Name
|
|
Years
of
Service
|
| John
C. Adams, Jr. |
|
4
|
| Timothy
D. Vargo |
|
13
|
| Robert
J. Hunt |
|
4
|
| Gerald
E. Colley |
|
10
|
| David
J. Wilhite |
|
13
|
Compensation Committee Report on Executive Compensation
The executive compensation program is designed to attract and retain executives
who are key to our long-term success. In this process, we want to align
an executive's compensation with AutoZone's attainment of business goals
and the increase in share value. The Compensation Committee reviews executive
compensation annually and makes appropriate adjustments based on company
performance, achievement of predetermined and individual goals, and changes
in an executive's duties and responsibilities. The compensation of other
AutoZone employees is based on a similar philosophy.
Compensation
Philosophy
Executive compensation consists of salary, bonus, and stock options.
Salary. The Committee desires that overall compensation
reflect each executive's performance over time. Base salaries are set at
levels subjectively determined by the Compensation Committee to adequately
reward and retain capable executives, including the Chief Executive Officer.
At the beginning of each fiscal year, the Compensation Committee reviews
and establishes the annual salary of each officer, including the Chief
Executive Officer. The Committee makes an independent, subjective determination
of the appropriate level of each officer's salary. The Compensation Committee
employs a compensation consultant to assist the Committee in comparing
AutoZone's compensation for its executives to that of other retailers.
However, the Committee uses this information to verify the reasonableness
of the compensation, but does not have a predetermined compensation objective.
The Committee does not use any mechanical formulations or weighting of
any of the factors considered.
Bonus.
Each fiscal year executive officers are paid a bonus based on AutoZone's
attainment of increases in earnings over the prior year and the attainment
of other goals as set by the Compensation Committee. A target is set at
the beginning of each fiscal year and bonuses are paid as a percentage
of the attainment of the objectives. A maximum bonus is established for
each executive officer. As a general matter, as an executive's level of
management responsibility in the Company increases, the greater the portion
of his or her potential total compensation depends on the Company's performance
as measured by increases in earnings over the previous year. No bonus is
payable under the bonus plan unless a predetermined minimum target is achieved.
A significant portion of each officer's compensation is directly related
to the performance of the Company. Please see Proposal 2 of this Proxy
Statement for a more complete discussion of the AutoZone, Inc. 2000 Executive
Incentive Compensation Plan under which bonuses will be paid to executive
officers in future years.
Stock Options. To align the long-term interests
of management and our stockholders, the Compensation Committee awards non-qualified
stock options to all levels of management, including individual store managers.
Stock option grants are made by a subjective determination by the Committee,
upon recommendation by the Chief Executive Officer (for grants other than
those to the Chief Executive Officer), who considers the recipient's past
performance and current responsibilities, and the number of shares previously
granted to that person.
Stock
Ownership
Beginning with fiscal year 2000, the Compensation Committee has implemented
the AutoZone, Inc. Management Stock Ownership Plan to encourage and facilitate
the ownership of AutoZone stock by senior management and members of the
Board of Directors. The plan provides guidelines for stock ownership levels
by senior management and directors. AutoZone will loan one-half of the
necessary funds to the executive officers and new directors. The borrower
is at risk and signs a promissory note for the full amount borrowed. As
a condition to obtaining the loan, beginning as of the bonus paid for the
2000 fiscal year, each senior executive must commit to use a set percentage
of any bonus received to acquire AutoZone stock and must fully participate
in AutoZone's employee stock purchase plan.
CEO
Compensation
In the last fiscal year, John C. Adams, Jr., Chairman and Chief Executive
Officer was paid $530,400 in salary and $265,200 in bonus. Mr. Adams has
an employment agreement which is described under the section entitled "Employment
Agreements" in this Proxy Statement. Mr. Adams did not receive any stock
options during the last fiscal year.
Tax
Deductions for Compensation
The federal tax code limits the amount of compensation that we may deduct
in any year for the Chief Executive Officer and our other four most highly
paid officers to $1 million. However, this deduction limitation does not
apply to performance-based compensation as defined in the tax code. In
order for AutoZone to continue to be able to deduct any compensation which
may exceed $1 million, the Committee recommends that the stockholders adopt
the AutoZone, Inc. 2000 Executive Incentive Compensation Plan, which is
Proposal 2 in this Proxy Statement. Our compensation plans are generally
designed and implemented so that they qualify for full deductibility. However,
we may from time to time pay compensation to our executive officers that
may not be fully deductible.
This report was unanimously adopted by the Compensation Committee and approved
by the Board of Directors.
Ronald
A. Terry, Chairman
N.
Gerry House
James
F. Keegan
Stock Performance Graph
This graph shows, from the end of fiscal year 1994 to the end of fiscal
year 1999, changes in the value of $100 invested in each of AutoZone's
common stock, Standard & Poor's Retail Store Composite Index, Standard
& Poor's 500 Composite Index, and a peer group consisting of other
automotive aftermarket retailers.
[PERFORMANCE GRAPH]
| |
Aug. 94
|
Aug. 95
|
Aug. 96
|
Aug. 97
|
Aug. 98
|
Aug. 99
|
| AutoZone, Inc. |
$100.00 |
$108.04 |
$109.55 |
$113.57 |
$104.27 |
$ 95.73 |
| S&P 500 Index |
$100.00 |
$121.45 |
$144.19 |
$202.81 |
$219.22 |
$306.52 |
| S&P Retail Store Composite Index |
$100.00 |
$101.71 |
$122.63 |
$157.84 |
$206.85 |
$270.83 |
| Peer Group |
$100.00 |
$103.37 |
$116.33 |
$119.35 |
$114.71 |
$114.02 |
In past proxy statements, we had used the Standard & Poor's Retail
Store Composite Index as a comparison index, principally because the specific
industry of other automotive aftermarket retailers had few public companies
against which to compare. We now believe that the group of public automotive
aftermarket retailers is large enough to present a valid comparison to
the value of our common stock, and will be using this peer group index
in the future. The peer group consists of CSK Auto Corporation, Discount
Auto Parts, Inc., Genuine Parts Company, O'Reilly Automotive, Inc., and
The Pep Boys-Manny, Moe & Jack.
EMPLOYMENT
AGREEMENTS
Mr. Adams, Mr. Vargo, Mr. Hunt, Mr. Colley, and Mr. Wilhite have each entered
into employment agreements. Mr. Adams's agreement states that he is employed
as Chairman and Chief Executive Officer, with a minimum annual salary of
$530,400, and a bonus potential of 100% of annual salary. Mr. Vargo's agreement
states that he is employed as President and Chief Operating Officer, with
a minimum annual salary of $424,400 and a bonus potential of 100% of annual
salary. Mr. Hunt's agreement states that he is employed as Executive Vice
President and Chief Financial Officer, with a minimum annual salary of
$306,000 and a bonus potential of 75% of annual salary. Mr. Colley's agreement
states that he is employed as Senior Vice President with a minimum annual
salary of $305,000, and a bonus potential of 50% of annual salary. Mr.
Wilhite's agreement states that he is employed as Senior Vice President,
with a minimum annual salary of $300,000 and a bonus potential of 50% of
annual salary.
All minimum salaries and bonus are subject to increase by the Compensation
Committee. These agreements continue until terminated by either the executive
or by us. If an agreement is terminated by us for cause, or by the executive
for any reason, the executive will cease to be an employee, and will cease
to receive salary, bonus and other benefits. If an agreement is terminated
by us without cause, the executive will remain an employee for three years
after the termination date and will continue to receive his then-current
salary and other benefits of an employee, and will receive a prorated bonus
for the fiscal year in which he was terminated, but no bonuses thereafter.
If an agreement is terminated by us or by the executive for reasons other
than a change in control, then the executive will be prohibited from competing
against AutoZone for three years after the termination date.
"Cause" is defined in each agreement as the willful engagement by the executive
in conduct which is demonstrably or materially injurious to AutoZone, monetarily
or otherwise. "Change in control" in each agreement generally means (although
more specifically defined in each agreement) either the acquisition of
a majority of our voting securities by or the sale of all or substantially
all of our assets to a non-affiliate of the company.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Hyde is the sole stockholder of a corporation that owns an aircraft
that was leased to us for our business at times during the 1999 fiscal
year. For fiscal year 1999, we paid the corporation that owned the aircraft
lease fees and expenses totaling $207,418. In addition, we employ pilots
that operated the aircraft for Mr. Hyde's personal benefit at times during
the 1999 fiscal year. For the use of the pilots' services, Mr. Hyde paid
us $98,000. We believe that the charges for our use of the plane and the
amount that we charge Mr. Hyde for the use of the pilots are reasonable
and equivalent to the fees charged by others for the use of similar aircraft
and pilots.
Upon his retirement as Chairman in 1997, Mr. Hyde entered into an agreement
not to compete against the Company until March 2002. In fiscal year 1999,
under the terms of that agreement, we paid Mr. Hyde $301,377, and provided
him personal security services valued at approximately $48,351.
INDEBTEDNESS
OF MANAGEMENT
Effective as of the beginning of the 2000 fiscal year, the Board of Directors
has adopted the AutoZone, Inc. Management Stock Ownership Plan. Under this
plan, each executive officer is encouraged to purchase and maintain ownership
of AutoZone stock in an amount which is a set multiple of his annual salary.
As a part of the program, we have agreed to loan each executive officer
up to one-half of the funds required to purchase the stock. The notes are
demand notes which mature in five years or upon termination of the officer's
employment. Interest accrues at a 6% annually compounded rate, which approximates
the applicable federal rate as set by the Internal Revenue Service. As
of the date of this Proxy Statement, Mr. Adams has a principal balance
of $402,941, Mr. Vargo has a principal balance of $848,800, Mr. Hunt has
a principal balance of $408,063, and Mr. Colley has a principal balance
of $300,000.
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Securities laws require our executive officers, directors, and owners of
more than ten percent of our common stock to file reports (Forms 3, 4,
and 5) with the Securities and Exchange Commission and the New York Stock
Exchange relating to the number of shares of common stock that they own,
and any changes in their ownership. To our knowledge, all persons required
to file such forms have done so in a timely manner.
STOCKHOLDER
PROPOSALS FOR 2000 ANNUAL MEETING
Stockholder proposals for inclusion in the Proxy Statement for the Annual
Meeting in the year 2000 must be received by June 22, 2000. Stockholders
proposals received after June 22, 2000, but by September 8, 2000, may be
presented at the meeting, but will not be included in the 2000 Proxy Statement.
Any stockholder proposal received after September 8, 2000, will not be
eligible to be presented for a vote to the stockholders in accordance with
AutoZone's bylaws. Any proposals must be mailed to AutoZone, Inc., Attention:
Secretary, Post Office Box 2198, Dept. 8074, Memphis, Tennessee 38101-9842.
ANNUAL
REPORT
A copy of our Annual Report is being mailed with this Proxy Statement to
all stockholders of record.
|
By
the order of the Board of Directors, |
|
HARRY
L. GOLDSMITH
Secretary |
|
|
Memphis,
Tennessee
October
25, 1999
EXHIBIT
A
AUTOZONE,
INC.
2000
EXECUTIVE INCENTIVE COMPENSATION PLAN
1.
PURPOSE.
The AutoZone, Inc. 2000 Executive Incentive Compensation Plan ("Plan")
is designed to provide incentives and rewards to eligible employees of
AutoZone, Inc. (the "Company") and its affiliates who have significant
responsibility for the success and growth of the Company and assist the
Company in attracting, motivating, and retaining key employees on a competitive
basis. The Plan is designed to ensure that the annual bonus paid pursuant
to this Plan to eligible employees of the Company is deductible under Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"). This
Plan shall be ratified by the Company's stockholders pursuant to 26 C.F.R.
§ 1.162-27(e)(4)(vi) at the annual meeting to be held on December
9, 1999, and shall be effective for the entire 2000 fiscal year. If the
stockholders do not ratify the Plan, the Plan shall not become effective.
2.
ADMINISTRATION OF THE PLAN.
The Plan shall be administered by the Compensation Committee of the Board
of Directors of the Company ("Committee"). The Committee shall be appointed
by the Board of Directors of the Company and shall consist of at least
two outside directors of the Company that satisfy the requirements of Code
Section 162(m). The Committee shall have the sole discretion and authority
to administer and interpret the Plan in accordance with Code Section 162(m).
The Committee's interpretations of the Plan, and all actions taken and
determinations made by the Committee pursuant to the powers vested in it
hereunder, shall be conclusive and binding on all parties concerned, including
the Company, its stockholders and any person receiving an award under the
Plan.
3.
ELIGIBILITY.
The individuals entitled to participate in the Plan shall be the executive
officers of the Company, as determined by the Committee.
4.
AWARDS.
Executive officers as determined by the Committee may be granted annual
incentive awards under this Plan at such times of each year as will satisfy
the requirements of Code Section 162(m), provided, however, that if an
individual becomes an executive officer during a year, an incentive goal
for that individual shall be made for that fiscal year at the time she
or he becomes an executive officer. The Committee may, in its discretion,
grant annual incentive awards to non-executive officers and managers of
the Company outside of this Plan.
The annual incentive award to each executive officer shall be based on
the Company, a subsidiary or division, attaining one or more of the following
objective goals as established by the Committee for the fiscal year:
|
(a)
earnings, |
|
(b)
earnings per share, |
|
(c)
common stock price, |
|
(d) |
market
share, |
|
(e) |
revenue, |
|
(f) |
Operating
or net cash flows, |
|
(g) |
pre-tax
profits, |
|
(h) |
earnings
before interest and taxes, |
|
(i) |
return
on capital |
|
(j) |
economic
value added, |
|
(k) |
return
on inventory |
|
(l) |
operating
margin |
|
(m) |
revenue |
|
(n) |
gross
profit margin |
Different measures of goal attainment may be set for different plan participants.
The performance goal may be a single goal or a range with a minimum goal
up to a maximum goal, with corresponding increases in the incentive award
up to the maximum award set by the Committee and as may be limited by this
Plan. Such performance goals may disregard, at the Committee's discretion,
the effect of one-time charges and extraordinary events such as asset write-downs,
litigation judgments or settlements, changes in tax laws, accounting principles
or other laws or provisions affecting reported results, accruals for reorganization
or restructuring, and any other extraordinary non-recurring items, acquisitions
or divestitures and any foreign exchange gains or losses. These goals shall
be established by the Committee either by written consent or as evidenced
by the minutes of a meeting at such times as to qualify amounts paid under
this Plan for tax deductible treatment under Code Section 162(m).
Payment of an earned award will be made in cash, or at the option of the
Committee, in whole or in part in Company common stock. Upon completion
of each fiscal year, the Committee shall review performance verses the
established goal, and shall certify (either by written consent or as evidenced
by the minutes of a meeting) the specified performance goals achieved for
the fiscal year (if any), and direct which award payments are payable under
the Plan, if any. No payment will be made if the minimum pre-established
goals are not met. The Committee may, in its discretion, reduce or eliminate
an individual's award that would have been otherwise paid. No individual
may receive in any one fiscal year an award under the Plan of an amount
greater than the lesser of (i) 150% of such individual's base salary for
that year or (ii) $2 million.
5.
MISCELLANEOUS PROVISIONS.
(a) The Company shall have the right to deduct all federal, state,
or local taxes required by law or Company policy from any award paid.
(b) Nothing contained in this Plan grants to any person any claim
or right to any payments under the Plan. Such payments shall be made at
the sole discretion of the Compensation Committee.
(c) Nothing contained in this Plan or any action taken by the Committee
pursuant to this Plan shall be construed as giving an individual any right
to be retained in the employ of the Company.
(d) The Plan shall be unfunded. The Company shall not be required
to establish any special or separate fund or to make any other segregation
of assets to assure the payment of any award under the Plan.
(e) The Plan may be amended, subject to the limits of Code Section
162(m), or terminated by the Committee at any time. However, no amendment
to the Plan shall be effective without prior approval of the Company's
stockholders which would (i) increase the maximum amount that may be paid
under the Plan to any person or (ii) modify the business criteria on which
performance targets are to be based under the Plan.
(f) This Plan shall terminate on the fifth anniversary after the
date of ratification by the Company's stockholders.
AUTOZONE,
INC.
Proxy
Solicited on Behalf of the Board of Directors of
the
Company for Annual Meeting of Stockholders
P
R
O
X
Y |
|
I
hereby appoint Harry L. Goldsmith and Donald R. Rawlins, and each of them,
as proxies, with full power of substitution, to vote all shares of common
stock of AutoZone, Inc., which I would be entitled to vote at the Annual
Meeting of AutoZone, Inc., to be held at the Orpheum Theatre, 203 South
Main Street, Memphis, Tennessee, on Thursday, December 9, 1999, at 10 a.m.,
and at any adjournments, on items 1, 2 and 3, as I have specified and such
other matters as may come before the meeting. |
|
| |
|
Election
of Directors, Nominees: |
(change
of address) |
|
| |
|
|
|
|
|
| |
|
(01)
John C. Adams, Jr., (02) Andrew M. Clarkson, |
|
| |
|
(03)
N. Gerry House, (04) Robert J. Hunt, (05) J.R.
Hyde, III, |
|
| |
|
(06)
James F. Keegan, (07) Edward S. Lampert, |
|
| |
|
(08)
Michael W. Michelson, (09) Ronald A. Terry, and |
|
| |
|
(10)
Timothy D. Vargo. |
|
|
| |
|
|
|
|
|
| |
|
You
are encouraged to specify your choices by marking the appropriate boxes,
SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote in
accordance with the Board of Director's recommendations. |
|
|
|
|
[Map to Orpheum Theatre appears here]
You
are invited
to
attend the
ANNUAL
MEETING
OF
STOCKHOLDERS
December
9, 1999
10:00
a.m.
Orpheum
Theatre
203
South Main Street
Memphis,
Tennessee
| [X] |
Please
mark your
votes
as in this
example. |
4631 |
This proxy when properly executed will be voted in the
manner directed below. If no direction is made, this proxy will be voted
FOR the election of directors and FOR proposals 2 and 3.
|
| The
Board of Directors recommends a vote FOR proposals 2 and 3. |
|
| |
|
FOR |
|
WITHHELD |
|
|
FOR |
AGAINST |
AB
S
TAIN |
|
|
| 1. |
Election
of
Directors
(see
reverse) |
[_] |
|
[_] |
2. |
Approval
of
executive
compensation
plan. |
[_] |
[_] |
[_] |
4. |
In
the discretion
of
the proxies
named
herein,
upon
such other matters as may properly come
before
the
meeting. |
| For,
except vote withheld from the following nominee(s): |
3. |
Approval
of
Independent
Auditors. |
[_] |
[_] |
[_] |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
| [_] |
Change
of Address Phone:
Please write new address on reverse side. |
| SIGNATURE(S) |
_____________________________________________________ |
DATE
____________________ |
|
The
signer hereby revokes all proxies heretofore given by the signer to vote
at the meeting or any adjournments thereof. |
|
|
|
| NOTE:
Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor,
administrator, trustee or guardian, please give full title. |
|
l
FOLD AND DETACH HERE IF YOU ARE RETURNING YOUR VOTED PROXY CARD BY MAIL
l
Internet
and Telephone Voting
We encourage you to take advantage of these convenient new ways by which
you can vote your shares. You can vote your shares through the Internet
or the telephone. This eliminates the need to return the proxy card.
To vote your shares through the Internet or the telephone you must use
the control number printed in the box above just below the perforation.
The series of numbers that appear in the box above must be used to access
the system.
1. To vote over the Internet:
•
Log
on the Internet and go to the Web site http://www.eproxyvote.com/azo
2. To vote over the telephone:
•
On a touch-tone telephone call toll free 1-877-PRX-VOTE (1-877-779-8683)
Your Internet or telephone vote authorizes the named proxies in the same
manner as if you marked, signed, dated and returned the proxy card.
If you choose to vote your shares through the Internet or the telephone,
you should not mail back your proxy card.
Your
vote is important. Thank you for voting.
