Pep Boys 2008 Annual Report Download - page 23

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more directly align the interests of management with that of its shareholders, the first 20% of an officer’s bonus
deferred into Pep Boys Stock is matched by us on a one-for-one basis with Pep Boys Stock that vests over three
years.
In order to keep our executive compensation program competitive, we also maintained an Executive
Supplemental Retirement Plan, or SERP. In fiscal 2008, the SERP included both a defined benefit portion and a
defined contribution portion. The defined benefit portion, applicable to certain legacy executives, provides a
retirement benefit based upon a participant’s years of service and average compensation. The defined contribution
portion, applicable to executives who were hired or whose benefit vested after 2004, provides fixed annual
contributions to a retirement account based upon the participant’s 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%
In fiscal 2008, all named executive officers participated in the defined contribution portion of the SERP, except
for Mr. Cirelli who participated in the defined benefit portion of the SERP. Mr. Cirelli also had a frozen benefit
under our qualified defined benefit plan, as described in “Pension Plans” on page 23 below.
On December 19, 2008, the SERP was amended to split the defined benefit portion into a stand alone Legacy
Plan and the defined contribution portion into a stand alone Account Plan. In addition, the Legacy Plan was
amended to provide for all amounts payable thereunder for periods on and after January 1, 2009 to be paid to
Legacy Plan participants in a single lump sum payment in January 2009. Thereafter, no other benefits will accrue
or become payable under the Legacy Plan. Mr. Cirelli was the only named officer that participated under the
Legacy Plan. Accordingly, in January 2009, Mr. Cirelli received the present value (as of December 31, 2008) of his
accumulated benefit under the Legacy Plan.
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 Non-Competition and Change of Control Agreements with
Messrs. Odell, Arthur, Cirelli, Fee and Webb as described in “Employment Agreements with Named Executive
Officers” on page 25 below. 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 Officer.
Mr. Arthur joined the Company on May 1, 2008. In order to induce Mr. Arthur to join the Company, the
Human Resource Committee recommended, and the full Board, approved (i) a base salary of $500,000, (ii) a target