Exhibit 10.4

 

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May 19, 2008

 

Shelley Broader

18134 Longwater Run Drive

Tampa, FL 33647

 

Dear Shelley,

 

Congratulations! On behalf of Michaels Stores Inc., I am pleased to confirm your
offer for the position of President & Chief Operating Officer, reporting to
Brian Cornell with the effective date of June 23, 2008, unless otherwise agreed
upon. Pursuant to the successful completion of your background investigation and
verification of information provided us in your employment application, and
contingent upon approval by the Board of Directors, the following confirms the
details of our offer:

 

Base Salary

 

Effective your first day of employment, your bi-weekly salary will be $24,038.47
($625,000.22 annualized).  Your salary increases will be consistent with our
policy of advancement on an individual merit basis and will be prorated in
accordance with your start date and company guidelines.  Members of our
corporate staff typically receive their annual performance appraisal in April,
based upon their results during the prior fiscal year.  Given the timing of your
start date, your first formal appraisal and any prorated merit increase is
expected to occur in April of 2009.

 

BONUS

 

Subject to Board approval of the Fiscal Year 2008 Bonus Plans, you will be
eligible to participate in the President & Chief Operating Officer Bonus Plan in
Fiscal Year 2008, which is based upon your results regarding established bonus
criteria associated with the bonus plan for your position during Fiscal 2008. 
In this plan you have the potential to earn a max bonus payout up to 140% of
your base salary.  Of the 140% (max) potential, 70% (target) is for attaining
plan results, and an additional 70% is allocated for attaining results above the
plan.  Bonus payments normally occur in April of each year and will be prorated
at seven-twelfths in accordance with your start date.

 

As discussed, we are pleased to guarantee your Fiscal Year 2008 bonus at the
Target level of $255,208.41 (gross) payable in April of 2009.  In accordance
with the FY 2008 bonus plan, you must be employed at fiscal year end to receive
a bonus payout.

 

Sign-on Bonus

 

Payable within (30) days of your start date, you will receive a one-time sign-on
bonus of $500,000.00 (net).  Please note, in accordance with company policy, any
associate who voluntarily leaves the company or is terminated for misconduct
within 12 months from the start date will be required to reimburse the company
for any and all monies paid for a sign-on bonus.

 

Long Term Incentive Plan and Co-Investment Opportunity

 

·                  As President & Chief Operating Officer, you will be eligible
to participate in the 2006 Equity Incentive Plan at the President & Chief
Operating Officer level.   Attached is a Compensation Illustration which
describes the proposed President & Chief Operating Officer stock option grant
level and the equity potential of such option grant. This illustration is not
and shall not be considered to be an offer of securities.

 

·                  As President & Chief Operating Officer, you will be eligible
to participate in the Management Co-Investment Program at the President & Chief
Operating Officer level, subject to satisfaction of the co-investment terms and
conditions, including your qualification as an appropriate investor under
securities laws.  The attached Compensation Illustration sets forth the current
President & Chief Operating Officer Participation level.  This illustration is
not and shall not be considered to be an offer of securities.

 

·                  Your first day of employment, you will be provided a one-time
grant of 54,134 shares of restricted stock pursuant to the terms in the attached
Restricted Stock Agreement.

 

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Shelley Broader

May 19, 2008

Page 2 of 4

 

EXECUTIVE CAR POLICY

 

In accordance with the Executive Car Policy, you are eligible to receive a new
automobile leased by the Company, with a fair market value not to exceed
$100,000, not more frequently than once every 24 months.  Under this policy,
upon the Company’s lease of any new automobile for you, any automobile
previously leased by the Company shall be returned to the Company.  A car leased
for you by the Company shall be insured by and for the benefit of the Company,
and the Company shall bear the cost of needed maintenance and repair.  All other
operational costs will be your responsibility.

 

BENEFITS

 

·                  You and your family will be eligible to participate in our
comprehensive executive medical, dental and vision plans at no cost to you. The
medical and dental plans provide for all medically necessary care without a
deductible or coinsurance.  Your coverage will begin on your first day of
employment, after completing our enrollment process.   Additionally, after 90
days, you will receive at no cost $50,000 of Basic Life Insurance and Accidental
Death and Dismemberment coverage.  You may also purchase group supplemental life
insurance for yourself, your spouse and any dependents and participate in our
flexible spending accounts.

 

·                  Through our Executive Life and Savings Program, you will be
covered for $1,000,000 of company paid Group Variable Universal Life Insurance
upon starting work for Michaels Stores.  This coverage also provides
a tax-advantaged opportunity for savings, including an employer match so that
your contributions up through 6% of eligible earnings can be matched at 50%
between this program and the 401(k) Plan.

 

·                  You will also be enrolled, at no cost to you, in our
Executive Short Term Disability Plan and Executive Long Term Disability Coverage
on your first day of active employment.

 

·                  You and your spouse are also eligible for an annual Executive
Physical at the Cooper Clinic.

 

·                  After you have completed six months of active service, you
will be eligible to participate in our 401(k) Plan.  This plan offers you a 50%
match on the first 6% of your earnings that you contribute to the Plan, a
variety of investment options, and the flexibility to perform daily fund
transfers.  During calendar year 2008, the IRS allows you to contribute a
maximum of $15,500 pre-tax dollars to the Plan; however, you may be limited to a
lesser amount due to the IRC discrimination testing results each year.  The
Highly Compensated Employee (HCE) 401(k) contribution limit for 2008 is 2%. You
may rollover any distribution from a prior employer’s qualified retirement plan
immediately without waiting six months.

 

·                  You will be eligible to receive four (4) weeks of paid
vacation in your first year of employment, following your 90th day of
employment.  Additional vacation time will be earned in accordance with company
policy.

 

·                  Sick days and personal days will be earned in accordance with
company policy.

 

·                  With certain restrictions, you will be entitled to receive a
25% discount on merchandise purchased in our Michaels and Aaron Brothers stores.

 

RELOCATION

 

·                  You will be provided $10,000 net to cover all of your living
expenses, any miscellaneous relocation expenses, and temporary housing expenses
beyond the first 90-day period provided by the Company.  This sum is considered
income and must be taxed as personal income.

 

·                  During your interim living period, Michaels will pay for two
trips a month for up to four months for home visits and/or house hunting trips
in the Dallas-Fort Worth area.

 

·                  You will be provided up to 90 days of corporate apartment
housing in the Dallas-Fort Worth area during the period of time before you have
relocated your household to a local residence.

 

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Shelley Broader

May 19, 2008

Page 3 of 4

 

·                  Michaels will cover reasonable and customary closing costs
(excluding discount points, hazard insurance, deposits and other prepaid
expenses) associated with the sale of your existing primary residence in Tampa,
FL and the purchase of a new residence in the Dallas-Fort Worth area.

 

·                  You will be reimbursed for duplicate mortgage payments,
excluding insurance, taxes, and utilities, up to $12,000 net.

 

·                  Michaels will arrange for and cover the costs of packing and
transporting your household goods.

 

·                  Contact our Compensation Administrator at 972.409.1505 to
initiate your move.  The Compensation Administrator will make a copy of the
Relocation policy available to you.  All taxable relocation benefits will be
grossed up in accordance with the Relocation policy.

 

·                  Please note an associate who voluntarily leaves the company
or is terminated for gross misconduct within 12 months from the date of the last
relocation payment on his/her behalf, will be required to reimburse the company
for all related payments.

 

Confidentiality and At Will

 

·                  During your employment with Michaels you will receive
confidential, proprietary and trade secret information.  Michaels has a vital
interest in maintaining its confidential information.  Accordingly, we will rely
upon you to protect the confidentiality such information obtained during your
employment.

 

·                  This is an at-will employment relationship, and either you or
Michaels may terminate the relationship for any reason, with or without cause,
and with or without notice.

 

On your first day of employment you need to bring forms of identification with
you that you may choose from the attached list of “acceptable documents”.

 

Shelley, it goes without saying that we look forward to having you join the
Michaels team and look forward to receiving your positive response to this
offer.  If you have any questions, please contact me at 972-409-5200.

 

Sincerely,

 

 

Shawn Hearn

Senior Vice President – Human Resources

 

Attachments

 

cc

Brian Cornell

 

Susann Fortney

 

RESPONSE TO OFFER FORM

 

Please indicate your agreement to the above by signing and dating below.  Return
the signed documents to Michelle Gadison via fax number (972) 409-1772 and US
mail the original to:

 

Michaels, 8000 Bent Branch Drive, Irving, TX 75063       Attention: Michelle
Gadison

 

I, Shelley G. Broader x accept or o decline the offer extended to me by Michaels
under the terms outlined in this letter.

 

 /s/ Shelley G. Broader

 

   May 19, 2008

 

 (SIGNATURE)

 

(DATE)

 

Please retain a copy of this document for your records.

 

Payment of compensation or benefits (other than base pay) is subject to the
eligibility provisions, individual benefit elections and other terms of the
plans as they apply.  For clarification or details concerning any of the plans,
refer to the Plan document.  In the event of a conflict between this document
and the Plan document, the Plan document will control, since this is an offer
letter and is only considered a summary of Plan Features.  Michaels Stores Inc.
reserves the right to change or cancel any plan details outlined in this offer
letter for any reason in accordance with federal, state or local laws.

 

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Shelley Broader

May 19, 2008

Page 4 of 4

 

Lists of Acceptable Documents

 

On your first day of employment, you need to bring two forms of identification
with you.  You may choose from the following:

 

List A

OR

List B

AND

List C

 

 

 

 

 

·                  U.S. Passport (unexpired or expired)

 

·                  Unexpired foreign passport, with a temporary I-551 stamp

 

·                  Permanent Resident Card or Alien Registration Receipt Card
with photograph (Form I-551)

 

·                Unexpired Employment Authorization Document that contains a
photograph (Form I-776, I-688, I-688A, I-688B)

 

·                  An unexpired foreign Arrival-Departure Record, Form I-94,
bearing the same name as the passport and containing and endorsement of the
alien’s nonimmigrant status, if that status authorizes the alien to work for the
employer

 

·                  Driver’s license or ID card issued by a state or outlying
possession of the U.S. provided it contains a photograph or information such as
name, date of birth, gender, height, eye color & address

 

·                  ID card issued by federal, state or local government agencies
or entities, provided it contains a photograph or information such as name, date
of birth, gender, height, eye color & address

 

·                  School ID card with a photograph

 

·                  Voter’s registration card

 

·                  U.S. Military card or draft record

 

·                  Military dependent’s ID card

 

·                  U.S. Coast Guard Merchant Mariner Card

 

·                  Native American tribal document

 

·                  Driver’s license issued by a Canadian government authority

 

For persons under age 18 who are unable to present a document listed above:

 

·                  School record or report card

·                  Clinic, doctor or hospital record

·                  Day-care or nursery school record

 

·                  U.S. social security card issued by the Social security
Administration (other than a card stating it is not valid for employment)

 

·                  Certification of Birth Abroad issued by the Dept. of State
(Form PS-545 or Form DS-1350)

 

·                  Original or certified copy of a birth certificate issued by a
state, county municipal authority or outlying possession of the U.S. bearing an
official seal

 

·                  Native American tribal document

 

·                  U.S. ID Card (INS Form I-197)

 

·                  ID Card for use of Resident Citizen in the U.S. (Form I-179)

 

·                  Unexpected employment authorization document issued by the
DHS (other than those listed under List A)

 

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