Pep Boys 2013 Annual Report Download - page 45

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(ITEM 5) PROPOSAL TO APPROVE THE AMENDMENT AND RESTATEMENT OF
OUR STOCK INCENTIVE PLAN TO EXTEND ITS TERM THROUGH DECEMBER 31, 2019 AND TO
PROVIDE AN ADDITIONAL 2,000,000 SHARES AVAILABLE FOR AWARD ISSUANCES
THEREUNDER
On April 8, 2014, our Board of Directors, subject to shareholder approval at the 2014 Annual Meeting, approved
The Pep Boys – Manny, Moe & Jack 2014 Stock Incentive Plan, which is an amendment and restatement of The Pep
Boys – Manny, Moe & Jack 2009 Stock Incentive Plan, (which, as proposed to be amended and restated, we refer to
as the “Stock Incentive Plan”). The amendments included in the Stock Incentive Plan would:
•increase by an additional 2,000,000 shares the total number of shares of Pep Boys Stock authorized for
issuance under the Stock Incentive Plan from 6,000,000 shares to 8,000,000 shares;
•extend the term of the Stock Incentive Plan so that it will expire on December 31, 2019, as opposed to
December 31, 2014;
•rename The Pep Boys – Manny, Moe & Jack 2009 Stock Incentive Plan to The Pep Boys – Manny, Moe &
Jack 2014 Stock Incentive Plan; and
•make certain clarifications to the terms of the Stock Incentive Plan.
In addition, shareholder approval of the Stock Incentive Plan is being sought (i) to enable the compensation
attributable to grants of stock options under the Stock Incentive Plan to continue to qualify for an exemption from
the $1,000,000 deduction limitation under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
“Code”) (see discussion of “Section 162(m)” under “Federal Income Tax Consequences” below), (ii) in order for
incentive stock options to continue to meet the requirements of the Code, (iii) to enable the compensation
attributable to performance-based restricted stock, phantom unit and dividend equivalent awards on phantom units
to continue to qualify for the performance-based compensation exemption under Section 162(m) of the Code and
(iv) in order to meet New York Stock Exchange listing requirements.
The Stock Incentive Plan was originally adopted in 1999 as The Pep Boys – Manny, Moe & Jack 1999 Stock
Incentive Plan and was subsequently amended and restated several times and renamed as The Pep Boys – Manny,
Moe & Jack 2009 Stock Incentive Plan (the “Current Plan”). The Current Plan is scheduled to terminate by its terms
on December 31, 2014 and there are currently 1,034,793 shares of Pep Boys Stock available for issuance and
2,652,166 shares of Pep Boys Stock subject to outstanding awards under the Current Plan. The Board of Directors
believes that the continuing ability to grant awards under the Stock Incentive Plan will further our compensation
structure and strategy and align the interest of our key personnel with that of our shareholders. In addition, these
awards will provide our key personnel with an additional incentive to devote themselves to our success and also
improves our ability to attract and retain individuals who will help us achieve sustained growth and financial success.
In order to continue to meet the objectives outlined above, the Stock Incentive Plan will extend the term to
December 31, 2019 and provide for 2,000,000 additional shares that may granted, which our Board of Directors
believes will be sufficient for future grants under the Stock Incentive Plan for the next three years The other
amendments are designed primarily to clarify certain terms thereof.
If approved by our shareholders, the Stock Incentive Plan will become effective on June 11, 2014. If the
shareholders do not approve the Stock Incentive Plan, the amendment and restatement of the Current Plan will not
become effective, no further awards will be issued under the Current Plan after December 31, 2014 and the
additional2,000,000 shares will not be authorized for issuance under the Current Plan.
The Board of Directors unanimously recommends that the shareholders approve the amendment and restatement
of the Stock Incentive Plan, which includes the extension of the term to December 31, 2019 and an increase in the