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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Family Dollar Stores, Inc.

(Name of registrant as specified in its charter)

(Name of person(s) filing proxy statement, if other than the registrant)

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FAMILY DOLLAR STORES, INC.

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD JANUARY 16, 2014

You are invited to attend the annual meeting of stockholders (the “Annual Meeting”) of Family Dollar Stores, Inc. (the “Company”), to be held at 2:00 p.m., local time, on January 16, 2014, at the Company’s Store Support Center, 10401 Monroe Road, Matthews, North Carolina, 28105. The Annual Meeting is being held for the following purposes:

(1) To elect as directors the eleven nominees named in the attached Proxy Statement;

(2) To vote on a non-binding advisory resolution to approve the compensation of the Company’s named executive officers as described in the Compensation Discussion and Analysis and tabular compensation disclosure in the attached Proxy Statement;

(3) To ratify the action of the Company’s Audit Committee in selecting PricewaterhouseCoopers LLP as independent registered public accountants of the Company for the fiscal year ending August 30, 2014; and

(4) To transact other business that is properly introduced at the Annual Meeting or any adjournment or postponement of the Annual Meeting.

The Board of Directors has set the close of business on November 27, 2013, as the record date for the determination of stockholders who will be entitled to notice of and voting rights at the Annual Meeting (the “Record Date”). The list of stockholders entitled to vote at the Annual Meeting will be available for inspection, as required by the Company’s Bylaws, at the Company’s Store Support Center, located at 10401 Monroe Road, Matthews, North Carolina, at least ten days before the Annual Meeting.

By Order of the Board of Directors

James C. Snyder, Jr.

Senior Vice President

General Counsel and Secretary

Matthews, North Carolina

December 3, 2013

FAMILY DOLLAR STORES, INC.

PROXY STATEMENT

Table of Contents

	Page
General Information		1
Proposal No. 1: Election of Directors		6
Director Compensation		11
Corporate Governance Matters and Committees of the Board of Directors		12
Compensation Discussion and Analysis		19
Compensation Committee Report		36
2013 Summary Compensation Table		36
2013 Grants of Plan-Based Awards		39
Employment and Severance Agreements		41
2013 Outstanding Equity Awards at Fiscal Year End		44
2013 Option Exercises and Stock Vested		46
2013 Non-Qualified Deferred Compensation		46
Potential Payments Upon Termination or Change in Control		48
Equity Compensation Plan Information		53
Ownership of the Company’s Securities		54
Section 16(a) Beneficial Ownership Reporting Compliance		56
Code of Ethics		56
Transactions with Related Persons		56
Proposal No. 2: Advisory Vote on Executive Compensation		58
Proposal No. 3: Ratification of Selection of Independent Registered Public Accountants		59
Stockholder Proposals for 2015 Annual Meeting		60
Other Matters		60
Incorporation by Reference of Certain Financial Information		60
Appendix A		A-1

FAMILY DOLLAR STORES, INC.

Post Office Box 1017

Charlotte, North Carolina 28201-1017

PROXY STATEMENT

IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON JANUARY 16, 2014:

This Proxy Statement, our 2013 Annual Report and a form of proxy card are available at www.proxyvote.com

GENERAL INFORMATION

Why did I receive these proxy materials?

We are providing these proxy materials in connection with the solicitation by the Board of Directors of Family Dollar Stores, Inc. (“Family Dollar,” the “Company,” “we,” “us,” or “our”) of proxies to be voted at our 2014 Annual Meeting of Stockholders (“Annual Meeting”) and at any adjournment or postponement of the Annual Meeting. These proxy materials will be made available to anyone who owns shares of our common stock (individually, a “stockholder”) on the Record Date. The Annual Meeting will be held at our Store Support Center, located at 10401 Monroe Road, Matthews, North Carolina, 28105, on January 16, 2014, at 2:00 p.m., local time.

We are making our proxy materials available by the Internet to expedite your receipt of these materials, reduce the cost of printing and distributing the proxy materials and lower the cost and environmental impact of our Annual Meeting. Beginning on December 6, 2013, we mailed or e-mailed to some of you a “Notice of Internet Availability of Proxy Materials” with instructions on how to access our proxy materials over the Internet (or, at your preference, on how to request paper copies of the materials) and how to vote. On or before December 6, 2013, we will make our proxy materials publicly available on the Internet so that such material is accessible according to the instructions provided in the notice. If you received a notice and would prefer to receive paper copies of the proxy materials, please follow the instructions included in the Notice of Internet Availability of Proxy Materials.

What happens at the Annual Meeting?

At the Annual Meeting, our stockholders will vote on the matters described in this Proxy Statement. Additionally, our management will present a report on our performance and respond to questions from stockholders. As of the date of this Proxy Statement, management is not aware of any other matters to be brought before the Annual Meeting.

What is a “proxy”?

A proxy is your legal designation giving another person permission to vote the stock you own. The person you designate is called your “proxy,” and the document that designates someone as your proxy is called a “proxy” or “proxy card.” A proxy card is included or made available with this Proxy Statement. When you sign the proxy card, you designate Howard R. Levine and Michael K. Bloom as your representatives at our Annual Meeting.

Who is entitled to vote?

Only the record holders of our common stock at the close of business on the Record Date will be entitled to vote at the Annual Meeting. The Record Date for the Annual Meeting is November 27, 2013. The list of stockholders entitled to vote at the Annual Meeting will be available for inspection as required by our Bylaws at our Store Support Center, located at 10401 Monroe Road, Matthews, North Carolina, at least ten days before the Annual Meeting.

How many votes do I have?

You have one vote for each share of common stock you owned as of the Record Date. These votes can be used for each matter to be voted upon.

What is a “stockholder of record?”

If your shares are registered in your name with our transfer agent, American Stock Transfer & Trust Company, LLC, then you are considered the stockholder of record for those shares. We send or make available proxy materials directly to all stockholders of record.

If your shares are held through a broker, bank or other nominee, you are considered the beneficial owner of these shares, even though you are not the stockholder of record. In this case, these proxy materials have been forwarded to you by your stockbroker or bank (who is actually considered the stockholder of record). As the beneficial owner of shares of our common stock, you have the right to tell your broker how to vote using the proxy materials. However, since you are not the stockholder of record, you may not vote these shares in person at the Annual Meeting unless you obtain a legal proxy from the stockholder of record. Your bank, broker or nominee should send you instructions for voting your shares.

What am I voting on?

You will be voting on:

1. the election of the eleven nominees named in this Proxy Statement to the Board of Directors (Proposal No. 1);

2. the non-binding, advisory resolution to approve the compensation of the Company’s named executive officers, as described in the Compensation Discussion and Analysis and tabular compensation disclosure in this Proxy Statement (Proposal No. 2); and

3. the proposal to ratify the action of our Audit Committee in selecting PricewaterhouseCoopers LLP as our independent registered public accountants for the fiscal year ending August 30, 2014 (Proposal No. 3).

What are the Board’s voting recommendations?

The Board recommends that you vote your shares:

• “FOR” each of the eleven nominees to the Board (Proposal No. 1);

• “FOR” the approval of the non-binding, advisory resolution to approve the compensation of the Company’s named executive officers, as described in the Compensation Discussion and Analysis and tabular compensation disclosure in this Proxy Statement (Proposal No. 2); and

• “FOR” the ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accountants (Proposal No. 3).

Unless you indicate otherwise on your proxy card, your proxies will be voted FOR the election of each of the nominees, FOR the approval of the non-binding, advisory resolution to approve the compensation of the Company’s named executive officers and FOR the ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accountants.

How can I vote my shares in person at the Annual Meeting?

All stockholders may vote in person at the Annual Meeting. You may also be represented by another person at the Annual Meeting by executing a proper proxy designating that person as your representative. If you hold your shares through a bank or broker, you must obtain a legal proxy from your bank or broker and present it to the Inspector of Election with your ballot to be able to vote at the Annual Meeting. For directions to the Annual Meeting, please contact us at (704) 847-6961 or by mail by writing: Corporate Secretary at Family Dollar Stores, Inc., P.O. Box 1017, Charlotte, NC 28201-1017.

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How can I vote my shares without attending the Annual Meeting?

Stockholders of record can vote prior to the Annual Meeting using the following methods:

1. By Touch-Tone Telephone—If you choose to vote by telephone, please call the toll free number printed on the proxy card and follow the recorded instructions.

2. By Internet—If you choose to vote using the Internet, please follow the instructions on the Notice of Internet Availability of Proxy Materials or the proxy card.

3. By Mail—If you choose to vote by mail, you must sign, date and return a proxy card in the enclosed postage-paid return envelope.

We encourage you to vote by telephone or by Internet. If you choose to vote using these methods, please note that voting will close at 11:59 p.m. Eastern Time, on January 15, 2014.

The availability of telephone and Internet voting for beneficial owners will depend on the voting processes of your broker, bank or other holder of record. Therefore, we recommend that you follow the voting instructions in the materials you receive.

If you vote by telephone or on the Internet, you do not have to return a proxy card.

Can I change or revoke my vote after returning my proxy?

Any stockholder giving a proxy can revoke it at any time before it is exercised by (i) delivering written notice of revocation to our Corporate Secretary; (ii) timely delivering a valid, later-dated proxy or a later-dated vote by telephone or on the Internet; or (iii) attending the Annual Meeting and voting in person. If you respond to this solicitation with a valid proxy and do not revoke it before it is exercised, it will be voted as you specified in the proxy.

How many votes must be present to hold the Annual Meeting?

A majority of the shares of our common stock outstanding on the Record Date must be present, either in person or by proxy, for a quorum at the Annual Meeting. On the Record Date, November 27, 2013, 113,760,784 shares of our common stock were outstanding. See “How will abstentions and broker non-votes be treated?” in this Proxy Statement for more information.

How many votes are necessary to approve each proposal?

Proposal No. 1: Subject to our Corporate Governance Guidelines, our directors are elected by a plurality of the votes of shares present at the Annual Meeting, either in person or by proxy. This means that the candidate who receives the most votes for a particular slot will be elected for that slot, whether or not the votes represent a majority.

Our Corporate Governance Guidelines provide that any director nominee who receives a greater number of votes “withheld” from his or her election than votes “for” such election shall tender his or her resignation from the Board of Directors (the “Board”) promptly following certification of the election results. The Nominating/Corporate Governance Committee will evaluate the best interests of Family Dollar and our stockholders and shall recommend to the Board the action to be taken with respect to the tendered resignation. This provision applies to uncontested elections only.

The approval of each of Proposal No. 2 and Proposal No. 3 requires the affirmative vote of a majority of shares present at the Annual Meeting, either in person or by proxy, and entitled to vote thereon.

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How will abstentions and broker non-votes be treated?

Abstentions will be counted for the purpose of determining the existence of a quorum and will have the same effect as a negative vote on matters other than the election of directors. Only votes “for” or “withheld” are counted in determining whether a plurality has been cast in favor of a director.

New York Stock Exchange (“NYSE”) rules prohibit brokers from voting on non-routine matters such as Proposals No. 1 and 2 without receiving instructions from the beneficial owner of the shares. In the absence of instructions, shares subject to such so-called broker non-votes will not be counted as voted or as present or represented on those proposals and so will have no effect on the vote, but will be counted for the purpose of determining the existence of a quorum. The ratification of the appointment of independent accountants (Proposal No. 3) is a routine matter under the NYSE Listed Company Rules. As a result, brokers who do not receive instructions as to how to vote on that matter from the beneficial owner of the shares generally may vote on that matter in their discretion.

Who will count the votes?

An automated system administered by Broadridge Financial Solutions, Inc. (“Broadridge”) will tabulate votes cast by proxy at the Annual Meeting. Broadridge will also act as the independent Inspector of Election and tabulate votes cast in person at the Annual Meeting.

Where can I find the voting results of the Annual Meeting?

We will announce preliminary voting results at the Annual Meeting. Additionally, we will publish voting results in a Current Report on Form 8-K to be filed with the Securities and Exchange Commission (“SEC”) within four business days after the Annual Meeting.

Do you provide electronic access to the Family Dollar Proxy Statement and Annual Report?

Yes. You may obtain copies of this Proxy Statement and our Annual Report on Form 10-K (“Annual Report”) for the fiscal year ended August 31, 2013 (“fiscal 2013”), by visiting www.proxyvote.com. You may also obtain a copy of our Annual Report (without exhibits), without charge, by sending a written request to: Corporate Secretary at Family Dollar Stores, Inc., P.O. Box 1017, Charlotte, NC, 28201-1017. We will provide copies of the exhibits to the Annual Report upon payment of a reasonable fee, upon receipt of a request addressed to the Corporate Secretary.

What is “householding” and how does it affect me?

We have adopted a procedure approved by the SEC called “householding.” Under this procedure, stockholders of record who have the same address and last name and who do not participate in electronic delivery of proxy materials will receive only one copy of our Notice of Annual Meeting, Proxy Statement and Annual Report, unless one or more of these stockholders notifies us that they wish to continue receiving individual copies. This procedure will reduce our printing costs and postage fees as well as have a positive environmental impact by decreasing the amount of paper used in the printing of our Annual Meeting materials.

Stockholders who participate in householding will continue to receive separate Notices of Internet Availability of Proxy Materials or proxy cards. Also, householding will not in any way affect dividend check mailings.

If you received a householded mailing this year and you would like an additional copy of this Proxy Statement or our Annual Report mailed to you, we will deliver a copy promptly upon your request to our Corporate Secretary at Family Dollar Stores, Inc., P.O. Box 1017, Charlotte, NC, 28201-1017, telephone: (704) 708-1974. If you are eligible for householding, but you and other stockholders of record with whom you share an

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address currently receive multiple copies of our Notice of Annual Meeting, Proxy Statement and Annual Report, or if you hold stock in more than one account, and in either case you wish to receive only a single copy of each of these documents for your household, please contact our transfer agent, American Stock Transfer & Trust Company, LLC, at 6201 15^th Avenue, Brooklyn, NY 11219, telephone: (800) 937-5449.

Who is paying for this Proxy Statement and the solicitation of my proxy, and how are proxies solicited?

We will pay the entire cost of soliciting proxies for the Annual Meeting. Our directors, officers and employees (who we refer to as “Team Members”) may solicit proxies personally or by mail, telephone or other means of communication. Our Team Members will not receive additional compensation for their soliciting efforts, if any are undertaken. In addition, brokerage firms, banks and other custodians, nominees and fiduciaries will send copies of these proxy materials to the beneficial owners of the stock held by them. We will reimburse these institutions for the reasonable costs they incur to do so. Although we do not plan to do so now, we may later decide to retain a professional proxy solicitation service. The cost of that service would be paid by us.

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PROPOSAL NO. 1

ELECTION OF DIRECTORS

At the Annual Meeting, eleven directors will be nominated for election to serve until the next annual meeting of stockholders or until their respective successors are elected and qualified. The number of directors is established by our Board of Directors (or the “Board”) pursuant to our Bylaws and has been set at eleven as of the Annual Meeting date. Votes cast pursuant to the enclosed proxy will be cast for the election of the eleven nominees named below unless authority is withheld. All nominees are currently members of the Board of Directors. If for any reason any nominee shall not be a candidate for election as a director at the Annual Meeting (an event that is not now anticipated), the shares represented by a properly signed and returned proxy card or voted by telephone or via the Internet will be voted for such substitute, if any, as shall be designated by the Board of Directors, or the Board may determine to leave the vacancy temporarily unfilled or reduce the authorized number of directors in accordance with the Bylaws.

The Board of Directors met eight times during fiscal 2013. The independent directors met four times during the year in executive session without the presence of management directors or other employees of the Company. All directors attended at least 75% of the aggregate of the total number of Board meetings and the total number of meetings held by committees of which each such director was a member. Pursuant to Corporate Governance Guidelines adopted by the Board, directors are expected to attend Board meetings on a regular basis and to attend the annual meeting of stockholders. All of the current directors attended our last annual meeting of stockholders.

Following are the biographies for our director nominees, including information concerning the particular experience, qualifications, attributes or skills that led the Nominating/Corporate Governance Committee and the Board to conclude that the nominee should serve on the Board. The Board of Directors has determined that each of the nominees, other than Mr. Levine, is an independent director within the meaning of the NYSE listing standards and the categorical independence standards adopted by the Board, as set forth in our Corporate Governance Guidelines.

Mark R. Bernstein, age 83, has served as a director of the Company since 1980. He is Of Counsel with the law firm of Parker, Poe, Adams & Bernstein L.L.P. Prior to his January 2002 retirement, he was Chairman of the law firm, Chairman of the Corporate Group and a partner in the firm. Mr. Bernstein previously served as a director of Rauch Industries, Inc., a manufacturer of Christmas ornaments, for more than a decade until its sale in 1996 and as a director of National Welders Supply Company, Inc., a welding gas distributor, for more than three decades until its sale in 2008. Mr. Bernstein also served as chairman of the North Carolina Economic Development Board from 1998 to 2000. Mr. Bernstein served as the Lead Director of our Board of Directors from 2004 to January 2013. Mr. Bernstein serves on our Nominating/Corporate Governance Committee.   Mr. Bernstein’s qualifications to serve on the Board include his extensive legal and transactional experience as a corporate lawyer, his diverse and valuable financial and leadership experience gained as a director on several public and private corporate and non-profit boards in a variety of industries and fields, and his deep understanding of the Company’s history and business.

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	Pamela L. Davies, age 56, has served as a director of the Company since 2009. Dr. Davies has been the president of Queens University of Charlotte since July 2002. Prior to assuming that role, Dr. Davies served as the Dean of the McColl School of Business at Queens University of Charlotte from 2000 to 2002 and the LeBow College of Business at Drexel University from 1997 to 2000. Her professional specialization is in the field of strategic planning with a particular emphasis on competitive and marketing strategy. Dr. Davies has also been a director of Sonoco Products Company since 2004, and previously served on the Board of Directors of C&D Technologies, Inc. from 1998 to 2010 and Charming Shoppes, Inc. from 1998 to June 2009. Dr. Davies serves as the Chairman of our Nominating/Corporate Governance Committee. Dr. Davies’ qualifications to serve on the Board include her extensive leadership experience and knowledge of strategic planning and marketing, as well as the valuable financial and industry experience gained as a director on several public company boards, including in the retail industry.
	Sharon Allred Decker, age 56, has served as a director of the Company since 1999. Mrs. Decker has served as the Secretary of the North Carolina Department of Commerce since January 2013. She has been the Chief Executive Officer of The Tapestry Group, LLC, a faith based, non-profit consulting and communications firm, since September 2004. From April 2003 to August 2004, she was President of The Tanner Companies, a manufacturer and retailer of apparel. From August 1999 to March 2003, she was President of Doncaster, a division of The Tanner Companies. Doncaster is a direct sales organization selling a high-end line of women’s apparel. Mrs. Decker has also been a director of Coca-Cola Bottling Co. Consolidated since 2001. She was a director of SCANA Corporation from 2005 to 2013. Mrs. Decker serves on our Leadership Development and Compensation Committee and our Nominating/Corporate Governance Committee. Mrs. Decker’s qualifications to serve on the Board include her executive leadership skills and understanding of strategic, operational and marketing issues facing large retail companies gained through her experience as an executive of retail industry companies. In addition, through her experience as a director on public and private company boards, she brings valuable financial and strategic experience to the Board.
	Edward C. Dolby, age 68, has served as a director of the Company since 2003. He has been the President of The Edward C. Dolby Strategic Consulting Group, LLC since September 2002, when he established the company to engage in business consulting. Prior to his retirement in December 2001, Mr. Dolby was employed by Bank of America Corporation for 32 years, where his positions included President of the North Carolina and South Carolina Consumer and Commercial Bank. In addition, Mr. Dolby chaired Bank of America’s Multicultural Marketing Leadership team and was an executive member of Bank of America’s Consumer Bank Forum. Mr. Dolby was also a member of Bank of America’s General Bank Executive Management Committee. Mr. Dolby serves on our Audit Committee and our Leadership Development and Compensation Committee. Mr. Dolby’s qualifications to serve on the Board include his financial, management and strategic acumen gained through his leadership roles in the banking and financial services industry coupled with his extensive retail banking background. His retail expertise augments his director qualifications.

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Glenn A. Eisenberg, age 52, has served as a director of the Company since 2002. He is the Executive Vice President—Finance and Administration of The Timken Company, a position he has held since January 2002. The Timken Company is an international manufacturer of highly engineered bearings and alloy steels and a provider of related products and services. From 1990 to 2001, Mr. Eisenberg was employed by United Dominion Industries, an international manufacturer of proprietary engineered products, where he held various positions, including President and Chief Operating Officer from December 1999 to May 2001. Mr. Eisenberg has also been a director of Alpha Natural Resources, Inc. since 2005. At Alpha Natural Resources, Mr. Eisenberg serves as its lead director and as Chairman of the Nominating and Corporate Governance Committee. Mr. Eisenberg serves as Chairman of our Audit Committee. Mr. Eisenberg’s qualifications to serve on the Board include his extensive global management, operational and financial knowledge and skills gained through his service as Executive Vice President—Finance and Administration of The Timken Company and in other senior executive capacities of global manufacturing firms. In addition, through his service as lead director and as the past and present chairman of various board committees of another public company, he brings valuable corporate governance and risk oversight experience. Further, the Board of Directors has determined that Mr. Eisenberg is an “audit committee financial expert,” as defined by applicable rules of the SEC.

Edward P. Garden, age 52, has served as a director of the Company since September 2011. He has been Chief Investment Officer and a Founding Partner of Trian Fund Management, L.P. since November 2005. In addition, Mr. Garden has served as a member of the board of directors of The Wendy’s Company (formerly known as Wendy’s/Arby’s Group, Inc. and prior to that Triarc Companies, Inc. (“Triarc”)) since December 2004. He served as Vice Chairman and a director of Triarc from December 2004 through June 2007 and Executive Vice President from August 2003 until December 2004. From 1999 to 2003, Mr. Garden was a managing director of Credit Suisse First Boston, where he served as a senior investment banker. From 1994 to 1999, he was a managing director at BT Alex Brown where he was a senior investment banker and, prior to that, co-head of Equity Capital Markets. Mr. Garden has also served as a director of Trian Acquisition I Corp. from October 2007 until January 2013 and as a director of Chemtura Corporation from January 2007 until March 2009. Mr. Garden’s qualifications to serve on the Board include his service as a director and senior executive of several public companies and his more than 25 years of experience advising, financing, operating and investing in companies. During the past several years, Mr. Garden, as Chief Investment Officer of Trian Fund Management, L.P., has worked with management teams and boards of directors to implement operational improvements. Prior to that, Mr. Garden worked with financial sponsors, executing financings through the issuance of bank debt, corporate bonds and equity capital, and providing strategic advisory services. Mr. Garden has strong operating experience and a network of relationships with institutional investors and investment banking/capital markets advisors that he can utilize for the Company’s benefit.

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	Howard R. Levine, age 54, has served as a director of the Company since 1997 and is our Chairman of the Board and Chief Executive Officer. He was employed by Family Dollar in various capacities in the Merchandising Department from 1981 to 1987, including employment as Senior Vice President—Merchandising and Advertising. From 1988 to 1992, Mr. Levine was President of Best Price Clothing Stores, Inc., a chain of ladies’ apparel stores. From 1992 to April 1996, he was self-employed as an investment manager. He rejoined Family Dollar in April 1996, and was appointed Vice President-General Merchandise Manager: Softlines in April 1996; Senior Vice President-Merchandising and Advertising in September 1996; President and Chief Operating Officer in April 1997; Chief Executive Officer in August 1998; and Chairman of the Board in January 2003. Mr. Levine is the son of Leon Levine, the founder and former Chairman of the Board of the Company. Mr. Levine is the sole member of our Equity Award Committee. Mr. Levine has extensive executive leadership experience in the retail industry, especially with small box retailers. As the Company’s Chief Executive Officer for more than 15 years, Mr. Levine brings to the Board an in-depth understanding of all aspects of the Company, including its customers, operations and key business drivers. The Board of Directors believes that this experience and understanding, combined with more than 23 years of working for the Company in various capacities in store operations, distribution and merchandising, give him the qualifications, attributes and skills to serve as a director for the Company.
	George R. Mahoney, Jr., age 71, has served as a director of the Company since 1987. He was employed by Family Dollar as General Counsel in 1976, as Vice President, General Counsel and Secretary from 1977 to 1984, as Senior Vice President, General Counsel and Secretary from 1984 to 1991 and as Executive Vice President, General Counsel and Secretary from 1991 until his retirement in May 2005. Mr. Mahoney serves on our Audit Committee. Mr. Mahoney’s qualifications to serve on the Board include his extensive experience in the areas of corporate law, finance, investor relations and human resources and his in-depth familiarity with the Company’s history and business.
	James G. Martin, age 77, has served as a director of the Company since 1996. He was employed by McGuireWoods Consulting as a Senior Advisor from July 2008 until his retirement in October 2011. He was employed by Carolinas HealthCare System in various executive roles, including Corporate Vice President, from January 1993 through March 2008. He served as Governor of the State of North Carolina from 1985 to 1993 and was a member of the United States House of Representatives, representing the Ninth District of North Carolina, from 1973 until 1984. Dr. Martin was a director of Palomar Medical Technologies, Inc. from 1997 until April 2013, a director of DesignLine Corporation from 2009 until 2012, and he was a Trustee of the North Carolina Capital Management Trust from 2000 until 2010. Dr. Martin was a director of aaiPharma Inc. from 1999 to 2007 and a director of Duke Energy Corporation from 1994 to 2006. Dr. Martin serves as Chairman of our Leadership Development and Compensation Committee. Dr. Martin’s qualifications to serve on the Board include his extensive leadership experience in both political and corporate settings, including his executive role as Governor of the State of North Carolina. In addition, Dr. Martin has developed valuable and diverse strategic and financial knowledge through his experience as a director on several public corporate and non-profit boards, including his experience as chairman of several committees of such boards.

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Harvey Morgan, age 71, has served as a director of the Company since 2007. Mr. Morgan has more than 40 years of investment banking experience with significant expertise in strategic advisory services, mergers and acquisitions, private placements and underwritings. He was a Managing Director of the investment banking firm Bentley Associates, L.P. from 2004 to 2013, and from 2001 to 2004, he was a Principal of Shattuck Hammond Partners. Mr. Morgan has also been a director of Cryolife, Inc. since 2008 and serves on its Audit and Governance Committees. Mr. Morgan also served as a director of Cybex International, Inc., from 2003 until February 2013 and a director of Burlington Coat Factory Warehouse Corporation from 1983 to 2005. Mr. Morgan serves on our Audit Committee and Nominating/Corporate Governance Committee. Mr. Morgan’s qualifications to serve on the Board include his strategic and financial acumen developed through decades of experience in the investment banking industry, as well as his leadership and corporate governance experience gained as a director of public company boards, including in the retail industry. In addition, the Board of Directors has determined that Mr. Morgan is an “audit committee financial expert,” as defined by applicable SEC rules.

Dale C. Pond, age 67, has served as a director of the Company since 2006. He retired in June 2005 as Senior Executive Vice President—Merchandising/Marketing after serving 12 years with Lowe’s Companies, Inc., a home improvement retailer. Prior to joining Lowe’s, he held a series of senior management positions at several retailers and home improvement companies including HQ/HomeQuarters Warehouse, Montgomery Ward and Payless Cashways, Inc. Mr. Pond has also been a director of Bassett Furniture Industries Inc. since 2002, where he serves as the Chairman of the Organization, Compensation and Nominating Committee. Mr. Pond served as a director of Scripps Networks Interactive, Inc., from 2008 until May 2012. Mr. Pond has served as the Lead Director of our Board of Directors since January 2013. Mr. Pond’s qualifications to serve on the Board include his demonstrated leadership and knowledge of financial, operational and strategic issues facing large retail companies gained through his executive leadership experience in the retail industry. In addition, through his years of service on the boards of several large companies, including as the chairman of the compensation and nominating committee of another public company, Mr. Pond is able to provide diverse and valuable finance, strategic and corporate governance experience to the Board.

Recommendation of the Board of Directors

The Board of Directors recommends that stockholders vote FOR the election of each of the nominees.

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DIRECTOR COMPENSATION

The Leadership Development and Compensation Committee annually reviews the Board’s compensation structure, including a comparison of the compensation paid by the Company to its directors with the compensation paid by companies included in the peer group established pursuant to the Company’s performance share rights program. For a discussion of this peer group, see “How does the Company select its peer group for the PSR program?” under the heading “Compensation Discussion and Analysis” in this Proxy Statement. Based on this information and other factors such as Company performance, director recruitment and current director compensation, the Leadership Development and Compensation Committee makes recommendations to the Board for adjustments, where appropriate, in director compensation. Director compensation for fiscal 2013 was based on retainer amounts and meeting fees established in September 2011 as well as an annual directors’ equity award of $75,000 set in August 2010, following advice from Hay Group, Inc., a compensation consultant to the Company and to the Leadership Development and Compensation Committee. The Leadership Development and Compensation Committee has determined that a mix of cash and equity compensation is appropriate for the directors, as further discussed below. Mr. Levine does not receive compensation for his services as a director or Chairman of the Board.

In fiscal 2013, the Company’s directors (other than Mr. Levine) received an annual retainer of $50,000. The Chairman of each of the Nominating/Corporate Governance Committee and the Leadership Development and Compensation Committee received an additional annual retainer of $15,000, and the Chairman of the Audit Committee received an additional annual retainer of $20,000. Our Lead Director was paid an additional annual retainer of $15,000. All retainers are paid quarterly in arrears with a pro-rata portion paid for any partial quarter served. In addition, non-management directors were paid $1,500 for each meeting of the Board attended and $1,000 for each committee meeting attended.

In addition to cash retainers and meeting fees, each of the non-management directors received an annual grant of our common stock in the amount of 1,293 shares with a value of $75,046 made on the day of the 2013 Annual Meeting in accordance with the terms of the Family Dollar Stores, Inc. 2006 Incentive Plan Directors’ Share Awards Guidelines (the “Directors’ Share Awards Guidelines”), which were adopted pursuant to the Family Dollar Stores, Inc. 2006 Incentive Plan (the “2006 Plan”). The grants were made upon the directors’ re-election in January 2013. The Board of Directors believes that the payment of a portion of the directors’ fees in the form of an annual grant of shares of our common stock supports the alignment of the directors’ interests with the interests of our stockholders. Non-management directors are required to maintain a level of equity interest in Family Dollar equal to at least one-half of the cumulative number of shares of our common stock awarded for their service as directors since August 2005. We encourage, but do not require, that directors maintain an equity interest in Family Dollar in excess of such minimum amounts. Currently, all of our directors are in compliance with these minimum requirements.

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We reimburse directors for all reasonable expenses incurred by them in connection with attendance at any meeting of the Board or its committees and for travel and other expenses incurred in connection with their duties as directors, which are not included in the table below.

The following table summarizes compensation we paid to non-employee directors in fiscal 2013.

Name	Fees Earned or Paid in Cash ($)		Stock Awards($)(1)		Total ($)
Mark R. Bernstein		71,316		75,046		146,362
Pamela L. Davies		80,684		75,046		155,730
Sharon Allred Decker		74,500		75,046		149,546
Edward C. Dolby		79,000		75,046		154,046
Glenn A. Eisenberg		90,000		75,046		165,046
Edward P. Garden		60,500		75,046		135,546
George R. Mahoney, Jr.		70,000		75,046		145,046
James G. Martin		83,000		75,046		158,046
Harvey Morgan		75,000		75,046		150,046
Dale C. Pond		83,000		75,046		158,046

⁽¹⁾  The amounts shown in this column indicate, for each director, the aggregate grant date fair value of stock awards granted in fiscal 2013, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 Compensation—Stock Compensation (“FASB ASC Topic 718”). For the total number of shares of common stock held by each non-employee director as of November 20, 2013, see “Ownership of the Company’s Securities” in this Proxy Statement.

CORPORATE GOVERNANCE MATTERS AND

COMMITTEES OF THE BOARD OF DIRECTORS

Director Independence

Our Corporate Governance Guidelines state that a majority of the Board members and all members of each of the Audit, Leadership Development and Compensation and Nominating/Corporate Governance Committees must be independent, as defined by the NYSE listing standards and additional categorical standards of independence adopted by the Board and set forth in such Guidelines, which can be found on our website at www.familydollar.com under the “Investor Relations” link (see “Corporate Governance” on the “Investor Relations” page). Under our Corporate Governance Guidelines, a director will not be considered independent if the director:

• has been employed by Family Dollar, its subsidiaries or affiliates within the last four years;

• has received, during the current year, or any of the three immediately preceding years, remuneration, directly or indirectly, other than de minimis remuneration (as defined below), as a result of service (other than as a director of a customer or supplier) as (i) an advisor, consultant or legal counsel to Family Dollar or to a member of our senior management; or (ii) a significant customer or supplier of Family Dollar;

• has any personal services contracts with Family Dollar or any member of our senior management;

• is an officer or employee of a not-for-profit entity that receives significant contributions from Family Dollar or serves any such entity in any capacity for which remuneration is received;

• is employed by a public company at which an executive officer of Family Dollar serves on the compensation committee of the board of directors;

• has any investment in any entity in which Family Dollar also has an investment, other than equity or debt investments that are available to the public in governmental or public entities, or investments in any other entity in which neither the director nor Family Dollar or any of its parents, subsidiaries, or affiliates own an interest of 5% or more or exercises managerial control;

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• has had any of the relationships described above with any affiliate of Family Dollar; or

• is a member of the immediate family of any person who fails to satisfy these qualifications.

A director shall be deemed to have received remuneration (excluding remuneration as a director, such as remuneration provided to a Committee Chairman or Lead Director), directly or indirectly, if the Company, its subsidiaries or affiliates, has paid remuneration to any entity in which the director has a beneficial ownership interest of 5% percent equity or more, or to an entity by which the director is employed or self-employed other than as a director. De minimis remuneration is excluded from this rule. Remuneration is de minimis if such remuneration is (a) $60,000 or less in any fiscal year; or (b) if such remuneration is paid to an entity and (i) such remuneration did not exceed the lesser of $1 million, or 5% of the gross revenues of the entity during the entity’s fiscal year and (ii) such remuneration did not directly result in a material increase in the compensation received by the director from that entity.

The Board has determined, after a review of the relationships between and among each of the directors, the Company and its officers, that Mark R. Bernstein, Pamela L. Davies, Sharon Allred Decker, Edward C. Dolby, Glenn A. Eisenberg, Edward P. Garden, George R. Mahoney, Jr., James G. Martin, Harvey Morgan and Dale C. Pond, who include the Lead Director and all the members of the Audit, Leadership Development and Compensation and Nominating/Corporate Governance committees, are independent, as defined by the NYSE listing standards and the categorical independence standards described above, and that no material relationships exist between any of the independent directors and Family Dollar other than by virtue of their being directors and stockholders.

In reaching its determination of independence, the Board reviewed each of the following transactions, relationships and arrangements. In each case, the Board determined that such transactions, relationships and arrangements did not impact any director’s independence.

• With respect to Mr. Mahoney, the Board considered that he was employed by the Company as General Counsel in 1976 and served as the Executive Vice President, General Counsel and Secretary of Family Dollar from 1991 until his retirement in May 2005.

• With respect to Dr. Davies, the Board considered the amount of charitable contributions made by our executive officers and immediate family members of our executive officers to charitable organizations of which she serves as an executive officer.

• With respect to Mr. Garden, the Board considered Mr. Garden’s relationship with Trian Fund Management, L.P. and its affiliates, and such firm’s ownership of approximately 7.35% of the common stock of the Company. The Board also considered the less than 1% ownership of PepsiCo, Inc. and less than 2.4% ownership of Mondelez International (formerly Kraft Foods), both of which are suppliers of the Company, by Trian Fund Management, L.P. and its affiliates.

Committees of the Board

Pursuant to our Bylaws, the Board of Directors has established four standing committees: the Audit, Leadership Development and Compensation, Equity Award, and Nominating/Corporate Governance Committees. The Charters of the Audit, Leadership Development and Compensation, Equity Award and Nominating/Corporate Governance Committees, our Corporate Governance Guidelines, and the Codes of Conduct applicable to our directors, officers and Team Members are available on our website at www.familydollar.com under the “Investor Relations” link (see “Corporate Governance” on the “Investor Relations” page). These documents also are available in print to stockholders upon request to our Corporate Secretary.

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The principal functions of each of our standing Board committees, the members of each committee and the number of meetings held in fiscal 2013 are set forth below:

Committee Name and Members	Committee Functions	Number of Meetings in Fiscal 2013
Audit Eisenberg(1)(2) Dolby Mahoney Morgan(2)	•      Assist the Board of Directors in fulfilling its responsibilities with respect to oversight of: (i)     the integrity of our financial statements; (ii)    our compliance with legal and regulatory requirements; (iii)  the independent auditor’s qualifications and independence; (iv)   the performance of our internal audit function and independent auditors; and (v)    the annual independent audit of our financial statements. •      Review the Company’s financial reports; •      Discuss the Company’s major financial risk exposures with management; •      Manage the Company’s relationship with the Company’s independent auditors; and •      Establish and oversee publication of procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by Team Members of concerns regarding questionable accounting or auditing matters.		8
Leadership Development and Compensation Martin(1)(3) Davies(3) Decker Dolby Pond (3)	•      Evaluate and approve the compensation of the CEO and executive officers; •      Evaluate and recommend to the Board compensation for non-management directors; •      Administer our incentive and equity-based compensation plans; •      Develop or review and recommend to the Board plans for the succession of our CEO and other executive officers, as necessary; and •      Establish and communicate to the Board and to management Family Dollar’s general compensation philosophy, as well as considerations for determining compensation for executive officers and directors.		9
Equity Award Levine	•      Select Team Members below the level of Vice President for participation in equity or cash incentive programs established by the Leadership Development and Compensation Committee pursuant to the 2006 Plan; and •      Approve the amount of grants or awards of equity or cash incentives to selected Team Members below the level of Vice President in accordance with the 2006 Plan programs and subject to such terms and limitations as established by the Leadership Development and Compensation Committee, which shall include limits on the number of equity related rights that may be granted in any fiscal year by the Equity Award Committee.		11	(4)

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Committee Name and Members	Committee Functions	Number of Meetings in Fiscal 2013
Nominating/ Corporate Governance Davies(1)(3) Bernstein Decker Morgan Martin(3)	•       Identify and recommend to the Board qualified individuals for election or re-election as directors at the annual meeting of stockholders or as otherwise required as a result of Board vacancies or an increase in the size of the Board; •       Review the structure, independence and composition of the Board and its committees and recommend to the Board the membership of the committees and chairs of such committees; •       If an incumbent director fails to receive the required vote for re-election in any uncontested election as provided in the Company’s Corporate Governance Guidelines, determine, and make recommendations to the Board regarding, whether or not to accept the director’s resignation; •       Evaluate the performance of the Board and Board committees and report findings to the Board; •       Develop (with our management) director orientation programs; •       Nominate for Board approval the Chairman of the Board and (if the Chairman is not an independent director) the Lead Director and make recommendations to the Board regarding their respective roles; •       Review and make recommendations to the Board regarding matters referred to the committee as provided in our codes of conduct; •       Evaluate and make recommendations to the Board regarding stockholder proposals; and •       Recommend to the Board and oversee the implementation of sound corporate governance principles and practices.		5

⁽¹⁾  Current Chairman of the Committee.

⁽²⁾  Designated as an Audit Committee Financial Expert.

⁽³⁾  On January 17, 2013: Dr. Davies became Chairman of the Nominating/Corporate Governance Committee and left the Leadership Development and Compensation Committee; Dr. Martin joined and became Chairman of the Leadership Development and Compensation Committee and Mr. Pond left the Leadership Development and Compensation Committee and became Lead Director. Prior to January 17, 2013, Mr. Pond served as Chairman of the Leadership Development and Compensation Committee and Dr. Martin served as Chairman of the Nominating/Corporate Governance Committee.

⁽⁴⁾  The Equity Award Committee acted by unanimous written consent 11 times in fiscal 2013.

Board Leadership Structure

Mr. Levine serves as our Chairman of the Board and Chief Executive Officer. The Company does not have a policy regarding the combination or separation of the Chairman and CEO roles. Rather, the Company’s Corporate Governance Guidelines retain flexibility for the Board to determine whether those roles should be combined or separated in light of prevailing circumstances. The Board periodically reviews the appropriateness and effectiveness of its leadership structure given numerous factors. The Board believes that having Mr. Levine serve as both Chairman and CEO, coupled with strong independent director leadership, is the most appropriate and effective Board leadership structure for the Company at this time.

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A number of factors support the current leadership structure. Mr. Levine has more than 27 years of experience in the retail industry and has served as the Chairman and CEO of the Company for the past ten years. The Board believes that Mr. Levine’s in-depth knowledge of the retail industry and of the businesses and operations of the Company best equips him to lead Board meetings as the directors discuss key business and strategic matters and best equips him to focus the Board on the most critical issues. The Board believes the current combined Chairman and CEO structure has promoted decisive leadership, ensured clear accountability and enhanced our ability to communicate with a single and consistent voice to stockholders, customers, Team Members and other stakeholders. During the ten years Mr. Levine has served as both Chairman and CEO, the Company has enhanced stockholder value and improved performance in many critical financial metrics, including earnings per diluted share, sales per square foot, and return on stockholders’ equity.

In addition, the Board believes that other aspects of the current leadership structure and Corporate Governance Guidelines ensure effective independent Board leadership and oversight of management. For example, the Board regularly meets in executive session without the CEO or any other members of management present, and the independent Lead Director presides at such sessions and coordinates the activities of the independent directors. The independent Lead Director also acts as a liaison between the Board and the Chairman of the Board and performs other duties set forth in the Company’s Corporate Governance Guidelines. In accordance with the Company’s Corporate Governance Guidelines, the Chairman of the Board consults with the Lead Director regarding the yearly schedule and agendas for Board meetings. As a matter of practice, the Chairman elicits input from the independent directors as to the matters they would like covered at the meetings and the information they would find most helpful in their deliberations and decision-making. Strong independent director leadership is also enhanced by the fact that the Board’s Audit, Leadership Development and Compensation, and Nominating/Corporate Governance Committees are composed solely of, and chaired by, independent directors.

In summary, the Board believes the Company’s existing Board leadership structure strikes an effective balance between strong, strategically advantageous Chairman and CEO leadership and appropriate oversight of management provided by strong independent directors. The combined Chairman and CEO structure has served the Company and its stockholders well and the Board believes that it remains the most appropriate leadership structure for the Company at this time. The Board believes that its programs for overseeing risk, as described under “The Board’s Role in Risk Oversight” below, would be effective under a variety of leadership frameworks and therefore do not materially affect its choice of structure.

The Board’s Role in Risk Oversight

The Board of Directors and its committees oversee the Company’s enterprise-wide approach to risk management. The Company’s risk management program seeks to support achievement of its long-term organizational objectives and enhance shareholder value.

The Company’s officers update the Board or its committees throughout the year on a variety of matters to assist them in understanding and monitoring the Company’s risk management policies and processes. These matters include operations, legal, regulatory, finance, reputation, and strategy, as well as the significant risks associated with these or other matters. When a Board committee receives an update, the entire Board is informed through the committee report. This process facilitates the Board’s and its committees’ coordination of the risk oversight role.

In addition, each of the Board’s committees reviews with management significant risks related to such committee’s area of responsibility. In accordance with its charter, the Audit Committee reviews the Company’s policies and processes with respect to financial risk assessment and risk management. Our Leadership Development and Compensation Committee reviews and discusses with management the risk associated with the design and implementation of our compensation plans and arrangements. In addition, as discussed in “Compensation Discussion and Analysis—Other Executive Officer Compensation Matters”, the Leadership

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Development and Compensation Committee periodically assesses the risks related to our overall compensation program. Our Nominating/Corporate Governance Committee reviews the Company’s policies and processes with respect to corporate compliance and regulatory issues.

Nominees for Election as Directors

The Nominating/Corporate Governance Committee considers all qualified candidates identified by members of the committee, by other Board members, by senior management, and by stockholders. To recommend a prospective nominee for the Nominating/Corporate Governance Committee’s consideration, stockholders should submit the candidate’s name and qualifications in writing to our Corporate Secretary at the following address: Family Dollar Stores, Inc., Attention: Corporate Secretary, P.O. Box 1017, Charlotte, NC 28201-1017. Any such submission must be accompanied by the written consent of the proposed nominee which states that he or she consents to being named as a nominee and to serve as a director if elected and must otherwise comply with the provisions of our Bylaws regarding stockholder nominations, including the provisions of Article II, Section 9 of the Bylaws which establish certain requirements regarding the information required to be provided by the nominating stockholder and the timeliness of the notice of such nomination (which generally must be submitted not later than 90 days nor more than 120 days prior to the anniversary date of the prior year’s annual meeting). For further information, see “Stockholder Proposals for 2015 Annual Meeting” in this Proxy Statement and our Bylaws which are available at www.familydollar.com under the “Investor Relations” link (see “Corporate Governance” on the “Investor Relations” page).

The Nominating/Corporate Governance Committee reviews each candidate’s biographical information and assesses each candidate’s independence, skills and expertise based on a variety of factors. In particular, the committee seeks directors who exhibit integrity in business and personal affairs; objectivity and independence in making informed business decisions; professional experience and specific areas of expertise; willingness to devote the time necessary to fulfill a director’s duties; the ability to contribute to the diversity of perspectives present in Board deliberations; and requirements of applicable law and listing standards. While the Company’s Corporate Governance Guidelines do not prescribe diversity standards, as a matter of practice, the committee considers diversity in the context of the Board as a whole and takes into account the personal characteristics (gender, ethnicity, age) and experience (industry, professional, public service) of current and prospective directors to facilitate Board deliberations that reflect a broad range of perspectives.

Based on its assessment of each candidate’s independence, skills and qualifications and the criteria described above, the Nominating/Corporate Governance Committee will make recommendations regarding potential director candidates to the Board. The Nominating/Corporate Governance Committee extends invitations on behalf of the Company to join the Board of Directors or to be nominated for election as a director to candidates approved by the Board.

The Nominating/Corporate Governance Committee follows the same process and uses the same criteria for evaluating candidates proposed by stockholders, members of the Board and members of senior management. The Company did not receive any recommendation of a director candidate from a stockholder, or group of stockholders, that beneficially owned more than 5% of our common stock for at least one year as of the date of recommendation.

Communication with the Board of Directors

Stockholders and other interested parties may communicate with the Board of Directors, the Lead Director or the non-management directors as a group by sending correspondence addressed to the applicable party to: Board of Directors, Family Dollar Stores, Inc., P.O. Box 1017, Charlotte, NC 28201-1017, or by sending an email addressed to Board@familydollar.com. Pursuant to procedures approved by the independent members of the Board of Directors, all such correspondence related to the Board’s duties and responsibilities will be reviewed by our General Counsel and forwarded to the Lead Director or summarized in periodic reports to the Lead Director. All such correspondence will be available to any of the directors upon request.

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Report of the Audit Committee of the Board of Directors

During fiscal 2013, Glenn A. Eisenberg served as Chairman of the Audit Committee of the Board of Directors. The other members of the Audit Committee during fiscal 2013 were Edward C. Dolby, George R. Mahoney, Jr. and Harvey Morgan. The Board of Directors has determined that all members of the Audit Committee are independent and are financially literate as required by the NYSE listing standards, and that Mr. Eisenberg and Mr. Morgan are “audit committee financial experts,” as defined by SEC rules, and have accounting or related financial management expertise, as required by the NYSE’s listing requirements.

The Audit Committee has reviewed and discussed the audited financial statements of Family Dollar Stores, Inc. for fiscal 2013 with our management. The Audit Committee has discussed with PricewaterhouseCoopers LLP (“PwC”), our independent registered public accountants, the matters required to be discussed by Statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1 AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T.

The Audit Committee has also received the written disclosures and the letter from PwC required by applicable requirements of the Public Company Accounting Oversight Board regarding PwC’s communications with the Audit Committee concerning independence and has discussed the independence of PwC with that firm.

Based on the Audit Committee’s review and the discussions noted above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Annual Report on Form 10-K for fiscal 2013 of Family Dollar Stores, Inc. for filing with the SEC.

This report is submitted by Glenn A. Eisenberg, Chairman, Edward C. Dolby, George R. Mahoney, Jr. and Harvey Morgan.

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COMPENSATION DISCUSSION AND ANALYSIS

Overview

This section sets forth the compensation programs and elements of compensation for our named executive officers (“NEOs”). Specifically, this Compensation Discussion and Analysis describes the objectives and features of our executive compensation programs, explains how we design our executive compensation programs and the reasons for such design, and shows how we allocate executive compensation to ensure that executives’ interests are aligned with those of our stockholders. In fiscal 2013, our NEOs were:

• Howard R. Levine – Chairman and Chief Executive Officer;

• Michael K. Bloom – President and Chief Operating Officer;

• Mary A. Winston – Executive Vice President, Chief Financial Officer;

• Barry W. Sullivan – Executive Vice President, Store Operations;

• James C. Snyder, Jr. – Senior Vice President, General Counsel and Secretary;

• Paul G. White – Executive Vice President, Chief Merchandising Officer until July 9, 2013; and

• Charles S. Gibson, Jr. – Executive Vice President, Supply Chain until April 30, 2013.

Mr. Gibson left the Company on April 30, 2013, and Mr. White left the Company on July 9, 2013.

Compensation for our NEOs and our Section 16 officers is reviewed and approved by the Leadership Development and Compensation Committee on an annual basis. The Leadership Development and Compensation Committee is also advised by management as to the compensation for all officers at the level of Senior Vice President. The Leadership Development and Compensation Committee approves our short-term and long-term compensation plans, as described below, which form the basis for all officer compensation packages.

Compensation Practices Highlights

Our compensation program is designed to drive and reward outstanding performance that benefits our stockholders. The Leadership Development and Compensation Committee has implemented compensation practices with this goal in mind, including:

• a mix of cash and equity compensation and short-term and long-term compensation;

• a mix of performance measures in determining incentive compensation (including Company performance and comparison against peer group performance);

• a clawback policy applicable to annual cash bonuses;

• executive stock ownership requirements;

• no stock option repricings;

• “double trigger” equity vesting upon a change in control only if equity is not assumed by the acquirer or the employee is terminated without cause; and

• no golden parachute excise tax gross-ups.

2013 Stockholder Vote on Executive Compensation

At the 2013 Annual Meeting of Stockholders, stockholders voted to approve, on a non-binding advisory basis, the compensation of the Company’s named executive officers as described in the 2013 Proxy Statement, with 96.95% of the votes cast voting to approve the compensation. The Leadership Development and Compensation Committee was aware of the stockholders’ prior approval of our executive compensation structure

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in its ongoing discussions about our compensation policies and structures. In addition, at the 2012 Annual Meeting, our stockholders expressed a preference that advisory votes on executive compensation occur every year, as recommended by our Board, a practice that the Board has decided to implement.

Summary of Fiscal 2013

In fiscal 2013, the macro-economic environment continued to impact our financial results. Our customers continued to face increased financial pressures, including continued high unemployment rates, increased payroll taxes, and volatility in gasoline prices. Recognizing these challenges, our teams adjusted our plans to manage our business in a difficult operating environment. We tightly controlled expenses, reduced receipts and aggressively managed unproductive inventory.

During fiscal 2013, we continued to focus on achieving our four corporate goals: build customer loyalty and experience; deliver profitable sales growth; drive continuous improvement; and develop diverse, high performing teams. These goals are designed to drive both short-term and longer-term financial results. The following are some highlights from these efforts:

• We accelerated our new store growth and increased our store openings to 500 stores. We renovated, relocated or expanded 830 stores under our comprehensive store renovation program. This program is intended to increase our competitiveness and sales productivity by transforming the customer’s shopping experience in a Family Dollar store. At the end of fiscal 2013, approximately 60% of our chain reflected a more compelling shopping experience.

• With a strong focus on increasing our relevancy with customers and driving sales productivity, in fiscal 2013 we launched our partnership with McLane Company, Inc. This strategic partnership enabled us to strengthen our refrigerated frozen supply chain and enhance our assortment of frozen and refrigerated food while also supporting our tobacco rollout.

• We made progress in increasing our penetration of private brands. In fiscal 2013, private brand sales increased by approximately 10% over fiscal 2012. Private brand consumable sales performed especially well, increasing by 21% over fiscal 2012. In fiscal 2013, private brand sales represented approximately 26% of total sales and approximately 18% of total consumable sales.

• We expanded our teams in Shanghai, Luxembourg, and Bangkok as part of our global sourcing program. Through this program, we increased merchandise purchases (at cost) direct from the factory by nearly 90% to approximately 5% of our total purchased merchandise.

Despite the many challenges facing the Company, our customers and the global economy, we achieved the following accomplishments in fiscal 2013:

• Net income per diluted share increased 7.0% to $3.83 in fiscal 2013, compared with $3.58 in fiscal 2012.

• Net sales increased 11.4%, reflecting a comparable store sales increase of 3.0% and the impact of sales from new stores opened as part of our store growth program.

• Consistent with the National Retail Federation Calendar, fiscal 2013 included 53 weeks as compared to 52 weeks in fiscal 2012. We estimate the extra week contributed about $189 million in total sales and $0.07 of earnings per diluted share.

• Despite the difficult macro-economic environment, we invested $744.4 million in our business to support accelerated new store openings, our store renovation effort and the construction of our 11^th distribution center.

• We increased our dividend per share rate by approximately 23.8% and delivered return on shareholders’ equity of 30.8%.

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Our compensation program is designed to drive and reward outstanding performance that benefits our stockholders. We believe that when the Company performs well and achieves its operating goals, our executive officers should receive rewards that are commensurate with those of our stockholders. In fiscal 2013, we continued to face a challenging operating environment. Despite these challenges, we delivered results that translated into record earnings for our stockholders. However, our actual results were below our pre-tax earnings goal. Consistent with our philosophy of aligning executive compensation with Company performance, we made actual bonus payments at 51.3% of the target award to our executives for fiscal 2013. For information about the performance of our common stock, please see the Stock Performance Graph under Part II, Item 5 of our Annual Report.

Compensation Program Objectives and Components

Our compensation philosophy and the material elements of our executive compensation program did not change from fiscal 2012 to fiscal 2013. Although we make minor adjustments to our compensation programs from year to year, we believe that consistency in our compensation philosophy and administration is an important attribute of our compensation program. We have not made significant adjustments to our compensation program since fiscal 2006 when we adopted our performance share rights program (as further described below) and our stockholders approved the Family Dollar Stores, Inc. 2006 Incentive Plan (the “2006 Plan” as further described below) at the 2006 Annual Meeting of Stockholders. At our 2011 Annual Meeting of Stockholders, our stockholders re-approved the performance measures for performance-based awards under the 2006 Plan.

What are the primary objectives of the Company’s executive compensation programs?

The primary objectives of our executive compensation programs are to:

• provide compensation packages that are competitive with those offered by our peers in the retail sector. By offering competitive compensation packages, we are better able to attract and retain talented executives who are capable of carrying out the objectives, goals and strategic initiatives established by the Board and executive management;

• align interests of our executives with those of stockholders by keeping a significant portion of NEO compensation “at risk” and linked to both our short-term and long-term financial success; and

• provide a total compensation program that drives individual contributions to our business results through a “pay-for-performance” compensation system.

What elements of compensation does the Company provide to executives to meet the objectives of its compensation programs?

We provide the following forms of compensation to our NEOs:

• base salary;

• annual cash bonus;

• performance-based share awards;

• stock options;

• select perquisites;

• severance and change in control benefits;

• 401(k) savings and deferred compensation plans; and

• health, life and disability insurance programs.

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Executive Compensation Program Design

What role do compensation consultants play in designing the Company’s compensation programs?

The Leadership Development and Compensation Committee’s goal is to establish total NEO compensation that promotes the objectives discussed above, and in particular at a level which is competitive enough to enable us to attract and retain talented executives. To assist with this analysis, the Leadership Development and Compensation Committee has engaged Hay Group, Inc. (“Hay Group”) to analyze the appropriate level of compensation for each NEO’s position and to provide appropriate “benchmarking” data (as discussed in greater detail below). For each NEO, Hay Group reviews the responsibilities assigned to his or her position, the knowledge and skills necessary to perform his or her job function, the importance of his or her role to the organization, and the scope of his or her business function. As part of its evaluation, Hay Group periodically interviews certain executives, reviews our organizational structure, and relies upon its collective retail consulting experience. Hay Group uses all of this information to analyze retail compensation market data and to ensure that each NEO’s position is compared to the appropriate benchmarking data.

Hay Group also provides the Leadership Development and Compensation Committee with materials describing compensation trends in the retail industry and general “best practices.” This allows the Leadership Development and Compensation Committee to review our pay practices against our peers in the U.S. marketplace (as described in more detail below). The total amount of fees paid to Hay Group for services to the Leadership Development and Compensation Committee for fiscal 2013 was approximately $68,133. In addition, the Leadership Development and Compensation Committee reimburses Hay Group for reasonable travel and business expenses. Hay Group received other fees from the Company for fiscal 2013 of approximately $189,081 for providing the Company with information on retail industry general compensation trends, stock option valuation services, benchmarking evaluations and market updates for non-executive Team Members in our domestic and global locations. The decision to engage Hay Group for services other than those provided to the Leadership Development and Compensation Committee was made by management and was reviewed and approved by the Leadership Development and Compensation Committee.

Additionally, the Leadership Development and Compensation Committee retained a second independent consultant, Steven Hall & Partners, to review compensation materials prepared by management and Hay Group. Steven Hall & Partners reviews recommended compensation amounts and levels and further advises the Leadership Development and Compensation Committee on compensation matters, including executive compensation trends and best practices. Unlike Hay Group, Steven Hall & Partners does not provide other advice or services to the Company and is hired by and takes direction solely from the Leadership Development and Compensation Committee.

The Leadership Development and Compensation Committee reviewed the independence of Hay Group and Steven Hall & Partners in light of the independence factors of the NYSE listing standards. Neither the Company nor the Leadership Development and Compensation Committee believe that the work of Hay Group or Steven Hall & Partners in fiscal 2013 raised any conflict of interest. The Leadership Development and Compensation Committee’s Charter grants it sole authority to select, retain and terminate compensation consultants, legal counsel and other advisors.

What role does management play in designing the Company’s compensation programs?

The annual compensation review process for all corporate Team Members, including our NEOs, occurs at the end of each fiscal year. At that time, the CEO discusses the performance of each of the other NEOs with the Leadership Development and Compensation Committee. The Leadership Development and Compensation Committee receives the CEO’s recommendations on the appropriate compensation packages for each NEO, together with benchmarking data for each NEO. The Leadership Development and Compensation Committee also considers “tally sheets” (described in more detail below) prepared by our Human Resources department.

As to the CEO’s compensation, the CEO submits a self-evaluation to the Board, and each director completes an evaluation of the CEO. The evaluation results are compiled by the Lead Director and the Chair of the

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Leadership Development and Compensation Committee. The results are presented to the independent members of the Board and discussed during an executive session. The Leadership Development and Compensation Committee meets separately with Hay Group and then with Steven Hall & Partners to discuss the CEO’s compensation package. The Chairman of the Leadership Development and Compensation Committee and the Lead Director then meet with the CEO to discuss his performance evaluation, compensation package and related market data.

What information is included in the “tally sheets” reviewed by the Leadership Development and Compensation Committee?

Tally sheets describe the total dollar value of each NEO’s annual compensation for the past three years. The total dollar value includes salary, short-term and long-term incentive compensation (collectively “Total Direct Compensation”), and the costs we incur to provide various health and insurance benefits and perquisites to our NEOs. The tally sheets also describe each NEO’s accumulated realized and unrealized stock option gains, any stock awards made under our performance share rights program, and the amounts our NEOs will receive if they leave the Company under various circumstances, such as retirement or termination in connection with a change in control. The Leadership Development and Compensation Committee’s annual review of tally sheets helps the Leadership Development and Compensation Committee oversee the design of our executive compensation program by providing a more complete picture of the current and historical compensation of each NEO.

How does the Company use benchmarking data to help establish NEO Compensation?

Because one of our primary compensation objectives is to provide compensation packages competitive with those of our peers in the retail sector, benchmarking data is vital to help us establish NEO compensation.

Hay Group compares the pay levels of our NEOs to positions of similar responsibility and job scope at U.S. companies contained in Hay Group’s All Retail Industry Database (the “Hay Retail Industry Database”). The Hay Retail Industry Database contains information on over 100 U.S. retail companies, including most of our direct competitors. The Hay Retail Industry Database is recognized as a leading compensation survey for the retail sector and contains a broad representation of the retail sector’s pay practices. The list of companies that comprised the Hay Retail Industry Database when we established fiscal 2013 compensation packages for our NEOs is attached to this Proxy Statement as Appendix A.

Once Hay Group identifies positions comparable to those of our NEOs at companies within the Hay Retail Industry Database, it provides the Leadership Development and Compensation Committee with information about the total compensation packages for those comparable positions at other retail companies, as well as benchmarking data for each component of executive compensation. Hay Group also analyzes the mix of pay offered to our NEOs, comparing fixed and variable pay as well as short-term and long-term incentives. The CEO provides recommendations to the Leadership Development and Compensation Committee regarding NEO compensation, and the Leadership Development and Compensation Committee then determines base salary and target levels of annual short-term and long-term incentive awards for our NEOs after considering these recommendations together with the benchmarking data provided by Hay Group.

The Total Direct Compensation offered to each NEO, as well as the components of Total Direct Compensation, vary as a result of the differing job scopes and complexity of each role. These differences in job responsibilities are reflected in the compensation survey data for the retail industry provided by the Hay Group reviewed annually by the Leadership Development and Compensation Committee.

How does the Leadership Development and Compensation Committee determine the amounts of specific compensation elements?

We do not utilize a formula or pre-set methodology to allocate NEO compensation among the elements of Total Direct Compensation. However, the Leadership Development and Compensation Committee has generally

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targeted the Total Direct Compensation level of each NEO near the 50^th percentile for similar positions at retail companies in the Hay Retail Industry Database and generally sets base salaries at or near the 50^th percentile.

To determine the proper mix of compensation elements, the Leadership Development and Compensation Committee considers a number of subjective factors, including:

• Current market practices. We compare both total direct compensation and each element of our executives’ compensation packages against the Hay Retail Industry Database, paying special attention to the compensation practices of our most direct competitors. We rely on our compensation consultants and our Human Resources managers to provide information about the compensation practices of our peers. We also look at our recent successes or failures in recruiting and retaining executives to help us establish compensation levels.

• Personal performance. We consider the recommendations of our CEO regarding the compensation of the other NEOs, including individual performance ratings, and experience of the NEO, along with the CEO’s view on compensation matters, when making compensation decisions at the end of each fiscal year. The Leadership Development and Compensation Committee has not established specific qualitative or quantitative guidelines, other than goals for overall Company performance pursuant to the incentive programs, to measure the personal performance of any NEO, with the exception of Mr. Snyder’s Target Bonus opportunity, which may increase or decrease based on his individual performance rating, as described in the “Description of Plan Based Awards” section, elsewhere in this proxy statement. However, the Leadership Development and Compensation Committee may consider subjective personal performance criteria when establishing NEO compensation.

• Balance. Our compensation program is intended to be balanced. We recognize the need to provide sufficient guaranteed short-term income to executives through base salary and benefits and also the need to balance that income with at-risk, performance-based short-term and longer-term financial rewards which promote achievement of our goals. Further, we believe that as an individual’s level of responsibility and ability to contribute to our financial success increases, that individual’s total compensation also should increase. Likewise, as an individual’s total compensation increases, we believe that the ratio of both equity to non-equity compensation and performance-based compensation to total compensation also should increase.

• Compensation best practices. We believe that compensation decisions should be reasonable, understandable, responsible and tied to the best interests of our stockholders. Therefore, we continuously monitor developments in executive compensation “best practices” to help us achieve our compensation objectives.

The Leadership Development and Compensation Committee does not consider an executive’s total equity ownership or gains from prior equity incentive awards in determining Total Direct Compensation.

Elements of Executive Compensation

What are the elements of the Company’s executive compensation?

The compensation packages for our executives, including our NEOs, consist of base salary and short-term and long-term incentive programs which are designed to ensure that a substantial portion of an executive’s compensation package is based on “pay for performance.” As described below, the short-term incentive program provides for payment of an annual cash bonus if we achieve certain pre-tax earnings goals, while the long-term incentive programs provide for the issuance of stock awards (Performance Share Rights and stock options, as further discussed below) which vest or are earned over multi-year periods and the value of which is dependent upon our performance, including our market stock price. These programs are implemented pursuant to the terms of the stockholder approved 2006 Plan.

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How does the Company set base salaries for its NEOs?

Initially upon hire or promotion, and then on an annual basis thereafter, the Leadership Development and Compensation Committee considers whether and to what extent adjustments to each NEO’s base salary should be made. We determine the base salary ranges for our NEOs primarily by reviewing compensation surveys provided by Hay Group and the Leadership Development and Compensation Committee’s consultants. Generally, we target our NEOs’ base salaries at the 50^th percentile of companies in the Hay Retail Industry Database. The Leadership Development and Compensation Committee believes that setting salaries lower than the median would prevent us from attracting and retaining top quality executive talent, while setting salaries at a higher level may over-compensate executives without regard to individual or company performance.

Once we determine the appropriate compensation ranges for our executives, we establish the specific salary for each NEO. To determine individual salaries, we consider each NEO’s experience, his or her tenure with Family Dollar, his or her pay in comparison to our other officers, competitive information provided by the Leadership Development and Compensation Committee’s consultants, and the NEO’s contribution to our objectives. We also consider our operating performance, and the NEO’s specific contributions to our performance, when setting executive salaries.

The base salaries paid to our NEOs in fiscal 2013 are contained in the Summary Compensation Table in this Proxy Statement. Information with respect to our NEOs’ fiscal 2014 compensation, including base salary levels, is set forth under the heading “NEO Compensation for Fiscal 2014” later in this discussion.

Analysis of fiscal 2013 NEO base salaries

We adjusted the base salaries paid to each NEO effective as of October 14, 2012, to reflect market conditions and in accordance with our practice described above. All salary adjustments also took into account the contributions of each NEO throughout fiscal 2012 as well the Company’s overall performance.

Mr. Levine’s base salary was increased by 4.3% in recognition of the Company’s performance and to keep his base salary within an acceptable range of the Leadership Development and Compensation Committee’s 50^th percentile target in respect of similar positions at retail companies in the Hay Retail Industry Database for base salary. This adjustment was also made to maintain the Leadership Development and Compensation Committee’s desired balance between base salary and long-term equity compensation.

Mr. Bloom received a 6.9% increase to his base salary that provided recognition for his role as President and Chief Operating Officer and positioned him within the Leadership Development and Compensation Committee’s 50^th percentile target in respect of similar positions at retail companies in the Hay Retail Industry Database for base salary.

Ms. Winston’s base salary was increased by 2.1% to maintain a competitive salary in her role as Executive Vice President, Chief Financial Officer in comparison to base salary for similar positions at retail companies in the Hay Retail Industry Database.

Mr. Sullivan received an increase to his base salary of 6.3% in order to bring his base salary within an acceptable range of the 50^th percentile for similar positions at retail companies in the Hay Retail Industry Database.

Mr. Snyder received an increase of 4.2% in base salary. The base salary increase Mr. Snyder received was recognition for his contributions in fiscal 2012 and to remain within acceptable range of the Leadership Development and Compensation Committee’s target for his base salary in respect of similar positions at retail companies in the Hay Retail Industry Database.

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Mr. White’s base salary increase of 3.4% was provided in acknowledgment of his role as Executive Vice President, Chief Merchandising Officer. The base salary offered to Mr. White was competitive with similar positions at retail companies in the Hay Retail Industry Database.

Mr. Gibson received a 2.3% increase to his base salary. The base salary offered to Mr. Gibson in fiscal 2013 was competitive with similar positions at retail companies in the Hay Retail Industry Database.

In fiscal 2013, the base salary for each NEO was at approximately the 50^th percentile for similar positions at retail companies in the Hay Retail Industry Database.

Why does the Company award an annual cash bonus to executives, and how does the Company determine the amount of the annual cash bonus?

Pursuant to the Guidelines for Annual Cash Bonus Awards established under the 2006 Plan (the “Cash Bonus Award Guidelines”), we provide short-term annual cash incentive awards, in the form of an annual cash bonus to NEOs to drive our short-term performance goals for annual pre-tax earnings (i.e., income prior to the deduction of income taxes), as adjusted pursuant to the Cash Bonus Award Guidelines. The short-term incentive performance goals are derived from our strategic planning process. We use the procedures described above under the heading “Executive Compensation Program Design” to determine the appropriate annual target bonus for each executive. In addition, we may award one-time bonuses from time to time in order to assist in our recruitment or retention of executive officers.

For NEOs, annual target bonuses currently range from 40% to 120% of his or her annual base salary (the “Target Bonus”). Consistent with our pay-for-performance philosophy, we believe that exemplary Company performance should be rewarded. Therefore, senior executives who have the most opportunity to impact our operating initiatives have a larger potential bonus than other participants in the program, so that their compensation is more closely tied to the achievement of our earnings goals. This provides our senior executives, including the NEOs, with powerful incentives to ensure we meet our performance goals. Annual bonus opportunities have a maximum payout equal to two times the Target Bonus.

Information regarding the annual cash bonus actually paid to our NEOs for fiscal 2013, fiscal 2012 and fiscal 2011 performance can be found in the Summary Compensation Table in this Proxy Statement.

For fiscal 2013, Target Bonuses under the Cash Bonus Award Guidelines approved by the Leadership Development and Compensation Committee for the NEOs were as follows:

Name	Target Bonus
Howard R. Levine		120% of base salary
Michael K. Bloom		75% of base salary
Mary A. Winston		55% of base salary
Barry W. Sullivan		55% of base salary
James C. Snyder, Jr.		40% of base salary
Paul G. White		55% of base salary
Charles S. Gibson, Jr.		55% of base salary

Analysis of Fiscal 2013 Target Bonuses

The Target Bonus for each of our NEOs for fiscal 2013 either approximated the 50^th percentile goal or was slightly below the 50^th percentile for similar positions at retail companies in the Hay Retail Industry Database. The actual payouts for each of our NEOs under the Cash Bonus Award Guidelines for 2013 were below the median for retail companies in the Hay Retail Industry Database.

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Analysis of Establishment of Pre-Tax Earnings Goal

Annual cash bonus awards are an important part of our compensation structure. The Leadership Development and Compensation Committee believes that establishing a target goal that requires a level of performance consistent with our earnings goal but that can be reached in most years aligns the interests of our NEOs with those of our stockholders. The Leadership Development and Compensation Committee considers the Company’s historical financial position, the economic environment, the financial performance of our competitors, and management’s proposed fiscal financial plan when establishing performance targets based on financial goals. These targets are meant to ensure that our executives’ total cash compensation is consistent with officers of our peer companies, if the Company’s financial performance is consistent with those peers. For fiscal 2013, our pre-tax earnings target goal (as adjusted in accordance with the terms of the Cash Bonus Award Guidelines) was $805.4 million. As reflected in the chart below, our actual adjusted pre-tax earnings of $687.7 million for fiscal 2013 was below our target goal, resulting in a payout of 51.3% of each NEO’s Target Bonus. See the table and discussion under the heading “Cash Bonus Awards” in this Proxy Statement for more information on the calculation of bonus awards and minimum and maximum payout amounts.

The following chart sets forth the percentage of Target Bonus payout in relation to our pre-tax earnings target goals over the last ten fiscal years:

⁽¹⁾  Pursuant to the 2006 Plan, the Leadership Development and Compensation Committee will adjust the calculation of pre-tax earnings under the Cash Bonus Award Guidelines to exclude unusual, non-recurring or other extraordinary items that may positively or negatively impact our pre-tax earnings.

⁽²⁾  Excludes the impact of a $45 million litigation charge and a $10.5 million charge related to stock option expenses. See Notes 8 and 10 to the Consolidated Financial Statements in our fiscal 2006 Annual Report for a description of these charges.

⁽³⁾  Excludes the impact of approximately $22 million in expenses and settlement costs related to our stockholder derivative litigation. See Note 8 to the Consolidated Financial Statements in our fiscal 2007

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Annual Report, Note 10 to the Consolidated Financial Statements in our fiscal 2006 Annual Report, and our Current Report on Form 8-K filed with the SEC on June 26, 2007, for a description of this litigation and the related settlement.

⁽⁴⁾  Excludes approximately $420,000 in expenses related to our stockholder derivative litigation and related matters. See Note 8 to the Consolidated Financial Statements in our fiscal 2007 Annual Report, Note 10 to the Consolidated Financial Statements in our fiscal 2006 Annual Report, and our Current Report on Form 8-K filed with the SEC on June 26, 2007, for a description of this litigation and the related settlement.

⁽⁵⁾  Excludes an $8.5 million positive net impact related to a favorable insurance settlement.

⁽⁶⁾  Excludes approximately $8.8 million in interest expense related to our issuance of public debt in January 2011.

⁽⁷⁾  Excludes an $11.5 million litigation charge and approximately $3.3 million in legal fees. See Note 11 to the Consolidated Financial Statements in our fiscal 2012 Annual Report for a description of the litigation charge.

⁽⁸⁾  Excludes a $3.0 million net impact related to accounting adjustments and litigation. See Note 12 to the Consolidated Financial Statements in our fiscal 2013 Annual Report for a description of our litigation.

Why does the Company provide long-term incentive awards to executives, and how does the Company determine the amount of those awards?

We believe that a large portion of each NEO’s compensation should be both performance-based and in the form of equity awards. Our long-term incentive awards are designed to align the interests of our executives with those of our stockholders. We currently provide two types of long-term incentive compensation: stock options and performance share rights (“PSRs”). PSR awards give recipients the right to be issued shares of our common stock, if we perform at a certain level as compared to a selected peer group of companies (the “Performance Peer Group”) over the relevant performance period. These awards are made under the 2006 Plan. We do not grant any restricted stock or restricted stock units that vest solely on the basis of service-based holding periods.

We use the procedures described above under the heading “Executive Compensation Program Design” to determine the appropriate total dollar value of long-term equity incentive compensation to award each NEO. We review this dollar value each year against the benchmarking data provided by Hay Group and may change it based on that benchmarking data, the NEO’s performance, market conditions or each NEO’s mix of total compensation. Once we establish the appropriate dollar value of long-term equity incentive compensation to be granted to each NEO in a particular fiscal year, it is divided equally between stock options and PSRs, using the value of an award of PSRs if performance were to be achieved at target.

Option and PSR awards are denominated in shares. The number of shares awarded is determined by dividing the total dollar value of long-term incentive compensation to be awarded to each NEO by a dollar value derived from the grant date fair value of our stock options and PSRs, each calculated in accordance with FASB ASC Topic 718.

Analysis of Long-Term Incentive Compensation

The target dollar value of the long-term incentive compensation granted to each NEO in fiscal 2013 was greater than the dollar value of the long-term incentive compensation granted to each NEO in fiscal 2012, with the exception of grants made to Ms. Winston, Mr. Gibson and Mr. Sullivan, who received the same dollar value of the long-term incentive compensation granted to them in fiscal 2012. The increases made to the long-term incentive values for all other NEOs were in response to changing long-term incentive values in the marketplace and to be within acceptable range of the 50^th percentile for similar positions at retail companies in the Hay Retail Industry Database.

We believe that equally balancing long-term equity incentive compensation awards between stock options and PSRs results in long-term compensation that drives Company performance both in the stock market and

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against our Performance Peer Group. This mix of stock options and PSRs also reduces our historical dependence on stock options and supports our ongoing management of stockholder dilution by delivering the same value to executives using fewer shares. Assigning a dollar value to these grants helps the executive officers understand the true value of their equity compensation and also helps us to manage our compensation costs for each executive officer.

In fiscal 2013, the targeted performance-based long-term equity portion of each NEO’s compensation either approximated the percentile goal or was slightly below the 50^th percentile for similar positions at retail companies in the Hay Retail Industry Database.

Information regarding the grant date fair value and the number of stock options and PSRs granted to our NEOs in fiscal 2013 for performance in fiscal 2012 can be found in the 2012 Grants of Plan-Based Awards Table in this Proxy Statement. Information regarding each NEO’s fiscal 2014 compensation, including their long-term equity incentive compensation granted in respect of fiscal 2013 performance, is set forth under the heading “NEO Compensation for Fiscal 2014” later in this discussion.

What is the purpose of the PSR program?

We believe that the PSR program focuses our executives on financial performance factors that are critical to driving long-term value for our stockholders, while also recognizing that the potential to achieve such performance is, in part, subject to various macroeconomic and other factors that are beyond the control of our officers. We believe that measuring our performance in terms of pre-tax income growth and average annual return on equity against other retail companies provides a pay-for-performance system that is appropriately competitive and rewarding. The awards of common stock under the PSR program reward our officers if our performance relative to the Performance Peer Group meets certain hurdles. While this program provides our executives with an opportunity to realize financial benefits anytime we outperform our competitors, it is especially impactful to our executives during periods when their stock options may have diminished in value as a result of factors affecting the equity markets or the entire retail channel. For a complete description of the terms of our PSR program, see the description of the program following the “2013 Grants of Plan-Based Awards” table in this Proxy Statement.

How does the Company select its peer group for the PSR program?

The Leadership Development and Compensation Committee reviews and approves the Performance Peer Group annually, making adjustments as appropriate. Each year, Hay Group provides data on the Performance Peer Group companies to the Leadership Development and Compensation Committee. This data includes financial data as well as publicly-announced retail strategies for each company. Generally, members of the Performance Peer Group must:

• be a retailer based in the United States and have equity that is publicly traded;

• have a customer base that is similar to that of the Company;

• have overlapping merchandise lines with the Company; and/or

• maintain a similar focus on real estate management.

For the fiscal 2011 – 2013 and the fiscal 2012 – 2014 performance periods, our Performance Peer Group included the following companies: 99 Cent Only Stores, Advance Auto Parts Inc., Big Lots, Inc., Casey’s General Stores, Inc., The Cato Corporation, Collective Brands, Inc., Dollar General Corporation, Dollar Tree Inc., Duckwall-ALCO Stores, Inc., Fred’s Inc., Kohl’s Corporation, Ross Stores, Inc., SuperValu Inc., Target Corporation, The Pantry, Inc., Walgreen Company and Wal-Mart Stores, Inc.

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In September 2012, 99 Cent Only Stores and Collective Brands were removed from the Performance Peer Group as originally established for each of the foregoing performance periods as they are no longer public companies.

For the fiscal 2013 – 2015 performance period, our Performance Peer Group includes the following companies: Advance Auto Parts Inc., Big Lots, Inc., Casey’s General Stores, Inc., The Cato Corporation, Dollar General Corporation, Dollar Tree Inc., Duckwall-ALCO Stores, Inc., Fred’s Inc., Kohl’s Corporation, Ross Stores, Inc., SuperValu Inc., Target Corporation, The Pantry, Inc., Walgreen Company and Wal-Mart Stores, Inc.

In the fall of 2013, the Leadership Development and Compensation Committee reviewed recommendations from management and Hay Group for additional peer group companies that meet the criteria listed above and approved the addition of AutoZone and PetSmart to the Performance Peer Group. For the fiscal 2014 – 2016 performance period, our Performance Peer Group includes the following companies: Advance Auto Parts Inc., ALCO Stores, Inc., Autozone, Inc. Big Lots, Inc., Casey’s General Stores, Inc., The Cato Corporation, Dollar General Corporation, Dollar Tree Inc., Fred’s Inc., Kohl’s Corporation, PetSmart, Inc., Ross Stores, Inc., SuperValu Inc., Target Corporation, The Pantry, Inc., Walgreen Company and Wal-Mart Stores, Inc.

Why does the Company choose to make long-term equity incentive awards in the form of stock options?

Stock options are designed to reward NEOs for building long-term stockholder value, as represented by the price of our common stock. We award stock options because they provide value to our executives only if the price of our common stock appreciates from the grant date and the exercise date and the executive remains employed by the Company until the stock option vests (subject to certain retirement provisions, as further described below). Accordingly, stock option awards help us achieve the primary goals of our executive compensation program: to assist our retention efforts by encouraging our executives to remain employed by the Company for the full term of the stock option and to align the interests of our NEOs directly with the interests of our stockholders. For a description of the terms of our stock option program and awards, see the description of the program following the “2013 Grants of Plan-Based Awards” table in this Proxy Statement.

When does the Company issue equity awards?

We have adopted a policy of making equity awards on pre-established dates to avoid any concern that grant dates have been selected based upon the release of material information about the Company. Annual equity awards for all eligible participants in our equity plans, including our NEOs, are presented to the Leadership Development and Compensation Committee for approval at a Leadership Development and Compensation Committee meeting scheduled for the first Tuesday after our fiscal year-end earnings release. Equity awards are occasionally given to Team Members throughout the year in connection with new hires and/or promotions. For newly hired or promoted officers at or above the level of Vice President, equity awards are approved quarterly by the Leadership Development and Compensation Committee at a meeting held on the second Tuesday of the first month of each fiscal quarter. For newly hired or promoted Team Members below the level of Vice President, equity awards are approved by the Equity Award Committee on the first Tuesday following the Company’s quarterly earnings release, or on the second Tuesday of each month of the National Retail Federation Retail Sales and Reporting and Merchandising Calendar, if the Company has not issued a quarterly earnings release in the week prior to the issuance of the award. The exercise price for all stock options is determined by the closing price of our common stock on the date the option grant is approved. The grant date for all equity awards is the date the awards are approved by the Leadership Development and Compensation Committee or the Equity Award Committee.

What perquisites does the Company offer to its executives?

NEOs (along with selected other executives) are offered executive supplemental disability insurance coverage and group disability insurance coverage paid for by the Company. In addition, selected executives, including NEOs, are provided the opportunity to have financial planning consultation with an outside investment adviser.

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Pursuant to his employment agreement, Mr. Levine also is offered non-exclusive personal use of the Company’s aircraft, subject to certain limits established by the Leadership Development and Compensation Committee each year and is provided with personal umbrella liability insurance coverage. For fiscal 2013, the Board approved Mr. Levine’s personal use of the Company’s aircraft for up to 70 hours, of which Mr. Levine used approximately 7.9 hours. Mr. Levine’s personal use of the Company’s aircraft is reviewed annually by the Leadership Development and Compensation Committee and is considered by the Leadership Development and Compensation Committee in setting Mr. Levine’s Total Direct Compensation each year.

In fiscal 2013, the Leadership Development and Compensation Committee approved Mr. Bloom’s non-exclusive personal use of the Company’s aircraft for a maximum of up to 25 hours for fiscal 2013. Mr. Bloom’s actual use of the Company’s aircraft in fiscal 2013 totaled 19.7 hours. Mr. Bloom’s personal use of the Company’s aircraft is reviewed annually by the Leadership Development and Compensation Committee and is considered by the Leadership Development and Compensation Committee in setting Mr. Bloom’s Total Direct Compensation each year.

We believe that the perquisites offered by the Company are minimal in cost and necessary to attract and retain talented executives, as many of our competitors offer similar benefits. With the exception of Mr. Levine’s and Mr. Bloom’s use of the Company’s aircraft, we do not offer NEOs any perquisites other than those benefits generally available to all of our Team Members, except as further described above and in Note 4 to the “Summary Compensation Table” in this Proxy Statement.

Does the Company provide employment contracts to NEOs?

We currently have employment agreements with two of our NEOs: Howard R. Levine, the Chairman of the Board and CEO, and Michael K. Bloom, our President and Chief Operating Officer. Under their employment agreements, these executive officers are entitled to certain compensation and benefits and agree to certain non-competition and other restrictive covenants. Presently, we do not have employment agreements with any other executive officers. We have severance agreements with other executive officers, including the other NEOs, which contain non-competition and other restrictive covenants. For more information, see “Employment and Severance Agreements” in this Proxy Statement.

Why does the Company offer severance benefits to its executives?

The Company believes it is necessary to offer severance benefits to our NEOs for several reasons. First, similarly-situated companies provide severance benefits to their executives, so providing these severance benefits is necessary for us to remain competitive and to attract and retain talented executives. Second, we believe it is in our best interest to ensure that our executives will remain dedicated to the Company even if there is a threat or occurrence of a change in control and to reduce any distractions to our executives that might be caused by the uncertainties and risks created by a pending or threatened change in control. Finally, the Leadership Development and Compensation Committee determined that it would be in our best interest to enter into severance agreements with our officers at the Vice President level and above, other than Messrs. Levine and Bloom who have employment agreements, in consideration for such officers agreeing to be bound by certain non-compete, non-solicitation, non-disparagement and confidentiality provisions not previously applicable to them. We believe that the non-compete and other covenants that are contained in these agreements are important tools in protecting the Company’s future growth and prospects. In establishing these arrangements, the Leadership Development and Compensation Committee also considered the fact that the Company does not provide pension, supplemental executive retention plans, or any above-market or preferential earnings to its NEOs through the Company’s deferred compensation plans.

The aforementioned employment and severance agreements with executives, as well as incentive opportunities under the 2006 Plan, require us to provide compensation or other benefits to NEOs when those individuals are terminated under certain circumstances or there is a change in control of the Company. The type

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and amount of these payments vary by executive level and the reason for the termination. For a description of the terms of these arrangements, See “Employment and Severance Agreements” and “Potential Payments Upon Termination or Change in Control” in this Proxy Statement.

The Leadership Development and Compensation Committee will periodically review these agreements to ensure that these purposes are being achieved and that the payments under such agreements are appropriate.

What type of retirement benefits does the Company provide to its executives?

Incentive Plan Retirement Provisions

The 2006 Plan contains provisions that allow eligible retirees to continue to exercise stock options after the date of their retirement. Specifically, these provisions provide that stock options held by qualifying retirees at the time of their retirement shall continue to vest and be exercisable until their expiration date in accordance with the terms of the 2006 Plan. In order to take advantage of this benefit, a participant must: (a) voluntarily terminate his or her employment, (b) at age sixty years or older, and (c) after a minimum of ten years of service to the Company. Additionally, retirees must agree to abide by certain non-competition and non-solicitation provisions for the term of the stock options.

Deferred Compensation Plan

The Family Dollar Compensation Deferral Plan (the “Deferred Compensation Plan”) allows certain Team Members, including NEOs, to elect to defer receipt of up to 50% of their base salary and up to 75% of their bonus payments. The Company does not fund, make any contributions to, or provide any interest rate subsidy for the Deferred Compensation Plan. We provide this benefit to attract and retain talented executives, as most of our competitors provide a similar benefit to their executive officers. For a description of the material terms of the Deferred Compensation Plan, see “2013 Non-Qualified Deferred Compensation” in this Proxy Statement.

401(k) Plan

We offer a 401(k) savings plan for all eligible Team Members, including the NEOs. In 2013, the Company provided a matching contribution equal to the following formula: The Company will provide a 100% match to the participant’s first 2% of base salary and bonus contributions and a 50% match to the participant’s next 1% of base salary and bonus contributions for a maximum Company contribution of 2.5% of base salary and bonus pay, subject to limits established by the plan and the Internal Revenue Code of 1986, as amended (the “Code”).

Other Executive Officer Compensation Matters

Does the Company have stock ownership guidelines for its executives?

Yes, we have stock ownership guidelines for our NEOs and all other executives who hold the position of Vice President or above. Under the guidelines, those officers are required to achieve and maintain ownership of our common stock in an amount equal to a multiple of their annual base salary, as set forth below. An officer must achieve his or her required ownership requirement within six years of his or her promotion to his or her current officer level. Until an executive achieves those ownership goals, he or she is required to retain 25% of the net value (after the exercise price of any options and after applicable taxes) of any equity award in the Company’s common stock. Our stock ownership guidelines provide for the following ownership levels:

Position	Stock Ownership Guidelines Multiple
Chief Executive Officer		6x annual base salary
Executive Vice Presidents, Chief Financial Officer, Chief Operating Officer or President		3x annual base salary
Senior Vice Presidents		2x annual base salary
Vice Presidents		1x annual base salary

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The following forms of equity interests are considered to determine whether an officer has satisfied the stock ownership requirements, based upon the highest market price of the Company’s common stock within the past two years:

• Stock owned directly by the officer, his or her spouse and/or children in his or her household;

• Stock held by the officer in the Company’s Employee Stock Purchase Plan or other benefit plans;

• Stock held in trust for the benefit of the officer and/or his or her immediate family, which is considered to be beneficially owned by the officer; and

• The after-tax net value of vested unexercised stock options. To determine the after-tax net value under our stock ownership guidelines, we calculate the difference between the exercise price and the value of the stock, less taxes withheld at an assumed rate of 25%.

These requirements ensure that the interests of our executives and our stockholders are aligned and reduce incentives for excessive short-term risk taking. The Leadership Development and Compensation Committee annually reviews actual stock ownership of each of our executives and periodically reviews the ownership guidelines. In 2013, The Leadership Development and Compensation Committee increased the ownership requirements for the Chief Executive Officer from 5x annual salary to 6x annual salary.

Does the Company have policies regarding transactions by officers in the Company’s stock?

Yes, the Company has established an “insider trading” compliance policy that requires our directors, NEOs and certain other officers to obtain pre-clearance from our General Counsel for any transaction in the Company’s common stock. The Company also publishes information on appropriate time periods for stock transactions and prohibits hedging transactions, short sales of the Company’s common stock or the engagement of any trading in publicly-traded puts, calls, warrants, options or similar instruments relating to our common stock. In addition, prior written consent is required before pledging the Company’s common stock. As part of our agreement with Trian Fund Management, L.P., an asset management firm, relating to Mr. Garden’s appointment to the Board, we agreed that Trian and its affiliates could engage in certain securities transactions that would provide Trian with economic interest in the Company that would not be considered violations of our insider trading compliance policy.

Does the Company consider the tax consequences of executive compensation when designing compensation packages?

Yes. Among other things, the Company considers the following:

Deductibility. Section 162(m) of the Code (“Section 162(m)”) provides that publicly held companies may not deduct compensation in excess of $1 million paid to the CEO or any of the three other highest paid executive officers (other than the CFO) in any taxable year if that income is not “performance-based,” as defined in Section 162(m). Our stockholders have approved the 2006 Plan, which was designed to preserve the future deductibility of incentive compensation paid under the plan. We consider Section 162(m) when determining executive compensation packages, and we believe that all applicable executive officer incentive compensation paid in fiscal 2013 met the deductibility requirements of Section 162(m).

FASB ASC Topic 718. We began accounting for share-based payments, including stock options and PSRs, pursuant to FASB ASC Topic 718 on August 28, 2005.

Section 409A of the Code (“Section 409A”). All awards issued under the 2006 Plan are intended either not to be subject to or otherwise to comply with Section 409A.

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How does the Company establish compensation for other executive officers who are not NEOs?

Our CEO, with the assistance of other executive officers, reviews compensation materials to determine the compensation packages of Executive and Senior Vice Presidents who are not NEOs. These materials are similar to those reviewed by management and the Leadership Development and Compensation Committee when setting compensation for the NEOs. The CEO reviews proposed compensation packages with the Leadership Development and Compensation Committee and obtains approval for all equity grants made to officers at the level of Vice President or above. In addition, the Leadership Development and Compensation Committee approves compensation packages for any officers who are considered “executive officers” for purposes of Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Do the Company’s compensation programs reward or encourage executives to take excessive risks?

The design of our compensation programs encourages all Team Members, including NEOs to remain focused on both the short-term and long-term operational and financial goals of the Company. Because our compensation program is balanced and intended to drive our major operating initiatives as they change from time to time, our Team Members do not have an incentive to engage in risky behavior to achieve short-term financial results. Moreover, payouts under both annual cash bonuses and PSRs are capped at 200% of the target incentive opportunity. We do not believe the design of our compensation program encourages our Team Members, including NEOs, to take risks that are new, unique or discrete from those associated with our overall business.

Does the Company have a “clawback” policy?

In the event we restate our financial results due to material non-compliance by the Company with any financial reporting requirements of the federal securities laws, as a result of intentional misconduct (as determined by the independent members of the Board under the Cash Bonus Award Guidelines), our executive officers are required to reimburse the Company the difference between (x) the amount of any cash bonus paid to the executive officer within the twelve months preceding such restatement and (y) the amount of the bonus such executive officer would have received had the amount of the bonus been calculated based on the restated financial statements.

NEO Compensation for Fiscal 2014

As reported in our Current Report on Form 8-K filed with the SEC on October 21, 2013, the Leadership Development and Compensation Committee approved fiscal 2014 compensation packages for our current senior executives at its meeting on October 15, 2013, as follows:

Name	Fiscal 2014 Base Salary(1)		% Increase from FY 2013 Base Salary			Target Bonus Percentage of Base Salary			Stock Options		Target PSR Grant (3-year Performance Period-fiscal 2014-2016)
Howard R. Levine	$	1,150,000		4.6	%		120	%		115,015		30,905
Michael K. Bloom	$	740,000		5.7	%		75	%		39,350		10,573
Mary A. Winston	$	505,000		4.1	%		55	%		15,135		4,067
Barry W. Sullivan	$	440,000		4.8	%		55	%		12,110		3,254
James C. Snyder, Jr.	$	415,000		5.1	%		40	%		7,265		1,952

⁽¹⁾  Increases to base salaries were effective October 27, 2013.

In considering the establishment of fiscal 2014 compensation packages for the NEOs, the Leadership Development and Compensation Committee followed the process described above under “Executive Compensation Program Design” and “Elements of Executive Compensation.”

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The Target Bonuses set forth above for fiscal 2014 were maintained at the same level as those set for fiscal 2013. The dollar value of long-term incentive compensation for each of the NEOs was maintained at the same level as the previous year with the exception of Mr. Levine and Mr. Snyder. The long-term incentive values for Mr. Levine and Mr. Snyder were increased to more closely align with the median for similar positions in the Hay Retail Industry Database. The dollar value of long-term incentive compensation is divided equally among PSRs and stock options. For a further discussion of the Company’s philosophy and process for establishing the Target Bonus and long-term incentive compensation levels, see the discussion of these matters set forth above.

Summary

The CEO, the Company’s Human Resources department and the Leadership Development and Compensation Committee, with advice from its consultants, have reviewed all components of each NEO’s compensation, including base salary, Target Bonus and long-term equity incentive compensation. We have determined that the compensation packages awarded to our NEOs are consistent with our goals to provide compensation that is competitive with the compensation offered to similar positions at retail companies in the Hay Retail Industry Database, to drive the Company’s financial performance, and to align the interests of our NEOs with our stockholders. Accordingly, we believe that our compensation programs are reasonable, competitive and not excessive.

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COMPENSATION COMMITTEE REPORT

The Leadership Development and Compensation Committee of the Board of Directors has reviewed and discussed the above section titled “Compensation Discussion and Analysis” with management, and, based on such review and discussions, recommended to the Board of Directors that the section be included in this Proxy Statement and incorporated by reference into the Company’s Annual Report on Form 10-K for fiscal 2013.

This report is submitted by James G. Martin, Chairman, Sharon Allred Decker and Edward C. Dolby as the members of the Leadership Development and Compensation Committee.

2013 SUMMARY COMPENSATION TABLE

The following table sets forth information concerning the compensation earned during fiscal 2013, 2012 and 2011 by the NEOs to the extent required by SEC regulations.

Name and Principal Position	Year		Salary ($)(1)		Bonus ($)		Stock Awards ($)(2)		Option Awards ($)(3)		Non-Equity Incentive Plan Compensation($)(1)			All Other Compensation ($)(4)			Total ($)
Howard R. Levine		2013		1,115,046				1,953,291		1,650,621		686,336	(5)		47,283	(6)		5,452,577
Chairman of the Board and Chief Executive Officer		2012		1,051,346		—		1,721,723		1,464,998		942,006	(7)		47,175			5,227,248
		2011		1,030,289		—		1,435,958		1,197,158		982,253	(8)		101,737			4,747,395
Michael K. Bloom(9)		2013		707,403				725,502		613,121		272,017	(5)		113,361	(10)		2,431,404
President and Chief Operating Officer		2012		598,365		—		1,951,317		585,986		335,085	(7)		100,155			3,570,909
		2011		—		—		—		—		—			—			—
Mary A. Winston(9)		2013		492,959				279,071		235,803		131,071	(5)		160,325	(11)		1,299,229
Executive Vice President-Chief Financial Officer		2012		155,289		115,000		478,170		208,706		85,408	(7)		49,679			1,092,252
		2011		—		—		—		—		—			—			—
Barry W. Sullivan(12)		2013		425,095				223,284		188,659		119,635	(5)		8,992			965,665
Executive Vice President-Store Operations		2012		—		—		—		—		—			—			—
		2011		—		—		—		—		—			—			—
James C. Snyder, Jr.(12)		2013		400,437				122,786		103,750		87,229	(5)		13,441			727,643
Senior Vice President-General Counsel and Secretary		2012		—		—		—		—		—			—			—
		2011		—		—		—		—		—			—			—
Paul G. White(9)(13)		2013		379,654				223,284		188,659		—			315,580	(14)		1,107,177
Executive Vice President-Chief Merchandising Officer		2012		414,808		—		308,027		174,701		160,173	(7)		37,467			1,095,176
		2011		—		—		—		—		—			—			—
Charles S. Gibson, Jr.(13)		2013		298,176				223,284		188,659		—			254,876	(15)		964,995
Executive Vice President-Supply Chain		2012		431,615		—		229,594		195,372		177,394	(7)		14,032			1,048,007
		2011		415,384		—		229,766		191,557		217,956	(8)		19,155			1,073,818

⁽¹⁾  Includes amounts deferred by certain of the NEOs pursuant to the Deferred Compensation Plan. See “2013 Non-Qualified Deferred Compensation” in this Proxy Statement. For fiscal 2013, salaries for the NEOs employed for the entire fiscal year include 53 weeks of earnings, which caused the actual earnings to exceed the targeted base salary for the fiscal year.

⁽²⁾  The amounts shown in this column indicate the aggregate grant date fair value of PSRs awarded in fiscal 2013, 2012 and 2011 computed in accordance with FASB ASC Topic 718, based upon the probable outcome of their performance conditions but excluding the effect of estimated forfeitures. See Note 11 to the Consolidated Financial Statements included in our fiscal 2011 Annual Report, Note 12 to the Consolidated

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Financial Statements included in our fiscal 2012 Annual Report and Note 13 to the Consolidated Financial Statements included in our fiscal 2013 Annual Report for a discussion of the relevant assumptions made in these valuations. For a description of the PSR awards granted to our NEOs in fiscal 2013, see the discussion under “2013 Grants of Plan-Based Awards” in this Proxy Statement. The value of PSRs awarded to our NEOs at the grant date assuming that the maximum level would be achieved for each fiscal year is as follows:

Name	2011 ($)		2012 ($)		2013 ($)
Howard R. Levine		2,871,915		3,443,445		3,906,581
Michael K Bloom		—		3,902,633		1,451,004
Mary A. Winston		—		956,340		558,141
Barry W. Sullivan		—		—		446,567
James C. Snyder, Jr.		—		—		245,571
Paul G. White		—		616,054		446,567
Charles S. Gibson, Jr.		459,532		459,188		446,567

⁽³⁾  The amounts shown in this column indicate the aggregate grant date fair value for stock option awards in fiscal 2013, 2012 and 2011 computed in accordance with FASB ASC Topic 718. See Note 11 to the Consolidated Financial Statements included in our fiscal 2011 Annual Report, Note 12 to the Consolidated Financial Statements included in our fiscal 2012 Annual Report and Note 13 to the Consolidated Financial Statements included in our fiscal 2013 Annual Report for a discussion of the relevant assumptions made in these valuations. For a description of the stock option awards granted to our NEOs in fiscal 2013, see the discussion under “2013 Grants of Plan-Based Awards” in this Proxy Statement.

⁽⁴⁾  All Other Compensation for fiscal 2013 includes insurance premiums paid in the following amounts: (i) $34 for short-term disability insurance coverage for each NEO, except Mr. White and Mr. Gibson, who received $31 and $23 for short-term disability coverage, respectively; and (ii) $2,830 for personal umbrella liability insurance coverage for Mr. Levine only. This column also includes our contributions to the 401(k) plan, long-term disability insurance coverage, executive supplemental disability insurance coverage, and term life insurance coverage for each NEO, as follows:

Name	401(k) ($)		Long-Term Disability ($)		Executive Supplemental Disability ($)		Term Life Insurance (including Accidental Death and Dismemberment) ($)
Howard R. Levine	$	6,375	$	2,100	$	4,589	$	1,080
Michael K Bloom	$	6,375	$	2,100	$	4,134	$	1,080
Mary A. Winston	$	9,577	$	2,100	$	4,146	$	1,044
Barry W. Sullivan	$	1,927	$	2,100	$	4,031	$	899
James C. Snyder, Jr.	$	6,644	$	2,100	$	3,824	$	839
Paul G. White	$	5,114	$	1,925	$	4,618	$	877
Charles S. Gibson, Jr.	$	3,851	$	1,400	$	3,036	$	638

All such amounts were determined by reference to the cash costs we paid for the item.

⁽⁵⁾  Represents amounts earned under the Cash Bonus Awards Guidelines for performance in fiscal 2013 but paid in fiscal 2014. Our fiscal 2013 pre-tax earnings (as adjusted) fell short of our target goal by 14.6% resulting in a payment of 51.3% of Target Bonus.

⁽⁶⁾  Includes the incremental cost to the Company of Mr. Levine’s personal use of Family Dollar aircraft which amounted to $30,275 in fiscal 2013. We determine the incremental cost of Mr. Levine’s personal use of the Company’s aircraft by multiplying the total of Mr. Levine’s personal flight hours in a fiscal year (including “dead head” hours), by the per hour incremental cost of all Family Dollar aircraft for the same fiscal year. The incremental aircraft cost per hour is determined by adding the cost of fuel, repairs, supplies, crew travel and meals, landing, and trip-related hangar and parking costs, and then dividing that figure by the total annual flight hours for all Family Dollar aircraft.

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⁽⁷⁾  Represents amounts earned under the Cash Bonus Awards Guidelines for performance in fiscal 2012 but paid in fiscal 2013. Our fiscal 2012 pre-tax earnings (as adjusted) fell short of our target goal by 7.6%, resulting in a payment of 74.7% of Target Bonus.

⁽⁸⁾  Represents amounts earned under the Cash Bonus Awards Guidelines for performance in fiscal 2011 but paid in fiscal 2012. Our fiscal 2011 pre-tax earnings (as adjusted) fell short of our target goal by 1.4%, resulting in a payment of 95.4% of Target Bonus.

⁽⁹⁾  Only fiscal 2012 and fiscal 2013 compensation information for Mr. Bloom and Ms. Winston is represented, since both officers began employment with the Company in fiscal 2012. Mr. White was promoted to the position of Executive Vice President and Chief Merchandising Officer in December 2011. Pursuant to SEC guidance, we have not included information regarding Mr. White’s compensation prior to fiscal 2012.

⁽¹⁰⁾  Includes both the relocation benefit payments made to Mr. Bloom and the value of Mr. Bloom’s personal use of the Company’s aircraft. In fiscal 2013, his relocation benefit totaled $35,813, which includes benefits grossed up by the Company by $34,012. The grossed up benefit value was realized in fiscal 2013 but attributable to relocation benefits provided in 2012. His personal use of the Family Dollar aircraft totaled $63,824. The value of his personal use of the Company’s aircraft was calculated using the same methodology for Mr. Levine’s use. (See above footnote 6.)

⁽¹¹⁾  Includes relocation benefit payments made to Ms. Winston. In fiscal 2013, her relocation benefit totaled $143,424.

⁽¹²⁾  Only fiscal 2013 compensation information for Mr. Sullivan and Mr. Snyder is represented, since both officers became NEOs in fiscal 2013. Pursuant to SEC guidance, we have not included compensation information for Mr. Sullivan or Mr. Snyder prior to fiscal 2013.

⁽¹³⁾  Although they have left the employ of the Company, Mr. Gibson and Mr. White are included in the Summary Compensation Table, due to their former positions as named executive officers of the Company during fiscal 2013.

⁽¹⁴⁾  Includes relocation benefit payments and severance benefits made to Mr. White. In fiscal 2013, his relocation benefit totaled $96,500 and includes relocation benefits grossed up by the Company by $25,970. In connection with his termination of employment, per the terms of his severance agreement, Mr. White received certain severance payments in fiscal 2013, including salary ($100,981) and bonus amounts ($105,534). These amounts are included in “All Other Compensation”.

⁽¹⁵⁾  In connection with his termination of employment, per the terms of his severance agreement, Mr. Gibson received certain severance payments in fiscal 2013, including salary ($164,310) and bonus amounts ($81,619). These amounts are included in “All Other Compensation”.

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2013 GRANTS OF PLAN-BASED AWARDS

The following table sets forth information concerning grants of plan-based awards made to our NEOs during fiscal 2013.

																		All Other Option Awards: Securities Underlying Options (#)		Exercise or Base Price of Option Awards ($/Sh)		Grant Date Fair Value of Stock and Option Awards ($)(5)
	Plan			Grant Date(4)		Estimated Future Payouts Under Non-Equity Incentive Plan Awards						Estimated Future Payouts Under Equity Incentive Plan Awards
Name						Threshold ($)		Target ($)		Maximum ($)		Threshold (#)		Target (#)		Maximum (#)
Howard R. Levine		(1	)		10/09/2012		660,000		1,320,000		2,640,000
		(2	)		10/09/2012								7,187		28,746		57,492						1,953,291
		(3	)		10/09/2012														99,435	$	67.95		1,650,621
Michael K. Bloom		(1	)		10/09/2012		262,500		525,000		1,050,000
		(2	)		10/09/2012								2,670		10,677		21,354						725,502
		(3	)		10/09/2012														36,935	$	67.95		613,121
Mary A. Winston		(1	)		10/09/2012		133,375		266,750		533,500
		(2	)		10/09/2012								1,027		4,107		8,214						279,071
		(3	)		10/09/2012														14,205	$	67.95		235,803
Barry W. Sullivan		(1	)		10/09/2012		115,500		231,000		462,000
		(2	)		10/09/2012								822		3,286		6,572						223,284
		(3	)		10/09/2012														11,365	$	67.95		188,659
James C. Snyder, Jr.		(1	)		10/09/2012		74,260		158,000		360,240
		(2	)		10/09/2012								452		1,807		3,614						122,786
		(3	)		10/09/2012														6,250	$	67.95		103,750
Paul G. White(6)		(1	)		10/09/2012		122,375		244,750		489,500
		(2	)		10/09/2012								822		3,286		6,572						223,284
		(3	)		10/09/2012														11,365	$	67.95		188,659
Charles S. Gibson, Jr.(6)		(1	)		10/09/2012		122,375		244,750		489,500
		(2	)		10/09/2012								822		3,286		6,572						223,284
		(3	)		10/09/2012														11,365	$	67.95		188,659

⁽¹⁾  Represents threshold, target and maximum payout levels based on Company performance pursuant to fiscal 2013 awards granted under the Cash Bonus Awards Guidelines. The actual amount earned by each NEO for fiscal 2013 is reported under the Non-Equity Incentive Plan Compensation column in the Summary Compensation Table. For more information regarding the Cash Bonus Awards Guidelines, see the discussion in “Compensation Discussion and Analysis” in this Proxy Statement and the description following this table.

⁽²⁾  Represents threshold, target and maximum payout levels pursuant to three-year PSR awards for the fiscal 2013 – 2015 performance period. These awards were granted pursuant to the 2006 Plan in fiscal 2013.

⁽³⁾  Represents stock option awards granted pursuant to the 2006 Plan in fiscal 2013.

⁽⁴⁾  In each case, the grant date is the same as the Leadership Development and Compensation Committee approval date.

⁽⁵⁾  The amounts shown in this column indicate the grant date fair value of PSRs and option awards computed in accordance with FASB ASC Topic 718, in the case of the PSRs, based upon the probable outcome of their performance conditions but excluding the effects of estimated forfeitures. See Note 13 to the Consolidated Financial Statements included in our 2013 Annual Report for a discussion of the relevant assumptions made in these valuations.

⁽⁶⁾  Both the non-equity incentive plan award and the equity incentive plan award thresholds, targets and maximums for Mr. White and Mr. Gibson represent amounts for the full 2013 fiscal year. Mr. White and Mr. Gibson received prorated values of these awards as of their last dates of employment with the Company.

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Description of Plan-Based Awards

All plan-based awards granted in fiscal 2013 and reported in the 2013 Grants of Plan-Based Awards table were granted under and subject to the terms of the 2006 Plan. The 2006 Plan is administered by the Leadership Development and Compensation Committee or, at the discretion of the Board, the 2006 Plan may from time to time be administered by the Board. The Leadership Development and Compensation Committee has, with certain limitations, the exclusive power to, among other things, establish the design of awards; determine performance measures; grant awards; designate participants; determine the type or types of awards to be granted to each participant; and to set the terms and conditions of any award granted under the 2006 Plan. To the extent permitted by applicable law, the Leadership Development and Compensation Committee may delegate its authority to any individual or committee of individuals.

Cash Bonus Awards. Under the Cash Bonus Award Guidelines, NEOs are eligible to receive an annual cash bonus equal to a percentage of their base salary. The percentage of the Target Bonus actually paid is determined by our achievement of pre-tax earnings goals, as established by the Leadership Development and Compensation Committee. The Cash Bonus Award Guidelines are designed so that bonuses are increased if we exceed our earnings goals and decreased if we miss our earnings goals.

As illustrated in the following chart, the potential bonus is increased by 3.33% for each 1% by which the goal is exceeded, up to a maximum of 50% additional bonus if we exceed our earnings goals by 15%. Thereafter, the bonus will increase by 5% for each 1% by which the goal is exceeded up to a cap of 200% of bonus award. Conversely, if we do not meet our pre-tax earnings goals, the potential bonus is decreased by 3.33% for each 1% by which the goal is missed, with no bonuses paid at all if pre-tax earnings are below 85% of the stated goal. Additionally, the Cash Bonus Awards Guidelines establish a cap of 7% of our annual net profits before deduction of certain incentive compensation on the total cash bonus paid to all participating Team Members in any year.

Cash Bonus Award
Company Pre-Tax Earnings Performance (as % of Goal)	Bonus Award (as % of Target Bonus Opportunity)
125%	200%
115%	150%
100%	100%
85%	50%
<85%	0%

Mr. Snyder’s individual performance rating may increase or decrease his potential bonus; all other NEOs are paid a Target Bonus based solely on the Company’s performance. As part of our overall pay for performance philosophy, positions at or below the level of Senior Vice President have a portion of their Target Bonus payment tied to individual performance. This plan design encourages alignment of individual and Company performance with financial rewards. Mr. Snyder’s entire bonus payment is affected by Company performance, with an amount equal to 20% of his bonus being impacted by individual performance. The individual performance factor will apply to that portion of the bonus opportunity with a multiplier of 0.7 to 1.7, based on his individual annual performance rating.

Stock Options. All stock option awards made in fiscal 2013 were made under our 2006 Non-Qualified Stock Option Grant Program, which was adopted pursuant to the 2006 Plan. All stock option awards have the following terms:

• The exercise price for each option is the closing price of a share of Family Dollar common stock on the date the option grant is approved.

• Options have a term of five years, and no portion of the option award can be exercised for at least two years from the date of the grant.

• Options become vested and exercisable in cumulative installments of 40% of the number of shares of Family Dollar common stock subject to the option two years following the date of grant, 70% three

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years following the date of grant, and 100% four years following the date of grant. This vesting schedule encourages executives to remain employed by the Company and helps to ensure an appropriate link to stockholder total return.

• Grants do not include reload provisions, and repricing of options is prohibited without stockholder approval.

Performance Share Rights. PSRs are awarded under the terms of the 2006 Incentive Plan Guidelines for Long-term Incentive Performance Share Rights Awards (the “PSR Guidelines”), which were adopted pursuant to the 2006 Plan. PSR awards give Team Members the right to be issued shares of our common stock, if we perform at a certain level as compared to the Performance Peer Group over the relevant performance period. Our performance is determined by analyzing our pre-tax net income growth (“earnings growth”) and average annual return on equity (“ROE”), each of which are given equal weight. For purposes of the PSRs, ROE is calculated by dividing the Company’s pre-tax net income for the relevant fiscal year by the total stockholders’ equity. The PSRs granted in fiscal 2013 cover a three-year performance period.

Each Team Member who receives PSRs is assigned a “target” number of shares. These shares are actually awarded to the Team Member at the end of the performance period if we are at the 50^th percentile as compared to our Performance Peer Group, for three-year earnings growth and ROE. If our performance is above or below the 50^th percentile, the number of shares is adjusted upward or downward from the target, as appropriate. Team Members do not receive any shares if our performance is below the 30^th percentile. Team Members can receive up to a maximum of twice the “target” award if our relative performance is above the 90^th percentile. The percentage of the “target” award received for various performance levels is summarized below (with linear interpolation between the stated thresholds):

Performance Against Selected Peer Group	Percent of Award Adjustment (to Target Award)
90th Percentile	200%
75th Percentile	150%
50th Percentile	100%
40th Percentile	75%
30th Percentile	25%
<30th Percentile	0%

For a list of the companies that comprise our Performance Peer Group, see the discussion in “Compensation Discussion and Analysis” of this Proxy Statement.

EMPLOYMENT AND SEVERANCE AGREEMENTS

Employment Agreements. The Company entered into employment agreements (the “Employment Agreements”) with the Chairman of the Board and CEO, Howard R. Levine effective December 28, 2012, and with President and Chief Operating Officer, Michael K. Bloom effective September 26, 2011. The Employment Agreements provide for a base salary, subject to annual review by the Board, eligibility to participate in the Company’s annual cash bonus plan pursuant to our Cash Bonus Award Guidelines and participation in the Company’s benefit plans. Additionally, Mr. Levine’s Employment Agreement includes the right to participate in the Company’s long-term incentive plans and arrangements for its senior executives and the non-exclusive personal use of the Company’s aircraft by Mr. Levine, his family and/or guests, subject to limitations and conditions established by the Leadership Development and Compensation Committee from time to time in consultation with Mr. Levine. The Leadership Development and Compensation Committee has presently limited Mr. Levine’s personal usage of the aircraft to no more than 70 hours for fiscal 2014.

The Employment Agreements provide that, in the event of termination of employment by the Company without Cause, or in the case of Mr. Levine, by Mr. Levine for Good Reason, prior to a Change in Control (in

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each case, as such terms are defined in the Employment Agreements), each of Messrs. Levine and Bloom are entitled to receive (i) severance payments equal to his monthly base salary at the time of termination for a period of thirty (30) months for Mr. Levine and twenty-four (24) months for Mr. Bloom, payable in accordance with the Company’s payroll practices, (ii) any earned but unpaid annual cash bonus payable under the Cash Bonus Award Guidelines for the fiscal year immediately preceding the year of termination, payable at the time the annual cash bonus would otherwise be paid, (iii) a pro-rata payment of the annual cash bonus payable under the Cash Bonus Award Guidelines for the fiscal year in which termination occurs based on actual Company performance, payable at the time the annual cash bonus would otherwise be paid and (iv) subsidized COBRA benefits. Generally, the salary continuation payments to Mr. Levine will be offset against any compensation received by Mr. Levine following the first anniversary of his termination of employment and in the case of Mr. Bloom, the payments set forth in (i)-(iii) above will be offset against any compensation received by Mr. Bloom during the twenty-four (24) month period following his termination of employment. In the event of termination of employment due to death or Disability (as defined in the Employment Agreements), Messrs. Levine and Bloom, or their estates, as applicable, will be entitled to receive the payments described in (i) through (iv) above, subject to reduction of any amounts received pursuant to certain certain disability and life insurance benefits paid for by the Company.

The Employment Agreements also provide that, in the event of a termination of employment without Cause or for Good Reason within twenty-four (24) months following a Change in Control (as such terms are defined in the Employment Agreements), each of Messrs. Levine and Bloom will receive a lump sum severance payment equal to thirty-six (36) times in the case of Mr. Levine and thirty (30) times in the case of Mr. Bloom, the sum of (a) his highest monthly base salary during the period beginning immediately prior to the Change in Control through his termination of employment and (b) the monthly equivalent of the average of the annual cash bonus award paid in the preceding three fiscal years under the applicable Cash Bonus Award Guidelines. The Company will also provide the executives with subsidized COBRA benefits. Mr. Levine is also entitled to the payments described herein, in the event his employment is terminated within twenty-four (24) months following a Change in Control due to his death or Disability (as defined in his Employment Agreement).

The severance payments payable upon a Change in Control are subject to adjustment in the event of the imposition of certain tax provisions. See also “Potential Payments upon Termination or Change in Control” for a discussion of the Company’s philosophy regarding the adoption of such severance provisions.

None of our other NEOs have entered into employment agreements with the Company.

Severance Agreements. In October 2012, the Leadership Development and Compensation Committee approved new severance agreements between the Company and the Executive and Senior Vice Presidents of the Company (the “Severance Agreements”), including each of the NEOs, other than Messrs. Levine and Bloom. The new Severance Agreements provide that, in the event of termination of employment by the Company without Cause or due to death or Disability (as such terms are defined in the Severance Agreements), the Executive Vice Presidents and Senior Vice Presidents shall be entitled to receive (i) severance payments equal to twenty-four (24) months (or in the case of Senior Vice Presidents, twelve (12) months) of their base salary in effect as of the termination date, payable in equal installments in accordance with the Company’s payroll practices, (ii) any earned but unpaid annual cash bonus payable under the Cash Bonus Award Guidelines for the fiscal year immediately preceding the year of termination, payable at the time the annual cash bonus would otherwise be paid, (iii) a pro-rata payment of the annual cash bonus payable under the Cash Bonus Award Guidelines for the fiscal year in which termination occurs, payable at the time the annual cash bonus would otherwise be paid and (iv) subsidized COBRA benefits. The severance payments described in (i)-(iv) will be reduced by any compensation received by the executive for services rendered to a third-party (other than service on a board of directors) and by any disability or life insurance benefits paid for by the Company.

In the event of a Change in Control (as defined in the Severance Agreements) of the Company and a termination of employment by the Company without Cause, by the executive for Good Reason or due to death or Disability within twenty-four (24) months following such Change in Control (in each case, as such terms are

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defined in the Severance Agreements), Executive Vice Presidents and Senior Vice Presidents shall be entitled to receive a lump sum severance payment equal to two times (one and one-half times for Senior Vice Presidents) the sum of (x) their highest annual base salary during the period beginning immediately prior to the Change in Control through their termination of employment and (y) the average of the annual cash bonuses paid in the preceding three fiscal years under the applicable Cash Bonus Award Guidelines. The Company will also provide the executives with subsidized COBRA benefits.

Release of Claims, Non-Compete and Other Covenants. In order to receive any severance benefits set forth in the Employment Agreements or Severance Agreements, the NEOs must execute a general release of claims against the Company. The Employment Agreements and the Severance Agreements contain confidentiality and non-disparagement provisions and agreements to provide future assistance to the Company regarding certain matters. In addition, for a period of one year following termination of employment, the NEOs shall be subject to covenants not to compete and not to solicit the Company’s Team Members. If the NEOs violate any of these restrictive covenants, he or she will immediately forfeit any unpaid severance payments and any right to any further continuation of benefits.

Tax Provisions. In connection with the adoption of the Employment Agreements and the Severance Agreements, the Company adopted, and affected officers have agreed to the application of, a policy with respect to severance payments made following a Change in Control. Pursuant to that policy, if the payments to be made to an officer are “parachute payments” pursuant to Section 280G of the Code and are subject to the excise tax imposed under Section 4999 of the Code, then the severance benefit will be either: (i) the amount the executive would receive with no adjustment to the severance benefit; or (ii) the severance benefit reduced to the extent that would result in no portion of the severance benefit being subject to excise tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the excise tax, results in the receipt of the greater after-tax amount of severance payments, notwithstanding that all or some portion of such severance payment may be taxable under Section 4999 of the Code. This provision benefits the Company by reducing the amount of payments that otherwise could be subject to the provisions of Section 280G of the Code which would limit the ability of the Company to take tax deductions with respect to such payments. In addition, the timing and form of the severance payments payable under the Employment Agreements and the Severance Agreements are subject to adjustment in order to avoid the imposition of Section 409A of the Code and Mr. Levine is entitled to an additional payment in the event the imposition of Section 409A of the Code results in an additional tax becoming due on any payments due to him pursuant to his Employment Agreement.

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2013 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END

The following table sets forth information concerning option awards and stock awards held by our NEOs as of August 31, 2013.

	Option Awards										Stock Awards
Name	Number of Securities Underlying Unexercised Options (#) Exercisable(1)		Number of Securities Underlying Unexercised Options (#) Unexercisable(1)		Option Exercise Price ($)		Option/Stock Award Grant Date(1)		Option Expiration Date(1)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)			Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2)
Howard R. Levine		120,691		51,724		28.11		10/13/2009		10/13/2014
		41,460		62,190		46.11		10/12/2010		10/12/2015		49,828	(3)		3,547,255
		—		113,040		51.49		10/4/2011		10/4/2016		49,489	(4)		3,523,122
		—		99,435		67.95		10/9/2012		10/9/2017		40,532	(5)		2,885,473
Michael K. Bloom		—		45,215		51.49		10/4/2011		10/4/2016		50,560	(6)		3,599,366
				36,935		67.95		10/9/2012		10/9/2017		15,055	(5)		1,071,765
Mary A. Winston		—		12,120		67.50		6/5/2012		6/5/2017		10,725	(7)		763,513
				14,205		67.95		10/9/2012		10/9/2017		5,791	(5)		412,261
Barry W. Sullivan		—		6,000		28.11		10/13/2009		10/13/2014
		—		7,464		46.11		10/12/2010		10/12/2015		5,980	(3)		425,716
		—		15,075		51.49		10/4/2011		10/4/2016		6,600	(4)		469,854
		—		11,365		67.95		10/9/2012		10/9/2017		4,634	(5)		329,894
James C. Snyder, Jr.		9,657		4,138		28.11		10/13/2009		10/13/2014
		3,318		4,977		46.11		10/12/2010		10/12/2015		3,988	(3)		283,906
		—		7,915		51.49		10/4/2011		10/4/2016		3,465	(4)		246,673
		—		6,250		67.95		10/9/2012		10/9/2017		2,548	(5)		181,392
Paul G. White		3,770		5,655		50.15		3/8/2011		3/8/2016		5,157	(8)		367,127
		—		8,290		51.49		10/4/2011		10/4/2016		2,321	(8)		165,232
		—		4,860		55.42		3/6/2012		3/6/2017		3,325	(8)		236,707
		—		11,365		67.95		10/9/2012		10/9/2017		1,418	(5)		100,947
Charles S. Gibson, Jr.		—		8,277		28.11		10/13/2009		10/13/2014
		—		9,951		46.11		10/12/2010		10/12/2015		7,088	(3)		504,595
		—		15,075		51.49		10/4/2011		10/4/2016		3,668	(4)		261,125
		—		11,365		67.95		10/9/2012		10/9/2017		1,031	(5)		73,397

⁽¹⁾  Options granted under the 2006 Plan vest in increments of 40% on the second anniversary of the grant date and an additional 30% on each of the third and fourth anniversaries of the grant date, and expire on the fifth anniversary of the grant date. For a description of the option terms, see “Description of Plan-Based Awards-Stock Options” in this Proxy Statement. Unless otherwise noted, option grants were made in accordance with the annual grant process. The grant date listed for each award is also applicable to the respective stock awards listed under the column “Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested” in this table.

⁽²⁾  Reflects value of outstanding awards of PSRs by reference to the closing price of Family Dollar common stock on the last trading day in fiscal 2013 (August 30, 2013) of $71.19 per share.

⁽³⁾  Represents PSRs awarded in fiscal 2011 under a three-year performance period (fiscal 2011 to fiscal 2013). PSRs are earned and convert to the right to receive shares of Family Dollar common stock based on our average ROE and earnings growth rate relative to the Performance Peer Group over the performance period. The number of shares reflects actual achievement against the performance goals for the three-year performance period at the 78^th percentile in relation to our peer group for earnings growth and ROE,

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resulting in an award of 160.0% of the target PSR award. However, for Mr. Gibson, the number of PSRs shown is not based upon the original amount awarded; rather it is based upon prorated awards as of his last date of employment.

⁽⁴⁾  Represents PSRs awarded in fiscal 2012 under a three-year performance period (fiscal 2012 to fiscal 2014). The number of shares reflected assumes participation by the officer through the end of the performance period and achievement against the performance goals equivalent to actual fiscal 2012 and fiscal 2013 performance at approximately the 74^th percentile in relation to our peer group for earnings growth and ROE. This level of performance, if sustained for the full three-year performance period, would result in an award of 148.0% of the target PSR award. However, for Mr. Gibson, the number of PSRs shown is not based upon the original amount awarded; rather it is based upon prorated awards as of his last date of employment.

⁽⁵⁾  Represents PSRs awarded in fiscal 2013 under a three-year performance period (fiscal 2013 to fiscal 2015). The number of shares reflected assumes participation by the officer through the end of the performance period and achievement against the performance goals equivalent to actual fiscal 2013 performance at approximately the 71^st percentile in relation to our peer group for earnings growth and ROE. This level of performance, if sustained for the full three-year performance period, would result in an award of 141.0% of the target PSR award. However, for Mr. White and Mr. Gibson, the number of PSRs shown is not based on the original amount awarded; rather it is based on prorated awards as of their respective last dates of employment.

⁽⁶⁾  For new hires and promotions, a prorated PSR award is provided for each outstanding performance period, except for performance periods that will lapse within six months of the hire or promotion date. Mr. Bloom’s total shares represent the aggregate of PSRs awarded to him on October 4, 2011, for all then outstanding performance periods (14,268 for fiscal 2011-2013 and 16,497 for fiscal 2012-2014) and a one-time new hire award of 19,795 shares for fiscal 2012-2014 given as part of his new hire offer. The number of shares listed for each performance period reflects actual or prospective achievement against the performance goals for the three-year performance period as noted in footnotes 3, 4 and 5.

⁽⁷⁾  For new hires and promotions, a prorated PSR award is provided for each outstanding performance period, except for performance periods that will lapse within six months of the hire or promotion date. Ms. Winston’s total shares represent the aggregate of PSRs awarded to her on June 5, 2012, for all then outstanding performance periods (3,191 for fiscal 2011-2013 and 2,500 for 2012-2014) and a one-time new hire award of 5,034 shares for fiscal 2012-2014 given as part of her new hire offer. The number of shares listed for each performance period reflects actual or prospective achievement against the performance goals for the three-year performance period as noted in footnotes 3, 4 and 5.

⁽⁸⁾  Mr. White received PSRs upon hire, through the annual award process and as part of his promotion to Executive Vice President, Chief Merchandising Officer. Of his 12,221 total PSRs represented, 6,858 relate to fiscal 2011-2013, 3,945 relate to fiscal 2012-2014 and 1,418 relate to 2013-2015. The number of PSRs shown is not based on the original amount awarded; rather it is based on prorated awards as of his last date of employment.

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2013 OPTION EXERCISES AND STOCK VESTED

The following table sets forth stock option exercises by our NEOs in fiscal 2013 and stock awards vested in fiscal 2013.

	Option Awards					Stock Awards
Name	Number of Shares Acquired on Exercise (#)			Value Realized on Exercise ($)		Number of Shares Acquired on Vesting (#)(1)		Value Realized on Vesting ($)(2)
Howard R. Levine		227,570	(3)		10,328,651		72,102		4,899,331
Michael K. Bloom		—			—		6,497		441,471
Mary A. Winston		—			—		—		—
Barry W. Sullivan		18,959	(4)		686,096		8,365		568,402
James C. Snyder, Jr.		5,015	(5)		173,455		5,769		392,004
Paul G. White		—			—		2,682		182,242
Charles S. Gibson, Jr.		25,921	(6)		967,580		11,537		783,939

⁽¹⁾  Represents shares issued in fiscal 2013 under the PSR program for the fiscal 2010 – 2012 performance period. Because we performed at the 73^rd percentile compared to our Performance Peer Group for earnings growth and ROE, our NEOs earned 145.7% of the target number of PSRs pursuant to the three-year PSR award made for the fiscal 2010 – 2012 performance period (for more information on our Performance Peer Group, see “How does the Company select its peer group for the PSR program” in the “Compensation Discussion and Analysis” section in this Proxy Statement).

Our Performance Peer Group for the fiscal 2010 – 2012 performance period consisted of the following companies: 99 Cent Only Stores, Advance Auto Parts Inc., Big Lots, Inc., Casey’s General Stores, Inc., The Cato Corporation, Collective Brands, Inc., Dollar Tree Inc., Duckwall-ALCO Stores, Inc., Fred’s Inc., Kohl’s Corporation, Rite Aid Corporation, Ross Stores Inc., SuperValu Inc., Target Corporation, The Pantry, Inc., Walgreen Company and Wal-Mart Stores, Inc.

⁽²⁾  Determined by reference to the closing price of Family Dollar common stock on October 9, 2012, the date such shares were issued. The closing price on such date was $67.95.

⁽³⁾  The options exercised by Mr. Levine had an exercise price of $23.36 per share and were granted on October 7, 2008.

⁽⁴⁾  7,983 of the options exercised by Mr. Sullivan had an exercise price of $23.36 per share; 6,000 of the options exercised by Mr. Sullivan had an exercise price of $28.11 per share; and 4,976 of the options exercised by Mr. Sullivan had an exercise price of $46.11 per share. These options were granted on October 7, 2008, October 13, 2009, and October 12, 2010, respectively.

⁽⁵⁾  The options exercised by Mr. Snyder had an exercise price of $33.84 per share and were granted on April 14, 2009.

⁽⁶⁾  11,010 of the options exercised by Mr. Gibson had an exercise price of $23.36 per share; 8,277 of the options exercised by Mr. Gibson had an exercise price of $28.11 per share; and 6,634 of the options exercised by Mr. Gibson had an exercise price of $46.11 per share. These options were granted on October 7, 2008, October 13, 2009, and October 12, 2010, respectively.

2013 NON-QUALIFIED DEFERRED COMPENSATION

The Deferred Compensation Plan allows certain Team Members, including NEOs, to elect to defer receipt of up to 50% of their base salary and up to 75% of their bonus payments. The Company does not fund, make any contributions to, or provide any interest rate subsidy for the Deferred Compensation Plan. In general, participants

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in the Deferred Compensation Plan receive payments following separation from service, provided that the participant may elect to receive payments on the earlier of a date certain or separation from service. The benefit participants may elect to receive payments in either a lump sum payment or in annual installments over five or ten years. Payments under the plan begin as soon as administratively feasible six months after a Team Member’s separation from service, unless a Team Member has elected to receive payments prior to separation from service in a specified year. Participants may elect to accrue a return on the deferred compensation by electing certain hypothetical investments that are similar to those offered under our 401(k) benefit plan for all eligible Team Members.

The following table shows information about the participation by each NEO in our Deferred Compensation Plan.

Name	Executive Contributions in Fiscal 2013 ($)(1)		Aggregate Earnings in Fiscal 2013 ($)(2)		Aggregate Distributions in Fiscal 2013 ($)		Aggregate Balance at Fiscal 2013 Year End ($)(3)(4)
Howard R. Levine		102,810		124,755		—		1,719,059
Michael K. Bloom		70,654		9,565		—		123,974
Mary A. Winston		—		—		—		—
Barry Sullivan		226,359		83,787		—		1,213,921
James Snyder		—		—		—		—
Paul G. White		—		—		—		—
Charles S. Gibson, Jr.		—		67,321		—		528,486

⁽¹⁾  Reflects amounts of salary deferrals which are also reported as compensation for fiscal 2013 in the Summary Compensation Table and deferrals of non-equity incentive plan compensation reported as compensation for fiscal 2012 in the 2012 Summary Compensation Table in the following amounts:

Name	Salary ($) (Deferred  in 2013)		Non-Equity Incentive Plan Compensation ($) 2012 (Deferred in 2013)
Howard R. Levine		55,709		47,100
Michael K. Bloom		70,654		—
Mary A. Winston		—		—
Barry Sullivan		106,059		120,301
James Snyder		—		—
Paul G. White		—		—
Charles S. Gibson, Jr.		—		—

The table does not include the following non-equity incentive plan compensation amounts deferred in fiscal 2013 to be paid in fiscal 2014. These amounts are reported as compensation for fiscal 2013 in the Summary Compensation Table:

Name	Non-Equity Incentive Plan Compensation ($) 2013 (Deferred in 2014)
Howard R. Levine		34,317
Michael K. Bloom		—
Mary A. Winston		65,536
Barry Sullivan		89,726
James Snyder		—
Paul G. White		—
Charles S. Gibson, Jr.		—

⁽²⁾  We do not provide above-market earnings on amounts deferred under the Deferred Compensation Plan. Therefore, pursuant to SEC regulations, these amounts are not reported in the Summary Compensation Table.

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⁽³⁾  This amount includes executive contributions and earnings relating to (i) salary deferrals made in fiscal 2013 and in prior fiscal years and (ii) bonus deferrals for bonuses earned in fiscal 2012 and paid in fiscal 2013 and bonuses earned and paid in prior fiscal years. This amount does not include deferrals with respect to fiscal 2013 bonuses to be paid in fiscal 2014.

⁽⁴⁾  Of this amount, $1,172,125 for Mr. Levine, $42,827 for Mr. Bloom, and $380,185 for Mr. Gibson was reported as compensation in the Summary Compensation Table for previous fiscal years.

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

We have entered into employment and severance agreements and maintain incentive plans that will require us to provide compensation or other benefits to our NEOs in connection with certain events related to a termination of employment or change in control of the Company. Capitalized terms used in the following descriptions have the definitions set forth in the Employment Agreement and Severance Agreements or in the 2006 Plan.

Employment and Severance Agreements

As described in the “Employment and Severance Agreements” section in this Proxy Statement, the Leadership Development and Compensation Committee approved the Employment Agreements and Severance Agreements for certain executives, including our NEOs. Generally, under the Employment Agreements and Severance Agreements, upon a termination of employment without Cause, death or Disability, our NEOs would become entitled to receive certain severance benefits, including salary continuation payments equal to a multiple of their monthly base salary, any earned but unpaid annual cash bonus for the fiscal year preceding the year of termination, a pro-rata payment of the annual cash bonus pursuant to our Cash Bonus Awards Guidelines for the fiscal year in which termination occurs and subsidized COBRA continuation coverage for up to eighteen (18) months following their termination of employment. Generally, the Employment Agreements and Severance Agreements also provide that, in the event of a termination of employment without Cause or for Good Reason within twenty-four (24) months following a Change in Control, the NEOs are entitled to a lump sum severance payment equal to a multiple of the sum of their highest annual base salary during the period beginning immediately prior to the Change in Control through the termination of employment and the average of the annual cash bonuses paid in the preceding three fiscal years under the Cash Bonus Award Guidelines. The Company will also continue to provide health benefits for the executive and his or her dependents for up to eighteen (18) months after termination. The Company’s obligation to provide the severance benefits described above to any NEO are contingent on the NEO’s compliance with certain non-competition, non-solicitation and confidentiality covenants contained in the Employment Agreements or Severance Agreements, respectively, and execution of a general release of claims against the Company. (For more information on our employment and severance agreements with our NEOs, see the “Employment and Severance Agreements” section in this Proxy Statement.)

2006 Plan

Under the 2006 Plan, in the event of a “Change in Control,” (as defined under the 2006 Plan) if (i) the acquiring company does not assume the outstanding awards under the 2006 Plan, or (ii) the acquiring company does assume the outstanding awards, and a participating Team Member is terminated from employment without “Cause” or the participant resigns for “Good Reason,” within two years following the Change in Control (as such terms are defined under the 2006 Plan) then:

• outstanding options would immediately vest upon the Change in Control or the date of termination of employment, as applicable, and remain exercisable for the duration of their term; and

• the target payout opportunities attainable under the annual cash bonus and PSRs outstanding at the time of the Change in Control or the date of termination of employment, as applicable, would be deemed to

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have been fully earned as of the effective date of the Change in Control or termination of employment, as applicable, based upon the greater of (i) an assumed achievement of all relevant performance goals at the “target” level, or (ii) the actual level of achievement of all relevant performance goals as of Family Dollar’s fiscal quarter end preceding such Change in Control. With respect to the annual cash bonus and PSRs, participants would be paid a prorated award based upon the length of the performance period that has elapsed prior to the date of the Change in Control or termination of employment within two years following a Change in Control. In addition, if a PSR award is not assumed by the acquiring company, the participant may have the opportunity to earn the remaining portion of the award not paid out upon the Change in Control.

In addition, under the 2006 Plan the Leadership Development and Compensation Committee has the discretion to accelerate vesting of awards in connection with a Change in Control or termination of employment and to cancel or adjust awards in the event of certain corporate transactions. Under the 2006 Plan, if a participant’s employment is terminated as a result of death, Disability, Retirement, or by the Company without Cause, any outstanding awards of PSRs will be paid out based on the Company’s performance for (A) the fiscal year in which the date of termination occurs plus (B) each completed fiscal year during the applicable performance period immediately preceding the date of termination. The number of shares of Family Dollar common stock awarded pursuant to the PSRs will be issued on a pro-rata basis based on the number of months the participant worked during the applicable performance period. In the event a participant’s employment is terminated prior to the issuance of shares of Family Dollar common stock in respect of any award of PSRs, either by the Company for Cause or due to any reason other than those described above, any outstanding award of PSRs will immediately be forfeited.

Non-Qualified Deferred Compensation

In the event of a termination of employment of any officer who participates in the Company’s Deferred Compensation Plan, payments under the plan will begin as soon as administratively feasible six months after such termination of employment. There is no provision for increased benefits in the event of termination of employment with the Company.

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Estimated Post-Employment Compensation and Benefits

The following table sets forth the estimated post-employment compensation and benefits that would have been payable to each of our current NEOs upon a separation from service under various circumstances or a change in control of the Company in accordance with their respective employment agreements and severance agreements and under our various incentive plans. Payments pursuant to the Deferred Compensation Plan are not included in the table (see “2013 Non-Qualified Deferred Compensation,” in this Proxy Statement). No payments, other than payments of accrued and unpaid base salary and vacation and non-qualified deferred compensation, are made to any NEO in the event of termination for Cause. The amounts payable are calculated based on the assumption that each covered circumstance under such arrangements occurred on August 30, 2013, the last business day of fiscal 2013.

Name	Benefits and Payments	Voluntary Departure ($)		Termination by the Company without Cause ($)		Change in Control ($)		Medical Disability ($)(3)		Death ($)(4)
Howard R. Levine	Severance Pay(1)(2)		—		3,436,336		5,910,595		3,136,336		2,436,336
	Performance Share Rights(5)		—		6,858,088		6,858,088		6,858,088		6,858,088
	Stock Options(6)		6,239,185		6,239,185		12,576,237		12,576,237		12,576,237
	Benefit Continuations (7)		—		14,003		14,003		14,003		—
	Total		6,239,185		16,547,612		25,358,923		22,584,664		21,870,661
Michael K. Bloom	Severance Pay(1)(2)		—		1,672,017		2,508,878		1,372,017		672,017
	Performance Share Rights(5)		—		3,095,769		3,095,769		3,095,769		3,095,769
	Stock Options(6)		—		—		1,010,405		1,010,405		1,010,405
	Benefit Continuations (7)		—		10,471		10,471		10,471		—
	Total		—		4,778,257		6,625,523		5,488,662		4,778,191
Mary A. Winston	Severance Pay(1)(2)		—		1,101,071		1,186,479		801,071		131,071
	Performance Share Rights(5)		—		722,365		722,365		722,365		722,365
	Stock Options(6)		—		—		90,747		90,747		90,747
	Benefit Continuations (7)		—		15,105		15,105		15,105		—
	Total		—		1,838,541		2,014,696		1,629,288		944,183
Barry W. Sullivan	Severance Pay(1)(2)		—		959,635		1,154,225		659,635		119,635
	Performance Share Rights(5)		—		849,083		849,083		849,083		849,083
	Stock Options(6)		—		—		779,478		779,478		779,478
	Benefit Continuations (7)		—		14,615		14,615		14,615		—
	Total		—		1,823,333		2,797,401		2,302,811		1,748,196
James C. Snyder, Jr.	Severance Pay(1)(2)		—		428,229		764,553		182,229		—
	Performance Share Rights(5)		—		509,009		509,009		509,009		509,009
	Stock Options(6)		499,239		499,239		978,504		978,504		978,504
	Benefit Continuations (7)		—		6,478		9,717		6,478		—
	Total		499,329		1,496,955		2,261,783		1,676,220		1,487,513

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⁽¹⁾  Represents severance payable in an amount equal to a multiple, as set forth below, of the NEO’s fiscal 2013 annual base salary, plus the amount of the pro rata bonus (assuming a termination date of August 30, 2013, 100%) payable to the NEO under the Cash Bonus Award Guidelines:

	Multiple Applicable on Termination without Cause, or due to Disability or death, prior to a Change in Control
Howard R. Levine		2.5
Michael K. Bloom		2
Mary A. Winston		2
Barry W. Sullivan		2
James C. Snyder, Jr.		1

⁽²⁾  Represents severance payable in the event of a qualifying termination following a Change in Control, equal to a multiple, as set forth below, of the sum of the NEO’s fiscal 2013 base annual salary plus the average annual cash bonus actually paid under the Cash Bonus Award Guidelines in the preceding fiscal three years:

	Multiple Applicable on Qualifying Termination After a Change in Control
Howard R. Levine		3
Michael K. Bloom		2.5
Mary A. Winston		2
Barry W. Sullivan		2
James C. Snyder, Jr.		1.5

⁽³⁾  The amount payable in the event of Disability has been reduced by estimated disability payments made pursuant to the Company’s executive disability program.

⁽⁴⁾  The amount payable in the event of death has been reduced by life insurance proceeds payable upon the death of each NEO pursuant to life insurance policies provided as part of the Company’s benefit program, up a maximum of $1,000,000.

⁽⁵⁾  In the event of any termination of employment described above, except in connection with a Change in Control, all outstanding awards of PSRs are paid on a pro-rata basis as of the date of the participant’s termination without Cause, or due to the participant’s Retirement, Disability or death, based on actual Company performance in the fiscal year of termination and any prior completed fiscal years in the performance period. Under the 2006 Plan, the executive would receive the amounts set forth under the column “Change in Control” only if: (a) the awards are not assumed by the surviving entity, or (b) the awards are assumed by the surviving entity, but the executive is terminated within two years of the Change in Control without Cause or for Good Reason. The payouts of the outstanding awards of PSRs on a Change in Control are determined based on the greater of (a) an assumed achievement of all relevant performance goals at the “target” level, or (b) the actual level of achievement of all relevant performance goals against the target level, as of Family Dollar’s fiscal quarter end preceding the date of Change in Control. The amounts set forth above are based upon the closing price of Family Dollar common stock as of August 30, 2013, the last trading day of the year, of $71.19 per share, multiplied by the number of shares of Family Dollar common stock to be awarded, adjusted for performance as set forth below:

• For the fiscal 2011 – 2013 three-year performance period, we assumed an award equivalent to 160% of the target number of PSRs awarded to each in NEO in fiscal 2011, based on actual performance against the fiscal 2011 – 2013 Performance Peer Group through fiscal 2013.

• For the fiscal 2012 – 2014 three-year performance period, we assumed an award equivalent to 148% of the target number of PSRs awarded to each in NEO in fiscal 2012, based on actual performance against the fiscal 2012 – 2014 Performance Peer Group through fiscal 2013.

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• For the fiscal 2013 – 2015 three-year performance period, we assumed an award equivalent to 141% of the target number of PSRs awarded to each in NEO in fiscal 2012, based on actual performance against the fiscal 2013 – 2015 Performance Peer Group through fiscal 2013.

⁽⁶⁾  As discussed above, stock options granted pursuant to the 2006 Plan accelerate and vest in full upon termination due to death and Disability, and would continue to vest and be exercisable through the expiration of their term in connection with a termination by the executive due to his or her Qualifying Retirement (as defined under the 2006 Plan Non-Qualified Stock Option Grant Program). Under the 2006 Plan, all stock options would vest in full and the executive would receive the amounts set forth under the column “Change in Control” only if: (a) the awards are not assumed by the surviving entity, or (b) the awards are assumed by the surviving entity, but the executive is terminated within two years of the Change in Control. The amounts set forth above are based upon the excess of the closing price of Family Dollar common stock as of August 30, 2013, the last trading day of the year, of $71.19 per share over the exercise price of the option and on the termination reasons as set forth below:

• In the event of the termination of an executive’s employment due to voluntary departure (other than a Qualifying Retirement) or by the Company without Cause, the executive would be entitled to exercise stock options that were vested on or before the date of termination for a period of ninety (90) days following the executive’s date of termination and all unvested stock options would be immediately forfeited as of the executive’s termination date.

• In the event of the termination of an executive’s employment due to death or Disability, or in connection with a Change in Control, all outstanding stock options would immediately vest in full on the date of the executive’s termination within two years following a Change in Control (if the outstanding options were assumed by the surviving entity on the date of the Change in Control) or on the date of a Change in Control, if the outstanding awards were not assumed by the surviving entity in the event of a Change of Control.

⁽⁷⁾  Reflects the incremental cost to the Company of the extension of health benefits following a termination without Cause or due to death or Disability or a qualifying termination following a Change in Control. These benefits would be extended for up to eighteen months in any of these events for all of the NEOs.

Actual Post-Employment Compensation and Benefits

The following table sets forth the actual post-employment compensation and benefits that were payable to each of our former NEOs upon a separation from service under specific circumstances in accordance with their respective employment agreements and severance agreements and under our various incentive plans. Payments pursuant to the Deferred Compensation Plan are not included in the table (see “2013 Non-Qualified Deferred Compensation,” above). No payments, other than payments of non-qualified deferred compensation, are made to any NEO in the event of termination for Cause.

	Paul G. White  ($)(1)		Charles S. Gibson ($)(2)
Severance Pay		995,534		971,619
Performance Share Rights		870,013		839,117
Stock Options		79,321		—
Benefit Continuations		14,625		15,095
Total		1,959,493		1,825,831

⁽¹⁾  Mr. White’s employment with the Company ended on July 9, 2013. His severance agreement provided him with continuation of certain compensation and benefits as described above in the “Employment and Severance Agreements” section in this Proxy Statement. Under the 2006 Plan, Mr. White received pro-rata payouts of all outstanding awards of PSRs on October 15, 2013 (the date the PSRs were paid out for the fiscal 2011-2013 performance period) based on actual Company performance during fiscal 2013 and the prior completed fiscal years in the applicable performance periods, pro-rated for the period of his

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employment during the applicable performance periods. The PSR amount set forth above in respect of the number of shares of Family Dollar common stock issued in connection with the payout of Mr. White’s outstanding awards of PSRs is based upon the closing price of Family Dollar common stock as of the payment date of $68.92 per share.

⁽²⁾  Mr. Gibson’s employment with the Company ended on April 30, 2013. His severance agreement provided him with continuation of certain compensation and benefits as described above. Under the 2006 Plan, Mr. Gibson received pro-rata payouts of all outstanding awards of PSRs on October 15, 2013 (the date the PSRs were paid out for the fiscal 2011-2013 performance period) based on actual Company performance during fiscal 2013 and the prior completed fiscal years in the applicable performance periods, pro-rated for the period of his employment during the applicable performance periods. The amount set forth above in respect of the number of shares of Family Dollar common stock issued in connection with the payout of Mr. Gibson’s outstanding awards of PSRs is based upon the closing price of Family Dollar common stock as of the payment date of $68.92 per share.

EQUITY COMPENSATION PLAN INFORMATION

The following table provides information with respect to the shares of our common stock that may be issued under the 2006 Plan, which is the only equity compensation plan that we currently maintain, as of August 31, 2013.

Plan Category	(a) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights(1)		(b) Weighted Average Exercise Price of Outstanding Options, Warrants and Rights(2)		(c) Number of Securities Remaining Available for Future Issuance(3)
Equity Compensation Plans Approved by Stockholders		2,084,439	$	50.71/share		8,778,754

⁽¹⁾  Consists of shares issuable upon exercise of options and the award of common stock pursuant to PSRs based on “target” performance granted under the 2006 Plan.

⁽²⁾  The weighted average exercise price is for options only and does not account for PSRs.

⁽³⁾  Consists of shares available for awards of options and other stock-based awards under the 2006 Plan.

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OWNERSHIP OF THE COMPANY’S SECURITIES

Ownership by Directors and Officers

The following table sets forth, for each of our directors and director nominees, each of our NEOs, and all of our current executive officers, directors and director nominees as a group, the number of shares of our common stock beneficially owned and the percent of our common stock so owned, all as of November 20, 2013, unless otherwise noted, and based on 113,759,986 shares outstanding as of that date:

Name	Amount and Nature of Beneficial Ownership(1)			Percent of Common Stock
Mark R. Bernstein		14,594	(2)		*
Pamela L. Davies		5,119			*
Sharon Allred Decker		6,050	(3)		*
Edward C. Dolby		13,087			*
Glenn A. Eisenberg		12,687			*
Edward P. Garden		8,364,997	(4)		7.35	%
Howard R. Levine		9,596,524	(5)		8.41	%
George R. Mahoney, Jr.		339,005			*
James G. Martin		11,969			*
Harvey Morgan		4,713	(6)		*
Dale C. Pond		10,557			*
Michael K. Bloom		31,983			*
Mary A. Winston		2,127			*
Barry W. Sullivan		30,685			*
James C. Snyder, Jr.		30,476			*
Paul G. White		2,406	(7)		*
Charles S. Gibson, Jr.		18,000	(7)		*
All Executive Officers, Directors and Director Nominees of the Company as a Group (16 persons)		18,494,979			16.21	%

* Less than one percent

⁽¹⁾  All shares are held with sole voting and investment power. These numbers include shares for which the following persons have the right to acquire beneficial ownership, as of November 20, 2013, or within 60 days thereafter, pursuant to the exercise of stock options: (i) Mr. Levine—290,186 shares; (ii) Mr. Bloom—18,086 shares; (iii) Mr. Snyder 22,768 shares and (v) all executive officers and directors as a group—345,958 shares. Does not include shares that may be awarded pursuant to the PSR program; see the “2013 Outstanding Equity Awards at Fiscal Year End” table for information regarding the potential award of common stock pursuant to the PSRs.

⁽²⁾  This number does not include 15,075 shares owned by Mr. Bernstein’s wife. Mr. Bernstein disclaims beneficial ownership of the shares owned by his wife.

⁽³⁾  This number includes 2,843 shares which are currently pledged.

⁽⁴⁾  Mr. Garden is deemed to beneficially own 8,363,704 shares of our common stock that are owned by Trian Fund Management, L.P. and its affiliates as described in the “Ownership by Certain Other Beneficial Owners” table below.

⁽⁵⁾  This number does not include 1,025 shares owned by Mr. Levine’s wife. Mr. Levine disclaims beneficial ownership of the shares owned by his wife.

⁽⁶⁾  This number does not include 4,650 shares owned by Mr. Morgan’s wife. Mr. Morgan disclaims beneficial ownership of the shares owned by his wife.

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⁽⁷⁾  Mr. Gibson and Mr. White are no longer officers or employees of the Company, and the amounts shown for each reflect their stock ownership as of the dates of their respective last Form 4 filings made with the SEC. Neither Mr. Gibson nor Mr. White currently has any outstanding rights granted by the Company to acquire beneficial ownership of shares. Mr. Gibson’s last Form 4 was filed on April 19, 2013, and Mr. White’s last Form 4 was filed on October 11, 2012.

Ownership by Certain Other Beneficial Owners

Based on filings with the SEC and other information, we believe that, as of the dates set forth below, the following stockholders beneficially owned more than 5% of our common stock:

Name and Address	Amount and Nature of Beneficial Ownership(1)			Percent  of Common Stock(2)
Paulson & Co. Inc.		11,265,600	(3)		9.90	%
1251 Avenue of Americas
New York, New York 10020
Trian Fund Management, L.P.		8,364,997	(4)		7.35	%
280 Park Avenue
41st Floor
New York, NY 10017
The Vanguard Group		7,326,247	(5)		6.44	%
100 Vanguard Blvd.
Malvern, PA 19355
Harris Associates, LP		6,309,436	(6)		5.55	%
2 North LaSalle Street, Suite 500
Chicago, IL 60602

⁽¹⁾  “Beneficial ownership” is a term broadly defined by the SEC and includes more than the typical form of stock ownership, that is, stock held in the person’s name. The term also includes what is referred to as “indirect ownership” such as where, for example, the person has or shares the power to vote the stock, sell it or acquire it within 60 days. Accordingly, some of the shares reported as beneficially owned in this table may actually be held by other persons or organizations. Those other persons and organizations are described in the reports filed with the SEC.

⁽²⁾  Based on the number of shares of common stock owned by each stockholder as set forth above and 113,759,986 shares of our common stock outstanding as of November 20, 2013.

⁽³⁾  Based solely on the Form 13F-HR filed on November 14, 2013 by Paulson & Co. and Paulson Management LP. As of September 30, 2013, the filers reported defined investment power and sole voting power over all of the reported shares.

⁽⁴⁾  Based solely on the Schedule 13D/A filed with the SEC on April 26, 2013, and subsequent Form 4s for Mr. Garden filed with the SEC by Trian Fund Management, L.P. As of April 26, 2013, the Filing Persons reported beneficial ownership of 8,364,997 shares. According to the Schedule 13D/A, the Filing Persons, who share voting and investment power, are Trian Partners, L.P., Trian Partners Master Fund, L.P., Trian Partners Parallel Fund I, L.P., Trian Partners Strategic Investment Fund, L.P., Trian Partners Master Fund (ERISA), L.P., Trian Fund Management, L.P., Trian Fund Management GP, LLC, Nelson Peltz, Peter W. May and Edward P. Garden.

⁽⁵⁾  Based solely on the Form 13F-HR filed with the SEC by The Vanguard Group, Inc. and its affiliates, on November 7, 2013. As of September 30, 2013, the Vanguard Group had sole investment power over

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7,171,618 shares, Vanguard Fiduciary Trust Company has investment power over 128,429 shares, and Vanguard Investments Australia has investment power over 26,200 shares. The Vanguard Group has sole voting power over 169,011 shares and no voting power over 7,157,236 shares.

⁽⁶⁾  Based solely on the Form 13F-HR filed with the SEC by Harris Associates LP and its affiliates on November 12, 2013. As of September 30, 2013, Harris Associates LP has sole investment power over 5,101,117 shares and Natixis Asset Management Advisors, L.P. has investment power over 1,208,319 shares. Harris Associates LP has sole voting power over 3,659,167 shares, shared voting power over 1,157,400 shares and no voting power over 1,492,869 shares.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires our directors and executive officers and persons who own more than ten percent of our common stock (collectively, “Reporting Persons”) to file with the SEC and NYSE initial reports of ownership and reports of changes in ownership of our common stock and to furnish us with copies of such reports. To our knowledge, which is based solely on a review of the copies of such reports furnished to us and written representations from Reporting Persons that no other reports were required, all Reporting Persons complied on a timely basis with all applicable filing requirements during fiscal 2013.

CODE OF ETHICS

We have adopted a code of ethics, the Code of Ethics for the Chief Executive Officer and Senior Financial Officers (the “CEO and Senior Financial Officers Code”), that applies to our principal executive officer, principal financial officer and other senior accounting officers. The CEO and Senior Financial Officers Code is posted on our website along with our Code of Business Conduct, which applies to all officers and Team Members, including the officers mentioned above. The Internet address for our website is www.familydollar.com, and the CEO and Senior Financial Officers Code and Code of Business Conduct may be found from our main website page by clicking first on “Investor Relations,” and then on “Corporate Governance,” next on “Codes of Business Conduct and Ethics.” We intend to satisfy any disclosure requirement under Item 5.05 of Form 8-K by posting to our website any amendment to or waiver of the CEO and Senior Financial Officers Code or Code of Business Conduct granted to our principal executive officer, principal financial officer, or other senior accounting officers.

TRANSACTIONS WITH RELATED PERSONS

Policy and Procedures

The Nominating/Corporate Governance Committee (the “Governance Committee”) has adopted written procedures for the review, approval and monitoring of transactions between Family Dollar and its directors and executive officers (and their immediate family members) that would be subject to disclosure in our Proxy Statement pursuant to the SEC rules (generally transactions involving amounts exceeding $120,000 in which a related party has a material interest). Under these procedures, the Governance Committee is to be informed of transactions subject to review before their implementation. The procedures establish our practices for obtaining and reporting information to the Governance Committee regarding such transactions on a periodic and an as-needed basis. The policy provides that such transactions are to be submitted for approval before they are initiated but also provides for ratification of such transactions. No director who is interested in a transaction may participate in the Governance Committee’s determinations as to the appropriateness of such transaction. In certain situations, the Chairman of the Governance Committee has been delegated the authority to make determinations regarding the approval of such transactions. The policy also pre-approves certain transactions excluded from the SEC’s disclosure rules and transactions arising solely from ownership of our stock in which

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all stockholders are equally treated. The Governance Committee and/or the Board have previously approved certain related party transactions, as described below. The procedures established by the Governance Committee provide for continuing monitoring and annual review of these pre-approved transactions. These procedures operate in conjunction with other aspects of the Company’s compliance program, such as our Board of Directors Code of Conduct and our Code of Business Conduct, which generally require directors and Team Members to report any circumstances that may create or appear to create a conflict between the interests of such a person and those of the Company, regardless of the amount involved. Related person transactions involving directors are also subject to Board approval or ratification when so required under Delaware law.

Related Party Transactions

We have entered into a Retirement Agreement with Mr. Leon Levine, the former Chairman of the Board and the father of Howard R. Levine, in connection with Mr. Leon Levine’s retirement as of September 30, 2002. Pursuant to the Retirement Agreement, we are currently providing continuing health care coverage for Mr. Leon Levine and certain members of his family and use of Family Dollar aircraft for up to 30 hours per year (not including “dead-head” time). We accrued approximately $1,285,000 in fiscal 2002 for the total value of these benefits to be received over the term of the Retirement Agreement. The incremental cost of providing these benefits and services was $169,850 in fiscal 2013.

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PROPOSAL NO. 2

ADVISORY VOTE ON EXECUTIVE COMPENSATION

Section 14A of the Exchange Act and related SEC rules now require that we provide our stockholders with the opportunity to vote to approve, on a non-binding, advisory basis, the compensation of our NEOs as disclosed in this Proxy Statement in accordance with SEC rules. We must provide this opportunity to our stockholders at least once every three years, commencing with the 2012 Annual Stockholders’ Meeting.

As described above under “Compensation Discussion and Analysis” in this Proxy Statement, our executive compensation program is designed with an emphasis on pay for performance and is intended to closely align the interests of our NEOs with the interests of our stockholders. The Leadership Development and Compensation Committee regularly reviews our executive compensation program to ensure that compensation is closely tied to the performance that our executive officers can impact and that is likely to have an impact on stockholder value. Our compensation programs are also designed to balance long-term performance with shorter-term performance and to mitigate any risk that an executive officer would be incentivized to pursue results only with respect to a single performance metric or performance period to the detriment of Family Dollar as a whole. In the Compensation Discussion and Analysis referred to above, we discuss why we believe the compensation of our NEOs for fiscal 2013 was well-aligned with the Company’s performance in fiscal 2013. We urge you to read carefully the Compensation Discussion and Analysis, the compensation tables and the related narrative discussion in this Proxy Statement.

The vote on this proposal is advisory, which means that the vote will not be binding on the Company, the Board or the Leadership Development and Compensation Committee. The Leadership Development and Compensation Committee will review the results of the vote on this proposal in connection with its regular evaluations of our executive compensation program.

In view of the foregoing, stockholders will vote on the following resolution at the 2014 Annual Meeting of Stockholders:

RESOLVED, that the Company’s stockholders hereby approve, on a non-binding advisory basis, the compensation of the Named Executive Officers of Family Dollar Stores, Inc. as disclosed in the Proxy Statement for the 2014 Annual Meeting of Stockholders, including in the Compensation Discussion and Analysis, compensation tables and accompanying narrative discussion, in accordance with the Securities and Exchange Commission’s compensation disclosure rules.

Recommendation of the Board of Directors

The Board of Directors recommends that stockholders vote FOR approval, on an advisory basis, of the compensation of the Company’s named executive officers as described in this Proxy Statement.

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PROPOSAL NO. 3

RATIFICATION OF SELECTION OF INDEPENDENT

REGISTERED PUBLIC ACCOUNTANTS

The Audit Committee, which consists entirely of independent directors, is recommending approval of its selection of PricewaterhouseCoopers LLP (“PwC”) as independent registered public accountants to audit and report on the consolidated financial statements of Family Dollar and its subsidiaries for fiscal 2014, and to perform such other appropriate accounting and related services as may be required by the Audit Committee. The affirmative vote of the holders of a majority of the shares of our common stock present or represented by proxy at the Annual Meeting and entitled to vote in respect thereto is required to ratify the selection of PwC for the purposes set forth above.

Stockholder ratification of the selection of PwC as the Company’s independent registered public accounting firm is not required by the Company’s Bylaws or otherwise. However, the Company is submitting the selection of PwC to the stockholders for ratification as a matter of good corporate practice. If the stockholders do not ratify the selection of PwC, the Audit Committee will reconsider whether or not to retain PwC. However, the Audit Committee will not be obliged to select a different auditor. Even if the selection is ratified, the Audit Committee in its discretion may direct the selection of a different independent registered public accounting firm at any time during the year if it is determined that such a change would be in the best interests of the Company and its stockholders. PwC served as our independent registered public accountants for the fiscal year ended August 31, 1991, and for each subsequent fiscal year. Representatives of PwC are expected to be present at the Annual Meeting and will have an opportunity to make a statement if they desire to do so and to respond to appropriate questions.

Independent Registered Public Accounting Firm’s Fees and Services

The following sets forth fees billed for the audit and other services provided by PwC for fiscal 2012 and fiscal 2013:

Fee Category	Fiscal 2012 Fees		Fiscal 2013 Fees
Audit Fees(1)	$	1,026,231	$	1,114,807
Audit-Related Fees(2)		11,411		—
Tax Fees		—		—
All Other Fees(3)	$	1,800	$	1,800
Total	$	1,039,442	$	1,116,607

⁽¹⁾  Includes fees for audits of annual financial statements, reviews of the related quarterly financial statements and for services normally provided in connection with statutory and regulatory filings or engagements.

⁽²⁾  Includes fees for audit related work for Family Dollar Insurance, Inc., our captive insurance company.

⁽³⁾  Represents fees paid for access to PwC’s accounting research database.

All services rendered by PwC are permissible under applicable laws and regulations regarding the independence of the independent registered public accounting firm, and all such services were pre-approved by the Audit Committee. The Audit Committee Charter requires that the Audit Committee pre-approve the services to be provided by PwC; the Audit Committee has delegated pre-approval authority to the Chairman of the Audit Committee with respect to audit services and permitted non-audit services to be performed for the Company by its independent registered public accountants up to $150,000 (other than the annual engagement of the independent registered public accountants). The Audit Committee will review all such delegated pre-approvals at their next scheduled meeting.

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Recommendation of the Board of Directors

The Board of Directors recommends that the stockholders vote FOR the ratification of the selection of PwC as our independent registered public accountants for fiscal 2014.

STOCKHOLDER PROPOSALS FOR 2015 ANNUAL MEETING

Proposals of stockholders intended to be presented at the next Annual Meeting of Stockholders in 2015 (the “2015 Annual Meeting”), and to be included in the Proxy Statement and form of proxy pursuant to Rule 14a-8 under the Exchange Act, must be received by us before the close of business on August 8, 2014. If a stockholder intends to present a proposal for consideration at the 2015 Annual Meeting (outside the processes of Rule 14a-8 under the Act), notice of such proposal must be delivered to the Company not earlier than September 18, 2014, and not later than October 18, 2014. Otherwise such proposal will be considered untimely under the Company’s Bylaws and pursuant to Rules 14a-4 and 14a-5(e) under the Exchange Act, and the persons named in the proxies solicited by the Board of Directors for the 2014 Annual Meeting may exercise discretionary voting power with respect to such proposal, if presented at the meeting, without including information regarding the proposal in the Company’s proxy materials. Any such proposals or notices should be in writing and should be sent by certified mail, return receipt requested, to the Corporate Secretary, Family Dollar Stores, Inc., P.O. Box 1017, Charlotte, NC, 28201-1017. Submitting a stockholder proposal does not guarantee that we will include such proposal in our next Proxy Statement. The Board reviews all stockholder proposals and determines whether further action is required.

OTHER MATTERS

Management knows of no other matters to be brought before the Annual Meeting. However, if any other matters do properly come before the Annual Meeting, it is intended that the shares represented by the proxies in the accompanying form will be voted in accordance with the best judgment of the person voting the proxies. Whether or not stockholders plan to attend the Annual Meeting, they are respectfully urged to sign, date and return the enclosed proxy which will, of course, be returned to them at the Annual Meeting if they are present and so request.

INCORPORATION BY REFERENCE OF CERTAIN FINANCIAL INFORMATION

We incorporate by reference in this Proxy Statement Notes 11 and 13 to our Consolidated Financial Statements included in our Annual Report for fiscal 2013. The fiscal 2013 Annual Report accompanies this Proxy Statement. Except as specifically set forth herein, the fiscal 2013 Annual Report is not deemed part of the proxy solicitation materials. Copies of the 2013 Annual Report may be obtained by sending a written request to: Corporate Secretary at Family Dollar Stores, Inc., P.O. Box 1017, Charlotte, NC, 28201-1017, telephone: (704) 708-1974. Our Annual Reports are also available in the “Investor Relations” section of our website at www.familydollar.com under the “Financial Reporting” tab.

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Appendix A

Hay Retail Industry Database

7-Eleven	DSW	The Pantry
Abercrombie & Fitch	Express	PETCO
Academy Sports & Outdoors	Family Dollar Stores	PetSmart
Ace Hardware	FedEx—Office & Print Services	Phillips-Van Heusen
A.C. Moore Arts & Crafts	Foot Locker	Pier 1 Imports
Advance Auto Parts	Fossil	Polo Ralph Lauren
Aeropostale	Gap	QVC
Alex Lee	GNC	Restoration Hardware
Amazon.com	The Gymboree Corporation	Retail Brand Alliance—Brooks Bros.
American Eagle Outfitters	Hallmark Cards—Retail	Ritchie Bros. Auctioneers
The Andersons	Harris Teeter	Ross Stores
Ann, Inc.	Helzberg Diamonds	Safeway
Ascena Retail Group	h.h. gregg	Saks
AutoZone	The Home Depot	Sears
Bebe	Hot Topic	ShopKo
Belk	Hudson’s Bay Company—Lord & Taylor	Sonic Automotive
Best Buy	J.C. Penney	The Sports Authority
Big Lots	J. Crew	St. John Knits Int’l
BJ’s Wholesale Club	Jewelry Television	Stage Stores
Body Shop	Kenneth Cole	Staples
The Bon-Ton	Knowledge Learning	Sterling Jewelers
Build-A-Bear	Kohl’s	SUPERVALU
Cabela’s	L.L. Bean	Talbots
Carter’s	L Brands	Target
Charlotte Russe	Limited Stores	Tiffany & Co.
Charming Shoppes	Liz Claiborne	TJX Companies
Chico’s	Lowe’s	Tory Burch
Children’s Place	LVMH Moet Hennessy Louis Vuitton	Toys ‘R’ Us
Christies European Holdings	Macy’s	Tractor Supply
Coach	Meijer	V.F. Corporation
Coldwater Creek	Michaels	Walgreens
Collective Brands	Movado Group	Walmart
Cracker Barrel Old Country	Neiman Marcus	Williams-Sonoma
Store—Retail	New York & Company	Winn-Dixie Stores
Crate and Barrel	Nike	Zale Corporation
CVS/Caremark	Nordstrom
Dick’s Sporting Goods	Office Depot
Dollar General	OfficeMax
Dollar Tree

A-1

  ATTENTION:  INVESTOR  RELATIONS P.O.  BOX  1017 CHARLOTTE,  NC  28201-1017 VOTE BY INTERNET - www.proxyvote.com   Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.   Electronic Delivery of Future PROXY MATERIALS   If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.   VOTE BY PHONE - 1-800-690-6903   Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you call and then follow the instructions.   VOTE BY MAIL   Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:   KEEP THIS PORTION FOR YOUR RECORDS

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DETACH AND RETURN THIS PORTION ONLY

THIS    PROXY    CARD    IS    VALID     ONLY    WHEN    SIGNED    AND    DATED.

		For All	Withhold All	For All Except	To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below.
The Board of Directors recommends you vote FOR the following:
1.	Election of Directors	¨	¨	¨
	Nominees
01	Mark R. Bernstein          02    Pamela L. Davies               03    Sharon Allred Decker                     04    Edward C. Dolby            05    Glenn A. Eisenberg
06	Edward P. Garden          07    Howard R. Levine              08    George R. Mahoney, Jr.                 09    James G. Martin              10    Harvey Morgan
11	Dale C. Pond
The Board of Directors recommends you vote FOR proposals 2 and 3.						For	Against	Abstain
2.	Approval, on an advisory basis, of the Company’s executive compensation.					¨	¨	¨
3.	Ratification of the selection of PricewaterhouseCoopers LLP as Independent Registered Public Accountants.					¨	¨	¨
NOTE: Such other business as may properly come before the meeting or any adjournment thereof.
For address change/comments, mark here.				¨
(see reverse for instructions)		Yes	No
Please indicate if you plan to attend this meeting		¨	¨
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer.

Signature [PLEASE SIGN WITHIN BOX]   Date   Signature (Joint Owners)   Date  

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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice & Proxy Statement, Annual Report is/are available at www.proxyvote.com. — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —
	FAMILY DOLLAR STORES, INC. Annual Meeting of Stockholders January 16, 2014 This proxy is solicited by the Board of Directors
	The undersigned hereby appoints Howard R. Levine and Michael K. Bloom, or either one of them, with full power of substitution, proxies of the undersigned to the Annual Meeting of Stockholders of Family Dollar Stores, Inc. to be held at 2:00 p.m. (local time) on Thursday, January 16, 2014, at the Company’s Store Support Center located at 10401 Monroe Road, Matthews, North Carolina, or at any adjournments thereof, with all the powers which the undersigned would possess if personally present, and instructs them to vote upon any matter which may properly be acted upon at this meeting, and specifically as indicated on the reverse side. The proxies are authorized to vote in their discretion upon such other business as may properly come before the meeting and any adjournments thereof. This Proxy, if received and correctly signed, will be voted in accordance with the choices specified. If a choice is not specified, this Proxy will be voted in favor of the Directors named in proposal 1, and for proposals 2 and 3. The cut-off for phone and Internet voting is 11:59 p.m. Eastern Time, on January 15, 2014. This Proxy is revocable, and the undersigned retains the right to attend this meeting and to vote his or her stock in person. The undersigned hereby acknowledges receipt of the notice of Annual Meeting of Stockholders and Proxy Statement.       Address change/comments:
	(If you noted any Address Changes and/or Comments above, please mark corresponding box on the reverse side.)
	Continued and to be signed on reverse side

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