UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934 (Amendment
(Amendment No. )
![]() | ![]() | Filed by the Registrant ☒ Filed by a Party other than the Registrant ☐ Check the appropriate box:
GROUP 1 AUTOMOTIVE, INC.
(Name of Registrant as Specified In Its Charter) (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check all boxes that apply):
Dear Fellow Shareholder We are pleased to invite you to attend Group 1 Automotive’s 2022 Annual Meeting of Shareholders to be held virtually on Wednesday, May 18, 2022, at 10:00 a.m. Central Daylight Saving Time. Please see the Notice of Annual Meeting for more information on how to attend and participate in the Annual Meeting. OVERVIEW Fiscal year 2021 was another record year for Group 1 Automotive. Despite the ongoing pandemic and well documented supply-chain disruptions, we were able to achieve significant growth in most of our financial metrics. Key accomplishments included: (i) revenue of $13.8 billion, an increase of 27%, (ii) adjusted earnings per share of $35.02, an increase of 94%, (iii) adjusted net income of $642 million, an increase of 93%, and (iv) $755.5 million adjusted operating cash flow, an increase of 50%(1). These results were attributable to expanded margins in our new and used vehicle sales, continued growth in our aftersales and finance and insurance businesses, and strong cost control. As a result of our 2021 financial performance, the Company generated strong cash flow which allowed us to grow the business by acquisitions as well as the repurchase of approximately 6% of our shares. The Company completed major acquisitions in both our U.S. and U.K. markets in 2021, resulting in an increase in our total dealership count as of December 31, 2021 to 218 from 184 at year-end 2020. The Company increased its footprint in the northeast United States with the acquisition of 33 dealerships, further diversifying our geographic footprint in the United States. In the United Kingdom, the Company added additional scale with the acquisition of 7 dealerships. These transactions represented, in the aggregate, $2.5 billion of annualized revenues. The Company also announced the divesture of our Brazilian operations with an expected closing date in the second quarter of 2022. INITIATIVES In 2021, we continued our work to prepare for increasing sales volumes of alternative fuel and electric vehicles (“EV”) by working with local utility companies and auto manufacturers to increase vehicle charging capacity. We also made additional investments in EV service equipment and training for our employees. In furtherance of our Human Capital initiatives, we appointed our first Chief Diversity Officer in May 2021 to continue the development and execution of our diversity, equity, and inclusion (“DEI”) strategy throughout the organization. This new role integrates our DEI strategy into every aspect of the employee lifecycle from recruitment to retention. We look forward to your participation in our 2022 virtual Annual Meeting, but if you cannot participate, we solicit your participation to vote on the business items set forth in the attached notice. Regardless of the number of shares you own, your vote matters. We encourage you to sign and return your proxy card or use telephone or internet voting features prior to the meeting to assure that your shares are represented and voted at the meeting. On behalf of our Board of Directors and all Group 1 Automotive team members, thank you for your continued interest and support in Group 1 Automotive, Inc. Sincerely,
Notice of Annual Meeting of Shareholders
MATTERS TO BE VOTED ON:
We are pleased this year to conduct the 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 proxy statement. The proxy materials, including this Notice of Annual Meeting, 12, 2022. Your vote is important. We urge you to review the accompanying materials carefully and to vote by telephone or internet as promptly as possible. Alternatively, you may complete, sign and return the proxy card, by mail. Houston, Texas April 12, 2022
By Order of the Board of Directors, Beth Sibley Corporate Secretary
Proxy Statement 2022 | 1 Business and Financial Highlights Despite the unique challenges of the coronavirus (“COVID-19”) pandemic, Group 1 Automotive, Inc. (“Group 1” or the “Company”) continued to deliver record-setting financial results and increased operational effectiveness in 2021. The Company achieved solid results by successfully expanding its omnichannel marketing, closing attractive acquisitions involving approximately $2.5 billion in acquired revenues, executing an aggressive cost reduction plan and reengineering its processes. Our 2021 financial results compared to 2020 included:
*Please see Appendix A for an explanation and reconciliation of these non-GAAP measures. [THIS PAGE INTENTIONALLY LEFT BLANK]
Proxy Statement 2022 | 3
This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider, and you should read
VOTING
proxy. VOTING MATTERS AND BOARD RECOMMENDATIONS
GOVERNANCE HIGHLIGHTS
SUSTAINABILITY HIGHLIGHTS We strongly believe that our environmental, social and governance (“ESG”) actions will help our business operations positively impact the planet, the people whose lives we touch and our bottom line. In an effort to better inform our shareholders and the investment community of our current initiatives and the actions we’ve taken, we recently released our inaugural 2021 Sustainability Report which may be found at www.group1corp.com/ESG. The report reflects the ESG progress we’ve made through 2021 and the things we hope to achieve in the future. A summary of our current ESG priorities and our respective 2021 accomplishments follows: Our ESG Priorities
Proxy Statement 2022 | 5 DIRECTOR NOMINEES The following table provides summary information about our nominees for election to the Board of
EXECUTIVE COMPENSATION We are asking our
favor of our executive compensation program. In evaluating this year’s 2021 SUMMARY COMPENSATION For more information, visit the section titled “Executive Compensation – 2021 Summary Compensation Table” on page 50.
2022 ANNUAL MEETING DATE AND VIRTUAL LOCATION Our
We have decided to conduct the 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 our Investor Relations website at www.group1corp.comas soon as practicable. 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 our Investor Relations website at www.group1corp.com. We Proactively Take Steps to Facilitate Your Participation. During the Annual Meeting, we will offer live technical support for all shareholders attending the meeting. ATTENDING THE ANNUAL MEETING To attend, vote and submit questions during the Annual Meeting, shareholders of record must use their control number on their proxy card to log into www.virtualshareholdermeeting.com/GPI2022; beneficial shareholders who do not have a control number may gain access to the meeting by logging into their brokerage firm’s website and selecting the shareholder communications mailbox to link through to the Annual Meeting; instructions should also be provided on the voting instruction card provided by their broker, bank, or other nominee. Online access to the meeting will begin at 9:30 a.m., Central Daylight Saving Time. If you encounter any difficulties accessing the virtual meeting during the check-in or course of the Annual Meeting, a phone number will be posted on the website to connect you to technical support. Shareholders who wish to submit a question in advance may do so either by emailing Investor Relations at ir@group1auto.comby 5:00 p.m., Central Daylight Saving Time, Tuesday, May 17, 2022, or visiting our Annual Meeting website, www.virtualshareholdermeeting.com/GPI2022. 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 only address questions that are germane to the matters being voted on at our Annual Meeting. References in this proxy statement to the Annual Meeting also refer to any adjournments, postponements or changes in location of the meeting, to the extent applicable.
DELIVERY OF PROXY MATERIALS
The proxy card provides instructions on how to inform 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 proxy-voting site. Your election to receive proxy materials by email or printed form will remain in effect until you terminate it. Choosing to receive future proxy materials by email will allow us to provide you with the information you need in a timelier manner, save
Proxy Statement 2022 | 9 Information about Our Board of Directors and its Committees
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES In BOARD PERFORMANCE PROCESS
Among other topics addressed, the Board and committee
BOARD LEADERSHIP STRUCTURE The
The GCR Committee considers the diversity of the Board when identifying director nominees in accordance with its charter. We believe board membership should reflect diversity in its broadest sense, including persons diverse in perspectives, personal and professional experiences, geography, gender, race and ethnicity. This process has resulted in a Board that is comprised of highly qualified
BOARD INDEPENDENCE The Board The Board has determined that each of the members of the Audit Committee, CHR Committee and GCR Committee are independent under applicable NYSE and Securities and Exchange Commission (“SEC”) rules for committee memberships, and that each member of the Audit Committee also meets the additional independence criteria set forth in Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All members of the Finance/Risk Management Committee, except for Messrs. Hesterberg and Pereira, are also independent as defined under the NYSE’s listing standards. The Board has also determined that each of Ms. Barth and Messrs. Quinn and Szews qualifies as an “audit committee financial expert” as that term is
defined under SEC rules. We have in the past, and may, in the future, make donations to various charitable organizations. From time to time, some of our directors, officers and employees have been, and in the future may be, affiliated with such charities. During the annual independence review, our
DIRECTOR RESIGNATION POLICY Under our director resignation policy, in an uncontested election of directors, any nominee who receives a greater number of votes “against” than votes “for” his or her election will, promptly following the certification of the
Our Board has established four standing committees to assist it in discharging its responsibilities: the Audit Committee, the Audit Committee Our Audit Committee assists the Board in oversight of
financial statements and other financial information provided by us to any governmental body or the public;
compliance with legal and regulatory requirements;
the effectiveness and performance of our internal audit function. In addition,
one time. The Report of the Audit Committee is set forth on page Compensation & Human Resources Committee
For additional information regarding the role of management in the CHR Committee process, please see “2021 Compensation Discussion and
Management.” The
one time. The Report of the
Our GCR Committee’s responsibilities
advise our Board about and recommend to it appropriate corporate governance guidelines and practices and assist in oversee the review the Company’s policies governing political contributions and
review ESG matters, including significant issues of corporate social and environmental responsibility and safety; review the establish, review and The
Finance/Risk Management Committee
RISK OVERSIGHT We have a robust Enterprise Risk Management Program, designed to identify, assess, monitor, manage, and mitigate our significant business risks by concentrating primarily in five principal Further, outside counsel advises our Board periodically on an as-needed basis to keep our directors informed concerning legal risks and other legal matters involving our Company. Finally, we have robust internal audit systems in place to help identify and mitigate risk and improve our internal controls, including reviewing our adherence to policies and procedures.
Proxy Statement 2022 | 13 Each Board committee has a significant role in assisting the Board in overseeing the risks that impact Group 1. Each committee is responsible for overseeing risks associated with its respective area of responsibility as further detailed below.
CYBERSECURITY AND INFORMATION SECURITY RISK OVERSIGHT Our Board recognizes the importance of maintaining the trust and confidence of our customers, vendors, shareholders and employees, and devotes significant time and attention to oversight of cybersecurity and information security risk. At each of its meetings, the FRM Committee receives presentations from our VP, Information Technology, on cybersecurity and information security risk, and on our cybersecurity initiatives. We also engage cybersecurity experts to review, test, evaluate and provide recommendations on our cybersecurity program. Additionally, to assure compliance with our policies and procedures members of our internal audit department regularly visit our dealerships to ensure that our customers’ personal information is protected and secured appropriately. The results of those dealership visits are reported to the Audit Committee. In 2021, our Board, the Finance/Risk Management Committee
Proxy Statement 2022 | 15 TRANSPARENCY AND ENGAGEMENT Governance Documents Our key governance documents including our Corporate Governance Guidelines and committee charters are available on our Investor Relations website at www.group1corp.com and shareholders may obtain a printed copy, free of charge, by sending a written request to Group 1 Automotive, Inc., 800 Gessner, Suite 500, Houston, TX 77024, Attn: Corporate Secretary. Communications With Directors Our Board welcomes communications from our c/o Group 1 Automotive, Inc. 800 Gessner, Suite 500 Houston, Texas 77024 Attn: Any appropriate correspondence addressed to our Board, to any committee of our Board, to the independent Each year, management interfaces with prospective investors, existing
Our core values of integrity, transparency, professionalism, teamwork and respect underlie our commitment to conduct our business in ways that are principled and accountable to key stakeholders, the environment and the communities in which we do business.We
SUSTAINABILITY GOVERNANCE We are
PROPOSAL 1
Our Board of Directors has nominated nine directors For more information on the director nominees, please see the section entitled “Qualifications of
The number of directors on our Board is reviewed annually and
DIRECTOR SKILLS AND DEMOGRAPHICS Our Board believes that each of our directors is highly qualified to serve as a member Described on the following pages are the principal occupations, positions and directorships for at least the past five years of our director nominees, as well as certain information regarding their individual experience, qualifications, attributes and skills that led our Board to conclude that they should serve on our Board. There are no family relationships among any of our directors or named executive officers.
Skills and
The lack of a IB – covered industry as Investment Banker *Company is listed on the Brazilian Stock Exchange
Diversity Considerations” on page 10. The
Shareholders or a group of
Proxy Statement 2022 | 21
Proxy Statement 2022 | 23
• Became the first woman to serve on Deloitte’s US executive committee and the management committee of Deloitte Global | • Currently serves on the board of Memorial Hermann Hospital System and Central Houston, Inc. and previously served on the boards of the Greater Houston Partnership and United Way of Greater Houston • President and sole owner of ATStrategies, LLC, a private consulting firm • Currently serves on the Board of Directors of Conway Mackenzie and as a consultant for Flynn Heath Leadership • Previously served as the strategic partner advisor to the World Economic Forum’s Technology Pioneer Program | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ms. Taylor is financially literate and has participated in audit committee meetings of many Deloitte clients. She was selected to serve on our Board due to her management and leadership experience, extensive background in global technology, development and execution of business strategy, and corporate governance experience. |
MARYANN WRIGHT Former Group Vice President of Johnson Controls International GCR Committee Chair Age 60 Director Since 2014 | Independent Director Other Current Directorships • Micron Technology, Inc. • Brunswick Corporation Other Directorships Within the Last Five Years • Delphi Technologies • Maxim Integrated Products, Inc. | Degrees B.A. in Economics and International Business; M.S. in Engineering, University of Michigan; M.B.A., Wayne State University | ||
Career Highlights | ||||
• Worked for Johnson Controls Power Solutions, the global leader in automotive lead-acid and advanced batteries, from 2007 through 2017, served as Group Vice President of Engineering & Product Development from 2013 through 2017, and Vice President of Technology and Innovation from 2009 to 2013. She served as Vice President and General Manager for Johnson Controls Hybrid Systems business and as CEO of Johnson Controls-Saft from 2007 through 2009. • Previously served as Executive Vice President Engineering, Product Development, Commercial and Program Management for Collins & Aikman Corporation | • Served as Director, Sustainable Mobility Technologies and Hybrid Vehicle Programs at Ford Motor Company from 1988 through 2005; Chief Engineer of the 2005 Ford Escape Hybrid, the industry’s first full hybrid SUV; led the launch of Ford’s first hydrogen-powered fuel cell fleet program • Owner of TechGoddess, LLC, a technical consulting firm • Board Chair of the Friends of Animals for Metro Detroit | |||
Ms. Wright was selected to serve on our Board because of her extensive experience and her knowledge of the automotive industry, having been named one of the “Leading 100 Women in the Automotive Industry” by Automotive News. Her unique business, manufacturing, engineering and technology background and her extensive global automotive experience make her well qualified to serve as a member of our Board. |
Our Board of Directors Recommends a Vote “FOR”“FOR” the Election of each of the Nominees for Director.
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Pursuant toProxy Statement 2022 | 25
Advisory Vote on Executive
Compensation
In accordance with the requirements of Section 14A of the Exchange Act, our stockholders are entitledshareholders have the opportunity to cast an annual advisory vote at the Annual Meeting to approve, on a non-binding advisory basis, the compensation of our named executive officers, as disclosed in this proxy statement. As an advisory vote, this Proposal 2 is not binding on Group 1, our Board or the Compensation Committee, will not overrule any previous decisions made by our Board orCHR Committee. However, the Compensation Committee, or require our Board or the Compensation Committee to take any future or remedial action. Although the vote is non-binding, the CompensationCHR Committee will take into account the outcome of the vote when considering future compensation decisions regarding our named executive compensation decisions.
officers.
Our Board recognizes that executive compensation is an important matter for our stockholders.shareholders. As described in detail inyou consider this Proposal 2, we urge you to read the CD&A section of this proxy statement for additional details on executive compensation, including the Compensationmore detailed information about our compensation philosophy and objectives, the decisions made by the CHR Committee is taskedin 2021, and the tabular disclosures regarding our named executive officers’ compensation together with the implementationaccompanying narrative disclosures in the “Executive Compensation” section of this proxy statement.
As described in the CD&A, we believe our compensation program is effective, appropriate and strongly aligned with the long-term interests of our executiveshareholders and that the total compensation philosophy. The core of that philosophy has been and continuespackage provided to be to pay our named executive officers compensation that is competitive with amounts paid by our peer companies based on individual and Company performance. In particular, the Compensation Committee strives to attract, retain and motivate talented executives, to reward past performance measured against established goals and provide incentives for future performance, and to align executives’ long-term interests with the interests(including potential payouts upon a termination or change of our stockholders. To do so, the Compensation Committee uses a combination of short- and long-term incentive compensation to reward near-term performance and to encourage our executives’ commitment to our long-range, strategic business goals. It is always the intention of the Compensation Committee that our named executive officers be compensated competitively and in a manner thatcontrol) is consistent with market practice. We also believe our strategy, sound corporate governance principles,executive compensation is reasonable and stockholder interests and concerns. Our Board believes that our compensation policies and practices are effective in achieving our Company’s goals of rewarding sustained financial and operating performance, leadership excellence and aligning the executives’ long-term interests with those of our stockholders.
competitive.
We believe that it is appropriate to seek the views of our stockholdersshareholders on the design and effectiveness of our executive compensation program, and we value your opinion. Based on the stockholdershareholder vote on the frequency of an advisory vote on executive compensation that took place at our 20182019 Annual Meeting of Stockholders,Shareholders, our Board determined to continue holding the vote on executive compensation annually until the next stockholdershareholder vote on the frequency of such advisory vote.
At our 20182021 Annual Meeting of Stockholders, 96%Shareholders, 97% of the shares voted on the say-on-pay vote (as defined below) were in favor of the compensation paid to our named executive officers. The CompensationCHR Committee believes this vote strongly endorses the compensation philosophy, policies and practices of the Company and, therefore, it did not make any significant changes in the structure of our executive compensation program as a result of this say-on-pay vote, other than the planned introduction of performance shares into the mix of long-term incentives in 2019, a best practice in executive compensation.
As described in the CD&A, we believe our compensation program is effective, appropriate and strongly aligned with the long-term interests of our stockholders and that the total compensation package provided to our named executive officers (including potential payouts upon a termination or change of control) is consistent with market practice. We also believe our executive compensation is reasonable and not excessive. In fact, as a result of continuing challenging economic conditions in our Oklahoma and Texas markets, management received no increases to base compensation in 2016 or 2017 and, salaries for 2016 and 2017 remained at the 2015 levels. In November 2017, the Committee elected to increase the base salaries for our named executive officers to become effective January 1, 2018, following record sales and record adjusted diluted earnings per share in 2017.
As you consider this Proposal 2, we urge you to read the CD&A section of this proxy statement for additional details on executive compensation, including the more detailed information about our compensation philosophy and objectives and the past compensation of our named executive officers, and to review the tabular disclosures regarding our named executive officers’ compensation together with the accompanying narrative disclosures in the “Executive Compensation” section of this proxy statement.
say-on-pay vote.
In light of these reasons, we are recommending that our stockholdersshareholders vote“FOR” “FOR” the following resolution:
“RESOLVED, that the compensation paid to our Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby Approved.”
Our Board of Directors Recommends a Vote“FOR” “FOR” the Non-Binding Advisory Approval of our Executive Compensation.
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Proxy Statement 2022 | 27
Ratification of the Appointment of Deloitte & Touche LLP as Our
Independent Registered Public Accounting Firm
The Audit Committee has appointed Ernst & Youngreappointed Deloitte as the Company’s independent registered public accounting firm and as auditors of the Company’s consolidated financials for 2022. The Audit Committee reviews the performance of the independent registered public accounting firm annually. In making the determination to re-appoint Deloitte for 2022, the Audit Committee considered, among other factors, the independence and performance of Group 1 forDeloitte, and the fiscal year ending December 31, 2019. We have been advised by Ernst & Young thatquality and candor of Deloitte’s communications with the Audit Committee and management. Deloitte has served as the Company’s independent registered public accounting firm has no relationship with Group 1 or its subsidiaries other than that arising from the firm’s engagement as auditors, tax advisors and consultants.since 2020. Representatives of Ernst & YoungDeloitte will be present atduring the Annual Meeting and will have the opportunity to make a statement and respond to appropriate questions from stockholders.shareholders.
Audit and Other Fees
Set forth below is a summary of certain fees accrued by Ernst & Young, which has served as our independent registered public accounting firm since 2002, for services related to the fiscal years ended December 31, 2017 and 2018. In determining the independence of Ernst & Young, the Audit Committee considered whether the provision of non-audit services is compatible with maintaining Ernst & Young’s independence.
Type of Fees | 2018 | 2017 | |||
Audit Fees(1) | $ 2,594,000 | $ 2,526,000 | |||
Audit Related Fees(2) | — | — | |||
Tax Fees(3) | 79,000 | 162,000 | |||
All Other Fees(4) | 2,200 | 2,200 | |||
TOTAL | $ 2,675,200 | $ 2,690,200 |
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The Audit Committee considers whether the provision of these services is compatible with maintaining Ernst & Young’s independence, and has determined such services for fiscal 2017 and 2018 were compatible. All of the services described above were pre-approved by the Audit Committee pursuant to paragraph (c) (7)(ii)(C) of Rule 2-01 of Regulation S-X under the Exchange Act, to the extent that rule was applicable during fiscal 2017 and 2018.
The Audit Committee has established a policy requiring pre-approval by the Audit Committee of all services (audit and non-audit) to be provided to us by our independent registered public accounting firm. In accordance with this policy, the Audit Committee has given its annual approval for the provision of audit services by Ernst & Young, and has also given its approval for up to a year in advance for the provision by Ernst & Young of particular categories or types of audit-related, tax and permitted non-audit services, in each case subject to a specific budget.
Any proposed services to be provided by the independent registered public accounting firm not covered by one of these approvals, including proposed services exceeding pre-approved budget levels, requires special pre-approval by the Audit Committee. The Audit Committee does not delegate its responsibilities to pre-approve services performed by the independent registered public accounting firm to management. All of the services listed above were pre-approved pursuant to this policy.
The ratification of our Audit Committee’s appointment of Ernst & Young as our independent registered public accounting firm for the fiscal year ending December 31, 2019 requires our receiving the affirmative vote of the holders of a majority of our common stock present in person or represented by proxy and entitled to vote on the proposal. Although ratification is not required, by our bylaws or otherwise, as a matter of good corporate governance, we are asking our stockholdersshareholders to approve the selection of Ernst & YoungDeloitte as our independent registered public accounting firm. If the selection is not ratified, the Audit Committee will consider whether it is appropriate to select another independent registered public accounting firm. Even if the selection is ratified, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in our best interest and the best interest of our stockholders.
shareholders.
Our Board of Directors recommends a vote“FOR” “FOR” Ratification of the Appointment of ErnstDeloitte & YoungTouche LLP as our Independent Registered Public Accounting Firm for the Fiscal Year Ending December 31, 2019.2022.
FEES PAID TO AUDITORS
The following table shows the fees paid to Deloitte for services related to the fiscal years ended December 31, 2020 and 2021. In determining the independence of Deloitte, the Audit Committee considered whether the provision of non-audit services is compatible with maintaining Deloitte’s independence.
Type of Fees | 2021 | 2020 | ||||||
Audit Fees1 | $ | 2,740,000 | $ | 2,125,000 | ||||
Audit Related Fees2 | 125,000 | 100,000 | ||||||
Tax Fees3 | 140,000 | 308,000 | ||||||
All Other Fees4 | — | — | ||||||
TOTAL | $ | 3,005,000 | $ | 2,533,000 |
1 | Audit fees consisted of amounts accrued for services performed in association with the integrated audit of the Company’s consolidated financial statements for 2020 and 2021, 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 2021 also include fees related to acquisition and divestiture activity during the year. Also included in audit fees are amounts accrued for assurance and related services that are related to the performance of the audit or review of our financial statements or that are traditionally performed by the independent registered public accounting firm, consisting primarily of statutory audits. Audit fees exclude reimbursed expenses of $63,000 and $85,000 for 2020 and 2021, respectively, in conjunction with their services. |
2 | Included in Audit Related Fees are amounts for services that are related to the performance of the audit or review of our financial statements, consisting primarily of statutory audits, 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. |
3 | Tax fees consisted of amounts billed in 2020 and 2021 for tax planning and consultation and tax compliance services. |
4 | There were no other fees in 2020 or 2021. |
The Audit Committee considered whether the provision of these services was compatible with maintaining Deloitte’s independence and has determined such services for fiscal 2020 and 2021 were compatible. All of the services described above were pre-approved by the Audit Committee pursuant to paragraph (c)(7) of Rule 2-01 of Regulation S-X under the Exchange Act.
The Audit Committee has established a policy requiring pre-approval by the Audit Committee of all services (audit and non-audit) to be provided to us by our independent registered public accounting firm. In accordance with this policy, the Audit Committee had given its annual approval for the provision of audit services by Deloitte for 2020 and 2021 and had also given its approval for up to a year in advance for the provision of particular categories or types of audit-related, tax and permitted non-audit services, in each case subject to a specific budget.
Any proposed services to be provided by the independent registered public accounting firm not covered by one of these approvals, including proposed services exceeding pre-approved budget levels, requires special pre-approval by the Audit Committee. The Audit Committee does not delegate its responsibilities to pre-approve services performed by the independent registered public accounting firm to management. All of the services listed above were pre-approved pursuant to this policy.
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Proxy Statement 2022 | 29
The Audit Committee is appointed by the Board of Directors to assist the Board in fulfilling its oversight responsibilities relating to our accounting policies, reporting policies, internal controls, compliance with legal and regulatory requirements, selection of the independent registered public accounting firm and the integrity of Group 1’s financial reports. The Board of Directors, upon the recommendation of its Nominating/Governance & Corporate Responsibility Committee, has determined that each member of the Audit 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 2002, the Audit Committee Charter and the Group 1 Automotive, Inc. Corporate Governance Guidelines.
The Audit Committee acts under ahas the duties and powers described in its written charter adopted and approved by the Board of Directors. The Audit Committee reviews and reassesses the adequacyA copy of the charter on an annual basis. Based on the recommendation of the Audit Committee, the Board approved the Audit Committee charter at a regularly scheduled meeting in February 2019. The Audit Committee charter is posted on our Investor Relations website,www.group1auto.comwww.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, 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 our internal auditors the overall scope and plans for the 20182021 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 2018,2021, management made updates to its internal control documentation for changes in internal control and completed its testing and evaluation of the Company’s system of internal control over financial reporting in response to the requirements set forth in Section 404 of the Sarbanes OxleySarbanes-Oxley Act of 2002 and related regulations. The Audit Committee has kept apprised of the progress of the evaluation and provided oversight and advice to management during the process. In connection with this oversight, the Audit Committee received updates provided by management and the independent auditor at each regularly scheduled Audit Committee meeting and met in executive session separately with the internal and the independent auditor to discuss the results of their examinations, observations and recommendations regarding internal control over financial reporting.
The independent registered public accounting firm is accountable to the Audit Committee, and the Audit Committee has the ultimate authority and responsibility to select, evaluate and, where appropriate, replace the independent registered public accounting firm. The Audit Committee engages in an annual evaluation of the independent 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 the firm, and the firm’s independence. The Audit Committee makes its selection based on the best interests of the Company and its stockholders.shareholders. The Audit Committee participates in the selection and annual evaluation of the leadLead 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 Ernst & Young LLP, our independent registered public accounting firm,Deloitte, our audited financial statements as of and for the year ended December 31, 2018.2021. The Audit Committee has also discussed with Ernst & Young LLPDeloitte the matters required to be discussed by Statement on Auditing Standard No. 1301 “Communications with Audit Committees,” issued bythe applicable requirements of the Public Company Accounting Oversight Board.Board and the Commission.
Ernst & Young LLPDeloitte submitted to the Audit Committee the written disclosures and the letter required by Rule 3526the applicable requirements of the Public Company Accounting Oversight BoardCommunication regarding the firm’s communications with the Audit Committees Concerning Independence.Committee concerning its independence. The Audit Committee discussed with Ernst & Young LLPDeloitte such firm’s independence. The Audit Committee has also considered whether the provision of non-audit services to our Company by Ernst & Young LLP isDeloitte was compatible with maintaining their independence.
Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements referred to above be included in our Annual Report on Form 10-K for the year ended December 31, 2018,2021, for filing with the SEC.
Respectfully submitted by the Audit Committee of the Board of Directors of Group 1,
Carin M. Barth (Chairman)(Chair)
Stephen D. Quinn
J. Terry StrangeSteven P. Stanbrook
Charles L. Szews
Anne Taylor
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Except as described under the heading “Executive Compensation — Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table”, our named executive officers serve at the discretion of our Board. Proxy Statement 2022 | 31
The following table setsbiographies set forth certain information as of the date of this proxy statement regarding our named executive officers:officers other than Mr. Hesterberg whose biography can be found on page 20:
DARYL A. KENNINGHAM President, U.S. and Brazilian Operations Age 57 Appointed in 2019 | ||||
Previous Group 1 Positions Held
| President, U.S. Operations from 2017 to 2019 • Regional Vice President – West Region from 2016 to 2017 • Regional Vice President – East Region from 2011 to 2016 | Degrees B.A. in Psychology, University of Michigan; M.B.A, University of Florida | ||
Experience • Prior to joining Group 1, he most recently served as Chief Operating Officer of Ascent Automotive • Held a variety of executive positions from 1998 to 2011, including Senior Vice President of Gulf States Toyota, President of Gulf States Financial Services, and President of USA Logistics (previously known as Gulf States Transportation) • Began his career at Nissan Motor Corporation in 1988 | ||||
DANIEL MCHENRY Senior Vice President and Chief Financial Officer Age 47 Appointed in 2020 | Previous Group 1 Positions Held • U.K. Finance Director from 2007 to 2020 | Degrees BSc in Economics, Queens University Belfast; MSc in Accounting & Management, Southampton University | ||
Experience • Member of the Association of Chartered and Certified Accountants in the U.K. • Joined Chandlers BMW in 2004 before its acquisition by Group 1 in 2007 • Prior to entering the auto retail business, he spent five years with KPMG | ||||
FRANK GRESE, JR. Senior Vice President, Training, Operations Support and Employee Communications Age 70 Appointed in 2022 | Previous Group 1 Positions Held •Senior Vice President, Human Resources, Training and Operations Support | |||
Mr. Hesterberg’s biographical information may be found on page 31 of this proxy statement. from 2016 to 2021
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![]() • Platform President of Group 1 Atlanta from | Degrees B.A. in Journalism, University of Georgia | ||
Experience • Immediately prior to joining Group 1 in 2004, he served as Director of Dealership Operations for a large, private dealer group • Previously held various executive positions, including Chief Operating Officer and District President, with large public and private dealer groups • Joined Nissan in 1982, where he ultimately served as National Dealer Advertising Manager until 1986 • Began his automotive career in the Ford Management Training Program in 1974 |
PETER C. DELONGCHAMPS | |||||
![]() Senior Vice President, Manufacturer Relations, Financial Services and Public Affairs Age 61 Appointed in 2018 | Previous Group • Vice President, Manufacturer Relations, Financial Services and Public Affairs from • Vice President, Manufacturer Relations and Public Affairs from • Vice President, Manufacturer Relations from | Degrees B.B.A. in Marketing, Baylor University | |||
Experience • Prior to joining Group 1, he was President of Advantage BMW, a Houston-based automotive retailer, from 1997 to 2004 • Began his automotive retailing career in 1980, having • Serves on the Board of Directors of Junior Achievement of Southeast | |||||
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2018 Compensation Discussion and Analysis
ThisProxy Statement 2022 | 33
and Analysis
Following the unprecedented events of 2020, Group 1 adapted, evolved, and emerged stronger as a Company in 2021. Our team worked tirelessly to navigate the unique challenges of the COVID-19 pandemic, especially supply chain disruptions, by maintaining strong cost control and preserving liquidity, while making significant investments to increase the size and improve the strength of our Company. As a result of these efforts, the Company achieved record sales and profits. Our strong performance was the result of an experienced, focused management team and dedicated employees that responded to the challenges we faced.
This CD&A provides a detailed description of our executive compensation philosophy, and programs, the compensation decisions the Compensation Committee has made under those programs and the factors considered in making those decisions.compensation determinations of the CHR Committee. As discussed in greater detail below, our compensation plans are designed to reward our named executive officers for the achievement of these results for our Company and our stockholders.results. The Compensation Discussion and AnalysisCD&A focuses on the compensation of our named executive officers as of December 31, 2018,2021, who were:
Earl J. Hesterberg
President and Chief Executive Officer;
Daryl A. Kenningham
President, U.S. and Brazilian Operations;
Daniel McHenry
Senior Vice President and Chief Financial Officer;
Frank Grese, Jr.
Senior Vice President, Human Resources, Training and Operations Support; and
Peter C. DeLongchamps
Senior Vice President, Manufacturer Relations, Financial Services and Public Affairs.
Compensation and Corporate GovernanceCOMPENSATION AND CORPORATE GOVERNANCE
The Committee continuously reviews best practices inOur executive compensation and has made several adjustmentsgovernance programs are designed to elements of our compensation programslink pay with operational performance and increases in long-term shareholder value while minimizing incentives that could lead to excessive risk-taking. We have adopted the following policies and practices over the past several yearstime to further align our executive compensation structure with our stockholders’ interests and current governance practices, including:accomplish such objectives:
Compensation Highlights | ||||||||||||
No Excise Tax Gross-Ups | No Single-Trigger Equity Vesting | Say-on-Pay Advisory Vote Conducted Annually | ||||||||||
Robust Stock Ownership Guidelines for Our Officers and Directors | Company Policy Prohibits Directors and Employees from Pledging or Hedging Group 1 Common Stock | Independent Compensation Consultant | ||||||||||
Performance-Based Shares | Clawback Provisions for Certain Restatements | Incentive Program Includes Both Financial and Mission-Based Goals | ||||||||||
ROLE OF THE COMPENSATION HIGHLIGHTS& HUMAN RESOURCES COMMITTEE, ITS CONSULTANT AND MANAGEMENT
Role of the CompensationThe CHR Committee its Consultant and Management
Our Board has entrusted the Compensation Committee (the “Committee”) with overall responsibility for establishing, implementing and monitoring our executive compensation program. Our Chief Executive Officer and Senior Vice President, of Human Resources, Training and Operations Support alsowork with the CHR Committee to implement and promote our executive compensation strategy and play a role in the implementation of the executive compensation process, by overseeing the performance and dynamics of the executive team and generally keepinginforming the Committee informed.CHR Committee. All final decisions regarding our named executive officers’ compensation remain with the CHR Committee, except in the case of our Chief Executive Officer. Based on a performance evaluation, the CHR Committee reviews and recommends the compensation for our Chief Executive Officer wherefor approval by the independent members of the Board make all decisions with the benefit of recommendations from the Committee.
Board.
The CHR Committee has engaged Pearl Meyer & Partners, LLC (“PM&P”), an executive compensation firm, to serve as its independent compensation consultant and to advise on executive compensation matters. In 2018, PM&P was engaged to conduct a competitive compensation analysis for the named executive officers. During that time, PM&P reviewedreviews compensation data for our peer companies (“Peer Companies”) in comparison to our current compensation practices and mademakes compensation recommendations to the CHR Committee. The Committee retainsBased on the analysis of PM&P, no changes were recommended to the Company’s current peer group of companies for 2021. PM&P attends certain meetings of the CHR Committee and has discussions with members of the CHR Committee or its Chair throughout the year to assist with the review and discussion of executive compensation matters.
PM&P is an independent compensation consulting firm and does not provide any other services to us outside of matters pertaining to executive officer and director compensation. PM&P reports directly althoughto the CHR Committee, which is the sole party responsible for determining the scope of services performed by PM&P and the directions given to PM&P regarding the performance of such services. However, in carrying out assignments PM&P may interact with our management when necessary and appropriate.
In February 2022, the CHR Committee considered the independence of PM&P doesin light of SEC rules and listing standards of the NYSE. The CHR Committee requested and received a letter from PM&P addressing the consulting firm’s independence, including the factors set forth in the listing standards of the NYSE. The CHR Committee discussed these considerations, among other things, and concluded that the work of PM&P did not provideraise any services to our Company other than its consulting services to the Committee, and the Committee determined that no conflict of interest exists between PM&P and our Company. Please see “Information About our Board of Directors and its Committees — interest.
CALIBRATING OUR EXECUTIVE COMPENSATION
Compensation Committee” for additional information on the role of the Committee, its consultant and management in setting executive compensation.
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Objectives of Our Executive Compensation Program
COMPENSATION PHILOSOPHY
Philosophy
The CHR Committee believes that the most effective executive compensation program is one designed to recruit, retainbe reasonable and motivate capable leadershipcompetitive, and rewardshould balance our goal of attracting, motivating, rewarding and retaining top-performing senior executives with our goal of aligning their interests with those individuals upon the achievement of their personal and departmental objectives, as well as upon our Company’s achievement of specific annual, long-term and strategic goals.shareholders. The CHR Committee annually evaluates both market competitiveness, as well as individual and Company performance,our executive compensation program to ensure that we maintainit is consistent with our ability to attract, retainshort-term and motivate talented employeeslong-term goals. We provide short-term incentive compensation opportunities in key positions.the form of annual cash bonuses, which focus on our achievement of annual corporate goals. We also provide long-term incentive compensation opportunities in the form of equity awards, which have historically consisted primarily of restricted stock and performance-based shares, with time-based vesting provisions. By maintaining competitive compensation and rewarding for performance, the CHR Committee strives to support our overall business objectives and provide our stockholdersshareholders with a superioran attractive rate of return over time.
Our strategic business focus during the fiscal year ended December 31, 20182021, consisted of the following objectives:
increase total same store gross profit through focused efforts in the new vehicle, used vehicle, finance and insurance, parts, service and collision departments;
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maintain a cost level that aligns with the anticipated level of business activity;
implement additional health and safety measures to protect our employees and customers in response to the COVID-19 pandemic;
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Proxy Statement 2022 | 35
seek strategic acquisition and divestiture opportunities within the automotive retail market so that we can continue to optimize our business operations in the U.S. and the U.K.; and
maintain a balanced capital allocation strategy including share repurchases, dividends and effective capital spending.
Our named executive officers’ individual or departmentalfunctional goals for the fiscal year ended December 31, 20182021, generally consisted of one or more of the following criteria, which provide support for our business objectives:
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sustain sales momentum;
STOCKHOLDER INPUT ON EXECUTIVE COMPENSATION MATTERSmaximize performance of recently acquired dealership operations;
In accordancecontinue to strengthen our processes and management for improved operating effectiveness and efficiency;
control costs and expenses as sales levels fluctuate;
dispose of underperforming dealerships and deploy the proceeds into other capital opportunities with applicable law and as described in more detail in Proposal 2 above, our stockholders havebetter returns;
drive the rightcapital allocation process, which seeks to vote, on an advisory non-binding basis, on the approval of the compensation of our named executive officers at specified intervals (the “say-on-pay vote”). Stockholders last voted on this matter at the 2018 Annual Meeting of Stockholders. In accordance with the frequency vote at the 2017 Annual Meeting of Stockholders we hold our say-on-pay vote every year. In 2018, 96% of the votes cast were in favor of our executive compensation program; therefore the Committee did not make any significant changesmaximize returns to our compensation program as a result of such a vote, other than the planned introduction of performance shares into the mix of long-term incentives in 2019, a best practice in executive compensation. The Committee will continue to consider on an annual basis the vote results for say-on-pay proposals when making compensation decisions for our named executive officers.shareholders; and
In addition to such consideration given to the results of the say-on-pay vote, at various times throughout the year the Committee considers any input it may receive from stockholdersidentify and other stakeholders, and more general developments in executive compensation principles, in the development and implementation of the Company’s executive compensation philosophy, policies and programs. For additional information on the say-on-pay vote with respect to the compensation paid to our named executive officers in 2018, see Proposal 2 above.successfully close acquisition targets.
Market Analysis
MARKET ANALYSIS
We engaged PM&P to conduct an independent market-based analysis of our executive compensation program in 2018. The&P’s market analysis process involvedinvolves the comparison of long-term, short-term andthe total compensation elements (base, annual incentive, long-term incentive and executive perquisites) with a selected group of peer companies (“Peer Companies”). Compensation data was compared at the 25th, 50thand 75thpercentiles of the market.
Companies.
While we do not think it is appropriate to establish compensation based solely on market analysis, we believe that the practice of comparing our compensation program to the programs of our peers can be useful for two reasons. First, our compensation practices must be competitive in order to attract and retain executives with the ability and experience necessary to provide leadership and to deliver strong performance to our stockholders.shareholders. Second, comparisoncomparative analysis allows us to assess the reasonableness of our compensation practices. This process allows us to achieve one of our primary objectivesobjective of maintaining competitive compensation, to ensure retention and assists inwhile aligning compensation with stockholdershareholder interests.
Our Peer Companies include all of the publicly traded automotive consolidators and specialty retailers associated with automotive sales, and automotive parts and service against whom we most directly compete for executive talent.compete. The list of our Peer Companies is periodically reviewed and updated by the Committee. Our 2018 Peer CompaniesThe Committee discussed the Company’s peer group with PM&P in 2021. Based on that discussion, no changes were made to the Company’s peer group of companies for 2021, which were:
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Advance Auto Parts, Inc. | •Lithia Motors, Inc. | ||
• | Asbury Automotive Group, Inc. | •LKQ Corporation | |
• | AutoNation, Inc. | •O’Reilly Automotive, Inc. | |
• | AutoZone, Inc. | •Penske Automotive Group, Inc. | |
• | CarMax, Inc. | •Rush Enterprises, Inc. | |
• | Genuine Parts Company | •Sonic Automotive, Inc. |
When evaluating the compensation data and making compensation decisions, the CHR Committee has taken into consideration the variance in revenue size among the entities comprising our Peer Companies. Additionally, when calculating a market value, the CHR Committee has considered other differences between us and our Peer Companies and us, such as corporate structure, tenure of officers, variance in scope of duties for each officer and other factors when calculating a market value. This value is used as the basis of comparison of compensation provided by us and our Peer Companies.factors. However, any application of market analysis data is tempered by our basic staffing philosophy, which is to remain as lean as practical. This guiding principle results in certain of our named executive officers having a broad range of job responsibilities, which, at certain of our Peer Companies, may be divided among multiple executive officers. The CHR Committee’s use of market analysis data for specific compensation components is described in more detail below.
Comprehensive Compensation Reviews
TALLY SHEETS
In 2018,The CHR Committee and PM&P reviewed a variety of data points and information when making 2021 executive compensation tally sheets fordecisions, including historical and estimated future compensation values, in order to get a thorough understanding of realizable pay in various circumstances. Our human resources department was able to prepare a historical compensation analysis of realizable compensation (rather than the grant date or accounting values that may have been presented in previous compensation tables) that our named executive officers were prepared by our Compensation Managerhave received over the last year, as well as the hypothetical value of compensation and reviewed bybenefits that could become payable upon both voluntary and involuntary termination scenarios or upon a change in control event. This information assisted the Committee. This review consistsCHR Committee in determining whether the structure of a twelve month summarypay for the 2021 year would be market-based, fair and appropriate, as well as to determine the desired mix of cash compensation earned, employee benefits provided, stock granted (with value at grant), and value of stock released (with value at release). Total shares and present value of unvested restricted stock is also presented for review. In addition to the PM&P market analysis, information from these tally sheets was also considered by the Committee in makingequity-based compensation decisions for the 2021 year.
Our shareholders have the right to vote, on an advisory non-binding basis, on the approval of the compensation of our named executive officers as well as guidingat specified intervals (the “say-on-pay vote”). In accordance with the designfrequency vote at the 2017 Annual Meeting of cash and non-cashShareholders we hold our say-on-pay vote every year. In 2021, 97% of the votes cast were in favor of our executive compensation and benefit programs.program; therefore, the CHR Committee did not make any significant changes to our compensation program or our general compensation philosophy following the vote. The Committee specifically used tally sheets inwill continue to consider on an annual basis the following contextsvote results for each named executive officer:
Our compensation program for our named executive officers includesand in setting our compensation goals and philosophy.
In addition to such consideration given to the results of the say-on-pay vote, at various times throughout the year the CHR Committee considers input from shareholders and other stakeholders as well as more general developments in executive compensation principles. The CHR Committee uses this information to develop and implement the Company’s executive compensation philosophy, policies and programs. For additional information on the say-on-pay vote with respect to the compensation paid to our named executive officers in 2021, see Proposal 2 above.
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Proxy Statement 2022 | 37
Compensation Program Structure
Our executive compensation program consists of annual cash compensation and long-term equity-based compensation. Annual cash compensation consists of annual base salary and payments under ouran annual cash incentive plan. Our long-term equity-based compensation consists of both restricted stock and performance-based equity awards, made under our long-term incentive plan.
with time-based vesting parameters. In addition, our named executive officers are eligible to (i) participate in our health and welfare plans, our Employee Stock Purchase Plan and our retirement plans (401(k) Savings Plan and Deferred Compensation Plan), (ii) receive a vehicle allowance and/or demonstrator vehicle(s), depending on the position held, and (iii) receive limited perquisites and other personal benefits as described under “Other Benefits” below.
Named executive officer compensation is composed of four primary components:
BASE SALARY
Long-Term Incentive | ||||||||||||||||
Base Salary | + | Annual Cash Incentive Plan | + | Performance Shares | + | Restricted Stock | ||||||||||
Competitive pay to attract and retain talented executives | An opportunity to earn an annual cash award based on the Company’s financial performance and mission-based business objectives; there will be no payout unless a minimum financial goal is achieved | A mix of restricted stock and performance-based shares, with time-based vesting provisions, to align management’s interests with long-term shareholders’ interests | ||||||||||||||
DesignBase Salary
Design
We provide our named executive officers with ana competitive annual base salary to compensate them for services rendered during the year. Our goal is to set base salaries for our named executive officers at levels that are competitive with comparable companies for the skills, experience, and requirements of similar positions, using market analysis as previously discussed, in order to attract and retain top talent. In order toTo achieve this goal, we have generally sought to provideset base salaries that fall near the 50thpercentile of our Peer Companies. We believe this supports competitive compensation and ensures retention. In order to ensure that each officer is appropriately compensated, the Committee, when setting base salaries, considers individual performance, tenure and experience and our financial performance in addition to the compensation review of the Peer Companies. Individual base salary levels are generally reviewed each November and are adjusted as appropriate based on an analysis of current market salary levels at the Peer Companies, local market conditions, individual performance and experience, and our financial performance.
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2021 Results and Fiscal 2022 Changes
Following the comprehensive compensation review, and considering certain economic conditions impacting the Company at that time, the CHR Committee approved a 3% increase to the base salaries for our named executive officers, except for Mr. Hesterberg whose increase was approved by the independent directors of the Board. The increases became effective January 1, 2021.
In November 2017,2021, after reviewing and discussing a competitive analysis prepared by PM&P, the tally sheets and certain economic conditions affecting the Company, the Committee discussed with Mr. Hesterberg the appropriate base compensation levels for the Company’s named executive officers other than himself. The Committee noted that due to challenging economic conditions in some of the Company’s key markets, base salaries for the named executive officers were not changed for 2016 or 2017, and remained at the 2015 base compensation levels. In November 2017, theCHR Committee elected to increaseadjust the base salaries for our named executive officers, effective January 1, 20182022 to levels that remainremained near the 50thpercentile compensation of our Peer Companies. Accordingly, the base salaries for Messrs. Hesterberg, Kenningham, Rickel, Grese and DeLongchamps were increased to $1,150,000, $624,000, $599,700, $572,500 and $478,300, respectively.
Compensation Changes for Fiscal 2019
In November 2018, the Committee elected to increase the base salaries for our named executive officers (with the exception of Mr. Hesterberg) effective January 1, 2019, to levels that remain near the 50th50th percentile compensation of our Peer Companies. Accordingly, the base salaries for our named executive officers were increasedadjusted as follows:noted in the table below. Mr. Grese’s salary for 2022 reflects a change in his responsibilities, as effective January 1, 2022, he is no longer responsible for Human Resources.
2018 Base Salary | 2019 Base Salary | |||||||||||||
Named Executive Officer | ($) | ($) | 2021 Base Salary ($) | 2022 Base Salary ($) | ||||||||||
Earl J. Hesterberg | 1,150,000 | 1,150,000 | 1,240,000 | 1,265,000 | ||||||||||
Daryl A. Kenningham | 624,000 | 655,200 | 760,000 | 775,000 | ||||||||||
John C. Rickel | 599,700 | 629,700 | ||||||||||||
Daniel McHenry | 575,000 | 620,000 | ||||||||||||
Frank Grese, Jr. | 572,500 | 595,400 | 633,450 | 596,119 | ||||||||||
Peter C. DeLongchamps | 478,300 | 492,650 | 530,450 | 541,059 |
ANNUAL INCENTIVE COMPENSATION PLAN
Annual Incentive Compensation Plan
Annual cash incentive awards are intended to align our annual performance and results with the compensation paid to persons who are most responsible for such performance, and to motivate and reward achievement of Company and individual or departmentalfunctional performance objectives. Meaningful, performance-related goals are established so that attaining or exceeding the performance targets is not assured, requires significant effort by each of our named executive officers, and if accomplished, contributes to the ongoing overall improvement and success of the Company.
For 2018,2021, the annual incentive compensation plan was based upon achievement of financial and individual, or departmental,mission-based, goals approved at the beginning of the year by the CHR Committee. The financial and mission-based portions of the annual incentive awards could be awarded independently so that achievement of one was not predicated on the achievement of the other. There is, however, a minimum earnings per share goallevel established by the CHR Committee at the beginning of each year which has tomust be achieved before any incentive award is paid.
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Proxy Statement 2022 | 39
The following is a description of the 20182021 performance metrics under the annual incentive compensation plan:
Financial Goal
The CHR Committee meets in November to determine appropriate financial metrics for the upcoming year, and has a general compensation philosophy of setting challenging, yet attainable, performance goals. PM&P provides the CHR Committee with market data and other information about the Company’s peers, which the CHR Committee reviews in the context of the Company’s short-term and long-term strategy, along with the metrics used in previous years. The CHR Committee evaluates information and analyses provided by management and PM&P to assess which metrics are expected to properly motivate management to produce short-term and long-term value for its shareholders.
For 2018, theThe CHR Committee selected adjusted net income* as our financial goal portionfor the 2021 annual incentive compensation plan. In setting the 2021 annual incentive award performance goal, the Committee considered historical performance levels, industry trends and forecasts, and our strategic plan. The Committee believes that this financial performance measure is effective and appropriate because it reflects income statement performance, which is consistent with the interests of our shareholders. The Committee selected this metric to be transparent and to provide clarity and consistency in calculating the cash incentive award. When set, threshold was considered achievable, target was considered challenging yet attainable and maximum was considered possible, but not without significant effort.
Under the 2021 annual incentive compensation plan, was based on achievement of diluted earnings per share (“EPS”). Diluted earnings per share is generally defined as our net income available to diluted common shares divided by the sum of the weighted average number of common shares outstanding during the period plus those that would have been outstanding, assuming issuance for all dilutive potential common shares. Under the 2018 annual incentive compensation plan, theCHR Committee may, in its sole discretion, adjust the Company’s EPSadjusted net income when determining achievement of the financial goal metric for extraordinary or unusual items that would be included in our annual operating results, but not typically considered at the time the targets were set, such as certain asset impairments or extraordinary dilutive events which materially affect EPS.
The Committee believes that EPS is the best metric for our financial goal portion of the annual incentive compensation plan, because it incentivizes our named executive officers to maximize stockholder return and only rewards our named executive officers if our stockholders are rewarded.adjusted net income. Further, no payments are made under the financial goal portion of the award unless a threshold level of EPSadjusted net income is achieved. The threshold, target and maximum levels of performance for the EPSadjusted net income metric set by the CHR Committee for 20182021 were as follows:
Threshold | Target | Maximum | |
($) | ($) | ($) | |
EPS | $8.20 | $8.55 | $8.76 |
Threshold ($) | Target ($) | Maximum ($) | ||||
Adjusted Net Income* | 260.0 million | 280.0 million | 330.0 million |
* | Please see Appendix A for an explanation and reconciliation of these non-GAAP measures. |
Mission-based Goals
Mission-based goals typically include specific goals that are related to the individual’s functional area and are established at the beginning of each fiscal year jointly by the named executive officer and our Chief Executive Officer and reviewed by the CHR Committee, or in the case of the Chief Executive Officer, by the CHR Committee and the Board. These goals are integral toward achieving key business objectives, such as those listed on page 42pages 34-35 which help improve our financial performance, promote corporate efficiencies and contribute to the growth of our Company. In 2018,2021, the following mission-based goals were assigned to each of our named executive officers:
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Name | |||
Earl J. Hesterberg | • Communicate corporate growth strategy to investment community and execution of same • Continued focus on technological excellence to improve effectiveness and efficiency of operations •Focus on | ||
recent additions to leadership team • | |||
operations • | |||
Evaluate strategic options for Brazilian operations • | Achieve selling, general and administrative cost reduction target | ||
Daryl A. Kenningham | |||
• | Achieve meaningful growth in U.S. used vehicle operations •Increase U.S. aftersales gross profit | ||
• | |||
Continued focus on technological excellence to improve effectiveness and efficiency of operations • | |||
Continued focus on corporate growth strategy and acquisition eligibility • | Focus on human capital, including DEI goals and actions; continued training and development of operations leadership •Achieve selling, general and administrative cost reduction target | ||
Daniel McHenry | |||
• | |||
controls framework through artificial intelligence • | |||
Evaluate strategic options for Brazilian operations • | Develop funding support plan for strategic growth initiatives • Develop technological improvements at the business support center • Focus on human capital, including DEI goals and actions, in succession planning •Achieve selling, general and administrative cost reduction target | ||
Frank Grese, Jr. | •Coordinate with procurement department to identify and achieve cost savings goal | ||
• | |||
Support greater employee engagement and development through employee recognition | |||
programs; development of DEI Council • | Achieve recruiting objectives for various dealership | ||
roles • | |||
Succession planning to recruit and develop SVP, Chief Human Resources Officer • | |||
development • | Achieve selling, general and administrative cost reduction target | ||
Peter C. DeLongchamps | •Achieve F&I per retail unit target | ||
• | Maintain capital expenditure projects within budget while maintaining positive relationships with manufacturers | ||
• | |||
ESG initiatives; continued focus on corporate philanthropy efforts • | Continued focus on communication and relationships with manufacturers and investment community | ||
• | Develop and launch online financial service compliance and training program •Achieve selling, general and administrative cost reduction target |
The CHR Committee decideddetermined that for 20182021 as long as earnings per shareadjusted net income was at least $7.25,$238.0 million, the mission-based portion of the award would be payable from 0% to 100% according to individual goal achievement levels. As a result, assuming all mission-based goals were attained, the following table sets forth the threshold, target and maximum annual incentive compensation plan potential payouts for 2018,2021, as a percentage of base salary. The target performance level was set such that, if attained, the total cash compensation paid to our named executive officers would approximate the median paid to named executive officers at our Peer Companies.
How the Annual Incentive is Paid (as a % of Salary) | |||||||||||||||
Financial Based | Total Opportunity (Assumes 100% Payout on Mission Based) | ||||||||||||||
Mission | |||||||||||||||
Named Executive Officer | Based | Threshold | Target | Max | Threshold | Target | Max | ||||||||
Earl J. Hesterberg | 50.0% | 16.7% | 33.3% | 75.0% | 66.67% | 83.33% | 125.00% | ||||||||
Daryl A. Kenningham | 50.0% | 16.7% | 33.3% | 75.0% | 66.67% | 83.33% | 125.00% | ||||||||
John C. Rickel | 50.0% | 16.7% | 33.3% | 65.0% | 66.67% | 83.33% | 115.00% | ||||||||
Frank Grese, Jr. | 50.0% | 16.7% | 33.3% | 65.0% | 66.67% | 83.33% | 115.00% | ||||||||
Peter C. DeLongchamps | 50.0% | 16.7% | 33.3% | 65.0% | 66.67% | 83.33% | 115.00% |
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Proxy Statement 2022 | 41
How the Annual Incentive is Paid (as a % of Salary) | ||||||||||||||||||||||||||||||||||||
Financial Based | Total Opportunity (Assumes 100% Payout on Mission Based) | |||||||||||||||||||||||||||||||||||
Named Executive Officer | Mission Based | Threshold | Target | Max | Threshold | Target | Max | |||||||||||||||||||||||||||||
Earl J. Hesterberg | 50.0 | % | 25.0 | % | 50.0 | % | 150.0 | % | 75.0 | % | 100.0 | % | 200.0 | % | ||||||||||||||||||||||
Daryl A. Kenningham | 50.0 | % | 25.0 | % | 50.0 | % | 100.0 | % | 75.0 | % | 100.0 | % | 150.0 | % | ||||||||||||||||||||||
Daniel McHenry | 50.0 | % | 16.7 | % | 33.3 | % | 65.0 | % | 66.7 | % | 83.3 | % | 115.0 | % | ||||||||||||||||||||||
Frank Grese, Jr. | 50.0 | % | 16.7 | % | 33.3 | % | 65.0 | % | 66.7 | % | 83.3 | % | 115.0 | % | ||||||||||||||||||||||
Peter C. DeLongchamps | 50.0 | % | 16.7 | % | 33.3 | % | 65.0 | % | 66.7 | % | 83.3 | % | 115.0 | % |
Results
For 2018,2021, we achieved the maximum level of our financial goal (EPS)(adjusted net income). Adjusted actual EPSnet income was $8.91,$642.2 million, exceeding the maximum target performance level of $8.76.
$330.0 million.
In connection with its review of the performance of our Chief Executive Officer, the CHR Committee determined that Mr. Hesterberg had achieved 100% of his 20182021 mission-based goals, resulting in a 100% payment of the mission-based payout. Following extensive discussion with our Chief Executive Officer regarding his evaluation of the performance of our named executive officers, the CHR Committee determined that the mission-based goals for Messrs. Kenningham, Rickel, GreseMcHenry and DeLongchamps were met, or surpassed their individual and departmental goals, resulting in 100% payout of the mission-based payout.payout, and Messrs. Kenningham and Grese had achieved a 95% and 96% payout, respectively, of their mission-based goals. In making these determinations, the CHR Committee specifically considered each named executive officer’s leadership in achieving each of the goals.
Based on the CHR Committee’s evaluation of the performance of each of our named executive officers, it determined the degree to which each named executive officer had achieved his goals and the following amounts of incentive compensation were paid with respect to the 20182021 year:
1 | The % of salary is based on employee salaries on December 31, 2021. |
LONG TERM EQUITY INCENTIVE COMPENSATIONAnnual Incentive Compensation Plan Changes for Fiscal 2022
In January 2022, the CHR Committee with the help of PM&P, reviewed the performance metrics (mission-based and financial-based) under the Company’s Annual Incentive Compensation Plan. The CHR Committee continues to believe that the mission-based goals set for each of the Company’s named executive officers are integral toward achieving key business objectives and contribute to the growth of the Company. The CHR Committee discussed a variety of financial metrics and determined that adjusted annual net income (as disclosed in the fourth quarter earnings release filed with the SEC following year-end), continues to be an appropriate metric for aligning the management team’s financial-based goals with the Company’s success for 2022. In November 2021, the CHR Committee made changes to the annual incentive compensation program for our named executive officers to increase the portion of the annual incentive program based on financial goals from 50% to 70%, and to reduce the portion of the annual incentive program based on mission-based goals from 50% to 30%.
Long Term Equity Incentive Compensation
Design
To align the compensation of our named executive officers with the attainment of our business goals and an increase in stockholdershareholder value, we award long-term equity incentive grants to our named executive officers as part of our total compensation package. These awards have been made pursuant to the Group 1 Automotive, Inc. 2014 Long Term Incentive Plan, as amended (the “LTIP”) and the 2007 Long Term Incentive Plan.
.
We believe that restricted stock, subject to time-based vesting requirements, appropriately aligns management’s interests with those of our Company and our stockholders,shareholders, while helping to motivate and retain key members of our management team.
Additionally, beginning in 2019, after extensive discussions between the CHR Committee and PM&P, the CHR Committee determined that the annual equity awards made to certain executive officers should include a performance-based award component. Accordingly, in 2021, 25% (increased to 50% in 2022, as discussed below) of each named executive officer’s equity compensation annual grants under the LTIP were subject to performance-based criteria under performance shares. These performance shares have been granted at the recommendation of PM&P in order to better align our incentive compensation with the incentive compensation of our peers.
When determining the size of the awards, we typically consider amounts that would provide our named executive officers with long-term incentive opportunities that, when performance is above target, results in pay above the median of our peer companies.Peer Companies. We then take into account individual performance, the position and value of the named executive officer to our Company, experience and length of service to us, our desire to incentivize the officer to remain with our Company, and the amount of equity previously awarded to the officer.
Restricted Stock Awards
Vesting of theseequity-based awards isare intended to facilitate retention, and the restricted stock shares vest over a five-year period with the restrictions relating to the awards lapsing 40% after two years and 20% in each year thereafter. Since 2008, our vesting provisions have been based on the passage of time. Under the terms of the current restricted stock award agreements, in the event of death or disability of any employee with unvested awards, all granted but unvested restricted stock awards will automatically vest. Certain qualified retirements will also result in the acceleration of vesting.
For more information on the potential vesting (or forfeiture) of outstanding Restricted Stock Awards, please see the section entitled “Executive Compensation — Potential Payments upon Termination or Change in Control — GROUP 1 AUTOMOTIVE 2014 LONG TERM INCENTIVE PLAN.”
Performance Share Awards
We designed 50% of the performance shares or 12.5% (50% x 25%) of the total 2021 annual equity-based grant, to be based on the Company’s return on invested capital (“ROIC”), and 50% of the performance shares of the equity award or 12.5% of the total annual equity-based grant to be based on the Company’s total shareholder return (“TSR”) relative to a comparator group of five domestic automotive retailers included in the Peer Companies.
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Proxy Statement 2022 | 43
These performance criteria are to be measured over a two-year performance period from the beginning of 2021 through the end of 2022. In addition, the 2021 performance share grants are subject to a three-year time-based vesting schedule. As a result, following the end of the two-year performance period, at the February 2023 meeting the CHR Committee will assess performance. Any awards that have satisfied the performance-based criteria will then continue to be subject to the time-based vesting requirement, which lapses at year end. Any 2021 performance shares earned will fully vest on December 31, 2023.
The 2021 awards generally vest from 0% to 200% of the target award granted, based on the ROIC and TSR performance achieved against our Peer Companies. However, the portion of the awards subject to TSR performance were also subject to a cap on the maximum fair market value of the awards that become earned. This maximum value cap would limit the upside value of each award in an environment where the eventstock price has increased substantially above the expected levels at the time of grant, limiting the number of shares that become eligible to be issued to the recipient upon settlement. As a “qualified retirement,” which is a retirement after a minimumresult, the maximum fair market value (determined as of ten yearsthe last day of service with our Company and the executive attainingapplicable performance period) of the age of 63, upon satisfaction of a two year non-compete and certain non-disclosure covenants, all unvested shares of(or restricted stock, or restricted stock units (granted in prior years) held byas further described below) may not exceed four times the fair market value of the target number of shares subject to TSR performance originally granted to the named executive officer (the “Maximum Value”). If the fair market value of the number of such shares (or restricted stock) exceeds that Maximum Value, then the number of TSR-based shares eligible to vest will be reduced to a number of whole shares that is equal to or less than the Maximum Value. However, if on the vesting date for the award, the aggregate fair market value of the shares payable to the individual is less than the Maximum Value, all or a portion of the number of share that were previously reduced due to the cap will become payable to the employee to the extent that the aggregate fair market value of the shares to be issued as of histhe vesting date does not exceed the Maximum Value.
For details regarding the potential vesting (or forfeiture of) the Performance Share Awards, please see the section entitled “Executive Compensation – Potential Payments upon Termination or Change in Control – GROUP 1 AUTOMOTIVE 2014 LONG TERM INCENTIVE PLAN.” The performance share agreements under the LTIP for our named executive officers provide that upon a named executive officer’s termination due to death or disability, the performance shares will pay out following the performance period based on actual performance. If a named executive officer’s employment is terminated due to a planned retirement date(generally defined as a mutually agreed upon retirement by the officer and the Company), the performance shares will vest. Provided, however, that beginning with the awards granted in 2018, anyconvert to time-based restricted stock grantedawards that will continue to vest, subject to the officer’s compliance with applicable restrictive covenants, until the second anniversary of the named executive must have been received at least six months prior to his notificationofficer’s termination of his intent to terminate hisemployment. Such a conversion will occur based on the actual performance achieved during the performance period. All other terminations of employment due to Qualified Retirement, and at least six months prior towill result in a forfeiture of the effective retirement date to be eligible for vesting as provided above.performance shares without payment.
20182021 Awards
In February 2018,2021, the CHR Committee reviewed the tally sheets and the competitive analysis prepared by PM&P and the Company’s comprehensive compensation review to determine how each named executive officer’s base salary and total compensation compared to their peers and in order to assesspeers. The CHR Committee also assessed all elements of each executive’s pay relative to total compensation. TheWhen making the decision as to the size of the equity award for each named executive officer the CHR Committee also considered each executive’s current equity position for purposes of reward and retention and considered other factors, such as size of previous awards, contribution to corporate results, leadership and Company performance during the year when making the decision as to the size of the equity award for each named executive officer.year. Based on the analysis and review described above, on February 20, 2018,19, 2021, the CHR Committee granted the following restricted stock and performance share awards to the named executive officers: Mr. Hesterberg (47,371 shares; valued at $3,599,959), Mr. Kenningham (13,000 shares; valued at $987,935),
2021 Long Term Equity Incentive Compensation | ||||||||||||||||
Named Executive Officer | Restricted Stock Awards (#) | Value1 ($) | Performance Share Awards (at Target) (#) | Value (at Target)1 ($) | ||||||||||||
Earl J. Hesterberg | 19,377 | 2,849,969 | 6,459 | 949,990 | ||||||||||||
Daryl A. Kenningham | 10,199 | 1,500,069 | 3,399 | 499,925 | ||||||||||||
Daniel McHenry | 2,550 | 375,054 | 849 | 124,871 | ||||||||||||
Frank Grese, Jr. | 3,569 | 524,929 | 1,189 | 174,878 | ||||||||||||
Peter C. DeLongchamps | 4,079 | 599,939 | 1,359 | 199,882 |
![]() | Value of awards reflect market rates on date of grant. |
Mr. Rickel (11,500 shares; valued at $873,943), Mr. Grese (9,000 shares; valued at $683,955) and Mr. DeLongchamps (8,500 shares; valued at $645,958).
For more information on the 20182021 equity awards, please see the section entitled “Executive Compensation — Grants of Plan BasedPlan-Based Awards in 2018.2021.”
Compensation Changes for Fiscal 2019
2022
In 2019,November 2021, after extensivereviewing a competitive analysis prepared by PM&P and following discussions betweenwith PM&P , the CompensationCHR Committee andincreased the compensation consultant,mix of performance based long term incentive from 25% to 50%. The financial metrics remained the Compensation Committee determined thatsame, with 25% (50% x 50%) of the total annual equity awards madeequity-based grant, to certain executive officers should include a performance-based award component. Accordingly, 25% of each NEO’s equity compensation under the LTIP will be subject to performance-based criteria, as follows:based on Group 1’s ROIC, and 50% of the performance-based portionperformance shares of the equity award or 12.5% (50% x 25%) of the total annual equity-based grant will be based on Group 1’s return on invested capital (“ROIC”), and 50% of the performance-based portion of the equity award or 12.5% of the total grant willto be based on the Company’s total shareholder return (“TSR”)TSR relative to a group of five domestic automotive retailers. The performance period is two fiscal years (2019 and 2020) but the vesting period for the performance shares is three years. The Committee will certify performance at the February 2021 meeting following the endother fifty percent of the two-year performance period, and anylong term incentive, restricted stock awards, that became eligible to vest as a result of performance will remain subject to a time-basedremains time vesting requirement for one additional year. Full vesting of any performance shares earned will vest on the third anniversary of the grant date (February 2022).
over five years.
401(K) PLAN
Plan
We maintain the Group 1 Automotive, Inc. 401(k) Savings Plan (the “401(k) Savings Plan”) to assist alleligible employees in providing for their retirement. Matching contributions may be in the form of cash or shares of our common stock or a combination of both, as determined by the CHR Committee. All of our matches have been in cash for all employees. Amounts that we contributed to each named executive officer’s 401(k) Savings Plan account are disclosed within the Summary Compensation Table.
EMPLOYEE STOCK PURCHASE PLAN
Employee Stock Purchase Plan
Generally, under the Group 1 Automotive, Inc. Employee Stock Purchase Plan, all employees, including our named executive officers, are offered the opportunity to purchase up to $25,000 annually of our common stock at a 15% discount to market, provided that the maximum number of shares that may be purchased by an employee shall not exceed 3,000 shares of common stock per quarter. This is an additional equity incentive we offer to all of our employees to further promote their interest in enhancing stockholdershareholder value. These shares may not be sold by the employee for a minimum of six months following purchase.
DEFERRED COMPENSATION PLAN
![]() | Proxy Statement 2022 | 44 |
Proxy Statement 2022 | 45
Deferred Compensation Plan
The Group 1 Automotive, Inc. Deferred Compensation Plan (the “Deferred Compensation Plan”) is designed as a retention tool for our corporate and regional officers, dealership general managers, and other key employees and non-employee directors.employees. It allows participants the opportunity to accumulate additional savings for retirement on a tax-deferred basis. Participants can choose from various defined investment options in whichIn 2021, the deferred compensation is notionally invested. Pursuant toCHR Committee approved an amendment and restatement of the Deferred Compensation Plan certain corporate officers, includingwhich eliminated all investment options except the declared rate option and a money-market fund, discontinued the ability of participants to elect and schedule in-service withdrawals, eliminated non-discretionary employer matching contributions and discontinued future participation by our named executive officers, may defer up to 50% of their base salary and up to 100% of their incentive compensation, and we may make contributions to the participants’ accounts.non-employee directors. For a more detailed discussion of the Deferred Compensation Plan, please see the section entitled “Executive Compensation — Nonqualified Deferred Compensation.”
OTHER BENEFITS
Other Benefits
Health and Welfare Benefits
Our named executive officers are eligible to participate in our standard medical, dental, vision, disability insurance and life insurance plans to meet their health and welfare needs. These benefits are provided so as to assure that we are able to maintain a competitive position in terms of attracting and retaining executive officers and other employees. This is a fixed component of compensation and the benefits are provided on a non-discriminatory basis to all of our full-time employees.
Vehicle Allowance
Under his employment agreement, our Chief Executive Officer is provided with two vehicles for his use. Our President, U.S. and Brazilian Operations also receives the use of two vehicles. Our Senior Vice President and Chief Financial Officer, our Senior Vice President, Human Resources, Training, and Operations Support and Employee Communications, and our Senior Vice President, Manufacturer Relations, Financial Services and Public Affairs, as well as our other Senior Vice Presidents, receive a vehicle allowance of $15,000 per year and the use of one vehicle. Vice Presidents are provided with a vehicle allowance of $11,300 per year, or a vehicle, and in certain limited cases, both.
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Other Limited Perquisites and Personal Benefits
We provide certain named executive officers with perquisites and other personal benefits that the CHR Committee believes are reasonable and consistent with our overall compensation programs and philosophy. These benefits are provided in order to enable us to attract and retain these executives. For example, we pay for club membership privileges that are used primarily for business but also for occasional personal purposes by our Chief Executive Officer, Mr. Hesterberg. In addition, we own a fractional interest in an aircraft which is primarily used for business purposes. However, we make a portion of our time available to Mr.Messrs. Hesterberg and Kenningham for personal use during the year. In 2018,2021, Mr. Hesterberg was allowed a maximum of 40 flight hours for personal use;use of the aircraft; however, his actual personal usage was 29.113.8 hours. In 2021, the CHR Committee approved 20 hours for personal use of the aircraft during the year for Mr. Kenningham. In 2021, Mr. Kenningham’s personal usage was 16.2 hours of personal flight time. Messrs. Hesterberg reimburses usand Kenningham reimburse the Company for his personal use based on the published standard industry fare level valuation method. We provide thisThis benefit is provided to Mr.Messrs. Hesterberg because it optimizesand Kenningham to optimize the use of histheir time and is consistent with similar benefits provided by our Peer Companies.
Employment Agreements, Severance Benefits and Change in Control Provisions
EMPLOYMENT AGREEMENTS, SEVERANCE BENEFITS AND CHANGE IN CONTROL PROVISIONS
We maintain employment and other compensatory agreements with certain named executive officers to ensure they will perform their roles for an extended period of time. Certain provisions contained in these agreements, such as non-competition and non-solicitation provisions, as well as change in control severance payments, are essential to retaining our talent and protecting our stockholders.shareholders. We believe that it is appropriate to compensate individuals to refrain from working with competitors following termination, and that compensation enhances the enforceability of such agreements. These agreements and our severance terminology are described in more detail elsewhere in this proxy statement.
Please read “Executive Compensation — Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table — Employment, Incentive Compensation and Non-Compete Agreements.” These agreements provide for severance compensation to be paid if the officer’s employment is terminated under certain conditions, such as following a corporate change, involuntary termination, termination by us for “cause,” death or disability, each as defined in the applicable executive’s agreement. The employment and other compensatory agreements between our Company and our named executive officers and the related severance provisions are designed to meet the following objectives:
CORPORATE CHANGE
Corporate Change
In certain limited scenarios, the potential for merger or being acquired may be in the best interests of our stockholders.shareholders. As a result, we provide severance compensation to certain named executive officers if the officer’s employment is terminated following a corporate change transaction. Our intent is to promote the ability of the officer to act in the best interests of our stockholdersshareholders even though his or her employment could be terminated as a result of the transaction. However, as previously discussed, we do not provide any excise tax gross-ups to any of our named executive officers.
TERMINATION WITHOUT CAUSE
Termination Without Cause
If we terminate the employment of certain named executive officers “without cause” as defined in the applicable agreement, we are obligated to pay the officer certain compensation and other benefits as described in greater detail in “Executive Compensation - Potential Payments Upon Termination or Change in Control.” We believe these payments are appropriate because the terminated officer is bound by confidentiality, non-solicitation and non-compete provisions ranging from one to two years after termination. Both partiesParties with existing agreements have mutually agreed to a severance package that would be in place prior to any termination event. This provides us with more flexibility to make a change in senior management if such a change is in the best interests of our Company and its stockholders.shareholders.
Hedging and Pledging Prohibitions
HEDGING AND PLEDGING PROHIBITIONS
Our Directorsdirectors and named executive officers, in addition to any of our employees or their designees, are prohibited from engaging in “short sales” of our stock or otherwise hedging the risk of ownership of our stock. Hedging is generally defined as purchasing a financial instrument that does, or is intended to, hedge or offset any decrease in the market value of our stock, regardless of the manner in which those individuals hold that stock (i.e., as an award from our LTIP, a gift, or from a direct purchase of the stock in the open market). We have also adopted a policy that prohibits our directors and officers from pledging their Company stock or engaging in any other transaction of a similar nature that has the effect of using Group 1 securities as collateral.
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Policy on Payment or Recoupment of Performance-Based Cash Bonuses and Performance-Based Stock Bonuses in the Event of Certain Restatements
POLICY ON PAYMENT OR RECOUPMENT OF PERFORMANCE-BASED AWARDS
The CHR Committee has adopted a policy on payment or recoupment (or “clawback”) of performance-based cash bonuses and performance-based stock bonuses in the event of certain financial restatements, excluding those required by a change in generally accepted accounting principles, which provides that we will require the payment or reimbursement (to the extent permitted by governing law) of all or a portion of any performance-based cash or performance-based stock bonus where: (a) the payment was predicated upon the achievement of certain financial results that were subsequently the subject of a material restatement and (b) a higher or lower payment would have been made to the employee based upon the restated financial results. In each of these instances, we will, to the extent practicable: (a) either make a payment of, or seek to recover, the cash amount by which the individual employee’s annual performance-based bonus was recalculated based on the restated financial results; provided that we will not pay or seek to recover bonuses paid more than three years prior to the date the applicable restatement is disclosed; (b) cause the award or cancellation of any performance-based stock awards; and (c) seek reimbursement of any unearned gains realized on the vesting of performance-based stock attributable to such awards.
![]() | Proxy Statement 2022 | 46 |
Proxy Statement 2022 | 47
Our Stock Ownership Guidelines
Our Board has adopted Stock Ownership Guidelines that apply to our named executive officers, as well as other officers within our Company. The guidelines require our named executive officers to maintain a minimum number of shares of our common stock (CEO – 6x base salary; other named executive officers – 3x base salary) while they are employed by us. The guidelines reinforce the importance of aligning the longer-term interests of our named executive officers with the interests of our stockholdersshareholders and are expressed in terms of the dollar value of their equity holdings as a multiple of each named executive officer’s base salary.
The dollar value of stock ownership is based on base salary times a multiple divided by the previous 36-month average stock price as calculated on December 31stof each year. Unvested restricted stock awards or restricted stock units are counted towards each named executive officer’s ownership requirement. Unvested performance shares are not considered in this calculation. Stock ownership levels should be achieved by each officer within five years of the adoption of these guidelines, or within five years of the individual’s appointment as an officer. Each of our named executive officers was in compliance with current guidelines on December 31, 2018,2021, as indicated below:below.
1 | Includes 2,282.53 shares held by the Hesterberg Management Trust, for which Mr. Hesterberg and his spouse are co-trustees, 65,517.61 shares of common stock held in gift trusts for the benefit of Mr. Hesterberg’s children, for which he serves as Trustee, 4,953 shares held by Mr. Hesterberg’s spouse, and 65,517.86 shares held by the 2019 | ![]() |
Tax Deductions for Compensation
TAX DEDUCTIONS FOR COMPENSATION
In conducting our executive compensation programs, prior to 2018 the CHR Committee considered the effects of Section 162(m) of the Internal Revenue Code (the “Code”), which denied publicly held companies a tax deduction for annual compensation in excess of $1 million paid to certain covered employees unless theiremployees. While the CHR Committee considers the deductibility of compensation was based on performance criteria. Section 162(m) of the Code was modified in connection with the Tax Cuts and Jobs Act, and beginning with the 2018 calendar year there is no longer an exception for performance-based compensation arrangements that are not deemedpaid to be grandfathered pursuant to the Tax Cuts and Jobs Act, therefore Section 162(m) of the Code did not have an impact on the compensation decisions that the Committee made in 2018. The Committee retains the ability to evaluate the performance of our named executive officers as one factor in its determinations, the CHR Committee will ultimately structure compensation in a manner that meets our business, retention and to pay appropriate compensation,incentive goals, even if some of it may be non-deductible, to ensure competitive levels of total compensation is paid to certain individuals.non-deductible.
RISK ASSESSMENT
We have reviewedannually review our compensation policies and practices for all employees, including our named executive officers, and have determined that our compensation programs are not reasonably likely to cause behaviors that would have a material adverse effect on our Company. Moreover, we believe that several design features of our compensation programs and policies reduce the likelihood of excessive risk-taking:
![]() | The program design provides a balanced mix of cash and equity, annual and longer-term incentives, and performance metrics. |
![]() | Annual and long-term incentive payouts are capped at industry standard levels. |
![]() | We currently do not grant stock options. |
![]() | The |
![]() | The compensation recovery policy (which extends to all employees participating in the incentive plan) allows our Company to “claw back” payments made using materially inaccurate financial results. |
![]() | Our named executive officers are subject to robust stock ownership guidelines. |
![]() | Compliance and ethical behaviors are integral factors considered in all performance assessments. |
![]() | We set the proper ethical and moral expectations through our policies, values and procedures and provide various mechanisms for reporting issues. |
![]() | We maintain an evaluation program, including periodic reviews and audits of our dealership sales, parts and service and finance departments, which enables us to verify that our compensation policies and practices are aligned with expectations. |
![]() | A cap is placed on the number of shares of common stock that may be awarded to an individual in any calendar year. |
We believe that, for all employees, our compensation programs do not encourage excessive risk and instead encourage behaviors that support sustainable value creation.creation aligned with our shareholders’ interests.
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Proxy Statement 2022 | 49
Report of the Compensation & Human
Resources Committee
During the last fiscal year, and this year in preparation for the filing of this proxy statement with the SEC, the Compensation & Human Resources Committee:
reviewed and discussed the disclosure set forth under the heading “2021 Compensation Discussion and Analysis” with management; and
based on the reviews and discussions referred to above, recommended to the Board of Directors that the disclosure set forth under the heading “2021 Compensation Discussion and Analysis” be included in this proxy statement and incorporated by reference into Group 1 Automotive, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
Respectfully submitted by the Compensation & Human Resources Committee of the Board of Directors,
Anne Taylor (Chair)
Max P. Watson, Jr. (Chairman)
John L. AdamsSteven C. Mizell
Stephen D. Quinn
Anne TaylorSteven P. Stanbrook
MaryAnn Wright
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2018 Summary Compensation Table
2021 SUMMARY COMPENSATION TABLE
The following table summarizes, with respect to our named executive officers, information relating to the compensation granted or earned for services rendered in all capacities during 2018.2021, 2020 and 2019. Our named executive officers consist of five senior corporate officers, including our Chief Executive Officer and our Chief Financial Officer.
Name and Principal Position | Year | Salary ($) | Stock Awards(1) ($) | Non-Equity Incentive Plan Compensation(2) ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings(3) ($) | All Other Compensation(4) ($) | Total ($) | |||||||
Earl J. Hesterberg President and Chief Executive Officer | 2018 | 1,150,000 | 3,599,959 | 1,437,500 | 337,607 | 378,588 | 6,903,654 | |||||||
2017 | 1,100,000 | 1,999,966 | 485,833 | 322,320 | 203,550 | 4,111,669 | ||||||||
2016 | 1,100,000 | 1,813,700 | 1,210,000 | 237,057 | 213,565 | 4,574,322 | ||||||||
Daryl A. Kenningham President, U.S. Operations | 2018 | 624,000 | 987,935 | 780,000 | 181,560 | 26,745 | 2,600,240 | |||||||
2017 | 533,333 | 962,312 | 645,296 | 169,653 | 31,310 | 2,341,904 | ||||||||
John C. Rickel Senior Vice President and Chief Financial Officer | 2018 | 599,700 | 873,943 | 689,655 | 395,460 | 26,210 | 2,584,968 | |||||||
2017 | 583,500 | 845,799 | 389,000 | 379,516 | 25,338 | 2,223,153 | ||||||||
2016 | 583,500 | 747,763 | 671,025 | 282,877 | 26,740 | 2,311,905 | ||||||||
Frank Grese, Jr. Senior Vice President, Human Resources, Training and Operations Support | 2018 | 572,500 | 683,955 | 658,375 | 193,206 | 31,914 | 2,139,950 | |||||||
2017 | 540,000 | 589,235 | 346,500 | 170,839 | 33,171 | 1,679,745 | ||||||||
2016 | 540,000 | 414,560 | 621,000 | 129,632 | 32,511 | 1,737,703 | ||||||||
Peter C. DeLongchamps Senior Vice President, Manufacturer Relations, Financial Services and Public Affairs | 2018 | 478,300 | 645,958 | 550,045 | 82,345 | 24,952 | 1,781,600 | |||||||
2017 | 456,300 | 651,610 | 182,520 | 82,239 | 22,418 | 1,395,087 | ||||||||
2016 | 456,300 | 518,200 | 342,225 | 66,367 | 18,759 | 1,401,851 |
Name and Principal Position | Year | Salary ($) | Stock Awards2 ($) | Non-Equity Incentive Plan Compensation3 ($) | Change in ($) | All Other Compensation5 ($) | Total ($) | |||||||||||||||||||||
Earl J. Hesterberg President and Chief Executive Officer | 2021 | 1,240,000 | 3,799,959 | 2,480,000 | 849,078 | 208,220 | 8,577,257 | |||||||||||||||||||||
2020 | 900,000 | 3,646,040 | 2,400,000 | 292,530 | 60,009 | 7,298,579 | ||||||||||||||||||||||
2019 | 1,150,000 | 3,600,029 | 2,127,500 | 361,583 | 685,290 | 7,924,402 | ||||||||||||||||||||||
Daryl A. Kenningham President, U.S. and Brazilian Operations | 2021 | 760,000 | 1,999,994 | 1,121,000 | 342,173 | 174,355 | 4,397,522 | |||||||||||||||||||||
2020 | 604,500 | 1,772,418 | 1,080,000 | 806,776 | 171,939 | 4,435,633 | ||||||||||||||||||||||
2019 | 655,200 | 1,121,992 | 982,800 | 164,068 | 177,153 | 3,101,213 | ||||||||||||||||||||||
Daniel McHenry Senior Vice President And Chief Financial Officer | 2021 | 575,000 | 499,925 | 661,250 | 859 | 34,557 | 1,771,591 | |||||||||||||||||||||
2020 | 375,317 | 450,026 | 349,506 | — | 13,607 | 1,188,456 | ||||||||||||||||||||||
Frank Grese, Jr.1 Senior Vice President, Human Resources, Training and Operations Support | 2021 | 633,450 | 699,807 | 715,799 | 373,425 | 32,605 | 2,455,086 | |||||||||||||||||||||
2020 | 558,625 | 708,927 | 707,250 | 157,112 | 34,764 | 2,166,678 | ||||||||||||||||||||||
2019 | 595,400 | 683,993 | 684,710 | 197,769 | 33,618 | 2,195,490 | ||||||||||||||||||||||
Peter C. DeLongchamps Senior Vice President, Manufacturer Relations, Financial Services and Public Affairs | 2021 | 530,450 | 799,821 | 610,018 | 142,794 | 29,663 | 2,112,746 | |||||||||||||||||||||
2020 | 467,792 | 708,927 | 592,250 | 54,561 | 30,613 | 1,854,143 | ||||||||||||||||||||||
2019 | 492,650 | 647,980 | 566,548 | 77,961 | 24,489 | 1,809,628 |
1 | Effective January 1, 2022, Mr. Grese was no longer responsible for Human Resources. |
The amounts in the “Stock Awards” column |
Annual cash incentive awards based upon the achievement of financial and mission-based goals. This is discussed further under |
Amounts reflect above-market earnings on the Deferred Compensation |
![]() | Proxy Statement 2022 | 50 |
Proxy Statement 2022 | 51
5 | The following table contains a breakdown of the compensation and benefits included under “All Other Compensation” for |
Name | Year | 401(k) Savings Plan Matching Contribution ($) | Automobile Allowance ($) | Use of Demonstrator Vehiclea ($) | Airplane Useb ($) | Club Membership and Dues ($) | Total ($) | |||||||
Earl J. Hesterberg | 2021 | 8,700 | — | 29,431 | 150,404 | 19,685 | 208,220 | |||||||
Daryl A. Kenningham | 2021 | 8,700 | — | 23,475 | 142,180 | — | 174,355 | |||||||
Daniel McHenry | 2021 | 8,700 | 15,000 | 10,857 | — | — | 34,557 | |||||||
Frank Grese, Jr. | 2021 | 7,111 | 15,000 | 10,494 | — | — | 32,605 | |||||||
Peter C. DeLongchamps | 2021 | 8,700 | 15,000 | 5,963 | — | — | 29,663 |
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Name | Year | 401(k) Savings Plan Matching Contribution ($) | Automobile Allowance ($) | Use of Demonstrator Vehicle(a) ($) | Airplane Use(b) ($) | Club Membership and Dues ($) | Total ($) | |||||||||||
Earl J. Hesterberg | 2018 | 7,950 | — | 27,538 | 330,759 | 12,341 | 378,588 | |||||||||||
Daryl A. Kenningham | 2018 | 7,950 | — | 18,795 | — | — | 26,745 | |||||||||||
John C. Rickel | 2018 | 7,950 | 15,000 | 3,260 | — | — | 26,210 | |||||||||||
Frank Grese, Jr. | 2018 | 5,913 | 15,000 | 11,001 | — | — | 31,914 | |||||||||||
Peter C. DeLongchamps | 2018 | 7,950 | 15,000 | 2,002 | — | — | 24,952 |
Represents the incremental cost for personal use of one or more Company demonstrator vehicles. The incremental cost is determined by multiplying the annual lease value of the vehicle by the percentage of personal use, which we track through travel logs. |
b | While we do not have formal arrangements regarding airplane use with our named executive officers other than |
Grants of Plan-Based Awards in 2018
GRANTS OF PLAN-BASED AWARDS IN 2021
The following table provides information concerning each grant of an award made to our named executive officers under our annual incentive compensation plan and 2014 Long Term Incentive Plan during 2018:2021:
Possible Payouts Under Non-Equity Incentive Plan Awards(1) | All Other Stock Awards: Number of Shares of Stock | Grant Date Fair Value of Stock and Option | ||||||||||||
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | or Units (#) | Awards ($) | ||||||||
Earl J. Hesterberg | — | — | 958,333 | 1,437,500 | — | — | ||||||||
02/20/2018 | — | — | — | 47,371 | 3,599,959 | |||||||||
Daryl A. Kenningham | — | — | 520,000 | 780,000 | — | — | ||||||||
02/20/2018 | — | — | — | 13,000 | 987,935 | |||||||||
John C. Rickel | — | — | 499,750 | 689,655 | — | — | ||||||||
02/20/2018 | — | — | — | 11,500 | 873,943 | |||||||||
Frank Grese, Jr. | — | — | 477,083 | 658,375 | — | — | ||||||||
02/20/2018 | — | — | — | 9,000 | 683,955 | |||||||||
Peter C. DeLongchamps | — | — | 378,583 | 550,045 | — | — | ||||||||
02/20/2018 | — | — | — | 8,500 | 645,958 |
Possible Payouts Under |
Possible Payouts Under | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock and Option Awards ($) | |||||||||||||||||||||||||||||||||||||
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||||||||
Earl J. Hesterberg | — | 930,000 | 1,240,000 | 2,480,000 | — | — | — | — | — | |||||||||||||||||||||||||||||||
02/19/2021 | — | — | — | — | — | — | 19,377 | 2,849,969 | ||||||||||||||||||||||||||||||||
02/19/2021 | — | — | — | 3,230 | 6,459 | 12,918 | — | 949,990 | ||||||||||||||||||||||||||||||||
Daryl A. Kenningham | — | 570,000 | 760,000 | 1,140,000 | — | — | — | — | — | |||||||||||||||||||||||||||||||
02/19/2021 | — | — | — | — | — | — | 10,199 | 1,500,069 | ||||||||||||||||||||||||||||||||
02/19/2021 | — | — | — | 1,700 | 3,399 | 6,798 | — | 499,925 | ||||||||||||||||||||||||||||||||
Daniel McHenry | — | 383,525 | 478,975 | 661,250 | — | — | — | — | — | |||||||||||||||||||||||||||||||
02/19/2021 | — | — | — | — | — | — | 2,550 | 375,054 | ||||||||||||||||||||||||||||||||
02/19/2021 | — | — | — | 425 | 849 | 1,698 | — | 124,871 | ||||||||||||||||||||||||||||||||
Frank Grese, Jr. | — | 422,511 | 527,664 | 728,468 | — | — | — | — | — | |||||||||||||||||||||||||||||||
02/19/2021 | — | — | — | — | — | — | 3,569 | 524,929 | ||||||||||||||||||||||||||||||||
02/19/2021 | — | — | — | 595 | 1,189 | 2,378 | — | 174,878 | ||||||||||||||||||||||||||||||||
Peter C. DeLongchamps | — | 353,810 | 441,865 | 610,018 | — | — | — | — | — | |||||||||||||||||||||||||||||||
02/19/2021 | — | — | — | — | — | — | 4,079 | 599,939 | ||||||||||||||||||||||||||||||||
02/19/2021 | — | — | — | 680 | 1,359 | 2,718 | — | 199,882 |
Estimated possible payouts under the |
![]() These columns reflect the threshold, target and maximum numbers of performance share units granted in 2021. The “Threshold” column reflects 50% of the target award; the “Target” column reflects 100% of the target award; and the “Maximum” column reflects 200% of the target number of the award, as this is the number of shares that could be earned based solely on the performance levels achieved. However, the awards were designed with a Maximum Value, a supplemental maximum payout formula that is described further within the CD&A above. This Maximum Value could potentially alter the number of shares of underlying common stock that could become payable pursuant to the award under any of the performance levels. |
|
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
NARRATIVE DISCLOSURE TO SUMMARY COMPENSATION TABLE AND GRANTS OF PLAN-BASED AWARDS TABLE
The following is a discussion of material factors we believe are necessary to an understanding of the information disclosed in the Summary Compensation Table and the Grants of Plan-Based Awards Table for 2018.2021.
EMPLOYMENT, INCENTIVE COMPENSATION AND NON-COMPETE AGREEMENTS
Employment, Incentive Compensation and Non-Compete Agreements
Earl J. Hesterberg
Effective May 19, 2015, we entered into anOur employment agreement with Mr. Hesterberg. Mr. Hesterberg’s annual base salary under the employment agreement is $1,100,000 (retroactive to January 1, 2015), subject to increase by the Compensation Committee from time to time. Effective January 1, 2018, the Compensation Committee increased Mr. Hesterberg’s base salary to $1,150,000.
On May 17, 2018, we entered into an amendment to employment agreement with Mr. Hesterberg. Under the terms of the employment agreement, as amended, the employment agreement was extended for a one-year term, and continuing through May 19, 2019, unless earlier terminated as provided therein. Following May 19, 2019, the agreement will continuecontinues in effect until terminated by either Group 1 or Mr. Hesterberg upon delivery of six-months advanced written notice of termination no later than six months prior to the date of termination set forth in such notice. Provisions of Mr. Hesterberg’s employment agreement, as amended, related to termination and change in control are discussed in “Potential Payments upon Termination or Change in Control” beginning on page 57 of this proxy statement.termination.
John C. Rickel
Daryl A. Kenningham
Effective January 1, 2009,June 6, 2011, we entered into an employmentincentive compensation, confidentiality, non-disclosure and non-compete agreement with Mr. Rickel. SubjectKenningham (the “Incentive Agreement”). The Incentive Agreement initially granted Mr. Kenningham 7,000 shares of restricted stock (which vested in full in 2016) in exchange for his agreement to certain non-competition restrictions and other customary restrictive covenants such as a confidentiality provision. The non-competition restriction within the Incentive Agreement is in effect during Mr. Kenningham’s employment and will continue in effect for a period of two years following his termination of employment for any reason.
Daniel McHenry
On June 1, 2020, we entered into an offer letter with Mr. McHenry (the “Offer Letter”), effective as of his appointment date. The Offer Letter provides that Mr. McHenry will receive an annual salary of $575,000 and will be eligible for an annual bonus opportunity equal to a maximum of 115% of his base salary. In connection with his promotion, and as an inducement to move to the termsU.S., on August 20, 2020, we entered into a “Retention, Confidentiality and conditionsNon-Compete Agreement with Mr. McHenry (the “Retention Agreement”). Pursuant to the Retention Agreement, Mr. McHenry was granted an initial restricted stock award of 2,067 shares, which was determined by dividing $200,000 by the closing price of our common stock on the date of grant. This initial restricted stock award will vest 40% on the second anniversary of the agreement, we agreeddate of grant, with an additional 20% vesting on each subsequent annual anniversary date thereafter. The Retention Agreement provides that Mr. McHenry will also be eligible to employ Mr. Rickel through December 31, 2010. Mr. Rickel’s employment agreement automatically renewsreceive future annual restricted stock awards, which will be based on his performance and subject to approval by the CHR Committee and which are expected to be granted at the same time and with similar vesting provisions as applicable for successive one-year periods unless either party prior to the expiration of the term provides 60 days prior written notice of termination to theour other party. Provisions of Mr. Rickel’s employment agreement related to termination and change in control are discussed in “Potential Payments upon Termination or Change in Control” beginning on page 57 of this proxy statement.
executive officers.
Additional Information
Messrs. Hesterberg, Kenningham, Rickel, Grese and DeLongchamps are also entitled to participate, on the same basis generally as our other employees, in all general employee benefit plans and programs that are made available to all or substantially all of our employees. In addition, Messrs. Hesterberg and Kenningham are entitled to the use of two demonstrator vehicles of their choice, and Messrs. Rickel, Grese and DeLongchamps are each entitled to one demonstrator vehicle of their choice and a vehicle allowance totaling $1,250 per month.
All incentive compensation awards payable to Messrs. Hesterberg and Rickel will be determined by the Committee in its sole discretion in accordance with the terms of our annual incentive compensation program, and all payments pursuant to this program shall be made on or before March 15thof the year following the year of service to which the incentive compensation relates.
We have not entered into an employment or non-compete agreement with Mr. Kenningham, Mr. Grese or Mr. DeLongchamps. However, in the event of a “qualified retirement”, which is a retirement after a minimum of ten years of service with our Company and the executive attaining the age of 63, upon satisfaction of a two year non-compete and certain non-disclosure covenants, all unvested shares of restricted stock or restricted stock units (granted in prior years) held by the named executive officer as of his retirement date will vest. Provided, however, that beginning with theequity-based compensation awards granted in 2018, any restricted stock awarded to the executive must have been granted (1) at least six months prior to the date the executive provides notification of his intent to terminate his employment due to qualified retirement, and (2) at least six months prior to his effective retirement date, to be eligible for vesting as provided above. Messrs. Hesterberg and Grese are currently the onlyour named executive officers eligible for a “qualified retirement”.could receive accelerated vesting in connection with certain qualifying terminations or change in control events.
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Proxy Statement 2022 | 53
Outstanding Equity Awards at DecemberOUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2018
2021
The following table provides information concerning restricted stock awards and performance share awards for our named executive officers. As of December 31, 2018,2021 none of our named executive officers held any stock options.
Stock Awards | ||||||||
Name | Grant Date(1) | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested(2) ($) | |||||
Earl J. Hesterberg | 02/25/2014 | 9,000 | 474,480 | |||||
02/24/2015 | 14,000 | 738,080 | ||||||
02/17/2016 | 21,000 | 1,107,120 | ||||||
03/01/2017 | 25,440 | 1,341,197 | ||||||
02/20/2018 | 47,371 | 2,497,399 | ||||||
Daryl A. Kenningham | 02/25/2014 | 1,000 | 52,720 | |||||
02/24/2015 | 3,200 | 168,704 | ||||||
02/17/2016 | 4,800 | 253,056 | ||||||
02/28/2017 | 12,265 | 646,611 | ||||||
02/20/2018 | 13,000 | 685,360 | ||||||
John C. Rickel | 02/25/2014 | 3,100 | 163,432 | |||||
02/24/2015 | 5,772 | 304,300 | ||||||
02/17/2016 | 8,658 | 456,450 | ||||||
02/28/2017 | 10,780 | 568,322 | ||||||
02/20/2018 | 11,500 | 606,280 | ||||||
Frank Grese, Jr. | 02/25/2014 | 1,600 | 84,352 | |||||
02/24/2015 | 3,200 | 168,704 | ||||||
02/17/2016 | 4,800 | 253,056 | ||||||
02/28/2017 | 7,510 | 395,927 | ||||||
02/20/2018 | 9,000 | 474,480 | ||||||
Peter C. DeLongchamps | 02/25/2014 | 2,200 | 115,984 | |||||
02/24/2015 | 3,848 | 202,867 | ||||||
02/17/2016 | 6,000 | 316,320 | ||||||
02/28/2017 | 8,305 | 437,840 | ||||||
02/20/2018 | 8,500 | 448,120 |
Restricted Stock Awards1 | Performance Share Awards2 | |||||||||||||||||||
Name | Grant Date | Number of Shares (#) | Market Value of Shares or Units of Stock That Have Not Vested3 ($) | Equity Incentive Plan Awards: Number of Unearned Shares or Units of Stock That Have Not Vested (#) | Equity Incentive Plan Awards: Market Value of Unearned Shares or Units of Stock That Have Not Vested3 ($) | |||||||||||||||
Earl J. Hesterberg | 03/01/2017 | 5,088 | 993,279 | — | — | |||||||||||||||
02/20/2018 | 18,949 | 3,699,224 | — | — | ||||||||||||||||
02/19/2019 | 26,316 | 5,137,410 | — | — | ||||||||||||||||
02/17/2020 | 40,532 | 7,912,657 | — | — | ||||||||||||||||
02/19/2021 | 19,377 | 3,782,778 | 6,459 | 1,260,926 | ||||||||||||||||
Daryl A. Kenningham | 02/28/2017 | 2,453 | 478,875 | — | — | |||||||||||||||
02/20/2018 | 5,200 | 1,015,144 | — | — | ||||||||||||||||
02/19/2019 | 8,203 | 1,601,390 | — | — | ||||||||||||||||
02/17/2020 | 19,703 | 3,846,420 | — | — | ||||||||||||||||
02/19/2021 | 10,199 | 1,991,049 | 3,399 | 663,553 | ||||||||||||||||
Daniel McHenry | 02/28/2017 | 700 | 136,654 | — | — | |||||||||||||||
02/20/2018 | 1,600 | 312,352 | — | — | ||||||||||||||||
02/19/2019 | 2,400 | 468,528 | — | — | ||||||||||||||||
02/17/2020 | 2,544 | 496,640 | — | — | ||||||||||||||||
08/20/2020 | 2,067 | 403,520 | — | — | ||||||||||||||||
02/19/2021 | 2,550 | 497,811 | 849 | 165,742 | ||||||||||||||||
Frank Grese, Jr. | 02/28/2017 | 1,502 | 293,220 | — | — | |||||||||||||||
02/20/2018 | 3,600 | 702,792 | — | — | ||||||||||||||||
02/19/2019 | 5,000 | 976,100 | — | — | ||||||||||||||||
02/17/2020 | 7,880 | 1,538,334 | — | — | ||||||||||||||||
02/19/2021 | 3,569 | 696,740 | 1,189 | 232,117 | ||||||||||||||||
Peter C. DeLongchamps | 02/28/2017 | 1,661 | 324,260 | — | — | |||||||||||||||
02/20/2018 | 3,400 | 663,748 | — | — | ||||||||||||||||
02/19/2019 | 4,738 | 924,952 | — | — | ||||||||||||||||
02/17/2020 | 7,880 | 1,538,334 | — | — | ||||||||||||||||
02/19/2021 | 4,079 | 796,302 | 1,359 | 265,304 |
Forfeiture restrictions on our restricted stock awards lapse over a five-year period: 40% of the award on the second anniversary of the grant date, and 20% on the third, fourth and fifth anniversaries of the grant date, respectively. Unvested shares granted on February 17, 2020 include performance shares which satisfied the performance vesting requirement as of December 31, 2020 but remain subject to time-based vesting which will lapse on December 31, 2022. |
Performance shares are earned with respect to measures over a designated performance period, as described in more detail within the CD&A section above. Regarding the February 19, 2021 award, the performance period begins on January 1, 2021 and ends on December 31, 2022. The vesting date is December 31, 2023. Values here are reported at Target payout amounts. |
3 | Calculated using value of our common stock at close of market on December 31, |
The following table provides information relating to the vesting of restricted stock during 20182021 on an aggregated basis for each of our named executive officers. Our named executive officers currently do not havehold stock options.
Stock Awards | ||||||
Name | Number of Shares Acquired on Vesting(1) (#) | Value Realized on Vesting(2) ($) | ||||
Earl J. Hesterberg | 39,000 | 2,938,970 | ||||
Daryl A. Kenningham | 7,600 | 573,302 | ||||
John C. Rickel | 14,758 | 1,113,049 | ||||
Frank Grese, Jr. | 8,200 | 618,338 | ||||
Peter C. DeLongchamps | 10,324 | 778,513 |
Performance Shares | Restricted Stock Awards | |||||||||||||||
Name | Number of Shares (#) | Value Realized ($) | Number of (#) | Value Realize on ($) | ||||||||||||
Earl J. Hesterberg | 26,440 | 5,121,957 | 39,106 | 5,811,914 | ||||||||||||
Daryl A. Kenningham | 8,239 | 1,596,059 | 12,120 | 1,799,709 | ||||||||||||
Daniel McHenry | — | — | 3,700 | 580,102 | ||||||||||||
Frank Grese, Jr. | 5,024 | 973,249 | 8,235 | 1,222,636 | ||||||||||||
Peter C. DeLongchamps | 4,758 | 921,720 | 8,518 | 1,265,827 |
Represents the gross number of shares acquired upon vesting of restricted stock and performance shares, without taking into account any shares withheld to satisfy applicable tax obligations. |
Represents the value of the vested restricted stock and performance shares, calculated by multiplying (a) the number of vested shares of restricted stock by (b) the average of the high and low sales prices of our common stock on the vesting date, which is how we calculate market value for purposes of this table. |
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Nonqualified Deferred Compensation
NONQUALIFIED DEFERRED COMPENSATION
The following table sets forth our named executive officers’ information regarding the Deferred Compensation Plan, including, with respect to each officer: (1) the aggregate contributions made by the officer, (2) the employer contribution, (3) the aggregate interest or other earnings accrued, and (4)(3) the total balance of the officer’s account.
Name | Executive Contributions in Last FY(1) ($) | Employer Match Contributions in Last FY(2) ($) | Aggregate Earnings in Last FY(3) ($) | Aggregate Balance at Last FYE(4) ($) | ||||||||
Earl J. Hesterberg | 1,150,000 | 210 | 549,120 | 7,223,963 | ||||||||
Daryl A. Kenningham | — | — | 296,192 | 3,881,688 | ||||||||
John C. Rickel | — | 210 | 645,528 | 8,464,076 | ||||||||
Frank Grese, Jr. | 615,438 | — | 314,178 | 4,263,458 | ||||||||
Peter C. DeLongchamps | 69,354 | — | 135,316 | 1,772,610 |
Name | Executive Contributions in Last FY1 ($) | Aggregate Earnings in Last FY2 ($) | Aggregate Balance at Last FYE3 ($) | |||||||||
Earl J. Hesterberg | — | 1,043,265 | 13,809,565 | |||||||||
Daryl A. Kenningham | — | 425,470 | 5,552,241 | |||||||||
Daniel McHenry | 127,938 | 1,073 | 129,011 | |||||||||
Frank Grese, Jr. | — | 462,891 | 6,061,279 | |||||||||
Peter C. DeLongchamps | 34,214 | 177,413 | 2,324,689 |
Reported as compensation to the named executive officer in the Summary Compensation Table for |
The following portions of the aggregate earnings in the last fiscal year were reported in the |
![]() | Proxy Statement 2022 | 54 |
Proxy Statement 2022 | 55
3 | The following portions of the aggregate balance amounts for each of the following named executive officers were reported as compensation to the officer in the Summary Compensation Table in previous years: |
Earl J. Hesterberg ($) | Daryl A. Kenningham ($) | John C. Rickel ($) | Frank Grese, Jr. ($) | Peter C. DeLongchamps ($) | ||||||||||||||||
2017 | 340,083 | 451,707 | 466,814 | 443,250 | 13,689 | |||||||||||||||
2016 | 847,000 | — | 904,425 | 321,300 | 82,134 | |||||||||||||||
2015 | 924,000 | — | 636,015 | — | 82,134 | |||||||||||||||
2014 | 375,000 | — | 560,835 | — | 86,450 | |||||||||||||||
2013 | 66,667 | — | 385,000 | — | 44,400 | |||||||||||||||
2012 | 125,000 | — | 215,938 | — | 62,550 | |||||||||||||||
2011 | 100,000 | — | 462,000 | — | 25,120 | |||||||||||||||
2010 | — | — | 465,750 | — | — | |||||||||||||||
2009 | 500,000 | — | 561,630 | — | — | |||||||||||||||
2008 | 37,159 | — | 11,300 | — | — | |||||||||||||||
2007 | 39,509 | — | 7,852 | — | — | |||||||||||||||
2006 | 25,465 | — | 1,235 | — | — | |||||||||||||||
2005 | 12,019 | — | — | — | — |
Earl J. Hesterberg ($) | Daryl A. Kenningham ($) | Daniel McHenry ($) | Frank Grese, Jr. ($) | Peter C. DeLongchamps ($) | ||||||||||||||||
2020 | 1,972,530 | 806,776 | — | 473,581 | 86,363 | |||||||||||||||
2019 | 1,850,833 | 164,068 | — | 197,769 | 92,740 | |||||||||||||||
2018 | 1,487,607 | 181,560 | — | 808,644 | 151,699 | |||||||||||||||
2017 | 622,403 | 621,360 | — | 614,089 | 95,928 | |||||||||||||||
2016 | 1,084,057 | — | — | 450,932 | 148,501 | |||||||||||||||
2015 | 1,094,001 | — | — | — | 137,899 | |||||||||||||||
2014 | 494,519 | — | — | — | 127,009 | |||||||||||||||
2013 | 202,527 | — | — | — | 89,271 | |||||||||||||||
2012 | 233,611 | — | — | — | 97,419 | |||||||||||||||
2011 | 178,285 | — | — | — | — | |||||||||||||||
2010 | — | — | — | — | — | |||||||||||||||
2009 | 500,000 | — | — | — | — | |||||||||||||||
2008 | 147,159 | — | — | — | — | |||||||||||||||
2007 | 179,235 | — | — | — | — | |||||||||||||||
2006 | 525,465 | — | — | — | — | |||||||||||||||
2005 | 205,240 | — | — | — | — |
Pursuant to the Deferred Compensation Plan, certain corporate officers, including named executive officers, may defer up to 50% of their base salary and up to 100% of their incentive compensation. Deferral elections are to be made no later than the last day of the calendar year immediately preceding the calendar year in which such compensation is earned. Atearned, or the plan administrative committee’s discretion, deferral elections with respect to certain performance-based compensation may be made not later than six months prior to the endfirst day of the performance period in which such compensation is earned. In addition, for eachnext calendar year, we contribute an amount on behalf of each executive equal toquarter where the amount ofemployee becomes eligible during the employer match the executive forfeited under the 401(k) Savings Plan in order for the 401(k) Savings Plan to comply with the nondiscrimination requirements of the Internal Revenue Code.calendar year. Currently, 100% of each named executive officer’s account is vested. We may also make discretionary credits to an officer’s account from time to time, which credits will be subject to a vesting schedule established by us at the time of such credit. We did not make any discretionary contribution credits during the 20172019, 2020 or 2018 year. If no vesting schedule is established, the officer will be vested in a percentage of the discretionary employer deferral equal to the officer’s vested interest in his “employer contribution account” under the 401(k) Savings Plan. If we undergo a corporate change, the officer will become fully vested in his account under the Deferred Compensation Plan.2021 calendar years.
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Benefits under the Deferred Compensation Plan will be paid no earlier than upon the executive’s termination of service, or, for deferrals made prior to January 1, 2021, upon a certain date elected by the officer. Benefits will be paid, at the participant’s election, in a lump sum or in annual installments, although all distributions will be paid in cash. Payments upon an executive’s termination of service may be delayed for six months to the extent necessary to comply with the requirements of Section 409A of the Internal Revenue Code. Except in the event of unforeseeable financial emergencies, effective January 1, 2021, in-service withdrawals are generally not permitted in the Deferred Compensation Plan, although the necessary portion of a participant’s vested account balance may be distributed in order to satisfy certain employment, federal or state taxes. An unforeseeable financial emergency shall allow a participant to access vested funds in his accounts upon the occurrence of: (1) a severe financial hardship of the participant that results from an illness or accident of the participant, or the participant’s beneficiary, spouse or dependent; (2) loss of the participant’s or the beneficiary’s property due to casualty; or (3) a similar extraordinary and unforeseeable circumstance as described in Section 409A of the Internal Revenue Code arising as a result of events beyond the participant’s control.
Effective January 1, 2021, an annual contribution limit of $300,000 was implemented for all employee deferrals with an employee lifetime maximum contribution amount of $3.5 million.
Deferred amounts will be deemed to be notionally invested in such fund as the participants shall designate. Most of the funds are also available in the Group 1 401(k) Savings Plan except foreither the Group 1 Guaranteed Crediting Rate investment option which is the default investment option and only available in the Deferred Compensation Plan.or a money market fund. The Group 1 Guaranteed Crediting Rate investment option is a declared interest rate, which is set by the Committee annually. The deferredannually, and was set by the Committee at 8.0% for 2021.
Deferred Compensation Plan Changes for Fiscal 2022
In November 2021, the CHR Committee reviewed a market analysis prepared by PM&P. Following extensive discussion between management, the CHR Committee and PM&P, the CHR Committee set the declared interest rate for 2018 was setthe Deferred Compensation Plan at 8.0%.6.5% for 2022. The 2022 rate reflects current interest rate changes and the Company’s cost of capital.
Potential Payments upon Termination or Change in Control
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
We believe providing certain senior corporate officers with severance payments and accelerated vesting of equity awards in certain circumstances are important retention tools. In addition, we believe that providing for double-trigger“double-trigger” (defined below) payments and equity award vesting to certain key executives in connection with a change in corporate control“corporate change” helps maximize stockholdershareholder value by encouraging our executives to objectively review any proposed transaction, whether or not that executive will continue to be employed. A “double-trigger” payment or benefit becomes due in the event of a qualifying event such as an involuntary termination of employment without “cause” or a termination of employment with “good reason” in connection with a corporate change. Executive officers at other companies in the general market against which we compete for executive talent commonly have equity compensation plans that provide for accelerated vesting upon a corporate change and post-termination payments, and we have consistently provided this benefit to certain senior corporate officers in order to remain competitive in attracting and retaining skilled professionals.
The discussionDisclosed below disclosesis the amount of compensation and/or other benefits that would be payable to each of our named executive officers in the event of termination of their employment under the following scenarios: death, disability, with and without cause, for certain constructive termination events, andin each case, following a corporate change. AllThese potential payments to the named executive officers upon termination of their employment or upon a corporate change that could have occurred on December 31, 2018 are governed by the 2014 Long Term Incentive Plan and the 2007 Long Term Incentive Plan pursuant to which various equity incentive awards were issued and, with respect to Messrs. Hesterberg, Kenningham, and Rickel,McHenry, the terms of employment agreements as described below.or other individual written arrangements. None of our named executive officers is entitled to an excise tax gross-up payment. For additional information regarding the employment agreements, see “2018“2021 Compensation Discussion and Analysis — Employment Agreements, Severance Benefits and Change in Control Provisions.”
Employment And Severance Agreements
EMPLOYMENT AGREEMENTS
We maintained employment agreements with Messrs. Hesterberg and Rickel during 2018. EachMr.Hesterberg’s Employment Agreement. Mr. Hesterberg’s agreement (the “Employment Agreement”) provides that in the event the executive is terminated due to an Involuntary Termination or the executive terminates his employment following a Constructive Termination Event, the executive will be entitled to the following:
a lump sum payment equal to the executive’s base salary divided by 12 and multiplied by a severance multiplier. The “severance multiplier” in the case of Mr. Hesterberg, is 12 months or the remaining months in the term of the employment agreement. The payment will be made on the first day of the seventh month following the termination of employment;
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a pro rata bonus calculated in accordance with our Annual Incentive Compensation Plan, paid in a single lump sum payment at the later of (1) the first day of the seventh month following the executive’s separation from service, or (2) March 15thof the year following the release of earnings for the year in which the separation of service occurred; | |
immediate vesting of all unvested restricted stock awards or stock options, which will be exercisable as if the executive had continued to be employed by the Company for the full term of his employment agreement; and
the use of a demonstrator vehicle for a period of six months.
In the event that the executive terminates employment following an involuntary reduction of his salary or incentive compensation targets within six months after a Corporate Change, the executive will be entitled to the same payments and benefits as described in the first three bullets above, except the severance multiplier will be 30 months. Each agreement further provides that if the executive’s employment is terminated due to Death or Disability, then the executive is entitled to:
his pro rata salary through the date of such termination and a pro rata bonus (based on his termination date), calculated in accordance with our Annual Incentive Compensation Plan, paid in a single lump sum payment at
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Proxy Statement 2022 | 57
the later of (1) the first day of the seventh month following the executive’s separation from service, or (2) March 15thof the year following the release of earnings for the year in which the separation of service occurred; |
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immediate vesting of all unvested restricted stock awards or stock options, which will be exercisable as if the executive had continued to be employed by us for the full term of his employment agreement; and
in the case of Disability, the use of a demonstrator vehicle for a period of six months, or in the event of the executive’s Death, the use of the vehicle would go to the surviving spouse, if any, for a period of twelve months.
Mr. Hesterberg’s agreement also provides that if he resigns at any time after May 18, 2018, all unvested equity awards held by Mr. Hesterberg will vest upon satisfaction of certain post-termination employment obligations set forth in his non-compete agreement (discussed below); provided, however, that beginning with the awards granted in 2018, any restricted stock awarded to the executive must have been granted at least six months prior to the date the executive provides notification of his intent to terminate his employment due to qualified retirement, and at least six months prior to his effective retirement date to be eligible for vesting as provided above. In addition, if Mr. Hesterberg’s employment is terminated for any reason, other than cause, after May 18, 2018, he will receive his pro rata bonus through the date of his termination, calculated in accordance with the annual incentive compensation plan and paid in a single lump sum payment.
In the event of a termination by the Company for Cause or a Voluntary Termination by the executive, all compensation and benefits will cease as of the respective date of termination. In these circumstances, the named executive officers would only receive base salary earned but not yet paid.
The employment agreements contain a covenant that the executives will not sue or lodge any claim against usthe Company based upon an Involuntary Termination for any payments in addition to those described above. In the event that the executive breaches this covenant, we will be entitled to recover from that executive all sums we or any of our subsidiaries or affiliates have expended in relation to such action. We will also be entitled to offset any amounts expended in relation to defending such claim against any amounts owed to the executive prior to a final determination of the arbitration provisions provided for in the employment agreement.
The executives haveMr. Hesterberg has agreed not to disclose, during or at any time after their employment with us, any of our confidential information or trade secrets. The executivesexecutive will return all proprietary materials, and all copies thereof, to usthe Company upon a termination of employment for any reason, and all copyrighted works that the executive may have created during his employment relating to usthe Company or our business in any manner shall remain our property.
Mr.Kenningham’s Incentive Compensation, Confidentiality, Non-Disclosure and Non-Compete Agreement. The Incentive Agreement provides for certain potential severance payments and includes customary restrictive covenants. In the event that Mr. Kenningham is terminated by the Company without Cause or incurs an Involuntary Termination (generally defined as a termination by Mr. Kenningham due to the Company breaching any material provision of the Incentive Agreement, a Constructive Termination Event, or an involuntary reduction in his base salary or incentive compensation targets (other than a reduction in such target that is applied consistently to other executive officers to reflect changes in relative EPS projections as a result of such Corporate Change) within six months following a “Corporate Change” that is not cured by the Company within 30 days of written notice from Mr. Kenningham), the Company shall pay to Mr. Kenningham a cash payment equal to one year of base salary at the most recent rate of pay, subject to Mr. Kenningham’s compliance with certain restrictive covenants within the Incentive Agreement and Mr. Kenningham’s execution of a general release in the Company’s favor; in addition, upon such a qualifying termination, Mr. Kenningham shall also be entitled to accelerated vesting of outstanding restricted stock awards, which is conditioned upon his compliance with the terms of such awards, and a pro-rated bonus calculated in accordance with the Company’s annual incentive compensation plan. In the event that Mr. Kenningham incurs a Disability, he shall be paid his regular salary in effect at the start of such Disability up to the first 120-day period of his Disability.
TheseMr.McHenry’s Retention and Severance Agreement. The Retention Agreement provides for certain potential severance payments and includes customary restrictive covenants. In the event that Mr. McHenry incurs a “Qualifying Termination” (generally defined as a termination without Cause or due to Mr. McHenry’s death or Disability), the Company shall pay to Mr. McHenry a cash payment equal to the average annual base salary that
Mr. McHenry received over the 24-month period immediately preceding the date of the applicable termination, subject to Mr. McHenry’s compliance with certain restrictive covenants within the Retention Agreement and upon Mr. McHenry’s execution of a general release in the Company’s favor.
As used in the above-described agreements generally containfor Messrs. Hesterberg, Kenningham and McHenry, as applicable, the following terms except where noted otherwiseshall generally have the meaning provided below, and the following provisions thatwhich could impact the amount of compensation that the executives receiveexecutive receives at or following theirhis separation from service from us:
“Cause” shall mean, for purposes of the Employment Agreement and the Retention Agreement, any of the following: (1) conviction or plea of nolo contendere to a felony or a crime involving moral turpitude; (2) breach of any material provision of either an agreement with us or our Code of Conduct or certain other material policies; (3) the use, for his own benefit, of any confidential or proprietary information of ours, or willfully divulging for his benefit such information; (4) fraud or misappropriation or theft of any of our funds or property; (5) willful refusal to perform his duties; or (6) gross negligence; provided, however, that we, before terminating the executive under (2), (5), or (6) must first give written notice to him of the nature of the alleged breach or refusal and must provide him with a period of time (15-20 days) to correct the problem, unless correction is inherently impossible.
“Cause” shall mean, for purposes of the Incentive Agreement, any of the following: (1) indictment or conviction of any felony or any crime involving dishonesty, (2) participation in any fraud or act of dishonesty against the Company, (3) a violation of any Company policy that causes a material detriment to the Company, (4) a breach of the executive’s duties to the Company, including but not limited to unsatisfactory performance of job duties that is not corrected within 30 days after written notice, (5) intentional damage to any property of the Company, (6) conduct by the executive that demonstrates gross unfitness to serve, and (7) a material breach of the Incentive Agreement.
“Corporate Change” shall mean 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 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.
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GROUP 1 AUTOMOTIVE 2014 LONG TERM INCENTIVE PLAN
Proxy Statement 2022 | 59
The“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 Plan provides that, upon
Upon the occurrence of a Corporate Change, the CompensationCHR Committee may fully vest any restricted stock awards then outstanding and, upon such vesting, all restrictions applicable to the restricted stock will terminate. Further, the 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, constitutes a change inor the ownershipparticipant’s award is not assumed or effective control of us or of a substantial portion of our assets, withinconverted by the meaning of Section 409A ofcontrolling entity following the Code, the Compensation Committee may require the mandatory surrender of phantom stock awards upon payment of the maximum value of such awards to their holders.Corporate Change.
The 2014 Long Term Incentive Plan provides that aA Corporate Change occurs if (1) we are dissolved and liquidated; (2) if we are not the surviving entity in any merger or consolidation (or we survive only as a subsidiary of an entity); (3) if 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.
Our named executive officers do not currently, and at December 31, 20182021 did not, hold any unvested stock options, or phantom stock awards, and therefore there are no amounts to report with respect to acceleration of stock option awards or payment of phantom stock awards by the CompensationCHR Committee in connection with a Corporate Change.
The award agreements for restricted stock under the Company’s 2014 Long Term Incentive Plan also establish vesting provisions applicable to termination of employment. The award agreement for all grants of restricted stock to our named executive officers, provides for accelerated vesting if the named executive officer’s employment is terminated due to death or disability. The award agreements also provide for accelerated vesting in the case of death or disability and induring the case oftwo-year period following a qualified retirement. A “qualified retirement” iswith respect to the 2021 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 non-compete and certain non-disclosure covenants. A “qualified retirement” with respect to awards granted prior to 2021 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 non-compete and certain non-disclosure covenants. Additionally, awards granted during the year employment is terminated will vest, provided the executive received such award at least six months prior to termination.
NON-COMPETITION AGREEMENTSThe performance share agreements for our named executive officers provides that upon a named executive’s officer’s termination due to death or disability, the performance shares will pay out following the performance period based on actual performance. If a named executive officer’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’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 2021 performance shares were also granted with a Maximum Value limitation. For performance share awards granted prior to 2021, a similar maximum value limitation applied, but that limitation applied to both TSR 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
Along with their respective employment agreements, Mr. Hesterberg has entered into a Non-Compete Agreement and Mr. Rickel hasMessrs. Kenningham and McHenry have entered into an Incentive Compensation and Non-Compete Agreement with us,the Company, each of which provide that for a period of two years following the executive’s termination of employment, the executive will not compete with usthe 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. RickelMcHenry 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 his Incentive Agreement.
Messrs. Hesterberg and Grese are eligible for a “qualified retirement”, as previously described under “2018“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, RickelMcHenry and DeLongchamps currently arewere not eligible for a qualified retirement.retirement as of December 31, 2021.
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Termination and Change in Control Tables for 2018
TERMINATION AND CHANGE IN CONTROL TABLES FOR 2021
The following tables summarizepresent for each named executive officer, the compensationestimated payments and other benefits that would have becomebeen payable to each named executive officer assuming hisas of the end of 2021 in the event of a termination of employment and a Corporate Change, as narratively described above.
These estimated amounts have been calculated as if the individual’s employment had been terminated, for the reasons specified below onor a Corporate Change had occurred, as of December 31, 2018, given, if applicable,2021, the named executive officer’s base salary aslast business day of that date2021, and theusing a closing price of the Company’s common stock on December 31, 2018 (the last trading day of the year),2021 which was $52.72. In addition,$195.22. The equity award calculations in the following tables summarizetable below do not include performance shares because the compensation that would become payable to Messrs. Hesterberg and Rickel assuming that a Corporate Change of the Company coupled with an involuntary reduction of his salary or incentive compensation target had occurred on December 31, 2018.performance period has not been fulfilled.
Earl J. Hesterberg | Involuntary Termination ($) | Constructive Termination ($) | Corporate Change ($) | Death and Disability ($) | Involuntary Termination ($) | Constructive Termination ($) | Corporate Change1 ($) | Death and Disability ($) | ||||||||||||||||||||||||
Salary and Bonus | 2,587,500 | 2,587,500 | 4,312,500 | 1,437,500 | 3,720,000 | 3,720,000 | 5,580,000 | 2,480,000 | ||||||||||||||||||||||||
Equity Compensation(1) | 6,158,276 | 6,158,276 | 6,158,276 | 6,158,276 | ||||||||||||||||||||||||||||
Equity Compensation2 | 18,977,141 | 18,977,141 | 18,977,141 | 18,977,141 | ||||||||||||||||||||||||||||
Use of Vehicle | 8,743 | 8,743 | 8,743 | 17,486 | 17,574 | 17,574 | 17,574 | 35,148 | ||||||||||||||||||||||||
TOTAL | 8,754,519 | 8,754,519 | 10,479,519 | 7,613,262 | 22,714,715 | 22,714,715 | 24,574,715 | 21,492,289 | ||||||||||||||||||||||||
Daryl A. Kenningham | Involuntary Termination ($) | 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 ($) | ||||||||||||||||||||||||||||
Salary and Bonus | 475,159 | 3 | — | — | 475,159 | |||||||||||||||||||||||||||
Equity Compensation | — | — | 2,315,504 | 2,315,504 | ||||||||||||||||||||||||||||
TOTAL | 475,159 | — | 2,315,504 | 2,790,663 |
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Proxy Statement 2022 | 61
Frank Grese, Jr. | Involuntary Termination ($) | Constructive Termination ($) | Corporate Change1 ($) | Death and Disability ($) | ||||||||||||
Equity Compensation2 | — | — | 3,711,913 | 3,711,913 | ||||||||||||
TOTAL | — | — | 3,711,913 | 3,711,913 | ||||||||||||
Peter C. DeLongchamps | Involuntary Termination ($) | Constructive Termination ($) | Corporate Change1 ($) | Death and Disability ($) | ||||||||||||
Equity Compensation | — | — | 3,752,324 | 3,752,324 | ||||||||||||
TOTAL | — | — | 3,752,324 | 3,752,324 |
1 | For Messrs. Hesterberg and Kenningham, the amounts in this column reflect the |
Daryl A. Kenningham | Involuntary Termination ($) | Constructive Termination ($) | Corporate Change(2) ($) | Death and Disability ($) | ||||||||||||
Equity Compensation(1) | — | — | 1,806,451 | 1,806,451 | ||||||||||||
TOTAL | — | — | 1,806,451 | 1,806,451 |
John C. Rickel | Involuntary Termination ($) | Constructive Termination ($) | Corporate Change ($) | Death and Disability ($) | ||||||||||||
Salary and Bonus | 1,289,355 | 1,289,355 | 2,188,905 | 689,655 | ||||||||||||
Equity Compensation(1) | 2,098,783 | 2,098,783 | 2,098,783 | 2,098,783 | ||||||||||||
Use of Vehicle | 1,630 | 1,630 | 1,630 | 3,260 | ||||||||||||
TOTAL | 3,389,768 | 3,389,768 | 4,289,318 | 2,791,698 |
table.
Frank Grese, Jr. | Involuntary Termination ($) | Constructive Termination ($) | Corporate Change(2) ($) | Death and Disability ($) | ||||||||||||
Equity Compensation(1) | — | — | 1,376,519 | 1,376,519 | ||||||||||||
TOTAL | — | — | 1,376,519 | 1,376,519 |
Peter C. DeLongchamps | Involuntary Termination ($) | Constructive Termination ($) | Corporate Change(2) ($) | Death and Disability ($) | ||||||||||||
Equity Compensation(1) | — | — | 1,521,130 | 1,521,130 | ||||||||||||
TOTAL | — | — | 1,521,130 | 1,521,130 |
![]() Although Messrs. Hesterberg and Grese have attained the age for a qualified retirement, each executive would be eligible to receive unvested restricted stock only if he remained compliant with his restrictive covenants. |
3 | For Mr. McHenry, this amount only relates to a termination by the Company without Cause, or in the event of Death and Disability. |
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2018 Director Compensation Table
2021 DIRECTOR COMPENSATION TABLE
The following table sets forth a summary of the compensation we paid to our non-employee directors in 2018.2021. Directors who are our full-time employees, currently Messrs. Hesterberg and Pereira, receive no compensation for serving as directors. The only current employees serving as directors are Earl J. Hesterberg, our President and Chief Executive Officer, and Lincoln Pereira, Regional Vice President, Brazil, and Chairman of UAB. AllMr. Hesterberg’s compensation paid to Mr. Hesterberg as an employee may be found aboveis shown in the Summary Compensation Table.Table and related tables above and Mr. Pereira’s compensation is discussed in the section titled “Certain Relationships and Related Transactions.”
Name | Fees Earned or Paid in Cash ($) | Stock Awards(1)(2) ($) | All Other Compensation(3) ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings(4) ($) | Total ($) | Fees Earned or Paid in Cash1 ($) | Stock Awards2,3 ($) | All Other Compensation4 ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings5 ($) | Total ($) | |||||||||||||||||||||||||
John L. Adams | 60,052 | 189,948 | 19,853 | 142,411 | 412,264 | ||||||||||||||||||||||||||||||
Carin M. Barth | 62,211 | 189,948 | 17,600 | 1 | 269,760 | 70,021 | 199,979 | 20,000 | 11 | 290,011 | |||||||||||||||||||||||||
Steven C. Mizell6 | 37,698 | 167,598 | 16,722 | — | 222,018 | ||||||||||||||||||||||||||||||
Stephen D. Quinn | 156,552 | 189,948 | 17,600 | 132,728 | 496,828 | 158,771 | 199,979 | 20,000 | — | 378,750 | |||||||||||||||||||||||||
J. Terry Strange | 69,052 | 189,948 | 17,600 | 52,257 | 328,857 | ||||||||||||||||||||||||||||||
Steven P. Stanbrook | 45,021 | 199,979 | 20,000 | — | 265,000 | ||||||||||||||||||||||||||||||
Charles L. Szews | 46,552 | 189,948 | 17,600 | — | 254,100 | 60,021 | 199,979 | 20,000 | — | 280,000 | |||||||||||||||||||||||||
Anne Taylor(5) | 14,433 | 61,421 | 5,643 | — | 81,497 | ||||||||||||||||||||||||||||||
Max P. Watson, Jr. | 60,052 | 189,948 | 17,600 | — | 267,600 | ||||||||||||||||||||||||||||||
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 | 45,052 | 189,948 | 17,600 | 6 | 252,606 | 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. |
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, |
Our directors are offered the option of taking their annual retainer in restricted stock or restricted stock units. In |
4 | The amounts in this column reflect the |
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 | |
![]() Mr. Mizell was appointed to the Board on March 1, 2021. |
7 | Mr. Watson retired from the Board effective May 12, 2021. |
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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 20182021 compensation program:
Retainer and Meeting Fees | ($) | |||
Annual Retainer | ||||
Annual Cash Retainer | 45,000 | |||
Equity Retainer | 200,000 | |||
Additional Annual Retainers | ||||
Non-Executive | 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 | ||||
All cash retainer amounts are paid quarterly. |
The equity portion of the retainer is paid annually in restricted stock or restricted stock units valued at approximately | |
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 $190,000$200,000 at the time of the grant pursuant to the 2014 Long Term Incentive Plan. Directors canIn 2021, directors could elect whether to receive the equity retainer in restricted stock or restricted stock units. In 2018,2021, all of our then current Directorsdirectors 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 2, 20184, 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 2,6401,576 shares of restricted stock or restricted stock units in payment of the equity portion of the 20182021 annual retainer. Ms. TaylorMr. Mizell was elected to the Board on September 5, 2018.March 1, 2021. Upon herhis election, shehe received a pro rata annual retainer of 8071,069 shares of restricted stock.stock units.
Prior to 2019, the forfeiture restrictions on restricted stock lapsed fully after six months. Beginning January 1, 2019, the restrictedRestricted stock or restricted stock units granted to our directors vest immediately upon issuance. All vested restricted stock unitsawards held by a director will settle upon the retirement, death or disability of the director. TheUnder grants of restricted stock units made prior to 2019, the vested restricted stock units held by a director are settled in cash or shares of our common stock upon the termination of the director’s membership on our Board of Directors. EffectiveBeginning with grants of restricted stock units made following January 1, 2019, all restricted stock units will beare settled in cash. In the event that a director’s membership on our Board of Directors is terminated for any reason other than retirement, death or disability, the director, for no consideration, forfeits to us all of his unvested restricted stock units. Any unvested restricted stock and any restricted stock units may not be sold or otherwise transferred.
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STOCK OWNERSHIP GUIDELINES
Our Board has adopted Stock Ownership Guidelines that apply to our non-employee directors. The guidelines currently requireIn 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 own and hold 10,000maintain 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 ourthe Company’s common stock. The holding requirement was determined based on competitive stock until the Director Ownership Requirement is reestablished through open
market practice. Stock ownership levels should be achieved by eachpurchases or annual director within five yearsequity grants. Restricted stock granted to directors as part of first appointmentthe annual retainer counts toward the Director Ownership Requirement without regard to the Board.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 stock ownership requirements for non-employee directors.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
Messrs. Adams, Quinn and Strange have elected to participate inCompensation” for a more fulsome description of the Company’s Deferred Compensation Plan described in greater detail above. Theand the material changes approved under the amended and restated plan.
Prior to amending the Deferred Compensation Plan effective January 1, 2021, the plan providesprovided those directors who electelected to participate an opportunity to accumulate additional savings for retirement on a tax-deferred basis. The non-employee directors maycould defer any portion of the cash compensation (annual retainer or meeting fees) that he or she receivesreceived with respect to the services provided to our Board, including any committee services, and the director willwould 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
Deferred amounts will be deemedAs 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 be notionally invested in such fund as the participants shall designate. MostNon-Executive Chair of the funds are also availableBoard and the GCR Committee Chair. Accordingly, the Board approved an increase in the Group 1 401(k) Savings Plan exceptannual retainer for the Group 1 Guaranteed Crediting Rate investment option which isNon-Executive Chair of the default investment optionBoard from $100,000 to $135,000 and only available infor the Deferred Compensation Plan.GCR Committee Chair from $10,000 to $15,000. The Group 1 Guaranteed Crediting Rate investment option is a declared interest rate, which is set by the Compensation Committee annually. The deferred interest rate for 2018 was set at 8.0%.
Ms. Barth and Ms. Wright, while not elected plan participants, have the cash portion of a marginal share fromincreases to the annual equity retainer deferred into the Deferred Compensation Plan.retainers were approved in order to maintain market competitiveness.
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Proxy Statement 2022 | 65
SEC regulations require that we provide a comparison of the annual total compensation of Earl Hesterberg, our Chief Executive Officer in 2018,2021, to the annual total compensation of an individual identified as our median compensated employee. For purposes2021, our last completed fiscal year:
Mr. Hesterberg’s annual total compensation was $8,577,257
Our median employee’s total compensation was $54,880
The ratio of providing the comparison in accordance with SEC regulations, we identified a “median employee” and compared Mr. Hesterberg’s annual total compensation to thatour 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. For 2018,
We identified our last completed2020 median compensated employee based on our population as of December 31, 2020. We used a consistently applied compensation measure which included total gross wages using our payroll records for fiscal year:2020. We converted the amount of compensation paid to non-U.S. employees to U.S. dollars using average foreign currency exchange rates for 2020. We annualized compensation for employees hired during 2020.
The methodology that weAnnual 2021 total compensation for the identified median employee and our CEO was calculated according to the SEC rules used to identify the median employee is described below. Annual total compensation is calculated in the same manner as the amount set forth incalculate the “Total” column in the 2018 Summary Compensation Table.
We believe the pay ratio information set forth above constitutes a reasonable estimate, calculated in a manner consistent with applicable SEC regulations.
Because 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.
Date Used to Determine Employee Population –For purposes of identifying the median employee, we selected December 31, 2017 to be the date as of which we would determine our employee population.
Composition of Employee Population –We determined that, as of December 31, 2017, we had three separate employee populations - Brazil, the U.K. and the U.S., with a total of 13,077 employees globally.
Given availability of payroll data, the size, composition and global diversity of these 13,077 employees, we employed statistical sampling to assist in identification of the median employee. We stratified the employee population based on similarity of characteristics such as geography into groups. We then took the natural log of compensation data for each employee within the group. This natural log of compensation provided us with the data used in the “consistently applied compensation measure (“CACM”) discussed below. From the log normal data, we calculated median, standard deviation and variance of each group for the purposes of deriving sample sizes that fairly represented the grouping. Using this methodology, we generated a random sample of 1,838 employees. The group medians were then weighted by total group headcount relative to Group 1’s 13,077 employees to derive the median employee.
Pay Data Used – To identify the median employee, we derived compensation information from our payroll records for fiscal 2017. We used a CACM which included total taxable income, or equivalent. We converted the amount of compensation paid to non-U.S. employees to U.S. dollars using average foreign currency exchange rates for 2017. We annualized compensation for full-time employees hired during 2017.
SEC rules permit companies to identify the median paid employee once every three years as long as there has been no change in the company’s employee population or compensation arrangements that significantly impacts the pay ratio disclosure. Since 2017 we have completed several acquisitions in the U.K. The additional employees from the acquisitions are homogenously distributed in terms of level and compensation to the existing population resulting in immaterial changes in our organization. Therefore, we are employing the same methodology used last year, as described above, to identify the median employee.
Using this methodology, there were several employees whose CACM aggregated around median. For consistency purposes, we chose to use the employee who was located in the U.S. with more consistent year over year compensation for purposes of the comparison to Mr. Hesterberg’s annual total compensation.
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Certain Relationships and Related
Transactions
During fiscal year 20182021 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 below and the compensation arrangements (including with respect to equity compensation) described in “2018“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 2018,2021, as provided by Oanda. The applicable exchange rates are: R$3.655.3950 = USD$1.00.
LINCOLN PEREIRA ANDLincoln Pereira and UAB
During 20182021 we paid Lincoln Pereira, a Director of our Company, R$945,264.001,107,778.00 (USD$258,976.44)205,334.20) cash compensation for his services as our Regional Vice President, Brazil and as Chairman of our Brazilian subsidiary, UAB, and R$104,643.02158,997.90 (USD$28,669.32)29,471.34) for health insurance. Also, we paid R$472,632.00 (USD$129,488.22) as an annual Corporate Bonus regarding 2017 achievements.
Mr. Pereira’s brother, Ricardo Ribeiro da Cunha Pereira, serves as Commercial Vice President, Paraná.Honda’s General Manager. During 20182021 the Company paid Mr. Ricardo Pereira R$483,740.42706,650.55 (USD$132,531.62)130,982.49) in total compensation, consisting of R$411,932.58648,497.61 (USD$112,858.24)120,203.45) of cash compensation and R$71,807.8458,152.94 (USD$19,673.38)10,779.04) for health insurance. Also, we paid R$38,000.00 (USD$10,410.96) as an annual Corporate Bonus regarding 2017 achievements.
Mr. Pereira’s brother, Andre Ribeiro, servesserved as Commercial Operations Director.Director until his death in May 2021. During 2018,2021, the Company paid Mr. Ribeiro R$977,389.28653,320.69 (USD$267,777.88)121,097.44) in total cash compensation, and R$95,413.33228,290.92 (USD$26,104.64)42,315.28) for health insurance. Also, we paid R$471,027.84 (USD$129,048.72) as an annual Corporate Bonus regarding 2017 achievements.
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$136,543.00180,000 (USD$37,409.04)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 monthone-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 20182021 are R$1,638,516.002,387,193.40 (USD$448,908.49)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.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$16,871.0017,302.66 (USD$4,622.19)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 monthone-month prior notice. Total payments to Irene Maria Flecha de Lima in 20182021 are R$202,452.00211,512.68 (USD$55,466.30)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 20182021 are R$395,061.376,150 (USD$108.235.99)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.
UAB purchases newspaper and radio advertising space from RPC Comunicações (“RPC”), a communications group in the state of Parana owned by Therezinha Cunha Pereira, Guilherme Cunha Pereira and Ana Amelia Cunha Pereira, Mr. Pereira’s aunt and two cousins, respectively. The prices are negotiated based on a price list published by RPC. UAB’s marketing department purchases the advertising space directly from RPC without any involvement from Mr. Pereira, at or below current market rates for such services, on an “as-needed” basis. There were no payments to RPC in 2018.
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Proxy Statement 2022 | 67
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 for 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. As required under the SEC’s rules, transactionsTransactions 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 when required, and disclosed in our proxy statement.
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 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, 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 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.
We also have other policies and procedures to prevent conflicts of interest. For example, our Corporate Governance Guidelines require that our Board assess the independence of the non-management directors at least annually, including a requirement that it determine whether or not any such directors have a material relationship with us, either directly or indirectly, as defined therein and as further described under “Information about our Board and its Committees — Independence of the Members of our Board.Board Independence.”
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Security Ownership Information
Security Ownership of Certain Beneficial Owners and Management
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows the amount of our common stock beneficially owned (unless otherwise indicated) by our directors and nominees, our named executive officers, our current directors and named executive officers as a group, and any stockholdersshareholders with over 5% of our common stock. Under SEC rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares “voting power,” which includes the power to vote or to direct the voting of such security, or “investment power,” which includes the power to dispose of, or to direct the disposition of, such security. A person is also deemed to be the beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under such rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may disclaim any beneficial interest. Except as otherwise indicated, directors and named executive officers possessed sole voting and investment power with respect to all shares of common stock in the table. In addition, except as otherwise indicated, all information is as of March 19, 2019.21, 2022.
Name and Address of Beneficial Owner(1) | Aggregate Number of Shares Owned(2) | Percent of Class Outstanding(3) | ||||||
Earl J. Hesterberg | 311,132 | 1.7 | % | |||||
Daryl A. Kenningham | 61,314 | * | ||||||
John C. Rickel | 137,751 | * | ||||||
Frank Grese, Jr. | 39,951 | * | ||||||
Peter C. DeLongchamps | 52,225 | * | ||||||
John L. Adams | 68,184 | (4) | * | |||||
Carin M. Barth | 8,334 | * | ||||||
Lincoln Pereira | 253,054 | (5) | 1.4 | % | ||||
Stephen D. Quinn | 46,076 | * | ||||||
J. Terry Strange | 52,052 | * | ||||||
Charles L. Szews | 8,878 | * | ||||||
Anne Taylor | 4,370 | * | ||||||
Max P. Watson, Jr. | 59,746 | * | ||||||
MaryAnn Wright | 11,866 | * | ||||||
All Directors and Named Executive Officers as a group (14 persons) | 1,114,933 | (6) | 6.0 | % | ||||
BlackRock, Inc. 55 East 52ndStreet New York, NY 10055 | 2,700,264 | (7) | 14.6 | % | ||||
The Vanguard Group, Inc. 100 Vanguard Boulevard Malvern, PA 19355 | 1,924,769 | (8) | 10.4 | % | ||||
Dimensional Fund Advisors LP. 6300 Bee Cave Road Austin, TX 78746 | 1,667,024 | (9) | 9.0 | % | ||||
Eminence Capital, LP 399 Park Avenue, 25thFloor New York, NY 10022 | 1,118,115 | (10) | 6.1 | % | ||||
Manulife Financial Corporation 200 Bloor Street East Toronto, Ontario, Canada M4W 1E5 | 936,483 | (11) | 5.1 | % |
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 | % |
* | Represents less than 1% of the outstanding common stock. |
1 | |
Except as otherwise indicated, the mailing address of each person or entity named in the table is Group 1 Automotive, Inc., 800 Gessner, Suite 500, Houston, Texas 77024. |
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Includes restricted shares as to which the individual has voting, but not dispositive, power, as follows: Mr. Hesterberg |
3 | |
Based on total shares outstanding of |
4 | Includes 45,680 shares held by the Hesterberg Management Trust, for which Mr. Hesterberg and his spouse are co-trustees, 65,517 shares of common stock held in gift trusts for the benefit of Mr. Hesterberg’s children, for which he serves as Trustee, 4,953 shares held by Mr. Hesterberg’s spouse, and 65,517 shares held by the 2019 Family Trust for which Mr. Hesterberg’s spouse serves as Trustee. |
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Proxy Statement 2022 | 69
Includes |
6 | |
Mr. Pereira has shared voting and dispositive power with respect to |
7 | |
Includes |
8 | |
As reported on Amendment No. |
9 | |
As reported on Amendment No. |
10 | |
As reported on Amendment No. | |
Section 16(a) Beneficial Ownership Reporting Compliance
Our named 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, we believe that all reporting requirements of Section 16(a) were met, except that, on August 31, 2018, a late Form 4 was filed to report the receipt and disposition by Mr. Pereira on May 15, 2017 of shares of our common stock held in escrow for the benefit of the UAB shareholders (as further described in footnote 5 to the Beneficial Ownership Table included herein).
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Questions and Answers about the
Annual Meeting
What is the purpose of the meeting?
At our Annual Meeting, stockholders will act upon the matters outlined in the notice of meeting, including the election of nine director nominees, the advisory vote to approve executive compensation, the ratification of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2019, and the consideration of any other matters properly presented at the meeting. In addition, senior management will be available to respond to questions regarding our business and financial performance during fiscal year 2018.
Who is entitled to vote at the meeting?
WHO IS ENTITLED TO VOTE AT THE MEETING?
Only our stockholdersshareholders as of 5:00 p.m., Central Daylight SavingsSaving Time, on March 19, 201921, 2022 (the record date) are entitled to receive notice of the Annual Meeting and to vote at the meeting. On March 19, 2019,21, 2022, there were 18,475,82916,672,323 shares of Group 1 common stock issued and outstanding and entitled to vote at the meeting.
How manyA 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 may I cast?
You are entitledfor a quorum or to one vote for each share of Group 1 common stock you owned at 5:00 p.m., Central Daylight Savings Time, on March 19, 2019, on all matters presentedapprove the foregoing proposals at the meeting.time of the Annual Meeting, the Annual Meeting may be adjourned in order to permit further solicitation of proxies.
What is the difference between a stockholder of record and a beneficial owner or street name holder?
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 stockholdershareholder 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 inBOTHstreet name and as a stockholdershareholder of record,YOU MUST VOTE SEPARATELY for each position of common stock.
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How doHOW DO I vote my shares?
VOTE MY SHARES?
If you are a stockholdershareholder of record on the record date, you may vote in person atonline during the Annual Meeting or by proxy using any of the following methods:
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![]() | Online — visit the website shown on the proxy card |
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![]() | 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 |
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![]() | 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 |
If you vote by internet or telephone, do not return your proxy card. The telephone and internet voting procedures are designed to authenticate stockholders’shareholders’ identities, to allow stockholdersshareholders to give their voting instructions and to confirm that stockholders’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 atonline during the meeting, you must requesthave a ballot. For directions to thecontrol number and access our Annual Meeting visitat www.sterlingmccalllexus.comwww.virtualshareholdermeeting.com/GPI2022and click on the Hours and Map link.
.
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 bring ituse the information provided on the legal proxy to access the meeting.Annual Meeting.
![]() | Proxy Statement 2022 | 70 |
Can
Proxy Statement 2022 | 71
CAN I change my vote or revoke my proxy?
CHANGE MY VOTE OR REVOKE MY PROXY?
If you are a stockholdershareholder of record on the record date, you can revoke your proxy prior to the completion of voting atduring 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 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 atduring the Annual Meeting will not automatically revoke your proxy.
If you are a street name stockholdershareholder you must follow the instructions of your broker, bank or other nominee to revoke your voting instructions. You may also vote in person atonline 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?
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”“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 stockholdersshareholders are present atduring the Annual Meeting but fail to vote or voluntarily withhold their vote for any of the matters upon which the stockholdersshareholders are voting.
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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 | Treatment of Abstentions | Treatment of Broker Non-Votes | ||||
1 | Each nominee must receive the affirmative vote of a majority of votes cast by | 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 |
The Company’sWe have adopted a majority vote director resignation policy, requires any director nominee in an uncontested election who receives a greater number of votes “against” than votes “for” his or her election to tender his or her resignation promptly following the certification of the election results. The Nominating/Governance Committee of the Board will consider all of the relevant facts and circumstances and make a recommendation to the Board with respect to whether to accept the resignation. Within 90 days, the Boardwhich is required to take action with respect to the recommendation and to promptly disclose its decision. The director resignation policy is more fully described in “Information about Our Board of Directors and Its Committees — Directorgreater detail under “Director Resignation Policy.”
Our Board has appointed Earl J. Hesterberg, our President and Chief Executive Officer, and John C. Rickel,Daniel McHenry, our Senior Vice President and Chief Financial Officer, as the management proxy holders for the Annual Meeting. If you are a stockholdershareholder 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 stockholdersshareholders who have their shares voted by duly submitting a proxy by mail, telephone or internet, unless the stockholdershareholder appropriately specifies otherwise, the management proxy holders will vote all shares represented by such valid proxies as our Board recommends.
How does the Board recommend I vote?
Our Board of Directors recommends that you vote your shares“FOR” each of the director nominees;“FOR” the approval, on a non-binding advisory basis, of our executive compensation; and“FOR” the ratification of the appointment of Ernst & Young as our independent registered public accounting firm for 2019.
What is a quorum?
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 atduring the Annual Meeting. Our independent inspector of election, Broadridge Financial Solutions, 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 atduring the Annual Meeting.
If less than a quorum is represented at the meeting, the chairmanChair of the meeting or a majority of the shares so represented may adjourn the meeting from time to time without further notice, and the persons named as proxies will vote the proxies they have been authorized atduring the Annual Meeting in favor of such an adjournment.
In the event a quorum is present atduring 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 stockholdershareholder 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 stockholdersshareholders withdraw such that the meeting is left with less than a quorum, the remaining stockholdersshareholders present atduring the meeting may continue to transact business until the meeting is adjourned or recessed.
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Who will bear the cost of soliciting votes for the Annual Meeting?
WHO WILL BEAR THE COST OF SOLICITING VOTES FOR THE ANNUAL MEETING?
We have engaged Alliance Advisors to assist with the solicitation of proxies for a fee not to exceed $5,500,$6,000, 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?
WHO WILL COUNT THE VOTES?
We have engaged Broadridge Financial Solutions to tabulate the votes and to serve as inspector of election atduring the Annual Meeting for a fee of approximately $3,500. Broadridge 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.
May I propose actions for consideration at next year’s Annual Meeting of Stockholders or nominate individuals to serve as directors?
You may submit proposals for consideration at future stockholder meetings, including director nominations. Please read “Stockholder Proposals for 2020 Annual Meeting” for information regarding the submission of stockholder proposals and director nominations for consideration at next year’s Annual Meeting.
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Proxy Statement 2022 | 73
StockholderShareholder Proposals for 2020 2023
Annual Meeting
Pursuant to the various rules promulgated by the SEC, stockholdersshareholders interested in submitting a proposal for inclusion in our proxy materials and for presentation at the 20202023 Annual Meeting of StockholdersShareholders 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, stockholdershareholder proposals must be received by our Corporate Secretary no later than December 13, 20192022 and meet the requirements of Rule 14a-8. No stockholdershareholder 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 Stockholders,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 stockholdershareholder entitled to vote and who complies with the notice procedures set forth in our Bylaws. Subject to the exception described below, a stockholdershareholder making a nomination for election to our Board or a proposal of business for the 20202023 Annual Meeting of StockholdersShareholders 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 20192022 Annual Meeting of Stockholders.Shareholders. In other words, for a stockholdershareholder nomination for election to our Board or a proposal of business to be considered at the 20202023 Annual Meeting of Stockholders,Shareholders, it should be properly submitted to our Corporate Secretary no earlier than the close of business January 17, 202018, 2023 and no later than the close of business February 16, 2020.17, 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 stockholdershareholder 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 10thday 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 stockholder’sshareholder’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 10thday following the day on which the public announcement is first made.
For each individual that a stockholdershareholder proposes to nominate as a director or propose other business (other than through Rule 14a-8) at the 20202023 Annual Meeting, the stockholder’sshareholder’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 Nominating/GovernanceGCR Committee may request additional information from the nominee or the stockholder.shareholder.
A copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018,2021, 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.
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We may send a single set of proxy materials, as applicable, and other stockholdershareholder communications to any household at which two or more stockholdersshareholders with the same last name reside, unless we have received contrary instructions from those stockholders.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 stockholdershareholder communications may be householded based on your prior express or implied consent. StockholdersShareholders 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 stockholdershareholder 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 1-800-542-1061 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 stockholders)shareholders) sharing an address who are receiving multiple copies of the proxy materials, and other stockholdershareholder 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 of such materials be mailed to all stockholdersshareholders 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.
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 atduring 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 stockholdershareholder 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
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![]() | Proxy Statement 2022 | 74 |
Proxy Statement 2022 | 75
Appendix A — Non-GAAP Financial
Measures
In addition to reporting our financial information in our Annual Report on Form 10-K using U.S. Generally Accepted Accounting Principles (“GAAP”), certain non-GAAP financial measures are used with respect to our annual incentive compensation and to evaluate the Company’s financial performance. Such non-GAAP financial measures include (i) adjusted operating cash flow, (ii) adjusted EPS, and (iii) adjusted net income, each of which are described further below. The Company does not intend for the information to be considered in isolation or as a substitute for the related GAAP financial measures. Other companies may define and calculate the measures differently than we do, limiting the usefulness of the measures for comparison with other companies.
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 — 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 | ||||||||||||||||||||||||||||
SG&A expenses | $ | 1,477.2 | $ | — | $ | (2.8 | ) | $ | 4.4 | $ | (13.4 | ) | $ | 5.3 | $ | — | $ | — | $ | 1,470.7 | ||||||||||||||||
Asset impairments | $ | 1.7 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (1.7 | ) | $ | — | $ | — | |||||||||||||||||
Income (loss) from operations | $ | 884.4 | $ | — | $ | 2.8 | $ | (4.4 | ) | $ | 13.4 | $ | (5.3 | ) | $ | 1.7 | $ | — | $ | 892.6 | ||||||||||||||||
Floorplan interest expense | $ | 27.6 | $ | (4.8 | ) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 22.9 | |||||||||||||||||
Income (loss) before income taxes | $ | 800.9 | $ | 4.8 | $ | 2.8 | $ | (4.4 | ) | $ | 13.4 | $ | (5.3 | ) | $ | 1.7 | $ | — | $ | 813.9 | ||||||||||||||||
Less: Provision (benefit) for income taxes | 175.5 | 1.1 | 0.6 | (1.0 | ) | 3.0 | (1.2 | ) | 0.4 | 1.9 | 180.3 | |||||||||||||||||||||||||
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Net income (loss) from continuing operations | 625.4 | 3.7 | 2.2 | (3.4 | ) | 10.5 | (4.2 | ) | 1.3 | (1.9 | ) | 633.7 | ||||||||||||||||||||||||
Less: Earnings (loss) allocated to participating securities | 21.0 | 0.1 | 0.1 | (0.1 | ) | 0.4 | (0.1 | ) | — | (0.1 | ) | 21.3 | ||||||||||||||||||||||||
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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 | |||||||||||||||
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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 | |||||||||||||||
Effective tax rate | 21.9 | % | 22.1 | % | ||||||||||||||||||||||||||||||||
SG&A as % gross profit1 | 60.5 | % | 60.3 | % | ||||||||||||||||||||||||||||||||
Operating margin2 | 6.6 | % | 6.6 | % | ||||||||||||||||||||||||||||||||
Pretax margin3 | 5.9 | % | 6.0 | % | ||||||||||||||||||||||||||||||||
Same Store SG&A expenses | $ | 1,415.9 | $ | — | $ | (2.8 | ) | $ | 2.1 | $ | (13.4 | ) | $ | 5.3 | $ | — | $ | — | $ | 1,407.1 | ||||||||||||||||
Same Store SG&A as % | 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 | % |
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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 | ||||||||
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Net (loss) income from discontinued operations available to diluted common shares | $ | (70.9 | ) | $ | 79.1 | $ | 8.2 | |||||
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Net income | $ | 552.1 | $ | 90.0 | $ | 642.1 | ||||||
Less: earnings allocated to participating securities | 18.5 | 3.0 | 21.6 | |||||||||
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Net income available to diluted common shares | $ | 533.6 | $ | 87.0 | $ | 620.6 | ||||||
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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 | |||||||||
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Diluted earnings per common share | $ | 30.11 | $ | 4.91 | $ | 35.02 | ||||||
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Adjusted SG&A as % of gross profit excludes the impact of SG&A reconciling items above. |
2 | Adjusted operating margin excludes the impact of SG&A reconciling items above and asset impairment charges. |
3 | Adjusted pretax margin excludes the impact of SG&A reconciling items above, asset impairment charges and a loss on interest rate swaps. |
RECONCILIATION OF CERTAIN NON-GAAP FINANCIAL MEASURES — 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 | Asset impairments | Loss on extinguishment of debt | Non-GAAP adjusted | |||||||||||||||||||||||||
SG&A expenses | $ | 1,138.2 | $ | 5.3 | $ | (1.2 | ) | $ | 2.7 | $ | (10.6 | ) | $ | — | $ | — | $ | 1,134.5 | ||||||||||||||
Asset impairments | $ | 26.7 | $ | — | $ | — | $ | — | $ | — | $ | (26.7 | ) | $ | — | $ | — | |||||||||||||||
Income (loss) from operations | $ | 495.7 | $ | (5.3 | ) | $ | 1.2 | $ | (2.7 | ) | $ | 10.6 | $ | 26.7 | $ | — | $ | 526.1 | ||||||||||||||
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 | ||||||||||||||
Less: Provision (benefit) for income taxes | 84.2 | (1.1 | ) | 0.2 | (0.6 | ) | 0.8 | 5.5 | 3.0 | 92.0 | ||||||||||||||||||||||
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Net income (loss) from continuing operations | 296.7 | (4.2 | ) | 1.0 | (2.1 | ) | 9.7 | 21.2 | 10.7 | 333.0 | ||||||||||||||||||||||
Less: Earnings (loss) allocated to participating securities | 10.6 | (0.2 | ) | — | (0.1 | ) | 0.3 | 0.8 | 0.4 | 11.9 | ||||||||||||||||||||||
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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 | ||||||||||||||
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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 | ||||||||||||||
Effective tax rate | 22.1 | % | 21.6 | % | ||||||||||||||||||||||||||||
SG&A as % gross profit1 | 65.6 | % | 65.4 | % | ||||||||||||||||||||||||||||
Operating margin2 | 4.7 | % | 5.0 | % | ||||||||||||||||||||||||||||
Pretax margin3 | 3.6 | % | 4.0 | % | ||||||||||||||||||||||||||||
Same Store SG&A expenses | $ | 1,123.3 | $ | — | $ | (1.2 | ) | $ | 2.7 | $ | (10.6 | ) | $ | — | $ | — | $ | 1,114.2 | ||||||||||||||
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 | % |
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 | — | ||||||||
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Net (loss) income from discontinued operations available to diluted common shares | $ | (9.8 | ) | $ | 10.4 | $ | 0.6 | |||||
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Net income | $ | 286.5 | $ | 47.1 | $ | 333.5 | ||||||
Less: earnings allocated to participating securities | 10.3 | 1.7 | 12.0 | |||||||||
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Net income available to diluted common shares | $ | 276.2 | $ | 45.4 | $ | 321.6 | ||||||
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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 | |||||||||
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Diluted earnings per common share | $ | 15.51 | $ | 2.55 | $ | 18.06 | ||||||
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1 | Adjusted SG&A as % of gross profit excludes the impact of SG&A reconciling items above. |
2 | Adjusted operating margin excludes the impact of SG&A reconciling items above and asset impairment charges. |
3 | Adjusted pretax margin excludes the impact of SG&A reconciling items above, asset impairment charges and a loss on extinguishment of debt. |
The following table reconciles cash flows on a GAAP basis to the corresponding adjusted amounts (in millions):
Years Ended | ||||||||
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 | |||||
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Adjusted net cash provided by operating activities | $ | 755.5 | $ | 503.7 | ||||
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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 | ) | ||||
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Adjusted net cash used in investing activities | $ | (1,120.8 | ) | $ | (83.3 | ) | ||
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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 | ||||||
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Adjusted net cash provided by (used in) financing activities | $ | 299.2 | $ | (357.8 | ) | |||
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![]() | Proxy Statement 2022 | 78 |
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 delivery 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. |
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. | ||||||||||||||||||||||||||||||
The Board of Directors recommends you vote FOR the following: | ||||||||||||||||||||||||||||||||||
☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||||
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 of the appointment of Deloitte & Touche LLP 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. | ||||||||||||||||||||||||||||||||||
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 |
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 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — |
![]() | 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 |