Pep Boys 2011 Annual Report Download - page 144

vesting restricted stock units (RSUs). Two-thirds of the 2011 RSUs are tied to the Company achieving
at least a threshold return on invested capital and one-third are tied to achieving at least a threshold
level of total shareholder return measured against our peer group. The Compensation Committee then
established target grant values intended to be competitive at market median of our peer group. In fiscal
2011, on account of the Company’s fiscal 2010 financial performance and the relative position of each
named executive officer’s total compensation to the market median of our peer group, the
Compensation Committee recommended, and the full Board approved, the following equity grants.
2011 Actual Grant
Target % as a % of Base
Title of Base Salary Salary
Odell ................................... 125% 134%
Arthur .................................. 50% 48%
Shull.................................... 50% 50%
Webb ................................... 50% 50%
Cirelli................................... 40% 37%
Retirement Plans. We maintain The Pep Boys Savings Plan, which is a broad-based 401(k) plan.
Participants make voluntary contributions to the savings plan, and we match 50% of the amounts
contributed by participants under the savings plan, up to 6% of salary. Due to low levels of
participation in the savings plan, the plan historically did not meet the non-discriminatory testing
requirements under Internal Revenue Code regulations. As a result, the savings plan was required to
make annual refunds of contributions made by our ‘‘highly compensated employees’’ (including the
named executive officers) under the savings plan. Beginning in 2004, we limited our officers’
contributions to the savings plan to 0.5% of their salary per year. Given this limitation, in order to
assist our officers with their retirement savings, in fiscal 2004, we adopted a non-qualified deferred
compensation plan that allows participants to defer up to 20% of their annual salary and 100% of their
annual bonus. To further encourage share ownership and more directly align the interests of
management with that of its shareholders, the first 20% of an officer’s bonus deferred into Pep Boys
Stock is matched by us on a one-for-one basis with Pep Boys Stock that vests over three years.
In order to keep our executive compensation program competitive, we also maintain a
Supplemental Executive Retirement Plan, or SERP, known as our Account Plan. The Account Plan
provides fixed annual contributions to a retirement account based upon the participant’s age and then
current compensation in accordance with the following:
Annual contribution as a
percentage of cash
compensation
(salary + short-term
If the Participant is... cash incentive)
At least 55 years of age . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19%
At least 45 years of age but not more than 54 years of age . . . 16%
At least 40 years of age but not more than 44 years of age . . . 13%
Not more than 39 years of age . . . . . . . . . . . . . . . . . . . . . . . 10%
Notwithstanding the foregoing, for the first four years of a participant’s employment, their
contribution percentage is limited to 10%. As an inducement to hire Mr. Arthur, however, this
limitation was waived.
In fiscal 2010, all named executive officers participated in the Account Plan.
In order to incent the achievement of incremental profitability, all Company contributions to the
savings plan and Account Plan (on account of all associates, including the named executive officers)
that would otherwise have been made during calendar 2011 were conditioned upon the Company’s
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