UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Form 10-K/A
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended
February 3, 2008.
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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Commission file number
001-13927
CSK Auto Corporation
(Exact name of registrant as
specified in its charter)
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Delaware
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86-0765798
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(State or other jurisdiction
of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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645 E. Missouri Ave.
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85012
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Suite 400
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(Zip Code)
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Phoenix, Arizona
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(Address of principal executive
offices)
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Securities registered pursuant to Section 12(b) of the
Act:
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Title of Each Class
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Name of Each Exchange on Which Registered:
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Common Stock, $.01 par value
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New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the
Act:
None
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes
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No
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Indicate by check mark if the registrant is not required to file
reports pursuant to section 13 or 15(d) of the
Act. Yes
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No
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Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been
subject to such filing requirements for the past
90 days. Yes
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No
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Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of
Regulation S-K
is not contained herein, and will not be contained, to the best
of the registrants knowledge, in definitive proxy or
information statements incorporated by reference in
Part III of this
Form 10-K
or any amendment to this
Form 10-K.
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Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in
Rule 12b-2
of the Exchange Act. (Check one):
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Large
accelerated
filer
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Accelerated
filer
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Non-accelerated
filer
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Smaller
reporting company
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(Do not check if a smaller
reporting company)
Indicate by check mark whether the registrant is a shell company
(as defined in
Rule 12b-2
of the
Act). Yes
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No
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As of August 3, 2007, the aggregate market value of our
voting and non-voting common stock held by non-affiliates was
approximately $541.2 million. For purposes of the above
statement only, all directors and executive officers of the
registrant are assumed to be affiliates.
As of May 22, 2008, there were 44,036,813 shares of
our common stock outstanding.
TABLE OF
CONTENTS
As used herein, the terms CSK, CSK Auto,
the Company, we, us, and
our refer to CSK Auto Corporation and its
subsidiaries, including its operating subsidiary, CSK Auto,
Inc., and its subsidiary, CSKAUTO.COM, Inc. The term
Auto as used herein refers to our operating
subsidiary, CSK Auto, Inc., and its subsidiary, CSKAUTO.COM, Inc.
EXPLANATORY
NOTE
On April 18, 2008, the Company filed its Annual Report on
Form 10-K
for the fiscal year ended February 3, 2008 (fiscal
2007) (the Original Annual Report) with the
Securities and Exchange Commission (the SEC). As
previously announced on April 1, 2008, the Company has
entered into a merger agreement with OReilly Automotive,
Inc. (OReilly) pursuant to which OReilly
will acquire all of the outstanding shares of the Companys
common stock (the Proposed Merger). As a result of
the Proposed Merger, the Company will not file a definitive
proxy statement for its 2008 annual meeting of shareholders
within 120 days after the end of its last fiscal year. The
Company is therefore filing this Annual Report on
Form 10-K/A
for fiscal 2007 (this
Form 10-K/A)
to set forth the information required by Items 10, 11, 12,
13 and 14 of Part III of the Original Annual Report, which
otherwise was planned to be incorporated by reference to said
proxy statement.
Except as discussed above, we have not modified or updated the
disclosure presented in the Original Annual Report. This
Form 10-K/A
does not reflect events that have occurred after the filing of
the Original Annual Report or modify or update disclosures
presented in the Original Annual Report affected by subsequent
events. Accordingly, this
Form 10-K/A
should be read in conjunction with our filings made with the SEC
subsequent to the date of the filing of the Original Annual
Report.
In addition, in accordance with applicable SEC rules, this
Form 10-K/A
includes updated certifications from our Chief Executive Officer
and Chief Financial Officer.
NOTE CONCERNING
FORWARD-LOOKING INFORMATION
Certain statements contained in this Annual Report are
forward-looking statements and are usually identified by words
such as may, will, expect,
anticipate, believe,
estimate, continue, could,
should or other similar expressions. We intend
forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995. These
forward-looking statements reflect current views about our
plans, strategies and prospects and speak only as of the date of
this Annual Report.
We believe that it is important to communicate our future
expectations to our investors. However, forward-looking
statements are subject to risks, uncertainties and assumptions
often beyond our control, including, but not limited to,
competitive pressures, the overall condition of the national and
regional economies, factors affecting import of products,
factors impacting consumer spending and driving habits such as
high gas prices, war and terrorism, natural disasters
and/or
extended periods of inclement weather, consumer debt levels and
inflation, demand for our products, integration and management
of any current and future acquisitions, conditions affecting new
store development, relationships with vendors, risks related to
compliance with Section 404 of the Sarbanes-
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Oxley Act of 2002 (SOX and such Section, SOX
404) and litigation and regulatory matters. Actual results
may differ materially from anticipated results described in
these forward-looking statements. For more information related
to these and other risks, please refer to the Risk Factors
section in the Original Annual Report. In addition to causing
our actual results to differ, the factors listed and referred to
above may cause our intentions to change from those statements
of intention set forth in this
Form 10-K/A.
Such changes in our intentions may cause our results to differ.
We may change our intentions at any time and without notice
based upon changes in such factors, our assumptions or otherwise.
Except as required by applicable law, we do not intend and
undertake no obligations to update publicly any forward-looking
statements, whether as a result of new information, future
events or otherwise. Given the uncertainties and risk factors
that could cause our actual results to differ materially from
those contained in any forward looking statement, you should not
place undue reliance upon forward-looking statements and should
carefully consider these risks and uncertainties, together with
the other risks described from time to time in our other reports
and documents filed with the SEC.
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PART III
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Item 10.
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Directors,
Executive Officers and Corporate Governance
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Set forth below are the name, age, and position of each of our
directors and executive officers as of May 22, 2008. Below
the table appears a brief account of each directors and
executive officers business experience. Our executive
officers also have the same titles at our subsidiary, CSK Auto,
Inc.
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Name
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Age
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Position
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Lawrence N. Mondry
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President and Chief Executive Officer, Director
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Charles K. Marquis
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Chairman of the Board
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James G. Bazlen
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Director
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Morton Godlas
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Director
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Terilyn A. Henderson
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Director
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Charles J. Philippin
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Director
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William A. Shutzer
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Director
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James Constantine
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Executive Vice President of Finance and Chief Financial Officer
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Dale Ward
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Executive Vice President Operations
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Brian K. Woods
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Executive Vice President Merchandising
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Michael D. Bryk
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Senior Vice President of Finance and Controller
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Larry Buresh
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Senior Vice President and Chief Information Officer
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Larry Ellis
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Senior Vice President Logistics
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Randi V. Morrison
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Senior Vice President, General Counsel & Secretary
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John Saar
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Senior Vice President Real Estate and Human Resources
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Gregory Langdon
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Senior Vice President Store Operations
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Lawrence N. Mondry
became our President and Chief
Executive Officer and a director in August 2007. Mr. Mondry
has over 20 years experience in merchandising and executive
management positions in the
multi-unit
specialty retailing industry. Prior to joining CSK, he served as
the Chief Executive Officer of CompUSA Inc., a retailer and
reseller of personal computers and related products and
services, from November 2003 to May 2006. He had served as
President and Chief Operating Officer of CompUSA Stores since
March 2000. From December 1993 to March 2000, he served as
Executive Vice President Merchandising and, from
1990 to December 1993, as Senior Vice President and General
Merchandise Manager. Mr. Mondry began his retail career in
1983 with Highland Superstores, a multi-regional consumer
electronics retailer, where he held various merchandising
positions including Vice President, National Merchandise
Manager. Mr. Mondry is also a director of Micron
Technology, Inc.
Charles K. Marquis
became our Chairman of the Board on
August 15, 2007. Mr. Marquis has served as one of our
directors since April 1999. He has been a senior advisor to
Investcorp, an international investment firm, or one or more of
its wholly-owned subsidiaries since January 1999. Prior to
joining Investcorp, Mr. Marquis was a partner in the law
firm of Gibson, Dunn & Crutcher LLP, our primary
outside corporate counsel. Mr. Marquis is also a director
of Tiffany & Co., Inc.
James G. Bazlen
became one of our directors in July 1994.
Mr. Bazlen previously served as one of our directors from
November 1989 to June 1992. Mr. Bazlen served as our
President and Chief Operating Officer from July 1994 until his
retirement from day-to-day operations in April 2000. Upon his
retirement as President and Chief Operating Officer of the
Company in April 2000, the Company entered into an employment
agreement with Mr. Bazlen that provided for him to work on
specific projects as designated by the new Chief Operating
Officer or Chief Executive Officer. Prior to July 1994,
Mr. Bazlen served the Company in various executive
positions since April 1991, including Senior Vice President,
Vice Chairman and Chief Financial Officer. Prior to that,
Mr. Bazlen served as Senior Vice President of The Trump
Group, a private investment group, from March 1986. Prior to
joining The
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Trump Group in 1986, Mr. Bazlen served in various executive
positions with General Electric Company and GE Capital for
13 years.
Morton Godlas
became one of our directors in October
1998. Mr. Godlas has been a consultant to the retail
industry since retiring from Lucky Stores, Inc. in 1982 as a
Corporate Senior Vice President. During his tenure with Lucky
Stores, which owned both the Kragen Auto Supply and Checker Auto
store chains now owned by the Company, the presidents of both
Kragen and Checker reported to Mr. Godlas. Prior to his
service with Lucky Stores, Mr. Godlas held various
executive positions with Gemco, a division of Lucky Stores, over
a 12 year period.
Terilyn A. Henderson
became one of our directors in April
2002. She was formerly with McKinsey & Company, Inc.
for 14 years from September 1987 to December 2001, the last
six of which she served in a partnership capacity. While at
McKinsey, Ms. Henderson was a co-leader of the Americas
Consumer Industries practice, serving clients primarily
concerning retail strategy and growth issues. Ms. Henderson
has published and spoken on the particular challenges of growth
for U.S. retailers.
Charles J. Philippin
originally became one of our
directors in October 1996. He resigned from our Board of
Directors in April 2000 and was reappointed in January 2004.
Since June 2002, he was a principal of GarMark, LLP, a mezzanine
investment firm until his retirement in March 1, 2008.
Prior to that, he was Chief Executive Officer of On-Line Retail
Partners, an internet software company. He has also served as a
member of the management committee of Investcorp, an
international investment firm, and was the National Director of
Merger & Acquisitions for Coopers & Lybrand
LLP (now PricewaterhouseCoopers LLP, our independent auditor).
Mr. Philippin is also a director of Alliance Laundry
Systems LLC.
William A. Shutzer
became one of our directors in
December 2003. Mr. Shutzer is Senior Managing Director of
Evercore Partners, a boutique investment banking firm that
provides mergers and acquisitions and other financial advisory
services and manages two private equity funds, and that has on
occasion provided financial advisory services to the Company on
an arms length basis (i.e., on terms the Company deemed to
be comparable to those provided by unrelated parties). Prior to
joining Evercore in April 2004, Mr. Shutzer was Managing
Member of Tancredo Financial Advisors, a boutique financial
advisory firm specializing in private company valuations and
strategic financial advisory services. Prior to that,
Mr. Shutzer was Managing Director in the Private Equity
Group at Lehman Brothers Inc. from October 2000 until December
2003. He previously served as a Partner in Thomas Weisel
Partners LLC, a merchant-banking firm, from 1999 through 2000,
and held senior executive positions at ING Baring Furman Selz
LLC from 1998 through 1999 and Furman Selz Inc. from 1994
through 1997. Mr. Shutzer is also a director of Jupiter
Media Corp., Tiffany & Co., Inc. and Turbo Chef
Technologies, Inc.
James Constantine
became our Executive Vice President of
Finance and Chief Financial Officer in November 2007. From 2006,
Mr. Constantine was Senior Vice President and Chief
Financial Officer of ShopKo Stores Operating Co., a retailer of
goods and services with stores located throughout the Midwest,
Mountain and Pacific Northwest regions. From 2000 to 2005,
Mr. Constantine was Executive Vice President, Chief
Financial and Administrative Officer of Factory Card &
Party Outlet, a specialty retailer of party and special occasion
merchandise. Prior to that, Mr. Constantine was Senior
Assistant Treasurer for, and held various other managerial
positions with, Sears, Roebuck and Co. from 1981 to 1999. From
1974 to 1981, he held various managerial positions with
Deloitte & Touche LLP.
Dale Ward
became our Executive Vice President
Operations, with oversight responsibility for Store Operations
and Commercial Sales in January 2008. Prior to this appointment,
Mr. Ward was Executive Vice President overseeing Store
Operations, Commercial Sales, Human Resources and
Merchandising & Marketing from October 2006. Prior to
this appointment, Mr. Ward served the Company in numerous
roles, including Senior Vice President
Merchandising & Marketing since May 2005, Executive
Vice President Commercial Operations from October
2001 to May 2005 and Senior Vice President Store
Operations from March 1997 to October 2001. Prior to that,
Mr. Ward served as Executive Vice President and Chief
Operating Officer of Orchard Supply Hardware since April 1996.
Mr. Ward served as President and Chief Executive Officer of
F&M Super Drug Stores, Inc., a drugstore chain, from 1994
to 1995. He also served as President and Chief Executive Officer
of Ben Franklin Stores, Inc., a variety and craft store chain,
from 1988 to 1993 and as Chairman of Ben Franklin Crafts Inc., a
craft store chain, from 1991 to 1993.
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Brian K. Woods
became our Executive Vice
President Merchandising in August 2007. Before
joining CSK Auto, Mr. Woods was with CompUSA, a retailer
and reseller of personal computers and related products and
services, for fifteen years and served in a variety of executive
and management positions. From October 2003 to February 2007 he
served as Executive Vice President and General Merchandising
Manager. Prior to that, from March 2000 to October 2003, he held
the position of Vice President of Technology Services.
Michael D. Bryk
became our Senior Vice President of
Finance and Controller in October 2007. Mr. Bryk served for
fourteen years in a variety of financial executive and
management positions with CompUSA, a retailer and reseller of
personal computers and related products and services. In
particular, from February 2007 through September 2007, he served
as Executive Vice President and Chief Financial Officer. From
2002 through February 2007, he served as Vice
President Finance and Administration. Prior to that,
from 2000 to 2002, he served as Vice President
Controller. Before joining CompUSA in 1993, Mr. Bryk served
as the Chief Financial Officer and in other finance management
capacities while employed with other consumer product retailers
in the Midwestern and Southeastern United States.
Larry Buresh
became our Senior Vice President and Chief
Information Officer in November 1998. Prior to that,
Mr. Buresh was Vice President and Chief Information Officer
of Chief Auto Parts, Inc. from 1995 to November 1998. From 1994
to 1995, Mr. Buresh was Senior Director of Central
Information Services for Sears, Roebuck & Co. From
1986 to 1994, Mr. Buresh was Vice President and Chief
Information Officer of Franks Nursery & Crafts,
Inc. Prior to that, Mr. Buresh was Vice President of
Management Information Services for Ben Franklin Stores Company.
Mr. Buresh is also a director of Service Repair Solutions
(formerly Mobile Productivity Incorporated) and Association for
Retail Technology Standards.
Larry Ellis
became our Senior Vice President
Logistics in April 2002. Prior to that, Mr. Ellis served as
Vice President Distribution, Transportation,
Priority Parts and Replenishment. Mr. Ellis career in
Logistics began over thirty two years ago with Fleenors,
Inc., which, through a series of transactions, was subsequently
acquired by Northern Automotive Corporation (a predecessor to
CSK Auto, Inc.) in 1988. During his career, Mr. Ellis has
served in several middle and senior management positions.
Randi V. Morrison
became our Senior Vice President,
General Counsel & Secretary in October 2006.
Ms. Morrison was formerly Vice President, General
Counsel & Secretary since August 2005. Prior to that
Ms. Morrison was Vice President, Assistant General
Counsel & Secretary from February 2004 to August 2005,
Assistant General Counsel & Assistant Secretary from
April 2001 to February 2004 and Senior Counsel from March 2000
to April 2001. Ms. Morrison joined CSK Auto as Legal
Counsel in March 1997. Prior to joining CSK Auto, Ms.
Morrison served as in house counsel to public traded
corporations in St. Louis, Missouri and Phoenix, Arizona since
January 1990.
John W. Saar
became our Senior Vice President
Real Estate and Human Resources in January 2008. Prior to that,
Mr. Saar served as Senior Vice President
Commercial Sales since October 2006 and Divisional Vice
President since 2001. Mr. Saar has more than 35 years
of tenure with the Company and has served in various management
and senior management roles with responsibility for real estate,
human resources, store operations and other functions.
Gregory Langdon
became our Senior Vice
President Store Operations in February 2008 after
most recently serving as our Vice President and Divisional Vice
President Operations since October 2005. Prior to
this appointment, Mr. Langdon spent five years as Regional
Vice President Operations from October 1999 to
October 2005. Mr. Langdon, who has more than 35 years
retail store operations management experience, initially joined
CSK Auto in May 1986. From 1994 to 1999, he served as Regional
Vice President for Paccar Automotive, Inc., which was
subsequently acquired by CSK Auto, Inc. in 1999. Before joining
CSK Auto in 1986, Mr. Langdon worked for Sears and Roebuck
for thirteen years in a variety of management positions.
Audit
Committee
The current members of our Audit Committee are
Ms. Henderson, and Messrs. Marquis and Philippin,
Chairperson. The Board of Directors has determined that all of
the members of the Audit Committee are independent as that term
is defined in the applicable NYSE listing standards and in SEC
Rule 10A-3.
The Board
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of Directors has also determined that the Chair of the Audit
Committee, Mr. Philippin, is an audit committee
financial expert as that term is defined in
Item 407(d)(5) of
Regulation S-K
and that all members of the Audit Committee are financially
literate under the SECs rules.
Corporate
Governance Guidelines and Committee Charters
Our Corporate Governance Guidelines (Governance
Guidelines) address topics such as board composition and
committees, director responsibilities, compensation and
orientation, stock ownership and Board of Directors
self-evaluation. The Nominating & Corporate Governance
Committee is responsible for overseeing and reviewing the
Governance Guidelines and recommending any changes to the Board.
Our Governance Guidelines and the charters of our Audit,
Compensation and Nominating and Corporate Governance Committees
are available on the Corporate Governance pages of the Investors
area of our website at
www.cskauto.com
, and printed
copies are available to any stockholder upon request.
Communications
with the Board of Directors
Any stockholder or other interested party who desires to
communicate with the Board or any particular director(s)
(including the presiding director (our Chairman of the Board) or
the non-management directors as a group) may do so
electronically by sending an
e-mail
to
boardofdirectors@cskauto.com. Alternatively, a stockholder can
contact the Board or any particular director(s) by writing to:
CSK Auto, Inc.,
c/o Legal
Department, Randi V. Morrison, Attention: Board of Directors at
645 East Missouri Avenue, Suite 400, Phoenix, AZ 85012. The
Corporate Secretary will forward to an independent director
designee approved by the majority of the independent directors,
or to the individual director or directors to whom the
communication is directed, all communications that are not
threatening, illegal, or similarly inappropriate. Additional
information concerning stockholder communications with our Board
is available on the Corporate Governance pages of the Investors
area of our website at
www.cskauto.com
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Codes of
Business Conduct and Ethics
Our Code of Business Conduct and Ethics is designed to assist
our associates and officers and our Board of Directors in
resolving various types of ethical issues that may arise in the
business environment. This Code covers topics such as conflicts
of interest, insider trading, confidentiality, and compliance
with laws. In addition, we have a Code of Ethics for Financial
Officers applicable to the Chief Executive Officer, Chief
Financial Officer, President, Controller, Treasurer, Director of
Accounting and Financial Reporting and other officers performing
similar functions, which addresses certain basic ethical
principles and practices. Both of the codes are available on the
Corporate Governance pages of the Investors area of our website
at
www.cskauto.com
, and printed copies are available to
any stockholder without charge, upon request. The request should
be submitted to CSK,
c/o Randi
Morrison, 645 E. Missouri Avenue, Suite 400,
Phoenix, AZ 85012. To the extent and in the manner required by
SEC rules and the NYSE Listing Standards, we intend to disclose
any future amendments to
and/or
waivers from (as the case may be) certain provisions of these
codes on the Companys website.
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Companys executive officers and
directors, and persons who own more than 10% of the
Companys common stock (herein collectively, our
Section 16 insiders) to file certain forms
reporting their ownership and changes in ownership of our stock
with the SEC and the NYSE, and to furnish the Company with
copies of these filings.
Based solely on our review of the copies of such forms that we
received and written representations from our Section 16
insiders, we believe that all of our Section 16 insiders
complied with these reporting obligations for fiscal 2007,
except that an award to Mr. Woods of restricted stock and
stock options was not reported on a timely-filed Form 4,
but such transactions were subsequently reported on Form 4.
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Item 11.
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Executive
Compensation
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COMPENSATION
OF DIRECTORS AND EXECUTIVE OFFICERS
Compensation
Discussion and Analysis
Our Compensation Discussion and Analysis addresses the following
topics:
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an overview and design of the Companys executive
compensation policies, programs and practices;
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the elements of our executive compensation program;
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the Companys stock ownership guidelines; and
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the impact of regulatory requirements on executive compensation.
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Overview
and Design of our Compensation Program
The Compensation Committee (for purposes of this Compensation
Discussion and Analysis, the Committee) administers
the Companys executive compensation program relative to
the Chief Executive Officer and certain other executive
officers, including each of the executive officers named in the
Summary Compensation Table below (the Named Executive
Officers or NEOs). The Committees
primary objective is to establish an executive compensation
program that links the interests of management and stockholders
and attracts, motivates and retains executive officers of high
caliber and ability. The Committees overall long-term
objective is to design and maintain an executive compensation
program that includes as integral components performance metrics
and targets that reward a desired level of Company and
individual performance. The Committee believes that compensation
paid to executive officers should be designed to encourage
decisions and actions that have a positive long-term impact on
overall Company performance.
Historically, the CEO has recommended to the Committee base
salary adjustments and bonuses for the executive officers. As
discussed further below, annual equity awards for executive
officers (and other eligible employees) are approved by the
Committee generally in accordance with the guidelines set forth
in the Companys Committee-approved equity grant
guidelines; however, occasionally management may suggest to the
Committee variations from the policy based on individual
performance considerations. The Committee has final authority
over compensation decisions in respect to the Companys
executive officers.
The Committee seeks to encourage management to acquire and
retain Company stock to align their interests with those of our
stockholders. The adoption of the 2004 Stock and Incentive Plan
(the 2004 Stock Plan) in June 2004 supported this
objective, providing for the grant to management (and other
eligible employees) of equity-based long-term incentive awards
on an approximately annual basis, as described in more detail
below. Also, in fiscal 2005, the Company adopted stock ownership
guidelines, which require members of the Board and management to
hold shares of Common Stock. For a more detailed discussion of
these guidelines, see the Stock Ownership Guidelines
section of this Compensation Discussion and Analysis below.
Elements
of the Executive Compensation Program
The Companys executive compensation program includes the
following short and long-term compensation elements:
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base salary;
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annual incentive awards payable in cash;
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long-term equity incentive awards in the form of stock options
and restricted stock granted annually under the 2004 Stock
Plan; and
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long-term incentive bonuses payable in cash and awarded under a
Long Term Incentive Plan (LTIP) established pursuant
to the 2004 Stock Plan.
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In addition to these elements, the Company provides retirement,
health and welfare benefits, certain perquisites and personal
benefits and severance and retention arrangements to members of
senior management, including each of the Named Executive
Officers. Typically, the Committees decisions relative to
these elements are influenced by the executive officers
level of responsibility and function within the Company and the
overall performance of the Company.
Base
Salary
The Committee annually reviews and approves all base salaries
for the Companys Named Executive Officers. The Committee
also reviews and approves adjustments to base salaries in
connection with an executive officers promotion or other
change in responsibilities. Adjustments to base salary are
typically based upon duties performed, business growth and the
general financial condition of the Company. In determining
adjustments to base salary and salary ranges for a particular
year, the Committee has typically considered information
included in its primary competitors proxy statements
(i.e., Advance Auto, AutoZone, Pep Boys and OReilly
Automotive) regarding salaries and other compensation elements
for the competitors named executive officers. In making
salary adjustments, the Committee also makes subjective
determinations regarding the overall performance of individual
officers.
In light of the Companys general financial condition and
overall performance, the Committee approved an increase in base
salary in fiscal 2007 for substantially all of the
Companys officers and employees of approximately 3%,
including each currently employed Named Executive Officer (other
than Messrs. Mondry and Constantine, who were hired in
2007).
Annual
Cash Incentive Compensation
Each year, the Committee adopts an incentive compensation plan
that provides for an annual cash incentive award opportunity for
the Companys executive officers. The Committee believes
that annual incentive award opportunities assist the Company in
attracting, retaining and motivating key personnel and reward
eligible employees for assisting the Company in achieving our
operational and strategic goals. Typically, bonuses for the
Companys executive officers under these plans are
calculated using a predetermined percentage of an
executives annual base salary relative to specified target
levels for (1) the executives level of individual
performance and (2) the Companys performance based on
achievement of pre-established Company and individual
performance goals. Historically, the Committee has established
the threshold, target and maximum levels for each of the
objective financial performance measures in the bonus plan based
on the approved budget for the fiscal year and for individual
performance based on performance relative to previously
established individual goals or other individual achievements
during the course of the fiscal year. Typically, if the
threshold for a particular component is not attained, no payment
will be made relative to that component. The Committee also has
the discretion to award bonuses to executive officers in
recognition of individual
and/or
Company performance outside of the context of the annual
incentive bonus plan, as well as to reduce or increase the size
of the annual cash incentive award. In fiscal 2007, the
Committee awarded discretionary bonuses to Mr. Riley (who
at the time was our Chief Financial Officer) and
Ms. Morrison in connection with the filing in May 2007 of
the fiscal 2005
Form 10-K,
which followed a lengthy financial statement restatement process
in which Mr. Riley and Ms. Morrison had significant
involvement and responsibility.
Historically, the Committee has approved pre-established Company
financial performance measures in the annual incentive plans.
However, in view of the Audit Committee-led investigation
conducted in 2006 and associated restatement process, as well as
the absence of accurate financial statements, the compensation
program for fiscal 2005, 2006 and 2007 represented a departure
from the norm as the Committee did not want to rely on
previously established financial targets (to the extent any had
been developed) or develop new objective financial targets for
annual incentive compensation in the absence at that time of
current annual audited financial statements.
In the absence of current financial statements in early fiscal
2007, the Board decided to defer establishment of financial
targets for bonus plan purposes (and therefore, had deferred
establishment of a bonus plan) for the Companys executive
officers and other general and administrative staff (excluding
certain of the senior executive officers that the Company hired
in 2007 whose bonus arrangements for fiscal 2007 were addressed
in their
8
employment arrangements). In November 2007, after the Company
became current in its financial reporting obligations, the
Committee adopted the 2007 General and Administrative Staff
Incentive Plan (the 2007 Bonus Plan). At that time,
it was clear that whatever financial targets that may have been
established at the beginning of the fiscal 2007 in connection
with the budgeting process would not have been achieved in whole
or in part. Therefore, the Board decided that it was appropriate
under the circumstances to provide that annual bonuses for
fiscal 2007 be based solely on the achievement of subjective
individual performance criteria. Maximum bonus amounts for the
Companys Named Executive Officers under the 2007 Bonus
Plan were established at 25% of each such officers annual
base salary in effect as of the end of fiscal 2007. The target
bonus award under the 2007 Bonus Plan for the Companys
Named Executive Officers was 15% of each such officers
fiscal year-end base salary, as adjusted based on changes in
position during the fiscal year and other factors provided for
in the 2007 Bonus Plan. In light of the Companys financial
performance and condition and the lack of Company financial
performance goals, the target levels under the 2007 Bonus Plan
equated to 25% of the Companys historical target bonus
levels. In the case of each of the Named Executive Officers,
other than our Chief Executive Officer Mr. Mondry, and
Chief Financial Officer Mr. Constantine, bonuses were
awarded at the maximum level, equal to 25% of their year-end
base salaries. Mr. Mondry, whose fiscal 2007 bonus was
guaranteed pursuant to his employment agreement, was awarded a
bonus for the 2007 fiscal year equal to 100% of his fiscal 2007
base salary (prorated for the number of days that
Mr. Mondry was employed by the Company during fiscal 2007).
Mr. Constantine, whose fiscal 2007 bonus was guaranteed
pursuant to his offer letter, was awarded a bonus for the 2007
fiscal year equal to 60% of his salary at the end of fiscal 2007
(prorated for the number of days that Mr. Constantine was
employed by the Company during fiscal 2007).
Long-Term Equity-Based Incentive Awards
In fiscal 2004, the Committee engaged KPMG LLP, compensation and
benefits consultants, to assist it in developing a long-term
incentive program designed to intensify focus on the
Companys long-term performance and to retain executive
talent. Based on the consultants recommendations, the
Committee adopted equity grant guidelines, which established the
basis for the annual equity grant program. These equity grant
guidelines were adopted by the Committee prior to the 2004
equity grant. The Committees objective has been to award
equity approximately annually. In accordance with the equity
grant guidelines, annual grants between 2004 and 2007 have
consisted of a mix of stock options and restricted stock to the
executive officers other than the Chief Executive Officer, whose
annual award historically consisted only of stock options to
ensure maximum deductibility in the context of
Section 162(m) of the Internal Revenue Code
(IRC).
The grants are made pursuant to our 2004 Stock Plan, which
provides for the award of equity-based compensation (incentive
stock options, non-qualified stock options, stock appreciation
rights, restricted stock, stock units, incentive bonuses and
other stock unit awards), and our equity grant guidelines, as
such have been modified by the Committee from time to time. The
2004 Stock Plan is flexible and allows the Committee to design
the Companys compensation programs using a mixture of
different elements. Plan participation is limited to employees
and directors of the Company and any subsidiary or parent of the
Company.
Our equity grant guidelines provide for the annual grant of
stock options and restricted stock to executive officers based
on a 70%/30% mix of options and restricted stock, respectively.
The Committee first establishes a total dollar value for equity
awards (expressed as a percentage of base salary) and then
determines the number of shares to be issued (in the form of
options and restricted stock based on the 70/30 mix) by
reference to the grant date fair market value of the equity
awards, which, for options, is based on the Black-Scholes option
pricing model, which the Company uses for financial reporting
purposes. In October 2007, in accordance with these guidelines,
the Committee approved the annual award of stock options and
restricted stock for the Companys then-current eligible
executive officers (the 2007 equity program grant).
Each Named Executive Officer employed with the Company at the
time of 2007 equity program grant received a 2007 equity program
grant that was valued relative to the executive officers
salary on the date of grant. As illustrated by the example
below, the Companys Executive Vice President,
Mr. Ward, received equity compensation with a grant date
value equal to 100% of his then current base salary, and its
Senior Vice Presidents, including Mr. Buresh and
Ms. Morrison, each received equity compensation with a
grant date value equal to 85% of their then current base salary.
9
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Grant Date
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Grant Date
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Total 2007
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Black-Scholes
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Percentage of
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Fair Market
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Equity Grant as
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Equity
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Percentage of
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Value of
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Equity Value
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Value of
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Executive
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a Percentage of
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Value at
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Equity Value
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Executives
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Granted in
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Executives
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Officers
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Executive
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Date of
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Granted in
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Stock Option
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Restricted
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Restricted
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salary
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Officers Salary
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Grant
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Stock Options
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Award
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Stock
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Stock Award
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Executive Officers Title
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($)
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(%)
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($)
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(%)
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($)
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(%)
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($)
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Executive Vice President
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100,000
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100
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%
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100,000
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70
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%
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70,000
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30
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%
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30,000
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Senior Vice President
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100,000
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85
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%
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85,000
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70
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%
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59,500
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30
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%
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25,500
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During fiscal 2007, in addition to hiring Mr. Mondry as the
Companys Chief Executive Officer, the Company hired a
number of other key senior executive officers, including
Mr. Constantine as the Companys Chief Financial
Officer. As a material inducement to the senior executive
officers respective agreements to join the Company, each
of the senior executive officers received a new hire equity
grant. Based on Mr. Mondrys recommendation to the
Committee, newly hired Executive Vice Presidents, such as
Mr. Constantine, each were awarded new hire grants of
100,000 stock options and 25,000 shares of restricted
stock. Each of the 2007 new hire grants were awarded pursuant to
the 2004 Stock Plan, except for Mr. Mondrys new hire
grant, which was awarded outside of the 2004 Stock Plan. In
light of the new hire grants, none of the senior executive
officers hired in fiscal 2007 also participated in the 2007
equity program grant, except for Mr. Mondry, whose 2007
equity program grant is described below.
Equity awards under the 2004 Stock Plan are subject to certain
time-based vesting conditions (described below) and may also be
subject to other vesting conditions, including the attainment of
performance goals. In some circumstances, such as in the event
of an eligible retirement, death, disability or in connection
with a change in control of the Company (each as defined in the
2004 Stock Plan), the vesting of equity awards under the 2004
Stock Plan may accelerate. The 2004 Stock Plan prohibits the
repricing of options without approval of stockholders.
Stock
Option Grants
As stated above and described in the Grants of Plan Based
Awards in Fiscal 2007 table below, the size of stock
option grants to the eligible Named Executive Officers under the
2007 equity program grant is determined using a Black Scholes
option pricing model. The per share exercise price of all
options granted cannot be less than the market value of our
common stock on the date of grant. Market value is defined under
the 2004 Stock Plan as the mean of the highest and lowest
reported sale prices for our common stock on the NYSE on the
date of grant. In general, stock options vest in increments of
one-third annually on the anniversary of the grant and become
fully vested in three years. If a holder of unvested stock
options ceases to be employed for any reason other than in the
event of an eligible retirement, death, disability or in
connection with a change in control of the Company, all unvested
stock options held by such holder shall be forfeited.
Restricted
Stock Grants
Commencing fiscal 2004, the Committee has awarded grants of
restricted stock to the Named Executive Officers as part of the
annual equity grant program. Like stock option grants, under the
2004 Stock Plan, restricted stock grants generally vest in
increments of one-third annually on the anniversary of the grant
and become fully vested in three years. Restricted stock may
vest prior to three years in the event of an eligible
retirement, death, disability or in connection with a change in
control of the Company (each as defined in the 2004 Stock Plan).
If a holder of restricted stock ceases to be employed for any
reason other than in the event of an eligible retirement, death,
disability or in connection with a change in control of the
Company, all shares held by such stockholder that are still
subject to the restrictions shall be forfeited.
Mr. Mondrys
Fiscal 2007 Equity Awards
As a material inducement to Mr. Mondrys agreement to
join the Company, and to provide Mr. Mondry with a
significant initial incentive to improve the Companys
performance and thereby materially and positively impact
shareholder value over time, on June 13, 2007,
Mr. Mondry was awarded 300,000 stock options and 75,000
restricted stock units. These initial stock option and
restricted stock unit awards were granted to Mr. Mondry
outside of the Companys 2004 Stock Plan and will each vest
in equal installments over three years, subject to
Mr. Mondrys
10
continued employment with the Company. These new hire inducement
awards will automatically vest in the event of a change in
control of the Company, as such term is defined in
Mr. Mondrys employment agreement.
At the time Mr. Mondrys employment arrangements were
entered into, it was contemplated that Mr. Mondry would not
participate in the Companys 2007 equity program grant, but
would first participate in the 2008 equity program grant. Under
the Companys annual equity grant program, the Chief
Executive Officer has historically received stock options equal
in value to 130% of base salary based on the then Black Scholes
valuation, and that is what the Company agreed to provide to
Mr. Mondry in the 2008 equity program grant pursuant to his
employment agreement. On October 20, 2007, in conjunction
with the Companys 2007 equity program grant, the Committee
authorized a grant of stock options to Mr. Mondry that
equates to 50% of the stock options that he would have received
had he fully participated in the 2007 equity program grant. The
2007 equity program grant to Mr. Mondry was made at that
time because the Committee determined that the substantial
decline in the Companys stock price over the four months
prior to the grant (which the Committee did not believe could in
any sense be attributed to anything Mr. Mondry did or did
not do) had, to a considerable extent, thwarted the objective of
providing Mr. Mondry with a significant initial equity
incentive.
The terms and conditions of the stock options awarded to
Mr. Mondry in October 2007 are identical to the other
options granted to eligible officers and associates pursuant to
the 2007 equity program grant, with one exception. When
Mr. Mondry was hired, there had been recurring speculation
concerning a possible near term merger or acquisition
transaction involving the Company. Consequently,
Mr. Mondrys initial employment arrangements reflected
in part the desire of the parties to adequately deal with that
possibility. When considering the grant of additional stock
options for Mr. Mondry at that time, the directors were
mindful that Mr. Mondry would receive meaningful economic
rewards in the event of a near term merger or acquisition
transaction by virtue of his initial restricted stock unit and
stock option awards and severance arrangements under his
employment agreement. At the same time, the directors did not
wish that the initial stock options be construed by
Mr. Mondry or others as reflecting a disincentive with
respect to such a near term transaction, provided, of course,
that any such transaction were deemed in the best interest of
the Companys stockholders. As a result of these
deliberations, it was determined that of the options granted to
Mr. Mondry on October 20, 2007, only 50,000
(approximately 33%) would accelerate upon a change in control of
the Company (and subsequent termination of employment within one
year) pursuant to a definitive (merger or acquisition
transaction) agreement entered into prior to May 31, 2008
(rather than full 100% acceleration as would otherwise occur in
accordance with the provisions of the Companys 2004 Stock
Plan and standard stock option agreement).
Long-Term
Incentive Bonuses
In June 2005, to motivate and ultimately reward senior
management for the development and execution of incremental and
alternative growth strategies that would be intended to
materially and positively impact stockholder value, the Company
granted to all of our then senior executive officers, including
some of the current Named Executive Officers, awards of
cash-based incentive bonus units under the LTIP. These at-risk
incentive bonus units vest and become payable (subject to
continued employment with the Company and the achievement of
certain performance vesting criteria established by the
Committee relating to the per share value of the Companys
common stock) in equal installments over 4 years (beginning
in May 2007); provided that vesting and payment will accelerate
upon a termination of employment within 12 months following
a change in control of the Company, by the Company without
cause, by the executive for good reason or by reason of the
executives death, disability or retirement. Each vested
incentive bonus unit entitles the holder thereof to a cash
payment equal to the excess of the average closing price of the
Companys common stock during a specified period of time
(or, in the case of a change in control, the transaction value
per share) over $20 per share. At the time of grant, the
Committee believed that tying this at-risk bonus to an amount in
excess of the Companys then-current stock price would
further align the interests of management with the interests of
our stockholders.
In June 2005, our former Chief Executive Officer,
Mr. Jenkins, was granted a total of 1,000,000 incentive
bonus units pursuant to the LTIP, and other executive officers,
including certain of our currently employed Named Executive
Officers, were each granted between 250,000 or 500,000 incentive
bonus units. Subsequent to the initial grant, certain newly
hired or promoted executive officers were also granted incentive
bonus units, such as our former Chief Financial Officer,
Mr. Riley, in October 2005 upon his employment with the
Company, and our
11
General Counsel, Ms. Morrison, in October 2006 upon her
promotion to Senior Vice President. The subsequent awards
consisted of fewer (between 100,000 and 125,000) incentive bonus
units based on the more abbreviated period of time these
executives would have to impact the Companys performance
after the grant date and prior to the previously established
vesting dates. At fiscal 2007 year end, the Company had
granted a total of 2,975,000 incentive bonus units, of which
975,000 had been forfeited in connection with certain executive
departures from the Company. In fiscal 2007, the Committee
determined that the performance vesting criteria was not
achieved; therefore, that portion of each LTIP
participants bonus unit award that would have otherwise
become payable on the applicable payment date (a total of 25% of
the award) was forfeited without consideration.
The LTIP provides that if the Company issues restated financial
statements that reflect a material reduction in previously
published sales or earnings and the restatement is attributable,
in whole or in material part, directly or indirectly, to the
malfeasance or gross negligence of an LTIP participant, the LTIP
participant will be required to repay any payments received
within the
24-month
period ending on the date the restatement is issued and will
forfeit the right to receive any future payments under the LTIP.
Upon termination of employment for any reason other than death,
disability, or a termination by the Company without cause, the
LTIP participant is required to repay any payments received
within the
24-month
period ending on the termination date and any payments received
after the termination date, and will forfeit the right to
receive future payments under the LTIP, if the participant
engages in any competitive activity (as defined in the LTIP).
For additional details concerning the LTIP, see footnote 3 to
the Outstanding Equity Awards at Fiscal 2007
Year-End table below.
Other
Benefits
401(k) Plan.
The Company sponsors a 401(k)
plan that is available to all our executive officers and other
employees upon their hire date. The Company matches from 40% to
60% of employee contributions in 10% increments, based on years
of service, up to 4% of the participants base salary.
Participant contributions are subject to certain restrictions as
set forth in the IRC.
Deferred Compensation Plan
. We also sponsor
the CSK Auto, Inc. Deferred Compensation Plan. The Deferred
Compensation Plan permits participants voluntarily to defer up
to 50% of their salary and 100% of their annual bonus without
regard to the limitations under the IRC applicable to the
Companys tax-qualified plans. Although the Company may
also make matching contributions to a participants account
under this Plan, the Company has not elected to do so. Deferred
amounts and any matching contributions under the Deferred
Compensation Plan are 100% vested at all times, and are invested
on behalf of the participant in investment vehicles selected
from time to time by the administrators of the Plan. Benefits
are payable at retirement in either a lump sum or installments
for up to 12 years. Benefits upon a termination of
employment prior to retirement are payable only in a lump sum.
See the Non-Qualified Deferred Compensation in Fiscal
2007 table below.
Perks and other personal benefits
. The Company
provides certain perquisites and personal benefits to our
executive officers that are not generally available to other
employees. The Committee believes that the perquisites and
personal benefits that are provided to the Companys
executive officers are generally comparable to those provided by
companies that compete in the marketplace for the services of
our executive officers. Historically, management has provided
certain senior executives with the use of a Company vehicle for
personal use, as well as a car allowance in the nature of the
Company payments or reimbursement of expenses for
gasoline, repair and maintenance, registration, insurance and
other costs and expenses and a tax
gross-up,
as
noted in the footnotes corresponding to the All Other
Compensation column of the Summary Compensation
Table below, which sets forth the Companys costs for
the perquisites and personal benefits provided to our Named
Executive Officers in fiscal 2006 and 2007. The Committee
determined that personal use of Company vehicles by members of
management should be discontinued effective at the end of fiscal
2007.
Additionally, pursuant to the terms of his employment agreement,
Mr. Mondry is entitled to certain perquisites and personal
benefits that are not generally available to other employees.
Specifically, the Company has agreed to reimburse
Mr. Mondry until June 30, 2008 for reasonable travel
and temporary living expenses incurred in connection with his
temporary living arrangements in Phoenix, Arizona and his travel
between his home in Dallas, Texas and the Companys
corporate headquarters in Phoenix, Arizona. If any of these
reimbursements are taxable to Mr. Mondry, Mr. Mondry
will be entitled to a cash payment so that he will be in the
same position as he would have
12
been had no taxes been imposed. Mr. Mondry is also entitled
to a car allowance of $2,000 per month until June 30, 2008.
In fiscal 2008, Mr. Mondrys employment agreement was
amended to provide for, among other benefits, an extension of
the relocation benefits and car allowance until the earlier of
the date that is eight months following the consummation of a
change in control transaction and thirty days following his
termination of employment for any reason provided that, on or
prior to June 30, 2008, the Company entered into an
agreement that, if consummated, would result in a change in
control. For additional details concerning the amendments to
Mr. Mondrys employment agreement, see the narrative
discussion in the Potential Payments Upon Termination or
Change In Control section below.
Employment
and Post-Employment Arrangements
Employment
Agreements
Mr. Jenkins
Employment Agreement
During fiscal 2007, the Company was party to an employment
agreement with our former Chief Executive Officer,
Mr. Jenkins. Under the agreement, Mr. Jenkins
annual bonus was to be awarded based upon goals for financial
performance and operating results of the Company as established
by the Compensation Committee of the Board of Directors during
the first part of the fiscal year. The Committee had broad
discretion in determining the measures upon which
Mr. Jenkins bonus was to be based, but in the past
has used criteria such as EBITDA, EPS, and cash flow. In
September 2006, Mr. Jenkins announced his intent to retire
from the Company. As the annual bonus was no longer relevant
given the changed circumstances, on April 16, 2007,
Mr. Jenkins and the Company amended the employment
agreement to reflect the terms and conditions of
Mr. Jenkins retirement from the Company and to ensure
a smooth and efficient transition of the CEO role. The amendment
provided that Mr. Jenkins would be employed on an at will
basis until the later of (i) the date he attained
age 65 or (ii) the earlier of (x) the date on
which a new CEO commences employment with the Company and
(y) September 30, 2007. After Mr. Jenkins retired
from the Company on August 15, 2007, he received a lump-sum
succession bonus payment of $900,000.
Mr. Mondrys
Employment Agreement
The Company entered into an employment agreement with
Mr. Mondry whereby Mr. Mondry would assume the
position of President and Chief Executive Officer of the Company
upon the retirement of Mr. Jenkins. At that time,
Mr. Mondry would also be appointed to the Companys
board of directors. When Mr. Jenkins retired in August
2007, pursuant to his employment agreement, Mr. Mondry
assumed the position of President and Chief Executive Officer of
the Company and was appointed to the Companys board of
directors.
Mr. Mondrys employment agreement contains restrictive
covenants imposing noncompetition obligations, restricting
soliciting and hiring Company employees and protecting
confidential information and the Companys ownership of
work product, as well as other covenants, during his employment
and for specified periods after the termination of his
employment for any reason. The employment agreement also
provides for certain benefits, which are described in more
detail in the Potential Payments upon Termination or
Change In Control section below.
In March 2008, the Committee approved amendments to
Mr. Mondrys employment agreement based on the
non-management directors determination that it was in the
Companys stockholders best interests that
Mr. Mondry remain keenly focused on his assigned duties and
the operations of the business in the context of the uncertainty
and potential for distraction associated with the likelihood of
a change in control. The additional benefits provided to
Mr. Mondry pursuant to these amendments are described in a
narrative discussion in the Potential Payments Upon
Termination or Change In Control section under the caption
Fiscal 2008 Amendments to Mr. Mondrys
Employment Agreement
below.
Other than Mr. Mondry, no currently employed executive
officer has an employment agreement with the Company.
Supplemental
Retirement Compensation
To retain and motivate Mr. Jenkins, in August 2000, the
Company entered into a supplemental executive retirement plan
(SERP) agreement with Mr. Jenkins that provides
supplemental retirement benefits for a period of
13
ten years, which began thirty days after the effective date of
his retirement. The benefit amount payable to Mr. Jenkins
under this agreement is $600,000 per annum. Pursuant to the
agreement, the Company also provides to Mr. Jenkins and his
spouse substantially comparable medical benefits (utilizing, as
applicable, such other medical benefit policies/programs as may
then be available, such as COBRA benefits, supplemental policies
to any applicable Medicare policy
and/or
reimbursement of out-of-pocket co-insurance and deductible
payments) as are made available by the Company to our executive
officers for a period of ten years commencing upon the
termination of his employment for any reason other than for
cause (as defined in the SERP). When Mr. Jenkins retired in
August 2007, he was fully vested in the SERP and became entitled
to receive the full benefits thereunder. For further information
on Mr. Jenkins SERP arrangements, see footnote 5 and
6 to the Summary Compensation table as well as the
Pension Benefits in Fiscal 2007 table below.
Other than Mr. Jenkins, no executive officer has a SERP
agreement with the Company.
Severance
and Retention Agreements
The Company has entered into severance and retention agreements
with each of the members of our senior management team,
including all of the Named Executive Officers currently employed
with the Company (except for Mr. Mondry, who has an
employment agreement with the Company). All of such agreements
entitle these executives to receive certain severance benefits
if (i) the Company terminates the executives
employment without cause, (ii) the executive terminates his
or her employment for good reason, or (iii) within twelve
months following a change of control of the Company, the Company
terminates such executives employment without cause or the
executive terminates his or her employment for good reason
(cause, good reason and change of control are each defined in
the agreement). During fiscal 2007, the severance benefits
consisted of the continued payment of 100% of salary and target
bonus, benefits for twelve months, the amount of then accrued
and unused vacation, outplacement services (the value of such
services not to exceed 15% of current salary) and, if
applicable, a tax gross-up payment in an amount such that after
payment by the executive of all taxes (including excise tax)
imposed upon the gross-up payment, the executive retains an
amount of the gross-up payment equal to the excise tax imposed
upon the payments.
During fiscal 2007, these agreements also contained change of
control provisions that provided these executives with
supplemental retention and severance benefits in the event of a
change of control of the Company. Generally, these benefits
consist of a lump sum retention bonus payment equal to three
months of the executive officers then-current salary if
(i) the executive remains employed with the Company or
surviving corporation for at least six months following a change
of control or (ii) the Company terminates his employment
without cause or the executive terminates his employment for
good reason within six months after the change of control. Any
benefits arising under the severance and retention agreements
are conditioned on the executives execution of a general
release of claims and agreement to abide by specific
non-compete, non-solicit, confidentiality and other obligations
set forth in the agreements. The Committee believes that the
protections provided to certain executive officers by the
severance and retention agreements will reinforce and encourage
the management teams continued attention and dedication to
the Company during times of uncertainty.
In March 2008, the Committee approved amendments to the
severance and retention agreements between the Company and each
member of our senior management team, including all of the Named
Executive Officers currently employed with the Company (except
for Mr. Mondry who has as employment agreement with the
Company). The Committee approved these arrangements at this time
based on the non-management directors determination that
it was in the Companys stockholders best interests
that senior management participate in a positive manner in the
strategic review process that resulted in the planned merger
with OReilly (described in the Original Annual Report in
Item 1, Business, under the caption
Merger Agreement) and remain keenly focused on the
business pending completion of that process, and potentially
well beyond that time should the Company remain independent. In
addition to the new benefits described in the narrative
discussion following the tables in the Potential Payments
Upon Termination or Change in Control section under the
caption
Fiscal 2008 Amendments to the Named Executive
Officers Severance and Retention Agreements
below, the executive will be eligible to receive the severance
benefits should he or she resign during a thirty day period
commencing six months after a change in control of the Company.
14
Stock
Ownership Guidelines
In 2005, the Company adopted stock ownership guidelines
applicable to all members of the Board and senior executive
officers of the Company to more closely align the interests of
the directors and officers with those of our stockholders.
Ownership requirements are expressed as a minimum number of
shares (1,000) for members of the Board of Directors and as a
minimum percentage of then current base salary (50%) for senior
officers. Ownership of the required shares includes stock owned
directly by the officer or director, shares held in a trust
whereby the officer or director has power over disposition of
the shares in the trust and any shares held in a 401(k) Plan or
similar arrangement. Restricted (unvested) shares and
unexercised stock options are not counted in calculating
ownership for purposes of these guidelines.
The senior officer guidelines are subject to a phase-in
component. Until such time that an officer is in compliance with
these guidelines, he or she is prohibited from selling any
shares of Company stock (except for shares acquired upon the
exercise of options) and must retain all restricted shares (less
shares sold for taxes required to be withheld or paid) awarded
by the Committee. All of our directors and one of our executive
officers have already attained or exceeded these ownership
levels.
Impact
of Regulatory Requirements on Compensation
The Committee is mindful of the potential impact upon the
Company of Section 162(m) of the IRC, which prohibits
public companies from deducting certain executive remuneration
in excess of $1,000,000. While reserving the right of the
Company to offer such compensation arrangements as may be
necessary to attract and retain executive officers of high
caliber and ability, the Committee intends generally to
structure such arrangements, where feasible, so as to minimize
or eliminate the impact of the limitations of
Section 162(m) of the IRC.
Beginning on January 29, 2006, the Company began accounting
for stock-based payments in accordance with the requirements of
Statement of Financial Accounting Standard (SFAS)
No. 123(R),
Share-Based Payment
(SFAS No. 123(R)) .
Compensation
Committee Report
The Compensation Committee of the Company has reviewed and
discussed the Compensation Discussion and Analysis required by
Item 402(b) of
Regulation S-K
with management and, based on such review and discussions, the
Compensation Committee recommended to the Board that the
Compensation Discussion and Analysis be included in the
Companys Annual Report on
Form 10-K
for the 2007 fiscal year.
Respectfully Submitted,
Compensation Committee
Charles K. Marquis, Chairman
Morton Godlas
Terilyn A. Henderson
Charles J. Philippin
Compensation
Committee Interlocks and Insider Participation
Directors Marquis, Godlas, Henderson and Philippin were members
of the Compensation Committee during fiscal 2007. No current
member of our Compensation Committee was, during fiscal 2007,
one of our executive officers or employees or was formerly one
of our officers. None of our executive officers serves as a
member of the board of directors or compensation committee of
any entity that has one or more executive officers serving as a
member of our Board of Directors.
15
Executive
Compensation Tables
CSK Auto Corporation is a holding company with no business
operations of its own; all of its business is conducted through
its wholly-owned subsidiary, CSK Auto, Inc. The officers of the
Company receive their compensation from CSK Auto, Inc. and
receive no additional compensation in their capacities as
officers of the Company.
Summary
Compensation Table
The following table sets forth information concerning the total
compensation earned in fiscal 2006 and 2007 by those individuals
who served as our Chief Executive Officer and our Chief
Financial Officer during fiscal 2007 and our three highest paid
executive officers during fiscal 2007 other than our Chief
Executive Officer and Chief Financial Officer (collectively, our
fiscal 2007 Named Executive Officers or
NEOs):
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Change in Pension
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Value and
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Nonqualified
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Non-Equity
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Deferred
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Incentive Plan
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Compensation
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All Other
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Salary
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Bonus
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Stock Awards
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Option Awards
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Compensation
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Earnings
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Compensation
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Total
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Name and Principal Position
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Year
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($)
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($)(1)
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($)(2)
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($)(3)
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($)(4)
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($)(5)
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($)(6)
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($)
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Lawrence N. Mondry
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2007
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486,154
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487,912
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299,995
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461,302
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105,686
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1,841,049
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President and Chief
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Executive Officer
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Maynard Jenkins
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2007
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521,446
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900,000
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308,755
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327,826
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175,418
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2,233,445
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Former Chairman and
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2006
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900,000
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447,454
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317,420
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43,536
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1,708,410
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Chief Executive Officer
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James D. Constantine
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2007
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66,462
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40,352
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18,495
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25,780
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19,119
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170,208
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Executive Vice President
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of Finance and Chief
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Financial Officer
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Steven L. Korby
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2007
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300,000
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27,104
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327,104
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Former Interim
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Chief Financial Officer
(7)
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James Riley
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2007
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144,054
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100,000
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(133
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(322
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77,634
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321,234
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Former Senior
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2006
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319,612
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90,840
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25,430
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82,852
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60,005
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578,739
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Vice President and
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Chief Financial Officer
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Dale Ward
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2007
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358,077
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87,985
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156,211
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90,125
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30,426
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722,824
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Executive Vice President
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2006
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337,365
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105,000
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51,530
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89,991
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21,960
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605,846
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Larry Buresh
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2007
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337,308
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76,797
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131,964
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84,875
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8,259
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639,203
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Senior Vice President
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2006
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321,916
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99,000
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48,779
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81,969
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8,764
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560,428
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and Chief Information Officer
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Randi Morrison
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2007
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255,769
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100,000
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39,407
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78,472
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64,357
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6,690
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544,695
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Senior Vice President,
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General Counsel
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and Secretary
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(1)
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Fiscal 2007 bonus amounts represent guaranteed bonuses paid to
Messrs. Mondry and Constantine pursuant to their respective
employment arrangements, Mr. Jenkins succession bonus
(pursuant to his employment agreement described in the
Compensation Discussion and Analysis
Employment and Post-Employment Arrangements
section
above), and bonuses paid to Ms. Morrison and Mr. Riley
during fiscal 2007 for their efforts in the completion of the
fiscal 2005 Form
10-K
(as
described in the Compensation Discussion and
Analysis
Annual Cash Incentive
Compensation
section above). Non-Equity Incentive Plan
awards pursuant to the 2007 Bonus Plan to Messrs. Ward and
Buresh and Ms. Morrison are described in footnote 4 below.
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Fiscal 2006 bonuses represent bonuses for eligible associates
under the 2006 General and Administrative Staff Incentive Plan
(the 2006 G&A Plan). These bonuses were
calculated using a predetermined percentage of a
participants annual base salary relative to specified
target levels for the eligible associates level of
individual performance and the Companys performance. In
the case of the 2006 NEOs, other than our Mr. Jenkins,
bonuses were awarded at the target level established for the
2006 G&A Plan, equal to 30% of an officers year-end
base salary (Mr. Rileys bonus was prorated due to an
approved medical leave of absence during a portion of fiscal
2006). The Compensation Committee used its discretion to award
bonuses at the target level in view of the continued
unavailability of financial statements for 2006 and earlier
periods as well as the Board of Directors then desire to
keep intact the Companys management and administrative
personnel notwithstanding the difficulties then being faced by
the Company.
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(2)
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The amounts included in the Stock Awards column
represent the compensation cost recognized by the Company in
fiscal 2006 and 2007 related to non-option stock awards granted
in fiscal 2004, 2005, 2006, and
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16
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2007 in accordance with SFAS No. 123(R), excluding any
impact of assumed forfeiture rates. Mr. Riley forfeited
8,399 restricted shares upon his departure from the Company in
June 2007. Compensation cost in fiscal 2007 for Mr. Riley
was impacted by this forfeiture.
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For a discussion of valuation assumptions, see Note 2 to
the Companys Consolidated Financial Statements included in
the Original Annual Report. Please also see the Grants of
Plan Based Awards in Fiscal 2007 table below for more
information regarding the option awards the Company granted
during fiscal 2007.
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(3)
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The amounts included in the Option Awards column are
the amounts of compensation cost recognized by the Company in
fiscal 2006 related to stock option awards in fiscal 2004, 2005
and 2006, and in fiscal 2007 related to stock option awards in
fiscal 2005, 2006 and 2007 in accordance with FAS 123(R),
excluding any impact of assumed forfeiture rates. Mr. Riley
forfeited 56,914 stock options upon his departure from the
Company in June 2007. Compensation cost in fiscal 2007 for
Mr. Riley was impacted by this forfeiture.
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For a discussion of valuation assumptions, see Note 2 to
the Companys Consolidated Financial Statements included in
the Original Annual Report. Please also see the Grants of
Plan Based Awards in Fiscal 2007 table below for more
information regarding the option awards the Company granted
during fiscal year 2007.
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(4)
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Fiscal 2007 Non-Equity Incentive Plan Compensation represents
bonuses for eligible associates under the 2007 Bonus Plan. These
bonuses were calculated using a predetermined percentage of a
participants annual base salary relative to specified
target levels for the eligible associates level of
individual performance. In the case of the 2007 NEOs who were
eligible under the 2007 Bonus Plan, bonuses were awarded at the
maximum level, equal to 25% of the officers year-end base
salary.
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(5)
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The amounts included in the Change in Pension Value and
Nonqualified Deferred Compensation Earnings column are the
changes in values of Mr. Jenkins SERP during fiscal
2006 and fiscal 2007. For additional information on the
valuation assumptions used to calculate the pension value, refer
to the Pension Benefits table below.
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(6)
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The amounts shown in the All Other Compensation
column are attributable to the following:
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Mr. Mondry: Amounts included for fiscal 2007 consist of
life insurance premiums; a vehicle allowance ($2,000 per month);
taxable cost of group-term life insurance; $65,638 of relocation
and living expenses paid by the Company; and $24,612 tax gross
up in relation to his relocation and living expenses.
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Mr. Jenkins: Amounts included for fiscal 2007 consist of
matching contributions to Mr. Jenkins 401(k) Plan;
life insurance premiums; aggregate incremental cost attributed
to the personal use of a Company-provided vehicle; taxable cost
of group-term life insurance; $2,326 tax gross up in relation to
personal use of Company-provided vehicle; and $158,548 payment
representing accrued and unpaid vacation owed to him on his
resignation date.
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Mr. Constantine: Amounts included for fiscal 2007 consist
of matching contributions to Mr. Constantines 401(k)
Plan; life insurance premiums; taxable cost of group-term life
insurance; relocation and living expenses paid by the Company;
and $3,631 tax gross up in relation to his relocation and living
expenses.
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Mr. Korby: Amounts included for fiscal 2007 consist of life
insurance premiums and $26,654 payment representing accrued and
unpaid vacation owed to him on his termination date.
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Mr. Riley: Amounts included for fiscal 2007 consist of
matching contributions to Mr. Rileys 401(k) Plan;
life insurance premiums; aggregate incremental cost attributed
to the personal use of a Company-provided vehicle; taxable cost
of group-term life insurance; $2,744 tax gross up in relation to
personal use of Company-provided vehicle and $65,860 payment
representing accrued and unpaid vacation owed to him on his
resignation date.
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Mr. Ward: Amounts included for fiscal 2007 consist of
matching contributions to Mr. Wards 401(k) Plan; life
insurance premiums; aggregate incremental cost attributed to the
personal use of a Company-provided vehicle; taxable cost of
group-term life insurance; and $7,652 tax gross up in relation
to personal use of Company-provided vehicle.
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Mr. Buresh: Amounts included for fiscal 2007 consist of
matching contributions to Mr. Bureshs 401(k) Plan;
life insurance premiums; and taxable cost of group-term life
insurance.
|
17
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Ms. Morrison: Amounts included for fiscal 2007 consist of
matching contributions to Ms. Morrisons 401(k) Plan;
life insurance premiums; and taxable cost of group-term life
insurance.
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(7)
|
|
Mr. Korby became our interim Chief Financial Officer in
fiscal 2007 following Mr. Rileys resignation.
Pursuant to an Interim Executive Services Agreement entered into
between Mr. Korby and the Company, Mr. Korby was paid
$50,000 per month for his services.
|
Grants of
Plan-Based Awards in Fiscal 2007
The following table shows all Grants of Plan-Based Awards in
fiscal 2007 to each of the NEOs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
|
|
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Awards:
|
|
|
Exercise
|
|
|
Closing
|
|
|
Date Fair
|
|
|
|
|
|
|
Estimated Future Payouts
|
|
|
Number
|
|
|
Number of
|
|
|
or Base
|
|
|
Price of
|
|
|
Value of
|
|
|
|
|
|
|
Under Non-Equity Incentive
|
|
|
of Shares
|
|
|
Securities
|
|
|
Price of
|
|
|
Stock on
|
|
|
Stock and
|
|
|
|
|
|
|
Plan Awards(1)
|
|
|
of Stock
|
|
|
Underlying
|
|
|
Option
|
|
|
Grant
|
|
|
Option
|
|
|
|
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
or Units
|
|
|
Options
|
|
|
Awards
|
|
|
Date
|
|
|
Awards
|
|
Name
|
|
Grant Date
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)(2)
|
|
|
(#)(3)
|
|
|
($/Sh)(4)
|
|
|
($/Sh)
|
|
|
($)(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lawrence Mondry
|
|
|
06/13/07
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300,000
|
|
|
|
18.66
|
|
|
|
18.56
|
|
|
|
1,916,130
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
06/13/07
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75,000
|
|
|
|
|
|
|
|
|
|
|
|
18.56
|
|
|
|
1,399,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/20/07
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
144,847
|
|
|
|
10.80
|
|
|
|
10.53
|
|
|
|
521,666
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maynard Jenkins
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James Constantine
|
|
|
11/14/07
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
10.15
|
|
|
|
10.01
|
|
|
|
348,820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/14/07
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
|
10.01
|
|
|
|
250,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven Korby
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James Riley
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dale Ward
|
|
|
10/20/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,209
|
|
|
|
10.80
|
|
|
|
10.53
|
|
|
|
252,858
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/20/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,271
|
|
|
|
|
|
|
|
|
|
|
|
10.53
|
|
|
|
108,154
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/11/07
|
|
|
|
31,544
|
|
|
|
54,075
|
|
|
|
90,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry Buresh
|
|
|
10/20/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56,202
|
|
|
|
10.80
|
|
|
|
10.53
|
|
|
|
202,412
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/20/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,222
|
|
|
|
|
|
|
|
|
|
|
|
10.53
|
|
|
|
86,578
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/11/07
|
|
|
|
29,706
|
|
|
|
50,925
|
|
|
|
84,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Randi Morrison
|
|
|
10/20/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,627
|
|
|
|
10.80
|
|
|
|
10.53
|
|
|
|
153,521
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/20/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,236
|
|
|
|
|
|
|
|
|
|
|
|
10.53
|
|
|
|
65,665
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/11/07
|
|
|
|
22,531
|
|
|
|
38,625
|
|
|
|
64,357
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
These columns show the range of payouts targeted for fiscal 2007
performance under the 2007 Bonus Plan. The amount shown in the
target column represents the incentive payment that
would have been earned by each NEO if the target level for the
performance objective had been attained (equivalent to 15% of
the NEOs base salary in effect at the end of fiscal 2007).
The amount shown in the maximum column represents
the maximum amount payable under the 2007 Bonus Plan (equivalent
to 25% of the NEOs base salary in effect at the end of
fiscal 2007). The amount shown in the threshold
column represents the amount payable under the 2007 Bonus Plan
if only the minimum level of performance is achieved on the
individual performance objectives (equivalent to 8.75% of the
NEOs base salary in effect at the end of fiscal 2007).
Additional information regarding the 2007 Bonus Plan and the
criteria applied in determining the amounts payable under the
2007 Bonus Plan, can be found in the Compensation
Discussion and Analysis under the subheading
Annual Cash Incentive Compensation.
The
actual amount of incentive bonus earned by each of our
fiscal 2007 NEOs is reported in the Non-Equity
Incentive Plan Compensation column in the Summary
Compensation Table.
|
|
(2)
|
|
Represents time vested restricted stock awards. The terms of the
restricted stock awards provide for three equal annual vestings
commencing one year from the award date.
|
|
(3)
|
|
Once vested, these stock options generally expire at the end of
seven years from the date of grant; one year after eligible
retirement, death, disability or involuntary termination by the
Company (or any purchaser, successor or assign) in connection
with a change in control (each defined in the 2004 Stock Plan);
three months after employment is terminated for any other
reason; or immediately upon an employees receipt of the
notice of termination if the associate is terminated for Cause
(as defined in the 2004 Stock Plan). However, pursuant to the
provisions of the 2004 Stock Plan, in no event will any option
be exercisable more than ten years after the date the option is
granted.
|
18
|
|
|
(4)
|
|
On October 20, 2007, the Compensation Committee awarded
stock options and restricted stock to certain Company employees,
including the NEOs who were employed with the Company at the
time of grant. The exercise price of the stock options was
$10.795 per share, which was the high-low average of our common
stock as reported on the NYSE. During fiscal 2007, the
Compensation Committee also awarded stock options and restricted
stock (or in Mr. Mondrys case, restricted stock
units) to each of the senior executive officers that the Company
hired during the year. The exercise price of these new hire
stock options was the high-low average of our common stock as
reported on the NYSE on the date of grant, reflected in the
table above. We use the average of the high and low prices of
the Companys common stock on the date of the grant in
accordance with the terms of our 2004 Stock Plan, described in
more detail in the Compensation Discussion and
Analysis section above. The terms of the options provide
for vesting in three equal annual installments commencing one
year from the grant date, subject to acceleration under certain
circumstances as noted above in the Compensation
Discussion and Analysis under the heading
Long-Term Equity-Based Incentive Awards
. The
options have a term of seven years and will expire on
October 20, 2014, unless terminated earlier in accordance
with the provisions of the 2004 Stock Plan.
|
|
(5)
|
|
The grant date fair values for the stock option grants are based
on the Black-Scholes option pricing model. Based on assumed
(i) risk free interest rate ranging from 4.03% to 5.13%,
(ii) expected stock price volatility ranging from 31.0% to
38.0%, (iii) no dividend yield and (iv) option
exercises occurring after four and one-half years, the model
produces a per option share value ranging from $3.39 to $6.41.
|
|
(6)
|
|
Pursuant to his employment agreement, on June 13, 2007,
Mr. Mondry was awarded 300,000 stock options and 75,000
restricted stock units.
|
|
(7)
|
|
As discussed above in the Compensation Discussion and
Analysis section, Mr. Mondry was awarded 144,847
stock options on October 20, 2007.
|
|
(8)
|
|
Upon his hire as Executive Vice President of Finance and Chief
Financial Officer, on November 14, 2007,
Mr. Constantine was awarded 100,000 stock options and
25,000 shares of restricted stock.
|
19
Outstanding
Equity Awards at Fiscal 2007 Year-End
The following table includes certain information concerning
unexercised stock options, stock options that have not vested,
LTIP awards and stock awards that have not vested for each of
the NEOs as of February 3, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
|
|
|
|
Option Awards
|
|
|
|
|
|
Number
|
|
|
Market
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
of Shares
|
|
|
Value of
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
or Units
|
|
|
Shares or
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
of Stock
|
|
|
Units of
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
That
|
|
|
Stock That
|
|
|
|
Options
|
|
|
Options
|
|
|
Exercise
|
|
|
Option
|
|
|
Have Not
|
|
|
Have Not
|
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Price
|
|
|
Expiration
|
|
|
Vested
|
|
|
Vested
|
|
Name
|
|
(#)
|
|
|
(#)
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lawrence Mondry
|
|
|
300,000
|
|
|
|
|
|
|
|
18.66
|
|
|
|
06/13/2014
|
|
|
|
75,000
|
|
|
|
673,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
144,847
|
|
|
|
|
|
|
|
10.80
|
|
|
|
10/20/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maynard Jenkins
|
|
|
242,424
|
|
|
|
|
|
|
|
13.32
|
|
|
|
08/15/2008
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
183,673
|
|
|
|
|
|
|
|
16.35
|
|
|
|
08/15/2008
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
750,000
|
(3)
|
|
|
N/A
|
(4)
|
|
|
5/15/2010
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James Constantine
|
|
|
|
|
|
|
100,000
|
|
|
|
10.15
|
|
|
|
11/14/2014
|
|
|
|
25,000
|
|
|
|
224,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steve Korby
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James Riley
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dale Ward
|
|
|
4,125
|
|
|
|
|
|
|
|
9.87
|
|
|
|
04/05/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,934
|
|
|
|
|
|
|
|
13.32
|
|
|
|
10/18/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,676
|
|
|
|
|
|
|
|
16.35
|
|
|
|
06/28/2012
|
|
|
|
1,582
|
|
|
|
14,206
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,580
|
|
|
|
25,161
|
|
|
|
16.62
|
|
|
|
11/30/2013
|
|
|
|
4,214
|
|
|
|
37,842
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,209
|
|
|
|
10.80
|
|
|
|
10/20/2014
|
|
|
|
10,271
|
|
|
|
92,234
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
187,500
|
(3)
|
|
|
N/A
|
(4)
|
|
|
5/15/2010
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry Buresh
|
|
|
25,000
|
|
|
|
|
|
|
|
11.00
|
|
|
|
02/09/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,000
|
|
|
|
|
|
|
|
11.00
|
|
|
|
02/09/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,250
|
|
|
|
|
|
|
|
11.00
|
|
|
|
02/09/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
|
|
|
|
|
|
|
9.87
|
|
|
|
04/05/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,141
|
|
|
|
|
|
|
|
13.32
|
|
|
|
10/18/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,555
|
|
|
|
|
|
|
|
16.35
|
|
|
|
06/28/2012
|
|
|
|
1,520
|
|
|
|
13,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,082
|
|
|
|
20,165
|
|
|
|
16.62
|
|
|
|
11/30/2013
|
|
|
|
3,377
|
|
|
|
30,325
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56,202
|
|
|
|
10.80
|
|
|
|
10/20/2014
|
|
|
|
8,222
|
|
|
|
73,834
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
187,500
|
(3)
|
|
|
N/A
|
(4)
|
|
|
5/15/2010
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Randi Morrison
|
|
|
660
|
|
|
|
|
|
|
|
9.87
|
|
|
|
04/05/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,089
|
|
|
|
|
|
|
|
19.58
|
|
|
|
02/02/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,000
|
|
|
|
|
|
|
|
13.32
|
|
|
|
10/18/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,727
|
|
|
|
|
|
|
|
16.35
|
|
|
|
06/28/2012
|
|
|
|
427
|
|
|
|
3,834
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,638
|
|
|
|
15,276
|
|
|
|
16.62
|
|
|
|
11/30/2013
|
|
|
|
2,558
|
|
|
|
22,971
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,627
|
|
|
|
10.80
|
|
|
|
10/20/2014
|
|
|
|
6,236
|
|
|
|
55,999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
93,750
|
(3)
|
|
|
N/A
|
(4)
|
|
|
5/15/2010
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Based on the closing price of our common stock as of
February 1, 2008 ($8.98 per share), as reported on the NYSE.
|
|
(2)
|
|
Mr. Jenkins retired from the Company on August 15,
2007. Pursuant to the 2004 Stock Plan, Mr. Jenkins
options that were then outstanding remain exercisable for one
year following his retirement.
|
|
(3)
|
|
Represents number of incentive units granted under the LTIP
unvested at fiscal 2007 year-end. Subject to specific
exceptions (e.g., retirement) as set forth in the LTIP, each
LTIP participant will be entitled to receive a distribution of
cash on May 15 of each of the calendar years 2007, 2008, 2009
and 2010 (each date being a Payment Date) equal in
value to the amount by which the average of the per share
closing prices of the Companys common stock over a
specified period of time (after release of the fiscal year
earnings for the immediately preceding fiscal year) exceeds the
base value of $20.00 (which is subject to adjustment in the
event of a change in the Companys capitalization)
multiplied by 25% of the LTIP participants aggregate
number of incentive bonus units, so long as LTIP participant
remains continuously employed by the Company through the
applicable Payment Date. In the event the formula described
above results in no payment to the LTIP participant on a Payment
Date, then the incentive bonus units vesting on such date will
be forfeited without consideration. On May 15, 2007, the
formula described above resulted in no payment to the LTIP
participants. Accordingly, on May 15, 2007,
Messrs. Jenkins, Riley, Ward, and Buresh and
Ms. Morrison each forfeited 25% of their total incentive
bonus units. Subsequent to fiscal 2007 year end, on
May 15, 2008, the formula described above
|
20
|
|
|
|
|
resulted in no payment to the LTIP participants. Accordingly, on
May 15, 2008, Messrs. Jenkins, Ward, and Buresh and
Ms. Morrison each forfeited an additional 25% of their
total (as of the initial grant) incentive bonus units.
Mr. Riley forfeited all of his remaining incentive bonus
units upon his resignation in June 2007.
|
|
(4)
|
|
There is no exercise price for LTIP incentive units.
|
Vesting
Schedule of all Outstanding Stock Option and Restricted Stock
Grants at
Fiscal 2007 Year-End
The following table includes vesting information on each of the
outstanding stock option and restricted stock grants represented
in the Outstanding Equity Awards at Fiscal 2007 Year-End
Table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vesting Date -
|
|
|
|
|
|
|
|
|
|
First 1/3 of
|
|
|
Vesting Date -
|
|
|
Vesting Date -
|
|
|
|
Option/Stock
|
|
|
Second 1/3 of
|
|
|
Final 1/3 of
|
|
Option/Stock Award Expiration Date
|
|
Award
|
|
|
Option Award
|
|
|
Option Award
|
|
|
08/15/2008
(1)
|
|
|
10/18/2005
|
|
|
|
10/18/2006
|
|
|
|
8/15/2007
|
|
|
|
|
1/29/2006
|
|
|
|
1/29/2006
|
|
|
|
1/29/2006
|
|
02/09/2009
(2)
|
|
|
11/9/2000
|
|
|
|
11/9/2001
|
|
|
|
11/9/2002
|
|
|
|
|
4/30/2001
|
|
|
|
4/30/2002
|
|
|
|
4/30/2003
|
|
|
|
|
2/9/2003
|
|
|
|
2/9/2004
|
|
|
|
2/9/2005
|
|
04/05/2009
|
|
|
04/05/2003
|
|
|
|
04/05/2004
|
|
|
|
04/05/2005
|
|
02/02/2011
(3)
|
|
|
02/02/2005
|
|
|
|
01/29/2006
|
|
|
|
01/29/2006
|
|
10/18/2011
|
|
|
10/18/2005
|
|
|
|
10/18/2006
|
|
|
|
10/18/2007
|
|
06/28/2012
(3)
|
|
|
01/29/2006
|
|
|
|
01/29/2006
|
|
|
|
01/29/2006
|
|
11/30/2013
|
|
|
11/30/2007
|
|
|
|
11/30/2008
|
|
|
|
11/30/2009
|
|
06/13/2014
|
|
|
06/13/2008
|
|
|
|
06/13/2009
|
|
|
|
06/13/2010
|
|
10/20/2014
|
|
|
10/20/2008
|
|
|
|
10/20/2009
|
|
|
|
10/20/2010
|
|
11/14/2014
|
|
|
11/14/2008
|
|
|
|
11/14/2009
|
|
|
|
11/14/2010
|
|
|
|
|
(1)
|
|
Mr. Jenkins retired from the Company on August 15,
2007. Pursuant to the 2004 Stock Plan, Mr. Jenkins
options that were then outstanding remain exercisable for one
year following his retirement. At Mr. Jenkins
retirement date, all of his stock options had already vested,
except for one tranche of 80,808 stock options that would have
vested on October 18, 2007. Because Mr. Jenkins
retired after the age of 65 and had at least 10 years of
service with the Company, all of Mr. Jenkins then
unvested stock options (80,808) vested upon his retirement
pursuant to the terms of the 2004 Stock Plan.
|
|
(2)
|
|
In 2001, the Compensation Committee authorized the re-price and
re-grant of all stock option awards outstanding with an exercise
price greater than $14.00 for the then members of senior
management. Such options were to be re-granted with an exercise
price the higher of 1) the fair market value of the
Companys common stock on the re-grant date, or 2) a
value between $10.00 and $11.00. Each of the stock option grants
would continue to vest (if not already fully vested) based on
its original vesting schedule.
|
|
(3)
|
|
On January 29, 2006, the last day of fiscal 2005, the
Compensation Committee authorized the acceleration of all stock
options previously granted to employees and executive officers
with an exercise price greater than $15.90 (the market price of
the Companys stock on January 27, 2006). Vesting of
option awards granted subsequent to this action (as well as
those with exercise prices below $15.90) was not accelerated and
such awards will vest equally over the service period
established in the award, typically three years. The primary
purpose of the accelerated vesting was to enable the Company to
avoid recognizing future compensation expense associated with
these options upon the planned adoption of SFAS No. 123R in
fiscal 2006. This included the general stock option grant set to
expire on June 28, 2012 and Ms. Morrisons stock
option grant set to expire on February 2, 2011. The
restricted stock granted June 28, 2005 shall continue to
vest in three installments each on the first, second and third
anniversaries of the grant date, subject to acceleration under
certain circumstances as described above the Compensation
Discussion and Analysis under the heading
Long-Term Equity Based Incentive Awards
.
|
21
Option
Exercises and Stock Vested in Fiscal 2007
The following table includes certain information with respect to
the options exercised and restricted stock vested by each of the
NEOs as of February 3, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of Shares
|
|
|
Value Realized on
|
|
|
Number of Shares
|
|
|
|
|
|
|
Acquired on
|
|
|
Exercise
|
|
|
Acquired
|
|
|
Value Realized
|
|
Name
|
|
Exercise (#)
|
|
|
($)
|
|
|
on Vesting(#)
|
|
|
on Vesting ($)(1)
|
|
|
Lawrence Mondry
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maynard Jenkins
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James Constantine
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steve Korby
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James Riley
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dale Ward
|
|
|
|
|
|
|
|
|
|
|
1,582
|
|
|
|
29,235
|
|
|
|
|
|
|
|
|
|
|
|
|
1,884
|
|
|
|
20,950
|
|
|
|
|
|
|
|
|
|
|
|
|
2,106
|
|
|
|
20,534
|
|
Larry Buresh
|
|
|
|
|
|
|
|
|
|
|
1,520
|
|
|
|
28,090
|
|
|
|
|
|
|
|
|
|
|
|
|
1,755
|
|
|
|
19,516
|
|
|
|
|
|
|
|
|
|
|
|
|
1,688
|
|
|
|
16,458
|
|
Randi Morrison
|
|
|
|
|
|
|
|
|
|
|
426
|
|
|
|
7,872
|
|
|
|
|
|
|
|
|
|
|
|
|
534
|
|
|
|
5,938
|
|
|
|
|
|
|
|
|
|
|
|
|
1,279
|
|
|
|
12,470
|
|
|
|
|
(1)
|
|
Represents the market value of the shares of restricted stock on
the day the stock vested. These shares represent restricted
stock granted in fiscal 2004, 2005 and 2006 that vested during
fiscal 2007.
|
Pension
Benefits in Fiscal 2007
The following table includes certain information with respect to
any plans that provide for payments to our NEOs at, or
following, retirement from the Company as of February 3,
2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Present
|
|
|
Payments
|
|
|
|
|
|
|
Years
|
|
|
Value of
|
|
|
During
|
|
|
|
|
|
|
Credited
|
|
|
Accumulated
|
|
|
Last Fiscal
|
|
|
|
|
|
|
Service
|
|
|
Benefit
|
|
|
Year
|
|
Name
|
|
Plan Name
|
|
|
(#)
|
|
|
($)(1)
|
|
|
($)(2)
|
|
|
Larry Mondry
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maynard Jenkins
|
|
|
SERP
|
(3)
|
|
|
N/A
|
|
|
|
3,990,632
|
|
|
|
400,000
|
|
James Constantine
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steve Korby
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James Riley
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dale Ward
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry Buresh
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Randi Morrison
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The estimated present value of the accumulated benefit is based
on an applicable discount rate of 8.5%.
|
|
(2)
|
|
Pursuant to the terms of the SERP, Mr. Jenkins was paid
$400,000 thirty days following his retirement from the Company
on August 15, 2007 and $200,000 six months following his
first payment (which was paid in fiscal 2008). In accordance
with the SERP, Mr. Jenkins is scheduled to be paid $600,000
per annum until he has been paid the full amount to which he is
entitled under his SERP (an additional $5,400,000).
|
|
(3)
|
|
The Company entered into this SERP with Mr. Jenkins in
August 2000. Mr. Jenkins became fully vested in the maximum
SERP benefit on February 1, 2006.
|
22
Additional information regarding the SERP can be found above
under the heading Compensation Discussion and
Analysis.
Non-Qualified
Deferred Compensation in Fiscal 2007
The Company sponsors the CSK Auto, Inc. Deferred Compensation
Plan, an unfunded deferred compensation plan maintained
primarily to provide deferred compensation benefits for a select
group of management or highly compensated employees
as defined by the Employee Retirement Income Security Act of
1974, as amended. The deferred compensation plan permits
participants voluntarily to defer up to 50% of their salary and
100% of their annual bonus without regard to the limitations
under the Internal Revenue Code of 1986, as amended, applicable
to the Companys tax-qualified plans. The Company may also
make matching contributions to a participants account
under this plan. Deferred amounts and any matching contributions
under the deferred compensation plan are 100% vested at all
times, and are invested on behalf of the participant in
investment vehicles selected from time to time by the
administrators of the plan. Benefits are payable at retirement
in either a lump sum or installments for up to 12 years.
Benefits upon a termination of employment prior to retirement
are payable only in a lump sum. As reflected in the following
table, only one of the Named Executive Officers participated in
the Deferred Compensation Plan in fiscal 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
Registrant
|
|
|
|
|
|
|
|
|
Aggregate Balance
|
|
|
|
Contributions in
|
|
|
Contributions in
|
|
|
Aggregate Earnings
|
|
|
Aggregate
|
|
|
at Fiscal 2007
|
|
|
|
Fiscal 2007
|
|
|
Fiscal 2007
|
|
|
in Fiscal 2007
|
|
|
Withdrawals/Distributions
|
|
|
Year-End
|
|
Name
|
|
($)(1)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Lawrence Mondry
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maynard Jenkins
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James Constantine
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steve Korby
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James Riley
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dale Ward
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry Buresh
|
|
|
46,679
|
|
|
|
|
|
|
|
(3,425
|
)
|
|
|
0
|
|
|
|
102,366
|
|
Randi Morrison
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Reflects amounts contributed by the NEO to the Deferred
Compensation Plan during the covered period. Accordingly, these
amounts are also reported as compensation to the NEO in the
Summary Compensation Table.
|
Potential
Payments Upon Termination or Change In Control
The following tables illustrate estimated amounts of
compensation payable to our current Named Executive Officers in
the event of termination of such executives employment
based on severance and retention arrangements, equity plans, and
in the case of Mr. Mondry, his employment agreement in
effect at the end of fiscal 2007. See
Compensation Discussion and
Analysis Employment and post-employment
arrangements for a detailed description of these
arrangements. These tables assume a February 1, 2008
termination date, and, where applicable, the closing price of
our common stock was $8.98 (as reported on the NYSE on
February 1, 2008). Actual compensation paid can only be
determined at the time of the executive officers departure
from the Company. Amounts actually received by
Messrs. Jenkins, Riley, and Korby upon their departures
from the Company during fiscal 2007 are described below under
the heading Post-Employment Benefits for
Messrs. Jenkins, Riley, and Korby.
23
Lawrence
Mondry
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Not for Cause
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(by Company)
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or For Good
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
Reason
|
|
|
Following a
|
|
|
|
Voluntary
|
|
|
|
|
|
|
|
|
|
|
|
For Cause
|
|
|
(by Executive)
|
|
|
Change in
|
|
Executive Payments
|
|
Termination
|
|
|
Retirement
|
|
|
Death
|
|
|
Disability
|
|
|
Termination
|
|
|
Termination
|
|
|
Control
|
|
Upon Termination
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Cash Severance
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,600,000
|
|
|
|
3,200,000
|
|
Retention Bonus
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of Unvested Equity Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
(2)
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
Restricted Stock/RSUs
(2)
|
|
|
|
|
|
|
|
|
|
|
673,500
|
|
|
|
673,500
|
|
|
|
|
|
|
|
673,500
|
|
|
|
673,500
|
|
Health and Welfare coverage
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax Gross Up
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned Vacation
|
|
|
127,269
|
|
|
|
127,269
|
|
|
|
127,269
|
|
|
|
127,269
|
|
|
|
127,269
|
|
|
|
127,269
|
|
|
|
127,269
|
|
Outplacement Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
127,269
|
|
|
|
127,269
|
|
|
|
800,769
|
|
|
|
800,769
|
|
|
|
127,269
|
|
|
|
2,400,769
|
|
|
|
4,000,769
|
|
|
|
|
(1)
|
|
If the Company had terminated Mr. Mondry without cause or
Mr. Mondry terminated his employment for good reason, in
each case, other than within the one year period following a
change in control and subject to Mr. Mondrys
continued compliance with his non-competition and other
covenants to the Company, Mr. Mondry would have received,
in addition to the other amounts described in the table above, a
severance payment equal to two years of his then base salary,
payable in equal monthly installments following his termination
of employment. If a change in control of the Company had
occurred and the Company terminated Mr. Mondry without
cause or Mr. Mondry terminated his employment for any
reason (including good reason), in each case within one year
after the change in control, then, in addition to the other
amounts described in the table above, Mr. Mondry would have
been entitled to a severance payment equal to two times the sum
of his then base salary and target bonus amount.
|
|
(2)
|
|
If the Company had terminated Mr. Mondry without cause or
Mr. Mondry terminated his employment for good reason, in
each case, other than within the one year period following a
change in control, any unvested portion of the initial stock
option and restricted stock unit awards granted to
Mr. Mondry upon the commencement of his employment with the
Company would have automatically vested. If a change in control
of the Company had occurred (whether or not
Mr. Mondrys employment was terminated), any unvested
portion of the initial stock option and restricted stock unit
awards granted to Mr. Mondry upon the commencement of his
employment with the Company, as well as 50,000 of the 144,847
stock options granted to him on October 20, 2007 would have
automatically vested. At fiscal 2007 year end, the exercise
price for all of Mr. Mondrys stock options was above
the fair market of our common stock, (as reported on the NYSE on
February 1, 2008).
|
|
(3)
|
|
At fiscal 2007 year end, Mr. Mondrys employment
arrangements did not provide for continued medical benefits
following a termination of employment.
|
|
(4)
|
|
Mr. Mondrys employment agreement does not provide for
any tax
gross-up
in
the event that any payment to be made to Mr. Mondry is
subject to the golden parachute excise tax. If the Company
determines that on the date of termination or such other
relevant time, Mr. Mondry is a specified
employee (as defined in Section 409A of the IRC) and
that any payments to be provided to Mr. Mondry pursuant to
the agreement are or may become subject to additional taxes or
penalties under Section 409A, then such payments will be
delayed until six months after separation from
service (as defined in Section 409A of the IRC) or
such shorter period deemed sufficient by the Company to avoid
any additional taxes or penalties under Section 409A.
|
24
Fiscal
2008 Amendments to Mr. Mondrys Employment
Agreement
Subsequent to fiscal 2007 year end, in March 2008, the
Committee approved amendments to Mr. Mondrys
employment agreement based on the non-management directors
determination that it was in the Companys
stockholders best interests that Mr. Mondry remain
keenly focused on his assigned duties and the operations of the
business in the context of the uncertainty and potential for
distraction associated with the likelihood of a change in
control. The amendments provide Mr. Mondry with the
following additional benefits:
|
|
|
|
|
Following the execution of an agreement that, if consummated,
would result in a change in control (as defined in the 2004
Stock Plan), Mr. Mondry, who currently resides outside of
the Phoenix, Arizona area shall not be required or permitted (at
the Companys expense) to relocate to Phoenix.
|
|
|
|
Continued health coverage (medical, dental and vision) for a
period of one year subsequent to the termination of his
employment by the Company without cause or by Mr. Mondry
for good reason, or termination of his employment by the Company
without cause or by Mr. Mondry for any reason (including
good reason) within one year after a change in control of the
Company. At the time when this health coverage ends,
Mr. Mondry will be entitled (at his own election and
expense) to COBRA coverage for an additional eighteen months.
|
|
|
|
The relocation benefits and car allowance described in his
employment agreement and currently provided to Mr. Mondry
thereunder and under CSK Auto, Inc.s travel and relocation
policies (including temporary housing in the Phoenix area,
weekly travel between his home in Dallas, Texas and Phoenix and
a tax
gross-up
for
any taxable income incurred as a result of such benefits), which
were scheduled to expire on June 30, 2008, will be extended
until the earlier of the date that is eight months following the
consummation of a change in control transaction or thirty days
following his termination of employment for any reason.
|
|
|
|
Failure to honor any of the agreements regarding the
reimbursement of travel and relocation expenses described above
will also be considered good reason for
Mr. Mondry to terminate employment under his employment
agreement.
|
|
|
|
The Company will also reimburse Mr. Mondry for the cost of
transporting his family and personal belongings from Phoenix
back to his home city following a termination of employment
(other than termination of employment for cause).
|
|
|
|
If there is a termination of employment following a change in
control and such termination is within one year of
Mr. Mondrys initial hire (June 8, 2007),
Mr. Mondry will not be required to repay to the Company any
relocation expenses properly incurred or expended and previously
reimbursed by the Company.
|
Senior
Management Team (other than Mr. Mondry)
Any payments owed to each of the following individuals upon a
termination of employment or a change in control of the Company
are based on (1) the severance and retention agreements
described above in the Compensation Discussion and
Analysis under the heading
Employment and
Post-Employment Arrangements
, (2) any stock
option or restricted stock agreements entered into between the
Named Executive Officer and the Company, and (3) in the
case of Messrs. Ward and Buresh and Ms. Morrison, any
LTIP agreement entered into between the Named Executive Officer
and the Company.
Subsequent to fiscal 2007 year end, the Committee approved
amendments to each of the senior executive officers
severance and retention agreements. A narrative discussion of
the additional benefits provided by these amendments follows the
tabular discussion in this section.
25
James
Constantine
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Not for Cause
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(by Company)
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or For Good
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
Reason
|
|
|
Following a
|
|
|
|
Voluntary
|
|
|
|
|
|
|
|
|
|
|
|
For Cause
|
|
|
(by Executive)
|
|
|
Change in
|
|
Executive Payments
|
|
Termination
|
|
|
Retirement
|
|
|
Death
|
|
|
Disability
|
|
|
Termination
|
|
|
Termination
|
|
|
Control
|
|
Upon Termination
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Cash Severance
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
576,000
|
|
|
|
576,000
|
|
Retention Bonus
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90,000
|
|
Acceleration of Unvested Equity Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
(3)
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
Restricted Stock
(3)
|
|
|
|
|
|
|
|
|
|
|
224,500
|
|
|
|
224,500
|
|
|
|
|
|
|
|
224,500
|
|
|
|
224,500
|
|
Health and Welfare coverage
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
20,000
|
|
Tax Gross Up
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
Earned Vacation
|
|
|
42,612
|
|
|
|
42,612
|
|
|
|
42,612
|
|
|
|
42,612
|
|
|
|
42,612
|
|
|
|
42,612
|
|
|
|
42,612
|
|
Outplacement Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54,000
|
|
|
|
54,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
42,612
|
|
|
|
42,612
|
|
|
|
267,112
|
|
|
|
267,112
|
|
|
|
42,612
|
|
|
|
917,112
|
|
|
|
1,007,112
|
|
|
|
|
(1)
|
|
If the Company had terminated Mr. Constantine without cause
or Mr. Constantine terminated his employment for good
reason, in each case, other than within the one year period
following a change in control, or if a change in control of the
Company had occurred and the Company terminated
Mr. Constantine without cause or Mr. Constantine
terminated his employment for good reason, in each case within
one year after the change in control, and in all cases subject
to Mr. Constantines continued compliance with his
non-competition and other covenants to the Company,
Mr. Constantine would have received, in addition to the
other amounts described in the table above, a severance payment
equal to 100% of the sum of his then base salary and target
bonus (60% of his base salary). These payments would have been
made in equal monthly installments over a twelve month period,
subject to deferral pursuant to IRC Section 409A.
|
|
(2)
|
|
Had a change in control occurred and
(i) Mr. Constantine remained continuously employed by
the Company or its affiliates or the continuing or surviving
corporation on a full-time basis through the date that is six
months following the change in control date or
(ii) Mr. Constantines employment with the
Company was terminated (a) by the Company without cause or
(b) by Mr. Constantine for good reason, in each case
before the date that is six months following the change in
control date, Mr. Constantine would have received three
months of his then current base salary, which would have been
paid in a lump sum within 10 days following the date that
is six months following the change in control date.
|
|
(3)
|
|
If the Company had terminated Mr. Constantine without cause
or Mr. Constantine terminated his employment for good
reason, in each case, other than within the one year period
following a change in control, any unvested portion of the
initial stock option and restricted stock awards granted to
Mr. Constantine following the commencement of his
employment with the Company would have automatically vested. If
a change in control of the Company had occurred (whether or not
Mr. Constantines employment was terminated), any
unvested portion of the initial stock option and restricted
stock awards granted to Mr. Constantine upon the
commencement of his employment with the Company would have
automatically vested. At fiscal 2007 year end, the exercise
price for all of Mr. Constantines stock options was
above the fair market of our common stock, (as reported on the
NYSE on February 1, 2008).
|
|
(4)
|
|
This figure represents the estimated cost of the continued
medical benefits for one year under Mr. Constantines
severance and retention agreement based on the current premium
costs as well as an estimated reimbursement of $8,000 per year
of out-of-pocket Exec-U-Care expenses (amounts not to be grossed
up for taxes).
|
|
(5)
|
|
Had Mr. Constantines employment terminated at fiscal
2007 year end, he would not have been subject to an excise
tax, and thus no
gross-up
payments would have been payable to Mr. Constantine.
|
26
Dale
Ward
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Not for Cause
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(by Company)
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or For Good
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
Reason
|
|
|
Following a
|
|
|
|
Voluntary
|
|
|
|
|
|
|
|
|
|
|
|
For Cause
|
|
|
(by Executive)
|
|
|
Change in
|
|
Executive Payments
|
|
Termination
|
|
|
Retirement
|
|
|
Death
|
|
|
Disability
|
|
|
Termination
|
|
|
Termination
|
|
|
Control
|
|
Upon Termination
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Cash Severance
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
576,800
|
|
|
|
576,800
|
|
Retention Bonus
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90,125
|
|
Acceleration of Unvested Equity Awards
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
(3)
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
Restricted Stock
(3)
|
|
|
|
|
|
|
|
|
|
|
144,282
|
|
|
|
144,282
|
|
|
|
|
|
|
|
|
|
|
|
144,282
|
|
Health and Welfare coverage
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
20,000
|
|
LTIP Units
(5)
|
|
|
|
|
|
|
0
|
(6)
|
|
|
0
|
(7)
|
|
|
0
|
(7)
|
|
|
|
|
|
|
0
|
(8)
|
|
|
0
|
(9)
|
Tax Gross Up
(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
Earned Vacation
|
|
|
61,801
|
|
|
|
61,801
|
|
|
|
61,801
|
|
|
|
61,801
|
|
|
|
61,801
|
|
|
|
61,801
|
|
|
|
61,801
|
|
Outplacement Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54,075
|
|
|
|
54,075
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
61,801
|
|
|
|
61,801
|
|
|
|
206,083
|
|
|
|
206,083
|
|
|
|
61,801
|
|
|
|
712,676
|
|
|
|
947,083
|
|
|
|
|
(1)
|
|
If the Company had terminated Mr. Ward without cause or
Mr. Ward terminated his employment for good reason, in each
case, other than within the one year period following a change
in control, or if a change in control of the Company had
occurred and the Company terminated Mr. Ward without cause
or Mr. Ward terminated his employment for good reason, in
each case within one year after the change in control, and in
all cases subject to Mr. Wards continued compliance
with his non-competition and other covenants to the Company,
Mr. Ward would have received, in addition to the other
amounts described in the table above, a severance payment equal
to 100% of the sum of his then base salary and target bonus (60%
of base salary). These payments would have been made in equal
monthly installments over a twelve month period, subject to
deferral pursuant to IRC Section 409A.
|
|
(2)
|
|
Had a change in control occurred and (i) Mr. Ward
remained continuously employed by the Company or its affiliates
or the continuing or surviving corporation on a full-time basis
through the date that is six months following the change in
control date or (ii) Mr. Wards employment with
the Company was terminated (a) by the Company without cause
or (b) by Mr. Ward for good reason, in each case
before the date that is six months following the change in
control date, Mr. Ward would have received three months of
his then current base salary, which would have been paid in a
lump sum within 10 days following the date that is six
months following the change in control date.
|
|
(3)
|
|
If the Company had terminated Mr. Ward without cause or
Mr. Ward terminated his employment for good reason, in each
case, other than within the one year period following a change
in control, any unvested portion of the stock option and
restricted stock awards granted to Mr. Ward would have
automatically vested. If a change in control of the Company had
occurred (whether or not Mr. Wards employment was
terminated), any unvested portion of the stock option and
restricted stock awards granted to Mr. Ward would have
automatically vested. At fiscal 2007 year end, the exercise
price for all of Mr. Wards stock options was above
the fair market of our common stock, (as reported on the NYSE on
February 1, 2008).
|
|
(4)
|
|
This figure represents the estimated cost of the continued
medical benefits for one year under Mr. Wards
severance and retention agreement based on the current premium
costs as well as an estimated reimbursement of $8,000 per year
of out-of-pocket Exec-U-Care expenses (amounts not to be grossed
up for taxes).
|
|
(5)
|
|
For each incentive bonus unit vested, the LTIP participant shall
be entitled to receive a cash payment from the Company equal to
the per share excess amount, if any, by which the average of the
per share closing prices of the Companys common stock on
the NYSE over a specified period of time (after release of by
the Company of
|
27
|
|
|
|
|
its fiscal year earnings) (the measuring period)
exceeds $20 per share (which figure is subject to certain
adjustments in the event of a change in the Companys
capitalization) the (LTIP Payment).
|
|
(6)
|
|
If Mr. Wards employment is terminated by reason of
his retirement (as defined in the LTIP) and the termination date
occurs prior to the occurrence of a change in control of the
Company, Mr. Ward will be entitled to an LTIP Payment of
100% of the amount, if any, that would have otherwise been
payable to him pursuant to the LTIP, with such amount determined
and paid as if he had not retired but had remained employed by
the Company through each of the then remaining payment dates.
The amount of cash, if any, that will ultimately be received by
Mr. Ward is not known until the end of the measuring period
(which, barring a change in control would be April 30 of 2007,
2008, 2009 and 2010). Assuming the stock price remains the same
as the price on February 1, 2008, the total amount payable
to Mr. Ward would be $0.
|
|
(7)
|
|
If Mr. Wards employment is terminated due to death or
following a disability and the termination date occurs prior to
the occurrence of a change in control of the Company,
Mr. Ward or his estate will be entitled to an LTIP Payment
of (1) 100% of the amount, if any, that would have
otherwise been payable to him with respect to the Plan Year (as
defined in the LTIP) in which the termination date occurs and
(2) 50% of the amount, if any, that would have otherwise
been payable to him with respect to the Plan Year immediately
following the Plan Year in which the termination date occurs, in
each case with such amounts determined and paid as if he had not
died or become disabled but had remained employed by the Company
through each of the then remaining payment dates. The amount of
cash, if any, that will ultimately be received by Mr. Ward
is not known until the end of the measuring period (which,
barring a change in control would be April 30 of 2007, 2008,
2009 and 2010). Assuming the stock price remains the same as the
price on February 1, 2008, the total amount payable to
Mr. Ward would be $0.
|
|
(8)
|
|
If Mr. Wards employment is terminated by the Company
without cause (as defined in the LTIP) and the termination date
occurs prior to the occurrence of a change in control of the
Company, Mr. Ward will be entitled to an LTIP Payment of
100% of the amount, if any, that would have otherwise been
payable to him with respect to the Plan Year (as defined in the
LTIP) in which the termination date occurs, with such amounts
determined and paid as if he had remained employed by the
Company through the applicable remaining payment date. The
amount of cash, if any, that will ultimately be received by
Mr. Ward is not known until the end of the measuring period
(which, barring a change in control, would be April 30 of 2007,
2008, 2009 and 2010). Assuming the stock price remains the same
as the price on February 1, 2008, the total amount payable
to Mr. Ward would be $0.
|
|
(9)
|
|
If Mr. Wards employment is terminated following a
change in control of the Company (1) by reason of his
death, disability or retirement or (2) by reason of a
termination of employment by the Company without cause or by
Mr. Ward with good reason (cause and good reason being
defined in the LTIP), Mr. Ward will be entitled to an
immediate cash payment equal to the per share excess, if any, of
the per share value of the consideration received by the
Companys common stockholders in a change in control
transaction as determined by the Committee in good faith and
$20, multiplied by 100% of the aggregate number of incentive
bonus units awarded to Mr. Ward and in respect of which
Mr. Ward has not yet received payment. Assuming the per
share transaction value of the consideration received by the
Companys common stockholders following a change in control
of the Company is the same as the stock price on
February 1, 2008, the total amount payable to Mr. Ward
would be $0.
|
|
(10)
|
|
Had Mr. Wards employment terminated at fiscal
2007 year end, he would not have been subject to an excise
tax, and thus no
gross-up
payments would have been payable to Mr. Ward.
|
28
Larry
Buresh
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Not for Cause
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(by Company)
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or For Good
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
Reason
|
|
|
Following a
|
|
|
|
Voluntary
|
|
|
|
|
|
|
|
|
|
|
|
For Cause
|
|
|
(by Executive)
|
|
|
Change in
|
|
Executive Payments
|
|
Termination
|
|
|
Retirement
|
|
|
Death
|
|
|
Disability
|
|
|
Termination
|
|
|
Termination
|
|
|
Control
|
|
Upon Termination
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Cash Severance
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
543,200
|
|
|
|
543,200
|
|
Retention Bonus
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
84,875
|
|
Acceleration of Unvested Equity Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
(3)
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
Restricted Stock
(3)
|
|
|
|
|
|
|
|
|
|
|
117,809
|
|
|
|
117,809
|
|
|
|
|
|
|
|
|
|
|
|
117,809
|
|
Health and Welfare coverage
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,000
|
|
|
|
14,000
|
|
LTIP Units
(5)
|
|
|
|
|
|
|
0
|
(6)
|
|
|
0
|
(7)
|
|
|
0
|
(7)
|
|
|
|
|
|
|
0
|
(8)
|
|
|
0
|
(9)
|
Tax Gross Up
(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
Earned Vacation
|
|
|
54,646
|
|
|
|
54,646
|
|
|
|
54,646
|
|
|
|
54,646
|
|
|
|
54,646
|
|
|
|
54,646
|
|
|
|
54,646
|
|
Outplacement Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,925
|
|
|
|
50,925
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
54,646
|
|
|
|
54,646
|
|
|
|
172,455
|
|
|
|
172,455
|
|
|
|
54,646
|
|
|
|
662,771
|
|
|
|
865,455
|
|
|
|
|
(1)
|
|
If the Company had terminated Mr. Buresh without cause or
Mr. Buresh terminated his employment for good reason, in
each case, other than within the one year period following a
change in control, or if a change in control of the Company had
occurred and the Company terminated Mr. Buresh without
cause or Mr. Buresh terminated his employment for good
reason, in each case within one year after the change in
control, and in all cases subject to Mr. Bureshs
continued compliance with his non-competition and other
covenants to the Company, Mr. Buresh would have received,
in addition to the other amounts described in the table above, a
severance payment equal to 100% of the sum of his then base
salary and target bonus (60% of base salary). These payments
would have been made in equal monthly installments over a twelve
month period, subject to deferral pursuant to IRC
Section 409A.
|
|
(2)
|
|
Had a change in control occurred and (i) Mr. Buresh
remained continuously employed by the Company or its affiliates
or the continuing or surviving corporation on a full-time basis
through the date that is six months following the change in
control date or (ii) Mr. Bureshs employment with
the Company was terminated (a) by the Company without cause
or (b) by Mr. Buresh for good reason, in each case
before the date that is six months following the change in
control date, Mr. Buresh would have received three months
of his then current base salary, which would have been paid in a
lump sum within 10 days following the date that is six
months following the change in control date.
|
|
(3)
|
|
If the Company had terminated Mr. Buresh without cause or
Mr. Buresh terminated his employment for good reason, in
each case, other than within the one year period following a
change in control, any unvested portion of the stock option and
restricted stock awards granted to Mr. Buresh would have
automatically vested. If a change in control of the Company had
occurred (whether or not Mr. Bureshs employment was
terminated), any unvested portion of the stock option and
restricted stock awards granted to Mr. Buresh would have
automatically vested. At fiscal 2007 year end, the exercise
price for all of Mr. Bureshs stock options was above
the fair market of our common stock, (as reported on the NYSE on
February 1, 2008).
|
|
(4)
|
|
This figure represents the estimated cost of the continued
medical benefits for one year under Mr. Bureshs
severance and retention agreement based on the current premium
costs as well as an estimated reimbursement of $8,000 per year
of out-of-pocket Exec-U-Care expenses (amounts not to be grossed
up for taxes).
|
|
(5)
|
|
For each incentive bonus unit vested, the LTIP participant shall
be entitled to receive the LTIP Payment (as defined above).
|
|
(6)
|
|
If Mr. Bureshs employment is terminated by reason of
his retirement (as defined in the LTIP) and the termination date
occurs prior to the occurrence of a change in control of the
Company, Mr. Buresh will be
|
29
|
|
|
|
|
entitled to an LTIP Payment of 100% of the amount, if any, that
would have otherwise been payable to him pursuant to the LTIP,
with such amount determined and paid as if he had not retired
but had remained employed by the Company through each of the
then remaining payment dates. The amount of cash, if any, that
will ultimately be received by Mr. Buresh is not known
until the end of the measuring period (which, barring a change
in control would be April 30 of 2007, 2008, 2009 and 2010).
Assuming the stock price remains the same as the price on
February 1, 2008, the total amount payable to
Mr. Buresh would be $0.
|
|
(7)
|
|
If Mr. Bureshs employment is terminated due to death
or following a disability and the termination date occurs prior
to the occurrence of a change in control of the Company,
Mr. Buresh or his estate will be entitled to an LTIP
Payment of (1) 100% of the amount, if any, that would have
otherwise been payable to him with respect to the Plan Year (as
defined in the LTIP) in which the termination date occurs and
(2) 50% of the amount, if any, that would have otherwise
been payable to him with respect to the Plan Year immediately
following the Plan Year in which the termination date occurs, in
each case with such amounts determined and paid as if he had not
died or become disabled but had remained employed by the Company
through each of the then remaining payment dates. The amount of
cash, if any, that will ultimately be received by
Mr. Buresh is not known until the end of the measuring
period (which, barring a change in control, would be April 30 of
2007, 2008, 2009 and 2010). Assuming the stock price remains the
same as the price on February 1, 2008, the total amount
payable to Mr. Buresh would be $0.
|
|
(8)
|
|
If Mr. Bureshs employment is terminated by the
Company without cause (as defined in the LTIP) and the
termination date occurs prior to the occurrence of a change in
control of the Company, Mr. Buresh will be entitled to an
LTIP Payment of 100% of the amount, if any, that would have
otherwise been payable to him with respect to the Plan Year (as
defined in the LTIP) in which the termination date occurs, with
such amounts determined and paid as if he had remained employed
by the Company through the applicable remaining payment date.
The amount of cash, if any, that will ultimately be received by
Mr. Buresh is not known until the end of the measuring
period (which, barring a change in control would be April 30 of
2007, 2008, 2009 and 2010). Assuming the stock price remains the
same as the price on February 1, 2008, the total amount
payable to Mr. Buresh would be $0.
|
|
(9)
|
|
If Mr. Bureshs employment is terminated following a
change in control of the Company (1) by reason of his
death, disability or retirement or (2) by reason of a
termination of employment by the Company without cause or by
Mr. Buresh with good reason (cause and good reason being
defined in the LTIP), Mr. Buresh will be entitled to an
immediate cash payment equal to the per share excess, if any, of
the per share value of the consideration received by the
Companys common stockholders in a change in control
transaction as determined by the Committee in good faith and
$20, multiplied by 100% of the aggregate number of incentive
bonus units awarded to Mr. Buresh and in respect of which
Mr. Buresh has not yet received payment. Assuming the per
share transaction value of the consideration received by the
Companys common stockholders following a change in control
of the Company is the same as the stock price on
February 1, 2008, the total amount payable to
Mr. Buresh would be $0.
|
|
(10)
|
|
Had Mr. Bureshs employment terminated at fiscal
2007 year end, he would not have been subject to an excise
tax, and thus no
gross-up
payments would have been payable to Mr. Buresh.
|
30
Randi
Morrison
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Not for Cause
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(by Company)
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or For Good
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
Reason
|
|
|
Following a
|
|
|
|
Voluntary
|
|
|
|
|
|
|
|
|
|
|
|
For Cause
|
|
|
(by Executive)
|
|
|
Change in
|
|
Executive Payments
|
|
Termination
|
|
|
Retirement
|
|
|
Death
|
|
|
Disability
|
|
|
Termination
|
|
|
Termination
|
|
|
Control
|
|
Upon Termination
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Cash Severance
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
412,000
|
|
|
|
412,000
|
|
Retention Bonus
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
64,375
|
|
Acceleration of Unvested Equity Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
(3)
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
Restricted Stock
(3)
|
|
|
|
|
|
|
|
|
|
|
82,805
|
|
|
|
82,805
|
|
|
|
|
|
|
|
|
|
|
|
82,805
|
|
Health and Welfare coverage
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
10,000
|
|
LTIP Units
(5)
|
|
|
|
|
|
|
0
|
(6)
|
|
|
0
|
(7)
|
|
|
0
|
(7)
|
|
|
|
|
|
|
0
|
(8)
|
|
|
0
|
(9)
|
Tax Gross Up
(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
Earned Vacation
|
|
|
34,255
|
|
|
|
34,255
|
|
|
|
34,255
|
|
|
|
34,255
|
|
|
|
34,255
|
|
|
|
34,255
|
|
|
|
34,255
|
|
Outplacement Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,625
|
|
|
|
38,625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
34,255
|
|
|
|
34,255
|
|
|
|
117,060
|
|
|
|
117,060
|
|
|
|
34,255
|
|
|
|
494,880
|
|
|
|
642,060
|
|
|
|
|
(1)
|
|
If the Company had terminated Ms. Morrison without cause or
Ms. Morrison terminated her employment for good reason, in
each case, other than within the one year period following a
change in control, or if a change in control of the Company had
occurred and the Company terminated Ms. Morrison without
cause or Ms. Morrison terminated her employment for
including good reason, in each case within one year after the
change in control, and in all cases subject to
Ms. Morrisons continued compliance with her
non-competition and other covenants to the Company,
Ms. Morrison would have received, in addition to the other
amounts described in the table above, a severance payment equal
to 100% of the sum of her then base salary and target bonus (60%
of base salary). These payments would have been made in equal
monthly installments over a twelve month period, subject to
deferral pursuant to IRC Section 409A.
|
|
(2)
|
|
Had a change in control occurred and (i) Ms. Morrison
remained continuously employed by the Company or its affiliates
or the continuing or surviving corporation on a full-time basis
through the date that is six months following the change in
control date or (ii) Ms. Morrisons employment
with the Company was terminated (a) by the Company without
cause or (b) by Ms. Morrison for good reason, in each
case before the date that is six months following the change in
control date, Ms. Morrison would have received three months
of her then current base salary, which would have been paid in a
lump sum within 10 days following the date that is six
months following the change in control date.
|
|
(3)
|
|
If the Company had terminated Ms. Morrison without cause or
Ms. Morrison terminated her employment for good reason, in
each case, other than within the one year period following a
change in control, any unvested portion of the stock option and
restricted stock awards granted to Ms. Morrison would have
automatically vested. If a change in control of the Company had
occurred (whether or not Ms. Morrisons employment was
terminated), any unvested portion of the stock option and
restricted stock awards granted to Ms. Morrison would have
automatically vested. At fiscal 2007 year end, the exercise
price for all of Ms. Morrisons stock options was
above the fair market of our common stock, (as reported on the
NYSE on February 1, 2008).
|
|
(4)
|
|
This figure represents the estimated cost of the continued
medical benefits for one year under Ms. Morrisons
severance and retention agreement based on the current premium
costs as well as an estimated reimbursement of $8,000 per year
of out-of-pocket Exec-U-Care expenses (amounts not to be grossed
up for taxes).
|
|
(5)
|
|
For each incentive bonus unit vested, the LTIP participant shall
be entitled to receive the LTIP Payment (as defined above).
|
|
(6)
|
|
If Ms. Morrisons employment is terminated by reason
of her retirement (as defined in the LTIP) and the termination
date occurs prior to the occurrence of a change in control of
the Company, Ms. Morrison will be
|
31
|
|
|
|
|
entitled to an LTIP Payment of 100% of the amount, if any, that
would have otherwise been payable to her pursuant to the LTIP,
with such amount determined and paid as if she had not retired
but had remained employed by the Company through each of the
then remaining payment dates. The amount of cash, if any, that
will ultimately be received by Ms. Morrison is not known
until the end of the measuring period (which, barring a change
in control would be April 30 of 2007, 2008, 2009 and 2010).
Assuming the stock price remains the same as the price on
February 1, 2008, the total amount payable to
Ms. Morrison would be $0.
|
|
(7)
|
|
If Ms. Morrisons employment is terminated due to
death or following a disability and the termination date occurs
prior to the occurrence of a change in control of the Company,
Ms. Morrison or her estate will be entitled to an LTIP
Payment of (1) 100% of the amount, if any, that would have
otherwise been payable to her with respect to the Plan Year (as
defined in the LTIP) in which the termination date occurs and
(2) 50% of the amount, if any, that would have otherwise
been payable to her with respect to the Plan Year immediately
following the Plan Year in which the termination date occurs, in
each case with such amounts determined and paid as if she had
not died or become disabled but had remained employed by the
Company through each of the then remaining payment dates. The
amount of cash, if any, that will ultimately be received by
Ms. Morrison is not known until the end of the measuring
period (which, barring a change in control, would be April 30 of
2007, 2008, 2009 and 2010). Assuming the stock price remains the
same as the price on February 1, 2008, the total amount
payable to Ms. Morrison would be $0.
|
|
(8)
|
|
If Ms. Morrisons employment is terminated by the
Company without cause (as defined in the LTIP) and the
termination date occurs prior to the occurrence of a change in
control of the Company, Ms. Morrison will be entitled to an
LTIP Payment of 100% of the amount, if any, that would have
otherwise been payable to her with respect to the Plan Year (as
defined in the LTIP) in which the termination date occurs, with
such amounts determined and paid as if she had remained employed
by the Company through the applicable remaining payment date.
The amount of cash, if any, that will ultimately be received by
Ms. Morrison is not known until the end of the measuring
period (which, barring a change in control would be April 30 of
2007, 2008, 2009 and 2010). Assuming the stock price remains the
same as the price on February 1, 2008, the total amount
payable to Ms. Morrison would be $0.
|
|
(9)
|
|
If Ms. Morrisons employment is terminated following a
change in control of the Company (1) by reason of her
death, disability or retirement or (2) by reason of a
termination of employment by the Company without cause or by
Ms. Morrison with good reason (cause and good reason being
defined in the LTIP), Ms. Morrison will be entitled to an
immediate cash payment equal to the per share excess, if any, of
the per share value of the consideration received by the
Companys common stockholders in a change in control
transaction as determined by the Committee in good faith and
$20, multiplied by 100% of the aggregate number of incentive
bonus units awarded to Ms. Morrison and in respect of which
Ms. Morrison has not yet received payment. Assuming the per
share transaction value of the consideration received by the
Companys common stockholders following a change in control
of the Company is the same as the stock price on
February 1, 2008, the total amount payable to
Ms. Morrison would be $0.
|
|
(10)
|
|
Had Ms. Morrisons employment terminated at fiscal
2007 year end, she would not have been subject to an excise
tax, and thus no
gross-up
payments would have been payable to Ms. Morrison.
|
Fiscal
2008 Amendments to the Named Executive Officers Severance
and Retention Agreements
Subsequent to fiscal 2007 year end, in March 2008, the
Committee approved amendments to the severance and retention
agreements between the Company and each member of our senior
management team, including all of the Named Executive Officers
currently employed with the Company (except for Mr. Mondry
who has an employment agreement with the Company). The Committee
approved these arrangements at that time based on the
non-management directors determination that it was in the
Companys stockholders best interests that senior
management participate in a positive manner in the strategic
review process then underway that resulted in the planned merger
with OReilly (described in the Original Annual Report in
Item 1, Business, under the caption
Merger Agreement) and remain keenly focused on the
business pending completion of that process, and
32
potentially well beyond that time should the Company remain
independent. These amendments provide the executives with the
following additional benefits:
|
|
|
|
|
In the event that a change of control (as defined under the
agreements) is consummated during fiscal 2008 and the executive
officer either remains employed by the Company for a period of
six months following the change of control or suffers a
termination of employment by the Company without cause (as
defined under the agreements) or by the executive for good
reason (as defined under the agreements), (i) if the
executives employment terminates prior to the end of
fiscal 2008, the executive will be entitled to a pro-rata annual
bonus (paid at the target bonus level), with such pro-ration
based on the greater of the actual number of months the
executive was employed during fiscal 2008 or the number of
months between February 4, 2008 and the six month
anniversary of the closing date of the change of control
transaction or (ii) if the executive remains employed by
the Company through the end of fiscal 2008, the executive will
be entitled to an annual bonus for 2008 equal to the
executives target bonus for the year (equal to 60% of the
executives base salary in effect at the end of fiscal
2008).
|
|
|
|
For each executive officer other than Mr. Mondry (whose
employment agreement already included a similar benefit), the
severance benefits ordinarily payable under the agreements upon
a termination of employment by the Company without cause or by
the executive for good reason following a change of control will
also become payable if the applicable executive resigns for any
reason during the
thirty-day
period commencing on the six-month anniversary of the change of
control.
|
|
|
|
The definition of good reason was amended to provide
that if the Company breaches the provisions of the letter
agreements dated March 31, 2008, between the Company and
each of certain executive officers (including some of our Named
Executive Officers) regarding the executives commuting
arrangements and related agreement by the Company to pay or
reimburse the executive for travel, living
and/or
relocation expenses as set forth therein, such executive shall
have good reason to terminate his or her employment.
|
|
|
|
Severance benefits now also include (i) eighteen months of
COBRA benefits (at executives election and expense) after
the twelve months of prepaid healthcare benefits expires,
(ii) lump sum payout of the executives fiscal 2008
Cash In Lieu incentive award (equal to 85% of Senior Vice
Presidents base salaries or 100% of Executive Vice
Presidents base salaries), (iii) reimbursement for
properly incurred business expenses (including, but not limited
to, expenses incurred pursuant to the Letter Agreement dated
March 31, 2008), (iv) retention for personal use
following termination of employment the cell phone
and/or
PDA
provided to the executive by the Company, and (v) no
repayment required by the executive of any relocation expenses
if the executive terminates employment within one year of hire
date (under the Companys relocation policy, the executive
would have had to reimburse the Company for relocation expenses
if he or she voluntarily terminates employment within one year
of hire date).
|
Post-Employment
Benefits for Messrs. Jenkins, Riley and Korby
On August 15, 2007, Mr. Jenkins, our former Chairman
and Chief Executive Officer, retired from the Company. In
connection with his retirement, in August 2007, Mr. Jenkins
was paid a lump sum of $158,548, representing the equivalent of
355.8 hours of accrued and unused vacation, and a lump sum
of $900,000, representing his succession bonus (pursuant to his
employment agreement with the Company, which is described above
in the Compensation Discussion and Analysis section
under the heading
Employment and Post-Employment
Arrangements
). Also, pursuant to the terms of his SERP
with the Company, Mr. Jenkins was paid an installment
payment of $400,000 in September 2007 (on the first scheduled
pay date following one month after his retirement date). Another
$200,000 installment payment was paid six months following the
first installment payment in March 2008. Mr. Jenkins is
entitled to receive a payment of $600,000 per year beginning in
September 2008 and ending in September 2016. From and after the
date of his resignation, Mr. Jenkins also continued to
receive executive health/medical benefits and will continue to
receive such executive health/medical benefits through September
2016. Because Mr. Jenkins retired after the age of 65 and
had at least 10 years of service with the Company, all of
Mr. Jenkins then unvested stock options (80,808)
vested upon his retirement pursuant to the 2004 Stock Plan.
33
On June 28, 2007, Mr. Riley, our former Senior Vice
President and Chief Financial Officer, resigned from the Company
to accept a position as Chief Financial Officer with a company
in his home state of Ohio. In connection with his resignation,
in July 2007, Mr. Riley was paid a lump sum of $65,860,
representing the equivalent of 403.5 hours of accrued and
unused vacation. Mr. Riley forfeited 56,914 unvested stock
options, 8,399 shares of restricted stock and all of the
incentive bonus units granted to him under the 2005 LTIP Plan.
Following the hiring of our current Chief Executive Officer in
November 2007, Mr. Korbys Interim Executive Services
Agreement was terminated effective December 25, 2007. In
connection with Mr. Korbys departure, in January
2008, Mr. Korby was paid a lump sum of $26,654,
representing the equivalent of 92.4 hours of accrued and
unused vacation.
Compensation
of Directors
Outside
Director Compensation Policy
Pursuant to our Outside Director Compensation Policy, as
amended, our outside directors are paid an annual cash stipend
of $50,000 (annual stipend). This Policy also
provides for (i) an annual award of options to purchase
10,000 shares of our common stock at the close of business
on the date of each annual meeting of stockholders, with an
exercise price equal to the fair market value at the close of
trading on the grant date (such options being granted pursuant
to the 2004 Stock Plan adopted by our stockholders in June
2004); (ii) payment of fees of $1,500 plus reimbursement of
reasonable expenses for each regular Board of Directors meeting
attended in person or telephonically, $1,500 plus reimbursement
of reasonable expenses for attendance in person at any committee
meeting or special Board meeting that is not held in conjunction
with a regular Board meeting, and $500 for each committee
meeting or special Board meeting attended telephonically (such
amount was increased in fiscal 2008 to $1,250 for each such
committee or special Board meeting attended telephonically); and
(iii) payment of annual fees of $15,000, $7,500 and $7,500
to the chairpersons of the Audit Committee, Compensation
Committee, and Nominating and Corporate Governance Committee,
respectively.
In fiscal 2007, the Board appointed its then-lead director,
Charles Marquis, as its non-executive Chairman of the Board,
following the retirement of Mr. Jenkins. Following this
appointment, the disinterested directors approved an annual
stipend of $36,000 for the non-management Chairman of the Board
position (in addition to the annual stipend, committee fees and
any other meeting fees that the non-management Chairman
receives). As described below, Mr. Marquis received a
pro-rated stipend for his service as the Chairman during fiscal
2007.
Fiscal
2007 Non-Employee Director Compensation Table
The following table summarizes the compensation provided by the
Company to the Non-Employee Directors for fiscal year ended
February 3, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or
|
|
|
Stock
|
|
|
Option
|
|
|
All Other
|
|
|
|
|
|
|
Paid in Cash
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Total
|
|
Name
|
|
($)(1)
|
|
|
($)
|
|
|
($)(2)
|
|
|
($)
|
|
|
($)
|
|
|
James G. Bazlen
(3)
|
|
|
20,000
|
|
|
|
|
|
|
|
60,082
|
|
|
|
51,200
|
|
|
|
131,282
|
|
Morton Godlas
|
|
|
71,500
|
|
|
|
|
|
|
|
60,082
|
|
|
|
|
|
|
|
131,582
|
|
Terilyn A. Henderson
(4)
|
|
|
78,375
|
|
|
|
|
|
|
|
60,082
|
|
|
|
|
|
|
|
138,457
|
|
Charles K. Marquis
(4)
|
|
|
104,500
|
|
|
|
|
|
|
|
60,082
|
|
|
|
|
|
|
|
164,582
|
|
Charles J. Philippin
(5)
|
|
|
93,000
|
|
|
|
|
|
|
|
60,082
|
|
|
|
|
|
|
|
153,082
|
|
William A. Shutzer
|
|
|
70,500
|
|
|
|
|
|
|
|
60,082
|
|
|
|
|
|
|
|
130,582
|
|
|
|
|
(1)
|
|
Pursuant to our Outside Director Compensation Policy described
above, Non-Employee Directors are also eligible for
reimbursement of reasonable expenses (e.g., travel expenses)
incurred in connection with attendance at Board and/or Committee
meetings. Expense amounts reimbursed are not included in the
table above.
|
|
(2)
|
|
The amounts included in the Option Awards column are
the amounts of compensation cost recognized by the Company in
fiscal 2007 related to stock option awards that have not yet
vested, in accordance with SFAS No. 123(R).
Non-management director stock option grants become fully vested
on the first anniversary
|
34
|
|
|
|
|
of the grant date (subject to earlier acceleration in some
circumstances, such as in the event of a change in control of
the Company) and expire seven years from the grant date.
|
|
|
|
|
|
The exercise price for all option awards shown is the average of
the high and low prices of the Companys common stock on
the date of grant. For a discussion of valuation assumptions,
see Note 2 Summary of Significant Accounting
Policies to the Companys Consolidated Financial
Statements included in the Original Annual Report under the
subheading Stock Options. The grant date fair value
of the stock options underlying the expense shown in this column
is as follows (for each director): (1) $63,522 for the
10,000 options granted November 30, 2006 and
(2) $33,848 for the 10,000 options granted November 8,
2007.
|
|
(3)
|
|
As discussed in Item 13 below under the caption
Certain Relationships and Related Transactions,
Mr. Bazlen, formerly our President and Chief Operating
Officer and currently a member of our Board of Directors, has an
employment agreement with the Company that provides for payment
of all compensation and reimbursement of expenses provided to
outside directors under the Outside Director Compensation Policy
except for the Annual Stipend, as well as payment of an annual
base salary (equal to the Annual Stipend) and certain benefits.
Amounts included in the All Other Compensation
column for Mr. Bazlen include his annual base salary as
well as Company matching contributions to his 401(k) Plan.
|
|
(4)
|
|
Mr. Marquis was Chair of the Compensation Committee during
fiscal 2007, and Chair of the Nominating and Corporate
Governance Committee during fiscal 2007 until September 10,
2007, at which time Terilyn Henderson was designated Chair of
the Nominating and Corporate Governance Committee.
|
|
(5)
|
|
Mr. Philippin was the Chair for the Audit Committee during
fiscal 2007.
|
Directors
Outstanding Equity Awards at Fiscal 2007 Year End
The following table includes certain information concerning
non-management directors outstanding equity awards as of
February 3, 2008:
|
|
|
|
|
|
|
Outstanding
|
|
|
|
Stock
|
|
|
|
Options
|
|
Name
|
|
(#)(1)
|
|
|
James Bazlen(2)
|
|
|
91,000
|
|
Morton Godlas
|
|
|
40,000
|
|
Terilyn Henderson
|
|
|
40,000
|
|
Charles Marquis
|
|
|
40,000
|
|
Charles Philippin
|
|
|
40,000
|
|
William Shutzer
|
|
|
40,000
|
|
|
|
|
(1)
|
|
For each director, all options are fully vested and exercisable
with the exception of 10,000 options awarded to each director
during fiscal 2007. Those options will become fully vested and
exercisable on November 8, 2008, unless earlier vested
pursuant to the terms of the 2004 Stock Plan.
|
|
(2)
|
|
Outstanding stock options for Mr. Bazlen consist of 51,000
options awarded to him while he was the President and Chief
Operating Officer of the Company and 40,000 options awarded to
him since 2004 as a member of our Board of Directors, after his
retirement as President and COO.
|
35
|
|
Item 12.
|
Security
Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
|
The following table sets forth certain information concerning
beneficial ownership of our common stock as of May 22, 2008
(the Ownership Date) (except as indicated below), by
(1) each person we know to be a beneficial owner of more
than 5% of our outstanding common stock, (2) each director
of the Company who could be deemed to be the beneficial owner of
shares of our common stock, (3) our Chief Executive Officer
and our Named Executive Officers who could be deemed to be the
beneficial owner of shares of our common stock, and (4) all
directors and executive officers of the Company as a group. The
number of shares and total voting power shown include shares
that these persons had a right to acquire within 60 days
after the Ownership Date through the exercise of stock options
and vested shares they hold in the Companys 401(k) Plan.
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Total Voting
|
|
Name
|
|
Shares
|
|
|
Power (%)*
|
|
|
OppenheimerFunds, Inc. (1)
|
|
|
5,363,917
|
|
|
|
12.00
|
|
Akre Capital Management, LLC (2)
|
|
|
4,418,020
|
|
|
|
10.00
|
|
GAMCO Asset Management and affiliated funds (3)
|
|
|
4,177,769
|
|
|
|
9.48
|
|
Robert S. Pitts, Jr. and affiliated funds (4)
|
|
|
2,910,000
|
|
|
|
6.62
|
|
Brencourt Advisors, LLC (5)
|
|
|
2,545,988
|
|
|
|
5.78
|
|
Friedman, Billings, Ramsey Group, Inc. (6)
|
|
|
2,496,769
|
|
|
|
5.67
|
|
GLG Partners LP (7)
|
|
|
2,274,776
|
|
|
|
5.17
|
|
James Bazlen (8)(9)
|
|
|
342,857
|
|
|
|
**
|
|
Morton Godlas (9)(10)
|
|
|
38,521
|
|
|
|
**
|
|
Terilyn A. Henderson (9)
|
|
|
31,012
|
|
|
|
**
|
|
Charles K. Marquis (9)
|
|
|
80,000
|
|
|
|
**
|
|
Charles J. Philippin (9)
|
|
|
45,601
|
|
|
|
**
|
|
William A. Shutzer (9)(11)
|
|
|
43,671
|
|
|
|
**
|
|
Lawrence Mondry (9)(12)
|
|
|
264,899
|
|
|
|
**
|
|
Larry Buresh (9)(12)
|
|
|
185,738
|
|
|
|
**
|
|
James Constantine (12)
|
|
|
25,000
|
|
|
|
**
|
|
Randi Morrison (9)(12)
|
|
|
46,832
|
|
|
|
**
|
|
Dale Ward (9)(12)
|
|
|
111,322
|
|
|
|
**
|
|
Maynard Jenkins (9)(13)(14)
|
|
|
449,697
|
|
|
|
**
|
|
James B. Riley (15)
|
|
|
11,442
|
|
|
|
**
|
|
All directors and executive officers as a group
(16 persons) (8)-(12)
|
|
|
1,414,450
|
|
|
|
3.21
|
|
|
|
|
*
|
|
As of the Ownership Date, 44,036,813 shares of common stock
were issued and outstanding.
|
|
**
|
|
Less than 1%.
|
|
(1)
|
|
OppenheimerFunds, Inc. (OFI) is an investment
adviser and manager of Oppenheimer Capital Income Fund
(OCIF), a registered investment company. OFI has
beneficial ownership of 5,363,317 shares and OCIF has
beneficial ownership of 5,362,917 shares. OFI has shared
voting and dispositive power with respect to
5,363,317 shares and OCIF has shared voting and dispositive
power with respect to 5,362,917 shares. The business
address for OFI is Two World Financial Center, 225 Liberty
Street, 11th Floor, New York, New York
10281-1008.
The business address for OCIF is 6803 S. Tucson Way,
Centennial, Colorado 80112. The information with respect to OFI
and OCIF is as of December 31, 2007, and was obtained from
the Schedule 13G/A filed with the SEC on their behalf on
February 4, 2008.
|
|
(2)
|
|
Charles T. Akre, Jr. and Akre Capital Management, LLC, an
investment advisor, beneficially own 4,418,020 shares of
our common stock and have shared voting and dispositive power
with respect to all of these shares. The business address of
each of the reporting entities is 2 West Marshall Street,
P.O. Box 998,
|
36
|
|
|
|
|
Middleburg, VA 20118. The foregoing information is as of
January 15, 2008 and was obtained from the
Schedule 13G filed with the SEC on their behalf on
January 18, 2008.
|
|
(3)
|
|
Gabelli Funds, LLC (GF) is a wholly-owned subsidiary
of GAMCO Investors, Inc. (GII) and is a registered
investment adviser. GAMCO Asset Management, Inc.
(GAM) is a wholly-owned subsidiary of GII and is a
registered investment adviser. Gabelli Securities, Inc.
(GSI) is a majority-owned subsidiary of GII and is a
registered investment adviser. MJG Associates, Inc.
(MJG) provides advisory services to private
investment partnerships and offshore funds. Mario Gabelli
directly or indirectly controls or acts as chief investment
advisor for each of the entities named above. GF has the sole
power to vote and dispose of 780,300 shares of our common
stock. GAM has the sole power to vote 3,127,269 shares of
our common stock and the sole power to dispose
3,207,269 shares of our common stock. GSI has the sole
power to vote and dispose of 178,200 shares of our common
stock. MJG has the sole power to vote and dispose of
12,000 shares of our common stock. The business address of
GF, GAM, and GSI is One Corporate Center, Rye, New York 10580.
The business address of MJG is 140 Greenwich Avenue, Greenwich,
CT 06830. The foregoing information is as of May 9, 2008
and was obtained from the Schedule 13D/A filed with the SEC
on their behalf on May 12, 2008.
|
|
(4)
|
|
Robert S. Pitts, Jr. (Mr. Pitts) is the
managing member of Steadfast Capital Management LLC
(Management) and Steadfast Advisors LLC
(Advisors) and has shared voting and dispositive
power with respect to 2,910,000 shares of our common stock.
Mr. Pitts and Management have shared voting and dispositive
power with respect to 2,506,542 shares of our common stock.
Advisors has shared power with Mr. Pitts and Steadfast
Capital, L.P. to vote or dispose of the 403,458 shares of
our common stock held by Steadfast Capital, L.P. Management has
the shared power with Mr. Pitts and American Steadfast,
L.P. to vote or dispose of the 834,458 shares of our common
stock held by American Steadfast, L.P. Management has the shared
power with Mr. Pitts and Steadfast International Ltd.
(International) to vote or dispose of the
1,672,084 shares of our common stock held by Steadfast
International Ltd. Collectively, the reporting entities own
2,910,000 shares of our common stock. The business address
for each reporting entity, except International, is
767 Fifth Avenue, 6th Floor, New York, New York 10153. The
business address for International is
c/o Appleby
Corporate Services (Cayman) Limited, P.O. Box 1350 GT,
George Town, Grand Cayman, Cayman Islands. The foregoing
information is as of December 31, 2007 and was obtained
from the Schedule 13G/A filed with the SEC on their behalf
on February 6, 2008.
|
|
(5)
|
|
Brencourt Advisors, LLC, an investment advisor, has the sole
power to vote, and to dispose or direct the disposition of
2,545,988 shares of our common stock. The business address
for Brencourt Advisors, LLC is 600 Lexington Avenue, 8th Floor,
New York, NY 10022. The foregoing information is as of
February 14, 2008 and was obtained from the
Schedule 13G filed with the SEC on its behalf on
February 22, 2008.
|
|
(6)
|
|
Each of Friedman, Billings, Ramsey Group, Inc. (FBR
Group), FBR TRS Holdings, Inc., FBR Capital Markets
Corporation, FBR Asset Management Holdings Inc., and FBR
Fund Advisers, Inc. has shared voting and dispositive power
with respect to all 2,496,769 shares of our common stock.
FBR Group is an SEC reporting company and its common stock is
traded on the New York Stock Exchange under the symbol FBR. The
business address of each of the reporting entities is 1001
Nineteenth Street North, Arlington, VA 22209. The foregoing
information is as of January 31, 2008 and was obtained from
the Schedule 13G filed with the SEC on their behalf on
February 11, 2008.
|
|
(7)
|
|
GLG Partners Limited (the General Partner) is the
general partner of GLG Partners LP. (the Investment
Manager). On November 2, 2007, the General Partner,
the Investment Manager and certain additional entities were
directly or indirectly acquired by GLG Partners, Inc. (the
Parent Company) (formerly named Freedom Acquisition
Holdings, Inc.), which is an SEC reporting company and has
common stock listed on the New York Stock Exchange. Each of Noam
Gottesman, Pierre Lagrange, and Emmanuel Roman is a managing
director of the General Partner (the Managing
Directors). Each of the General Partner, the Investment
Manager and the Parent Company has shared voting and dispositive
power with respect to all 2,274,776 shares of our common
stock. The business address of the Parent Company is 390 Park
Avenue, 20th Floor, New York, NY 10022. The business address of
each of the other reporting entities is
c/o GLG
Partners LP, 1 Curzon Street, London W1J BHB, United Kingdom.
The information with respect to the General Partner, GLG
Partners LP and the Managing Directors is as of
December 31, 2007 and was obtained from the
Schedule 13G/A
filed with the SEC on their behalf on February 14, 2008.
|
37
|
|
|
(8)
|
|
Includes 259,857 shares of common stock held by a revocable
family trust and 2,000 shares of common stock owned by
Mr. Bazlens children.
|
|
(9)
|
|
Includes the following shares of our common stock that the
following individuals have the right to acquire within
60 days after May 22, 2008, through the exercise of
options: James Bazlen (81,000); Morton Godlas (30,000); Terilyn
A. Henderson (30,000); Charles K. Marquis (30,000); Charles J.
Philippin (30,000); William A. Shutzer (30,000); Lawrence Mondry
(100,000); Larry Buresh (131,528); Randi Morrison (33,114); Dale
Ward (86,315); Maynard Jenkins (374,635); and all current
directors and executive officers as a group (707,599). Upon
departure from the Company, all unvested stock options are
forfeited.
|
|
(10)
|
|
Consists of 8,521 shares of common stock held in a
revocable family trust.
|
|
(11)
|
|
Includes 2,000 shares of common stock held by a Defined
Benefit Plan.
|
|
(12)
|
|
Includes shares of restricted stock (or in the case of
Mr. Mondrys initial hire grant, restricted stock
units) awarded to our executive officers, net of a portion of
the restricted stock that has already vested as well as shares
that were surrendered back to the Company to satisfy tax
obligations arising from these vestings (total net shares as of
May 22, 2008 are shown in parentheses after each named
individual): Lawrence Mondry (164,899); James Constantine
(25,000); Larry Buresh (13,119); Randi Morrison (9,221); Dale
Ward (16,067); and all executive officers as a group (285,210).
Such shares vest as to 33
1
/
3
%
on each of the first, second and third year anniversaries of the
grant date and confer the holders with the entire beneficial
ownership interest in, and all rights and privileges of a
stockholder as to, such restricted shares, including voting
rights. Upon departure from the Company, all unvested shares of
restricted stock are forfeited.
|
|
(13)
|
|
Includes 23,600 shares of common stock held in revocable
family trusts.
|
|
(14)
|
|
As discussed in Item 1, Business in the
Original Annual Report under the caption Information About
Our Executive Officers in August 2007, Mr. Jenkins
retired from the Company. The number of shares owned by
Mr. Jenkins is as of August 15, 2007.
|
|
(15)
|
|
As discussed in Item 1, Business in the
Original Annual Report under the caption Information About
Our Executive Officers in June 2007, Mr. Riley
resigned from the Company. The number of shares owned by
Mr. Riley is as of June 30, 2007.
|
Equity
Compensation Plan Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
Number of Securities
|
|
|
|
to be Issued Upon
|
|
|
Weighted-average
|
|
|
Remaining Available
|
|
|
|
Exercise of
|
|
|
Exercise Price of
|
|
|
for Future Issuance
|
|
|
|
Outstanding Options,
|
|
|
Outstanding Options,
|
|
|
under Equity
|
|
Plan Category
|
|
Warrants and Rights
|
|
|
Warrants and Rights
|
|
|
Compensation Plans(1)
|
|
|
Equity compensation plans approved by security holders
|
|
|
3,742,413
|
|
|
$
|
13.17
|
|
|
|
2,082,184
|
|
Equity compensation plans not approved by security holders(2)
|
|
|
375,000
|
|
|
$
|
18.66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,117,413
|
|
|
$
|
13.67
|
|
|
|
2,082,184
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Excludes the securities to be issued upon exercise of
outstanding options, warrants and rights. Availability for
future issuance under our 2004 Stock Plan has been reduced based
on previously issued restricted stock awards weighted as set
forth in such plan.
|
|
(2)
|
|
Consists of stock options and restricted stock units awarded to
our Chief Executive Officer, Mr. Mondry, under the terms of
his employment agreement approved by the Board of Directors
effective June 13, 2007.
|
|
|
Item 13.
|
Certain
Relationships and Related Transactions and Director
Independence
|
The Company has a written policy and has established procedures
regarding approval of transactions between the Company and any
employee, officer, director and certain immediate family members
and other related persons including those required to be
reported under Item 404(a) of
Regulation S-K.
Under this policy, the Nominating and Corporate Governance
Committee or the Committees authorized delegate (which,
for purposes of this policy, is the
38
Chairman of the Committee) must approve any transaction between
the Company and any related party. In determining whether to
approve a related party transaction, the Committee considers all
relevant factors, including but not limited to the benefits to
the Company, the impact on a directors independence, the
availability of comparable products or services, the terms of
the transaction, the terms available to unrelated third parties
or to employees generally, and whether the transaction is,
overall, inconsistent with the best interests of the Company. If
a member of the Committee, or any of his or her immediate family
members, is a party to any proposed transaction, the Committee
member shall not participate in any review, consideration or
approval of the related party transaction. The Company did not
have any related party transactions in fiscal 2007.
Director
Independence
Our Governance Guidelines provide that the Board will meet the
criteria for independence as established by the NYSE. In
addition, the Board considers transactions and relationships
between each director and any member of his or her immediate
family and the Company and its affiliates and subsidiaries, to
determine whether any such relationships or transactions are
inconsistent with a determination that the director is
independent. Pursuant to the NYSE Listing Standards, and based
on its review of director independence (considering
relationships between each of the directors and their immediate
family members and the Company, both in the aggregate and
individually), the Board has determined that a majority of the
Companys directors, specifically Ms. Henderson and
Messrs. Godlas, Marquis, Philippin and Shutzer, are
independent directors. In so doing, the Board
determined that each of these individuals meets the bright
line independence standards of the NYSE. In addition, the
Board determined that all of the members of the Audit Committee
are independent as that term is defined in the applicable NYSE
listing standards and in SEC
Rule 10A-3.
Upon his retirement as President and Chief Operating Officer of
the Company in April 2000, the Company entered into an
employment agreement with Mr. Bazlen, a member of our Board
of Directors, for the performance of specific projects for the
Company, as designated by the Chief Executive Officer or
President, for an annual base salary ($50,000 since April
2005) and continued payment of certain medical, dental,
insurance, 401(k) and other benefits. This agreement is
terminable by either party upon written notice. In connection
with his membership on our Board of Directors, Mr. Bazlen
receives all compensation (including annual grants of stock
options, but excluding the Annual Stipend), that is provided to
our outside directors under the Outside Director Compensation
Policy described in Item 11, Executive
Compensation, above under the caption Compensation
of Directors Outside Director Compensation
Policy.
The Board of Directors had previously determined not to
characterize Mr. Shutzer as independent
pursuant to the NYSE Listing Standards because they determined
that Mr. Shutzer, or a company by which he is employed, may
provide investment banking or other financial advisory services
to the Company in the future. Since joining Evercore Partners
(together with its affiliates
and/or
subsidiaries, Evercore) as a Senior Managing Partner
in April 2004, the Company has entered into two agreements with
Evercore for financial advisory services, both of which were
prior to fiscal 2007. In November 2007, pursuant to the NYSE
Listing Standards, and based on its review of director
independence, the disinterested directors of the Board
determined to characterize Mr. Shutzer as an independent
director based on the determination that Mr. Shutzer, or a
company by which he is employed, would no longer provide
investment banking or other financial services to the Company in
the foreseeable future.
|
|
Item 14.
|
Principal
Accountant Fees and Services
|
Audit
Committee Pre-Approval Policies
Pursuant to paragraph (c)(7)(i) of
Rule 2-01
of
Regulation S-X,
the Audit Committee has adopted policies and procedures for
approving all audit and permissible non-audit services performed
by our independent registered public accounting firm. Consistent
with these policies, all engagements of the independent auditor
to perform any audit services and non-audit services have been
pre-approved by the Audit Committee. No services provided by our
independent auditor were approved by the Audit Committee
pursuant to the de minimis exception to the
pre-approval requirement set forth in paragraph (c)(7)(i)(C) of
Rule 2-01
of
Regulation S-X.
39
The Company incurred the following fees for services performed
by PricewaterhouseCoopers LLP for fiscal 2007 and fiscal 2006:
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
Audit Fees(1)
|
|
$
|
5,329,387
|
|
|
$
|
1,614,160
|
|
Audit-Related Fees(2)
|
|
|
495,105
|
|
|
|
14,057
|
|
Tax Fees(3)
|
|
|
345,040
|
|
|
|
776,821
|
|
All Other Fees(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
6,169,532
|
|
|
$
|
2,405,038
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The audit fees reported for fiscal 2007 are substantially higher
than fiscal 2006 because the amount for fiscal 2007 includes
(i) $935,804 related to the completion of our Annual Report
on
Form 10-K
for fiscal 2006, which was filed on July 9, 2007 and
amended on August 15, 2007; (ii) $458,489 for reviews
of Quarterly Reports on
Form 10-Q
for fiscal 2006, which were also filed on August 15, 2007;
(iii) $1,006,764 for reviews of Quarterly Reports on
Form 10-Q
for fiscal 2007; and (iv) $2,928,330 for the integrated
audit for fiscal 2007. The audit fees reported for fiscal 2006
includes amounts billed through June 15, 2007 for the
integrated audit for fiscal 2006 and include $364,160 related to
completion of our Annual Report on
Form 10-K
for fiscal 2005, which was filed on May 1, 2007.
|
|
(2)
|
|
The audit related fees for fiscal 2007 were primarily for
professional services rendered relative to the Companys
then-proposed merger agreement with OReilly (executed
April 1, 2008), a review of responses to SEC staff comment
letters, and audit services relative to certain of the
Companys employee benefit plans. The audit-related fees
for fiscal 2006 were primarily for professional services
rendered relating to a review of a response to a SEC staff
comment letter.
|
|
(3)
|
|
Tax fees for fiscal 2007 and 2006, respectively, were for
services related to tax compliance (including reviewing tax
returns) and tax advice. For fiscal 2007, fees for tax
compliance totaled $233,940 and fees for tax advice totaled
$111,100. For fiscal 2006, fees for tax compliance totaled
$175,744 and fees for tax advice totaled $601,077.
|
|
(4)
|
|
There were no fees billed to the Company during fiscal 2007 or
2006 for services other than those described above.
|
The Audit Committee has considered whether the provision by
PricewaterhouseCoopers LLP of non-audit services is compatible
with the firms maintaining its independence in connection
with its audit of the Companys financial statements, and
has determined that the permissible non-audit services conducted
by PricewaterhouseCoopers LLP do not impair or impede the
firms independence.
PART IV
|
|
Item 15.
|
Exhibit
and Financial Statement Schedules
|
(a)(1) The following consolidated financial statements of CSK
Auto Corporation are included in Item 8, Financial
Statements and Supplementary Data of the Original Annual
Report.
|
|
|
Consolidated Statements of Operations Fiscal Years
Ended February 3, 2008, February 4, 2007 and
January 29, 2006
|
|
|
Consolidated Balance Sheets February 3, 2008
and February 4, 2007
|
|
|
Consolidated Statements of Cash Flows Fiscal Years
Ended February 3, 2008, February 4, 2007 and
January 29, 2006
|
|
|
Consolidated Statements of Stockholders Equity
Fiscal Years Ended February 3, 2008, February 4, 2007
and January 29, 2006
|
|
|
Notes to Consolidated Financial Statements
|
|
|
(a)(2) The following financial statement schedules of CSK Auto
Corporation for the three years ended February 3, 2008 are
included in the Original Annual Report, as required by
Item 14(d): Schedule I Financial Information of the
Registrant and Schedule II Valuation and Qualifying
Accounts. Other schedules have been omitted because information
is not required or otherwise is included in the Notes to
Consolidated Financial Statements.
(a)(3) and (b) Exhibits:
The Exhibit Index included at the end of this
Form 10-K/A
is incorporated herein by reference.
40
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, the registrant has
duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, on this
2
nd
day
of June, 2008.
CSK AUTO CORPORATION
|
|
|
|
By:
|
/s/ Lawrence
N. Mondry
|
Lawrence N. Mondry
President and Chief Executive Officer
|
|
|
|
By:
|
/s/ James
D. Constantine
|
James D. Constantine
Executive Vice President of Finance and
Chief Financial Officer
41
Exhibit Index
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description of Exhibits
|
|
|
31
|
.01*
|
|
Certification by the Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
31
|
.02*
|
|
Certification by the Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
32
|
.01*
|
|
Certification of the Chief Executive Officer and Chief Financial
Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
* Filed herewith.
42
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