SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 | |
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THE PEP BOYS–MANNY, MOE & JACK (Name of Registrant as Specified in Its Charter) |
BARINGTON COMPANIES EQUITY PARTNERS, L.P. |
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant) |
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Barington Capital Group, L.P.
888 Seventh Avenue
New York, New York 10019
July 13, 2006
Mr. William Leonard
Chairman of the Board
The Pep Boys – Manny, Moe & Jack
3111 West Allegheny Avenue
Philadelphia, Pennsylvania 19132
Dear Bill:
As the representative of a group of investors that is one of the largest stockholders of The Pep Boys – Manny, Moe & Jack (“Pep Boys” or the “Company”), we find ourselves being repeatedly disappointed by the performance of the Board of Directors of the Company. We are convinced that the Board has made a series of poor decisions to the detriment of shareholder value, including extending the employment of Lawrence Stevenson as the Company’s Chief Executive Officer in February 2005, when a clean break with no cost to stockholders was available, and maintaining its support of Mr. Stevenson’s operating plan despite the disastrous effects it has had on the Company’s financial and share price performance.
The Board’s review of strategic alternatives, which is now in its sixth month, appears to have been a failure. Furthermore, we believe that it is a serious mistake that the Board has failed to put in place a new leadership team capable of developing and executing an effective operating plan for the Company, as we have suggested a number of times. As Goldman, Sachs & Co. analyst Matthew Fassler noted over five months ago in his February 10, 2006 analyst report, “Leadership with different experience and qualifications would probably be able to engineer a turnaround of the service effort in short order, but that scenario does not appear imminent.”
Finally, we find it unacceptable that the Board has not yet held (or even scheduled) the 2006 annual meeting of stockholders, which the Company historically holds in late May or early June. As opposed to the Company’s directors who in the aggregate own less than 2% of the outstanding stock of the Company (excluding stock option and similar grants), the stockholders of Pep Boys have significant capital at risk. As shareholder value continues to deteriorate, we will not let the Board disenfranchise its stockholders, whether by hiding behind the strategic alternatives process or otherwise.
We believe that change is needed now at Pep Boys – not just at the CEO level but at the Board level as well. The Company has an extremely valuable asset base that stockholders have entrusted to the Board to protect and grow. The performance of the Pep Boys Board to date has convinced us that it is no longer worthy of this trust. For these reasons, we again call on the Board to promptly schedule the 2006 annual meeting of stockholders in order to permit the owners of Pep Boys to exercise their right to vote on the Company’s future.
Sincerely yours,
/s/ James A. Mitarotonda
James A. Mitarotonda
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Barington Companies Equity Partners, L.P. (“Barington”) intends to make a preliminary filing with the Securities and Exchange Commission (the “SEC”) of a proxy statement and an accompanying WHITE proxy card to be used to solicit votes for the election of its nominees at the 2006 Annual Meeting of Shareholders of The Pep Boys – Manny, Moe & Jack, a Pennsylvania corporation (the “Company”).
The following persons, which have joined with Barington in filing a Statement on Schedule 13D with respect to the Company’s common stock, are anticipated to be, or may be deemed to be, participants in any such proxy solicitation: Barington Companies Equity Partners, L.P., Barington Investments, L.P., Barington Companies Advisors, LLC, Barington Companies Investors, LLC, Barington Companies Offshore Fund, Ltd., Barington Offshore Advisors, LLC, Barington Capital Group, L.P., LNA Capital Corp., James Mitarotonda, Parche, LLC, Starboard Value and Opportunity Master Fund Ltd., RCG Carpathia Master Fund, Ltd., RCG Ambrose Master Fund, Ltd., RCG Halifax Fund, Ltd., Ramius Master Fund, Ltd., Ramius Fund III, Ltd, Admiral Advisors, LLC, Ramius Advisors, LLC, Ramius Capital Group, L.L.C., C4S & Co., L.L.C., Peter A. Cohen, Morgan B. Stark, Jeffrey M. Solomon, Thomas W. Strauss, RJG Capital Partners, L.P., RJG Capital Management, LLC, Ronald Gross, D.B. Zwirn Special Opportunities Fund, L.P., D.B. Zwirn Special Opportunities Fund (TE), L.P., D.B. Zwirn Special Opportunities Fund, Ltd., HCM/Z Special Opportunities LLC, D.B. Zwirn & Co., L.P., DBZ GP, LLC, Zwirn Holdings, LLC and Daniel B. Zwirn.
BARINGTON COMPANIES EQUITY PARTNERS, L.P. STRONGLY ADVISES ALL SHAREHOLDERS OF THE COMPANY TO READ SUCH PROXY STATEMENT WHEN IT IS AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION, INCLUDING INFORMATION RELATING TO THE PARTICIPANTS IN THE PROXY SOLICITATION. SUCH PROXY STATEMENT, WHEN FILED, AND ANY OTHER RELEVANT DOCUMENTS WILL BE AVAILABLE AT NO CHARGE ON THE SEC'S WEB SITE AT HTTP://WWW.SEC.GOV. IN ADDITION, SHAREHOLDERS MAY ALSO OBTAIN A COPY OF THE PROXY STATEMENT, WHEN FILED, WITHOUT CHARGE, BY CONTACTING BARINGTON’S PROXY SOLICITOR, MACKENZIE PARTNERS, INC., AT ITS TOLL-FREE NUMBER: (800) 322-2885 OR PROXY@MACKENZIEPARTNERS.COM.
INFORMATION REGARDING THE DIRECT OR INDIRECT INTERESTS OF CERTAIN PERSONS ANTICIPATED TO BE, OR WHO MAY BE DEEMED TO BE, PARTICIPANTS IN SUCH POTENTIAL PROXY SOLICITATION IS AS FOLLOWS:
As of July 12, 2006, Barington Companies Equity Partners, L.P. beneficially owns an aggregate of 907,619 shares of Common Stock, representing approximately 1.67% of the shares of Common Stock presently outstanding based upon the 54,252,467shares of Common Stock reported by the Company to be issued and outstanding as of May 26, 2006 in its Form 10-Q filed with the Securities and Exchange Commission on June 7, 2006 (the “Issued and Outstanding Shares”).
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As of July 12, 2006, Barington Investments, L.P. beneficially owns 661,735 shares of Common Stock, constituting approximately 1.22% of the Issued and Outstanding Shares. As of July 12, 2006, Barington Companies Offshore Fund, Ltd. beneficially owns 1,195,234 shares of Common Stock, constituting approximately 2.20% of the Issued and Outstanding Shares. As the investment advisor to Barington Companies Equity Partners, L.P. and the investment advisor and general partner of Barington Investments, L.P., Barington Companies Advisors, LLC may be deemed to beneficially own the 907,619 shares of Common Stock beneficially owned by Barington Companies Equity Partners, L.P. and the 661,735 shares of Common Stock beneficially owned by Barington Investments, L.P., representing an aggregate of 1,569,354 shares, constituting approximately 2.89% of the Issued and Outstanding Shares. As the general partner of Barington Companies Equity Partners, L.P., Barington Companies Investors, LLC may be deemed to beneficially own the 907,619 shares of Common Stock beneficially owned by Barington Companies Equity Partners, L.P., constituting approximately 1.67% of the Issued and Outstanding Shares. As the investment advisor to Barington Companies Offshore Fund, Ltd., Barington Offshore Advisors, LLC may be deemed to beneficially own the 1,195,234 shares of Common Stock beneficially owned by Barington Companies Offshore Fund, Ltd., constituting approximately 2.20% of the Issued and Outstanding Shares. As the majority member of Barington Companies Advisors, LLC and Barington Companies Investors, LLC, Barington Capital Group, L.P. may be deemed to beneficially own the 907,619 shares of Common Stock beneficially owned by Barington Companies Equity Partners, L.P. and the 661,735 shares of Common Stock beneficially owned by Barington Investments, L.P. As the majority member of Barington Offshore Advisors, LLC, Barington Capital Group, L.P. may also be deemed to beneficially own the 1,195,234 shares of Common Stock beneficially owned by Barington Companies Offshore Fund, Ltd., representing an aggregate of 2,764,588 shares, constituting approximately 5.10% of the Issued and Outstanding Shares. As the general partner of Barington Capital Group, L.P., LNA Capital Corp. may be deemed to beneficially own the 907,619 shares of Common Stock beneficially owned by Barington Companies Equity Partners, L.P., the 661,735 shares of Common Stock beneficially owned by Barington Investments, L.P. and the 1,195,234 shares of Common Stock beneficially owned by Barington Companies Offshore Fund, Ltd., representing an aggregate of 2,764,588 shares of Common Stock, constituting approximately 5.10% of the Issued and Outstanding Shares. As the sole stockholder and director of LNA Capital Corp., Mr. Mitarotonda may be deemed to beneficially own the 907,619 shares of Common Stock beneficially owned by Barington Companies Equity Partners, L.P., the 661,735 shares of Common Stock beneficially owned by Barington Investments, L.P. and the 1,195,234 shares of Common Stock beneficially owned by Barington Companies Offshore Fund, Ltd., representing an aggregate of 2,764,588 shares of Common Stock, constituting approximately 5.10% of the Issued and Outstanding Shares. Each of Barington Companies Advisors, LLC and Barington Companies Investors, LLC share voting and dispositive power with respect to the 907,619 shares of Common Stock beneficially owned by Barington Companies Equity Partners, L.P. Mr. Mitarotonda has sole voting and dispositive power with respect to the 907,619 shares of Common Stock beneficially owned by Barington Companies Equity Partners, L.P., the 661,735 shares of Common Stock beneficially owned by Barington Investments, L.P. and the 1,195,234 shares of Common Stock beneficially owned by Barington Companies Offshore Fund, Ltd. Mr. Mitarotonda disclaims beneficial ownership of any such shares except to the extent of his pecuniary interest therein.
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As of July 12, 2006, RCG Carpathia Master Fund, Ltd. beneficially owns 89,297 shares of Common Stock which may be acquired upon conversion of $2,000,000 aggregate principal amount of the Company’s outstanding 4.25% convertible debentures owned by RCG Carpathia Master Fund, Ltd.
As of July 12, 2006, each of Parche, LLC and Starboard Value and Opportunity Master Fund Ltd. beneficially own 365,451 and 976,333 shares of Common Stock, respectively, constituting approximately 0.67% and 1.80%, respectively, of the Issued and Outstanding Shares. As the managing member of Parche, LLC and the investment manager of Starboard Value and Opportunity Master Fund Ltd., Admiral Advisors, LLC may be deemed to beneficially own the 365,451 shares and the 976,333 shares of Common Stock owned by Parche, LLC and Starboard Value and Opportunity Master Fund Ltd., respectively, representing an aggregate of 1,341,784 shares, constituting approximately 2.47% of the Issued and Outstanding Shares. As of July 12, 2006, each of RCG Ambrose Master Fund, Ltd., RCG Halifax Fund, Ltd., Ramius Master Fund, Ltd. and Ramius Master Fund III, Ltd beneficially own 101,312, 107,471, 404,276 and 23,285 shares of Common Stock, respectively, constituting approximately 0.19%, 0.20%, 0.75% and 0.04%, respectively, of the Issued and Outstanding Shares. As the investment manager of Ramius Master Fund, Ltd. and Ramius Fund III, Ltd, Ramius Advisors, LLC may be deemed to beneficially own the 404,276 shares of Common Stock owned by Ramius Master Fund, Ltd. and the 23,285 shares of Common Stock owned by Ramius Fund III, Ltd, representing an aggregate of 427,561 shares, constituting approximately 0.79% of the Issued and Outstanding Shares. As the sole member of Admiral Advisors, LLC and Ramius Advisors, LLC and the investment manager of RCG Carpathia Master Fund, Ltd., RCG Ambrose Master Fund, Ltd. and RCG Halifax Fund, Ltd., Ramius Capital Group, L.L.C. may be deemed to beneficially own the 365,451 shares of Common Stock owned by Parche, LLC, the 976,333 shares of Common Stock owned by Starboard Value and Opportunity Master Fund Ltd., the 89,297 shares of Common Stock that may be acquired upon conversion of the convertible debentures owned by RCG Carpathia Master Fund, Ltd., the 101,312 shares of Common Stock owned by RCG Ambrose Master Fund, Ltd., the 107,471 shares of Common Stock owned by RCG Halifax Fund, Ltd., the 404,276 shares of Common Stock owned by Ramius Master Fund, Ltd. and the 23,285 shares of Common Stock owned by Ramius Fund III, Ltd, representing an aggregate of 2,067,425 shares, constituting approximately 3.81% of the Issued and Outstanding Shares. As the managing member of Ramius Capital Group, L.L.C., C4S & Co., L.L.C. may be deemed to beneficially own the 365,451 shares of Common Stock owned by Parche, LLC, the 976,333 shares of Common Stock owned by Starboard Value and Opportunity Master Fund Ltd., the 89,297 shares of Common Stock that may be acquired upon conversion of the convertible debentures owned by RCG Carpathia Master Fund, Ltd., the 101,312 shares of Common Stock owned by RCG Ambrose Master Fund, Ltd., the 107,471 shares of Common Stock owned by RCG Halifax Fund, Ltd., the 404,276 shares of Common Stock owned by Ramius Master Fund, Ltd. and the 23,285 shares of Common Stock owned by Ramius Fund III, Ltd, representing an aggregate of 2,067,425 shares, constituting approximately 3.81% of the Issued and Outstanding Shares. As the managing members of C4S & Co., L.L.C., each of Peter A. Cohen, Morgan B. Stark, Jeffrey M. Solomon and Thomas W. Strauss may be deemed to beneficially own the 365,451 shares of Common Stock owned by Parche, LLC, the 976,333 shares of Common Stock owned by Starboard Value and Opportunity Master Fund Ltd., the 89,297 shares of Common Stock that may be acquired upon conversion of the convertible debentures owned by RCG Carpathia Master Fund, Ltd., the 101,312 shares of Common Stock owned by RCG Ambrose Master Fund, Ltd., the 107,471 shares of Common Stock owned by RCG Halifax Fund, Ltd., the 404,276 shares of Common Stock owned by Ramius Master Fund, Ltd. and the 23,285 shares of Common Stock owned by Ramius Fund III, Ltd, representing an aggregate of 2,067,425 shares, constituting approximately 3.81% of the Issued and Outstanding Shares. Each of Messrs. Cohen, Stark, Solomon and Strauss share voting and dispositive power with respect to the 365,451 shares of Common Stock owned by Parche, LLC, the 976,333 shares of Common Stock owned by Starboard Value and Opportunity Master Fund Ltd., the 89,297 shares of Common Stock that may be acquired upon conversion of the convertible debentures owned by RCG Carpathia Master Fund, Ltd., the 101,312 shares of Common Stock owned by RCG Ambrose Master Fund, Ltd., the 107,471 shares of Common Stock owned by RCG Halifax Fund, Ltd., the 404,276 shares of Common Stock owned by Ramius Master Fund, Ltd. and the 23,285 shares of Common Stock owned by Ramius Fund III, Ltd, by virtue of their shared authority to vote and dispose of such shares. Messrs. Cohen, Stark, Solomon and Strauss disclaim beneficial ownership of such shares.
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As of July 12, 2006, RJG Capital Partners, L.P. beneficially owns 8,000 shares of Common Stock, constituting approximately 0.01% of the Issued and Outstanding Shares. As the general partner of RJG Capital Partners, L.P., RJG Capital Management, LLC may be deemed to beneficially own the 8,000 shares owned by RJG Capital Partners, L.P., constituting approximately 0.01% of the Issued and Outstanding Shares. As the managing member of RJG Capital Management, LLC, which in turn is the general partner of RJG Capital Partners, L.P., Mr. Gross may be deemed to beneficially own the 8,000 shares owned by RJG Capital Partners, L.P., constituting approximately 0.01% of the Issued and Outstanding Shares. Mr. Gross has sole voting and dispositive power with respect to the 8,000 shares owned by RJG Capital Partners, L.P. by virtue of his authority to vote and dispose of such shares. Mr. Gross disclaims beneficial ownership of any such shares except to the extent of his pecuniary interest therein.
As of July 12, 2006, each of D.B. Zwirn Special Opportunities Fund, L.P. and D.B. Zwirn Special Opportunities Fund (TE), L.P. beneficially own 52,944 shares and 52,989 shares of Common Stock, respectively, constituting approximately 0.10% and 0.10%, respectively, of the Issued and Outstanding Shares. As of July 12, 2006, each of D.B. Zwirn Special Opportunities Fund, Ltd. and HCM/Z Special Opportunities LLC beneficially own 315,270 shares and 108,281 shares of Common Stock, respectively, constituting approximately 0.58% and 0.20%, respectively, of the Issued and Outstanding Shares.
As the manager of D.B. Zwirn Special Opportunities Fund, L.P., D.B. Zwirn Special Opportunities Fund (TE), L.P., D.B. Zwirn Special Opportunities Fund, Ltd. and HCM/Z Special Opportunities LLC, D.B. Zwirn & Co., L.P. may be deemed to beneficially own the 52,944 shares of Common Stock beneficially owned by D.B. Zwirn Special Opportunities Fund, L.P., the 52,989 shares of Common Stock beneficially owned by D.B. Zwirn Special Opportunities Fund (TE), L.P., the 315,270 shares of Common Stock beneficially owned by D.B. Zwirn Special Opportunities Fund, Ltd. and the 108,281 shares of Common Stock beneficially owned by HCM/Z Special Opportunities LLC, representing an aggregate of 529,484 shares, constituting approximately 0.98% of the Issued and Outstanding Shares. As general partner of D.B. Zwirn & Co., L.P., DBZ GP, LLC may be deemed to beneficially own the 52,944 shares of Common Stock beneficially owned by D.B. Zwirn Special Opportunities Fund, L.P., the 52,989 shares of Common Stock beneficially owned by D.B. Zwirn Special Opportunities Fund (TE), L.P., the 315,270 shares of Common Stock beneficially owned by D.B. Zwirn Special Opportunities Fund, Ltd. and the 108,281 shares of Common Stock beneficially owned by HCM/Z Special Opportunities LLC, representing an aggregate of 529,484 shares, constituting approximately 0.98% of the Issued and Outstanding Shares. As the managing member of DBZ GP, LLC, Zwirn Holdings, LLC may be deemed to beneficially own the 52,944 shares of Common Stock beneficially owned by D.B. Zwirn Special Opportunities Fund, L.P., the 52,989 shares of Common Stock beneficially owned by D.B. Zwirn Special Opportunities Fund (TE), L.P., the 315,270 shares of Common Stock beneficially owned by D.B. Zwirn Special Opportunities Fund, Ltd. and the 108,281 shares of Common Stock beneficially owned by HCM/Z Special Opportunities LLC, representing an aggregate of 529,484 shares, constituting approximately 0.98% of the Issued and Outstanding Shares. As the managing member of Zwirn Holdings, LLC, Daniel B. Zwirn may be deemed to beneficially own the 52,944 shares of Common Stock beneficially owned by D.B. Zwirn Special Opportunities Fund, L.P., the 52,989 shares of Common Stock beneficially owned by D.B. Zwirn Special Opportunities Fund (TE), L.P., the 315,270 shares of Common Stock beneficially owned by D.B. Zwirn Special Opportunities Fund, Ltd. and the 108,281 shares of Common Stock beneficially owned by HCM/Z Special Opportunities LLC, representing an aggregate of 529,484 shares, constituting approximately 0.98% of the Issued and Outstanding Shares. Mr. Zwirn disclaims beneficial ownership of such shares except to the extent of his pecuniary interest therein.
The persons listed above do not believe that certain of the foregoing information is called for by the Items of Schedule 14A and are disclosing it for supplemental informational purposes only. Information with respect to each of the persons is given solely by such person and no person shall have responsibility for the accuracy or completeness of information supplied by another person.
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