Pep Boys 2013 Annual Report Download - page 24

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19
Peer Group.
The selection of an appropriate peer group is obviously a key element of any executive compensation program, in
order that comparisons to ‘market’ compensation levels are meaningful and appropriate. Pep Boys compares itself
with a custom peer group, which is comprised of companies with whom we compete for executive talent. These
companies include key competitors in the automotive service and retail business (many of which are larger in size
than Pep Boys) and comparably-sized companies in the broader hardlines retail industry. This peer group is
reviewed annually and was most recently revised for fiscal 2013 in order to provide a more robust data set and utilize
companies with average revenues, market capitalization and employee count closer to that of Pep Boys. For fiscal
2013, the Compensation Committee added Asbury Automotive, Finish Line, Hibbett Sports, Lithia Motors, Pier 1
Imports, Williams Sonoma and Zale Corporation and removed Dick’s Sporting Goods and PetSmart, resulting in the
following expanded peer group of 20 companies.
•Aarons •Advance Auto Parts •Asbury Automotive •AutoZone
•Big 5 Sporting Goods •Cabela’s •Conn’s •Finish Line
•hhgregg •Lithia Motors •Midas •Monro Muffler & Brake
•O’Reilly Automotive •Pier 1 Imports •RadioShack •Rent-A-Center
•Tractor Supply •West Marine •Williams Sonoma •Zales Corp.
In addition to this list of specific peer companies, in certain cases Pep Boys utilizes comparative pay data from
general industry for positions where incumbents may typically be recruited from outside of the hardlines retailing
sector.
The Compensation Process.
For fiscal 2013, the Compensation Committee recommended to the full Board the short- and long-term incentive
plan objectives, targets and weightings and the resulting annual target total compensation levels for all of the named
executive officers (other than the President & Chief Executive Officer). These recommendations were developed
with input from the President & Chief Executive Officer and the Senior Vice President - Human Resources and in
consultation with Pay Governance, the Compensation Committee’s independent compensation consultant. The
Compensation Committee considered, but was not bound to and did not always accept, management’s suggestions
with respect to executive compensation. In addition, the Compensation Committee recommended to the full Board
the annual total compensation level for the President & Chief Executive Officer after consulting with Pay
Governance. Our President & Chief Executive Officer was not involved in formulating recommendations as to his
own compensation.
To arrive at its recommendations for compensation to be paid to our President & Chief Executive Officer and
other named executive officers, the chair of the Compensation Committee scheduled and developed the agenda for
committee meetings in consultation with the Senior Vice President - Human Resources. The Senior Vice President -
Human Resources was responsible for developing appropriate materials for the Compensation Committee’s review
and consideration and for reviewing these materials with the chair of the Compensation Committee and Pay
Governance prior to their presentation to the Compensation Committee. The President & Chief Executive Officer,
Senior Vice President – Human Resources and Senior Vice President – General Counsel & Secretary attended all
committee meetings, excluding portions of meetings where their own compensation was discussed, and excluding the
regular executive sessions held at the conclusion of each regularly-scheduled meeting of the Committee.