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EX-10.1 - EX-10.1 - PETSMART INC | p17188exv10w1.htm |
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): March 23, 2010
PetSmart, Inc.
(Exact Name of Registrant as Specified in Charter)
Delaware | 0-21888 | 94-3024325 | ||
(State or Other Jurisdiction of | (Commission File Number) | (IRS Employer | ||
Incorporation) | Identification No.) |
19601 North 27th Avenue, Phoenix, Arizona 85027
(Address of Principal Executive Offices) (Zip Code)
(623) 580-6100
(Registrants telephone number, including area code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
(Address of Principal Executive Offices) (Zip Code)
(Registrants telephone number, including area code)
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
(e)
Cash Bonuses for Fiscal Year Ending January 30, 2011
On March 23, 2010, the Compensation Committee of the Board of Directors, or the
Committee, selected the following business criteria pursuant to PetSmarts Executive Short-Term
Incentive Plan, or the ESTIP, for determining the amount of the cash bonuses that may be awarded to
our executive officers for our fiscal year ending January 30, 2011:
| Increase in comparable store sales as calculated from PetSmarts audited financial statements (1); and | |||
| End-of-year net cash as calculated from PetSmarts audited financial statements, as adjusted. (2) |
(1) | Defined as sales in stores open at least one year as measured by comparing fiscal year 2010 to fiscal year 2009. | |
(2) | End-of-year net cash is defined as cash, restricted cash and cash equivalents, less outstanding debt on our revolving credit agreement, as adjusted for: (i) changes to our current dividend policy, (ii) any common stock share repurchases, (iii) changes in capital expenditures due to Board approved increases to our fiscal year 2010 budget or decreases from fewer new store openings, and (iv) changes to our accounts payable policies relative to payment terms. |
The Committee also provided for additional potential cash bonuses for executive officers using
earnings before taxes as calculated from PetSmarts audited financial statements. As this metric
has not been approved by our stockholders pursuant to the ESTIP, amounts awarded pursuant to
achievement of this metric will not qualify as performance-based compensation pursuant to
Section 162(m) of the Internal Revenue Code.
The Compensation Committee also approved the following target bonuses, multipliers and
business criteria weightings. The following chart has been prepared by combining both the ESTIP
awards and the earnings before taxes award.
SVP/Store | ||||||||||||||||||||
Executive | Operations | Other | ||||||||||||||||||
Chairman | President/CEO | CFO | SVP/Merchandising | SVP | ||||||||||||||||
Bonus |
||||||||||||||||||||
Target Bonus as a percent of salary |
100 | % | 100 | % | 75 | % | 75 | % | 50 | % | ||||||||||
Multiplier due to achievement against target criteria |
up to 3 times | up to 3 times | up to 3 times | up to 3 times | up to 3 times | |||||||||||||||
Criteria |
||||||||||||||||||||
Earnings before taxes |
60 | % | 60 | % | 60 | % | 60 | % | 60 | % | ||||||||||
Comparable store sales |
25 | % | 25 | % | 25 | % | 25 | % | 25 | % | ||||||||||
End-of-year net cash |
15 | % | 15 | % | 15 | % | 15 | % | 15 | % |
PetSmart must achieve a minimum level of earnings before taxes before any payment can be made under
any of the business criteria.
2010 Performance Share Unit Program
On March 23, 2010, the Committee also approved the performance criteria for our 2010
Performance Share Unit Program, or the Program. Grants under the Program will be made from our
2006 Equity Incentive Plan. The Committee established the Program to provide greater linkage of pay
and performance, help focus key employees on achieving a key performance goal, and provide
significant award upside for achieving outstanding performance, while maintaining a level of total
direct compensation competitiveness for participants. All members of our senior management team and
other key members of management will participate in the Program. The Committee approved the grant
of performance share units in a number equal to a specified dollar
value divided by the closing price
of our common stock as reported on the NASDAQ Global Select Market on March 23, 2010.
The number of performance share units actually awarded is tied to the companys achievement against
minimum, target, and maximum levels of a performance metric selected by the Committee.
For fiscal year 2010, the actual number of performance share units awarded to each participant
will be set at an initial threshold of 50% of his or her target number of performance share units,
regardless of performance results. The performance criteria require that we achieve a minimum
earnings before taxes threshold before participants may be awarded more than 50% of the target
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number of
performance share units. If the minimum performance threshold is not achieved, 50%
of the target number of performance share units will be awarded, and participants will forfeit the
remainder of the target award. If the minimum performance threshold is met, the Program then
provides, using the performance criteria, for the calculation of additional performance share units
to be awarded, depending on the level of actual achievement. If we
achieve between the minimum and maximum
level of earnings before taxes performance, each participant will earn between 50% to 150% of his
or her target number of performance share units, with linear interpolation for achievement falling
between the minimum and target, and target and maximum performance levels, respectively, rounded
up to the next whole number of performance share units. For example,
if we achieve the target performance level of earnings before taxes,
the target number of performance share units will be awarded. If
earnings before taxes results are
halfway between the minimum and target performance levels, 75% of the target number of
performance share units will be awarded. Similarly, if performance results are halfway between the
target and maximum performance levels, each participant will receive 125% of the target number of
the performance share units. If we achieve at or above the maximum
performance level of earnings before
taxes, each participant will earn 150% of his or her target number of performance share units.
Performance share units will be awarded (if at all) upon certification by the Committee of
actual performance achievement following our 2010 fiscal year-end, subject to specified change of
control exceptions that will accelerate the award of the performance share units. Thereafter, any
awarded performance share units are subject to time-based vesting and will cliff vest on the third
anniversary of the grant date (currently expected to be March 23, 2013), contingent upon the
participants continued service to PetSmart. The awarded performance share units may also earlier
vest upon the participants termination of employment due to retirement or upon specified change of
control transactions. The shares of common stock will be issued to the participant once the
performance share units vest.
The minimum, target and maximum awards for the performance share units granted to our
principal executive officer, principal financial officer and other named executive officers, as set
forth in our proxy statement for our fiscal year 2008, expressed in dollars as of the grant date,
are as follows:
Minimum | Target | Maximum | ||||||||||||
Officer | Title | Award ($ value) | Award ($ value) | Award ($ value) | ||||||||||
Philip L. Francis |
Executive Chairman | $ | 525,000 | $ | 1,050,000 | $ | 1,575,000 | |||||||
Robert F. Moran |
President and Chief Executive Officer | $ | 525,000 | $ | 1,050,000 | $ | 1,575,000 | |||||||
Lawrence P. Molloy |
Senior Vice President, Chief Financial Officer | $ | 163,750 | $ | 327,500 | $ | 491,250 | |||||||
Joseph D. OLeary |
Senior Vice President, Merchandising | $ | 163,750 | $ | 327,500 | $ | 491,250 | |||||||
David K. Lenhardt |
Senior Vice President, Store Operations | $ | 163,750 | $ | 327,500 | $ | 491,250 |
A participant may earn less than his or her target award, but in no event may a participant
earn an award in excess of his or her maximum award.
The description of the Program contained herein is a summary of the material terms of the
Program, does not purport to be complete, and is qualified in its entirety by reference to (i) the
2006 Equity Incentive Plan, which is filed as Exhibit 10.21 to PetSmarts Annual Report on Form
10-K for the fiscal year ended January 28, 2007 (File No. 0-21888), filed with the Securities and
Exchange Commission on March 28, 2007, (ii) the Form of Award Grant Notice and Performance Share
Award Agreement filed as Exhibit 10.1 to PetSmarts Form 8-K filed with the Securities and Exchange
Commission on February 19, 2009 (File No. 0-21888)(the 8-K), and (iii) the 2010 Performance Share
Unit Program filed as Exhibit 10.1 hereto, each of which is incorporated herein by reference.
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Item 9.01 | Financial Statements and Exhibits. |
(d)
Exhibit No. | Description | |||
10.1 | 2010 Performance Share Unit Program. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
PetSmart, Inc. |
||||
By: | /S/ J. Dale Brunk | |||
Dated: March ___, 2010 | J. Dale Brunk | |||
Vice President, Deputy General Counsel, and Assistant Secretary |
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