--------------------------------------------------------------------------------

 

EXHIBIT 10.1
Letterhead Graphic [letterhead.jpg]

April 2, 2009

James Fogarty
14 Old Roaming Brook Road
Mt. Kisco, NY 10544

Dear Jim:

On behalf of the Board of Directors of Charming Shoppes, Inc., I am pleased to
extend to you this offer of employment to serve in the position of President,
Chief Executive Officer (CEO) and Director of Charming Shoppes, Inc., located in
Bensalem, Pennsylvania. Your starting date will be a date mutually agreed
upon. We have enjoyed getting acquainted with you and are enthusiastic about the
skills, ideas and potential that you bring to our organization.  Likewise, we
are confident that you will find Charming Shoppes, Inc., an environment in which
excellence is recognized and rewarded.

Listed below is a summary of the key terms of your annual compensation
package.  Additional details follow this summary:
 
· 
Annual Base Salary: $1,000,000
   
· 
“Welcome” Equity Grant: 2,000,000 Stock Appreciation Rights (“SAR’s”)
   
·
Target Bonus:  150% of base which would equate to a target bonus opportunity of
$1,500,000

o 
The Company will pay you a guaranteed bonus of $1,500,000
 
(150% of base salary) for your first year of employment, in April 2010

· 
Annual Auto Allowance: $15,000
   
· 
Annual Flexible Perquisite Allowance: $20,000

 
 

--------------------------------------------------------------------------------

 
 

Additional Details

Welcome Equity Grant:  Charming Shoppes, Inc. hopes that you will accept our
offer of employment set forth in this letter.  As an inducement to accept this
offer, you will be granted 2,000,000 units of SAR’s in the aggregate to be
effective on your first day of employment.  900,000 SAR’s and 1,100,000 SAR’s,
respectively, will be granted pursuant to our 2004 Stock Award and Incentive
Plan (the “2004 Plan”) and our 2003 Incentive Compensation Plan (the “2003
Plan”), respectively.  The SAR’s granted under the 2004 Plan will vest in equal
amounts over the first four years from the date of grant, all as more fully set
forth in the Stock Appreciation Rights Agreement (2004 Plan) attached
hereto.  The SAR’s granted under the 2003 Plan will vest in 25% increments at
the earlier of (a) achieving a target stock price within a designated fiscal
year, or (b) the last trading day of each of the first four fiscal years, all as
more fully set forth in the Stock Appreciation Rights Agreement (2003 Plan)
attached hereto.   The SAR’s will be settled by delivery of shares at the time
of vesting.  Actual value at the time of vesting will be determined by the
market performance of the stock and are not guaranteed by the Company.

The approved grant under the 2003 Plan will be made in reliance on NASDAQ
Marketplace Rule 4350(i) (1) (A) (iv), and on terms substantially the same as
set forth in the Stock Appreciation Rights Agreement (2003 Plan).  That rule
requires that we issue a press release announcing this grant shortly after it is
effective.  Under NASDAQ rules, we will be required to identify you by name in
the press release and provide details regarding the grant.

Bonus Program:  For fiscal year 2010, which began February 3, 2009, you will be
eligible to participate in an Executive Incentive Plan under the 2004 Stock
Award and Incentive Plan with a targeted bonus opportunity of one hundred and
fifty percent (150%) of your base salary.  Plan design is subject to review and
approval each year by the Company’s Board of Directors.  Under the current plan
design, the Executive Incentive Plan is built upon the Company achieving a
financial target established for that fiscal year, in combination with the
achievement of any target performance goals.  The Company does not guarantee
bonus payments, except for the guaranteed bonus of $1,500,000 payable to you for
your first year of employment in April 2010.  Should you be entitled to a bonus
payment in excess of target for fiscal year 2010, such excess will be paid to
you in addition to the guaranteed bonus payment of $1,500,000.  The plan
typically has provided for a reduced bonus payout should the Company results
reach a minimum level as determined by the Board of Directors.  The payment
level increases as the Company approaches the Targeted level and should the
Company surpass the Targeted level, your bonus payout may increase up to two
hundred percent (200%) of your base salary based upon the business performance
and you personally achieving any target performance goals set for you.  Shortly
after you start with the Company you will receive additional information about
this program.

 
2

--------------------------------------------------------------------------------

 

Te

Auto Allowance: As it is presently designed, you will receive one thousand two
hundred fifty dollars ($1,250) per month allowance.  The Company requires all
executives covered under this program to maintain a record of business usage and
to provide that information to the Company’s finance department prior to each
year-end.  Auto Allowance awards are paid on a monthly basis and will appear on
your paycheck at the beginning of the month.

Flexible Perquisite Allowance:  You will have a flexible perquisite allowance of
$20,000 per year to spend on specified items such as financial counseling and
wellness expenses. The details of this specific program will be more fully
described upon commencement of your employment.

BENEFITS:  The Company will also contribute toward a robust selection of
benefits that are part of your Total Rewards package, and which are outlined in
the Benefits Enrollment Guidebook 2009 which is included with this
letter.  Please understand that eligibility for benefits may be triggered by
your starting date of employment and any adjustments to the effective dates of
coverage will be made and confirmed with you, once we have established your
actual employment date.  Listed below are additional details.

Medical Benefits: You will be eligible to participate in your choice of the
Company's medical options, prescription, vision and dental programs as of the
first of the month following 30 days of employment.  The Company has established
a Premium Conversion (S125) Plan so that you are able to pay your portion of the
coverage with pre-tax dollars.  You will receive an enrollment guidebook
detailing the plan provisions and related costs approximately two weeks prior to
your eligibility date for coverage.  Should you decide to forego participation
in the Company health related coverage plans during your enrollment time, you
may re-consider your option to do so during the open enrollment period which has
typically been held in November of each year with coverage effective at the
beginning of January. Short-term disability, life insurance and other optional
benefit offerings will go into effect after the required waiting periods.

Executive Life Insurance:  Effective with the commencement of your employment,
you will be provided with enrollment information for an additional life
insurance benefit that will provide a death benefit equal to one time your
salary ($1,000,000).

Paid-Time-Off:  In calendar year 2009, you will be eligible to participate in
the Company Paid Time Off Plan (PTO) with 20 PTO days available.  Under the
Company’s PTO Plan you may use a PTO day to cover vacation time, sick days,
personal days, etc.  In calendar year 2010 you will be eligible for 26 PTO
days. The number of days you receive under the Company PTO plan does not include
Paid Holidays.  The Company recognizes six (6) paid holidays (Memorial Day,
Independence Day, Labor Day, Thanksgiving, Christmas, and New Years Day).

 
3

--------------------------------------------------------------------------------

 

Te

Annual Review: Your performance review would be completed by the Board of
Directors and you will have the opportunity to complete a self-appraisal of your
performance to review prior to completion of the final appraisal rating.

Long Term Incentive Program: In addition to the “Welcome” Grant of SAR’s, you
will be eligible to participate in the Long Term Incentive Program (LTIP), under
which the Company will provide you with an equity based award beginning
in Spring 2011 and in subsequent years as determined by the plan approved by the
Company’s Compensation Committee of the Board of Directors.  While subject to
review each year by the Company’s Board of Directors, the annual LTIP program
for individuals at your position level with the Company, currently has both
performance based, as well as a time based equity components of the award.  Each
year, plan details are outlined to you in a communication packet prepared
specifically for you.  In addition you will be able to access information about
your LTIP balances through our Fidelity Investment partner who handle the
administration and account management of the stock awards; Employee Stock
Purchase Plan, the 401(k), and the Non Qualified (NQ) Variable
Deferred Compensation Plan accounts.

401(k):  After the required waiting periods, you will be eligible for the
Company’s 401(k) Retirement Program which is administered by Fidelity
Investment.  Based upon your position and compensation level, when you have
reached the eligibility date to place “new” money into the Company’s 401(k)
plan, you will be restricted to a contribution level of no more than three
percent (3%) of your salary.  You will be eligible to roll-over any money from a
qualified plan into the Company’s 401(k) plan upon your hire date.  The Benefit
Service Center staff will be available to answer any questions you may have with
respect to these benefits.  Please note that the Company has suspended matching
contributions at least through December 31, 2009.

Variable Deferred Compensation Plan: After the commencement of your employment
with the Company, you will be eligible to participate in the Company’s Variable
Deferred Compensation Plan for Executives.  The details of this plan will be
explained to you following your start date. Please note that the Company has
suspended matching contributions at least through December 31, 2009.

Relocation:  The Company recognizes that relocation to a new community often
takes time and careful consideration of the options regarding where to settle in
the greater Bensalem, Pennsylvania area.  Prior to initiating your relocation in
the Bensalem area, all temporary living and commutation expenses for the first
twelve months of your employment will be paid for by the Company.

Under our relocation policy, you will have twelve (12) months from your date of
hire to complete the relocation process.  The Company currently partners with
Primacy Relocation LLC to handle this important process for you and your
family.  It is our goal to make your relocation process efficient in the form of
services offered and to reduce the cost impact that may be incurred during the
relocation process.  It is imperative that if you accept our offer of
employment, you speak with Primacy prior to initiating contact with any other
outside party regarding your relocation (including but not limited to Real
Estate Agents, Temporary Living Providers and/or Household Good
Providers).  Failure to work within the established relocation guidelines,
administered by Primacy, may result in a loss of this relocation benefit.

 
4

--------------------------------------------------------------------------------

 

Te

As the Chief Executive Officer, you will be receiving the highest level of
relocation support offered under our program which includes a period of
temporary housing including storage of your household goods until your new
location is confirmed, a miscellaneous expense allowance to help with the cost
of items not covered under the relocation policy, such as carpet cleaning, car
registration/license fees, utility hookups, etc., and the eligibility to
participate in our Buyer Value Option (BVO).  This BVO feature assists you with
the sale of your existing home when compared to a direct reimbursement program
through the following:

·  
Having the customer closing costs paid through Primacy therefore not requiring
tax assistance

·  
Your eligibility to receive an equity advancement (once an offer has been
received on the home you are selling) which will allow you to move more quickly
on the purchase of a new home

·  
Primacy will handle the closing on the home you are selling, which would
eliminate the need for you to return home for a closing process.

Taxable relocation payments will appear on your individual W-2 and the Company
will provide tax assistance (gross-up) on many of the taxable payments to offset
your individual tax burden.  We encourage you to seek advice from a tax expert
to determine your individual tax impact regarding relocation expenses.  As a
condition to reimbursement, you will be responsible for keeping accurate expense
records, completing relocation expense reports and providing clear, readable
receipts.

A summary of the relocation process is included with this offer letter so that
you may better understand how our process works.  Once you have accepted our
offer we will work with Primacy to set up your relocation account and any
additional questions can be reviewed with your individual relocation
coordinator.

Executive Severance Agreement:  As of the first day of your employment with the
Company, the Executive Severance Agreement, which includes a Change in Control
provision, will become effective.  You in turn will commit to a non-compete,
non-solicitation, non-hire and non-disclosure undertaking, as more fully set
forth in the Executive Severance Agreement. The details around this protection
are provided to you as an enclosure to this letter.

As you may know, your employment with the Company is an at will
relationship.  This letter is not a formal contract of employment with the
Company or a contract for any particular length of employment, but rather a
summary of the initial terms of your employment.  In addition we have included a
copy of the CSI Standards of Business Conduct which will be applicable to you
during your employment with the Company.

If you are in full agreement with this offer and accept its terms, please sign
the offer letter, the Executive Severance Agreement, and the Business Conduct
Policy.  Please return the originals in the enclosed envelope, and we will
return fully executed copies for your records.

 
5

--------------------------------------------------------------------------------

 

Te

Jim, on behalf of all of us here at Charming Shoppes, Inc., I am pleased to
extend this offer of employment to you and I look forward to welcoming you to
the Company.  I believe you have the unique blend of talents to lead us in
transforming Charming Shoppes, Inc.  Your background is well suited to the
task.  The Board is confident that you can create substantial shareholder value.

Please contact Gale Varma, Executive Vice President – Human Resources at
215-633-4929 if there is anything we can do to assist you in a smooth transition
to the Company.  On behalf of all your new colleagues, I look forward to hearing
from you.

Sincerely,

Alan Rosskamm
Interim CEO and Chairman of the Board

I have read and agree to accept the terms offered to me:

___________________________________________
James Fogarty

___________________________________________
Date:

Attachments:
Executive Severance Agreement
SAR’s Agreement (2003 Plan)
SAR’s Agreement (2004 Plan)
Relocation Policy
SAR’s Hand-out
Benefits Enrollment Guidebook

cc:
Michael Goldstein – Charming Shoppes Board of Directors
 
Gale Varma - Executive Vice President – Human Resources

 
6

--------------------------------------------------------------------------------