Pep Boys 2013 Annual Report Download - page 26

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21
levels believed necessary to induce them to join the Company with reference to their individual experience and
position responsibilities, as well as peer group data for comparable executives.
Short-Term Incentives. The named executive officers participate in our Annual Incentive Bonus Plan, which is a
short-term incentive plan designed to reward the achievement of pre-established goals determined by the
Compensation Committee to be critical to the Company’s success. In order to directly align our named executive
officers’ short-term incentive compensation with that of our overall performance, these pre-established goals consist
entirely of corporate (as opposed to individual) objectives. For fiscal 2013, the named executive officers’ annual
short-term incentive opportunities were as follows:
% of Base Salary
Title Threshold Target Cash Cap(a) Maximum
President & CEO 50 100 150 200
Executive Vice President 37.5 75 112.5 150
Senior Vice Presidents 22.5 45 67.5 90
(a) Amounts achieved above the “cash cap” percentage up to the “maximum” percentage are earned and paid out over
the subsequent three years, assuming the executive remains employed by the Company.
For fiscal 2013, the Compensation Committee recommended, and the full Board approved, the following
objectives and associated weightings under the Annual Incentive Bonus Plan.
Objective
Weighting
(%) Threshold Target Cash Cap Maximum
Net Earnings(a) 50 $13,200,000 $16,500,000 $20,625,000 $24,750,000
Comparable Store Sales
Growth
30 1.9% 2.4% 3.0% 3.6%
After-Tax ROIC(b) 20 3.3% 3.8% 4.4% 5.1%
Total 100
(a) Calculated before unusual, non-operating gains and losses.
(b) Net Income (before unusual, non-operating gains and losses) divided by net debt plus equity.
For fiscal 2013, the Compensation Committee established target levels that it believed were achievable, but also
substantially uncertain. The Compensation Committee retains full discretion to award or withhold in its entirety, or
to increase or decrease the amount of, short-term incentive plan compensation regardless of the attainment, or failure
to attain, the relevant performance goal(s) (except that short-term incentive plan compensation cannot be increased in
the case of compensation meant to qualify as “performance-based” compensation under Section 162(m) of the
Internal Revenue Code).
For fiscal 2013, the Company did not achieve its threshold results against its corporate objectives, so no short-
term incentive plan compensation was paid to the named executive officers, except for Mr. Flanagan for whom a pro-
rata portion (based on time in position during fiscal 2013) of his short-term incentive was guaranteed at target level
as an inducement to join the Company.
Update. As more fully described above, in recognition of the increased amount of equity to be granted in fiscal
2014 (in place of historically made retirement plan contributions), a portion of which includes a return on invested
capital (ROIC) component, after-tax ROIC was eliminated as a 2014 objective under our Annual Incentive Bonus
Plan. Comparable store sales growth and Net Earnings were retained as 2014 objectives with weightings of 40%
and 60%, respectively.