**Exhibit10.4**

 

 

May 19, 2008

 

Shelley Broader

18134 Longwater Run Drive

Tampa, FL 33647

 

Dear Shelley,

 

Congratulations! Onbehalf of Michaels Stores Inc., I am pleased to confirm your offer for theposition of President & Chief Operating Officer, reporting to BrianCornell with the effective date of June 23, 2008, unless otherwise agreedupon. Pursuant to the successful completion of your background investigationand verification of information provided us in your employment application, andcontingent upon approval by the Board of Directors, the following confirms thedetails of our offer:

 

**Base Salary**

 

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

 

## **Bonus**

 

Subject to Board approvalof the Fiscal Year 2008 Bonus Plans, you will be eligible to participate in the**President & Chief Operating Officer BonusPlan** in Fiscal Year 2008, which is based upon your results regardingestablished bonus criteria associated with the bonus plan for your positionduring Fiscal 2008.  In this plan youhave the potential to earn a max bonus payout up to **140%**of your base salary.  Of the **140%** (max) potential, **70%**(target) isfor attaining plan results, and an additional **70%**isallocated for attaining results above the plan. Bonus payments normally occur in April of each year and will beprorated at seven-twelfths in accordance with your start date.

 

As discussed, we arepleased to **guarantee your Fiscal Year 2008 bonus**atthe**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**

 

Payablewithin (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 formisconduct within 12 months from the start date will be required to reimbursethe company for any and all monies paid for a sign-on bonus.

 

**Long Term Incentive Plan andCo-Investment Opportunity**

 

·                  As President &Chief Operating Officer, you will be eligible to participate in the 2006 EquityIncentive Plan at the President & Chief Operating Officer level.   Attached is a Compensation Illustrationwhich describes the proposed President & Chief Operating Officer stockoption grant level and the equity potential of such option grant. Thisillustration 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 ManagementCo-Investment Program at the President & Chief Operating Officerlevel, subject to satisfaction of the co-investment terms and conditions,including your qualification as an appropriate investor under securitieslaws.  The attached CompensationIllustration sets forth the current President & Chief OperatingOfficer Participation level.  Thisillustration is not and shall not be considered to be an offer of securities.

 

·                  Yourfirst day of employment, you will be provided a one-time grant of 54,134 sharesof restricted stock pursuant to the terms in the attached Restricted StockAgreement.

 

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Shelley Broader

May 19, 2008

Page 2 of 4

 

# **ExecutiveCar Policy**

 

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

 

# **Benefits**

 

·                  Youand your family will be eligible to participate in our comprehensive **executive medical, dental and vision plans** at no cost toyou. The medical and dental plans provide for all medically necessary carewithout a deductible or coinsurance. Your coverage will begin on your first day of employment, aftercompleting our enrollment process.   Additionally, after 90 days, youwill receive at no cost **$50,000** ofBasic Life Insurance and Accidental Death and Dismemberment coverage.  You may also purchase group supplemental lifeinsurance for yourself, your spouse and any dependents and participate in ourflexible spending accounts.

 

·                  Throughour Executive Life andSavings Program, you will be covered for **$1,000,000** ofcompany paid **Group Variable Universal Life Insurance**upon starting work for Michaels Stores.  This coverage also providesa tax-advantaged opportunity for savings, including an employer matchso that your contributions up through 6% of eligible earnings can be matched at50% between this program and the 401(k) Plan.

 

·                  Youwill also be enrolled, at no cost to you, in our **ExecutiveShort Term Disability Plan** and **Executive Long TermDisability Coverage** on your first day of active employment.

 

·                  Youand your spouse are also eligible for an annual **ExecutivePhysical** at the Cooper Clinic.

 

·                  Afteryou have completed six months of active service, you will be eligible toparticipate in our **401(k) Plan**.  This plan offers you a 50% match on the first6% of your earnings that you contribute to the Plan, a variety of investmentoptions, and the flexibility to perform daily fund transfers.  During calendar year 2008, the IRS allows youto contribute a maximum of $15,500 pre-tax dollars to the Plan; however, youmay be limited to a lesser amount due to the IRC discrimination testing resultseach year.  The Highly CompensatedEmployee (HCE) 401(k) contribution limit for 2008 is 2%. You may **rollover** any distribution from a prior employer’s qualifiedretirement plan immediately **without waiting six months**.

 

·                  You will beeligible to receive **four (4) weeks ofpaid vacation** in your first year of employment, following your 90thday of employment.  Additional vacationtime will be earned in accordance with company policy.

 

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

 

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

 

# **Relocation**

 

·                  Youwill be provided**$10,000 net** to cover all of yourliving expenses, any miscellaneous relocation expenses, and temporary housingexpenses beyond the first 90-day period provided by the Company.  This sum is considered income and must betaxed as personal income.

 

·                  Duringyour interim living period, Michaels will pay for **two trips amonth for up to four months** for home visits and/or house huntingtrips in the Dallas-Fort Worth area.

 

·                  Youwill be provided up to **90 days of corporateapartment housing** in the Dallas-Fort Worth area during the period oftime before you have relocated your household to a local residence.

 

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Shelley Broader

May 19, 2008

Page 3 of 4

 

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

 

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

 

·                  Michaelswill arrange for and cover the costs of packing and transporting your householdgoods.

 

·                  Contactour Compensation Administrator at 972.409.1505 to initiate your move.  The Compensation Administrator will make acopy of the Relocation policy available to you. All taxable relocation benefits will be grossed up in accordance withthe Relocation policy.

 

·                  Pleasenote an associate who voluntarily leaves the company or is terminated for grossmisconduct within 12 months from the date of the last relocation payment onhis/her behalf, will be required to reimburse the company for all relatedpayments.

 

**Confidentiality and At Will**

 

·                  Duringyour employment with Michaels you will receive confidential, proprietary andtrade secret information.  Michaels has avital interest in maintaining its confidential information.  Accordingly, we will rely upon you to protectthe confidentiality such information obtained during your employment.

 

·                  Thisis an at-will employment relationship, and either you or Michaels may terminatethe relationship for any reason, with or without cause, and with or withoutnotice.

 

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

 

Shelley, it goes withoutsaying that we look forward to having you join the Michaels team and lookforward to receiving your positive response to this offer.  If you have any questions, please contact meat 972-409-5200.

 

Sincerely,

 

 

Shawn Hearn

Senior Vice President –Human Resources

 

Attachments

 
| cc     | Brian Cornell  |
|--------|----------------|
|   | Susann Fortney |

 

**RESPONSETO OFFER FORM**

 

Please indicate youragreement to the above by signing and dating below.  Return the signed documents to MichelleGadison 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 acceptor o decline the offer extended to me by Michaelsunder 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.**

 

Paymentof compensation or benefits (other than base pay) is subject to the eligibilityprovisions, individual benefit elections and other terms of the plans as theyapply.  For clarification or detailsconcerning any of the plans, refer to the Plan document.  In the event of a conflict between thisdocument and the Plan document, the Plan document will control, since this isan offer letter and is only considered a summary of Plan Features.  Michaels Stores Inc. reserves the rightto change or cancel any plan details outlined in this offer letter for anyreason 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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