form8k02012008.htm
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 1,
2008
_____________
CHARMING
SHOPPES, INC.
(Exact
name of registrant as specified in its charter)
_____________
|
PENNSYLVANIA
|
000-07258
|
23-1721355
|
|
(State
or other jurisdiction
of
incorporation)
|
(Commission
File Number)
|
(IRS
Employer Identification No.)
|
| |
|
|
450
WINKS LANE, BENSALEM, PA
(Address
of principal executive offices)
|
19020
(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 simultaneously
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
5.02 Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
(e) The
Compensation Committee of Charming Shoppes (the "Company") regularly reviews
and
examines the Company's compensation arrangements for
executives. In 2007 this review included an analysis, carried
out with the assistance of the Committee's independent compensation consultants,
of the Company's executive severance agreements with its named executive
officers and other senior officers of the Company. The
Company’s Compensation Committee has discussed such new severance arrangements
over the past several months and has recommended that the Company adopt new
agreements. Among other things, the Committee determined that these
agreements should be revised to condition severance payments upon agreement
by
the executives to customary non-competition covenants that had not been included
in the existing agreements of the Company’s named executive officers and most
other executives, as well as non-solicitation covenants and the executive’s
delivery of a release of claims to the Company. The new agreements
also provide for severance payments upon certain involuntary terminations of
employment not in connection with a change in control (as defined in the new
agreements) and to limit the Company’s obligation to make gross up payments for
excise taxes imposed on the executives under Section 4999 of the Internal
Revenue Code of 1986, as amended (the “Code”). In addition, the
Committee determined to reduce the amount of severance that executives would
receive in the event of a termination of employment within 24 months after
a
change in control.
As
a
result of this review the Company is in the process of replacing its existing
severance agreements with new agreements that reflect these changes. On February
1, the Company entered into new executive severance agreements (the
“Agreements”) with four of its named executive officers -- Eric M. Specter,
Executive Vice President and Chief Financial Officer, Joseph M. Baron, Executive
Vice President and Chief Operating Officer, Anthony A. DeSabato, Executive
Vice
President - Corporate and Labor Relations and Business Ethics, and Colin D.
Stern, Executive Vice President and General Counsel. The Company also
expects to enter into new severance agreements with other executive vice
presidents and senior vice presidents of the Company in the ordinary course
of
business. The new agreements replace and supersede the executives’
previous change in control agreements with the Company.
Under
the
Agreements, an executive is entitled to receive severance benefits upon a
termination of employment by the Company other than for Cause (as defined in
the
Agreements), or upon a termination by the executive for Good Reason (as defined
in the Agreements) (each a “Qualifying Termination”). In the event of
a Qualifying Termination, the executive will receive severance equal to the
sum
of the executive’s annual base salary and three-year average bonus (as defined
in the Agreements), which amount will be payable over 12 months, monthly
reimbursements of COBRA health care premiums during the 12-month severance
period (or until the executive obtains similar coverage from a subsequent
employer, if earlier), and a prorated annual bonus for the year of termination,
based on Company performance. The Company will also provide certain
outplacement services. In the event of a Qualifying Termination that
occurs during the 24-month period following a change in control, in lieu of
the
severance benefits described above, the executive will receive a lump sum
severance amount equal to 1.5 times the sum of the executive’s annual base
salary and three-year average bonus, a lump sum payment equal to the cost of
COBRA health care premiums and life insurance and disability coverage for the
18-month period following termination, and a prorated annual bonus at target
for
the year of termination.
Under
the
Agreements, if an excise tax under section 4999 of the Code is imposed on any
payments, and such payments are at least 110% of the threshold amount that
triggers the excise tax under section 4999, the Company will provide the
executive with a tax gross up payment for such excise taxes. If such
payments are less than 110% of the threshold amount, no gross up payment will
be
made and, instead, the amount of such payments will be reduced to the section
280G threshold amount if such reduction provides the executive with a greater
net after-tax amount than would be the case if no reduction was
made.
The
Agreements have a three-year term which, at the end of the first year of the
three-year term and at the end of each year thereafter, automatically extends
for one additional year unless notice of non-renewal is delivered.
The
new
severance agreements for the Company’s senior vice presidents are similar to the
Agreements for the named executive officers and other executive vice presidents,
except that, in general, (i) in the event of a Qualifying Termination, the
regular severance multiple is 0.75 and the Change in Control severance multiple
is one, and (ii) no gross up payment will be paid with respect to any excise
tax
under section 4999 of the Code.
Some
of
the provisions described above may be modified in the agreements with certain
officers (excluding the named executive officers).
A
copy of
the form of Agreement is attached hereto as Exhibit 10.1 and is incorporated
herein by reference. A copy of the form of severance agreement
between certain senior vice presidents and the Company is attached hereto as
Exhibit 10.2 and is incorporated herein by reference.
Item
7.01. Regulation FD Disclosure.
On
February 5, 2008 we issued a press release announcing an executive management
change. Joseph M. Baron, Executive Vice President and Chief Operating
Officer, has assumed leadership of our Bensalem-based retail businesses on
an
interim basis following the departure of Diane M. Paccione, who has left
the
Company. We are conducting a search for an appropriate successor to
Paccione. The press release is attached as Exhibit 99.1 to this
Report on Form 8-K.
In
accordance with general instruction B.2 to Form 8-K, the information included
in
this Item 7.01, and the exhibit 99.1 attached hereto, shall be deemed to
be
“furnished” and shall not be deemed to be “filed” with the Securities and
Exchange Commission for purposes of Section 18 of the Securities Exchange
Act of
1934, as amended.
Item
9.01 Financial Statements and Exhibits (c) Exhibits.
|
Exhibit
No.
|
Description
|
| |
|
|
10.1
|
Form
of Severance Agreement, dated February 1, 2008 between certain
executive
vice presidents and the Company, including the following named
executive
officers: Eric M. Specter,
Joseph M. Baron,
Anthony A. DeSabato
and Colin D. Stern
|
| |
|
|
10.2
|
Form
of Severance Agreement between certain senior vice presidents and
the
Company
|
| |
|
|
99.1
|
Charming
Shoppes, Inc. press release dated February 5,
2008
|
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
5, 2008
|
/S/
ERIC M. SPECTER
|
| |
Eric
M. Specter
|
| |
Executive
Vice President
|
| |
Chief
Financial Officer
|
| |
|
EXHIBIT
INDEX
|
Exhibit
No.
|
Description
|
| |
|
|
10.1
|
Form
of Severance Agreement, dated February 1, 2008 between certain
executive
vice presidents and the Company, including the following named
executive
officers: Eric M. Specter, Joseph M. Baron, Anthony A. DeSabato
and Colin
D. Stern
|
| |
|
|
10.2
|
Form
of Severance Agreement between certain senior vice presidents and
the
Company
|
| |
|
|
99.1
|
Charming
Shoppes, Inc. press release dated February 5,
2008
|