CHARMING SHOPPES, INC. Annual Incentive Program Fiscal 2010 As Amended and Restated March 26, 2009

 

 

 

 

1. General

 

This Annual Incentive Program, as amended and restated (the “Program”), of Charming Shoppes, Inc. (the “Company”) authorizes the grant of Annual Incentive Awards under the Company’s 2003 Incentive Compensation Plan (the “Plan”) to executives and key employees and sets forth certain terms and conditions of such Awards.  The purpose of the Program is to help the Company secure and retain executives and key employees of outstanding ability and to motivate such persons to help the Company achieve excellent performance, by providing incentives directly linked to measures of annual performance based on corporate consolidated results, divisional results, individual performance, and/or other performance measures, and otherwise to further the purposes of the Plan. &# 160;The terms and conditions of the Plan are hereby incorporated by reference in this Program.  If any provision of this program or an implementing document hereunder conflicts with a provision of the Plan, the provision of the Plan shall govern.  The Annual Incentive Awards authorized hereunder for Covered Employees are intended to qualify as “performance-based” compensation under Section 162(m) of the Code.

 

2. Definitions

 

       Capitalized terms used in this Program but not defined herein have the same meanings as defined in the Plan.  In addition to such terms and those terms defined in Section 1 above, the following are defined terms under this Program:

 

 

 

(c) “Participant” means an employee participating in this Program.

 

 

 

 

 

3. Eligibility

 

Employees who are eligible to participate in the Plan may be selected by the Committee to participate in this Program.

 

4. Designation and Earning of Annual Incentive Award Opportunities

 

 

 

5. Settlement of Awards.

 

 

 

 

6. Effect of Termination of Employment; Retirement

 

Upon a Participant’s Termination of Employment prior to completion of a Performance Period or, after completion of a Performance Period but prior to the Stated Settlement Date (i.e., the date of payment and settlement of the Participant’s Annual Incentive Award under Section 5(b) with respect to that Performance Period assuming no elective deferral), the Participant’s Annual Incentive Award Opportunity relating to such Performance Period shall cease to be earnable and shall be canceled, and the Participant shall have no further rights or opportunities hereunder, unless otherwise provided in an employment agreement or severance agreement between the Company and the Participant in effect at the time of Termination of Employment or otherwise determined by the Committee in its sole discretion.

Upon a Participant’s Retirement prior to completion of a Performance Period, a Pro-Rata Portion of the Participant’s Annual Incentive Award relating to such Performance Period shall be deemed earned and vested in accordance with and at the time that the Committee makes, the determination pursuant to Section 4(b) hereof.  For purposes hereof, a Pro-Rata Portion of the Participant’s Annual Incentive Award shall be the product of (i) the Annual Incentive Award determined by the Committee pursuant to Section 4(b) hereof as if the Participant was employed by the Company or any Subsidiary through the completion of the Performance Period and the Stated Settlement Date multiplied by (ii) a fraction, the numerator of which shall be the number of full and partial months that the Participant was e mployed by the Company or any Subsidiary between the date of commencement of the Performance Period and the date of Retirement, and the denominator of which shall be the number twelve (12).  The Retirement of a Participant after completion of a Performance Period will not result in forfeiture or otherwise affect the Participant’s Annual Incentive Award for that Performance Period.

7. General Provisions.

 

 

 

 

 

 

 

 

 

(e) Severablity.  The invalidity of any provision of the Program or a document hereunder shall not be deemed to render the remainder of this Program or such document invalid.

 

 

 

Compensation Committee Minutes March 26, 2009 and Board of Directors March 26, 2009

 

 

 

In furtherance of Section 4 of the Annual Incentive Program (the “Program”), for the Company’s 2010 fiscal year (the “Fiscal 2010 Performance Period”) the Performance Goal, Award Opportunities, and participation shall be as set forth in this Designation.  Terms used in this Designation have the meanings defined in the Program.

 

 

Performance Period

 

(a)

Nature of Performance Goals.  For the Fiscal 2010 Performance Period, the Performance Goals shall be based solely or in part on (a) corporate consolidated results (specifically, consolidated operating earnings before income taxes and non-cash interest expense determined pursuant to FSP APB 14-1 “Accounting for Convertible Debt Instruments that may be settled in cash upon Conversion (Including Partial Cash Settlements)”  and excluding extraordinary and non-recurring items including, without limitation, severance payments, store closing costs, business transformation costs, and related expenses (“Consolidated Operating Earnings”), as defined in the “Charming Shoppes, Inc. 2009 Budget Presentation”), (b) divisional operating profits be fore taxes and store occupancy expenses and excluding extraordinary and non-recurring items, including, without limitation, severance payments, store closing costs, business transformation costs and related expense (“Divisional Operating Profits”) as set forth in each divisions’ 2009 Annual Plan, (c) other division performance goals and (e) individual performance goals, all as more fully set forth in Schedules I and II hereto.  The specific Performance Goals and the Participants including all Executive Officers and other senior officers to whom they apply are set forth below and in Schedules I and II hereto.  The Performance Goals of other Participants shall be determined by the Chief Executive Officer and the Divisional President (to the extent applicable) in consultation with the Chief Financial Officer and the Executive Vice President - Human Resources of the Company (the “Authorized Officers”).  In furtherance of the foregoing:

 

Ø	The Consolidated Operating Earnings Performance Goal for fiscal 2010 shall be a Minimum of $0 ( “Minimum”), a Target of $18,000,000, and a Maximum of $63,000,000.

Ø	The Divisional Operating Profits Performance Goals for Fiscal 2010 for the divisions (the “Divisions”) including without limitation, Lane Bryant, Fashion Bug and Catherines and the respective Minimum, Target and Maximum levels of  Divisional Operating Profits are set forth in Schedule I hereto.

An Annual Incentive Award Opportunity based on the achievement of the Consolidated Operating Earnings Performance Goal will be earned only if Consolidated Operating Earnings equal or exceed the specified Minimum Goal; and An Annual Incentive Award Opportunity based on Divisional Operating Profits and other divisional or individual performance goals will be earned only if the Divisional Operating Profits equals or exceeds the specified minimum level for the Performance Period for that division as set forth in Schedules I and II hereto.

(b)

Designation of Participants and Award Opportunity Terms.  Participants in the Program for the Fiscal 2010 Performance Period shall be executive officers, senior officers and other employees designated in Impact Levels 1 through 9 at the date hereof as more fully set forth in Schedule I hereto.  For each Participant in Impact Levels 1 through 9, for the Fiscal 2010 Performance Period, the Participant’s target Annual Incentive Award Opportunity, designated levels of achievement of the Company and Divisional Performance Goals, the weights accorded to Performance Goals, range of potential Annual Incentive Awards relating to the level of achievement of  Performance Goals, and other Award Opportunity terms are set forth on Schedule I and Schedule II hereto.

 

For  participants (a) Annual Incentive Awards achieved at the Minimum, Target and Maximum Performance Goals will be equal to varying percentages of the Annual Incentive Awards that would be payable on the achievement of a  Performance Goal at Target as more fully set forth in Schedules I and II hereto; and (b) achievement of a Performance Goal between the Minimum and Target and Maximum Performance Goals set forth on Schedule I hereto shall be determined as follows:  (i)  the achievement of Consolidated Operating Earnings  at Minimum and Division Operating Profits at Minimum, as the case may be,  will entitle payment of an Annual Incentive Award equal to the prescribed applicable percentage set forth in Schedule I of the Annual Incentive Award that would b e payable on the achievement of the applicable  Performance Goal at Target;  (ii) the achievement of Consolidated Operating Earnings  at Target and Divisional Operating Profits at Target, as the case may be, will entitle payment of an Annual Incentive Award equal to the prescribed applicable percentage set forth in Schedule I of the Annual Incentive Award that is payable on the achievement of the applicable Performance Goal at Target; (iii) the achievement of Consolidated Operating Earnings  at Maximum and Divisional Operating Profits at Maximum, as the case may be, will entitle payment of an Annual Incentive equal to the prescribed applicable percentage of salary set forth in Schedule I for the achievement of the Maximum; and (iv)  Annual Incentive Awards based on the achievement of Performance Goals between Minimum and Target and between Target and Maximum will be determined on a pro-rata basis (i.e. interpolated) but in no event will an Annual Incentive Aw ard be granted in excess of the prescribed applicable percentage of salary set forth in the Schedule I hereto for the achievement of the applicable Performance Goal at Maximum even if performance in excess of that level is achieved.

 

(c)

Adjustments to Performance Goals.  The Committee may determine in its discretion to adjust the Performance Goals specified in (a) above (except as limited by the 2003 Plan and the Program).

 

 

Other provisions hereof notwithstanding, the Chief Executive Officer of the Company may modify any Annual Incentive Award Opportunity or Annual Incentive Award granted to any Participant in order to comply with local laws or customs in any jurisdiction other than the United States applicable to such Participant.