| • | “Corporate Change” means the first to occur of any of the following events: (1) any person acquires 50% or more of our common stock or voting securities, other than (a) any acquisition directly from or resulting from an acquisition of our shares by the Company, (b) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company, or (c) any acquisition by any entity pursuant to a transaction which complies with clauses (a) or (b); (2) the occurrence of a merger, reorganization, consolidation or disposition of all or substantially all of our assets, unless our shareholders prior to such transaction hold more than 50% of the equity and voting power of the resulting entity or entity holding such assets, no person (other than benefit plans of such entity) holds 50% or more of the equity or voting power of such entity and at least a majority of the board of directors of such entity were members of the Incumbent Board; (3) our shareholders approve our complete liquidation or dissolution; or (4) under the Kenningham Incentive Agreement, within any period of 24 consecutive months and subject to certain exceptions, a change in the composition of the board of directors of the Company such that the incumbent board ceases for any reason to constitute a least a majority of the Board.“Constructive Termination Event” shall occur upon: (1) the failure by us to pay the executive’s compensation as provided in the applicable agreement; (2) relocation without his consent of his primary employment location of more than 50 miles; (3) our request that the executive perform any illegal activity or sign-off on any inappropriate financial statement or acknowledgement; (4) a material diminution in the executive’s position, duties, responsibilities, reporting status, or authority; or (5) a material negative reduction in base salary or incentive compensation targets within six months after a Corporate Change, except that before exercising his right to terminate the employment relationship pursuant to any of the previous provisions, he must first give written notice to our Board of the circumstances purportedly giving rise to his right to terminate and must provide us with a minimum of thirty days (fifteen days under the Incentive Agreement) to correct the problem, unless correction is inherently impossible.
“Disability” under the Employment Agreement and Retention Agreement shall mean the executive’s becoming incapacitated by accident, sickness or other circumstance that in the reasonable opinion of a qualified doctor approved by our Board, renders him mentally or physically incapable of performing the essential functions of the executive’s position, with or without reasonable accommodation, and that will continue, in the reasonable opinion of the doctor, for a period of no less than 180 days.
“Disability” under the Incentive Agreement means any ailment or condition that prevents the executive from actively carrying out his duties under the Incentive Agreement for a continuous period of 120 days.
| | |  | “Constructive Termination Event” occurs upon: (1) the failure by us to pay the executive’s compensation as provided in the applicable agreement; (2) relocation without his consent of his primary employment location of more than 50 miles; (3) our request that the executive perform any illegal activity or sign-off on any inappropriate financial statement or acknowledgement; (4) a material diminution in the executive’s position, duties, responsibilities, reporting status, or authority; or (5) a material negative reduction in base salary or incentive compensation targets within six months after a Corporate Change, except that before exercising his right to terminate the employment relationship pursuant to any of the previous provisions, he must first give written notice to our Board of the circumstances purportedly giving rise to his right to terminate and must provide us with a minimum of thirty days (fifteen days under the Kenningham Incentive Agreement) to correct the problem, unless correction is inherently impossible. | | • | Proxy Statement 2022 | 58“Disability” under the McHenry Retention Agreement means the executive’s becoming incapacitated by accident, sickness, or other circumstance that, in the reasonable opinion of a qualified doctor approved by our Board, renders him mentally or physically incapable of performing the essential functions of the executive’s position, with or without reasonable accommodation, and that will continue, in the reasonable opinion of the doctor, for a period of no less than 180 days. | | • | “Disability” under the Kenningham Incentive Agreement means any ailment or condition that prevents the executive from actively carrying out his duties under the Kenningham Incentive Agreement for a continuous period of 120 days. | | • | “Involuntary Termination” means, for purposes of the McHenry Retention Agreement, a termination by the executive due to a Constructive Termination Event by itself or in relation to a Corporate Change, or by us for any reason without Cause, at the discretion of our Board; an “Involuntary Termination” also includes the nonrenewal of the executive’s employment agreement by the Board. Under the Kenningham Incentive Agreement, an Involuntary Termination has the meaning described above. | | • | “Voluntary Termination” means a termination by the executive other than for a Constructive Termination Event. |
Proxy Statement 2022 | 59
“Involuntary Termination” shall mean, for purposes of the Employment Agreement and Retention Agreement, a termination by the executive due to a Constructive Termination Event by itself or in relation to a Corporate Change, or by us for any reason without Cause, at the discretion of our Board; an “Involuntary Termination” also includes the nonrenewal of the executive’s employment agreement by the Board. Under the Incentive Agreement, an Involuntary Termination has the meaning defined in the description of such agreement above.
“Voluntary Termination” shall mean a termination by the executive other than for a Constructive Termination Event.
Group 1 Automotive 2014 Long Term Incentive PlanUpon the occurrence of a Corporate Change, the CHR Committee, in its sole discretion, may decide to accelerate and fully vest any restricted stock awards then outstanding, and, upon such vesting, all restrictions applicable to the restricted stock will terminate. Further, the CHR Committee may determine that the performance conditions are satisfied for the performance share awards upon a Corporate Change if the participant is also terminated without cause or for good reason in connection with the Corporate Change, or the participant’s award is not assumed or converted by the controlling entity following the Corporate Change. A Corporate Change occurs if (1) we are dissolved and liquidated; (2) we are not the surviving entity in any merger or consolidation (or we survive only as a subsidiary of an entity); (3) we sell, lease or exchange all or substantially all of our assets to any other person or entity; (4) any person, entity or group acquires or gains ownership or control of more than 50% of the outstanding shares of our voting stock; or (5) after a contested election of directors, the persons who were directors before such election cease to constitute a majority of our Board of Directors. GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 70 Our named executive officersNEOs do not currently, and atas of December 31, 20212023 did not, hold any unvested stock options, and therefore there are no amounts to report with respect to acceleration of stock option awards by the CHR Committee in connection with a Corporate Change.report. The restricted stock award agreements for restricted stock also establish vesting provisions applicable to termination of employment. TheSuch award agreement for all grants of restricted stock to our named executive officers, providesagreements provide for accelerated vesting if the named executive officer’sNEO’s employment is terminated due to death or disability. The award agreements also provide for accelerated vesting in the case of death or disability during the two-year period following a qualified retirement. A “qualified retirement” with respect to the 20212022 and 2023 awards generally means a retirement after attaining the age of 63 and following the date on which the sum of the executive’s age and years of service equals or exceeds the age of 70, and so long as the executive has completed, in aggregate, five years of service, and upon satisfaction of a two year two-year non-compete and certain non-disclosure covenants. A “qualified retirement” with respect to awards granted prior to 20212022 generally means a termination of employment on a date that is on or after the employee’s attainment of age 63 and following the employee’s completion of at least ten years of service with the Company and upon satisfaction of a two year two-year non-compete and certain non-disclosure covenants. Additionally, awards granted during the year employment is terminated will vest, provided the executive received such an award at least six months prior to termination. The performance share agreements for our named executive officers providesNEOs provide that upon a named executive’s officer’sNEO’s termination due to death or disability, the performance shares will paybe paid out following the performance period based on actual performance. If a named executive officer’sNEO’s employment is terminated due to a “planned retirement” (generally defined as a mutually agreed upon retirement by the officer and the Company), the performance shares will convert to time-based restricted stock awards that will continue to vest, subject to the officer’s compliance with applicable restrictive covenants, until the second anniversary of the named executive officer’sNEO’s termination of employment. Such a conversion will occur based on the actual performance achieved during the performance period. All other terminations of employment (other than as described above in connection with a Corporate Change) will result in a forfeiture of the performance shares without payment. As described in the CD&A above, the 20212022 and 2023 performance shares were also granted with a Maximum Value limitation. For performance share awards granted prior to 2021,2022, a similar maximum value limitationMaximum Value Limitation applied, but that limitation applied to both TSRrTSR and ROIC-based awards, to be calculated separately. These value limits could potentially alter the number of shares that become payable in connection with an acceleration or payment event. 
Non-Competition Agreements Non-Competition Agreements
Along with their respective employment agreements, Mr. Hesterberg has entered into a Non-Compete Agreement and Messrs. Kenningham and McHenry have entered into an Incentive Compensationincentive compensation and Non-Compete Agreementnon-compete agreement with the Company, each of which provideprovides that for a period of two years following the executive’s termination of employment, the executive will not compete with the Company or induce any of our employees to leave his or her employment with us or hire any of our employees. If Mr. Hesterberg violates this agreement, he will also forfeit his rights to any restricted stock and stock options granted pursuant to his employment agreement, and we will have the right to refrain from making any further payments under that agreement, as well as to receive back from Mr. Hesterberg the full value of any payments which were made to him in the previous twelve months as well as the value of any restricted stock or stock options that may have vested during the past twelve months from the date of Mr. Hesterberg’s termination. If Mr. McHenry violates his agreement, we will have the right to demand forfeiture of any cash or equity award realized during the twelve months prior to the violation. If Mr. Kenningham violates his agreement, we will have the right to refrain from making any further payments under histhe Kenningham Incentive Agreement.
Messrs. Hesterberg and Grese are eligible for a “qualified retirement”, as previously described under “2021 Compensation Discussion and Analysis — Long Term Equity Incentive Compensation,” and therefore would be subject to the two year non-compete agreement described therein.
Messrs. Kenningham, McHenry and DeLongchamps were not eligible for a qualified retirement as of December 31, 2021.2023. TERMINATION AND CHANGE IN CONTROL TABLES FOR 2021
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 71 Termination and Change in Control Tables for 2023The following tables present for each named executive officer,below disclose the estimated payments andamount of compensation and/or other benefits that would have been payable as ofdue to the end of 2021NEOs in the event of atheir termination of employment, andincluding but not limited to, in connection with a Corporate Change, as narratively described above. These estimated amounts have been calculated as ifassuming the individual’s employment had been terminated, or a Corporate Change hadtermination occurred as ofon December 31, 2021, the last business day of 2021,2023, and using athe Company common stock closing price of the Company’s common stock$304.74 on December 31, 2021 which was $195.22. 29, 2023 (the last trading day of the 2023 year).
The equity award calculations in the tabletables below do not include performance shares becausefor which the performance period has not been fulfilled. For additional information regarding the possible payouts for performance shares, see “Grants of Plan-Based Awards” above. | | | | | | | | | | | | | | | | | | | | | | | Earl J. Hesterberg | | Involuntary
Termination
($) | | | Constructive
Termination
($) | | | Corporate
Change1
($) | | | Death and
Disability
($) | | | | | | | Salary and Bonus | | | 3,720,000 | | | | 3,720,000 | | | | 5,580,000 | | | | 2,480,000 | | | | | | | Equity Compensation2 | | | 18,977,141 | | | | 18,977,141 | | | | 18,977,141 | | | | 18,977,141 | | | | | | | Use of Vehicle | | | 17,574 | | | | 17,574 | | | | 17,574 | | | | 35,148 | | | | | | | TOTAL | | | 22,714,715 | | | | 22,714,715 | | | | 24,574,715 | | | | 21,492,289 | | | | | | | | | | | | | | | | | | | | | | | | | Daryl A. Kenningham | | Involuntary
Termination
($) | | | Constructive
Termination
($) | | | Corporate
Change1
($) | | | Death and
Disability
($) | | | | | | | Salary and Bonus | | | 1,881,000 | | | | 1,881,000 | | | | 1,881,000 | | | | — | | | | | | | Equity Compensation | | | 7,694,206 | | | | 7,694,206 | | | | 7,694,206 | | | | 7,694,206 | | | | | | | TOTAL | | | 9,575,206 | | | | 9,575,206 | | | | 9,575,206 | | | | 7,694,206 | | | | | | | | | | | | | | | | | | | | | | | | | Daniel McHenry | | Involuntary
Termination
($) | | | Constructive
Termination
($) | | | Corporate
Change1
($) | | | Death and
Disability
($) | | | | | | | Salary and Bonus | | | 475,159 | 3 | | | — | | | | — | | | | 475,159 | | | | | | | Equity Compensation | | | — | | | | — | | | | 2,315,504 | | | | 2,315,504 | | | | | | | TOTAL | | | 475,159 | | | | — | | | | 2,315,504 | | | | 2,790,663 | |
| | | | | Proxy Statement 2022 | 60 |
Proxy Statement 2022 | 61
| | | | | Frank Grese, Jr. | | Involuntary
Termination
($) | | | Constructive
Termination
($) | | | Corporate
Change1
($) | | | Death and
Disability
($) | | | | Equity Compensation2 | | | — | | | | — | | | | 3,711,913 | | | | 3,711,913 | | | | | Daryl A. Kenningham | | | Involuntary
Termination
($) | | Constructive
Termination
($) | | Corporate
Change(1)
($) | | Death and
Disability
($) | | Salary and Bonus | | | 2,949,705 | | 2,949,705 | | 2,949,705 | | — (3) | | Equity Compensation | | | 12,725,334 | | 12,725,334 | | 12,725,334 | | 12,725,334 | TOTAL | | | — | | | | — | | | | 3,711,913 | | | | 3,711,913 | | | 15,675,039 | | 15,675,039 | | 15,675,039 | | 12,725,334 | | | | | | | | | | | | | | | | | | | Daniel J. McHenry(2) | | | Involuntary
Termination
($) | | Constructive
Termination
($) | | Corporate
Change(1)
($) | | Death and
Disability
($) | | Salary and Bonus | | | 660,000 | | — | | — | | 660,000 | | Equity Compensation | | | — | | — | | 3,659,623 | | 3,659,623 | | TOTAL | | | 660,000 | | — | | 3,659,623 | | 4,319,623 | | | | | | | | | | | | Peter C. DeLongchamps | | Involuntary
Termination
($) | | | Constructive
Termination
($) | | | Corporate
Change1
($) | | | Death and
Disability
($) | | | Involuntary
Termination
($) | | Constructive
Termination
($) | | Corporate
Change(1)
($) | | Death and
Disability
($) | | Equity Compensation | | | — | | — | | 4,045,424 | | 4,045,424 | | TOTAL | | | — | | — | | 4,045,424 | | 4,045,424 | | | | | | | | | | | | Gillian A. Hobson | | | Involuntary
Termination
($) | | Constructive
Termination
($) | | Corporate
Change(1)
($) | | Death and
Disability
($) | | Salary and Bonus | | | — | | — | | — | | — | Equity Compensation | | | — | | | | — | | | | 3,752,324 | | | | 3,752,324 | | | — | | — | | 463,205 | | 463,205 | | TOTAL | | | — | | — | | 463,205 | | 463,205 | | | | | | | | | | | | Michael D. Jones | | | Involuntary
Termination
($) | | Constructive
Termination
($) | | Corporate
Change(1)
($) | | Death and
Disability
($) | | Salary and Bonus | | | — | | — | | — | | — | | Equity Compensation | | | — | | — | | 3,590,752 | | 3,590,752 | TOTAL | | | — | | | | — | | | | 3,752,324 | | | | 3,752,324 | | | — | | — | | 3,590,752 | | 3,590,752 |
1(1) | For Messrs. Hesterberg andMr. Kenningham, the amounts in this column reflect the cash payments and acceleration value of equity award benefits that would become payable upon a qualifying termination following a Corporate Change. Upon a Corporate Change without an accompanying qualifying termination, Messrs. Hesterberg andMr. Kenningham, along with the remaining named executive officers,NEOs, would also be eligible to receive accelerated vesting of outstanding equity awards in connection with a Corporate Change only upon the sole discretion of the CHR Committee, which we have assumed to have occurred for purposes of this table. |
2(2) | Although Messrs. Hesterberg and Grese have attained the age for a qualified retirement, each executive would be eligible to receive unvested restricted stock only if he remained compliant with his restrictive covenants.
|
3 | For Mr. McHenry, this amountamounts only relatesrelate to a termination by the Company without Cause, or due to death or Disability. | | (3) | Mr. Kenningham could receive up to 120 days of continued base salary ($361,644) in the event of Death and Disability.that he is deemed to incur a disability. |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 72
Director Compensation
2021 DIRECTOR COMPENSATION TABLE
The following table sets forth a summary of the compensation we paid to our non-employee directors in 2021. Directors who are our full-time employees, currently Messrs. Hesterberg and Pereira, receive no compensation for serving as directors. Mr. Hesterberg’s compensation is shown in the Summary Compensation Table and related tables above and Mr. Pereira’s compensation is discussed in the section titled “Certain Relationships and Related Transactions.”
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Fees Earned
or Paid in
Cash1
($) | | | Stock
Awards2,3
($) | | | All Other
Compensation4
($) | | | Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings5
($) | | | Total
($) | | | | | | | | Carin M. Barth | | | 70,021 | | | | 199,979 | | | | 20,000 | | | | 11 | | | | 290,011 | | | | | | | | Steven C. Mizell6 | | | 37,698 | | | | 167,598 | | | | 16,722 | | | | — | | | | 222,018 | | | | | | | | Stephen D. Quinn | | | 158,771 | | | | 199,979 | | | | 20,000 | | | | — | | | | 378,750 | | | | | | | | Steven P. Stanbrook | | | 45,021 | | | | 199,979 | | | | 20,000 | | | | — | | | | 265,000 | | | | | | | | Charles L. Szews | | | 60,021 | | | | 199,979 | | | | 20,000 | | | | — | | | | 280,000 | | | | | | | | Max P. Watson, Jr.7 | | | 22,521 | | | | 199,979 | | | | 10,000 | | | | — | | | | 232,500 | | | | | | | | Anne Taylor | | | 60,021 | | | | 199,979 | | | | 20,000 | | | | 1,794 | | | | 281,794 | | | | | | | | MaryAnn Wright | | | 51,271 | | | | 199,979 | | | | 20,000 | | | | 20 | | | | 271,270 | |
1 | The amounts in this column include the cash value of a fractional share awarded as part of the equity-based compensation retainer as described in more detail in the narrative.
|
2 | The amounts included in the “Stock Awards” column represent the grant date fair value of awards computed in accordance with FASB ASC Topic 718. Assumptions made in the calculation of these amounts are included in Note 5 to our audited financial statements for the fiscal year ended December 31, 2021, included in our Annual Report on Form 10-K.
|
3 | Our directors are offered the option of taking their annual retainer in restricted stock or restricted stock units. In 2021 each non-employee director received 1,576 shares of restricted stock or restricted stock units in payment of the equity portion of the 2021 annual retainer. Mr. Mizell joined the Board March 1, 2021, and received a prorated retainer of 1,069 shares for 2021.
|
4 | The amounts in this column reflect the annual vehicle stipend.
|
5 | Amounts reported reflect above-market earnings on the Deferred Compensation Plan. Amounts are reflective of earnings in excess of 120% of the applicable federal long-term rate, with compounding, of 1.56%. We do not sponsor a pension plan.
|
6 | Mr. Mizell was appointed to the Board on March 1, 2021.
|
7 | Mr. Watson retired from the Board effective May 12, 2021.
|
| | | | | Proxy Statement 2022 | 62 |
Proxy Statement 2022 | 63
RETAINERS AND FEES
The table below sets forth the compensation components we paid to our non-employee directors which governed the 2021 compensation program:
| | | | | | | Retainer and Meeting Fees1
| | 2021
($) | | | | Annual Retainer
| | | | | | | Annual Cash Retainer
| | | 45,000 | | | | Equity Retainer2
| | | 200,000 | | | | Additional Annual Retainers
| | | | | | | Non-Executive Chair of the Board3
| | | 100,000 | | | | Audit Committee Chair
| | | 25,000 | | | | Compensation & Human Resources Committee Chair
| | | 15,000 | | | | Finance/Risk Management Committee Chair
| | | 15,000 | | | | Governance & Corporate Responsibility Committee Chair4
| | | 10,000 | | | | Annual Vehicle Stipend
| | | 20,000 | |
2 | The equity portion of the retainer is paid annually in restricted stock or restricted stock units valued at approximately $200,000 at the time of the grant pursuant to the 2014 Long Term Incentive Plan.
|
3 | The annual retainer for the Non-Executive Chair of the Board was increased to $135,000, effective November 16, 2021.
|
4 | The annual retainer for the GCR Committee Chair was increased to $15,000, effective November 16, 2021.
|
EQUITY-BASED COMPENSATION
The equity portion of our non-employee directors’ retainers is paid annually in restricted stock or restricted stock units valued at approximately $200,000 at the time of the grant pursuant to the 2014 Long Term Incentive Plan. In 2021, directors could elect whether to receive the equity retainer in restricted stock or restricted stock units. In 2021, all of our then current directors elected to receive their annual retainer in restricted stock, except for Ms. Barth, Mr. Mizell, Ms. Taylor and Ms. Wright, who each elected to receive restricted stock units. The grant was effective January 4, 2021 and was determined based on the average of the high and low market price of our common stock on that date. Accordingly, each non-employee director received 1,576 shares of restricted stock or restricted stock units in payment of the equity portion of the 2021 annual retainer. Mr. Mizell was elected to the Board on March 1, 2021. Upon his election, he received a pro rata annual retainer of 1,069 shares of restricted stock units.
Restricted stock or restricted stock units granted to our directors vest immediately upon issuance. All vested awards held by a director will settle upon the retirement, death or disability of the director. Under grants of restricted stock units made prior to 2019, the vested restricted stock units held by a director are settled or shares of our common stock upon the termination of the director’s membership on our Board of Directors. Beginning with grants of restricted stock units made following January 1, 2019, all restricted stock units are settled in cash.
STOCK OWNERSHIP GUIDELINES
Our Board has adopted Stock Ownership Guidelines that apply to our non-employee directors. In November 2021, following discussion with PM&P, upon the recommendation of the GCR Committee, the Board approved updates to the Stock Ownership Guidelines. Under the updated Stock Ownership Guidelines, our non-employee directors are required to maintain stock ownership value of $450,000 (“Director Ownership Requirement”) within five years. Once the Director Ownership Requirement is achieved, directors may sell or otherwise dispose of any shares in excess of the $450,000 value. In the event a director’s stock ownership value falls below the Director Ownership Requirement because of a decline in stock price, the director is prohibited from selling or otherwise disposing of shares of the Company’s common stock until the Director Ownership Requirement is reestablished through open
market purchases or annual director equity grants. Restricted stock granted to directors as part of the annual retainer counts toward the Director Ownership Requirement without regard to the vesting or other liquidity provisions related thereto. Stock that applies toward satisfaction of these guidelines includes: (1) shares of common stock owned outright by the director and his or her immediate family members who share the same household, whether held individually or jointly and (2) awarded restricted stock and restricted stock unit shares. Each of our directors has met, or will meet within the applicable timeframe, our current Director Ownership Requirements.
NONQUALIFIED DEFERRED COMPENSATION
In November 2020, the CHR Committee approved an amendment and restatement to the Deferred Compensation Plan, effective January 1, 2021. Under the amended and restated plan, non-employee directors can no longer defer director compensation under the plan. However, previously deferred amounts remain deferred under the plan until the originally scheduled payment date. Please see the section entitled “Executive Compensation — Nonqualified Deferred Compensation” for a more fulsome description of the Company’s Deferred Compensation Plan and the material changes approved under the amended and restated plan.
Prior to amending the Deferred Compensation Plan effective January 1, 2021, the plan provided those directors who elected to participate an opportunity to accumulate additional savings for retirement on a tax-deferred basis. The non-employee directors could defer any portion of the cash compensation (annual retainer or meeting fees) that he or she received with respect to the services provided to our Board, including any committee services, and the director would be 100% vested in his account at all times. We have complete discretion over how the deferred funds are utilized and they represent our unsecured obligation to the participants.
COMPENSATION CHANGES FOR FISCAL 2022
As described above, in November 2021, following review of a competitive market analysis prepared by PM&P, the GCR Committee recommended an increase in the annual retainers paid to the Non-Executive Chair of the Board and the GCR Committee Chair. Accordingly, the Board approved an increase in the annual retainer for the Non-Executive Chair of the Board from $100,000 to $135,000 and for the GCR Committee Chair from $10,000 to $15,000. The increases to the annual retainers were approved in order to maintain market competitiveness.
| | | | | Proxy Statement 2022 | 64 |
Proxy Statement 2022 | 65
CEO Pay Ratio Disclosure
SEC regulations require that we provide a comparison of the annual total compensation of our Chief Executive OfficerCEO in 2021,2023, to the annual total compensation of an individual identified as our median compensated employee. For 2021, our last completed fiscal year: Mr. Hesterberg’s annual total compensation was $8,577,257
Identifying the Median Employee Our median employee’s total compensation was $54,880
COMPENSATION MEASURE The ratio of Mr. Hesterberg’s annual total compensation to our median employee’s annual total compensation was 156 to 1.
SEC rules allow us to use the employee identified in 2020 for three years. However, this individual was on leave for a substantial part of 2021. Therefore, for 2021 we selected an employee with substantially similar compensation to the 2020 identified median employee.
We identified our 20202023 median compensated employee based on our population as of December 31, 2020.2023. We used a consistently applied compensation measure which included total gross wages using our payroll records for fiscal 2020.2023. We converted the amount of compensation paid to non-U.S. employees to U.S. dollars using average foreign currency exchange rates for 2020.2023. We annualized compensation for employees hired during 2020.2023. EMPLOYEES INCLUDED AND EXCLUDEDSEC rules allow us to use the employee identified in 2021 for three years. Because there has not been a material change in our employee population or employee compensation arrangements since 2021 that would result in a significant change in the CEO Pay Ratio, we are using the same employee in 2023 as we did in 2022 and 2021, as permitted by SEC rules. Calculating the RatioMETHODOLOGYAnnual 20212023 total compensation for the identified median employee and our CEO was calculated according to the SEC rules used to calculate the “Total” column in the Summary Compensation Table. We believe the pay ratio information set forth aboveherein constitutes a reasonable estimate, calculated in a manner consistent with applicable SEC regulations. RESULTSFor 2023, our last completed fiscal year: | • | Mr. Kenningham’s annual total compensation was $7,274,300 | | • | Our median employee’s total compensation was $58,547 | | • | The ratio of Mr. Kenningham’s annual total compensation to our median employee’s annual total compensation was 124 to 1. |
Comparing GP1’s Ratio to Other CompaniesBecause other companies may use different methodologies to identify their median employees, the pay ratio set forth above may not be comparable to the pay ratios used by other companies.
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 73 Pay Versus Performance DisclosureIn accordance with SEC rules, we provide the following disclosure regarding executive “compensation actually paid” (“CAP”) and certain Company performance for the fiscal years listed below. Please refer to the CD&A for a complete description of how executive compensation relates to Company performance and how the CHR Committee makes its decisions. | | | | | | | | | | | | | | | Average
Summary | | | Average | | | Value of Initial Fixed $100
Investment Based On: | | | | | | Adjusted | | | Year | | Summary
Compensation
Table Total for
Kenningham(1) | | | Compensation
Actually Paid to
Kenningham(1) (2) (3) | | | Summary
Compensation
Table Total for
Hesterberg(1) | | | Compensation
Actually Paid to
Hesterberg(1) (2) (3) | | | Compensation
Table Total
for Non-CEO
NEOs(4) | | | Compensation
Actually Paid
to Non-CEO
NEOs(2) (3) (4) | | | Total
Shareholder
Return | | | Peer Group
Total
Shareholder
Return(5) | | | Net
Income
(in
millions) | | | Net Income
from
Continuing
Operations | | | (a) | | | (b) | | | | (c) | | | | (b) | | | | (c) | | | | (d) | | | | (e) | | | | (f) | | | | (g) | | | | (h) | | | | (i) | | | 2023 | | $ | 7,274,300 | | | $ | 12,370,687 | | | | N/A | | | | N/A | | | $ | 2,053,869 | | | $ | 3,343,276 | | | $ | 313.79 | | | $ | 268.90 | | | $ | 601.6 | | | $ | 623.3 | | | 2022 | | | N/A | | | | N/A | | | $ | 8,774,685 | | | $ | 8,512,251 | | | $ | 2,881,512 | | | $ | 2,877,697 | | | $ | 184.39 | | | $ | 189.75 | | | $ | 751.5 | | | $ | 728.7 | | | 2021 | | | N/A | | | | N/A | | | $ | 8,577,257 | | | $ | 19,080,981 | | | $ | 2,684,236 | | | $ | 4,992,687 | | | $ | 197.96 | | | $ | 205.74 | | | $ | 552.1 | | | $ | 633.7 | | | 2020 | | | N/A | | | | N/A | | | $ | 7,298,579 | | | $ | 12,911,445 | | | $ | 2,657,309 | | | $ | 3,543,096 | | | $ | 131.93 | | | $ | 146.68 | | | $ | 286.5 | | | $ | 333.0 | |
| | | (1) | Earl Hesterberg served as CEO until 12/31/2022. Effective 1/1/2023, Daryl Kenningham was named CEO. | | (2) | Deductions from, and additions to, total compensation in the 2023 Summary Compensation Table to calculate Compensation Actually Paid consist of: |
| (3) | Equity valuation assumptions for calculating Compensation Actually Paid are not materially different from grant date valuation assumptions. | | (4) | Non-CEO NEOs reflect the average Summary Compensation Table total compensation and average Compensation Actually Paid for the following executives by year: 2023: Daniel J. McHenry, Peter C. DeLongchamps, Gillian A. Hobson, Michael D. Jones 2022: Daryl A. Kenningham, Daniel J. McHenry, Peter C. DeLongchamps, Darryl Burman 2021: Daryl A. Kenningham, Daniel J. McHenry, Frank Grese Jr., Peter C. DeLongchamps 2020: Daryl A. Kenningham, Daniel J. McHenry, John Rickel, Frank Grese Jr., Peter C. DeLongchamps |
| (5) | The peer group is comprised of Lithia Motors, Autonation, Sonic Automotive, Penske Automotive Group, and Asbury Automotive Group | | (6) | Reconciliations for Adjusted Net Income can be found on page 130 of this proxy statement |
| | | (1) | Earl Hesterberg served as CEO until 12/31/2022. Effective 1/1/2023, Daryl Kenningham was named CEO. |
| (2) | Deductions from, and additions to, total compensation in the 2023 Summary Compensation Table to calculate Compensation Actually Paid consist of: |
| | | 2023 | | | | | Daryl A.
Kenningham | | Average
Non-CEO
NEOs | | | Total Compensation from Summary Compensation | | $ | 7,274,300 | | $ | 2,053,869 | | | Adjustments for Pension | | | | | | | | | Adjustment for Summary Compensation Table Pension | | $ | 0 | | $ | 0 | | | Amount added for current year service cost | | $ | 0 | | $ | 0 | | | Amount added for prior service cost impacting current year | | $ | 0 | | $ | 0 | | | Total Adjustments for Pension | | $ | 0 | | $ | 0 | | | Adjustments for Equity Awards | | | | | | | | | Adjustment for grant date values in the Summary Compensation Table | | $ | (3,499,802) | | $ | (737,385) | | | Year-end fair value of unvested awards granted in the current year | | $ | 6,420,975 | | $ | 1,284,874 | | | Year-over-year difference of year-end fair values for unvested awards granted in prior years | | $ | 2,395,423 | | $ | 684,640 | | | Fair values at vest date for awards granted and vested in current year | | $ | 0 | | $ | 0 | | | Difference in fair values between prior year-end fair values and vest date fair values for awards granted in prior years | | $ | (298,389) | | $ | 38,931 | | | Forfeitures during current year equal to prior year-end fair value | | $ | 0 | | $ | 0 | | | Dividends or dividend equivalents not otherwise included in the total compensation | | $ | 78,180 | | $ | 18,348 | | | Total Adjustments for Equity Awards | | $ | 5,096,387 | | $ | 1,289,408 | | | Compensation Actually Paid (as calculated) | | $ | 12,370,687 | | $ | 3,343,276 | |
| (3) | Equity valuation assumptions for calculating Compensation Actually Paid are not materially different from grant date valuation assumptions. |
| (4) | Non-CEO NEOs reflect the average Summary Compensation Table total compensation and average Compensation Actually Paid for the following executives by year: |
2023: Daniel J. McHenry, Peter C. DeLongchamps, Gillian A. Hobson, Michael D. Jones 2022: Daryl A. Kenningham, Daniel J. McHenry, Peter C. DeLongchamps, Darryl Burman 2021: Daryl A. Kenningham, Daniel J. McHenry, Frank Grese Jr., Peter C. DeLongchamps 2020: Daryl A. Kenningham, Daniel J. McHenry, John Rickel, Frank Grese Jr., Peter C. DeLongchamps | (5) | The peer group is comprised of Lithia Motors, Autonation, Sonic Automotive, Penske Automotive Group, and Asbury Automotive Group | | (6) | Reconciliations for Adjusted Net Income can be found on page 130 of this proxy statement |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 74TABULAR LIST OF FINANCIAL PERFORMANCE MEASURES
In our assessment, the most important financial performance measures used to link CAP (as calculated in accordance with the SEC rules), to our NEOs in 2023 to our performance were: | | | • | Adjusted Net Income, | | • | Relative Total Shareholder Return, and | | • | Return on Invested Capital. |
Certain RelationshipsPAY VERSUS PERFORMANCE: GRAPHICAL DESCRIPTION
The illustrations below provide a graphical description of CAP (as calculated in accordance with the SEC rules) and Relatedthe following measures: Transactions
| • | the Company’s cumulative TSR and the Peer Group’s cumulative TSR; | | • | the Company’s Net Income; and | | • | the Company Selected Measure, which is adjusted net income. |
CAP and Cumulative TSR / Cumulative TSR of the Peer Group
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 75 CAP and Company Net Income
CAP and Adjusted Net Income from Continuing Operations
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 76 Audit Committee ReportTRANSACTIONS
During fiscal year 2021 we were not,The Audit Committee is appointed by the Board of Directors to assist the Board in fulfilling its oversight responsibilities relating to the integrity of the Company’s financial statements, the Company’s compliance with legal and we are not currently, a party to a transaction or seriesregulatory requirements, the independent registered public accounting firm’s qualifications, independence and performance, the performance of transactions in which the amount involved did or may exceed $120,000, in which anyCompany’s internal audit function, and the Company’s internal control over financial reporting. The Board of our directors, executive officers, any holderDirectors, upon the recommendation of more than 5% of our common stock or anyits Governance & Corporate Responsibility Committee, has determined that each member of the immediate familyAudit Committee has the requisite independence and other qualifications for audit committee membership under New York Stock Exchange corporate governance listing standards, the Sarbanes-Oxley Act of any of these persons had or will have a direct or indirect material interest, except as described below2002, the Audit Committee Charter and the compensation arrangements (including with respect to equity compensation) described in “2021 Compensation Discussion and Analysis,” “Executive Compensation” and “Director Compensation.”
Information below pertains to certain related party transactions related to the operations of our subsidiary UAB, which we acquired in February 2013. All of the operations of UAB are in Brazil. The conversion of amounts expressed in Brazilian Reais to U.S. Dollars was calculated by using the average currency exchange rate for 2021, as provided by Oanda. R$5.3950 = USD$1.00.
Lincoln Pereira and UAB
During 2021 we paid Lincoln Pereira, a Director of our Company, R$1,107,778.00 (USD$205,334.20) cash compensation for his services as our Regional Vice President, Brazil and as Chairman of our Brazilian subsidiary, UAB, and R$158,997.90 (USD$29,471.34) for health insurance.
Mr. Pereira’s brother, Ricardo Ribeiro da Cunha Pereira, serves as Honda’s General Manager. During 2021 the Company paid Mr. Ricardo Pereira R$706,650.55 (USD$130,982.49) in total compensation, consisting of R$648,497.61 (USD$120,203.45) of cash compensation and R$58,152.94 (USD$10,779.04) for health insurance.
Mr. Pereira’s brother, Andre Ribeiro, served as Commercial Operations Director until his death in May 2021. During 2021, the Company paid Mr. Ribeiro R$653,320.69 (USD$121,097.44) in total cash compensation, and R$228,290.92 (USD$42,315.28) for health insurance.
UAB leases office and retail space at market rates from Santorini Negócios Imobiliários Ltda. (“Santorini”), a real estate company which was co-founded by Mr. Pereira. The lease provides for monthly payments of R$180,000 (USD$33,364.23) and is adjusted annually pursuant to the IGP-M/FGV index. The lease expires in February 2029 but can be terminated with one-month prior notice, subject to a three month early-termination penalty payment. Current owners of Santorini include Mr. Pereira’s wife, Anna Luiza Flecha de Lima da Cunha Pereira, who also manages the property, Irene Maria Flecha de Lima, Mr. Pereira’s mother-in-law, and Andrea Maria Flecha da Lima, Mr. Pereira’s sister-in-law. Total payments to Santorini in 2021 are R$2,387,193.40 (USD$442,482.55). Mr. Pereira holds no ownership interest in Santorini.
UAB also leases office space at market rates from Irene Maria Flecha de Lima, Mr. Pereira’s mother-in-law, and managed by Anna Luiza Flecha de Lima da Cunha Pereira (Mr. Pereira’s wife) and Andrea Maria Flecha da Lima (Mr. Pereira’s sister-in-law). The lease provides for monthly payments of R$17,302.66 (USD$3,207.16) and is adjusted annually pursuant to the IGP-M/FGV index. The lease expired in October 2015 but can be terminated at any time with one-month prior notice. Total payments in 2021 are R$211,512.68 (USD$39,205.32).
Mr. Pereira’s cousin, Joao Candido Cunha Pereira, represents UAB in legal court cases solely relating to the State of Paraná. These legal services are governed by a contractual relationship signed in January 2012 for an undetermined term and can be terminated at any time with 90 days’ notice. All legal rates are at or below the current market rate for such legal services. Total payments to Joao Candido Cunha Pereira in 2021 are R$6,150 (USD$1,139.94). UAB previously was also represented in legal matters by Cunha Pereira Law Firm, which was controlled by Mr. Pereira and his father. Mr. Pereira closed the Cunha Pereira Law Firm in 2016.Group 1 Automotive, Inc. Corporate Governance Guidelines.
| | | | | Proxy Statement 2022 | 66 |
Proxy Statement 2022 | 67
POLICIES AND PROCEDURES
We review all relationships and transactions in which we and our directors and named executive officers or their immediate family members are participants to determine whether such persons have a direct or indirect material interest. Our General Counsel’s office is primarily responsible forEach year, the development and implementation of written procedures and controls to obtain information from the directors and named executive officers with respect to related person transactions and for subsequently determining, based on the facts and circumstances disclosed to them, whether we or a related person has a direct or indirect material interest in the transaction. Transactions that are determined to be directly or indirectly material to us or a related person are disclosed as required in documents, including our proxy statement, filed with the SEC.
Our Code of Conduct discourages all conflicts of interest, requires disclosure and provides guidance on handling conflicts of interest. Under the Code of Conduct, conflicts of interest occur when private or family interests interfere in any way, or even appear to interfere, with the interests of our Company. Our restrictions on conflicts of interest under the Code of Conduct include related person transactions.
We have multiple processes for reporting conflicts of interests, and related person transactions. Under the Code of Conduct, all employees are required to report any actual or apparent conflict of interest, or potential conflict of interest, to their supervisors and all related person transactions involving our regional or market executives must be communicated in writing as part of their quarterly representation letter. This information is then reviewed by our Internal Audit Department, General Counsel, Audit Committee our Board or ourreviews the work and status of its independent registered public accounting firm as deemed necessary,with the Company. Deloitte also provides non-audit services, including, among others, tax planning and consultation and tax compliance.
The Audit Committee acts under a written charter adopted and approved by the Board of Directors. The Audit Committee reviews and reassesses the adequacy of the charter on an annual basis. The Audit Committee charter is posted on our website, www.group1corp.com, and you may obtain a printed copy of the Audit Committee charter by sending a written request to Group 1 Automotive, Inc., 800 Gessner Rd., Suite 500, Houston, TX 77024, Attn: Corporate Secretary. The Audit Committee assists the Board’s oversight and monitoring of the Company’s system of internal controls, including the internal audit function. The Audit Committee discussed with management. As part of this review,our internal auditors the following factors are generally considered: overall scope and plans for the nature2023 internal audit. At each Audit Committee meeting, the Audit Committee is provided the opportunity to meet with the internal auditor with, and without, management present. During 2023, management made updates to its internal control documentation for changes in internal control and completed its testing and evaluation of the related person’s interestCompany’s system of internal control over financial reporting in response to the transaction; the material termsrequirements set forth in Section 404 of the transaction, including, without limitation, the amountSarbanes-Oxley Act of 2002 and type of transaction;
the importancerelated regulations. The Audit Committee has kept apprised of the transaction to the related person;
the importanceprogress of the transactionevaluation and provided oversight and advice to a third party;
management during the importance ofprocess. In connection with this oversight, the transaction to us; whether the transaction would impair the judgment of a director, named executive officer or employee to act in the best interest of our Company;
whether the transaction might affect the status of a director as independent under the independence standards of the NYSE; and
any other matters deemed appropriate with respect to the particular transaction.
Ultimately, all such transactions must be approved or ratified by our Board. Any member of our Board who is a related person with respect to a transaction is recused from the review of the transaction.
In addition, our legal staff annually distributes a questionnaire to our named executive officers and members of our Board requesting certain information regarding, among other things, their immediate family members, employment and beneficial ownership interests. This information is then reviewed for any conflicts of interest under the Code of Conduct. At the completion of the annual audit, our Audit Committee received updates provided by management and the independent registered public accounting firm reviewat each regularly scheduled Audit Committee meeting and met in executive session separately with management, insider and related person transactions and potential conflictsthe director of interest. In addition, our internal audit function has processes in place, under its written procedure policies,and the independent registered public accounting firm to identify related person transactionsdiscuss the results of their examinations, observations and potential conflicts of interest and report themrecommendations regarding internal control over financial reporting.
The independent registered public accounting firm is accountable to senior managementthe Audit Committee, and the Audit Committee. We also have other policiesCommittee has the ultimate authority and proceduresresponsibility to prevent conflicts of interest. For example, our Corporate Governance Guidelines require that our Board assessselect, evaluate and, where appropriate, replace the independenceindependent registered public accounting firm. The Audit Committee engages in an annual evaluation of the non-management directors at least annually, including a requirement that it determine whether or not any such directors have a material relationshipindependent registered public accounting firm’s qualifications, assessing the firm’s quality of service, the firm’s sufficiency of resources, the quality of the communication and interaction with us, either directly or indirectly,the firm, and the firm’s independence. The Audit Committee makes its selection based on the best interests of the Company and its shareholders. The Audit Committee participates in the selection of the Lead Audit Partner (the “Lead Partner”) of the independent registered public accounting firm through its review of the Lead Partner’s professional qualifications, experience, and prior performance on the Company’s audit (if any), through in-person meetings with the Lead Partner, and through discussion between the Audit Committee and management regarding the selection of the Lead Partner.
The Audit Committee has reviewed and discussed with management and Deloitte, our audited financial statements as defined thereinof and as further described under “Information about ourfor the year ended December 31, 2023. The Audit Committee also discussed with Deloitte the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the SEC. GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 77 Deloitte submitted to the Audit Committee the written disclosures and the letter required by the applicable requirements of the Public Company Accounting Oversight Board regarding the firm’s communications with the Audit Committee concerning its Committees —independence. The Audit Committee discussed with Deloitte such firm’s independence. The Audit Committee also considered whether the provision of non-audit services to our Company by Deloitte was compatible with maintaining their independence. Based on the review and discussions referred to above, the Audit Committee recommended to the Board Independence.”of Directors that the audited financial statements referred to above be included in our Annual Report on Form 10-K for the year ended December 31, 2023, for filing with the SEC. Respectfully submitted by the Audit Committee of the Board of Directors. Carin M. Barth (Chair)
Stephen D. Quinn
Steven P. Stanbrook
Charles L. Szews
Anne Taylor GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 78 Proposal 3:
Appoint Deloitte & Touche LLP
to Serve as Independent Auditor
for 2024What
am I
voting on? | We are asking shareholders to ratify the appointment of a firm of independent registered public accountants to serve as the Company’s independent auditor for the fiscal year ending December 31, 2024. Deloitte & Touche LLP, an independent registered public accounting firm, has served as Group 1’s independent auditor since 2020. For 2024, the Audit Committee has reappointed Deloitte as our independent auditor, and the Board has approved the firm for appointment by the shareholders. |
Frequently Asked Questions About the AuditorHOW IS THE AUDITOR RETAINED AND REVIEWED BY THE COMPANY? The Audit Committee is directly responsible for the nomination, compensation, retention and oversight of the Company’s independent auditor. To fulfill this responsibility, the Audit Committee engages in an annual evaluation of the independent auditor’s qualifications, performance and independence, and periodically considers the advisability of selecting a different independent registered public accounting firm to serve in that capacity. HOW LONG MAY THE AUDIT PARTNER PROVIDE SERVICES TO GP1? In accordance with SEC rules and Deloitte’s policies, audit partners are subject to rotation requirements that limit the number of consecutive years an individual partner may provide service to Group 1. For lead and concurring audit partners, the limit is five years. The selection process for the lead audit partner includes meetings between the members of the Audit Committee and the candidate, as well as consideration of the candidate by the full Audit Committee with input from management. WILL THE AUDITOR ATTEND THE ANNUAL MEETING? Representatives of Deloitte will be present during the 2024 Annual Meeting and will have the opportunity to make a statement and respond to appropriate questions from shareholders. GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 79 WHAT WERE THE AUDITOR’S FEES IN 2023 AND 2022? | Type of Fees | | 2023 | | | 2022 | | | Audit Fees | | $ | 3,110,000 | | | $ | 2,686,300 | | | Audit-Related Fees | | | — | | | | — | | | Tax Fees | | | 40,000 | | | | 34,350 | | | All Other Fees | | | — | | | | — | | | TOTAL | | $ | 3,150,000 | | | $ | 2,720,650 | |
Audit Fees Audit fees consisted of amounts accrued for services performed in association with the integrated audit of the Company’s consolidated financial statements for 2022 and 2023, and attestation of the effectiveness of the Company’s internal controls over financial reporting (including required quarterly reviews). Other procedures included consultations on audit or accounting matters that arise during or as a result of the audit or quarterly reviews. Audit fees for 2022 and 2023 also include fees related to acquisition and divestiture activity during the year. Also included in audit fees are amounts accrued for assurance services related to statutory audits. Audit fees exclude reimbursed expenses of $100,000 and $135,000 for 2022 and 2023, respectively, in conjunction with Deloitte's services. Audit-Related Fees Audit-related fees in both years include amounts for services that are related to the performance of the audit or review of our financial statements, consisting primarily of services performed in connection with SEC registration statements, periodic reports and other documents filed with the SEC or documents issued in connection with securities offerings. There were no audit-related fees in 2022 or 2023. Tax Fees Tax fees in 2023 and 2022 related to tax compliance services. All Other Fees There were no other fees in 2022 or 2023. HOW DOES THE AUDIT COMMITTEE MONITOR AND CONTROL NON-AUDIT SERVICES? The Audit Committee has established procedures requiring its review and advance approval of all engagements for non-audit services provided by Deloitte. The Audit Committee Chair has the delegated authority to pre-approve permitted non-audit services with certain limitations and must notify the Audit Committee at its next meeting of each service so approved. The Audit Committee approved all of Deloitte’s engagements and fees for 2023 and 2022. The Audit Committee reviews with Deloitte whether non-audit services to be provided are compatible with maintaining the firm’s independence. In addition, the Audit Committee monitors the fees paid to Deloitte so that fees paid in any year to Deloitte for non-audit services do not exceed the fees paid for audit and audit-related services. Non-audit services consist of those described above, as tax compliance fees. WHY SHOULD I VOTE FOR THIS PROPOSAL? Through its review process, the Audit Committee determined that Deloitte has acquired extensive knowledge of the Company’s operations, performance and development through its previous service as the independent auditor for Deloitte. The Audit Committee and the Board believe that the continued retention of Deloitte as our independent auditor is in the best interest of the Company and our shareholders.  | | | | | THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR RATIFICATION OFTHE APPOINTMENT OF DELOITTE & TOUCHE LLP AS OUR INDEPENDENT REGISTERED PUBLICACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2024. |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 80Proposal 4:
Approve 2024 Employee
Stock Purchase Plan
What
am I
voting on? | The Board unanimously recommends that shareholders approve the second amended and restated Employee Stock Purchase Plan to increase the number of shares available for issuance under the plan and to extend the term to May 24, 2034. |
Why Should I Vote For This Proposal?Security Ownership InformationBACKGROUND AND PURPOSE OF THE PROPOSAL
Our Board and our shareholders originally adopted the Group 1 Automotive, Inc. Employee Stock Purchase Plan (the “Plan”) on September 23, 1997. The purpose of the Plan is to provide an incentive for our employees to acquire an interest in our Company through their purchase of shares of our common stock. Amendments to the Plan increasing the number of shares issuable under the Plan were approved by the Company and our shareholders in 1998, 2000, 2003, 2006, 2009 and 2015. The most recent version of the Plan adopted in 2015 provided that an aggregate of 4,500,000 shares could be issued under the Plan. On March 27, 2024, our Board adopted the second amendment and restatement of the Plan (the “Amended Plan”), to be effective as of May 15, 2024, to (a) increase the number of shares of common stock available for issuance under the Plan from 4,500,000 to 4,750,000 shares (the “Share Increase”), (b) extend the term of the Plan from May 19, 2025, to March 24, 2034 (the “Term Extension”) and (c) remove the 180-day sale restriction following the exercise of an option (the “Resale Restriction”). The Share Increase and the Term Extension amendments are the only two items within the Amended Plan that require shareholder approval to become effective. Because the Resale Restriction described in clause (c) above is not a material amendment to the Plan it will become effective regardless of the outcome of the vote on this Proposal 4. The material terms of the Amended Plan are summarized below. In the event that the additional shares are approved for issuance pursuant to the Plan, the Company will promptly register the additional shares with the SEC on a registration statement on Form S-8. CONSEQUENCES OF FAILING TO APPROVE THE PROPOSAL The Amended Plan will not be implemented unless it is approved by shareholders. If the Amended Plan is not approved by our shareholders, the Plan will remain in effect in its present form and eligible participants will only be able to purchase the remaining approved shares under the Plan. As of December 31, 2023, 270,833 shares remained available for purchase pursuant to the Plan, which, based on current participation levels and a stock price of $304.74 as of December 29, 2023 (the last trading day of 2023), we expect to be depleted prior to the end of the term of the Plan. Failure of our shareholders to approve this Proposal 4 will not affect the rights of existing participants under the Plan or under any previously granted awards under the Plan. GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 81 SECURITY OWNERSHIPSUMMARY OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTAMENDED PLAN
The following summary provides a description of the Plan assuming that the proposed second amendment and restatement of the Plan is approved and becomes effective. The following summary of the Amended Plan is qualified in its entirety by reference to the complete text of the Amended Plan, that has been filed with the Securities and Exchange Commission as Appendix A to this filing. Shares Available under the Plan; Adjustments The total number of shares of common stock that may be issued under the Amended Plan may not, in the aggregate, exceed 4,750,000 shares (including all shares previously sold under the Plan prior to the effective date of this second amendment and restatement), which may be unissued or reacquired shares, including shares bought on the market or otherwise for purposes of the Amended Plan. As of December 31, 2023, 4,299,166.61 shares had been issued under the Plan. The number of shares issuable under the Amended Plan is subject to adjustment in the event of a change in our common stock by reason of a stock dividend or by reason of a subdivision, stock split, reverse stock split, recapitalization, reorganization, combination, reclassification of shares or other similar change. Upon any such event, the maximum number of shares that may be subject to any option, and the number and option price of shares subject to options outstanding under the Amended Plan will also be adjusted accordingly. Eligibility Each of our employees or the employees of any “Participating Company” as of a grant date is eligible to participate in the Amended Plan. Each of our present or future parents or subsidiaries that is located within the United States or the United Kingdom is automatically designated as a Participating Company unless the administrative committee of the Amended Plan (the “Administrative Committee”) makes a written determination to the contrary. However, no option may be granted to an employee if such employee, immediately after the option is granted, owns 5% or more of the total combined voting power or value of all classes of our stock. As of December 31, 2023, approximately 16,019 employees were eligible to participate in the Plan. Participation An eligible employee may elect to participate in the Amended Plan for any calendar quarter during the period from March 24, 2024, to March 24, 2034, on the first day of each successive April, July, October and January (each of which dates is referred to as a “date of grant”). Except as otherwise provided in the Amended Plan, the term of each option granted under the Amended Plan will be for three months (each of such three-month periods is referred to as an “option period”), which will begin on a date of grant and end on the last day of each option period (referred to as a “date of exercise”). Subject to certain limitations of the Internal Revenue Code of 1986, as amended (the “Code”), the number of shares subject to an option for a participant will equal the quotient of (a) the aggregate payroll deductions withheld on behalf of such participant during the option period, divided by (b) the option price of our common stock applicable to the option period, including fractions. However, the maximum number of shares that may be subject to any option may not exceed 3,000 (subject to adjustment). An eligible employee may participate in the Amended Plan only by means of payroll deduction. Each eligible employee who elects to participate in the Amended Plan must deliver to our company, within the time period prescribed by the Administrative Committee, a written payroll deduction authorization form whereby he or she gives notice of his or her election to participate in the Amended Plan as of the next following date of grant, and whereby he or she designates a whole percentage of his or her eligible compensation to be deducted from his or her compensation for each pay period and paid into the Amended Plan for his or her account. The designated percentage may not be less than 1% or greater than 10%. However, no employee may be granted an option under the Amended Plan that permits such employee to purchase more than $25,000 of our common stock (based on its fair market value at the time such option is granted) in any calendar year. Subject to the limits described above, each participant in the Amended Plan automatically and without any act on his or her part will be deemed to have exercised his or her option on each date of exercise to the extent of his or her unused payroll deductions under the Amended Plan and to the extent the issuance of our common stock to such participant upon such exercise is lawful. The per share purchase price of the common stock to be paid by each GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 82 participant on each exercise of his or her option will equal 85% of the fair market value of our common stock on the date of exercise or on the date of grant, whichever amount is less. For all purposes under the Amended Plan, the fair market value of a share of our common stock on a particular date is equal to the closing price of our common stock on the New York Stock Exchange on that date (or, if no shares of common stock have been traded on that date, on the next regular business date on which shares of the common stock are so traded). As of December 29, 2023, the fair market value of a share of our common stock was $304.74. A participant who elects to participate in the Amended Plan and who takes no action to change or revoke the election prior to any subsequent date of grant will be deemed to have made the same election, including the same attendant payroll deduction authorization, for the next following and/or subsequent date(s) of grant. Withdrawal from the Plan and Changes in Payroll Authorization A participant may not elect to change the percentage of his or her payroll deductions during an option period. However, any participant may withdraw in whole, or in part, from the Amended Plan on or before the fifteenth day of the last month of a particular option period by timely delivering a notice of withdrawal. Partial withdrawals are not permitted. Promptly following receipt of the notice of withdrawal, we will refund to the participant the amount of his or her payroll deductions under the Amended Plan that have not yet been otherwise returned or used upon exercise of options and the participant's payroll deduction authorization and interest in unexercised options under the Amended Plan will terminate. Delivery of Shares; Restrictions on Transfer As soon as practicable after each date of exercise, we will deliver to a custodian selected by the Administrative Committee one or more certificates representing (or will otherwise cause to be credited to the account of such custodian) the total number of whole shares of our common stock respecting options exercised on such date of exercise in the aggregate (for both whole and fractional shares) of all of the participating eligible employees. The custodian will keep accurate records of the beneficial interests of each participating employee in such shares by means of participant accounts under the Amended Plan, and will provide quarterly or such other periodic statements with respect thereto as may be directed by the Administrative Committee. The Administrative Committee may, from time to time, specific with respect to a particular grant of options, establish a restriction period that shall apply to the shares of common stock acquired pursuant to such options. Following this restriction period, the optionee may, in accordance with procedures established by the Administrative Committee and the custodian, direct the sale or distribution of some or all of the whole shares of common stock in his or her account that are not then subject to transfer restrictions and, in the event of a sale, request payment of the net proceeds from such sale. The transfer restrictions will continue to apply upon a participant's termination of employment. Termination of Employment; Leaves of Absence Except as described below, if the employment of a participant terminates for any reason, then the participant's participation in the Amended Plan automatically ceases and we will refund the amount of such participant's payroll deductions under the Amended Plan that have not yet been otherwise returned or used upon exercise of options. During a paid leave of absence approved by us and meeting Internal Revenue Service regulations, a participant's elected payroll deductions will continue. A participant may not contribute to the Amended Plan during an unpaid leave of absence. If a participant takes an unpaid leave of absence that is approved by us and meets Internal Revenue Service regulations, then such participant's payroll deductions for such option period that were made prior to such leave may remain in the Amended Plan and be used to purchase common stock on the date of exercise relating to such option period. If a participant takes a leave of absence that is not described in the first or third sentence of this paragraph, then such participant will be considered to have withdrawn from the Amended Plan. Further, notwithstanding the foregoing, if a participant takes a leave of absence that is described in the first or third sentence of this paragraph and such leave of absence exceeds three months, then such participant will be considered to have withdrawn from the Amended Plan on the first day after such three-month period (unless such participant has a right to reemployment guaranteed either by statute or contract, in which case such participant will not be considered to have withdrawn from the Amended Plan unless and until he fails to return to employment on the first day following the period during which his reemployment rights are so guaranteed). GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 83 Restriction upon Assignment of Option An option granted under the Amended Plan may not be transferred other than by will or the laws of descent and distribution. Subject to certain limited exceptions, each option is exercisable, during the employee's lifetime, only by the employee to whom it was granted. Administration and Modification of the Plan The Amended Plan is administered by the Administrative Committee, the members of which are appointed from time to time by our Board. Our Board, in its discretion, may terminate the Amended Plan at any time with respect to any common stock for which options have not been granted. However, no change in any option granted may be made that would impair the rights of an optionee without the consent of such optionee. Our Board or the Administrative Committee has the right to alter or amend the Amended Plan or any part thereof from time to time; provided that shareholder approval is also required to (1) increase the aggregate number of shares which may be issued pursuant to the Amended Plan (other than as a result of the anti-dilution provisions), (2) change the class of corporations whose employees may receive options under the Amended Plan or the class of eligible employees, (3) extend the term of the Amended Plan or (4) otherwise cause options issued under the Amended Plan to fail to meet the requirements of employee stock purchase options as defined in Section 423 of the Code. Merger, Consolidation or Liquidation of Group 1 If our Company is not the surviving corporation in any merger or consolidation (or survives only as a subsidiary of another entity), or if Group 1 is to be dissolved or liquidated, then, unless a surviving corporation assumes or substitutes new options (within the meaning of Section 424(a) of the Code) for all options then outstanding, (a) the date of exercise for all options then outstanding will be accelerated to a date fixed by the Administrative Committee prior to the effective date of such merger or consolidation or such dissolution or liquidation and (b) upon such effective date any unexercised options will expire and we promptly will refund to each participant the amount of such participant's payroll deductions under the Amended Plan that have not yet been otherwise returned to him or her or used upon exercise of options. Plan Benefits Non-employee directors are not eligible to participate in the Amended Plan. The benefits to be received by our executive officers and employees as a result of the proposed amendment and restatement of the Plan are not determinable because the amounts of future purchases by participants are based on elective participant contributions. UNITED STATES FEDERAL INCOME TAX CONSEQUENCES The following is a brief summary of certain of the United States federal income tax consequences relating to the Amended Plan based on federal income tax laws currently in effect. This summary applies to the Amended Plan as normally operated and is not intended to provide or supplement tax advice to eligible employees. The summary contains general statements based on current United States federal income tax statutes, regulations and currently available interpretations thereof. This summary is not intended to be exhaustive and does not describe state, local or foreign tax consequences or the effect, if any, of gift, estate and inheritance taxes. The Amended Plan is not qualified under Section 401(a) of the Code. The Amended Plan is intended to be an “employee stock purchase plan” within the meaning of Section 423 of the Code. Under this type of plan, no taxable income will be reportable by a participant, and no deductions will be allowable to us, due to the grant of the option at the beginning of an offering or at the purchase of shares at the end of an offering. A participant will, however, recognize taxable income in the year in which the shares purchased under the Amended Plan are sold or otherwise made the subject of disposition. A sale or other disposition of shares purchased under the Amended Plan will be a “disqualifying disposition” if such sale or disposition occurs prior to the later of (i) two years after the date the option is granted (i.e., the commencement date of the offering period to which the option pertains) and (ii) one year from the date of the purchase of the applicable shares. If the participant makes a disqualifying disposition of shares purchased under the Amended Plan, the excess of the fair market value of the shares on the date of purchase over the purchase price will be treated as ordinary income to the participant at the time of such disposition, and any additional gain (or loss) on the disposition (after adding GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 84 the amount treated as ordinary income to the participant's basis in the shares) will be a capital gain (or loss) to the participant. We will be entitled to an income tax deduction for the amount treated as ordinary income to the participant for our taxable year in which the disposition occurs, although the income tax deduction may be limited by the deductibility of compensation paid to certain of our officers under Section 162(m) of the Code. In no other instance will we be allowed a deduction with respect to the participant's disposition of the purchased shares. If the participant sells or otherwise disposes of shares purchased under the Amended Plan after satisfying the holding period outlined above (i.e., a qualifying disposition), then the participant will realize ordinary income in the year of disposition equal to the excess of the lesser of (i) the fair market value of the shares on the date of disposition over the purchase price for the shares or (ii) the greater of (a) the fair market value of the shares on the date the option relating to the disposed shares was first granted over the purchase price and (b) the fair market value of the shares on the day immediately prior to the consummation of the transaction over the purchase price. Any additional gain (or loss) on the disposition (after adding the amount treated as ordinary income to the participant's basis in the shares) will be long-term capital gain (or loss) to the participant. We will not be entitled to an income tax deduction for any amount with respect to the issuance or exercise of the option or the sale of the underlying shares. VOTE REQUIRED Approval of the Amended Plan requires the affirmative vote of the holders of a majority of the shares of common stock present in person or by proxy and entitled to vote on the matter. Abstentions shall be deemed a vote against this Proposal 4. However, broker non-votes will not be counted as shares entitled to vote, and thus will not be considered for purposes of determining whether a majority has been achieved. If you own shares through a bank, broker or other holder of record, you must instruct your bank, broker or other holder of record how to vote your shares in order for your vote to be counted with respect to this Proposal 4. Participation by Certain Individuals As discussed above, all employees of the Company, including employees who are directors and executive officers who meet designated eligibility criteria, are eligible to purchase common stock under the Amended Plan. The following table sets forth participation in the Plan by the certain individuals and groups listed below for the 12 months ended December 31, 2023(1): | Name and Position | | Dollar Value of Discount ($) | | Number of Shares of Common Stock
Purchased (#) | Daryl A. Kenningham
(Chief Executive Officer and President) | | 3,750.00 | | 139.54 | Daniel J. McHenry
(Senior Vice President & Chief Financial Officer) | | 3,750.00 | | 139.54 | Gillian A. Hobson
(Senior Vice President, Chief Legal Officer & Corporate Secretary) | | 0.00 | | 0.00 | Peter C. DeLongchamps
(Senior Vice President) | | 2,132.80 | | 76.39 | Michael D. Jones
(Senior Vice President) | | 3,750.00 | | 135.59 | | Executive Officer Group | | 14,662.75 | | 526.61 | | Non-Employee Director Group | | 0.00 | | 0.00 | | Non-Executive Officer Employee Group | | 3,562,392.33 | | 119,381.89 |
| (1) | As discussed above, all employees of the Company, including employees who are directors and executive officers who meet designated eligibility criteria, are eligible to purchase common stock under the Amended Plan. For illustrative purposes, the following table sets forth participation in the Plan by certain individual and groups listed below for the 12 months ending December 31, 2023. This reflects stock purchased in 2023 with respect to the following four quarterly offering periods: (i) October 1, 2022 to December 31, 2022 (stock purchased in January 2023); (ii) January 1, 2023 to March 31, 2023 (stock purchased in April 2023); (iii) April 1, 2023 to June 30, 2023 (stock purchased in July 2023) and (iv) July 1, 2023 to September 30, 2023 (stock purchased in October 2023). |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 85 SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLAN The following table shows the amountsummarizes information about each of our common stock beneficially owned (unless otherwise indicated)equity compensation plans, including the LTIP and the Plan, as of December 31, 2023: | Plan Category | | (a)
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights | | (b)
Weighted average
exercise price of
outstanding options,
warrants and rights | | (c)
Number of securities
remaining available for
future issuance
(excluding securities
reflected in column (a)) | | Equity compensation plans approved by security holders | | 374,629 | | — | | 1,340,940 | | Equity compensation plans not approved by security holders | | — | | — | | — | | TOTAL | | 374,629 | | — | | 1,340,940 |
NEW PLAN BENEFITS Participation in the Amended Plan is entirely within the discretion of the eligible employees. Because the Company cannot presently determine the participation levels by employees, the rate of contributions by employees and the eventual purchase price under the Amended Plan, it is not possible to determine the value of benefits that may be obtained by executive officers and other employees under the Amended Plan going forward. BOARD RECOMMENDATION The Board believes that approval of the Amended Plan is in the best interests of the Company and our shareholders. For the reasons stated above, the shareholders are being asked to approve this Proposal 4. | THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE APPROVAL OFTHE 2024 EMPLOYEE STOCK PURCHASE PLAN. |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 86 Proposal 5:
Approve 2024 Long-Term
Incentive PlanWhat
am I
voting on? | The Board unanimously recommends that shareholders approve the 2024 Long-Term Incentive Plan, including the authorization of 700,000 shares to be used for awards and to extend the term to May 15, 2034. |
Why Should I Vote For This Proposal?BACKGROUND AND PURPOSE OF THE PROPOSAL The Group 1 2014 Long Term Incentive LTIP was previously adopted by the Board on March 25, 2014, and subsequently approved by shareholders with the First Amendment to the Group 1 Automotive, Inc. 2014 Long Term Incentive Plan being approved by shareholders on May 13, 2020 (collectively, the “LTIP”). On March 27, 2024, our Board approved the amendment and restatement of the LTIP (the “2024 LTIP”). The purpose of the 2024 LTIP is to (i) authorize 700,000 shares to be utilized for awards pursuant to the LTIP (the “LTIP Share Increase”), (ii) extend the term of the LTIP by ten years (the “LTIP Term Extension”) and (iii) to make certain other minor, administerial changes to the LTIP (the “Administrative Amendments”). At the 2024 Annual Meeting, shareholders will be asked to approve the 2024 LTIP, to be effective May 15, 2024, if approved (the “Effective Date”). The LTIP Share Increase and the LTIP Term Extension amendments are the only two items within the 2024 LTIP that require shareholder approval to become effective on the Effective Date. Note that the Administrative Amendments are not material amendments to the LTIP that must be approved by our directorsshareholders, and nominees, our named executive officers, our current directorsthose modifications will become effective notwithstanding the outcome of the vote on this Proposal 5. The Administrative Amendments are being described herein solely to provide a thorough description of the 2024 LTIP to shareholders. The reasons we believe shareholders should approve the 2024 LTIP, and named executive officers as a group, and any shareholders with over 5%summary description of the 2024 LTIP, are set forth below. The use of stock-based awards continues to be a key element of our common stock. Exceptcompensation program. The LTIP authorized a total of 2,200,000 shares for issuance in connection with awards under the LTIP plus (i) the number of shares that remained available for issuance for future award grants under the Group 1 Automotive, Inc. 2007 Long Term Incentive Plan (as amended and restated as otherwise indicated, directorsof March 11, 2010) (the “Prior Plan”) as of the original effective date of the LTIP and named executive officers possessed sole voting and investment power with respect(ii) the number of shares subject to outstanding awards as of the original effective date of the LTIP to the extent that any such award lapses or the rights of its holder terminate without all shares of common stock inunderlying such award being issued or transferred to the table. In addition, except as otherwise indicated, all information isholder thereof or without any such holder receiving a cash settlement under any such award, but as of March 21, 2022.February 29, 2024, only 1,002,731 shares remain available. The current termination date for the LTIP is also set to expire on May 19, 2024, at which time we would be prevented from granting new awards pursuant to the LTIP. | | | | | | | | | | | | | Name and Address of Beneficial Owner1 | | Aggregate
Number of
Shares
Owned2 | | | Percent of
Class Outstanding3 | | | | | Earl J. Hesterberg | | | 257,615 | 4 | | | 2.0 | % | | | | Daryl A. Kenningham | | | 53,585 | 5 | | | * | | | | | Daniel McHenry | | | 20,118 | | | | * | | | | | Frank Grese, Jr. | | | 22,624 | | | | * | | | | | Peter C. DeLongchamps | | | 35,450 | | | | * | | | | | Carin M. Barth | | | 2,131 | | | | * | | | | | Steven C. Mizell | | | — | | | | * | | | | | Lincoln Pereira | | | 153,122 | 6 | | | * | | | | | Stephen D. Quinn | | | 50,676 | | | | * | | | | | Steven P. Stanbrook | | | 7,018 | | | | * | | | | | Charles L. Szews | | | 13,478 | | | | * | | | | | Anne Taylor | | | 807 | | | | * | | | | | MaryAnn Wright | | | — | | | | * | | | | | All Directors and Named Executive Officers as a group (13 persons) | | | 627,567 | 7 | | | 3.8 | % | | | | BlackRock, Inc. 55 East 52nd Street New York, NY 10055 | | | 2,983,695 | 8 | | | 17.9 | % | | | | The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355 | | | 1,910,640 | 9 | | | 11.5 | % | | | | Dimensional Fund Advisors LP 6300 Bee Cave Road Building One Austin, TX 78746 | | | 1,331,041 | 10 | | | 8.0 | % |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 87 The following table includes aggregated information regarding awards outstanding under the LTIP as of February 29, 2024, the number of shares available for future awards under the LTIP as of that date, and the proposed number of shares that would be issuable under 2024 LTIP if this Proposal 5 is approved by shareholders. | Number of
Shares | | As a Percentage
of Shares
Outstanding(1) | | Outstanding full-value awards (restricted stock awards, performance shares, and phantom stock awards)(2) | | 417,476 | | 3.08%(2) | | Total shares of our common stock available for future award grants under the LTIP | | 1,002,731 | | 7.41%(3) | | Proposed additional shares of our common stock available for future issuance under the 2024 LTIP | | 700,000 | | 5.17%(4) |
| (1) | As of February 29, 2024, there were approximately 13,538,401 shares of our common stock outstanding. | | (2) | Of this amount, 300,954 shares (2.22% of our outstanding shares) were represented by unvested restricted stock awards, 70,820 were represented by unvested performance shares, and 31,199 were represented by non-cash settled phantom shares. There were no stock options or stock appreciation rights outstanding under the existing LTIP as of February 29, 2024. | | (3) | The total shares subject to outstanding full-value awards as of February 29, 2024, plus the number of shares authorized for future plan awards, represents a current overhang of 10.50% under the existing LTIP as of that date (i.e., the potential dilution of our shareholders represented by the existing LTIP). | | (4) | This percentage reflects the simple dilution of our shareholders that would occur if the 2024 LTIP is approved. Based on the closing price of our common stock on February 29, 2024, of $270.65 per share, the aggregate market value of the outstanding common stock.share increase solicited in this Proposal 5 (i.e., 700,000 shares) equals $189,455,000. |
In 2021, 2022, and 2023, we granted awards (restricted stock, restricted stock units, and performance shares) under the LTIP covering 124,380 shares, 116,869 shares and 75,265 shares, respectively, of our common stock. Based upon the methodology used by Institutional Shareholder Services (“ISS”), which assigns a greater weight to full-value awards than to stock option awards, the compensation consultant to our CHR Committee determined that our “burn rate” (which represents the rate at which our equity award grants under the LTIP diluted our shareholders) for each of 2021, 2022, and 2023 was 0.70%, 0.76% and 0.55%, respectively, with an average three-year burn rate of 0.67%. Our ISS three-year average burn rate is lower than the 3.19% three-year average burn rate for other companies within the Company’s Global Industry Classification Standard (“GICS”). In determining the number of shares to request for approval under the 2024 LTIP, our CHR Committee worked with our management team and the CHR Committee’s compensation consultant to evaluate a number of factors, including our share usage under the LTIP, the dilution of our shareholders that will occur if the 2024 LTIP is adopted, and criteria expected to be used by institutional proxy advisory firms in evaluating our proposal for the 2024 LTIP. As noted in “Summary of the 2024 LTIP” below, our CHR Committee would retain full discretion under the 2024 LTIP to determine the number and amount of awards to be granted under the 2024 LTIP, subject to the terms of the 2024 LTIP, and future benefits or amounts that may be received by participants under the 2024 LTIP are not determinable at this time. Since our last request for additional shares at our 2020 annual meeting, our Company has grown significantly. Future growth in the number of our dealerships and employees could impact the rate at which our CHR Committee grants awards under the 2024 LTIP. We believe that we have demonstrated our commitment to sound equity compensation practices. We recognize that equity compensation awards dilute shareholder equity and, therefore, we have carefully managed our equity incentive compensation. Our equity compensation practices are targeted to be competitive and consistent with market practices, and we believe our historical share usage has been responsible and mindful of shareholder interests. In the event that the additional shares are approved for issuance pursuant to the 2024 LTIP, the Company will promptly register the additional shares with the SEC on a registration statement on Form S-8. GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 88 CONSEQUENCES OF FAILING TO APPROVE THE PROPOSAL The LTIP Share Increase and the LTIP Term Extension will not be implemented unless this Proposal 5 is approved by shareholders. If this Proposal 5 is not approved by our shareholders, the LTIP will generally remain in effect in its present form (absent the Administrative Amendments), and the Company will only be able to issue the remaining approved shares to eligible participants during the original term of the LTIP (i.e., until May 19, 2024). Failure of our shareholders to approve this Proposal 5 also will not affect the rights of existing award holders under the LTIP or under any previously granted awards under the LTIP. SUMMARY OF THE 2024 LTIP The following summary of the 2024 LTIP does not purport to be a complete description of all provisions of the 2024 LTIP and should be read in conjunction with, and is qualified in its entirety by reference to, the complete text of the 2024 LTIP, which is attached to this proxy statement as Appendix B. The 2024 LTIP gives the CHR Committee the ability to grant options, stock appreciation rights, restricted stock awards, restricted stock unit awards, dividend equivalents, performance awards, phantom stock awards, other stock-based awards, bonus stock awards, substitute awards, cash awards, or any combination of the foregoing. Unless earlier terminated by action of our Board, the 2024 LTIP will terminate on March 24, 2034. Awards granted before the termination date of the 2024 LTIP will continue to be effective in accordance with their terms and conditions. Purpose The 2024 LTIP is designed to align our employees' and directors' long-term interests with those of our shareholders by allowing these individuals the potential to develop and maintain a significant equity ownership position in the Company. Awards The 2024 LTIP provides for the grant of any or all of the following types of awards: | • | Stock options (including incentive stock options (“ISOs”) and non-statutory stock options (“NSOs”) (together, the mailing address"Options")); | | • | Stock appreciation rights (or "SARs"); | | • | Restricted stock awards; | | • | Restricted stock unit awards; | | • | Dividend equivalents; | | • | Performance awards; | | • | Phantom stock awards; | | • | Other stock-based awards; | | • | Bonus stock awards; | | • | Substitute awards; | | • | Cash awards; and | | • | Any combination of each person or entity named in the table is Group 1 Automotive, Inc., 800 Gessner, Suite 500, Houston, Texas 77024.foregoing. |
2 | Includes restricted shares as to which the individual has voting, but not dispositive, power, as follows: Mr. Hesterberg (75,744 shares), Mr. Kenningham (33,429 shares), Mr. McHenry (10,687 shares), Mr. Grese (13,910 shares), Mr. DeLongchamps (14,146 shares), and Mr. Pereira (148,682 shares held in escrow, of which 113,869 shares are designated for the UAB shareholders and 34,813 shares are designated for Mr. Pereira). Does not include restricted stock units as to which the directors do not have voting or dispositive power, as follows: Ms. Barth (10,803 shares), Mr. Mizell (2,099 shares), Ms. Taylor (8,163 shares) and Ms. Wright (16,466 shares). Does not include unvested performance shares, as follows: Mr. Hesterberg (28,479 shares), Mr. Kenningham (14,996 shares), Mr. McHenry (2,992 shares), Mr. Grese (4,970 shares), Mr. DeLongchamps (5,140 shares), or 2020 performance shares that have met the performance criteria requirement, but not the time-based vesting requirement, as follows: Mr. Hesterberg (13,071 shares), Mr. Kenningham (6,354 shares), Mr. Grese (2,541 shares) and Mr. DeLongchamps (2,541 shares).
Plan Highlights Key features of the 2024 LTIP include: |
3• | Based on total shares outstanding of 16,672,323 at March 21, 2022.
|
4 | Includes 45,680 shares held byNo Liberal Share Counting. The 2024 LTIP does not permit us to use “liberal share counting” methods, such as adding back to the Hesterberg Management Trust, for which Mr. Hesterberg and his spouse are co-trustees, 65,517 shares of common stock held in gift trustsavailable for issuance under the benefit2024 LTIP shares that were used to pay the exercise price of Mr. Hesterberg’s children, for which he serves as Trustee, 4,953 shares held by Mr. Hesterberg’s spouse, and 65,517 shares heldstock options or to cover withholding obligations.
| | • | Independent Committee. The 2024 LTIP is administered by the 2019 Family TrustCHR Committee, which is composed entirely of independent directors who qualify as “Non-Employee Directors” within the meaning of SEC Rule 16b-3 promulgated under the Exchange Act. |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 89 | • | No Discounted Stock Options or Stock Appreciation Rights. The 2024 LTIP requires that the purchase price for which Mr. Hesterberg’s spouse serves as Trustee.stock options or stock appreciation rights be at least 100% of the per share fair market value on the date of grant (outside of options assumed in certain corporate transactions described in the 2024 LTIP). | | • | No Repricing. We have never repriced any underwater stock options or stock appreciation rights, and the 2024 LTIP prohibits any repricing of stock options or stock appreciation rights (outside of certain corporate transactions or adjustment events described in the 2024 LTIP) or cancellation of underwater stock options or stock appreciation rights for consideration, in each case without approval by our shareholders. | | • | Limited Term. Ten-year term. | | • | Clawback Policy. All awards are subject to potential reduction, cancellation, or forfeiture pursuant to any clawback policy in place and adopted or amended by the Company. | | • | Limitations. Meaningful annual limits on total director compensation. |
Persons Who May Participate Awards may be made under the 2024 LTIP to our employees, consultants, the employees and consultants of our affiliates, and our non-employee directors. Only individuals who are our employees or who are employees of one of our affiliates are eligible to receive ISOs. The CHR Committee determines in its discretion which eligible persons will receive awards under the 2024 LTIP. As of February 29, 2024, approximately 242 of our employees, 8 of our non-employee directors and none of our or our affiliate’s consultants or employees of our affiliates were eligible to participate in the existing LTIP. Shares Subject to the 2024 LTIP The maximum number of shares of our common stock that may be issued or transferred pursuant to the 2024 LTIP shall equal 700,000. To the extent an award granted under the 2024 LTIP lapses or otherwise terminates without the delivery of shares of our common stock (or if any shares of common stock issued or delivered pursuant to an award granted under the 2024 LTIP are forfeited by the holder of such award), then the shares of our common stock covered by such award (or portion thereof that lapses, terminates or is forfeited) will again be available for awards granted under the 2024 LTIP. Common stock tendered or otherwise used in payment of the exercise price of an option, withheld to satisfy a tax withholding obligation, or repurchased by us with proceeds from the exercise of an option will not be added to the maximum share limit under the 2024 LTIP. Maximum Amount of Compensation that May be Paid to a Participant Subject to shareholder approval, the maximum number of shares of our common stock that may be subject to ISOs granted under the 2024 LTIP is 175,000 shares. In addition, the maximum number of shares of common stock that may be granted to any one individual during any calendar year is 75,000 shares. The number and kind of shares available under the 2024 LTIP and the individual share limits under the 2024 LTIP are subject to adjustment for stock dividends and stock splits and in certain other situations as further described in the 2024 LTIP. Any shares of our common stock delivered pursuant to an award may consist, in whole or in part, of authorized and unissued shares or previously issued shares of our common stock reacquired by us. Awards granted under the 2024 LTIP (other than ISOs, which are subject to special rules described below) may not be transferred other than (i) by will or the laws of descent and distribution, (ii) pursuant to a qualified domestic relations order or (iii) with the consent of the CHR Committee. However, the CHR Committee may not approve the transfer of any award granted under the 2024 LTIP if the holder of the award is to receive any consideration in connection with the transfer. GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 90 | | | | | Proxy Statement 2022 | 68 |
Administration
Proxy Statement 2022 | 69The 2024 LTIP provides for administration by the CHR Committee of the Board, which is to be comprised solely of two or more non-employee directors (within the meaning of Rule 16b-3 of the Exchange Act). The Board retains the discretion to designate another committee to administer the 2024 LTIP or to elect to administer the 2024 LTIP itself. The CHR Committee has the full authority, subject to the terms of the 2024 LTIP, to:
5• | Includes 18,156 shares held bydesignate which employees, consultants, or directors shall receive an award;
| | • | determine the Kenningham 2018 Management Trust, for which Mr. Kenningham and his spouse are co-trustees.types of awards to be granted under the 2024 LTIP; |
6• | Mr. Pereira has shared voting and dispositive power with respect to 118,309 shares; all such shares are owned by Abbe Investments, Ltd., a British Virgin Islands company, owned 98% by Mr. Pereira and 2% by his spouse. In addition, Mr. Pereira has sole voting, but no dispositive, power with respect to 148,682 shares held in escrow fordetermine the benefittime or times an award shall be made;
| | • | determine the number of Mr. Pereira and João Alberto Gross Figueiró, the estate of André Ribeiro da Cunha Pereira, Maurício Vaz Rodrigues and Roger Penske, Jr., pursuant to a Stockholders’ Agreement dated February 28, 2013. Mr. Pereira has been designated the Stockholder Representative for those shares and directs voting of the shares. Of the 148,682, shares held in escrow, 34,813, shares have been designated for Mr. Pereira. |
7 | Includes 147,916 restricted shares as to which the named executive officers and directors currently have voting, but not dispositive, power, and 37,531 restricted stock units as to which the directors do not have voting or dispositive power, although the restricted stock units do count towards the Company’s stock ownership requirements. Does not include 63,874 performance shares as to which the named executive officers do not have voting rights or dispositive power.
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8 | As reported on Amendment No. 14 to Schedule 13G as of December 31, 2021 and filed with the SEC on January 27, 2022. BlackRock, Inc., as a parent holding company or control person, has sole voting power over 2,927,107 shares, sole dispositive power over 2,986,695 shares, and aggregate beneficial ownership of 2,983,695 shares. The subsidiaries of BlackRock, Inc. that acquired the shares reported by BlackRock, Inc. are as follows: BlackRock Fund Advisors (which owns 5% or greater of the outstanding shares being reported in the Amendment No. 14 to Schedule 13G), Aperio Group, LLC, BlackRock Life Limited, BlackRock Advisors, LLC, BlackRock Investment Management (UK) Limited, BlackRock Asset Management Canada Limited, BlackRock Investment Management (Australia) Limited, BlackRock (Netherlands) B.V., BlackRock Asset Management Ireland Limited, BlackRock Institutional Trust Company, National Association, BlackRock Japan Co., Ltd., BlackRock Fund Managers Ltd., BlackRock Financial Management, Inc., BlackRock Asset Management Schweiz AG and BlackRock Investment Management, LLC. The interest of one such person, iShares Core S&P Small-Cap ETF, in the common stock of the Company, is more than 5% of the total outstanding common stock.
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9 | As reported on Amendment No. 14 to Schedule 13G as of December 31, 2021 and filed with the SEC on February 10, 2022. The Vanguard Group, Inc. has shared voting power over 16,051 shares, sole dispositive power over 1,879,907 shares, shared dispositive power over 30,733 shares and aggregate beneficial ownership of 1,910,640 shares.
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10 | As reported on Amendment No. 16 to Schedule 13G dated as of December 31, 2021 and filed with the SEC on February 8, 2022, Dimensional Fund Advisors LP, or certain of its subsidiaries (collectively, “Dimensional”) serve as investment manager to certain other commingled group trusts and separate accounts (such investment companies, trusts and accounts, collectively referred to as the “Funds”). In its role as investment advisor, sub-adviser and/or manager, Dimensional possesses voting and/or investment power over shares of our common stock that are ownedmay be issued under each award;
| | • | determine the terms and conditions of any award; | | • | interpret, construe, and administer the 2024 LTIP and any agreement relating to an award made under the 2024 LTIP; | | • | and make any other determination that the CHR Committee deems necessary or desirable for the administration of the 2024 LTIP. |
AWARDS UNDER THE 2024 LTIP Stock Options The 2024 LTIP provides for two types of options; ISOs and NSOs. The CHR Committee is authorized to grant options to eligible participants, which, in the case of ISOs, are only individuals who are employed by us or one of our subsidiaries at the time of grant, and determines (i) the term of each option, (ii) the time at which an option may be exercised, (iii) the purchase price and (iv) the form of payment of the exercise price. The purchase price per share of our common stock will not be less than 100% of the fair market value of the common stock on the date of grant of such option regardless of whether such option is ISO or a NSO. Further, the purchase price of any ISO granted to an employee who possesses more than 10% of the total combined voting power of all classes of our stock or of any of our subsidiaries within the meaning of Section 422(b)(6) of the Code must be at least 110% of the fair market value of a share of our common stock at the time such option is granted. The maximum term of an option (or any tandem stock appreciation rights) is 10 years. Any ISO granted to an employee who possesses more than 10% of the total combined voting power of all classes of our stock or of any of our subsidiaries within the meaning of Section 422(b)(6) of the Code must not be exercisable more than five years from the date of grant. Option awards may include the right to surrender the optioned shares in exchange for a payment in the amount of the fair market value of the shares for which the option is surrendered over the exercise price for such shares (a “stock appreciation right”). Stock appreciation rights granted in connection with ISOs are exercisable only when the fair market value of the common stock exceeds the exercise price therefore specified under the option. Restricted Stock Award The CHR Committee is authorized to grant restricted stock awards to eligible individuals. Pursuant to a restricted stock award, shares of our common stock will be issued or delivered to the holder without any cash payment to us, except to the extent otherwise provided by the CHR Committee or required by law; provided, however, that the shares will be subject to certain restrictions on the disposition thereof and certain obligations to forfeit the shares to us as may be determined in the discretion of the CHR Committee. The forfeiture restrictions on a restricted stock award may lapse based upon achievement of performance criteria, continued service with the Company or its affiliates, the occurrence of an event or satisfaction of any other condition or any combination of the foregoing. We retain custody of the shares of our common stock issued pursuant to a restricted stock award until the disposition and forfeiture restrictions lapse. The holder may not sell, transfer, pledge, exchange, hypothecate or otherwise dispose of the shares until the expiration of the restriction period. However, upon the issuance to the holder of shares of our common stock pursuant to a restricted stock award, except for the foregoing restrictions, the holder will have all the rights of one of our shareholders with respect to the shares, including the right to vote GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 91 the shares and to receive all dividends and other distributions paid with respect to the shares, provided that any dividends that are payable with respect to a performance-vested restricted stock award will be deferred and paid contingent upon satisfaction of the vesting criteria applicable to the underlying award. Performance Awards The CHR Committee may, in its sole discretion, grant performance awards under the 2024 LTIP that may be paid in cash, shares of common stock, or a combination thereof as determined by the CHR Committee. Performance awards may be based on one or more, or a combination, of the following metrics (which (i) may be absolute, relative to one or more other companies, relative to one or more indexes, and may be contingent upon our future performance or the performance of any of our affiliates, divisions, or departments, and (ii) may include relative or growth achievement regarding such metrics): | • | the price of a share of our common stock, | | • | our earnings per share, | | • | our market share, | | • | the market share of one of our business units designated by the Funds,CHR Committee, | | • | our sales, | | • | the sales of one of our business units designated by the CHR Committee, | | • | our or any of our business units’ profit margins, as designated by the CHR Committee, | | • | our or any of our business units’ net income (before or after taxes) or any component of the net income calculation (such as sales, general, and administrative expenses), our or any of our business units’ cash flow or return on investment, as designated by the CHR Committee, | | • | our or any of our business units’ earnings before or after interest, taxes, depreciation, and/or amortization, as designated by the CHR Committee, | | • | economic value added, | | • | our return on capital, assets, or shareholders' equity, or | | • | our total shareholders' return. |
The CHR Committee may also provide a grant for the payment of dividend equivalents with respect to performance awards, provided that payment of dividend equivalents shall, in all cases, be deferred and contingent upon the vesting of the underlying performance award. Phantom Stock Awards The CHR Committee is authorized to grant phantom stock awards under the 2024 LTIP, which may include grants of stock appreciation rights. These are awards of rights to receive shares of our common stock (or the fair market value thereof), or rights to receive amounts equal to share appreciation over a specific period of time. These awards vest over a period of time established by the CHR Committee, without satisfaction of any performance criteria or objectives. The CHR Committee may, in its discretion, require payment or other conditions of the recipient of a phantom stock award. A phantom stock award may include a stock appreciation right that is granted independently of a stock option. Payment of a phantom stock award may be made in cash, shares of our common stock, or a combination thereof. The CHR Committee may also provide at grant for the payment of dividend equivalents with respect to phantom stock awards. Stock Appreciation Rights A stock appreciation right provides the right to receive a number of shares or, in the discretion of the CHR Committee, an amount in cash or a combination of shares and cash, based on the increase in the fair market value of the shares underlying the rights during a specified period of time. The CHR Committee may grant stock appreciation rights subject to such terms and conditions and exercisable at such times as determined by the CHR Committee and specified in the applicable award agreement. The term of a stock appreciation right will not exceed 10 years. Stock appreciation rights may not be re-priced without shareholder approval. Stock appreciation rights are not eligible to receive dividends or dividend equivalent rights. GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 92 Restricted Stock Units Restricted Stock Units (“RSUs”) are rights to receive common stock, cash, or a combination of both at the end of a specified period. The CHR Committee may subject RSUs to restrictions (which may include a risk of forfeiture) to be specified in the respective award agreement, and those restrictions may lapse at such times as the CHR Committee may determine. Dividend Equivalents Dividend equivalents may be granted, entitling an eligible individual to receive cash, common stock, awards under the 2024 LTIP, or other property equal in value to dividends paid with respect to a specified number of shares of common stock or other periodic payments at the discretion of the CHR Committee. Dividend equivalents may be awarded on a freestanding basis or in connection with another award; provided, however, that, under the 2024 LTIP, dividend equivalents will not be granted in connection with the grant of any Options or SARs. The CHR Committee may provide that dividend equivalents will be payable or distributed when accrued or that they will be deemed reinvested in additional common stock, awards, or other investment vehicles. The CHR Committee will specify any restrictions on transferability and risks of forfeiture that are imposed upon dividend equivalents. Bonus Stock Awards The CHR Committee is authorized to grant bonus stock awards under the 2024 LTIP. Bonus stock awards are unrestricted shares of our common stock that are subject to such terms and conditions as the CHR Committee may determine and they need not be subject to performance criteria or objectives or forfeiture. The CHR Committee determines the purchase price, if any, for awards of bonus stock. Other Stock-Based Awards Other stock-based awards are awards denominated in or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, the value of our common stock. Cash Awards The CHR Committee may grant awards under the 2024 LTIP that provide for the payment of cash to an eligible individual in such amounts and upon such terms and conditions as the CHR Committee shall determine. Substitute Awards The Company may grant awards in substitution for any other award granted under the 2024 LTIP or another plan of the Company or its affiliates or any other right of a person to receive payment from the Company or its affiliates. Awards may also be granted in substitution for awards held by individuals who become eligible individuals as a result of certain business transactions. Substitute awards that are Options or SARs may have an exercise price per share that is less than the fair market value of a share of our common stock on the date of substitution if the substitution complies with the requirements of Section 409A of the Code and the guidance and regulations promulgated thereunder and other applicable laws. General Award Terms Any award granted pursuant to the 2024 LTIP may be subject to time-based or performance-based vesting conditions, as determined by the CHR Committee. The CHR Committee may use any business criteria and other measures of performance it deems appropriate in establishing the performance goals applicable to a performance-based vesting award. Adjustments The number and kind of shares covered by outstanding awards under the 2024 LTIP and, if applicable, the prices per share applicable thereto, are subject to adjustment in the event of merger, consolidation, liquidation, reorganization, recapitalization, reclassification, stock dividend, spin-off, split-up, stock split, reverse stock split or other distribution with respect to the shares of common stock, or any similar corporate transaction or event. The permitted adjustments are only those the CHR Committee determines are appropriate to reflect the occurrence of the transaction or event, including but not limited to adjustments in the number and kind of securities reserved for GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 93 issuance, in the award limits on individual awards, in the performance goals of any outstanding awards; and to the number and kind of securities subject to outstanding awards and, if applicable, to the grant amounts, exercise prices or of the awards. Any such adjustments will be made in a manner consistent with the requirements of Section 409A of the Code (“Section 409A”) and, in the case of ISOs, any such adjustments will be made in a manner consistent with the requirements of Section 424(a) of the Code. Accelerated Vesting Subject Section 409A, the terms of awards granted under the 2024 LTIP may include accelerated vesting or lapse of forfeiture restrictions, as applicable, including (1) by virtue of the retirement, death or disability of a participant or (2) in the event of a corporate change where either (A) within a specified period of time a participant is involuntarily terminated for reasons other than for cause or terminates his or her employment for good reason or (B) such awards are not assumed or converted into replacement awards in a corporate change in a manner described in the applicable award agreement. Subject to Sections 409A, the CHR Committee may also provide for accelerated vesting, lapse of forfeiture restrictions, and waiver of any performance, service, or other limitation with respect to any outstanding award granted under the 2024 LTIP, including upon a termination of employment by reason of death, disability, retirement or upon a corporate change. Tax Withholding A participant will be responsible for payment of any taxes required by law to be withheld from an award or an amount paid in satisfaction of an award, which will be paid by the participant on or prior to the payment or other event that results in taxable income in respect of an award. The award agreement will specify the manner in which the withholding obligation shall be satisfied with respect to the particular type of award; provided, that, if shares of common stock are withheld from delivery upon exercise of an Option or SAR, the fair market value of the shares withheld will not exceed the minimum amount of tax for which withholding is required. Amendment and Termination Our Board in its discretion may terminate the 2024 LTIP at any time with respect to any shares for which an award has not theretofore been made. Our Board has the right to alter or amend the 2024 LTIP or any part thereof from time to time, and the CHR Committee has the right to prospectively or retroactively amend the terms of any award; provided that no change in any award theretofore made may be made which would impair the rights of the recipient of the award without the consent of such recipient and provided, further, that our Board may not, without approval of our shareholders, amend the 2024 LTIP to increase the maximum aggregate number of shares of our common stock that may be issued under the 2024 LTIP or the benefits otherwise accrued to participants under the 2024 LTIP, increase the maximum number of shares of common stock that may be issued under the 2024 LTIP through ISOs or change the class of individuals eligible to receive awards under the 2024 LTIP or amend outstanding stock options or stock appreciation rights to lower the applicable purchase price or substitute cash or other awards for any such underwater stock option or stock appreciation right. Further, to the extent shareholder approval of an amendment to the 2024 LTIP is necessary to satisfy the requirements of Rule 16b-3 of the Exchange Act or any securities exchange listing requirements of the New York Stock Exchange or other securities exchange on which the common stock is then listed, no amendment will be effective unless and until so approved by our shareholders. Corporate Change Individual award agreements will set forth the treatment of awards granted under the 2024 LTIP in the event of a corporate change. The 2024 LTIP provides that, unless defined otherwise in an applicable award agreement, a corporate change occurs if: | • | we are dissolved and liquidated; | | • | if we are not the surviving entity in any merger or consolidation (or we survive only as a subsidiary of an entity); | | • | if we sell, lease or exchange all or substantially all of our assets; | | • | any person, entity or group acquires or gains ownership or control of more than 50% of the outstanding shares of our voting stock; or | | • | after a contested election of directors, the persons who were directors before such election cease to constitute a majority of our Board. |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 94 Non-U.S. Participants To facilitate grants under the 2024 LTIP to participants who are foreign nationals or who provide services outside of the United States, the CHR Committee may provide for special terms for awards to such participants as the CHR Committee may consider necessary or appropriate to accommodate differences in local law, tax policy or custom. The CHR Committee may also approve supplements to the 2024 LTIP (including sub-plans) to govern such awards. Clawback All awards granted pursuant to the 2024 LTIP are subject to any written clawback policy of the Company as currently in effect or that may be established and/or amended from time to time. UNITED STATES FEDERAL INCOME TAX ASPECTS OF THE 2024 LTIP The following is a brief summary of some of the United States federal income tax consequences of certain transactions under the 2024 LTIP based on current federal income tax laws, as in effect on January 1, 2024, which is subject to change (possibly retroactively). This summary, which is presented for the information of shareholders considering how to vote on this proposal and not for participants of the 2024 LTIP, is not intended to be complete and does not describe federal taxes other than income taxes (such as Medicare and Social Security taxes), state, local or foreign tax consequences. The tax treatment for a participant in the 2024 LTIP may vary depending on his or her particular situation and may, therefore, be subject to special rules not discussed below. In addition, certain awards that may be granted pursuant to the 2024 LTIP could be subject to additional taxes unless they are designed to comply with certain restrictions set forth in Section 409A of the Code and guidance promulgated thereunder. Non-Statutory Stock Options; Stock Appreciation Rights As a general rule, no federal income tax is imposed on the optionee upon grant (whether or not including a stock appreciation right). Generally, upon exercise, the optionee will recognize ordinary income in the year of exercise in an amount equal to the excess of the fair market value of the shares on the date of exercise over the option price paid for the shares. In the case of the exercise of a stock appreciation right, the optionee will recognize ordinary income in the year of exercise in an amount equal to the cash received plus the fair market value of the shares distributed. Upon a subsequent disposition of the shares received upon exercise of a NSO, any appreciation after the date of exercise should qualify as capital gain. Incentive Stock Options The ISOs under the 2024 LTIP are intended to constitute “incentive stock options” within the meaning of Section 422 of the Code. No federal income tax is imposed upon the grant or the exercise of an ISO if the optionee does not dispose of shares within the two-year period beginning on the date the ISO was granted or within the one-year period beginning on the date the option was exercised (collectively, the “holding period”). With respect to an ISO, the difference between the fair market value of the stock on the date of exercise and the exercise price must be included in the optionee's alternative minimum taxable income. Upon disposition of the shares received upon exercise after the holding period, any appreciation of the shares above the exercise price should constitute capital gain. If an optionee disposes of shares acquired pursuant to his or her exercise prior to the end of the holding period, the optionee recognize, at the time of disposition, ordinary income. The amount treated as income is the excess of the fair market value of the shares at the time of exercise (or in the case of a sale in which a loss would be recognized, the amount realized on the sale if less) over the exercise price. Any amount realized in excess of the fair market value of the shares at the time of exercise would be treated as short-term or long-term capital gain, depending on the holding period. Restricted Stock Awards An employee who has been granted restricted stock under the 2024 LTIP will not realize taxable income at the time of grant, assuming that the restrictions constitute a substantial risk of forfeiture for federal income tax purposes. Upon expiration of the forfeiture restrictions (i.e., as shares become vested), the holder will realize ordinary income in an amount equal to the excess of the fair market value of the shares at such time over the amount, if any, paid for the shares. Dividends paid to the holder during the period that the forfeiture restrictions apply will also be compensation to the employee. Notwithstanding the foregoing, the recipient of restricted stock may elect to be taxed at the GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 95 time of grant of the restricted stock based upon the fair market value of the shares on the date of the award, in which case: | • | dividends paid to the recipient during the period that any forfeiture restrictions apply will be taxable as dividends and will not be deductible by us; and | | • | there will be no further federal income tax consequences when the forfeiture restrictions lapse. |
Restricted Stock Unit Awards; Cash Awards An individual will recognize ordinary compensation income upon receipt of cash pursuant to a cash award or, if earlier, at the time the cash is otherwise made available for the participant to draw upon. Individuals will not have taxable income at the time of grant of an RSU, but rather, will generally recognize ordinary compensation income at the time he or she receives cash or a share of our common stock in settlement of the RSU, as applicable, in an amount equal to the cash or the fair market value of the common stock received. Performance Awards and Phantom Stock Awards An individual who has been granted a performance award or a phantom stock award generally will not realize taxable income at the time of grant. Whether a performance award or phantom stock award is paid in cash or shares of our common stock, the individual will have taxable compensation. The measure of such income will be the amount of any cash paid and the fair market value of any shares of our common stock either at the time the performance award or the phantom stock award is paid or at the time any restrictions on the shares (including restrictions under Section 16(b) of the Exchange Act) subsequently lapse, depending on the nature, if any, of the restrictions imposed and whether the individual elects to be taxed without regard to any such restrictions. Bonus Stock Awards An individual who has been granted a bonus stock award will realize taxable income at the time of the grant. A participant will be subject to withholding for federal, and generally for state and local, income taxes at the time he or she recognizes income under the rules described above for common stock or cash received. Dividends that are received by a participant before the common stock is taxed to the participant under the rules described in the preceding paragraph are taxed as additional compensation, not as dividend income. The tax basis in the common stock received by a participant will equal the amount recognized by him or her as compensation income under the rules described in the preceding paragraph, and the participant’s capital gains holding period in those shares will commence on the later of the date the shares are received or the restrictions lapse. Subject to the discussion immediately below, we or one of our subsidiaries (as applicable) will be entitled to a deduction for federal income tax purposes that corresponds as to timing and amount with the compensation income recognized by a participant under the rules described above. Tax Code Limitations on Deductibility In order for the amounts described above to be deductible, such amounts must constitute reasonable compensation for services rendered or to be rendered and must be ordinary and necessary business expenses. Our ability (or the ability of one of our subsidiaries, as applicable) to obtain a deduction for future payments under the 2024 LTIP could also be limited by the golden parachute payment rules of Section 280G of the Code, which prevent the deductibility of certain excess parachute payments made in connection with a change in control of an employer-corporation. Finally, our ability (or the ability of one of our subsidiaries, as applicable) to obtain a deduction for amounts paid under the 2024 LTIP could be limited by Section 162(m) of the Code, which limits the deductibility, for federal income tax purposes, of compensation paid to “covered employees” of a publicly traded corporation to $1,000,000 for any such officer during any taxable year of the corporation. GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 96 Requirements Regarding Deferred Compensation Certain of the benefits under the 2024 LTIP may constitute “deferred compensation” within the meaning of Section 409A. Failure to comply with the requirements of Section 409A regarding the timing of payment distributions could result in the affected participants being required to recognize ordinary income for federal tax purposes earlier than expected, and being subject to substantial penalties. NEW PLAN BENEFITS The awards, if any, that will be made to eligible persons under the 2024 LTIP are subject to the discretion of the CHR Committee and, therefore, we cannot currently determine the benefits or number of shares subject to awards that may be granted in the future to our executive officers, employees, consultants, and directors under the 2024 LTIP. Therefore, a New Plan Benefits Table is not provided. VOTE REQUIRED Approval of the 2024 LTIP requires the affirmative vote of the holders of a majority of the shares of common stock present in person or by proxy and entitled to vote on the matter. BOARD RECOMMENDATION The Board believes that approval of the 2024 LTIP is in the best interests of the Company and our shareholders. For the reasons stated above, the shareholders are being asked to approve this Proposal 5. The Board unanimously recommends a vote “FOR” approval of the 2024 LTIP. | THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE APPROVAL OFTHE 2024 LONG-TERM INCENTIVE PLAN. |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 97 Frequently Asked Questions About
the Annual Meeting| Your vote is very important! | WHY AM I BEING PROVIDED WITH THESE PROXY MATERIALS? We are providing these proxy materials to you in connection with the solicitation by the Board of Group 1 Automotive, Inc. of proxies to be the beneficial ownervoted at our 2024 Annual Meeting of such shares held by the Funds. Dimensional has sole voting power as to 1,312,153 sharesShareholders and sole dispositive power as to 1,331,041 shares. Dimensional disclaims beneficial ownership of all such securities. The Funds have the right to receiveat any postponed or the power to direct the receipt of dividends from, or the proceeds from the sale of the securities held in their respective accounts.reconvened meeting. |
WILL THE ANNUAL MEETING ALSO BE HELD IN-PERSON OR ONLY VIRTUALLY?
Questions and Answers aboutWe have decided to conduct the
2024 Annual Meeting solely online via the Internet through a live webcast and online shareholder tools. We believe a virtual format facilitates shareholder attendance and participation by leveraging technology to allow us to communicate more effectively and efficiently with our shareholders. This format empowers shareholders around the world to participate at no cost. We have designed the virtual format to enhance shareholder access and participation and protect shareholder rights. Specifically: We Encourage Questions.Shareholders have multiple opportunities to submit questions for the meeting. Shareholders may submit a question online in advance or live during the meeting, following the instructions below. During the meeting, we will answer as many appropriate shareholder-submitted questions as time permits. Following the Annual Meeting, we will publish an answer to each appropriate question we received on the Investor Relations section of our website at www.group1corp.com as soon as practicable. WHO
We Believe in Transparency. Although the live webcast is available only to shareholders at the time of the meeting, following completion of the Annual Meeting, a webcast replay, final report of the inspector of election, and answers to all appropriate questions asked by investors in connection with the Annual Meeting will be posted as soon as practicable to the Investor Relations section of our website at www.group1corp.com. WHEN IS ENTITLED TO VOTE AT THE MEETING?Our Annual Meeting will be held virtually at www.virtualshareholdermeeting.com/GPI2024, on Wednesday, May 15, 2024, at 9:00 a.m., Central Daylight Saving Time, or at such other time and place to which the meeting may be adjourned. WHO CAN ATTEND THE ANNUAL MEETING?Only our shareholders as of 5:00 p.m., Central Daylight Saving Time, on March 21, 202220, 2024 (the record date) are entitled to receive notice of the Annual Meeting and to vote at the meeting. On March 21, 2022,20, 2024, there were 16,672,32313,507,962 shares of Group 1 common stock issued and outstanding and entitled to vote at the meeting. A list of shareholders will be available and may be inspected during normal business hours for a period of at least 10 days prior to the Annual Meeting at our offices at 800 Gessner, Suite 500, Houston, Texas 77024. The list of shareholders will also be available for your review during the Annual Meeting by accessing the meeting website during the Annual Meeting. In the event there are not sufficient votes for a quorum or to approve the foregoing proposals at the time of the Annual Meeting, the Annual Meeting may be adjourned in order to permit further solicitation of proxies. WHAT IS
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 98 WILL THERE BE AN OPPORTUNITY TO ASK QUESTIONS BEFORE OR DURING THE DIFFERENCE BETWEEN A SHAREHOLDER OF RECORD AND A BENEFICIAL OWNER OR STREET NAME HOLDER?If your shares are registered directly in your name with our registrar and transfer agent, American Stock Transfer & Trust Company, LLC, you are considered a shareholder of record with respect to those shares.
If your shares are held in a brokerage account or by a bank or other nominee, you are considered the “beneficial owner” of those shares, and your shares are held in street name.
If you hold common stock in BOTH street name and as a shareholder of record, YOU MUST VOTE SEPARATELY for each position of common stock.
HOW DO I VOTE MY SHARES?
If you are a shareholder of record on the record date, you may vote in person online during the Annual Meeting or by proxy using any of the following methods:
MEETING? | | |  | | Online — visit the website shown on the proxy card (www.proxyvote.com) and follow the instructions at that website at any time prior to 11:59 p.m., Eastern Daylight Saving Time, on May 12, 2022; | | |  | | Telephone — within the United States (“U.S.”) or Canada, call the toll-free telephone number shown on the proxy card and follow the instructions at any time prior to 11:59 p.m., Eastern Daylight Saving Time, on May 12, 2022; or | | |  | | Mail — if you receive a paper copy of the proxy materials, complete, sign and date the proxy card and return the proxy card in the prepaid envelope. Your proxy card must be received by the Company before the voting polls close during the Annual Meeting. |
If you voteShareholders who wish to submit a question in advance may do so either by internetemailing Investor Relations at ir@group1auto.com by 5:00 p.m., Central Daylight Saving Time, Tuesday, May 14, 2024, or telephone, do not return your proxy card. The telephone and internet voting procedures are designed to authenticate shareholders’ identities, to allow shareholders to give their voting instructions and to confirm that shareholders’ instructions have been recorded properly.
Submitting your proxy by internet or telephone will not affect your right to vote in person online should you decide to attend the Annual Meeting.
If you want to vote in person online during the meeting, you must have a control number and accessvisiting our Annual Meeting atwebsite, www.virtualshareholdermeeting.com/GPI2022GPI2024.
If you hold your shares in street name, you Shareholders also may submit questions live during the meeting. We plan to reserve some time for shareholder questions to be read and answered by Company personnel during the meeting. In submitting questions, please note that we will receive instructions from your broker, bank or other nominee describing how to vote your shares. Beneficial owners voting by telephone or internetonly address questions that are subjectgermane to the same deadlines as described above for holders of record. If you want to vote in person, you must obtain a legal proxy from your broker, bank or other nominee and use the information providedmatters being voted on the legal proxy to access theat our Annual Meeting.
| | | | | Proxy Statement 2022 | 70 |
WHAT IF I HAVE TROUBLE LOGGING INTO THE ANNUAL MEETING? Proxy Statement 2022 | 71
CAN I CHANGE MY VOTE OR REVOKE MY PROXY?
If you are a shareholderencounter any difficulties accessing the virtual meeting during the check-in or course of record on the record date, you can revoke your proxy prior to the completion of voting during the Annual Meeting, by:a phone number will be posted on the website to connect you to technical support. delivering an executed, later-dated proxy that is received by the Corporate Secretary of the Company before the voting polls close during the Annual Meeting;
resubmitting your proxy by internet or telephone at any time prior to 11:59 p.m., Eastern Daylight Saving Time, on May 17, 2022;
delivering a written notice of revocation of the proxy to Beth Sibley, Corporate Secretary, Group 1 Automotive, Inc., 800 Gessner, Suite 500, Houston, Texas 77024 no later than May 17, 2022; or
voting in person online during the Annual Meeting.
Only your latest dated proxy that we receive prior to the Annual Meeting will be counted. Further, your attendance during the Annual Meeting will not automatically revoke your proxy.
If you are a street name shareholder you must follow the instructions of your broker, bank or other nominee to revoke your voting instructions. You may also vote in person online during the Annual Meeting if you obtain a legal proxy from your broker, bank or other nominee.
WHAT IS THE EFFECT OF BROKER NON-VOTES AND ABSTENTIONS AND WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL?
If you hold your shares in street name, you will receive instructions from your broker, bank or other nominee describing how to vote your shares. If you do not instruct your broker, bank or other nominee how to vote your shares, they may vote your shares as they decide as to each routine matter under the rules of the NYSE. Only Proposal No. 3 is considered a “routine” matter.
If you do not provide specific voting instructions to your broker on non-routine matters, your broker may not cast a vote on the proposal, resulting in a broker non-vote. Although any broker non-vote would be counted as present at the meeting for purposes of determining a quorum, it would be treated as not entitled to vote with respect to “non-routine” matters. If you are a beneficial owner holding shares through a broker, bank or other nominee and you do not provide voting instructions on certain matters, your broker may cast a vote on your behalf for Proposal No. 3, but may not cast a vote on Proposals No. 1 or 2. Abstentions occur when shareholders are present during the Annual Meeting but fail to vote or voluntarily withhold their vote for any of the matters upon which the shareholders are voting.
The table below describes the vote required for approval of each matter to be brought before the meeting, as well as the treatment of abstentions and broker non-votes as to each matter.
QUORUM REQUIREMENT FOR THE ANNUAL MEETING? | | | | | | | | | | | Proposal
| | Vote Required | | Treatment of
Abstentions | | Treatment
of Broker
Non-Votes | | | | | 1
| | Each nominee must receive the affirmative vote of a majority of votes cast by shareholders entitled to vote in the election of directors. Nominees who receive more “for” votes than “against” votes are elected, subject to our director resignation policy described below | | No Effect | | Not taken into account | | | | | 2
| | The affirmative vote of the holders of a majority of the shares present in person online or represented by proxy and entitled to vote on the matter | | Count as a vote “against” | | Not taken into account | | | | | 3
| | The affirmative vote of the holders of a majority of the shares present in person online or represented by proxy and entitled to vote on the matter | | Count as a vote “against” | | Brokers have discretion |
We have adopted a majority vote director resignation policy, which is described in greater detail under “Director Resignation Policy.”
Our Board has appointed Earl J. Hesterberg, our President and Chief Executive Officer, and Daniel McHenry, our Senior Vice President and Chief Financial Officer, as the management proxy holders for the Annual Meeting. If you are a shareholder of record, your shares will be voted by the management proxy holders in accordance with the
instructions on the proxy card you submit by mail, or the instructions provided for any proxy submitted by telephone or internet, as applicable. For shareholders who have their shares voted by duly submitting a proxy by mail, telephone or internet, unless the shareholder appropriately specifies otherwise, the management proxy holders will vote all shares represented by such valid proxies as our Board recommends.
WHAT IS A QUORUM?
There must be a quorum for the Annual Meeting to be held. A quorum will be present if the holders of a majority of the shares of common stock entitled to vote are present in person, online or represented by proxy during the Annual Meeting. Our independent inspector of election, Broadridge Financial Solutions, Inc. (“Broadridge”), will determine whether or not a quorum is present. There must be a quorum for the Annual Meeting to be held. Proxies received but marked as abstentions or broker non-votes will be included in the calculation of votes considered to be present during the Annual Meeting. If less than a quorum is represented at the meeting, the Chair of the meeting or a majority of the shares so represented may adjourn the meeting from time to time without further notice other than announcement at the meeting, and the persons named as proxies will vote the proxies they have been authorized during the Annual Meeting in favor of such an adjournment. In the event a quorum is present during the Annual Meeting but sufficient votes to approve any of the items proposed by our Board have not been received, the persons named as proxies may propose one or more adjournments of the meeting to permit further solicitation of proxies. A shareholder vote may be taken on one or more of the proposals in this proxy statement prior to such adjournment if sufficient proxies have been received and it is otherwise appropriate. If a quorum is present, the persons named as proxies will vote the proxies they have been authorized to vote on any other business properly brought before the meeting in favor of such an adjournment. If a quorum is initially established, but sufficient shareholders withdraw such that the meeting is left with less than a quorum, the remaining shareholders present during the meeting may continue to transact business until the meeting is adjourned or recessed. WHO
HOW DO I VOTE?If you are a shareholder of record on the record date, you may vote in person or online during the Annual Meeting or by proxy using any of the following methods:  | Visit the website shown on the proxy card (www.proxyvote.com) and follow the instructions at that website at any time prior to 11:59 p.m., Eastern Daylight Saving Time, on May 14, 2024; |  | Within the U.S. or Canada, call the toll-free telephone number shown on the proxy card and follow the instructions at any time prior to 11:59 p.m., Eastern Daylight Saving Time, on May 14, 2024; or |  | If you receive a paper copy of the proxy materials, complete, sign and date the proxy card and return the proxy card in the prepaid envelope. Your proxy card must be received by the Company before the voting polls close during the Annual Meeting. |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 99 If you vote by internet or telephone, do not return your proxy card. The telephone and internet voting procedures are designed to authenticate shareholders’ identities, to allow shareholders to give their voting instructions and to confirm that shareholders’ instructions have been recorded properly. Submitting your proxy by internet or telephone will not affect your right to vote in person online should you decide to attend the Annual Meeting. If you want to vote in person online during the meeting, you must have a control number and access our Annual Meeting at www.virtualshareholdermeeting.com/GPI2024. If you hold your shares in street name, you will receive instructions from your broker, bank or other nominee describing how to vote your shares. Beneficial owners voting by telephone or internet are subject to the same deadlines as described above for holders of record. If you want to vote in person, you must obtain a legal proxy from your broker, bank or other nominee and use the information provided on the legal proxy to access the Annual Meeting. HOW DO I CHANGE MY VOTE?If you are a shareholder of record on the record date, you can revoke your proxy prior to the completion of voting during the Annual Meeting by: | • | delivering an executed, later-dated proxy that is received by the Corporate Secretary of the Company before the voting polls close during the Annual Meeting; | | • | resubmitting your proxy by internet or telephone at any time prior to 11:59 p.m., Eastern Daylight Saving Time, on May 14, 2024; | | • | delivering a written notice of revocation of the proxy to Corporate Secretary, Group 1 Automotive, Inc., 800 Gessner, Suite 500, Houston, Texas 77024 no later than May 14, 2024; or | | • | voting in person online during the Annual Meeting. |
Only your latest dated proxy that we receive prior to the Annual Meeting will be counted. Further, your attendance during the Annual Meeting will not automatically revoke your proxy. If you are a street name shareholder you must follow the instructions of your broker, bank or other nominee to revoke your voting instructions. You may also vote in person online during the Annual Meeting if you obtain a legal proxy from your broker, bank or other nominee. WHAT IS THE DIFFERENCE BETWEEN A SHAREHOLDER OF RECORD AND A BENEFICIAL OWNER OR STREET NAME HOLDER?If your shares are registered directly in your name with our registrar and transfer agent, American Stock Transfer & Trust Company, LLC, you are considered a shareholder of record with respect to those shares. If your shares are held in a brokerage account or by a bank or other nominee, you are considered the “beneficial owner” of those shares, and your shares are held in street name. If you hold common stock in BOTH street name and as a shareholder of record, YOU MUST VOTE SEPARATELY for each position of common stock. HOW WILL BEAR THE COST OF SOLICITING VOTES FORMY SHARES BE VOTED?Each share of Group 1 common stock is entitled to one vote. Our Board has appointed Daryl A. Kenningham, our President and Chief Executive Officer, and Daniel J. McHenry, our Senior Vice President and Chief Financial Officer, as the management proxy holders for the Annual Meeting. If you are a shareholder of record, your shares will be voted by the management proxy holders in accordance with the instructions on the properly executed proxy card you submit by mail, or the instructions provided for any proxy properly submitted by telephone or internet, as applicable. For shareholders who have their shares voted by duly submitting a proxy by mail, telephone or internet, unless the shareholder appropriately specifies otherwise, the management proxy holders will vote all shares represented by such valid proxies as our Board recommends. GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 100 As of the date of filing this proxy statement, our Board is not aware of any other business or nominee to be presented or voted upon during the Annual Meeting. If any other business or nominee is properly presented, the proxies solicited by our Board will provide the proxy holders with the authority to vote on those matters and nominees in accordance with such persons’ discretion. WHAT PROPOSALS WILL BE VOTED ON AT THE ANNUAL MEETING?MEETING AND WHAT VOTES ARE REQUIRED TO APPROVE EACH OF THE PROPOSALS?The table below describes the vote required for approval of each matter to be brought before the meeting, as well as the treatment of abstentions and broker non-votes as to each matter. | Proposal | | Vote Required for Approval | | Impact of
Abstentions | | Impact of Broker
Non-Votes | | Proposal 1: Election of Directors | | Each nominee must receive the affirmative vote of a majority of votes cast by shareholders entitled to vote in the election of directors. Nominees who receive more “for” votes than “against” votes are elected, subject to our director resignation policy described below. | | Not counted as votes cast; no impact on outcome. | | No impact on outcome. | | Proposal 2: Advisory Vote toApprove Executive Compensation | | The affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote on the matter. | | An abstention is treated as present and entitled to vote on the matter and therefore has the effect of a vote against approval. | | No impact on outcome. | | Proposal 3: Ratification ofDeloitte & Touche LLP asIndependent Registered Public Accounting Firm | | The affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote on the matter. | | An abstention is treated as present and entitled to vote on the matter and therefore has the effect of a vote against approval. | | Brokers have discretion. | | Proposal 4: Approve the 2024Employee Stock Purchase Plan | | The affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote on the matter. | | An abstention is treated as present and entitled to vote on the matter and therefore has the effect of a vote against approval. | | No impact on outcome. | | Proposal 5: Approve the 2024Long-Term Incentive Plan | | The affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote on the matter. | | An abstention is treated as present and entitled to vote on the matter and therefore has the effect of a vote against approval. | | No impact on outcome. |
HOW DO ABSTENTIONS AND BROKER NON-VOTES AFFECT THE VOTING RESULTS?If you hold your shares in street name, you will receive instructions from your broker, bank or other nominee describing how to vote your shares. If you do not instruct your broker, bank or other nominee how to vote your shares, they may vote your shares as they decide as to each routine matter under the rules of the NYSE. Only Proposal No. 3 is considered a “routine” matter. If you do not provide specific voting instructions to your broker on non-routine matters, your broker may not cast a vote on the proposal, resulting in a broker non-vote. Although any broker non-vote would be counted as present at the meeting for purposes of determining a quorum, it would be treated as not entitled to vote with respect to “non-routine” matters. If you are a beneficial owner holding shares through a broker, bank or other nominee and you do not provide timely voting instructions, your broker may cast a vote on your behalf for Proposal No. 3, but may not cast a vote on Proposals No. 1, 2, 4 and 5. Abstentions occur when shareholders are present during the Annual Meeting but fail to vote or voluntarily withhold their vote for any of the matters upon which the shareholders are voting. GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 101 WHAT HAPPENS IF A DIRECTOR IN AN UNCONTESTED ELECTION RECEIVES MORE VOTES “AGAINST” THAN “FOR” THEIR ELECTION?Under our director resignation policy, in an uncontested election of directors, any nominee who receives a greater number of votes “withheld” than votes “for” his or her election will, promptly following the certification of the shareholder vote, tender his or her written resignation to the Board for consideration by the GCR Committee. The GCR Committee will consider the resignation, as well as all factors it considers relevant, and will make a recommendation to the Board concerning whether to accept or reject such resignation. The Board will take formal action on the recommendation no later than 90 days following the certification of the results of the shareholders’ meeting. The Company will promptly disclose to the public the Board’s decision whether to accept or reject the director’s tendered resignation. If applicable, the Board will also disclose the reason or reasons for rejecting the tendered resignation. WHO COUNTS THE VOTES?We have engaged Broadridge to tabulate the votes and to serve as inspector of election during the Annual Meeting for a fee of approximately $3,000 plus disbursements. Broadridge will separately tabulate “For” and “Against” votes, abstentions and broker non-votes. Broadridge will also certify the election results and perform any other acts required by the Delaware General Corporation Law. HOW MAY THE COMPANY SOLICIT MY PROXY?We have engaged Alliance Advisors, LLC, to assist with the solicitation of proxies for a fee not to exceed $6,000,of approximately $8,000, plus reimbursement for reasonable out-of-pocket expenses. We will bear all expenses of soliciting proxies. We may reimburse brokerage firms, custodians, nominees, fiduciaries and other persons representing beneficial owners of our common stock for their reasonable expenses in forwarding solicitation material to such beneficial owners. Directors, officers and employees of Group 1 may also solicit proxies in person or by other means of communication. Such directors, officers and employees will not be additionally compensated but may be reimbursed for reasonable out-of-pocket expenses in connection with such solicitation. WHO WILL COUNT THE VOTES?
HOW CAN I RECEIVE MY PROXY MATERIALS ELECTRONICALLY?We have engaged Broadridge Financial SolutionsThe proxy card provides instructions on how to tabulateinform us to send future proxy materials to you electronically by email. If you choose to receive future proxy materials by email, you will receive an email next year with instructions containing a link to those materials and a link to the votes andproxy-voting site. Your election to serve as inspector of election during the Annual Meeting for a fee of approximately $3,500. Broadridgereceive proxy materials by email or printed form will separately tabulate “For,” “Against” and “Withhold” votes, abstentions and broker non-votes. Broadridge will also certify the election results and perform any other acts required by the Delaware General Corporation Law.remain in effect until you terminate it.
| | | | | Proxy Statement 2022 | 72 |
WHAT IF I SHARE THE SAME ADDRESS AS ANOTHER GROUP 1 SHAREHOLDER? Proxy Statement 2022 | 73
Shareholder Proposals for 2023
Annual Meeting
Pursuant to the various rules promulgated by the SEC, shareholders interested in submitting a proposal for inclusion in our proxy materials and for presentation at the 2023 Annual Meeting of Shareholders may do so by following the procedures set forth in Rule 14a-8 under the Exchange Act. In general, to be eligible for inclusion in our proxy materials, shareholder proposals must be received by our Corporate Secretary no later than December 13, 2022 and meet the requirements of Rule 14a-8. No shareholder proposal was received for inclusion in this proxy statement.
As more specifically provided for in our Bylaws, in order for a nomination of persons for election to our Board or a proposal of business (other than through Rule 14a-8) to be properly brought before our Annual Meeting of Shareholders, it must be either specified in the notice of the meeting given by our Corporate Secretary or otherwise brought before the meeting by or at the direction of our Board or by a shareholder entitled to vote and who complies with the notice procedures set forth in our Bylaws. Subject to the exception described below, a shareholder making a nomination for election to our Board or a proposal of business for the 2023 Annual Meeting of Shareholders must deliver proper notice to our Corporate Secretary no earlier than the close of business 120 days and no later than the close of business 90 days prior to the anniversary date of the 2022 Annual Meeting of Shareholders. In other words, for a shareholder nomination for election to our Board or a proposal of business to be considered at the 2023 Annual Meeting of Shareholders, it should be properly submitted to our Corporate Secretary no earlier than the close of business January 18, 2023 and no later than the close of business February 17, 2023. However, in the event that the date of an Annual Meeting is more than 30 days before or more than 60 days after the anniversary date of the preceding year’s Annual Meeting, the shareholder notice must be delivered not earlier than 120 days prior to such Annual Meeting and not later than 90 days prior to such Annual Meeting or, if the first public announcement of the date of such Annual Meeting is less than 100 days prior to the date of such Annual Meeting, the 10th day following the day on which public announcement of the date of such Annual Meeting is first made by the Company.
If we increase the number of directors to be elected at an Annual Meeting and do not make a public announcement naming all of the nominees for director and specifying the size of the increased Board at least 80 days prior to the first anniversary of the preceding year’s Annual Meeting, a shareholder’s notice regarding the nominees for the new positions created by the increase will be considered timely if it is delivered to our Corporate Secretary not later than the close of business on the 10th day following the day on which the public announcement is first made.
For each individual that a shareholder proposes to nominate as a director or propose other business (other than through Rule 14a-8) at the 2023 Annual Meeting, the shareholder’s written notice to our Corporate Secretary must include the information required by and meet the detailed requirements set forth in our Bylaws. From time to time, the GCR Committee may request additional information from the nominee or the shareholder.
2021 Annual Report
A copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, including the financial statements and the financial statement schedules, if any, but not including exhibits, will be furnished at no charge to each person to whom a proxy statement is delivered or made available upon the written request of such person addressed to 800 Gessner, Suite 500, Houston, TX 77024, Attn: Corporate Secretary.
HOUSEHOLDING
We may send a single set of proxy materials, as applicable, and other shareholder communications to any household at which two or more shareholders with the same last name reside, unless we have received contrary instructions from those shareholders. This process is called “householding.” This reduces duplicate mailings and saves printing and postage costs as well as natural resources. The proxy materials and other shareholder communications may be householded based on your prior express or implied consent. Shareholders who participate in householding will continue to have access to and utilize separate proxy voting instructions. If you wish to opt out of householding, and would like to have separate copies of the proxy materials mailed to each shareholder sharing your address, or if you are receiving multiple copies and would like to receive a single copy, please contact Broadridge Financial Solutions, Inc., by calling 1-800-542-10611-866-540-7095 or by writing Broadridge Financial Solutions, Inc., Householding Department, 51 Mercedes Way, Edgewood, NY 11717. Broadridge will promptly deliver the requested materials. Beneficial owners (street name shareholders) sharing an address who are receiving multiple copies of the proxy materials, and other shareholder communications and who wish to receive a single copy of such materials in the future will need to contact their broker, bank or other nominee to request that only a single copy GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 102 of such materials be mailed to all shareholders at the shared address in the future. However, please note that if you want to receive a paper proxy card or other proxy materials for purposes of this year’s meeting, you should follow the instructions included in the information that was sent to you. OTHER MATTERS
As of the date of filing this proxy statement, our Board is not aware of any other business or nominee to be presented or voted upon during the Annual Meeting. If any other business or nominee is properly presented, the proxies solicited by our Board will provide the proxy holders with the authority to vote on those matters and nominees in accordance with such persons’ discretion. Where a shareholder has appropriately specified how a proxy is to be voted, it will be voted by the proxy holders in accordance with the specification.
By Order of the Board of Directors,
Beth Sibley
Corporate Secretary
| | | | | Proxy Statement 2022 | 74 |
HOW CAN I RECEIVE A COPY OF THE COMPANY’S 2023 ANNUAL REPORT ON FORM 10-K? Proxy Statement 2022 | 75
Appendix A — Non-GAAP Financial
Measures
In addition to reporting our financial information incopy of our Annual Report on Form 10-K using U.S. Generally Accepted Accounting Principles (“GAAP” for the year ended December 31, 2023, including the financial statements and the financial statement schedules, if any, but not including exhibits, will be furnished at no charge to each person to whom a proxy statement is delivered or made available upon the written request of such person addressed to 800 Gessner, Suite 500, Houston, TX 77024, Attn: Corporate Secretary.
HOW DO I SUBMIT PROPOSALS AND NOMINATIONS FOR THE 2025 ANNUAL MEETING?Pursuant to the various rules promulgated by the SEC, shareholders interested in submitting a proposal for inclusion in our proxy materials and for presentation at the 2025 Annual Meeting of Shareholders (the “2025 Annual Meeting”) may do so by following the procedures set forth in Rule 14a-8 under the Exchange Act. In general, to be eligible for inclusion in our proxy materials, shareholder proposals must be received by our Corporate Secretary no later than December 16, 2024 and meet the requirements of Rule 14a-8 of the Exchange Act. No shareholder proposal was received for inclusion in this proxy statement. As more specifically provided for in our Bylaws, in order for a nomination of persons for election to our Board or a proposal of business (other than through Rule 14a-8) to be properly brought before our Annual Meeting of Shareholders, it must be either specified in the notice of the meeting given by our Corporate Secretary or otherwise brought before the meeting by or at the direction of our Board or by a shareholder who was a shareholder of record at the time of giving notice provided for in our Bylaws, is entitled to vote at the meeting, and who complies with the notice procedures set forth in our Bylaws. Subject to the exception described below, a shareholder making a nomination for election to our Board or a proposal of business for the 2025 Annual Meeting must deliver proper notice to our Corporate Secretary at the principal executive offices of the Company no earlier than the close of business 120 days, and no later than the close of business 90 days, prior to the anniversary date of the 2024 Annual Meeting. In other words, for a shareholder nomination for election to our Board or a proposal of business to be considered at the 2024 Annual Meeting (other than through Rule 14a-8), certain non-GAAPit should be properly submitted to our Corporate Secretary at the principal executive offices of the Company no earlier than the close of business January 15, 2025 and no later than the close of business February 14, 2025. However, in the event that the date of an Annual Meeting is more than 30 days before or more than 60 days after the anniversary date of the preceding year’s Annual Meeting, the shareholder notice must be delivered not earlier than 120 days prior to such Annual Meeting and not later than 90 days prior to such Annual Meeting or, if the first public announcement of the date of such Annual Meeting is less than 100 days prior to the date of such Annual Meeting, the 10th day following the day on which public announcement of the date of such Annual Meeting is first made by the Company. If we increase the number of directors to be elected at an Annual Meeting and do not make a public announcement naming all of the nominees for director and specifying the size of the increased Board at least 80 days prior to the first anniversary of the preceding year’s Annual Meeting, a shareholder’s notice regarding the nominees for the new positions created by the increase will be considered timely if it is delivered to our Corporate Secretary at the principal executive offices of the Company not later than the close of business on the 10th day following the day on which the public announcement is first made. For each individual that a shareholder proposes to nominate as a director or propose other business (other than through Rule 14a-8) at the 2025 Annual Meeting, the shareholder’s written notice to our Corporate Secretary must include the information required by and meet the detailed requirements set forth in our Bylaws. From time to time, the GCR Committee may request additional information from the nominee or the shareholder. Any shareholder who intends to solicit proxies in support of any director nominees must comply with the content requirements of SEC Rule 14a-19 (the SEC’s universal proxy rule) at the time it complies with the earlier deadlines in the advance notice provisions of our Bylaws. Thus, if a shareholder intends to solicit proxies in support of any GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 103 director nominees submitted under the advance notice provisions of our Bylaws for the 2025 Annual Meeting, then such shareholder must also provide proper written notice that sets forth all the information required by SEC Rule 14a-19 to the Corporate Secretary between January 15, 2025, and February 14, 2025; provided, however, that if (a) next year’s annual meeting is called for a date that is more than 30 days before or more than 60 days after the anniversary date of the preceding year’s Annual Meeting, the shareholder notice must be delivered not earlier than 120 days prior to such Annual Meeting and not later than 90 days prior to such Annual Meeting or, if the first public announcement of the date of such Annual Meeting is less than 100 days prior to the date of such Annual Meeting, the 10th day following the day on which public announcement of the date of such Annual Meeting is first made by the Company; or (b) next year’s annual meeting is called for a date that is more than 30 days but less than 60 days after the first anniversary date of the preceding year’s Annual Meeting, the shareholder notice must be delivered no later than the close of business on the later of 60 days prior to the date of the 2025 Annual Meeting or the tenth day following the day on which public announcement of the date of such annual meeting is first made by the Company. HOW DO I CONTACT THE CORPORATE SECRETARY’S OFFICE?Shareholders may contact Group 1’s Corporate Secretary’s Office by writing a letter to: c/o Group 1 Automotive, Inc.
800 Gessner, Suite 500
Houston, Texas 77024
Attn: Corporate Secretary FORWARD-LOOKING STATEMENTSThis Proxy Material contains “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and involve risks and uncertainties, which may cause results to differ materially from those set forth in the statements. The forward-looking statements may include statements regarding the business or financial measuresperformance. No forward-looking statement can be guaranteed and actual results may differ materially from those projected. Group 1 undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise. Forward-looking statements should be evaluated together with the many uncertainties that affect Group 1’s business, particularly those mentioned in the risk factors and cautionary statements in Item 1A of Group 1’s Annual Report on Form 10-K for the year ended December 31, 2023, and in its periodic reports on Form 10-Q and current reports on Form 8-K, if any, which we incorporate by reference. CORPORATE GOVERNANCE INFORMATION AND HOW TO CONTACT THE BOARDOur key governance documents including our Corporate Governance Guidelines and committee charters are usedavailable on the Corporate Governance section of our website at www.group1corp.com and shareholders may obtain a printed copy, free of charge, by sending a written request to the Corporate Secretary. Our Board welcomes communications from our shareholders and other interested parties. Shareholders and any other interested parties may send communications to our Board, to any committee of our Board, to the independent Board Chair (who presides over the executive sessions of our independent and non-management directors), or to any director in particular, to: c/o Group 1 Automotive, Inc.
800 Gessner, Suite 500
Houston, Texas 77024
Attn: Chair of the Board Any appropriate correspondence addressed to our Board, to any committee of our Board, to the independent Board Chair, or to any one of the directors in care of our offices will be forwarded to the addressee or addressees. GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 104 TRANSACTIONS WITH RELATED PERSONSWe review all relationships and transactions in which we and our directors and NEOs or their immediate family members are participants to determine whether such persons have a direct or indirect material interest. Our General Counsel’s office is primarily responsible for the development and implementation of written procedures and controls to obtain information from the directors and NEOs with respect to related person transactions and for subsequently determining, based on the facts and circumstances disclosed to them, whether we or a related person has a direct or indirect material interest in the transaction. Transactions that are determined to be directly or indirectly material to us or a related person are disclosed as required in documents, including our proxy statement, filed with the SEC. We have multiple processes for reporting conflicts of interests, and related person transactions. Under the Code of Conduct, all employees are required to report any actual or apparent conflict of interest, or potential conflict of interest, to their supervisors and all related person transactions involving our regional or market executives must be communicated in writing as part of their quarterly representation letter. This information is then reviewed by our Internal Audit Department, General Counsel, Audit Committee, our Board or our independent registered public accounting firm, as deemed necessary, and discussed with management. As part of this review, the following factors are generally considered: | • | the nature of the related person’s interest in the transaction; | | • | the material terms of the transaction, including, without limitation, the amount and type of transaction; | | • | the importance of the transaction to the related person; | | • | the importance of the transaction to a third party; | | • | the importance of the transaction to us; | | • | whether the transaction would impair the judgment of a director, NEO or employee to act in the best interest of our Company; | | • | whether the transaction might affect the status of a director as independent under the independence standards of the NYSE; and | | • | any other matters deemed appropriate with respect to the particular transaction. |
Ultimately, all such transactions must be approved or ratified by our Board. Any member of our Board who is a related person with respect to a transaction is recused from the review of the transaction. In addition, our legal staff annually distributes a questionnaire to our NEOs and members of our Board requesting certain information regarding, among other things, their immediate family members, employment and beneficial ownership interests. This information is then reviewed for any conflicts of interest under the Code of Conduct. At the completion of the annual incentiveaudit, our Audit Committee and the independent registered public accounting firm review with management, insider and related person transactions and potential conflicts of interest. In addition, our internal audit function has processes in place, under its written procedure policies, to identify related person transactions and potential conflicts of interest and report them to senior management and the Audit Committee. During 2023 we were not, and we are not currently, a party to a transaction or series of transactions in which the amount involved did or may exceed $120,000, in which any of our directors, executive officers, any holder of more than 5% of our common stock or any member of the immediate family of any of these persons had or will have a direct or indirect material interest, except as described in the compensation arrangements (including with respect to equity compensation) described in “Compensation Discussion and Analysis,” “Executive Compensation” and “Director Compensation.” DELINQUENT SECTION 16(A) REPORTSOur executive officers, directors and any person who owns more than 10% of our common stock are required by Section 16(a) of the Exchange Act to file reports regarding their ownership of our stock. To our knowledge, based solely on a review of the copies of these reports furnished to us and written representations from these individuals that no other reports were required, all filing requirements were met, except one Form 4 for Mr. McKissic, reporting two transactions, which was filed late on May 26, 2023 and one Form 4 for Mr. McHenry, reporting one transaction, which was filed late on August 25, 2023. GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 105 APPENDIX A:EMPLOYEE STOCK PURCHASE PLAN |
Group 1 Automotive, Inc. Second Amended and Restated Employee Stock Purchase Plan (Effective as of May 15, 2024) | 1. | Purpose. The GROUP 1 AUTOMOTIVE, INC. EMPLOYEE STOCK PURCHASE PLAN (the “Plan”) is intended to provide an incentive for employees of GROUP 1 AUTOMOTIVE, INC. (the “Company”) and certain of its subsidiaries to acquire or increase a proprietary interest in the Company through the purchase of shares of the Company’s common stock. The Plan is intended to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code of 1986, as amended (the “Code”). The provisions of the Plan shall be construed in a manner consistent with the requirements of that section of the Code. The Plan is a further amendment and restatement of the Group 1 Automotive, Inc. 1998 Employee Stock Purchase Plan (the “1998 Plan”), which was originally adopted effective January 1, 1998, and subsequently amended from time to time, including the most recent amendment and restatement effective May 19, 2015 (together, the “Prior Plan”). This Plan shall supersede and replace in its entirety the Prior Plan. | | 2. | Definitions. Where the following words and phrases are used in the Plan, they shall have the respective meanings set forth below, unless the context clearly indicates to the contrary: |
| (a) | “Board” means the Board of Directors of the Company. | | (b) | “Code” means the Internal Revenue Code of 1986, as amended. | | (c) | “Committee” means a committee appointed from time to time by the Board to administer the Plan as provided in paragraph 3. | | (d) | “Company” means Group 1 Automotive, Inc., a Delaware corporation. | | (e) | “Custodian Retention Period” means the period of time, if any, immediately following the Restriction Period during which shares of Stock acquired by a participant in the Plan may not be transferred out of the brokerage account maintained by the custodian on the participant’s behalf pursuant to the Plan, as provided in subparagraph 8(d). | | (f) | “Date of Exercise” means the last day of each Option Period. | | (g) | “Date of Grant” means January 1, 1998, and, thereafter, the first day of each successive April, July, October, and January. | | (h) | “Eligible Compensation” means the total of all wages, salaries, fees for professional service, and other amounts received in cash or in kind by a participant for services actually rendered or labor performed for his employer while a participant and an employee to the extent such amounts are includable in gross income, subject to the following adjustments and limitations: |
| (i) | The following shall be excluded: |
| (A) | reimbursements and other expense allowances; | | (B) | cash and noncash fringe benefits; | | (C) | moving expenses; | | (D) | employer contributions to or payments from this or any other deferred compensation program, whether such program is qualified under Section 401(a) of the Code or nonqualified; |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 106 | (E) | welfare benefits; | | (F) | amounts realized from the receipt or exercise of a stock option that is not an incentive stock option within the meaning of Section 422 of the Code; | | (G) | amounts realized at the time property described in section 83 of the Code is freely transferable or no longer subject to a substantial risk of forfeiture; | | (H) | amounts realized as a result of an election described in Section 83(b) of the Code; | | (I) | any amount realized as a result of a disqualifying disposition within the meaning of Section 421(a) of the Code; and | | (J) | any other amounts that receive special tax benefits under the Code but are not hereinafter included. |
| (ii) | Elective contributions made on a participant’s behalf by his employer that are not includable in income under Section 125 or Section 402(e)(3) of the Code and any amounts that are not includable in the gross income of a participant under a salary reduction agreement by reason of the application of Section 132(f) of the Code shall be included. |
| (i) | “Exchange Act” means the Securities Exchange Act of 1934, as amended. | | (j) | “Option Period” means the three month period beginning on each Date of Grant. | | (k) | “Option Price” shall have the meaning assigned to such term in paragraph 8(b). | | (l) | “Participating Company” means any present or future parent or subsidiary corporation of the Company that is located in the United States or the United Kingdom (unless the Committee makes a written determination that such parent or subsidiary corporation shall not be a Participating Company) and any other foreign parent or subsidiary corporation that participates in the Plan pursuant to paragraph 4. | | (m) | “Plan” means this Group 1 Automotive, Inc. Employee Stock Purchase Plan, as amended and restated effective May 15, 2024, (the “Effective Date”) as amended from time to time. | | (n) | “Restriction Period” means the period of time, if any, during which shares of Stock acquired by a participant in the Plan may not be sold, assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered or disposed of by such participant as provided in subparagraph 8(d). | | (o) | “Sale Restrictions” means the restrictions applicable during the Restriction Period, as provided in subparagraph 8(d), which prohibit a participant in the Plan from selling, assigning, pledging, exchanging, hypothecating or otherwise transferring, encumbering or disposing of shares of Stock acquired pursuant to the exercise of options under the Plan. | | (p) | “Stock” means the shares of the Company’s common stock, par value $0.01 per share. |
| 3. | Administration of the Plan. The Plan shall be administered by the Committee, the members of which shall be appointed from time to time by the Board. Each member of the Committee shall serve for a term commencing on a date specified by the Board and continuing until he dies, resigns, or is removed from office by the Board. Subject to the provisions of the Plan, the Committee shall interpret the Plan and all options granted under the Plan, make such rules as it deems necessary for the proper administration of the Plan, and make all other determinations necessary or advisable for the administration of the Plan. In addition, the Committee shall correct any defect or supply any omission or reconcile any inconsistency in the Plan, or in any option granted under the Plan, in the manner and to the extent that the Committee deems desirable to carry the Plan or any option into effect. The Committee shall, in its sole discretion, make such decisions or determinations and take such actions, and all such decisions, determinations, and actions taken or made by the Committee pursuant to this and the other paragraphs of the Plan shall be final and conclusive on all parties. The Committee shall not be liable for any decision, determination, or action taken in good faith in connection with the administration of the Plan. The Committee shall have the authority to delegate routine day-to-day administration of the Plan to such officers and employees of the Company as the Committee deems appropriate, and such persons shall not be liable for any decision, determination or action taken in good faith in connection with such delegated administration. | | | | 4. | Participating Companies. Unless the Committee makes a written determination to the contrary, all present and future domestic parent and subsidiary corporations of the Company, and all present and future parent or subsidiary corporations of the Company located in the United Kingdom, shall be Participating Companies. The Committee may designate any other present or future foreign parent or subsidiary corporation of the Company, which is eligible by law, to participate in the Plan as a Participating Company by written instrument delivered to |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 107 | the designated Participating Company. Such written instrument shall specify the effective date of such designation and shall become, as to such designated Participating Company and persons in its employment, a part of the Plan. The terms of the Plan may be modified as applied to the Participating Company only to the extent permitted under Section 423 of the Code. Transfer of employment among the Company and Participating Companies (and among any other parent or subsidiary corporation of the Company) shall not be considered a termination of employment hereunder. Notwithstanding the foregoing, (a) any Participating Company may, by appropriate action of its Board of Directors, terminate its participation in the Plan upon thirty days prior written notice to the Committee and (b) the Committee may, in its discretion, terminate a Participating Company’s Plan participation at any time. | | | | 5. | Eligibility. Subject to the provisions hereof, all employees (as determined under Section 3401 of the Code) of the Company and the Participating Companies who are employed by the Company or any Participating Company as of a Date of Grant shall be eligible to participate in the Plan; provided, however, that no option shall be granted to an employee if such employee, immediately after the option is granted, owns stock possessing five percent or more of the total combined voting power or value of all classes of stock of the Company or of its parent or subsidiary corporations (within the meaning of Sections 423(b)(3) and 424(d) of the Code). | | | | 6. | Stock Subject to the Plan. Subject to the provisions of paragraph 13, the aggregate number of shares which may be sold pursuant to options granted under the Plan shall not exceed 4,750,000 shares of the authorized Stock (including all shares previously sold under the Prior Plan prior to the Effective Date), which shares may be unissued shares or reacquired shares, including shares bought on the market or otherwise for purposes of the Plan. Should any option granted under the Plan expire or terminate prior to its exercise in full, the shares theretofore subject to such option may again be subject to an option granted under the Plan. Any shares that are not subject to outstanding options upon the termination of the Plan shall cease to be subject to the Plan. | | | | 7. | Grant of Options. | | | | (a) | In General. Following the Effective Date of the Plan and continuing while the Plan remains in force, the Company shall offer options under the Plan to purchase shares of Stock to all eligible employees who elect to participate in the Plan. Except as otherwise determined by the Committee, these options shall be granted on each Date of Grant. Except as provided in paragraph 13, the term of each option shall be for three months, which shall begin on a Date of Grant and end on the last day of such three-month period. Subject to subparagraph 7(d), the number of shares of Stock subject to an option for a participant shall be equal to the quotient of (i) the aggregate payroll deductions withheld on behalf of such participant during the Option Period in accordance with subparagraph 7(b), divided by (ii) the Option Price of the Stock applicable to the Option Period, including fractions; provided, however, that the maximum number of shares of Stock that may be subject to any option for a participant may not exceed 3,000 (subject to adjustment as provided in paragraph 13). | | | | (b) | Election to Participate; Payroll Deduction Authorization.An eligible employee may participate in the Plan only by means of payroll deduction. Except as provided in subparagraph 7(f), each eligible employee who elects to participate in the Plan shall deliver to the Company or any third party administrator designated by the Company, within the time period prescribed by the Committee, a written payroll deduction authorization in a form prepared by the Company (which may be in electronic or telephonic form) whereby he gives notice of his election to participate in the Plan as of the next following Date of Grant, and whereby he designates a whole percentage of his Eligible Compensation to be deducted from his compensation for each pay period and paid into the Plan for his account. The designated percentage may not be less than 1% nor exceed 10% (or such other percentage as the Board or the Committee may establish from time to time prior to a Date of Grant). | | | | (c) | Changes in Payroll Authorization.The payroll deduction authorization referred to in subparagraph 7(b) may not be changed during the Option Period. However, a participant may withdraw from the Plan as provided in paragraph 9. | | | | (d) | $25,000 Limitation.No employee shall be granted an option under the Plan which permits his rights to purchase Stock under the Plan and under all other employee stock purchase plans of the Company and its parent and subsidiary corporations to accrue at a rate which exceeds $25,000 of fair market value of Stock (determined at the time such option is granted) for each calendar year in which such option is outstanding at any time (within the meaning of Section 423(b)(8) of the Code). Any payroll deductions in excess of the amount specified in the foregoing sentence shall be returned to the participant as soon as administratively feasible after the next following Date of Exercise. |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 108 | (e) | Leaves of Absence. During a paid leave of absence approved by the Company and meeting the requirements of Treasury Regulation § 1.421-7(h)(2), a participant’s elected payroll deductions shall continue. A participant may not contribute to the Plan during an unpaid leave of absence. If a participant takes an unpaid leave of absence that is approved by the Company and meets the requirements of Treasury Regulation § 1.421-7(h)(2), then such participant’s payroll deductions for such Option Period that were made prior to such leave may remain in the Plan and be used to purchase Stock under the Plan on the Date of Exercise relating to such Option Period. If a participant takes a leave of absence that is not described in the first or third sentence of this subparagraph 7(e), then he shall be withdrawn from the Plan pursuant to the provisions of paragraph 9 hereof. Further, notwithstanding the preceding provisions of this subparagraph 7(e), if a participant takes a leave of absence that is described in the first or third sentence of this subparagraph 7(e) and such leave of absence exceeds the Maximum Period, then he shall be withdrawn from the Plan pursuant to the provisions of paragraph 9 hereof on the day immediately following the last day of the Maximum Period. For purposes of the preceding sentence, the term “Maximum Period” shall mean, with respect to a participant, the three-month period beginning on the first day of the participant’s leave of absence; provided, however, that if the participant’s right to reemployment by the Company (or a parent or subsidiary corporation of the Company) is provided either by statute or contract, then such three-month period shall be extended until the last day upon which such reemployment rights are so provided. | | | | (f) | Continuing Election. Subject to the limitation set forth in subparagraph 7(d), a participant (i) who has elected to participate in the Plan pursuant to subparagraph 7(b) as of a Date of Grant and (ii) who takes no action to change or revoke such election as of the next following Date of Grant and/or as of any subsequent Date of Grant on or before the deadline for such change or revocation prescribed by the Committee shall be deemed to have made the same election, including the same attendant payroll deduction authorization, for such next following and/or subsequent Date(s) of Grant as was in effect immediately prior to such respective Date of Grant. Payroll deductions that are limited by subparagraph 7(d) shall recommence at the rate provided in such participant’s payroll deduction authorization at the beginning of the first Option Period that is scheduled to end in the following calendar year, unless the participant changes the amount of his payroll deduction authorization pursuant to paragraph 7, withdraws from the Plan as provided in paragraph 9, or is terminated from participation in the Plan as provided in paragraph 10. | | | | 8. | Exercise of Options. | | | | (a) | General Statement. Subject to the limitation set forth in subparagraph 7(d), each participant in the Plan automatically and without any act on his part shall be deemed to have exercised his option on each Date of Exercise to the extent of his unused payroll deductions under the Plan and to the extent the issuance of Stock to such participant upon such exercise is lawful. If the total number of shares of Stock for which options are exercised on any Date of Exercise exceeds the maximum number of shares then available for sale under the Plan, the Company shall allocate the remaining shares by reducing participants’ designated payroll deduction authorization percentages in order of the highest percentages until the excess is eliminated, and any remaining balance of payroll deductions credited to the account of a participant under the Plan shall be refunded to him promptly. | | | | (b) | “Option Price” Defined. The term “Option Price” shall mean the per share price of Stock to be paid by each participant on each exercise of his option, which price shall be equal to 85% of the fair market value of the Stock on the Date of Exercise or on the Date of Grant, whichever amount is less. For all purposes under the Plan, the fair market value of a share of Stock on a particular date shall be equal to the closing price of the Stock on the New York Stock Exchange, Inc. on that date (or, if no shares of Stock have been traded on that date, on the next regular business date on which shares of the Stock are so traded). Notwithstanding any provision of the Plan to the contrary, prior to the commencement of any Option Period, the Committee in its discretion may establish a minimum exercise price for such Option Period to the effect that if the Option Price for such Option Period is less than such minimum exercise price, then each participant shall be deemed to have withdrawn from the Plan pursuant to paragraph 9 immediately prior to the Date of Exercise of such Offering Period; provided, however, that a participant’s payroll deduction authorization shall not be terminated with respect to the Date of Grant of any subsequent Option Period by reason of any such deemed withdrawal. Any such minimum exercise price shall be subject to adjustment in the same manner as provided in paragraph 13 with respect to the number of shares subject to the Plan, the maximum number of shares that may be subject to any option, and the number and Option Price of shares subject to options outstanding under the Plan. |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 109 | (c) | Delivery of Shares. As soon as practicable after each Date of Exercise, the Company shall deliver to a custodian selected by the Committee one or more certificates representing (or shall otherwise cause to be credited to the account of such custodian) the total number of whole shares of Stock respecting options exercised on such Date of Exercise in the aggregate (for both whole and fractional shares) of all of the participants hereunder. Any remaining amount representing a fractional share shall not be certificated (or otherwise so credited) and such remaining amount shall be paid in cash to the custodian. As soon as administratively practicable following each Date of Exercise, such custodian shall transfer the number of shares of Stock purchased by each participant on such Date of Exercise to the brokerage account established with such custodian on behalf of such participant. At the time of delivery of the shares into a participant’s brokerage account with the custodian, any fractional share shall be converted to cash based on the fair market value of the Stock on the date of delivery and such cash shall be paid to the participant. Such custodian shall keep accurate records of the brokerage accounts of each participant under the Plan, and shall provide each eligible employee with quarterly or such other periodic statements with respect thereto as may be directed by the Committee. If the Company is required to obtain from any U.S. commission or agency authority to issue any such shares, the Company shall seek to obtain such authority. Inability of the Company to obtain from any commission or agency (whether U.S. or foreign) authority which the Company’s General Counsel or his designee deems necessary for the lawful issuance of any such shares shall relieve the Company from liability to any participant in the Plan except to return to him the amount of his payroll deductions under the Plan which would have otherwise been used upon exercise of the relevant option. | | | | (d) | Restrictions on Sale and Transfer. The Committee may from time to time specify with respect to a particular grant of options the Restriction Period that shall apply to the shares of Stock acquired pursuant to such options. Except as hereinafter provided, during any Restriction Period applicable to shares of Stock acquired under the Plan during a particular Option Period, such shares may not be sold, assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered or disposed of by the participant who has purchased such shares; provided, however, that such Sale Restrictions shall not apply to the transfer, exchange or conversion of such shares of Stock pursuant to a merger, consolidation or other plan of reorganization of the Company, but the stock, securities or other property (other than cash) received upon any such transfer, exchange or conversion shall also become subject to the same Sale Restrictions applicable to the original shares of Stock, and shall be held in the participants’ accounts, pursuant to the provisions hereof. Upon the expiration of such Restriction Period, the Sale Restrictions shall cease to apply and the optionee may, pursuant to procedures established by the Committee and the custodian, direct the sale of some or all of the whole shares of Stock in his Company stock account that are not then subject to Sale Restrictions and request payment of the net proceeds from such sale. Upon the termination of the participant’s employment with the Company and its parent or subsidiary corporations for any reason whatsoever, the Sale Restrictions shall continue to apply with respect to all shares of Stock purchased by such participant until the end of the applicable Restriction Period(s) with respect to such shares. Following the expiration of the applicable Restriction Period(s), unless sold by the custodian in accordance with the participant’s direction, the shares of Stock in a participant’s account shall be held by the custodian and may not be transferred on behalf of the participant for a period of two years following the respective Date(s) of Grant. For the avoidance of doubt, subject to paragraph 17, a participant (or, in the event of his death, his beneficiaries) may direct that the custodian sell such shares of Stock during the Custodian Retention Period. The Committee may cause the Stock issued in connection with the exercise of options under the Plan to bear such legends or other appropriate restrictions, and the Committee may take such other actions, as it deems appropriate in order to reflect the restrictions set forth in this subparagraph 8(d) and to assure compliance with applicable laws. | | | | 9. | Withdrawal from the Plan. | | | | (a) | General Statement. Any participant may withdraw in whole from the Plan at any time on or before the fifteenth day of the last month of a particular Option Period. Partial withdrawals shall not be permitted. A participant who wishes to withdraw from the Plan must timely deliver to the Company a notice of withdrawal in a form prepared by the Company (which may be in electronic or telephonic form). The Company, promptly following the time when the notice of withdrawal is delivered, shall refund to the participant the amount of his payroll deductions under the Plan which have not yet been otherwise returned to him or used upon exercise of options; and thereupon, automatically and without any further act on his part, his payroll deduction authorization and his interest in unexercised options under the Plan shall terminate. |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 110 | (b) | Eligibility Following Withdrawal. A participant who withdraws from the Plan shall be eligible to participate again in the Plan upon expiration of the Option Period during which he withdrew (provided that he is otherwise eligible to participate in the Plan at such time). | | | | 10. | Termination of Employment. If the employment of a participant terminates for any reason whatsoever, then his participation in the Plan automatically and without any act on his part shall terminate as of the date of the termination of his employment. The Company shall promptly refund to him the amount of his payroll deductions under the Plan which have not yet been otherwise returned to him or used upon exercise of options, and thereupon his interest in unexercised options under the Plan shall terminate. Notwithstanding the foregoing, shares of Stock purchased by the participant upon Exercise Dates preceding the date of the termination of his employment shall remain subject to the applicable Restriction Period(s) and subsequent Custodian Retention Period(s) in accordance with subparagraph 8(d). | | | | 11. | Restriction Upon Assignment of Option. An option granted under the Plan shall not be transferable otherwise than by will or the laws of descent and distribution. Each option shall be exercisable, during his lifetime, only by the employee to whom granted. The Company shall not recognize and shall be under no duty to recognize any assignment or purported assignment by an employee of his option or of any rights under his option or under the Plan. | | | | 12. | No Rights of Stockholder Until Exercise of Option. With respect to shares of Stock subject to an option, an optionee shall not be deemed to be a stockholder, and he shall not have any of the rights or privileges of a stockholder, until such option has been exercised and a Stock certificate has been delivered to him (or a share of Stock otherwise credited to his account under the Plan). With respect to an individual’s Stock held by the custodian pursuant to subparagraph 8(d), the custodian shall, automatically reinvest in additional shares of Stock for such individual’s account any cash dividends received by the custodian and attributable to such Stock and shall, in accordance with procedures adopted by the custodian, facilitate the individual’s voting rights attributable to shares held in the individual’s account with the custodian. | | | | 13. | Changes in Stock; Adjustments. Whenever any change is made in the Stock, by reason of a stock dividend or by reason of subdivision, stock split, reverse stock split, recapitalization, reorganization, combination, reclassification of shares or other similar change, appropriate action will be taken by the Committee to prevent the dilution or enlargement of rights by adjusting accordingly the number of shares subject to the Plan, the maximum number of shares that may be subject to any option, and the number and Option Price of shares subject to options outstanding under the Plan. | | | | If the Company shall not be the surviving corporation in any merger or consolidation (or survives only as a subsidiary of another entity), or if the Company is to be dissolved or liquidated, then, unless a surviving corporation assumes or substitutes new options (within the meaning of Section 424(a) of the Code) for all options then outstanding, (i) the Date of Exercise for all options then outstanding shall be accelerated to a date fixed by the Committee prior to the effective date of such merger or consolidation or such dissolution or liquidation and (ii) upon such effective date any unexercised options shall expire and the Company promptly shall refund to each participant the amount of such participant’s payroll deductions under the Plan which have not yet been otherwise returned to him or used upon exercise of options. | | | | 14. | Use of Funds; No Interest Paid. All funds received or held by the Company under the Plan shall be included in the general funds of the Company free of any trust or other restriction, and may be used for any corporate purpose. No interest shall be paid or credited to any participant. | | | | 15. | Term of the Plan. The Plan, as amended and restated by this instrument, shall be effective upon the date of its adoption by the Board; provided; however, that no options granted under this Plan shall be exercised until the Plan has been approved by the shareholders of the Company, which shareholder approval must be completed within 12 months of the date the Plan was approved by the Board or the Plan shall become void and of no further effect, no options may be exercised under the Plan as so amended, and the Company promptly shall refund to each participant the amount of such participant’s payroll deductions under the Plan to the extent such participant’s options were granted under the Plan as so amended; and thereupon, automatically and without any further act on his part, his payroll deduction authorization and his interest in unexercised options under the Plan shall terminate. Except with respect to options then outstanding, if not sooner terminated under the provisions of paragraph 16, the Plan shall terminate upon and no further payroll deductions shall be made and no further options shall be granted after March 24, 2034. |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 111 | 16. | Amendment or Termination of the Plan. The Board in its discretion may terminate the Plan at any time with respect to any Stock for which options have not theretofore been granted. The Board and the Committee shall each have the right to alter or amend the Plan or any part thereof from time to time; provided, however, that no change in any option theretofore granted may be made that would impair the rights of the optionee without the consent of such optionee; and provided, further, that without stockholder approval as required under Treasury Regulation § 1.423-2(c) (or any applicable successor regulations) Board and the Committee may not amend the Plan to increase the aggregate number of shares which may be issued pursuant to the provisions of the Plan (other than as a result of the anti-dilution provisions of the Plan), change the class of corporations whose employees may receive options under the Plan or the class of eligible employees, extend the term of the Plan, or otherwise cause options issued under the Plan to fail to meet the requirements of employee stock purchase options as defined in Section 423 of the Code. | | | | 17. | Securities Laws. The Company shall not be obligated to issue any Stock pursuant to any option granted under the Plan at any time when the offer, issuance, or sale of shares covered by such option has not been registered under the Securities Act of 1933, as amended, or does not comply with such other state, federal or foreign laws, rules or regulations, or the requirements of any stock exchange upon which the Stock may then be listed, as the Company or the Committee deems applicable and, in the opinion of legal counsel for the Company, there is no exemption from the requirements of such laws, rules, regulations or requirements available for the offer, issuance and sale of such shares. Further, all Stock acquired pursuant to the Plan shall be subject to the Company’s policies concerning compliance with securities laws and regulations, as such policies may be amended from time to time. The terms and conditions of options granted hereunder to, and the purchase of shares by, persons subject to Section 16 of the Exchange Act shall comply with any applicable provisions of Rule 16b-3. As to such persons, the Plan shall be deemed to contain, and such options shall contain, and the shares issued upon exercise thereof shall be subject to, such additional conditions and restrictions as may be required from time to time by Rule 16b-3 to qualify for the maximum exemption from Section 16 of the Exchange Act with respect to Plan transactions. | | | | 18. | No Restriction on Corporate Action. Nothing contained in the Plan shall be construed to prevent the Company or any subsidiary from taking any corporate action that is deemed by the Company or such subsidiary to be appropriate or in its best interest, whether or not such action would have an adverse effect on the Plan or any option granted under the Plan. No employee, beneficiary, or other person shall have any claim against the Company or any subsidiary as a result of any such action. | | | | 19. | Miscellaneous Provisions. | | | | (a) | Parent and Subsidiary Corporations. For all purposes of the Plan, a corporation shall be considered to be a parent or subsidiary corporation of the Company only if such corporation is a parent or subsidiary corporation of the Company within the meaning of Sections 424(e) or (f) of the Code. | | | | (b) | Number and Gender. Wherever appropriate herein, words used in the singular shall be considered to include the plural and words used in the plural shall be considered to include the singular. The masculine gender, where appearing in the Plan, shall be deemed to include the feminine gender. | | | | (c) | Headings. The headings and subheadings in the Plan are included solely for convenience, and if there is any conflict between such headings or subheadings and the text of the Plan, the text shall control. | | | | (d) | Not a Contract of Employment. The adoption and maintenance of the Plan shall not be deemed to be a contract between the Company or any Participating Company and any person or to be consideration for the employment of any person. Participation in the Plan at any given time shall not be deemed to create the right to participate in the Plan, or any other arrangement permitting an employee of the Company or any Participating Company to purchase Stock at a discount, in the future. The rights and obligations under any participant’s terms of employment with the Company or any Participating Company shall not be affected by participation in the Plan. Nothing herein contained shall be deemed to give any person the right to be retained in the employ of the Company or any Participating Company or to restrict the right of the Company or any Participating Company to discharge any person at any time, nor shall the Plan be deemed to give the Company or any Participating Company the right to require any person to remain in the employ of the Company or such Participating Company |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 112 | or to restrict any person’s right to terminate his employment at any time. The Plan shall not afford any participant any additional right to compensation as a result of the termination of such participant’s employment for any reason whatsoever. | | | | (e) | Compliance with Applicable Laws. The Company’s obligation to offer, issue, sell or deliver Stock under the Plan is at all times subject to all approvals of and compliance with any governmental authorities (whether domestic or foreign) required in connection with the authorization, offer, issuance, sale or delivery of Stock as well as all federal, state, local and foreign laws. Without limiting the scope of the preceding sentence, and notwithstanding any other provision in the Plan, the Company shall not be obligated to grant options or to offer, issue, sell or deliver Stock under the Plan to any employee who is a citizen or resident of a jurisdiction the laws of which, for reasons of its public policy, prohibit the Company from taking any such action with respect to such employee. | | | | (f) | Severability. If any provision of the Plan shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining provisions hereof; instead, each provision shall be fully severable and the Plan shall be construed and enforced as if said illegal or invalid provision had never been included herein. | | | | (g) | Electronic and/or Telephonic Documentation and Submission. Any of the payroll deduction authorizations, enrollment documents, and any other forms and designations referenced in the Plan and their submission may be electronic and/or telephonic, as directed by the Committee. | | | | (h) | Governing Law. All provisions of the Plan shall be construed in accordance with the laws of Texas except to the extent preempted by federal law. With respect to all options granted to persons in the United Kingdom, and only such options, the Company or a Participating Company may, without the need for authority or consent, withhold any amount and make any arrangement it considers necessary to meet any liability of the participant to taxation or National Insurance (social security) in connection with the grant, exercise or cancellation of an option and the participant may be required to agree to the transfer to him of any secondary National Insurance contributions for which the Company, a Participating Company or any other person (other than the participant) is liable for as a consequence of the grant exercise, release or assignment of an option. | | | | (i) | Tax Withholding. At the time an option under the Plan is exercised, in whole or in part, or at the time some or all of the Stock issued under the Plan is disposed of, the participant must make adequate provision for the Company’s (or a Participating Company’s) federal, state or other tax withholding obligations, if any, that arise upon the exercise of the option or the disposition of the Stock. At any time, the Company (or a Participating Company) may withhold from the participant’s compensation the amount necessary for the Company (or a Participating Company) to meet any applicable withholding obligations, including without limitation any withholding required to make available to the Company (or a Participating Company) any tax deductions or benefits attributable to the sale or disposition of Stock purchased by the participant under the Plan. |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 113 APPENDIX B:Group 1 Automotive, Inc.
2024 Long Term Incentive Plan I. Purpose of the Plan The purpose of the GROUP 1 AUTOMOTIVE, INC. 2024 LONG TERM INCENTIVE PLAN (the “Plan”) is to provide a means through which GROUP 1 AUTOMOTIVE, INC., a Delaware corporation (the “Company”), and its Affiliates may attract qualified persons to serve as Directors or Consultants or to enter into or remain in the employ of the Company and its Affiliates and to evaluateprovide a means whereby those individuals upon whom the responsibilities of the successful administration and management of the Company and its Affiliates rest, and whose present and potential contributions to the Company and its Affiliates are of importance, can acquire and maintain stock ownership, thereby strengthening their concern for the welfare of the Company and its Affiliates. Accordingly, the Plan provides for granting Options, Stock Appreciation Rights, Restricted Stock Awards, Restricted Stock Unit Awards, Dividend Equivalents, Performance Awards, Phantom Stock Awards, Other Stock-Based Awards, Bonus Stock Awards, Substitute Awards, Cash Awards, or any combination of the foregoing, as suited to the circumstances of the particular employee, Consultant, or Director as provided herein. This Plan is an amendment and restatement of the Group 1 Automotive, Inc. 2014 Long Term Incentive Plan. II. Definitions The following definitions shall be applicable throughout the Plan unless specifically modified by any paragraph: | a. | “Affiliate” means any corporation, partnership, limited liability company or partnership, association, trust, or other organization which, directly or indirectly, controls, is controlled by, or is under common control with, the Company. For purposes of the preceding sentence, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any entity or organization, shall mean the possession, directly or indirectly, of the power (i) to vote more than 50% of the securities having ordinary voting power for the election of directors of the controlled entity or organization or (ii) to direct or cause the direction of the management and policies of the controlled entity or organization, whether through the ownership of voting securities or by contract or otherwise. | | b. | “Award” means, individually or collectively, any Option, Stock Appreciation Rights, Restricted Stock Award, Restricted Stock Unit Award, Dividend Equivalents, Performance Award, Phantom Stock Award, Substitute Award, Cash Award, Other Stock-Based Award or Bonus Stock Award, together with any other right or interest, granted under the Plan. | | c. | “Board” means the Board of Directors of the Company. | | d. | “Bonus Stock Award” means an Award granted under Paragraph XI of the Plan. | | e. | “Cash Award” means an Award denominated in cash granted under Paragraph XIV of the Plan. | | f. | “Code” means the Internal Revenue Code of 1986, as amended. Reference in the Plan to any section of the Code shall be deemed to include any amendments or successor provisions to such section and any regulations under such section. | | g. | “Committee” means a committee of the Board that is selected by the Board as provided in Subparagraph IV(a). | | h. | “Common Stock” means the common stock, par value $0.01 per share, of the Company, or any security into which such common stock may be changed by reason of any transaction or event of the type described in Paragraph XVI. | | i. | “Company” means Group 1 Automotive, Inc., a Delaware corporation. |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 114 | j. | “Consultant” means any person who is not an employee or a Director and who is providing advisory or consulting services to the Company or any Affiliate (provided that such person satisfies the Form S-8 definition of an “employee”). | | k. | “Corporate Change” shall have the meaning assigned to such term in Subparagraph XV(c) of the Plan. | | l. | “Director” means an individual who is a member of the Board. | | m. | “Dividend Equivalent” means a right granted to an Eligible Individual under Paragraph XIII to receive cash, Common Stock, other Awards, or other property equal in value to dividends paid with respect to a specified number of shares of Common Stock, or other periodic payments. | | n. | “Effective Date” has the meaning set forth in Paragraph III. | | o. | “Eligible Individual” shall have the meaning assigned to such term in Paragraph VI of the Plan. | | p. | An “employee” means any person (including a Director) in an employment relationship with the Company or any Affiliate, provided that such individual must be an “employee” of the Company or any of its parents or subsidiaries within the meaning of General Instruction A.1(a) to Form S-8 if such individual is granted an Award that may be settled in Common Stock. An employee on a leave of absence may be a Participant at the discretion of the Committee. | | q. | “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, including the guidance, rules, and regulations promulgated thereunder and successor provisions, guidance, rules, and regulations thereto. | | r. | “Fair Market Value” means, as of any specified date, (i) the mean of the high and low sales prices of the Common Stock reported on the New York Stock Exchange on that date or, if the Common Stock is not then listed on the New York Stock Exchange, on any other national securities exchange on which the Common Stock is listed, or, if there shall have been no such sales so reported on that date, on the last preceding date on which such a sale was so reported or (ii) if the Common Stock is traded over the counter at the time a determination of its fair market value is required to be made hereunder, the average between the reported high and low or closing bid and asked prices of Common Stock on the most recent date on which Common Stock was publicly traded. In the event Common Stock is not publicly traded at the time a determination of its value is required to be made hereunder, the determination of its fair market value shall be made by the Committee in such manner as it deems appropriate and as is consistent with the requirements of section 409A of the Code. | | s. | “Incentive Stock Option” means an Option designated as an incentive stock option within the meaning of section 422 of the Code. | | t. | “Option” means an Award granted under Paragraph VII of the Plan and includes both Incentive Stock Options to purchase Common Stock and Options that do not constitute Incentive Stock Options to purchase Common Stock. | | u. | “Option Agreement” means an agreement, certificate, resolution, or other type or form of writing or other evidence approved by the Committee that sets forth the terms and conditions of an Option, which Option Agreement may be in an electronic medium, may be limited to notation on the books and records of the Company and, unless otherwise determined by the Committee, need not be signed by a representative of the Company or a Participant. | | v. | “Other Stock-Based Award” means an Award granted to an Eligible Individual under Subparagraph XI(b). | | w. | “Participant” means an employee, Consultant, or Director who has been granted an Award under the Plan that remains outstanding, including a person who is no longer an Eligible Individual. | | x. | “Performance Award” means an Award granted under Paragraph IX of the Plan. | | y. | “Performance Award Agreement” means an agreement, certificate, resolution, or other type or form of writing or other evidence approved by the Committee that sets forth the terms and conditions of a Performance Award, which Performance Award Agreement may be in an electronic medium, may be limited to notation on the books and records of the Company and, unless otherwise determined by the Committee, need not be signed by a representative of the Company or a Participant. | | z. | “Phantom Stock Award” means an Award granted under Paragraph X of the Plan. | | aa. | “Phantom Stock Award Agreement” means an agreement, certificate, resolution, or other type or form of writing or other evidence approved by the Committee that sets forth the terms and conditions of a Phantom Stock |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 115 | Award, which Phantom Stock Award Agreement may be in an electronic medium, may be limited to notation on the books and records of the Company and, unless otherwise determined by the Committee, need not be signed by a representative of the Company or a Participant. | | bb. | “Plan” means the Group 1 Automotive, Inc. 2024 Long Term Incentive Plan, as amended from time to time. | | cc. | “Prior Plans” means the Group 1 Automotive, Inc. 2007 Long Term Incentive Plan (as amended and restated effective as of March 11, 2010) and the Group 1 Automotive, Inc. 2014 Long Term Incentive Plan. | | dd. | “Qualified Member” means a member of the Board who is (i) a “non-employee director” within the meaning of Rule 16b-3(b)(3) and (ii) “independent” under the listing standards or rules of the securities exchange upon which the Common Stock is traded, but only to the extent such independence is required in order to take the action at issue pursuant to such standards or rules. | | ee. | “Restricted Stock Agreement” means an agreement, certificate, resolution, or other type or form of writing or other evidence approved by the Committee that sets forth the terms and conditions of a Restricted Stock Award, which Restricted Stock Agreement may be in an electronic medium, may be limited to notation on the books and records of the Company and, unless otherwise determined by the Committee, need not be signed by a representative of the Company or a Participant. | | ff. | “Restricted Stock” means Common Stock granted to an Eligible Individual under Paragraph VIII of the Plan that is subject to certain restrictions and to a risk of forfeiture. | | gg. | “Restricted Stock Award” means an Award granted under Paragraph VIII of the Plan. | | hh. | “Restricted Stock Unit” means a right granted to an Eligible Individual under Paragraph XII of the Plan to receive Common Stock, cash, or a combination thereof at the end of a specified period (which may or may not be coterminous with the vesting schedule of the Award of Restricted Stock Units). | | ii. | “Restricted Stock Unit Award” means an Award granted under Paragraph XII of the Plan. | | jj. | “Rule 16b-3” means SEC Rule 16b-3 promulgated under the Exchange Act, as such may be amended from time to time, and any successor rule, regulation, or statute fulfilling the same or a similar function. | | kk. | “Stock Appreciation Right” means a right to acquire, upon exercise of the right, Common Stock and/or, in the sole discretion of the Committee, cash having an aggregate value equal to the then excess of the Fair Market Value of the shares with respect to which the right is exercised over the exercise price therefor. | | ll. | “SEC” means the Securities and Exchange Commission. | | mm. | “Securities Act” means the Securities Act of 1933, as amended from time to time, including the guidance, rules, and regulations promulgated thereunder and successor provisions, guidance, rules, and regulations thereto. | | III. Effective Date and Duration of the Plan | | a. | Effective Date. The Plan shall be effective as of May 15, 2024 (the “Effective Date”). | | b. | Duration. Unless sooner terminated as provided herein, the Plan shall terminate on the calendar day immediately preceding the 10th anniversary of the Effective Date. After the Plan is terminated, no Awards may be granted under the Plan, but Awards previously granted under the Plan shall remain outstanding in accordance with their applicable terms and conditions and the Plan’s terms and conditions. | | c. | Prior Plans. No further grants shall be made under the Prior Plans from and after the Effective Date of the Plan. | | IV. Administration | | a. | Administration of the Plan. The Plan shall be administered by a committee of, and appointed by, the Board that, unless otherwise determined by the Board, shall be comprised solely of two or more Qualified Members, except to the extent the Board elects to administer the Plan, in which case references herein to the “Committee” shall be deemed to include references to the “Board.” | | b. | Powers. Subject to the express provisions of the Plan, Rule 16b-3, and other applicable laws, the Committee shall have authority, in its sole and absolute discretion, to: |
| i. | determine which employees, Consultants, or Directors shall receive an Award and designate such individuals as Participants; | | ii. | the time or times when such Award shall be made; | | iii. | determine the type or types of Awards that shall be granted to an Eligible Individual; | | iv. | determine the number of shares of Common Stock or amount of cash to be covered by Awards; |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 116 | v. | determine the terms and conditions of any Award, including whether, to what extent, and under what circumstances Awards may be vested, settled, exercised, canceled, or forfeited (including conditions based on continued employment or service requirements or the achievement of one or more performance goals); | | vi. | except as otherwise provided in Paragraph XVI, modify, waive, or adjust any term or condition of an Award that has been granted, which may include the acceleration of vesting, waiver of forfeiture restrictions, modification of the form of settlement of the Award (for example, from cash to Common Stock or vice versa), early termination of a performance period, or modification of any other condition or limitation regarding an Award; | | vii. | determine the treatment of an Award upon a termination of employment or other service relationship; | | viii. | impose a holding period with respect to an Award or the shares of Common Stock received in connection with an Award; | | ix. | interpret and administer the Plan and any agreement entered into in connection with an Award; and | | x. | correct any defect, supply any omission, or reconcile any inconsistency in the Plan, in any Award, in any Award agreement, or in any other evidence relating to an Award in the manner and to the extent the Committee shall deem expedient to carry the Plan or any such agreement or other evidence into effect. |
In making such determinations, the Committee may take into account the nature of the services rendered by the respective employees, Consultants, or Directors, their present and potential contribution to the Company’s financial performance. Such non-GAAP financial measures include (i) adjusted operating cash flow, (ii) adjusted EPS,success, and (iii) adjusted net income, eachsuch other factors as the Committee, in its sole discretion, shall deem relevant. The express grant of which are described further below. The Company doesany specific power to the Committee and the taking of any actions by the Committee shall not intend for the information to be considered in isolationconstrued as limiting any power or as a substitute for the related GAAP financial measures. Other companies may define and calculate the measures differently than we do, limiting the usefulnessauthority of the measures for comparison with other companies.Committee. | c. | Additional Powers. The Committee shall have such additional powers as are delegated to it by the other provisions of the Plan. Subject to the express provisions of the Plan, this shall include the power to construe the Plan and the terms governing Awards granted hereunder, to prescribe rules and regulations relating to the Plan, to determine the terms, restrictions, and provisions of the agreement or other evidence relating to each Award, including such terms, restrictions, and provisions as shall be requisite in the judgment of the Committee to cause designated Options to qualify as Incentive Stock Options, and to make all other determinations necessary or advisable for administering the Plan. The determinations of the Committee and actions taken by the Committee on the matters referred to in this Paragraph IV shall be final, conclusive, and binding on all persons, including the Company, its Affiliates, stockholders, Participants, and beneficiaries having an interest under the Plan. | | d. | Exercise of Committee Authority. At any time that a member of the Committee is not a Qualified Member, any action of the Committee relating to an Award granted or to be granted to an Eligible Individual who is then subject to Section 16 of the Exchange Act in respect of the Company where such action is not taken by the full Board may be taken either (i) by a subcommittee, designated by the Committee, composed solely of two or more Qualified Members, or (ii) by the Committee but with each such member who is not a Qualified Member abstaining or recusing himself or herself from such action; provided, however, that upon such abstention or recusal, the Committee remains composed solely of two or more Qualified Members. Such action, authorized by such a subcommittee or by the Committee upon the abstention or recusal of such non-Qualified Member(s), shall be the action of the Committee for purposes of the Plan. For the avoidance of doubt, the full Board may take any action relating to an Award granted or to be granted to an Eligible Individual who is then subject to Section 16 of the Exchange Act in respect of the Company. | | e. | Delegation of Authority. The Committee may delegate any or all of its powers and duties under the Plan to a subcommittee of directors or to any officer of the Company, including the power to perform administrative functions and grant Awards; provided, that such delegation does not (i) violate state or corporate law, or (ii) result in the loss of an exemption under Rule 16b-3(d)(1) for Awards granted to Participants subject to Section 16 of the Exchange Act in respect of the Company. Upon any such delegation, all references in the Plan to the “Committee,” other than in Paragraph XVI, shall be deemed to include any subcommittee or officer of the Company to whom such powers have been delegated by the Committee. Any such delegation shall not limit the right of such subcommittee members or such an officer to receive Awards; provided, however, that such subcommittee members and any such officer may not grant Awards to himself or herself, a member of the Board, or any executive officer of the Company or its Affiliate, or take any action with respect to any Award previously granted to himself or herself, a member of the Board, or any executive officer of the Company or its Affiliate. |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 117 | The Committee may also appoint agents who are not executive officers of the Company or members of the Board to assist in administering the Plan, provided, however, that such individuals may not be delegated the authority to grant or modify any Awards that will, or may, be settled in Common Stock. | | f. | Limitation of Liability. The Committee and each member thereof shall be entitled to, in good faith, rely or act upon any report or other information furnished to him or her by any officer or employee of the Company or any of its Affiliates, the Company’s legal counsel, independent auditors, consultants or any other agents assisting in the administration of the Plan. Members of the Committee and any officer or employee of the Company or any of its Affiliates acting at the direction or on behalf of the Committee shall not be personally liable for any action or determination taken or made in good faith with respect to the Plan, and shall, to the fullest extent permitted by law, be indemnified and held harmless by the Company with respect to any such action or determination. | | g. | Non-U.S. Participants. In order to facilitate the making of any grant or combination of grants under the Plan, the Committee may provide for such special terms for awards to Participants who are foreign nationals or who are employed by the Company or any Affiliate outside of the United States of America or who provide services to the Company under an agreement with a foreign nation or agency, as the Committee may consider necessary or appropriate to accommodate differences in local law, tax policy, or custom. Moreover, the Committee may approve such supplements to or amendments, restatements, or alternative versions of the Plan (including, without limitation, sub-plans) as it may consider necessary or appropriate for such purposes, without thereby affecting the terms of the Plan as in effect for any other purpose, and the Secretary of the Company or other appropriate officer of the Company may certify any such document as having been approved and adopted in the same manner as the Plan. No such special terms, supplements, amendments, or restatements, however, will include any provisions that are inconsistent with the terms of the Plan as then in effect unless the Plan could have been amended to eliminate such inconsistency without further approval by the stockholders of the Company. | | V. Shares Subject to the Plan; Award Limits; Grant of Awards | | a. | Common Stock Subject to the Plan and Award Limits. |
| i. | Subject to adjustment in the manner as provided in Subparagraph XVI(b), the aggregate maximum number of shares of Common Stock that may be issued or transferred under the Plan shall equal 700,000. | | ii. | For purposes of Subparagraph V(a)(i) above, shares of Common Stock shall be deemed to have been issued under the Plan only to the extent actually issued and delivered pursuant to an Award (and, with respect to an Award pursuant to which any shares of Common Stock have been issued or delivered subject to a forfeiture restriction, only to the extent such forfeiture restriction lapses). To the extent that an Award lapses or the rights of its holder terminate, any shares of Common Stock subject to such Award (or portion thereof that lapses, terminates or is forfeited), will again be available for the grant of an Award under the Plan; provided, however, that the following shares of Common Stock will not be added to the aggregate maximum number of shares of Common Stock available for issuance or transfer under Subparagraph V(a)(i) above: (A) shares of Common Stock tendered or otherwise used in payment of the option price of an Option (or the purchase price or exercise price of an option granted under the Prior Plans); (B) Common Stock withheld by the Company to satisfy a tax withholding obligation; (C) shares of Common Stock subject to a Stock Appreciation Right (or a stock appreciation right granted under the Prior Plans) that are not actually issued in connection with its Common Stock settlement on exercise thereof; and (D) shares of Common Stock reacquired by the Company on the open market or otherwise using cash proceeds from the exercise of an Option (or options granted under the Prior Plans). | | iii. | Notwithstanding any provision in the Plan to the contrary, (A) the aggregate maximum number of shares of Common Stock that may be issued under the Plan through Incentive Stock Options may not exceed 175,000 shares of Common Stock (subject to adjustment in the manner as provided in Subparagraph XVI(b)), and (B) the maximum number of shares of Common Stock that may be subject to Awards denominated in shares of Common Stock that may be granted to any one individual during any calendar year may not exceed 75,000 shares of Common Stock (subject to adjustment in the manner as provided in Subparagraph XVI(b)). |
| b. | Grant of Awards. The Committee may, from time to time, grant Awards to one or more employees, Consultants, or Directors determined by it to be eligible for participation in the Plan in accordance with the terms of the Plan. |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 118 | c. | Stock Offered. Subject to the limitations set forth in Subparagraph V(a), the stock to be offered pursuant to the grant of an Award may be (i) authorized but unissued Common Stock or (ii) Common Stock previously issued and outstanding and reacquired by the Company, including shares purchased on the open market. Any of such shares which remain unissued and which are not subject to outstanding Awards at the termination of the Plan shall cease to be subject to the Plan but, until termination of the Plan, the Company shall at all times make available a sufficient number of shares to meet the requirements of the Plan. |
VI. Eligibility Awards may be granted only to persons who, at the time of grant, are employees, Consultants, or Directors (collectively, the “Eligible Individuals”). An Award may be granted on more than one occasion to the same person. VII. Stock Options and Stock Appreciation Rights | a. | Option Period. The term of each Option shall be as specified by the Committee at the date of grant, but in no event shall an Option be exercisable after the expiration of 10 years from the date of grant. | | b. | Exercise of Option or Stock Appreciation Right. An Option or Stock Appreciation Right shall be exercisable in whole or in such installments and at such times as determined by the Committee. An Option or Stock Appreciation Right may provide for the early exercise of such Option or Stock Appreciation Right, including (x) in the event of the retirement, death, or disability of a Participant, or (y) in the event of a Corporate Change where either (A) within a specified period the Participant is involuntarily terminated for reasons other than for cause or terminates his or her employment for good reason or (B) such Option or Stock Appreciation Right is not assumed or converted into a replacement award in a manner described in the Option Agreement. | | c. | Special Limitations on Incentive Stock Options. An Incentive Stock Option may be granted only to an individual who is employed by the Company or any parent or subsidiary corporation of the Company (as defined in section 424 of the Code) at the time the Option is granted. To the extent that the aggregate fair market value (determined at the time the respective Incentive Stock Option is granted) of stock with respect to which Incentive Stock Options are exercisable for the first time by an individual during any calendar year under all incentive stock option plans of the Company and its parent and subsidiary corporations exceeds $100,000, such Incentive Stock Options shall be treated as Options that do not constitute Incentive Stock Options. The Committee shall determine, in accordance with applicable provisions of the Code, Treasury Regulations, and other administrative pronouncements, which of a Participant’s Incentive Stock Options will not constitute Incentive Stock Options because of such limitation and shall notify the Participant of such determination as soon as practicable after such determination. No Incentive Stock Option shall be granted to an individual if, at the time the Option is granted, such individual owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent or subsidiary corporation, within the meaning of section 422(b)(6) of the Code, unless (i) at the time such Option is granted, the option price is at least 110% of the Fair Market Value of the Common Stock subject to the Option and (ii) such Option by its terms is not exercisable after the expiration of five years from the date of grant. Except as otherwise provided in sections 421 or 422 of the Code, an Incentive Stock Option shall not be transferable otherwise than by will or the laws of descent and distribution and shall be exercisable during the Participant’s lifetime only by such Participant or the Participant’s guardian or legal representative. | | d. | Option Agreement. Each Option shall be evidenced by an Option Agreement in such form and containing such provisions not inconsistent with the provisions of the Plan as the Committee from time to time shall approve, including, as applicable, provisions to qualify an Option as an Incentive Stock Option under section 422 of the Code. Each Option Agreement shall specify the effect of termination of (i) employment, (ii) the consulting or advisory relationship, or (iii) membership on the Board, as applicable, on the exercisability of the Option. Further, an Option Agreement may provide, on such terms and conditions as the Committee in its sole discretion may prescribe, for the grant of a Stock Appreciation Right in connection with the grant of an Option and, in such case, the exercise of the Stock Appreciation Right shall result in the surrender of the right to purchase a number of shares under the Option equal to the number of shares with respect to which the Stock Appreciation Right is exercised (and vice versa). In no event shall a Stock Appreciation Right be exercisable after the expiration of 10 years from the date of grant. In the case of any Stock Appreciation Right that is granted in connection with an Incentive Stock Option, such right shall be exercisable only when the Fair Market Value of the Common Stock exceeds the price specified therefor in the Option Agreement or the portion thereof to be surrendered. The terms and conditions of the respective Option Agreements need not be identical. |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 119 | e. | Option Price and Payment. The price at which a share of Common Stock may be purchased upon exercise of an Option shall be determined by the Committee but, subject to adjustment as provided in Paragraph XVI and subject to Subparagraph XVII(g), such purchase price shall not be less than the greater of (A) the par value per share of the Common Stock or (B) 100% of the Fair Market Value of a share of Common Stock on the date such Option is granted (or in the case of an ISO granted to an individual who owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or its parent or any of its subsidiaries, 110% of the Fair Market Value per share of the Common Stock on the date of grant). The Option or portion thereof may be exercised by delivery of an irrevocable notice of exercise to the Company, as specified by the Committee. The purchase price of the Option or portion thereof will be payable (i) in cash or by check acceptable to the Company or by wire transfer of immediately available funds, (ii) by the actual or constructive transfer to the Company of Common Stock owned by the Participant having a value at the time of exercise equal to the total option price, (iii) subject to any conditions or limitations established by the Committee, the Company’s withholding of Common Stock otherwise issuable upon exercise of an Option pursuant to a “net exercise” arrangement (it being understood that, solely for purposes of determining the number of treasury shares held by the Company, the Common Stock so withheld will not be treated as issued and acquired by the Company upon such exercise), (iv) by a combination of such methods of payment, or (v) to the extent permitted by law, by such other methods as may be approved by the Committee (including, but not limited to, a “cashless exercise” pursuant to procedures established by the Committee). Separate stock certificates shall be issued, or separate electronic recordkeeping entries shall be maintained with respect to shares of Common Stock delivered electronically, by the Company for those shares acquired pursuant to the exercise of an Incentive Stock Option and for those shares acquired pursuant to the exercise of any Option that does not constitute an Incentive Stock Option. | | f. | Restrictions on Repricing of Options and Stock Appreciation Rights. Except as provided in Paragraph XVI, the Committee may not, without approval of the stockholders of the Company, (i) amend any outstanding Option Agreement to lower the purchase price or exercise price, as applicable, for any Option or Stock Appreciation Right granted under such agreement or (ii) cancel any outstanding Option or Stock Appreciation Right in exchange for cash, other Awards or other Options or Stock Appreciation Rights that have an option price or exercise price, as applicable, that is less than the option price or exercise price of the original Option or Stock Appreciation Right, as applicable. This Subparagraph VII(f) is intended to prohibit the repricing of “underwater” Options and Stock Appreciation Rights and will not be construed to prohibit the adjustments provided for in Paragraph XVI. | | g. | Stockholder Rights and Privileges. The Participant shall be entitled to all the privileges and rights of a stockholder only with respect to such shares of Common Stock as have been purchased under the Option, or Stock Appreciation Right and for which certificates of stock have been registered in the Participant’s name or a book entry is made in such Participant’s name. Options and Stock Appreciation Rights granted under the Plan may not provide for any dividends or Dividend Equivalents thereon. | | VIII. Restricted Stock Awards | | a. | Forfeiture Restrictions to Be Established by the Committee. Shares of Common Stock that are the subject of a Restricted Stock Award shall be subject to restrictions on disposition by the Participant and an obligation of the Participant to forfeit and surrender the shares to the Company under certain circumstances (the “Forfeiture Restrictions”). The Forfeiture Restrictions shall be determined by the Committee in its sole discretion, and the Committee may provide that the Forfeiture Restrictions shall lapse upon (i) the attainment of one or more performance measures established by the Committee, (ii) the Participant’s continued employment with the Company or continued service as a Consultant or Director for a specified period of time, (iii) the occurrence of any event or the satisfaction of any other condition specified by the Committee in its sole discretion, or (iv) a combination of any of the foregoing. Each Restricted Stock Award may have different Forfeiture Restrictions in the discretion of the Committee. Any Restricted Stock Award may provide for the early termination of the Forfeiture Restrictions on such Restricted Stock Award, including (x) in the event of the retirement, death or disability of a Participant or (y) in the event of a Corporate Change where either (A) within a specified period the Participant is involuntarily terminated for reasons other than for cause or terminates his or her employment for good reason or (B) such Restricted Stock Award is not assumed or converted into a replacement award in a manner described in the Restricted Stock Agreement. |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 120 | b. | Other Terms and Conditions. Common Stock awarded pursuant to a Restricted Stock Award shall be represented by a stock certificate registered in the name of the Participant or restricted shares of Common Stock electronically delivered to a brokerage account established in the name of the Participant. Unless provided otherwise in a Restricted Stock Agreement, the Participant shall have the right to receive dividends with respect to Common Stock subject to a Restricted Stock Award, to vote Common Stock subject thereto, and to enjoy all other stockholder rights, except that (i) the Participant shall not be entitled to delivery of the stock certificate or unrestricted electronic delivery of the stock until the Forfeiture Restrictions have expired, (ii) the Company shall retain custody of the stock until the Forfeiture Restrictions have expired, (iii) the Participant may not sell, transfer, pledge, exchange, hypothecate, or otherwise dispose of the stock until the Forfeiture Restrictions have expired, (iv) a breach of the terms and conditions established by the Committee pursuant to the Restricted Stock Agreement shall cause a forfeiture of the Restricted Stock Award, and (v) with respect to the payment of any dividend with respect to shares of Common Stock subject to a Restricted Stock Award that is subject to performance-vesting measures, each such dividend shall in all cases be deferred until and paid contingent upon the achievement of the performance measures applicable to the underlying Restricted Stock Award. | | c. | Payment for Restricted Stock. The Committee shall determine the amount and form of any payment for Common Stock received pursuant to a Restricted Stock Award, provided that in the absence of such a determination, a Participant shall not be required to make any payment for Common Stock received pursuant to a Restricted Stock Award, except to the extent otherwise required by law. | | d. | Restricted Stock Agreements. At the time any Award is made under this Paragraph VIII, the Company and the Participant shall document the terms of such Restricted Stock Award pursuant to a Restricted Stock Agreement setting forth each of the matters contemplated hereby and such other matters as the Committee may determine to be appropriate. The terms and provisions of the respective Restricted Stock Agreements need not be identical. | | e. | Dividends and Splits. As a condition to the grant of an Award of Restricted Stock, the Committee may allow a Participant to elect, or may require, that any cash dividends paid on a share of Restricted Stock be automatically reinvested in additional shares of Restricted Stock, applied to the purchase of additional Awards or deferred without interest to the date of vesting of the associated Award of Restricted Stock. Unless otherwise determined by the Committee and specified in the applicable Award agreement, Common Stock distributed in connection with a Common Stock split or Common Stock dividend, and other property (other than cash) distributed as a dividend, shall be subject to restrictions and a risk of forfeiture to the same extent as the Restricted Stock with respect to which such Common Stock or other property has been distributed. | | IX. Performance Awards | | a. | Performance Period; Dividend Equivalents. The Committee shall establish, with respect to and at the time of each Performance Award, the number of shares of Common Stock subject to, or the maximum value of, the Performance Award and the performance period over which the performance applicable to the Performance Award shall be measured. The Committee may, at the time of a Performance Award (other than a Restricted Stock Award that is granted as a Performance Award), provide for the payment of Dividend Equivalents to the holder thereof either in cash or in additional Common Stock, subject in all cases to deferral and payment on a contingent basis based on the Participant’s earning of the shares of Common Stock underlying such Performance Award with respect to which such Dividend Equivalents are paid. | | b. | Performance Measures. A Performance Award shall be awarded to a Participant contingent upon future performance of the Company or any Affiliate, division, or department thereof during the performance period. The Committee shall establish the performance measures applicable to such performance, which performance measures shall be established either (i) prior to the beginning of the performance period or (ii) within 90 days after the beginning of the performance period if the outcome of the performance targets is substantially uncertain at the time such targets are established, but not later than the date that 25% of the performance period has elapsed. Such performance measures (x) may be made subject to adjustment for specified significant extraordinary items or events, (y) may be absolute, relative to one or more other companies, relative to one or more indexes, and (z) may be contingent upon future performance of the Company or any Affiliate, division, or department thereof. The performance measures established by the Committee may be based upon one or more, or a combination of, the following metrics (including relative or growth achievement regarding such metrics): (1) the price of a share of Common Stock, (2) the Company’s earnings per share, (3) the Company’s market share, (4) the market share of a business unit of the Company designated by the Committee, (5) the Company’s sales, (6) the sales of a business unit of the Company designated by the Committee, (7) the profit margins of the |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 121 | Company or any business unit of the Company designated by the Committee, (8) the net income (before or after taxes) of the Company or any business unit of the Company designated by the Committee or any component of such net income calculation (including but not limited to sales, general and administrative expenses), (9) the cash flow or return on investment of the Company or any business unit of the Company designated by the Committee, (10) the earnings before or after interest, taxes, depreciation, and/or amortization of the Company or any business unit of the Company designated by the Committee, (11) economic value added, (12) the return on capital, assets, or stockholders’ equity achieved by the Company, (13) the total stockholders’ return achieved by the Company, or (14) a combination of any of the foregoing. If the Committee determines that a change in the business, operations, corporate structure, or capital structure of the Company, or the manner in which it conducts its business, or other events or circumstances render the performance objectives unsuitable, the Committee may in its discretion modify such performance objectives or the related minimum acceptable level of achievement, in whole or in part, as the Committee deems appropriate and equitable. | | c. | Awards Criteria. In determining the value of Performance Awards, the Committee may take into account a Participant’s responsibility level, performance, potential, other Awards, and such other considerations as it deems appropriate. The Committee, in its sole discretion, may provide for a reduction in the value of a Participant’s Performance Award during the performance period. | | d. | Payment. Following the end of the performance period (or at such other time as the applicable Performance Award Agreement may provide), the holder of a Performance Award shall be entitled to receive an amount not exceeding the number of shares of Common Stock subject to, or the maximum value of, the Performance Award, based on the achievement of the performance measures for such performance period, as determined and certified in writing by the Committee. Payment of a Performance Award may be made in cash, Common Stock, or a combination thereof, as determined by the Committee. Payment may be made in a lump sum or in installments as prescribed by the Committee in the Performance Award Agreement. If a Performance Award denominated in shares of Common Stock is to be paid in cash, such payment shall be based on the Fair Market Value of the Common Stock on the payment date or such other date as may be specified by the Committee in the Performance Award Agreement. | | e. | Performance Award Agreements. At the time any Award is made under this Paragraph IX, the Company shall document the terms of the Performance Award pursuant to a Performance Award Agreement setting forth each of the matters contemplated hereby and such additional matters as the Committee may determine to be appropriate. Any Performance Award may provide for the early lapse of the performance period or other modification with respect to the performance period, including (i) in the event of the retirement, death, or debility of a Participant or (ii) in the event of a Corporate Change where either (A) within a specified period the Participant is involuntarily terminated for reasons other than for cause or terminates his or her employment for good reason or (B) such Performance Award is not assumed or converted into a replacement award in a manner described in the Performance Award Agreement. The terms and provisions of the respective Performance Award Agreements need not be identical. | | X. Phantom Stock Awards | | a. | Phantom Stock Awards; Dividend Equivalents. Phantom Stock Awards are rights to receive shares of Common Stock (or the Fair Market Value thereof) or rights to receive an amount equal to any appreciation or increase in the Fair Market Value of Common Stock over a specified period of time, which vest over a period of time, as established by the Committee, without satisfaction of any performance criteria or objectives. The Committee may, in its discretion, require payment or other conditions of the Participant respecting any Phantom Stock Award. A Phantom Stock Award may include, without limitation, a Stock Appreciation Right that is granted independently of an Option; provided, however, that the exercise price per share of Common Stock subject to the Stock Appreciation Right shall be determined by the Committee but, subject to adjustment as provided in Paragraph XVI and subject to Subparagraph XVII(g), such exercise price shall not be less than the Fair Market Value of a share of Common Stock on the date such Stock Appreciation Right is granted. The Committee may, at the time of a Phantom Stock Award (other than a Stock Appreciation Right), provide for the payment of Dividend Equivalents to the holder thereof either in cash or in additional Common Stock, with any such Dividend Equivalents to become payable in compliance with section 409A of the Code, as applicable. |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 122 | b. | Award Period. The Committee shall establish, with respect to and at the time of each Phantom Stock Award, a period over which the Award shall vest with respect to the Participant. Any Phantom Stock Award may provide for the early lapse of the service period or other modification of the service period, including (i) in the event of the retirement, death, or disability of a Participant or (ii) in the event of a Corporate Change where either (A) within a specified period the Participant is involuntarily terminated for reasons other than for cause or terminates his or her employment for good reason or (B) such Phantom Stock Award is not assumed or converted into a replacement award in a manner described in the Phantom Stock Award Agreement. | | c. | Awards Criteria. In determining the value of Phantom Stock Awards, the Committee may take into account a Participant’s responsibility level, performance, potential, other Awards, and such other considerations as it deems appropriate. | | d. | Payment. Following the end of the vesting period for a Phantom Stock Award (or at such other time as the applicable Phantom Stock Award Agreement may provide), the holder of a Phantom Stock Award shall be entitled to receive payment of an amount, not exceeding the maximum value of the Phantom Stock Award, based on the then vested value of the Award. Payment of a Phantom Stock Award may be made in cash, Common Stock, or a combination thereof, as determined by the Committee. If a Phantom Stock Award that is denominated in shares of Common Stock is to be paid in cash, such payment shall be based on the Fair Market Value of the Common Stock on the payment date or such other date as may be specified by the Committee in the Performance Award Agreement. | | e. | Termination of Award. A Phantom Stock Award shall terminate if the Participant does not remain continuously in the employ of the Company and its Affiliates or does not continue to perform services as a Consultant or a Director for the Company and its Affiliates at all times during the applicable vesting period, except as may be otherwise determined by the Committee). | | f. | Phantom Stock Award Agreements. At the time any Award is made under this Paragraph X, the Company shall document the terms of such Phantom Stock Award pursuant to a Phantom Stock Award Agreement setting forth each of the matters contemplated hereby and such additional matters as the Committee may determine to be appropriate. The terms and provisions of the respective Phantom Stock Award Agreements need not be identical. | | XI. Bonus Stock and Other Stock-Based Awards | | a. | Each Bonus Stock Award granted to a Participant shall constitute a transfer of unrestricted shares of Common Stock on such terms and conditions as the Committee shall determine. Bonus Stock Awards shall be made in shares of Common Stock and need not be subject to performance criteria or objectives or to forfeiture. The purchase price, if any, for shares of Common Stock issued in connection with a Bonus Stock Award shall be determined by the Committee in its sole discretion. | | b. | The Committee is authorized, subject to limitations under applicable law, to grant to Eligible Individuals such Other Stock-Based Awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Common Stock, as deemed by the Committee to be consistent with the purposes of the Plan, including convertible or exchangeable debt securities, other rights convertible or exchangeable into Common Stock, purchase rights for Common Stock, Awards with value and payment contingent upon the performance of the Company or any other factors designated by the Committee, and Awards valued by reference to the book value of Common Stock or the value of securities of, or the performance of, specified Affiliates. The Committee shall determine the terms and conditions of such Other Stock-Based Awards. Common Stock delivered pursuant to an Other Stock-Based Award in the nature of a purchase right granted under this Paragraph XI shall be purchased for such consideration, paid for at such times, by such methods, and in such forms, including cash, Common Stock, other Awards, or other property, as the Committee shall determine. Other Stock-Based Awards need not be subject to performance criteria, objectives, or to forfeiture. |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 123 | XII. Restricted Stock Unit Awards | | a. | The Committee is authorized to grant Restricted Stock Units to Eligible Individuals on the following terms and conditions: |
| i. | Award and Restrictions. Restricted Stock Units shall be subject to such restrictions (which may include a risk of forfeiture) as the Committee may impose. | | ii. | Settlement. Settlement of vested Restricted Stock Units shall occur upon vesting or upon expiration of the deferral period specified for such Restricted Stock Units by the Committee (or, if permitted by the Committee, as elected by the Participant). Restricted Stock Units shall be settled by delivery of (A) a number of shares of Common Stock equal to the number of Restricted Stock Units for which settlement is due or (B) cash in an amount equal to the Fair Market Value of the specified number of shares of Common Stock equal to the number of Restricted Stock Units for which settlement is due, or a combination thereof, as determined by the Committee at the date of grant or thereafter. |
| XIII. Dividend Equivalents | | a. | The Committee is authorized to grant Dividend Equivalents to Eligible Individuals, entitling any such Eligible Individuals to receive cash, Common Stock, other Awards, or other property equal in value to dividends or other distributions paid with respect to a specified number of shares of Common Stock. Dividend Equivalents may be awarded on a free-standing basis or in connection with another Award (other than an Award of Restricted Stock or a Bonus Stock Award). The Committee may provide that Dividend Equivalents shall be paid or distributed when accrued or at a later specified date and, if distributed at a later date, may be deemed to have been reinvested in additional Common Stock, Awards, or other investment vehicles or accrued in a bookkeeping account without interest, and subject to such restrictions on transferability and risks of forfeiture, as the Committee may specify. With respect to Dividend Equivalents granted in connection with another Award, absent a contrary provision in an agreement evidencing an Award, such Dividend Equivalents shall be subject to the same restrictions and risk of forfeiture as the Award with respect to which the dividends accrue and shall not be paid unless and until such Award has vested and been earned. | | XIV. Cash Awards | | a. | The Committee is authorized to grant Cash Awards, on a free-standing basis or as an element of, a supplement to, or in lieu of any other Award under the Plan to Eligible Individuals in such amounts and subject to such other terms as the Committee in its discretion determines to be appropriate. | | XV. Recapitalization or Reorganization | | a. | No Effect on Right or Power. The existence of the Plan and the Awards granted hereunder shall not affect in any way the right or power of the Board or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization, or other change in the Company’s or any Affiliate’s capital structure or its business, any merger or consolidation of the Company or any Affiliate, any issue of debt or equity securities ahead of or affecting Common Stock or the rights thereof, the dissolution or liquidation of the Company or any Affiliate, any sale, lease, exchange, or other disposition of all or any part of its or any of its Affiliates’ assets or business, or any other corporate act or proceeding. | | b. | Adjustments. In the event of any corporate event or transaction (including, but not limited to, a change in the Common Stock or the capitalization of the Company) such as a merger, consolidation, reorganization, recapitalization, separation, partial or complete liquidation, stock dividend, special cash dividend, stock split, reverse stock split, split up, spin-off, or other distribution of stock or property of the Company, combination of shares of Common Stock, exchange of shares of Common Stock, dividend in-kind, or other like change in capital structure, number of outstanding shares of Common Stock or distribution (other than normal cash dividends) to stockholders of the Company, or any similar corporate event or transaction, the Committee shall, in order to prevent dilution or enlargement of Participants’ rights under the Plan and outstanding awards, substitute or adjust, as applicable, the number and kind of shares of Common Stock (or other securities) that may be issued under the Plan or under particular forms of Awards, the number and kind of shares of Common Stock (or other securities) subject to outstanding Awards, the option price or exercise price applicable to outstanding Awards, the Award limits set forth in Subparagraph V(a) (provided that the Incentive Stock Option limit shall be adjusted if and to the extent such adjustment would not cause any Option intended to qualify as an Incentive Stock Option to fail to so qualify) and the terms and conditions of outstanding Awards. Notwithstanding anything |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 124 | herein to the contrary, the Committee may not take any such action as described in this Subparagraph XVI(b) that would cause an Award that is otherwise exempt from section 409A of the Code to become subject to section 409A of the Code, or cause an Award that is subject to the requirements of section 409A of the Code to fail to comply with such requirements. The determination of the Committee as to the foregoing adjustments, if any, shall be final, conclusive, and binding on the Company and all Participants and other parties having any interest in an Award under the Plan. | | c. | Corporate Changes. For purposes of the Plan, except as may be otherwise prescribed by the Committee in the terms governing an Award granted under the Plan, a “Corporate Change” will be deemed to have occurred upon any of the following events: (i) the Company shall not be the surviving entity in any merger or consolidation (or survives only as a subsidiary of an entity), (ii) the Company sells, leases, or exchanges all or substantially all of its assets to any other person or entity, (iii) the Company is to be dissolved and liquidated, (iv) any person or entity, including a “group” as contemplated by section 13(d)(3) of the Exchange Act, acquires or gains ownership or control (including, without limitation, power to vote) of more than 50% of the outstanding shares of the Company’s voting stock (based upon voting power), or (v) as a result of or in connection with a contested election of Directors, the persons who were Directors of the Company before such election shall cease to constitute a majority of the Board. | | d. | Stockholder Action. Any adjustment provided for in the above Subparagraphs shall be subject to any required stockholder action to approve such adjustments. | | e. | No Adjustments Unless Otherwise Provided. Except as hereinbefore expressly provided, the issuance by the Company of shares of stock of any class or securities convertible into shares of stock of any class, for cash, property, labor, or services, upon direct sale, upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, and in any case whether or not for fair value, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of shares of Common Stock subject to Awards theretofore granted or the purchase price per share or exercise price per share, if applicable. | | XVI. Amendment and Termination of the Plan; Amendment of Awards | | a. | Plan. The Board, in its discretion, may terminate the Plan at any time with respect to any shares of Common Stock for which Awards have not theretofore been granted. The Board shall have the right to alter or amend the Plan or any part thereof from time to time; provided that no change in the Plan may be made that would impair the rights of a Participant with respect to an Award theretofore granted without the consent of the Participant; and provided, further, that the Board may not, without approval of the stockholders of the Company, (i) amend the Plan to increase the maximum aggregate number of shares that may be issued under the Plan or the benefits otherwise accrued to Participants under the Plan, (ii) increase the maximum number of shares that may be issued under the Plan through Incentive Stock Options, (iii) change the class of individuals eligible to receive Awards under the Plan, or (iv) amend or delete Subparagraph VII(f). Further, to the extent stockholder approval of an amendment to the Plan is necessary to satisfy (1) the requirements of Rule 16b-3 or (2) any securities exchange listing requirements of the New York Stock Exchange or other securities exchange on which the Common Stock is then listed, no such amendment shall be effective unless and until so approved by the stockholders of the Company. | | b. | Awards. If permitted by section 409A of the Code, including in the case of termination of employment by reason of death, disability, or retirement, or in the event of a Corporate Change, to the extent a Participant holds an Option or Stock Appreciation Right not immediately exercisable in full, any Restricted Stock Award as to which the Forfeiture Restrictions have not lapsed, or any Performance Award or Phantom Stock Award as to which the performance period or service period, as applicable, has not been completed, the Committee may, in its sole discretion, accelerate the time at which such Option, Stock Appreciation Right or other award may be exercised or the time at which such Forfeiture Restrictions will lapse or the time when such performance period or service period will end or may waive any other limitation or requirement under any such Award. The Committee may amend the terms of any Award theretofore granted under the Plan prospectively or retroactively. Subject to Paragraph XVI, no such amendment will impair the rights of any Participant without his or her consent. |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 125 | XVII. Miscellaneous | | a. | No Right to an Award. Neither the adoption of the Plan nor any action of the Board or of the Committee shall be deemed to give any individual any right to be granted an Option, a right to a Restricted Stock Award, a right to a Performance Award, a right to a Phantom Stock Award, a right to a Bonus Stock Award, or any other rights hereunder except as may be evidenced by an Award agreement duly executed on behalf of the Company, and then only to the extent and on the terms and conditions expressly set forth therein. The Plan shall be unfunded. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or fiduciary relationship between the Company or any Affiliate of the Company and a Participant or any other person. To the extent that any person acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no greater than the right of any general unsecured creditor of the Company or such Affiliate. The Company shall not be required to establish any special or separate fund or to make any other segregation of funds or assets to assure the performance of its obligations under any Award. | | b. | No Employment/Membership Rights Conferred. Nothing contained in the Plan shall (i) confer upon any employee or Consultant any right with respect to continuation of employment or of a consulting or advisory relationship with the Company or any Affiliate or (ii) interfere in any way with the right of the Company or any Affiliate to terminate his or her employment or consulting or advisory relationship at any time. Nothing contained in the Plan shall confer upon any Director any right with respect to continuation of membership on the Board. | | c. | Other Laws; Withholding. The Company shall not be obligated to issue any Common Stock pursuant to any Award granted under the Plan at any time when the shares covered by such Award have not been registered under the Securities Act and such other state and federal laws, rules, and regulations as the Company or the Committee deems applicable and, in the opinion of legal counsel for the Company, there is no exemption from the registration requirements of such laws, rules, and regulations available for the issuance and sale of such shares. To the extent that the Company is required to withhold federal, state, local, or foreign taxes in connection with any payment made or benefit realized by a Participant or other person under the Plan, and the amounts available to the Company for such withholding are insufficient, it will be a condition to the receipt of such payment or the realization of such benefit that the Participant or such other person make arrangements satisfactory to the Company for payment of the balance of such taxes required to be withheld, which arrangements (in the discretion of the Committee) may include relinquishment of a portion of such benefit. If a Participant’s benefit is to be received in the form of Common Stock, and such Participant fails to make arrangements for the payment of tax, then, unless otherwise determined by the Committee, the Company will withhold shares of Common Stock having a value equal to the amount required to be withheld. Notwithstanding the foregoing, when a Participant is required to pay the Company an amount required to be withheld under applicable income and employment tax laws, the Participant may elect, unless otherwise determined by the Committee, to satisfy the obligation, in whole or in part, by having withheld, from the shares required to be delivered to the Participant, shares of Common Stock having a value equal to the amount required to be withheld (except in the case of a Restricted Stock Award where an election under section 83(b) of the Code has been made), or by delivering to the Company other shares of Common Stock held by such Participant. The shares used for tax withholding will be valued at an amount equal to the market value of such Common Stock on the date the benefit is to be included in Participant’s income. In no event will the market value of the Common Stock to be withheld and delivered pursuant to this Section to satisfy applicable withholding taxes in connection with the benefit exceed the minimum amount of taxes required to be withheld. Participants will also make such arrangements as the Company may require for the payment of any withholding tax obligation that may arise in connection with the disposition of Common Stock acquired upon the exercise of Options or Stock Appreciation Rights. | | d. | No Restriction on Corporate Action. Nothing contained in the Plan shall be construed to prevent the Company or any Affiliate from taking any action which is deemed by the Company or such Affiliate to be appropriate or in its best interest, whether or not such action would have an adverse effect on the Plan or any Award made under the Plan. No Participant, beneficiary, or other person shall have any claim against the Company or any Affiliate as a result of any such action. |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 126 | e. | Restrictions on Transfer. An Award (other than an Incentive Stock Option, which shall be subject to the transfer restrictions set forth in Subparagraph VII(c)) shall not be transferable otherwise than (i) by will or the laws of descent and distribution, (ii) pursuant to a qualified domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended, or the rules thereunder, or (iii) with the written consent of the Committee; provided, however, that in no event shall a transfer of an Award in exchange for consideration to be paid or provided to the holder of such Award (including, without limitation, a Participant) be approved by the Committee pursuant to this paragraph. An Award may be transferred pursuant to a domestic relations order entered or approved by a court of competent jurisdiction upon delivery to the Company of a written request for such transfer and a certified copy of such order. | | f. | Compliance with Section 409A of the Code. |
| i. | To the extent applicable, it is intended that the Plan and any grants made hereunder comply with the provisions of section 409A of the Code so that the income inclusion provisions of section 409A(a)(1) of the Code do not apply to the Participants. The Plan and any grants made hereunder will be administered in a manner consistent with this intent. Any reference in the Plan to section 409A of the Code will also include any regulations or any other formal guidance promulgated with respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service. | | ii. | Neither a Participant nor any of a Participant’s creditors or beneficiaries will have the right to subject any deferred compensation (within the meaning of section 409A of the Code) payable under the Plan and grants hereunder to any anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment. Except as permitted under section 409A of the Code, any deferred compensation (within the meaning of section 409A of the Code) payable to a Participant or for a Participant’s benefit under the Plan and grants hereunder may not be reduced by, or offset against, any amount owing by a Participant to the Company or any of its subsidiaries. | | iii. | If, at the time of a Participant’s separation from service (within the meaning of section 409A of the Code), (i) the Participant will be a specified employee (within the meaning of section 409A of the Code and using the identification methodology selected by the Company from time to time) and (ii) the Company makes a good faith determination that an amount payable hereunder constitutes deferred compensation (within the meaning of section 409A of the Code) the payment of which is required to be delayed pursuant to the six-month delay rule set forth in section 409A of the Code in order to avoid taxes or penalties under section 409A of the Code, then the Company will not pay such amount on the otherwise scheduled payment date but will instead pay it, without interest, on the tenth business day of the seventh month after such separation from service. | | iv. | Notwithstanding any provision of the Plan and grants hereunder to the contrary, in light of the uncertainty with respect to the proper application of section 409A of the Code, the Company reserves the right to make amendments to the Plan and grants hereunder as the Company deems necessary or desirable to avoid the imposition of taxes or penalties under section 409A of the Code. In any case, a Participant will be solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on a Participant or for a Participant’s account in connection with the Plan and grants hereunder (including any taxes and penalties under section 409A of the Code), and neither the Company nor any of its affiliates will have any obligation to indemnify or otherwise hold a Participant harmless from any or all of such taxes or penalties. |
| g. | Stock-Based Awards in Substitution for Option Rights or Awards Granted by Other Company. Notwithstanding anything in the Plan to the contrary: |
| i. | “Substitute Awards” may be granted under the Plan in substitution for or in conversion of, or in connection with an assumption of, stock options, stock appreciation rights, restricted stock, restricted stock units, or other stock or stock-based awards held by awardees of an entity engaging in a corporate acquisition or merger transaction with the Company or any subsidiary of the Company. Any conversion, substitution, or assumption will be effective as of the close of the merger or acquisition, and, to the extent applicable, will be conducted in a manner that complies with section 409A of the Code. The Substitute Awards so granted may reflect the original terms of the awards being assumed or substituted or converted for and need not comply with other specific terms of the Plan, and may account for Common Stock substituted for the securities covered by the original awards and the number of shares subject to the original awards, as well as any exercise or purchase prices applicable to the original awards, adjusted to account for differences in stock prices in connection with the transaction. |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 127 | ii. | In the event that a company acquired by the Company or any subsidiary of the Company or with which the Company or any subsidiary of the Company merges has shares available under a pre-existing plan previously approved by stockholders and not adopted in contemplation of such acquisition or merger, the shares available for grant pursuant to the terms of such plan (as adjusted, to the extent appropriate, to reflect such acquisition or merger) may be used for awards made after such acquisition or merger under the Plan; provided, however, that awards using such available shares may not be made after the date awards or grants could have been made under the terms of the pre-existing plan absent the acquisition or merger, and may only be made to individuals who were not employees or directors of the Company or any subsidiary prior to such acquisition or merger. | | iii. | Any shares of Common Stock that are issued or transferred by, or that are subject to any awards that are granted by, or become obligations of, the Company under Subparagraphs XVII(g)(i)-(ii) above will not reduce the Common Stock available for issuance or transfer under the Plan or otherwise count against the limits contained in Paragraph V of the Plan. In addition, no shares of Common Stock that are issued or transferred by, or that are subject to any awards that are granted by, or become obligations of, the Company under Subparagraphs XVII(g)(i)-(ii) above will be added to the aggregate plan limit contained in Paragraph V of the Plan. |
| h. | Detrimental Activity and Recapture Provisions. Any individual agreement governing an Award granted pursuant to this Plan may provide for the cancellation or forfeiture of an Award or the forfeiture and repayment to the Company of any gain related to an Award, or other provisions intended to have a similar effect, upon such terms and conditions as may be determined by the Committee from time to time, if a Participant, either (i) during employment or other service with the Company or an Affiliate thereof or (ii) within a specified period after termination of such employment or service, shall engage in any detrimental activity. In addition, notwithstanding anything in the Plan to the contrary, any individual agreement governing an Award granted pursuant to this Plan may also provide for the cancellation or forfeiture of an award or the forfeiture and repayment to the Company of any gain related to an award, or other provisions intended to have a similar effect, upon such terms and conditions as may be required by the Committee or under Section 10D of the Exchange Act and any applicable rules or regulations promulgated by the Securities and Exchange Commission or any national securities exchange or national securities association on which the Common Stock may be traded. | | i. | Governing Law. The Plan shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to conflicts of laws principles thereof. | | j. | Evidencing Common Stock. The Common Stock or other securities of the Company delivered pursuant to an Award may be evidenced in any manner deemed appropriate by the Committee in its sole discretion, including in the form of a certificate issued in the name of the Participant or by book entry, electronic or otherwise, and shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations, and other requirements of the SEC, any stock exchange upon which such Common Stock or other securities are then listed, and any applicable federal, state, or other laws, and the Committee may cause a legend or legends to be inscribed on any such certificates to make appropriate reference to such restrictions. Further, if certificates representing Restricted Stock are registered in the name of the Participant, the Company may retain physical possession of the certificates and may require that the Participant deliver a stock power to the Company, endorsed in blank, related to the Restricted Stock. | | k. | Additional Agreements. Each Eligible Individual to whom an Award is granted under the Plan may be required to agree in writing, as a condition to the grant of such Award or otherwise, to subject an Award that is exercised or settled following such Eligible Individual’s termination of employment or service to a general release of claims and/or a noncompetition or other restricted covenant agreement in favor of the Company and its Affiliates, with the terms and conditions of such agreement(s) to be determined in good faith by the Committee. | | l. | Fractional Shares. No fractional shares of Common Stock shall be delivered pursuant to the Plan or any Award, nor shall any cash in lieu of fractional shares be paid. |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 128 | m. | Interpretation. Headings are given to the Paragraphs of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof. Words in the masculine gender shall include the feminine gender, and, where appropriate, the plural shall include the singular, and the singular shall include the plural. In the event of any conflict between the terms and conditions of an Award agreement and the Plan, the provisions of the Plan shall control. The use herein of the word “including” following any general statement, term, or matter shall not be construed to limit such statement, term, or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not non-limiting language (such as “without limitation,” “but not limited to,” or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that could reasonably fall within the broadest possible scope of such general statement, term or matter. References herein to any agreement, instrument, or other document means such agreement, instrument, or other document as amended, supplemented, and modified from time to time to the extent permitted by the provisions thereof and not prohibited by the Plan. | | n. | Facility of Payment. Any amounts payable hereunder to any individual under legal disability or who, in the judgment of the Committee, is unable to manage properly his financial affairs, may be paid to the legal representative of such individual, or may be applied for the benefit of such individual in any manner that the Committee may select, and the Company shall be relieved of any further liability for payment of such amounts. | | o. | Clawback. The Plan and all Awards granted hereunder are subject to any written clawback policies of the Company as currently in effect or that may be established and/or amended from time to time (the “Clawback Policy”). Any such policy may subject a Participant’s Awards and amounts paid or realized with respect to Awards to reduction, cancelation, forfeiture, or recoupment if certain specified events or wrongful conduct occur, including an accounting restatement due to the Company’s noncompliance with financial reporting regulations or other events or wrongful conduct specified in any such clawback policy. The Committee may require such Participants to forfeit, return, or reimburse to the Company all or a portion of their Awards and any amounts paid thereunder pursuant to the terms of the Clawback Policy or as necessary or appropriate to comply with applicable laws. | | p. | Status under ERISA. The Plan shall not constitute an “employee benefit plan” for purposes of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended. |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 129 APPENDIX C:RECONCILIATION OF GAAP MEASURES TO CORRESPONDING NON-GAAP MEASURES |
In addition to evaluating the financial condition and results of our operations in accordance with U.S. GAAP, from time to time our management evaluates and analyzes results and any impact on the Company of strategic decisions and actions relating to, among other things, cost reduction, growth, profitability improvement initiatives, and other events outside of normal, or “core,” business and operations, by considering alternative financial measures not prepared in accordance with U.S. GAAP. In our evaluation of results from time to time, we exclude items that do not arise directly from core operations, such as non-cash asset impairment charges, out-of-period adjustments, legal matters, gains and losses on dealership franchise or real estate transactions, and catastrophic events, such as hailstorms, hurricanes, and snow storms. Because these non-core charges and gains materially affect the Company’s financial condition or results in the specific period in which they are recognized, management also evaluates, and makes resource allocation and performance evaluation decisions based on, the related non-GAAP measures excluding such items. This includes evaluating measures such as adjusted selling, general and administrative expenses, adjusted net income, adjusted diluted earnings per share, and constant currency. These adjusted measures are not measures of financial performance under U.S. GAAP, but are instead considered non-GAAP financial performance measures. Non-GAAP measures do not have definitions under U.S. GAAP and may be defined differently by, and not be comparable to similarly titled measures used by, other companies. As a result, any non-GAAP financial measures considered and evaluated by management are reviewed in conjunction with a review of the most directly comparable measures calculated in accordance with U.S. GAAP. We caution investors not to place undue reliance on such non-GAAP measures, but also to consider them with the most directly comparable U.S. GAAP measures. In addition to using such non-GAAP measures to evaluate results in a specific period, management believes that such measures may provide more complete and consistent comparisons of operational performance on a period-over-period historical basis and a better indication of expected future trends. Our management also uses these adjusted measures in conjunction with U.S. GAAP financial measures to assess our business, including communication with our Board of Directors, investors, and industry analysts concerning financial performance. We disclose these non-GAAP measures, and the related reconciliations, because we believe investors use these metrics in evaluating longer-term period-over-period performance, and to allow investors to better understand and evaluate the information used by management to assess operating performance. The exclusion of certain expenses in the calculation of non-GAAP financial measures should not be construed as an inference that these costs are unusual or infrequent. We anticipate excluding these expenses in the future presentation of our non-GAAP financial measures. In addition, we evaluate our results of operations on both an as reported and a constant currency basis. The constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates. We believe providing constant currency information provides valuable supplemental information regarding our underlying business and results of operations, consistent with how we evaluate our performance. We calculate constant currency percentages by converting our current period reported results for entities reporting in currencies other than U.S. dollars using comparative period exchange rates rather than the actual exchange rates in effect during the respective periods. The constant currency performance measures
should not be considered a substitute for, or superior to, the measures of financial performance prepared in accordance with U.S. GAAP. The Same Store amounts presented include the results of dealerships for the identical months in each period presented in comparison, commencing with the first full month in which the dealership was owned by us and, in the case of dispositions, ending with the last full month it was owned by us. Same Store results also include the activities of our corporate headquarters. Certain amounts in the financial statements may not compute due to rounding. All computations have been calculated using unrounded amounts for all periods presented. RECONCILIATION OF CERTAIN NON-GAAP FINANCIAL MEASURES
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 130 Group 1 Automotive, Inc. Reconciliation of Certain Non-GAAP Financial Measures — CONSOLIDATED Consolidated
(Unaudited)
(In millions, except per share data)
| | | | | | | | Year Ended December 31, 2021 | | | | | | | U.S.
GAAP | | Loss on
interest
rate swaps | | Catastrophic
events | | Dealership
and real
estate
transactions | | Acquisition
costs | | Legal
matters | | Asset
impairments | | Tax rate
changes | | Non-GAAP
adjusted | | | Year Ended December 31, 2023 | | | | | U.S.
GAAP | | Non-cash
gain on
interest
rate swaps | | Catastrophic
events | | Dealership
and real estate
transactions | | Acquisition
costs | | Legal items
and other
professional
fees | | Asset
impairments
and
accelerated
depreciation | | Non-
GAAP
adjusted | | SG&A expenses | | $ | 1,477.2 | | | $ | — | | | $ | (2.8 | ) | | $ | 4.4 | | | $ | (13.4 | ) | | $ | 5.3 | | | $ | — | | | $ | — | | | $ | 1,470.7 | | | $ | 1,926.8 | | | $ | — | | | $ | (3.4 | ) | | $ | 22.0 | | | $ | (0.9 | ) | | $ | (6.1 | ) | | $ | — | | | $ | 1,938.4 | | | | Depreciation and amortization expense | | | | 92.0 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (1.2 | ) | | | 90.8 | | Asset impairments | | $ | 1.7 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | (1.7 | ) | | $ | — | | | $ | — | | | | 32.9 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (32.9 | ) | | | — | | | Income (loss) from operations | | $ | 884.4 | | | $ | — | | | $ | 2.8 | | | $ | (4.4 | ) | | $ | 13.4 | | | $ | (5.3 | ) | | $ | 1.7 | | | $ | — | | | $ | 892.6 | | | | 968.6 | | | | — | | | | 3.4 | | | | (22.0 | ) | | | 0.9 | | | | 6.1 | | | | 34.0 | | | | 991.1 | | | Floorplan interest expense | | $ | 27.6 | | | $ | (4.8 | ) | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 22.9 | | | | | Other interest expense, net | | | | 99.8 | | | | 4.0 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 103.8 | | Income (loss) before income taxes | | $ | 800.9 | | | $ | 4.8 | | | $ | 2.8 | | | $ | (4.4 | ) | | $ | 13.4 | | | $ | (5.3 | ) | | $ | 1.7 | | | $ | — | | | $ | 813.9 | | | $ | 800.2 | | | $ | (4.0 | ) | | $ | 3.4 | | | $ | (21.9 | ) | | $ | 0.9 | | | $ | 6.1 | | | $ | 34.0 | | | $ | 818.7 | | | Less: Provision (benefit) for income taxes | | | 175.5 | | | | 1.1 | | | | 0.6 | | | | (1.0 | ) | | | 3.0 | | | | (1.2 | ) | | | 0.4 | | | | 1.9 | | | | 180.3 | | | | 198.2 | | | | (0.9 | ) | | | 0.8 | | | | (12.8 | ) | | | 0.2 | | | | 1.5 | | | | 8.4 | | | | 195.4 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net income (loss) from continuing operations | | | 625.4 | | | | 3.7 | | | | 2.2 | | | | (3.4 | ) | | | 10.5 | | | | (4.2 | ) | | | 1.3 | | | | (1.9 | ) | | | 633.7 | | | | 602.0 | | | | (3.1 | ) | | | 2.6 | | | | (9.1 | ) | | | 0.7 | | | | 4.6 | | | | 25.6 | | | | 623.3 | | | Less: Earnings (loss) allocated to participating securities | | | 21.0 | | | | 0.1 | | | | 0.1 | | | | (0.1 | ) | | | 0.4 | | | | (0.1 | ) | | | — | | | | (0.1 | ) | | | 21.3 | | | | 14.8 | | | | (0.1 | ) | | | 0.1 | | | | (0.2 | ) | | | — | | | | 0.1 | | | | 0.6 | | | | 15.3 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net income (loss) from continuing operations available to diluted common shares | | $ | 604.4 | | | $ | 3.6 | | | $ | 2.1 | | | $ | (3.3 | ) | | $ | 10.1 | | | $ | (4.0 | ) | | $ | 1.3 | | | $ | (1.8 | ) | | $ | 612.4 | | | $ | 587.2 | | | $ | (3.0 | ) | | $ | 2.5 | | | $ | (8.9 | ) | | $ | 0.7 | | | $ | 4.5 | | | $ | 25.0 | | | $ | 608.0 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Diluted earnings (loss) per common share from continuing operations | | $ | 34.11 | | | $ | 0.20 | | | $ | 0.12 | | | $ | (0.19 | ) | | $ | 0.57 | | | $ | (0.23 | ) | | $ | 0.07 | | | $ | (0.10 | ) | | $ | 34.55 | | | $ | 42.75 | | | $ | (0.22 | ) | | $ | 0.18 | | | $ | (0.65 | ) | | $ | 0.05 | | | $ | 0.33 | | | $ | 1.82 | | | $ | 44.27 | | | Effective tax rate | | | 21.9 | % | | | | | | | | | | | | | | | | | 22.1 | % | | | 24.8 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | 23.9 | % | | SG&A as % gross profit1 | | | 60.5 | % | | | | | | | | | | | | | | | | | 60.3 | % | | | Operating margin2 | | | 6.6 | % | | | | | | | | | | | | | | | | | 6.6 | % | | | Pretax margin3 | | | 5.9 | % | | | | | | | | | | | | | | | | | 6.0 | % | | | | SG&A as % gross profit(1) | | | | 63.8 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | 64.2 | % | | Operating margin(2) | | | | 5.4 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | 5.5 | % | | Pretax margin(3) | | | | 4.5 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | 4.6 | % | Same Store SG&A expenses | | $ | 1,415.9 | | | $ | — | | | $ | (2.8 | ) | | $ | 2.1 | | | $ | (13.4 | ) | | $ | 5.3 | | | $ | — | | | $ | — | | | $ | 1,407.1 | | | $ | 1,845.4 | | | $ | — | | | $ | (3.4 | ) | | $ | — | | | $ | (0.9 | ) | | $ | (6.1 | ) | | $ | — | | | $ | 1,834.9 | | | Same Store SG&A as %
gross profit1 | | | 60.2 | % | | | | | | | | | | | | | | | | | 59.9 | % | | | Same Store income (loss) from operations | | $ | 858.0 | | | $ | — | | | $ | 2.8 | | | $ | (2.1 | ) | | $ | 13.4 | | | $ | (5.3 | ) | | $ | 1.7 | | | $ | — | | | $ | 868.5 | | | | Same Store operating margin2 | | | 6.6 | % | | | | | | | | | | | | | | | | | 6.7 | % | | | Same Store SG&A as % gross profit(1) | | | | 64.6 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | 64.2 | % | | Same Store income from operations | | | $ | 890.4 | | | $ | — | | | $ | 3.4 | | | $ | — | | | $ | 0.9 | | | $ | 6.1 | | | $ | 33.8 | | | $ | 934.6 | | | Same Store operating margin(2) | | | | 5.3 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | 5.6 | % |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 131 | | | | | Proxy Statement 2022 | 76 |
Proxy Statement 2022 | 77
| | | | | | | | | | | | | | | | | | | | | U.S.
GAAP | | | Non-GAAP
adjustments | | | Non-GAAP
adjusted | | | | | | Net (loss) income from discontinued operations | | $ | (73.3 | ) | | $ | 81.8 | | | $ | 8.5 | | | | | | Less: (loss) earnings allocated to participating securities | | | (2.5 | ) | | | 2.8 | | | | 0.3 | | | | | | | | | | | | | | | | | | | Net (loss) income from discontinued operations available to diluted common shares | | $ | (70.9 | ) | | $ | 79.1 | | | $ | 8.2 | | | | | | | | | | | | | | | | | | | Net income | | $ | 552.1 | | | $ | 90.0 | | | $ | 642.1 | | | | | | Less: earnings allocated to participating securities | | | 18.5 | | | | 3.0 | | | | 21.6 | | | | | | | | | | | | | | | | | | | Net income available to diluted common shares | | $ | 533.6 | | | $ | 87.0 | | | $ | 620.6 | | | | | | | | | | | | | | | | | | | Diluted (loss) earnings per common share from discontinued operations | | $ | (4.00 | ) | | $ | 4.47 | | | $ | 0.46 | | | | | | Diluted earnings per common share from continuing operations | | | 34.11 | | | | 0.45 | | | | 34.55 | | | | | | | | | | | | | | | | | | | Diluted earnings per common share | | $ | 30.11 | | | $ | 4.91 | | | $ | 35.02 | | | | | | | | | | | | | | |
| | | U.S.
GAAP | | | Non-GAAP
adjustments | | | Non-GAAP
adjusted | | | Net loss from discontinued operations | | $ | (0.4 | ) | | $ | — | | | $ | (0.4 | ) | | Less: Loss allocated to participating securities | | | — | | | | — | | | | — | | | Net loss from discontinued operations available to diluted common shares | | $ | (0.4 | ) | | $ | — | | | $ | (0.4 | ) | | Net income | | $ | 601.6 | | | $ | 21.3 | | | $ | 622.9 | | | Less: Earnings allocated to participating securities | | | 14.8 | | | | 0.5 | | | | 15.3 | | | Net income available to diluted common shares | | $ | 586.9 | | | $ | 20.8 | | | $ | 607.6 | | | Diluted loss per common share from discontinued operations | | $ | (0.03 | ) | | $ | — | | | $ | (0.03 | ) | | Diluted earnings per common share from continuing operations | | | 42.75 | | | | 1.51 | | | | 44.27 | | | Diluted earnings per common share | | $ | 42.73 | | | $ | 1.51 | | | $ | 44.24 | |
1(1) | Adjusted SG&A as % of gross profit excludes the impact of SG&A reconciling items above. |
2(2) | Adjusted operating margin excludes the impact of SG&A reconciling items, aboveaccelerated depreciation expense and asset impairment charges. |
3(3) | Adjusted pretax margin excludes the impact of SG&A reconciling items, above,accelerated depreciation expense, asset impairment charges and a lossnon-cash gain on interest rate swaps. |
RECONCILIATION OF CERTAIN NON-GAAP FINANCIAL MEASURES
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 132 Group 1 Automotive, Inc. Reconciliation of Certain Non-GAAP Financial Measures — CONSOLIDATED Consolidated
(Unaudited)
(In millions, except per share data)
| | | | | | | | Year Ended December 31, 2020 | | | | | | U.S.
GAAP | | Dealership
and real
estate
transactions | | Severance
costs | | Legal
matters | | Out-of- period
adjustment | | Asset
impairments | | Loss on
extinguishment
of debt | | Non-GAAP
adjusted | | | Year Ended December 31, 2022 | | | | U.S. GAAP | | Dealership
and real
estate
transactions | | Acquisition
costs | | Legal
matters | | Asset
impairments | | Non-GAAP
adjusted | | SG&A expenses | | $ | 1,138.2 | | | $ | 5.3 | | | $ | (1.2 | ) | | $ | 2.7 | | | $ | (10.6 | ) | | $ | — | | | $ | — | | | $ | 1,134.5 | | | $ | 1,783.3 | | | $ | 38.8 | | | $ | (2.2 | ) | | $ | (0.8 | ) | | $ | — | | | $ | 1,819.2 | | | Asset impairments | | $ | 26.7 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | (26.7 | ) | | $ | — | | | $ | — | | | | 2.1 | | | | — | | | | — | | | | — | | | | (2.1 | ) | | | — | | | Income (loss) from operations | | $ | 495.7 | | | $ | (5.3 | ) | | $ | 1.2 | | | $ | (2.7 | ) | | $ | 10.6 | | | $ | 26.7 | | | $ | — | | | $ | 526.1 | | | | 1,091.4 | | | | (38.8 | ) | | | 2.2 | | | | 0.8 | | | | 2.1 | | | | 1,057.6 | | | Loss on extinguishment of debt | | $ | 13.7 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | (13.7 | ) | | $ | — | | | | Income (loss) before income taxes | | $ | 380.8 | | | $ | (5.3 | ) | | $ | 1.2 | | | $ | (2.7 | ) | | $ | 10.6 | | | $ | 26.7 | | | $ | 13.7 | | | $ | 424.9 | | | $ | 985.3 | | | $ | (38.8 | ) | | $ | 2.2 | | | $ | 0.8 | | | $ | 2.1 | | | $ | 951.6 | | | Less: Provision (benefit) for income taxes | | | 84.2 | | | | (1.1 | ) | | | 0.2 | | | | (0.6 | ) | | | 0.8 | | | | 5.5 | | | | 3.0 | | | | 92.0 | | | | 231.1 | | | | (9.1 | ) | | | 0.2 | | | | 0.2 | | | | 0.5 | | | | 222.9 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net income (loss) from continuing operations | | | 296.7 | | | | (4.2 | ) | | | 1.0 | | | | (2.1 | ) | | | 9.7 | | | | 21.2 | | | | 10.7 | | | | 333.0 | | | | 754.2 | | | | (29.7 | ) | | | 1.9 | | | | 0.6 | | | | 1.6 | | | | 728.7 | | | Less: Earnings (loss) allocated to participating securities | | | 10.6 | | | | (0.2 | ) | | | — | | | | (0.1 | ) | | | 0.3 | | | | 0.8 | | | | 0.4 | | | | 11.9 | | | | 21.3 | | | | (0.8 | ) | | | 0.1 | | | | — | | | | — | | | | 20.6 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net income (loss) from continuing operations available to diluted common shares | | $ | 286.0 | | | $ | (4.0 | ) | | $ | 1.0 | | | $ | (2.1 | ) | | $ | 9.4 | | | $ | 20.4 | | | $ | 10.3 | | | $ | 321.0 | | | $ | 733.0 | | | $ | (28.9 | ) | | $ | 1.9 | | | $ | 0.6 | | | $ | 1.6 | | | $ | 708.2 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Diluted earnings (loss) per common share from continuing operations | | $ | 16.06 | | | $ | (0.23 | ) | | $ | 0.05 | | | $ | (0.12 | ) | | $ | 0.53 | | | $ | 1.15 | | | $ | 0.58 | | | $ | 18.03 | | | $ | 47.31 | | | $ | (1.86 | ) | | $ | 0.12 | | | $ | 0.04 | | | $ | 0.10 | | | $ | 45.71 | | | Effective tax rate | | | 22.1 | % | | | | | | | | | | | | | | | 21.6 | % | | | 23.5 | % | | | | | | | | | | | | | | | | | | | 23.4 | % | | SG&A as % gross profit1 | | | 65.6 | % | | | | | | | | | | | | | | | 65.4 | % | | | Operating margin2 | | | 4.7 | % | | | | | | | | | | | | | | | 5.0 | % | | | Pretax margin3 | | | 3.6 | % | | | | | | | | | | | | | | | 4.0 | % | | | | SG&A as % gross profit(1) | | | | 60.1 | % | | | | | | | | | | | | | | | | | | | 61.4 | % | | Operating margin(2) | | | | 6.7 | % | | | | | | | | | | | | | | | | | | | 6.5 | % | | Pretax margin(3) | | | | 6.1 | % | | | | | | | | | | | | | | | | | | | 5.9 | % | Same Store SG&A expenses | | $ | 1,123.3 | | | $ | — | | | $ | (1.2 | ) | | $ | 2.7 | | | $ | (10.6 | ) | | $ | — | | | $ | — | | | $ | 1,114.2 | | | $ | 1,771.1 | | | $ | — | | | $ | (2.2 | ) | | $ | (0.8 | ) | | $ | — | | | $ | 1,768.2 | | | Same Store SG&A as % gross profit1 | | | 65.7 | % | | | | | | | | | | | | | | | 65.1 | % | | | Same Store income (loss) from operations | | $ | 493.8 | | | $ | — | | | $ | 1.2 | | | $ | (2.7 | ) | | $ | 10.6 | | | $ | 21.9 | | | $ | — | | | $ | 524.7 | | | | Same Store operating margin2 | | | 4.7 | % | | | | | | | | | | | | | | | 5.0 | % | | | Same Store SG&A as % gross profit(1) | | | | 61.2 | % | | | | | | | | | | | | | | | | | | | 61.1 | % | | Same Store income from operations | | | $ | 1,034.6 | | | $ | — | | | $ | 2.2 | | | $ | 0.8 | | | $ | 1.4 | | | $ | 1,038.9 | | | Same Store operating margin(2) | | | | 6.5 | % | | | | | | | | | | | | | | | | | | | 6.6 | % |
| | | | | | | | | | | | | | | | | | | | | U.S.
GAAP | | | Non-GAAP
adjustments | | | Non-GAAP
adjusted | | | | | | Net (loss) income from discontinued operations | | $ | (10.2 | ) | | $ | 10.8 | | | $ | 0.6 | | | | | | Less: (loss) earnings allocated to participating securities | | | (0.4 | ) | | | 0.4 | | | | — | | | | | | | | | | | | | | | | | | | Net (loss) income from discontinued operations available to diluted common shares | | $ | (9.8 | ) | | $ | 10.4 | | | $ | 0.6 | | | | | | | | | | | | | | | | | | | Net income | | $ | 286.5 | | | $ | 47.1 | | | $ | 333.5 | | | | | | Less: earnings allocated to participating securities | | | 10.3 | | | | 1.7 | | | | 12.0 | | | | | | | | | | | | | | | | | | | Net income available to diluted common shares | | $ | 276.2 | | | $ | 45.4 | | | $ | 321.6 | | | | | | | | | | | | | | | | | | | Diluted (loss) earnings per common share from discontinued operations | | $ | (0.55 | ) | | $ | 0.58 | | | $ | 0.03 | | | | | | Diluted earnings per common share from continuing operations | | | 16.06 | | | | 1.97 | | | | 18.03 | | | | | | | | | | | | | | | | | | | Diluted earnings per common share | | $ | 15.51 | | | $ | 2.55 | | | $ | 18.06 | | | | | | | | | | | | | | |
| | | U.S.
GAAP | | | Non-GAAP
adjustments | | | Non-GAAP
adjusted | | | Net (loss) income from discontinued operations | | $ | (2.7 | ) | | $ | 5.0 | | | $ | 2.3 | | | Less: (Loss) earnings allocated to participating securities | | | (0.1 | ) | | | 0.1 | | | | 0.1 | | | Net (loss) income from discontinued operations available to diluted common shares | | $ | (2.6 | ) | | $ | 4.9 | | | $ | 2.2 | | | Net income (loss) | | $ | 751.5 | | | $ | (20.5 | ) | | $ | 731.0 | | | Less: Earnings (loss) allocated to participating securities | | | 21.2 | | | | (0.6 | ) | | | 20.6 | | | Net income (loss) available to diluted common shares | | $ | 730.3 | | | $ | (20.0 | ) | | $ | 710.4 | | | Diluted (loss) earnings per common share from discontinued operations | | $ | (0.17 | ) | | $ | 0.31 | | | $ | 0.14 | | | Diluted earnings (loss) per common share from continuing operations | | | 47.31 | | | | (1.60 | ) | | | 45.71 | | | Diluted earnings (loss) per common share | | $ | 47.14 | | | $ | (1.29 | ) | | $ | 45.85 | |
1(1) | Adjusted SG&A as % of gross profit excludes the impact of SG&A reconciling items above. |
2(2) | Adjusted operating margin excludes the impact of SG&A reconciling items above and asset impairment charges. |
3(3) | Adjusted pretax margin excludes the impact of SG&A reconciling items above,and asset impairment charges and a loss on extinguishment of debt. charges. |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 133 The following table reconciles cash flows on a U.S. GAAP basis to the corresponding adjusted amounts (in millions): | | | | | | | | | | | | | | | Years Ended
December 31, | | | | | | | | 2021 | | | 2020 | | | | | CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | | | | Net cash provided by operating activities: | | $ | 1,259.6 | | | $ | 805.4 | | | | | Change in Floorplan notes payable — credit facility and other, excluding floorplan offset and net acquisitions and dispositions | | | (491.5 | ) | | | (313.7 | ) | | | | Change in Floorplan notes payable — manufacturer affiliates associated with net acquisitions and dispositions and floorplan offset activity | | | (12.7 | ) | | | 12.0 | | | | | | | | | | | | | | Adjusted net cash provided by operating activities | | $ | 755.5 | | | $ | 503.7 | | | | | | | | | | | | | | CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | | | | | Net cash used in investing activities: | | $ | (1,251.7 | ) | | $ | (74.7 | ) | | | | Change in cash paid for acquisitions, associated with Floorplan notes payable | | | 137.9 | | | | — | | | | | Change in proceeds from disposition of franchises, property and equipment, associated with Floorplan notes payable | | | (7.0 | ) | | | (8.6 | ) | | | | | | | | | | | | | Adjusted net cash used in investing activities | | $ | (1,120.8 | ) | | $ | (83.3 | ) | | | | | | | | | | | | | CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | | | Net cash used in financing activities: | | $ | (74.0 | ) | | $ | (668.1 | ) | | | | Change in Floorplan notes payable, excluding floorplan offset | | | 373.2 | | | | 310.3 | | | | | | | | | | | | | | Adjusted net cash provided by (used in) financing activities | | $ | 299.2 | | | $ | (357.8 | ) | | | | | | | | | |
| | | | | Proxy Statement 2022 | 78 |
| | | Years Ended December 31, | | | | 2023 | | | 2022 | | | CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | | Net cash provided by operating activities: | | $ | 190.2 | | | $ | 585.9 | | | Change in Floorplan notes payable — credit facility and other, excluding floorplan offset and net acquisitions and dispositions | | | 504.6 | | | | 319.7 | | | Change in Floorplan notes payable — manufacturer affiliates associated with net acquisitions and dispositions and floorplan offset activity | | | 25.2 | | | | 10.1 | | | Adjusted net cash provided by operating activities | | $ | 720.0 | | | $ | 915.7 | | | CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | | | Net cash used in investing activities: | | $ | (366.1 | ) | | $ | (484.6 | ) | | Change in cash paid for acquisitions, associated with Floorplan notes payable | | | 66.3 | | | | 25.3 | | | Change in proceeds from disposition of franchises, property and equipment, associated with Floorplan notes payable | | | (48.8 | ) | | | (3.9 | ) | | Adjusted net cash used in investing activities | | $ | (348.6 | ) | | $ | (463.2 | ) | | CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | Net cash provided by (used in) financing activities: | | $ | 185.2 | | | $ | (67.3 | ) | | Change in Floorplan notes payable, excluding floorplan offset | | | (547.3 | ) | | | (351.2 | ) | | Adjusted net cash used in financing activities | | $ | (362.1 | ) | | $ | (418.6 | ) |
2023 Non-GAAP Free Cash Flow | | | Years Ended December 31, | | | | 2023 | | | 2022 | | | Adjusted net cash provided by operating activities | | $ | 720.0 | | | $ | 915.7 | | | Non-discretionary capital expenditures(1) | | | (139.2 | ) | | | (113.1 | ) | | Adjusted free cash flow | | $ | 580.8 | | | $ | 802.6 | |
| (1) | 
GROUP 1 AUTOMOTIVE, INC.
| 800 GESSNER ROAD | SUITE 500 | HOUSTON, TX 77024 |
| | VOTE BY INTERNET - www.proxyvote.com or scan the QR Barcode above | Use the Internet to transmit your voting instructions and for electronic deliveryThis amount excludes purchases of information. Vote by 11:59 P.M. ET on May 17, 2022. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. | | During The Meeting - Go towww.virtualshareholdermeeting.com/GPI2022 | You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. | | VOTE BY PHONE - 1-800-690-6903 | Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 P.M. ET on May 17, 2022. Have your proxy card in hand when you call and then follow the instructions. | | VOTE BY MAIL | Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.real estate associated with existing dealership operations, as these are considered discretionary. |
GROUP 1 AUTOMOTIVE 2024 PROXY STATEMENT 134 | | | TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | KEEP THIS PORTION FOR YOUR RECORDS |
— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —
| | | | | DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |  | | | | | | | | | | | | For
All
| | Withhold
All
| | For All
Except
| | | | | | To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below.
INTEGRITY We conduct ourselves with the highest
level of ethics, both personally and
professionally, when we sell to and
perform services for our customers,
and we never compromise our honesty. | 
TRANSPARENCY We promote open and honest
communication between each other
and with our customers. | | | | | | | | | | | | 
The Board of Directors recommends you vote FOR the following:RESPECT
We treat everyone, customers,
colleagues and other stakeholders
alike, with dignity and equality. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | | | | | | | | | | | 1. | | Election of Directors | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Nominees: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 01) Carin M. Barth | | 02) Earl J. Hesterberg | | | | 03) Steven C. Mizell | | | | | | | | 04) Lincoln Pereira Filho | | | | 05) Stephen D. Quinn | | | | | | | | | | | | | | 06) Steven P. Stanbrook | | 07) Charles L. Szews | | | | 08) Anne Taylor | | | | | | | | 09) MaryAnn Wright | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | The Board of Directors recommends you vote FOR proposals 2 and 3. | | | | | | | | | | | | | | For | | Against | | Abstain | | | | | | | | 2. | | Advisory Vote on Executive Compensation. | | | | ☐ | | ☐ | | ☐ | | | | | | | | 3. | | Ratification
TEAMWORK We put the interests of the appointment of Deloitte & Touche LLPgroup first,
before our individual interests, as independent registered public accounting firm of the Company for the fiscal year ending December 31, 2022. | | ☐ | | ☐ | | ☐ | | | | | | | | NOTE: In their discretion, such attorney-in-fact and proxies are authorized to vote upon such other business as may properly come before the meeting or any adjournment or postponement thereof. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | we
know that success only comes when
we work together. | Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Signature [PLEASE SIGN WITHIN BOX] Date
| | Signature (Joint Owners)
| | Date
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| | | | | Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report on Form 10-K for the fiscal year ended December 31, 2021 are available at
www.proxyvote.com
— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —PROFESSIONALISM
We set our standards high, so that we
can exceed expectations and strive for
perfection in everything we do. |
 800 Gessner, Suite 500 | Houston, TX 77024 | | | | | | |  | | | | GROUP 1 AUTOMOTIVE, INC.
ANNUAL MEETING OF SHAREHOLDERS - MAY 18, 2022
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby revokes all prior proxies and appoints Earl J. Hesterberg and Daniel McHenry, and each of them, as proxies with full power of substitution, to represent and to vote all shares of common stock of Group 1 Automotive, Inc. which the undersigned is entitled to vote, at the Annual Meeting of Shareholders to be held on May 18, 2022 at 10:00 a.m., Central Daylight Saving Time, virtually at www.virtualshareholdermeeting.com/GPI2022, and at any adjournment or postponement thereof, on any matter properly coming before the meeting, and specifically the matters described on the reverse side hereof.
This proxy, when properly executed, will be voted in the manner directed herein by the undersigned. If no direction is given, this proxy will be voted FOR the nominees set forth in proposal 1, FOR proposal 2 and FOR proposal 3. This proxy also delegates discretionary authority to vote upon such other matters as may properly come before the 2022 Annual Meeting of Shareholders or at any adjournment or postponement thereof. Please see the accompanying proxy statement for additional details.
| | | | | | | Continued and to be signed on reverse side
| | |
|
Chair 
Member
for a particular item does not mean that the director does not possess that qualification, characteristic, skill or experience. We look to each director to be knowledgeable in these areas; however, the 
