Pep Boys 2008 Annual Report Download - page 43

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37
(Item 5) SHAREHOLDER PROPOSAL REGARDING
THE COMPANY’S REINCORPORATION TO NORTH DAKOTA
John Chevedden, 2215 Nelson Avenue, No. 205, Redondo Beach, California 90278 has notified us that he intends
to introduce the following resolution at the meeting:
REINCORPORATE IN A SHAREOWNER-FRIENDLY STATE
Resolved: That shareowners hereby request that our board of directors take the necessary steps to reincorporate the
Company in North Dakota with articles of incorporation that provide that the Company is subject to the North
Dakota Publicly Traded Corporations Act.
Statement of John Chevedden
This proposal requests that our board initiate the process to reincorporate the Company in North Dakota under the
new North Dakota Publicly Traded Corporations Act. If our company were subject to the North Dakota act there
would be additional benefits:
1 There would be a right of proxy access for shareowners who owned 5% of our Company's shares for at
least two years.
1 Shareowners would be reimbursed for their expenses in proxy contests to the extent they are successful.
1 The board of directors could not be classified.
1 The ability of the board to adopt a poison pill would be limited.
1 Shareowners would vote each year on executive pay practices.
These provisions, together with others in the North Dakota act, would give us as shareowners more rights than are
available under any other state corporation law. By reincorporating in North Dakota, our company would instantly
have the best governance system available. This would have a particularly favorable impact on our company
because we are currently incorporated in Pennsylvania, with a low standard of shareholder rights.
The SEC recently refused to allow shareowners a right of access to management's proxy statement. And Delaware
courts recently invalidated a bylaw requiring reimbursement of proxy expenses. Each of those rights is part of the
North Dakota act. As a result, reincorporation in North Dakota is now the best alternative for achieving the rights of
proxy access and reimbursement of proxy expenses. As a North Dakota company our Company would also shift to
cumulative voting, “say on pay,” and other best practices in governance.
Our Company needs to improve its governance:
• The Corporate Library www.thecorporatelibrary.com, an independent investment research firm, rated our
company:
"D" in governance.
"High Governance Risk Assessment."
"Very High Concern" in Executive Pay with $10 million for Jeffrey Rachor.
"Very High Concern" in accounting with a SOX 404 violation.
• In addition to our D-rated board our directors also served on other boards rated D or F by the Corporate
Library:
James Mitarotonda Griffon (GFF) F-rated
Robert Hotz Universal Health Services (UHS)
Shan Atkins Spartan Stores (SPTN)
Thomas Hudson Brink's (BCO)
Irvin Reid Mack-Cali Realty (CLI)
Nick White Dillard's (DDS)
• However 4 of our directors served on no other boards -Experience concern.
• We had no shareholder right to: