GENUINE PARTS CO
10-Ks and 10-Qs
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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
(Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
o Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to § 240.14a-12
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to § 240.14a-12
Genuine Parts Company
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
| þ | No fee required. | |
| o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
| 1) | Title of each class of securities to which transaction applies: | ||
| 2) | Aggregate number of securities to which transaction applies: | ||
| 3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): | ||
| 4) | Proposed maximum aggregate value of transaction: | ||
| 5) | Total fee paid: | ||
| o | Fee paid previously with preliminary materials. | |
| o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
| 1) | Amount Previously Paid: | ||
| 2) | Form, Schedule or Registration Statement No.: | ||
| 3) | Filing Party: | ||
| 4) | Date Filed: | ||
Table of Contents
GENUINE
PARTS COMPANY
2999 Circle 75 Parkway
Atlanta, Georgia 30339
2999 Circle 75 Parkway
Atlanta, Georgia 30339
NOTICE OF 2010 ANNUAL MEETING OF SHAREHOLDERS
April 19, 2010
TO THE SHAREHOLDERS OF GENUINE PARTS COMPANY:
The 2010 Annual Meeting of Shareholders of Genuine Parts
Company, a Georgia corporation, will be held at the
Company’s headquarters, 2999 Circle 75 Parkway, Atlanta,
Georgia, on Monday, the 19th day of April 2010, at
10:00 a.m., for the following purposes:
(1) To elect as directors the eleven nominees named in the
attached proxy statement;
(2) To ratify the selection of Ernst & Young LLP
as the Company’s independent auditors for the fiscal year
ending December 31, 2010;
(3) To act upon such other matters as may properly come
before the meeting or any reconvened meeting following any
adjournment thereof.
Information relevant to these matters is set forth in the
attached proxy statement. Only holders of record of Common Stock
at the close of business on February 11, 2010 will be
entitled to vote at the meeting.
Important Notice Regarding the Availability of Proxy
Materials for the Shareholder Meeting to be held on
April 19, 2010.
The Proxy
Statement and the 2009 Annual Report to Shareholders are
available at
http://www.proxydocs.com/gpc
http://www.proxydocs.com/gpc
By Order of the Board of Directors,
CAROL B. YANCEY
Senior Vice President — Finance and
Corporate Secretary
Senior Vice President — Finance and
Corporate Secretary
Atlanta, Georgia
February 26, 2010
YOUR VOTE
IS IMPORTANT!
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING IN
PERSON, PLEASE VOTE, SIGN, DATE AND RETURN THE ENCLOSED PROXY
PROMPTLY IN THE ENCLOSED BUSINESS REPLY ENVELOPE, OR YOU CAN
VOTE BY TELEPHONE OR INTERNET PURSUANT TO THE
INSTRUCTIONS ON THE ENCLOSED PROXY CARD. IF YOU DO ATTEND
THE MEETING, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON.
TABLE
OF CONTENTS
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Table of Contents
GENUINE
PARTS COMPANY
2999 Circle 75 Parkway
Atlanta, Georgia 30339
2999 Circle 75 Parkway
Atlanta, Georgia 30339
PROXY
STATEMENT
ANNUAL
MEETING — APRIL 19, 2010
This proxy statement is being furnished to the shareholders of
Genuine Parts Company in connection with the solicitation of
proxies by the Board of Directors of the Company for use at the
Company’s 2010 Annual Meeting of Shareholders to be held on
Monday, April 19, 2010, at 10:00 a.m. local time and
at any reconvened meeting following any adjournment thereof. The
Annual Meeting will be held at the Company’s headquarters,
2999 Circle 75 Parkway, Atlanta, Georgia.
This proxy statement and the accompanying proxy card are first
being mailed to shareholders on or about February 26, 2010.
The Company’s 2009 annual report to the shareholders,
including consolidated financial statements for the year ended
December 31, 2009, is enclosed.
VOTING
Shareholders of record can simplify their voting and reduce the
Company’s costs by voting their shares via telephone or the
Internet. Instructions for voting via telephone or the Internet
are set forth on the enclosed proxy card. The telephone and
Internet voting procedures are designed to authenticate votes
cast by use of a personal identification number. These
procedures enable shareholders to appoint a proxy to vote their
shares and to confirm that their instructions have been properly
recorded. If your shares are held in the name of a bank or
broker (the availability of telephone and Internet voting will
depend on the voting processes of the applicable bank or broker
in “street name”); therefore, it is recommended that
you follow the voting instructions on the form you receive. If
you do not choose to vote by telephone or the Internet, please
mark your choices on the enclosed proxy card and then date, sign
and return the proxy card at your earliest opportunity.
All proxies properly voted by telephone or the Internet and all
properly executed written proxy cards that are delivered to the
Company (and not later revoked) will be voted in accordance with
instructions given in the proxy. When voting for director
nominees, you may (1) vote FOR all nominees listed in this
proxy statement, (2) WITHHOLD AUTHORITY to vote for all
nominees, or (3) WITHHOLD AUTHORITY to vote for one or more
nominees but vote FOR the other nominees. To ratify the
selection of independent auditors, you may vote FOR or AGAINST
the proposal or you may ABSTAIN from voting.
If a signed proxy card is received which does not specify a vote
or an abstention, the shares represented by that proxy card will
be voted FOR all nominees to the Board of Directors listed in
this proxy statement and FOR the ratification of the selection
of independent auditors for the fiscal year ending
December 31, 2010. The Company is not aware, as of the date
hereof, of any matters to be voted upon at the Annual Meeting
other than those stated in this proxy statement and the
accompanying Notice of 2010 Annual Meeting of Shareholders. If
any other matters are properly brought before the Annual
Meeting, the enclosed proxy card gives discretionary authority
to the persons named as proxies to vote the shares represented
thereby in their discretion.
If you hold your shares in street name and you do not instruct
your bank or brokerage firm how to vote your shares at least ten
days before the date of the Annual Meeting, your bank or
brokerage firm cannot vote your shares without instructions on
“Proposal 1 — Election of Directors,”
which will have the same effect as a withhold vote. However,
your bank or brokerage firm may vote your shares in its
discretion on “Proposal 2 — Ratification of
Selection of Independent Auditors.”
A shareholder of record who submits a proxy pursuant to this
solicitation may revoke it at any time prior to its exercise at
the Annual Meeting. Such revocation may be by delivery of
written notice to the Corporate Secretary of the Company at the
Company’s address shown above, by delivery of a proxy
bearing a later date, or by voting in person at the Annual
Meeting. Street name holders may revoke their proxies prior to
the Annual Meeting by following the procedures specified by
their bank or brokerage firm.
Table of Contents
Only holders of record of the Company’s Common Stock at the
close of business on the record date for the Annual Meeting,
which is February 11, 2010, are entitled to vote at the
Annual Meeting. Persons who hold shares of Common Stock in
street name as of the record date may vote at the Annual Meeting
only if they hold a valid proxy from their bank or brokerage
firm. At the close of business on February 11, 2010, the
Company had outstanding and entitled to vote at the Annual
Meeting 158,703,873 shares of Common Stock.
On each proposal presented for a vote at the Annual Meeting,
each shareholder is entitled to one vote per share of Common
Stock held as of the record date. A quorum for the purposes of
all matters to be voted on shall consist of shareholders
representing, in person or by proxy, a majority of the
outstanding shares of Common Stock entitled to vote at the
Annual Meeting. Shares represented at the Annual Meeting that
are abstained or withheld from voting will be considered present
for purposes of determining a quorum at the Annual Meeting. If
less than a majority of the outstanding shares of Common Stock
are represented at the Annual Meeting, a majority of the shares
so represented may adjourn the Annual Meeting to another date,
time or place.
The vote required for the election of directors and the
ratification of the selection of independent auditors is a
majority of the shares of Common Stock outstanding and entitled
to vote which are represented at the Annual Meeting. Because
votes withheld and abstentions will be considered as present and
entitled to vote at the Annual Meeting but will not be voted,
they will have the same effect as votes “against” both
proposals.
PROPOSAL 1
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of
eleven directorships. The Board of Directors, based on the
recommendation of its Compensation, Nominating and Governance
Committee, has nominated the eleven directors named below to
serve until the 2011 Annual Meeting and the election and
qualification of their successors.
In the event that any nominee is unable to serve (which is not
anticipated), the Board of Directors may:
| • | designate a substitute nominee, in which case the persons designated as proxies will cast votes for the election of such substitute nominee; | |
| • | allow the vacancy to remain open until a suitable candidate is located and nominated; or | |
| • | adopt a resolution to decrease the authorized number of directorships. |
If any incumbent director nominee in an uncontested election
should fail to receive the required affirmative vote of the
holders of a majority of the shares present or represented at
the Annual Meeting, under Georgia law, the director remains in
office as a “holdover” director until his or her
successor is elected and qualified or until his or her earlier
resignation, retirement, disqualification, removal from office
or death. In the event of a holdover director, the Board of
Directors in its discretion may request the director to resign
from the Board. If the director resigns, the Board of Directors
may:
| • | immediately fill the resulting vacancy; | |
| • | allow the vacancy to remain open until a suitable candidate is located and appointed; or | |
| • | adopt a resolution to decrease the authorized number of directorships. |
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE “FOR” THE ELECTION OF ALL OF THE NOMINEES.
ALL VALID PROXIES RECEIVED WILL BE SO VOTED UNLESS SHAREHOLDERS
SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.
Set forth below is certain information about each of the eleven
nominees for director. For additional information about the
nominees, including the experience, qualifications, attributes
and skills that our Board believes makes them well qualified to
serve as directors, as well as information about our director
independence requirements, our director nominating process, our
board leadership structure and other corporate governance
matters, see “Corporate Governance” below.
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Table of Contents
NOMINEES
FOR DIRECTOR
|
Director |
||
|
Name, Principal Occupation, Certain Other Current and Past
Directorships and Age
|
Since | |
|
Dr. Mary B. Bullock is President Emerita of Agnes
Scott College in Atlanta, Georgia and visiting part-time
professor at Emory University. Dr. Bullock retired in
August 2006 as President of Agnes Scott College, a position she
held since 1995. Dr. Bullock is 65.
|
2002 | |
|
Jean Douville is the Chairman of the Board of Directors
of our wholly-owned subsidiary, UAP Inc., having been a director
since 1981 and Chairman since 1992. He served as President of
UAP Inc. from 1981 through 2000 and as Chief Executive Officer
from 1982 through 2000. UAP Inc. is a distributor of automotive
replacement parts headquartered in Montreal, Quebec, Canada.
Mr. Douville is Chairman of the Board of Banque Nationale
du Canada and a director of Richelieu Hardware Ltd.
Mr. Douville is 66.
|
1992 | |
|
Thomas C. Gallagher has been President of the Company
since 1990, Chief Executive Officer since August 2004 and
Chairman of the Board since February 2005. Mr. Gallagher
served as Chief Operating Officer of the Company from 1990 until
August 2004. Mr. Gallagher previously served as a director
of Oxford Industries, Inc. and STI Classic Funds.
Mr. Gallagher is 62.
|
1990 | |
|
George C. “Jack” Guynn retired in October 2006
as President and CEO of the Federal Reserve Bank of Atlanta,
where he worked his entire career. Mr. Guynn is a director
of Oxford Industries, Inc. and Acuity Brands. Mr. Guynn is
67.
|
2006 | |
|
John D. Johns is Chairman, President and Chief Executive
Officer of Protective Life Corporation in Birmingham, Alabama
and serves as a director of Protective Life and Annuity
Insurance Company and Protective Life Insurance Company, two of
Protective Life Corporation’s subsidiaries. Mr. Johns
has served as President and Chief Executive Officer of
Protective Life Corporation since January 2002 and became
Chairman in January 2003. He served as President and Chief
Operating Officer of Protective Life from August 1996 through
December 2001, and from October 1993 through August 1996 he
served as Executive Vice President and Chief Financial Officer.
Mr. Johns previously served as a director of Alabama
National BanCorporation and John H. Harland Company.
Mr. Johns is 58.
|
2002 | |
|
Michael M.E. Johns, M.D. is Chancellor, Emory
University, a position he has held since October 2007. From June
1996 to October 2007, Dr. Johns served as Executive Vice
President for Health Affairs, Emory University; Chief Executive
Officer of the Robert W. Woodruff Health Sciences Center; and
Chairman of Emory Healthcare, Emory University. From 1990 to
June 1996, Dr. Johns served as Dean of the School of
Medicine, Johns Hopkins University. Dr. Johns is also a
director of Johnson & Johnson and AMN Healthcare.
Dr. Johns is 68.
|
2000 | |
|
J. Hicks Lanier has served as Chief Executive Officer and
Chairman of the Board of Oxford Industries, Inc. since 1981 and
as a director of Oxford Industries, Inc. since 1969.
Mr. Lanier served as President of Oxford Industries, Inc.
from 1977 to 2003. Oxford Industries, Inc. is an apparel
manufacturer headquartered in Atlanta, Georgia. Mr. Lanier
is also a director of Crawford & Company and SunTrust
Banks, Inc. Mr. Lanier will be retiring as director from
Crawford & Company at the May 4, 2010 Annual
Meeting. Mr. Lanier is 69.
|
1995 | |
|
Wendy B. Needham was Managing Director, Global Automotive
Research for Credit Suisse First Boston from August 2000 to June
2003, and a Principal, Automotive Research, for Donaldson,
Lufkin and Jenrette from 1994 to 2000. Ms. Needham
previously served as a Director of Asahi Tec and Metaldyne
Corporation. Ms. Needham is 57.
|
2003 | |
|
Jerry W. Nix has been the Vice Chairman of the Board of
Directors since November 2005. He is Executive Vice President
Finance and Chief Financial Officer of the Company, a position
he has held since 2000. Previously, Mr. Nix held the
position of Senior Vice President Finance from 1990 until
February 2000. Mr. Nix is 64.
|
2005 | |
|
Larry L. Prince is Chairman of the Executive Committee of
the Board of Directors of the Company. Mr. Prince served as
Chairman of the Board of the Company from 1990 through February
2005 and as Chief Executive Officer from 1989 through August
2004. He is also a director of SunTrust Banks, Inc., Rollins,
Inc. and two of its related companies, RPC, Inc. and Marine
Products Corporation. Mr. Prince previously served as a
director of Crawford & Company, Equifax Inc. and John
H. Harland Company. Mr. Prince is 71.
|
1978 |
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|
Director |
||
|
Name, Principal Occupation, Certain Other Current and Past
Directorships and Age
|
Since | |
|
Gary W. Rollins has served as President and Chief
Operating Officer since 1984 and Chief Executive Officer since
2001 of Rollins, Inc., a national provider of consumer services
headquartered in Atlanta, Georgia. Mr. Rollins is a
director of Rollins, Inc. and two of its related companies, RPC,
Inc. and Marine Products Corporation. Mr. Rollins is 65.
|
2005 |
CORPORATE
GOVERNANCE
Independent
Directors
The Company’s Common Stock is listed on the New York Stock
Exchange. The NYSE requires that a majority of the directors,
and all of the members of certain committees of the board of
directors be “independent directors,” as defined in
the NYSE corporate governance standards. Generally, a director
does not qualify as an independent director if the director (or
in some cases, members of the director’s immediate family)
has, or in the past three years has had, certain material
relationships or affiliations with the Company, its external or
internal auditors, or other companies that do business with the
Company. The Board has affirmatively determined that seven of
the Company’s eleven current directors have no other direct
or indirect relationships with the Company and therefore are
independent directors on the basis of the NYSE corporate
governance standards and an analysis of all facts specific to
each director. The independent directors are Mary B. Bullock,
George C. “Jack” Guynn, John D. Johns, Michael M. E.
Johns, M.D., J. Hicks Lanier, Wendy B. Needham and Gary W.
Rollins.
Corporate
Governance Guidelines
The Board of Directors has adopted Corporate Governance
Guidelines that give effect to the NYSE’s requirements
related to corporate governance and various other corporate
governance matters. The Company’s Corporate Governance
Guidelines, as well as the charters of the Compensation,
Nominating and Governance Committee and the Audit Committee, are
available on the Company’s website at www.genpt.com.
Non-Management
Director Meetings and Presiding Independent Director
Pursuant to the Company’s Corporate Governance Guidelines,
the Company’s non-management directors meet separately from
the other directors in regularly scheduled executive sessions at
least annually and at such other times as may be scheduled by
the Chairman of the Board or by the presiding independent
director or as may be requested by any non-management director.
The independent directors serving on the Company’s Board of
Directors have appointed J. Hicks Lanier to serve as the
Board’s presiding independent director. As the presiding
independent director, Mr. Lanier presides at all meetings
of non-management and independent directors and serves as a
liaison between the Chief Executive Officer and the
non-management and independent directors. During 2009, the
independent directors held four meetings without management.
Mr. Lanier presided over all of these meetings.
Board
Leadership Structure
As is common practice among public companies in the United
States, the Board has appointed the Company’s Chief
Executive Officer to serve as Chairman of the Board. In his
position as CEO, Mr. Gallagher has primary responsibility
for the
day-to-day
operations of the Company and provides consistent leadership on
the Company’s key strategic objectives. In his role as
Chairman of the Board, he sets the strategic priorities for the
Board (with input from the presiding independent director),
presides over its meetings and communicates its strategic
findings and guidance to management. The Board believes that the
combination of these two roles provides more consistent
communication and coordination throughout the organization,
which results in a more effective and efficient implementation
of corporate strategy and is important in unifying the
Company’s strategy behind a single vision. In addition, we
have found that our CEO is the most knowledgeable member of the
Board regarding risks the Company may be facing and, in his role
as Chairman, is able to facilitate the Board’s oversight of
such risks.
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Table of Contents
As noted earlier, the independent directors have appointed a
presiding independent director, which provides balance to the
Board’s structure. With a supermajority of independent
directors, an Audit Committee and a Compensation, Nominating and
Governance Committee each comprised entirely of independent
directors, and a presiding independent director to oversee all
meetings of the non-management directors, the Company’s
Board of Directors is comfortable that its existing leadership
structure provides for an appropriate balance that best serves
the Company and its shareholders. The Board of Directors
periodically reviews its leadership structure to ensure that it
remains the optimal structure for our Company and our
shareholders.
Director
Nominating Process
Shareholders may recommend a director nominee by writing to the
Corporate Secretary specifying the nominee’s name and the
other required information set forth in the Company’s
Corporate Governance Guidelines, which are available on the
Company’s website at www.genpt.com. All
recommendations should include the written consent of the
nominee to be nominated for election to the Company’s Board
of Directors. To be considered, recommendations must be received
by the Company at least 120 calendar days prior to the date of
the Company’s proxy statement for the prior year’s
Annual Meeting of Shareholders and include all required
information to be considered. In the case of the 2011 Annual
Meeting of Shareholders, this deadline is October 29, 2010.
All recommendations will be brought to the attention of the
Compensation, Nominating and Governance Committee.
The Company’s Board of Directors has established the
following process for the identification and selection of
candidates for director. The Compensation, Nominating and
Governance Committee, in consultation with the Chairman of the
Board, annually reviews the appropriate experience, skills and
characteristics required of Board members in the context of the
current membership of the Board to determine whether the Board
would better be enhanced by the addition of one or more
directors. This review includes, among other relevant factors in
the context of the perceived needs of the Board at that time,
issues of experience, reputation, judgment, diversity and
skills. The Compensation, Nominating and Governance Committee,
when considering diversity, gives strong consideration to a wide
range of diversity factors as a matter of practice.
If the Compensation, Nominating and Governance Committee
determines that adding a new director is advisable, the
Committee initiates a search, working with other directors,
management and, if it deems appropriate or necessary, a search
firm retained to assist in the search. The Compensation,
Nominating and Governance Committee considers all appropriate
candidates proposed by management, directors and shareholders.
Information regarding potential candidates is presented to the
Compensation, Nominating and Governance Committee, and the
Committee evaluates the candidates based on the needs of the
Board at that time. Potential candidates are evaluated according
to the same criteria, regardless of whether the candidate was
recommended by shareholders, the Compensation, Nominating and
Governance Committee, another director, Company management, a
search firm or another third party. The Compensation, Nominating
and Governance Committee then submits any recommended
candidate(s) to the full Board of Directors for approval and
recommendation to the shareholders.
The Company’s Board of Directors is comprised of
individuals with diverse experience at policy-making levels in a
variety of businesses, as well as in education and non-profit
organizations in areas that are relevant to the Company’s
activities. Each director was nominated on the basis of the
unique experience, qualifications, attributes and skills that he
or she brings to the Board, as well as how those factors blend
with those of the others on the Board as a whole. On an
individual basis:
| • | Dr. Bullock brings to the Board her extensive experience with work force issues and strategic planning gained during her tenure as president of an independent national liberal arts college for women. | |
| • | Mr. Douville brings both management and industry experience as a former CEO and current Chairman of UAP/NAPA Canada, our Canadian subsidiary. In addition, as the chairman of a major Canadian bank, he is able to share his insights into international and other macro-economic trends. | |
| • | Mr. Gallagher has 39 years of operating experience with the Company and brings insight into all aspects of our business due to both his current role and his history with the Company. Mr. Gallagher’s leadership, together with the skills and knowledge of the industry and the Company gained in his tenure here, has been instrumental in the growth and success of the Company. |
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| • | Mr. Guynn’s prior role as President and CEO of the Federal Reserve Bank of Atlanta provides the Board with information and insight into areas of government relations and regulatory issues. In addition, Mr. Guynn’s financial and accounting experience with the Federal Reserve, as well as his experience as a member of the audit committees of other public company boards, is a great asset to the Audit Committee. | |
| • | Mr. Johns brings experience in running every aspect of a public company, including his current position as the Chairman, CEO and President of a public company and previous experience as a COO, CFO and General Counsel of NYSE-listed public companies. Mr. Johns also has experience as a director of other public company boards. | |
| • | Dr. Johns has served in numerous senior leadership positions at some of the nation’s most prestigious academic institutions, hospitals and health care systems. His involvement in strategic planning and management at these diverse organizations adds a unique perspective to the Board. Dr. Johns also brings experience as a director of other public company boards. | |
| • | Mr. Lanier has served as CEO of an NYSE-listed public company since 1981 and has served on the boards of six publicly traded companies over the last 30 years. Mr. Lanier’s long and varied business career, including service as Chairman and CEO of a large, publicly-traded company, well qualify him to serve on the Company’s Board. | |
| • | Ms. Needham offers extensive knowledge and understanding of the U.S. and international auto industries as a former managing director of global automotive research at a world-wide financial services company. Throughout her career she has analyzed the financial performance and strategies of public companies in the global auto industry and brings this experience to bear as the Chair of the Company’s Audit Committee. | |
| • | Mr. Nix has served in key financial positions within the Company over the past 20 years and as the Company’s CFO for the last ten years, providing him with extensive knowledge of the Company’s business and financial position. He also oversees the Company’s legal, human resources, logistics, construction, real estate and technology functions. With this knowledge and experience, Mr. Nix provides the Board with essential information that enables a better understanding of the business and financial risks facing the Company. | |
| • | Mr. Prince’s experience as the former Chairman and CEO of the Company and his over 40 years of experience with the Company offers the Board extensive knowledge of the Company and its history. Mr. Prince’s extensive management and executive experience well qualify him to serve on our board. | |
| • | Mr. Rollins offers experience as the CEO of a publicly traded NYSE-listed company, as well as specific expertise in the service industry. Mr. Rollins also brings extensive experience as a director of other NYSE-listed companies. |
Communications
with the Board
The Company’s Corporate Governance Guidelines provide for a
process by which shareholders or other interested parties may
communicate with the Board, a Board committee, the presiding
independent director, the non-management directors as a group,
or individual directors. Shareholders or other interested
parties who wish to communicate with the Board, a Board
committee or any such other individual director or directors may
do so by sending written communications addressed to the Board
of Directors, a Board committee or such individual director or
directors,
c/o Corporate
Secretary, Genuine Parts Company, 2999 Circle 75 Parkway,
Atlanta, Georgia 30339. This information is also available on
the Company’s website at www.genpt.com. All
communications will be compiled by the Secretary of the Company
and forwarded to the members of the Board to whom the
communication is directed or, if the communication is not
directed to any particular member(s) of the Board, the
communication shall be forwarded to all members of the Board of
Directors.
Annual
Performance Evaluations
The Company’s Corporate Governance Guidelines provide that
the Board of Directors shall conduct an annual evaluation to
determine, among other matters, whether the Board and the
Committees are functioning effectively. The Audit Committee and
the Compensation, Nominating and Governance Committee are also
required to each
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conduct an annual self-evaluation. The Compensation, Nominating
and Governance Committee is responsible for overseeing this
self-evaluation process. The Board, Audit Committee and
Compensation, Nominating and Governance Committee each conducted
an annual self-evaluation process during 2009.
Board
Oversight of Risk
The Company’s Board of Directors recognizes that, although
risk management is primarily the responsibility of the
Company’s management team, the Board plays a critical role
in the oversight of risk. The Board believes that an important
part of its responsibilities is to assess the major risks the
Company faces and review the Company’s options for
monitoring and controlling these risks. The Board assumes
responsibility for the Company’s overall risk assessment.
The Audit Committee has specific responsibility for oversight of
risks associated with financial accounting and audits, as well
as internal control over financial reporting. This includes the
Company’s risk assessment and management policies, the
Company’s major financial risk exposure and the steps taken
by management to monitor and mitigate such exposure. The
Compensation, Nominating and Governance Committee oversees the
risks relating to the Company’s compensation policies and
practices as well as management development and leadership
succession in the Company’s various business units. The
Board as a whole examines specific business risks in its regular
reviews of the individual business units and also on a
company-wide basis as part of its regular strategic reviews.
In addition to periodic reports from the two committees about
risks, the Board receives presentations throughout the year from
various business units that include discussion of significant
risks specific to their business unit as necessary.
Periodically, at Board meetings, management discusses matters of
particular importance or concern, including any significant
areas of risk requiring Board attention.
Code of
Conduct and Ethics
The Board of Directors has adopted a Code of Conduct and Ethics
for Employees, Contract
and/or
Temporary Workers, Officers and Directors and a Code of Conduct
and Ethics for Senior Financial Officers, both of which are
available on the Company’s website at www.genpt.com.
These Codes of Conduct and Ethics comply with NYSE and
Securities and Exchange Commission (the “SEC”)
requirements, including procedures for the confidential,
anonymous submission by employees or others of any complaints or
concerns about the Company or its accounting, internal
accounting controls or auditing matters. The Company will post
any amendments to or waivers from the Code of Conduct and Ethics
(to the extent applicable to the Company’s executive
officers and directors) on its website.
Board
Attendance
The Company’s Corporate Governance Guidelines provide that
all directors are expected to attend all meetings of the Board
and committees on which they serve and are also expected to
attend the Annual Meeting of Shareholders. During 2009, the
Board of Directors held five meetings. All of the directors
attended all of the Board of Directors meetings and meetings of
committees of the Board on which they served. All of the
Company’s directors were in attendance at the
Company’s 2009 Annual Meeting.
Board
Committees
The Board presently has three standing committees. Information
regarding the functions of the Board’s committees, their
present membership and the number of meetings held by each
committee during 2009 is set forth below:
Executive Committee. The Executive Committee
is authorized, to the extent permitted by law, to act on behalf
of the Board of Directors on all matters that may arise between
regular meetings of the Board upon which the Board of Directors
would be authorized to act. The current members of the Executive
Committee are Larry L. Prince (Chair), Thomas C. Gallagher, J.
Hicks Lanier and Gary W. Rollins. During 2009, this committee
held five meetings.
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Audit Committee. The Audit Committee’s
main role is to assist the Board of Directors with oversight of
(1) the integrity of the Company’s financial
statements, (2) the Company’s compliance with legal
and regulatory requirements, (3) the independent
auditor’s qualifications and independence and (4) the
performance of the Company’s internal audit function and
independent auditors. As part of its duties, the Audit Committee
assists in the oversight of (a) management’s
assessment of, and reporting on, the effectiveness of internal
control over financial reporting, (b) the independent
auditor’s integrated audit, which includes expressing an
opinion on the conformity of the Company’s audited
financial statements with United States generally accepted
accounting principles, (c) the independent auditor’s
audit of the Company’s internal control over financial
reporting which includes expressing an opinion on the
effectiveness of the Company’s internal control over
financial reporting and (d) the Company’s risk
assessment and risk management. The Audit Committee oversees the
Company’s accounting and financial reporting process and
has the authority and responsibility for the appointment,
retention and oversight of the Company’s independent
auditors, including pre-approval of all audit and non-audit
services to be performed by the independent auditors. The Audit
Committee annually reviews and approves the firm to be engaged
as independent auditors for the Company for the next fiscal
year, reviews with the independent auditors the plan and results
of the audit engagement, reviews the scope and results of the
Company’s procedures for internal auditing and monitors the
design and maintenance of the Company’s internal accounting
controls. The Audit Committee Report appears later in this proxy
statement. A current copy of the written charter of the Audit
Committee is available on the Company’s website at
www.genpt.com.
The current members of the Audit Committee are Wendy B. Needham
(Chair), Mary B. Bullock, George C. Guynn and Michael M.E.
Johns. All members of the Audit Committee are independent of the
Company and management, as required by section 303A.06 of
the New York Stock Exchange listing standards and SEC
Rule 10A-3.
The Board has determined that all members of the Audit Committee
meet the financial literacy requirements of the NYSE corporate
governance listing standards. During 2009, the Audit Committee
held five meetings.
The Board of Directors has determined that Mr. Guynn and
Ms. Needham meet the requirements adopted by the SEC for
qualification as an “audit committee financial
expert.” Mr. Guynn retired in 2006 as President and
CEO of the Federal Reserve Bank of Atlanta, where he worked his
entire career. In such capacity, Mr. Guynn has experience
actively supervising a principal financial officer, principal
accounting officer, controller, public accountant, auditor or
person performing similar functions and other relevant
experience. Ms. Needham was formerly Managing Director,
Global Automotive Research for Credit Suisse First Boston from
August 2000 to June 2003. Prior to that, Ms. Needham was a
Principal, Automotive Research for Donaldson, Lufkin &
Jenrette for six years. In both of these positions,
Ms. Needham actively reviewed financial statements and
prepared various financial analyses and evaluations of such
financial statements and related business operations.
Compensation, Nominating and Governance
Committee. The Compensation, Nominating and
Governance Committee is responsible for (a) determining and
evaluating the compensation of the Chief Executive Officer and
other executive officers and key employees and approving and
monitoring our executive compensation plans, policies, and
programs, (b) identifying and evaluating potential nominees
for election to the Board and recommending candidates for
consideration by the Board and shareholders, (c) developing
and recommending to the Board a set of Corporate Governance
Guidelines, as well as periodically reevaluating those Corporate
Governance Guidelines, and (d) overseeing the evaluation of
the Board of Directors and management. The Committee also
periodically reviews and evaluates the risk involved in the
Company’s compensation policies and practices and the
relationship of such policies and practices to the
Company’s overall risk and management of that risk. The
Committee has and may exercise the authority of the Board of
Directors as specified by the Board and to the extent permitted
under the Georgia Business Corporation Code, and the Committee
has the authority to delegate its duties and responsibilities to
subcommittees as it deems necessary and advisable. A description
of the Committee’s policy regarding director candidates
nominated by shareholders appears in “Director Nominating
Process” above.
The Committee independently retains a compensation consultant,
Hewitt Associates, to assist the Committee in its deliberations
regarding executive compensation. The mandate of the consultant
is to serve
8
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the Company and work for the Committee in its review of
executive compensation practices, including the competitiveness
of pay levels, design issues, market trends and technical
considerations. Hewitt Associates has assisted the Committee
with the development of competitive market data and a related
assessment of the Company’s executive compensation levels,
design of long-term incentive grants and reporting of executive
compensation under the SEC’s proxy disclosure rules. Our
Chairman, President and Chief Executive Officer, with input from
our Senior Vice President — Human Resources and Hewitt
Associates, recommends to the Committee base salary, target
bonus levels, actual bonus payouts and long-term incentive
grants for our senior executives. The Committee considers,
discusses, modifies as appropriate, and takes action on such
proposals.
The Company’s management also retained Hewitt Associates
for record-keeping services related to the Company’s
employee benefit plans. Neither the Board nor the Compensation,
Nominating and Governance Committee was involved in
management’s decision to retain Hewitt Associates for these
record-keeping services when such services began in April 2005.
During 2009, the Company paid Hewitt Associates approximately
$170,000 for executive compensation consulting services, and
$3.5 million for fees related to benefits plans.
The current members of the Compensation, Nominating and
Governance Committee are J. Hicks Lanier (Chair), John D. Johns,
Michael M.E. Johns, M.D. and Gary W. Rollins. All members
of the Compensation, Nominating and Governance Committee are
independent of the Company and management, as required by
Sections 303A.04 and 303A.05 of the NYSE listing standards.
During 2009, the Compensation, Nominating and Governance
Committee held three meetings. A current copy of the written
charter of the Compensation, Nominating and Governance Committee
is available on the Company’s website at
www.genpt.com.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of
February 11, 2010, as to all persons or groups known to the
Company to be beneficial owners of more than five percent of the
outstanding Common Stock of the Company.
|
Shares |
||||||||||
|
Beneficially |
Percent |
|||||||||
|
Title of Class
|
Name and Address of Beneficial Owner
|
Owned | of Class | |||||||
|
Common Stock,
$1.00 par value |
Blackrock, Inc. 40 East 52nd Street New York, NY 10022 |
9,125,926 | (1) | 5.7% | ||||||
| (1) | This information is based upon information included in a Schedule 13G filed on January 29, 2010 by Blackrock, Inc. Blackrock, Inc. reports sole voting power with respect to all 9,125,926 shares and sole dispositive power with respect to all 9,125,926 shares. According to the filing, the reported shares are held by Blackrock, Inc. through subsidiaries. |
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SECURITY
OWNERSHIP OF MANAGEMENT
Based on information provided to the Company by the named
persons, set forth in the table below is information regarding
the beneficial ownership of Common Stock of the Company held by
the Company’s directors and nominees for director, the
named executive officers (as defined in “Executive
Compensation” below) and all directors, nominees for
director and executive officers of the Company as a group as of
February 11, 2010:
|
Shares of |
Percentage of |
|||||||
|
Common Stock |
Common Stock |
|||||||
|
Name
|
Beneficially Owned(1) | Outstanding | ||||||
|
Mary B. Bullock
|
14,479 | (2) | * | |||||
|
R. Bruce Clayton
|
3,171,349 | (3) | 2.0 | % | ||||
|
Paul D. Donahue
|
116,736 | (4) | * | |||||
|
Jean Douville
|
4,989 | (5) | * | |||||
|
Thomas C. Gallagher
|
866,036 | (6) | * | |||||
|
George C. “Jack” Guynn
|
4,613 | (7) | * | |||||
|
John D. Johns
|
19,355 | (8) | * | |||||
|
Michael M. E. Johns, M.D.
|
25,523 | (9) | * | |||||
|
J. Hicks Lanier
|
52,215 | (10) | * | |||||
|
Wendy B. Needham
|
9,498 | (11) | * | |||||
|
Jerry W. Nix
|
3,364,197 | (12) | 2.1 | % | ||||
|
Larry L. Prince
|
412,334 | (13) | * | |||||
|
Gary W. Rollins
|
40,365 | (14) | * | |||||
|
Larry R. Samuelson
|
128,515 | (15) | * | |||||
|
Robert J. Susor
|
1,296,929 | (16) | * | |||||
|
Directors, Nominees and Executive Officers as a Group
(15 persons)
|
5,333,138 | (17) | 3.4 | % | ||||
| * | Less than 1%. | |
| (1) | Information relating to the beneficial ownership of Common Stock by directors, nominees for director and executive officers is based upon information furnished by each such individual using “beneficial ownership” concepts set forth in rules promulgated by the SEC. Except as indicated in other footnotes to this table, directors, nominees and executive officers possessed sole voting and investment power with respect to all shares set forth by their names. The table includes, in some instances, shares in which members of a director’s, nominee’s or executive officer’s immediate family or trusts or foundations established by them have a beneficial interest and as to which the director, nominee or executive officer disclaims beneficial ownership. | |
| (2) | Includes (i) 7,109 restricted stock units that each represent a right to receive one share of Common Stock on the five-year anniversary of their original grant date, subject to earlier settlement in certain events, including a termination of service as a director by reason of retirement and (ii) 6,146 shares of Common Stock equivalents held in Ms. Bullock’s stock account under the Directors’ Deferred Compensation Plan. See “Compensation of Directors.” | |
| (3) | Includes 57,370 shares subject to stock options and stock appreciation rights that are exercisable currently or within 60 days after February 11, 2010. Also includes 2,016,931 shares held in trust for Company employees under the Company’s Pension Plan for which Mr. Clayton is one of four trustees and 1,088,532 shares held in a benefit fund for Company employees of which Mr. Clayton is one of four trustees. Mr. Clayton disclaims beneficial ownership as to all such shares held in both trusts. Does not include 2,820 restricted stock units that each represent a right to receive one share of Common Stock on the five-year anniversary of their original grant date, subject to earlier settlement in certain events outside the control of Mr. Clayton. | |
| (4) | Includes 111,400 shares subject to stock options and stock appreciation rights that are exercisable currently or within 60 days after February 11, 2010. Does not include 5,447 restricted stock units that each represent a right |
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| to receive one share of Common Stock on the five-year anniversary of their original grant date, subject to earlier settlement in certain events outside the control of Mr. Donahue. | ||
| (5) | Includes 2,739 shares of Common Stock equivalents held in Mr. Douville’s stock account under the Directors’ Deferred Compensation Plan. | |
| (6) | Includes (i) 525,500 shares subject to stock options and stock appreciation rights that are exercisable currently or within 60 days after February 11, 2010, and (ii) 946 shares owned jointly by Mr. Gallagher and his wife. Does not include 20,143 restricted stock units that each represent a right to receive one share of Common Stock on the five-year anniversary of their original grant date, subject to earlier settlement in certain events outside the control of Mr. Gallagher. | |
| (7) | Includes 3,613 restricted stock units that each represent a right to receive one share of Common Stock on the five-year anniversary of their original grant date, subject to earlier settlement in certain events, including a termination of service as a director by reason of retirement. | |
| (8) | Includes (i) 7,109 restricted stock units that each represent a right to receive one share of Common Stock on the five-year anniversary of their original grant date, subject to earlier settlement in certain events, including a termination of service as a director by reason of retirement, (ii) 8,951 shares of Common Stock equivalents held in Mr. Johns’ stock account under the Directors’ Deferred Compensation Plan, and (iii) 2,053 shares owned by Mr. Johns’ wife, as to which Mr. Johns disclaims beneficial ownership. | |
| (9) | Includes (i) 3,000 shares subject to stock options that are exercisable currently or within 60 days after February 11, 2010, (ii) 7,109 restricted stock units that each represent a right to receive one share of Common Stock on the five-year anniversary of their original grant date, subject to earlier settlement in certain events, including a termination of service as a director by reason of retirement, and (iii) 13,213 shares of Common Stock equivalents held in Dr. Johns’ stock account under the Directors’ Deferred Compensation Plan. | |
| (10) | Includes (i) 3,000 shares subject to stock options that are exercisable currently or within 60 days after February 11, 2010, (ii) 7,109 restricted stock units that each represent a right to receive one share of Common Stock on the five-year anniversary of their original grant date, subject to earlier settlement in certain events, including a termination of service as a director by reason of retirement, and (iii) 2,400 shares held by a trust for the benefit of Mr. Lanier as to which Mr. Lanier has sole voting power and the ability to veto investment decisions made by the trustee. Also includes 9,900 shares held in four trusts for the benefit of Mr. Lanier’s siblings for which Mr. Lanier has sole voting power and the ability to veto investment decisions made by the trustees, 2,250 shares owned by Oxford Industries Foundation as to which Mr. Lanier has shared voting and investment power, and 24,831 shares held by a charitable foundation for which Mr. Lanier is one of six trustees and thereby has sole voting and shared investment power. Mr. Lanier disclaims beneficial ownership as to the shares held in such trusts and foundations. | |
| (11) | Includes (i) 7,109 restricted stock units that each represent a right to receive one share of Common Stock on the five-year anniversary of their original grant date, subject to earlier settlement in certain events, including a termination of service as a director by reason of retirement, and (ii) 1,058 shares held jointly by Ms. Needham and her husband. | |
| (12) | Includes 190,350 shares subject to stock options and stock appreciation rights that are exercisable currently or within 60 days after February 11, 2010. Also includes 2,016,931 shares held in trust for Company employees under the Company’s Pension Plan for which Mr. Nix is one of four trustees and 1,088,532 shares held in a benefit fund for Company employees of which Mr. Nix is one of four trustees. Mr. Nix disclaims beneficial ownership as to all such shares held in both trusts. Does not include 9,348 restricted stock units that each represent a right to receive one share of Common Stock on the five-year anniversary of their original grant date, subject to earlier settlement in certain events outside the control of Mr. Nix. | |
| (13) | Includes (i) 5,335 restricted stock units that each represent a right to receive one share of Common Stock on the five-year anniversary of their original grant date, subject to earlier settlement in certain events, including a termination of service as a director by means of retirement, and (ii) 25,000 shares held by Mr. Prince’s wife. Mr. Prince disclaims beneficial ownership as to all such shares held by his wife. | |
| (14) | Includes (i) 5,335 restricted stock units that each represent a right to receive one share of Common Stock on the five-year anniversary of their original grant date, subject to earlier settlement in certain events, including a |
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| termination of service as a director by reason of retirement, (ii) 500 shares held by Mr. Rollins’ wife, and (iii) 34,030 shares held in a charitable foundation for which Mr. Rollins is a trustee and thereby has shared voting and investment power. Mr. Rollins disclaims beneficial ownership as to all such shares held by his wife and in trust. | ||
| (15) | Includes 96,827 shares subject to stock options and stock appreciation rights that are exercisable currently or within 60 days after February 11, 2010. Does not include 2,514 restricted stock units that each represent a right to receive one share of Common Stock on the five-year anniversary of their original grant date, subject to earlier settlement in certain events outside the control of Mr. Samuelson. | |
| (16) | Includes (i) 161,262 shares subject to stock options and stock appreciation rights that are exercisable currently or within 60 days after February 11, 2010, and (ii) 688 shares owned jointly by Mr. Susor and his wife. Also includes 1,088,532 shares held in a benefit fund for Company employees of which Mr. Susor is one of four trustees. Mr. Susor disclaims beneficial ownership as to all such shares held in trust. Does not include 7,414 restricted stock units that each represent a right to receive one share of Common Stock on the five-year anniversary of their original grant date, subject to earlier settlement in certain events outside the control of Mr. Susor. | |
| (17) | Includes (i) 1,203,534 shares or rights issuable to certain executive officers and directors upon the exercise of options, stock appreciation rights and restricted stock units that are exercisable currently; (ii) 2,016,931 shares held in trust for Company’s employees under the Company’s Pension Plan; (iii) 1,088,532 shares held in a benefit fund for Company employees; and (iv) 31,048 shares held as Common Stock equivalents in directors’ stock accounts under the Directors’ Deferred Compensation Plan. |
EXECUTIVE
COMPENSATION
COMPENSATION
DISCUSSION AND ANALYSIS
In this section, we will give an overview and analysis of our
executive compensation program and policies, the material
compensation decisions we have made under those programs and
policies, and the material factors that we considered in making
those decisions. Later in this proxy statement under the heading
“Additional Information Regarding Executive
Compensation” you will find a series of tables containing
specific information about the compensation earned or paid in
2009 to the following individuals, whom we refer to as our named
executive officers:
| • | Thomas C. Gallagher, Chairman, President and Chief Executive Officer | |
| • | Jerry W. Nix, Vice Chairman and Chief Financial Officer | |
| • | Paul D. Donahue, Executive Vice President and President — U.S. Automotive Parts Group | |
| • | Robert J. Susor, Executive Vice President | |
| • | R. Bruce Clayton, Senior Vice President — Human Resources | |
| • | Larry R. Samuelson, Former President — U.S. Automotive Parts Group |
The discussion below is intended to help you understand the
detailed information provided in those tables and put that
information into context within our overall compensation program.
Compensation
Philosophy and Objectives
Our overall goal in compensating executive officers is to
attract, retain and motivate key executives of superior ability
who are critical to our future success. We believe that both
short-term and long-term incentive compensation opportunities
provided to executive officers should be directly aligned with
our performance, and that compensation should be structured to
ensure that a significant portion of executives’
compensation opportunities is directly related to achievement of
financial and operational goals and other factors that impact
shareholder value.
Our compensation decisions with respect to executive officer
salaries, annual incentives, and long-term incentive
compensation opportunities are influenced by (a) the
executive’s level of responsibility and function
12
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within the Company, (b) the overall performance and
profitability of the Company, (c) our assessment of the
competitive marketplace, including other peer companies and, in
2009, (d) the economic environment. Our philosophy is to
focus on total direct compensation opportunities through a mix
of base salary, annual cash bonus and long-term incentives,
including stock-based awards, although we did not grant any
long-term incentive awards during 2009.
We also believe that the best way to directly align the
interests of our executives with the interests of our
shareholders is to make sure that our executives acquire and
retain a significant level of stock ownership throughout their
tenure with us. Our compensation program pursues this objective
in two ways: through our equity-based long-term incentive awards
and our stock ownership guidelines for our senior executives, as
described in more detail below.
Overview
of Executive Compensation Components
The Company’s executive compensation program consists of
several compensation elements, as described in the table below.
| Pay Element | What the Pay Element Rewards | Purpose of the Pay Element | ||||
|
Base Salary
|
Core competence in the executive role relative to skills, experience and contributions to the Company | Provide fixed compensation based on competitive market practice | ||||
| Annual Cash Incentive | Contributions toward the Company’s achievement of specified pre-tax profit goals |
• Provides focus on meeting annual goals
that lead to our long-term success
• Provides annual performance-based cash incentive compensation • Motivates achievement of critical annual performance metrics |
||||
| Long-Term Incentives |
Stock Appreciation Rights (SARs): • Sustained stock price appreciation, thereby aligning executives’ interests with those of shareholders • Continued employment with the Company during a three-year vesting period |
The combination of SARs and PRSUs provides a blended long-term focus on:
• Sustained stock price performance
• Achievement of pre-tax profitability targets
• Executive ownership of our stock
• Executive retention in a challenging business environment and competitive labor market
|
||||
|
Performance Restricted Stock Units (PRSUs): • Sustained pre-tax profitability (determines the number of PRSUs that are earned) • Focus on our stock price performance • Continued employment with the Company during a four-year vesting period (five years including the performance year) |
||||||
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| Pay Element | What the Pay Element Rewards | Purpose of the Pay Element | ||||
| Retirement Benefits |
• Our executive officers are eligible to
participate in employee benefit plans available to our eligible
employees, including both tax-qualified and nonqualified
retirement plans.
• The Tax Deferred Savings Plan is a nonqualified voluntary deferral program that allows our executive officers to defer and invest a portion of their annual bonus. • The Supplemental Retirement Plan (SRP) is a nonqualified, noncontributory “restoration” program. The SRP applies only to persons whose annual earnings are expected to be equal to or greater than the IRS Code limitations, and is intended to make those employees “whole” on amounts the executive would have been entitled to receive under the regular pension plan had that plan not been limited by the IRS Code. |
• The Tax Deferred Savings Plan provides a
voluntary tax-deferred retirement savings vehicle for our
executive officers. The Tax Deferred Savings Plan is described
in more detail within the Executive Compensation section of this
Proxy Statement. • The SRP provides a tax-deferred retirement savings alternative for amounts exceeding IRS limitations on qualified programs, and makes total retirement benefits for our executive officers commensurate with those available to our other employees as a percentage of pay. The SRP is described in more detail within the Executive Compensation section of this Proxy Statement. |
||||
|
Welfare Benefits |
• Executives participate in employee
benefit plans generally available to our employees, including
medical, health, life insurance and disability plans.
• Continuation of welfare benefits may occur as part of severance upon certain terminations of employment. |
These benefits are part of our broad-based total compensation program. | ||||
| Additional Benefits and Perquisites |
• CEO only: Board-mandated requirement
that the corporate aircraft be used for personal travel.
• CEO only: Selected club memberships |
The Board requires that our CEO use the corporate aircraft for personal travel to accommodate security, availability and efficiency concerns.
Club memberships facilitate the CEO’s role as a Company representative in the community. The Company does not provide tax reimbursements with respect to any perquisites to executive officers. |
||||
| Change in Control and Termination Benefits | We have change in control agreements with certain officers, including our named executive officers. The agreements provide severance benefits if an officer’s employment is terminated within two years after a change in control. | Change in control arrangements are designed to retain executives and provide continuity of management in the event of an actual or threatened change in control. See the Change in Control Arrangements as described in more detail within the Executive Compensation section of this Proxy Statement. | ||||
The use of these programs enables us to reinforce our pay for
performance philosophy, as well as strengthen our ability to
attract and retain highly qualified executives. We believe that
this combination of programs provides
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an appropriate mix of fixed and variable pay, balances
short-term operational performance with long-term shareholder
value and encourages executive recruitment and retention.
Determination
of Appropriate Pay Levels
Pay
Philosophy and Competitive Standing
In general, we seek to provide competitive pay by targeting at
or under the 50th percentile relative to a peer group for total
direct compensation opportunities, including salary, target
annual bonus, and long-term incentives. To achieve the 50th
percentile positioning for the annual cash compensation
component, we provide somewhat conservative base salaries and
higher-than-average
target bonus opportunities, to focus less on fixed pay and more
on performance-based opportunities.
With the assistance of the Committee’s compensation
consultant, Hewitt Associates, we collected and analyzed
competitive market data to be used as background for 2009 pay
decisions. This data was referenced when targeting the 50th
percentile positioning for annual cash compensation discussed
above. Data sources included public company proxy statements,
published compensation surveys from Mercer and Watson Wyatt, and
a private total compensation database maintained by Hewitt
Associates. We compared compensation opportunities for our named
executive officers with pay opportunities available to executive
officers in comparable positions at similar companies (our
“Comparison Group”). During 2009 the Comparison Group
included companies from three industry segments in which we
compete: automotive parts, industrial parts and office products.
The study group includes companies that make up the Dow Jones
Auto Parts and Equipment Index (with respect to the automotive
parts segment as the Company is a member of such industry
group), Applied Industrial Technologies, Inc. and Kaman
Corporation (with respect to the industrial parts segment), and
United Stationers Inc. (with respect to the office products
segment). Competitive data was adjusted based on the
Company’s
and/or
relevant business unit’s revenue size using regression
analysis. This adjustment allowed for more accurate comparisons
to be made. Hewitt Associates also provided us with competitive
pay information for a separate reference group of companies
consisting of both local and industry competitors (either at the
corporate or subsidiary level). While this information was
helpful in assessing our competitive position among similar
companies in the marketplace, we did not use this information to
benchmark our targeted pay at the desired range relative to our
peers.
During 2009, Hewitt Associates provided competitive data that
allowed the Company and the Committee to make decisions
regarding the setting of total compensation opportunities for
each named executive.
2009
Base Salary
Our base salary levels reflect a combination of factors,
including competitive pay levels relative to the peer groups
discussed above, the executive’s experience and tenure, our
overall annual budget for both merit increases and pre-tax
profit, the executive’s individual performance and changes
in responsibility. We review salary levels annually to recognize
these factors. We do not target base salary at any particular
percent of total compensation.
As noted above, our compensation philosophy targets base
salaries that are somewhat below market for comparable
positions. The base salaries of our named executive officers
compared to competitive benchmarking reflect our conservative
philosophy. No executives received a base salary increase for
2009; however, effective July 1, 2009, Mr. Donahue
assumed the responsibilities of President of the
U.S. Automotive Parts Group. As a result, the Compensation,
Nominating and Governance Committee of the Board of Directors
approved a 7.1% increase (on an annualized basis) in base salary
for Mr. Donahue.
2009
Annual Incentive Plan
Our Annual Incentive Plan (the “Annual Incentive
Plan”) provides our executive officers with an opportunity
to earn annual cash bonuses based on our achievement of certain
pre-established performance goals. As in setting base salaries,
we consider a combination of factors in establishing the annual
target bonus opportunities for our named executive officers.
Budgeted pre-tax profit is the primary factor, as target bonus
opportunities are adjusted annually when we set our pre-tax
profit goals for the year. We do not target annual bonus
opportunities at any particular percentage of total compensation.
15
Table of Contents
As mentioned above, we set higher than average target bonus
opportunities relative to our Comparison Group so that, when
combined with conservative salary levels, the targeted annual
cash compensation of our executive officers is near the 50th
percentile relative to our Comparison Group based on competitive
benchmarking by Hewitt Associates. Actual cash compensation
levels may be above or below the 50th percentile to the extent
actual performance exceeds or does not meet our annual
performance goals.
We set the profit goals for 2009 bonus opportunities at levels
that are intended to be challenging, yet achievable, and reflect
better than average growth within our competitive industry. Once
performance goals have been set and approved, the Compensation,
Nominating and Governance Committee then sets a range of bonus
opportunities for each named executive officer based on
achievement of such goals. Target bonus opportunities for 2009
were set as a percentage of each named executive officer’s
base salary, as follows: Mr. Gallagher, 119%; Mr. Nix,
84%; Mr. Susor, 56%; Mr. Donahue, 67% and
Mr. Clayton 54%. These targets continue to reflect the
Company’s philosophy of providing the opportunity to earn
an increase over prior year actual total cash compensation if
goals are achieved.
The performance goals set for each executive officer, along with
any base salary increase that may be granted, allow the
calculation of target bonus opportunities to occur. After the
Company’s profit goals are determined, total cash
compensation targets are set to establish a correlation with the
Company’s profit and performance goals. The
executive’s base salary is then compared to their target
total cash compensation. The difference between base salary and
target total cash compensation is typically established as the
executive’s target bonus opportunity. This methodology
directly reinforces the Company’s
pay-for-performance
philosophy. No base salary increases were granted in 2009 to any
of the named executive offers except Mr. Donahue, as
described above.
For Messrs. Gallagher, Nix and Clayton we set annual bonus
opportunities for 2009 based on achievement of performance goals
relating to pre-tax profits of the Company, which we believe has
a strong correlation with shareholder value. The profit goals
for the Company are determined by aggregating profit goals for
the Company’s subsidiaries, which are each set based upon
(i) prior year performance by store, branch, or
distribution center; (ii) the overall economic outlook of
the region served by a particular store, branch, or distribution
center; and (iii) specific market conditions.
Actual bonus amounts for 2009 were determined based on relative
achievement of the performance goals. Messrs. Gallagher,
Nix, and Clayton were eligible to earn from 45% of their target
bonus amount (if the Company achieved 75% of its pre-tax profits
goal) to 150% of their target bonus amount (if the Company
achieved 110% of its pre-tax profits goal). No bonus is earned
if performance falls below 75% of the pre-tax profit goal. See
the table below.
|
Pre-Tax Profit as a % of Profit Goal
|
% of Target Bonus | |||
|
Below 75%
|
0 | % | ||
|
75%
|
45 | % | ||
|
100%
|
100 | % | ||
|
110%
|
150 | % | ||
|
Above 110%
|
150 | % | ||
Straight-line interpolation is used between data points.
Mr. Donahue’s annual bonus opportunity for 2009 was
based upon a minimum guarantee of $300,000 due to his promotion
to President — U.S. Automotive Parts Group
effective July 1, 2009. The bonus amount was determined by
considering Mr. Donahue’s bonus opportunity in his
previous position compared to the duties and responsibilities of
his new position, along with appropriate pay alignment with
other executives in the Company.
For Mr. Donahue, the performance range for our Automotive
Parts Group (“APG”) profit versus quota was 75% to
110%. The performance range for the sum of the profits of
Altrom, Rayloc, and Balkamp (“Automotive”) versus
quota was 75% to 118%. Each of the two bonus opportunities was
weighted 50%. For the Automotive portion of his bonus, he was
eligible to earn no less than 45% of his target bonus amount (if
the percent of pre-tax profit achieved was 75% or lower) to 150%
of his target bonus amount (if 118% of pre-tax profit was
achieved). For the APG portion of his bonus, he was eligible to
earn no less than 45% of his target bonus amount (if the percent
of pre-
16
Table of Contents
tax profit achieved was 75% or lower) to 150% of his target
bonus amount (if 110% of the Company pre-tax profit was
achieved). See the table below. In recognition of
Mr. Donahue’s new responsibilities as President,
U.S. Automotive Parts Group, effective July 1, 2009,
his total combined bonus for 2009 was approved by the
Compensation, Nominating and Governance Committee to be no less
than $300,000.
|
Pre-Tax Profit |
% of Target |
% of Target |
||||||||
|
(Automotive) |
Bonus x 50% |
Pre-Tax Profit (APG) |
Bonus x 50% |
|||||||
|
as a % |
(Pre-Tax |
as a % of |
(Pre-Tax |
|||||||
|
of Quota
|
Profit) | Quota | Profit) | |||||||
|
At or Below 75%
|
45 | % | At or Below 75% | 45 | % | |||||
|
100%
|
100 | % | 100% | 100 | % | |||||
|
118%
|
150 | % | 110% | 150 | % | |||||
|
Above 118%
|
150 | % | Above 110% | 150 | % | |||||
Straight-line interpolation is used between data points.
Mr. Susor’s annual bonus opportunity for 2009 was
based on our Automotive Parts Group’s goals relating to:
(i) pre-tax profit; (ii) sales; (iii) inventory
growth versus sales growth; (iv) accounts receivable growth
versus sales growth; and (v) expense growth versus gross
profit growth. The bonus opportunities were weighted as follows:
pre-tax profit, 45%; sales, 25%; year-end inventory growth
versus sales growth, 10%; year-end accounts receivable growth
versus sales growth, 10%; and full-year expense growth versus
gross profit growth, 10%.
For Mr. Susor, the performance range for APG profit versus
quota was 75% to 110%, and for sales versus quota was 95% to
105%. The corresponding bonus opportunity as a percentage of
target ranged from 45% to 150% for the profit performance
measure, and from 15% to 150% for the sales performance
measure — each depending on actual achievement level.
No bonus is earned if performance falls below the minimum
requirement for any performance measure. See the table below.
Additionally, bonus opportunity was provided for attainment of
inventory, accounts receivable, and expense control goals, with
a goal of 1% improvement versus the prior year. Additional bonus
opportunity is earned if the inventory, accounts receivable and
expense control goal of 1% improvement is exceeded.
|
% of Target |
||||||||||
|
Pre-Tax Profit |
Bonus x 45% |
Sales as |
% of Target |
|||||||
|
as a % |
(Pre-Tax |
a % of |
Bonus x 25 % |
|||||||
|
of Quota
|
Profit) | Quota | (Sales) | |||||||
|
Below 75%
|
0 | % | Below 95% | 0 | % | |||||
|
75%
|
45 | % | 95% | 15 | % | |||||
|
100%
|
100 | % | 100% | 100 | % | |||||
|
110%
|
150 | % | 105% | 150 | % | |||||
|
Above 110%
|
150 | % | 105% | 150 | % | |||||
Straight-line interpolation is used between data points for
bonus calculations pertaining to pre-tax profit and sales.
The bonus formulas under the Annual Incentive Plan are applied
strictly. The Committee did not, in 2009, exercise discretion to
increase bonus payments for the named executive officers
(although it could exercise discretion to reduce the actual
bonus amounts).
For 2009, the Company’s pre-tax profit was below the target
level set for executive officer incentive bonuses, resulting in
bonus payments equal to 78% of the target bonus opportunity for
Messrs. Gallagher, Nix, and Clayton. Mr. Donahue’s
program resulted in a bonus payment equal to 106% of the target
opportunity, and Mr. Susor’s program produced a bonus
payment equal to 55% of target. Mr. Samuelson retired from
the Company effective May 1, 2009 and did not receive an
annual incentive plan or payment for 2009.
For additional information about the Annual Incentive Plan,
please refer to the “Grants of Plan-Based Awards”
table, which shows the threshold, target and maximum bonus
amounts payable under the plan for 2009, and the Summary
Compensation Table, which shows the actual amount of bonuses
paid under the plan to our named executive officers for 2009.
17
Table of Contents
2009
Long-Term Incentives
During 2009, the Compensation, Nominating and Governance
Committee did not grant long-term equity-based incentive
compensation due to the overall business climate, economic
uncertainty and the expense associated with a grant.
Change in
Control Arrangements
The Company believes that severance protections, particularly in
the context of a change in control transaction, can play a
valuable role in attracting and retaining key executive
officers. Accordingly, the Company has entered into change in
control agreements with each of the named executive officers.
Information regarding these agreements and the benefits they
provide is included in the Post Termination Payments and
Benefits section of this Proxy Statement.
The Compensation Committee evaluates the level of severance
benefits to each such officer on a
case-by-case
basis, and in general, we consider these severance protections
an important part of our executives’ compensation and
consistent with competitive practices.
We believe that the potential occurrence of a change in control
transaction would create uncertainty regarding the continued
employment of our executive officers. This uncertainty results
from the fact that many change in control transactions result in
significant organizational changes, particularly at the senior
executive level. In order to encourage our senior executive
officers to remain employed with the Company during an important
time when their prospects for continued employment are often
uncertain, we provide our executive officers with severance
benefits if the executive’s employment is terminated by the
Company without cause or by the executive for “good
reason” in connection with a change in control. Because we
believe that a termination by the executive for good reason may
be conceptually the same as a termination by the Company without
cause, and because we believe that in the context of a change in
control, potential acquirors would otherwise have an incentive
to constructively terminate the executive’s employment to
avoid paying severance, we believe it is appropriate to provide
severance benefits in these circumstances.
Factors
Considered in Decisions to Materially Increase or Decrease
Compensation
Market data, individual performance, retention needs and
internal pay equity have been the primary factors considered in
decisions to adjust compensation materially. We do not target
any particular weight for base salary, annual bonus and
long-term incentive as a percent of total direct compensation.
We tend to follow market practice in allocating between the
various forms of compensation, but with greater emphasis on
performance-based incentive bonus opportunities. We use an
approximate 60/40 mix with regard to SAR and PRSU grant value,
to balance retention and performance.
Timing of
Compensation
At the March 13, 2009 meeting of the Compensation,
Nominating and Governance Committee, annual incentive plans were
reviewed and approved. There were no adjustments made to base
salaries and neither SARs nor PRSUs were granted.
Stock
Ownership Guidelines
We have adopted stock ownership guidelines for the named
executive officers identified above and for other key executives
designated by the Compensation, Nominating and Governance
Committee. The ownership guidelines are reviewed at least
annually by the Compensation, Nominating and Governance
Committee, which also has the authority to evaluate whether
exceptions should be made for any executive on whom the
guidelines would impose a financial hardship. The current
guidelines as determined by the Committee include:
(i) CEO — ownership equal to seven times prior
year’s salary; and (ii) other covered
executives — ownership equal to one to three times
prior year’s salary.
The covered executives have a period of five years in which to
satisfy the guidelines, either from the date of adoption of the
policy in November 2006, or the date of appointment to a
qualifying position, whichever is later. Shares counted toward
this requirement will be based on shares beneficially owned by
such executive (as beneficial ownership is defined by the
SEC’s rules and regulations) including PRSUs, but excluding
unexercised options and measured against the average year-end
stock price for the preceding three fiscal years. The guidelines
also call for the covered executive to retain 50% of the net
shares obtained through the exercise of options or when a
restricted
18
Table of Contents
stock award vests for at least six months. The covered
executives are encouraged to retain stock ownership per the
guidelines for a period of six months following the date of
retirement.
Impact of
Accounting and Tax Treatments of Compensation
The accounting and tax treatment of compensation generally has
not been a factor in determining the amounts of compensation for
our executive officers. However, the Committee and management
have considered the accounting and tax impact of various program
designs to balance the potential cost to the Company with the
benefit/value to the executive.
With regard to Code Section 162(m), it is the
Committee’s intent to maximize deductibility of executive
compensation while retaining some discretion needed to
compensate executives in a manner commensurate with performance
and the competitive landscape for executive talent. The Annual
Incentive Plan has been approved by shareholders and is designed
to qualify as “performance-based” to be fully
deductible by the Company. The 2006 Long-Term Incentive Plan is
approved by shareholders and permits the award of stock options,
SARs and other performance-based equity awards that are fully
deductible under Code Section 162(m).
Role of
Executive Officers in Determining Compensation
Our Chairman, President and Chief Executive Officer, with input
from our Senior Vice President — Human Resources,
recommends to the Committee base salary, target bonus levels,
actual bonus payouts and long-term incentive grants for our
senior officer group (other than himself). Mr. Gallagher
makes these recommendations to the Committee based on data and
analysis provided by our independent compensation consultant and
qualitative judgments regarding individual performance.
Mr. Gallagher is not involved with any aspect of
determining his own compensation.
ADDITIONAL
INFORMATION REGARDING EXECUTIVE COMPENSATION
2009
SUMMARY COMPENSATION TABLE
|
Change in |
||||||||||||||||||||||||||||||||
|
Pension |
||||||||||||||||||||||||||||||||
|
Value and |
||||||||||||||||||||||||||||||||
|
Non- |
||||||||||||||||||||||||||||||||
|
Qualified |
||||||||||||||||||||||||||||||||
|
Non-Equity |
Deferred |
|||||||||||||||||||||||||||||||
|
Stock |
Option |
Incentive Plan |
Compensation |
All Other |
||||||||||||||||||||||||||||
|
Awards |
Awards |
Compensation |
Earnings |
Compensation |
||||||||||||||||||||||||||||
|
Name and Principal Position
|
Year | Salary ($) | ($)(1) | ($)(1) | ($)(2) | ($)(3) | ($)(4) | Total ($) | ||||||||||||||||||||||||
|
Thomas C. Gallagher
|
2009 | 875,000 | — | — | 812,597 | 1,217,925 | 125,181 | 3,030,703 | ||||||||||||||||||||||||
|
Chairman, President, and
|
2008 | 875,000 | 499,920 | 563,328 | 866,716 | 1,565,241 | 210,159 | 4,580,364 | ||||||||||||||||||||||||
|
Chief Executive Officer
|
2007 | 835,000 | 491,600 | 818,633 | 1,332,340 | 1,568,728 | 163,189 | 5,209,490 | ||||||||||||||||||||||||
|
Jerry W. Nix
|
2009 | 505,000 | — | — | 330,191 | 611,510 | 2,940 | 1,449,641 | ||||||||||||||||||||||||
|
Vice Chairman and Chief
|
2008 | 505,000 | 232,463 | 259,131 | 338,889 | 750,075 | 2,760 | 2,088,318 | ||||||||||||||||||||||||
|
Financial Officer
|
2007 | 480,000 | 228,594 | 377,831 | 517,055 | 848,979 | 2,700 | 2,455,159 | ||||||||||||||||||||||||
|
Paul D. Donahue
|
2009 | 435,000 | — | — | 318,099 | 99,199 | 12,250 | 864,548 | ||||||||||||||||||||||||
|
Executive Vice
|
2008 | 420,000 | 154,975 | 172,754 | 136,455 | 136,261 | 2,760 | 1,023,205 | ||||||||||||||||||||||||
|
President and President —
|
2007 | 390,421 | 152,396 | 251,887 | 425,000 | 75,839 | 2,700 | 1,298,243 | ||||||||||||||||||||||||
|
U.S. Automotive Parts Group
|
||||||||||||||||||||||||||||||||
|
Robert J. Susor
|
2009 | 425,000 | — | — | 131,179 | 385,003 | 2,940 | 944,122 | ||||||||||||||||||||||||
|
Executive Vice President
|
2008 | 425,000 | 154,975 | 172,754 | 150,101 | 641,254 | 2,760 | 1,546,844 | ||||||||||||||||||||||||
| 2007 | 405,000 | 152,396 | 251,887 | 378,558 | 599,191 | 2,700 | 1,789,732 | |||||||||||||||||||||||||
|
Robert B. Clayton
|
2009 | 310,000 | — | — | 131,452 | 251,916 | 2,940 | 696,308 | ||||||||||||||||||||||||
|
Senior Vice President —
Human Resources |
||||||||||||||||||||||||||||||||
|
Larry R. Samuelson
|
2009 | 148,333 | — | — | — | 232,071 | 299,607 | 680,011 | ||||||||||||||||||||||||
|
Former President —
|
2008 | 445,000 | 194,969 | 194,035 | 146,653 | 367,701 | 2,760 | 1,351,118 | ||||||||||||||||||||||||
|
U.S. Automotive Parts Group(5)
|
2007 | 430,000 | 191,724 | 283,373 | 203,476 | 461,306 | 2,700 | 1,572,579 | ||||||||||||||||||||||||
| (1) | Represents the aggregate grant date fair value of the award determined in accordance with FASB ASC Topic 718. Grant date fair value for the PRSUs is based on the grant date fair value of the underlying shares and the |
19
Table of Contents
| probable outcome of performance-based vesting conditions, excluding the effect of estimated forfeitures. Grant date fair value for SARs is based on the Black-Scholes option pricing model. The actual value, if any, that a named executive officer may realize upon exercise of SARs will depend on the excess of the stock price over the base value on the date of exercise, so there is no assurance that the value realized by a named executive officer will be at or near the value estimated by the Black-Scholes model. The assumptions used in determining the grant date fair values of the SARs are set forth in the notes to the Company’s consolidated financial statements, which are included in our Annual Report on Form 10-K for the year ended December 31, 2009 filed with the SEC. | ||
| (2) | Reflects the value of cash incentive bonuses earned under our Annual Incentive Plan. | |
| (3) | Reflects the increase during 2009 in actuarial present values of each executive officer’s accumulated benefits under our Pension Plan and our Supplemental Retirement Plan, and with respect to Mr. Gallagher, our Original Deferred Compensation Plan. | |
| (4) | Amounts reflected in this column for 2009 include 401(k) matching contributions in the amount of $2,940 for each named executive officer with the exception of Mr. Donahue who received a matching contribution of $12,250. The amount shown for Mr. Samuelson includes eight months of severance pay as a result of his early retirement from the Company. The amount shown for Mr. Gallagher also includes his personal use of company aircraft ($114,214) and club membership dues ($8,027). The incremental cost to the Company of the personal use of company aircraft is calculated based on the average variable operating costs to the Company. Variable operating costs include fuel costs, mileage, maintenance, crew travel expenses, catering and other miscellaneous variable costs. The total annual variable costs are divided by the annual number of miles the Company aircraft flew to derive an average variable cost per mile. This average variable cost per mile is then multiplied by the miles flown for personal use to derive the incremental cost. The fixed costs that do not change based on usage, such as pilot salaries, the lease costs of the company aircraft, hangar expense for the home hangar, and general taxes and insurance are excluded from the incremental cost calculation. When Company aircraft is being used for mixed business and personal use, only the incremental cost of the personal use is included, such as on-board catering or other charges attributable to an extra passenger traveling for personal reasons on an aircraft being primarily used for a business trip. The Board of Directors mandates that the Company’s Chief Executive Officer use corporate aircraft for personal travel to accommodate security, availability and efficiency concerns. The Company does not provide tax reimbursements with respect to any perquisites to executive officers. | |
| (5) | Mr. Samuelson retired from the Company effective May 1, 2009. |
2009
GRANTS OF PLAN-BASED AWARDS
|
All Other |
||||||||||||||||||||||||||||||||||||||||
|
Option |
Exercise |
Grant |
||||||||||||||||||||||||||||||||||||||
|
Awards: |
or |
Date Fair |
||||||||||||||||||||||||||||||||||||||
|
Estimated Future Payouts |
Estimated Future Payouts |
Number of |
Base |
Value of |
||||||||||||||||||||||||||||||||||||
|
Under Non-Equity Incentive |
Under Equity Incentive Plan |
Securities |
Price of |
Stock and |
||||||||||||||||||||||||||||||||||||
| Plan Awards(1) | Awards |
Underlying |
Option |
Option |
||||||||||||||||||||||||||||||||||||
|
Grant |
Threshold |
Target |
Maximum |
Threshold |
Target |
Maximum |
Options |
Awards |
Awards |
|||||||||||||||||||||||||||||||
|
Name
|
Date | ($) | ($) | ($) | (#) | (#) | (#) | (#) | ($/Sh) | ($) | ||||||||||||||||||||||||||||||
|
Thomas C. Gallagher
|
468,450 | 1,041,000 | 1,561,500 | |||||||||||||||||||||||||||||||||||||
|
Jerry W. Nix
|
190,350 | 423,000 | 634,500 | |||||||||||||||||||||||||||||||||||||
|
Paul D. Donahue
|
300,000 | 300,000 | 450,000 | |||||||||||||||||||||||||||||||||||||
|
Robert J. Susor
|
92,235 | 236,500 | 354,750 | |||||||||||||||||||||||||||||||||||||
|
Robert B. Clayton
|
75,780 | 168,400 | 252,600 | |||||||||||||||||||||||||||||||||||||
|
Larry R. Samuelson
|
— | — | — | |||||||||||||||||||||||||||||||||||||
| (1) | Represents threshold, target and maximum payout levels under the Annual Incentive Plan for 2009 performance. The actual amount of incentive bonus earned by each named executive officer is reported under the Non-Equity Incentive Plan Compensation column in the Summary Compensation Table. Additional information regarding the design of the Annual Incentive Plan is included in the Compensation Discussion and Analysis section of this Proxy Statement. |
20
Table of Contents
2009
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||
|
Market |
||||||||||||||||||||||||||||||||||||||||
|
Value of |
||||||||||||||||||||||||||||||||||||||||
|
Number of |
Number of |
Number of |
Shares or |
|||||||||||||||||||||||||||||||||||||
|
Securities |
Securities |
Shares or |
Units of |
|||||||||||||||||||||||||||||||||||||
|
Underlying |
Underlying |
Units of |
Stock That |
|||||||||||||||||||||||||||||||||||||
|
Unexercised |
Unexercised |
Option |
Option |
Stock That |
Have Not |
|||||||||||||||||||||||||||||||||||
|
Options (#) |
Options (#) |
Exercise |
Expiration |
Have Not |
Vested ($) |
|||||||||||||||||||||||||||||||||||
| Name | Exercisable | Unexercisable | Price ($) | Date | Vested (#) | (7) | ||||||||||||||||||||||||||||||||||
|
Thomas C. Gallagher
|
30,000 | 60,000 | (1) | 41.66 | 4/1/2018 | |||||||||||||||||||||||||||||||||||
| 52,000 | 26,000 | (2) | 49.16 | 3/27/2017 | ||||||||||||||||||||||||||||||||||||
| 8,802 | (5) | 334,109 | ||||||||||||||||||||||||||||||||||||||
| 78,000 | — | 44.20 | 3/27/2016 | |||||||||||||||||||||||||||||||||||||
| 11,221 | (6) | 425,944 | ||||||||||||||||||||||||||||||||||||||
| 78,000 | — | 43.93 | 3/14/2015 | |||||||||||||||||||||||||||||||||||||
| 69,000 | — | 36.58 | 4/19/2014 | |||||||||||||||||||||||||||||||||||||
| 150,000 | — | 32.04 | 8/19/2012 | |||||||||||||||||||||||||||||||||||||
| 17,500 | — | 21.375 | 6/20/2010 | |||||||||||||||||||||||||||||||||||||
|
Jerry W. Nix
|
13,800 | 27,600 | (1) | 41.66 | 4/1/2018 | |||||||||||||||||||||||||||||||||||
| 24,000 | 12,000 | (2) | 49.16 | 3/27/2017 | ||||||||||||||||||||||||||||||||||||
| 4,093 | (5) | 155,355 | ||||||||||||||||||||||||||||||||||||||
| 36,000 | — | 44.20 | 3/27/2016 | |||||||||||||||||||||||||||||||||||||
| 5,218 | (6) | 198,064 | ||||||||||||||||||||||||||||||||||||||
| 24,000 | — | 43.93 | 3/14/2015 | |||||||||||||||||||||||||||||||||||||
| 24,000 | — | 36.58 | 4/19/2014 | |||||||||||||||||||||||||||||||||||||
| 42,750 | — | 32.04 | 8/19/2012 | |||||||||||||||||||||||||||||||||||||
| 7,191 | 4,671 | (3) | 21.4063 | 6/20/2010 | ||||||||||||||||||||||||||||||||||||
|
Paul D. Donahue
|
9,200 | 18,400 | (1) | 41.66 | 4/1/2018 | |||||||||||||||||||||||||||||||||||
| 16,000 | 8,000 | (2) | 49.16 | 3/27/2017 | ||||||||||||||||||||||||||||||||||||
| 2,728 | (5) | 103,556 | ||||||||||||||||||||||||||||||||||||||
| 18,000 | — | 44.20 | 3/27/2016 | |||||||||||||||||||||||||||||||||||||
| 2,693 | (6) | 102,227 | ||||||||||||||||||||||||||||||||||||||
| 18,000 | — | 43.93 | 3/14/2015 | |||||||||||||||||||||||||||||||||||||
| 18,000 | — | 36.58 | 4/19/2014 | |||||||||||||||||||||||||||||||||||||
| 15,000 | — | 32.05 | 10/1/2013 | |||||||||||||||||||||||||||||||||||||
|
Robert J. Susor
|
9,200 | 18,400 | (1) | 41.66 | 4/1/2018 | |||||||||||||||||||||||||||||||||||
| 1,170 | (4) | 44,406 | ||||||||||||||||||||||||||||||||||||||
| 16,000 | 8,000 | (2) | 49.16 | 3/27/2017 | ||||||||||||||||||||||||||||||||||||
| 2,728 | (5) | 103,556 | ||||||||||||||||||||||||||||||||||||||
| 24,000 | — | 44.20 | 3/27/2016 | |||||||||||||||||||||||||||||||||||||
| 3,478 | (6) | 132,043 | ||||||||||||||||||||||||||||||||||||||
| 24,000 | — | 43.93 | 3/14/2015 | |||||||||||||||||||||||||||||||||||||
| 24,000 | — | 36.58 | 4/19/2014 | |||||||||||||||||||||||||||||||||||||
21
Table of Contents
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||
|
Market |
||||||||||||||||||||||||||||||||||||||||
|
Value of |
||||||||||||||||||||||||||||||||||||||||
|
Number of |
Number of |
Number of |
Shares or |
|||||||||||||||||||||||||||||||||||||
|
Securities |
Securities |
Shares or |
Units of |
|||||||||||||||||||||||||||||||||||||
|
Underlying |
Underlying |
Units of |
Stock That |
|||||||||||||||||||||||||||||||||||||
|
Unexercised |
Unexercised |
Option |
Option |
Stock That |
Have Not |
|||||||||||||||||||||||||||||||||||
|
Options (#) |
Options (#) |
Exercise |
Expiration |
Have Not |
Vested ($) |
|||||||||||||||||||||||||||||||||||
| Name | Exercisable | Unexercisable | Price ($) | Date | Vested (#) | (7) | ||||||||||||||||||||||||||||||||||
| 35,000 | — | 32.04 | 8/19/2012 | |||||||||||||||||||||||||||||||||||||
| 7,191 | 4,671 | (3) | 21.4063 | 6/20/2010 | ||||||||||||||||||||||||||||||||||||
|
R. Bruce Clayton
|
3,450 | 6,900 | (1) | 41.66 | 4/1/2018 | |||||||||||||||||||||||||||||||||||
| 6,000 | 3,000 | (2) | 49.16 | 3/27/2017 | ||||||||||||||||||||||||||||||||||||
| 1,232 | (5) | 46,755 | ||||||||||||||||||||||||||||||||||||||
| 9,000 | — | 44.20 | 3/27/2016 | |||||||||||||||||||||||||||||||||||||
| 1,571 | (6) | 59,632 | ||||||||||||||||||||||||||||||||||||||
| 9,000 | — | 43.93 | 3/14/2015 | |||||||||||||||||||||||||||||||||||||
| 9,000 | — | 36.58 | 4/19/2014 | |||||||||||||||||||||||||||||||||||||
| 14,470 | — | 32.04 | 8/19/2012 | |||||||||||||||||||||||||||||||||||||
|
Larry R. Samuelson
|
10,333 | 10,333 | (1) | 41.66 | 4/1/2018 | |||||||||||||||||||||||||||||||||||
| 18,000 | 9,000 | (2) | 49.16 | 3/27/2017 | ||||||||||||||||||||||||||||||||||||
| 30,000 | — | 44.20 | 3/27/2016 | |||||||||||||||||||||||||||||||||||||
| 30,000 | — | 43.93 | 3/14/2015 | |||||||||||||||||||||||||||||||||||||
| — | 4,678 | (3) | 21.375 | 6/20/2010 | ||||||||||||||||||||||||||||||||||||
| (1) | The SARs were granted on April 1, 2008 and vest in one-third increments on each of the first three anniversaries of the grant date. | |
| (2) | The SARs were granted on March 27, 2007 and vest in one-third increments on each of the first three anniversaries of the grant date. | |
| (3) | The stock options were granted on June 20, 2000. For Messrs. Nix and Susor, the options vest with respect to 4,671 shares on January 1, 2010. For Mr. Samuelson, the options vest with respect to 4,678 shares on January 1, 2010. | |
| (4) | The PRSUs were granted on April 1, 2008 and vest on December 31, 2012, or earlier upon a change in control of the Company or in the event of (i) the executive’s retirement from the Company or (ii) the executive’s employment with the Company is terminated due to death or disability. Amounts reflect additional PRSUs received through reinvestment of dividend equivalent rights. | |
| (5) | The PRSUs were granted on March 27, 2007 and vest on December 31, 2011, or earlier upon a change in control of the Company or in the event of (i) the executive’s retirement from the Company or (ii) the executive’s employment with the Company is terminated due to death or disability. Amounts reflect additional PRSUs received through reinvestment of dividend equivalent rights. | |
| (6) | The PRSUs were granted on March 27, 2006 and vest on December 31, 2010, or earlier upon a change in control of the Company or in the event of (i) the executive’s retirement from the Company or (ii) the executive’s employment with the Company is terminated due to death or disability. Amounts reflect additional PRSUs received through reinvestment of dividend equivalent rights. | |
| (7) | Reflects the value as calculated based on the closing price of the Company’s Common Stock on December 31, 2009 of $37.96 per share. |
22
Table of Contents
2009
OPTION EXERCISES AND STOCK VESTED
| Option Awards | Stock Awards | |||||||||||||||
|
Number of |
Number of |
|||||||||||||||
|
Shares |
Shares |
|||||||||||||||
|
Acquired on |
Value Realized |
Acquired on |
||||||||||||||
|
Exercise |
on Exercise ($) |
Exercise |
Value Realized |
|||||||||||||
|
Name
|
(#) | (1) | (#) | on Exercise ($) (2) | ||||||||||||
|
Thomas C. Gallagher
|
115,721 | 203,380 | 11,557 | 442,210 | ||||||||||||
|
Jerry W. Nix
|
1,435 | 9,961 | 3,586 | 137,210 | ||||||||||||
|
Paul D. Donahue
|
— | — | 2,447 | 93,653 | ||||||||||||
|
Robert J. Susor
|
20,000 | 42,024 | 3,586 | 137,210 | ||||||||||||
|
R. Bruce Clayton
|
— | — | 1,617 | 61,876 | ||||||||||||
|
Larry R. Samuelson
|
9,068 | 131,156 | 4,511 | 172,620 | ||||||||||||
| (1) | Value realized represents the excess of the fair market value of the shares at the time of exercise over the exercise price of the options. | |
| (2) | Value realized represents the fair market value of the shares on the vesting date. |
2009
PENSION BENEFITS
|
Number of |
Present |
|||||||||||||
|
Years |
Value of |
|||||||||||||
|
Credited |
Accumulated |
Payments During |
||||||||||||
|
Name
|
Plan Name | Service (#) | Benefit ($) | Last Fiscal Year ($) | ||||||||||
|
Thomas C. Gallagher
|
Pension Plan | 39.50 | 859,736 | — | ||||||||||
|
Supplemental Retirement Plan |
39.50 | 8,142,274 | — | |||||||||||
|
Original Deferred Compensation Plan |
31.00 | 350,970 | — | |||||||||||
|
Jerry W. Nix
|
Pension Plan | 31.33 | 887,847 | — | ||||||||||
|
Supplemental Retirement Plan |
31.33 | 3,177,379 | — | |||||||||||
|
Paul D. Donahue
|
Pension Plan | 5.83 | 119,235 | — | ||||||||||
|
Supplemental Retirement Plan |
6.83 | 381,618 | — | |||||||||||
|
Robert J. Susor
|
Pension Plan | 41.67 | 1,020,928 | — | ||||||||||
|
Supplemental Retirement Plan |
41.67 | 2,651,858 | — | |||||||||||
|
R. Bruce Clayton
|
Pension Plan | 13.75 | 610,605 | — | ||||||||||
|
Supplemental Retirement Plan |
13.75 | 795,011 | — | |||||||||||
|
Larry R. Samuelson
|
Pension Plan | 35.25 | 879,318 | — | ||||||||||
|
Supplemental Retirement Plan |
35.25 | 2,431,338 | — | |||||||||||
The Pension Benefits table provides information regarding the
number of years of credited service, the present value of
accumulated benefits, and any payments made during the last
fiscal year with respect to The Genuine Parts
23
Table of Contents
Company Pension Plan (the “Pension Plan”), the
Supplemental Retirement Plan (the “SRP”), and The
Genuine Parts Company Original Deferred Compensation Plan (the
“ODCP”).
The Pension Plan is a broad-based, tax-qualified defined benefit
pension plan, which provides a benefit upon retirement to
eligible employees of the Company. It was amended effective
March 1, 2008 to provide that employees hired on or after
that date are not eligible to participate in the plan, and there
are no new entrants to the Pension Plan after December 31,
2009. In general, all employees hired before March 1, 2008
except leased employees, independent contractors, and certain
collectively-bargained employees are eligible to participate.
Benefits are based upon years of credited service and the
average of the highest five years of earnings out of the last
ten years. Earnings are generally based on total pay, but do not
include amounts that have been deferred. The service amounts
shown in the table above for the Pension Plan and the SRP
represent actual years of service with the Company. No
additional years of credited service have been granted to the
named executive officers under the Pension Plan.
The Pension Plan was amended to freeze credited service as of
December 31, 2008, while continuing to reflect future pay
increases, for most plan participants (i.e., “a soft plan
freeze”). Such participants began participating in a newly
established company-sponsored 401(k) savings plan effective
January 1, 2009. The soft plan freeze does not apply to
service used for vesting purposes or to determine a
participant’s eligibility for early retirement under the
Pension Plan. Participants who satisfied a Rule of 70 criteria
(age plus service equal to 70 or more) were given the option to
remain under the old provisions. All named executive officers
except Mr. Donahue satisfied the Rule of 70 criteria and
elected to remain under the old provisions.
Several forms of benefit payments are available under the
Pension Plan. The Pension Plan offers a life annuity option,
50%, 75%, and 100% joint and survivor options, and a
10-year
certain and life annuity option. Minimum lump sum distributions
of benefits are available if less than or equal to $5,000. The
payout option must be elected by the participant before benefit
payments begin. All options available under the Pension Plan are
actuarially equivalent.
The benefit payable for normal or early retirement under the
Pension Plan is the greater of two benefits. The first benefit
is a percentage of the participant’s average earnings less
50% of his monthly Social Security benefit. The applicable
percentage is based on years of credited service and increases
by 0.5% per year of credited service from 40% at 15 years
of service to 55% at 45 or more years of service. The second
benefit is 30% of the participant’s average earnings. Only
the second benefit is available to participants with less than
15 years of credited service. For such individuals, 30% of
the participant’s average earnings is multiplied by a
fraction with the numerator equal to credited service (not to
exceed 180 months) and the denominator equal to 180.
The benefit described above begins at age 65; however,
early retirement benefit payments are available under the
Pension Plan to participants who retire after attaining
age 55 and completing 15 years of service. Early
retirement benefits are reduced 0.5% for each month by which
benefit commencement precedes age 65. As of
December 31, 2009, Messrs. Gallagher, Nix, Samuelson
and Susor were eligible for early retirement benefits.
For Messrs. Clayton and Donahue, termination benefits are
calculated in the same manner as normal retirement benefits,
except that (a) the benefit is calculated based on
projected credited service at normal retirement date and then
(b) the benefit is reduced by multiplying it by a service
fraction equal to the ratio of credited service at termination
to projected credited service at normal retirement date.
Projected credited service at normal retirement date is
determined as if the participant had continued in employment
until his or her normal retirement. Under the terms of the
Pension Plan as amended effective December 31, 2008,
Mr. Donahue does not satisfy Rule of 70 criteria and as a
result, the numerator of his service fraction is frozen as of
December 31, 2008, although projected credited service at
normal retirement date continues to be determined as if he had
earned credited service through his normal retirement date.
Participants are fully vested in benefits after seven years of
service, with partial vesting after three years of service. The
Pension Plan was amended effective December 31, 2008 to
provide that only participants who satisfy Rule of 70 criteria
and elect to remain under the old plan provisions may earn
additional credited service while disabled. These participants
may earn up to two years of additional credited service while
disabled and receiving long term disability benefits from The
Genuine Parts Company Long Term Disability Plan. A 50% survivor
annuity
24
Table of Contents
is payable to a participant’s spouse upon death prior to
retirement. A surviving spouse may waive the 50% survivor
benefit and elect instead to receive a benefit from The Genuine
Parts Company Death Benefit Plan.
Effective January 1, 2009, in the event of a change in
control a participant’s benefit accrued under the Pension
Plan is fully vested and, if the participant terminates
employment within five years following the change in control,
the participant may elect to receive an immediate lump sum
distribution of the accrued benefit.
The SRP is a nonqualified defined benefit pension plan which
covers pay and benefits above the qualified limits in the
Pension Plan. In addition, pension benefits that would have been
earned under the Pension Plan had compensation not been deferred
are provided by the SRP. Otherwise, the provisions of the SRP as
in effect on December 31, 2008 (i.e., prior to the plan
changes described below) are generally the same as those of the
Pension Plan as in effect on that date, except benefits are
payable only for retirement, disability, death or change in
control. A participant who is eligible for early retirement and
terminates employment due to a change in control will receive an
immediate lump sum payment of any benefits due from the SRP as
in effect on December 31, 2008.
The SRP was amended and restated effective January 1, 2009
to provide that no employees may commence participation in the
plan on or after that date. The amended plan provides full
vesting and an immediate lump sum payment of any benefits due
under the SRP if a participant dies, and full vesting of
benefits accrued under the SRP in the event the plan is
terminated or the participant becomes disabled.
Participants’ credited service in the SRP is not frozen as
of December 31, 2008. Also, if a SRP participant’s
credited service is frozen in the Pension Plan as amended
effective December 31, 2008, an additional offset is
applied to the benefits otherwise accrued under the SRP. This
offset is determined based on the accumulated sum (with interest
at 6.0% per year) of 3.8% of the participant’s Pension Plan
earnings during each calendar year after December 31, 2008.
Benefits earned under the SRP are paid from Company assets, and
are
grossed-up
for any FICA taxes due. Executives sign a joinder agreement to
become participants in the SRP and select an optional form of
benefit payment in the agreement. SRP participants may change
their payment form elections at any time prior to benefit
commencement.
Amounts reported above as the actuarial present value of
accumulated benefits under the Pension Plan and the SRP are
computed using the interest and mortality assumptions that the
Company applies to amounts reported in its financial statement
disclosures, and are assumed to be payable at age 65. The
interest rate assumption at December 31, 2009 is 6.55% for
the Pension Plan and 6.45% for the SRP. The mortality assumption
for the Pension Plan is based on the RP 2000 Mortality Table,
with a blue collar adjustment, and with mortality improvements
projected to 2015 using Scale AA. The mortality assumption for
the SRP is the same except that a white collar adjustment is
applied. SRP benefits have been adjusted by 1.45% to account for
estimated FICA tax
gross-ups.
The ODCP is a nonqualified plan that provides an annuity
benefit, funded partially by executive salary deferrals.
Mr. Gallagher is the only named executive officer in this
plan, and his annual salary deferrals total $9,441 for these
benefits. The retirement benefit is derived by converting the
account balance at the retirement date to an annuity, using
insurance company annuity tables applicable to individuals of
similar age and risk categories. The annuity is then doubled to
arrive at the retirement benefit amount. The retirement benefit
is payable as a
10-year
certain and life annuity at age 65 for normal retirement,
or at age 55 with 15 years of service for early retirement.
Mr. Gallagher is currently eligible for early retirement
benefits under the ODCP. There is a minimum benefit guarantee of
$40,000 per year for normal retirement, and also a specified
death and disability benefit of $3,333 per month. These benefits
are payable from Company assets. The service amount shown in the
table represents the period during which Mr. Gallagher has
been making salary deferrals for benefits provided by the ODCP.
Amounts reported as the actuarial present value of accumulated
benefits under the ODCP are computed based on insurance company
estimates of benefit amounts payable at age 65 (assuming no
future salary deferrals) and the interest and mortality
assumptions the Company uses for purposes of financial statement
disclosures of the SRP referred to above.
25
Table of Contents
2009
NONQUALIFIED DEFERRED COMPENSATION
|
Aggregate |
||||||||||||||||||||
|
Executive |
Company |
Aggregate |
Withdrawals/ |
Aggregate |
||||||||||||||||
|
Contributions in |
Contributions |
Earnings in |
Distributions |
Balance at Last |
||||||||||||||||
|
Name
|
Last FY ($)(1) | in Last FY ($) | Last FY ($) | ($) | FYE ($)(2) | |||||||||||||||
|
Thomas C. Gallagher
|
— | — | 219,307 | — | 1,228,542 | |||||||||||||||
|
Jerry W. Nix
|
— | — | 138,945 | — | 660,714 | |||||||||||||||
|
Paul D. Donahue
|
— | — | 23,314 | — | 134,414 | |||||||||||||||
|
Robert J. Susor
|
30,020 | — | 127,617 | — | 638,952 | |||||||||||||||
|
R. Bruce Clayton
|
18,714 | — | 23,690 | — | 96,023 | |||||||||||||||
|
Larry R. Samuelson
|
— | — | — | — | — | |||||||||||||||
| (1) | Reflects deferrals under the Company’s Tax Deferred Savings Plan of incentive bonuses earned for 2008 and paid to the named executive officers in 2009. These amounts are not reported as 2009 compensation in the Summary Compensation Table. | |
| (2) | Includes the following amounts of contributions to the Tax Deferred Savings Plan by the named executive officers that were previously reported as compensation to the named executive officers in the Company’s Summary Compensation Table for previous years: Mr. Gallagher, $200,000; Mr. Nix, $513,461; Mr. Donahue, $169,723; Mr. Susor, $180,087; Mr. Clayton, $18,714; Mr. Samuelson, $0. |
The Genuine Parts Company Tax Deferred Savings Plan is a
nonqualified deferred compensation plan pursuant to which the
named executive officers may elect to defer up to 100% of their
annual incentive bonus. Deferral elections are due by June 30 of
each year, and are irrevocable. These deferral elections are for
the bonus earned during that year, which would otherwise be
payable in February of the following year. Deferrals are held
for each participant in separate individual accounts in an
irrevocable rabbi trust. Deferred amounts are credited with
earnings or losses based on the rate of return of mutual funds
selected by the executive, which the executive may change at any
time. Payment begins on the first day of the seventh month
following the executive’s termination of service. The
executive must also make an irrevocable election regarding
payment terms, which may be either a lump sum, or installments
of five (5), ten (10), or fifteen (15) years. Hardship
withdrawals are available for unforeseeable emergency financial
hardship situations. If a participant dies before receiving the
full value of the deferral account balances, the designated
beneficiary would receive the remainder of that benefit in the
same payment form as originally specified (i.e., lump sum or
installments). All accounts would be immediately distributed
upon a change in control of the Company.
POST
TERMINATION PAYMENTS AND BENEFITS
Benefits to Named Executive Officers in the Event of a Change
in Control. The Company does not have employment
agreements with any of its executive officers. The Company has
entered into change in control agreements with certain executive
officers, including the named executive officers. These
agreements provide severance payments and benefits to the
executive if his employment is terminated within two years after
a change in control of the Company, if the change in control
occurs during the term of the agreement. The change in control
agreements have a three year term with automatic annual
extensions unless either party gives notice of non-renewal.
Under each of the change in control agreements, if the executive
is terminated by the Company without cause or the executive
resigns for good reason (as such terms are defined in the
agreement), he will receive a pro rata bonus for the year of
termination, plus a lump sum severance payment equal to a
multiple (three in the case of Messrs. Gallagher, Nix and
Susor, and two in the case of Messrs. Donahue and Clayton)
of the executive’s then-current annual salary and the
average of the annual bonuses he received in the three years
prior to the year of termination. In addition, the Company will
continue to provide the executive with group health coverage for
a period of 24 months.
26
Table of Contents
If the executive’s employment is terminated by the Company
for cause or he resigns without good reason, the agreement will
terminate without further obligation of the Company other than
the payment of any accrued but unpaid salary or benefits. In the
case of death, disability or retirement, the executive, or his
estate, would be entitled to payment of any accrued but unpaid
salary or benefits, plus a pro rata bonus for the year in which
the termination occurred.
The change in control agreements provide for a
gross-up of
applicable excise tax imposed under Section 4999 of the
Internal Revenue Code, provided that amounts determined to be
parachute payments exceed 110% of the amount that could be paid
without triggering the excise tax. If the parachute payments are
less than that threshold amount, the payments will be limited to
the maximum amount that could be paid without triggering the
excise tax.
Summary of Termination Payments and
Benefits. The following tables summarize the
value of the termination payments and benefits that our named
executive officers (other than Mr. Samuleson) would receive
if they had terminated employment on December 31, 2009
under the circumstances shown. The tables exclude
(i) amounts accrued through December 31, 2009 that
would be paid in the normal course of continued employment, such
as accrued but unpaid salary and earned annual bonus for 2009
and (ii) vested account balances under our Partnership
Plan, which is a 401(k) plan that is generally available to all
of our salaried employees.
As noted above, Mr. Samuelson retired from the Company
effective May 1, 2009. In connection with his retirement,
Mr. Samuelson may begin receiving Pension Plan benefits in
the form of an annuity in the amount of $79,832 (with a 50%
joint and survivor annuity option) and Supplemental Retirement
Plan benefits in the form of an annuity in the amount of
$188,457 (with a 100% joint and survivor annuity option).
Thomas C.
Gallagher
|
Termination |
||||||||||||||||||||
|
by Company |
||||||||||||||||||||
|
or Executive |
Involuntary |
|||||||||||||||||||
|
Other Than |
Termination |
|||||||||||||||||||
|
Retirement, |
Following a |
|||||||||||||||||||
|
Death or |
Change in |
|||||||||||||||||||
|
Benefit
|
Retirement ($) | Death ($) | Disability ($) | Disability ($) | Control ($) | |||||||||||||||
|
Cash Severance
|
— | — | — | — | 6,132,717 | (1) | ||||||||||||||
|
Acceleration of Equity Awards
|
||||||||||||||||||||
|
Stock Options and SARs(2)
|
— | — | — | — | — | |||||||||||||||
|
Restricted Stock and PRSUs(3)
|
— | 760,053 | 760,053 | — | 760,053 | |||||||||||||||
|
Retirement Benefits
|
||||||||||||||||||||
|
Pension Plan(4)
|
78,096 | 39,048 | 95,316 | 78,096 | 78,096 | (5) | ||||||||||||||
|
Supplemental Retirement Plan(6)
|
634,894 | 4,739,098 | 634,894 | 634,894 | 11,154,423 | (7) | ||||||||||||||
|
Original Def Comp Plan(8)
|
37,035 | 40,000 | 40,000 | 37,035 | 543,286 | (9) | ||||||||||||||
|
Tax-Deferred Savings Plan(10)
|
1,228,542 | 1,228,542 | 1,228,542 | 1,228,542 | 1,228,542 | |||||||||||||||
|
Other Benefits
|
||||||||||||||||||||
|
Health & Welfare Coverage
|
— | — | — | — | 16,931 | (11) | ||||||||||||||
|
Total
|
1,978,567 | 6,806,741 | 2,758,805 | 1,978,567 | 19,914,048 | |||||||||||||||
| (1) | Severance payment payable in lump sum pursuant to the change in control agreement described above. | |
| (2) | Reflects the excess of the fair market value of the underlying shares as of December 31, 2009 over the exercise or base price of all unvested options and SARs the vesting of which accelerates in connection with the specified event. | |
| (3) | Reflects the fair market value as of December 31, 2009 of restricted stock and shares underlying PRSUs the vesting of which accelerates in connection with the specified event. | |
| (4) | Pension Plan benefits shown for all termination scenarios are annual annuities assuming a 50% joint and survivor annuity option and, except for disability benefits, are assumed to be payable on January 1, 2010. The |
27
Table of Contents
| surviving spouse may elect to waive the death benefit from the Pension Plan and elect instead to receive a benefit from The Genuine Parts Company Death Benefit Plan. The disability benefits under the Pension Plan assume two extra years of credited service are earned while on disability, but not past age 65, and that the benefits are payable at age 65. | ||
| (5) | Mr. Gallagher may elect to receive his pension benefit in the form of a lump sum payment in the event of termination within five years following a change in control. A lump sum option is not otherwise available under the plan. The lump sum payable to Mr. Gallagher if he terminated December 31, 2009 following a change in control is $1,241,922. | |
| (6) | Supplemental Retirement Plan benefits shown for all termination scenarios (except death and involuntary termination following a change in control) assume payment under the 100% joint and survivor annuity option elected by Mr. Gallagher. The death benefit shown is payable as a lump sum to Mr. Gallagher’s surviving spouse in the event of his death. The lump sum death benefit is calculated as 50% of the present value of the single life annuity payable on January 1, 2010. Disability benefits under the Supplemental Retirement Plan are assumed to be equal to early retirement benefits and are payable on January 1, 2010. The Supplemental Retirement Plan annuity benefits shown in the table do not reflect estimated FICA tax gross-ups paid by the Company. The estimated FICA tax gross-up, based on 1.45% of the lump sum value of the Supplemental Retirement Plan benefit calculated on the FICA tax basis for the plan, is $118,646. | |
| (7) | An immediate lump sum distribution of benefits is required in the event of termination following a change in control. The lump sum value of the benefit calculated includes an estimated FICA tax gross-up amount of $159,427. | |
| (8) | Original Deferred Compensation Plan benefits are payable as a 10-year certain and life annuity. | |
| (9) | Amount reflects a lump sum distribution of benefits as required under the plan in the event of termination following a change in control. | |
| (10) | Benefits payable under the Tax Deferred Savings Plan are described and quantified in the Nonqualified Deferred Compensation table in this proxy statement. | |
| (11) | Reflects the cost of 24 months of continued group health coverage pursuant to the change in control agreement described above. In order to comply with Internal Revenue Code section 409A, during the last 6 months of this continued coverage period, the Company will satisfy its obligation to provide group health coverage by making 6 monthly installment payments to the executive in an amount equal to the monthly cost of providing such coverage, based upon the “applicable premium” under COBRA. |
28
Table of Contents
Jerry W.
Nix
|
Termination |
||||||||||||||||||||
|
by Company |
||||||||||||||||||||
|
or Executive |
Involuntary |
|||||||||||||||||||
|
Other Than |
Termination |
|||||||||||||||||||
|
Retirement, |
Following a |
|||||||||||||||||||
|
Death or |
Change in |
|||||||||||||||||||
|
Benefit
|
Retirement ($) | Death ($) | Disability ($) | Disability ($) | Control ($) | |||||||||||||||
|
Cash Severance
|
— | — | — | — | 2,880,812 | (1) | ||||||||||||||
|
Acceleration of Equity Awards
|
||||||||||||||||||||
|
Stock Options and SARs(2)
|
— | — | — | — | 77,322 | |||||||||||||||
|
Restricted Stock and PRSUs(3)
|
— | 353,419 | 353,419 | — | 353,419 | |||||||||||||||
|
Retirement Benefits
|
||||||||||||||||||||
|
Pension Plan(4)
|
80,465 | 40,233 | 86,316 | 80,465 | 80,465 | (5) | ||||||||||||||
|
Supplemental Retirement Plan(6)
|
267,909 | 1,790,597 | 267,909 | 267,909 | 4,160,804 | (7) | ||||||||||||||
|
Tax-Deferred Savings Plan(8)
|
660,714 | 660,714 | 660,714 | 660,714 | 660,714 | |||||||||||||||
|
Other Benefits
|
||||||||||||||||||||
|
Health & Welfare
|
— | — | — | — | 15,137 | (9) | ||||||||||||||
|
Estimated 280G Tax
Gross-Ups
|
— | — | — | — | 1,284,177 | (10) | ||||||||||||||
|
Total
|
1,009,088 | 2,844,963 | 1,368,358 | 1,009,088 | 9,512,850 | |||||||||||||||
| (1) | Severance payment payable in lump sum pursuant to the change in control agreement described above. | |
| (2) | Reflects the excess of the fair market value of the underlying shares as of December 31, 2009 over the exercise or base price of all unvested options and SARs the vesting of which accelerates in connection with the specified event. | |
| (3) | Reflects the fair market value as of December 31, 2009 of restricted stock and shares underlying PRSUs the vesting of which accelerates in connection with the specified event. | |
| (4) | Pension Plan benefits shown for all termination scenarios are annual annuities assuming a 50% joint and survivor annuity option and, except for disability benefits, are assumed to be payable on January 1, 2010. The surviving spouse may elect to waive the death benefit from the Pension Plan and elect instead to receive a benefit from The Genuine Parts Company Death Benefit Plan. The disability benefits under the Pension Plan assume two extra years of credited service are earned while on disability, but not past age 65, and that the benefits are payable at age 65. | |
| (5) | Mr. Nix may elect to receive his pension benefit in the form of a lump sum payment in the event of termination within five years following a change in control. A lump sum option is not otherwise available under the plan. The lump sum payable to Mr. Nix if he terminated December 31, 2009 following a change in control is $1,231,372. | |
| (6) | Supplemental Retirement Plan benefits shown for all termination scenarios (except death and involuntary termination following a change in control) assume payment under the 50% joint and survivor annuity option elected by Mr. Nix. The death benefit shown is payable as a lump sum to Mr. Nix’s surviving spouse in the event of his death. The lump sum death benefit is calculated as 50% of the resent value of the single life annuity payable on January 1, 2010. Disability benefits under the Supplemental Retirement Plan are assumed to be equal to early retirement benefits and are payable on January 1, 2010. The Supplemental Retirement Plan annuity benefits shown in the table do not reflect estimated FICA tax grossups paid by the Company. The estimated FICA tax gross-up, based on 1.45% of the lump sum value of the Supplemental Retirement Plan benefit calculated on the FICA tax basis for the plan, is $45,525. | |
| (7) | An immediate lump sum distribution of benefits is required in the event of termination following a change in control. The lump sum value of the benefit calculated includes an estimated FICA tax gross-up amount of $59,469. | |
| (8) | Benefits payable under the Tax Deferred Savings Plan are described and quantified in the Nonqualified Deferred Compensation table in this proxy statement. |
29
Table of Contents
| (9) | Reflects the cost of 24 months of continued group health coverage pursuant to the change in control agreement described above. In order to comply with Internal Revenue Code section 409A, during the last 6 months of this continued coverage period, the Company will satisfy its obligation to provide group health coverage by making 6 monthly installment payments to the executive in an amount equal to the monthly cost of providing such coverage, based upon the “applicable premium” under COBRA. | |
| (10) | The calculation of the estimated 280G gross-up payment is based upon a 280G excise tax rate of 20%, a 35% federal income tax rate, a 1.45% Medicare tax rate and a 6% state income tax rate. |
Paul D.
Donahue
|
Termination |
||||||||||||||||||||
|
by Company |
||||||||||||||||||||
|
or Executive |
Involuntary |
|||||||||||||||||||
|
Other Than |
Termination |
|||||||||||||||||||
|
Retirement, |
Following a |
|||||||||||||||||||
|
Death or |
Change in |
|||||||||||||||||||
|
Benefit
|
Retirement ($) | Death ($) | Disability ($) | Disability ($) | Control ($) | |||||||||||||||
|
Cash Severance
|
— | — | — | — | 1,470,232 | (1) | ||||||||||||||
|
Acceleration of Equity Awards
|
||||||||||||||||||||
|
Stock Options and SARs(2)
|
— | — | — | — | — | |||||||||||||||
|
Restricted Stock and PRSUs(3)
|
— | 205,783 | 205,783 | — | 205,783 | |||||||||||||||
|
Retirement Benefits
|
||||||||||||||||||||
|
Pension Plan(4)
|
17,763 | 8,882 | 17,763 | 17,763 | 22,204 | (5) | ||||||||||||||
|
Supplemental Retirement Plan(6)
|
— | 219,388 | 73,440 | — | 639,531 | (7) | ||||||||||||||
|
Tax-Deferred Savings Plan(8)
|
134,414 | 134,414 | 134,414 | 134,414 | 134,414 | |||||||||||||||
|
Other Benefits
|
||||||||||||||||||||
|
Health & Welfare
|
— | — | — | — | 22,771 | (9) | ||||||||||||||
|
Estimated 280G Tax
Gross-Ups
|
— | — | — | — | 779,578 | (10) | ||||||||||||||
|
Total
|
152,177 | 568,467 | 431,400 | 152,177 | 3,274,513 | |||||||||||||||
| (1) | Severance payment payable in lump sum pursuant to the change in control agreement described above. | |
| (2) | Reflects the excess of the fair market value of the underlying shares as of December 31, 2009 over the exercise or base price of all unvested options and SARs the vesting of which accelerates in connection with the specified event. | |
| (3) | Reflects the fair market value as of December 31, 2009 of restricted stock and shares underlying PRSUs the vesting of which accelerates in connection with the specified event. | |
| (4) | Pension Plan benefits shown for all termination scenarios are annual annuities assuming a 50% joint and survivor annuity option and are assumed to be payable at age 65. The surviving spouse may elect to waive the death benefit from the Pension Plan and elect instead to receive a benefit from The Genuine Parts Company Death Benefit Plan. All benefits except the change in control benefits reflect the application of Mr. Donahue’s partially vested percentage. | |
| (5) | Mr. Donahue may elect to receive his pension benefit in the form of a lump sum payment in the event of termination within five years following a change in control. A lump sum option is not otherwise available under the plan. The Pension Plan also provides for 100% vesting upon a change in control. The lump sum payable to Mr. Donahue if he terminated December 31, 2009 following a change in control is $213,838. | |
| (6) | The Supplemental Retirement Plan provides for 100% vesting upon death, disability or the occurrence of a change in control. No benefits are payable if termination occurs for other reasons prior to eligibility for early retirement (at least age 55 with at least 15 years of service). The death benefit shown is payable as a lump sum to Mr. Donahue’s surviving spouse in the event of his death. The lump sum death benefit is calculated as 50% of the present value of the single life annuity payable to Mr. Donahue at age 65. Disability benefits under the |
30
Table of Contents
| Supplemental Retirement Plan are assumed to be equal to the benefit accrued under the plan as of December 31, 2009 and payable at age 65 under the elected single life annuity option. | ||
| (7) | An immediate lump sum distribution of benefits is required in the event of termination following a change in control. The lump sum value of the benefit calculated includes an estimated FICA tax gross-up amount of $9,141. | |
| (8) | Benefits payable under the Tax Deferred Savings Plan are described and quantified in the Nonqualified Deferred Compensation table in this proxy statement. | |
| (9) | Reflects the cost of 24 months of continued group health coverage pursuant to the change in control agreement described above. In order to comply with Internal Revenue Code section 409A, during the last 6 months of this continued coverage period, the Company will satisfy its obligation to provide group health coverage by making 6 monthly installment payments to the executive in an amount equal to the monthly cost of providing such coverage, based upon the “applicable premium” under COBRA. | |
| (10) | The calculation of the estimated 280G gross-up payment is based upon a 280G excise tax rate of 20%, a 35% federal income tax rate, a 1.45% Medicare tax rate and a 6% state income tax rate. |
Robert J.
Susor
|
Termination |
||||||||||||||||||||
|
by Company |
||||||||||||||||||||
|
or Executive |
Involuntary |
|||||||||||||||||||
|
Other Than |
Termination |
|||||||||||||||||||
|
Retirement, |
Following a |
|||||||||||||||||||
|
Death or |
Change in |
|||||||||||||||||||
|
Benefit
|
Retirement ($) | Death ($) | Disability ($) | Disability ($) | Control ($) | |||||||||||||||
|
Cash Severance
|
— | — | — | — | 2,175,438 | (1) | ||||||||||||||
|
Acceleration of Equity Awards
Stock Options and SARs(2) |
— | — | — | — | 77,322 | |||||||||||||||
|
Restricted Stock and PRSUs(3)
|
— | 280,005 | 280,005 | — | 280,005 | |||||||||||||||
|
Retirement Benefits
|
||||||||||||||||||||
|
Pension Plan(4)
|
91,647 | 45,824 | 95,591 | 91,647 | 91,647 | (5) | ||||||||||||||
|
Supplemental Retirement Plan(6)
|
210,955 | 1,480,612 | 210,955 | 210,955 | 3,470,101 | (7) | ||||||||||||||
|
Tax-Deferred Savings Plan(8)
|
638,952 | 638,952 | 638,952 | 638,952 | 638,952 | |||||||||||||||
|
Other Benefits
|
||||||||||||||||||||
|
Health & Welfare
|
— | — | — | — | 16,931 | (9) | ||||||||||||||
|
Estimated 280G Tax
Gross-Ups
|
— | — | — | — | 963,972 | (10) | ||||||||||||||
|
Total
|
941,554 | 2,445,393 | 1,225,503 | 941,554 | 7,714,368 | |||||||||||||||
| (1) | Severance payment payable in lump sum pursuant to the change in control agreement described above. | |
| (2) | Reflects the excess of the fair market value of the underlying shares as of December 31, 2009 over the exercise or base price of all unvested options and SARs the vesting of which accelerates in connection with the specified event. | |
| (3) | Reflects the fair market value as of December 31, 2009 of restricted stock and shares underlying PRSUs the vesting of which accelerates in connection with the specified event. | |
| (4) | Pension Plan benefits shown for all termination scenarios are annual annuities assuming a 50% joint and survivor annuity option and, except for disability benefits, are assumed to be payable on January 1, 2010. The surviving spouse may elect to waive the death benefit from the Pension Plan and elect instead to receive a benefit from The Genuine Parts Company Death Benefit Plan. The disability benefits under the Pension Plan assume two extra years of credited service are earned while on disability, but not past age 65, and that the benefits are payable at age 65. | |
| (5) | Mr. Susor may elect to receive his pension benefit in the form of a lump sum payment in the event of termination within five years following a change in control. A lump sum option is not otherwise available |
31
Table of Contents
| under the plan. The lump sum payable to Mr. Susor if he terminated December 31, 2009 following a change in control is $1,403,982. | ||
| (6) | Supplemental Retirement Plan benefits shown for all termination scenarios (except death and involuntary termination following a change in control) assume payment under the 75% joint and survivor annuity option elected by Mr. Susor. The death benefit shown is payable as a lump sum to Mr. Susor’s surviving spouse in the event of his death. The lump sum death benefit is calculated as 50% of the present value of the single life annuity payable on January 1, 2010. Disability benefits under the Supplemental Retirement Plan are assumed to be equal to early retirement benefits and are payable on January 1, 2010. The Supplemental Retirement Plan annuity benefits shown in the table do not reflect estimated FICA tax grossups paid by the Company. The estimated FICA tax gross-up, based on 1.45% of the lump sum value of the Supplemental Retirement Plan benefit calculated on the FICA tax basis for the plan, is $37,458. | |
| (7) | An immediate lump sum distribution of benefits is required in the event of termination following a change in control. The lump sum value of the benefit calculated includes an estimated FICA tax gross-up amount of $49,597. | |
| (8) | Benefits payable under the Tax Deferred Savings Plan are described and quantified in the Nonqualified Deferred Compensation table in this proxy statement. | |
| (9) | Reflects the cost of 24 months of continued group health coverage pursuant to the change in control agreement described above. In order to comply with Internal Revenue Code section 409A, during the last 6 months of this continued coverage period, the Company will satisfy its obligation to provide group health coverage by making 6 monthly installment payments to the executive in an amount equal to the monthly cost of providing such coverage, based upon the “applicable premium” under COBRA. | |
| (10) | The calculation of the estimated 280G gross-up payment is based upon a 280G excise tax rate of 20%, a 35% federal income tax rate, a 1.45% Medicare tax rate and a 6% state income tax rate. |
R. Bruce
Clayton
|
Termination |
||||||||||||||||||||
|
by Company |
||||||||||||||||||||
|
or Executive |
Involuntary |
|||||||||||||||||||
|
Other Than |
Termination |
|||||||||||||||||||
|
Retirement, |
Following a |
|||||||||||||||||||
|
Death or |
Change in |
|||||||||||||||||||
|
Benefit
|
Retirement ($) | Death ($) | Disability ($) | Disability ($) | Control ($) | |||||||||||||||
|
Cash Severance
|
— | — | — | — | 960,426 | (1) | ||||||||||||||
|
Acceleration of Equity Awards
|
||||||||||||||||||||
|
Stock Options and SARs(2)
|
— | — | — | — | — | |||||||||||||||
|
Restricted Stock and PRSUs(3)
|
— | 106,387 | 106,387 | — | 106,387 | |||||||||||||||
|
Retirement Benefits
|
||||||||||||||||||||
|
Pension Plan(4)
|
60,592 | 30,296 | 67,934 | 60,592 | 60,592 | (5) | ||||||||||||||
|
Supplemental Retirement Plan(6)
|
— | 438,523 | 69,717 | — | 1,045,171 | (7) | ||||||||||||||
|
Tax-Deferred Savings Plan(8)
|
96,023 | 96,023 | 96,023 | 96,023 | 96,023 | |||||||||||||||
|
Other Benefits
|
||||||||||||||||||||
|
Health & Welfare
|
— | — | — | — | 15,137 | (9) | ||||||||||||||
|
Total
|
156,615 | 671,229 | 340,061 | 156,615 | 2,283,736 | |||||||||||||||
| (1) | Severance payment payable in lump sum pursuant to the change in control agreement described above. | |
| (2) | Reflects the excess of the fair market value of the underlying shares as of December 31, 2009 over the exercise or base price of all unvested options and SARs the vesting of which accelerates in connection with the specified event. | |
| (3) | Reflects the fair market value as of December 31, 2009 of restricted stock and shares underlying PRSUs the vesting of which accelerates in connection with the specified event. |
32
Table of Contents
| (4) | Pension Plan benefits shown for all termination scenarios are annual annuities assuming a 50% joint and survivor annuity option and are assumed to be payable at age 65. The surviving spouse may elect to waive the death benefit from the Pension Plan and elect instead to receive a benefit from The Genuine Parts Company Death Benefit Plan. The disability benefits under the Pension Plan assume two extra years of credited service are earned while on disability, but not past age 65, and that the benefits are payable at age 65. | |
| (5) | Mr. Clayton may elect to receive his pension benefit in the form of a lump sum payment in the event of termination within five years following a change in control. A lump sum option is not otherwise available under the plan. The lump sum payable to Mr. Clayton if he terminated December 31, 2009 following a change in control is $858,497. | |
| (6) | The Supplemental Retirement Plan provides for 100% vesting upon death, disability or the occurrence of a change in control. No benefits are payable if termination occurs for other reasons prior to eligibility for early retirement (at least age 55 with at least 15 years of service). The death benefit shown is payable as a lump sum to Mr. Clayton’s surviving spouse in the event of his death. The lump sum death benefit is calculated as 50% of the present value of the single life annuity payable to Mr. Clayton at age 65. Disability benefits under the Supplemental Retirement Plan are assumed to be equal to the benefit accrued under the plan as of December 31, 2009 and payable at age 65 under the elected 75% joint and survivor annuity option. | |
| (7) | An immediate lump sum distribution of benefits is required in the event of termination following a change in control. The lump sum value of the benefit calculated includes an estimated FICA tax gross-up amount of $14,938. | |
| (8) | Benefits payable under the Tax Deferred Savings Plan are described and quantified in the Nonqualified Deferred Compensation table in this proxy statement. | |
| (9) | Reflects the cost of 24 months of continued group health coverage pursuant to the change in control agreement described above. In order to comply with Internal Revenue Code section 409A, during the last 6 months of this continued coverage period, the Company will satisfy its obligation to provide group health coverage by making 6 monthly installment payments to the executive in an amount equal to the monthly cost of providing such coverage, based upon the “applicable premium” under COBRA. |
COMPENSATION,
NOMINATING AND GOVERNANCE COMMITTEE REPORT
The Compensation, Nominating and Governance Committee of the
Board of Directors of Genuine Parts Company oversees the
compensation programs of Genuine Parts Company on behalf of the
Board. In fulfilling its oversight responsibilities, the
Committee reviewed and discussed with management of the Company
the Compensation Discussion and Analysis included in this proxy
statement.
In reliance on the review and discussions referred to above, the
Committee recommended to the Board of Directors that the
Compensation Discussion and Analysis be included in the
Company’s Annual Report on
Form 10-K
for the year ended December 31, 2009 and in this proxy
statement, each of which has been filed with the SEC.
Members of the Compensation, Nominating and
Governance Committee:
J. Hicks Lanier (Chair)
John D. Johns
Michael M.E. Johns, M.D.
Gary W. Rollins
John D. Johns
Michael M.E. Johns, M.D.
Gary W. Rollins
This report shall not be deemed to be incorporated by
reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as
amended, and shall not otherwise be deemed filed under such
acts.
33
Table of Contents
COMPENSATION,
NOMINATING AND GOVERNANCE COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
The following directors served on the Compensation, Nominating
and Governance Committee during all or a portion of 2009: J.
Hicks Lanier, Richard W. Courts, II, John D. Johns, Michael
M.E. Johns, M.D. and Gary W. Rollins. None of such persons
was an officer or employee of the Company during 2009 or at any
time in the past. During 2009, none of the members of the
Compensation, Nominating and Governance Committee had any
relationship with the Company requiring disclosure under
applicable rules of the SEC. None of our executive officers
served as a member of the Board of Directors or compensation
committee, or similar committee, of any other company whose
executive officer(s) served as a member of our Board of
Directors or our Compensation, Nominating and Governance
Committee.
COMPENSATION
OF DIRECTORS
2009 Director
Compensation
|
Fees |
||||||||||||||||||||
|
Earned or |
Stock |
All Other |
||||||||||||||||||
|
Paid in |
Awards |
Compensation |
||||||||||||||||||
|
NAME
|
Year | Cash ($) | ($) | ($) | Total ($) | |||||||||||||||
|
Mary B. Bullock
|
2009 | 47,500 | — | 47,500 | ||||||||||||||||
|
Jean Douville
|
2009 | — | — | 124,549 | (1) | 124,549 | ||||||||||||||
|
George C. Guynn
|
2009 | 47,500 | — | 47,500 | ||||||||||||||||
|
John D. Johns
|
2009 | 45,000 | — | 45,000 | ||||||||||||||||
|
Michael M. E. Johns, M.D.
|
2009 | 48,750 | — | 48,750 | ||||||||||||||||
|
J. Hicks Lanier
|
2009 | 55,000 | — | 55,000 | ||||||||||||||||
|
Wendy B. Needham
|
2009 | 50,000 | — | 50,000 | ||||||||||||||||
|
Larry L. Prince
|
2009 | 46,250 | — | 41,213 | (2) | 87,463 | ||||||||||||||
|
Gary W. Rollins
|
2009 | 47,500 | — | 47,500 | ||||||||||||||||
The aggregate number of RSUs and stock options held by each
director as of December 31, 2009 was as follows:
|
Director
|
Number of RSUs | Number of Options | ||||||
|
Mary B. Bullock
|
7,109 | — | ||||||
|
Jean Douville
|
— | — | ||||||
|
George C. Guynn
|
3,613 | — | ||||||
|
John D. Johns
|
7,109 | — | ||||||
|
Michael M. E. Johns, M.D.
|
7,109 | 3,000 | ||||||
|
J. Hicks Lanier
|
7,109 | 3,000 | ||||||
|
Wendy B. Needham
|
7,109 | — | ||||||
|
Larry L. Prince
|
5,335 | — | ||||||
|
Gary W. Rollins
|
5,335 | — | ||||||
| (1) | Mr. Douville is an employee of our wholly-owned subsidiary, UAP Inc., a distributor of automotive replacement parts headquartered in Montreal, Quebec, Canada. For 2009, Mr. Douville received a base salary equal to $66,270, plus $58,279 in other benefits, including a car allowance, flexible spending account and other miscellaneous perquisites. | |
| (2) | Represents the incremental cost to the Company of the following benefits and perquisites that were approved as post-retirement benefits for Mr. Prince in connection with his retirement as an executive officer of the Company on March 31, 2005: use of office space and executive assistant for non company business $31,303, medical and dental insurance coverage $8,950, club membership dues $960. |
34
Table of Contents
Compensation payable to the Company’s non-employee
directors is evaluated and determined by the Company’s full
Board of Directors. Non-employee directors of the Company are
paid $8,750 per quarter in compensation for service as director,
plus $1,250 per board and committee meeting attended, except
that the Chair of the Audit Committee and the Compensation,
Nominating and Governance Committee are paid $10,000 per quarter
and $1,250 per board and committee meeting attended.
Non-employee directors may elect to defer the receipt of meeting
and/or
director fees in accordance with the terms of the Company’s
Directors’ Deferred Compensation Plan. In addition,
non-employee directors may from time to time be granted
restricted stock units pursuant to the provisions of the Genuine
Parts Company 2006 Long Term Incentive Plan. No restricted stock
units were granted to the Company’s non-employee directors
in 2009.
TRANSACTIONS
WITH RELATED PERSONS
The Company recognizes that transactions between the Company and
any of its directors or executives can present potential or
actual conflicts of interest and create the appearance that
Company decisions are based on considerations other than the
best interests of the Company and its shareholders. Therefore,
as a general matter and in accordance with the (1) the Code
of Conduct and Ethics for Employees, Officers, Contract
and/or
Temporary Workers and Directors of Genuine Parts Company and
(2) the Genuine Parts Company Code of Conduct and Ethics
for Senior Financial Officers, it is the Company’s
preference to avoid such transactions. Nevertheless, the Company
recognizes that there are situations where such transactions may
be in, or may not be inconsistent with, the best interests of
the Company. Therefore, the Company has adopted a formal policy
which requires the Company’s Compensation, Nominating and
Governance Committee to review and, if appropriate, to approve
or ratify any such transactions. Pursuant to the policy, the
Committee will review any transaction in which the Company is or
will be a participant and the amount involved exceeds $120,000,
and in which any of the Company’s directors or executives
had, has or will have a direct or indirect material interest.
After its review the Committee will only approve or ratify those
transactions that are in, or are not inconsistent with, the best
interests of the Company and its shareholders, as the Committee
determines in good faith. The policy is attached as
Appendix A to the Company’s Corporate Governance
Guidelines, which are available on the Company’s website at
www.genpt.com.
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Audit Committee of the Board of Directors has selected
Ernst & Young LLP as the Company’s independent
auditors for the current fiscal year ending December 31,
2010. The Audit Committee has also pre-approved the engagement
of Ernst & Young LLP to provide federal, state and
international tax return preparation, advisory and related
services to the Company during 2010. Although ratification by
the shareholders of the selection of Ernst & Young LLP
as the Company’s independent auditors is not required by
law or by the Bylaws of the Company, the Audit Committee
believes it is appropriate to seek shareholder ratification of
this appointment in light of the critical role played by the
independent auditors in auditing the Company’s consolidated
financial statements and the effectiveness of the Company’s
internal control over financial reporting. If this selection is
not ratified at the Annual Meeting, the Audit Committee intends
to reconsider its selection of independent auditors for the
fiscal year ending December 31, 2010.
Ernst & Young LLP served as the Company’s
independent auditors for the fiscal year ended December 31,
2009. Representatives of that firm are expected to be present at
the Annual Meeting and will have an opportunity to make a
statement if they desire to do so and to respond to appropriate
questions.
Audit and
Non-Audit Fees
Audit Fees. The aggregate fees billed by
Ernst & Young LLP for professional services rendered
for the audit of the Company’s consolidated financial
statements for 2008 and 2009, the auditor’s report on the
effectiveness of internal control over financial reporting as of
December 31, 2008 and 2009 and for the reviews of the
Company’s consolidated financial statements included in the
Company’s quarterly reports on
Form 10-Q
filed with the SEC during 2008 and 2009 were approximately
$4.0 million and $3.6 million, respectively.
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Audit Related Fees. The aggregate fees billed
by Ernst & Young LLP for 2008 and 2009 for assurance
and related services that are reasonably related to the
performance of the audit or review of the Company’s
financial statements and are not reported above under the
caption “Audit Fees” were approximately $85,000 and
$35,000, respectively. These services primarily related to the
Company’s benefit plans and audit consultations.
Tax Fees. The aggregate fees billed by
Ernst & Young LLP for 2008 and 2009 for professional
services rendered for tax compliance and tax advice for the
Company were $2.4 million and $2.7 million,
respectively.
All Other Fees. No fees were billed by
Ernst & Young LLP for professional services rendered
during 2008 and 2009 other than as stated above under the
captions “Audit Fees,” “Audit Related Fees”
and “Tax Fees.”
Audit
Committee Pre-Approval Policy
Under the Audit Committee’s Charter and its Pre-Approval
Policy, the Audit Committee is required to approve in advance
the terms of all audit services as well as all permissible audit
related and non-audit services to be provided by the independent
auditors. Unless a service to be provided by the independent
auditors has received approval under the Pre-Approval Policy, it
will require specific pre-approval by the Audit Committee. The
Pre-Approval Policy is detailed as to the particular services to
be provided, and the Audit Committee is to be informed about
each service provided. Non-audit services may be approved by the
Chair of the Committee and reported to the full Audit Committee
at its next meeting but may not be approved by the
Company’s management. The term of any pre-approval is
twelve months unless the Audit Committee specifically provides
for a different period.
The Audit Committee must approve the annual audit engagement
terms and fees prior to the commencement of any audit work other
than that necessary for the independent auditor to prepare the
proposed audit approach, scope and fee estimates. The Audit
Committee also must approve changes in terms, conditions and
fees resulting from changes in audit scope, Company structure or
other items, if any. In the event audit related or non-audit
services that are pre-approved under the Pre-Approval Policy
have an estimated cost in excess of certain dollar thresholds,
these services require specific pre-approval by the Audit
Committee or by the Chair of the Audit Committee.
In determining the approval of services by the independent
auditors, the Audit Committee or its Chair evaluates each
service to determine whether the performance of such service
would (a) impair the auditor’s independence;
(b) create a mutual or conflicting interest between the
auditor and the Company; (c) place the auditor in the
position of auditing its own work; (d) result in the
auditor acting as management or an employee of the Company; or
(e) place the auditor in a position of being an advocate
for the Company.
All of the services described above under the captions
“Audit Fees,” “Audit Related Fees” and
“Tax Fees” were approved by the Audit Committee
pursuant to legal requirements and the Audit Committee Charter
and the Pre-Approval Policy.
Audit
Committee Review
The Audit Committee has reviewed the services rendered by
Ernst & Young LLP during 2009 and has determined that
the services rendered are compatible with maintaining the
independence of Ernst & Young LLP as the
Company’s independent auditors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR”
THE RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP
AS INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31,
2010. PROXIES RECEIVED BY THE BOARD OF DIRECTORS WILL BE SO
VOTED UNLESS SHAREHOLDERS SPECIFY IN THEIR PROXIES A CONTRARY
CHOICE.
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AUDIT
COMMITTEE REPORT
The Audit Committee of the Board of Directors is comprised of
four directors who are independent directors as defined under
the NYSE corporate governance listing standards. The Audit
Committee operates under a written charter adopted by the Board
of Directors.
The Audit Committee oversees the Company’s financial
reporting process on behalf of the Board of Directors.
Management is responsible for the Company’s financial
statements and the financial reporting process, including
implementing and maintaining effective internal control over
financial reporting and for the assessment of, and reporting on,
the effectiveness of internal control over financial reporting.
The independent auditors are responsible for expressing an
opinion on the conformity of those audited financial statements
with accounting principles generally accepted in the United
States and the effectiveness of the Company’s internal
control over financial reporting.
In fulfilling its oversight responsibilities, the Audit
Committee has reviewed and discussed with management and the
independent auditors the Company’s audited financial
statements for the year ended December 31, 2009 and reports
of management and of the independent auditors on the
effectiveness of the Company’s internal control over
financial reporting as of December 31, 2009 contained in
the Company’s Annual Report on
Form 10-K
for the year ended December 31, 2009, including a
discussion of the reasonableness of significant judgments and
the clarity of disclosures in the financial statements. The
Audit Committee also reviewed and discussed with management and
the independent auditors the disclosures made in
“Management’s Discussion and Analysis of Financial
Condition and Results of Operations” included in the
Company’s 2009 Annual Report to Shareholders and its Annual
Report on
Form 10-K
for the year ended December 31, 2009.
The Audit Committee has discussed with the independent auditors
the matters required to be discussed by Statement on Auditing
Standards No. 61, Communication with Audit
Committees, as amended and as adopted by the Public Company
Accounting Oversight Board in Rule 3200T. In addition, the
Audit Committee has discussed with the independent auditors the
auditor’s independence from the Company and its management,
including the matters in the written disclosures and the letter
provided by the independent auditors to the Audit Committee as
required by applicable requirements of the Public Company
Accounting Oversight Board regarding the independent
auditor’s communications with the Audit Committee
concerning independence, and has considered the compatibility of
non-audit services with the auditor’s independence.
The Committee discussed with the Company’s independent
auditors the overall scope and plans for their integrated audit.
The Committee meets with the independent auditors, with and
without management present, to discuss the results of their
examinations, their evaluations of the Company’s internal
controls and the overall quality of the Company’s financial
reporting.
Based on the reviews and discussions referred to above, the
Audit Committee recommended to the Board of Directors, and the
Board has approved, that the audited financial statements for
the year ended December 31, 2009 be included in the
Company’s Annual Report on
Form 10-K
for the year ended December 31, 2009 for filing with the
SEC. The Audit Committee and the Board of Directors have also
approved the selection of Ernst & Young LLP as the
Company’s independent auditors for the fiscal year ending
December 31, 2010.
Members of the Audit Committee
Wendy B. Needham (Chair)
Mary B. Bullock
George C. Guynn
Michael M.E. Johns, M.D.
Mary B. Bullock
George C. Guynn
Michael M.E. Johns, M.D.
This report shall not be deemed to be incorporated by
reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as
amended, and shall not otherwise be deemed filed under such
acts.
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SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires the Company’s directors and executive officers and
persons who own more than ten percent of the Company’s
Common Stock to file with the SEC initial reports of ownership
and reports of changes in ownership of Common Stock and other
equity securities of the Company. Directors, executive officers
and greater than ten percent shareholders are required by SEC
regulation to furnish the Company copies of all
Section 16(a) reports they file. To the Company’s
knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations
that no other reports were required, during 2009, all
Section 16(a) filing requirements applicable to directors,
executive officers and greater than ten percent beneficial
owners were complied with by such persons.
SOLICITATION
OF PROXIES
The cost of soliciting proxies will be borne by the Company. The
Company has retained Georgeson Shareholder to assist in the
solicitation of proxies for a fee of approximately $9,000 and
reimbursement of certain expenses. Officers and regular
employees of the Company, at no additional compensation, may
also assist in the solicitation. Solicitation may be by mail,
telephone, Internet or personal contact.
HOUSEHOLDING
OF ANNUAL MEETING MATERIALS
The SEC’s rules permit us, with your permission, to send a
single set of proxy statements and annual reports to any
household at which two or more shareholders reside if we believe
that they are members of the same family. Each shareholder will
continue to receive a separate proxy card. This procedure, known
as householding, reduces the volume of duplicate information you
receive and helps to reduce our expenses. In order to take
advantage of this opportunity, we have delivered only one proxy
statement and annual report to multiple shareholders who share
an address, unless we received contrary instructions from the
affected shareholders prior to the mailing date. We will deliver
a separate copy of the proxy statement or annual report, as
requested, to any shareholder at a shared address to which a
single copy of those documents was delivered. If you prefer to
receive separate copies of a proxy statement or annual report,
either now or in the future, or if you are currently receiving
multiple copies and prefer to receive only a single copy in the
future you can so request by calling us at
(770) 953-1700
or by writing to us at any time at the following address:
Investor Relations, Genuine Parts Company, 2999 Circle 75
Parkway, Atlanta, Georgia 30339.
A majority of brokerage firms have instituted householding. If
your family has multiple holdings in the Company, you may have
received householding notification directly from your broker.
Please contact your broker directly if you have any questions,
if you require additional copies of the proxy statement or
annual report, if you are currently receiving multiple copies of
the proxy statement and annual report and wish to receive only a
single copy or if you wish to revoke your decision to household
and thereby receive multiple statements and reports. These
options are available to you at any time.
OTHER
MATTERS
Management does not know of any matters to be brought before the
Annual Meeting other than those referred to above. If any
matters which are not specifically set forth in the form of
proxy and this proxy statement properly come before the Annual
Meeting, the persons designated as proxies will vote thereon as
recommended by the Board of Directors or, if the Board of
Directors makes no recommendation, in accordance with their best
judgment.
Whether or not you expect to be present at the Annual Meeting in
person, please vote, sign, date and return the enclosed proxy
card promptly in the enclosed business reply envelope. No
postage is necessary if mailed in the United States. If you
prefer, you can vote by telephone or Internet voting by
following the instructions on the enclosed proxy card.
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SHAREHOLDER
PROPOSALS FOR 2011 ANNUAL MEETING
A shareholder proposal for business to be brought before the
2011 Annual Meeting of Shareholders (other than nominations of
persons to serve as directors) will be acted upon only in the
following circumstances:
| • | Shareholder Proposals for Inclusion in Next Year’s Proxy Statement — To be considered for inclusion in next year’s proxy statement, shareholder proposals, submitted in accordance with the SEC’s Rule 14a-8, must be received at our principal executive officers no later than the close of business on October 29, 2010 and comply with all applicable SEC rules. | |
| • | Other Shareholder Proposals for Presentation at Next Year’s Annual Meeting of Shareholders — Any shareholder proposal that is not submitted for inclusion in next year’s proxy statement under SEC Rule 14a-8 but is instead sought to be presented directly at the 2011 Annual Meeting of Shareholders should be received at our principal executive offices no later than the close of business on January 12, 2011. Proposals should contain detailed information about the proposal and the shareholder proponent. SEC rules permit management to vote proxies in its discretion on such proposals in certain cases if the shareholder does not comply with this deadline, and in certain other cases notwithstanding the shareholder’s compliance with this deadline. |
All recommendations of persons for nomination to the Board of
Directors of the Company must be received at out principal
executive offices no later that the close of business on
October 29, 2010 and must contain the information specified
in and otherwise comply with our Corporate Governance
Guidelines. See “Corporate Governance — Director
Nominating Process.”
All shareholder proposals and recommendations of persons for
nomination to the Board should be sent to Genuine Parts Company,
2999 Circle 75 Parkway, Atlanta, Georgia 30339, Attention:
Corporate Secretary.
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| C123456789 000004 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext MR A SAMPLE DESIGNATION (IF ANY) 000000000.000000 ext 000000000.000000 ext ADD 1 Electronic Voting Instructions ADD 2 ADD 3 You can vote by Internet or telephone! ADD 4 Available 24 hours a day, 7 days a week! ADD 5 Instead of mailing your proxy, you may choose one of the two voting ADD 6 methods outlined below to vote your proxy. VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. Proxies submitted by the Internet or telephone must be received by 1:00 a.m., Eastern Time, on April 19, 2010. Vote by Internet • Log on to the Internet and go to www.investorvote.com • Follow the steps outlined on the secured website. Vote by telephone • Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada any time on a touch tone telephone. There is NO CHARGE to you for the call. Using a black ink pen, mark your votes with an X as shown in X • Follow the instructions provided by the recorded message. this example. Please do not write outside the designated areas. Annual Meeting Proxy Card 1234 5678 9012 345 3 IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. 3 A Proposals — The Board of Directors recommends a vote FOR the eleven listed nominees and FOR Proposal 2. 1. Election of Directors: For Withhold For Withhold For Withhold 01 — Dr. Mary B. Bullock 02 — Jean Douville 03 — Thomas C. Gallagher 04 - George C. “Jack” Guynn 05 — John D. Johns 06 Michael M. E. Johns, MD 07 — J. Hicks Lanier 08 - Wendy B. Needham 09 — Jerry W. Nix 10 — Larry L. Prince 11 — Gary W. Rollins For Against Abstain 2. Ratification of the selection of Ernst & Young LLP as the Company’s independent auditors for the fiscal year ending December 31, 2010. B Non-Voting Items Change of Address — Please print your new address below. Comments — Please print your comments below. Meeting Attendance Mark the box to the right if you plan to attend the Annual Meeting. C Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. C 1234567890 J N T MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND U P X 0 2 4 4 6 7 1 MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND <STOCK#> 0153IB |
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| 3 IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. 3 Proxy — Genuine Parts Company Proxy Solicited by Board of Directors of Genuine Parts Company for the Annual Meeting of Shareholders to be held April 19, 2010 The undersigned hereby appoints THOMAS C. GALLAGHER and JERRY W. NIX, or either of them, with the individual power of substitution, proxies to vote all shares of Common Stock of Genuine Parts Company that the undersigned may be entitled to vote at the Annual Meeting of Shareholders to be held in Atlanta, Georgia on April 19, 2010 and at any reconvened Meeting following any adjournment thereof. Said proxies will vote on the proposals set forth in the Notice of Annual Meeting and Proxy Statement as specified on this card, and are authorized to vote in their discretion as to any other matters that may properly come before the meeting. Your shares will be voted in accordance with your instructions. IF A VOTE IS NOT SPECIFIED, THE PROXIES WILL VOTE “FOR” PROPOSALS 1 AND 2. YOUR VOTE IS IMPORTANT Please vote, sign, date and return the proxy card promptly using the enclosed envelope. (Continued, and to be signed, on the reverse side) |
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| NNNNNNNNNNNN NNNNNNNNN Using a black ink pen, mark your votes with an X as shown in X this example. Please do not write outside the designated areas. Annual Meeting Proxy Card 3 PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. 3 A Proposals — The Board of Directors recommends a vote FOR the eleven listed nominees and FOR Proposal 2. 1. Election of Directors: For Withhold For Withhold For Withhold 01 — Dr. Mary B. Bullock 02 — Jean Douville 03 — Thomas C. Gallagher + 04 — George C. “Jack” Guynn 05 — John D. Johns 06 Michael M. E. Johns, MD 07 — J. Hicks Lanier 08 — Wendy B. Needham 09 — Jerry W. Nix 10 — Larry L. Prince 11 - Gary W. Rollins For Against Abstain 2. Ratification of the selection of Ernst & Young LLP as the Company’s independent auditors for the fiscal year ending December 31, 2010. B Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. 1 U P X 0 2 4 4 6 7 2 + <STOCK#> 0153JA |
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| 3 PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. 3 Proxy — Genuine Parts Company Proxy Solicited by Board of Directors of Genuine Parts Company for the Annual Meeting of Shareholders to be held April 19, 2010 The undersigned hereby appoints THOMAS C. GALLAGHER and JERRY W. NIX, or either of them, with the individual power of substitution, proxies to vote all shares of Common Stock of Genuine Parts Company that the undersigned may be entitled to vote at the Annual Meeting of Shareholders to be held in Atlanta, Georgia on April 19, 2010 and at any reconvened Meeting following any adjournment thereof. Said proxies will vote on the proposals set forth in the Notice of Annual Meeting and Proxy Statement as specified on this card, and are authorized to vote in their discretion as to any other matters that may properly come before the meeting. Your shares will be voted in accordance with your instructions. IF A VOTE IS NOT SPECIFIED, THE PROXIES WILL VOTE “FOR” PROPOSALS 1 AND 2. YOUR VOTE IS IMPORTANT Please vote, sign, date and return the proxy card promptly using the enclosed envelope. (Continued, and to be signed, on the reverse side) |
TABLE OF CONTENTS
ANNUAL MEETING APRIL 19, 2010VOTINGPROPOSAL 1 ELECTION OF DIRECTORSCORPORATE GOVERNANCESECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERSSECURITY OWNERSHIP OF MANAGEMENTEXECUTIVE COMPENSATIONCOMPENSATION DISCUSSION AND ANALYSISADDITIONAL INFORMATION REGARDING EXECUTIVE COMPENSATIONCOMPENSATION, NOMINATING AND GOVERNANCE COMMITTEE REPORTCOMPENSATION, NOMINATING AND GOVERNANCE COMMITTEE INTERLOCKS AND INSIDER PARTICIPATIONCOMPENSATION OF DIRECTORSTRANSACTIONS WITH RELATED PERSONSPROPOSAL 2 RATIFICATION OF SELECTION OF INDEPENDENT AUDITORSAUDIT COMMITTEE REPORTSECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCESOLICITATION OF PROXIESHOUSEHOLDING OF ANNUAL MEETING MATERIALSOTHER MATTERSSHAREHOLDER PROPOSALS FOR 2011 ANNUAL MEETING