Pep Boys 2009 Annual Report Download - page 23

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Short-Term Incentives. The named executive officers participate in our Annual Incentive Bonus Plan, which is a
short-term incentive plan designed to reward the achievement of pre-established goals. In order to directly align our
named executive officers’ short-term incentive compensation with that of our overall performance, these pre-
established goals consist entirely of corporate (as opposed to individual) objectives. For fiscal 2009, the named
executive officers’ potential participation levels were as follows:
% of Base
Salary
Title
Threshold Target Cash Cap(a)
Maximum
Chief Executive Officer 50 100 150 200
Executive Vice President 37.5 75 112.5 150
Senior Vice President 22.5 45 67.5 90
(a) Amounts achieved above the “cash cap” percentage up to the “maximum” percentage are earned and paid out over the
subsequent three years, assuming the executive remains employed by the Company.
For fiscal 2009, the corporate objectives, those financial measures deemed most important to Pep Boys’ overall
success, and their weightings were as follows:
Objective
Weighting
(%) Threshold Target Cash Cap Maximum
Pre-Tax Income(a) 80 $19,500,000 $26,000,000 $39,000,000 $52,000,000
Service Net Promoter Score(b) 10 60 65 70 75
Retail Net Promoter Score(b) 10 69 72 75 80
(a) Calculated before unusual non-operating gains and losses and corporate bonus and retirement plan expense.
(b) A customer satisfaction score that measures the likelihood of referring others to Pep Boys. Payout on these objectives was conditioned upon
achieving the Pre-Tax Income objective at or above threshold.
For fiscal 2009, the Compensation Committee established target levels that it believed were achievable.
However, it also believed, at the time the target levels were established, that the achievement of the targets was
substantially uncertain. The Compensation Committee retains full discretion to either award or withhold in its
entirety, or increase or decrease the amount of, short-term incentive plan compensation regardless of the attainment,
or failure to attain, the relevant performance goal(s) (except that short-term incentive plan compensation cannot be
increased in the case of compensation meant to qualify as “performance based” compensation under Section 162(m)
of the Internal Revenue Code).
For fiscal 2009, the Company achieved its corporate objectives in the areas of (i) pre-tax income at $43,859,000,
(ii) service net promoter score at 67 and (iii) retail net promoter score at 75, resulting in an aggregate potential
payout of 162% of target. Accordingly, for fiscal 2009, the Compensation Committee approved short-term incentive
plan compensation for Mr. Odell at 162%, Mr. Arthur at 121% and each of Messrs. Cirelli, Shull and Webb at 73%
of their respective 2009 annual salaries. Since the Company achieved its corporate objectives in excess of the Cash
Cap, a portion of each named executive officer’s short-term incentive plan compensation will only be earned and
paid out over the subsequent three years if the applicable named executive officer remains employed by the
Company. Mr. Odell declined $150,000 of his fiscal 2009 short-term incentive plan compensation that he was
otherwise entitled to receive, which amount, at Mr. Odell’s request, was allocated to an account set aside by Pep
Boys to provide associates’ children with educational scholarships.
2010 Update. Having achieved the stated corporate objective of returning to profitability in fiscal 2009, the
Compensation Committee recommended and the Board approved a wider range of short-term objectives for fiscal
2010. The fiscal 2010 corporate objectives and weightings are as follows: