UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 20, 2005
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CIRCUIT CITY STORES, INC.
(Exact name of registrant as specified in its charter)
Virginia
(State or other jurisdiction of
incorporation or organization)
001-05767 54-0493875
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(Commission (I.R.S. Employer
File No.) Identification No.)
9950 Mayland Drive, Richmond, Virginia 23233
(Address of principal executive offices) (Zip Code)
(804) 527-4000
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
SECTION 1 - REGISTRANT'S BUSINESS AND OPERATIONS
Item 1.01. Entry into a Material Definitive Agreement.
Equity Awards
Effective June 21, 2005, the Compensation and Personnel Committee approved
equity awards to executive officers under the Amended and Restated 2003 Stock
Incentive Plan (the "Plan"). The awards include performance accelerated
restricted stock, time-based restricted stock, and non-qualified stock options.
The awards are intended to be multi-year awards that will retain and motivate
key executives.
The performance accelerated restricted stock awards will vest on July 1
following the fourth anniversary of the award, with a provision for earlier
accelerated vesting based upon attainment of Operating Profit Margin at the
following levels, which are cumulative: at 2.3%, 25% of the shares will vest; at
3.25%, 50% of the shares will vest; at 4.0%, 75% of the shares will vest; and at
4.5%, 100% of the shares will vest. "Operating Profit Margin" means earnings
from continuing operations before income taxes as a percentage of net sales and
operating revenues, as reflected in the audited consolidated financial
statements of the Company, measured as of each fiscal year end for fiscal years
2006, 2007, 2008 and 2009.
The time-based restricted stock awards will vest on July 1 following the fourth
anniversary of the award, and the non-qualified stock options will vest at a
rate of 25% per year, beginning July 1, 2006.
The form of performance accelerated restricted stock award letter to be used
under the Plan is attached as Exhibit 10.1, the form of time-based restricted
stock award letter to be used under the Plan is attached as Exhibit 10.2, and
the form of non-qualified stock option grant letter to be used under the Plan is
attached as Exhibit 10.3.
At the request of W. Alan McCollough, Chairman and Chief Executive Officer, and
with the concurrence of the Compensation and Personnel Committee, Mr. McCollough
did not receive a grant of non-qualified stock options. Equity awards equal in
value to the grant of 400,000 stock options that otherwise would have been made
to Mr. McCollough will be set aside for "Chairman's awards" to individuals who
have the potential to make significant contributions to the achievement of the
Company's performance goals.
Equity awards made to executive officers under the Plan will include a provision
requiring the executive officer to retain at least 50% of the shares received
upon vesting or exercise, after satisfaction of applicable tax liabilities,
until the executive officer meets the Company's stock ownership guidelines.
Executive Officer Salary Increases
On June 20, 2005, the Compensation and Personnel Committee (the "Committee") of
the Board of Directors of Circuit City Stores, Inc. (the "Company") approved
compensation changes under existing Employment Agreements between the Company
and Philip J. Schoonover and between the Company and Michael E. Foss. These
changes were made in connection with the annual review of base salaries of
executive officers of the Company. In connection with this review, the Committee
reviewed and discussed a report from an independent compensation consultant
comparing the Company's compensation structure with market compensation data
derived from surveys of both the retail industry and a broader range of
industries.
A summary of compensation information for Mr. Schoonover and Mr. Foss is set
forth in Exhibit 99.1. The compensation changes are effective as of June 21,
2005.
SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits
Exhibit No. Description of Exhibit
99.1 Summary of Compensation Information
10.1 Form of Performance Accelerated Restricted Stock Award letter
10.2 Form of Time-based Restricted Stock Award letter
10.3 Form of Non-Qualified Stock Option Grant letter
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CIRCUIT CITY STORES, INC.
By: /s/ Philip J. Dunn
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Philip J. Dunn
Senior Vice President, Controller & Treasurer
Date: June 23, 2005
EXHIBIT INDEX
Exhibit No. Description of Exhibit
99.1 Summary of Compensation Information
10.1 Form of Performance Accelerated Restricted Stock Award letter
10.2 Form of Time-based Restricted Stock Award letter
10.3 Form of Non-Qualified Stock Option Grant letter