Pep Boys 2008 Annual Report Download - page 33

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(ITEM 3) PROPOSAL TO AMEND AND RESTATE OUR STOCK INCENTIVE PLAN
TO EXTEND ITS TERM THROUGH DECEMBER 31, 2014 AND TO PROVIDE AN ADDITIONAL
1,500,000 SHARES AVAILABLE FOR AWARD ISSUANCES THEREUNDER
On February 26, 2009, the Board of Directors, subject to stockholder approval at the 2009 Annual Meeting,
approved The Pep Boys – Manny, Moe & Jack 2009 Stock Incentive Plan, which is an amendment and restatement
of The Pep Boys – Manny, Moe & Jack 1999 Stock Incentive Plan (which, as proposed to be amended and restated,
we refer to as the “2009 Plan”). The amendments included in the 2009 Plan would:
• increase by an additional 1,500,000 shares the total number of shares of Pep Boys Stock authorized for
issuance under the 2009 Plan from 4,500,000 shares to 6,000,000 shares;
• extend the term of the 2009 Plan so that it will expire on December 31, 2014, as opposed to March 23, 2009;
• rename The Pep Boys – Manny, Moe & Jack 1999 Stock Incentive Plan to The Pep Boys – Manny, Moe &
Jack 2009 Stock Incentive Plan; and
• make certain clarifications to the terms of the 2009 Plan.
In addition, stockholder approval of the 2009 Plan is being sought (i) to enable the compensation attributable to
grants of stock options under the 2009 Plan to qualify for an exemption from the $1,000,000 deduction limitation
under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) (see discussion of “Section
162(m)” under “Federal Income Tax Consequences” below), (ii) in order for incentive stock options to meet the
requirements of the Code, and (iii) in order to meet New York Stock Exchange listing requirements. If approved by
the stockholders, the 2009 Plan will become effective on June 24, 2009. If the stockholders do not approve the
2009 Plan, the amendment and restatement of The Pep Boys – Manny, Moe & Jack 1999 Stock Incentive Plan to the
2009 Plan will not become effective and no further awards will be issued under The Pep Boys – Manny, Moe &
Jack 1999 Stock Incentive Plan (the “Current Plan”).
The Board of Directors believes that awards granted under the 2009 Plan will align the interests of management
with that of our stockholders -- long-term growth in the price of Pep Boys Stock. These award grants will provide
our key personnel with an additional incentive to devote themselves to our success. The availability of awards
under the 2009 Plan also improves our ability to attract and retain individuals who will help us achieve sustained
growth and financial success.
The Current Plan was originally adopted in 1999 and expired on March 23, 2009. At that time, the Current Plan
had approximately 1,200,000 shares available for awards remaining. In order to be able to utilize these remaining
shares, the term of the Current Plan needs to be extended. In order to continue to meet the objectives outlined
above, additional shares are also needed. The Board of Directors believes that the 1,500,000 additional shares
requested will be sufficient for future grants under the 2009 Plan for the next three years. The other amendments to
the Current Plan are designed primarily to clarify certain terms thereof.
The Board of Directors has unanimously approved, and recommends that the stockholders approve, the
amendment and restatement of the 2009 Plan to extend its term to December 31, 2014, and increase the number of
shares available for awards under the 2009 Plan by 1,500,000 shares to a total of 6,000,000 shares.
The material terms of the 2009 Plan are summarized below. This summary of the 2009 Plan is not intended to
be a complete description of the 2009 Plan and is qualified in its entirety by the actual text of the 2009 Plan, which
is attached to this Proxy Statement as Exhibit A.
Material Features of the 2009 Plan
General. The 2009 Plan provides that awards may be in any of the following forms: (i) incentive stock options,
(ii) nonqualified stock options and (iii) restricted stock (including phantom units convertible into shares of Pep Boys
Stock).