Pep Boys 2008 Annual Report Download - page 39

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determinations, including factual determinations, and to take all other actions necessary or appropriate for the
proper administration of the Bonus Plan.
Eligibility and Participation. Our officer and director level employees are eligible to participate in the Bonus
Plan for each fiscal year or portion thereof, unless excluded from participation by the Committee. As soon as
practicable, but no later than ninety days after the beginning of the performance period, the Committee will
determine the employees who will be participants for the performance period. Subject to certain limited exceptions
described below, an employee must be actively employed on the last day of the performance period in order to be
eligible to receive a bonus for that period. Unless the Committee determines otherwise, employees who become
eligible to participate in the Bonus Plan after the performance period has begun will receive a prorated bonus for the
performance period in which they first become eligible. Participants in the Bonus Plan will also be eligible to
participate in such other bonus, sales incentive plan or other compensation programs as we may establish. Each
participant in the Bonus Plan will earn bonuses at one of four bonus levels, as follows – Chief Executive Officer –
Tier I; Executive Vice Presidents – Tier II; Senior Vice Presidents – Tier III; and Vice Presidents – Tier IV. If a
participant is employed at more than one bonus level during a performance period, the total bonus amount for which
such participant will be eligible to receive will be prorated based on the period of time during the performance
period that such individual was employed at each bonus level. All of our officers are eligible and have been elected
to participate in the Bonus Plan for our 2009 fiscal year.
Performance Period. Unless the Committee determines otherwise, the performance period for which the
performance goals will be measured will be our fiscal year.
Establishment of Plan Components. Within the first ninety days of each performance period, the Committee
will determine (i) the participants; (ii) the minimum, target, MAX and CAP performance levels for each of the
objective business criteria being used; (iii) the relative weightings of the respective objective business criteria being
used; (iv) the minimum, target, MAX and CAP bonus amounts (each expressed as a percentage of base salary) at
each bonus level; and (v) the percentages of the bonus amounts (which percentages may be different for each
participant) that are attributable to the performance during the performance period; provided, however, that in the
case of any bonus designated as qualified performance-based compensation for purposes of Section 162(m) of the
Code, the Board will make such determinations no later than ninety days after the beginning of the performance
period or the date on which 25% of the performance period has been completed, whichever is earlier. To the extent
a bonus is designated as qualified performance-based compensation under Section 162(m) of the Code, no such
bonus will be made as an alternative to any other award that is not designated as qualified performance-based
compensation and such bonus will be separate and apart from all other awards made.
For purposes of the Bonus Plan, base salary means the participant’s base salary for the fiscal year, which
includes amounts the participant elects to forego to our Deferred Compensation Plan (other than equity-based
deferred compensation), and amounts the participant elects to forego under our 401(k) plan and 125 plan. Base
salary does not include any amount attributable to any bonuses paid or accrued, whether or not pursuant to a plan or
program.
Section 162(m) of the Code requires us to establish a maximum annual bonus that can be paid to any individual
under the Bonus Plan. As a result, the Bonus Plan provides that the maximum amount that can be paid for a bonus
designated as qualified performance-based compensation under the Plan that is payable to a participant for any
fiscal year is $3,000,000.
Performance Goals. For any bonus under the Bonus Plan designated to qualify as qualified performance-based
compensation under Section 162(m) of the Code, the performance goals will be based on pre-established, objective
business criteria and will be set forth in writing by the Committee within the period required under Section 162(m)
of the Code. The relevant business criteria will include at least one of the following: (1) return on total stockholder
equity; (2) earnings per share of Pep Boys Stock; (3) net income (before or after taxes); (4) earnings before interest,
taxes, depreciation and amortization; (5) sales or revenue targets; (6) return on assets, capital or investment; (7) cash
flow; (8) market share; (9) cost reduction goals; (10) budget comparisons; (11) implementation or completion of
projects or processes strategic or critical to our business operation; (12) measures of customer satisfaction; and/or
(13) any combination of, or a specified increase in, any of the foregoing. The performance goals established by the