DEF 14A of Advance Auto Parts Inc, Mar 21, 2025

DEF 14A of Advance Auto Parts Inc

Filed Mar 21, 2025 · FY20240001158449-25-000140

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, 64 Independent | 2020 | President and Chief Executive Officer, ECOS Consulting, LLC | Nominating & Corporate Governance Audit | SM Energy Company Vesuvius plc | | | John F. Ferraro, 69 Independent | 2015 | Former Global Chief Operating Officer, Ernst & Young | Audit (Chair) | International Flavors & Fragrances Inc. ManpowerGroup, Inc. | | | Joan M. Hilson, 65 Independent | 2022 | Chief Operating & Financial Officer, Signet Jewelers Ltd. | Finance (Chair) Audit | | | | Jeffrey J. Jones II, 57 Independent | 2019 | President, Chief Executive Officer, H&R Block, Inc. | Compensation (Chair) Nominating & Corporate Governance | H&R Block, Inc. | | | Eugene I. Lee, Jr., 63 Independent Chair of the Board | 2015 | Former Chairman and Chief Executive Officer, Darden Restaurants, Inc. | | | | | Shane M. O'Kelly, 56 President and Chief Executive Officer | 2023 | President and Chief Executive Officer, Advance Auto Parts, Inc. | | | | | Thomas W. Seboldt, 58 Independent | 2024 | President, Seboldt Consulting Services LLC | Nominating & Corporate Governance | | | | Gregory L. Smith, 61 Independent | 2024 | Executive Vice President Enterprise Operations, Medtronic plc | Audit Finance | | | | A. Brent Windom, 64 Independent | 2024 | President, Windom Consulting LLC | Compensation Finance | |

  3. Director Nominees

    The current Chair of the Nominating and Corporate Governance Committee is not, and two members of the Compensation Committee are not, standing for re-election to the Board. Following the Annual Meeting, committee composition for the upcoming term will be determined, including additional independent director service on the Compensation Committee and appointment of an independent director to serve as the Chair of the Nominating and Corporate Governance Committee.

  4. Election of Directors

    Election of Directors At the 2025 annual meeting of stockholders (the "Annual Meeting"), you will vote to elect as directors the nine nominees listed below to serve until our 2026 annual meeting of stockholders or until their respective successors are elected and qualified. Our Board has nominated Carla J. Bailo, John F. Ferraro, Joan M. Hilson, Jeffrey J. Jones II, Eugene I. Lee, Jr., Shane M. O'Kelly, Thomas W. Seboldt, Gregory L. Smith, and A. Brent Windom for election as directors. All of the nominees are current members of our Board. As previously disclosed, Sherice R. Torres will not stand for re-election at the Annual meeting, but will serve out the remainder of her current Board term. In additional, Douglas A. Pertz, who is a current director on the Board, will not be standing for re-election at the Annual Meeting. He will serve out the remainder of his current Board term that expires at the Annual Meeting. The Board does not have any vacancies. 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 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 17, 2025 (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: 69 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. JOAN M. HILSON Independent

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

  9. JOAN M. HILSON Independent

    | Age: 65 Director Since: March 2022 Committees: Audit Finance (Chair) 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 at Signet Jewelers, she has been integral to 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. She has been designated by the Board as an audit committee financial expert consistent with SEC regulations. Professional Experience Ms. Hilson has served as Chief Operating & Financial Officer of Signet Jewelers, Ltd., the world's largest retailer of diamond jewelry, since October 2024, and previously served as Chief Financial & Strategy Officer from March 2021 to October 2024. She has held the position of Chief Financial Officer at Signet 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). |

  10. JEFFREY J. JONES II Independent

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

  11. JEFFREY J. JONES II Independent

    | Age: 57 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 over 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. He has served as President and Chief Executive Officer of a leading tax, small business and financial services company since 2017, where he has had substantial experience with launching initiatives to drive traffic, brand affinity and loyalty. Additionally, 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, small business and financial services company, 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. |

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

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

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

    | Age: 63 Director Since: November 2015 Committee: None Other Current Public Company Boards: None | Key Experience and Skills Mr. Lee’s prior 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. His long tenured service on the boards of directors of RARE Hospitality International, Inc. and Darden Restaurants, Inc., as well as his temporary service as Interim Executive Chair of the Advance Auto Parts Board, have deepened his governance expertise and board leadership experience. Professional Experience Mr. Lee served as the President and 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, from February 2015 through May 2022. Previously, Mr. Lee served as Darden’s 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 served as a member of the Darden Board of Directors from February 2015 through September 2023, including as Chairman from January 2021 through September 2023. |

  14. SHANE M. O'KELLY

    SHANE M. O'KELLY President and Chief Executive Officer, Advance Auto Parts, Inc.

  15. SHANE M. O'KELLY

    | Age: 56 Director Since: September 2023 Committee: None Other Current Public Company Boards: None | Key Experience and Skills Mr. O'Kelly has served as our President and Chief Executive Officer and a member of our Board since 2023. Previously, Mr. O'Kelly was the Chief Executive Officer of HD Supply, Inc. ("HD Supply") where he improved operational execution, oversaw the transition of a distribution center network and delivered record sales and profit numbers. Mr. O'Kelly brings to the Board significant experience and leadership in the areas of general management, retail operations and strategic planning. Professional Experience Mr. O’Kelly joined Advance Auto Parts as President and Chief Executive Officer in September 2023. Prior to joining Advance, Mr. O’Kelly served as the Chief Executive Officer of HD Supply, a national distributor and provider of maintenance, repair and operations (“MRO”) products and a wholly-owned subsidiary of The Home Depot, Inc. (the “Home Depot”), a leading home improvement retailer, from December 2020 to September 2023. From March 2018 through December 2020, Mr. O’Kelly served as Chief Executive Officer of Interline Brands, Inc., a leading national distributor and marketer of MRO products that was merged into Home Depot in December 2020. He previously served as Chief Executive Officer of PetroChoice Holdings, Inc., a leading national lubricant distributor, from June 2011 to March 2018, and as Chief Executive Officer of AH Harris & Sons, Inc., a specialty construction supply distributor, from January 2008 to June 2011. Mr. O’Kelly formerly served as a Captain in the U.S. Army. |

  16. THOMAS W. SEBOLDT Independent

    THOMAS W. SEBOLDT Independent

  17. President, Seboldt Consulting Services LLC

    President, Seboldt Consulting Services LLC

  18. President, Seboldt Consulting Services LLC

    | Age: 58 Director Since: March 2024 Committee: Nominating and Corporate Governance Other Current Public Company Boards: None | Key Experience and Skills Mr. Seboldt has over three decades of service in the automotive industry. In particular, his deep experience in merchandising at O'Reilly Automotive, Inc. brings key experience in a focus area for the Company. He has also served in leadership roles on several prominent industry associations, which provides the Board with valuable insights on matters of particular importance in the aftermarket automotive industry. Professional Experience Mr. Seboldt is a seasoned executive in the automotive retail industry with over three decades of industry experience. Mr. Seboldt has been the President of Seboldt Consulting Services LLC, an automotive industry consulting firm, since January 2019. Previously, Mr. Seboldt spent the vast majority of his career with O’Reilly Automotive, Inc., an American auto parts retailer, from 1987 until November 2018, where he held several titles of increasing responsibility, including Vice President, Merchandising. Mr. Seboldt has also served on the board of prominent industry associations including the California Automotive Wholesalers’ Association (“CAWA”) and the Auto Care Association. During his tenure on the CAWA Board, Mr. Seboldt has served in a variety of positions, including President, Vice President, Executive Committee member and Treasurer. |

  19. GREGORY L. SMITH Independent

    GREGORY L. SMITH Independent

  20. Executive Vice President Enterprise Operations, Medtronic plc

    Executive Vice President Enterprise Operations, Medtronic plc

  21. Executive Vice President Enterprise Operations, Medtronic plc

    | Age: 61 Director Since: March 2024 Committee: Audit Finance Other Current Public Company Boards: None | Key Experience and Skills Mr. Smith brings deep expertise in supply chain to the Board, providing valuable insights in a key area of focus for the Company. His executive experience in multinational retail organizations, including organizations that serve both consumers and other businesses, brings valuable perspective to the Board. Professional Experience Mr. Smith is a proven supply chain expert with nearly 40 years of experience across a variety of industries. Mr. Smith currently serves as Executive Vice President Enterprise Operations of Medtronic plc, a leading global healthcare technology company. Prior to joining Medtronic in 2021, Mr. Smith was Executive Vice President, Supply Chain of Walmart Inc., a multinational omni-channel retail corporation, from 2017 to 2021 and Senior Vice President, Global Operations of The Goodyear Tire and Rubber Company, a multinational tire manufacturer, from 2011 to 2016. Earlier in his career, Mr. Smith spent a decade with Conagra Foods, Inc., a consumer packaged goods company, where he served in several leadership positions, including Executive Vice President, Supply Chain. He previously held roles with United Signature Foods LLC and Aurora Foods Inc. |

  22. A. BRENT WINDOM Independent

    A. BRENT WINDOM Independent

  23. President, Windom Consulting LLC

    President, Windom Consulting LLC

  24. President, Windom Consulting LLC

    | Age: 64 Director Since: March 2024 Committee: Compensation Finance Other Current Public Company Boards: None | Key Experience and Skills Mr. Windom's deep automotive industry experience, including service as chief executive officer at multiple organizations, provides the Board with valuable insights. Mr. Windom's expertise in operations, particularly in the automotive aftermarket, provide highly relevant subject matter expertise. He also brings experience in Canadian operations to the Board. Professional Experience Mr. Windom is an experienced automotive industry executive, having spent nearly four decades working in roles across the sector. Most recently, Mr. Windom has served as the President of Windom Consulting LLC, an executive consulting services business, since July 2021. From May 2019 to June 2021, Mr. Windom served as President and Chief Executive Officer of Uni-Select Inc., a leading automotive refinish, industrial coatings and automotive aftermarket parts distributor. Previously, Mr. Windom was President and COO of Canadian Automotive Group, Uni-Select’s Canadian business, from July 2017 to May 2019. Mr. Windom also served as president and Chief Executive Officer of Auto Plus | Pep Boys, a major U.S.-based distributor of automotive aftermarket parts and an aftermarket retailer, from February 2016 until July 2017, which was formed following Icahn Enterprises L.P.’s acquisition of Uni-Select USA, Inc. and Beck/Arnley Worldparts, Inc. Prior to joining IEH Auto Parts, Mr. Windom spent 10 years with Uni-Select, where he held positions of increasing responsibility including President and Chief Operating Officer, Uni-Select USA. |

  25. President, Windom Consulting LLC

    | 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, the Nominating and Corporate Governance Chair receives $17,500 and the Finance Committee Chair receives $17,500. 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. 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 one year from the date of grant. On June 4, 2024, each non-management director serving at the time received 2,530 DSUs valued at $165,000 on the date of grant, except for Messrs. Seboldt, Smith and Windom, who received 2,952 DSUs, reflective of their annual equity retainer for the upcoming term and their prorated retainers for the 2023 - 2024 Board term. 2024 Director Summary Compensation Information provided in the following table reflects the compensation delivered to our non-management directors for 2024:

  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 | 117,500 | 165,000 | 282,500 | | Jeffrey J. Jones II | 120,000 | 165,000 | 285,000 | | Eugene I. Lee, Jr. | 300,000 | 165,000 | 465,000 | | Douglas A. Pertz | 117,500 | 165,000 | 282,500 | | Thomas W. Seboldt | 116,667 | 192,500 | 309,167 | | Gregory L. Smith | 116,667 | 192,500 | 309,167 | | Sherice R. Torres | 100,000 | 165,000 | 265,000 | | Arthur L. Valdez Jr. | — | — | — | | A. Brent Windom | 116,667 | 192,500 | 309,167 |

  28. Director Compensation

    (a)Includes earned or deferred board and chair retainers for 2024. Each of Messrs. Seboldt, Smith and Windom were appointed to the Board in March 2024, and their compensation reflects pro-rated compensation for the 2023 - 2024 Board term and compensation for the 2024 - 2025 Board term. Mr. Valdez's Board service ceased in May 2024 at the end of the 2023 - 2024 Board term, and he received no compensation for the 2024 - 2025 Board term. (b)Represents the grant date fair value of DSUs granted during 2024 for the annual equity retainers. 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 16 of the Company’s consolidated financial statements in the 2024 Form 10-K filed with the SEC on February 26, 2025. Directors’ Outstanding Equity Awards at 2024 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 2024.

  29. Director Compensation

    | Name | Outstanding Deferred Stock Units (#) | | Carla J. Bailo | 7,715 | | John F. Ferraro | 20,205 | | Joan M. Hilson | 6,147 | | Jeffrey J. Jones II | 11,073 | | Eugene I. Lee, Jr | 72,121 | | Douglas A. Pertz | 12,532 | | Thomas W. Seboldt | 2,984 | | Gregory L. Smith | 2,984 | | Sherice R. Torres | 6,487 | | A. Brent Windom | 2,984 |

  30. Historical Short-Term Incentive Program Payouts*

    Historical Short-Term Incentive Program Payouts*

  31. Historical Long-Term Incentive Program Payouts

    Historical Long-Term Incentive Program Payouts

  32. Short-Term Incentive Compensation

    Short-Term Incentive Compensation Principles. We provide opportunity to earn STI to link pay to performance by aligning the achievement of short-term operational objectives of our business to annual compensation 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. 2024 Design & Methodology. We made modest design changes to our STI program for 2024, including removal of the “free cash flow” metric, more heavily weighting the “operating income” metric, reflecting how individual performance factors into the plan and adjusting the payout curves, each as more fully described below. Overall Program Design. The program consists of two pre-established financial metrics (“Operating Income,” weighted at 65%, and “Comparable Store Sales,” weighted at 25%) coupled with an individual performance component (weighted at 10%). Following discussion with F.W. Cook and management, the Compensation Committee determined that Operating Income and Comparable Store Sales were the most appropriate measures of achievement of our operational goals for 2024. However, the Compensation Committee determined that Operating Income objective was the most important for the Company to achieve in 2024 to demonstrate improved operational performance and financial health. It removed the third metric from the 2023 program, “Free Cash Flow,” and increased the weighting on “Operating Income” to more closely tie compensation to performance against that objective. The Compensation Committee determined that it would be beneficial to retain a component of the plan that based payout based on individual achievement of key objectives. Accordingly, it updated the previous plan modifier into a core plan metric for individual objectives, whereby executives’ achievement of key strategic goals with respect to their functional area makes up 10% of their total short-term incentive opportunity. These aspects of plan design, as well as the year-over-year changes in plan design, are further described below.

  33. Short-Term Incentive Compensation

    | Metric | Rationale | | Operating Income (65%) | 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. The Compensation Committee determined that in 2024, this was the single most important measure to achieve to demonstrate improved operational performance and financial health. | | Comparable Store Sales (25%) | 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. | | Individual Objectives (10%) | By tying a portion of our executives’ compensation to the achievement of strategic outcomes in the functional areas they oversee, we seek to motivate focus and delivery of department goals over a short-term period. |

  34. Short-Term Incentive Compensation

    | Year-Over-Year Changes in Plan Design | | | Change from 2023 to 2024 Program | Rationale | | Metric Selection: Removal of Free Cash Flow | Removal of the metric from the Plan enables more focused achievement on other performance metrics. | | Metric Weightings: Operating Income (from 33% to 65%); and Comparable Store Sales (from 33% to 25%) | More heavily focus the program on achievement of the metric most important to demonstration of short-term operational improvement. | | Plan Design: Individual Contributions | Updated the portion of the program that varies with individual performance; such portion now makes up 10% of the core program (as opposed to being a modifier to the core program) and incentivizes executives to deliver against functional goals important to the Company’s short-term business performance. | | Payout Curves: Adjustments to Flatten Curves Around Target | Ensure improved year-over-year performance before executives receive improved pay outcomes, as further described below under “—Determination of Targets.” |

  35. Short-Term Incentive Compensation

    Our named executive officers had individual performance objectives with respect to the following: •Shane O’Kelly: Individual performance goals directly tied to performance goals of all direct reports while driving the key decisions to support the future direction of the company •Ryan Grimsland: Reduction of indirect spending; remediation of material weakness in internal control over financial reporting; evaluation and execution of potential sale of Worldpac business •Bruce Starnes: Product margin improvement; improvement in product lifecycle management •Herman Word: improvement of profit per store; execution of independent store initiatives •Sridhar Donthi: Consistent performance of store systems and technology improvements 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 2024 operating targets. In 2024, the Compensation Committee decided to continue using payout curves that would minimize payout variability around the target performance level. The revised payout curves further aligned payouts above target to exceptionally exceeding prior year performance. For all metrics, threshold payout required greater than prior year performance. The below further outlines specific considerations with respect to our 2024 annual operating plan targets, which equated target performance levels for our STI metrics.

  36. Short-Term Incentive Compensation

    | | Operating Income | Comparable Store Sales | | 2023 Actual Results | $114.0 million | (0.3%) | | 2024 STI Target | $432.0 - 454.0 million | 1.8% | | Rationale | Business plan built to deliver significantly higher operating income than prior year performance. | Rigorous target determined for annual business plan based on prior performance results. |

  37. Short-Term Incentive Compensation

    Target STI compensation for each of our NEOs was 85% of base salary, other than for Mr. O’Kelly, who had a target of 150% of his base salary.

  38. 2024 Potential v. Actual STI Payouts

    2024 Potential v. Actual STI Payouts

  39. 2024 Potential v. Actual STI Payouts

    | Metric | Weight | Threshold | Low Range | Target | High Range | Maximum | Payout | | ($713) | | | | | | | | | Operating Income | 65% | $346 | $389 | $432-$454 | $476 | $519 | | | Associated Payout % | | 35% | 90% | 100% | 125% | 200% | 0% | | (0.7%) | | | | | | | | | Comparable Store Sales | 25% | —% | 1.0% | 1.8% | 3.0% | 5.0% | | | Associated Payout % | | 40% | 80% | 100% | 120% | 200% | 0% |

  40. 2024 Potential v. Actual STI Payouts

    Individual Performance Component. Each NEO had several pre-determined individual performance objectives that aligned with key business goals for their respective departments for 2024. Except with respect to his own objectives, the CEO evaluated performance against each objective and made a recommendation to the Compensation Committee, who reviewed and approved determination of achievement, based on simplified payout curve of 50% payout for partial achievement, 100% payout for target achievement and 150% payout for above-target achievement. While achievement of discrete objectives ranged from 0% (for failure to achieve) to 150% (for above-target achievement), across the totality of their respective objectives, each named executive officer achieved at the 100% level, resulting in an aggregate STI payout of 10%.

  41. 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 shareholders. It is an important part of providing competitive overall compensation to our executives, promotes retention and helps balance focus between the shorter-term execution of operational priorities with longer-term objectives. 2024 Design & Methodology. The design of our LTI program for 2024 was unchanged from 2023. Overall Program Design. LTI is awarded to executives annually with a three-year performance/vesting 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.

  42. 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 | Align a substantial portion of executive compensation entirely dependent upon delivery of sustainable, long-term total shareholder return; one-year holding period applies post-vesting to further encourage actions that support long-term value | | 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, vested options are generally cancelled 90 days following cessation of employment) |

  43. Long-Term Incentive Compensation

    Determination of Targets. In determining the target performance level for the PSU component of our LTI in 2024, the Compensation Committee determined that target payout should only be achieved for above-median RTSR achievement versus 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.

  44. Long-Term Incentive Compensation

    | | Prior Period Performance | Threshold (35% payout) | Target (100% payout) | Maximum (200% payout) | | Three-year RTSR against the S&P 500 | 2nd %ile | 35th %ile | 55th %ile | 80th %ile |

  45. 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 and individual contributions to business outcomes. The Compensation Committee made the following determinations with respect to target LTI value for our NEOs:

  46. Long-Term Incentive Compensation

    | NEO | 2023 Target LTI | 2024 Target LTI | Change (%) | Principal Rationale | | Shane M. O’Kelly | N/A | $6,500,000 | N/A | New hire in 2023; market competitive in employment agreement | | Ryan M. Grimsland | N/A | $1,600,000 | N/A | New hire in 2023; market competitive in employment agreement | | Bruce M. Starnes, III | N/A | N/A | N/A | New hire in 2024; not eligible for 2024 LTI | | Herman L. Word, Jr. | $1,150,000 | $1,250,000 | 8.7% | Alignment with market based on role | | Sridhar R. Donthi | N/A | $1,100,000 | N/A | Newly designated officer in 2024; market competitive |

  47. Long-Term Incentive Compensation

    Although he did not receive a regular annual LTI award for 2024, the employment agreement with Mr. Starnes contemplates a $1,000,000 target grant for 2025.

  48. 2024 Potential v. Actual LTI Payout

    2024 Potential v. Actual LTI Payout Our awards to executive officers made in 2022 depended solely on relative total shareholder return against companies in the S&P 500. Our relative TSR for the 2022 – 2024 performance period ranked below the threshold, and therefore no shares vested for the 2022 – 2024 performance period. The following depicts potential v. actual results achieved.

  49. 2024 Potential v. Actual LTI Payout

    | Metric | Weight | Threshold (35% payout) | Target (100% payout) | Maximum (200% payout) | Payout | | 2nd percentile | | | | | | | RTSR | 1/3 | 35th percentile | 55th percentile | 80th percentile | 0% |

  50. 2024 Potential v. Actual LTI Payout

    Other Compensation and Pay Practices

  51. Employment Agreements

    Employment Agreements We have employment agreements with each of our named 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. Other than Mr. O’Kelly, who has an initial three-year term, and Messrs. Grimsland and Starnes, who each have an initial two-year term, 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.

  52. Granting of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information

    Granting of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information We do not grant stock options or similar awards in anticipation of the release of material nonpublic information that is likely to result in changes to the price of our common stock, such as a significant positive or negative earnings announcement, and do not time the public release of such information based on stock option grant dates. Our annual grants of stock options are awarded on a predetermined date during an “open trading window.” The only grant of stock options or similar awards outside of this annual cycle in 2024 was to Mr. Starnes in connection with his hire, and such award was also made on a predetermined date during an “open trading window.” During the last completed fiscal year, we have not awarded options to any named executive officer during the period beginning four business days before and ending one business day after the filing of a period report on Form 10-Q or Form 10-K or the filing or furnishing of a current report on Form 8-K, and we have not timed the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation. Compensation Governance

  53. Roles and Responsibilities

    | 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 |

  54. 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-third to three times our revenue), number of employees (approximately one-third to three times our employee population), market capitalization (approximately one-fourth to four and a half times our 12-month average 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 2024 our peer group consisted of the following:

  55. Role of Peer Group and Benchmarking

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

  56. Role of Peer Group and Benchmarking

    In August 2024, we reviewed our peer group again and our Compensation Committee, with advice of F.W. Cook, determined to remove CarMax, Dollar General and Dollar Tree from the peer group and add Group 1 Automotive, Applied Industrial Technologies, Floor & Décor and Sally Beauty Supply LLC to better reflect the guiding parameters used to construct the peer group.

  57. Important Pay Practices

    Important Pay Practices No Single-Trigger Vesting for Change in Control. We do not have any single trigger acceleration arrangement in the event of a change in control for any of our executive officers. Incentive Compensation Clawback Policy. We maintain a policy that requires repayment of incentive compensation, including, among other types of compensation, short-term incentive cash compensation and performance-based equity awards, received by executives in the event of an accounting restatement in accordance with the listing standards of the New York Stock Exchange. 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.

  58. 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. 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 associates are linked to financial, customer or operating measures. All associates, 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.

  59. Executive Compensation

    | | | | Bonus | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation | All Other Compensation | | | Name and Principal Position | | Salary | | (a) (b) | (c) | | (d) | Total | | | Year | ($) | ($) | ($) | ($) | ($) | ($) | ($) | | Shane M. O'Kelly | 2024 | $1,125,000 | $1,000,000 | $6,255,449 | 1,624,973 | $168,750 | $129,464 | $10,303,636 | | President, Chief Executive Officer (from Sept. 11, 2023) | 2023 | 302,885 | 1,000,000 | 4,593,593 | 3,523,500 | — | 19,108 | 9,439,086 | | Ryan P. Grimsland | 2024 | 675,000 | — | 1,539,821 | 399,988 | 57,375 | 142,010 | 2,814,194 | | Executive Vice President, Chief Financial Officer (from Nov. 27, 2023) | 2023 | 38,942 | 750,000 | 1,600,030 | 400,004 | — | 42 | 2,789,018 | | Bruce M. Starnes, III | 2024 | 288,462 | 300,000 | 1,300,022 | 315,946 | 26,615 | 113,018 | 2,344,063 | | Executive Vice President, Chief Merchant | | | | | | | | | | Herman L. Word, Jr. | 2024 | 600,000 | — | 1,202,976 | 312,501 | 51,000 | 17,585 | 2,184,062 | | Executive Vice President, Professional, Independents and Canada | 2023 | 595,192 | — | 862,535 | 287,498 | — | 10,925 | 1,756,150 | | | 2022 | 465,193 | — | 799,986 | 100,079 | 408,525 | 7,213 | 1,780,996 | | Sridhar R. Donthi | 2024 | 606,635 | — | 1,058,667 | 274,956 | — | 13,800 | 1,954,058 | | Executive Vice President, Chief Technology Officer (through January 13, 2025) | | | | | | | | |

  60. Pay Versus Performance Table

    Pay Versus Performance Table

  61. Pay Versus Performance Table

    | Year | SCT Total for CEO (1) | SCT Total for Former CEO (1) | CAP to Current CEO (2) | CAP to Former CEO (2) | 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 Share-holder Return | Peer Group Total Share-holder Return (3) | | Comp. Store Sales Growth | GAAP Operating Income ($m) | | 2024 | $10,303,636 | – | $2,396,573 | – | $2,324,139 | $1,196,441 | $30.67 | $219.96 | $(366) | (0.7)% | $(713) | | 2023 | $9,439,086 | $4,139,044 | $9,853,745 | $(3,934,421) | $2,163,565 | $875,625 | $41.73 | $162.36 | $30 | (0.3)% | $114 | | 2022 | – | $8,384,948 | – | $(7,267,775) | $2,008,124 | $(169,402) | $98.46 | $114.02 | $502 | 0.3% | $754 | | 2021 | – | $10,052,271 | – | $24,632,043 | $2,684,996 | $4,775,021 | $155.06 | $173.50 | $616 | 10.7% | $902 | | 2020 | – | $8,056,454 | – | $7,289,919 | $1,975,014 | $2,044,128 | $100.25 | $145.42 | $493 | 2.4% | $750 |

  62. Pay Versus Performance Table

    (1) 2024 CEO is Shane M. O'Kelly; other NEOs are Ryan P. Grimsland, Sridhar R. Donthi, Bruce M. Starnes, III and Herman L. Word, Jr.. 2023 CEOs are Shane M. O'Kelly and Thomas R. Greco (former); 2023 other NEOs are Ryan P. Grimsland, Anthony A. Iskander, Jeffrey W. Shepherd, Herman L. Word, Jr., Tammy M. Finley, Stephen Szilagyi, Robert B. Cushing, and Jason B. McDonell. 2022 CEO is Thomas R. Greco; 2022 other NEOs are Jeffrey W. Shepherd, Robert B. Cushing, Herman L. Word, Jr. and Reuben E. Slone. 2021 CEO is Thomas R. Greco; 2021 other NEOs are Jeffrey W. Shepherd, Robert B. Cushing, Reuben E. Slone, and Jason B. McDonell. (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:

  63. Pay Versus Performance Table

    | | Fiscal Year 2024 | | Fiscal Year 2023 | | | Fiscal Year 2022 | | Fiscal Year 2021 | | | | CEO (O’Kelly) | Avg. Other NEOs | CEO (O'Kelly) | CEO (Greco) | Avg. Other NEOs | CEO (Greco) | Avg. Other NEOs | CEO (Greco) | Avg. Other NEOs | | SCT Total | $10,303,636 | $2,324,139 | $9,439,086 | $4,139,044 | $2,163,565 | $8,384,948 | $2,008,124 | $10,052,271 | $2,684,996 | | Minus SCT Equity | $7,880,422 | $1,601,219 | $8,117,093 | $3,000,021 | $1,268,778 | $6,500,022 | $1,087,542 | $6,000,025 | $987,593 | | Plus End of Year Fair Value of Equity Granted During FY Outstanding and Unvested at End of Year | $2,806,174 | $694,439 | $8,530,502 | – | $517,216 | $3,443,902 | $635,235 | $10,501,631 | $1,685,480 | | Plus (Minus) Change in Fair Value from End of Prior Year to End of Year of Awards Granted in Any Prior Fiscal Year Outstanding and Unvested at End of Year | $(1,776,900) | $(172,589) | – | $(4,557,437) | $(328,064) | $(10,813,511) | $(1,485,175) | $10,287,185 | $1,381,805 | | Plus (Minus) Change in Fair Value from End of Prior Year to Vesting Date of Awards Granted in Any Prior Fiscal Year that Vested During the Fiscal Year | $(1,055,915) | $(48,329) | – | $(516,006) | $(65,622) | $(1,783,092) | $(240,045) | $(209,019) | $10,333 | | Minus Fair Value at End of Prior Year of Awards Granted in Prior Year that were Forfeited During the Fiscal Year | – | – | – | – | $142,692 | – | – | – | – | | Compensation Actually Paid | $2,396,573 | $1,196,441 | $9,853,745 | $(3,934,421) | $875,625 | $(7,267,775) | $(169,402) | $24,632,043 | $4,775,021 |

  64. Pay Versus Performance Table

    EOY = End of Year; BOY = Beginning of Year, SCT = Summary Compensation Table, CAP = Compensation Actually Paid 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 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 2019, 2020, and 2021 PSUs and relative TSR vs. the constituents of the S&P 500 for the 2022, 2023, and 2024 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 2024 Annual Report on Form 10-K.