UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

Filed by the Registrantx

Filed by a Party other than the Registrant¨

Check the appropriate box:

AutoNation, 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):

		AUTONATION, INC. AutoNation Headquarters 200 SW 1st Ave Fort Lauderdale, FL 33301

March 25, 2010

Dear Fellow AutoNation Stockholder:

We are pleased to invite you to join us at the 2010 Annual Meeting of Stockholders of AutoNation, Inc. to be held at 9:00 a.m. Eastern Time on Wednesday, May 5, 2010 at the AutoNation Headquarters, located at 200 SW 1st Ave, Fort Lauderdale, Florida 33301.

At this year’s Annual Meeting, the agenda includes the annual election of directors; ratification of the selection of our independent registered public accounting firm; and consideration of two stockholder proposals, if properly presented at the annual meeting. We will also report on our progress and provide an opportunity for you to ask questions of general interest.

The Board of Directors recommends that you voteFOR the election of the director nominees,FOR ratification of the selection of our independent registered public accounting firm, andAGAINST the two stockholder proposals. Please refer to the proxy statement for detailed information on each of the proposals and the annual meeting. Your vote is important, and we ask that you please cast your vote as soon as possible.

We look forward to seeing you on May 5, 2010 in Fort Lauderdale.

Sincerely,

Mike Jackson

Chairman of the Board and

Chief Executive Officer

		AUTONATION, INC. AutoNation Headquarters 200 SW 1st Ave Fort Lauderdale, FL 33301

NOTICE OF THE 20102011 ANNUAL MEETING OF STOCKHOLDERS

To Stockholders of AutoNation, Inc.:

The 20102011 Annual Meeting of Stockholders of AutoNation, Inc. will be held aton the 15th Floor of the AutoNation Headquarters, located at 200 SW 1st Ave, Fort Lauderdale, Florida 33301, on Wednesday, May 5, 20104, 2011, at 9:00 a.m. Eastern Time for the following purposes as more fully described in the proxy statement:

Only stockholders of record as of 5:00 p.m. Eastern Time on March 17, 2010,2011, the record date, are entitled to receive notice of the Annual Meeting and to vote at the Annual Meeting or any adjournments or postponements of the Annual Meeting.

We cordially invite you to attend the Annual Meeting in person.Even if you plan to attend the Annual Meeting, we ask that you please cast your vote as soon as possible. You may revoke your proxy and reclaim your right to vote at any time prior to its use. The proxy statement includes information on what you will need to attend the Annual Meeting.

By Order of the Board of Directors,

Jonathan P. Ferrando

Executive Vice President,

General Counsel and Secretary

March 25, 201023, 2011

TABLE OF CONTENTS

		AUTONATION, INC. AutoNation Headquarters 200 SW 1st Ave Fort Lauderdale, FL 33301

PROXY STATEMENT

This Proxy Statement contains information relating to the solicitation of proxies by the Board of Directors (the “Board”) of AutoNation, Inc. (“AutoNation” or the “Company”) for use at our 20102011 Annual Meeting of Stockholders.Stockholders or any adjournment or postponement thereof. Our Annual Meeting will be held aton the 15th Floor of the AutoNation Headquarters, located at 200 SW 1st Ave, Fort Lauderdale, Florida 33301, on Wednesday, May 5, 20104, 2011, at 9:00 a.m. Eastern Time.

Only stockholders of record as of 5:00 p.m. Eastern Time on March 17, 20102011 (the “Record Date”“record date”) are entitled to receive notice of the Annual Meeting and to vote at the Annual Meeting or any adjournments or postponements of the Annual Meeting. As of the Record Date,record date, there were 169,853,466149,420,388 shares of AutoNation common stock issued and outstanding and entitled to vote at the Annual Meeting. We made copies of this proxy statement available to our stockholders beginning on March 25, 2010.23, 2011.

QUESTIONSAND ANSWERS ABOUT OUR ANNUAL MEETING

What is the purpose of our 20102011 Annual Meeting?

Our 20102011 Annual Meeting will be held for the following purposes:

In addition, senior management will report on our business and respond to your questions.

Why did I receive a notice regarding the availability of proxy materials on the Internet instead of a full set of proxy materials?

In accordance with the rules of the Securities and Exchange Commission (“SEC”), we are furnishing our proxy materials, including this proxy statement and our annual report, to our stockholders primarily via the Internet. On or about March 25, 2010,23, 2011, we began mailing to our stockholders a Notice of Internet Availability of Proxy Materials (the “Notice”) that contains instructions on how to access our proxy materials on the Internet, how to vote, and how to request printed copies. Stockholders may request to receive all future proxy materials in printed form by mail or electronically by e-mailemail by following the instructions contained in the Notice.

How can I attend the Annual Meeting?

You are entitled to attend the annual meetingAnnual Meeting only if you were an AutoNation stockholder as of the Record Daterecord date or you hold a valid proxy for the annual meeting.Annual Meeting. You shouldmay be preparedasked to present valid photo identification for admittance. If your shares are held by a brokerage firm, bank, or a trustee, you should provideand proof of beneficialstock ownership as of the Record Date, such as a bank or brokerage account statement or other similar evidence of ownership. Even if you planrecord date to attendbe admitted to the Annual Meeting, please cast your vote as soon as possible.Meeting.

What are the voting rights of AutoNation stockholders?

Each stockholder is entitled to one vote on each of the nineten director nominees and one vote on each other matter properly presented at the Annual Meeting for each share of common stock owned by that stockholder on the Record Date.record date.

What constitutes a quorum?

In order for usHow many shares must be present or represented to conduct business at ourthe Annual Meeting, we must have a quorumMeeting?

The holders of at least 84,926,73474,710,195 shares (a majority of common stock represented atshares outstanding on the Annual Meeting,record date) must be present in person or represented by proxy and entitled to vote. If you submit a properly executed proxy or vote instruction card or properly cast your vote by telephone or via the Internet, your shares will be considered part of the quorum, even if you abstain from voting or withhold authority to vote as to a particular proposal. We also will consider as present for purposes of determining whether a quorum exists any shares represented by “broker non-votes.”

What are “broker non-votes”?

“Broker non-votes” occur when shares held by a brokerage firm are not voted with respect to a proposal because the firm has not received voting instructions from the stockholder and the firm does not have the authority to vote the shares in its discretion. Under the rules of the New York Stock Exchange (“NYSE”), brokerage firms have the authority to vote their customers’ shares on certain “routine” matters for which they do not receive voting instructions. Prior to 2010, an uncontested election of directors was considered a “routine” matter under NYSE rules. In 2009, the SEC approved a proposal to amend the NYSE rules to eliminate discretionary voting by brokers in any election of directors. Accordingly, at this year’s annual meeting, in the event that a brokerage firm does not receive voting instructions from one of our stockholders, such firm will have the authority to vote such stockholder’s shares only with respect to the ratification of the selection of our independent registered public accounting firm, and such stockholder’s shares will not be voted, and will be considered “broker non-votes,” with respect to the election of directors and the two stockholder proposals.

Will my shares be voted if I do not provide my proxy?

If your shares are held by a brokerage firm and you do not provide the firm specific voting instructions, such firm will have the authority to vote your shares only with respect to the ratification of the selection of our independent registered public accounting firm, and your shares will not be voted, and will be considered “broker non-votes,” with respect to the election of directors and the two stockholder proposals. Therefore, we urge you to provide voting instructions so that your shares will be voted. If you hold your shares directly in your own name, your shares will not be voted unless you provide a proxy or fill out a written ballot in personconduct business at the Annual Meeting. If you hold shares throughBoth abstentions and broker non-votes are counted for the AutoNation 401(k) Plan, your shares will be voted as described below even if you do not provide voting instructions.

How do I vote my 401(k) shares?

If you participate inpurpose of determining the AutoNation 401(k) Plan, you may vote the numberpresence of shares credited to your account as of 5:00 p.m. Eastern Time on March 17, 2010, by following the instructions provided by the Plan’s trustee, Merrill Lynch & Co. (“Merrill Lynch”). If you do not provide clear voting instructions, Merrill Lynch will vote the shares in your account in the same proportion that it votes shares for which it received valid and timely instructions.a quorum.

How do I vote?

Registered Stockholders

. If you are a registered stockholder (you hold your shares in your own name through our transfer agent), you may vote in person at the Annual Meeting. We will give you a ballot when you arrive. If you do not wish to vote in person or if you will not be attending the Annual Meeting, you may vote by proxy. You can vote by proxy over the Internet by following the instructions provided in the Notice, or, if you receive printed copies of the proxy materials by mail, you can also vote by mail or telephone by following the instructions provided on the proxy card.

Beneficial Owners

. If you are a beneficial owner of shares (your shares are held in the name of a brokerage firm, bank, or a trustee) and you wish to vote in person at the Annual Meeting, you must obtain a valid proxy from the organization that holds your shares. If you do not wish to vote in person or you will not be attending the Annual Meeting, you may vote by proxy. You may vote by proxy over the Internet by following the instructions provided in the Notice, or, if you receive printed copies of the proxy materials by mail, you can also vote by mail or telephone by following the instructions provided on the proxy card. Please also refer to the instructions you receive from your brokerage firm, bank, or trustee on how to vote your shares.

401(k) Participants. If you participate in the AutoNation 401(k) Plan, you may vote the number of shares credited to your account as of 5:00 p.m. Eastern Time on March 17, 2011, by following the instructions provided by the Plan’s trustee, Wells Fargo Bank, N.A. (“Wells Fargo”).

Will my shares be voted if I do not provide voting instructions?

If your shares are held by a brokerage firm and you do not provide the firm specific voting instructions, that firm will have the authority to vote your shares only with respect to the ratification of the selection of our independent registered public accounting firm (Proposal 2), and your shares will not be voted and will be considered broker non-votes with respect to the election of directors (Proposal 1), the advisory vote on executive compensation (Proposal 3), the advisory vote on the frequency of the advisory vote on executive compensation (Proposal 4), and the two stockholder proposals (Proposals 5 and 6). See also “What are broker non-votes?” below. We urge you to provide voting instructions so that your shares will be voted.

If you hold shares through the AutoNation 401(k) Plan and you do not provide clear voting instructions, Wells Fargo will vote the shares in your 401(k) account in the same proportion that it votes shares for which it received valid and timely instructions.

Can I change my vote after I have voted?

You may revoke your proxy and change your vote at any time before the final vote at the meeting.Annual Meeting. You may vote again on a later date on the Internet or by telephone (only your latest Internet or telephone proxy submitted prior to the meeting will be counted), by signing and returning a new proxy card with a later date, or

by attending the meeting and voting in person. However, your attendance at the Annual Meeting will not automatically revoke your proxy unless you vote again at the meeting or specifically request in writing that your prior proxy be revoked.

What vote is required to elect directors or take other action at the Annual Meeting?

In order toProposal 1: Election of Directors. To be approved, any proposalelected, directors must receive a majority of votes cast (the number of shares voted “for” a director nominee must exceed the number of votes cast “against” that comes beforenominee).

Proposal 2: Ratification of the Annual Meeting, including the proposal to elect directors, the proposal to ratifySelection of Our Independent Registered Public Accounting Firm. Ratification of the selection of KPMG LLP as our independent registered public accounting firm and each offor the stockholder proposals, must receiveyear ended December 31, 2011, requires the affirmative vote of athe majority of the shares present in person or by proxy and entitled to vote aton the Annual Meeting with respectproposal.

Proposal 3: Advisory Vote on Executive Compensation. Advisory approval of the resolution on executive compensation requires the affirmative vote of the majority of shares present in person or by proxy and entitled to suchvote on the proposal. If you mark your

Proposal 4:Advisory Vote on Frequency of Advisory Vote on Executive Compensation. Stockholders may indicate whether they prefer that we conduct future advisory votes on executive compensation every one, two, or three years, and the option receiving the highest number of votes will be deemed to be the preferred frequency of our stockholders.

Proposal 5: Stockholder Proposal. Approval of the stockholder proposal on special meetings requires the affirmative vote of the majority of shares present in person or by proxy and entitled to vote on the proposal.

Proposal 6: Stockholder Proposal. Approval of the stockholder proposal on cumulative voting requires the affirmative vote of the majority of shares present in person or by proxy and entitled to vote instruction card “withhold” with respecton the proposal.

What happens if an incumbent director fails to anyreceive a majority vote?

Our Corporate Governance Guidelines, available athttp://corp.autonation.com/investors, provide that if an incumbent director or “abstain” with respectfails to any other proposal, you will effectively be voting against thereceive a majority vote in an uncontested election of directors, such director must offer his or againsther written resignation from the approval ofBoard. The Guidelines provide procedures pursuant to which the Board will consider any such proposal. If yourresignation.

What are broker non-votes?

Broker non-votes occur when shares held by a brokerage firm are not voted by your brokerage firm or nominee with respect to a particular proposal or if you direct your proxy holderbecause the firm has not received voting instructions from the beneficial owner of the shares and the firm does not have the authority to vote all orthe shares in its discretion.

Under the rules of the New York Stock Exchange (“NYSE”), brokerage firms have the authority to vote shares held for a portionbeneficial owner on “routine” matters, such as the ratification of yourthe selection of our independent registered public accounting firm (Proposal 2), without instructions from the beneficial owner of those shares. The election of directors (Proposal 1), the advisory vote on executive compensation (Proposal 3), the advisory vote on the frequency of the advisory vote on executive compensation (Proposal 4), and the two stockholder proposals (Proposals 5 and 6) are considered non-routine matters. As a result, if a brokerage firm does not receive voting instructions from the beneficial owner of shares held by the firm, those shares will not be voted and will be considered broker non-votes with respect to those matters.

How are abstentions and broker non-votes treated?

Abstentions and broker non-votes are counted for purposes of determining whether a particular proposal, such sharesquorum is present. For Proposal 1, abstentions will not be counted in determining whether a director received a majority of votes cast (only “FOR” and “AGAINST” votes are counted). For Proposals 2, 3, 5, and 6, abstentions will have the same effect as negative votes. For Proposal 4, abstentions will not be counted in determining the preferred frequency for future advisory votes on executive compensation. Broker non-votes will not be counted for or against suchpurposes of determining the voting results of any proposal. We urge you to provide voting instructions so that your shares will be voted.

How does the Board recommend I vote on the proposals?

The Board recommends that you voteFOR the “FOR” election of each of the ten director nominees (see “Proposal 1: Election of Directors”),FORnamed in this proxy statement, “FOR” ratification of the selection of KPMG LLP as our independent registered public accounting firm (see “Proposal 2: Ratificationfor 2011, “FOR” advisory approval of the Selectionresolution on executive compensation, for every “3 YEARS” as the preferred frequency for future advisory votes on executive compensation, and “AGAINST” each of Our Independent Registered Public Accounting Firm”), andAGAINSTthe two stockholder proposals (see “Proposal 3: Stockholder Proposal” and “Proposal 4: Stockholder Proposal”).proposals. See “Items To Be Voted On” for more information.

How will the persons named as proxies vote?

If you complete and submit a proxy, the persons named as proxies will follow your instructions. If you submit a proxy but do not provide instructions, or if your instructions are unclear, the persons named as proxies will vote your shares as follows:FOR the “FOR” election of each of the ten director nomineesFOR named in this proxy statement, “FOR” ratification of the selection of KPMG LLP as our independent registered public accounting firm for 2011, “FOR” advisory approval of the resolution on executive compensation, for every “3 YEARS” as the preferred frequency for future advisory votes on executive compensation, andAGAINST “AGAINST” each of the stockholder proposals. With respect to any other proposal that properly comes before the Annual Meeting, the persons named as proxies will vote as recommended by our Board of Directors, or if no recommendation is given, in their own discretion.

Who will pay for the cost of soliciting proxies?

We will pay for the cost of soliciting proxies, and we have retained Innisfree M&A Incorporated to assist with the solicitation of proxies for a fee not to exceed $12,000, plus reimbursement for out-of-pocket expenses.proxies. Our directors, officers, and other employees, without additional compensation, may also solicit proxies personally or in writing, by telephone, e-mail,email, or otherwise. As is customary, we will reimburse brokerage firms, fiduciaries, voting trustees, and other nominees for forwarding our proxy materials to each beneficial owner of common stock held of record by them.

PBROPOSAL 1: ELECTIONOARDOF DIRECTORSAND CORPORATE GOVERNANCE

Directors

Our Board of Directors (the “Board”) currently consists of ten members. Except for Messrs. Larson and Brown,Ms. Rosenthal, each of our current directors was elected by our stockholders at our 20092010 Annual Meeting of Stockholders. Upon the recommendation of the Corporate Governance and Nominating Committee, the Board appointed Messrs. Larson and BrownMs. Rosenthal as membersa member of the Board effective February 24, 2010. Our Chairman and CEO and certain of ourMarch 14, 2011. An independent directors suggested Messrs. Larson and Browndirector recommended Ms. Rosenthal for consideration as prospectivea Board candidates. Mr. Brown previously served as one of our directors from May 1997 until May 2008. On March 8, 2010, Kim C. Goodman, who has served as one of our directors since February 2007, informed the Company that she will not stand for re-election to the Board at the 2010 Annual Meeting. Ms. Goodman will continue to serve on our Board and the Audit Committee until the date of the Annual Meeting.member.

Upon the recommendation of the Corporate Governance and Nominating Committee, ourthe Board has nominated the nine persons listed beloweach of our current directors to stand for election for a new term expiring at the 20112012 Annual Meeting of Stockholders or until their successors are duly elected and qualified. Each nominee listed below is currentlySee “Items To Be Voted On – Proposal 1: Election of Directors.”

Our Board consists of a diverse group of leaders. Many of our directors have experience serving as a directorexecutive officers or on boards and is willingboard committees of major companies. Many of our directors also have extensive corporate finance and able to serveinvestment banking experience as well as a directorbroad understanding of AutoNation.

The Board recommends that you vote “FOR” the electioncapital markets. Our directors have a strong owner orientation – approximately 72% of eachour common stock is held by our directors or entities or persons related to our directors (as of the following nominees.March 15, 2011).

We have set forth below certain information regarding each nominee,of our directors, including the specific experience, qualifications, attributes, or skills that led the Board to conclude that such nomineeperson should serve as a director. Our Corporate Governance and Nominating Committee and the Board believe that the experience, qualifications, attributes, and skills of our directors provide the Company with the ability to address the evolving needs of the Company and represent the best interests of our stockholders.

Mike Jackson has served as our Chairman of the Board since January 2003 and as our Chief Executive Officer and Director since September 1999. From October 1998 until September 1999, Mr. Jackson served as Chief Executive Officer of Mercedes-Benz USA, LLC, a North American operating unit of DaimlerChrysler AG, a multinational automotive manufacturing company. From April 1997 until September 1999, Mr. Jackson also served as President of Mercedes-Benz USA. From July 1990 until March 1997, Mr. Jackson served in various

capacities at Mercedes-Benz USA, including as Executive Vice President immediately prior to his appointment as President of Mercedes-Benz USA. Mr. Jackson was also the managing partner from March 1979 to July 1990 of Euro Motorcars of Bethesda, Maryland, a regional group that owned and operated eleven automotive dealership franchises, including Mercedes-Benz and other brands of automobiles. In January 2011, Mr. Jackson was appointed to the Board of Directors of the Federal Reserve Bank of Atlanta’s Miami Branch. Mr. Jackson’s automotive experience, his position as our Chief Executive Officer, and his broad knowledge of our Company and the automotive industry led the Board to conclude that he should serve as one of our directors.

Robert J. Brown has served as one of our directors since February 2010 and also previously served as one of our directors from May 1997 until May 2008. Mr. Brown has served as Chairman and Chief Executive Officer of B&C Associates, Inc., a management consulting, marketing research, and public relations firm, since 1973. Mr. Brown served as a director of Wachovia Corporation, a commercial and retail bank from April 1993 until April 2007, Sonoco Products Company, a manufacturer of industrial and consumer packaging products, from April 1993 until February 2007, and Duke Energy Corporation, an electric power company, from April 1994 until May 2005. Mr. Brown’s experience operating B&C Associates, Inc. and his prior public company Boardboard experience led the Board to conclude that he should serve as one of our directors.

Rick L. Burdick has served as one of our directors since May 1991. Since 1988, Mr. Burdick has been a partner in Akin, Gump, Strauss, Hauer & Feld, L.L.P., a global full service law firm. Mr. Burdick is managing partner (international) and chair of the international corporate transactions practice of the firm. He also serves as Lead Director of CBIZ, Inc. (formerly, Century Business Services, Inc.), a provider of outsourced business services to small and medium-sized companies in the United States. Mr. Burdick’s experience as a senior partner at a large law firm advising large companies on a broad range of corporate transactions and on securities law and corporate governance matters led the Board to conclude that he should serve as one of our directors.

William C. Crowley has served as one of our directors since January 2002. Since January 1999, Mr. Crowley has been President and Chief Operating Officer of ESL Investments, Inc., a private investment firm. Since March 2005, Mr. Crowley has served as a director of Sears Holdings Corporation, a broadline retailer. Additionally, he hasHe served as Executive Vice President of Sears Holdings Corporation, sincea broadline retailer, from March 2005 until January 2011 and as Chief Administrative Officer of Sears Holdings Corporation sincefrom September 2005.2005 until January 2011. Mr. Crowley also served as the Chief Financial Officer of Sears Holdings Corporation from March 2005 until September 2006 and from January 2007 until October 2007. Mr. Crowley has served as a director of Sears Canada Inc. since March 2005 and as the Chairman of the Board of Sears Canada Inc. since December 2006. From May 2003 until March 2005, Mr. Crowley served as director and Senior Vice President, Finance of Kmart Holding Corporation. Prior to joining ESL Investments in 1999, Mr. Crowley was a Managing Director at Goldman, Sachs & Co., a leading global investment banking and securities firm. Mr. Crowley is a director of AutoZone, Inc. He served as a director of Sears Holdings Corporation from March 2005 until May 2010. Mr. Crowley’s experience in corporate finance and investment banking, as well as his experience as a senior executive officer of a major Fortune 500 company and his position as the President and Chief Operating Officer of ESL Investments, Inc., led the Board to conclude that he should serve as one of our directors.

David B. Edelson has served as one of our directors since July 2008. Mr. Edelson is Senior Vice President of Loews Corporation, a diversified holding company with subsidiaries in the property-casualty insurance, offshore drilling, natural gas transmission and storage, natural gas exploration and production, and lodging industries. He joined Loews in May 2005. Prior to joining Loews, Mr. Edelson was Executive Vice President & Corporate Treasurer of JPMorgan Chase & Co. He was named Corporate Treasurer in April 2001 and promoted to Executive Vice President in February 2003. Mr. Edelson spent the first 15 years of his career as an investment banker, first with Goldman Sachs & Co. and subsequently with JPMorgan Chase & Co. He has served as a director of CNA Surety Corporation, a 62%61%-owned subsidiary of CNA Financial Corporation, which is a 90%-owned subsidiary of Loews Corporation, since February 2007 and in January 2009 became its Chairman of the Board. Mr. Edelson’s experience as a senior executive officer of a large holding company owning a wide range of businesses, as well as his prior experience as an investment banker and corporate treasurer, led the Board to conclude that he should serve as one of our directors.

Robert R. Grusky has served as one of our directors since June 2006. In 2000, Mr. Grusky founded Hope Capital Management, LLC, an investment management firm for which he serves as Managing Member. He co-founded New Mountain Capital, LLC, a private equity and public equity investment management firm, in 2000 and was a Principal, Managing Director and Member of New Mountain Capital from 2000 to 2005 and has been a Senior Advisor since then. From 1998 to 2000, Mr. Grusky served as President of RSL Investments Corporation, the primary investment vehicle for the Hon. Ronald S. Lauder. Prior thereto, Mr. Grusky also served in a variety of capacities at Goldman, Sachs & Co. in its Mergers & Acquisitions Department and Principal Investment Area. Mr. Grusky is a director of Strayer Education, Inc., an education services company, and AutoZone, Inc., a specialty retailer of automotive parts. Mr. Grusky’s board experience and experience in investment management, private equity, and investment banking led the Board to conclude that he should serve as one of our directors.

Michael Larson has served as one of our directors since February 2010. Mr. Larson serves as the chief investment officer for William H. Gates III, a position he has held since 1994. He is responsible for Mr. Gates’ non-Microsoft investments as well as the investments of the Bill & Melinda Gates Foundation Trust. He serves as a director of Republic Services, Inc., and Grupo Televisa, S.A.B., and Pan American Silver Corp. In addition, he is Chairman of the Board of Trustees for Western Asset/Claymore Inflation-Linked Securities & Income Fund and Western Asset/Claymore Inflation-Linked Opportunities & Income Fund. From November 1999 until December 2010, Mr. Larson served as a director of Pan American Silver Corp. Mr. Larson’s investment and business experience and broad understanding of the capital markets, business cycles, and capital investment and allocation led the Board to conclude that he should serve as one of our directors.

Michael E. Maroone has served as one of our directors since July 2005 and as our President and Chief Operating Officer since August 1999. Following our acquisition of the Maroone Automotive Group in January 1997, Mr. Maroone served as President of our New Vehicle Dealer Division. In January 1998, Mr. Maroone was named President of our Automotive Retail Group with responsibility for our new and used vehicle operations. Prior to joining AutoNation, Mr. Maroone was President and Chief Executive Officer of the Maroone Automotive Group, one of the country’s largest privately-held automotive retail groups prior to its acquisition by us. Mr. Maroone’s position as our President and his broad knowledge of our Company and the automotive retail industry led the Board to conclude that he should serve as one of our directors.

Carlos A. Migoya has served as one of our directors since June 2006. SinceFrom February 2010 until December 2010, Mr. Migoya has served as City Manager for the City of Miami. He formerly served as Regional President – North Carolina of Wachovia Corporation, a Wells Fargo Company, from December 2007 until May 2009. From June 2006 until December 2007, Mr. Migoya served as State CEO for the Atlantic Region of Wachovia Corporation. In this position, Mr. Migoya was responsible for Wachovia’s general banking businesses in New Jersey, Connecticut, and New York. From 1987 until 2006, Mr. Migoya served as Regional President – Dade and Monroe Counties of Wachovia Corporation, with responsibility for Wachovia’s general banking businesses in the region. Mr. Migoya has more than 35 years of experience in banking. Mr. Migoya’s management and banking experience led the Board to conclude that he should serve as one of our directors.

CORPORATE GOVERNANCEAlison H. Rosenthal has served as one of our directors since March 2011. From February 2006 until January 2011, Ms. Rosenthal led various initiatives in the Business Development Department at Facebook, Inc., where she served as Senior Manager from February 2006 until July 2008 and as Head of the Global Operator Program, Mobile from July 2008 until January 2011. Ms. Rosenthal also served as an associate at General Atlantic Partners, LLC, a global private equity fund focused on IT, from February 2001 until June 2003 and as an analyst at Goldman, Sachs & Co., a leading global investment banking and securities firm, from July 1998 until July 2000. Ms. Rosenthal’s technology experience, including in the areas of mobile applications and social media, and investment and finance experience led the Board to conclude that she should serve as one of our directors.

Corporate Governance Guidelines and Codes of Ethics

Our Board is committed to sound corporate governance principles and practices. Our Board’s core principles of corporate governance are set forth in the AutoNation, Inc. Corporate Governance Guidelines (the “Guidelines”

“Guidelines”), which were adopted by the Board in March 2003 and most recently amended as of July 30, 2009.February 2, 2011. The Guidelines serve as a framework within which our Board conducts its operations. The Corporate Governance and Nominating Committee of our Board has beenis charged with periodically reviewing the Guidelines and recommending to our Board appropriate changes in light of applicable laws and regulations, the governance standards identified by leading governance authorities, and our Company’s evolving needs.

In order to clearly set forth our commitment to conduct our operations in accordance with our high standards of business ethics and applicable laws and regulations, we have a Company-wide Business Ethics Program, which includes a Code of Business Ethics applicable to all of our employees. We also maintain a 24-hour Alert-Line for employees to report any Company policy violations under our Business Ethics Program. In addition, our Board has adopted the Code of Ethics for Senior Officers and the Code of Business Ethics for the Board of Directors. These codes comply with NYSE listing standards.

A copy of the Guidelines and the codes referenced above are available on our corporate website athttp://corp.autonation.com/investors. You also may obtain a printed copy of the Guidelines by sending a written request to: Investor Relations, AutoNation, Inc., 200 SW 1st Ave, Fort Lauderdale, FL 33301.

Role of the Board and Board Structure

Our business and affairs are managed under the direction of our Board, which is the Company’s ultimate decision-making body, except with respect to those matters reserved to our stockholders. Our Board’s mission is to maximize long-term stockholder value. Our Board establishes our overall corporate policies, selects and evaluates our senior management team, whichwho is charged with the conduct of our business, and acts as an advisor and counselor to senior management. Our Board also oversees our business strategy and planning as well as the performance of management in executing our business strategy, assessing and managing risks, and managing our day-to-day operations.

Our Board’s oversight of our business strategy and planning and management of our day-to-day operations includes a review of risks that could impact our goals, objectives, and financial condition. In addition, our Audit, Corporate Governance and Nominating, and Compensation committees assist the Board in overseeing our management of risk. Our Audit Committee reviews with management significant risks as well as our process for assessing and managing risks. Our Corporate Governance and Nominating Committee oversees our Company-wide Business Ethics Program, which includes a Code of Business Ethics applicable to all of our employees. Our Compensation Committee, in certain cases through its Executive Compensation Subcommittee, reviews and approves our executive compensation program and also reviews the general compensation structure for our corporate and key field employees. While our Board oversees our management of risk as outlined above, management is responsible for identifying and managing risks.

The positions of Chairman of the Board and Chief Executive Officer are both currently held by Mike Jackson. The Board believes that this leadership model is currently appropriate for the following reasons:

In addition, we believe that the current leadership structure of the Board supports its risk oversight functions by providing independent leadership at the committee level, executive sessions of the Board of Directors with rotating presiding directors and ultimate oversight by the full Board led by our Chairman and CEO.

Our Board of Directors held 1315 meetings and took one action by unanimous written consent during 2009.2010. In 2009,2010, each person serving as a director attended at least 75% of the total number of meetings of our Board and any Board committee on which he or she served.

Our independent directors held four executive sessions without management present during 2009.2010. Our Board has not appointed a lead independent director; instead, in accordance with our Guidelines, the presiding director for each executive session is rotated among the Chairs of our Board committees.

Our directors are expected to attend our Annual Meeting of Stockholders. Any director who is unable to attend our Annual Meeting is expected to notify the Chairman of the Board in advance of the Annual Meeting. Except for Mr. Burdick,Kim C. Goodman, who coulddid not attend duestand for re-election to a scheduling conflict,the Board, each person who was then serving as a director attended the 20092010 Annual Meeting of Stockholders.

Board Committees

Our Board has established three separately designated standing committees to assist the Board in discharging its responsibilities: the Audit Committee, the Compensation Committee, and the Corporate Governance and Nominating Committee. In addition, our Board has established the Executive Compensation Subcommittee, which is a subcommittee of the Compensation Committee. The charters for our Board committees are in compliance with SEC rules and NYSE listing standards. These charters are available athttp://corp.autonation.com/investors, and you may obtain a printed copy of any of these charters by sending a written request to: Investor Relations, AutoNation, Inc., 200 SW 1st Ave, Fort Lauderdale, Florida 33301.

The following table sets forth the current membership of each of our Board’s committees:

Audit Committee

The Audit Committee primarily assists our Board in fulfilling its oversight responsibilities by reviewing our financial reporting and audit processes and our systems of internal control over financial reporting and disclosure controls. Among the Committee’s core responsibilities are the following: (i) overseeing the integrity of our financial statements, for which management is responsible, and reviewing and approving the scope of the annual audit; (ii) selecting, retaining, compensating, overseeing, and evaluating our independent registered public accounting firm; (iii) reviewing the Company’s critical accounting policies; (iv) reviewing the Company’s quarterly and annual financial statements prior to the filing of such statements with the SEC; (v) preparing the Audit Committee report for inclusion in our proxy statement; and (vi) reviewing with management significant risks and assessing the steps management has taken to minimize, monitor, and control such risks or exposures. For a complete description of our Audit Committee’s responsibilities, you should refer to the Audit Committee’s charter.

The Audit Committee currently consists of four directors. Our Board has determined that each Audit Committee member has the requisite independence and other qualifications for audit committee membership under SEC rules, NYSE listing standards, the Audit Committee’s charter, and the independence standards set forth in the Guidelines (as discussed below under “Director Independence”). Our Board has also determined that each of Mr. Grusky and Mr. Edelson is an “audit committee financial expert” within the meaning of Item 407(d)(5) of Regulation S-K under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). See “Proposal 1: Election of Directors”“Directors” above for a description of the business experience of each of Mr. Grusky and Mr. Edelson.

The Audit Committee held eight meetings and took no actions by unanimous written consent during 2009.2010. The Report of the Audit Committee Report for fiscal 2009,2010, which contains a description of the Audit Committee’s responsibilities and its recommendation with respect to our audited consolidated financial statements for the year ended December 31, 2009,2010, is set forth below under “Audit-Related Matters – Report of the Audit Committee.“Audit Committee Report.”

Compensation Committee

The Compensation Committee primarily assists our Board in fulfilling its compensation and management development and succession planning oversight responsibilities by, among other things: (i) reviewing our director compensation program; (ii) reviewing and approving the compensation of our Chief Executive Officer and other senior executive officers and, except as expressly delegated to the Executive Compensation Subcommittee, setting annual and long-term performance goals for these individuals; (iii) reviewing and approving the compensation of all of our corporate officers; and (iv) reviewing the Company’s program for management development and succession planning.

The Committee reviews executive compensation at its meetings throughout the year and sets executive compensation. The Committee also reviews director compensation annually. As part of its review of executive compensation, the Committee reviews the executive compensation arrangements at other retail companies. The Committee reviews the data at a high level in order to evaluate and confirm whether our executive compensation is within a reasonably competitive range. The Committee, however, does not set executive compensation at a set target percentile based on the data. See “Executive Compensation – Compensation Discussion and Analysis – Setting Compensation Levels of Executive Officers.” Additionally, our Chief Executive Officer reviews the performance of each named executive officer and makes recommendations to the Committee with respect to compensation adjustments for such officers. However, the Committee determines in its sole discretion whether to make any adjustments to the compensation paid to such officers. The Committee did not engage a compensation consultant to advise the Committee with respect to executive or director compensation for 2009.2010.

Our Board has determined that each Compensation Committee member has the requisite independence for Compensation Committee membership under NYSE listing standards and the independence standards set forth in the Guidelines. The Compensation Committee held five meetings and took no actiontwo actions by unanimous written consent during 2009.2010. For more information on the responsibilities and activities of the Compensation Committee, including the Committee’s processes for determining executive compensation, see “Executive Compensation” below, as well as the Compensation Committee’s charter.

Executive Compensation Subcommittee

The Executive Compensation Subcommittee is a subcommittee of the Compensation Committee. The Subcommittee assists the Board and the Compensation Committee in fulfilling their compensation oversight responsibilities by performing the following duties: (i) reviewing and approving performance-based compensation of executive officers as contemplated under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), including bonuses and stock-based awards; (ii) administering the AutoNation, Inc. Senior Executive Incentive Bonus Plan, including establishing performance goals and certifying whether such goals are attained as contemplated under Section 162(m) of the Code; and (iii) administering our equity compensation plans, including approving stock-based awards.

Our Board has determined that each member of the Subcommittee qualifies as a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act, and as an “outside director” under Section 162(m) of the Code. The Executive Compensation Subcommittee held sixfive meetings and took noone action by unanimous written consent during 2009.2010. For more information on the responsibilities and activities of the Executive Compensation Subcommittee, please refer to the Executive Compensation Subcommittee’s charter.

Corporate Governance and Nominating Committee

The Corporate Governance and Nominating Committee assists our Board in fulfilling its oversight responsibilities by performing the following duties: (i) periodically reviewing the corporate governance principles and practices set forth in the Guidelines, in comparison to the governance standards identified by leading governance authorities and our evolving needs, and making recommendations to the Board with respect to any appropriate amendment to the Guidelines; (ii) leading annual evaluations of Board and Board committee performance; (iii) assessing periodically our Board’s needs in terms of skills and qualifications and recommending to our Board candidates for nomination and election to our Board; (iv) reviewing Board candidates recommended by our stockholders; and (v) recommending to our Board assignments to committees.

Our Board has determined that each Corporate Governance and Nominating Committee member is independent under NYSE listing standards and the independence standards set forth in the Guidelines. In 2009,2010, the Corporate Governance and Nominating Committee held foursix meetings and took noone action by unanimous written consent.

The Corporate Governance and Nominating Committee has a policy with regard to the consideration of director candidates recommended by stockholders. For information regarding this policy, refer to “Stockholder Communications – Stockholder Director Nominations”Recommendations” below.

Director Independence

The director independence standards set forth in our Guidelines, (availableavailable athttp://corp.autonation.com/investors), meet and in some areas exceed the listing standards of the NYSE. Our Board has affirmatively determined that all of our directors, except Messrs. Jackson and Maroone, are independent under our director independence standards. Mr. Jackson, is our Chairman and Chief Executive Officer, and Mr. Maroone, is our President and Chief Operating Officer.Officer, are “independent” under our independence standards and the listing standards of the NYSE.

In addition to our independence standards, the directors who serve on our Audit Committee each satisfy standards established by the SEC providing that to qualify as “independent” for the purposes of membership on that committee, members of audit committees may not (1) accept directly or indirectly any consulting, advisory, or other compensatory fee from the company other than their director compensation or (2) be an affiliated person of the Company or any of its subsidiaries.

In making this determination, ourits independence determinations, the Board considered relationships and transactions since the beginning of 2008 between the Company and its subsidiaries and our non-employee directors, entities associated with those directors, or members of their immediate families, including the relationships and transactions and relationships described inunder “Certain Relationships and Related Transactions” below. In addition,The Board determined that none of the Boardrelationships and transactions it considered impaired the independence of our non-employee directors or disqualified any of our non-employee directors from serving as independent directors under our independence standards and the listing standards of the NYSE. The Board’s independence determinations included a review of the following transactionsrelationships and relationships: (1) with respect to Mr. Burdick, our use of the law firm of Akin, Gump, Strauss, Hauer & Feld, L.L.P. for certain legal services (which use was discontinued as of January 1, 2008); (2) with respect to transactions:

The Board determined that Kim C. Goodman, who served as a director and Audit Committee member for part of 2010, was “independent” under our independence standards, the listing standards of the NYSE, and the SEC independence standards applicable to Ms. Goodman,members of audit committees. In making this determination, the Board reviewed and considered our payment of credit card fees to American Express; (5)Express in the ordinary course of business, in light of her position as an officer of American Express. The Board determined that the transactions with respect to Mr. Grusky, his minority investment in ESL Partners, L.P.; (6) with respect to Mr. Larson, our use of Republic Services, Inc. for waste collection and disposal services; and (7) with respect to Mr. Migoya, our sale of vehicles and parts and service to the City of Miami. In each case, the relationshipsAmerican Express did not violate ourimpair her independence standards or disqualify her from serving as an independent director under the NYSE listing standards, and the Board concluded that such relationships would not impair theapplicable independence of our non-employee directors.standards.

Director Selection Process

The Corporate Governance and Nominating Committee is responsible for identifying, evaluating, and recommending candidates to the Board for nomination and election to the Board. The Committee is also responsible for assessing the appropriate balance of skills and characteristics required of our Board members. The Committee considers candidates suggested by its members and other Board members, as well as management and stockholders. The Committee has retained an executive search firm to identify and review candidates in the past.

In accordance with the Guidelines, candidates, including candidates recommended by stockholders, are selected on the basis of, among other things, broad experience, wisdom, integrity, ability to make independent analytical inquiries, understanding of our business environment, the candidate’s ownership interest in the Company, and willingness and ability to devote adequate time to Board duties, all in the context of the needs of our Board at that point in time and with the objective of ensuring diversity in the background, experience, and viewpoints of our Board members. The Guidelines provide that the number of directors should permit diversity of experience without hindering effective discussion, diminishing individual accountability, or exceeding a number that can function efficiently as a body.

The Board periodically reviews the size of the Board to determine the size that will be most effective for the Company. In addition, the Board completes an annual self-evaluation, which includes a self-assessment questionnaire for each Board member. The self-assessment questionnaire addresses topics such as the structure of the Board, the skills and backgrounds of the current directors, the size of the Board, and the Board’s committee structure. Each of the Audit Committee, the Corporate Governance and Nominating Committee, the Compensation Committee, and the Executive Compensation Subcommittee also completes an annual self-evaluation, which includes a self-assessment questionnaire tailored specifically for such committee or subcommittee.

Candidates recommended by our stockholders are considered on the same basis as if such candidates were recommended by one of our Board members or other persons. See “Stockholder Communications – Stockholder Director Nominations”Recommendations” below.

Board Compensation

Our non-employee director compensation program is designed to:

Summary

Each ofIn 2010, our non-employee directors receivesdirector compensation program consisted of the following annual fees and other compensation for service on our Board:following:

Additionally,In October 2010, our Board of Directors amended our non-employee director compensation program to (1) increase the annual retainer from $25,000 to $50,000 and eliminate the per meeting Board fees, (2) replace the per meeting Committee fees with retainers for Committee members, and (3) eliminate the annual vehicle allowance for non-employee directors, in each case effective January 1, 2011. As a result, for 2011 our non-employee director compensation program consists of the following:

In connection with the amendments described above, the Board also amended the AutoNation, Inc. 2007 Non-Employee Director Stock Option Plan (the “2007 Non-Employee Director Plan”) provides for:

Unless otherwise provided, allAll options granted under the 2007 Non-Employee Director Plan are:

20092010 Director Compensation

The following table sets forth the compensation earned during 20092010 by each non-employee director.

(4)	Ms. Goodman did not stand for re-election to the Board at the 2010 Annual Meeting.

Director Stock Ownership Guidelines

The Board believes that directors should be stockholders and have a financial stake in the Company. Toward this end, the Board expects that each director will invest at least $100,000 in the Company’s common stock within five years of first becoming a director (prior to February 12, 2009, our Guidelines provided that each director should “own shares of the Company’s common stock having a market value of at least $100,000” – in light of market volatility impacting our stock price, our Guidelines were amended to require each director to “invest at least $100,000” in our common stock).director. Exceptions to this requirement may only be made by the Board under compelling mitigating circumstances.

The following table sets forth information regarding investments made by our directors in our common stock as of March 17, 2010.15, 2011.

20102011 Option Grants

In accordance with the terms of the 2007 Non-Employee Director Plan, as amended, on January 2, 2010,March 1, 2011, Messrs. Brown, Burdick, Crowley, Edelson, Grusky, Larson, and Migoya and Ms. Goodman were each automatically granted an option to purchase 20,0005,000 shares of our common stock at an exercise price equal to $19.15$32.50 per share, the closing price per share of our common stock on December 31, 2009. Also in accordance with the terms of the 2007 Non-Employee Director Plan, Messrs. Larson and Brown were each automatically grantedMarch 1, 2011. Each non-employee director will also receive an option to purchase 50,0005,000 shares of our common stock upon their appointments toon the Board on February 24, 2010. The options granted to Messrs. Larsonfirst trading day of each of June 2011, September 2011, and Brown on February 24, 2010December 2011. Each option grant will have an exercise price equal to $18.02 per share, the closing price of aper share of our common stock on February 23, 2010.the applicable grant date.

Compensation Committee Interlocks and Insider Participation

During 2009,2010, Messrs. Burdick, Crowley, Larson, and Migoya served on our Compensation Committee. Please refer to “Certain Relationships and Related Party Transactions” below for a description of certain transactions we entered into since January 1, 20092010 in which Mr. Crowley may have an indirect material interest.

None of our Compensation Committee members has ever been an officer or employee of AutoNation or any of our subsidiaries, and none of our executive officers has served on the compensation committee or board of directors of any company, one of whose executive officers served on our Board or our Compensation Committee.

Certain Relationships and Related Party Transactions

Our Board has adopted a written policy which requires that transactions with related parties must be entered into in good faith on fair and reasonable terms that are no less favorable to us than those that would be available in a comparable transaction in arm’s-length dealings with an unrelated third party. Our Board, by a vote of the disinterested directors, must approve all related party transactions valued over $500,000, while our Audit Committee must approve all related party transactions valued between $100,000 and $500,000 and review with management all other related party transactions. The following is

In accordance with SEC rules, we have set forth below a summary of related party transactions that occurred since January 1, 2009,2010, in which the amount involved exceeded $120,000, the Company or one of its subsidiaries was a participant, and any related party may be deemed to have had a direct or indirect material interest. Under SEC rules, a related party is any director, executive officer, nominee for director, or 5% stockholder of the Company, and their immediate family members. In each of whichcase, the transactions complied with our Board’s policy on related party transactions.

We enter into commercial transactions with Sears Holdings Corporation and its affiliates (collectively, “Sears”), which are related to ESL Investments, Inc., in

In January 2009, our Board authorized and approved letter agreements with certain automotive manufacturers in order to,that, among other things, eliminate any potentialeliminated certain adverse consequences that would have been triggered under ourthe framework agreements with those manufacturers in the event that ESL acquiresupon ESL’s acquisition of a 50% or more ofgreater ownership interest in our common

stock.Company. The letter agreementagreements with American Honda Motor Co., Inc. (“Honda,” and such agreement, the “Honda Agreement”Honda”) and the letter agreement with Toyota Motor Sales, U.S.A., Inc. (“Toyota,” and such agreement, the “Toyota Agreement”Toyota”) also contain governance-related and other provisions as described below. Alsoprovisions. ESL is also a party to both the Honda and Toyota Agreements is ESL, our largest stockholder.

agreements. Under the terms of the Honda Agreement, Honda has agreed not to assert its right to purchase our Honda and Acura franchises and/or similar remedies under the manufacturer framework agreement between Honda and the Company in the event that ESL acquires 50% or more of our common stock. If ESL acquires more than 50% of our common stock,Toyota agreements, ESL has agreed to vote all shares of our common stock in excess of 50% of our outstanding shares in the same proportion as all non-ESL-owned shares are voted. In addition, we have agreedFor additional information regarding these agreements, please refer to ensure that a majority“Agreements with Vehicle Manufacturers – Framework Agreements” in Part I, Item 1 of our Board is independent of bothAnnual Report on Form 10-K for the Companyyear ended December 31, 2010.

In April 2010, we entered into an amendment to the Toyota agreement with Toyota and ESL, under existing NYSE listing standards. Furthermore, the Honda Agreementwhich provides that Honda’s consent does not applyif either (a) the exercise of options to a “going private” transaction under Rule 13e-3purchase our common stock and/or (b) the issuance or vesting of the Exchange Act. The terms and conditionsrestricted shares of the Honda Agreement will only apply at such time and for so long asour common stock, causes ESL owns more thanto no longer own in excess of 50% of our common stock.stock,

Under the terms of

then the Toyota Agreement, Toyota has agreedagreement, and Toyota’s consent thereunder, will continue to be in effect until any subsequent disposition of common stock by ESL during the time when ESL’s ownership is not to assert its right to purchase our Toyota and Lexus franchises and/or similar remedies under the manufacturer framework agreement between Toyota and the Company in the event that ESL acquires 50% or moreexcess of our common stock. If ESL acquires more than 50% of our common stock ESL hasas a result of such exercise, issuance, or vesting. In December 2010, Toyota agreed to vote all shares in excess of 50% in the same proportion as all non-ESL-owned shares are voted. Furthermore, we have agreed that a majority of our Board will be independent from both the Company and from ESL under existing NYSE listing standards. We have also agreed not to merge, consolidate, or combine with any entity owned or controlled by ESL unless Toyota consents thereto. In addition, the Toyota Agreement provides that in the event that we appoint a Chief Operating Officer who, in the good faith judgment of our Board, does not have sufficient breadth and depth of experience, a relevant, successful automotive track record, and extensive successful automotive experience, ESL shall be required to divest its shares in excess of 50% within nine months or its voting interest will be limited to 25%, and if ESL does not divest such shares within 18 months, it will lose all voting rights until it divests such shares. The terms and conditionsan extension of the Toyota Agreement will only apply at such time and for so long as ESL owns more than 50% of our common stock and, pursuant to an amendment to the original Toyota Agreement, will terminate onagreement until December 31, 2010 with respect to future stock acquisitions by ESL, provided that ESL may seek successive annual one-year extensions, and Toyota may not unreasonably withhold or delay its consent thereto.

In connection with the Toyota and Honda Agreements described above, in January 2009, our Board authorized and approved a separate letter agreement between the Company and ESL (the “ESL Agreement”), in which ESL agreed to vote shares of our common stock owned by ESL in excess of 45% in the same proportion as all non-ESL-owned shares are voted. The ESL Agreement expired on January 28, 2010 pursuant to its terms.

We also entered into separate letter agreements with certain other manufacturers that eliminate any potential adverse consequences under our framework agreements with those manufacturers in the event that ESL acquires 50% or more of our common stock. ESL is not a party to any of those agreements.2011.

Stockholder Communications

Communications with the Company and the Board

Stockholders and interested parties may communicate with the Company through its Investor Relations Department by writing to Investor Relations, 200 SW 1st Ave, Fort Lauderdale, FL 33301.

Stockholders and interested parties interested in communicating with our Board, any Board committee, any individual director, any group of directors (such as our independent directors), or our presiding director should send written correspondence to AutoNation, Inc. Board of Directors, c/o Corporate Secretary, AutoNation, Inc., 200 SW 1st Ave, Fort Lauderdale, Florida 33301. Additional information is available on our corporate website athttp://corp.autonation.com/investors.

Stockholder Proposals for Next Year’s Annual Meeting

As more specifically provided in our by-laws, no business may be brought before an Annual Meeting unless it is specified in the notice of the Annual Meeting or is otherwise brought before the Annual Meeting by or at the direction of our Board of Directors or by a stockholder entitled to vote who has delivered proper notice to us not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s Annual Meeting. Accordingly, any stockholder proposal to be considered at the 20112012 Annual Meeting of Stockholders, including nominations of persons for election to our Board, generally must be properly submitted to us not earlier than January 5, 20112012 nor later than February 4, 2011.2012. Detailed information for submitting stockholder proposals or nominations of director candidates will be provided upon written request to the Secretary of AutoNation, Inc., 200 SW 1st Ave, Fort Lauderdale, Florida 33301.

These requirements are separate from the Securities and Exchange Commission’sSEC’s requirements that a stockholder must meet in order to have a stockholder proposal included in our Proxy Statement for the 20112012 Annual Meeting of Stockholders. Stockholders interested in submitting a proposal for inclusion in our proxy materials for the 20112012 Annual Meeting of Stockholders may do so by following the procedures set forth in Rule 14a-8 under the Exchange Act. To be eligible for inclusion in such proxy materials, stockholder proposals must be received by our Secretary not later than November 25, 2010.24, 2011.

Stockholder Director NominationsRecommendations

The Corporate Governance and Nominating Committee has established a policy pursuant to which it considers director candidates recommended by our stockholders. All director candidates recommended by our stockholders are considered for selection to the Board on the same basis as if such candidates were recommended by one or more of our directors or other persons. To recommend a director candidate for consideration by our Corporate Governance and Nominating Committee, a stockholder must submit the recommendation in writing to our Corporate Secretary not later than 120 calendar days prior to the anniversary date of our proxy statement distributed to our stockholders in connection with our previous year’s annual meeting of stockholders, and the recommendation must provide the following information: (i) the name of the stockholder making the recommendation; (ii) the name of the candidate; (iii) the candidate’s resume or a listing of his or her qualifications to be a director; (iv) the proposed candidate’s written consent to being named as a nominee and to serving as one of our directors if elected; and (v) a description of all relationships, arrangements, or understandings, if any, between the proposed candidate and the recommending stockholder and between the proposed candidate and us so that the candidate’s independence may be assessed. The stockholder or the director candidate also must provide any additional information requested by our Corporate Governance and Nominating Committee to assist the Committee in appropriately evaluating the candidate.

SECTION 16(A)16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires that our directors, executive officers, and persons who beneficially own 10% or more of our stock file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of our stock and our other equity securities. To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required, during the year ended December 31, 2009,2010, our directors, executive officers, and greater than 10% beneficial owners complied with all such applicable filing requirements.requirements, except that one late Form 4 was filed for Mr. Westfall on June 3, 2010 to report the sale of 1,773 shares of common stock held in his 401(k) account on April 30, 2010.

STOCK OWNERSHIP

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following table sets forth certain information as of March 17, 201015, 2011 regarding beneficial owners of more than five percent of the outstanding shares of our common stock.

On May 20, 2010, we filed with the SEC a Current Report on Form 8-K to disclose that ESL became the beneficial owner of a greater than 50% ownership interest in our common stock. Please refer to the Form 8-K and also to “Agreements with Vehicle Manufacturers – Framework Agreements” in Part I, Item 1 of our Annual Report on Form 10-K for the year ended December 31, 2010, for a description of certain letter agreements by and among the Company, ESL, and certain automotive manufacturers relating to ESL’s ownership of our common stock. See also “Board of Directors and Corporate Governance – Certain Relationships and Related Party Transactions.”

SECURITY OWNERSHIP OF MANAGEMENT

The following table sets forth certain information as of March 17, 201015, 2011 regarding the amount of our common stock beneficially owned by each of our current directors and executive officers and by our current directors and executive officers as a group. Beneficial ownership includes shares that may be acquired within 60 days of March 17, 201015, 2011 through the exercise of outstanding stock options, as well as shares of restricted stock.

EXECUTIVE COMPENSATION

REPORT OF THE COMPENSATION COMMITTEE AND

EXECUTIVE COMPENSATION SUBCOMMITTEE REPORT

The following statement made by our Compensation Committee and Executive Compensation Subcommittee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate such statement by reference.

The Compensation Committee and Executive Compensation Subcommittee of the Company have reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K and, based on such review and discussion, the Compensation Committee and Executive Compensation Subcommittee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009.2010.

Compensation Committee:

William C. Crowley, Chair

Rick L. Burdick

Michael Larson

Carlos A. Migoya

Executive Compensation Subcommittee:

Carlos A. Migoya, Chair

Rick L. Burdick

Michael Larson

COMPENSATION DISCUSSION AND ANALYSIS

Overview

Our compensation programs are administered by the Compensation Committee (referred to as the “Committee” in this section) and the Executive Compensation Subcommittee (referred to as the “Subcommittee” in this section) of the Committee. The Committee primarily assists the Board in fulfilling its oversight responsibilities by, among other things: (i) reviewing our director compensation program; (ii) reviewing and approving the compensation of our Chief Executive Officer (“CEO”) and other senior executive officers and, except as expressly delegated to the Subcommittee, setting annual and long-term performance goals for these individuals and reviewing the performance of these individuals; and (iii) reviewing and approving the compensation of all of our corporate officers.

The Subcommittee assists the Board and the Committee in fulfilling their responsibilities by performing the following duties: (i) reviewing and approving performance-based compensation of executive officers as contemplated under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), including bonuses and stock-based awards; (ii) administering the AutoNation, Inc. Senior Executive Incentive Bonus Plan, including establishing performance goals and certifying whether such goals are attained as contemplated under Section 162(m) of the Code; and (iii) administering our equity compensation plans, including approving stock-based awards.

SinceFrom January 1, 2009,2010 until May 5, 2010, the Committee has consisted of William C. Crowley (Chair), Rick L. Burdick, and Carlos A. Migoya, and the Subcommittee has consisted of Mr. Migoya (Chair) and Mr. Burdick. On May 5, 2010, the Board appointed Michael Larson to the Compensation Committee and the Executive Compensation Subcommittee. Since May 5, 2010, the Committee has consisted of Mr. Crowley (Chair), Mr. Burdick, Mr. Larson, and Mr. Migoya, and the Subcommittee has consisted of Mr. Migoya (Chair), Mr. Burdick, and Mr. Larson.

For the fiscal year ended December 31, 2009,2010, our “named executive officers” were: Mike Jackson, Chairman and Chief Executive Officer; Michael E. Maroone, President and Chief Operating Officer; Michael J. Short, Executive Vice President and Chief Financial Officer; Jonathan P. Ferrando, Executive Vice President, General Counsel and Secretary; and Kevin P. Westfall, Senior Vice President, Sales.

This Compensation Discussion and Analysis section discusses the compensation policies and programs for theour named executive officers as shown in the compensation tables that follow.

Compensation Philosophy and Objectives

The Committee’s fundamental philosophy is to closely link executive compensation with the achievement of performance goals and to create an owner-oriented culture. The Committee’s objectives in administering our compensation program for executive officers are to ensure that we are able to attract and retain highly-skilled executives and to provide a compensation program that incentivizes management to optimize business performance, deploy capital productively, and increase long-term stockholder value. The Committee also believes that overall compensation should be fair for the services rendered and that the compensation structure should be transparent, which is why the key components of executive compensation are limited to a base salary, an annual performance bonus based solely on the achievement of financial targets, and stock-based awards.

Setting Compensation Levels of Executive Officers

The Committee reviews executive compensation at its meetings throughout the year and sets executive compensation based primarily on our financial and operating performance and on executive management’s performance in executing the Company’s business strategy, optimizing the Company’s business performance and

productivity of its business operations, and increasing long-term stockholder value. The Committee also considers the scope of an executive’s duties and responsibilities and individual executive performance. Our CEO

reviews the performance of eachother named executive officerofficers and makes recommendations, if any, to the Committee with respect to compensation adjustments for such officers. However, the Committee determines in its sole discretion whether to make any adjustments to the compensation paid to such executive officers.

As part of its review of executive compensation, the Committee reviews the executive compensation arrangements at peer group companies. Our peer group includes comparable specialty retail companies based on specific financial measures, including, but not limited to, revenue, total assets, market capitalization, and net income. For 2009, the following companies were removed from our peer group: Best Buy Co., Inc., Foot Locker, Inc., and Saks Incorporated, in each case, due to significant differences in financial measures as compared to AutoNation and the other peer group companies, and Circuit City Stores, Inc., due to its bankruptcy filing. In light of the removal of those companies, and to increase the number of companies in, and improve the quality of, our peer group, the following companies were added: Advance Auto Parts, Inc., BJ’s Wholesale Club, Inc., CarMax, Inc., Family Dollar Stores, Inc., J.C. Penney Company, Inc., Nordstrom, Inc., and Tiffany & Co. The Committee’s practice has been to make changes to our peer group only when necessary or when in the Committee’s judgment comparison to a company is no longer appropriate. OurThere were no changes to our peer group for 20092010 as compared to 2009. For 2010, our peer group consisted of the following companies:

The Committee reviews the executive compensation benchmark data at a high level in order to evaluate and confirm whether our executive compensation is within a reasonably competitive range. The Committee, however, does not set executive compensation at a specific target percentile within the peer group. Instead, the Committee focuses on providing compensation that is fair for the services rendered, closely linking executive compensation with the achievement of Company performance goals, and creating an owner-oriented culture, where the interests of our executive officers are aligned with the long-term interests of our stockholders.

The Committee has no pre-established target for the allocation between either cash and non-cash or short-term and long-term incentive compensation. However, a significant portion of each executive officer’s total compensation is allocated to incentive compensation in the form of an annual performance-based bonus and stock-based awards in order to provide incentives to create and maintain long-term stockholder value. The Committee reviews and considers total compensation in setting each element of compensation for our named executive officers.

20092010 Executive Compensation Elements

The key elements of our executive compensation program for the year ended December 31, 20092010 were:

Executive officers are also entitled to limited perquisites and other benefits as outlined below. The following is a summary of the considerations underlying each component of compensation paid to our named executive officers for 2009.2010.

Base Salary

We provide our named executive officers and other officers with a base salary to compensate them for services rendered during the fiscal year. The Committee reviews and, as appropriate, adjusts the base salaries for our named executive officers. The factors that the Committee considers in setting salaries include the scope of

job responsibilities, individual contributions to our success, Company-wide performance, and market compensation. However, the Committee does not as a practice grant annual base salary adjustments for executive officers, and it did not grant any base salary adjustments during 20092010 for any of the named executive officers.

Annual Incentive Bonus

20092010 Incentive Bonus

A core component of our compensation program is the AutoNation Operating Performance Plan (the “AOP”), the annual bonus program in which bonus-eligible, corporate-level employees participate. The AOP is designed to incentivize management to continually improve our operating performance and to use capital to maximize returns. In February 2009,2010, the Subcommittee established performance goals under the AOP for 20092010 based upon specified levels of adjusted operating income per basic share and adjusted operating income as a percentage of gross margin. The following table sets forth the 20092010 bonus metrics under the AOP.

In calculating the level of our performance under the AOP, operating income per basic share is adjusted to reflect a capital charge for acquisitions and the repurchase of shares of our common stock, as well as to exclude the effect of certain extraordinary or other items. Certain other adjustments are made as well to ensure operating performance is measured to incentivize management appropriately (for example, floorplan interest expense is charged against operating income to ensure management manages this expense; on a generally accepted accounting principles basis, floorplan interest expense is not included in operating income). The capital charge is designed to encourage more productive uses of capital and to discourage less productive uses of capital. The adjusted operating income as a percentage of gross margin metric is designed to incentivize management to increase variability in our expense structure and to increase the productivity of our operations so that bottom-line profitability and stockholder value are maximized.

Each year, the Subcommittee, in its sole discretion, determines which of our named executive officers or other key employees will participate in the AutoNation, Inc. Senior Executive Incentive Bonus Plan (the “Executive Incentive Plan”). The Executive Incentive Plan is designed to create a direct link between pay and performance for our executive officers and to ensure that annual cash performance bonuses payable to executive officers of the Company are tax-deductible by the Company pursuant to Section 162(m) of the Code. Historically, the Subcommittee has selected only those officers who were likely to receive annual compensation in excess of $1 million. Our executive officers may participate in either the AOP or the Executive Incentive Plan, but not both. The Subcommittee is also responsible for identifying annual “performance factors” and establishing specific performance targets with respect thereto that must be met in order for annual bonuses to be paid under the Executive Incentive Plan.

In February 2009,2010, the Subcommittee established an incentive bonus program for 20092010 for certain of our named executive officers under the Executive Incentive Plan. For 2009,2010, the Subcommittee selected Mike Jackson, Michael E. Maroone, Michael J. Short, and Jonathan P. Ferrando to participate in the Executive

Incentive Plan. Under the terms of the Executive Incentive Plan, the Subcommittee set specific annual performance goals and established an objective formula for calculating the amount of the target awards for participants. The 20092010 bonus metrics that the Subcommittee established under the Executive Incentive Plan were the same as those that the Committee established for 20092010 under the AOP (set forth above) for all other corporate bonus plan participants, including Mr. Westfall. The Subcommittee believes that symmetry between the AOP and the Executive Incentive Plan assures that all participants are appropriately aligned to achieve our objectives.

One hundred percent of the target award for each participant in the AOP and the Executive Incentive Plan was based upon achievement of the predetermined performance goals. Bonus awards under the AOP and the Executive Incentive Plan were payable on a sliding scale based on the Company’s actual achievement relative to the predetermined goals, with the possibility that bonuses earned may exceed or be less than the targeted payout level. The Subcommittee had absolute “negative discretion” to eliminate or reduce the amount of any award under the AOP and the Executive Incentive Plan.

The following table sets forth the 20092010 threshold and target awards reflected as a percentage of salary for each of the participants under the Executive Incentive Plan and for Mr. Westfall under the AOP.

Based on our financial performance against the bonus targets, bonus awards under the AOP and the Executive Incentive Plan were paid at 111.25%186.72% of the targeted levels. Performance under the AOP and the Executive Incentive Plan for 20092010 was calculated as follows:

Actual payouts to our named executive officers are shown in the table entitled “Summary Compensation Table” below. The Executive Incentive Plan was the only bonus program in which our named executive officers participated in 2009,2010, other than Mr. Westfall who participated in the AOP only.

As part of our retention efforts with respect to Mr. Jackson, a portion of the 2010 bonus earned by Mr. Jackson under the Executive Incentive Plan (equal to $715,760) will be paid to him on a deferred basis in 2013 (without interest), subject to certain terms and conditions.

20102011 Incentive Bonus

In February 2010,2011, the Subcommittee selected the 20102011 participants under the Executive Incentive Plan, established specific objective annual performance goals for 2010,2011, and set target awards for the 20102011 participants in the Executive Incentive Plan. For 2010,2011, the Subcommittee selected Messrs. Jackson, Maroone, Short, and Ferrando to participate in the Executive Incentive Plan. The performance goals that the Subcommittee established for 20102011 under the Executive Incentive Plan are based upon the achievement of specified levels of adjusted operating income per basic share (minus a net charge for capital deployed for acquisitions or share repurchases and subject to an adjustment for certain extraordinary or other items) and adjusted operating income as a percentage of gross margin for the Company during 2010.2011. The performance goals established under the Executive Incentive Plan for 20102011 also constitute the performance goals that have been established for bonus-eligible, corporatecorporate-level employees of the Company under the AOP to ensure that the corporate management team is fully aligned. Bonus awards under both the AOP and the Executive Incentive Plan will be payable on a sliding scale based on our actual achievement relative to the predetermined goals, with the possibility that bonuses earned may exceed or be less than the targeted level. The Subcommittee will have absolute “negative discretion” to eliminate or reduce the amount of any award under the AOP and the Executive Incentive Plan.

The following table sets forth the 20102011 threshold and target awards reflected as a percentage of salary for each of the participants under the Executive Incentive Plan and for Mr. Westfall under the AOP.

As part of our retention efforts with respect to Mr. Jackson, a portion of the 20102011 bonus earned by Mr. Jackson under the Executive Incentive Plan (equal to 33 ¹/3% of his base salary)salary to the extent actually awarded) will be paid to him on a deferred basis in 2013 (without interest), subject to certain terms and conditions.

Stock-Based Awards

The Subcommittee grants stock-based awards to our named executive officers in order to provide long-term incentives which align the long-term interests of management and our stockholders. The Committee believes that stock-based awards motivate our named executive officers to focus on optimizing our long-term business performance and stockholder value and create an owner-oriented culture. For 2009,2010, the Subcommittee administered our equity compensation plans and approved all stock-based awards under the AutoNation, Inc. 2008 Employee Equity and Incentive Plan (the “2008 Plan”), which was approved by our stockholders at the 2008 Annual Meeting of Stockholders.

Stock-based awards are approved on an annual basis in amounts determined by the Subcommittee, while carefully considering the cost to us and our stockholders, including common stock dilution. For 2009,2010, the sum of all stock-based awards granted to AutoNation employees represented potential share issuances equal to approximately 0.79%0.78% of our outstanding shares of common stock (0.68%(0.67% relating to stock options and 0.11% relating to restricted stock).

In 2009,2010, the Subcommittee approved two types of stock-based awards: stock options and restricted stock. Except for Messrs. Jackson, Maroone, Short, and Ferrando, who received stock options only, other employees eligible for stock-based awards received either a mix of stock options and restricted stock, or restricted stock only. Mr. Westfall received a mix of stock options and restricted stock.

The 20092010 annual stock option and restricted stock awards were made to all stock option-eligible and restricted stock-eligible employees at the same time. Additionally, the 20092010 annual stock option awards were made to all stock option-eligible employees on the same terms (other than the number of options granted, which varies primarily by position and based on individual performance), and the 20092010 annual restricted stock awards were made to all restricted stock-eligible employees on the same terms (other than the number of restricted shares granted, which varies primarily by position and based on individual performance).

Stock Options

Prior toSince 2009, the Subcommittee’s practice hadhas been to approve annual stock option awards during our third fiscal quarter at meetings of the Subcommittee (or predecessor committees responsible for option grants at the time) with an effective grant date after the public release of the Company’s second-quarter earnings. Additionally, the terms of the annual stock option awards provided that stock options would vest in equal installments over four years commencing with the first anniversary of thequarter and to grant date and expire ten years after the grant date.

For 2009, the Subcommittee modified its practice by approving the annual stock option awards for our named executive officers and other employees at its regularly scheduled meeting on February 11, 2009 and granting the awards in four equal increments over the year, subject to continuous employment through each grant date. Consistent with this practice, on February 4, 2010, the Subcommittee approved the 2010 annual stock option awards for our named executive officers and other employees. One-fourth of each stock option award that was approved on February 11, 2009 was granted on each of March 2, 2009,1, 2010, June 1, 2009,2010, September 1, 2009,2010, and December 1, 2009.2010. The 20092010 stock option grants have an exercise price equal to the closing price per share on the grant date, vest in equal annual installments over four years commencing on June 1, 2010,2011, and expire on March 2, 2019.1, 2020. Detailed information regarding the 20092010 stock option grants to our named executive officers is provided in the table entitled “Grants of Plan-Based Awards in Fiscal 2009”2010” below.

Since the Subcommittee approved the 20092010 annual stock option awards in February, the exercise price for each of the four grants comprising an annual stock option award iswas based on the closing price of our common stock on a pre-determined date subsequent to the approval of such award. The Subcommittee believes that this practice is fair and reasonable to the award recipients, the Company, and its stockholders since it minimizes the impact that any particular event could have on the exercise price of stock options, particularly during times of market volatility. The Subcommittee adopted this practice for all stock option-eligible employees of the Company and in 2009 awarded stock options to all stock option-eligible employees on the same terms (other than the number of options granted, which varies primarily by position and based on individual performance).

On February 4, 2010,1, 2011, the Subcommittee approved the 20102011 annual stock options awards for our named executive officers and other employees. The total stock option award for 20102011 that the Subcommittee granted to each of our named executive officers is as follows: Mike Jackson – 255,024221,516 options, Michael E. Maroone – 204,104177,288 options, Michael J. Short – 153,364133,212 options, Jonathan P. Ferrando – 153,364133,212 options, and Kevin P. Westfall – 15,33213,316 options. One-fourth of each stock option award that was approved on February 4, 2010,1, 2011, was granted on March 1, 2010,2011, and an additional one-fourth of each stock option award will be granted on the first trading day of each of June, September, and December 2010.2011. In accordance with the 2008 Plan, the options granted on March 1, 20102011 have an exercise price equal to the closing price per share on such date ($18.20)32.50), and each subsequent option grant will have an exercise price equal to the closing price per share on the applicable grant date. The 20102011 stock option awards vest in equal annual installments over four years commencing on June 1, 20112012 and expire on March 1, 2020.2021.

Restricted Stock

On February 11, 2009,4, 2010, the same date that it approved the 20092010 stock option awards, the Subcommittee approved restricted stock awards to certain employees, including Mr. Westfall, who received 5,3245,112 shares of

restricted stock, but excluding all other named executive officers. These shares of restricted stock were granted on March 2, 20091, 2010 and will vest in equal annual installments over four years commencing on June 1, 2010. The 2009 restricted stock awards were made to all restricted stock-eligible employees of the Company on the same terms (other than the number of restricted shares granted, which varies primarily by position and based on individual performance).2011.

On February 4, 2010,1, 2011, in addition to the 20102011 stock option awards, the Subcommittee approved the 20102011 restricted stock awards to certain employees, including Mr. Westfall, who received 5,1124,440 shares of restricted stock. The Subcommittee did not grant restricted stock awards to our other named executive officers. The 20102011 restricted stock awards were granted on March 1, 20102011 and will vest in equal annual installments over four years commencing on June 1, 2011.2012.

Perquisites and Other Benefits

Our compensation program for named executive officers also includes limited perquisites and other benefits, including participation in the Company’s life and health insurance and similar benefit programs (including the AutoNation 401(k) Plan and the AutoNation, Inc. Deferred Compensation Plan) on the same general terms as other participants in these programs, participation in Company car programs entitling the executives to a demonstrator vehicle use and/or a vehicle allowance, use of an on-site fitness facility and, pursuant to their employment agreements, limited personal use of corporate aircraft for each of Messrs. Jackson and Maroone. The employment agreements with each of Messrs. Jackson and Maroone, respectively, provide for personal use of corporate aircraft of up to 70 hours per year.

Employment Agreements with Executive Officers

We have anOn July 20, 2010, we entered into new employment agreementagreements with each of Mike Jackson and Michael E. Maroone.Maroone, pursuant to which Mr. Jackson will continue to serve as Chairman and Chief Executive Officer until September 24, 2013 and Mr. Maroone will continue to serve as President and Chief Operating Officer until December 31, 2013. The new agreements are on substantially the same terms and conditions as Mr. Jackson’s and Mr. Maroone’s prior employment agreements, which were replaced and superseded by the new agreements. See “Employment Agreements” below for a summary of the material terms of the new employment agreements. The Committee believes that entering into the employment agreements with Messrs. Jackson and Maroone furthered our efforts to attract and retain such executives. For a summary of the material terms of these employment agreements, please see “Employment Agreements” below.

Severance Policy and Agreements for Post-Termination Payments

We have a policy governing severance and change in control agreements with the Company’s named executive officers, which is set forth in our Corporate Governance Guidelines. Generally, the policy provides that we will not enter into any severance agreements with senior executives that provide specified benefits in an amount exceeding 299% of the sum of such executive’s base salary plus bonus unless such severance agreement has been submitted to a stockholder vote. Further, unless such severance agreement has been submitted to a stockholder vote, we will not enter into a severance agreement that provides for the payment of specified benefits to an executive triggered by (i) a change in control of our Company that is approved by stockholders but not completed, or (ii) a completed change in control of the Company in which the named executive officer remains employed in a substantially similar capacity by the successor entity.

We have entered into stock option agreements with all of our named executive officers, as well as employment agreements with Mr.Messrs. Jackson and Mr. Maroone that provide for payments or benefits to such persons at, following, or in connection with, termination under certain circumstances. We have not entered into any change in control agreements with any of our named executive officers. The payment or benefits provisions contained in the stock option agreements and the employment agreements are designed to promote stability and continuity of senior management. A description of the applicable potential payments under such agreements for the named executive officers is provided under “Potential Payments Upon Termination or Change in Control” below.

Company Policy on Section 162(m) Limits on Deductibility of Compensation

Section 162(m) of the Code generally disallows a tax deduction to public corporations for compensation over $1,000,000 paid for any fiscal year to the corporation’s CEO and four other most highly compensated executive officers as of the end of any fiscal year. However, the statute exempts qualifying performance-based compensation from the deduction limit if certain requirements are met.

The Committee administers the executive compensation program in general, and our Executive Incentive Plan in particular, in a manner that maximizes the tax deductibility of compensation paid to the Company’s executives under Section 162(m) of the Code to the extent practicable. The Committee believes, however, that our priority is to attract and retain highly-skilled executives to manage our Company and, in some cases, the loss of a tax deduction may be necessary to accomplish that goal. Accordingly, the Committee has from time to time approved elements of compensation for certain officers that are not fully deductible, and the Committee reserves the right to do so in the future in appropriate circumstances. For 2009,2010, the compensation of our named executive officers was fully deductible under Section 162(m), except for $150,000 of Mr. Jackson’s base salary and approximately $190,000$208,289 of other non-performance-based compensation for Messrs. Jackson and Maroone.

Executive Stock Ownership Guidelines

In order to further align the long-term interests of management and stockholders and to ensure an owner-oriented culture, the Board believes thathas set stock ownership guidelines for our senior executive officers should have a significant financial stake in our Company. Accordingly, in February 2006, the Board adopted a policy setting forth its expectation that the Chief Executive Officer, and the President and Chief Operating Officer, will attain ownership of our common stock with a fair market value of not less than four times his or her annual base compensation, and each Executive Vice President will attain ownership of AutoNation’s common stock with a fair marketPresident. The following table sets forth information regarding the number and dollar value of not less than two times his or her annual base compensation, in each case within five yearsshares held by these officers as of such person first becoming an executive officer orMarch 15, 2011 and lists the adoptionspecific ownership requirements under the ownership guidelines. Each of the policy. On July 30, 2009, in light of market volatility impacting our stock price, the Board amendedthese officers has either satisfied the ownership guidelines or has time remaining to include fixed share alternatives, which are set forth indo so. The ownership guidelines provide that the table below, and to extend the deadline under the policy untilownership requirements must be met by the later of February 7, 2014 or the date that is five years after the executive was appointed to suchthe position.

Exceptions to this requirement may only be made by the Board of Directors under compelling mitigating circumstances. The Committee believes these ownership guidelines are an important tool in aligning the interests of our senior executive officers with the long term interests of our stockholders. The following table sets forth information regarding number and dollar value of shares held by our senior executive officers as of December 31, 2009.

Conclusion

The Committee believes that our compensation programs appropriately reward executive performance and align the interests of our named executive officers and key employees with the long-term interests of our stockholders, while also enabling the Company to attract and retain talented executives. The Committee will continue to evolve and administer our compensation program in a manner that the Committee believes will be in the best interests of our stockholders.

COMPENSATION TABLES

Summary Compensation Table

The following table provides information concerning total compensation earned in 2007, 2008, 2009, and 20092010 by our Chief Executive Officer, Chief Financial Officer, and the three other most highly compensated individuals serving as executive officers of the Company at the end of 2009.2010.

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Includes $929 imputed income from$4,773 for group term life insurance, $15,750$204,766 for personal usage of corporate aircraft, and $59,602 for demonstrator vehicle usage and/or a vehicle allowance, $4,554and $74 for a company paid executive health examination, and a $4,000 matching contribution to Mr. Short’s non-qualified deferred compensation account.examination.

We have employment agreements with Messrs. Jackson and Maroone that establish certain terms relating to their compensation. For information regarding these agreements, refer to “Employment Agreements” below.

Grants of Plan-Based Awards in Fiscal 20092010

The Executive Incentive Plan was approved by the Board in February 2007 and by our stockholders in May 2007. For 2009,2010, the Executive Compensation Subcommittee selected Messrs. Jackson, Maroone, Short, and Ferrando to participate in the Executive Incentive Plan. Under the terms of the Executive Incentive Plan, the Subcommittee set specific annual performance goals (while actual performance relative to the target remained substantially uncertain within the meaning of Section 162(m) of the Code) and established an objective formula for calculating the amount of the target awards for the participants. The target incentive awards, as a percentage of base salary, assigned to our select named executive officers for 20092010 were: Mike Jackson —– 133 ¹/3%; Michael E. Maroone —– 100%; Michael J. Short —– 75%; and Jonathan P. Ferrando —– 75%.

The performance goals that the Subcommittee established for 20092010 under the Executive Incentive Plan for the executives named above —– adjusted operating income per basic share (75% weight) of $2.14$2.25 and adjusted operating income as a percentage of gross margin (25% weight) of 16.50% —20.8% – were the same as those that the Committee established for 20092010 under the AOP for all other corporate bonus plan participants, including Mr. Westfall, who was eligible to receive a target award as a percentage of his base salary of 45%. One hundred percent of the target award for each participant in the AOP and the Executive Incentive Plan was based upon achievement of the predetermined performance goals.

Bonus awards under the Executive Incentive Plan and the AOP were payable on a sliding scale based on our actual achievement relative to the predetermined goals, with the possibility that bonuses earned may exceed or be less than the targeted level. The Subcommittee had absolute “negative discretion” to eliminate or reduce the amount of any award under the Executive Incentive Plan and the AOP.

Based on our financial performance against the bonus targets, bonus awards under the Executive Incentive Plan and the AOP were paid at 111.25%186.72% of the targeted levels. Actual payouts to our named executive officers are set forth in the table entitled “Summary Compensation Table” above, and information regarding how our 20092010 performance was calculated is set forth in “Compensation Discussion and Analysis —– Annual Incentive Bonus” above. The Executive Incentive Plan was the only bonus program in which our named executive officers participated in 2009,2010, other than Mr. Westfall who participated in the AOP only.

The following table sets forth certain information with respect to the (i) non-equity incentive plan awards granted to Messrs. Jackson, Maroone, Short, and Ferrando under the Executive Incentive Plan and to Mr. Westfall under the AOP and (ii) the option awards granted to each of our named executive officers and the restricted stock awards granted to Mr. Westfall under the 2008 Plan.

Outstanding Equity Awards at Fiscal Year-End 20092010

The following table provides information concerning unexercised options and unvested restricted stock awards held by the named executive officers of the Company as of December 31, 2009.2010.