| (*) | Denotes less than 1% of the Company’s common stock. |
(1) | | (1) | Based on a Schedule 13G/A filed with the SEC on February 14, 2011.2014. Represents shares owned by Fidelity Management & Research Company (“Fidelity”), a wholly-owned subsidiary of FMR LLC (“FMR”) and investment advisor to various investment companies (collectively, the “Fidelity Funds”), Pyramis Global Advisors Trust Company (“Pyramis”), an indirect, wholly-owned subsidiary of FMR, and Edward C. Johnson III, who is the Chairman of FMR. The business address of FMR is 82 Devonshire245 Summer Street, Boston, Massachusetts 02109. The business address of Pyramis is 900 Salem Street, Smithfield, Rhode Island 02917.02210. Mr. Johnson and FMR, through its control of Fidelity and the Fidelity Funds, have the sole power to dispose of 4,363,9422,878,909 shares owned by the Fidelity Funds. Neither FMR nor Mr. Johnson has the sole power to vote or direct the voting of the shares owned directly by the Fidelity Funds, which power resides with the Funds’ Board of Trustees. The number of shares of the Company’s common stock owned by the Fidelity Funds reported in this Beneficial Ownership Table includes 88,942 shares of common stock resulting from the assumed conversion on December 31, 2010 of $3,000,000 principal amount of the Company’s 3.00% Senior Subordinated Convertible Notes due 2012 (29.6472 shares of the Company’s common stock for each $1,000 principal amount of notes). |
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| (2) | Based on a Schedule 13G/A filed with the SEC on March 19, 2009.February 13, 2014. Represents shares owned by and on behalf of each of MSD Capital, L.P. (“MSD Capital”) and, MSD SBI, L.P. (“MSD SBI”) and Michael S. Dell (“Dell”). MSD SBI is the record and direct beneficial owner of the shares. MSD Capital is the general partner of MSD SBI and may be deemed to indirectly beneficially own the shares owned by MSD SBI. MSD Capital Management LLC (“Capital Management”) is the general partner of MSD Capital and may be deemed to indirectly beneficially own the shares beneficially owned by MSD Capital. BothEach of Glenn R. Fuhrman, John C. Phelan and Marc R. Lisker is a manager of Capital Management and may be deemed to indirectly beneficially own the shares beneficially owned by Capital Management. Dell is the controlling member of Capital Management and may be deemed to indirectly beneficially own the shares beneficially owned by Capital Management. Each of MSD Capital, and MSD SBI, disclaimDell and Messrs. Fuhrman, Phelan and Lisker disclaims beneficial ownership of such securities except to the shares.extent of any pecuniary interest therein. The business address of MSD Capital and MSD SBI is 645 Fifth Avenue, 21st Floor, New York, New York 10022. The business address of Dell is c/o Dell, Inc., One Dell Way, Round Rock, Texas 78682. |
| (3) | | (3) | Based on a Schedule 13G/A filed with the SEC on February 14, 2014. Represents shares owned by and on behalf of each Eminence Capital, LLC (“Eminence Capital”), Eminence GP, LLC (“Eminence GP”) and Ricky C. Sandler (“Sandler”). Eminence Capital serves as the investment manager to several Eminence funds and a separately managed account and may be deemed to have voting and dispositive power over shares held for the accounts of the Eminence funds and the separately managed account. Eminence GP serves as general partner or manager with respect to the shares directly owned by some of the Eminence funds and may be deemed to have voting and dispositive power over the shares held for the accounts of certain Eminence funds. Sandler is the chief executive officer of Eminence Capital and managing member of Eminence GP and may be deemed to have voting and dispositive power over shares held for the accounts of the Eminence funds and the separately managed account, and individually over shares owned by certain family accounts and other related accounts over which Sandler has investment discretion. Eminence Capital, Eminence GP and Sandler have shared voting and dispositive power with respect to 1,822,538 shares and Sandler has sole voting and dispositive power with respect to 375 shares. The business address of Eminence Capital, Eminence GP and Sandler is 65 East 55th Street, 25th Floor, New York, New York 10022. | | | (4) | Based on a Schedule 13G/A filed with the SEC on February 11, 2011. Represents shares owned by QVT Fund LP (the “Fund”) and Quintessence Fund L.P. (“Quintessence”).2014. The business address of the Fund is Walkers SPV, Walker House, 87 Mary Street, George Town, Grand Cayman, KY1 9001 Cayman Islands. The business address for QVT Financial LPVanguard Group (“QVT Financial”), QVT Financial GP LLC (“QVT Financial GP”), and QVT Associates GP LLC (“QVT Associates”Vanguard”) is 1177 Avenue of the Americas, 9th Floor, New York, New York 10036. QVT Financial is the investment manager of the Fund, which beneficially owns 2,587,669 shares of the Company’s common stock. QVT Financial is also the investment manager of Quintessence, which beneficially owns 275,902 shares of the Company’s common stock. QVT Financial100 Vanguard Boulevard, Malvern, Pennsylvania 19355. Vanguard has thesole power to direct the vote 43,422 shares and dispositionto dispose of the common stock held by the Fund and Quintessence and may be deemed to be1,704,339 shares. Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of Vanguard, is the beneficial owner of an aggregate amount41,742 shares. Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of 2,863,571 sharesVanguard, is the beneficial owner of common stock. QVT Financial GP, as the general partner of QVT Financial, may be deemed to beneficially own the same number of shares reported by QVT Financial. QVT Associates, as general partner of the Fund and Quintessence, may be deemed to beneficially own the aggregate amount of 2,863,571 shares of common stock owned by the Fund and Quintessence.1,700 shares. |
| (4) | | (5) | Based on a Schedule 13G filed with the SEC on February 2, 2011.January 28, 2014. The principal business address of BlackRockBlackrock, Inc. is 40 East 52nd52nd Street, New York, New York 10022. Blackrock, Inc. has sole power to vote 1,638,362 shares and to dispose of 1,737,413 shares. |
| | (5)(6) | Includes (i) 5,000 options granted23,492 shares of unvested restricted stock. Mr. Kearney has the right to vote, but no right to dispose of, the shares of unvested restricted stock. Also includes 13,891 shares of common stock vested in connection with director compensation exercisable within 60 days afterMarch 2014 under the 2013 performance share unit program. Mr. Kearney has the right to dispose of these shares issued to him under the 2013 performance share unit program, but no right to vote such shares at the Annual Meeting, as such shares were not outstanding and entitled to vote on the record date. |
| (6) | Includes (i) 10,000 options granted in connection with director compensation exercisable within 60 days after the record date. |
(7) | Includes (i) 5,001 options granted in connection with director compensation exercisable within 60 days after the record date.to acquire 5,000 shares of common stock that are vested and exercisable. |
| (8) | Includes (i) 18,000 options granted in connection with director compensation exercisable within 60 days after the record date. |
(9)(8) | Includes (i) 183,333 options exercisable within 60 days after the record date and (ii) 110,91348,919 shares of unvested restricted stock. Mr. Monaghan has the right to vote, but no right to dispose of, the shares of unvested restricted stock. Also includes 8,99617,361 shares of common stock vested in March 20112014 under the 20102013 performance share unit program, after 6,637 shares of common stock were forfeited for the payment of taxes upon such issuance.program. Mr. Monaghan has the right to dispose of these shares issued to him under the 2013 performance share unit program, but no right to vote such shares at the 2011 Annual Meeting, of Stockholders, as such shares were issuednot outstanding and entitled to him aftervote on the record date. Also includes shares of common stock held in The Monaghan Foundation, Inc., as to which Mr. Monaghan has the right to vote and dispose of such shares. |
| | (10)(9) | Includes (i) 436,044 options exercisable within 60 days after the record date and (ii) 48,00012,937 shares of unvested restricted stock, 24,000 shares of which will vest within 60 days after the record date.stock. Mr. OglesbyKrenz has the right to vote, but no right to dispose of, the shares of unvested restricted stock. Also includes 14,3875,022 shares of common stock issuedvested in March 2014 under the 20082013 performance share unit program, and 16,648 shares of common stock issued under the 2010 performance share unit program, in March 2011, after 10,613 shares of common stock and 12,281 shares of commons stock were forfeited for the payment of taxes upon each respective issuance.program. Mr. OglesbyKrenz has the right to dispose of these shares issued to him under the 2013 performance share unit program, but no right to vote such shares at the 2011 Annual Meeting, of Stockholders, as such shares were issued to him after the record date. |
(11) | Includes (i) 210,605 options exercisable within 60 days after the record datenot outstanding and (ii) 57,452 shares of unvested restricted stock. Mr. Kearney has the rightentitled to vote but no right to dispose of, the shares of unvested restricted stock. Also includes 2,877 shares of common stock issued under the 2008 performance share unit program, and 8,996 shares of common
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| stock issued under the 2010 performance share unit program, in March 2011, after 2,123 shares of common stock and 6,637 shares of commons stock were forfeited for the payment of taxes upon each respective issuance. Mr. Kearney has the right to dispose of these shares, but no right to vote such shares at the 2011 Annual Meeting of Stockholders, as such shares were issued to him afteron the record date.
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(12) | Includes (i) 25,000 options exercisable within 60 days after the record date and (ii) 36,271 shares of unvested restricted stock. Ms. Chandler has the right to vote, but no right to dispose of, these shares of unvested restricted stock. Also includes 6,788 shares of common stock issued in March 2011 under the 2010 performance share unit program, after 3,262 shares of common stock were forfeited for the payment of taxes upon such issuance. Ms. Chandler has the right to dispose of these shares, but no right to vote such shares at the 2011 Annual Meeting of Stockholders, as such shares were issued to her after the record date. |
(13)(10) | Represents 28,700Includes 3,874 shares of unvested restricted stock. Mr. Parham has the right to vote, but no right to dispose of, these shares of unvested restricted stock. |
(14) | Includes (i) 17,667 options that are exercisable within 60 days after Also includes 2,133 shares of common stock vested in March 2014 under the 2013 performance share unit program. Mr. Parham has the right to dispose of the shares issued to him as payout under the 2013 performance share unit program, but no right to vote such shares at the Annual Meeting, as such shares were not outstanding and entitled to vote on the record date and (ii) 16,577date. | | | (11) | Includes 9,299 shares of unvested restricted stock. Mr. StyleVillasana has the right to vote, but no right to dispose of, these shares of unvested restricted stock. Also includes 8442,700 shares of common stock issuedvested in March 2014 under the 20082013 performance share unit program, and 2,262 shares of common stock issued under the 2010 performance share unit program, in March 2011, after 406 shares of common stock and 1,088 shares of common stock were forfeited for the payment of taxes upon each respective issuance.program. Mr. StyleVillasana has the right to dispose of thesethe shares issued to him as payout under the 2013 performance share unit program, but no right to vote such shares at the 2011 Annual Meeting, of Stockholders, as such shares were issuednot outstanding and entitled to him aftervote on the record date. | | | (12) | See footnotes (6) through (11). Also includes (i) an additional 6,141 shares of unvested restricted stock as to which the individual has voting but not dispositive power and (ii) 967 shares of common stock vested in March 2014 under the 2013 performance share unit program as to which the individual has dispositive but not voting power at the Annual meeting as such shares were not outstanding and entitled to vote on the record date. |
(15) | See also footnotes (5) through (14). |
Equity Ownership Guidelines The following are the We have adopted equity ownership guidelines forapplicable to our directors and named executive officers:officers. Under these guidelines, we expect that:
| | | | • | each director should own at least five times his or her annual retainer in value of our common stock; | | | | • | the Chief Executive Officer (“CEO”) should own at least five times his base salary in value of our common stock; and | | | | • | the Chief Financial Officer (“CFO”) and the other named executive officers should own at least three times his or her base salary in value of our common stock. |
each director should own at leastEquity ownership, for the value of shares of our equity equal to three times his or her annual retainer;
the Chief Executive Officer should own at least the value of shares of our equity equal to three times his base salary; and
the Chief Financial Officer and the other named executive officers should own at least the value of shares of our equity equal to two times his or her base salary.
The specific number of shares that each director and named executive officer must own was set using the 36-month average share price of our common stock on October 21, 2008, the adoption datepurposes of these guidelines, which share price was $19.33. The share price for these guidelines has not been reset since that date, but may be reset in the event of significant changes in the price of our common stock. Unvested restricted shares are counted toward the achievement of these guidelines, but vested and unvested options are not applicable.is determined as follows:
| | | | • | unvested restricted shares are included when calculating equity ownership; | | | | • | earned, but unvested, performance shares are included when calculating equity ownership; and | | | | • | vested and unvested options are not included when calculating equity ownership. |
We expect that our directors and named executive officers appointedto comply with these guidelines within five years after the date of adoptiontheir election or appointment. All of these guidelines to comply with the requirements of these guidelines within three years from the date of their appointment. For directors who were already serving on the Board and the named executive officers serving in their positions at the time these guidelines were adopted, we expect such persons will comply with these requirements three years after the adoption date. We believe that our current directors and named executive officers will be ablewho are subject to meet these guidelines through standard equity grants awardedare in compliance with them. We further expect that the named executive officers who are not yet subject to them. In addition, in 2010, we implementedthese guidelines based on their date of election or appointment will timely comply with these guidelines. Our equity ownership guidelines for employees that are director-level and above. Our Equity Ownership Guidelines are locatedcontained in our Corporate Governance Guidelines, which can be found on our web site atwww.asburyauto.com under “Investor Relations” at “Corporate Governance.”
Asbury Policy Regarding Hedging or Pledging of Asbury Stock Insiders of Asbury are strongly discouraged from trading in Asbury common stock on a short-term basis. In addition, Asbury prohibits its directors and officers who are subject to the reporting requirements of the Securities Exchange Act of 1934 (the “Section 16 officers”) from pledging Asbury common stock or otherwise subjecting Asbury common stock to margin calls or the ability to be sold outside of the owner’s control. All insiders of Asbury are prohibited from engaging in hedging activities involving Asbury common stock.
Table of Contents PROPOSAL NO. 1.
ELECTION OF DIRECTORS
There are no arrangements or understandings between anyDirectors and Nominees for Election as Directors
The Board is divided into three classes, with the members of each class serving a three-year term on the Board. The term of each Class I director expires at the 2015 annual meeting of stockholders, the term of each Class II director expires at the 2016 annual meeting of stockholders, and the term of each Class III director expires at the Annual Meeting. Mr. Vernon Jordan, Jr., a Class III member of the Board who has served as a director since April 2002, will not stand for reelection at the Annual Meeting. The Company thanks him for his 12 years of faithful service to the Company. Pursuant to our Restated Certificate of Incorporation and resolutions of the Board, the size of the Board will be set at eight directors following the Annual Meeting. Directors are elected by a plurality of the votes cast. This means that each of the two nominees andwill be elected if they receive more affirmative votes than any other person pursuantperson. If you vote “Withheld” with respect to which such nominee was selected. Four nominees are nominated to hold office as Class III directors for a termthe election of three years and until their respective successors have been duly elected and qualified. If a proxy votes “FOR” all of the nominees for director or withholds a vote from one or more nominees, for director, the proxy holders will follow the instructions. If a proxy does not give instructions as to how theyour shares represented thereby should be voted for each of the nominees, the shares represented by such proxy will not be voted. Any such shares not voted with respect to the person or persons indicated, although they will have no effect on the outcomebe counted for purposes of the election of directors.determining whether there is a quorum.
Each director-nominee has consented to being named in this proxy statement and has agreed to serve if elected. Management has no reason to believe that anyeither of the director-nominees will not serve if elected. If a nominee is unable or unwilling to stand for election, the Board will designate a substitute nominee or choose to further reduce the size of the Board. If a substitute nominee is designated, the proxy holders will vote your shares for the substitute nominee, unless you have withheld authority for the nominee who is not standing for election. Directors and Nominees for Election as Directors
The Board is divided into three classes, with the members of each class serving three-year terms on the Board. The term of each Class III director expires at the 2011 Annual Meeting of Stockholders, the term of each Class I director expires at the 2012 Annual Meeting of Stockholders, and the term of each Class II director expires at the 2013 Annual Meeting of the Stockholders.
On February 10, 2011, we announced the retirement of Charles R. Oglesby, our former President and Chief Executive Officer and the election of Craig T. Monaghan to the position of President and Chief Executive Officer, effective February 9, 2011. In conjunction with Mr. Oglesby’s planned retirement and for transition purposes, Mr. Oglesby was appointed as Executive Chairman until the date of his retirement on July 31, 2011. Mr. Oglesby, who was a Class III director, resigned as a member of such class and was immediately thereafter elected by the Board as a Class I director.
Pursuant to our Restated Certificate of Incorporation and resolutions of the Board, the size of the Board is currently set at ten directors. However, at a meeting of the Board on February 16, 2011, the Board approved the expansion of its size to eleven members, effective as of the date of the 2011 Annual Meeting of Stockholders. The expansion of the Board size was approved in anticipation of the election of four nominees at the 2011 Annual Meeting of Stockholders, including our new President and Chief Executive Officer.
Stockholders are entitled to one vote for each director-nominee. Shares cannot be voted for a greater number of persons than the total number of director-nominees.
Below is certain information about our director-nominees and the directors includingwho will continue to serve on the director-nominees,Board following the Annual Meeting, their principal occupation, business experience as well as other matters, and the Board’s assessment of their individual qualifications to serve on our Board. For certain additional information regarding the director-nominees and the directors includingwho will continue to serve on the director-nominees,Board following the Annual Meeting, see the sections entitled “Securities Owned by Management and Certain Beneficial Owners,” “Governance of the Company,” and “Related Person Transactions” in this proxy statement. Nominees for Election as Class III Directors Except for Upon the recommendation of the Governance and Nominating Committee, our Board has nominated Juanita James and Craig T. Monaghan our President and Chief Executive Officer, who has been nominated for election to Class III of the Board, allBoard. Both of the Class III director-nominees are currently directors of the Company. The other
nominees for election to Class III of the Board are Juanita T. James, Vernon E. Jordan, Jr., and Eugene S. Katz. If elected or re-elected at the 2011 Annual Meeting, of Stockholders, as applicable, terms of these individuals will expire at the 2014 Annual Meeting2017 annual meeting of Stockholdersstockholders or when their respective successors are duly elected and qualified.
The Board unanimously recommends you vote FOR each of these nominees. JUANITA T. JAMES(58) (61) has served as a member of the Board since October 2007, as a member of the Compensation and Human Resources Committee (also referred to in this proxy statement as the “Compensation Committee”) since May 2008, as a member of the Risk Committee since October 2012 and as a member of the Audit Committee since January 2009. Ms. James has served as the President and Chief Executive Officer of the Fairfield County Community Foundation (“FCCF”) since October 2011. Prior to joining FCCF, Ms. James served as the Vice President and Chief Marketing and Communications Officer for Pitney Bowes, Inc. (“Pitney Bowes”) from May 2007 until November 2010, during which time she also served on its CEO Council and its Corporate Social Responsibility Committee. From October 2006 to May 2007, Ms. James served as the Vice President and Chief Communications Officer for Pitney Bowes. From October 2004 until October 2006, Ms. James served as the Vice President of Direct Marketing Strategy and Business Development for Pitney Bowes. From 2002 until 2004, Ms. James served as the Vice President, Project Leader of Human Resources Transformation for Pitney Bowes, where she led a global SAP Human Resources and Payroll implementation and launched the company’s first shared services initiative. Prior to joining Pitney Bowes in 1999, Ms. James was the Executive Vice President, Marketing and Editorial of Doubleday Direct, Inc. Ms. James had a distinguished 20-year career at Time Warner, Inc., including 12 years in senior management positions. Based on her management experience at FCCF, Pitney Bowes and Doubleday Direct, the Board has determined that Ms. James brings to the Board demonstrated senior-level leadership experience. Through her various positions at Pitney Bowes, Ms. James also brings to the Board a broad understanding of sales, marketing, brand management, investor relations and general communications matters that affect large companies, which are areas that are critical to the automotive retail business and to which she can provide valuable insight. As a former member of the audit committee of The Rouse Company, the Board believes that Ms. James has gained valuable experience dealing with accounting principles, and financial reporting rules and regulations, evaluating financial results and generally overseeing thepublic company financial reporting processes of a public company that are useful in her service on the Audit Committee.processes. In addition, the Board also believes that Ms. James’ service as former Chair of the nominatingNominating and governance committeeGovernance Committee of The Rouse Company, former Board President of the Stamford Museum & Nature Center,as well as her prior and current service on thenumerous not-for-profit boards, of Reading is Fundamental, Lesley University, the First County Bank Board Corporators, and as Trustee Emeritus of Princeton University, provides her with additional experience upon which she can draw upon as a member of our Board, the Audit Committee, the Risk Committee and the Compensation Committee.
Table of Contents VERNON E. JORDAN, JR.CRAIG T. MONAGHAN(75) (57) has served as a member of the Boardour President and CEO since April 2002,February 2011, and was a member of the Audit Committee from April 2002 to February 2003. He has served as a Senior Managing Director of Lazard Frères & Co. since January 2000 and serves as a member of the board of Lazard, Ltd. Prior to joining Lazard, Mr. Jordan was a senior executive partner with the law firm of Akin, Gump, Strauss, Hauer & Feld, L.L.P., where he currently remains Senior Counsel. Mr. Jordan serves on the International Advisory Board of Barrick Gold and as a Senior Advisor to the boards of American Express Company and Xerox Corporation. During the past five years, Mr. Jordan served on the boards of the following public companies: America Online Latin Communications, Inc., American Express Company, Dow Jones & Company, Inc., J.C. Penney Company, Inc., Xerox Corporation and Sara Lee Corporation. Mr. Jordan also served on the International Advisory Board of DaimlerChrysler, and he was also a Senior Advisor to Shinsei Bank, Ltd. during the past five years.
With the various directorships he has held over the last 35 years, Mr. Jordan has gained a significant depth and breadth of knowledge relating to public company boards and the implementation and execution of their oversight responsibilities. In addition to holding the positions stated above, Mr. Jordan has held key leadership positions with prominent not-for-profit corporations and has held various presidential appointments. As such, the Board has determined that Mr. Jordan’s diverse experiences appropriately qualify him as a skilled director.
EUGENE S. KATZ(65) has served as a member of the Board and a member of the AuditExecutive Committee since January 2007. Mr. Katz has also served as the Chair of the Audit Committee since January 2009, served as a member of the Risk Management Committee (also referred to in this proxy statement as the “Risk Committee”) from January 2009 until February 2011, and became a member of the Compensation and Human Resources Committee in February 2011. He is a former partner of PricewaterhouseCoopers (“PwC”), where he began his career in 1969, and became a partner in July 1980. Mr. Katz retired from PwC in June 2006. From 2002 and through his retirement in June 2006, Mr. Katz served as the west region risk management partner of PwC. In addition, Mr. Katz was a member of the PwC Governing Board from 1992 to 1997, and from 2001 to 2005.
Mr. Katz has over 37 years of experience in public accounting, during which he was responsible for leading audit engagements of private and public companies and served a variety of clients ranging from start-up companies to larger public companies. Because of Mr. Katz’s significant exposure to complex financial reporting, accounting and risk management matters as a former public accountant, the Board has determined that Mr. Katz is well-positioned to be both the Chair of our Audit Committee, assisting the Audit Committee in fulfilling its responsibility of overseeing our independent auditors, and a valuable member of the Compensation Committee.
CRAIG T. MONAGHAN(54) has served as our President and Chief Executive Officer since FebruaryApril 2011. Prior to becoming our President and Chief Executive Officer,CEO, Mr. Monaghan served as our Senior Vice President and Chief Financial OfficerCFO since May 2008, and continuescontinued as our principal financial officer until we hirehired a new chief financial officer.CFO in June 2011. Prior to joining us, Mr. Monaghan served as the Chief Financial OfficerCFO at Sears Holding Corp., a national broadline retailer, between September 2006 and January 2007. From May 2000 to August 2006, he served as Executive Vice President and Chief Financial OfficerCFO of AutoNation, Inc., the largest automotive retailer in the United States. Previously, Mr. Monaghan served as Chief Financial OfficerCFO of iVillage.com, which he helped take public in 1999. Earlier in his career, he was employed by Reader’s Digest Association, Bristol-Myers Squibb Co. and General Motors Corp.
Mr. Monaghan has over two decades of experience as a finance executive at large public companies, including AutoNation, Inc., the nation’s largest automotive retailer. Mr. Monaghan brings to our Board broad executive management skills, as well as in-depth experience in responding to financial, strategic and operational challenges, which skills he has demonstrated throughout his career, including by successfully navigating the Company through the significant challenges it faced during the recent economic downturn and downturn in the automotive retailing industry. The Board believes that Mr. Monaghan’s significant experience in overseeing financial reporting, accounting and risk management matters for the Company and other public companies well-positions him to serve as a member of the Board. Current Class I Directors The Class I directors are not standing for re-electionreelection at the upcoming annual meeting.Annual Meeting. Their terms expire at the 2012 Annual Meeting2015 annual meeting of Stockholders.stockholders. JANET M. CLARKE(58) (61) has served as a member of the Board since April 2005 and as a member of the Audit Committee since October 2012. She also served on the Audit Committee from April 2005 to January 2009. Ms. Clarke has served as a member of the Human Resources and Compensation Committee (also referred to in this proxy statement as the “Compensation Committee”) since April 2005 and was appointed Chair of the Compensation Committee in August 2006. Ms. Clarke was also appointed as a member of the Governance and Nominating Committee (also referred to in this proxy statement as the “Governance Committee”) in November 2006. Ms. Clarke is the founder of Clarke Littlefield LLC, a marketing technologies advisory firm, and has served as its President since June 2003 and previously from 2001 to 2002. She was the Chief Marketing Officer of DealerTrack, Inc., a privately held automotive finance technology services company from September 2002 to June 2003. Ms. Clarke was the Chair and Chief Executive OfficerCEO of KnowledgeBase Marketing, a subsidiary of Young and Rubicam, Inc., from February 2000 through February 2001. Ms. Clarke served as Managing Director, Global Database Marketing at Citibank for Citigroup’s consumer business from May 1997 until February 2000. Within the last five years, Ms. Clarke was a director and a member of the Audit Committee and the Chair of the Compensation Committee of ExpressJet Holdings, Inc., a director and Chair of the Compensation Committee of eFunds Corporation, and a director and the Chair of the Governance and Nominating Committee of Gateway, Inc. Ms. Clarke offers significant business experience to our Board particularly in the areas of marketing and marketing technology, as a result of the various senior management positions she has held in large corporations and at Clarke Littlefield.of various sizes. In addition, given the public and private company directorships that she has held during her career, the Board has determined that Ms. Clarke has a broad range of experience as a director and a deep understanding of board oversight and the exercise of appropriate diligence, which makes her an appropriate and valuable member of our Governance Committee. Furthermore, the Board believes that Ms. Clarke’s prior positions as Chair of the Compensation Committee of eFunds and Chair of the Compensation Committee of ExpressJet Holdings provides her with valuable experience with respect to compensation of senior executives and that it is appropriate for her to serve as the Chair of our Compensation Committee. The Board also believes that Ms. Clarke has the requisite experience to serve as a member of our Audit Committee. DENNIS E. CLEMENTS (66)(69) has served as a member of the Board since September 2006. Mr. Clements became a member of the Compensation Committee and the Governance Committee in October 2006, and a member of the Executive Committee in January 2007.2007 and a member of the Risk Management Committee in July 2013. He was appointed Chair of the Governance Committee in May 2007, and Chair of the Executive Committee in January 2009. In addition, Mr. Clements was appointed a member of the Succession Planning Committee in October 2010, a temporary committee of the Board which was disbanded in February 2011.2007. Mr. Clements is currently a consultant with Discretionary Effort L.L.C., which he founded in 2005. From June 2000 to June 2005, Mr. Clements was an officer of Toyota Motor Sales, USA, serving as Group Vice President and General Manager of Lexus USA. He was President of Toyota’s Central Atlantic division from June 1991 to June 2000, and held a number of other senior sales management positions at Toyota. Earlier in his career, Mr. Clements worked with Ford Motor Co. for 15 years, progressing through a variety of sales and management positions in the Ford and Lincoln-Mercury divisions. Mr. Clements also serves on the advisory boardsboard of Noribachi L.L.C., a company that produces smart energy products, including LED lighting, consumer electronics, solar solutions, and its affiliate, Qnuru.provides engineering and design services for such products.
Table of Contents Mr. Clements has over 40 years of experience, including executive level appointments, in the automotive business. Most notably, with his twenty-five years of experience at Toyota and fifteen years of experience at Ford, the Board has determined that Mr. Clements brings a vast knowledge of the automotive industry and a valuable perspective on automotive manufacturers to the Board. Given his significant executive experience, the Board believes that Mr. Clements has a broad understanding of board oversight within the automobile industry, giving him experience upon which to draw as he serves as the Chair of our Executive and Governance Committees,Committee, as a member of our Compensation Committee and as a member of our Compensation and Human ResourcesRisk Management Committee. MICHAEL J. DURHAMEUGENE S. KATZ(60) (68) has served as a member of the Board since February 2003 and as the Company’s Non-Executive Chairman from January 2004 until February 2011. He has also served on the Governance Committee since February 2005 and the Risk Committee since January 2009, becoming the Chair of the Risk Committee in February 2011. In addition, Mr. Durham served as a member of the Executive Committee from March 2004 until February 2011, a member of the Succession Planning Committee, a temporary committee of the Board, from October 2010 until February 2011 when such Committee was disbanded, a member of the Audit Committee from February 2003 until July 2006, and served as the Chair of the Governance Committee from April 2005 until May 2007. He is the Chief Executive Officer and founder of Cognizant Associates, Inc., a consulting firm, which he founded in August 2000. From July 1996 until October 1999, Mr. Durham served as the President and Chief Executive Officer of Sabre, Inc., and as President from March 1995 to July 1996. Prior to joining Sabre, Inc., Mr. Durham spent sixteen years with AMR/American Airlines, serving as Senior Vice President and Treasurer of AMR and Senior Vice President of Finance and Chief Financial Officer of American Airlines. Mr. Durham is currently the Non-executive Chairman of the board of Acxiom Corporation, and a member of the board and a member of the Audit Committee of Hertz Global Holdings. Other public company directorships held bysince January 2007. Mr. Durham duringKatz has also served as the past five years include AGL Resources, Inc., where he served at various times as a memberChair of the Audit Committee the Compensation Committee and the Environment and
Corporate Responsibility Committee; Bombardier Inc., where hesince January 2009, served as a member of the AuditRisk Committee from January 2009 until February 2011, and the Pension and Oversight Committee, and Northwest Airlines Corp., where he served as the Chairman of the Audit Committee.
The Board has determined that Mr. Durham’s broad executive and board experience provides him with key skills in working with directors, understanding board processes and functions, responding to financial, strategic and operational challenges and opportunities of our business and overseeing management. Furthermore, the Board believes that the depth and breadth of Mr. Durham’s exposure to complex financial issues throughout his various senior management positions at other large corporations and his service on other public company audit committees, and in assessing the business and financial risks associated with such service, makes him a valuable asset to our Risk Committee. The Board has concluded that all of these attributes, coupled with his service on a number of large public company boards, positions him well to serve as a member of the Board.
CHARLES R. OGLESBY (64)Compensation Committee since February 2011. He is a former partner of PricewaterhouseCoopers (“PwC”), where he began his career in 1969, and became a partner in July 1980. Mr. Katz retired from PwC in June 2006. From 2002 and through his retirement in June 2006, Mr. Katz served as our President and Chief Executive Officer from May 2007 until February 2011.the west region risk management partner of PwC. In February 2011,addition, Mr. Oglesby retired from his position as our President and Chief Executive Officer, andKatz was appointed to serve as the Executive Chairman of the Board while transitioning his duties. He is expected to retire, and resign from the Board, in July 2011. Mr. Oglesby has served as a member of the PwC Governing Board since September 2006 and as a member of the Executive Committee since May 2007. From September 2006 until May 2007, Mr. Oglesby served as our Senior Vice President and Chief Operating Officer,from 1992 to 1997, and from August 2004 until March 2007, he served as Chief Executive Officer of our former South Region.2001 to 2005.
Mr. Oglesby joined us as President and Chief Executive Officer of Asbury Automotive Arkansas in February 2002. From July 1998 to February 2000, Mr. Oglesby served as President and Chief Operating Officer of the First America Automotive Group in San Francisco. Mr. Oglesby brings to the Board a deep knowledge of the automobile retail industry. WithKatz has over 3040 years of experience in the automotive retail industry in numerous sales,public accounting, during which he was responsible for leading audit engagements of private and public companies and served a variety of clients ranging from start-up companies to larger public companies. Because of Mr. Katz’s significant experience with complex financial reporting, accounting and risk management and ownership-level positions in multiple geographies, the Board believes that Mr. Oglesby not only possesses extensive management skills, but also significant knowledge in the important areas of sales and marketing. In addition, Mr. Oglesby has held various leadership roles on National and Regional Dealer Councils, which provide him additional insight into the automotive retail industry and the important current trends and risks related thereto. As our recently retired President and Chief Executive Officer and now Executive Chairman,matters as a former public accountant, the Board has determined that Mr. Oglesby remains uniquely familiar withKatz is well-positioned to be both the Chair of our business andAudit Committee, assisting the automobile industry, which allows him to provide a wealth of knowledge to assist the BoardAudit Committee in fulfilling its responsibilities toresponsibility of overseeing our stakeholders. In addition, Mr. Oglesby isindependent registered public accounting firm, and a valuable member of the board of the Gwinnett Chamber of Commerce and the Gwinnett Medical Center Foundation, which the Board believes provides additional insight into Board oversight and the exercise of appropriate diligence.Compensation Committee.
Current Class II Directors The Class II directors are not standing for re-electionreelection at the upcoming annual meeting.Annual Meeting. Their terms expire at the 2013 Annual Meeting2016 annual meeting of Stockholders.stockholders. THOMAS C. DeLOACH, JR. (63)(66) has served as our Non-Executive Chairman since August 2011 and, prior to that time, served as our Lead Independent Director since February 2011. Mr. DeLoach has served as a member of the Board and as a member of the Audit Committee since January 2007, a member of the Governance and Nominating Committee (also referred to in this proxy statement as the “Governance Committee”) since April 2012, a member of the Risk Management Committee (also referred to in this proxy statement as the “Risk Committee”) since January 2009, of which he was Chair until February 2011, Chair of the Succession Planning Committee from October 2010 until February 2011, when such Committee was disbanded, and a member of the Executive Committee since February 2011.2011 and its Chair since May 2013. He is a former executive of Mobil Corporation (“Mobil”) and served in various positions at Mobil from July 1969 until March 2000. From 1998 to 2000, Mr. DeLoach was the president of the Global Midstream Division at Mobil. From 1994 to 1998, Mr. DeLoach served as the Chief Financial OfficerCFO of Mobil. From May 2000 to July 2002, Mr. DeLoach was a member of management of a NASCAR racing team owned principally by Roger Penske. In September 2002, he formed PIT Instruction & Training, LLC, of which he is a principal and a managing partner.member. In addition, since June 2005, Mr. DeLoach has served as a principal and a managing partnermember of Red Horse Racing II, LLC, a NASCAR Camping World Truck Series race team. Mr. DeLoach is a member of the Board of Trustees, the CompensationCorporate Governance and Nominating Committee and the Chair of the AuditCompensation Committee of Liberty Property Trust, a self-managed real estate investment trust. Mr. DeLoach was also formerly the Chair of the Audit Committee of Liberty Property Trust. With his managerial and board experience, the Board has determined that Mr. DeLoach brings to the Board demonstrated critical leadership skills, which skills are appropriate for a Lead Independent DirectorNon-Executive Board Chairman and a member of the Executive Committee. In addition, as the former Chief Financial OfficerCFO of Mobil, coupled with his former position as Chair of the Audit Committee of Liberty Property Trust, Mr. DeLoach has been exposed toexperience with complex accounting, financial and risk-related issues, such as the application of accounting principles and financial reporting rules and regulations, and evaluation of financial results and general oversight of the financial reporting processes and risk analyses of large businesses. As a result of his broad accounting, financial and executive experience, the Board believes that Mr. DeLoach is a valuable member of our Board, and Audit Committee, Governance Committee and Risk Committees,Committee and chair of our Executive Committee, and is well-qualified to assist in the auditor oversight function as an Audit Committee member.
Table of Contents MICHAEL S. KEARNEY(62) has served as a member of the Board since October 2012 and as our Executive Vice President and COO since February 2011. Prior to February 2011, Mr. Kearney served as our Senior Vice President and COO from March 2009. Before becoming our Senior Vice President and COO, Mr. Kearney served as the President and CEO of our former Eastern Region, which included Nalley Automotive Group in Georgia, Crown Automotive Company in North Carolina, South Carolina, Virginia and New Jersey, and Coggin Automotive Group and Courtesy Auto Group in Florida. Mr. Kearney joined Crown Automotive Company in 1990 as its CFO, and assumed the role of its President and CEO in September 2000. The Company acquired Crown Automotive Company in 1998. Mr. Kearney has developed extensive experience in the management and operations of automotive retailers throughout his over three decades of experience. Mr. Kearney brings to our Board an in-depth understanding of the operations of the Company and significant experience responding to the financial, strategic and operational challenges facing the Company and automotive retailers generally. The Board believes that Mr. Kearney’s extensive automotive retail experience well-positions him to serve as a member of the Board. PHILIP F. MARITZ(50)(53) has served as a member of the Board, and was a member of the Audit Committee, since April 2002. In April 2012, Mr. Maritz resigned from the Audit Committee and was appointed to serve on the Risk Committee as Chairman. He is the co-founder and President of Maritz, Wolff & Co., which manages the Hotel Equity Fund, a private equity investment fund that invests in luxury hotels and resorts. In 1990, he founded Maritz Properties, a commercial real estate development and investment firm where he serves as President. He is also athe Managing Director of Broadreach Capital Partners, a private equity real estate investment fund. With his significant real estate investment and management, strategic and operational experience as President of Maritz, Wolff & Co. and Maritz Properties, along with his financial and investment experience as a Managing Director of Broadreach Capital Partners, the Board has determined that Mr. Maritz has valuable insight into the effective strategic management of businesses.businesses, including with respect to the evaluation of operational, financial and transactional risks. In addition, Mr. Maritz’s experience in marketing and sales of luxury goods and services and his strategic management of luxury brands is relevant to our Company and our business. Mr. Maritz’s leadership positions at these various companies demonstrate his management abilities and his understanding of business and financial strategy and operations, making him a valuable member of our Audit and Risk Committees.Committee. Furthermore, Mr. Maritz is, or has been, a director of a number of privately-held companies, including Rosewood Hotels and Resorts and Dolce Hotels and Resorts, and a number of non-profit organizations, including Princeton University Art Museum Advisory Council, Stanford Business School Management Board, the American University of Cairo and the boardMetropolitan Museum of the Stanford Graduate School of Business,Art Visiting Committee for Photography, which the Board believes provides additional insight into Board functions, including appropriate oversight, risk management and diligence.fiduciary obligations. JEFFREY I. WOOLEY(66) has served as a member of the Board since March 2003 and as a member of the Risk Committee of the Board since April 2010. Mr. Wooley also served as President and Chief Executive Officer of Asbury Automotive Tampa G.P. LLC, a wholly owned subsidiary of the Company (“Asbury Tampa”) from September 1998 until February 2005 and as the non-executive Chairman of Asbury Tampa from March 2005 until March 2010. Mr. Wooley began his automotive career in 1965 and opened his first dealership in 1975. Prior to selling his dealerships to us in 1998, Mr. Wooley owned and operated nine franchises. He is a past President of the Pontiac National Dealer Council.
Mr. Wooley has over 40 years of experience in multiple facets of the automobile industry—including as a former salesperson, general manager and owner of several dealerships. Mr. Wooley has extensive experience dealing with both foreign and domestic automobile manufacturers, including serving as a field representative for the Pontiac Division of General Motors for four years, which is invaluable to the Board with respect to the Company’s relations with automobile manufacturers. Mr. Wooley’s extensive knowledge of the automobile industry offers the Board a deep understanding of our business. Furthermore, the Board has determined that Mr. Wooley brings significant institutional knowledge of our Company to the Board as he has been affiliated with the Company since its inception and has served in various significant management positions within the Company. With such knowledge of our business and the automobile industry, the Board believes that Mr. Wooley is an invaluable member of the Risk Committee as he has an astute ability to identify key risks in our business and the automotive retailing industry.
GOVERNANCE OF THE COMPANY Recent Company Leadership Changes
On February 10, 2011, we announced the following changes to our leadership structure, effective as of February 9, 2011:
Charles R. Oglesby’s retirement as President and Chief Financial Officer, resignation as a member of Class III of the Board and his appointment as a Class I member of the Board and Executive Chairman of the Board until July 31, 2011, at which time Mr. Oglesby will resign from all positions with the Company, all pursuant to the provisions of the Second Amended and Restated Employment Agreement between Mr. Oglesby and the Company;
the election of Craig T. Monaghan to the position of President and Chief Executive Officer; and
the promotion of Michael S. Kearney to Executive Vice President and Chief Operating Officer.
In connection with the appointment of Mr. Oglesby as Executive Chairman of the Board, Mr. Durham resigned as our Non-Executive Chairman. At such time, the Board appointed Thomas C. DeLoach, Jr. as the Lead Independent Director. For a further discussion of our Board’s leadership structure, the “Board Leadership Structure” discussion on page 22 of this proxy statement.
Independence of Directors and Director-Nominees The Board has determined that all of the following eightdirectors, other than Messrs. Monaghan and Kearney, who are employees of its eleven directors and director-nomineesthe Company, qualify as independent directors under the rules of the New York Stock Exchange (the “NYSE”)NYSE and the Company’s Corporate Governance Guidelines: Ms. Clarke and Ms. James, and Messrs. Clements, DeLoach, Durham, Jordan, Katz and Maritz.Guidelines. In order to qualify as an independent director of the Company, the Board must affirmatively determine, based upon all relevant facts and circumstances, that the director does not have a material relationship with the Company that would affect his or her independence, either directly or as a partner, shareholderstockholder or officer of an organization that has a relationship with the Company. The Board has adopted the categorical independence standards set forth in the Company’s Corporate Governance Guidelines and below to assist it in making determinations of director independence. These standards comply with, and in some respects are more stringent than, the NYSE’s categorical standards for director independence:independence. Our Corporate Governance Guidelines can be found on our web site atwww.asburyauto.com under “Investor Relations” at “Corporate Governance.” he or she has not been employed by, and none of his or her immediate family members (as defined by the NYSE) has been an executive officer of, the Company at any time within the three years preceding the date of this determination;
he or she has not received, and none of his or her immediate family members has received, more than $120,000 per yearFurthermore, in direct compensation from the Company, other than director and committee fees and pension or other forms of deferred compensationorder for prior service (provided such compensation is not contingent in any way on continued service), at any time within the three years preceding the date of this determination;
he or she is not a current partner or employee of a firm that is the Company’s internal or external auditor; none of his or her immediate family members is a current partner of such a firm; none of his or her immediate family members is a current employee of such a firm and personally works on the Company’s audit; and neither he, she nor any of his or her immediate family members was, within the last three years, a partner or employee of such a firm and personally worked on the Company’s audit within that time;
he or she has not, and none of his or her immediate family members has, at any time within three years from the date of this determination, been employed as an executive officer of another company where any of the Company’s present executive officers serve on that company’s compensation committee; and
he or she is not an executive officer or an employee, and none of his or her immediate family members is an executive officer, of a company (other than a tax exempt organization) that, during the current fiscal year or last three completed fiscal years, made payments to, or received payments from, the Company for property or services in an amount that, in any single year, exceeds the greater of $1 million, or 2% of such other company’s consolidated gross revenues.
Furthermore, a director cannotto qualify as independent for Audit Committee purposes, if the director other than in his or her capacity as a member ofalso must satisfy the Audit Committee, the Board or any other Board committee:
accepts directly or indirectly any consulting, advisory or other compensatory fee from the Company. Compensatory fees do not include the receipt of fixed amounts of compensation under a retirement plan (including deferred compensation) for prior service with the Company provided that such compensation is not contingent in any way on continued service; or
is an affiliated person of the Company.
In addition to satisfying the above-describedadditional independence criteria specified in Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In order for a director to qualify as independent for Compensation Committee purposes, pursuant to the charter of our Compensation Committee, the director must meet the Company’s categorical independence standards described above, and must also be deemed (i) a “non-employee director” for purposes of Rule 16b-3 under the Securities Exchange Act, of 1934 (the “Exchange Act”), and (ii) an “outside director” for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). Rule 16b-3 defines “non-employee director” as a director who:
Table of Contents is not currently an officer of, or is not otherwise currently employed by,In making its independence determinations, the Company or a parent or subsidiary ofBoard considered the Company;
does not receive compensation from the Company or a parent or subsidiary of the Company, for services rendered as a consultant or in any capacity other than as a director, except for an amount that does not exceed $120,000;relationships and
does not possess an interest in any other transaction with the Company for which disclosure would be required transactions described under the “Related Person Transactions” sectionbelow, including any relationship or transaction pursuant to which any of this proxy statement.
Section 162(m)our non-employee directors, entities associated with those directors, or members of the Code and its corresponding regulation, Regulation 1.162-27, defines “outside director” astheir immediate families purchased or leased a director who:
is notvehicle at a current employee of the Company;
is not a former employee of the Company receiving compensation for prior service (other than benefits under a tax-qualified retirement plan);
has not been an officer of the Company; and
receives no remuneration from the Company in any capacity other than as director.
dealership. The Board has affirmatively determined by applying the categorical standards set forth above, that none of the Company’srelationships 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 has any material relationship withunder our categorical independence standards set forth in our Corporate Governance Guidelines and the Company, either directly or as a partner, stockholder or officer of an organization that has a relationship with the Company.NYSE listing standards. Nomination of Directors The Governance and Nominating Committee evaluates, and recommends to the full Board, nominees to serve as directors on our Board. Except for Mr. Monaghan, our President and Chief Executive Officer, theThe nominees for election at the 2011 Annual Meeting of Stockholders are allboth current directors and were originally recommended to the Board by various sources, including other directors, a third-party executive search firm engaged by the Company and other stakeholders. In addition to these sources, in the future, director candidates may be identified by management or additional third-party executive search firms that may from time to time be engaged to assist in identifying and evaluating potential nominees. Candidates are evaluated in light of the then-current composition of the Board, the operating requirements of the Company and the long-term interests of the stockholders. In performing this evaluation, the Governance and Nominating Committee will consider the diversity, age, skills and other experience of the candidate, and other factors it deems appropriate, given the needs of the Board and the Company at the appropriate time, to maintain what it considers to be an appropriate balance of knowledge, experience and capabilities. Qualified director nominees should possess an appropriate balance of the following qualities: high moral character and personal integrity, a high level of leadership or managerial experience, experience and knowledge relative to matters affecting the Company, the ability and willingness to contribute to the Board, the ability to exercise sound, independent business judgment, a long-term commitment to the interests of stockholders and growth of the Company, freedom from conflicts of interest, the ability to dedicate sufficient time, energy and attention to Board activities and the diligent performance of his or her duties, and reflect the diversity of the Company’s stockholders, employees, customers and communities. The Board will consider director candidates recommended by the Company’s stockholders. In order to make such a nomination, the stockholder must (i) be a record holder of shares of common stock on the record date, (ii) be entitled to vote for the election of such director(s) and (iii) comply with the notice procedures set forth in the Company’s bylaws.Bylaws. If you would like a copy of the Company’s bylaws,Bylaws, please notify the Company at the address given on the first page of this proxy statement. The bylawsBylaws are also available on the Company’s web site atwww.asburyauto.com under “Investor Relations” at “Corporate Governance.” Notice of a stockholder’s recommendation with regard to nominees for election to the Board must be delivered to, or mailed to and received by, the Secretary of the Company not later than 90 days or earlier than 120 days prior to the anniversary date of the preceding year’s annual meeting of stockholders. If the annual meeting of the stockholders for which the recommendation is submitted is more than 30 days before or more than 60 days after the first anniversary of the preceding year’s annual meeting of stockholders, such recommendation must be received by the Secretary of the Company not earlier than 120 days prior to the annual meeting and not later than 90 days prior to such annual meeting or the 10th day following the day on which public announcement of the annual meeting date is first made by the Company. The stockholder’s notice shall be signed by the stockholder of record who intends to recommend a nominee, and shall set forth: | | | (A) as to each person whom the stockholder proposes to nominate for election or reelection as a director: (1) all information relating to such person that is required to be set forth in the notice pursuant to Section 2.07 of the Company’s Bylaws (and Items 403 and 404 under Regulation S-K); (2) a written questionnaire with respect to identity, background and qualification of the proposed nominee, (3) a written representation and agreement that the proposed nominee (i) is not and will not become a party to (x) any agreement or similar understanding that the nominee, if elected, will adopt a specific voting commitment on any issue or question that has not been disclosed to the Company or, (y) any voting commitment that could limit or interfere with such person’s fiduciary duty under applicable law, (ii) is not and will not become a party to any agreement or similar understanding with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service as a director, that has not been disclosed to the Company, and (iii) if elected, will comply with all applicable publicly disclosed corporate governance, conflict of interest, confidentiality, stock ownership and trading policies of the Company, and (4) all other information relating to such person that is required to be disclosed in solicitation of proxies for the election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act, including, the nominee’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected; and |
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| | | (B) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (1) the name and address of such stockholder, as they appear on the Company’s books, and of such beneficial owner, (2) the number of shares of the Company which are owned of record and beneficially by such stockholder and such beneficial owner, (3) a representation that such person that is required to be set forth in the notice pursuant to Section 2.07 of the Company’s Bylaws (and Items 403 and 404 under Regulation S-K); (2) a written questionnaire with respect to identity, background and qualification of the proposed nominee, (3) a written representation and agreement that the proposed nominee (i) is not and will not become a party to (x) any agreement or similar understanding that the nominee, if elected, will adopt a specific voting commitment on any issue or question that has not been disclosed to the Company or, (y) any voting commitment that could limit or interfere with such person’s fiduciary duty under applicable law, (ii) is not and will not become a party to any agreement or similar understanding with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service as a director, that has not been disclosed to the Company, and (iii) if elected, will comply with all applicable publicly disclosed corporate governance, conflict of interest, confidentiality, stock ownership and trading policies of the Company, and (4) all other information relating to such person that is required to be disclosed in solicitation of proxies for the election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act, including, the nominee’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected; and (B) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (1) the name and address of such stockholder, as they appear on the Company’s books, and of such beneficial owner, (2) the number of shares of the Company which are owned of record and beneficially by such stockholder and such beneficial owner, (3) a representation that such
stockholder is entitled to vote at the meeting and intends to appear in person or by proxy at the meeting to nominate the person specified in the notice, (4) a representation whether the stockholder or beneficial owner, if any, intends or is part of a group that intends (x) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Company’s outstanding capital stock required to elect the nominee and/or (y) otherwise to solicit proxies from stockholders in support of such nomination, (5) a description of any Derivative Interest (as defined in the Bylaws), (6) any proxy, contract, or similar understanding that increases or decreases the voting power of such stockholder or beneficial owner, (7) any dividend rights held of record or beneficially by the stockholder on shares of the Company that are separated or severable from the underlying shares, (8) any performance-related fees (other than an asset-based fee) to which the stockholder or beneficial owner may be entitled as a result of any increase or decrease in the value of shares of the Company or Derivative Interests; and (9) any other information relating to such stockholder or beneficial owner that would be required to be disclosed in a proxy statement or other filing required pursuant to Section 14(a) of the Exchange Act. |
Communications with the Board We have a Stockholder Communication Policy with established procedures for stockholders and interested parties to communicate directly with the Board, with our non-management directors, or with a particular director. The stockholder or interested party should send written communication to (i) the Lead Independent Director, if applicable, (ii) the Chairman of the Board or Chair of the appropriate committee, (iii) the non-management directors or (iv) an individual director, in care of the Corporate Secretary, at Asbury Automotive Group, Inc., 2905 Premiere Parkway NW, Suite 300, Duluth, GA 30097. Any communications relating to the Company’s auditing, accounting, internal controls, or fraud or unethical behaviors should be directed to the attention of the Chair of the Audit Committee in care of the Corporate Secretary, at the foregoing address. The Audit Committee will respond to such communication, if appropriate, in accordance with the procedures established with respect to such matters. Any written communication should include the name and address of the stockholder or interested party sending such communication so that a response can be provided, if necessary or appropriate. Stockholders and interested parties may, however, remain anonymous. If the stockholder or interested party desires that such communication be kept confidential from management, the envelope must be clearly marked “confidential,” and the Corporate Secretary will then forward the communication, unopened, to the individual addressee. Committees of the Board The Board has asestablished five separately designated standing committees anto assist the Board in discharging its responsibilities: the Audit Committee, athe Compensation and Human Resources Committee, (also referred to as the “Compensation Committee”), anGovernance Committee, the Executive Committee, a Governance and Nominating Committee (also referred to as the “Governance Committee”) and a Risk Management Committee (also referred to as the “Risk Committee”). The Board also formed a Succession Planning Committee in October 2010, which was disbanded in February 2011.Committee. Audit Committee The members of the Audit Committee during 20102013 were Messrs. Katz (Chair), and DeLoach, and Maritz,Ms. James and Ms. James.Clarke. The Committee held nine meetings in 2010. In accordance with the NYSE’s rules, all members2013. Our Board has determined that each member of the Audit Committee meetmeets the requisite independence and other qualification requirements for Audit Committee members and are financially literate.audit committee membership. Messrs. DeLoach and Katz were determined by the Board to be “audit committee financial experts” as that term is defined bywithin the SEC. The chartermeaning of Item 407(d)(5) of Regulation S-K under the Exchange Act. Each year, the Audit Committee is available on our web site atwww.asburyauto.com under “Investor Relations” at “Corporate Governance.” This Committee retains thean auditing firm engaged each yearto serve as our independent auditors.registered public accounting firm. With management and the independent auditors,registered public accounting firm, the Committee reviews the financial statements, oversees the financial reporting process and assesses the adequacy of basic accounting services rendered to us. The Audit Committee’s review of
financial statements is more fully described below under the caption “Report of the Audit“Audit Committee Report,” and its responsibilities are outlined in the Audit Committee Charter. Compensation and Human Resources Committee
The memberscharter of the Compensation and Human ResourceAudit Committee during 2010 were Ms. Clarke (Chair), Mr. Clements, and Ms. James. In February 2011, Mr. Katz was appointed as a member of this Committee. The Compensation Committee held 13 meetings in 2010, four of which were joint meetings with the Succession Planning Committee. Each member of the Compensation and Human Resources Committee is an independent director and meets the additional criteria to qualify for independence for the Compensation and Human Resources Committee’s purposes. The Compensation and Human Resources Committee’s charter is available on our web site atwww.asburyauto.com under “Investor Relations” at “Corporate Governance.”
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Compensation and Human Resources Committee The members of the Compensation and Human Resources Committee during 2013 were Ms. Clarke (Chair), Mr. Clements, Ms. James and Mr. Katz. The Compensation Committee held ten meetings in 2013. Our Board has determined that each member of the Compensation Committee meets the requisite independence requirements for Compensation Committee membership, including qualifying 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. On February 13, 2013, the Compensation Committee amended its charter to address recent NYSE rule changes regarding compensation committee member independence and the retention and independence of compensation consultants and other advisors. The Compensation Committee establishes and reviews our general compensation philosophy with the input of management, oversees the development and implementation of our compensation philosophy to ensure that our compensation plans are consistent with our general compensation philosophy, establishes the compensation to be paid to the Chief Executive Officer,CEO, reviews the recommendations of the Chief Executive OfficerCEO as to the appropriate compensation of our other corporate officers, generally administers and issues awards under our equity incentive plans from time to time in effect, oversees our other benefit plans and assists the Board in its succession planning. See “Compensation Discussion and Analysis” for a discussion of our compensation philosophy and how the Compensation and Human Resources Committee determines the compensation of our executive officers. The Compensation Committee may, in its discretion, delegate all or a portion of its duties and responsibilities to a subcommittee of the Committee. The Compensation Committee’s charter is available on our web site atwww.asburyauto.com under “Investor Relations” at “Corporate Governance.” Governance and Nominating Committee The members of the Governance Committee during 2013 were Mr. Clements (Chair), Ms. Clarke and Mr. DeLoach. The Governance Committee held seven meetings in 2013. Our Board has determined that each member of the Governance Committee meets the requisite independence requirements for Governance Committee membership under NYSE listing standards and the categorical independence standards set forth in the Corporate Governance Guidelines. The Governance Committee assists the Board by identifying qualified individuals to become directors, recommending the composition of the Board and its committees, and the compensation to be paid to the directors. It is also responsible for monitoring the process to assess the Board’s effectiveness, developing and implementing our Corporate Governance Guidelines and many of our corporate governance policies, including the oversight of compliance under our Equity Ownership Guidelines, our Code of Business Conduct and Ethics and our Related Party Transaction Policy. The charter of the Governance Committee is available on the Company’s web site atwww.asburyauto.com under “Investor Relations” at “Corporate Governance.” Executive Committee The members of the Executive Committee during 20102013 were Messrs. ClementsDeLoach (Chair), Durham,Clements, and Oglesby. The Committee held one meeting in 2010. In February 2011, Mr. DeLoach was appointed as a member Committee, replacing Mr. Durham. As such, the current members of the Executive Committee are Messrs. Clements (Chair), DeLoach and Oglesby.Monaghan. The Executive Committee has exercised and may exercise all the authority of the Board when the Board is not in session, except that it does not have the authority toto: (i) approve or propose to stockholders actions required by the Delaware General Corporation Law to be approved by stockholders; (ii) adopt, amend or repeal our by-laws;Bylaws; (iii) authorize distributions; (iv) fill vacancies on the Board or any of its committees; (v) approve a plan of merger, consolidation or reorganization not requiring stockholder approval; (vi) authorize or approve the reacquisition of shares, except according to a formula or method prescribed by the Board; or (vii) authorize or approve the issuance or sale or contract for sale of shares or determine the designation and relative rights, preferences and limitations of a class or series of shares. Governance and Nominating Committee
The members of the Governance and Nominating Committee during 2010 were Messrs. Clements (Chair) and Durham, and Ms. Clarke. During 2010, the Governance and Nominating Committee held three meetings. The charter of the Governance and Nominating Committee is available on the Company’s web site atwww.asburyauto.com under “Investor Relations” at “Corporate Governance.”
The Governance and Nominating Committee assumes the nominating and corporate governance duties on behalf of the Board. The Governance and Nominating Committee assists the Board by identifying qualified individuals to become directors, recommending the composition of the Board and its committees, and the compensation to be paid to the directors. It is also responsible for monitoring the process to assess the Board’s effectiveness, developing and implementing our corporate governance guidelines and many of our corporate governance policies, including the oversight of compliance under our Equity Ownership Guidelines, our Code of Business Conduct and Ethics and our Related Party Transaction Policy.
Risk Management Committee The members of the Risk Management Committee during 20102013 were Messrs. DeLoach (Chair), Durham, Katz and Wooley. In February 2011, Mr. Maritz was appointed as a member of the Risk Management Committee, replacing Mr. Katz. In addition, in February 2011, Mr. Durham was appointed the Chair of this Committee. As such, the current members of the Risk Management Committee are Messrs. Durham (Chair), DeLoach, Maritz and Wooley.Clements (as of July 2013), and Ms. James.
Table of Contents During 2010, the The Risk Management Committee held four meetings.seven meetings in 2013. The charter of the Risk Management Committee is available on the Company’s web site atwww.asburyauto.com under “Investor Relations” at “Corporate Governance.” The Risk Management Committee assists the Board in fulfilling its responsibility of overseeing the identification, assessment and management of our key operational risks.risks and provides assistance to management in evaluating major financial transactions, including acquisitions and divestitures.
Succession Planning Committee
At a meeting The charter of the BoardRisk Committee is available on October 19, 2010, and upon the recommendation of the Governance Committee, the Board formed a special Succession Planning Committee to assist the Board in fulfilling its succession planning duties. On February 16, 2011, upon the recommendation of the Governance Committee, the Board determined that the Succession Planning Committee had fulfilled its responsibilities and disbanded the Committee, effective immediately. The members of the Succession Planning Committee were Messrs. DeLoach (Chair), Clements and Durham. The Succession Planning Committee held eight meetings, four of which were joint meetings with the Compensation and Human Resources Committee.Company’s web site atwww.asburyauto.com under “Investor Relations” at “Corporate Governance.”
Director Fees; Attendance at Meetings Directors who are employees of the Company dodid not receive a retainer or any other fees for service on the Board or its committees.committees in 2013. All other directors (“non-management directors”) receivereceived the annual retainer and meeting fees described below, except for Mr. Oglesby who, during the termbelow. In addition, in which he serves as Executive Chairman, is entitled only to the payments pursuant to his employment agreement. In addition,2013, the non-management directors receive an annualreceived a grant of restricted stock valued at $70,000 that vested immediately upon grant and the use of a motor vehicle (including transporting the vehicle to the director, any taxes payable relating to the vehicle and repair, maintenance and service of the vehicle). Our directors also receive expense reimbursements in connection with Board and committee meeting attendance. In 2010,2013, compensation earned bypaid to the non-management directors was as follows: Annual Retainers (paid quarterly in advance): the Non-Executive Chairman—$150,000;
the other non-management directors—$40,000;
the Audit Committee, Compensation and Human Resources Committee, Risk Committee and Succession Planning Committee chairs—$15,000 (the Risk Committee chair received a $10,000 retainer until October 2010); and
the Governance Committee chair—$10,000.
| | | | • | the Lead Independent Director/Non-Executive Chairman—$150,000; | | | | • | the other non-management directors—$40,000; | | | | • | the Audit Committee, Compensation Committee, Governance Committee and Risk Committee chairs—$15,000. |
Meeting Fees (paid quarterly in arrears): | | | | • | Board, Audit Committee, Compensation Committee, Governance Committee and Risk Committee in person meetings—$2,000; | | | | • | Board, Compensation Committee, Governance Committee and Risk Committee, telephonic meetings—$1,000; | | | | • | Audit Committee telephonic meetings—$1,500; and | | | | • | Executive Committee meetings, in person or telephonic—$1,500 (payable to the Executive Committee chair only). |
Executive Committee meetings, in person or telephonic—$1,500 (payable to the Executive Committee chair only);
Board, Audit Committee, Compensation and Human Resources Committee, Risk Committee, the Governance Committee and Succession Planning Committee in person meetings—$2,000;
Board, Compensation and Human Resources Committee, Risk Committee, Governance Committee and Succession Planning Committee telephonic meetings—$1,000; and
Audit Committee telephonic meetings—$1,500.
In addition, the Chairman of the Board was paid meeting fees for his attendance at any committee meeting of which he was not a member.
On February 17, 2010, upon the recommendation of the Compensation and Human Resources Committee, the Board determined that, upon the expiration of Mr. Wooley’s employment agreement on March 31, 2010, he be compensated for his service on the Board consistent with the compensation paid to non-management directors. During the term of his employment agreement, Mr. Wooley did not receive additional compensation from us for his services as a director. Beginning April 1, 2010, Mr. Wooley began receiving compensation for his service on the Board in the same manner as the other non-management directors, including a prorated grant of shares of restricted stock equal to $52,494, calculated using the closing price of our common stock on April 1, 2010. For an additional discussion of payments made to Mr. Wooley during 2010, see the “Director Compensation Table” and “Related Person Transactions—Related Person Transactions with Jeffrey I. Wooley” below.
The following table shows compensation earned by the non-management directors for the 2010 fiscal year.2013. For information concerning the compensation of Mr. Oglesby,Messrs. Monaghan and Kearney, see “Summary Compensation Table.”
Table of Contents 20102013 DIRECTOR COMPENSATION TABLE
| | | | | | | | | | | | | | | | | Name | | Fees Earned or
Paid in Cash | | | Stock
Awards(2) | | | All Other
Compensation(3) | | | Total | | Michael J. Durham | | $ | 200,375 | | | $ | 70,001 | | | $ | 31,625 | | | $ | 302,001 | | Non-Executive Chairman of the Board(1) | | | | | | | | | | | | | | | | | Janet M. Clarke | | $ | 91,875 | | | $ | 70,001 | | | $ | 20,453 | | | $ | 182,329 | | Compensation and Human Resources Committee Chair | | | | | | | | | | | | | | | | | Dennis E. Clements | | $ | 91,875 | | | $ | 70,001 | | | $ | 15,845 | | | $ | 177,721 | | Governance & Nominating Committee Chair Executive Committee Chair | | | | | | | | | | | | | | | | | Thomas C. DeLoach, Jr. | | $ | 99,125 | | | $ | 70,001 | | | $ | 12,179 | | | $ | 181,305 | | Risk Committee Chair Succession Committee Chair | | | | | | | | | | | | | | | | | Juanita T. James | | $ | 86,875 | | | $ | 70,001 | | | $ | 31,281 | | | $ | 188,157 | | Vernon E. Jordan, Jr. | | $ | 47,875 | | | $ | 70,001 | | | $ | 50,079 | | | $ | 167,955 | | Eugene S. Katz | | $ | 90,875 | | | $ | 70,001 | | | $ | 15,678 | | | $ | 176,554 | | Audit Committee Chair | | | | | | | | | | | | | | | | | Philip F. Maritz | | $ | 61,375 | | | $ | 70,001 | | | $ | 14,786 | | | $ | 146,162 | | Jeffrey I. Wooley | | $ | 46,000 | | | $ | 52,494 | | | $ | 39,114 | | | $ | 137,608 | |
| | | | | | | | | | | | | | Name | | Fees Earned
in Cash | | Stock
Awards(1) | | All Other
Compensation(2) | | Total | | Janet M. Clarke | | $ | 103,500 | | $ | 70,010 | | $ | 27,690 | | $ | 201,200 | | Dennis E. Clements | | $ | 93,000 | | $ | 70,010 | | $ | 11,116 | | $ | 174,126 | | Thomas C. DeLoach, Jr. | | $ | 197,000 | | $ | 70,010 | | $ | 14,110 | | $ | 281,120 | | Juanita T. James | | $ | 89,000 | | $ | 70,010 | | $ | 19,429 | | $ | 178,439 | | Vernon E. Jordan, Jr.(3) | | $ | 51,000 | | $ | 70,010 | | $ | 29,649 | | $ | 150,659 | | Eugene S. Katz | | $ | 95,000 | | $ | 70,010 | | $ | 21,188 | | $ | 186,198 | | Philip F. Maritz | | $ | 76,000 | | $ | 70,010 | | $ | 28,473 | | $ | 174,483 | |
(1) | As part of the Company’s management succession process and in connection with the appointment of Charles Oglesby as Executive Chairman, Mr. Durham resigned as Non-Executive Chairman effective February 9, 2011. |
| (2)(1) | The amount in this column for each director other than with respect to Mr. Wooley, represents the aggregate grant date fair value of 6,0452,002 shares of common stock granted to each non-management director on February 17, 2010, which was $70,001. The aggregate grant date fair value was20, 2013 calculated in accordance with FASB ASC Topic 718 by multiplying the number of shares by the closing market price of our common stock on the date of grant, which was $11.58 per share. For Jeffrey I. Wooley, the amount in this column represents the aggregate grant date fair value of 3,857 shares of common stock granted on April 1, 2010, which was $52,494. The aggregate grant date fair value was calculated in accordance with FASB ASC Topic 718 by multiplying the number of shares by the closing market price of our common stock on the date of grant, which was $13.61 per share.718. For a more detailed discussion of the assumptions used to determine the valuation of the stock awards set forth in this column, please see a discussion of such valuation in Note 2422 of the Consolidated Financial Statements in our 20102013 Annual Report on Form 10-K, filed with10-K. | | | | As of December 31, 2013, the SEC on February 28, 2011, which is incorporated into this proxy statement by reference. |
As of December 31, 2010, each non-management director held the number of unvested shares of restricted stock set forth beside his or her name: Michael J. Durham: 1,641 ; Janet M. Clarke: 1,641; Dennis E. Clements: 1,641; Thomas C. DeLoach, Jr.: 1,641; Juanita T. James: 1,953; Vernon E. Jordan, Jr.: 1,641; Eugene S. Katz: 1,641; and Philip F. Maritz: 1,641.
As of December 31, 2010, the following non-management directors held the number of outstanding stock options set forth beside his or her name: Michael Durham: 10,000; Janet M. Clarke: 5,000; Vernon E. Jordan, Jr.: 5,001; and Philip F. Maritz: 18,000.following non-management directors held the number of outstanding stock options set forth beside his or her name: Philip F. Maritz: 5,000. No other non-management directors held any stock options.
| | (3)(2) | Represents the incremental cost to us for the respective use of a vehicle received by non-management directors. We calculate incremental costs of personal use vehicles as all direct costs (excluding fuel), including without limitation, the cost of transporting the vehicle to the director, any taxes, repairs, and any maintenance and service of the vehicle. In addition, we include the difference between our cost for the vehicle and the ultimate sale price or the anticipated sale price, pro-rated for the amount of time the director had possession of the vehicle during the fiscal year, plus an estimate of lost interest income calculated as our initial cash outlay for the vehicle multiplied by our weighted average interest rate on invested cash. We do not estimate lost margin on an ultimate sale of the vehicle. | | | (3) | Mr. Jordan, a Class III director whose term will expire at the Annual Meeting, will not stand for re-election. |
At a meeting of the Board on October 20, 2010, the Governance Committee recommended, and the Board approved an increase in the annual retainer to be paid to the chair of the Risk Committee from $10,000 to $15,000. In connection with the establishment of the Lead Independent Director role effective as of February 9, 2011, the Board set the Lead Independent Director’s annual retainer at $150,000. Meeting Attendance
During 2010,2013, there were nineeight meetings of the Board. Each current director attended at least 75% of the total meetings of the Board and committees on which he or she served. In accordance with the NYSE’s rules therequiring that non-management directors meet at regularly scheduled executive sessions, our non-management directors held twelveseven executive sessions during 2010. The2013. Mr. DeLoach, as the Non-Executive Chairman, presided over such executive sessions in 2010. Under our current leadership structure, the Executive Chairman will preside over Board meetings, including executive sessions. However, the Lead Independent Director will preside oversessions and non-management executive sessions of the Board.
We do not have a policy with regard to the attendance of the members of the Board at annual meetings of our stockholders. At the time of our 2010 Annual Meeting2013 annual meeting of Stockholders,stockholders, the Board consisted of ten members. Ninenine members, and all of the ten of the members of the Board attended such meeting in person. Code of Business Conduct and Ethics and Corporate Governance Guidelines In accordance with the NYSE’s rules and the rules and regulations adopted by the SEC pursuant to the Sarbanes-Oxley Act of 2002, the Board has adopted Corporate Governance Guidelines and a Code of Business Conduct and Ethics applicable to all of our directors, officers and employees. On October 20, 2010, upon the recommendation of the Governance Committee, the Board adopted revisions to our Corporate Governance Guidelines that (i) expand the Board self-assessment process; and (ii) require the Board to annually appoint Board Committees and Committee chairs, and to annually elect the Chair of the Board. On February 16, 2011, the Board also adopted revisions to our Code of Business Conduct and Ethics that: (a) expanded the Company’s prohibition on retaliation against whistleblowers; (b) highlighted the importance of internal reporting; and (c) added provisions for safety, intellectual property, environmental and privacy issues. The amendments were, in part, in response to the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Both the Corporate Governance Guidelines and the Code of Business Conduct and Ethics are available on our web site atwww.asburyauto.com under “Investor Relations” at “Corporate Governance.” We will provide you with copies of the above-mentioned documents as well as our Audit Committee, Compensation and Human Resources Committee, Governance Committee and Risk Committee charters, free of charge, if you call 770-418-8212 or submit a request in writing to Investor Relations, Asbury Automotive Group, Inc., 2905 Premiere Parkway NW, Suite 300, Duluth, GA 30097.
Table of Contents Board Leadership Structure The Chairman of the Board provides leadership to the Board and works with the Board to define its structure and activities in the fulfillment of its responsibilities. The Company believes that the members of the Board possess considerable experience and unique knowledge of the challenges and opportunities the Company faces, and therefore are in the best position to evaluate the needs of the Company and how best to organize the capabilities of our directors and senior executives to meet those needs. As a result, the Company believes that the decision as to who should serve as Chairman and as President and Chief Executive Officer,CEO, and whether the offices should be combined or separate, is properly the responsibility of the Board, to be exercised from time to time in appropriate consideration of then-existing facts and circumstances. Our Corporate Governance Guidelines provide the Board the flexibility to determine whether or not the separation or combination of the Chairman and President and Chief Executive OfficerCEO offices is in the best interests of the Company at any time. As part of our succession plan and to aid in the transition of our corporate leadership, effective February 9, 2011, Mr. Oglesby became our Executive Chairman in connection with his retirement from his position as President and Chief Executive Officer and his planned retirement and resignation from the Board on July 31, 2011. Effective February 9, 2011, Mr. Monaghan, a nominee for director, became our President and Chief Executive Officer.
Since our incorporation, we have separated themaintained separate positions of Chairman and President and Chief Executive Officer,CEO, as the Board believes that, based on the skills and responsibilities of the various Board members, such separation enhances (i) appropriate oversight of management by the Board, (ii) Board independence, (iii) the accountability to our stockholders by the Board and (iv) our overall leadership structure. We believe this structure is appropriate because we compete in an industry with many external forces that may affect our viability and profitability, therefore presenting significant challenges requiring extensive oversight and management capability. As such, we believe that by separating the Chairman function from that of the President and Chief Executive Officer,CEO, our President and Chief Executive OfficerCEO can properly focus on managing the business, rather than diverting his efforts to also overseeing the Board. In order to giveensure a significant voice towithin our non-management directors and to reinforce effective, independent leadership on the Board, when the Board appointed Mr. Oglesby as Executive Chairman ithas created the position of Lead Independent Director. In light of this new Board position of Lead Independent Director, we amended our Corporate Governance Guidelines to outline the circumstances in which Lead Independent Director would be appointed by our Board and to set forth such director’s responsibilities. Under the Company’s Corporate Governance Guidelines, a Lead Independent Director is appointed when the Chairman is the Chief Executive OfficerCEO or any other officer or employee of the Company, or if the Chairman is not otherwise independent. If and when a Lead Independent Director is appointed, his or her responsibilities, which are described in the Company’s Corporate Governance Guidelines, include, among other things: calling, setting agendas for, and presiding over non-management executive sessions of the Board;
calling special meetings of the full Board;
collaborating and consulting with the Chairman, our Chief Executive Officer, our Corporate Secretary, and other members of our senior management concerning schedules and agendas for and written materials to be distributed in advance of or to be presented at Board meetings, and approving or directing the approval of the schedules, agendas, and materials for Board meetings;
collaborating and consulting with committee chairs concerning schedules, agendas, and written materials;
presiding over Board meetings in the absence of the Chairman;
serving as a liaison between independent directors and the Chairman if and to the extent necessary or advisable;
receiving and evaluating substantive direct communications from interested parties to non-management directors;
where circumstances require communication from the Board to stockholders, being available with the Chairman and our Chief Executive Officer for consultation and direct communication with stockholders; and
calling special meetings of the non-management directors.
In recognition of his demonstrated critical leadership skills, theThe independent directors have designated Thomas C. DeLoach, Jr. as Lead Independent Director. It isnon-executive Chairman of the Board’s intent to appoint an independent Board member as the Board’s Chairman upon Mr. Oglesby’s retirement and resignation from the Board in July 2011.Board.
We believe that the foregoing structure, policies, and practices, when combined with the Company’s other governance policies and procedures, provide appropriate opportunities for oversight, discussion, and evaluation of decisions and direction from the Board. The Board’s Risk Oversight Role The Board maintains oversight responsibility for management of the Company’s risks. The Board has delegated oversight responsibility for certain areas of potential risk exposure to its committees. Each committee reports to the Board at regular intervals or more frequently, if appropriate, with respect to the risks and matters for which it maintains responsibility. The Company’s Risk Committee is responsible for further assisting the Board in fulfilling its oversight role by identifying, assessing and managing key financial, strategic and operational risks of the Company.Company and by providing management with assistance in evaluating major financial transactions, including acquisitions and divestitures. Management annually reviews with the Risk Committee our key risks to help evaluate the Company’s risk profile and related risk management processes. In this review, management highlights for the Risk Committee our most significant risks to facilitate the Risk Committee’s evaluation of our long-term financial plans, budgets and strategic initiatives. The Risk Committee, based on such review, considers the appropriate process for managing or mitigating material risks and the appropriate allocation of resources related to such material risks. The Risk Committee reports such findings to the Board at the Board’s quarterly meetings, and the Audit Committee, as appropriate. As a NYSE-listed company, the Audit Committee is charged with (i) discussing guidelines and policies to govern the process by which management assesses and manages exposure to risk; (ii) discussing major financial risk exposures and the steps management has taken to monitor and control such exposure; and (iii) reviewing in a general manner the processes in place to assess and manage risk. Recognizing that the Risk Committee’s role complimentscomplements the Audit Committee’s role in risk oversight, our Risk Committee charter mandates that at least one member of the Audit Committee be a member of the Risk Committee. During 2010, our Risk Committee consisted of two members of our Audit Committee, Messrs. DeLoach (chair) and Katz, and Mr. Durham, who was a member of our Audit Committee from February 2003 until July 2006. Currently, our Risk Committee consists of four members, two of which are members of our Audit Committee, Messrs.Mr. DeLoach and Maritz, and Mr. Durham, who became the Risk Committee chair in February 2011.Ms. James.
The Compensation and Human Resources Committee is primarily responsible for the design and oversight of our executive compensation policies, plansprograms and practices. A key objective of the Compensation Committee, together with the Risk Committee, is to oversee the implementation and development of our compensation plansprograms to ensure such plansprograms are consistent with the Company’s general philosophy after accounting for the Company’s key risk profile. Beginning in 2009, In 2013, the Compensation and Human Resources Committee engaged its independent compensation consultant, Frederic W. Cook & Co., Inc. (“FW Cook”), to work with management and conduct a full risk assessment of the Company’s compensation programs. This assessment included an inventory of all
compensation programs, including incentive compensation plans then-currently in place at the Company, a review of the design and features of the Company’s compensation programs with key members of management responsible for such programs, and an assessment of program design and features relative to compensation risk factors. The Risk Committee and the CompensationRisk Committee reviewed the Company’s risk profile and related risk management processes and the findings of the compensation risk assessment to determine if any material risks were deemed to be likely to arise fromconcluded that our then-current compensation policies and programs and to determine whether thesepractices for our employees did not create risks are reasonably likely to have a material adverse effect on our business. Upon reviewus.
Table of FW Cook’s findings, the Risk Committee and Compensation and Human Resources Committee determined that the Company’s then-current pay plans and policies were not reasonably likely to have a material adverse effect on the Company. In the first quarter of 2011, FW Cook reviewed our compensation programs and determined there had been no material changes in 2010. The Risk Committee and the Compensation and Human Resources Committee again reviewed the Company’s risk profile and related risk management processes, and the findings of the compensation risk assessment, to (i) determine if any material risks were deemed to be likely to arise from our compensation policies and programs; and (ii) determine whether any such risks are reasonably likely to have a material adverse effect on the Company. The Risk Committee and Compensation and Human Resources Committee determined that the Company’s then-current pay plans and policies were not reasonably likely to have a material adverse effect on the Company.Contents
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Exchange Act requires our executivedirectors, and certain of our officers and directors, and persons who beneficially own more than ten percent or more of the Company’s common stock, to file initial reports of ownership and reports of changes in ownership of such securities with the SEC. Based solely upon a review of the copies of the filings furnished to us or prepared by us on behalf of such Section 16(a) filers, or written representations that no Forms 5other reports were required, with the exception of a Form 4 for Mr. Kearney pertaining to a single transaction, which was filed late due to administrative error, we believe that all of these filers complied with all Section 16(a) filing requirements during 2010, with the exception2013.
Table of one inadvertently late Form 4 filing for Juanita James to report one transaction relating to shares forfeited for payment of taxes upon the vesting of restricted stock. ContentsEXECUTIVE OFFICERS Listed below is information regarding the Company’s executive officers as of March 23, 2011.5, 2014. All of our executive officers are elected by and serve at the discretion of the Board. | | | | | | | Name | | Age | | | Position | Craig T. Monaghan | | 57 | 54 | | | President and Chief Executive Officer; Principal Financial Officer | Michael Kearney | | 62 | 59 | | | Executive Vice President and Chief Operating Officer | Elizabeth B. Chandler
| | | 47 | | | Vice President, General Counsel and Secretary | Joseph G. Parham
| | | 61 | | | Vice President, Chief Human Resources Officer | Keith R. Style | | 40 | 38 | | | Senior Vice President Operationsand Chief Financial Officer | Scott J. Krenz | | 62 | | Senior Vice President | Joseph G. Parham, Jr. | | 64 | | Vice President, Chief Human Resources Officer | George A. Villasana | | 46 | | Vice President, General Counsel and Secretary |
Set forth below is a brief description of the business experience of the Company’s corporate officers for at least the past five years. CRAIG T. MONAGHAN has served as our President and Chief Executive Officer since February 2011. Prior to becoming our President and Chief Executive Officer,Please see Mr. MonaghanMonaghan’s biographical information under “PROPOSAL NO. 1 – ELECTION OF DIRECTORS” above. MICHAEL S. KEARNEY Please see Mr. Kearney’s biographical information under “PROPOSAL NO. 1 – ELECTION OF DIRECTORS” above. KEITH R. STYLE has served as our Senior Vice President and Chief Financial Officer since May 2008, and continuesJanuary 1, 2014. Mr. Style previously served as our principalVice President of Finance since November 2008 overseeing the operational financial officer until we hire a new chief financial officer.functions, management reporting and process improvement initiatives at the Company. Mr. Style joined the Company in October 2003 and held several prior positions with Asbury, including, Vice President of Investor Relations, Director of Budgeting & Forecasting, and Assistant Controller. Prior to joining us,the Company, Mr. Monaghan served as the Chief Financial Officer at Sears Holding Corp.Style held various finance and accounting positions with Sirius Satellite Radio, Inc., a national broadline retailer, between September 2006 and January 2007. From May 2000 to August 2006, he served as Executive Vice President and Chief Financial Officer of AutoNation, Inc., the largest automotive retailer in the United States. Previously,satellite entertainment provider. Mr. Monaghan served as Chief Financial Officer of iVillage.com, which he helped take public in 1999. Earlier inStyle began his career he was employed by Reader’s Digest Association, Bristol-Myers Squibb Co. and General Motors Corp.with Arthur Andersen LLP. MICHAEL S. KEARNEY SCOTT J. KRENZ has served as our Executive Vice President and Chief Operating Officer since February 2011. Prior to February 2011, Mr. Kearney served as our Senior Vice President and Chief Operating OfficerCFO from March 2009. Before becoming ourJune 2011 until December 31, 2013. In connection with his announced retirement from the position of CFO effective December 31, 2013, he agreed to remain in the employ of the Company in the capacity of Senior Vice President and Chief Operating Officer,through March 31, 2014, at which time he is retiring from all positions with the Company. Prior to joining the Company, Mr. KearneyKrenz served as the Executive Vice President and Chief Executive OfficerCFO of our former Eastern Region, which included Nalley Automotive Group in Georgia, Crown Automotive Company in North Carolina, South Carolina, Virginia and New Jersey, and Coggin Automotive Group and Courtesy Auto Group in Florida.Heidrick & Struggles International, Inc., a global leadership advisory firm, from 2008 until 2011. In 2007, Mr. Kearney joined Crown Automotive Company in 1990 as its Chief Financial Officer, and assumed the role of its President and Chief Executive Officer in September 2000. The Company acquired Crown Automotive Company in 1998.
ELIZABETH B. CHANDLERhas served as our Vice President, General Counsel and Corporate Secretary since May 2009. From 2006 until May 2009, when she joined us, Ms. ChandlerKrenz served as the City Attorney for Atlanta, Georgia, where she reported directly to the mayor and city council, and provided counsel on a broad range of legal and governance issues. Between 2000 and 2006, Ms. Chandler served as Assistant General Counsel,Executive Vice President and Corporate SecretaryCFO of MirantNavigant Consulting, Inc., a management consulting firm. Prior to serving at Navigant, Mr. Krenz served as the CFO of Sapient Corporation, a publicly-traded global energy company, where she was responsible for the complianceIT services and ethics programs, as well as the internal decision-making and governance process. Prior to joining Mirant, Ms. Chandler was a partner with Troutman Sanders, LLP in its corporate group, where her practice included a broad range of corporate and contract matters, including project development and finance.Internet marketing firm, from 2004 through 2006.
JOSEPH G. PARHAM, JR.has served as our Vice President, Chief Human Resources Officer since May 2010. Mr. Parham is retiring from all positions with the Company effective June 30, 2014. From 2001 until his retirement in 2006, Mr. Parham served as the Senior Vice President, Human Resources for Acuity Brands, Inc., a leading provider of lighting fixtures and related products and services, where he was responsible for executive compensation, leadership development, benefits design, succession planning and major organization development programs. Prior to joining Acuity Brands, Mr. Parham served atas Senior Vice President, Human Resources for National Service Industries from 2000 to 2001, as President and Chief Operating OfficerCOO of the Polaroid Eyewear division of Polaroid Corporation from 1999 to 2000, and as Senior Vice President, Global Human Resources of Polaroid Corporation from 1994 to 1999. KEITH R. STYLE GEORGE A. VILLASANAhas served as our Vice President, OperationsGeneral Counsel and Secretary since January 2011. Prior to becoming ourApril 2012 after holding the position of Senior Vice President Operations,and General Counsel at Swisher Hygiene Inc. from February 2011 to April 2012. From June 2007 to July 2010, Mr. StyleVillasana served as ourExecutive Vice President of Finance from November 2008, with responsibility for the Company’s financial reporting and financial planningGeneral Counsel at Pet DRx Corporation, which he helped take public and analysis.which was later sold to VCA Antech, Inc. From August 2006 until November 2008, Mr. Style2000 to June 2007, he served as the Company’s Vice President of Financial Planning and Analysis, which included responsibility for the Company’s investor relations activities. Since joining the Company in 2003, Mr. Style has served in various positions, including Assistant Controller. Prior to joining the Company, Mr. Style workedSenior Corporate Counsel at Sirius Satellite Radio,AutoNation, Inc., a leading satellite radio entertainment provider, where he servedthe nation’s largest automotive retailer. Earlier in the planning and controllership functions for more than five years. Mr. Style began his career he was a corporate attorney with Arthur Andersen LLP.Holland & Knight, LLP, and Shutts & Bowen, LLP in Miami, Florida, and a staff attorney with the Securities and Exchange Commission in Washington, D.C.
Table of Contents COMPENSATION DISCUSSION & ANALYSIS This compensation discussion and analysis (“CD&A”) is focused primarily on the compensation policies and programs as they relate to our executive officers in 2013, with certain additional detail about the compensation paid, or payable, to our “named executive officers.” Our named executive officers consist of all individuals who served as chief executive officer or chief financial officer in 2013, and our three other most highly compensated executive officers in 2013. Our named executive officers in 2013 were as follows: | | | | • | Craig T. Monaghan, President and Chief Executive Officer; | | | | | • | Michael Kearney, Executive Vice President, Chief Operating Officer; | | | | | • | Scott J. Krenz; Senior Vice President and former Chief Financial Officer; | | | | | • | Joseph G. Parham, Jr. Vice President, Chief Human Resources Officer; and | | | | | • | George A. Villasana, Vice President, General Counsel and Secretary. |
Mr. Krenz retired from the position of CFO effective December 31, 2013, and is retiring from all positions with the Company on March 31, 2014. Mr. Parham is retiring from all positions with the Company on June 30, 2014. The Compensation and Human Resources Committee of the Board (also referred to in this Compensation Discussion and Analysis section of the proxy statement (the “CD&A”)CD&A as the “Committee”) is charged with various duties concerning the compensation of our corporateexecutive officers, including the development of our compensation philosophy relating to those individuals. With respect to decisions directly impacting executive compensation, itsthe Committee’s primary responsibilities as a committee are to: | | | | • | establish all aspects of compensation for our executive officers, including the named executive officers, and approve awards to the CEO, subject to Board ratification, under our incentive-based compensation plans; | | | | | • | oversee the development, implementation and administration of our compensation and benefit plans; and | | | | | • | prepare the Compensation Committee Report and review and discuss with management the CD&A, as required to be included in our annual proxy statement or annual report on Form 10-K filed with the SEC. |
establish all aspects of compensation for our corporate officers, including our named executive officers whose names appear in the Summary Compensation Table below, and approve awards to the CEO, subject to Board ratification, under our incentive-based compensation plans;
oversee the development, implementation and administration of the Company’s compensation and benefit plans; and
prepare the Compensation and Human Resources Committee Report and review and discuss with management the CD&A, as required to be included in the Company’s annual proxy statement or annual report on Form 10-K filed with the SEC.
For additional information regarding the Committee’s function and composition, see “Governance of the Company—Committees of the Board—Compensation and Human Resources Committee” on page 18 of this proxy statement, and the charter of the Committee, which is available on our web site atwww.asburyauto.com under “Investor Relations” at “Corporate Governance.Committee.” Overview We believe that fostering an entrepreneurial spirit is essential to our success. Accordingly, we encourage our executive officers to manage our Company in a way that preserves local decision making,the decision-making authority of our dealership managers, especially concerning those decisions that directly affect our customers, while leveraging and consolidating infrastructurecustomers. In furtherance of that principle, we have centralized a number of administrative activities at our corporate headquarters to maximize efficiency and effectiveness.allow our dealership managers to focus on dealership operations. As a result, the objectives of our executive compensation philosophy are to: (i) | | | | • | support the attainment of our vision, business strategy and operating imperatives; | | | | | • | guide the design and implementation of effective executive compensation and benefit plans; | | | | | • | reinforce our business values; and | | | | | • | align management and stockholder interests. |
For 2013, the attainment of our vision, business strategyCommittee worked with its compensation consultant, described in more detail below, to develop and operating imperatives, (ii) guide the design and implementation of fully effectiveanalyze comparative data on executive compensation with a goal of setting and benefit plans, (iii) reinforcemaintaining total executive compensation at target performance levels between the 25th and 50th percentile of compensation paid to executives in similar positions within our business values and (iv) align management and stockholder interests.Peer Group (defined below). However, in determining this range, the Committee acknowledged that, as a result of the significant variable components of compensation described in more detail elsewhere in this CD&A, actual payouts may be significantly above or below this range based on actual performance when compared to target performance. In determining and setting the 20102013 compensation levels of our named executive officers, the Compensation and Human Resources Committee acknowledged the fiscalrecent achievements of our management team, despiteincluding the challenging automotive retail environment, which began in 2008 and continued into 2010. In 2010,following: | | | | • | we grew adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) and adjusted earnings per share (“EPS”) by approximately 22% and 49%, respectively in 2012 compared to 2011; | | | | | • | our revenues grew 12% from the previous year, totaling approximately $4.6 billion; | | | | | • | we experienced gross profit growth in all four of our business lines; |
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| | | | • | we reduced our selling, general and administrative expenses as a percentage of gross profit by 330 basis points in comparison to 2011; | | | | | • | we repaid our outstanding 3.00% senior subordinated convertible notes due 2012; and | | | | | • | we reduced our leverage ratio to 2.4x at December 31, 2012, which represented a 14% decrease as compared to the end of 2011. |
For 2013, the Committee approved incentive compensation programs as discussed below, that were designed to incentivizefocus our executive management team to growon improving the measureable financial metrics described below, which are generally indicative of our earnings per share (“EPS”)success, including improving EBITDA, a metric used by management and our net income, while effectively managing costs.that the Committee believes is often used by investors and market analysts in comparing performance and determining enterprise value. The following key areas of achievementachievements in fiscal 2010 were among those noted by2013 impacted actual payouts, and the Committee in light of the current economic environment and continuing challenges in our industry as a whole: we grew adjusted EPS from continuing operations and adjusted EBITDA 64% and 26%, respectively, in 2010 compared to 2009, as reported in our earnings release for the fourth quarter of 2010 and our investor presentation available on our website;
our revenues grew 16%, totaling $3.9 billion in 2010 compared to $3.4 billion in 2009;
we experienced gross profit growth in all fouroverall compensation of our business lines in fiscal year 2010;
we reducedexecutive officers, under our selling, general and administrative expenses as a percentage of gross profit by 290 basis points at fiscal year 2010 in comparison to fiscal year 2009;
we successfully completed a tender offer and redemptionincentive compensation programs for our 8% Senior Subordinated Notes due 2014 and an offering of 8.375% Senior Subordinated Notes due 2020, thus extending the debt maturity by six years.
While we are pleased with these accomplishments, we are mindful of the slow recovery of the economy and of our industry. Accordingly, in addition to the measures we have taken to produce positive financial results, we remain focused on our responsibility to our stockholders to create value in our business, and are thus mindful of our pay practices. The Compensation and Human Resources Committee continually monitors our policies to ensure that they emphasize programs that reward executives for results that are consistent with stockholder interests. As such, we have the following responsible and stockholder-focused compensation policies, programs and practices in place:
2013: | • | | Conservative Pay Practices. In
| | | • | we reported adjusted EBITDA of $245.2 million, an increase of 25% over our 2012 adjusted EBITDA; | | | | | • | adjusted EPS was $3.53, an increase of 34% over the prior year; | | | | | • | our gross profit per light of the challenging economicvehicle unit sold was $3,242, compared to $3,182 in 2012; | | | | | • | we improved our same-store fixed gross profit by 11% over 2012; and automotive retail environment, we have not increased base salaries for the last two years for certain of | | | | | • | our named executive officers. In addition, in fiscal year 2009, in order to conserve cash, the Compensation and Human Resources Committee exercised its negative discretion to reduce cash payouts under our annual cash bonus plan to certain eligible participants and granted those individuals an equity award in an amount equivalent to the cash foregone under such plan. The Committee also works with its compensation consultant to use comparative data for executive compensation and generally aims to set and maintain total executive compensation between the 25th and 50th percentile of that of our Peer Groupreturn on invested capital (“ROIC”), which is measured as EBITDA divided by invested capital (defined below) was 25%. |
| • | | Performance-Based Pay. A substantial portion of executive pay is in the form of variable, performance-based compensation, which helps us effectively manage the cost of our pay programs. In addition, the Compensation and Human Resources Committee believes that performance-based equity grants and compensation programs helps to align management’s interests with the interests of our stockholders.
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| • | | Limited Perquisites. Other than the traditional car allowance or demonstrator vehicles granted to our named executive officers, we have substantially eliminated the majority of the perquisites that we previously provided to such officers.
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| • | | Equity Ownership Guidelines. Our named executive officers are required to comply with stock ownership guidelines throughout the period of their employment with the Company.
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| • | | Prohibition on Hedging our Securities. Our employees are prohibited from engaging in short sales of our securities and from buying or selling puts or calls on, or any other financial instruments that are designed to hedge or offset decreases or increases in the value of, securities.
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| • | | Recoupment Policy. We have a recoupment policy that requires certain employees to reimburse the Company for performance-based incentive compensation paid to them in the event the Company is required to restate its financial results due to fraud or intentional misconduct by such employees.
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Elements of Compensation The various elements of compensation paidprovided by the Company are intended to (i) provide an appropriate level of financial certainty through the non-variable compensation, paid to each executive officer,(ii) implement our philosophy and ensure that a significant portion of total compensation is performance-based, and (iii) create a balance of long-termshort-term and short-termlong-term incentives. The key elements of our executive compensation program for 2013 are outlined below, together with a summary of the purposes ofand considerations underlying each compensation element are summarized below: element. | | | | Compensation Element | | PurposePurpose/Underlying Consideration
| Base Salary | | • to | To provide base pay benchmarked to the individual’s level of responsibility, talent, and experience; | | • | to provide financial predictability; | | • | to provide a salaryfixed component of compensation that is market competitive; and | | • | to promote retention of executives.attract and retain executive talent. | | | | | Short-Term Incentives (under our Annual Cash Incentive Plan) | | | | | • to | To optimize annual operating results; | | • | to more directly align management with stockholders;and stockholder interests; | | • | to provide, along with base salary, market competitive cash compensation when targeted performance objectives are met; | | • | to provide appropriate incentives to exceed targeted results; | | • | to pay meaningful incremental cash awards when actual results exceed target;targeted results; and | | • | to encourage internal alignment and teamwork. | | | | | Long-Term Incentives (also referred to as “Equity-Based Compensation”) | | | | | • to | To balance the short-term orientation of other compensation elements; | | • | to more directly align management with our stockholders’ long-term interests; | | • | to focus executives on the achievement of long-term results; | | • | to support the growth and profitability of each of our revenue source of the Company;sources; | | • | to allowprovide retirement asset accumulation by key executives to accumulate retirement assets;executives; and | | • | to retain key managementexecutive talent. | | | | | Employment and Severance Arrangements | | • | To enable us to attract and retain talented executives; | | • | to protect our interests through appropriate restrictive post-employment covenants, including non-competition and non-solicitation; |
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| | | | Compensation Element | | Purpose/Underlying Consideration | | | • | to, when and if appropriate, ensure that management is able to analyze any potential change in control transaction objectively; and | | • | to, when and if appropriate, provide for continuity of management in the event of a change in control. | | | | | Other Benefits | | • to | To be competitive in the markets where we compete for executive talent; | | • | to avoid materially different approaches to benefits among executive and non-executive employees; and | | • to be cost effective through shared expense with executives, where appropriate; and | • to provide limited perquisites when job-related and market-driven within the realm ofperquisites in line with our corporate governance philosophies.
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Compensation Philosophy and Guidelines The Committee, with the help of an outsideits independent compensation consultant, (discussed below), has developed anour executive compensation philosophy. Our compensation philosophy for the Company that sets forth certain general guidelines that the Committee considers in making decisions and recommendations related to theexecutive compensation of our executive officers (including our named executive officers)officers’ compensation). The key principles and considerations underlying our compensation philosophy are the following: | | | | • | create a “pay-for-results” culture with clear emphasis on pay-for-performance and accountability; | | | | | • | effectively manage the cost of compensation programs by providing that a substantial portion of executive pay is in the form of variable, performance-based compensation; | | | | | • | consider total compensation in light of competitive market practices, internal equity considerations, and individual-specific characteristics; | | | | | • | provide a balanced total compensation program to ensure management is not encouraged to take unnecessary or excessive risks; | | | | | • | encourage equity ownership by management; | | | | | • | reinforce teamwork and internal alignment of management; and | | | | | • | consider stakeholder perceptions and governance practices when formulating pay plans and actions. |
emphasize a “pay-for-results” culture with clear emphasis on pay-for-performance and accountability;
effectively manage the cost of pay programs by providing that a substantial portion of executive pay will be in the form of variable, performance-based compensation;
ensure a reasonable return on our total compensation expenditures;
consider total compensation in light of competitive market practices, internal equity considerations, and individual-specific characteristics;
provide a balanced total compensation program to ensure management is not encouraged to take unnecessary and excessive risks that may harm the Company;
encourage equity ownership by management;
reinforce teamwork and internal alignment of management; and
consider stakeholder perceptions and governance practices when formulating pay plans and actions.
Decisions and recommendations with respect to compensation of the Company’s executive officers were made in February of 2010, consistentConsistent with past practice, in order to effectively communicate expectations with and incentivize such individuals in connection with their, and the Company’s, performance.
Subsequent to the decision making concerning 2010our performance, we generally make compensation the Committee updated the philosophy to expressly align such philosophy with certain other compensation-related guidelines already adopted by the Company. Specifically, the Committee amended the philosophy to include references to (i) the Company’s existing prohibition on hedging activities by our employees related to the Company’s stock, and (ii) our recoupment policy, which requires certain employees to reimburse the Company for certain performance-based incentive compensation paid to themprogram decisions in the event the Company is required to restate its financial results due to fraud or intentional misconduct by such employees.
All decisions madefirst quarter of a year. Except with respect to executive officer changes during 2013 that resulted in the 2010entry into new agreements relating to employment terms and conditions, substantially all compensation of the Company’sdecisions for our executive officers for the 2013 fiscal year were made at the Committee’s regularly scheduled meeting in the first quarter of 2013. In 2013, all compensation decisions were consistent with the Company’s compensation philosophy as updated in 2010.
To further support our overall compensation philosophy and guidelines.
The Role of Stockholder Say-on-Pay Votes and Related Considerations At our 2013 annual meeting of stockholders held on April 17, 2013, approximately 99.6% of the votes cast by stockholders’ on the advisory vote on executive compensation (the “say-on-pay proposal”) were in favor of the compensation of our named executive officers. The Committee believes this favorable vote affirms our stockholders’ support of its approach to further alignexecutive compensation and, as a result, the interestsCommittee did not make material changes to the implementation of our executive compensation philosophy in 2013. Further, we provide our stockholders with our management team, our Board has adopted certain equity ownership guidelines applicablethe opportunity to our executive officers, which are contained in our Corporate Governance Guidelines. These guidelines are discussed in more detail above under “Securities Owned by Management and Certain Beneficial Owners—Equity Ownership Guidelines”vote annually on page 7.a say-on-pay proposal. Compensation Consultant
In 2006,addition to consideration given to the results of the vote on the say on pay proposal, at various times through the year the Committee retained FW Cook, an independentconsiders direct and indirect input from stockholders and other stakeholders, and more general developments in executive compensation consulting firm, to assist the Committeeprinciples, in the evaluation of executing its responsibilities. This retention continued through 2010. In 2010, FW Cook assisted the Committee in, among other things, estimating the appropriate types and amounts of termination pay for certain executive officers, estimating the appropriate elements and values in a total compensation package for a new executive officer, and the development and determination of appropriate levels for our 2010 long-term and short-term incentive awards. In addition, FW Cook annually provides the Committee with:
a competitive analysisimplementation of the Company’s executive compensation (includingphilosophy, policies and practices. For additional information on how these considerations impacted 2013 and 2014 compensation decisions, see “—Policies and Practices” below.
Table of Contents Policies and Practices Our compensation philosophy and guidelines are implemented through a number of policies and practices described below. The Committee continually monitors and, as appropriate, adjusts our compensation policies and practices to ensure that they emphasize, and reward executives for, our executive officers) on an annualized basis using publicly available information from our Peer Group (as described below);results that are consistent with stockholder interests and corporate governance best practices. | • | | | • | Appropriate Base Salary Adjustments. As described above, the Committee works with a competitive analysiscompensation consultant to set our executive officers’ overall compensation levels at target performance levels between the 25th and 50th percentile of compensation paid to executives in similar positions within our Peer Group. As described below, at its regularly scheduled meeting in the first quarter of 2013, at which annual compensation decisions are typically made, the Committee made certain market-based adjustments in the base salaries of our named executive officers for 2013. | | | | | • | Tie Pay to Performance. The Committee believes that performance-based equity grants and compensation programs help to align management’s interests with the interests of our stockholders. To this end, in 2013, 60% of our equity awards which, as described elsewhere, are intended to act as long-term incentives are solely performance-based and vest over time, which was an increase from 50% in 2012. | | | | | • | Limit Perquisites. We have eliminated substantially all of the Company’s executive compensation (including forperquisites historically provided to our executive officers)officers, retaining only those limited perquisites, such as the provision of car allowances or “demonstrator” vehicles, which we consider appropriate and typical in our industry. | | | | | • | Equity Ownership Guidelines. We have adopted equity ownership guidelines applicable to, among others, our executive officers. These guidelines encourage stock ownership and the further alignment of management, Board and stockholder interests by requiring the CEO and our other named executive officers and directors to own a number of shares of our common stock the value of which is equal to a stated multiple of his or her base salary or annual Board retainer, as applicable. For additional information, see “Securities Owned by Management and Certain Beneficial Owners—Equity Ownership Guidelines.” | | | | | • | Prohibition on an annualized basis using compensation surveys. Data gatheredHedging of our Securities. We do not believe it is appropriate for officers, directors or other “insiders” to try to profit from surveys represents the practicesshort-term fluctuations in our stock price. As a result, our executive officers (as well as our other employees and members of general industry companies with annual revenues comparableour Board) are prohibited from engaging in short sales of our common stock and from buying or selling puts or calls on, or any other financial instruments that are designed to our annual revenue (e.g., approximately $4.0 billion). A total of approximately 700 companies participatedhedge or offset decreases or increases in the surveysvalue of, our common stock. Additionally, our Section 16 officers (as well as members of our Board) are prohibited from pledging our securities, including holding them in margin accounts. | | | | | • | Accelerated Vesting of Equity Awards Only Upon a “Double Trigger” in Connection with a Change of Control. In accordance with what the Committee determined as a trend in compensation matters, equity-based awards granted under our 2012 Equity Incentive Plan and all awards granted after February 8, 2012 under our amended 2002 Equity Incentive Plan generally provide that were used,an award will be accelerated in connection with a change of control transaction only if: (i) the acquiror does not replace or substitute the subject equity award with an equivalent award, or (ii) the participant’s employment is involuntarily terminated within two years following the change of control. | | | | | • | Recoupment Policy. We maintain a recoupment policy that requires certain officers to reimburse certain performance-based incentive compensation paid to them in the event that we are required to restate financial results due to fraud or intentional misconduct by such individuals. | | | | | • | Independent Compensation Consultant. Compensation determinations are made with the input of an independent compensation consultant engaged by the Committee. For further discussion of the selection and input of this compensation consultant, see “—Compensation Consultant” below. | | | | | • | Appropriate Compensation Risk Assessment. The Committee annually reviews and assesses potential risks arising from our compensation programs. For a further discussion of this risk assessment, see “Governance of the names of such companies were kept confidential.Company—The Board’s Risk Oversight Role.” |
Our currentCompensation Consultant
In 2013, the Committee retained Pay Governance LLC (“Pay Governance”) as its independent executive compensation consultant. Pay Governance provides advice to the Committee on matters related to the fulfillment of the Committee’s responsibilities under its charter and on a wide range of executive compensation and related governance matters. As advisor to the Compensation Committee, Pay Governance reviews the total compensation strategy and pay levels for the Company’s executive officers, examines all aspects of the Company’s executive compensation programs to ensure their ongoing support of the Company’s business strategy, informs the Compensation Committee of developing legal and regulatory considerations affecting executive compensation and benefit programs, and provides general advice to the Compensation Committee with respect to compensation decisions pertaining to the Chief Executive Officer and other senior executives. All of the services provided by Pay Governance during 2013 were to the Compensation Committee, and Pay Governance did not provide any additional services to the Company. At least annually, the Compensation Committee conducts a review of its compensation consultant’s performance and potential conflicts of interest. In accordance with applicable SEC and NYSE requirements the Committee reviewed potential conflicts of interest with the compensation consultant’s independence and concluded that the work of the compensation consultant did not raise any conflicts of interest.
Table of Contents During 2013, at the Compensation Committee’s request, Pay Governance (i) provided competitive market data on compensation for executives, (ii) reviewed our annual proxy statement disclosures, (iii) provided the Compensation Committee with an analysis of the compensation of the named executive officers as reported in the Company’s 2013 proxy statement as compared to the compensation provided to executives by the companies in the Peer Group as reported in their proxy statements, and (iv) provided the Committee with advice regarding various tax and regulatory issues. The peer group used for purposes of benchmarking our compensation (the “Peer Group”) in 2013 was adopted by the Committee in 20092012 based in part, on FW Cook’s recommendations. The peer group consists primarilyinput and analyses by Pay Governance of automotive retailers and companies in automotive-related industries with similar characteristics such as revenue, market capitalization, EBITDAthat it believes are reflective of Asbury’s retail business model and/or operating income, and against whomthat operate in industries closely related to the Company would expect to compete for talent. As such, our peer group (the “Peer Group”)Company. Asbury’s Peer Group consists of the following companies:
| | | • | | automotive retailers•:
| Automotive retailers:Advanced Auto Parts Inc., AutoNation, Inc., AutoZone, Inc., Carmax Inc., Group 1 Automotive, Inc., Lithia Motors Inc., O’Reilly Automotive, Inc., Penske Automotive Group, Inc., and Sonic Automotive Inc.,; and The Pep Boys—Manny Moe and Jack; |
| | | | • | | companies in•
| Other related industriescompanies:: American Axle and Manufacturing Holdings,Avis Budget Group, Inc., Arvinmeritor,Cabela’s, Inc., Genuine Parts Company, Rush Enterprises, Inc.LKQ Corporation, Tiffany & Co., and Tractor Supply Company. |
The annual analyses prepared by FW Cook for the Committee generally include:
an evaluation of our annual and long-term incentive plans, including the proposed levels and mix of pay and types of awards made and to be made under our various compensation plans; and
an analysis of overall competitive compensation, which includes Peer Group base salaries, bonus opportunities and the value of long-term compensation elements.
Aside from its work for the Committee, FW Cook does not provide any services to, nor in 2010 did it receive any compensation from, the Company.
Additional Considerations When Makingin Executive Compensation Decisions The Committee historically has, and in 2010 used, As described above, the evaluations and analyses prepared by FW Cook to help benchmark our executive compensation against that of our Peer Group. The Committee generally aims to set and maintain theestablish total compensation oflevels for our executive officers at target performance levels between the 25th25th and 50th50th percentile of the target total compensation levels of executive officers with equivalent responsibilities in our Peer Group. Based on reported results, the Company was at approximately the 30th percentile in terms of revenue and net income in the Peer Group.
In addition to competitive analyses of executive compensation provided to the Committee by FW, the Committee also historically has considered, as it did in 2010, a number of other factors, in its discretion, when making compensation decisions and reviewing and approving executive officer compensation including. These additional factors include, but are not limited to, (i) individual performance of the executive, (ii) tenure and importance to the Company of the executive, (iii) the Company’s financial condition; and (iv) internal equity considerations. The Committee does not believe it is appropriate to use pre-established formulas in determining total compensation for any of our executive officers. However,Notwithstanding this, however, given the use of short-term cash incentives and time-vested and performance-based equity compensation as principal components of compensation, the Committee expects that when our performance exceeds targeted performance levels, total compensation forthe actual payouts received by our executive officers may be above competitive median levels.
In addition to considering the evaluations and analyses prepared by Pay Governance, to help benchmark our executive compensation against that of our Peer Group, the Committee also considered a number of other factors when setting executive officer compensation for 2013, including: | | | | • | individual performance of the executive; | | | | | • | the executive’s tenure and importance to us; | | | | | • | our financial condition; and | | | | | • | internal equity considerations. |
Review of 20102013 Compensation With respect to compensation paid to our For 2013, each named executive officers in 2010, each such officer was eligible to receive compensation consisting of the following four primary elements: (i) a base salary; (ii) a short-term (annual) incentive in the form of a cash bonus opportunity pursuant to our amendedAmended and restated key executive incentive compensation plan;Restated Key Executive Incentive Compensation Plan; (iii) a long-term incentive in the form of equity grants under the Company’s 20022012 Equity Incentive Plan, which is referred to in this CD&A as our long-term equity incentive plan;Plan; and (iv) perquisites and other benefits.
Base Salaries Increases, if any, in base salarysalaries for executive officers (other than for the CEO) are generally recommended to the Committee by the CEO on an annual basis.basis, absent a change in circumstances at another time of year that would make reconsideration appropriate at that time. Increases in base salary for the CEO, if any, are initiated and approved by the Committee. In setting base salary, the Committee takes into account the executive’s current and expected experience, skills, level in the organization, and scope of responsibilities, as well as the Company’sresponsibilities. The Committee also considers our financial health in addition toand the compensation data received from FW Cook.its independent compensation consultant.
Table of Contents Due to the then-continued declinesignificant contributions to the Company’s performance of the named executive officers in the2012 in a continued uncertain general economic environment, and the uncertainty in the automobile retailing industry Messrs. Monaghanin particular, and Kearney and Ms. Chandlerthe fact that the named executive officers did not receive meritbase salary increases in 2010. In connection with2012, following the renegotiationregular, annual review of his employment agreement, Mr. Oglesby received a 5% base salary increase, effective March 1, 2010. The 2010 base salaries by the Committee at its regularly scheduled meeting in the first quarter of 2013, the Committee awarded certain market-based adjustments in base salaries to the named executive officers.
Annual base salaries in 2013 for the named executive officers were as follows: | | | | | | | | | | | Name | | Title | | Annual
Base
Salary | | | Title | | Annual
Base
Salary | | Charles R. Oglesby | | President & CEO | | $ | 875,443 | | | Craig T. Monaghan | | SVP & CFO | | $ | 607,772 | | | President and CEO | | $ | 950,000 | | Michael S. Kearney | | SVP & COO | | $ | 600,000 | | | EVP and COO | | $ | 705,000 | | Joseph G. Parham (1) | | VP, Chief Human Resources Officer | | $ | 330,000 | | | Elizabeth B. Chandler | | VP, General Counsel & Secretary | | $ | 330,000 | | | Scott J. Krenz | | | SVP and Former CFO(1) | | $ | 440,000 | | Joseph G. Parham, Jr. | | | VP, Chief Human Resources Officer(2) | | $ | 340,000 | | George A. Villasana | | | VP, General Counsel and Secretary | | $ | 350,000 | |
| | (1) | | (1) | Mr. Krenz retired from the position of CFO effective December 31, 2013, and is retiring from all positions with the Company effective March 31, 2014. | | | (2) | Mr. Parham joinedis retiring from all positions with the Company as VP, Chief Human Resources Officer, effective May 3, 2010.June 30, 2014. |
Annual Cash BonusIncentive Plan In As described above, in order to motivate management toward the achievement of certain pre-established corporate goals, and to remain competitive in the industry, the Company believeswe believe that a significant portion of each named executive officer’s total compensation should be performance-based. The CompanyWe also believesbelieve that management is motivated by the opportunity to earn incremental cash compensation based upon the achievement of annual or similar shorter-term performance objectives, and that such additional compensation opportunity properly fosters effective management, innovative thinking, and the implementation of cost saving measures by our executive officers, which may enable us to further enhance our stockholder value. The cash awards paid to our executive officers are paid under the valueterms of the Company.our Amended and Restated Key Executive Incentive Compensation Plan.
For 2010,fiscal year 2013, the Committee determineddecided it was appropriate to use the same cash incentive plan structure that was used in fiscal year 2012, with potential payouts under our annualthe cash bonusincentive plan should be entirelybeing dependent upon a matrix ofthe achievement of established levels of earnings before interest, taxes, depreciation and amortization (“EBITDA”) dependent uponEBITDA (subject to adjustment as described below) correlated with actual United States Annual Automotive Sales (“USAAS,”USAAS”) as reported by Motor Intelligence).Intelligence. The choiceselection of EBITDA as the performance benchmark for payouts under the annual cash bonusincentive plan reflected the Committee’s continued belief that EBITDA is an important metric used by management from time to time to evaluate and analyze results and the impact on the Company of strategic decisions and actions relating to, among other things, events outside of normal, or “core,” business operations, and is often used by investors and market analysts in comparing performance and in determining enterprise value. Further, given the continued uncertainty in the general economic environment, and specifically within the retail automotiveautomobile retailing industry in 2010,2013, the Committee believed it was appropriate to establish award opportunities at various levels of expected EBITDA, in each case dependent upon actual USAAS, which wasremained highly uncertain and beyond the control of management. As a result, the Committee believed it was appropriate to incentivize management to increase target EBITDA at higher levels of USAAS. In connection with the determination of EBITDA as the appropriate performance metric under the annual cash bonusincentive plan, the Committee further believed it was appropriate to provide for certain potential adjustments to the traditional measure of EBITDA to account for the impact on our financial results of certain potential extraordinary items. These items are nonrecurring in nature (such as impairment chargestypically result from strategic actions and decisions relating to, among other things, cost reduction, growth, and profitability improvement initiatives, and other events outside of normal, or gains or losses on the sales of assets) and, thecore, business operations. The Committee believed these items are not properly allocable to the determination of operational results in a given period.
ForTable of Contents
To account for the potential for different levels of USAAS, at each established level of USAAS established under the annual cash bonusincentive plan, for 2013 three EBITDA performance goals were established: (i) a “threshold” level; (ii) a “target” level; and (iii) a “maximum” bonus level. Under the terms of the annual cash incentive plan, if EBITDA did not meet the established “threshold” level at the actual USAAS, no payouts would be made under the plan. Further, if EBITDA exceeded the established “maximum” level at the actual USAAS, payout under the annual cash incentive plan would be limited as if performance had equaled the maximum performance goal. If actual USAAS was between two established levels, or if the achievement of EBITDA performance goals based on actual EBITDA was between threshold and target levels, or target and maximum levels, participants would be entitled to a ratable portion of any payment due based upon linear interpolation. In determining what it considered an appropriate “target” performance goal at the various levels of USAAS, the Committee consulted with management and evaluated various internally-prepared models and forecasts. After consultation with FW Cook,Pay Governance in the first quarter of 2013, the Committee approved the threshold and maximum performance goals at 85% and 115% of target, respectively. The Committee believed that this range would provide similar payout results to those at the threshold and maximum performance goals of 80% and 120%, respectively, that were used in corresponding goal levels in our annual cash bonus plan in previous years. The table below sets out the bonus matrixthreshold, target and maximum EBITDA performance goals approved for 2010.2013. | | | | | | | | | | | | | EBITDA Performance Goals (in millions) | | Actual USAAS
(in millions) | | Threshold (85% of Target)
50% Payout | | Target (100%)
100% Payout | | Maximum (115% of Target)
200% Payout | | 12.5 & lower | | | $ 152.1 | | | $ 178.9 | | | $ 205.7 | | 13.5 | | | $ 163.2 | | | $ 192.0 | | | $ 220.8 | | 14.5 | | | $ 174.4 | | | $ 205.2 | | | $ 235.9 | | 15.2 | | | $ 182.2 | | | $ 214.4 | | | $ 246.6 | | 15.5 | | | $ 185.6 | | | $ 218.3 | | | $ 251.1 | | 16.5 | | | $ 196.7 | | | $ 231.5 | | | $ 266.2 | | 17.5 & above | | | $ 207.9 | | | $ 244.6 | | | $ 281.3 | |
| | | | | | | USAAS (in millions) | | EBITDA Performance Goal (in millions) | | | Threshold (85% of Target) 50% Payout | | Target (100%) 100% Payout | | Maximum (115% of Target) 200% Payout | 8.5 or less | | $ 75.7 | | $ 89.0 | | $ 102.4 | 9.5 | | $ 86.2 | | $ 101.5 | | $ 116.7 | 10.5 | | $ 97.7 | | $ 115.0 | | $ 132.2 | 11.5 | | $ 108.0 | | $ 127.0 | | $ 146.1 | 12.5 | | $ 119.0 | | $ 140.0 | | $ 161.0 | 13.5 or more | | $ 133.4 | | $ 157.0 | | $ 180.5 |
For 2010,2013, actual USAAS as reported by Motor Intelligence was 11.615.6 million. Based on this level of USAAS, EBITDA levels for the purpose of determining payouts under the annual cash bonusincentive plan were calculated by interpolation as follows: threshold: $109.0$186.7 million; target: $128.2$219.7 million; and maximum: $147.4$252.6 million. After accounting for certain adjustments as provided for under the annual cash bonus plan, theThe Company achievedrecorded EBITDA of $138.5$241.7 million in 2010, resulting in2013, and the Committee established a 155% payout at 167% of target under the cash incentive plan. Such payout amounts were within the maximum amounts described below under the caption “Section 162(m).” The Committee established bonusincentive opportunities, as a percentage of base salary, for each named executive officer dependent upon each named executive officer’s respective current and expected future respective positions, skills, and experience, as well as other factors described above including the degree of responsibility assumed and expected to be assumed by such individual for aspects of the organization that impact our financial performance. The target bonus opportunity for each of Messrs. Oglesby, Monaghan, Kearney, andKrenz, Parham, and Ms. Chandler,Villasana was set at 100%, 70%75%, 60%55%, 40% and 40% of their respective base salaries. Threshold and maximum bonus payout opportunities were set at one-half of target and two-times target percentages, respectively. The various bonus opportunities (as a percentage of base salary), and actual dollar amounts paid, pursuant to the 20102013 annual cash bonusincentive plan are detailed in the table below. | | | | | | | | | | | | | | | | | Name | | Threshold
Opportunity | | | Target
Opportunity | | | Maximum
Opportunity | | | Actual
Payment
(155% of Target) | | Charles R. Oglesby | | | 50 | % | | | 100 | % | | | 200 | % | | $ | 1,356,937 | | Craig T. Monaghan | | | 35 | % | | | 70 | % | | | 140 | % | | $ | 659,433 | | Michael Kearney | | | 30 | % | | | 60 | % | | | 120 | % | | $ | 558,000 | | Joseph G. Parham, Jr.(1) | | | 20 | % | | | 40 | % | | | 80 | % | | $ | 136,400 | | Elizabeth B. Chandler | | | 20 | % | | | 40 | % | | | 80 | % | | $ | 204,600 | |
(1) | The bonus payment to Mr. Parham represents the pro rata bonus amount earned from May 3, 2010, the date he commenced his employment with the Company, through December 31, 2010. |
| | | | | | | | | | | | | | Name | | Threshold
Opportunity | | Target
Opportunity | | Maximum
Opportunity | | Actual
Payment
(167% of Target) | | Craig T. Monaghan | | | 50% | | | 100% | | | 200% | | $ | 1,586,500 | | Michael Kearney | | | 37.5% | | | 75% | | | 150% | | $ | 883,013 | | Scott J. Krenz | | | 27.5% | | | 55% | | | 110% | | $ | 404,140 | | Joseph G. Parham, Jr. | | | 20% | | | 40% | | | 80% | | $ | 227,120 | | George A. Villasana | | | 20% | | | 40% | | | 80% | | $ | 233,800 | |
Equity-Based Compensation For 2010, the The Committee didgenerally does not use a specific formula for allocating equity-based compensation as a partpercentage of total compensation for the named executive officers. Instead,For 2013, consistent with prior years, the Committee considered a number of factors to establishin establishing the level of long-term compensation for each named executive officer, primarily (i) Peer Group compensation pay practices and norms for comparable executives, (ii) general industry pay levels for comparable executives as gathered from publicly-available sources, (iii) primarily:
| | | | • | Peer Group compensation pay practices and norms for comparable executives; | | | | | • | general industry pay levels for comparable executives as gathered from publicly-available sources; | | | | | • | historical individual performance and responsibility of the executive; | | | | | • | tenure and importance to us of the executive; | | | | | • | expected future responsibilities of the executive; |
Table of the executive, (iv) tenure and importance to the Company of the executive, (v) expected future responsibilities of the executive, (vi) the impact of recent historical equity-based compensation decisions, awards and payouts to each executive (including the fact that annual awards granted in 2009 were in the form of stock options), and (vii) internal equity considerations.Contents
| | | | • | the impact of recent historical equity-based compensation decisions, awards and payouts to each executive; and | | | | | • | internal pay equity considerations. |
To ensure that the equity-based awards to executive officers in 20102013 addressed both the long-term performance and retention objectives of our equity incentive plan, the Committee decided that the awards should generally be a blend of (i) time-vesting restricted stock, and (ii) performance share units which areannual grant would consist of: | | | | • | 40% time-vesting restricted stock, which the Committee believes enhances executive officer retention; and | | | | | • | 60% performance share units, the vesting of which is subject to our achievement of certain performance metrics, which the Committee believes provides an appropriate amount of executive officer focus on our financial success, as well as the continued employment of the executive. |
In 2013, the achievement by the Company of certain performance metrics, also vest over time and are payable in shares of our common stock. The Committee concluded that time-vesting non-performance based restricted stock was an appropriate complement and balance to the performance share units, and enhance retention. Consequently, the following named executive officers receivedwere granted the mixnumber of shares of restricted stock and the number of performance share unitsunit awards (at target performance levels) set forth beside his or her name below: | | | | | | | | Name | | Number of
Shares of
Restricted
Stock Granted | | Number of
Performance
Share Units
Granted
(at Target
Performance
Level) | | Craig T. Monaghan | | | 25,720 | | | 38,580 | | Michael S. Kearney | | | 13,720 | | | 20,580 | | Scott J. Krenz | | | 7,440 | | | 11,160 | | Joseph G. Parham, Jr. | | | 3,160 | | | 4,740 | | George A. Villasana | | | 4,000 | | | 6,000 | |
2013 Restricted Stock Award Features | | | | | | | | | Name | | Number of
Shares of
Restricted
Stock Granted | | | Number of
Performance
Share Units
Granted | | Craig T. Monaghan | | | 35,000 | | | | 35,000 | | Michael S. Kearney | | | 35,000 | | | | 35,000 | | Elizabeth B. Chandler | | | 22,500 | | | | 22,500 | | Joseph G. Parham, Jr.(1) | | | 10,000 | | | | 10,000 | |
(1) | Upon joining the Company in May 2010, Mr. Parham was awarded 10,000 performance share units and 10,000 shares of restricted stock, which have the same terms as the equity awards issued to the other named executive officers in 2010, as described above. In addition, Mr. Parham was granted a special new hire equity award of 10,000 additional shares of restricted stock to further encourage share ownership and to assist Mr. Parham in meeting our equity holding guidelines for executives. These shares of restricted stock awarded to Mr. Parham as a special new hire equity award vest on the third anniversary of the grant date. |
The Committee made a similar decision with respect to the 2010 equity-based award made to Mr. Oglesby, except that, in accordance with certain provisions of his employment agreement, Mr. Oglesby received restricted stock units instead of restricted stock. As a result, the Committee recommended to the Board, and the Board subsequently approved, equity awards to Mr. Oglesby consisting of 64,767 restricted stock units and 64,767 performance share units under the same performance metric criteria approved by the Committee for the other named executive officers described below. The 20102013 restricted stock awards granted to the named executive officers vest ratably over three years (two years in the case of Mr. Kearney in light of his years of service to the Company and in order to provide an additional retention benefit) beginning on the first anniversary of the date of grant.grant date. In the event that dividends are paid on shares of our common stock at any time when restricted stock or restricted stock unit awards remain unvested, any such dividends will accrue and be payable to the grantee upon vesting of the underlying restricted shares. In the event such shares do not vest, no such dividends will be paid.
2013 Performance Share Unit Award Features The performance share unit awards havegranted to the named executive officers had a one-year performance period based uponon our fiscal year 20102013 performance (described below) and, assuming satisfaction of such performance requirements, vest ratablyprovide for ratable vesting over three-years (two years in the case of Mr. Kearney for the reasons cited above) beginning on the grant date of the award, and requiringrequire continued employment with the Company through the vesting period. Such performance share unit awards, if paid, will be paid in shares of our common stock. In evaluating and approving such criteria,considering the performance share unit program, the Committee believed it was important to set what it considered among other things,challenging, yet attainable, targets for the factors described above relatingperformance period. The Committee, with the input of Pay Governance, determined that it would be difficult to equity-based awards. In addition, the Committee believedproject our performance over a multi-year performance period, and therefore determined that a one-year performance period, waswith subsequent year vesting restrictions, remained appropriate, in light of continued economic and industry-specific uncertainty. The Committee also determined that this one-year performance period for the performance share unit awards, coupled with a three-year vesting period, should provideincluding providing sufficient alignment between management and stockholder interests and serveserving as a valuable retentionexecutive-retention tool.
Under eachthe performance share unit award,awards program, each executive iswas awarded a target number of performance share units. A percentageunits that could be earned based on our performance relative to certain comparable companies with respect to the performance metrics described below. These metrics were selected because of eachtheir relative importance to our financial success. The number of performance share unit award willunits awarded to each executive was recommended to the Committee by the CEO based on each executive’s past performance and level of responsibility; the number of performance share units awarded to the CEO was determined by the Committee and awarded to the CEO based on his past performance. The actual number of performance share units that could be converted into shares of our common stock atearned was based on the end of each vesting period, subject to our achievement of certain pre-established performance goals setapproved by the Committee.Committee at the beginning of the performance period. The number of sharesshare units awarded was dependent upon our performance during 2010determined based on “points” earned, as described below, and could range from 0% to 150% of the target number of units. The Committee chose a payout range of 0% to 150% for percentageof the target payout to conformaward consistent with a prevailing market trend of reduced maximum payouts (from 200% maximum target payout in prior performance share unit programslevels to 150% maximum target payout for the 2010 performance share unit program) to address any possiblereduce potential concerns regarding excessive risk-taking by employees eligible for such awards.
Table of Contents Under our 20102013 performance share unit award program, our performance was to be determined, or scored, using fourand thus the actual number of shares were to be earned, based upon the following five performance elements, which included, (i) front end light vehicle gross profit yield per light vehicle unit sold; (ii) percentage improvement in same store gross profit; (iii) basis point improvement in EBITDA margin; and (iv) basis point improvement in return on invested capital. These performance elements were chosen because they are the Committee determined them to be key drivers of long-term performance in our industry. We wereindustry: | | | | • | front-end light vehicle gross profit yield per light vehicle unit sold; | | | | | • | percentage improvement in same-store gross profit measured against the prior fiscal year; | | | | | • | EBITDA margin; | | | | | • | basis point improvement in EPS measured against the prior fiscal year; and | | | | | • | ROIC. |
For these purposes, EBITDA margin is defined as EBITDA divided by total gross profit. EBITDA is defined as earnings before non-floor plan interest, any gain/loss on repurchase of debt, income taxes, depreciation and amortization, impairment expenses and other publicly reported non-core items. ROIC is defined as EBITDA divided by invested capital. Invested capital is defined as book value of total debt (excluding floor plan debt) less cash, or “net debt”, plus book value of equity. The 2013 performance share unit award program was designed so that each element of our performance would be ranked and scored on each performance element against the comparable element of performance offor AutoNation, Inc., Group 1 Automotive, Inc. and Sonic Automotive, Inc. (the “PSU Peer Group”), our three most comparable competitors. With respect to actual performance relating tocompetitors based on lines of business. We and each performance element, the Company andmember of the PSU Peer Group were ranked between zero (0) and three (3),on each performance element, first through fourth, with zero (0)each performance element determined by reference to each entity’s most recently publicly available financial results. For purposes of determining our points beingearned under the lowest score and three (3)2013 performance share unit program, points being the highest scorewere earned for each element as follows: | | | | • | 3 points were awarded if we ranked 1st in the performance element; | | | | | • | 2 points were awarded if we ranked 2nd in the performance element; | | | | | • | 1 point was awarded if we ranked 3rd in the performance element; and | | | | | • | 0 points were awarded if we ranked 4th in the performance element. |
The points earned for each performance element as shown in the chart below. The total number of points attributable to the Company for each performance element waswere added together, such that the highest number of collective points achievable bywe could achieve was 15, as shown in the Companytable below. In addition, our performance results and those of each PSU Peer Group member under each performance element could be adjusted for material, publicly disclosed non-core items. The target percentage was twelve (12). Additionally, to encourage improvedbe determined based on the total points earned according to the chart below. | | | | | | | | | Target % | | | Total Points Earned | | From | | To | | | 0 | | 0% | | 0% | | No Payment | 1 | | 0% | | 40% | | | 2 | | 20% | | 50% | | | 3 | | 40% | | 60% | | | 4 | | 50% | | 70% | | | 5 | | 60% | | 80% | | | 6 | | 70% | | 90% | | | 7 | | 80% | | 100% | | | 8 | | 90% | | 110% | | Target | 9 | | 100% | | 115% | | | 10 | | 105% | | 120% | | | 11 | | 110% | | 125% | | | 12 | | 120% | | 130% | | | 13 | | 130% | | 140% | | | 14 | | 140% | | 150% | | | 15 | | 150% | | 150% | | Maximum |
Table of Contents The maximum number of points available and, based on the considerations above, the actual number of points earned for each performance overelement under the previous fiscal year, the Committee designed the 20102013 performance share unit award program is detailed in the following table: | | | | | | | | | | | | | | | | | | | | | | Gross Profit
Yield Per
Light Vehicle
Unit Sold | | Percentage
Improvement
in Same
Store Gross
Profit | | EBITDA
Margin | | EPS | | ROIC | | Total | | Maximum Points Available | | | 3 | | | 3 | | | 3 | | | 3 | | | 3 | | | 15 | | Points Earned by Asbury | | | 2 | | | 3 | | | 2 | | | 3 | | | 3 | | | 13 | |
Pursuant to limit the payout to 100% of target if the Company’s earnings per share was between 80% and 100% of our 2009 earnings per share level, and if our actual 2010 earnings per share was below 80% of our 2009 earnings per share level, there would be no payout. For the purposes of determining the payout under this program, and pursuant to the point system established under the 2010 performance share unit program, a total of 1013 points (out of a maximum of 1215 points available) were earned by the Company based on the achievement level of the performance elements described above, resulting inand the Committee, using its discretion under the program, established a payout of 134% of target.
The maximuma number of points available and the actual numbershares of points earned for each performance element for the 2010 performance period is detailed in the table below:
| | | | | | | | | | | | | | | | | | | | | | | | Gross Profit
Yield Per
Light Vehicle
Unit Sold | | | Percentage
Improvement in
Same Store
Gross Profit | | | EBIDTA
Margin
Improvement | | | ROIC
Improvement | | | Total | | Maximum Points Available | | | 3 | | | | 3 | | | | 3 | | | | 3 | | | | 12 | | Points Achieved by Asbury | | | 2 | | | | 2 | | | | 3 | | | | 3 | | | | 10 | |
Payoutour common stock at 135% of Percentage Based on Points Earned by the Company
| | | | | | | | | | | | | | | Points earned | | 0,1 | | 2,3 | | 4,5 | | 6,7 | | 8,9 | | 10,11 | | 12 | Percent of target shares awarded | | 0% | | 50% | | 75% | | 100% | | 116.5% | | 134% | | 150% | | | No payout | | | | | | Target | | | | | | Maximum |
The Committee authorized the paymenttarget. Payments of awards pursuant to the 20102013 performance share unit award program were made as set forth below. All such amounts were within the maximum amounts described below to each ofunder the named executive officers on March 15, 2011, with the Board previously delegating its authority to the Committee to authorize the payment of the award related to such grant to Messrs. Oglesby and Monaghan on such date.caption “Section 162(m).”
| | | | | | | | Name | | Target
Number of
PSUs Granted | | Number of Shares
of Common Stock
Awarded
Under the
2013 Performance
Share Unit
Award Program | | Craig T. Monaghan | | | 38,580 | | | 52,083 | | Michael S. Kearney | | | 20,580 | | | 27,783 | | Scott J. Krenz | | | 11,160 | | | 15,066 | | Joseph G. Parham, Jr. | | | 4,740 | | | 6,399 | | George A. Villasana | | | 6,000 | | | 8,100 | |
In accordance with the terms of suchthe 2013 performance share unit award program, one-third of the award to each named executive officer was vested at such time. | | | | | | | | | Name | | Target
Number of
PSUs Granted | | | Number of
Shares of
Common Stock
Awarded
Under the
2010 PSU
Program(1) | | Charles R. Oglesby | | | 64,767 | | | | 86,788 | | Craig T. Monaghan | | | 35,000 | | | | 46,900 | | Michael S. Kearney | | | 35,000 | | | | 46,900 | | Elizabeth B. Chandler | | | 22,500 | | | | 30,150 | | Joseph G. Parham, Jr. | | | 10,000 | (2) | | | 13,400 | (3) |
(1) | The amounts in this column represent a payout at 134% of the target number of shares granted to each named executive officer under the 2010 performance share unit program. |
(2) | Represents the number of performance shares awarded to Mr. Parham upon joining the Company on May 3, 2010. |
(3) | The first third of this award to Mr. Parham will not vest until May 3, 2011. |
As previously disclosed, the Company’s 2009 financial performance resulted in achievement of goals that would have resulted in cash payments under the 2009 annual cash bonus plan at the maximum level (200% of target). Pursuant to the discretion afforded the Committee under that plan, and after reviewing various factors including, but not limited to, the then-continued uncertainty in the economy and the automotive retail industry, the Committee and management agreed that the actual cash payout to 2009 bonus plan participants, including the named executive officers, would be reduced by 25%, resulting in a payout of 150% of target. The Committee determined that because it had reduced the cash payout under the 2009 annual cash bonus plan by 25%, and in recognition of their contributions to the successlater of the Company, certain individuals, including the named executive officers, should receive a one-time special equity grant of restricted stock (and, in the case of Mr. Oglesby, restricted stock units) in the amounts in the table below. The grants of restricted shares and restricted share units, respectively, which were awarded to each of the named executive officers in the table below in February 2010, vest ratably over a three-year period beginning on thefirst anniversary of the grant date.date and the date the payout of a number of shares of our common stock is established by the Committee.
Other Benefits | | | | | Name
| | Number of
Shares of
Restricted
Stock/Restricted
Stock Units
Granted | | Charles R. Oglesby
| | | 36,000 | | Craig T. Monaghan
| | | 18,643 | | Michael S. Kearney
| | | 15,776 | | Elizabeth B. Chandler
| | | 3,856 | |
Other Benefits
In 2010,2013, our executive officers were eligible to participate in the Company’s employee benefit plans generally available to all of our employees in the corporate office. Furthermore, each named executive officer received an auto allowance. The benefits offered to our executive officers consist ofoffice, including medical, dental, life and disability insurance plans, as well as participationto participate in our 401(k) plan. The participation of our executive officers in each of these plans is considered appropriate by the Company as such benefits are traditionally offered under the same terms and at the same cost as to other employees who are employed in our corporate office. In January 2009, in light of the then-current economic environment and its continued significant impact on the automotive retailing industry, we determined it was appropriate to suspend the Company-match component of our 401(k) plan for certain highly paid executives, including the named executive officers, and continued such suspension throughout 2010. We do not provide a defined benefit or a supplemental retirement plan for our executive officers or other employees, and our Wealth Accumulation Plan, which is a deferred compensation plan offered to certain highly-paid employees, including the named executive officers, did not in 2010 include a Company-funded match, or require any other cash contribution by the Company.
In the automotiveautomobile retailing industry, senior executives are typically provided with the use of one or more demonstrator vehicles from a company’sretailer’s inventory of new vehicles in order to, among other things, show support for the Company’sretailer’s offered brands. Executives are typically entitled to these vehicles for business and personal use. In our case, however, prior to 2009, our corporate headquarters were located in a different region than our primary operations which made it impractical to provide demonstrator vehicles to the eligible corporate officers. Subsequent to the relocation of our corporate headquarters to Duluth, Georgia in 2009, management decided to limitManagement has limited the number of demonstrator vehicles grantedprovided to our employees of the Company due to the risks associated with the use of such vehicles. As such, toTo provide a similar benefit, we have provided and continued to provide in 2010, a cash car allowance of $800 per month to certain of our corporate officers at the vice president level and above, including our named executive officers. In 2010, Mr. Oglesby received a car allowance of $1,000 per monthofficers, as described below, and thein 2013, Messrs. Monaghan and Kearney each were entitled to use of one demonstrator automobile pursuant to the terms of histheir respective employment agreement, and our other officers at the vice president level and above received a car allowance of $800 per month. In addition to his monthly car allowance, Mr. Kearney had the use of one demonstrator automobile as a result of his required significant automobile travel and to be consistent with the benefit of having two demonstrator vehicles provided to him in his prior position with the Company.
In 2010, Mr. Oglesby also received reimbursement (including for the related income tax impact) for certain legal expenses incurred by him in connection with the negotiation and execution of his employment agreement with the Company in March 2010.agreements.
Employment, Severance and Change in Control Arrangements General Provisions of Employment, Severance and SeveranceSeparation Agreements Prior to February 9, 2011, Charles Oglesby was the only named executive officer that was party to an employment agreement with the Company. In connection with the executionimplementation of the Company’scertain aspects of our succession plan effective February 9, 2011, the Companyand as a retention and executive recruitment tool, we have entered into new employment agreements with Messrs. Monaghan and Kearney, and amended and restated its agreement with Mr. Oglesby.Kearney. In addition, the Company has entered intowe are currently party to certain agreements relating to severance agreements with Ms. Chandler and Mr. Parham. These agreements (including the employment agreementsand/or separation arrangements with Messrs. Oglesby, MonaghanKrenz, Parham and Kearney)Villasana. These agreements provide for certain benefits in the event of involuntary termination without cause and,or for Messrs. Oglesby, Monaghangood reason by the named executive officer, and Kearney, additional benefits in the event of termination by the Company without cause or by the named executive officer for certain events within two years following a change in control.control for Mr. Villasana. Agreements with Mr. Krenz and Mr. Parham have been entered into in connection with their announced retirements, and are described in more detail below. Each executive has agreed to certain confidentiality, non-compete, and non-solicitation provisions contained in his or her agreement.
The Company believesTable of Contents
We believe that these agreements serve as appropriate retention and motivational tools for these executives by generally providing a measure of financial security in the event of an unplanned termination of employment, with the exception of a termination for cause. Furthermore, from time to time, we examine various strategic alternatives, and the provisions of these agreements are important to retain these key people whose continued employment might be at risk in certain changes of control, although such transactions may otherwise be in the best interests of our stockholders. As a corporate policy, the Company believeswe believe that it may be difficult to attract and retain talented executives with provisions in our severance arrangements that deny severance benefits in the event of a termination for performance-related issues. A description of the terms of thethese employment, severance and separation agreements, with Messrs. Oglesby, Monaghan and Kearney, including their respective severance arrangements, the terms of the respective severance arrangements with Ms. Chandler and Mr. Parham and the potential payouts to these individuals pursuant to the applicable severance arrangements,provisions thereof, are summarized in the “Potential“Employment Agreements and Potential Payments Upon Termination” section of this proxy statement. Section 162(m) Section 162(m) of the Code generally imposes a $1,000,000 per taxable year ceiling on the tax deductibility to a company of remuneration paid (not including amounts deferred) to the company’s chief executive officer and any one of the other three most highly compensated executive officers of a publicly held corporation (with the exception of such company’s chief financial officer), unless the remuneration is treated as performance-based or is otherwise exempt from the provisions of Section 162(m). While we intend to maximize the tax-efficiency of our compensation programs generally, the Committee and the Board retain the flexibility in the manner in which we award compensation to act in the best interests of the Company and its stockholders, including awarding compensation that may not be deductible by reason of Section 162(m). However, The Committee structures and administers annual cash incentive awards under our shareholder-approved Amended and Restated Key Executive Incentive Compensation Plan and long-term equity incentive awards under our shareholder-approved equity incentive plans with the goal of maximizing the tax deductibility of certain awards as “performance-based” compensation under Section 162(m) of the Code, to ensurethe extent practical and deemed appropriate, consistent with maintaining competitive compensation. Commencing with fiscal year 2012, in connection with annual cash incentive awards and long-term equity incentive awards, the Committee selects an objective maximum annual cash incentive award and long-term equity incentive awards that our performance-based compensation complies with Section 162(m),a named executive officer may receive based on the achievement of specified EBITDA (adjusted as described below) performance levels, but may not increase awards above these maximum amounts. Each year, the Committee establishes performance goalscriteria for annual cash incentive awards and long-term equity incentive awards and may apply negative discretion to the maximum award amounts. For fiscal 2013, the Committee exercised its negative discretion to arrive at the actual annual cash incentive plan awards and long-term equity incentive awards received by our performance-based compensation programs within the first 90 daysnamed executive officers.
Table of the fiscal year.Contents COMPENSATION AND HUMAN RESOURCES COMMITTEE REPORT The Compensation and Human Resources Committee of the Company has reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K of the Exchange Act and, based on such review and discussions, the Compensation and Human Resources Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement. Submittedstatement and incorporated by reference in the Members ofCompany’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013.
| | | Members of the Compensation and Human Resources Committee | | Janet M. Clarke (Chair) | | Dennis E. Clements | | Juanita T. James | | Eugene S. Katz |
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION During 2010,2013, Ms. Clarke (Chair), Mr. Clements, and Ms. James and Mr. Katz, none of whom is or was formerly an officer or employee of the Company, were members of the Compensation and Human Resources Committee of our Board. None of the Compensation and Human Resources Committee members serve asor other members of the board of directors or compensation committeeBoard serves as an executive officer of any entity that hasfor which one or moreof the Company’s executive officers servingserves as a director or member of our Board or Compensation Committee.such other entity’s compensation committee.
Table of Contents EXECUTIVE COMPENSATION The following table shows the compensation paid for fiscal years 2008, 20092013, 2012 and 2010 for the2011 to our CEO, theour former CFO (who served in such position through December 31, 2013) and our three other most highly compensated executive officers of the Company who were employed by the Company at the end of 2010in 2013 (collectively, the “named executive officers”). For a more detailed discussion about the compensation arrangements for these executive officers, see “Compensation Discussion and Analysis.” SUMMARY COMPENSATION TABLE | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Position | | Year | | | Salary
(1) | | | Stock
Awards
(2) | | | Option
Awards
(3) | | | Non-Equity
Incentive Plan
Compensation
(4) | | | All Other
Compensation | | | Total | | Charles R. Oglesby | | | 2010 | | | $ | 868,495 | | | $ | 1,916,884 | | | $ | 0 | | | $ | 1,356,937 | | | $ | 37,320 | (6) | | $ | 4,179,636 | | President and Chief Executive Officer(5) | | | 2009 | | | $ | 779,668 | | | $ | 654,480 | | | $ | 633,500 | | | $ | 1,250,633 | | | $ | 62,650 | (7) | | $ | 3,380,931 | | | | | 2008 | | | $ | 825,000 | | | $ | 1,422,000 | | | $ | 0 | | | $ | 0 | | | $ | 237,310 | (8) | | $ | 2,484,310 | | | | | | | | | | Craig T. Monaghan | | | 2010 | | | $ | 607,772 | | | $ | 1,011,417 | | | $ | 0 | | | $ | 659,433 | | | $ | 9,600 | (9) | | $ | 2,288,222 | | Senior Vice President and Chief Financial Officer(5) | |
| 2009
2008 |
| | $
$ | 568,345
380,769 |
(11) | | $
$ | 0
840,000 |
| | $
$ | 629,750
0 |
| | $
$ | 638,161
0 |
| | $
$ | 16,854
94,923 | (10)
(12) | | $
$ | 1,853,110
1,315,692 |
| | | | | | | | | Michael Kearney | | | 2010 | | | $ | 600,000 | | | $ | 978,704 | | | $ | 0 | | | $ | 558,000 | | | $ | 11,283 | (13) | | $ | 2,147,987 | | Senior Vice President and Chief Operating Officer(5) | | | 2009 | | | $ | 600,000 | | | $ | 0 | | | $ | 532,000 | | | $ | 540,000 | | | $ | 71,562 | (14) | | $ | 1,743,562 | | | | | 2008 | | | $ | 375,000 | | | $ | 276,200 | | | $ | 0 | | | $ | 317,550 | (15) | | $ | 21,453 | (16) | | $ | 990,203 | | | | | | | | | | Joseph G. Parham | | | 2010 | | | $ | 218,942 | (17) | | $ | 477,900 | | | $ | 0 | | | $ | 136,400 | | | $ | 6,400 | (18) | | $ | 839,642 | | Vice President, Chief Human Resources Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Elizabeth B. Chandler | | | 2010 | | | $ | 330,000 | | | $ | 557,447 | | | $ | 0 | | | $ | 204,600 | | | $ | 9,600 | (9) | | $ | 1,101,647 | | Vice President, General Counsel and Corporate Secretary | | | 2009 | | | $ | 209,423 | (19) | | $ | 83,300 | | | $ | 412,500 | | | $ | 132,000 | | | $ | 5,910 | (20) | | $ | 843,133 | |
| | | | | | | | | | | | | | | | | | | | | | | Name and Position | | Year | | Salary | | Stock
Awards (1) | | Option
Awards | | Non-Equity
Incentive Plan
Compensation
(2) | | All Other
Compensation | | Total | | | | | | | | | | | | | | | | | | | | | | | | | Craig T. Monaghan | | | 2013 | | $ | 916,667 | | $ | 2,248,571 | | | — | | $ | 1,586,500 | | $ | 32,423 | (3) | $ | 4,784,161 | | President and CEO | | | 2012 | | $ | 750,000 | | $ | 1,748,896 | | | — | | $ | 1,035,000 | | $ | 26,799 | | $ | 3,560,695 | | | | | 2011 | | $ | 735,346 | | $ | 1,499,954 | | | — | | $ | 705,000 | | $ | 22,338 | | $ | 2,962,638 | | | | | | | | | | | | | | | | | | | | | | | | | Michael Kearney | | | 2013 | | $ | 700,000 | | $ | 1,199,471 | | | — | | $ | 883,013 | | $ | 16,530 | (4) | $ | 2,799,014 | | Executive Vice President | | | 2012 | | $ | 675,000 | | $ | 1,049,846 | | | — | | $ | 698,625 | | $ | 16,097 | | $ | 2,439,568 | | and COO | | | 2011 | | $ | 667,452 | | $ | 900,104 | | | — | | $ | 475,875 | | $ | 116,843 | | $ | 2,160,274 | | | | | | | | | | | | | | | | | | | | | | | | | Scott Krenz | | | 2013 | | $ | 437,500 | | $ | 650,442 | | | — | | $ | 404,140 | | $ | 9,600 | (5) | $ | 1,501,682 | | Senior Vice President and | | | 2012 | | $ | 425,000 | | $ | 650,752 | | | — | | $ | 322,575 | | $ | 84,600 | | $ | 1,482,927 | | Former CFO | | | 2011 | | $ | 219,038 | (6) | $ | 400,012 | | | — | | $ | 109,863 | (7) | $ | 79,948 | | $ | 808,861 | | | | | | | | | | | | | | | | | | | | | | | | | Joseph G. Parham | | | 2013 | | $ | 338,333 | | $ | 276,263 | | | — | | $ | 227,120 | | $ | 9,600 | (5) | $ | 851,316 | | Vice President, Chief Human | | | 2012 | | $ | 328,192 | | $ | 269,452 | | | — | | $ | 182,160 | | $ | 9,600 | | $ | 789,404 | | Resources Officer | | | 2011 | | $ | 330,000 | | $ | 331,818 | | | — | | $ | 124,080 | | $ | 9,600 | | $ | 795,498 | | | | | | | | | | | | | | | | | | | | | | | | | George A. Villasana | | | 2013 | | $ | 344,167 | | $ | 349,700 | | | — | | $ | 233,800 | | $ | 62,100 | (8) | $ | 989,767 | | Vice President, General | | | 2012 | | $ | 223,125 | (9) | $ | 315,010 | | | — | | $ | 123,107 | (10) | $ | 134,300 | | $ | 795,542 | | Counsel and Secretary | | | | | | | | | | | | | | | | | | | | | | |
(1) | Base salary is the guaranteed element of a named executive officer’s total compensation. Individuals whose job responsibilities have a greater potential to affect company performance have a smaller proportion of their total compensation tied to salary and a greater proportion tied to the incentive-based annual cash bonus. |
| (2)(1) | The amounts in this column represent the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 for awards of performance shares and shares of restricted stock for the fiscal years ended December 31, 2010, 20092013, 2012 and 2008,2011, as described in the “Compensation Discussion and Analysis—Equity-Based Compensation” discussion and in footnote 2 of the “Grants of Plan-Based Awards Table” below. For a more detailed discussion of the assumptions used to determine the valuation of the stock awards set forth in this column, please see a discussion of such valuation in Note 2422 of the Consolidated Financial Statements in our 2010 Annual Report on Form 10-K for the year ended December 31, 2013, filed with the SEC on February 28, 2011,25, 2014, which footnote is incorporated into this proxy statement by reference. |
| | | | The maximum possible value of performance awards (based on the assumption that the highest level of performance is achieved) granted to each of our named executive officers in 2010 is set forth beside his or her name: Mr. Oglesby: $1,125,003;2013 was as follows: Mr. Monaghan: $599,025;$2,023,715; Mr. Kearney: $599,025;$1,079,525; Mr. Krenz: $585,398; Mr. Parham: $238,950;$248,637 and Ms. Chandler: $385,088. |
| The maximum possible valueMr. Villasana $314,730. For additional information on the actual number of performance share awards (based on the assumption that the highest level of performance is achieved) granted, to each of our named executive officers in 2008 is set forth beside his or her name: Mr. Oglesby: $1,244,250; Mr. Monaghan: $588,000; and Mr. Kearney: $241,675. Fiscal years 2008, 2009 and 2010 compose the performance period for the 2008 performance awards. Any payout under these awards will be made in the first quarter of 2011. |
(3) | The amounts in this column represent the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. For a more detailed discussion of the assumptions used to determine the valuation of the option awards set forth in this column, please see the discussion under “Compensation Discussion and Analysis – Review of such valuation in Note 24 of the Consolidated Financial Statements in our 2010 Annual Report on Form 10-K, filed with the SEC on February 28, 2011, which is incorporated into this proxy statement by reference.2013 Compensation – Equity Based Compensation” above. |
| | | (4)(2) | The amounts in this column represent the actual amount payablepaid under the applicable year’s annual cash bonusincentive plan. Awards under the plan were based on (i) our performance as measured by net operating income from continuing operations in fiscal year 2008; (ii) our performance as measured by earnings per share at different levels of United States Annual Automobile Sales in fiscal year 2009; and (iii) our performance as measured by earnings before interest, taxes, depreciation and amortization (“EBITDA”) at different levels of United States Annual Automobile Sales in fiscal year 2010. The figures in this column for 2008, 2009 and |
| 2010amounts represent the entire cash bonus paid toincentive award earned by the named executive officers forin those fiscal years. There were no cash bonuses paid out under the annual cash bonus plan for fiscal year 2008. For a more detailed discussion of the annual cash bonus plan, please see the section of this proxy statement entitled, “Compensation Discussion and Analysis—Annual Cash Bonus Plan.” See footnote (15) for an explanation of the cash award paid to Mr. Kearney in 2008.
|
| (5) | On February 10, 2011, we announced the retirement of Charles R. Oglesby, our former President and Chief Executive Officer, and the election of Craig T. Monaghan to the position of President and Chief Executive Officer, effective February 9, 2011. In conjunction with Mr. Oglesby’s planned retirement and for transition purposes, Mr. Oglesby was appointed as Executive Chairman until the date of his retirement on July 31, 2011. Also effective February 9, 2011, Michael S. Kearney was elected as our Executive Vice President and Chief Operating Officer. |
| (6)(3) | Represents (i) the imputed income associated with the use of one demonstrator vehicle valued at $8,943,$22,823; and (ii) a reimbursement for legal fees in the amount of $7,123 in connection with the negotiation of Mr. Oglesby’s employment agreement, (iii) a tax gross-up of income of $5,254 related to the reimbursement for the legal fees described in (ii) above, and (iv) an automobile allowance of $16,000.$9,600. |
| (7) | Represents (i) $27,600 of accrued dividends on performance shares that were issued in 2006 and vested in 2009, (ii) a reimbursement for legal fees in the amount of $6,359 in connection with the negotiation of Mr. Oglesby’s employment agreement, (iii) a tax gross-up of income of $4,691 related to the reimbursement for the legal fees described in (ii) above, and (iv) an automobile allowance of $24,000. |
(8) | Represents (i) a reimbursement for legal fees in the amount of $6,886 in connection with the negotiation of Mr. Oglesby’s employment agreement, (ii) a tax gross-up of income of $5,079 related to the reimbursement for the legal fees described in (i) above, (iii) dividends amounting to $44,250 on unvested shares of restricted stock, (iv) a company 401(k) plan match of $4,600, (v) an automobile allowance of $24,000, (vi) $110,650 paid for the use of an apartment leased by us, (vii) housing and living expenses, including a gym membership, of $7,162, (viii) commuting expenses of $22,255 and (ix) $12,428 for shipping goods from New York to his home in Duluth, Georgia. |
(9)(4) | Represents an automobile allowance of $9,600. |
(10) | Represents (i) $4,175 for storage of household good in connection with his relocation to Duluth, Georgia, (ii) a tax gross-up of income of $3,079 related to the storage of household goods and (iii) an automobile allowance of $9,600. |
(11) | Represents base salary compensation for Mr. Monaghan from his start date of May 12, 2008 to December 31, 2008. |
(12) | Represents (i) $12,118 for costs associated with relocation to Duluth, Georgia, (ii) $29,489 for costs for meals and commuting to our corporate office in New York from his homes in Florida and Delaware, (iii) $6,014 for storage of household goods, (iv) a tax gross-up of income of $34,275 related to the relocation, (v) dividends amounting to $6,750 on unvested shares of restricted stock, and (vi) an automobile allowance of $6,277. |
(13) | Represents (i) the imputed income associated with the use of one demonstrator vehicle valued at $2,071$6,939; and (ii) an automobile allowance of $9,212.$9,600. |
| | | (14)(5) | Represents an automobile allowance. | | | | (6) | Represents base salary from June 27, 2011, the date he commenced employment with the Company, to December 31, 2011. | | | | (7) | Represents the pro rata annual cash incentive plan amount earned from June 27, 2011, the date he commenced employment with the Company, to December 31, 2011. | | | | (8) | Represents (i) a relocation cash allowance of $30,000, (ii) a tax gross-up of income of $18,441 related to the relocation, (iii) $13,800 in accrued dividends on performance shares that were issued in 2006 and vested in 2009, (iv) an automobile allowance of $7,200$9,600; and (v)(ii) the imputed income associated with the useremainder of a demonstrator vehicle valued at $2,121.signing bonus paid to Mr. Villasana in lieu of relocation benefits. |
| (15) | Mr. Kearney’s cash bonus for 2008 consisted of incentive payments earned in connection with his then responsibilities as Chief Executive Officer of the former Eastern Region. At that time, his incentive payments were based solely on the achievement of net income before taxes for his regional responsibilities. Upon his promotion to Senior Vice President and Chief Operating Officer in March 2009, his bonus became based upon the achievement of the same financial goals as the other named executive officers. |
(16) | Represents (i) a company 401(k) plan match of $4,600, (ii) the imputed income associated with the use of two demonstrator vehicles valued at $10,103, and (iii) dividends amounting to $6,750. |
(17)(9) | Represents base salary compensation for Mr. Parham from his startApril 16, 2012, the date on May 3, 2010he commenced employment with the Company, to December 31, 2010.2012. | | | | (10) | Represents the pro rata annual cash incentive plan amount earned from April 16, 2012, the date he commenced employment with the Company. |
Table of Contents (18) | Represents an automobile allowance of $6,400. |
(19) | Represents base salary compensation for Ms. Chandler from her start date on May 13, 2009 to December 31, 2009. |
(20) | Represents an automobile allowance of $5,910. |
20102013 GRANTS OF PLAN-BASED AWARDS TABLE
| Name | | Grant
Date | | | Estimated Potential Payouts
Under Non-Equity Incentive
Plan Awards(1)
($ amount) | | Estimated Future Payouts
Under Equity Incentive
Plan Awards(2)
(# of shares) | | All Other
Stock
Awards:
Number of
Shares of
Stock or
Units(3)
(# of shares) | | | Grant
Date Fair
Value of
Stock and
Option
Awards
($ amount) | | | | | | Threshold | | Target | | Maximum | | Threshold | | Target | | Maximum | | | Charles R. Oglesby | | | 2/17/2010 | | | $ | 437,722 | | | $ | 875,443 | | | $ | 1,750,886 | | | | | | | | | | | | | | | | 2/17/2010 | | | | | | | | | | | | | | | | 64,767 | | | $ | 750,002 | | | | | | | | | | | | | | | | | | | | | | | | | | 2/17/2010 | | | | | | | | | | | | | | | | 36,000 | | | $ | 416,880 | | | All Other
Stock
Awards:
Number of
Shares of
Stock or)
Units(3)
(# of shares) | | Grant
Date Fair
Value of
Stock and
Option
Awards
($ amount) | | | | | 2/17/2010 | | | | | | | | | | 32,384 | | | | 64,767 | | | | 97,151 | | | | | $ | 750,002 | | | Estimated Potential Payouts
Under Non-Equity Incentive
Plan Awards(1)
($ amount) | | Estimated Future Payouts
Under Equity Incentive
Plan Awards(2)
(# of shares) | | | | | All Other
Stock
Awards:
Number of
Shares of
Stock or)
Units(3)
(# of shares) | Grant
Date Fair
Value of
Stock and
Option
Awards
($ amount) | | | | | | | | | | Approval
Date | | Grant
Date | | Name | | | Threshold | | Target | | Maximum | | Threshold | | Target | | Maximum | | Craig T. Monaghan | | | 2/17/2010 | | | $ | 212,720 | | | $ | 425,440 | | | $ | 850,881 | | | | | | | | | | | | | | | 2/12/2013 | | $ | 475,000 | | $ | 950,000 | | $ | 1,900,000 | | | | | | | | | | | | | | 2/16/2010 | | | | | | | | | | | | | | | | 35,000 | | | $ | 399,350 | | | | | | 2/16/2010 | | | | | | | | | | | | | | | | 18,643 | | | $ | 212,717 | | | 2/12/2013 | | 2/20/2013 | | | | | | | | | | | | | | 25,720 | | $ | 899,428 | | | | | 2/16/2010 | | | | | | | | | | 17,500 | | | | 35,000 | | | | 52,500 | | | | | $ | 399,350 | | | 2/12/2013 | | 2/20/2013 | | | | | | | | 7,716 | | 38,580 | | 57,870 | | | | $ | 1,349,143 | | | | | | | | | | | | | | | | | | | | | | | | | Michael S. Kearney | | | 2/17/2010 | | | $ | 180,000 | | | $ | 360,000 | | | $ | 720,000 | | | | | | | | | | | | | | | 2/12/2013 | | $ | 264,375 | | $ | 528,750 | | $ | 1,057,500 | | | | | | | | | | | | | | | 2/16/2010 | | | | | | | | | | | | | | | | 35,000 | | | $ | 399,350 | | | 2/12/2013 | | 2/20/2013 | | | | | | | | | | | | | | 13,720 | | $ | 479,788 | | | | | 2/16/2010 | | | | | | | | | | | | | | | | 15,776 | | | $ | 180,004 | | | 2/12/2013 | | 2/20/2013 | | | | | | | | 4,116 | | 20,580 | | 30,870 | | | | $ | 719,683 | | | | | 2/16/2010 | | | | | | | | | | 17,500 | | | | 35,000 | | | | 52,500 | | | | | $ | 399,350 | | | | | | | | | | | | | | | | | | | | | | | Scott J. Krenz | | | | | 2/12/2013 | | $ | 121,000 | | $ | 242,000 | | $ | 484,000 | | | | | | | | | | | | | | | 2/12/2013 | | 2/20/2013 | | | | | | | | | | | | | | 7,440 | | $ | 260,177 | | | | | 2/12/2013 | | 2/20/2013 | | | | | | | | 2,232 | | 11,160 | | 16,740 | | | | $ | 390,265 | | | | | | | | | | | | | | | | | | | | | | | | | Joseph G. Parham | | | 5/3/2010 | | | $ | 44,000 | | | $ | 88,000 | | | $ | 176,000 | | | | | | | | | | | | | | | 2/12/2013 | | $ | 68,000 | | $ | 136,000 | | $ | 272,000 | | | | | | | | | | | | | | | 5/3/2010 | | | | | | | | | | | | | | | | 10,000 | | | $ | 159,300 | | | 2/12/2013 | | 2/20/2013 | | | | | | | | | | | | | | 3,160 | | $ | 110,505 | | | | | 5/3/2010 | | | | | | | | | | | | | | | | 10,000 | | | $ | 159,300 | | | 2/12/2013 | | 2/20/2013 | | | | | | | | 948 | | 4,740 | | 7,110 | | | | $ | 165,758 | | | | | 5/3/2010 | | | | | | | | | | 5,000 | | | | 10,000 | | | | 15,000 | | | | | $ | 159,300 | | | | | | | | | | | | | | | | | | | | | | | | Elizabeth B. Chandler | | | 2/17/2010 | | | $ | 66,000 | | | $ | 132,000 | | | $ | 264,000 | | | | | | | | | | | | | George A. Villasana | | | | | 2/12/2013 | | $ | 70,000 | | $ | 140,000 | | $ | 280,000 | | | | | | | | | | | | | | | 2/16/2010 | | | | | | | | | | | | | | | | 22,500 | | | $ | 256,725 | | | 2/12/2013 | | 2/20/2013 | | | | | | | | | | | | | | 4,000 | | $ | 139,880 | | | | | 2/16/2010 | | | | | | | | | | | | | | | | 3,856 | | | $ | 43,997 | | | 2/12/2013 | | 2/20/2013 | | | | | | | | 1,200 | | 6,000 | | 9,000 | | | | 209,820 | | | | | 2/16/2010 | | | | | | | | | | 11,250 | | | | 22,500 | | | | 33,750 | | | | | $ | 256,725 | | |
| | (1) | Represents potential payouts under our annual cash bonusincentive plan for each named executive officer. For 2010, any cash bonus payment that would have been received would have been based on EBITDA at different levels of United States Annual Automotive Sales. While the Compensation Committee establishes both threshold and target bonus levels, the maximum payout is 200%. Because Mr. Parham commenced employment with us on May 3, 2010, his potential payout for 2010 was prorated to reflect the number of months worked in fiscal year 2010. For a more detailed discussion of the annual cash bonusincentive plan and the actual awards paid under this plan, see the section of the proxy statement entitled, “Compensation Discussion and Analysis—Annual Cash BonusIncentive Plan” and the “Summary Compensation Table” above. |
| | (2) | The Compensation Committee approved a grant of performance share unit awards to certain key employees, including our named executive officers listed in the table above, as part of compensation for the fiscal year ended December 31, 2010. Fiscal year 2010 was the performance period for the 2010 performance unit awards and such awards vest ratably over three years beginning on the grant date of the award, and require continued employment with the Company through the vesting period.2013. For a more detailed description of the Company’s performance share program, see the section of this proxy statement entitled, “Compensation Discussion and Analysis—Equity-Based Compensation.” |
| | (3) | The Compensation Committee approved grants of restricted stock to certain key employees, including our named executive officers listed in the table above, as part of compensation for the fiscal year ended December 31, 2010. In lieu thereof, Mr. Oglesby received grants of restricted stock units. The grants vest ratably over three years beginning on the first anniversary of the date of the grant. Upon joining the Company on May 3, 2010, Mr. Parham received two awards of 10,000 shares of restricted stock. One award vests in three equal installments beginning on the first anniversary of such grant date and the other award vests on the third anniversary of the date of the grant.2013. For a more detailed discussion of these awards, see the section of the proxy statement entitled, “Compensation Discussion and Analysis—Equity-Based Compensation” and the “Summary Compensation Table” above. |
Table of Contents OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 20102013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards(1) | | Stock Awards(2) | | | Option Awards | | Stock Awards(1) | | Name | | Number of
Securities
Underlying
Unexercised
Options
Exercisable | | Number of
Securities
Underlying
Unexercised
Options
Unexercisable | | Option
Exercise
Price | | Option
Expiration
Date | | Number of
Shares or
Units of
Stock That
Have Not
Vested | | Market
Value of
Shares or
Units of
Stock That
Have Not
Vested(3) | | Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested | | Equity Incentive
Plan Awards:
Market or Payout
Value of
Unearned Shares,
Units or Other
Rights That have
Not Vested(4) | | | Number of
Securities
Underlying
Unexercised
Options
Exercisable | | Number of
Securities
Underlying
Unexercised
Options
Unexercisable | | Option
Exercise
Price | | Option
Expiration
Date | | Number of
Shares or
Units of
Stock That
Have Not
Vested | | Market
Value of
Shares or
Units of
Stock That
Have Not
Vested(2) | | Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested | | Equity Incentive
Plan Awards:
Market or Payout
Value of
Unearned Shares,
Units or Other
Rights That have
Not Vested(3) | | Charles R. Oglesby | | | 116,666 | | | | 233,334 | | | $ | 3.64 | | | | 1/29/2019 | | | | 198,767 | | | $ | 3,673,214 | | | | 114,767 | | | $ | 2,120,894 | | | | | | 50,000 | | | | 0 | | | $ | 13.79 | | | | 11/8/2014 | | | | | | | | | | | | | | 50,000 | | | | 0 | | | $ | 14.33 | | | | 6/7/2014 | | | | | | | | | | | | | | 50,000 | | | | 0 | | | $ | 10.40 | | | | 5/12/2013 | | | | | | | | | | | | | | 60,606 | | | | 0 | | | $ | 16.50 | | | | 3/13/2012 | | | | | | | | | | | | Craig T. Monaghan | | | 91,666 | | | | 183,334 | | | $ | 3.64 | | | | 1/29/2019 | | | | 83,643 | | | $ | 1,545,723 | | | | 55,000 | | | $ | 1,016,400 | | | — | | — | | — | | — | | 70,771 | | $ | 3,803,233 | | 57,870 | | $ | 4,294,417 | | | | | | | | | | | | | | | | | | | | | Michael S. Kearney | | | 16,666 | | | | 33,334 | | | $ | 9.09 | | | | 4/29/2019 | | | | 60,776 | | | $ | 1,123,140 | | | | 45,000 | | | $ | 831,600 | | | — | | — | | — | | — | | 35,354 | | $ | 1,899,924 | | 30,870 | | $ | 2,490,527 | | | | | 33,333 | | | | 66,667 | | | $ | 3.64 | | | | 1/29/2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 50,000 | | | | 0 | | | $ | 14.33 | | | | 6/7/2014 | | | | | | | | | | | | | | 60,606 | | | | 0 | | | $ | 16.50 | | | | 3/13/2012 | | | | | | | | | | | Scott J. Krenz | | | — | | — | | — | | — | | 19,684 | | $ | 1,057,818 | | 16,740 | | $ | 1,395,305 | | | | | | | | | | | | | | | | | | | | | Joseph G. Parham | | | 0 | | | | 0 | | | $ | 0 | | | | | | 20,000 | | | $ | 369,600 | | | | 10,000 | | | $ | 184,800 | | | — | | — | | — | | — | | 9,594 | | $ | 515,582 | | 7,110 | | $ | 657,455 | | | | | | | | | | | | | | | | | | | | | Elizabeth B. Chandler | | | 25,000 | | | | 50,000 | | | $ | 8.33 | | | | 5/13/2019 | | | | 36,356 | | | $ | 671,859 | | | | 22,500 | | | $ | 415,800 | | | George A. Villasana | | | — | | — | | — | | — | | 11,576 | | $ | 622,094 | | 9,000 | | $ | 322,401 | |
(1) | All information in the “Option Awards” portion of the table relates to awards of nonqualified stock options. Options vest in three equal installments beginning on the first anniversary of the grant date. |
| (2)(1) | All information in the “Stock Awards” portion of the table relates to (i) awards of performance shares assuming a payout at the targetmaximum level of performance, and (ii) awards of shares of restricted stock. |
| | | (3)(2) | Assumes a stock price of $18.48,$53.74, the closing price of our common stock on December 31, 2010.2013. |
| | | (4)(3) | Represents the aggregate payout value of performance shares underlying each award of performance shares that have not yet vested, calculated by multiplying (x) the target number of performance shares by (y) $ 18.48,$53.74, the closing price of our common stock on December 31, 2010.2013. |
20102013 OPTION EXERCISES AND STOCK VESTED
| | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | | Stock Awards | | | Option Awards | | Stock Awards | | Name | | Number of
Shares
Acquired on
Exercise | | | Value
Realized
Upon
Exercise | | | Number of
Shares
Acquired on
Vesting | | Value
Realized on
Vesting | | | Number of
Shares
Acquired on
Exercise(1) | | Value
Realized
Upon
Exercise(1) | | Number of
Shares
Acquired on
Vesting(2) | | Value
Realized on
Vesting(2) | | Charles R. Oglesby | | | — | | | | — | | | | 30,667 | (1) | | $ | 504,098 | (1) | | Craig T. Monaghan | | | — | | | | — | | | | — | | | | — | | | | | | | 43,157 | | $ | 1,565,716 | | Michael S. Kearney | | | — | | | | — | | | | — | | | | — | | | | | | | 34,114 | | $ | 1,236,002 | | Scott J. Krenz | | | — | | — | | 11,483 | | $ | 438,284 | | Joseph G. Parham | | | — | | | | — | | | | — | | | | — | | | — | | — | | 17,481 | | $ | 683,690 | | Elizabeth B. Chandler | | | — | | | | — | | | | — | | | | — | | | George A. Villasana | | | — | | — | | 2,524 | | $ | 99,723 | |
| | (1) | RepresentsThe number of shares acquired upon exercise reflects the final one-thirdgross number of shares acquired, without reduction for any shares surrendered to pay the option exercise price and/or satisfy tax withholding requirements. The value realized on exercise represents the gross number of shares acquired upon the option exercise multiplied by the market price of our common stock at the time of exercise on the exercise date, as reported on the NYSE, less the per share exercise price. | | | | (2) | The number of shares acquired upon vesting represents the net number of shares acquired after the surrender of any shares to satisfy tax withholding requirements. The value realized on the vesting of a grant of 20,000 shares of restricted stock issued to Mr. Oglesby on May 4, 2007, andor performance share awards represents the dollar value realized uponnet number of shares acquired after the vestingsurrender of such shares. Of the 6,667any shares that vested, 2,831 shares of common stock issuable to Mr. Oglesby were forfeited to satisfy tax obligations forwithholding requirements multiplied by the issuance of these shares of restricted stock. As a result, on May 4, 2010, Mr. Oglesby received a total of 3,836 sharesclosing price of our common stock, under this award. This figure also representsas reported on the one-thirdNYSE, on the vesting date of a grant of 72,000 shares ofthe restricted stock issued to Mr. Oglesby on April 29, 2009, andor the dollar value realized uponpayout date of the vesting of such shares. Of the 24,000 shares that were vested, 10,188 shares of common stock issuable to Mr. Oglesby were forfeited to satisfy tax obligations for the issuance of these shares of restricted stock. As a result, on April 29, 2010, Mr. Oglesby received a total of 13,812 shares of our common stock under this award.performance share awards, as applicable. |
Table of Contents 20102013 NONQUALIFIED DEFERRED COMPENSATION(1)
| | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Executive
Contributions
in Last FY | | | Registrant
Contributions
in Last FY | | | Aggregate
Earnings
in Last
FY(2) | | | Aggregate
Withdrawals/
Distributions | | | Aggregate
Balance
at
Last
FYE(3) | | | Executive
Contributions
in Last FY | | Registrant
Contributions
in Last FY | | Aggregate
Earnings
in Last
FY(2) | | Aggregate
Withdrawals/
Distributions | | Aggregate
Balance
at
Last
FYE | | Charles R. Oglesby | | | — | | | | — | | | $ | 24,915 | | | | — | | | $ | 209,979 | | | Craig T. Monaghan | | | — | | | | — | | | | — | | | | — | | | | — | | | — | | — | | — | | — | | — | | Michael S. Kearney | | | — | | | | — | | | $ | 9,066 | | | | — | | | $ | 103,042 | | | — | | — | | $ | 2,298 | | $ | 118,182 | | | — | | Scott J. Krenz | | | — | | — | | — | | — | | — | | Joseph G. Parham | | | — | | | | — | | | | — | | | | — | | | | — | | | — | | — | | — | | — | | — | | Elizabeth B. Chandler | | | — | | | | — | | | | — | | | | — | | | | — | | | George A. Villasana | | | — | | — | | — | | — | | — | |
| | (1) | Our Wealth Accumulation Plan allowsallowed qualifying individuals to defer base salary and/or bonusannual cash incentive plan payments to either in-service or retirement distributions. Our named executive officers maywere entitled to defer up to 100% of their base salary and/or bonusannual cash incentive plan payments under this Plan.plan. The deferred assets are held in a rabbi trust and are invested on behalf of the Company’s participants in market investments managed by The Newport Group. In the event of termination of employment, all balances are paid out according to the terms of the Plan. We do not match deferrals by the named executive officers and we do not guarantee a minimum return. All gains and losses shown in the table above resulted from the investments selected by each participant. ThisWealth Accumulation Plan compliescomplied with regulation 409(a) of the Internal Revenue Code. In 2012, the Board, upon the Compensation Committee’s recommendation, terminated the Wealth Accumulation Plan, and in 2013 all accounts were paid out in full to participants. |
| | | (2) | The amounts in this column were not reported as compensation to the respective named executive officer in the Summary Compensation Table. |
(3) | The amounts in this column, or any portion thereof, were not previously reported as compensation to the respective named executive officer in the Summary Compensation Table in previous years. |
Table of ContentsEMPLOYMENT ARRANGEMENTS AND POTENTIAL PAYMENTS
UPON TERMINATION AND CHANGE IN CONTROL Employment Agreement with Charles R. Oglesby
As disclosed above, the Company is party to an employment agreement with Mr. Oglesby, which was initially entered into on May 4, 2007, and was subsequently amended and restated on March 22, 2010 (the “Original Agreement”).The Original Agreement was for a term of two years and provided Mr. Oglesby with a base salary of $875,443, a monthly car allowance of $1,000, and the use of a demonstrator vehicle. Under the terms of the Original Agreement, in the event of Mr. Oglesby’s eligible retirement, or termination by the Company for any reason other than death, disability or cause, or by Mr. Oglesby for good reason prior to a change of control, he would be entitled to receive the following severance or retirement pay from the Company: (i) continuation of his base salary for 12 months at twice the rate then in effect, (ii) an amount equal to 200% of his base salary, payable over the 12-month period following the first anniversary of such termination, and (iii) an amount equal to a prorated portion of his base salary, payable over the 12-month period following such termination (or, in the case of his retirement, over the 24-month period following such termination); provided that the aggregate amount of such payments could not exceed two and one-half times the sum of his base salary and target bonus then in effect. Mr. Oglesby would also receive the continuation of his benefits for up to two years (or, in the case of retirement, up to three years) following such termination. In the event such a termination by the Company occurred within two years following a change of control, the Company would provide the foregoing payments and benefits, except that the payments described in clauses (i) through (iii) would be paid in a lump sum.
Pursuant to the terms of the Original Agreement, in the event Mr. Oglesby retired on or after May 4, 2010, but prior to May 4, 2012, (i) all of Mr. Oglesby’s unvested stock options granted prior to January 1, 2010, and any deferred compensation awarded, would automatically vest in full (and such options would remain exercisable for two years following such termination date), and (ii) any performance shares granted prior to January 1, 2010 would be treated in the same manner as if Mr. Oglesby’s employment was terminated by the Company (other than for cause) upon a change in control and would automatically vest in full. In the event of Mr. Oglesby’s eligible retirement on or after May 4, 2012, he would be entitled to the accelerated vesting provided in clauses (i) and (ii) immediately above, and any outstanding shares of restricted stock granted prior to January 1, 2010 and Mr. Oglesby’s grant of 36,000 restricted stock units (issued to him on February 17, 2010 in connection with the reduction in this 2009 annual cash bonus award) would automatically vest in full. With the exception of the award of 36,000 restricted stock units granted to Mr. Oglesby on February 17, 2010, the Original Agreement did not provide for the acceleration of any equity awards granted to him on or after January 1, 2010.
In addition, in the event Mr. Oglesby’s employment was terminated by the Company without cause under the terms of the Original Agreement (i) all of Mr. Oglesby’s unvested stock options will become vested and exercisable, and will remain exercisable until the earlier of expiration pursuant to their respective terms or two years from the date of the termination, (ii) all of Mr. Oglesby’s performance shares or performance units will generally be treated as provided in the applicable award agreement as if Mr. Oglesby’s employment was terminated by the Company (other than for cause) upon a change in control, and will automatically vest in full, and (iii) any unvested restricted stock and restricted stock unit awards and deferred compensation shall automatically vest.
On February 9, 2011, the Company and Mr. Oglesby entered into a Second Amended and Restated Employment Agreement (the “Oglesby Agreement”). Pursuant to the terms of the Oglesby Agreement, as of February 9, 2011, the effective date of the Oglesby Agreement, Mr. Oglesby retired from the positions of President and Chief Executive Officer of the Company, and was elected to the position of Executive Chairman of the Company for a term (the “Oglesby Term”) ending July 31, 2011. During the Oglesby Term, Mr. Oglesby is entitled to the salary and benefits as in effect pursuant to the Original Agreement and as described above. In the event Mr. Oglesby’s employment is terminated by the Company without cause or by reason of his death or disability (a “Termination”), or upon his retirement, in each case upon his execution of a release in favor of the Company, he will be entitled to (a) continued payment of his base salary for 12 months at twice the rate in effect
on the date of Termination or retirement, as the case may be, (b) an amount equal to 200% of such base salary, payable over the 12-month period immediately following the completion of the payments provided in (i) above, and (c) an amount equal to such base salary prorated for the portion of the year completed prior to such Termination or retirement, as applicable, in each case payable over the 24-month period following the applicable date. Notwithstanding the foregoing, in the event of a Termination following a change of control, Mr. Oglesby may be entitled to such payments in a lump sum.
Also in the event of a Termination or retirement, as applicable, all of Mr. Oglesby’s unvested equity will vest in the same manner as described above under the termination provisions of the Original Agreement.
Also in accordance with the Oglesby Agreement, in the event of either Termination or retirement, Mr. Oglesby will be entitled to continue to participate in Company-sponsored benefit plans until he is employed by another company or December 31st of the second calendar year following Termination or retirement. In addition, the Oglesby Agreement contains certain confidentiality, non-compete and non-solicit obligations.
The amounts in the “Severance Arrangements” tables below were calculated based on the terms of the Original Agreement which was in effect on December 31, 2010.
Employment Agreement with Craig T. MonahanMonaghan Also on February 9, 2011 and in connection with the foregoing, Craig T. Monaghan, our then Senior Vice President and Chief Financial Officer of the Company, was elected as President and Chief Executive Officer of the Company. In connection with this election, the Company and Mr. Monaghan We have entered into an employment agreement (thewith Craig T. Monaghan, our President and CEO (such agreement, as amended and restated to date, the “Monaghan Agreement”), effective as of February 9, 2011, which agreement specified the terms and conditions of Mr. Monaghan’s employment by the Company.. The Monaghan Agreement expires on February 9, 2013,2015, and contains a provisionprovides for automatic extensions for successive one-year terms,periods, unless notice is provided by either party provides notice of termination to the other.
The Monaghan Agreement may only be terminated before the expiration of the initial two-year period or prior to the end of any extended period by: (i) either party upon mutual agreement or due to the Disability (as defined in the Monaghan Agreement) of Mr. Monaghan; (ii) Mr. Monaghan with or without good reason upon notice to the Company; (iii) the Company for cause or without cause (and, if without cause, upon notice to Mr. Monaghan). Upon any termination, Mr. Monaghan will cease to be an officer and director of the Company and any of its affiliates.
During the term of Under the Monaghan Agreement, Mr. Monaghan is entitled to aMonaghan’s base salary of $750,000 per year,is subject to periodic review and increase, and he is entitled to receive an annual bonus targeted at(which includes a non-equity incentive compensation award opportunity) based on a target of 100% of his then-current base salary. Mr. Monaghan is also eligible to receive annual equity grants or other long-term incentive awards granted under the Company’s long-term equity incentive plans, and is entitled to a monthly automobile allowance and the use of a Company owned demonstrator vehicle.
In Under the event that (i) during the termterms of the Monaghan Agreement, if (i) the Company elects not to not extend such termthe Monaghan Agreement and, uponat its expiration, Mr. Monaghan will not have reachedattained age 65, or (ii) the Company terminates the Monaghan Agreement without cause“cause” or (iii) Mr. Monaghan terminates suchthe Monaghan Agreement for good reason“good reason” when no change“change in controlcontrol” has occurred (any of the foregoing, a “Monaghan Non-Change in Control Qualifying Termination”), Mr. Monaghan will be entitled to receive: (a) 100% of his base salary, plus 100% of his target annual bonus, payable monthly in equal installments over 12 months; (b) a pro-rated bonus based on actual performance for the year of termination, payable when otherfollowing:
| | | | • | 100% of his base salary, plus 100% of his target annual bonus (which includes any non-equity incentive plan compensation); | | | | | • | a pro-rated bonus (which includes any non-equity incentive plan compensation) based on actual performance for the year of termination; | | | | | • | continued participation for 12 months in all health and welfare plans of the Company bonuses are paid for such year; and (c) continued participation for 12 months in all health and welfare plans as in effect immediately prior to the termination of employment; and | | | | | • | accelerated vesting of all unvested equity and other long-term incentive awards that would have vested in the 364 days following the termination of the Monaghan Agreement. |
Also under the termination of his employment. In addition, in either event, all of Mr. Monaghan’s equity and long-term incentive awards not vested asterms of the effective end or termination date, as the case may be, but due to vest in the first 364 days following such date will become 100% vested on such date. If within two years following a change of control,Monaghan Agreement, if Mr. Monaghan is terminated without cause or resigns for good reason within two years following a change in control (a “Monaghan Change in Control Qualifying Termination” and, together with a Monaghan Non-Change in Control Qualifying Termination, as the case may be, a “Monaghan Qualifying Termination”), Mr. Monaghan will be entitled to receive: (i) 200% of his then-current base salary, plus 200% of his target annual bonus, payable in a single lump sum; (2) a pro-rated bonus based on target bonus for the year of termination of his employment, payable with lump sum severance benefit; and (iii) continued participation forfollowing:
24 months in all health and welfare plans as
| | | | • | 200% of his base salary, plus 200% of his target annual bonus (which includes any non-equity incentive plan compensation); | | | | | • | a pro-rated bonus (which includes any non-equity incentive plan compensation) based on target performance for the year of termination; | | | | | • | continued participation for 24 months in all health and welfare plans of the Company in effect immediately prior to the termination of employment; and | | | | | • | vesting of all unvested equity and other long-term incentive awards, effective on the date of the change in control. |
�� The foregoing severance payments are conditioned upon Mr. Monaghan executing a general release in favor of the Company. The Monaghan Agreement also contains certain confidentiality, non-compete and non-solicit obligations. In the event of a breach of these obligations, the Company may stop paying any amounts due, as described above, and demand repayment of 50% of the severance amounts paid prior to the terminationbreach of his employment. Additionally, all of Mr. Monaghan’s equity and long-term incentive awards not vested will become 100% vested on the effective date of the change of control.such obligations. In the event The Monaghan Agreement also provides that, if Mr. Monaghan retires after reaching age 65, then upon such retirement, all of Mr. Monaghan’shis equity and long-term incentive awards not vested as of thehis effective retirement date will continue to vest without regard to the terminationsuch retirement.
Table of employment. In addition, the Monaghan Agreement contains certain confidentiality, non-compete and non-solicit obligations. Prior to the entry into the Monaghan Agreement, Mr. Monaghan had a severance agreement with the Company. The terms of Mr. Monaghan’s severance Agreement provided for one year of base salary, benefits continuation and a pro-rated bonus in the amount that he would have received had he not been terminated during such year, if terminated without cause prior to a change in control. In addition, if his office was relocated by more than 50 miles, his base salary was reduced or his duties or title was diminished, he could trigger the termination provisions of his severance agreement. If his employment was terminated without cause within two years following a change in control, he was entitled to three years of base salary, a pro-rated bonus in the amount that he would have received had he not been terminated during such year, and benefits continuation. Messrs. Monaghan was not entitled to severance in the event of termination due to death, disability, retirement, voluntary resignation or cause.
The amounts in the “Severance Arrangements” tables below were calculated based on the terms of Mr. Monaghan’s severance agreement which was in effect on December 31, 2010.Contents
Employment Agreement with Michael S. Kearney Also on February 9, 2011, the Company We have entered into an Employment Agreementemployment agreement with Michael Kearney, (the “Kearney Agreement”), effective as of February 9, 2011, pursuant to which Mr. Kearney was appointedour Executive Vice President and Chief Operating Officer.COO (such agreement as amended and restated to date, the “Kearney Agreement”). The Kearney Agreement expires on February 9, 2013,2015, and contains a provisionprovides for automatic extensions for successive one-year terms,periods, unless notice is provided by either party provides notice of termination to the other.
The Kearney Agreement may only be terminated before the expiration of the initial two-year period or prior to the end of any extended period by: (i) either party upon mutual agreement or due to the disability of Mr. Kearney; (ii) Mr. Kearney with or without good reason upon notice to the Company; (iii) the Company for cause or without cause (and, if without cause, upon notice to Mr. Kearney). Upon any termination, Mr. Kearney will cease to be an officer and director of the Company and any of its affiliates.
During the term of Under the Kearney Agreement, Mr. Kearney is entitled to aKearney’s base salary of $675,000 per year,is subject to periodic review and increase, and he is entitled to receive an annual bonus targeted at(which includes a non-equity incentive plan award opportunity) based on a target of 75% of his then-current base salary. Mr. Kearney is also eligible to receive annual equity grants or other long-term incentive awards granted under the Company’s long-term equity incentive plans, and is entitled to a monthly automobile allowance and the use of a Company owned demonstrator vehicle. In addition, in connection with this promotion, on February 15, 2011,
Under the Compensation and Human Resources Committee approved a one-time bonus of $100,000 payable to Mr. Kearney. In the event that (i) during the termterms of the Kearney Agreement, if (i) the Company elects not to not extend such termthe Kearney Agreement and, uponat its expiration, Mr. Kearney will not have reachedattained age 65, or (ii) the Company terminates the Kearney Agreement without cause“cause” or (iii) Mr. Kearney terminates such Kearney Agreement for good reason“good reason” when no change“change in control” has occurred (any of control has occurred,the foregoing, a “Kearney Non-Change in Control Qualifying Termination”), Mr. Kearney will be entitled to receive: (a) 100% of his base salary, plus 100% of his target annual bonus, payable monthly in equal installments over 12 months; (b) a pro-rated bonus based on actual performance for the year of termination, payable when otherfollowing:
| | | | • | 100% of his base salary, plus 100% of his target annual bonus (which includes any non-equity incentive plan compensation); | | | | | • | a pro-rated bonus (which includes any non-equity incentive plan compensation) based on actual performance for the year of termination; | | | | | • | continued participation for 12 months in all health and welfare plans of the Company bonuses are paid for such year; and (c) continued participation for 12 months in all health and welfare plans as in effect immediately prior to the termination of employment; and | | | | | • | accelerated vesting of all unvested equity and other long-term incentive awards that would have vested in the 364 days following the termination of the Kearney Agreement. |
Also under the termination of his employment. In addition, in either event, all of Mr. Kearney’s equity and long-term incentive awards not vested asterms of the effective end or termination date, as the case may be, but due to vest in the first 364 days following such date will become 100% vested on such date.
If within two years following a change of control,Kearney Agreement, if Mr. Kearney is terminated without cause or resigns for good reason within two years following a change in control (a “Kearney Change in Control Qualifying Termination” and, together with a Kearney Non-Change in Control Qualifying Termination, as the case may be, a “Kearney Qualifying Termination”), Mr. Kearney will be entitled to receive: (i) 200% of his then-current base salary, plus 200% of his target annual bonus, payable in a single lump sum; (2) a pro-rated bonus based on target bonus forreceive the year of termination of his employment, payable with lump sum severance benefit; and (iii) continued participation for 24 months in all health and welfare plans asfollowing:
| | | | • | 200% of his base salary, plus 200% of his target annual bonus (which includes any non-equity incentive plan compensation); | | | | | • | a pro-rated bonus (which includes any non-equity incentive plan compensation) based on target performance for the year of termination; | | | | | • | continued participation for 24 months in all health and welfare plans of the Company in effect immediately prior to the termination of employment; and | | | | | • | accelerated vesting of all unvested equity and other long-term incentive awards effective on the date of the change in control. |
The foregoing severance payments are conditioned upon Mr. Kearney executing a general release in favor of the Company. The Kearney Agreement also contains certain confidentiality, non-compete and non-solicit obligations. In the event of a breach of these obligations, the Company may stop paying any amounts due, as described above, and demand repayment of 50% of the severance amounts paid prior to the terminationbreach of his employment. Additionally, all of Mr. Kearney’s equity and long-term incentive awards not vested will become 100% vested on the effective date of the change of control.such obligations. In the event The Kearney Agreement also provides that, if Mr. Kearney retires after reaching age 65, then upon such retirement, all of Mr. Kearney’shis equity and long-term incentive awards not vested as of thehis effective retirement date will continue to vest without regard to such retirement
Employment Letter Agreement with George A. Villasana On March 31, 2012, the terminationCompany entered into a letter agreement with George Villasana, pursuant to which he agreed to serve as the Company’s Vice President and General Counsel.
Table of employment. In addition,Contents Under this letter agreement, Mr. Villasana is entitled to a base salary of at least $315,000 per year, and is entitled to receive an annual bonus (which includes a non-equity incentive plan award opportunity) based on a target of 40% of his base salary. The letter agreement also provided for a signing bonus of $180,000, which is subject to repayment in the Kearneyevent Mr. Villasana terminates his employment with the Company before the second anniversary of his employment. The letter agreement provided for a grant of restricted shares valued at $315,000, which grant vests ratably over three years, and also provided that Mr. Villasana is entitled to a monthly automobile allowance. Severance Agreement contains certain confidentiality, non-compete and non-solicit obligations.with George A. Villasana Prior The Company is party to the entry into the Kearney Agreement, Mr. Kearney had a severance agreement (the “Severance Agreement”) with the Company.Mr. Villasana. The terms of Mr. Kearney’s severanceSeverance Agreement providedprovides for one year of base salary, one year of benefits continuation, and a pro-rated bonus (which includes any payment under a non-equity incentive compensation plan) in the amount that hethe Mr. Villasana would have received had he not been terminated during such year (collectively, the “Severance Payment”) if Mr. Villasana is terminated by the Company without cause. If“cause,” or Mr. Kearney’s office was relocatedVillasana terminates his employment with the Company due to the occurrence of certain events (described below) specified in the Severance Agreement within two years following a change in control (either of the foregoing, a “Villasana Qualifying Termination”).
The Severance Agreement requires Mr. Villasana to execute a general release in favor of the Company as a condition to receiving any Severance Payments. The Severance Agreement also contains certain confidentiality, non-compete and non-solicit obligations and provides that, if such obligations are breached by more than 50 miles, his base salary was reduced or duties or title is diminished, he could triggerMr. Villasana, the termination provisions of hisCompany has the right to stop making any otherwise required severance agreement. He waspayments. The Severance Agreement also provides that Mr. Villasana will not entitled to severancereceive any Severance Payment in the event of termination due to death, disability, retirement, voluntary resignation or termination by the Company for cause. The amounts inSeparation Agreement with Scott J. Krenz
In connection with his retirement from the “Severance Arrangements” tables below were calculated based onposition of Chief Financial Officer effective December 31, 2013, the Company entered into a separation agreement and general release (the “Krenz Separation Agreement”) with Mr. Krenz. Pursuant to the terms of the Krenz Separation Agreement, Mr. Kearney’sKrenz has agreed to remain in the employ of the Company in the capacity of Senior Vice President through March 31, 2014 (the “Krenz Separation Date”), and to waive the right to any payments that would otherwise be due to him in connection with his retirement under his prior severance agreement which waswith the Company. In exchange for such agreement, among other things, Mr. Krenz will continue to be entitled to his base salary in effect on December 31, 2010. Severance Agreements for Elizabeth B. Chandler and Joseph G. Parham, Jr.
At December 31, 2010, Ms. Chandler and Mr. Parham had severance arrangements with the Company providing for one year of base salary, benefits continuation and a pro-rated bonus in the amount that he or she would have received had he or she not been terminated during such year, if terminated without cause. If Mr. Parham’s and Ms. Chandler’s respective office is relocated outside a 50-mile radius from the centerdate of the City of Atlanta, their base salary is reduced or duties or title is diminished, he or she may triggerKrenz Separation Agreement through the termination provisions of their respective agreement. Neither Ms. Chandler nor Mr. Parham will receive severanceKrenz Separation Date (except in the event of an earlier termination for cause). Mr. Krenz will also be entitled to a cash payment (prorated through the Krenz Separation Date) based on the annual bonus (or non-equity incentive plan compensation) paid to the Company’s executive officers under the Company’s annual cash incentive plan for 2014, continued vesting of his outstanding equity awards through the Krenz Separation Date, and to continued health and dental insurance for 12 months following the Krenz Separation Date. The Krenz Separation Agreement requires Mr. Krenz to execute a general release in favor of the Company as a condition to receiving any cash payments under the Company’s annual cash incentive plan for 2014 and continued health and dental insurance.
Separation Agreement with Joseph G. Parham In connection with his retirement from the positions of Vice President and Chief Human Resources Officer effective June 30, 2014, the Company entered into a separation agreement and general release (the “Parham Separation Agreement”) with Mr. Parham. Pursuant to the terms of the Parham Separation Agreement, Mr. Parham has agreed to remain in the employ of the Company in his current capacity and to assist with, among other things, the search for, and transition of his role to, a successor to his position, and to waive the right to any payments that would otherwise be due to death, disability,him in connection with his retirement voluntary resignation or cause. At is meetingunder his prior severance agreement with the Company. In exchange for such agreement, among other things, Mr. Parham will continue to be entitled to his base salary in February 2011,effect on the Compensation and Human Resources Committee approved amendmentsdate of the Parham Separation Agreement for a period of 12 months following the Parham Separation Date. Mr. Parham will also be entitled to a cash payment (prorated through the Parham Separation Date) based on the annual bonus (or non-equity incentive plan compensation) paid to the respective severance agreementsCompany’s executive officers under the Company’s annual cash incentive plan for Ms. Chandler2014 and Mr.to continued health and dental insurance for 12 months following the Parham Separation Date.
Table of Contents Equity Incentive Plan Payout Provisions In addition to provide that they receive two times their respective base salary upon a termination without cause within two years afterthe payments required to be made in connection with certain qualifying separations from service described above, whether or not in connection with a change in control of the Company. In additionCompany, awards made under the Company’s 2002 Equity Incentive Plan prior to the severance benefitsFebruary 8, 2012 generally provided infor the agreements with our named executive officers, upon a change of control, our equity incentive plan provides for accelerated vesting of anythereof (of unvested options and unvested shares of restricted stock,stock), and anthe accelerated calculation and payout of the performance shares outstanding thereunder upon a change in control of the Company. On February 8, 2012, the Company amended and restated its 2002 Equity Incentive Plan to provide that awards made from and after that date, subject to the terms of any individual employment or severance agreements, will be accelerated in connection with a change in control transaction only if: (i) the acquiror does not replace or substitute an equivalent award, or (ii) the participant’s employment is involuntarily terminated within two years following the change in control. The Company’s 2012 Equity Incentive Plan also contains a similar provision for all awards granted thereunder.
Certain Defined Terms Cause Under the Monaghan and Kearney Agreements, “cause” generally means any of the following: (i) the executive’s willful misconduct, failure to follow a lawful directive of the Board, gross negligence or blatant violation of Company policy, (ii) the executive’s commission of fraud, misappropriation, dishonesty or embezzlement against the Company or an affiliate, (iii) in the case of Mr. Monaghan, his commission of a felony or a crime of moral turpitude, and in the case of Mr. Kearney, his conviction of, or entry of a plea ofnolo contendere to, a felony or misdemeanor (other than traffic violations and similar offenses), or (iv) the executive’s commission of a material breach of the applicable employment agreement. Under Mr. Villasana’s Severance Agreement, “cause” generally means any of the following: (i) the executive’s gross negligence or serious misconduct (including criminal, fraudulent and dishonest conduct) that is or may be outstanding. injurious to the Company, (ii) the executive’s conviction of, or entry of a plea ofnolo contendere to, a felony or other crime that involves moral turpitude, (iii) the executive’s breach of the confidentiality, non-compete and non-solicit obligations contained in the Severance Agreement, (iv) the executive’s willful and continued failure to perform his duties on behalf of the Company, or (v) the executive’s material breach of certain Company policies. Good Reason Under the Monaghan and Kearney Agreements, “good reason” generally means the occurrence of any of the following without the executive’s consent, but only after notice of, and an opportunity to cure, such event: (i) the nature or scope of the executive’s duties or responsibilities are materially diminished, (ii) the Company changes the location of the executive’s employment to a place more than 50 miles from its present location, (iii) the Company’s material breach of the applicable employment agreement, or (iv) a change in the executive’s salary below the base amount specified in the applicable employment agreement. Under the Villasana Severance Agreement, “good reason” generally means the occurrence of any of the following, but only after notice of, and the opportunity to cure, such event: (i) the Company changes the location of the executive’s employment to a place more than 50 miles from its present location, (ii) a material diminution in the executive’s base compensation, or (iii) a material diminution in the executive’s authority, duties or responsibilities. In addition, if the executive terminates his employment with the Company for any of the foregoing reasons within two years following a change in control, the executive will be entitled to receive the Severance Payment. Change in Control A “change in control” generally means the occurrence of any of the following events: | | | | • | any person becomes the beneficial owner of 35% or more of the Company’s securities entitled to vote in the election of directors, provided, in the case of the Company’s 2002 Equity Incentive Plan, the Monaghan Agreement and the Villasana Severance Agreement, that such an acquisition will not be considered a change in control if it is made by (x) the Company or any subsidiary, (y) an employee benefit plan sponsored or maintained by the Company or any subsidiary, or (z) a person that reports such acquisition on Schedule 13G under the Exchange Act, so long as such person does not later become required to report on Schedule 13D while beneficially owning 35% or more of the Company’s securities entitled to vote in the election of directors; |
Table of Contents
| | | | • | in the case of the Company’s 2002 Equity Incentive Plan, the Monaghan Agreement and the Villasana Severance Agreement, the Company’s completion of a merger, consolidation or other business combination transaction in which the Company’s securities outstanding immediately prior to such transaction represent less than 50% of the combined voting power of the Company or other surviving entity after such transaction, except where the transaction agreement provides that members of the Company’s Board serving at the time of the first public announcement of the transaction will constitute at least a majority of the directors of the resulting entity; | | | | | • | individuals who, as of the date specified in the applicable agreement or plan, constitute the Board cease to constitute at least a majority, in the case of the Company’s 2002 Equity Incentive Plan, the Monaghan Agreement and the Villasana Severance Agreement, or at least 2/3, in the case of the Kearney Agreement, of the Board, provided that any individual whose election or nomination for election by the Company’s stockholders was approved by at least 2/3 of the directors then comprising the incumbent Board will be considered to be incumbent members of the Board, but excluding any individual who first assumes office as a director of the Company as a result of an actual or threatened election contest; or | | | | | • | approval by the Company’s stockholders of the liquidation or dissolution of the Company. |
Potential Payments Upon Separation from Service or Change in Control The following table detailstables detail the severance obligationsamounts that would have been payable to each of our named executive officers had (i) each such officer separated from service with the Company as if they were terminatedof December 31, 2013 (with or without the occurrence of a change in control) or (ii) a change in control of the Company occurred on December 31, 2010. This table assumes that there was no change2013 without a separation from service, in control.each case after taking into account the following assumptions as applicable: | | | | • | the separation agreement entered into with Mr. Parham on February 5, 2014 and described in more detail above was effective as of December 31, 2013; | | | | | • | no payment value was ascribed to any presently vested and exercisable equity incentive awards, as such awards would not be impacted by a separation from service or change in control; | | | | | • | all equity incentive awards that would accelerate in connection with a separation from service or change in control were accelerated and cash valued as of December 31, 2013 (based on $53.74, the closing price of our common stock on the NYSE on such date) by multiplying the number of such shares by the closing price per share of our common stock on the NYSE on December 31, 2013; | | | | | • | each of the named executive officers continued to be entitled to participate in the Company’s health and dental insurance plans (no such officer obtained other employment which provided at least equal benefits), and the cost thereof was cash valued at the cost to the Company; | | | | | • | all parties complied with any required release and notice provisions in the applicable agreement; | | | | | • | all amounts due to the named executive officers were paid immediately; and | | | | | • | each of the named executive officers continued to comply with any restrictive or other covenant applicable to him that may have otherwise resulted in the repayment or withholding of severance amounts due. |
2010 Severance Arrangements
( Qualifying Termination Assuming No Change of Control)in Control
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Named Executive Officer | | Title | | Severance
Payout | | Pro-Rated
Bonus(1) | | Benefits
Continuation | | Stock Option
Acceleration(2) | | Performance
Share/
Restricted
Stock
Acceleration(3) | | Total | | | Base Salary
Continuation (1) | | Bonus (1) | | Benefits
Continuation | | Performance
Share/
Restricted
Stock
Acceleration | | Total | | Charles R. Oglesby | | President and CEO | | $ | 4,377,215 | | | $ | — | | | $ | 5,870 | | | $ | 3,462,667 | | | $ | 2,273,040 | | | $ | 10,118,792 | | | Craig T. Monaghan | | SVP & CFO | | $ | 607,772 | | | $ | 659,433 | | | $ | 5,948 | | | $ | | | | $ | | | | $ | 1,273,153 | | | $ | 950,000 | | $ | 2,536,500 | | $ | 7,728 | | $ | 4,618,523 | | $ | 8,112,751 | | Michael S. Kearney | | SVP & COO | | $ | 600,000 | | | $ | 558,000 | | | $ | 2,935 | | | $ | — | | | $ | | | | $ | 1,160,935 | | | $ | 705,000 | | $ | 1,411,763 | | $ | 5,292 | | $ | 2,811,462 | | $ | 4,933,517 | | Elizabeth B. Chandler | | VP, General Counsel | | $ | 330,000 | | | $ | 204,600 | | | $ | 5,948 | | | $ | — | | | $ | — | | | $ | 540,548 | | | Scott J. Krenz | | | $ | 110,000 | | $ | 101,035 | | $ | 8,745 | | $ | 930,562 | | $ | 1,150,342 | | Joseph G. Parham, Jr. | | VP, Chief Human
Resources Officer | | $ | 330,000 | | | $ | 136,400 | | | $ | 1,870 | | | $ | — | | | $ | — | | | $ | 468,270 | | | $ | 510,000 | | $ | 113,560 | | $ | 3,258 | | $ | 701,307 | | $ | 1,328,125 | | George A. Villasana | | | $ | 350,000 | | $ | 233,800 | | $ | 2,172 | | $ | — | | $ | 585,972 | |
| | (1) | | (1) | Based upon the actual calculationor target amounts of the total bonussalary and non-equity incentive plan compensation paid under the 2010 annual cash bonus plan,in 2013, which plan is discussedare described above in the Compensation Discussion and Analysis section of this proxy statement. | | | | |
(2) | Represents the value that would be received upon the acceleration of vesting of all unvested options granted to the named executive officer. The vesting of these options would accelerate upon a termination of their respective employment. For more information concerning outstanding options granted to the named executive officers, see the “Outstanding Equity Awards at Fiscal Year-End” table in this proxy statement. |
(3) | Represents the value of our common stock after conversion of awards of performance shares and vesting of unvested shares of restricted stock that each named executive officer would receive upon termination. |
The following table details the change in control severance obligation to eachTable of the named executive officers assuming a change in control and a termination of employment on December 31, 2010, and assuming a stock price of $18.48, the closing price of our common stock on that date.Contents
2010 Severance Arrangements
( Qualifying Termination Assuming Change of Control)in Control
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Named Executive Officer | | Title | | Severance
Payout | | Pro-Rated
Bonus(1) | | Benefits
Continuation | | Stock Option
Acceleration(2) | | Performance
Share/
Restricted
Stock
Acceleration(3) | | Total | | | Base Salary
Continuation (1) | | Bonus (1) | | Benefits
Continuation | | Performance
Share/
Restricted
Stock
Acceleration (2) | | Total | | Charles R. Oglesby | | President and CEO | | $ | 4,377,215 | | | $ | — | | | $ | 5,870 | | | $ | 3,462,667 | | | $ | 5,739,052 | | | $ | 13,584,804 | | | Craig T. Monaghan | | SVP & CFO | | $ | 1,823,316 | | | $ | 659,433 | | | $ | 17,844 | | | $ | 2,720,667 | | | $ | 2,597,235 | | | $ | 7,818,494 | | | $ | 1,900,000 | | $ | 2,850,000 | | $ | 15,456 | | $ | 8,823,302 | | $ | 13,588,758 | | Michael S. Kearney | | SVP & COO | | $ | 600,000 | | | $ | 558,000 | | | $ | 2,935 | | | $ | 1,302,345 | | | $ | 2,082,252 | | | $ | 4,545,532 | | | $ | 1,410,000 | | $ | 1,586,250 | | $ | 10,584 | | $ | 4,777,540 | | $ | 7,784,374 | | Elizabeth B. Chandler | | VP, General Counsel | | $ | 330,000 | | | $ | 204,600 | | | $ | 5,948 | | | $ | 507,500 | | | $ | 1,229,031 | | | $ | 2,277,079 | | | Scott J. Krenz | | | $ | 110,000 | | $ | 101,035 | | $ | 8,745 | | $ | 1,329,313 | | $ | 1,549,093 | | Joseph G. Parham, Jr. | | VP, CHRO | | $ | 330,000 | | | $ | 136,400 | | | $ | 1,870 | | | $ | 0 | | | $ | 617,232 | | | $ | 1,085,502 | | | $ | 510,000 | | $ | 113,560 | | $ | 3,258 | | $ | 701,307 | | $ | 1,328,125 | | George A. Villasana | | | $ | 350,000 | | $ | 233,800 | | $ | 2,172 | | $ | 944,534 | | $ | 1,530,506 | |
| | (1) | | (1) | Based upon the actual calculationor target amounts of the total bonussalary and non-equity incentive plan compensation paid under the 2010 annual cash bonus plan,in 2013, which plan is discussedare described above in the Compensation Discussion and Analysis section of this proxy statement. |
| (2) | Represents the value that would be received upon the acceleration of vesting of all unvested options granted to the named executive officers. The vesting of these options would accelerate upon a change of control. For more information concerning outstanding options granted to the named executive officers, see the “Outstanding Equity Awards at Fiscal Year-End” table in this proxy statement. |
(3)(2) | RepresentsIncludes the value of our common stock after conversionawards made under the Company’s 2002 Equity Incentive Plan prior to February 8, 2012 that provide for accelerated vesting or accelerated calculation and payout thereof, as applicable, as described above under “Equity Incentive Plan Payout Provisions.” | | | | |
Change in Control Without a Qualifying Termination | | | | | | | | | | | | | | | | | Named
Executive
Officer | | Base Salary
Continuation | | Bonus | | Benefits
Continuation | | Performance
Share/
Restricted
Stock
Acceleration (1) | | Total | | Craig T. Monaghan | | $ | — | | $ | — | | $ | — | | $ | 1,807,491 | | $ | 1,807,491 | | Michael S. Kearney | | $ | — | | $ | — | | $ | — | | $ | 845,545 | | $ | 845,545 | | Scott J. Krenz | | $ | — | | $ | — | | $ | — | | $ | 398,751 | | $ | 398,751 | | Joseph G. Parham, Jr. | | $ | — | | $ | — | | $ | — | | $ | 311,692 | | $ | 311,692 | | George A. Villasana | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
| | | | | (1) | Reflects the value of awards made under the Company’s 2002 Equity Incentive Plan prior to February 8, 2012 that provide for accelerated vesting or accelerated calculation and payout thereof, as applicable, as described above under “Equity Incentive Plan Payout Provisions.” |
Separation from Service Upon Death or Disability | | | | | | | | | | | | | | | | | Named
Executive
Officer | | Base Salary
Continuation | | Bonus | | Benefits
Continuation | | Restricted
Stock
Acceleration (1) | | Total | | Craig T. Monaghan | | $ | — | | $ | — | | $ | — | | $ | 3,803,234 | | $ | 3,803,234 | | Michael S. Kearney | | $ | — | | $ | — | | $ | — | | $ | 1,899,924 | | $ | 1,899,924 | | Scott J. Krenz | | $ | — | | $ | — | | $ | — | | $ | 1,057,816 | | $ | 1,057,816 | | Joseph G. Parham, Jr. | | $ | — | | $ | — | | $ | — | | $ | 515,582 | | $ | 515,582 | | George A. Villasana | | $ | — | | $ | — | | $ | — | | $ | 622,094 | | $ | 622,094 | |
| | | | | (1) | Reflects the value of awards of performance shares and vesting of unvested shares of restricted stock made under the Company’s equity incentive plans that each named executive officer would receiveprovide for the accelerated vesting thereof solely upon a change of control of the Company and a subsequent termination of employment.an executive’s death or disability. |
Table of ContentsSECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The securities outstanding under our equity compensation plans, the weighted average exercise price of outstanding equity, and the number of securities remaining available for issuance under our equity compensation plans, as of December 31, 2010, were as follows:
| | | | | | | | | | | | | Plan Category | | Number of Securities
to be Issued Upon Exercise
of Outstanding Equity,
Warrant and Rights
(a) | | | Weighted Average
Exercise Price of
Outstanding Equity,
Warrants and Rights
(b) | | | Number of Securities Remaining
Available for Future Issuance
Under Equity Compensation Plans
(excluding securities reflected
in column (a))
(c) | | Equity compensation plans approved by security holders(1) | | | 2,044,988 | | | $ | 8.57 | | | | 2,732,543 | | | | | | | | | | | | | | |
(1) | Represents 1,538,978 stock options, 405,243 performance shares and 100,767 restricted share units. The number of performance shares reported in this table assumes that we attain the target performance goals associated with each respective grant of performance shares. |
The Company’s 2002 Stock Option Plan was originally adopted by the Board on March 9, 2002. On February 25, 2003, the Board approved an amendment to the 2002 Stock Option Plan increasing the number of shares available for issuance under the 2002 Stock Option Plan from 1,500,000 to 4,750,000. The Company’s 2002 Stock Option Plan, as amended, was approved by the Company’s stockholders at the Company’s annual stockholders meeting on May 8, 2003, and renamed the Asbury Automotive Group, Inc. 2002 Equity Incentive Plan (referred to herein as the “2002 Equity Incentive Plan”).
On January 29, 2009, the Board approved a further amendment to our 2002 Equity Incentive Plan to increase the number of shares available for issuance thereunder by an additional 2,575,000 shares to 7,325,000 shares. The 2002 Equity Incentive Plan, as amended, was approved by the Company’s stockholders at the Company’s annual stockholders meeting on April 29, 2009.
RELATED PERSON TRANSACTIONS We have adopted a written policy relating to related person transactions, which sets out the criteria for review of transactions between the Company and our affiliates and members of their immediate families. This policy covers our directors and officers, and each stockholder that holds directly or indirectly, more than 5% of our common stock. In addition, we have adopted a written Delegation of Authority Policy, which establishes an executive approval process for many of the Company’s transactions in which certain related person transactions would be included. In reviewing and approving related person transactions under these policies and procedures, senior management and the Board considers, among other things: the nature of the related person’s interest in the transaction;
whether the related person has a direct or indirect material interest;
| | | | • | the nature of the related person’s interest in the transaction; | | | | | • | whether the related person has a direct or indirect material interest; | | | | | • | the material terms of the transaction, including the amount and type of transaction; | | | | | • | the significance of the transaction to the Company and to the related person; | | | | | • | whether the terms of the transaction are arms-length; and | | | | | • | whether the transaction would violate the “Conflicts of Interest” provisions of our Code of Business Conduct and Ethics for Directors, Officers and Employees. |
Vehicle Purchase and type of transaction; the significance of the transaction to the Company and to the related person;
whether the terms of the transaction are arms-length; and
whether the transaction would violate the “Conflicts of Interest” provisions of our Code of Business Conduct and Ethics or Fraud Control Policy.
Related Person Transactions with Jeffrey I. WooleyLease
Mr. Wooley, who is a member of our Board, had an employment agreement with the Company pursuant to which he was employed as the Non-Executive Chairman of our subsidiary, Asbury Tampa, effective as of March 31, 2005 until March 31, 2010 (the “Wooley Agreement”). In 2010, Mr. Wooley received $12,500 in salary payments based on an annual salary of $50,000 due to a voluntary 50% reduction in salary that he took on December 1, 2008. Under the terms of the Wooley Agreement, he was also entitled to the use of an office located at one of Asbury Tampa’s dealership locations and was reimbursed an additional $3,333 per month for administrative support. Mr. Wooley participated in all life insurance, medical insurance, disability insurance and other benefits that may be provided to the employees of Asbury Tampa, subject to the terms and eligibility requirements of the plan documents of each respective insurance or other benefit plan. Under the Wooley Agreement, Mr. Wooley was entitled to a reimbursement of his country club dues, but as of December 1, 2008, he also waived this right to reimbursement. In addition to his salary, until March 31, 2010, Mr. Wooley also received the use of four demonstrator vehicles, the use of which amounted to $10,770 of imputed income to him during 2010. Although the Wooley Agreement has expired, Mr. Wooley remains subject to non-competition and non-solicitation provisions under the terms of such Agreement until March 31, 2011.
On February 17, 2010, upon the recommendation of the Compensation Committee, the Board determined that upon the termination of the Wooley Agreement on March 31, 2010, Mr. Wooley be compensated for his service on the Board consistent with the compensation paid to non-management directors. During the term of his employment agreement and through April 1, 2010, Mr. Wooley did not receive additional compensation from us for his services as a director. For a detailed discussion of the compensation arrangements for Mr. Wooley and our other non-management Board members, see the “Governance of the Company – Director Fees; Attendance at Meetings” section of this proxy statement.
In addition, until January 5, 2011, we were party to two leases for two properties in Tampa, Florida, which contain dealership lots and offices (the “Original Leases”) with Mr. Wooley, for which we paid approximately $2.8 million in rent during 2010. The leases on such properties were scheduled to expire by their terms in 2013.
On December 17, 2010, Asbury Tampa entered into a purchase agreement (the “Purchase Agreement”) with Mr. Wooley to purchase the premises on which the Company’s Courtesy Hyundai, Courtesy Nissan and Courtesy Smart dealerships are located for an aggregate purchase price of approximately $16.8 million (the “Purchase Transaction”). The Purchase Agreement contained representations and warranties customary for arms-length transactions of this type. The Purchase Transaction, which was subject to customary closing conditions, was consummated on January 5, 2011.
Concurrently with the Purchase Transaction, Asbury Tampa entered into a new lease for the property (the “Brandon Property”) on which the Company’s Courtesy Toyota of Brandon dealership is located (the “Lease”, together with the Purchase Transaction being the “Wooley Transaction”). The term of the lease commenced on January 5, 2011 and expires on December 31, 2030 (the “Lease Term”), which Lease Term may renewed for two successive five year renewal periods. Pursuant to the terms of the Lease, the Company will pay an annual base rent of $1.28 million (the “Base Rent”), which Base Rent may increase after the 11th year of the Lease Term by the lesser of the Consumer Price Index or 3%, depending on whether or not certain environmental remediation for the premises has been completed by Mr. Wooley. In addition, Mr. Wooley will reimburse the Company for certain costs incurred by the Company for environmental compliance and remediation on the Brandon Property in connection with any manufacturer required renovations that may be conducted by the Company during the Lease Term. Pursuant to the terms of the Lease, Mr. Wooley granted Asbury Tampa a purchase option to purchase Brandon Property for a purchase price of $16 million (the “Brandon Property Purchase Price”) (i) at the 5th year of the Lease Term, providing that the existing environmental conditions on the Brandon Property have been properly remediated by Mr. Wooley; or (ii) at any time after the 10th year of the Lease Term. The Brandon Property Purchase Price may be adjusted, however, based on equivalent percentage increases in the Base Rent pursuant to the terms of the Lease.
The Wooley Transaction was reviewed and approved by the Board under our policy and procedures for related person transactions, as described above.
Other
From time to time, including in 2013, certain of our directors and named executive officers, or their respective family members, purchase or lease vehicles at the Company’s dealerships, which occasionally may beare valued over $120,000. SECURITIES AUTHORIZED FOR ISSUANCE UNDER
EQUITY COMPENSATION PLANS The securities outstanding under our equity compensation plans, the weighted average exercise price of outstanding options, and the number of securities remaining available for issuance under our equity compensation plans, as of December 31, 2013, were as follows: | | | | | | | | | | | Plan Category | | Number of Securities
to be Issued Upon Exercise
of Outstanding Options,
Warrant and Rights
(a) | | Weighted Average
Exercise Price of
Outstanding Options,
Warrants and Rights
(b) | | Number of Securities Remaining
Available for Future Issuance
Under Equity Compensation Plans
(excluding securities reflected
in column (a))
(c) | | Equity compensation plans approved by security holders | | | 704,004 | (1) | $ | 27.68 | | | 1,321,010 | |
| | | | | (1) | Represents 8,167 stock options, 329,713 performance shares and 366,124 shares of restricted stock. The number of performance shares reported in this table assumes that we attain the target performance goals associated with each respective grant of performance shares. |
All of the 8,167 shares which may be issued upon exercise of outstanding options are issuable under the Company’s 2002 Stock Option Plan. None of such shares are issuable under our 2012 Equity Incentive Plan. We are prohibited from making grants of additional securities under the 2002 Equity Incentive Plan.
Table of Contents PROPOSALNO. 2 PROPOSAL TO ADOPT AN AMENDMENT TO THE BYLAWS OF ASBURY AUTOMOTIVE GROUP, INC. TO PROVIDE THAT DELAWARE WILL SERVE AS THE EXCLUSIVE FORUM FOR CERTAIN LEGAL ACTIONS We are asking stockholders to approve an amendment (the “Amendment”) to the Company’s Bylaws (the “Bylaws) that, if adopted, would result in the courts of Delaware serving as the exclusive forum for certain legal actions involving the Company. Specifically, if this proposal is approved by stockholders, the Bylaws will be amended to add a new Section 7.03 thereto, with the text of such Section as follows: Section 7.03Forum for Adjudication of Disputes. (a) Unless the Corporation consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any Director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, or (iv) any action asserting a claim governed by the internal affairs doctrine, shall be a state or federal court located within the state of Delaware, in all cases subject to the court’s having personal jurisdiction over the indispensable parties named as defendants. (b) If any action the subject matter of which is within the scope of paragraph (a) above is filed in a court other than a court located within the state of Delaware (a “Foreign Action”) in the name of any stockholder, such stockholder shall be deemed to have consented to (i) the personal jurisdiction of the state and federal courts located within the state of Delaware in connection with any action brought in any such court to enforce paragraph (a) above (an “FSC Enforcement Action”) and (ii) having service of process made upon such stockholder in any FSC Enforcement Action by service upon such stockholder’s counsel in the Foreign Action as agent for such stockholder. The Bylaws, as proposed to be amended and marked to show the proposed changes, are attached asAppendix A to this proxy statement. If approved by stockholders, the Amendment will be immediately effective. The Company, which is incorporated in Delaware, is one of the largest automotive retailers in the United States, operating 100 franchises (80 dealership locations) in 18 metropolitan markets within 10 states as of December 31, 2013. From time to time the Company has been, and expects that it may continue to be, the subject of various lawsuits arising out of its business and operations. The Board believes that there are a number of benefits from requiring that certain disputes involving the Company or its directors or officers, such as: (i) certain derivative actions; (ii) certain claims of a breach of fiduciary duty owed by a director, officer or other employee to the Company or its stockholders; or (iii) actions asserting a claim arising under the Delaware General Corporation Law or the internal affairs doctrine, be litigated in the Delaware courts. The Company believes that the Company’s ability to require claims to be brought in a single forum will help ensure consistent consideration of issues, and increase efficiency and cost effectiveness, all of which are in the best interests of the Company and its stockholders. Further, the Board believes that Delaware courts are best suited to address disputes involving such matters given that the Company is incorporated in Delaware. Specifically, Delaware offers a specialized court system uniquely equipped to deal with corporate law questions, with streamlined procedures and processes which help provide consistent, relatively quick decisions. This accelerated schedule can limit the time, cost and uncertainty of litigation for all parties. These courts have also developed considerable expertise in dealing with corporate law issues, as well as a substantial and influential body of case law construing Delaware's corporate law and long-standing precedent regarding corporate governance, all of which were among the considerations when the Company first incorporated in Delaware.
Table of Contents Exclusive jurisdiction provisions such as is contemplated by the Amendment are becoming increasingly common. Without a bylaw or similar provision such as that contemplated by the Amendment, the Company remains exposed to the possibility of plaintiffs using the Company’s diverse operational base to bring claims against the Company in multiple jurisdictions or choosing a forum state for litigation that may not apply Delaware law to the Company's internal affairs in the same manner as the Delaware courts would be expected to do so. The Company believes that adoption of the Amendment would reduce the risk that the Company could become subject to duplicative litigation in multiple forums, as well as the risk that the outcome of cases in multiple forums could be inconsistent, even though each forum purports to follow Delaware law. Any of these could expose the Company to increased expenses or losses. While it is possible that an exclusive jurisdiction provision such as is contemplated by the Amendment could possibly deter future lawsuits or similar actions that one or more stockholders may consider to be in their best interest, the Amendment has no impact on whether such actions may be filed or the kind of remedy a stockholder may obtain and therefore it does not deprive stockholders of legitimate claims; rather it attempts to prevent the Company from being forced to waste corporate assets defending against duplicative suits. At the same time, the Board believes that the Company should retain the ability to consent to an alternative forum on a case-by-case basis where the Company determines that its interest and those of its stockholders are best served by permitting such a dispute proceed in a forum other than Delaware. The Company is aware, notwithstanding the adoption of an exclusive jurisdiction provision, that the enforceability of similar choice of forum provisions in other companies’ governing document has been challenged in various legal proceedings, and it is possible that, in connection with any such proceedings, including any legal proceedings that may be brought to challenge the Amendment if it is approved, judicial decisions or other rulings or changes in law could declare or otherwise render exclusive forum clauses like the one contained in the Amendment to be inapplicable or unenforceable. After considering the foregoing, the Board believes the Amendment is in the best interests of the Company and its stockholders. The Board unanimously recommends a vote “FOR” the approval of an amendment
to the Bylaws to provide that Delaware will serve as the exclusive forum
for certain legal actions.
Table of Contents PROPOSAL NO. 23 PROPOSAL TO APPROVE THE AMENDED AND RESTATED ASBURY AUTOMOTIVE GROUP, INC.
KEY EXECUTIVE INCENTIVE COMPENSATION PLAN At our 2009 annual meeting of stockholders on April 29, 2009, our stockholders approved our Amended and Restated Key Executive Incentive Compensation Plan (also referred to in this proxy statement as the “Incentive Compensation Plan”). Pursuant to the Incentive Compensation Plan, the Compensation Committee (the “Committee”) is authorized to make incentive compensation awards, subject to a maximum annual award limitation, to executive officers of the Company based on the performance of the Company, its subsidiaries, affiliates, divisions or operating units, or any combination of the foregoing. Certain of these awards are intended to meet the requirements of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), and be tax deductible to the Company. Generally, Section 162(m) of the Code prevents a company from obtaining a federal income tax deduction for compensation paid to its chief executive officer and its other three most highly compensated executive officers (other than its chief financial officer) (collectively referred to as “covered employees”) in excess of $1 million for any year. However, “performance-based compensation” that is payable solely on account of the attainment of one or more performance goals is not subject to the deduction limitation if: (i) the performance goals are objective, pre-established and determined by a committee comprised solely of two or more outside directors; (ii) the material terms of the performance goals under which the compensation is to be paid are disclosed to the stockholders and approved by a majority vote at least every five years; and (iii) the committee comprised solely of two or more outside directors certifies that the performance goals and other material terms were in fact satisfied before the compensation is paid. As a result, we are again submitting the Incentive Compensation Plan to stockholders for approval in order to preserve our ability to grant awards in accordance with Section 162(m) of the Code that are tax deductible to the Company. While we believe it is in the best interests of the Company and our stockholders to have the ability to grant “performance-based compensation” under Section 162(m) of the Code, in certain circumstances, we may decide to grant compensation to our covered employees that will not qualify as “performance-based compensation” for purposes of Section 162(m) of the Code. Moreover, even if we intend to grant compensation that qualifies as “performance-based compensation” under Section 162(m) of the Code, we cannot guarantee that such compensation ultimately will be tax deductible by the Company. The following summary of the material terms of the Incentive Compensation Plan is qualified in its entirety by reference to the complete text of the Incentive Compensation Plan, which is set forth asAppendix B to this proxy statement, and incorporated herein by reference. Description of the Incentive Compensation Plan Purpose. The purpose of the Incentive Compensation Plan is to attract, retain and motivate highly qualified individuals who are key executives of the Company and its subsidiaries and affiliates, to obtain the best possible performance from each Incentive Compensation Plan participant, to further underscore the importance of achieving particular business objectives established for us, and to include in the participants’ compensation package a bonus component that is tied directly to the achievement of those objectives. Such bonus component is intended to qualify as performance-based compensation under Section 162(m) of the Code in order to permit the Company’s tax deduction for compensation paid under the Plan to the “covered employees.” Committee’s Authority. The Committee has sole responsibility for selecting eligible participants, establishing performance goals, setting performance periods, setting target/maximum award amounts, certifying whether performance goals have been attained and determining actual award amounts. However, the Board must ratify all awards to the Chief Executive Officer that are approved by the Committee. Subject to the terms of the Incentive Compensation Plan, the Committee has the authority to determine the terms of any award made under the Incentive Compensation Plan. Within the first 90 days of a performance period under the Incentive Compensation Plan (or, if shorter, within the maximum period allowed under Section 162(m) of the Code), the Committee will establish in writing (1) the length of the performance period, (2) the participants eligible to participate in the applicable performance period, (3) the target/maximum award payable to each participant and (4) the performance goal(s) for awards granted under the Incentive Compensation Plan for that performance period. The Committee consists solely of two or more “outside directors” within the meaning of Section 162(m) of the Code.
Table of Contents Maximum Award. Awards payable to any individual participant under the Incentive Compensation Plan in any fiscal year may not exceed $5,000,000. Eligible Participants. Any individual who is on the active payroll of the Company or its subsidiaries or affiliates during the applicable performance period and who is determined by the Committee to be an executive officer of the Company or its subsidiaries or affiliates is eligible to participate in the Incentive Compensation Plan. As of January 1, 2014, 6 persons were eligible to be designated to participate in the Incentive Compensation Plan. Within the first 90 days of the applicable performance period (or, if shorter, within the maximum period allowed under Section 162(m) of the Code), the Committee will select those eligible individuals who will participate in the Incentive Compensation Plan for the applicable performance period. The Committee may thereafter remove any individual from participation in the Incentive Compensation Plan at any time prior to the payment of awards for the applicable performance period thereunder. To be eligible to receive an award under the Incentive Compensation Plan, the participant must generally be employed on the date the Company makes payments with respect to awards for the applicable performance period. The Committee may in its discretion, however, make payment of an award to any participant who has retired or whose employment has terminated after the beginning of the performance period, or to the designee or estate of a participant who died prior to the date on which the Company makes payments with respect to awards for the applicable performance period, but not unless and until the Committee has certified attainment of the relevant performance goals for the applicable performance period. Performance Period. A performance period under the Incentive Compensation Plan will be a full fiscal year of the Company or other period of time (which may be longer or shorter than a full fiscal year of the Company, to the extent consistent with Section 162(m) of the Code) determined by the Committee. Performance Goals. The performance goal(s) that may be selected by the Committee may be based upon one or more of the following criteria: (1) net income before or after taxes, (2) earnings before or after taxes (including earnings before interest, taxes, depreciation and amortization), (3) operating income, (4) earnings per share, (5) return on stockholders’ equity, (6) return on investment, (7) return on assets, (8) level or amount of acquisitions, (9) share price, (10) profitability/profit margins, (11) market share, (12) revenues or sales (based on units and/or dollars), (13) costs, (14) cash flow, (15) working capital, (16) objective measures of customer satisfaction, (17) objective measures of objective measures of employee satisfaction, (18) expense levels and expense ratios, (19) gross margin and gross margin ratios, (20) employee turnover, (21) implementation of systems, (22) completion of projects, (23) level or amount of divestitures, (24) goals related to capitalization or restructuring of the balance sheet, and (25) goals related to management or expense restructuring. The foregoing criteria may, as determined by the Committee, relate to the Company, one or more of its subsidiaries, affiliates, divisions or operational units, or any combination of the foregoing, and may be applied on an absolute basis and/or be relative to one or more peer companies or indices or any combination thereof. To the extent required under Section 162(m) of the Code, within the first 90 days of the performance period (or, if shorter, within the maximum period allowed under Section 162(m) of the Code), the Committee will define, in writing and in an objective fashion, the manner of calculating the performance criteria it selects to use for the applicable performance period in order to determine whether the applicable performance goal(s) have been attained. The Committee is authorized at any time during the first 90 days of a performance period (or, if shorter, within the maximum period allowed under Section 162(m) of the Code), or any time thereafter (but only to the extent the exercise of such authority after such time would not cause the awards to fail to qualify as “qualified performance based compensation” under Section 162(m) of the Code), in its sole and absolute discretion, to adjust or modify the calculation of performance goal(s) for the applicable performance period to the extent permitted under Section 162(m) of the Code (1) in the event of, or in anticipation of, any unusual or extraordinary corporate item, transaction, event or development affecting the Company, or any of its subsidiaries, affiliates, divisions or operating units (to the extent applicable to such performance goal(s)) or (2) in recognition of, or in anticipation of, any other unusual or nonrecurring events affecting the Company or any of its subsidiaries, affiliates, divisions or operating units (to the extent applicable to such performance goal(s)), or the financial statements of the Company or any of its subsidiaries, affiliates, divisions or operating units (to the extent applicable to such performance goal(s)), or of changes in applicable rules, rulings, regulations or other requirements of any governmental body or securities exchange, accounting principles, law or business conditions. Payment of Awards. Following the completion of the applicable performance period, the Committee will meet to review and certify in writing whether, and to what extent, the performance goal(s) for the performance period have been achieved. If the applicable performance goal(s) have been achieved, the Committee will then determine the actual size of each participant’s award for the performance period. In determining the actual size of an individual award for a performance period, the Committee may, in its sole judgment, reduce or eliminate the maximum award payable to the participant for the performance period.
Table of Contents Awards will be paid in cash to participants as soon as administratively possible following completion of the Committee’s certification of the attainment of the performance goals, unless the Committee determines that any award or any portion thereof will be deferred. In no event may a participant receive any payment (1) in respect of an award unless and until, and only to the extent that, the performance goal(s) for the applicable performance period are achieved and certified by the Committee and (2) of any award in excess of the annual limitation set forth under the plan. Administration. The Incentive Compensation Plan is administered by the Committee. The Committee has full power to construe and interpret the Incentive Compensation Plan, establish and amend rules and regulations for its administration, correct any defect, supply any omission and reconcile any inconsistency in the Incentive Compensation Plan and any award granted thereunder, and perform all other acts relating to the Incentive Compensation Plan, including the delegation of administrative responsibilities, that it believes reasonable and proper and in conformity with the purposes of the Incentive Compensation Plan and the requirements of Section 162(m) of the Code. Any decision made, or action taken, by the Committee arising out of or in connection with the interpretation and/or administration of the Incentive Compensation Plan is final, conclusive and binding on all persons affected thereby. In no event may the Committee use its discretionary authority to (1) provide payment in respect of any award if the performance goal(s) for the applicable performance period have not been attained and certified by the Committee, (2) increase an award for any participant following the first 90 days of the performance period (or, if shorter, the maximum period allowed under Section 162(m) of the Code) or (3) increase an award above the maximum amount payable under the Incentive Compensation Plan. No member of the Board, the Committee or any employee of the Company or any of its subsidiaries or affiliates will be liable for any action taken or omitted or any determination made in good faith with respect to the Incentive Compensation Plan or any award granted under the Incentive Compensation Plan, and those persons will be indemnified in connection with such actions taken or omitted and such determination in accordance with the terms of the Incentive Compensation Plan. Amendment/Termination. The Incentive Compensation Plan will continue in effect until terminated by the Board. The Committee may amend the Incentive Compensation Plan from time to time, repeal it entirely or direct the discontinuance of awards under the Incentive Compensation Plan either temporarily or permanently. Any Incentive Compensation Plan amendment that changes (1) the persons eligible to receive awards under the Incentive Compensation Plan, (2) the criteria that may be used to set performance goals or (3) the maximum award payable to a plan participant, will not be effective prior to stockholder approval thereof. Non-Transferability. No right or interest of any participant in the Incentive Compensation Plan shall be assignable or transferable, or subject to any claims of any creditor or subject to any lien. Plan Benefits. The table below sets forth the 2014 target awards (expressed as a percentage of base salary to be paid in 2014) for eligible participants in the Incentive Compensation Plan with respect to the 2014 performance period. The amounts actually payable under the Incentive Compensation Plan for 2014, if any, will vary based on the extent of achievement of certain performance goals and are therefore not determinable.
Table of Contents NEW PLAN BENEFITS
Asbury Automotive Group, Inc. Amended and Restated
Key Executive Incentive Compensation Plan | | | | | | Name and Position | | | 2014 Target Award1 | | Craig T. Monaghan, President and CEO | | | 100 | % | Michael S. Kearney, Executive Vice President and COO | | | 75 | % | Keith R. Style, Senior Vice President and Chief Financial Officer2 | | | 55 | % | Scott J. Krenz, Senior Vice President3 | | | 55 | % | Joseph G. Parham, Jr., Vice President, Chief Human Resources Officer4 | | | 40 | % | George A. Villasana, Vice President, General Counsel and Secretary | | | 40 | % | Executive Group5 | | | 61 | %6 | Non-Executive Director Group7 | | | N/A | 7 | Non-Executive Officer Employee Group8 | | | N/A | 8 |
| | 1 Expressed as a percentage of 2014 base salary. | | | 2 Mr. Style was appointed to these positions effective January 1, 2014. | | | 3 Mr. Krenz retired from his position as Chief Financial Officer effective December 31, 2013, and is retiring from all positions with the Company effective March 31, 2014. Any payout to him under the Incentive Compensation Plan for 2014 will be made pro rata for the portion of 2014 that he remains in our employ. | | | 4 Mr. Parham is retiring from all positions within the Company effective June 30, 2014. Any payout to him under the Key Executive Incentive Compensation Plan for 2014 will be made pro rata for the portion of 2014 that he remains in our employ. | | | 5 This group consists of all of the Company’s current executive officers. | | | 6 Determined as an average of the target award for all eligible participants. | | | 7 This group consists of all of the Company’s current non-employee directors. | | | 8 This group consists of all of the Company’s current employees, including officers, who are not executive officers. |
Table of Contents The maximum award opportunities under the Incentive Compensation Plan with respect to the 2014 performance period, expressed as a percentage of base salary payable in 2014, are 200% for Mr. Monaghan; 150% for Mr. Kearney; 110% for Mr. Style; 110% for Mr. Krenz (payable pro rata for the portion of 2014 that he remains in our employ); 80% for Mr. Parham (payable pro rata for the portion of 2014 that he remains in our employ); and 80% for Mr. Villasana. Effective April 1, 2014, the annual base salaries for these individuals will be $950,000 for Mr. Monaghan; $705,000 for Mr. Kearney; $400,000 for Mr. Style; $440,000 for Mr. Krenz (payable on a pro rata basis for the portion of 2014 that he remains in our employ); $340,000 for Mr. Parham (payable pro rata for the portion of 2014 that he remains in our employ); and $375,000 for Mr. Villasana. As explained above, neither directors nor non-executive employees of the Company are eligible to participate in the Incentive Compensation Plan. Because the structure of awards of the Incentive Compensation Plan for subsequent years will be determined at the discretion of the Committee, the benefits payable for subsequent years, if any, are not determinable. The Board and management recommend a vote FOR the approval of the
Incentive Compensation Plan.
Table of Contents PROPOSAL NO. 4
ADVISORY VOTE ONAPPROVAL OF EXECUTIVE COMPENSATION In 2010, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), which, among other things, imposes a number of new corporate governance requirements on publicly held-companies. The proxy statement rules Pursuant to Section 14A of the Exchange Act, were revised pursuant to the Dodd-Frank Act to provideour stockholders withhave the right to vote to approve, on an advisory (non-binding) basis, the compensation of our named executive officers, as disclosed pursuant to the compensation and disclosure rules of the Securities and Exchange Commission.officers. The advisory stockholder vote is commonly referred to as the “say-on-pay” vote. At the 2013 annual meeting of stockholders, approximately 99.6% of the shares voted on this proposal were voted in support of the Company’s compensation program. We hold this vote annually, so our Board is again submitting a non-binding stockholder vote on our executive compensation.
As described in the Compensation“Compensation Discussion and AnalysisAnalysis” section of this proxy statement, our compensation program is designed to reward our executive officers for their individual and collective performance and for our collective performance in our earnings per share, total stockholdersstockholder return, achieving target goals relating to our EBIDTA and other annual and long-term business objectives. Please read the “Compensation Discussion and Analysis” section of this proxy statement for additional details about our executive compensation philosophy and programs, including information about the fiscal year 20102013 compensation of our named executive officers as set out in the tables and accompanying narrative. This proposal gives you as a stockholder the opportunity to express your views on the compensation of our named executive officers. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this proxy statement. Accordingly, we are asking stockholderstockholders to approve the following resolution: | | | “RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the ‘Compensation Discussion and Analysis,’ compensation tables and any related material disclosed in this proxy statement, is hereby APPROVED.” |
“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the ‘Compensation Discussion and Analysis,’ compensation tables and any related material disclosed in this proxy statement, is hereby APPROVED.”
Because your vote is advisory, it will not be binding on our Board and may not be construed as overruling any decision by the Board, nor towill it create or imply any additional fiduciary duty of the Board. However, the Board will review the voting results and may, in its sole discretion, take into account the outcome of the vote when considering future executive compensation arrangements. Our Board and our Compensation and Human Resources Committee believe that our commitment to responsible compensation practices justifies a vote by stockholders for the resolution approving the compensation of our executivesnamed executive officers as disclosed in this proxy statement. The boardBoard unanimously recommends you vote FOR the advisory approval of the compensation of our named
executive officers, as disclosed in this proxy statement pursuant to the compensation
disclosure rules of the Securities and Exchange Commission.
Table of Contents PROPOSAL NO. 3AUDIT COMMITTEE REPORT
ADVISORY VOTE ON THE FREQUENCY OF AN ADVISORY VOTE ON EXECUTIVE COMPENSATION
The Dodd-Frank Act and Section 14A of the Exchange Act also requires us to provide stockholders the right to vote, on an advisory (non-binding) basis, on the frequency with which the Company should include an advisory vote on named executive officer compensation, similar to that contained in Proposal 2, at future annual stockholder meetings. Stockholders may vote for a “say-on-pay” vote to occur as frequently as every one, two or three years or may abstain from voting. We and the Board welcome our stockholders’ views on this subject, and will carefully consider the outcome of this vote consistent with the best interests of all stockholders.
The Board recommends that the advisory vote to approve named executive officer compensation be held each year as part of our annual stockholders meetings. The Board believes an annual advisory vote would provide relatively timely feedback on our executive compensation arrangements, plans, programs and policies.
Please note that you may cast your advisory vote as to your preferred frequency of an advisory vote on named executive officer compensation by choosing any one of the following three options: an advisory vote every year; an advisory vote every two years; or an advisory vote every three years. You may also abstain from voting on this item. Your vote on this proposal is not a vote to approve or to vote against the Board’s recommended frequency. Accordingly, we are seeking a vote on the following resolution:
“RESOLVED, that the voting frequency of one year, two years or three years that receives the largest number of votes cast will be determined to be the frequency with which the Company is to hold an advisory stockholder vote to approve the compensation of the Company’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, compensation tables and any related material.”
The frequency option (i.e., every one year, every two years or every three years) that receives a plurality of the votes cast on this proposal will be deemed the preferred option of stockholders. However, because this vote is advisory and not binding, the Board may decide to hold an advisory vote to approve named executive officer compensation more or less frequently than the deemed preferred option.
The Board recommends that you vote FOR the advisory vote on
frequency of executive compensation to be held every year.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee has reviewed and discussed the Company’s audited consolidated financial statements for the year ended December 31, 20102013 with the Company’s management and Ernst & Young LLP, the Company’s independent auditorsregistered public accounting firm for the year ended December 31, 2010.2013. Management represented to the Audit Committee that the Company’s consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America. The Audit Committee has also discussed with Ernst & Young LLP the matters required to be discussed by theStatement on Auditing StandardsStandard No. 6116, as amended, as adopted“Communications with Audit Committees,” issued by the Public Company Accounting Oversight Board, in Rule 3200T, including the auditors’ judgment about the quality of the Company’s accounting principles as applied in its financial reporting.amended, from time to time. The Audit Committee has received the written disclosures and the letter from Ernst & Young LLP required by the applicable requirements of the Public Company Accounting Oversight Board regarding Ernst & Young LLP’s communications with the Audit Committee concerning independence, and has discussed with Ernst & Young LLP their independence from the Company and its management. Based on the reviews and discussions outlined above, the Audit Committee recommended to the Board that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, for filing with the SEC.2013. Submitted by the Members of the Audit Committee:
Eugene S. Katz (Chair)
Thomas C. DeLoach, Jr.
Juanita T. James
Janet M. Clarke
Philip MaritzTable of Contents
PROPOSAL NO. 4 5
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORSREGISTERED PUBLIC ACCOUNTING FIRM The Audit Committee has appointed Ernst & Young LLP as our independent auditorsregistered public accounting firm for the year ending December 31, 2011.2014. If the stockholders fail to ratify this appointment, the Audit Committee may, but is not required to, reconsider whether to retain that firm. Representatives from Ernst & Young LLP are expected to be present at the annual meetingAnnual Meeting and, if present, will have the opportunity to make a statement if they desire to and to answer appropriate questions. INDEPENDENT AUDITORS’REGISTERED PUBLIC ACCOUNTING FIRM FEES The following table summarizes the aggregate fees billed to us by our independent auditors:Ernst & Young LLP for fiscal years 2013 and 2012: | | | | | | | | | | 2013 | | 2012 | | Audit Fees | | $ | 1,743,000 | | $ | 1,196,009 | | | | | | | | | | Expenses | | $ | 35,000 | | $ | 33,000 | | Total | | $ | 1,778,000 | | $ | 1,229,000 | |
| | | | | | | | | | | | 2010 | | | 2009 | | Audit Fees | | $ | 1,532,000 | | | $ | 1,198,000 | | Tax Fees | | $ | 61,000 | | | $ | 75,000 | | Expenses | | $ | 35,000 | | | $ | 42,000 | | | | | | | | | | | Total | | $ | 1,628,000 | | | $ | 1,315,000 | | | | | | | | | | |
Audit Fees
Audit fees are composed of fees for professional services rendered by Ernst & Young LLP for the fiscal years ended December 31, 20102013 and 2009,2012, for the audits of our annual financial statements, and for the reviews of the financial statements included in our Quarterly Reports on Form 10-Q for the fiscal years ended 20102013 and 2009,2012, respectively. Audit fees for 2010 also2013 included $221,000$500,000 of fees related to various transactions, including the add-on issuance of $100.0 million aggregate principal amount of our 8.375% Notes in November 2010. June 2013, our $75.0 million real estate credit agreement with Bank of America and other transactions completed during 2013.The audit fees also included fees associated with the audit of the effectiveness of our internal controls over financial reporting as required by Section 404 of the Sarbanes-Oxley Act. Included in the 20102013 audit fees and expenses is $529,000$413,000 that had not been billed to us as of December 31, 2010.2013. Included in the 20092012 audit fees and expenses is $449,000$84,000 that had not been billed to us as of December 31, 2009. Tax Fees
The tax fees relate to professional services rendered for employment tax consultations and miscellaneous tax compliance matters.2012.
Audit Committee’s Pre-Approval Policies and Procedures The Audit Committee has policies and procedures that require the pre-approval by the Audit Committee of all fees paid to, and all services performed by, our independent auditors.registered public accounting firm. Each year, the Audit Committee approves the proposed services, including the nature, type and scope of services to be performed by theour independent auditorsregistered public accounting firm during the fiscal year and the related fees. Audit Committee pre-approval is also required for those engagements that may arise during the course of the year that are outside the scope of the initial services and fees pre-approved by the Audit Committee. In December 2010, theThe Audit Committee has delegated to the Audit Committee chair the ability to approve non-audit work of our independent auditor.registered public accounting firm. Pursuant to the requirements of the Sarbanes-Oxley Act, the fees and services provided as noted in the table above were authorized and approved by the Audit Committee in compliance with the pre-approval policies and procedures described herein. The boardBoard unanimously recommends you vote FOR the ratification of the selection of
Ernst & Young LLP as our independent auditorsregistered public accounting firm for the year ending December 31, 2011.2014.
Table of Contents STOCKHOLDER PROPOSALS FOR THE 20122015 ANNUAL MEETING This proxy statement relates to the Company’s Annual Meeting of Stockholders for the calendar year 2011,2014, which will take place on April 20, 2011.16, 2015. The Company currently expects that its 2011 Annual Meeting2015 annual meeting of Stockholdersstockholders will be held in April 2012.2014. In order to be eligible for inclusion in the Company’s proxy materials for the 2012 Annual Meeting,2015 annual meeting, any stockholder proposal must be submitted in writing to the Company’s Corporate Secretary and received at the Company’s executive offices at 2905 Premiere Parkway NW, Suite 300, Duluth, GA 30097 by the close of business on November 25, 2011,[•], 2014, or such later date as the Company may determine and announce in connection with the actual scheduling of the 2012 Annual Meeting.2015 annual meeting. To be considered for presentation at the 2012 Annual Meeting,2015 annual meeting, although not included in the Company’s proxy statement, any stockholder proposal must be received at the Company’s executive offices at the foregoing address not earlier than December 22, 2011,[•], 2014, but on or before the close of business on January 21, 2012,[•], or such later date as the Company may determine and announce in connection with the actual scheduling of the 2012 Annual Meeting.2015 annual meeting. The procedure for nominating directors is described above under “Governance of the Company—Nomination of Directors.” All stockholder proposals for inclusion in the Company’s proxy materials will be subject to the requirements of the proxy rules adopted under the Exchange Act and, as with any stockholder proposal (regardless of whether it is included in the Company’s proxy materials), the Company’s Restated Certificate of Incorporation, the Company’s bylawsBylaws and Delaware law. OTHER MATTERS Management is not aware of any other matters to be brought before the 2011 Annual Meeting, of Stockholders, but if other matters come before the meeting, the proxy holders intend to take such action as in their judgment is in the best interest of the Company and its stockholders. The Company will bear the expenses of preparing, printing and mailing the proxy materials to the stockholders. In addition, the Company has retained Phoenix Advisory Partners to aid in the broker search and the solicitation of proxies, for a fee of approximately $8,500, plus reasonable out-of-pocket expenses and disbursements. Officers and employees of the Company may request the return of proxies without additional compensation.
DELIVERY OF PROXY MATERIALS TO HOUSEHOLDS Under the rules of the SEC, the Company is permitted to use a method of delivery, often referred to as “householding.” Householding permits the Company to mail a single set of proxy materials to any household in which two or more different stockholders reside and are members of the same household or in which one stockholder has multiple accounts. The Company did not household materials for the annual meeting.Annual Meeting. If the Company households materials for future meetings, then only one copy of the Company’s annual report and proxy statement will be sent to multiple stockholders of the Company who share the same address and last name, unless the Company has received contrary instructions from one or more of those stockholders. In addition, the Company has been notified that certain intermediaries (i.e.(i.e., banks, brokers banks or other nominees) will household proxy materials for the annual meeting.Annual Meeting. For voting purposes, a separate proxy card will be included for each account at the shared address. The Company will deliver promptly, upon oral or written request, a separate copy of the annual report and proxy statement to any stockholder at the same address. If you wish to receive a separate copy of the annual report and proxy statement, you may contact the Company’s Investor Relations Department (a) by mail at 2905 Premiere Parkway NW, Suite 300, Duluth, GA 30097, (b) by telephone at 770-418-8212, or (c) by e-mail atir@asburyauto.com. You may also contact your bank, broker bank or other nominee to make a similar request. Stockholders sharing an address who now receive multiple copies of the Company’s annual report and proxy statement may request delivery of a single copy by contacting the Company as indicated above, or by contacting their bank, broker bank or other nominee, provided the broker, bank or other nominee has elected to household proxy materials. ADDITIONAL INFORMATION The Company files annual, quarterly and current reports, proxy materials and other information with the SEC. You may read and copy any document that the Company files at the Public Reference Room of the SEC at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. You may also inspect the Company’s filings at the regional offices of the SEC or over the Internet at the SEC’s web site atwww.sec.gov. Additional information can also be found on the Company’s web site atwww.asburyauto.com. Information contained on any web site referenced in this proxy statement is not incorporated by reference in this proxy statement. If you would like to receive a copy of any exhibits listed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010,2013, please call or submit a request in writing to Investor Relations, Asbury Automotive Group, Inc., 2905 Premiere Parkway NW, Suite 300, Duluth, GA 30097, and the exhibits will be provided to you upon the payment of a nominal fee (which fee will be limited to the expenses the Company incurs in providing you with the requested exhibits).
Table of Contents APPENDIX A BY-LAWS OF ASBURY AUTOMOTIVE GROUP, INC. ARTICLE I
Offices 2905 Premiere Parkway NW, Suite 300Section 1.01
Duluth, Georgia 30097
ANNUAL MEETING OF STOCKHOLDERS, APRIL 20, 2011, AT 8:00 A.M.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
Delaware Office. The undersigned hereby appoints Elizabeth B. Chandler and Joseph G. Parham, Jr., and each or either of them, with full power of substitution, to act as proxies for the undersigned, and to vote all shares of common stockprincipal office of Asbury Automotive Group, Inc. (“Asbury”(the “Corporation”) in the State of Delaware shall be in the City of Wilmington, County of New Castle, and the resident agent in charge thereof shall be The Corporation Trust Company. Section 1.02Other Offices. The Corporation may have offices at such other place or places as from time to time the board of directors of the Corporation (the “Board of Directors”, and each member thereof, a “Director”) may determine or the business of the Corporation may require. Section 1.03Books and Records. The books and records of the Corporation may be kept outside the State of Delaware at such place or places as may from time to time be designated by the Board of Directors. ARTICLE II
Meetings of Stockholders Section 2.01Annual Meeting. The annual meeting of the stockholders of the Corporation shall be held on such date and at such time as may be fixed by resolution of the Board of Directors. Section 2.02Special Meeting. Except as otherwise required by law and subject to the rights of the holders of any class or series of stock having a preference over the common stock, par value $0.01 per share, of the Corporation (the “Common Stock”) as to dividends or upon liquidation, dissolution or winding up, special meetings of stockholders of the Corporation for any purpose or purposes may be called only by (a) the Board of Directors pursuant to a resolution stating the purpose or purposes thereof approved by a majority of the total number of Directors which the Corporation would have if there were no vacancies or unfilled newly-created directorships (the “Whole Board”), or (b) by the Chairman of the Board of Directors (the “Chairman of the Board”), either upon his own initiative or the written request of the holders of at least 50% of the voting power of all Voting Stock then outstanding. No business other than that stated in the notice shall be transacted at any special meeting. Table of Contents Section 2.03Place of Meeting. The Board of Directors or the Chairman of the Board, as markedthe case may be, may designate the place, if any, of meeting for any annual meeting or for any special meeting of the stockholders. If no designation is so made, the place of meeting shall be the principal office of the Corporation. Section 2.04Notice of Meeting. Notice, stating the place, day and hour of the meeting and the purpose or purposes for which the meeting is called, shall be delivered by the Corporation not less than 10 calendar days nor more than 60 calendar days before the date of the meeting, either personally, by mail or by other lawful means, to each stockholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail with postage thereon prepaid, addressed to the stockholder at such person’s address as it appears on the reverse side,stock transfer books of the Corporation. Such further notice shall be given as may be required by law. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Meetings may be held without notice if all stockholders entitled to notice are present (except when stockholders entitled to notice attend the meeting for the express purpose of objecting, at the beginning of the meeting, because the meeting is not lawfully called or convened), or if notice is waived by those not present in accordance with Section 6.04. Any previously scheduled meeting of the stockholders may be postponed, and any special meeting of the stockholders may be canceled, by resolution of the Board of Directors, upon public notice given prior to the date previously scheduled for such meeting of stockholders. Section 2.05Quorum and Adjournment; Voting. Except as otherwise provided by law or by the Certificate of Incorporation of the Corporation (the “Certificate of Incorporation”), the holders of a majority of the voting power of all outstanding shares of the Corporation entitled to vote generally in the election of Directors (the “Voting Stock”), represented in person or by proxy, shall constitute a quorum at a meeting of stockholders, except that when specified business is to be voted on by a class or series of stock voting as a class, the holders of a majority of the voting power of the outstanding shares of such class or series shall constitute a quorum of such class or series for the transaction of such business. The chairman of the meeting may adjourn the meeting from time to time, whether or not there is such a quorum. No notice of the time and place of adjourned meetings need be given except as required by law. The stockholders present at a duly called meeting at which a quorum is present may continue to transact business until adjournment, notwithstanding the undersignedwithdrawal of enough stockholders to leave less than a quorum. Section 2.06Proxies. At all meetings of stockholders, a stockholder may vote by proxy in accordance with the General Corporation Law of the State of Delaware (the “DGCL”) or by such person’s duly authorized attorney in fact. Section 2.07Notice of Stockholder Business and Nominations. (a)Annual Meetings of Stockholders. (i)Proposals of business to be considered by the stockholders at an annual meeting of stockholders (other than the nomination of a person for election to the Board of Directors) may be made (A) pursuant to the Corporation’s notice of meeting pursuant to Section 2.04, (B) by or at the direction of the Chairman of the Board or (C) by any stockholder of the Corporation who was a stockholder of record at the time of giving of notice provided for in this Section 2.07, who is a stockholder of record at the time of the annual meeting, who is entitled to vote only at the Annual Meetingannual meeting and who complies with all applicable requirements set forth in this Section 2.07. Table of Stockholders (the “Annual Meeting”Contents Subject to the rights, if any, of the holders of any series of preferred stock of the Corporation (“Preferred Stock”) to elect additional directors as may be provided in an applicable Preferred Stock Designation (as defined in the Certificate of Incorporation), nominations of persons for election to the Board of Directors at an annual meeting of stockholders may be made only (A) by or at the direction of the Board of Directors or (B) by a stockholder who (x) has complied with all applicable requirements of this Section 2.07 in relation to such nomination, (y) was a stockholder of record of the Corporation at the time of giving the notice required by this Section 2.07 and is a stockholder of record of the Corporation at the time of the annual meeting, and (z) is entitled to vote at the annual meeting. For the avoidance of doubt, the foregoing will be the exclusive means for a stockholder to submit business before an annual meeting of stockholders (other than proposals properly made in accordance with Rule 14a-8 under the Securities Exchange Act of 1934 (such act, and the rules and regulations promulgated thereunder, the “Exchange Act”) and included in the notice of meeting given by or at the direction of the Board of Directors). (ii)For the nomination of a person for election to the Board of Directors, or for other business to be held on Wednesday, April 20, 2011,properly brought before an annual meeting by a stockholder pursuant to subsection (a)(i) of this Section 2.07, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and such other business must otherwise be a proper matter for stockholder action. To be timely, a stockholder’s notice shall be delivered to the Secretary of the Corporation at 8:00 a.m., local time, at Asbury’s corporate headquarters located at 2905 Premiere Parkway NW, Suite 300, Duluth, Georgia, and at any and all adjournments thereof, as markedthe principal executive offices of the Corporation not later than the close of business on the reverse side.ninetieth calendar day nor earlier than the close of business on the one hundred twentieth calendar day prior to the first anniversary of the preceding year’s annual meeting;provided,however, that in the event that the date of the annual meeting is more than thirty calendar days before or more than sixty calendar days after such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the one hundred twentieth calendar day prior to such annual meeting and not later than the close of business on the later of the ninetieth calendar day prior to such annual meeting or the tenth calendar day following the calendar day on which public announcement of the date of such meeting is first made by the Corporation. In no event shall the public announcement of an adjournment or postponement of an annual meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above. Table of Contents Such stockholder’s notice shall set forth: This proxy(A)as to each person whom the stockholder proposes to nominate for election or reelection as a Director:
(1)all information with respect to such proposed nominee that would be required to be set forth in a stockholder’s notice pursuant to this Section 2.07 if such proposed nominee were a Proposing Person (as defined below); (2)all information that would be required to be disclosed pursuant to Items 403 and 404 under Regulation S-K if the stockholder giving the notice or any other Proposing Person were the “registrant” for purposes of such rule and the proposed nominee were a director or executive officer of such registrant; (3)a written questionnaire with respect to the identity, background and qualification of the proposed nominee and the background of any other person or entity on whose behalf the nomination is revocablebeing made (which questionnaire will be provided by the Secretary upon written request); (4)a written representation and agreement (in the form provided by the Secretary upon written request) that the proposed nominee (i) is not and will not become a party to (x) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how the proposed nominee, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Corporation or (y) any Voting Commitment that could limit or interfere with the proposed nominee’s ability to comply, if elected as a director of the Corporation, with the proposed nominee’s fiduciary duties under applicable law, (ii) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed therein, and (iii) if elected as a director of the Corporation, the proposed nominee would be votedin compliance, and will comply, with all applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Corporation; and (5)all other information relating to such person that is required to be disclosed in solicitations of proxies for the election of Directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act (including such person’s written consent to being named in the proxy statement as directed, buta nominee and to serving as a Director if no instructions are specified, this proxy willelected); Table of Contents (B)as to any business other than the nomination of a person for election to the Board of Directors, that a stockholder proposes to bring before the meeting, a description in reasonable detail of the business desired to be voted FORbrought before the proposals listed.Ifmeeting, the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend either the Certificate of Incorporation or these By-Laws, the language of the proposed amendment), the reasons for conducting such business at the meeting and any material interest in such business of any Proposing Person on whose behalf the proposal is made and a description in reasonable detail of all agreements, arrangements and understandings among the Proposing Persons or between any Proposing Person and any other businessperson or entity in connection with the proposal; and (C)as to the stockholder giving the notice, the beneficial owner or owners, if different, on whose behalf the nomination or proposal, as the case may be, is presentedmade and any “affiliate” or “associate” (each within the meaning of Rule 12b-2 under the Exchange Act) of any of the foregoing (each, a “Proposing Person”), (i) the name and address of such Proposing Person, as they appear on the Corporation’s books, (ii) the class and number of shares of stock of the Corporation which are owned beneficially and of record by each such Proposing Person (including any shares of any class of stock of the Corporation as to which such Proposing Person has a right to acquire beneficial ownership, whether such right is exercisable immediately or after the passage of time), (iii) a representation that the stockholder giving the notice is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the Annual Meeting, includingmeeting to propose such business or nomination, (iv) a representation whether any Proposing Person intends or is part of a group which intends (x) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to approve or adopt the proposal or elect the nominee, as the case may be and/or (y) otherwise to solicit proxies from stockholders in support of such proposal or nomination, (v) a description of (x) any option, warrant, convertible security, stock appreciation right or similar right (including any derivative securities, as defined under Rule 16a-1 under the Exchange Act), whether or not presently exercisable, with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class of securities of the Corporation or with a value derived in whole or in part from the value of any class of securities of the Corporation, whether or not such instrument or right is subject to settlement in whole or in part in the underlying class of securities of the Corporation or otherwise, directly or indirectly held of record or owned beneficially by such Proposing Person and (y) each other direct or indirect opportunity of such Proposing Person to profit or share in any profit derived from, or to manage the risk or benefit from, any increase or decrease in the value of the Corporation’s securities, in each case Table of Contents regardless of whether (A) such interest conveys any voting rights in such security to such Proposing Person, (B) such interest is required to be, or is capable of being, settled through delivery of such security, or (C) such Proposing Person may have entered into other transactions that hedge the economic effect of any such interest (any such interest referred to in this clause (v), being a “Derivative Interest”); (vi) any proxy, contract, arrangement, understanding or relationship pursuant to which the Proposing Person has a right to vote any shares of the Corporation or which has the effect of increasing or decreasing the voting power of such Proposing Person; (vii) any rights directly or indirectly held of record or beneficially by the Proposing Person to dividends on the shares of the Corporation that are separated or separable from the underlying shares of the Corporation; (viii) any performance-related fees (other than an asset-based fee) to which the Proposing Person may be entitled as a result of any increase or decrease in the value of shares of the Corporation or Derivative Interests; and (ix) any other information relating to such Proposing Person that would be required to be disclosed in a proxy statement or other filing required pursuant to Section 14(a) of the Exchange Act to be made in connection with a general solicitation of proxies or consents by such Proposing Person in support of the business proposed to be brought before the meeting. (iii)Notwithstanding anything in the second sentence of paragraph (a)(ii) of this Section 2.07 to the contrary, in the event that the number of Directors to be elected to the Board of Directors at an annual meeting is increased and there is no public announcement by the Corporation naming all of the nominees for Director or specifying the size of the increased Board of Directors at least one hundred calendar days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice required by this By-Law shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the tenth calendar day following the day on which such public announcement is first made by the Corporation. (iv)A stockholder nominating a person for election to the Board of Directors providing notice of other business proposed to be brought before an annual meeting must further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice, is true and correct at all times up to and including the date of such meeting and any adjournment or postponement thereof. Such update and supplement shall be delivered or mailed to the Secretary at the principal executive offices of the Corporation, (A) in the case of the update and supplement required to be made as of the record date, not later than the later of five business days after the record date for the meeting and five business days after the first public disclosure of the record date for the meeting, and (B) in the case of the update and supplement required to be made as of 10 business days prior to the meeting or any adjournment or postponement thereof, not later than eight business days prior to the date for the meeting, if practicable (or, if not practicable, on the first practicable date prior to any adjournment or postponement thereof). Table of Contents (b)Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been properly brought before the meeting pursuant to the Corporation’s notice of meeting under Section 2.04. Nominations of persons for election to the Board of Directors at a special meeting of stockholders at which Directors are to be elected may only be made (i) pursuant to the Corporation’s notice of meeting, (ii) by or at the direction of the Chairman of the Board or (iii) provided that the Board of Directors has determined that Directors shall be elected at such meeting, by any stockholder of the Corporation who is a stockholder of record at the time of giving of notice provided for in this By-Law, who shall be entitled to vote at the meeting and who otherwise complies with all applicable procedures and obligations set forth in this By-Law for the nomination of a person for election to the Board of Directors (notwithstanding the fact that a nomination pursuant to this subsection is not in connection with an annual meeting). In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more Directors to the Board of Directors, any stockholder entitled to vote in such election of Directors may nominate pursuant to clause (iii) of the immediately preceding sentence of this Section 2.07(b) a person or persons (as the case may be), for election to such position(s) as specified in the Corporation’s notice of meeting, if the stockholder’s notice required by paragraph (a)(ii) of this Section 2.07 shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the close of business on the one hundred twentieth calendar day prior to such special meeting and not later than the close of business on the later of the ninetieth calendar day prior to such special meeting or the tenth calendar day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement of an adjournment or postponement of a special meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above. (c)General. (i)Only such persons who are nominated in accordance with the procedures set forth in this Section 2.07 shall be eligible to serve as Directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this By-Law. Except as otherwise provided by law, the Certificate of Incorporation or these By-Laws, the chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this Section 2.07 (including whether any Proposing Person on whose behalf a nomination or proposal is made solicited (or is part of a group which solicited) or did not so solicit, as the case may be, proxies in support of such stockholder’s nominee or proposal in compliance with such stockholder’s representation as required by this Section 2.07) and, if any proposed nomination or business is not in compliance with this By-Law, to declare that such defective proposal or nomination shall be disregarded. Notwithstanding the foregoing provisions of this Section 2.07, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual or special meeting of stockholders of the Corporation to present a nomination or business, such nomination shall be disregarded and such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation. Table of Contents (ii)For purposes of this By-Law, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act. (iii)Notwithstanding the foregoing provisions of this Section 2.07, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 2.07. Nothing in this Section 2.07 shall be deemed to affect any rights (a) of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act or (b) of the holders of any series of Preferred Stock to elect Directors under an applicable Preferred Stock Designation. Section 2.08Procedure for Election of Directors; Required Vote. Election of Directors at all meetings of the stockholders at which Directors are to be elected shall be by ballot, and, subject to the rights of the holders of any series of Preferred Stock to elect Directors under an applicable Preferred Stock Designation, a plurality of the votes cast thereat shall elect Directors. Except as otherwise provided by law, the Certificate of Incorporation, a Preferred Stock Designation, applicable stock exchange rules or other rules and regulations applicable to the Corporation or these By-Laws, in all matters other than the election of Directors, the affirmative vote of a majority of the voting power of the shares present in person or represented by proxy at the meeting and entitled to vote on the matter shall be the act of the stockholders. Section 2.09Inspectors of Elections; Opening and Closing the Polls. (a)The Board of Directors by resolution shall appoint, or shall authorize an officer of the Corporation to appoint, one or more inspectors, which inspector or inspectors may include individuals who serve the Corporation in other capacities, including, without limitation, as officers, employees, agents or representatives, to act at the meetings of stockholders and make a written report thereof. One or more persons may be designated as alternate inspector(s) to replace any inspector who fails to act. If no inspector or alternate has been appointed to act or is able to act at a meeting of stockholders, the chairman of the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before discharging such person’s duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of such person’s ability. The inspectors shall have the duties prescribed by law. Table of Contents (b)The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting by the person presiding over the meeting. The Board of Directors may adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the person presiding over any meeting of stockholders shall have the right and authority to convene and to adjourn the meeting, this proxy will be votedto prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such presiding officer, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by those named in this proxy in their best judgment. As of March 23, 2011, the Board of Directors knowsor prescribed by the presiding officer of nothe meeting, may include, without limitation, the following: (i) an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies or such other persons as the chairman of the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. The presiding officer at any meeting of stockholders, in addition to making any other determinations that may be appropriate to the conduct of the meeting, shall, if the facts warrant, determine and declare to the meeting that a matter or business was not properly brought before the meeting and if such presiding officer should so determine, such person shall so declare to the meeting that any such matter or business not properly brought before the meeting shall not be transacted or considered. Unless and to the extent determined by the Board of Directors or the person presiding over the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure. ARTICLE III
Board of Directors Section 3.01General Powers. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. In addition to the powers and authorities by these By-Laws expressly conferred upon them, the Board of Directors may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these By-Laws required to be exercised or done by the stockholders. Section 3.02Regular Meetings. A regular meeting of the Board of Directors shall be held without other notice than this By-Law in conjunction with the annual meeting of stockholders. The Board of Directors may, by resolution, provide the time and place for the holding of additional regular meetings without other notice than such resolution. Section 3.03Special Meetings. Special meetings of the Board of Directors shall be called it the request of the Chairman of the Board, the President and Chief Executive Officer or a majority of the Board of Directors then in office. The person or persons authorized to call special meetings of the Board of Directors may fix the place and time of the meetings. Table of Contents Section 3.04Notice. Notice of any special meeting of Directors shall be given to each Director at such person’s business or residence in writing by hand delivery, first-class or overnight mail or courier service, telegram or facsimile transmission, orally by telephone or any other lawful means. If mailed by first-class mail, such notice shall be deemed adequately delivered when deposited in the United States mail so addressed, with postage thereon prepaid, at least 5 calendar days before such meeting. If by telegram, overnight mail or courier service, such notice shall be deemed adequately delivered when the telegram is delivered to the telegraph company or the notice is delivered to the overnight mail or courier service company at least 24 hours before such meeting. If by facsimile transmission, such notice shall be deemed adequately delivered when the notice is transmitted at least 12 hours before such meeting. If by telephone, by hand delivery or by other lawful means, the notice shall be given at least 12 hours prior to the time set for the meeting. Neither the business to be presentedtransacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice of such meeting, except for amendments to these By-Laws, as provided under Section 8.01. A meeting may be held at any time without notice if all the Directors are present (except when Directors attend for the express purpose of objecting, at the Annual Meeting.beginning of the meeting, because it is not lawfully called or conveyed) or if those not present waive notice of the meeting either before or after such meeting. Section 3.05Action By Consent of Board of Directors. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board of Directors or committee, as the case may be, consent thereto in accordance with applicable law. Section 3.06Conference Telephone Meetings. Members of the Board of Directors or any committee thereof may participate in a meeting of the Board of Directors or such committee by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting. Section 3.07Quorum. Subject to Article VI of the Certificate of Incorporation, a whole number of Directors equal to at least a majority of the Whole Board shall constitute a quorum for the transaction of business, but if at any meeting of the Board of Directors there shall be less than a quorum present, a majority of the Directors present may adjourn the meeting from time to time without further notice. The undersigned hereby acknowledges receiptact of the majority of the Directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. Section 3.08Committees of the Board of Directors. (a)The Board of Directors may from Asbury priortime to executiontime designate committees, which shall consist of one or more Directors. The Board of Directors may designate one or more Directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any such committee may, to the extent permitted by law, exercise such powers and shall have such responsibilities as shall be specified in the designating resolution. In the absence or disqualification of any member of such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Table of Contents (b)A majority of any committee may determine its action and fix the time and place of its meetings, unless the Board of Directors shall otherwise provide. Notice of such meetings shall be given to each member of the committee in the manner provided for in Section 3.04. The Board of Directors shall have power at any time to fill vacancies in, to change the membership of, or to dissolve any such committee. Nothing herein shall be deemed to prevent the Board of Directors from appointing one or more committees consisting in whole or in part of persons who are not Directors; provided, however, that no such committee shall have or may exercise any authority of the Board of Directors. Section 3.09Records. The Board of Directors shall cause to be kept a record containing the minutes of the proceedings of the meetings of the Board of Directors and of the stockholders, appropriate stock books and registers and such books of records and accounts as may be necessary for the proper conduct of the business of the Corporation. Section 3.10Chairman of the Board. A Chairman of the Board shall be chosen from among the Directors. The Chairman of the Board shall preside at all meetings of the stockholders and of the Board of Directors. The Chairman of the Board shall have such other powers and duties as may from time to time be conferred by the Board of Directors. The Board of Directors also may elect a Vice-Chairman to act in the place of the Chairman of the Board upon his or her absence or inability to act. ARTICLE IV
Officers Section 4.01Elected Officers. The elected officers of the Corporation shall be a President and Chief Executive Officer, a Secretary, a Treasurer, and such other officers (including, without limitation, Senior Vice Presidents and Executive Vice Presidents and Vice Presidents) as the Board of Directors from time to time may deem proper. All officers elected by the Board of Directors shall each have such powers and duties as generally pertain to their respective offices, subject to the specific provisions of this proxyArticle IV. Such officers shall also have such powers and duties as from time to time may be conferred by the Board of Directors or by any committee thereof. The Board of Directors or any committee thereof may from time to time elect, or the Chairman of the Board or President and Chief Executive Officer may appoint, such other officers (including one or more Vice Presidents, Controllers, Assistant Secretaries and Assistant Treasurers), as may be necessary or desirable for the conduct of the business of the Corporation. Such other officers and agents shall have such duties and shall hold their offices for such terms as shall be provided in these By-Laws or as may be prescribed by the Board of Directors or such committee or by the Chairman of the Board or President and Chief Executive Officer, as the case may be. Section 4.02Election and Term of Office. The elected officers of the Corporation shall be elected annually by the Board of Directors at the regular meeting of the Board of Directors held in conjunction with the annual meeting of the stockholders. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as convenient. Each officer shall hold office until such person’s successor shall have been duly elected and shall have qualified or until such person’s death or until he shall resign or be removed pursuant to Section 4.08. Table of Contents Section 4.03President; Chief Executive Officer. The President shall be the Chief Executive Officer of the Corporation, shall act in a general executive capacity and shall be responsible for the administration and operation of the Corporation’s business and general supervision of its policies and affairs. The President and Chief Executive Officer, if he or she is also a Director, shall, in the absence of or because of the inability to act of the Chairman or Vice Chairman of the Board, perform all duties of the Chairman of the Board and preside at all meetings of stockholders and of the Board of Directors. Section 4.04Vice Presidents. Each Senior Vice President and Executive Vice President and any Vice President shall have such powers and shall perform such duties as shall be assigned to such person by the Board of Directors or by the President and Chief Executive Officer. Section 4.05Treasurer. (a)The Treasurer shall exercise general supervision over the receipt, custody and disbursement of corporate funds. The Treasurer shall cause the funds of the Corporation to be deposited in such banks as may be authorized by the Board of Directors, or in such banks as may be designated as depositories in the manner provided by resolution of the Board of Directors The Treasurer shall have such further powers and duties and shall be subject to such directions as may be granted or imposed from time to time by the Board of Directors, the Chairman of the Board or the President and Chief Executive Officer. (b)The Board of Directors, the Chairman of the Board or the President and Chief Executive Officer may designate one or more Assistant Treasurers who shall have such of the authority and perform such of the duties of the Treasurer as may be assigned to them by the Board of Directors, the Chairman of the Board or the President and Chief Executive Officer. During the Treasurer’s absence or inability, the Treasurer’s authority and duties shall be possessed by such Assistant Treasurer’ s) as the Board of Directors, the Chairman of the Board or the President and Chief Executive Officer may designate. Section 4.06Secretary. (a)The Secretary shall keep or cause to be kept in one or more books provided for that purpose, the minutes of all meetings of the Board of Directors, the committees of the Board of Directors and the stockholders; shall see that all notices are duly given in accordance with the provisions of these By-Laws and as required by law; shall be custodian of the records and the seal of the Corporation and affix and attest the seal to all stock certificates of the Corporation (unless the seal of the Corporation on such certificates shall be a facsimile, as hereinafter provided) and affix and attest the seal to all other documents to be executed on behalf of the Corporation under its seal and shall see that the books, reports, statements, certificates and other documents and records required by law to be kept and filed are properly kept and filed; and in general, shall perform all the duties incident to the office of Secretary and such other duties as from time to time may be assigned to the Secretary by the Board of Directors, the Chairman of the Board or the President and Chief Executive Officer. Table of Contents (b)The Board of Directors, the Chairman of the Board or the President and Chief Executive Officer may designate one or more Assistant Secretaries who shall have such of the authority and perform such of the duties of the Secretary as may be provided in these By-Laws or assigned to them by the Board of Directors, the Chairman of the Board or the President and Chief Executive Officer. During the Secretary’s absence or inability, the Secretary’s authority and duties shall be possessed by such Assistant Secretary or Assistant Secretaries as the Board of Directors, the Chairman of the Board or the President and Chief Executive Officer may designate. Section 4.07Removal. Any officer or agent of the Corporation may be removed by the affirmative vote of a Noticemajority of Annual Meetingthe Board of StockholdersDirectors whenever, in their judgment, the best interests of the Corporation would be served thereby. Any officer or agent appointed by the Chairman of the Board or the President and Proxy Statement dated March 23, 2011Chief Executive Officer may be removed by him or her whenever, in such person’s judgment, the best interests of the Corporation would be served thereby. No elected officer shall have any contractual rights against the Corporation for compensation by virtue of such election beyond the date of the election of such person’s successor, such person’s death, such person’s resignation or such person’s removal, whichever event shall first occur, except as otherwise provided in an employment contract or under an employee benefit plan. Section 4.08Vacancies. A newly created elected office and a vacancy in any elected office because of death, resignation, or removal may be filled by the Board of Directors for the unexpired portion of the term at any meeting of the Board of Directors. Any vacancy in an office appointed by the Chairman of the Board or the President and Chief Executive Officer because of death, resignation, or removal may be filled by the Chairman of the Board or the President and Chief Executive Officer. ARTICLE V
Stock Certificates and Transfers Section 5.01Stock Certificates and Transfers. The interest of each stockholder of the Corporation shall be evidenced by certificates for shares of stock in such form as the Corporation may from time to time prescribe. The shares of the stock of the Corporation shall be transferred on the books of the Corporation by the holder thereof in person or by such person’s attorney, upon surrender for cancellation of certificates for at least the same number of shares, with an assignment and power of transfer endorsed thereon or attached thereto, duly executed, with such proof of the authenticity of the signature as the Corporation or its agents may reasonably require. The certificates of stock shall be signed, countersigned and registered in such manner as the Board of Directors may by resolution prescribe or as may otherwise be permitted by applicable law, which resolution may permit all or any of the signatures on such certificates to be in facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. Notwithstanding the foregoing provisions regarding share certificates, the Corporation may provide that, subject to the rights of stockholders under applicable law, some or all of any or all classes or series of the Corporation’s common or any preferred shares may be uncertificated shares. Table of Contents Section 5.02Lost, Stolen or Destroyed Certificates. No certificate for shares of stock in the Corporation shall be issued in place of any certificate alleged to have been lost, destroyed or stolen, except on production of such evidence of such loss, destruction or theft and on delivery to the Corporation of a bond or indemnity in such amount, upon such terms and secured by such surety, as the Board of Directors or any financial officer may in its or such person’s discretion require. ARTICLE VI
Miscellaneous Provisions Section 6.01Fiscal Year. The fiscal year of the Corporation shall begin on the first day of January and end on the last day of December of each year. Section 6.02Dividends. The Board of Directors may from time to time declare, and the 2010 Annual ReportCorporation may pay, dividends on Form 10-K.its outstanding shares in the manner and upon the terms and conditions provided by law and the Certificate of Incorporation. Section 6.03Seal. The corporate seal shall have inscribed thereon the words “Corporate Seal,” the year of incorporation and the word “Delaware.” | PLEASE MARK THIS PROXY AND SIGN AND DATE IT ON THE REVERSE SIDE
AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
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(Continued andSection 6.04Waiver of Notice. Whenever any notice is required to be votedgiven to any stockholder or Director under the provisions of the DGCL or these By-Laws, a waiver thereof given in accordance with applicable law shall be deemed equivalent to the giving of such notice. Neither the business to be transacted at, nor the purpose of, any annual or special meeting of the stockholders or the Board of Directors or committee thereof need be specified in any waiver of notice of such meeting.
Section 6.05Audits. The accounts, books and records of the Corporation shall be audited upon the conclusion of each fiscal year by an independent certified public accountant selected by the Board of Directors, and it shall be the duty of the Board of Directors to cause such audit to be done annually. Section 6.06Resignations. Any Director or any officer, whether elected or appointed, may resign at any time by giving written notice of such resignation to the Chairman of the Board, the President and Chief Executive Officer, or the Secretary, and such resignation shall be deemed to be effective as of the close of business on the reverse side.date said notice is received by the Chairman of the Board, the President and Chief Executive Officer, or the Secretary, or at such later time as is specified therein. No formal action shall be required of the Board of Directors or the stockholders to make any such resignation effective. Table of Contents ARTICLE VII
Contracts, Proxies, Exclusive Forum, Etc. Section 7.01Contracts. Except as otherwise required by law, the Certificate of Incorporation, a Preferred Stock Designation, or these By-Laws, any contracts or other instruments may be executed and delivered in the name and on the behalf of the Corporation by such officer or officers of the Corporation as the Board of Directors may from time to time direct. Such authority may be general or confined to specific instances as the Board of Directors may determine. The Chairman of the Board, the President and Chief Executive Officer or any Senior Vice President, Executive Vice President or Vice President may execute bonds, contracts, deeds, leases and other instruments to be made or executed or for or on behalf of the Corporation. Subject to any restrictions imposed by the Board of Directors or the Chairman of the Board, the President and Chief Executive Officer or any Senior Vice President, Executive Vice President or Vice President of the Corporation may delegate contractual powers to others under such person’s jurisdiction, it being understood, however, that any such delegation of power shall not relieve such officer of responsibility with respect to the exercise of such delegated power. Section 7.02Proxies. Unless otherwise provided by resolution adopted by the Board of Directors, the Chairman of the Board, the President and Chief Executive Officer or any Senior Vice President, Executive Vice President or Vice President may from time to time appoint an attorney or attorneys or agent or agents of the Corporation, in the name and on behalf of the Corporation, to cast the votes which the Corporation may be entitled to cast as the holders of stock or other securities in any other entity, any of whose stock or other securities may be held by the Corporation, at meetings of the holders of the stock or other securities of such other entity, or to consent in accordance with applicable law, in the name of the Corporation as such holder, to any action by such other entity, and may instruct the person or persons so appointed as to the manner of casting such votes or giving such consent, and may execute or cause to be executed in the name and on behalf of the Corporation and under its corporate seal or otherwise, all such proxies, consents or other instruments as such person may deem necessary or proper in the premises. Section 7.03 Forum for Adjudication of Disputes. (a) Unless the Corporation consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any Director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, or (iv) any action asserting a claim governed by the internal affairs doctrine, shall be a state or federal court located within the state of Delaware, in all cases subject to the court’s having personal jurisdiction over the indispensable parties named as defendants. Table of Contents (b) If any action the subject matter of which is within the scope of paragraph (a) above is filed in a court other than a court located within the state of Delaware (a “Foreign Action”) in the name of any stockholder, such stockholder shall be deemed to have consented to (i) the personal jurisdiction of the state and federal courts located within the state of Delaware in connection with any action brought in any such court to enforce paragraph (a) above (an “FSC Enforcement Action”) and (ii) having service of process made upon such stockholder in any FSC Enforcement Action by service upon such stockholder’s counsel in the Foreign Action as agent for such stockholder.” ARTICLE VIII
Amendments Section 8.01Amendments. The By-Laws may be altered or repealed and new By-Laws may be adopted (a) at any annual or special meeting of stockholders by the affirmative vote of the holders of a majority of the voting power of the Voting Stock then outstanding, voting as a single class, provided, however, that any proposed alteration or repeal of, or the adoption of any By-Law inconsistent with, Section 2.02, Section 2.07 or this Section 8.01, by the stockholders shall require the affirmative vote of the holders of at least 80% of the voting power of all Voting Stock then outstanding, voting together as a single class, and provided, further, however, that, in the case of any such stockholder action at a special meeting of stockholders, notice of the proposed alteration, repeal or adoption of the new By-Law or By-Laws must be contained in the notice of such special meeting, or (b) by the affirmative vote of a majority of the Whole Board. | | | | | | | | | Electronic Voting Instructions: You can vote by Internet or telephone! Available 24 hours a day, 7 days a week! | | | Instead or mailing your proxy, you may choose one of the two voting methods outlined below to vote your proxy. VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.Proxies submitted by the Internet or telephone must be received by 1:00 a.m., Central Time, on April 20, 2011. | | | | | | | 
| | | | Vote by Internet
•Log on to the Internet and go to
www.envisionreports.com/ABG
•Follow the steps outlined on the secure website.
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| | | | Vote by telephone
•Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada any time on a touch tone telephone. There isNO CHARGE to you for the call.
•Follow the instructions provided by the recorded message.
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| | Using ablack ink pen, mark your votes with an X as shown in this | | example. Please do not write outside the designated areas. |
| | | | | | | | | | | | | | | | | | | A. Proposals – The Board of Directors recommends a vote FOR the nominees listed, FOR Proposals 2 and 4, and for a1 YEAR frequency with respect to Proposal 3. | | | | | | | | | | | | | | | | | | FOR | | WITHHOLD | | | | | | | | | | | | | | | | | | | | | | 4. Election of Directors:
| | (01) Juanita T. James | | ¨ | | ¨ | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | FOR | | AGAINST | | | ABSTAIN | | | | | | | | | | | | | (02) Vernon E. Jordan, Jr. | | ¨ | | ¨ | | 2. An advisory vote on Asbury’s executive compensation. | | | | ¨ | | ¨ | | | ¨ | | | | | | | | | | | | | | | | | | | | | 1 Year | | 2 Years | | 3 Years | | | ABSTAIN | | | | | | | | | | | | | (03) Eugene S. Katz | | ¨ | | ¨ | | 3. An advisory vote on the frequency of Asbury holding an advisory vote on executive compensation. | | ¨ | | ¨ | | ¨ | | | ¨ | | | | | | | | | | | | | | | | | | | | | | | FOR | | AGAINST | | | ABSTAIN | | | | | | | | | | | | | (04) Craig T. Monaghan | | | | | | 4. Ratification of appointment of Ernst & Young LLP as Asbury’s independent public accountants for the year ending December 31, 2011. | | | | ¨ | | ¨ | | | ¨ | | | | | | | Meeting Attendance
Mark this box with an X if you plan to attend the Annual Meeting.
| | ¨ | | | | | | | | | | | | | | B. Non-Voting Items
Change of Address – Please print new address below.
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Table of Contents APPENDIX B AMENDED AND RESTATED ASBURY AUTOMOTIVE GROUP, INC. KEY EXECUTIVE INCENTIVE COMPENSATION PLAN (Effective January 1, 2004, Amended and Restated as of March 25, 2009) SECTION 1.Purpose. The purpose of the Asbury Automotive Group, Inc. Key Executive Incentive Compensation Plan (the “Plan”) is to attract, retain and motivate highly qualified individuals who are key executives of Asbury Automotive Group, Inc.(the “Company”), and its subsidiaries and affiliates (together with the Company and their and its successors, “Asbury”); to obtain the best possible performance from each Participant; to further underscore the importance of achieving particular business objectives established for Asbury; and to include in Participants’ compensation package a bonus component that is tied directly to the achievement of those objectives. Such bonus component is intended to qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended from time to time (the “Code”), and the Plan shall be interpreted accordingly. SECTION 2.Definitions. For the purposes of the Plan, the following terms shall have the following meanings: “Asbury” shall have the meaning set forth in Section 1. “Awards” shall mean the incentive awards made pursuant to the Plan. “Board of Directors” shall mean the Board of Directors of the Company. “Code” shall have the meaning set forth in Section 1. “Committee” shall mean the Compensation Committee of the Board of Directors. “Company” shall have the meaning set forth in Section 1. “Covered Person” shall have the meaning set forth in Section 12(f). “Eligible Employee” shall mean an Employee who is an executive officer of Asbury, as determined by the Committee. “Employee” shall mean an individual who is on the active payroll of Asbury at any time during the period for which an Award is made under the Plan. “Establishment Period” shall have the meaning set forth in Section 5. “Participant” shall mean an Eligible Employee who is selected by the Committee to participate in the Plan. “Performance Period” shall mean a full fiscal year of the Company or other period of time (which may be longer or shorter than a full fiscal year of the Company, to the extent consistent with Section 162(m) of the Code) determined by the Committee. “Plan” shall have the meaning set forth in Section 1. “Section 409A” shall mean Section 409A of the Code and the Department of Treasury regulations and other interpretive guidance issued thereunder. SECTION 3.Effective Date; Term. The Plan became effective as of January 1, 2004, and was approved by the Company’s stockholders at the Company’s 2004 Annual Meeting of Stockholders on June 3, 2004 and at the Company’s 2009 Annual Meeting of Stockholders on April 29, 2009, and, subject to Section 9, shall remain in effect until such time as it shall be terminated by the Board of Directors. The Plan supersedes all previous bonus plans. The Plan was subsequently amended and restated to include the revised requirements of Section 409A of the Code, which amendment and restatement was approved by the Committee on November 21, 2008. The Plan is hereby further amended and restated to include additional performance criteria and to clarify provisions relating to the length of Performance Periods, which amendment and restatement was approved by the Committee on March 25, 2009. Table of Contents SECTION 4.Maximum Awards. Awards payable with respect to any fiscal year of the Company to any Participant shall not exceed $5,000,000. SECTION 5.Eligibility. (a) Within the first 90 days of the applicable Performance Period (or, if shorter, within the maximum period allowed under Section 162(m) of the Code) (the “Establishment Period”), the Committee shall select those Eligible Employees who shall participate in the Plan for such Performance Period. In determining those Eligible Employees who are selected to participate in the Plan, the Committee shall give consideration to the contribution made by the Employee to the achievement of Asbury’s established objectives and such other matters as it shall deem relevant. The Committee shall have the authority at any time prior to the payment of Awards for the applicable Performance Period to remove Participants from the Plan for that Performance Period. (b) To be eligible to receive an Award, the Eligible Employee must be employed on the date Asbury makes payments with respect to Awards for the applicable Performance Period. Notwithstanding the foregoing, in the discretion of the Committee, Awards may be made to Eligible Employees who have retired or whose employment has terminated after the beginning of the Performance Period for which an Award is made, or to the designee or estate of an Eligible Employee who died prior to the date on which Asbury makes payments with respect to Awards for the applicable Performance Period, but not unless and until the Committee has certified attainment of the relevant performance goals in accordance with Section 7(b). SECTION 6.Awards. (a) Subject to the terms of the Plan, the Committee shall have the authority to determine the terms of any Award. (b) Within the Establishment Period, the Committee shall establish in writing (i) the length of the Performance Period, (ii) the Eligible Employees who shall participate in the applicable Performance Period, (iii) the target/maximum Award payable to each Participant and (iv) the performance goal(s) for Awards granted for that Performance Period. The performance goal(s) that may be selected by the Committee shall be based upon one or more of the following criteria: (A) net income before or after taxes, (B) earnings before or after taxes (including earnings before interest, taxes, depreciation and amortization), (C) operating income, (D) earnings per share, (E) return on stockholders’ equity, (F) return on investment, (G) return on assets, (H) level or amount of acquisitions, (I) share price, (J) profitability/profit margins, (K) market share, (L) revenues or sales (based on units and/or dollars), (M) costs, (N) cash flow, (O) working capital, (P) objective measures of customer satisfaction, (Q) objective measures of objective measures of employee satisfaction, (R) expense levels and expense ratios, (S) gross margin and gross margin ratios, (T) employee turnover, (U) implementation of systems, (V) completion of projects, (W) level or amount of divestitures, (X) goals related to capitalization or restructuring of the balance sheet, and (Y) goals related to management or expense restructuring. The foregoing criteria may, as determined by the Committee, relate to the Company, one or more of its subsidiaries, affiliates, divisions or operational units, or any combination of the foregoing, and may be applied on an absolute basis and/or be relative to one or more peer companies or indices or any combination thereof. To the extent required under Section 162(m) of the Code, within the Establishment Period, the Committee shall define, in writing and in an objective fashion, the manner of calculating the performance criteria it selects to use for the applicable Performance Period in order to determine whether the applicable performance goal(s) have been attained. (c) The Committee is authorized at any time during the Establishment Period, or any time thereafter (but only to the extent the exercise of such authority after the Establishment Period would not cause the applicable Awards to fail to qualify as “qualified performance-based compensation” under Section 162(m) of the Code), in its sole and absolute discretion, to adjust or modify the calculation of performance goal(s) for the applicable Performance Period to the extent permitted under Section 162(m) of the Code (i) in the event of, or in anticipation of, any unusual or extraordinary corporate item, transaction, event or development affecting the Company, or any of its subsidiaries, affiliates, divisions or operating units (to the extent applicable to such performance goal(s)) or (ii) in recognition of, or in anticipation of, any other unusual or nonrecurring events affecting the Company or any of its subsidiaries, affiliates, divisions or operating units (to the extent applicable to such performance goal(s)), or the financial statements of the Company or any of its subsidiaries, affiliates, divisions or operating units (to the extent applicable to such performance goal(s)), or of changes in applicable rules, rulings, regulations or other requirements of any governmental body or securities exchange, accounting principles, law or business conditions. Table of Contents SECTION 7. Payment of Awards. (a) Awards payable under the Plan for a Performance Period shall be paid in cash to Participants as soon as administratively possible following completion of the performance goal certifications required by Section 7(b), but in any event within the period required by Section 409A such that it qualifies as a “short-term deferral” pursuant to Section 1.409A-1(b)(4) of the Department of Treasury regulations, unless the Committee shall determine that any Award or any portion thereof shall be deferred pursuant to an approved deferred compensation plan in accordance with Section 409A. In no event may a Participant receive any payment (i) in respect of an Award unless and until, and only to the extent that, the performance goal(s) for the applicable Performance Period are achieved and certified by the Committee in accordance with Section 7(b) and (ii) of any Award in excess of the limitation set forth in Section 4. (b) Following the completion of the applicable Performance Period, the Committee shall meet to review and certify in writing whether, and to what extent, the performance goal(s) for the Performance Period have been achieved. If the applicable performance goal(s) have been achieved, the Committee shall then determine the actual size of each Participant’s Award for the Performance Period. In determining the actual size of an individual Award for a Performance Period, the Committee may, in its sole judgment, reduce or eliminate the maximum Award payable to the Participant for the Performance Period. SECTION 8.Administration and Interpretation. (a) The Committee shall have full authority to administer the Plan. The Committee shall have full power to construe and interpret the Plan, establish and amend rules and regulations for its administration, correct any defect, supply any omission and reconcile any inconsistency in the Plan and any Award, and perform all other acts relating to the Plan, including the delegation of administrative responsibilities, that it believes reasonable and proper and in conformity with the purposes of the Plan and the requirements of Section 162(m) of the Code. (b) The Committee has sole responsibility for selecting Eligible Employees and Participants, establishing performance goals, setting Performance Periods, setting target/maximum Award amounts, certifying whether performance goals have been attained and determining actual Award amounts. (c) Any decision made, or action taken, by the Committee arising out of or in connection with the interpretation and/or administration of the Plan shall be final, conclusive and binding on all persons affected thereby. (d) In no event shall any discretionary authority granted to the Committee by the Plan be used to (i) provide payment in respect of any Award if the performance goal(s) for the applicable Performance Period have not been attained and certified by the Committee, (ii) increase an Award for any Participant following the Establishment Period or (iii) increase an Award above the maximum amount payable under Section 4 of the Plan. SECTION 9.Amendment/Termination. The Committee shall have the right to amend the Plan from time to time or to repeal it entirely or to direct the discontinuance of Awards either temporarily or permanently;provided,however, that no amendment of the Plan that changes (i) the persons eligible to receive Awards under the Plan, (ii) the criteria that may be used to set performance goals under the Plan, as set forth in Section 6(b), or (iii) the maximum Award payable to an Eligible Employee, as set forth in Section 4, shall be effective before approval by shareholders in a manner that complies with the requirements of Section 162(m) of the Code. SECTION 10.Special Awards and Other Plans. (a) Nothing contained in the Plan shall prohibit Asbury from establishing other special awards or incentive compensation plans providing for the payment of incentive compensation to Employees (including Eligible Employees). (b) Payments or benefits provided to an Eligible Employee under any stock, deferred compensation, savings, retirement or other employee benefit plan are governed solely by the terms of such plan. SECTION 11.Rights of Eligible Employees. (a) Neither the Plan, nor the adoption or operation of the Plan, nor any documents describing or referring to the Plan (or any part hereof) shall confer upon any Employee any right to continue in the employ of Asbury. (b) No individual to whom an Award has been made or any other party shall have any interest in any asset of Asbury until such amount has been paid. | C. Authorized Signatures – This section must be completed for your vote to be counted. – Date and Sign Below
Note: Please sign card exactly as name appears on this proxy. When shares are held by joint tenants, both should sign.
When signing as attorney, executor, administrator, trustee or guardian, please give full title as such.
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Table of Contents (c) No right or interest of any Participant in the Plan shall be assignable or transferable, or subject to any claims of any creditor or subject to any lien. SECTION 12.Miscellaneous. (a) All expenses and costs incurred in connection with the operation of the Plan shall be borne by Asbury, and no part therefor (other than the amounts of Awards under the Plan) shall be charged against the maximum limitation of Section 4. (b) All Awards are subject to withholding, where applicable, for Federal, state, local and foreign taxes. (c) Any provision of the Plan that is held to be invalid, illegal or unenforceable (whether in whole or in part) shall be deemed modified to the extent, but only to the extent, of such invalidity, illegality or unenforceability and the remaining provisions of the Plan shall not be affected thereby. (d) The Plan and the rights and obligations of the parties to the Plan shall be governed by, and construed and interpreted in accordance with, the laws of the State of Delaware (without regard to principles of conflicts of law). (e) All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, including any purchaser of all or substantially all the assets of the Company. (f) No member of the Board of Directors, the Committee or any employee of Asbury (each such person, a “Covered Person”) shall be liable for any action taken or omitted to be taken or any determination made in good faith with respect to the Plan or any Award hereunder. Each Covered Person shall be indemnified and held harmless by the Company against and from (i) any loss, cost, liability or expense (including attorneys’ fees) that may be imposed upon or incurred by such Covered Person in connection with or resulting from any action, suit or proceeding to which such Covered Person may be a party or in which such Covered Person may be involved by reason of any action taken or omitted to be taken under the Plan or any Award Agreement and (ii) any and all amounts paid by such Covered Person, with the Company’s approval, in settlement thereof, or paid by such Covered Person in satisfaction of any judgment in any such action, suit or proceeding against such Covered Person;provided that the Company shall have the right, at its own expense, to assume and defend any such action, suit or proceeding and, once the Company gives notice of its intent to assume the defense, the Company shall have sole control over such defense with counsel of the Company’s choice. The foregoing right of indemnification shall not be available to a Covered Person to the extent that a court of competent jurisdiction in a final judgment or other final adjudication, in either case not subject to further appeal, determines that the acts or omissions of such Covered Person giving rise to the indemnification claim resulted from such Covered Person’s bad faith, fraud or willful criminal act or omission or that such right of indemnification is otherwise prohibited by law. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which Covered Persons may be entitled under the Company’s Restated Certificate of Incorporation or Restated Bylaws, as a matter of law, or otherwise, or any other power that the Company may have to indemnify such persons or hold them harmless. (g) To the extent applicable, the Plan and the Awards shall be interpreted in accordance with Section 409A. Notwithstanding any provision of the Plan to the contrary, in the event that the Committee determines that any Award may be subject to Section 409A, the Committee may adopt such amendments to the Plan and the applicable Award or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Committee determines are necessary or appropriate to (i) exempt the Award from Section 409A and/or preserve the intended tax treatment of the benefits provided with respect to the Award, or (ii) comply with the requirements of Section 409A and thereby avoid the application of penalty taxes under Section 409A. |
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