UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 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): January 27, 2006
THE
CHILDREN’S PLACE RETAIL STORES, INC.
(Exact
name of registrant as specified in its charter)
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Delaware
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0-23071
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31-1241495
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(State
or other jurisdiction of
incorporation)
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(Commission
File
Number)
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(IRS
Employer
Identification
No.)
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915
Secaucus Road, Secaucus, New
Jersey
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07094
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(Address
of principal executive
offices)
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(Zip
Code)
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(201)
558-2400
Registrant's
Telephone Number
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 (see General Instruction A.2 below):
| o |
Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act
(17
CFR 240.13e-4(c))
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Item
1.01. Entry
Into a Material Definitive Agreement.
Acceleration
of Vesting of Options.
On
and as
of January 27, 2006, the Compensation Committee (the “Committee”) of the Board
of Directors (the “Board”) of The Children’s Place Retail Stores, Inc. (the
“Company”), after discussion with the Board, approved the acceleration of
vesting for outstanding in- and out-of-the-money stock options held by the
Company’s employees representing the right to purchase a total of approximately
2.1 million shares of the Company’s common stock (the “Accelerated Options”).
The vesting of stock options for a total of 348,000 shares previously granted
to
non-employee directors and certain executives of the Company was not changed
by
this action.
In
connection with this acceleration of vesting, the Committee also established
restrictions on the sale or other transfer of shares that may be acquired upon
the exercise of Accelerated Options by each holder of Accelerated Options whose
Accelerated Options represent the right to purchase more than 5,000 shares
of
common stock (each, a “Significant Holder”). Significant Holders will be
permitted to exercise Accelerated Options prior to the time such Accelerated
Options would have been vested under their original vesting schedule, subject
to
the Significant Holder’s acceptance of the transfer restrictions established by
the Committee, which are contained in a transfer restriction agreement provided
to each Significant Holder. Such transfer restrictions prevent Significant
Holders from selling or transferring any shares acquired upon the exercise
of
Accelerated Options until the date on which the Accelerated Options would have
otherwise vested under their original vesting schedule. Such transfer
restrictions lapse immediately upon the Significant Holder’s death, disability
or retirement, or a change in control of the Company. In the event a Significant
Holder ceases to be employed by the Company for any reason other than death,
disability or retirement from the Company, such transfer restrictions will
continue to apply for the remainder of the original vesting period as if the
Significant Holder’s employment with the Company had not ceased or terminated.
Transfer restrictions will not apply after the original vesting date for such
Accelerated Options with respect to any shares acquired upon the exercise of
Accelerated Options, whether or not the Significant Holder executed the transfer
restriction agreement.
Except
as
described above, all other terms and conditions of each Accelerated Option
and
the Company’s equity compensation plans remain unchanged.
The
decision to accelerate the vesting of certain stock options was made to reduce
equity compensation expense that would have been recorded in future periods
following the Company’s adoption in the first quarter of fiscal 2006 of
Statement of Financial Accounting Standard No. 123, “Share Based Payment
(revised 2004)” (“SFAS 123R”). Under accounting guidance effective during fiscal
2005 (Accounting Principles Board Opinion 25 and other relevant accounting
guidance), the Company will record an expense in the fourth quarter of fiscal
2005 of approximately $2.1 million, which represents the Company’s estimate of
intrinsic value that would have been forfeited had the acceleration not
occurred. The future SFAS 123R expense that is eliminated as a result of the
acceleration of the vesting of these options is estimated at approximately
$20.9
million, approximately $6.9 million of which is estimated would have been
recognized in fiscal 2006. Under SFAS 123R, the Company will reflect the $20.9
million of eliminated expense in its pro forma disclosure to be contained in
the
Company’s Annual Report on Form 10-K.
Grant
of Performance Awards
On
January 30, 2006, the Committee granted performance stock awards (“Performance
Awards”) to be paid in the form of shares of common stock (“Performance Shares”)
under the Company’s 2005 Equity Incentive Plan to certain executive officers and
other key employees (each, a “Participant”). The issuance of Performance Shares
under each Performance Award will be contingent upon, among other things,
meeting certain consolidated earnings per share and cumulative earnings targets
designated by the Committee for the Company’s 2005, 2006 and 2007 fiscal years
(the “Performance Period”). If these targets are met or exceeded during the
Performance Period, the Participants may be entitled to receive from 0% to
200%
of such Participant’s target number of Performance Shares. Pursuant to the
Performance Awards, the Participants may earn up to a maximum aggregate of
approximately 1,200,000 Performance Shares at 200% (approximately 600,000
Performance Shares at 100%). The Participants receiving such Performance Awards
included the Company’s Chief Executive Officer and certain other members of
senior management.
If
after
the end of the Performance Period, the Committee determines that the requisite
performance targets have been achieved or exceeded, 50% of the earned
Performance Shares will be delivered to Participants promptly following the
date
of such determination. The remaining 50% of the earned Performance Shares will
be delivered one year later, provided that the Participant remains employed
by
the Company, other than due to the Participant’s death or disability.
Participants will be entitled to receive a pro rated portion of the Performance
Shares in the event of death or disability, or if a change in control of the
Company occurs, during the Performance Period. Prior to the delivery of any
Performance Shares, no Participant will be deemed to have any ownership or
shareholder rights (including without limitation dividend and voting rights)
with respect to such shares, nor may the Participant sell or otherwise transfer
any of the Performance Shares.
Each
grant of a Performance Award by the Committee is subject to the terms and
conditions of the 2005 Equity Incentive Plan and a performance award agreement
to be entered into between each Participant and the Company.
Assuming
the 100% performance target is met, the Company estimates the equity
compensation expense that will be required to be recognized for the Performance
Awards will approximate $27.8 million over the requisite service period, $11.0
million of which is estimated to be recognized in fiscal 2006.
This
report contains forward-looking statements within the meaning of federal
securities laws, which are intended to be covered by the safe harbors created
thereby. These statements include, but may not be limited to, statements
regarding the Company’s anticipated future compensation expenses and
compensation expenses avoided. These forward-looking statements are based
upon
the Company’s current expectations and assumptions and are subject to various
risks and uncertainties that could cause actual results to differ materially
from those contemplated in such forward looking
statements.
Item
9.01. Financial
Statements and Exhibits.
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(c)
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Exhibits |
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Exhibit
No. |
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Description |
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None. |
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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.
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The
Children’s
Place Retail Stores, Inc. |
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By: |
/s/ Hiten
Patel |
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Name:
Hiten Patel |
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Title:
Senior Vice President, Chief Financial Officer |
| Dated: February 1, 2006 |
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