Pep Boys 2007 Annual Report Download - page 25

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officers who do not actively participate in the defined benefit portion of the SERP now receive fixed annual
contributions to a retirement account maintained under the SERP based upon their age and then current
compensation in accordance with the following:
If the Participant is…
Annual contribution as a
percentage of cash
compensation (salary +
short-term cash
incentive)
At least 55 years of age 19%
At least 45 years of age but not more than 54 years of age 16%
At least 40 years of age but not more than 44 years of age 13%
Not more than 39 years of age 10%
All named executive officers participate in the defined contribution portion of the SERP, except for Mr. Page
who participated in the defined benefit portion of the SERP. Mr. Page also had a frozen benefit under our qualified
defined benefit plan, as described in “Pension Plans” on page 23 below.
Health and Welfare Benefits. In order to keep our executive compensation program competitive, we also
provide our named executive officers with health and welfare benefits, including medical and dental coverage, life
insurance valued at one times salary, long term disability coverage, an auto allowance and a tax/financial planning
allowance.
Employment Agreements. We have entered into an Employment Agreement and Change of Control Agreement
with Mr. Rachor and Non-Competition and Change of Control Agreements with Messrs. Odell, Cirelli, Webb and
Yanowitz as described in “Employment Agreements with Named Executive Officers” on page 25 below. The
purpose of Mr. Rachor’s Employment Agreement is to secure his employment for a period of three years. The
purpose of our Non-Competition Agreements is to prevent our named executive officers from soliciting our
employees or competing with us if they leave Pep Boys of their own volition. As consideration for such restrictive
covenants, the Non-Competition Agreements provide for a severance payment to be made to a named executive
officer if he is terminated by the Company without “cause.” The purpose of the Change of Control Agreements is
to provide an incentive for our officers to remain in employment and continue to focus on the best interests of the
company without regard to any possible change of control.
New Executive Officers.
Mr. Rachor joined the Company on March 13, 2007. In order to induce Mr. Rachor to join the Company, the
Human Resource Committee recommended, and the full Board, approved (i) a base salary of $1,200,000, (ii) a
target annual bonus equal to 150% of his base salary (such bonus being guaranteed for fiscal 2007), (iii)
participation in the Company’s other incentive and welfare and benefit plans made available to executives, (iv) an
inducement grant of 1,000,000 options and 500,000 restricted stock units and (v) a signing bonus of $1,200,000.
This compensation package was designed by the Human Resources Committee to be competitive with those of the
chief executive officers of the Company’s peer group and to compensate Mr. Rachor for certain bonus awards and
equity holdings that Mr. Rachor forfeited upon leaving his former employer.
Mr. Odell joined the Company on September 17, 2007. In order to induce Mr. Odell to join the Company, the
Human Resource Committee recommended, and the full Board, approved (i) a base salary of $500,000, (ii) a target
annual bonus equal to 75% of his base salary (such bonus being guaranteed for fiscal 2007), (iii) participation in the
Company’s other incentive and welfare and benefit plans made available to executives, (iv) an inducement grant of
restricted stock units valued at $500,000, (v) the grant of Mr. Odell’s fiscal 2008 target long-term incentives on his
hire date (rather than in February 2008) and (vi) a signing bonus of $400,000. This compensation package was
designed by the Human Resources Committee to be competitive with those of the chief operating officers of the
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