exv10w1



 





Exhibit 10.1




Jeffrey N. Boyer




Michaels Stores, Inc.




Fiscal Year 2006

Bonus Plan




President and

Chief Financial Officer




 









 





Fiscal Year 2006 Bonus Plan




Purpose





	 	 	The Fiscal Year 2006 Bonus Plan has been developed to provide financial incentives to those members
of management that can make an important contribution to Michaels success and to encourage those
members to remain with the Company.





Eligibility





	1.	 	To be eligible for a bonus under the Fiscal Year 2006 Bonus Plan, an associate must be in a
bonus eligible position during Fiscal Year 2006. The Fiscal Year begins on January 29, 2006,
and concludes on February 3, 2007.
	 
	2.	 	An associate must be employed with the Company, in good standing (see #8), and in a bonus
eligible position at the time of bonus payout in order to be eligible to receive a bonus. If
an associate is not employed in a bonus eligible position at the beginning of the fiscal year,
but assumes a bonus eligible position during the fiscal year, he/she will be eligible to earn
a prorated bonus based upon the number of full months that he/she was in the bonus eligible
position. Individuals who assume a bonus eligible position on or before the 15th of the month
will receive credit for that entire month. Individuals who assume such a position after the
15th will not receive credit for that month.
	 
	3.	 	Bonus payments will normally occur by April 15th, following the end of the fiscal year.
Associates must be employed at the time of bonus payout in order to be eligible to receive a
bonus.
	 
	4.	 	Anyone hired or placed in a bonus eligible position after November 15, 2006 will not be
eligible to earn a bonus under the Fiscal Year 2006 Bonus Plan.
	 
	5.	 	Any associate who is on leave of absence longer than 90 days in Fiscal Year 2006 may be
eligible to earn a prorated bonus for time worked during the fiscal year, in accordance with
the normal proration guidelines outlined in this document.
	 
	6.	 	An associate must be in an active status for at least one month of Fiscal Year 2006, as
defined in this document, to be eligible for any bonus consideration.
	 
	7.	 	If an associate is promoted or changes position during the fiscal year, the associate may be
eligible for bonus earnings calculated using the number of full months (see #2) in each
position, the respective base salaries, and the applicable target bonus amount(s).
	 
	8.	 	An associate must be in “good standing” at the time of bonus payout to be eligible for a
Fiscal Year 2006 bonus. An associate does not meet this requirement if: 1) he/she receives an
overall performance rating of “Unacceptable” for FY 2006; and/or 2) at the time of bonus
payout (check date), he/she is on a Performance Improvement Plan
(“PIP”) that was initiated during FY 2006. Associates who are on a Performance Improvement Plan that
is initiated in FY 2007 will be eligible for a bonus payment for FY 2006.




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How a Bonus Is Earned



The following factors must be satisfied in order for an eligible associate to earn a bonus under
the Fiscal Year 2006 Bonus Plan.





	1.	 	The associate must be eligible as set forth in the Eligibility section of the Fiscal Year
2006 Bonus Plan.
	 
	2.	 	In order to earn a bonus under the Fiscal Year 2006 Bonus Plan, an associate must be employed
by the Company, in a bonus eligible position, at the time bonuses are paid. If an associate is
not employed by the Company in a bonus eligible position at the time bonuses are paid,
regardless of the reason for termination of employment, the associate does not earn a bonus
under the Fiscal Year 2006 Bonus Plan.
	 
	3.	 	An associate does not earn a bonus payment for FY 2006 if: 1) he/she receives an overall
performance rating of “Unacceptable” for FY 2006 and/or 2) at the time of bonus payout he/she
is on a Performance Improvement Plan (“PIP”) that was initiated during FY 2006. Associates who
are on a Performance Improvement Plan that was initiated in FY 2007 will be eligible for a
bonus payment for FY 2006.




The Company anticipates that this bonus plan will be part of an ongoing bonus program, but the
Company does not guarantee that the program will in fact continue for future periods or that the
terms, amounts or measures of the program will not change.



When bonuses are earned, the Company typically makes bonus payments in April of the following
fiscal year.




Bonus Payout Formula



Bonus payouts will be based upon your earned percentage multiplied by your base salary as of the
first day of the fiscal year (January 29, 2006). Your earned percentage will be based upon actual
performance as compared to Plan.




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Bonus Plan Measures, Definitions & Financial Targets




Fiscal Year 2006 Bonus plan measures, definitions and financial targets are as follows:




	 	 	 	 	 	 	 
	Plan Measure	 	Measure Definition	 	Plans Using This	 	Financial Target
	 	 	 	 	Measure	 	$ or %
	 
	Michaels
Stores Inc. Company
Profit Before Taxes
($)

	 	Gross sales less
cost of sales, SG&A
expenses &
interest, plus
investment income
and after other
income or expenses
(excludes effect of
one-time charges).
	 	Ÿ    Corporate

     Management

Ÿ    Distribution

Ÿ    Marketing

Ÿ    Merchandising

Ÿ    Inventory

     Management

Ÿ    Store Ops

     Corporate
	 	Ÿ     $                    
	 
	Net Income %
of Sales (Michaels
Stores, U.S. &
Canada)

	 	Net Sales less all
costs and expenses
on the store income
statement,
excluding the
effect of share
based compensation
expenses.
	 	Ÿ    Store Ops

     Corporate

     Management
	 	Ÿ                         %
	 
	Operating
Income % of Sales
(Michaels Stores,
U.S. & Canada)
Company / Zone

	 	Net Sales less all
costs and expenses
on the store income
statement,
excluding the
effect of bonus and
share based
compensation
expenses.
	 	Ÿ    Store Ops

Ÿ    Store Ops

     Support
	 	Ÿ     n/a
	 
	Store Sales
Plan (Michaels
Stores, U.S. &
Canada)
Company / Zone

	 	Net sales on store
income statement.
	 	Ÿ    All Store Ops
	 	Ÿ     $                    
	 
	Net Buyer

Contribution ($)*

	 	Scan margin plus
entitlements &
other allowances.
	 	Ÿ    Merchandising
	 	Ÿ     n/a
	 
	Merchandise

Comp Store Sales

Plan ($)

	 	Sales increase in
stores open at
least 13 months.
	 	Ÿ    Merchandising

Ÿ    Marketing

Ÿ    Inventory

     Management
	 	Ÿ     $                    
	 
	Company

Monthly Average

Inventory ($) per

store

	 	Avg. inventory per
store for the 13
months 1/06 through
1/07 divided by 13.
(Includes stores,
warehouse,
in-transit only)
	 	Ÿ    Merchandising

Ÿ    Inventory

     Management
	 	Ÿ     $                    
	 
	Supply Chain

Expense Ratio

	 	Ratio (%) of supply
chain expenses ($)
to volume ($)
	 	Ÿ    Distribution

     Corporate
	 	Ÿ     n/a
	 
	Specific DC

Performance

	 	Ratio (%) of DC
expense ($) to
volume ($)
	 	Ÿ    Distribution

     Center

     Management
	 	Ÿ     n/a
	 





     *May include inter-company profit allocation where applicable.



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2006 Bonus Plan — President and Chief Financial Officer




Michaels Stores Inc. Company Profit Before Taxes ($M)

Plan:




	 	 	 
	% of Plan	 	Bonus Payout
	 	 	% of Salary
	103+% ($___)
	 	80%
	101.5% ($___)
	 	70%
	Plan 100.0% ($___)
	 	60%
	99.0% ($___)
	 	50%
	98.0% ($___)
	 	40%
	97.0% ($___)
	 	30%
	96.0% ($___)
	 	20%
	95.0% ($___)
	 	15%
	94.0% ($___)
	 	10%
	Less than 94%
	 	0%






Example



* Actual results are 100% of plan



* Total Bonus earned = 60%




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