Pep Boys 2011 Annual Report Download - page 38

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32
(ITEM 4) SHAREHOLDER PROPOSAL REGARDING
REQUIRING OUR EXECUTIVE OFFICERS TO RETAIN PEP BOYS STOCK
FOLLOWING THE TERMINATION OF THEIR EMPLOYMENT
John Chevedden, 2215 Nelson Avenue, No. 205, Redondo Beach, California 90278 has notified us that he
intends to introduce the following resolution at the meeting:
Executives to Retain Significant Stock
“RESOLVED, Shareholders urge that our executive pay committee adopt a policy requiring that senior executives
retain a significant percentage of stock acquired through equity pay programs until one-year following the
termination of their employment and to report to shareholders regarding this policy before our next annual
shareholder meeting.
Shareholders recommend that a percentage of at least 44% of net after-tax stock be required. This policy shall apply
to future grants and awards of equity pay and should address the permissibility of transactions such as hedging
transactions which are not sales but reduce the risk of loss to executives. This proposal asks for a retention policy
starting as soon as possible.
Requiring senior executives to hold a significant portion of stock obtained through executive pay plans after
employment termination would focus our executives on our company’s long-term success. A Conference Board
Task Force report on executive pay stated that at least hold-to-retirement requirements give executives “an ever-
growing incentive to focus on long-term stock price performance.”
The merit of this proposal should also be considered in the context of the opportunity for additional improvement in
our company’s 2011 reported corporate governance in order to make our company more competitive:
The Corporate Library, an independent investment research firm, rated our company “Moderate Concern” in
Executive Pay –only 48% of executive pay was incentive based.
The corporate Library said our executive pay committee had the discretion to increase executive bonuses regardless
of an attainment of relevant goals. Furthermore, long-term incentive pay consisted of time-based equity pay in the
form of market-priced stock options and restricted stock units. Equity pay given for long-term incentive pay is
effective only if it includes performance-vesting conditions.”
Please encourage our board to respond positively to this proposal:
Executives to Retain Significant Stock –Yes on Item 4.”