Pep Boys 2009 Annual Report Download - page 37

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The Compensation Committee fixes the exercise price per share for stock options on the date of grant. The
exercise price of an NQSO or ISO granted under the 2009 Stock Incentive Plan will be at least 100% of the fair
market value of the underlying shares of Pep Boys Stock on the date of grant. However, if the grantee of an ISO is a
person who holds more than ten percent of the total combined voting power of all classes of our outstanding stock,
the exercise price per share of an ISO granted to such person must be at least 110% of the fair market value of a
share of Pep Boys Stock on the date of grant. To the extent the aggregate fair market value of the shares of Pep
Boys Stock, determined on the date of grant, with respect to which ISOs become exercisable for the first time by a
grantee during any calendar year exceeds $100,000, such ISOs will be treated as NQSOs. The current measure of
fair market value on a particular date, which will continue to be applicable immediately following adoption of the
2009 Stock Incentive Plan, is the mean between the highest and lowest quoted selling prices of the shares of Pep
Boys Stock on the day of grant.
The Compensation Committee determines the term of each stock option; provided, however, that the term may
not exceed ten years from the date of grant and, if the grantee of an ISO is a person who holds more than ten percent
of the combined voting power of all classes of our outstanding stock, the term for such person may not exceed five
years from the date of grant. The period during which a stock option will become exercisable is determined by the
Compensation Committee and specified in the grant agreement. Stock options, once they become exercisable, may
be exercised while the grantee is employed by or providing service to us or an affiliate or within a specified period of
time after such termination of employment or service. Unless the Compensation Committee determines otherwise or
the earlier termination occurs on account of the term of the stock option, stock options are exercisable (i) 60 days
after the grantee’s termination of employment or service if such termination is for any reason other than on account
of disability, death or cause, (ii) 180 days after the grantee’s termination of employment or service if such
termination is on account of death or disability, or (iii) immediately upon termination of employment or service if
such termination is on account of cause, a willful breach of a grantee’s employment contract, an act of disloyalty to
us or one of our affiliates, disclosure or misuse of trade secrets or confidential information, or, in the case of a non-
employee director, certain intentional acts that are adverse to us or one of our affiliates.
A grantee may exercise a stock option by paying cash, through a certified check payable to us, or by such other
mode of payment as the Compensation Committee may approve, including payment through a broker in accordance
with procedures permitted by Regulation T of the Federal Reserve Board. The Compensation Committee may also
permit a grantee to exercise a stock option through payment of shares, subject to certain conditions that the
Compensation Committee deems appropriate.
Restricted Stock/Phantom Units
The Compensation Committee may grant awards of restricted stock and phantom units to anyone eligible to
participate in the 2009 Stock Incentive Plan. Awards of restricted stock are grants of shares of Pep Boys Stock that
are subject to a vesting condition, while awards of phantom units are phantom rights that are convertible to an
equivalent number of shares of Pep Boys Stock if certain vesting and other conditions are satisfied. The
Compensation Committee determines the number of shares of Pep Boys Stock subject to an award of restricted stock
and phantom units. The Compensation Committee will determine the restriction period for awards of restricted stock
and phantom units, provided that no such awards will vest prior to one year from the date of grant of such award.
Unless the Compensation Committee determines otherwise, during the period from the date a restricted stock grant is
awarded to the date the restriction period for such award expires, the grantee will be entitled to all rights of a
stockholder, including the right to vote the shares of Pep Boys Stock and to receive dividends and other distributions
declared on such shares from time to time, as distributed. With respect to grants of phantom units, the participant
will not have any rights as a stockholder until such date phantom units are redeemed as shares of Pep Boys Stock;
however, subject to the determination of the Compensation Committee, may receive dividend equivalents on such
units as if they were shares of Pep Boys Stock and the equivalent of other distributions declared on the shares of Pep
Boys Stock from time to time. With respect to any dividends or distributions on performance-based restricted stock
(or equivalents of such in connection with phantom units), such dividends and distributions will be subject to the
same vesting and forfeiture provisions applicable to the award of restricted stock (or phantom units). Dividends and
equivalents may be paid out in cash or Pep Boys Stock, at the Committee’s election.