DEF 14A of Group 1 Automotive Inc
Filed Apr 5, 2024 · FY20230001308179-24-000455
BOARD NOMINEES
BOARD NOMINEES
BOARD NOMINEES
| | | | Skills and Expertise(1) | | | | | | | | | | | | DIRECTORS(2) | | | | | | | | | | | | | | | Carin M. Barth Co-Founder and President of LB Capital, Inc., a private equity investment firm | 2017 | 2 | | | | | | | | | | | | | Daryl A. Kenningham President and Chief Executive Officer of Group 1 | 2022 | 0 | | | | | | | | | | | | | Steven C. Mizell Former Executive Vice President and Chief Human Resources Officer at Merck & Co., Inc. | 2021 | 1 | | | | | | | | | | | | | Lincoln Pereira Filho Former Regional Vice President, Brazil of Group 1 | 2013 | 1 | | | | | | | | | | | | | Stephen D. Quinn Former General Partner and Managing Director of Goldman, Sachs & Co. | 2002 | 1 | | | | | | | | | | | | | Steven P. Stanbrook Former Chief Operating Officer, International Markets of S.C. Johnson, Inc. | 2019 | 1 | | | | | | | | | | | | | Charles L. Szews Former Chief Executive Officer of Oshkosh Corporation | 2016(5) | 1 | | | | | | | | | | | | | Anne Taylor Former Vice Chairman and Managing Partner of the Houston office of Deloitte | 2018 | 2 | | | | | | | | | | | | | Maryann Wright Former Group Vice President of Johnson Controls International | 2014 | 3 | | | | | | | | | | | |
BOARD NOMINEES
| (1) The lack of a for a particular item does not mean that the director does not possess that qualification, characteristic, skill or experience. We look to each director to be knowledgeable in these areas; however, the indicates that the item is a specific qualification, characteristic, skill or experience that the director brings to the Board. | | (2) Three of our nine directors are female and two of our nine directors are ethnically diverse. | | (3) Includes former or current President or CEO and Public Company Executive position experience. | | (4) Includes automotive, retail, and engineering/product development experience. | | (5) Non-Executive Chair of the Board since May 2023. |
BOARD ENGAGEMENT IN 2023
BOARD ENGAGEMENT IN 2023 In 2023, our Board actively engaged with management on a range of matters, providing effective oversight and guidance to enable the Company to execute on key priorities that underpin our business strategy.
BOARD ENGAGEMENT IN 2023
| 97.8% | 97.5% | 100% | | Overall attendance by directors at the five Board meetings during 2023 | Overall attendance by directors at Board and their respective committee meetings in 2023 | Overall attendance by directors at the 2023 Annual Meeting of Shareholders |
STRENGTHENING DIRECTOR OVERSIGHT
STRENGTHENING DIRECTOR OVERSIGHT Essential to each director’s ability to provide robust and effective oversight is a deep understanding of our businesses, our strategic focus, and significant risks we may encounter, as well as an ongoing awareness of new developments and emerging risks that may arise during their Board service. Below are some of the ways in which our directors are able to gain such understanding and awareness.
STRENGTHENING DIRECTOR OVERSIGHT
| Strategy and Business Plan Reviews Annually, the Board holds a meeting with senior management to review the strategy and long-range plans for each of our businesses and to discuss other topics, such as key Company areas of focus and significant and emerging risks. At the Board’s other meetings, it reviews Company progress against its long-range plans. | Site Visits As part of our directors’ continuing education, the Board strives to visit dealerships in at least one market each year. This gives directors insight into the Company’s dealership operations and the opportunity to interact with employees and key executives. | | Outside Perspectives The Board is periodically briefed by experts and counsel on strategic, financial, legal, compliance, and other matters. This gives them additional perspectives on the Company’s business environment, strategic focus areas, performance, and significant and emerging risks. | Direct Interaction with Management Our CEO and other members of senior management communicate with directors on a regular basis outside of regularly scheduled Board and committee meetings, including through periodic written updates and special meetings. |
Proposal 1: Election of Directors
Proposal 1: Election of Directors
Proposal 1: Election of Directors
| What am I voting on? | We are seeking your support for the election of the nine individuals nominated to serve on the Board until the 2025 Annual Meeting of Shareholders. We believe these nominees have the right experience, skills and perspective to guide the Company and provide effective oversight of our strategy and our business plans. All nominees currently serve as a director of the Company and are well qualified to serve as a director of a large automotive retail company. |
NOMINEES
NOMINEES The Board, upon the recommendation of the GCR Committee, has nominated for election the nine individuals listed in this Proxy Statement. All are current directors of Group 1.
NOMINEES
| | THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING NOMINEES: |
NOMINEES
| Carin M. Barth | | | | | INDEPENDENT DIRECTOR Co-Founder and President of LB Capital, Inc., a private equity investment firm | | Age: 61 Director since: 2017 Board Committees: Audit Committee (Chair), Finance/Risk Management Committee, Governance & Corporate Responsibility Committee | | | Key Skills and Expertise | | | | | Finance/Accounting/Sox Financial Expert | Senior Leadership | Industry Experience | | | P&L Responsibility | Mergers & Acquisitions | | |
Qualifications
Qualifications Ms. Barth has extensive experience in a variety of financial matters, including as chief financial officer for several entities. She also has a history of corporate and civic governance, which provides additional depth and financial expertise to our Board. Her experience with mergers and acquisitions, in operating a private equity company, her previous and currently held board positions on other publicly traded companies and her audit committee experience are key attributes, among others, that make her well qualified to serve on our Board.
Experience
Experience
Experience
| • | Co-Founder and President of LB Capital, Inc. since 1988 | | • | Operating Partner, Mountain Capital, LLC | | • | Currently serves on the board of The Welch Foundation | | • | Former board member and current emeritus board member of Ronald McDonald House of Houston | | • | Commissioner of the Texas Department of Public Safety from 2008 to 2014 | | • | Appointed by President George W. Bush to serve as Chief Financial Officer of the U.S. Department of Housing and Urban Development from 2004 to 2005 |
Other Current Directorships
Other Current Directorships
Other Current Directorships
| • | Enterprise Products Holdings LLC | | • | Black Stone Minerals, L.P. |
Former Public Company Directorships
Former Public Company Directorships
Former Public Company Directorships
| • | BBVA USA Bancshares, Inc. | | • | Halcón Resources Corporation |
Degrees
Degrees
Degrees
| • | B.S. in Economics, University of Alabama | | • | M.B.A., Vanderbilt University’s Owen Graduate School of Management |
Degrees
| Daryl A. Kenningham | | | | | DIRECTOR President and Chief Executive Officer of Group 1 | | Age: 59 Director since: 2022 Board Committees: Finance/Risk Management Committee | | | Key Skills and Expertise | | | | | Senior Leadership | Industry Experience | International | | | Mergers & Acquisitions | P&L Responsibility | | |
Degrees
As our President and Chief Executive Officer, Mr. Kenningham sets the strategic direction of our Company under the guidance of our Board. He has extensive senior executive management experience in the automotive industry. His successful leadership of our Company and extensive knowledge of the automotive industry provides our Board with a unique perspective on the opportunities and challenges we face and makes him well qualified to serve on our Board.
Experience
Experience
Experience
| • | CEO of Group 1 since January 2023 and President since August 2022 | | • | Served as Group 1’s Chief Operating Officer from August 2022 to December 2022 | | • | President of U.S. Operations from 2017 to August 2022 | | | Regional Vice President – West Region from 2016 to 2017 | | | Regional Vice President – East Region from 2011 to 2016 | | • | Served as the Chief Operating Officer of Ascent Automotive from December 2010 to April 2011 | | • | Served in senior executive roles from 1998 to 2011 at Gulf States Toyota, including Senior Vice President of Gulf States Toyota, President of Gulf States Financial Services, and as President at USA Logistics (previously known as Gulf States Transportation) | | • | Held various sales, marketing and vehicle distribution positions in the U.S. and Japan with Nissan Motor Corporation from 1988 to 1998 |
Other Current Directorships
Other Current Directorships
Other Current Directorships
| • | None |
Former Public Company Directorships
Former Public Company Directorships
Former Public Company Directorships
| • | None |
Degrees
Degrees
Degrees
| • | B.A. in Psychology, University of Michigan | | • | M.B.A., University of Florida |
Degrees
| Steven C. Mizell | | | | | INDEPENDENT DIRECTOR Former Executive Vice President and Chief Human Resources Officer at Merck & Co., Inc. (“Merck”) | | Age: 64 Director since: 2021 Board Committees: Compensation & Human Resources Committee, Governance & Corporate Responsibility Committee | | | Key Skills and Expertise | | | | | Senior Leadership | International | | | | Mergers & Acquisitions | Human Resources/Cultural | | |
Degrees
Mr. Mizell’s human resource management expertise from his position with an international, publicly traded company makes him well qualified to serve as a member of our Board. His extensive, global leadership experience and knowledge of human capital management provides our Board with valuable insights. Mr. Mizell will continue serving as a strategic advisor to Merck until July 1, 2024. The chairs of the Board and GCR Committee considered whether Mr. Mizell’s upcoming change in circumstance would impact his service as a director on the Board and determined that it would not. Accordingly, they recommended that Mr. Mizell continue to serve on the Board.
Experience
Experience
Experience
| • | Served as Executive Vice President and Chief Human Resources Officer at Merck from 2018 to April of 2024, with the company being recognized during his tenure as one of the Top 10 Best Workplaces in Health Care and Biopharma by Fortune and Great Place to Work, Best Workplace for Innovators by Fast Company magazine, Best Companies for Multicultural Women by Working Mother magazine, Top Veteran-Friendly Companies by U.S. Veterans Magazine and Companies that Care by People Magazine | | • | Joined Monsanto, a global leader in sustainable agriculture, as Senior Vice President, Chief Human Resources Officer in 2004; served as Executive Vice President, Chief Human Resources Officer from 2007 to 2018 |
Experience
| • | Previously served as Senior Vice President and Chief Corporate Resources Officer for AdvancePCS, a pharmaceutical company | | • | Recognized as one of St. Louis’ most influential Diverse Business Leaders | | • | National Association of Corporate Directors (NACD) Directorship Certified |
Other Current Directorships
Other Current Directorships
Other Current Directorships
| • | Allegion plc |
Former Public Company Directorships
Former Public Company Directorships
Former Public Company Directorships
| • | Oshkosh Corporation |
Degrees
Degrees
Degrees
| • | B.S. in Industrial Management, Georgia Institute of Technology | | • | M.S. in Management, Carnegie Mellon University |
Degrees
| Lincoln Pereira Filho | | | | | DIRECTOR Former Regional Vice President, Brazil of Group 1 | | Age: 64 Director since: 2013 Board Committees: Finance/Risk Management Committee (Chair) | | | Key Skills and Expertise | | | | | Industry Experience | Senior Leadership | Technology/Cybersecurity | | | International | Mergers & Acquisitions | Legal | |
Degrees
Mr. Pereira has extensive automotive retailing and manufacturer relations experience, as well as legal, finance, business and management expertise. Mr. Pereira’s experience and expertise in the automotive industry make him well qualified to serve as a member of our Board.
Experience
Experience
Experience
| • | Served as Group 1’s Regional Vice President, Brazil from 2013 through June 2022 | | • | Served as a legal representative of United Auto do Brasil Ltda, a public auto group operating in São Paulo and controlled by United Auto Group, from 1999 to 2005 | | • | Previously practiced law with Cunha Pereira Advogados, representing professional athletes and international racecar drivers, from 1995 through 2005 | | • | Founded Atrium Telecomunicações Ltda, a provider of local exchange telecommunication services, in 1999. Atrium was sold to Telefónica of Spain in December 2004 |
Experience
| • | Founded E-Vertical Tecnologia, a leading provider of high tech facilities management services to commercial properties | | • | Serves as Vice President of the São Paulo Chamber of Commerce (ACSP) | | • | Held numerous positions with various banks, both in Brazil and abroad, from 1978 through 1995 | | • | Serves on the Advisory Board of Equifax Brasil |
Other Current Directorships
Other Current Directorships
Other Current Directorships
| • | None |
Former Public Company Directorships
Former Public Company Directorships
Former Public Company Directorships
| • | Associação Brasileira dos Concessionários BMW | | • | Associação Brasileira dos Distribuidores Toyota | | • | Boa Vista Serviços S.A.-SCPC | | • | Tempo Telecomunicações |
Degrees
Degrees
Degrees
| • | LL.B, Faculdade de Direito do Largo de São Francisco; London Business School |
Degrees
| Stephen D. Quinn | | | | | INDEPENDENT DIRECTOR Former General Partner and Managing Director of Goldman, Sachs & Co. | | Age: 68 Director since: 2002 Board Committees: Audit Committee, Compensation & Human Resources Committee, Finance/Risk Management Committee, Governance & Corporate Responsibility Committee | | | Key Skills and Expertise | | | | | Finance/Accounting/Sox Financial Expert | Industry Experience | | | | International | Mergers & Acquisitions | | |
Degrees
Mr. Quinn was selected to serve as a director on our Board due to his valuable financial expertise and extensive experience with capital markets transactions. His judgment in assessing business strategies and the accompanying risks is an invaluable resource for our business model. Mr. Quinn also has significant historical knowledge of our Company as a result of his role at Goldman Sachs, an underwriter for our initial public offering. The Board believes his experience and expertise in these matters make him well qualified to serve as a member and former Non-Executive Chair of our Board.
Experience
Experience
Experience
| • | Joined Goldman, Sachs & Co., a full-service global investment banking and securities firm, in August 1981, where he specialized in corporate finance | | • | Served as a General Partner and Managing Director of Goldman, Sachs & Co. from 1990 until his retirement in 2001 |
Other Current Directorships
Other Current Directorships
Other Current Directorships
| • | Zions Bancorporation |
Former Public Company Directorships
Former Public Company Directorships
Former Public Company Directorships
| • | None |
Degrees
Degrees
Degrees
| • | B.S. in Economics, Brigham Young University | | • | M.B.A., Harvard University Graduate School of Business |
Degrees
| Steven P. Stanbrook | | | | | INDEPENDENT DIRECTOR Former Chief Operating Officer, International Markets of S.C. Johnson, Inc. | | Age: 66 Director since: 2019 Board Committees: Audit Committee, Compensation & Human Resources Committee, Finance/Risk Management Committee | | | Key Skills and Expertise | | | | | Senior Leadership | Industry Experience | International | | | Mergers & Acquisitions | Human Resources/Cultural | P&L Responsibility | |
Degrees
Mr. Stanbrook was selected to serve on our Board due to his extensive international operational experience and his background in business development. His previous and current board positions on other publicly traded companies, combined with his global operational experience in a variety of senior management positions, have provided him with a wealth of knowledge in dealing with complex strategic, business matters.
Experience
Experience
Experience
| • | Retired from S.C. Johnson, Inc., a global manufacturer and marketer of household products, in 2015, following a distinguished 19-year career serving in various roles, including most recently as Chief Operating Officer, International Markets | | • | Previously held a variety of senior leadership positions with both Sara Lee Corporation, including Chief Executive Officer of Sara Lee Bakery, and CompuServe, the leading, global Internet Service Provider | | • | Over 30 years of experience operating across the global consumer packaged goods sector | | • | Director, Voyant Beauty, LLC, a private company |
Other Current Directorships
Other Current Directorships
Other Current Directorships
| • | Primo Water Corporation |
Former Public Company Directorships
Former Public Company Directorships
Former Public Company Directorships
| • | Chiquita Brands International, Inc. | | • | Hewitt Associates, Inc. | | • | Imperial Brands plc |
Degrees
Degrees
Degrees
| • | HNC in Business Studies, Thames Valley University, U.K. |
Degrees
| Charles L. Szews | | | | | INDEPENDENT DIRECTOR Former Chief Executive Officer of Oshkosh Corporation and Non-Executive Chair of the Board | | Age: 67 Director since: 2016 Board Committees: Audit Committee, Compensation & Human Resources Committee, Finance/Risk Management Committee, Governance & Corporate Responsibility Committee | | | Key Skills and Expertise | | | | | Finance/Accounting/Sox Financial Expert | Senior Leadership | Industry Experience | | | International | Mergers & Acquisitions | Human Resources/Cultural | | | P&L Responsibility | Technology/Cybersecurity | | |
Degrees
Mr. Szews was selected to serve on our Board due to his extensive operational and financial experience and his background in public accounting, auditing and risk management. His previous and current board positions on other publicly traded companies have provided many years of audit committee experience, including as chair. Mr. Szews’ extensive financial and audit experience in a variety of senior management positions, combined with his global operational experience in vehicle manufacturing and distribution, including autonomous and electric vehicles, have provided him with a wealth of knowledge in dealing with complex strategic, financial and accounting matters.
Experience
Experience
Experience
| • | Joined Oshkosh Corporation, a leading global manufacturer of specialty vehicles and vehicle bodies serving access equipment, defense, fire and emergency, and commercial markets, as Vice President and CFO in 1996; appointed Executive Vice President in October 1997; appointed President and Chief Operating Officer in October 2007 | | • | Served as Chief Executive Officer at Oshkosh Corporation from January 2011 until his retirement in 2016 | | • | Vice President and Controller at Fort Howard Corporation during its leveraged buyout | | • | Began his career with Ernst & Young |
Other Current Directorships
Other Current Directorships
Other Current Directorships
| • | Commercial Metals Company |
Former Public Company Directorships
Former Public Company Directorships
Former Public Company Directorships
| • | Rowan Companies plc | | • | Valaris plc | | • | Allegion plc | | • | Gardner Denver, Inc. | | • | Oshkosh Corporation |
Degrees
Degrees
Degrees
| • | B.B.A. in Comprehensive Public Accounting, University of Wisconsin – Eau Claire |
Degrees
| Anne Taylor | | | | | INDEPENDENT DIRECTOR Former Vice Chairman and Managing Partner of the Houston office of Deloitte | | Age: 68 Director since: 2018 Board Committees: Audit Committee, Compensation & Human Resources Committee (Chair) | | | Key Skills and Expertise | | | | | Industry Experience | Technology/Cybersecurity | Mergers & Acquisitions | | | Human Resources/ Cultural | P&L Responsibility | International | |
Degrees
Ms. Taylor is financially literate and has participated in audit committee meetings of many Deloitte clients. She was selected to serve on our Board due to her management and leadership experience, extensive background in global technology, development and execution of business strategy, and corporate governance experience.
Experience
Experience
Experience
| • | Joined Deloitte, a leading global provider of audit and assurance, consulting, financial advisory, risk advisory, tax and related services in 1987, serving as Regional Managing Partner, Chief Strategy Officer and Global Leader for e-business; served as Vice Chairman and Managing Partner of the Houston office from 2005 until her retirement in 2018; chaired the strategic review of the proposed transaction to separate Deloitte Consulting while serving on Deloitte’s Board of Directors | | • | Became the first woman to serve on Deloitte’s US executive committee and the management committee of Deloitte Global | | • | Currently serves on the board of Memorial Hermann Hospital System. Previously served on the boards of the Greater Houston Partnership, United Way of Greater Houston and Junior Achievement and chaired the board of Central Houston, Inc. |
Experience
| • | Currently serves on the board of directors of Conway Mackenzie and as a consultant for Bravanti, a consulting firm focused on leadership acceleration | | • | Previously served as the strategic partner advisor to the World Economic Forum’s Technology Pioneer Program |
Other Current Directorships
Other Current Directorships
Other Current Directorships
| • | Southwestern Energy Company | | • | Chord Energy Corporation (formerly Whiting Petroleum Corporation) |
Former Public Company Directorships
Former Public Company Directorships
Former Public Company Directorships
| • | None |
Degrees
Degrees
Degrees
| • | B.S. in Engineering, University of Utah | | • | M.S. in Engineering, University of Utah | | • | Attended Princeton University, pursuing PhD studies in Transportation Engineering |
Degrees
| MaryAnn Wright | | | | | INDEPENDENT DIRECTOR Former Group Vice President of Johnson Controls International | | Age: 62 Director since: 2014 Board Committees: Compensation & Human Resources Committee, Finance/Risk Management Committee, Governance & Corporate Responsibility Committee (Chair) | | | Key Skills and Expertise | | | | | Senior Leadership | Industry Experience | International | | | Mergers & Acquisitions | Technology/Cybersecurity | P&L Responsibility | |
Degrees
Ms. Wright was selected to serve on our Board because of her extensive experience and her knowledge of the automotive industry, having been named one of the “Leading 100 Women in the Automotive Industry” by Automotive News. Her unique business, manufacturing, engineering and technology background and her extensive global automotive experience make her well qualified to serve as a member of our Board.
Compensation of Directors
Compensation of Directors
NONQUALIFIED DEFERRED COMPENSATION
NONQUALIFIED DEFERRED COMPENSATION Non-employee directors currently cannot defer director compensation under the Company’s Deferred Compensation Plan. However, previously deferred amounts remain deferred under the Deferred Compensation Plan until the originally scheduled payment date. Please see the section entitled “Executive Compensation — Nonqualified Deferred Compensation for the 2023 Fiscal Year” for a more fulsome description of the Company’s Deferred Compensation Plan. Prior to January 1, 2021, the Company’s Deferred Compensation Plan permitted non-employee directors who elected to participate an opportunity to accumulate additional savings for retirement on a tax-deferred basis. These directors could defer in the Deferred Compensation Plan any portion of their cash compensation received for services provided to our Board or its committees, while remaining 100% vested in deferred funds. We have complete discretion over how the deferred funds are utilized and they represent our unsecured obligation to the participants.
2023 Director Compensation
2023 Director Compensation The following table sets forth a summary of the compensation we paid to our non-employee directors in 2023.
2023 Director Compensation
| Name | Fees Earned or Paid in Cash ($) | Stock Awards(1),(2) ($) | All Other Compensation(3) ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings(4) ($) | Total ($) | | Carin M. Barth | 75,000 | 199,853 | 20,000 | 7 | 294,860 | | Steven C. Mizell | 45,500 | 199,853 | 20,000 | - | 264,853 | | Lincoln Pereira Filho | 57,500 | 199,853 | 20,000 | - | 277,353 | | Stephen D. Quinn | 112,500 | 199,853 | 20,000 | - | 332,353 | | Steven P. Stanbrook | 45,000 | 199,853 | 20,000 | - | 264,853 | | Charles L. Szews | 125,000 | 199,853 | 20,000 | - | 344,853 | | Anne Taylor | 70,000 | 199,853 | 20,000 | 1,154 | 291,008 | | MaryAnn Wright | 70,000 | 199,853 | 20,000 | 13 | 289,866 |
2023 Director Compensation
| (1) The amounts included in the “Stock Awards’ column represent the grant date fair value of awards computed in accordance with FASB ASC Topic 718. Assumptions made in the calculation of these amounts are included in Note 5 to our audited financial statements for the year ended December 31, 2023, included in our Annual Report on Form 10-K. | | (2) Our directors are offered the option of taking their annual retainer in restricted stock or restricted stock units. In 2023, each non-employee director received 1,102 shares of restricted stock or restricted stock units, as applicable, in payment of the equity portion of the 2023 annual retainer. | | (3) The amounts in this column reflect the annual vehicle stipend. | | (4) Amounts reported reflect above-market earnings on the Deferred Compensation Plan. Amounts are reflective of earnings in excess of 120% of the applicable federal long-term rate, with compounding, of 5.10%. We do not sponsor a pension plan. |
CHANGES TO DIRECTOR COMPENSATION FOR 2024
CHANGES TO DIRECTOR COMPENSATION FOR 2024 In November 2023, after a review of a competitive market analysis prepared by Pearl Meyer & Partners, LLC (“PM&P”) the GCR Committee recommended, and the Board approved the following changes to the non-employee director compensation structure, effective as of January 1, 2024:
CHANGES TO DIRECTOR COMPENSATION FOR 2024
| • | Increased the annual cash retainer from $45,000 to $65,000; | | • | Eliminated the $20,000 vehicle stipend; | | • | Increased the annual equity retainer from $200,000 to $225,000; and | | • | Increased the annual cash retainer for the Board Chair from $135,000 to $175,000. |
Compensation Discussion and Analysis
| Executive Summary | 40 | | 2023 Performance Overview | 40 | | How We Align Pay and Performance | 42 | | How We Make Pay Decisions and Assess Our Programs | 44 | | Roles and Responsibilities | 44 | | 2023 Independent Consultant Engagement | 45 | | Compensation Peer Group and Use of Market Data | 45 | | Shareholder Feedback on Compensation | 47 | | 2023 Principal Elements of Compensation | 48 | | Base Salary | 48 | | Annual Incentive Awards | 48 | | Long-Term Incentive (“LTI”) Awards | 52 | | 2023 CEO Pay Decisions | 54 | | 2023 Pay Decisions for Other NEOs | 55 | | Other Compensation Elements | 59 | | Retirement and Deferred Compensation Benefits | 59 | | Perquisites and other Benefits | 59 | | Employment, Severance and Change of Control Arrangements | 60 | | Other Executive Compensation Policies and Practices | 61 | | Clawback Policy | 61 | | Prohibitions on Certain Transactions Involving Group 1 Stock | 61 | | Tax Deductibility of Incentive Compensation | 61 |
Our Key Principles and Objectives
| Competitive | Long-Term Focus | | Total compensation should be sufficiently competitive to attract, retain and motivate a leadership team capable of maximizing our performance. Elements are benchmarked relative to peers. | For our most senior executives, long-term, equity-based compensation opportunities significantly outweigh short-term, cash-based opportunities. Annual objectives should lead to sustainable, long-term performance. | | Balance | Pay-for-Performance | | Annual and long-term incentive opportunities reward the appropriate balance of short-, medium- and long-term financial, strategic and operational business results, without encouraging excessive risk-taking. | A substantial portion of compensation is variable, contingent upon and directly linked to Company and individual performance. The portion of total compensation contingent on performance should increase with an executive’s level of responsibility. | | Shareholder Alignment | | | The financial interests of our executives are aligned with the long-term interests of our shareholders through equity-based compensation and performance metrics that correlate with long-term shareholder value creation. | |
2023 Total Direct Compensation
| | Base Salary ($K)(1) | Annual Incentive ($K)(2) | Long-Term Incentive ($K)(3) | Total Direct Compensation ($K) | | Daryl A. Kenningham | 1,100 | 1,850 | 3,500 | 6,450 | | Daniel J. McHenry | 700 | 673 | 850 | 2,223 | | Peter C. DeLongchamps | 575 | 596 | 700 | 1,871 | | Gillian A. Hobson | 551 | 829 | 700 | 2,080 | | Michael D. Jones | 525 | 479 | 700 | 1,704 |
Independent Compensation Consultant
Independent Compensation Consultant Provides an independent perspective and assessment
Independent Compensation Consultant
| • | Advises the CHR Committee on a variety of subjects, including compensation plan design and current market trends, pay-for-performance analytics, benchmarking data, risk assessment and related matters. | | • | Reports directly to the CHR Committee, participates in meetings as requested and communicates with the CHR Committee Chair between meetings, as necessary. |
COMPENSATION PEER GROUP AND USE OF MARKET DATA
COMPENSATION PEER GROUP AND USE OF MARKET DATA
How We Use Peer Group Data
How We Use Peer Group Data The CHR Committee believes that to keep our executive compensation program sufficiently competitive, the target value of each principal element of compensation should approximate the market median of the companies Group 1 views as competitors for senior executive talent. For this reason, we compare our executive compensation program to the programs of companies within our Compensation Peer Group (“CPG”). In addition, we use market data from a broader group of companies to gain insight into general compensation trends and to supplement CPG market data when the CHR Committee finds it necessary or appropriate, but that does not change the identity of the core companies identified as a peer for that year. The CHR Committee annually evaluates each compensation element and total direct compensation relative to the market for each executive officer’s role and makes adjustments as appropriate. However, individual compensation may vary from market median guidelines based on the CHR Committee’s assessment of other factors that it considers relevant, including Company, function and/or individual performance, job scope, retention risk, internal pay equity and tenure in the role.
How Our Peer Group is Constructed
How Our Peer Group is Constructed Our CPG includes all of the publicly traded automotive consolidators and specialty retailers associated with automotive sales and automotive parts and service against whom we most directly compete. The companies included in our CPG are periodically reviewed and updated by the CHR Committee. The CHR Committee discussed the Company’s CPG with PM&P in 2023. Based on that discussion, our CPG for 2023, shown below, was unchanged from 2022.
2023 Compensation Peer Group
2023 Compensation Peer Group
2023 Compensation Peer Group
| | | | Automotive Retail | Parts | | Asbury Automotive Group, Inc. | Advance Auto Parts, Inc. | | AutoNation, Inc. | AutoZone, Inc. | | CarMax, Inc. | Genuine Parts Company | | Lithia Motors, Inc. | LKQ Corporation | | Penske Automotive Group, Inc. | O’Reilly Automotive, Inc. | | Rush Enterprises, Inc. | | | Sonic Automotive, Inc. | |
2023 Compensation Peer Group
When evaluating the compensation data and making compensation decisions, the CHR Committee has taken into consideration the variance in revenue size among our CPG. Additionally, when calculating a market value, the CHR Committee has considered other differences between our CPG and us, such as corporate structure, tenure of executive officers, variance in scope of duties for each officer and other factors. However, any application of market analysis data is tempered by our basic organizational philosophy, which is to remain as lean as practical. This guiding principle means that certain of our NEOs have a broad range of job responsibilities that, at certain companies included in our CPG, may be divided among multiple executive officers. The CHR Committee’s use of market analysis data for specific compensation components is described in more detail below.
Timeline for Compensation Decisions
| NOVEMBER 2022 | JANUARY 2023 | FEBRUARY 2023 | JANUARY 2024 | FEBRUARY 2024 | | Approved 2023 base salary adjustments | Base salary increases take effect Approved financial metrics for 2023 annual incentive plan | Approved 2023 target levels for annual incentive plan performance factors Approved 2023 restricted stock and performance share awards | Reviewed preliminary 2023 Company and individual NEO performance | Reviewed final 2023 Company and individual NEO performance and approved 2023 annual incentive plan payouts |
ANNUAL INCENTIVE AWARDS
ANNUAL INCENTIVE AWARDS Annual incentive awards, which are granted under the Group 1 Automotive Annual Incentive Plan (“AIP”), are an integral component of our executive compensation program. The AIP reinforces Company and individual or functional performance objectives, and enables us to attract, retain and motivate our executive talent.
How Annual Incentive Awards are Determined
How Annual Incentive Awards are Determined Though performance relative to pre-established financial goals is the primary basis for determining the financial performance factors, the CHR Committee retains the right to make discretionary adjustments to the overall performance factors if it determines that such financial performance does not accurately reflect the overall quality of performance for the year. The CHR Committee made no adjustments for the 2023 payout.
2023 Annual Incentive Targets
2023 Annual Incentive Targets Each NEO has an annual incentive target that is expressed as a percentage of the NEO’s base salary as in effect on January 1, 2023 (and for Ms. Hobson, as in effect on her start date). These targets are based on relevant market data for each NEO’s role and generally approximate the median of our CPG as a NEO matures in the role. Below are the 2023 target percentages under the AIP for each NEO:
2023 Annual Incentive Targets
| | Annual Incentive Opportunity (as % of Base Salary) | | | | Named Executive Officer | Threshold | Target | Max | | Daryl A. Kenningham | 65.0% | 130.0% | 260.0% | | Daniel J. McHenry | 41.7% | 83.3% | 125.0% | | Peter C. DeLongchamps | 41.7% | 83.3% | 125.0% | | Gillian A. Hobson | 41.7% | 83.3% | 125.0% | | Michael D. Jones | 41.7% | 83.3% | 125.0% |
Our Financial Performance Metric
| | Adjusted Net Income from Continuing Operations | | How is our AIP financial metric defined? | We start with a GAAP measure: Group 1’s net income attributable to common shareholders.* Then we adjust for the impact of certain items that do not arise directly from core operations. These may include, in any given year, non-cash asset impairment charges, out-of-period adjustments, legal matters, gains and losses on dealership, franchise or real estate transactions, and catastrophic events, such as hailstorms, hurricanes, and snowstorms. Please see Appendix C on page 130 for an explanation and reconciliation of this non-GAAP measure. | | Why did the CHR Committee choose this metric? | The CHR Committee believes adjusted net income is relevant because it measures the immediate impact of operating decisions on Group 1’s overall performance, and includes the impact of items such as tax, interest and foreign exchange fluctuations, which are managed at the Corporate level. | | Why do we use a non-GAAP financial metric for annual incentives? | The CHR Committee believes annual incentives should not be positively or negatively impacted by short-term decisions made in the best interest of Group 1’s long-term business strategies. Our non-GAAP performance measures encourage decision-making that considers long-term value creation but does not conflict with our short-term incentive metrics. Adjustments noted above allow for a clearer assessment of business performance and help to align our annual incentive goals with the non-GAAP financial expectations we communicate to shareholders. |
Our Financial Performance Metric
The CHR Committee selected adjusted net income from continuing operations as our financial goal because it reflects income statement performance, consistent with the interests of our shareholders, and because it reflects income statement performance for on-going operations of the Company. For 2023, the CHR Committee set threshold, target and maximum goals for adjusted net income, where threshold was considered achievable, target was considered challenging yet attainable and maximum was considered possible with significant effort. However, no payments are made under this portion of the annual incentive award unless the threshold level of adjusted net income is achieved.
How We Performed on Our 2023 Financial Performance Metric
How We Performed on Our 2023 Financial Performance Metric The CHR Committee established goals for adjusted net income at threshold, target and maximum performance levels for the Company. Performance below the threshold level results in no payout under the AIP.
How We Performed on Our 2023 Financial Performance Metric
| | Annual Incentive Paid as % of Base Salary | | | | | Named Executive Officer | Threshold | Target | Max | 2023 Results | | Daryl A. Kenningham | 45.5% | 91.0% | 182.0% | 123.3% | | Daniel J. McHenry | 29.2% | 58.3% | 87.5% | 68.7% | | Peter C. DeLongchamps | 29.2% | 58.3% | 87.5% | 68.7% | | Gillian A. Hobson | 29.2% | 58.3% | 87.5% | 68.7% | | Michael D. Jones | 29.2% | 58.3% | 87.5% | 68.7% |
2023 Strategic Goal Performance
| | Annual Incentive Paid as % of Base Salary | | | | | Named Executive Officer | Threshold | Target | Max | 2023 Results | | Daryl A. Kenningham | 19.5% | 39.0% | 78.0% | 44.9% | | Daniel J. McHenry | 12.5% | 25.0% | 37.5% | 27.5% | | Peter C. DeLongchamps | 12.5% | 25.0% | 37.5% | 35.0% | | Gillian A. Hobson | 12.5% | 25.0% | 37.5% | 27.5% | | Michael D. Jones | 12.5% | 25.0% | 37.5% | 22.5% |
How Performance Affected Payouts
How Performance Affected Payouts Below are the weighted results and actual 2023 payouts for our NEOs when combining both the financial and strategic goals for 2023.
How Performance Affected Payouts
| | Annual Incentive Paid as % of Base Salary | | | | Named Executive Officer | Adjusted Net Income | Strategic Goals | Total | | Daryl A. Kenningham | 123.3% | 44.9% | 168.2% | | Daniel J. McHenry | 68.7% | 27.5% | 96.2% | | Peter C. DeLongchamps | 68.7% | 35.0% | 103.7% | | Gillian A. Hobson | 68.7% | 27.5% | 96.1% | | Michael D. Jones | 68.7% | 22.5% | 91.2% |
How Our Annual Incentive Plan Design Changed For 2024
How Our Annual Incentive Plan Design Changed For 2024 As part of our annual compensation review including the competitive compensation analysis prepared by PM&P, the CHR Committee reviewed and approved certain changes to the 2024 compensation of our NEOs. As a result, the 2024 base salaries of Messrs. Kenningham, McHenry, DeLongchamps, Jones and Ms. Hobson increased by 13.6%, 11.4%, 4.0%, 4.0% and 11.3%, respectively. In addition, the CHR Committee approved adjusted net income and aftersales gross profit, weighted 80% and 20%, respectively, as the performance metrics for the 2024 annual incentive plan. Annual incentive opportunities were also increased for all NEOs such that all NEOs are eligible to earn up to 200% (max) of the target of base salary. Finally, the CHR Committee has discretion to modify awards downward or upward to differentiate and reward leadership performance. The maximum individual performance multiplier for leadership performance is 120%.
LONG-TERM INCENTIVE (“LTI”) AWARDS
LONG-TERM INCENTIVE (“LTI”) AWARDS The CHR Committee annually reviews the design of our LTI awards made pursuant to the Group 1 Automotive 2014 Long Term Incentive Plan (the “LTIP”) to ensure consistency with our program’s fundamental objective of aligning the interests of executives and shareholders, while attracting and retaining talented senior leaders. Our annual LTI awards are subject to three-year, service-based (and in the case of performance shares, performance-based) vesting requirements, with exceptions for death, disability, retirement, change-in-control and certain qualifying involuntary terminations.
LTI Award Mix
LTI Award Mix The LTI award mix for all of our NEOs, other than Mr. Jones who has historically received 100% of his LTI award in restricted stock, is shown below:
Restricted Stock Awards
Restricted Stock Awards Restricted stock awards made to our NEOs vest ratably over a three-year period to encourage long term retention of recipients with the Company.
Performance Share Awards
Performance Share Awards Our 2023 performance share awards will vest following the end of a three-year period, subject to Company performance relative to pre-established return on invested capital, and relative total shareholder return performance goals, which are measured over a two-year performance period.
Performance Goals and Weightings for Performance Shares
Performance Goals and Weightings for Performance Shares
Performance Goals and Weightings for Performance Shares
| Metric(1) | Weighting | Threshold (50% payout) | Target (100% payout) | Maximum (200% payout) | | Return on Invested Capital (“ROIC”) • Calculated using a quarterly average over the performance period | 50% | 15.0% | 17.0% | 19.0% | | Relative Total Shareholder Return (“rTSR”)(2) • Measures GPI’s cumulative two-year TSR(3) percentile rank relative to five domestic automotive retail companies • Payout for this portion of the award is capped at 100% of target if GPI’s TSR is negative | 50% | 25% below the median company TSR | Equal to the median company TSR | 50% or more above the median company TSR |
Performance Goals and Weightings for Performance Shares
| (1) Performance goals are based on non-GAAP financial measures. See Appendix C on page 130 for a definition of how these measures are calculated. | | (2) Comparator group consists of Penske, AutoNation, Asbury, Sonic and Lithia. | | (3) Attainment within performance parameters is subject to interpolation on a linear basis, with adjustments upward or downward from the target 100% payout by 2.0% for each percentage point Group 1’s rTSR is above or below that of the median company’s rTSR |
Limit on Maximum Vesting Value
Limit on Maximum Vesting Value If the value of performance shares subject to rTSR performance at vesting (valued by multiplying the number of performance shares vesting by the closing Group 1 stock price on the vest date) is greater than 400% of the value of the performance shares at grant (valued by multiplying the number of performance shares at target-level performance by the closing Group 1 stock price on the grant date), the vesting factor will be reduced so that the value delivered to our NEOs will be no greater than 400% of the grant value (the “Maximum Value Limit”).
What the CHR Committee Considers when Setting Performance Goals
What the CHR Committee Considers when Setting Performance Goals When setting financial performance goals for our performance share awards, the CHR Committee considers various long-term business factors, including macroeconomic market trends. ROIC is defined as operating income less any taxes over invested capital for the performance period. The CHR Committee has discretion in determining ROIC for a respective performance period. See Appendix C on page 130 for more information on how we calculate ROIC. For details regarding the potential vesting (or forfeiture of) the performance share awards, please see the section entitled “Executive Compensation — Potential Payments upon Termination or Change in Control.” The performance share award agreements entered into with our NEOs pursuant to the LTIP provide that upon a NEO’s termination due to death or disability, the number of performance shares that will be earned following the performance period will be based on actual performance. If a NEO’s employment is terminated due to a planned retirement (generally defined as a mutually agreed upon retirement by the officer and the Company), the performance shares will convert to time-based restricted stock awards that will continue to vest, subject to the officer’s compliance with applicable restrictive covenants, until the second anniversary of the NEO’s termination of employment. Such a conversion will occur based on the actual performance achieved during the performance period. All other terminations of employment will result in a forfeiture of the performance shares without payment.
2023 CEO Pay Decisions
| Compensation Overview | | | Base Salary. In connection with his promotion to President and Chief Operating Officer on August 24, 2022, Mr. Kenningham’s base salary was increased to $1,100,000 and maintained during 2023, which was below the median of our CPG. Annual Incentive Award. The CHR Committee approved an annual incentive award of $1,849,075. This was a result of the Company’s performance relative to the pre-established financial goal of adjusted net income and the CHR Committee’s assessment of Mr. Kenningham’s performance relative to his individual strategic goals. LTI. The CHR Committee approved 2023 LTI awards (50% in performance shares and 50% in restricted stock) of $3.5 million, an amount that is below the median of our CPG for his role. | |
2023 Pay Decisions for Other NEOs
| Compensation Overview | | | Base Salary. Mr. McHenry received an annual merit increase from $620,000 to $700,000 to more closely align his base salary with the market median for this role and reflect his tenure and performance in this role. Following the increase, Mr. McHenry’s base salary is commensurate with the CPG median for his role. Annual Incentive Award. In determining Mr. McHenry’s 2023 annual incentive award, the CHR Committee considered Mr. McHenry’s effective leadership of the Company’s finance function and the individual performance considerations noted below, and awarded him a $673,312 annual incentive award for 2023. LTI. The CHR Committee approved 2023 LTI awards (50% in performance shares and 50% in restricted stock) of $850,000 for Mr. McHenry. | |
2023 Pay Decisions for Other NEOs
| Compensation Overview | | | Base Salary. Mr. DeLongchamps received an annual merit increase from $541,059 to $575,000 in recognition of his oversight responsibilities for multiple functional areas of the Company. Annual Incentive Award. In determining Mr. DeLongchamps’ 2023 annual incentive award, the CHR Committee considered Mr. DeLongchamps’ effective leadership and management of the Company’s financial services and manufacturer relations functions and the individual performance considerations noted below, and awarded him a $596,203 annual incentive award for 2023. LTI. The CHR Committee approved 2023 LTI awards (50% in performance shares and 50% in restricted stock) of $700,000 for Mr. DeLongchamps. | |
2023 Pay Decisions for Other NEOs
| Compensation Overview | | | Base Salary. Ms. Hobson received an annual base salary of $575,000, which was prorated for her start date of January 16, 2023 in the amount of $551,042. Annual Incentive Award. In determining Ms. Hobson’s 2023 annual incentive award, the CHR Committee considered Ms. Hobson’s effective leadership and management of the Company’s legal function and the individual performance considerations noted below, and awarded her a $528,833 annual incentive award for 2023, prorated for her start date. She also received a $300,000 hiring bonus on her start date. LTI. The CHR Committee approved 2023 LTI awards (50% in performance shares and 50% in restricted stock) of $700,000 for Ms. Hobson. | |
EMPLOYMENT, SEVERANCE AND CHANGE OF CONTROL ARRANGEMENTS
EMPLOYMENT, SEVERANCE AND CHANGE OF CONTROL ARRANGEMENTS We have employment and other compensatory agreements with certain NEOs to ensure they will perform their roles for an extended period of time. Certain provisions contained in these agreements, such as non-competition and non-solicitation provisions, as well as change in control severance arrangements, are essential to retaining our talent and protecting our shareholders. We believe it is appropriate to compensate individuals to refrain from working with competitors following termination, and that compensation enhances the enforceability of such agreements. Similarly, these agreements provide for severance compensation to be paid if an officer’s employment is terminated under certain conditions, such as following a corporate change, involuntary termination, termination by us for “cause,” or death or disability, each as defined in the applicable NEOs agreement. These agreements and our severance terminology are described in more detail under “Executive Compensation —Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table — Employment, Incentive Compensation and Non-Compete Agreements.”
Termination Without Cause
Termination Without Cause If we terminate the employment of certain NEOs without “cause” as defined in the applicable agreement, we are obligated to pay the officer certain compensation and other benefits, as described in detail in “Executive Compensation — Potential Payments Upon Termination or Change in Control.” We believe these payments are appropriate because the terminated officer will be bound by confidentiality, non-solicitation and non-compete restrictions, ranging from one to two years after termination. Parties with existing agreements have mutually agreed to a severance package prior to any termination event, which gives us the flexibility to make a change in senior management if such a change is in the best interests of our Company and our shareholders.
Summary Compensation Table
Summary Compensation Table The following table summarizes, with respect to our NEOs, information relating to the compensation granted or earned for services rendered in all capacities during 2023, 2022 and 2021. Our NEOs consist of five executive officers, consistent with SEC rules, including our CEO and our Chief Financial Officer.
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus(1) ($) | Stock Awards(2) ($) | Non-Equity Incentive Plan Compensation(3) ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings(4) ($) | All Other Compensation ($)(5) | Total ($) | | Daryl A. Kenningham President and Chief Executive Officer | 2023 | 1,100,000 | — | 3,499,802 | 1,849,705 | 216,857 | 607,936 | 7,274,300 | | | 2022 | 890,399 | — | 2,499,932 | 1,514,281 | 242,130 | 323,895 | 5,470,637 | | | 2021 | 760,000 | — | 1,999,994 | 1,121,000 | 342,173 | 174,355 | 4,397,522 | | Daniel J. McHenry Senior Vice President and Chief Financial Officer | 2023 | 700,000 | — | 849,798 | 673,312 | 9,765 | 32,173 | 2,265,048 | | | 2022 | 620,000 | — | 749,858 | 697,500 | 6,617 | 36,276 | 2,110,251 | | | 2021 | 575,000 | — | 499,925 | 661,250 | 859 | 34,557 | 1,771,591 | | Peter C. DeLongchamps Senior Vice President, Manufacturer Relations, Financial Services and Public Affairs | 2023 | 575,000 | — | 699,914 | 596,203 | 88,218 | 29,413 | 1,988,748 | | | 2022 | 541,059 | 35,000 | 699,995 | 608,692 | 100,180 | 27,653 | 2,012,579 | | | 2021 | 530,450 | — | 799,821 | 610,018 | 142,794 | 29,663 | 2,112,746 | | Gillian A. Hobson Senior Vice President, Chief Legal Officer and Corporate Secretary | 2023 | 551,042 | 300,000 | 699,914 | 528,833 | — | 32,545 | 2,112,333 | | Michael D. Jones Senior Vice President, Aftersales | 2023 | 525,000 | — | 699,914 | 478,734 | 117,304 | 28,393 | 1,849,345 |
Summary Compensation Table
| (1) For Mr. DeLongchamps, reflects a one-time, special bonus paid in special recognition of his successful engagement in 2022 with our manufacturer partners. For Ms. Hobson, reflects a one-time hiring bonus paid to Ms. Hobson when she joined the Company on January 16, 2023. | | (2) The amounts in the “Stock Awards” column reflect the required accounting expense for restricted stock and performance share awards and do not correspond to the actual value that may be recognized by our NEOs with respect to such awards; instead, they represent the grant date fair value of the awards computed in accordance with Financial Accounting Standards Board Accounting Standard Codification Topic 718 (“FASB ASC Topic 718”) in connection with awards granted under the LTIP. Assumptions made in the calculation of these amounts in fiscal years 2021, 2022, and 2023 are included in Note 5 to the audited financial statements included in our Annual Reports on Form 10-K for the fiscal years ended December 31, 2021, December 31, 2022, and December 31, 2023, respectively. Certain of these awards have no intrinsic value to the recipient until the performance or vesting schedule is met. For example: as of December 31, 2023, our NEOs had not realized any value from their 2023 restricted stock awards because vesting will not begin until 2024, when forfeiture restrictions will lapse as to 33% of the awards. Forfeiture restrictions will lapse as to the remaining 67% of the 2023 awards in a 33% increment in 2025 and a 34% increment in 2026. Regarding performance share awards granted in 2023, assuming performance is satisfied, they are scheduled to vest on December 31, 2024, and vested shares will be released on December 31, 2025. With respect to the one-half portion of the performance share awards that are based on ‘performance conditions’ for accounting purposes (as opposed to market conditions), if we assumed that the probable accounting value was based on the maximum payout for the awards, the grant date values would have been as follows: Mr. Kenningham, $1,749,786; Mr. McHenry; $424,784; Mr. DeLongchamps; $349,957; and Ms. Hobson; $349,957. Vesting schedules for equity awards can be found in the footnotes to the “Outstanding Equity Awards at Fiscal Year-End” table. |
Summary Compensation Table
| (3) Annual cash incentive awards based upon the achievement of financial and performance-based goals. This is discussed further under “2023 Principal Elements of Compensation — Annual Incentive Awards”. | | (4) Amounts reflect above-market earnings on the Deferred Compensation Plan, as defined by earnings in excess of 120% of the applicable federal long-term rate, with compounding interest of 5.10%. We do not offer a pension plan. | | (5) The following table reflects the categories of compensation and benefits included under “All Other Compensation” for 2023: |
Summary Compensation Table
| Name | Year | 401(k) Savings Plan Matching Contribution ($) | Automobile Allowance ($) | Use of Demonstrator Vehicles(a) ($) | Airplane Use(b) ($) | Total ($) | | Daryl A. Kenningham | 2023 | 9,900 | — | 30,252 | 567,784 | 607,936 | | Daniel J. McHenry | 2023 | 9,900 | 15,000 | 7,273 | — | 32,173 | | Peter C. DeLongchamps | 2023 | 9,900 | 15,000 | 4,513 | — | 29,413 | | Gillian A. Hobson | 2023 | 2,156 | 14,375 | 16,013 | — | 32,545 | | Michael D. Jones | 2023 | 8,366 | 15,000 | 5,027 | — | 28,393 |
Summary Compensation Table
| (a) Represents the incremental cost for personal use of one or more Company demonstrator vehicles. The incremental cost is determined by multiplying the annual lease value of the vehicle by the percentage of personal use, which we track through travel logs. | | (b) In the event that Mr. Kenningham or his family members make use of the airplane, he reimburses us for their personal costs. The amount within this column represents the incremental cost to us of providing this benefit to Mr. Kenningham, which is generally the difference between the amount paid by Mr. Kenningham for the use of our leased airplane under the standard industry fare level method and the lease cost to the Company for such use. |
Grants of Plan-Based Awards
Grants of Plan-Based Awards The following table provides information concerning each grant of an award made to our NEOs under the AIP and the LTIP during 2023:
Grants of Plan-Based Awards
| | | Possible Payouts Under Non-Equity Incentive Plan Awards(1) | | | Possible Payouts Under Equity Incentive Plan Awards(2) | | | All Other Stock Awards: Number | Grant Date Fair | | Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | of Shares of Stock or Units(3) (#) | Value of Stock Awards ($) | | Daryl A. Kenningham | — | 1,358,500 | 1,859,000 | 2,860,000 | — | — | — | — | — | | | 02/14/2023 | — | — | — | — | — | — | 7,601 | 1,750,016 | | | 02/14/2023 | — | — | — | 3, 800 | 7,600 | 15,200 | — | 1,749,786 | | Daniel J. McHenry | — | 466,900 | 670,600 | 875,000 | — | — | — | — | — | | | 02/14/2023 | — | — | — | — | — | — | 1,846 | 425,014 | | | 02/14/2023 | — | — | — | 923 | 1,845 | 3,690 | — | 424,784 | | Peter C. DeLongchamps | — | 383,525 | 550,850 | 718,750 | — | — | — | — | — | | | 02/14/2023 | — | — | — | — | — | — | 1,520 | 349,957 | | | 02/14/2023 | — | — | — | 760 | 1,520 | 3,040 | — | 349,957 | | Gillian A. Hobson | — | 367,764 | 528,212 | 689,212 | — | — | — | — | — | | | 02/14/2023 | — | — | — | — | — | — | 1,520 | 349,957 | | | 02/14/2023 | — | — | — | 760 | 1,520 | 3,040 | — | 349,957 | | Michael D. Jones | — | 350,175 | 502,950 | 656,250 | — | — | — | — | — | | | 02/14/2023 | — | — | — | — | — | — | 3,040 | 699,914 |
Grants of Plan-Based Awards
| (1) These columns reflect the possible payouts for 2023 under the AIP. The amounts shown in the “Threshold”, “Target” and “Maximum” columns assume achievement of 100% of the strategic goals under each performance tier for each NEO. See the “Annual Incentive Plan Compensation” column of the 2023 Summary Compensation Table for actual amounts paid to NEOs under the annual incentive compensation plan for services performed in 2023 and the “2023 Principal Elements of Compensation — Annual Incentive Awards” for a description of the AIP and how the payouts were determined. | | (2) These columns reflect the threshold, target and maximum number of shares that may be earned by the respective NEO based solely on performance levels achieved with respect to the performance share awards granted in 2023. The “Threshold” column reflects 50% of the target number of the award; the “Target” column reflects 100% of the target number of the award; and the “Maximum” column reflects 200% of the target number of the award. However, the awards were designed with a Maximum Value Limit, a supplemental maximum payout formula that is described further within the CD&A above. This Maximum Value Limit could potentially alter the number of shares of underlying common stock that could become payable pursuant to the award under any of the performance levels. | | (3) These amounts reflect the grants of restricted stock to the NEOs. |
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table The following is a discussion of material factors we believe are necessary to form an understanding of the information disclosed in the Summary Compensation Table and the Grants of Plan-Based Awards Table for 2023.
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End The following table provides information concerning restricted stock awards and performance share awards for our NEOs. As of December 31, 2023, none of our NEOs held any stock options.
Outstanding Equity Awards at Fiscal Year-End
| | Restricted Stock Awards(1) | | | Performance Share Awards(2) | | | Name | Grant Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested(4) ($) | Equity Incentive Plan Awards: Number of Unearned Shares or Units of Stock That Have Not Vested (#) | Equity Incentive Plan Awards: Market Value of Unearned Shares or Units of Stock That Have Not Vested(3) ($) | | Daryl A. Kenningham | 02/19/2019 | 2,736 | 833,769 | — | — | | | 02/17/2020 | 5,344 | 1,628,531 | — | — | | | 02/19/2021 | 6,120 | 1,865,009 | — | — | | | 02/15/2022 | 7,145 | 2,177,367 | — | — | | | 02/15/2022 | 12,812(2) | 3,904,329(2) | — | — | | | 02/14/2023 | 7,601 | 2,316,329 | 7,600 | 2,316,024 | | Daniel J. McHenry | 02/19/2019 | 800 | 243,792 | — | — | | | 02/17/2020 | 1,019 | 310,530 | — | — | | | 08/18/2020 | 828 | 252,325 | — | — | | | 02/19/2021 | 1,530 | 466,252 | — | — | | | 02/15/2022 | 2,143 | 653,058 | — | — | | | 02/15/2022 | 3,843(2) | 1,171,116(2) | — | — | | | 02/14/2023 | 1,846 | 562,550 | 1,845 | 562,245 | | Peter C. DeLongchamps | 02/19/2019 | 1,581 | 481,794 | — | — | | | 02/17/2020 | 2,138 | 651,534 | — | — | | | 02/19/2021 | 2,448 | 746,004 | — | — | | | 02/15/2022 | 2,001 | 609,785 | — | — | | | 02/15/2022 | 3,587(2) | 1,093,102(2) | — | — | | | 02/14/2023 | 1,520 | 463,205 | 1,520 | 463,205 | | Gillian A. Hobson | 02/14/2023 | 1,520 | 463,205 | 1,520 | 463,205 | | Michael D. Jones | 02/19/2019 | 1,073 | 326,986 | — | — | | | 02/17/2020 | 1,629 | 496,421 | — | — | | | 02/19/2021 | 2,040 | 621,670 | — | — | | | 02/15/2022 | 4,001 | 1,219,265 | — | — | | | 02/14/2023 | 3,040 | 926,410 | — | — |
Outstanding Equity Awards at Fiscal Year-End
| (1) This footnote is applicable to all awards within this column, other than awards specifically designated as being discussed in footnote 2 below. Forfeiture restrictions on our restricted stock awards prior to 2023 lapse over a five-year period in the following percentages: 40% of the award on the second anniversary of the grant date, and 20% on the third, fourth and fifth anniversaries of the grant date, respectively. Starting with the restricted stock awards granted in 2023, the forfeiture restrictions lapse over a three-year period in the following percentages: 33% of the award on the first and second anniversary of the grant date, respectively, and 34% on the third anniversary of the grant date. | | (2) Performance share awards are earned based on the Company’s performance over a designated performance period, as described in more detail within the CD&A above, as well as an additional one-year service requirement. The shares disclosed in these rows reflect performance share awards that have been earned as of December 31, 2023, and remain subject solely to time-based vesting requirements. For the performance share awards granted on February 15, 2022, the performance period began on January 1, 2022, and ended on December 31, 2023. The service-based vesting date for these awards will continue to be in effect until December 31, 2024. The values included in these rows are reflective of the actual shares earned as of the end of the performance period, which will remain outstanding and subject to vesting conditions until the vesting date. |
Outstanding Equity Awards at Fiscal Year-End
| (3) For the performance share awards granted on February 14, 2023, the performance period began on January 1, 2023, and ends on December 31, 2024. The service-based vesting date is December 31, 2025, and the values included in the table reflect payout of these awards at target. | | (4) Calculated using the value of our common stock at close of market on December 29, 2023, the last trading day of 2023, $304.74. |
Stock Vested in the 2023 Fiscal Year
Stock Vested in the 2023 Fiscal Year The following table provides information relating to the vesting of restricted stock and performance share awards during 2023 on an aggregated basis for each of our NEOs. None of our NEOs hold stock options awards.
Stock Vested in the 2023 Fiscal Year
| | Stock Awards | | | | | | Performance Share Awards | | Restricted Stock Awards | | | Name | Number of Shares Acquired on Vesting(1) (#) | Value Realized on Vesting(2) ($) | Number of Shares Acquired on Vesting(1) (#) | Value Realize on Vesting(2) ($) | | Daryl A. Kenningham | 5,632 | 1,722,998 | 12,084 | 2,843,687 | | Daniel J. McHenry | 1,406 | 430,138 | 3,541 | 845,022 | | Peter C. DeLongchamps | 2,251 | 688,648 | 5,978 | 1,408,437 | | Gillian A. Hobson | — | — | — | — | | Michael D. Jones | — | — | 4,046 | 952,656 |
Stock Vested in the 2023 Fiscal Year
| (1) Represents the gross number of shares acquired upon vesting of restricted stock and performance share awards, without taking into account any shares withheld to satisfy applicable tax obligations. | | (2) Represents the value of the vested restricted stock and performance shares, calculated by multiplying (a) the number of vested shares of restricted stock or performance shares, as applicable, by (b) the market value equal to the average of the high and low sales prices of our common stock on the vesting date. |
Nonqualified Deferred Compensation for the 2023 Fiscal Year
Nonqualified Deferred Compensation for the 2023 Fiscal Year The following table sets forth our NEOs’ information regarding the Deferred Compensation Plan, including, with respect to each officer: (1) the aggregate contributions made by the officer, (2) the aggregate interest or other earnings accrued and (3) the total balance of the officer’s account.
Nonqualified Deferred Compensation for the 2023 Fiscal Year
| Name | Executive Contributions in Last FY(1) ($) | Aggregate Earnings in Last FY(2) ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE(3) ($) | | Daryl A. Kenningham | — | 515,769 | (119,591) | 6,320,231 | | Daniel J. McHenry | 137,331 | 23,226 | — | 399,123 | | Peter C. DeLongchamps | — | 209,815 | (83,722) | 2,566,948 | | Gillian A. Hobson | — | — | — | — | | Michael D. Jones | 263,304 | 278,993 | — | 3,728,502 |
Nonqualified Deferred Compensation for the 2023 Fiscal Year
| (1) Reported as compensation to the NEO in the Summary Compensation Table for 2023 (including any compensation pursuant to the AIP earned during 2023 but paid in 2024). | | (2) The following portions of the aggregate earnings in the last fiscal year were reported in the 2023 “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of the 2023 Summary Compensation Table because they were above-market earnings: Mr. Kenningham ($216,857), Mr. McHenry ($9,765), Mr. DeLongchamps ($88,218) and Mr. Jones ($117,304). |
Nonqualified Deferred Compensation for the 2023 Fiscal Year
| (3) The following portions of the aggregate balance amounts for each of the following NEOs were reported as compensation to the officer in the Summary Compensation Table in previous years for which they were listed as NEOs: |
Nonqualified Deferred Compensation for the 2023 Fiscal Year
| | Daryl A. Kenningham ($) | Daniel J. McHenry ($) | Peter C. DeLongchamps ($) | | 2022 | 242,130 | 107,367 | 100,180 | | 2021 | 342,173 | 100,047 | 161,095 | | 2020 | 806,776 | — | 86,363 | | 2019 | 164,068 | — | 92,740 | | 2018 | 181,560 | — | 151,699 | | 2017 | 621,360 | — | 95,928 | | 2016 | — | — | 148,501 | | 2015 | — | — | 137,899 | | 2014 | — | — | 127,009 | | 2013 | — | — | 89,271 | | 2012 | — | — | 97,419 |
Nonqualified Deferred Compensation for the 2023 Fiscal Year
Pursuant to the Deferred Compensation Plan, certain corporate officers, including our NEOs, may defer up to 50% of their base salary and up to 100% of their incentive compensation. Deferral elections are to be made no later than the last day of the calendar year immediately preceding the calendar year in which such compensation is earned, or the first day of the next calendar quarter where the employee becomes eligible during the calendar year. Currently, 100% of each NEO’s account is vested. We may also make discretionary credits to a NEO’s account from time to time, which credits will be subject to a vesting schedule established by us at the time of such credit. We did not make any discretionary contribution credits during the 2021, 2022 or 2023 calendar years. Benefits under the Deferred Compensation Plan will be paid no earlier than upon the NEO’s termination of service, or, for deferrals made prior to January 1, 2021, upon a certain date elected by the NEO. Benefits will be paid, at the NEO’s election, in a lump sum or in annual instalments, although all distributions will be paid in cash. Payments upon the NEO’s termination of service may be delayed for six months, to the extent necessary to comply with the requirements of Section 409A of the Code. Except in the event of unforeseeable financial emergencies, effective January 1, 2021, in-service withdrawals are not permitted in the Deferred Compensation Plan, although the necessary portion of the NEO’s vested account balance may be distributed to satisfy certain employment, federal or state taxes. An unforeseeable financial emergency shall allow a NEO to access vested funds in his or her accounts upon the occurrence of: (1) a severe financial hardship of the NEO that results from an illness or accident of the NEO, or the NEO’s beneficiary, spouse or dependent; (2) loss of the NEO’s or the beneficiary’s property due to casualty; or (3) a similar extraordinary and unforeseeable circumstance as described in Section 409A of the Code arising as a result of events beyond the NEO’s control. Effective January 1, 2021, an annual contribution limit of $300,000 was implemented for all employee deferrals, including NEO deferrals, with a lifetime maximum contribution amount of $3.5 million. Deferred amounts will be deemed to be notionally invested in either the Group 1 Guaranteed Crediting Rate investment option or a money market fund. The Group 1 Guaranteed Crediting Rate investment option is a declared interest rate, set by the CHR Committee annually, and the rate is 8.5% for 2023.
Potential Payments upon Termination or Change in Control
Potential Payments upon Termination or Change in Control We believe providing certain senior corporate officers with severance payments and accelerated vesting of equity awards in certain circumstances are important retention tools. In addition, we believe that providing for “double-trigger” (defined below) payments and equity award vesting to certain key executives in connection with a “corporate change” helps maximize shareholder value by encouraging our executives to objectively review any proposed transaction, whether or not that executive will continue to be employed. A “double-trigger” payment or benefit becomes due in the event of a qualifying event, such as an involuntary termination of employment without cause or a termination of employment by the executive for good reason, in each case, in connection with a corporate change. Executive officers at other companies in the general market against which we compete for executive talent commonly have equity compensation plans that provide for accelerated vesting upon a corporate change and post-termination payments, and we have consistently provided this benefit to certain senior corporate officers to remain competitive in attracting and retaining skilled professionals. Disclosed below is the amount of compensation and/or other benefits that would be payable to each of our NEOs in the event of termination of their employment under the following scenarios: death, disability, with and without cause, for certain constructive termination events, in each case, following a corporate change. These potential payments are governed by the LTIP pursuant to which various equity incentive awards were issued, and, with respect to Messrs. Kenningham and McHenry, the terms of employment agreements or other individual written arrangements. None of our NEOs is entitled to an excise tax gross-up payment. For additional information regarding the employment agreements, see “Compensation Discussion and Analysis — Employment and Severance Agreements.”
CEO Pay Ratio
CEO Pay Ratio SEC regulations require that we provide a comparison of the annual total compensation of our CEO in 2023, to the annual total compensation of an individual identified as our median compensated employee.
Pay Versus Performance Disclosure
Pay Versus Performance Disclosure In accordance with SEC rules, we provide the following disclosure regarding executive “compensation actually paid” (“CAP”) and certain Company performance for the fiscal years listed below. Please refer to the CD&A for a complete description of how executive compensation relates to Company performance and how the CHR Committee makes its decisions.
Pay Versus Performance Disclosure
| | | | | | Average Summary | Average | Value of Initial Fixed $100 Investment Based On: | | | Adjusted | | Year | Summary Compensation Table Total for Kenningham(1) | Compensation Actually Paid to Kenningham(1) (2) (3) | Summary Compensation Table Total for Hesterberg(1) | Compensation Actually Paid to Hesterberg(1) (2) (3) | Compensation Table Total for Non-CEO NEOs(4) | Compensation Actually Paid to Non-CEO NEOs(2) (3) (4) | Total Shareholder Return | Peer Group Total Shareholder Return(5) | Net Income (in millions) | Net Income from Continuing Operations | | (a) | (b) | (c) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | | 2023 | $7,274,300 | $12,370,687 | N/A | N/A | $2,053,869 | $3,343,276 | $313.79 | $268.90 | $601.6 | $623.3 | | 2022 | N/A | N/A | $8,774,685 | $8,512,251 | $2,881,512 | $2,877,697 | $184.39 | $189.75 | $751.5 | $728.7 | | 2021 | N/A | N/A | $8,577,257 | $19,080,981 | $2,684,236 | $4,992,687 | $197.96 | $205.74 | $552.1 | $633.7 | | 2020 | N/A | N/A | $7,298,579 | $12,911,445 | $2,657,309 | $3,543,096 | $131.93 | $146.68 | $286.5 | $333.0 |
Pay Versus Performance Disclosure
| (1) Earl Hesterberg served as CEO until 12/31/2022. Effective 1/1/2023, Daryl Kenningham was named CEO. |
Pay Versus Performance Disclosure
| (2) Deductions from, and additions to, total compensation in the 2023 Summary Compensation Table to calculate Compensation Actually Paid consist of: |
Pay Versus Performance Disclosure
| | 2023 | | | | Daryl A. Kenningham | Average Non-CEO NEOs | | Total Compensation from Summary Compensation | $7,274,300 | $2,053,869 | | Adjustments for Pension | | | | Adjustment for Summary Compensation Table Pension | $0 | $0 | | Amount added for current year service cost | $0 | $0 | | Amount added for prior service cost impacting current year | $0 | $0 | | Total Adjustments for Pension | $0 | $0 | | Adjustments for Equity Awards | | | | Adjustment for grant date values in the Summary Compensation Table | $(3,499,802) | $(737,385) | | Year-end fair value of unvested awards granted in the current year | $6,420,975 | $1,284,874 | | Year-over-year difference of year-end fair values for unvested awards granted in prior years | $2,395,423 | $684,640 | | Fair values at vest date for awards granted and vested in current year | $0 | $0 | | Difference in fair values between prior year-end fair values and vest date fair values for awards granted in prior years | $(298,389) | $38,931 | | Forfeitures during current year equal to prior year-end fair value | $0 | $0 | | Dividends or dividend equivalents not otherwise included in the total compensation | $78,180 | $18,348 | | Total Adjustments for Equity Awards | $5,096,387 | $1,289,408 | | Compensation Actually Paid (as calculated) | $12,370,687 | $3,343,276 |
Pay Versus Performance Disclosure
| (3) Equity valuation assumptions for calculating Compensation Actually Paid are not materially different from grant date valuation assumptions. |
Pay Versus Performance Disclosure
| (4) Non-CEO NEOs reflect the average Summary Compensation Table total compensation and average Compensation Actually Paid for the following executives by year: |
Pay Versus Performance Disclosure
2023: Daniel J. McHenry, Peter C. DeLongchamps, Gillian A. Hobson, Michael D. Jones 2022: Daryl A. Kenningham, Daniel J. McHenry, Peter C. DeLongchamps, Darryl Burman 2021: Daryl A. Kenningham, Daniel J. McHenry, Frank Grese Jr., Peter C. DeLongchamps 2020: Daryl A. Kenningham, Daniel J. McHenry, John Rickel, Frank Grese Jr., Peter C. DeLongchamps
Pay Versus Performance Disclosure
| (5) The peer group is comprised of Lithia Motors, Autonation, Sonic Automotive, Penske Automotive Group, and Asbury Automotive Group | | (6) Reconciliations for Adjusted Net Income can be found on page 130 of this proxy statement |
PAY VERSUS PERFORMANCE: GRAPHICAL DESCRIPTION
PAY VERSUS PERFORMANCE: GRAPHICAL DESCRIPTION The illustrations below provide a graphical description of CAP (as calculated in accordance with the SEC rules) and the following measures:
PAY VERSUS PERFORMANCE: GRAPHICAL DESCRIPTION
| • | the Company’s cumulative TSR and the Peer Group’s cumulative TSR; | | • | the Company’s Net Income; and | | • | the Company Selected Measure, which is adjusted net income. |