operating income target, with time-based vesting of one-third of the award on the first three anniversaries of the grant date

Amount of payout does not vary providing the target is met

RSUs settled in stock

 

The minimum level of adjusted operating income performance required to earn a payout was raised from 80% to 85%; if performance does not reach 85%, there is no payout

The adjusted operating income performance that can earn a payout ranges from 85% up to a maximum of 115%

In order to increase the at-risk elements of the award, the award earned by an executive ranges from 75% of the target award for performance of 85% up to a cap of 150% of target award for performance of 115% or greater

The purpose of the change was to decrease compensation if 100% of the target was not met, but provide an incentive by increasing compensation if more than 100% of the target was achieved

Awards are designated as performance stock units ("PSUs") and settled in stock

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  2018 Performance Program
  Changes Implemented in 2019

 

 

 

 

 
Long-Term Performance Plan Awards ("LTPP")  

Performance-based vesting on three-year cumulative achievement of at least 83% of target adjusted operating income

The percentage of a targeted award that may be earned by an executive ranges from 25% of the award for performance of 83% of target adjusted operating income up to a cap of 200% of the award for performance of 125% of target adjusted operating income

Award is paid 50% in cash and 50% in grant date RSUs settled in stock

 

Based on shareholder feedback received, we changed the performance metric for LTPP awards from adjusted operating income to adjusted EBITDA to utilize a second performance metric; we also believe that adjusted EBITDA can be forecast more reliably over a three year period than adjusted operating income

The minimum level of three year cumulative performance required to earn a payout was raised to 85%


Note: To evaluate performance in a manner consistent with how management evaluates our operating results, the financial metrics in our annual and long-term incentive plans are measured on a non-GAAP basis.

              In March 2019, the Compensation Committee also determined that, notwithstanding Mr. Sasser's continued responsibilities as Executive Chairman, a reduction in Mr. Sasser's compensation for 2019 would be appropriate. This reduction in compensation was made in accordance with the Compensation Committee's longstanding transition plan. As a result, Mr. Sasser's base salary decreased from $1.7 million in 2018 to $1.0 million in 2019, and he no longer participates in our annual incentive bonus plan or receives LTPP incentive awards. Mr. Sasser received a PSU award (formerly called "performance-based RSUs) in 2019, but the target amount to be earned decreased from $7.0 million in 2018 to $5.5 million in 2019. Mr. Sasser's total target compensation decreased 48.3% as a result of the changes described above. For additional information on Mr. Sasser's role, responsibilities and compensation, please see "Executive Compensation Principles."

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Key 2019 Compensation Decisions

 

Base Salaries

  The Compensation Committee made adjustments to base salaries based on various factors, including job performance and the salaries of executives in similar positions at peer companies.



 


Annual Cash Incentive Bonus Opportunity


 


The percentage of base salary that represented the target annual incentive opportunity for the Enterprise President increased from 100% to 130% as a result of his promotion in December 2019. His annual cash incentive bonus was prorated based on his increased base salary and bonus target following his promotion. There were no changes in the percentage of base salary that represented the target annual incentive opportunity for the other NEOs in 2019. The target percentages were set based on external and internal factors applicable to the positions held by these individuals.



 


Annual Cash Incentive Performance Goals


 


There was a rigorous process to set corporate performance goals for the combined enterprise, the Dollar Tree US banner and the Family Dollar banner. As noted above, we eliminated the individual performance component from prior years so that corporate performance accounted for 100% of the annual incentive performance goals. The program had a threshold performance level of 85% of the applicable target level of adjusted operating income, which must be met or exceeded in order for any payout to be earned, with a maximum performance level of 115% of target.



 


Annual Cash Incentive Payouts


 


In 2019, the Company achieved enterprise adjusted operating income of $1,604.3 million, which was 90.90% of the target amount; the Dollar Tree banner achieved adjusted operating income of $1,651.2 million, which was 95.68% of the target amount; and the Family Dollar banner achieved adjusted operating income of $243.3 million, which was 73.15% of the target amount. This resulted in payouts of 54.5% of the target amount to the executive officers of the combined enterprise, 78.39% of the target amount to the executive officers of the Dollar Tree banner and 0% of the target amount to the executive officers of the Family Dollar banner.

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Long-Term Incentives

 

Performance Stock Units (PSUs) were granted, as well as grants of RSUs and cash under the 2019-2021 LTPP. In 2019, the performance metrics utilized were adjusted operating income for the PSUs and adjusted EBITDA for the LTPP. Based on the enterprise adjusted operating income goal for the 2019 PSUs, the Company achieved adjusted operating income of $1,604.3 million, which was 90.90% of the target amount; the Dollar Tree banner achieved adjusted operating income of $1,651.2 million, which was 95.68% of the target amount; and the Family Dollar banner achieved adjusted operating income of $243.3 million, which was 73.15% of the target amount. This resulted in payouts of 84.83% of the target amount to the executive officers of the combined enterprise, 92.80% of the target amount to the executive officers of the Dollar Tree banner and 0% of the target amount to the executive officers of the Family Dollar banner.



 


2017-2019 LTPP Payout


 


Based on the Company's three-year adjusted operating income goal from 2017 to 2019, the Company achieved adjusted operating income of $5,440 million, which was 92.29% of the target amount. This resulted in a payout of 48.23% of the target amount to our named executive officers. For the additional 2017 LTPP award granted to the Chief Executive Officer upon his promotion in September 2017 that was based on the Company's two-year adjusted operating income goal from 2018 to 2019, the Company achieved adjusted operating income of $3,406.3 million, resulting in 83.90% achievement and a payout at 27.25%.



 


Proration of LTPP Awards Upon Retirement


 


In 2019, the provisions of LTPP awards were changed to provide for forfeiture of an award upon the retirement of an executive if the executive has worked less than 12 months of the three-year performance period. If an executive retires after working 12 months or more of the performance period, the awards are prorated based on the number of months of service. Previously, the LTPP awards had not been prorated.

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Key 2020 Compensation Decisions

 

2020-2022 LTPP Payout

  Based on our ongoing efforts to implement best practices, our LTPP awards beginning in 2020 will consist solely of performance-based RSUs rather than our historical practice of providing LTPP awards in the form of 50% RSUs and 50% cash.



 


LTPP Payout Curve


 


The payout curve was adjusted to raise the threshold achievement level from 85% to 90% to align with best practices.



 


Performance Stock Units ("PSUs")


 


Beginning in 2020, the performance metric for PSU awards will change from adjusted operating income to adjusted EBITDA. However, our annual cash incentive bonus program will continue to use adjusted operating income as the performance metric based on shareholder feedback indicating a preference to maintain at least two different performance metrics for our incentive plans.

 

Target Pay Mix

              Consistent with our desire to align pay and performance, our Compensation Committee takes our primary pay elements (base salary, annual incentives and long-term incentives) and develops a target pay package for each executive that is more heavily weighted towards variable or at-risk pay. Although our Compensation Committee does not target a specific allocation for each pay element, the Committee is nevertheless cognizant of delivering an appropriate balance between fixed and variable elements, as well as short- and long-term incentives, as evidenced here in the following 2019 target pay mix allocation charts:

GRAPHIC

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Compensation Governance

              Our pay-for-performance philosophy and compensation practices provide an appropriate framework for our executives to achieve our financial and strategic goals without encouraging them to take excessive risks in their business decisions. Some of our core practices include:

GRAPHIC

Alignment of Pay and Performance

              Our compensation program is grounded in a pay-for-performance philosophy. Performance goals in both our short- and long-term incentive plans are set at challenging levels, with the ultimate goal that achievement will drive long-term, sustainable shareholder value growth. When financial targets and performance goals are not met, pay outcomes for our executives should reflect this reality. For fiscal 2019, performance awards earned in fiscal 2019 were well below the targets which reflects our rigorous target setting process.

              Our analysis of the link between pay and performance indicates that when share price and performance go up, the value of outstanding pay rises. Conversely, when share price goes down or performance goals are not achieved, the value of pay declines. While there are certainly other factors to consider, including a lag effect due to the timing of award grants, Mr. Philbin's total realizable compensation as Chief Executive Officer over the past three years, as shown in the following table, is indicative of this directional pay and performance alignment.

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GRAPHIC

Note: Total realizable compensation for each fiscal year includes the sum of base salary, the cash bonus paid under the MICP, cash earned pursuant to vested LTPP awards, the value of unvested cash-based awards under the LTPP, and the value of all unvested equity incentive awards calculated using the closing market price of our stock as of the end of such fiscal year.

Say on Pay Votes

              At our 2019 annual shareholders' meeting, our annual non-binding advisory vote on executive compensation was overwhelmingly approved by our shareholders, receiving approximately 95% support. The Compensation Committee reviewed these final vote results, which we believe reinforce shareholder support for our pay for performance philosophy and the appropriateness of our compensation structure. The Compensation Committee determined that the structure of our executive compensation program continues to be appropriately aligned to the achievement of Company goals and objectives and in the best interests of our shareholders.

              The Compensation Committee regularly reviews the executive compensation program to determine if adjustments are needed to remain competitive and aligned with our shareholders' interests. Further, the Compensation Committee and management recognize the value of engaging in a dialogue with our shareholders and receiving feedback on an ongoing basis to ensure alignment between our executive officers' compensation, our business objectives and the interests of our shareholders. In 2018, we contacted holders of approximately 53% of our outstanding shares concerning executive compensation or governance matters to invite them into the process. In response to feedback received from our shareholders in 2018, the Compensation Committee approved the use of an additional performance metric for our incentive plans in March 2019. The performance metric for the LTPP was changed from adjusted operating income to adjusted EBITDA while we continued to use adjusted operating income as the performance metric for annual cash incentive bonus and non-LTPP performance awards in 2019. We also eliminated the individual performance component of the annual cash incentive bonus calculation, which is now based 100% on adjusted operating income as a performance metric. In addition, we increased the thresholds for vesting of our LTPP and non-LTPP awards to 85% of the applicable target performance goal.

              In 2019, we continued our engagement efforts by contacting holders of approximately 64% of our outstanding shares to seek input and to provide perspective on our pay for performance

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philosophy and other governance matters. While there were no concerns raised regarding our executive compensation program, the Compensation Committee in March 2020 found it appropriate to change the performance metric of the PSU awards from adjusted operating income to adjusted EBITDA beginning with the PSUs granted to our executives in 2020. The Company continues to use adjusted operating income as the performance metric for the annual cash bonus incentives and adjusted EBITDA for the LTPP awards in order to maintain at least two different performance metrics for our incentive plans, as preferred by our shareholders, and to reflect our belief that operating income and EBITDA are the best objective metrics to align performance with shareholder value. To further align the interests of our executives with those of our shareholders, we changed the form of the LTPP award to performance-based RSUs only as opposed to 50% RSUs and 50% cash.

Executive Compensation Setting Process

Our Compensation Program Philosophy and Objectives

              The Compensation Committee has adopted a pay-for-performance policy for executive officers that balances each executive's total compensation between cash and non-cash, and current and long-term, components. The principal objectives of our compensation policies are to:

              The Compensation Committee begins its work each year with the determination of the peer group. The goal is to select as many as 20 public retailers with revenues, market capitalization and qualitative factors similar to Dollar Tree. When we are unable to identify a sufficient number of retailers that satisfy our requirements, we expand our pool to include retail-related public companies. For example, in 2018 Sysco Corporation and Aramark Corporation were included in the peer group as retail-related public companies.

              Although the Compensation Committee does not mandate a specific percentile of the peer group for total direct compensation of any executive, to ensure our compensation is competitive among our peer group, we use the 50th percentile as a point of reference in setting total direct compensation. To align pay with shareholder interests, we target the Chief Executive Officer's at-risk compensation to be more than 85% of his total compensation (88% in 2019). For other named executive officers, 80% of their total compensation was at-risk in 2019. To further align compensation with long-term shareholder value, we also believe that the Chief Executive Officer's long-term incentive compensation should be a substantial majority of his total at-risk pool (72% of total compensation in 2019), and a slightly higher percentage than the other named executive officers (67% of total compensation in 2019).

              To unite the executive management team in pursuit of a common objective, we chose to use adjusted operating income and adjusted EBITDA in 2019 as the performance metrics for at-risk

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compensation. We have used other metrics in the past, but believe that adjusted operating income and adjusted EBITDA are the best objective metrics to align performance with shareholder value.

              We believe that the adjusted operating income goal for the cash bonus and the 2019 PSU grant should be difficult but not impossible to achieve. For example, in 2019, a strong performance year, the Dollar Tree US banner achieved 95.68% of its adjusted operating income target for a 78.39% of target payout for our annual cash bonus awards. The Family Dollar banner did not achieve 85% of its adjusted operating income target, which was the threshold to earn a bonus, so its payout was 0.00%. The enterprise (which is both banners) achieved 90.90% of its target adjusted operating income so the payout was 54.50%. Because it is much more difficult to forecast the performance of a retailer over three years because of factors beyond management's control (the economy, weather, trade wars, etc.), we try to set the three-year adjusted EBITDA target for our LTPP awards at a realistic level. We also believe that the pay and performance curve for the annual cash bonus, PSU and LTPP awards should be relatively steep, giving the executives meaningful downside risk and upside benefit if performance falls short of or exceeds the target. This approach again aligns the executive's pay with shareholder return.

Use of Peer Group

              The Compensation Committee, with the assistance of its former compensation consultant Aon Consulting, Inc. ("Aon Consulting"), approved in October 2018 a new peer group of 19 companies that we believe are similarly situated to Dollar Tree and are representative of the markets in which we compete for executive talent.

              The peer group was developed based primarily upon Dollar Tree's industry and size. Revenue growth and market capitalization were selected as the appropriate size filters. The Committee also considered qualitative factors such as retail presence, price points and/or customer base. Aon Consulting assisted the Compensation Committee with identifying executive positions comparable to those of our named executive officers and providing the Committee with benchmarking data for both total direct compensation and each element of total direct compensation within the peer group. This analysis provided the Committee with a perspective on Dollar Tree's pay-for-performance relationship relative to its peers.

              Using these criteria, the Compensation Committee determined that 17 companies from the 2017 peer group would continue to be included in the 2018 peer group. Two companies, Staples, Inc. and YUM! Brands, Inc., were removed from the peer group because Staples is no longer a public company for which reliable compensation information is available and YUM! Brands did not meet the Committee's revenue criteria. The two companies removed from the peer group were replaced with Aramark, a global provider of food, facilities and uniform services to clients in various industries, and Tractor Supply Company, a large rural lifestyle retailer in the United States, following a review of the annual revenue, market capitalization and qualitative factors of each company. As a result, the following 19 companies constituted our peer group for 2018 and there

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were no changes to this peer group in 2019, as the Committee determined it continues to be representative of the markets in which we compete for executive talent:


Aramark Corporation

 

Macy's Inc.
Bed Bath & Beyond, Inc.   McDonalds Corporation
Best Buy Co. Inc.   Nordstrom, Inc.
CarMax, Inc.   Rite Aid Corporation
Dollar General Corporation   Ross Stores, Inc.
Gap, Inc.   Starbucks Corporation
Genuine Parts Company   Sysco Corporation
Kohl's Corporation   TJX Companies, Inc.
L Brands, Inc.   Tractor Supply Company
Lowe's Companies, Inc.    

              The Committee does not target a specific market data percentile for total direct compensation or individual components of compensation but rather reviews data from the peer group companies as a point of reference to help ensure that our overall compensation remains competitive.

Executive Compensation Principles

              We selected the components of compensation to achieve our stated executive compensation objectives. Our executive compensation program consists of base salaries, annual cash incentives and long-term incentives generally in the form of cash, RSU and PSU awards. These components of executive compensation are used together to strike an appropriate balance between cash and stock compensation and between short-term and long-term incentives. We expect a significant portion of an executive's total compensation to be at risk, tied both to our annual and long-term performance as well as to the creation of sustainable shareholder value. In particular, we believe that both short-term and long-term incentive compensation should be tied directly to the achievement of corporate performance goals. In addition, we believe that long-term incentive compensation should reward an executive for his or her contribution to our long-term corporate performance and shareholder value creation. Under our policy, performance above the targeted goal results in increased total compensation, and performance below the targeted goal results in decreased total compensation.

              We differentiate compensation to executives based on the principle that total compensation should be commensurate with an executive's position and responsibility, while at the same time, a greater percentage of total compensation should be tied to corporate performance, and therefore be at risk, as position and responsibility increases. Thus, executives with greater roles and responsibilities associated with achieving our performance targets should bear a greater proportion of the risk if those goals are not achieved and should receive a greater proportion of the reward if our performance targets are met or surpassed. In addition, as an executive's position and responsibility increase, the use of long-term incentive compensation should increase as a percentage of total compensation because our senior executives have the greatest influence on our strategic performance over time.

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              The compensation of our named executive officers in 2019 was based on the application of the executive compensation principles described above in light of their respective roles and responsibilities in the Company. The compensation of our Chief Executive Officer, Mr. Philbin, is based on his primary responsibility as the principal executive officer overseeing the business, management and operations of the Company. Mr. Philbin has a unique role as primary architect of the Company's strategic vision and is responsible for the planning and implementation of the Company's strategic and operational initiatives and goals.

              Mr. Sasser serves as our Executive Chairman with primary responsibilities for Board leadership and engagement with our management team. As the former Chief Executive Officer of the Company, Mr. Sasser is uniquely qualified to serve in these capacities. Mr. Sasser's Board leadership responsibilities include, among other things, mentoring the Chief Executive Officer, developing the new store support center in 2019 and assisting in integration, overseeing the general functioning of the Board and its committees, assessing the composition of the Board, recruiting potential candidates for the Board as necessary, consulting regularly with the Lead Director to discuss matters that concern the Board, leading the Board's annual review of the Company's business strategy, financial plans and capital resources, and leading the Board's role in succession planning for executive officers.

              Mr. Sasser's management responsibilities include providing advice and support to the President and Chief Executive Officer on critical Company initiatives and shareholder communications, the perpetuation of the Company's successful business culture and the maintenance of market and customer relevance through development of long-term strategic plans. In addition, Mr. Sasser is responsible for challenging and holding management accountable, as appropriate, and transferring his institutional knowledge and principles to the organization. As liaison between the Board and management, Mr. Sasser is responsible for providing opportunities for the Board and management to engage in open discussions of strategic initiatives, opportunities and industry outlook, for ensuring that management understands and carries out the Board's decisions and for helping the Board remain connected to the individual managers who are executing the Company's business plans.

              As Executive Chairman, Mr. Sasser does not receive director compensation for carrying out his duties under the Company's bylaws. Such duties include presiding at meetings of the shareholders and of the Board of Directors, managing the business and affairs of the Company as directed from time to time by the Board of Directors and seeing that all orders and resolutions of the Board are carried into effect.

              In 2019, in comparison to our other executive officers, our Chief Executive Officer and Executive Chairman received greater total compensation as a result of their greater authority, responsibility and oversight. As noted above, Mr. Sasser's compensation was significantly reduced for 2019 in light of his changing role at the Company.

Role of the Compensation Committee

              The Compensation Committee consists entirely of non-employee, independent members of our Board of Directors and operates under a written charter approved by the Board. The Compensation Committee has the direct responsibility to review and determine the compensation of all named executive officers, including the determination of performance metrics and goals and the achievement of performance goals.

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              The Compensation Committee considers shareholder feedback and other factors as it seeks to align the objectives and operation of our executive compensation program with the interests of our shareholders. The Compensation Committee has historically consulted, and expects to continue to consult, with the Chief Executive Officer and senior management, as well as an independent external compensation consultant retained by the Compensation Committee when deemed appropriate, in the exercise of its duties. Notwithstanding such consultation, the Compensation Committee retains absolute discretion over all compensation decisions with respect to the named executive officers.

              In determining the compensation of our executive officers, the Compensation Committee evaluates total overall compensation, as well as the mix of salary, cash bonus incentives and equity incentives, using a number of factors including:

Role of the Chief Executive Officer in Compensation Decision-Making

              In general, at the Compensation Committee's request, our Chief Executive Officer may review and recommend to the Compensation Committee or its consultants the compensation structure and awards for the other named executive officers. The Chief Executive Officer participates in the development of business plans and annual budgets, and corresponding performance metric goals. The Chief Executive Officer also provides information to the Compensation Committee and its consultants regarding the job performance and overall responsibilities of the other named executive officers. He makes no recommendations concerning his own compensation to the Compensation Committee or its consultants. The Chief Executive Officer does not vote on executive compensation matters nor is he present when his compensation is being discussed or approved.

Role of the Compensation Consultant

              Pursuant to its written Charter, the Compensation Committee has the authority to engage the services of outside independent advisers. In October 2019, the Compensation Committee retained Korn Ferry to assist the Committee in determining the appropriateness and competitiveness of our executive compensation program. Korn Ferry did not provide any other services to the Company in 2019. Previously, the Committee engaged Aon Consulting to provide executive compensation services from 2010 through September 2019. No executive officer had the authority to direct the work of Korn Ferry or Aon Consulting with regards to its work with the Compensation Committee. The Compensation Committee bears ultimate responsibility for approving the compensation of all named executive officers.

              During the portion of the 2019 fiscal year that Aon Consulting was retained to provide executive compensation consulting services, its affiliate, Aon Risk Services, Inc. provided and continues to provide insurance brokerage services to the Company for which it received commissions. The Company paid $79,221 to Aon Consulting for the executive compensation services and $1,537,043 to Aon Risk Services for the insurance brokerage services in fiscal 2019.

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              The decision to engage Aon Risk for these additional services to the Company was made by management and the approval of the Compensation Committee or Board of Directors was not required or requested. However, the Compensation Committee reviewed its relationship with its outside consultants, including Aon Consulting and Korn Ferry, taking into consideration the six independence factors set forth in Rule 10C-1 under the Securities Exchange Act of 1934. The Committee also reviewed the internal guidelines adopted by its consultants to guard against any potential conflict of interest and ensure its consultants provide only independent advice, regardless of fees paid to the firm. Based on its review, the Compensation Committee determined that its engagement of Aon Consulting did not, and Korn Ferry does not, raise any conflicts of interest and the Committee believes the additional services provided to management by Aon Risk did not impair the objectivity of the advice rendered by Aon Consulting to the Compensation Committee on executive compensation matters.

Assessment of Risk

              The Compensation Committee has responsibility for establishing our compensation philosophy and objectives, determining the structure, components and other elements of our programs and reviewing and approving the compensation of our NEOs. In addition, an important objective of our overall executive compensation program is to reduce any incentives that may influence executives to take imprudent risks that might harm the Company or our shareholders. At least annually, the Compensation Committee assesses the risk of our compensation program. The Compensation Committee has overseen the establishment of a number of controls that address compensation-related risk and serve to mitigate such risk, including stock ownership guidelines for executive officers and maintaining prohibitions on the hedging of Dollar Tree stock or holding Company stock in a margin account. As a result, we have reviewed our compensation policies and practices for all employees and concluded that such policies and practices are not reasonably likely to have a material adverse effect on our Company.

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Components of Executive Compensation

              The executive compensation program consists of three principal components: base salary, annual cash bonus incentives and long-term incentives. The Compensation Committee considers these components individually and reviews the overall distribution between them but does not target specific allocation percentages or amounts.

Element



Term



Strategic Role


     
Base Salary   Short Term  

Helps attract and retain executives through market-competitive base pay
    

Based on individual performance, experience and scope of responsibility
    

          
Annual Cash Bonus Incentive   Short Term (cash)  

Encourages achievement of short-term strategic and financial performance metrics that create shareholder value
    

Cash bonus incentives are based 100% on adjusted operating income goals
    



     
Long-Term Incentive Awards   Long Term (equity and cash)  

Aligns executives' interests with those of shareholders
    

Motivates executives to deliver long-term sustained performance
    

Creates a retention incentive through multi-year vesting and robust stock ownership guidelines
    

Long-term awards consist of performance-based RSUs, PSUs and cash awards and are 100% based on Company performance goals
    

              In addition, we also provide our executives with the benefits that are commonly available to our full-time associates, including participation in our retirement savings plan, employee stock purchase plan, health, dental and vision plans and various insurance plans, including disability and life insurance.

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Base Salary

              Our base salary philosophy is to provide reasonable current income to our named executive officers in amounts that will attract and retain individuals with a broad, proven track record of performance. To accomplish this objective, we provide base salaries that are intended to be competitive relative to similar positions at comparable companies. Base salaries are reviewed annually and adjustments are made as required to recognize outstanding individual performance, expanded duties or changes in the competitive marketplace.

              The Compensation Committee, with the assistance of its former consultant Aon Consulting, determined during its March 2019 meeting that Mr. Witynski would receive an annual base salary increase in order to keep his salary at a competitive level while the salaries of all other named executive officers remained the same as the prior year, except for Mr. Sasser whose salary was reduced as part of the Compensation Committee's existing transition plan. In determining the base salaries for 2019, the Compensation Committee reviewed market data from its peer group, Aon Consulting's data on salary increases for executives and other relevant internal factors such as individual performance and internal pay equity.

Executive


2018
Base Salary


2019
Base Salary


Year over Year
Change

Gary Philbin



$1,400,000




$1,400,000




0

%

Kevin Wampler

$800,000 $800,000 0 %

Bob Sasser

$1,700,000 $1,000,000 –41.2 %

Michael Witynski(1)

$700,000 $1,050,000 50 %

William Old, Jr.

$700,000 $700,000 0 %

Duncan Mac Naughton

$1,050,000 $1,050,000 0 %

(1)
In March 2019, the Compensation Committee approved a 21.4% increase to Mr. Witynski's base salary of $700,000. In connection with Mr. Witynski's promotion to Enterprise President in December 2019, the Compensation Committee, with the assistance of Korn Ferry, approved an additional 24% increase to his base salary of $850,000.

Annual Cash Bonus Incentives

              We provide our executive officers, including the named executive officers, with the opportunity to annually earn cash incentives under the Management Incentive Compensation Plan ("MICP"). These incentives are designed to encourage the achievement of corporate and individual objectives and to reward those individuals who significantly impact our corporate results.

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              Executive bonus opportunities are set as a percentage of salary. For 2019, the executive bonus opportunities were as follows:

Executive


Bonus Incentive
Opportunity
(as a % of base salary)

Gary Philbin



140

%

Kevin Wampler

70 %

Bob Sasser(1)

Michael Witynski(2)

105 %

William Old, Jr.

70 %

Duncan Mac Naughton

100 %

(1)
In accordance with the Compensation Committee's transition plan for Mr. Sasser, he no longer participates in our annual cash bonus incentive plan.

(2)
In December 2019, the Compensation Committee increased Mr. Witynski's executive bonus opportunity from 100% of his base salary to 130% in connection with his promotion to Enterprise President. Because Mr. Witynski's promotion occurred in the fourth quarter of fiscal 2019, his bonus opportunity was calculated on a prorated basis using the bonus targets in effect both before and after the effective date of his promotion. The prorated bonus targets resulted in a blended bonus incentive opportunity as a percent of base salary of 105%.

              Beginning in fiscal 2019, the Compensation Committee eliminated the individual performance component for purposes of calculating the annual cash bonus incentive and determined that bonuses would be weighted 100% on the achievement of the corporate performance target (adjusted operating income in 2019), thereby more closely aligning executives' interests with the interests of shareholders. The 2019 incentive targets, as in prior years, were set using the market data provided from the peer group and our assessment of appropriate targets within our management structure.

              The Company performance goals for the annual cash bonus incentive are generally derived from operating income targets defined by the annual budget as approved by the Board of Directors at the beginning of the fiscal year. Thus, these performance goals are consistent with the Board's overall outlook of the Company's potential performance over a one year horizon. For executive compensation purposes, the Compensation Committee adjusts the operating income targets for the enterprise and the Dollar Tree and Family Dollar banners to exclude, among other things, items such as currency fluctuations, various expenses and non-cash goodwill and intangible impairment charges. In addition to adjusted operating income, the Compensation Committee considers alternative metrics for corporate performance as well as the use of multiple metrics in the design of the Company's compensation program.

              In March 2019, the Compensation Committee determined that the use of adjusted operating income as the performance metric in fiscal 2019 for the annual cash bonus incentive plan was appropriate because it encourages achievement of strategic and financial performance metrics that create sustainable shareholder value, it is something over which executive officers have control and it is an important metric for evaluating the performance of retail companies. The performance targets are intended to be challenging but achievable, and serve to focus our management team on a common goal while aligning efforts with shareholder interests.

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              In order for an executive to receive any bonus, however, we must achieve at least 85% of the adjusted operating income target. Annual incentive awards in 2019 were determined as follows:

GRAPHIC

              The Compensation Committee establishes the MICP corporate performance target, which is derived from the annual budget approved by the Board of Directors at the beginning of the fiscal year. For 2019, the corporate performance target was determined to be adjusted operating income, with a target set at $1,764.9 million for the combined enterprise, $1,725.8 million for the Dollar Tree US banner and $332.6 million for the Family Dollar banner. These targets reflect the adjusted operating income underlying the annual budget approved by the Board of Directors.

              The Compensation Committee used adjusted operating income as the performance metric for fiscal 2019 because it encourages achievement of strategic and financial performance metrics that create sustainable shareholder value, it is something over which executive officers have control and it is an important metric for evaluating the performance of retail companies.

              The corporate performance measure for Messrs. Philbin, Wampler and Old relates to the adjusted operating income target for the combined corporate enterprise which was set at $1,764.9 million in 2019. The performance measure for Mr. Witynski relates to the adjusted operating income target for the Dollar Tree US banner which was set at $1,725.8 million. For fiscal 2020, Mr. Witynski's corporate performance measure is based on the performance target for the combined enterprise.

              The following table summarizes the potential earned awards based on the percentage of the applicable corporate performance target attained.

% of Corporate
Performance Target
Attained



Portion of Executive's
Corporate
Performance Bonus
Deemed Earned

Below 85.0%



0

%

85% 25 %
90% 50 %
95% 75 %
100% 100 %
105% 137.50 %
110% 175 %
115.0% or above 212.50 %

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              The corporate performance measure for Mr. Mac Naughton, former President of Family Dollar Stores, relates to the adjusted operating income target for that banner. Maximum bonus for the corporate performance component is earned with performance achieved at 136% of target for the Family Dollar banner. For 2019, the adjusted operating income target was set at $332.6 million for the Family Dollar banner, which reflected our strategic plan. The following table illustrates potential payouts for the Family Dollar executives in fiscal 2019.

% of Corporate
Performance Target
Attained



Portion of Executive's
Corporate
Performance Bonus
Deemed Earned
Below 85.0% 0 %
85% 25 %
90% 50 %
100% 100 %
105% 105 %
113.5% 120 %
122.5% 140 %
130% 170 %
136.0% or above 212.50 %

              The MICP bonuses relating to performance in a given fiscal year are paid in the following year when annual results are available, upon approval by the Compensation Committee, generally in March or April. The Compensation Committee may revise the target amount to account for unusual factors. Any modification is carefully considered by the Committee and applied only in special circumstances that warrant the modification. The Compensation Committee did not exercise such discretion with respect to the 2019 bonus payments.

              The definition of adjusted operating income approved by the Compensation Committee for purposes of measuring the 2019 target performance under the MICP excluded the effects relating to or resulting from: (i) Canadian currency fluctuations; (ii) hiring, severance, relocation, closing, reduction in workforce expenses, or other expenses incurred to consolidate workforces and the store support centers to the extent different than the estimates contained in the 2019 Fiscal Budget; (iii) changes in accounting policies, practices and pronouncements; (iv) Summit Pointe expenses to the extent different than the estimates contained in the 2019 Fiscal Budget; (v) non-cash goodwill and intangible impairment charges; (vi) expenses incurred with respect to future mergers, acquisitions, or divestitures; (vii) any loss, cost or expense related to an uninsured disaster; (viii) lease costs, asset write-offs, incentive compensation, and severance related to closed stores; (ix) costs related to shareholder activism and corporate governance; and (x) changes in the manner shared services are allocated based upon the methodology used in the 2019 Fiscal Budget approved by the Board of Directors ("Fiscal Budget").

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              During its March 2020 meeting, the Compensation Committee certified the following Company and banner performance for fiscal 2019:

Metric

2019 Target

2019 Achievement

% of Target

Payout %
Enterprise adjusted operating income $1,764.9 million $1,604.3 million 90.90 % 54.50 %
Dollar Tree adjusted operating income $1,725.8 million $1,651.2 million 95.68 % 78.39 %
Family Dollar adjusted operating income $332.6 million $243.3 million 73.15 % 0 %

              Based upon the performance calculation described above, the Compensation Committee authorized payouts for the executives as follows:

Executive


Bonus
Target
as % of
Base
Salary





Total
Amount
Available
for Bonus(1)




Payout %

Corporate
Performance
Bonus
Earned(2)

Gary Philbin

140 % $1,960,000 54.50 % $1,068,200

Kevin Wampler

70 % $560,000 54.50 % $305,200

Bob Sasser(3)

Michael Witynski(4)

105 % $935,851 78.39 % $733,613

William Old, Jr.

70 % $490,000 54.50 % $267,050

Duncan Mac Naughton(5)

100 % $1,050,000 0 % $0

(1)
Represents the base salary of the named executive officer multiplied by the target percentage of base salary.

(2)
Represents the total amount available for bonus multiplied by the applicable payout percentage.

(3)
Beginning in 2019, Mr. Sasser no longer participates in the annual cash bonus incentive plan.

(4)
In December 2019, Mr. Witynski was promoted to Enterprise President at which time his base salary increased from $850,000 to $1,050,000 and his bonus target increased from 100% of his prior base salary to 130% of his new base salary. Because Mr. Witynski's promotion occurred in the fourth quarter of fiscal 2019, his bonus opportunity was calculated on a prorated basis using the salary and bonus targets in effect both before and after the effective date of his promotion. The prorated salary and bonus targets resulted in a blended bonus target as a percent of base salary of 105% and a total amount available for bonus of $935,851.

(5)
The Family Dollar executives did not receive a bonus payout because the performance goal was not satisfied. Additionally, Mr. Mac Naughton was not eligible for a bonus due to termination of his employment on February 1, 2020.

              In March 2019, the Compensation Committee determined that future annual incentive bonus awards would be based 100% on corporate performance beginning in fiscal 2019. The Compensation Committee in the past had determined that 85% of the annual incentive bonus would be based on corporate performance while 15% of the annual incentive bonus would be based on individual performance. The Compensation Committee believes that the change to providing annual incentive bonus awards based solely on corporate performance will assist in driving improved corporate performance and better align the interests of executives with those of shareholders.

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Long-Term Incentives

              The largest component of our executive compensation program has been long-term incentive awards in the form of performance-based RSU awards (now designated as PSUs beginning in 2019) and performance-based LTPP awards (50% in RSUs and 50% in cash) pursuant to our 2011 Omnibus Incentive Plan. We believe that long-term performance-based equity and cash incentives provide our executives with a strong link to our long-term performance and create an ownership culture to help align the interests of our executives with those of our shareholders. The Committee structured the long-term performance-based equity and cash incentives portion of executive officer compensation to be "at risk" in order to directly align our executives with the interests of shareholders. The long-term incentive awards are set at levels generally at market based upon the peer data.

              The Compensation Committee's objective in granting long-term performance-based equity and cash incentives as part of the overall compensation for executives is to achieve alignment with shareholder interests through stock ownership while also focusing on retention. Restricted stock, RSUs and PSUs provide more immediate value to executives, even in advance of stock price appreciation, with the opportunity for increased value as the stock price increases. In addition, we believe that long-term performance-based equity and cash awards that vest over multiple years focus executives on consistent long-term growth in shareholder value and promote executive retention because the executives will only realize the value of the equity or cash if they remain in our employment during the vesting period. Multiple year performance goals also promote consistent growth in shareholder value across a longer time horizon.

              The Compensation Committee generally has approved two distinct types of long-term incentive awards. Prior to 2019, the first type of award has been a performance-based RSU that vests after achievement of a percentage of a target performance metric in the first year after grant, with time-based vesting of one-third of the award on successive anniversaries of the grant date. Once the performance threshold had been met, the amount of the payout typically has not increased to correspond with increasing levels of corporate performance. These awards were settled in stock and there was no cash component. The second type of award has been a combination of performance-based RSUs and a performance cash bonus award made under our three-year LTPP program. The program provides for vesting upon the achievement of a cumulative performance goal that is measured over a three-year performance period. Once the performance threshold has been met, the LTPP award is settled in both stock and cash. Historically, the Committee used Company adjusted operating income as its performance metric for both types of awards because it encourages achievement of strategic and financial performance metrics that create sustainable shareholder value, it is something over which executive officers have control and it is an important metric for evaluating the performance of retail companies.

              The Compensation Committee generally grants equity-based awards and long-term cash on an annual basis, and at other times as the Committee deems appropriate, including for newly hired or promoted executive officers or due to special retention needs. The Compensation Committee determines the aggregate monetary grant value of executive officers' equity-based awards taking into account, among other things, our pay mix targets, the desired mix of equity-based vehicles, the executive officer's contribution to Company performance, competitive compensation levels and dilution or pool limits. The target number of RSUs is determined by dividing the target RSU award value by the fair market value of a share of Dollar Tree stock on the date of grant.

              In March 2019, the Compensation Committee approved changes to our long-term incentive compensation program for executive officers, including our NEOs. Beginning in 2019, LTPP awards

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vest based on the three-year cumulative achievement of at least 85% of target adjusted EBITDA (a change from the three-year cumulative achievement of at least 83% of target adjusted operating income). All non-LTPP awards were designated as performance stock units ("PSUs") beginning in 2019. Non-LTPP awards vest upon achievement of at least 85% of target adjusted operating income (an increase from 80%) during a one year performance period, coupled with time-based vesting of one-third of the award on each successive anniversary of the grant date. The Committee also changed the design of non-LTPP awards to incorporate a "payout curve" that determines the amount of the award from threshold achievement of target adjusted operating income (75% payout) to target goal (100% payout) to maximum award (150% payout). The payout curve was added to the non-LTPP awards to incentivize performance above the threshold level of performance. The prior design of the non-LTPP awards provided a payout upon reaching the threshold level of performance, but the payout amount did not vary based on increasing levels of performance exceeding the threshold. As a result of these changes in 2019 by the Committee, our long-term performance-based incentive program for executive officers featured increased vesting thresholds to 85% of the target corporate performance metric and different performance metrics (adjusted EBITDA for the LTPP and adjusted operating income for the 2019 non-LTPP awards).

              In March 2020, the Compensation Committee approved additional changes to our long-term incentive compensation program for executive officers. Beginning in 2020, the LTPP awards will be awarded in the form of 100% performance-based RSUs rather than 50% RSUs and 50% cash. The Committee also raised the threshold achievement level from 85% to 90% and the payout range is between 50% and 200% beginning with the 2020 LTPP Grants. For fiscal 2020, the Committee determined that the relative weighting of long-term incentive awards for the Chief Executive Officer would remain the same as 2019. However, the Committee changed the relative weightings of long-term incentive awards for our other executive officers to 75% in PSUs and 25% in LTPP awards because of the importance of improving the performance in fiscal 2020.

              In 2019, the Compensation Committee made awards of PSUs with vesting upon achievement of at least 85% of target adjusted operating income for fiscal 2019, coupled with time-based vesting of one-third of the award on each successive anniversary of the grant date. The target number of PSUs was determined by dividing the target PSU award value by the fair market value of a share of Dollar Tree stock on the date of grant.

Executive


Target PSUs ($)

Target PSUs (#)

Gary Philbin

$7,000,000 67,489

Kevin Wampler

$1,400,000 13,497

Bob Sasser

$5,500,000 53,027

Michael Witynski

$1,500,000 14,462

William Old, Jr.

$950,000 9,159

Duncan Mac Naughton

$2,200,000 21,210

              Performance Metric.    The Compensation Committee used adjusted operating income as the performance metric for 2019 because it encourages achievement of strategic and financial performance metrics that create sustainable shareholder value, it is something over which executive officers have control and it is an important metric for evaluating the performance of retail companies.

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              For purposes of the 2019 PSU grants, adjusted operating income excludes the effects relating to or resulting from:

              (i) Canadian currency fluctuations; (ii) hiring, severance, relocation, closing, reduction in workforce expenses or other expenses incurred to consolidate workforces and the store support centers to the extent different than the estimates contained in the 2019 Fiscal Budget; (iii) changes in accounting policies, practices and pronouncements; (iv) Summit Pointe expenses to the extent different than the estimates contained in the 2019 Fiscal Budget; (v) non-cash goodwill and intangible impairment charges; (vi) expenses incurred with respect to future mergers, acquisitions, or divestitures; (vii) any loss, cost or expense related to an uninsured disaster; (viii) lease costs, asset write-offs, incentive compensation, and severance related to closed stores; (ix) costs related to shareholder activism and corporate governance; and (x) changes in the manner shared services are allocated based upon the methodology used in the 2019 Fiscal Budget approved by the Board of Directors ("Fiscal Budget").

              Performance Goal.    The Compensation Committee set separate target levels of 2019 adjusted operating income for the Company as a combined enterprise, the Dollar Tree banner and the Family Dollar banner. The target levels were intended to be rigorous and challenging, based on a review of the 2019 business plan and taking into account the market environment, past and expected future performance of peer companies and various risks. For 2019, the target levels were set significantly below the 2018 target levels to take into account significant one-time costs incurred for the store support center consolidation from North Carolina to Virginia (including moving and relocation expenses, retention bonuses and the costs to replace a number of Family Dollar associates who did not agree to relocate from North Carolina to Virginia) and our store optimization plan (including the rent and other costs of closing 423 Family Dollar stores and 44 Dollar Tree stores, rebannering of 200 Family Dollar stores to Dollar Tree stores, and remodeling and converting 1,166 Family Dollar stores to the H2 format). The Compensation Committee also set the threshold level of performance at 85% of the applicable target. The actual payout will vary based on increasing levels of performance that exceed the threshold level.

Performance Metric


2019 Target
($ in millions)


Actual Results
($ in millions)


% of Target

Payout %

2019 Enterprise adjusted operating income

$1,764.9 $1,604.3 90.90 % 84.83 %

2019 Dollar Tree adjusted operating income

$1,725.8 $1,651.2 95.68 % 92.80 %

2019 Family Dollar adjusted operating income

$332.6 $243.3 73.15 % 0 %

              Performance Stock Units Earned.    The Compensation Committee certified in March 2020 that the performance goal established for the PSUs granted to each of our named executive officers was met, except for the performance goal relating to the PSUs granted to Mr. Mac Naughton.


Executive



PSUs Earned (#)

Gary Philbin

57,250

Kevin Wampler

11,449

Bob Sasser

44,982

Michael Witynski

13,420

William Old, Jr.

7,769

Duncan Mac Naughton

0

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              In addition, the Compensation Committee made grants of performance-based RSUs under the LTPP. The Compensation Committee established the target value of the LTPP opportunity for each of our named executive officers. The target value of the award was divided between a potential cash amount and a target number of RSUs. The target number of RSUs was determined by dividing the target RSU award value (which represents fifty percent of the total target award value) by the fair market value of a share of Dollar Tree stock on the date of grant.

Executive


Target RSUs
($)


Target RSUs
(#)


Target Long-Term
Cash Opportunity
($)



Total
($)

Gary Philbin

$750,000 7,231 $750,000 $1,500,000

Kevin Wampler

$475,000 4,579 $475,000 $950,000

Bob Sasser(1)

Michael Witynski

$450,000 4,338 $450,000 $900,000

William Old, Jr.

$350,000 3,374 $350,000 $700,000

Duncan Mac Naughton

$500,000 4,820 $500,000 $1,000,000

(1)
Beginning in 2019, Mr. Sasser no longer participates in the Long-Term Performance Plan.

              Target Opportunities.    The Compensation Committee defined a payout curve which determines the amount to be paid depending on actual performance. The Compensation Committee set the payout for achieving the threshold level of performance at 25%, with the payout increasing from 25% for threshold performance to 100% of the target opportunity for achieving target performance. Similarly, the payout for achieving between target and maximum performance ranges from 100% of the target opportunity to 200% of the target opportunity, also with the payout increasing in a straight-line manner.

              Performance Metric.    The Compensation Committee used three-year cumulative adjusted EBITDA (2019-2021) as the performance metric because it is a long-term goal and for the reasons set forth above.

              Performance Goal.    The Compensation Committee set the three-year cumulative adjusted EBITDA target at a level requiring significant effort, based on the Company's annual budget and long-term plan. The Compensation Committee also set the threshold level at 85% of the target. This award will not vest, if at all, until the completion of the 2021 fiscal year.

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              In 2017, the Compensation Committee made grants of performance-based RSUs and cash opportunity awards under the LTPP. The target values of the awards were divided between a target number of RSUs and a potential cash amount. The target number of RSUs was determined by dividing the target RSU award value by the fair market value of a share of Dollar Tree stock on the date of grant.

Executive


Target RSUs
($)


Target RSUs
(#)


Target Long-Term
Cash Opportunity
($)



Total
($)

Gary Philbin

$500,000 6,372 $500,000 $1,000,000

Gary Philbin(1)

$250,000 3,005 $250,000 $500,000

Kevin Wampler

$400,000 5,098 $400,000 $800,000

Bob Sasser

$750,000 9,559 $750,000 $1,500,000

Michael Witynski

$150,000 1,911 $150,000 $300,000

Michael Witynski(2)

$150,000 2,089 $150,000 $300,000

William Old, Jr.

$300,000 3,823 $300,000 $600,000

Duncan Mac Naughton

$500,000 6,372 $500,000 $1,000,000

(1)
Represents the additional award granted to Mr. Philbin upon his promotion in September 2017 with a two-year cumulative operating income target for fiscal years 2018 through 2019.

(2)
Represents the additional award granted to Mr. Witynski upon his promotion in July 2017.

              Performance Metric.    The Compensation Committee used three-year cumulative adjusted operating income as the performance metric. For purposes of the 2017 LTPP Grants, adjusted operating income excludes the effects relating to or resulting from: (i) Canadian currency fluctuations; (ii) severance, relocation and reduction in workforce expenses and other expenses incurred to consolidate workforces; (iii) changes in accounting policies, practices and pronouncements; (iv) unreimbursed costs for unwinding the arrangement with Sycamore Partners (Dollar Express) for the divested stores; (v) non-cash goodwill and intangible impairment charges; (vi) expenses incurred with respect to future mergers, acquisitions, or divestitures; (vii) any loss, cost or expense due to Family Dollar litigation filed prior to the merger date that is not included in the 2017 Fiscal Budget, and (viii) changes in the manner shared services are allocated based upon the methodology used in the 2017 Fiscal Budget previously approved by the Board of Directors.

              Performance-Based RSUs and Cash Earned.    In March 2020, the Compensation Committee determined the Company's actual performance and the corresponding performance achievement percentage relative to the 2017-2019 performance goal.

Performance Metric

Threshold

Target

Maximum

Actual
Results
  ($ in millions)
Three-Year adjusted operating income (2017-2019) $4,892.9 $5,895.0 $7,368.8 $5,440
% of Target 83 % 100 % 125 % 92.29 %

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              Performance-Based RSUs and Cash Earned for Mr. Philbin's Award Upon Promotion.    In March 2020, the Compensation Committee determined the Company's actual performance and the corresponding performance achievement percentage relative to the 2018-2019 performance goal for Mr. Philbin's additional award granted upon his promotion in September 2017.

Performance Metric

Threshold

Target

Maximum

Actual
Results
  ($ in millions)
Two-Year adjusted operating income (2018-2019) $3,369.8 $4,060 $5,075 $3,406.3
% of Target 83 % 100 % 125 % 83.90 %

              The performance achievement percentage was then converted to an earning percentage as set forth below. If the overall performance achievement percentage was below the threshold, then the earning percentage would be zero (and the individual would not receive any shares in respect of the RSUs granted or performance cash). If the overall performance achievement percentage was between the threshold and maximum, the earning percentage would vary based on the level of achievement. If the earning percentage was above the maximum, the maximum earning percentage would be applied.

Achievement
Level


Performance
Achievement %


Earning %
Threshold 83 % 25 %
Target 100 % 100 %
Maximum 125 % 200 %

              The Compensation Committee and the Board approved the performance achievement relative to target performance measures, the calculation of the earning percentage and the determination of the number of RSUs and the amount of cash earned. The overall three-year performance achievement percentage of 92.29% resulted in an earned percentage of 48.23%. Based on this outcome, the NEOs earned RSUs and cash in respect of their 2017-2019 LTPP awards as follows:

Executive


Earned %

Cash Earned

RSUs Earned (#)

Gary Philbin

48.23 % $241,150 3,073

Gary Philbin(1)

27.25 % $68,125 818

Kevin Wampler

48.23 % $192,920 2,459

Bob Sasser

48.23 % $361,725