Pep Boys 2011 Annual Report Download - page 15

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•Except as provided below, all of our management employees who receive short-term incentive-based
compensation do so pursuant to the terms of our shareholder approved Annual Incentive Bonus Plan. The
bonus targets under such plan for Officer’s are entirely based, and for middle-management are primarily
based, upon the achievement of stated corporate-level financial objectives, which are in alignment with our
overall business plan. In particular, we do not place disproportionate weight on any one metric, do not
include an inordinate amount of metrics, reasonably leverage the selected metrics and employ features to
mitigate risks, including limitations on annual cash payouts. Accordingly, we do not believe that the structure
of the Annual Incentive Bonus Plan encourages associates to take risks that are reasonably likely to have a
material adverse effect on Pep Boys. (The aforementioned exception is for store level associates who have a
separate bonus program and whose bonus compensation, individually or in the aggregate, is of an amount that
creates little, if any, risk to Pep Boys.)
•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.
Compensation Committee Interlocks and Insider Participation
Ms. Atkins and Messrs. Hotz and Mitarotonda are the current members of our Compensation Committee. None
of these members is or has been an officer or employee of Pep Boys or has any relationship with Pep Boys requiring
disclosure under Item 404 of SEC Regulation S-K. No executive officer of Pep Boys serves as a member of the
board of directorsor compensation committee of any entity that has one or more executive officers serving as a
member of Pep Boys’ Board of Directors orCompensation Committee.
Meetings and Committees of the Board of Directors
The Board of Directors held sixteen meetings during fiscal 2011. During fiscal 2011, each director standing for
re-election attended at least 75% of the aggregate number of meetings held by the Board and all committee(s) on
which such director served. The Board of Directors has standing Audit, Compensation and Nominating and
Governance Committees. All Committee members are “independent” as defined by the listing standards of the
NYSE.