Pep Boys 2011 Annual Report Download - page 137

• Our long-term incentive-based compensation is granted in the form of equity awards, which are
subject to time-based and performance-based vesting that is aligned to our corporate objective of
creating value for our shareholders. The nature of such awards discourages short-term risk
taking. In addition, our officers are subject to share ownership guidelines requiring them to be
invested in our future performance.
• We believe that our mix of fixed compensation and ‘‘at risk’’ compensation does not encourage
inappropriate risk-taking by our associates.
Personal Loans to Executive Officers and Directors. Pep Boys has no personal loans extended to its
executive officers or directors.
Director Attendance at the Annual Meeting. All Board members are strongly encouraged to attend
the Annual Meeting of Shareholders. All nominees then standing for election attended the 2011
Annual Meeting.
Communicating with the Board of Directors. Interested parties should address all communications
to the full Board or an individual director to the attention of our corporate Secretary. Our corporate
Secretary reviews all such communications to determine if they are related to specific products or
services, are solicitations or otherwise relate to improper or irrelevant topics. All such improper
communications receive a response in due course. Any communication directed to an individual
director relating solely to a matter involving such director is forwarded to such director. Any
communication directed to an individual director relating to a matter involving both such director and
Pep Boys or the Board of Directors, as a whole, is forwarded to such director and the Chairman of the
Board. The balance of the communications are forwarded to the Chairman of the Board. Except for
improper communications, all interested party communications to the Board of Directors or an
individual director received by the corporate Secretary are kept in confidence from management. These
procedures were adopted unanimously by the independent directors.
Report of the Audit Committee of the Board of Directors
The Audit Committee reviews Pep Boys’ financial statements and makes recommendations to the
full Board of Directors on matters concerning the audits of Pep Boys’ books and records. Each
committee member is ‘‘independent’’ as defined by the listing standards of the New York Stock
Exchange. Ms. Scaccetti (chair), Mr. Hotz, Mr. Reid and Mr. Williams are the current members of the
Audit Committee. Ms. Scaccetti has been designated by the full Board as an Audit Committee
Financial Expert as defined by SEC regulations. A written charter adopted by the full Board governs
the activities of the Audit Committee. The charter is reviewed, and when necessary revised, annually.
Management has primary responsibility for Pep Boys’ internal accounting controls and financial
reporting process. The independent registered public accounting firm is responsible for performing an
independent audit of Pep Boys’ consolidated financial statements and internal control over financial
reporting in accordance with standards of the Public Company Accounting Oversight Board (United
States) and to issue a report as a result of such audits. The Audit Committee’s responsibility is to
monitor and oversee these processes. The Audit Committee serves as a focal point for communication
among the Board of Directors and its committees, the independent registered public accounting firm,
management and Pep Boys’ internal audit function, as the respective duties of such groups, or their
constituent members, relate to Pep Boys’ financial accounting and reporting and to its internal controls.
In this context, the Audit Committee reviewed and discussed the audited consolidated financial
statements with management and the independent registered public accounting firm. These discussions
included the matters required to be discussed by Statement on Auditing Standards No. 61, as amended
and adopted by the Public Company Accounting Oversight Board (Communication with Audit
Committees). The Audit Committee also reviewed and discussed with management, the internal
auditors and the independent registered public accounting firm, management’s report, and the
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