UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (Amendment No. )
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
☐ | Preliminary Proxy Statement |
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☐ | Confidential, for Use of the Commission Only (as permitted by Rule |
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☒ | Definitive Proxy Statement |
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☐ | Definitive Additional Materials |
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☐ | Soliciting Material Under Rule |
O’REILLY AUTOMOTIVE, INC.
(Name of Registrant as Specified In Its Charter)Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box)all boxes that apply):
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March 27, 202031, 2023
Dear Shareholder:
You are cordially invited to attend the 20202023 Annual Meeting of Shareholders of O’Reilly Automotive, Inc. to be held in a virtual-only format via live audio webcast at the DoubleTree Hotel Springfield, 2431 North Glenstone Avenue, Springfield, Missouri 65803,www.virtualshareholdermeeting.com/ORLY2023 on Thursday, May 14, 2020,18, 2023, at 10:9:00 a.m. Central Time. We have designed the format of the Annual Meeting to ensure that shareholders are afforded similar rights and opportunities to participate as they would at an in-person meeting.
Details of the business to be conducted at the Annual Meeting are given in the attached Notice of Annual Meeting of Shareholders and Proxy Statement.
In addition to the specific matters to be acted upon, there will be a report on the progress of the Company and an opportunity for questions of general interest to the shareholders.
It is important that your shares be represented at the meeting. Whether or not you plan to attend in person,via the live audio webcast, please complete, sign, date and return the enclosed proxy card in the envelope provided at your earliest convenience or vote via telephone or Internet using the instructions on the proxy card. If you attend the meeting, you may vote your shares in person even if you have previously signed and returned your proxy.
We intend to hold our Annual Meeting in person. However, we are actively monitoring the coronavirus (COVID-19); we are sensitive to the public health and travel concerns our shareholders may have and the protocols that federal, state and local governments may impose. In the event it is not possible or advisable to hold our Annual Meeting in person, we will announce alternative arrangements for the meeting in a press release and a filing with the Securities and Exchange Commission as promptly as practicable, which may include holding the meeting solely by means of remote communication. Please also monitor our website at www.OReillyAuto.com for updated information. If you are planning to attend our meeting in person, please check the website one week prior to the meeting date for final details. We encourage you to vote your shares prior to the Annual Meeting by completing, signing, dating and returning the enclosed proxy card in the envelope provided at your earliest convenience or voting via telephone or Internet using the instructions on the proxy card.Greg Henslee
In order to assist us in preparing for the Annual Meeting, please let us know if you plan to attend by contacting Tricia Headley, our Corporate Secretary, at 233 South Patterson Avenue, Springfield, Missouri 65802, (417) 874‑7161.
We look forward to seeing you at the Annual Meeting.
David O’Reilly
Executive Chairman of the Board
O’REILLY AUTOMOTIVE, INC.
233 South Patterson Avenue
Springfield, Missouri 65802
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 14, 202018, 2023
What:Annual Meeting of Shareholders (“Annual Meeting”)
When:Thursday, May 14, 2020, 10:00 a.m. Central Time
Where:DoubleTree Hotel Springfield
2431 North Glenstone Avenue
Springfield, Missouri 65803
We intend to hold our Annual Meeting in person. However, we are actively monitoring the coronavirus (COVID-19); we are sensitive to the public health and travel concerns our shareholders may have and the protocols that federal, state and local governments may impose. In the event it is not possible or advisable to hold our Annual Meeting in person, we will announce alternative arrangements for the meeting in a press release and a filing with the Securities and Exchange Commission as promptly as practicable, which may include holding the meeting solely by means of remote communication. Please also monitor our website at www.OReillyAuto.com for updated information. If you are planning to attend our meeting in person, please check the website one week prior to the meeting date for final details. We encourage you to vote your shares prior to the Annual Meeting by completing, signing, dating and returning the enclosed proxy card in the envelope provided at your earliest convenience or voting via telephone or Internet using the instructions on the proxy card.
Why:The Annual Meeting is being held for the following purposes:
What: |
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When: | Thursday, May 18, 2023, 9:00 a.m. Central Time |
Where: | The Annual Meeting will be held in a virtual-only format via live audio webcast at www.virtualshareholdermeeting.com/ORLY2023. |
Why: | The Annual Meeting is being held for the following purposes: |
| ● | to elect as Directors the |
| to conduct an advisory (non-binding) vote on executive compensation; |
| to conduct an advisory (non-binding) vote on the frequency (either one, two or three years) of future advisory (non-binding) votes on executive compensation; |
● | to ratify the appointment of Ernst & Young LLP as independent auditors for the fiscal year ending December 31, |
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| to consider and act upon |
| to transact such other germane business as may properly come before the meeting or any adjournments thereof. |
The Board of Directors has fixed the close of business on March 16, 2020,9, 2023, as the record date for the determination of shareholders entitled to notice of and to vote at the Annual Meeting and any adjournments or postponements thereof. A list of all shareholders entitled to vote at the Annual Meeting, arranged in alphabetical order and showing the address of and number of shares held by each shareholder, will be available during usual business hours at the office of the Corporate Secretary, Tricia Headley,Julie Gray, at 2831455 South Ingram Mill Road,Patterson Avenue, Springfield, Missouri 65804,65802, to be examined by any shareholder for any purpose reasonably related to the Annual Meeting for ten days prior to the date thereof. The list will also be electronically available for examination throughout the course of the meeting.
Your vote is important to ensure a quorum at the meeting. Even if you own only a few shares, and whether or not you expect to be present atvirtually attend the meeting, we request you mark, date, sign and mail the enclosed proxy card in the postage-paid envelope provided or vote your shares by telephone or Internet as directed on the enclosed proxy card. Telephone and Internet voting for shareholders of record will be available 24 hours a day and will close on Wednesday, May 13, 2020,17, 2023, at 11:59 p.m. Eastern Time.
A copy of the Company’s Annual Shareholders’ Report for fiscal year 20192022 accompanies this notice.
By Order of the Board of Directors,
Tricia HeadleyJulie Gray
Secretary
TABLE OF CONTENTS
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General Information |
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Proposal 3 – Advisory Vote on the Frequency of Future Say on Pay Votes | 48 |
Proposal 4 – Ratification of Selection of Independent Auditors |
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O’REILLY AUTOMOTIVE, INC.
233 South Patterson Avenue
Springfield, Missouri 65802
The enclosed proxy is solicited by the Board of Directors (the “Board”) of O’Reilly Automotive, Inc. (the “Company” or “O’Reilly”), for use at the Annual Meeting of Shareholders (“Annual Meeting”) to be held in a virtual only format via live audio webcast at the DoubleTree Hotel Springfield, 2431 North Glenstone Avenue, Springfield, Missouri 65803,www.virtualshareholdermeeting.com/ORLY2023 on Thursday, May 14, 2020,18, 2023, at 10:9:00 a.m., Central Time, and at any adjournments thereof.
Whether or not you expect to virtually attend the meeting, in person, please return your executed proxy card in the enclosed postage-paid envelope or vote via telephone or Internet, using the instructions discussed below and on the proxy card, and the shares represented thereby will be voted in accordance with your instructions. References to the Company’s website and the contents thereof do not constitute incorporation by reference of the information contained on the Company’s website, and such information is not part of this proxy statement. The proxy statement and the accompanying proxy card is expected to first begin mailing to shareholders on or about March 27, 2020.31, 2023.
GENERAL INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
What is the purpose of the Annual Meeting?
At the Annual Meeting, shareholders will act upon the matters described in the accompanying notice of meeting. In addition, management will report on the Company’s performance during fiscal 2019 and respond to questions from shareholders.
When and where will the 20202023 Annual Meeting be held?
The Annual Meeting will be held in a virtual only format via live audio webcast at the DoubleTree Hotel Springfield, 2431 North Glenstone Avenue, Springfield, Missouri 65803,www.virtualshareholdermeeting.com/ORLY2023 on Thursday, May 14, 2020,18, 2023, at 10:9:00 a.m. Central Time.
We intend to hold our To access the virtual Annual Meeting, in person. However, we are actively monitoringyou must enter the coronavirus (COVID-19); we are sensitive16-digit control number found on your proxy card, voting instruction form or Important Notice Regarding the Availability of Proxy Materials. If you do not have a control number, you may access the Annual Meeting as a guest. Online access to the public health and travel concerns our shareholders may have andlive audio webcast of the protocols that federal, state and local governments may impose. In the event it is not possible or advisable to hold our Annual Meeting in person, we will announce alternative arrangements for the meeting in a press release and a filing with the Securities and Exchange Commission as promptly as practicable, which may include holding the meeting solely by means of remote communication. Please also monitor our website at www.OReillyAuto.com for updated information. If you are planning to attend our meeting in person, please check the website one weekopen 15 minutes prior to the meeting date for final details.start of the Annual Meeting. We encourage you to vote your shares prior toaccess the meeting in advance of the designated start time.
How will the Annual Meeting be conducted and will there be a question and answer session?
We have designed the format of the Annual Meeting to ensure that our shareholders are afforded similar rights and opportunities to participate as they would at an in-person meeting. All of our board members are expected to join the Annual Meeting and will be available to respond to questions germane to the business matters presented during the meeting. We intend to answer questions submitted during the meeting that are germane to business matters of the meeting, and in accordance with our Rules for Conduct, which will be able to be viewed on the day of and during the Annual Meeting. Questions will be grouped by completing, signing, datingtopic, and returningsubstantially similar questions will be answered only once. Questions should be succinct and cover only one topic per question. To promote fairness, efficient use of the enclosed proxy cardCompany’s resources and ensure all shareholder questions are able to be addressed, we will respond to no more than three questions from any single shareholder. If there are any matters of individual concern to a shareholder or if a question posed was not otherwise answered, we will provide an opportunity for shareholders to contact us separately after the Annual Meeting through our Investor Relations website, http://corporate.oreillyauto.com/contact-us, or by contacting us at (417) 829-5878.
What if I need technical assistance during the Annual Meeting?
If you encounter difficulties accessing or hearing the virtual Annual Meeting audio webcast, please contact the technical support number that will be posted on the Annual Meeting website log-in page for assistance. We encourage attendees to log in to the virtual Annual Meeting 15 minutes ahead of time.
If I cannot participate in the envelope providedlive Annual Meeting webcast, can I listen to it later?
An audio replay of the Annual Meeting, including the questions answered during the meeting, will be available approximately 24 hours after completion of the meeting, will remain available for 12 months, and can be accessed through the Company’s website at your earliest convenience or voting via telephone or Internet using the instructions on the proxy card.http://corporate.oreillyauto.com/corporate-information-news-room.
Who may vote?
Any shareholder of record as of the record date is entitled to receive this notice and vote their shares at the Annual Meeting.
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What is a “shareholder of record”?
A shareholder of record is a shareholder whose ownership of the Company’s common stock is reflected directly on the books and records of the transfer agent, Computershare Trust Company, N.A. (“Computershare”).
What is the record date for the Annual Meeting?
The record date is March 16, 2020.9, 2023. Shareholders of record at the close of business on March 16, 2020,9, 2023, will be entitled to vote at the Annual Meeting. Each share of common stock will have one vote on each matter to be voted upon.
Which O’Reilly shares are included in the proxy card I received?
The proxy card you received covers the number of common shares to be voted in your account as of the record date.
What is the difference between holding shares as a registered shareholder and as a beneficial owner?
A registered shareholder owns shares that are registered directly in their name with the Company’s transfer agent, Computershare. A beneficial owner owns shares held in a stock brokerage account or by a bank. If your shares are held in a stock brokerage account or by a bank or other holder of record, you are considered the beneficial owner of shares held in “street name.” If you are a beneficial owner but not a shareholder of record, you should follow the instructions provided by your broker, bank or other record holder to direct your broker, bank or other holder on how to vote your shares.
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Why would I receive more than one proxy card?
You may receive more than one proxy card if you owned shares in more than one account. You should vote the shares on each of your proxy cards.
What matters will be voted on at the Annual Meeting?
At the Annual Meeting, shareholders will be asked to vote on threefour proposals that were solicited by the Board (Proposals 1 through 5)4), as well as twoa shareholder proposalsproposal (Proposal 6 and Proposal 7)5), if properly presented at the Annual Meeting:
1) | To elect as Directors the |
2) | To conduct an advisory (non-binding) vote on executive compensation; |
3) | To conduct an advisory (non-binding) vote on the frequency (either one, two or three years) of future advisory (non-binding) votes on executive compensation; |
4) | To ratify the appointment of Ernst & Young LLP as independent auditors for the fiscal year ending December 31, |
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| 5) | A shareholder proposal entitled “Independent Board Chairman,” if properly presented. |
MayHow do I vote with my proxy card in person at the Annual Meeting?shares?
If you wish toYou may vote your shares in person atshare by proxy or during the Annual Meeting, you may bring a signed proxy card with your choices specified by marking the appropriate boxes on the card.meeting:
We intend to hold our Annual Meeting in person. However, we are actively monitoring the coronavirus (COVID-19); we are sensitive to the public health and travel concerns our shareholders may have and the protocols that federal, state and local governments may impose. In the event it is not possible or advisable to hold our Annual Meeting in person, we will announce alternative arrangements for the meeting in a press release and a filing with the Securities and Exchange Commission as promptly as practicable, which may include holding the meeting solely by means of remote communication. Please also monitor our website at www.OReillyAuto.com for updated information. If you are planning to attend our meeting in person, please check the website one week prior to the meeting date for final details. We encourage you to vote your shares prior to the Annual Meeting by completing, signing, dating and returning the enclosed proxy card in the envelope provided at your earliest convenience or voting via telephone or Internet using the instructions on the proxy card.
May I vote without attending the Annual Meeting?
If you do not plan to attend the Annual Meeting, you have three options to vote your shares:
1) | Via Mail: You may vote by properly completing and signing the enclosed proxy card and returning the card in the enclosed, postage-paid envelope. Please specify your choices on the proxy card by marking the appropriate boxes. Shares will be voted in accordance with your written instructions; however, it is not necessary to mark any boxes if you wish to vote in accordance with the Board’s recommendations, outlined further below. Mark, sign and date your proxy card and return it in the postage-paid envelope provided or send it to O’Reilly Automotive, Inc. Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
2) | Via the Internet: You may vote on the Internet by visiting www.proxyvote.com. Have your proxy card in hand when you access the website and follow the instructions to obtain your records and create an electronic voting instruction form. |
3) | Via Telephone: Using any touch-tone telephone, you may vote your shares by dialing toll-free: |
4) | During the Meeting: You may vote at the Annual Meeting using the 16-digit control number included on your proxy card, voting instruction form or Important Notice Regarding the Availability of Proxy Materials. |
If you choose to vote on the Internet or by telephone, please note voting will close at 11:59 p.m. Eastern Time, on Wednesday, May 13, 2020.
If you do not attend the Annual Meeting, your shares cannot be voted unless a signed proxy card is returned, shares are voted using the Internet or the telephone, or other specific arrangements have been made to have your shares represented. Whether or not you attend the meeting, the17, 2023. The Board encourages you to vote your shares promptly.
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May I change my vote after I submit my proxy?
You may change your vote after submitting a proxy card. If, after sending in your proxy, you decide to vote in person or desire to revoke your proxy for any other reason, you may do so by notifying the Secretary of the Company in writing at the principal executive office at
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any time prior to the voting of the proxy. The Company’s principal executive office is located at 455 South Patterson Avenue, Springfield, Missouri 65802, the mailing address for which is O’Reilly Automotive, Inc., 233 South Patterson Avenue, Springfield, Missouri 65802.65802, Attention: Secretary.
Are my votes confidential?
All shareholder meeting proxies ballots and tabulations that identify the vote of a particular shareholder will be kept confidential, except as necessary to allow the inspectors of election to certify the voting results or to meet legal requirements. Representatives of Broadridge Financial Solutions (“Broadridge”) will act as the inspector of election and will count the votes.
How will my vote be counted?
All votes will be tabulated by Broadridge. All properly executed proxies received by the Board pursuant to this solicitation will be voted in accordance with the shareholder’s directions specified in the proxy card. If no such directions have been specified by marking the appropriate squares in the signed and returned proxy card, the shares will be voted by the persons named in the enclosed proxy card as follows:
1) | FOR the election as Directors the |
2) | FOR the approval, by an advisory (non-binding) vote, of the |
3) | For the selection, by an advisory (non-binding) vote, of future advisory (non-binding) votes on executive compensation every “ONE-YEAR” (annually); |
4) | FOR the ratification of the selection of Ernst & Young LLP as the Company’s independent auditors for the fiscal year ending December 31, |
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| 5) | AGAINST the shareholder proposal entitled “Independent Board Chairman,” if properly presented. |
The Board is not aware of any matter to be presented for action at the Annual Meeting other than the matters set forth herein. The Company’s shareholders have no dissenter’s or appraisal rights in connection with any of the proposals described herein.
No nominee has indicated that he or she would be unable or unwilling to serve as a Director, if elected. However, should any nominee become unable or unwilling to serve for any reason, it is intended that the persons named in the proxy will vote for the election of such other persons in their stead as may be designated by the Board. The Board is not aware of any reason that might cause any nominee to be unavailable to serve as a Director.
How does the Board recommend I vote?
The Board recommends a vote “FOR” each of the nominees for Director named in this proxy statement. The Board recommends a vote “FOR” the approval, by an advisory (non-binding) vote, of the 20192022 compensation of the Company’s Named Executive Officers. The Board recommends a vote for the selection, by an advisory (non-binding) vote, of future advisory (non-binding) votes on executive compensation every “ONE YEAR” (annually). The Board recommends a vote “FOR” the ratification of the selection of Ernst & Young LLP as the Company’s independent auditors for the year ending December 31, 2020. The Board recommends a vote “FOR” the proposed amendment to the Articles of Incorporation to reduce the stock ownership required for shareholders to call a special meeting. The Board recommends a vote “FOR” the proposed amendment to the Articles of Incorporation to delete unnecessary and outdated language related to classification of Board and to reflect other non-substantive revisions. The Board recommends a vote “AGAINST” the shareholder proposal relating to material human capital risks and opportunities, if properly presented.2023. The Board recommends a vote “AGAINST” the shareholder proposal entitled “Independent Board Chairman,” if properly presented.
What constitutes a quorum?
On March 16, 2020,9, 2023, there were 74,251,56361,567,220 shares of common stock outstanding, which constitutes all of the outstanding shares of the Company’s voting capital stock. A majority of the outstanding shares entitled to vote at the Annual Meeting, represented in personvirtually or by proxy, will constitute a quorum at the meeting.
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What are the standards for determining whether an item has been approved?
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| Quorum | | Effect of | Effect of Broker Non- | ||||
Item of Business | | Required | | Voting Approval Standard | | Abstention (1) | | Votes (2) |
Proposal 1: Election of Directors (3) | | Yes | | Affirmative vote of majority of shares present and entitled to vote (4) | | Vote against | | Counted for quorum purposes; no effect on voting |
Proposal 2: Advisory vote on Executive Compensation | | Yes | | Affirmative vote of majority of shares present and entitled to vote (4) | | Vote against | | Counted for quorum purposes; no effect on voting |
Proposal 3: | | Yes | |
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Proposal | | Yes | | Affirmative vote of majority of shares present and entitled to vote (4) | | Vote against | | Not applicable |
Proposal 5: Shareholder proposal entitled “Independent Board Chairman” | | Yes | | Affirmative vote of majority of shares present and entitled to vote (4) | | Vote against | | Counted for quorum purposes; no effect on voting |
(1) | Proxies marked “ABSTAIN” will be deemed to be represented at the Annual Meeting and considered in determining whether the requisite number of affirmative votes are cast on such matter. |
(2) | A broker non-vote occurs when a broker has not received voting instructions from the beneficial owner of shares, and the broker does not have, or declines to exercise, discretionary authority to vote those shares. |
(3) | Cumulative voting is not allowed for Election of Directors. |
(4) | “Shares present and entitled to vote” includes shares represented |
AreBroker non-votes occur when shares held by a brokerage firm are not voted with respect to a proposal because the firm has not received voting instructions from the beneficial owner of the shares, and the firm does not have the authority to vote the shares in its discretion.
How can I get electronic access to the Notice, proxy statement and Annual Report available on the Internet?Report?
The Notice, proxy statement and Annual Report are available at www.proxyvote.com. The required control number can be found on your proxy card in the box next to the arrow.card. These materials are also available on our website at http://corporate.oreillyauto.com/investor-relations-financials.
Where may I find the voting results of the Annual Meeting?
The Board plans to announce the preliminary voting results at the Annual Meeting. The Company plans to publish the final results in a Current Report on Form 8‑K8-K to be filed with the Securities and Exchange Commission (the “SEC”) within four business days following the Annual Meeting, if final voting results are available at that time. If the final voting results are not available within that time, the Company will report preliminary results in a Current Report on Form 8‑K8-K within four business days following the Annual Meeting and will report final voting results in an amended Current Report on Form 8‑K8-K when available.
Will a proxy solicitor be used?
No, the Company has not engaged a third party to assist in the solicitation of proxies for the Annual Meeting.
What are the deadlines for consideration of shareholder proposals or director nominations for the 20212024 Annual Meeting of Shareholders?
Shareholder proposals intended to be presented at the 20212024 Annual Meeting of Shareholders and included in the Company’s proxy materials relating to that meeting pursuant to Rule 14a‑814a-8 under the Exchange Act must be received by the Company at the Company’s principal executive offices by November 27, 2020.December 2, 2023. The Company’s Amended and Restated Bylaws (the “Bylaws”) require that shareholder proposals made outside of Rule 14a‑814a-8 be submitted not later than February 13, 2021,18, 2024, and not earlier than January 14, 2021.19, 2024.
In addition to satisfying the deadlines in our Bylaws, any shareholder who intends to solicit proxies in support of director nominees other than our own must comply with the additional requirements of Rule 14a-19(b). To the extent any information is required by Rule 14a-19(b) that is not required under our Bylaws, it must be received by March 19, 2024.
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What are the deadlines for submitting director nominations for inclusion in the Company’s proxy materials?
Under the Bylaws, a shareholder (or a group of up to 20 shareholders) owning three percent or more of the Company’s outstanding shares of common stock continuously for at least three years may nominate and include in the Company’s proxy materials candidates for up to 20% of the Board (rounded down, but not less than two). Nominations must comply with the requirements and conditions of the Bylaws, including the delivery of proper notice to the Secretary of the Company at the Company’s address appearing on the first page of this proxy statement not later than November 27, 2020,December 2, 2023, and not earlier than October 28, 2020.November 2, 2023.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table summarizes information as of December 31, 2019,2022, with respect to each person or other entity (other than management) known to the Company to be the beneficial owner of more than five percent (5%) of its outstanding shares of common stock.
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Class of Stock |
| Owner |
| Beneficial Ownership |
| Class | | Owner | | Beneficial Ownership | | Class | ||||
Common Stock |
| BlackRock, Inc. |
| 5,908,522 | (1) |
| 7.8 | % |
| The Vanguard Group |
| 5,166,545 | (1) | | 8.3 | % |
Common Stock |
| The Vanguard Group |
| 5,828,499 | (2) |
| 7.7 | % |
| BlackRock, Inc. |
| 4,597,447 | (2) | | 7.3 | % |
(1) | As reflected on such beneficial owner’s Schedule 13G/A dated February |
(2) | As reflected on such beneficial owner’s Schedule 13G/A dated |
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SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table summarizes, as of March 16, 2020,9, 2023, the beneficial ownership of the Company’s outstanding shares of common stock for each current Director and Director nominee of the Board, each of the Company’s current Named Executive Officers and all Directors and executive officers as a group. Unless otherwise indicated, the Company believes that the beneficial owners set forth in the following table have sole voting and dispositive power.
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| Direct |
| Indirect |
| Current Exercisable |
| Total |
| Percent of |
Name |
| Ownership |
| Ownership |
| Options (a) |
| Ownership (a) |
| Class |
David O’Reilly (b) |
| 131,754 |
| 477,161 |
| — |
| 608,915 |
| * |
Larry O’Reilly (c) |
| 133,588 |
| 175,662 |
| — |
| 309,250 |
| * |
Rosalie O’Reilly Wooten (d) |
| 18,480 |
| 185,222 |
| — |
| 203,702 |
| * |
Greg Henslee (e) |
| 32,813 |
| 4,997 |
| 152,673 |
| 190,483 |
| * |
Jay D. Burchfield (f) |
| 16,962 |
| — |
| — |
| 16,962 |
| * |
Thomas T. Hendrickson (f) |
| 1,429 |
| — |
| — |
| 1,429 |
| * |
John R. Murphy (f) |
| 2,245 |
| — |
| — |
| 2,245 |
| * |
Dana M. Perlman (g) |
| 1,210 |
| — |
| — |
| 1,210 |
| * |
Maria A. Sastre |
| — |
| — |
| — |
| — |
| * |
Andrea M. Weiss (h) |
| 381 |
| — |
| — |
| 381 |
| * |
Gregory D. Johnson (i) |
| 4,317 |
| 961 |
| 43,688 |
| 48,966 |
| * |
Jeff M. Shaw (j) |
| 23,587 |
| 5,620 |
| 47,648 |
| 76,855 |
| * |
Tom McFall (k) |
| 5,646 |
| 420 |
| 85,038 |
| 91,104 |
| * |
All Directors and executive officers as a group (25 persons) |
| 386,520 |
| 859,388 |
| 571,682 |
| 1,817,590 |
| 2.43% |
*denotes less than 1.0%
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| Direct |
| Indirect |
| Current Exercisable |
| Total |
| Percent of |
Name | | Ownership | | Ownership | | Options (a) | | Ownership (a) | | Class |
Greg Henslee (b) |
| 8,359 | | 30,493 |
| 59,599 |
| 98,451 | | * |
David O’Reilly (c) |
| 61,757 | | 243,085 |
| — |
| 304,842 | | * |
Larry O’Reilly (d) |
| 52,508 | | 157,849 |
| — |
| 210,357 | | * |
Jay D. Burchfield (e) |
| 17,839 | | — |
| — |
| 17,839 | | * |
Thomas T. Hendrickson (e) |
| 1,246 | | — |
| — |
| 1,246 | | * |
John R. Murphy (e) |
| 1,600 | | — |
| — |
| 1,600 | | * |
Dana M. Perlman (e) |
| 1,298 | | — |
| — |
| 1,298 | | * |
Maria A. Sastre (e) | | 877 | | — |
| — |
| 877 | | * |
Andrea M. Weiss (e) |
| 1,158 | | — |
| — |
| 1,158 | | * |
Fred Whitfield (e) | | 365 | | — |
| — |
| 365 | | * |
Gregory D. Johnson (f) |
| 4,743 | | 968 | | 64,205 | | 69,916 | | * |
Brad Beckham (g) | | 662 | | 1,075 |
| 14,472 |
| 16,209 | | * |
Jeremy Fletcher (h) | | 2,300 | | 212 | | 8,490 | | 11,002 | | * |
Brent Kirby (i) | | 25 | | — |
| 15,188 |
| 15,213 | | * |
Tom McFall (j) |
| 5,897 | | 420 |
| 46,043 |
| 52,360 | | * |
All Directors and executive officers as a group (28 persons) |
| 176,230 | | 441,617 |
| 342,466 |
| 960,313 | | 1.55% |
* | denotes less than 1.0% |
(a) | With respect to each person, assumes the exercise of all stock options held by such person that were exercisable within 60 days of March |
(b) | The stated number of directly owned shares includes |
(c) | The stated number of directly owned shares includes 1,049 restricted shares awarded under the Company’s long-term incentive compensation plans. The stated number of indirectly owned shares includes |
(d) | The stated number of indirectly owned shares includes 98,367 shares controlled by Mr. O’Reilly as trustee of a trust for the benefit of his children, |
|
|
|
|
(e) | The stated number of directly owned shares includes |
(f) | The stated number of directly owned shares includes 2,630 shares held in the O’Reilly Employee Stock Purchase Plan. The stated number of indirectly owned shares |
| The stated number of directly owned shares includes |
|
|
|
|
|
|
| The stated number of directly owned shares includes |
| The stated number of directly owned shares includes |
(j) | The stated number of directly owned shares includes 28 shares held in the O’Reilly Employee Stock Purchase Plan. The stated number of indirectly owned shares |
Officer and Director Stock Ownership Guidelines
The Board has adopted stock ownership requirements for the Company’s independent Directors, executive officers and executive and senior vice presidents to further align their interests with those of the Company’s shareholders. In February of 2023, the Board revised the stock ownership requirements for the affiliated Director(s), president(s), and co-presidents to further align the Company’s Board and management interests with those of the Company’s shareholders. The Human Capital and Compensation Committee reviews the stock ownership guidelines and requirements and reviews progress toward meeting ownership requirements quarterly. The Compensation Committeequarterly and has discretion to waive these guidelines; however, it has never done so.
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The
As of December 31, 2022, the Company’s independent Directors are required to own shares of the Company’s common stock valued at a minimum of $150,000five times their annual cash retainer, currently $550,000, within five years of the date they first become a Director.Director or of a change in the minimum requirement. For purposes of the guidelines, common stock ownership includes shares owned by the Director, directly or indirectly, vested restricted shares awarded by the Company and the intrinsic value of the Director’s vested stock options granted toby the Director, but excludes unvested restricted share awards.Company. As of December 31, 2019,2022, the total stockholdings of each of the independent directors, who has been serving as a Director for at least five years, satisfied their respective stock ownership requirement.
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The Company’s executive officersaffiliated Directors and executive and senior vice presidentsexecutives are required to own shares ofcomply with and maintain the stock ownership requirements the Company’s common stock valued at the minimum of a specified multiple of their base salary within five years of first assuming their respective positions.position or of a change in the minimum requirement. For purposes of the guidelines, common stock ownership includes shares owned by the officer directly, shares held by the officer in the Company’s Employee Stock Purchase Plan, shares held by the officer in the Company’s Profit Sharing and Savings Plan, vested restricted shares awarded by the Company, and the tax affected intrinsic value of the officer’s vested stock options granted under the Company’s incentive plans. Individuals who do not achievecomply with the required level of ownership within the prescribedspecified time period of time may, at the discretion of the Compensation Committee,will be required to hold 50% of net after-tax shares issued upon the exercise of any of their stock options and maywill not be allowed to sell any other shares of the Company that they may own.own until compliance is achieved. The stock ownership requirement does not apply after thean executive officer or executive or senior vice president reaches age 62. The Compensation Committee may waive these guidelines at its discretion; however, it has never done so. As of December 31, 2019,2022, each of the Company’s executive officers and executive and senior vice presidents, who had been in their positions for at least five years, satisfied the stock ownership requirement applicable to each of them.
The following table identifies the executive officers’affiliated Director and executive and senior vice presidents’stock ownership requirement as of December 31, 2019:requirements:
| | |
Position |
| |
| Minimum Ownership Requirement Multiple of Base Salary | |
Affiliated Board Director(s) | | 5x |
Chief Executive Officer |
| 5x |
President(s)/Co-Presidents(s) | | 4x |
Chief Operating Officer |
| 3x |
Chief Financial Officer |
| 3x |
Executive Vice |
| 3x |
Senior Vice |
| 2x |
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PROPOSAL 1 -– ELECTION OF DIRECTORS
Information about the Director Nominees
The Company’s Bylaws and Amended and Restated Articles of Incorporation provide for the annual election of Directors. The Board has nominated Greg Henslee, David O’Reilly, Larry O’Reilly, Greg Henslee, Jay D. Burchfield, Thomas T. Hendrickson, John R. Murphy, Dana M. Perlman, Maria A. Sastre, and Andrea M. Weiss and Fred Whitfield as Directors for a one-year term expiring at the Company’s 20212024 Annual Meeting of Shareholders.
The following identifies (i) the business experience and principal occupation for at least the last five years of each of the nominees; (ii) his or her present positions and offices with the Company, if applicable; (iii) the year in which he or she was first elected or appointed a Director (each serving continuously since first elected or appointed, unless otherwise stated); (iv) his or her age; (v) his or her directorships for at least the last five years in any company with a class of securities registered pursuant to Section 12 or subject to the requirements of Section 15(d) of the Securities Exchange Act of 1934, as amended, or in any company registered as an investment company under the Investment Company Act of 1940 (as specifically noted), as applicable; and (vi) the qualifications and skills, which the Director possesses, that qualify him or her for service on the Company’s Board.
(i) | his or her present positions and offices with the Company, if applicable; |
(ii) | his or her age; |
(iii) | the year in which he or she was first elected or appointed a Director (each serving continuously since first elected or appointed, unless otherwise stated); |
(iv) | the business experience and principal occupation for at least the last five years of each of the nominees; |
(v) | the qualifications and skills, which the Director possesses, that qualify him or her for service on the Company’s Board; and |
(vi) | his or her directorships for at least the last five years in any company with a class of securities registered pursuant to Section 12 or subject to the requirements of Section 15(d) of the Securities Exchange Act of 1934, as amended, or in any company registered as an investment company under the Investment Company Act of 1940 (as specifically noted), as applicable. |
Each of the below nominees’ current term expires in 2020.2023.
David O’Reilly, age 70,
Greg Henslee
Affiliated Director and Executive Chairman of the Board, has been a director since 1972.
Experience: Mr. O’Reilly has served as Chairman of the Age: 62
Director since: 2017
Board since February of 2005. Mr. O’Reilly served as Co-Chairman of the Board from August 1999 to February 2005; Chief Executive Officer from March 1993 to February 2005; President of the Company from March 1993 to August 1999; and Vice President of the Company from 1975 to March 1993.committees: None.
Qualifications and Skills: Mr. O’Reilly is being re-nominated as a Director because, among his other qualifications, he possesses over 45 years of experience and expertise in the Company’s operations and strategic business development and has held leadership roles in numerous aftermarket industry organizations and associations, as well as having served on several bank boards and charitable organization boards.
Larry O’Reilly, age 73, Affiliated Director and Vice Chairman of the Board, has been a director since 1969.Experience
Experience: Mr. O’Reilly has served as Vice-Chairman of the Board since February of 2005. Mr. O’Reilly served as Co-Chairman of the Board from August 1999 to February 2005; Chief Operating Officer from March 1993 to February 2003; President from March 1993 to August 1999; and Vice President from 1975 to March 1993. Mr. O’Reilly retired from active Company management in February of 2003. Mr. O’Reilly currently serves as Chairman and Director of Mercy Hospital Springfield since January 2000; Board Member of the Missouri Sports Hall of Fame since January 2003; and Trustee of the Lance Armstrong Endowment Board since December 2005.
Qualifications and Skills: Mr. O’Reilly is being re-nominated as a Director because, among his other qualifications, he possesses over 50 years of experience and expertise in the Company’s operations, in the automotive aftermarket industry and strategic business development.
Greg Henslee, age 59, Affiliated Director and Executive Vice Chairman of the Board, has been a director since 2017.
Experience: Mr. Henslee has served as a member of the Board since November 2017 and Executive Vice Chairman of the Board since May 2018.2021. Mr. Henslee served as Executive Vice Chairman of the Board from May 2018 until May 2021. Mr. Henslee served as Chief Executive Officer from February 2005 until May 2018. Mr. Henslee served O’Reilly as President from December 2012 to February 2017; Co-President from 1999 to 2012; Senior Vice President of Information Systems, Inventory Control, Customer Service, Computer Operations, Pricing and Loss Prevention from 1998 to 1999; Vice President of Store Operations from 1995 to 1998; and Director of Computer Operations and Loss Prevention from 1993 to 1995.
Qualifications and Skills:
Mr. Henslee is being nominatedre-nominated as a Director because, among his other qualifications, he possesses over 3540 years of experience in the automotive aftermarket industry, and 3538 years of experience and expertise in the Company’s operations, strategic planning and leadership development, as well as holdsand has held leadership positions on various automotive aftermarket organizations and associations.
David O’Reilly
Affiliated Director and Executive Vice Chairman of the Board
Age: 73
Director since: 1972
Board committees: None.
Experience
Mr. O’Reilly has served as Executive Vice Chairman of the Board since May 2021. Mr. O’Reilly served as Executive Chairman of the Board from February 2005 until May 2021. Mr. O’Reilly served as Co-Chairman of the Board from August 1999 to February 2005;
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Chief Executive Officer from March 1993 to February 2005; President of the Company from March 1993 to August 1999; and Vice President of the Company from 1975 to March 1993.
Qualifications and Skills
Mr. O’Reilly is being re-nominated as a Director because, among his other qualifications, he possesses over 45 years of experience and expertise in the Company’s operations and strategic business development and has held leadership roles in numerous automotive aftermarket industry organizations and associations, as well as having served on several bank boards and charitable organization boards.
Larry O’Reilly
Affiliated Director and Vice Chairman of the Board
Age: 76
Director since: 1969
Board committees: None.
Experience
Mr. O’Reilly has served as Vice Chairman of the Board since February of 2005. Mr. O’Reilly served as Co-Chairman of the Board from August 1999 to February 2005; Chief Operating Officer from March 1993 to February 2003; President from March 1993 to August 1999; and Vice President from 1975 to March 1993. Mr. O’Reilly retired from active Company management in February of 2003. Mr. O’Reilly served as Chairman and Director of Mercy Hospital Springfield from 2000 to 2022; Board Member of the Missouri Sports Hall of Fame from 2003 to 2022; and Trustee of the Lance Armstrong Endowment Board from December 2005 to 2022.
Qualifications and Skills
Mr. O’Reilly is being re-nominated as a Director because, among his other qualifications, he possesses over 50 years of experience and expertise in the Company’s operations, in the automotive aftermarket industry and strategic business development.
Jay D. Burchfield age 74,
Independent Director of the Board, has been a director since 1997.
Age: 77
Director since: 1997
Independent Lead Director since: 2018
Board committees: Audit Committee and Human Capital and Compensation Committee
Experience:
Mr. Burchfield serveshas served as a Director, Chairman of the Compensation Committee, and Member of the Audit, Executive and Nominating and Wealth Committees of Simmons First National Corporation since May 2015; Chairman of the Board and Director of Trust Company of the Ozarks from April 1998 until his retirement in October 2015; Senior Principal of
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SilverTree Companies, a real estate company, since January 2010. Mr. Burchfield’s career has spanned more than 40 years in the banking and financial services industry.
Qualifications and Skills:
Mr. Burchfield is being re-nominated as a Director because, among his other qualifications, he possesses experience and expertise in the banking industry, strategic business development, executive compensation and leadership development. Mr. Burchfield also has the benefit of his other board position, which provides additional experience in board oversight.
Current Public Directorships
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Thomas T. Hendrickson age 65,
Independent Director of the Board, has been a director since 2010.
Age: 68
Director since: 2010
Board committees: Audit Committee (Chair) and Corporate Governance/Nominating Committee
Experience:
Mr. Hendrickson serveshas served as a Director and Audit Committee Chairperson for Snap One Holdings Corp. since May 2022; Director and Audit Committee Chairperson for Ollie’s Bargain Outlet Holdings, Inc. since 2015; Chief Administrative Officer, Chief Financial Officer and Treasurer for The Sports Authority, Inc., the parent of retailer “Sports Authority,” from 2003 until his retirement in February of 2014; Executive Vice President and Chief Financial Officer, and Treasurer of Gart Sports Company, from 1998 until its merger with Sports Authority in 2003; and Vice President of Finance, Senior Vice President, and Executive Vice President and Chief Financial Officer of Sportmart, Inc., from 1993 to 1997; and Divisional Vice President and Controller of Miller’s Outpost Stores, a retailer specializing in apparel to young consumers, from 1987 to 1993.1997. Mr. Hendrickson is a Certified Public Accountant and has over 32 years of retail business experience.
Qualifications and Skills:
Mr. Hendrickson is being re-nominated as a Director because, among his other qualifications, he possesses experience and expertise in the retail industry and the areas of risk assessment, accounting and finance, including experience as a chief financial officer. Mr. Hendrickson also has the benefit of his other board positions, which provide additional experience in board oversight.
Current Public Directorships
John R. Murphy age 69,
Independent Director of the Board, has been a director since 2003.
Age: 72
Director since: 2003
Board committees: Audit Committee and Human Capital and Compensation Committee (Chair)
Experience:
Mr. Murphy servesjoined the board of Cadrenal Therapeutics, Inc. in January of 2023, as a directorDirector and theAudit Committee Chairman. Mr. Murphy served as a Director, Audit Committee Chairman, and Member of the Nominating and Governance Committee of Apria, Healthcare since 2019.Inc. from 2019 until April of 2022, when the company was sold. Mr. Murphy also serves as a directorDirector and the Audit Committee Chairman of Summit Materials, Inc. (“Summit”) since 2012,2012; he is also has served as a member of the Governance and Nominating Committee.Committee until 2022. In 2013, Mr. Murphy served as Summit’s Interim Chief Financial Officer. In addition, Mr. Murphy servesserved as a directorDirector and the Audit Committee Chairman of Alight Solutions since 2019.from 2019 until 2021. In 2012, Mr. Murphy was named a directorDirector and Audit Committee Chairman of DJO Global, Inc.,; he served in that capacity until 2019. In 2011, Mr. Murphy served as a director,Director, Audit Committee and Special Committee member of Graham Packaging, Inc. until September of that year.year when the company was sold. Mr. Murphy served as Senior Vice President and Chief Financial Officer of Smurfit-Stone Container Corporation (“Smurfit-Stone”) from 2009 to 2010, where he led the financial restructuring of Smurfit-Stone during its Chapter 11 reorganization. Mr. Murphy was President and Chief Executive Officer of Accuride Corporation, Inc. (“Accuride”) and a member of its board of directors until October 2008. Mr. Murphy served as Accuride’s President and Chief Operating Officer from January 2007 to October 2007. Accuride filed Chapter 11 bankruptcy in October 2009 and emerged in 2010. He2007; he served as President and Chief Financial Officer from February 2006 to December 2006 and as Executive Vice President and Chief Financial Officer from March 1998 to January 2006. Mr. Murphy holds a Bachelor of Science in Accounting from Pennsylvania State University and a Master of Business Administration from the University of Colorado and is a Certified Public Accountant.Accountant and holds a Masters of Business Administration.
Qualifications and Skills:
Mr. Murphy is being re-nominated as a Director because, among his other qualifications, he possesses experience and expertise in the automotive aftermarket industry, in the accounting and finance areas, including experience as a chief financial officer, and he possesses
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experience in restructuring and mergers and acquisitions. Mr. Murphy also has the benefit of his other board positions, which provide additional experience in board oversight.
Current Public Directorships
| ● | Summit Materials, Inc. (SUM), since 2012 |
| ● | Cadrenal Therapeutics, Inc. (CVKD), since January of 2023 |
Prior Public Board Service
| ● | Graham Packaging Company Inc. (GRM), 2011 |
| ● | Apria, Inc. (APR), 2019 to 2022 |
Dana M. Perlman age 39,
Independent Director of the Board, has been a director since 2017.
Age: 42
Director since: 2017
Board committees: Audit Committee and Corporate Governance/Nominating Committee (Chair)
Experience:
Ms. Perlman servesserved as Chief Strategy Officer and Treasurer of PVH Corp. (“PVH”) from 2021 to July 2022, where she was a key partner to the Chief Executive Officer and a member of Executive Leadership, responsible for leading PVH’s global strategy, transformation and business development, including defining, activating and managing PVH’s strategic vision and priorities to deliver key targets, spearheading mergers and acquisitions, integrations, strategic partnerships and value-enhancing projects across PVH. Ms. Perlman was also responsible for PVH’s treasury and investor relations functions. Prior to her role as Chief Strategy Officer and Treasurer of PVH, Ms. Perlman served as Senior Vice President, Treasurer, Business Development and Investor Relations of PVH Corp. (“PVH”) since 2011, where she oversees the management of accounts receivable, treasury and capital markets, corporate communications, investor relations and crisis communications. Ms. Perlman is also responsible for business development at PVH, where she assists in corporate strategy, acquisitions and strategic projects.2011. Prior to joining PVH, Ms. Perlman served as Director of Retail Investment Banking at Barclays Capital. Prior to her role at Barclays Capital, Ms. Perlman held positions with Lehman Brothers and Credit Suisse First Boston. Ms. Perlman earnedhas a Bachelor’s Degree inBachelor of Business Administration from Thethe University of Michigan Ross School of Business. Ms. Perlman also sits on the Board of Sigma Lithium Corporation and is the Chair of the Finance Committee and serves as a member of the Audit Committee and ESG Committee.
Qualifications and Skills:
Ms. Perlman is being re-nominated as a director because, among her other qualifications, she possesses over 1520 years of experience and expertise in the global retail industry and the areas of strategy, finance, investment banking, business development, acquisitions, risk management, corporate and employer branding, investor communications and investor communications.environmental, sustainability and governance communication. Ms. Perlman also has the benefit of her other board position, which provides additional experience in board oversight.
Current Public Directorships
Andrea M. Weiss, age 65,
Maria A. Sastre
Independent Director of the Board, has been a director since 2019.
Experience: Ms. Weiss is the founder ofAge: 67
Director since: 2020
Board committees: Audit Committee and serves as President and Chief Executive Officer of Retail Consulting, Inc. since 2002. Ms. Weiss is also the founder of The O Alliance, LLC, a global consulting practice focused on retail, e-commerce and consumer companies. Prior to founding Retail Consulting, Inc., Ms. Weiss was President of dELiA*s, Inc., President of Guess?, Inc., Executive Vice President, Chief Stores Officer of L Brands, Inc., Senior Vice President of Ann Inc., and Director
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of Merchandising of The Walt Disney Company. Ms. Weiss is also a board member for Cracker Barrel Old Country Store, Inc. since 2003, RPT Realty since 2018 and Bed Bath & Beyond Inc. since 2019. Ms. Weiss currently serves on several private advisory boards as well. Ms. Weiss served on the board of directors of GSI Commerce from 2006 to 2011, Chico’s FAS, Inc. from 2009 to 2018, The Pepboys - Manny, Moe & Jack from 2013 to 2016 and Nutrisystem, Inc. from 2013 to 2019. Ms. Weiss holds a Masters of Administrative Science from The Johns Hopkins University and a Bachelor of Fine Arts from Virginia Commonwealth University. Ms. Weiss also completed post-graduate studies at Harvard Business School and The Kellogg School at Northwestern University.Corporate Governance/Nominating Committee
Qualifications and Skills: Ms. Weiss is being re-nominated as a director because, among her other qualifications, she possesses over 30 years of experience in the retail industry and the areas of marketing, consumer branding, proprietary brand development, consumer behavior, global retail and e-commerce operations and board governance.
The below director nominee is not currently serving as a director and was nominated for election by the Board in January of 2020:Experience
Maria A. Sastre, age 64, Independent Director Nominee.
Experience:Ms. Sastre served as President and Chief Operating Officer of Signature Flight Support Corporation (“Signature”), the world’s largest network of fixed-based operations and support services for business, government and private aviation, from 2013 until her retirement in 2018. Ms. Sastre joined Signature in 2010 as its Chief Operating Officer. Prior to joining Signature, Ms. Sastre was President and Chief Executive Officer of Take Stock in Children, Inc. from 2009 to 2010, a senior executive with Royal Caribbean Cruises LTD from 2000 to 2008, where she held the positions of Vice President, International, Asia, Latin America & Caribbean and Vice President of Hotel Operations, and, prior to 2000, she held numerous domestic and international executive and leadership positions with United Airlines, Inc., Continental Airlines, Inc. and Eastern Airlines, Inc. Ms. Sastre is also a board member of General Mills, Inc. since 2018. Ms. Sastre currently serves on several private and non-profit boards, as well, including
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Guidewell Mutual Holding Corporation (Florida Blue) since 2016, where she serves as Chair of the Talent & Compensation Committee, and Miramar Services Corporation since 2019. Ms. Sastre serves as the Chair of the Nomination & Governance Committee of General Mills, Inc. and also previously served on the boardBoard of directors of Darden Restaurants, Inc. from 1998 to 2014, where she also servedPublix Supermarkets and as Chair of the Finance Committee for part of her tenure, and Laidlaw International,Darden Restaurants, Inc. from 2003 to 2007. Ms. Sastre holds a Bachelors of Arts in management and Masters of Business Administration from New York Institute of Technology, as well as an Associate degree in accounting from Miami Dade College. Ms. Sastre also received an Honorary Doctorate Degree in business administration from Johnson & Wales University.
Qualifications and Skills:Skills
Ms. Sastre is being nominatedre-nominated as a director because, among her other qualifications, she possesses experience in global operations, marketing, retail, mergers and acquisitions, government/public policy and e-commerce and over 20 years of public company board experience, including audit, finance, corporate governance and compensation committees.
Current Public Directorships
| ● | General Mills, Inc. (GIS), since 2018 |
Prior Public Board Service
| ● | Darden Restaurants, Inc. (DRI), 1998 to 2014 |
| ● | Laidlaw International, Inc. (LI), 2003 to 2007 |
Andrea M. Weiss
Independent Director of the Board
Age: 68
Director since: 2019
Board committees: Audit Committee and Human Capital and Compensation Committee
Experience
Ms. Weiss is the founder of and serves as President and Chief Executive Officer of Retail Consulting, Inc. since 2002. Ms. Weiss is also the founder of The O Alliance, LLC, a global consulting practice focused on retail, e-commerce and consumer companies. Prior to founding Retail Consulting, Inc., Ms. Weiss was President of dELiA*s, Inc., President of Guess?, Inc., Executive Vice President, Chief Stores Officer of L Brands, Inc., Senior Vice President of Ann Inc., and Director of Merchandising of The Walt Disney Company. Ms. Weiss is also a board member for Cracker Barrel Old Country Store, Inc. since 2003, RPT Realty since 2018 and Bed Bath & Beyond Inc. since 2019. Ms. Weiss currently serves on several private advisory boards. Ms. Weiss served on the board of directors of GSI Commerce from 2006 to 2011, Chico’s FAS, Inc. from 2009 to 2018, The Pepboys - Manny, Moe & Jack from 2013 to 2016 and Nutrisystem, Inc. from 2013 to 2019. Ms. Weiss holds a Masters of Administrative Science from The Johns Hopkins University and a Bachelor of Fine Arts from Virginia Commonwealth University. Ms. Weiss also completed post-graduate studies at Harvard Business School and The Kellogg School at Northwestern University.
Qualifications and Skills
Ms. Weiss is being re-nominated as a director because, among her other qualifications, she possesses over 30 years of experience in the retail industry and the areas of marketing, consumer branding, proprietary brand development, consumer behavior, global retail and e-commerce operations and board governance. Ms. Weiss also has the benefit of her other board positions, which provide additional experience in board oversight.
Current Public Directorships
Prior Public Board Service
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Fred Whitfield
Independent Director of the Board
Age: 64
Director since: 2021
Board committees: Audit Committee and Corporate Governance/Nominating Committee
Experience
Mr. Whitfield has served as President, Vice Chairman, Alternate Governor and Minority Owner of Hornets Sports & Entertainment (“HSE”) since 2018. Mr. Whitfield joined HSE in 2006 as its President, Chief Operating Officer and Alternate Governor, and during his tenure with HSE, he has overseen all areas of business operations and strategy for the Charlotte Hornets and Spectrum Center, including sales, marketing, public relations, legal, finance and human resources. Along with serving as an Alternate Governor on the National Basketball Association Board of Governors, Mr. Whitfield also currently serves as a member of the National Basketball Association Global Diversity and Inclusion Council. Prior to joining HSE, Mr. Whitfield was Director of Business/Legal Affairs of Jordan Brand (a division of NIKE, Inc.); Director of Player Personnel and Assistant Legal Counsel of the Washington Wizards; numerous positions with NIKE, Inc., the last being Director of Player Development, Basketball Sports Marketing; and Senior Partner of Whitfield & Blackmon, Attorneys at Law, LLP. Additionally, Mr. Whitfield is the founder of HoopTee Charities, Inc., which supports a number of non-profit organizations and initiatives. Mr. Whitfield holds a Juris Doctorate from North Carolina Central University, as well as a Bachelor of Business Administration in economics and a Masters of Business Administration in marketing, both from Campbell University.
Qualifications and Skills
Mr. Whitfield is being re-nominated as a director because, among his other qualifications, he possesses experience and expertise in areas of the law and legal compliance, brand management and strategies, business development, and diversity and inclusion.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE ELECTED NOMINEES.
Current Board member, Rosalie O’Reilly Wooten, has not been nominated for re-election, as she is expected to retire from the Board in May 2020 (at the end of the 2019 director term), consistent with the Board’s mandatory retirement age policy.
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INFORMATION CONCERNING THE BOARD OF DIRECTORS
Director Independence
Rules of the Nasdaq Stock Market (the “Nasdaq”(“Nasdaq”) require that a majority of the Board be “independent.” Under the Nasdaq rules, a director or director nominee is independent if he or she is not an officer or employee of the Company and does not have any relationship with the Company which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The Board has reviewed the independence of its Directors and director nominee under the Nasdaq rules. During this review, the Board considered transactions and relationships between each Director or any member of his or her family and the Company during 2019.2022. Please see discussions in “Affiliated Relationships” and “Certain Relationships and Related Transactions” sections for further descriptions, by specific category and type, of the transactions and relationships reviewed. Consistent with these considerations, the Board has determined that Messrs. Burchfield, Hendrickson, Murphy and Murphy,Whitfield, and Mss. Perlman, Sastre and Weiss (“independent Directors”), as well as Ms. Sastre, director nominee, are independent under the Nasdaq rules.
Affiliated Relationships
Greg Henslee, Director of the Board, served as the Company’s Chief Executive Officer from 2005 through 2018. Greg Henslee also serves as Executive Chairman of the Board of the Company. David O’Reilly and Larry O’Reilly, and Rosalie O’Reilly Wooten, Directors of the Board, are siblings. David O’Reilly also serves as Executive Vice Chairman of the Board of the Company.
Leadership Structure
The Company’s leadership structure, within its Board, consists of a Chairman of the Board, two Vice Chairmen of the Board, an Independent Lead Director, an Audit Committee, a Corporate Governance/Nominating Committee and a Human Capital and Compensation Committee. The Independent Lead Director also serves on the Audit Committee and the Human Capital and Compensation Committee. All Committee members satisfy the independence requirements under the Nasdaq rules. The Company’s Bylaws permit the positions of Chairman of the Board and Chief Executive Officer to be held by the same person; however, the Board believes these roles and their attendant responsibilities should be separate and fulfilled by two separate individuals. The Company believes having separate roles allows its Board to effectively provide guidance to and oversight of its management. As a result, David O’ReillyGreg Henslee serves in the role of Chairman of the Board and Gregory D. Johnson serves in the role of Chief Executive OfficerOfficer.
Independent Lead Director
From time to time, in the interest of sound corporate governance, the Board may appoint an Independent Lead Director. The Board believes that the designation of an Independent Lead Director improves the functionality of the Board and its Committees and aids in the fiduciary obligations each Director has to the Company and its shareholders. In May of 2018, the Corporate Governance/Nominating Committee nominated, and the Board approved, Jay D. Burchfield to serve as Independent Lead Director. Mr. Burchfield has served as Independent Lead Director since that time.
The responsibilities of the Independent Lead Director include, but are not limited to, the following:
| Serves as a liaison among other Directors, with the Company’s management, between Board committees and the Board; |
| Presides at Board meetings in the absence of the Chairman of the Board, or at the request of the Chairman of the Board; |
| Ensures Board leadership in the absence or incapacitation of the Chairman of the Board; |
| Chairs executive sessions involving only the independent Directors, develops the agenda for executive sessions to ensure that independent Directors have adequate opportunities for these meetings to be held and adequate time to discuss issues and communicates with the Company’s management, as appropriate, the results of the executive sessions; |
| Consults with the Chairman of the Board as to the appropriate schedules and agendas of Board meetings to ensure there is sufficient time available for serious discussion of appropriate topics proposed by the independent Directors; |
| Advises the Chairman of the Board on the conduct of Board meetings to facilitate teamwork and communication among independent and non-independent Directors; |
| Together with the Chairman of the Board, collaborates with the Company’s management to determine the information and materials provided to the Directors, so that the independent Directors have adequate resources, especially by way of full, timely and relevant information, to support their decision-making responsibilities; |
|
|
| ● | Is available to advise committee chairs in fulfilling their designated roles and responsibilities to the Board; |
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| Collaborates with the Board to guide the Company’s management on strategic issues and long-term planning; |
● | Consults with the Chairman of the Board on such matters as are pertinent to the Board and the Company; |
| ● | Works with the Corporate Governance/Nominating Committee Chair to analyze the annual Board self-assessment results; |
| ● | Collaborates with the Chairman of the Board and Corporate Governance/Nominating Committee on Board succession planning; |
|
|
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| Acts as the focal point on the Board concerning issues such as corporate governance and suggestions from independent Directors and monitors and coordinates with the Company’s management on corporate governance issues and developments; |
| Collaborates with the |
|
|
|
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| Is available for direct communication and consultation with shareholders, upon request through Board approved procedures; and |
| Performs such other duties as the Board or Chairman of the Board may delegate, from time to time. |
Meeting Attendance
During 2019,2022, four regularly scheduled meetings of the Board were held. During suchthe year, each current Director attended 100% of the total number of meetings of the Board during his or her term of service.service, with the exception of Mr. Whitfield who attended 50% of the total number of meetings of the Board. During 2019,2022, each independent Director attended 100% of the total number of meetings held by all committees of the Board for which he or she served, with the exception of Mr. MurphyWhitfield who attended 96%64% and Ms. WeissSastre who attended 85%92% of the total number of meetings held by all committees of the Board for which eachhe or she served.
Time is allotted at each Board meeting for an executive session involving only the independent Directors. The Company’s independent Directors held four closed-session meetings during 2019,2022, and each current independent directorDirector attended all meetings during his or her term of service.service, with the exception of Mr. Whitfield who attended 50%.
The Company encourages, but does not require, the members of its Board to attend the Annual Meeting. Each director then serving on the Board attended the Company’s 20192022 Annual Meeting.
Committees of the Board
The Board has three standing committees, the Audit Committee, the Human Capital and Compensation Committee and the Corporate Governance/Nominating Committee. Each committee is governed by a written charter and is comprised solely of independent Directors in accordance with the Nasdaq Listing Qualifications. Charters for each committee are available on the Company’s website at www.OReillyAuto.com and can be obtained free of charge by written request to the attention of the Secretary at the Company’s address appearing on the first page of this proxy statement or by telephone at (417) 874‑7161.874-7161.
Because Greg Henslee, David O’Reilly and Larry O’Reilly Rosalie O’Reilly Wooten and Greg Henslee do not qualify as independent Directors, they do not participate on any committees of the Board.
Audit Committee
Number of Members:
| Seven |
Members: | Thomas T. Hendrickson (Chair), Jay D. Burchfield, John R. Murphy, Dana M. Perlman, Maria A. Sastre, Andrea M. Weiss and Fred Whitfield |
Number of Meetings during 2022: | Eight |
Purpose and Functions:
The purpose of the Audit Committee is to
(i) | review reports of the Company’s financial results, audits and internal controls and communicate the results of those evaluations to management; |
(ii) | review the Company’s financial policies and procedures and direct changes as appropriate; |
(iii) | direct and oversee the performance of the Company’s internal audit function; |
(iv) | review of information security and cybersecurity risks; |
(v) | recommend the engagement of the Company’s independent auditors; |
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| (vi) | confer with the independent auditors regarding the adequacy of the Company’s financial controls and fiscal policy in accordance with generally accepted auditing standards; |
(vii) |
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(viii) | review the independent auditor’s procedures for ensuring its independence with respect to the services performed for the |
(ix) | review the Company’s compliance program annually, including the whistleblower program’s quarterly updates; and |
(x) | review all related party transactions. |
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The Board has determined that each member of the Audit Committee is “independent” pursuant to the Nasdaq rules, as well as the independence requirements for audit committee members under Rule 10A‑310A-3 promulgated under the Exchange Act. In addition, the Board has determined that Mr. Hendrickson, ChairpersonChair of the Audit Committee, is qualified as an audit committee financial expert, as that term is defined in the rules of the SEC. The Company’s Audit Committee Charter may be viewed on its website at www.OReillyAuto.com.
Human Capital and Compensation Committee
Number of Members:
| Three |
Members: | John R. Murphy (Chair), Jay D. Burchfield and Andrea M. Weiss |
Number of Meetings during 2022: | Four |
Purpose and Functions:
The purpose of the Human Capital and Compensation Committee is to
(i) | act on behalf of the Board with respect to the establishment and administration of the policies governing the annual compensation of the Company’s executive officers; |
(ii) | define and articulate the Company’s overall executive compensation philosophy and to administer and approve all elements of compensation for the Company’s executive officers and senior management; |
(iii) | review and approve the corporate goals and objectives relevant to the Chairman of the Board and CEO’s compensation; |
(iv) | evaluate the Chairman of the Board and CEO’s performance based on those goals and objectives; |
(v) | work with, and receive recommendations from, the Company’s Human Resources Department regarding the Company’s executive |
(vi) | oversee the awards and related actions under the Company’s various equity |
(vii) | provide oversight and guidance on all human capital management development efforts, including succession planning, recruiting and retention, and diversity and inclusion. |
Because the Company’s executive leadership is of critical importance to the Company’s success, the succession planning process is led by the Human Capital and Compensation Committee. This committee reviews the Company’s succession planning practices and procedures and makes recommendations to the Board concerning succession developments, while ensuring the appropriate succession plans are in place for key executive positions.
The Committee has the authority to retain consultants and advisors, as it may deem appropriate in its discretion. The Committee has, from time to time, historically utilized third party compensation survey data and/or outside consultant advisors in order to achieve its goal of attracting and retaining executive officers who contribute to the long-term success of the Company. During 2019,2022, the Company did not engageengaged Meridian Compensation Partners, LLC, an outside consultant advisor, for compensation advisory services. The Company’s Human Capital and Compensation Committee Charter may be viewed on its website at www.OReillyAuto.com.
Corporate Governance/Nominating Committee
Number of Members: | Four |
Members: | Dana M. Perlman (Chair), Thomas T. Hendrickson, Maria A. Sastre and Fred Whitfield |
Number of Meetings during 2022: | Four |
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Number of Members:Three
Members:Dana M. Perlman (Chairperson), John R. Murphy and Andrea M. Weiss
Number of Meetings during 2019:Four
Purpose and Functions:
The purpose of the Corporate Governance/Nominating Committee is to
(i) | establish criteria for the selection of Directors, identify any additional skills sets or attributes necessary to fill gaps on the current Board and to recommend to the Board the nominees for Director in connection with the Company’s Annual Meeting of the shareholders; |
(ii) | consider changes in principal employment of Directors and new directorships by Directors to ensure there are no conflicts of interest or loss of skill set; |
(iii) | take a leadership role in shaping the Company’s corporate governance policies and to issue and implement the Corporate Governance Principles of the Company; |
| (iv) | develop and coordinate annual evaluations of the Board, its committees and its members; |
| (v) | advise the Board regarding long-term Board succession; |
| (vi) | adhere to all legal standards required by the SEC and Nasdaq; and |
| (vii) | review and assess the Company’s environmental, sustainability, social and governance policies, goals and programs, and make recommendations to management based on their review and assessment. |
The Corporate Governance/Nominating Committee conducts an annual Board evaluation process to determine the effectiveness of the Board and as a tool to aid in continuous improvement. The Chair of the Corporate Governance/Nominating Committee, in partnership with the Company’s outside counsel, provides questionnaires to the Board, which are completed and returned directly to the Company’s outside counsel who compiles the responses and reports the results on an anonymous basis to the Corporate Governance/Nominating Committee Chair for evaluation and discussion with the Board’s Independent Lead Director and the Chairman of the Board. Topics in the questionnaire include:
| ● | Board effectiveness and leadership structure; |
| ● | Board member skills and performance; |
| ● | Board composition, including diversity; |
| ● | Board succession planning; |
| ● | Board committee effectiveness; and |
| ● | Board interaction and communication with Company management. |
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In recent years, the Board’s self-evaluation process has contributed to improve Board diversity, changes in Board committee membership and committee Chairs, increased focus on Board succession planning and Board refreshment and an increased focus and reporting on the Company’s environmental, sustainability, social and governance policies and programs, including enhanced shareholder outreach.
The Company’s Corporate Governance Principles may be viewed along with the Corporate Governance/Nominating Committee Charter on its website at www.OReillyAuto.com.
The Corporate Governance/Nominating Committee does not have a written policy on the consideration of Director Candidates recommended by shareholders. It is the view of the Board that all candidates, whether recommended by a shareholder or the Corporate Governance/Nominating Committee, shall be evaluated based on the same established criteria for persons to be nominated for election to the Board and its committees. The established criteria for persons to be nominated for election to the Board and its committees, taking into account the composition of the Board as a whole, at a minimum, includes
| a candidate’s qualification as “independent” under the federal securities laws and the rules and regulations of the SEC and Nasdaq applicable to the Board and each of its committees; |
| depth, breadth and diversity of experience within the Company’s industry and otherwise; |
| commitments outside of the Board and the ability to devote adequate time to Board and committee matters; |
| special areas of expertise; |
| accounting and financial knowledge; |
| willingness to apply sound and independent business judgment; |
| leadership ability; |
| experience in developing and assessing business strategies; |
| ● | corporate governance expertise; |
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| risk management skills; and |
| for incumbent members of the Board, the past performance of the incumbent director. |
The Corporate Governance/Nominating Committee is actively engaged with and regularly engagesevaluates and considers director succession for the members of its Board, lead director, and committees and committee chairs to ensure a mix of knowledge and abilities, expertise and tenure that promote and support the Company’s long-term success, while giving consideration to evolving skills, perspective and experience needed on the Board to perform its corporate governance role. In addition, when the Corporate Governance/Nominating Committee seeks a new candidate for directorship, it seeks qualifications from the individual that satisfy the established criteria for a person to be nominated and a candidate that will complement the attributes and perspective of the other members of the Board. As the Company’s strategic priorities and the composition of the Board evolve, the priorities and emphasis of qualifications the Corporate Governance/Nominating Committee is seeking in a candidate will change, from timeadapting to time.the Company’s strategic priorities. Individuals identified by the Corporate Governance/Nominating Committee as qualified to become directors are then recommended to the Board for nomination, and the Board determines the nominees for election after considering the recommendation and report of the Corporate Governance/Nomination Committee.
Finding qualified candidates interested in serving as director is of the highest level of importance to the Corporate Governance/Nominating Committee. As such, the Corporate Governance/Nominating Committee may use any and all appropriate methods at its disposal for identifying candidates for election. The Corporate Governance/Nominating Committee’s methods for identifying candidates for election to the Company’s Board include the solicitation of possible candidates from a number of sources, including engaging with outside search firms, from members of its Board, its executives individuals personally known to the members of its Board and other research. Shareholders wishing to recommend a candidate for nomination as a director are requested to send the recommendation in writing to O’Reilly Automotive, Inc. Corporate Governance/Nomination Committee, attention to Tricia Headley,Julie Gray, at 233 South Patterson Avenue, Springfield, Missouri 65802. The Board believes it is best qualified to evaluate candidates based on its knowledge of the Company’s business structure, and the Corporate Governance/Nominating Committee may retain one or more third-party search firms to identify suitable candidates.
The Corporate Governance/Nominating Committee’s ongoing efforts to ensure the appropriate breadth and depth of experience on the Board has resulted in the addition of four new independent directors in the past five years, as well as a rotation in the Independent Lead Director role over that same period. The Corporate Governance/Nominating Committee retained The Stewart Group, Inc. to assist with the search for a suitable candidate to fill the vacancy due to Mrs. Rosalie O’Reilly Wooten’s expected retirement from theremains intensely focused on Board at the end of the 2019 director term, resulting in the nomination of Ms. Maria A. Sastre.succession, including an emphasis on Independent Lead Director and board Committee chair succession and/or rotation.
Shareholder Nominations
A shareholder who desires to nominate one or more persons for election as director(s) shall deliver “timely notice” (as defined in Section 12, Article II of the Company’s Bylaws) of the shareholder’s intent to make such nomination or nominations, either by personal delivery or by United States mail, postage prepaid, to the Secretary of the Company at the Company’s address appearing on the first page of this proxy statement. In accordance with Section 13, Article II of the Bylaws, such notice shall set forth
(i) | the name and address of record of the shareholder who intends to make the nomination; |
(ii) | the class and number of shares of the capital stock that are beneficially owned by the shareholder on the date of such notice; |
(iii) | the name, age, business and residential addresses, and principal occupation or employment of each proposed nominee; |
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(iv) | a description of all arrangements or understandings between the shareholder and each nominee, and other arrangements or understandings known to the shareholder, pursuant to which the nomination or nominations are to be made by the shareholder; any other information regarding each proposed nominee that would be required to be included in a proxy statement filed with the SEC; and |
(v) | the written consent of each proposed nominee being so named to serve as a Director of the Company. |
The presiding officer of a meeting may, if the facts warrant, determine at the meeting that a nomination was not made in accordance with the foregoing procedure, and if he or she should make that determination, he or she shall so declare at the Annual Meeting, and the defective nomination shall be disregarded.
Risk Oversight
It is management’s responsibility to assess and manage the Company’s exposure to various risks and bring the Company’s most material risks to the Board’s attention. The Board has oversight responsibility offor the processes established to report and monitor systems for material risks applicable to the Company. In its oversight role, the Board annually reviews the Company’s strategic plan, which addresses, among other things, the risks and opportunities facing the Company.
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A quarterly risk overview is provided to the Board by the Company’s General Counsel and the Company’s Senior Vice President of Information Technology, and the Company’s Vice President of Treasury and Government Affairs, which details the Company’s current and potential risk exposure to litigation, self-insurance, information technology, cybersecuritysecurity and self-insurance.cybersecurity. In addition, quarterly operational updates and risk assessments are provided by Senior Vice Presidents of selected operational areas, including acquisitions, store operations, distribution operations, finance and real estate.
The Board has delegated certain risk management oversight responsibility to the Board committees, as detailed below. Each committee regularly reports to the full Board.
Audit Committee Risk Oversight
The Audit Committee provides risk management oversight for areas including economic, financial (such as accounting, credit, liquidity and tax), legal, compliance and regulatory risks. As part of its responsibilities as set forth in its charter, the Audit Committee is responsible for discussing with management the Company’s major financial risk exposures and the steps management has taken to monitor and control those exposures, including the Company’s risk assessment and risk management policies. Specific risk assessment areas include reviews of the Company’s Annual Corporate Risk Assessment, which uses the ISO 31000 framework, quarterly high risk scenario updates, quarterly information security and cybersecurity risk updates and a Management Status Report (which identifies the material strategic and operational Company business risks and the controls that respond to and mitigate those risks), the Company’s Code of Conduct and Ethics program compliance, related party transactions, insider trading policy compliance, the Company’s TIPS Hotline activity, the appropriate interpretation and application of new accounting standards, the internal auditor’s comprehensive audit plan and the external auditor’s independence and audit effectiveness. The Audit Committee also reviews, with management, the Company’s financial performance and financing arrangements and meets with the Company’s internal and external auditors to review the Company’s compliance with all applicable financial reporting and Sarbanes-Oxley requirements. The Audit Committee also reviews, with management, the status of the Company’s information security and cybersecurity programs and initiatives, business continuity planning and PCI compliance.
Human Capital and Compensation Committee Risk Oversight
The Human Capital and Compensation Committee provides risk management oversight for areas including compensation, retention, human capital management and diversity and inclusion risks. Specific risk assessment areas include reviews of executive officer succession planning, senior management development plans and approval of hiring, promotions and total compensation for the Company’s executives and senior management, including base salary, incentive compensation, benefits and perquisites to ensure they are market competitive and consistent with the Company’s performance goalscompensation philosophy and ensures that these compensation plans and arrangements do not create inappropriate risks. In addition, the Human Capital and Compensation Committee assesses risks for non-executive human capital management, including diversity and inclusion and recruiting and retention.
Corporate Governance/Nominating Committee Risk Oversight
The Corporate Governance/Nominating Committee provides risk management oversight for areas including director succession planning and skills assessment, operations, business, long-term strategy, competitive and reputation risks. Specific risk assessment areas include reviews of the Company’s corporate governance guidelines and their implementation, the Company’s Code of Conduct and Ethics program compliance, the Board committee charters, the Company’s Corporate Governance Principles, updates on shareholder activism and the Company’s environmental, social and governance policies and disclosures.
Under the oversight and direction of the Corporate Governance/Nominating Committee, the Company issuedissues its inaugural 2018annual Sustainability, Social, & Governance Report, in 2019, which illustrates the Company’s approach to human capital management, workforce diversity and inclusion, labor practices, environmental consciousness and governance initiatives. The Report is available on the Company’s website at www.OReillyAuto.com.
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Board Diversity
In selecting a Director nominee, the Corporate Governance/Nominating Committee focuses on skills,a diverse skill set, viewpoints, expertiseexperience and background that would complement the existing Board. While the Board does not have a formal policy on Board diversity as it relates to the selection of nominees for the Board, the Corporate Governance/Nominating Committee willdoes consider diversity in market knowledge, experience, employment, ethnicity, gender and geography among other factors. Decisions by the Board regarding continued servicenomination of Directors are made based on expected contributions to the Board in furtherance of the interests of shareholders.
| | | | |
Board Diversity Matrix | ||||
(as of December 31, 2022) | ||||
Total number of Directors | | 10 | | |
| Female | Male | Non-Binary | Did Not Disclose Gender |
Part I: Gender Identity | | | | |
Directors | 3 | 7 | — | — |
Part II: Demographic Background | | | | |
African American or Black | — | 1 | — | — |
Alaskan Native or Native American | — | — | — | — |
Asian | — | — | — | — |
Hispanic or Latinx | 1 | — | — | — |
Native Hawaiian or Pacific Islander | — | — | — | — |
White | 2 | 6 | — | — |
Two or more races or ethnicities | — | — | — | — |
| | | | |
LGBTQ+ | | — | | |
Did not disclose demographic background | | — | | |
| | | | |
Board Diversity Matrix | ||||
(as of December 31, 2021) | ||||
Total number of Directors | | 10 | | |
| Female | Male | Non-Binary | Did Not Disclose Gender |
Part I: Gender Identity | | | | |
Directors | 3 | 7 | — | — |
Part II: Demographic Background | | | | |
African American or Black | — | 1 | — | — |
Alaskan Native or Native American | — | — | — | — |
Asian | — | — | — | — |
Hispanic or Latinx | 1 | — | — | — |
Native Hawaiian or Pacific Islander | — | — | — | — |
White | 2 | 6 | — | — |
Two or more races or ethnicities | — | — | — | — |
| | | | |
LGBTQ+ | | — | | |
Did not disclose demographic background | | — | | |
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Director Skills and Composition Matrix
The Corporate Governance/Nominating Committee reviewed the core competencies that it believes should be represented on our Board and believes that the qualifications and skills set below reflect the appropriate mix of experiences that, taken together, provide the variety and depth of knowledge necessary for effective oversight, direction and vision for the Company. The following table highlights specific information concerning each Director nominee and the key experience or expertise, qualifications and skills they bring to our Board; their diversity, age, independence and tenure are included as well. A particular Director may possess additional experience, qualifications, attributes or skills, even if not expressly indicated.
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Director Skills and Composition Matrix | |||||||||||
December 31, 2022 | |||||||||||
| | Board of Directors | |||||||||
| Greg | David | Larry | Jay D. | Thomas T. | John R. | Dana M. | Maria A. | Andrea M. | Fred | |
Knowledge & Skills | Henslee | O’Reilly | O’Reilly | Burchfield | Hendrickson | Murphy | Perlman | Sastre | Weiss | Whitfield | |
Leadership: | | | | | | | | | | | |
| Public Company Board of | | | | * | * | * | * | * | * | |
| Director Experience | | | | | | | | | | |
| C-Suite Experience | * | * | * | * | * | * | * | * | * | * |
| Financial/Accounting | | | | | * | * | * | | | |
| Expertise | | | | | | | | | | |
Operational: | | | | | | | | | | | |
| Retail Industry Expertise | * | * | * | * | * | | * | * | * | * |
| Automotive Aftermarket | * | * | * | | | | | | | |
| Industry Expertise | | | | | | | | | | |
| Human Capital Management/ | * | * | | * | | * | | * | | * |
| Compensation Expertise | | | | | | | | | | |
| International Expertise | | | | | | * | * | * | * | |
| Strategic Planning/Capital | * | * | * | * | * | * | * | * | * | * |
| Allocation Expertise | | | | | | | | | | |
| Omnichannel Expertise | | | | | | | * | | * | * |
| Technology/Cybersecurity | | | | | * | * | | | * | |
| Expertise | | | | | | | | | | |
| Distribution/Supply Chain | * | * | * | | * | | | | | |
| Expertise | | | | | | | | | | |
| Real Estate Expertise | * | * | * | * | * | | * | * | * | |
Governance: | | | | | | | | | | | |
| Risk Assessment/Management | * | * | * | * | * | * | * | * | * | * |
| Expertise | | | | | | | | | | |
| Government/Regulatory/Public | | | | * | | | | * | | * |
| Policy Expertise | | | | | | | | | | |
| Business Ethics/Corporate | | | | | | | | | | |
| Sustainability and Social | | | * | * | * | * | * | * | * | * |
| Responsibility Expertise | | | | | | | | | | |
| | | | | | | | | | | |
Demographic Background | | | | | | | | | | | |
Gender (Male/Female/Non-Binary) | M | M | M | M | M | M | F | F | F | M | |
Age (at May 18, 2023) | 62 | 73 | 76 | 77 | 68 | 72 | 42 | 67 | 68 | 64 | |
| | | | | | | | | | | African |
Diversity (race/ethnicity) | White | White | White | White | White | White | White | Hispanic | White | American | |
Independence | | | | * | * | * | * | * | * | * | |
Board tenure (at May 18, 2023) | 5 | 51 | 54 | 26 | 13 | 20 | 5 | 3 | 4 | 1 | |
Compensation of Directors
Independent Directors
Independent Directors are paid an annual fee and meeting feesretainer for attendance at each Board and Committee meeting, withservice to the Board. The Independent Lead Director receivingis paid an additional annual fee for service on the Board. Each Committee ChairpersonChair is paid an additional annual fee for service as chairpersonchair of each respective Committee.
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To assist the Company in recruiting and retaining qualified Directors, the Company also awards each independent Director an annual restricted share award that vests annually in equal installments overone installment after a three-yearone-year period. Upon resignation from the Board for any reason other than retirement, death or disability, all outstanding, unrestedunvested equity awards are immediately forfeited. The Board makes an annual determination of the number of restricted shares to be awarded to everyeach independent Director.
The following table summarizes the compensation paid to the independent Directors, including stock awards, for the year ended December 31, 2019:2022:
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Annual retainer |
| $ | 110,000 | |
Annual Independent Lead Director fee | | $ | 35,000 | |
Committee Chair fees | | $ | 25,000 | Audit Committee |
| | $ | 21,500 | Human Capital and Compensation Committee |
| | $ | 17,000 | Corporate Governance/Nominating Committee |
Restricted stock | | In May of 2022, each independent Director was awarded a number of restricted shares valued at approximately $157,000. These restricted shares vest in one installment after a one-year period. In May of 2022, each independent Director received 248 restricted shares awarded at a price of $635.62 per share. | ||
Non-qualified stock options | | No stock option awards were granted during 2022. | ||
Independent Director retainers and fees in the aggregate amount of $493,750$849,125 were paid during 20192022 and independent Director restricted stock awards with an aggregate fair value of $700,602$1,103,438 were granted in 2019.2022.
Affiliated Directors
The Affiliated Director compensation plan provides for an annual cash retainer of $230,000 and quarterly meeting fees of $2,500$273,000 for attendance at eachservice to the Board, meeting to affiliated Directors (including, for the 2019 term,this includes Larry O’Reilly and Rosalie O’Reilly Wooten).O’Reilly. Affiliated Directors are not paid any other fee amounts and are not granted equity awards in their capacity as directors.
Greg Henslee and David O’Reilly and Greg Henslee do not receive any additional compensation for services they provide as Directors and are compensated solely for the services they provide as executive officers.
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The following table summarizes the compensation paid to all Directors for the year ended December 31, 2019,2022, other than Greg Henslee and David O’Reilly and Greg Henslee whose compensation is fully reflected in the “Summary Compensation Table” portion of this proxy statement:
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| | and Fees | | | | | | | | Nonqualified | | | | | ||||||||||||||
| | Earned or | | | | | | Non-Equity | | Deferred | | | | | ||||||||||||||
| | Paid In | | Stock | | Option | | Incentive Plan | | Compensation | | All Other | | | ||||||||||||||
| | Cash | | Awards (a) | | Awards | | Compensation | | Earnings | | Compensation | | Total | ||||||||||||||
Name |
| ($) |
| ($) (a) |
| ($) |
| ($) |
| Earnings |
| ($) (b) |
| ($) | | ($) | | ($) | | ($) | | ($) |
| ($) | | ($) | | ($) |
Larry O’Reilly |
| 236,539 |
| — |
| — |
| — |
| — |
| 352 |
| 236,891 |
| 268,500 |
| — |
| — |
| — |
| — |
| — |
| 268,500 |
Rosalie O’Reilly Wooten (c) |
| 236,539 |
| — |
| — |
| — |
| — |
| — |
| 236,539 | ||||||||||||||
Jay D. Burchfield |
| 102,750 |
| 140,120 |
| — |
| — |
| — |
| — |
| 242,870 |
| 141,000 |
| 157,634 |
| — |
| — |
| — |
| — |
| 298,634 |
Thomas T. Hendrickson |
| 102,750 |
| 140,120 |
| — |
| — |
| — |
| — |
| 242,870 |
| 131,000 |
| 157,634 |
| — |
| — |
| — |
| — |
| 288,634 |
John R. Murphy |
| 99,250 |
| 140,120 |
| — |
| — |
| — |
| — |
| 239,370 |
| 127,750 |
| 157,634 |
| — |
| — |
| — |
| — |
| 285,384 |
Dana M. Perlman |
| 96,875 |
| 140,120 |
| — |
| — |
| — |
| — |
| 236,995 |
| 123,875 |
| 157,634 |
| — |
| — |
| — |
| — |
| 281,509 |
Ronald Rashkow (d) |
| 24,625 |
| — |
| — |
| — |
| — |
| — |
| 24,625 | ||||||||||||||
Maria A. Sastre |
| 108,500 |
| 157,634 |
| — |
| — |
| — |
| — |
| 266,134 | ||||||||||||||
Andrea M. Weiss |
| 67,500 |
| 140,120 |
| — |
| — |
| — |
| — |
| 207,620 | | 108,500 | | 157,634 | | — | | — | | — | | — | | 266,134 |
Fred Whitfield | | 108,500 | | 157,634 | | — | | — | | — | | — | | 266,134 | ||||||||||||||
(a) | Stock awards granted to Directors represent restricted shares, which vest in |
| | | | |
| | Stock Awards | ||
| | Number of Shares or Units of Stock That | | Market Value of Shares or Units of Stock That |
| | Have Not Vested (i) | | Have Not Vested |
Name |
| (#) | | ($) |
Jay D. Burchfield | | 248 | | 209,319 |
Thomas T. Hendrickson |
| 248 | | 209,319 |
John R. Murphy |
| 248 | | 209,319 |
Dana M. Perlman |
| 248 | | 209,319 |
Maria A. Sastre | | 248 | | 209,319 |
Andrea M. Weiss |
| 248 | | 209,319 |
Fred Whitfield |
| 248 | | 209,319 |
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| Market Value of Shares or Units of Stock That | |
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| Not Vested |
| Have Not Vested | |
Name |
| (#) |
| ($) | |
Jay D. Burchfield |
| 895 | (i) |
| 392,243 |
Thomas T. Hendrickson |
| 895 | (i) |
| 392,243 |
John R. Murphy |
| 895 | (i) |
| 392,243 |
Dana M. Perlman |
| 826 | (ii) |
| 362,003 |
Andrea M. Weiss |
| 381 | (iii) |
| 166,977 |
(i) | Represents restricted shares granted on May |
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In addition, all Directors are reimbursed for reasonableappropriate travel and other out-of-pocket expenses incurred in connection with attendance at Board meetings.
Human Capital and Compensation Committee Interlocks and Insider Participation
No member of the Human Capital and Compensation Committee is now, nor has ever been, an officer or an employee of the Company or any of its subsidiaries. None of the Company’s executive officers served as a director or as a member of a compensation committee (or other committee serving an equivalent function) of any other entity one of whose executive officers served as a director of the Company or a member of the Human Capital and Compensation Committee during 2019.2022.
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20
COMPENSATION OF EXECUTIVE OFFICERS
Compensation Discussion and Analysis
This section describes the compensation packages of the Company’s principal executive officer, principal financial officer, and three other most highly compensated officers, as well as the Executive Chairman of the Board and Executive Vice Chairman of the Board, who were employed by the Company on December 31, 20192022 (such individuals are referred to as the “Named Executive Officers” or “NEOs” in this proxy statement). The NEOs and their positions are identified below:
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| Gregory D. Johnson |
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| ● | Brent Kirby – Executive Vice President and Chief Supply Chain Officer (Effective January 9, 2023, Mr. Kirby’s title changed to Co-President.) |
| ● | Tom McFall– Executive Vice President (Mr. McFall’s title changed from Executive Vice President and Chief Financial Officer to Executive Vice President on May 9, 2022.) |
Executive summary
The Human Capital and Compensation Committee of the Board is responsible for reviewing the performance of the Company’s NEOs, Executive Vice Presidents and Senior Vice Presidents (together,(collectively, its “executive officers”), recommending to the Board compensation packages and specific compensation levels for its executive officers and other management team members, establishing policies and guidelines for other benefit programs and administering the award of stock options and other stock-based incentives under the Company’s incentive plans.
At the 20192022 Annual Meeting, over 95%86% of the votes cast in the advisory vote on executive compensation, which were present and entitled to vote on the matter, were in favor of the compensation of the Company’s NEOs as disclosed in the 20192022 proxy statement. The Board believes that the outcome of this proposal evidences the commitment of the Human Capital and Compensation Committee to maintain open dialogue with the Company’s shareholders regarding the Company’s executive compensation program, and the Human Capital and Compensation Committee has and will continue to consider these voting results and shareholder sentiments generally as it formulates and implements an executive compensation program designed to align the long-term interests of the Company’s executive officers with the interests of its shareholders.
The policies and procedures of the Human Capital and Compensation Committee are designed to assist the Board in its oversight of the implementation and effectiveness of its policies and strategies regarding the investment in the Company’s most important asset,asset: its employees (whom the Company refers to as “Team Members”). These strategies and policies include, but are not limited to,to:
| building an increasingly diverse and inclusive Team; |
● | recruiting and retaining qualified Team Members; |
| supporting the career development and progression of Team Members; |
| management succession, in conjunction with the Company’s Corporate Governance/Nominating Committee; and |
| other employment practices. |
Compensation objectives and philosophy
The main objective of the Company’s compensation philosophy is to provide its executive officers and management with a total compensation package that is competitive and equitable, and which encourages and rewards performance based in part upon the Company’s performance in terms of increases in long-term shareholder value. The Company’s compensation objectives include both long-term, share-based incentives and short-term, cash incentives. The Company believes that aligning the interests of its executives and management with those of its shareholders further promotes the success of not only the Company, but also its Team Members.
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Risk assessment of compensation programs
The Human Capital and Compensation Committee has reviewed the potential effects of the various components of the Company’s executive officers’ compensation and benefits programs on individual and collective behavior and, ultimately, on itsthe Company’s risk profile and overall approach to risk management. During its review, theThe Human Capital and Compensation Committee focusedfocuses on the Company’s short-term incentives, long-term incentives, and change in control benefits as having the greatest potential to create incentives for individual or collective risk taking. Following a thorough review of these and the other components of the Company’s compensation and benefits programs, the Human Capital and Compensation Committee has determined that the programs do not create any incentives with respect to individual or collective behavior that are likely to have a material adverse effect upon either itsthe Company’s risk profile or overall approach to risk management.
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Additionally, the Company’s non-executive officer and management compensation policies and practices do not excessively incentivize or create need for inappropriate risk-taking by its Team Members, and therefore, it is not reasonably likely that the current compensation policies and practices would have a material adverse effect on the Company.
Overview of compensation programs
The key elements of the compensation packages for the Company’s executive officers, including the NEOs, are base salary, annual cash incentive compensation and long-term, share-based incentives. In determining the composition of elements in each compensation package, the Human Capital and Compensation Committee aims to create a balanced set of rewards, utilizing market-driven influences and external compensation benchmarks, as well as the Company’s current cash considerations.benchmarks. To ensure that the Company thrives in the competitive talent market, the Human Capital and Compensation Committee reviews industry resources, references and other benchmark reports to determine competitive market ranges and reasonable levels of compensation.compensation and, when appropriate, will utilize third party compensation survey data and/or outside consultant advisors to achieve this objective, which are used for context in reviewing the overall compensation levels and maintaining a reasonable and competitive compensation program.
In reviewing the compensation packages of each of the Company’s executive officers and management, the Human Capital and Compensation Committee tallies the correspondingaggregate dollar value of each element of an individual’s compensation, including salary, incentive compensation, accumulated realized and unrealized share-based compensation gains, the dollar value to such individual and cost to the Company of all perquisites and other personal benefits the earnings and accumulated benefits under the Company’s non-qualified deferred compensation program and the potential impact of several potential severance and change-in-control scenarios. For new appointments to senior executive management, the Company’s management presents compensation recommendations to the Human Capital and Compensation Committee for consideration.
Competitive assessments
The Company’s Human Resources Department, utilizing both publicly available and third-party compiled data, provides the Human Capital and Compensation Committee with industry benchmark information and compensation survey data from the companies in its peer group, including peer salary, bonus, incentive compensation, share-based compensation and other compensation. The Compensation Committee considers the Company’s relative performance compared with an established group of peer companies in the automotive aftermarket industry, other specialty retailers.
The group of peer companies is reviewed annually by the Human Capital and Compensation Committee to ensure that the comparisons are meaningful. The Human Capital and Compensation Committee evaluates retail peers that conduct business outside of the automotive aftermarket industry based on criteria such as revenue, operating margin, net income, market capitalization, team member count and oneone- and three yearthree-year total shareholder returns, as applicable. In addition to these key financial and operational metrics, the Human Capital and Compensation Committee also evaluates potential peers based on competition for team member recruitment and companies whose general customer demographics are similar to those of O’Reilly’s.the Company.
Based on its annual review using the previously described criteria, theThe Human Capital and Compensation Committee removed seven companies from the prior year’s peer group and added seven companies toconsiders the Company’s 2019relative performance compared with the established group of peer group. The companies added and removed from the peer group are identified in the following table:
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The Company’s 2019 peer group members are identified in the following table:
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The range, meanautomotive aftermarket industry and median revenueother specialty retailers and market capitalization of the Company’s 2019 peer group, as well as those metrics for O’Reilly, as of December 31, 2019, are identified in the following table (in billions):
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| December 31, 2019 | ||
| Revenue |
| Market Capitalization |
Peer Group : |
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Range | $6.89 - $27.25 |
| $0.40 - $53.77 |
Mean | $ 14.55 |
| $ 16.49 |
Median | $ 12.54 |
| $ 12.17 |
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O’Reilly Automotive, Inc. | $ 10.15 |
| $ 33.14 |
The Compensation Committee also considers broad-based survey data compiled by a third-party, Equilar, Inc., ofincluding total compensation for top management at companies with total revenues comparable to the total revenues of the Company. The Compensation Committee uses the industryHuman Capital and market survey data for context in reviewing the overall compensation levels and maintaining a reasonable and competitive compensation program. The Compensation Committee does not use this data or peer group data to set specific compensation benchmarks for a position or for any element of compensation. Rather, the Compensation Committee evaluatescompensation but, rather, to evaluate the overall performance of the Company and the individual performance of management to set compensation at reasonable and competitive levels.
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Based on its annual review using the previously described criteria, the Human Capital and Compensation Committee made no changes to the Company’s 2022 peer group. The Company’s 2022 peer group members are identified in the following table:
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2022 Peer Group | ||||||
Peer Name | | Peer Ticker Symbol | | Peer Name | | Peer Ticker Symbol |
Advance Auto Parts, Inc. | | AAP | | Dollar Tree, Inc. | | DLTR |
AutoNation, Inc. | | AN | | Foot Locker, Inc. | | FL |
AutoZone, Inc. | | AZO | | Genuine Parts Company | | GPC |
Bed Bath & Beyond Inc. | | BBBY | | LKQ Corporation | | LKQ |
Big Lots, Inc. | | BIG | | Lowe’s Companies, Inc. | | LOW |
CarMax, Inc. | | KMX | | Ross Stores, Inc. | | ROST |
Darden Restaurants, Inc. | | DRI | | The Sherwin-Williams Company | | SHW |
Dick’s Sporting Goods, Inc. | | DKS | | Tractor Supply Company | | TSCO |
Dollar General Corporation | | DG | | W.W. Grainger, Inc. | | GWW |
The range, mean and median revenue and market capitalization of the Company’s 2022 peer group, as well as those metrics for O’Reilly, for the twelve months ended December 31, 2022, or of the most recently completed period end, are identified in the following table (in billions):
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| Revenue | | Market Capitalization |
Peer Group: | | | |
Range | $5.66 - $95.95 | | $0.29 - $119.86 |
Mean | $21.48 | | $27.57 |
Median | $15.90 | | $20.51 |
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O’Reilly Automotive, Inc. | $14.41 | | $52.63 |
Base salary
The Company provides competitive annual base salaries to its executive officers and management in recognition of their job responsibilities.responsibilities and performance. In determining annual base salary, it is the Human Capital and Compensation Committee’s goal to bring the salaries of the Company’s executive officers and management in line with base compensation being paid by its peer group. The Human Capital and Compensation Committee specifically reviews compensation information from the publicly traded automotive aftermarket companies in its peer group and compensation surveys and data from the other specialty retailers in its peer group. The Human Capital and Compensation Committee believes that the Company’s principal competitors for its executive officers are not necessarily the same companies that would be included in a peer group compiled for purposes of comparing shareholder returns. Consequently, the companies that are reviewed for such compensation purposes may not be the same as the companies comprising the indices included in the Annual Report of the Company for 20192022 that accompanies this proxy statement. The Human Capital and Compensation Committee increased base salary levels in 20192022 for the Company’s NEOs to maintain compensation at competitive levels and to reflect Company performance and the individual performance of each of its NEOs.
Incentive compensation plan
The Company provides competitive annual incentive compensation as a percent of base salary based on achievement of certain objective performance goals established by the Human Capital and Compensation Committee each year in order to motivate attainment of short-term goals, link annual cash compensation to achievement of annual priorities and reward individual performance and contributions.
At the beginning of each year a comprehensive operating plan is developed, which contains estimates for the Company’s projected performance for the year, by reviewing the Company’s historical performance, trends in the automotive aftermarket and retail industry, and the performance of industry peers and other comparable companies.general economic conditions. The targets for the incentive compensation plans set by the Human Capital and Compensation Committee generally correspond to this operating plan. The comprehensive operating plan for the 20192022 fiscal year was approved by the Board in JanuaryFebruary of 20192022 and reflects the projected results for the 20192022 fiscal year. The Company’s actual performance in each of the target areas is compared to the individual targets predetermined by the Human Capital and Compensation Committee to determine the incentive amount, if any, earned by each executive officer. Upon achievement of such performance goals, executive officers receive incentive compensation based upon a percentage of their respective base salaries for the attainment of a defined performance goal.
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The overall potential valuecompensation varies depending upon the executive’s position; however, under the Company’s 2017 Incentive Award Plan, the maximum aggregate amount of cash compensation that may be paid to any one participant in any year is $10,000,000. For 2019,2022, the Company’s Chief Executive Officer, Mr. Johnson, andhad a target of 100% of his individual base salary, which was the same position level salary target applicable in 2021. For 2022, the Company’s Chief Operating Officer, Mr. Shaw,Beckham, Chief Financial Officer,
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Mr. Fletcher, Chief Supply Chain Officer, Mr. Kirby, and Executive Vice President, Mr. McFall, had cumulative targets of 100%80% of their individual base salaries, and its Chief Financial Officer, Mr. McFall, had a cumulative target of 80% of his individual base salary, which were, in each case, the same position level salary targets applicable in 2018.2021, except for Mr. Fletcher, whose target was 50%. The Board sets performance target achievement levels for its executives that are challenging enough to require strong and consistent effort by the executives to be achieved and such that the Company’s actual performance above projections would result in payouts above target levels and would likely also result in an increase in total shareholder value. Over the last five years, annual incentive payouts under the executive incentive compensation plan have been below target one time and exceeded target fourfive times, ranging from 15%104% to 245%765% of target during this period of time, and over that same period, the value of the Company’s stock, and associated total shareholder value,return, increased 128%352%.
The performance metrics, weighting, targets, actual results and achievement levels utilized by the Human Capital and Compensation Committee for calculating the incentive compensation payable to each of the NEOs for the year ended December 31, 2019,2022, are identified in the table below:
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Performance Metric |
| (%) |
| Threshold |
| Target |
| Actual |
| (%) | | (%) | | Threshold | | Target | | Actual | | (%) | ||||||||||||
Comparable store sales (a) |
| 30 |
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| 2.5 | % |
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| 4.0 | % |
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| 4.0 | % |
| 29.6 |
| 30 |
| | 4.5 | % | | | 6.0 | % | | | 6.4 | % | | 37.3 |
Operating income (in thousands) |
| 30 |
| $ | 1,855,000 |
| $ | 1,925,000 |
| $ | 1,920,726 |
| 28.5 |
| 30 | | $ | 2,903,000 | | $ | 2,993,000 | | $ | 2,954,491 | | 19.3 | ||||||
Return on invested capital (b) |
| 20 |
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| 35.65 | % |
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| 37.65 | % |
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| 38.74 | % |
| 27.5 |
| 20 | |
| 57.32 | % | |
| 61.75 | % | |
| 71.44 | % | | 52.8 |
Free cash flow (in thousands) (c) |
| 20 |
| $ | 858,000 |
| $ | 1,065,000 |
| $ | 1,020,649 |
| 18.5 |
| 20 | | $ | 1,221,000 | | $ | 1,488,000 | | $ | 2,371,123 | | 69.6 | ||||||
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| | 179.0 | ||||||||||||||||
(a) | Calculated based on the change in sales for U.S. stores open at least one year and |
(b) | Calculated as net income, excluding excess tax benefit from share-based compensation payments, plus interest expense, divided by the sum of average debt and average equity, less average cash. |
(c) | Calculated as net cash provided by operating activities, less capital expenditures, excess tax benefit from share-based compensation payments and investment in tax credit equity |
The following table summarizes the 20192022 performance incentive compensation plan salary targets and the resulting payouts for each of the Company’s NEOs who participated in the plan:
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| Incentive |
| | Base Salary |
| Target |
| Target |
| Achievement | | Achieved (a) |
Named Executive Officer | | ($) | | (%) | | ($) | | (%) | | ($) |
Gregory D. Johnson | | | | | | | | | | |
President and Chief Executive Officer |
| 1,425,000 |
| 100 | | 1,425,000 |
| 179.0 |
| 2,550,499 |
Brad Beckham | | | | | | | | | | |
Executive Vice President and Chief Operating Officer | | 600,000 | | 80 | | 480,000 | | 179.0 | | 859,116 |
Jeremy Fletcher (b) | | | | | | | | | | |
Executive Vice President and Chief Financial Officer | | 550,000 | | 80 | | 440,000 | | 179.0 | | 787,523 |
Brent Kirby | | | | | | | | | | |
Executive Vice President and Chief Supply Chain Officer | | 600,000 | | 80 | | 480,000 | | 179.0 | | 859,116 |
Tom McFall (b) | | | | | | | | | | |
Executive Vice President |
| 500,000 |
| 80 |
| 400,000 |
| 179.0 |
| 715,930 |
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| Base Salary |
| Target |
| Target |
| Achievement |
| Incentive Achieved |
Named Executive Officer |
| ($) |
| (%) |
| ($) |
| (%) |
| ($) |
Gregory D. Johnson, Chief Executive Officer |
| 1,000,000 |
| 100 |
| 1,000,000 |
| 104.1 |
| 1,041,229 |
Jeff M. Shaw, Chief Operating Officer |
| 750,000 |
| 100 |
| 750,000 |
| 104.1 |
| 780,921 |
Tom McFall, Chief Financial Officer |
| 800,000 |
| 80 |
| 640,000 |
| 104.1 |
| 666,386 |
| (a) | Performance incentive compensation plan has a maximum payout of $10,000,000 per participant. |
(b) | Effective May 9, 2022, Jeremy Fletcher was promoted to Executive Vice President and Chief Financial Officer, and at that time, Tom McFall’s title changed from Executive Vice President and Chief Financial Officer to Executive Vice President. |
Greg Henslee and David O’Reilly, and Greg Henslee, in consultation with the Human Capital and Compensation Committee, have elected to exclude themselvesare excluded from participation in the annual cash incentive compensation plan pursuant to their responsibilities of providing strategic direction and guidance to the Company and their more limited role in the Company’s day-to-day operational activities.
Long-term, stock-based incentives
The Company offers long-term incentives for executive officers and management in the form of stock option and restricted stock awards. Stock options and restricted stock may be awarded to the Company’s NEOs, upper- and middle-managers and other key personnel.
The Company believes that its stock-based incentive award programs are an important component of compensation as an incentive forto drive long-term corporate performance. The Human Capital and Compensation Committee has determined that the annual award of restricted stock or grant of
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stock options to the Company’s executive officers is a key component of each executive officer’s total compensation package based on histheir duties. The amounts of such restricted stock awards and/or stock option grants are determined by the Human Capital and Compensation Committee annually in conjunction with performance reviews and salary adjustments during the JanuaryFebruary Human Capital and Compensation Committee meeting. In determining whether and how many restricted stock awards and/or stock options should be granted, the Human Capital and Compensation Committee considers the responsibilities and senioritylevel of each of the executive officers, as well as the Company’s financial performance and other factors as it deems appropriate, consistent with its compensation philosophy and policies. The restricted stock awards and stock options awarded by the Human Capital and Compensation Committee in 2019,2022, as reflected in the “Grants of Plan Based Awards” table, include an annual award of restricted stock or grant of stock options, as the case may be, determined by the Human Capital and Compensation Committee in consideration of the factors described above.
In the past, the Human Capital and Compensation Committee has reviewed and considered using other equity-based incentives for the long-term compensation component. After a thorough analysis, including an analysis of the equity grant practices of our peer group companies,
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stock options and restricted stock awards were determined to be the most effective methods of aligning management interests with those of the Company’s shareholders.
The Human Capital and Compensation Committee has also established specific stock option awards to be granted upon the achievement of certain defined positions of employment.advancements in position. These are automaticposition grants that occur on the date of promotion or appointment to such positions with an option price equal to the closing market value of the common stock underlying the option on such date. It is the Company’s belief that these position-related grants provide an additional incentive tosignificantly increase the retention, motivation and overall performance of its executives, management and other Team Members to set personal long-term employment goals.Members. In furtherance of this belief, the Company also has a Team Member stock purchase plan that enables Team Members to purchase itsO’Reilly common stock at a discount through payroll deductions, and Team Members are also able to invest in the Company’s common stock through its 401(k) plan. In addition, the Compensation Committee may grant stock option awards in connection with a material business event, such as a large acquisition. The Compensation Committee believes that these special stock option awards provide an additional incentive to the Company’s executive officers, management and other Team Members to ensure these material acquisitions are integrated effectively and efficiently.
Other
The Company sponsors a 401(k) Profit Sharing and Savings Plan (the “401(k) Plan”) that allows Team Members to make plan contributions on a pre-tax basis. The Company matches 100% of the first 2% of the Team Member’s compensation, and 25% of the next 4% of the Team Member’s compensation.
Although executives are eligible to participate in the 401(k) Plan, the application of the annual limitations on contributions under Section 401(a)(17) of the Internal Revenue Code of 1986, as amended (the “Code”) prevents highly compensated employees, as defined by the Code, from participating at the same levels as non-highly compensated employees. The Company has established the O’Reilly Automotive Deferred Compensation Plan (the “Deferred Compensation Plan”), which is intended to restore contributions lost because of the application of the annual limitations under the Code that are applicable to the 401(k) Plan. The Deferred Compensation Plan provides executives who participatewhose participation in the 401(k) Plan is limited with the opportunity to defer the full 6% of covered compensation, including salary and incentive-based compensation, by making contributions to the Deferred Compensation Plan that are then matched by the Company as if they had been made under the 401(k) Plan. This benefit, which assists executives in accumulating funds for retirement, is consistent with observed competitive practices of similarly situated companies.
Section 162(m) (“Section 162(m)”) of the Code generally disallows a tax deduction to publicly held companies for compensation paid to certain executive officers, to the extent that compensation exceeds $1 million per officer in any year. The Human Capital and Compensation Committee believes that in establishing the cash and equity incentive compensation programs for the Company’s executive officers, the potential deductibility of the compensation payable under those programs should be only one of a number of relevant factors taken into consideration, and not the sole governing factor. Accordingly, the Human Capital and Compensation Committee may provide one or more executive officers with the opportunity to earn base and incentive compensation, whether through base salary, cash incentive basedincentive-based compensation programs tied to the Company’s financial performance or share-based awards in the form of restricted stock or stock options, which may be in excess of the amount deductible by reason of Section 162(m) or other provisions of the Code. The Company believes it is important to maintain incentive compensation at the requisite level to attract and retain the executive officers essential to the Company’s financial success, even if all or parta portion of that compensation may not be tax deductible by reason of the Section 162(m) limitation.
In addition, the Company provides its executive officers with certain perquisites, which the Human Capital and Compensation Committee believes are reasonable and consistent with the objectives of attracting and retaining superior Team Members,talent, as well as maintaining a competitive total compensation package for the executive officers. Perquisites can include personal use of a Company automobile, personal use of the Company plane, reimbursement for health and country club memberships and reimbursements under the Company’s executive management medical reimbursement benefit plan. Perquisite amounts for the Company’s NEOs are included in the “Summary Compensation Table” in the column “All Other Compensation.”
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The Company has entered into change in control severance agreements with its NEOs. These are described in the “Potential Payments on Termination or Change in Control” and “Employment Arrangements with Executive Officers” sections of the narrative disclosure to the “Summary Compensation Table.”
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Compensation mix
The following table summarizes the Company’s actual compensation mix that resulted in 20192022 from the compensation programs and practices described above, which includes base salary, restricted stock awards or stock options, non-equity incentive compensation and/or other benefits, for each of its NEOs:
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| Stock |
| Incentive |
| Other |
| Total | ||||||
Named Executive Officer |
| Salary |
| Awards |
| Options |
| Compensation |
| Benefits |
| Compensation | ||||||
David O’Reilly, Chairman of the Board |
| 64 | % |
| 32 | % |
| — | % |
| — | % |
| 4 | % |
| 100 | % |
Greg Henslee, Executive Vice Chairman of the Board |
| 63 | % |
| 32 | % |
| — | % |
| — | % |
| 5 | % |
| 100 | % |
Gregory D. Johnson, Chief Executive Officer |
| 32 | % |
| — | % |
| 32 | % |
| 34 | % |
| 2 | % |
| 100 | % |
Jeff M. Shaw, Chief Operating Officer |
| 32 | % |
| — | % |
| 32 | % |
| 33 | % |
| 3 | % |
| 100 | % |
Tom McFall, Chief Financial Officer |
| 34 | % |
| — | % |
| 34 | % |
| 29 | % |
| 3 | % |
| 100 | % |
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| | | Restricted | | | | Non-Equity | | | | | ||||||
| | Base | | Stock | | Stock | | Incentive | | Other | | Total | ||||||
Named Executive Officer | | Salary | | Awards | | Options | | Compensation | | Benefits | | Compensation | ||||||
Greg Henslee | | | | | | | | | | | | | | | | | | |
Executive Chairman of the Board |
| 63 | % | | 32 | % | | — | % | | — | % | | 5 | % | | 100 | % |
David O’Reilly | | | | | | | | | | | | | | | | | | |
Executive Vice Chairman of the Board |
| 64 | % | | 32 | % | | — | % | | — | % | | 4 | % | | 100 | % |
Gregory D. Johnson | | | | | | | | | | | | | | | | | | |
President and Chief Executive Officer |
| 26 | % | | — | % | | 25 | % | | 47 | % | | 2 | % | | 100 | % |
Brad Beckham | | | | | | | | | | | | | | | | | | |
Executive Vice President and Chief Operating Officer | | 19 | % | | — | % | | 51 | % | | 28 | % | | 2 | % | | 100 | % |
Jeremy Fletcher (a) | | | | | | | | | | | | | | | | | | |
Executive Vice President and Chief Financial Officer | | 20 | % | | — | % | | 46 | % | | 33 | % | | 1 | % | | 100 | % |
Brent Kirby | | | | | | | | | | | | | | | | | | |
Executive Vice President and Chief Supply Chain Officer | | 19 | % | | — | % | | 51 | % | | 28 | % | | 2 | % | | 100 | % |
Tom McFall (a) | | | | | | | | | | | | | | | | | | |
Executive Vice President |
| 28 | % | | — | % | | 39 | % | | 31 | % | | 2 | % | | 100 | % |
(a) | Effective May 9, 2022, Jeremy Fletcher was promoted to Executive Vice President and Chief Financial Officer, and at that time, Tom McFall’s title changed from Executive Vice President and Chief Financial Officer to Executive Vice President. |
Clawback policy
The Board is dedicated to maintaining and enhancing a culture that is focused on integrity and accountability while tying compensation to the Company’s performance. The Board, following a recommendation by the Human Capital and Compensation Committee, adopted an incentive compensation clawback policy (the “Policy”) in 2014. Each of the Company’s NEOs has signed an acknowledgement agreeing to comply with the provisions of the Policy. The Policy is intended to provide an appropriate and effective incentive compensation recoupment program and to offer a balanced approach to aligning the interests of the Company’s NEOs and shareholders.program.
The adopted Policy specifically provides that if the Board or the Human Capital and Compensation Committee determines that incentive compensation of a current or former NEO was overpaid as a result of a restatement of the reported financial results of the Company due to material non-compliance with financial reporting requirements that resulted from the fraud or willful misconduct of the covered employee, then the Board or the Human Capital and Compensation Committee will review the incentive compensation paid, granted, vested or accrued based on the prior inaccurate results. The Policy also provides that, to the extent practicable, and as permitted by applicable law, the Board or Human Capital and Compensation Committee will determine whether to seek to recover or cancel the difference between any incentive compensation that was based on having met or exceeded performance targets that would not otherwise have been met based upon accurate financial data and the incentive compensation that would have been paid or granted or that would have vested had the actual payment, granting or vesting been calculated based on the accurate data or restated results, as applicable.
The Policy applies to all incentive compensation granted, paid or credited after the Policy’s adoption by the Board, except to the extent prohibited by applicable law or any other legal obligation of the Company. “Incentive compensation” means performance bonuses and incentive awards (including stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares or other stock-based awards) paid, granted, vested or accrued under any Company plan or agreement in the form of cash or Company common stock.
In 2022, the SEC adopted final rules implementing the incentive-based compensation recovery provisions of the Dodd-Frank Act. The Company intends to review and revise its current recoupment policies and/or adopt a new recoupment policy, to comply with the new requirements, once the Nasdaq listing standards become effective.
31
Prohibition on Pledging and Hedging Company Securities
During 2019, the Board amended theThe Company’s Insider Trading Policy to specifically prohibitprohibits Directors and Named Executive Officers from hedging or pledging Company securities. These covered persons may not enter into hedging or monetization transactions with respect to Company securities, and they cannot hold Company securities in a margin account or pledge Company securities as collateral for a loan. ThisThe Board believes this policy change was instituted to further ensure thatensures the interests of these covered persons will remain aligned with those of the Company’s security holders and so these individuals will continue to be incentivized to execute the Company’s long-term plans and achieve the performance for which their equity awards are intended.
32
26
HUMAN CAPITAL AND COMPENSATION COMMITTEE REPORT
The Human Capital and Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on its review and discussion with management, the Human Capital and Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and in O’Reilly Automotive, Inc.’s Annual Report on Form 10‑K10-K for the year ended December 31, 2019.2022.
Respectfully submitted,
THE HUMAN CAPITAL AND COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OF O’REILLY AUTOMOTIVE, INC.
John R. Murphy
ChairpersonChair of the Human Capital and Compensation Committee
Jay D. Burchfield
Member of the Human Capital and Compensation Committee
Thomas T. HendricksonAndrea M. Weiss
Member of the Human Capital and Compensation Committee
33
27
The following table summarizes the annual compensation paid to or earned by the Company’s NEOs for the fiscal years ended December 31, 2019, 20182022, 2021 and 2017:2020:
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SUMMARY COMPENSATION TABLE | SUMMARY COMPENSATION TABLE | SUMMARY COMPENSATION TABLE | ||||||||||||||||||||||||||||||||||
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Name |
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| Non-Equity |
| Deferred |
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| | | | | | | | | | | | Non-Equity | | Deferred | | | |
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And |
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| Option |
| Incentive Plan |
| Compensation |
| All Other |
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| | | | | | | | Stock | | Option | | Incentive Plan | | Compensation | | All Other | |
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Principal |
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| Salary |
| Bonus |
| Awards |
| Awards |
| Compensation |
| Earnings |
| Compensation |
| Total | | | | Salary(a) | | Bonus | | Awards(b) | | Awards(c) | | Compensation(d) | | Earnings | | Compensation(e) | | Total |
Position |
| Year |
| ($)(a) |
| ($) |
| ($)(b) |
| ($)(c) |
| ($)(d) |
| ($) |
| ($)(e) |
| ($) |
| Year |
| ($) |
| ($) |
| ($) |
| ($) |
| ($) |
| ($) |
| ($) |
| ($) |
David O’Reilly |
| 2019 |
| 729,615 |
| — |
| 367,408 |
| — |
| — |
| — |
| 49,639 |
| 1,146,662 | ||||||||||||||||||
Greg Henslee (f) |
| 2022 |
| 779,615 |
| — |
| 392,325 |
| — |
| — |
| — |
| 60,413 |
| 1,232,353 | ||||||||||||||||||
Executive | | | | | | | | | | | | | | | | | | | ||||||||||||||||||
Chairman of the |
| 2021 |
| 711,538 |
| — |
| 324,873 |
| — |
| — |
| — |
| 50,408 |
| 1,086,819 | ||||||||||||||||||
Board | | | | | | | | | | | | | | | | | | | ||||||||||||||||||
|
| 2020 |
| 650,000 |
| — |
| 324,987 |
| — |
| — |
| — |
| 54,168 |
| 1,029,155 | ||||||||||||||||||
| | | | | | | | | | | | | | | | | | | ||||||||||||||||||
David O’Reilly (f) |
| 2022 |
| 675,385 |
| — | | 340,147 |
| — |
| — |
| — |
| 38,590 |
| 1,054,122 | ||||||||||||||||||
Executive Vice | | | | | | | | | | | | | | | | | | | ||||||||||||||||||
Chairman of |
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| 2021 |
| 682,692 |
| — | | 367,346 |
| — |
| — |
| — |
| 38,409 |
| 1,088,447 |
the Board |
| 2018 |
| 698,308 |
| — |
| 350,015 |
| — |
| — |
| — |
| 44,518 |
| 1,092,841 | | | | | | | | | | | | | | | | | | |
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| 2017 |
| 683,000 |
| — |
| 344,735 |
| — |
| — |
| — |
| 43,429 |
| 1,071,164 | ||||||||||||||||||
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Greg Henslee (f) |
| 2019 |
| 650,000 |
| — |
| 325,014 |
| — |
| — |
| — |
| 51,664 |
| 1,026,678 | ||||||||||||||||||
Executive Vice |
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Chairman of the |
| 2018 |
| 753,846 |
| — |
| 325,089 |
| — |
| — |
| — |
| 47,157 |
| 1,126,092 | ||||||||||||||||||
Board |
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| 2017 |
| 1,313,462 |
| — |
| — |
| 1,324,580 |
| 195,842 |
| — |
| 53,050 |
| 2,886,934 | ||||||||||||||||||
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| 2020 |
| 735,000 |
| — | | 367,395 |
| — |
| — |
| — |
| 46,229 |
| 1,148,624 | ||||||||||||||||||
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Greg D. |
| 2019 |
| 976,923 |
| — |
| — |
| 999,964 |
| 1,041,229 |
| — |
| 62,366 |
| 3,080,482 |
| 2022 |
| 1,413,462 |
| — |
| — |
| 1,425,055 |
| 2,550,499 |
| — |
| 88,335 |
| 5,477,351 |
Johnson |
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President and |
| 2021 |
| 1,334,615 |
| — |
| — |
| 1,349,999 |
| 10,000,000 |
| — |
| 79,656 |
| 12,764,271 | ||||||||||||||||||
Chief Executive |
| 2018 |
| 803,846 |
| — |
| — |
| 2,849,986 |
| 1,160,373 |
| — |
| 52,057 |
| 4,866,262 | | | | | | | | | | | | | | | | | | |
Officer and |
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Co-President |
| 2017 |
| 519,230 |
| — |
| — |
| 549,809 |
| 65,034 |
| — |
| 34,036 |
| 1,168,109 | ||||||||||||||||||
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Jeff M. Shaw (f) |
| 2019 |
| 742,308 |
| — |
| — |
| 750,001 |
| 780,921 |
| — |
| 67,570 |
| 2,340,800 | ||||||||||||||||||
Officer |
| 2020 |
| 1,211,538 |
| — |
| — |
| 1,249,949 |
| 6,454,953 |
| — |
| 74,518 |
| 8,990,958 | ||||||||||||||||||
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Brad Beckham | | 2022 | | 600,000 | | — | | — | | 1,599,991 | | 859,116 | | — | | 49,303 | | 3,108,410 | ||||||||||||||||||
Executive Vice | | | | | | | | | | | | | | | | | | | ||||||||||||||||||
President and | | 2021 | | 484,615 | | — | | — | | 249,939 | | 3,061,124 | | — | | 32,256 | | 3,827,934 | ||||||||||||||||||
Chief Operating |
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Officer and |
| 2018 |
| 676,923 |
| — |
| — |
| 1,699,969 |
| 955,601 |
| — |
| 45,502 |
| 3,377,995 | ||||||||||||||||||
Co-President |
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| 2017 |
| 526,923 |
| — |
| — |
| 549,809 |
| 65,034 |
| — |
| 36,649 |
| 1,178,415 | ||||||||||||||||||
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Tom McFall |
| 2019 |
| 796,154 |
| — |
| — |
| 799,971 |
| 666,386 |
| — |
| 71,396 |
| 2,333,907 | ||||||||||||||||||
Officer | | | | | | | | | | | | | | | | | | | ||||||||||||||||||
| | | | | | | | | | | | | | | | | | | ||||||||||||||||||
Jeremy Fletcher (g) | | 2022 |
| 468,462 |
| — |
| — |
| 1,105,037 |
| 787,523 |
| — |
| 30,722 |
| 2,391,744 | ||||||||||||||||||
Executive Vice | | | | | | | | | | | | | | | | | | | ||||||||||||||||||
President and | | | | | | | | | | | | | | | | | | | ||||||||||||||||||
Chief Financial |
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Officer and |
| 2018 |
| 771,154 |
| — |
| — |
| 775,017 |
| 846,389 |
| — |
| 52,967 |
| 2,445,527 | ||||||||||||||||||
Officer | | | | | | | | | | | | | | | | | | | ||||||||||||||||||
| | | | | | | | | | | | | | | | | | | ||||||||||||||||||
Brent Kirby | | 2022 | | 600,000 | | — | | — | | 1,599,991 | | 859,116 | | — | | 49,292 | | 3,108,399 | ||||||||||||||||||
Executive Vice | | | | | | | | | | | | | | | | | | | ||||||||||||||||||
President and | | 2021 | | 500,000 | | — | | — | | 249,939 | | 3,061,124 | | — | | 40,875 | | 3,851,938 | ||||||||||||||||||
Chief Supply | | | | | | | | | | | | | | | | | | | ||||||||||||||||||
Chain Officer | | | | | | | | | | | | | | | | | | | ||||||||||||||||||
| | | | | | | | | | | | | | | | | | | ||||||||||||||||||
Tom McFall (g) |
| 2022 |
| 647,692 |
| — |
| — |
| 900,082 |
| 715,930 |
| — |
| 50,603 |
| 2,314,307 | ||||||||||||||||||
Executive Vice |
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President |
| 2017 |
| 745,385 |
| — |
| — |
| 749,799 |
| 88,683 |
| — |
| 48,454 |
| 1,632,321 |
| 2021 |
| 855,385 |
| — |
| — |
| 859,987 |
| 5,265,134 |
| — |
| 58,170 |
| 7,038,676 |
| | | | | | | | | | | | | | | | | | | ||||||||||||||||||
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| 2020 |
| 825,385 |
| — |
| — |
| 829,986 |
| 3,428,871 |
| — |
| 76,388 |
| 5,160,630 | ||||||||||||||||||
(a) | The |
(b) | The “Stock |
(c) | The “Option Awards” column refers to the option awards granted to the NEOs, which become exercisable with respect to 25% of the covered shares one year from the date of grant; 50% exercisable two years from the date of grant; 75% exercisable three years from the date of grant and |
34
the remainder become exercisable four years from the date of grant. The amounts recognized in the above table reflect the grant date fair value of stock option awards granted during 2022, 2021 and 2020. During the fiscal years ended December 31, 2022, 2021 and 2020, no option awards were forfeited by the named executives. The grant date fair value of option awards was determined using the Black-Scholes option-pricing model. The Black-Scholes model requires the use of assumptions, including expected volatility, expected life, the risk-free rate and the expected dividend yield. Please see Note 12 “Share-Based Compensation and Benefit Plans” to the Company’s Consolidated Financial Statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2022, for further discussion of these assumptions and the accounting used in calculating share-based compensation expenses in accordance with ASC 718.
(d) | The “Non-Equity Incentive Plan Compensation” column refers to the cash payouts under the Company’s annual performance incentive plan, which is paid in the year following the plan year. A detailed description of the annual performance incentive plan can be found in the “Incentive compensation |
28
(e) | The “All Other Compensation” column includes the following: |
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| Personal Use | | |
| | | | Company | | | | | | | | Stock | | of Company | | |
| | | | Contributions | | | | Medical | | Value of | | Discount from | | Automobile or | | Perquisites |
| | | | to Deferred | | Company | | Insurance | | Company Paid | | Employee | | Allowance for | | and |
| | | | Compensation | | Contributions | | Premium | | Group Term | | Stock | | Personal | | Personal |
| | | | Plan | | to 401(k) Plan | | Reimbursement | | Life Insurance | | Purchase Plan | | Automobile | | Benefits (i) |
Name |
| Year |
| ($) |
| ($) |
| ($) |
| ($) |
| ($) |
| ($) | | ($) |
Greg |
| 2022 |
| 23,388 |
| 906 |
| 10,700 |
| 3,564 |
| 6,855 |
| 7,800 | | 7,200 |
Henslee (f) |
| 2021 |
| 21,346 |
| — |
| 10,300 |
| 3,564 |
| 6,210 |
| 4,800 | | 4,188 |
|
| 2020 |
| 19,500 |
| — |
| 10,000 |
| 3,564 |
| 5,735 |
| 8,400 | | 6,969 |
David |
| 2022 |
| 20,262 |
| — |
| 10,700 |
| 6,798 |
| — |
| — | | 830 |
O’Reilly (f) |
| 2021 |
| 20,481 |
| — |
| 10,300 |
| 6,798 |
| — |
| — | | 830 |
|
| 2020 |
| 22,050 |
| — |
| 10,000 |
| 6,798 |
| — |
| 6,551 | | 830 |
Greg D. |
| 2022 |
| 42,404 |
| 4,933 |
| 10,700 |
| 2,322 |
| 12,421 |
| 7,200 | | 8,355 |
Johnson |
| 2021 |
| 40,038 |
| — |
| 10,300 |
| 2,322 |
| 11,708 |
| 7,200 | | 8,088 |
|
| 2020 |
| 36,346 |
| — |
| 10,000 |
| 2,322 |
| 10,520 |
| 7,200 | | 8,130 |
Brad | | 2022 | | 18,000 | | — | | 10,700 | | 472 | | 5,226 | | 6,600 | | 8,305 |
Beckham | | 2021 | | 14,538 | | — | | 10,300 | | 385 | | 3,869 | | 1,200 | | 1,964 |
Jeremy | | 2022 | | 14,054 | | — | | 10,700 | | 477 | | 3,977 | | 600 | | 914 |
Fletcher (g) | | | | | | | | | | | | | | | | |
Brent | | 2022 | | 18,000 | | 1,385 | | 10,700 | | 1,242 | | 2,091 | | 7,200 | | 8,674 |
Kirby | | 2021 | | 15,000 | | — | | 10,300 | | 1,121 | | 68 | | 6,600 | | 7,786 |
Tom |
| 2022 |
| 19,431 |
| 577 |
| 10,700 |
| 1,242 |
| 5,959 |
| 6,600 | | 6,094 |
McFall (g) |
| 2021 |
| 25,662 |
| — |
| 10,300 |
| 1,242 |
| 7,527 |
| 7,200 | | 6,239 |
|
| 2020 |
| 44,753 |
| — |
| 10,000 |
| 1,242 |
| 7,262 |
| 7,200 | | 5,931 |
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| Personal Use |
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| Company |
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| Stock |
| of Company |
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| Contributions |
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| Medical |
| Value of |
| Discount from |
| Automobile or |
| Perquisites |
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| to Deferred |
| Company |
| Insurance |
| Company Paid |
| Employee |
| Allowance for |
| and |
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| Compensation |
| Contributions |
| Premium |
| Group Term |
| Stock |
| Personal |
| Personal |
|
|
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| Plan |
| to 401(k) Plan |
| Reimbursement |
| Life Insurance |
| Purchase Plan |
| Automobile |
| Benefits |
Name |
| Year |
| ($) |
| ($) |
| ($) |
| ($) |
| ($) |
| ($) |
| ($)(i) |
David |
| 2019 |
| 21,888 |
| — |
| 9,800 |
| 10,413 |
| — |
| 6,551 |
| 987 |
O’Reilly |
| 2018 |
| 13,966 |
| 6,983 |
| 9,400 |
| 6,594 |
| — |
| 6,551 |
| 1,024 |
|
| 2017 |
| 13,660 |
| 6,830 |
| 9,000 |
| 6,858 |
| — |
| 6,057 |
| 1,024 |
Greg |
| 2019 |
| 19,500 |
| — |
| 9,800 |
| 2,411 |
| 5,735 |
| 7,800 |
| 6,418 |
Henslee (f) |
| 2018 |
| 18,500 |
| — |
| 9,400 |
| 2,233 |
| 7,110 |
| 4,800 |
| 5,114 |
|
| 2017 |
| 18,000 |
| — |
| 9,000 |
| 2,322 |
| 11,963 |
| 4,724 |
| 7,041 |
Greg D. |
| 2019 |
| 29,308 |
| — |
| 9,800 |
| 1,242 |
| 8,807 |
| 7,200 |
| 6,009 |
Johnson (f) |
| 2018 |
| 16,077 |
| 8,038 |
| 9,400 |
| 1,242 |
| 6,899 |
| 7,800 |
| 2,601 |
|
| 2017 |
| 10,385 |
| 5,192 |
| 9,000 |
| 924 |
| 4,564 |
| 3,600 |
| 371 |
Jeff M. |
| 2019 |
| 41,381 |
| — |
| 9,800 |
| 2,322 |
| 6,516 |
| 7,200 |
| 351 |
Shaw (f) |
| 2018 |
| 14,189 |
| 6,769 |
| 9,400 |
| 2,322 |
| 5,871 |
| 6,600 |
| 351 |
|
| 2017 |
| 11,846 |
| 5,269 |
| 9,000 |
| 1,905 |
| 4,683 |
| 3,600 |
| 346 |
Tom |
| 2019 |
| 40,812 |
| — |
| 9,800 |
| 841 |
| 7,008 |
| 7,200 |
| 5,735 |
McFall |
| 2018 |
| 15,600 |
| 7,712 |
| 9,400 |
| 779 |
| 6,787 |
| 7,200 |
| 5,489 |
|
| 2017 |
| 15,378 |
| 7,454 |
| 9,000 |
| 810 |
| 6,801 |
| 3,705 |
| 5,306 |
(i) | The “Perquisites and Personal Benefits” column for each NEO for each year included perquisites and personal benefits valued at less than $10,000 for each benefit, which consisted primarily of, for certain NEOs but not necessarily all, club dues. |
(f) | On May |
(g) | Effective May 9, 2022, Jeremy Fletcher was promoted to Executive Vice President and Chief |
35
The following table summarizes all awards granted during the year ended December 31, 2019,2022, to each of the NEOs:
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| ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||
GRANTS OF PLAN BASED AWARDS | GRANTS OF PLAN BASED AWARDS | GRANTS OF PLAN BASED AWARDS | ||||||||||||||||||||||||||||||||||||||||||
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| All Other |
| All Other |
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|
| ||||||||||||||||||||||
|
|
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|
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|
|
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|
|
|
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|
|
| Stock |
| Option |
|
|
| Grant | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Awards: |
| Awards: |
| Exercise |
| Date Fair | ||||||||||||||||||||||
|
|
|
| Estimated Future Payouts |
| Estimated Future Payouts |
| Number |
| Number of |
| or Base |
| Value of | ||||||||||||||||||||||||||||||
|
|
|
| Under Non-Equity Incentive |
| Under Equity Incentive |
| of Shares |
| Securities |
| Price of |
| Stock and | ||||||||||||||||||||||||||||||
|
|
|
| Plan Awards (a) |
| Plan Awards |
| of Stock |
| Underlying |
| Option |
| Option | ||||||||||||||||||||||||||||||
|
| Grant |
| Threshold |
| Target |
| Max |
| Threshold |
| Target |
| Max |
| or Units |
| Options |
| Awards |
| Awards | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | All Other | | All Other | | | |
| ||||||||||||||||||||||
| | | | | | | | | | | | | | | | Stock | | Option | | | | Grant | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | Awards: | | Awards: | | Exercise | | Date Fair | ||||||||||||||||||||||
| | | | Estimated Future Payouts | | Estimated Future Payouts | | Number | | Number of | | or Base | | Value of | ||||||||||||||||||||||||||||||
| | | | Under Non-Equity Incentive | | Under Equity Incentive | | of Shares | | Securities | | Price of | | Stock and | ||||||||||||||||||||||||||||||
| | | | Plan Awards (a) | | Plan Awards | | of Stock | | Underlying | | Option | | Option | ||||||||||||||||||||||||||||||
| | Grant | | Threshold | | Target | | Max (b) | | Threshold | | Target | | Max | | or Units (c) | | Options (d) | | Awards | | Awards | ||||||||||||||||||||||
Name |
| Date |
| ($) |
| ($) |
| ($) |
| (#) |
| (#) |
| (#) |
| (#) (b) |
| (#) (c) |
| ($/Sh) |
| ($) |
| Date |
| ($) |
| ($) |
| ($) |
| (#) |
| (#) |
| (#) |
| (#) |
| (#) |
| ($/Sh) |
| ($) |
Greg | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||
Henslee |
| 2/3/2022 |
| — |
| — |
| — |
| — |
| — |
| — |
| 594 |
| — |
| — |
| 392,325 | ||||||||||||||||||||||
David |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| | | | | | | | | | | | | | | | | | | | | | |
O’Reilly |
| 1/31/2019 |
| — |
| — |
| — |
| — |
| — |
| — |
| 1,066 |
| — |
| — |
| 367,408 |
| 2/3/2022 |
| — |
| — |
| — |
| — |
| — |
| — |
| 515 |
| — |
| — |
| 340,147 |
Greg |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Henslee |
| 1/31/2019 |
| — |
| — |
| — |
| — |
| — |
| — |
| 943 |
| — |
| — |
| 325,014 | ||||||||||||||||||||||
Gregory D. |
| 1/31/2019 |
| — |
| 1,000,000 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| 2/3/2022 |
| — |
| 1,425,000 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
Johnson |
| 1/31/2019 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| 8,885 |
| 344.66 |
| 999,964 |
| 2/3/2022 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| 6,333 |
| 225.02 |
| 1,425,055 |
Jeff M. |
| 1/31/2019 |
| — |
| 750,000 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — | ||||||||||||||||||||||
Shaw |
| 1/31/2019 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| 6,664 |
| 344.66 |
| 750,001 | ||||||||||||||||||||||
Brad | | 2/3/2022 | | — | | 480,000 | | — |
| — |
| — |
| — |
| — |
| — |
| — |
| — | ||||||||||||||||||||||
Beckham | | 1/3/2022 | | — |
| — |
| — |
| — |
| — |
| — |
| — | | 4,307 | | 232.20 | | 1,000,086 | ||||||||||||||||||||||
| | 2/3/2022 | | — |
| — |
| — |
| — |
| — |
| — |
| — | | 2,666 | | 225.02 | | 599,905 | ||||||||||||||||||||||
Jeremy | | 5/9/2022 | | — | | 440,000 | | — |
| — |
| — |
| — |
| — |
| — |
| — |
| — | ||||||||||||||||||||||
Fletcher (e) | | 2/3/2022 | | — |
| — |
| — |
| — |
| — |
| — |
| — | | 467 | | 225.02 | | 105,085 | ||||||||||||||||||||||
| | 5/9/2022 | | — |
| — |
| — |
| — |
| — |
| — |
| — | | 4,340 | | 230.40 | | 999,953 | ||||||||||||||||||||||
Brent | | 2/3/2022 | | — | | 480,000 | | — |
| — |
| — |
| — |
| — |
| — |
| — |
| — | ||||||||||||||||||||||
Kirby | | 1/3/2022 | | — |
| — |
| — |
| — |
| — |
| — |
| — | | 4,307 | | 232.20 | | 1,000,086 | ||||||||||||||||||||||
| | 2/3/2022 | | — |
| — |
| — |
| — |
| — |
| — |
| — | | 2,666 | | 225.02 | | 599,905 | ||||||||||||||||||||||
Tom |
| 1/31/2019 |
| — |
| 800,000 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| 2/3/2022 |
| — |
| 400,000 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
McFall |
| 1/31/2019 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| 7,108 |
| 344.66 |
| 799,971 | ||||||||||||||||||||||
McFall (e) |
| 2/3/2022 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| 4,000 |
| 225.02 |
| 900,082 | ||||||||||||||||||||||
(a) | The “Estimated Future Payouts Under Non-Equity Incentive Plan Awards” - “Target” column refers to the potential cash payouts under the Company’s annual performance incentive plan for its executive officers, including the NEOs, for |
(b) | The maximum aggregate amount of cash compensation that may be paid to any one participant in any year is $10,000,000 per participant. |
(c) | The “All Other Stock Awards: Number of Shares of Stock or Units” column refers to restricted share awards granted to NEOs, which vest in three equal installments on |
| The “All Other Option Awards: Number of Securities Underlying Options” column refers to stock option awards granted to the NEOs, which become exercisable with respect to 25% of the covered shares one year from the date of grant; 50% exercisable two years from the date of grant; 75% exercisable three years from the date of grant, while the remainder become exercisable four years from the date of grant. |
(e) | Effective May 9, 2022, Jeremy Fletcher was promoted to Executive Vice President and Chief Financial Officer, and at that time, Tom McFall’s title changed from Executive Vice President and Chief Financial Officer to Executive Vice President. |
36
29
The following table identifies information concerning unexercised stock options, stock options that have not vested and stock awards that have not vested for each of the NEOs as of December 31, 2019:2022:
| | | | | | | | | | | | | | | | | | |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END | ||||||||||||||||||
| | Option Awards | | Stock Awards | ||||||||||||||
| | | | | | | | | | | | | | | | Equity Incentive Plan | ||
| | | | | | Equity | | | | | | | | | | Awards: | ||
| | | | | | Incentive | | | | | | | | Market | | Number | | Market or |
| | | | | | Plan Awards: | | | | | | Number | | Value of | | of | | payout value |
| | | | | | Number of | | | | | | of Shares | | Shares or | | unearned | | of unearned |
| | | | | | Securities | | | | | | or Units | | Units of | | shares, | | shares, |
| | | | | | Underlying | | | | | | of Stock | | Stock | | units or | | units or |
| | Number of Securities | | Unexercised | | Option | | | | That | | That | | other rights | | other rights | ||
| | Underlying Unexercised | | Unearned | | Exercise | | Option | | Have Not | | Have Not | | that have | | that have | ||
| | Options (#) | | Options | | Price | | Expiration | | Vested | | Vested | | not vested | | not vested | ||
Name |
| Exercisable |
| Unexercisable |
| (#) |
| ($) |
| Date |
| (#) |
| ($) |
| (#) |
| ($) |
Greg |
| 23,088 |
| — | | — |
| 192.65 |
| 1/29/2025 |
| — |
| — |
| — |
| — |
Henslee |
| 18,264 |
| — | | — |
| 256.34 |
| 1/28/2026 |
| — |
| — |
| — |
| — |
|
| 18,247 |
| — | | — |
| 256.69 |
| 2/2/2027 |
| — |
| — |
| — |
| — |
|
| — |
| — | | — |
| — |
| — |
| 1,331 | (a) | 1,123,404 | (a) | — |
| — |
David | | | | | | | | | | | | | | | | | | |
O’Reilly |
| — |
| — | | — |
| — |
| — |
| 1,348 | (b) | 1,137,752 | (b) | — |
| — |
Greg D. |
| 3,740 |
| — | | — |
| 256.34 |
| 1/28/2026 |
| — |
| — |
| — |
| — |
Johnson |
| 7,574 |
| — | | — |
| 256.69 |
| 2/2/2027 |
| — |
| — |
| — |
| — |
|
| 10,227 |
| — | | — |
| 262.38 |
| 2/1/2028 |
| — |
| — |
| — |
| — |
|
| 24,064 |
| — | | — |
| 262.38 |
| 2/1/2028 |
| — |
| — |
| — |
| — |
|
| 6,664 |
| 2,221 | (c) | — |
| 344.66 |
| 1/31/2029 |
| — |
| — |
| — |
| — |
|
| 4,904 | | 4,903 | (d) | — | | 419.88 | | 1/30/2030 |
| — |
| — |
| — |
| — |
|
| 2,258 | | 6,773 | (e) | — | | 451.84 | | 2/4/2031 |
| — |
| — |
| — |
| — |
|
| — | | 6,333 | (f) | — | | 660.48 | | 2/3/2032 |
| — |
| — |
| — |
| — |
Brad | | 1,032 | | — | | — | | 192.65 | | 1/29/2025 | | — | | — | | — | | — |
Beckham | | 5,000 | | — | | — | | 210.23 | | 3/13/2025 | | — | | — | | — | | — |
| | 833 | | — | | — | | 256.34 | | 1/28/2026 | | — | | — | | — | | — |
| | 909 | | — | | — | | 256.69 | | 2/2/2027 | | — | | — | | — | | — |
| | 1,564 | | — | | — | | 262.38 | | 2/1/2028 | | — | | — | | — | | — |
| | 1,033 | | 344 | (c) | — | | 344.66 | | 1/31/2029 | | — | | — | | — | | — |
| | 785 | | 784 | (d) | — | | 419.88 | | 1/30/2030 | | — | | — | | — | | — |
| | 418 | | 1,254 | (e) | — | | 451.84 | | 2/4/2031 | | — | | — | | — | | — |
| | — | | 4,307 | (g) | — | | 695.94 | | 1/3/2032 | | — | | — | | — | | — |
| | — | | 2,666 | (f) | — | | 660.48 | | 2/3/2032 | | — | | — | | — | | — |
Jeremy | | 5,000 | | — | | — | | 210.23 | | 3/13/2025 | | — | | — | | — | | — |
Fletcher (i) | | 253 | | — | | — | | 272.21 | | 3/11/2026 | | — | | — | | — | | — |
| | 826 | | — | | — | | 256.69 | | 2/2/2027 | | — | | — | | — | | — |
| | 812 | | — | | — | | 262.38 | | 2/1/2028 | | — | | — | | — | | — |
| | 500 | | 166 | (c) | — | | 344.66 | | 1/31/2029 | | — | | — | | — | | — |
| | 330 | | 329 | (d) | — | | 419.88 | | 1/30/2030 | | — | | — | | — | | — |
| | 161 | | 481 | (e) | — | | 451.84 | | 2/4/2031 | | — | | — | | — | | — |
| | — | | 467 | (f) | — | | 660.48 | | 2/3/2032 | | — | | — | | — | | — |
| | — | | 4,340 | (h) | — | | 610.07 | | 5/9/2032 | | — | | — | | — | | — |
Brent | | 10,725 | | — | | — | | 290.51 | | 7/18/2028 | | — | | — | | — | | — |
Kirby | | 830 | | 276 | (c) | — | | 344.66 | | 1/31/2029 | | — | | — | | — | | — |
| | 518 | | 518 | (d) | — | | 419.88 | | 1/30/2030 | | — | | — | | — | | — |
| | 418 | | 1,254 | (e) | — | | 451.84 | | 2/4/2031 | | — | | — | | — | | — |
| | — | | 4,307 | (g) | — | | 695.94 | | 1/3/2032 | | — | | — | | — | | — |
| | — | | 2,666 | (f) | — | | 660.48 | | 2/3/2032 | | — | | — | | — | | — |
Tom |
| 10,520 |
| — | | — |
| 256.34 |
| 1/28/2026 |
| — |
| — |
| — |
| — |
McFall (i) |
| 10,329 | | — | | — | | 256.69 | | 2/2/2027 |
| — |
| — |
| — |
| — |
| | 9,325 |
| — | | — |
| 262.38 |
| 2/1/2028 | | — | | — | | — | | — |
|
| 5,331 |
| 1,777 | (c) | — |
| 344.66 |
| 1/31/2029 |
| — |
| — |
| — |
| — |
|
| 3,256 |
| 3,256 | (d) | — |
| 419.88 |
| 1/30/2030 |
| — |
| — |
| — |
| — |
| | 1,439 |
| 4,314 | (e) | — |
| 451.84 |
| 2/4/2031 |
| — |
| — |
| — |
| — |
|
| — |
| 4,000 | (f) | — |
| 660.48 |
| 2/3/2032 |
| — |
| — |
| — |
| — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END | ||||||||||||||||||
|
| Option Awards |
| Stock Awards | ||||||||||||||
|
|
|
|
|
| Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Incentive |
|
|
|
|
|
|
| Market |
|
|
|
|
|
|
|
|
|
| Plan Awards: |
|
|
|
|
| Number |
| Value of |
|
|
|
|
|
|
|
|
|
| Number of |
|
|
|
|
| of Shares |
| Shares or |
|
|
|
|
|
|
|
|
|
| Securities |
|
|
|
|
| or Units |
| Units of |
| Equity Incentive Plan | ||
|
|
|
|
|
| Underlying |
|
|
|
|
| of Stock |
| Stock |
| Awards: Number of | ||
|
| Number of Securities |
| Unexercised |
| Option |
|
|
| That |
| That |
| Unearned Shares, | ||||
|
| Underlying Unexercised |
| Unearned |
| Exercise |
| Option |
| Have Not |
| Have Not |
| Units or Other Rights | ||||
|
| Options (#) |
| Options |
| Price |
| Expiration |
| Vested |
| Vested |
| That Have Not Vested | ||||
Name |
| Exercisable |
| Unexercisable |
| (#) |
| ($) |
| Date |
| (#) |
| ($) |
| (#) |
| ($) |
David |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
O’Reilly |
| — |
| — |
| — |
| — |
| — |
| 2,402 | (a) | 1,052,701 |
| — |
| — |
Greg |
| 36,214 |
| — |
| — |
| 81.54 |
| 2/2/2022 |
| — |
| — |
| — |
| — |
Henslee (b) |
| 33,846 |
| — |
| — |
| 92.65 |
| 1/31/2023 |
| — |
| — |
| — |
| — |
|
| 27,576 |
| — |
| — |
| 132.29 |
| 1/30/2024 |
| — |
| — |
| — |
| — |
|
| 23,088 |
| — |
| — |
| 192.65 |
| 1/29/2025 |
| — |
| — |
| — |
| — |
|
| 13,698 |
| 4,566 | (c) | — |
| 256.34 |
| 1/28/2026 |
| — |
| — |
| — |
| — |
|
| 9,124 |
| 9,123 | (d) | — |
| 256.69 |
| 2/2/2027 |
| — |
| — |
| — |
| — |
|
| — |
| — |
| — |
| — |
| — |
| 1,769 | (e) | 775,282 |
| — |
| — |
Greg D. |
| 3,374 |
| — |
| — |
| 58.21 |
| 2/8/2021 |
| — |
| — |
| — |
| — |
Johnson (b) |
| 2,537 |
| — |
| — |
| 81.54 |
| 2/2/2022 |
| — |
| — |
| — |
| — |
|
| 2,355 |
| — |
| — |
| 92.65 |
| 1/31/2023 |
| — |
| — |
| — |
| — |
|
| 1,918 |
| — |
| — |
| 132.29 |
| 1/30/2024 |
| — |
| — |
| — |
| — |
|
| 4,716 |
| — |
| — |
| 192.65 |
| 1/29/2025 |
| — |
| — |
| — |
| — |
|
| 2,805 |
| 935 | (c) | — |
| 256.34 |
| 1/28/2026 |
| — |
| — |
| — |
| — |
|
| 3,787 |
| 3,787 | (d) | — |
| 256.69 |
| 2/2/2027 |
| — |
| — |
| — |
| — |
|
| 2,557 |
| 7,670 | (f) | — |
| 262.38 |
| 2/1/2028 |
| — |
| — |
| — |
| — |
|
| 6,016 |
| 18,048 | (f) | — |
| 262.38 |
| 2/1/2028 |
| — |
| — |
| — |
| — |
|
| — |
| 8,885 | (g) | — |
| 344.66 |
| 1/31/2029 |
| — |
| — |
| — |
| — |
Jeff M. |
| 7,500 |
| — |
| — |
| 90.79 |
| 12/13/2022 |
| — |
| — |
| — |
| — |
Shaw (b) |
| 4,905 |
| — |
| — |
| 92.65 |
| 1/31/2023 |
| — |
| — |
| — |
| — |
|
| 7,020 |
| — |
| — |
| 132.29 |
| 1/30/2024 |
| — |
| — |
| — |
| — |
|
| 5,974 |
| — |
| — |
| 192.65 |
| 1/29/2025 |
| — |
| — |
| — |
| — |
|
| 3,506 |
| 1,169 | (c) | — |
| 256.34 |
| 1/28/2026 |
| — |
| — |
| — |
| — |
|
| 3,787 |
| 3,787 | (d) | — |
| 256.69 |
| 2/2/2027 |
| — |
| — |
| — |
| — |
|
| 2,106 |
| 6,316 | (f) | — |
| 262.38 |
| 2/1/2028 |
| — |
| — |
| — |
| — |
|
| 3,008 |
| 9,024 | (f) | — |
| 262.38 |
| 2/1/2028 |
| — |
| — |
| — |
| — |
|
| — |
| 6,664 | (g) | — |
| 344.66 |
| 1/31/2029 |
| — |
| — |
| — |
| — |
Tom |
| 11,140 |
| — |
| — |
| 81.54 |
| 2/2/2022 |
| — |
| — |
| — |
| — |
McFall |
| 19,784 |
| — |
| — |
| 92.65 |
| 1/31/2023 |
| — |
| — |
| — |
| — |
|
| 16,045 |
| — |
| — |
| 132.29 |
| 1/30/2024 |
| — |
| — |
| — |
| — |
|
| 13,362 |
| — |
| — |
| 192.65 |
| 1/29/2025 |
| — |
| — |
| — |
| — |
|
| 7,890 |
| 2,630 | (c) | — |
| 256.34 |
| 1/28/2026 |
| — |
| — |
| — |
| — |
|
| 5,165 |
| 5,164 | (d) | — |
| 256.69 |
| 2/2/2027 |
| — |
| — |
| — |
| — |
|
| 2,331 |
| 6,994 | (f) | — |
| 262.38 |
| 2/1/2028 |
| — |
| — |
| — |
| — |
|
| — |
| 7,108 | (g) | — |
| 344.66 |
| 1/31/2029 |
| — |
| — |
| — |
| — |
37
(a) | Represents restricted shares granted on January 30, 2020, February |
(b) | Represents restricted shares granted on January 30, 2020, February 4, 2021, and |
|
|
|
|
|
|
30
|
|
|
|
| Represents stock options granted on January 31, 2019, which become exercisable in four equal installments on January 31, 2020, 2021, 2022 and 2023. |
(d) | Represents stock options granted on January 30, 2020, which become exercisable in four equal installments on January 30, 2021, 2022, 2023 and 2024. |
(e) | Represents stock options granted on February 4, 2021, which become exercisable in four equal installments on February 4, 2022, 2023, 2024 and 2025. |
(f) | Represents stock options granted on February 3, 2022, which become exercisable in four equal installments on February 3, 2023, 2024, 2025 and 2026. |
(g) | Represents stock options granted on January 3, 2022, which become exercisable in four equal installments on January 3, 2023, 2024, 2025 and 2026. |
(h) | Represents stock options granted on May 9, 2022, which become exercisable in four equal installments on May 9, 2023, 2024, 2025 and 2026. |
(i) | Effective May 9, 2022, Jeremy Fletcher was promoted to Executive Vice President and Chief Financial Officer, and at that time, Tom McFall’s title changed from Executive Vice President and Chief Financial Officer to Executive Vice President. |
The following table summarizes stock option awards exercised and shares of restricted stock, which vested during the year ended December 31, 2019,2022, and the aggregate dollar values realized upon such exercise or vesting for each of the NEOs:
|
|
|
|
|
|
|
|
| ||||||||
| | | | | | | | | ||||||||
OPTION EXERCISES AND STOCK VESTED | OPTION EXERCISES AND STOCK VESTED | OPTION EXERCISES AND STOCK VESTED | ||||||||||||||
|
| Options Awards |
| Stock Awards | ||||||||||||
|
| Number of Shares |
| Value Realized on |
| Number of Shares |
| Value Realized on | ||||||||
|
| Acquired on Exercise |
| Exercise |
| Acquired on Vesting |
| Vesting | ||||||||
|
| Options Awards |
| Stock Awards | ||||||||||||
| | Number of Shares |
| Value Realized on | | Number of Shares |
| Value Realized on | ||||||||
| | Acquired on Exercise | | Exercise | | Acquired on Vesting (a) | | Vesting | ||||||||
Name |
| (#) |
| ($) |
| (#)(a) |
| ($) | | (#) | | ($) | | (#) | | ($) |
Greg Henslee |
| 27,576 |
| 17,098,800 |
| 812 |
| 525,821 | ||||||||
David O’Reilly |
| 25,000 |
| 9,977,488 |
| 1,315 |
| 451,300 |
| — |
| — |
| 918 |
| 594,462 |
Greg Henslee |
| 98,206 |
| 35,093,452 |
| 413 |
| 143,208 | ||||||||
Gregory D. Johnson |
| — |
| — |
| — |
| — |
| 6,634 |
| 4,209,258 |
| — |
| — |
Jeff M. Shaw |
| 13,873 |
| 4,631,141 |
| — |
| — | ||||||||
Brad Beckham | | 5,000 | | 3,443,353 | | — |
| — | ||||||||
Jeremy Fletcher | | 5,000 | | 3,487,458 | | — | | — | ||||||||
Brent Kirby | | — |
| — | | — |
| — | ||||||||
Tom McFall |
| 10,000 |
| 3,556,253 |
| — |
| — |
| 13,362 |
| 7,863,355 |
| — |
| — |
(a) | Reflects the vesting of restricted stock awards granted in |
38
The following table identifies information regarding the contributions by each NEO and the Company under the Deferred Compensation Plan for the year ended December 31, 2019,2022, as well as information on aggregate earnings, withdrawals and balances for each NEO:
|
|
|
|
|
|
|
|
|
|
| ||||||||||
| | | | | | | | | | | ||||||||||
NONQUALIFIED DEFERRED COMPENSATION | NONQUALIFIED DEFERRED COMPENSATION | NONQUALIFIED DEFERRED COMPENSATION | ||||||||||||||||||
|
|
|
|
|
|
|
| Aggregate |
|
| ||||||||||
|
| Executive |
| Registrant |
| Aggregate |
| Withdrawals / |
| Aggregate | ||||||||||
|
| Contributions in |
| Contributions in |
| Earnings in Last |
| Distributions in |
| Balance at Last | ||||||||||
|
| Last Fiscal Year |
| Last Fiscal Year |
| Fiscal Year |
| Last Fiscal Year |
| Fiscal Year End | ||||||||||
| | | | | | | | Aggregate | |
| ||||||||||
| | Executive | | Registrant | | Aggregate | | Withdrawals / | | Aggregate | ||||||||||
| | Contributions in | | Contributions in | | Earnings in Last | | Distributions in | | Balance at Last | ||||||||||
| | Last Fiscal Year (a) | | Last Fiscal Year (b) | | Fiscal Year (c) | | Last Fiscal Year | | Fiscal Year End | ||||||||||
Name |
| ($)(a) |
| ($)(b) |
| ($)(c) |
| ($) |
| ($) |
| ($) |
| ($) |
| ($) |
| ($) |
| ($) |
Greg Henslee |
| 46,777 |
| 21,346 |
| (699,873) |
| — |
| 5,923,380 | ||||||||||
David O’Reilly |
| 43,777 |
| 13,966 |
| 407,459 |
| — |
| 1,801,845 |
| 40,523 |
| 20,481 |
| (604,799) |
| — |
| 2,306,894 |
Greg Henslee |
| 39,000 |
| 18,500 |
| 907,062 |
| — |
| 4,964,394 | ||||||||||
Gregory D. Johnson |
| 390,769 |
| 16,077 |
| 209,686 |
| — |
| 1,222,747 |
| 706,731 |
| 40,038 |
| (702,009) |
| — |
| 3,274,135 |
Jeff M. Shaw |
| 1,018,745 |
| 14,189 |
| 737,431 |
| — |
| 5,545,591 | ||||||||||
Brad Beckham | | 762,225 | | 14,538 | | (209,192) | | — | | 1,242,382 | ||||||||||
Jeremy Fletcher | | 374,769 | | 9,415 | | (397,830) | | — | | 1,818,886 | ||||||||||
Brent Kirby | | 213,056 | | 15,000 | | (48,581) | | — | | 423,355 | ||||||||||
Tom McFall |
| 164,254 |
| 15,600 |
| 320,055 |
| — |
| 1,652,077 |
| 591,283 |
| 25,662 |
| (548,105) |
| — |
| 3,060,200 |
(a) | All NEO contribution amounts have been included in the “Salary” column of the “Summary Compensation Table.” |
(b) | All registrant contributions have been included in the “All Other Compensation” column of the “Summary Compensation Table.” NEOs must be employed on December 31 to receive that year’s Company matching contribution, with the matching Contribution funded annually at the beginning of the year following the year in which the matching contribution was earned. At the beginning of |
(c) | Amounts included in the “Aggregate Earnings in Last Fiscal Year” column are not reported as compensation in the “Summary Compensation Table |
The Deferred Compensation Plan provides executive officers who participate in the 401(k) Plan with the opportunity to defer the full 6% of covered compensation, including salary and incentive basedincentive-based compensation, by making contributions to the Deferred Compensation Plan that are then matched by the Company as if they had been made under the 401(k) Plan. The Deferred Compensation Plan is intended to restore contributions lost because of the application of the annual limitations under the Code that are applicable to the 401(k) Plan. Executive officers may elect to defer their base compensation, incentive compensation and/or bonuses to the Deferred Compensation Plan. ExecutiveUnder the Deferred Compensation Plan, executive officers can elect to allocate their contributions, as well as the Company matching contributions, to various equity, bond or fixed income funds that mirror the 401(k) Plan, or a combination thereof, and all interest and/or earnings, which may be credited to the executive officer’s account, are based on the applicable fund’s market performance. Executive officers may elect to receive distributions at retirement or starting in a specific future year before or after anticipated retirement and may elect to receive the distribution in a lump sum or in periodic payments.
31
CEO Pay Ratio
Pursuant to Item 402(u) of Regulation S-K and Section 953(b) of the Dodd-Frank Act (the “Rule”), presented below is the ratio of annual total compensation of the Company’s Chief Executive Officer, GregGregory D. Johnson, to the annual total compensation of the Company’s median employee (excluding the Chief Executive Officer). The ratio presented below is a reasonable estimate calculated in a manner consistent with Item 402(u).
To determine the median employee in 2018,2021, the Company calculated the annual total cash compensation of each employee for theyear ended December 31, 2018, which2021, which was also the measurement date.date. Total cash compensation for this purpose included base salary, bonus and commissions compiled from the Company’s payroll data. For employees who were hired during the year, but did not work the full year, their compensation was annualized, but no cost-of-living adjustments were made. Independent contractors or leased workers were not included in the employee population. For 2019,2022, the Company used the same median employee identified for purposes of the ratio calculation, as it did for the year ended December 31, 2018,2021, and alsothe Company used the same measurement date of December 31, as the31. The Company determined that there had been no material changes to its 20182021 median employee’s position, job functions or employment status, and there had been no change to the Company’s overall employee population or employee compensation arrangements that would significantly impact the pay ratio disclosure. No cost-of-living adjustments were applied as part of the calculation. Employees in MexicoInternational employees were excluded from the total employee population under the Rule’s allowed de minimis exemption, as these 1,2612,249 employees accounted for less than 5% of the Company’s total employee population of 82,48487,376 as of December 31, 2019.2022. For 2019,2022, the employee population for the ratio calculation consisted of 80,11185,127 full-time, part-time and seasonal workers who were employed in the United SatesStates as of December 31, 2019.2022.
39
Annual total compensation, as determined under the Rule, for the Company’s Chief Executive Officer was $3,080,482$5,477,351 for the year ended December 31, 2019,2022, see “Summary Compensation Table” for details. Annual total compensation, as determined under the Rule, for the Company’s median employee was $23,175$34,835 for the year ended December 31, 2019.2022. The ratio of the Company’s Chief Executive Officer’s annual total compensation to its median employee’s total compensation is 133157 to 1 for the year ended December 31, 2019.2022.
Pay versus Performance
Pursuant to Item 402(v) of Regulation S-K and Section 953(a) of the Dodd-Frank Act, presented below is information that shows the compensation paid to Company NEOs and financial performance of the Company. The company did not materially modify or reprice any outstanding equity awards in fiscal 2022.
| | | | | | | | | | | | | | | | |
| | | | | | Average | | | | Value of Initial Fixed $100 | | | | | ||
| | | | | | Summary | | Average | | Investment Based On: | | | | | ||
| | Summary | | | | Compensation | | Compensation | | | | Peer Group | | | | |
| | Compensation | | Compensation | | Table Total | | Actually Paid | | Total | | Total | | | | |
| | Table Total | | Actually Paid | | for Non-PEO | | to Non-PEO | | Shareholder | | Shareholder | | | | Operating |
| | for PEO | | to PEO(d)(e) | | NEOs | | NEOs(f)(g) | | Return | | Return(h) | | Net Income | | Income |
Year | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) |
2022(a) | | 5,477,351 | | 8,519,969 | | 2,201,556 | | 3,340,752 | | 193 | | 112 | | 2,172,650,000 | | 2,954,491,000 |
2021(b) | | 12,764,271 | | 19,042,393 | | 4,150,852 | | 5,926,087 | | 161 | | 173 | | 2,164,685,000 | | 2,917,168,000 |
2020(c) | | 8,990,958 | | 9,135,920 | | 3,266,357 | | 3,273,105 | | 103 | | 145 | | 1,752,302,000 | | 2,419,336,000 |
(a) | For 2022, Gregory D. Johnson was the PEO and non-PEO NEOs included Greg Henslee, David O’Reilly, Brad Beckham, Jeremy Fletcher, Brent Kirby and Tom McFall. Effective May 9, 2022, Jeremy Fletcher was promoted to Executive Vice President and Chief Financial Officer, and at that time, Tom McFall’s title changed from Executive Vice President and Chief Financial Officer to Executive Vice President. |
(b) | For 2021, Gregory D. Johnson was the PEO and non-PEO NEOs included Greg Henslee, David O’Reilly, Brad Beckham, Brent Kirby, Tom McFall and Jeff M. Shaw. |
(c) | For 2020, Gregory D. Johnson was the PEO and non-PEO NEOs included Greg Henslee, David O’Reilly, Tom McFall and Jeff M. Shaw. |
(d) | The amounts in the following table represent each of the amounts deducted from and added to the equity award values, as presented in the “Summary Compensation Table,” for the PEO for the applicable year for purposes of computing the “compensation actually paid” amounts appearing in the “Compensation Actually Paid to PEO” column of the “Pay Versus Performance” table. There was no change in pension values for the years ended December 31, 2022, 2021 and 2020, as the Company did not offer a pension plan. |
| | | | | | | | | | |
| | Grant Date | | | | | | Change in Fair Value as | | Total Equity |
| | Fair Value of | | Year-End Value | | Change in Fair Value as | | of the Vesting Date of | | Value |
| | Equity Awards | | of Equity Awards | | of Year-End of Any Prior | | Any Prior Year Awards | | Reflected in |
| | Granted During | | Granted During | | Year Awards that Remain | | the Vested During | | Compensation |
| | Applicable Year | | Applicable Year | | Unvested as of Year-End | | Applicable Year | | Actually Paid |
Year | | ($) | | ($) | | ($) | | ($) | | ($) |
2022 | | (1,425,055) | | 2,669,294 | | 2,461,678 | | (663,299) | | 3,042,618 |
2021 | | (1,349,999) | | 3,186,484 | | 4,659,462 | | (217,825) | | 6,278,122 |
2020 | | (1,249,949) | | 1,514,108 | | 301,086 | | (420,283) | | 144,962 |
(e) | The table below identifies the weighted-average assumptions used in the Black-Scholes option pricing model for valuing option awards included in compensation actually paid to PEO: |
| | | | | | | | | |
| | December 31, | |||||||
| | 2022 | | 2021 | | 2020 | |||
Risk free interest rate | | 3.09 | % | | 1.02 | % | | 0.65 | % |
Expected life | | 7.1 | Years | | 7.0 | Years | | 7.0 | Years |
Expected volatility | | 29.6 | % | | 29.7 | % | | 29.3 | % |
Expected dividend yield | | — | % | | — | % | | — | % |
(f) | The amounts in the following table represent each of the amounts deducted from and added to the equity award values, as presented in the “Summary Compensation Table,” for the non-PEO NEOs for the applicable year for purposes of computing the “compensation actually paid” amounts appearing in the “Average Compensation Actually Paid to non-PEO NEOs” column of the “Pay Versus Performance” table. There was no change in pension values for the years ended December 31, 2022, 2021 and 2020, as the Company did not offer a pension plan. |
| | | | | | | | | | |
| | Grant Date | | Year-End | | Change in Fair Value | | Change in Fair Value | | Total |
| | Fair Value of | | Value of | | as of Year-End | | as of the Vesting Date | | Equity Value |
| | Equity Awards | | Equity Awards | | of Any Prior Year | | of Any Prior Year | | Reflected in |
| | Granted During | | Granted During | | Awards that Remain | | Awards that Vested | | Compensation |
| | Applicable Year | | Applicable Year | | Unvested as of Year-End | | During Applicable Year | | Actually Paid |
Year | | ($) | | ($) | | ($) | | ($) | | ($) |
2022 | | (989,596) | | 1,747,461 | | 471,834 | | (90,504) | | 1,139,196 |
2021 | | (479,515) | | 1,039,838 | | 1,217,694 | | (2,782) | | 1,775,235 |
2020 | | (578,083) | | 677,148 | | 105,700 | | (198,017) | | 6,748 |
40
(g) | The table below identifies the weighted-average assumptions used in the Black-Scholes option pricing model for valuing option awards included in average compensation actually paid to non-PEO NEOs: |
| | | | | | | | | |
| | December 31, | |||||||
| | 2022 | | 2021 | | 2020 | |||
Risk free interest rate | | 3.12 | % | | 1.00 | % | | 0.69 | % |
Expected life | | 7.2 | Years | | 7.0 | Years | | 6.9 | Years |
Expected volatility | | 29.5 | % | | 29.6 | % | | 29.2 | % |
Expected dividend yield | | — | % | | — | % | | — | % |
(h) | Peer Group is the Standard and Poor’s S&P 500 Retail Index used for purposes of Item 201(e) of Regulation S-K. Please see Item 5 “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” included on the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, for further discussion of its peer group. |
Below shows the graphical description of the relationship between “Compensation Actually Paid” to the PEO and the average “Compensation Actually Paid” to the non-PEO NEOs to the Company’s financial performance measures, Net Income and Operating Income, for the three most recently completed fiscal years:
41
Below shows the graphical description of the relationship between “Compensation Actually Paid” to the PEO and the average “Compensation Actually Paid” to the non-PEO NEOs to the Company’s total shareholder return, value of initial fixed $100 investment, for the three most recently completed fiscal years:
42
Below shows the graphical description of the relationship between the Company’s total shareholder return and its peer group total shareholder return, value of initial fixed $100 investment, for the three most recently completed fiscal years:
Below, in an unranked order, are the most important financial performance measures used to link executive compensation actually paid to the Company’s NEOs, except Greg Henslee and David O’Reilly, to the Company’s performance for the year ended December 31, 2022, as further described in the “Compensation Discussion and Analysis” portion of this proxy statement. Greg Henslee and David O’Reilly, in consultation with the Human Capital and Compensation Committee, are excluded from participation in the annual cash incentive compensation plan pursuant to their responsibilities of providing strategic direction and guidance to the Company and their limited role in the Company’s day-to-day operational activities and, therefore, excluded from these financial performance measures.
|
Most Important Performance Measures |
Comparable Store Sales |
Operating Income |
Return on Invested Capital |
Free Cash Flow |
Potential Payments on Termination or Change in Control
Change in Control Agreements
The Company has entered into change in control severance agreements (“the CIC Agreements”) with its NEOs, which become effective only upon a Change in Control (as defined in the CIC Agreements). In addition, under the Company’s incentive plans there is acceleration of vesting with respect to stock options and restricted stock awards upon a Change in Control (as defined in the applicable incentive plan).
Pursuant to the terms of the CIC Agreements, if, within six months prior to or two years following a Change in Control, any of the NEOs’ employment is terminated by the Company without “Cause,” by reason of death or “Disability,” or by the NEO for “Good
43
Reason” (each, as defined in the CIC Agreements), then, thatsubject to the NEO’s execution of a release of claims and compliance with their CIC Agreement the NEO will be entitled toto:
| continuation of salary for two years and a payment equal to two times the NEO’s target bonus; |
| continuation of insurance coverage for two years; |
| any unpaid bonus for the immediately preceding year and a pro rata target bonus for the year of termination; |
| an amount equal to all earned but unused vacation days; |
| payment for outplacement services, up to $30,000 and not to exceed 24 months; |
| immediate vesting for all equity-based awards and immediate exercisability for 12 months for all outstanding stock options; and |
| all reasonable legal fees and expenses incurred in disputing the termination of the executive’s employment. |
32
The following table shows the amounts that those NEOs who have entered into CIC Agreements would have received if their employment had been terminated by the Company without Cause, by reason of death or Disability, or by the NEO for Good Reason immediately following a Change in Control on December 31, 2019.2022. The unvested stock option grants and unvested restricted share awards vest pursuant to the terms of the incentive plans upon a Change in Control irrespective of a termination of employment. ThisThe below table does not include amounts related to the NEOs’ vested benefits under the Deferred Compensation Plan, or pursuant to vested stock option grants or vested restricted share awards or other compensation, which are described in the tables above.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
|
| David |
| Greg |
| Gregory D. |
| Jeff M. |
|
|
| |||||||||||||||||||||||||
|
| O’Reilly |
| Henslee |
| Johnson |
| Shaw |
| Tom McFall | ||||||||||||||||||||||||||
Annual salary |
| $ | 1,400,000 |
| $ | 1,300,000 |
| $ | 2,000,000 |
| $ | 1,500,000 |
| $ | 1,600,000 | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | |||||||||||||||
|
| Greg | | David |
| Gregory D. |
| Brad | | Jeremy | | Brent |
| Tom | ||||||||||||||||||||||
| | Henslee | | O’Reilly | | Johnson | | Beckham | | Fletcher (b) | | Kirby | | McFall (b) | ||||||||||||||||||||||
Annual salary for two years | | $ | 1,570,000 | | $ | 1,360,000 | | $ | 2,850,000 | | $ | 1,200,000 | | $ | 1,100,000 | | $ | 1,200,000 | | $ | 1,000,000 | |||||||||||||||
Incentive compensation |
|
| — |
|
| — |
|
| 2,000,000 |
|
| 1,500,000 |
|
| 1,280,000 | |
| — | |
| — | |
| 2,850,000 | |
| 960,000 | |
| 880,000 | |
| 960,000 | |
| 800,000 |
Continuation of insurance coverage |
|
| 2,112 |
|
| 39,871 |
|
| 18,485 |
|
| 38,203 |
|
| 45,251 | |
| 45,724 | |
| 1,968 | |
| 46,531 | |
| 53,484 | |
| 52,414 | |
| 82,014 | |
| 48,414 |
Earned but not used vacation |
|
| 56,538 |
|
| 50,000 |
|
| 26,923 |
|
| 57,692 |
|
| 33,077 | |
| 81,518 | |
| 70,615 | |
| 147,982 | |
| 36,923 | |
| 45,480 | |
| 50,677 | |
| 51,922 |
Unvested stock option grants |
|
| — |
|
| 2,487,110 |
|
| 6,212,619 |
|
| 4,222,020 |
|
| 3,311,491 | |
| — | |
| — | |
| 7,007,433 | |
| 2,123,291 | |
| 1,512,188 | |
| 1,976,510 | |
| 4,694,521 |
Unvested restricted share awards |
|
| 1,052,701 |
|
| 775,282 |
|
| — |
|
| — |
|
| — | |
| 1,123,404 | |
| 1,137,752 | |
| — | |
| — | |
| — | |
| — | |
| — |
Total |
| $ | 2,511,351 |
| $ | 4,652,263 |
| $ | 10,258,027 |
| $ | 7,317,915 |
| $ | 6,269,819 | | $ | 2,820,646 | | $ | 2,570,335 | | $ | 12,901,946 | | $ | 4,373,698 | | $ | 3,590,082 | | $ | 4,269,201 | | $ | 6,594,857 |
(a) | Each NEO may also receive payment for outplacement service for up to $30,000. |
(b) | Effective May 9, 2022, Jeremy Fletcher was promoted to Executive Vice President and Chief Financial Officer, and at that time, Tom McFall’s title changed from Executive Vice President and Chief Financial Officer to Executive Vice President. |
Employment Arrangements with Executive Officers
The Company entered into a written employment agreement effective January 1, 1993, with David O’Reilly. Such agreement provides for Mr. O’Reilly to be employed by the Company for a minimum period of three years and automatically renews for each calendar year thereafter. As compensation for services rendered to the Company, the agreement provides for Mr. O’Reilly to receive (i) a base annual salary adjusted annually; and (ii) a bonus, the amount of which is determined by reference to such criteria as may be established by the Human Capital and Compensation Committee. Mr. O’Reilly, in consultation with the Human Capital and Compensation Committee, has elected to exclude himselfis excluded from participating in the bonus portion of his employment agreement pursuant to his responsibilities of providing strategic direction and guidance to the company and his more limited role in the Company’s day-to-day operational activities.
Mr. O’Reilly’s employment may be terminated by the Company for cause (as defined in the agreement) or without cause. If Mr. O’Reilly’s employment is terminated for cause or if Mr. O’Reilly resigns, his salary and bonus rights will cease on the date of such termination or resignation. If the Company terminates Mr. O’Reilly without cause, all compensation payments will continue through the remainder of the agreement’s term. Pursuant to this agreement, Mr. O’Reilly has agreed, for so long as he is receiving payments thereunder, to adhere to certain confidentiality obligations and refrain from engaging, directly or indirectly, in any automotive parts distribution, manufacturing or sales business in the states in which the Company operates without prior written consent of the Company. If Mr. O’Reilly had terminated employment on December 31, 2019,2022, such payments would have totaled approximately $735,000.$680,000.
The Company entered into a written retirement agreement effective December 29, 1997, as amended on February 1, 2001, with David O’Reilly. Such agreement, as amended, provides for supplemental retirement benefits for a period of ten years beginning with the date
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of Mr. O’Reilly’s retirement. Benefits under the agreement include an annual salary, adjusted annually for inflation, full participation in the Company’s health insurance program, full participation in the Company’s medical reimbursement plan for senior management, use and maintenance of a Company vehicle and premiums for split-dollar life insurance. Pursuant to this agreement, Mr. O’Reilly has agreed, for so long as he is receiving payments thereunder, to adhere to certain confidentiality obligations and refrain from engaging, directly or indirectly, in any automotive parts distribution, manufacturing or sales business in the states in which the Company operates without prior written consent of the Company. If Mr. O’Reilly had retired from the Company on December 31, 2019,2022, his first yearfirst-year annual salary payment would have totaled approximately $207,000,$226,000, and his other benefits under this agreement for the first year would have totaled approximately $27,800.$18,000.
Director Compensation
Please see the “Compensation of Directors” section of this proxy statement for a discussion of the manner in which the Company’s directors are compensated.
Certain Relationships and Related Transactions
The Company leases certain land and buildings related to 7268 of its O’Reilly Auto Parts stores and one surplus property under fifteen- and twenty-year operating lease agreements with entities in which David O’Reilly and Larry O’Reilly, and Rosalie O’Reilly Wooten, or members of their families, are affiliated. In addition, the Company leases certain land and buildings related to two of its O’Reilly Auto Parts stores under fifteen-year operating lease agreements with Greg Henslee. Generally, these lease agreements provide for renewal options for an additional five years at the option of the Company and the lease agreements are periodically modified to further extend the lease term for specific stores under the agreements. The total aggregate lease payments paid by the Company to the entities and individuals above was $4.7 million for the year ended December 31, 2019.2022. The Company believes that the terms and conditions of the transactions with affiliates
33
described above were no less favorable to the Company than those that would have been available to the Company in comparable transactions with unaffiliated parties.
Approval or ratification of transactions with related persons
Pursuant to the terms of the Audit Committee Charter, the Audit Committee is responsible for reviewing and approving all proposed transactions between the Company, any of the Company’s Officers or Directors, or relatives or affiliates of any such Officers or Directors, to ensure that such related party transactions are on a similar economic basis as a like transaction that occurred at arm’s length with an independent third party and are in the Company’s overall best interest and in the best interest of the Company’s shareholders. The quarterly Audit Committee meeting includes a standing agenda item for the review of such related party transactions. The Audit Committee has not adopted any specific procedures for the conduct of the reviews, rather each transaction is considered in light of the individual facts and circumstances. In the course of its review and approval of a transaction, the Audit Committee considers the following, among other factors it deems appropriate:
| whether the transaction is fair and reasonable to the Company; |
| the business reasons for the transaction; |
| whether the transaction would impair the independence of one or more of the Company’s Officers or Directors; and |
| whether the transaction is material, taking into account the significance of the transaction. |
During 2019,2022, all related party transactions were reviewed in accordance with the above procedures.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires the Company’s executive officers and Directors, and persons who own more than 10% of a registered class of the Company’s equity securities, to file reports of ownership and changes in ownership with the SEC. Such individuals are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. To the Company’s knowledge, based solely on its review of the copies of such forms furnished to it and written representations with respect to the timely filing of all reports required to be filed, it believes that such persons complied with all Section 16(a) filing requirements applicable to them with respect to transactions for the year ended December 31, 2022, except for a late Form 5 filing dated November 9, 2022, made on behalf of Larry O’Reilly reporting transactions made on July 27, 2020, and June 2, 2021.
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34
The Audit Committee functions pursuant to a written charter, which may be viewed on the Company’s website at www.OReillyAuto.com. In compliance with that charter and in connection with the December 31, 2019,2022, financial statements, the Audit Committee
| reviewed and discussed with management the Company’s audited financial statements as of, and for the year ended, December 31, |
| discussed with the |
| received from the independent auditors the written disclosures and the letter regarding the auditor’s independence required by the applicable requirements of the PCAOB and has discussed with the independent auditors their independence. |
Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements referred to above be included in the Company’s Annual Report on Form 10‑K10-K for the fiscal year ended December 31, 2019.2022.
THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS OF O’REILLY AUTOMOTIVE, INC.
Thomas T. Hendrickson
ChairpersonChair of the Audit Committee
Jay D. Burchfield
Member of the Audit Committee
John R. Murphy
Member of the Audit Committee
Dana M. Perlman
Member of the Audit Committee
Maria A. Sastre
Member of the Audit Committee
Andrea M. Weiss
Member of the Audit Committee
Fred Whitfield
Member of the Audit Committee
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35
PROPOSAL 2 -– ADVISORY VOTE ON EXECUTIVE COMPENSATION
Pursuant to Section 14A of the Exchange Act, the Company is required to provide shareholders with an opportunity to vote, on an advisory (non-binding) basis, to approve the compensation of its NEOs. This proposal is commonly referred to as a “Say-on-Pay” proposal. As required by these rules, the Company is asking you to vote FOR the adoption of the following resolution:
“Resolved, that the compensation paid to the Company’s NEOs, as disclosed in this proxy statement pursuant to Item 402 of Regulation S-K of the Securities Exchange Act of 1934, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”
In considering their vote, shareholders should review the Company’s compensation of its NEOs in the “Compensation Discussion and Analysis” (“CD&A”) section herein and Human Capital and Compensation Committee report included in these proxy materials. As described in the CD&A, the Company’s executive officer compensation programs are designed around the following elements:
| recruiting and retaining qualified Team Members, |
| the career development and progression of the Company’s Team Members, and |
| observed industry practices. |
The main objective of the Company’s compensation philosophy is to provide its executive officers and management with a total compensation package that is competitive and equitable and that encourages and rewards performance based in part upon the Company’s performance in terms of increases in share value. The Company believes that aligning the interests of its executives and management with those of its shareholders further promotes the success of not only the Company, but also its Team Members. The Company’s executive compensation policies are focused upon both short-term and long-term incentives and goals. The Company believes that such policies do not create incentives for inappropriate individual or collective risk taking. The Company also believes that the current programs do not create any incentives with respect to individual or collective behavior that are likely to have a material adverse effect upon either its risk profile or overall approach to risk management.
The Company also has adopted an incentive compensation clawback policy and entered into change in control agreements with the Company’s executives that do not contain excise tax gross-up provisions, as described in more detail above under the description “Clawback policy” and under the description “Potential Payments on Termination or Change in Control” in this proxy statement.
As this vote is advisory in nature, this proposal does not bind the Company to any specific course of action. However, the Human Capital and Compensation Committee, which is responsible for designing and implementing its executive compensation packages, values the opinions expressed by the Company’s shareholders in this vote and will consider the outcome of the vote when making decisions on future executive compensation packages.
Although this vote is advisory in nature and does not impose any action on the Company or the Human Capital and Compensation Committee of the Board, the Company strongly encourages all shareholders to vote on this matter.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE APPROVAL OF THE COMPANY’S EXECUTIVE OFFICER COMPENSATION AS DESCRIBED IN THIS PROXY STATEMENT.
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36
PROPOSAL 3 – ADVISORY VOTE ON THE FREQUENCY OF FUTURE SAY ON PAY VOTES
Pursuant to Section 14Aof the Exchange Act, every six years, the Company is required to provide shareholders with an opportunity to vote, on an advisory (non-binding) basis, as to whether the Company should hold an advisory vote on executive compensation every one, two or three years. Shareholders may also abstain from voting on the matter.
After considering the benefits and consequences of each option for the frequency of submitting the advisory vote on executive compensation to shareholders, the Board recommends submitting the advisory vote on the compensation of the NEOs to the Company’s shareholders every year (annually). The Company’s executive compensation programs are designed to support its long-term business strategy, and an annual vote will allow shareholders to more frequently assess the program in relation to the Company’s annual and long-term performance. As described in the “Compensation Discussion and Analysis” section herein, one of the core principles of the Company’s executive compensation program is to ensure management’s interests are aligned with its shareholders’ interests to support long-term value creation. While the Board acknowledges that a biennial or triennial vote is consistent with its long-term focus on performance and executive equity incentives, the Board believes that companies benefit from the rigor and discipline of having to annually submit their executive compensation to shareholder vote, for the reasons outlined below.
An annual vote will provide the Company with the regular input required to proactively respond to shareholders’ sentiments and implement any necessary changes as soon as reasonably possible. The Board carefully reviews and evaluates appropriate changes to the program each year to maintain the consistency and credibility of the program, which is important in motivating and retaining the Company’s Team Members. The Board, therefore, believes that an annual vote is an appropriate frequency to provide the Company’s management and the Board the ability to regularly assess shareholders’ input and to implement any appropriate changes to the Company’s executive compensation program.
Generally, the affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote at the Annual Meeting would be required for the approval of a proposal. However, because this vote for this proposal is advisory in nature, if no one single choice (one year, two years or three years) receives a total majority of the votes, the frequency receiving the most votes will be considered the preference of the shareholders.
As this vote is advisory in nature, this proposal does not bind the Company to any specific course of action. However, the Human Capital and Compensation Committee of the Board, which will be ultimately responsible for determining the frequency of future compensation votes, values the opinions expressed by the Company’s shareholders and will consider the outcome of the vote when making decisions on the frequency of future advisory votes on executive compensation.
Although this vote is advisory in nature and does not impose any action on the Company or the Human Capital and Compensation Committee of the Board, the Company strongly encourages all shareholders to vote on this matter. The next advisory vote on the frequency of future say on pay votes is expected to occur in 2029.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR A FREQUENCY OF “ONE YEAR” FOR ADVISORY VOTES ON EXECUTIVE COMPENSATION.
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PROPOSAL 3 -4 – RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Audit Committee is directly responsible for the appointment, compensation, retention, evaluation and oversight of the Company’s independent registered public accounting firm retained to audit the Company’s financial statements. As part of this responsibility, the Audit Committee considers the firm’s independence, qualifications, performance, and whether the independent registered public accounting firm should be rotated, as well as the impact of such a rotation. The Audit Committee is also involved in the selection and approval of the Lead Audit Partner who, in compliance with Sarbanes-Oxley requirements, rotates every five years. The last Lead Audit Partner rotation occurred in 2015.2020. Pursuant to these requirements, the Company will have a new Lead Audit Partner in 2020.2025.
At the Annual Meeting of Shareholders held on May 7, 2019,12, 2022, the Company’s shareholders ratified the selection of Ernst & Young (“E&Y”) as the Company’s independent auditors for the year ending December 31, 2019. 2022.
It is the Audit Committee’s policy that the Company’s independent auditors be engaged to provide primarily audit and audit-related services. However, pursuant to the policy, in certain circumstances and using stringent standards in its evaluation, the Audit Committee may authorize the Company’s independent auditors to provide tax or other non-audit related services when it determines that the Company’s independent auditors will be the most efficient and effective service provider.
The Audit Committee has adopted a policy that requires advance approval of all audit, audit-related, tax and other services performed by the independent auditor. The policy provides for preapproval by the Audit Committee of specifically defined audit and non-audit services. Unless the specific service has been previously approved with respect to that year, the Audit Committee must approve the permitted service before the independent auditor is engaged to perform it. The Audit Committee has delegated to the ChairpersonChair of the Audit Committee authority to approve permitted services, provided that the ChairpersonChair reports any decisions to the Committee at its next scheduled meeting. Each year prior to engaging the Company’s independent auditor, the Company submits to the Audit Committee for approval a list of services expected to be provided during that fiscal year within each of the three categories of services described below, as well as related estimated fees, which are generally based on time and materials.
All services provided by the Company’s independent auditor during 20192022 were preapproved in accordance with this policy.
The Audit Committee, after review and discussion with the Company’s independent auditor of the preceding information, determined that the provision of these services was compatible with maintaining the Company’s independent auditor’s independence.
Fees Paid to Independent Registered Public Accounting Firm
The following table summarizes the fees billed by E&Y for audit and other professional services during the years ended December 31, 20192022 and 2018:2021:
|
|
|
|
|
|
| ||||||
|
| For the Year Ended | ||||||||||
|
| December 31, | ||||||||||
|
| 2019 |
| 2018 | ||||||||
| | | | | | | ||||||
| | For the Year Ended | ||||||||||
| | December 31, | ||||||||||
|
| 2022 |
| 2021 | ||||||||
Audit fees (a) |
| $ | 2,016,455 |
| $ | 2,008,331 | | $ | 2,212,734 | | $ | 1,976,812 |
Audit-related fees (b) |
|
| 30,875 |
|
| 30,900 | |
| 33,990 | |
| 48,386 |
Tax fees (c) |
|
| 405,151 |
|
| 481,004 | |
| 387,061 | |
| 338,734 |
Total Fees |
| $ | 2,452,481 |
| $ | 2,520,235 | | $ | 2,633,785 | | $ | 2,363,932 |
(a) | Consists of fees and expenses billed for the audit of the Company’s consolidated financial statements, the audit of the effectiveness of internal control over financial reporting and the review of the Company’s quarterly reports on Form |
(b) | Consists of fees and expenses billed for the annual audit of the Company’s employee benefit |
(c) | Consists of fees and expenses billed for tax advisory services, including compliance, planning and advice. |
The Audit Committee of the Board has selected Ernst & Young LLP (“E&Y”), as the Company’s independent auditors for the year ending December 31, 2020,2023, and has further directed that management submit the selection of independent auditors for ratification by the shareholders at the Annual Meeting. E&Y has audited the Company’s financial statements since 1992. Representatives of E&Y are expected to be present at the Annual Meeting. They will have an opportunity to make a statement, if they so desire, and will be available to respond to appropriate questions.
None of the Company’s Bylaws, other governing documents, Missouri or federal law, or The Nasdaq Global Select Market Listing Qualifications requires shareholder ratification of the selection of E&Y as the Company’s independent auditors. However, the Audit Committee is submitting the selection of E&Y to the shareholders for ratification as a matter of good corporate practice. If the
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shareholders fail to ratify the selection, the Audit Committee will reconsider whether or not to retain that firm. Even if the selection is
37
ratified, the Audit Committee, in its discretion, may direct the appointment of different independent auditors at any time during the year if the Audit Committee determines that such a change would be in the best interests of the Company and its shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE PROPOSAL TO RATIFY THE SELECTION OF ERNST & YOUNG LLP AS THE COMPANY’S INDEPENDENT AUDITORS FOR THE YEAR ENDING DECEMBER 31, 2020.2023.
50
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PROPOSAL 4 - AMENDMENT TO ARTICLES OF INCORPORATION TO REDUCE STOCK OWNERSHIP REQUIRED FOR SHAREHOLDERS TO CALL SPECIAL MEETING
At the Company’s 2019 Annual Meeting of Shareholders, a shareholder proposal requesting that the Board “take the steps necessary to amend our bylaws and each appropriate governing document to give holders in the aggregate of 15% of our outstanding common stock the power to call a special shareowner meeting” received approximately 51% of the votes represented by the shares present and entitled to vote at the meeting. In light of the voting outcome, the Board and the Corporate Governance and Nominating Committee considered possible amendments to the Company’s Articles of Incorporation (the “Articles”) and Bylaws.
After careful consideration, and upon the recommendation of the Corporate Governance and Nominating Committee, the Board has approved, and recommends to the shareholders for approval, an amendment to the Articles to reduce the stock ownership required for shareholders to call a special meeting. This amendment would permit shareholders that own, in the aggregate, at least 15% of the voting power of the Company’s outstanding shares of common stock, as calculated below, to call a special meeting of shareholders. The current minimum stock ownership required to call a special meeting is 25% of the voting power of the Company’s outstanding shares of common stock, as further detailed below.
Existing Ownership Threshold.
The Articles and Bylaws currently provide that shareholders representing at least 25% of the voting power of the Company’s outstanding shares of common stock may call a special meeting of shareholders if those shareholders have held a net long position in those shares for at least one year. The one-year holding and net long position requirements are intended to protect against a meeting being called by shareholders whose interests are transitory or are otherwise not aligned with those of other shareholders in terms of advancing the economic prospects of the Company. The Bylaws also set forth the procedures and other requirements related to calling a special meeting, which are not being amended in connection with this Proposal 4.
Amended Ownership Threshold.
Pursuant to the proposed amendment to the Articles and the corresponding amendment to the Bylaws, the minimum ownership threshold would be reduced from 25% to 15%. No other provisions of the Articles or Bylaws, including the method to calculate voting power, would be amended in connection with this Proposal 4.
The Board, upon recommendation of the Corporate Governance and Nominating Committee, has approved a corresponding amendment to the Bylaws, which will become effective if and when the amendment to the Articles becomes effective.
The proposed amendment to the Articles described in this Proposal 4 is set forth in Annex A to this proxy statement, with additions of text underscored and deletions of text shown as strikethroughs.
If this proposed amendment to the Articles is approved by the Company’s shareholders, it will become effective upon its filing with the Secretary of State of the State of Missouri, which filing would be made promptly after the 2020 Annual Meeting of Shareholders. If this proposed amendment to the Articles is not approved, neither such amendment to the Articles nor the corresponding amendment to the Bylaws will take effect.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE ADOPTION AND APPROVAL OF THIS AMENDMENT TO THE ARTICLES OF INCORPORATION.
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PROPOSAL 5 - AMENDMENT TO ARTICLES OF INCORPORATION TO DELETE UNNECESSARY AND OUTDATED LANGUAGE RELATED TO CLASSIFICATION OF BOARD AND TO REFLECT OTHER NON-SUBSTANTIVE REVISIONS
The Articles currently include certain language that is no longer necessary or relevant. After careful consideration, and upon the recommendation of the Corporate Governance and Nominating Committee, the Board has approved, and recommends to the shareholders for approval, an amendment to the Articles to delete such language, including with respect to the prior classification of the Board. For background, the Board previously was divided into three classes, where one-third of the Board was elected each year, thereby making each Director’s term three years. Because the Board’s classified structure ceased in 2015 and now all Directors are elected on an annual basis, language in the Articles providing for the transition from a classified board structure to the annual election of all Directors is no longer applicable. Accordingly, the Board is proposing to delete such language.
In addition, for clarity, the Board is proposing to rename the Amended and Restated Articles of Incorporation to the “Second Amended and Restated Articles of Incorporation.”
The proposed amendment to the Articles described in this Proposal 5 is set forth in Annex B to this proxy statement, with additions of text underscored and deletions of text shown as strikethroughs.
If this proposed amendment to the Articles is approved by the Company’s shareholders, it will become effective upon its filing with the Secretary of State of the State of Missouri, which filing would be made promptly after the 2020 Annual Meeting of Shareholders. If this proposed amendment to the Articles is not approved, it will not take effect.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE ADOPTION AND APPROVAL OF THIS AMENDMENT TO THE ARTICLES OF INCORPORATION.
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PROPOSAL 6 - SHAREHOLDER PROPOSAL RELATING TO MATERIAL HUMAN CAPITAL RISKS AND OPPORTUNITIES
The Company has been advised that As You Sow, on behalf of Terry L Miller and Debra Shank Miller, P.O. Box 17311, Seattle, WA 98127, who have indicated that they are beneficial owners of no less than $2,000 worth of shares of the Company’s common stock, intends to submit the following proposal at the Annual Meeting:
“Whereas: Human capital management disclosures are garnering attention in Congress1 and the SEC;2
The retail sector’s low-average wages, which help our Company maintain low prices on products, may increase labor-related risks. Companies can face decreases in market share and revenue from negative consumer sentiment in the event of public disagreement between companies and workers;
Underrepresentation of women and minorities in management structures may lay a foundation for allegations of discriminatory practices in promotions or wages. Litigation can eat into thin margins and cause reputational damage;
The Sustainability Accounting Standards Board (SASB) has established sector-specific standards to assist companies in disclosing financially material, decision-useful sustainability information to investors. The standards identify a minimum set of sustainability issues most likely to impact operating performance or financial condition of the typical company in an industry. Businesses use SASB standards to better identify, manage, and communicate to investors sustainability information that is comparable, consistent, and financially material, thereby enabling better investment and voting decisions;
The SASB standards are recognized as financially material by mainstream investors. The SASB Investor Advisory Group, 46 global asset owners and managers “[b]elieve SASB’s approach--which is industry-specific and materiality-focused--will help provide investors with relevant and decision-useful information.”3 Members of the SASB Investor Advisory Group and SASB Alliance, “a growing movement of organizations that believe standardized, industry-specific, and materiality-based standards help companies and investors adapt to the market’s expectations,” comprise seven of the ten largest worldwide money managers4 as well as pension funds of six states;5
SASB Labor Practices standards encompass average hourly wage and percentage of in-store employees earning minimum wage; voluntary and involuntary turnover rate for in-store employees; and total amount of monetary losses as a result of legal proceedings associated with labor law violations;
SASB Workforce Diversity and Inclusion metrics concern the percentage of each gender category for global operations; and standard EEO-1 racial and ethnic group categories for U.S. operations for management and non-managerial employees;
Yet, our Company does not disclose this financially material information. Its absence challenges investors’ ability to comprehensively evaluate our company’s management of sustainability risks and opportunities;
Therefore, be it resolved: Shareholders request that the Board of Directors issue a report to shareholders describing the company’s policies, performance, and improvement targets related to material human capital risks and opportunities by 180 days after the 2020 Annual Meeting, at reasonable expense and excluding confidential information, prepared in consideration of the metrics and guidelines set forth in the SASB Multiline and Specialty Retailers & Distributors standard’s provisions on workforce diversity and inclusion and labor practices requirements.”
____________________________
1Dana Wilkie, “Workplace May Be New Battleground for 2019-20 Congress,” November 7, 2018.
Available at https://www.shrm.org/hr-today/news/hr-news/pages/2018-mid-term-election-workplace- legislation.aspx
2Securities And Exchange Commission 17 CFR 229, 239, and 240 [Release Nos. 33-10668; 34-86614; File No. S7-11-19] RIN 3235-AL78. Modernization of Regulation S-K Items 101, 103, and 105.
Available at https://www.sec.gov/rules/proposed/2019/33-10668.pdf
3Support from Investors. https://www.sasb.org/investor-use/supporters/
4Pensions & Investments “The Largest Money Managers,” May 27, 2019. At 25.
https://www.pionline.com/assets/docs/CO119854528.PDF
5SASB Alliance Organizational Members. https://www.sasb.org/alliancemembership/ organizational-members/
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The Company’s Statement in Opposition to Proposal 6:
The Board recommends a vote AGAINST proposal 6, as the Board believes that the requested report is unnecessary and not in the best interests of the Company or its shareholders.
The Company’s approach to material human capital risks and opportunities, including workforce diversity and inclusion and labor practices, is integral to the Company’s success and already is described in the Company’s Sustainability, Social, & Governance Report.
The Board believes that the Company’s existing public disclosures, including the Sustainability, Social, & Governance Report (the “Report”) available on the Company’s website, describe its approach to and the importance to the Company of material human capital risks and opportunities, including workforce diversity and inclusion and labor practices. The Company is committed to a thoughtful approach that best leverages the Company’s time and resources and takes into account our engagement with various stakeholders and our focus on transparently communicating our environmental, social and governance (“ESG”) progress. The Report, which the Company intends to publish annually, represents a first step on the Company’s path to expand and report on its ESG initiatives.
As publicly affirmed in the Report, the Company is committed to workforce diversity and promoting an inclusive environment. In order to promote diversity, the Company helps build bridges between Team Members to trust, respect and understand one another including encouraging differing perspectives. In addition, the Company’s Talent Acquisition team offers diversity resources in each state where we operate in order to help find the best and most diversified candidates for employment. The Company also is equally committed to maintaining a workplace that respects the diversity of its Team Members by enforcing our Equal Employment Opportunity, or EEO, policies and respecting and encouraging diversity of thought and being open to novel ideas. To that end, we have a zero tolerance policy for discrimination and harassment and are dedicated to providing a work environment that is free from discrimination and harassment, which are strictly prohibited and will not be tolerated. We also provide ongoing training to Team Members to both educate and maintain compliance with our zero tolerance policy and any Team Member who violates this policy is subject to discipline, up to and including termination.
The Company also is committed to sound labor practices, including with respect to employee compensation and benefits, health and wellness programs, engagement and advancement programs, community outreach initiatives and human rights standards for our suppliers. ��We pay competitive, market-driven wages to Team Members, along with incentive pay based upon individual or store performance. In addition, we offer up to three different levels of health care plans to eligible Team Members, with the Company funding a significant percentage of the cost for such coverage. We also offer a number of programs designed to ready Team Members to take on more responsibility and for promotion, such as the Leadership Enhancement and Development Program, which identifies Team Members for next-level management positions and invites those Team Members to complete development activities to prepare them for advancement. The Company’s Field Manager Training Programs equip those promoted, in part, by offering additional leadership workshops that include training on diversity and inclusion.
In addition, the Company views its community outreach initiatives as an extension of its labor practices, which have resulted in donations of more than $18.7 million to charities and community groups addressing a variety of needs in employees’ communities, such as hunger, veteran support, at-risk children, sheltering the victims of domestic abuse, literacy, cancer research, homelessness and humane societies. Finally, in addition to the Company’s own labor practices, the Company supports efforts to eradicate slavery and human trafficking in its supply chain. Accordingly, the Company’s suppliers are required to acknowledge there is no slavery or human trafficking involved with the products they supply to the Company.
Given the Company’s ongoing focus on material human capital risks and opportunities, including workforce diversity and inclusion and labor practices, creation of the requested report would require significant time and expense and would offer little added benefit to shareholders in light of the information already provided and intended to be provided by the Company.
The Board also believes that the proposal seeks to advance a solution to a problem that does not exist at the Company. In particular, the proposal ignores the tremendous shareholder value created by the Company’s outstanding long-term performance and the Board and management’s exceptional leadership. For example, the Company’s stock price grew from $192.62 at the end of 2014 to $438.26 at the end of 2019, representing a total shareholder return of 128% over the most recent five-year period. By comparison, the total shareholder return of the S&P 500 Index during the same five-year period was 57%. The strong performance of the Company’s stock in both absolute and relative terms underscores the fact that the proposal does not seek to address any performance-related deficiencies at the Company.
The Company remains committed to providing reasonable, cost-effective and transparent information on material human capital risks and opportunities to its stakeholders, including investors, customers and our communities. The Board believes that preparation and publication of the requested report, however, would not be an efficient use of the Company’s financial and human resources. In
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particular, the requested report would not provide sufficient benefits to justify the required time and expense, particularly in light of the information already available on the Company’s website or otherwise publicly available. Therefore, the Board believes that the requested report is unnecessary and not in the best interest of the Company or its shareholders.
Recommendation of the Board:
For the foregoing reasons, the Board of Directors recommends that you vote “AGAINST” proposal 6 to requesting a report. As with all proposals, if the proposal is not properly presented by the proponent at the Annual Meeting, it will not be voted upon.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “AGAINST” THE SHAREHOLDER PROPOSAL RELATING TO MATERIAL HUMAN CAPITAL RISKS AND OPPORTUNITIES.
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PROPOSAL 7 -– SHAREHOLDER PROPOSAL ENTITLED “INDEPENDENT BOARD CHAIRMAN”
The Company has been advised that Mr. John Chevedden, 2215 Nelson Avenue, No. 205, Redondo Beach, CA 90278, who has indicated he is a beneficial owner of no fewer than 5010 shares of the Company’s common stock, intends to submit the following proposal at the Annual Meeting:
“Proposal 5 – Independent Board Chairman
Shareholders request ourthat the Board of Directors to adopt asan enduring policy, and amend ourthe governing documents as necessary to requirein order that 2 separate people hold the office of the Chairman and the office of the CEO.
Whenever possible, the Chairman of the Board shall be an independent memberIndependent Director.
The Board has the discretion to select a Temporary Chairman of the Board whenever possible. Although it would be betterwho is not an Independent Director to have an immediate transition to an independent Board Chairman,serve while the Board would haveis seeking an Independent Chairman of the discretionBoard on an accelerated basis.
It is a best practice to phaseadopt this policy soon. However, this policy could be phased in this policywhen there is a contract renewal for our current CEO or for the next Chief Executive OfficerCEO transition.
If the Board determines that a Chairman, who was independent when selected is no longer independent, the Board shall select a new Chairman who satisfies the requirements of the policy within a reasonable amount of time. Compliance with this policy is waived if no independent director is available and willing to serve as Chairman.
This proposal topic won 50%-plus support at 5 major U.S. companies in one-year including 73%-support at Netflix. These 5 majority votes would have been still higher if all shareholders had access to independent proxy voting advice. This proposal topic won 36%-support at our 2016 annual meeting which is significant.
However in 2016 this situation probably did not exist: Both our Chairman, David O'Reilly, and our Lead Director, Jay Burchfield, received 6-times as many negative votes each in 2019 as 2 other directors. Plus David O'Reilly had 47-years long tenure and Jay Burchfield had 22-years long-tenure. Long-tenure in a director is the opposite of independence and independence can be the most important attribute for a director especially a Chairman or a Lead Director.
In 2019 shareholders rejected management's advice and gave 51 %-support to a shareholder proposal to make calling a special meeting more accessible to shareholders. This 51 % support probably represents more than 55% support from shareholders who have access to independent proxy voting advice.
Management should take into consideration that many shareholders lack access to independent proxy voting advice and thus 51 % support is truly impressive. Plus the 2019 O'Reilly proxy said that O'Reilly is committed to stockholder engagement. Apparently the O'Reilly stockholder engagement did not foresee the 51 %-vote.
The roles of Chairman and CEO are fundamentally different and should be held by 2 directors, a CEO and a Chairman who is completely independent of the CEO and our company. The job of the CEO is to manage the company. The job of the Chairman is to oversee the CEO and management.
This proposal is important to O’Reilly Automotive because the Board can give the 2 most important jobs at O’Reilly Automotive, Chairman and CEO, to one person on short notice.
Plus there is no provision for an enhanced role for a Lead Director when one person holds the 2 most important jobs at O’Reilly Automotive. This proposal topic won nearly 40% support at the 2020 O’Reilly Automotive meeting in spite of not pointing out the lack of an enhanced role for a Lead Director.
Please vote yes:
Independent Board Chairman-Proposal 7Chairman – Proposal 5”
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The Company’s Statement in Opposition to Proposal 7:5:
The Board recommends a vote AGAINST proposal 7,5, as the Board believes the proposal is unnecessary and not in the best interests of the shareholders.
The roles of the Chairman and Chief Executive Officer are currently separate.
The Company already has a separate Chairman and Chief Executive Officer, contrary to the proponent’s implications,, and those positions have been filled by separate individuals for the last 1518 years. Nevertheless, thethe Board has carefully considered and approved its current leadership structure and firmly believes that such structure is appropriate and in the best interests of the Company and its shareholders. In particular, the Board believes that its current leadership structure allows our Chief Executive Officer to focus on developing and implementing the Company’s business strategies and objectives and supervising day-to-day business operations and allows our Chairman to lead the Board in its oversight and advisory roles. The Board also believes that the current separation of the Chairman and Chief Executive Officer roles provides a clear delineation of responsibilities for each position and fosters greater accountability of management.
In addition, since 2008, the Board has had an Independent Lead Director. We believe that the Independent Lead Director provides strong, independent leadership and aids the Board in meeting its fiduciary obligations to the Company and its shareholders. Our Independent Lead Director carries a clear mandate and has significant authority and responsibilities, including presiding at the executive sessions of the independent directors and coordinating the activities of the other independent directors.
A flexible leadership structure is the most effective for the Company and our shareholders.
The Company does not have a formal policy requiring that the positions of Chairman and Chief Executive Officer be separated or requiring that the position of Chairman be filled only by an independent director. Instead, the Board believes that the Company and its shareholders are best served when leadership choices are made by the Board on a case-by-case basis -– rather than be dictated by a predetermined policy. This approach provides the Board with the necessary flexibility to determine whether the positions should be held by the same person or by separate persons based on the leadership needs of the Company at any particular time. Adopting a policy to restrictAlthough the Board’s discretion in selectingCompany has separated the Chairman, as well as restricting the ability to combine the positionsroles of Chairman and Chief Executive Officer for 18 years, adopting a rigid requirement to split these positions would deprive the Board of the ability to select the most qualified and appropriate individual to lead the Board as Chairman regardless of what the Board believes to be in the best interests of the Company and its shareholders.
In addition, the Board effectively oversees management and provides vigorous oversight of the Company’s business and affairs. The Board and its standing committees, which consist entirely of independent directors, vigorously oversee the effectiveness of management policies and decisions, including the execution of key strategic initiatives. Consequently, independent directors directly oversee such critical matters as the integrity of the Company’s financial statements, the compensation of executive management, the selection and evaluation of directors, and the development and implementation of corporate governance programs. Moreover, as described above, the Board has adopted a practice of appointing an Independent Lead Director who is charged with acting as a liaison among other directors, with management and between Board committees and the Board. The Independent Lead Director could also preside at Board meetings in the absence of the Chairman. This position improves the functionality of the Board and its Committees and aids in the fiduciary obligations each director has to the Company and its shareholders.
The Company’s long track record of strong performance demonstrates that the Company’s existing corporate governance policies are effective.
The Board also believes that the proposal seeks to advance a solution to a problem that does not exist at the Company. In particular, the proposal ignores the tremendous shareholder value created by the Company’s outstanding long-term performance and the Board and management’s exceptional leadership. For example, the Company’s stock price grew from $192.62$240.54 at the end of 20142017 to $438.26$844.03 at the end of 2019,2022, representing a total shareholder return of 128%351% over the most recent five-year period. By comparison, the total shareholder return of the S&P 500 Index during the same five-year period was 57%144%. The strong performance of the Company’s stock in both absolute and relative terms underscores the fact that the proposal does not seek to address any performance-related deficiencies at the Company.
The Board further believes that the current leadership model, when combined with our independent board governance structure, provides strong and consistent leadership and independent and effective oversight of the Company’s business and affairs. The proposal attempts to impose an inflexible policy that does not permit the Board, regardless of the circumstances, to exercise judgment about which arrangements would best serve the interests of our shareholders. The Board does not believe that adoption of such policy is either the right approach ornor necessary for the Company or its shareholders.
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Given the current separation of the Chairman and Chief Executive Officer roles, coupled with the Company’s strong corporate governance policies and long track record of performance, the Board believes that adoption of the proposal is unnecessary and not in the best interest of the Company or its shareholders. Further, our shareholders affirmed this view by rejecting a substantially similar proposal submitted by the same proponent at both our 2016 and 2020 annual meetingmeetings of shareholders.
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Recommendation of the Board:
For the foregoing reasons, the Board of Directors recommends that you vote “AGAINST” proposal 75 to adopt an independent board chairman policy. As with all proposals, if the proposal is not properly presented by the proponent at the Annual Meeting, it will not be voted upon.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “AGAINST” THE SHAREHOLDER PROPOSAL ENTITLED “INDEPENDENT BOARD CHAIRMAN.”
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The following table sets forth shares authorized for issuance under the Company’s equity compensation plans as of December 31, 20192022 (in thousands, except weighted-average exercise price):
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| Number of securities remaining | |||||||
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| Number of shares to be |
| Weighted-average |
| available for future issuance | ||||||||
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| issued upon exercise of |
| exercise price of |
| under equity compensation plans | ||||||||
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| outstanding options, |
| outstanding options, |
| (excluding securities reflected in | ||||||||
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| warrants and rights |
| warrants and rights (a) |
| column (a)). | ||||||||
| | | | | | | | |||||||
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| (A) | | (B) |
| (C) | ||||||||
| | | | | | Number of securities remaining | ||||||||
| | Number of securities to be | | Weighted-average | | available for future issuance | ||||||||
| | issued upon exercise of | | exercise price of | | under equity compensation plans | ||||||||
| | outstanding options, | | outstanding options, | | (excluding securities reflected in | ||||||||
| | warrants and rights | | warrants and rights (a) | | column (A)). | ||||||||
Equity compensation plans approved by shareholders |
| 1,635 |
| $ | 218.10 |
| 5,749 | | 1,069 | | $ | 356.76 |
| 5,575 |
Equity compensation plans not approved by shareholders |
| — |
|
| — |
| — | | — | |
| — |
| — |
Total |
| 1,635 |
| $ | 218.10 |
| 5,749 | | 1,069 | | $ | 356.76 |
| 5,575 |
| Includes weighted average exercise price of outstanding stock options. |
The Annual Report of the Company for the year ended December 31, 2019,2022, containing, among other things, audited consolidated financial statements of the Company, accompanies this proxy statement.
FUTURE PROPOSALS OF SHAREHOLDERS
Shareholder proposals intended to be presented at the 20212024 Annual Meeting and included in the Company’s proxy materials relating to that meeting pursuant to Rule 14a‑814a-8 under the Exchange Act must be received by the Company at the Company’s principal executive offices by November 27, 2020.December 2, 2023. In order for shareholder proposals made outside of Rule 14a‑814a-8 under the Exchange Act to be considered “timely” within the meaning of Rule 14a‑4(c)14a-4(c) under the Exchange Act, the Company’s Bylaws require that such proposals must be submitted, not later than February 13, 2021,18, 2024, and not earlier than January 14, 2021.19, 2024. In order for director nominations to be included in the Company’s proxy materials pursuant to the Bylaws, nominations must comply with the requirements and conditions of the Bylaws, including the delivery of proper notice to the Secretary of the Company at the Company’s address appearing on the first page of this proxy statement not later than November 27, 2020,December 2, 2023, and not earlier than October 28, 2020.November 2, 2023.
The Board knows of no business to be brought before the Annual Meeting other than as set forth in this proxy statement. If other matters properly come before the meeting, it is the intention of the persons named in the solicited proxy to vote the proxy on such matters in accordance with their judgment as to the best interests of the Company.
MISCELLANEOUS
The Company will pay the cost of soliciting proxies in the accompanying form. In addition to solicitation by use of the mails, certain officers and regular employees of the Company may solicit the return of proxies by telephone, fax or personal interview and may request brokerage houses and custodians, nominees and fiduciaries to forward soliciting material to their principals and will agree to reimburse them for their reasonable out-of-pocket expenses.
Shareholders are urged to mark, sign, date and send in their proxies without delay or vote via telephone or Internet using the instructions on the proxy card.
COMMUNICATION WITH THE BOARD OF DIRECTORS
A shareholder who wishes to communicate with the Company’s Board, specific individual Directors or the independent Directors as a group, may do so by directing a written request addressed to such Director(s) in care of the Corporate Secretary at 233 South Patterson Avenue, Springfield, Missouri, 65802 or via e-mail through its website at www.OReillyAuto.com. Such communication will be directed to the intended Director, group of Directors or the entire Board, as the case may be.
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In some instances, only one copy of this proxy statement or Annual Report is being delivered to multiple shareholders sharing an address, unless the Company has received instructions from one or more of the shareholders to continue to deliver multiple copies. The Company will deliver promptly upon oral or written request a separate copy of the proxy statement or Annual Report, as applicable, to any shareholder at your address. If you wish to receive a separate copy of the proxy statement or Annual Report, you may call the Secretary of the Company at (417) 874‑7161,874-7280, or send a written request to O’Reilly Automotive, Inc., 233 South Patterson Avenue, Springfield, Missouri 65802, Attention: Secretary. Alternatively, shareholders sharing an address who now receive multiple copies of the proxy statement or Annual Report may request delivery of a single copy, also by calling the Secretary of the Company at the number or writing to the Company at the address listed above.
Additional information regarding the Company can be found in the Company’s Annual Report on Form 10‑K10-K for the year ended December 31, 2019,2022, filed by the Company with the SEC.
A copy of the Company’s Annual Report on Form 10‑K10-K for the year ended December 31, 20192022 (as filed with the SEC), including financial statements and financial statement schedules (excluding most exhibits), is available to shareholders without charge, upon written request to O’Reilly Automotive, Inc., 233 South Patterson Avenue, Springfield, Missouri 65802, Attention: Secretary.
By Order of the Board of Directors
Tricia HeadleyJulie Gray
Secretary
Springfield, Missouri
March 27, 202031, 2023
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PROPOSED AMENDMENT TO ARTICLES OF INCORPORATION TO REDUCE STOCK OWNERSHIP REQUIRED FOR SHAREHOLDERS TO CALL SPECIAL MEETING
Article VII:
A special meeting of the shareholders may be called only by: (i) the Board of Directors pursuant to a resolution adopted by the affirmative vote of a majority of the entire Board of Directors; (ii) the Chief Executive Officer of the corporation; (iii) the Chief Operating Officer of the corporation; or (iv) as and to the extent required by the Bylaws of this corporation, by the Secretary of this corporation upon the written request of the holders of record of at least twenty-fivefifteen percent (2515%) of the voting power of all outstanding shares of common stock of the corporation entitled to vote at such meeting, such voting power to be calculated and determined in the manner specified, and with any limitations as may be set forth, in this corporation’s Bylaws. At such special meeting of shareholders, only such business shall be conducted, and only such proposals shall be acted upon, as were specified in the notice thereof.
A-1
PROPOSED AMENDMENT TO ARTICLES OF INCORPORATION TO DELETE UNNECESSARY AND OUTDATED LANGUAGE RELATED TO CLASSIFICATION OF BOARD AND TO REFLECT OTHER NON-SUBSTANTIVE REVISIONS
Article IV:
The number of directors of the corporation shall be that number that is fixed by, or in the manner provided in, the Bylaws of the corporation; provided, however, that the number of directors of the corporation shall not be less than three. Directors need not be shareholders of the corporation.
Prior to the 2015 annual meeting of shareholders, the Board of Directors shall be classified and shall be divided into three classes, as nearly equal in number as possible: Class I, Class II and Class III. Class II directors were elected at the 2010 annual meeting of shareholders for a term expiring at the 2013 annual meeting of shareholders. Class III directors were elected at the 2011 annual meeting of shareholders for a term expiring at the 2014 annual meeting of shareholders. Class I directors were elected at the 2012 annual meeting of shareholders for a term expiring at the 2015 annual meeting of shareholders. Commencing with the 2013 annual meeting of shareholders, successors to the class of directors whose term expires at such annual meeting shall be elected in accordance with this Article IV for a term expiring at the next succeeding annual meeting of shareholders and the election and qualification of their respective successors, if any. Commencing with the 2015 annual meeting of shareholders, the classification of directors shall cease, and allAll directors shall be elected for a term expiring at the next succeeding annual meeting of shareholders and the election or qualification of their respective successors, if any.
As used in these Articles of Incorporation, the term “entire Board of Directors” means the directors comprising all the classes into which the Board of Directors has been divided, if any. Subject to the rights, if any, of the holders of any class of capital stock of the corporation other than common stock then outstanding, any vacancies in the Board of Directors that occur for any reason prior to the expiration of the term of office of a director, including vacancies that occur by reason of an increase in the number of directors, shall be filled only by the Board of Directors of the corporation, acting by the affirmative vote of a majority of the remaining directors then in office (even if less than a quorum).
B-1
O’REILLY AUTOMOTIVE, INC.
You are cordially invited to attend the Annual Meeting of Shareholders of O’Reilly Automotive, Inc., to be held virtually via live audio webcast at the DoubleTree Hotel Springfield, 2431 North Glenstone Avenue, Springfield, Missouri,www.virtualshareholdermeeting.com/ORLY2023 on Thursday, May 14, 2020,18, 2023, at 10:9:00 a.m. Central Time.
We intend You must enter the 16-digit control number found on your proxy card, voting instruction form or Important Notice Regarding the Availability of Proxy Materials, to hold our Annual Meeting in person. However, we are actively monitoringaccess the coronavirus (COVID-19); we are sensitive to the public health and travel concerns our shareholdersvirtual meeting. If you do not have a control number, you may have and the protocols that federal, state and local governments may impose. In the event it is not possible or advisable to hold our Annual Meeting in person, we will announce alternative arrangements foraccess the meeting inas a press release and a filing with the Securities and Exchange Commission as promptly as practicable, which may include holding the meeting solely by means of remote communication. Please also monitor our website at www.OReillyAuto.com for updated information. If you are planning to attend our meeting in person, please check the website one week prior to the meeting date for final details. We encourage you to vote your shares prior to the Annual Meeting by completing, signing, dating and returning the enclosed proxy card in the envelope provided at your earliest convenience or voting via telephone or Internet using the instructions on the proxy card.guest.
2019
2022 HIGHLIGHTS
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.www.proxyvote.com.
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PROXY
PROXY
O’REILLY AUTOMOTIVE, INC.
Annual Meeting of Shareholders
Thursday, May 14, 202018, 2023
(THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS)
The undersigned hereby appoints Greg Henslee, David O’Reilly and Larry O’Reilly, and Greg Henslee, and eachany of them, as proxies, with full power of substitution, and hereby authorizes them to represent and vote as the undersigned designates, all shares of Common Stock of O’Reilly Automotive, Inc., a Missouri corporation, held by the undersigned on March 16, 2020,9, 2023, at the Annual Meeting of Shareholders to be held on May 14, 2020,18, 2023, at 10:9:00 a.m. Central Time, in Springfield, Missouri, or at any adjournments or postponements thereof, upon the matters set forth on the reverse side of this card, all in accordance with and as more fully described in the accompanying Notice of Annual Meeting of Shareholders and Proxy Statement, receipt of which is hereby acknowledged.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED “FOR” PROPOSALS 1, 2, 3,AND 4, AND 5,“ONE YEAR” ON PROPOSAL 3, AND “AGAINST” PROPOSALS 6 AND 7,PROPOSAL 5, AND IN THE DISCRETION OF THE PROXY HOLDER ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING AND ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF.
Continued and to be signed on reverse side.
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Before the Annual Meeting – Go to www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time, May 13, 2020.17, 2023. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and create an electronic voting instruction form.
During the Annual Meeting – Go to www.virtualshareholdermeeting.com/ORLY2023
You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time, May 17, 2023. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return in the postage-paid envelope we have provided or return to O’Reilly Automotive, Inc. Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
ELECTRONIC DELIVERY OF FUTURE SHAREHOLDER COMMUNICATIONSPROXY MATERIALS
If you would like to reduce the costs incurred by O’Reilly Automotive, Inc. in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access shareholder communicationsproxy materials electronically in future years.
VOTE BY PHONE - 1‑800‑690‑6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time, May 13, 2020. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return in the postage-paid envelope we have provided or return to O’Reilly Automotive, Inc. Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
O’REILLY AUTOMOTIVE, INC.
The Board of Directors recommends you vote FOR Proposals 1, 2, and 4, “One Year” on Proposal 3 4 and AGAINST Proposal 5 and AGAINST Proposals 6 and 7 (as described in the accompanying Proxy Statement):
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1. | Election of Director Nominees: | |
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| Against | Abstain | |||||||
| 1a. | David O’Reilly | | | ☐ | ☐ | ☐ | ||||||
| 1b. | Larry O’Reilly | | | ☐ | ☐ | ☐ | ||||||
| 1c. | Greg Henslee | | | ☐ | ☐ | ☐ | ||||||
| 1d. | Jay D. Burchfield | | | ☐ | ☐ | ☐ | ||||||
| 1e. | Thomas T. Hendrickson | | | ☐ | ☐ | ☐ | ||||||
| 1f. | John R. Murphy | | | ☐ | ☐ | ☐ | ||||||
| 1g. | Dana M. Perlman | | | ☐ | ☐ | ☐ | ||||||
| 1h. | Maria A. Sastre | | | ☐ | ☐ | ☐ | ||||||
| 1i. | Andrea M. Weiss | | | ☐ | ☐ | ☐ | ||||||
| 1j. | Fred Whitfield | | | ☐ | ☐ | ☐ | ||||||
2. | Advisory vote to approve executive compensation. | | | ☐ | ☐ | ☐ | |||||||
| | | | 1 Year | 2 Years | 3 Years | Abstain | ||||||
3. | Advisory vote on the frequency of future say on pay votes. | | ☐ | ☐ | ☐ | ☐ | |||||||
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4. | Ratification of appointment of Ernst & Young LLP as independent auditors for the fiscal year ending December 31, | |
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Please sign exactly as name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.
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