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Table of ContentsTABLE OF CONTENTS
The Annual Meeting of Stockholders of will be held May 13, 20202555 Telegraph RoadBloomfield Hills, Michigan 48302
At
We currently plan to hold the 2020 Annual Meeting open to stockholders as provided in the enclosed proxy. However, we will continue to monitor the current Coronavirus situation closely and will provide notice via a website posting if any changes to the Annual Meeting are necessary.
The past yearcommercial truck retailers. 2022 was a remarkable periodrecord year for our business. Although we faced unprecedented challenges from Brexit, changing vehicle tastesbusiness, driven in response to new emissions standards (especially in Europe), industry mobility developments and rapidly-changing technology,part by the diversification provided by our investments across the transportation services drove our business. Overall, I was very pleased with our performance last year.
In retail automotive, we celebrated our 20th anniversary since the initial acquisition of the business in 1999. Since then, we have grown Penske Automotive Group organically and through acquisition and 2019 was no exception. sector.
•Moving up
meeting.
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| | /s/ Roger S. Penske | |
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| | | Roger S. Penske Chair of the Board and Chief Executive Officer | |
Table of ContentsTABLE OF CONTENTS
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Notice of 20202023 Annual Meeting of Stockholders
Date: | | | May 11, 2023 |
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Time: | | 9:00 a.m. Eastern Daylight Time | |
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Virtual Meeting: | | | Virtual Annual Meeting – www.virtualshareholdermeeting.com/PAG2023 This year’s Annual Meeting will be virtual and held online via a live webcast. We are not holding an in-person meeting. To attend the Annual Meeting, ask questions and examine our list of stockholders you will need to visit www.virtualshareholdermeeting.com/PAG2023, and you will be required to enter the control number on your Notice of Internet Availability of Proxy Materials, proxy card or voting instruction form. Log-in for the virtual Annual Meeting begins at 8:30 a.m. Please refer to the “Attending the Meeting” section of the proxy statement for more details. |
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Record date: | | | March |
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Items of business: | | | • To elect thirteen directors to serve until the next annual meeting • To adopt an Amended and Restated Certificate of Incorporation to incorporate new Delaware law provisions regarding officer exculpation • To ratify the selection of Deloitte & Touche LLP as our independent auditor for 2023 • To approve, on a non-binding advisory basis, the compensation paid to our named executive officers • To approve, on a non-binding advisory basis, the frequency of future advisory votes on our named executive officer compensation |
telephone. at: https://www.penskeautomotive.com/investors/financials/annual-reports/default.aspxWe are furnishingprimarily via the internet. Onand to send stockholders (other than those stockholders who previously requested electronic or about March 27, 2020, we will send our stockholderspaper delivery) a noticeNotice of internet availabilityInternet Availability of proxy materialsProxy Materials containing instructions on how to access our proxy materials, including our proxy statement and our 2019 annual report to stockholders. The notice of internet availability of proxy materials also instructs you onfiscal year 2022 Annual Report, and how to vote viathrough the internet. Other stockholders, in accordance with their prior requests, will receive e-mail notification of how to access our proxy materials and vote via the internetInternet or will be mailed paper copies of our proxy materials and a proxy card or voting instruction form.Internet distribution of our proxy materials is designed to expedite receipt by stockholders, lower the cost of the annual meeting and conserve natural resources. However, if you would prefer to receive paper copies of proxy materials, please follow the instructions included in the notice of internet availability of proxy materials.2019 annual report to stockholdersfiscal year 2022 Annual Report are available atwww.envisionreports.com/pag./s/ Shane M. Spradlin Shane M. SpradlinExecutive Vice President, General Counsel and Secretary
4830219, 2020, 2023
Table of ContentsTABLE OF CONTENTS
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This summary highlights information contained elsewhere in this Proxy Statement.proxy statement. This summary does not contain all of the information you should consider, and you should read the entire Proxy Statementproxy statement carefully before voting.
Annual Meeting of Stockholders
Date: | | | May 11, 2023 |
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Time: | | 9:00 a.m. Eastern Daylight Time | |
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Record date: | | | March |
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Voting: | | | Stockholders as of the record date are entitled to vote. Each share of common stock is entitled to one vote for each director nominee and one vote for each of the proposals to be voted on. |
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Virtual meeting: | | Virtual Annual Meeting You will need the | |
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Access to | | | If you are |
Meeting agenda
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Name John D. Barr Lisa Davis 56 2017 Former Chief Executive Officer · M M Wolfgang Dürheimer 61 2018 Retired Chairman and CEO · M Michael R. Eisenson 64 1993 Founding Partner and Co-Chairman M Robert H. Kurnick, Jr. 58 2006 President, Penske Automotive Group M Kimberly J. McWaters 55 2004 Retired President and CEO, Universal Technical Institute, Inc. · F C Greg Penske 57 n/a Chairman, and Chief Executive Officer, Roger S. Penske 83 1999 Chair and Chief Executive Officer C Sandra E. Pierce 61 2012 Senior Executive Vice President and Chair Greg C. Smith 68 2017 Principal, Greg C. Smith LLC and · C,F Ronald G. Steinhart 79 2001 Retired Chairman and CEO · F H. Brian Thompson 80 2002 Executive Chairman · C M M Masashi Yamanaka 56 2018 Executive Vice President — Strategic As a matter of good corporate governance, we ask that our stockholders ratify the selection of Deloitte & Touche LLP as our independent auditor for Audit Fees Audit Related Fees Tax Fees Tax Compliance Other Tax Fees All Other Fees Total Fees As a leading international, diversified transportation services company, we recognize it’s our responsibility to ensure we contribute to a healthy environment, economic opportunity, and social equity in the communities where we operate around the world. We recognize we are accountable to key stakeholders and the communities in which we do business. We are committed to responsible business practices, continuous improvement of our operations and the strengthening of relationships with our stakeholders. MatterBoard vote recommendationPage Reference Page 4Approvalour 2020 Equity Incentive PlanAmended and Restated Certificate of Incorporation
For
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20202023
For
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For
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i Our Director Nominees Age Director Occupation Independent Committee Memberships since AC CC NCG EC 72 2002 Retired Chairman
Papa Murphy's Holdings, Inc. · F
Gas and Power and
Managing Board Member Siemens AG
Bentley Motors Ltd.
Charlesbank Capital Partners
Penske Motor Group
Penske Automotive Group
Huntington Michigan
Former Vice Chairman, Ford Motor Company
Commercial Banking Group, Bank One Corporation
GTT Communications, Inc.
Relationship Management
Penske Automotive Group ACAudit CommitteeCChairCCCompensation and Management Development CommitteeFFinancial expertNCGNominating and Corporate Governance CommitteeMMemberECExecutive Committeeii2020 Equity Incentive PlanIn light of the expiration of the Company's existing 2015 equity incentive plan on May 5, 2020, our stockholders are being asked to approve a new 2020 Equity Incentive Plan. This plan provides up to 5.0 million shares for equity awards and terminates once all awards have been issued under the plan. In the last three years, we have granted a gross amount of 1,237,937 incentive equity awards, which represents an average annual rate of shares issued as compared to shares outstanding of approximately 0.50%.Auditors2020.2023. Set forth below is summary information with respect to 20192022 auditor fees paid to Deloitte & Touche LLP.
$ 3,218,042 149,895 141,363 304,268 — $ 3,813,568 Corporate Social Responsibilityenvironmental, social and governanceESG efforts where we can have the most positive impact on our business and society, including issues related to community investment, environmental sustainability, human capital, and investor outreach.Central to our mission are the core values of ethics, integrity, professionalism, teamwork and exceeding the expectations of our customers and employees. Our commitment to corporate social responsibilityto:theseour core values asand ensures that we aim to conductenrich our business in ways that enrichcommunities, minimize our environmental impact, protect the communities where we work and live, focus on the environmenthealth and safety of our team members and customers, and provide a diverse and inclusive workplace that is safe, inclusive and diverse– all while providingcreating value tofor our stakeholders. The most important investments we make are in our people. Everything we aspire to be as a company builds on our ability to come together as one team. We provide our team members a supportive work environment that empowers them to do meaningful work while fulfilling their passions and balancing work goals with life goals.responsible business practicesiiiand continuous improvementregular, transparent communication of our operationsprogress and look forward to bringing our relationshipsstakeholders along with our employees and the communities in which we live and work.us on this journey.
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We ask that our stockholders annually approve on an advisory basis our named executive officer compensation. The Board of Directors recommends a FOR vote because it believes that our compensation policies and practices are effective in achieving the Company'sCompany’s goals of rewarding sustained financial and operating performance and leadership excellence, aligning the executives'executives’ long-term interest with those of our stockholders and motivating our executives to remain with the Companyus for long and productive careers. In 2019,2022, over 99%98% of the votes cast by our stockholders approved our 20182021 named executive officer compensation.
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✔Independent Lead Director | | ✔No officer severance agreements | | ||||
✔Clawback provision for certain restatements | | ✔ Board attendance of | | ||||
✔Director independence guidelines more stringent than NYSE guidelines | | ✔Robust stock ownership guidelines for our Officers and Directors | | ||||
✔No stockholder rights plan (poison pill) | | ✔Annual election of our Board of Directors | | ||||
✔Say on pay advisory vote conducted annually | | ✔Company policy prohibits Directors and employees from hedging our Common Stock | | ||||
| | ✔ ESG oversight by Nominating and Corporate Governance Committee | | | |
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2019 Compensation Summary
Set forth below is the 2019 compensation for each named executive officer as determined under Securities and Exchange Commission rules.
Name and Principal Position | | Salary ($) | | Bonus ($) | | Stock Awards ($)(1) | | All Other Compensation ($) | | Total ($) | ||||||
Roger S. Penske | $ | 1,400,000 | | — | | 5,000,000 | (2) | | 493,752 | $ | 6,893,752 | |||||
Chief Executive Officer | | | | | | | | | | | ||||||
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Robert H. Kurnick, Jr. | $ | 800,000 | | — | | 1,000,000 | (2) | | 176,315 | $ | 1,976,315 | |||||
President | | | | | | |||||||||||
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J.D. Carlson | $ | 575,000 | | 315,000 | | 500,000 | (2) | | 77,659 | $ | 1,467,659 | |||||
Executive Vice President & Chief Financial Officer | | | | | | |||||||||||
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Bud Denker | $ | 575,000 | | 315,000 | | 500,000 | (2) | | 34,649 | $ | 1,424,649 | |||||
Executive Vice President — Human Resources | | | | | | |||||||||||
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Shane M. Spradlin | $ | 575,000 | | 315,000 | | 500,000 | (2) | | 89,597 | $ | 1,479,597 | |||||
Executive Vice President, General Counsel & Sec. | | | | | |
Please see the footnote references beginning on page 34 for further information regarding our named executive officer compensation.
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Q. Who can vote?TABLE OF CONTENTS
The first proposal to be voted on at the annual meeting will be the election of our thirteen director nominees. Our Nominating and Corporate Governance Committee and Board of Directors recommend approval of each of the nominees outlined below. If elected, each will serve until the next annual meeting of stockholders and until their successor has been elected and qualified or until their earlier The Nominating and Corporate Governance Committee and Board of Directors reviewed the qualities of the Board members as a group, including the diversity of the New York. Mr. 2022. The Board believes that the qualities and skills listedA. Our stockholders asthe close of business on the record date, March 17, 2020, can vote at the annual meeting. Each share of our common stock gets one vote. Votes may not be cumulated. As of March 17, 2020, there were 80,887,853 shares of our common stock outstanding.Q. Why did I receive a notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials?A. As permitted by the Securities and Exchange Commission ("SEC"), we have elected to provide access to our proxy materials primarily over the Internet rather than mailing paper copies of those materials to each stockholder. On or about March 27, 2020, we will mail a Notice of Internet Availability of Proxy Materials (the "Notice") to our stockholders, which provides website and other information for the purpose of accessing our proxy materials. All stockholders will have the ability to access the proxy materials on the website referred to in the Notice or request a printed or electronic set of the proxy materials. Instructions on how to access the proxy materials over the Internet or to request a printed copy may be found in the Notice. In addition, stockholders may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis. We encourage you to take advantage of the availability of the proxy materials on the Internet to help reduce the cost and environmental impact of the printing and mailing of materials for the annual meeting.Q. How can I get electronic access to the proxy materials?A. The Notice provides you with instructions regarding how to view our proxy materials for the annual meeting on the Internet and instruct us to send proxy materials to you by email. Choosing to receive proxy materials by email will save us the cost of printing and mailing documents to you and will reduce the impact of the printing and mailing of materials for our annual meeting on the environment. If you choose to receive future proxy materials by email, you will receive an email message next year with instructions containing a link to those materials and a link to the proxy voting website. Your election to receive proxy materials by email will remain in effect unless and until you rescind it.Q. What is the difference between a stockholder of record and a beneficial owner of shares held in street name?A.Stockholder of Record. If your shares are registered directly in your name with our transfer agent, Computershare Limited, you are the stockholder of record with respect to those shares and we sent the Notice directly to you. If you request copies of the proxy materials by mail, you will receive a proxy card.Beneficial Owner of Shares Held in Street Name. If your shares are held in an account at a brokerage firm, bank, broker-dealer or other similar organization, then you are the beneficial owner of shares held in "street name," and the Notice was forwarded to you by that organization. The organization holding your account is considered the stockholder of record
Directorsfor purposes of voting at the annual meeting. As a beneficial owner, you have the right to direct that organization on how to vote the shares held in your account. If you request copies of the proxy materials by mail, you will receive a voting instruction form.Q. How do I vote my shares?A. If you are a stockholder of record or a participant in the Company's stock fund within our Company 401(k) plan, you may vote in any of the following ways:By Internet. You may vote online by accessing www.envisionreports.com/pag and following the on-screen instructions. You will need the Control Number included on the Notice or on your proxy card, as applicable. You may vote online 24 hours a day. If you vote online, you do not need to return a proxy card.By Telephone. In the U.S., you may vote by calling toll free 1-800-652-VOTE (1-800-652-8683) and following the instructions. You will need the Control Number included on the Notice or on your proxy card, as applicable. You may vote by telephone 24 hours a day. If you vote by telephone, you do not need to return a proxy card.By Mail. If you requested printed copies of the proxy materials, you will receive a proxy card, and you may vote by signing, dating and mailing the proxy card in the envelope provided. Votes submitted by mail must be received at our headquarters on or before May 12, 2020.In Person. You may vote in person at the annual meeting by requesting a ballot from the inspector of election at the meeting.A.If you are a beneficial owner of shares held in street name, you may vote in any of the following ways:By Internet. You may vote online by following the instructions provided in the Notice. You will need the Control Number included on the Notice or on your voting instruction form, as applicable. You may vote online 24 hours a day. If you vote online, you do not need to return a voting instruction form.By Telephone. You may vote by telephone by following the instructions provided in the Notice. You will need the Control Number included on the Notice or on your voting instruction form, as applicable. You may vote by telephone 24 hours a day. If you vote by telephone, you do not need to return a voting instruction form.By Mail. If you requested printed copies of the proxy materials, you will receive a voting instruction form, and you may vote by signing, dating and mailing it in the envelope provided. Votes submitted by mail must be received at our headquarters on or before May 12, 2020.In Person. You must obtain a legal proxy from the organization that holds your shares of record in order to vote your shares in person at the annual meeting. Follow the instructions on the Notice to obtain this legal proxy.For both stockholders of record and beneficial owners of shares held in street name (other than stockholders within our 401(k) plan), online and telephone voting is available through 11:59 p.m. ET on May 12, 2020. For shares held by the stock fund within the Company's 401(k) plan, online and telephone voting is available through 2:00 a.m. ET on May 10, 2020.Q. Can I change my mind after I vote?A. You may change your vote at any time before the meeting by (1) signing and returning another proxy card with a later date (or voting through the Internet or telephone again), (2) voting at the meeting if you are a registered stockholder or have obtained a legal proxy from your bank or broker or (3) sending a notice to our Corporate Secretary prior to the meeting stating that you are revoking your proxy. If you are attending the meeting, you will have access tothe company appointed proxies to change your vote until the polls close.Q. What if I return my proxy card but do not provide voting instructions?A. Proxies that are signed and returned but do not contain instructions will be voted (1) FOR the election of the thirteen nominees for director, (2) FOR the approval of our 2020 Equity Incentive Plan, (3) FOR the ratification of our independent auditor and (4) FOR approval of our named executive officer compensation.Q. Will my shares be voted if I do not provide my proxy instruction form?A. If you are a stockholder of record and do not provide a proxy, you must attend the meeting in order to vote your shares. If you are a beneficial holder of shares held in street name, your shares may be voted even if you do not provide voting instructions on your instruction form as discussed below.Q. May stockholders ask questions at the meeting?A. Yes. Our representatives will answer stockholders' questions of general interest at the end of the meeting. In order to give a greater number of stockholders an opportunity to ask questions, individuals or groups may be allowed to ask only one question and repetitive or follow-up questions may not be permitted.Q. How many votes must be present to hold the meeting?A. Your shares are counted as present at the meeting if you attend the meeting and vote in person or if you properly return a proxy card or vote via the Internet or telephone. In order for us to conduct our meeting, a majority of our outstanding shares of common stock as of March 17, 2020 must be present in person or by proxy at the meeting (40,443,927 shares). This is referred to as a quorum. Abstentions and broker non-votes will be counted for purposes of establishing a quorum at the meeting.Q. What is the effect of withheld votes, abstentions and broker non-votes and how are they treated?A. If you "withhold" with respect to one or more director nominees, your vote will have no effect on the election of such nominee(s), as the thirteen nominees receiving the highest number of "For" votes will be elected as directors.If you elect to "abstain" with respect to any proposal, the shares are considered present and entitled to vote with respect to such proposal and included for purposes of calculating the presence of a quorum at the Annual Meeting. You may abstain from voting on any proposal to be voted on at the Annual Meeting, other than the election of directors. Under Proposals 2, 3 and 4, abstentions will count as votes "against" the proposal.A broker non-vote with respect to a proposal occurs when shares are held by a bank, broker or other nominee in street name, and the bank broker or other nominee does not receive voting instructions from the beneficial owner as to how to vote such shares. Brokers have the authority under New York Stock Exchange rules to vote shares for which their customers do not provide voting instructions on certain "routine" matters resulting in a broker non-vote. Under these rules, only the proposal to ratify our independent auditing firm is a "routine matter" being voted on by our stockholders this year. Broker non-votes will only be counted for Proposal 3.Q. How many votes are needed to approve the proposals?A. Regarding the election of directors (Proposal 1), our directors are elected by a plurality of the votes cast and the thirteen nominees receiving the highest number of "For" votes will be elected as directors. Regarding Proposals 2, 3 and 4, the measures will pass if each receives the affirmative vote of a majority of shares present and entitled to vote at the meeting.Proposal 1 — Election of Directorsdeath, resignation or removal. Pursuant to a stockholders agreement, certain of our stockholders affiliated with Roger S. Penske and Mitsui & Co., Ltd. have agreed to vote together to elect members of our Board of Directors. See "Related“Related Party Transactions"Transactions” for a description of this stockholders agreement.Penske Corporation recommended Greg Penske (Roger S. Penske's son) to our Nominating and Corporate Governance Committee as a candidate for election to our Board of Directors at the 2020 annual meeting and intends to recommenda candidate for election at the 2021 and 2022 annual meetings.our Vice Chair effective January 1, 2023. We previously disclosed in last year’s proxy statement that Penske Corporation has informed us that it does not intend to recommend Greg Penske for re-election to our Board at the 2023 annual meeting. Beginning in 2023, in lieu of Greg Penske, Penske Corporation presently intendsintended to recommend one of Mr. Penske's otherPenske’s sons, Roger Penske, Jr., to the Nominating and Corporate Governance Committee for nomination as a candidate for election to our Board at thein 2023, 2024 and 2025 annual meetings. It is expected that2025. However, Penske Corporation subsequently determined to recommend Roger S. Penske, Jr. will serve as an advisory committee memberVice Chair of the Advisory Board of Penske Truck Leasing (PTL) for 2020, 2021Transportation Solutions (PTS) effective January 1, 2023 and 2022 and it is expected thatcontinue to recommend Greg Penske will step down from our Board at the 2023 annual meeting and will serve as an advisory committee member of PTL beginninga director in 2023.having personal integrity, loyalty to our company and concern for its success and welfare, willingness to apply sound and independent business judgment, and having sufficient time available for company matters.personal accomplishment within their field. Experience in at least one of the following is also desired: high level of leadership experience in business or administration, breadth of knowledge concerning issues affecting our company,Company, willingness to contribute special competence to board activities, accomplishments within the director'sdirector’s respective field, and experience reading and understanding financial statements.Board'sBoard’s career experiences, viewpoints, company affiliations, expertise with respect to the various facets of our business operations, and business experiences. The Board did not employ any particular benchmarksbenchmark with respect to these qualities but was mindful of achieving an appropriate balance of these qualities with respect to the Board of Directors as a whole. Moreover, the Board of Directors and Nominating and Corporate Governance Committee considered each nominee'snominee’s overall service to our companyCompany during the previous term, each nominee'snominee’s personal integrity and adherence to the standards noted above, as well as the individual experience of each director noted within their biographies below.Our Board On October 31, 2021, GTT Communications, Inc. filed a voluntary petition for relief under chapter 11 of Directors Recommends a Vote "FOR" Eachtitle 11 of the Following Nominees:John D. Barr — Retired Chairman, Papa Murphy's Holdings, Inc.Mr. Barr, 72, has served as a director since December 2002. Mr. Barr wasUnited States Code in the past Chairman of Papa Murphy's Holdings, Inc., a franchisor and operator of Take-N-Bake pizza from September 2009 to September 2016 and was its Chief Executive Officer from April 2004 to January 1, 2012. From 1999 until April 2004, Mr. Barr served as President and Chief Executive Officer of Automotive Performance Industries, a vehicle transportation service provider. Prior thereto, Mr. Barr was President and Chief Operating Officer, as well as a member of the Board of Directors, of Quaker State Corporation from June 1995 to 1999. Prior to joining Quaker State, Mr. Barr spent 25 years with the Valvoline Company, a subsidiary ofAshland Inc., where he was President and Chief Executive Officer from 1987 to 1995.Individual experience: Extensive oil industry experience from serving ultimately as COO and director of Quaker State Corporation; breadth of knowledge concerning issues affecting our Company; experience with franchise business model as former CEO of Papa Murphy's Holdings.Lisa Davis — Former Chief Executive Officer Gas and Power and Managing Board Member, Siemens AGMs. Davis, 56, has served as a director since May 2017. From August 2014 through February 2020 when she resigned, Ms. Davis served as a member of the Managing Board for Siemens AG responsible as Chief Executive OfficerUnited States Bankruptcy Court for the company's Gas and Power global operations present in 80 countries around the world. Also from January 2017 through February 2020 she served as Chair and CEOSouthern District of Siemens Corporation, USA, the largest market globally for Siemens AG. From 1986 to 2014, Ms. Davis served in various capacities with Exxon Corporation, Texaco USA and Royal Dutch Shell, most recently, Executive Vice President — Strategy, Portfolio and Alternative Energy and Vice President — Lubricants and Commercial Fuels Americas, and previously numerous leadership positions in Supply and Refining. Ms. Davis is also a director for Kosmos Energy Ltd and Air Products and Chemicals, Inc. Individual experience: Extensive global energy industry experience from serving in various capacities along the entire value chain from upstream to manufacturing to sales and marketing; senior executive leadership experience with international industry-leading companies; diverse experience with public company board service in the US and Europe.Wolfgang Dürheimer — Retired Chairman and CEO Bentley Motors Ltd.Dürheimer, 61, has served as a director since May 2018 and served as the Chairman and Chief Executive Officer of Bentley Motors Ltd., a subsidiary of Volkswagen AG, from April 2014 to January 2018, as well as the President of its sister companies, Bugatti Automobiles S.A.S. and Bugatti International S.A. Previously, Mr. Dürheimer held various positions with Volkswagen AG and its subsidiaries, most recently as the Chief Representative of Volkswagen Group Motorsport responsible for the Group Motorsport Strategy from February 2011 to January 2018 and heThompson was a member of the Board of Management of Audi AG from September 2012 to March 2014. From 1999 until 2011, Mr. Dürheimer worked for Porsche AG, where he was a member of the Board of Management responsible for Research and Development. Prior to joining Porsche in 1999, Mr. Dürheimer worked 14 years with BMW, where he held various managerial roles.Individual experience: Extensive automotive industry experience with some of the company's largest represented brands including Audi, Bentley, BMW, and Porsche, culminating in leadership experience as Chief Executive Officer of Bentley Motors; relationships with our key automotive industry partners, breadth of knowledge concerning issues facing our company.Michael R. Eisenson — Founding Partner and Co-Chairman of Charlesbank Capital Partners LLCMr. Eisenson, 64, has served as a director since December 1993. He has served as the Co-Chairman of Charlesbank Capital Partners LLC, a private investment firm and the successor to Harvard Private Capital Group, Inc. since July 1, 2017. Previously, he was a Managing Director and CEO of Charlesbank Capital Partners LLC, which he founded in 1998. Mr. Eisenson is also a director of Penske Corporation as of August 2017 and is a director of a number of private companies. In the previous five years, Mr. Eisenson was formerly a director of Blueknight Energy Partners, L.P., and Montpelier RE Holdings Ltd.Individual experience: Familiarity with all of the Company's key operations from serving as our director since 1993; experience managing Charlesbank and affiliates and their portfolio companies; experience in commercial finance, private equity and leveraged finance; demonstrated success formerly serving as our audit committee chairman.Robert H. Kurnick, Jr. — President of Penske Automotive GroupMr. Kurnick, Jr., 58, has served as our President since April 2008 and has been a director since May 2006. Since September 2017, Mr. Kurnick has served as Vice Chair of Penske Corporation, and from 2003 until then served as President of Penske Corporation. He has also been a director of Penske Corporation since 2003. Penske Corporation is a privately owned diversified transportation services company that holds, through its subsidiaries, interests in a number of businesses.Individual experience: Familiarity with all of the Company's key operations; breadth of knowledge concerning issues affecting our Company; extensive automotive industry experience; experience as Vice Chair and former President of Penske Corporation.Kimberly J. McWaters — Retired President and CEO of Universal Technical Institute, Inc.Ms. McWaters, 55, has served as a director since December 2004. She retired as President and CEO of Universal Technical Institute, Inc. (UTI), the nation's leading provider of transportation industry technician training on October 31, 2019. She was named President of UTI in 2000, CEO in 2003 and she served as its Chairman from 2013 to 2017. Ms. McWaters joined UTI in 1984 and has held several leadership positions in the company, including Vice President of Marketing and Vice President of Sales & Marketing. Ms. McWaters is also a director of UTI and Mobile Mini, Inc.Individual experience: Automotive industry experience with UTI; accomplishment within her field culminating with leadership experience as Chief Executive Officer of UTI; expertise relating to service and parts operations and particularly service technicians.Greg Penske — Chairman and CEO of Penske Motor GroupMr. Penske, 57, has been the Chairman and Chief Executive Officer of Penske Motor Group, LLC, an automotive group that includes Longo Toyota, the largest volume Toyota dealership in the U.S.A., as well as Lexus and Mercedes brands. From 1997 to 1999 he was the President and CEO of Penske Motorsports, a publicly traded company which operated racetracks in the U.S. Mr. Penske currently serves on the Board of Directors for Penske Corporation, Penske Entertainment and the Penske Truck Leasing Advisory Board. Mr. Penske is the son of our Chief Executive Officer, Roger S. Penske. Mr. Penske formerly served as our Director from May 2014 through May 2017.Individual Experience: Extensive automotive retail industry experience; relationships with key automotive partners; familiarity with all of the Company's key operations through Penske Corporation directorship and Penske Truck Leasing Advisory Board membership.Roger S. Penske — Chair of the Board and CEO of Penske Automotive GroupMr. Penske, 83, has served as a director since May 1999. Since May 1999, Mr. Penske has served as our Chair and CEO. Mr. Penske has also been Chair of the Board and CEO of Penske Corporation since 1969 and Chair of the Board of Penske Truck Leasing Corporation since 1982. Mr. Penske serves as a member of the Board of Directors of Universal Technical Institute. Mr. Penske also is a Director of the Downtown Detroit Partnership and a director of Business Leaders for Michigan.Individual experience: Extensive automotive industry experience; relationships with our key automotive partners; familiarity with all of the Company's key operations; experience as an executive and a director of some of the world's leading companies; significant ownership position of our stock through Penske Corporation and other affiliates.Sandra E. Pierce — Senior Executive Vice President and Chair, Huntington MichiganMs. Pierce, 61, has served as a director since December 2012. Since August 2016, Ms. Pierce has led the Private Bank, Huntington Insurance, and Auto Finance/RV Marine as well as state activities in Michigan. From February 1, 2013, until their August 2016 merger with Huntington, Ms. Pierce served as Vice Chairman of FirstMerit Corporation, and Chairman and CEO of FirstMerit Michigan. From 2005 until June 2012, Ms. Pierce served as the Chief Executive Officer and President at Charter One Bank Michigan, a division of RBS Citizens, N.A. ("RBS") where she had responsibilities for commercial banking and all state bank activitiesin Michigan as well as oversight of all state activities in Illinois and Ohio. From 1978 through 2004, Ms. Pierce served as Regional Executive of Midwest Retail Operations for JPMorgan Chase, with responsibilities for Michigan and Indiana, and she held a number of management positions in the retail, commercial lending, and private banking businesses at JPMorgan Chase and its predecessor companies, Bank One, First Chicago NBD Corp. and NBD Bancorp. Ms. Pierce is a director at American Axel and Manufacturing Holdings, Inc., and ITC Holdings Corporation and has performed leadership duties with numerous civic organizations, including immediate past Chair of Henry Ford Health System, Inc. since January 2012.Individual Experience: Extensive retail and commercial banking experience; accomplished within her field culminating in CEO experience; extensive experience on private company boards and demonstrated commitment to civic works.Greg C. Smith — Principal, Greg C. Smith LLC and former Vice Chairman, Ford Motor CompanyMr. Smith, 68, has served as a director since August 2017. Mr. Smith, retired Vice Chairman of Ford Motor Company, currently serves as Principal of Greg C. Smith, LLC, a private management consulting firm, a position he has held since 2007. Previously, Mr. Smith was employed by Ford Motor Company for over 30 years until 2006. Mr. Smith held various executive-level management positions at Ford Motor Company, most recently serving as Vice Chairman from 2005 until 2006, Executive Vice President and President — Americas from 2004 until 2005, Group Vice President — Ford Motor Company and Chairman and Chief Executive Officer — Ford Motor Credit Company from 2002 to 2004, Vice President, Ford Motor Company, and President and Chief Operating Officer, Ford Motor Credit Company from 2001 to 2002. As Vice Chairman, Mr. Smith was responsible for Ford's Corporate Strategy and Staff, including Human Resources and Labor Affairs, Information Technology, and Automotive Strategy. During his career at Ford, Mr. Smith ran several major business units and had extensive experience in Financial Services, Strategy, Marketing and Sales, Engineering and Product Development. Mr. Smith also was responsible for Hertz when Ford owned it, and in 2005, Automotive Components Holdings, the portion of Visteon that Ford repurchased. Currently, Mr. Smith serves as a director of Lear Corporation and formerly served as a director of Penske Corporation, the Federal National Mortgage Association (Fannie Mae) and Solutia, Inc. Mr. Smith serves on the Risk Oversight Advisory Council of the National Association of Corporate Directors. Mr. Smith has a bachelor's degree in Mechanical Engineering from Rose-Hulman Institute of Technology and an MBA from Eastern Michigan University.Individual experience: Extensive experience as an executive and a director; experience in a leadership role in automotive and finance; perspective gained from leadership role in automotive and financial industries; extensive public company audit committee experience.Ronald G. Steinhart — Retired Chairman and CEO, Commercial Banking Group, Bank One CorporationMr. Steinhart, 79, has served as a director since March 2001. Mr. Steinhart served as Chairman and CEO, Commercial Banking Group, of Bank One Corporation from December 1996 until his retirement in January 2000. From January 1995 to December 1996, Mr. Steinhart was Chairman and CEO of Bank One, Texas, N.A. Mr. Steinhart joined Bank One in connection with its merger with Team Bank, which he founded in 1988. In the previous five years, Mr. Steinhart formerly served as a director of Southcross Energy Partners, L.P.Individual experience: Extensive experience in banking and commercial lending industries; experience with respect to automotive retail finance and insurance operations; extensive public company audit committee experience.H. Brian Thompson — Executive Chairmanofficer of GTT Communications, Inc.Mr. Thompson, 80, has served as a director since March 2002. Mr. Thompson is Executive Chairman of GTT Communications, Inc., a leading global cloud network provider to multinational clients. Mr. Thompson continues to head his own private equity investment and advisory firm, Universal Telecommunications, Inc. From December 2002 to June 2007, Mr. Thompson was Chairman of Comsat International and also served as Chairman and Chief Executive Officer of GlobalTeleSystems Group, Inc. from March 1999 through September of 2000. Mr. Thompson was Chairman and CEO of LCI International from 1991 until its merger with Qwest Communications International Inc. in June 1998. Mr. Thompson became Vice Chairman of the board for Qwest until his resignation in December 1998. Mr. Thompson previously served as Executive Vice President of MCI Communications Corporation from 1981 to 1990, and prior to MCI, was a management consultant with the Washington, DC offices of McKinsey & Company for nine years, where he specialized in the management of telecommunications. He currently serves as a member of the board of directors of Pendrell Corporation. In the previous five years, Mr. Thompson was formerly a director of Axcelis Technologies, Inc. and Sonus Networks, Inc. Mr. Thompson received his MBA from Harvard's Graduate School of Business, and holds an undergraduate degree in chemical engineering from the University of Massachusetts.Individual experience: Extensive experience as an executive and director of numerous public companies; experience in a leadership role directing international corporations; perspective gained from leadership role in communications industry; demonstrated success serving as our lead independent director.Masashi Yamanaka — Executive Vice President, Strategic Relationship Management, Penske Automotive GroupMr. Yamanaka, 56, has served as a director since December 2018 and our Executive Vice President, Strategic Relationship Management since March 1, 2019. Prior to that, he held numerous positions with Mitsui starting in April 1987. Mr. Yamanaka was Senior Vice President of Mitsui & Co. (U.S.A.), Inc. from December 2018 to February 2019, and the General Manager of Mitsui's Second Motor Vehicles Division from April 2015 to November 2018. From July 2014 to April 2015, he served as Deputy General Manager, Second Motor Vehicles Division. From January 2013 to July 2014, he served as Deputy General Manager, Planning and Administrative Department, Planning & Administrative Division of the Machinery & Infrastructure Business Unit.Individual Experience: Global automotive industry experience; breadth of knowledge concerning international opportunities; affiliation with Mitsui, which is the Company's second largest stockholder. above for each of the nominees, qualifies each such nominee for service as a director of our company. 
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| |  Age: 59 Joined Board: 2017 Committees: Compensation, Corporate Governance | | | From August 2014 through February 2020 when she resigned, Ms. Davis served as a member of the Managing Board for Siemens AG responsible as Chief Executive Officer for the company’s Gas and Power global operations present in 80 countries around the world. Also, from January 2017 through February 2020 she served as Chair and CEO of Siemens Corporation, USA, the largest market globally for Siemens AG. From 1986 to 2014, Ms. Davis served in various capacities with Exxon Corporation, Texaco USA and Royal Dutch Shell, most recently, Executive Vice President – Strategy, Portfolio and Alternative Energy and Vice President – Lubricants and Commercial Fuels Americas, and previously numerous leadership positions in Supply and Refining. Ms. Davis is also a director for Air Products and Chemicals, Inc., Phillips 66, and C3.ai, Inc. and was previously a director of Kosmos Energy Ltd. in the past five years. In February 2023, Ms. Davis was appointed to the Advisory Board of our affiliate Penske Transportations Solutions (a private company). Individual experience: Extensive global energy industry experience from serving in various capacities along the entire value chain from upstream to manufacturing to sales and marketing; senior executive leadership experience with international industry-leading companies; diverse experience with public company board service in the U.S. and Europe. | |
| |  Age: 64 Joined Board: 2018 Committees: Compensation | | | Mr. Dürheimer served as the Chairman and Chief Executive Officer of Bentley Motors Ltd., a subsidiary of Volkswagen AG, from April 2014 to January 2018, as well as the President of its sister companies, Bugatti Automobiles S.A.S. and Bugatti International S.A. Previously, Mr. Dürheimer held various positions with Volkswagen AG and its subsidiaries, most recently as the Chief Representative of Volkswagen Group Motorsport responsible for the Group Motorsport Strategy from February 2011 to January 2018 and he was a member of the Board of Management of Audi AG from September 2012 to March 2014. From 1999 until 2011, Mr. Dürheimer worked for Porsche AG, where he was a member of the Board of Management responsible for Research and Development. Prior to joining Porsche in 1999, Mr. Dürheimer worked 14 years with BMW, where he held various managerial roles. Individual experience: Extensive automotive industry experience with some of the Company’s largest represented brands including Audi, Bentley, BMW, and Porsche, culminating in leadership experience as Chief Executive Officer of Bentley Motors; relationships with our key automotive industry partners, breadth of knowledge concerning issues facing our Company. | |
| |  Age: 67 Joined Board: 1993 | | | Mr. Eisenson has served as the Founding Partner of Charlesbank Capital Partners LLC, a private investment firm and the successor to Harvard Private Capital Group, Inc. since July 1, 2017. Previously, he was CEO of Charlesbank Capital Partners LLC, which he founded in 1998. Mr. Eisenson also serves as a director of Penske Corporation and is a director of a number of other private companies. Individual experience: Familiarity with all of the Company’s key operations from serving as our director since 1993; experience managing Charlesbank and affiliates and their portfolio companies; experience in commercial finance, private equity and leveraged finance; demonstrated success formerly serving as our Audit Committee Chair. | |
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| |  Age: 61 Joined Board: 2006 | | | Mr. Kurnick has served as our President since April 2008. Since September 2017, Mr. Kurnick has served as Vice Chair of Penske Corporation, and from 2003 until then served as President of Penske Corporation. He has also been a director of Penske Corporation since 2003. Penske Corporation is a privately owned diversified transportation services company that holds, through its subsidiaries, interests in a number of businesses. Individual experience: Familiarity with all of the Company’s key operations; breadth of knowledge concerning issues affecting our Company; extensive automotive industry experience; experience as Vice Chair and former President of Penske Corporation. | |
| |  Age: 58 Joined Board: 2004 Committees: Audit, Corporate Governance (Chair) | | | Ms. McWaters has served as President and Chief Executive Officer of Fresh Start Women’s Foundation since February 1, 2021, after a long tenure as a director of that organization. Ms. McWaters was previously President and CEO of Universal Technical Institute, Inc. (UTI), the nation’s leading provider of transportation industry technician training through October 31, 2019. She was named President of UTI in 2000, CEO in 2003 and she served as its Chairman from 2013 to 2017. Ms. McWaters joined UTI in 1984 and has held several leadership positions in the company, including Vice President of Marketing and Vice President of Sales & Marketing. Ms. McWaters is also a director of WillScot Mobile Mini Holdings Corp. and previously served as a member of the Board of Directors of UTI in the past five years. Individual experience: Automotive industry experience with UTI; accomplishment within her field culminating with leadership experience as Chief Executive Officer of UTI; expertise relating to service and parts operations and particularly service technicians; community involvement with Fresh Start Women’s Foundation. | |
| |  Age: 53 Joined Board: 2021 | | | Mr. Odagiri has served as a director since December 2021 and currently serves as Senior Vice President, Mitsui & Co. (USA), Inc. He held numerous positions with Mitsui and its affiliates starting in April 1992. Mr. Odagiri was Chairman and Managing Director of Bussan Auto Finance India Pvt. Ltd. from April 2020 to December 2021. From March 2019 to March 2020, he served as Deputy Managing Director of India Yamaha Motor Pvt. Ltd. and from April 2017 to February 2019, he served as General Manager, Group Management Framework Department in Mitsui’s First Motor Vehicles Division. From January 2015 to March 2017, he served as General Manager, Yamaha Business Department in Mitsui’s Third Motor Vehicles Division. Individual Experience: Global automotive industry experience; breadth of knowledge concerning international opportunities; affiliation with Mitsui, which is the Company’s second largest stockholder. | |
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| |  Age: 60 Joined Board: 2020 | | | Mr. Penske joined our Board in May 2020, has served as our Vice Chair of the Board since January 2023 and was previously our director from May 2014 to May 2017. Mr. Penske has been the Chairman and Chief Executive Officer of Penske Motor Group, LLC, an automotive group that includes the Toyota and Lexus brands. Mr. Penske has served on the Board of Directors of Penske Corporation since 1999, and also currently serves as a board member and Vice Chairman of Penske Entertainment and board member of Petersen Automotive Museum. Mr. Penske is the son of our Chief Executive Officer, Roger Penske. Individual Experience: Extensive automotive retail industry experience; relationships with key automotive partners; familiarity with all of the Company’s key operations; breadth of knowledge concerning issues affecting our Company. | |
| |  Age: 86 Joined Board: 1999 | | | Since May 1999, Mr. Penske has served as our Chair and CEO. Mr. Penske has also been Chairman of the Board and CEO of Penske Corporation since 1969 and Chair of the Board of Penske Truck Leasing Corporation since 1982. Mr. Penske previously served as a member of the Board of Directors of Universal Technical Institute in the past five years.. Individual experience: Extensive automotive industry experience; relationships with our key automotive partners; familiarity with all of the Company’s key operations; experience as an executive and a director of some of the world’s leading companies; significant ownership position of our stock through Penske Corporation and other affiliates. | |
| |  Age: 64 Joined Board: 2012 | | | Since August 2016, Ms. Pierce has been Huntington Bank’s Senior Executive Vice President, Private Bank and Regional Banking Director and Chair of Michigan. Ms. Pierce has led the Private Bank, Insurance Agency, Auto, Marine and RV businesses as well as state activities in Michigan. From February 1, 2013, until their August 2016 merger with Huntington, Ms. Pierce served as Vice Chairman of FirstMerit Corporation, and Chairman and CEO of FirstMerit Michigan. From 2005 until June 2012, Ms. Pierce served as the Chief Executive Officer and President at Charter One Bank Michigan, a division of RBS Citizens, N.A. where she had responsibilities for commercial banking and all state bank activities in Michigan as well as oversight of all state activities in Illinois and Ohio. From 1978 through 2004, Ms. Pierce served as Regional Executive of Midwest Retail Operations for JPMorgan Chase, with responsibilities for Michigan and Indiana, and she held a number of management positions in the retail, commercial lending, and private banking businesses at JPMorgan Chase and its predecessor companies, Bank One, First Chicago NBD Corp. and NBD Bancorp. Ms. Pierce is a director of American Axle and Manufacturing Holdings, Inc., and has performed leadership duties with numerous civic organizations. Ms. Pierce is also Board Chair of ITC Holdings, which was previously a public company in the past five years. In December 2022, Ms. Pierce was appointed to Michigan State University’s Board of Trustees by Michigan Governor Whitmer. Individual Experience: Extensive retail and commercial banking experience; accomplished within her field culminating in CEO experience; extensive experience on company boards and demonstrated commitment to civic works. | |
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| |  Age: 71 Joined Board: 2017 Committees: Audit (Chair) | | | Mr. Smith, retired Vice Chairman of Ford Motor Company, currently serves as Principal of Greg C. Smith, LLC, a private management consulting firm, a position he has held since 2007. Previously, Mr. Smith was employed by Ford Motor Company for over 30 years until 2006. Mr. Smith held various executive-level management positions at Ford Motor Company, most recently serving as Vice Chairman from 2005 until 2006. As Vice Chairman, Mr. Smith was responsible for Ford’s Corporate Strategy and Staff, including Human Resources and Labor Affairs, Information Technology, and Automotive Strategy. Currently, Mr. Smith serves as the Non-Executive Chairman of the Board of Directors of Lear Corporation and formerly served as a director of Penske Corporation, the Federal National Mortgage Association (Fannie Mae) and Solutia, Inc. Mr. Smith serves on the Risk Oversight Advisory Council of the National Association of Corporate Directors. Individual experience: Extensive experience as an executive and a director; experience and perspective gained from leadership role in automotive and finance; extensive public company audit committee experience. | |
| |  Age: 82 Joined Board: 2001 Committees: Audit | | | Mr. Steinhart served as Chairman and CEO, Commercial Banking Group, of Bank One Corporation from December 1996 until his retirement in January 2000. From January 1995 to December 1996, Mr. Steinhart was Chairman and CEO of Bank One, Texas, N.A. Mr. Steinhart joined Bank One in connection with its merger with Team Bank, which he founded in 1988. Mr. Steinhart is a certified public accountant (retired status) and previously served as a Director of eight other public companies and a trustee of the MFS/Compass Group of mutual funds. Individual experience: Extensive experience in banking and commercial lending industries; experience with respect to automotive retail finance and insurance operations; extensive public company audit committee experience. | |
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| |  Age: 83 Joined Board: 2002 Committees: Compensation (Chair), Corporate Governance; Lead Independent Director | | | Mr. Thompson has served as a director since March 2002 and is the Chairman and Chief Executive Officer of his private equity investment and advisory firm, Universal Telecommunications, Inc. Mr. Thompson was Executive Chairman of GTT Communications, Inc., a leading global cloud network provider to multinational clients, from October 2006 to January 2022. From December 2002 to June 2007, Mr. Thompson was Chairman of Comsat International and also served as Chairman and Chief Executive Officer of Global TeleSystems Group, Inc. from March 1999 through September of 2000. Mr. Thompson was Chairman and CEO of LCI International from 1991 until its merger with Qwest Communications International Inc. in June 1998. Mr. Thompson became Vice Chairman of the board for Qwest until his resignation in December 1998. Mr. Thompson previously served as Executive Vice President of MCI Communications Corporation from 1981 to 1990, and prior to MCI, was a management consultant with the Washington, DC offices of McKinsey & Company for nine years, where he specialized in the management of telecommunications. He currently serves as a member of the board of directors of Pendrell Corporation. Mr. Thompson received his MBA from Harvard’s Graduate School of Business and holds an undergraduate degree in chemical engineering from the University of Massachusetts. Individual experience: Extensive experience as an executive and director of numerous public companies; experience in a leadership role directing international corporations; perspective gained from leadership role in communications industry; demonstrated success serving as our lead independent director. | |
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CURRENT DIRECTORS | BOD | Audit Committee | Compensation & Management Development Committee | Nominating & Corporate Governance Committee | Executive Committee | |||||
John D. Barr | M | F | | | | |||||
Lisa Davis | M | M | M | |||||||
Wolfgang Dürheimer | M | | M | | | |||||
Michael R. Eisenson | M | M | ||||||||
Robert H. Kurnick, Jr. | M | | | | M | |||||
Kimberly J. McWaters | M | F | C | |||||||
Roger S. Penske | C | | | | C | |||||
Roger S. Penske, Jr. | M | |||||||||
Sandra E. Pierce | M | | | | | |||||
Greg C. Smith | M | C,F | ||||||||
Ronald G. Steinhart | M | F | | | | |||||
H. Brian Thompson | M | C | M | M | ||||||
Masashi Yamanaka | M | | | | | |||||
No. of Meetings in 2019 | 6 | 8 | 5 | 2 | 0 |
- The Board of Directors believes it is appropriate for us as a public company to have exculpation clauses in our Certificate of Incorporation. The nature of the role of directors and officers often requires them to make decisions on crucial matters. Frequently, directors and officers must make decisions in response to time-sensitive opportunities and challenges, which can create substantial risk of investigations, claims, actions, suits or proceedings seeking to impose liability on the basis of hindsight, especially in the current litigious environment and regardless of merit. Limiting concern about personal risk would empower both directors and officers to best exercise their business judgment in furtherance of stockholder interests. The Company expects a number of industry participants to adopt exculpation clauses that limit the personal liability of officers in their charters and failing to adopt the amendment could impact our recruitment and retention of exceptional officer candidates that conclude that the potential exposure to liabilities, costs of defense and other risks of proceedings exceeds the benefits of serving as an officer of the Company.
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| | CURRENT DIRECTORS | | | BOD | | | Audit Committee | | | Compensation & Management Development Committee | | | Nominating & Corporate Governance Committee | | | Executive Committee | |
| | | | | | | | | | | | | ||||||
| | John Barr | | | M | | | F | | | | | | | | |||
| | Lisa Davis | | | M | | | | | M | | | M | | | | ||
| | Wolfgang Dürheimer | | | M | | | | | M | | | | | | |||
| | Michael Eisenson | | | M | | | | | | | | | M | | |||
| | Robert Kurnick, Jr. | | | M | | | | | | | | | M | | |||
| | Kimberly McWaters | | | M | | | F | | | | | C | | | | ||
| | Kota Odagiri | | | M | | | | | | | | | | ||||
| | Greg Penske | | | VC | | | | | | | | | | ||||
| | Roger Penske | | | C | | | | | | | | | C | | |||
| | Sandra Pierce | | | M | | | | | | | | | | ||||
| | Greg Smith | | | M | | | C, F | | | | | | | | |||
| | Ronald Steinhart | | | M | | | F | | | | | | | | |||
| | H. Brian Thompson | | | M | | | | | C | | | M | | | M | | |
| | No. of Meetings in 2022 | | | 5 | | | 7 | | | 5 | | | 2 | | | 0 | |
2022. The Compensation and Management Development Committeeassists the Board of Directors in discharging its responsibility relating to:"Governance"“Governance” within the "Investor Relations"“Investors” section. The principal responsibilities of each committee are described below. Collectively, our directors attended 98%97% of our board and committee meetings in 2019,2022, and each director attended at least 83%92% of their respective meetings. All of our directors are encouraged to attend the annual meeting of stockholders and 12 of our 13all directors serving at that time attended the annual meeting in 2019."independent"“independent” and "financially literate"“financially literate” under New York Stock Exchange rules and applicable law, and each of the four are "audit“audit committee financial experts,"” as that term is defined in Securities and Exchange Commission rules.••••business risks or exposurescybersecurity incidents and the steps taken to assess, monitor and mitigate these risks or exposures•
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•- Committee:
Board Structure and Lead Director.Roger
•
Director Independence. A majority of our Board of Directors is independent and each of the members of our
individual independence tests specified by the NYSE Listed Company Manual Section 303A.02.
Board of Directors must determine that the director does not have any direct or indirect material relationship with us. In addition to applying these guidelines, the Board of Directors considers relevant facts and circumstances in making the determination of independence, and not merely from the standpoint of the director, but also from that of persons or organizations with which the director has an affiliation. The Board considers the transactions, relationships and arrangements between the Company, and its affiliates such as Penske Corporation, Penske Racing, Penske Entertainment and Penske Truck LeasingTransportation Solutions and affiliates of the director, including those described under "Related“Related Party Transactions"Transactions” and elsewhere in the proxy statement, in its independence determination. The Board also considers ownership of our or our affiliates'affiliates’ securities by the directors and their affiliates, ownership by our management team of any securities of affiliates of directors, and sponsorships of Penske Racing or other Penske affiliated racing entities by any of our or our directors'directors’ affiliates.
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1.
| 1. | The director is employed by us, or an immediate family member is one of our executive officers.* |
| 2. | The director receives more than $60,000 of direct compensation from us, other than director fees and deferred compensation for prior service (provided such compensation is not contingent in any way on continued service).* |
| 3. | The director is affiliated with or employed by our independent auditing firm, or an immediate family member is affiliated with or employed in a professional capacity by our independent auditing firm. |
| 4. | An executive officer of ours serves on the compensation committee of the board of directors of a company that employs the director or an immediate family member as an executive officer. |
| 5. | The director is an executive officer or employee, or if an immediate family member is an executive officer, of another company that does business with us and the sales by that company to us or purchases by that company from us, in any single fiscal year during the evaluation period, are more than the greater of two percent of the annual revenues of that company or $1 million. |
| 6. | The director serves as an officer, director or trustee of a charitable organization, and our charitable contributions to the organization are more than the greater of $250,000 or one percent of that organization’s total annual charitable receipts during its last completed fiscal year. |
| * | Subject to the rules of the New York Stock Exchange, employment as an Interim Chair, Interim CEO or other executive officer on an interim basis, and related compensation, shall not disqualify a director from being considered independent immediately following that employment. |
Risk Management. We have designed and implemented processes to manage risk in our operations. The role of the Board of Directors in risk management is primarily one of oversight. Management is responsible for the implementation and execution of our risk management initiatives. Our Board of Directors executes its oversight role directly and also through its various committees as set forth below.
Audit Committee
•reviews management's assessment
Nominating and Corporate Governance Committee
•oversees compliance with legal and regulatory requirements
•reviews risks relating to our governance structure
Compensation and Management Development Committee
•reviews risks inherent in our compensation policies•reviews the Company's succession planning
Full Board of Directors
•
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risks relating to our governance structure
Director Advisor Program. The Board has adopted a policy in its Corporate Governance Guidelines for the designation of certain former directors as
2022 or 2023.
any securities trading plan is also subject to these limits, as well as approval of our General Counsel who will confirm all legal requirements of such plan, including any applicable waiting periods, before implementation of such plan. No officers or directors implemented Rule 10b5-1 trading plans in 2022 or 2023 year-to-date.
Stock Ownership Guidelines/Pledging. Our stock ownership guidelines, discussed in the CD&A below, require threshold levels of our stock to be held by executive officers, other senior officers and directors. These guidelines exclude any shares that are pledged by our directors and officers.
Controlled Company. Under the New York Stock Exchange rules, if a company is
Director Candidates. When considering new candidates for our Board of Directors, the Nominating and Corporate Governance Committee uses the network of contacts of the Board of Directors to compile potential candidates, but may also engage, if it deems appropriate, a professional search firm. The committee considers whether the nominee would be independent and
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•
We will consider recommendations received by November 19, 2020 for nomination at the 2021 annual meeting of stockholders.
Location of Corporate Governance Documents. Our corporate governance guidelines and the other documents referenced in this section are posted on our website, www.penskeautomotive.com, under the sub-heading
Stockholder Director Nominations and Proposals for
2024.
Central toare driven by our mission are the core values of ethics, integrity, transparency, professionalism, teamworkthat ensures we enrich our communities, minimize our environmental impact, protect the health and exceeding the expectationssafety of our
customers team members and employees. Our commitment to Corporate Social Responsibility is driven by these core values as we aim to conduct our business in ways that enrich the communities where we work and live, focus on the environment and safety,customers, and provide a diverse and inclusive workplace – all while creating value for our stakeholders. The most important investments we make are in our people. Everything we aspire to be as a company builds on our ability to come together as one team. We provide our team members a supportive work environment that empowers them to do meaningful work while fulfilling their passions and balancing work goals with life goals.
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Privacyplay. We aimare proud of these efforts and we encourage participation by all dealerships and employees, including through our commitment to be transparent about the information we collect from our customers. We also want individuals to be informed about what we do with their information and allow them to fully exercise their rights in regards to that information.
Community We encourage our local businesses to support local communities through philanthropic endeavors, similar to our corporate office. We support a variety of organizations, including Toys for Tots, The Humane Society, Habitat for Humanity, as well as local food banks, hospitals, and school districts. Over the last five years, we have held national campaigns to support The Paralyzed Veterans of American, donatingAmerica (“PVA”). Since 2015, our dealerships have supported the PVA, an organization working to ensure paralyzed and disabled veterans receive the care, benefits, and job opportunities they deserve. Each year, we match certain donations from our customers and team members to the PVA and have contributed more than $1.0$8.5 million to the group. As a company with a presence spanning four continents, we are able to make positive impacts well beyond the borders of the communities where our dealerships are located. After the outbreak of the war in 2019 through contributions solicited from customers, employeesUkraine, we and our own contributions.
Environment, Climate Changeaffiliate Penske Transportation Solutions made a $1 million contribution to World Central Kitchen, an organization working to supply meals to those in need at the frontlines of humanitarian, climate, and Safetycommunity crises. We encouraged team members to also donate to this cause, raising over $150,000 from employees.
•Partnerships with environmental and safety consulting and auditing firms to assure best practices in environmental and safety management.•Selected newer facilities are constructed using environment-friendly features such as LED fixtures, occupancy sensors, low-E glass, low flow toilets, motion sensors for sinks, high efficiency HVAC equipment, including web-based energy management systems, programmable thermostats and LEED-certified building materials.•Selected existing facilities have been retrofitted with LED lighting, reducing our energy usage.•Recycling certain electronic equipment and vehicle waste products, such as recycled oil.•Significant reduction of the paper usage in our hiring process, employee handbooks and annual benefit enrollment process as well as replacing customer paperwork with electronic formats in certain markets.
Human Capital Human capital is our most importantgreatest asset. We fosterunderstand that exceptional customer service can only be consistently delivered by attracting, motivating, training, and supportretaining the wellness ofvery best team members. With this in mind, we put our employees at the heart of everything that we do by developing their talent and enabling them to createbuild long-term careers.
•We provide an annual confidential employee engagement survey for most employees.•Now in its fifteenth year, we sponsor a program through the National Automobile Dealers Association designed to train high-potential employees.•We focus on hiring veterans. Since 2014, we have hired more than 745 individuals through support of the Hiring Our Heroes program in the United States•In 2019, 33 of our U.S. dealerships were named by Automotive News to the 'Top 100 Dealerships to Work For'. Additionally, Fortune Magazine has recognized Penske Automotive Group as a World's Most Admired Company.•In the U.K., we were named 2019 'Dealer Group of the Year' by both Automotive Management and Motor Trader Magazines, consolidating our position as the UK's largest and most successful dealer group. In the U.K., we have been named by Glassdoor as the 14thBest Place To Work. We were not only the highest-ranked business in the Automotive Sector, our company was the top-rated retailer ahead of other large national businesses.•We have a zero-tolerance approach to slavery and human trafficking in our operations. We support the California Transparency in Supply Chains Act of 2010 and the United Kingdom's Modern Slavery Act of 2015 and their intent to prevent and eliminate slavery and human trafficking from global supply chains by increasing transparency.
locations.
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The following is a description of the material features of the 2020 Equity Incentive Plan. This description is qualified in its entirety by reference to the full text of the 2020 Equity Incentive Plan, a copy of which is attached to this proxy statement as Appendix A.
Summary
In light of the expiration of our 2015 Equity Incentive Plan on May 5, 2020, our stockholders are being asked to approve the 2020 Equity Incentive Plan (the "Equity Incentive Plan") which will be used to award incentive cash and equity compensation to our management and board of directors. Both our Compensation and Management Development Committee and Board of Directors have approved the Equity Incentive Plan, subject to stockholder approval at the annual meeting.
This plan provides up to 5.0 million shares for equity awards, and terminates once all awards have been issued, unless our Board of Directors terminates it prior to that date. In the last three years, we have granted a gross amount of 1,237,937 incentive equity awards, which represents an average annual rate of shares issued as compared to shares outstanding of approximately 0.50%.
General
Upon adoption by stockholders at the annual meeting, the Equity Incentive Plan will authorize 5.0 million shares of our common stock for issuance as incentive awards. Incentive awards under the Equity Incentive Plan may be in the form of cash, stock options, stock appreciation rights, restricted stock, restricted stock units, performance compensation awards or common stock. If an incentive award expires, terminates or is forfeited without the issuance of shares, then such shares will again be available for grant under the Equity Incentive Plan. However, shares that participants use to pay taxes or option exercise prices will not be recycled for new awards. Adjustments will be made in the aggregate number of shares that may be issued under the Equity Incentive Plan in the event of a change affecting shares of our common stock, such as a stock dividend or split, recapitalization, reorganization, or merger. No more than 1,000,000 shares may be allocated for incentive awards to any one participant during any single calendar year. As of March 17, the closing price of a share of our common stock was $26.57.
Administration and Term. Our Compensation and Management Development Committee will administer the Equity Incentive Plan, including the power to determine when to grant incentive awards; which eligible participants will receive incentive awards; whether the award will be an option, stock appreciation right, restricted stock, restricted stock unit, cash award or company common stock; whether awards will be subject to performance goals; and the number of shares or units to be allocated to each incentive award. The committee may impose conditions on the exercise of options and stock appreciation rights and upon the transfer of restricted stock or restricted stock units under the Equity Incentive Plan and may impose such other restrictions and requirements as it may deem appropriate, including reserving the right for us to reacquire shares issued pursuant to an incentive award.
The committee has delegated limited authority to the Company's CEO to grant equity awards to the company's non-executive officer employees. The committee delegated this authority in order to permit the CEO to award limited equity grants without the specific action of the committee. Pursuant to this delegation, the CEO has had the discretion to make a maximum of 50,000 awards, which authority has been renewed from time to time.
The Equity Incentive Plan will terminate once all shares reserved for issuance have been issued, unless our Board of Directors terminates it prior
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to that date. Incentive awards existing after the termination date will continue to be governed by the terms and conditions of the Equity Incentive Plan.
Eligibility. All present and future employees, directors and other company contributors (such as consultants and advisors) are eligible to receive incentive awards under the Equity Incentive Plan if selected for participation by our Compensation and Management Development Committee. As of March 17, approximately 27,000 employees, directors and company contributors were eligible to receive incentive awards under the Equity Incentive Plan.
Restricted Stock and Restricted Stock Units. Restricted stock and restricted stock units issued pursuant to the Equity Incentive Plan are subject to the following general restrictions: (1) no such shares or units may be sold, transferred, pledged, or otherwise encumbered or disposed of until the restrictions on such shares or units have lapsed or been removed under the provisions of the Equity Incentive Plan and (2) if a holder of restricted stock or restricted stock units ceases to be employed by us or one of our affiliates or ceases to be a company contributor, any shares of restricted stock, or restricted stock units, on which the restrictions have not lapsed or been otherwise removed will be forfeited. The committee is also authorized to impose other terms on restricted stock or restricted stock units, including additional events of forfeiture. The committee will establish the terms and conditions upon which the restrictions on those shares or units will lapse; provided that, unless otherwise specified in an award, the period of restriction must be at least one year from the date of grant. The terms and conditions may include, without limitation, the lapsing of those restrictions at the end of a specified period of time as a result of the disability or death of the participant, or as a result of the occurrence of a change-in-control. In addition, the committee may at any time, in its sole discretion, accelerate the time at which any or all restrictions will lapse or remove any and all restrictions.
Participants holding shares of restricted stock may exercise full voting rights with respect to those shares and are entitled to receive all dividends and other distributions paid with respect to those shares. Participants holding restricted stock units do not possess any voting rights with respect to those units, but are entitled to receive a payment equal all dividends and other distributions paid with respect to the shares underlying those units if and as so provided in the related award agreement. Restricted stock units may be settled by the company in the form of shares of company common stock, cash, or a fixed combination of both, as determined by the committee.
Stock Options. Options granted under the Equity Incentive Plan may be incentive stock options (qualifying for favorable income tax treatment under Section 422 of the Internal Revenue Code of 1986, as amended) or non-statutory stock options. The option price for any option awarded under the plan may not be less than 100% (or, in the case of an incentive stock option granted to a 10% stockholder, 110%) of the fair market value of the our common stock on the date of the grant. The committee determines any vesting requirement for option awards. Payment of the option exercise price may be made in cash or as otherwise provided in an option award or by separate action of the committee. The maximum term of any option granted under the plan is ten years. To date, no stock options have been issued pursuant to the expiring equity incentive plan.
Stock Appreciation Rights. The committee may award stock appreciation rights under the Equity Incentive Plan and impose such conditions upon their exercise as it deems appropriate. When the stock appreciation right is exercisable, the holder may surrender to us all or a portion of the unexercised stock appreciation right and receive in exchange an amount equal to the difference between (i) the fair market value on the date of exercise of the common stock covered by the surrendered portion of the stock appreciation right and (ii) the fair market value of the common stock on the date the stock appreciation right was awarded. The committee may limit the amount that can be received when a stock appreciation right is exercised. Our obligation arising upon exercise
of a stock appreciation right may be paid in the company's common stock or in cash, or in any combination of the two, as the committee may determine. Stock appreciation rights may only be exercised at the times specified by the committee. To date, no stock appreciation rights have been granted under the expiring equity incentive plan.
Performance Goals. The committee may make the vesting or exercisability of any incentive award contingent on the achievement of performance goals. The committee may develop applicable performance goals using the following or other measurements: specified levels of or increases or decreases in revenue, return on equity, earnings per share, total earnings, earnings growth, earnings from continuing operations, EBITDA, EBITDAR, return on capital/equity, return on assets, gross profit, earnings before interest and taxes, unit sales, unit sales growth, gross or operating margin, cost reduction goals, fixed cost coverage measurements (including the ratio of service and parts revenues to operating costs), return on investment, increase in the fair market value of our common stock, share price (including growth measures and total stockholder return), market capitalization, operating profit, profit margin, net income, cash flow (including operating cash flow and free cash flow), financial return ratios, expense ratios, total return to stockholders, market share, earnings measures/ratios, balance sheet measurements (including debt to equity ratios, maintenance of specified credit availability levels, compliance with credit covenants, inventory measurements and receivables/payables metrics), human resources measurements (including measurements of employee turnover, workers' compensation costs and employee satisfaction), internal rate of return, unit sales, same store sales, specified levels of acquisitions/acquired revenue, customer satisfaction and productivity and compliance objectives (including lack of material weakness in internal controls, each as determined in accordance with the relevant AICPA or PCAOB principles), or as adjusted to omit the effects of extraordinary items, acquisitions or dispositions, the gain or loss on the disposal of a business segment, unusual or infrequently occurring events and transactions, accruals for incentive awards under the Equity Incentive Plan and/or cumulative effects of changes in accounting principles. These criteria may relate to the Company, one or more of its subsidiaries or one or more of its or their divisions or units, or any combination of the foregoing, and may be applied on an absolute basis and/or be relative to one or more peer group companies or indices, or any combination thereof, all as the committee shall determine.
Change-in-Control. Upon a change in control of our Company, all outstanding options and stock appreciation rights will be exchanged for a cash payment equal to the spread between the change in control price and the exercise price and all restricted stock and restricted stock units will immediately vest assuming, if applicable, that any performance goals were met at the higher of 100% or the performance trend at the time of the change in control. However the Board or the Compensation and Management Development Committee may provide for alternative treatment for some or all awards in its discretion. A change of control will be deemed to have taken place if any individual, entity or group other than the specified holders of common stock affiliated with Penske Corporation become the beneficial owner of Company securities that constitute more than 50% of the combined voting power of the then outstanding securities of the Company that may be cast for the election of directors to the Board of the Company (other than as a result of an issuance of securities initiated by the Company in the ordinary course of business).
Transferability of Incentive Awards. No incentive awards granted under the Equity Incentive Plan may be sold, transferred, pledged, or otherwise disposed of, other than by will or by the laws of descent and distribution and all options and stock appreciation rights are exercisable during the participant's lifetime only by such participant or, if permissible under applicable law, by the participant's guardians or legal representatives, except that the committee, in its discretion, may permit the transfer of incentive awards to a family member or trust for no consideration. Upon the death of a participant, the participant's personal
representative or beneficiary may exercise the participant's rights, if any, under the plan.
Re-pricing Prior Awards. Except in connection with certain corporate transactions, the terms of outstanding incentive awards may not be amended to reduce the exercise price of outstanding options or stock appreciation rights or cancel outstanding options or stock appreciation rights in exchange for cash, other incentive awards or options or stock appreciation rights with an exercise price that is less than the exercise price of the original options or stock appreciation rights without stockholder approval.
Federal Income Tax Information. The following is a general summary of the current federal income tax treatment of incentive awards that would be authorized to be granted under the Equity Incentive Plan, based upon the current provisions of the Internal Revenue Code of 1986, as amended, and regulations promulgated thereunder. As the rules governing the tax treatment of such awards are technical in nature, the following discussion of tax consequences is necessarily general in nature and does not purport to be complete. In addition, statutory provisions are subject to change, as are their interpretations, and their application may vary in individual circumstances. This discussion does not address the tax consequences under applicable state and local law.
Incentive Stock Options. A participant generally will not recognize income on the grant or exercise of an incentive stock option. However, the difference between the exercise price and the fair market value of the stock on the date of exercise is an adjustment item for purposes of the alternative minimum tax. If a participant disposes of the stock received upon the exercise of an incentive stock option within certain specified periods (a "disqualifying disposition"), the participant will recognize ordinary income on the exercise of such incentive stock option in the same manner as on the exercise of a nonqualified stock option, as described below.
Non-qualified Stock Options and Stock Appreciation Rights. A participant generally is not required to recognize income on the grant of a nonqualified stock option or a stock appreciation right. Instead, ordinary income generally is required to be recognized on the date the nonqualified stock option or stock appreciation right is exercised. In general, the amount of ordinary income required to be recognized is (i) in the case of a nonqualified stock option an amount equal to the excess, if any, of the fair market value of the shares on the exercise date over the exercise price and (ii) in the case of a stock appreciation right, the amount of cash and/or the fair market value of any shares received upon exercise.
Restricted Stock. Unless a participant who receives an award of restricted stock makes an election under Section 83(b) of the Internal Revenue Code of 1986, as amended, as described below, the participant generally is not required to recognize ordinary income on the award of restricted stock. Instead, on the date the restrictions lapse and the shares vest (that is, become transferable and no longer subject to forfeiture), the participant will be required to recognize ordinary income in an amount equal to the excess, if any, of the fair market value of the shares on that date over the amount paid, if any for those shares. If a participant makes a Section 83(b) election to recognize ordinary income on the date the shares are awarded, the amount of ordinary income required to be recognized is an amount equal to the excess, if any, of the fair market value of the shares on the date awarded over the amount paid, if any for those shares. In that case, the participant will not be required to recognize additional ordinary income when the restrictions lapse and the shares vest.
Restricted Stock Units. A participant generally is not required to recognize income on the grant of a restricted stock unit. In general, on the date the units are paid, the participant will be required to recognize ordinary income in an amount equal to the cash and/or the fair market value of the units on that date shares received as payment.
Company Common Stock. A participant generally is required to recognize income on the date of grant of company common stock in the amount of the fair market value of the stock received.
Gain or Loss on Sale or Exchange of Shares. In general, gain or loss from the sale or exchange of shares granted under the Equity Incentive Plan will be treated as capital gain or loss, provided that the shares are held as capital assets at the time of the sale or exchange.
Deductibility by Us. We generally are not allowed a deduction in connection with the grant or exercise of an incentive stock option. However, if a participant is required to recognize income as a result of a disqualifying disposition, we will be entitled to a deduction equal to the amount of ordinary income so recognized. In the case of a nonqualified stock option, a stock appreciation right, restricted stock, restricted stock unit or common stock, in general, we will be allowed a deduction in an amount equal to the amount of ordinary income recognized by a participant, provided that certain income tax reporting requirements are satisfied. However, due to Internal Revenue Code Section 162(m), we are unable to take a deduction for compensation (including incentive awards granted under the Equity Incentive Plan) paid to our named executive officers (and any other employees considered "covered employees" under Internal Revenue Code Section 162(m)) that is in excess of $1 million.
Modification of Equity Incentive Plan. Our board of directors may amend, alter, or terminate the Equity Incentive Plan as it deems advisable, provided that our stockholders must approve any amendment that is required to be approved by stockholders under the Internal Revenue Code, law, or stock exchange listing requirements, including, but not limited to, amendments that would (i) materially increase the benefits accruing to participants under the Equity Incentive Plan, (ii) materially increase the number of shares of our common stock that may be issued under the Equity Incentive Plan or (iii) materially modify the requirements of eligibility for participation in the Equity Incentive Plan. Incentive awards granted under the Equity Incentive Plan may be amended with the consent of the participant so long as the amended award is consistent with the terms of the plan.
New Plan Benefits. Because awards under the Equity Incentive Plan are subject to the discretion of the Compensation and Management Development Committee, the benefits and amounts that will be received or allocated in the future under the Equity Incentive Plan, as well as amounts that would have been received in the last fiscal year had the Equity Incentive Plan been in effect, are not determinable.
Vote Required. In order to be adopted, the Equity Incentive Plan must be approved by the affirmative vote of a majority of shares present and entitled to vote at the meeting. Abstentions will have the same effect as votes cast against the proposal. If our stockholders do not approve the Equity Incentive Plan, we will be unable to make any incentive awards to our management team, board of directors or others due to the expiration of our 2015 Equity Incentive Plan on May 5, 2020.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2
Securities Authorized for Issuance Under Equity Compensation Plans
The following table provides details regarding the shares of common stock issuable upon the exercise of outstanding options, warrants and rights granted under our equity compensation plans (including individual equity compensation arrangements) as of December 31, 2019.
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Our Audit Committee has selected Deloitte & Touche LLP, the member firm of Deloitte Touche Tohmatsu Limited, and their respective affiliates (collectively referred to as "Deloitte") as our principal independent auditing firm for 2020. We have determined to submit the selection of auditors to stockholder ratification, even though it is not required by our governing documents or Delaware law. If the selection of Deloitte as our independent auditor is not ratified by our stockholders, our Audit Committee will re-evaluate its selection, taking into consideration the stockholder vote on the ratification and the advisability of selecting new auditors prior to completion of the 2020 audit.
Our Audit Committee is solely responsible for selecting, engaging and terminating our independent auditing firm, and may do so at any time at its discretion. It is anticipated that a representative of Deloitte will be present at the annual meeting with the opportunity to make a statement and to answer appropriate questions.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF DELOITTE & TOUCHE LLP AS OUR INDEPENDENT AUDITOR
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The Audit Committee of the Board of Directors is responsible for providing independent, objective oversight of our accounting functions and internal controls as more fully discussed above under "Our“Our Corporate Governance."” The Audit Committee has the sole authority to retain and terminate our independent auditing firm, and is responsible for recommending to the Board of Directors that our financial statements be included in our annual report on Form 10-K.
2023.
| | Greg Smith (Chair) | | | Kimberly McWaters | |
| | John Barr | | | Ronald Steinhart | |
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Audit Fees Audit Related Fees Tax Fees Tax Compliance Other Tax Fees All Other Fees Total Fees The Audit Committee has considered the nature of the above-listed services provided by Deloitte and determined that they are compatible with their provision of independent audit services under relevant guidance. The Audit Committee has discussed these services with Deloitte and management and determined that they are permitted under the Code of Professional Conduct of the American Institute of Certified Public Accountants, the auditor independence requirements of the Public Company Accounting Oversight Board, and the laws and regulations administered by the Securities and Exchange Commission. proxy statement. Compensation Philosophy.Other than with respect to Messrs. Kurnick and Penske, the majority of our executive and employee compensation is payable in cash in the short-term and is comprised principally of salary and cash bonuses. We use cash compensation as the majority of our compensation because we believe it provides the most flexibility for our employees and is less dilutive to existing stockholders than equity compensation. The compensation committee also recognizes that stock prices may reflect factors other than long-term performance, such as general economic conditions and varying attitudes among investors toward the stock market in general and toward automotive retail companies specifically. However, we also provide long-term compensation in the form of restricted stock awards for senior employees, including each of our named executive 12 Under the policy, if our Board determines that a member of management earned performance based compensation or incentive compensation within the last three years due to fraud, negligence or intentional misconduct, and such conduct was expected that each will spend approximately 75% of his time on Penske Automotive matters. We were reimbursed approximately four percent of Mr. ” vesting. consulting agreements, as we believe it may be important to have continuing access to these Name and Principal Position Roger S. Penske Chief Executive Officer Robert H. Kurnick, Jr. President J.D. Carlson Executive Vice President & Chief Financial Officer Bud Denker Executive Vice President — Human Resources Shane M. Spradlin Executive Vice President, General Counsel & Secretary The specific Objective • EBITDA (earnings before interest, taxes, depreciation and amortization) of $881.5 million (100% attainment), EBITDA below $818 million results in no attainment, EBITDA of $818 million results in 50% attainment, and EBITDA of $923 million yields 200% attainment.(1) • Compliance with the covenants in our U.S. and U.K. credit facilities • Comparative earnings per share of $5.46 to $5.66 (100% attainment), EPS of $5.34 to $5.45 (50% attainment) and EPS over $5.66 (200% attainment) • Operating margin of 2.99% to 3.18% (100% attainment), operating margin of 2.88% to 2.98% (50% attainment) and above 3.18% (150% attainment)(2) • Common stock price performance exceeds performance of 5 of 8 selected peer group companies during 2019 (100% attainment). Outperformance of 4 of 8 yields 50% attainment, 6 of 8 yields 125% attainment, 7 of 8 yields 150% attainment and 8 of 8 yields 200% attainment(3) • Customer satisfaction scores exceed manufacturer objectives at 90% of our U.S. franchises • No material weaknesses in our internal controls • Reduce selling, general and administrative expense as a percentage of gross profit by more than 100 basis points (100% attainment). Reduction below 10 basis points results in no attainment, reduction of 10 to 50 basis points results in 25% attainment, reduction of 51 to 75 basis points results in 50% attainment and reduction of 76 to 100 basis points results in 75% attainment • Same-store revenue growth of 1.51% to 2.5% (100% attainment). Growth of 1% to 1.5% results in 50% attainment, and growth above 2.51% yields 150% attainment. Total Name and Principal Position Roger S. Penske Chief Executive Officer Robert H. Kurnick, Jr. President J.D. Carlson Executive Vice President & Chief Financial Officer Bud Denker Executive Vice President — Human Resources Shane M. Spradlin Executive Vice President, General Counsel & Secretary The performance objectives for these awards are as follows: Name and Principal Position Roger S. Penske Chief Executive Officer Robert H. Kurnick, Jr. President J.D. Carlson Executive Vice President & Chief Financial Officer Bud Denker Executive Vice President — Human Resources Shane M. Spradlin Executive Vice President, General Counsel & Secretary Name and Principal Position Roger S. Penske Chief Executive Officer Robert H. Kurnick, Jr. President J.D. Carlson Executive Vice President & Chief Financial Officer Bud Denker Executive Vice President — Human Resources Shane M. Spradlin Executive Vice President, General Counsel & Secretary20192022 and 2018,2021, all of which services were approved by our Audit Committee:••management'smanagement’s assessment of internal control over financial reporting••••••••All Other Fees:•primarily related to software charges 2019 2018
$ 3,218,042 $ 3,002,019 149,895 111,000 141,363 134,334 304,268 206,972 — — $ 3,813,568 $ 3,454,325 Proposal 4 — Advisory Vote on Executive CompensationWe annually seek a non-binding advisory vote on our executive compensation. Because your vote is advisory, it will not be binding upon the Compensation and Management Development Committee, however, the committee will take the outcome of the vote into account when making future executive compensation decisions. Last year, our stockholders approved the compensation of our named executive officers as described under "Compensation Discussion and Analysis" and "Executive Compensation" with over 99% of the votes cast by our stockholders voting in favor. As we evaluated our compensation programs and practices, we were mindful of this strong shareholder support in deciding to maintain the overall framework of our compensation program and the majority of our compensation practices unchanged from last year.Our compensation program is designed to motivate our executive officers to enhance long-term stockholder value and to attract and retain the highest quality executive and key employee talent available. We believe our executive compensation is aligned with increasing the value of our common stock and promoting our key strategies, values and long term financial and operational objectives. In this regard, we note that:•Mr. Penske beneficially owns approximately 35 million shares of our common stock, which significantly aligns his interests with the stockholders' interests•In the last several years, neither our Chief Executive Officer nor President has received an annual cash bonus as both only have received restricted stock grants in lieu of a cash bonus•The named executive officers receive restricted stock grants with vesting provisions weighted towards the third and fourth years and are subject to stock ownership requirements discussed below, which encourages long-term stock ownership•We do not have any employment agreements with our named executive officers and have no agreements that provide for severance payments upon termination of employment•Our executive officers earn no additional retirement income under any supplemental executive retirement plan•Executive officers are subject to a compensation recovery or "clawback" policy, which provides that we may recoup some or all of the executive officer's incentive compensation as a result of certain detrimental conduct to encourage compliance with policies and appropriate behavior, and we prohibit our directors, officers and employees from engaging in hedging with respect to our equity securities (as discussed above under "Our Corporate Governance")•We structure our compensation practices to be consistent with and support sound risk management. Our compensation committee reviews risk associated with our compensation policies and has determined such risk is not excessiveTHE BOARD OF DIRECTORS BELIEVES THAT THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS IS APPROPRIATE AND RECOMMENDS A VOTE FOR THE FOLLOWING ADVISORY RESOLUTION:"RESOLVED, that the compensation paid to the Company's named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion is hereby APPROVED."Table of ContentsTABLE OF CONTENTSExecutive OfficersFor 2019, ourOur named executive officers, whose compensation we describe below, are Messrs. Denker, Kurnick, Penske Kurnick, Carlson, Denker, and Spradlin.Spradlin and Ms. Hulgrave. Each of theseour named executive officers werewas elected by the Board of Directors and will hold office until their successors have been duly elected and qualified or until their earlier resignation or removal from office. Biographies of Messrs. Kurnick and Penske are set forth above. Biographies of our other named executive officers are provided below:J.D. Carlson, 50,and Chief Financial Officer since June 2015 and prior to that served as our Senior Vice President and Corporate Controller since May 2011. He previously served as our Vice President and Controller since joining our company in April 2006. Prior to joining us, Mr. Carlson was Corporate Controller for Tecumseh Products. He was previously a Senior Manager for PricewaterhouseCoopers, an accounting and financial advisory services firm, which he joined in 1995.Bud Denker, 61, has served as our Executive Vice President —– Human Resources since July 1, 2015. Since September 2017, heHe also has servedserves as President of Penske Corporation, and he serves as Executive Vice President, Marketing and Communications of Penske Corporation as well as Executive Vice President of Penske Racing. Mr. Denker served as our Executive Vice President —– Marketing from July 2005 to June 2015. Prior to joining us, Mr. Denker served as Vice President, Brand and Market Development for Eastman Kodak Company from 2001-2005.M. Spradlin,, 50, 53, has served as our Executive Vice President since February 2010, our General Counsel since December 2007, and our Corporate Secretary since March 2004. Mr. Spradlin joined our Company in March 2003. From 1999 to 2003, he served as Corporate Counsel to Nextel Communications in Reston, Virginia. From 1995 through 1999, Mr. Spradlin was an associate with the New York and Washington, D.C. offices of Latham & Watkins, specializing in corporate finance and mergers and acquisitions.Additional corporate officers include:George Brochick, 70, has served as Executive Vice President of Strategic Development since July 1, 2012. Prior to this, he served as Executive Vice President of our Western Region since December 2002. He joined PAG in 1996 upon the sale of the former Sun Automotive Group to Penske Automotive. In addition to his current executive functions, Mr. Brochick has held numerous dealership general manager positions throughout his automotive career. From 1977 to 1984, prior to entering the automobile business, Mr. Brochick served as Vice President, Operations, for Southwest Kenworth, Inc. Mr. Brochick also held the position of Director, Marketing Services, for Euclid, Inc., a division of Daimler-Benz, A.G., with worldwide responsibilities for market research and technical field studies. Mr. Brochick has previously served as a Board Member of the American International Automobile Dealers Association and is currently serving as a Board Member for the Duke University Board of Visitors.Richard A. Hook, 45, has served as our Executive Vice President and Chief Information Officer since February 13, 2019. Prior to that, he served as our Senior Vice President and Chief Information Officer since May 1, 2015, as well as Vice President, IT Infrastructure since July 2009. Before joining us in 2009, Mr. Hook held various positions at Arthur Andersen LLP, H&R Block Financial Advisors and Federal-Mogul Corporation.Shelley Hulgrave, 41, has served as our Senior Vice President since February 2020 and our Corporate Controller since June 2015. She has also served as our Corporate Accounting Manager beginning in October 2006 coordinating the company's accounting teams in the United States, Europe and Australia. Prior to joining us, Ms. Hulgrave held various positionsfor DaimlerChrysler Financial and Ernst & Young.Aaron Michael, 44, has served as our Senior Vice President, Financial Services since 2014 and has been our Treasurer since 2006. In his role as Treasurer, he manages our capital structure and real estate portfolio. From 2001 through 2006, Mr. Michael was employed by Penske Corporation in various finance and treasury roles. Prior to working with Penske, Mr. Michael was a commercial lender for Comerica Bank in its Detroit, MI office.Terri Mulcahey, 54, has served as our Executive Vice President, Marketing and Business Development since July 1, 2015. Prior to that, Ms. Mulcahey served as our Senior Vice President, Marketing and Business Development from July 1, 2012, and as our Vice President, Business Development from April 9, 2007. Before joining us, Ms. Mulcahey served in various roles at the Reynolds and Reynolds Company for 20 years, including the role of Senior Vice President of Sales and Service for North America operations.Anthony R. Pordon, 55, has served as Executive Vice President since May 2011. Prior to that, Mr. Pordon served as Senior Vice President since January 2006 and Vice President since July 2001. Mr. Pordon's primary responsibilities include Investor Relations, Corporate Communications, and Corporate Development, including the responsibility for establishing, directing and maintaining our communication strategies and representation on Wall Street with the buy-side and sell-side analyst community. Prior to joining us, Mr. Pordon served in various capacities at Detroit Diesel Corporation, a manufacturer of heavy-duty diesel engines. Prior to Detroit Diesel, Mr. Pordon was an auditor at Deloitte & Touche LLP.Compensation Committee ReportProxy Statement.
Development Committee of the Board of DirectorsH. Brian Thompson (Chair)Lisa DavisWolfgang Dürheimer Compensation Discussion and Analysisofficers.officers (“NEOs”). Our restricted stock program awards typically vest over four years, with 70% of any award vesting in the third and fourth years. We believe this long termlong-term compensation helps to align management'smanagement’s goals with those of our other stockholders and provides a long-term retention inducement for our key employees, as discussed below under the heading "Long Term“Long-Term Incentive Plans."2019. Notwithstanding management's participation in the executive compensation process, all named executive officer2022. All NEO compensation determinations are made by the committee, using its independent judgment and analysis.—– Human Resources and Chief Executive Officer, each of whom attends part of most committee meetings. These executives make recommendations concerning our compensation policies generally, certain specific elements of compensation for senior management (such as equity awards and bonuses), and report to the committee as to companyCompany personnel and developments. Our Chief Executive Officer also makes specific compensation recommendations concerning our other executive officers and certain other employees. Our Chief Executive Officer doesexecutives do not participate in determining histheir own compensation.incentive basedincentive-based compensation arrangement induces an inherent element of risk taking by senior management. We incentincentivize management through annual discretionary bonuses, restricted stock grants and, in some cases, performance basedperformance-based bonuses. The committee assesses the risk related to our compensation policies for the named executive officers and for the employees generally and has determined that our compensation arrangements do not lend themselves to unnecessary or excessive risk taking. The committee believes that any inherent risk is mitigated by the following factors:••committee's negativecommittee’s discretion to reduce any performance basedperformance-based award••field and consolidated results••"Our“Our Corporate Governance"Governance” beginning on page 7.
.("Clawback"(“Clawback”) Policy.We have a policy regarding the recovery of unfairly earned compensation.of upwith respect to an aggregate of 50,000 shares of our common stock (or stock equivalents) for new hires or spot awards,per year, other than awards to executive officers, provided thatthe grant or vesting of the awards are reported to the committee at its next meeting. Our compensation committee believes that this delegation of authority allows us to meet our ongoing business needs in a practical manner. Our Chief Executive Officer approved the grant or vesting of awards for 1,936with respect to 25,082 shares under that authority in 2019,2022, which awards were ratified by the committee.Guidelines.Guidelines. Our stock ownership guidelines are designed to align our management and Board members'members’ interests with our stockholders. The guidelines require that officers and directors own the following levels of common stock, expressed as a multiple of base salary. Multiple ofBase SalaryCEO 8x President4xExecutive Vice Presidents 2x $40,000 ×$60,000 x 10 = $400,000)$600,000). Directors and officers have five years from appointment to reach the minimum ownership level, though our policy allows extensions at the discretion of the Chair and Lead Director. These guidelines exclude any shares that are pledged by any of our directors and officers, and also include any shares of restricted stock held by the officer or director. reviews and determines all aspects of compensation for our named executive officers.NEOs. In making decisions regarding non-CEO compensation, the committee receives input from our Chief Executive Officer. The committee believes that solely using annual quantitative performance measurements does not create the appropriate balance of incentives to build long-term value. Thus, the committee evaluates a broad range of qualitative factors, including reliability, a track record of integrity, good judgment, foresight and the ability to lead others.(Asburywhich in 2022 consisted of Asbury Automotive Group, AutoNation, CarMax, Group 1 Automotive, Lithia Motors and Sonic Automotive).Automotive. While we benchmark our compensation, we do not target a specific quartile of pay for our named executive officersNEOs as compared to our peers.above mentionedabove-mentioned factors, the level of compensation that we pay to Messrs. Denker and Kurnick reflect that each devotes a percentage of his time to affiliated companies for which they receive additional compensation from Penske Corporation. Specifically, Mr. Kurnick serves as Penske Corporation'sCorporation’s Vice Chair and Mr. Denker serves as the President of Penske Corporation. Our committee does not track the exact percentage of time spent on Penske Automotive versus affiliated matters, recognizing that the amount varies from year to year, but it is generallySpradlin'sSpradlin’s base salary by Penske Corporation to reflect his efforts on behalf of Penske Corporation. The full amount of Mr. Spradlin'sSpradlin’s base salary is shown in the table below.••••named executive officersNEOs are determined by scope of job responsibility, experience, individual performance, historical salary levels and the benchmarking information discussed above. The committee approves salary levels for named executive officers and certain key employees in order to maintain external compensation competitiveness using the benchmarks noted above, and to reflect the performance of those employees in the prior year and to reflect any change in the employee's responsibilities. The evaluation of the individual'sindividual’s performance is based upon the committee's subjectivecommittee’s perception of that individual'sindividual’s performance, based in large part on input from our Chief Executive Officer with respect to each of the other named executive officers,NEOs, and the factors noted above under "Determination“Determination of Compensation Amounts."named executive officers.NEOs. The items of corporate performance that are considered for our named executive officersNEOs are the same as those with respect to the award detailed below under "Long-Term“Long-Term Incentive Plans."” Our compensation committee uses these factors in a subjective evaluation to gauge Company performance, keeping in mind the impact of the general performance of the automotive retail industry. Beginning January 2020,1, 2022, we increased the annual base salaries of Messrs. Carlson,Kurnick and Penske by $100,000 and $200,000, respectively, based on the committee’s review of these factors. Beginning December 1, 2022, Ms. Hulgrave’s annual base salary was increased by $100,000, and beginning January 1, 2023, Messrs. Denker and Spradlin'sSpradlin’s annual base salaries were each increased by $25,000, resulting fromin each case based on the Committee'sCommittee’s review of these factors. Each now receives a salary of $600,000.In the past several years, ourOur Chief Executive Officer and President have not received any discretionary bonus payments, and instead receive only the restricted stock grants resulting from their achievement of performance goals, as described below under "Long-Term“Long-Term Incentive Plans."” We pay annual cash bonuses to our other named executive officersNEOs to provide an incentive for future performance and as a reward for performance during the prior year. These discretionary bonus payments are determined in varying degrees based on three criteria:••individual'sindividual’s performance in the prior year•individual'sindividual’s business unit in the prior yearnamed executive officersNEOs are the same as those detailed below under "Long-Term“Long-Term Incentive Plans."” Our compensation committee uses these factors in a subjective evaluation to gaugeevaluate Company performance, keeping in mind the impact of the overall performance of the business sectors in which we compete. The evaluation of the individual'sindividual’s performance and the performance of the individual'sindividual’s business unit is based on the committee'scommittee’s perception of that performance, based in part on input from our Chief Executive Officer and the factors noted above under "Determination“Determination of Compensation Amounts." The amount of cash bonuses paid to Messrs. Carlson, Denker and Spradlin are set forth in the "Bonus" column of the Summary Compensation Table below.”
Restricted Stock Awards.Each member of senior management, including each of the named executive officers,NEOs, is eligible to receive a restricted stock award because we believe these awards effectively align management'smanagement’s goals with those of our other stockholders. Restricted stock grants for management typically vest over four years at a rate of 15%, 15%, 20% and 50% per year, and are subject to forfeiture in the event the employee departs from the Company before vesting. We believe these awards provide a longer-term incentive for management because the majority of the award vests in the third and fourth year. We employ this form of compensation in part because many of our initiatives may take several years to yield benefits. We also believe that weighted vesting of these awards provides an additional incentive to retain our valuable employees due to the unvested value that may be created over time. Our restricted stock awards mirror our other outstanding stock, including the rightproviding dividend and voting rights prior to vote with our other stockholders and receive dividends.2019 and 2020,2022, each of our named executive officersNEOs other than Ms. Hulgrave received restricted stock awards resulting from achievement of the long termlong-term incentive plan awards discussed below.below as well. Ms. Hulgrave received a discretionary award in 2022 as she was named Chief Financial Officer in 2021 after the long-term incentive awards for the other officers had been implemented. In total in 2019,2022, the committee approved the grant of approximately 546,963304,626 equity incentive awards under our 2015 Equity Incentive Planequity plans (representing approximately 0.7%0.4% of our current outstanding equity), including all of the awards to our named executive officers. Our 2015NEOs. Awards were granted under our 2020 Equity Incentive Plan provideswhich originally provided up to fourfive million shares for equity awards. In February 2023, each of our NEOs received restricted stock awards and terminates on May 5, 2020.
resulting from achievement of the long-term incentive plan awards discussed below.named executive officers,NEOs, and certain other employees, with selected other benefits or perquisites in order to attract and retain them. With respect to health and welfare benefits, the committee believes that our employees should receive a meaningful benefit package commensurate with those of other automotive retailers, recognizing the increasing cost of those benefits in recent years. We also provide our U.S. employees with company matching under our 401(k) plan. The amounts received by the named executive offers in this regard are set forth in the "All Other Compensation" column of the "Summary Compensation" table belownamed executive officers,NEOs, as well as other eligible employees, may defer up to 50% of their base salary and up to 100%95% of their bonus compensation pursuant to the Penske Automotive Group, Inc. Amended and Restated Deferred Compensation Plan effective January 1, 2018 (the "DCP"“DCP”). The DCP is an unfunded, non-qualified deferred compensation plan which provides the opportunity to accumulate additional savings for retirement on a tax deferred basis. The Company does not match funds deferred through this plan. Additional details regarding our DCP can be found below in the "Nonqualified“Nonqualified Deferred Compensation"Compensation” table.named executive officersNEOs and directors are also provided with an automobile allowance or the use of a companyCompany vehicle. From time to time, we may provide other benefits to certain members of our senior management. We have valued these benefits in the "All“All Other Compensation"Compensation” column of the "Summary Compensation"“Summary Compensation” table below based on our cost. We review these benefits on a case-by-case basis and believe, if limited in scope, such benefits can provide an incentive to long termlong-term performance and help retain our valuable employees.compensation.compensation from our Company. We believe our mix of short-term and long-term compensation provides a retention incentive that makes an employment contract unnecessary, while providing us flexibility with respect to managing the departure of an executive officer. Our lack of pre-arranged severance compensation is consistent with our performance basedperformance-based compensation philosophy and provides us the flexibility to enter into post-employment arrangements based on circumstances existing upon departure. We have historically entered into varying types of severance arrangements with departing members of our senior management, which have included vesting of restricted stock andindividuals'individuals’ knowledge base and guidance. In the event we employ consulting agreements, we have typically obtained a non-compete agreement with these individuals. With respect to a change in control, none of our current executive officers have been guaranteed any change of control payments, however, our outstanding restricted stock grants provide thatvest in the event of a change of control, the award will vest.Long Termcontrol.Plans OurPlans. In February 2022, our compensation committee established 20192022 performance targets for a performance basedperformance-based award for each of named executive officers in February 2019.the NEOs. The earned payouts for these awards are set forth in the table below and, for Messrs. Denker and Spradlin, and Ms. Hulgrave, were paid in shares of restricted stock in February 20202023 as set forth below. During 2019, the company faced macroeconomic challenges, particularly in its U.K. operations, from the continued delays in Brexit which led to declining consumer confidence and an oversupply of both new and used vehicles in the market. Further, changing consumer preferences with respect to government driven policies regarding diesel-powered vehicles also resulted in an over-supply of used vehicles in the market. Messrs. Carlson, Denker and Spradlin achieved 41% of the performance targets noted below, which underperformance we believe results significantly from these events. Messrs. Kurnick and Penske, achieved 31%however, waived the acceptance of approximately 33% and 27%, respectively, of the performance targets noted below. However,resulting awards. While each earned $7.5 million and $1.5 million, respectively, Mr. Kurnick waived the acceptance of $500,000 of that award and Mr. Penske waived acceptance of $2.0 million of that award in addition to the considerations above, the compensation committee believes that the underperformance for the customer satisfaction objective noted below was due to product issues with one brand, which was not subject to the influence of our management and therefore determined to pay out this objective at the full 10%.Our compensation committee has approved the payments noted below, which are below the threshold payments noted below, considering the extraordinary naturelight of the circumstances leadingincrease in value of previously earned awards and to provide additional opportunity for awards to others in management without additional shareholder dilution. The amount noted in the result, managements' efforts in 2019, Company retention concernstable below reflects the award amounts that were achieved and considering thataccepted.Chief Executive Officer and President received no bonus with respect to 2019 other than this award.TheNEOs, the amount of restricted stock noted below granted in February 20202023 and vesting over a four yearfour-year period was calculated by dividing the total award achieved and accepted by our average closing stock price for each trading day in 20192022 ($46.1127)108.55). Messrs. Kurnick and Penske diddo not receive an annual cash bonus because they each received thisbonuses. Their performance bonuses are paid only in shares of restricted stock grant.as a result of the long-term incentive plans.2019 Long Term (1) Reflects a reduced amount as Messrs. Kurnick and Penske waived the acceptance of $500,000 and $2.0 million of their awards, respectively, as discussed above. Threshold
($) Target
($) Maximum
($) Payment
($) Payment
(Shares)
$ 2,500,000 $ 5,000,000 $ 7,500,000 $ 2,050,000 44,456 500,000 1,000,000 1,500,000 $ 410,000 8,891 250,000 500,000 750,000 $ 205,000 4,446 250,000 500,000 750,000 $ 205,000 4,446 250,000 500,000 750,000 $ 205,000 4,446 2019 Long Term Incentive Award Objectives20192022 performance objectives for Messrs. Kurnickthese officers listed above and Penskeresults were as follows: (1) Performance between these amounts yields pro rata attainment (2) Operating margin is the ratio of operating income to total revenue (3) The peer group companies for this purpose are Asbury Automotive, AutoNation, CarMax, Group 1 Automotive, Lithia Automotive, Sonic Automotive, Ryder and Pendragon PLC (U.K.) (4) This objective was not met. However, the compensation committee believes that the underperformance on this objective was due to the inability to conduct in-person training which was not subject to the influence of our management and therefore determined to pay out this objective at the full 7.5%. Result % of Award Achievement
$825.3 20 % 11 % Compliant 10 % 10 % $5.28 10 % 0 % 2.82 10 % 0 % 2 of 8 10 % 0 % (4) 10 % (4 ) None 10 % 10 % Increase of 39 bps 10 % 0 % –.7% 10 % 0 % 100 % 41 % (1)Performance between these amounts yields pro rata attainment.(2)Operating margin is the ratio of operating income to total revenue.(3)The peer group companies for this purpose are Asbury Automotive, AutoNation, CarMax, Lithia Automotive, Group 1 Automotive, Sonic Automotive, Ryder and Pendragon PLC (U.K.).(4)This objective was not met. However, the compensation committee believes that the underperformance for this objective was due to product issues with one brand which was not subject to the influence of our management and therefore determined to pay out this objective at the full 10%.The specific 2019 performance objectives for Messrs. Carlson, Denker and Spradlin were the same as those set forth above, except for the omission of the customer satisfaction objective, which percentage amounts were instead allocated evenly to the covenant compliance and the internal controls objectives.2020 Long Term2020,2023, the committee established similar performance basedperformance-based awards for our named executive officersNEOs in the amounts specified below to be paid in shares of restricted stock to be granted in 20212024 calculated by dividing the resulting total award achieved by the average PAG closing stock price for each trading day in 2020.2023. Target ($) Maximum ($)
$ 5,000,000 $ 7,500,000 1,000,000 1,500,000 500,000 750,000 500,000 750,000 500,000 750,000 Objective
•$831.8$1,888 million (100% attainment), EBITDA below $771.8$1,737 million results in no attainment, EBITDA of $771.8$1,737 million results in 50% attainment, and EBITDA of $870.9$1,974 million yields 200% attainment.attainment (1) 20% •Compliance with the covenants in our U.S. and U.K. credit facilities 10% •$5.52$16.34 to $5.77$17.10 (100% attainment), EPS of $5.28$15.66 to $5.51$16.33 (50% attainment), EPS of $17.11 to $17.96 (200% attainment), and EPS over $5.77 (200%$17.97 (300% attainment) 10% •Operating margin of 2.89% to 2.93% (100% attainment), operating margin of 2.82% to 2.84% (50% attainment), operating margin of 2.85% to 2.88% (75% attainment) and above 2.93% (200% attainment)(2) 10% •53 of 85 selected peer group companies during 2020 (100% attainment). Outperformance of 4 of 8 yields 50% attainment, 6 of 8 yields 125% attainment, 7 of 85 yields 150% attainment and 85 of 85 yields 200% attainment(3)attainment (2) 10% franchisesdealerships 10% 10% 20% Total 100% (1)Performance between these amounts yields pro rata attainment.(2)Operating margin is the ratio of operating income to total revenue.(3)The peer group companies for this purpose are Asbury Automotive, AutoNation, CarMax, Lithia Automotive, Group 1 Automotive, Sonic Automotive, Ryder and Pendragon PLC (U.K.).(1) Performance between these amounts yields pro rata attainment (2) The peer group companies for this purpose are Asbury Automotive, AutoNation, Lithia Automotive, Group 1 Automotive and Sonic Automotive Executive Compensation20192022 annual and long-term compensation for our Chief Executive Officer, Chief Financial Officer and each of our three other most highly compensated named executive officers, collectively referred to as the "named“named executive officers."officers” or “NEOs”.” For a discussion of our methodology in valuing the items set forth under "All“All Other Compensation,"” see "CD&A —“Compensation Discussion & Analysis – Other Compensation."2019” (1) These amounts represent the grant date fair value of the long-term incentive awards which were settled by issuing shares of restricted stock in February of the subsequent year all computed in accordance with FASB ASC Topic 718. Additional assumptions used in the calculation of the amounts in this column are included in footnote 13 to our audited financial statements for the year ended December 31, 2022 included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 21, 2023. These amounts represent the target amount for the awards. The 2023 payouts for these performance-based awards are each set forth in the table below which was ultimately paid in shares of restricted stock in February 2023 valued as set forth above. For Ms. Hulgrave, the 2021 award represents the value of the discretionary restricted stock award she received in February 2021, and for 2022, the amount also includes, in addition to the target amount of the 2022 long-term incentive award, the value of the discretionary award she received in 2022. (2) Consists of $650,613 of dividends on unvested restricted stock awards and $50,000 in charitable donations pursuant to our director charitable matching program. (3) Consists of $37,670 for an automobile allowance, $50,000 in charitable donations pursuant to our director charitable matching program and $130,164 in dividends on unvested restricted stock awards. (4) As discussed in footnote (1) above, represents two years of stock awards for Ms. Hulgrave: the discretionary award issued in February 2022 ($749,983), and the long-term incentive award for 2022 ($500,000). (5) Consists of $27,600 for an automobile allowance, matching funds under our U.S. 401(k) plan, Company-sponsored life insurance, Company-sponsored lunch program, $28,767 in dividends on unvested restricted stock awards, payments for a country club membership, use of sporting event tickets and a tax allowance of $4,329. (6) Represents dividends on unvested restricted stock. (7) Represents an automobile allowance, Company-sponsored life insurance, matching funds under our U.S. 401(k) plan, Company-sponsored lunch program, payments for a country club membership, use of sporting event tickets, dividends on unvested restricted stock of $64,732, and a tax allowance of $5,173. Year Salary
($) Bonus
($) Stock
Awards
($)(1) All Other
Compensation
($) Total
($)
2019 $ 1,400,000 — $ 5,000,000 (2) $ 493,752 (3) $ 6,893,752 2018 1,400,000 — 5,000,000 424,351 6,824,351 2017 1,375,000 — 5,000,000 432,491 6,807,491 �� 2019 800,000 — 1,000,000 (2) 176,315 (4) 1,976,315 2018 800,000 — 1,000,000 162,890 1,962,890 2017 787,500 — 1,000,000 164,130 1,951,630 2019 575,000 315,000 500,000 (2) 77,659 (5) 1,467,659 2018 547,917 350,000 500,000 66,223 1,789,140 2017 522,917 300,000 200,000 70,222 1,093,139 2019 575,000 315,000 500,000 (2) 34,649 (6) 1,424,649 2018 547,917 350,000 500,000 24,166 1,747,083 2017 523,958 300,000 200,000 18,423 1,042,381 2019 575,000 315,000 500,000 (2) 89,597 (7) 1,479,597 2018 547,917 350,000 500,000 76,500 1,799,417 2017 523,958 300,000 295,001 74,809 1,193,768 (1)These amounts represent the grant date fair value of the restricted stock awards that we granted during 2019 under our 2015 Equity Incentive Plan, computed in accordance with FASB ASC Topic 718. Additional assumptions used in the calculation of the amounts in this column are included in footnote 14 to our audited financial statements for the year ended December 31, 2019 included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 21, 2020.(2)These amounts represent the target amount for a performance based award issued in February 2019 described below. The payouts for the performance based awards are each set forth in the table below, along with the achievement amount, which was ultimately paid in shares of restricted stock in February 2020.(3)Consists of $443,752 of dividends on unvested restricted stock awards and $50,000 in charitable donations pursuant to our director charitable matching program.(4)Consists of $37,670 for an automobile allowance, $50,000 in charitable donations pursuant to our director charitable matching program and $88,645 in dividends on unvested restricted stock awards.(5)Represents $27,600 for an automobile allowance, matching funds under our U.S. 401(k) plan, company-sponsored life insurance, company-sponsored lunch program, personal use of sporting event tickets, $35,090 in dividends on unvested restricted stock awards, and a tax allowance of $3,474.(6)Represents spousal travel costs, $33,742 in dividends on unvested restricted stock and a tax allowance of $395.(7)Represents an automobile allowance, company-sponsored life insurance, matching funds under our U.S. 401(k) plan, company-sponsored lunch program, payments for a country club membership, personal use of sporting event tickets, $39,690 in dividends on unvested restricted stock, spousal travel costs and a tax allowance of $4,265.Table of ContentsTABLE OF CONTENTS2019 Long Term (1) Reflects a reduced amount as Messrs. Kurnick and Penske waived the acceptance of $500,000 and $2.0 million of their awards, respectively, as discussed above under “Compensation Discussion & Analysis-Long-Term Incentive Plans”. Threshold ($) Target ($) Maximum ($) Payment ($)
2,500,000 5,000,000 $ 7,500,000 $ 2,050,000 500,000 1,000,000 $ 1,500,000 $ 410,000 250,000 500,000 750,000 $ 205,000 250,000 500,000 750,000 $ 205,000 250,000 500,000 750,000 $ 205,000 (1) These columns show the target and maximum award values for the awards granted under our 2022 Long-Term Incentive Plan described above under the heading “2022 Long-Term Incentive Awards” which awards were paid out in shares of restricted stock in February 2023. (2) For Ms. Hulgrave, reflects her discretionary award in February 2022 and for the others, reflects the shares that were issued in February 2022 to settle the 2021 Long-Term Incentive Awards. (3) Computed in accordance with ASC 718.
| | Estimated Future Payouts under Equity Incentive Plan Awards(1) | | All other Awards: Number of Shares | | Grant Date Fair Value of Stock | ||||||||||||||
Name and Principal Position | | Grant Date | | Threshold ($) | | Target ($) | | Maximum ($) | | of Stock | | Awards ($)(2) | |||||||
Roger S. Penske | | 2/12/2019 | | 2,500,000 | | 5,000,000 | $ | 7,500,000 | | | $ | 5,000,000 | |||||||
Chief Executive Officer | | 2/12/2019 | | | | | | | | 107,543 | | 5,100,000 | |||||||
| |||||||||||||||||||
Robert H. Kurnick, Jr. | | 2/12/2019 | | 500,000 | | 1,000,000 | $ | 1,500,000 | | | | 1,000,000 | |||||||
President | | 2/12/2019 | | | | | | | | 21,509 | | 1,020,000 | |||||||
| |||||||||||||||||||
J.D. Carlson | | 2/12/2019 | | 250,000 | | 500,000 | | 750,000 | | | | 500,000 | |||||||
Executive Vice President & | | 2/12/2019 | | | | | | | | 10,754 | | 510,000 | |||||||
Chief Financial Officer | | | | | | | | | | | | | |||||||
| |||||||||||||||||||
Bud Denker | | 2/12/2019 | | 250,000 | | 500,000 | | 750,000 | | | | 500,000 | |||||||
Executive Vice President — | | 2/12/2019 | | | | | | | | 10,754 | | 510,000 | |||||||
Human Resources | | | | | | | | | | | | | |||||||
| |||||||||||||||||||
Shane M. Spradlin | | 2/12/2019 | | 250,000 | | 500,000 | | 750,000 | | | | 500,000 | |||||||
Executive Vice President, | | 2/12/2019 | | | | | | | | 10,754 | | 510,000 | |||||||
General Counsel & Sec. | | | | | | | | | | | | | |||||||
(1)These columns show the threshold, target, and maximum award values, denominated in dollars, for the awards granted under our 2019 Long Term Incentive Plan described above under the heading "2019 Long Term Incentive Awards." While these awards are denominated in dollars in the table, they were paid out in shares of restricted stock in 2020.(2)Computed in accordance with ASC 718.
Name Roger S. Penske Chief Executive Officer Robert H. Kurnick, Jr. President J.D. Carlson Executive Vice President & Chief Financial Officer Bud Denker Executive Vice President — Human Resources Shane M. Spradlin Executive Vice President, General Counsel & Secretary (2) (3) (4) (5) 20192022 Year-End Stock Awards Number of Shares
of Stock That
Have Not Vested (#) Market Value of Shares
of Stock That
Have Not Vested(1)
315,044 (2) $ 15,821,509 63,009 (3) $ 3,164,312 26,150 (4) $ 1,313,253 26,150 (5) $ 1,313,253 28,684 (6) $ 1,440,510 (1) Market value is based upon the closing price of our common stock on December 31, 20192022 ($50.22)114.93).These restricted shares vest as follows: June 1, 2020 – 83,52962,66397,137 June 1, 2021 – 81,22922,22871,474 20222025 – 65,39596,573 These restricted shares vest as follows: June 1, 2020 – 16,70512,53319,433 June 1, 2021 – 16,2454,44614,158 20222025 – 13,08019,186 These restricted shares vest as follows: June 1, 2020 – 5,8996,2673,845 June 1, 2021 – 5,5622,2234,174 20222025 – 6,1994,430 These restricted shares vest as follows: June 1, 2020 – 5,8996,2679,713 June 1, 2021 – 5,5622,2237,424 20222025 – 6,1999,934 (6) The restricted shares vest as follows:June 1, 2020 – 7,516 June 1, 2023 – 6,267June 1, 2021 – 6,479June 1, 2024 – 2,223June 1, 2022 – 6,199
| | Stock Awards | ||||||
Name | | Number of Shares Acquired on Vesting (#) | | Value Realized on Vesting ($) | |||
Roger S. Penske | | 74,142 | $ | 3,167,346 | |||
Chief Executive Officer | | | |||||
Robert H. Kurnick, Jr. | 14,691 | $ | 627,600 | ||||
President | |||||||
J.D. Carlson | | 6,343 | $ | 270,973 | |||
Executive Vice President & Chief Financial Officer | | | |||||
Bud Denker | 4,593 | $ | 196,213 | ||||
Executive Vice President — Human Resources | |||||||
Shane M. Spradlin | | 7,118 | $ | 304,081 | |||
Executive Vice President, General Counsel & Secretary | | | |||||
for 2022
We believe the DCP is an important tool for recruiting key employees and assists in employee retention. The table below reflects the contributions, earnings, withdrawals, and distributions during 2019,2022, and the account balances as of December 31, 20192022 for each named executive officer under the DCP.
| | Name | | | Executive Contributions In Last FY(1) | | | Registrant Contributions In Last FY | | | Aggregate Earnings In Last FY (2) | | | Aggregate Withdrawals / Distributions | | | Aggregate Balance at Last FYE (3) | |
| | | | | | | | | | | | | ||||||
| | Roger Penske Chief Executive Officer | | | – | | | – | | | – | | | – | | | – | |
| | | | | | | | | | | | | ||||||
| | Robert Kurnick, Jr. President | | | – | | | – | | | – | | | – | | | – | |
| | | | | | | | | | | | | ||||||
| | Shelley Hulgrave EVP & Chief Financial Officer | | | $117,812 | | | – | | | ($43,645) | | | – | | | $310,610 | |
| | | | | | | | | | | | | ||||||
| | Bud Denker EVP, Human Resources | | | $182,500 | | | – | | | ($80,454) | | | – | | | $477,136 | |
| | | | | | | | | | | | | ||||||
| | Shane Spradlin EVP, General Counsel & Secretary | | | $492,970 | | | – | | | ($186,456) | | | – | | | $1,346,267 | |
| (1) | These amounts are reported in the “Salary” and “Bonus” columns of the Summary Compensation Table. |
| (2) | The amounts in this column were not reported as compensation in the Summary Compensation Table. |
| (3) | The following amounts represent the amounts reported in this column which were reported as compensation to the named executive officer in the Summary Compensation Table for previous years: Shelley Hulgrave – $214,891; Bud Denker – $422,929; Shane Spradlin – $1,234,100. |
Name | | Executive Contributions In Last FY(1) | | Registrant Contributions In Last FY | | Aggregate Earnings In Last FY(2) | | Aggregate Withdrawals / Distributions | | Aggregate Balance at Last FYE(3) | ||||||
Roger S. Penske | | — | | — | | — | | — | | — | ||||||
Chief Executive Officer | | | | | | |||||||||||
Robert H. Kurnick, Jr. | — | — | — | — | — | |||||||||||
President | ||||||||||||||||
J.D. Carlson | $ | 608,898 | | — | $ | 108,884 | | — | $ | 1,326,081 | ||||||
EVP & Chief Financial Officer | | | | | | |||||||||||
Bud Denker | $ | 69,283 | — | $ | 2,220 | — | ||||||||||
EVP — Human Resources | $ | 71,503 | ||||||||||||||
Shane M. Spradlin | $ | 212,801 | | — | $ | 33,843 | | — | | | ||||||
EVP, General Counsel & Secretary | | | | | | | | | $ | 430,835 |
(1)The full amounts in this column were previously reported in the "Salary" and "Bonus" columns of the Summary Compensation Table(2)The amounts in this column were not reported as compensation in the Summary Compensation Table.(3)No portion of the amount shown in this column has been shown in the Summary Compensation Table in years prior to 2019.
Pension Benefits and Nonqualified Deferred Compensation.. Our executive officers are not eligible to participate in any defined benefit compensation plans. The Penske Automotive Group, Inc. Deferred Compensation Plan ("DCP") discussed above allows participants the opportunity to accumulate additional savings for retirement on a tax-deferred basis. For a more detailed discussion of the DCP, please see the section entitled "Executive Compensation — Nonqualified Deferred Compensation."
"
December 31, 2022.
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| | Year | | | Summary Compensation Table Total for PEO | | | Compensation Actually Paid to PEO (1) | | | Average Summary Compensation Table Total for Non-PEO NEOs(1) | | | Average Compensation Actually Paid to Non-PEO NEOs (1) | | | Value of Initial Fixed $100 Investment Based On: | | | Net Income | | | EBITDA (3) | | |||
| | Total Shareholder Return (2) | | | Peer Group Total Shareholder Return (2) | | | (In millions) | | ||||||||||||||||||
| | 2022 | | | $7,300,613 | | | $14,618,634 | | | $2,009,163 | | | $2,532,735 | | | $241.76 | | | $174.37 | | | $1,386 | | | $2,057 | |
| | 2021 | | | 6,981,685 | | | 26,778,167 | | | 1,982,924 | | | 3,479,767 | | | 221.35 | | | 200.63 | | | 1,193 | | | 1,798 | |
| | 2020 | | | 5,979,555 | | | 4,146,492 | | | 1,505,797 | | | 1,279,321 | | | 120.06 | | | 152.87 | | | 545 | | | 934 | |
| | | | | | | | | | | | | | | | | | | |||||||||
| (1) | By SEC rules, these amounts reflect the amount disclosed above in our Summary Compensation Table (a) minus the grant date fair value of equity compensation in the Summary Compensation Table, (b) plus year-end fair value of stock awards granted in the year that were outstanding and unvested as of the end of year, (c) plus the change as of year-end in fair value of prior year awards that were outstanding and unvested as of the end of year or, for awards vesting in that year, the change in fair value of those awards as of the vesting date. The other elements required to be disclosed pursuant to SEC rules in the definition of compensation “actually paid” are inapplicable to our NEO compensation. The calculations for (b) and (c) are as follows: |
| | | | Year | | | Share Price at 12/31 | | | Shares Granted | | | Granted Shares Fair Value at 12/31 | | | Other Shares Outstanding | | | Change in Fair Value | | | Shares Vested | | | Vested Shares Change in Fair Value | | | Total Stock Compensation Actually Paid | | |
| | PEO | | | 2022 | | | $114.93 | | | 86,498 | | | $9,941,215 | | | 206,728 | | | $1,593,873 | | | 86,896 | | | $782,933 | | | $12,318,021 | |
| | 2021 | | | 107.22 | | | 143,340 | | | 15,368,915 | | | 150,284 | | | 7,188,084 | | | 81,229 | | | 2,239,484 | | | 24,796,482 | | |||
| | 2020 | | | 59.39 | | | 44,456 | | | 2,640,242 | | | 187,057 | | | 1,715,313 | | | 83,529 | | | (1,188,618) | | | 3,166,937 | | |||
| | Other NEOs (Fair values represent averages) | | | 2022 | | | 114.93 | | | 9,291 | | | 1,067,843 | | | 23,563 | | | 181,673 | | | 9.287 | | | 86,552 | | | 1,336,068 | |
| | 2021 | | | 107.22 | | | 15,094 | | | 1,638,777 | | | 16,366 | | | 782,786 | | | 10,220 | | | 281,760 | | | 2,468,307 | | |||
| | 2020 | | | 59.39 | | | 5,557 | | | 300,045 | | | 21,441 | | | 196,616 | | | 9,005 | | | (128,138) | | | 398,524 | |
| (2) | Total shareholder return measures the change in value of our common stock, adjusted to include dividends received by our shareholders over the period. Our peer group for purposes of the peer group total shareholder return disclosure is the same as the one identified in Item 5 of our annual report on Form 10K and consists of the following companies, each of which principally conducts automotive retail operations: Asbury Automotive Group, Inc., AutoNation, Inc., Group 1 Automotive, Inc., Lithia Motors, Inc., and Sonic Automotive, Inc. (the “Peer Group”). |
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| (3) | The following table reconciles this non-GAAP measure to the closest applicable GAAP measure, net income |
| | Non-GAAP Reconciliations | | |||||||||
| | | | Twelve Months Ended December 31, | | |||||||
| | (Amounts in Millions) | | | 2022 | | | 2021 | | | 2020 | |
| | Net Income | | | $1,386.2 | | | $1,192.7 | | | $545.3 | |
| | Add: Depreciation | | | 127.3 | | | 121.5 | | | 115.5 | |
| | Other Interest Expense | | | 70.4 | | | 68.6 | | | 111.0 | |
| | Income Taxes | | | 473.0 | | | 416.3 | | | 162.7 | |
| | Income from Discontinued Operations, net of tax | | | (0.0) | | | (1.3) | | | (0.4) | |
| | EBITDA | | | $2,056.9 | | | $1,797.8 | | | $934.1 | |
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•
We are required under SEC rules to also disclose the most important financial performance measures that link compensation “actually paid” to our NEOs (which amounts are shown in the table above using the SEC’s methodology) to Company performance. We believe those metrics are as follows: Financial PerformanceMeasures Net Income EBITDA Earnings Per Share Operating Margin Stock Price Performance We selected these measures because we believe our compensation “actually paid” is most influenced by two factors: (1) the amount of restricted stock granted to our NEOs under the annual performance plans over the relevant period and (2) the change in our stock price over time (see footnote 1 to the Pay Verses Performance Table above). The largest components of our performance plans are EBITDA, EPS, operating margin and stock price performance, which collectively represent up to two-thirds of the total amount available under the plans. We believe the change in our stock price over time is correlated most closely to the financial performance measures EBITDA, EPS and net income.33
$7,300,613. Based on this information, the ratio of the annual total compensation of Mr. Penske to the median of the annual total compensation of all employees was estimated to be 155130 to 1.
To identify the median of the annual total compensation of our worldwide employee population, as well as to calculate the annual total compensation of the “median employee” from this population, our methodology necessarily involved certain material assumptions, adjustments, and estimates as permitted by SEC rules and interpretations.
We
for 2022.
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stock or deferred stock (at their prior election) in December valued on the date of grant. We changed our director compensation fees in light of the additional workload associated with the positions of Vice Chair, Lead Director and committee Chair.
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Table of ContentsTABLE OF CONTENTS
201920192022 who were also our employees (Messrs. Kurnick Penske, Sasaki and Yamanaka) receivePenske) as well as Kota Odagiri received no additional (1) Greg Penske elected to receive equity in lieu of a cash retainer for 2022. Mr. Thompson elected to receive 50% of his cash compensation in equity in 2022. (2) These amounts represent the grant date fair value of awards computed in accordance with FASB ASC Topic 718 in connection with stock awards granted under our 2020 Equity Incentive Plan and excludes the amount of any equity compensation received in lieu of cash noted in footnote one. (3) See the following table for a description of these amounts and other information. (4) Includes $20,000 in lieu of a Company sponsored vehicle. (1) Represents vehicle depreciation, insurance costs, maintenance costs and, if applicable, disposal costs on sale of vehicle, and, for Ms. Davis and Ms. Pierce, spousal travel. (2) This director elected to receive $20,000 in lieu of a company vehicle.
Name | | Fees Earned or Paid in Cash(1) | | Stock Awards(2) | | All Other Compensation(3) | | Total | |||||
John D. Barr | $ | 45,000 | $ | 208,880 | $ | 105,466 | $ | 359,346 | |||||
Lisa A. Davis | 40,000 | 208,880 | 92,698 | 341,578 | |||||||||
Wolfgang Dürheimer | | 40,000 | | 208,880 | | 18,760 | | 267,640 | |||||
Michael R. Eisenson | 60,000 | (4) | 208,880 | 50,442 | 319,322 | ||||||||
Kimberly J. McWaters | | 55,000 | | 208,880 | | 68,401 | | 332,281 | |||||
Roger S. Penske, Jr. | 60,000 | (4) | 208,880 | 53,836 | 322,716 | ||||||||
Sandra A. Pierce | | 40,000 | | 208,880 | | 76,805 | | 325,685 | |||||
Greg C. Smith | 75,000 | (4) | 208,880 | 50,000 | 333,880 | ||||||||
Ronald G. Steinhart | | 45,000 | | 208,880 | | 66,328 | | 320,208 | |||||
H. Brian Thompson | 75,000 | 208,880 | 56,588 | 340,468 |
(1)Ms. Davis and Ms. Pierce elected to receive equity in lieu of a cash retainer for 2019. Mr. Thompson elected to receive 50% of his retainer in equity in 2019.(2)These amounts represent the grant date fair value of awards computed in accordance with FASB ASC Topic 718 in connection with stock awards granted under our 2015 Equity Incentive Plan, and excludes the amount of any equity compensation received in lieu of cash noted in footnote one.(3)See the following table for a description of these amounts and other information.(4)Includes $20,000 in lieu of a company sponsored vehicle.
Name | | Company Sponsored Vehicle(1) | | Charitable Match | | Other(3) | | Total | | Deferred Stock Units at 12/31/19 | ||||||
John D. Barr | $ | 75,466 | $ | 30,000 | | — | $ | 105,466 | | 33,820 | ||||||
Lisa A. Davis, | 40,372 | 50,000 | $ | 2,326 | 92,698 | 14,812 | ||||||||||
Wolfgang Dürheimer | | 18,760 | | — | | — | | 18,760 | | 8,140 | ||||||
Michael R. Eisenson | — | (2) | 50,000 | 442 | 50,442 | — | ||||||||||
Kimberly J. McWaters | | 35,401 | | 33,000 | | — | | 68,401 | | 40,314 | ||||||
Roger S. Penske, Jr. | — | (2) | 50,000 | 3,836 | 53,836 | 12,408 | ||||||||||
Sandra A. Pierce | | 26,294 | | 50,000 | | 511 | | 76,805 | | 8,115 | ||||||
Greg C. Smith | — | (2) | 50,000 | — | 50,000 | 12,408 | ||||||||||
Ronald G. Steinhart | | 16,328 | | 50,000 | | — | | 66,328 | | — | ||||||
H. Brian Thompson | 6,379 | 50,000 | 209 | 56,588 | — |
(1)Represents vehicle depreciation, insurance costs, maintenance costs and, if applicable, disposal costs on sale of vehicle.(2)This director elected to receive $20,000 in lieu of a company sponsored vehicle.(3)Spousal travel.
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The following table sets forth information with respect to the beneficial ownership of our common stock as of March 17, 202015, 2023 by (1) each person known to us to own more than five percent of our common stock, (2) each of our directors, (3) each of our named executive officers and (4) all of our directors and executive officers as a group.
"Beneficial ownership" “Beneficial ownership” is determined in accordance with the rules of the SEC and includes voting and investment power with respect to shares, including shares of restricted but unvested stock. The percentage of ownership is based on 80,887,85369,069,096 shares of our common stock outstanding on March 17, 2020.15, 2023, excluding Treasury shares. Unless otherwise indicated in a footnote, each person identified in the table below has sole voting and dispositive power with respect to the common stock beneficially owned by that person and none of the shares are pledged as security.
| | Name of Beneficial Owner | | | Economic Ownership(1) | | | Beneficial Ownership(2) | | | Percent | |
| | | | | | | | | ||||
| | Principal Stockholders | | | | | | | | |||
| | Penske Corporation (3) | | | 34,181,121 | | | 34,181,121 | | | 49.5% | |
| | 2555 Telegraph Road, Bloomfield Hills, MI 48302-0954 | | | | | | | | |||
| | Mitsui (4) | | | 13,322,205 | | | 13,322,205 | | | 19.3% | |
| | 2-1 Otemachi, 1-Chome, Chiyoda-ku, Tokyo, Japan 100-8631 | | | | | | | | |||
| | | | | | | | | ||||
| | Current Directors and Nominees | | | | | | | | |||
| | John Barr | | | 39,626 | | | 3,712 | | | * | |
| | Lisa Davis (5) | | | 25,433 | | | 2,029 | | | * | |
| | Wolfgang Dürheimer | | | 17,393 | | | 0 | | | * | |
| | Michael Eisenson | | | 79,970 | | | 79,970 | | | * | |
| | Robert Kurnick, Jr. (6) | | | 104,057 | | | 104,057 | | | * | |
| | Kimberly McWaters | | | 60,083 | | | 8,524 | | | * | |
| | Kota Odagiri | | | 0 | | | 0 | | | * | |
| | Greg Penske (5) | | | 48,296 | | | 48,296 | | | * | |
| | Roger Penske (7) | | | 35,141,343 | | | 35,141,343 | | | 50.9% | |
| | Sandra Pierce (5) | | | 40,819 | | | 29,810 | | | * | |
| | Greg Smith | | | 19,888 | | | 0 | | | * | |
| | Ronald Steinhart | | | 52,076 | | | 52,076 | | | * | |
| | H. Brian Thompson (8) | | | 112,416 | | | 112,416 | | | * | |
| | | | | | | | | ||||
| | Current and Former Officers Who Are Not Directors | | | | | | | | |||
| | Bud Denker (6) | | | 42,454 | | | 42,454 | | | * | |
| | Shelley Hulgrave (6) | | | 23,426 | | | 23,426 | | | * | |
| | Shane Spradlin (6) | | | 47,500 | | | 47,500 | | | * | |
| | | | | | | | | ||||
| | All directors nominees and executive officers (16 persons) | | | 35,854,780 | | | 35,695,613 | | | 51.7% | |
| * | Less than 1% |
| (1) | Economic Ownership is defined as “Beneficial Ownership” (see footnote 2), plus the amount of deferred stock units held by certain non-employee directors in connection with their director compensation. |
| (2) | Pursuant to the regulations of the SEC, shares are deemed to be “beneficially owned” by a person if such person has the right to acquire such shares within 60 days or directly or indirectly has or shares the power to vote or dispose of such shares. |
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| (3) | Penske Corporation is the beneficial owner of these shares of common stock, of which it has shared power to vote and dispose together with a wholly owned subsidiary. Fifty percent of the shares deemed owned by Penske Corporation are currently pledged under a loan facility. Penske Corporation also has the right to vote the shares owned by the Mitsui entities (see note 4) under certain circumstances discussed under “Certain Relationships and Related Party Transactions.” If these shares were deemed to be beneficially owned by Penske Corporation, its beneficial ownership would be 47,503,326 shares or 68.8%. |
| (4) | Represents 2,664,042 shares held by Mitsui & Co., (U.S.A.), Inc. and 10,658,163 shares held by Mitsui & Co., Ltd. |
| (5) | The Director has shared voting power with respect to these shares. |
| (6) | Includes for Mr. Kurnick, 67,876 shares of restricted stock, for Mr. Denker, 36,232 shares of restricted stock, for Ms. Hulgrave, 21,017 shares of restricted stock, and for Mr. Spradlin, 36,232 shares of restricted stock. |
| (7) | Includes the 34,181,121 shares deemed to be beneficially owned by Penske Corporation, as to all of which shares Mr. Penske may be deemed to have shared voting and dispositive power. Mr. Penske is the Chairman and Chief Executive Officer of Penske Corporation. Mr. Penske disclaims beneficial ownership of the shares beneficially owned by Penske Corporation, except to the extent of his pecuniary interest therein. Penske Corporation also has the right to vote the shares owned by the Mitsui entities (see note 4) under certain circumstances discussed under “Certain Relationships and Related Party Transactions.” If these shares were deemed to be beneficially owned by Mr. Penske, his beneficial ownership would be 48,463,548 shares or 70.2%. In addition, Mr. Penske has shared voting power with respect to 286,833 of these shares. These figures include 343,894 shares of restricted stock. |
| (8) | Mr. Thompson has shared voting power with respect to 4,000 of these shares. |
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Name of Beneficial Owner | | Economic Ownership(1) | | Beneficial Ownership(2) | | Percent | ||||
Principal Stockholders | | | | |||||||
Penske Corporation(3) | | 34,181,121 | | 34,181,121 | | 42.3 | % | |||
2555 Telegraph Road, Bloomfield Hills, MI 48302-0954 | | | | |||||||
Mitsui(4) | 13,322,205 | 13,322,205 | 16.5 | % | ||||||
1-3, Marunouchi, 1-Chome, Chiyoda-ku, Tokyo, Japan 100-8631 | ||||||||||
| | | | |||||||
Current Directors and Nominees | | | | |||||||
John D. Barr | | 56,135 | | 22,000 | | * | ||||
Lisa A. Davis | 14,950 | -0- | * | |||||||
Wolfgang Dürheimer | | 8,216 | | -0- | | * | ||||
Michael R. Eisenson | 79,657 | 79,657 | * | |||||||
Robert H. Kurnick, Jr.(5) | | 98,821 | | 98,821 | | * | ||||
Kimberly J. McWaters | 49,614 | 8,924 | * | |||||||
Greg Penske(6) | | 38,178 | | 38,178 | | * | ||||
Roger S. Penske(7) | 35,120,145 | 35,120,145 | 43.4 | % | ||||||
Roger S. Penske, Jr. | | 14,118 | | 1,594 | (6) | | * | |||
Sandra A. Pierce(6) | 35,340 | 27,150 | * | |||||||
Greg C. Smith | | 12,524 | | -0- | | * | ||||
Ronald G. Steinhart | 57,140 | 57,140 | * | |||||||
H. Brian Thompson(8) | | 102,694 | | 102,694 | | * | ||||
Masashi Yamanaka | -0- | -0- | * | |||||||
Officers Who Are Not Directors | | | | |||||||
J.D. Carlson(5) | | 37,105 | | 37,105 | | * | ||||
Bud Denker(5) | 40,679 | 40,679 | * | |||||||
Shane M. Spradlin(5) | | 46,263 | | 46,263 | | * | ||||
All directors and executive officers (17 persons) | 35,811,579 | 35,680,350 | 44.1 | % |
*Less than 1%
(1)Economic Ownership is defined as "Beneficial Ownership" (see footnote 2), plus the amount of deferred stock units held by certain non-employee directors in connection with their director compensation.(2)Pursuant to the regulations of the SEC, shares are deemed to be "beneficially owned" by a person if such person has the right to acquire such shares within 60 days or directly or indirectly has or shares the power to vote or dispose of such shares.(3)Penske Corporation is the beneficial owner of these shares of common stock, of which it has shared power to vote and dispose together with a wholly owned subsidiary. All of the shares deemed owned by Penske Corporation are pledged under a loan facility. Penske Corporation also has the right to vote the shares owned by the Mitsui entities (see note 4) under certain circumstances discussed under "Certain Relationships and Related Party Transactions." If these shares were deemed to be beneficially owned by Penske Corporation, its beneficial ownership would be 47,503,326 shares or 58.6%.(4)Represents 2,664,042 shares held by Mitsui & Co., (U.S.A.), Inc. and 10,658,163 shares held by Mitsui & Co., Ltd.(5)Includes for Mr. Kurnick, 63,009 shares of restricted stock, for Mr. Carlson, 26,150 shares of restricted stock, for Mr. Denker, 26,150 shares of restricted stock, and for Mr. Spradlin, 28,684 shares of restricted stock.(6)The Director has shared voting power with respect to these shares.(7)Includes the 34,181,121 shares deemed to be beneficially owned by Penske Corporation, as to all of which shares Mr. Penske may be deemed to have shared voting and dispositive power. Mr. Penske is the Chair and Chief Executive Officer of Penske Corporation. Mr. Penske disclaims beneficial ownership of the shares beneficially owned by Penske Corporation, except to the extent of his pecuniary interest therein. Penske Corporation also has the right to vote the shares owned by the Mitsui entities (see note 4) under certain circumstances discussed under "Certain Relationships and Related Party Transactions." If these shares were deemed to be beneficially owned by Mr. Penske, his beneficial ownership would be 48,397,894 shares or 59.7%. In addition, Mr. Penske has shared voting power with respect to 294,485 of these shares. These figures include 315,044 shares of restricted stock.(8)Mr. Thompson has shared voting power with respect to 4,000 of these shares.
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Our Board of Directors has adopted a written policy with respect to the approval of related party transactions. Under the policy, related party transactions valued over $5,000$10,000 must be approved by a majority of either the members of our Audit Committee or our disinterested Board members. Our Audit Committee approves all individual related party transactions valued below $1$5 million, all multiple-payment transactions valued below $5$25 million (such as a lease), and any transaction substantially similar to a prior year'syear’s transaction (regardless of amount). Our Board, by a vote of the disinterested directors, reviews and approves all other related party transactions. At each regularly scheduled meeting, our Audit Committee reviews any proposed new related party transactions for approval and reviews the status of previously approved transactions. Each of the transactions noted below was approved by our Board of Directors or Audit Committee pursuant to this policy.
center management, transportation management, and lead logistics provider. PTL is owned 41.1% by Penske Corporation, 28.9% by us,provider services and 30% by affiliates of Mitsui & Co., Ltd.
dry van truckload carrier services.
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2022. In September 2021, PTG sold a parcel of real property in Kansas City, Kansas to PTS. The property sold has been utilized by PTG as a collision center and upon closing was leased back to PTG by PTS pursuant to a short-term month-to-month lease while it prepares a new site for development. PTG paid $222,000 in lease payments under this lease in 2022.
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$5.2 $4.3 million over the remaining period), and the second lease has a term expiring in February 2027 with annual rent of $219,000 per year (or $1.6$0.9 million over the remaining period).
We entered into a license agreement with an affiliate of Penske Corporation for a license of the "Penske Automotive" name. This agreement provides us with a perpetual license of the name "Penske Automotive" and related trade names so long as Penske Corporation and its affiliates own in excess of 20% of our outstanding common stock and we adhere to the other terms of the license agreement. In December 2019, we renewed our two-year marketing arrangement with an affiliate of Jay Penske, Roger S. Penske's son, under which we agreed to incur approximately $600,000 for marketing and subscription services over the two-year period.
From time to time, we enter into arrangements with Penske Truck Leasing and/or other Penske Corporation affiliates and third party vendors in order to achieve the benefits of scale or synergy opportunities as between the companies. These arrangements are reviewed by the Board in accordance with our policy noted above. For example, we aggregate several Penske entities in connection with sourcing certain telecommunications services to achieve the benefits of scale.
On June 3, 2019, we repurchased 256,369 shares of our outstanding common stock from Roger S. Penske for $11.4 million, or $44.40 per share, under our securities repurchase program approved by our Board of Directors.
Our officers, directors and their affiliates periodically purchase, lease or sell vehicles and parts from us or PTL at fair market value. This includes purchases and sales of trucks, logistics and other services and parts as between our subsidiaries and those of PTL (principally consisting of purchases of $15.2 million of trucks and parts by PTL from our PTG subsidiaries, and purchases of $0.6 million of used trucks by PTG from PTL).
Additionally, we hire service technicians who have graduated from Universal Technical Institute ("UTI"), a provider of technical education, whose former Chief Executive Officer, Kimberly McWaters, is one of our directors. Ms. McWaters retired from UTI on October 31, 2019, though she remains a director. We generally make no payments to UTI relating to the hiring of these graduates and hire them on the same terms as other employers. However, in order to assist us in sourcing qualified service technicians for our Premier Truck Group operations, we entered into an arrangement with UTI designed to assist us in sourcing qualified service technicians. We and UTI are jointly designing and developing a training program for soldiers at the Fort Bliss military base near El Paso, Texas. Graduates of the program are intended to have all the skills required to enable them to become technicians in our retail truck business. Our agreement, which runs through June 30, 2024, calls for UTI to recruit qualified soldiers, recruit qualified instructors and provide training for 40 soldiers per year, and for us to pay for the initial build of the training space, provide training support and provide and maintain training vehicles. We paid $48,435 under this arrangement in 2019, which was paid in developing the training space.
$7,399.
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20202023 Annual Meeting of Stockholders
8:Stockholders; 9:00 a.m. Eastern Daylight Time, May 13, 2020Penske Automotive Group2555 Telegraph RoadBloomfield Hills, Michigan 48302
Voting11, 2023
We encourage you to submit proxies in advance by telephone, by Internet or by mail. You maymeeting without the inconvenience and environmental impact of travel. Our Board also vote in person atbelieves that holding the annual meeting instead, or may executeof stockholders in a proxy designatingvirtual format provides the opportunity for participation by a representativebroader group of stockholders, while reducing the costs associated with planning, holding, and arranging logistics for in-person meeting proceedings. The Board intends that the virtual meeting format provide stockholders a level of transparency as close as possible to vote for youthe traditional in-person meeting format at the meeting. If your shares are held for you
| 1. | Visit www.virtualshareholdermeeting.com/PAG2023; and |
| 2. | Enter the 16-digit control number included on your Notice Regarding the Availability of Proxy Materials (“Notice”), on your proxy card (if you received a printed copy of the proxy materials), or on the instructions that accompanied your proxy materials. |
Admission
You
We are sensitive to the public health and travel concerns our shareholders may have and recommendations that public health officials may issue in light of the evolving coronavirus (COVID-19) situation. As a result, we may impose additional procedures or limitations on meeting attendees (beyond those described above) or may decide to holdanswered during the meeting, in a different location or solely by means of remote communication (i.e., a virtual-only meeting). We plansubject to announce any such updates on our website, www.penskeautomotive.com within the "Investor Relations" section, and we encourage you to check this website prior to the meeting if you plan to attend.time constraints.
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Dated:about March 19, 2020
__, 2023, we will mail a Notice of Internet Availability of Proxy Materials (the “Notice”) to our stockholders, which provides website and other information for the purpose of accessing our proxy materials. All stockholders will have the ability to access the proxy materials on the website referred to in the Notice or request a printed or electronic set of the proxy materials. Instructions on how to access the proxy materials over the Internet or to request a printed copy may be found in the Notice. In addition, stockholders may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis. We encourage you to take advantage of the availability of the proxy materials on the Internet to help reduce the cost and environmental impact of the printing and mailing of materials for the annual meeting.
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1. Purpose.
| 1. | The present name of the Corporation is Penske Automotive Group, Inc. and the original name of the Corporation was EMCO Motor Holdings, Inc. The Corporation’s original Certificate of Incorporation was filed with the Secretary of State of Delaware on December 6, 1990. |
| 2. | This Fourth Amended and Restated Certificate of Incorporation has been duly adopted in accordance with the provisions of Sections 242 and 245 of the General Corporation Law of the State of Delaware as set forth in Title 8 of the Delaware Code. |
| 3. | The text of the Certificate of Incorporation of the Corporation is hereby amended and restated to read in its entirety as follows: |
| 1. | Designation. |
A-1 |
| 2. | Voting Power of Common Stock. |
| 3. | Certain Provisions relating to Common Stock. |
A-2 |
A-3 |
2. Definitions. Whenholder of the following terms are capitalized, theyCommon Stock converted.
(a)"Act" meansforce), (b) any sale of securities of the Corporation to a person or group of persons (within the meaning of the Securities Exchange Act of 1934, asamended. A referenceamended (the “1934 Act”)) if, after such sale, such person or group of persons in the aggregate would own or control securities which possess in the aggregate the ordinary voting power toany provisionelect a majority of theAct shall include reference toCorporation’s directors (provided that such sale has been approved by the Corporation’s Board of Directors or a committee thereof), (c) anysuccessor or replacement provisionsale of securities of theAct, and any regulations promulgated with respectCorporation tosuch provision.(b)"Affiliate" meansaParentperson orSubsidiarygroup of persons (within the meaning of theCompany, whether existing as1934 Act) if, after such sale, such person or group of persons in the aggregate would own or control securities of theeffective dateCorporation (excluding any Non-Voting Common Stock being converted and disposed ofthe Plan or hereafter created or acquired.(c)"Applicable Withholding Taxes" means the amount of federal, state, local and foreign income and payroll taxes that the Company is required by applicable law to withholdin connection withany Award, provided, however, that if shares of Company Stock are usedsuch Conversion Event) which possess in the aggregate the ordinary voting power topay such Applicable Withholding Taxes, then the Fair Market Value of such shares may not exceed the total maximum statutory tax withholding obligations associated with the Award to the extent needed for the Company (or an Affiliate) to avoid an accounting charge.(d)"Award" means individually or collectively, the award of an Option, Stock Appreciation Right, Company Stock Award, Incentive Award or Restricted Award.(e)"Award Agreement" means the written or electronic document that sets forth the terms ofelect aParticipant's Award and may include a separate written or electronic employment or services agreement between the Company or an Affiliate and a Participant, to the extent such agreement provides for any type of Award permitted to be granted under the Plan and is granted in accordance with the termsmajority of thePlan.(f)"Board" means the BoardCorporation’s directors, (d) any sale ofDirectorssecurities of theCompany.(g)"ChangeCorporation to a person or group ofControl" meanspersons (within theoccurrencemeaning of thefollowing event: any individual, entity1934 Act) if, after such sale, such person or group(as definedof persons would not, inSection 13(d)(3) oftheAct) other thanaggregate, own, control or have thePermitted Holders becomes the beneficial owner (as defined in Rule 13(d)(3) under the Act) of Company securities that constituteright to acquire more than50%two percent (2%) of thecombined voting power of the thenoutstanding securities ofthe Company that may be cast for the electionany class ofdirectors to the Board of the Company (other than as a result of an issuance of securities initiated by the Company in the ordinary course of business). Notwithstanding the foregoing, (i) no Change of Control shall be deemed to have occurred if there is consummated any transaction or series of integrated transactions immediately following which the record holders of the Stock immediately prior to such transaction or series of transactions continue to own, directly or
indirectly, in the same proportions as their ownership in the Company, an entity that owns all or substantially all of the assets or voting securities of the Company immediately followingCorporation, and (e) a merger, consolidation or similar transaction involving the Corporation if, after such transaction, a person or seriesgroup of transactions; and (ii) for purposes of an Award (A) that provides for the payment of deferred compensation that is subject to Code Section 409A upon a Change of Control or (2) with respect to which the Company permits a deferral election, the definition of "Change of Control" shall be deemed amended to conform to the requirements of Code Section 409A to the extent necessary for the Award and deferral election to comply with Code Section 409A.
(h)"Code" means the Internal Revenue Code of 1986, as amended. A reference to any provision of the Code shall include reference to any successor or replacement provision of the Code, and any regulations promulgated with respect to such provision.(i)"Committee" means the Plan administrator, as described under Section 14, and to the extent of any delegation, the delegate of the Committee.(j)"Company" means Penske Automotive Group, Inc., a Delaware corporation, and any successor thereto.(k)"Company Contributor" means a consultant, advisor or other individual (except a member of the Board or an employee of the Company, a Parent or a Subsidiary of the Company), who (i) renders bona fide services to the Company or any Affiliate that are not in connection with the offer and sale of the Company's securities in a capital-raising transaction; and (ii) does not promote or maintain a market for the Company's securities.(l)"Company Stock" means the common stock of the Company. In the event of a change in the capital structure of the Company, the shares resulting from such a change shall be deemed to be Company Stock withinpersons (within the meaning of thePlan.(m)"Company Stock Award" means an award1934 Act) in the aggregate would own or control securities which possess in the aggregate the ordinary voting power to elect a majority ofCompany Stock made without any restrictions.(n)"Date of Grant" meansthedate on whichsurviving corporation’s directors (provided that theCommittee authorizes an Award, or such later date as shall be designatedtransaction has been approved by theCommittee.(o)"Disability"Corporation’s Board of Directors or"Disabled" means, as to an Incentive Stock Option, a disability within the meaning of Code Section 22(e)(3), and, as to a Restricted Stock Unit and any other Award determined to be subject to Code Section 409A, a disability within the meaning of Code Section 409A(a)(2)(C)committee thereof).As to all other forms of Awards, the Committee
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(q)"Incentive Award" means a long or short-term incentive award with payment in the form of cash, Company Stock or a combination of both, as designated by the Committee and conditioned on the attainment of specified Performance Goals, or any other event that the Committee determines.(r)"Incentive Stock Option" means an Option intended to meet the requirements of, and qualify for favorable federal income tax treatment under, Code Section 422.(s)"Maturity Date" means, with respect to a Restricted Stock Unit, the date upon which all restrictions applicable to such Restricted Stock Unit have lapsed or been removed.(t)"Nonstatutory Stock Option" means an Option that does not meet the requirements of Code Section 422 or, even if meeting the requirements of Code Section 422, is not intended to be an Incentive Stock Option and is so designated.(u)"Officer" means a person who is an officer of the Company within the meaning of Section 16 of the Act.(v)"Option" means a right to purchase Company Stock granted under Section 7 of the Plan, at a price determined in accordance with the Plan.(w)"Parent" means,mean with respect to anycorporation, a parent of that corporation within the meaning of Code Section 424(e).(x)"Participant" means any employee, director or other Company Contributor who receives an Award under the Plan. Where the context so requires, all references to a Participant includes the legal or personal representative thereof or any transferee.(y)"Performance Goals" means any objective or subjective goals that the Committee shall select with respect to any Award under the Plan. A Performance Goal may, but is not required to, relate to one or more of the following with respect to the Company, one or more of its Subsidiaries or one or more of its or their divisions or units, or any combination of the foregoing, and may be applied on an absolute basis and/or be relative to one or more peer group companies or indices, or any combination thereof, as the Committee shall determine: specified levels of or increases or decreases in revenue, return on equity, earnings per share, total earnings, earnings growth, earnings from continuing operations, EBITDA, EBITDAR, return on capital/equity, return on assets, gross profit, earnings before interest and taxes, sales, sales growth, gross or operating margin, cost reduction goals, fixed cost coverage measurements (including the ratio of service and parts revenues to operating costs), return on investment, increase in the fair market value of the Common Stock, share price (including growth measures and total stockholder return), market capitalization, operating profit, profit margin, net income, cash flow (including operating cash flow and free cash flow), financial return ratios, expense ratios, total return to shareholders, market share, earnings measures/ratios, balance sheet measurements (including debt to equity ratios, maintenance of specified credit availability levels, compliance with credit covenants, inventory measurements and receivables/payables metrics), human resources measurements (including measurements of employee turnover, workers' compensation costs and employee satisfaction), internal rate of return, unit sales, same store sales, specified levels of acquisitions/acquired revenue, customer satisfaction and productivity and compliance objectives (including lack of material weakness in internal controls, each as determined in accordance with the relevant AICPA or PCAOB principles). The Committee will determine the method of measuring or evaluating a Performance Goal, and reserves the right to adjust or modify such method at any time.
(z)"Permitted Holder" means (i) Mr. Roger S. Penske, his estate, guardians, conservators, administrators, committees or personal representatives; (ii) immediate family members and lineal descendants of Mr. Roger S. Penske and their respective guardians, conservators, administrators, committees or personal representatives; (iii) trusts or other entities created for the benefit of any of the Persons listed in (i) or (ii) above or for the benefit of a trust covered by this clause (iii); and (iv)person, any otherPerson or entity and their respective Subsidiaries, in each case so long as the Persons or entities covered by clauses (i), (ii) or (iii),person, directly or indirectly controlling, controlled by or under common control with suchPerson or entities.person. Forpurposesthe purpose ofthisthe above definition,"control" whenthe term “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to anyentity meansperson, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of suchentity, directly or indirectly,person, whether through the ownership of voting securities or by contract orotherwise, and the terms "controlling" and "controlled" have meanings correlative to the foregoing.(aa)"Restricted Award" means, collectively, the award of Restricted Stock or Restricted Stock Units.(bb)"Restricted Stock" means Company Stock awarded upon the terms andotherwise.
Subsidiary of the Company. Indirect ownership of stock shall be determined in accordance with Code Section 424(d).
3. General. Awards may be granted under the Plan in the form of Options, Stock Appreciation Rights, Company Stock Awards, Incentive Awards and Restricted Awards. Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options.
4. Number of Shares of Company Stock and Compensation Cap.
(a)Plan Reserve.Subject to Section 13 of the Plan, there shall be reserved for issuance under the Plan an aggregate of 5,000,000 shares of Company Stock, which shall be authorized, but unissued shares (the "Reserve").(b)Depletion of Reserve.The Reserve shall be depleted on the date of grant of an Award by the maximum number of Shares, if any,with respect to,whichsuchAward is granted. For clarity, an Award that provides for settlement solely in cash shall not cause any depletionshares ofthe Reserve at the time such Award is granted. If such Award is later amended, however, to permitCommon Stock orrequire settlement in Shares, then the Reserve shall be depleted, at the time of such amendment, by the maximum number of Shares which may beshares issuedin settlement of such Award.(c)Replenishment of Reserve.Shares of Company Stock that are subject to Awards but that (i) are not issued under the Award as a result of the expiration or termination of the Award, or because such Award is settled in cash, (ii) will not be issued because the criteria for issuanceupon conversion of such shareswill not be met, (iii) are issued but forfeited pursuant(iv) any person tothe terms of the Award, or (iv) are issued but the Company subsequently reacquires them pursuant to rights reserved upon the issuance ofwhich suchshares, shall be recredited to the Reserve and may again be used for new Awards under this Plan. Notwithstanding the foregoing, shares of Company Stock recredited to the Reserve pursuant to clause (iv) may not be issued pursuant to Incentive Stock Options. Shares that are withheld by, or tendered back to, the Company for payment of Applicable Withholding Taxes or to pay the exercise price of an Option shall not be recredited to the Reserve.(d)Individual Award Limits.Subject to Section 13 of the Plan, no more than 1,000,000 shares of Company Stock may be allocated to the Awards that are granted to any one Participant during any single calendar year, of which no more than 1,000,000 shares of Company Common Stock may be awarded to any one Participant in the form of Incentive Stock Options during any single calendar year.(e)Substitute Awards.Substitute Awards shall not reduce the Reserve or the per-Participant Award limits under Section 4(e). Additionally, in the event that a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines has shares available under a pre-existing plan approved by shareholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the shares of Company Stock authorized for grant under the Plan; provided that Awards using such available shares shall not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were not Participants prior to such acquisition or combination.
5. Eligibility.
(a)Individuals Eligible for Awards.All present and future employees or directors of the CompanyRegulated Stockholder or any of its Affiliates has transferred such shares, so long as such transferee shall hold, andother Company Contributors shall be eligibleonly with respect to,receive Awardsany shares transferred by such stockholder or Affiliates or any shares issued upon conversion of such shares but only if such person (or any Affiliate of such person) is (A) subject to the provisions of Regulation Y or (B) subject to regulation under thePlan. Subjectinsurance laws of any jurisdiction, and (v) International Motor Cars Group II, LLC, Chase Equity Associates, L.P. or any other stockholder (x) that is subject toany restrictions imposed inthePlan, the Committee shall have the powerprovisions of Regulation Y anddiscretion, as provided in Section 14, to select which employees, directors and Company Contributors shall receive Awards and to determine for each such Participant the terms and conditions, the nature(y) that holds shares of Common Stock or Preferred Stock of theAward andCorporation.
6. Company Stock Awards, Incentive Awards and Restricted Awards.
(a)Grant of Company Stock Award.Whenever the Committee deems it appropriate to grant a Company Stock Award, the Company shall provide an Award Agreement to the Participant stating the number of shares of Company Stock for which the Company Stock Award is granted, and the terms and conditions thereof. A Company Stock Award may be made by the Committee in its discretion without cash consideration.(b)Grant of Incentive Award.Whenever the Committee deems it appropriate to grant an Incentive Award, the Company shall provide an Award Agreement to the Participant stating the terms and conditions on which the Incentive Award is granted. An Incentive Award may be made by the Committee in its discretion with or without cash consideration.(c)Grant of Restricted Award.Whenever the Committee deems it appropriate to grant a Restricted Award, the Company shall provide an Award Agreement to the Participant stating the number of shares of Restricted Stock or number of Restricted Stock Units for which the Restricted Award is granted and the terms and conditions thereof, to the extent consistent with paragraphs (d) and (e) below, as applicable. A Restricted Award may be made by the Committee in its discretion without cash consideration.(d)Restricted Award Terms.(i)All Restricted Awards.A Restricted Stock Award issued pursuant to the PlanBoard shall besubject to the following restrictions:(1)None of such shares or units may be sold, assigned, transferred, pledged, hypothecated, or otherwise encumbered or disposed of until the restrictions on such shares or units shall have lapsed.(2)Unless specified otherwise in a Participant's Award Agreement oraspermitted by the Plan, the restrictions on such shares or units must remain in effect for a period of no less than one year from the Date of Grant.(3)Unless specified otherwise in a Participant's Award Agreement or as permitted by the Plan, if a Participant ceases to be employed by the Company or any Affiliate, or otherwise ceases to be a Company Contributor, as applicable, prior to the date the restrictions on such Award
(4)The Committee may establish such other restrictions on such shares or units that the Committee deems appropriate, including, without limitation, events of forfeiture and Performance Goals that must be achieved for the vesting of Awards.(ii)Restricted Stock Awards.Upon the acceptance by a Participant of an award of Restricted Stock, unless otherwiseset forth in theAward Agreement,Bylaws of the Corporation. Elections of directors need not be by written ballot. At each annual meeting of stockholders of the Corporation, the directors elected at suchParticipantmeeting shallsubjectserve for a one-year term expiring at the next annual meeting of stockholders or until their earlier death, resignation or removal.
shall have lapsed, then the Participant shall forfeit to the Company any Restricted Awards on the date such Participant shall cease to be so employed.
(1)Each Restricted Stock Unit shall entitle the Participant, on the Maturity Date, to receive from the Company an amount equal to the Fair Market Value on the Maturity Date of one share of Company Stock subject to any limitations or enhancements on such value as the Committee may set forth in the notice of the Restricted Stock Unit Award.(2)The manner in which the Company's obligation arising on the Maturity Date of a Restricted Stock Unit shall be paid and date of payment shall be determinedsanctioned by theCommittee and shall be set forth in the Participant's Award Agreement. The Committee may provide for payment in Company Stock or cash or a fixed combination of Company Stock and cash, or the Committee may reserve the right to determine the manner of payment at the time the payment is made.(3)A Participant receiving an award of Restricted Stock Units shall not possess any rights of a shareholder with respect to the Restricted Stock Units and shall be entitled to receive payments equivalent to dividends and other distributions paid on shares of Company Stock only to the extent set forth in the Award Agreement.
(e)Withholding Taxes.Each Participant shall agree at the time the Participant's Company Stock Award, Incentive Award and/or Restricted Award is granted, and as a condition thereof, to pay to the Company or make arrangements satisfactory to the Company regarding the payment to the Company of, Applicable Withholding Taxes. Until such amount has been paid or arrangements satisfactory to the Company have been made, no stock certificates free of a legend reflecting the restrictions set forth in paragraph (d) above shall be issued to such Participant for Restricted Stock. As an alternative to making a cash payment to the Company to satisfy Applicable Withholding Taxes for an Award of Company Stock, Restricted Stock, or Restricted Stock Units that are settled in shares of Company Stock, if the grant so provides, or the Committee by separate action so permits, the Participant may elect to (i) deliver shares of Company Stock (either by actual delivery or attestation) or (ii) have the Company retain that number of shares of Company Stock that otherwise be issued under the Award, in each case having a Fair Market Value sufficient to satisfy all or a specified portion of the Applicable Withholding Taxes. Any such election shall be made only in accordance with procedures established by the Committee. The Committee has the express authority to change any election procedure it establishes at any time. The Applicable Withholding Taxes attributable to
Restricted Stock Units or Incentive Awards that are settled in cash may be withheld from the cash payment by the Company to the Participant for such Restricted Stock Units or Incentive Award.
(f)Legend on Share Certificates.The Company may place on any certificate representing Company Stock issued under this Section 6 any legend deemed desirable by the Company's counsel to comply with federal or state securities laws, and the Company may require of the Participant a customary written indication of the Participant's investment intent.
7. Options.
(a)Grant of Options.Whenever the Committee deems it appropriate to grant Options, the Company shall provide an Award Agreement to the Participant stating the number of shares for which Options are granted, the exercise price per share, whether the Options are Incentive Stock Options or Nonstatutory Stock Options, and the conditionscourt to which thegrant and exercise of the Options are subject, including whether vesting will be contingent on the achievement of any Performance Goals, as the Committee acting in its complete discretion deems consistent with the terms of the Plan. Incentive Stock options only may be granted to employees of the Company, the Parent or a Subsidiary of the Company.(b)Exercise Price.The exercise price of shares of Company Stock covered by an Option shall be not less than 100% of the Fair Market Value of such shares on the Date of Grant; provided that if an Incentive Stock Option is granted to an employee who, at the time of the grant, is a 10% Shareholder, then the exercise price of the shares covered by the Incentive Stock Option shall be not less than 110% of the Fair Market Value of such shares on the Date of Grant.(c)Exercise of Stock Options.Options may be exercised in whole or in part at such times as may be specified by the Committee in the Participant's Award Agreement; provided that:(i)No Incentive Stock Option may be exercised after the first to occur of:(x)Ten years (or, in the case of an Incentive Stock Option granted to a 10% Shareholder, five years) from the Date of Grant;(y)Three months after the date of the Participant's termination of employment with the Company and its Affiliates for reasons other than death or Disability; or(z)One year following the date of the Participant's termination of employment from the Company and its Affiliates by reason of death or Disability.
(ii)An Incentive Stock Option, by its terms, shall be exercisable in any calendar year only to the extent that the aggregate Fair Market Value (determined at the Date of Grant) of the Company Stock with respect to which Incentive Stock Options are exercisable for the first time during the calendar year does not exceed $100,000 (the "Limitation Amount"). Incentive Stock Options granted under the Plan and all other plans of the Company and any Parent or Subsidiary of the Company shall be aggregated for purposes of determining whether the Limitation Amountsaid application has beenexceeded. The Committee may impose such conditions as it deems appropriate on an Incentive Stock Option to ensure that the foregoing requirement is met. If Incentive Stock Options that first become exercisable in a calendar year exceed the Limitation Amount, the excess Options will be treated as Nonstatutory Stock Options to the extent permitted by law.
If an Incentive Stock Option remains exercisable after the time periods set forth in clauses (y) or (z), then it shall be treated as a Nonstatutory Stock Option following the end of such time periods.
(d)Automatic Exercise.Notwithstanding the foregoing, an Option Award Agreement may provide that if on the last day of the term of an Option the Fair Market Value of one share of Company Stock exceeds the exercise price of the Option, the Participant has not exercised the Option and the Option has not expired, the Option shall be deemed to have been exercised by the Participant on such day with paymentmade,by withholding shares of Company Stock otherwise issuable in connection with the exercise of the Option. In such event, the Company shall deliver to the Participant the number of shares of Company Stock for which the Option was deemed exercised, less the number of shares of Company Stock required to be withheld for the payment of the total purchase price and Applicable Withholding Taxes; and any fractional share of Company Stock shall be cancelled or settled in cash as determined by the Company.
8. Stock Appreciation Rights.
(a)Grant of Stock Appreciation Rights.Whenever the Committee deems it appropriate to grant Stock Appreciation Rights, the Company shall provide an Award Agreement to the Participant stating the number of shares for which Stock Appreciation Rights are granted, the exercise price per share, and the conditions to which the grant and exercise of the Stock Appreciation Rights are subject, including whether vesting will be contingent on the achievement of any Performance Goals, as the Committee acting in its complete discretion deems consistent with the terms of the Plan.(b)Calculation of Value.Stock Appreciation Rights shall entitle the Participant, upon the exercise of all or any part of the Stock Appreciation Rights, to receive from the Company an amount equal to the excess of (x) the Fair Market Value on the date of exercise of the Company Stock covered by the surrendered Stock Appreciation Rights over (y) the Fair Market Value on the Date of Grant of the Company Stock covered by the Stock Appreciation Rights. The Committee may limit the amount that the Participant may be entitled to receive upon exercise of the Stock Appreciation Right.(c)Exercise.Stock Appreciation Rights shall be exercisable, in whole or in part, at such times as the Committee shall specify in the Participant's Stock Appreciation Rights Award Agreement.(d)Settlement.The manner in which the Company's obligation arising upon the exercise of a Stock Appreciation Right shall be paid shall be determined by the Committee and shall be set forth in the Award Agreement. The Committee may provide for payment in Company Stock or cash, or a fixed combination of Company Stock or cash, or the Committee may reserve the right to determine the manner of payment at the time the Stock Appreciation Right is exercised. Shares of Company Stock issued upon the exercise of a Stock Appreciation Right shall be valued at their Fair Market Value on the date of exercise.
9. Method of Exercise of Options and Stock Appreciation Rights.
(a)Notice and Payment of Exercise Price.Options and Stock Appreciation Rights may be exercised by the Participant by giving notice of the exercise to the Company, stating the number of shares the Participant has elected to purchase under the Option or the number of Stock Appreciation Rights the Participant has elected to exercise. In the case of a purchase of shares under an Option, such notice shall be effective only if accompanied by the exercise price in full paid in cash; provided that, if the terms of an Option so permit, or the Committee by separate action so permits, the Participant may (i) deliver shares of Company Stock (valued at their Fair Market Value on the date of exercise) in satisfaction of all or any part of the exercise price (either by actual delivery or attestation), (ii) to the extent permitted under applicable laws and regulations, deliver a properly executed exercise notice together with irrevocable instructions to a broker to exercise all or part of the Option, sell a sufficient number of shares of Company Stock to cover the exercise price and other costs and expenses associated with such sale and deliver promptly the amount necessary to pay the exercise price or
(iii) request that the Company reduce the number of shares of Company Stock issued by the number of shares having an aggregate Fair Market Value equal to the aggregate exercise price. The Participant shall not be entitled to make payment of the exercise price other than in cash unless provisions for an alternative payment method are included in the Participant's stock option Award Agreement or are agreed to in writing by the Company with the approval of the Committee prior to exercise of the Option.
(b)Legend on Share Certificates.The Company may place on any certificate representing Company Stock issued upon the exercise of an Option or a Stock Appreciation Right any legend deemed desirable by the Company's counsel to comply with federal or state securities laws, and the Company may require of the Participant a customary written indication of the Participant's investment intent.(c)Shareholder Rights.Until the Participant has made any required payment, including any Applicable Withholding Taxes, and has had issued to him a certificate for the shares of Company Stock acquired, he shall possess no shareholder rights with respect to the shares.(d)Withholding Taxes.Each Participant shall agree as a condition of the exercise of an Option or a Stock Appreciation Right to pay to the Company Applicable Withholding Taxes, or make arrangements satisfactory to the Company regarding the payment to the Company of such amounts. Until Applicable Withholding Taxes have been paid or arrangements satisfactory to the Company have been made, no stock certificate shall be issued upon the exercise of an Option or a Stock Appreciation Right.
As an alternative to making a cash payment to the Company to satisfy Applicable Withholding Taxes if the Option or Stock Appreciation Rights Award Agreement so provides, or the Committee by separate action so provides, a Participant may elect to (i) deliver shares of Company Stock, (ii) to the extent permitted under applicable laws and regulations, deliver irrevocable instructions to a broker to exercise all or part of the Option, sell a sufficient number of shares of Company Stock to cover the Applicable Withholding Taxes and expenses associated with such sale and deliver promptly the amount necessary to pay the Applicable Withholding Taxes, or (iii) have the Company retain that number of shares of Company Stock that would otherwise be issuable upon exercise having a Fair Market Value that would satisfy all or a specified portion of the Applicable Withholding Taxes. Any such election shall be made only in accordance with procedures established by the Committee.
(e)Compliance with Laws.Notwithstanding anything herein to the contrary, if the Company is subject to Section 16 of the Act, Options and Stock Appreciation Rights shall always be granted and exercised in such a manner as to conform to the provisions of Rule 16b-3.
10. Nontransferability of Awards. Except as described below or as otherwise determined by the Committee and set forth in a Participant's Award Agreement, no Award shall be transferable by a Participant except by will or the laws of descent and distribution, and an Option or Stock Appreciation Right shall be exercised only by a Participant during the lifetime of the Participant. Notwithstanding the foregoing, a Participant may assign or transfer an Award that is not an Incentive Stock Option with the consent of the Committee to a family member (or trust or other entity for the benefit of the Participant or the Participant's family members), without consideration (each transferee thereof, a "Permitted Assignee"); provided that any such Permitted Assignee shall be bound by and subject to all of the terms and conditions of the Plan and transferred Award and shall execute an Award Agreement satisfactory to the Company evidencing such obligations. Notwithstanding the foregoing, a Participant who transfers an Award, as well as the Participant's transferee, also shall remain bound by the terms and conditions of the Plan.
11. Effective Date of the Plan. This Plan shall become effective on May 13, 2020, subject to the approval of the holders of a majority of the shares present or represented by proxy at a duly held meeting of shareholders of the Company on such date.
12. Termination and Amendment of Plan and Awards.
(a)Term of Plan.If not sooner terminated by the Board pursuant to Section 12(b), this Plan shall terminate when all shares of Company Stock reserved for issuance hereunder have been issued. If the term of this Plan extends beyond ten (10) years from the Effective Date, no Incentive Stock Options may be granted after such time unless the shareholders of the Company have approved an extension of this Plan for such purpose. No Awards shall be granted under the Plan after its termination. If the Plan is terminated by the Board pursuant to Section 12(b), then the authority of the Board and the Committee under this Section 12 and to otherwise administer the Plan will extend beyond the date of this Plan's termination to the extent necessary to administer Awards outstanding on the date of the Plan's termination. In addition, termination of this Plan will not affect the rights of Participants with respect to Awards previously granted to them, and all unexpired Awards will continue in force and effect after termination of this Plan except as they may lapse or be terminated by their own terms and conditions.(b)Termination and Amendment of Plan.The Board may, at any time, terminate the Plan or amend the Plan in such respects as it shall deem advisable, subject to the following limitations:(i)Shareholders must approve any amendment to the Plan to the extent the Company determines that such approval is required by the Code, Rule 16b-3, the listing requirements of the Stock Exchange on which Company Stock is then traded, or any other applicable law, including, but not limited to, an amendment that (i) increases the total number of shares of Company Stock reserved for issuance pursuant to Awards granted under the Plan (except pursuant to Section 13), (ii) expands the class of persons eligible to receive Awards, or (iii) materially increases the benefits accruing to Participants under the Plan.(ii)A termination or amendment of the Plan shall not, without the consent of the Participant, adversely affect a Participant's rights under an Award previously granted to such Participant, except that the Board may unilaterally amend the Plan and Awards as it deems appropriate to ensure compliance with Rule 16b-3 and other applicable law, and to cause Awards to meet the requirements of the Code, including Code Sections 422 and 409A.
(c)Amendment, Modification or Cancellation of Awards.The Committee may modify, amend, or cancel any Award, or waive any restrictions or conditions applicable to any Award, subject to the following limitations:(i)Any modification or amendment that materially diminishes the rights of the Participant, or the cancellation of an Award, shall be effective only if agreed to by the Participant, except that the Committee need not obtain Participant consent for the adjustment or cancellation of an Award pursuant to Section 13 or to the extent the Committee determines it necessary to comply with Rule 16b-3 or any other applicable law, the Code, or the listing requirements of the Stock Exchange or market on which the Shares are then traded.(ii)Other than as provided in Section 13, outstanding Options or Stock Appreciation Rights may not (A) be amended to reduce the exercise price or grant price of such outstanding Options or Stock Appreciation Rights; (B) be cancelled in exchange for Options or Stock Appreciation Rights with an exercise or grant price that is less than the exercise price of the original Options or Stock Appreciation Rights; or (C) be cancelled in exchange for cash or other securities if the exercise
price or grant price of such outstanding Option or Stock Appreciation Right is greater than the Fair Market Value of a share of Company Stock.
13. Change in Capital Structure.
(a)Adjustment of Shares.In the event of a stock dividend, stock split or combination of shares, recapitalization, merger in which the Company is the surviving corporation, reorganization, reincorporation, consolidation, special dividend, spin-off or other change in the Company's capital stock without the receipt of consideration by the Company (including, but not limited to, the creation or issuance to shareholders generally of rights, options or warrants for the purchase of common stock or preferred stock of the Company), or any other event shall occur (which event, in the judgment of the Board or Committee, necessitates an adjustment to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Plan), the number and kind of shares of stock or securities of the Company to be subject to the Plan and to Awards then outstanding or to be granted thereunder, the aggregate and individual maximum number of shares or securities which may be delivered under the Plan pursuant to Section 4, and the exercise price and other terms and relevant provisions of Awards shall be appropriately adjusted by the Committee, whose determination shallbe binding on allpersons; provided, however, that no adjustmentthe creditors or class ofan outstanding Optioncreditors, and/orStock Appreciation Righton all stockholders or class of stockholders of the Corporation, as the case may be,made that would create a deferral of income or a modification, extension or renewal of such Option or Stock Appreciation Right under Code Section 409A except as permitted thereby. Ifand also on theadjustment would produce fractional shares with respect to any Incentive Award, Restricted Award or unexercised Option or Stock Appreciation Right, the Committee may adjust appropriately the number of shares covered by the Award so as to eliminate the fractional shares.
Notwithstanding the foregoing, in the case of a stock dividend (other than a stock dividend declared in lieu of an ordinary cash dividend) or subdivision or combination of the shares (including a reverse stock split), if noCorporation.
(b)Change of Control.If an Award Agreement specifies the treatment of an Award upon a Change of Control, then such provisions in the Award Agreement shall control, notwithstanding any contrary provision in this Plan. If an Award Agreement does not contain provisions regarding treatment of an Award upon a Change of Control, then, unless provided otherwise by the Board or Committee prior to a Change of Control, in the event of a Change of Control:(i)Each outstanding Option or Stock Appreciation Right shall become immediately and fully vested and all Options and Stock Appreciations Rights shall be cancelled as of the closing of the Change of Control in exchange for a cash payment equal to the excess of the "Change in Control Price" (meaning the price paid or deemed paid in the Change of Control transaction, as determined by the Committee) over the exercise or grant price of such Awards;(ii)Outstanding Restricted Awards and Incentive Awards that are not then vested shall vest assuming, if applicable, the Performance Goals were met at the higher of (A) 100% of target or (B) the level of achievement of the Performance Goals measured at the time of the Change of Control and assuming that the Performance Goals would continue to be achieved at the same rate through the end of the performance period; and
(iii)Except as otherwise expressly provided in any agreement between a Participant and the Company or one of its Affiliates, if the receipt of any payment by a Participant under the circumstances described above would result in the payment by the Participant of any excise tax provided for in Section 280G and Section 4999 of the Code, then the Committee may, in its discretion, reduce the amount of such payment to the extent required to prevent the imposition of such excise tax.
(c)Participant Consent Not Required.Any determination made or action taken under this Section 13 by the Committee or Board shall be final and conclusive and may be made or taken without the consent of any Participant.
14. Administration of the Plan. The Plan shall be administered by the Committee, which shall be the full Board or a committee appointed by the Board, consisting of not less than two members of the Board. As of the Effective Date, the Board appoints the Compensation and Management Development Committee of the Board to be the Committee for purposes of the Plan. The Committee shall have general authority to impose any limitation or condition upon an Award that the Committee deems appropriate to achieve the objectives of the Award and the Plan and, without limitation and in addition to powers set forth elsewhere in the Plan, shall have the following specific authority:
(a)Authority.The Committee shall have the power and complete discretion to determine (i) which eligible employees, directors and other Company Contributors shall receive an Award and the nature of the Award, (ii) the number of shares of Company Stock to be covered by each Award, (iii) whether Options shall be Incentive Stock Options or Nonstatutory Stock Options, (iv) the Fair Market Value of Company Stock, subject to Section 2(p), (v) the time or times when an Award shall be granted, (vi) whether an Award shall become vested over a period of time and/or upon the achievement of Performance Goals, and when it shall be fully vested, (vii) when Options or Stock Appreciation Rights may be exercised, (viii) whether a Disability exists, subject to Section 2(o), (ix) the manner in which payment will be made upon the exercise of Options or Stock Appreciation Rights, (x) conditions relating to the length of time before disposition of Company Stock received under an Award is permitted, (xi) the manner of payment of Applicable Withholding Taxes, (xii) the terms and conditions applicable to Restricted Awards, (xiii) the terms and conditions on which restrictions upon Restricted Awards shall lapse, (xiv) whether to accelerate the time at which any or all restrictions with respect to Restricted Awards will lapse or be removed, (xv) notice provisions relating to the sale of Company Stock acquired under the Plan, and (xvi) any additional requirements relating to Awards that the Committee deems appropriate.
The Committee may accelerate the vesting of an Award, or cause the lapse of restrictions related to such Award, or deem an Award to be earned, in whole or in part, in the event of the Participant's death, Disability, retirement, termination of employment, Change of Control, or any other event as determined by the Committee in its sole discretion.
(b)Administrative Rules.The Committee may adopt rules and procedures for carrying out the Plan. The interpretation and construction of any provision of the Plan by the Committee shall be final and conclusive. The Committee may consult with counsel, who may be counsel to the Company, and shall not incur any liability for any action taken in good faith in reliance upon the advice of counsel.(c)Delegation to Subcommittee.If a committee of the Board is appointed to serve as the Committee, such Committee shall have, in connection with the administration of the Plan, the powers possessed by the Board, including the power to delegate a subcommittee of the administrative powers the Committee is authorized to exercise, subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board.
(d)Delegation to Officers.To the extent permitted by applicable law, the Committee may delegate to one or more Officers the authority to exercise the Committee's authority under the Plan, other than with respect to Participants who are Officers.(e)Rule 16b-3.As to Awards that that are authorized by the Committee and intended to be exempt under Rule 16b-3 of the Exchange Act, the requirements of Rule 16b-3(d)(1) under the Exchange Act with respect to committee action also are intended to be satisfied. To the extent applicable, Committee members shall meet the requirements of the rules and regulations of the Stock Exchange.(f)Indemnification.In addition to such other rights of indemnification as they may have, the members of the Committee (or any subcommittee or Officer who is a delegate thereof) shall be indemnified by the Company against the reasonable expenses, including attorneys' fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan or any Award granted hereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by the Board) or paid by the Board in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be determined in such action, suit or proceeding that such Committee member has acted in bad faith; provided, however, that within 60 days after receipt of notice of institution of any such action, suit or proceeding, a Committee member shall offer the Company in writing the opportunity, at its own cost, to handle and defend the same.
15. Notice. All notices and other communications required or permitted to be given under this Plantaken at an annual or special meeting of the Corporation's stockholders may be taken only at such duly called annual or special meeting.
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(a)Ifindemnify to theCompany — at its principal business address to the attention of the Secretary;(b)If to any Participant — at the last address of the Participant known to the sender at the time the notice or other communication is sent.
In either event, notice may also be delivered via email as long as the email account is one used in the regular course of business of the Participant or Company representative. In addition, notice may be providedfullest extent permitted under and in accordance with such procedures adopted by the Committee, which may include notice provided via a third party administrator platform.
16. Compliance with Code Section 409A.
(a)To the extent that amounts payable under this Plan are subject to Code Section 409A, the Plan and Awards are intended to comply with such Code Section 409A and official guidance issued thereunder. Otherwise, the Plan and Awards are intended to be exempt from Code Section 409A. Notwithstanding anything to the contrary, the Plan and Awards shall be interpreted, operated and administered in a manner consistent with these intentions.(b)For purposes of the Plan, all references to "employment termination," "termination from employment," "termination from service," "separation from service" or like phrases are intended to constitute a "separation from service" as defined by Code Section 409A.(c)Notwithstanding anything in the Plan to the contrary, if a Participant is a specified employee (within the meaning of the default provisions for determining specified employees under Section 409A of the Code) with respect to the Company at the time of the Participant's employment termination or
separation from service, all payments that are not then exempt from Code Section 409A, which are payable as a result of such employment termination or separation from service, and would have been due during the six-month period following the Participant's employment termination or separation from service shall be aggregated and paid on the date that is six months and one day after the Participant's employment termination or separation from service (or, if earlier, as soon as practicable after the date of the Participant's death).
17. Clawback. Notwithstanding any other provisions in this Plan, all Awards shall be subject to recovery under (a) any law, government regulation or Stock Exchange listing requirement, and (b) any recoupment or clawback policy adopted by the Board. Any amendment to such clawback policy after the date an Award is granted shall be applicable to such Award without the need for Participant consent.
18. Miscellaneous.
(a)No Shareholder Rights. No Participant shall be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares of Company Stock subject to an Award unless otherwise stated herein or until such Participation has satisfied all requirements under the terms of the Award.(b)No Guarantee of Tax Treatment. Notwithstanding any provisions of the Plan, the Company does not guarantee to any Participant that (i) any Award intended to be exempt from Code Section 409A shall be so exempt, (ii) any Award intended to comply with Code Section 409A or Code Section 422 shall so comply, or (iii) any Award shall otherwise receive a specific tax treatment under any other applicable tax law, nor in any such case will the Company or any Parent or Subsidiary indemnify, defend or hold harmless any individual with respect to the tax consequences of any Award.(c)Governing Law.The terms of the Plan shall be governed bythe laws of the State of Delawarewithout regardany person who was or is a party or is threatened toconflict of law provisions atbe made a party to anyjurisdiction.(d)Limitations on Actions and Venue. Any legalthreatened, pending or completed action, suit or proceeding,with respect to this Plan, any Awardwhether civil, criminal, administrative orany Award Agreement, must be brought within one (1) year (365 days) after the day the complaining party first knew or should have knowninvestigative by reason of theevents giving risefact that that person is or was a director, officer, trustee, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, trustee, employee or agent of or in any other capacity with another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by that person in connection with such action, suit or proceeding if that person acted in good faith and in a manner that person reasonably believed to be in, or not opposed to, thecomplaint,best interests of the Corporation, and,the exclusive jurisdiction, forum, and venuewith respect to anysuch legalcriminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.
(g)No Fractional Shares. No fractional Shares or other securities may be issued or delivered pursuant to this Plan. If, but for this provision, fractional Shares would be issuable pursuant to an Award, then such fractional Share shall be canceled without payment thereunder. Notwithstanding the foregoing, the Committee may alternatively decide, in its sole discretion, to cause such fractional Shares to be rounded up to the nearest whole Share or for a cash payment to be made equal to the Fair Market Value of such fractional Share.(h)Unfunded Plan. This Plan is unfunded and does not create, and should not be construed to create, a trust or separate fund with respect to this Plan's benefits. This Plan does not establish any fiduciary relationship between the Company and any Participant or other person. To the extent any person holds any rights by virtue of an Award granted under this Plan, such rights are no greater than the rights of the Company's general unsecured creditors. Neither the Company nor any Subsidiary will be required to segregate any assets that may at any time be represented by Awards granted pursuant to the Plan.(i)Severability. Ifany provision of thisPlanCertificate of Incorporation inconsistent with this Article IX, shall eliminate or reduce the effect of this Article IX in respect of any matter occurring before such amendment, repeal or adoption of an inconsistent provision or in respect of any cause of action, suit or claim relating to any such matter which would have given rise to a right of indemnification or right to receive expenses pursuant to this Article IX, if such provision had not been so amended or repealed or if a provision inconsistent therewith had not been so adopted.
IN WITNESS HEREOF, this instrument has been executed as of the 13th day of May, 2020.
PENSKE AUTOMOTIVE GROUP, INC.
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Using a black ink pen, mark your votes with an X as shown in
this example. Please do not write outside the designated areas. x
Annual Meeting Proxy Card
IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
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B Authorized Signatures – This section must be completed for your vote to be counted. – Date and Sign Below
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title.
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IF VOTING BY MAIL, YOU MUST COMPLETE SECTIONS A – C ON BOTH SIDES OF THIS CARD.
FormProxy Card — Penske Automotive Group, Inc.IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.Proxy — Penske Automotive Group, Inc.PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORSThe undersigned hereby revokes all prior proxies and appoints Robert H. Kurnick, Jr. and Shane M. Spradlin and each of them, as proxies with full power of substitution, to vote on behalf of the undersigned the same number of shares of Common Stock, par value $0.0001 per share, of Penske Automotive Group, Inc. which the undersigned is entitled to vote, at the Annual Meeting of StockholdersIncorporation to be held on May 13, 2020 at 8:00 a.m., Eastern Daylight Time, at our corporate headquarters, 2555 Telegraph Road, Bloomfield Hills, Michigan 48302,signed by its duly authorized officer and at any postponements or adjournments thereof, on any matter properly coming before the meeting,foregoing facts stated herein are true and specifically the matters described on the reverse side hereof.THE PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, IT WILL BE VOTED FOR THE ELECTION OF THE NOMINEES NAMED HEREIN, FOR APPROVAL OF OUR 2020 EQUITY INCENTIVE PLAN, FOR RATIFICATION OF OUR AUDITORS, FOR APPROVAL OF OUR EXECUTIVE COMPENSATION AND ACCORDING TO THE DISCRETION OF THE PROXY HOLDERS ON ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY POSTPONEMENTS OR ADJOURNMENTS THEREOF. THE PROPOSALS HEREIN ARE PROPOSED BY THE BOARD OF DIRECTORS.CONTINUED AND TO BE SIGNED ON REVERSE SIDEC Non-Voting ItemsChange of Address – Please print your new address below.Comments – Please print your comments below.Meeting Attendance Mark the box to the right ¨if you plan to attend the Annual MeetingIF VOTING BY MAIL, YOU MUST COMPLETE SECTIONS A – C ON BOTH SIDES OF THIS CARD. Electronic Voting Instructions Available 24 hours a day, 7 days a week!
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