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 7, 2005
CHARMING SHOPPES, INC.
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 000-07258 23-1721355
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
450 WINKS LANE, BENSALEM, PA 19020
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215) 245-9100
NOT APPLICABLE
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simul-
taneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. Entry into a Material Definitive Agreement.
On February 7, 2005, Charming Shoppes, Inc. (the "Company") granted
restricted stock and performance share awards to Dorrit J. Bern, the Company's
Chief Executive Officer, and to Joseph M. Baron, Anthony A. DeSabato, Eric M.
Specter, and Colin D. Stern, the other executive officers who were named in the
Company's 2004 Proxy Statement and/or who are expected to be named in the
Company's 2005 Proxy Statement (the "Executive Officers"). These grants were
made pursuant to the Charming Shoppes, Inc. 2004 Stock Award and Incentive Plan
(the "2004 Plan"), which was approved by the Company's Board of Directors on
April 30, 2004 and by the Company's shareholders on June 24, 2004. In addition
to approving the plan, shareholders also approved, among other things, the
material terms of certain awards that may be granted under the 2004 Plan to the
named 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. The 2004 Plan was filed with the Securities and Exchange Commission on May
19, 2004 as Appendix "B" to the Company's 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 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 the Company's 2004 Proxy Statement and by
reference to the full text of the Forms of Restricted Stock Agreement and
Performance Share Agreement filed as Exhibits under Section 9.01 of this Report
on Form 8-K.
Restricted Stock Agreement
The Company granted to Ms. Bern restricted shares of its common stock under
the Form of Restricted Stock Agreement filed as Exhibit 99.1 to this Report on
Form 8-K. The restricted shares are subject to a two-year restricted period
commencing on the date of grant. In general, the shares of restricted stock 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 by and between the Company
and Dorrit J. Bern dated as of January 1, 2005 (the "Employment Agreement"),
filed as Exhibit 99.1 to the Company's Report on Form 8-K dated January 3, 2005
and filed on January 4, 2005. In addition, the lapse of restrictions on shares
issued under the Restricted Stock 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 the restricted shares will vest immediately. A
non-renewal of the Employment Agreement by the Company will be treated as a
termination for good reason. If the employee elects to defer any of the
restricted shares pursuant to the Company's Variable Deferred Compensation Plan
for Executives or a successor plan (the "Deferred Compensation Plan"), the terms
of the Deferred Compensation Plan will govern the timing of payment of vested
restricted shares.
The Company granted to the remaining Executive Officers, restricted shares
of its common stock under the Form of Restricted Stock Agreement filed as
Exhibit 99.2 to this Report on Form 8-K. Restrictions on the shares lapse as to
33% of the total number of shares granted on each of the third and fourth
anniversaries of the date of grant, and as to 34% of the total number of shares
granted on the fifth anniversary of the date of grant. In general, the shares of
restricted stock are subject to forfeiture during the restricted period upon
termination of employment for any reason other than death, permanent disability,
retirement, or involuntary termination by the Company for reasons other than
cause (as defined in the Restricted Stock Agreement). In addition, the lapse of
restrictions on shares issued under the Restricted Stock Agreement will be
accelerated in the event of a change in control of the Company (as defined in
the Restricted Stock Agreement), and the restricted shares will vest
immediately. If the employee elects to defer any of the restricted shares
pursuant to the Deferred Compensation Plan, the terms of the Deferred
Compensation Plan will govern the timing of payment of vested restricted shares.
1
Performance Share Agreement
The Company granted to Ms. Bern, restricted stock units with respect to
shares of its common stock under the Form of Performance Share Agreement filed
as Exhibit 99.3 to this Report on Form 8-K. The actual number of shares that
will vest and be distributed pursuant to the Performance Share Agreement will
depend on the Company's 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 the
Company's 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 February 2, 2008, subject to continued employment with the
Company and to the Company's 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 by and between the Company
and Dorrit J. Bern dated as of January 1, 2005 (the "Employment Agreement"),
filed as Exhibit 99.1 to the Company's Report on Form 8-K dated January 3, 2005
and filed on January 4, 2005. 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. If the employee elects to defer any of
the performance shares pursuant to the Company's Variable Deferred Compensation
Plan for Executives or a successor plan (the "Deferred Compensation Plan"), the
terms of the Deferred Compensation Plan will govern the timing of payment of
vested shares.
The Company granted to the remaining Executive Officers, restricted stock
units with respect to shares of its common stock under the Form of Performance
Share Agreement filed as Exhibit 99.4 to this Report on Form 8-K. The actual
number of shares that will vest and be distributed pursuant to the Performance
Share Agreement will depend on the Company's achievement of certain performance
goals or the satisfaction of other conditions described in the Performance Share
Agreement. The performance goal relates to the Company's 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 February 2, 2008, subject
to continued employment with the Company and to the Company's 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, permanent
disability, retirement, or involuntary termination by the Company for reasons
other than cause (as defined in the Performance Share Agreement). In addition,
the lapse of restrictions on restricted stock units under the Performance Share
Agreement will be accelerated in the event of a change in control of the Company
(as defined in the Performance Share Agreement), and shares of common stock
equal to the Target Shares (as defined in the Performance Share Agreement) will
vest immediately. If the employee elects to defer any of the performance shares
pursuant to the Deferred Compensation Plan, the terms of the Deferred
Compensation Plan will govern the timing of payment of vested shares.
2
Awards Granted Under the Restricted Stock and Performance Share Agreements
The number of restricted shares granted under the Restricted Stock
Agreement, and the number of restricted stock units representing the Target
Shares to be awarded under the Performance Share Agreement, for each of the
executive officers who were named in the Company's 2004 Proxy Statement and/or
who are expected to be named in the Company's 2005 Proxy Statement is as
follows:
Target
Restricted Performance
Name Shares Shares
---- ------ ------
Dorrit J. Bern............... 150,966 150,966
Joseph M. Baron.............. 45,000 30,000
Anthony A. DeSabato.......... 23,400 15,600
Eric M. Specter.............. 39,000 26,000
Colin D. Stern............... 28,800 19,200
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits.
Exhibit No. Description
99.1 Form of Charming Shoppes, Inc. 2004 Stock Award and Incentive Plan
Restricted Stock Agreement between the Company and Dorrit J. Bern.
99.2 Form of Charming Shoppes, Inc. 2004 Stock Award and Incentive Plan
Restricted Stock Agreement - Section 16 Officers.
99.3 Form of Charming Shoppes, Inc. 2004 Stock Award and Incentive Plan
Performance Share Agreement between the Company and Dorrit J. Bern.
99.4 Form of Charming Shoppes, Inc. 2004 Stock Award and Incentive Plan
Performance Share Agreement.
3
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.
CHARMING SHOPPES, INC.
----------------------
(Registrant)
Date: February 11, 2005
/S/ ERIC M. SPECTER
---------------------
Eric M. Specter
Executive Vice President
Chief Financial Officer
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EXHIBIT INDEX
Exhibit No. Description
99.1 Form of Charming Shoppes, Inc. 2004 Stock Award and Incentive Plan
Restricted Stock Agreement between the Company and Dorrit J. Bern.
99.2 Form of Charming Shoppes, Inc. 2004 Stock Award and Incentive Plan
Restricted Stock Agreement - Section 16 Officers.
99.3 Form of Charming Shoppes, Inc. 2004 Stock Award and Incentive Plan
Performance Share Agreement between the Company and Dorrit J. Bern.
99.4 Form of Charming Shoppes, Inc. 2004 Stock Award and Incentive Plan
Performance Share Agreement.