Exhibit 10.27

 

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May 5, 2013

Carrie W. Teffner

314 W Cole Avenue

Wheaton, IL 60187

Dear Carrie,

PetSmart, Inc. (“Company” or “PetSmart”) is always looking to hire the best
people, and we believe that you would be a great fit for the position of Senior
Vice President, Chief Financial Officer. We know that it is our people who make
the difference and ensure the continuing success of our company. That is why we
are excited to offer this position to you. This position is under the purview of
the Compensation Committee of the PetSmart Board of Directors (“Committee”).
Although Committee members have provided informal approval of the terms
contained in this offer letter, it remains subject to their formal approval.
Upon your acceptance, the Committee will be requested to provide a final formal
meeting approval. We look forward to your acceptance and we will plan a start
date for your employment to commence on June 3, 2013. The terms and conditions
of your offer follow:

 

  1.

As Senior Vice President, Chief Financial Officer, you will work at 19601 N.
27th Avenue, Phoenix, AZ 85027, perform the duties customarily associated with
this position, and report directly to the Chief Executive Officer of the
Company.

 

  2. Your initial base salary will be $550,000 per year, less standard
deductions and withholdings, paid biweekly. The next base salary review and
adjustment will take place in March 2014; provided, however, your base salary
will not be adjusted downward without your prior written consent.

 

  3. You are eligible to participate in the Executive Short Term Incentive Plan
(“ESTIP”). Your target incentive is 75% of your annual base salary calculated on
actual earnings for the fiscal year. For the 2013 fiscal year, you will receive
an annual incentive bonus award equal to the higher of the performance based
award amount earned under the ESTIP based upon your partial fiscal year
employment, or, the award you would have earned under the ESTIP assuming full
fiscal year employment with a 100% payout at target. In order to be eligible for
this bonus, we require you be employed with PetSmart at the end of the fiscal
year or as designated by the ESTIP document. PetSmart may modify compensation
and benefits from time to time, as it deems necessary and Board approval is
necessary prior to any bonus award or payment.

 

  4. A one-time cash bonus of $100,000, less applicable withholdings, to be paid
to you with your first paycheck following your date of employment, subject to
your compliance with requirements outlined in paragraphs 9 and 10 below related
to confidentiality, non-compete, non-solicitation, code of business ethics and
policies, and clawback policy. This bonus is also subject to a twelve (12) month
earn-out period with a pro-rata forfeiture during the first year of employment
in the event you leave the Company prior to your first anniversary date under
the conditions

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  5. described below. A forfeiture would apply in the event you voluntarily
terminate employment other than for circumstances which would constitute a
“Constructive Termination” (as such term is defined in the Amended and Restated
Executive Change In Control and Severance Benefit Plan), death or disability, or
are terminated for Cause prior to your first anniversary date. For purposes
hereof, “Cause” shall mean:

(i) a refusal or failure to follow the lawful and reasonable directions of the
Board of Directors (the “Board”) or individual to whom you report which refusal
or failure is not cured within 30 days following delivery of written notice of
such conduct to you;

(ii) a material failure by you to perform your duties in a manner reasonably
satisfactory to the Board that is not cured within 30 days following delivery of
written notice of such failure to you; or

(iii) your participation in, a conviction of or a plea of guilty or nolo
contendere to a felony or any crime involving moral turpitude, fraud or
dishonesty that is likely to have or has had a material adverse effect on the
Company.

The amount of payback due to forfeiture would be determined at the rate of
$8,333.33 per month and apply to the number of months (whole and partial)
between your termination date and your first employment anniversary date. Any
sums you owe under this agreement may be deducted from your final paycheck or
from any other sums owed to you by PetSmart.

 

  6. As part of our ongoing annual long-term incentive program, upon
commencement of your employment with PetSmart, Inc. you will be granted
non-qualified stock options and a target award of performance share units with a
total target value of $500,000 on the grant date. The grant date for your
initial equity award is intended to be on the first date of your employment with
PetSmart. One-half of the grant value will be in stock options and one-half in
performance share units. The grant price of the stock options is determined on
the grant date. The number of stock options granted will be based on the stock
price on the grant date and the binomial factor in effect on that date used for
pricing stock options by the Company. The number of performance share units
granted will be based on the stock price on the grant date. The final number of
performance share units awarded will be determined at the end of fiscal year
2015, based on Company performance on the financial measure selected by our
Board and outlined in the Grant Notice. The range of performance share units
awarded is between 0% and 200% of the target award. Performance share units vest
three years after the date of grant. Stock options vest at the rate of 25% of
the number of shares granted on each of the four consecutive anniversaries
following the date of grant. The Company reserves the right to modify, amend, or
withdraw the Plan. Stock option and performance share awards are governed by the
2011 Equity Incentive Plans and related award agreements.

You will be eligible to participate in future grants under our Equity Incentive
Plan. In accordance with the plan, annual grants are typically made in March of
each year. The annual equity grants are subject to performance criteria and
vesting terms that require Board approval. Although there is no commitment by
PetSmart to make future grants, based upon past practice the value of annual
grants for this position would be expected to be consistent with your grant upon
hire.

The actual amount of any plan award is always subject to Company and Board
approval, and, as noted above, no guarantee is made that future grants will
follow our previous practice. Under the terms of the plan itself, the Company
reserves the right to modify, amend, or withdraw it altogether.

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  7. In addition to the long term incentive plan equity grants outlined in
paragraph 5, you will receive additional one-time equity grants related to your
joining the Company with a target value of $200,000 on the grant date. The grant
date for this additional equity compensation is also intended to be on the first
date of your employment with PetSmart. These grants will consist of
non-qualified stock options and a target award of performance share units.
One-half of the grant value will be in stock options and one-half in performance
share units. The grant price of the stock options is determined on the grant
date. The number of stock options granted will be based on the stock price on
the grant date and the binomial factor in effect on that date used for pricing
stock options by the Company. The number of performance share units granted will
be based on the stock price on the grant date. The final number of performance
share units awarded will be determined at the end of fiscal year 2015, based on
Company performance on the financial measure selected by our Board and outlined
in the Grant Notice. The range of performance share units awarded is between 0%
and 200% of the target award. Performance share units vest three years after the
date of grant. Stock options vest at the rate of 25% of the number of shares
granted on each of the four consecutive anniversaries following the date of
grant. The Company reserves the right to modify, amend, or withdraw the Plan.
Stock option and performance share awards are governed by the 2011 Equity
Incentive Plans and related award agreements.

 

  8. You will receive full relocation benefits for your move from Wheaton, IL to
the Phoenix, AZ metropolitan area, under the terms of the Officer Relocation
Policy. You understand and agree that if you voluntarily terminate employment or
are terminated for cause prior to the expiration of the two-year period (the
beginning of which commences at the start of your relocation), you must repay
100% of all relocation expenses previously reimbursed or paid by PetSmart if you
leave during the first year, and all incurred costs on a prorated basis (over
the course of two years) during the second year. Any sums you owe under this
agreement may be deducted from your final paycheck or from any other sums
otherwise payable to you by PetSmart.

 

  9. In addition to your salary and incentive compensation, you will be eligible
for the following Company benefits consistent with Company policy: for the
remainder of the 2013 calendar year, your available vacation will be prorated
according to our vacation schedule and based on your start date. On January 1,
2014, you will be eligible for 160 potential vacation hours for calendar year
2014. You will be eligible for health, life and disability insurance pursuant to
the PetSmart, Inc. SmartChoices Benefits Plan on the first day of the month
following your hire date. Details about these benefits are provided in the
Associate Handbook and Summary Plan Descriptions. You will also be eligible to
participate in the Company’s 401(k), Employee Stock Purchase Plan, Deferred
Compensation Plan and Executive Choice Program, as may be modified from time to
time with the approval of the Company’s Board of Directors. The Executive Choice
Program offers benefits up to a value of $20,000, which includes reimbursement
for expenses related to financial and estate planning, tax preparation and
insurance supplements. In addition, you are eligible for the annual Executive
Physical Program. Details and eligibility on these plans will be provided during
your orientation. The Company reserves the right to modify your compensation and
benefits from time to time, as it deems necessary.

 

  10. You will be expected to abide by all of the Company’s policies and
procedures. As a further condition of your employment, you agree to refrain from
any unauthorized use or disclosure of the Company’s proprietary or confidential
information or materials. You also agree to sign and comply with the Company’s
Confidentiality Agreement, Non-Compete and Non-Solicitation Agreement (which
non-compete shall not extend beyond 12 months), and Code of Business and Ethics
and Policies. By accepting this offer, you are representing that you are not a
party to any agreement (e.g., a non-compete) with any third party or prior
employer, which would conflict with or inhibit your performance of your duties
with PetSmart.

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  11. You will be covered under the PetSmart Clawback Policy and agree to
acknowledge in writing that you are subject to the terms of such policy. The
Company will enter into an Indemnification Agreement with you for your
protection and such Indemnification Agreement shall survive the termination of
your employment to the extent set forth therein.

 

  12. In the event of a dissolution, liquidation or sale of substantially all of
the assets of the Company or a merger or consolidation in which the Company is
not the surviving corporation (Change in Control) and where your employment is
terminated as a result of this change of control, within 36 months of the date
of the Change of Control, you will be entitled to benefits under our Amended and
Restated Change in Control and Severance Benefit Plan. You will also be entitled
to the benefits under the Amended and Restated Change in Control Severance
Benefit Plan for any “Covered Termination” (as such term is defined in the
Amended and Restated Change in Control and Severance Benefit Plan). A copy of
this Plan will be provided to you.

 

  13. Except as provided in the Amended and Restated Change in Control and
Severance Benefit Plan as noted in the previous paragraph, your employment
relationship is at-will and either you or the Company may terminate your
employment relationship at any time for any reason whatsoever, with or without
cause or advance notice.

 

  14. Except for provisions contained in the various Company policies and
benefit plans included but not limited to those referred to in this offer
letter, this letter constitutes the complete, final and exclusive embodiment of
the entire agreement between you and PetSmart with respect to the terms and
conditions of your employment. In entering this agreement, neither party is
relying on any promise or representation, written or oral, other than those
expressly contained herein, and this agreement supersedes any other such
promises, representations or agreements.

This letter agreement may not be amended or modified except in a written
agreement signed by you and a duly authorized Company officer. As required by
law, this offer of employment is subject to proof of your right to work in the
United States. This offer is also subject to your submitting to a mandatory drug
test and the completion of a background check, the results of which must be
satisfactory to the Company, in its sole discretion. The results of the drug
test or the background check may, at the Company’s sole discretion, disqualify
you from employment with the Company.

 

  15. To ensure rapid and economical resolution of any disputes which may arise
under this agreement and any disputes relating to your employment, you and the
Company agree that any and all disputes or controversies of any nature
whatsoever, regarding the interpretation, performance, enforcement or breach of
the Agreement, or your employment with PetSmart shall be resolved in Phoenix,
Arizona, by confidential, final and binding arbitration (rather than trial by
jury or court or resolution in some other forum) under the then existing rules
of the American Arbitration Association.

We are looking forward to you accepting our offer as described above. Please
sign below and immediately return this letter to: Erick Goldberg, Senior Vice
President, Human Resources, 19601 N 27th Avenue, Phoenix, Arizona 85027, e-mail:
egoldberg@ssg.petsmart.com. I look forward to you joining the PetSmart team and
feel that you have a great deal to contribute to our organization. I am
confident you will find challenge, satisfaction and opportunity while at
PetSmart.

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Very truly yours, PetSmart, Inc.  /S/ David Lenhardt David Lenhardt President
and Chief Operating Officer

 

Agreed and Accepted:    Carrie W. Teffner Date