UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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Genuine Parts Company
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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2018
NOTICE OF ANNUAL MEETING
AND PROXY STATEMENT
GENUINE PARTS COMPANY
2999 Circle 75Wildwood Parkway
Atlanta, Georgia 30339
NOTICE OF 20162018 ANNUAL MEETING OF SHAREHOLDERS
April 25, 201623, 2018
TO THE SHAREHOLDERS OF GENUINE PARTS COMPANY:
The 20162018 Annual Meeting of Shareholders of Genuine Parts Company, a Georgia corporation, will be held at the Company’s headquarters, 2999 Circle 75Wildwood Parkway, Atlanta, Georgia 30339, on Monday, the 25th23rd day of April 2016,2018, at 10:00 a.m., for the following purposes:
(1) To elect as directors the thirteen nominees named in the attached proxy statement;
(1) | To elect as directors the eleven nominees named in the attached proxy statement; |
(2) To approve, by a non-binding advisory vote, the compensation of the Company’s executive officers;
(2) | To approve, by anon-binding advisory vote, the compensation of the Company’s executive officers; |
(3) To ratify the selection of Ernst & Young LLP as the Company’s independent auditors for the fiscal year ending December 31, 2016; and
(3) | To ratify the selection of Ernst & Young LLP as the Company’s independent auditors for the fiscal year ending December 31, 2018; and |
(4) To act upon such other matters as may properly come before the meeting or any reconvened meeting following any adjournment thereof.
(4) | To act upon such other matters as may properly come before the meeting or any reconvened meeting following any adjournment thereof. |
Information relevant to these matters is set forth in the attached proxy statement. Only holders of record of Common Stock at the close of business on February 16, 201613, 2018 will be entitled to vote at the meeting.
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be held on April 25, 2016.23, 2018.
The Proxy Statement and the 20152017 Annual Report to Shareholders are available at
http://www.proxydocs.com/gpc
By Order of the Board of Directors, |
JENNIFER L. ELLIS |
Corporate Secretary |
Atlanta, Georgia
February 26, 201627, 2018
YOUR VOTE IS IMPORTANT!
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING IN PERSON, PLEASE VOTE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY IN THE ENCLOSED BUSINESS REPLY ENVELOPE, OR YOU CAN VOTE BY TELEPHONE OR INTERNET PURSUANT TO THE INSTRUCTIONS ON THE ENCLOSED PROXY CARD. IF YOU DO ATTEND THE MEETING, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON.
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Consideration of Last Year’s Advisory Shareholder Vote on Executive Compensation | 17 | |||
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Factors Considered in Decisions to Materially Increase or Decrease Compensation | 24 | |||
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COMPENSATION, NOMINATING AND GOVERNANCE COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION | ||||
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PROPOSAL 3 — RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS | ||||
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ANNUAL MEETING — APRIL 25, 201623, 2018
This proxy statement is being furnished to the shareholders of Genuine Parts Company in connection with the solicitation of proxies by the Board of Directors of the Company for use at the Company’s 20162018 Annual Meeting of Shareholders to be held on Monday, April 25, 2016,23, 2018, at 10:00 a.m. local time and at any reconvened meeting following any adjournment thereof. The Annual Meeting will be held at the Company’s headquarters, 2999 Circle 75Wildwood Parkway, Atlanta, Georgia.Georgia 30339.
This proxy statement and the accompanying proxy card are first being mailed to shareholders and made available on our website on or about February 26, 2016.27, 2018. The Company’s 20152017 annual report to the shareholders, including consolidated financial statements for the year ended December 31, 2015,2017, is enclosed.
Shareholders of record can simplify their voting and reduce the Company’s costs by voting their shares via telephone or the Internet. Instructions for voting via telephone or the Internet are set forth on the enclosed proxy card. The telephone and Internet voting procedures are designed to authenticate votes cast by use of a personal identification number. These procedures enable shareholders to appoint a proxy to vote their shares and to confirm that their instructions have been properly recorded. If your shares are held in the name of a bank or broker (in “street name”), the availability of telephone and Internet voting will depend on the voting processes of the applicable bank or broker; therefore, it is recommended that you follow the voting instructions on the form you receive from your bank or broker. If you do not choose to vote by telephone or the Internet, please mark your choices on the enclosed proxy card and then date, sign and return the proxy card at your earliest opportunity.
All proxies properly voted by telephone or the Internet and all properly executed written proxy cards that are delivered to the Company (and not later revoked) will be voted in accordance with instructions given in the proxy. When voting on the election of directors, you may (1) vote FOR all nominees listed in this proxy statement, (2) WITHHOLD AUTHORITY to vote for all nominees, or (3) WITHHOLD AUTHORITY to vote for one or more nominees but vote FOR the other nominees. When voting on the approval of the Company’s executive compensation program and the ratification of the selection of independent auditors, you may vote FOR or AGAINST the proposal or you may ABSTAIN from voting.
If a signed proxy card is received which does not specify a vote or an abstention, the shares represented by that proxy card will be voted FOR all nominees to the Board of Directors listed in this proxy statement, FOR the proposal to approve the Company’s executive compensation program, and FOR the ratification of the selection of independent auditors for the fiscal year ending December 31, 2016.2018. The Company is not aware, as of the date hereof, of any matters to be voted upon at the Annual Meeting other than those stated in this proxy statement and the accompanying Notice of 20162018 Annual Meeting of Shareholders. If any other matters are properly brought before the Annual Meeting, the enclosed proxy card gives discretionary authority to the persons named as proxies to vote the shares represented thereby in their discretion.
If you hold your shares in street name and you do not instruct your bank or brokerage firm in accordance with their directions how to vote your shares prior to the date of the Annual Meeting, your bank or brokerage firm cannot vote your shares (referred to as “brokernon-votes”) on the following proposals: “Proposal 1 — Election of Directors,” or “Proposal 2 — Advisory Vote on Executive Compensation,” and such shares will be considered “brokernon-votes” and will not affect the outcome of these votes. However, your bank or brokerage firm may vote your shares in its discretion on “Proposal 3 — Ratification of Selection of Independent Auditors.”
A shareholder of record who submits a proxy pursuant to this solicitation may revoke it at any time prior to its exercise at the Annual Meeting. Such revocation may be by delivery of written notice to the Corporate Secretary of the Company at the Company’s address shown above, by delivery of a proxy bearing a later date (including a later vote by telephone or the Internet), or by voting in person at the Annual Meeting. Street name holders may revoke their proxies prior to the Annual Meeting by following the procedures specified by their bank or brokerage firm.
Only holders of record of the Company’s Common Stock at the close of business on the record date for the Annual Meeting, which is February 16, 2016,13, 2018, are entitled to vote at the Annual Meeting. Persons who hold shares of Common Stock in street name as of the record date may vote at the Annual Meeting only if they hold a
Genuine Parts Company | 2018 Proxy Statement 1
Voting
valid proxy from their bank or brokerage firm. At the close of business on February 16, 2016,13, 2018, the Company had outstanding and entitled to vote at the Annual Meeting 149,515,598146,734,604 shares of Common Stock.
On each proposal presented for a vote at the Annual Meeting, each shareholder is entitled to one vote per share of Common Stock held as of the record date. A quorum for the purposes of all matters to be voted on shall consist of shareholders representing, in person or by proxy, a majority of the outstanding shares of Common Stock entitled to vote at the Annual Meeting. Shares represented at the Annual Meeting that are abstained or withheld from voting and brokernon-votes will be considered present for purposes of determining a quorum at the Annual Meeting. If less than a majority of the outstanding shares of Common Stock are represented at the Annual Meeting, a majority of the shares so represented may adjourn the Annual Meeting to another date, time or place.
The vote required for (1) the election of directors, (2) the advisory vote on executive compensation, and (3) the ratification of the selection of independent auditors is the affirmative vote of a majority of the shares of Common Stock outstanding and entitled to vote on such proposal which are represented at the Annual Meeting. Because votes withheld and abstentions will be considered as present and entitled to vote at the Annual Meeting but will not be voted “for” these proposals, they will have the same effect as votes “against” these proposals.
Although the advisory vote on executive compensation isnon-binding as provided by law, the Company’s Board of Directors will review the results of the vote and take it into account inconsideration when making future determinations concerning executive compensation.
2 Genuine Parts Company | 2018 Proxy Statement
ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of fourteentwelve directorships. Mr. Jean DouvilleJerry W. Nix has reached mandatory retirement age for the Board and therefore will not stand forre-election at the 20162018 Annual Meeting. The Board of Directors has approved the recommendation of its Compensation, Nominating and Governance Committee to decrease the number of directorships to thirteeneleven as of the date of the 20162018 Annual Meeting and has nominated the thirteeneleven nominees named below to serve as directors until the 20172019 Annual Meeting and the election and qualification of their successors.
In the event that any nominee is unable to serve (which is not anticipated), the Board of Directors may:
designate a substitute nominee, in which case the persons designated as proxies will cast votes for the election of such substitute nominee;
allow the vacancy to remain open until a suitable candidate is located and nominated; or
adopt a resolution to decrease the authorized number of directorships.
If any incumbent director nominee in an uncontested election should fail to receive the required affirmative vote of the holders of a majority of the shares entitled to vote which are represented at the Annual Meeting, under Georgia law, the director remains in office as a “holdover” director until his or her successor is elected and qualified or until his or her earlier resignation, retirement, disqualification, removal from office or death. In the event of a holdover director, the Board of Directors in its discretion may request the director to resign from the Board. If the director resigns, the Board of Directors may:
immediately fill the resulting vacancy;
allow the vacancy to remain open until a suitable candidate is located and appointed; or
adopt a resolution to decrease the authorized number of directorships.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE ELECTION OF ALL OF THE NOMINEES.
Set forth below is certain information about each of the thirteeneleven nominees for director. For additional information about the nominees, including the experience, qualifications, attributes and skills that our Board believes makes them well qualified to serve as directors, as well as information about our director independence requirements, our director nominating process, our board leadership structure, and other corporate governance matters, see “Corporate Governance” below.
NOMINEES FOR DIRECTORNominees For Director
• Director Since 2015 • Independent Director • Audit Committee • Financial Expert • Age 66 | ||||
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Elizabeth W. Camp is President and Chief Executive Officer of DF Management, Inc., a private investment and commercial real estate management company, a position she has held since 2000. Previously, Ms. Camp served in various capacities, including President and Chief Executive Officer of Camp Oil Company for 16 years. Ms. Camp serves as | ||||
Paul D. Donahue • Director Since 2012 • Executive Committee • Age 61 | ||||
Paul D. Donahue is President and Chief Executive Officer of the Company. In May of 2016, he was named Chief Executive Officer and was named President of the Company in January of |
Genuine Parts Company | 2018 Proxy Statement 3
Proposal 1 Election of Directors
Gary P. Fayard • Director Since 2014 • Independent Director • Audit Committee • Financial Expert • Age 65 | ||||
Gary P. Fayard was Executive Vice President and Chief Financial Officer of the Coca-Cola Company from 2003 until his retirement in May, 2014. Mr. Fayard joined the Coca-Cola Company in 1994 as Vice President and Controller. He was promoted to the role of Senior Vice President and Chief Financial Officer in 1999. He has served as Director on numerousfor-profit andnot-for-profit boards, including service on the Coca-Cola Enterprises, Inc. board from 2001 until 2009, service on the Coca-Cola FEMSA board from 2003 to 2016, and currently serves on the board of directors of | ||||
Thomas C. Gallagher • Director Since 1990 • Executive Committee (Chair) • Age 70 | ||||
Thomas C. Gallagher is Chairman of the Board. Mr. Gallagher retired as an employee of the Company on June 30th, 2017. He has | ||||
P. Russell Hardin • Director Since 2017 • Independent Director • Compensation, Nominating and Governance Committee • Age 60 | P. Russell Hardin is President of the Robert W. Woodruff Foundation, the Joseph B. Whitehead Foundation, the Lettie Pate Evans Foundation and the Lettie Pate Whitehead Foundation. These foundations manage approximately $10 billion in assets and distribute approximately $400 million in grants each year, which support Georgia’s institutions in the areas of education, health, human welfare, the environment, community and economic development, philanthropy and volunteerism, and the arts. Mr. Hardin joined the Foundations’ staff in 1988 and was named President in 2006. Prior to his work at the Foundation, Mr. Hardin practiced law with the Atlanta firm of King & Spalding. | |||
John R. Holder • Director Since 2011 • Independent Director • Compensation, Nominating and Governance Committee • Age 63 | John R. Holder is Chairman and Chief Executive Officer of Holder Properties, a commercial and residential real estate development, leasing, and management company based in Atlanta. Mr. Holder has held the position of Chairman since 1989 and Chief Executive Officer since 1980. He is also a director of Oxford Industries, Inc. | |||
Donna W. Hyland • Director Since 2015 • Independent Director • Audit Committee • Financial Expert • Age 57 | ||||
Donna W. Hyland is President and Chief Executive Officer of Children’s Healthcare of Atlanta and has served in that role since June 2008. Prior to that role, she was the Chief Operating Officer of Children’s Healthcare of Atlanta from January 2003 to May 2008 and the Chief Financial Officer from February 1998 to December 2002. She serves as a director of Cousins Properties, Inc. and serves as a financial expert on its Audit Committee. | ||||
John D. Johns • Director Since 2002 • Independent Director (Lead) • Executive Committee • Compensation, Nominating and Governance Committee (Chair) • Age 66 |
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John D. Johns is |
4 Genuine Parts Company | 2018 Proxy Statement
Proposal 1 Election of Directors
Robert C. “Robin” Loudermilk, Jr. • Director Since 2010 • Independent Director • Audit Committee • Age 58 | Robert C. “Robin” Loudermilk, Jr. is | |||
Wendy B. Needham • Director Since 2003 • Independent Director • Audit Committee (Chair) • Financial Expert • Age 65 | ||||
Wendy B. Needham was Managing Director, Global Automotive Research for Credit Suisse First Boston, an investment banking firm, from August 2000 to June 2003, and a Principal, Automotive Research, for Donaldson, Lufkin and Jenrette from 1994 to 2000. Ms. Needham previously served as a director of Asahi Tec. | ||||
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E. Jenner Wood, III • Director Since 2014 • Independent Director • Audit Committee • Financial Expert • Compensation, Nominating and Governance Committee • Age 66 | E. Jenner Wood, III was Corporate Executive Vice President of SunTrust Banks, Inc. until his retirement in December of 2016. He was Chairman, President and Chief Executive Officer of the Atlanta Division of SunTrust Bank from April, 2014 to October, 2015 and served as a Corporate Executive Vice President of SunTrust Banks, Inc. |
Genuine Parts Company | 2018 Proxy Statement 5
Independent Directors
The Company’s Common Stock is listed on the New York Stock Exchange. The NYSE requires that a majority of the directors, and all of the members of certain committees of the board of directors be “independent directors,” as defined in the NYSE corporate governance standards. Generally, a director does not qualify as an independent director if the director (or in some cases, members of the director’s immediate family) has, or in the past three years has had, certain material relationships or affiliations with the Company, its external or internal auditors, or other companies that do business with the Company. The Board has affirmatively determined that tennine of the Company’s fourteentwelve current directors and tennine of the thirteeneleven director nominees have no other direct or indirect relationships with the Company and therefore are independent directors according to the NYSE corporate governance standards and an analysis of all facts specific to each director.
Mr. E. Jenner Wood, a Director of the Company since August 17, 2014 is Corporate Executive Vice President of SunTrust Banks, Inc. During 2015, the Company continued its long-standing banking relationship with SunTrust, and used the Bank’s services in the general course of business. This banking relationship was reviewed and considered by the Board and the Compensation, Nominating, and Governance Committee in determining the independence of Mr. Wood. The amount of payments made and received by SunTrust and the Company represented an immaterial percentage of the Company’s and SunTrust’s revenues. The Board and Compensation, Nominating, and Governance Committee believe that the relationship during 2015 was non-preferential and that Mr. Wood did not personally participate in or benefit from this relationship, leading to the conclusion that the relationship was not material and to a determination that Mr. Wood is independent.
The independent directors and nominees are: Mary B. Bullock, Elizabeth W. Camp, Gary P. Fayard, P. Russell Hardin, John R. Holder, Donna W. Hyland, John D. Johns, Robert C. “Robin” Loudermilk, Wendy B. Needham, Gary W. Rollins and E. Jenner Wood.
Corporate Governance Guidelines
The Board of Directors has adopted Corporate Governance Guidelines that give effect to the NYSE’s requirements related to corporate governance and various other corporate governance matters. The Company’s Corporate Governance Guidelines, as well as the charters of the Compensation, Nominating and Governance Committee and the Audit Committee, are available on the Company’s website atwww.genpt.com.
Non-Management Director Meetings and Presiding Independent Director
Pursuant to the Company’s Corporate Governance Guidelines, the Company’snon-management directors meet separately from the other directors in regularly scheduled executive sessions at least annually and at such other times as may be scheduled by the Chairman of the Board or by the presiding independent director or as may be requested by anynon-management director.
The independent directors serving on the Company’s Board of Directors appointed Gary W. RollinsJohn D. Johns to serve as the Board’s presiding independent director effective in April 2013.2017. As the presiding independent director, Mr. RollinsJohns presides at all meetings ofnon-management and independent directors and serves as a liaison between the Chief Executive Officer and thenon-management and independent directors. During 2015,2017, the independent directors held four meetings without management. Mr. Rollins, the previous presiding independent director presided over allthe first of these meetings, and Mr. Johns, after his appointment in April, presided over the rest of these meetings.
Board Leadership Structure
TheUpon the Board’s appointment of Paul Donahue as both President and Chief Executive Officer of the Company in May of 2016, the Board has appointed the Company’s former Chief Executive Officer and Chairman, Mr. Gallagher, to serve as Executive Chairman until June of 2017 when Mr. Gallagher retired as an employee of the Company and becamenon-Executive Chairman of the Board. In his recent position as CEO, Mr. Gallagher hashad primary responsibility for theday-to-day operations of the Company and provides consistentCompany; as Chairman, he continues to provide leadership on the Company’s key strategic objectives. In his roleobjectives as Chairman of the Board, he sets thewell as set strategic priorities for the Board (with input from the presiding independent director), presidespreside over its meetings, and communicates itscommunicate strategic findings and guidance to management. The Board believes that the combination of these two roles provides more consistent communication and coordination throughout the organization, which results in a more effective and efficient implementation of corporate strategy. The Board believes that this leadership structure — a combined Chairman of the Board and Chief Executive Officer — is currently the most effective structure for the Company at this time and is instrumental in unifying the Company’s strategy behind a single vision. In addition, we have found that our CEO is the most knowledgeable member of the Board regarding risks the Company may be facing and, in his role as Chairman, is able to facilitate the Board’s oversight of such risks.Company.
As noted earlier, the independent directors have appointed a presiding independent director, which provides balance to the Board’s structure. With a supermajority of independent directors, an Audit Committee and a Compensation, Nominating and Governance Committee each comprised entirely of independent directors, and a presiding independent director to oversee all meetings of thenon-management directors, the Company’s Board of Directors is comfortable that its existingcurrent leadership structure provides for an appropriate balance that best serves the Company and its shareholders. The Board of Directors periodically reviews its leadership structure to ensure that it remains the optimal structure for our Company and ourits shareholders.
6 Genuine Parts Company | 2018 Proxy Statement
Corporate Governance
Director Nominating Process
Shareholders may recommend a director nominee by writing to the Corporate Secretary specifying the nominee’s name and the other required information as set forth in the Company’sBy-laws. TheBy-laws require, among other things, that the shareholder making the nomination: (1) notify us in writing no later than the close of business on the 90th day and no earlier than the close of business on the 120th day prior to the first anniversary of the date of the Company’s notice of annual meeting sent to shareholders in connection with the previous year’s annual meeting; (2) include certain information about the nominee, including his or her name, occupation and Company share ownership; (3) include certain information about the shareholder proponent and the beneficial owner, if any on whose behalf the nomination is made, including such person or entity’s name, address, Company share ownership and certain other information regarding the relationship between the shareholder and beneficial owner, if applicable, and any derivative or hedging positions in Company securities; and (4) update the required information as of the record date and after any subsequent change. The notice must comply with all requirements of theBy-laws and, if the nomination is to be included in next year’s proxy statement, the requirements of SEC Rule14a-8 and must be timely received by the Corporate Secretary at Genuine Parts Company, 2999 Circle 75Wildwood Parkway, Atlanta, Georgia 30339.
The Company’s Board of Directors has established the following process for the identification and selection of candidates for director. The Compensation, Nominating and Governance Committee, in consultation with the Chairman of the Board, annually reviews the appropriate experience, skills and characteristics required of Board members in the context of the current membership of the Board to determine whether the Board would better be enhanced by the addition of one or more directors. This review includes, among other relevant factors in the context of the perceived needs of the Board at that time, issues of experience, reputation, judgment, diversity and skills. With regard to diversity, the Board and the Compensation, Nominating and Governance Committee believe that sound governance of the Company in an increasingly complex international marketplace requires a wide range of viewpoints. As a result, although the Board does not have a formal policy regarding Board
diversity, the Board and the Committee believe that the Board should be comprised of a well-balanced group of individuals with diverse backgrounds, educations, experiences and skills that contribute to board diversity, and the Compensation, Nominating and Governance Committee considers such factors when reviewing potential candidates.
If the Compensation, Nominating and Governance Committee determines that adding a new director is advisable, the Committee initiates a search, working with other directors, management and, if it deems appropriate or necessary, a search firm retained to assist in the search. The Compensation, Nominating and Governance Committee considers all appropriate candidates proposed by management, directors and shareholders. Information regarding potential candidates is presented to the Compensation, Nominating and Governance Committee, and the Committee evaluates the candidates based on the needs of the Board at that time. Potential candidates are evaluated according to the same criteria, regardless of whether the candidate was recommended by shareholders, the Compensation, Nominating and Governance Committee, another director, Company management, a search firm or another third party. The Compensation, Nominating and Governance Committee then submits any recommended candidate(s) to the full Board of Directors for approval and recommendation to the shareholders.
The Company’s Board of Directors is comprised of individuals with diverse experience at policy-making levels in a variety of businesses, as well as in education andnon-profit organizations, in areas that are relevant to the Company’s activities. Each director was nominated on the basis of the unique experience, qualifications, attributes and skills that he or she brings to the Board, as well as how those factors blend with those of the others on the Board as a whole. On an individual basis:
Dr. Bullock brings to the Board her extensive experience with work force issues and strategic planning gained during her tenure as president of an independent national liberal arts college for women. Additionally, her experience as a founding executive of Duke Kunshan University in China, assists Dr. Bullock in bringing strategic, educational, and fiscal planning experience as well as extensive international relations knowledge focusing on economic and manufacturing trends abroad to our Board.
Ms. Camp has over 30 years of leadership experience in various executive roles, most recently as President and Chief Executive Officer of an investment and commercial real estate management company. Ms. Camp also currently serves as alead independent director at Synovus Financial Corp. where she has chaired both its Audit and Compensation Committees. While Chair of the Synovus Audit Committee, Ms. Camp was responsible for ensuring the bank was in compliance with all of the various banking regulations that had recently been enacted in response to the 2008 recession. Her leadership and experience in this complex area was paramount to Synovus’s success at such a crucial time for the banking industry. Her previous experience as a tax attorney at large accounting and law firms in the Washington D.C. area will also benefit the Company in the financial, accounting, tax, and legal areas. Ms. Camp’s background as an executive officer and director and her expertise in accounting, tax and legal matters will provide expertise in management and auditing, as well as leadership skills to our Board and Audit Committee.
Genuine Parts Company | 2018 Proxy Statement 7
Corporate Governance
Washington D.C. area also benefits the Company in the financial, accounting, tax, and legal areas. Ms. Camp’s background as an executive officer and director and her expertise in accounting, tax and legal matters have provided expertise in management and auditing, as well as leadership skills to our Board and Audit Committee. |
Mr. Fayard brings to the Board a wealth of financial, accounting, and auditing knowledge as the former CFO of one of America’s largest corporations. Additionally, Mr. Fayard has served as Director on numerousfor-profit andnot-for-profit boards, giving him direct exposure to a wide variety of businesses and industries. He is also a former partner at a major public accounting firm. Mr. Fayard’s financial background and broad business exposure make him a significant contributor to our Board.
Mr. Gallagher has 4547 years of operating experience with the Company and brings insight into all aspects of our business due to both his current role and hisextensive history with the Company. Mr. Gallagher’s leadership,
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Ms. Hyland offers our board extensive knowledge of the health care industry as President and Chief Executive Officer of Children’s Healthcare of Atlanta. Her previous experience as COO and CFO of Children’s, as well as her experience on manynon-profit boards will bringbrings a wide range of business and accounting experience to our board. Ms. Hyland also serves as a director at Cousins Properties, Inc., afor-profit real estate company, and additionally serves as a financial expert on the Cousins’ Audit Committee. Ms. Hyland’s experience servingservice as a financial expert on a public company audit committee will bringprovides a wealth of experience that she has brought to our Board and Audit Committee.
Mr. Johns brings experience in running every aspect of a large insurance company, including his current position as Chairman and former CEO as well as previous experience as a CEO, COO, CFO, and General Counsel of NYSE-listed public companies. Mr. Johns also serves as a director at Southern Company and is a member of its Audit Committee. Mr. Johns is also on the board of Regions Financial Corporation, where he serves onas Chair of the Risk Committee. He brings a wealth of diverse experience to our Board as the Lead Independent Director, a member of the Executive Committee, and as Chair of our Compensation, Nominating, and Governance and Risk Committees.
Mr. Loudermilk offers extensive knowledge of the real estate industry, as founder and CEO of a real estate management company in Atlanta. He also has over 25 years of experience working with a public company in various positions, including CEO, and over 10 years as an experienced senior executive. Mr. Loudermilk’s operational, financial and management expertise and expansive knowledge of a multi-store retail business are a significant contribution to the Board and Audit Committee.
8 Genuine Parts Company | 2018 Proxy Statement
Corporate Governance
Prior to his retirement in 2013, Mr. Nix served in key financial positions within the Company for over 20 years and as the Company’s CFO for 13 years, providing him with extensive knowledge of the Company’s business and financial position. While serving as CFO, he managed the Company’s legal, human resources, logistics, construction, real estate and technology functions. With this knowledge and experience, Mr. Nix provides the Board with essential information that enables a better understanding of the business and financial risks facing the Company. Mr. Nix also brings experience as a director of another NYSE-listed company.
Mr. Rollins offers experience as the CEO of a publicly traded NYSE-listed company, as well as specific expertise in the service industry. Mr. Rollins’ management, operational, and financial expertise are a significant contribution to the Board. Mr. Rollins also uses his experience and expertise in serving as the Board’s Lead Independent Director.
Mr. Wood’s professional career includes over 20 years in executive management positions with SunTrust Banks, Inc. and its various affiliates and 3940 years of experience in the areas of banking and investment management generally. Mr. Wood has served as a Director on the Board of Southern Company since 2012, currently serves on its audit committee, and serves as the lead independent director at Oxford Industries, Inc. Mr. Wood’s insights with respect to financial issues and the financial services industry, including the retail and business aspects of banking operations, together with his extensive experience on the boards of directors and committees of public and private companies, make him a valuable asset to our Board.
Communications with the Board
The Company’s Corporate Governance Guidelines provide for a process by which shareholders or other interested parties may communicate with the Board, a Board committee, the presiding independent director, thenon-management directors as a group, or individual directors. Shareholders or other interested parties who wish to communicate with the Board, a Board committee or any such other individual director or directors may do so by sending written communications addressed to the Board of Directors, a Board committee or such individual director or directors, c/o Corporate Secretary, Genuine Parts Company, 2999 Circle 75Wildwood Parkway, Atlanta, Georgia 30339. This information is also available on the Company’s website atwww.genpt.com. All communications will be compiled by the Secretary of the Company and forwarded to the members of the Board to whom the communication is directed or, if the communication is not directed to any particular member(s) of the Board, the communication shall be forwarded to all members of the Board of Directors.
Annual Performance Evaluations
The Board recognizes that a robust and constructive evaluation process is an essential part of good corporate governance and Board effectiveness. The Company’s Corporate Governance Guidelines provide that the Board of Directors shall conduct an annual evaluation to determine, among other matters, whether the Board and the Committees are functioning effectively. The Audit Committee and the Compensation, Nominating and Governance Committee are also required to each conduct an annual self-evaluation. The Compensation, Nominating and Governance Committee is responsible for overseeing this self-evaluation process. Through the performance evaluations, directors review the Board’s and Committees’ performances, including areas where the Board and Committees feel they function effectively, and importantly, areas where the Board and Committees believe they can improve.
The Board, Audit Committee, and Compensation, Nominating and Governance Committee each conducted an annual self-evaluation process during 2015.2017, and feedback from the process was reported to and discussed by the Board. Changes to processes and procedures of the Board and Committees based on such feedback were implemented and will be monitored in future evaluations.
Board Oversight of Risk
The Company’s Board of Directors recognizes that, although risk management is primarily the responsibility of the Company’s management team, the Board plays a critical role in the oversight of risk. The Board believes that an important part of its responsibilities is to assess the major risks the Company faces and review the Company’s options for monitoring and controlling these risks. The Board assumes responsibility for the Company’s overall risk assessment.
The Board as a whole examines specific business risks in its regular reviews of the individual business units and also on a Company-wide basis as part of its regular strategic reviews. In addition to periodic reports from two committees (discussed below) about risks, the Board receives presentations throughout the year from various business units that include discussion of significant risks specific to theirsuch business unit as necessary. Periodically, at Board meetings, management discusses matters of particular importance or concern, including any significant areas of risk requiring Board attention.
Genuine Parts Company | 2018 Proxy Statement 9
Corporate Governance
The Audit Committee has specific responsibility for oversight of risks associated with financial accounting and audits, as well as internal control over financial reporting. The Audit Committee monitors and reviews applicable enterprise risks identified as part of the Company’s enterprise risk management program, including the Company’s risk assessment and management policies, the Company’s major financial risk exposure and the steps taken by management to monitor and mitigate such exposure.
The Compensation, Nominating and Governance Committee oversees the risks relating to the Company’s compensation policies and practices as well as management development and leadership succession in the Company’s various business units.
The Compensation, Nominating and Governance Committee annually reviews with management the design and operation of the Company’s incentive compensation arrangements for all employees, including executive officers, for the purpose of determining whether such programs might encourage inappropriate risk-taking that could have a material adverse effect on the Company. In advance of such review, the Company identifies internal and external factors that comprise the Company’s primary business risks, and management compiles an inventory of incentive compensation arrangements, which are then summarized for the Compensation, Nominating and Governance Committee and reviewed for the purpose of identifying any aspects of such programs that might encourage behaviors that could exacerbate the identified business risks.
In conducting this assessment for 2015,2017, the Compensation, Nominating and Governance Committee considered the performance objectives and target levels used in connection with these incentive awards and also
the features of the Company’s compensation program that are designed to mitigate compensation-related risk. Based on such assessment, the Compensation, Nominating and Governance Committee concluded that the Company’s compensation policies and practices for its employees are not reasonably likely to have a material adverse effect on the Company.
Code of Conduct and Ethics
The Board of Directors has adopted a Code of Conduct and Ethics for Employees, Contract and/or Temporary Workers, Officers and Directors and a Code of Conduct and Ethics for Senior Financial Officers, both of which are available on the Company’s website atwww.genpt.com. These Codes of Conduct and Ethics comply with NYSE and Securities and Exchange Commission (the “SEC”) requirements, including procedures for the confidential, anonymous submission by employees or others of any complaints or concerns about the Company or its accounting, internal accounting controls or auditing matters. The Company will post any amendments to or waivers from the Code of Conduct and Ethics (to the extent applicable to the Company’s executive officers and directors) on its website.
Board Attendance
The Company’s Corporate Governance Guidelines provide that all directors are expected to attend all meetings of the Board and committees on which they serve and are also expected to attend the Annual Meeting of Shareholders. During 2015,2017, the Board of Directors held fourseven meetings. AllOne director missed one meeting; otherwise, all of the directors attended all of the Board of DirectorsDirector meetings. EachOther than one Compensation, Nominating, and Governance and Executive Committee member missing one meeting of each respective Committee, all committee members attended all of the directors attended 100% of thecommittee meetings of committees of the Board on which they served. All of the Company’s directors were in attendance atattended the Company’s 20152017 Annual Meeting.
Board Committees
The Board presently has three standing committees. Information regarding the functions of the Board’s committees, their present membership and the number of meetings held by each committee during 20152017 is set forth below:
Executive Committee. The Executive Committee is authorized, to the extent permitted by law, to act on behalf of the Board of Directors on all matters that may arise between regular meetings of the Board upon which the Board of Directors would be authorized to act. The current members of the Executive Committee are Thomas C. Gallagher (Chair), Paul D. Donahue, John D. Johns and Gary W. Rollins.Wendy B. Needham. During 2015,2017, this committee held five meetings.
10 Genuine Parts Company | 2018 Proxy Statement
Corporate Governance
Audit Committee. The Audit Committee’s main role is to assist the Board of Directors with oversight of (1) the integrity of the Company’s financial statements, (2) the Company’s compliance with legal and regulatory requirements, (3) the independent auditor’s qualifications and independence and (4) the performance of the Company’s internal audit function and independent auditors. As part of its duties, the Audit Committee assists in the oversight of (a) management’s assessment of, and reporting on, the effectiveness of internal control over financial reporting, (b) the independent auditor’s integrated audit, which includes expressing an opinion on the conformity of the Company’s audited financial statements with United States generally accepted accounting principles, (c) the independent auditor’s audit of the Company’s internal control over financial reporting which includes expressing an opinion on the effectiveness of the Company’s internal control over financial reporting and (d) the Company’s risk assessment and risk management. (See “Board Oversight of Risk” above.) The Audit Committee oversees the Company’s accounting and financial reporting process and has the authority and responsibility for the appointment, retention and oversight of the Company’s independent auditors, includingpre-approval of all audit andnon-audit services to be performed by the independent auditors. The Audit Committee annually reviews and approves the firm to be engaged as independent auditors for the Company for the next fiscal year, reviews with the independent auditors the plan and results of the audit engagement, reviews the scopeandscope and results of the Company’s procedures for internal auditing and monitors the design and maintenance of the Company’s internal accounting controls. The Audit Committee Report appears later in this proxy statement. A current copy of the written charter of the Audit Committee is available on the Company’s website atwww.genpt.com.
The current members of the Audit Committee are Wendy B. Needham (Chair), Mary B. Bullock, Elizabeth W. Camp, Gary P. Fayard, Donna W. Hyland, Robert C. Loudermilk, Jr. and E. Jenner Wood. All members of the Audit Committee are independent of the Company and management, as required by the New York Stock Exchange listing standards and SEC requirements. The Board has determined that all members of the Audit Committee meet the financial literacy requirements of the NYSE corporate governance listing standards. During 2015,2017, the Audit Committee held fiveseven meetings.
The Board of Directors has determined that Ms. Camp, Mr. Fayard, Ms. Hyland, Ms. Needham, and Mr. Wood meet the requirements adopted by the SEC for qualification as an “audit committee financial expert.” Ms. Camp currently oversees all aspects of business as President and CEO of a private investment and commercial real estate management company. She also has previous experience in accounting, tax, and legal matters as a tax attorney as well as extensive finance and accounting experience as a director for over 10 years of Synovus, serving as a current member and former chair of its Audit Committee. Mr. Fayard retired in 2014 as CFO of The Coca-Cola Company, where he held various financial leadership positions since joining the company in 1994. Previous to his role at Coca-Cola, he was a partner at a major public accounting firm. Mr. Fayard brings a wealth of financial, accounting, and auditing knowledge from his finance roles at Coca-Cola. Mr. Fayard also has served as Director on numerousfor-profit andnot-for-profit boards, giving him direct exposure to the finance and accounting of a wide variety of businesses and industries. Ms. Hyland currently acts as the President and CEO of Children’s Healthcare of Atlanta and oversees all functions of the hospital, including its finances. As former CFO of the organization, Ms. Hyland gained significant experience with the details of the finance and accounting areas of the business. Her professional experience as well as her directorship at Cousins Properties and membership of Cousins’ Audit Committee, as well as memberships ofon manynon-profit boards exposed her to a broad spectrum of finance and accounting issues in a variety of businesses and industries. Ms. Needham was formerly Managing Director, Global Automotive Research for Credit Suisse First Boston from August 2000 to June 2003. Prior to that, Ms. Needham was a Principal, Automotive Research for Donaldson, Lufkin & Jenrette for six years. In both of these positions, Ms. Needham actively reviewed financial statements and prepared various financial analyses and evaluations of such financial statements and related business operations. Mr. Wood isrecently retired as Corporate Executive Vice President of SunTrust Banks, Inc. and prior to that, he held the position of Chairman, President and Chief Executive Officer of the Atlanta Division of SunTrust Bank. Mr. Wood has direct insight and extensive experience with respect to financial issues and the financial services industry, including as it relates to the retail and business aspects of banking operations.industry.
Compensation, Nominating and Governance Committee. The Compensation, Nominating and Governance Committee is responsible for (1) determining and evaluating the compensation of the Chief Executive Officer and other executive officers and key employees and approving and monitoring our executive compensation plans, policies, and programs, (2) identifying and evaluating potential nominees for election to the Board and recommending candidates for consideration by the Board and shareholders, (3) developing and recommending to
Genuine Parts Company | 2018 Proxy Statement 11
Corporate Governance
the Board a set of Corporate Governance Guidelines, as well as periodically reevaluating those Corporate Governance Guidelines, and (4) overseeing the evaluation of the Board of Directors and management. The Committee also periodically reviews and evaluates the risk involved in the Company’s compensation policies and practices and the relationship of such policies and practices to the Company’s overall risk and management of that risk. The Committee has and may exercise the authority of the Board of Directors as specified by the Board and to the extent permitted under the Georgia Business Corporation Code, and the Committee has the authority to delegate its duties and responsibilities to subcommittees as it deems necessary and advisable. A brief description of the Committee’s policy regarding director candidates nominated by shareholders appears in “Director Nominating Process” above, and a full version can be found in the Company’sBy-Laws.
For 2015,2017, the Committee independently retained a compensation consultant, Meridian Compensation Partners, LLC, to assist it in its review of and deliberations regarding executive compensation practices, including the competitiveness of pay levels, design issues, market trends and technical considerations.
During the year, Meridian assisted the Committee with the development of competitive market data for executives and a related assessment of the Company’s executive compensation levels, a risk assessment of the Company’s incentive compensation, and also provided legislative and regulatory updates and guidance regarding reporting of executive compensation under the SEC’s proxy disclosure rules. OurBoth our Chairman and our Chief Executive
Officer, with input from our Senior Vice President — President—Human Resources and Meridian, recommended to the Committee base salary, target bonus levels, actual bonus payouts and long-term incentive grants for our senior executives. The Committee considered, discussed, modified as appropriate, and took action on such proposals. The Committee has agreed that Meridian will play a similar role for 2016.2018.
The Compensation, Nominating and Governance Committee annually considers whether the work of any compensation consultant raised any conflict of interest. For 2015,2017, the Committee considered various factors, including the six factors mandated by SEC rules, and determined that with respect to executive and director compensation-related matters, no conflict of interest was raised by the work of Meridian. The Committee also considers the six independence factors mandated by SEC rules before engaging any other compensation advisers.
The current members of the Compensation, Nominating and Governance Committee are John D. Johns (Chair), P. Russell Hardin, John R. Holder, Gary W. Rollins and E. Jenner Wood. All members of the Compensation, Nominating and Governance Committee are independent of the Company and management, as required by the NYSE listing standards and the SEC. During 2015,2017, the Compensation, Nominating and Governance Committee held fourfive meetings. A current copy of the written charter of the Compensation, Nominating and Governance Committee is available on the Company’s website atwww.genpt.com.www.genpt.com.
12 Genuine Parts Company | 2018 Proxy Statement
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of February 16, 2016,13, 2018, as to all persons or groups known to the Company to be beneficial owners of more than five percent of the outstanding Common Stock of the Company.
Title of Class | Name and Address of Beneficial Owner | Shares Beneficially Owned | Percent of Class | |||||||
Common Stock, $1.00 par value | The Vanguard Group, Inc. 100 Vanguard Blvd. Malvern, PA 19355 | 13,188,093 | (1) | 8.7 | % | |||||
Common Stock, $1.00 par value | Blackrock, Inc. 55 East 52nd Street New York, NY 10055 | 13,171,325 | (2) | 8.7 | % | |||||
Common Stock, $1.00 par value | State Street Corporation State Street Financial Center One Lincoln Street Boston, MA 02111 | 8,399,273 | (3) | 5.6 | % |
Title of Class | Name and Address of Beneficial Owner | Shares Beneficially Owned | Percent of Class | ||||||||||||||
Common Stock, $1.00 par value | Blackrock, Inc. 55 East 52nd Street New York, NY 10055 | 15,945,256 (1) | 10.9% | ||||||||||||||
Common Stock, $1.00 par value | The Vanguard Group, Inc. 100 Vanguard Blvd. Malvern, PA 19355 | 15,805,295 (2) | 10.8% | ||||||||||||||
Common Stock, $1.00 par value | State Street Corporation State Street Financial Center One Lincoln Street Boston, MA 02111 | 8,670,879 (3) | 5.9% |
(1) | This information is based upon information included in a Schedule 13G filed on February |
(2) | This information is based upon information included in a Schedule 13G filed on February 9, 2018 by The Vanguard Group, Inc. The Vanguard Group, Inc. reports sole voting power with respect to |
(3) | This information is based upon information included in a Schedule 13G filed on February |
Genuine Parts Company | 2018 Proxy Statement 13
SECURITY OWNERSHIP OF MANAGEMENT
Based on information provided to the Company by the named persons, set forth in the table below is information regarding the beneficial ownership of Common Stock of the Company held by the Company’s directors and nominees for director, the named executive officers (as defined in “Executive Compensation” below) and all directors, nominees for director and executive officers of the Company as a group as of February 16, 2016:13, 2018:
Name | Shares of Common Stock Beneficially Owned(1) | Percentage of Common Stock Outstanding | ||||||
Timothy P. Breen | 21,068 | (2) | * | |||||
Mary B. Bullock | 22,702 | (3) | * | |||||
Elizabeth W. Camp | 500 | * | ||||||
Paul D. Donahue | 112,526 | (4) | * | |||||
Jean Douville | 5,534 | (5) | * | |||||
Gary P. Fayard | 5,581 | (6) | * | |||||
Thomas C. Gallagher | 814,922 | (7) | * | |||||
John R. Holder | 15,216 | (8) | * | |||||
Donna W. Hyland | 182 | (9) | * | |||||
John D. Johns | 33,305 | (10) | * | |||||
Robin C. Loudermilk | 27,646 | (11) | * | |||||
Wendy B. Needham | 17,641 | (12) | * | |||||
James R. Neill | 3,125,419 | (13) | 2.0 | % | ||||
Jerry W. Nix | 172,603 | (14) | * | |||||
Gary W. Rollins | 50,765 | (15) | * | |||||
Carol B. Yancey | 3,169,422 | (16) | 2.1 | % | ||||
E. Jenner Wood | 5,243 | (17) | * | |||||
Directors and Executive Officers as a Group (17 persons) | 4,494,812 | (18) | 3.0 | % |
Name
| Shares of Common Stock Beneficially Owned (1)
| Percentage of Common Stock Outstanding
| |||||||||||||
Timothy P. Breen | 33,472 | (2) | * | ||||||||||||
Elizabeth W. Camp | 4,642 | (3) | * | ||||||||||||
Paul D. Donahue | 142,655 | (4) | * | ||||||||||||
Gary P. Fayard | 11,729 | (5) | * | ||||||||||||
Thomas C. Gallagher | 845,679 | (6) | * | ||||||||||||
P. Russell Hardin | 480 | (7) | * | ||||||||||||
John R. Holder | 20,273 | (8) | * | ||||||||||||
Donna W. Hyland | 5,857 | (9) | * | ||||||||||||
John D. Johns | 39,418 | (10) | * | ||||||||||||
Robin C. Loudermilk | 33,533 | (11) | * | ||||||||||||
Lee A. Maher | 76,294 | (12) | * | ||||||||||||
Wendy B. Needham | 18,098 | (13) | * | ||||||||||||
James R. Neill | 3,127,925 | (14) | 2.1 | % | |||||||||||
Jerry W. Nix | 162,288 | (15) | * | ||||||||||||
Carol B. Yancey | 3,185,160 | (16) | 2.2 | % | |||||||||||
E. Jenner Wood | 10,265 | (17) | * | ||||||||||||
Directors and Executive Officers as a Group (16 persons) | 4,612,305 | (18) | 3.1 | % |
* | Less than 1% |
(1) | Information relating to the beneficial ownership of Common Stock by directors and executive officers is based upon information furnished by each such individual using “beneficial ownership” concepts set forth in rules promulgated by the SEC. Except as indicated in other footnotes to this table, directors and executive officers possessed sole voting and investment power with respect to all shares set forth by their names. The table includes, in some instances, shares in which members of a director’s or executive officer’s immediate family or trusts or foundations established by them have a beneficial interest and as to which the director or executive officer disclaims beneficial ownership. |
(2) | Includes |
(3) | Includes 4,142 restricted stock units that each represent a right to receive one share of Common Stock on the five-year anniversary of their original grant date, subject to earlier settlement in certain events, including a termination of service as a director by reason of retirement. |
(4) | Includes 72,632 shares subject to stock options and stock appreciation rights that are exercisable currently or within 60 days after February 13, 2018. Does not include 29,301 restricted stock units that each represent a right to receive one share of Common Stock on the five-year anniversary of their original grant date, subject to earlier settlement in certain events outside the control of Mr. Donahue. |
(5) | Includes (i) |
Includes |
Includes |
Includes (i) |
14 Genuine Parts Company | 2018 Proxy Statement
Security Ownership of Management
Includes (i) |
(10) | Includes (i) |
(11) | Includes (i) |
(12) | Includes 26,225 shares subject to stock options and stock appreciation rights that are exercisable currently or within 60 days after February 13, 2018. Does not include 5,886 restricted stock units that each represent a right to receive one share of Common Stock on the five-year anniversary of their original grant date, subject to earlier settlement in certain events outside the control of Mr. Maher. |
(13) | Includes (i) |
Includes (i) |
(15) | Includes (i) |
(16) | Includes (i) |
(17) | Includes (i) |
(18) | Includes (i) |
Genuine Parts Company | 2018 Proxy Statement 15
COMPENSATION DISCUSSION AND ANALYSIS
In this section, an overview and analysis is provided of theour executive compensation programprograms and policies, the material compensation decisions we have made under those programs and policies, and the material factors that we considered in making those decisions. Later in this proxy statement under the heading “Additional Information Regarding Executive Compensation” you will find a series of tables containing specific information about the compensation earned or paid in 20152017 to the following individuals, whomwho are referred to as our named executive officers:
Thomas C. Gallagher, Chairman of the Board, who retired as an executive officer and Chief Executive Officer
Paul D. Donahue, President of the Company
Carol B. Yancey, Executive Vice President & Chief Financial Officer
Timothy P. Breen, President & Chief Executive Officer — Motion Industries
The discussion below is intended to explain the detailed information provided in those tables and put that information into context within the Company’s overall compensation program.
During 2015,2017, the Compensation, Nominating and Governance Committee actions and ourpay-for-performance program operated such that compensation actually earned by executives reflected the performance of the Company and grants made were below market levels.Company. Highlights for 20152017 are as follows:
Performance
Our total shareholder return for 20152017 was -17%3.1%. However, our total shareholder return for the five year period ending December 31, 2015 was 14.1%, which has increasedThis served to increase both long-term shareholder wealth and the value of equity awards previously granted to our executives.
Revenues were down 0.4%up 4.1% and were 96%99.8% of our target;pre-tax earnings were up 0.5%down 1.3% and were 97%95.2% of our target.
Plan Payouts
As a result of the above and other performance results, 20152017 bonus payouts and earning of performance-based restricted stock units were generally below target.
20152017 annual incentive awards for Messrs. Gallagher, Donahue and Neill and Ms. Yancey were 94%85% of the total target amounts,amount, based on the Company’s 2015 2017pre-tax profit of 1,123,681,000,$1,059,971,000, or 97% achievement95% of the target performance level.
Mr. Donahue’s 2015Breen’s 2017 annual incentive award was 94%135% of total target. This award was partly earned based on the Company’s pre-tax profit performance, which was 97% of target. Mr. Donahue’s annual incentive award is also based on the Automotive Group’s performance. The Automotive Group’s pre-tax profit was 98% of target.
Mr. Breen’s 2015 annual incentive award was 41% of total target. This award was partly earned based on the Industrial Products Group’spre-tax profit performance, which was at 86%104% of target. Mr. Breen’s annual incentive award is also based on the Industrial Products Group’s sales performance. The Industrial Products Group’s sales performance, which was 93%103% of target. Additional goals pertaining to Mr. Breen’s performance in 2015 compared to 2014 infor the area of accounts receivable was met; however, goalsIndustrial Products Group pertaining to inventory turnover and expense controlworking capital were not met.
16 Genuine Parts Company | 2018 Proxy Statement
Compensation Discussion and Analysis
20152017 Pay Opportunities
Any 20152017 base salary increases higher than3-4% and any increases in 20152017 target bonus percentage were made in order to recognize promotions into new roles or additional responsibilities.
Long-term incentive awards (stock appreciation rights, or SARs, and performance-based restricted stock units, or PRSUs) were granted to our executive officers in 20152017 at generally similar levels relative to prior year grants, but still below thesize-adjusted 50th percentile of the market data.
PRSU payouts were dependent on achievement of corporate performance goals relating topre-tax profit for 2015.
SARs deliver value to executive officers only to the extent our stock price increases after the grant date.
In addition, we believe ourBest Practices
Our compensation programs reflect a “best practices” approach to pay and governance:
The Company’s “double trigger” change-in-control severance arrangements with the named executive officers do not provide for any excise tax gross ups.
The Company hasWe have no employment contracts or guaranteed severance arrangements with named executive officers other than our “double-trigger” change in control agreements.
BeginningOurchange-in-control severance arrangements with 2015 grants, allthe named executive officers do not provide for any excise tax gross ups.
We target pay opportunities for base salary, target bonus and long-term incentives as a group at or below thesize-adjusted 50th percentile of the market data.
About 78%73% of our CEO’s compensation is performance-based and performance-based compensation represents between 61% and 71%70% of compensation for each of the other named executive officers.
Our stock ownership guidelines result in our executives being long-term holders of our stock.
Our Annual Incentive Plan contains a clawback provision.
We have no taxgross-ups for perquisites or benefits other than relocation.
We have neverre-priced stock options or stock appreciation rights.
We pay dividend equivalents on performance-based restricted stock units only to the extent such units are earned through performance.
Our insider trading policy prohibits transactions in publicly traded options and other hedging transactions with respect to Company common stock.
Consideration of Last Year’s Advisory Shareholder Vote on Executive Compensation
At the 20152017 Annual Meeting of Shareholders, approximately 97%96% of the shares present and entitled to vote were cast in support of the compensation of the Company’s executive officers, as discussed and disclosed in the 20152017 Proxy Statement.
In light of the strong shareholder support of the compensation paid to our executive officers evidenced by the results of this advisory vote, the Board and the Committee did not make any specific changes to our executive compensation program for 2016 in response to the vote. However, in continuing our “best practices” approach to executive compensation, beginning with 2015 grants, all long-term incentives are subject to “double trigger” vesting upon a change in control.2017. Future advisory votes on executive compensation will serve as an additional tool to guide the Board and the Committee in evaluating the alignment of the Company’s executive compensation program with the interests of the Company and its shareholders.
At the 2011 Annual Meeting of Shareholders, our shareholders expressed a preference that advisory votes on executive compensation occur once every year. Consistent with this preference, the Board implemented an annual advisory vote on executive compensation until the next required vote on the frequency of shareholder votes on the compensation of executive officers, which is scheduled to occur at the 2017 Annual Meeting.
Genuine Parts Company | 2018 Proxy Statement 17
Compensation Discussion and Analysis
Compensation Philosophy and Objectives
Our overall goal in compensating executive officers is to attract, retain and motivate key executives of superior ability who are critical to our future success. We believe that short-term and long-term incentive compensation opportunities provided to executive officers should be directly aligned with our performance, and our compensation is structured to ensure that a significant portion of executives’ compensation opportunities is directly related to achievement of financial and operational goals and other factors that impact shareholder value.
Our compensation decisions with respect to executive officer salaries, annual incentives, and long-term incentive compensation opportunities are influenced by (a) the executive’s level of responsibility and function within the Company, (b) the overall performance and profitability of the Company, (c) our assessment of the competitive marketplace, including other peer companies, and (d) the economic environment. Our philosophy is to focus on total direct compensation opportunities through a mix of base salary, annual cash bonus and long-term incentives, including stock-based awards.
We also believe that the best way to directly align the interests of our executives with the interests of our shareholders is to make sure that our executives acquire and retain a significant level of stock ownership throughout their tenure with the Company. Our compensation program pursues this objective in two ways: through our equity-based long-term incentive awards and our stock ownership guidelines for our senior executives, as described in more detail below.
Overview of Executive Compensation Components
The Company’s executive compensation program consists of several compensation elements, as described in the table below.
Pay Element | What the Pay Element is Designed to Reward | Objective of the Pay Element | Why We Choose to Pay Each Element | |||
Base Salary | Core competence in the executive role relative to skills, experience and contributions to the Company | Provide fixed compensation based on competitive market practice | Provide a standard element of competitive market pay | |||
Annual Cash Incentive | Contributions toward the Company’s achievement of specifiedpre-tax profit goals, as well as achievement of revenue and asset management goals for certain NEOs | • Provide focus on meeting critical annual goals that lead to our long-term success
• Provide annual performance-based cash incentive compensation | Motivate achievement of critical annual performance metrics |
18 Genuine Parts Company | 2018 Proxy Statement
Compensation Discussion and Analysis
Pay Element | What the Pay Element is Designed to Reward | Objective of the Pay Element | Why We Choose to Pay Each Element | |||
Long-Term Incentives | Stock Appreciation Rights (SARs):
• Sustained stock price appreciation
• Continued employment with the Company during a three-year vesting period | The combination of SARs and PRSUs provides a blended long-term focus on:
• Sustained stock price performance
• Achievement ofpre-tax profitability targets
• Executive ownership of our stock
• Executive retention in a challenging business environment and competitive labor market | Align executives’ interests with those of shareholders and enhance their retention | |||
Performance Restricted Stock Units (PRSUs):
• Sustainedpre-tax profitability (determines the number of PRSUs that are earned)
• Focus on the Company’s stock price performance
• Continued employment with the Company during a four-year vesting period (five years including the performance year) |
|
|
| ||||
Retirement Benefits Plans are described in detail later in this proxy statement under the heading “Additional Information Regarding Executive Compensation” | Executives are eligible to participate in employee benefit plans available to all
• Tax Deferred Savings Plan: Rewards saving for retirement
• Supplemental Retirement Plan (SRP): Rewards executives for continued employment in the same manner as other employees | • Tax Deferred Savings Plan: Provide a voluntarytax-deferred retirement savings vehicle for our executive officers
• SRP: Make total retirement benefits for our executive officers commensurate with those available to our other employees as a percentage of pay | Treat executives in the same manner as other employees by making them “whole” on amounts they would have been entitled to receive under retirement plans had the plans not been limited by the IRS Code | |||
Welfare Benefits | • Executives participate in medical, health, life insurance and disability plans generally available to our employees
• Continuation of welfare benefits may occur as part of severance upon certain terminations of employment | Provide health and welfare benefits to our employees that are competitive within the marketplace | These benefits are part of our broad-based total compensation program |
Genuine Parts Company | 2018 Proxy Statement 19
Compensation Discussion and Analysis
Pay Element | What the Pay Element is Designed to Reward | Objective of the Pay Element | Why We Choose to Pay Each Element | |||
Additional Benefits and Perquisites | • CEO
• CEO and Chairman only: Selected club memberships
Neither item has a tax reimbursement provision
| Corporate aircraft use: Accommodate security,
Club memberships: Facilitate the | Accomplish the specific objectives noted at left | |||
Change in Control and Termination Benefits |
What it rewards: Continued employment in the event of an actual or threatened change in control | Retain executives and provide continuity of management in the event of an actual or threatened change in control | Maintain a stable executive organization in the face of the uncertainty of an actual or threatened change in control |
The use of these programs enables us to reinforce our pay for performance philosophy, as well as strengthen our ability to attract and retain highly qualified executives. We believe that this combination of programs provides an appropriate mix of fixed and variable pay, balances short-term operational performance with long-term shareholder value and encourages executive recruitment and retention.
Determination of Appropriate Pay Levels
Pay Philosophy and Competitive Standing
In general, we target total compensation opportunities for our executive officers at or under thesize-adjusted 50th percentile of the market data, including salary, target annual bonus, and long-term incentive opportunities. We provide somewhat conservative base salaries, higher-than-market target bonus opportunities andlower-than-50th percentile long-term incentives.
Determinations of one element of pay tend not to affect determinations of other pay elements.
We also design our incentive plans to pay more or less than the target amount when performance is above or below target performance levels. Thus, our plans are designed to result in payouts that are commensurate with the Company’s performance for that year or period.
For 2015,2017, with the assistance of the Committee’s compensation consultant, Meridian Compensation Partners, LLC, we reviewed and analyzed competitive market data to be used as background for 20152017 pay decisions and to obtain a general understanding of current compensation practices. This data was referenced when targeting the positioning for compensation discussed above. Data sources included public company proxy statements, broad-based, published compensation surveys and a private total compensation database maintained by Aon Hewitt.
20 Genuine Parts Company | 2018 Proxy Statement
Compensation Discussion and Analysis
We compared compensation opportunities for our named executive officers with pay opportunities available to executive officers in comparable positions at similar companies (our “Comparison Group”). During 20152017 the Comparison Group included companies from industry segments in which we compete: automotive parts, industrial parts, specialty retail and office products. The Comparison Group companies used in 20152017 are shown below. While the companies are either larger or smaller than us, Meridian used various statistical techniques tosize-adjust the data to our revenue size. The list of companies below is reevaluated annually to take into account changes in our own operations, our size and our industry. Comparedindustry, but the only change made for 2017 was the removal of Federal Mogul due to the prior year, one company was deleted (OfficeMax Inc.).its acquisition by Icahn Enterprises.
Advance Auto Parts, Inc. Applied Industrial Technologies, Inc. Arrow Electronics, Inc. Autozone, Inc. Avnet, Inc. Eaton Corporation Plc.
Johnson Controls Kaman Corp. LKQ Corp. MSC Industrial Direct Co., Inc. | O’Reilly Automotive, Inc. Office Depot, Inc. Parker-Hannifin Corporation Staples, Inc. Tech Data Corp. Tenneco Inc. Tractor Supply Company Essendant Inc. (formerly United Wesco International W. W. Grainger, Inc. |
20152017 Base Salary
Our base salary levels reflect a combination of factors, including the pay posture discussed above, the executive’s experience and tenure, our overall annual budget for both pay increases andpre-tax profit, the executive’s individual performance and changes in responsibility. We review salary levels annually to recognize these factors.
The following base pay increases for 20152017 were effective on April 1, 2015; however, Mr. Breen’s base pay increase was effective on January 1, 2015. They were as follows:2017:
Executive |
Salary Increase | Comments | ||||
Gallagher(1) | % | Role change from Executive Chairman toNon-Executive Chairman on July 1, 2017 | ||||
Donahue | % | |||||
Yancey | % | Promoted to Chief Financial Officer in 2013; pay continues below market level | ||||
Breen | % | |||||
Maher | 5.0 | % | Pay continues below market level | |||
Neill | % |
(1) | Mr. Gallagher’s base salary and bonus opportunity werepro-rated based on his June 30, 2017 retirement date. |
20152017 Annual Incentive Plan
Our Annual Incentive Planannual incentive plan (the “Annual Incentive Plan”) provides our executive officers with an opportunity to earn annual cash bonuses based on our achievement of certainpre-established performance goals. The Compensation, Nominating and Governance Committee sets target bonus opportunities for each named executive officer to be earned based on achievement of such goals. Similar to the process for setting base salaries, we consider a combination of factors in establishing the annual target bonus opportunities for our named executive officers. Target bonus opportunities for 2017 were set as a percentage of each named executive officer’s base salary, as follows: Mr. Gallagher, 192% (bonuspro-rated based on June 30, 2017 retirement date); Mr. Donahue, 130%; Ms. Yancey, 110%; Mr. Breen, 100%; Mr. Maher, 100% and Mr. Neill, 85%.
For 2017, we utilized generally the same performance metrics as in 2016, with an emphasis onpre-tax profit, together with working capital improvements and, with respect to our named executive officers with specific operational responsibilities, sales and inventory turnover metrics. We set the profit goals for 20152017 bonus
Genuine Parts Company | 2018 Proxy Statement 21
Compensation Discussion and Analysis
opportunities at levels that are intended to be challenging yet achievable, and reflect better than average growth within our competitive industry. Goals are set for pre-tax profit, along with revenue, expense control and asset management for certain executives with specific operational responsibilities.
The Compensation, Nominating and Governance Committee sets target bonus opportunities for each named executive officer to be earned based on achievement of such goals. Target bonus opportunities for 2015 were set as a percentage of each named executive officer’s base salary, as follows: Mr. Gallagher, 192%; Mr. Donahue, 115%; Ms. Yancey, 105%; Mr. Breen, 100% and Mr. Neill, 85%.
The performance goals on which each executive officer’s 20152017 bonus opportunity is determined variesvary depending on the individual’s role in the company.Company. Performance criteria and relative weights for 20152017 are shown below for each executive. The combination of goals for each executive is intended to have a strong correlation with shareholder value. Goals for Corporate, Automotive and Industrial Products are each set based upon (i) prior year performance by store, branch, or distribution center; (ii) the overall economic outlook of the region served by a particular store, branch, or distribution center; and (iii) specific market conditions.
Performance Goal | 2015 Weight of Goal by Executive | |||||||||||
Gallagher Yancey Neill | Donahue(1) | Breen(2) | ||||||||||
Corporate Pre-tax profit | 100 | % | 50 | % | ||||||||
Automotive | ||||||||||||
Pre-tax profit | 50 | % | ||||||||||
Industrial Products | ||||||||||||
Pre-tax profit | 45 | % | ||||||||||
Sales | 25 | % | ||||||||||
Inventory growth vs. sales growth | 10 | % | ||||||||||
Accounts receivable growth vs. sales growth | 10 | % | ||||||||||
Expense control vs. gross profit growth | 10 | % | ||||||||||
|
|
|
|
|
| |||||||
Total | 100 | % | 100 | % | 100 | % | ||||||
|
|
|
|
|
|
Performance Goal
| 2017 Weight of Goal by Executive | |||||||||||
Gallagher Yancey Neill(1)
| Breen(2)
| Maher(3)
| ||||||||||
Pre-tax profit | 80 | % | 50 | % | 50% | |||||||
Sales | 30 | % | 30% | |||||||||
Working capital improvement | 20 | % | 10 | % | 10% | |||||||
Inventory turnover | 10 | % | 10% | |||||||||
Total | 100 | % | 100 | % | 100% |
(1) | For |
(2) | For Mr. Breen, the performance goals related to the Industrial Products Group, which consists |
(3) | For Mr. Maher, the performance goals related to the U.S. Automotive Parts Group. |
The ranges of bonus payout possibilities for the variouspre-tax profit goals and the U.S. Automotive and Industrial Products sales and other goals are shown below. Straight-line interpolation is used between data points. The 20152017 Corporatepre-tax profit goal was $1,157,861,000.$1,113,583,000.
Pre-Tax Profit (Corporate, Automotive, or Industrial Products) as a % of Quota | % of Target Bonus Earned | Mr. Breen: Industrial Products Sales as a % of Quota | % of Target Bonus Earned | |||||||||
Pre-Tax Profit (Corporate, U.S. Automotive, or Industrial Products) as a % of Quota
| % of Target Bonus Earned
| Sales as a % of Quota
| % of Target Bonus Earned
| |||||||||
Below 75% | —% | Below 95% | —% | —% | Below 95% | —% | ||||||
75% | 45% | 95% | 15% | 45% | 95% | 15% | ||||||
100% | 100% | 100% | 100% | 100% | 100% | 100% | ||||||
110% or above | 175% | 105% or above | 150% | 175% | 105% or above | 150% |
For Mr. Breen, bonus opportunity was provided for attainment of inventory accounts receivable,turnover, and expense control goals,working capital improvement, with a goal of various levels of improvement versus the prior year. Bonus opportunity was provided from 50% of target to 150% of target based on the achievement of the various levels of improvement.
For 2015,Mr. Maher, bonus opportunity was provided for attainment of inventory turnover and working capital improvement goals, with a goal of various levels of improvement versus the prior year. Bonus opportunity for inventory turnover was provided from 15% of target to 150% of target based on the achievement of the various levels of improvement, and for working capital improvement goals, 50% of target to 150% of target based on the achievement of improvement.
For 2017, the Company’spre-tax profit was $1,123,681,000$1,059,971,000, representing 97%95% of the target level set for executive officer incentive bonuses, and working capital improvement performance was improved 1%, representing 68% of the target level set for the executive officer incentive bonuses resulting in bonus payments equal to 94%85% of the total target bonus opportunity for Mr. Gallagher, Mr. Donahue, Ms. Yancey and Mr. Neill.
Mr. Donahue’s program produced a bonus payment equal to 94% of target based on the Company’s pre-tax profit performance of 97% of target and on Automotive Group pre-tax profit performance of 98% of target.
Mr. Breen’s program produced a bonus payment equal to 41%135% of target earned based on Industrial Products Group performance. That Group’spre-tax profit was 86%104% of target, while its sales performance was 93%103% of target. Additional goals pertaining to accounts receivableinventory turnover and working capital improvement were met; however, goalsexceeded.
Mr. Maher’s program produced a bonus payment equal to 56% of target earned based on U.S. Automotive Parts Group performance. That Group’spre-tax profit was 80% of target, while its sales performance was 96% of
22 Genuine Parts Company | 2018 Proxy Statement
Compensation Discussion and Analysis
target. The additional goal pertaining to inventory and expense control were not met.turnover was partially met while working capital improvement was exceeded.
In developing the payout figures, formulas were applied strictly. The Committee did not exercise discretion to increase or decrease 20152017 bonus payments for the named executive officers.
For additional information about the Annual Incentive Plan, please refer to the “Grants of Plan-Based Awards” table, which shows the threshold, target and maximum bonus amounts payable under the plan for 2015,2017, and the Summary Compensation Table, which shows the actual amount of bonuses paid under the plan to our named executive officers for 2015.2017.
20152017 Long-Term Incentives
During 2015,2017, the Compensation, Nominating and Governance Committee granted long-term equity-based incentive compensation to our executive officers in the form of Stock Appreciation Rights (“SARs”) and Performance Restricted Stock Units (“PRSUs”). These grants align executive performance and achievement with shareholder interests.
SARs: Each SAR represents the right to receive upon exercise an amount, payable in shares of common stock, equal to the excess, if any, of the fair market value of our common stock on the date of exercise over the base value of the grant. The SARs were granted with a base value equal to the closing stock price on the date of the grant (April 1, 2015)3, 2017). The SARs vest in equal annual installments on the first three anniversaries following the grant date and have aten-year exercise period.
PRSUs: The PRSUs represent the right to earn and receive a number of shares of our common stock in the future, based on the level of the Company’s 2015 2017pre-tax profit performance as shown in the table below.
Percent of Pre-Tax Profit Goal Achieved | % of Target Award Earned | % of Target Award Earned
| ||||||
110% or higher | 150 | % | 150 | % | ||||
100% | 100 | % | 100 | % | ||||
90% | 50 | % | 50 | % | ||||
Less than 90% | — | % | — | % |
To the extent the PRSUs are earned, they are subject to an additional four-year vesting schedule (e.g., for PRSUs granted in 2015,2017, shares of restricted stock will be earned in early 20162018 based on 20152017 performance and will vest on December 1, 2019)2021). Dividends declared after the restricted shares are earned are accrued and converted into additional shares of stock at the end of the vesting period.
The sizes of grants to individual named executive officers were subjectively determined by considering the following factors:
Competitive market data, defined by the competitive award levels summarized in the annual executive compensation study;
The officer’s responsibility level;
The officer’s specific function within the overall organizational structure;
The Company’s profitability, including consideration of the compensation cost associated with the awards; and
The number and amount of awards currently held by the executive officer (we continue to review this as part of our administration of stock ownership guidelines discussed below).
Comparison to market data suggests that the value of the 20152017 SARs and PRSUs awarded to our named executive officers was less than a 50th percentile grant relative to our Comparison Group. Grants in 20152017 were weighted approximately 25% SARs and 75% PRSUs.
Mr. Gallagher,Donahue, Ms. Yancey and Mr. Neill earned 85%76% of their PRSUs in 2015,2017, based on the Company’s actual 2015 2017pre-tax profit of $1,123,681,000,$1,059,971,000, which represented 97%95% of the Company’spre-tax profit goal of $1,157,861,000.
Genuine Parts Company | 2018 Proxy Statement 23
Compensation Discussion and Analysis
$1,113,583,000. Mr. DonahueBreen earned 87%118% of his PRSUs in 2015,2017, based on a 98% level of104% achievement of the 2015 2017pre-tax profit goalsgoal for the Automotive division and 97% for the total Company.Industrial Products Group. Mr. BreenMaher earned 0% of his PRSUs in 2015,2017, based on an 86%a 80% level of achievement of the 2015 2017pre-tax profit goalgoals for the Industrial ProductsAutomotive Parts Group. Mr. Gallagher did not receive a long term incentive award in 2017 due to his retirement as an employee of the Company.
Please refer to the “Grants of Plan-Based Awards” and “Outstanding Equity Awards at FiscalYear-End” tables and the related footnotes for additional information about long-term stock awards.
Change in Control Arrangements
The Company believes that severanceSeverance protections, particularly in the context of a change in control transaction, can play a valuable role in attracting and retaining key executive officers. Accordingly, the Company has entered into change in control agreements with each of the named executive officers. Information regarding these agreements and the benefits they provide is included in the Post Termination Payments and Benefits section of this Proxy Statement.
The Compensation, Nominating and Governance Committee evaluates the level of severance benefits to each such officer on acase-by-case basis, and in general, we consider these severance protections an important part of our executives’ compensation and consistent with competitive practices.
We believe that theThe potential occurrence of a change in control transaction would create uncertainty regarding the continued employment of our executive officers. This uncertainty results from the fact that many change in control transactions result in significant organizational changes, particularly at the senior executive level. In order to encourage our senior executive officers to remain employed with the Company during an important time when their prospects for continued employment are often uncertain, we provide our executive officers with severance benefits if the executive’s employment is terminated by the Company without cause or by the executive for “good reason” in connection with a change in control. Because we believe that a termination by the executive for good reason may be conceptually the same as a termination by the Company without cause, and because we believe that in the context of a change in control, potential acquirers would otherwise have an incentive to constructively terminate the executive’s employment to avoid paying severance, we believe it is appropriate to provide severance benefits in these circumstances.
Thechange-in-control agreements with our executives were amended in 2014 to eliminate all taxgross-ups with respect to excise taxes under Internal Revenue Code Section 4999 that may be due on such payments. In addition, the Company has in the pastgrossed-up additional SRP amounts for FICA taxes in the event of a change in control. The SRP was amended and restated January 1, 2009 to provide that no employees may commence participation in the plan on or after that date. As such, there are no furthergross-ups other than to those individuals participating in the SRP prior to the January 1, 2009 freezing of the plan.
Factors Considered in Decisions to Materially Increase or Decrease Compensation
Market data, individual performance, retention needs and internal pay equity have been the primary factors considered in decisions to adjust compensation materially. We do not target any particular weight for base salary, annual bonus and long-term incentive as a percent of total direct compensation. We tend to follow market practice in allocating between the various forms of compensation, but with greater emphasis on performance-based incentive bonus opportunities because doing so results in pay opportunity that is heavily performance-based, as shown below, and results in compensation that is directly aligned with Company performance, is market-competitive and allows us to attract and retain competent executives.
2015 Performance-Based24 Genuine Parts Company | 2018 Proxy Statement
Compensation Discussion and Analysis
2017 Variable versus Fixed Compensation:
The following table shows the allocation of each Executive’s base salary and short-term and long-term incentive compensation opportunities between fixed and performance-based compensation (at the target levels).
Name | Fixed Compensation | Performance-Based Compensation | Fixed Compensation
| Variable Compensation
| ||||||||
Gallagher | 22% | 78% | 34 | % | 66 | % | ||||||
Donahue | 29% | 71% | 27 | % | 73 | % | ||||||
Yancey | 30% | 70% | 30 | % | 70 | % | ||||||
Breen | 34% | 66% | 34 | % | 66 | % | ||||||
Maher | 39 | % | 61 | % | ||||||||
Neill | 39% | 61% | 35 | % | 65 | % |
20152017 Short-Term versus Long-Term Incentive Compensation:
The following table shows the allocation between each Executive’s target short-term and long-term incentive compensation opportunities (each at the target level) as a percentage of each Executive’s base salary.
Name | Short-Term Incentive Opportunity | Long-Term Incentive Opportunity | Short-Term Incentive Opportunity
| Long-Term Incentive Opportunity
| ||||||||
Gallagher | 192% | 155% | 192 | % | N/A | |||||||
Donahue | 115% | 129% | 130 | % | 145 | % | ||||||
Yancey | 105% | 126% | 110 | % | 120 | % | ||||||
Breen | 100% | 90% | 100 | % | 93 | % | ||||||
Maher | 100 | % | 83 | % | ||||||||
Neill | 85% | 73% | 85 | % | 74 | % |
Base salary adjustments, annual incentive plan opportunities, and SAR/PRSU grants were approved at the March 27, 201520, 2017 meeting of the Compensation, Nominating and Governance Committee. These compensation adjustments and awards were all effective April 1, 2015.2017. We do not coordinate the timing of equity award grants with the release of materialnon-public information. The exercise price for SARs is established at the fair market value of the closing price of our stock on the effective date of the grant (April 1, 2015)3, 2017).
We have adopted stock ownership guidelines for the named executive officers identified above and for other key executives designated by the Compensation, Nominating and Governance Committee. The ownership guidelines are reviewed at least annually by the Compensation, Nominating and Governance Committee, which also has the authority to evaluate whether exceptions should be made for any executive on whom the guidelines would impose a financial hardship. The current guidelines as determined by the Committee include: (i) CEO — ownership equal to seven times prior year’s salary; and (ii) other covered executives — ownership equal to one to three times the prior year’s salary.
The covered executives have a period of five years in which to satisfy the guidelines from the date of appointment to a qualifying position. Shares counted toward this requirement will be based on shares beneficially owned by such executive (as beneficial ownership is defined by the SEC’s rules and regulations) including PRSUs, but excluding unexercised options and measured against the averageyear-end stock price for the preceding three fiscal years. The guidelines also call for the covered executive to retain 50% of the net shares obtained through the exercise of options or when a restricted stock award vests for at least six months. The covered executives are encouraged to retain stock ownership per the guidelines for a period of six months following the date of retirement.
Genuine Parts Company | 2018 Proxy Statement 25
Compensation Discussion and Analysis
Impact of Accounting and Tax Treatments of Compensation
The accounting and tax treatment of compensation generally has not been a factor in determining the amounts of compensation for our executive officers. However, the Committee and management have considered the accounting and tax impact of various program designs to balance the potential cost to the Company with the benefit/value to the executive.
With regardCode 162(m) places a limit of $1 million on the amount of compensation that a company may deduct in any year with respect to IRS Code Section 162(m), itcertain executive officers. It is the Committee’s intent to maximize deductibility of executive compensation while retaining some discretion needed to compensate executives in a manner commensurate with performance and the competitive landscape for executive talent. The Annual Incentive Plan has beenwas approved by shareholders and is designed to qualify as “performance-based” to be fully deductible by the Company. The 2006 Long-Term Incentive Plan andIn addition, the 2015 Incentive Plan arewas approved by shareholders and permit the award of stock options, SARs and other performance-based equity awards that are intended to be fully deductible under Code Section 162(m). The exemption from Code Section 162(m)‘s deduction limit for performance-based compensation, however, has been repealed, effective for taxable years beginning after December 31, 2017, such that compensation paid to our covered executive officers in excess of $1 million will not be deductible unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017.
Since 2010, the Company has had a clawback provision in its Annual Incentive Plan. If at any time after payment of an executive’s bonus, the Company and its auditors determine that it was calculated on financial results that subsequently were restated or were otherwise based on incorrect data, the executive may be required to repay the unearned portion to the Company upon notice from the Company.
Role of Executive Officers in Determining Compensation
Our Chairman and Chief Executive Officer, with input from our Senior Vice President — Human Resources, recommendsrecommend to the Compensation, Nominating, and Governance Committee base salary, target bonus levels, actual bonus payouts and long-term incentive grants for our senior officer group (other than himself)themselves). Mr. GallagherDonahue makes these recommendations to the Committee based on data and analysis provided by our independent compensation consultant and qualitative judgments regarding individual performance. Mr. GallagherDonahue is not involved with any aspect of determining his own compensation.
26 Genuine Parts Company | 2018 Proxy Statement
ADDITIONAL INFORMATION REGARDING EXECUTIVE COMPENSATION
20152017 SUMMARY COMPENSATION TABLE
Name and Principal Position | Year | Salary($) | Stock Awards ($)(1) | Option Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(2) | Change in Pension Value and Non- Qualified Deferred Compensation Earnings ($)(3) | All Other Compensation ($)(4) | Total ($) | ||||||||||||||||||||||||
Thomas C. Gallagher | 2015 | 1,124,750 | 1,318,906 | 439,504 | 2,034,213 | 1,195,940 | 97,321 | 6,210,634 | ||||||||||||||||||||||||
Chairman and Chief | 2014 | 1,091,750 | 1,315,020 | 443,362 | 2,182,916 | 4,974,776 | 122,987 | 10,130,811 | ||||||||||||||||||||||||
Executive Officer | 2013 | 1,059,250 | 1,041,120 | 385,152 | 1,868,431 | 253,762 | 79,382 | 4,687,097 | ||||||||||||||||||||||||
Paul D. Donahue | 2015 | 650,000 | 640,415 | 213,462 | 715,957 | 58,822 | 47,935 | 2,326,591 | ||||||||||||||||||||||||
President of the | 2014 | 612,000 | 637,980 | 216,174 | 698,836 | 506,462 | 52,558 | 2,724,010 | ||||||||||||||||||||||||
Company | 2013 | 581,000 | 501,280 | 192,576 | 512,661 | 197,627 | 34,881 | 2,020,025 | ||||||||||||||||||||||||
Carol B. Yancey | 2015 | 462,500 | 445,446 | 148,530 | 461,450 | 140,394 | 13,000 | 1,671,320 | ||||||||||||||||||||||||
Executive Vice President and | 2014 | 430,000 | 442,680 | 151,459 | 454,774 | 345,275 | 13,000 | 1,837,188 | ||||||||||||||||||||||||
Chief Financial Officer | 2013 | 383,833 | 385,600 | 101,356 | 364,821 | 17,651 | 12,750 | 1,266,011 | ||||||||||||||||||||||||
Timothy P. Breen | 2015 | 444,000 | 300,023 | 99,967 | 180,147 | 62,969 | 13,000 | 1,100,106 | ||||||||||||||||||||||||
President & Chief Executive | ||||||||||||||||||||||||||||||||
Officer Motion Industries | ||||||||||||||||||||||||||||||||
James R. Neill | 2015 | 307,500 | 170,196 | 56,747 | 246,387 | 103,297 | 13,000 | 897,127 | ||||||||||||||||||||||||
Senior Vice President — | 2014 | 287,500 | 169,260 | 57,830 | 263,562 | 272,171 | 13,000 | 1,063,323 | ||||||||||||||||||||||||
Human Resources |
Name and Principal Position
| Year
| Salary($)
| Stock Awards ($)(1)
| Option Awards ($)(1)
| Non-Equity Incentive Plan Compensation ($)(2)
|
Change in Pension Value and Non- Qualified Deferred Compensation Earnings ($)(3)
| All Other Compensation ($)(4)
| Total ($)
| ||||||||||||||||||||||||||||||||
Thomas C. Gallagher | 2017 | 538,500 | — | — | 952,725 | 1,250,291 | 59,991 | 2,801,507 | ||||||||||||||||||||||||||||||||
Chairman | 2016 | 1,158,500 | 1,318,797 | 439,708 | 2,242,174 | 3,916,599 | 150,067 | 9,225,845 | ||||||||||||||||||||||||||||||||
2015 | 1,124,750 | 1,318,906 | 439,504 | 2,034,213 | 1,195,940 | 97,321 | 6,210,634 | |||||||||||||||||||||||||||||||||
Paul D. Donahue | 2017 | 1,001,250 | 1,125,185 | 375,023 | 1,144,036 | 1,181,237 | 92,755 | 4,919,486 | ||||||||||||||||||||||||||||||||
President & Chief | 2016 | 840,000 | 800,253 | 266,814 | 1,080,566 | 847,754 | 121,982 | 3,957,369 | ||||||||||||||||||||||||||||||||
Executive Officer | 2015 | 650,000 | 640,415 | 213,462 | 715,957 | 58,822 | 47,935 | 2,326,591 | ||||||||||||||||||||||||||||||||
Carol B. Yancey | 2017 | 539,500 | 490,095 | 163,413 | 510,161 | 621,101 | 13,000 | 2,337,270 | ||||||||||||||||||||||||||||||||
Executive Vice President & | 2016 | 507,500 | 445,748 | 148,553 | 572,300 | 546,071 | 13,250 | 2,233,422 | ||||||||||||||||||||||||||||||||
Chief Financial Officer | 2015 | 462,500 | 445,446 | 148,530 | 461,450 | 140,394 | 13,000 | 1,671,320 | ||||||||||||||||||||||||||||||||
Timothy P. Breen | 2017 | 471,250 | 330,193 | 110,007 | 643,085 | 387,398 | 13,000 | 1,954,933 | ||||||||||||||||||||||||||||||||
President & Chief Executive | 2016 | 456,000 | 300,157 | 100,004 | 282,144 | 297,084 | 13,250 | 1,448,639 | ||||||||||||||||||||||||||||||||
Officer Motion Industries | 2015 | 444,000 | 300,023 | 99,967 | 180,147 | 62,969 | 13,000 | 1,100,106 | ||||||||||||||||||||||||||||||||
Lee A. Maher | 2017 | 523,750 | 330,193 | 110,007 | 297,941 | 425,555 | 13,000 | 1,700,446 | ||||||||||||||||||||||||||||||||
President — U.S. Automotive | 2016 | 489,670 | 300,157 | 100,004 | 169,795 | 551,734 | 13,250 | 1,624,610 | ||||||||||||||||||||||||||||||||
Parts Group | ||||||||||||||||||||||||||||||||||||||||
James R. Neill | 2017 | 331,750 | 187,004 | 62,365 | 242,326 | 249,117 | 13,000 | 1,085,562 | ||||||||||||||||||||||||||||||||
Senior Vice President — | 2016 | 319,000 | 170,023 | 56,730 | 273,843 | 203,769 | 13,250 | 1,036,615 | ||||||||||||||||||||||||||||||||
Human Resources | 2015 | 307,500 | 170,196 | 56,747 | 246,387 | 103,297 | 13,000 | 897,127 |
(1) | Represents the aggregate grant date fair value of awards determined in accordance with FASB ASC Topic 718. Grant date fair value for performance-based restricted stock units (“PRSUs”) reflected in the Stock Awards column is based on the grant date fair value of the underlying shares and the probable outcome of performance-based vesting conditions, excluding the effect of estimated forfeitures. Grant date fair value for stock appreciation rights (“SARs”) reflected in the Option Awards column is based on the Black-Scholes option pricing model. The actual value, if any, that a named executive officer may realize upon exercise of SARs will depend on the excess of the stock price over the base value on the date of exercise, so there is no assurance that the value realized by a named executive officer will be at or near the value estimated by the Black-Scholes model. The assumptions used in determining the grant date fair values of the SARs are set forth in the notes to the Company’s consolidated financial statements, which are included in our Annual Report on Form10-K for the year ended December 31, |
(2) | Reflects the value of cash incentive bonuses earned under our Annual Incentive Plan. |
(3) | Reflects the increase during |
(4) | Amounts reflected in this column for |
passenger traveling for personal reasons on an aircraft being primarily used for a business trip. The Board of Directors mandates that the Company’s Chairman, Chief Executive Officer and President use corporate aircraft for personal travel to accommodate security, availability and efficiency concerns. The Company does not provide tax reimbursements with respect to any perquisites to executive officers. |
2015Genuine Parts Company | 2018 Proxy Statement 27
Additional Information Regarding Executive Compensation
2017 CEO PAY RATIO
As required by item 402(u) of RegulationS-K, the Compensation, Nominating, and Governance Committee reviewed a comparison of our CEO’s annual total compensation in fiscal year 2017 to that of all other Company employees for the same period. We identified our median employee by examining 2017 Box 1W-2 and foreign equivalent taxable income amounts for all individuals, excluding our CEO, who were employed by us on December 31, 2017 whether on a full-time, part-time, or seasonal basis. As permitted by disclosure rules, we omitted approximately 7,000 employees that were added to the Company through acquisitions during 2017. We did not annualize the compensation for any full-time employees that were not employed by us for all of 2017. We applied a foreign currency to U.S. dollar exchange rate to the compensation paid in foreign currency. After identifying the median employee, we calculated annual total compensation for such employee using the same methodology we use for our named executive officers as set forth in the 2017 Summary Compensation Table above.
The annual total compensation for fiscal year 2017 for our CEO was $4,919,486 as noted in the table above and for our median employee it was $35,415. The resulting ratio of our CEO’s pay to the pay of our median employee for fiscal year 2017 is 139 to 1.
2017 GRANTS OF PLAN-BASED AWARDS
Name | Approval Date | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Option Awards: Number of Securities Underlying Options (#)(3) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(4) | |||||||||||||||||||||||||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||||||||||||||
Thomas C. Gallagher | 978,975 | 2,175,500 | 3,807,125 | |||||||||||||||||||||||||||||||||||||||||
3/27/2015 | 4/1/2015 | 7,188 | 14,375 | 21,563 | 1,318,906 | |||||||||||||||||||||||||||||||||||||||
3/27/2015 | 4/1/2015 | 32,490 | 91.75 | 439,504 | ||||||||||||||||||||||||||||||||||||||||
Paul D. Donahue | 341,550 | 759,000 | 1,328,250 | |||||||||||||||||||||||||||||||||||||||||
3/27/2015 | 4/1/2015 | 3,490 | 6,980 | 10,470 | 640,415 | |||||||||||||||||||||||||||||||||||||||
3/27/2015 | 4/1/2015 | 15,780 | 91.75 | 213,462 | ||||||||||||||||||||||||||||||||||||||||
Carol B. Yancey | 222,075 | 493,500 | 863,625 | |||||||||||||||||||||||||||||||||||||||||
3/27/2015 | 4/1/2015 | 2,428 | 4,855 | 7,283 | 445,446 | |||||||||||||||||||||||||||||||||||||||
3/27/2015 | 4/1/2015 | 10,980 | 91.75 | 148,530 | ||||||||||||||||||||||||||||||||||||||||
Timothy P. Breen | 173,160 | 444,000 | 715,950 | |||||||||||||||||||||||||||||||||||||||||
3/27/2015 | 4/1/2015 | 1,635 | 3,270 | 4,905 | 300,023 | |||||||||||||||||||||||||||||||||||||||
3/27/2015 | 4/1/2015 | 7,390 | 91.75 | 99,967 | ||||||||||||||||||||||||||||||||||||||||
James R. Neill | 118,575 | 263,500 | 461,125 | |||||||||||||||||||||||||||||||||||||||||
3/27/2015 | 4/1/2015 | 928 | 1,855 | 2,783 | 170,196 | |||||||||||||||||||||||||||||||||||||||
3/27/2015 | 4/1/2015 | 4,195 | 91.75 | 56,747 |
Name
| Approval
| Grant Date
| Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)
| Estimated Future Payouts Under Equity Incentive Plan Awards(2)
| All Other Option Awards: Number of Securities Underlying Options (#)(3)
| Exercise or Base Price of Option Awards ($/Sh)
| Grant Date Fair Value of Stock and Option Awards ($)(4)
| |||||||||||||||||||||||||||||||||||||||||
Threshold ($)
| Target ($)
| Maximum ($)
| Threshold (#)
| Target (#)
| Maximum (#)
| |||||||||||||||||||||||||||||||||||||||||||
Thomas C. Gallagher(5) | 1,030,860 | 2,241,000 | 3,809,700 | |||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
— | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
Paul D. Donahue | 618,930 | 1,345,500 | 2,287,350 | |||||||||||||||||||||||||||||||||||||||||||||
3/20/2017 | 4/3/2017 | 6,228 | 12,455 | 18,683 | 1,125,185 | |||||||||||||||||||||||||||||||||||||||||||
3/20/2017 | 4/3/2017 | 27,000 | 90.34 | 375,023 | ||||||||||||||||||||||||||||||||||||||||||||
Carol B. Yancey | 276,000 | 600,000 | 1,020,000 | |||||||||||||||||||||||||||||||||||||||||||||
3/20/2017 | 4/3/2017 | 2,713 | 5,425 | 8,138 | 490,095 | |||||||||||||||||||||||||||||||||||||||||||
3/20/2017 | 4/3/2017 | 11,765 | 90.34 | 163,413 | ||||||||||||||||||||||||||||||||||||||||||||
Timothy P. Breen | 175,750 | 475,000 | 771,875 | |||||||||||||||||||||||||||||||||||||||||||||
3/20/2017 | 4/3/2017 | 1,828 | 3,655 | 5,483 | 330,193 | |||||||||||||||||||||||||||||||||||||||||||
3/20/2017 | 4/3/2017 | 7,920 | 90.34 | 110,007 | ||||||||||||||||||||||||||||||||||||||||||||
Lee A. Maher | 177,550 | 530,000 | 861,250 | |||||||||||||||||||||||||||||||||||||||||||||
3/20/2017 | 4/3/2017 | 1,828 | 3,655 | 5,483 | 330,193 | |||||||||||||||||||||||||||||||||||||||||||
3/20/2017 | 4/3/2017 | 7,920 | 90.34 | 110,007 | ||||||||||||||||||||||||||||||||||||||||||||
James R. Neill | 131,100 | 285,000 | 484,500 | |||||||||||||||||||||||||||||||||||||||||||||
3/20/2017 | 4/3/2017 | 1,035 | 2,070 | 3,105 | 187,004 | |||||||||||||||||||||||||||||||||||||||||||
3/20/2017 | 4/3/2017 | 4,490 | 90.34 | 62,365 |
(1) | Represents threshold, target and maximum payout levels under the Annual Incentive Plan for |
(2) | Represents threshold, target and maximum number of PRSUs to be earned on December 31, |
28 Genuine Parts Company | 2018 Proxy Statement
Additional Information Regarding Executive Compensation
(3) | Each SAR represents the right to receive from the Company upon exercise an amount, payable in shares of Common Stock, equal to the excess, if any, of the fair market value of one share of Common Stock on the date of exercise over the base value per share. The SARs were granted with a base value equal to the fair market value of the Company’s Common Stock on the date of grant. The SARs vest in equal annual installments on each of the first three anniversaries of the grant date, subject to accelerated vesting upon a termination of employment due to death, disability or retirement more than one year after the date of grant |
of the SAR or upon a change in control of the Company. The SARs granted on April |
(4) | Represents the grant date fair value of the award determined in accordance with FASB ASC Topic 718. Grant date fair value for the PRSUs is based on the grant date fair value of the underlying shares and the probable outcome of performance-based vesting conditions, excluding the effect of estimated forfeitures. Grant date fair value for SARs is based on the Black-Scholes option pricing model for use in valuing executive stock options. The actual value, if any, that a named executive officer may realize upon exercise of SARs will depend on the excess of the stock price over the base value on the date of exercise, so there is no assurance that the value realized by a named executive officer will be at or near the value estimated by the Black-Scholes model. The assumptions used in determining the grant date fair values of these awards are set forth in the notes to the Company’s consolidated financial statements, which are included in our Annual Report on Form10-K for the year ended December 31, |
(5) | Mr. Gallagher did not receive a grant due to his June 30, 2017 retirement date. |
20152017 OUTSTANDING EQUITY AWARDS AT FISCALYEAR-END
Option Awards | Stock Awards | Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) (8) | Number of Securities Underlying Unexercised Options (#) Exercisable
| Number of Securities Underlying Unexercised Options (#) Unexercisable
| Option Exercise Price ($)
| Option Expiration Date
| Number of Shares or Units of Stock That Have Not Vested (#)
|
Market Value of Shares or Units of Stock That Have Not Vested ($) (8)
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
Thomas C. Gallagher | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | 32,490 | (1 | ) | 91.75 | 4/1/2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
32,515 | — | 99.72 | 6/30/2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
10,733 | 21,467 | (2 | ) | 86.80 | 4/1/2024 | 32,490 | — | 91.75 | 6/30/2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
12,253 | (4) | 1,052,410 | 9,488 | (5 | ) | 901,455 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
25,333 | 12,667 | (3 | ) | 77.12 | 4/1/2023 | 32,200 | — | 86.80 | 6/30/2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
15,467 | (5) | 1,328,461 | 12,253 | (6 | ) | 1,164,158 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
42,000 | — | 63.28 | 4/2/2022 | 38,000 | — | 77.12 | 6/30/2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8,103 | (6) | 695,967 | 15,467 | (7 | ) | 1,469,520 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
90,000 | — | 54.09 | 4/1/2021 | 42,000 | — | 63.28 | 6/30/2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
16,000 | (7) | 1,374,240 | 90,000 | — | 54.09 | 4/1/2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
73,000 | — | 42.66 | 4/1/2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Paul D. Donahue | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | 15,780 | (1 | ) | 91.75 | 4/1/2025 | — | 27,000 | (1 | ) | 90.34 | 4/3/2027 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
6,080 | (4) | 522,211 | 9,456 | (4 | ) | 898,415 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5,233 | 10,467 | (2 | ) | 86.80 | 4/1/2024 | 6,576 | 13,154 | (2 | ) | 99.72 | 4/1/2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
6,895 | (5) | 592,212 | 5,757 | (5 | ) | 546,973 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
12,666 | 6,334 | (3 | ) | 77.12 | 4/1/2023 | 10,520 | 5,260 | (3 | ) | 91.75 | 4/1/2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
4,306 | (6) | 369,842 | 6,080 | (6 | ) | 577,661 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
17,500 | — | 63.28 | 4/1/2022 | 15,700 | — | 86.80 | 4/1/2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6,600 | (7) | 566,874 | 6,895 | (7 | ) | 655,094 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
19,000 | — | 77.12 | 4/1/2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4/2/2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carol B. Yancey | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | 10,980 | (1 | ) | 91.75 | 4/1/2025 | — | 11,765 | (1 | ) | 90.34 | 4/3/2027 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
4,119 | (4 | ) | 391,346 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3,336 | 7,334 | (2 | ) | 86.80 | 4/1/2024 | 3,661 | 7,324 | (2 | ) | 99.72 | 4/1/2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
4,138 | (4) | 355,413 | 3,206 | (5 | ) | 304,602 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6,666 | 3,334 | (3 | ) | 77.12 | 4/1/2023 | 7,320 | 3,660 | (3 | ) | 91.75 | 4/1/2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
5,207 | (5) | 447,229 | 4,138 | (6 | ) | 393,151 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5,350 | — | 63.28 | 4/2/2022 | 11,000 | — | 86.80 | 4/1/2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3,001 | (6) | 257,756 | 5,207 | (7 | ) | 494,717 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8,300 | — | 54.09 | 4/1/2021 | 10,000 | — | 77.12 | 4/1/2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2,025 | (7) | 173,927 | 5,350 | — | 63.28 | 4/2/2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Timothy P. Breen | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | 7,390 | (1 | ) | 91.75 | 4/1/2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1,833 | 3,667 | (2 | ) | 86.80 | 4/1/2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2,711 | (5) | 232,848 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2,800 | 1,400 | (3 | ) | 77.12 | 4/1/2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1,144 | (7) | 98,258 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4,500 | — | 63.28 | 4/1/2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3,000 | — | 54.09 | 4/1/2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
James R. Neill | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | 4,195 | (1 | ) | 91.75 | 4/1/2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1,581 | (4 | ) | 135,792 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1,400 | 2,800 | (2 | ) | 86.80 | 4/1/2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1,990 | (5) | 170,921 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2,400 | 1,200 | (3 | ) | 77.12 | 4/2/2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
840 | (6) | 72,148 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3,900 | — | 63.28 | 4/1/2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
858 | (7 | ) | 73,694 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6,000 | — | 54.09 | 4/1/2021 |
Genuine Parts Company | 2018 Proxy Statement 29
Additional Information Regarding Executive Compensation
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||
Name
| Number of Securities Underlying Unexercised Options (#) Exercisable
| Number of Securities Underlying Unexercised Options (#) Unexercisable
| Option Exercise Price ($)
| Option Expiration Date
| Number of Shares or Units of Stock That Have Not Vested (#)
|
Market Value of Shares or Units of Stock That Have Not Vested ($) (8)
| ||||||||||||||||||||||||||
Timothy P. Breen | ||||||||||||||||||||||||||||||||
— | 7,920 | (1 | ) | 90.34 | 4/3/2027 | |||||||||||||||||||||||||||
4,328 | (4 | ) | 411,203 | |||||||||||||||||||||||||||||
2,465 | 4,930 | (2 | ) | 99.72 | 4/1/2026 | |||||||||||||||||||||||||||
1,564 | (5 | ) | 148,596 | |||||||||||||||||||||||||||||
4,926 | 2,464 | (3 | ) | 91.75 | 4/1/2025 | |||||||||||||||||||||||||||
5,500 | 86.80 | 4/1/2024 | ||||||||||||||||||||||||||||||
2,711 | (7 | ) | 257,572 | |||||||||||||||||||||||||||||
4,200 | — | 77.12 | 4/1/2023 | |||||||||||||||||||||||||||||
4,500 | — | 63.28 | 4/2/2022 | |||||||||||||||||||||||||||||
3,000 | — | 54.09 | 4/1/2021 | |||||||||||||||||||||||||||||
Lee A. Maher | ||||||||||||||||||||||||||||||||
— | 7,920 | (1 | ) | 90.34 | 4/3/2027 | |||||||||||||||||||||||||||
— | — | |||||||||||||||||||||||||||||||
2,465 | 4,930 | (2 | ) | 99.72 | 4/1/2026 | |||||||||||||||||||||||||||
4,036 | 2,019 | (3 | ) | 91.75 | 4/1/2025 | |||||||||||||||||||||||||||
2,627 | (6 | ) | 249,591 | |||||||||||||||||||||||||||||
6,000 | — | 86.80 | 4/1/2024 | |||||||||||||||||||||||||||||
2,861 | (7 | ) | 271,824 | |||||||||||||||||||||||||||||
6,600 | — | 77.12 | 4/1/2023 | |||||||||||||||||||||||||||||
7,900 | — | 63.28 | 4/2/2022 | |||||||||||||||||||||||||||||
James R. Neill | ||||||||||||||||||||||||||||||||
— | 4,490 | (1 | ) | 90.34 | 4/3/2027 | |||||||||||||||||||||||||||
1,572 | (4 | ) | 149,356 | |||||||||||||||||||||||||||||
1,398 | 2,797 | (2 | ) | 99.72 | 4/1/2026 | |||||||||||||||||||||||||||
1,223 | (5 | ) | 116,197 | |||||||||||||||||||||||||||||
2,796 | 1,399 | (3 | ) | 91.75 | 4/1/2025 | |||||||||||||||||||||||||||
1,581 | (6 | ) | 150,211 | |||||||||||||||||||||||||||||
4,200 | — | 86.80 | 4/1/2024 | |||||||||||||||||||||||||||||
1,990 | (7 | ) | 189,070 | |||||||||||||||||||||||||||||
3,600 | — | 77.12 | 4/1/2023 | |||||||||||||||||||||||||||||
3,900 | — | 63.28 | 4/2/2022 |
(1) | The SARs were granted on April |
(2) | The SARs were granted on April 1, |
(3) | The SARs were granted on April |
(4) | The PRSUs were granted on April 3, 2017 and vest on December 1, 2021, or earlier upon a change in control of the Company or in the event of (i) the executive’s retirement from the Company or (ii) the executive’s employment with the Company is terminated due to death or disability. The PRSUs will convert to shares of stock on December 1, 2021, or earlier upon a change in control of the Company. |
(5) | The PRSUs were granted on April 1, 2016 and vest on December 1, 2020, or earlier upon a change in control of the Company or in the event of (i) the executive’s retirement from the Company or (ii) the executive’s employment with the Company is terminated due to death or disability. The PRSUs will convert to shares of stock on December 1, 2020, or earlier upon a change in control of the Company. |
(6) | The PRSUs were granted on April 1, 2015 and vest on December 1, 2019, or earlier upon a change in control of the Company or in the event of (i) the executive’s retirement from the Company or (ii) the executive’s employment with the Company is terminated due to death or disability. The PRSUs will convert to shares of stock on December 1, 2019, or earlier upon a change in control of the Company. |
The PRSUs were granted on April 1, 2014 and vest on December 1, 2018, or earlier upon a change in control of the Company or in the event of (i) the executive’s retirement from the Company or (ii) the executive’s employment with the Company is terminated due to death or disability. The PRSUs will convert to shares of stock on December 1, 2018, or earlier upon a change in control of the Company. |
(8) | Reflects the value as calculated based on the closing price of the Company’s Common Stock on December 31, |
201530 Genuine Parts Company | 2018 Proxy Statement
Additional Information Regarding Executive Compensation
2017 OPTION EXERCISES AND STOCK VESTED
Option Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) (1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) (2) | ||||||||||||
Thomas C. Gallagher | — | — | 6,935 | 1,210,776 | ||||||||||||
Paul D. Donahue | — | — | 3,515 | 479,313 | ||||||||||||
Carol B. Yancey | — | — | 1,110 | 151,381 | ||||||||||||
Timothy P. Breen | — | — | 563 | 75,691 | ||||||||||||
James R. Neill | — | — | 1,110 | 151,381 |
Option Awards |
Stock Awards | |||||||||||||||
Name
| Number of Awards
| Value Realized on Exercise
| Number of
| Value Realized on Vesting ($) (2)
| ||||||||||||
Thomas C. Gallagher | — | — | 8,103 | 826,586 | ||||||||||||
Paul D. Donahue | — | — | 4,306 | 439,279 | ||||||||||||
Carol B. Yancey | — | — | 3,001 | 306,122 | ||||||||||||
Timothy P. Breen | — | — | — | — | ||||||||||||
Lee A. Maher | — | — | 1,828 | 186,512 | ||||||||||||
James R. Neill | — | — | 840 | 85,700 |
(1) | Value realized represents the excess of the fair market value of the shares at the time of exercise over the exercise price of the options. |
(2) | Value realized represents the fair market value of the shares on the vesting date. |
Equity Compensation Plan Information
The following table gives information as of December 31, 20152017 about the common stock that may be issued under all of the Company’s existing equity compensation plans:
Plan Category | (a) Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights(1) | (b) Weighted Average Exercise Price of Outstanding Options, Warrants and Rights | (c) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) | |||||||||
Equity Compensation Plans Approved by Shareholders: | 46,000 | (2) | $ | 44.20 | — | |||||||
4,134,845 | (3) | $ | 70.97 | — | ||||||||
— | (4) | n/a | 10,000,000 | (6) | ||||||||
|
|
|
| |||||||||
Equity Compensation Plans Not Approved by Shareholders: | 85,284 | (5) | n/a | 914,716 | ||||||||
|
|
|
| |||||||||
Total | 4,266,129 | — | 10,914,716 |
Plan Category
| (a) Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights(1)
| (b) Weighted Average Exercise Price of Outstanding Options, Warrants and Rights
|
(c) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))
| |||||||||
Equity Compensation Plans Approved by Shareholders: | 2,579,696 | (2) | $ | 75.17 | — | |||||||
1,619,932 | (3) | $ | 94.76 | 8,367,665 | (5) | |||||||
Equity Compensation Plans Not Approved by Shareholders: | 96,630 | (4) | n/a | 903,370 | ||||||||
|
|
|
|
|
| |||||||
Total | 4,296,258 | — | 9,271,035 |
(1) | Reflects the maximum number of shares issuable pursuant to the exercise or conversion of stock options, stock appreciation rights, restricted stock units and common stock equivalents. The actual number of shares issued upon exercise of stock appreciation rights is calculated based on the excess of fair market value of our common stock on date of exercise and the grant price of the stock appreciation rights. |
(2) | Genuine Parts Company |
Genuine Parts Company 2015 Incentive Plan. |
Genuine Parts Company Director’s Deferred Compensation Plan, as amended. |
All of these shares are available for issuance pursuant to grants of full-value stock awards. |
2015Genuine Parts Company | 2018 Proxy Statement 31
Additional Information Regarding Executive Compensation
2017 PENSION BENEFITS
Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit ($) | Payments During Last Fiscal Year ($) | ||||||||||
Thomas C. Gallagher | Pension Plan | 43.50 | 1,846,742 | — | ||||||||||
Supplemental Retirement Plan | 45.50 | 23,247,617 | — | |||||||||||
Original Deferred Compensation Plan | 34.00 | 595,575 | 48,157 | |||||||||||
Paul D. Donahue | Pension Plan | 5.83 | 251,887 | — | ||||||||||
Supplemental Retirement Plan | 12.83 | 2,241,376 | — | |||||||||||
Carol B. Yancey | Pension Plan | 17.67 | 382,653 | — | ||||||||||
Supplemental Retirement Plan | 24.67 | 1,054,613 | — | |||||||||||
Timothy P. Breen | Pension Plan | 10.25 | 285,285 | — | ||||||||||
Supplemental Retirement Plan | 17.25 | 704,174 | — | |||||||||||
James R. Neill | Pension Plan | 2.17 | 63,838 | — | ||||||||||
Supplemental Retirement Plan | 9.17 | 311,630 | — |
Name Plan Name Number of Years Credited Service (#) Present Value of Accumulated Benefit ($) Payments During Last Fiscal Year ($) Thomas C. Gallagher Paul D. Donahue Carol B. Yancey Timothy P. Breen Lee A. Maher James R. Neill Pension Plan N/A 2,492,575 88,129 Supplemental Retirement Plan N/A 27,017,329 568,270 Original Deferred Compensation Plan N/A 594,207 48,157 Pension Plan 5.83 309,270 — Supplemental Retirement Plan 14.83 4,212,984 — Pension Plan 17.67 507,050 — Supplemental Retirement Plan 26.67 2,097,388 — Pension Plan 10.25 363,867 — Supplemental Retirement Plan 19.25 1,310,074 — Pension Plan 36.08 1,272,557 — Supplemental Retirement Plan 40.08 3,299,679 — Pension Plan 2.17 82,669 — Supplemental Retirement Plan 11.17 745,685 —
The Pension Benefit Table provides information regarding the number of years of credited service, the present value of accumulated benefits, and any payments made during the last fiscal year with respect to the Genuine Parts Company Pension Plan (the “Pension Plan”), the Genuine Parts Company Supplemental Retirement Plan (the “SRP”), and the Genuine Parts Company Original Deferred Compensation Plan (the “ODCP”).
The Pension Plan is a broad-based,tax-qualified defined benefit pension plan which provides a benefit upon retirement to eligible employees of the Company. It was amended effective March 1, 2008, to provide that employees hired on or after that date are not eligible to participate in the plan, and there are no new entrants to the Pension Plan after December 31, 2009. In general, all employees hired before March 1, 2008, except leased employees, independent contractors and certain collectively-bargained employees are eligible to participate. Benefits are based upon years of credited service and the average of the highest five nonconsecutive years of earnings out of the last ten years. Pension Plan earnings are generally based on total pay, but do not include deferred compensation. The service amounts shown in the table above for the Pension Plan and the SRP represent actual years of service with the Company. Other than what the plan provides to all participants, no additional years of credited service have been granted to the named executive officers under the Pension Plan or the SRP.
The Pension Plan was amended to freeze credited service as of December 31, 2008, while continuing to reflect future pay increases, for most plan participants (i.e., “a soft plan freeze”). Such participants began participating in a newly established company-sponsored 401(k) savings plan effective January 1, 2009.
The soft plan freeze does not apply to service used for vesting purposes or to determine a participant’s eligibility for early retirement under the Pension Plan. Participants who satisfied a Rule of 70 criteria (age plus service equal to 70 or more) were given the option to remain under the old provisions. Only Mr. Gallagher and Mr. Maher satisfied the Rule of 70 criteria and elected to remain under the old provisions.
Several forms of benefit payments are available under the Pension Plan. The Pension Plan offers a life annuity option, 50%, 75%, and 100% joint and survivor options, and a10-year certain and life annuity option. The Pension Plan was amended in 20142016 to reflect an ongoing lump sum option for future terminations and retirements whereif the present value of benefits are $30,000$75,000 or less. Minimum lump sum distributions of benefits are required if $5,000 or less. The payout option must be elected by the participant before benefit payments begin. All options available under the Pension Plan are approximately equal in actuarial value.
The benefit payable for normal or early retirement under the Pension Plan is the greater of two benefits.benefit formulas. The first benefitformula is a percentage of the participant’s average earnings less 50% of his estimated Social Security benefit. The applicable percentage is based on years of credited service and increases by 0.5% per year of credited service from 40% at 15 years of service to 55% at 45 or more years of service. The second benefitformula is 30% of the participant’s average earnings. Only the second benefit is available toFor participants with less than 15 years of credited service.service, only the second benefit formula is available. For such individuals, 30% of the participant’s average earnings is multiplied by a fraction with the numerator equal to credited service (not to exceed 180 months) and the denominator equal to 180.
As of December 31, 2015, Mr. Gallagher was eligible for delayed retirement benefits.
32 Genuine Parts Company | 2018 Proxy Statement
Additional Information Regarding Executive Compensation
The benefit payable for delayed retirement under the Pension Plan is the greater of two benefits. The first benefit is the normal retirement benefit determined based on the participant’s average earnings and credited service at his delayed retirement date. The second benefit is the normal retirement benefit actuarially increased from the participant’s normal retirement date to the delayed retirement date based on the attained age at each date.
Early retirement benefit payments are available under the Pension Plan to participants who retire after attaining age 55 and completing 15 years of service. Early retirement benefits are reduced 0.5% for each month by which benefit commencement precedes normal retirement age (age 65 with five years of participation).
Termination benefits are calculated in the same manner as normal retirement benefits, except that (a) the benefit is calculated based on projected credited service at normal retirement date and then (b) the benefit is reduced by multiplying it by a service fraction equal to the ratio of credited service at termination to projected credited service at normal retirement date. Projected credited service at normal retirement date is determined as if
the participant had continued in employment until his or her normal retirement. Under the terms of the Pension Plan, as of December 31, 2008, Mr. Donahue, Ms. Yancey, Mr. Breen, and Mr. Neill did not satisfy Rule of 70 criteria and as a result, the numerator of their service fraction is frozen as of December 31, 2008, although projected credited service at normal retirement date continues to be determined as if they earned credited service through their normal retirement date.
Participants are fully vested in their Pension Plan benefits after seven years of service, with partial vesting after three years of service. The Pension Plan was amended effective December 31, 2008, to provide that in general, only participants who satisfy Rule of 70 criteria and elect to remain under the old plan provisions may earn up to two years of additional credited service following termination due to disability and while receiving long term disability benefits from the Genuine Parts Company Long-Term Disability Plan. A 50% survivor annuity is payable to a participant’s spouse upon death prior to retirement. A surviving spouse may waive the 50% survivor benefit and elect instead to receive a benefit from the Genuine Parts Company Death Benefit Plan.
Effective January 1, 2009, in the event of a change in control, a participant’s benefit accrued under the Pension Plan is fully vested and, if the participant terminates employment within five years following the change in control, the participant may elect to receive an immediate lump sum distribution of the accrued benefit.
The Pension Plan was further amended effective December 31, 2013, to freeze future benefit accruals for all participants, including those who satisfy Rule of 70 criteria. In addition, all active participants with at least one hour of service after December 31, 2013, were fully vested in their accrued benefits as of that date. No further benefit accruals will be provided after 2013 for either additional credited service or future earnings. All benefits are frozen as of December 31, 2013, for all purposes including disability, termination and retirement. All active Pension Plan participants who satisfy Rule of 70 criteria and elected to remain under the old provisions became eligible on January 1, 2014, for the company-sponsored 401(k) Savings Plan that was established effective January 1, 2009.
The standard death benefit in the Pension Plan provides a 50% survivor annuity payable to a participant’s spouse upon death prior to retirement. Since the Death Benefit Plan was merged into the Pension Plan during 2017, a surviving spouse may instead elect to receive this alternative death benefit based on different provisions and payment form.
The SRP is a nonqualified defined benefit pension plan which covers pay and benefits above the qualified limits in the Pension Plan for participants who satisfied the Rule of 70 criteria and entered the SRP plan prior to January 1, 2009. The SRP also provides benefits on a reduced basis for participants who entered the SRP prior to January 1, 2009, but did not satisfy the Rule of 70 criteria in the Pension Plan, or who entered the SRP after January 1, 2009. Otherwise, the provisions of the SRP in effect on December 31, 2008, are generally the same as those of the Pension Plan as in effect on that date, except benefits are payable only for retirement, disability, death, or change in control, and SRP earnings include deferred compensation.
The SRP was amended and restated effective January 1, 2009. The amended plan provides full vesting and an immediate lump sum payment if a participant dies, and full vesting of SRP benefits in the event the plan is terminated, the participant becomes disabled, or there is a change in control. Participants’ credited service in the SRP is not frozen as of December 31, 2008. Also, if a SRP participant’s credited service was frozen in the Pension Plan as amended effective December 31, 2008, an additional offset is applied to the benefits otherwise accrued under the SRP. This offset is determined based on the accumulated sum (with interest at 6.0% per year) of 3.8% of the participant’s Pension Plan earnings during each calendar year after December 31, 2008.
Genuine Parts Company | 2018 Proxy Statement 33
Additional Information Regarding Executive Compensation
The SRP was later amended effective August 16, 2010, to provide that in the event of a participant’s death while in active service, the survivor benefit payable is 100% of the lump sum present value of the participant’s accrued benefit as of the date of death. Prior to the amendment, 50% of the lump sum present value was payable as a survivor benefit.
The SRP was most recently amended effective December 31, 2013, to change the benefit formula. For Mr. Gallagher and Mr. Maher, SRP benefits will continue to reflect an offset for Pension Plan benefits; however, this offset will be determined as if the Pension Plan were not frozen on December 31, 2013. As a result, future SRP benefits will remain unchanged following the Pension Plan freeze.freeze did not have an impact on future SRP benefits.
Beginning January 1, 2014, Mr. Donahue, Mr. Breen and Ms. Yancey’s SRP benefit will bewas calculated under a revised benefit formula which applies to participants who entered the plan prior to January 1, 2009, and whose credited service was frozen in the Pension Plan as of December 31, 2008. The revised benefit formula is based on all years of credited service and earnings and cannot be less than the accrued SRP benefit as of
December 31, 2013. The revised formula is a percentage of the participant’s average earnings less 50% of their Social Security benefit. The applicable percentage is based on years of credited service and increases by 0.5% per year of credited service from 30% at 15 years of service to 45% at 45 or more years of service. For participants with less than 15 years of projected credited service at normal retirement, the applicable percentage is equal to 30% multiplied by a fraction with the numerator equal to credited service (not to exceed 180 months) and the denominator equal to 180. Under the revised SRP benefit formula, there is an offset for the frozen Pension Plan benefit, but no other offsets apply.
This most recent2013 SRP amendment also defines the benefit formula for participants who entered the SRP on or after January 1, 2009, which applies to Mr. Neill’s benefit. This formula is identical to the revised benefit formula fornon-grandfathered participants who entered the plan prior to January 1, 2009, but it does not provide a minimum benefit as of December 31, 2013.
Benefits earned under the SRP are paid from Company assets, and for participants who entered the plan prior to January 1, 2009, they aregrossed-up for FICA taxes. Therefore, all named executive officers receive a FICA taxgross-up except Mr. Neill. Executives sign a joinder agreement to become participants in the SRP and select an optional form of benefit payment in the agreement. SRP participants may change their payment form elections at any time prior to benefit commencement.
Amounts reported in the 20152017 Pension Benefits table as the actuarial present value of accumulated benefits under the Pension Plan and the SRP are computedcalculated using the interest and mortality assumptions that the Company applies to amounts reported in its financial statement disclosures foryear-end, and are assumed to be payable immediately for Mr. Gallagher and at age 65 for Mr. Donahue, Ms. Yancey, Mr. Breen and Mr. Neill. Mr. Gallagher commenced payment of his Pension and SRP benefits effective July 1, 2017. The present value of future payments due to him as of December 31, 2017, are represented in the table. The interest rate assumptions at December 31, 2015,2017, are 4.90%3.75% for the Pension Plan and 4.85%3.75% for the SRP. The mortality assumption is a modified RP-2014theRP-2017 mortality table (using Scale BB for mortality improvements from 2006 to 2014), and the mortality improvement assumption for future years is Scale MP-2014MP-2017 converging to 0.62% long-term annual improvements by 2027.improvements. A blue-collar table is used for the Pension Plan calculations, and a white-collar table is used for the SRP calculations. SRP benefits have been adjustedincreased by 2.35% as of December 31, 2015,2017, to account for estimated FICA taxgross-ups for applicable NEOs (but not for any income tax impact on suchgross-ups).
The ODCP is a nonqualified plan that provides an annuity benefit, funded partially by executive salary deferrals. Mr. Gallagher is the only named executive officer in this plan, and no salary deferrals have been made under the plan since 2012 following Mr. Gallagher’s attainment of his normal retirement age. The retirement benefit currently in payment is a10-year certain and life annuity beginningwhich began on January 1, 2014. These benefits are payable from Company assets. The service amount shown in the table represents the period during which Mr. Gallagher has been making salary deferrals for benefits provided by the ODCP. The 20152017 Pension Benefits table shows no increase in credited service under the Original Deferred Compensation Plan since 2012 given that there have been no deferrals under the plan by Mr. Gallagher since that time. Amounts reported in the 20152017 Pension Benefits table as the actuarial present value of accumulated benefits under the ODCP are based in the annuity amount in payment and the interest and mortality assumptions the Company uses for purposes of financial statement disclosures of the SRP referred to above.
201534 Genuine Parts Company | 2018 Proxy Statement
Additional Information Regarding Executive Compensation
2017 NONQUALIFIED DEFERRED COMPENSATION
Name | Executive Contributions in Last FY ($) | Company Contributions in Last FY ($) | Aggregate Earnings in Last FY ($)(1) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($)(2) | |||||||||||||||
Thomas C. Gallagher | — | — | 21,017 | — | 2,010,974 | |||||||||||||||
Paul D. Donahue | — | — | 448 | — | 215,682 | |||||||||||||||
Carol B. Yancey | 20,000 | — | 3,490 | — | 261,815 | |||||||||||||||
Timothy P. Breen | — | — | — | — | — | |||||||||||||||
James R. Neill | — | — | — | — | — |
Name Executive Contributions in Last FY ($) Company Contributions in Last FY ($) Aggregate Earnings in Last FY ($)(1) Aggregate Withdrawals/ Distributions ($) Aggregate Balance at Last FYE ($)(2) Thomas C. Gallagher Paul D. Donahue Carol B. Yancey Timothy P. Breen Lee A. Maher James R. Neill — — 338,299 — 2,539,194 — — 37,339 — 269,388 20,000 — 73,571 — 408,531 — — — — — — — — — — — — — — —
(1) | Reflects amounts earned in |
(2) | Includes the following amounts of contributions to the Tax Deferred Savings Plan by the named executive officers that were previously reported as compensation to the named executive officers in the Company’s Summary Compensation Table for previous years: Mr. Gallagher, $200,000; Mr. Donahue, $169,723; Ms. Yancey, |
The Genuine Parts Company Tax Deferred Savings Plan is a nonqualified deferred compensation plan pursuant to which the named executive officers may elect to defer up to 100% of their annual incentive bonus. Deferral elections are due by June 30 of each year, and are irrevocable. These deferral elections are for the bonus earned during that year, which would otherwise be payable in February of the following year. Effective January 1, 2011, the Plan was amended to allow executives to defer up to 100% of their annual salary. Deferrals are held for each participant in separate individual accounts in an irrevocable rabbi trust. Deferred amounts are credited with earnings or losses based on the rate of return of mutual funds selected by the executive, which the executive may change at any time. Payment begins on the first day of the seventh month following the executive’s termination of service. The executive must also make an irrevocable election regarding payment terms, which may be either a lump sum, or installments of five (5), ten (10), or fifteen (15) years. Hardship withdrawals are available for unforeseeable emergency financial hardship situations. If a participant dies before receiving the full value of the deferral account balances, the designated beneficiary would receive the remainder of that benefit in the same payment form as originally specified (i.e., lump sum or installments). All accounts would be immediately distributed upon a change in control of the Company.
POST TERMINATION PAYMENTS AND BENEFITS
Benefits to Named Executive Officers in the Event of a Change in Control. The Company does not have employment agreements with any of its executive officers. The Company has entered into change in control agreements with certain executive officers, including the named executive officers. These agreements provide severance payments and benefits to the executive if his employment is terminated within two years after a change in control of the Company, if the change in control occurs during the term of the agreement. The change in control agreements have a three year term with automatic annual extensions unless either party gives notice ofnon-renewal.
Under each of the change in control agreements, if the executive is terminated by the Company without cause or the executive resigns for good reason (as such terms are defined in the agreement), within two years after a change in control, he or she will receive a pro rata bonus for the year of termination, plus a lump sum severance payment equal to a multiple (three in the case of Mr. Gallagher and two in the case of Ms. Yancey and Messrs. Donahue, Neill and Breen) oftimes the executive’s then-current annual salary and the average of the annual bonuses he or she received in the three years prior to the year of termination. In addition, the Company will continue to provide the executive with group health coverage for a period of 24 months.
If the executive’s employment is terminated by the Company for cause or he resigns without good reason, the agreement will terminate without further obligation of the Company other than the payment of any accrued but unpaid salary or benefits. In the case of death, disability or retirement, the executive, or his estate, would be entitled to payment of any accrued but unpaid salary or benefits, plus a pro rata bonus for the year in which the termination occurred.
The change in control agreements were amended in 2014 to eliminate all taxgross-ups with respect to the 20% excise tax that may be imposed under Section 4999 of the Internal Revenue Code on individuals who receive compensation in connection with a change of control that exceeds certain specified limits. As amended, the
Genuine Parts Company | 2018 Proxy Statement 35
Additional Information Regarding Executive Compensation
change in control agreements provide that in the event the executive would be subject to a 20% excise tax under Section 4999, the payments and benefits to the executive would be reduced to the maximum amount that does not trigger the excise tax unless the executive would retain greater value (on anafter-tax basis) by receiving all payments and benefits and paying all excise and income taxes.
Summary of Termination Payments and Benefits. The following tables summarize the value of the termination payments and benefits that our named executive officers would receive if they had terminated employment on December 31, 20152017 under the circumstances shown. The tables exclude (i) amounts accrued through December 31, 20152017 that would be paid in the normal course of continued employment, such as accrued but unpaid salary and earned annual bonus for 20152017 and (ii) vested account balances under our 401(k) Savings Plan, which is a 401(k) plan that is generally available to all of our salaried employees. The amounts shown for Mr. Gallagher reflect the actual payments and benefits he was entitled to receive upon his retirement from the Company on June 30, 2017.
Thomas C. Gallagher
Benefit | Retirement ($) | Death ($) | Disability ($) | Termination by Company or Executive Other Than Retirement, Death or Disability ($) | Involuntary Termination Following a Change in Control ($) | |||||||||||||||
Cash Severance | — | — | — | — | 9,820,722 | (1) | ||||||||||||||
Acceleration of Equity Awards | ||||||||||||||||||||
Stock Options and SARs(2) | 111,090 | 111,090 | 111,090 | — | 111,090 | |||||||||||||||
Restricted Stock and PRSUs(3) | 3,398,667 | 4,633,336 | 4,633,336 | — | 4,633,336 | |||||||||||||||
Retirement Benefits | ||||||||||||||||||||
Pension Plan(4) | 151,162 | 75,581 | 151,162 | 151,162 | 151,162 | (5) | ||||||||||||||
Supplemental Retirement Plan(6) | 1,541,887 | 22,955,257 | 1,541,887 | 1,541,887 | 27,558,045 | (7) | ||||||||||||||
Original Def Comp Plan(8) | 48,157 | 48,157 | 48,157 | 48,157 | 606,435 | (9) | ||||||||||||||
Tax-Deferred Savings Plan(10) | 2,010,974 | 2,010,974 | 2,010,974 | 2,010,974 | 2,010,974 | |||||||||||||||
Other Benefits | ||||||||||||||||||||
Health & Welfare Coverage | — | — | — | — | 17,256 | (11) | ||||||||||||||
Total | 7,261,937 | 29,834,395 | 8,496,606 | 3,752,180 | 44,909,020 |
Benefit | Retirement ($) | Death ($) | Disability ($) | Termination by Company or Executive Other Than Retirement, Death or Disability ($) | Involuntary Termination Following a Change in Control ($) | ||||||||||||||||||||
Cash Severance | — | — | — | — | — | ||||||||||||||||||||
Acceleration of Equity Awards | |||||||||||||||||||||||||
Stock Options and SARs(1) | 1,004,591 | — | — | — | — | ||||||||||||||||||||
Restricted Stock and PRSUs(2) | 2,768,329 | — | — | — | — | ||||||||||||||||||||
Retirement Benefits | |||||||||||||||||||||||||
Pension Plan(3) | 176,259 | — | — | — | — | ||||||||||||||||||||
Supplemental Retirement Plan(3) | 1,752,716 | — | — | — | — | ||||||||||||||||||||
Original Def Comp Plan(4) | 48,157 | — | — | — | — | ||||||||||||||||||||
Tax-Deferred Savings Plan(5) | 2,539,194 | — | — | — | — | ||||||||||||||||||||
Total | 8,289,246 | — | — | — | — |
(1) | Reflects the excess of the fair market value of the underlying shares as of June 30, 2017 over the exercise or base price of all unvested options and SARs the vesting of which accelerates in connection with Mr. Gallagher’s retirement from the Company on June 30, 2017. |
(2) | Reflects the fair market value as of June 30, 2017 of restricted stock and shares underlying PRSUs that became vested in connection with Mr. Gallagher’s retirement from the Company. |
(3) | Mr. Gallagher retired from employment with Genuine Parts Company on June 30, 2017, and elected a 100% joint and survivor option for his Pension and Supplemental Retirement Plan Benefits. His elected annual benefit amounts for these plans are shown under the retirement column. Apart from a potential lump sum benefit of his remaining Supplemental Retirement Plan benefits in the event of a Change in Control, other scenarios do not apply. |
(4) | Original Deferred Compensation Plan benefits are payable as a10-year certain and life annuity. Since Mr. Gallagher attained age 65 in 2012, the benefits commenced on January 1, 2014 under the terms of the agreements. |
(5) | Benefits payable under the Tax Deferred Savings Plan are described and quantified in the Nonqualified Deferred Compensation table in this proxy statement. |
36 Genuine Parts Company | 2018 Proxy Statement
Additional Information Regarding Executive Compensation
Paul D. Donahue
Benefit
| Retirement ($)
| Death ($)
| Disability ($)
| Termination by Company or Executive Other Than Retirement, Death or Disability ($)
| Involuntary Termination Following a Change in Control ($)
| ||||||||||||||||||||
Cash Severance | — | — | — | — | 3,666,073 | (1) | |||||||||||||||||||
Acceleration of Equity Awards | |||||||||||||||||||||||||
Stock Options and SARs(2) | — | 143,238 | 143,238 | — | 143,238 | ||||||||||||||||||||
Restricted Stock and PRSUs(3) | — | 1,779,727 | 1,779,727 | — | 1,779,727 | ||||||||||||||||||||
Retirement Benefits | |||||||||||||||||||||||||
Pension Plan(4) | 24,504 | 12,252 | 24,504 | 24,504 | 24,504 | (5) | |||||||||||||||||||
Supplemental Retirement Plan(6) | — | 4,022,783 | 333,684 | — | 5,139,154 | (7) | |||||||||||||||||||
Tax-Deferred Savings Plan(8) | 269,388 | 269,388 | 269,388 | 269,388 | 269,388 | ||||||||||||||||||||
Other Benefits | |||||||||||||||||||||||||
Health & Welfare | — | — | — | — | 29,844 | (9) | |||||||||||||||||||
Total | 293,892 | 6,227,388 | 2,550,541 | 293,892 | 11,051,928 |
(1) | Severance payment payable in lump sum pursuant to the change in control agreement described above. |
(2) | Reflects the excess of the fair market value of the underlying shares as of December 31, |
(3) | Reflects the fair market value as of December 31, |
(4) | Pension Plan benefits shown for all termination scenarios are annual annuities assuming a 50% joint and survivor annuity option and are assumed to be payable |
(5) | Mr. |
|
Paul D. Donahue
Benefit | Retirement ($) | Death ($) | Disability ($) | Termination by Company or Executive Other Than Retirement, Death or Disability ($) | Involuntary Termination Following a Change in Control ($) | |||||||||||||||
Cash Severance | — | — | — | — | 2,528,123 | (1) | ||||||||||||||
Acceleration of Equity Awards | ||||||||||||||||||||
Stock Options and SARs(2) | — | 55,549 | 55,549 | — | 55,549 | |||||||||||||||
Restricted Stock and PRSUs(3) | — | 1,528,928 | 1,528,928 | — | 1,528,928 | |||||||||||||||
Retirement Benefits | ||||||||||||||||||||
Pension Plan(4) | 24,375 | 12,188 | 24,375 | 24,375 | 24,375 | (5) | ||||||||||||||
Supplemental Retirement Plan(6) | — | 117,812 | 217,884 | — | 3,039,313 | (7) | ||||||||||||||
Tax-Deferred Savings Plan(8) | 215,682 | 215,682 | 215,682 | 215,682 | 215,682 | |||||||||||||||
Other Benefits | ||||||||||||||||||||
Health & Welfare | — | — | — | — | 27,792 | (9) | ||||||||||||||
Total | 240,057 | 1,930,159 | 2,042,418 | 240,057 | 7,419,762 |
|
(6) | The Supplemental Retirement Plan provides for 100% vesting upon death, disability or the occurrence of a change in control. No benefits are payable if termination occurs for other reasons prior to eligibility for early retirement (at least age 55 with at least 15 years of service). The death benefit shown is payable as a lump sum to Mr. Donahue’s beneficiary in the event of his death. The immediate lump sum death benefit is calculated as 100% of the present value of the single life annuity payable to Mr. Donahue |
(7) | An immediate lump sum distribution of benefits is required in the event of termination following a change in control. The lump sum value of the benefit calculated includes an estimated FICA taxgross-up amount of |
(8) | Benefits payable under the Tax Deferred Savings Plan are described and quantified in the Nonqualified Deferred Compensation table in this proxy statement. |
(9) | Reflects the cost of 24 months of continued group health coverage pursuant to the change in control agreement described above. In order to comply with Internal Revenue Code section 409A, during the last 6 months of this continued coverage period, the Company will satisfy its obligation to provide group health coverage by making 6 monthly installment payments to the executive in an amount equal to the monthly cost of providing such coverage, based upon the “applicable premium” under COBRA. |
Genuine Parts Company | 2018 Proxy Statement 37
Additional Information Regarding Executive Compensation
Carol B. Yancey
Benefit | Retirement ($) | Death ($) | Disability ($) | Termination by Company or Executive Other Than Retirement, Death or Disability ($) | Involuntary Termination Following a Change in Control ($) | |||||||||||||||
Cash Severance | — | — | — | — | 1,690,119 | (1) | ||||||||||||||
Acceleration of Equity Awards | ||||||||||||||||||||
Stock Options and SARs(2) | — | 29,239 | 29,239 | — | 29,239 | |||||||||||||||
Restricted Stock and PRSUs(3) | — | 878,912 | 878,912 | — | 878,912 | |||||||||||||||
Retirement Benefits | ||||||||||||||||||||
Pension Plan(4) | 47,559 | 308,152 | 47,559 | 47,559 | 47,559 | (5) | ||||||||||||||
Supplemental Retirement Plan(6) | — | 920,837 | 110,877 | — | 1,596,645 | (7) | ||||||||||||||
Tax-Deferred Savings Plan(8) | 261,815 | 261,815 | 261,815 | 261,815 | 261,815 | |||||||||||||||
Other Benefits | ||||||||||||||||||||
Health & Welfare | — | — | — | — | 27,792 | (9) | ||||||||||||||
Estimated 280G Tax “Cut-Back” to Avoid Excise Tax | — | — | — | — | (233,150 | )(10) | ||||||||||||||
Total | 309,374 | 2,398,955 | 1,328,402 | 309,374 | 4,298,931 |
Benefit
| Retirement ($)
| Death ($)
| Disability ($)
| Termination by Company or Executive Other Than Retirement, Death or Disability ($)
| Involuntary Termination Following a Change in Control ($)
| ||||||||||||||||||||
Cash Severance | — | — | — | — | 2,071,349 | (1) | |||||||||||||||||||
Acceleration of Equity Awards | |||||||||||||||||||||||||
Stock Options and SARs(2) | — | 66,874 | 66,874 | — | 66,874 | ||||||||||||||||||||
Restricted Stock and PRSUs(3) | — | 1,192,471 | 1,192,471 | — | 1,192,471 | ||||||||||||||||||||
Retirement Benefits | |||||||||||||||||||||||||
Pension Plan(4) | 47,764 | 306,630 | 47,764 | 47,764 | 47,764 | (5) | |||||||||||||||||||
Supplemental Retirement Plan(6) | — | 1,793,076 | 167,625 | — | 2,648,952 | (7) | |||||||||||||||||||
Tax-Deferred Savings Plan(8) | 408,531 | 408,531 | 408,531 | 408,531 | 408,531 | ||||||||||||||||||||
Other Benefits | |||||||||||||||||||||||||
Health & Welfare | — | — | — | — | 29,844 | (9) | |||||||||||||||||||
Estimated 280G Tax“Cut-Back” to Avoid Excise Tax | — | — | — | — | (277,556 | )(10) | |||||||||||||||||||
Total | 456,295 | 3,767,582 | 1,883,265 | 456,295 | 6,188,229 |
(1) | Severance payment payable in lump sum pursuant to the change in control agreement described above. |
(2) | Reflects the excess of the fair market value of the underlying shares as of December 31, |
(3) | Reflects the fair market value as of December 31, |
(4) | Pension Plan benefits shown for all termination scenarios are annual annuities assuming a 50% joint and survivor annuity option and are assumed to be payable at age 65 (apart from that from death). The surviving |
spouse may elect to waive the standardpre-retirement death benefit from the Pension Plan and elect instead to receive |
(5) | Ms. Yancey may elect to receive her pension benefit in the form of a lump sum payment in the event of termination within five years following a change in control. A lump sum option is not otherwise available under the plan. The lump sum payable to Ms. Yancey if she terminated December 31, |
(6) | The Supplemental Retirement Plan provides for 100% vesting upon death, disability or the occurrence of a change in control. No benefits are payable if termination occurs for other reasons prior to eligibility for early retirement (at least age 55 with at least 15 years of service). The death benefit shown is payable as a lump sum to Ms. Yancey’s beneficiary in the event of her death. The immediate lump sum death benefit is calculated as 100% of the present value of the single life annuity payable to Ms. Yancey |
(7) | An immediate lump sum distribution of benefits is required in the event of termination following a change in control. The lump sum value of the benefit calculated includes an estimated FICA taxgross-up amount of |
(8) | Benefits payable under the Tax Deferred Savings Plan are described and quantified in the Nonqualified Deferred Compensation table in this proxy statement. |
(9) | Reflects the cost of 24 months of continued group health coverage pursuant to the change in control agreement described above. In order to comply with Internal Revenue Code section 409A, during the last 6 months of this continued coverage period, the Company will satisfy its obligation to provide group health coverage by making 6 monthly installment payments to the executive in an amount equal to the monthly cost of providing such coverage, based upon the “applicable premium” under COBRA. |
(10) | The change in control agreement provides that in the event the executive would be subject to a 20% excise tax under Section 4999 of the Internal Revenue Code (imposed on individuals who receive compensation in connection with a change of control that exceeds certain specified limits), the payments and benefits will be reduced to the maximum amount that does not trigger the excise tax, unless the executive would retain greater value (on anafter-tax basis) by receiving all payments and benefits and paying all excise and income taxes. |
38 Genuine Parts Company | 2018 Proxy Statement
Additional Information Regarding Executive Compensation
Timothy P. Breen
Benefit | Retirement ($) | Death ($) | Disability ($) | Termination by Company or Executive Other Than Retirement, Death or Disability ($) | Involuntary Termination Following a Change in Control ($) | |||||||||||||||
Cash Severance | — | — | — | — | 1,298,034 | (1) | ||||||||||||||
Acceleration of Equity Awards | ||||||||||||||||||||
Stock Options and SARs(2) | — | 12,278 | 12,278 | — | 12,278 | |||||||||||||||
Restricted Stock and PRSUs(3) | — | 331,106 | 331,106 | — | 331,106 | |||||||||||||||
Retirement Benefits | ||||||||||||||||||||
Pension Plan(4) | 14,875 | 156,750 | 14,875 | 14,875 | 14,875 | (5) | ||||||||||||||
Supplemental Retirement Plan(6) | 49,890 | 910,762 | 49,890 | 49,890 | 1,213,188 | (7) | ||||||||||||||
Other Benefits | ||||||||||||||||||||
Health & Welfare | — | — | — | — | 20,496 | (8) | ||||||||||||||
Estimated 280G Tax “Cut-Back” to Avoid Excise Tax | — | — | — | — | (78,672 | )(9) | ||||||||||||||
Total | 64,765 | 1,410,896 | 408,149 | 64,765 | 2,811,305 |
Benefit
| Retirement ($)
| Death ($)
| Disability ($)
| Termination by Company or Executive Other Than Retirement, Death or Disability ($)
| Involuntary Termination Following a Change in Control ($)
| ||||||||||||||||||||
Cash Severance | — | — | — | — | 1,481,647 | (1) | |||||||||||||||||||
Acceleration of Equity Awards | |||||||||||||||||||||||||
Stock Options and SARs(2) | — | 45,019 | 45,019 | — | 45,019 | ||||||||||||||||||||
Restricted Stock and PRSUs(3) | — | 406,168 | 406,168 | — | 406,168 | ||||||||||||||||||||
Retirement Benefits | |||||||||||||||||||||||||
Pension Plan(4) | 19,003 | 156,368 | 19,003 | 19,003 | 19,003 | (5) | |||||||||||||||||||
Supplemental Retirement Plan(6) | 74,748 | 1,442,477 | 74,748 | 74,748 | 1,804,002 | (7) | |||||||||||||||||||
Other Benefits | |||||||||||||||||||||||||
Health & Welfare | — | — | — | — | 21,984 | (8) | |||||||||||||||||||
Estimated 280G Tax“Cut-Back” to Avoid Excise Tax | (35,335 | )(9) | |||||||||||||||||||||||
Total | 93,751 | 2,050,032 | 544,938 | 93,751 | 3,742,488 |
(1) | Severance payment payable in lump sum pursuant to the change in control agreement described above. |
(2) | Reflects the excess of the fair market value of the underlying shares as of December 31, |
(3) | Reflects the fair market value as of December 31, |
(4) | Pension Plan benefits shown for all termination scenarios are annual annuities assuming a 50% joint and survivor annuity option and are assumed to be payable on January 1, |
(5) | Mr. Breen may elect to receive his pension benefit in the form of a lump sum payment in the event of termination within five years following a change in control. A lump sum option is not otherwise available under the plan. The lump sum payable to Mr. Breen if he terminated December 31, |
(6) | Supplemental Retirement Plan benefits shown for all termination scenarios (except death and involuntary termination following a change in control) assume payment under the |
(7) | An immediate lump sum distribution of benefits is required in the event of termination following a change in control. The lump sum value of the benefit calculated includes an estimated FICA taxgross-up amount of |
(8) | Reflects the cost of 24 months of continued group health coverage pursuant to the change in control agreement described above. In order to comply with Internal Revenue Code section 409A, during the last 6 months of this continued coverage period, the Company will satisfy its obligation to provide group health coverage by making 6 monthly installment payments to the executive in an amount equal to the monthly cost of providing such coverage, based upon the “applicable premium” under COBRA. |
(9) | The change in control agreement provides that in the event the executive would be subject to a 20% excise tax under Section 4999 of the Internal Revenue Code (imposed on individuals who receive compensation in connection with a change of control that exceeds certain specified limits), the payments and benefits will be reduced to the maximum amount that does not trigger the excise tax, unless the executive would retain greater value (on anafter-tax basis) by receiving all payments and benefits and paying all excise and income taxes. |
James R. NeillGenuine Parts Company | 2018 Proxy Statement 39
Additional Information Regarding Executive Compensation
Benefit | Retirement ($) | Death ($) | Disability ($) | Termination by Company or Executive Other Than Retirement, Death or Disability ($) | Involuntary Termination Following a Change in Control ($) | |||||||||||||||
Cash Severance | — | — | — | — | 946,517 | (1) | ||||||||||||||
Acceleration of Equity Awards | ||||||||||||||||||||
Stock Options and SARs(2) | — | 10,524 | 10,524 | — | 10,524 | |||||||||||||||
Restricted Stock and PRSUs(3) | — | 316,762 | 316,762 | — | 316,762 | |||||||||||||||
Retirement Benefits | ||||||||||||||||||||
Pension Plan(4) | 8,073 | 4,037 | 8,073 | 8,073 | 8,073 | (5) | ||||||||||||||
Supplemental Retirement Plan(6) | — | 292,445 | 33,215 | — | 474,270 | (7) | ||||||||||||||
Other Benefits | ||||||||||||||||||||
Health & Welfare | — | — | — | — | 27,792 | (8) | ||||||||||||||
Estimated 280G Tax “Cut-Back” to Avoid Excise Tax | — | — | — | — | (417,120 | )(9) | ||||||||||||||
Total | 8,073 | 623,768 | 368,574 | 8,073 | 1,366,818 |
Lee A. Maher
Benefit
| Retirement ($)
| Death ($)
| Disability ($)
| Termination by Company or Executive Other Than Retirement, Death or Disability ($)
| Involuntary Termination Following a Change in Control ($)
| ||||||||||||||||||||
Cash Severance | — | — | — | — | 1,589,120 | (1) | |||||||||||||||||||
Acceleration of Equity Awards | |||||||||||||||||||||||||
Stock Options and SARs(2) | — | 43,568 | 43,568 | — | 43,568 | ||||||||||||||||||||
Restricted Stock and PRSUs(3) | — | 958,936 | 958,936 | — | 958,936 | ||||||||||||||||||||
Retirement Benefits | |||||||||||||||||||||||||
Pension Plan(4) | 83,432 | 41,716 | 83,432 | 83,432 | 83,432 | (5) | |||||||||||||||||||
Supplemental Retirement Plan(6) | 185,148 | 3,375,414 | 185,148 | 185,148 | 4,087,281 | (7) | |||||||||||||||||||
Other Benefits | |||||||||||||||||||||||||
Health & Welfare | — | — | — | — | 21,984 | (8) | |||||||||||||||||||
Total | 268,580 | 4,419,634 | 1,271,084 | 268,580 | 6,784,321 |
(1) | Severance payment payable in lump sum pursuant to the change in control agreement described above. |
(2) | Reflects the excess of the fair market value of the underlying shares as of December 31, |
(3) | Reflects the fair market value as of December 31, |
(4) | Pension Plan benefits shown for all termination scenarios are annual annuities assuming a 50% joint and survivor annuity option and are assumed to be payable on January 1, |
(5) | Mr. Maher may elect to receive his pension benefit in the form of a lump sum payment in the event of termination within five years following a change in control. A lump sum option is not otherwise available under the plan. The lump sum payable to Mr. Maher if he terminated December 31, 2017 following a change in control is $1,685,849. |
(6) | Supplemental Retirement Plan benefits shown for all termination scenarios (except death and involuntary termination following a change in control) assume payment under the 100% joint and survivor annuity option elected by Mr. Maher with payment beginning January 1, 2018. The death benefit shown is payable as a lump sum to Mr. Maher’s beneficiary in the event of his death. The lump sum death benefit is calculated as 100% of the present value of the single life annuity payable on January 1, 2018. Disability benefits under the Supplemental Retirement Plan are assumed to be equal to early retirement benefits and are payable on January 1, 2018. The Supplemental Retirement Plan annuity benefits shown in the table do not reflect estimated FICA taxgross-ups paid by the Company. The estimated FICA taxgross-up, based on 2.35% of the lump sum value of the Supplemental Retirement Plan benefit calculated on the FICA tax basis for the plan, is $77,393 upon termination for retirement. |
(7) | An immediate lump sum distribution of benefits is required in the event of termination following a change in control. The lump sum value of the benefit calculated includes an estimated FICA taxgross-up amount of $93,846. |
(8) | Reflects the cost of 24 months of continued group health coverage pursuant to the change in control agreement described above. In order to comply with Internal Revenue Code section 409A, during the last 6 months of this continued coverage period, the Company will satisfy its obligation to provide group health coverage by making 6 monthly installment payments to the executive in an amount equal to the monthly cost of providing such coverage, based upon the “applicable premium” under COBRA. |
40 Genuine Parts Company | 2018 Proxy Statement
Additional Information Regarding Executive Compensation
James R. Neill
Benefit
| Retirement ($)
| Death ($)
| Disability ($)
| Termination by Company or Executive Other Than Retirement, Death or Disability ($)
| Involuntary Termination Following a Change in Control ($)
| ||||||||||||||||||||
Cash Severance | — | — | — | — | 1,186,028 | (1) | |||||||||||||||||||
Acceleration of Equity Awards | |||||||||||||||||||||||||
Stock Options and SARs(2) | — | 25,529 | 25,529 | — | 25,529 | ||||||||||||||||||||
Restricted Stock and PRSUs(3) | — | 455,478 | 455,478 | — | 455,478 | ||||||||||||||||||||
Retirement Benefits | |||||||||||||||||||||||||
Pension Plan(4) | 8,120 | 4,060 | 8,120 | 8,120 | 8,120 | (5) | |||||||||||||||||||
Supplemental Retirement Plan(6) | — | 690,443 | 61,536 | — | 965,283 | (7) | |||||||||||||||||||
Other Benefits | |||||||||||||||||||||||||
Health & Welfare | — | — | — | — | 29,844 | (8) | |||||||||||||||||||
Estimated 280G Tax“Cut-Back” to Avoid Excise Tax | — | — | — | — | (166,815 | )(9) | |||||||||||||||||||
Total | 8,120 | 1,175,510 | 550,663 | 8,120 | 2,503,467 |
(1) | Severance payment payable in lump sum pursuant to the change in control agreement described above. |
(2) | Reflects the excess of the fair market value of the underlying shares as of December 31, 2017 over the exercise or base price of all unvested options and SARs the vesting of which accelerates in connection with the specified event. |
(3) | Reflects the fair market value as of December 31, 2017 of restricted stock and shares underlying PRSUs the vesting of which accelerates in connection with the specified event. |
(4) | Pension Plan benefits shown for all termination scenarios are annual annuities assuming a 50% joint and survivor annuity option and are assumed to be payable at age 65. the surviving spouse may elect to waive the standardpre-retirement death benefit from the Pension Plan and elect to receive an alternative death benefit available with different forms of payment. |
(5) | Mr. Neill may elect to receive his pension benefit in the form of a lump sum payment in the event of termination within five years following a change in control. A lump sum option is not otherwise available under the plan. The lump sum payable to Mr. Neill if he terminated December 31, |
(6) | The Supplemental Retirement Plan provides for 100% vesting upon death, disability or the occurrence of a change in control. No benefits are payable if termination occurs for other reasons prior to eligibility for early retirement (at least age 55 with at least 15 years of service). The death benefit shown is payable as a lump sum to Mr. Neill’s beneficiary in the event of his death. The immediate lump sum death benefit is calculated as 100% of the present value of the single life annuity payable to Mr. Neill |
(7) | An immediate lump sum distribution of benefits is required in the event of termination following a change in control. |
(8) | Reflects the cost of 24 months of continued group health coverage pursuant to the change in control agreement described above. In order to comply with Internal Revenue Code section 409A, during the last 6 months of this continued coverage period, the Company will satisfy its obligation to provide group health coverage by making 6 monthly installment payments to the executive in an amount equal to the monthly cost of providing such coverage, based upon the “applicable premium” under COBRA. |
(9) | The change in control agreement provides that in the event the executive would be subject to a 20% excise tax under Section 4999 of the Internal Revenue Code (imposed on individuals who receive compensation in connection with a change of control that exceeds certain specified limits), the payments and benefits will be reduced to the maximum amount that does not trigger the excise tax, unless the executive would retain greater value (on anafter-tax basis) by receiving all payments and benefits and paying all excise and income taxes. |
Genuine Parts Company | 2018 Proxy Statement 41
COMPENSATION, NOMINATING AND GOVERNANCE COMMITTEE REPORT
The Compensation, Nominating and Governance Committee of the Board of Directors of Genuine Parts Company oversees the compensation programs of Genuine Parts Company on behalf of the Board. In fulfilling its oversight responsibilities, the Committee reviewed and discussed with management of the Company the Compensation Discussion and Analysis included in this proxy statement.
In reliance on the review and discussions referred to above, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form10-K for the year ended December 31, 20152017 and in this proxy statement, each of which has been filed with the SEC.
Members of the Compensation, Nominating and
Governance Committee:
John D. Johns (Chair)
P. Russell Hardin
John R. Holder
Gary W. Rollins
E. Jenner Wood
This report shall not be deemed to be incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, and shall not otherwise be deemed filed under such acts.
COMPENSATION, NOMINATING AND GOVERNANCE COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following directors served on the Compensation, Nominating and Governance Committee during alluntil the 2017 Annual Meeting of 2015:Shareholders on April 24, 2017: John D. Johns, John R. Holder, Gary W. Rollins and E. Jenner Wood. Mr. Rollins retired from the board on April 24, 2017 due to reaching the mandatory retirement age of 72. Mr. P. Russell Hardin was appointed as a member of the Compensation, Nominating, and Governance Committee when he was elected to the Board in August of 2017. Mr. Hardin attended his first Compensation, Nominating, and Governance Committee meeting on November 20, 2017. None of such persons was an officer or employee of the Company during 20152017 or at any time in the past. During 2015,2017, none of the members of the Compensation, Nominating and Governance Committee had any relationship with the Company requiring disclosure under applicable rules of the SEC. None of our executive officers served as a member of the Board of Directors or compensation committee, or similar committee, of any other company whose executive officer(s) served as a member of our Board of Directors or our Compensation, Nominating and Governance Committee.
42 Genuine Parts Company | 2018 Proxy Statement
20152017 Director Compensation
NAME | Fees Earned or Paid in Cash ($) | Stock Awards ($)(3) | All Other Compensation ($) | Total ($) | ||||||||||||
Mary B. Bullock | 73,500 | 183,500 | 257,000 | |||||||||||||
Elizabeth W. Camp(1) | 31,000 | — | 31,000 | |||||||||||||
Jean Douville | — | — | 98,603 | (4) | 98,603 | |||||||||||
Gary P. Fayard | 73,500 | 183,500 | 257,000 | |||||||||||||
John R. Holder | 72,000 | 183,500 | 255,500 | |||||||||||||
Donna W. Hyland(2) | 11,500 | — | 11,500 | |||||||||||||
John D. Johns | 77,500 | 183,500 | 261,000 | |||||||||||||
Robert C. Loudermilk, Jr. | 73,500 | 183,500 | 257,000 | |||||||||||||
Wendy B. Needham | 78,500 | 183,500 | 262,000 | |||||||||||||
Jerry W. Nix | 66,000 | 183,500 | 249,500 | |||||||||||||
Gary W. Rollins | 88,000 | 183,500 | 271,500 | |||||||||||||
E. Jenner Wood | 76,500 | 183,500 | 260,000 |
NAME Fees Earned or Paid in Cash ($) Stock Awards ($)(1) Total Elizabeth W. Camp Gary P. Fayard Thomas C. Gallagher(2) P. Russell Hardin(3) John R. Holder Donna W. Hyland John D. Johns Robert C. Loudermilk, Jr. Wendy B. Needham Jerry W. Nix E. Jenner Wood
($) 81,000 180,680 261,680 81,000 180,680 261,680 189,000 — 189,000 31,000 — 31,000 79,500 180,680 260,180 81,000 180,680 261,680 95,500 180,680 276,180 81,000 180,680 261,680 89,000 180,680 269,680 70,500 180,680 251,180 90,000 180,680 270,680
(1) |
Represents the aggregate grant date total fair value of stock awards determined in accordance with FASB ASC Topic 718. The awards reflected in this column consist of 2,000 RSUs granted tonon-employee directors on April |
(2) | Mr. Gallagher began earning director fees on July 1, 2017, after he retired as an employee of the Company. He did not receive a stock award in 2017. Of the $189,000 reflected as Fees Earned or Paid in Cash for Mr. Gallagher, $150,000 was his Chairman fee, $30,000 was his director fee, and the remaining were meeting fees. |
(3) | Mr. Hardin was elected to the Board on August 21, 2017. He did not receive a stock award in 2017. |
The aggregate number of RSUs and SARs held by each director as of December 31, 20152017 was as follows:
Director | Number of SARs | Number of RSUs | ||||||
Mary B. Bullock | 10,740 | |||||||
Elizabeth W. Camp | — | |||||||
Jean Douville | — | |||||||
Gary P. Fayard | 4,110 | |||||||
John R. Holder | 10,725 | |||||||
Donna W. Hyland | — | |||||||
John D. Johns | 10,740 | |||||||
Robert C. Loudermilk, Jr. | 10,725 | |||||||
Wendy B. Needham | 10,740 | |||||||
Jerry W. Nix | 19,000 | 12,070 | ||||||
Gary W. Rollins | 10,740 | |||||||
E. Jenner Wood | 2,029 |