DEF 14A of Advance Auto Parts Inc, Apr 7, 2023

DEF 14A of Advance Auto Parts Inc

Filed Apr 7, 2023 · FY20220001158449-23-000107

Open on EDGAR

  1. Director Nominees

    Director Nominees

  2. Director Nominees

    | | Name and Age | Director Since | Occupation | Current Committees | Other Current Public Company Boards | | | Carla J. Bailo, 62 Independent | 2020 | President and Chief Executive Officer of ECOS Consulting, LLC and Former President and Chief Executive Officer of The Center for Automotive Research | Nominating & Corporate Governance Audit | SM Energy Company Vesuvius plc | | | John F. Ferraro, 67 Independent | 2015 | Former Global Chief Operating Officer, Ernst & Young | Audit (Chair) | International Flavors & Fragrances Inc. ManpowerGroup, Inc. | | | Thomas R. Greco, 64 | 2016 | President and Chief Executive Officer, Advance Auto Parts, Inc. | | Tapestry, Inc. | | | Joan M. Hilson, 63 Independent | 2022 | Chief Financial & Strategy Officer, Signet Jewelers Ltd. | Audit | | | | Jeffrey J. Jones II, 55 Independent | 2019 | President, Chief Executive Officer, H&R Block, Inc. | Compensation (Chair) Nominating & Corporate Governance | H&R Block, Inc. | | | Eugene I. Lee, Jr., 61 Independent Chair of the Board | 2015 | Chairman and Former Chief Executive Officer, Darden Restaurants, Inc. | | Darden Restaurants, Inc. | | | Douglas A. Pertz, 68 Independent | 2018 | Executive Chairman, The Brink's Company | Nominating & Corporate Governance Compensation | The Brink's Company | | | Sherice R. Torres, 49 Independent | 2021 | Chief Marketing Officer, Circle Internet Financial, LLC | Compensation | | | | Arthur L. Valdez Jr., 52 Independent | 2020 | Former Executive Vice President, Chief Supply Chain & Logistics Officer, Target Corporation | Audit | |

  3. Director Nominees

    The current chair of the Nominating and Corporate Governance Committee is not standing for re-election to the Board. Following the Annual Meeting, an independent director will be appointed to serve as Chair of the Nominating and Corporate Governance Committee.

  4. Election of Directors

    Election of Directors At the 2023 annual meeting of stockholders (the "Annual Meeting"), you will vote to elect as directors the nine nominees listed below to serve until our 2024 annual meeting of stockholders or until their respective successors are elected and qualified. Our Board has nominated Carla J. Bailo, John F. Ferraro, Thomas R. Greco, Joan M. Hilson, Jeffrey J. Jones II, Eugene I. Lee, Jr., Douglas A. Pertz, Sherice R. Torres and Arthur L. Valdez Jr. for election as directors. Nigel Travis, who is a current director on the Board, will not stand for re-election at the Annual Meeting. He will serve out the remainder of his current Board term that expires at the Annual Meeting. All of the nominees are current members of our Board. Each nominee has consented to being named in this Proxy Statement as a nominee and has agreed to serve as a director if elected. None of the nominees to our Board has any family relationship with any other nominee or with any of our executive officers. The Board does not have any vacancies. The persons named as proxies in the accompanying form of proxy have advised us that at the Annual Meeting, unless otherwise directed, they intend to vote the shares covered by the proxies FOR the election of the nominees named above. If one or more of the nominees are unable to serve, or will not serve, the persons named as proxies may vote for the election of any substitute nominees that our Board may propose. The persons named as proxies may not vote for a greater number of persons than the number of nominees named above. Our by-laws provide that a nominee for director in an uncontested election must receive a majority of the votes cast at the Annual Meeting for the election of that director in order to be elected. If a nominee for director who is an incumbent director is not elected and no successor has been elected at the Annual Meeting, the director is expected to tender his or her resignation from the Board contingent on acceptance of such resignation by the Board.

  5. Nominees for Election to Our Board

    Nominees for Election to Our Board The following information is provided about our nominees for director effective as of the record date, March 30, 2023 (the "Record Date").

  6. Former Global Chief Operating Officer, Ernst & Young

    Former Global Chief Operating Officer, Ernst & Young

  7. Former Global Chief Operating Officer, Ernst & Young

    | Age: 67 Director Since: February 2015 Committee: Audit (Chair) Other Current Public Company Boards: International Flavors & Fragrances Inc. ManpowerGroup Inc. | Key Experience and Skills Mr. Ferraro has extensive financial, corporate management, governance and public policy experience which enables him to assist the Board in identifying trends and developments that affect public companies. In addition, the Board benefits from his experience in the areas of marketing and the development of corporate strategy. He has been designated by the Board as an audit committee financial expert consistent with SEC regulations. Professional Experience Mr. Ferraro served as our independent Lead Director from November 2015 to May 2016. Mr. Ferraro founded RP Intellectual Partners LLC, a successor to a part of Alpha Alpha Intellectual Partners LLC, in November 2022. He also served as Executive Vice President, Strategy and Sales of Aquilon Energy Services, a software and services company for the energy industry from February 2019 to July 2019. He served as Global Chief Operating Officer ("COO") of Ernst & Young ("EY"), a leading professional services firm, from 2007 to December 2014 and retired as a partner of EY at the end of January 2015. In addition, Mr. Ferraro served as a member of EY’s Global Executive Board for more than 10 years. Mr. Ferraro joined EY in 1976 and prior to his COO role he served in several senior leadership positions at EY, including Global Vice Chair Audit. Mr. Ferraro practiced as a Certified Public Accountant for 35 years. Mr. Ferraro has served as a director for ManpowerGroup Inc., a provider of workforce solutions, since January 2016, and for International Flavors & Fragrances Inc., a manufacturer of flavors and fragrances, since May 2015. |

  8. THOMAS R. GRECO

    THOMAS R. GRECO President and Chief Executive Officer, Advance Auto Parts, Inc.

  9. THOMAS R. GRECO

    | Age: 64 Director Since: April 2016 Committee: None Other Current Public Company Boards: Tapestry, Inc. | Key Experience and Skills Mr. Greco has served as our President and Chief Executive Officer and a member of our Board since 2016. Previously, Mr. Greco was the Chief Executive Officer of Frito-Lay North America, where he worked to grow revenue and increase profits, providing him with important experience in the consumer retail industry. Mr. Greco brings to the Board significant experience and leadership in the areas of corporate strategy, marketing, supply chain and logistics. Professional Experience Mr. Greco became our President and Chief Executive Officer in August 2016, having served as Chief Executive Officer since April 2016. From September 2014 until April 2016, Mr. Greco served as Chief Executive Officer, Frito-Lay North America, a unit of PepsiCo, Inc. (“PepsiCo”), a leading global food and beverage company. As Chief Executive Officer, Frito-Lay North America, Mr. Greco was responsible for overseeing PepsiCo’s snack and convenient foods business in the U.S. and Canada. Mr. Greco previously served as Executive Vice President, PepsiCo and President, Frito-Lay North America from September 2011 until September 2014 and as Executive Vice President and Chief Commercial Officer for Pepsi Beverages Company from 2009 to September 2011. Mr. Greco joined PepsiCo in Canada in 1986 and served in a variety of leadership positions, including Region Vice President, Midwest; President, Frito-Lay Canada; Senior Vice President, Sales, Frito-Lay North America; President, Global Sales, PepsiCo; and Executive Vice President, Sales, North America Beverages. Before joining PepsiCo, Mr. Greco worked at The Proctor & Gamble Company, a consumer packaged goods company. He has served as a director of Tapestry, Inc., an American multinational luxury fashion holding company, since December 2020. |

  10. JOAN M. HILSON Independent

    JOAN M. HILSON Independent Chief Financial & Strategy Officer, Signet Jewelers Ltd.

  11. JOAN M. HILSON Independent

    | Age: 63 Director Since: March 2022 Committees: Audit Other Current Public Company Boards: None | Key Experience and Skills Ms. Hilson brings more than 35 years of finance experience and deep specialty retail experience to our Board. In her role as Chief Financial & Strategy Officer of Signet Jewelers, she has strong experience with leading transformation on a strategy intended to drive profitable growth through innovation, capital management, real estate optimization and expansion of market share, which brings valuable perspective to our Board. Professional Experience Ms. Hilson has served as Chief Financial & Strategy Officer of Signet Jewelers, Ltd., the world's largest retailer of diamond jewelry, since March 2021, and she has served as Signet's Chief Financial Officer since April 2019. Prior to joining Signet, Ms. Hilson served as Chief Financial Officer of David’s Bridal Inc., a large specialty clothing retailer from 2014 to 2019; Executive Vice President and Chief Financial Officer and other executive financial leadership roles at American Eagle Outfitters, Inc., a lifestyle, clothing and accessories retailer from 2005 to 2012; and in several financial reporting, financial planning and merchandise planning positions at Limited Brands, Inc., a specialty retailer, including as Executive Vice President and Chief Financial Officer for Victoria’s Secret Stores division. Ms. Hilson served as the Controller of Sterling Jewelers (now Signet Jewelers) from 1985 to 1992. She began her career as an auditor at Coopers & Lybrand LLP, one of the oldest professional financial and consulting services firms in the United States (which subsequently merged with PricewaterhouseCoopers). |

  12. JEFFREY J. JONES II Independent

    JEFFREY J. JONES II Independent President and Chief Executive Officer, H&R Block, Inc.

  13. JEFFREY J. JONES II Independent

    | Age: 55 Director Since: February 2019 Committees: Compensation (Chair); Nominating and Corporate Governance Other Current Public Company Boards: H&R Block, Inc. | Key Experience and Skills Mr. Jones brings to the Board nearly 30 years of executive management, innovative leadership and operational excellence experience while holding key roles with top companies in the retail, consumer products, agency and technology industries, where he has had substantial experience with launching initiatives to drive traffic, brand affinity and loyalty. His position as a director of another public company also enables him to share with the Board his experience with governance issues facing public companies. Professional Experience Mr. Jones is currently President and Chief Executive Officer of H&R Block, Inc., a global consumer tax services provider, a position he has held since October 2017. Prior to October 2017, Mr. Jones served as H&R Block’s President and Chief Executive Officer-Designate beginning in August 2017. Previously, Mr. Jones served as President, Ride Sharing at Uber Technologies Inc., an on-demand car service company, from September 2016 until March 2017 and Executive Vice President and Chief Marketing Officer at Target Corporation, a retail sales company, from April 2012 to September 2016. Prior to his time at Target Corporation, Mr. Jones held various executive and leadership roles related to sales, agency and marketing with iconic brands such as The Coca-Cola Company and The Gap, Inc. He has served as a director of H&R Block, Inc. since 2017. |

  14. EUGENE I. LEE, JR. Independent (Chair of the Board)

    EUGENE I. LEE, JR. Independent (Chair of the Board) Chairman and Former Chief Executive Officer, Darden Restaurants, Inc.

  15. EUGENE I. LEE, JR. Independent (Chair of the Board)

    | Age: 61 Director Since: November 2015 Committee: None Other Current Public Company Boards: Darden Restaurants, Inc. | Key Experience and Skills Mr. Lee’s experience as the Chief Executive Officer of a national group of chain restaurants provides him with strong insights into customer service and the types of management issues that face companies with large numbers of employees in numerous locations throughout the country. In addition, he brings experience in marketing, real estate, strategic planning and change management. Professional Experience Mr. Lee currently serves as the Chairman, and from January 2021 through May 2022, served as the Chief Executive Officer, of Darden Restaurants, Inc. ("Darden"), the owner and operator of Olive Garden, LongHorn Steakhouse, Bahama Breeze, Cheddar's Scratch Kitchen, Seasons 52, The Capital Grille, Eddie V’s and Yard House restaurants in North America. Previously, Mr. Lee served as Darden’s President and Chief Executive Officer from February 2015 to January 2021, President and Interim Chief Executive Officer from October 2014 to February 2015, and President and Chief Operating Officer from September 2013 to October 2014. He served as President of Darden’s Specialty Restaurant Group from October 2007 to September 2013 following Darden’s acquisition of RARE Hospitality International, Inc., where he had served as President and a member of the Board of Directors since 2001. Mr. Lee has served as a member of the Darden Board of Directors since February 2015. |

  16. DOUGLAS A. PERTZ Independent

    DOUGLAS A. PERTZ Independent

  17. Executive Chairman, The Brink's Company

    Executive Chairman, The Brink's Company

  18. Executive Chairman, The Brink's Company

    | Age: 68 Director Since: May 2018 Committee: Compensation; Nominating and Corporate Governance Other Current Public Company Boards: The Brink's Company | Key Experience and Skills Mr. Pertz has led several global companies as Chief Executive Officer over the past 20 years and throughout his career has guided multinational organizations through both operational turnaround and growth acceleration. Mr. Pertz’s leadership positions have honed his operational expertise in branch and route-based logistics, business-to-business services, channel and brand marketing and growth through acquisition. Professional Experience Mr. Pertz is the Executive Chairman of The Brink’s Company (“Brink’s”), the world’s largest cash management company including cash-in-transit, ATM services, international transportation of valuables, cash management and payment services, since May 2022. Previously, Mr. Pertz served as President and Chief Executive Officer of Brink’s from June 2016 through May 2022. Prior to joining Brink’s, Mr. Pertz was the President and Chief Executive Officer of Recall Holdings Limited (“Recall”), a global provider of digital and physical information management and security services, from 2013 to 2016. Prior to joining Recall, Mr. Pertz served as a partner with Bolder Capital, LLC, a private equity firm specializing in acquisitions and investments in middle market companies and as a partner with One Equity Partners, the private equity arm of JPMorgan Chase & Co. He also served as Chief Executive Officer and on the Board of Directors of IMC Global, the predecessor company to The Mosaic Company, Culligan Water Technologies and Clipper Windpower, and as a Group Executive and Corporate Vice President at Danaher Corporation. Mr. Pertz has served as a member of Brink’s Board of Directors since June 2016 and in the past has served on the board of directors of numerous other public companies, including Recall, Nalco Holdings, The Mosaic Company and Bowater. |

  19. SHERICE R. TORRES Independent

    SHERICE R. TORRES Independent

  20. Chief Marketing Officer, Circle Internet Financial, LLC

    Chief Marketing Officer, Circle Internet Financial, LLC

  21. Chief Marketing Officer, Circle Internet Financial, LLC

    | Age: 49 Director Since: September 2021 Committee: Compensation Other Current Public Company Boards: None | Key Experience and Skills Ms. Torres has nearly 25 years of executive management experience with top companies in marketing, brand management, strategic planning and social responsibility. This deep experience in digital marketing is complemented by her experience with and commitment to enhancing diversity, equity and inclusion. Professional Ms. Torres has served as the Chief Marketing Officer of Circle Internet Financial, LLC, a global internet finance firm since January 2022. From November 2020 until January 2022, she served as Chief Marketing Officer of Novi, a division of Meta (formerly known as Facebook), a leading technology company, where she led all aspects of global marketing across Facebook's payment products. From August 2014 to May 2020, Ms. Torres served as Global Marketing Director for Google, Inc., a leading technology company, and from May 2020 to October 2020, she served as Global Inclusion Director for Google. Prior to 2014, Ms. Torres served in a variety of leadership roles at Viacom (now Paramount), a media and entertainment company, across consumer products, strategic planning and digital. She began her career in the change management consulting practice of Deloitte Touche Tohmatsu Limited, a multinational professional services provider. Ms. Torres also served on the board of directors of LogicMark, LLC, a seller of medical alert devices, from February 2022 to March 2023. |

  22. ARTHUR L. VALDEZ JR. Independent

    ARTHUR L. VALDEZ JR. Independent

  23. Former Executive Vice President, Chief Supply Chain & Logistics Officer, Target Corporation

    Former Executive Vice President, Chief Supply Chain & Logistics Officer, Target Corporation

  24. Former Executive Vice President, Chief Supply Chain & Logistics Officer, Target Corporation

    | Age: 52 Director Since: August 2020 Committee: Audit Other Current Public Company Boards: None | Key Experience and Skills Mr. Valdez's executive experience provides the Board with valuable insights in a key component of the Company's continued transformation. In particular, Mr. Valdez's deep experience with supply chain throughout its growth at Amazon and his leadership of global supply chain and logistics for Target provide highly relevant subject matter expertise. Additionally, the Board believes that Mr. Valdez brings important diversity of thought and experience to the Board that is particularly relevant to retailers serving a broad array of consumers. Professional Experience Mr. Valdez served as Executive Vice President, Chief Supply Chain & Logistics Officer of Target Corporation, a retail corporation, from March 2016 to September 2022, where he led all functions of Target’s global supply chain and logistics network. He currently serves as a consultant for Target Corporation. Mr. Valdez has spent his career building supply chain and fulfillment networks across Asia, Europe and North and South America. Prior to his time at Target Corporation, Mr. Valdez spent 17 years in a variety of leadership roles with Amazon.com Inc., an online retailer, including Vice President, Operations, International Expansion, Vice President, Worldwide Transportation, and Vice President, Operations, Amazon.co.uk Ltd. |

  25. Former Executive Vice President, Chief Supply Chain & Logistics Officer, Target Corporation

    | THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF OUR BOARD NOMINEES. |

  26. Director Compensation

    Director Compensation Under our director compensation program, each non-management director receives annual compensation consisting of a combination of cash and equity based compensation. Management directors do not receive any additional compensation for services as a director. Each non-management director receives an annual retainer of $100,000 and additional applicable retainers or fees as set forth in the following paragraph. Directors who chair Board committees receive additional retainer amounts annually for their committee chair responsibilities. The Audit Committee Chair receives $25,000, the Compensation Committee Chair receives $20,000 and the Nominating and Corporate Governance Chair receives $15,000. The independent Board Chair (or the independent Lead Director in the event the Board Chair is not independent) receives an additional $200,000 annual retainer. Members of the recently formed Succession Committee will receive $5,000 per month of service ($10,000 for the Chair). Each non-management director may elect to defer or receive all or a portion of his or her retainer amounts in the form of deferred stock units, or DSUs. Each DSU is equivalent to one share of our common stock. Dividends paid by us are credited toward the purchase of additional DSUs and are distributed together with the underlying DSUs. DSUs are payable in the form of common stock to participating directors over a specified period of time as elected by the participating director, or whenever their service with the Company ends, whichever is sooner. In addition, each non-management director receives equity compensation valued at $165,000 per year as of the date of grant. The equity compensation is awarded annually in the form of DSUs, granted to directors shortly after the date of the annual stockholder meeting, and will be distributed in common shares after the director’s service with the Company ends. Board members who are appointed at any time other than at the annual meeting receive a prorated DSU award with a grant value based upon the number of months from their election date until the next annual stockholder meeting. The annual grant of DSUs may vest pro-rata based upon the number of months the director has served during the current term in the event that a director's service as a member of the Board ends before May 1 of the calendar year following the Company's most recent annual meeting. On May 30, 2022, each non-management director serving at the time, other than Ms. Hilson, received 855 DSUs valued at $165,000 on the date of grant. Ms. Hilson received 989 DSUs, representing the $165,000 annual grant for the 2022-2023 Board term plus the pro-rated portion of equity compensation for the 2021-2022 Board term from her joining the Board in March 2022. 2022 Director Summary Compensation Information provided in the following table reflects the compensation delivered to our non-management directors for 2022:

  27. Director Compensation

    | Name | Fees Earned or Paid in Cash(a) | Stock Awards(b) | Total | | Carla J. Bailo | $100,000 | $165,000 | $265,000 | | John F. Ferraro | 125,000 | 165,000 | 290,000 | | Joan M. Hilson | 115,833 | 190,833 | 306,667 | | Jeffrey J. Jones II | 120,000 | 165,000 | 285,000 | | Eugene I. Lee, Jr. | 300,000 | 165,000 | 465,000 | | Douglas A. Pertz | 100,000 | 165,000 | 265,000 | | Nigel Travis | 115,000 | 165,000 | 280,000 | | Sherice R. Torres | 100,000 | 165,000 | 265,000 | | Arthur L. Valdez Jr. | 100,000 | 165,000 | 265,000 |

  28. Director Compensation

    (a)Includes earned or deferred board and chair retainers for 2022. Ms. Hilson joined the Board in March 2022 and earned a pro-rata portion of the compensation for the 2021 - 2022 Board term, as well as compensation for the Board term commencing May 2022. (b)Represents the grant date fair value of DSUs granted during 2022. The grant date fair value is calculated in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification Topic 718 ("ASC Topic 718") based on the closing price of the Company’s stock on the date of grant. For additional information regarding the valuation assumptions of these awards, refer to Note 15 of the Company’s consolidated financial statements in the 2022 Form 10-K filed with the SEC on February 28, 2023. These amounts reflect the aggregate grant date fair value. Ms. Hilson received a pro-rated equity grant for service during the 2021 - 2022 Board term based on the number of months of service, as well as receiving the equity grant for the Board term commencing May 2022. Directors’ Outstanding Equity Awards at 2022 Fiscal-Year End The following table provides information about the equity awards outstanding as of the end of our last fiscal year for our non-management directors who served during fiscal 2022.

  29. Director Compensation

    | Name | Outstanding Deferred Stock Units (#) | | Carla J. Bailo | 2,902 | | John F. Ferraro | 12,182 | | Joan M. Hilson | 1,007 | | Jeffrey J. Jones II | 4,917 | | Eugene I. Lee, Jr | 15,160 | | Douglas A. Pertz | 6,573 | | Sherice R. Torres | 1,329 | | Nigel Travis | 5,982 | | Arthur L. Valdez Jr. | 2,502 |

  30. Overview of Executive Compensation Program

    | Element | 2022 Payout (% of target) | | Base Pay | n/a (fixed) | | STI | 38% | | LTI | 123% |

  31. 2022 Performance and Incentive Plan Outcomes

    2022 Performance and Incentive Plan Outcomes STI: 2022 presented many challenges to the retail operating environment and our business. Most notably, record inflation that pressured many of our customers, competitive market dynamics and continued investment in our strategic initiatives contributed to free cash flow that fell short of the threshold levels for STI payout. Our comparable store sales and adjusted operating income results fell short of targeted levels but still achieved threshold levels for STI payout. We also diligently pursued progress against our DEI goals, delivering improved representation levels and increased participation in networks that support the creation of an inclusive culture during 2022.

  32. 2022 Performance and Incentive Plan Outcomes

    | Metric | Weight | Component Payout | Total STI Payout | | Comparable Store Sales | 1/3 | 45% | 38% | | Adjusted Operating Income | 1/3 | 71% | | | Free Cash Flow | 1/3 | 0% | |

  33. 2022 Performance and Incentive Plan Outcomes

    Achievement of individualized, functional DEI performance goals modified this payout by amounts for our NEOs ranging from 0 percentage points to 9 percentage points. LTI: Over the three-year period from 2020 – 2022, the PSU component of our LTI measured performance against comparable store sales, return on invested capital and RTSR. We believe this three-year period carried an unusually high level of uncertainty and volatility. Nonetheless, our team remained focused on serving our customers with care and speed, executing with excellence and mindfully advancing key strategic initiatives to improve our sales and profits. While relative total shareholder return did not meet our threshold level for payout, performance against the other two metrics exceeded targeted levels.

  34. 2022 Performance and Incentive Plan Outcomes

    | Metric | Weight | Component Payout | Total LTI Payout | | Comparable Store Sales | 1/3 | 180% | 123% | | Return on Invested Capital | 1/3 | 190% | | | RTSR | 1/3 | 0% | |

  35. 2022 Performance and Incentive Plan Outcomes

    While we delivered against our three-year comparable store sales and return on invested capital goals, our RTSR performance has lagged our targeted achievement levels. In 2021, we updated our corporate strategy, focusing on pillars that we believe will drive total shareholder return over the long term. Beginning with awards made in 2021 for the 2021 – 2023 performance period, PSUs will pay out solely based upon RTSR performance against the other companies in the S&P 500. For more information about our incentive plans and 2022 performance, please see “—Executive Compensation Program.” Compensation Principles and Governance

  36. Compensation Governance

    | Management | •Develop business plans and strategy, which are then integrated into incentive plan design and used to establish performance goals | | | •CEO: determine other executive officers' objectives and review their performance | | | •Make recommendations with respect to executive officer compensation, incentive plan design and performance measures | | Stockholders | •Vote annually on our executive compensation framework and practices | | | •Provide feedback to management on executive compensation through shareholder outreach | | F.W. Cook | •Provide independent, expert advice regarding executive compensation matters directly to the Compensation Committee | | | •Analyze and make recommendations regarding the Company's peer group | | | •Provide competitive market data | | | •Assist with design of incentive plans and evaluation of pay practices, including associated risks | | | •Provide updates on regulatory matters related to executive compensation | | Compensation Committee | •Determine compensation for executive officers | | | •Review and approve the Company's peer group used for executive compensation matters | | | •Approve executive officer employment, severance and/or change in control agreements | | | •Review, recommend to the Board and administer incentive plans applicable to executives | | | •Approve and oversee implementation of compensatory policies applicable to executive officers, such as the Incentive Clawback Policy and Stock Ownership Guidelines | | | •Make recommendations to the Board with respect to non-employee director compensation | | Full Board of Directors | •Determine annual CEO objectives and annually review CEO performance | | | •Approve any incentive plans applicable to executive officers | | | •Approve all non-employee director compensation | | | •Receive regular reports from the Compensation Committee and share perspective where applicable |

  37. Role of Peer Group and Benchmarking

    Role of Peer Group and Benchmarking We use a group of similarly situated peer companies to help us evaluate the competitiveness of our executives’ compensation. On the whole, we aim to provide our executives with total target compensation that approximates the median among our peers, being mindful of the importance of competitiveness of pay and retention of talent. We do not target any particular benchmark level for any aspect of executive compensation, but rather seek to provide our executives with compensation that is well-balanced between long-term and short-term components. We also use our peer group to evaluate the market competitiveness of our incentive plans, broader pay practices and non-employee director compensation. We select approximately 15 to 20 U.S.-based public companies in our and similar industries based on objective criteria, including net revenues (approximately one to two and a half times our revenue), number of employees (approximately one to three times our employee population), market capitalization (approximately one to four and a half times our market capitalization) and business similarity with respect to products, customers and/or operations, seeking a balanced representation of company size and endeavoring to promote year-over-year continuity where reasonable. We review our peer group annually. For 2022 our peer group consisted of the following:

  38. Role of Peer Group and Benchmarking

    | Academy Sports & Outdoor, Inc. | Dollar Tree, Inc. | The Sherwin-Williams Company | | AutoZone, Inc. | Fastenal Company | Tractor Supply Company | | Bed Bath & Beyond Inc. | Genuine Parts Company | Ulta Beauty, Inc. | | CarMax, Inc. | LKQ Corporation | W.W. Grainger, Inc. | | Dick’s Sporting Goods, Inc. | O’Reilly Automotive, Inc. | WESCO International, Inc. | | Dollar General Corporation | Office Depot, Inc. | Williams-Sonoma Inc. |

  39. Role of Peer Group and Benchmarking

    In August 2022, we reviewed our peer group again and following consideration of the criteria enumerated above, decided to remove Bed Bath & Beyond Inc. (market capitalization too low) and The Sherwin-Williams Company (market capitalization too high and different industry with manufacturing), and add Bath & Body Works, Inc. (more comparable for our company). Components of Compensation

  40. Short-Term Incentive Compensation

    Short-Term Incentive Compensation Principles. We provide opportunity to earn STI to incentivize and reward performance against near-term operating objectives and provide competitive overall compensation. We tie performance measures for our STI program closely to key targeted deliverables of our annual operating plan. STI is paid annually in cash based on achievement of the pre-determined metrics. 2022 Design & Methodology. The design of our STI program for 2022 was unchanged from 2021. Overall Program Design. The program consists of three equally weighted pre-established financial metrics coupled with an individual modifier ranging from +/- 10 percentage points for performance against pre-established DEI goals. Following discussion with F.W. Cook and management, the Compensation Committee determined that the financial metrics in the program continued to be the most appropriate measures of achievement of our operational goals for 2022. Similarly, the Committee decided to retain the DEI modifier for STI in 2022 to impose reward or penalty for individual contribution to our longer-term DEI goals, which we believe are important for our long-term success.

  41. Short-Term Incentive Compensation

    | Metric | Rationale | | Comparable Store Sales | As an aftermarket automotive retailer, a key measure of our performance is how much revenue our stores generate on a comparable, year over year basis. One of our key long-term strategic initiatives is to improve sales and profitability per store, and focusing annually on delivering positive comparable store sales is an important contributor to that initiative. | | Adjusted Operating Income | Adjusted operating income is a key profitability measure for our business. Through this metric, we seek to incentivize and reward short-term performance that contributes to long-term, sustainable improvements in the profitability of our business. | | Free Cash Flow | An important pillar of our long-term strategy is to return cash to our stockholders. Our ability to do so depends on our generation of free cash flow, and we include free cash flow as an STI metric to measure and reward this key component of our strategy on an annual basis. |

  42. Short-Term Incentive Compensation

    Determination of Targets. In general, we seek to align STI target levels to the targeted performance reflected in our annual operating plan. We believe this methodology focuses our team, including our executive officers, on delivering the goals of our annual operating plan and directly aligns their short-term, at-risk compensation to the performance of our business objectives. Using the target achievement levels as an anchor, the Compensation Committee then set maximum achievement levels as stretch goals that would require exceptional performance to payout and threshold achievement levels that would still encourage strong execution but would appropriately reflect risks to full achievement of 2022 operating targets. The below further outlines specific considerations with respect to our 2022 annual operating plan targets, which equated target performance levels for our STI metrics.

  43. Short-Term Incentive Compensation

    | | Comparable Store Sales | Adjusted Operating Income | Free Cash Flows | | 2021 Actual Results | 10.7% | $1,051.4 million | $822.6 million |

  44. Short-Term Incentive Compensation

    | 2022 STI Target | 2.0% | $1,156.0 million | $775.0 million | | Rationale | Unique drivers contributed to exceptionally strong 2021 performance. Targeted level contemplated meaningful growth following a record year and reflected anticipated macroeconomic volatility, including potential for acceleration of inflation and derivative impact on core customers | Business plan built to deliver higher operating income year over year | Unique drivers contributed to exceptionally strong topline performance in 2021. Targeted level represents a strong level of cash flow, though lower than 2021 due to contemplated higher operating costs associated with anticipated inflation and planned investments in strategic initiatives to drive long-term growth and profitability. |

  45. Short-Term Incentive Compensation

    Target STI compensation for each of our NEOs was 85% of his base salary, other than for Mr. Greco, who had a target of 150% of his base salary. These levels were determined in consideration of the scope and complexity of the role, market data, individual contributions to business outcomes and internal pay equity. For Mr. Greco, whose target increased from 125% to 150% in 2022, consideration was given to the balance of pay components that make up his total target direct compensation.

  46. 2022 Potential v. Actual STI Payouts

    2022 Potential v. Actual STI Payouts

  47. 2022 Potential v. Actual STI Payouts

    | Metric | Weight | Threshold (35% payout) | Target (100% payout) | Maximum (200% payout) | Payout | | 0.3% | | | | | | | Comparable Store Sales | 1/3 | 0.0% | 2.0% | 5.0% | 45% | | $1,093 | | | | | | | Adjusted Operating Income | 1/3 | $1,017 | $1,156 | $1,362 | 71% | | $298 | | | | | | | Free Cash Flow | 1/3 | $660 | $775 | $1007 | 0% | | | | | | | 38% |

  48. 2022 Potential v. Actual STI Payouts

    Mr. Word’s annual incentive compensation for 2022 was determined on a pro-rata basis based on his mid-year promotion to an executive officer position. Prior to the time that he became an executive officer, Mr. Word’s annual bonus structure comprised 50% of the STI described herein and 50% of the incentive plan for his business function. See “—Summary Compensation Table” for total non-equity incentive plan compensation earned by Mr. Word for 2022. Following his promotion to EVP, U.S. Stores and Independents, Mr. Word was compensated pursuant to the STI described herein applicable to all executive officers for the remainder of the year. DEI Modifier. Each NEO had pre-established DEI goals among his individual objectives established at the start of the year. For 2022, the categories of goals applicable to each NEO remained unchanged. Each executive had six DEI goals as follows:

  49. 2022 Potential v. Actual STI Payouts

    | Representation Goals (4) | Inclusion Goals (2) | | People of color – percentage of employees (1) across NEO’s function and (2) at management levels in NEO’s function | Participation in team member networks and events designed to promote and develop an inclusive culture | | Women – percentage of employees (1) across NEO’s function and (2) at management levels in NEO’s function | Percentage of employees across NEO’s function and at management levels in NEO’s function |

  50. 2022 Potential v. Actual STI Payouts

    Representation goals for 2022 were determined in consideration of the Company’s stated long-term DEI goal of increasing representation, including leadership representation, of women and people of color by 25% by 2026. Inclusion goals for 2022 were determined in consideration of building on strong performance from 2021, during which the Company significantly expanded the breadth and accessibility of its team member networks. At the end of the performance period, management evaluated the degree of achievement across the six DEI goals for each executive officer. In consideration of a challenging environment in 2022 and significant early progress towards long-term DEI goals, management recommended modifiers for executive officers that ranged from 0 percentage points to 10 percentage points. The Compensation Committee considered management’s recommendation, as well as other indicia of DEI performance, such as the particular executive’s leadership or sponsorship of DEI initiatives, in determining the modifier applicable to each executive officer. DEI performance modifiers for our NEOs ranged from 0 percentage points to 9 percentage points for 2022. For additional information, please see “—Summary Compensation Table.”

  51. Long-Term Incentive Compensation

    Long-Term Incentive Compensation Principles. LTI is intended to align the interests of our leadership, including our executive officers, with those of our stockholders. It is an important part of providing competitive overall compensation to our executives, promotes retention and helps balance focus on shorter-term execution of operational priorities with attention to longer-term objectives. 2022 Design & Methodology. The design of our LTI program for 2022 was unchanged from 2021. Overall Program Design. LTI is granted to executives annually for a three-year period, with the target value awarded divided as shown below and vesting generally subject to continued employment. 50% of our annual LTI awards to executives are issued in PSUs, whose value depends not only on the Company’s absolute TSR, but also on achievement against the long-term performance measure.

  52. Long-Term Incentive Compensation

    | % of Target Award | Vehicle | Vesting | Rationale | | 50% | PSUs | If at all, at the end of a three-year performance period based on RTSR against the other companies in the S&P 500 | Make a substantial portion of executive compensation entirely dependent upon delivery of sustainable, long-term total shareholder return | | 25% | RSUs | Ratably over three years | Further align the interests of our executives with those of our stockholders and retain key talent | | 25% | Stock options | Ratably over three years, with a 10-year term | Make a portion of executive compensation entirely contingent upon stock price appreciation and promote retention (while options provide a significant source of potential long-term value to individuals, they are generally terminated 90 days following cessation of employment) |

  53. Long-Term Incentive Compensation

    Determination of Targets. In determining the target performance level for the PSU component of our LTI in 2022, the Committee determined that target payout should only be achieved for above-median RTSR against the other companies in the S&P 500. It determined that maximum payout should only be achieved for extraordinary results delivering top quintile RTSR over the performance period, which it believed to be a significant stretch goal. The level for threshold payout was established such that the award would only pay out with significant improvement from RTSR performance for the prior three-year performance period. Importantly, even if RTSR exceeds the 55th percentile, payout will be capped at 100% of target in the event absolute total shareholder return is negative for the performance period.

  54. Long-Term Incentive Compensation

    | | Prior Period Performance | Threshold (35% payout) | Target (100% payout) | Maximum (200% payout) | | Three-year RTSR against the S&P 500 | 21st %ile | 35th %ile | 55th %ile | 80th %ile |

  55. Long-Term Incentive Compensation

    Each executive officers’ annual grant is made at a target value that depends on the scope and complexity of the role, market data, individual contributions to business outcomes and internal pay equity. For 2022, the Committee made the following determinations with respect to target LTI value for our NEOs:

  56. Long-Term Incentive Compensation

    | NEO | 2021 Target LTI | 2022 Target LTI | Change (%) | Principal Rationale | | Thomas R. Greco | $6,000,000 | $6,500,000 | 8.3% | Part of overall compensatory adjustment for multi-year performance and maturity in role; help maintain balance among short-term and long-term components of compensation; market competitiveness of total target direct compensation | | Jeffrey W. Shepherd | $1,000,000 | $1,600,000 | 60.0% | Market competitiveness of target total direct compensation; shift more of target total direct compensation to LTI; promote retention | | Robert B. Cushing | $900,000 | $1,000,000 | 11.1% | Market competitiveness; promote retention | | Herman L. Word, Jr. | n/a | $900,000 | n/a | Mid-year promotion to executive officer role; promote retention(1) | | Reuben E. Slone | $850,000 | $850,000 | 0.0% | No market need to increase target |

  57. Long-Term Incentive Compensation

    (1) Mr. Word became an executive officer on October 2, 2022. 2022 Target LTI represents annual award made for his prior, non-executive position as well as a one-time award granted in connection with his promotion to promote retention and internal equity. In February 2023, Mr. Greco informed the Board of his intention to retire from the position of President and Chief Executive Officer at the end of the year. In consideration of this plan and to further incentivize future performance, in lieu of an annual LTI grant for 2023, the Committee granted Mr. Greco a below-target award of LTI of $3,000,000, comprised entirely of PSUs with a performance metric tied to a key operating metric for 2023 performance and vesting tied to the later of the one-year performance period or a transition period following Mr. Greco's retirement.

  58. 2022 Potential v. Actual LTI Payout

    2022 Potential v. Actual LTI Payout Our awards to executive officers made in 2020 depended on three-year performance against three equally weighted metrics: return on invested capital, relative total shareholder return and average annual comparable store sales growth. The following depicts potential v. actual results achieved.

  59. 2022 Potential v. Actual LTI Payout

    | Metric | Weight | Threshold (35% payout) | Target (100% payout) | Maximum (200% payout) | Payout | | 16.8% | | | | | | | Return on Invested Capital | 1/3 | 14.9% | 15.9% | 16.9% | 190% | | 7th percentile | | | | | | | RTSR | 1/3 | 35th percentile | 55th percentile | 80th percentile | —% | | 4.5% | | | | | | | Average Annual Comparable Store Sales | 1/3 | 1.0% | 2.5% | 5.0% | 180% | | | | | | | 123% |

  60. 2022 Potential v. Actual LTI Payout

    Other Compensation and Pay Practices

  61. Employment Agreements

    Employment Agreements We have employment agreements with each of our executive officers that outline the terms of their employment with us. Each employment agreement describes the base salary, STI and LTI opportunities of the executive. Each agreement is for a one-year term and automatically renews for successive one-year periods unless 90 days advance notice is provided. Our employment agreements include confidentiality, non-competition and non-solicitation obligations for our executive officers. The agreements also outline the compensation to which they are entitled in the event of death, disability, termination by the Company for Due Cause, termination by the Company other than for Due Cause, resignation by the executive for Good Reason, resignation by the executive without Good Reason and termination following a change in control. These terms are more fully described in “—Potential Payments Upon Termination or Change in Control Table.” We believe these various compensatory arrangements in the event of an executive’s severance are important to enabling attraction and retention of key executive talent and promote focus on achievement of long-term strategic objectives.

  62. Important Pay Practices

    Important Pay Practices Double-Trigger Vesting for Change in Control. The agreements governing equity grants to our executive officers contain provisions that only accelerate vesting of outstanding equity awards following a change in control if the awards are not assumed by the surviving entity or an executive is terminated. Incentive Compensation Clawback Policy. We maintain a policy that generally requires repayment of incentive compensation, including, among other types of compensation, time-based and performance-based equity awards, received by executives if the executive’s fraud or willful misconduct results in an accounting restatement. The Company intends to adopt a new incentive compensation clawback policy once the New York Stock Exchange finalizes its listing standards as required by recently adopted rules by the Securities and Exchange Commission. Stock Ownership Guidelines. To further align the interests of our officers and directors with those of our stockholders, all of our executive officers and directors are required to hold a certain value of our stock. All shares of common stock beneficially owned by the individual, as well as outstanding but unvested time-based restricted stock units, count towards the required thresholds; we do not consider the value of outstanding but unvested performance-based restricted stock units, vested or unvested stock options or any other type of derivative equity when determining whether an individual satisfies the ownership guidelines.

  63. Compensation Program Risk Assessment

    Compensation Program Risk Assessment We assess our executive and broad-based compensation and benefits programs to determine whether the programs' provisions and operation create undesired or unintentional material risk. The risk assessment process includes a review of our compensation program policies and practices, such as our performance-based executive compensation programs and stock ownership guidelines, to ensure that the interests of our executives are aligned with those of our stockholders by encouraging long-term superior performance without encouraging excessive or unnecessary risk-taking. We take into consideration compensation terms and practices, such as performance-based vesting of a substantial portion of our executives' long-term incentive compensation, to drive long-term decision making and mitigate adverse risk-taking that may occur due to year-over-year performance measurements, and rewards growth over the long term. We regularly review and audit our bonus plans to ensure short-term incentives are appropriately linked to business outcomes, and such reviews are shared with the Compensation Committee. We have reviewed all of our compensation programs and found none that would be reasonably likely to have a material adverse effect on the Company. Our performance based executive compensation program, as described more fully in CD&A, coupled with our stock ownership guidelines, aligns the interests of our executives with stockholders by encouraging long term superior performance without encouraging excessive or unnecessary risk taking. We believe that our long standing compensation philosophy discussed in CD&A is a key component of our history of consistent growth, which demonstrates an alignment of the interests of participants and stockholders and rewards each with increased value over the long term. As illustrated in CD&A, the compensation of our executives is primarily based on performance over a long term period. We believe the performance based vesting of a substantial portion of our executives' long-term incentive compensation drives long-term decision making, mitigates adverse risk taking that may occur due to year over year performance measurements, and rewards growth over the long term. The Compensation Committee, with the guidance and assistance of its independent compensation consultant, reviews and approves compensation components for all named executive officers and other executive officers. Annual incentives are reviewed each year and payments are subject to Compensation Committee discretion. The bonus plans for other team members are linked to financial, customer or operating measures. All team members, including officers, and our directors are subject to our Insider Trading Policy, which prohibits hedging existing ownership positions in the Company's securities, short selling the Company's stock, purchasing or selling derivative securities, and, unless certain stringent requirements are met, pledging Company stock.

  64. Executive Compensation

    | | | | Bonus | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation | All Other Compensation | | | Name and Principal Position | | Salary | | (a) (b) | (c) | (d) | (e) | Total | | | Year | ($) | ($) | ($) | ($) | ($) | ($) | ($) | | Thomas R. Greco | 2022 | $1,121,155 | $— | $4,875,008 | $1,625,014 | $749,756 | $14,015 | $8,384,948 | | President and Chief Executive Officer | 2021 | 1,100,008 | — | 4,500,044 | 1,499,981 | 2,940,300 | 11,938 | 10,052,271 | | | 2020 | 1,100,008 | — | 5,559,210 | — | 1,386,990 | 10,246 | 8,056,454 | | Jeffrey W. Shepherd | 2022 | 756,308 | — | 1,199,889 | 400,154 | 248,911 | 5,684 | 2,610,946 | | Executive Vice President, Chief Financial Officer | 2021 | 667,740 | — | 749,949 | 250,060 | 1,214,013 | 5,690 | 2,887,452 | | | 2020 | 595,890 | — | 909,756 | — | 476,340 | 4,945 | 1,986,931 | | Robert B. Cushing | 2022 | 641,923 | — | 750,033 | 249,981 | 260,035 | 12,875 | 1,914,847 | | Executive Vice President, Professional | 2021 | 621,027 | — | 925,253 | 224,908 | 1,046,563 | 12,253 | 2,830,004 | | | 2020 | 600,000 | — | 1,010,831 | — | 476,340 | 11,832 | 2,099,003 | | Herman L. Word, Jr. | 2022 | 465,193 | — | 799,986 | 100,079 | 408,525 | 7,213 | 1,780,995 | | Executive Vice President, U.S. Stores and Independents (from October 2, 2022) | | | | | | | | | | Reuben E. Slone | 2022 | 650,000 | — | 637,364 | 212,681 | 223,376 | 13,253 | 1,736,674 | | Former Executive Vice President, Supply Chain (through January 9, 2023) | 2021 | 646,027 | — | 637,518 | 212,497 | 1,093,950 | 12,645 | 2,602,637 | | | 2020 | 624,998 | — | 909,756 | — | 496,188 | 15,440 | 2,046,382 |

  65. Pay Versus Performance Table

    Pay Versus Performance Table

  66. Pay Versus Performance Table

    | Year | SCT Total for CEO | CAP to CEO | Average SCT Total for Other NEOs (1) | Average CAP to Other NEOs (2) | Value of Initial Fixed $100 Investment Based on: | | GAAP Net Income ($m) | Company Selected Measure | | | | | | | | Total Shareholder Return | Peer Group Total Shareholder Return (3) | | Comparable Store Sales Growth | Adjusted Operating Income ($m) | | 2022 | $8,384,948 | $(7,267,775) | $2,008,124 | $(169,402) | $98.46 | $114.02 | $502 | 0.3% | $1,093 | | 2021 | 10,052,271 | 24,632,043 | 2,684,996 | 4,775,021 | 155.06 | 173.50 | $616 | 10.7 | $1,051 | | 2020 | 8,056,454 | 7,289,919 | 1,975,014 | 2,044,128 | 100.25 | 145.42 | $493 | 2.4 | $813 |

  67. Pay Versus Performance Table

    (1) CEO for all years is Mr. Greco. Other NEOs are Messrs. Shepherd, Cushing, Word and Slone for 2022; Messrs. Shepherd, Cushing and Slone and Jason B. McDonell for 2021; and Messrs. Shepherd, Cushing and Slone and Michael T. Broderick for 2020. (2) The dollar amounts reported represent CAP, as computed in accordance with SEC rules. The dollar amounts do not reflect the actual amount of compensation earned by or paid during the applicable year. In accordance with SEC rules, the following adjustments were made to SCT total compensation to determine the CAP values: Reconciliation of SCT to CAP for CEO:

  68. Pay Versus Performance Table

    | | SCT Total for CEO | Minus SCT Equity for CEO | Plus End of Year ("EOY") Fair Value of Equity Granted During FY Outstanding and Unvested at EOY | Plus (Minus) Change in Fair Value form Beginning of Year ("BOY") to EOY of Awards Granted in Any Prior FY Outstanding and Unvested at EOY | Plus (Minus) Change in Fair Value from BOY to Vesting Date of Awards Granted in Any Prior FY that Vested During the FY | Minus Fair Value at BOY of Awards Granted in Prior Year that were Forfeited During the FY | CEO CAP | | 2022 | $8,384,948 | $6,500,022 | $3,443,902 | $(10,813,511) | $(1,783,092) | $— | $(7,267,775) | | 2021 | 10,052,271 | 6,000,025 | 10,501,631 | 10,287,185 | (209,019) | — | 24,632,043 | | 2020 | 8,056,454 | 5,559,210 | 8,192,754 | (2,693,536) | (706,543) | — | 7,289,919 |

  69. Pay Versus Performance Table

    Reconciliation of SCT to CAP for Other NEOs:

  70. Pay Versus Performance Table

    | | SCT Total for Average Other NEOs | Minus SCT Equity for Average Other NEOs | Plus EOY Fair Value of Equity Granted During FY Outstanding and Unvested at EOY | Plus (Minus) Change in Fair Value form BOY to EOY of Awards Granted in Any Prior FY Outstanding and Unvested at EOY | Plus (Minus) Change in Fair Value from BOY to Vesting Date of Awards Granted in Any Prior FY that Vested During the FY | Minus Fair Value at BOY of Awards Granted in Prior Year that were Forfeited During the FY | Average Other NEO CAP | | 2022 | $2,008,124 | $1,087,542 | $635,235 | $(1,485,175) | $(240,045.00) | $— | $(169,402) | | 2021 | 2,684,996 | 987,593 | 1,685,480 | 1,381,805 | 10,333.00 | — | 4,775,021 | | 2020 | 1,975,014 | 922,388 | 1,359,352 | (313,257) | (54,593.00) | — | 2,044,128 |

  71. Pay Versus Performance Table

    The fair value of option awards was determined using a Black-Scholes option-pricing model. The fair value of RSUs used to calculate CAP was based on the Company's closing stock price on each valuation date, including accrued dividend equivalent units. The fair value of PSUs used to calculate CAP assumes estimated performance results as of the end of each reporting year for financial metrics (average annual comparable store sales growth and return on invested capital, which were performance measures in our 2018, 2019, 2020, and 2021 PSU awards) and a Monte Carlo simulation valuation model for market metrics (which were relative TSR vs. a peer group for the 2018, 2019, and 2020 PSUs and relative TSR vs. the constituents of the S&P 500 for the 2021 and 2022 PSUs), in accordance with FASB ASC 718. Fair values include accrued dividend equivalent units. (3) Reflects total shareholder return indexed to $100 for the S&P 500 Retailing Index, which is an industry line peer group reported in the performance graph included in the Company’s 2022 Annual Report on Form 10-K.