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): March 23, 2010

PetSmart, Inc.

(Exact Name of Registrant as Specified in Charter)

Delaware		0-21888		94-3024325
(State or Other Jurisdiction of		(Commission File Number)		(IRS Employer
Incorporation)				Identification No.)

19601 North 27^th Avenue, Phoenix, Arizona 85027
(Address of Principal Executive Offices) (Zip Code)
(623) 580-6100
(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:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 5.02		Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Cash Bonuses for Fiscal Year Ending January 30, 2011

     On March 23, 2010, the Compensation Committee of the Board of Directors, or the Committee, selected the following business criteria pursuant to PetSmart’s Executive Short-Term Incentive Plan, or the ESTIP, for determining the amount of the cash bonuses that may be awarded to our executive officers for our fiscal year ending January 30, 2011:

		—		Increase in comparable store sales as calculated from PetSmart’s audited financial statements (1); and
		—		End-of-year net cash as calculated from PetSmart’s audited financial statements, as adjusted. (2)

     The Committee also provided for additional potential cash bonuses for executive officers using earnings before taxes as calculated from PetSmart’s audited financial statements. As this metric has not been approved by our stockholders pursuant to the ESTIP, amounts awarded pursuant to achievement of this metric will not qualify as performance-based compensation pursuant to Section 162(m) of the Internal Revenue Code.

     The Compensation Committee also approved the following target bonuses, multipliers and business criteria weightings. The following chart has been prepared by combining both the ESTIP awards and the earnings before taxes award.

														SVP/Store
		Executive												Operations				Other
		Chairman				President/CEO				CFO				SVP/Merchandising				SVP
Bonus
Target Bonus as a percent of salary			100	%			100	%			75	%			75	%			50	%
Multiplier due to achievement against target criteria		up to 3 times				up to 3 times				up to 3 times				up to 3 times				up to 3 times
Criteria
Earnings before taxes			60	%			60	%			60	%			60	%			60	%
Comparable store sales			25	%			25	%			25	%			25	%			25	%
End-of-year net cash			15	%			15	%			15	%			15	%			15	%

PetSmart must achieve a minimum level of earnings before taxes before any payment can be made under any of the business criteria.

     On March 23, 2010, the Committee also approved the performance criteria for our 2010 Performance Share Unit Program, or the Program. Grants under the Program will be made from our 2006 Equity Incentive Plan. The Committee established the Program to provide greater linkage of pay and performance, help focus key employees on achieving a key performance goal, and provide significant award upside for achieving outstanding performance, while maintaining a level of total direct compensation competitiveness for participants. All members of our senior management team and other key members of management will participate in the Program. The Committee approved the grant of performance share units in a number equal to a specified dollar value divided by the closing price of our common stock as reported on the NASDAQ Global Select Market on March 23, 2010. The number of performance share units actually awarded is tied to the company’s achievement against “minimum,” “target,” and “maximum” levels of a performance metric selected by the Committee.

     For fiscal year 2010, the actual number of performance share units awarded to each participant will be set at an initial threshold of 50% of his or her target number of performance share units, regardless of performance results. The performance criteria require that we achieve a minimum earnings before taxes threshold before participants may be awarded more than 50% of the target

number of performance share units. If the minimum performance threshold is not achieved, 50% of the target number of performance share units will be awarded, and participants will forfeit the remainder of the target award. If the minimum performance threshold is met, the Program then provides, using the performance criteria, for the calculation of additional performance share units to be awarded, depending on the level of actual achievement. If we achieve between the minimum and maximum level of earnings before taxes performance, each participant will earn between 50% to 150% of his or her target number of performance share units, with linear interpolation for achievement falling between the minimum and target, and target and maximum performance levels, respectively, rounded up to the next whole number of performance share units. For example, if we achieve the target performance level of earnings before taxes, the target number of performance share units will be awarded. If earnings before taxes results are halfway between the minimum and target performance levels, 75% of the target number of performance share units will be awarded. Similarly, if performance results are halfway between the target and maximum performance levels, each participant will receive 125% of the target number of the performance share units. If we achieve at or above the maximum performance level of earnings before taxes, each participant will earn 150% of his or her target number of performance share units.

     Performance share units will be awarded (if at all) upon certification by the Committee of actual performance achievement following our 2010 fiscal year-end, subject to specified change of control exceptions that will accelerate the award of the performance share units. Thereafter, any awarded performance share units are subject to time-based vesting and will cliff vest on the third anniversary of the grant date (currently expected to be March 23, 2013), contingent upon the participant’s continued service to PetSmart. The awarded performance share units may also earlier vest upon the participant’s termination of employment due to retirement or upon specified change of control transactions. The shares of common stock will be issued to the participant once the performance share units vest.

     The minimum, target and maximum awards for the performance share units granted to our principal executive officer, principal financial officer and other named executive officers, as set forth in our proxy statement for our fiscal year 2008, expressed in dollars as of the grant date, are as follows:

				Minimum				Target				Maximum
Officer		Title		Award ($ value)				Award ($ value)				Award ($ value)
Philip L. Francis		Executive Chairman		$	525,000			$	1,050,000			$	1,575,000
Robert F. Moran		President and Chief Executive Officer		$	525,000			$	1,050,000			$	1,575,000
Lawrence P. Molloy		Senior Vice President, Chief Financial Officer		$	163,750			$	327,500			$	491,250
Joseph D. O’Leary		Senior Vice President, Merchandising		$	163,750			$	327,500			$	491,250
David K. Lenhardt		Senior Vice President, Store Operations		$	163,750			$	327,500			$	491,250

     A participant may earn less than his or her target award, but in no event may a participant earn an award in excess of his or her maximum award.

     The description of the Program contained herein is a summary of the material terms of the Program, does not purport to be complete, and is qualified in its entirety by reference to (i) the 2006 Equity Incentive Plan, which is filed as Exhibit 10.21 to PetSmart’s Annual Report on Form 10-K for the fiscal year ended January 28, 2007 (File No. 0-21888), filed with the Securities and Exchange Commission on March 28, 2007, (ii) the Form of Award Grant Notice and Performance Share Award Agreement filed as Exhibit 10.1 to PetSmart’s Form 8-K filed with the Securities and Exchange Commission on February 19, 2009 (File No. 0-21888)(the “8-K”), and (iii) the 2010 Performance Share Unit Program filed as Exhibit 10.1 hereto, each of which is incorporated herein by reference.

Item 9.01		Financial Statements and Exhibits.

Exhibit No.				Description
	10.1			2010 Performance Share Unit Program.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

EXHIBITS

Exhibit No.				Description
	10.1			2010 Performance Share Unit Program.