Exhibit
10.4


 





 


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.


 

















 


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.


 

















 


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.


 

















 


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)