-svg%3c/title%3e%3cstyle%3e%20.s0%20{%20fill:%20%23f37f00%20}%20.s1%20{%20fill:%20%23d52b1e%20}%20%3c/style%3e%3cg%20id='%23f37f00ff'%3e%3cpath%20id='Layer'%20class='s0'%20d='m449.1%200h150.7c-60.8%20106.4-121.3%20213-182%20319.5-89.1%20156.3-178.1%20312.6-267.1%20468.9-50.1%200-100.2%200-150.2%200%2079.9-140.7%20160-281.4%20240.1-422.1%2069.6-122%20138.8-244.3%20208.5-366.3z'/%3e%3cpath%20id='Layer'%20class='s0'%20d='m675.8%200h93c-93.2%20163.5-186.2%20327.1-279.3%20490.6-3.3%205.9-7%2011.7-9.7%2017.9-53.4%2093.3-106.7%20186.7-160.2%20279.9-30.9%200-61.9%200.1-92.8-0.1%20107.3-188.8%20215-377.4%20322.4-566.1%2042.3-74%2084.1-148.3%20126.6-222.2z'/%3e%3cpath%20id='Layer'%20class='s0'%20d='m866.7%200h54.9c-57%2099.7-113.5%20199.8-170.5%20299.6-92.6%20162.9-185.4%20325.8-278%20488.8-18.2%200-36.5%200-54.7%200%20104.2-183.7%20208.8-367.1%20313.1-550.8%2045.2-79.1%2090-158.5%20135.2-237.6z'/%3e%3cpath%20id='Layer'%20class='s0'%20d='m1028.9%200h26.3c-58.9%20103.1-117.3%20206.5-176.1%20309.7-90.8%20159.5-181.6%20319.1-272.3%20478.7-8.8%200-17.7%200-26.5%200%2075.6-132.9%20151.1-265.8%20226.8-398.6%2074-129.9%20147.7-260%20221.8-389.8z'/%3e%3c/g%3e%3cg%20id='%23d52b1eff'%3e%3cpath%20id='Layer'%20fill-rule='evenodd'%20class='s1'%20d='m1342.9%200h22.5c14.2%200.6%2028.5%201.2%2042.6%203.1%2015%202.3%2030%204.3%2044.7%207.8%2021%205.1%2041.6%2011.8%2061.1%2021.3%2018.1%208.9%2035.2%2020.5%2049.1%2035.2%2010.6%2011%2018.9%2024.1%2024.5%2038.3%208.4%2022.3%209.6%2047.2%203.8%2070.4-4.6%2020.2-13.5%2039-24.2%2056.7-105.1%20185.2-210.1%20370.5-315.4%20555.7-75.2-0.2-150.5%200-225.7-0.1%2032.6-57.6%2065.1-115.3%2097.8-172.9-37%200-74%200-110.9%200-32.7%2057.6-65.3%20115.3-97.8%20172.9-76.1%200-152.2%200.1-228.2%200%20116.5-205.9%20232.8-411.9%20349.3-617.7%2018.6-37.2%2045.4-70.3%2078.2-95.8%2023.6-18.9%2050.3-33.8%2078.2-45.2%2047.8-19.1%2099.2-27.9%20150.4-29.7zm-91%20218.3c-12.8%206.4-23.4%2016.7-31%2028.7-34.3%2060.3-68.1%20120.9-102.4%20181.2%2037%200.1%2074%200%20111%200%2030.6-54%2061.1-108.2%2091.7-162.2%204.7-8.9%209.5-18.1%2010.2-28.2%200.5-7-2.1-14.7-7.9-18.8-7.1-5.5-16.2-7.2-24.8-8.4-15.9-1.6-32.4%200.5-46.8%207.7z'/%3e%3c/g%3e%3c/svg%3e)
DEF 14A of Autozone Inc
Filed Oct 30, 2024 · FY20240001558370-24-013963
Director independence
Director independence As stated in AutoZone’s Corporate Governance Principles, a substantial majority of the Board of Directors should be independent in accordance with the rules of the New York Stock Exchange (“NYSE”). The Board annually assesses each director’s independence after reviewing relevant relationships involving the director and AutoZone. As part of this review, the Nominating and Corporate Governance Committee and the Board considered all such relationships involving AutoZone’s non-employee directors, including the below matters. Ordinary Course Transactions and Business Relationships. The Company routinely procures goods or services from various entities for which a director or his or her immediate family member may be affiliated. During FY24, all such transactions were conducted in the ordinary course of business and on an arms-length basis.
Director independence
| ● | Ms. Soltau is a member of the board of directors of Southwest Airlines Co. from which AutoZone purchased airline tickets. |
Director independence
| ● | Mr. Hannasch is Special Advisor to the President and Chief Executive Officer of Alimentation Couche-Tard, which operates Circle K convenience stores from which AutoZone purchased miscellaneous goods. |
Director independence
| ● | Mr. Jordan is the Chief Executive Officer and Chairman of the board of directors of First Horizon Corporation. First Horizon holds various AutoZone deposit accounts and participates in one of AutoZone’s supplier confirmed receivables programs (under which some AutoZone vendors are borrowers, but AutoZone is not a party to those agreements). |
Director independence
| ● | Ms. King is a member of the board of directors of Unum Group from which AutoZone procured group insurance benefits. |
Director independence
Current or Prior Employment of Immediate Family Member. Directors may have an immediate family member who is an AutoZoner. In FY24, all such employment relationships were in a non-officer capacity and all compensation-related decisions were made in a manner that is consistent with internal practices and policies. Charitable Contributions or Event Sponsorships. The Company periodically makes donations to not-for-profit organizations or sponsors events with which Board members or their immediate family members may be affiliated. During FY24, all such contributions were conducted in the ordinary course of business and consistent with AutoZone’s charitable giving guidelines or otherwise in furtherance of a business purpose. As such, the Board concluded that none of these transactions were, individually or cumulatively, material to AutoZone and also did not materially benefit any director, directly or indirectly. Accordingly, the Board affirmatively determined that none of Mses. Goodspeed, King, or Soltau or Messrs. George, Graves, Guimaraes, Hannasch, Jordan or Mrkonic has a material relationship with the Company other than in their capacity as a Board member and that all of them are independent within the meaning of the AutoZone Corporate Governance Principles, the NYSE listing standards and applicable law. The Board also determined that Messrs. Rhodes and Daniele are not independent since each is an employee of the Company. COMMITTEES. AutoZone’s Board has three standing committees, each consisting solely of independent directors—the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee (the “Standing Committees”). Additional information about each of the Committees is included below.
Director independence
| 8 | | 2024 Proxy Statement |
Director independence
GOVERNANCE DOCUMENTS. The key governance documents and policies adopted by the Board are:
Director independence
| ● | Corporate Governance Principles; |
Director independence
| ● | Charters for its Audit, Compensation, and Nominating & Corporate Governance Committees; |
Director independence
| ● | Code of Conduct for all directors, officers and employees; |
Director independence
| ● | Code of Ethical Conduct for Financial Executives; and |
Director independence
| ● | Policy on Political Contributions and Lobbying Engagements. |
Director independence
The Board reviews these corporate governance documents and policies from time to time and revises them when it believes it serves the interests of the Company and its shareholders to do so, such as in response to changing governance practices or legal requirements. For example, in fiscal year 2024, following the CEO succession, the Nominating and Corporate Governance Committee, together with input and feedback from all Board members, conducted a thorough review and update of the Corporate Governance Principles. Each of these documents is available on our website at investors.autozone.com and is also available, free of charge, in print to any shareholder who requests it. ENVIRONMENTAL, SOCIAL & GOVERNANCE REPORTS. As part of our commitment to continuous improvement and maximizing long-term shareholder value, the Company’s commitment to sustainability has expanded over time. AutoZone has published an ESG Report, and the most current version of this report covering the 2023 Fiscal Year is available on our website at www.investors.autozone.com. Our website and the information contained therein or linked thereto are not intended to be incorporated into this Proxy Statement. Further, our ESG Report is not, and will not be deemed to be, a part of this Proxy Statement or incorporated by reference herein or into any of our other filings with the SEC.
Director Compensation
Director Compensation AutoZone’s current director compensation program became effective January 1, 2024 (the “Director Compensation Program”). Annual Retainer Fees. Non-employee directors receive an annual retainer fee (the “Annual Retainer”). Furthermore, each director is eligible to receive an additional fee (“Additional Fee”), the amount of which varies depending on his or her role. The Additional Fees and the Annual Retainer, enumerated below, together comprise the “Director Compensation”. There are no meeting fees.
Director Compensation
| Director Compensation Components | ($) | | Annual Retainer | 270,000 | | Additional Fees: | | | Lead Director | 35,000 | | Audit Committee Chair | 30,000 | | Audit Committee Member | 15,000 | | Compensation Committee Chair | 25,000 | | Nominating & Corporate Governance Committee Chair | 20,000 |
Director Compensation
Under the 2020 Omnibus Incentive Award Plan (the “2020 Omnibus Incentive Plan”) and Director Compensation Program, non-employee directors receive Director Compensation in the form of immediately vested Restricted Stock Units (“RSUs”). A non-employee director may elect to receive a fixed portion of the Annual Retainer plus any Additional Fees in the form of cash, paid in quarterly installments (the “Cash Election”), with the remainder of the Annual Retainer paid in the form of RSUs. The Cash Election during calendar year 2024 was $100,000 but all directors elected to receive compensation fully in RSUs. All RSUs are granted on January 1 of the applicable calendar year. If a non-employee director is elected to the Board, or assumes a different position, after January 1, he or she will receive the Annual Retainer and/or Additional Fees, prorated based on the number of days remaining in the calendar year, for RSUs, or the number of days remaining in the quarter, for cash, as applicable. RSUs granted to non-employee directors are fully vested on the date of grant and become payable, or are settled, on the date on which the non-employee director ceases to be a director (the “Payment Date”), or at the director’s election, on the first or fifth anniversary of the grant date. Upon timely delivery of an election form, a non-employee director may elect to receive payment on the date on which he or she ceases to be a director. RSUs are payable in shares of AutoZone common stock no later than the fifteenth day of the third month following the end of the tax year in which such Payment Date occurs. COMPENSATION-SETTING PROCESS. The Compensation Committee reviews the Board’s compensation on a biennial basis to ensure that non-employee directors are reasonably compensated in relation to AutoZone’s peer group companies (discussed in detail under Benchmarking) and to comparable U.S. companies in general. AutoZone’s 2020 Omnibus Incentive Plan contains a dollar limit of $750,000 on the total amount of annual compensation payable to its non-employee directors, provided that the Board may make exceptions to this limit under extraordinary circumstances.
Director Compensation
| 18 | | 2024 Proxy Statement |
Director Compensation Table
Director Compensation Table This table shows the compensation paid to our non-employee directors during the 2024 fiscal year.
Director Compensation Table
| | Fees | Stock | | | | Paid in Cash | Awards | | | | ($) | ($) | Total | | Name (1) | (2) | (3)(4) | ($) | | Michael A. George | — | 285,000 | 285,000 | | Linda A. Goodspeed | — | 285,000 | 285,000 | | Earl G. Graves, Jr. | — | 325,000 | 325,000 | | Enderson Guimaraes | — | 270,000 | 270,000 | | Brian P. Hannasch | — | 270,000 | 270,000 | | D. Bryan Jordan | — | 300,000 | 300,000 | | Gale V. King | — | 270,000 | 270,000 | | George R. Mrkonic, Jr. | — | 310,000 | 310,000 | | Jill A. Soltau | — | 270,000 | 270,000 |
Director Compensation Table
| (1) Each of Philip B. Daniele, III and William C. Rhodes, III serves on the Board but does not receive any compensation for his service as a director. Their respective compensation as employees of the Company are shown in the Summary Compensation Table on page 66. |
Director Compensation Table
| (2) This column represents the portion of the Director Compensation that was paid in cash and earned in fiscal year 2024 pursuant to the Cash Election, as described above. |
Director Compensation Table
| (3) The “Stock Awards” column represents the aggregate grant date fair value computed in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718 for awards of Restricted Stock Units under the 2020 Omnibus Incentive Plan during fiscal year 2024. See Note B Share-Based Payments, to our consolidated financial statements in the FY24 Form 10-K for a discussion of our accounting for share-based awards and the assumptions used. The aggregate number of outstanding awards of common stock under the AutoZone, Inc. 2003 Director Compensation Plan (“Stock Units”) and Restricted Stock Units held by each director at the end of fiscal 2024 are shown in the following footnote 4. See the section titled “Share Ownership Information” beginning on page 76 for more information about our directors’ stock ownership. |
Director Compensation Table
| (4) As of August 31, 2024, each current non-employee director had the following aggregate number of outstanding Restricted Stock Units and Stock Units: |
Director Compensation Table
| | Restricted | | | | Stock | Stock | | | Units | Units | | Name | (#) | (#) | | Michael A. George | 332 | — | | Linda A. Goodspeed | 2,802 | — | | Earl G. Graves | 4,958 | 3,417 | | Enderson Guimaraes | 3,155 | — | | Brian P. Hannasch | 719 | — | | D. Bryan Jordan | 3,098 | — | | Gale V. King | 1,170 | — | | George R. Mrkonic, Jr. | 3,470 | 1,405 | | Jill A. Soltau | 1,087 | — |
Director Compensation Table
| 2024 Proxy Statement | | 19 |
Director Compensation Table
Stock Ownership Requirement. The Board has established a stock ownership requirement for non-employee directors. Each director is required to own AutoZone common stock and/or RSUs having a cumulative fair market value in an amount equal to seven times the value of the cash Annual Retainer payable pursuant to the Director Compensation Program within five years of joining the Board, and to maintain such ownership level thereafter. Exceptions to this requirement may only be made by the Board under compelling mitigating circumstances. Shares, Stock Units and RSUs issued under the AutoZone, Inc. Second Amended and Restated Director Compensation Plan, the 2003 Director Compensation Plan, the 2011 Equity Plan, the Amended 2011 Equity Plan and the 2020 Omnibus Incentive Plan count toward this requirement. As of the date of this Proxy Statement, each director meets or exceeds his or her obligations under the requirement. OTHER PREDECESSOR PLANS. The AutoZone, Inc. Second Amended and Restated Director Compensation Plan was terminated in December 2002 and was replaced by the AutoZone, Inc. First Amended and Restated 2003 Director Compensation Plan (the “2003 Director Compensation Plan”) and the AutoZone, Inc. First Amended and Restated 2003 Director Stock Option Plan (the “2003 Director Stock Option Plan”). The 2003 Director Compensation Plan and the 2003 Director Stock Option Plan were terminated in December 2010 and replaced by the 2011 Equity Plan. The 2011 Equity Plan was terminated in December 2015 and replaced with the Amended 2011 Equity Plan. In December 2020, shareholders approved the 2020 Omnibus Incentive Plan and no further grants have been made under the Amended 2011 Equity Plan. However, grants made under those plans continue in effect under the terms of the grant made and are included in the aggregate awards outstanding shown above.
Director Compensation Table
| 20 | | 2024 Proxy Statement |
Nominees
Nominees
Nominees
| PHILIP B. DANIELE, III | | | | Age: 55 Director Since: 2024 Independent: No Committees: None | BIOGRAPHY: Mr. Daniele was appointed to the role of President and Chief Executive Officer in January 2024. Prior to being named CEO-Elect in June 2023, Mr. Daniele had served as Executive Vice President – Merchandising, Marketing and Supply Chain from June 2021 to September 2023 and Senior Vice President – Commercial from 2015 to 2021. In addition, Mr. Daniele held the roles of Vice President – Commercial Support from 2013 to 2015, Vice President – Merchandising from 2008 to 2013, and Divisional Vice President – Store Operations from 2005 to 2008. Prior to 2005, Mr. Daniele held several other key management positions with the Company. | KEY SKILLS: ● CEO ● Retail ● Operations | | | QUALIFICATIONS: ● 31 years of AutoZone tenure with experience leading multiple functional areas. ● Held nearly every role in store operations. ● Approximately 40 years of experience in the aftermarket automotive industry. | | | MICHAEL A. GEORGE | | | | Age: 63 Director Since: 2022 Independent: Yes Committees: ● Audit | BIOGRAPHY: Mr. George served as President and Chief Executive Officer of Qurate Retail, Inc. from March 2018 to September 2021, the parent company of QVC, and as Chief Executive Officer of QVC from 2005 through July 2021. He previously held various positions with Dell, Inc. from 2001 to 2005, most notably as the Chief Marketing Officer and General Manager of its U.S. consumer business. Prior to that, Mr. George was a senior partner at McKinsey & Company and led the firm’s North American Retail Industry Group. | KEY SKILLS: ● CEO ● Retail ● Marketing | | | QUALIFICATIONS: ● Significant experience in the retail industry due to extensive career as Chief Executive Officer of QVC/Qurate and serving as leader of McKinsey’s North American Retail Industry Group. ● Brings fresh perspective on issues of marketing, customer experience and e-Commerce, given the unique nature of QVC’s video-driven retail business. ● Having extensive experience as CEO and a public company director enables him to be an effective and informed contributor to the Board. PUBLIC DIRECTORSHIPS (last five years): ● Ralph Lauren Corp. (2018 – present) ● Qurate Retail, Inc. (2011 – 2021) ● Brinker International, Inc. (2013 – 2019) | |
Nominees
| 26 | | 2024 Proxy Statement |
Nominees
| LINDA A. GOODSPEED | | | | Age: 62 Director Since: 2013 Independent: Yes Committees: ● Audit ● Compensation | BIOGRAPHY: Ms. Goodspeed served as the Chief Operating Officer and a Managing Partner at WealthStrategies Financial Advisors from 2007 until her retirement in 2017. She had served as Senior Vice President and Chief Information Officer of ServiceMaster from 2011 to 2014. From 2008 to September 2011, Ms. Goodspeed served as Vice President, Information Systems and Chief Information Officer for Nissan North America, Inc., a subsidiary of Nissan Motor Company, a global manufacturer of vehicles. From 2001 to 2008, Ms. Goodspeed served as Executive Vice President and Chief Technology Officer at Lennox International, Inc., a global manufacturer of air conditioning, heating and commercial refrigeration equipment. | KEY SKILLS: ● Information Technology ● Automotive ● Public Board Experience | | | QUALIFICATIONS: ● Deep experience with respect to information technology (IT) matters gained from leading complex IT organizations while serving as Chief Information Officer. ● Knowledge of automotive industry lends valuable insights into risks and opportunities affecting automotive aftermarket industry. ● Experience serving on different public company boards enables her to contribute and serve the Board in a highly effectively manner. | | | | PUBLIC DIRECTORSHIPS (last five years): ● American Electric Power Co., Inc. (2006 – 2024) ● Darling Ingredients Inc. (2017 – present) ● Williams Industrial Services Group Inc. (2021 – 2023) ● Global Power Equipment Group (2016 – 2018) | |
Nominees
| EARL G. GRAVES, JR. | | | | Age: 62 Director Since: 2002 Independent: Yes (Lead Independent Director) Committees: ● Nominating & Corp Gov (Chair) | BIOGRAPHY: Mr. Graves has been the President and Chief Executive Officer of Black Enterprise, the premier business, investing and wealth-building resource for African Americans providing valuable business information across different content channels. He has served in this role since January 2006 and served as its President and Chief Operating Officer from 1998 to 2006. Mr. Graves has been employed by the same company in various capacities since 1988. QUALIFICATIONS: ● Significant expertise in marketing, customer insights and brand awareness. ● Deep knowledge of human capital management matters gained from extensive career leading Black Enterprise. ● Vast experience in overseeing and advising on matters of digital strategy. | KEY SKILLS ● CEO ● Marketing ● Human Capital Management |
Nominees
| 2024 Proxy Statement | | 27 |
Nominees
| BRIAN P. HANNASCH | | | | Age: 58 Director Since: 2022 Independent: Yes Committees: ● Compensation | BIOGRAPHY: Mr. Hannasch served as President and Chief Executive Officer of Alimentation Couche-Tard, which operates Circle K, a global fuel and convenience retailer, from September 2014 to September 2024. Today, Mr. Hannasch continues as Special Advisor to his successor. Mr. Hannasch joined Couche-Tard in 2001 and served as Chief Operating Officer, Senior Vice President of U.S. Operations and Senior Vice President of Western North America prior to serving as CEO. QUALIFICATIONS: ● Extensive knowledge of retail operations gained from serving in operational leadership roles of increasing responsibility. ● 10 years of experience serving as CEO of a public, global, retail enterprise allowing him to offer directly comparable experiences, learnings and insights relating to AutoZone’s business as well as matters of corporate governance. ● Led the expansion of Couche-Tard brands into numerous international markets including Europe and Asia. PUBLIC DIRECTORSHIPS (last five years): ● Alimentation Couche-Tard (2014 – present) | KEY SKILLS: ● CEO ● Operations ● International |
Nominees
| GALE V. KING | | | | Age: 68 Director Since: 2018 Independent: Yes Committees: ● Compensation | BIOGRAPHY: Ms. King served as the Executive Vice President—Chief Administrative Officer of Nationwide Mutual Insurance Company, a leading financial services company, from 2012 through her retirement in July 2021. She previously served as their Executive Vice President—Chief Human Resources Officer from 2009 to 2012. QUALIFICATIONS: ● Extensive experience in human resources providing critical insights into recruitment, retention, training and development and other issues of human capital management. ● Served as chair of Board’s ad hoc CEO succession planning committee culminating in the June 2023 announcement of Mr. Daniele as CEO-Elect. ● Experience serving on different public company boards enables her to contribute and serve the Board in a highly effective manner. PUBLIC DIRECTORSHIPS (last five years): ● J.B. Hunt Transport Services, Inc. (2020 – 2023) ● Unum Group (2022 – present) | KEY SKILLS: ● Human Resources ● Public Directorship |
Nominees
| 28 | | 2024 Proxy Statement |
Nominees
| GEORGE R. MRKONIC, JR. | | | | Age: 72 Director Since: 2006 Independent: Yes Committees: ● Audit ● Compensation (Chair) | BIOGRAPHY: Mr. Mrkonic is the retired non-Executive Chairman of Maru Group, a London, UK based research, insight and advisory services firm. Previously, he was the Non-Executive Chairman of Paperchase Products Limited, London, UK, a retailer of cards, stationery, wraps and gifts in the UK, Europe and the Middle East since 2005, and had been a director since 1999. Prior to that, he was President of Borders Group, Inc. from 1994 to 1997 and Vice Chairman from 1994 to 2002. QUALIFICATIONS: ● Vast retail experience gained from serving as a senior executive and board member at several retail companies. ● Extensive knowledge and understanding of corporate strategy, finance, governance and compensation programs. ● Served on multiple public company boards allowing for relevant and informed insights and learnings. PUBLIC DIRECTORSHIPS (last five years): ● Ulta Salon, Cosmetics & Fragrance, Inc. (2015 – present) ● Brinker International, Inc. (2003 – 2021) | KEY SKILLS: ● Public Directorship ● Strategy / Bus Development ● Retail |
Nominees
| WILLIAM C. RHODES, III | | | | Age: 59 Director Since: 2005 Independent: No Committees: None | BIOGRAPHY: Mr. Rhodes serves as Executive Chairman of the Board. Prior to the CEO succession in January 2024, Mr. Rhodes served as AutoZone’s President and Chief Executive Officer, and a director since 2005 and was named Chairman in 2007. Previously, he served in various capacities of increasing responsibility within the Company since 1994. Prior to 1994, Mr. Rhodes was a manager with Ernst & Young LLP. QUALIFICATIONS: ● Nearly 30 years of AutoZone tenure, including nearly 19 years as President and Chief Executive Officer. ● Extensive knowledge and understanding of the automotive aftermarket industry domestically and internationally. ● Expertise of the retail industry gained from AutoZone tenure, prior retail board experience and leadership experience at retail industry trade group. ● Strong financial expertise to drive long-term profitable growth. PUBLIC DIRECTORSHIPS (last five years): ● Regions Financial Corp. (2024 – present) ● Dollar General Corp. (2009 – 2023) | KEY SKILLS: ● CEO ● Retail ● Strategy / Bus Development ● Finance |
Nominees
| 2024 Proxy Statement | | 29 |
Nominees
| JILL A. SOLTAU | | | | Age: 57 Director Since: 2018 Independent: Yes Committees: ● Nominating & Corp Gov | BIOGRAPHY: Ms. Soltau served as the Chief Executive Officer and a member of the Board of Directors of the J.C. Penney Company, Inc., from October 2018 to December 2020. She previously served as President and Chief Executive Officer of JoAnn Stores Inc. from February 2015 to October 2018. Prior to joining JoAnn, Ms. Soltau served as President of Shopko Stores Operating Co. LLC and has held senior level positions in national and regional retailers, including Kohl’s and former Saks Inc. subsidiaries. QUALIFICATIONS: ● Significant experience serving as Chief Executive Officer in public and private retailers with deep knowledge of retail operations, strategic planning and business development ● Extensive expertise and modern approach in the retail industry from a career serving in leadership roles of increasing responsibility in customer facing functions of merchandising, marketing and operations ● Serves on multiple public company boards providing valuable and relevant insights and perspectives. PUBLIC DIRECTORSHIPS (last five years): ● Southwest Airlines Co. (2023 – November 2024) ● Kirkland’s Inc. (2022 – present) ● J.C. Penney Company, Inc. (2018 – 2020) | KEY SKILLS: ● CEO ● Retail ● Strategy / Bus Development ● Merchandising |
Nominees
| 30 | | 2024 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS
| Table of Contents | | Compensation Committee Report | | Executive Summary | 39 | The Compensation Committee of the Board has reviewed and discussed with management the following CD&A. Based on such review and discussions, the Committee recommended to the Board of Directors that the CD&A be included in this proxy statement. Compensation Committee, George R. Mrkonic, Jr. (Chair) Brian P. Hannasch Linda A. Goodspeed Gale V. King | | FY24 Year in Review | 39 | | | Letter from the Compensation Committee | 40 | | | Shareholder Support and Engagement | 41 | | | Q&A with Our Compensation Committee Chair | 42 | | | Leadership Transition | 44 | | | Diversity, Equity and Inclusion | 44 | | | Compensation Framework | 45 | | | Guiding Principles | 45 | | | Compensation Elements and Mix | 48 | | | Target Compensation Mix | 49 | | | Compensation Governance | 50 | | | Compensation Committee Oversight | 50 | | | Roles and Responsibilities | 50 | | | Benchmarking | 52 | | | Establishing Compensation Levels | 53 | | | Compensation Program Details | 55 | | | Base Salary | 55 | Named Executive Officers | | Annual Incentive Plan | 56 | WILLIAM C. RHODES, III Executive Chairman PHILIP B. DANIELE, III President and Chief Executive Officer JAMERE JACKSON Chief Financial Officer THOMAS B. NEWBERN Chief Operating Officer WILLIAM R. HACKNEY Executive Vice President, Merchandising, Marketing and Supply Chain KENNETH E. JAYCOX, JR. Senior Vice President, Commercial *Reflects titles as of fiscal year-end. | | Long-Term Incentive Plan | 59 | | | One-Time Special Awards | 61 | | | Other Practices, Policies & Guidelines | 62 | | | Summary Compensation Table | 66 | | | Grants of Plan-Based Awards | 67 | | | Outstanding Equity Awards at Fiscal Year-End | 68 | | | Option Exercises and Stock Vested | 69 | | | Nonqualified Deferred Compensation | 69 | |
LETTER FROM THE COMPENSATION COMMITTEE
LETTER FROM THE COMPENSATION COMMITTEE To Our Valued Shareholders, We, as the Compensation Committee, are pleased to present this year’s Compensation Discussion and Analysis (CD&A) for AutoZone. Our executive compensation program is rooted in long-term shareholder value, and this year’s CD&A discusses our fiscal year 2024 executive compensation program decisions, highlighting how our distinctive approach to long-term incentives has driven exceptional performance for over two decades. At AutoZone, our compensation philosophy has always prioritized long-term value creation over short-term gains. This is why we have consistently relied on stock options as the cornerstone of our Long-Term Incentive Plan (“LTIP”), albeit a unique choice for public companies in today’s business environment. And while relative to other executive compensation programs our approach may be unconventional, over the past 20 years, it has proven quite effective, helping us to deliver exceptional results: our Total Shareholder Return (TSR) has averaged approximately 20% per year, significantly outperforming both the S&P 500 and S&P Retail Indices, placing us in the top 3% of all public companies based on TSR. In addition, our fixed share approach, granting approximately 0.9% of shares annually, ensures that the true cost to shareholders remains predictable and transparent. Even during market disruptions, our LTIP has proven resilient, driving both retention and performance. For these reasons, we continue to stand by our decision to maintain its core structure. At the same time, we also highly value shareholder input. Since the introduction of the “Say-on-Pay” advisory vote in 2011, we have consistently received strong support for our compensation practices, with no less than 86% of votes cast in favor before 2023. However, last year’s 78% support marked a change and prompted us to enhance our engagement efforts to better understand shareholder feedback and address any concerns. Most of our shareholders continue to share that they strongly support our program and approach to equity grants, as well as appreciate our unwavering focus on managing the cost of our program. However, we recognize that the direct connections between the significant growth in our stock price, the Black-Scholes value of stock options, and our fixed share rate model has contributed to a notable rise in the total value of our equity grants from prior years. As a result, to reset the connection between the Black-Scholes value of stock options and the fixed share rate, the Compensation Committee will grant stock options to the NEOs in FY25 at the same award value as FY24 (the actual number of options granted was reduced). We also made additional refinements to our executive compensation program based on feedback, detailed on pages 41-42 of this CD&A. For further clarity, pages 42-43 of this CD&A include a special Q&A section addressing common questions about our use of stock options and a fixed share model. Thank you for your continued trust and support. We appreciate the care you will take in reviewing this year’s CD&A and are confident it reflects our commitment to continually strengthening our compensation program and aligning it with shareholder interests. We remain dedicated to fostering long-term growth, creating shareholder value, and maintaining an executive compensation program that supports these objectives. Sincerely,
SAY-ON-PAY & Shareholder Engagement
SAY-ON-PAY & Shareholder Engagement At Autozone, we believe that maintaining a strong and transparent relationship with our shareholders is essential to our long-term success. We have always been committed to engaging with our shareholders on key issues, including our executive compensation practices. This commitment is reflected in the consistently high levels of support we have received through our annual “Say-on-Pay” advisory vote since 2011. At our 2023 Annual Meeting of Shareholders, we continued to receive strong majority support for our executive compensation program. However, our lower vote outcome reinforced our ongoing dedication to listening to our shareholders and responding to their feedback. Since July 2024, we proactively reached out to shareholders representing 74% of our outstanding shares as of June 30, 2024 and invited them to join the Chair of the Compensation Committee, in virtual meetings to discuss our program. Our goal was to listen to and understand our shareholders’ perspectives and engage in constructive dialogues to gather further insights on the areas of specific concern. By October 2, 2024, we conducted meetings with shareholders representing approximately 52% of our shares. The Compensation Committee Chair participated in all the meetings and shared the feedback directly with the other Compensation Committee members, as well as the full Board. The central topic of our discussions was about our unique approach to long-term incentives. Most of our shareholders continue to strongly support the design of our LTIP but requested more details for our decision to continue to use 100% stock options and a fixed share model since it is an unconventional approach (please see pages 42-43 of this CD&A for a special Q&A section addressing common questions about our approach). Shareholders also provided feedback on other aspects of our program, including observations that informed refinements for FY24 and FY25. Below is a summary of the key messages we heard from our shareholders and how we have responded.
SAY-ON-PAY & Shareholder Engagement
| niv | | | | What We Heard | How We Responded | | | Some shared concerns about the continued use of 100% traditional stock options in our LTIP and the increased value of equity grants compared to prior years | ● Froze the total stock option equity compensation (based on the Black-Scholes value) granted to NEOs based upon FY24 grants granting the same total stock option compensation value in FY25 ● Granted 50% of the Executive Chairman’s FY24 LTIP award using premium-priced stock options (10% above stock price on date of grant) with a 100% cliff vest after five years, and further reduced the Executive Chairman’s FY25 LTIP grant to $2,350,000, to less than half of the FY24 grant value ● Granted 25% of the CEO’s FY25 LTIP awards using premium-priced stock options (10% above stock price on date of grant), each with a 100% cliff vest after five years, aligning total compensation to approximately the 30th percentile of the Peer Group For more information about how we set compensation levels for our CEO, Executive Chairman and other NEOs, please refer to page 53 of this CD&A. | | | Some expressed a preference for deferred vesting on stock options beyond the 1st anniversary of the Vesting Commencement Date | ● Changed the vesting schedule* starting with FY25 grants from 25% per year annually to the following: | | | | % Vested | Anniversary of Vesting Commencement Date | | | 0% | 1st Year | | | 50% | 2nd Year | | | 25% | 3rd Year | | | 25% | 4th Year | | | *Note: Any Executive Committee member who is 55 years or older but has less than 15 years of service with AutoZone will continue to have their stock options vest in four equal tranches starting on first anniversary of the Vesting Commencement Date. | |
SAY-ON-PAY & Shareholder Engagement
| niv | | | What We Heard | How We Responded | | Some would like a maximum on annual incentive plan payouts, and do not support the upside opportunity executive officers’ have driven by the individual modifier component of annual incentive awards | ● In FY23 we implemented maximum payout opportunity of 300% for annual incentive plan awards ● Eliminated the individual modifier component of the annual incentive plan effective FY25. | | Some wanted to better understand why we don’t explicitly use of Environmental, Social Governance (“ESG”) metrics in our annual incentive plan | ● Culturally, we believe ESG initiatives are important, and they are embedded in everything we do. As such, we do not believe that ESG as standalone metrics in our annual incentive plan would materially drive results. We expect and hold our AutoZoners accountable, especially our executive officers, to be environmentally responsible, inclusive and respectful practicing sound governance as part of their everyday behaviors. | | Some questioned the perquisites offered to executives | ● The largest benefit we offer is our match on charitable contributions of up to $50,000, annually. This perquisite is reflective of AutoZone’s culture of giving. On average, it is approximately 40% of total perquisite value. All other benefits are consistent with market practice. |
Q&A WITH OUR COMPENSATION COMMITTEE CHAIR
Q&A WITH OUR COMPENSATION COMMITTEE CHAIR In response to shareholder interest in our unique approach to long-term incentives, below are answers to some commonly asked questions we receive about our focus on stock options and additional insights into why we’ve maintained our current compensation strategy.
How do you manage between long-term and short-term performance incentives?
How do you manage between long-term and short-term performance incentives? At AutoZone we are focused on the primary mission of creating long-term sustainable value. While we certainly want to perform in the short-term as well, we never want that to be at the expense of long-term value creation. We balance those two objectives in the following ways: 1. By making the long-term incentives do most of the work by allocating 81% of total compensation of the NEO’s to long-term compensation versus only 8% for short-term awards; 2. By paying short-term compensation on Economic Profit, which is 50% based on EBIT and 50% based on ROIC. We believe that these metrics balance annual growth and return while driving long-term value creation; 3. By setting realistic bottoms up plans for the short-term plan that are not so stretched that management would ever need to compromise future performance to achieve the short-term reward. We believe we have achieved the right balance in both short- and long-term goal setting and performance management if we meet or exceed those short-term targets routinely (as we have done in 17 out of the last 20 years for the EBIT portion of the award) while at the same time exceeding any relevant benchmarks over the long-term (AutoZone has generated TSR in the top 3% of all public companies over the last 20 years).
How do you manage between long-term and short-term performance incentives?
| 42 | | 2024 Proxy Statement |
How do you manage between long-term and short-term performance incentives?
Why does AutoZone prioritize stock options over performance share units (PSUs) in its Long-Term Incentive Plan? We believe stock options are the most effective way to align management incentives with long-term shareholder value. Unlike PSUs, which can sometimes shift focus to short-term accounting metrics, stock options encourage sustainable, high-return investments that drive long-term performance in a way that is 100% aligned with shareholders. Our stock option plan ensures that management remains focused on consistent, long-term value creation. In addition, executives tend to hold onto their options longer than is typical, effectively behaving like shareholders who balance protecting in-the-money value with driving future growth. Given the proven effectiveness of stock options in driving performance and retention, as well as their strong alignment with shareholder interests, we believe it would be irresponsible to shift away from this strategy. Our plan remains cost-competitive for shareholders and essential to sustaining long-term success. How do stock options support AutoZone’s long-term value creation? Stock options provide continuous and dynamic incentives that directly align with shareholder interests. By focusing on maximizing share price over the long term, management avoids short-term trade-offs that could harm sustainable growth. This approach has proven resilient even during market disruptions, such as the COVID-19 pandemic and the financial crisis of 2008. Why does AutoZone use a fixed percentage of shares rather than the more common Black-Scholes model? We prefer a fixed percentage of shares approach because it directly ties the true shareholder cost—dilution—to a real and predictable metric: the annual share count. This approach offers greater transparency and aligns our practices with the interests of shareholders. What are the advantages of AutoZone’s fixed share approach over Black-Scholes-based benchmarking? Our fixed share approach avoids the inflationary pressure that arises from constantly benchmarking compensation against peer groups using Black-Scholes values. By setting a fixed percentage of shares (0.9%) relative to the annual share count, we maintain a consistent and predictable metric, independent of fluctuations in share price or peer group movements. In addition, if the share price stays flat (or goes down) the Black-Scholes value of the grant will be flat (or decline). How does AutoZone’s fixed percentage of shares align with industry standards? The 0.9% annual share grant is identical to our peer group average and materially below the S&P 500 index, demonstrating that our approach is both competitive and aligned with broader industry practices. Also, as shown on page 47, the overall cost of our program is generally below median versus comparable companies. How can you ensure that using 100% stock options in your compensation approach doesn't encourage unnecessary risk-taking? While some might believe that relying solely on stock options could incentivize risky behavior, our experience over the last two decades tells a different story. Our exceptional performance has led to significant in-the-money value for stock options, which executives typically hold for extended periods. The substantial value accumulated over time far outweighs the annual grants, encouraging a balanced approach focused on protecting existing value while continuing to create new value. Furthermore, although there may be a concern that executives could manage stock prices in the short term, this contradicts the way our program operates. We do not provide earnings guidance, host analyst days, or promote our stock publicly, ensuring that short-term stock price manipulation is not a focus. Lastly, the fixed timing of our stock option grants further mitigates the potential for risk-taking by ensuring that decisions are made based on long-term value creation rather than short-term gains.
How do you manage between long-term and short-term performance incentives?
| 2024 Proxy Statement | | 43 |
Guiding Principles
| COMPENSATION GUIDING PRINCIPLES | | | | Drive PERFORMANCE Does the compensation program represent a pay-for-performance philosophy by driving short-term and long-term performance? Are there appropriate risk mitigation measures designed to prevent excessive risk taking? | | | Drive RETENTION Are we attracting and retaining effective leaders who can develop and execute long-term strategic objectives? Are they appropriately incented to ensure the long-term success of the organization, including after their retirement? Are they encouraged to attract, retain and develop organizational talent for the future? | | | Drive SHAREHOLDER VALUE Are we investing in the profitable growth of the business by incenting sustainable value creation? Are performance and retention achieved in a manner that does not come at an excessive cost to shareholders? |
Guiding Principles
Evaluating long-term performance is a necessary first step in evaluating executive compensation. At AutoZone, we pay particular attention to Total Shareholder Return (TSR), Diluted Earnings per Share (EPS), Earnings before Interest and Taxes (EBIT) and Return on Invested Capital (ROIC). We believe these metrics, when viewed over a ten-to-twenty-year horizon, provide a strong indication of whether our compensation program embodies not only a pay-for-performance incentive structure, but also a pay-for-long-term-performance incentive structure. We believe embracing stock options versus performance-based stock units and opting for a fixed share model demonstrate a deep understanding of what behaviors drive success, and what incentives drive those desired behaviors. Is it working? Are we driving Long-Term Performance? Our approach to performance-based compensation and long-term incentives is admittedly unique and unconventional. However, when evaluating our performance over the past 20 years, we’ve observed the following exceptional results—our annualized TSR has averaged approximately 20%, materially exceeding both the S&P 500 and S&P Retail Indices; and we are in the top 3% of all public companies when measured on the basis of Total Shareholder Return.
Guiding Principles
| Investing in the profitable long-term growth of the business is a basic tenet of AutoZone. We passionately pursue opportunities that provide a strong return on investment and exercise restraint when presented with opportunities that we believe will not provide the returns that shareholders have come to expect from us. While some refer to this approach as our disciplined capital allocation strategy, at AutoZone, we simply call it Living our Pledge and Values. An AutoZoner always Strives for Exceptional Performance. Our compensation programs are designed to incent behaviors that stand true to this basic principle of driving long-term shareholder value, by profitably investing in and growing our business and returning excess cash to our shareholders. The below table demonstrates alignment between pay, performance and cost effectiveness of the stock option program. | | | | An AutoZoner always STRIVES FOR EXCEPTIONAL PERFORMANCE | | | Be accountable and honor your commitments. Act in a manner of the highest legal and ethical standards. Use resources wisely and promote a culture of thrift. Take strong initiative, act quickly and do the job right the first time. |
Guiding Principles
Source: Financials from Yahoo! Finance; SBE from 10k filings 1 &2 Excludes AutoZone; based on companies reporting as of August 31, 2024 1 High-Performing Companies (Cos) are firms with sales of $20B and 10% or better Total Shareholder Return in last 5 years (n=58). Note: the impact of SBE has been muted by the option tax benefit to the point that Net Income was virtually unchanged due to SBE. Over the past three years, as stock price and therefore, share-based expense, significantly increased, the tax benefit from stock option exercises have correspondingly risen, nearly offsetting the program’s costs as reflected on the P&L statement. It is important to highlight that share-based expense is a non-cash charge derived from a complex mathematical formula, whereas the tax savings are actual cash benefits. Consequently, despite the perceived impact, our option program has not been more dilutive to shareholders over the past decade than a hypothetical 50/50 stock options/RSU program.
Compensation ELEMENTS AND MIX
| ✓ | a mix of short-term and long-term incentive compensation to align pay outcomes to both the achievement of our annual operating plan as well as our long-term strategy; |
Compensation ELEMENTS AND MIX
| ✓ | a mix of cash and equity compensation to align interests of our executives with those of our shareholders; and |
Compensation ELEMENTS AND MIX
| Compensation Components | | Guiding Principles | | BASE SALARY | ● Fixed cash compensation typically below median ● Allows AutoZone to attract and retain highly qualified executives through the delivery of stable, cash compensation ● Salaries reflect individual’s level of responsibility and experience, scope and complexity of position, market data and internal pay equity | | | ANNUAL INCENTIVE PLAN | ● Variable cash compensation ● Drives short-term Company performance ● Payout is based upon performance against pre-established, realistic, team-based financial goals of EBIT and ROIC, as drivers of economic profit | | | LONG-TERM INCENTIVE PLAN | ● Variable equity compensation, subject to holding and vesting requirements ● Drives long-term performance ● Directly aligns executives’ interests with shareholders by rewarding long-term value creation as measured by stock price appreciation using stock options ● Due to the share buyback program, each year, we are effectively reducing the number of stock options we grant as the grant pool is based on a fixed percentage of shares outstanding ● Our option holders hold their vested options for long periods of time further reinforcing our ownership culture. | | | BENEFITS | ● Health, welfare and retirement benefit plans and programs, including participation in stock purchase plans ● Helps attract and retain experienced executives | | | PERQUISITES | ● Limited perquisites and personal benefits, such as charitable contribution match, home security systems and airline club memberships, which allow executives to devote more time to business while also promoting community engagement, health, wellness and safety | |
Independent Compensation Consultant
Independent Compensation Consultant For FY24, the Compensation Committee again selected and retained Pearl Meyer to serve as its independent compensation consultant. Prior to its engagement, the Committee re-assessed Pearl Meyer’s independence in light of applicable SEC rules and NYSE listing standards and determined that no conflict of interest or independence concerns existed. Pearl Meyer reports directly to the Compensation Committee and provides independent advice regarding executive and non-employee director compensation programs and practices. Representatives from Pearl Meyer also regularly attend meetings of the Compensation Committee and executive sessions as may be requested by the Committee from time to time.
Management
| Compensation Planning Cycle | | | SEPTEMBER - NOVEMBER | DECEMBER – FEBRUARY | | ● Review company and individual performance for prior year and approve annual incentive plan payouts ● Review and approve compensation disclosures to appear in Proxy Statement ● Approve compensation levels, including base salary, annual incentive plan target and equity awards ● Review feedback from Compensation Committee self-evaluation ● Review executive compliance with stock ownership policy | ● Review year-to-date results against annual incentive plan targets ● Review Say-on-Pay results and proxy advisory firm analyses ● Review compliance with Compensation Committee Charter ● Review director compensation (biennially) ● Review director compliance with stock ownership policy | | MARCH – MAY | JUNE - AUGUST | | ● Review year-to-date results against annual incentive plan targets ● Review composition of Peer Group and approve any changes ● Review trends and best practices, due to legislative and regulatory changes or otherwise ● Discuss potential changes to compensation plans or policies ● Review consultant independence and fees | ● Review year-to-date results against annual incentive plan targets ● Review share-based expense trend ● Discuss feedback from shareholder engagement ● Review compensation plans and potential changes for following year ● Review findings from compensation program risk assessment. ● Discuss compensation levels for executive officers for following year |
Benchmarking
Benchmarking AutoZone reviews publicly available data from a peer group of companies to help us ensure that our executive compensation programs remain effective in carrying out our Guiding Principles.
Peer Group Composition
Peer Group Composition Our peer group is composed of direct competitors; companies with which we compete for talent, customers and capital; and companies with a comparable range of key financial measures and business model (e.g. specialty retailer with retail and commercial customers). Such companies are likely to have executive positions comparable in breadth, complexity and scope of responsibility to ours. The peer group data we use is from proxy filings and other published sources – it is not prepared or compiled especially for AutoZone. We annually review the appropriateness of this peer group. It typically has changed when a peer company experiences events such as acquisitions and spin-offs, or in the event a member company experiences significant performance challenges.
Peer Group Composition
| ● ● ● ● ● | ● ● ● ● ● | ● ● ● ● | | FY24 Peer Group | | | | ● Advance Auto Parts ● Bath and Body Works ● Costco Wholesale ● Dick’s Sporting Goods ● Dollar General | ● Dollar Tree ● Genuine Parts ● LKQ Corporation ● Lowe’s Companies ● O’Reilly Automotive | ● Sherwin Williams ● Tractor Supply Company ● Ulta Beauty ● W.W. Grainger |
Peer Group Composition
No Changes to FY25 Peer Group. During FY24, the Compensation Committee reviewed the peer group for FY25 compensation programs. The intent of such review was to ensure our peer group consists of companies with a similar business model and face similar risks and opportunities as the macroeconomic environment changes, while also selecting companies with comparable financial metrics, market capitalizations and go-to market strategies. Management continues to believe the business models of automotive retailers and petroleum distributors are too dissimilar for inclusion in our peer group. Following such review, and upon the recommendation of management and Pearl Meyer, the Compensation Committee did not make any changes and approved the above peer group for FY25 compensation matters.
Use of Peer Group Data
Use of Peer Group Data Peer group data is an important tool in determining executive compensation levels. However, due to a number of factors, executive compensation data is not perfectly comparable across companies. For example, companies, like AutoZone, consider the scope, complexity and strategic contributions of each role in setting executive compensation. These factors vary significantly across companies, even in the same industry. For this reason, AutoZone does not engage in strict benchmarking of compensation levels, i.e., we do not use specific data to support precise targeting of compensation, such as setting an executive’s base pay at the 50th percentile of an identified group of companies. Instead, we utilize peer group data to help determine competitive base salaries and short-term incentive target amounts that support our ability to attract and retain executive talent within our overall compensation philosophy. As referenced before, we do not target a Black-Scholes value for the option awards. We have a fixed run rate every year (approximately 0.9% of outstanding shares) which makes the cost of our program more predictable and does not tie us to continuous benchmarking that drives increased costs.
Chief Executive Officer
| Name | Rhodes(1) | | Daniele(1) | | | Total Cash Compensation | | 2,415,000 | | 2,300,000 | | Peer Group Percentile | | 43% | | 37% | | Total Compensation | | 18,796,822 | | 9,499,838 | | Peer Group Percentile | | 99% | | 30% |
Chief Executive Officer
(1) Reflects annualized target compensation for Mr. Rhodes as Chairman, President and CEO and Mr. Daniele as President and CEO during FY24. Note we do not specify a long-term incentive target but used fixed-share modeling based on a % of shares outstanding. Mr. Daniele as first year President and CEO was intentionally set below market median. Following such review, the Compensation Committee determined to set Mr. Daniele’s total compensation at a competitive level but below market median compared to the peer group. His cash compensation, consisting of base salary and target annual incentive opportunity, is relatively consistent with that of Mr. Rhodes’, but his long-term incentive compensation is significantly less. Additionally, as recently as 2019 before the recent stock price increase, Mr. Rhodes’ total compensation was in the 36th percentile compared to peers.
Executive Chairman
Executive Chairman In determining compensation for Mr. Rhodes in his role as Executive Chairman, the Compensation Committee reviewed peer group data and found great variability in Executive Chairman pay, due to each Company’s unique facts and circumstances. The Committee sought to design a compensation structure that incentivized Mr. Rhodes to remain focused on the long-term performance and success of the Company while also acknowledging the significant change in his role. As such, Mr. Rhodes’ compensation is heavily weighted towards long-term, at-risk incentive compensation, with a modest base salary and no annual incentive award opportunity. In addition, the Committee used premium priced stock options for 50% of the award with five-year cliff vesting to further reinforce the importance of long-term growth and sustainability.
Base Salary
| Name | FY23 | FY24 | Increase | Rationale | | William C. Rhodes, III | $1,050,000 | $150,000 | (85.7)% | Benchmarks widely varied but total compensation targeted well-below median with low level of base salary and significant weight in long-term premium priced stock options with five-year cliff vesting to retain and capitalize on the outgoing CEO’s institutional knowledge while ensuring a smooth transition to the new CEO | | Philip B. Daniele, III | 519,000 | 1,000,000 | 92.7% | Pursuant to promotion to President and CEO, we targeted pay to be competitive but below market median of the peer group | | Jamere Jackson | 731,000 | 800,000 | 9.4% | Pursuant to promotion and based on general market experience in related role, we targeted 75th percentile for base salary of the peer group and S&P500 | | Thomas B. Newbern | 641,000 | 800,000 | 24.8% | Pursuant to promotion and based on general market experience in related role, we targeted 50th percentile for base salary of the peer group and S&P500, aligning with CFO | | William R. Hackney | 426,000 | 500,000 | 17.3% | Pursuant to promotion and based on general market experience and tenure related to EVP role specializing in Merchandising, Marketing and Supply Chain, we targeted below 25th percentile for base salary of the peer group and S&P500, recognizing total compensation would be at or above 75th percentile | | Kenneth E. Jaycox, Jr. | — | 500,000 | 0.0% | New hire competitive with market data |
ANNUAL INCENTIVE PLAN
ANNUAL INCENTIVE PLAN All executive officers were eligible to receive an annual cash incentive award under the FY24 U.S. Management Incentive Plan (“MIP”), which is designed to motivate and reward executives for short-term performance measured against pre-established financial goals. The following graphic illustrates the general design and structure of the MIP, or the annual incentive plan. The Compensation Committee annually reviews the design and elements of our executive compensation program to ensure it continues to reflect our Guiding Principles. In addition, the Committee periodically engages in a deeper review as may be appropriate due to evolving best practices, macroeconomic circumstances or otherwise. For example, during FY24, the Compensation Committee reviewed historical annual plan attainment levels over the prior 20-year period to ensure plan design reflected the Guiding Principles of Drive Performance and Drive Shareholder Value. In particular, the Compensation Committee reviewed incentive plan payout levels and performance against planned targets. In the instances where the Company performed significantly greater than plan and executive officers earned significant incentive plan payouts, the Committee reviewed underlying factors driving the exceptional performance, the incremental cost to shareholders, the growth in AutoZone’s market capitalization, industry performance and industry-wide compensation practices. Based on this review, the Compensation Committee determined the MIP, or the annual incentive plan, is designed effectively and furthers all three Guiding Principles. As a result, the Compensation Committee has not made any significant changes to the plan design.
Performance Goals and Payout Matrix
Performance Goals and Payout Matrix Actual payouts under our annual incentive plan are based upon performance against the matrix set forth on the following page. In developing the matrix, the Compensation Committee began with Economic Profit because it ensures that the Company is using capital to generate profitable earnings efficiently and in a manner that is sustainable for the future. In other words, Economic Profit ensures that growth, as well as the cost of growth, are balanced and achieved in a manner that maximizes the long-term interests of our shareholders. Furthermore, Economic Profit allows us to align short-term compensation goals to long-term value creation. Accordingly, target Economic Profit, calculated by reference to the FY24 operating plan EBIT and ROIC, would result in target (or 100%) payout. Different levels of attainment of EBIT and ROIC on a pre-determined matrix result in varying levels of Economic Profit and payout is based upon actual Economic Profit against target Economic Profit. Accordingly, annual incentive payouts are driven by EBIT and ROIC and their corresponding impact to Economic Profit versus target. For these reasons, we do not apply straight-line interpolation of our EBIT and ROIC as we focus on impact to Economic Profit instead.
Performance Goals and Payout Matrix
| 56 | | 2024 Proxy Statement |
Performance Goals and Payout Matrix
The key metrics in developing the FY24 annual incentive plan are defined below. The Compensation Committee may (but is not required to) adjust for the effect of one-time charges and extraordinary events such as asset write-downs, litigation judgments or settlements, changes in tax laws, accounting principles or other laws or provisions affecting reported results, accruals for reorganization or restructuring, and any other extraordinary non-recurring items, acquisitions or divestitures and any foreign exchange gains or losses on the calculation of performance.
Performance Goals and Payout Matrix
| ● | Earnings before interest and taxes (“EBIT”) is defined as net income plus interest and taxes. |
Performance Goals and Payout Matrix
| ● | Return on Invested Capital (“ROIC”) is defined as after-tax operating profit (excluding rent) divided by average invested capital (which includes a factor to consider operating leases as financing leases). |
Performance Goals and Payout Matrix
| ● | Economic Profit is calculated as net operating profit (including rent) after taxes, less the cost of capital using a capital charge rate of 10.5%. |
Performance Goals and Payout Matrix
Additionally, the Payout Matrix is further adjusted to ensure the annual incentive plan embodies our Guiding Principles—Drive Performance, Drive Retention and Drive Shareholder Value. These adjustments to the matrix serve as “guardrails” and are described below.
Performance Goals and Payout Matrix
| ● | Performance Hurdle. The annual incentive plan is subject to a pre-established threshold or hurdle such that no annual incentive awards are paid out unless the Company achieves 90% of target Economic Profit. If the Company achieves 90% of target Economic Profit, payout is 50% of target MIP opportunity. Achievement above 50% is paid by reference to the matrix. We believe this ensures goals are appropriately rigorous to drive performance. |
Performance Goals and Payout Matrix
| ● | Emphasize EBIT Growth. The matrix is also modified such that payout shall not exceed target (or 100%) unless the EBIT target is exceeded. In other words, exceeding the ROIC target alone will not be sufficient to result in an above-target payout. The rationale for this is that there must be “incremental EBIT” (or EBIT in excess of target EBIT) to fund the additional incentive payout. This ensures that any excess payout earned by, and paid to, management does not come at the expense of shareholders but rather is paid out of the additional profit dollars generated by management’s efforts. |
Performance Goals and Payout Matrix
Historically, the Compensation Committee has not made adjustments related to foreign exchange gains or losses related to the calculation of performance under the MIP. Beginning in FY25, the attainment calculation will exclude the impact of foreign currency fluctuations above a de minimis threshold. This is due to the fact that Mexico has grown to become an increasingly meaningful part of the business and our desire not to reward or penalize bonus recipients for aspects of performance outside of their control. The Compensation Committee has approved the FY25 MIP based upon last year’s exchange rate and any material variance up or down will not be included in the calculation of awards. The payout matrix below reflects the targets for FY24, after giving effect to the Company’s actual effective tax rate.
Performance Goals and Payout Matrix
| | AutoZone FY24 Annual Incentive Plan Payout Matrix | | | | | | | | | | ROIC | EBIT | $3,185.5 | $3,372.8 | $3,560.2 | $3,747.6 | $3,785.1 | $3,935.0 | $4,122.4 | $4,309.7 | | | (MMs) | 85% | 90% | 95% | 100% | 101% | 105% | 110% | 115% | | | 48.32% | — | —% | 71% | 93% | 98% | 115% | 137% | 159% | | | 48.82% | — | 50% | 73% | 95% | 99% | 117% | 139% | 161% | | | 49.32% | — | 52% | 74% | 96% | 100% | 118% | 140% | 162% | | | 49.82% | — | 53% | 75% | 97% | 102% | 120% | 142% | 164% | | | 50.32% | — | 54% | 76% | 99% | 103% | 121% | 143% | 166% | | | 50.82% | — | 55% | 78% | 100% | 104% | 122% | 145% | 167% | | | 51.32% | — | 56% | 79% | 100% | 106% | 124% | 146% | 168% | | | 51.82% | — | 58% | 80% | 100% | 107% | 125% | 147% | 170% | | | 52.32% | — | 59% | 81% | 100% | 108% | 126% | 149% | 171% | | | 52.82% | — | 60% | 82% | 100% | 109% | 127% | 150% | 173% | | | 53.32% | — | 61% | 83% | 100% | 111% | 129% | 151% | 174% |
Performance Goals and Payout Matrix
Note: Shaded areas on the matrix indicate levels of attainment in which EBIT and ROIC would result in Economic Profit that is less than 90% of target Economic Profit and therefore does not meet the specified hurdle and results in no payout.
Performance Goals and Payout Matrix
| 2024 Proxy Statement | | 57 |
Attainment per Matrix
| ($in mill) | Target | Actual | | Economic Profit | $2,550.1 | $2,546.6 | | EBIT | $3,747.6 | $3,748.7 | | ROIC | 50.82% | 48.76% | | MIP Attainment per Matrix (% of Target): 99.31% | | |
Individual Modifier
Individual Modifier Our annual incentive plan includes an individual modifier, which can adjust payouts positively or negatively as set forth below for all executives except for our CEO. The modifier serves to incent exceptional individual performance against pre-established individual goals. The individual performance component is structured as a modifier rather than a separate metric to ensure all executives are working collaboratively as one team in the best interests of the Company as a whole, rather than having individual goals compete with the shared interests of the organization. The pre-established individual goals for each of our executive officers support the attainment of our enterprise-wide financial goals and strategic growth priorities. For FY24, these goals were focused on improving the customer experience across all channels, executing sales initiatives, expanding our store footprint (including hub and mega hub stores), expanding inventory assortment, realizing operating efficiencies and managing and developing a diverse and talented workforce. In response to shareholder feedback, the individual modifier component of the annual incentive plan has been eliminated effective FY25.
Individual Modifier
| Rating | Modification | Description | | 1 | 0% | Consistently did not meet expectations. No incentive plan payout regardless of company performance. | | 2 | -20% | Did not meet expectations. Incentive plan target payout is reduced by 20%. | | 3 | None | Met expectations. No modification to payout. | | 4 | + 20% | Exceeded expectations. Incentive plan target payout is increased by 20%. | | 5 | + 30% | Exceptional performance. Incentive plan target payout is increased by 30%. |
Actual Payouts
Actual Payouts Based on actual FY24 performance against pre-established financial goals and individual goals, each NEO earned the following annual incentive plan payout.
Actual Payouts
| | | | | Payout | | | | | | Target | | (99.31% | | | | | Base Salary | (% of Base | Target | of Target) | Individual | Actual Payout | | Name | ($) | Salary) | ($) | ($) | Modifier | ($) | | William C. Rhodes, III(1) | $467,885 | 102.1% | $477,750 | $474,454 | $— | $474,454 | | Philip B. Daniele, III(2) | 855,000 | 114.8% | 1,009,327 | 1,002,363 | — | 1,002,363 | | Jamere Jackson(2) | 804,769 | 96.5% | 776,654 | 771,295 | — | 771,295 | | Thomas B. Newbern(2) | 790,923 | 96.9% | 766,269 | 760,982 | — | 760,982 | | William R. Hackney(2) | 498,230 | 73.0% | 363,842 | 361,332 | 72,768 | 434,100 | | Kenneth E. Jaycox, Jr. | 48,077 | 60.0% | 28,846 | 28,647 | — | 28,647 |
Actual Payouts
| (1) Mr. Rhodes payout is based on earnings for time in role as Chairman, President and CEO with a target of 130% of base salary. Mr. Rhodes is not bonus eligible in his new role as Executive Chairman. |
Actual Payouts
| (2) Messrs. Daniele, Jackson, Newbern and Hackney have prorated bonus targets based on time in respective role. Mr. Daniele’s target was 75% of base salary prior to and 130% since assuming the President and CEO role. Messrs. Jackson’s and Newbern’s targets were 75% of base salary prior to and 100% since their promotions. Mr. Hackney’s target was 60% of base salary prior to and 75% since his promotion to Executive Vice President. |
Long-Term Incentive Plan
Long-Term Incentive Plan For FY24, all executive officers were awarded long-term incentives under the 2020 AutoZone, Inc. Omnibus Incentive Award Plan in the form of stock options. These equity awards are granted to drive long-term performance by rewarding value creation from stock price appreciation. As with other elements of executive compensation, the Compensation Committee annually reviews the design of the long-term incentive plan to ensure it remains effective and in furtherance of the Guiding Principles. While the Compensation Committee has traditionally granted long-term compensation in the form of stock options, the Committee continues to evaluate the efficacy of stock options against other potential equity vehicles, primarily performance share units.
Long-Term Incentive Plan
| ● | Performance Metrics. Stock options directly align management’s interest with the long-term interests of shareholders by awarding value upon stock price appreciation and long-term value creation. |
Long-Term Incentive Plan
| ● | Term. The 10-year term of stock options necessarily incents management to focus on a 7- to 10-year performance period when options typically reach their greatest value. By contrast, performance share units typically carry a 3- or 4-year performance period. Because of the success of the stock option program and success of company our option holders have held longer than typical which further reinforces the benefits, including a tax benefit to the company. |
Long-Term Incentive Plan
| ● | Resilience. The Committee observed the great volatility and compensation outcomes experienced by companies and management teams across all industries and sectors during the height of the COVID pandemic. Boards faced difficult decisions, such as whether to exercise discretion, modify awards, modify performance metrics or lose good talent. By contrast, the long-term nature of stock options is more resilient to extreme and unpredictable volatility caused by macroeconomic factors, thus enabling management to focus on the best interests of the Company and its shareholders as we did during the pandemic. |
Long-Term Incentive Plan
| ● | Retention. Turnover of executive officers, after excluding departures due to retirement or performance, remain below market. Additionally, because retirement-eligible executives (as defined in the applicable plan) may retain option awards for the entire term, these executives are further incented to develop organizational talent, facilitate succession planning and transfer institutional knowledge. This ensures the long-term stability and growth of the organization even after the individual’s retirement. |
Long-Term Incentive Plan
| 2024 Proxy Statement | | 59 |
Long-Term Incentive Plan
| ● | Cost to Company. In the event of significant stock price appreciation, the Company realizes greater tax deduction from stock option awards. In fact, in recent years, the tax benefits recognized by the Company have virtually offset the adverse impact on Net Income of the stock-based compensation expense. When Black-Scholes value is increasing, we have a natural hedge because the tax benefit neutralizes P&L risk to the company. |
Long-Term Incentive Plan
| ● | Prevalence. Stock options are less prevalent in today’s market. In some instances, stock options are disfavored because they are too rigorous (i.e., companies are unable to deliver long-term growth making stock options the less valuable instrument or even causing them to be worthless). Some constituents disfavor stock options because they are not rigorous enough (i.e., it is argued they are not performance-based). Additionally, stock options are disfavored by some management teams who have had experience with underwater stock options or teams who don’t see a path to considerable future value creation. Our Board and management team believe in and want to incentivize our management team to continue to deliver exceptional performance. |
Long-Term Incentive Plan
After considering the factors above, the Committee contends that stock options are the most appropriate performance-based equity vehicle for AutoZone’s leadership team and in the best interests of the Company’s shareholders. Also, when considering the efficacy of stock options, the Committee observed the following:
Long-Term Incentive Plan
| ● | The Company’s burn rate remains at the median of the Peer Group. |
Long-Term Incentive Plan
| ● | The Company’s long-term performance, as measured by total shareholder return over the last ten years is in the top quartile compared to its Peer Group. |
Long-Term Incentive Plan
| ● | The average number of years stock options have been held before exercise is 6 years from the date of grant, for current executive officers as a group (based upon the last ten years of activity). In many instances, our most senior executive officers hold closer to 6-8 years which is significantly longer than the vesting period. |
Stock Options
Stock Options The non-qualified stock options are typically granted in early October at the first regularly scheduled Compensation Committee meeting of the fiscal year. Awards of stock options may be granted outside of this time frame in the event of promotions, external hires or other unique circumstances. Options have a term of ten years and generally become vested and exercisable over a four-year period at the rate of one-fourth per year. Beginning with the FY25, the majority of our executive committee will vest over a four-year period with nothing vesting after year 1, 50% exercisable after two years and 25% vest in year three and year four. Beginning with the FY21 grant, options vest on October 15 of each year following the grant date, to ensure the first vesting date occurs more than one full year after the date of grant. The exercise price for such options is equal to the closing price of our common stock on the grant date, as quoted on the NYSE. Under the terms of the AutoZone, Inc. 2020 Omnibus Incentive Award Plan, we may not grant stock options with a strike price at a discount to fair market value. Unless otherwise determined by the Compensation Committee, “fair market value” as of a given date is the closing price of our common stock as quoted on the NYSE on such date or, if the shares were not traded on that date, the most recent preceding date when such shares were traded.
Stock Options
| 60 | | 2024 Proxy Statement |
FY24 Long-Term Incentive Plan Awards
FY24 Long-Term Incentive Plan Awards
FY24 Long-Term Incentive Plan Awards
| Name | FY23 Options Granted | | FY24 Options Granted | | Share (+/-) from | Value (+/-) from | | | | (#) | ($) | (#) | ($) | Prior Year | Prior Year | Rationale | | William C. Rhodes, III | 19,700 | $15,877,386 | 4,699 | $4,850,336 | (76.1)% | (69.5)% | Decrease related to change in duties and responsibilities | | Philip B. Daniele, III | 5,240 | 4,223,223 | 7,427 | 7,199,838 | 41.7% | 70.5% | Increase related to new role as President and CEO and increased Black-Scholes value of stock options | | Jamere Jackson | 5,240 | 4,223,223 | 5,287 | 5,200,028 | 0.9% | 23.1% | Increase related to promotion and increased Black-Scholes value of stock options | | Thomas B. Newbern | 5,240 | 4,223,223 | 5,287 | 5,200,028 | 0.9% | 23.1% | Increase related to promotion and increased Black-Scholes value of stock options | | William R. Hackney | 3,640 | 3,327,449 | 4,763 | 4,684,648 | 30.9% | 40.8% | Increase related to promotion and increased Black-Scholes value of stock options | | Kenneth E. Jaycox, Jr. | -- | -- | 4,713 | 5,298,895 | N/A | N/A | New hire package to be competitive |
Executive Chairman Award
Executive Chairman Award The Committee granted Mr. Rhodes a long-term incentive award consisting of non-qualified stock options with a grant date fair value of $4,850,000, based upon the Black-Scholes option pricing valuation model. This award consisted of the below terms that are different from our traditional annual LTIP awards.
One-Time Special Awards
One-Time Special Awards As a general rule, the Company does not grant one-time special awards to executive officers. However, in limited instances, the Company may grant a one-time special sign-on award for the sole purpose of recruiting and attracting high-caliber candidates to the AutoZone Executive Committee. Over the past five years, the Company has only issued one-time special awards to executive officers in five instances, all of which were sign-on awards subject to our typical four-year vesting conditions. Consistent with historical practice, during FY24, the Company granted a sign-on award to the newly hired SVP, Commercial. These sign-on awards, consistent with market practice, serve to incentivize external candidates to accept our offer of employment while also providing compensation for any unvested awards he or she may have left from their prior employer. Furthermore, providing equity subject to multi-year vesting conditions immediately aligns external hires’ interests with those of the balance of the management team and our shareholders.
Summary Compensation Table
Summary Compensation Table This table shows the compensation paid to the NEOs during the 2024, 2023 and 2022 fiscal years.
Summary Compensation Table
| | | | | | | Non-Equity | | | | | | | | Stock | Option | Incentive Plan | All Other | | | | | Salary | Bonus | Awards | Awards | Compensation | Compensation | Total | | Name and Principal Position | Year | ($) | ($)(1) | ($) (2)(3) | ($) (3) | ($) (4) | ($) (5) | ($) | | William C. Rhodes, III | 2024 | 467,885 | — | 66,998 | 4,850,336 | 474,454 | 186,925 | 6,046,598 | | Executive Chairman | 2023 | 1,050,000 | — | 89,372 | 15,877,386 | 1,539,720 | 240,344 | 18,796,822 | | | 2022 | 1,050,000 | — | 89,909 | 10,280,340 | 2,613,975 | 295,786 | 14,330,010 | | Philip B. Daniele, III | 2024 | 855,000 | — | 25,022 | 7,199,838 | 1,002,363 | 116,242 | 9,198,465 | | President & Chief Executive Officer | 2023 | 516,077 | — | 28,354 | 4,223,223 | 436,602 | 83,212 | 5,287,468 | | | 2022 | 500,000 | — | 7,988 | 2,736,529 | 718,126 | 76,184 | 4,038,827 | | Jamere Jackson | 2024 | 804,769 | — | 8,135 | 5,200,028 | 771,295 | 93,383 | 6,877,610 | | Chief Financial Officer | 2023 | 727,769 | — | — | 4,223,223 | 615,693 | 97,312 | 5,663,997 | | | 2022 | 708,462 | — | — | 2,736,529 | 1,017,528 | 114,348 | 4,576,867 | | Thomas B. Newbern | 2024 | 790,923 | — | — | 5,200,028 | 760,982 | 82,624 | 6,834,557 | | Chief Operating Officer | 2023 | 637,154 | — | — | 4,223,223 | 539,032 | 88,184 | 5,487,593 | | | 2022 | 612,923 | — | — | 3,284,813 | 880,311 | 112,417 | 4,890,464 | | William R. Hackney | 2024 | 498,230 | — | 28,442 | 4,684,648 | 434,100 | 82,027 | 5,727,447 | | Executive Vice President, | 2023 | | | | | | | | | Merchandising, Marketing & Supply Chain | 2022 | | | | | | | | | Kenneth E. Jaycox, Jr. | 2024 | 48,077 | — | — | 5,298,895 | 28,647 | 21,473 | 5,397,092 | | Senior Vice President, Commercial | 2023 | | | | | | | | | | 2022 | | | | | | | |
Summary Compensation Table
| (1) Annual incentive awards were paid pursuant to the EICP and therefore appear in the “non-equity incentive plan compensation” column of the table. |
Summary Compensation Table
| (2) Represents shares acquired pursuant to the Executive Stock Purchase Plan. See “Compensation Discussion and Analysis” on page 64 for more information about the Executive Stock Purchase Plan. See Note B, Share-Based Payments, to our consolidated financial statements in our Annual Report for a description of the Executive Stock Purchase Plan and the accounting and assumptions used in calculating expenses in accordance with FASB ASC Topic 718. |
Summary Compensation Table
| (3) The value of stock awards and option awards was determined as required by FASB ASC Topic 718. There is no assurance that these values will be realized. See Note B, Share-Based Payments, to our consolidated financial statements in our Annual Report for details on assumptions used in the valuation. |
Summary Compensation Table
| (4) Incentive amounts were earned for the 2024 fiscal year pursuant to the EICP and were paid in October 2024. See “Compensation Discussion and Analysis” on page 56 for more information about this plan. |
Summary Compensation Table
| (5) All Other Compensation includes the following: |
Summary Compensation Table
| | | | | | | Company | | | | | | | | | Contributions | | | | | Perquisites and | | | | to Defined | Life | | | | Personal | | Charitable | Imputed | Contribution | Insurance | | | | Benefits | Relocation | Contributions | Income | Plans | Premiums | | Name | | ($)(A) | ($) | ($)(B) | ($)(C) | ($)(D) | ($) | | William C. Rhodes, III | 2024 | 11,969 | — | 50,000 | 28,027 | 90,389 | 6,540 | | Philip B. Daniele, III | 2024 | 16,585 | — | 50,000 | 11,191 | 35,745 | 2,720 | | Jamere Jackson | 2024 | 10,550 | — | 11,667 | 12,421 | 54,892 | 3,853 | | Thomas B. Newbern | 2024 | 7,835 | — | — | 22,619 | 48,780 | 3,390 | | William R. Hackney | 2024 | 6,138 | — | 50,000 | 8,452 | 15,859 | 1,578 | | Kenneth E. Jaycox, Jr. | 2024 | 421 | 20,574 | — | 377 | — | 101 |
Summary Compensation Table
| 66 | | 2024 Proxy Statement |
Summary Compensation Table
| (A) Perquisites and personal benefits for all NEOs include matching charitable contributions under the AutoZone Matching Gift Program, Company-provided home security system and/or monitoring services, airline club memberships and status upgrades, Company-paid spouse business-related travel and Company-paid long-term disability insurance premiums. |
Summary Compensation Table
| (B) The perquisites or personal benefits which exceeded the greater of $25,000 or 10% of the total amount of perquisites and personal benefits for an executive officer, consisted of matching charitable contributions made under the AutoZone Matching Gift program, under which executives may contribute to qualified charitable organizations and AutoZone provides a matching contribution to the charities in an equal amount, up to $50,000 in the aggregate for each executive committee member annually. |
Summary Compensation Table
| (C) Represents amounts related to imputed earnings on company-paid, taxable life insurance and miscellaneous other items. |
Summary Compensation Table
| (D) Represents employer contributions to the AutoZone, Inc. 401(k) Plan and the AutoZone, Inc. Executive Deferred Compensation Plan. |
Grants of Plan-Based Awards
Grants of Plan-Based Awards The following table sets forth information regarding plan-based awards granted to the Company’s NEOs during the 2024 fiscal year. See “Compensation Discussion and Analysis” beginning on page 38 for additional information on each of these awards.
Grants of Plan-Based Awards
| | | | | | All Other | All Other | | | | | | | | | Stock | Option | | Grant | | | | | | | Awards: | Awards: | Exercise | Date Fair | | | | Estimated Future Payments | | | Number of | Number of | or Base | Value of | | | | Under Non-equity Incentive | | | Shares of | Securities | Price of | Stock and | | | | Plans (1) | | | Stock or | Underlying | Option | Option | | | Equity Plans | Threshold | Target | Maximum | Units | Options | Awards | Awards | | Name | Grant Date | ($) | ($) | ($) | (#) (2) | (#) (3) | ($) | ($) | | William C. Rhodes, III | | 238,875 | 477,750 | 1,433,250 | | | | | | | 10/6/2023 | | | | | 2,246 | 2,549.04 | 2,425,580 | | | 10/6/2023 | | | | | 2,453 | 2,803.94 | 2,424,756 | | | 9/30/2023 | | | | 5 | | | 12,700 | | | 12/29/2023 | | | | 21 | | | 54,298 | | | | | | | | | | 4,917,334 | | Philip B. Daniele, III | | 504,663 | 1,009,327 | 3,027,981 | | | | | | | 10/6/2023 | | | | | 5,287 | 2,549.04 | 5,200,028 | | | 1/2/2024 | | | | | 2,140 | 2,568.50 | 1,999,810 | | | 9/30/2023 | | | | 3 | | | 7,620 | | | 12/29/2023 | | | | 2 | | | 5,171 | | | 3/31/2024 | | | | 2 | | | 6,303 | | | 6/30/2024 | | | | 2 | | | 5,928 | | | | | | | | | | 7,224,860 | | Jamere Jackson | | 388,327 | 776,654 | 2,329,961 | | | | | | | 10/6/2023 | | | | | 5,287 | 2,549.04 | 5,200,028 | | | 12/29/2023 | | | | 2 | | | 5,171 | | | 6/30/2024 | | | | 1 | | | 2,964 | | | | | | | | | | 5,208,163 | | Thomas B. Newbern | | 383,135 | 766,269 | 2,298,808 | | | | | | | 10/6/2023 | | | | | 5,287 | 2,549.04 | 5,200,028 | | | | | | | | | | 5,200,028 | | William R. Hackney | | 181,921 | 363,842 | 1,091,527 | | | | | | | 10/6/2023 | | | | | 4,763 | 2,549.04 | 4,684,648 | | | 12/29/2023 | | | | 11 | | | 28,442 | | | | | | | | | | 4,713,090 | | Kenneth E. Jaycox, Jr. | | 14,423 | 28,846 | 86,538 | | | | | | | 7/29/2024 | | | | | 4,713 | 3,072.66 | 5,298,895 | | | | | | | | | | 5,298,895 |
Grants of Plan-Based Awards
| (1) Represents potential threshold, target and maximum incentive compensation for the 2024 fiscal year under the EICP based on the dollar value of the estimated target amount payable if the specified performance target is reached. The amounts actually paid for the 2024 fiscal year are described in the “Non-Equity Incentive Plan Compensation” column in the Summary Compensation Table. The “threshold” is the minimum payment level under the EICP which is 50% of the target amount. The maximum is 300% of the target. |
Grants of Plan-Based Awards
| 2024 Proxy Statement | | 67 |
Grants of Plan-Based Awards
| (2) Represents shares awarded pursuant to the Executive Stock Purchase Plan. |
Grants of Plan-Based Awards
| (3) Represents options awarded pursuant to the 2020 Omnibus Incentive Plan. |
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End The following table sets forth information regarding outstanding stock option awards under the Amended 2011 Equity Plan, the 2011 Equity Plan, 2020 Omnibus Incentive Plan, and unvested shares under the Executive Stock Purchase Plan for the Company’s NEOs as of August 31, 2024:
Outstanding Equity Awards at Fiscal Year-End
| | | Option Awards | | | | Shares | | | | | | | | | Number of | Market | | | | Number of Securities | | | | Shares of | Value of | | | | Underlying Unexercised Options | | Option | | Stock that | Shares of Stock | | | | (1) | | Exercise | Option | have not | that have not | | Name | Grant Date | Exercisable | Unexercisable | Price ($) (4) | Expiration Date | Vested (2) | Vested ($) (3) | | William C. Rhodes, III | 9/25/2018 | 26,500 | — | 772.80 | 9/26/2028 | | | | | 10/7/2019 | 27,500 | — | 1,060.81 | 10/8/2029 | | | | | 10/7/2020 | 22,950 | 7,650 | 1,139.99 | 10/8/2030 | | | | | 10/5/2021 | 10,500 | 10,500 | 1,651.22 | 10/5/2031 | | | | | 10/4/2022 | 4,925 | 14,775 | 2,205.03 | 10/4/2032 | | | | | 10/6/2023 | — | 2,453 | 2,803.94 | 10/6/2033 | | | | | 10/6/2023 | — | 2,246 | 2,549.04 | 10/6/2033 | | | | | 9/30/2023 | | | | | 5 | 15,907 | | | 12/29/2023 | | | | | 21 | 66,811 | | Totals | | 92,375 | 37,624 | | | 26 | 82,718 | | Philip B. Daniele, III | 9/23/2016 | 2,000 | — | 744.85 | 9/24/2026 | | | | | 9/26/2017 | 5,460 | — | 587.13 | 9/27/2027 | | | | | 9/25/2018 | 5,450 | — | 772.80 | 9/26/2028 | | | | | 10/7/2019 | 6,620 | — | 1,060.81 | 10/8/2029 | | | | | 10/7/2020 | 3,600 | 1,200 | 1,139.99 | 10/8/2030 | | | | | 6/16/2021 | 375 | 125 | 1,390.47 | 6/16/2031 | | | | | 10/5/2021 | 2,794 | 2,796 | 1,651.22 | 10/5/2031 | | | | | 10/4/2022 | 1,310 | 3,930 | 2,205.03 | 10/4/2032 | | | | | 10/6/2023 | — | 5,287 | 2,549.04 | 10/6/2033 | | | | | 1/2/2024 | — | 2,140 | 2,568.50 | 1/2/2034 | | | | | 9/30/2023 | | | | | 3 | 9,544 | | | 12/29/2023 | | | | | 2 | 6,363 | | | 3/31/2024 | | | | | 2 | 6,363 | | | 6/30/2024 | | | | | 2 | 6,363 | | Totals | | 27,609 | 15,478 | | | 9 | 28,633 | | Jamere Jackson | 9/23/2020 | 2,221 | 741 | 1,128.95 | 9/24/2030 | | | | | 10/7/2020 | 5,175 | 1,725 | 1,139.99 | 10/8/2030 | | | | | 10/5/2021 | 2,794 | 2,796 | 1,651.22 | 10/5/2031 | | | | | 10/4/2022 | 1,310 | 3,930 | 2,205.03 | 10/4/2032 | | | | | 10/6/2023 | — | 5,287 | 2,549.04 | 10/6/2033 | | | | | 12/29/2023 | | | | | 2 | 6,363 | | | 6/30/2024 | | | | | 1 | 3,181 | | Totals | | 11,500 | 14,479 | | | 3 | 9,544 | | Thomas B. Newbern | 10/7/2019 | 8,500 | — | 1,060.81 | 10/8/2029 | | | | | 10/7/2020 | 5,175 | 1,725 | 1,139.99 | 10/8/2030 | | | | | 10/5/2021 | 3,354 | 3,356 | 1,651.22 | 10/5/2031 | | | | | 10/4/2022 | 1,310 | 3,930 | 2,205.03 | 10/4/2032 | | | | | 10/6/2023 | — | 5,287 | 2,549.04 | 10/6/2033 | | | | Totals | | 18,339 | 14,298 | | | — | — | | William R. Hackney | 10/7/2019 | 1,271 | — | 1,060.81 | 10/8/2029 | | | | | 10/24/2022 | 910 | 2,730 | 2,407.52 | 10/24/2032 | | | | | 10/6/2023 | — | 4,763 | 2,549.04 | 10/6/2033 | | | | | 12/29/2023 | | | | | 11 | 34,996 | | Totals | | 2,181 | 7,493 | | | 11 | 34,996 | | Kenneth E. Jaycox, Jr. | 7/29/2024 | — | 4,713 | 3,072.66 | 7/29/2034 | | | | Totals | | — | 4,713 | | | — | — |
Outstanding Equity Awards at Fiscal Year-End
| (1) Unless indicated otherwise, stock options vest annually in one-fourth increments over a four-year period. |
Outstanding Equity Awards at Fiscal Year-End
| 68 | | 2024 Proxy Statement |
Outstanding Equity Awards at Fiscal Year-End
| (2) Represents shares acquired pursuant to unvested shares granted under the Executive Stock Purchase Plan. Such shares vest on the first anniversary of the date the option was exercised under the plan and will vest immediately upon a participant’s termination of employment without cause or the participant’s death or disability. |
Outstanding Equity Awards at Fiscal Year-End
| (3) Based on the closing price of AutoZone common stock on August 31, 2024 (3,181.48 per share). |
Option Exercises and Stock Vested
Option Exercises and Stock Vested The following table sets forth information regarding stock option exercises and vested stock awards for the Company’s NEOs during the fiscal year ended August 31, 2024:
Option Exercises and Stock Vested
| | Option Awards | | Stock Awards | | | | Number | | Number | | | | of Shares | Value | of Shares | Value | | | Acquired | Realized | Acquired | Realized | | | on Exercise | on Exercise | on Vesting | on Vesting | | Name | (#) | ($) (1) | (#) (2) | ($) (3) | | William C. Rhodes, III | 18,750 | 47,734,852 | 37 | 99,738 | | Philip B. Daniele, III | 4,190 | 10,126,512 | 12 | 33,678 | | Jamere Jackson | — | — | — | — | | Thomas B. Newbern | 7,800 | 13,874,765 | — | — | | William R. Hackney | — | — | — | — | | Kenneth E. Jaycox, Jr. | — | — | — | — |
Option Exercises and Stock Vested
| (1) If the shares were sold immediately upon exercise, the value realized on exercise of the option is the difference between the actual sales price and the exercise price of the option. Otherwise, the value realized is the difference between the closing price of AutoZone common stock on the New York Stock Exchange on the date of exercise and the exercise price of the option. |
Option Exercises and Stock Vested
| (2) Represents shares acquired pursuant to the Executive Stock Purchase Plan. See “Compensation Discussion and Analysis” on page 64 for more information about this plan. |
Option Exercises and Stock Vested
| (3) Based on the closing price of AutoZone common stock on the vesting date. |
Nonqualified Deferred Compensation
Nonqualified Deferred Compensation The following table sets forth information regarding nonqualified deferred compensation for the Company’s NEOs as of and for the year ended August 31, 2024.
Nonqualified Deferred Compensation
| | Executive | Company | Aggregate | Aggregate | Aggregate | | | Contributions | Contributions | Earnings/ Losses | Withdrawals / | Balance at | | | in Last FY | in Last FY | in Last FY | Distributions | Last FYE | | Name | ($) (1) | ($) (2) | ($) (3) | ($) | ($) | | William C. Rhodes, III | 516,435 | 90,389 | 7,141,029 | — | 34,573,548 | | Philip B. Daniele, III | 183,682 | 25,153 | 186,944 | — | 1,420,894 | | Jamere Jackson | 71,660 | 41,092 | 77,938 | — | 546,134 | | Thomas B. Newbern | 267,845 | 34,980 | 311,429 | (1,074,269) | 2,540,167 | | William R. Hackney | — | — | — | — | — | | Kenneth E. Jaycox, Jr. | — | — | — | — | — |
Nonqualified Deferred Compensation
| (1) Represents contributions by the NEOs under the AutoZone, Inc. Executive Deferred Compensation Plan (the “EDCP”). Such contributions are included under the appropriate “Salary” and “Non-Equity Incentive Plan Compensation” columns for the NEOs in the Summary Compensation Table. |
Nonqualified Deferred Compensation
| (2) Represents matching contributions by the Company under the EDCP. Such contributions are included under the “All Other Compensation” column for the NEOs in the Summary Compensation Table. |
Nonqualified Deferred Compensation
| (3) Represents the difference between the aggregate balance at end of fiscal 2024 and the end of fiscal 2023, excluding (i) contributions made by the executive officer and the Company during fiscal 2024 and (ii) any withdrawals or distributions during fiscal 2024. None of the earnings/losses in this column were included in the Summary Compensation Table because they were not preferential or above market. |
Nonqualified Deferred Compensation
| 2024 Proxy Statement | | 69 |
Nonqualified Deferred Compensation
Officers of the Company with the title of vice president or higher based in the United States are eligible to participate in the EDCP. As of August 31, 2024, there were 56 such officers of the Company. The EDCP is a nonqualified plan that allows officers to make a pretax deferral of base salary and bonus compensation. Officers may defer up to 25% of base salary and up to 75% of bonus compensation. The Company match is calculated based on 100% of the first 3% of deferred compensation and 50% of the next 2% deferred, less the maximum value of the Company match available generally to participants in AutoZone’s 401(k) Plan. Participants may select among various mutual funds in which to invest their deferral accounts. Participants may elect to receive distribution of their deferral accounts at retirement or starting in a specific future year of choice before or after anticipated retirement (but not later than the year in which the participant reaches age 75). If a participant’s employment with AutoZone terminates other than by retirement or death, the account balance will be paid in a lump sum payment six months after termination of employment. There are provisions in the EDCP for withdrawal of all or part of the deferral account balance in the event of an extreme and unforeseen financial hardship.
Potential Payments Upon Termination Or Change In Control
Potential Payments Upon Termination Or Change In Control Our NEOs may receive certain benefits if their employment terminates under specified circumstances. These benefits derive from Company policies, plans, agreements and arrangements described below.
PAY RATIO DISCLOSURE
PAY RATIO DISCLOSURE Pursuant to Item 402(u) of Regulation S-K, we have conducted an analysis of our global employee population in order to estimate and disclose the total compensation paid to our median paid employee, not including our CEO, as well as the ratio of the total compensation paid to said median employee as compared to the total compensation paid to our CEO. The analysis, which is described below, yielded the following results:
PAY RATIO DISCLOSURE
| Total compensation for the median employee | | | for fiscal 2024 (not including the CEO): | $30,637 | | Total compensation for the CEO: | $9,198,465 | | Resulting CEO-to-median employee pay ratio: | 300:1 |
PAY RATIO DISCLOSURE
Measurement date. We identified the median employee from our population as of June 30, 2024. Compensation measure. The regulations require us to use a “consistently applied compensation measure”, or CACM, to identify the median employee. Based on an analysis of the AutoZone workforce, we determined that fixed or guaranteed compensation, including overtime and earnings for paid time off, plus variable compensation (e.g., bonus or commission pay) closely approximate the annual total direct compensation of our employees. We converted the earnings paid in local (non-U.S.) currency to U.S. dollars using published exchange rates as of June 30, 2024. We did not apply pay adjustments allowed by the rules in order to ensure a conservative estimate (i.e., it is unlikely that the estimate could have been higher than that calculated). Excluded population. We excluded from the analysis AutoZone employees in Austria, Brazil, Canada, China, Germany, India, Taiwan, Turkey and the United Kingdom, pursuant to the de minimis exemption under the rules. The 1,728 employees in these locations represent less than 5% of the total employee population of 124,663 as of June 30, 2024.
Pay versus Performance
Pay versus Performance The following table sets forth (i) total compensation paid to Mr. Rhodes, our former principal executive officer (“PEO”) and Mr. Daniele, our current PEO, for all three fiscal years presented, as set forth in our Summary Compensation Table (“SCT”), (ii) Compensation Actually Paid (“CAP”) to our PEO, (iii) average total compensation paid to our other NEOs, excluding Mr. Rhodes and Mr. Daniele, as set forth in the SCT for such fiscal year, (iv) average CAP to our other NEOs, in each case as calculated in accordance with Item 402(v) of Regulation S-K, and (v) certain Company and peer group performance measures for the periods indicated. CAP does not reflect value actually realized by the applicable executives or how the Compensation Committee evaluates compensation decisions.
Pay versus Performance
| 2024 Proxy Statement | | 73 |
Pay versus Performance
| | | | | | | | Value of Initial Fixed $100 | | | | | Fiscal Year | Summary Compensation Table Total for PEO (current) | Summary Compensation Table Total for PEO (former) | Compensation Actually Paid to PEO (current) (1)(2) | Compensation Actually Paid to PEO (former) (1)(2) | Average Summary Compensation Table Total for Non- PEO NEOs (3) | Average Compensation Actually Paid to Non- PEO NEOs (2)(3)(4) | Total Shareholder Return | Peer Group Total Shareholder Return (5) | Net Income ($s in millions) | Economic Profit ($s in millions)(6) | | 2024 | $9,198,465 | $6,046,598 | $15,071,027 | $21,056,588 | $6,209,177 | $9,568,493 | $267.55 | $124.17 | $2,662.4 | $2,546.6 | | 2023 | | 18,796,822 | | 37,562,328 | 5,404,080 | 10,077,359 | 206.32 | 98.08 | 2,528.4 | 2,432.0 | | 2022 | | 14,330,010 | | 53,183,213 | 4,403,231 | 12,895,019 | 181.90 | 91.92 | 2,429.6 | 2,278.5 | | 2021 | | 14,838,996 | | 33,457,070 | 3,943,435 | 6,034,162 | 130.22 | 110.88 | 2,170.3 | 1,984.4 |
Pay versus Performance
| (1) Reconciliation of amounts shown in Summary Compensation Table to CAP to PEO. |
Pay versus Performance
| Former CEO- William C. Rhodes, III | | | | | | | | | | Fiscal Year | Summary Compensation Table Total (SCT) | Value of Stock Awards and Option Awards Reported in SCT (deducted) | Year-End Value of Awards Granted in Fiscal Year (1) | Change in Fair Value of Prior Year Awards- Outstanding and Unvested (2) | Change in Fair Value (from Prior Year End) of Prior Year Awards- Vested (2) | Prior Year Fair Value of Prior Year Awards that Failed to Vest (2) | Total Adjustments | CAP | | 2024 | $6,046,598 | $(4,917,334) | $6,368,390 | $12,949,232 | $609,702 | $— | $15,009,990 | $21,056,588 | | 2023 | 18,796,822 | (15,966,758) | 24,357,600 | 9,772,375 | 602,289 | — | 18,765,506 | 37,562,328 | | 2022 | 14,330,010 | (10,370,249) | 20,198,760 | 26,351,061 | 2,673,630 | — | 38,853,203 | 53,183,213 | | 2021 | 14,838,996 | (9,586,448) | 18,881,745 | 10,972,210 | (1,649,432) | — | 18,618,074 | 33,457,070 | | Current CEO- Philip B. Daniele, III | | | | | | | | | | Fiscal Year | Summary Compensation Table Total (SCT) | Value of Stock Awards and Option Awards Reported in SCT (deducted) | Year-End Value of Awards Granted in Fiscal Year (1) | Change in Fair Value of Prior Year Awards- Outstanding and Unvested (2) | Change in Fair Value (from Prior Year End) of Prior Year Awards- Vested (2) | Prior Year Fair Value of Prior Year Awards that Failed to Vest (2) | Total Adjustments | CAP | | 2024 | $9,198,465 | $(7,224,860) | $9,992,595 | $2,989,428 | $115,398 | $— | $5,872,562 | $15,071,027 |
Pay versus Performance
| (2) Stock options are valued based on the Black-Scholes option pricing model as of the applicable measurement date. Stock options valued on a date other than the grant date are valued using the stock price and updated assumptions (i.e., term, volatility, interest rate) on such measurement date. |
Pay versus Performance
| (3) The Non-PEO NEOs are comprised of: Messrs. Jackson, Newbern, Hackney and Jaycox for fiscal year 2024, Messrs. Jackson, Newbern, Daniele and Frazer for fiscal years 2023 and 2022; and Messrs. Jackson, Giles, Newbern and Finestone and Ms. Ohm for fiscal year 2021. |
Pay versus Performance
| (4) Reconciliation of amounts shown in Summary Compensation Table to CAP to Non-PEO NEOs |
Pay versus Performance
| Fiscal Year | Summary Compensation Table Total (SCT) | Value of Stock Awards and Option Awards Reported in SCT (deducted) | Year-End Value of Awards Granted in Fiscal Year (1) | Change in Fair Value of Prior Year Awards- Outstanding and Unvested (2) | Change in Fair Value (from Prior Year End) of Prior Year Awards-Vested (2) | Prior Year Fair Value of Prior Year Awards that Failed to Vest (2) | Total Adjustments | CAP | | 2024 | $6,209,177 | $(5,105,044) | $6,522,730 | $1,924,159 | $17,471 | $— | $3,359,316 | $9,568,493 | | 2023 | 5,404,080 | (4,245,009) | 6,476,196 | 2,317,977 | 124,116 | — | 4,673,280 | 10,077,359 | | 2022 | 4,403,231 | (2,886,928) | 5,633,491 | 5,210,600 | 534,626 | — | 8,491,789 | 12,895,019 | | 2021 | 3,943,435 | (1,967,903) | 3,892,579 | 1,413,531 | (145,677) | (1,101,803) | 2,090,726 | 6,034,162 |
Pay versus Performance
| (5) Represents the weighted peer group total shareholder return (“TSR”), weighted according to each of the companies’ respective market capitalizations at the beginning of each period for which a return is indicated. The Company's peer group is the S&P Retail Index as reflected in our Annual Report on Form 10-K for fiscal year 2023. |
Pay versus Performance
| (6) Economic Profit was selected by the Company as the “most important” financial performance measure (that is not otherwise required to be disclosed in the table above) used to link CAP to Company performance for the most recently completed fiscal year, or the Company-Selected Measure. See page 56 of “Compensation Discussion and Analysis” for more information about how Economic Profit is calculated. |
Pay versus Performance
| 74 | | 2024 Proxy Statement |
Pay versus Performance
Aggregate change in the actuarial present value of the accumulated benefits (deducted)” and “Aggregate service cost and prior service cost for pension benefits” intentionally omitted as such amounts are not applicable.
Equity Compensation Plans
| (2) Consists of the AutoZone, Inc. Second Amended and Restated Director Compensation Plan, which was approved by the Board but was not submitted for approval by the shareholders as then permitted under the rules of the NYSE. This plan was terminated in December 2002. Any outstanding awards consist of stock appreciation rights that may be converted into shares immediately upon termination as a director. |