8-K

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):  June 4, 2007

MICHAELS STORES, INC.

(Exact Name of Registrant as Specified in Charter)

Delaware	001-09338	75-1943604
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

8000 Bent Branch Drive

Irving, Texas  75063

P.O. Box 619566

DFW, Texas  75261-9566

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (972) 409-1300

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):

¨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))

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

 On June 4, 2007, Michaels Stores, Inc. (the “Company”) announced that Brian C. Cornell was appointed to the position of Chief Executive Officer of the Company.

Prior to joining the Company, Mr. Cornell (age 48) served as Executive Vice President and Chief Marketing Officer of Safeway Inc. (food and drug retailer) since April 2004.  In this role, Mr. Cornell was responsible for Safeway’s merchandising, marketing, manufacturing, supply chain and on-line business.  Prior to joining Safeway, Mr. Cornell served as President of Pepsi Cola North America’s (“PCNA”) Food Services Division and Senior Vice President of Sales for PCNA, a role he assumed in March 2003.  Prior to joining PCNA, Mr. Cornell was Regional President of PepsiCo Beverages International’s European business and President of Tropicana Products International based in Belgium. Mr. Cornell joined PepsiCo, Inc. when it acquired Tropicana from the Seagram Company in 1998. Mr. Cornell serves as a director of OfficeMax, Inc. (business and retail office products distribution).

The Company and Mr. Cornell entered into an employment agreement dated June 4, 2007.  Pursuant to the employment agreement, Mr. Cornell will receive an annual base salary of $1,000,000, subject to increase by the Board of Directors.  Mr. Cornell will be eligible to earn an annual incentive bonus at a target of 100% of his annual base salary, and a maximum bonus potential of 200% of his annual base salary, based on performance criteria established by the Board of Directors for each fiscal year during his employment.  Upon commencement of employment, Mr. Cornell will receive a cash award of $2.5 million, a restricted stock award of 133,333 shares of common stock that will vest 50% on each of the first and second anniversaries of the date of grant (vesting would accelerate in the event of Mr. Cornell’s death or disability), and an option to purchase 2,270,966 shares of common stock which is divided into six tranches with exercise prices ranging from $15.00 per share to $52.50 per share, each tranche vesting 20% on each of the first five anniversaries of February 16, 2007.

Pursuant to the employment agreement, if Mr. Cornell’s employment is terminated by the Company without cause or by Mr. Cornell for good reason, then, for the two year period following the date of termination, he would be entitled to receive a severance benefit equal to (i) his base salary at the rate in effect on the date of termination, (ii) the amount of his annual target bonus for the year of termination and (iii) continued medical benefits.

No arrangement or understanding exists between Mr. Cornell and any other person pursuant to which Mr. Cornell was selected as an officer of the Company.

There is no family relationship between any director, executive officer, or person nominated or chosen by the Company to become a director or executive officer of the Company and Mr. Cornell.  In addition, except for execution of the employment agreement, since the beginning of the Company’s last fiscal year, there has been no transaction (or series of transactions), and there is no currently proposed transaction (or series of transactions), to which the Company was or is to be a party, in which the amount involved exceeds $120,000 and in which Mr. Cornell or any member of his immediate family had or will have a direct or indirect material interest.

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Item 9.01. Financial Statements and Exhibits.

(d)           Exhibits.

Exhibit Number	Description
99.1	Press Release issued by Michaels Stores, Inc., dated June 4, 2007

3

SIGNATURE

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.

	MICHAELS STORES, INC.
	By:	/s/ Jeffrey N. Boyer
		Jeffrey N. Boyer
		President and Chief Financial Officer
Date: June 4, 2007

INDEX TO EXHIBITS

Exhibit Number	Description
99.1	Press Release of Michaels Stores, Inc., dated June 4, 2007

EX-99.1

Exhibit 99.1

NEWS RELEASE
FOR IMMEDIATE RELEASE	Lisa K. Klinger
	Senior Vice President - Finance and Treasurer
	(972) 409-1528
	klingerl@michaels.com

BRIAN C. CORNELL NAMED CHIEF EXECUTIVE OFFICER
OF
MICHAELS STORES

Former Safeway and PepsiCo Executive Brings Strong Consumer Products Marketing
Experience to Leading Crafts Retailer

Irving, TX, June 4, 2007 — Michaels Stores, Inc., the world’s largest specialty retailer of arts, crafts, framing, floral, wall décor, and seasonal merchandise for the hobbyist and do-it-yourself home decorator, today announced that Brian C. Cornell has been named Chief Executive Officer of the company, effective June 4, 2007.  Cornell most recently served as Executive Vice President and Chief Marketing Officer of Safeway, Inc., where he had responsibility for the merchandising, marketing, manufacturing, supply chain and online business.

Cornell was one of the key architects behind Safeway’s “Ingredients for Life” brand re-positioning, its advancements in consumer and shopper insights, the introduction of O Organics and Eating Right private label brands, and Safeway’s new lifestyle store format.  In 2005, he was named Marketing Executive of the Year by Supermarket News, and was featured as the Retailer of the Year by Grocery Headquarters Magazine in 2006.

In 2006, leading global private equity firms Bain Capital and The Blackstone Group invested in a recapitalization of Michaels Stores in a take-private transaction valued at more than $6 billion.

“I am excited about the opportunity to join this best-in-class specialty retailer, and to further advance Michaels Stores’ leadership position and brand recognition through focused merchandising, consumer insights, marketing and operating initiatives,” said Cornell, who is 48. “I am pleased to work with Michaels’ employees, management team and our vendor partners to position the company for the long term, and create unparalleled shopping experiences for our customers.”  Jeffrey Boyer, President and Chief Financial Officer, and Gregory Sandfort, President and Chief Operating Officer, will report to Cornell.

Cornell’s professional career spans more than 25 years, and includes a broad range of experiences in consumer products marketing and general management.  Prior to joining Safeway in 2004, Cornell served as President of Pepsi-Cola North America’s Foodservice Division, and as Senior Vice President of Sales for Pepsi-Cola North America. He previously was Regional President of PepsiCo Beverages International’s European and African business, and President of Tropicana Products International based in Brussels, Belgium. He held a number of key positions with Tropicana prior to its acquisition by PepsiCo in 1998.

8000 BENT BRANCH DRIVE · IRVING, TEXAS 75063
(972) 409-1300

“Brian is an outstanding retail and consumer products executive who we believe will further energize the talented team at Michaels Stores, help improve the uniqueness of the merchandise we sell, and continue to enhance the customer shopping experience,” said Matt Levin, a Managing Director at Bain Capital.  “Brian’s impressive track record gives us great confidence in his ability to seize the exciting customer, merchandising, and operational opportunities that lie ahead for Michaels, and to fully realize the company’s growth potential,” commented Michael Chae, a Senior Managing Director at The Blackstone Group.

Cornell is a director of OfficeMax Inc., and previously served as Chairman of GroceryWorks Holdings, Inc.  He earned his BA degree at UCLA and attended its Anderson Graduate School of Management.

About Michaels Stores

Michaels Stores, Inc. is North America’s largest specialty retailer of arts, crafts, framing, floral, wall décor, and seasonal merchandise for the hobbyist and do-it-yourself home decorator.  As of May 30, 2007, the Company owns and operates 930 Michaels stores in 48 states and Canada, 168 Aaron Brothers stores, 11 Recollections stores, and four Star Wholesale operations.

 About The Blackstone Group

The Blackstone Group is a leading global alternative asset manager and provider of financial advisory services. The Blackstone Group is one of the largest independent alternative asset managers in the world. Its alternative asset management businesses include the management of corporate private equity funds, real estate opportunity funds, funds of hedge funds, mezzanine funds, senior debt funds, proprietary hedge funds and closed-end mutual funds. The Blackstone Group also provides various financial advisory services, including mergers and acquisitions advisory, restructuring and reorganization advisory and fund placement services. For further information visit www.blackstone.com

About Bain Capital

Bain Capital (www.baincapital.com) is a global private investment firm that manages several pools of capital including private equity, venture capital, public equity, and leveraged debt assets with approximately $50 billion in total assets under management.  Since its inception in 1984, Bain Capital has made private equity investments and add-on acquisitions in over 230 companies around the world, including such leading retailers and consumer companies as Toys “R” Us, Burger King, Staples, Burlington Coat Factory, Shopper’s Drug Mart, Brookstone, Domino’s Pizza, Dollarama, Sealy Corp., Sports Authority and Duane Reade.  Headquartered in Boston, Bain Capital has offices in New York, London, Munich, Hong Kong, Shanghai, and Tokyo.

Media and Investor Contacts:

For Michaels Stores:  Lisa K. Klinger, 972-409-1528

For Bain Capital:  Alex Stanton, Stanton Crenshaw Communications, 212-780-0701

For The Blackstone Group: John Ford, The Blackstone Group, 212-583-5559

8000 BENT BRANCH DRIVE · IRVING, TEXAS 75063
(972) 409-1300