Pep Boys 2013 Annual Report Download - page 47

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Types of Awards
Stock Options
The Compensation Committee may grant stock options intended to qualify as incentive stock options within the
meaning of Section 422 of the Code (“ISOs”) or so-called “nonqualified stock options” that are not so intended to
qualify (“NQSOs”) or any combination of ISOs and NQSOs. Anyone eligible to participate in the Stock Incentive
Plan may receive a grant of NQSOs. Only our employees and those of our affiliates, which qualify as a parent or
subsidiary corporation under Section 424 of the Code, may receive a grant of ISOs. The aggregate number of shares
of Pep Boys Stock that may be issued under the Stock Incentive Plan as ISOs is 8,000,000 shares, and all shares
issued under the Stock Incentive Plan as ISOs shall count against the total authorized shares of Pep Boys Stock
authorized for issuance under the Stock Incentive Plan.
The Compensation Committee fixes the exercise price per share for stock options on the date of grant. The
exercise price of an NQSO or ISO granted under the Stock Incentive Plan will be at least 100% of the fair market
value of the underlying shares of Pep Boys Stock on the date of grant. However, if the grantee of an ISO is a person
who holds more than 10% of the total combined voting power of all classes of our outstanding stock, the exercise
price per share of an ISO granted to such person must be at least 110% of the fair market value of a share of Pep
Boys Stock on the date of grant. To the extent the aggregate fair market value of the shares of Pep Boys Stock,
determined on the date of grant, with respect to which ISOs become exercisable for the first time by a grantee during
any calendar year exceeds $100,000, such ISOs will be treated as NQSOs. The current measure of fair market value
on the day of grant, which will continue to be applicable immediately following adoption of the Stock Incentive Plan,
is the mean between the highest and lowest quoted selling prices of the shares of Pep Boys Stock on the day of grant.
The Compensation Committee determines the term of each stock option; provided, however, that the term may
not exceed ten years from the date of grant and, if the grantee of an ISO is a person who holds more than 10% of the
combined voting power of all classes of our outstanding stock, the term for such person may not exceed five years
from the date of grant. The period during which a stock option will become exercisable is determined by the
Compensation Committee and specified in the grant agreement. Stock options, once they become exercisable, may
be exercised while the grantee is employed by or providing service to us or an affiliate or within a specified period of
time after such termination of employment or service. Unless the Compensation Committee determines otherwise or
the earlier termination occurs on account of the term of the stock option, stock options are exercisable (i) 60 days
after the grantee’s termination of employment or service if such termination is for any reason other than on account
of disability, death or cause (or for any other reason described in subsection (iii) below), (ii) 180 days after the
grantee’s termination of employment or service if such termination is on account of death or disability, (iii) in the
case of an employee, immediately upon termination of employment if such termination of employment is on account
of cause, a willful breach of a grantee’s employment contract, an act of disloyalty to us or one of our affiliates,
disclosure or misuse of trade secrets or confidential information, or (iv) in the case of a non-employee director,
immediately if there occurs certain intentional acts that are adverse to us or one of our affiliates.
A grantee may exercise a stock option by paying cash, through a certified check payable to us or by such other
mode of payment as the Compensation Committee may approve, including payment through a broker in accordance
with procedures permitted by Regulation T of the Federal Reserve Board or through a net exercise. The
Compensation Committee may also permit a grantee to exercise a stock option through payment of shares, subject to
certain conditions that the Compensation Committee deems appropriate.
Restricted Stock/Phantom Units
The Compensation Committee may grant awards of restricted stock and phantom units to anyone eligible to
participate in the Stock Incentive Plan. Awards of restricted stock are grants of shares of Pep Boys Stock that are
subject to a vesting condition, while awards of phantom units are phantom rights that are convertible to an equivalent
number of shares of Pep Boys Stock if certain vesting and other conditions are satisfied. The Compensation
Committee determines the number of shares of Pep Boys Stock subject to an award of restricted stock and phantom