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TABLE OF CONTENTS
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrantý | ||
Filed by a Party other than the Registranto | ||
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o | Preliminary Proxy Statement | |
o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
ý | Definitive Proxy Statement | |
o | Definitive Additional Materials | |
o | Soliciting Material under §240.14a-12 |
Penske Automotive Group, Inc. | ||||
(Name of Registrant as Specified In Its Charter) | ||||
(Name of Person(s) Filing Proxy Statement, if other than the Registrant) | ||||
Payment of Filing Fee (Check the appropriate box): | ||||
ý | No fee required. | |||
o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | |||
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Annual Meeting of Stockholders
The Annual Meeting of Stockholders of
Penske Automotive Group, Inc. will be held May 10, 201813, 2020
2555 Telegraph Road
Bloomfield Hills, Michigan 48302
Dear Fellow Stockholder:
YouAt the date of this letter, the Coronavirus continues to impact our daily business. Our focus is to ensure we meet customer needs while doing our part to keep our customers, employees and our communities safe. We have enhanced our cleaning procedures, both for facilities and vehicles, and instructed employees who feel ill to stay home, among other measures.
We currently plan to hold the 2020 Annual Meeting open to stockholders as provided in the enclosed proxy. However, we will continue to monitor the current Coronavirus situation closely and will provide notice via a website posting if any changes to the Annual Meeting are invitednecessary.
The past year was a remarkable period for our business. Although we faced unprecedented challenges from Brexit, changing vehicle tastes in response to attendnew emissions standards (especially in Europe), industry mobility developments and rapidly-changing technology, the annual meetingdiversification provided by our investments across transportation services drove our business. Overall, I was very pleased with our performance last year.
In retail automotive, we celebrated our 20th anniversary since the initial acquisition of stockholders ofthe business in 1999. Since then, we have grown Penske Automotive Group Inc.organically and through acquisition and 2019 was no exception. Some highlights from the past year include:
The agenda for this year's annual meeting includescommercial vehicle business, while making our company the annual election of directors, ratification oflargest Freightliner and Western Star dealer in the selectionUnited States
Our success is driven by each and every one of our independent auditor,27,000 employees and FOR approvaltheir unwavering commitment to customer satisfaction. Their relentless focus on driving repeat and referral business by exceeding the expectations of our executive officer compensation. Please refer tocustomers through best-in-class customer service and the detailed information on eachhighest level of these proposals and our annual meeting of stockholders in the accompanying materials.integrity.
We have elected to deliver our proxy materials to our stockholders over the Internet. This delivery process provides stockholders with the information they need, while at the same time conserving natural resources and lowering the cost of printing and delivery. On or about March 28, 2018, we will mail to our stockholders a notice of internet availability of proxy materials containing instructions on how to access our 2018 proxy statement and 2017 annual report to stockholders. This notice also provides instructions on how to vote online or by telephone and includes information on how to request a paper copy of the proxy materials by mail.
The annual meeting provides an excellent opportunity for stockholders to become better acquainted with the Company and its directors and officers, and I hope that you will attend. Whether or not you plan to attend, we ask that you cast your vote as soon as possible. This will assure your shares are represented at the meeting. Thank you forWe appreciate your continued support, of Penske Automotive Group.and we hope that you will stay safe and healthy.
Sincerely, | ||
/s/ Roger S. Penske | ||
Roger S. Penske Chair of the Board and Chief Executive Officer | ||
Bloomfield Hills, Michigan March |
Penske Automotive Group, Inc. |
Notice of 20182020 Annual Meeting of Stockholders
Date: | May | |
Time: | 8:00 a.m. Eastern Daylight Time | |
Place: | 2555 Telegraph Road Bloomfield Hills, Michigan 48302 | |
Record date: | March | |
Items of business: | • To elect thirteen directors to serve until the next annual meeting • To approve our 2020 Equity Incentive Plan • To ratify the selection of Deloitte & Touche LLP as our independent auditor for • To approve, on a non-binding advisory basis, the compensation paid to our |
Important
INTERNET AVAILABILITY OF PROXY MATERIALS
We are furnishing proxy materials to our stockholders primarily via the internet. On or about March 27, 2020, we will send our stockholders a notice regarding theof internet availability of proxy materials forcontaining instructions on how to access our proxy materials, including our proxy statement and our 2019 annual report to stockholders. The notice of internet availability of proxy materials also instructs you on how to vote via the stockholderinternet. Other stockholders, in accordance with their prior requests, will receive e-mail notification of how to access our proxy materials and vote via the internet or will be mailed paper copies of our proxy materials and a proxy card or voting instruction form.
Internet distribution of our proxy materials is designed to expedite receipt by stockholders, lower the cost of the annual meeting and conserve natural resources. However, if you would prefer to be held on May 10, 2018.receive paper copies of proxy materials, please follow the instructions included in the notice of internet availability of proxy materials.
Our Proxy Statement, Proxy Cardproxy statement, proxy card and Annual Report2019 annual report to Stockholdersstockholders are available atwww.envisionreports.com/pag.
By order of the Board of DirectorsDirectors:
/s/ Shane M. Spradlin
Shane M. Spradlin
Executive Vice President, General Counsel and Secretary
Bloomfield Hills, Michigan
March 20, 201819, 2020
Proxy summary |
This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information you should consider, and you should read the entire Proxy Statement carefully before voting.
Annual Meeting of Stockholders
Date: | May | |
Time: | 8:00 a.m. Eastern Daylight Time | |
Place: | 2555 Telegraph Road Bloomfield Hills, Michigan 48302 | |
Record date: | March | |
Voting: | Stockholders as of the record date are entitled to vote. Each share of common stock is entitled to one vote for each director nominee and one vote for each of the proposals to be voted on. | |
Admission to meeting: | ||
Access to company appointed proxies: | If you are attending the meeting, you will have access to the company appointed proxies |
Meeting agenda
Voting mattersMatters and vote recommendationVote Recommendation
Matter | | Board vote recommendation | | Page Reference | ||||
Election of directors | For each director nominee | Page | ||||||
| For | | Page 15 | |||||
For | Page | |||||||
Advisory vote on named executive officer compensation | | For | | Page 23 | ||||
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Our |
The following table provides summary information about each director nominee. Each director is elected annually by a majority of votes cast.
Name | | Age | | Director | | Occupation | | Independent | Committee Memberships | | Age | | Director | | Occupation | | Independent | Committee Memberships | ||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
since | AC | CC | NCG | EC | since | AC | CC | NCG | EC | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
John D. Barr | 70 | 2002 | Retired Chairman Papa Murphy's Holdings, Inc. | · | F | 72 | 2002 | Retired Chairman Papa Murphy's Holdings, Inc. | · | F | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lisa Davis | | 54 | | 2017 | | Chair and CEO Siemens Corporation, USA | | · | | | | M | | | | | | 56 | | 2017 | | Former Chief Executive Officer | | · | | | | M | | M | | | ||||||||||||||||||||||||||||||||
Wolfgang Dürheimer | 59 | — | Retired Chairman and CEO | · | 61 | 2018 | Retired Chairman and CEO | · | M | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Michael R. Eisenson | | 62 | | 1993 | | Founding Partner and Co-Chairman | | | | | | | | | | M | | 64 | | 1993 | | Founding Partner and Co-Chairman | | | | | | | | | | M | ||||||||||||||||||||||||||||||||
Robert H. Kurnick, Jr. | 56 | 2006 | President, Penske Automotive Group | M | 58 | 2006 | President, Penske Automotive Group | M | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Kimberly J. McWaters | | 53 | | 2004 | | President and CEO, Universal Technical Institute, Inc. | | · | | F | | | | C | | | | 55 | | 2004 | | Retired President and CEO, Universal Technical Institute, Inc. | | · | | F | | | | C | | | ||||||||||||||||||||||||||||||||
Greg Penske | 57 | n/a | Chairman, and Chief Executive Officer, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Roger S. Penske | 81 | 1999 | Chair and Chief Executive Officer | C | | 83 | | 1999 | | Chair and Chief Executive Officer | | | | | | | | | | C | ||||||||||||||||||||||||||||||||||||||||||||
Roger S. Penske, Jr. | | 58 | | 2017 | | President, CEO and Chairman | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||||||
Sandra E. Pierce | 59 | 2012 | Senior Executive Vice President | · | M | M | 61 | 2012 | Senior Executive Vice President and Chair | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Kanji Sasaki | | 48 | | 2014 | | Sr. Vice President — International Business Development | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||||||
Greg C. Smith | 66 | 2017 | Principal, Greg C. Smith LLC and | · | C, F | | 68 | | 2017 | | Principal, Greg C. Smith LLC and | | · | | C,F | | | | | | | |||||||||||||||||||||||||||||||||||||||||||
Ronald G. Steinhart | | 77 | | 2001 | | Retired Chairman and CEO | | · | | F | | | | | | | 79 | 2001 | Retired Chairman and CEO | · | F | |||||||||||||||||||||||||||||||||||||||||||
H. Brian Thompson | 78 | 2002 | Executive Chairman | · | C | M | M | | 80 | | 2002 | | Executive Chairman | | · | | | | C | | M | | M | |||||||||||||||||||||||||||||||||||||||||
Masashi Yamanaka | 56 | 2018 | Executive Vice President — Strategic |
AC | Audit Committee | C | Chair | |||
CC | Compensation and Management Development Committee | F | Financial expert | |||
NCG | Nominating and Corporate Governance Committee | M | Member | |||
EC | Executive Committee |
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2020 Equity Incentive Plan |
In light of the expiration of the Company's existing 2015 equity incentive plan on May 5, 2020, our stockholders are being asked to approve a new 2020 Equity Incentive Plan. This plan provides up to 5.0 million shares for equity awards and terminates once all awards have been issued under the plan. In the last three years, we have granted a gross amount of 1,237,937 incentive equity awards, which represents an average annual rate of shares issued as compared to shares outstanding of approximately 0.50%.
Auditors |
As a matter of good corporate governance, we ask that our stockholders ratify the selection of Deloitte & Touche LLP as our independent auditor for 2018.2020. Set forth below is summary information with respect to 20172019 auditor fees forpaid to Deloitte & Touche LLP.
| Deloitte | | ||||||||
Audit Fees | $ | 2,967,591 | $ | 3,218,042 | ||||||
Audit Related Fees | 199,000 | 149,895 | ||||||||
Tax Fees | | | ||||||||
Tax Compliance | 206,891 | 141,363 | ||||||||
Other Tax Fees | | 219,807 | | 304,268 | ||||||
All Other Fees | — | — | ||||||||
| | | | | | | | | | |
Total Fees | $ | 3,593,289 | $ | 3,813,568 |
Corporate Social Responsibility |
We recognize we are accountable to key stakeholders and the communities in which we do business. We focus our environmental, social and governance efforts where we can have the most positive impact on our business and society, including issues related to community investment, environmental sustainability, human capital, and investor outreach.
Central to our mission are the core values of ethics, integrity, professionalism, teamwork and exceeding the expectations of our customers and employees. Our commitment to corporate social responsibility is driven by these core values as we aim to conduct our business in ways that enrich the communities where we work and live, focus on the environment and safety, provide a workplace that is safe, inclusive and diverse while providing value to our stakeholders. We are committed to responsible business practices
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and continuous improvement of our operations and our relationships with our employees and the communities in which we live and work.
| | | | | | | | |
Community | Environment, Climate Change and Safety | |||||||
We believe that positively involving our employees and giving back to the communities in which we do business is core to our culture. Our efforts include employee volunteer opportunities and partnerships with local food banks, homeless shelters, hospitals, school districts, animal rescue organizations, and other charitable organizations. | We are committed to monitoring and managing the environmental impact of our businesses, determining the impact of climate change on our businesses, and to protecting the health and safety of our employees, customers and those with whom we do business. | |||||||
| | | | | | | | |
Human Capital | Privacy and Investor Outreach | |||||||
Human Capital is our most important asset. Our goal is to create an environment that fosters inclusion and diversity. We aim to maintain a collaborative, supportive, and opportunistic culture based on ethics and integrity that enhances innovation, employee engagement and teamwork. | We aim to be transparent about the information we collect from our customers. We also want individuals to be informed about what we do with their information and allow them to fully exercise their rights in regards to that information. We regularly interact with investment analysts and other members of the investment community through investor calls, industry events, conferences and meetings. This interaction enables us to gain a more thorough understanding of the views and perceptions of stockholders and the investment community. | |||||||
| | | | | | | | |
Executive Compensation |
We ask that our stockholders annually approve on an advisory basis our named executive officer compensation. The Board of Directors recommends a FOR vote because it believes that our compensation policies and practices are effective in achieving the Company's goals of rewarding sustained financial and operating performance and leadership excellence, aligning the executives' long-term interest with those of our stockholders and motivating theour executives to remain with the Company for long and productive careers. In 2017,2019, over 99% of the votes cast by our stockholders approved our 2016 executive compensation and there were not significant changes to the elements of our 20172018 executive compensation.
Compensation and Corporate Governance Highlights
ü | Independent Lead Director | ü | No officer severance agreements | |||
ü | Clawback provision for certain restatements | ü | Average Board attendance of 98% during 2019 | |||
ü | Director independence guidelines more stringent than NYSE guidelines | ü | Robust stock ownership guidelines for our Officers and Directors | |||
ü | No stockholder rights plan (poison pill) | ü | Annual election of our Board of Directors | |||
ü | Say on pay advisory vote conducted annually | ü | Company policy prohibits Directors and employees from hedging our Common Stock |
iv
20172019 Compensation Summary
Set forth below is the 20172019 compensation for each named executive officer as determined under SECSecurities and Exchange Commission rules.
Name and Principal Position | | Salary ($) | | Bonus ($) | | Stock Awards ($)(1) | | All Other Compensation ($) | | Total ($) | | Salary ($) | | Bonus ($) | | Stock Awards ($)(1) | | All Other Compensation ($) | | Total ($) | ||||||||||||
Roger S. Penske | | 1,375,000 | | — | | 5,000,000 | (2) | | 432,491 | (3) | $ | 6,807,491 | $ | 1,400,000 | | — | | 5,000,000 | (2) | | 493,752 | $ | 6,893,752 | |||||||||
Chief Executive Officer | | | | | | | | | | | | | | | | | | | | | ||||||||||||
| ||||||||||||||||||||||||||||||||
Robert H. Kurnick, Jr. | | 787,500 | | — | | 1,000,000 | (4) | | 164,130 | (5) | $ | 1,951,630 | $ | 800,000 | | — | | 1,000,000 | (2) | | 176,315 | $ | 1,976,315 | |||||||||
President | | | | | | | | | | | ||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||
J.D. Carlson | | 522,917 | | 300,000 | | 200,000 | | 70,222 | (6) | $ | 1,093,139 | $ | 575,000 | | 315,000 | | 500,000 | (2) | | 77,659 | $ | 1,467,659 | ||||||||||
Executive Vice President & Chief Financial Officer | | | | | | | | | | | ||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||
Bud Denker | | 523,958 | | 300,000 | | 200,000 | | 18,423 | (7) | $ | 1,042,381 | $ | 575,000 | | 315,000 | | 500,000 | (2) | | 34,649 | $ | 1,424,649 | ||||||||||
Executive Vice President — Human Resources | | | | | | | | | | | ||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||
Shane M. Spradlin | | 523,958 | | 300,000 | | 295,001 | | 74,809 | (8) | $ | 1,193,768 | $ | 575,000 | | 315,000 | | 500,000 | (2) | | 89,597 | $ | 1,479,597 | ||||||||||
Executive Vice President, General Counsel & Sec. | | | | | | | | | | |
Please see the footnote references beginning on page 2934 for further information regarding our named executive officer compensation.
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Proxy statement table of contents |
Questions about the Meeting | ||
Proposal 1 — Election of Directors | ||
Our Corporate Governance | ||
Board Committees | ||
Board Structure and Lead Director | ||
Director Independence | ||
Risk Management | 11 | |
Director Advisor Program | 12 | |
| ||
Stock Ownership Guidelines/Pledging | ||
Controlled Company | ||
Director Candidates | 13 | |
Location of Corporate Governance Documents | ||
| ||
Stockholder Nominations and Proposals for | ||
Corporate Social Responsibility | 13 | |
Proposal 2 — Approval of our 2020 Equity Incentive Plan | 15 | |
Proposal 3 — Ratification of the Selection of our Independent Auditor | ||
Proposal | ||
Executive Officers | ||
Compensation Committee Report | ||
Compensation Discussion and Analysis ("CD&A") | ||
Executive Compensation | ||
Director Compensation | ||
Security Ownership of Certain Beneficial Owners and Management | ||
Related Party Transactions | ||
Information about Attending the Meeting | ||
Appendix A — 2020 Equity Incentive Plan | A-1 |
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Questions about the Meeting |
Q. What am I voting on?
A. | Proposal 1: | Election of thirteen directors to serve until the next annual meeting of stockholders, or until their successors are duly elected and qualified | ||
Proposal 2: | Approval of our 2020 Equity Incentive Plan | |||
Proposal 3: | Ratification of the selection of Deloitte & Touche LLP as our independent auditing firm for | |||
Proposal | Advisory vote regarding executive compensation |
Q. Who can vote?
A. Our stockholders as of the close of business on the record date, March 13, 2018,17, 2020, can vote at the annual meeting. Each share of our common stock gets one vote. Votes may not be cumulated. As of March 13, 2018,17, 2020, there were 86,107,69380,887,853 shares of our common stock outstanding.
Q. Why did I receive a notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials?
A. As permitted by the Securities and Exchange Commission ("SEC"), we have elected to provide access to our proxy materials primarily over the Internet rather than mailing paper copies of those materials to each stockholder. On or about March 28, 2018,27, 2020, we will mail a Notice of Internet Availability of Proxy Materials (the "Notice") to our stockholders, which provides website and other information for the purpose of accessing our proxy materials. All stockholders will have the ability to access the proxy materials on the website referred to in the Notice or request a printed or electronic set of the proxy materials. Instructions on how to access the proxy materials over the Internet or to request a printed copy may be found in the Notice. In addition, stockholders may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis. We encourage you to take advantage of the availability of the proxy materials on the Internet to help reduce the cost and environmental impact of the printing and mailing of materials for the annual meeting.
Q. How can I get electronic access to the proxy materials?
A. The Notice provides you with instructions regarding how to view our proxy materials for the annual meeting on the Internet and instruct us to send proxy materials to you by email. Choosing to receive proxy materials by email will save us the cost of printing and mailing documents to you and will reduce the impact of the printing and mailing of materials for our annual meeting on the environment. If you choose to receive future proxy materials by email, you will receive an email message next year with instructions containing a link to those materials and a link to the proxy voting website. Your election to receive proxy materials by email will remain in effect unless and until you rescind it.
Q. What is the difference between a stockholder of record and a beneficial owner of shares held in street name?
A.Stockholder of Record.Record. If your shares are registered directly in your name with our transfer agent, Computershare Limited, you are the stockholder of record with respect to those shares and we sent the Notice directly to you. If you request copies of the proxy materials by mail, you will receive a proxy card.
Beneficial Owner of Shares Held in Street Name.Name. If your shares are held in an account at a brokerage firm, bank, broker-dealer or other similar organization, then you are the beneficial owner of shares held in "street name," and the Notice was forwarded to you by that organization. The organization holding your account is considered the stockholder of record
for purposes of voting at the annual meeting. As a beneficial owner, you have the right to direct that organization on how to vote the shares held in your account. If you request copies of the
proxy materials by mail, you will receive a voting instruction form.
Q. How do I vote my shares?
A. If you are a stockholder of record or a participant in the Company's stock fund within our Company 401(k) plan, you may vote in any of the following ways:
By Internet.Internet. You may vote online by accessing www.envisionreports.com/pag and following the on-screen instructions. You will need the Control Number included on the Notice or on your proxy card, as applicable. You may vote online 24 hours a day. If you vote online, you do not need to return a proxy card.
By Telephone.Telephone. In the U.S., you may vote by calling toll free 1-800-652-VOTE (1-800-652-8683) and following the instructions. You will need the Control Number included on the Notice or on your proxy card, as applicable. You may vote by telephone 24 hours a day. If you vote by telephone, you do not need to return a proxy card.
By Mail.Mail. If you requested printed copies of the proxy materials, you will receive a proxy card, and you may vote by signing, dating and mailing the proxy card in the envelope provided. Votes submitted by mail must be received at our headquarters on or before May 9, 2018.12, 2020.
In Person.Person. You may vote in person at the annual meeting by requesting a ballot from the inspector of election at the meeting.
A. If you are a beneficial owner of shares held in street name, you may vote in any of the following ways:
By Internet.Internet. You may vote online by following the instructions provided in the Notice. You will need the Control Number included on the Notice or on your voting instruction form, as applicable. You may vote online 24 hours a day. If you vote online, you do not need to return a voting instruction form.
By Telephone.Telephone. You may vote by telephone by following the instructions provided in the Notice. You will need the Control Number included on the Notice or on your voting instruction form, as applicable. You may vote by telephone 24 hours a day. If you vote by telephone, you do not need to return a voting instruction form.
By Mail.Mail. If you requested printed copies of the proxy materials, you will receive a voting instruction form, and you may vote by signing, dating and mailing it in the envelope provided. Votes submitted by mail must be received at our headquarters on or before May 9, 2018.12, 2020.
In Person.Person. You must obtain a legal proxy from the organization that holds your shares of record in order to vote your shares in person at the annual meeting. Follow the instructions on the Notice to obtain this legal proxy.
For both stockholders of record and beneficial owners of shares held in street name (other than stockholders within our 401(k) plan), online and telephone voting is available through 11:59 p.m. ET on May 9, 2018.12, 2020. For shares held by the stock fund within the Company's 401(k) plan, online and telephone voting is available through 11:59 p.m.2:00 a.m. ET on May 4, 2018.10, 2020.
Q. Can I change my mind after I vote?
A. You may change your vote at any time before the meeting by (1) signing and returning another proxy card with a later date (or voting through the Internet or telephone again), (2) voting at the meeting if you are a registered stockholder or have obtained a legal proxy from your bank or broker or (3) sending a notice to our Corporate Secretary prior to the meeting stating that you are revoking your proxy. If you are attending the meeting, you will have access to
the company appointed proxies to change your vote until the polls close.
Q. What if I return my proxy card but do not provide voting instructions?
A. Proxies that are signed and returned but do not contain instructions will be voted (1) FOR the election of the thirteen nominees for director,
Table (2) FOR the approval of Contents
(2)our 2020 Equity Incentive Plan, (3) FOR the ratification of our independent auditor and (3)(4) FOR approval of our named executive officer compensation.
Q. Will my shares be voted if I do not provide my proxy instruction form?
A. If you are a stockholder of record and do not provide a proxy, you must attend the meeting in order to vote your shares. If you are a beneficial holder of shares held in street name, your shares may be voted even if you do not provide voting instructions on your instruction form as discussed below.
Q. May stockholders ask questions at the meeting?
A.Yes. Our representatives will answer stockholders' questions of general interest at the end of the meeting. In order to give a greater number of stockholders an opportunity to ask questions, individuals or groups may be allowed to ask only one question and repetitive or follow-up questions may not be permitted.
Q. How many votes must be present to hold the meeting?
A. Your shares are counted as present at the meeting if you attend the meeting and vote in person or if you properly return a proxy card or vote via the Internet or telephone. In order for us to conduct our meeting, a majority of our outstanding shares of common stock as of March 13, 201817, 2020 must be present in person or by proxy at the meeting (43,053,847(40,443,927 shares). This is referred to as a quorum. Abstentions and broker non-votes will be counted for purposes of establishing a quorum at the meeting.
Q. What is the effect of withheld votes, abstentions and broker non-votes and how are they treated?
A. If you "withhold" with respect to one or more director nominees, your vote will have no effect on the election of such nominee(s), as the thirteen nominees receiving the highest number of "For" votes will be elected as directors.
If you elect to "abstain" with respect to any proposal, the shares are considered present and entitled to vote with respect to such proposal and included for purposes of calculating the presence of a quorum at the Annual Meeting. You may abstain from voting on any proposal to be voted on at the Annual Meeting, other than the election of directors. Under Proposals 2, 3 and 3,4, abstentions will count as votes against"against" the proposal.
A broker non-vote with respect to a proposal occurs when shares are held by a bank, broker or other nominee in street name, and the bank broker or other nominee does not receive voting instructions from the beneficial owner as to how to vote such shares. Brokers have the authority under New York Stock Exchange rules to vote shares for which their customers do not provide voting instructions on certain "routine" matters resulting in a broker non-vote. Under these rules, only the proposal to ratify our independent auditing firm is a "routine matter" being voted on by our stockholders this year. Broker non-votes will only be counted for Proposal 2.3.
Q. How many votes are needed to approve the proposals?
A. Regarding the election of directors (Proposal 1), our directors are elected by a plurality of the votes cast and the thirteen nominees receiving the highest number of "For" votes will be elected as directors. Regarding Proposals 2, 3 and 3,4, the measures will pass if each receives the affirmative vote of a majority of shares present and entitled to vote at the meeting.
Proposal 1 — Election of Directors |
The first proposal to be voted on at the annual meeting will be the election of thirteen director nominees. Our Nominating and Corporate Governance Committee and Board of Directors recommend approval of each of the nominees outlined below. If elected, each will serve a one-year term.until the next annual meeting of stockholders and until their successor has been elected and qualified or until their earlier death, resignation or removal. Pursuant to a stockholders agreement, certain of our stockholders affiliated with Roger S. Penske and Mitsui & Co., Ltd. have agreed to vote together to elect members of our Board of Directors. See "Related Party Transactions" for a description of this stockholders agreement.
Penske Corporation previously recommended Roger S.Greg Penske Jr. (Roger S. Penske's son) to our Nominating and Corporate Governance Committee as a candidate for election to our Board of Directors at the 2020 annual meeting.meeting and intends to recommend Greg Penske as a candidate for election at the 2021 and 2022 annual meetings. Penske Corporation has informed us that it does not intend to recommend Greg Penske for re-election to our Board at the 2023 annual meeting. Beginning in 2023, in lieu of Greg Penske, Penske Corporation presently intends to recommend one of Mr. Penske's other sons, Roger S. Penske, Jr., to the Nominating and Corporate Governance Committee for nomination as a candidate for election to our Board at the 20192023, 2024 and 2025 annual meeting as well.meetings. It is expected that GregRoger S. Penske, (Roger S. Penske's son)Jr. will serve as an advisory committee member of Penske Truck Leasing (PTL) for both 20182020, 2021 and 2019.2022 and it is expected that Greg Penske will step down from our Board at the 2023 annual meeting and will serve as an advisory committee member of PTL beginning in 2023.
Director Nominees. Our Nominating and Corporate Governance Committee has established minimum qualifications for director nominees, including having personal integrity, loyalty to Penske Automotive Groupour company and concern for its success and welfare, willingness to apply sound and independent business judgment and having sufficient time available for Penske Automotive Groupcompany matters. Experience in at least one of the following is also desired: high level of leadership experience in business or administration, breadth of knowledge concerning issues affecting Penske Automotive Group,our company, willingness to contribute special competence to board activities, accomplishments within the director's respective field, and experience reading and understanding financial statements.
The Nominating and Corporate Governance Committee and Board of Directors reviewed the qualities of the Board members as a group, including the diversity of the Board's career experiences, viewpoints, company affiliations, expertise with respect to the various facets of our business operations, and business experiences. The Board did not employ any particular benchmarks with respect to these qualities, but was mindful of achieving an appropriate balance of these qualities with respect to the Board of Directors as a whole. Moreover, the Board of Directors and Nominating and Corporate Governance Committee considered each nominee's overall service to Penske Automotive Groupour company during the previous term, each nominee's personal integrity and adherence to the standards noted above, as well as the individual experience of each director noted within their biographies below.
Our Board of Directors Recommends a Vote "FOR" Each of the Following Nominees:
John D. Barr — Retired Chairman, Papa Murphy's Holdings, Inc.
Mr. Barr, 70,72, has served as a director since December 2002. Mr. Barr was the past Chairman of Papa Murphy's Holdings, Inc., a franchisor and operator of Take-N-Bake pizza from September 2009 to September 2016 and was its Chief Executive Officer from April 2004 to January 1, 2012. From 1999 until April 2004, Mr. Barr served as President and Chief Executive Officer of Automotive Performance Industries, a vehicle transportation service provider. Prior thereto, Mr. Barr was President and Chief Operating Officer, as well as a member of the Board of Directors, of Quaker State Corporation from June 1995 to 1999. Prior to joining Quaker State, Mr. Barr spent 25 years with the Valvoline Company, a subsidiary of
Ashland Inc., where he was President and Chief Executive Officer from 1987 to 1995. Mr. Barr previously served on the Board of Directors of United Road Services, a provider of transportation services and logistics in North America through September 1, 2017.Individual experience: Extensive oil industry experience from serving ultimately as COO and director of Quaker State Corporation; breadth of knowledge concerning issues affecting our Company; experience with franchise business model as former CEO of Papa Murphy's Holdings.
Lisa Davis — ChairFormer Chief Executive Officer Gas and CEO,Power and Managing Board Member, Siemens Corporation, USAAG
Ms. Davis 54,, 56, has served as a director since May 2017. Since January 1, 2017,From August 2014 through February 2020 when she resigned, Ms. Davis serves as the Chair and CEO of Siemens Corporation, USA, a division of Siemens, AG and, since August 2014, has also served as a member of the Managing Board offor Siemens AG responsible as Chief Executive Officer for the company's Oil & Gas and Power Generation businesses, as well as forglobal operations present in 80 countries around the Region North America and South America. From 2012 to August 2014, Ms. Davisworld. Also from January 2017 through February 2020 she served as Executive Vice President, Strategy, Portfolio & Alternative EnergyChair and CEO of Royal Dutch Shell, UK. PriorSiemens Corporation, USA, the largest market globally for Siemens AG. From 1986 to that,2014, Ms. Davis served in various capacities with Exxon Corporation, Texaco USA and Royal Dutch Shell, Texacomost recently, Executive Vice President — Strategy, Portfolio and Exxon Corporation.Alternative Energy and Vice President — Lubricants and Commercial Fuels Americas, and previously numerous leadership positions in Supply and Refining. Ms. Davis is also a director for Kosmos Energy Ltd and Air Products and Chemicals, Inc. Individual experience: Extensive global energy industry experience from serving in various capacities with global companies;along the entire value chain from upstream to manufacturing to sales and marketing; senior executive leadership experience with international industry-leading company.companies; diverse experience with public company board service in the US and Europe.
Wolfgang Dürheimer — Retired Chairman and CEO Bentley Motors Ltd.
Mr. Dürheimer, 59,61, has served as a director since May 2018 and served as the Chairman and Chief Executive Officer of Bentley Motors Ltd., a subsidiary of Volkswagen AG, from April 2014 to January 2018, as well as the President of its sister companies, Bugatti Automobiles S.A.S. and Bugatti International S.A. Previously, Mr. Dürheimer held various positions with Volkswagen AG and its subsidiaries, most recently as the Chief Representative of Volkswagen Group Motorsport responsible for the Group Motorsport Strategy from February 2011 to January 2018 and he was a member of the Board of Management of Audi AG from September 2012 to March 2014. From 1999 until 2011, Mr. Dürheimer worked for Porsche AG, where he was a member of the Board of Management responsible for Research and Development. Prior to joining Porsche in 1999, Mr. Dürheimer worked 14 years with BMW, where he held various managerial roles.Individual experience: Extensive automotive industry experience with some of the company's largest represented brands including Audi, Bentley, BMW, and Porsche, culminating in leadership experience as Chief Executive Officer of Bentley Motors; relationships with our key automotive industry partners, breadth of knowledge concerning issues facing our company.
Michael R. Eisenson — Founding Partner and Co-Chairman of Charlesbank Capital Partners LLC
Mr. Eisenson, 62,64, has served as a director since December 1993. He has served as the Co-Chairman of Charlesbank Capital Partners LLC, a private investment firm and the successor to Harvard Private Capital Group, Inc. since July 1, 2017. Previously, he was a Managing Director and CEO of Charlesbank Capital Partners LLC, which he founded in 1998. Mr. Eisenson is also a director of Penske Corporation as of August 2017 and is a director of a number of private companies. In the previous five years, Mr. Eisenson was formerly a director of Blueknight Energy Partners, L.P., and Montpelier RE Holdings Ltd., and CIFC Corp.Individual experience: Familiarity with all of the Company's key operations from serving as our director since 1993; experience managing Charlesbank and affiliates and their portfolio companies; experience in commercial finance, private equity and leveraged finance; demonstrated success formerly serving as our audit committee chairman.
Robert H. Kurnick, Jr. — President of Penske Automotive Group
Mr. Kurnick, Jr., 56,58, has served as our President since April 2008 and has been a director since May 2006. Since September 2017, Mr. Kurnick has served as Vice Chair of Penske Corporation, and from 2003 until then served as President of Penske Corporation. He has also been a director of Penske Corporation since 2003. Penske Corporation is a privately owned diversified transportation services company that holds, through its subsidiaries, interests in a number of businesses.Individual experience: Familiarity with all of the Company's key operations; breadth of knowledge concerning issues affecting our Company; extensive automotive industry experience; experience as Vice Chair and former President of Penske Corporation.
Kimberly J. McWaters — Retired President and CEO of Universal Technical Institute, Inc.
Ms. McWaters, 53,55, has served as a director since December 2004. She is currently a Director,retired as President and CEO of Universal Technical Institute, Inc. (UTI), the nation's leading provider of transportation industry technician training.training on October 31, 2019. She was named President of UTI in 2000, and CEO in 2003 and she served as its Chairman from 2013 to 2017. Ms. McWaters joined UTI in 1984 and has held several leadership positions in the company, including Vice President of Marketing and Vice President of Sales & Marketing. Ms. McWaters is also a director of UTI and Mobile Mini, Inc.Individual experience: Automotive industry experience with Universal Technical Institute;UTI; accomplishment within her field culminating with leadership experience as Chief Executive Officer of UTI; expertise relating to service and parts operations and particularly service technicians.
Greg Penske — Chairman and CEO of Penske Motor Group
Mr. Penske, 57, has been the Chairman and Chief Executive Officer of Penske Motor Group, LLC, an automotive group that includes Longo Toyota, the largest volume Toyota dealership in the U.S.A., as well as Lexus and Mercedes brands. From 1997 to 1999 he was the President and CEO of Penske Motorsports, a publicly traded company which operated racetracks in the U.S. Mr. Penske currently serves on the Board of Directors for Penske Corporation, Penske Entertainment and the Penske Truck Leasing Advisory Board. Mr. Penske is the son of our Chief Executive Officer, Roger S. Penske. Mr. Penske formerly served as our Director from May 2014 through May 2017.Individual Experience: Extensive automotive retail industry experience; relationships with key automotive partners; familiarity with all of the Company's key operations through Penske Corporation directorship and Penske Truck Leasing Advisory Board membership.
Roger S. Penske — Chair of the Board and CEO of Penske Automotive Group
Mr. Penske, 81,83, has served as a director since May 1999. Since May 1999, Mr. Penske has served as our Chair and CEO. Mr. Penske has also been Chair of the Board and CEO of Penske Corporation since 1969 and Chair of the Board of Penske Truck Leasing Corporation since 1982. Mr. Penske serves as a member of the Board of Directors of Universal Technical Institute, and was formerly a director of General Electric Company in the previous five years.Institute. Mr. Penske also is a Director of the Downtown Detroit Partnership and a director of Business Leaders for Michigan.Individual experience: Extensive automotive industry experience; relationships with our key automotive partners; familiarity with all of the Company's key operations; experience as an executive and a director of some of the world's leading companies; significant ownership position of our stock through Penske Corporation and other affiliates.
Roger S. Penske, Jr. — President, Chief Executive Officer and Chairman of SoCal Penske Dealer Group
Mr. Penske, Jr., 58, has served as a director since May 2017. Since 2008, Mr. Penske has been the President, Chief Executive Officer and Chairman of SoCal Penske Dealer Group, a group of new car dealerships in Southern California. He previously served as our President from January 2007 through March 2008. From July 2003 to January 2007, Mr. Penske, Jr., served as our Executive Vice President — East Operations and from January 2001 to July 2003 he served as our President — Mid-Atlantic Region. Mr. Penske, Jr., serves as a member of the Board of Directors of Penske Corporation, has served on the advisory committee of Penske Truck Leasing and is the son of our Chair and Chief Executive Officer.Individual experience: Extensive automotive retail industry experience; relationships with key automotive partners; familiarity with all of the Company's key operations through prior employ, advisory committee membership of Penske Truck Leasing and Penske Corporation directorship.
Sandra E. Pierce — Senior Executive Vice President — Private Client Group & Regional Banking Director, and Chairman,Chair, Huntington Michigan
Ms. Pierce, 59,61, has served as a director since December 2012. Since August 2016, Ms. Pierce has served as Senior Executive Vice President — Private Client Group & Regional Banking Director, and Chairman, Huntington Michigan. Ms. Pierce leadsled the Private Client Group,Bank, Huntington Insurance, and Auto Finance and Public Affairs teamsFinance/RV Marine as well as state activities in Michigan. From February 1, 2013, until their August 2016 merger with Huntington, Ms. Pierce served as Vice Chairman of FirstMerit Corporation, and Chairman and CEO of FirstMerit Michigan. From 2005 until June 2012, Ms. Pierce served as the Chief Executive Officer and President at Charter One Bank Michigan, a division of RBS Citizens, N.A. ("RBS") where she had responsibilities for commercial banking and all state bank activities
in Michigan as well as oversight of all state activities in Illinois and Ohio. From 1978 through 2004, Ms. Pierce served as Regional Executive of Midwest Retail Operations for JPMorgan Chase, with responsibilities for Michigan and Indiana, and she held a number of management positions in the retail, commercial lending, and private banking businesses at JPMorgan Chase and its predecessor companies, Bank One, First Chicago NBD Corp. and NBD Bancorp. Ms. Pierce is a director at American Axel and Manufacturing Holdings, Inc., and ITC Holdings
Corporation and has performed leadership duties with numerous civic organizations, including Chairman and Trusteeimmediate past Chair of Henry Ford Health System, Inc. since January 2012.Individual Experience: Extensive retail and commercial banking experience; accomplished within her field culminating in CEO experience; extensive experience on private company boards and demonstrated commitment to civic works.
Kanji Sasaki — Senior Vice President, International Business Development of Penske Automotive Group
Mr. Sasaki, 48, has served as a director since July 2014 and our Senior Vice President — International Business Development since October 2014. Mr. Sasaki is currently an employee of Mitsui & Co., Ltd. (Japan) and has held several positions with Mitsui since April, 1992. Mr. Sasaki served as the General Manager of Mitsui's First Motor Vehicles Division, Second Business Department from July 2013 to June 2014. From August 2011 to June 2013, he served as a General Manager in Mitsui's Motor Vehicles Americas Division, Penske & Logistics Business Department. From June 2007 to June 2011, Mr. Sasaki was on secondment to Hino Motors Sales U.S.A., serving as a Senior Vice President, Secretary and Treasurer.Individual Experience: Global automotive industry experience; breadth of knowledge concerning international opportunities; affiliation with Mitsui, which is the Company's second largest stockholder.
Greg C. Smith — Principal, Greg C. Smith LLC and former Vice Chairman, Ford Motor Company
Mr. Smith, 66,68, has served as a director since August 2017. Mr. Smith, retired Vice Chairman of Ford Motor Company, currently serves as Principal of Greg C. Smith, LLC, a private management consulting firm, a position he has held since 2007. Previously, Mr. Smith was employed by Ford Motor Company for over 30 years until 2006. Mr. Smith held various executive-level management positions at Ford Motor Company, most recently serving as Vice Chairman from 2005 until 2006, Executive Vice President and President — Americas from 2004 until 2005, Group Vice President — Ford Motor Company and Chairman and Chief Executive Officer — Ford Motor Credit Company from 2002 to 2004, Vice President, Ford Motor Company, and President and Chief Operating Officer, Ford Motor Credit Company from 2001 to 2002. As Vice Chairman, Mr. Smith was responsible for Ford's Corporate Strategy and Staff, including Human Resources and Labor Affairs, Information Technology, and Automotive Strategy. During his career at Ford, Mr. Smith ran several major business units and had extensive experience in Financial Services, Strategy, Marketing and Sales, Engineering and Product Development. Mr. Smith also was responsible for Hertz when Ford owned it, and in 2005, Automotive Components Holdings, the portion of Visteon that Ford repurchased. Currently, Mr. Smith serves as a director of Lear Corporation and formerly served as a director of Penske Corporation, the Federal National Mortgage Association (Fannie Mae) and Solutia, Inc. Mr. Smith is a Board Leadership Fellowserves on the Risk Oversight Advisory Council of the National Association of Corporate Directors and also serves on the Risk Oversight Advisory Council.Directors. Mr. Smith has a bachelor's degree in Mechanical Engineering from Rose-Hulman Institute of Technology and an MBA from Eastern Michigan University.Individual experience: Extensive experience as an executive and a director; experience in a leadership role in automotive and finance; perspective gained from leadership role in automotive and financial industries; extensive public company audit committee experience.
Ronald G. Steinhart — Retired Chairman and CEO, Commercial Banking Group, Bank One Corporation
Mr. Steinhart, 77,79, has served as a director since March 2001. Mr. Steinhart served as Chairman and CEO, Commercial Banking Group, of Bank One Corporation from December 1996 until his retirement in January 2000. From January 1995 to December 1996, Mr. Steinhart was Chairman and CEO of Bank One, Texas, N.A. Mr. Steinhart joined Bank One in connection with its merger with Team Bank, which he founded in 1988. In the previous five years, Mr. Steinhart formerly served as a director of Texas Industries, Inc., Southcross Energy Partners, L.P. and Susser Holdings Corporation.Individual experience: Extensive experience in banking and commercial lending industries; experience with respect to automotive retail finance and insurance operations; extensive public company audit committee experience.
H. Brian Thompson — Executive Chairman of GTT Communications, Inc.
Mr. Thompson, 78,80, has served as a director since March 2002. Mr. Thompson is Executive Chairman of GTT Communications, Inc., a leading global cloud network provider to multinational clients. Mr. Thompson continues to head his own private equity investment and advisory firm, Universal Telecommunications, Inc. From December 2002 to June 2007, Mr. Thompson was Chairman of Comsat International and also served as Chairman and Chief Executive Officer of Global
TeleSystems Group, Inc. from March 1999 through September of 2000. Mr. Thompson was Chairman and CEO of LCI International from 1991 until its merger with Qwest Communications International Inc. in June 1998. Mr. Thompson became Vice Chairman of the board for Qwest until his resignation in December 1998. Mr. Thompson previously served as Executive Vice President of MCI Communications Corporation from 1981 to 1990, and prior to MCI, was a management consultant with the Washington, DC offices of McKinsey & Company for nine years, where he specialized in the management of telecommunications. He currently serves as a member of the board of directors of Pendrell Corporation andCorporation. In the previous five years, Mr. Thompson was formerly a director of Axcelis Technologies, Inc. and Sonus Networks, Inc. Mr. Thompson received his MBA from Harvard's Graduate School of Business, and holds an undergraduate degree in chemical engineering from the University of Massachusetts.Individual experience: Extensive experience as an executive and director of numerous public companies; experience in a leadership role directing international corporations; perspective gained from leadership role in communications industry; demonstrated success serving as our lead independent director.
Masashi Yamanaka — Executive Vice President, Strategic Relationship Management, Penske Automotive Group
Mr. Yamanaka, 56, has served as a director since December 2018 and our Executive Vice President, Strategic Relationship Management since March 1, 2019. Prior to that, he held numerous positions with Mitsui starting in April 1987. Mr. Yamanaka was Senior Vice President of Mitsui & Co. (U.S.A.), Inc. from December 2018 to February 2019, and the General Manager of Mitsui's Second Motor Vehicles Division from April 2015 to November 2018. From July 2014 to April 2015, he served as Deputy General Manager, Second Motor Vehicles Division. From January 2013 to July 2014, he served as Deputy General Manager, Planning and Administrative Department, Planning & Administrative Division of the Machinery & Infrastructure Business Unit.Individual Experience: Global automotive industry experience; breadth of knowledge concerning international opportunities; affiliation with Mitsui, which is the Company's second largest stockholder.
The Board believes that the qualities and skills listed above for each of the nominees, qualifies each such nominee for service as a director of our company.
Our Corporate Governance |
CURRENT DIRECTORS | BOD | Audit Committee | Compensation & Management Development Committee | Nominating & Corporate Governance Committee | Executive Committee | BOD | Audit Committee | Compensation & Management Development Committee | Nominating & Corporate Governance Committee | Executive Committee | ||||||||||
John D. Barr | M | F | | | | M | F | | | | ||||||||||
Lisa Davis | M | M | M | M | M | |||||||||||||||
Wolfgang Dürheimer | M | | M | | | |||||||||||||||
Michael R. Eisenson | M | | | | M | M | M | |||||||||||||
Robert H. Kurnick, Jr. | M | M | M | | | | M | |||||||||||||
William J. Lovejoy | M | | M | | | |||||||||||||||
Kimberly J. McWaters | M | F | C | M | F | C | ||||||||||||||
Lucio A. Noto | M | | | | M | |||||||||||||||
Roger S. Penske | C | C | C | | | | C | |||||||||||||
Roger S. Penske, Jr. | M | | | | | M | ||||||||||||||
Sandra E. Pierce | M | M | M | M | | | | | ||||||||||||
Kanji Sasaki | M | | | | | |||||||||||||||
Greg C. Smith | M | C, F | M | C,F | ||||||||||||||||
Ronald G. Steinhart | M | F | | | | M | F | | | | ||||||||||
H. Brian Thompson | M | C | M | M | M | C | M | M | ||||||||||||
No. of Meetings 2017 | 6 | 6 | 5 | 4 | 0 | |||||||||||||||
Masashi Yamanaka | M | | | | | |||||||||||||||
No. of Meetings in 2019 | 6 | 8 | 5 | 2 | 0 |
Board Committees
Our Board of Directors has four standing committees: the Audit Committee, the Compensation and Management Development Committee, the Nominating and Corporate Governance Committee and the Executive Committee. Charters for the Audit, Compensation and Management Development, and Nominating and Corporate Governance committees are available on our website, www.penskeautomotive.com, under the headingsub-heading "Governance" within the "Investor Relations" section. The principal responsibilities of each committee are described below. Collectively, our directors attended over 96%98% of our board and committee meetings in 2017,2019, and each director attended at least 83% of their meetings. All of our directors are encouraged to attend the annual meeting of stockholders and all12 of our 13 directors serving at that time attended the annual meeting in 2017.2019.
Committee Member Qualifications. Each of the members of our Audit, Compensation and Management Development, and Nominating and Corporate Governance Committees are independent under New York Stock Exchange guidelines and our guidelines for director independence. The Board of Directors has determined that all members of the Audit Committee are "independent" and "financially literate" under New York Stock Exchange rules and applicable law, and each of the four are "audit committee financial experts," as that term is defined in Securities and Exchange Commission rules.
The Audit Committee assists the Board of Directors in fulfilling its oversight responsibility relating to the:
The Compensation and Management Development Committee assists the Board of Directors in discharging its responsibility relating to:
The Nominating and Corporate Governance Committee:
Executive Committee. Our Executive Committee's primary function is to act upon matters when the Board of Directors is not in session. The Executive Committee has the full power and authority of the Board of Directors, except to the extent limited by law or our certificate of incorporation or bylaws or other governance documents.
Board Structure and Lead Director. Roger S. Penske is the Chair of our Board of Directors and our Chief Executive Officer. We believe the combination of these two offices represents the most appropriate approach for our company due to Mr. Penske's significant ownership position through Penske Corporation, his extensive automotive industry experience, his relationships with our key automotivesuppliers and other partners and his experience as an executive and a director of some of the world's leading companies. In light of the combination of these positions, one of our governance principles is to have an independent "Lead Director." Our Lead Director is responsible for:
Our Lead Director is H. Brian Thompson. HeYou may be contactedcommunicate with the Lead Director by leaving a message at the following telephone number: 800-469-1634.writing to us, c/o Corporate Secretary and General Counsel, 2555 Telegraph Road, Bloomfield Hills, MI 48302. All messages will be reviewed by our Corporate Secretary's office and all (other than frivolous messages) will be forwarded to the Lead Director. Any written communications to the independent directors as a group or the entire Board of Directors may be sent care of the Corporate Secretary to our principal executive office.as well. These communications (other than frivolous messages) will also be forwarded to the Lead Director.
Director Independence. A majority of our Board of Directors is independent and each of the members of our audit, compensation and nominating committees is independent. The Board of Directors has determined that Mss. Davis McWaters and PierceMcWaters and Messrs. Barr, Dürheimer, Lovejoy, Smith, Steinhart and Thompson are each independent in accordance with the listing requirements of the New York Stock Exchange and our guidelines for independent directors which can be found in our corporate governance guidelines on our website www.penskeautomotive.com under the sub-heading "Governance" within the "Investor Relations" section, and as set forth below. As required by New York Stock Exchange rules, our Board of Directors determined that no material relationship exists which would interfere with the exercise of independent judgment in carrying out the responsibilities of the independent directors.
For a director to be considered independent under our corporate governance guidelines, the
Board of Directors must determine that the director does not have any direct or indirect
material relationship with us. In addition to applying these guidelines, the Board of Directors considers relevant facts and circumstances in making the determination of independence, and not merely from the standpoint of the director, but also from that of persons or organizations with which the director has an affiliation. The Board considers the transactions, relationships and arrangements between the Company, and its affiliates such as Penske Corporation, Penske Racing, Penske Entertainment and Penske Truck Leasing and affiliates of the director, including those described under "Related Party Transactions" and elsewhere in the proxy statement, in its independence determination. The Board also considers ownership of our or our affiliates' securities by the directors and their affiliates, ownership by our management team of any securities of affiliates of directors, and sponsorships of Penske Racing or other Penske affiliated racing entities by any of our or our directors' affiliates, and any direct or indirect investments in affiliates of Charlesbank Capital Partners, an affiliate of Michael Eisenson, or Transportation Resource Partners, an affiliate of Penske Corporation.affiliates.
Under our guidelines, which are more stringent than the New York Stock Exchange guidelines, a director will not be independent if:
Risk Management. We have designed and implemented processes to manage risk in our operations. The role of the Board of Director's roleDirectors in risk management is primarily one of oversight. Management is responsible for the implementation and execution of our risk management initiatives. Our Board of Directors executes its oversight role directly and also through its various committees as set forth below.
Audit Committee
Nominating and Corporate Governance Committee
Compensation and Management Development Committee
Full Board of Directors
As part of its review of operational risk, the Board of Directors reviews cybersecurity risks facing our company, including the potential for breach of our key information technology systems and the potential for a breach of our systems and processes relating to the protection of customer and employee confidential information. The Board meets periodically with our Chief Information Officer and our Audit Committee reviews key risks, including these risks, at its regular meetings and reviews any significant cybersecurity incidents.
Director Advisor ProgramProgram.
The Board has adopted a policy in its Corporate Governance Guidelines for the designation of certain former directors as "Director Advisors" which allows us to retain the benefits of continuing guidance from our long-tenured directors. This program is designed to encourage director renewal while retaining access to former long-tenured directors' valuable experience and institutional knowledge. Director Advisors are expected typically to be invited to attend two Board meetings per year and be available for continuing consultation. A Director Advisor is not entitled to attend any Board meeting, may not vote on any business coming before the Board nor is he or she counted as a member of the Board for the purpose of determining a quorum or for any other purpose. A Director Advisor is not a member of the Board or a "director" as that term is used in our Amended and Restated Bylaws,bylaws, this Proxy Statementproxy statement or otherwise.
As compensation for 2018 service, Director Advisors are entitled to continuing cash compensation of $40,000 per year payable in cash or company stock at the director's election, and a charitable match opportunity and use of a company vehicle under the same terms as our director compensation program, as well as reimbursement of company expenses and travel to our meetings. In February 2018,2020, the Board designated William Lovejoy, a member of our Board sincefrom 2004 to 2018, and Lucio Noto, a member of our Board sincefrom 2001 to 2018, as Director Advisors for 2018, beginning in May 2018.2020.
Securities Trading Policy/Anti-Hedging.No Hedging or Short Selling. Our securities trading policy applies to all of our directors, officers and employees and restricts trading in our securities while in possession of material nonpublic information. The policy prohibits our directors, officers, employees and their designees from engaging in hedging, short sales and other trading techniques that offset any decrease in market value of our equity securities without the approval of our General Counsel. No such approvals were requestedgranted in 2017.2019, but we retain this flexibility in the event of a hardship need for a non-executive employee.
Stock Ownership Guidelines/Pledging. Our stock ownership guidelines, discussed in the CD&A below, require threshold levels of our stock to be held by executive officers, other senior officers and directors. These guidelines exclude any shares that are pledged by our directors and officers.
Controlled Company. Under the New York Stock Exchange rules, if a company is "controlled" it need not have a majority of independent directors or solely independent compensation or nominating committees. We are a "controlled company" because more than 50% of the voting power for the election of directors is held by Penske Corporation through its voting agreement with Mitsui & Co. and their affiliates. These entities are considered a group due to the provisions of the stockholders agreement between these parties described under "Related Party Transactions." Even though we are a "controlled company," we are fully compliant with the New York Stock Exchange rules for non-controlled companies.
Director Candidates. When considering new candidates for our Board of Directors, the Nominating and Corporate Governance Committee uses the network of contacts of the Board of Directors to compile potential candidates, but may also engage, if it deems appropriate, a professional search firm. The committee considers whether the nominee would be independent and meets with each candidateconsiders the candidate's diversity in relation to discuss and consider histhe then existing Board, potentially including age, gender, ethnicity, geography, business experience or her qualifications.expertise or other factors. The Nominating and Corporate Governance Committee will consider director candidates recommended by stockholders pursuant to procedures outlined below. Stockholder proposals for nominees should be addressed to
our Corporate Secretary, Penske Automotive Group, 2555 Telegraph Road, Bloomfield Hills, MI 48302. The committee's evaluation of stockholder-proposed candidates will be the same as for any other candidates.
Director candidate submissions are to include:
RecommendationsWe will consider recommendations received by November 27, 2018, will be considered19, 2020 for nomination at the 2019 annual meeting of stockholders. Recommendations received after November 27, 2018 will be considered for nomination at the 20202021 annual meeting of stockholders.
Location of Corporate Governance Documents. Our corporate governance guidelines and the other documents referenced in this section are posted on our website, www.penskeautomotive.com, under the headingsub-heading "Governance" within the "Investor Relations" section. We have also adopted a Code of Business Conduct and Ethics that applies to all of our employees and directors. We intend to disclose waivers, if any, for our executive officers or directors from the code, and changes to the code, on our website.
Section 16(a) Beneficial Ownership Reporting Compliance. Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers, directors and persons who beneficially own more than 10% of our stock to file reports of ownership with the SEC. Our employees prepare these reports using information obtained from them and our records. Based solely on our review of such forms received by the Company and the written representations of the reporting persons, the Company has determined that no reporting persons known to the Company were delinquent with respect to their reporting obligations as set forth in Section 16(a) of the Exchange Act, except that Ms. Pierce was late once in 2016 and once in 2017 to report transactions with respect to shares owned jointly with her adult children in the amount of 300 shares and 400 shares, respectively.
Stockholder Nominations and Proposals for 2019.2021. We must receive any proposals submitted pursuant to Rule 14(a)-8 of the SEC proxy rules intended to be presented to stockholders at our 20192021 annual meeting of stockholders at our principal executive offices at 2555 Telegraph Road, Bloomfield Hills, Michigan 48302 for inclusion in the proxy statement by November 14, 2018.19, 2020. These proposals must also meet other requirements of the rules of the SEC relating to stockholder proposals. Stockholders who intend to present an item of business at the annual meeting of stockholders in 20192021 (other than a proposal submitted for inclusion in our proxy statement) must follow the procedures set forth in our bylaws and provide us notice of the business no later than February 8, 2019.12, 2021.
Corporate Social Responsibility. We recognize we are accountable to key stakeholders and the communities in which we do business. We focus our environmental, social and governance efforts where we can have the most positive impact on our business and society, including issues related to community investment, environmental sustainability, human capital, and investor outreach.
Central to our mission are the core values of ethics, integrity, transparency, professionalism, teamwork and exceeding the expectations of our
customers and employees. Our commitment to Corporate Social Responsibility is driven by these core values as we aim to conduct our business in ways that enrich the communities where we work and live, focus on the environment and safety, and provide a workplace that is safe, inclusive and diverse. We are committed to responsible business practices and continuous improvement of our operations and our relationships with our employees and the communities in which we live and work.
Privacy We aim to be transparent about the information we collect from our customers. We also want individuals to be informed about what we do with their information and allow them to fully exercise their rights in regards to that information.
Community We encourage our local businesses to support local communities through philanthropic endeavors, similar to our corporate office. We support a variety of organizations, including Toys for Tots, The Humane Society, Habitat for Humanity, as well as local food banks, hospitals, and school districts. Over the last five years, we have held national campaigns to support The Paralyzed Veterans of American, donating more than $1.0 million in 2019 through contributions solicited from customers, employees and our own contributions.
Environment, Climate Change and Safety We are committed to maintaining a safe environment for our employees, customers and business partners. We also seek to determine the impact of climate change on our businesses and the impact of our businesses on climate change. In addition to the sale and service of a variety of hybrid and electric-powered low-emission vehicles, our efforts to maintain a safe environment and mitigate our effects on climate change include:
Human Capital Human capital is our most important asset. We foster and support the wellness of our employees to create a healthier company, improve workplace satisfaction and provide value to our shareholders. In that regard:
Proposal 2 — Approval of our 2020 Equity Incentive Plan |
The following is a description of the material features of the 2020 Equity Incentive Plan. This description is qualified in its entirety by reference to the full text of the 2020 Equity Incentive Plan, a copy of which is attached to this proxy statement as Appendix A.
Summary
In light of the expiration of our 2015 Equity Incentive Plan on May 5, 2020, our stockholders are being asked to approve the 2020 Equity Incentive Plan (the "Equity Incentive Plan") which will be used to award incentive cash and equity compensation to our management and board of directors. Both our Compensation and Management Development Committee and Board of Directors have approved the Equity Incentive Plan, subject to stockholder approval at the annual meeting.
This plan provides up to 5.0 million shares for equity awards, and terminates once all awards have been issued, unless our Board of Directors terminates it prior to that date. In the last three years, we have granted a gross amount of 1,237,937 incentive equity awards, which represents an average annual rate of shares issued as compared to shares outstanding of approximately 0.50%.
General
Upon adoption by stockholders at the annual meeting, the Equity Incentive Plan will authorize 5.0 million shares of our common stock for issuance as incentive awards. Incentive awards under the Equity Incentive Plan may be in the form of cash, stock options, stock appreciation rights, restricted stock, restricted stock units, performance compensation awards or common stock. If an incentive award expires, terminates or is forfeited without the issuance of shares, then such shares will again be available for grant under the Equity Incentive Plan. However, shares that participants use to pay taxes or option exercise prices will not be recycled for new awards. Adjustments will be made in the aggregate number of shares that may be issued under the Equity Incentive Plan in the event of a change affecting shares of our common stock, such as a stock dividend or split, recapitalization, reorganization, or merger. No more than 1,000,000 shares may be allocated for incentive awards to any one participant during any single calendar year. As of March 17, the closing price of a share of our common stock was $26.57.
Administration and Term. Our Compensation and Management Development Committee will administer the Equity Incentive Plan, including the power to determine when to grant incentive awards; which eligible participants will receive incentive awards; whether the award will be an option, stock appreciation right, restricted stock, restricted stock unit, cash award or company common stock; whether awards will be subject to performance goals; and the number of shares or units to be allocated to each incentive award. The committee may impose conditions on the exercise of options and stock appreciation rights and upon the transfer of restricted stock or restricted stock units under the Equity Incentive Plan and may impose such other restrictions and requirements as it may deem appropriate, including reserving the right for us to reacquire shares issued pursuant to an incentive award.
The committee has delegated limited authority to the Company's CEO to grant equity awards to the company's non-executive officer employees. The committee delegated this authority in order to permit the CEO to award limited equity grants without the specific action of the committee. Pursuant to this delegation, the CEO has had the discretion to make a maximum of 50,000 awards, which authority has been renewed from time to time.
The Equity Incentive Plan will terminate once all shares reserved for issuance have been issued, unless our Board of Directors terminates it prior
to that date. Incentive awards existing after the termination date will continue to be governed by the terms and conditions of the Equity Incentive Plan.
Eligibility. All present and future employees, directors and other company contributors (such as consultants and advisors) are eligible to receive incentive awards under the Equity Incentive Plan if selected for participation by our Compensation and Management Development Committee. As of March 17, approximately 27,000 employees, directors and company contributors were eligible to receive incentive awards under the Equity Incentive Plan.
Restricted Stock and Restricted Stock Units. Restricted stock and restricted stock units issued pursuant to the Equity Incentive Plan are subject to the following general restrictions: (1) no such shares or units may be sold, transferred, pledged, or otherwise encumbered or disposed of until the restrictions on such shares or units have lapsed or been removed under the provisions of the Equity Incentive Plan and (2) if a holder of restricted stock or restricted stock units ceases to be employed by us or one of our affiliates or ceases to be a company contributor, any shares of restricted stock, or restricted stock units, on which the restrictions have not lapsed or been otherwise removed will be forfeited. The committee is also authorized to impose other terms on restricted stock or restricted stock units, including additional events of forfeiture. The committee will establish the terms and conditions upon which the restrictions on those shares or units will lapse; provided that, unless otherwise specified in an award, the period of restriction must be at least one year from the date of grant. The terms and conditions may include, without limitation, the lapsing of those restrictions at the end of a specified period of time as a result of the disability or death of the participant, or as a result of the occurrence of a change-in-control. In addition, the committee may at any time, in its sole discretion, accelerate the time at which any or all restrictions will lapse or remove any and all restrictions.
Participants holding shares of restricted stock may exercise full voting rights with respect to those shares and are entitled to receive all dividends and other distributions paid with respect to those shares. Participants holding restricted stock units do not possess any voting rights with respect to those units, but are entitled to receive a payment equal all dividends and other distributions paid with respect to the shares underlying those units if and as so provided in the related award agreement. Restricted stock units may be settled by the company in the form of shares of company common stock, cash, or a fixed combination of both, as determined by the committee.
Stock Options. Options granted under the Equity Incentive Plan may be incentive stock options (qualifying for favorable income tax treatment under Section 422 of the Internal Revenue Code of 1986, as amended) or non-statutory stock options. The option price for any option awarded under the plan may not be less than 100% (or, in the case of an incentive stock option granted to a 10% stockholder, 110%) of the fair market value of the our common stock on the date of the grant. The committee determines any vesting requirement for option awards. Payment of the option exercise price may be made in cash or as otherwise provided in an option award or by separate action of the committee. The maximum term of any option granted under the plan is ten years. To date, no stock options have been issued pursuant to the expiring equity incentive plan.
Stock Appreciation Rights. The committee may award stock appreciation rights under the Equity Incentive Plan and impose such conditions upon their exercise as it deems appropriate. When the stock appreciation right is exercisable, the holder may surrender to us all or a portion of the unexercised stock appreciation right and receive in exchange an amount equal to the difference between (i) the fair market value on the date of exercise of the common stock covered by the surrendered portion of the stock appreciation right and (ii) the fair market value of the common stock on the date the stock appreciation right was awarded. The committee may limit the amount that can be received when a stock appreciation right is exercised. Our obligation arising upon exercise
of a stock appreciation right may be paid in the company's common stock or in cash, or in any combination of the two, as the committee may determine. Stock appreciation rights may only be exercised at the times specified by the committee. To date, no stock appreciation rights have been granted under the expiring equity incentive plan.
Performance Goals. The committee may make the vesting or exercisability of any incentive award contingent on the achievement of performance goals. The committee may develop applicable performance goals using the following or other measurements: specified levels of or increases or decreases in revenue, return on equity, earnings per share, total earnings, earnings growth, earnings from continuing operations, EBITDA, EBITDAR, return on capital/equity, return on assets, gross profit, earnings before interest and taxes, unit sales, unit sales growth, gross or operating margin, cost reduction goals, fixed cost coverage measurements (including the ratio of service and parts revenues to operating costs), return on investment, increase in the fair market value of our common stock, share price (including growth measures and total stockholder return), market capitalization, operating profit, profit margin, net income, cash flow (including operating cash flow and free cash flow), financial return ratios, expense ratios, total return to stockholders, market share, earnings measures/ratios, balance sheet measurements (including debt to equity ratios, maintenance of specified credit availability levels, compliance with credit covenants, inventory measurements and receivables/payables metrics), human resources measurements (including measurements of employee turnover, workers' compensation costs and employee satisfaction), internal rate of return, unit sales, same store sales, specified levels of acquisitions/acquired revenue, customer satisfaction and productivity and compliance objectives (including lack of material weakness in internal controls, each as determined in accordance with the relevant AICPA or PCAOB principles), or as adjusted to omit the effects of extraordinary items, acquisitions or dispositions, the gain or loss on the disposal of a business segment, unusual or infrequently occurring events and transactions, accruals for incentive awards under the Equity Incentive Plan and/or cumulative effects of changes in accounting principles. These criteria may relate to the Company, one or more of its subsidiaries or one or more of its or their divisions or units, or any combination of the foregoing, and may be applied on an absolute basis and/or be relative to one or more peer group companies or indices, or any combination thereof, all as the committee shall determine.
Change-in-Control. Upon a change in control of our Company, all outstanding options and stock appreciation rights will be exchanged for a cash payment equal to the spread between the change in control price and the exercise price and all restricted stock and restricted stock units will immediately vest assuming, if applicable, that any performance goals were met at the higher of 100% or the performance trend at the time of the change in control. However the Board or the Compensation and Management Development Committee may provide for alternative treatment for some or all awards in its discretion. A change of control will be deemed to have taken place if any individual, entity or group other than the specified holders of common stock affiliated with Penske Corporation become the beneficial owner of Company securities that constitute more than 50% of the combined voting power of the then outstanding securities of the Company that may be cast for the election of directors to the Board of the Company (other than as a result of an issuance of securities initiated by the Company in the ordinary course of business).
Transferability of Incentive Awards. No incentive awards granted under the Equity Incentive Plan may be sold, transferred, pledged, or otherwise disposed of, other than by will or by the laws of descent and distribution and all options and stock appreciation rights are exercisable during the participant's lifetime only by such participant or, if permissible under applicable law, by the participant's guardians or legal representatives, except that the committee, in its discretion, may permit the transfer of incentive awards to a family member or trust for no consideration. Upon the death of a participant, the participant's personal
representative or beneficiary may exercise the participant's rights, if any, under the plan.
Re-pricing Prior Awards. Except in connection with certain corporate transactions, the terms of outstanding incentive awards may not be amended to reduce the exercise price of outstanding options or stock appreciation rights or cancel outstanding options or stock appreciation rights in exchange for cash, other incentive awards or options or stock appreciation rights with an exercise price that is less than the exercise price of the original options or stock appreciation rights without stockholder approval.
Federal Income Tax Information. The following is a general summary of the current federal income tax treatment of incentive awards that would be authorized to be granted under the Equity Incentive Plan, based upon the current provisions of the Internal Revenue Code of 1986, as amended, and regulations promulgated thereunder. As the rules governing the tax treatment of such awards are technical in nature, the following discussion of tax consequences is necessarily general in nature and does not purport to be complete. In addition, statutory provisions are subject to change, as are their interpretations, and their application may vary in individual circumstances. This discussion does not address the tax consequences under applicable state and local law.
Incentive Stock Options. A participant generally will not recognize income on the grant or exercise of an incentive stock option. However, the difference between the exercise price and the fair market value of the stock on the date of exercise is an adjustment item for purposes of the alternative minimum tax. If a participant disposes of the stock received upon the exercise of an incentive stock option within certain specified periods (a "disqualifying disposition"), the participant will recognize ordinary income on the exercise of such incentive stock option in the same manner as on the exercise of a nonqualified stock option, as described below.
Non-qualified Stock Options and Stock Appreciation Rights. A participant generally is not required to recognize income on the grant of a nonqualified stock option or a stock appreciation right. Instead, ordinary income generally is required to be recognized on the date the nonqualified stock option or stock appreciation right is exercised. In general, the amount of ordinary income required to be recognized is (i) in the case of a nonqualified stock option an amount equal to the excess, if any, of the fair market value of the shares on the exercise date over the exercise price and (ii) in the case of a stock appreciation right, the amount of cash and/or the fair market value of any shares received upon exercise.
Restricted Stock. Unless a participant who receives an award of restricted stock makes an election under Section 83(b) of the Internal Revenue Code of 1986, as amended, as described below, the participant generally is not required to recognize ordinary income on the award of restricted stock. Instead, on the date the restrictions lapse and the shares vest (that is, become transferable and no longer subject to forfeiture), the participant will be required to recognize ordinary income in an amount equal to the excess, if any, of the fair market value of the shares on that date over the amount paid, if any for those shares. If a participant makes a Section 83(b) election to recognize ordinary income on the date the shares are awarded, the amount of ordinary income required to be recognized is an amount equal to the excess, if any, of the fair market value of the shares on the date awarded over the amount paid, if any for those shares. In that case, the participant will not be required to recognize additional ordinary income when the restrictions lapse and the shares vest.
Restricted Stock Units. A participant generally is not required to recognize income on the grant of a restricted stock unit. In general, on the date the units are paid, the participant will be required to recognize ordinary income in an amount equal to the cash and/or the fair market value of the units on that date shares received as payment.
Company Common Stock. A participant generally is required to recognize income on the date of grant of company common stock in the amount of the fair market value of the stock received.
Gain or Loss on Sale or Exchange of Shares. In general, gain or loss from the sale or exchange of shares granted under the Equity Incentive Plan will be treated as capital gain or loss, provided that the shares are held as capital assets at the time of the sale or exchange.
Deductibility by Us. We generally are not allowed a deduction in connection with the grant or exercise of an incentive stock option. However, if a participant is required to recognize income as a result of a disqualifying disposition, we will be entitled to a deduction equal to the amount of ordinary income so recognized. In the case of a nonqualified stock option, a stock appreciation right, restricted stock, restricted stock unit or common stock, in general, we will be allowed a deduction in an amount equal to the amount of ordinary income recognized by a participant, provided that certain income tax reporting requirements are satisfied. However, due to Internal Revenue Code Section 162(m), we are unable to take a deduction for compensation (including incentive awards granted under the Equity Incentive Plan) paid to our named executive officers (and any other employees considered "covered employees" under Internal Revenue Code Section 162(m)) that is in excess of $1 million.
Modification of Equity Incentive Plan. Our board of directors may amend, alter, or terminate the Equity Incentive Plan as it deems advisable, provided that our stockholders must approve any amendment that is required to be approved by stockholders under the Internal Revenue Code, law, or stock exchange listing requirements, including, but not limited to, amendments that would (i) materially increase the benefits accruing to participants under the Equity Incentive Plan, (ii) materially increase the number of shares of our common stock that may be issued under the Equity Incentive Plan or (iii) materially modify the requirements of eligibility for participation in the Equity Incentive Plan. Incentive awards granted under the Equity Incentive Plan may be amended with the consent of the participant so long as the amended award is consistent with the terms of the plan.
New Plan Benefits. Because awards under the Equity Incentive Plan are subject to the discretion of the Compensation and Management Development Committee, the benefits and amounts that will be received or allocated in the future under the Equity Incentive Plan, as well as amounts that would have been received in the last fiscal year had the Equity Incentive Plan been in effect, are not determinable.
Vote Required. In order to be adopted, the Equity Incentive Plan must be approved by the affirmative vote of a majority of shares present and entitled to vote at the meeting. Abstentions will have the same effect as votes cast against the proposal. If our stockholders do not approve the Equity Incentive Plan, we will be unable to make any incentive awards to our management team, board of directors or others due to the expiration of our 2015 Equity Incentive Plan on May 5, 2020.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2
Securities Authorized for Issuance Under Equity Compensation Plans
The following table provides details regarding the shares of common stock issuable upon the exercise of outstanding options, warrants and rights granted under our equity compensation plans (including individual equity compensation arrangements) as of December 31, 2019.
Plan Category | | Number of securities to be issued upon exercise of outstanding options, warrants and rights (A) | | Weighted-average exercise price of outstanding options, warrants and rights (B) | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (A)) (B) | ||||
Equity compensation plans approved by security holders | | — | $ | — | | 2,259,169 | ||||
Equity compensation plans not approved by security holders | — | — | — | |||||||
Total | | — | | — | | 2,259,169 |
Proposal 3 — Ratification of the Selection of our Independent Auditor |
Our Audit Committee has selected Deloitte & Touche LLP, the member firm of Deloitte Touche Tohmatsu Limited, and their respective affiliates (collectively referred to as "Deloitte") as our principal independent auditing firm for 2018.
2020. We have determined to submit the selection of auditors to stockholder ratification, even though it is not required by our governing documents or Delaware law. If the selection of Deloitte as our independent auditor is not ratified by our stockholders, our Audit Committee will re-evaluate its selection, taking into consideration the stockholder vote on the ratification and the advisability of selecting new auditors prior to completion of the 20182020 audit.
Our Audit Committee is solely responsible for selecting, engaging and terminating our independent auditing firm, and may do so at any time at its discretion. It is anticipated that a representative of Deloitte will be present at the annual meeting with the opportunity to make a statement and to answer appropriate questions.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF DELOITTE & TOUCHE LLP AS OUR INDEPENDENT AUDITOR
AUDIT COMMITTEE REPORT |
The Audit Committee of the Board of Directors is responsible for providing independent, objective oversight of our accounting functions and internal controls as more fully discussed above under "Our Corporate Governance." The Audit Committee has the sole authority to retain and terminate our independent auditing firm, and is responsible for recommending to the Board of Directors that our financial statements be included in our annual report on Form 10-K.
The Audit Committee took a number of steps in making this recommendation for our 20172019 annual report. The Audit Committee discussed with our independent auditing firm those matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board ("PCAOB"), and the SEC, including information regarding their independence and the scope and results of their audit. These communications and discussions were intended to assist the Audit Committee in overseeing the financial reporting and disclosure process. The Audit Committee also discussed the independent auditing firm's independence and received the letters and written disclosures from the independent auditing firm required by the PCAOB. Finally, the Audit Committee reviewed and discussed the annual audited financial statements with our management and the independent auditing firm in advance of the public release of operating results, and before the filing of our annual and quarterly reports with the Securities and Exchange Commission.SEC.
Based on the foregoing, and such other matters deemed relevant and appropriate by the Audit Committee, the Audit Committee recommended to the Board of Directors that our audited financial statements be included in our 20172019 annual report on Form 10-K as filed with the SEC on February 22, 2018.21, 2020.
The Audit Committee of the Board of Directors
Greg C. Smith (Chair)
John D. Barr
Kimberly J. McWaters
Ronald G. Steinhart
INDEPENDENT AUDITING FIRM FEES
Deloitte & Touche LLP is our principal independent registered public accounting firm. In delivering its audit opinion, Deloitte & Touche LLP has historically relied on the opinions of KPMG LLP, principally in respect of our subsidiary which holds our U.K. operations. In an effort to achieve synergies associated with retaining only one auditing firm, our Audit Committee approved the dismissal of KPMG LLP on May 9, 2017 and Deloitte & Touche LLP is now our sole independent auditor, as previously disclosed.
The reports of KPMG LLP for the fiscal years ended December 31, 2016 and December 31, 2015 did not contain any adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principle. During our fiscal years ended December 31, 2016 and 2015 and through the subsequent date of dismissal (i) there were no disagreements (as that term is defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) between us and KPMG LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the satisfaction of KPMG LLP would have caused KPMG LLP to make reference to the subject matter of the disagreement in connection with its reports on our consolidated financial statements for such years, and (ii) there were no "reportable events" (as that term is defined in Item 304(a)(1)(v) of Regulation S-K).
We paid Deloitte & Touche LLP and KPMG LLP the fees described below in 20172019 and 2016,2018, all of which services were approved by our Audit Committee:
Audit Services:
Audit Related Services:
Tax Fees:
All Other Fees:
| Deloitte | | KPMG | | 2019 | | 2018 | |||||||||||||||
| 2017 | | 2016 | | 2017 | | 2016 | |||||||||||||||
| | | | | | | | | | | | | | |||||||||
Audit Fees | $ | 2,967,591 | $ | 2,131,685 | $ | 60,809 | $ | 574,848 | $ | 3,218,042 | $ | 3,002,019 | ||||||||||
Audit Related Fees | 199,000 | 122,100 | 40,120 | 203,960 | 149,895 | 111,000 | ||||||||||||||||
Tax Fees | | | | | | | ||||||||||||||||
Tax Compliance | 206,891 | 185,884 | — | — | 141,363 | 134,334 | ||||||||||||||||
Other Tax Fees | | 219,807 | | 236,909 | | — | | — | | 304,268 | | 206,972 | ||||||||||
All Other Fees | — | — | — | 7,440 | — | — | ||||||||||||||||
| | | | | | | | | | | | | | |||||||||
Total Fees | $ | 3,593,289 | $ | 2,676,578 | $ | 100,929 | $ | 786,248 | $ | 3,813,568 | $ | 3,454,325 |
The Audit Committee has considered the nature of the above-listed services provided by the independent auditing firmDeloitte and determined that they are compatible with their provision of independent audit services under relevant guidance. The Audit Committee has discussed these services with the independent auditing firmDeloitte and management and determined that they are permitted under the Code of Professional Conduct of the American Institute of Certified Public Accountants, the auditor independence requirements of the Public Company Accounting Oversight Board, and the laws and regulations administered by the Securities and Exchange Commission.
Pre-approval Policy. The Audit Committee has adopted a policy requiring pre-approval of all audit and non-audit services provided by the independent auditing firms.Deloitte. The primary purpose of this policy is to ensure that we engage our public accountants with a view toward maintaining independence. The Audit Committee is required to pre-approve all services relating to work performed for us by our independent auditing firmsDeloitte and related fees. The Audit Committee must also approve fees incurred for pre-approved services that are in excess of the approved amount. Pre-approval of audit and non-audit services and fees may be given at any time up to a year before commencement of the specified service. The Chair of the Audit Committee may independently approve fees and services as long as they are reviewed and ratified by the Audit Committee at its next regularly scheduled meeting. All of the services and related fees set forth above were approved by the Audit Committee in accordance with this policy.
Proposal |
Last year, our stockholders approved the compensation of our named executive officers as described under "Compensation Discussion and Analysis" and "Executive Compensation" with over 99% of the votes cast by our stockholders voting in favor. We annually seek a non-binding advisory vote on our executive compensation and there were not any significant changes to the elements of our 2017 executive compensation. Because your vote is advisory, it will not be binding upon the Compensation and Management Development Committee, however, the committee will take the outcome of the vote into account when making future executive compensation decisions. Last year, our stockholders approved the compensation of our named executive officers as described under "Compensation Discussion and Analysis" and "Executive Compensation" with over 99% of the votes cast by our stockholders voting in favor. As we evaluated our compensation programs and practices, we were mindful of this strong shareholder support in deciding to maintain the overall framework of our compensation program and the majority of our compensation practices unchanged from last year.
Our compensation program is designed to motivate our executive officers to enhance long-term stockholder value and to attract and retain the highest quality executive and key employee talent available. We believe our executive compensation is aligned with increasing the value of our common stock and promoting our key strategies, values and long term financial and operational objectives. In this regard, we note that:
THE BOARD OF DIRECTORS BELIEVES THAT THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS IS APPROPRIATE AND RECOMMENDS A VOTE FOR THE FOLLOWING ADVISORY RESOLUTION:
"RESOLVED, that the compensation paid to the Company's named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion is hereby APPROVED."
Executive Officers |
OurFor 2019, our named executive officers, whose compensation we describe below, are Messrs. Penske, Kurnick, Carlson, Denker, and Spradlin. Each of these executive officers were elected by the Board of Directors and will hold office until their successors have been duly elected and qualified or until their earlier resignation or removal from office. Biographies of Messrs. Kurnick and Penske are set forth above. Biographies of our other named executive officers are provided below:
J.D. Carlson,48, 50, has served as our Executive Vice President and Chief Financial Officer since June 2015 and prior to that served as our Senior Vice President and Corporate Controller since May 2011. He previously served as our Vice President and Controller since joining our company in April 2006. Prior to joining us, Mr. Carlson was Corporate Controller for Tecumseh Products. He was previously a Senior Manager for PricewaterhouseCoopers, an accounting and financial advisory services firm, which he joined in 1995.
Bud Denker, 59,61, has served as our Executive Vice President — Human Resources since July 1, 2015. Since September 2017, he also has served as President of Penske Corporation, and he serves as Executive Vice President, Marketing and Communications of Penske Corporation as well as Executive Vice President of Penske Racing. Mr. Denker served as our Executive Vice President — Marketing from July 2005 to June 2015. Prior to joining us, Mr. Denker served as Vice President, Brand and Market Development for Eastman Kodak Company from 2001-2005.
Shane M. Spradlin, 48,50, has served as our Executive Vice President since February 2010, our General Counsel since December 2007, and our Corporate Secretary since March 2004. Mr. Spradlin joined our Company in March 2003. From 1999 to 2003, he served as Corporate Counsel to Nextel Communications in Reston, Virginia. From 1995 through 1999, Mr. Spradlin was an associate with the New York and Washington, D.C. offices of Latham & Watkins, specializing in corporate finance and mergers and acquisitions.
Additional corporate officers include:
George Brochick, 70, has served as Executive Vice President of Strategic Development since July 1, 2012. Prior to this, he served as Executive Vice President of our Western Region since December 2002. He joined PAG in 1996 upon the sale of the former Sun Automotive Group to Penske Automotive. In addition to his current executive functions, Mr. Brochick has held numerous dealership general manager positions throughout his automotive career. From 1977 to 1984, prior to entering the automobile business, Mr. Brochick served as Vice President, Operations, for Southwest Kenworth, Inc. Mr. Brochick also held the position of Director, Marketing Services, for Euclid, Inc., a division of Daimler-Benz, A.G., with worldwide responsibilities for market research and technical field studies. Mr. Brochick has previously served as a Board Member of the American International Automobile Dealers Association and is currently serving as a Board Member for the Duke University Board of Visitors.
Richard A. Hook, 45, has served as our Executive Vice President and Chief Information Officer since February 13, 2019. Prior to that, he served as our Senior Vice President and Chief Information Officer since May 1, 2015, as well as Vice President, IT Infrastructure since July 2009. Before joining us in 2009, Mr. Hook held various positions at Arthur Andersen LLP, H&R Block Financial Advisors and Federal-Mogul Corporation.
Shelley Hulgrave, 41, has served as our Senior Vice President since February 2020 and our Corporate Controller since June 2015. She has also served as our Corporate Accounting Manager beginning in October 2006 coordinating the company's accounting teams in the United States, Europe and Australia. Prior to joining us, Ms. Hulgrave held various positions
for DaimlerChrysler Financial and Ernst & Young.
Aaron Michael, 44, has served as our Senior Vice President, Financial Services since 2014 and has been our Treasurer since 2006. In his role as Treasurer, he manages our capital structure and real estate portfolio. From 2001 through 2006, Mr. Michael was employed by Penske Corporation in various finance and treasury roles. Prior to working with Penske, Mr. Michael was a commercial lender for Comerica Bank in its Detroit, MI office.
Terri Mulcahey, 54, has served as our Executive Vice President, Marketing and Business Development since July 1, 2015. Prior to that, Ms. Mulcahey served as our Senior Vice President, Marketing and Business Development from July 1, 2012, and as our Vice President, Business Development from April 9, 2007. Before joining us, Ms. Mulcahey served in various roles at the Reynolds and Reynolds Company for 20 years, including the role of Senior Vice President of Sales and Service for North America operations.
Anthony R. Pordon, 55, has served as Executive Vice President since May 2011. Prior to that, Mr. Pordon served as Senior Vice President since January 2006 and Vice President since July 2001. Mr. Pordon's primary responsibilities include Investor Relations, Corporate Communications, and Corporate Development, including the responsibility for establishing, directing and maintaining our communication strategies and representation on Wall Street with the buy-side and sell-side analyst community. Prior to joining us, Mr. Pordon served in various capacities at Detroit Diesel Corporation, a manufacturer of heavy-duty diesel engines. Prior to Detroit Diesel, Mr. Pordon was an auditor at Deloitte & Touche LLP.
Compensation Committee Report |
The Compensation and Management Development Committee of the Board of Directors has reviewed and discussed the Compensation Discussion and Analysis set forth below with management. Based on this review and these discussions with management, the committee has recommended to our Board of Directors that the Compensation DisclosureDiscussion and Analysis be included in this Proxy Statement.
The Compensation & Management
Development Committee of the Board of Directors
H. Brian Thompson (Chair)
Lisa DavisWilliam J. LovejoySandra A. PierceWolfgang Dürheimer
Compensation Discussion and Analysis |
Executive Summary. Our compensation program is designed to motivate our executive officers to enhance long-term stockholder value and to attract and retain the highest quality executive and key employee talent available. We believe our executive compensation should be aligned with increasing the value of our common stock and promoting our key strategies, values and long term financial and operational objectives. As further discussed below:
In recent years, Mr. Penske has received an annual performance based award payable in shares of restricted stock. For 2017, Mr. Penske was eligible to attain up to 150% of his target performance based award. As detailed below, Mr. Penske achieved 69% of the performance targets listed below, entitling him to approximately $3.45 million in shares of restricted stock granted in February 2018.
In 2017, over 99% of the votes cast by our stockholders approved our 2016 executive compensation and there have not been any significant changes to the elements of our executive compensation in 2017.
Compensation Philosophy. Other than with respect to Messrs. Kurnick and Penske, the majority of our executive and employee compensation is payable in cash in the short-term, and is comprised principally of salary and cash bonuses. We use cash compensation as the majority of our compensation because we believe it provides the most flexibility for our employees and is less dilutive to existing stockholders than equity compensation. The compensation committee also recognizes that stock prices may reflect factors other than long-term performance, such as general economic conditions and varying attitudes among investors toward the stock market in general and toward automotive retail companies specifically. However, we also provide long-term compensation in the form of restricted stock awards for senior employees.employees, including each of our named executive officers. Our restricted stock program awards typically vest over four years, with 70% of any award vesting in the third and fourth years. We believe this long term compensation helps to align management's goals with those of our other stockholders and provides a long-term retention inducement for our key employees, as discussed below under the heading "Incentive Equity Awards."Long Term Incentive Plans."
Outside Advisors and Consultants. Our compensation committee has full access to any
of our employees and has the authority to hire outside consultants and advisors at its discretion, though it did not do so in 2017.2019. Notwithstanding management's participation in the executive compensation process, all named executive officer compensation determinations are made by the committee, using its independent judgment and analysis.
Role of Executive Officers. The compensation committee relies on our senior management to assist in fulfilling many of its duties, in particular our Executive Vice President — Human Resources and Chief Executive Officer, each of whom attends part of most committee meetings. These executives make recommendations concerning our compensation policies generally, certain specific elements of compensation for senior management (such as equity awards and bonuses), and report to the committee as to company personnel and developments. Our Chief Executive Officer also makes specific compensation recommendations concerning our other executive officers and certain other employees. Our Chief Executive Officer does not participate in determining his own compensation.
Addressing Risk. Our compensation committee recognizes that any incentive based compensation arrangement induces an inherent element of risk taking by senior management. We incent management through annual discretionary bonuses, restricted stock grants and, in some cases, performance based bonuses. The committee assesses the risk related to our compensation policies for the named executive officers and for the employees generally, and has determined that our compensation arrangements do not lend themselves to unnecessary or excessive risk taking. The committee believes that any inherent risk is mitigated by the following factors:
The responsibilities of the compensation committee and committee member independence are described under "Our Corporate Governance" beginning on page 10.7.
Compensation Recovery ("Clawback") Policy. We have a policy regarding the recovery of unfairly earned compensation.
Under the policy, if our Board determines that a member of management earned performance based compensation or incentive compensation within the last three years due to fraud, negligence or intentional misconduct, and such conduct was a significant contributing factor to our restating our financial statements or the reporting of material inaccuracies relating to financial reporting or other performance metrics used in those awards, our Board has the discretion to cause that employee to repay and/or forfeit all compensation that was expressly conditioned upon the achievement of the misreported financial results.
Equity Award Approval Policy. We have an equity award approval policy which requires that all equity awards be approved by the committee and that the grant date of all awards except those discussed below shall be the date of the approval by the committee. As part of that policy, the compensation committee delegated to our Chief Executive Officer the authority to grant awards of up to an aggregate of 50,000 shares of our common stock (or stock equivalents) for new hires or spot awards, other than to executive officers, provided that the awards are reported to the committee at its next meeting. Our compensation committee believes that this delegation of authority allows us to meet our ongoing business needs in a practical manner. Our Chief Executive Officer approved awards for 10,0321,936 shares under that authority in 2017,2019, which awards were ratified by the committee.
Stock Ownership Guidelines. Our stock ownership guidelines are designed to align our management and Board members' interests with our stockholders. The guidelines require that officers and directors own the following levels of common stock, expressed as a multiple of base salary.
Executive Officer Level | | Multiple of Base Salary | ||
CEO | | 8x | ||
President | 4x | |||
Executive Vice Presidents | | 2x |
Non-employee board members are required to own common stock equal to fiveten times our annual retainer (currently, $40,000 × 5= $200,000)10 = $400,000). Directors and officers have until the later of five years from adoption of the policy or appointment to reach the minimum ownership level, though our policy allows extensions at the discretion of the Chair and Lead Director. These guidelines exclude any shares that are pledged by any of our directors and officers.officers, and also include any shares of restricted stock held by the officer or director.
Determination of Compensation Amounts. The compensation committee reviews and determines all aspects of compensation for our named executive officers. In making decisions regarding non-CEO compensation, the committee receives input from our Chief Executive Officer. Except with respect to our annual performance awards to our Chief Executive Officer and President (discussed below), our compensation committee does not use formulas in determining the amount and mix of compensation. The committee believes that solely using annual quantitative performance measurements does not create the appropriate balance of incentives to build long-term value. Thus, the committee evaluates a broad range of qualitative factors, including reliability, a track record of integrity, good judgment, foresight and the ability to lead others.
The committee reviews salary adjustments with a view to maintaining external compensation competitiveness. We annually benchmark competitiveness of our total compensation against a group of publicly traded automotive retailers (Asbury Automotive Group, AutoNation, CarMax, Group 1 Automotive, Lithia Motors and Sonic Automotive). Also, in 2017 we benchmarked our compensation against a broader group of regionally-headquartered automotive companies (American Axle, Adient, BorgWarner, Cooper Standard, Delphi Corporation, Ford Motor Company, General Motors, Lear Corporation, Tower International and Visteon). While we benchmark our compensation, we do not target a specific quartile of pay for our named executive officers as compared to our peers.
Deductibility of Executive Compensation. Section 162(m) ofIn addition to the Internal Revenue Code of 1986, as amended, generally imposes a $1 million per year ceiling onabove mentioned factors, the tax-deductibility of some typeslevel of compensation paidthat we pay to named executive officersMessrs. Denker and Kurnick reflect that each devotes a percentage of a public company. Priorhis time to 2018, deductibilityaffiliated companies for which they receive additional compensation above $1 million could be achieved iffrom Penske Corporation. Specifically, Mr. Kurnick serves as Penske Corporation's Vice Chair and Mr. Denker serves as the remuneration was treated as performance-based.President of Penske Corporation. Our committee does not track the exact percentage of time spent on Penske Automotive versus affiliated matters, recognizing that the amount varies from year to year, but it is generally
expected that each will spend approximately 75% of his time on Penske Automotive matters. We designed our 2015 Equity Incentive Planwere reimbursed approximately four percent of Mr. Spradlin's base salary by Penske Corporation to facilitatereflect his efforts on behalf of Penske Corporation. The full amount of Mr. Spradlin's base salary is shown in the payment of performance-based compensation meeting these tax deductibility rules where appropriate. The Tax Cuts and Jobs Act of 2017 eliminates the "performance-based compensation" exception. Beginning in 2018, all compensation paid to a covered employee in excess of $1 million is now non-deductible.table below.
Our Compensation Program. Our compensation program primarily consists of four elements:
Base Salary. The salaries of our named executive officers are determined by scope of job responsibility, experience, individual performance, historical salary levels and the benchmarking information discussed above. The committee approves salary levels for named executive officers and certain key employees in order to maintain external compensation competitiveness using the benchmarks noted
above, and to reflect the performance of those employees in the prior year and to reflect any change in the employee's responsibilities. The evaluation of the individual's performance is based upon the committee's subjective perception of that individual's performance, based in large part on input from our Chief Executive Officer when determining non-CEO salary levels,with respect to each of the other named executive officers, and the factors noted above under "Determination of Compensation Amounts."
The committee also considers our Company-wide performance in the prior year and general economic factors.factors when setting base salary levels for each of the named executive officers. The items of corporate performance that are considered for our named executive officers are the same as those with respect to the award detailed below under "2017/2018 Compensation."Long-Term Incentive Plans." Our compensation committee uses these factors in a subjective evaluation to gauge Company performance, keeping in mind the impact of the general performance of the automotive retail industry. Beginning January 2020, Messrs. Carlson, Denker and Spradlin's salaries were each increased $25,000 resulting from the Committee's review of these factors. Each now receives a salary of $600,000.
Annual Bonus Payments. Our senior management is eligible to receive annual discretionary cash bonus payments. In the past several years, our Chief Executive Officer and President have not received any discretionary bonus payments, receivingand instead receive only the restricted stock grants resulting from their achievement of performance based awardsgoals, as described below under "2017/2018 Compensation" and "President Compensation."Long-Term Incentive Plans." We pay annual cash bonuses to our other named executive officers to provide an incentive for future performance and as a reward for performance during the prior year. These discretionary bonus payments are determined in varying degrees based on three criteria:
The items of Company-wide performance that are considered for our named executive officers are the same as those detailed below under "2017/2018 Compensation."Long-Term Incentive Plans." Our compensation committee uses these factors in a subjective evaluation to gauge Company performance, keeping in mind the impact of the overall performance of the business sectors in which we compete. The evaluation of the individual's performance and the performance of the individual's business unit is based on the committee's perception of that performance, based in part on input from our Chief Executive Officer and the factors noted above under "Determination of Compensation Amounts." The amount of cash bonuses paid to Messrs. Carlson, Denker and Spradlin are set forth in the "Bonus" column of the Summary Compensation Table below.
Incentive EquityRestricted Stock Awards. In 2017, we issued equity incentive awards under our 2015 Equity Incentive Plan, which provides up to four million shares for equity awards, including awards that are intended to satisfy the requirements of Section 162(m) of the Internal Revenue Code and terminates on May 5, 2020. We have 2,898,519 awards (giving effect to certain forfeitures and shares withheld) available under the plan.
Each member of senior management, including each of the named executive officers, is eligible to receive a restricted stock award because we believe these awards effectively align management's goals with those of our other stockholders. Restricted stock grants for management typically vest over four years at a rate of 15%, 15%, 20% and 50% per year, and are subject to forfeiture in the event the employee departs from the Company before vesting. We believe these awards provide a longer-term incentive for management because the majority of the award vests in the third and fourth year. We employ this form of compensation in part because many of our initiatives may take several years to yield benefits. We also believe that weighted vesting of these awards provides an additional incentive to retain our valuable employees due to the unvested value that may be created over time. Our restricted stock awards mirror our other outstanding stock, including the right to vote with our other stockholders and receive dividends. Under certain situations, we have issued restricted stock units to employees, in particular in foreign jurisdictions, which do not include voting rights but otherwise mirror the restricted stock awards.
Restricted stock grants are generally discretionary and are based upon the awards granted in the prior year adjusted to reflect
changes in the responsibilitiesIn 2019 and 2020, each of theour named executive officers the individual's performance and Company-wide performance measures detailed below under "2017/2018 Compensation," keeping in mind the overall performancereceived restricted stock awards resulting from achievement of the business sectorslong term incentive plan awards discussed below. In total in which we compete. The amounts are also established to induce retention, as the awards are the sole aspect of long-term compensation for our named executive officers. In 2017,2019, the committee approved the grant of approximately 337,381546,963 equity incentive equity awards under our 2015 Equity Incentive Plan (representing approximately 0.4%0.7% of our current outstanding equity), including all of the awards relating to the 2017 management incentive awards for our Chief Executive Officer and President but excluding awards to our non-employee directors.named executive officers. Our 2015 Equity Incentive Plan provides up to four million shares for equity awards and terminates on May 5, 2020.
Other Compensation. We may also provide our named executive officers, and certain other employees, with selected other benefits or perquisites in order to attract and retain highly skilled employees.them. With respect to health and welfare benefits, the committee believes that our employees should receive a meaningful benefit package commensurate with those of other automotive retailers, recognizing the increasing cost of those benefits in recent years. We also provide our U.S. employees with company matching under our 401(k) plan.
Beginning in 2018, eligible employees, including our The amounts received by the named executive offers in this regard are set forth in the "All Other Compensation" column of the "Summary Compensation" table below
Our named executive officers, as well as other eligible employees, may defer up to 50% of their base salary and up to 100% of their bonus compensation pursuant to the Penske Automotive Group, Inc. Deferred Compensation Plan, effective January 1, 2018 (the "Deferred Compensation Plan""DCP"). The Deferred Compensation PlanDCP is an unfunded, non-qualified deferred compensation plan which provides the opportunity to accumulate additional savings for retirement on a tax deferred basis. The Company does not match funds deferred through this plan. Additional details regarding our DCP can be found below in the "Nonqualified Deferred Compensation" table.
Our named executive officers and directors are also provided with an automobile allowance or the use of a company vehicle. From time to time, we may provide other benefits to certain members of our senior management, such as payment for a country club membership or tax gross-ups for certain items.management. We have valued these benefits in the following disclosure tables"All Other Compensation" column of the "Summary Compensation" table below based on our cost except for situations where the employee or director has used a company owned vehicle, in which case we have used Internal Revenue Service guidelines.cost. We review these benefits on a case-by-case basis and believe, if limited in scope, such benefits can provide an incentive to long term performance and help retain our valuable employees.
No Employment Agreements or Pre-arranged Severance Compensation. None of our current executive officers have been provided an employment agreement, nor are they entitled to any pre-arranged severance compensation. We believe our mix of short-term and long-term compensation provides a retention incentive that makes an employment contract unnecessary, while providing us flexibility with respect to managing the departure of an executive officer. Our lack of pre-arranged severance compensation is consistent with our performance based compensation philosophy, and provides us the flexibility to enter into post-employment arrangements based on circumstances existing upon departure. We have historically entered into varying types of severance arrangements with departing members of our senior management, which have included vesting of restricted stock and
consulting agreements, as we believe it may be important to have continuing access to these individuals' knowledge base and guidance. In the event we employ consulting agreements, we have typically obtained a non-compete agreement with these individuals. With respect to a change in control, none of our current executive officers have been guaranteed any change of control payments, however, certain of our outstanding restricted stock grants provide that in the event of a change of control, the award will vest.
2017/2018 Compensation
Chief Executive Officer Compensation.Long Term Incentive Plans Our compensation committee established 20172019 performance targets for a performance based award for Mr. Penskeeach of named executive officers in February 2017.2019. The payouts are set forth in the table below and were paid in shares of restricted stock in February 2020 as set forth below. During 2019, the company faced macroeconomic challenges, particularly in its U.K. operations, from the continued delays in Brexit which led to declining consumer confidence and an oversupply of both new and used vehicles in the market. Further, changing consumer preferences with respect to government driven policies regarding diesel-powered vehicles also resulted in an over-supply of used vehicles in the market. Messrs. Carlson, Denker and Spradlin achieved 41% of the performance targets noted below, which underperformance we believe results significantly from these events. Messrs. Kurnick and Penske achieved 31% of the performance targets noted below. However, in addition to the considerations above, the compensation committee believes that the underperformance for the customer satisfaction objective noted below was due to product issues with one brand, which was not subject to the influence of our management and therefore determined to pay out this objective at the full 10%.
Our compensation committee has approved the payments noted below, which are below the threshold payments noted below, considering the extraordinary nature of the circumstances leading to the result, managements' efforts in 2019, Company retention concerns and considering that the Chief Executive Officer and President received no bonus with respect to 2019 other than this award.
The amount of restricted stock noted below granted in February 2020 and vesting over a four year period was calculated by dividing the total award established a threshold payout of $2.5 million (50% of target), a target payout of $5.0 million (100% of target)achieved by our average closing stock price for each trading day in 2019 ($46.1127). Messrs. Kurnick and a maximum potential payout of $7.5 million (150% of target)Penske did not receive an annual cash bonus because they each received this restricted stock grant.
2019 Long Term Incentive Award Amounts
Name and Principal Position | | Threshold ($) | | Target ($) | | Maximum ($) | | Payment ($) | | Payment (Shares) | ||||||
Roger S. Penske | $ | 2,500,000 | $ | 5,000,000 | $ | 7,500,000 | $ | 2,050,000 | | 44,456 | ||||||
Chief Executive Officer | | | | | | | | | | | ||||||
| ||||||||||||||||
Robert H. Kurnick, Jr. | | 500,000 | | 1,000,000 | | 1,500,000 | $ | 410,000 | | 8,891 | ||||||
President | | | | | | |||||||||||
| ||||||||||||||||
J.D. Carlson | | 250,000 | | 500,000 | | 750,000 | $ | 205,000 | | 4,446 | ||||||
Executive Vice President & Chief Financial Officer | | | | | | |||||||||||
| ||||||||||||||||
Bud Denker | | 250,000 | | 500,000 | | 750,000 | $ | 205,000 | | 4,446 | ||||||
Executive Vice President — Human Resources | | | | | | |||||||||||
| ||||||||||||||||
Shane M. Spradlin | | 250,000 | | 500,000 | | 750,000 | $ | 205,000 | | 4,446 | ||||||
Executive Vice President, General Counsel & Secretary | | | | | |
2019 Long Term Incentive Award Objectives
The specific 2019 performance objectives for Messrs. Kurnick and Penske were as follows:
Objective | Result | | % of Award | | Achievement | ||||
• EBITDA (earnings before interest, taxes, depreciation and amortization) of $881.5 million (100% attainment), EBITDA below $818 million results in no attainment, EBITDA of $818 million results in 50% attainment, and EBITDA of $923 million yields 200% attainment.(1) | $825.3 | | 20 | % | | 11 | % | ||
• Compliance with the covenants in our U.S. and U.K. credit facilities | Compliant | 10 | % | 10 | % | ||||
• Comparative earnings per share of $5.46 to $5.66 (100% attainment), EPS of $5.34 to $5.45 (50% attainment) and EPS over $5.66 (200% attainment) | $5.28 | | 10 | % | | 0 | % | ||
• Operating margin of 2.99% to 3.18% (100% attainment), operating margin of 2.88% to 2.98% (50% attainment) and above 3.18% (150% attainment)(2) | 2.82 | 10 | % | 0 | % | ||||
• Common stock price performance exceeds performance of 5 of 8 selected peer group companies during 2019 (100% attainment). Outperformance of 4 of 8 yields 50% attainment, 6 of 8 yields 125% attainment, 7 of 8 yields 150% attainment and 8 of 8 yields 200% attainment(3) | 2 of 8 | | 10 | % | | 0 | % | ||
• Customer satisfaction scores exceed manufacturer objectives at 90% of our U.S. franchises | (4) | 10 | % | (4 | ) | ||||
• No material weaknesses in our internal controls | None | | 10 | % | | 10 | % | ||
• Reduce selling, general and administrative expense as a percentage of gross profit by more than 100 basis points (100% attainment). Reduction below 10 basis points results in no attainment, reduction of 10 to 50 basis points results in 25% attainment, reduction of 51 to 75 basis points results in 50% attainment and reduction of 76 to 100 basis points results in 75% attainment | Increase of 39 bps | 10 | % | 0 | % | ||||
• Same-store revenue growth of 1.51% to 2.5% (100% attainment). Growth of 1% to 1.5% results in 50% attainment, and growth above 2.51% yields 150% attainment. | –.7% | | 10 | % | | 0 | % | ||
Total | 100 | % | 41 | % |
The specific 2019 performance objectives for Messrs. Carlson, Denker and Spradlin were the same as those set forth above, except for the omission of the customer satisfaction objective, which percentage amounts were instead allocated evenly to the covenant compliance and the internal controls objectives.
2020 Long Term Incentive Award Amounts
In February 2020, the committee established similar performance based awards for our named executive officers in the amounts specified below to be paid in shares of restricted stock to be granted in 2018. Mr. Penske achieved 69% of the performance metrics noted below, which entitled him to approximately $3.45 million in shares of restricted stock granted in February 2018 calculated by dividing the total award achieved by the average PAG stock price for each trading day in 2017 resulting in an award of 74,434 shares of restricted stock, vesting over a four year period in accordance with the committee's equity award approval policy. Mr. Penske did not receive an annual cash bonus because he received this restricted stock grant in lieu of a cash bonus.
The specific 2017 performance objectives and related performance were as follows:
Objective | Result | | % of Award | | Achievement | ||||
• EBITDA (earnings before interest, taxes, depreciation and amortization) of $735 million (100% attainment). EBITDA below $683 million results in no attainment, EBITDA of $683 million results in 50% attainment, and EBITDA of $770 million yields 200% attainment.(1)(2) | $750.7 million | | 20 | % | | 29 | % | ||
• Compliance with the covenants in our U.S. and U.K. credit facilities | Compliant | 10 | % | 10 | % | ||||
• Earnings per share of $4.28 to $4.35 (100% attainment). EPS of $3.93 to $4.27 (50% attainment) and EPS over $4.35 (200% attainment)(1) | $4.31 | | 10 | % | | 10 | % | ||
• Operating margin of 3.0% to 3.19% (100% attainment), operating margin of 2.9% to 2.99% (50% attainment) and above 3.2% (150% attainment)(1)(3) | Did not achieve | 10 | % | 0 | % | ||||
• Common stock price performance exceeds the S&P 500 Index during 2017 (100% attainment). Performance below the S&P 500 results in no attainment and outperformance by 7.5% to 15% yields 125% attainment and outperformance by more than 15% or more yields 150% attainment | Did not achieve | | 10 | % | | 0 | % | ||
• Customer satisfaction scores exceed manufacturer objectives at 90% of our U.S. franchises | Exceeds | 10 | % | 10 | % | ||||
• No material weaknesses in our internal controls | None | | 10 | % | | 10 | % | ||
• Reduce selling, general and administrative expense as a percentage of gross profit by more than 100 basis points (100% attainment). Reduction below 10 basis points results in no attainment, reduction of 10 to 50 basis points results in 25% attainment, reduction of 51 to 75 results in 50% attainment and reduction of 76 to 100 results in 75% attainment | Did not achieve | 10 | % | 0 | % | ||||
• Same-store revenue growth of 5% (100% attainment). Growth below 5% results in no attainment, and growth of 10% yields 200% attainment.(2) | Did not achieve | | 10 | % | | 0 | % | ||
Total | 100 | % | 69 | % |
In February 2018, the committee established a similar performance based award for Mr. Penske with respect to 2018, with a threshold payout of $2.5 million (50% of target), a target payout of $5.0 million (100% of target) and a maximum potential payout of $7.5 million (150% of target) to be paid in shares of restricted stock to be granted in 20192021 calculated by dividing the resulting total award achieved by the average PAG closing stock price for each trading day in 2018. 2020.
Name and Principal Position | | Target ($) | | Maximum ($) | |||
Roger S. Penske | $ | 5,000,000 | $ | 7,500,000 | |||
Chief Executive Officer | | | |||||
| |||||||
Robert H. Kurnick, Jr. | | 1,000,000 | | 1,500,000 | |||
President | | | |||||
| |||||||
J.D. Carlson | | 500,000 | | 750,000 | |||
Executive Vice President & Chief Financial Officer | | | |||||
| |||||||
Bud Denker | | 500,000 | | 750,000 | |||
Executive Vice President — Human Resources | | | |||||
| |||||||
Shane M. Spradlin | | 500,000 | | 750,000 | |||
Executive Vice President, General Counsel & Secretary | | |
The performance objectives for 2018these awards are as follows:
Objective | | % of Award | ||
• EBITDA (earnings before interest, taxes, depreciation and amortization) of | | 20 | % | |
• Compliance with the covenants in our U.S. and U.K. credit facilities | 10 | % | ||
• Comparative earnings per share of | | 10 | % | |
• Operating margin of | 10 | % | ||
• Common stock price performance exceeds performance of 5 of 8 selected peer group companies during | | 10 | % | |
• Customer satisfaction scores exceed manufacturer objectives at 90% of our U.S. franchises | 10 | % | ||
• No material weaknesses in our internal controls | | 10 | % | |
•
| % | |||
| | |||
| 100 | % |
President Compensation. In February 2017, the committee established a similar performance based award for Mr. Kurnick with respect to 2017, with a threshold payout of $500,000 (50% of target), a target payout of $1,000,000 (100% of target) and a maximum potential payout of $1.5 million (150% of target) to be paid in shares of restricted stock to be granted in 2018. The performance objectives and component percentages are the same as those set forth above with respect to the 2017 award for Mr. Penske. Mr. Kurnick achieved 69% of the performance metrics noted above, which entitled him to approximately $690,000 in shares of restricted stock granted in February 2018 calculated by dividing the total award achieved by the average PAG stock price for each trading day in 2017 resulting in an award of 14,887 shares of restricted stock, vesting over a four year period in accordance with the committee's equity award approval policy. Mr. Kurnick did not receive an annual cash bonus because he received this restricted stock grant in lieu of a cash bonus.
In February 2018, the committee established a similar performance based award for Mr. Kurnick with respect to 2018, with a threshold payout of $500,000 (50% of target), a target payout of $1.0 million (100% of target) and a maximum potential payout of $1.5 million (150% of target) to be paid in shares of restricted stock to be granted in 2019 calculated by dividing the resulting total award achieved by the average PAG stock price for each trading day in 2018. The performance objectives and component percentages are the same as those set forth above with respect to the 2018 award for Mr. Penske.
The level of compensation paid to Mr. Kurnick reflects that he devotes a percentage of his time to Penske Corporation, serving as its Vice Chair, for which he is compensated by Penske Corporation. Our committee does not track the exact percentage of time spent on Penske Automotive matters, recognizing that the amount varies from year to year, but it is generally expected to represent approximately 75% of his time. In determining Mr. Kurnick's pay, our compensation committee considers the impact of the time Mr. Kurnick spends on Penske Automotive matters, including the benefits of his leadership capabilities.
Other Executive Officer Compensation. Mr. Denker, our Executive Vice President — Human Resources also serves as the President and Executive Vice President, Marketing and Communications for Penske Corporation and the Executive Vice President of Penske Racing, a wholly owned subsidiary of Penske Corporation, for which he receives additional compensation from Penske Corporation.
In February 2018, Messrs. Carlson, Denker and Spradlin also received performance based awards with respect to 2018 with a threshold payout of $250,000 (50% of target), a target payout of $500,000 (100% of target) and a maximum payout of $750,000 (150% of target) to be paid in shares of restricted stock in 2019 calculated by dividing the resulting total award achieved by the average PAG stock price for each trading day in 2018. The performance objectives and component percentages are the same as those set forth above with respect to the 2018 award for Mr. Penske, except for the omission of the customer satisfaction objective, which percentage amounts were instead allocated evenly to the covenant compliance and the internal controls objectives.
Each of our named executive officers received the stock awards and bonuses set forth in the tables below. In addition, in February 2018, Messrs. Carlson, Denker and Spradlin each received 6,721 shares of restricted stock, vesting over four years at a rate of 15%, 15%, 20% and 50% as part of our annual grant under the 2015 Equity Incentive Plan. We were reimbursed approximately five percent of Mr. Spradlin's base salary by Penske Corporation to reflect his efforts on behalf of Penske Corporation. The full amount of Mr. Spradlin's base salary is shown in the table below.
Executive Compensation |
The following table contains information concerning 20172019 annual and long-term compensation for our Chief Executive Officer, Chief Financial Officer and each of our three other most highly compensated named executive officers, collectively referred to as the "named executive officers." For a discussion of our methodology in valuing the items set forth under "All Other Compensation," see "CD&A — Other Compensation."
20172019 Summary Compensation Table
Name and Principal Position | | Year | | Salary ($) | | Bonus ($) | | Stock Awards ($)(1) | | All Other Compensation ($) | | Total ($) | | Year | | Salary ($) | | Bonus ($) | | Stock Awards ($)(1) | | All Other Compensation ($) | | Total ($) | ||||||||||||||
Roger S. Penske | | 2017 | $ | 1,375,000 | | — | $ | 5,000,000 | (2) | $ | 432,491 | (3) | $ | 6,807,491 | | 2019 | $ | 1,400,000 | | — | $ | 5,000,000 | (2) | $ | 493,752 | (3) | $ | 6,893,752 | ||||||||||
Chief Executive Officer | | 2016 | | 1,200,000 | | — | | 5,000,000 | | 337,331 | | 6,537,331 | | 2018 | | 1,400,000 | | — | | 5,000,000 | | 424,351 | | 6,824,351 | ||||||||||||||
| | 2015 | | 1,200,000 | | — | | 5,000,000 | | 333,691 | | 6,533,691 | | 2017 | | 1,375,000 | | — | | 5,000,000 | | 432,491 | | 6,807,491 | ||||||||||||||
| �� | |||||||||||||||||||||||||||||||||||||
Robert H. Kurnick, Jr. | | 2017 | | 787,500 | | — | | 1,000,000 | (4) | | 164,130 | (5) | | 1,951,630 | | 2019 | | 800,000 | | — | | 1,000,000 | (2) | | 176,315 | (4) | | 1,976,315 | ||||||||||
President | | 2016 | | 700,000 | | — | | 1,000,000 | | 153,065 | | 1,853,065 | | 2018 | | 800,000 | | — | | 1,000,000 | | 162,890 | | 1,962,890 | ||||||||||||||
| | 2015 | | 700,000 | | — | | 1,000,000 | | 149,518 | | 1,849,518 | | 2017 | | 787,500 | | — | | 1,000,000 | | 164,130 | | 1,951,630 | ||||||||||||||
| ||||||||||||||||||||||||||||||||||||||
J.D. Carlson | | 2017 | | 522,917 | | 300,000 | | 200,000 | | 70,222 | (6) | | 1,093,139 | | 2019 | | 575,000 | | 315,000 | | 500,000 | (2) | | 77,659 | (5) | | 1,467,659 | |||||||||||
Executive Vice President & Chief | | 2016 | | 475,000 | | 265,000 | | 180,550 | | 60,974 | | 981,524 | | 2018 | | 547,917 | | 350,000 | | 500,000 | | 66,223 | | 1,789,140 | ||||||||||||||
Financial Officer | | 2015 | | 432,372 | | 175,000 | | 369,975 | | 43,505 | | 1,020,852 | | 2017 | | 522,917 | | 300,000 | | 200,000 | | 70,222 | | 1,093,139 | ||||||||||||||
| ||||||||||||||||||||||||||||||||||||||
Bud Denker | | 2017 | | 523,958 | | 300,000 | | 200,000 | | 18,423 | (7) | | 1,042,381 | | 2019 | | 575,000 | | 315,000 | | 500,000 | (2) | | 34,649 | (6) | | 1,424,649 | |||||||||||
Executive Vice President — | | 2016 | | 500,000 | | 265,000 | | 180,550 | | 15,088 | | 960,638 | | 2018 | | 547,917 | | 350,000 | | 500,000 | | 24,166 | | 1,747,083 | ||||||||||||||
Human Resources | | 2015 | | 300,909 | | 200,000 | | 191,480 | | 5,525 | | 697,914 | | 2017 | | 523,958 | | 300,000 | | 200,000 | | 18,423 | | 1,042,381 | ||||||||||||||
| ||||||||||||||||||||||||||||||||||||||
Shane M. Spradlin | | 2017 | | 523,958 | | 300,000 | | 295,001 | | 74,809 | (8) | | 1,193,768 | | 2019 | | 575,000 | | 315,000 | | 500,000 | (2) | | 89,597 | (7) | | 1,479,597 | |||||||||||
Executive Vice President, General | | 2016 | | 500,000 | | 265,000 | | 270,825 | | 74,148 | | 1,109,973 | | 2018 | | 547,917 | | 350,000 | | 500,000 | | 76,500 | | 1,799,417 | ||||||||||||||
Counsel & Secretary | | 2015 | | 479,327 | | 250,000 | | 359,025 | | 67,314 | | 1,155,666 | | 2017 | | 523,958 | | 300,000 | | 295,001 | | 74,809 | | 1,193,768 |
2019 Long Term Incentive Award Amounts
Name and Principal Position | | Threshold ($) | | Target ($) | | Maximum ($) | | Payment ($) | ||||||
Roger S. Penske | | 2,500,000 | | 5,000,000 | $ | 7,500,000 | $ | 2,050,000 | ||||||
Chief Executive Officer | | | | | ||||||||||
| ||||||||||||||
Robert H. Kurnick, Jr. | | 500,000 | | 1,000,000 | $ | 1,500,000 | $ | 410,000 | ||||||
President | | | | | ||||||||||
| ||||||||||||||
J.D. Carlson | | 250,000 | | 500,000 | | 750,000 | $ | 205,000 | ||||||
Executive Vice President & Chief Financial Officer | | | | | ||||||||||
| ||||||||||||||
Bud Denker | | 250,000 | | 500,000 | | 750,000 | $ | 205,000 | ||||||
Executive Vice President — Human Resources | | | | | ||||||||||
| ||||||||||||||
Shane M. Spradlin | | 250,000 | | 500,000 | | 750,000 | $ | 205,000 | ||||||
Executive Vice President, General Counsel & Secretary | | | | |
Grants of Plan-Based Awards in 20172019
| Estimated Future Payouts under Equity Incentive Plan Awards | | All other Awards: Number of Shares | | Grant Date Fair Value of Stock | | Estimated Future Payouts under Equity Incentive Plan Awards(1) | | All other Awards: Number of Shares | | Grant Date Fair Value of Stock | |||||||||||||||||||||||||||
Name and Principal Position | | Grant Date | | Threshold ($) | | Target ($) | | Maximum ($) | | of Stock | | Awards ($) | | Grant Date | | Threshold ($) | | Target ($) | | Maximum ($) | | of Stock | | Awards ($)(2) | ||||||||||||||
Roger S. Penske | | 2/8/2017 | | 2,500,000 | | 5,000,000 | $ | 7,500,000 | | | $ | 5,000,000 | | 2/12/2019 | | 2,500,000 | | 5,000,000 | $ | 7,500,000 | | | $ | 5,000,000 | ||||||||||||||
Chief Executive Officer | | 2/8/2017 | | | | | | | | 87,085 | | 3,540,000 | | 2/12/2019 | | | | | | | | 107,543 | | 5,100,000 | ||||||||||||||
| ||||||||||||||||||||||||||||||||||||||
Robert H. Kurnick, Jr. | | 2/8/2017 | | 500,000 | | 1,000,000 | $ | 1,500,000 | | | | 1,000,000 | | 2/12/2019 | | 500,000 | | 1,000,000 | $ | 1,500,000 | | | | 1,000,000 | ||||||||||||||
President | | 2/8/2017 | | | | | | | | 17,417 | | 708,000 | | 2/12/2019 | | | | | | | | 21,509 | | 1,020,000 | ||||||||||||||
| ||||||||||||||||||||||||||||||||||||||
J.D. Carlson | | 2/8/2017 | | | | | | | | 3,861 | | 200,000 | | 2/12/2019 | | 250,000 | | 500,000 | | 750,000 | | | | 500,000 | ||||||||||||||
Executive Vice President & | | | | | | | | 2/12/2019 | | | | | | | | 10,754 | | 510,000 | ||||||||||||||||||||
Chief Financial Officer | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||
Bud Denker | | 2/8/2017 | | | | | | | | 3,861 | | 200,000 | | 2/12/2019 | | 250,000 | | 500,000 | | 750,000 | | | | 500,000 | ||||||||||||||
Executive Vice President — | | | | | | | | 2/12/2019 | | | | | | | | 10,754 | | 510,000 | ||||||||||||||||||||
Human Resources | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||
Shane M. Spradlin | | 2/8/2017 | | | | | | | | 5,695 | | 295,001 | | 2/12/2019 | | 250,000 | | 500,000 | | 750,000 | | | | 500,000 | ||||||||||||||
Executive Vice President, | | | | | | | | 2/12/2019 | | | | | | | | 10,754 | | 510,000 | ||||||||||||||||||||
General Counsel & Secretary | | | | | | | ||||||||||||||||||||||||||||||||
General Counsel & Sec. | | | | | | | | | | | | |
This
Narrative Discussion of Summary Compensation Table and Plan Based Awards
The amounts set forth in the two preceding tables reflect payments and awards to our named executive officers based on the principles and descriptions discussed under "CD&A."
Mr. Penske's Performance Based Award. Our compensation committee established 2017 performance targets for a performance based award for Mr. Penske in February 2017. The award established a threshold payout of $2.5 million (50% of target), a target payout of $5.0 million (100% of target) and a maximum potential payout of $7.5 million (150% of target) to be paidout in shares of restricted stock to be granted in 2018. Mr. Penske achieved 69% of the performance metrics noted above relating to this award, which entitled him to approximately $3.45 million2020.
Mr. Kurnick's Performance Based Award. In February 2017, the committee established a similar performance based award for Mr. Kurnick with respect to 2017, with a threshold payout of $500,000 (50% of target), a target payout of $1.0 million (100% of target) and a maximum potential payout of $1.5 million (150% of target) to be paid in shares of restricted stock to be granted in 2018. Mr. Kurnick achieved 69% of the performance metrics noted above relating to this award, which entitled him to approximately $690,000 in shares of restricted stock granted in February 2018, as more fully discussed above in "CD&A — President Compensation." Mr. Kurnick did not receive an annual cash bonus because he received this restricted stock grant in lieu of a cash bonus.
Other Restricted Stock Awards. The equity awards granted in February 2017 to Messrs. Carlson, Denker and Spradlin were awarded as part of an annual grant of restricted stock pursuant to the terms of the 2015 Equity Incentive Plan. These awards each vest annually on June 1 over four years at a rate of 15%, 15%, 20% and 50% and were issued based on principles described in the "CD&A — Incentive Equity Awards."
Outstanding Equity Awards at 20172019 Year-End
| Stock Awards | | Stock Awards | |||||||||||
Name | | Number of Shares of Stock That Have Not Vested (#) | | Market Value of Shares of Stock That Have Not Vested(1) | | Number of Shares of Stock That Have Not Vested (#) | | Market Value of Shares of Stock That Have Not Vested(1) | ||||||
Roger S. Penske | | 328,279 | (2) | $ | 15,708,150 | | 315,044 | (2) | $ | 15,821,509 | ||||
Chief Executive Officer | | | | | ||||||||||
Robert H. Kurnick, Jr. | 66,308 | (3) | $ | 3,172,838 | 63,009 | (3) | $ | 3,164,312 | ||||||
President | ||||||||||||||
J.D. Carlson | | 15,486 | (4) | $ | 741,005 | | 26,150 | (4) | $ | 1,313,253 | ||||
Executive Vice President & Chief Financial Officer | | | | | ||||||||||
Bud Denker | 12,661 | (5) | $ | 605,829 | 26,150 | (5) | $ | 1,313,253 | ||||||
Executive Vice President — Human Resources | ||||||||||||||
Shane M. Spradlin | | 20,981 | (6) | $ | 1,003,941 | | 28,684 | (6) | $ | 1,440,510 | ||||
Executive Vice President, General Counsel & Secretary | | | | |
(1) Market value is based upon the closing price of our common stock on December | ||||
(2) These restricted shares vest as follows: | ||||
June 1, | June 1, | |||
June 1, | June 1, | |||
June 1, | ||||
(3) These restricted shares vest as follows: | ||||
June 1, | June 1, | |||
June 1, | June 1, | |||
June 1, | ||||
(4) These restricted shares vest as follows: | ||||
June 1, | June 1, | |||
June 1, | June 1, | |||
June 1, 2022 – 6,199 | ||||
(5) These restricted shares vest as follows: | ||||
June 1, | June 1, | |||
June 1, | June 1, | |||
June 1, 2022 – 6,199 | ||||
(6) The restricted shares vest as follows: | ||||
June 1, | June 1, | |||
June 1, | June 1, | |||
June 1, 2022 – 6,199 |
Option Exercises and Stock Vested During 20172019
| Stock Awards | | Stock Awards | |||||||||||
Name | | Number of Shares Acquired on Vesting (#) | | Value Realized on Vesting ($) | | Number of Shares Acquired on Vesting (#) | | Value Realized on Vesting ($) | ||||||
Roger S. Penske | | 102,699 | $ | 4,444,813 | | 74,142 | $ | 3,167,346 | ||||||
Chief Executive Officer | | | | | ||||||||||
Robert H. Kurnick, Jr. | 19,131 | 827,990 | 14,691 | $ | 627,600 | |||||||||
President | ||||||||||||||
J.D. Carlson | | 5,475 | | 236,958 | | 6,343 | $ | 270,973 | ||||||
Executive Vice President & Chief Financial Officer | | | | | ||||||||||
Bud Denker | 4,050 | 175,284 | 4,593 | $ | 196,213 | |||||||||
Executive Vice President — Human Resources | ||||||||||||||
Shane M. Spradlin | | 8,714 | | 377,142 | | 7,118 | $ | 304,081 | ||||||
Executive Vice President, General Counsel & Secretary | | | | |
Nonqualified Deferred Compensation
The Penske Automotive Group, Inc. Deferred Compensation Plan ("DCP") allows qualifying individuals, including our named executive officers, to defer on a pre-tax basis up to 50% of their base salary and/or up to 100% of their annual bonus until their retirement or separation from the Company. The deferred assets are held in a rabbi trust and are invested on behalf of the participants in investments managed by Canadian Imperial Bank of Commerce (CIBC). In the event of termination of employment, all balances would be paid in either a lump sum or up to ten annual installments, according to the employee's prior election. We do not provide any matching contributions and we do not guarantee a minimum return on these amounts. All gains and losses shown in the table below resulted from the investments managed by CIBC.
We believe the DCP is an important tool for recruiting key employees and assists in employee retention. The table below reflects the contributions, earnings, withdrawals and distributions during 2019, and the account balances as of December 31, 2019 for each named executive officer under the DCP.
Name | | Executive Contributions In Last FY(1) | | Registrant Contributions In Last FY | | Aggregate Earnings In Last FY(2) | | Aggregate Withdrawals / Distributions | | Aggregate Balance at Last FYE(3) | ||||||
Roger S. Penske | | — | | — | | — | | — | | — | ||||||
Chief Executive Officer | | | | | | |||||||||||
Robert H. Kurnick, Jr. | — | — | — | — | — | |||||||||||
President | ||||||||||||||||
J.D. Carlson | $ | 608,898 | | — | $ | 108,884 | | — | $ | 1,326,081 | ||||||
EVP & Chief Financial Officer | | | | | | |||||||||||
Bud Denker | $ | 69,283 | — | $ | 2,220 | — | ||||||||||
EVP — Human Resources | $ | 71,503 | ||||||||||||||
Shane M. Spradlin | $ | 212,801 | | — | $ | 33,843 | | — | | | ||||||
EVP, General Counsel & Secretary | | | | | | | | | $ | 430,835 |
Pension Benefits and Nonqualified Deferred CompensationCompensation.
Our executive officers are not eligible to participate in any defined benefit compensation plans. Effective January 1, 2018, certain corporate officers, including our named executive officers, may defer up to 50% of their base salary and up to 100% of their bonus compensation pursuant to the Company'sThe Penske Automotive Group, Inc. Deferred Compensation Plan ("DCP") discussed above. The Company does not match funds deferred through this plan.above allows participants the opportunity to accumulate additional savings for retirement on a tax-deferred basis. For a more detailed discussion of the DCP, please see the section entitled "Executive Compensation — Nonqualified Deferred Compensation."
"Golden Parachutes" or Termination/Change in Control PaymentsPayments.
None of our current named executive officers have been provided an employment agreement, nor are they entitled to any pre-arranged severance compensation. With respect to a change in control, none of our current named executive officers have been guaranteed any change of control payments, however, our outstanding restricted stock grants provide that in the event of a change of control the award will vest. Based on a closing stock price of $46.91$40.03 on March 13, 2018,11, 2020, the following number of shares would vest assuming a change of control occurred on that date: Roger Penske 328,279315,044 shares ($15,399,568)12,611,211), Robert Kurnick 66,30863,009 shares ($3,110,508)2,522,250), Shane Spradlin 27,74228,684 shares ($1,301,377)1,148,221), J.D. Carlson 22,24726,150 shares ($1,043,607)1,046,785) and Bud Denker 19,42226,150 shares ($911,086)1,046,785).
CEO Pay Ratio. As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, and applicable SEC rules, we are providing the following information about the relationship of the median annual total compensation of our employees and the annual total compensation of Roger S. Penske, our Chief Executive Officer. For the year ended December 31, 2017:2019:
Based on this information, the ratio of the annual total compensation of Mr. Penske to the median of the annual total compensation of all employees was estimated to be 168155 to 1.
To identifyPursuant to SEC rules, we are permitted to calculate our CEO pay ratio for the year ended December 31, 2019 using the same median of the annual total compensation ofemployee that we identified in 2018 because we do not believe that there have been any changes to our worldwide employee population as well as to calculate the annual totalor employee compensation of the "median employee" from this population,arrangements during 2019 that would have a significant impact on our
methodology necessarily involved certain material assumptions, adjustments, and estimates pay ratio disclosure. We identified our median employee in 2017 as permitted by SEC rules and interpretations. As of December 31, 2017, when our worldwide employee population consisted of approximately 26,300 individuals. We selected December 31, 2017 as the date upon which we would identify the median employee. In identifying the median employee, we have excluded from our employee population all of the employees in the following jurisdictions as permitted by SEC rules and interpretations based on the small number of employees located in each: Canada (219), New Zealand (85) and Italy (535).
To identify theour 2017 median employee from our employee population, we then compared the amount of U.S. gross taxable wages or equivalent foreign metric of our employees as reflected in our payroll records. Once we identified our median employee, we
We combined all of the elements of suchour median employee's compensation for 20172019 in accordance with the SEC's requirements, resulting in annual total compensation of $40,409.$44,527. With respect to the annual total compensation of Mr. Penske, we used the amount reported in the "Total" column of our 20172019 Summary Compensation Table included in this Proxy Statement.
Director Compensation |
The Board of Directors believes that its members should receive a mix of cash and equity compensation, with the option to receive certain compensation in the form of equity. The Board of Directors approves changes to director compensation only upon the recommendation of the Compensation and Management Development Committee, which is composed solely of independent directors. Although all of our directors are eligible for our charitable donation matching program discussed below, only those directors who are not our employees are eligible for director compensation.
Annual Fee and Stock Award. Each non-employee director receives an annual fee of $40,000, except for audit committee members, who receive $45,000. CommitteeThe Lead Director receives an additional $25,000 and committee chairs receive an additional $5,000.$10,000. These fees are payable, at the option of each non-employee director, in cash or common stock valued on the date of receipt (generally in the fourth quarter of the year of service). Our non-employee directors also receive an annual grant of 4,000 shares of stock.
Option to Defer Receipt until Termination of Board Service. Under our Non-Employee Director Compensation Plan, the annual fee and equity awards earned by our non-employee directors may be deferred in either cash (for the annual fee) and/or deferred stock. Each deferred stock unit is equal in value to a share of common stock, and ultimately will be paid in cash after a director retires. These stock units do not have voting rights, but do receive dividends in the form of additional stock units which are credited to the director's account on the date dividends are paid. All cash fees deferred are held in our general funds, and interest on such deferred fees is credited to the director's account at the then current U.S. 90-day Treasury bill rate on a quarterly basis.
Charitable Donation Matching Program. All directors are eligible to participate in a charitable matching gift program. Under this program, in 2017 we matchedmatch up to $50,000 per year in contributions by each director to institutions qualified as tax-exempt organizations under 501(c)(3) of the Internal Revenue Code and other institutions approved at the discretion of management. We may decline to match any contribution to an institution with goals that are incompatible with ours, or due to conflicts with our director independence policy. This program is not available for matching of political contributions. While the contributions are directed by our directors, we retain the tax deduction for matching contributions paid by us.
Other Amounts. As part of our director continuing education program, each director is eligible to be reimbursed by us for the cost and expenses relating to one education seminar per year. These amounts are excluded from the table below. Each non-employee director is also entitled to the use of a company vehicle, including the cost of routine maintenance and repairs and company-sponsored automobile insurance relating to that vehicle. Beginning in 2018, forFor any director who declines the use of a company-sponsored vehicle, we will provide a $20,000 cash payment in lieu of the company-sponsored vehicle. All directors are also entitled to reimbursement for their reasonable out-of-pocket expenses in connection with their travel to, and attendance at, meetings of the Board of Directors or its committees. Because we expect attendance at all meetings, and a substantial portion of the Board of Directors' work is done outside of formal meetings, we do not pay meeting fees.
20172019 Director Compensation Table
Our directors serving in 20172019 who arewere also our employees (Messrs. Kurnick, Penske, Sasaki and Sasaki)Yamanaka) receive no additional compensation for serving as directors, though they are eligible for the charitable matching program noted above.
Name | | Fees Earned or Paid in Cash(1) | | Stock Awards(2) | | All Other Compensation(3) | | Total | | Fees Earned or Paid in Cash(1) | | Stock Awards(2) | | All Other Compensation(3) | | Total | ||||||||||
John D. Barr | $ | 45,000 | $ | 192,520 | $ | 95,926 | $ | 333,446 | $ | 45,000 | $ | 208,880 | $ | 105,466 | $ | 359,346 | ||||||||||
Lisa A. Davis | 26,667 | (4) | 192,520 | 62,983 | 282,170 | 40,000 | 208,880 | 92,698 | 341,578 | |||||||||||||||||
Wolfgang Dürheimer | | 40,000 | | 208,880 | | 18,760 | | 267,640 | ||||||||||||||||||
Michael R. Eisenson | | 46,667 | (4) | | 192,520 | | 69,099 | | 308,286 | 60,000 | (4) | 208,880 | 50,442 | 319,322 | ||||||||||||
William J. Lovejoy | 40,000 | 192,520 | 76,737 | 309,257 | ||||||||||||||||||||||
Kimberly J. McWaters | | 50,000 | | 192,520 | | 56,986 | | 299,506 | | 55,000 | | 208,880 | | 68,401 | | 332,281 | ||||||||||
Lucio A. Noto | 40,000 | 192,520 | 85,901 | 318,421 | ||||||||||||||||||||||
Greg Penske | | 13,260 | (4) | | 0 | | 0 | | 13,260 | |||||||||||||||||
Roger S. Penske, Jr. | 26,667 | (4) | 192,520 | 50,000 | 269,187 | 60,000 | (4) | 208,880 | 53,836 | 322,716 | ||||||||||||||||
Sandra A. Pierce | | 40,000 | | 192,520 | | 74,386 | | 306,906 | | 40,000 | | 208,880 | | 76,805 | | 325,685 | ||||||||||
Greg C. Smith | 16,667 | (4) | 192,520 | 49,800 | 258,987 | 75,000 | (4) | 208,880 | 50,000 | 333,880 | ||||||||||||||||
Ronald G. Steinhart | | 45,000 | | 192,520 | | 69,445 | | 306,965 | | 45,000 | | 208,880 | | 66,328 | | 320,208 | ||||||||||
H. Brian Thompson | 45,000 | 192,520 | 79,973 | 317,493 | 75,000 | 208,880 | 56,588 | 340,468 |
Name | | Company Sponsored Vehicle | | Charitable Match | | Total | | Deferred Stock Units at 12/31/17 | | Company Sponsored Vehicle(1) | | Charitable Match | | Other(3) | | Total | | Deferred Stock Units at 12/31/19 | |||||||||||
John D. Barr | $ | 45,926 | $ | 50,000 | $ | 95,926 | | 31,699 | $ | 75,466 | $ | 30,000 | | — | $ | 105,466 | | 33,820 | |||||||||||
Lisa A. Davis | 12,983 | 50,000 | 62,983 | 4,554 | |||||||||||||||||||||||||
Lisa A. Davis, | 40,372 | 50,000 | $ | 2,326 | 92,698 | 14,812 | |||||||||||||||||||||||
Wolfgang Dürheimer | | 18,760 | | — | | — | | 18,760 | | 8,140 | |||||||||||||||||||
Michael R. Eisenson | | 19,099 | | 50,000 | | 69,099 | | 0 | — | (2) | 50,000 | 442 | 50,442 | — | |||||||||||||||
William J. Lovejoy | 26,737 | 50,000 | 76,737 | 74,454 | |||||||||||||||||||||||||
Kimberly J. McWaters | | 24,486 | | 32,500 | | 56,986 | | 30,156 | | 35,401 | | 33,000 | | — | | 68,401 | | 40,314 | |||||||||||
Lucio A. Noto | 35,901 | 50,000 | 85,901 | 51,900 | |||||||||||||||||||||||||
Roger S. Penske, Jr. | | — | | 50,000 | | 50,000 | | 0 | — | (2) | 50,000 | 3,836 | 53,836 | 12,408 | |||||||||||||||
Sandra A. Pierce | 24,386 | 50,000 | 74,386 | 4,000 | | 26,294 | | 50,000 | | 511 | | 76,805 | | 8,115 | |||||||||||||||
Greg C. Smith | | — | | 49,800 | | 49,800 | | 4,000 | — | (2) | 50,000 | — | 50,000 | 12,408 | |||||||||||||||
Ronald G. Steinhart | 19,445 | 50,000 | 69,445 | 0 | | 16,328 | | 50,000 | | — | | 66,328 | | — | |||||||||||||||
H. Brian Thompson | | 29,973 | | 50,000 | | 79,973 | | 0 | 6,379 | 50,000 | 209 | 56,588 | — |
Security Ownership of Certain Beneficial Owners and Management |
The following table sets forth information with respect to the beneficial ownership of our common stock as of March 13, 201817, 2020 by (1) each person known to us to own more than five percent of our common stock, (2) each of our directors, (3) each of our named executive officers and (4) all of our directors and executive officers as a group.
"Beneficial ownership" is determined in accordance with the rules of the SEC and includes voting and investment power with respect to shares, including shares of restricted but unvested stock. The percentage of ownership is based on 86,107,69380,887,853 shares of our common stock outstanding on March 13, 2018.17, 2020. Unless otherwise indicated in a footnote, each person identified in the table below has sole voting and dispositive power with respect to the common stock beneficially owned by that person and none of the shares are pledged as security.
Name of Beneficial Owner | | Economic Ownership(1) | | Beneficial Ownership(2) | | Percent | | Economic Ownership(1) | | Beneficial Ownership(2) | | Percent | ||||||||
Principal Stockholders | | | | | | | ||||||||||||||
Penske Corporation(3) | | 34,181,121 | | 34,181,121 | | 39.7 | % | | 34,181,121 | | 34,181,121 | | 42.3 | % | ||||||
2555 Telegraph Road, Bloomfield Hills, MI 48302-0954 | | | | | | | ||||||||||||||
Mitsui(4) | 14,455,221 | 14,455,221 | 16.8 | % | 13,322,205 | 13,322,205 | 16.5 | % | ||||||||||||
1-3, Marunouchi, 1-Chome, Chiyoda-ku, Tokyo, Japan 100-8631 | ||||||||||||||||||||
| | | | | | | ||||||||||||||
Current Directors and Nominees | | | | | | | ||||||||||||||
John D. Barr | | 50,938 | | 19,000 | | * | | 56,135 | | 22,000 | | * | ||||||||
Lisa A. Davis | 4,588 | 0 | * | 14,950 | -0- | * | ||||||||||||||
Wolfgang Dürheimer | | 0 | | 0 | | * | | 8,216 | | -0- | | * | ||||||||
Michael R. Eisenson | 96,657 | 96,657 | * | 79,657 | 79,657 | * | ||||||||||||||
Robert H. Kurnick, Jr.(5) | | 93,120 | | 93,120 | | * | | 98,821 | | 98,821 | | * | ||||||||
William J. Lovejoy | 91,016 | 16,000 | * | |||||||||||||||||
Kimberly J. McWaters | | 49,308 | | 18,924 | | * | 49,614 | 8,924 | * | |||||||||||
Lucio A. Noto | 96,965 | 44,674 | * | |||||||||||||||||
Roger S. Penske(6) | | 35,293,254 | | 35,293,254 | | 41.0 | % | |||||||||||||
Greg Penske(6) | | 38,178 | | 38,178 | | * | ||||||||||||||
Roger S. Penske(7) | 35,120,145 | 35,120,145 | 43.4 | % | ||||||||||||||||
Roger S. Penske, Jr. | 5,624 | 1,594 | (7) | * | | 14,118 | | 1,594 | (6) | | * | |||||||||
Sandra A. Pierce | | 25,101 | | 19,150 | (8) | | * | |||||||||||||
Kanji Sasaki | 0 | 0 | * | |||||||||||||||||
Sandra A. Pierce(6) | 35,340 | 27,150 | * | |||||||||||||||||
Greg C. Smith | | 4,030 | | 0 | | * | | 12,524 | | -0- | | * | ||||||||
Ronald G. Steinhart | 53,400 | 53,400 | * | 57,140 | 57,140 | * | ||||||||||||||
H. Brian Thompson | | 89,028 | | 89,028 | | * | ||||||||||||||
H. Brian Thompson(8) | | 102,694 | | 102,694 | | * | ||||||||||||||
Masashi Yamanaka | -0- | -0- | * | |||||||||||||||||
Officers Who Are Not Directors | | | | | | | ||||||||||||||
J.D. Carlson(5) | | 31,605 | | 31,605 | | * | | 37,105 | | 37,105 | | * | ||||||||
Bud Denker(5) | 29,004 | 29,004 | * | 40,679 | 40,679 | * | ||||||||||||||
Shane M. Spradlin(5) | | 47,759 | | 47,759 | | * | | 46,263 | | 46,263 | | * | ||||||||
All directors and named executive officers (17 persons) | 36,061,397 | 35,853,169 | 41.6 | % | ||||||||||||||||
All directors and executive officers (17 persons) | 35,811,579 | 35,680,350 | 44.1 | % |
Related Party Transactions |
Our Board of Directors has adopted a written policy with respect to the approval of related party transactions. Under the policy, related party transactions valued over $5,000 must be approved by a majority of either the members of our Audit Committee or our disinterested Board members. Our Audit Committee approves all individual related party transactions valued below $1 million, all multiple-payment transactions valued below $5 million (such as a lease), and any transaction substantially similar to a prior year's transaction (regardless of amount). Our Board, by a vote of the disinterested directors, reviews and approves all other related party transactions. At each regularly scheduled meeting, our Audit Committee reviews any proposed new related party transactions for approval and reviews the status of previously approved transactions. Each of the transactions noted below was approved by our Board of Directors or Audit Committee pursuant to this policy.
Stockholders Agreement and Stock Purchase Agreement. Entities affiliated with Roger S. Penske, our Chair of the Board and Chief Executive Officer, are parties to a stockholders agreement described below. Mr. Penske is also Chair of the Board and Chief Executive Officer of Penske Corporation, and, through entities affiliated with Penske Corporation, our largest stockholder. The parties to the stockholders agreement are Mitsui & Co., Ltd., Mitsui & Co, (USA), Inc. (collectively, "Mitsui"), Penske Corporation and Penske Automotive Holdings Corp. (collectively the "Penske companies").
Pursuant to the stockholders agreement, the Penske companies agreed to vote their shares for up to two directors who are representatives of Mitsui and Mitsui agreed to vote its shares for up to fourteen directors voted for by the Penske companies. In addition, the Penske companies agreed that if they transfer any of our shares of common stock, Mitsui would be entitled to "tag along" by transferring a pro rata amount, which expires March 26, 2030, of its shares upon similar terms and conditions, subject to certain limitations. This agreement terminates in 2024, or, if earlier, upon the mutual consent
We and Mitsui have agreed that Mitsui has a right to (1) an observer at all of the parties or when either party no longerour Board of Directors meetings so long as Mitsui owns anyat least 2.5% of our outstanding common stock, and (2) designate a senior executive so long as Mitsui owns at least 10% of our outstanding common stock.
Registration Rights Agreements. Both the Penske companies and Mitsui possess registration rights pursuant to which they are able on two remaining occasions each to register all or part of our common stock held by them, subject to specified limitations. They are also entitled to request inclusion of all or any part of their common stock in any registration of securities by us on Forms S-1 or S-3 under the Securities Act of 1933, as amended.
Other Related Party Interests. Several of our directors and officers are affiliated with Penske Corporation or related entities. Mr. Penske is a managing member of certain investment vehicles of Transportation Resource Partners, an organization that undertakes investments in transportation-related industries. Greg Penske, Roger Penske's son, was one of our directors through May 9, 2017 and Roger S. Penske, Jr., also Roger Penske's son, is one of our directors. Robert Kurnick, our President and a Director, is also the Vice Chair and a Director of Penske Corporation. Mr. Denker, our Executive Vice President — Human Resources is the President of Penske Corporation. Mr. Eisenson, one of our directors, joined the board of directorsis a director of Penske Corporation in August 2017.Corporation. In 2017,2019, we were reimbursed approximately fivefour percent of the base salary of Shane Spradlin, our General Counsel, by Penske Corporation to reflect his efforts on behalf of Penske Corporation affiliates. These employees or directors may receive salary, bonus or other compensation from Penske Corporation or its affiliates unrelated to their service at Penske Automotive. Our director Lucio A. Noto is an investor in Transportation Resource Partners.
Penske Truck Leasing. We own aan approximately 28.9% interest in Penske Truck Leasing Co., L.P. ("PTL"), a leading provider of transportation services and supply chain management. PTL is capable of meeting customers' needs across the supply chain with a broad product offering that
includes full-service truck leasing, truck rental and contract maintenance, along with logistics services such as dedicated contract carriage, distribution
center management, transportation management and lead logistics provider. PTL is owned 41.1% by Penske Corporation, 28.9% by us, and 30% by affiliates of Mitsui & Co., Ltd. ("Mitsui").
On September 7, 2017, we acquired an additional 5.5% ownership interest inThe PTL from GE Capital Global Holdings, LLC ("GE Capital") for approximately $239.1 million in cash to bring our total ownership interest to 28.9% (the "2017 Acquisition"). Prior to the 2017 Acquisition, we held a 23.4% ownership interest in PTL. Concurrently with our investment pursuant to the 2017 Acquisition, affiliates of Mitsui our second largest stockholder, acquired an additional 10% ownership interest in PTL at the same valuation. In connection with the 2017 Acquisition, the PTL partners agreed to amend and restate the existing partnership agreement, among the partners which, among other things, provides us with specified partner distribution and governance rights and restricts our ability to transfer our interest. We and Mitsui were granted additional governance rights as part of the transaction. In addition, the partnership now has a six member advisory committee (previously seven member) and we continue to beare entitled to one of the representatives serving on the advisory committee. We continue to have the right to pro rata quarterly distributions equal to 50% of PTL's consolidated net income and we expect to realize significant cash tax savings.
We continue to be able tomay transfer our directly owned interests with the unanimous consent of the other partners, or if we provide the remaining partners with a right of first offer to acquire our interests, except that we may transfer up to 9.02% of our interest to Penske Corporation without complying with the right of first offer to the remaining partner. We and Penske Corporation have previously agreed that (1) in the event of any transfer by Penske Corporation of their partnership interests to a third party, we will be entitled to "tag-along" by transferring a pro rata amount of our partnership interests on similar terms and conditions, and (2) Penske Corporation is entitled to a right of first refusal in the event of any transfer of our partnership interests, subject to the terms of the partnership agreement. Additionally, PTL has agreed to indemnify the general partner for any actions in connection with managing PTL, except those taken in bad faith or in violation of the partnership agreement.
The partnership agreement continues to allowallows Penske Corporation beginning December 31, 2017, to give notice to require PTL to begin to effect an initial public offering of equity securities, subject to certain limitations, as soon as practicable after the first anniversary of the initial notice, and, beginning in 2025, we and Mitsui continue to have a similar right to require PTL to begin an initial public offering of equity securities, subject to certain limitations, as soon as reasonably practicable. The term of the partnership agreement was amended as part of the transaction to be indefinite.
A portion of our existing PTL ownership interests were previously held through a limited liability company, LJVP Holdings LLC ("Holdings"). The limited liability company agreement of Holdings also was amended as part of the 2017 Acquisition. We had governance rights in Holdings typical of a minority investor and, in light of our prior indemnification requirements related to the Holdings Bonds noted below, we had the right to approve certain additional debt obligations before incurrence by Holdings. The agreement contained restrictions on our ability to transfer our interests similar to those in the PTL partnership agreement discussed above.
Historically, affiliates of GE Capital ("GEC") provided PTL with a majority of its financing, though PTL has refinanced all of its GEC indebtedness. As part of that refinancing in 2012, we and the other PTL partners created Holdings which, together with GEC, co-issued $700.0 million of 3.8% senior unsecured notes due 2019 (the "Holdings Bonds"). GEC agreed to be a co-obligor of the Holdings Bonds in order to achieve lower interest rates on the Holdings Bonds. We agreed to indemnify GEC for 9.0% of any principal or interest that GEC was required to pay on the original bonds and pay GEC an annual fee of approximately $0.95 million for acting as obligor. The maximum amount of our
contingent obligations to GEC under this agreement was 9.0% of the original principal repayment due in 2019 ($63.1 million) and 9.0% of interest payments required under the original Holdings Bonds, plus fees and default interest, if any. On October 2, 2017, we elected to make a payment in full of our obligations under this agreement of $63.8 million and have no further obligations to make payments under this agreement. In light of our satisfaction of these amounts, in March 2018, we redeemed our interests in Holdings for equivalent interests in PTL directly.
In 2017,2019, we received $52.4$71.9 million from PTL in pro rata cash distributions. Our Chair and Chief Executive Officer also serves as Chair of PTL, for which he is compensated by PTL. As a limited partner, we do not influence or control the amount of that compensation. In 2017,2019, our subsidiary operating retail commercial truck dealerships, Premier Truck Group, assisted in providing customer financing arrangements at several PTL used truck sales centers in the United States and Canada. In 2017, we received $173,000 for providing these services.Canada generating $4.2 million in commissions in 2019.
Our Australian subsidiary, Penske Transportation Group International owns a 28.33% interest in a joint venture with a PTL subsidiary to lease trucks in Australia and New Zealand. In September 2017, PTL purchased an additional 5% percent of the ownership interests in this joint venture from us for $234,990. Previously, we owned 33.3% of this joint venture. The joint venture combines our sales expertise in Australia with PTL's truck leasing experience. We continue to be party to a stockholder's agreement relating to this investment that provides us with specified distribution and governance rights and restricts our ability to transfer our interests.
We were previously a 31% owner of Penske Vehicle Services ("PVS"), a provider of outsourced vehicle management solutions, along with Penske Corporation (15%), PTL (17%) and third party investors. In December 2017, we, Penske Corporation and the third party investors sold our interests to PTL on the same financial terms. We received $19.2 million in connection with the transaction and terminated the existing stockholders agreement and management agreement. In 2017, we received $687,583 from PVS in pro rata cash distributions.
Other Transactions. From time to time, we pay and/or receive fees from Penske Corporation and its affiliates for services rendered in the normal course of business, including payments to third parties by Penske Corporation on our behalf which we then reimburse to them, payments to third parties made by us on behalf of Penske Corporation which they then reimburse to us, shared office expenses, shared employee expenses and payments relating to the use of aircraft from Penske Aviation, a subsidiary of Penske Corporation. These transactions are reviewed periodically by our Audit Committee and reflect the provider's cost or an amount mutually agreed upon by both parties. Aggregate payments relating to such transactions amounted to $6.0$5.4 million paid by us in 2017.2019.
In June 2008, RP Automotive, an affiliate of Mr. Penske, Jr., purchased two of our subsidiaries operating six franchises in California. In connection with these transactions, the former subsidiaries continue to lease certain fixed assets from us. One of the leases has a term expiring in December 2037 with annual rent of $289,000 per year (or $5.8
$5.2 million over the remaining period), and the second lease has a term expiring in February 2027 with annual rent of $219,000 per year (or $2.0$1.6 million over the remaining period).
We entered into a license agreement with an affiliate of Penske Corporation for a license of the "Penske Automotive" name. This agreement provides us with a perpetual license of the name "Penske Automotive" and related trade names so long as Penske Corporation and its affiliates own in excess of 20% of our outstanding common stock and we adhere to the other terms of the license agreement. In 2017,December 2019, we entered into arenewed our two-year marketing arrangement with an affiliate of Jay Penske, Roger S. Penske's son, under which we agreed to incur approximately $600,000 for marketing and subscription services over the two year period, $337,000 of which was payable in 2017.
Table of Contentstwo-year period.
From time to time, we enter into arrangements with Penske Truck Leasing and/or other Penske Corporation affiliates and third party vendors in order to achieve the benefits of scale or synergy opportunities as between the companies. These arrangements are reviewed by the Board in accordance with our policy noted above. For example, we aggregate several Penske entities in connection with sourcing certain telecommunications services to achieve the benefits of scale.
We were previously a 7% owner of NPA, an auctioneer of powersport vehicles, which was owned 7% by Mitsui, and controlled by Transportation Resource Partners (TRP), an organization discussed above. InOn June 2017,3, 2019, we and the other investors sold our interests to a third party on the same financial terms. We received $6.0 million in connection with the transaction and terminated the existing stockholders agreement. In 2017, we received $1.5 million from NPA in pro rata cash distributions.
In 2017, we purchased $1.05 million in vehicle transportation services from United Road Services, a national auto transport company ("URS"). Additionally, we sold $193,988 in trucks and related parts to URS from our PTG subsidiaries. Until September 2017, URS was indirectly majority owned by Charlesbank Capital Partners, an affiliate of Michael Eisenson, onerepurchased 256,369 shares of our directors, and TRP andoutstanding common stock from Roger S. Penske collectively owned approximately 8%for $11.4 million, or $44.40 per share, under our securities repurchase program approved by our Board of URS.Directors.
Our officers, directors and their affiliates periodically purchase, lease or sell vehicles and parts from us or PTL at fair market value. This includes purchases and sales of trucks, logistics and other services and parts as between our subsidiaries and those of PTL (principally consisting of purchases of $14.2$15.2 million of trucks and parts by PTL from our PTG subsidiaries, and purchases of $3.1$0.6 million of used trucks by PTG from PTL).
Additionally, we hire service technicians who have graduated from Universal Technical Institute ("UTI"), a provider of technical education, whose former Chief Executive Officer, Kimberly McWaters, is one of our directors. Ms. McWaters retired from UTI on October 31, 2019, though she remains a director. We generally make no payments to UTI relating to the hiring of these graduates and hire them on the same terms as other employers. However, in order to assist us in sourcing qualified service technicians for our Premier Truck Group operations, we entered into an arrangement with UTI designed to assist us in sourcing qualified service technicians. We and UTI are jointly designing and developing a training program for soldiers at the Fort Bliss military base near El Paso, Texas. Graduates of the program are intended to have all the skills required to enable them to become technicians in our retail truck business. Our agreement, which runs through June 30, 2024, calls for UTI to recruit qualified soldiers, recruit qualified instructors and provide training for 40 soldiers per year, and for us to pay for the initial build of the training space, provide training support and provide and maintain training vehicles. We paid $48,435 under this arrangement in 2019, which was paid in developing the training space.
Mr. Sasaki,On December 12, 2018, we entered into a Services Agreement with Mitsui under which Mitsui employee Masashi Yamanaka, one of our board members,directors, assisted the Company in strategic development of business opportunities and relationships in transportation related industries and the evaluation of new technologies in the automotive and trucking sectors. From January 9, 2019, to February 28, 2019 when we terminated the Services Agreement, we paid a fee of $49,583 for these services. Beginning March 1, 2019, Mr. Yamanaka was designated our Executive Vice President, Strategic Relationship Management for which he received $326,061$304,946 in total compensation, relating to his service as Senior Vice President — International Business Development, including a tax allowance of $9,708$7,871 relating to $26,060$19,991 of non-cash compensation. Mr. SasakiYamanaka is an employee of Mitsui & Co., Ltd. (Japan). To the extent his salary exceedsexceeded or iswas less than an amount set annually by Mitsui, he makesmade or receivesreceived payments to/from Mitsui intended to mitigate the effect of exchange rate changes.
Ms. Pierce is a Senior Executive Vice President of Huntington Bank. In 2017,2019, Huntington Bank purchased $45$46.0 million in automotive contracts from us, representing approximately 2,300 vehicles.
An entity (the "Investor") controlled by one of our directors, Lucio A. Noto, owns a 20% interest in one of our subsidiaries, UAG Connecticut I, LLC, pursuant to an agreement which entitles the Investor to 20% of the operating profits of UAG Connecticut I. This agreement also provides the Investor with the right to appoint one of three directors, as well as "tag-along rights" in the event1,931 vehicles and we intend to sell our interest in UAG Connecticut I. We have a right of first refusal with respect to any potential sale by the Investor of its interest. From time to time, we provide UAG Connecticut I with working capital and other debt financing. UAG Connecticut I makes periodic pro rata distributions, pursuant to which the Investor was paid $612,696 during 2017.
A separate entity controlled by Mr. Noto (the "Additional Investor"), owns a 20% interest in our subsidiary that owns Mercedes-Benz of Greenwich. From time to time, we provide Mercedes-Benz of Greenwich with working capital and other debt financing and expect to make periodic pro rata distributions from Mercedes-Benz of Greenwich to the Investor which totaled $610,949 in 2017. We have entered into an operating agreement that provides rights and obligations similar as those described above with respect to UAG Connecticut I.
Mr. Noto also has an indirect ownership interest in Putnam Leasing Company, which is a provider of leasing for premium vehicles. In 2017, Putnam Leasing purchased $8.6received $1.9 million in automotive contractsfinance reserve and preferred lender fees from us, representing 40 vehicles, to offer leasing to our customers.Huntington Bank.
Information about Attending the Meeting |
PAG 20182020 Annual Meeting of Stockholders
8:00 a.m. Eastern Daylight Time, May 10, 201813, 2020
Penske Automotive Group
2555 Telegraph Road
Bloomfield Hills, Michigan 48302
Voting in Person at the Meeting
We encourage you to submit proxies in advance by telephone, by Internet or by mail. You may also vote in person at the annual meeting instead, or may execute a proxy designating a representative to vote for you at the meeting. If your PAG shares are held for you in a brokerage, bank or other institutional account, you must obtain a proxy from that entity and bring it with you to hand in with your ballot in order to be able to vote your shares at the meeting.
Admission
You will be asked to verify proof of ownership of PAGour stock before being admitted to our annual meeting. If you hold shares indirectly through a bank or brokerage firm, please bring a recent statement to verify your ownership. We reserve the right to deny admission to anyone who cannot verify he or she is one of our stockholders. Cameras and recording devices will not be permitted.
We are sensitive to the public health and travel concerns our shareholders may have and recommendations that public health officials may issue in light of the evolving coronavirus (COVID-19) situation. As a result, we may impose additional procedures or limitations on meeting attendees (beyond those described above) or may decide to hold the meeting in a different location or solely by means of remote communication (i.e., a virtual-only meeting). We plan to announce any such updates on our website, www.penskeautomotive.com within the "Investor Relations" section, and we encourage you to check this website prior to the meeting if you plan to attend.
Proxies are solicited by or on behalf of our Board of Directors. We will bear the cost of this solicitation. In addition to the solicitation of the proxies by mail, some of our officers and regular employees, without extra remuneration, may solicit proxies personally, or by telephone or otherwise. In addition, we will make arrangements with brokerage houses and other custodians, nominees and fiduciaries to forward proxies and proxy material to their principals, and we will reimburse them for their expenses in forwarding soliciting materials, which are not expected to exceed an aggregate of $10,000.
We will provide without charge to each of our stockholders, on the written request of such stockholder, a copy of our Form 10-K for the year ended December 31, 20172019 and any of the other documents referenced herein. Copies can be obtained from Penske Automotive Group, Inc., Investor Relations, 2555 Telegraph Road, Bloomfield Hills, Michigan 48302-0954 (248-648-2500) or (866-715-5289).
Dated: March 19, 2020
PENSKE AUTOMOTIVE GROUP, INC.
2020 EQUITY INCENTIVE PLAN
1. Purpose. The purpose of this 2020 Equity Incentive Plan (the "Plan") is to further the long term stability and financial success of Penske Automotive Group, Inc. (the "Company") by (a) attracting and retaining key employees, members of the Board of Directors and other contributors to the Company and its Affiliates through the use of equity and cash incentives and (b) encouraging equity ownership in the Company by members of the Company's Board of Directors and management. It is believed that ownership of Company Stock will stimulate the efforts of those Participants upon whose judgment and interest the Company is and will be dependent for the successful conduct of its business. It is also believed that awards granted under this Plan will strengthen their desire to remain with the Company and will further align those Participants' interests with those of the Company's shareholders.
2. Definitions. When the following terms are capitalized, they shall have the meanings indicated, unless otherwise provided in an Award Agreement:
indirectly, in the same proportions as their ownership in the Company, an entity that owns all or substantially all of the assets or voting securities of the Company immediately following such transaction or series of transactions; and (ii) for purposes of an Award (A) that provides for the payment of deferred compensation that is subject to Code Section 409A upon a Change of Control or (2) with respect to which the Company permits a deferral election, the definition of "Change of Control" shall be deemed amended to conform to the requirements of Code Section 409A to the extent necessary for the Award and deferral election to comply with Code Section 409A.
Subsidiary of the Company. Indirect ownership of stock shall be determined in accordance with Code Section 424(d).
3. General. Awards may be granted under the Plan in the form of Options, Stock Appreciation Rights, Company Stock Awards, Incentive Awards and Restricted Awards. Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options.
4. Number of Shares of Company Stock and Compensation Cap.
5. Eligibility.
6. Company Stock Awards, Incentive Awards and Restricted Awards.
shall have lapsed, then the Participant shall forfeit to the Company any Restricted Awards on the date such Participant shall cease to be so employed.
Restricted Stock Units or Incentive Awards that are settled in cash may be withheld from the cash payment by the Company to the Participant for such Restricted Stock Units or Incentive Award.
7. Options.
If an Incentive Stock Option remains exercisable after the time periods set forth in clauses (y) or (z), then it shall be treated as a Nonstatutory Stock Option following the end of such time periods.
8. Stock Appreciation Rights.
9. Method of Exercise of Options and Stock Appreciation Rights.
(iii) request that the Company reduce the number of shares of Company Stock issued by the number of shares having an aggregate Fair Market Value equal to the aggregate exercise price. The Participant shall not be entitled to make payment of the exercise price other than in cash unless provisions for an alternative payment method are included in the Participant's stock option Award Agreement or are agreed to in writing by the Company with the approval of the Committee prior to exercise of the Option.
As an alternative to making a cash payment to the Company to satisfy Applicable Withholding Taxes if the Option or Stock Appreciation Rights Award Agreement so provides, or the Committee by separate action so provides, a Participant may elect to (i) deliver shares of Company Stock, (ii) to the extent permitted under applicable laws and regulations, deliver irrevocable instructions to a broker to exercise all or part of the Option, sell a sufficient number of shares of Company Stock to cover the Applicable Withholding Taxes and expenses associated with such sale and deliver promptly the amount necessary to pay the Applicable Withholding Taxes, or (iii) have the Company retain that number of shares of Company Stock that would otherwise be issuable upon exercise having a Fair Market Value that would satisfy all or a specified portion of the Applicable Withholding Taxes. Any such election shall be made only in accordance with procedures established by the Committee.
10. Nontransferability of Awards. Except as described below or as otherwise determined by the Committee and set forth in a Participant's Award Agreement, no Award shall be transferable by a Participant except by will or the laws of descent and distribution, and an Option or Stock Appreciation Right shall be exercised only by a Participant during the lifetime of the Participant. Notwithstanding the foregoing, a Participant may assign or transfer an Award that is not an Incentive Stock Option with the consent of the Committee to a family member (or trust or other entity for the benefit of the Participant or the Participant's family members), without consideration (each transferee thereof, a "Permitted Assignee"); provided that any such Permitted Assignee shall be bound by and subject to all of the terms and conditions of the Plan and transferred Award and shall execute an Award Agreement satisfactory to the Company evidencing such obligations. Notwithstanding the foregoing, a Participant who transfers an Award, as well as the Participant's transferee, also shall remain bound by the terms and conditions of the Plan.
11. Effective Date of the Plan. This Plan shall become effective on May 13, 2020, subject to the approval of the holders of a majority of the shares present or represented by proxy at a duly held meeting of shareholders of the Company on such date.
12. Termination and Amendment of Plan and Awards.
price or grant price of such outstanding Option or Stock Appreciation Right is greater than the Fair Market Value of a share of Company Stock.
13. Change in Capital Structure.
Notwithstanding the foregoing, in the case of a stock dividend (other than a stock dividend declared in lieu of an ordinary cash dividend) or subdivision or combination of the shares (including a reverse stock split), if no action is taken by the Committee, adjustments contemplated by this subsection that are proportionate shall nevertheless automatically be made as of the date of such stock dividend or subdivision or combination of the shares; provided that the number of shares of Company Stock subject to any Award payable or denominated in shares must always be a whole number, and any fractional share resulting from such adjustment shall be rounded down to the nearest whole share, unless the Committee determines otherwise.
14. Administration of the Plan. The Plan shall be administered by the Committee, which shall be the full Board or a committee appointed by the Board, consisting of not less than two members of the Board. As of the Effective Date, the Board appoints the Compensation and Management Development Committee of the Board to be the Committee for purposes of the Plan. The Committee shall have general authority to impose any limitation or condition upon an Award that the Committee deems appropriate to achieve the objectives of the Award and the Plan and, without limitation and in addition to powers set forth elsewhere in the Plan, shall have the following specific authority:
The Committee may accelerate the vesting of an Award, or cause the lapse of restrictions related to such Award, or deem an Award to be earned, in whole or in part, in the event of the Participant's death, Disability, retirement, termination of employment, Change of Control, or any other event as determined by the Committee in its sole discretion.
15. Notice. All notices and other communications required or permitted to be given under this Plan shall be in writing and shall be deemed to have been duly given if delivered personally or mailed first class, postage prepaid, as follows:
In either event, notice may also be delivered via email as long as the email account is one used in the regular course of business of the Participant or Company representative. In addition, notice may be provided in accordance with such procedures adopted by the Committee, which may include notice provided via a third party administrator platform.
16. Compliance with Code Section 409A.
separation from service, all payments that are not then exempt from Code Section 409A, which are payable as a result of such employment termination or separation from service, and would have been due during the six-month period following the Participant's employment termination or separation from service shall be aggregated and paid on the date that is six months and one day after the Participant's employment termination or separation from service (or, if earlier, as soon as practicable after the date of the Participant's death).
17. Clawback. Notwithstanding any other provisions in this Plan, all Awards shall be subject to recovery under (a) any law, government regulation or Stock Exchange listing requirement, and (b) any recoupment or clawback policy adopted by the Board. Any amendment to such clawback policy after the date an Award is granted shall be applicable to such Award without the need for Participant consent.
18. Miscellaneous.
IN WITNESS HEREOF, this instrument has been executed as of the 13th day of May, 2020.
PENSKE AUTOMOTIVE GROUP, INC.
By: | Claude H. Denker, III,Executive Vice President, Human Resources |
Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy. VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. Proxies submitted by the Internet or telephone must be received by 11:59 p.m., Eastern Daylight Time, on May 12, 2020. | ||||
Vote by Internet | ||||
· | Go to www.envisionreports.com/pag | |||
· | Or scan the QR code with your smartphone | |||
· | Follow the steps outlined on the secured website | |||
Vote by telephone | ||||
· | Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch tone telephone | |||
· | Follow the instructions provided by the recorded message | |||
Using a black ink pen, mark your votes with an X as shown in
this example. Please do not write outside the designated areas. x
Annual Meeting Proxy Card
IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
A Proposals – The Board of Directors recommends that you vote FOR the following proposals: | |||||
1. | Election of Directors: | ||||
For | Withhold | ||||
01 — John D. Barr | o | o | |||
02 — Lisa Davis | o | o | |||
03 — Wolfgang Dürheimer | o | o | |||
04 — Michael R. Eisenson | o | o | |||
05 — Robert H. Kurnick, Jr. | o | o | |||
06 — Kimberly J. McWaters | o | o | |||
07 — Greg Penske | o | o | |||
08 — Roger S. Penske | o | o | |||
09 — Sandra E. Pierce | o | o | |||
10 — Greg C. Smith | o | o | |||
11 — Ronald G. Steinhart | o | o | |||
12 — H. Brian Thompson | o | o | |||
13 — Masashi Yamanaka | o | o |
For | Against | Abstain | |||||
2. | Approval of the 2020 Equity Incentive Plan. | o | o | o | |||
3. | Ratification of the selection of Deloitte & Touche LLP as the Company’s independent auditing firm for the year ending December 31, 2020. | o | o | o | |||
4. | Approval, by non-binding vote, of executive compensation. | o | o | o |
B Authorized Signatures – This section must be completed for your vote to be counted. – Date and Sign Below
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title.
Date (mm/dd/yyyy) – Please print date below. | Signature 1 – Please keep signature within the box. | Signature 2 – Please keep signature within the box. | ||||
/ | / | |||||
IF VOTING BY MAIL, YOU MUST COMPLETE SECTIONS A – C ON BOTH SIDES OF THIS CARD.
Form of Proxy Card — Penske Automotive Group, Inc.
IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
Proxy — Penske Automotive Group, Inc.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby revokes all prior proxies and appoints Robert H. Kurnick, Jr. and Shane M. Spradlin and each of them, as proxies with full power of substitution, to vote on behalf of the undersigned the same number of shares of Common Stock, par value $0.0001 per share, of Penske Automotive Group, Inc. which the undersigned is entitled to vote, at the Annual Meeting of Stockholders to be held on May 10, 201813, 2020 at 8:00 a.m., Eastern Daylight Time, at our corporate headquarters, 2555 Telegraph Road, Bloomfield Hills, Michigan 48302, and at any postponements or adjournments thereof, on any matter properly coming before the meeting, and specifically the matters described on the reverse side hereof.
THE PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, IT WILL BE VOTED FOR THE ELECTION OF THE NOMINEES NAMED HEREIN, FOR APPROVAL OF OUR 2020 EQUITY INCENTIVE PLAN, FOR RATIFICATION OF OUR AUDITORS, FOR APPROVAL OF OUR EXECUTIVE COMPENSATION AND ACCORDING TO THE DISCRETION OF THE PROXY HOLDERS ON ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY POSTPONEMENTS OR ADJOURNMENTS THEREOF. THE PROPOSALS HEREIN ARE PROPOSED BY THE BOARD OF DIRECTORS.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
C Non-Voting Items
Change of Address |
| Comments | Meeting Attendance |
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| Mark the box to the right ¨ if you plan to attend the Annual Meeting |
IF VOTING BY MAIL, YOU MUST COMPLETE SECTIONS A —– C ON BOTH SIDES OF THIS CARD.
| Electronic Voting Instructions | |
| Available 24 hours a day, 7 days a week! | |
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Annual Meeting Proxy Card
IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
A Proposals – The Board of Directors recommends that you vote FOR the following proposals:
1. Election of Directors:
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B Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title.
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IF VOTING BY MAIL, YOU MUST COMPLETE SECTIONS A — C ON BOTH SIDES OF THIS CARD.