UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
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☐ | Soliciting Material Pursuant to §240.14a-12 |
Genuine Parts Company
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Genuine Parts Company
Notice of 2019 Annual Meeting & Proxy Statement |
GENUINE PARTS COMPANY
2999 Circle 75Wildwood Parkway
Atlanta, Georgia 30339
NOTICE OF 20162019 ANNUAL MEETING OF SHAREHOLDERS
April 25, 201622, 2019
TO THE SHAREHOLDERS OF GENUINE PARTS COMPANY:
The 20162019 Annual Meeting of Shareholders of Genuine Parts Company, a Georgia corporation, will be held at the Company’s headquarters, 2999 Circle 75Wildwood Parkway, Atlanta, Georgia 30339, on Monday, the 25th22nd day of April 2016,2019, at 10:00 a.m., for the following purposes:
(1) To elect as directors the thirteen nominees named in the attached proxy statement;
(1) | To elect as directors the eleven nominees named in the attached proxy statement; |
(2) To approve, by a non-binding advisory vote, the compensation of the Company’s executive officers;
(2) | To approve, by anon-binding advisory vote, the compensation of the Company’s executive officers; |
(3) To ratify the selection of Ernst & Young LLP as the Company’s independent auditors for the fiscal year ending December 31, 2016; and
(3) | To ratify the selection of Ernst & Young LLP as the Company’s independent auditors for the fiscal year ending December 31, 2019; and |
(4)
(4) | To act upon such other matters as may properly come before the meeting or any reconvened meeting following any adjournment thereof. |
Information relevant to these matters is set forth in the attached proxy statement. Only holders of record of the Company’s Common Stock at the close of business on February 16, 201613, 2019 will be entitled to vote at the meeting.
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be held on April 25, 2016.22, 2019.
The Proxy Statement and the 20152018 Annual Report to Shareholders are available at
http://www.proxydocs.com/gpc
By Order of the Board of Directors, |
JENNIFER L. ELLIS |
Corporate Secretary |
Atlanta, Georgia
February 26, 2016March 5, 2019
YOUR VOTE IS IMPORTANT!
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING IN PERSON, PLEASE VOTE BY TELEPHONE OR INTERNET PURSUANT TO THE INSTRUCTIONS ON THE ENCLOSED PROXY CARD OR COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY IN THE ENCLOSED BUSINESS REPLY ENVELOPE, OR YOU CAN VOTE BY TELEPHONE OR INTERNET PURSUANT TO THE INSTRUCTIONS ON THE ENCLOSED PROXY CARD.ENVELOPE. IF YOU DO ATTEND THE MEETING, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON.
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Consideration of Last Year’s Advisory Shareholder Vote on Executive Compensation | 20 | |||
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Factors Considered in Decisions to Materially Increase or Decrease Compensation | 27 | |||
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COMPENSATION, NOMINATING AND GOVERNANCE COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION | 43 | |||
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PROPOSAL 3 — RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS | ||||
ANNUAL MEETING — APRIL 25, 201622, 2019
This proxy statement is being furnished to the shareholders of Genuine Parts Company in connection with the solicitation of proxies by the Board of Directors of the Company for use at the Company’s 20162019 Annual Meeting of Shareholders to be held on Monday, April 25, 2016,22, 2019, at 10:00 a.m. local time and at any reconvened meeting following any adjournment thereof. The Annual Meeting will be held at the Company’s headquarters, 2999 Circle 75Wildwood Parkway, Atlanta, Georgia.Georgia 30339.
This proxy statement and the accompanying proxy card are first being mailed to shareholders and made available on our website on or about February 26, 2016.March 5, 2019. The Company’s 20152018 annual report to the shareholders, including consolidated financial statements for the year ended December 31, 2015,2018, is enclosed.
Shareholders of record can simplify their voting and reduce the Company’s costs by voting their shares via telephone or the Internet. Instructions for voting via telephone or the Internet are set forth on the enclosed proxy card. The telephone and Internet voting procedures are designed to authenticate votes cast by use of a personal identification number. These procedures enable shareholders to appoint a proxy to vote their shares and to confirm that their instructions have been properly recorded. If your shares are held in the name of a bank or broker (in “street name”), the availability of telephone and Internet voting will depend on the voting processes of the applicable bank or broker; therefore, it is recommended that you follow the voting instructions on the form you receive from your bank or broker. If you do not choose to vote by telephone or the Internet, please mark your choices on the enclosed proxy card and then date, sign and return the proxy card at your earliest opportunity.
All proxies properly voted by telephone or the Internet and all properly executed written proxy cards that are delivered to the Company (and not later revoked) will be voted in accordance with instructions given in the proxy. When voting on the election of directors, you may (1) vote FOR all nominees listed in this proxy statement, (2) WITHHOLD AUTHORITY to vote for all nominees, or (3) WITHHOLD AUTHORITY to vote for one or more nominees but vote FOR the other nominees. When voting on the approval of the Company’s executive compensation program and the ratification of the selection of independent auditors, you may vote FOR or AGAINST the proposal or you may ABSTAIN from voting.
If a signed proxy card is received which does not specify a vote or an abstention, the shares represented by that proxy card will be voted FOR all nominees to the Board of Directors listed in this proxy statement, FOR the proposal to approve the Company’s executive compensation program, and FOR the ratification of the selection of independent auditors for the fiscal year ending December 31, 2016.2019. The Company is not aware, as of the date hereof, of any matters to be voted upon at the Annual Meeting other than those stated in this proxy statement and the accompanying Notice of 20162019 Annual Meeting of Shareholders. If any other matters are properly brought before the Annual Meeting, the enclosed proxy card gives discretionary authority to the persons named as proxies to vote the shares represented thereby in their discretion.
If you hold your shares in street name and you do not instruct your bank or brokerage firm in accordance with their directions how to vote your shares prior to the date of the Annual Meeting, your bank or brokerage firm cannot vote your shares (referred to as “brokernon-votes”) on the following proposals: “Proposal 1 — Election of Directors,” or “Proposal 2 — Advisory Vote on Executive Compensation,” and such shares will be considered “brokernon-votes” and will not affect the outcome of these votes. However, your bank or brokerage firm may vote your shares in its discretion on “Proposal 3 — Ratification of Selection of Independent Auditors.”Auditors” if you do not provide voting instructions.
A shareholder of record who submits a proxy pursuant to this solicitation may revoke it at any time prior to its exercise at the Annual Meeting. Such revocation may be by delivery of written notice to the Corporate Secretary of the Company at the Company’s address shown above, by delivery of a proxy bearing a later date (including a later vote by telephone or the Internet), or by voting in person at the Annual Meeting. Street name holders may revoke their proxies prior to the Annual Meeting by following the procedures specified by their bank or brokerage firm.
Only holders of record of the Company’s Common Stock at the close of business on the record date for the Annual Meeting, which is February 16, 2016,13, 2019, are entitled to vote at the Annual Meeting. Persons who hold
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Voting
shares of Common Stock in street name as of the record date may vote at the Annual Meeting only if they hold a valid proxy from their bank or brokerage firm. At the close of business on February 16, 2016,13, 2019, the Company had 145,943,765 shares of common stock outstanding and entitled to vote at the Annual Meeting 149,515,598 shares of Common Stock.Meeting.
On each proposal presented for a vote at the Annual Meeting, each shareholder is entitled to one vote per share of Common Stock held as of the record date. A quorum for the purposes of all matters to be voted on shall consist of shareholders representing, in person or by proxy, a majority of the outstanding shares of Common Stock entitled to vote at the Annual Meeting. Shares represented at the Annual Meeting that are abstained or withheld from voting and brokernon-votes will be considered present for purposes of determining a quorum at the Annual Meeting. If less than a majority of the outstanding shares of Common Stock are represented at the Annual Meeting, a majority of the shares so represented may adjourn the Annual Meeting to another date, time or place.place to allow for the solicitation of additional proxies or other measures to obtain a quorum.
The vote required for (1) the election of directors, (2) the advisory vote on executive compensation, and (3) the ratification of the selection of independent auditors is the affirmative vote of a majority of the shares of Common Stock outstanding and entitled to vote on such proposal which are represented at the Annual Meeting. Because votes withheld and abstentions will be considered as present and entitled to vote at the Annual Meeting but will not be voted “for” these proposals, they will have the same effect as votes “against” these proposals.
Although the advisory vote on executive compensation isnon-binding as provided by law, the Company’s Board of Directors will review the results of the vote and take it into account inconsideration when making future determinations concerning executive compensation.
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ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of fourteeneleven directorships. Mr. Jean Douville has reached mandatory retirement age for the Board and therefore will not stand for re-election at the 2016 Annual Meeting. The Board of Directors has approved the recommendation of its Compensation, Nominating and Governance Committee to decreasenominate the number of directorships to thirteen as of the date of the 2016 Annual Meeting and has nominated the thirteeneleven nominees named below to serve as directors until the 20172020 Annual Meeting and the election and qualification of their successors.
In the event that any nominee is unable to serve (which is not anticipated), the Board of Directors may:
designate a substitute nominee, in which case the persons designated as proxies will cast votes for the election of such substitute nominee;
allow the vacancy to remain open until a suitable candidate is located and nominated; or
adopt a resolution to decrease the authorized number of directorships.
If any incumbent director nominee in an uncontested election should fail to receive the required affirmative vote of the holders of a majority of the shares entitled to vote which are represented at the Annual Meeting, under Georgia law, the director remains in office as a “holdover” director until his or her successor is elected and qualified or until his or her earlier resignation, retirement, disqualification, removal from office or death. In the event of a holdover director, the Board of Directors in its discretion may request the director to resign from the Board. If the director resigns, the Board of Directors may:
immediately fill the resulting vacancy;
allow the vacancy to remain open until a suitable candidate is located and appointed; or
adopt a resolution to decrease the authorized number of directorships.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE ELECTION OF ALL OF THE NOMINEES.
Set forth below is certain information about each of the thirteeneleven nominees for director. For additional information about the nominees,director, including the experience, qualifications, attributes and skills that our Board believes makes them well qualified to serve as directors, as well as informationdirectors. Information about our director independence requirements, our director nominating process, our board leadership structure, and other corporate governance matters seecan be found in the “Corporate Governance” below.section.
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Proposal 1 Election of Directors
NOMINEES FOR DIRECTOR
• Director Since 2015 • Independent Director • Audit Committee • Financial Expert • Age 67 | ||||
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Elizabeth W. Camp is President and Chief Executive Officer of DF Management, Inc., a private investment and commercial real estate management company, a position she has held since 2000. Previously, Ms. Camp served in various capacities, including President and Chief Executive Officer of Camp Oil Company for 16 years. Ms. Camp serves as Qualifications Ms. Camp has over 30 years of leadership experience in various executive roles, most recently as President and Chief Executive Officer of an investment and commercial real estate management company. Ms. Camp also currently serves as lead independent director at Synovus Financial Corp. where she has chaired | ||||
Paul D. Donahue • Director Since 2012 • Executive Committee • Age 62 | ||||
Background Paul D. Donahue is President and Chief Executive Officer of the Company. In May of 2016, he was named Chief Executive Officer and was named President of the Company in January of Qualifications Mr. Donahue |
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Proposal 1 Election of Directors
Gary P. Fayard • Director Since 2014 • Independent Director • Audit Committee • Financial Expert • Age 66 | ||||
Background Gary P. Fayard was Executive Vice President and Chief Financial Officer of the Coca-Cola Company from 2003 until his retirement in May, 2014. Mr. Fayard joined the Coca-Cola Company in 1994 as Vice President and Controller. He was promoted to the role of Senior Vice President and Chief Financial Officer in 1999. He has served as Qualifications Mr. Fayard brings to the Board a wealth of financial, accounting, and auditing knowledge as the former CFO of one of America’s largest corporations. Additionally, as a Director and Audit Committee member on numerousfor-profit andnot-for-profit boards, he has had direct exposure to a wide variety of businesses and industries. He is | ||||
Thomas C. Gallagher • Director Since 1990 • Executive Committee (Chair) • Age 71 | ||||
Background Thomas C. Gallagher is Chairman of the Board. Mr. Gallagher retired as an employee of the Company on June 30th, 2017. He has Qualifications Mr. Gallagher |
2019 Proxy Statement |
Proposal 1 Election of Directors
P. Russell Hardin • Director Since 2017 • Independent Director • Compensation, Nominating and Governance Committee • Age 62 | Background P. Russell Hardin is President of the Robert W. Woodruff Foundation, the Joseph B. Whitehead Foundation, the Lettie Pate Evans Foundation and the Lettie Pate Whitehead Foundation. These foundations manage approximately $11 billion in assets and distribute approximately $400 million in grants each year, which support Georgia’s institutions in the areas of education, health, human welfare, the environment, community and economic development, philanthropy and volunteerism, and the arts. Mr. Hardin joined the Foundations’ staff in 1988 and was named President in 2006. Prior to his work at the Foundation, Mr. Hardin practiced law with the Atlanta firm of King & Spalding. Qualifications Mr. Hardin offers the Board extensive experience in the areas of finance, philanthropy, governance, and law. Mr. Hardin’s leadership at the Robert W. Woodruff Foundation and other related foundations, as well as his service as trustee of Northwestern Mutual Life Insurance and a director on the SunTrust Bank Atlanta Advisory Council bring financial, governance and management expertise that contribute to both the Board and the Compensation, Nominating, and Governance Committee. | |||
John R. Holder • Director Since 2011 • Independent Director • Compensation, Nominating and Governance Committee • Age 64 | Background John R. Holder is Chairman and Chief Executive Officer of Holder Properties, a commercial and residential real estate development, leasing, and management company based in Atlanta. Mr. Holder has held the position of Chairman since 1989 and Chief Executive Officer since 1980. He is also a director of Oxford Industries, Inc. and is a member of its Audit Committee. Qualifications Mr. Holder brings to the Board his strategic leadership in the growth of Holder Properties, which has been involved in the development of over 100 commercial buildings valued in excess of $2.5 billion, as well as his extensive involvement in the areas of financial and marketing management. His service as the Chairman and CEO of Holder Properties, together with various board affiliations including as director and Audit Committee member of publicly traded Oxford, Industries, Inc. as well as various civic organizations, have given him leadership experience, business acumen and financial literacy that is | |||
Donna W. Hyland • Director Since 2015 • Independent Director • Audit Committee • Financial Expert • Age 58 | ||||
Background Donna W. Hyland is President and Chief Executive Officer of Children’s Healthcare of Atlanta and has served in that role since June 2008. Prior to that role, she was the Chief Operating Officer of Children’s Healthcare of Atlanta from January 2003 to May 2008 and the Chief Financial Officer from February 1998 to December 2002. She serves as a director of Cousins Properties, Inc. and serves as Chair of its Audit Committee. Qualifications Ms. Hyland offers our board extensive knowledge of the health care industry as President and Chief Executive Officer of Children’s Healthcare of Atlanta. Her previous experience as COO and CFO of Children’s, as well as her experience on manynon-profit boards brings a wide range of business and accounting experience to our board. Ms. Hyland also serves as a director at Cousins Properties, Inc., a publicly traded real estate company, and additionally serves as Chair and a financial expert on |
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Proposal 1 Election of Directors
• Director Since 2002 • Independent Director (Lead) • Executive Committee • Compensation, Nominating and • Age 67 | ||||
Background John D. Johns is Qualifications Mr. Johns brings experience in running every aspect of a large insurance company, including his position as Chairman and former CEO as well as previous experience as a CEO, COO, CFO, and General Counsel of NYSE-listed public companies. Mr. Johns also serves as a director at Southern Company and is a member of its Audit Committee. Mr. Johns is | ||||
Robert C. “Robin” Loudermilk, Jr. • Director Since 2010 • Independent Director • Audit Committee • Age 59 | Background Robert C. “Robin” Loudermilk, Jr. is Qualifications Mr. Loudermilk |
2019 Proxy Statement |
Proposal 1 Election of Directors
Wendy B. Needham • Director Since 2003 • Independent Director • Executive Committee • Audit Committee (Chair) • Financial Expert • Age 66 | Background Wendy B. Needham was Managing Director, Global Automotive Research for Credit Suisse First Boston, an investment banking firm, from August 2000 to June 2003, and a Principal, Automotive Research, for Donaldson, Lufkin and Jenrette from 1994 to 2000. Ms. Needham previously served as a director of Asahi Tec. Qualifications Ms. Needham | |||||
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E. Jenner Wood, III • Director Since 2014 • Independent Director • Audit Committee • Financial Expert • Compensation, Nominating and Governance Committee • Age 67 | Background E. Jenner Wood, III was Corporate Executive Vice President of SunTrust Banks, Inc. until his retirement in December of 2016. He was Chairman, President and Chief Executive Officer of the Atlanta Division of SunTrust Bank from April, 2014 to October, 2015 and served as a Corporate Executive Vice President of SunTrust Banks, Inc. Qualifications Mr. Wood’s professional career includes over 20 years in executive management positions with SunTrust Banks, Inc. and its various affiliates and 40 years of experience in the areas of banking and investment management generally. Mr. Wood |
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Proposal 1 Election of Directors
Board Diversity
GENDER 3 27.3% WOMEN DIRECTORS 3 out of our 11 director nominees are women TENURE 5 33 0-4 yrs 5-9 yrs 10+ yrs 45.5% UNDER 5 YEARS 5 out of our 11 director nominees have a tenure of less than 5 years INDEPENDENCE 9 81.8% INDEPENDENT 9 out of our 11 director nominees are independent
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Independent Directors
The Company’s Common Stock is listed on the New York Stock Exchange.Exchange under the symbol “GPC.” The NYSE requires that a majority of the directors, and all of the members of certain committees of the board of directors be “independent directors,” as defined in the NYSE corporate governance standards. Generally, a director does not qualify as an independent director if the director (or in some cases, members of the director’s immediate family) has, or in the past three years has had, certain material relationships or affiliations with the Company, its external or internal auditors, or other companies that do business with the Company. The Board has affirmatively determined that tennine of the Company’s fourteeneleven current directors and tennine of the thirteeneleven director nominees have no other direct or indirect relationships with the Company and therefore are independent directors according to the NYSE corporate governance standards and an analysis of all facts specific to each director.
Mr. E. Jenner Wood, a Director of the Company since August 17, 2014 is Corporate Executive Vice President of SunTrust Banks, Inc. During 2015, the Company continued its long-standing banking relationship with SunTrust, and used the Bank’s services in the general course of business. This banking relationship was reviewed and considered by the Board and the Compensation, Nominating, and Governance Committee in determining the independence of Mr. Wood. The amount of payments made and received by SunTrust and the Company represented an immaterial percentage of the Company’s and SunTrust’s revenues. The Board and Compensation, Nominating, and Governance Committee believe that the relationship during 2015 was non-preferential and that Mr. Wood did not personally participate in or benefit from this relationship, leading to the conclusion that the relationship was not material and to a determination that Mr. Wood is independent.
The independent directors and nominees are: Mary B. Bullock, Elizabeth W. Camp, Gary P. Fayard, P. Russell Hardin, John R. Holder, Donna W. Hyland, John D. Johns, Robert C. “Robin” Loudermilk, Wendy B. Needham, Gary W. Rollins and E. Jenner Wood.
Corporate Governance Guidelines
The Board of Directors has adopted Corporate Governance Guidelines that give effect to the NYSE’s requirements related to corporate governance and various other corporate governance matters. The Company’s Corporate Governance Guidelines, as well as the charters of the Compensation, Nominating and Governance Committee and the Audit Committee, are available on the Company’s website atwww.genpt.com.
Non-Management Director Meetings and Presiding Independent Director
Pursuant to the Company’s Corporate Governance Guidelines, the Company’snon-management directors meet separately from the other directors in regularly scheduled executive sessions at least annually and at such other times as may be scheduled by the Chairman of the Board or by the presiding independent director or as may be requested by anynon-management director.
The independent directors serving on the Company’s Board of Directors appointed Gary W. RollinsJohn D. Johns to serve as the Board’s presiding independent director effective in April 2013.2017. As the presiding independent director, Mr. RollinsJohns presides at all meetings ofnon-management and independent directors and serves as a liaison between the Chief Executive Officer and the non-management and independent directors. During 2015,2018, the independent directors held four meetings without management. Mr. RollinsJohns presided over all of these meetings.
Board Leadership Structure
The Board has appointedCompany’s Corporate Governance Guidelines allow the Company’s Chief Executive Officerindependent directors flexibility to serve assplit up or combine the roles of Chairman ofand CEO. The directors annually review the Board. In his position as CEO, Mr. Gallagher has primary responsibility forBoard’s leadership structure to determine the day-to-day operationsstructure that is in the best interests of the Company and provides consistent leadership on the Company’s key strategic objectives. In his roleits shareholders. Currently, and during all of 2018, Paul Donahue serves as ChairmanPresident and Chief Executive Officer of the Board,Company and Thomas C. Gallagher, the former CEO of the Company, serves as itsNon-Executive Chairman. As former CEO, Mr. Gallagher had primary responsibility for theday-to-day operations of the Company; asNon-Executive Chairman, he sets the strategic priorities for the Board (with input from the presiding independent director), and presides over its meetings and communicates its strategic findings and guidance to management. The Board believes that the combination of these two roles provides more consistent communication and coordination throughout the organization, which results in a more effective and efficient implementation of corporate strategy.meetings. The Board believes that this leadership structure — a combined Chairman of the Board and Chief Executive Officer — is currently the most effective structure for the Company at this time and is instrumental in unifying the Company’s strategy behind a single vision. In addition, we have found that our CEO is the most knowledgeable memberbest interests of the Board regarding risks the Company may be facing and, in his role as Chairman, is able to facilitate the Board’s oversight of such risks.its shareholders.
As noted earlier, the independent directors have appointed a presiding independent director, which provides balance to the Board’s structure. With a supermajority of independent directors, an Audit Committee and a Compensation, Nominating and Governance Committee each comprised entirely of independent directors, and a presiding independent director to oversee all meetings of thenon-management directors, the Company’s Board of Directors is comfortable that its existingcurrent leadership structure provides for an appropriate balance that best serves the Company and its shareholders. The Board of Directors periodically reviews its leadership structure to ensure that it remains the optimal structure for our Company and our shareholders.the Company.
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Corporate Governance
Director Nominating Process
Shareholders may recommend a director nominee by writing to the Corporate Secretary specifying the nominee’s name and the other required information as set forth in the Company’sBy-laws. TheBy-laws require, among other things, that the shareholder making the nomination: (1) notify us in writing no later than the close of business on the 90th day and no earlier than the close of business on the 120th day prior to the first anniversary of the date of the Company’s notice of annual meeting sent to shareholders in connection with the previous year’s annual meeting; (2) include certain information about the nominee, including his or her name, occupation and Company share ownership; (3) include certain information about the shareholder proponent and the beneficial owner, if any on whose behalf the nomination is made, including such person or entity’s name, address, Company share ownership and certain other information regarding the relationship between the shareholder and beneficial owner, if applicable, and any derivative or hedging positions in Company securities; and (4) update the required information as of the record date and after any subsequent change. The notice must comply with all requirements of theBy-laws and, if the nomination is to be included in next year’s proxy statement, the requirements of SEC Rule14a-8 and must be timely received by the Corporate Secretary at Genuine Parts Company, 2999 Circle 75Wildwood Parkway, Atlanta, Georgia 30339.
On November 19, 2018, the Board of Directors adopted and approved an amendment to the Company’sBy-laws to implement proxy access. The Company’sBy-laws, as amended and restated, provide that whenever the Board of Directors solicits proxies with respect to the election of directors at an annual meeting of shareholders, subject to certain requirements, a shareholder, or a group of up to 20 shareholders, owning 3% or more of the Company’s outstanding common stock continuously for at least three years can require the Company to include in its proxy materials for such annual meeting director nominations for up to the greater of (i) 20% of the number of directors up for election, rounding down to nearest whole number, or (ii) two directors. Shareholder requests to include shareholder nominees in the Company’s proxy materials for the 2020 annual meeting of shareholders must be received by the Corporate Secretary no earlier than October 7, 2019 and no later than November 6, 2019 and must satisfy the requirements specified in the Company’sBy-laws.
The Company’s Board of Directors has established the following process for the identification and selection of candidates for director. The Compensation, Nominating and Governance Committee, in consultation with the Chairman of the Board, annually reviews the appropriate experience, skills and characteristics required of Board members in the context of the current membership of the Board to determine whether the Board would better be enhanced by the addition of one or more directors. This review includes, among other relevant factors in the context of the perceived needs of the Board at that time, issues of experience, reputation, judgment, diversity and skills. With regard to diversity, the Board and the Compensation, Nominating and Governance Committee believe that sound governance of the Company in an increasingly complex international marketplace requires a wide range of viewpoints. As a result, although the Board does not have a formal policy regarding Board
diversity, the Board and the Committee believe that the Board should be comprised of a well-balanced group of individuals with diverse backgrounds, educations, experiences and skills that contribute to board diversity, and the Compensation, Nominating and Governance Committee considers such factors when reviewing potential candidates.
If the Compensation, Nominating and Governance Committee determines that adding a new director is advisable, the Committee initiates a search, working with other directors, management and, if it deems appropriate or necessary, a search firm retained to assist in the search. The Compensation, Nominating and Governance Committee considers all appropriate candidates proposed by management, directors and shareholders. Information regarding potential candidates is presented to the Compensation, Nominating and Governance Committee, and the Committee evaluates the candidates based on the needs of the Board at that time. Potential candidates are evaluated according to the same criteria, regardless of whether the candidate was recommended by shareholders, the Compensation, Nominating and Governance Committee, another director, Company management, a search firm or another third party. The Compensation, Nominating and Governance Committee then submits any recommended candidate(s) to the full Board of Directors for approval and recommendation to the shareholders for approval at the Company’s annual meeting of shareholders.
The Company’s Board of Directors is comprised of individuals with diverse experience at policy-making levels in a variety of businesses, as well as in education andnon-profit organizations, in areas that are relevant to the Company’s activities. Each director was nominated on the basis of the unique experience, qualifications,
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Corporate Governance
attributes and skills that he or she brings to the Board, as well as how those factors blend with those of the others on the Board as a whole. On an individual basis:
Dr. Bullock brings to the Board her extensive experience with work force issues and strategic planning gained during her tenure as president of an independent national liberal arts college for women. Additionally, her experience as a founding executive of Duke Kunshan University in China, assists Dr. Bullock in bringing strategic, educational, and fiscal planning experience as well as extensive international relations knowledge focusing on economic and manufacturing trends abroad to our Board.
Ms. Camp has over 30 years of leadership experience in various executive roles, most recently as President and Chief Executive Officer of an investment and commercial real estate management company. Ms. Camp also serves as a director at Synovus Financial Corp. where she has chaired both its Audit and Compensation Committees. While Chair of the Synovus Audit Committee, Ms. Camp was responsible for ensuring the bank was in compliance with all of the various banking regulations that had recently been enacted in response to the 2008 recession. Her leadership and experience in this complex area was paramount to Synovus’s success at such a crucial time for the banking industry. Her previous experience as a tax attorney at large accounting and law firms in the Washington D.C. area will also benefit the Company in the financial, accounting, tax, and legal areas. Ms. Camp’s background as an executive officer and director and her expertise in accounting, tax and legal matters will provide expertise in management and auditing, as well as leadership skills to our Board and Audit Committee.
Mr. Donahue has twelve years of successful operating and management experience with the Company, which has included extensive involvement with numerous operating divisions within the Company. Prior to joining the Company, Mr. Donahue spent 24 years with a publicly traded consumer products manufacturer, ten of which were in their office products division. While there, he successfully held a number of sales, marketing, operations and executive positions. Mr. Donahue’s proven leadership, experience and success have contributed to the success of the Company and are beneficial to our Board.
Mr. Fayard brings to the Board a wealth of financial, accounting, and auditing knowledge as the former CFO of one of America’s largest corporations. Additionally, Mr. Fayard has served as Director on numerous for-profit and not-for-profit boards, giving him direct exposure to a wide variety of businesses and industries. He is also a former partner at a major public accounting firm. Mr. Fayard’s financial background and broad business exposure make him a significant contributor to our Board.
Mr. Gallagher has 45 years of operating experience with the Company and brings insight into all aspects of our business due to both his current role and his history with the Company. Mr. Gallagher’s leadership,
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Mr. Holder brings to the Board his strategic leadership in the growth of Holder Properties, which has been involved in the development of over 11 million square feet of real estate totaling in excess of $2 billion, as well as his extensive involvement in the areas of financial and marketing management. His service as the Chairman and CEO of Holder Properties, together with various board affiliations which include civic organizations, has given him leadership experience, business acumen and financial literacy that is beneficial to our Board, Audit, and Compensation, Nominating and Governance Committees.
Ms. Hyland offers our board extensive knowledge of the health care industry as President and Chief Executive Officer of Children’s Healthcare of Atlanta. Her previous experience as COO and CFO of Children’s, as well as her experience on many non-profit boards will bring a wide range of business and accounting experience to our board. Ms. Hyland also serves as a director at Cousins Properties, Inc., a for-profit real estate company, and additionally serves as a financial expert on the Cousins’ Audit Committee. Ms. Hyland’s experience serving as a financial expert on a public company audit committee will bring a wealth of experience to our Board and Audit Committee.
Mr. Johns brings experience in running every aspect of a large insurance company, including his current position as Chairman and CEO as well as previous experience as a CEO, COO, CFO, and General Counsel of NYSE-listed public companies. Mr. Johns also serves as a director on the board of Regions Financial Corporation, where he serves on the Nominating and Governance and Risk Committees.
Mr. Loudermilk offers extensive knowledge of the real estate industry, as founder and CEO of a real estate management company in Atlanta. He also has over 25 years of experience working with a public company in various positions, including CEO, and over 10 years as an experienced senior executive. Mr. Loudermilk’s operational, financial and management expertise and expansive knowledge of a multi-store retail business are a significant contribution to the Board and Audit Committee.
Ms. Needham offers extensive knowledge and understanding of the U.S. and international auto industries as a former managing director of global automotive research at a world-wide financial services company. Throughout her career she has analyzed the financial performance and strategies of public companies in the global auto industry and brings this experience to bear as the Chair of the Company’s Audit Committee.
Prior to his retirement in 2013, Mr. Nix served in key financial positions within the Company for over 20 years and as the Company’s CFO for 13 years, providing him with extensive knowledge of the Company’s business and financial position. While serving as CFO, he managed the Company’s legal, human resources, logistics, construction, real estate and technology functions. With this knowledge and experience, Mr. Nix provides the Board with essential information that enables a better understanding of the business and financial risks facing the Company. Mr. Nix also brings experience as a director of another NYSE-listed company.
Mr. Rollins offers experience as the CEO of a publicly traded NYSE-listed company, as well as specific expertise in the service industry. Mr. Rollins’ management, operational, and financial expertise are a significant contribution to the Board. Mr. Rollins also uses his experience and expertise in serving as the Board’s Lead Independent Director.
Mr. Wood’s professional career includes over 20 years in executive management positions with SunTrust Banks, Inc. and its various affiliates and 39 years of experience in the areas of banking and investment management generally. Mr. Wood has served as a Director on the Board of Southern Company since 2012, and serves as the lead independent director at Oxford Industries, Inc. Mr. Wood’s insights with respect to financial issues and the financial services industry, including the retail and business aspects of banking operations, together with his extensive experience on the boards of directors and committees of public and private companies, make him a valuable asset to our Board.
Communications with the Board
The Company’s Corporate Governance Guidelines provide for a process by which shareholders or other interested parties may communicate with the Board, a Board committee, the presiding independent director, thenon-management directors as a group, or individual directors. Shareholders or other interested parties who wish to communicate with the Board, a Board committee or any such other individual director or directors may do so by sending written communications addressed to the Board of Directors, a Board committee or such individual director or directors, c/o Corporate Secretary, Genuine Parts Company, 2999 Circle 75Wildwood Parkway, Atlanta, Georgia 30339. This information is also available on the Company’s website atwww.genpt.com. All communications will be compiled by the Secretary of the Company and forwarded to the members of the Board to whom the communication is directed or, if the communication is not directed to any particular member(s) of the Board, the communication shall be forwarded to all members of the Board of Directors.
Annual Performance Evaluations
The Board recognizes that a robust and constructive evaluation process is an essential part of good corporate governance and Board effectiveness. The Company’s Corporate Governance Guidelines provide that the Board of Directors shall conduct an annual evaluation to determine, among other matters, whether the Board and the Committees are functioning effectively. The Audit Committee and the Compensation, Nominating and Governance Committee are also required to each conduct an annual self-evaluation. The Compensation, Nominating and Governance Committee is responsible for overseeing this self-evaluation process. Through the performance evaluations, directors review the Board’s and Committees’ performances, including areas where the Board and Committees feel they function effectively, and importantly, areas where the Board and Committees believe they can improve. Results requiring additional consideration are addressed at subsequent board and committee meetings.
The Board, Audit Committee, and Compensation, Nominating and Governance Committee each conducted an annual self-evaluation process during 2015.2018, and feedback from the process was reported to and discussed by the Board. Changes to processes and procedures of the Board and Committees based on such feedback were implemented and will be monitored in future evaluations.
Board Oversight of Risk
The Company’s Board of Directors recognizes that, although risk management is primarily the responsibility of the Company’s management team, the Board plays a critical role in the oversight of risk. The Board believes that an important part of its responsibilities is to assess the major risks the Company faces and review the Company’s options for monitoring and controlling these risks. The Board assumes responsibility for the Company’s overall risk assessment.
The Board as a whole examines specific business risks in its regular reviews of the individual business units and also on a Company-wide basis as part of its regular strategic reviews. In addition to periodic reports from two committees (discussed below) about risks, the Board receives presentations throughout the year from various business units that include discussion of significant risks specific to theirsuch business unit as necessary. Periodically, at Board meetings, management discusses matters of particular importance or concern, including any significant areas of risk requiring Board attention.
The Audit Committee has specific responsibility for oversight of risks associated with financial accounting and audits, as well as internal control over financial reporting.reporting, and information technology/cyber security risk. The Audit Committee monitors and reviews applicable enterprise risks identified as part of the Company’s enterprise risk management program, including the Company’s risk assessment and management policies, the Company’s major financial risk exposure and cyber and information security exposure and the steps taken by management to monitor and mitigate such exposure. The Audit Committee receives quarterly updates at Committee meetings specific to the Company’s cyber security program and IT security risk, and the Board receives periodic updates from the Audit Committee Chair on cyber security and IT security risk and also receives an update directly from the Chief Information Officer at least once per year.
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Corporate Governance
The Compensation, Nominating and Governance Committee oversees the risks relating to the Company’s compensation policies and practices as well as management development and leadership succession in the Company’s various business units.
The Compensation, Nominating and Governance Committee annually reviews with management the design and operation of the Company’s incentive compensation arrangements for all employees, including executive officers, for the purpose of determining whether such programs might encourage inappropriate risk-taking that could have a material adverse effect on the Company. In advance of such review, the Company identifies internal and external factors that comprise the Company’s primary business risks, and management compiles an inventory of incentive compensation arrangements, which are then summarized for the Compensation, Nominating and Governance Committee and reviewed for the purpose of identifying any aspects of such programs that might encourage behaviors that could exacerbate the identified business risks.
In conducting this assessment for 2015,2018, the Compensation, Nominating and Governance Committee considered the performance objectives and target levels used in connection with these incentive awards and also
the features of the Company’s compensation program that are designed to mitigate compensation-related risk. Based on such assessment, the Compensation, Nominating and Governance Committee concluded that the Company’s compensation policies and practices for its employees are not reasonably likely to have a material adverse effect on the Company.
Code of Conduct and Ethics
The Board of Directors has adopted a Code of Conduct and Ethics for Employees, Contract and/or Temporary Workers, Officers and Directors and a Code of Conduct and Ethics for Senior Financial Officers, both of which are available on the Company’s website atwww.genpt.com. These Codes of Conduct and Ethics comply with NYSE and Securities and Exchange Commission (the “SEC”) requirements, including procedures for the confidential, anonymous submission by employees or others of any complaints or concerns about the Company or its accounting, internal accounting controls or auditing matters. The Company will post any amendments to or waivers from the Code of Conduct and Ethics (to the extent applicable to the Company’s executive officers and directors) on its website.
Environmental & Social Sustainability
The Company is committed to operating our business with integrity, contributing to our local communities, promoting a culture of diversity and inclusion, and using our natural resources thoughtfully and responsibly. In 2018 the Company issued its inaugural Sustainability Report, which provides detailed information on the Company’s environmental and social sustainability initiatives. The report can be found onwww.genpt.com.
Board Attendance
The Company’s Corporate Governance Guidelines provide that all directors are expected to attend all meetings of the Board and committees on which they serve and are also expected to attend the Annual Meeting of Shareholders. During 2015,2018, the Board of Directors held foursix meetings. AllTwo directors missed one meeting; otherwise, all of the directors attended all of the Board of DirectorsDirector meetings. EachAll committee members attended all of the directors attended 100% of thecommittee meetings of committees of the Board on which they served. All of the Company’s directors were in attendance atattended the Company’s 20152018 Annual Meeting.
Board Committees
The Board presently has three standing committees. Information regarding the functions of the Board’s committees, their present membership and the number of meetings held by each committee during 20152018 is set forth below:
Executive Committee. The Executive Committee is authorized, to the extent permitted by law, to act on behalf of the Board of Directors on all matters that may arise between regular meetings of the Board upon which the Board of Directors would be authorized to act. The current members of the Executive Committee are Thomas C. Gallagher (Chair), Paul D. Donahue, John D. Johns and Gary W. Rollins.Wendy B. Needham. During 2015,2018, this committee held fivefour meetings.
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Corporate Governance
Audit Committee. The Audit Committee’s main role is to assist the Board of Directors with oversight of (1) the integrity of the Company’s financial statements, (2) the Company’s compliance with legal and regulatory requirements, (3) the independent auditor’s qualifications and independence and (4) the performance of the Company’s internal audit function and independent auditors. As part of its duties, the Audit Committee assists in the oversight of (a) management’s assessment of, and reporting on, the effectiveness of internal control over financial reporting, (b) the independent auditor’s integrated audit, which includes expressing an opinion on the conformity of the Company’s audited financial statements with United States generally accepted accounting principles, (c) the independent auditor’s audit of the Company’s internal control over financial reporting which includes expressing an opinion on the effectiveness of the Company’s internal control over financial reporting, and (d) the Company’s risk assessment and risk management.management, and (e) the Company’s cyber security program. (See “Board Oversight of Risk” above.) The Audit Committee oversees the Company’s accounting and financial reporting process and has the authority and responsibility for the appointment, retention and oversight of the Company’s independent auditors, includingpre-approval of all audit andnon-audit services to be performed by the independent auditors. The Audit Committee annually reviews and approves the firm to be engaged as independent auditors for the Company for the next fiscal year, reviews with the independent auditors the plan and results of the audit engagement, reviews the scopeandscope and results of the Company’s procedures for internal auditing and monitors the design and maintenance of the Company’s internal accounting controls. Additionally, as noted above, the Audit Committee oversees the Company’s cyber security program and receives updates on IT security/cyber risk and mitigation initiatives at least quarterly. The Audit Committee Report appears later in this proxy statement. A current copy of the written charter of the Audit Committee is available on the Company’s website atwww.genpt.com.
The current members of the Audit Committee are Wendy B. Needham (Chair), Mary B. Bullock, Elizabeth W. Camp, Gary P. Fayard, Donna W. Hyland, Robert C. Loudermilk, Jr. and E. Jenner Wood. All members of the Audit Committee are independent of the Company and management, as required by the New York Stock ExchangeNYSE listing standards and SEC requirements. The Board has determined that all members of the Audit Committee meet the financial literacy requirements of the NYSE corporate governance listing standards. During 2015,2018, the Audit Committee held fivesix meetings.
The Board of Directors has determined that Ms. Camp, Mr. Fayard, Ms. Hyland, Ms. Needham, and Mr. Wood meet the requirements adopted by the SEC for qualification as an “audit committee financial expert.” Ms. Camp currently oversees all aspects of business as President and CEO of a private investment and commercial real estate management company. She also has previous experience in accounting, tax, and legal matters as a tax attorney as well as extensive finance and accounting experience as a director for over 10 years of Synovus, serving as a current member and former chair of its Audit Committee. Mr. Fayard retired in 2014 as CFO of The Coca-Cola Company, where he held various financial leadership positions since joining the company in 1994. Previous to his role at Coca-Cola, he was a partner at a major public accounting firm. Mr. Fayard brings a wealth of financial, accounting, and auditing knowledge from his finance roles at Coca-Cola. Mr. Fayard also has served as Directordirector and audit committee member on numerousfor-profit andnot-for-profit boards, giving him direct exposure to the finance and accounting of a wide variety of businesses and industries. Ms. Hyland currently acts as the President and CEO of Children’s Healthcare of Atlanta and oversees all functions of the hospital, including its finances. As former CFO of the organization, Ms. Hyland gained significant experience with the details of the finance and accounting areas of the business. Her professional experience as well as her directorship at Cousins Properties and membershipchair of Cousins’ Audit Committee, as well as memberships ofon manynon-profit boards exposed her to a broad spectrum of finance and accounting issues in a variety of businesses and industries. Ms. Needham was formerly Managing Director, Global Automotive Research for Credit Suisse First Boston from August 2000 to June 2003. Prior to that, Ms. Needham was a Principal, Automotive Research for Donaldson, Lufkin & Jenrette for six years. In both of these positions, Ms. Needham actively reviewed financial statements and prepared various financial analyses and evaluations of such financial statements and related business operations. Mr. Wood isretired in 2016 as Corporate Executive Vice President of SunTrust Banks, Inc. and prior to that, he held the position of Chairman, President and Chief Executive Officer of the Atlanta Division of SunTrust Bank. Mr. Wood has direct insight and extensive experience with respect to financial issues and the financial services industry, including as it relates to the retail and business aspects of banking operations.industry.
Compensation, Nominating and Governance Committee. The Compensation, Nominating and Governance Committee is responsible for (1) determining and evaluating the compensation of the Chief Executive Officer and other executive officers and key employees and approving and monitoring our executive compensation plans,
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Corporate Governance
policies, and programs, (2) identifying and evaluating potential nominees for election to the Board and recommending candidates for consideration by the Board and shareholders, (3) developing and recommending to the Board a set of Corporate Governance Guidelines, as well as periodically reevaluating those Corporate Governance Guidelines, and (4) overseeing the evaluation of the Board of Directors and management. The Committee also periodically reviews and evaluates the risk involved in the Company’s compensation policies and practices and the relationship of such policies and practices to the Company’s overall risk and management of that risk. The Committee has and may exercise the authority of the Board of Directors as specified by the Board and to the extent permitted under the Georgia Business Corporation Code, and the Committee has the authority to delegate its duties and responsibilities to subcommittees as it deems necessary and advisable. A brief description of the Committee’s policy regarding director candidates nominated by shareholders appears in “Director Nominating Process” above, and a full version can be found in the Company’sBy-Laws.
For 2015,2018, the Committee independently retained a compensation consultant, Meridian Compensation Partners, LLC, to assist it in its review of and deliberations regarding executive compensation practices, including the competitiveness of pay levels, design issues, market trends and technical considerations.
During the year, Meridian assisted the Committee with the development of competitive market data for executives and a related assessment of the Company’s executive compensation levels, a risk assessment of the Company’s incentive compensation, and also provided legislative and regulatory updates and guidance regarding reporting of executive compensation under the SEC’s proxy disclosure rules. Our Chairman and Chief Executive
Officer, with input from our Senior Vice President — Human Resources and Meridian, recommended to the Committee base salary, target bonus levels, actual bonus payouts and long-term incentive grants for our senior executives. The Committee considered, discussed, modified as appropriate, and took action on such proposals. The Committee has agreed that Meridian will play a similar role for 2016.2019.
The Compensation, Nominating and Governance Committee annually considers whether the work of any compensation consultant raised any conflict of interest. For 2015,2018, the Committee considered various factors, including the six factors mandated by SEC rules, and determined that with respect to executive and director compensation-related matters, no conflict of interest was raised by the work of Meridian. The Committee also considers the six independence factors mandated by SEC rules before engaging any other compensation advisers.
The current members of the Compensation, Nominating and Governance Committee are John D. Johns (Chair), P. Russell Hardin, John R. Holder, Gary W. Rollins and E. Jenner Wood. All members of the Compensation, Nominating and Governance Committee are independent of the Company and management, as required by the NYSE listing standards and the SEC. During 2015,2018, the Compensation, Nominating and Governance Committee held fourfive meetings. A current copy of the written charter of the Compensation, Nominating and Governance Committee is available on the Company’s website atwww.genpt.com.www.genpt.com.
2019 Proxy Statement | 15 |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of February 16, 2016,13, 2019, as to all persons or groups known to the Company to be beneficial owners of more than five percent of the outstanding Common Stock of the Company.
Title of Class | Name and Address of Beneficial Owner | Shares Beneficially Owned | Percent of Class | |||||||
Common Stock, $1.00 par value | The Vanguard Group, Inc. 100 Vanguard Blvd. Malvern, PA 19355 | 13,188,093 | (1) | 8.7 | % | |||||
Common Stock, $1.00 par value | Blackrock, Inc. 55 East 52nd Street New York, NY 10055 | 13,171,325 | (2) | 8.7 | % | |||||
Common Stock, $1.00 par value | State Street Corporation State Street Financial Center One Lincoln Street Boston, MA 02111 | 8,399,273 | (3) | 5.6 | % |
Title of Class | Name and Address of Beneficial Owner | Shares Beneficially Owned | Percent of | |||||||
Common Stock, $1.00 par value | The Vanguard Group, Inc. 100 Vanguard Blvd. Malvern, PA 19355 | 15,390,890(1) | 10.5% | |||||||
Common Stock, $1.00 par value | Blackrock, Inc. 55 East 52nd Street New York, NY 10055 | 14,536,577(2) | 9.9% | |||||||
Common Stock, $1.00 par value | State Street Corporation State Street Financial Center One Lincoln Street Boston, MA 02111 | 8,466,883(3) | 5.8% |
(1) | This information is based upon information included in a Schedule 13G filed on February |
(2) | This information is based upon information included in a Schedule 13G filed on February |
(3) | This information is based upon information included in a Schedule 13G filed on February |
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SECURITY OWNERSHIP OF MANAGEMENT
Based on information provided to the Company by the named persons, set forth in the table below is information regarding the beneficial ownership of Common Stock of the Company held by the Company’s directors and nominees for director, the named executive officers (as defined in “Executive Compensation” below) and all directors, nominees for director and executive officers of the Company as a group as of February 16, 2016:13, 2019:
Name | Shares of Common Stock Beneficially Owned(1) | Percentage of Common Stock Outstanding | ||||||
Timothy P. Breen | 21,068 | (2) | * | |||||
Mary B. Bullock | 22,702 | (3) | * | |||||
Elizabeth W. Camp | 500 | * | ||||||
Paul D. Donahue | 112,526 | (4) | * | |||||
Jean Douville | 5,534 | (5) | * | |||||
Gary P. Fayard | 5,581 | (6) | * | |||||
Thomas C. Gallagher | 814,922 | (7) | * | |||||
John R. Holder | 15,216 | (8) | * | |||||
Donna W. Hyland | 182 | (9) | * | |||||
John D. Johns | 33,305 | (10) | * | |||||
Robin C. Loudermilk | 27,646 | (11) | * | |||||
Wendy B. Needham | 17,641 | (12) | * | |||||
James R. Neill | 3,125,419 | (13) | 2.0 | % | ||||
Jerry W. Nix | 172,603 | (14) | * | |||||
Gary W. Rollins | 50,765 | (15) | * | |||||
Carol B. Yancey | 3,169,422 | (16) | 2.1 | % | ||||
E. Jenner Wood | 5,243 | (17) | * | |||||
Directors and Executive Officers as a Group (17 persons) | 4,494,812 | (18) | 3.0 | % |
Director/Executive Officer
| Shares of Common Stock Beneficially Owned(1)
| Percentage of Common Stock Outstanding
| ||||||
Timothy P. Breen | 37,005 | (2) | * | |||||
Elizabeth W. Camp | 6,818 | (3) | * | |||||
Paul D. Donahue | 162,318 | (4) | * | |||||
Gary P. Fayard | 15,033 | (5) | * | |||||
Thomas C. Gallagher | 857,293 | (6) | * | |||||
P. Russell Hardin | 3,408 | (7) | * | |||||
John R. Holder | 23,544 | (8) | * | |||||
Donna W. Hyland | 9,149 | (9) | * | |||||
John D. Johns | 43,070 | (10) | * | |||||
Robin C. Loudermilk | 36,839 | (11) | * | |||||
Lee A. Maher | 78,072 | (12) | * | |||||
Wendy B. Needham | 19,927 | (13) | * | |||||
James R. Neill | 3,131,148 | (14) | 2.1 | % | ||||
E. Jenner Wood | 12,376 | (15) | * | |||||
Carol B. Yancey | 3,195,968 | (16) | 2.2 | % | ||||
Directors and Executive Officers as a Group (15 persons) | 6,580,947 | (17) | 4.5 | % |
* | Less than 1% |
(1) | Information relating to the beneficial ownership of Common Stock by directors and executive officers is based upon information furnished by each such individual using “beneficial ownership” concepts set forth in rules promulgated by the SEC. Except as indicated in other footnotes to this table, directors and executive officers possessed sole voting and investment power with respect to all shares set forth by their names. The table includes, in some instances, shares in which members of a director’s or executive officer’s immediate family or trusts or foundations established by them have a beneficial interest and as to which the director or executive officer disclaims beneficial ownership. |
(2) | Includes |
(3) | Includes 6,318 restricted stock units that each represent a right to receive one share of Common Stock on the five-year anniversary of their original grant date, subject to earlier settlement in certain events, including a termination of service as a director by reason of retirement. |
(4) | Includes 88,210 shares subject to stock options and stock appreciation rights that are exercisable currently or within 60 days after February 13, 2019. Does not include 41,311 restricted stock units that each represent a right to receive one share of Common Stock on the five-year anniversary of their original grant date, subject to earlier settlement in certain events outside the control of Mr. |
Includes (i) |
Includes |
2019 Proxy Statement | 17 |
Security Ownership of Management
(7) | Includes (i) |
Includes (i) |
(9) |
Includes (i) |
(10) | Includes (i) 10,850 restricted stock units that each represent a right to receive one share of Common Stock on the five-year anniversary of their original grant date, subject to earlier settlement in certain events, including a termination of service as a director by reason of retirement, (ii) 21,478 shares of Common Stock equivalents held in Mr. |
Includes (i) |
Includes |
(13) | Includes 10,850 restricted stock units that each represent a right to receive one share of Common Stock on the five-year anniversary of their original grant date, subject to earlier settlement in certain events, including a termination of service as a director by reason of retirement. |
(14) | Includes 19,182 shares subject to stock options and stock appreciation rights that are exercisable currently or within 60 days after February 13, 2019. Does not include 7,772 restricted stock units that each represent a right to receive one share of Common Stock on the five-year anniversary of their original grant date, subject to earlier settlement in certain events outside the control of Mr. Neill. Also includes 2,016,931 shares held in trust for Company employees under the Company’s Pension Plan for which Mr. Neill is one of six trustees and 1,088,532 shares held in a benefit fund for Company employees of which Mr. Neill is one of four trustees. |
Includes (i) |
(16) | Includes 50,817 shares subject to stock options and stock appreciation rights that are exercisable currently or within 60 days after February |
(17) | Includes (i) |
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COMPENSATION DISCUSSION AND ANALYSIS
In this section, an overview and analysis is provided of theour executive compensation programprograms and policies, the material compensation decisions we have made under those programs and policies, and the material factors that we considered in making those decisions. Later in this proxy statement under the heading “Additional Information Regarding Executive Compensation” you will find a series of tables containing specific information about the compensation earned or paid in 20152018 to the following individuals, whomwho are referred to as our named executive officers:
Thomas C. Gallagher, Chairman and Chief Executive Officer
Paul D. Donahue, President of the Company& Chief Executive Officer
Carol B. Yancey, Executive Vice President & Chief Financial Officer
Timothy P. Breen, President & Chief Executive Officer — Motion Industries (deceased)
Lee A. Maher, Executive Vice President — U.S. Automotive Parts Group
James R. Neill, Senior Vice President — Human Resources
The discussion below is intended to explain the detailed information provided in those tables and put that information into context within the Company’s overall compensation program.
During 2015,2018, the Compensation, Nominating and Governance Committee actions and ourpay-for-performance program operated such that compensation actually earned by executives reflected the performance of the Company and grants made were below market levels.Company. Highlights for 20152018 are as follows:
Performance
Our total shareholder return for 20152018 was -17%4.1%. However, our total shareholder return for the five year period ending December 31, 2015 was 14.1%, which has increasedThis served to increase both long-term shareholder wealth and the value of equity awards previously granted to our executives.
Revenues were down 0.4%up 15% and were 96%100% of our target;pre-tax earnings were up 0.5%5% and were 97%98% of our target. Our working capital performance was improved 10%, which was 150% of the target amount.
Long Term Incentive Program Change
The Compensation, Nominating and Governance Committee made several changes to the long term incentive program in 2018. Changes were made following discussions with management and consultation with the Committee’s compensation consultant, Meridian Compensation Partners LLC (Meridian) regarding the goals of the long-term incentive program, effectiveness of the current program and market practices. The new program discontinued the use of stock appreciation rights (SARs) and provides for grants to executives comprised of 67% performance restricted stock units (PRSUs) and 33% time-vested restricted stock units (RSUs). Both awards cliff vest after 3 years, with the amount of PRSUs vesting dependent on the achievement of the Company’spre-tax profit goal.
Plan Payouts
As a result of the above and other performance results, 20152018 bonus payouts were generally above target and earning of performance-based restricted stock units were generallyslightly below target.
20152018 annual incentive awards for Messrs. GallagherDonahue and Neill and Ms. Yancey were 94%105.8% of the total target amounts,amount, based on the Company’s 2015 2018pre-tax profit of 1,123,681,000,$1,111,717,000, or 97% achievement97.6% of the target performance level.amount, and a working capital improvement of 10%, which was 150% of the target amount.
Mr. Donahue’s 2015Breen’s 2018 annual incentive award was 94%137% of total target. Mr. Breen unexpectedly passed away in August 2018. Based on the terms of his annual incentive plan, he would have been awarded apro-rated amount of his annual incentive award for 2018; however, the Compensation, Nominating, and Governance Committee unanimously approved a fullpay-out of Mr. Breen’s actual earned bonus amount to his spouse.
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Compensation Discussion and Analysis
Mr. Breen’s bonus was earned based on the industrial product group exceeding itspre-tax profit goal at 105%, exceeding its sales goal at 103%, exceeding its inventory goal, and exceeding its working capital goal. |
Mr. Maher’s 2018 annual incentive award was 74% of total target. This award was partly earned based on the Company’s Automotive Part’s Group’spre-tax profit performance, which was 97%90% of target. Mr. Donahue’sMaher’s annual incentive award is also based on the Automotive Group’s performance. The Automotive Group’s pre-tax profitsales which was 98% of target.
Mr. Breen’s 2015 annual incentive award The inventory turnover performance goal was 41% of total target. This awardpartially met and the working capital goal was partly earned based on the Industrial Products Group’s pre-tax profit performance, which was at 86% of target. Mr. Breen’s annual incentive award is also based on the Industrial Products Group’s sales performance. The Industrial Products Group’s sales performance was 93% of target. Additional goals pertaining to Mr. Breen’s performance in 2015 compared to 2014 in the area of accounts receivable was met; however, goals pertaining to inventory and expense control were not met.exceeded.
The performance-based restricted stock units granted in 20152018 were earned at 85%88% of target for Messrs. Gallaghereach NEO. Mr. Breen’s untimely passing triggered 100% achievement and Neill and Ms. Yancey, at 87%immediate vesting of target for Mr. Donahue, and at 0% of target for Mr. Breen for performance during 2015. Such earnedhis performance-based restricted stock granted in 2018. Earned shares otherwise generally vest based on fourafter two additional years of continued employment.
20152018 Pay Opportunities
Any 20152018 base salary increases higher than3-4% and any increases in 20152018 target bonus percentage were made in order to recognize promotions into newexpansion of roles or additional responsibilities.meaningful gaps to market levels.
Long-term incentive awards (stock appreciation rights, or SARs,(PRSUs and performance-based restricted stock units, or PRSUs)RSUs) were granted to our executive officers and other participants in 2015 at similar levels2018, with an approximately 20% increase in value relative to prior year grants but still belowto make the size-adjusted 50th percentile of theawards more closely align with market data.data relating to our peer companies.
PRSU payouts were dependent on achievement of corporateapre-tax profit performance goals relating to pre-tax profitgoal for 2015.2018.
SARsRSUs deliver value to executive officers only to the extent our stock price increases after the grant date.a three year vesting period.
In addition, we believe ourBest Practices
Our compensation programs reflect a “best practices” approach to pay and governance:
The Company’s “double trigger” change-in-control severance arrangements with the named executive officers do not provide for any excise tax gross ups.
The Company hasWe have no employment contracts or guaranteed severance arrangements with named executive officers other than our “double-trigger” change in control agreements.
BeginningWe have minimum three year vesting for our long term incentives (PRSUs and RSUs).
Ourchange-in-control severance arrangements with 2015 grants, allthe named executive officers do not provide for any excise tax gross ups.
Grants of long-term incentives are subject to “double-trigger” vesting upon a change in control.
We target pay opportunities for base salary, target bonus and long-term incentives as a group at or below the size-adjusted 50th percentile of the market data.
• | We evaluate the competitiveness of target pay opportunities for base salary, target bonus and long-term incentives as a group relative to thesize-adjusted 50th percentile of the market data. |
About 78%75% of our CEO’s compensation is performance-based and performance-based compensation represents between 61%63% and 71% of compensation for each of the other named executive officers.
Our stock ownership guidelines result in our executives being long-term holders of our stock.
Our Annual Incentive Plan contains aand Long Term Incentive programs contain clawback provision.provisions.
We have no taxgross-ups for perquisites or benefits other than relocation.
We have neverre-priced stock options or stock appreciation rights. long term incentive awards.
We pay dividend equivalents on performance-based restricted stock units only to the extent such units are earned through performance.
Our insider trading policy prohibits transactions in publicly traded options and other hedging transactions with respect to Company common stock.
Consideration of Last Year’s Advisory Shareholder Vote on Executive Compensation
At the 20152018 Annual Meeting of Shareholders, approximately 97%94% of the shares present and entitled to vote were cast in support of the compensation of the Company’s executive officers, as discussed and disclosed in the 20152018 Proxy Statement.
20 | 2019 Proxy Statement |
Compensation Discussion and Analysis
In light of the strong shareholder support of the compensation paid to our executive officers evidenced by the results of this advisory vote, the Board and the Committee did not make any specific changes to our executive compensation program for 2016 in response to the vote. However, in continuing our “best practices” approach to executive compensation, beginning with 2015 grants, all long-term incentives are subject to “double trigger” vesting upon a change in control.2018. Future advisory votes on executive compensation will serve as an additional tool to guide the Board and the Committee in evaluating the alignment of the Company’s executive compensation program with the interests of the Company and its shareholders.
At the 2011 Annual Meeting of Shareholders, our shareholders expressed a preference that advisory votes on executive compensation occur once every year. Consistent with this preference, the Board implemented an annual advisory vote on executive compensation until the next required vote on the frequency of shareholder votes on the compensation of executive officers, which is scheduled to occur at the 2017 Annual Meeting.
Compensation Philosophy and Objectives
Our overall goal in compensating executive officers is to attract, retain and motivate key executives of superior ability who are critical to our future success. We believe that short-term and long-term incentive compensation opportunities provided to executive officers should be directly aligned with our performance, and our compensation is structured to ensure that a significant portion of executives’ compensation opportunities is directly related to achievement of financial and operational goals and other factors that impactincrease shareholder value.
Our compensation decisions with respect to executive officer salaries, annual incentives, and long-term incentive compensation opportunities are influenced by (a) the executive’s level of responsibility and function within the Company, (b) the overall performance and profitability of the Company, (c) our assessment of the competitive marketplace, including other peer companies, and (d) the economic environment. Our philosophy is to focus on total direct compensation opportunities through a mix of base salary, annual cash bonus and long-term incentives, including stock-based awards.
We also believe that the best way to directly align the interests of our executives with the interests of our shareholders is to make sure that our executives acquire and retain a significant level of stock ownership throughout their tenure with the Company. Our compensation program pursues this objective in two ways: through our equity-based long-term incentive awards and our stock ownership guidelines for our senior executives, as described in more detail below.
Overview of Executive Compensation Components
The Company’s executive compensation program consists of several compensation elements, as described in the table below.
Pay Element | What the Pay Element is Designed to Reward | Objective of the Pay Element | Why We Choose to Pay Each Element | |||
Base Salary | Core competence in the executive role relative to skills, experience and contributions to the Company | Provide fixed compensation based on competitive market practice | Provide a standard element of competitive market pay | |||
Annual Cash Incentive | Contributions toward the Company’s achievement of specifiedpre-tax profit and asset management goals, as well as achievement of revenue | • Provide focus on meeting critical annual goals that lead to our long-term success
• Provide annual performance-based cash incentive compensation | Motivate achievement of critical annual performance metrics |
2019 Proxy Statement | 21 |
Compensation Discussion and Analysis
Pay Element | What the Pay Element is Designed to Reward | Objective of the Pay Element | Why We Choose to Pay Each Element | |||
Long-Term Incentives |
|
| ||||
Performance Restricted Stock Units (PRSUs):
• Sustainedpre-tax profitability (determines the number of PRSUs that are earned)
• Focus on the Company’s stock price performance
• Continued employment with the Company during |
Restricted Stock Units (RSUs):
• Focus on the
• Continued employment with the Company during a three year vesting period |
• Sustained stock price performance • Achievement of • Executive ownership of our stock • Executive retention in a challenging business environment and competitive labor market |
| ||||
Retirement Benefits Plans are described in detail later in this proxy statement under the heading “Additional Information Regarding Executive Compensation” | Executives are eligible to participate in employee benefit plans available to all
• Tax Deferred Savings Plan: Rewards saving for retirement
• Supplemental Retirement Plan (SRP): | • Tax Deferred Savings Plan: Provide a voluntarytax-deferred retirement savings vehicle for our executive officers
• SRP: Make total retirement benefits for our executive officers commensurate with those available to our other employees as a percentage of pay | Treat executives in the same manner as other employees by making them “whole” on amounts they would have been entitled to receive under retirement plans had the plans not been limited by the IRS Code | |||
Welfare Benefits | • Executives participate in medical, health, life insurance and disability plans generally available to our employees
• Continuation of welfare benefits may occur as part of severance upon certain terminations of employment | Provide health and welfare benefits to our employees that are competitive within the marketplace | These benefits are part of our broad-based total compensation program |
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Compensation Discussion and Analysis
Pay Element | What the Pay Element is Designed to Reward | Objective of the Pay Element | Why We Choose to Pay Each Element | |||
Additional Benefits and Perquisites | •
•
Neither item has a tax reimbursement provision
| Corporate aircraft use: Accommodate security,
Club | ||||
Change in Control and Termination Benefits |
What it rewards: Continued employment in the event of an actual or threatened change in control | Retain executives and provide continuity of management in the event of an actual or threatened change in control | Maintain a stable executive organization in the face of the uncertainty of an actual or threatened change in control |
The use of these programs enables us to reinforce our pay for performance philosophy, as well as strengthen our ability to attract and retain highly qualified executives. We believe that this combination of programs provides an appropriate mix of fixed and variable pay, balances short-term operational performance with long-term shareholder value and encourages executive recruitment and retention.
Determination of Appropriate Pay Levels
Pay Philosophy and Competitive Standing
In general, we target totalevaluate the competitiveness of compensation opportunities for our executive officers at or underrelative to thesize-adjusted 50th percentile of the market data, including salary, target annual bonus, and long-term incentive opportunities. We provide somewhat conservative base salaries, higher-than-market target bonus opportunities and lower-than-50th percentile long-term incentives.data.
Determinations of one element of pay tend not to affect determinations of other pay elements.
We also design our incentive plans to pay more or less than the target amount when performance is above or below target performance levels. Thus, our plans are designed to result in payouts that are commensurate with the Company’s performance for that year or period.
For 2015,2018, with the assistance of the Committee’s compensation consultant, Meridian, Compensation Partners, LLC, we reviewed and analyzed competitive market data to be used as background for 20152018 pay decisions and to obtain a general understanding of current compensation practices. This data was referenced when targeting the positioning for compensation discussed above. Data sources included public company proxy statements, broad-based, published compensation surveys and a private total compensation database maintained by Aon Hewitt.
We compared compensation opportunities for our named executive officers with pay opportunities available to executive officers in comparable positions at similar companies (our “Comparison Group”). During 20152018 the Comparison Group included companies from industry segments in which we compete: automotive parts, industrial parts, specialty retail and office products. The Comparison Group companies used in 20152018 are shown below. While the companies are either larger or smaller than us, Meridian used various statistical techniques tosize-adjust the data to our revenue size. The list of companies below is reevaluated annually to take into account changes in our own operations, our size and our industry. ComparedChanges made for 2018 were the removal of Johnson Controls due to its merger with Tyco, Staples due to its privatization, and the prior year, one company was deleted (OfficeMaxaddition of Lear Corporation, Cummins Inc.). and Adient plc.
2019 Proxy Statement | 23 |
Compensation Discussion and Analysis
Adient Plc. Advance Auto Parts, Inc. Applied Industrial Technologies, Inc. Arrow Electronics, Inc. Autozone, Inc. Avnet, Inc. Cummins Inc. Eaton Corporation Plc.
Kaman Corp. Lear Corporation | LKQ Corp. MSC Industrial Direct Co., Inc. | O’Reilly Automotive, Inc. Office Depot, Inc. Parker-Hannifin Corporation
Tech Data Corp. Tenneco Inc. Tractor Supply Company Essendant Inc. (formerly United Wesco International W. W. Grainger, Inc. |
20152018 Base Salary
Our base salary levels reflect a combination of factors, including the pay posture discussed above, the executive’s experience and tenure, our overall annual budget for both pay increases andpre-tax profit, the executive’s individual performance and changes in responsibility. We review salary levels annually to recognize these factors.
The following base pay increases for 20152018 were effective on April 1, 2015; however, Mr. Breen’s base pay increase was effective on January 1, 2015. They were as follows:2018:
Executive |
Salary Increase |
| ||||
| ||||||
Donahue | ||||||
Yancey | ||||||
Breen | 5.3% | |||||
Maher | ||||||
Neill | 4.0% |
2015Mr. Donahue’s salary was increased to get him more in line with the market.
2018 Annual Incentive Plan
Our Annual Incentive Planannual incentive plan (the “Annual Incentive Plan”) provides our executive officers with an opportunity to earn annual cash bonuses based on our achievement of certainpre-established performance goals. The Compensation, Nominating and Governance Committee sets target bonus opportunities for each named executive officer to be earned based on achievement of such goals. Similar to the process for setting base salaries, we consider a combination of factors in establishing the annual target bonus opportunities for our named executive officers. Target bonus opportunities for 2018 were set as a percentage of each named executive officer’s base salary, as follows: Mr. Donahue, 130%; Ms. Yancey, 110%; Mr. Breen, 100%; Mr. Maher, 100% and Mr. Neill, 85%.
For 2018, we utilized generally the same performance metrics as in 2017, with an emphasis onpre-tax profit, together with working capital improvements and, with respect to our named executive officers with specific operational responsibilities, sales and inventory turnover metrics. We set the profit goals for 20152018 bonus opportunities at levels that are intended to be challenging yet achievable, and reflect better than average growth within our competitive industry. Goals are set for pre-tax profit, along with revenue, expense control
24 | 2019 Proxy Statement |
Compensation Discussion and asset management for certain executives with specific operational responsibilities.Analysis
The Compensation, Nominating and Governance Committee sets target bonus opportunities for each named executive officer to be earned based on achievement of such goals. Target bonus opportunities for 2015 were set as a percentage of each named executive officer’s base salary, as follows: Mr. Gallagher, 192%; Mr. Donahue, 115%; Ms. Yancey, 105%; Mr. Breen, 100% and Mr. Neill, 85%.
The performance goals on which each executive officer’s 2015officer���s 2018 bonus opportunity is determined variesvary depending on the individual’s role in the company.Company. Performance criteria and relative weights for 20152018 are shown below for each executive. The combination of goals for each executive is intended to have a strong correlation with shareholder value. Goals for Corporate, Automotive and Industrial Products are each set based upon (i) prior year performance by store, branch, or distribution center; (ii) the overall economic outlook of the region served by a particular store, branch, or distribution center; and (iii) specific market conditions.
Performance Goal | 2015 Weight of Goal by Executive | |||||||||||
Gallagher Yancey Neill | Donahue(1) | Breen(2) | ||||||||||
Corporate Pre-tax profit | 100 | % | 50 | % | ||||||||
Automotive | ||||||||||||
Pre-tax profit | 50 | % | ||||||||||
Industrial Products | ||||||||||||
Pre-tax profit | 45 | % | ||||||||||
Sales | 25 | % | ||||||||||
Inventory growth vs. sales growth | 10 | % | ||||||||||
Accounts receivable growth vs. sales growth | 10 | % | ||||||||||
Expense control vs. gross profit growth | 10 | % | ||||||||||
|
|
|
|
|
| |||||||
Total | 100 | % | 100 | % | 100 | % | ||||||
|
|
|
|
|
|
Performance Goal
| 2018 Weight of Goal by Executive
| |||||||||||
Donahue Yancey Neill(1)
| Breen(2)
| Maher(3)
| ||||||||||
Pre-tax profit | 80 | % | 50 | % | 50% | |||||||
Sales | 30 | % | 30% | |||||||||
Working capital improvement | 20 | % | 10 | % | 10% | |||||||
Inventory turnover | 10 | % | 10% | |||||||||
Total | 100 | % | 100 | % | 100% |
(1) | For |
(2) | For Mr. Breen, the performance goals related to the Industrial Products Group, which consists |
(3) | For Mr. Maher, the performance goals related to the U.S. Automotive Parts Group. |
The ranges of bonus payout possibilities for the variouspre-tax profit goals and the U.S. Automotive and Industrial Products sales and other goals are shown below. Straight-line interpolation is used between data points. The 20152018 Corporatepre-tax profit goal was $1,157,861,000.$1,139,038,000.
Pre-Tax Profit (Corporate, Automotive, or Industrial Products) as a % of Quota | % of Target Bonus Earned | Mr. Breen: Industrial Products Sales as a % of Quota | % of Target Bonus Earned | |||||||||
Pre-Tax Profit (Corporate, U.S. Automotive, or Industrial Products) as a % of Performance Goal
| % of Target Bonus Earned
| Sales as a % of Performance Goal
| % of Target Bonus Earned
| |||||||||
Below 75% | —% | Below 95% | —% | —% | Below 95% | —% | ||||||
75% | 45% | 95% | 15% | 45% | 95% | 15% | ||||||
100% | 100% | 100% | 100% | 100% | 100% | 100% | ||||||
110% or above | 175% | 105% or above | 150% | 175% | 105% or above | 150% |
ForIn addition, for Mr. Breen, bonus opportunity was provided for attainment of inventory accounts receivable,turnover, and expense control goals,working capital improvement, with a goal of various levels of improvement versus the prior year. Bonus opportunity was provided from 50% of target to 150% of target based on the achievement of the various levels of improvement.
For 2015,Mr. Maher, bonus opportunity was provided for attainment of inventory turnover and working capital improvement goals, with a goal of various levels of improvement versus the prior year. Bonus opportunity for inventory turnover was provided from 15% of target to 150% of target based on the achievement of the various levels of improvement, and for working capital improvement goals, 50% of target to 150% of target based on the achievement of improvement.
For 2018, the Company’spre-tax profit was $1,123,681,000$1,111,717,000, representing 97%97.6% of the target level set for executive officer incentive bonuses, and working capital improvement performance was improved 10%, representing 150% of the target level set for the executive officer incentive bonuses resulting in bonus payments equal to 94%105.8% of the total target bonus opportunity for Mr. Gallagher,Donahue, Ms. Yancey and Mr. Neill.
As noted above, the Compensation, Nominating and Governance Committee approved a full-year actual bonus payout of Mr. Donahue’sBreen’s program to his spouse, following his death in August 2018.
Mr. Maher’s program produced a bonus payment equal to 94% of target based on the Company’s pre-tax profit performance of 97% of target and on Automotive Group pre-tax profit performance of 98% of target.
Mr. Breen’s program produced a bonus payment equal to 41%74% of target earned based on Industrial ProductsU.S. Automotive Parts Group performance. That Group’spre-tax profit was 86%90% of target, while its sales performance was 93%98% of target. Additional goals pertaining to accounts receivable were met; however, goalsThe additional goal pertaining to inventory turnover was partially met while working capital improvement goal was exceeded.
2019 Proxy Statement | 25 |
Compensation Discussion and expense control were not met.Analysis
In developing
Except for Mr. Breen’s payout, when calculating the payout figures, formulas were applied strictly. The Committee did not exercise discretion to increase or decrease 20152018 bonus payments for the named executive officers.
For additional information about the Annual Incentive Plan, please refer to the “Grants of Plan-Based Awards” table, which shows the threshold, target and maximum bonus amounts payable under the plan for 2015,2018, and the Summary Compensation Table, which shows the actual amount of bonuses paid under the plan to our named executive officers for 2015.2018.
20152018 Long-Term Incentives
During 2015,2018, the Compensation, Nominating and Governance Committee granted long-term equity-based incentive compensation to our executive officers in the form of Stock Appreciation Rights (“SARs”) and Performance Restricted Stock Units (“PRSUs”) and Restricted Stock Units (“RSUs”). These grants align executive performance and achievement with shareholder interests.
SARs: Each SAR represents the right to receive upon exercise an amount, payable in shares of common stock, equal to the excess, if any, of the fair market value of our common stock on the date of exercise over the base value of the grant. The SARs were granted with a base value equal to the closing stock price on the date of the grant (April 1, 2015). The SARs vest in equal annual installments on the first three anniversaries following the grant date and have a ten-year exercise period.
PRSUs: The PRSUs represent the right to earn and receive a number of shares of our common stock in the future, based on the level of the Company’s 2015 2018pre-tax profit performance as shown in the table below.
Percent of Pre-Tax Profit Goal Achieved | % of Target Award Earned | % of Target Award Earned
| ||||||
110% or higher | 150 | % | 150 | % | ||||
100% | 100 | % | 100 | % | ||||
90% | 50 | % | 50 | % | ||||
Less than 90% | — | % | — | % |
To the extent the PRSUs are earned, they are subject to an additional four-yeartwo-year vesting schedule (e.g., for PRSUs granted in 2015,2018, shares of restricted stock will be earned in early 20162019 based on 20152018 performance and will vest on DecemberMay 1, 2019)2021). Dividends declared after the restricted shares are earned are accrued and converted into additional shares of stock at the end of the vesting period.
RSUs: RSUs represent the right to receive a number of shares of our common stock after a three year vesting schedule. Dividends declared are accrued and converted into additional shares of stock at the end of the vesting period.
The sizes of grants to individual named executive officers were subjectively determined by considering the following factors:
Competitive market data, defined by the competitive award levels summarized in the annual executive compensation study;
The officer’s responsibility level;
The officer’s specific function within the overall organizational structure;
The Company’s profitability, including consideration of the compensation cost associated with the awards; and
The number and amount of awards currently held by the executive officer (we continue to review this as part of our administration of stock ownership guidelines discussed below).
Comparison to market data suggests that the value of the 2015 SARs2018 PRSUs and PRSUsRSUs awarded to our named executive officers was less than a 50th percentile grantbelow the median relative to our Comparison Group. Grants in 20152018 were weighted approximately 25% SARs67% PRSUs and 75% PRSUs.33% RSUs.
Mr. Gallagher, Ms. Yancey and Mr. NeillAll NEOs earned 85%88% of their PRSUs in 2015,2018, based on the Company’s actual 2015 2018pre-tax profit of $1,123,681,000,$1,111,717,000, which represented 97%97.6% of the Company’spre-tax profit goal of $1,157,861,000.$1,139,038,000. As discussed above, Mr. DonahueBreen earned 87%100% of his PRSUs in 2015, based on a 98% level2018, which vested immediately effective with his date of achievement of the 2015 pre-tax profit goals for the Automotive divisionpassing in August 2018.
26 | 2019 Proxy Statement |
Compensation Discussion and 97% for the total Company. Mr. Breen earned 0% of his PRSUs in 2015, based on an 86% achievement of the 2015 pre-tax profit goal for the Industrial Products Group.Analysis
Please refer to the “Grants of Plan-Based Awards” and “Outstanding Equity Awards at FiscalYear-End” tables and the related footnotes for additional information about long-term stock awards.
Change in Control Arrangements
The Company believes that severanceSeverance protections, particularly in the context of a change in control transaction, can play a valuable role in attracting and retaining key executive officers. Accordingly, the Company has entered into change in control agreements with each of the named executive officers. Information regarding these agreements and the benefits they provide is included in the Post Termination Payments and Benefits section of this Proxy Statement.
The Compensation, Nominating and Governance Committee evaluates the level of severance benefits to each such officer on acase-by-case basis, and in general, we consider these severance protections an important part of our executives’ compensation and consistent with competitive practices.
We believe that theThe potential occurrence of a change in control transaction would create uncertainty regarding the continued employment of our executive officers. This uncertainty results from the fact that many change in control transactions result in significant organizational changes, particularly at the senior executive level. In order to encourage our senior executive officers to remain employed with the Company during an important time when their prospects for continued employment are often uncertain, we provide our executive officers with severance benefits if the executive’s employment is terminated by the Company without cause“cause” or by the executive for “good reason” in connection with a change in control. Because we believe that a termination by the executive for good reason may be conceptually the same as a termination by the Company without cause, and because we believe that in the context of a change in control, potential acquirers would otherwise have an incentive to constructively terminate the executive’s employment to avoid paying severance, we believe it is appropriate to provide severance benefits in these circumstances.
The change-in-controlchange in control agreements with our executives were amended in 2014 to eliminate alldo not provide for any taxgross-ups with respect to excise taxes under Internal Revenue Code Section 4999 that may be due on such payments. In addition, the Company has in the past grossed-up additional SRP amounts for FICA taxes in the event of a change in control. The SRP was amended and restated January 1, 2009 to provide that no employees may commence participation in the plan on or after that date. As such, there are no further gross-ups other than to those individuals participating in the SRP prior to the January 1, 2009 freezing of the plan.
Factors Considered in Decisions to Materially Increase or Decrease Compensation
Market data, individual performance, retention needs and internal pay equity have been the primary factors considered in decisions to adjust compensation materially. We do not target any particular weight for base salary, annual bonus and long-term incentive as a percent of total direct compensation. We tend to follow market practice in allocating between the various forms of compensation, but with greater emphasis on performance-based incentive bonus opportunities because doing so results in pay opportunity that is heavily performance-based, as shown below, and results in compensation that is directly aligned with Company performance, is market-competitive and allows us to attract and retain competent executives.
2019 Proxy Statement | 27 |
2015 Performance-BasedCompensation Discussion and Analysis
2018 Variable versus Fixed Compensation:
The following table showscharts show the allocation of each Executive’sthe CEO and NEOs base salary and short-term and long-term incentive compensation opportunities between fixed and performance-based compensation (at the target levels).
Name | Fixed Compensation | Performance-Based Compensation | ||
Gallagher | 22% | 78% | ||
Donahue | 29% | 71% | ||
Yancey | 30% | 70% | ||
Breen | 34% | 66% | ||
Neill | 39% | 61% |
20152018 Short-Term versus Long-Term Incentive Compensation:
The following table shows the allocation between each Executive’s target short-term and long-term incentive compensation opportunities (each at the target level) as a percentage of each Executive’s base salary.
Name | Short-Term Incentive Opportunity | Long-Term Incentive Opportunity | Short-Term Incentive Opportunity
| Long-Term Incentive Opportunity
| ||||||||
Gallagher | 192% | 155% | ||||||||||
Donahue | 115% | 129% | 130 | % | 164 | % | ||||||
Yancey | 105% | 126% | 110 | % | 138 | % | ||||||
Breen | 100% | 90% | 100 | % | 106 | % | ||||||
Maher | 100 | % | 97 | % | ||||||||
Neill | 85% | 73% | 85 | % | 86 | % |
Base salary adjustments, annual incentive plan opportunities, and SAR/PRSUPRSU/RSU grants were approved at the March 27, 20152018 meeting of the Compensation, Nominating and Governance Committee. TheseThe compensation adjustments and awards were all effective April 1, 2015. We do not coordinate2018, and the timing of equity awardPRSU and RSU grants with the release of material non-public information. The exercise price for SARs is established at the fair market value of the closing price of our stock on thewere effective date of the grant (AprilMay 1, 2015).
We have adopted stock ownership guidelines for the named executive officers identified above and for other key executives designated by the Compensation, Nominating and Governance Committee. The ownership guidelines are reviewed at least annually by the Compensation, Nominating and Governance Committee, which also has the authority to evaluate whether exceptions should be made for any executive on whom the guidelines would
28 | 2019 Proxy Statement |
Compensation Discussion and Analysis
impose a financial hardship. The current guidelines as determined by the Committee include: (i) CEO — ownership equal to seven times prior year’s salary; (ii) Named Executive Officers — ownership equal to three times prior year’s salary; and (ii) other covered executives(iii) Corporate Senior Vice Presidents and Subsidiary Presidents — ownership equal to one to three times the prior year’s salary.
The covered executives have a period of five years in which to satisfy the guidelines from the date of appointment to a qualifying position. Shares counted toward this requirement will be based on shares beneficially owned by such executive (as beneficial ownership is defined by the SEC’s rules and regulations) including PRSUs, but excluding unexercised options and measured against the averageyear-end stock price for the preceding three fiscal years. The guidelines also call for the covered executive to retain 50% of the net shares obtained through the exercise of options or when a restricted stock award vests for at least six months. The covered executives are encouraged to retain stock ownership per the guidelines for a period of six months following the date of retirement.
Impact of Accounting and Tax Treatments of Compensation
The accounting and tax treatment of compensation generally has not been a factor in determining the amounts of compensation for our executive officers. However, the Committee and management have considered the accounting and tax impact of various program designs to balance the potential cost to the Company with the benefit/value to the executive.
With regardCode 162(m) places a limit of $1 million on the amount of compensation that a company may deduct in any year with respect to IRS Code Section 162(m), itcertain executive officers. It is the Committee’s intent to maximize deductibility of executive compensation while retaining some discretion needed to compensate executives in a manner commensurate with performance and the competitive landscape for executive talent. The Annual2015 Incentive Plan has beenwas approved by shareholders and is designed to qualify as “performance-based” to be fully deductible by the Company. The 2006 Long-Term Incentive Plan and the 2015 Incentive Plan are approved by shareholders and permitpermits the award of stock options, SARs and other performance-based equity awards that are intended to be fully deductible as “performance based” compensation under Code Section 162(m). The exemption from Code Section 162(m)‘s deduction limit for performance-based compensation, however, has been repealed, effective for taxable years beginning after December 31, 2017, such that compensation paid to our covered executive officers in excess of $1 million will not be deductible unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017.
Since 2010, theThe Company has had a clawback provisionprovisions in its Annual Incentive Plan.program and its Long Term Incentive program. If at any time after payment of an executive’s bonus or after performance units are earned, the Company and its auditors determine that it was calculated on financial results that subsequently were restated or were otherwise based on incorrect data, the executive may be required to repay or relinquish the unearned portion to the Company upon notice from the Company. Outside of the U.S., clawback provisions are subject to local law.
Role of Executive Officers in Determining Compensation
Our Chairman and Chief Executive Officer, with input from our Senior Vice President — Human Resources, recommendsrecommend to the Compensation, Nominating, and Governance Committee base salary, target bonus levels, actual bonus payouts and long-term incentive grants for our senior officer group (other than himself)themselves). Mr. GallagherDonahue makes these recommendations to the Committee based on data and analysis provided by our independent compensation consultant and qualitative judgments regarding individual performance. Mr. GallagherDonahue is not involved with any aspect of determining his own compensation.
2019 Proxy Statement | 29 |
ADDITIONAL INFORMATION REGARDING EXECUTIVE COMPENSATION
20152018 SUMMARY COMPENSATION TABLE
Name and Principal Position | Year | Salary($) | Stock Awards ($)(1) | Option Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(2) | Change in Pension Value and Non- Qualified Deferred Compensation Earnings ($)(3) | All Other Compensation ($)(4) | Total ($) | ||||||||||||||||||||||||
Thomas C. Gallagher | 2015 | 1,124,750 | 1,318,906 | 439,504 | 2,034,213 | 1,195,940 | 97,321 | 6,210,634 | ||||||||||||||||||||||||
Chairman and Chief | 2014 | 1,091,750 | 1,315,020 | 443,362 | 2,182,916 | 4,974,776 | 122,987 | 10,130,811 | ||||||||||||||||||||||||
Executive Officer | 2013 | 1,059,250 | 1,041,120 | 385,152 | 1,868,431 | 253,762 | 79,382 | 4,687,097 | ||||||||||||||||||||||||
Paul D. Donahue | 2015 | 650,000 | 640,415 | 213,462 | 715,957 | 58,822 | 47,935 | 2,326,591 | ||||||||||||||||||||||||
President of the | 2014 | 612,000 | 637,980 | 216,174 | 698,836 | 506,462 | 52,558 | 2,724,010 | ||||||||||||||||||||||||
Company | 2013 | 581,000 | 501,280 | 192,576 | 512,661 | 197,627 | 34,881 | 2,020,025 | ||||||||||||||||||||||||
Carol B. Yancey | 2015 | 462,500 | 445,446 | 148,530 | 461,450 | 140,394 | 13,000 | 1,671,320 | ||||||||||||||||||||||||
Executive Vice President and | 2014 | 430,000 | 442,680 | 151,459 | 454,774 | 345,275 | 13,000 | 1,837,188 | ||||||||||||||||||||||||
Chief Financial Officer | 2013 | 383,833 | 385,600 | 101,356 | 364,821 | 17,651 | 12,750 | 1,266,011 | ||||||||||||||||||||||||
Timothy P. Breen | 2015 | 444,000 | 300,023 | 99,967 | 180,147 | 62,969 | 13,000 | 1,100,106 | ||||||||||||||||||||||||
President & Chief Executive | ||||||||||||||||||||||||||||||||
Officer Motion Industries | ||||||||||||||||||||||||||||||||
James R. Neill | 2015 | 307,500 | 170,196 | 56,747 | 246,387 | 103,297 | 13,000 | 897,127 | ||||||||||||||||||||||||
Senior Vice President — | 2014 | 287,500 | 169,260 | 57,830 | 263,562 | 272,171 | 13,000 | 1,063,323 | ||||||||||||||||||||||||
Human Resources |
Name and Principal Position
| Year
| Salary($)
| Stock Awards ($)(1)
| Option Awards ($)(1)
| Non-Equity Incentive Plan Compensation ($)(2)
|
Change in Pension Value and Non- Qualified Deferred Compensation Earnings ($)(3)
| All Other Compensation ($)(4)
| Total ($)
| ||||||||||||||||||||||||
Paul D. Donahue | 2018 | 1,083,750 | 1,800,204 | — | 1,512,597 | 830,499 | 73,279 | 5,300,329 | ||||||||||||||||||||||||
President & Chief | 2017 | 1,001,250 | 1,125,185 | 375,023 | 1,144,036 | 1,181,237 | 92,755 | 4,919,486 | ||||||||||||||||||||||||
Executive Officer | 2016 | 840,000 | 800,253 | 266,814 | 1,080,566 | 847,754 | 121,982 | 3,957,369 | ||||||||||||||||||||||||
Carol B. Yancey | 2018 | 562,500 | 784,375 | — | 661,100 | 124,139 | 13,750 | 2,145,864 | ||||||||||||||||||||||||
Executive Vice President & | 2017 | 539,500 | 490,095 | 163,413 | 510,161 | 621,101 | 13,000 | 2,337,270 | ||||||||||||||||||||||||
Chief Financial Officer | 2016 | 507,500 | 445,748 | 148,553 | 572,300 | 546,071 | 13,250 | 2,233,422 | ||||||||||||||||||||||||
Timothy P. Breen | 2018 | 337,164 | 528,089 | — | 684,963 | 436,009 | 13,750 | 1,999,975 | ||||||||||||||||||||||||
President & Chief Executive | 2017 | 471,250 | 330,193 | 110,007 | 643,085 | 387,398 | 13,000 | 1,954,933 | ||||||||||||||||||||||||
Officer | 2016 | 456,000 | 300,157 | 100,004 | 282,144 | 297,084 | 13,250 | 1,448,639 | ||||||||||||||||||||||||
Motion Industries | ||||||||||||||||||||||||||||||||
Lee A. Maher | 2018 | 540,667 | 528,089 | — | 401,906 | 128,137 | 13,750 | 1,612,549 | ||||||||||||||||||||||||
Executive Vice President | 2017 | 523,750 | 330,193 | 110,007 | 297,941 | 425,555 | 13,000 | 1,700,446 | ||||||||||||||||||||||||
U.S. Automotive Parts Group | 2016 | 489,670 | 300,157 | 100,004 | 169,795 | 551,734 | 13,250 | 1,624,610 | ||||||||||||||||||||||||
James R. Neill | 2018 | 345,125 | 299,295 | — | 313,414 | 103,600 | 13,750 | 1,075,184 | ||||||||||||||||||||||||
Senior Vice President — | 2017 | 331,750 | 187,004 | 62,365 | 242,326 | 249,117 | 13,000 | 1,085,562 | ||||||||||||||||||||||||
Human Resources | 2016 | 319,000 | 170,023 | 56,730 | 273,843 | 203,769 | 13,250 | 1,036,615 |
(1) | Represents the aggregate grant date fair value of awards determined in accordance with FASB ASC Topic 718. Grant date fair value for restricted stock units (“RSUs”) reflected in the Stock Awards column is based on the grant date fair value of the underlying shares. Grant date fair value for performance-based restricted stock units (“PRSUs”) reflected in the Stock Awards column is based on the grant date fair value of the underlying shares and the probable outcome of performance-based vesting conditions, excluding the effect of estimated forfeitures. Grant date fair value for stock appreciation rights (“SARs”) reflected in the Option Awards column is based on the Black-Scholes option pricing model. The actual value, if any, that a named executive officer may realize upon exercise of SARs will depend on the excess of the stock price over the base value on the date of exercise, so there is no assurance that the value realized by a named executive officer will be at or near the value estimated by the Black-Scholes model. The assumptions used in determining the grant date fair values of the SARs are set forth in the notes to the Company’s consolidated financial statements, which are included in our Annual Report on Form10-K for the year ended December 31, |
(2) | Reflects the value of cash incentive bonuses earned under our Annual Incentive Plan. |
(3) | Reflects the increase during |
(4) | Amounts reflected in this column for |
passenger traveling for personal reasons on an aircraft being primarily used for a business trip. |
20152018 CEO PAY RATIO
As required by item 402(u) of RegulationS-K, the Compensation, Nominating, and Governance Committee reviewed a comparison of our CEO’s annual total compensation in fiscal year 2018 to that of our median employee, which we identified in 2017. We identified our median employee by examining 2017 Box 1W-2 and foreign equivalent taxable income amounts for all individuals, excluding our CEO, who were employed by us on December 31, 2017 whether on a full-time, part-time, or seasonal basis. As permitted by disclosure rules, we omitted approximately 7,000 employees that were added to the Company through acquisitions during 2017. We
30 | 2019 Proxy Statement |
Additional Information Regarding Executive Compensation
did not annualize the compensation for any full-time employees that were not employed by us for all of 2017. We applied a foreign currency to U.S. dollar exchange rate to the compensation paid in foreign currency. After identifying the median employee, we calculated annual total compensation for such employee using the same methodology we use for our named executive officers as set forth in the 2018 Summary Compensation Table above.
As permitted by the regulation, we are using the same median employee for 2018. After performing an analysis of our employee population after 2017 mergers and acquisitions activity was taken into account, we concluded that there has been no change in our employee population or employee compensation arrangements that we believe would significantly impact the pay ratio disclosure.
For fiscal year 2018, the annual total compensation for our CEO was $5,300,329 as noted in the table above and for our median employee it was $38,485. The resulting ratio of our CEO’s pay to the pay of our median employee for fiscal year 2018 is 138 to 1.
2018 GRANTS OF PLAN-BASED AWARDS
Name | Approval Date | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Option Awards: Number of Securities Underlying Options (#)(3) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(4) | Approval
| Grant Date
| Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)
| Estimated Future Payouts Under Equity Incentive Plan Awards(2)
| All Other Stock Awards: Number of Shares of Stock or Units (#)(3)
| Grant Date Fair Value of Stock Awards ($)(4)
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Threshold ($)
| Target ($)
| Maximum ($)
| Threshold (#)
| Target (#)
| Maximum (#)
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Thomas C. Gallagher | 978,975 | 2,175,500 | 3,807,125 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/27/2015 | 4/1/2015 | 7,188 | 14,375 | 21,563 | 1,318,906 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/27/2015 | 4/1/2015 | 32,490 | 91.75 | 439,504 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Paul D. Donahue | 341,550 | 759,000 | 1,328,250 | 657,800 | 1,430,000 | 2,431,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/27/2018 | 5/1/2018 | 6,800 | 13,600 | 20,400 | 1,206,048 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/27/2015 | 4/1/2015 | 3,490 | 6,980 | 10,470 | 640,415 | 3/27/2018 | 5/1/2018 | 6,700 | 594,156 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/27/2015 | 4/1/2015 | 15,780 | 91.75 | 213,462 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carol B. Yancey | 222,075 | 493,500 | 863,625 | 287,500 | 625,000 | 1,062,500 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/27/2015 | 4/1/2015 | 2,428 | 4,855 | 7,283 | 445,446 | 3/27/2018 | 5/1/2018 | 2,963 | 5,925 | 8,888 | 525,429 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/27/2015 | 4/1/2015 | 10,980 | 91.75 | 148,530 | 3/27/2018 | 5/1/2018 | 2,920 | 258,946 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Timothy P. Breen | 173,160 | 444,000 | 715,950 | 185,000 | 500,000 | 812,500 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/27/2018 | 5/1/2018 | 1,995 | 3,990 | 5,985 | 353,833 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/27/2018 | 5/1/2018 | 1,965 | 174,256 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lee A. Maher | 182,910 | 546,000 | 887,250 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/27/2018 | 5/1/2018 | 1,995 | 3,990 | 5,985 | 353,833 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/27/2015 | 4/1/2015 | 1,635 | 3,270 | 4,905 | 300,023 | 3/27/2018 | 5/1/2018 | 1,965 | 174,256 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/27/2015 | 4/1/2015 | 7,390 | 91.75 | 99,967 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
James R. Neill | 118,575 | 263,500 | 461,125 | 136,298 | 296,300 | 503,710 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/27/2015 | 4/1/2015 | 928 | 1,855 | 2,783 | 170,196 | 3/27/2018 | 5/1/2018 | 1,130 | 2,260 | 3,390 | 200,417 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/27/2015 | 4/1/2015 | 4,195 | 91.75 | 56,747 | 3/27/2018 | 5/1/2018 | 1,115 | 98,878 |
(1) | Represents threshold, target and maximum payout levels under the Annual Incentive Plan for |
(2) | Represents threshold, target and maximum number of PRSUs to be earned on December 31, |
(3) |
|
2019 Proxy Statement | 31 |
Additional Information Regarding Executive Compensation
(4) | Represents the grant date fair value of the award determined in accordance with FASB ASC Topic 718. Grant date fair value for the PRSUs is based on the grant date fair value of the underlying shares and the probable outcome of performance-based vesting conditions, excluding the effect of estimated forfeitures. |
20152018 OUTSTANDING EQUITY AWARDS AT FISCALYEAR-END
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) (8) | ||||||||||||||||||||||||||
Thomas C. Gallagher | ||||||||||||||||||||||||||||||||
— | 32,490 | (1 | ) | 91.75 | 4/1/2025 | |||||||||||||||||||||||||||
10,733 | 21,467 | (2 | ) | 86.80 | 4/1/2024 | |||||||||||||||||||||||||||
12,253 | (4) | 1,052,410 | ||||||||||||||||||||||||||||||
25,333 | 12,667 | (3 | ) | 77.12 | 4/1/2023 | |||||||||||||||||||||||||||
15,467 | (5) | 1,328,461 | ||||||||||||||||||||||||||||||
42,000 | — | 63.28 | 4/2/2022 | |||||||||||||||||||||||||||||
8,103 | (6) | 695,967 | ||||||||||||||||||||||||||||||
90,000 | — | 54.09 | 4/1/2021 | |||||||||||||||||||||||||||||
16,000 | (7) | 1,374,240 | ||||||||||||||||||||||||||||||
73,000 | — | 42.66 | 4/1/2020 | |||||||||||||||||||||||||||||
Paul D. Donahue | ||||||||||||||||||||||||||||||||
— | 15,780 | (1 | ) | 91.75 | 4/1/2025 | |||||||||||||||||||||||||||
6,080 | (4) | 522,211 | ||||||||||||||||||||||||||||||
5,233 | 10,467 | (2 | ) | 86.80 | 4/1/2024 | |||||||||||||||||||||||||||
6,895 | (5) | 592,212 | ||||||||||||||||||||||||||||||
12,666 | 6,334 | (3 | ) | 77.12 | 4/1/2023 | |||||||||||||||||||||||||||
4,306 | (6) | 369,842 | ||||||||||||||||||||||||||||||
17,500 | — | 63.28 | 4/1/2022 | |||||||||||||||||||||||||||||
6,600 | (7) | 566,874 | ||||||||||||||||||||||||||||||
Carol B. Yancey | ||||||||||||||||||||||||||||||||
— | 10,980 | (1 | ) | 91.75 | 4/1/2025 | |||||||||||||||||||||||||||
3,336 | 7,334 | (2 | ) | 86.80 | 4/1/2024 | |||||||||||||||||||||||||||
4,138 | (4) | 355,413 | ||||||||||||||||||||||||||||||
6,666 | 3,334 | (3 | ) | 77.12 | 4/1/2023 | |||||||||||||||||||||||||||
5,207 | (5) | 447,229 | ||||||||||||||||||||||||||||||
5,350 | — | 63.28 | 4/2/2022 | |||||||||||||||||||||||||||||
3,001 | (6) | 257,756 | ||||||||||||||||||||||||||||||
8,300 | — | 54.09 | 4/1/2021 | |||||||||||||||||||||||||||||
2,025 | (7) | 173,927 | ||||||||||||||||||||||||||||||
Timothy P. Breen | ||||||||||||||||||||||||||||||||
— | 7,390 | (1 | ) | 91.75 | 4/1/2025 | |||||||||||||||||||||||||||
1,833 | 3,667 | (2 | ) | 86.80 | 4/1/2024 | |||||||||||||||||||||||||||
2,711 | (5) | 232,848 | ||||||||||||||||||||||||||||||
2,800 | 1,400 | (3 | ) | 77.12 | 4/1/2023 | |||||||||||||||||||||||||||
1,144 | (7) | 98,258 | ||||||||||||||||||||||||||||||
4,500 | — | 63.28 | 4/1/2022 | |||||||||||||||||||||||||||||
3,000 | — | 54.09 | 4/1/2021 | |||||||||||||||||||||||||||||
James R. Neill | ||||||||||||||||||||||||||||||||
— | 4,195 | (1 | ) | 91.75 | 4/1/2025 | |||||||||||||||||||||||||||
1,581 | (4 | ) | 135,792 | |||||||||||||||||||||||||||||
1,400 | 2,800 | (2 | ) | 86.80 | 4/1/2024 | |||||||||||||||||||||||||||
1,990 | (5) | 170,921 | ||||||||||||||||||||||||||||||
2,400 | 1,200 | (3 | ) | 77.12 | 4/2/2023 | |||||||||||||||||||||||||||
840 | (6) | 72,148 | ||||||||||||||||||||||||||||||
3,900 | — | 63.28 | 4/1/2022 | |||||||||||||||||||||||||||||
858 | (7 | ) | 73,694 | |||||||||||||||||||||||||||||
6,000 | — | 54.09 | 4/1/2021 |
Name Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable Option Exercise Price ($) Option Expiration Date Number of Shares or Units of Stock That Have Not Vested (#) Market Value of Shares or Units of Stock That Have Not Vested ($)(7) Paul D. Donahue Carol B. Yancey Timothy P. Breen Lee A. Maher James R. Neill Option Awards Stock Awards 9,000 18,000 (1) 90.34 4/3/2027 18,668 (3) 1,792,501 13,153 6,577 (2) 99.72 4/1/2026 9,456 (4) 907,965 15,780 — 91.75 4/1/2025 5,757 (5) 552,787 15,700 — 86.80 4/1/2024 6,080 (6) 583,802 19,000 — 77.12 4/1/2023 3,921 7,844 (1) 90.34 4/3/2027 8,134 (3) 781,027 7,323 3,662 (2) 99.72 4/1/2026 4,119 (4) 395,506 10,980 — 91.75 4/1/2025 3,206 (5) 307,840 11,000 — 86.80 4/1/2024 4,138 (6) 397,331 10,000 — 77.12 4/1/2023 7,920 — 90.34 8/18/2022 5,955 (3) 571,799 7,395 — 99.72 8/18/2022 4,328 (4) 415,575 7,390 — 91.75 8/18/2022 1,564 (5) 150,175 5,500 — 86.80 8/18/2022 4,200 — 77.12 8/18/2022 4,500 — 63.28 4/2/2022 2,640 5,280 (1) 90.34 4/3/2027 — — 4,930 2,465 (2) 99.72 4/1/2026 — — 6,055 — 91.75 4/1/2025 5,476 (3) 525,806 6,000 — 86.80 4/1/2024 2,627 (6) 252,245 1,496 2,994 (1) 90.34 4/3/2027 3,104 (3) 298,046 2,796 1,399 (2) 99.72 4/1/2026 1,572 (4) 150,943 4,195 — 91.75 4/1/2025 1,223 (5) 117,432 4,200 — 86.80 4/1/2024 1,581 (6) 151,808 3,600 — 77.12 4/1/2023
(1) | The SARs were granted on April |
32 | 2019 Proxy Statement |
Additional Information Regarding Executive Compensation
(2) | The SARs were granted on April 1, |
(3) | Includes PRSUs and RSUs that were granted on |
(4) | The PRSUs were granted on April 3, 2017 and vest on December 1, 2021, or earlier upon a change in control of the Company or in the event of (i) the executive’s retirement from the Company or (ii) the executive’s employment with the Company is terminated due to death or disability. The PRSUs will convert to shares of stock on December 1, 2021, or earlier upon a change in control of the Company. |
(5) | The PRSUs were granted on April 1, 2016 and vest on December 1, 2020, or earlier upon a change in control of the Company or in the event of (i) the executive’s retirement from the Company or (ii) the executive’s employment with the Company is terminated due to death or disability. The PRSUs will convert to shares of stock on December 1, 2020, or earlier upon a change in control of the Company. |
(6) | The PRSUs were granted on April 1, 2015 and vest on December 1, 2019, or earlier upon a change in control of the Company or in the event of (i) the executive’s retirement from the Company or (ii) the executive’s employment with the Company is terminated due to death or disability. The PRSUs will convert to shares of stock on December 1, 2019, or earlier upon a change in control of the Company. |
(7) |
Reflects the value as calculated based on the closing price of the Company’s Common Stock on December 31, |
20152018 OPTION EXERCISES AND STOCK VESTED
Option Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) (1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) (2) | ||||||||||||
Thomas C. Gallagher | — | — | 6,935 | 1,210,776 | ||||||||||||
Paul D. Donahue | — | — | 3,515 | 479,313 | ||||||||||||
Carol B. Yancey | — | — | 1,110 | 151,381 | ||||||||||||
Timothy P. Breen | — | — | 563 | 75,691 | ||||||||||||
James R. Neill | — | — | 1,110 | 151,381 |
Option Awards |
Stock Awards | |||||||||||||||
Name
| Number of Awards
| Value Realized on Exercise
| Number of
| Value Realized on Vesting ($) (2)
| ||||||||||||
Paul D. Donahue | — | — | 6,895 | 793,005 | ||||||||||||
Carol B. Yancey | 5,350 | 209,881 | 5,207 | 598,810 | ||||||||||||
Timothy P. Breen | 3,000 | 145,260 | 2,711 | 311,807 | ||||||||||||
Lee A. Maher | 14,500 | 480,395 | 2,861 | 329,066 | ||||||||||||
James R. Neill | 3,900 | 152,997 | 1,990 | 228,817 |
(1) | Value realized represents the excess of the fair market value of the shares at the time of exercise over the exercise price of the options. |
(2) | Value realized represents the fair market value of the shares on the vesting date. |
Equity Compensation Plan Information
The following table gives information as of December 31, 20152018 about the common stock that may be issued under all of the Company’s existing equity compensation plans:
Plan Category | (a) Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights(1) | (b) Weighted Average Exercise Price of Outstanding Options, Warrants and Rights | (c) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) | |||||||||
Equity Compensation Plans Approved by Shareholders: | 46,000 | (2) | $ | 44.20 | — | |||||||
4,134,845 | (3) | $ | 70.97 | — | ||||||||
— | (4) | n/a | 10,000,000 | (6) | ||||||||
|
|
|
| |||||||||
Equity Compensation Plans Not Approved by Shareholders: | 85,284 | (5) | n/a | 914,716 | ||||||||
|
|
|
| |||||||||
Total | 4,266,129 | — | 10,914,716 |
Plan Category
| (a) Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights(1)
| (b) Weighted Average Exercise Price of Outstanding Options, Warrants and Rights
| (c) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))
| |||||||||
Equity Compensation Plans Approved by Shareholders: | 1,857,768 | (2) | $ | 77.32 | — | |||||||
1,791,931 | (3) | $ | 94.80 | 8,134,991 | (5) | |||||||
Equity Compensation Plans Not Approved by Shareholders: | 103,779 | (4) | n/a | 896,221 | ||||||||
|
|
|
| |||||||||
Total | 3,753,478 | — | 9,031,212 |
(1) | Reflects the maximum number of shares issuable pursuant to the exercise or conversion of stock options, stock appreciation rights, restricted stock units and common stock equivalents. The actual number of shares issued upon exercise of stock appreciation rights is calculated based on the excess of fair market value of our common stock on date of exercise and the grant price of the stock appreciation rights. |
(2) |
Genuine Parts Company 2006 Long-Term Incentive Plan. |
(3) | Genuine Parts Company 2015 Incentive Plan. |
(4) |
Genuine Parts Company Director’s Deferred Compensation Plan, as amended. |
All of these shares are available for issuance pursuant to grants of full-value stock awards. |
2019 Proxy Statement | 33 |
2015Additional Information Regarding Executive Compensation
2018 PENSION BENEFITS
Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit ($) | Payments During Last Fiscal Year ($) | ||||||||||
Thomas C. Gallagher | Pension Plan | 43.50 | 1,846,742 | — | ||||||||||
Supplemental Retirement Plan | 45.50 | 23,247,617 | — | |||||||||||
Original Deferred Compensation Plan | 34.00 | 595,575 | 48,157 | |||||||||||
Paul D. Donahue | Pension Plan | 5.83 | 251,887 | — | ||||||||||
Supplemental Retirement Plan | 12.83 | 2,241,376 | — | |||||||||||
Carol B. Yancey | Pension Plan | 17.67 | 382,653 | — | ||||||||||
Supplemental Retirement Plan | 24.67 | 1,054,613 | — | |||||||||||
Timothy P. Breen | Pension Plan | 10.25 | 285,285 | — | ||||||||||
Supplemental Retirement Plan | 17.25 | 704,174 | — | |||||||||||
James R. Neill | Pension Plan | 2.17 | 63,838 | — | ||||||||||
Supplemental Retirement Plan | 9.17 | 311,630 | — |
Name Plan Name Number of Years Credited Service (#) Present Value of Accumulated Benefit ($) Payments During Last Fiscal Year ($) Paul D. Donahue Carol B. Yancey Timothy P. Breen Lee A. Maher James R. Neill Pension Plan 5.83 301,711 — Supplemental Retirement Plan 15.83 5,051,042 — Pension Plan 17.67 474,968 — Supplemental Retirement Plan 27.67 2,253,609 — Pension Plan — — 175,657 Supplemental Retirement Plan — — 1,934,293 Pension Plan 36.08 1,248,243 — Supplemental Retirement Plan 41.08 3,452,130 — Pension Plan 2.17 78,391 — Supplemental Retirement Plan 12.17 853,563 —
The Pension Benefit Table provides information regarding the number of years of credited service, the present value of accumulated benefits, and any payments made during the last fiscal year with respect to the Genuine Parts Company Pension Plan (the “Pension Plan”), and the Genuine Parts Company Supplemental Retirement Plan (the “SRP”), and the Genuine Parts Company Original Deferred Compensation Plan (the “ODCP”).
The Pension Plan is a broad-based,tax-qualified defined benefit pension plan which provides a benefit upon retirement to eligible employees of the Company. It was amended effective March 1, 2008, to provide that employees hired on or after that date are not eligible to participate in the plan, and there are no new entrants to the Pension Plan after December 31, 2009. In general, all employees hired beforeprior to March 1, 2008, except leased employees, independent contractors and certain collectively-bargained employees are eligible to participate. Benefits are based upon years of credited service and the average of the highest five nonconsecutive years of earnings out of the last ten years. Pension Plan earnings are generally based on total pay, but do not include deferred compensation. The service amounts shown in the table above for the Pension Plan and the SRP represent actual years of service with the Company. Other than what the plan provides to all participants, no additional years of credited service have been granted to the named executive officers under the Pension Plan or the SRP.
The Pension Plan was amended to freeze credited service as of December 31, 2008, while continuing to reflect future pay increases for most plan participants (i.e., “a soft plan freeze”). Such participants began participating in a newly established company-sponsored 401(k) savings plan effective January 1, 2009.
The soft plan freeze does not apply to service used for vesting purposes or to determine a participant’s eligibility for early retirement under the Pension Plan. Participants who satisfied a Rule of 70 criteria (age plus service equal to 70 or more) were given the option to remain under the old provisions. Only Mr. GallagherMaher satisfied the Rule of 70 criteria and elected to remain under the old provisions.
Several forms of benefit payments are available under the Pension Plan. The Pension Plan offers a life annuity option, 50%, 75%, and 100% joint and survivor options, and a10-year certain and life annuity option. The Pension Plan was amended in 20142016 to reflect an ongoing lump sum option for future terminations and retirements whereif the present value of benefits are $30,000$75,000 or less. Minimum lump sum distributions of benefits are required if $5,000 or less. The payout option must be elected by the participant before benefit payments begin. All options available under the Pension Plan are approximately equal in value.
The benefit payable for normal or early retirement under the Pension Plan is the greater of two benefits. The first benefit is a percentage of the participant’s average earnings less 50% of his estimated Social Security benefit. The applicable percentage is based on years of credited service and increases by 0.5% per year of credited service from 40% at 15 years of service to 55% at 45 or more years of service. The second benefit is 30% of the participant’s average earnings. Only the second benefit is available to participants with less than 15 years of credited service. For such individuals, 30% of the participant’s average earnings is multiplied by a fraction with the numerator equal to credited service (not to exceed 180 months) and the denominator equal to 180.
As of December 31, 2015, Mr. Gallagher was eligible for delayed retirement benefits. The benefit payable for delayed retirement under the Pension Plan is the greater of two benefits. The first benefit is the normal retirement benefit determined based on the participant’s average earnings and credited service at
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Additional Information Regarding Executive Compensation
his delayed retirement date. The second benefit is the normal retirement benefit actuarially increased from the participant’s normal retirement date to the delayed retirement date based on the attained age at each date.
Early retirement benefit payments are available under the Pension Plan to participants who retire after attaining age 55 and completing 15 years of service. Early retirement benefits are reduced 0.5% for each month by which benefit commencement precedes normal retirement age (age 65 with five years of participation).
Termination benefits are calculated in the same manner as normal retirement benefits, except that (a) the benefit is calculated based on projected credited service at normal retirement date and then (b) the benefit is reduced by multiplying it by a service fraction equal to the ratio of credited service at termination to projected credited service at normal retirement date. Projected credited service at normal retirement date is determined as if
the participant had continued in employment until his or her normal retirement. Under the terms of the Pension Plan, as of December 31, 2008, Mr. Donahue, Ms. Yancey, Mr. Breen, and Mr. Neill did not satisfy Rule of 70 criteria and as a result, the numerator of their service fraction is frozen as of December 31, 2008, although projected credited service at normal retirement date continues to be determined as if they earned credited service through their normal retirement date.
Participants are fully vested in their Pension Plan benefits after seven years of service, with partial vesting after three years of service. The Pension Plan was amended effective December 31, 2008, to provide that in general, only participants who satisfy Rule of 70 criteria and elect to remain under the old plan provisions may earn up to two years of additional credited service following termination due to disability and while receiving long term disability benefits from the Genuine Parts Company Long-Term Disability Plan. A 50% survivor annuity is payable to a participant’s spouse upon death prior to retirement. A surviving spouse may waive the 50% survivor benefit and elect instead to receive a benefit from the Genuine Parts Company Death Benefit Plan.
Effective January 1, 2009, in the event of a change in control, a participant’s benefit accrued under the Pension Plan is fully vested and, if the participant terminates employment within five years following the change in control, the participant may elect to receive an immediate lump sum distribution of the accrued benefit.
The Pension Plan was further amended effective December 31, 2013, to freeze future benefit accruals for all participants, including those who satisfy Rule of 70 criteria. In addition, all active participants with at least one hour of service after December 31, 2013, were fully vested in their accrued benefits as of that date. No further benefit accruals will be provided after 2013 for either additional credited service or future earnings. All benefits are frozen as of December 31, 2013, for all purposes including disability, termination and retirement. All active Pension Plan participants who satisfy Rule of 70 criteria and elected to remain under the old provisions became eligible on January 1, 2014, for the company-sponsored 401(k) Savings Plan that was established effective January 1, 2009.
The standard death benefit in the Pension Plan provides a 50% survivor annuity payable to a participant’s spouse upon death prior to retirement. Since the Death Benefit Plan was merged into the Pension Plan during 2017, a surviving spouse may instead elect to receive this alternative death benefit based on different provisions and payment form.
The SRP is a nonqualified defined benefit pension plan which covers pay and benefits above the qualified limits in the Pension Plan for participants who satisfied the Rule of 70 criteria and entered the SRP plan prior to January 1, 2009. The SRP also provides benefits on a reduced basis for participants who entered the SRP prior to January 1, 2009, but did not satisfy the Rule of 70 criteria in the Pension Plan, or who entered the SRP after January 1, 2009. Otherwise, the provisions of the SRP in effect on December 31, 2008, are generally the same as those of the Pension Plan as in effect on that date, except benefits are payable only for retirement, disability, death, or change in control, and SRP earnings include deferred compensation.
The SRP was amended and restated effective January 1, 2009. The amended plan provides full vesting and an immediate lump sum payment if a participant dies, and full vesting of SRP benefits in the event the plan is terminated, the participant becomes disabled, or there is a change in control. Participants’ credited service in the SRP is not frozen as of December 31, 2008. Also, if a SRP participant’s credited service was frozen in the Pension Plan as amended effective December 31, 2008, an additional offset is applied to the benefits otherwise accrued under the SRP. This offset is determined based on the accumulated sum (with interest at 6.0% per year) of 3.8% of the participant’s Pension Plan earnings during each calendar year after December 31, 2008.
The SRP was later amended effective August 16, 2010, to provide that in the event of a participant’s death while in active service, the survivor benefit payable is 100% of the lump sum present value of the participant’s accrued benefit as of the date of death. Prior to the amendment, 50% of the lump sum present value was payable as a survivor benefit.
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Additional Information Regarding Executive Compensation
The SRP was most recently amended effective December 31, 2013, to change the benefit formula. For Mr. Gallagher,Maher, SRP benefits will continue to reflect an offset for Pension Plan benefits; however, this offset will be determined as if the Pension Plan were not frozen on December 31, 2013. As a result, future SRP benefits will remain unchanged following the Pension Plan freeze.freeze did not have an impact on future SRP benefits.
Beginning January 1, 2014, Mr. Donahue, Mr. Breen and Ms. Yancey’s SRP benefit will be calculated under a revised benefit formula which applies to participants who entered the plan prior to January 1, 2009, and whose credited service was frozen in the Pension Plan as of December 31, 2008. The revised benefit formula is based on all years of credited service and earnings and cannot be less than the accrued SRP benefit as of
December 31, 2013. The revised formula is a percentage of the participant’s average earnings less 50% of their Social Security benefit. The applicable percentage is based on years of credited service and increases by 0.5% per year of credited service from 30% at 15 years of service to 45% at 45 or more years of service. For participants with less than 15 years of projected credited service at normal retirement, the applicable percentage is equal to 30% multiplied by a fraction with the numerator equal to credited service (not to exceed 180 months) and the denominator equal to 180. Under the revised SRP benefit formula, there is an offset for the frozen Pension Plan benefit, but no other offsets apply.
This most recent SRP amendment also defines the benefit formula for participants who entered the SRP on or after January 1, 2009, which applies to Mr. Neill’s benefit. This formula is identical to the revised benefit formula fornon-grandfathered participants who entered the plan prior to January 1, 2009, but it does not provide a minimum benefit as of December 31, 2013.
Benefits earned under the SRP are paid from Company assets, and for participants who entered the plan prior to January 1, 2009, they aregrossed-up for FICA taxes. Therefore, all named executive officers receive a FICA taxgross-up except Mr. Neill. Executives sign a joinder agreement to become participants in the SRP and select an optional form of benefit payment in the agreement. SRP participants may change their payment form elections at any time prior to benefit commencement.
Amounts reported in the 20152018 Pension Benefits tableTable as the actuarial present value of accumulated benefits under the Pension Plan and the SRP are computedcalculated using the interest and mortality assumptions that the Company applies to amounts reported in its financial statement disclosures foryear-end, and are assumed to be payable immediately for Mr. Gallagher and at age 65 for Mr. Donahue, Ms. Yancey, Mr. Breen, and Mr. Neill. Mr. Breen passed away in August of 2018, and Pension and SRP lump sum payments were made to his surviving spouse on September 28, 2018 and October 1, 2018, respectively. The interest rate assumptions at December 31, 2015,2018, are 4.90%4.42% for the Pension Plan and 4.85%4.44% for the SRP. The mortality assumption is athe modifiedRP-2014 mortality table (using Scale BB for mortality improvementsprojected from 2006 to 2014), and the mortality improvement assumption for future years isusing Scale MP-2014MP-2018 converging to 0.62% long-term annual improvements by 2027.improvements. A blue-collar table is used for the Pension Plan calculations, and a white-collar table is used for the SRP calculations. SRP benefits have been adjustedincreased by 2.35% as of December 31, 2015,2018, to account for estimated FICA taxgross-ups for applicable NEOs (but not for any income tax impact on suchgross-ups).
The ODCP is a nonqualified plan that provides an annuity benefit, funded partially by executive salary deferrals. Mr. Gallagher is the only named executive officer in this plan, and no salary deferrals have been made under the plan since 2012 following Mr. Gallagher’s attainment of his normal retirement age. The retirement benefit currently in payment is a 10-year certain and life annuity beginning January 1, 2014. These benefits are payable from Company assets. The service amount shown in the table represents the period during which Mr. Gallagher has been making salary deferrals for benefits provided by the ODCP. The 2015 Pension Benefits table shows no increase in credited service under the Original Deferred Compensation Plan since 2012 given that there have been no deferrals under the plan by Mr. Gallagher since that time. Amounts reported in the 2015 Pension Benefits table as the actuarial present value of accumulated benefits under the ODCP are based in the annuity amount in payment and the interest and mortality assumptions the Company uses for purposes of financial statement disclosures of the SRP referred to above.
20152018 NONQUALIFIED DEFERRED COMPENSATION
Name | Executive Contributions in Last FY ($) | Company Contributions in Last FY ($) | Aggregate Earnings in Last FY ($)(1) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($)(2) | |||||||||||||||
Thomas C. Gallagher | — | — | 21,017 | — | 2,010,974 | |||||||||||||||
Paul D. Donahue | — | — | 448 | — | 215,682 | |||||||||||||||
Carol B. Yancey | 20,000 | — | 3,490 | — | 261,815 | |||||||||||||||
Timothy P. Breen | — | — | — | — | — | |||||||||||||||
James R. Neill | — | — | — | — | — |
Name Executive Contributions in Last FY ($) Company Contributions in Last FY ($) Aggregate Earnings in Last FY ($)(1) Aggregate Withdrawals/ Distributions ($) Aggregate Balance at Last FYE ($)(2) Paul D. Donahue Carol B. Yancey Timothy P. Breen Lee A. Maher James R. Neill — — (12,342 ) — 257,046 — — (26,827 ) — 381,705 — — — — — — — — — — — — — — —
Reflects amounts earned in |
Includes the following amounts of contributions to the Tax Deferred Savings Plan by the named executive officers that were previously reported as compensation to the named executive officers in the Company’s Summary Compensation Table for previous years: Mr. |
The Genuine Parts Company Tax Deferred Savings Plan is a nonqualified deferred compensation plan pursuant to which the named executive officers may elect to defer up to 100% of their annual incentive bonus. Deferral
36 | 2019 Proxy Statement |
Additional Information Regarding Executive Compensation
elections are due by June 30 of each year, and are irrevocable. These deferral elections are for the bonus earned during that year, which would otherwise be payable in February of the following year. Effective January 1, 2011, the Plan was amended to allow executives to defer up to 100% of their annual salary. Deferrals are held for each participant in separate individual accounts in an irrevocable rabbi trust. Deferred amounts are credited with earnings or losses based on the rate of return of mutual funds selected by the executive, which the executive may change at any time. Payment begins on the first day of the seventh month following the executive’s termination of service. The executive must also make an irrevocable election regarding payment terms, which may be either a lump sum, or installments of five (5), ten (10), or fifteen (15) years. Hardship withdrawals are available for unforeseeable emergency financial hardship situations. If a participant dies before receiving the full value of the deferral account balances, the designated beneficiary would receive the remainder of that benefit in the same payment form as originally specified (i.e., lump sum or installments). All accounts would be immediately distributed upon a change in control of the Company.
POST TERMINATION PAYMENTS AND BENEFITS
Benefits to Named Executive Officers in the Event of a Change in Control. The Company does not have employment agreements with any of its executive officers. The Company has entered into change in control agreements with certain executive officers, including the named executive officers. These agreements provide severance payments and benefits to the executive if his employment is terminated within two years after a change in control of the Company, if the change in control occurs during the term of the agreement. The change in control agreements have a three year term with automatic annual extensions unless either party gives notice ofnon-renewal.
Under each of the change in control agreements, if the executive is terminated by the Company without cause or the executive resigns for good reason (as such terms are defined in the agreement), within two years after a change in control, he or she will receive a pro rata bonus for the year of termination, plus a lump sum severance payment equal to a multiple (three in the case of Mr. Gallagher and two in the case of Ms. Yancey and Messrs. Donahue, Neill and Breen) oftimes the executive’s then-current annual salary and the average of the annual bonuses he or she received in the three years prior to the year of termination. In addition, the Company will continue to provide the executive with group health coverage for a period of 24 months.
If the executive’s employment is terminated by the Company for cause or he resigns without good reason, the agreement will terminate without further obligation of the Company other than the payment of any accrued but unpaid salary or benefits. In the case of death, disability or retirement, the executive, or his estate, would be entitled to payment of any accrued but unpaid salary or benefits, plus a pro rata bonus for the year in which the termination occurred.
The change in control agreements were amended in 2014 to eliminate all taxgross-ups with respect to the 20% excise tax that may be imposed under Section 4999 of the Internal Revenue Code on individuals who receive compensation in connection with a change of control that exceeds certain specified limits. As amended, the change in control agreements provide that in the event the executive would be subject to a 20% excise tax under Section 4999, the payments and benefits to the executive would be reduced to the maximum amount that does not trigger the excise tax unless the executive would retain greater value (on anafter-tax basis) by receiving all payments and benefits and paying all excise and income taxes.
Summary of Termination Payments and Benefits. The following tables summarize the value of the termination payments and benefits that our named executive officers would receive if they had terminated employment on December 31, 20152018 under the circumstances shown. The tables exclude (i) amounts accrued through December 31, 20152018 that would be paid in the normal course of continued employment, such as accrued but unpaid salary and earned annual bonus for 20152018 and (ii) vested account balances under our 401(k) Savings Plan, which is a 401(k) plan that is generally available to all of our salaried employees.
Thomas C. Gallagher
Benefit | Retirement ($) | Death ($) | Disability ($) | Termination by Company or Executive Other Than Retirement, Death or Disability ($) | Involuntary Termination Following a Change in Control ($) | |||||||||||||||
Cash Severance | — | — | — | — | 9,820,722 | (1) | ||||||||||||||
Acceleration of Equity Awards | ||||||||||||||||||||
Stock Options and SARs(2) | 111,090 | 111,090 | 111,090 | — | 111,090 | |||||||||||||||
Restricted Stock and PRSUs(3) | 3,398,667 | 4,633,336 | 4,633,336 | — | 4,633,336 | |||||||||||||||
Retirement Benefits | ||||||||||||||||||||
Pension Plan(4) | 151,162 | 75,581 | 151,162 | 151,162 | 151,162 | (5) | ||||||||||||||
Supplemental Retirement Plan(6) | 1,541,887 | 22,955,257 | 1,541,887 | 1,541,887 | 27,558,045 | (7) | ||||||||||||||
Original Def Comp Plan(8) | 48,157 | 48,157 | 48,157 | 48,157 | 606,435 | (9) | ||||||||||||||
Tax-Deferred Savings Plan(10) | 2,010,974 | 2,010,974 | 2,010,974 | 2,010,974 | 2,010,974 | |||||||||||||||
Other Benefits | ||||||||||||||||||||
Health & Welfare Coverage | — | — | — | — | 17,256 | (11) | ||||||||||||||
Total | 7,261,937 | 29,834,395 | 8,496,606 | 3,752,180 | 44,909,020 |
2019 Proxy Statement | 37 |
Additional Information Regarding Executive Compensation
Paul D. Donahue
Benefit
| Retirement ($)
| Death ($)
| Disability ($)
| Termination by Company or Executive Other Than Retirement, Death or Disability ($)
| Involuntary Termination Following a Change in Control ($)
| |||||||||||||||
Cash Severance | — | — | — | — | 4,127,873 | (1) | ||||||||||||||
Acceleration of Equity Awards | ||||||||||||||||||||
Stock Options and SARs(2) | — | 102,240 | 102,240 | — | 102,240 | |||||||||||||||
Restricted Stock and PRSUs(3) | — | 3,837,055 | 3,837,055 | — | 3,837,055 | |||||||||||||||
Retirement Benefits | ||||||||||||||||||||
Pension Plan(4) | 20,941 | 10,470 | 20,941 | 20,941 | 20,941 | (5) | ||||||||||||||
Supplemental Retirement Plan(6) | 387,828 | 5,617,937 | 387,828 | 387,828 | 6,593,009 | (7) | ||||||||||||||
Tax-Deferred Savings Plan(8) | 257,046 | 257,046 | 257,046 | 257,046 | 257,046 | |||||||||||||||
Other Benefits | ||||||||||||||||||||
Health & Welfare | — | — | — | — | 22,308 | (9) | ||||||||||||||
Total | 665,815 | 9,824,748 | 4,605,110 | 665,815 | 14,960,472 |
(1) | Severance payment payable in lump sum pursuant to the change in control agreement described above. |
(2) | Reflects the excess of the fair market value of the underlying shares as of December 31, |
(3) | Reflects the fair market value as of December 31, |
(4) | Pension Plan benefits shown for all termination scenarios are annual annuities assuming a 50% joint and survivor annuity option and are assumed to be payable |
(5) | Mr. |
(6) | Supplemental Retirement Plan benefits shown for all termination scenarios (except death and involuntary termination following a change in control) assume payment under the |
(7) | An immediate lump sum distribution of benefits is required in the event of termination following a change in control. The lump sum value of the benefit calculated includes an estimated FICA taxgross-up amount of |
(8) |
Benefits payable under the Tax Deferred Savings Plan are described and quantified in the Nonqualified Deferred Compensation table in this proxy statement. |
Reflects the cost of 24 months of continued group health coverage pursuant to the change in control agreement described above. In order to comply with Internal Revenue Code section 409A, during the last 6 months of this continued coverage period, the Company will satisfy its obligation to provide group health coverage by making 6 monthly installment payments to the executive in an amount equal to the monthly cost of providing such coverage, based upon the “applicable premium” under COBRA. |
Paul D. Donahue
Benefit | Retirement ($) | Death ($) | Disability ($) | Termination by Company or Executive Other Than Retirement, Death or Disability ($) | Involuntary Termination Following a Change in Control ($) | |||||||||||||||
Cash Severance | — | — | — | — | 2,528,123 | (1) | ||||||||||||||
Acceleration of Equity Awards | ||||||||||||||||||||
Stock Options and SARs(2) | — | 55,549 | 55,549 | — | 55,549 | |||||||||||||||
Restricted Stock and PRSUs(3) | — | 1,528,928 | 1,528,928 | — | 1,528,928 | |||||||||||||||
Retirement Benefits | ||||||||||||||||||||
Pension Plan(4) | 24,375 | 12,188 | 24,375 | 24,375 | 24,375 | (5) | ||||||||||||||
Supplemental Retirement Plan(6) | — | 117,812 | 217,884 | — | 3,039,313 | (7) | ||||||||||||||
Tax-Deferred Savings Plan(8) | 215,682 | 215,682 | 215,682 | 215,682 | 215,682 | |||||||||||||||
Other Benefits | ||||||||||||||||||||
Health & Welfare | — | — | — | — | 27,792 | (9) | ||||||||||||||
Total | 240,057 | 1,930,159 | 2,042,418 | 240,057 | 7,419,762 |
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Additional Information Regarding Executive Compensation
Carol B. Yancey
Benefit
| Retirement ($)
| Death ($)
| Disability ($)
| Termination by Company or Executive Other Than Retirement, Death or Disability ($)
| Involuntary Termination Following a Change in Control ($)
| |||||||||||||||
Cash Severance | — | — | — | — | 2,154,274 | (1) | ||||||||||||||
Acceleration of Equity Awards | ||||||||||||||||||||
Stock Options and SARs(2) | — | 44,554 | 44,554 | — | 44,554 | |||||||||||||||
Restricted Stock and PRSUs(3) | — | 1,881,704 | 1,881,704 | — | 1,881,704 | |||||||||||||||
Retirement Benefits | ||||||||||||||||||||
Pension Plan(4) | 21,785 | 299,691 | 21,785 | 21,785 | 21,785 | (5) | ||||||||||||||
Supplemental Retirement Plan(6) | 109,689 | 2,044,582 | 109,689 | 109,689 | 2,472,227 | (7) | ||||||||||||||
Tax-Deferred Savings Plan(8) | 381,705 | 381,705 | 381,705 | 381,705 | 381,705 | |||||||||||||||
Other Benefits | ||||||||||||||||||||
Health & Welfare | — | — | — | — | 30,300 | (9) | ||||||||||||||
Total | 513,179 | 4,652,236 | 2,439,437 | 513,179 | 6,986,549 |
(1) | Severance payment payable in lump sum pursuant to the change in control agreement described above. |
(2) | Reflects the excess of the fair market value of the underlying shares as of December 31, |
(3) | Reflects the fair market value as of December 31, |
(4) | Pension Plan benefits shown for all termination scenarios are annual annuities assuming a 50% joint and survivor annuity option and are assumed to be payable |
(5) |
|
under the plan. The lump sum payable to |
(6) | Supplemental Retirement Plan |
(7) | An immediate lump sum distribution of benefits is required in the event of termination following a change in control. The lump sum value of the benefit calculated includes an estimated FICA taxgross-up amount of |
(8) | Benefits payable under the Tax Deferred Savings Plan are described and quantified in the Nonqualified Deferred Compensation table in this proxy statement. |
(9) | Reflects the cost of 24 months of continued group health coverage pursuant to the change in control agreement described above. In order to comply with Internal Revenue Code section 409A, during the last 6 months of this continued coverage period, the Company will satisfy its obligation to provide group health coverage by making 6 monthly installment payments to the executive in an amount equal to the monthly cost of providing such coverage, based upon the “applicable premium” under COBRA. |
Carol B. Yancey
Benefit | Retirement ($) | Death ($) | Disability ($) | Termination by Company or Executive Other Than Retirement, Death or Disability ($) | Involuntary Termination Following a Change in Control ($) | |||||||||||||||
Cash Severance | — | — | — | — | 1,690,119 | (1) | ||||||||||||||
Acceleration of Equity Awards | ||||||||||||||||||||
Stock Options and SARs(2) | — | 29,239 | 29,239 | — | 29,239 | |||||||||||||||
Restricted Stock and PRSUs(3) | — | 878,912 | 878,912 | — | 878,912 | |||||||||||||||
Retirement Benefits | ||||||||||||||||||||
Pension Plan(4) | 47,559 | 308,152 | 47,559 | 47,559 | 47,559 | (5) | ||||||||||||||
Supplemental Retirement Plan(6) | — | 920,837 | 110,877 | — | 1,596,645 | (7) | ||||||||||||||
Tax-Deferred Savings Plan(8) | 261,815 | 261,815 | 261,815 | 261,815 | 261,815 | |||||||||||||||
Other Benefits | ||||||||||||||||||||
Health & Welfare | — | — | — | — | 27,792 | (9) | ||||||||||||||
Estimated 280G Tax “Cut-Back” to Avoid Excise Tax | — | — | — | — | (233,150 | )(10) | ||||||||||||||
Total | 309,374 | 2,398,955 | 1,328,402 | 309,374 | 4,298,931 |
2019 Proxy Statement | 39 |
Additional Information Regarding Executive Compensation
Timothy P. Breen (1)
Benefit | Retirement ($) | Death ($) | Disability ($) | Termination by Company or Executive Other Than Retirement, Death or Disability ($) | Involuntary Termination Following a Change in Control ($) | |||||||||||||||
Acceleration of Equity Awards | ||||||||||||||||||||
Stock Options and SARs(2) | — | 45,144 | — | — | — | |||||||||||||||
Restricted Stock and PRSUs(3) | — | 1,171,550 | — | — | — | |||||||||||||||
Retirement Benefits | ||||||||||||||||||||
Pension Plan | — | 175,657 | — | — | — | |||||||||||||||
Supplemental Retirement Plan | — | 1,934,293 | — | — | — | |||||||||||||||
Total | — | 3,326,644 | — | — | — |
(1) | Mr. Breen passed away while employed with the Company during 2018. The amounts shown reflect actual payments and benefits made or provided to his surviving spouse during 2018. |
(2) | Reflects the excess of the fair market value of the underlying shares as of August 18, 2018 over the exercise or base price of all unvested options and SARs the vesting of which accelerates in connection with Mr. Breen’s death. |
(3) | Reflects the fair market value as of August 18, 2018 of restricted stock and shares underlying PRSUs the vesting of which accelerates in connection with Mr. Breen’s death. |
Lee A. Maher
Benefit
| Retirement ($)
| Death ($)
| Disability ($)
| Termination by Company or Executive Other Than Retirement, Death or Disability ($)
| Involuntary Termination Following a Change in Control ($)
| |||||||||||||||
Cash Severance | — | — | — | — | 1,572,554 | (1) | ||||||||||||||
Acceleration of Equity Awards | ||||||||||||||||||||
Stock Options and SARs(2) | — | 29,990 | 29,990 | — | 29,990 | |||||||||||||||
Restricted Stock and PRSUs(3) | — | 778,050 | 778,050 | — | 778,050 | |||||||||||||||
Retirement Benefits | ||||||||||||||||||||
Pension Plan(4) | 89,055 | 44,527 | 89,055 | 89,055 | 89,055 | (5) | ||||||||||||||
Supplemental Retirement Plan(6) | 208,325 | 3,555,266 | 208,325 | 208,325 | 4,153,394 | (7) | ||||||||||||||
Other Benefits | ||||||||||||||||||||
Health & Welfare | — | — | — | — | 22,308 | (8) | ||||||||||||||
Total | 297,380 | 4,407,833 | 1,105,420 | 297,380 | 6,645,351 |
(1) | Severance payment payable in lump sum pursuant to the change in control agreement described above. |
(2) | Reflects the excess of the fair market value of the underlying shares as of December 31, |
(3) | Reflects the fair market value as of December 31, |
(4) | Pension Plan benefits shown for all termination scenarios are annual annuities assuming a 50% joint and survivor annuity option and are assumed to be payable |
spouse may elect to waive the standardpre-retirement death benefit from the Pension Plan and elect |
(5) | Mr. Maher may elect to receive |
(6) | Supplemental Retirement Plan |
40 | 2019 Proxy Statement |
Additional Information Regarding Executive Compensation
Supplemental Retirement Plan annuity benefits shown in the table do not reflect estimated FICA taxgross-ups paid by the Company. The estimated FICA taxgross-up, based on 2.35% of the lump sum value of the Supplemental Retirement Plan benefit calculated on the FICA tax basis for the plan, is $78,806 upon retirement. |
(7) | An immediate lump sum distribution of benefits is required in the event of termination following a change in control. The lump sum value of the benefit calculated includes an estimated FICA taxgross-up amount of |
(8) |
Reflects the cost of 24 months of continued group health coverage pursuant to the change in control agreement described above. In order to comply with Internal Revenue Code section 409A, during the last 6 months of this continued coverage period, the Company will satisfy its obligation to provide group health coverage by making 6 monthly installment payments to the executive in an amount equal to the monthly cost of providing such coverage, based upon the “applicable premium” under COBRA. |
Timothy P. BreenJames R. Neill
Benefit | Retirement ($) | Death ($) | Disability ($) | Termination by Company or Executive Other Than Retirement, Death or Disability ($) | Involuntary Termination Following a Change in Control ($) | |||||||||||||||
Cash Severance | — | — | — | — | 1,298,034 | (1) | ||||||||||||||
Acceleration of Equity Awards | ||||||||||||||||||||
Stock Options and SARs(2) | — | 12,278 | 12,278 | — | 12,278 | |||||||||||||||
Restricted Stock and PRSUs(3) | — | 331,106 | 331,106 | — | 331,106 | |||||||||||||||
Retirement Benefits | ||||||||||||||||||||
Pension Plan(4) | 14,875 | 156,750 | 14,875 | 14,875 | 14,875 | (5) | ||||||||||||||
Supplemental Retirement Plan(6) | 49,890 | 910,762 | 49,890 | 49,890 | 1,213,188 | (7) | ||||||||||||||
Other Benefits | ||||||||||||||||||||
Health & Welfare | — | — | — | — | 20,496 | (8) | ||||||||||||||
Estimated 280G Tax “Cut-Back” to Avoid Excise Tax | — | — | — | — | (78,672 | )(9) | ||||||||||||||
Total | 64,765 | 1,410,896 | 408,149 | 64,765 | 2,811,305 |
Benefit
| Retirement ($)
| Death ($)
| Disability ($)
| Termination by Company or Executive Other Than Retirement, Death or Disability ($)
| Involuntary Termination Following a Change in Control ($)
| |||||||||||||||
Cash Severance | — | — | — | — | 1,198,621 | (1) | ||||||||||||||
Acceleration of Equity Awards | ||||||||||||||||||||
Stock Options and SARs(2) | — | 17,006 | 17,006 | — | 17,006 | |||||||||||||||
Restricted Stock and PRSUs(3) | — | 718,230 | 718,230 | — | 718,230 | |||||||||||||||
Retirement Benefits | ||||||||||||||||||||
Pension Plan(4) | 8,120 | 4,060 | 8,120 | 8,120 | 8,120 | (5) | ||||||||||||||
Supplemental Retirement Plan(6) | — | 825,905 | 74,925 | — | 1,057,307 | (7) | ||||||||||||||
Other Benefits | ||||||||||||||||||||
Health & Welfare | — | — | — | — | 30,300 | (8) | ||||||||||||||
Total | 8,120 | 1,565,201 | 818,281 | 8,120 | 3,029,584 |
(1) | Severance payment payable in lump sum pursuant to the change in control agreement described above. |
(2) | Reflects the excess of the fair market value of the underlying shares as of December 31, |
(3) | Reflects the fair market value as of December 31, |
(4) | Pension Plan benefits shown for all termination scenarios are annual annuities assuming a 50% joint and survivor annuity option and are assumed to be payable |
(5) | Mr. |
(6) | The Supplemental Retirement Plan |
(7) | An immediate lump sum distribution of benefits is required in the event of termination following a change in control. |
(8) | Reflects the cost of 24 months of continued group health coverage pursuant to the change in control agreement described above. In order to comply with Internal Revenue Code section 409A, during the last 6 months of this continued coverage period, the Company will satisfy its obligation to provide group health coverage by making 6 monthly installment payments to the executive in an amount equal to the monthly cost of providing such coverage, based upon the “applicable premium” under COBRA. |
2019 Proxy Statement | 41 |
James R. Neill
Benefit | Retirement ($) | Death ($) | Disability ($) | Termination by Company or Executive Other Than Retirement, Death or Disability ($) | Involuntary Termination Following a Change in Control ($) | |||||||||||||||
Cash Severance | — | — | — | — | 946,517 | (1) | ||||||||||||||
Acceleration of Equity Awards | ||||||||||||||||||||
Stock Options and SARs(2) | — | 10,524 | 10,524 | — | 10,524 | |||||||||||||||
Restricted Stock and PRSUs(3) | — | 316,762 | 316,762 | — | 316,762 | |||||||||||||||
Retirement Benefits | ||||||||||||||||||||
Pension Plan(4) | 8,073 | 4,037 | 8,073 | 8,073 | 8,073 | (5) | ||||||||||||||
Supplemental Retirement Plan(6) | — | 292,445 | 33,215 | — | 474,270 | (7) | ||||||||||||||
Other Benefits | ||||||||||||||||||||
Health & Welfare | — | — | — | — | 27,792 | (8) | ||||||||||||||
Estimated 280G Tax “Cut-Back” to Avoid Excise Tax | — | — | — | — | (417,120 | )(9) | ||||||||||||||
Total | 8,073 | 623,768 | 368,574 | 8,073 | 1,366,818 |
COMPENSATION, NOMINATING AND GOVERNANCE COMMITTEE REPORT
The Compensation, Nominating and Governance Committee of the Board of Directors of Genuine Parts Company oversees the compensation programs of Genuine Parts Company on behalf of the Board. In fulfilling its oversight responsibilities, the Committee reviewed and discussed with management of the Company the Compensation Discussion and Analysis included in this proxy statement.
In reliance on the review and discussions referred to above, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form10-K for the year ended December 31, 20152018 and in this proxy statement, each of which has been filed with the SEC.
Members of the Compensation, Nominating and
Governance Committee:
John D. Johns (Chair)
P. Russell Hardin
John R. Holder
Gary W. Rollins
E. Jenner Wood
This report shall not be deemed to be incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, and shall not otherwise be deemed filed under such acts.
42 | 2019 Proxy Statement |
COMPENSATION, NOMINATING AND GOVERNANCE COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following directors served on the Compensation, Nominating and Governance Committee duringfor all of 2015:2018: John D. Johns, P. Russell Hardin, John R. Holder, Gary W. Rollins and E. Jenner Wood. None of such persons was an officer or employee of the Company during 20152018 or at any time in the past. During 2015,2018, none of the members of the Compensation, Nominating and Governance Committee had any relationship with the Company requiring disclosure under applicable rules of the SEC. None of our executive officers served as a member of the Board of Directors or compensation committee, or similar committee, of any other company whose executive officer(s) served as a member of our Board of Directors or our Compensation, Nominating and Governance Committee.
2019 Proxy Statement | 43 |
20152018 Director Compensation
NAME | Fees Earned or Paid in Cash ($) | Stock Awards ($)(3) | All Other Compensation ($) | Total ($) | ||||||||||||
Mary B. Bullock | 73,500 | 183,500 | 257,000 | |||||||||||||
Elizabeth W. Camp(1) | 31,000 | — | 31,000 | |||||||||||||
Jean Douville | — | — | 98,603 | (4) | 98,603 | |||||||||||
Gary P. Fayard | 73,500 | 183,500 | 257,000 | |||||||||||||
John R. Holder | 72,000 | 183,500 | 255,500 | |||||||||||||
Donna W. Hyland(2) | 11,500 | — | 11,500 | |||||||||||||
John D. Johns | 77,500 | 183,500 | 261,000 | |||||||||||||
Robert C. Loudermilk, Jr. | 73,500 | 183,500 | 257,000 | |||||||||||||
Wendy B. Needham | 78,500 | 183,500 | 262,000 | |||||||||||||
Jerry W. Nix | 66,000 | 183,500 | 249,500 | |||||||||||||
Gary W. Rollins | 88,000 | 183,500 | 271,500 | |||||||||||||
E. Jenner Wood | 76,500 | 183,500 | 260,000 |
Director Fees Earned or Paid in Cash ($) Stock Awards ($)(1) Total ($) Elizabeth W. Camp Gary P. Fayard Thomas C. Gallagher P. Russell Hardin John R. Holder Donna W. Hyland John D. Johns Robert C. Loudermilk, Jr. Wendy B. Needham E. Jenner Wood 82,500 177,360 �� 259,860 82,500 177,360 259,860 378,500 177,360 555,860 80,000 177,360 257,360 80,000 177,360 257,360 82,500 177,360 259,860 117,500 177,360 294,860 82,500 177,360 259,860 102,500 177,360 279,860 91,500 177,360 268,860
(1) |
Represents the aggregate grant date total fair value of stock awards determined in accordance with FASB ASC Topic 718. The awards reflected in this column consist of 2,000 RSUs granted tonon-employee directors on |
The aggregate number of RSUs and SARs held by each director as of December 31, 20152018 was as follows:
Director | Number of SARs | Number of RSUs | ||||||
Mary B. Bullock | 10,740 | |||||||
Elizabeth W. Camp | — | |||||||
Jean Douville | — | |||||||
Gary P. Fayard | 4,110 | |||||||
John R. Holder | 10,725 | |||||||
Donna W. Hyland | — | |||||||
John D. Johns | 10,740 | |||||||
Robert C. Loudermilk, Jr. | 10,725 | |||||||
Wendy B. Needham | 10,740 | |||||||
Jerry W. Nix | 19,000 | 12,070 | ||||||
Gary W. Rollins | 10,740 | |||||||
E. Jenner Wood | 2,029 |
Director | Number of | |||
Elizabeth W. Camp | 6,318 | |||
Gary P. Fayard | 10,830 | |||
Thomas C. Gallagher | 25,471 | |||
P. Russell Hardin | 2,046 | |||
John R. Holder | 10,849 | |||
Donna W. Hyland | 6,318 | |||
John D. Johns | 10,850 | |||
Robert C. Loudermilk, Jr. | 10,849 | |||
Wendy B. Needham | 10,850 | |||
E. Jenner Wood | 8,545 |
Compensation payable to the Company’snon-employee directors is evaluated and determined by the Compensation, Nominating, and Governance Committee and is then approved by the Company’s full Board of Directors. In 2015, 2018,non-employee directors of the Company were paid $15,000 per quarter for service as director, plus $1,500$2,000 per board and committee meeting attended, except that the Chair of the Audit Committee and the Chair of the Compensation, Nominating and Governance Committee were paid $16,250$18,750 per quarter and $1,500$2,000 per board and committee meeting attended, and the Lead Independent Director was paid $17,500$23,750 per quarter and $1,500$2,000 per board and committee meeting attended. Upon the Executive Chairman’s retirement as an employee on June 30, 2017, the Compensation, Nominating, and Governance Committee approved the following compensation for theNon-Executive Chairman: $90,000 per quarter and $2,000 per board and committee meeting attended. The Committeere-evaluated the Chairman’s pay in 2018 and determined that the amount continued to be appropriate for the duties performed by the Chairman.Non-employee directors may elect to defer the receipt of meeting and/or director fees in accordance with the terms of the Company’s Directors’ Deferred Compensation Plan. In addition,non-employee directors may from time to time be granted restricted stock units pursuant to the provisions of the Genuine Parts Company 2015 Incentive Plan. On AprilMay 1, 20152018 eachnon-employee director serving on such date was granted 2,000 RSUs. Each RSU represents a fully vested right to receive one share of our common stock on AprilMay 1, 2020,2023, or earlier upon a termination of service as a director by reason of death, disability or retirement, or upon a change in control of the Company.
Eachnon-employee director is required to own shares of Company common stock valued at three times his or her annual cash retainer for the prior fiscal year measured against the average stock price for the preceding three fiscal years. Directors will have five years from the date of election to the Board to attain such a level of ownership. Shares counted toward this requirement will be based on shares beneficially owned by such director (as defined by the SEC’s rules and regulations) including restricted stock units and director deferred compensation shares, but excluding any unexercised stock options or stock appreciation rights.
44 | 2019 Proxy Statement |
TRANSACTIONS WITH RELATED PERSONS
The Company recognizes that transactions between the Company and any of its directors, executives or other related persons can present potential or actual conflicts of interest and create the appearance that Company decisions are based on considerations other than the best interests of the Company and its shareholders. Therefore, as a general matter and in accordance with the (1) the Code of Conduct and Ethics for Employees, Officers, Contract and/or Temporary Workers and Directors of Genuine Parts Company and (2) the Genuine Parts Company Code of Conduct and Ethics for Senior Financial Officers, it is the Company’s preference to avoid such transactions. Nevertheless, the Company recognizes that there are situations where such transactions may be in, or may not be inconsistent with, the best interests of the Company. Therefore, the Company has adopted a formal policy which requires the Company’s Compensation, Nominating and Governance Committee to review and, if appropriate, to approve or ratify any such transactions. Pursuant to the policy, the Committee will review any transaction in which the Company is or will be a participant and the amount involved exceeds $120,000, and in which any of the Company’s directors, executives or other related persons had, has or will have a direct or indirect material interest. After its review, the Committee will only approve or ratify those transactions that are in, or are not inconsistent with, the best interests of the Company and its shareholders, as the Committee determines in good faith. The policy is attached as Appendix A to the Company’s Corporate Governance Guidelines, which are available on the Company’s website atwww.genpt.com. The Company has concluded that there are no material related person transactions or agreements that were entered into during the fiscal year ended December 31, 2018, and through the date of this proxy statement that would require disclosure under this policy.
Mr. E. Jenner Wood, a Director since August 17, 2014 is Corporate Executive Vice President of SunTrust Banks, Inc. During 2015, the Company continued its long-standing banking relationship with SunTrust, and used the Bank’s services in the general course of business. This banking relationship was reviewed and considered by the Board and the Compensation, Nominating, and Governance Committee in determining the independence of Mr. Wood. The amount of payments made and received by SunTrust and the Company represented an immaterial percentage of the Company’s and SunTrust’s revenues. The Board and Compensation, Nominating, and Governance Committee believe that the relationship during 2015 was non-preferential and that Mr. Wood did not personally participate in or benefit from this relationship.
2019 Proxy Statement | 45 |
ADVISORY VOTE ON EXECUTIVE COMPENSATION
ThePursuant to Section 14A of the Exchange Act (which was added by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, enables2010), we are providing our shareholders with the opportunity to vote to approve, on an advisory(non-binding) basis, the compensation of our named executive officers. At the 20152018 Annual Meeting of Shareholders, approximately 97%94% of the shares present and entitled to vote were voted in support of the Company’s compensation program. We plan to hold this vote annually, so our Board of Directors is again submitting anon-binding shareholder vote on our executive compensation as described in this proxy statement (commonly referred to as “say-on-pay”“say-on-pay”). The Company seeks your advisory vote and asks that you support the compensation of our named executive officers as disclosed in this proxy statement.
As discussed in the Compensation Discussion and Analysis, we have designed our executive compensation program to attract, retain and motivate the highest quality executive officers, directly link pay to our performance, and build value for our shareholders. Highlights of our executive compensation program, as described above in the Compensation Discussion and Analysis, are:
Pay for Performance.Performance. Our pay program is heavily performance-based, using multiple performance measures.
We Target Competitive and Market-Based Pay with Actual Pay Dependent on Performance. We target competitive pay at or under the size-adjusted 50th percentile of the market data, with actual pay dependent on Company and individual performance.
• | Competitive and Market-Based PayBased on Performance. We evaluate the competitiveness of compensation relative to thesize-adjusted 50th percentile of the market data, with actual pay dependent on Company and individual performance. |
Long-Term IncentiveIncentives Aligned with Shareholder Interests. A long-term incentive program that is entirely performance-based and aligned with shareholder interests through a link to stock price.
Stock Ownership Requirements.Our stock ownership requirements for executives align the interests of the executives and shareholders.
No Employment Contracts.No employment contracts with our named executive officers or guaranteed severance except in the case of double-trigger change in control agreements.
No ExciseTax-Gross Ups. Our double-trigger executive change in control agreements do not provide any excise taxgross-ups.
Compensation Clawback.Clawback Provisions. Our Annual Incentive Plan includes aand Long Term Incentive programs include clawback provision.provisions. If at any time after payment of an executive’s annual bonus is paid or after PRSUs are earned, it is determined that it wasthey were calculated or earned based on financial results that subsequently were restated or were otherwise based on incorrect data, the executive may be required to forfeit or repay the applicable amount to the Company.
Few perquisites.
In sum, our compensation is designed to reward executives when the Company achieves strong financial and operational results, and likewise to provide reduced pay when financial and operating results are not as strong. We believe the 20152018 compensation of our named executive officers is reflective of and consistent with that intent.
Thissay-on-pay proposal gives our shareholders the opportunity to express their views on our named executive officers’ compensation. 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, the Board invites you to review carefully the Compensation Discussion and Analysis and the tabular and other disclosures on compensation under “Executive Compensation” and cast a vote to approve the Company’s executive compensation programs through the following resolution:
“Resolved, that the shareholders approve the compensation of the Company’s executive officers, including the Company’s compensation practices and principles and their implementation, as discussed and disclosed in the Compensation Discussion and Analysis, the executive compensation tables, and any narrative compensation disclosure contained in this Proxy Statement.”
46 | 2019 Proxy Statement |
Proposal 2 Advisory Vote on Executive Compensation
Thesay-on-pay vote is advisory, and therefore not binding on the Company, the Compensation, Nominating and Governance Committee or the Board of Directors. The shareholders’ advisory vote will not overrule any decision made by the Board or the Committee or create or imply any additional fiduciary duty by our directors. Our Board and Compensation, Nominating and Governance Committee value the opinions of our shareholders and to the extent there is any significant vote against the named executive officer compensation as disclosed in this Proxy Statement, we will consider our shareholders’ concerns, and the Compensation, Nominating and Governance Committee will evaluate whether any actions are necessary to address those concerns.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” APPROVAL OF PROPOSAL 2.
2019 Proxy Statement | 47 |
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Audit Committee of the Board of Directors is directly responsible for the appointment, compensation, retention, and oversight of the independent external audit firm retained to audit the Company’s financial statements. The Audit Committee has selected Ernst & Young LLP as the Company’s independent auditors for the current fiscal year ending December 31, 2016.2019. Our Board of Directors has unanimously endorsed this selection. Ernst & Young LLP is a registered public accounting firm with the PCAOB, as required by the Sarbanes-Oxley Act of 2002 and the rules of the PCAOB. The Audit Committee has alsopre-approved the engagement of Ernst & Young LLP to provide federal, state and international tax return preparation, advisory and related services to the Company during 2016.2019.
The Audit Committee recognizes the importance of maintaining the independence of the Company’s independent auditor, both in fact and appearance. In order to ensure continuing auditor independence, the Audit Committee periodically considers whether there should be a rotation of the independent auditor. In addition, the Audit Committee has adopted restrictions on our hiring of an Ernst & Young LLP partner, director, manager, staff, advising member of the department of professional practice, reviewing actuary, reviewing tax professional and any other persons having responsibility for providing audit assurance on any aspect of their certification of the Company’s financial statements. In accordance with SEC rules and Ernst & Young LLP’s policies, lead engagement partners are subject to rotation requirements (at least every five years) to limit the number of consecutive years the lead partner may provide services. The Audit Committee is directly involved in the selection of Ernst & Young LLP’s lead engagement partner.
Each year, the Audit Committee evaluates the qualifications, performance and independence of the Company’s independent auditor and determines whether tore-engage the current independent auditor for the following year. In doing so, the Audit Committee considers, among other things: (i) external data relating to audit quality and performance, including recent PCAOB reports on Ernst & Young LLP and its peer firms; (ii) Ernst & Young LLP’s tenure as our independent auditor and its familiarity with our operations and businesses, accounting policies and practices and internal control over financial reporting; (iii) the quality and efficiency of the services provided by the auditors, the auditors’ capabilities and technical expertise; and (iv) Ernst & Young LLP’s independence.
Based on this evaluation, the members of the Audit Committee and the Board believe that the continued retention of Ernst & Young LLP to serve as the Company’s independent external auditor is in the best interest of the Company and its shareholders.
Although ratification by the shareholders of the selection of Ernst & Young LLP as the Company’s independent auditors is not required by law or by the Bylaws of the Company, the Audit Committee believes it is
appropriate to seek shareholder ratification of this selection in light of the critical role played by the independent auditors in auditing the Company’s consolidated financial statements and the effectiveness of the Company’s internal control over financial reporting. If this selection is not ratified at the Annual Meeting, the Audit Committee may investigate the reasons for the shareholders’ rejection and would reconsider its selection of independent auditors for the fiscal year ending December 31, 2016.2019. Even if the selection is ratified, the Audit Committee in its discretion may select a different registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and our shareholders.
Ernst & Young LLP served as the Company’s independent auditors for the fiscal year ended December 31, 2015. The members of the Audit Committee and the Board believe that the continued retention of Ernst & Young LLP to serve as the Company’s independent external auditor is in the best interest of the Company and its investors.2018. Representatives of that firm are expected to be present at the Annual Meeting and will have an opportunity to make a statement if they desire to do so and to respond to appropriate questions.
Audit andNon-Audit Fees
The Audit Committee is responsible for the audit fee negotiations associated with the Company’s retention of Ernst & Young LLP.
Audit Fees. The aggregate fees billed by Ernst & Young LLP for professional services rendered for the audit of the Company’s consolidated financial statements, for 2014 and 2015,audits of the auditor’s report on the effectiveness ofCompany’s internal control over financial reporting, as of December 31, 2014 and 2015statutory audits for certain international subsidiaries during 2017 and for the reviews of2018 were approximately $9.3 million and $13.4 million, respectively. The increase in fees during 2018 is primarily due to audit services related to the Company’s consolidated financial statements includedEuropean operations acquired in the Company’s quarterly reports on Form 10-Q filed with the SEC during 2014 and 2015 were approximately $5.6 million and $5.3 million, respectively.November of 2017.
48 | 2019 Proxy Statement |
Proposal 3 Ratification of Selection of Independent Auditors
Audit Related Fees. The aggregate fees billed by Ernst & Young LLP in 2017 and 2018 for 2014 and 2015 for assurance andaudit related services that are reasonably related to the performance of the audit or review of the Company’s financialstatementsfinancial statements and are not reported above under the caption “Audit Fees” were approximately $80,000$4.1 million and $36,000,$3.7 million respectively. These services primarily related to the Company’s benefit planscarve-out, due diligence and accounting consultations.other transaction-related services.
Tax Fees. The aggregate fees billed by Ernst & Young LLP for 2014in 2017 and 20152018 for professional services rendered for tax compliance and tax advice for the Company were $3.5$4.9 million and $3.1$5.9 million, respectively. The increase primarily relates to tax compliance for the Company’s European operations as well as U.S. tax reform.
All Other Fees. No fees were billed by Ernst & Young LLP for professional services rendered during 20142017 and 20152018 other than as stated above under the captions “Audit Fees,” “Audit Related Fees” and “Tax Fees.”
Audit CommitteePre-Approval Policy
Under the Audit Committee’s Charter and itsPre-Approval Policy, the Audit Committee is required to approve in advance the terms of all audit services as well as all permissible audit related andnon-audit services to be provided by the independent auditors. Unless a service to be provided by the independent auditors has received approval under thePre-Approval Policy, it will require specificpre-approval by the Audit Committee. ThePre-Approval Policy is detailed as to the particular services to be provided, and the Audit Committee is to be informed about each service provided.Non-audit services may be approved by the Chair of the Committee and reported to the full Audit Committee at its next meeting but may not be approved by the Company’s management.
The Audit Committee must approve the annual audit engagement services prior to the commencement of any audit work. The Audit Committee also must approve changes in terms, conditions and fees resulting from changes in audit scope, Company structure or other items, if any. In the event audit related ornon-audit services that arepre-approved under thePre-Approval Policy have an estimated cost in excess of certain dollar thresholds, these services require approval by the Audit Committee or by the Chair of the Audit Committee.
In determining the approval of services by the independent auditors, the Audit Committee or its Chair evaluates each service to determine whether the performance of such service would (a) impair the auditor’s independence; (b) create a mutual or conflicting interest between the auditor and the Company; (c) place the auditor in the position of auditing its own work; (d) result in the auditor acting as management or an employee of the Company; or (e) place the auditor in a position of being an advocate for the Company.
All of the services described above under the captions “Audit Fees,” “Audit Related Fees” and “Tax Fees” were approved by the Audit Committee pursuant to legal requirements and the Audit Committee Charter and thePre-Approval Policy.
Audit Committee Review
The Audit Committee has reviewed the services rendered by Ernst & Young LLP during 20152018 and has determined that the services rendered are compatible with maintaining the independence of Ernst & Young LLP as the Company’s independent auditors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2016.2019.
2019 Proxy Statement | 49 |
The Audit Committee of the Board of Directors is comprised of sevensix directors who are independent of the Company and management as required by the NYSE corporate governance listing standards and by SEC rules. The Audit Committee operates under a written charter adopted by the Board of Directors.
The Audit Committee oversees the Company’s financial reporting process on behalf of the Board of Directors. Management is responsible for the Company’s financial statements and the financial reporting process, including implementing and maintaining effective internal control over financial reporting and for the assessment of, and reporting on, the effectiveness of internal control over financial reporting. The independent auditors are responsible for expressing an opinion on the conformity of those audited financial statements with accounting principles generally accepted in the United States and the effectiveness of the Company’s internal control over financial reporting. The Audit Committee also oversees the Company’s cyber and information security processes, procedures and controls.
In fulfilling its oversight responsibilities, the Audit Committee has reviewed and discussed with management and the independent auditors the Company’s audited financial statements for the year ended December 31, 20152018 and reports of management and of the independent auditors on the effectiveness of the Company’s internal control over financial reporting as of December 31, 20152018 contained in the Company’s Annual Report on Form10-K for the year ended December 31, 2015,2018, including a discussion of the reasonableness of significant judgments and the clarity of disclosures in the financial statements. The Audit Committee also reviewed and discussed with management and the independent auditors the disclosures made in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s 20152018 Annual Report to Shareholders and its Annual Report on Form10-K for the year ended December 31, 2015.2018.
The Audit Committee has discussed with the independent auditors the matters required to be discussed by Public Company Accounting Oversight Board Auditing Standard No. 16, Communications with Audit Committees. In addition, the Audit Committee has discussed with the independent auditors the auditor’s independence from the Company and its management, including the matters in the written disclosures and the letter provided by the independent auditors to the Audit Committee as required by applicable requirements of the Public Company Accounting Oversight Board Rule 3526 regarding the independent auditor’s communications with the Audit Committee concerning independence, and has considered the compatibility ofnon-audit services with the auditor’s independence.
The Committee discussed with the Company’s independent auditors the overall scope and plans for their integrated audit. The Committee meets with the independent auditors, with and without management present, to discuss the results of their examinations, their evaluations of the Company’s internal controls and the overall quality of the Company’s financial reporting.
Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors, and the Board has approved, that the audited financial statements for the year ended December 31, 20152018 be included in the Company’s Annual Report on Form10-K for the year ended December 31, 20152018 for filing with the SEC. The Audit Committee and the Board of Directors have also approved the selection of Ernst & Young LLP as the Company’s independent auditors for the fiscal year ending December 31, 2016.2019.
Members of the Audit Committee:
Wendy B. Needham (Chair)
Mary B. Bullock
Elizabeth W. Camp
Gary P. Fayard
Donna W. Hyland
Robert C. Loudermilk, Jr.
E. Jenner Wood
This report shall not be deemed to be incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, and shall not otherwise be deemed filed under such acts.
50 | 2019 Proxy Statement |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s directors and executive officers and persons who own more than ten percent of the Company’s Common Stock to file with the SEC initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Directors, executive officers and greater than ten percent shareholders are required by SEC regulation to furnish the Company copies of all Section 16(a) reports they file. To the Company’s knowledge, based solely on a review of the copies of such reports furnished to the Company and written representations that no other reports were required, during 2015,2018, all Section 16(a) filing requirements applicable to directors, executive officers and greater than ten percent beneficial owners were complied with on a timely basis by such persons.
The cost of soliciting proxies will be borne by the Company. The Company has retained Georgeson ShareholderLLC to assist in the solicitation of proxies for a fee of approximately $9,000 and reimbursement of certain expenses. Officers and regular employees of the Company, receiving no additional compensation, may also assist in the solicitation. Solicitation may be by mail, telephone, Internet or personal contact.
HOUSEHOLDING OF ANNUAL MEETING MATERIALS
The SEC’s rules permit us, with your permission, to send a single set of proxy statements and annual reports to any household at which two or more shareholders reside if we believe that they are members of the same family. Each shareholder will continue to receive a separate proxy card. This procedure, known as householding, reduces the volume of duplicate information you receive and helps to reduce our expenses. In order to take advantage of this opportunity, we have delivered only one proxy statement and annual report to multiple shareholders who share an address, unless we received contrary instructions from the affected shareholders prior to the mailing date. We will deliver a separate copy of the proxy statement or annual report, as requested, to any shareholder at a shared address to which a single copy of those documents was delivered. If you prefer to receive separate copies of a proxy statement or annual report, either now or in the future, or if you are currently receiving multiple copies and prefer to receive only a single copy in the future you can so request by calling us at (770) 953-1700(678)934-5000 or by writing to us at any time at the following address: Investor Relations, Genuine Parts Company, 2999 Circle 75Wildwood Parkway, Atlanta, Georgia 30339.
A majority of brokerage firms have instituted householding. If your family has multiple holdings in the Company, you may have received householding notification directly from your broker. Please contact your broker directly if you have any questions, if you require additional copies of the proxy statement or annual report, if you are currently receiving multiple copies of the proxy statement and annual report and wish to receive only a single copy or if you wish to revoke your decision to household and thereby receive multiple statements and reports. These options are available to you at any time.
2019 Proxy Statement | 51 |
Management does not know of any matters to be brought before the Annual Meeting other than those referred to above. If any matters which are not specifically set forth in the form of proxy and this proxy statement properly come before the Annual Meeting, the persons designated as proxies will vote thereon as recommended by the Board of Directors or, if the Board of Directors makes no recommendation, in accordance with their best judgment.
SHAREHOLDER PROPOSALS FOR 20172020 ANNUAL MEETING
A shareholder proposal for business to be brought before the 20172020 Annual Meeting of Shareholders (other than nominations of persons to serve as directors) will be acted upon only in the following circumstances:
Shareholder Proposals for Inclusion in Next Year’s Proxy Statement — To be considered for inclusion in next year’s proxy statement, shareholder proposals, submitted in accordance with the SEC’s Rule14a-8, must be received at our principal executive office no later than the close of business on November 6, 2019 and must comply with all applicable SEC rules.
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Other Shareholder Proposals for Presentation at Next Year’s Annual Meeting of Shareholders — Any shareholder proposal that is not submitted for inclusion in next year’s proxy statement under SEC Rule14a-8 but is instead sought to be presented directly at the 20172020 Annual Meeting of Shareholders should be received at our principal executive officesoffice no later than the close of business on January 12, 2017.20, 2020. Proposals should contain detailed information about the proposal and the shareholder proponent. SEC rules permit management to vote proxies in its discretion on such proposals in certain cases if the shareholder does not comply with this deadline, and in certain other cases notwithstanding the shareholder’s compliance with this deadline.
All recommendations of persons for nomination to the Board of Directors of the Company must be received at our principal executive officesoffice no later than the close of business on the 90th day (November 28, 2016)(December 6, 2019) and no earlier than the close of business on the 120th day (October 29, 2016)(November 6, 2019) prior to the first anniversary of the date of the Company’s notice of annual meeting sent to shareholders in connection with the previous year’s annual meeting and must contain the information specified in and otherwise comply with ourBy-laws. See Section 3.4 “Certain Nomination Requirements.” However, if the date of the 20172020 Annual Meeting of Shareholders is held more than 30 calendar days earlier than or 70 calendar days after the anniversary of this year’s meeting, notice by the shareholder, to be timely, must be received no later than the close of business on the 90th day and no earlier than the close of business on the 120th day prior to the date of the 20172020 Annual Meeting of Shareholders or, if the first public announcement of the date of the 20172020 Annual Meeting of Shareholders is less than 100 days prior to the date of the 20172020 Annual Meeting of Shareholders, the 10th day following the day on which public announcement of the date of the 20172020 Annual Meeting of Shareholders is first made by the Company.
All recommendations of persons for nomination to the Board of Directors of the Company pursuant to the Company’s proxy accessBy-law provision must be received at our principal executive office no later than the close of business on the 120th day (November 6, 2019) and no earlier than the close of business on the 150th day (October 7, 2019) prior to the first anniversary of the date of the Company’s notice of annual meeting sent to shareholders in connection with the previous year’s annual meeting and must contain the information specified in and otherwise comply with ourBy-laws. See Section 2.10 “Proxy Access for Director Nominations.” However, if the date of the 2020 Annual Meeting of Shareholders is held more than 30 calendar days before or after the anniversary of this year’s meeting, notice by the shareholder, to be timely, must be received no later than the close of business on the 120th day and no earlier than the close of business on the 150th day prior to the date of the 2020 Annual Meeting of Shareholders or, if the first public announcement of the date of the 2020 Annual Meeting of Shareholders is less than 130 days prior to the date of the 2020 Annual Meeting of Shareholders, the 10th day following the day on which public announcement of the date of the 2020 Annual Meeting of Shareholders is first made by the Company.
All shareholder proposals and recommendations of persons for nomination to the Board should be sent to Genuine Parts Company, 2999 Circle 75Wildwood Parkway, Atlanta, Georgia 30339, Attention: Corporate Secretary.
52 | 2019 Proxy Statement |
Electronic Voting Instructions | ||||||||||
Available 24 hours a day, 7 days a week! | ||||||||||
Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy. | ||||||||||
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. | ||||||||||
Proxies submitted by the Internet or telephone must be received by 1:00 a.m., Eastern Time, on April | ||||||||||
Vote by Internet | ||||||||||
• Go towww.investorvote.com/GPC | ||||||||||
• Or scan the QR code with your smartphone | ||||||||||
• Follow the steps outlined on the secure website | ||||||||||
Vote by telephone | ||||||||||
• Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch tone telephone | ||||||||||
• Follow the instructions provided by the recorded message | ||||||||||
Using ablack ink pen, mark your votes with anX as shown in this example. Please do not write outside the designated areas. |
q IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
A | Proposals — | The Board of Directors recommends a vote Proposal 3. | ||
1. Election of Directors: | For | Withhold | For | Withhold | For | Withhold | + | ||||||||||||
01 - | |||||||||||||||||||
05 - P. Russell Hardin | ☐ | ☐ | 06 - John R. Holder | ||||||||||||||||
07 - Donna W. Hyland | 08 - John D. Johns | 09 - Robert C. “Robin” Loudermilk, Jr. | |||||||||||||||||
10 - Wendy B. Needham | 11 - | ||||||||||||||||||
☐ |
For | Against | Abstain | For | Against | Abstain | |||||||||||||||||||
2. Advisory vote on executive compensation. | ☐ | ☐ | 3. Ratification of the selection of Ernst & Young LLP as the Company’s independent | ☐ |
B |
Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below |
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. |
Date (mm/dd/yyyy) — Please print date below. | Signature 1 — Please keep signature within the box. | Signature 2 — Please keep signature within the box. |
/ / |
02Z13A |
q IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
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Proxy — Genuine Parts Company
Proxy Solicited by the Board of Directors of Genuine Parts Company for the
Annual Meeting of Shareholders to be held April 25, 201622, 2019
The undersigned hereby appoints THOMAS C. GALLAGHERPAUL D. DONAHUE and CAROL B. YANCEY, or either of them, with the individual power of substitution, proxies to vote all shares of Common Stock of Genuine Parts Company that the undersigned may be entitled to vote at the Annual Meeting of Shareholders to be held in Atlanta, Georgia on April 25, 201622, 2019 and at any reconvened Meeting following any adjournment thereof. Said proxies will vote on the proposals set forth in the Notice of Annual Meeting and Proxy Statement as specified on this card, and are authorized to vote in their discretion as to any other matters that may properly come before the meeting.
Your shares will be voted in accordance with your instructions.IF A VOTE IS NOT SPECIFIED, THE PROXIES WILL VOTE “FOR” PROPOSALS 1, 2 AND 3.
YOUR VOTE IS IMPORTANT
Please vote, sign, date and return the proxy card promptly using the enclosed envelope.
C | Non-Voting Items |
Change of Address — Please print your new address below. | Comments — Please print your comments below. |
Meeting Attendance Mark the box to the right | ☐ | |||||||||
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