Pep Boys 2010 Annual Report Download - page 39

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(ITEM 5) PROPOSAL TO APPROVE OUR EMPLOYEE STOCK PURCHASE PLAN
On March 29, 2011, the Board adopted The Pep Boys – Manny, Moe & Jack Employee Stock Purchase Plan, or
the ESPP, subject to shareholder approval at the Annual Meeting. If approved by our shareholders, the ESPP will
become effective on July 1, 2011.
The Board believes it is in our best interests and the interests of our shareholders to adopt the ESPP. The ESPP
is intended to encourage ownership in Pep Boys Stock by our employees and to provide an additional incentive for
them to promote the long-term growth and success of our business. We believe that providing our employees with a
convenient method to invest in Pep Boys Stock will increase the equity stake of our employees and will benefit our
shareholders by aligning more closely the interest of participating employees with those of our shareholders.
Stockholder approval of the ESPP is necessary in order for the ESPP to meet the requirements of Section 423 of the
Internal Revenue Code and to comply with the listing maintenance standards of the New York Stock Exchange.
The Board has unanimously approved, and recommends that the shareholders approve, the adoption of the ESPP.
The material terms of the ESPP are summarized below. This summary of the ESPP is not intended to be a
complete description of the ESPP and is qualified in its entirety by the actual text of the ESPP, which is attached to
this Proxy Statement as Exhibit A.
Material Features of the Employee Stock Purchase Plan
Purpose. The ESPP allows our employees and those employees of our participating subsidiaries to purchase
shares of Pep Boys Stock at up to a fifteen percent (15%) discount through payroll deductions. The purpose of the
ESPP is to provide participating employees with the opportunity to acquire an ownership interest in us. These
ownership interests are designed to provide an incentive for participants to help increase our long-term growth and
success and provide an opportunity to share in that success as we continue to shape the future of our business.
Administration. The ESPP will be administered by an administrative committee appointed by the Board, or the
Benefits Committee. The Benefits Committee will have full authority to interpret and construe any provision of the
ESPP, and to adopt such rules and regulations for administering the ESPP as it deems necessary. Currently, there are
three members on the Benefits Committee. Benefits Committee members serve until they resign from such position
or are removed by the Board of Directors. The Benefits Committee may delegate its ministerial duties to one or
more subcommittees or to a third party administrator. All decisions by the Benefits Committee will be final and
binding on all parties having an interest in the ESPP.
Shares Available for Issuance Under the ESPP. We have reserved 2,000,000 shares of Pep Boys Stock for
issuance under the ESPP. The foregoing share limit is subject to adjustments in certain circumstances described
below.
Adjustments. In connection with stock splits, reverse stock splits, stock dividends, spinoff, recapitalizations,
combination of shares, exchange of shares and other events affecting Pep Boys Stock, the Benefits Committee will
make equitable adjustments to the maximum number and class of securities issuable under the ESPP, the maximum
number and class of securities purchasable per participant on any purchase date and the number and class of
securities and the price per share in effect under each outstanding option, in order to prevent the dilution or
enlargement of benefits thereunder.
Eligibility. All of our employees and employees of our subsidiary corporations who receive earnings considered
wages under Internal Revenue Code Section 3401(a) and who have completed at least ninety (90) days of service
(including any periods of service with any company we acquire) will be eligible to participate in the ESPP. Under
the requirements of the Internal Revenue Code, an employee who owns, or holds outstanding options or other rights
to purchase, five percent (5%) or more of the total combined voting power of all classes of our stock or any of our
subsidiaries is not eligible to participate. For purposes of determining who is a five percent owner, attribution of
ownership rules apply, and shares of stock subject to outstanding options are taken into account. None of our non-
employee directors are eligible to participate in the ESPP. As of April 8, 2011, approximately 18,300 employees