0001158449-20-000081.txt : 20200402 0001158449-20-000081.hdr.sgml : 20200402 20200402160626 ACCESSION NUMBER: 0001158449-20-000081 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 33 CONFORMED PERIOD OF REPORT: 20191228 FILED AS OF DATE: 20200402 DATE AS OF CHANGE: 20200402 EFFECTIVENESS DATE: 20200402 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ADVANCE AUTO PARTS INC CENTRAL INDEX KEY: 0001158449 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-AUTO & HOME SUPPLY STORES [5531] IRS NUMBER: 542049910 STATE OF INCORPORATION: DE FISCAL YEAR END: 1228 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-16797 FILM NUMBER: 20768968 BUSINESS ADDRESS: STREET 1: 2635 EAST MILLBROOK ROAD CITY: RALEIGH STATE: NC ZIP: 27604 BUSINESS PHONE: 5403624911 MAIL ADDRESS: STREET 1: 5008 AIRPORT ROAD CITY: ROANOKE STATE: VA ZIP: 24012 DEF 14A 1 aap_proxyx2020filingdef14a.htm DEF 14A Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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ADVANCE AUTO PARTS, INC.
(Name of Registrant as Specified in its Charter)
 
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ADVANCE AUTO PARTS, INC.
2635 EAST MILLBROOK ROAD
RALEIGH, NORTH CAROLINA 27604
Notice of 2020 Annual Meeting of Stockholders of
Advance Auto Parts, Inc. (the "Company")

Logistics
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DATE AND TIME
 
PLACE
 
RECORD DATE
Friday, May 15, 2020
at 8:30 a.m. Eastern Daylight Time
 
www.virtualshareholdermeeting.com/AAP2020
There will be no physical location for this year's meeting.
 
Holders of record of our common stock at
the close of business on March 18, 2020, are
entitled to vote at our Annual Meeting.
Voting Items
 
 
 
Board Recommendation
1
Election of the nine nominees named in the Proxy Statement to the Board of Directors ("Board") to serve until the 2021 annual meeting of stockholders
 
FOR
each director nominee
2
Advisory vote to approve the compensation of the Company’s named executive officers
 
FOR
3
Ratification of the appointment by the Audit Committee of Deloitte & Touche LLP ("Deloitte") as the Company’s independent registered public accounting firm for 2020
 
FOR
4
Advisory vote on a stockholder proposal, if presented at our Annual Meeting, regarding the ability of stockholders to act by written consent
 
AGAINST
5
Action upon such other matters, if any, as may properly come before the meeting
 
 

Advance Voting Methods
(Your vote must be received by 11:59 p.m. (EDT) on May 14, 2020, the day before the Annual Meeting)
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INTERNET
www.proxyvote.com
TOLL FREE TELEPHONE
1-800-690-6903
MAIL
Complete and sign your proxy card

We invite you to attend our Annual Meeting and vote. We urge you, after reading the attached proxy statement (the "Proxy Statement"), to vote your proxy by Internet or telephone by following the instructions on the form of proxy or by signing and returning the enclosed proxy card in the enclosed postage prepaid envelope as promptly as possible. If you attend our Annual Meeting, you may vote live at the virtual meeting, even if you previously voted by proxy. Our Customer Support Center is accessible to persons with disabilities. If you have a disability, we can provide reasonable assistance to help you participate in the meeting upon request.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to be held May 15, 2020:
The Notice of 2020 Annual Stockholders' Meeting and Proxy Statement and the 2019 Annual Report on Form 10-K,
are available at www.proxyvote.com.

The Notice of Annual Meeting and the accompanying Proxy Statement are being distributed or made available, as the case may be, on or about April 2, 2020.

By order of the Board of Directors,
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Tammy Moss Finley
Executive Vice President, General Counsel and Corporate Secretary
Raleigh, North Carolina
April 2, 2020




Proxy Statement Summary
Voting Roadmap
Proposal 1
Board Recommendation
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Election of the nine nominees named in the Proxy Statement to the Board of Directors ("Board") to serve until the 2021 annual meeting of stockholders
The Board recommends a vote FOR each director nominee
See page 1
Director Nominees
 
Name and Age
Director
Since
Occupation
Current Committees
Other Current Public
Company Boards
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John F. Bergstrom, 73
Independent
2008
Chairman and Chief Executive Officer, Bergstrom Corporation
Compensation (Chair)
Associated Banc-Corp


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Brad W. Buss, 56
Independent
2016
Chief Financial Officer, SolarCity Corporation
(retired)
Audit (Chair)
Marvell Technology Group Ltd.

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John F. Ferraro, 64
Independent
2015
Past Global Chief Operating Officer, Ernst & Young

Nominating & Corporate Governance (Chair)
International Flavors & Fragrances Inc.
ManpowerGroup, Inc.
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Thomas R. Greco, 61
2016
President and Chief Executive Officer, Advance Auto Parts, Inc.
 
 
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Jeffrey J. Jones II, 52
Independent
2019
President, Chief Executive Officer, H&R Block, Inc.
Nominating & Corporate Governance
H&R Block, Inc.
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Eugene I. Lee, Jr., 58
Independent Expected Chair of the Board
2015
President and Chief Executive Officer, Darden Restaurants, Inc.
Compensation
Darden Restaurants, Inc.
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Sharon L. McCollam, 57
Independent
2019
Chief Administrative and Chief Financial Officer of Best Buy Co., Inc. (retired)
Audit
Chewy, Inc. Signet Jewelers, Ltd.
Stitch Fix, Inc.
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Douglas A. Pertz, 65
  Independent
2018
President and Chief Executive Officer, The Brink's Company
Compensation
The Brink's Company
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Nigel Travis, 70
Independent
2018
Retired Chief Executive Officer and Current Chairman of the Board, Dunkin' Brands Group, Inc.
Nominating & Corporate Governance
Abercrombie & Fitch Co.
Dunkin' Brands Group, Inc.
Office Depot, Inc. (through Office Depot's 2020 annual meeting)



i



Director Skills and Core Competencies
In 2019, the Nominating and Corporate Governance Committee reviewed the core competencies that it believes should be represented on our Board and continues to believe that the qualifications and skill sets below, which are unchanged from 2018, remain important in consideration of the Company's long term strategic plan to provide leadership and diverse viewpoints on matters considered by the Board.
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ii



Board Responsiveness to Stockholders
As described below, the Board has shown responsiveness to evolving corporate governance best practices by implementing a number of enhancements that have been informed by engagement with our stockholders.
Stockholder Engagement
Outreach
We regularly conduct stockholder governance outreach. Feedback from stockholders is shared with the Board and the applicable Committees periodically.
Participants
Outreach discussions with our stockholders generally include our Chief Executive Officer (“CEO”) and management representatives from Human Resources/Compensation, Investor Relations and office of the General Counsel and Corporate Secretary.

Topics discussed
Items discussed with stockholders focused on areas including executive compensation and the performance metrics for our short term and long term incentive plans, Environmental, Social and Governance (“ESG”) actions, including publication of our Corporate Sustainability and Social Report and Board oversight, Board composition, cyber security, human capital and our ability to attract and retain key talent.
We also discussed our strategic priorities and milestones related to our transformation plan.

Responsiveness
The Board values feedback received in the course of stockholder engagement. After considering feedback from stockholders over the past several years, we have adopted and implemented executive compensation and governance best practices such as:
Proxy Access
ü 3/3/20/20
Right available to a stockholder or group of stockholders holding 3% for 3 years to nominate up to 20% of the Board. Up to 20 stockholders may aggregate ownership to reach the 3% ownership.
Board Evaluations/ Skill Assessment
ü Enhanced Process
Ongoing evaluation of Board effectiveness and updated skills matrix
Right to Call a
Special Meeting
ü 25% à 10%, no holding period
Reduced threshold from 25% of shares outstanding to 10% of shares outstanding and eliminated 1-year holding requirement
ESG Disclosures
ü Improved Disclosures
Significantly enhanced disclosure of our ESG activities and outcomes commencing in 2018 and including our Corporate Sustainability and Social Report
See Compensation Discussion & Analysis ("CD&A") beginning on page 19 for additional information about dialog with our stockholders related to our compensation program.


iii



Corporate Governance Highlights
ü
Annual election of all directors
 
ü
Regular executive sessions of independent directors
ü
Directors elected by majority voting
 
ü
Annual evaluation of the Board, Committees and individual directors
ü
Independent Chair of the Board
 
ü
Strong Guidelines on Significant Governance Issues
ü
Over 90 percent of our current directors are independent
 
ü
Board policy on CEO succession planning
ü
All NYSE required Board committees consist solely of independent directors
 
ü
Policies prohibiting hedging and (unless certain stringent requirements are met) prohibiting pledging for all employees and directors
ü
Proxy Access right
 
ü
Robust stock ownership guidelines for directors and Executive Officers
ü
Right for stockholders of 10% or more of the Company's stock to call a special meeting
 
ü
Average tenure of 4.1 years for current directors

Proposal 2
Board Recommendation
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Advisory vote to approve the compensation of the Company’s named executive officers.
The Board recommends a vote FOR this Proposal
See page 18
Executive Compensation Highlights
The Company’s compensation programs continue to center on a pay for performance philosophy. Compensation actions in 2019 were directly aligned with this philosophy to ensure our leadership’s interests are aligned with those of our stockholders.
Compensation Framework
The following table summarizes the compensation elements provided for our Named Executive Officers ("NEOs") in 2019:
Element
Purpose
 
Metrics
Base Salary
Fixed annual cash compensation to attract and retain executives
 
Established after review of base salaries of executives of companies in our peer group and the performance of each executive officer
Annual Incentive
Plan (“AIP”) (1)
Performance based variable pay that delivers cash incentives when executives meet or exceed key financial and operating targets
 
1/3 Enterprise Comparable Store Sales
1/3 Enterprise Adjusted Operating Income
1/3 Free Cash Flow
Long Term Incentive ("LTI") Equity Compensation
Performance and service based equity compensation to reward executives for a balanced combination of meeting or exceeding key financial and operating targets and creating long term stockholder value
 
70% Performance based Restricted Stock Units:
 
 
33% 3 Year Average Comparable Store Sales Growth
34% 3 Year Return on Invested Capital ("ROIC")
33% 3 Year Relative Total Shareholder Return ("TSR")
 
30% Time based Restricted Stock Units ("RSUs")
(1) Enterprise Comparable Stores Sales represents revenue generated by stores, branches and ecommerce in 2019 relative to the revenue generated by stores, branches and ecommerce in 2018, not including new stores and branches and Independently owned Carquest branded stores. Enterprise Adjusted Operating Income represents the Company’s earnings before interest and taxes, adjusted for non-operational/non-recurring items. Free Cash Flow represents the amount of cash the Company generates from operations less purchases of property and equipment.


iv




Pay For Performance Alignment
The following chart illustrates the mix of 2019 target compensation for our CEO and our other NEOs.
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2019 Performance Plan Payouts
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For additional information about 2019 results achieved and corresponding plan payouts, please see the discussion beginning on page 25 in CD&A.


v



Strong Compensation Governance
STOCKHOLDER FRIENDLY PRACTICES WE EMPLOY
 
STOCKHOLDER UNFRIENDLY PRACTICES WE AVOID
ü
Pay for Performance with rigorous objective financial and operational metrics that are closely tied to our success and delivery of stockholder value
 
û
Excise tax gross ups for Change in Control payments
ü
Incentive Compensation Clawback Policy
 
û
Repricing or exchange of underwater stock options
ü
“Double Trigger” vesting
 
û
Dividends on unearned annual performance based equity awards
ü
Robust Stock Ownership Guidelines
 
û
Hedging
ü
Independence requirements for our Compensation Consultant
 
û
Pledging unless certain stringent requirements are met

For a detailed discussion of our executive compensation program, including the correlation to our comprehensive strategic plan focused on creating long term stockholder value, please see CD&A beginning on page 19.

Proposal 3
Board Recommendation
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Ratification of the appointment by the Audit Committee of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for 2020
The Board recommends a vote FOR this Proposal
See page 45

Proposal 4
Board Recommendation
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Stockholder proposal to permit stockholders to act by written consent, if presented at the Annual Meeting
The Board recommends a vote AGAINST this Proposal
See page 49




vi



Table of Contents
Proposal No. 1 Election of Directors
 
Proposal No. 2 Stockholder Advisory Vote to Approve the Compensation of the Company's Named Executive Officers
Nominees for Election to Our Board
 
Compensation Discussion and Analysis
Corporate Governance
 
Executive Summary
Overview
 
Compensation Governance
Guidelines on Significant Governance Issues
 
Framework for Executive Compensation
Director Independence
 
Other Compensation and Benefit Programs
Board Leadership Structure
 
Compensation Committee Report
Board Refreshment
 
Additional Information Regarding Executive Compensation
Board Evaluation
 
Summary Compensation Table
Stockholder and Interested Party Communications with our Board
 
Grants of Plan-Based Awards in 2019
Nominations for Directors
 
Outstanding Equity Awards at 2019 Fiscal Year End
Proxy Access
 
Option Exercises and Stock Vested in 2019
Code of Ethics and Business Conduct
 
Non-Qualified Deferred Compensation for 2019
Code of Ethics for Finance Professionals
 
Potential Payments Upon Termination of Employment or Change in Control
Related Party Transactions
 
Information Concerning our Executive Officers
Succession Planning
 
Security Ownership of Certain Beneficial Owners and Management
Meetings and Committees of the Board
 
Stock Ownership Guidelines for Directors and Executive Officers
The Board
 
Delinquent Section 16(a) Reports
Meetings of Non-Management and Independent Directors
 
Equity Compensation Plan Information
Committees of the Board
 
Proposal No. 3 Ratification of Appointment of Deloitte & Touche LLP as our Independent Registered Public Accounting Firm for 2020
Board's Role in Risk Oversight
 
2019 and 2018 Audit Fees
Aligning Stockholder Interests and Compensation Risk Mitigation
 
Audit Committee Report
Director Compensation
 
Proposal No. 4 Stockholder Proposal Entitled "Right to Act by Written Consent"
2019 Director Summary Compensation
 
Board of Directors' Statement in Opposition to Proposal No. 4
Directors' Outstanding Equity Awards at 2019 Fiscal-Year End
 
Other Matters

Note:  Unless otherwise indicated in the text, any reference to a year is intended to refer to the Company’s fiscal year of the same date as described in the Company’s 2019 Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on February 18, 2020.




Proposal No. 1
Election of Directors
At the Annual Meeting, you will vote to elect as directors the nine nominees listed below to serve until our 2021 annual meeting of stockholders or until their respective successors are elected and qualified. Our Board has nominated John F. Bergstrom, Brad W. Buss, John F. Ferraro, Thomas R. Greco, Jeffrey J. Jones II, Eugene I. Lee, Jr., Sharon L. McCollam, Douglas A. Pertz and Nigel Travis for election as directors. All of the nominees are current members of our Board. Each nominee has consented to being named in this Proxy Statement as a nominee and has agreed to serve as a director if elected. None of the nominees to our Board has any family relationship with any other nominee or with any of our executive officers. Neither Jeffrey C. Smith nor Adriana Karaboutis, each of whom is a current director, will stand for re-election at the Annual Meeting. Each of them will serve out the remainder of their terms, which will end at the Annual Meeting. The Board does not have any vacancies, but the Board has commenced a search for additional director candidates and in the normal course of its deliberations, may decide from time to time to add one or more directors who possess skills and experience that may be beneficial to our Board and our Company.
  
The persons named as proxies in the accompanying form of proxy have advised us that at the Annual Meeting, unless otherwise directed, they intend to vote the shares covered by the proxies FOR the election of the nominees named above. If one or more of the nominees are unable to serve, or will not serve, the persons named as proxies may vote for the election of any substitute nominees that our Board may propose. The persons named as proxies may not vote for a greater number of persons than the number of nominees named above. Our by-laws provide that a nominee for director in an uncontested election must receive a majority of the votes cast at the Annual Meeting for the election of that director in order to be elected. If a nominee for director who is an incumbent director is not elected and no successor has been elected at the Annual Meeting, the director is expected to tender his or her resignation from the Board contingent on acceptance of such resignation by the Board.

Nominees for Election to Our Board
The following information is provided about our nominees for director effective as of the record date, March 18, 2020 (the "Record Date").

JOHN F. BERGSTROM Independent
Chairman and Chief Executive Officer, Bergstrom Corporation
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Age: 73
Director Since:
May 2008
Committees:
Compensation (Chair)
Other Current Public Company Boards:
Associated Banc-Corp.
Key Experience and Skills
With more than 35 years of experience in automotive sales, service and parts management in an organization representing all major automotive manufacturers that distribute cars in the United States, Mr. Bergstrom brings a unique and valuable point of view to our Board. Bergstrom Corporation has been cited as the number one quality automotive dealer in the country and highlighted for its focus on outstanding customer service. In addition, as a result of his service as a director of several other public companies, including his current membership on the compensation committee of Associated Banc-Corp., he is in an excellent position to share with the Board his experience with governance issues facing public companies. Mr. Bergstrom was also named to the 2017 National Association of Corporate Directors (NACD) Directorship 100, which honors the most influential boardroom leaders each year.

Professional Experience
Mr. Bergstrom is the Chairman and Chief Executive Officer of Bergstrom Corporation, which is one of the top 50 automobile dealership groups in America. Mr. Bergstrom has served in his current role at Bergstrom Corporation for more than five years. Mr. Bergstrom has served as a director of Associated Banc-Corp, a diversified bank holding company, since December 2010, and has previously served as a director of Kimberly-Clark Corporation, a global health and hygiene company, from 1987 to 2019, and WEC Energy Group, Inc., formerly Wisconsin Energy Corporation, a diversified energy company, from 1987 to 2019.



1



BRAD W. BUSS Independent
Retired Chief Financial Officer, SolarCity Corporation
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Age: 56
Director Since:
March 2016
Committee:
Audit (Chair)
Other Current Public Company Boards:
Marvell Technology Group Ltd.

Key Experience and Skills
Mr. Buss’ extensive financial background, knowledge gained from his experience in the technology industry, and board positions equip him to provide valuable insight to our Board on issues that impact public companies. He has been designated by the Board as an Audit Committee financial expert consistent with SEC regulations.

Professional Experience
Mr. Buss retired in February 2016 as the Chief Financial Officer of SolarCity Corporation, a provider of clean energy services, where he had served since August 2014. Prior to joining SolarCity, he served as Chief Financial Officer and Executive Vice President, Finance and Administration of Cypress Semiconductor Corporation, a semiconductor design and manufacturing company, from August 2005 to June 2014. Prior to August 2005, Mr. Buss held various financial leadership roles with Altera Corporation, a provider of custom logic solutions, Cisco Systems, a networking company, Veba Electronics LLC, a distributor of semiconductors and computer products, and Wyle Electronics, Inc., a semiconductor and computer parts distributor. Mr. Buss has served on the board of directors for Marvell Technology Group Ltd., a fabless semiconductor provider of high-performance application-specific standard products, since July 2018, following Marvell's acquisition of Cavium, Inc., a provider of highly integrated semiconductor products, where he had served as a director since July 2016. Mr. Buss previously served on the board of directors for Tesla, Inc., a manufacturer of electric vehicles and energy storage products, from November 2009 until 2019. He currently serves as a member of the Audit Committee of Marvell Technology Group Ltd., and he formerly served as a member of the Compensation Committee and Nominating and Governance Committee and as Chair of the Audit Committee for Tesla, Inc. He also served as a director and Chair of the Audit Committee for Café Press Inc., an online retailer of stock and user-customized on demand products, from October 2007 to August 2016.
JOHN F. FERRARO Independent
Past Global Chief Operating Officer, Ernst & Young
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Age: 64
Director Since:
February 2015
Committee:
Nominating and Corporate Governance (Chair)
Other Current Public Company Boards:
International Flavors & Fragrances Inc.
ManpowerGroup Inc.
Key Experience and Skills
Mr. Ferraro has extensive financial, corporate management, governance and public policy experience which enables him to assist the Board in identifying trends and developments that affect public companies. In addition, the Board benefits from his experience in the areas of marketing and the development of corporate strategy.

Professional Experience
Mr. Ferraro served as our independent Lead Director from November 2015 to May 2016. Mr. Ferraro served as Executive Vice President, Strategy and Sales of Aquilon Energy Services, a software and services company for the energy industry from February 2019 to July 2019. He served as Global Chief Operating Officer ("COO") of Ernst & Young ("EY"), a leading professional services firm, from 2007 to December 2014 and retired as a partner of EY at the end of January 2015. In addition, Mr. Ferraro served as a member of EY’s Global Executive Board for more than 10 years. Mr. Ferraro joined EY in 1976 and prior to his COO role he served in several senior leadership positions at EY, including Global Vice Chair Audit. Mr. Ferraro practiced as a Certified Public Accountant for 35 years. Mr. Ferraro has served as a director for ManpowerGroup Inc., a provider of workforce solutions, since January 2016, and for International Flavors & Fragrances Inc., a manufacturer of flavors and fragrances, since May 2015.



2



THOMAS R. GRECO
President and Chief Executive Officer, Advance Auto Parts, Inc.
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Age: 61
Director Since:
April 2016
Key Experience and Skills
Mr. Greco has served as our President and Chief Executive Officer and a member of our Board since 2016. During that time, he has overseen the development of the Company's long term strategic plan and the launch of the Company's transformation initiatives. Previously, Mr. Greco was the Chief Executive Officer of Frito-Lay North America, where he worked to grow revenue and increase profits, providing him with important experience in the consumer retail industry.  Mr. Greco brings to the Board significant experience and leadership in the areas of corporate strategy, marketing, supply chain and logistics. 

Professional Experience
Mr. Greco became our President and Chief Executive Officer in August 2016, having served as Chief Executive Officer since April 2016. From September 2014 until April 2016, Mr. Greco served as Chief Executive Officer, Frito-Lay North America, a unit of PepsiCo, Inc. (“PepsiCo”), a leading global food and beverage company.  As Chief Executive Officer, Frito-Lay North America, Mr. Greco was responsible for overseeing PepsiCo’s snack and convenient foods business in the U.S. and Canada.  Mr. Greco previously served as Executive Vice President, PepsiCo and President, Frito-Lay North America from September 2011 until September 2014 and as Executive Vice President and Chief Commercial Officer for Pepsi Beverages Company from 2009 to September 2011.  Mr. Greco joined PepsiCo in Canada in 1986 and served in a variety of leadership positions, including Region Vice President, Midwest; President, Frito-Lay Canada; Senior Vice President, Sales, Frito-Lay North America; President, Global Sales, PepsiCo; and Executive Vice President, Sales, North America Beverages.  Before joining PepsiCo, Mr. Greco worked at The Proctor & Gamble Company, a consumer packaged goods company.  Mr. Greco served as a director of G&K Services, Inc., a service focused provider of branded uniform and facility services programs, from July 2014 to March 2017.
JEFFREY J. JONES II Independent
President and Chief Executive Officer, H&R Block, Inc.
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Age: 52
Director Since:
February 2019
Committee:
Nominating and Corporate Governance
Other Current Public Company Boards:
H&R Block, Inc.

Key Experience and Skills
Mr. Jones brings to the Board nearly 30 years of executive management, innovative leadership and operational excellence experience while holding key roles with top companies in the retail, consumer products, agency and technology industries, where he has had substantial experience with launching initiatives to drive traffic, brand affinity and loyalty. His position as a director of another public company also enables him to share with the Board his experience with governance issues facing public companies.

Professional Experience
Mr. Jones is currently President and Chief Executive Officer of H&R Block, Inc., a global consumer tax services provider, a position he has held since October 2017. Prior to October 2017, Mr. Jones served as H&R Block’s President and Chief Executive Officer-Designate beginning in August 2017. Previously, Mr. Jones served as President, Ride Sharing at Uber Technologies Inc., an on-demand car service company, from September 2016 until March 2017 and Executive Vice President and Chief Marketing Officer at Target Corporation, a retail sales company, from April 2012 to September 2016. Prior to his time at Target Corporation, Mr. Jones held various executive and leadership roles related to sales, agency and marketing with iconic brands such as The Coca-Cola Company and The Gap, Inc. He has served as a director of H&R Block, Inc. since 2017.



3



EUGENE I. LEE, JR. Independent
President and Chief Executive Officer, Darden Restaurants, Inc.
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Age: 58
Director Since:
November 2015
Committee:
Compensation
Other Current Public Company Boards:
Darden Restaurants, Inc.

Key Experience and Skills
Mr. Lee’s experience as the Chief Executive Officer of a national group of chain restaurants provides him with strong insights into customer service and the types of management issues that face companies with large numbers of employees in numerous locations throughout the country. In addition, he brings experience in marketing, real estate, strategic planning and change management.

Professional Experience
Mr. Lee is the President and Chief Executive Officer of Darden Restaurants, Inc. ("Darden"), the owner and operator of Olive Garden, LongHorn Steakhouse, Bahama Breeze, Cheddar's Scratch Kitchen, Seasons 52, The Capital Grille, Eddie V’s and Yard House restaurants in North America, positions he has held since February 2015. Previously, Mr. Lee served as Darden’s President and Interim Chief Executive Officer from October 2014 to February 2015, and President and Chief Operating Officer from September 2013 to October 2014. He served as President of Darden’s Specialty Restaurant Group from October 2007 to September 2013 following Darden’s acquisition of RARE Hospitality International, Inc., where he had served as President and a member of the Board of Directors since 2001. Mr. Lee has served as a member of the Darden Board of Directors since February 2015.
SHARON L. McCOLLAM Independent
Retired Executive Vice President, Chief Administrative Officer and Chief Financial Officer,
Best Buy Co., Inc.
sharonmccollambwa01.jpg
Age: 57
Director Since:
February 2019
Committee:
Audit
Other Current Public Company Boards:
Chewy, Inc.
Signet Jewelers, Inc.
Stitch Fix, Inc.

Key Experience and Skills
Ms. McCollam's extensive experience with global finance, information technology, supply chain, customer care, real estate and omnichannel turnarounds in the retail sector, as well as her board positions, equip her to provide valuable insights that impact the management and governance of public companies in the retail sector. She has been designated by the Board as an Audit Committee financial expert consistent with SEC regulations.

Professional
Ms. McCollam served as Executive Vice President, Chief Administrative Officer and Chief Financial Officer of Best Buy Co., Inc., a provider of technology products, services, and solutions from December 2012 until June 2016, and continued to serve as a senior advisor through January 2017. From 2006 to 2012, she served as Executive Vice President, Chief Operating and Chief Financial Officer at Williams-Sonoma Inc., a specialty retailer of high-quality products for the home, and as Chief Financial Officer from 2000 to 2006. Prior to Williams-Sonoma, Ms. McCollam served as Chief Financial Officer of Dole Fresh Vegetables, Inc., a division of Dole Food Company, Inc., a producer and marketer of fresh fruit and vegetables. She is a Certified Public Accountant. Ms. McCollam has served as a director of Signet Jewelers, Limited, a omni-channel diamond jewelry retailer, since March 2018, of Stitch Fix, Inc., an online apparel specialty retailer, since November 2016, and of Chewy, Inc., an online pets and pet parents retailer, since June 2019. Our Board has determined that Ms. McCollam's simultaneous service on the audit committees of these companies does not impair her ability to effectively serve on our Audit Committee. She previously served on the board of directors of Whole Foods Market, Inc., OfficeMax Incorporated, Del Monte Foods Company and Williams-Sonoma, Inc.



4



DOUGLAS A. PERTZ Independent
President and Chief Executive Officer, The Brink's Company
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Age: 65
Director Since:
May 2018
Committee:
Compensation
Other Current Public Company Boards:
The Brink's Company
Key Experience and Skills
Mr. Pertz has led several global companies as Chief Executive Officer over the past 20 years and throughout his career has guided multinational organizations through both operational turnaround and growth acceleration. Mr. Pertz’s leadership positions have honed his operational expertise in branch and route-based logistics, business-to-business services, channel and brand marketing and growth through acquisition.

Professional Experience
Mr. Pertz is the President and Chief Executive Officer of The Brink’s Company (“Brink’s”), the world’s largest cash management company including cash-in-transit, ATM services, international transportation of valuables, cash management and payment services. He has held these positions since June 2016. Prior to joining Brink’s, Mr. Pertz was the President and Chief Executive Officer of Recall Holdings Limited (“Recall”), a global provider of digital and physical information management and security services, from 2013 to 2016. Prior to joining Recall, Mr. Pertz served as a partner with Bolder Capital, LLC, a private equity firm specializing in acquisitions and investments in middle market companies and as a partner with One Equity Partners, the private equity arm of JPMorgan Chase & Co. He also served as Chief Executive Officer and on the Board of Directors of IMC Global, the predecessor company to The Mosaic Company, Culligan Water Technologies and Clipper Windpower, and as a Group Executive and Corporate Vice President at Danaher Corporation. Mr. Pertz has served as a member of Brink’s Board of Directors since June 2016 and in the past has served on the board of directors of numerous other public companies, including Recall, Nalco Holdings, The Mosaic Company and Bowater.
NIGEL TRAVIS Independent
Chairman of the Board and Retired Chief Executive Officer, Dunkin' Brands Group, Inc.
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Age: 70
Director Since:
August 2018
Committee:
Nominating and Corporate Governance
Other Current Public Company Boards:
Abercrombie & Fitch Co.
Dunkin' Brands Group, Inc.
Office Depot, Inc. (through Office Depot's 2020 annual meeting)

Key Experience and Skills
Mr. Travis' experience in executive leadership roles at several global companies within the retail and restaurant industries, including his experience as an architect of the turnaround of Dunkin' Brands provides the Board with valuable insights for the continued transformation of Advance. In addition, as a result of his service as a director of several other public companies, he is in an excellent position to share with the Board his experience with governance issues facing public companies.

Professional Experience
Mr. Travis served as the Executive Chairman of the Board for Dunkin’ Brands Group, Inc., a quick-service restaurant franchisor, from July 2018 to January 2019 when he transitioned to Chairman. Previously, he served as Chief Executive Officer of Dunkin’ Brands from January 2009 to July 2018, and assumed the additional responsibility of Chairman of the Board in May 2013. Mr. Travis has also served in executive leadership roles at various companies within the retail and restaurant industries. He continues to serve as the Chairman of the Board of Dunkin' Brands. He has served as a director of Office Depot, Inc., an office supply company, since March 2012, and as a director of Abercrombie & Fitch Co., a global multi-brand specialty retailer, since January 2019.

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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF OUR BOARD’S NOMINEES.


5



Corporate Governance
Overview
Our Company believes that our good corporate governance practices reflect our values and support our strategic and financial performance. The compass of our corporate governance practices can be found in our by-laws, our Guidelines on Significant Governance Issues and our Code of Ethics and Business Conduct, which were adopted by our Board to guide our Company, our Board and our employees (“Team Members”) and are available on our website at ir.advanceautoparts.com under "Governance." Our by-laws provide that in an uncontested election, directors must receive a majority of the votes cast at the Annual Meeting for the election of directors and that, subject to certain procedural and stock ownership requirements, stockholders may request a special meeting of stockholders and submit nominees for director for consideration by the Nominating and Corporate Governance Committee or for inclusion in our proxy statement through proxy access. Each standing committee of the Board has a charter, available at ir.advanceautoparts.com under "Governance," that spells out the roles and responsibilities assigned to it by the Board. In addition, the Board has established policies and procedures that address matters such as chief executive officer succession planning, transactions with related persons, risk oversight, communications with the Board by stockholders and other interested parties, and the independence and qualifications of our directors. This “Corporate Governance” section provides insights into how the Board has implemented these policies and procedures to benefit our Company and our stockholders.

Guidelines on Significant Governance Issues
 
The responsibility of our Board is to review, approve and regularly monitor the effectiveness of our fundamental operating, financial and other business plans, as well as our policies and decisions, including the execution of our strategies and objectives. Accordingly, our Board has adopted guidelines on the following significant governance issues:
1
the structure of our Board, including, among other things, the size, mix of independent and non-independent members, membership criteria, term of service and compensation;
2
the assessment of performance of our Board through the annual evaluation of the Board, individual directors and Board committees;
3
Board procedural matters, including, among other things, selection of the Chair of the Board, Board meetings, Board communications, retention of counsel and advisers, and our expectations regarding the performance of our directors;
4
committee matters, including, among other things, the types of committees, charters of committees, independence of committee members, chairs of committees, service of committee members, committee agendas and committee minutes and reports;
5
chief executive officer evaluation, development and succession planning;
6
codes of conduct, including our Code of Ethics and Business Conduct and our Code of Ethics for Finance Professionals; and
7
other matters, including, among other things, auditor services, Board access to management and interaction with third parties, directors and officers insurance and the indemnification/limitation of liability of directors, our policy prohibiting Company loans to our executive officers and directors, and confidential stockholder voting.

A complete copy of our Guidelines on Significant Governance Issues is available on our website at ir.advanceautoparts.com under "Governance."



6



Director Independence
Our Board, after consultation with and upon the recommendation of the Nominating and Corporate Governance Committee, determined that, with the exception of Mr. Greco, each of our incumbent directors is an “independent” director under the listing standards of the New York Stock Exchange (“NYSE”), because each of these individuals:
(1)
has no material relationship with us or our subsidiaries, either directly or indirectly, as a partner, stockholder or officer of an organization that has a relationship with us or our subsidiaries; and
(2)
satisfies the “bright line independence” criteria set forth in Section 303A.02(b) of the NYSE’s listing standards.
Based on such standards, the Board determined that Mr. Greco is not independent because he is employed as our President and Chief Executive Officer.
To determine whether a director was qualified to be considered independent, the Board assessed the issue of materiality of any relationship not merely from the standpoint of each director or nominee, but also from that of persons or organizations with which the director or nominee may have an affiliation. Our Board reviews each director’s status under this definition at least annually with the assistance of the Nominating and Corporate Governance Committee. Each director is required to keep the Nominating and Corporate Governance Committee fully and promptly informed as to any developments that might affect his or her independence.

Board Leadership Structure
Our Guidelines on Significant Governance Issues and by-laws allow the Board to combine or separate the roles of the Chair of the Board and the Chief Executive Officer. The Board regularly considers whether to maintain the separation of the roles of Chair and Chief Executive Officer. In the event that the Board chooses to combine these roles, or in the event that the Chair of the Board is not an independent director, our governance guidelines provide for the selection of an independent Lead Director. Mr. Smith has continuously served as the Independent Chair of the Board since May 2016. The Board intends to appoint Mr. Lee to serve as Independent Chair of the Board upon the expiration of Mr. Smith's term.
The responsibilities of the independent Chair or independent Lead Director include participating in development of the Board’s agenda, as well as facilitating the discussions and interactions of the Board to ensure that every directors’ viewpoint is heard and considered. The Chair presides over meetings of the Board and, if independent, also over meetings of the independent directors. When the Chair is not independent, the independent Lead Director is expected to preside over meetings of the independent directors. Where an Independent Lead Director exists, he or she also has the responsibility to act as principal liaison between the Chair, the Chief Executive Officer and the full Board.

Board Refreshment
We believe the Board benefits from a balance of newer directors, who bring fresh perspectives, and longer serving directors, who have contributed to our strategy over time and have deep understanding of our operations. We continually assess the composition of the Board, including its size and diversity, and a key part of our annual Board evaluation process focuses on the skills and experience of our directors to ensure alignment with the strategic direction of the Company. In the case of Mr. Bergstrom, who has reached the age of retirement specified in our Guidelines on Significant Governance Issues, the Nominating and Corporate Governance Committee has concluded that he is independent and that his continued service as a director is in the Company’s best interest because he continues to provide valuable and unique insights to the Board as a result of his extensive experience and current role as the Chairman and Chief Executive Officer of an expansive automotive dealership business.

Key facts about our Board refreshment
4 New Directors
have joined our Board in the past 3 years
 
4.1 Years
average tenure of our current directors



7



Board Evaluation
The Board recognizes that a robust and constructive evaluation process is an essential component of good corporate governance and Board effectiveness.
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Board Evaluation Objectives
Evaluations are designed to assess the qualifications, attributes, skills and experience represented on the Board and whether the Board, its committees and individual directors are functioning effectively.
 
 
     
 
 
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Role of the Board
The Board is responsible for annually conducting an evaluation of the Board and individual directors.
 
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Role of the Board’s Committees
Each committee is responsible for annually evaluating its performance and reporting the results to the Board.
 
 
 
 
 
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2019 Evaluation Process
The evaluation process included live interviews with each director conducted by an independent third party, who compiled the results and discussed them with the Chair of the Board and the Chair of the Nominating and Corporate Governance Committee. The results of the assessment were then reported to and discussed by the full Nominating and Corporate Governance Committee and the Board.
 
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Topics Addressed in 2019
Topics addressed in the evaluation process included, among others: the role and functioning of the Board and Board committees; interpersonal dynamics of the Board and committees; diversity of the Board; qualifications of directors; Board succession; director preparedness; Board interaction with management and management succession; Board committee structure and governance; and representation of stockholder interests.

Stockholder and Interested Party Communications with our Board
Any interested party, including any stockholder, who desires to communicate with our Board generally or directly with a specific director, one or more of the independent directors, our non-management directors as a group or our Chair of the Board, including on an anonymous or confidential basis, may do so by delivering a written communication to the Board, a specific director, the independent directors, the non-management directors as a group or to our Chair of the Board, c/o Advance Auto Parts, Inc., 2635 East Millbrook Road, Raleigh, North Carolina 27604, Attention: General Counsel. The general counsel will not open a communication that is conspicuously marked "Confidential" or is addressed to one or more of our independent directors, our non-management directors as a group or our Chair of the Board and will forward each such communication to the appropriate individual director or group of directors, as specified in the communication. Such communications will not be disclosed to the non-independent or management members of our Board or to management unless so instructed by the independent or non-management directors. Communications will be forwarded by the general counsel on a bi-monthly basis. The general counsel will ensure the timely delivery of any time sensitive communication to the extent such communication indicates time sensitivity.




8



Nominations for Directors
Identifying Director Candidates
The Nominating and Corporate Governance Committee is responsible for leading the search for and evaluating qualified individuals to become nominees for election as directors. The Committee is authorized to retain a search firm, if needed, to assist in identifying, screening and attracting director candidates. During 2019, the Committee did not utilize the services of a search firm to assist in identifying potential director candidates, but the Committee has engaged a third party firm for that purpose in 2020. After a director candidate has been identified, the Committee evaluates each candidate for director within the context of the needs of the Board in its composition as a whole. The Committee considers such factors as the candidate’s business experience, skills, independence, judgment, and ability and willingness to commit sufficient time and attention to the activities of the Board. At a minimum, recommended candidates for nomination must possess the highest personal and professional ethics, integrity and values, and commit to representing the long term interests of our stockholders.

The Nominating and Corporate Governance Committee also considers whether the nominee would likely provide a diverse viewpoint and actively and constructively participate in the Board’s discourse and deliberations. Although the Board has not adopted a formal policy with regard to diversity (as to gender, race, ethnic background and experience) in the composition of the Board, the Committee strives to compose a Board that reflects sensitivity to the need for an appreciation of such diversity, including racial and gender diversity.


Stockholder Recommendations for Director Candidates
The Nominating and Corporate Governance Committee will consider stockholder suggestions for nominees for directors. Any stockholder who desires to recommend a candidate for director must submit the recommendation in writing and follow the procedures set forth in our by-laws. Our by-laws require that a stockholder’s nomination be received by the corporate secretary not less than 120 days nor more than 150 days prior to the first anniversary of the date of the preceding year’s annual meeting. The notice should include the following information about the proposed nominee: name, age, business and residence addresses, principal occupation or employment, the number of shares of Company stock owned by the nominee and additional information required by our by-laws as well as any information that may be required by the SEC’s regulations. In addition, the stockholder providing the notice should provide his or her name and address as they appear on our books, the number and type of shares or other equitable interests that are beneficially owned by the stockholder and additional information required by our by-laws. The Committee does not evaluate any candidate for nomination as a director any differently solely because the candidate was recommended by a stockholder.  A copy of our by-laws may be obtained by submitting a request to: Advance Auto Parts, Inc., 2635 East Millbrook Road, Raleigh, North Carolina 27604, Attention: Corporate Secretary. Our by-laws also are available on our website at ir.advanceautoparts.com under "Governance."

Proxy Access
Our Board regularly considers our corporate governance practices in light of developing best practices as well as the information received as a result of stockholder outreach and communications. Since 2017, our by-laws have provided that a stockholder, or group of 20 or fewer stockholders, owning at least three percent of our outstanding shares continuously for at least three years may nominate candidates to serve on the Board and have those candidates included in our annual meeting materials. The maximum number of proxy access candidates that a stockholder or stockholder group may propose as nominees is the greater of (i) two or (ii) 20 percent of the Board. This process is subject to additional eligibility, procedural and disclosure requirements as provided in our by-laws, including the requirements that the nominee must be deemed to be independent under applicable stock exchange listing requirements and that notice of such nominations must be delivered to us not later than 120 days nor earlier than 150 days prior to the first anniversary of the date on which we mailed the proxy statement for the preceding year’s annual meeting of stockholders.



9



Code of Ethics and Business Conduct
We expect all of our Team Members, our officers and our directors, and any parties with whom we do business to conduct themselves in accordance with the highest ethical standards. Accordingly, we have adopted a Code of Ethics and Business Conduct, which outlines our commitment to, and expectations for, honest and ethical conduct by all of these persons and parties in their business dealings. Since 2018, our Code of Ethics and Business Conduct has included provisions with respect to the human rights standards for our company and those with whom we do business. Our Team Members, officers and directors are expected to review and acknowledge our Code of Ethics and Business Conduct annually. In addition, our Team Members and our officers are expected to participate in training on our Code of Ethics and Business Conduct on an annual basis. A complete copy of our Code of Ethics and Business Conduct is available at ir.advanceautoparts.com under "Governance." The Company will disclose within four business days any substantive changes in or waivers of the Code of Ethics and Business Conduct granted to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, by posting such information on our website rather than by filing a Form 8-K.

Code of Ethics for Finance Professionals
We have also adopted a Code of Ethics for Finance Professionals to promote and provide for ethical conduct by our finance professionals, as well as for full, fair and accurate financial management and reporting. Our finance professionals include our principal executive officer, principal financial officer, principal accounting officer or controller and any other person performing similar functions. We expect all of these finance professionals to act in accordance with the highest standards of professional integrity, to provide full and accurate disclosure in any public communications as well as reports and other documents filed with the SEC and other regulators, to comply with all applicable laws, rules and regulations and to deter wrongdoing. Our Code of Ethics for Finance Professionals is intended to supplement our Code of Ethics and Business Conduct. A complete copy of the Code of Ethics for Finance Professionals is available at ir.advanceautoparts.com under "Governance." The Company will disclose within four business days any substantive changes in or waivers of the Code of Ethics for Finance Professionals granted to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, by posting such information on our website rather than by filing a Form 8-K.

Related Party Transactions
Pursuant to our Code of Ethics and Business Conduct and the Board’s policy with respect to related party transactions, officers and directors are required to disclose to the Chair of the Nominating and Corporate Governance Committee of the Board or to our general counsel any transaction or relationship that may create an actual or perceived conflict of interest. Pursuant to the Board’s policy, our general counsel’s office reviews such transactions or relationships and advises the Nominating and Corporate Governance Committee in the event that a transaction or relationship is determined to be a related party transaction. The Nominating and Corporate Governance Committee then reviews the transaction in light of the relevant facts and circumstances and makes a determination of whether to ratify or approve the transaction. In the case of a transaction involving a director, the Nominating and Corporate Governance Committee would also review the transaction to determine whether it might have an effect on the independence of the director. The Nominating and Corporate Governance Committee reports its conclusions and recommendations to the Board for its consideration.
In addition, our Guidelines on Significant Governance Issues require each director to disclose to the Board (or Audit Committee) any interest that he or she has in any contract or transaction that is being considered by the Board (or Audit Committee) for approval. After making such a disclosure and responding to any questions the Board may have, the interested director is expected to abstain from voting on the matter and leave the meeting while the remaining directors discuss and vote on such matter.
On an annual basis, each director and executive officer is obligated to complete a Related Persons Questionnaire, which requires identification of Related Persons as defined by the Company's Related Persons Policy, as well as a Director and Officer Questionnaire, which requires disclosure of any transactions with the Company in which the director or executive officer, or any member of his or her immediate family, has a direct or indirect material interest. The annual questionnaires are prepared and distributed by our general counsel’s office, and each director or executive officer returns the completed questionnaires to the general counsel’s office for review. Any related party transactions with directors or executive officers that have been identified through the processes described above are disclosed consistent with applicable rules and regulations.
Since the outset of 2019, car dealerships owned by Bergstrom Corporation, where Mr. Bergstrom is the Chairman and Chief Executive Officer, paid us a total of approximately $400,000 to purchase automotive parts. Such purchases were made in the ordinary course of business upon terms available to our similarly situated Professional customers.
After carefully considering the terms of the proposed agreement, including the comparable costs for similar services in the relevant market, during 2018 the Nominating and Corporate Governance Committee reviewed and approved the engagement of The Cuttlefish, a company solely owned by Evan Schechtman, to perform certain digital consulting services for our Marketing Department, consistent with the provisions of the Company's Related Person Transaction Policy. In 2019, the Company incurred and paid fees to The Cuttlefish of approximately $400,000 in connection with this engagement. Mr. Schechtman is married to


10



Natalie S. Schechtman, our Executive Vice President, Human Resources, who is an executive officer of the Company. Ms. Schechtman explicitly recused herself from any involvement with respect to our retention of, or payments to, this firm.
Succession Planning
In light of the critical importance of executive leadership to our success and consistent with our Guidelines on Significant Governance Issues, the Board has adopted a chief executive officer succession planning process that is led by the Nominating and Corporate Governance Committee. The Guidelines on Significant Governance Issues and the Nominating and Corporate Governance Committee Charter provide that the Nominating and Corporate Governance Committee is charged with the responsibility of developing a process for identifying and evaluating candidates to succeed the chief executive officer and to report annually to the Board on the status of the succession plan, including issues related to the preparedness for the possibility of an emergency situation involving senior management and assessment of the long term growth and development of the senior management team. Our Guidelines on Significant Governance Issues also provide that in the event the Board undertakes to name a successor to the Chief Executive Officer, the independent directors shall name a Succession Committee to identify, assess and make recommendations to the Board regarding candidates for that position.



11



Meetings and Committees of the Board
The Board
Each director is expected to make every reasonable effort to attend each meeting of the Board and any committee of which the director is a member and to be reasonably available to management and the other directors between meetings. Our Board met nine times during 2019. Each incumbent director attended 75 percent or more of the total number of meetings of the Board and meetings of the committees of the Board on which he or she served. All eleven of our current directors, including the nine who have been nominated for reelection at the Annual Meeting, attended our 2019 annual meeting of stockholders and were available for questions from our stockholders.
Meetings of Non-Management and Independent Directors
In accordance with applicable NYSE listing requirements, our independent directors hold regular executive sessions at which management, including the Chief Executive Officer, is not present. During 2019, these meetings were presided over by Mr. Smith, independent Chair of the Board. For 2020, our independent and non-management directors are scheduled to meet separately in conjunction with each of the regularly scheduled non-telephonic meetings of the Board. 
Committees of the Board
We currently have an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee, each of which is comprised entirely of independent directors in accordance with the listing standards of the NYSE. The following table sets forth the names of each current committee member, the number of times each committee met in 2019 and the primary responsibilities of each committee.
AUDIT COMMITTEE
Members:
     
Primary Responsibilities
Brad W. Buss (Chair)
Adriana Karaboutis
Sharon L. McCollam

Meetings in 2019: 8
 
monitors the integrity of our financial statements, reporting processes, internal controls and legal and regulatory compliance;
 
appoints, determines the compensation of, evaluates and, when appropriate, replaces our independent registered public accounting firm;
 
pre-approves all audit and permitted non-audit services to be performed by our independent registered public accounting firm;
 
monitors the qualifications and independence and oversees performance of our independent registered public accounting firm;
 
reviews and makes recommendations to the Board regarding our financial policies, including investment guidelines, deployment of capital and short term and long term financing; and
 
reviews with management the implementation and effectiveness of the Company’s compliance programs, discusses guidelines and policies with respect to risk assessment and risk management and oversees our internal audit function.


12



COMPENSATION COMMITTEE
Members:
     
Primary Responsibilities
John F. Bergstrom (Chair)
Eugene I. Lee, Jr.
Douglas A. Pertz

Meetings in 2019: 5
 
reviews and approves our executive compensation philosophy;
 
annually reviews and approves corporate goals and objectives relevant to the compensation of the CEO and evaluates the CEO’s performance in light of these goals;
 
determines and approves the compensation of our executive officers;
 
oversees our incentive and equity based compensation plans, reviews and approves our peer companies and data sources for purposes of evaluating our compensation competitiveness and establishing the appropriate competitive positioning of the levels and mix of compensation elements;
 
oversees development and implementation of the succession plans for executive management (other than the CEO), including identifying successors and reporting annually to the Board;
 
oversees the Company’s executive compensation recovery (“clawback”) policy; and
 
recommends to the Board compensation guidelines for determining the form and amount of compensation for outside directors.
NOMINATING and CORPORATE GOVERNANCE COMMITTEE
Members:
     
Primary Responsibilities
John F. Ferraro (Chair)
Jeffrey J. Jones II
Nigel Travis

Meetings in 2019: 5
 
assists the Board in identifying, evaluating and recommending candidates for election to the Board;
 
establishes procedures and provides oversight for evaluating the Board and management;
 
oversees development and implementation of the CEO succession plan, including identifying the CEO's successor and reporting annually to the Board;
 
develops, recommends and reassesses our corporate governance guidelines;
 
reviews and recommends retirement and other policies for directors and recommends to the Board whether to accept or reject a director's resignation;
 
reviews the development and communication of our ESG programs;
 
evaluates the size, structure and composition of the Board and its committees; and
 
establishes procedures for stockholders to recommend candidates for nomination as directors and to send communications to the Board.
Our Board has adopted written charters for each committee setting forth the roles and responsibilities of each committee. Each of the charters is available on our website at ir.advanceautoparts.com under "Governance."



13



Board’s Role in Risk Oversight
One of our Board’s responsibilities is the oversight of the enterprise-wide risk management activities of the Company. Risk is inherent in any business and the Board’s oversight, assessment and decisions regarding risks occur in the context of, and in conjunction with, the other activities of the Board and its committees that are comprised solely of non-management directors. The following graphic illustrates the Board’s oversight process:
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14



Aligning Stockholder Interests and Compensation Risk Mitigation
We have reviewed all of our compensation programs and found none that would be reasonably likely to have a material adverse effect on the Company. Our performance based executive compensation program, as described more fully in CD&A, coupled with our stock ownership guidelines, aligns the interests of our executives with stockholders by encouraging long term superior performance without encouraging excessive or unnecessary risk taking. Our long standing compensation philosophy discussed in CD&A is a key component of our history of consistent growth, which demonstrates an alignment of the interests of participants and stockholders and rewards each with increased value over the long term. As illustrated in the "Framework for Executive Compensation" section of CD&A, the compensation of our executives is primarily based on performance over a long term period. We believe the performance based vesting of a substantial portion of our executives' long term incentive compensation drives long term decision making, mitigates adverse risk taking that may occur due to year over year performance measurements, and rewards growth over the long term. The Compensation Committee, with the guidance and assistance of its independent compensation consultant, reviews and approves compensation components for all named executive officers and other executive officers. Annual incentives are reviewed each year and payments are subject to Compensation Committee discretion. The bonus plans for other Team Members are linked to financial, customer or operating measures. All Team Members, including officers, and our directors are subject to our Insider Trading Policy, which prohibits hedging existing ownership positions in the Company's securities, short selling the Company's stock, purchasing or selling derivative securities, and, unless certain stringent requirements are met, pledging Company stock.


15



Director Compensation
Under our director compensation program, each non-management director receives annual compensation that is comprised of a combination of cash and equity based compensation. Management directors do not receive any additional compensation for services as a director. Each non-management director receives an annual retainer of $85,000, which is paid in quarterly installments, and additional applicable retainers or fees as set forth in the following paragraph.

Directors who chair Board committees receive additional retainer amounts annually for their committee chair responsibilities. The Audit Committee Chair receives $20,000, the Compensation Committee Chair receives $15,000 and the Nominating and Corporate Governance Chair receives $10,000. The independent Board Chair (or the independent Lead Director in the event the Board Chair is not independent) receives an additional $100,000 annual retainer.

Each non-management director may elect to receive all or a portion of his or her retainer amounts on a deferred basis in the form of deferred stock units, or DSUs. Each DSU is equivalent to one share of our common stock. Dividends paid by us are credited toward the purchase of additional DSUs and are distributed together with the underlying DSUs. DSUs are payable in the form of common stock to participating directors over a specified period of time as elected by the participating director, or whenever their Board service ends, whichever is sooner.

In addition, each non-management director receives equity compensation valued at $155,000 per year. The equity compensation is awarded annually in the form of DSUs, granted to directors shortly after the date of the annual stockholder meeting, and will be distributed in common shares after the director’s service on the Board ends. Board members who are appointed at any time other than at the annual meeting receive a prorated DSU award with a grant value based upon the number of months from their election date until the next annual stockholder meeting. The annual grant of DSUs may vest pro-rata based upon the number of months the director has served during the current term in the event that a director's service as a member of the Board ends before May 1 of the calendar year following the Company's most recent annual meeting. On May 15, 2019, each non-management director received 995 DSUs valued at $155,000 on the date of grant.

2019 Director Summary Compensation
Information provided in the following table reflects the compensation delivered to our non-management directors for our last fiscal year:
Name
     
Fees Earned or
Paid in Cash(a)
     
Stock
Awards(b)
     
Total
John F. Bergstrom
 
$
100,000

 
$
155,000

 
$
255,000

Brad W. Buss
 
105,000

 
155,000

 
260,000

Fiona P. Dias (c)
 
42,500

 

 
42,500

John F. Ferraro
 
95,000

 
155,000

 
250,000

Jeffrey J. Jones II (c)
 
63,750

 
155,000

 
218,750

Adriana Karaboutis
 
85,000

 
155,000

 
240,000

Eugene I. Lee, Jr  
 
85,000

 
155,000

 
240,000

Sharon L. McCollam (c)
 
63,750

 
155,000

 
218,750

Douglas A. Pertz
 
85,000

 
155,000

 
240,000

Jeffrey C. Smith
 
185,000

 
155,000

 
340,000

Nigel Travis
 
85,000

 
155,000

 
240,000


(a)
Includes earned or deferred board retainers and chair retainers during 2019, which were paid in quarterly installments.
(b)
Represents the grant date fair value of DSUs granted during 2019. The grant date fair value is calculated in accordance with the Financial Accounting Standards Board’s Accounting Statement of Codification Topic 718 ("ASC Topic 718") based on the closing price of the Company’s stock on the date of grant. For additional information regarding the valuation assumptions of these awards, refer to Note 15 of the Company’s consolidated financial statements in the 2019 Form 10-K filed with the SEC on February 18, 2020. These amounts reflect the aggregate grant date fair value.
(c)
Ms. Dias retired from the Board immediately following our 2019 annual meeting, and Mr. Jones and Ms. McCollam joined the Board in February 2019. Accordingly, each of them received only a pro-rated portion of the cash retainer paid to non-management directors during 2019. Because the annual equity grants of DSUs are awarded following our annual stockholder meeting, Ms. Dias did not receive an equity grant.


16



Directors’ Outstanding Equity Awards at 2019 Fiscal-Year End
The following table provides information about the equity awards outstanding as of the end of our last fiscal year for our non-management directors:
Name
 
Outstanding Deferred
Stock Units (#)

John F. Bergstrom
 
14,249

Brad W. Buss
 
4,186

John F. Ferraro
 
7,474

Jeffrey J. Jones II
 
995

Adriana Karaboutis
 
5,062

Eugene I. Lee, Jr  
 
6,105

Sharon L. McCollam
 
995

Douglas A. Pertz
 
2,249

Jeffrey C. Smith
 
8,027

Nigel Travis
 
1,639





17



Proposal No. 2
Stockholder Advisory Vote to Approve the Compensation
of the Company's Named Executive Officers
 
At the 2019 Annual Meeting of Stockholders, 96 percent of the shares voted were cast in support of our compensation program for executive officers. We encourage you to review the CD&A section of this Proxy Statement and vote to approve the compensation of our named executive officers as disclosed therein and in the accompanying tables and narrative discussion contained in this Proxy Statement. We are providing this opportunity to vote on the compensation of our named executive officers as required by Section 14A of the Securities Exchange Act of 1934. Although your vote is advisory and not binding on our Board, our Compensation Committee or the Board will carefully consider the voting results and take them into consideration when making future decisions regarding executive compensation policies and procedures. It is expected that the next say-on-pay vote will occur at the 2021 annual meeting of stockholders.
 
Our executive compensation programs have played a key role in our ability to attract and retain a highly experienced, successful team to manage our Company and drive strategic and financial results for our stockholders. We believe our executive compensation programs are well structured to further our business objectives and support our culture. We believe that our compensation programs help further engage our workforce and position us to deliver strong results for our stockholders, our customers and the communities in which we operate.
 
We believe our executive compensation programs strike the appropriate balance between utilizing responsible, measured pay practices and effectively incentivizing our executives to dedicate themselves fully to value creation for our stockholders. This balance is evidenced by the following:
 
The compensation of our executives is based on a design that aims to align pay with both the attainment of annual operational and financial goals, which the Compensation Committee establishes, and sustained long term value creation;
Our compensation programs are substantially tied into our key business objectives and the success of our stockholders. If the value we deliver to our stockholders declines, so does the value of the compensation we deliver to our executives;
We maintain high levels of corporate governance oversight over our executive pay programs;
We closely monitor the compensation programs and pay levels of executives from companies of similar size and complexity to help ensure that our compensation programs are within the norm of a range of market practices; and
Our Compensation Committee, in conjunction with our Nominating and Corporate Governance Committee and senior management, engages in a talent review process annually to address succession and executive development for our Chief Executive Officer and other key executives.

The Board strongly endorses our executive compensation programs and recommends that the stockholders vote in favor of the following resolution:
 
"RESOLVED, that the compensation of our named executive officers as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the "Compensation Discussion and Analysis," compensation tables and narrative discussion contained in this Proxy Statement, is hereby APPROVED."
 

checkiconreda02.jpg
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE COMPENSATION OF THE COMPANY'S NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THE COMPENSATION DISCUSSION AND ANALYSIS SECTION, THE ACCOMPANYING COMPENSATION TABLES AND NARRATIVE DISCUSSION CONTAINED IN THIS PROXY STATEMENT.




18



Compensation Discussion and Analysis
This section describes the compensation packages of our principal executive officer, principal financial officer and three other most highly compensated executive officers as of December 28, 2019. We refer to these executives as our “Named Executive Officers” or “NEOs.”
Thomas R. Greco
President and Chief Executive Officer
     
Jeffrey W. Shepherd
Executive Vice President, Chief Financial Officer
     
Robert B. Cushing
Executive Vice President, Professional
     
Michael T. Broderick
Executive Vice President, Merchandising and Store Operations Support
     
Reuben E. Slone
Executive Vice President, Supply Chain

Our Compensation Discussion and Analysis addresses the following topics:
1.
Executive Summary,
2.
Compensation Governance,
3.
Framework for Executive Compensation, and
4.
Other Compensation and Benefit Programs.

1 Executive Summary
Corporate Highlights
In 2019, we continued to execute our transformation agenda. Consistent with our Mission, Passion for Customers…Passion for Yes!, we began every initiative in 2019 with a Customer-first focus. The dedication of all our Team Members across our entire Company, as well as our network of independent Carquest partners, enabled significant progress toward achieving our long term objectives.

The core focus of our strategic plan is centered on improving the Customer experience and driving consistent execution for both Professional and Do-It-Yourself Customers. In 2019, we continued to focus on the four pillars of our margin expansion plans: driving sales and profit per store, improving our supply chain, optimizing material cost and category management and increasing SG&A productivity. We made key investments in our supply chain, information technology projects and our eCommerce platform. We were also pleased to launch our partnership with Walmart.com in 2019 and announce our acquisition of the DieHard brand, which will make DieHard branded batteries, among other products, available to our customers beginning 2020. We believe that the initiatives we implemented in 2019 will have a pivotal impact on the shopping experience of our Customers in the future.

In addition, in 2019, we continued to advance environmental, health and safety initiatives throughout the Company. We have joined the SASB Alliance Group and released our initial CDP scores. We continue to differentiate ourselves by investing in our Team Members through increased training and development opportunities as well as stock award programs, such as Fuel the Frontline and Be An Owner, which reward select Team Members for meeting or exceeding performance objectives. Team Member engagement is an important part of our culture, and we believe that our people focused initiatives are inextricably linked with advancements in long term sustainability and profitability. In addition to our several initiatives focused on engagement and development, in 2019, we continued to focus on leveraging the diverse talents of our Team Members, investing in attracting, retaining and promoting top talent.

Finally, we remain committed to the disciplined execution of our capital allocation priorities, including maintaining an investment grade rating, investing in high return capital projects that will enable our successful transformation and returning cash to our stockholders. Consistent with these priorities, we invested approximately $270 million in our business in 2019 focused, heavily on information technology and supply chain projects. Further, our disciplined cash management enabled us to return value to our stockholders through the Company's share repurchase program and dividends totaling over $500 million in 2019. We are committed to maintaining our disciplined cash management approach through continued investments in capital projects that help solidify our Customer Value Proposition and deliver financial and operational improvements that allow us to live out our Mission: Passion for Customers…Passion for Yes!



19



Our long term incentive plan for the 2017 through 2019 performance period ("2017-2019 LTIP") and our 2019 annual incentive plan ("2019 AIP") utilized a subset of the following measures: Total Shareholder Return, Comparable Store Sales, Comparable Adjusted Operating Income and Return on Invested Capital as their performance metrics. Based on the Company's performance results, our NEOs earned the following incentive payouts:

2019 AIP
69.6% Payout

NEOs received a payout under the 2019 AIP because our performance exceeded our target for our Free Cash Flow metric under the plan and exceeded our thresholds for the other two performance metrics under the plan - Comparable Store Sales and Adjusted Operating Income. Since performance for these two performance metrics were not at target levels, we paid less than 100% of target.
2017-2019 LTIP
12.0% Payout

Each of our NEOs (other than Mr. Slone who was not part of our executive team and therefore did not receive an LTIP award in 2017) received a payout under the 2017-2019 LTIP because our performance for the Return on Invested Capital metric exceeded our threshold. Performance for the other two metrics under the plan - Relative Total Shareholder Return and Comparable Sales Growth - did not exceed our threshold.

Investor Outreach: Connecting with Our Stockholders
We believe it is extremely important to provide an open forum for stockholder discussion and feedback. We proactively reach out to our stockholders to discuss key issues in our business, provide updates on our performance and priorities and otherwise engage with our investors. For 2019, we participated in discussions with stockholders on a variety of topics, including, among others, performance metrics for our short term and long term incentive plans, CEO compensation, ESG actions and Board oversight, Board composition and potential changes or additions, human capital and our ability to attract and retain talent, and cyber security.

We believe that fostering an open forum with our stockholders helps us better align our governance framework and compensation programs with long term stockholder interests. At our 2019 annual meeting of stockholders, our stockholders demonstrated an overwhelming level of support for our executive compensation programs, with 96 percent of shares voted cast in favor of our executive compensation program.

96%
“Say on Pay” Support

2019 Executive Officer Compensation Program Highlights
Our compensation programs continue to center on a pay for performance philosophy. The compensation actions we took in 2019 are directly aligned with this belief to help ensure our management’s interests are aligned with those of our stockholders.
Compensation Element
     
Purpose
     
2019 Actions
Base Salary
 
Fixed annual cash compensation to attract and retain executives
 
In 2019, we increased base compensation for each of our NEOs other than Mr. Greco and Mr. Slone (who joined the executive team in 2018 and whose compensation was competitive for the position at the time) to make pay more competitive in the marketplace, help ensure retention of top performing leaders and promote internal pay equity among senior leaders.
2019 AIP Cash Incentive Plan
 
Performance based variable pay that delivers cash incentives when executives meet or exceed key financial results
 
For 2019, each NEO received a payout of 69.6% of their bonus target as the threshold goals under the plan were exceeded.
LTI Equity Compensation
 
Performance and time based equity compensation to reward executives for a balanced combination of meeting or exceeding key financial results and creating long term stockholder value
 
For 2019, we increased LTI awards for each of our NEOs other than Mr. Slone (who joined the executive team in 2018 and whose compensation was competitive for the position at the time) to bring target compensation closer to the median of the Company's peer group and help ensure retention of top performing leaders. In March 2019, NEOs were granted annual LTI awards that consisted of 70% performance based RSUs (covering a 2019-2021 performance period) and 30% time based RSUs.


20




2 Compensation Governance
We believe good corporate governance practices that reflect our values and support our strong strategic and financial performance must include policies and procedures related to our compensation practices. We regularly review our compensation programs to ensure that our incentives are aligned with stockholder value.
Compensation Framework Highlights
WE DO
HOW DO WE DO IT
ü
Pay for Performance
A significant portion of our compensation package is performance based for our NEOs.
ü
Have a Clawback Policy
Our Board adopted an Incentive Compensation Clawback Policy that provides incentives may be required to be paid back if the covered executive’s fraud or willful misconduct results in an accounting restatement.
ü
Incorporate double trigger vesting
In the event of a Change in Control, vesting only accelerates if awards are not replaced or an executive is terminated.
ü
Have Stock Ownership Guidelines
All directors and NEOs are required to maintain meaningful levels of stock to ensure alignment with stockholder interests.
ü
Ensure independence requirements are met for Compensation Consultant
Our Compensation Committee has exercised authority to engage and retain the services of an independent compensation consultant.

WE DO NOT
HOW DO WE ENFORCE IT
û
Provide excise tax gross-ups for change-in-control payments
Our executive employment agreements provide for “net best” payment limitations for change-in-control payments.
û
Provide significant perquisites or benefits
Our Executive Officers participate in the same benefit and retirement plans as our employees and we do not offer any additional programs.
û
Reprice or exchange underwater stock options
Our 2014 LTI Plan precludes repricing.
û
Permit hedging
Our insider trading policy (i) prohibits directors and certain employees, including NEOs, from trading our stock except during specified windows, (ii) prohibits directors and all employees from pledging our common stock unless certain stringent requirements are met, and (iii) prohibits directors and all employees from engaging in hedging of our common stock. We do not permit hedging or pledging of our LTI awards.
û
Permit pledging unless certain stringent requirements are met

Compensation Decision Roles
The Compensation Committee has final approval of all compensation recommendations for our NEOs except for the CEO, for whom the Compensation Committee’s recommendations are subject to review and approval by the full Board. The Committee has engaged Frederic W. Cook & Co., Inc. (“FW Cook”), an independent consulting firm, to provide advice and assistance to the Committee when making decisions. FW Cook reports to the Committee, and all services provided by FW Cook are on behalf of the Committee.


21




Compensation Committee
 
FW Cook
 
CEO and Management
ü
Review and approve annual performance and compensation of CEO and NEOs, including salary, short term and long term incentives
 
ü
Provide advice and assistance to the Compensation Committee when making compensation decisions
 
ü
CEO annually reviews performance of all executives
ü
Review, make recommendations and approve compensation plans
 
ü
Assist with reviews and updates on compensation best practices and provide benchmarking for salary and incentive compensation of peer group companies
 
ü
Management develops and maintains an effective pay and performance management system and develops the strategic plan and business goals which are incorporated into incentives for performance measures
ü
Periodically review the Company's peer group
 
ü
Provide the Compensation Committee with updates on regulatory and compliance changes related to executive compensation as applicable
 
ü
CEO makes recommendations for salary and incentive compensation of other executives commensurate with performance of each executive and the Company
ü
Oversee the Incentive Clawback Policy and Stock Ownership Guidelines
 
ü
Provide the Compensation Committee with analysis for peer group selection
 
 
 
Setting Executive Compensation
In determining appropriate compensation opportunities for our NEOs, the Compensation Committee reviews competitive market data provided by FW Cook on compensation practices among a peer group of other specialty retailers. On behalf of the Committee, FW Cook conducts an annual review of the compensation practices of our peer group.
Our peer group is established using a set of guiding principles:
ü
Limit consideration to companies with revenues between $3 billion and $30 billion, generally equivalent to a minimum of one-third and a maximum of three times our revenues;
ü
Include domestic, publicly traded companies that have a targeted focus of similar industries (including, but not limited to, Automotive Retail, General Merchandise Stores and Specialty Stores); and
ü
Consider alignment to companies with similar customers and/or business operations.

In August 2018, the Compensation Committee, with the assistance of FW Cook, reviewed our executive compensation peer group based on these principles and recommended adding the Michaels Companies to the peer group and removing Staples, Inc., which had been acquired and taken private. The following companies comprised our executive compensation peer group for 2018, which was used in competitive analyses to inform the Compensation Committee’s decisions on setting 2019 target pay opportunities for our NEOs:

AutoZone, Inc.
Genuine Parts Company
Office Depot, Inc.
CarMax, Inc.
HD Supply Holdings, Inc.
The Sherwin-Williams Company
Dick's Sporting Goods, Inc.
LKQ Corporation
Tractor Supply Company
Dollar General Corporation
The Michaels Companies, Inc.
W.W. Grainger, Inc.
Dollar Tree, Inc.
O’Reilly Automotive, Inc.
WESCO International, Inc.
Fastenal Company
 
 

In August 2019, the Compensation Committee again reviewed our executive compensation peer group and made no changes at that time. We will continue to monitor and review our peer group on an annual basis.

Compensation Positioning
The Compensation Committee considers multiple sources of information when determining executive pay. Generally speaking, we target the market median for annual compensation at target. The Committee reviews compensation data from our peer group as well as from other available external sources to ensure we are considering market best practices.



22



3 Framework for Executive Compensation
Compensation Philosophy and Objectives
Our executive compensation philosophy is straightforward - we pay for performance.
Our executives are accountable for the performance of the business and are compensated based on that performance.
In order to ensure we are effectively fulfilling our pay for performance philosophy, we strive to deliver a significant portion of our executive compensation through short term cash and long term share based incentive compensation.
The annual total direct compensation mix for our CEO and our other NEOs are illustrated below.
chart-a73bde138f5158059e8.jpgchart-3507be2c2aeb54c4b1a.jpg
Incentive based compensation for our CEO is 86% of his total compensation.
Our other NEOs, on average, have 71% of their total compensation tied to incentive based compensation.

Although there is no pre-established policy or target allocation between specific compensation components, the majority of our executive officers’ annual total target compensation is determined by our performance as compared to performance goals established for our short term and long term plans.

Base Salary
The Committee reviews the information provided by FW Cook regarding executive officers’ base salary levels compared to the base salaries of executives of our peer group companies as presented in their latest available proxy statements. The Committee also reviews the assessment of the performance of each executive officer. Performance reviews generally include assessing outcomes compared to specific business and strategic objectives that are established and reviewed annually. Strategic objectives are related to each executive officer’s role and may include objectives linked to environmental, health and safety, inclusion and diversity, and Customer and Team Member engagement and retention.

The table below summarizes 2019 base salaries compared to 2018 as of the end of the year. The Committee determined that Messrs. Greco and Slone’s respective salaries were in line with the targeted ranges for their roles and did not increase either of their base salaries. Messrs. Shepherd, Cushing and Broderick each received base salary increases to better align their compensation with the competitive market, promote retention and increase internal pay equity.

NEOs
     
2018 Salary
     
2019 Salary
     
% Change

Mr. Greco
 
$1,100,000
 
$1,100,000
 
0
%
Mr. Shepherd
 
$525,000
 
$575,000
 
9.5
%
Mr. Cushing
 
$525,000
 
$600,000
 
14.3
%
Mr. Broderick
 
$450,000
 
$500,000
 
11.1
%
Mr. Slone
 
$625,000
 
$625,000
 
0
%


23




Annual Incentive Plan
Our compensation philosophy connects our executives’ potential annual earnings to the achievement of performance objectives designed to support successful execution of our business strategies. We strive to ensure that our executives are rewarded for meeting or exceeding the goals that we set and strive to deliver each year.

Our AIP provides for the payment of cash bonuses based upon our performance in relation to predetermined financial and operational targets established during the first quarter of the fiscal year. Each NEO’s AIP target as a percentage of his or her base salary is established so that the NEO’s total annual cash compensation at target is aligned with the Committee’s desired positioning relative to the market.
NEOs
Base Salary
AIP Target (%)

AIP Target ($)
Mr. Greco
$1,100,000
135
%
$1,485,000
Mr. Shepherd
$575,000
85
%
$488,750
Mr. Cushing
$600,000
85
%
$510,000
Mr. Broderick
$500,000
85
%
$425,000
Mr. Slone
$625,000
85
%
$531,250

Our AIP payouts for 2019 were based on our performance as compared to the goals approved by the Compensation Committee. In 2019, the Committee reviewed the design of the AIP and decided to maintain the AIP metrics and weightings from 2018, as they continued to be consistent with our annual operating plan goals and objectives. 2019 was the third consecutive year of maintaining the metrics and weightings of the AIP, and we believe this consistency has been important in building a pay for performance culture at the Company. We believe that the alignment between metrics of our AIP and key attributes of our strategic operating plan helps ensure that our leaders are focused on important areas driving creation of long term stockholder value and that the AIP metrics are driving behavior required to achieve objectives of our strategic plan.

Our methodology for establishing the targets for the 2019 AIP was centered on alignment with our annual operating plan. Threshold payout levels were set for the Comparable Store Sales metric below 2018 results to establish a reasonable attainment outcome, for the Free Cash Flow target, below 2018 results in consideration of significant investments planned to occur in 2019 in connection with our business transformation, and for Adjusted Operating Income, above 2018 results such that our executives will only receive payout upon improvement from the prior year's performance. Maximum payout levels were set as significant stretch goals for each metric.
2019 Annual Incentive Plan Performance Results Table
The following table shows the actual performance results for 2019, as well as the goals that would have resulted in threshold, target and maximum level payouts for 2019. To the extent that performance fell between the applicable threshold, target or maximum performance levels for each of the three performance metrics, payouts were determined using linear interpolation.
 
 
Actual vs. Potential Payout Results
 
Metric
Performance
Weight
25% of Target (Threshold)
100% of Target
200% of Target
(Maximum)
Final Payout
Enterprise Adjusted Operating Income
($ in million)
1/3
 
 
 
 
 
66.0%
 
 
 
 
$795.0
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$774.0
$812.0
$893.0
Enterprise Comparable
Store Sales (%)
1/3
 
 
 
 
 
32.0%
 
 
1.1%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.0%
2.5%
5.0%
Free Cash Flow
($ in millions)
1/3
 
 
 
111.0%
 
 
 
 
 
 
$596.8
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$550.0
$575.0
$775.0
 
 
 
 
 
 
 
 
 
 
 
 
69.6%


24



Long Term Incentive Compensation
Our executives receive long term incentive compensation intended to link their compensation to our long term financial success. Our NEOs receive 70% of their annual LTI grant in the form of performance based RSUs and 30% of their annual LTI grant in the form of time based RSUs. Our performance based RSUs are earned based on our performance against three metrics: Comparable Store Sales, Return on Invested Capital ("ROIC") and Relative Total Shareholder Return ("Relative TSR"), each measured over a three year performance period. The Compensation Committee reviewed the design of our plan and determined to make no changes to it for 2019, making 2019 the third consecutive year that our annual LTI grants had these metrics and weightings. We believe these three metrics best represent and drive the desired long term strategic and financial objectives of our Company and that the consistency in plan design has been important in building a pay for performance culture at the Company. Target levels for the annual LTI grants are aligned with the financial performance needed to achieve the objectives of our long term strategic business plan.
2019 Annual Long Term LTI Grant Summary Table
The table below summarizes the annual LTI grants that were made to our NEOs in March 2019:
NEOs
Annual Grant LTI Target
% Performance Based
% Time Based
Mr. Greco
$5,500,000
70%
30%
Mr. Shepherd
$850,000
70%
30%
Mr. Cushing
$1,000,000
70%
30%
Mr. Broderick
$850,000
70%
30%
Mr. Slone
$850,000
70%
30%

Our analysis of peer group data in late 2018 indicated that long term incentive award levels were low for each of our named executive officers. Accordingly, we increased annual LTI grants for 2019 to bring target compensation closer to the median of the Company's peer group and help ensure retention of top performing leaders.

Generally, our time based RSUs vest in equal installments over three years, beginning on the first anniversary of the grant date. Our performance based awards may vest at the end of the three year performance period based on the company’s actual performance for 2019 through 2021 as compared to the performance targets established by the Compensation Committee in 2019. The payout ultimately earned can range from zero to 200% of the target amount based on actual performance relative to the predetermined goals. The three year performance period for the Relative TSR commences on the grant date and ends on the third anniversary of the grant date.
Metric
Weighting

How will we measure
Average Comparable Store Sales Growth
33
%
Results vs. Target
ROIC
34
%
Results vs. Target
Relative TSR
33
%
Relative performance to Peer Group

Historical Performance Based LTI Awards
In March 2017, annual LTI grants were made in the form of performance based RSUs for the 2017 to 2019 performance period. The metrics selected for these awards were the Company’s three year ROIC (weighted at 34%), Relative TSR (weighted at 33%) and Average Annual Comparable Stores Sales Growth (weighted at 33%).


25




2017 through 2019 LTI Performance Vesting Table
The following table shows the actual performance results for 2017 to 2019, as well as the threshold, target and maximum performance levels for the annual LTI grant for the 2017 to 2019 performance period.
 
 
Actual Payout Results
 
Metric
Performance
Weight
25% of Target (Threshold)
100% of Target
200% of Target
(Maximum)
Final Payout % by Metric
Return on Invested Capital
(%)
34%
 
 
 
35.0%
 
13.7%
 
 
 
 
 
 
 
 
 
 
 
 
13.5%
15.0%
16.5%
Relative Total Shareholder Return (%)
33%
 
 
 
0.0%
20.0%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
35.0%
55.0%
80.0%
Average Annual Comparable
Store Sales Growth (%)
33%
 
 
 
0.0%
0.4%
 
 
 
 
 
 
 
 
 
1.0%
2.5%
4.0%
 
 
 
 
 
 
 
 
 
12.0%

Messrs. Greco, Shepherd, Broderick and Cushing each received an annual grant of performance based RSUs for the 2017-2019 performance period. The performance based SARs granted for the 2017-2019 performance period paid out at 12.0% percent of target, because Relative TSR and Average Annual Comparable Stores Sales Growth failed to exceed the threshold levels and ROIC reached only slightly above the threshold level.

Stock Ownership Guidelines
Since 2006, we have had stock ownership guidelines in place that prescribe required levels of stock ownership and the timeline for achieving the required levels. These guidelines are designed to further strengthen and align our leadership with stockholders’ interests. Additional information about our stock ownership guidelines is presented in the "Stock Ownership Guidelines for Directors and Executive Officers" section of this Proxy Statement. As of March 2020, all NEOs are either meeting or on track to meet the required holdings based on the ownership levels required. 
Role
Ownership Guideline
CEO
6 times base salary
CFO and/or President
3 times base salary
Executive Vice President/Senior Vice President
2 times base salary
Incentive Compensation Clawback Policy
In 2012, our Board adopted an Incentive Compensation Clawback Policy that covers all forms of incentive compensation paid to current and former executive officers. Under the terms of the policy, incentive compensation may be required to be paid back if the covered executive’s fraud or willful misconduct results in an accounting restatement, and it is determined that such misconduct resulted in an overpayment of incentive compensation.




26



4 Other Compensation and Benefit Programs
We offer the following retirement savings programs to our NEOs as a part of our overall compensation strategy. Other than providing an executive physical benefit to our NEOs, we do not offer any enhanced or additional benefits to our NEOs that our Team Members do not also receive.
401(k) plan, which is available to all Team Members over age 21. There are no enhanced benefits for NEOs.
Deferred Compensation Plan, which permits all Team Members who meet the definition of a Highly Compensated Employee (as defined in the plan) to defer up to 50 percent of their annual salary and up to 50 percent of their bonus earnings and is ultimately settled in cash. The Company does not provide matching contributions on employee deferrals.
Deferred Stock Unit Plan, which is available to NEOs and executive/senior vice presidents of the Company. Eligible executives can voluntarily defer up to 50 percent of their base salaries in this program, which is ultimately settled in our stock. The Company does not provide matching contributions on employee deferrals.
 
Detailed information about deferrals made by NEOs into the Deferred Compensation Plan and Deferred Stock Unit Plan is presented in the "Non-Qualified Deferred Compensation for 2019" table contained in this Proxy Statement.

In addition to the retirement savings program benefits described above, we offer reimbursement for an executive physical for certain executives. Mr. Greco received reimbursement under this program in 2019, and the value of this reimbursement is included in the “All Other Compensation” section of the Summary Compensation Table.
Employment Agreements
We have entered into employment agreements with all NEOs and other selected senior executives. The Committee has determined that these agreements are beneficial to us because they contain restrictive covenants relating to confidential information, non-competition and non-solicitation of our employees. We compete for executive talent, and we believe that providing severance protection plays an important role in attracting and retaining key executives and enabling them to focus on the Company’s strategic goals. The agreements provide for severance payments under certain circumstances, which are discussed in more detail in the “Potential Payments Upon Termination or Change in Control Table” on page 36. The employment agreements with all of our NEOs provide that any incentive compensation granted to the executive by us is subject to our Incentive Compensation Clawback Policy, and none of the severance agreements provides tax gross-ups on any compensation or perquisite.

Following the initial one year term, the agreements for Messrs. Greco (effective April 11, 2016), Shepherd (effective September 17, 2018), Cushing (effective August 21, 2016), Broderick (effective February 6, 2018) and Slone (effective October 3, 2018) automatically renew for an additional one year term unless either the executive or the Company provides notice of non-renewal at least 90 days (or, in the case of Mr. Slone, 120 days) prior to the end of the then effective term.

The employment agreements with our NEOs specify annual base salary and annual performance based cash target bonus amounts for each executive, calculated as a specified percentage of the executive’s base salary. The performance measures are determined by the Compensation Committee annually and are consistent with the measures applied to other senior executives.

If the executive’s employment is terminated in the event of the executive’s death, we have agreed to pay to the executive’s designated beneficiary or estate an amount equal to one year of base salary at the rate then in effect, plus an amount equal to the executive’s target level bonus in effect at the time of the executive's death.

In the event of termination of employment due to disability as defined in the agreements, the executive will receive a lump sum payment amount equal to 30 percent of base salary at the rate then in effect, plus an amount equal to the executive’s target level annual bonus then in effect in addition to the benefits payable under our qualified group disability plan. 

In addition, under the terms of the executives' long term incentive awards (except for Mr. Greco's inducement SARs award), if the executive’s employment is terminated on account of death or disability, all time based RSUs and SARs granted to the executive pursuant to our 2014 LTIP or any successor plan will vest and become exercisable if not then vested or exercisable. If the executive’s employment is terminated on account of death, disability or retirement prior to the vesting date of the executive’s performance based SARs or RSUs (except for Mr. Greco's sign on RSU award), the performance based SARs or RSUs will become eligible for exercise or issuance on the normal vesting date for performance based awards on a pro-rata basis for the time that the executive was employed during the performance period. The pro rata amount of performance SARs or RSUs that will become eligible for exercise or issuance will be based on our actual performance through the end of the performance period. In the event Mr. Greco's employment is terminated on account of his death or disability, or if we terminate his employment without "Due Cause" or he terminates his employment for "Good Reason," as defined in his agreement, a pro rata portion of his unvested inducement award of time based SARs will vest and become exercisable based on the time that he was employed during the vesting period. If we terminate the executive’s employment without "Due Cause" or if the executive terminates his or her employment for "Good Reason," as defined in the agreements, other than following a Change in Control, as defined in the 2014 LTIP, Messrs. Shepherd, Cushing, Broderick and Slone will be entitled to a lump sum severance payment in an amount


27



equal to one year of base salary at the rate then in effect, plus an amount equal to an average of the past three years' annual bonus payments. Mr. Greco is entitled to an amount equal to one and one half times his annual base salary at the rate then in effect and an amount equal to one and one half times the average value of the annual bonuses paid to him for the three completed fiscal years immediately prior to the date of such termination, as well as an annual bonus for the fiscal year of termination of employment, based on actual full year performance, prorated to reflect the time of service for such fiscal year through the date of termination. Except as described in the preceding paragraph with respect to Mr. Greco's inducement and sign on grants, any performance based grants of SARs and RSUs will vest immediately on a pro rata basis based on our performance for the amount of time the executive was employed during the performance period measured as of the most recently completed fiscal quarter. Executives are also granted a right to continue their medical benefits for one year post termination at the same cost as active employees and to receive outplacement services for a period of up to one year, except for Mr. Greco who may continue his medical benefits for 18 months post termination at such cost.

If, within 12 months after a Change in Control, we terminate the executive officer’s employment other than for Due Cause, death or disability, or the executive terminates the executive’s employment for Good Reason, the executive will be entitled to receive a lump sum severance payment in an amount equal to two times base salary at the rate then in effect, plus two times the target annual bonus amount then in effect. Mr. Greco is also entitled to these benefits in the event his employment is terminated in contemplation of a Change in Control within three months prior to the consummation of a Change in Control. In addition, we will provide the executive certain outplacement services for a period of up to one year. In the event of a Change in Control, all time based RSUs, as well as Mr. Greco's sign on performance based RSUs, will vest and become exercisable or issued only if the acquiring entity does not exchange or replace the LTI grants or upon termination of employment without Due Cause within 24 months following the Change in Control event. Performance based SARs and RSUs will vest at the same time on a pro rata basis based on our performance for the amount of time the executive was employed during the performance period measured as of the most recently completed fiscal quarter prior to the Change in Control event. Executives are also granted a right to continue their medical benefits for up to one year post termination at the same cost as active employees, except for Mr. Greco who may continue his medical benefits for 18 months post termination at such cost.

In the event of a Change in Control, the employment agreements provide that if payments upon termination of employment related to a Change in Control would be subjected to the excise tax imposed by Section 4999 of the Internal Revenue Code, and if reducing the amount of the payments would result in greater benefits to him or her (after taking into consideration the payment of all income and excise taxes that would be owed as a result of the Change in Control payments), we will reduce the Change in Control payments by the amount necessary to maximize the benefits received by him or her, determined on an after-tax basis. The Change in Control payments are not eligible for tax gross up payments.
Tax Deductibility of Pay
In designing our executive compensation programs, we have historically considered the potential impact of Section 162(m) of the Internal Revenue Code, which disallows a tax deduction for any publicly held corporation for individual compensation exceeding $1,000,000 in any taxable year paid to our NEOs. Prior to the adoption of the Tax Cuts and Jobs Act (the "Act") in 2017, compensation paid in accordance with a stockholder approved performance based incentive plan was exempt from Section 162(m) and is tax deductible by us. Certain of our executive compensation plans, including the shareholder-approved 2014 LTIP, enabled us to qualify certain LTI awards and annual bonuses as "performance based" compensation under Section 162(m) of the Internal Revenue Code through 2017. In general, we intended to structure compensation programs to meet the requirements of Section 162(m), other than time based restricted stock or RSUs and selected annual incentive awards to newly hired executives in their first year of employment, which are not considered performance based under Section 162(m) of the Internal Revenue Code. The exemption for performance based compensation was repealed as part of the Act and will generally no longer be available for performance based compensation awarded following 2017. Accordingly, the Company may experience lower levels of tax deductibility of executive compensation costs in the future.


28



Compensation Committee Report
Our Compensation Committee is comprised entirely of three independent directors who meet independence, experience and other qualification requirements of the NYSE listing standards, and the rules and regulations of the SEC. Mr. Bergstrom is the chair of our Compensation Committee. The Compensation Committee operates under a written charter adopted by the Board. Our charter can be viewed on our website at ir.advanceautoparts.com under the "Governance" section.

We have relied on management’s representation that the CD&A presented in this Proxy Statement has been prepared with integrity and objectivity and in conformity with SEC regulations. Based upon our review and discussion with management, we recommended to the Board that the CD&A be included in this Proxy Statement and incorporated by reference into our 2019 Annual Report on Form 10-K.

THE COMPENSATION COMMITTEE
John F. Bergstrom (Chair)
Eugene I. Lee, Jr.
Douglas A. Pertz


29



Additional Information Regarding
Executive Compensation

Summary Compensation Table
The following Summary Compensation Table provides the compensation earned by our chief executive officer, principal financial officer and the other three most highly compensated executive officers as of the end of each for the last three completed fiscal years.
 
 
 
 
 
 
Bonus
 
Stock Awards
 
 Non-Equity
 Incentive Plan
Compensation
 
All Other
Compensation
 
 
Name and
Principal Position
 
 
 
Salary
 
 
 
 (b) (c)
 
(d)
 
(e)
 
Total
 
Year
 
($)
 
($)
 
($)
 
($)
 
($)
 
($)
Thomas R. Greco
 
2019
 
$
1,100,008

 
$

 
$
5,547,466

 
$
1,033,560

 
$
10,479

 
$
7,691,513

President and
Chief Executive Officer
 
2018
 
1,100,008

 

 
5,210,628

 
2,497,770

 
47,729

 
8,856,135

 
2017
 
1,100,008

 

 
5,000,129

 

 
27,860

 
6,127,997

Jeffrey W. Shepherd
 
2019
 
566,646

 

 
857,333

 
340,170

 
3,896

 
1,768,045

Executive Vice President, Chief Financial Officer
 
2018
 
450,752

 

 
758,483

 
750,611

 
5,658

 
1,965,504

 
2017
 
330,773

 

 
1,094,874

 

 
172,212

 
1,597,859

Robert B. Cushing
 
2019
 
587,468

 

 
1,008,674

 
354,960

 
11,571

 
1,962,673

Executive Vice President, Professional
 
2018
 
515,491

 

 
625,344

 
750,611

 
554

 
1,892,000

 
2017
 
470,017

 

 
1,100,117

 

 
132,717

 
1,702,851

Michael T. Broderick
 
2019
 
491,645

 

 
857,333

 
295,800

 
4,248

 
1,649,026

Executive Vice President, Merchandising and Store Operations Support
 
2018
 
449,199

 

 
625,344

 
643,376

 
8,457

 
1,726,376

Reuben E. Slone(a)
 
2019
 
624,998

 

 
857,333

 
369,749

 
5,369

 
1,857,449

Executive Vice President, Supply Chain
 
2018
 
156,250

 

 
1,000,022

 
310,910

 
11,440

 
1,478,622

 
(a)
During 2018, Mr. Slone served as a member of our Board until October, when he became employed by the Company as our Executive Vice President, Supply Chain. Accordingly, his salary for 2018 is a prorated amount of his base salary based upon the time he was employed by us.
(b)
Represents the grant date fair value of performance and time based RSUs granted during each of the years presented. The grant date fair value is calculated using the closing price of our common stock on the date of grant. For additional information regarding the valuation assumptions of this award, refer to Note 15 of our consolidated financial statements in the 2019 Form 10-K filed with the SEC on February 18, 2020. See the "2019 Grants of Plan-Based Awards Table" and "Outstanding Equity Awards at 2019 Fiscal Year-End Table" in this Proxy Statement for information on stock awards granted in 2019 and prior years. Any performance awards included in these amounts have been valued based on the probable outcome of the performance conditions as of the grant date.
(c)
The maximum value for performance awards (as of the grant date), assuming the highest level of performance is achieved for performance awards granted, is provided for each executive in the table below.


30



Name
 
Year
 
Performance Based RSUs
Maximum Grant Date Fair Value
($)
 
Mr. Greco
 
2019
 
$
7,794,834

 
 
 
2018
 
7,421,226

 
 
 
2017
 
7,000,149

 
Mr. Shepherd
 
2019
 
1,204,536

 
 
 
2018
 
506,683

 
 
 
2017
 
479,429

 
Mr. Cushing
 
2019
 
1,417,274

 
 
 
2018
 
890,638

 
 
 
2017
 
840,118

 
Mr. Broderick
 
2019
 
1,204,536

 
 
 
2018
 
890,638

 
Mr. Slone
 
2019
 
1,204,536

 
 
 
2018
 
747,105

 

(d)
For 2019, represents amounts paid to our NEOs in March 2020 under our 2019 AIP. See the "Annual Incentive Plan" section of this Proxy Statement for additional information regarding our 2019 AIP.
(e)
For 2019, includes (i) Company matching contributions according to the terms of the Company's 401(k) plan in the amounts of $8,462 for Mr. Greco, $2,625 for Mr. Shepherd, $10,723 for Mr. Cushing, and $3,115 for Mr. Broderick; (ii) life insurance premiums paid by the Company for each executive as follows: $2,017 for Mr. Greco; $1,271 for Mr. Shepherd; $847 for Mr. Cushing; $1,132 for Mr. Broderick; and $1,051 for Mr. Slone; and (iii) for Mr. Slone includes relocation and temporary living expenses in the amount of $2,392 and $1,926 for related tax reimbursement payments.



31



Grants of Plan-Based Awards in 2019
The following table sets forth information concerning grants of cash and stock based awards made under our annual and long term incentive plans during 2019. The threshold, target and maximum non-equity incentive award amounts shown in the table represent the amounts to be paid if our performance had met the respective levels of the applicable performance measures. The performance measures are more fully described under the heading "Annual Incentive Plan" in CD&A. The threshold, target and maximum equity incentive award amounts shown in the table represent the amounts to be paid if our performance meets the respective level of applicable performance measures as more fully described under the heading "Long Term Incentive Compensation" in CD&A.
 
 
 
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards (a)
 
Estimated Future Payouts Under Equity Incentive Plan Awards (b)
 
All Other Stock Awards: Number of Shares of Stock or Units
(#) (c)
 
 
 
Grant Date Fair Value of Stock and Option Awards
($) (d)
Name
Grant Date
Approval Date
Threshold
($)
 
Target
($)
 
Maximum
($)
 
Threshold
(#)
 
Target
(#)
 
Maximum
(#)
 
 
 
 
Mr. Greco
 
 
$
371,250

 
$
1,485,000

 
$
2,970,000

 

 

 

 

 
 
 
$

 
3/1/2019
2/11/2019

 

 

 
4,012

 
16,049

 
32,098

 

 
 
 
2,566,717

 
3/1/2019
2/11/2019

 

 

 

 

 

 
10,273

 
 
 
1,650,049

 
3/1/2019
2/11/2019

 

 

 
2,006

 
8,024

 
16,048

 

 
 
 
1,330,700

Mr. Shepherd
 
 
122,187

 
488,750

 
977,500

 

 

 

 

 
 
 

 
3/1/2019
2/11/2019

 

 

 
620

 
2,480

 
4,960

 

 
 
 
396,626

 
3/1/2019
2/11/2019

 

 

 

 

 

 
1,588

 
 
 
255,065

 
3/1/2019
2/11/2019

 

 

 
310

 
1,240

 
2,480

 

 
 
 
205,642

Mr. Cushing
 
 
127,500

 
510,000

 
1,020,000

 

 

 

 

 
 
 

 
3/1/2019
2/11/2019

 

 

 
730

 
2,918

 
5,836

 

 
 
 
466,676

 
3/1/2019
2/11/2019

 

 

 

 

 

 
1,868

 
 
 
300,037

 
3/1/2019
2/11/2019

 

 

 
365

 
1,459

 
2,918

 

 
 
 
241,961

Mr. Broderick
 
 
106,250

 
425,000

 
850,000

 

 

 

 

 
 
 

 
3/1/2019
2/11/2019

 

 

 
620

 
2,480

 
4,960

 

 
 
 
396,626

 
3/1/2019
2/11/2019

 

 

 

 

 

 
1,588

 
 
 
255,065

 
3/1/2019
2/11/2019

 

 

 
310

 
1,240

 
2,480

 

 
 
 
205,642

Mr. Slone
 
 
132,812

 
531,249

 
1,062,497

 

 

 

 

 
 
 

 
3/1/2019
2/11/2019

 

 

 
620

 
2,480

 
4,960

 

 
 
 
396,626

 
3/1/2019
2/11/2019

 

 

 

 

 

 
1,588

 
 
 
255,065

 
3/1/2019
2/11/2019

 

 

 
310

 
1,240

 
2,480

 

 
 
 
205,642

(a)
Amounts shown represent possible cash payouts under our 2019 AIP. See the "Annual Incentive Plan" section of this Proxy Statement for a discussion of threshold, target and maximum cash incentive plan payouts.
(b)
Amounts shown represent the shares of our common stock issuable assuming achievement of the specific threshold, target or maximum levels of performance established by the Compensation Committee for performance based RSU grants to our executives. These performance based RSU grants were part of our annual long term equity grants made in 2019 and related to the 2019 through 2021 three year performance period. See the "Long Term Incentive Compensation" section of this Proxy Statement for more information regarding our performance based RSU grants.
(c)
Amounts shown represent the number of time based RSUs granted to our executives for 2019. For more information regarding awards of time based RSUs, see the "Long Term Incentive Compensation" section of this Proxy Statement.
(d)
Amounts shown represent the aggregate grant date fair value of the equity awards calculated in accordance with ASC Topic 718 utilizing the assumptions discussed in Note 15 of our consolidated financial statements in the 2019 Form 10-K filed with the SEC on February 18, 2020. The attainment of target level for performance awards was deemed probable at the date of grant for the each of the performance awards granted during 2019. Accordingly, the grant date fair value was calculated at target level for these awards.

The time vested portions of the RSU awards granted in 2019 include rights to receive dividend equivalent payments in the same amount as paid to our stockholders, but do not include voting rights. The performance based RSUs granted in 2019 do not include dividend or voting rights. We paid quarterly cash dividends of $0.06 per share in 2019.


32



Outstanding Equity Awards at 2019 Fiscal Year-End

The following table provides information concerning stock based awards granted to our NEOs that were outstanding at the end of our last fiscal year.
 
 
 
 
Option Awards (a) 
 
Stock Awards (b)
 
 
 
 
 
 
 
 
 
 
Equity Incentive Plan Awards:
Name
 
Grant Date
 
Number of Securities Underlying Unexercised Options Exercisable (#)
 
Number of Securities Underlying Unexercised Options Unexercisable (#)
 
Equity Incentive Plan Awards: Number of Shares Underlying Unexercised Unearned Options (#)
 
Option Exercise Price ($)
 
Option Expiration Date
 
Number of Shares or Units of Stock That Have Not Vested (#)
 
Market Value of Shares or Units of Stock That Have Not Vested ($)
 
Number of Unearned Shares, Units, or Other Rights That Have Not Vested  (#)
 
Market Value of Unearned Shares, Units, or Other Rights That Have Not Vested ($)
Mr. Greco
 
3/1/2019 (c) (d)
 

 

 

 
$

 
 
 

 
$

 
2,006

 
$
317,650

 
 
3/1/2019 (c)
 

 

 

 

 
 
 
10,273

 
1,626,730

 

 

 
 
3/1/2019 (c)
 

 

 

 

 
 
 

 

 
16,049

 
2,541,359

 
 
3/1/2018 (d)
 

 

 

 

 
 
 

 

 
21,046

 
3,332,634

 
 
3/1/2018
 

 

 

 

 
 
 
8,510

 
1,347,559

 

 

 
 
3/1/2018
 

 

 

 

 
 
 

 

 
39,948

 
6,325,766

 
 
3/1/2017 (d)
 

 

 

 

 
 
 

 

 
1,861

 
294,729

 
 
3/1/2017
 

 

 

 

 
 
 
3,192

 
505,453

 

 

 
 
3/1/2017
 

 

 

 

 
 
 

 

 
3,723

 
589,616

 
 
4/14/2016
 
22,915

 
45,830

 

 
160.94

 
4/14/2023
 

 

 

 

 
 
4/14/2016
 

 

 

 

 
 
 
4,557

 
721,601

 

 

Mr. Shepherd
 
3/1/2019 (c) (d)
 

 

 

 

 
 
 

 

 
310

 
49,089

 
 
3/1/2019 (c)
 

 

 

 

 
 
 
1,588

 
251,460

 

 

 
 
3/1/2019 (c)
 

 

 

 

 
 
 

 

 
2,480

 
392,708

 
 
5/29/2018
 

 

 

 

 
 
 
1,345

 
212,981

 

 

 
 
3/1/2018 (d)
 

 

 

 

 
 
 

 

 
1,390

 
220,107

 
 
3/1/2018
 

 

 

 

 
 
 
1,448

 
229,291

 

 

 
 
3/1/2018
 

 

 

 

 
 
 

 

 
2,780

 
440,213

 
 
3/1/2017 (d)
 

 

 

 

 
 
 

 

 
130

 
20,586

 
 
3/1/2017
 

 

 

 

 
 
 
1,820

 
288,197

 

 

 
 
3/1/2017
 

 

 

 

 
 
 

 

 
261

 
41,329

Mr. Cushing
 
3/1/2019 (c) (d)
 

 

 

 

 
 
 

 

 
365

 
57,758

 
 
3/1/2019 (c)
 

 

 

 

 
 
 
1,868

 
295,798

 

 

 
 
3/1/2019 (c)
 

 

 

 

 
 
 

 

 
2,918

 
462,065

 
 
3/1/2018 (d)
 

 

 

 

 
 
 

 

 
2,526

 
399,992

 
 
3/1/2018
 

 

 

 

 
 
 
1,022

 
161,834

 

 

 
 
3/1/2018
 

 

 

 

 
 
 

 

 
4,794

 
759,130

 
 
8/1/2017
 

 

 

 

 
 
 
1,751

 
277,271

 

 

 
 
3/1/2017 (d)
 

 

 

 

 
 
 

 

 
223

 
35,352

 
 
3/1/2017
 

 

 

 

 
 
 
383

 
60,648

 

 

 
 
3/1/2017
 

 

 

 

 
 
 

 

 
447

 
70,782

 
 
2/10/2014
 
711

 

 

 
123.32

 
2/10/2021
 

 

 

 

Mr. Broderick
 
3/1/2019 (c) (d)
 

 

 

 

 
 
 

 

 
310

 
49,089

 
 
3/1/2019 (c)
 

 

 

 

 
 
 
1,588

 
251,460

 

 

 
 
3/1/2019 (c)
 

 

 

 

 
 
 

 

 
2,480

 
392,708

 
 
3/1/2018 (d)
 

 

 

 

 
 
 

 

 
2,526

 
399,992

 
 
3/1/2018
 

 

 

 

 
 
 
1,022

 
161,834

 

 

 
 
3/1/2018
 

 

 

 

 
 
 

 

 
4,794

 
759,130

 
 
11/20/2017
 

 

 

 

 
 
 
365