exh1013may32008.htm


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    EXHIBIT
10.13

     

    CHARMING
SHOPPES, INC.

     

    Annual
Incentive Program – Fiscal 2009

     

    As
Amended and Restated March 27, 2008

     

    1. 
 General

     

    This
Annual Incentive Program, as amended and restated (the “Program”), of Charming
Shoppes, Inc. (the “Company”) authorizes the grant of Annual Incentive Awards
under the Company’s 2003 Incentive Compensation Plan (the “Plan”) to executives
and key employees and sets forth certain terms and conditions of such
Awards.  The purpose of the Program is to help the Company secure and
retain executives and key employees of outstanding ability and to motivate such
persons to help the Company achieve excellent performance, by providing
incentives directly linked to measures of annual performance based on corporate
consolidated results, divisional results, individual performance, and/or other
performance measures, and otherwise to further the purposes of the
Plan.  The terms and conditions of the Plan are hereby incorporated by
reference in this Program.  If any provision of this program or an
implementing document hereunder conflicts with a provision of the Plan, the
provision of the Plan shall govern.  The Annual Incentive Awards
authorized hereunder for Covered Employees are intended to qualify as
“performance-based” compensation under Section 162(m) of the Code.

     

    2. 
 Definitions

     

    Capitalized
terms used in this Program but not defined herein have the same meanings as
defined in the Plan.  In addition to such terms and those terms
defined in Section 1 above, the following are defined terms under this
Program:

     

    (a) 
 “Annual
Incentive Award” or “Award” means the amount of a Participant’s Annual Incentive
Award Opportunity in respect of a specified Performance Period (typically, one
fiscal year) determined by the Committee to have been earned and the
Participant’s rights to future payments of cash in settlement
thereof.

     

    (b) 
 “Annual
Incentive Award Opportunity” or “Award Opportunity” means the Participant’s
opportunity to earn specified dollar-denominated amounts under this Plan based
on performance during a Performance Period.  An Annual Incentive Award
Opportunity constitutes a conditional right to receive settlement of an Annual
Incentive Award.

     

    (c) 
 “Participant”
means an employee participating in this Program.

     

    (d) 
 “Performance
Goal” means the Company, divisional, individual, or other accomplishment
required as a condition to the earning of an Award
Opportunity.  Unless otherwise determined by the Committee at the time
Award Opportunities are authorized, Performance Goals shall meet the
requirements of Section 6(b) of the Plan.

     

    (e) 
 “Performance
Period” means the period of one fiscal year over which an Annual Incentive Award
Opportunity may be earned, provided that the Committee may specify a shorter
duration for any Performance Period.

     

    (f) 
 “Retirement”
shall mean the voluntary termination of a Participant’s employment by the
Participant at or after the Participant has attained the age of 62 immediately
after which the Participant is not employed by the Company or any
Subsidiary.

     

    (g) 
 “Termination
of Employment” means (i) the termination of a Participant’s employment by the
Company or a Subsidiary, or (ii) the voluntary termination of a Participant’s
employment (other than a Retirement) immediately after which the Participant is
not employed by the Company or any Subsidiary.

     

    3. 
 Eligibility

     

    Employees
who are eligible to participate in the Plan may be selected by the Committee to
participate in this Program.

     

    4. 
 Designation
and Earning of Annual Incentive Award Opportunities

     

    (a) 
 Designation of Award Opportunities
and Performance Goals.  The Committee shall select employees to
participate in the Program for a Performance Period and designate, for each such
Participant, the Award Opportunity such Participant may earn for such
Performance Period, the nature of the Performance Goal the achievement of which
will result in the earning of the Award Opportunity, and the levels of earning
of the Award Opportunity corresponding to the levels of achievement of the
Performance Goal.  In the case of a Covered Employee, the Committee’s
determinations under this Section 4(a) shall be made not later than 90 days
after the Performance Period begins and in no event after 25% of the Performance
Period has elapsed.  The Award Opportunity earnable by each
Participant shall range from 0% to a specified maximum percentage of a specified
target Award Opportunity.  The Committee shall specify a table, grid,
or formula that sets forth the amount of a Participant’s Award Opportunity that
will be earned corresponding to the level of achievement of a specified
Performance Goal.  The foregoing notwithstanding, the per-person
limitation under Section 5 of the Plan shall apply to each Participant’s Award
Opportunity.  For this purpose, awards under the Plan shall be deemed
to use the per-person award limitation thereunder in the order in which the
applicable performance periods are scheduled to end, and for performance periods
ending on the same date in the order in which the award opportunities were
authorized.

     

    (b) 
 Determination of Annual Incentive
Award.  Within a reasonable time after the end of each
Performance Period, the Committee shall determine the extent to which the
Performance Goal for the earning of the Participant’s Annual Incentive Award
Opportunity was achieved during such Performance Period and the resulting Award
to the Participant for such Performance Period.  To the extent
permitted under Section 6(d) of the Plan, the Committee may adjust the amount of
an Award in its discretion in light of such considerations as the Committee may
deem relevant (but subject to the applicable maximum Award Opportunity
authorized for each Participant); provided, however, that, with respect to a
Covered Employee, no upward adjustment may be made and such adjustments
otherwise shall comply with applicable requirements of Treasury Regulation
1.162-27(e) under the Code.  Subject to Section 6 hereof, the Annual
Incentive Award shall be deemed earned and vested at the time the Committee
makes the determination pursuant to this Section 4(b).

     

    5. 
 Settlement
of Awards.

     

    (a) 
 Elective
Deferral.  A Participant will be permitted to elect to defer
settlement of the Annual Incentive Award if and to the extent such Participant
is selected to participate in the Company’s Variable Deferred Compensation Plan
for Executives and deferrals of Awards are authorized and validly deferred in
accordance with that plan.

     

    (b) 
 Settlement of
Award.  Any non-deferred Annual Incentive Award shall be paid
and settled by the Company promptly after the date of determination by the
Committee under Section 4(b) hereof (such scheduled payment date being the
“Stated Settlement Date”), but no later than 90 days after the end of the
Performance Period.  With respect to any deferred amount of a
Participant’s Annual Incentive Award, such amount will be credited to the
Participant’s deferral account under the Company’s Variable Deferred
Compensation Plan for Executives as promptly as practicable at or after the date
of determination by the Committee under Section 4(b) hereof.

     

    (c) 
 Tax
Withholding.  The Company shall deduct from any payment in
settlement of a Participant’s Annual Incentive Award or other payment to the
Participant any Federal, state, or local withholding or other tax or charge
which the Company is then required to deduct under applicable law with respect
to the Award.

     

    (d) 
 Non-Transferability.  An
Annual Incentive Award Opportunity, any resulting Annual Incentive Award,
including any deferred cash amount resulting from an Annual Incentive Award, and
any other right hereunder shall be non-assignable and non-transferable except
pursuant to the laws of descent and distribution in the event of the death of
the Participant (or pursuant to a beneficiary designation, if permitted by the
Committee), and shall not be pledged, encumbered, or hypothecated to or in favor
of any party other than the Company or a subsidiary or affiliate or subject to
any lien, obligation, or liability of the Participant to any party other than
the Company or a subsidiary or affiliate.

     

    6. 
 Effect
of Termination of Employment; Retirement

     

    Upon a
Participant’s Termination of Employment prior to completion of a Performance
Period or, after completion of a Performance Period but prior to the Stated
Settlement Date (i.e., the date of payment and settlement of the Participant’s
Annual Incentive Award under Section 5(b) with respect to that Performance
Period assuming no elective deferral), the Participant’s Annual Incentive Award
Opportunity relating to such Performance Period shall cease to be earnable and
shall be canceled, and the Participant shall have no further rights or
opportunities hereunder, unless otherwise provided in an employment agreement or
severance agreement between the Company and the Participant in effect at the
time of Termination of Employment or otherwise determined by the Committee in
its sole discretion.

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Upon a
Participant’s Retirement prior to completion of a Performance Period, a Pro-Rata
Portion of the Participant’s Annual Incentive Award relating to such Performance
Period shall be deemed earned and vested in accordance with and at the time that
the Committee makes, the determination pursuant to Section 4(b)
hereof.  For purposes hereof, a Pro-Rata Portion of the Participant’s
Annual Incentive Award shall be the product of (i) the Annual Incentive Award
determined by the Committee pursuant to Section 4(b) hereof as if the
Participant was employed by the Company or any Subsidiary through the completion
of the Performance Period and the Stated Settlement Date multiplied by (ii) a
fraction, the numerator of which shall be the number of full and partial months
that the Participant was employed by the Company or any Subsidiary between the
date of commencement of the Performance Period and the date of Retirement, and
the denominator of which shall be the number twelve (12).  The
Retirement of a Participant after completion of a Performance Period will not
result in forfeiture or otherwise affect the Participant’s Annual Incentive
Award for that Performance Period.

     

    7. 
 General
Provisions.

     

    (a) 
 Changes to this
Program.  The Committee may at any time amend, alter, suspend,
discontinue, or terminate this Program, and such action shall not be subject to
the approval of the Company’s shareholders or Participants; provided, however,
that any amendment to the Program beyond the scope of the Committee’s authority
shall be subject to the approval of the Board of Directors.  Nothing
shall limit the authority of the Committee, in its discretion, to accelerate the
termination of any deferral period and the resulting payment and settlement of
deferred amounts, with respect to an individual Participant or all Participants,
without the consent of the affected Participants.

     

    (b) 
 Unfunded Status of Participant
Rights.  Annual Incentive Awards, accounts, deferred amounts,
and related rights of a Participant represent unfunded deferred compensation
obligations of the Company for ERISA and federal income tax purposes and, with
respect thereto, the Participant shall have rights no greater than those of an
unsecured creditor of the Company.

     

    (c) 
 Nonexclusivity of the
Program.  The adoption of this Program shall not be construed
as creating any limitations on the power of the Board or Committee to adopt such
other compensation arrangements as it may deem desirable for any Participant, or
to pay other amounts as annual bonuses apart from the Program, whether under the
Plan or otherwise.

     

    (d) 
 No Right to Continued
Employment.  Neither the Program nor any action taken hereunder
shall be construed as giving any employee the right to be retained in the employ
of the Company or any of its subsidiaries or affiliates, nor shall it interfere
in any way with the right of the Company or any of its subsidiaries or
affiliates to terminate any employee’s employment at any time.

     

    (e) 
 Severablity.  The
invalidity of any provision of the Program or a document hereunder shall not be
deemed to render the remainder of this Program or such document
invalid.

     

    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Compensation
Committee Minutes March 27, 2008 and Board of Directors March 28,
2008

     

    Annual Incentive Program -
Designation of Fiscal 2009 Performance Period, Performance

     

    Goal, and Annual Incentive
Award Opportunities

     

    In
furtherance of Section 4 of the Annual Incentive Program (the “Program”), for
the Company’s 2009 fiscal year (the “Fiscal 2009 Performance Period”) the
Performance Goal, Award Opportunities, and participation shall be as set forth
in this Designation.  Terms used in this Designation have the meanings
defined in the Program.

     

    Part
I.             Performance
Goals and Award Opportunities for the Fiscal 2009 Performance
Period

     

    
      	
              (a)  

            	
              Nature of Performance
      Goals.  For the Fiscal 2009 Performance Period, the
      Performance Goal shall be based solely or in part on corporate
      consolidated results (specifically, consolidated operating earnings before
      income taxes  and excluding extraordinary and non-recurring
      items including, without limitation, severance payments, store closing
      costs and proxy contest and related expenses (“Consolidated Operating
      Earnings”), as defined in the “Charming Shoppes, Inc. 2008 Budget
      Presentation”), division performance goals and individual performance
      goals.  The specific Performance Goals and the Participants
      including all Executive Officers and other senior officers to whom they
      apply are set forth below and in Schedules I and II hereto.  The
      Performance Goals of other Participants shall be determined by the Chief
      Executive Officer and the Divisional President (to the extent applicable)
      in consultation with the Chief Financial Officer and the Executive Vice
      President - Human Resources of the Company (the “Authorized
      Officers”).  In furtherance of the
  foregoing:

            


    

     

    
      	
               
      

            	
              --

            	
              The
      Consolidated Operating Earnings Performance Goal for fiscal 2009 shall be
      a Minimum of $_____________ (the “Minimum Goal”), a Target of $__________,
      and a Maximum of $___________.

            


    

    
      	
               
      

            	
              --

            	
              The
      minimum, target and maximum levels of operating earnings for Lane Bryant,
      Fashion Bug, Catherines and Crosstown are set forth in Schedule I
      hereto.

            


    

    
      	
               
      

            	
              --

            	
              An
      Annual Incentive Award Opportunity based on the achievement of the
      Consolidated Operating Earnings Performance Goal will be earned only if
      Consolidated Operating Earnings equal or exceed the specified Minimum
      Goal; and An Annual Incentive Award Opportunity based on divisional
      operating income and individual performance goals will be earned only if
      the divisional operating income equals or exceeds the specified minimum
      level for the Performance Period for that division as set forth in
      Schedules I and II hereto.

            


    

    


    
      	
              (b)  

            	
              Designation of
      Participants and Award Opportunity Terms.  Participants
      in the Program for the Fiscal 2009 Performance Period shall be executive
      officers, senior officers and other employees designated in Impact Levels
      1 through 9 at the date hereof as more fully set forth in Schedule I
      hereto.  For each Participant in Impact Levels 1 through 9, the
      Fiscal 2009 Performance Period, the Participant’s target Annual Incentive
      Award Opportunity, designated levels of achievement of the Company
      Performance Goals, range of potential Annual Incentive Awards relating to
      the level of achievement of the Performance Goal, and other Award
      Opportunity terms are set forth on Schedule I and Schedule II
      hereto.  Division Performance Goals and related terms shall be
      determined by the Authorized Officers, subject to The divisional
      performance weights  in accordance with Schedule I and
      II.

            


    

     

    For all
“Corporate” participants (a) Annual Incentive Awards achieved at the minimum,
target and maximum Performance Goals will be equal to varying percentages of the
Annual Incentive Awards that would be payable on the achievement of the target
Performance Goal as more fully set forth in Schedule I hereto; and (b)
achievement of a Performance Goal between the minimum and target Performance
Goals set forth on Schedule I hereto shall be determined as
follows:  (i) the achievement of Consolidated Operating Earnings equal
to or greater than $__________ and less than $__________ will entitle payment of
an Annual Incentive Award equal to 25% of the Annual Incentive Award that would
be payable on the achievement of the target Performance Goal; (ii) the
achievement of Consolidated Operating Earnings equal to or greater than
$________ and less than $_________ will entitle payment of an Annual Incentive
Award equal to 50% of the Annual Incentive Award that would be payable on the
achievement of the target Performance Goal; (iii) the achievement of
Consolidated Operating Earnings equal to or greater than $________ and less than
$________ will entitle payment of an Annual Incentive Award equal to 50% of the
Annual Incentive Award that would be payable on the achievement of the target
Performance Goal; (iv) the achievement of Consolidated Operating Earnings equal
to $_________ will entitle payment of an Annual Incentive Award equal to 100% of
the Annual Incentive Award that is payable on the achievement of the target
Performance Goal; and (v)  Annual Incentive Awards based on the
achievement of Performance Goals between the applicable target and maximum
Consolidated Operating Earnings levels as set forth in the Schedule I hereto
will be determined on a pro-rata basis (i.e. interpolated) but in no event will
an Annual Incentive Award be granted in excess of the prescribed applicable
percentage of salary set forth in the Schedule I hereto for the achievement of
the maximum Consolidated Operating Earnings level even if performance in excess
of that level is achieved.

     

    
      	
              (c)  

            	
              Adjustments to
      Performance Goals.  The Committee may determine in its
      discretion to adjust the Performance Goals specified in (a) above (except
      as limited by the 2003 Plan and the
Program).

            


    

     

    


     

    


     

    


     

    Part
II.            Foreign
Participants

     

    Other
provisions hereof notwithstanding, the Chief Executive Officer of the Company
may modify any Annual Incentive Award Opportunity or Annual Incentive Award
granted to any Participant in order to comply with local laws or customs in any
jurisdiction other than the United States applicable to such
Participant.