Form 8-K February 2, 2006 (2)
UNITED
STATES
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
Date
of
Report (Date of earliest event reported) February 2, 2006
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CHARMING
SHOPPES, INC.
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(Exact
name of registrant as specified in its
charter)
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PENNSYLVANIA
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000-07258
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23-1721355
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(State
or other jurisdiction
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(Commission
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(IRS
Employer
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of
incorporation)
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File
Number)
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Identification
No.)
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450
WINKS LANE, BENSALEM, PA 19020
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(Address
of principal executive offices) (Zip
Code)
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(215)
245-9100
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(Registrant’s
telephone number, including area
code)
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NOT
APPLICABLE
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(Former
name or former address, if changed since last
report.)
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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
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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Item
1.01. Entry into a Material Definitive Agreement.
On
February 2, 2006 the Compensation and Stock Option Committee (the “Compensation
Committee”) of our Board of Directors (the “Board”) approved the annual
performance measures and annual incentive opportunities for the fiscal year
ended February 3, 2007 for the following Executive Officers, who were named
in
our 2005 Proxy Statement and who are expected to be named in our 2006 Proxy
Statement (the “Executive Officers”):
Dorrit
J.
Bern
Joseph
M.
Baron
Anthony
A. DeSabato
Eric
M.
Specter
Colin
D.
Stern
Such
incentive opportunities were established under our 2003 Incentive Compensation
Plan (the “Incentive Compensation Plan”), which was approved by our shareholders
on June 26, 2003. The level of target annual incentive opportunities available
to the Executive Officers range from 50% - 100% of salary and are determined
upon the achievement of a pre-set target corporate operating earnings goal
that
was approved by the Compensation Committee and, with respect to Dorrit J.
Bern,
our Chairman of the Board, President and Chief Executive Officer, also by
the
independent members of the Board.
The
Compensation Committee (and the independent members of the Board with respect
to
Ms. Bern), also approved a minimum level of performance based upon the
achievement of a pre-set corporate operating earnings goal that would enable
the
Executive Officers to earn an incentive award equal to 25% - 30% of their
target
opportunity. The Compensation Committee (and the independent members of the
Board with respect to Ms. Bern) also approved an above-target performance
level
based upon the achievement of a pre-set corporate operating earnings goal
that
would enable the Executive Officers to earn twice their target opportunity.
A
formula for interpolating payments for performance between minimum and target
or
between target and maximum levels is specified under the Incentive Compensation
Plan. No awards can be paid out under the Incentive Compensation Plan if
corporate operating earnings performance does not reach the established minimum
performance level.
The
actual annual incentive award for Ms. Bern is to be determined based solely
upon
the achievement of those pre-set corporate operating earnings goals. After
determining the actual annual incentive award available for payment to the
other
Executive Officers based on the achievement of those pre-set corporate operating
earnings goals, 70% - 80% of that award is payable based on that achievement
alone while 20% - 30% of that award is tied to the achievement of certain
other
objectives (as recommended by Ms. Bern and approved by the Compensation
Committee). The pre-set corporate operating earnings goals were established
based on our financial plan. Our fiscal year 2007 Annual Incentive Program
is
filed as Exhibit 99.1 to this Report on Form 8-K.
On
February 2, 2006, we also granted restricted stock
units
and performance share awards to Dorrit J. Bern, our Chief Executive Officer.
These grants were made pursuant to the Charming Shoppes, Inc. 2004 Stock
Award
and Incentive Plan (the “2004 Plan”), which was approved by our Board of
Directors on April 30, 2004 and approved by our shareholders on June 24,
2004.
In addition to approving the 2004 Plan, shareholders also approved, among
other
things, the material terms of certain awards that may be granted under the
2004
Plan to our executive officers in order to meet the requirement for such
awards
to qualify as “performance-based” under Section 162(m) of the Internal Revenue
Code. We filed the 2004 Plan with the Securities and Exchange Commission
on May
19, 2004 as Appendix “B” to our 2004 Proxy Statement Pursuant to Section 14 of
the Securities Exchange Act of 1934. Following is a brief description of
the
general terms of the restricted stock units and performance share awards,
which
is qualified in its entirety by reference to the full text of the 2004 Plan
filed as “Appendix B” to our 2004 Proxy Statement and by reference to the full
text of the Forms of Restricted Stock Units Agreement and Performance Share
Agreement filed as Exhibits 99.2 and 99.3, respectively, to this Report on
Form
8-K.
We
granted to Ms. Bern 99,522 restricted stock units with respect to shares
of our
common stock
under
the Form of Restricted Stock
Unit
Agreement filed as Exhibit 99.2 to this Report on Form 8-K and as required
pursuant to the Employment Agreement by and between the Company and Dorrit
J.
Bern dated as of January 1, 2005 (the “Employment Agreement”), filed as Exhibit
99.1 to our Report on Form 8-K dated January 3, 2005 and filed on January
4,
2005. The restricted stock units are subject to a two-year restricted period
commencing on the date of grant and ending on January 31, 2008. In general,
the
restricted stock
units
are subject to forfeiture during the restricted period upon termination of
employment for any reason other than death, disability, retirement, termination
by the employee for good reason, or termination by the Company for reasons
other
than cause. The terms “disability,” “good reason,” and “cause” have the meanings
ascribed to such terms in the Employment Agreement. In addition, the lapse
of
restrictions on the restricted stock units will be accelerated if Ms. Bern
resigns for good reason, is terminated without cause, dies, or becomes disabled,
or in the event of a change in control of the Company (as defined in the
Employment Agreement), and the restricted stock units will vest immediately.
A
non-renewal of the Employment Agreement by the Company will be treated as
a
termination for good reason. Ms. Bern may elect to defer receipt of any shares
issued in connection with the Restricted Stock Unit Agreement pursuant to
our
Variable Deferred Compensation Plan for Executives or a successor plan (the
“Deferred Compensation Plan”). Under such circumstances, the terms of the
Deferred Compensation Plan will govern the timing of payment of such
shares.
Performance
Share Agreement
We
also
granted to Ms. Bern 99,522 restricted stock units with respect to shares
of our
common stock under the Form of Performance Share Agreement filed as Exhibit
99.3
to this Report on Form 8-K and as required pursuant to the Employment Agreement
by and between the Company and Dorrit J. Bern dated as of January 1, 2005
(the
“Employment Agreement”), filed as Exhibit 99.1 to our Report on Form 8-K dated
January 3, 2005 and filed on January 4, 2005. The actual number of shares
that
will vest and be distributed pursuant to the Performance Share Agreement
will
depend on our achievement of certain performance goals over a three-year
performance period or the satisfaction of other conditions described in the
Performance Share Agreement. The performance goal relates to our achievement
of
a specified level of cumulative free cash flow (as defined in the Performance
Share Agreement), and provides for 100% vesting upon achievement of the target
amount, 50% vesting upon achievement of a minimum amount, and 200% vesting
upon
achievement of a maximum amount, with interpolation between these measuring
points. The restricted stock units generally vest on January 31, 2009, subject
to continued employment with the Company and to our achievement of the
performance goals specified in the Performance Share Agreement. In general,
the
restricted stock units are subject to forfeiture during the restricted period
upon termination of employment for any reason other than death, disability,
retirement, termination by the employee for good reason, or termination by
the
Company for reasons other than cause. The terms “disability,” “good reason,” and
“cause” have the meanings ascribed to such terms in the Employment Agreement. In
addition, the lapse of restrictions on restricted stock units under the
Performance Share Agreement will be accelerated if Ms. Bern resigns for good
reason, is terminated without cause, dies or becomes disabled, or in the
event
of a change in control of the Company (as defined in the Employment Agreement),
and shares of common stock equal to the Target Shares (as defined in the
Performance Share Agreement) will vest immediately. A non-renewal of the
Employment Agreement by the Company will be treated as a termination for
good
reason. Ms. Bern may elect to defer receipt any shares issued in connection
with
the Performance Share Agreement pursuant to our Variable Deferred Compensation
Plan for Executives or a successor plan (the “Deferred Compensation Plan”).
Under such circumstances, the terms of the Deferred Compensation Plan will
govern the timing of payment of such shares.
Item
9.01 Financial Statements and Exhibits
(c)
Exhibits.
Exhibit No.
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Description
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99.1
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Charming
Shoppes, Inc. Annual Incentive Program As Amended and Restated February
2,
2006.
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99.2
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Form
of Charming Shoppes, Inc. 2004 Stock Award and Incentive Plan Restricted
Stock Units Agreement.
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99.3
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Form
of Charming Shoppes, Inc. 2004 Stock Award and Incentive Plan Performance
Share Agreement.
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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.
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CHARMING
SHOPPES, INC.
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(Registrant)
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Date:
February 7, 2006
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/S/
ERIC M. SPECTER
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Eric
M. Specter
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Executive
Vice President
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Chief
Financial Officer
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EXHIBIT
INDEX
Exhibit No.
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Description
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99.1
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Charming
Shoppes, Inc. Annual Incentive Program As Amended and Restated February
2,
2006.
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99.2
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Form
of Charming Shoppes, Inc. 2004 Stock Award and Incentive Plan Restricted
Stock Units Agreement.
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99.3
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Form
of Charming Shoppes, Inc. 2004 Stock Award and Incentive Plan Performance
Share Agreement.
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