From MEMA Industry News

NEW YORK -- Barington Capital Group LP announced today its support of the decision of the Board of Directors of The Pep Boys to separate the roles of chairman and chief executive officer (CEO) and retain Goldman, Sachs & Co. to explore strategic and financial alternatives for the company. Barington represents a group of investors that owns approximately 8 percent of the outstanding common stock of The Pep Boys.

Barington, however, is critical of the decision of the Board to extend the employment of Lawrence Stevenson as CEO and reiterated its support for the company's current operating plan. "We question how the Board could extend the services of Mr. Stevenson, much less improve the terms of his employment arrangement, amid the material deterioration that has occurred in the company's financial performance under his watch," stated James Mitarotonda, the chairman and CEO of Barington.

In a December 2005 letter to William Leonard, the company's then presiding independent director, Mitarotonda called for the board to employ a new chief executive, noting that Barington has, "been disappointed by the performance of the company under Lawrence Stevenson," and believes, "that the turnaround plan implemented under his leadership has been poorly executed and unnecessarily disruptive to the company's two main businesses, leading to a significant decrease in shareholder value."

On Friday, the company disclosed in a filing with the Securities and Exchange Commission that the Board had entered into new agreements with Stevenson that would provide him with one year's base salary upon termination without cause and a two-year employment agreement effective upon a change in control. The Board had the option of electing not to extend Stevenson's employment, which was scheduled to expire in April, at which point the company would have had no further payment obligations to Stevenson under his previous employment agreement.

"Going forward, Barington intends to closely monitor the company and remains prepared to take such action as necessary to ensure that the Pep Boys Board maintains its focus on maximizing shareholder value," noted Mitarotonda. "As one of the company's largest stockholders, we are committed to seeing the company maximize value for the benefit of all Pep Boys stockholders."

_______________________________________

Click here to view the rest of today's headlines.