0001158449-21-000085.txt : 20210331 0001158449-21-000085.hdr.sgml : 20210331 20210331172218 ACCESSION NUMBER: 0001158449-21-000085 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 34 CONFORMED PERIOD OF REPORT: 20210102 FILED AS OF DATE: 20210331 DATE AS OF CHANGE: 20210331 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: 0102 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-16797 FILM NUMBER: 21794712 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_proxyx2021filingdef14a.htm DEF 14A Document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
 
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ADVANCE AUTO PARTS, INC.
(Name of Registrant as Specified in its Charter)
 
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
 
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ADVANCE AUTO PARTS, INC.
2635 EAST MILLBROOK ROAD
RALEIGH, NORTH CAROLINA 27604

Notice of 2021 Annual Meeting of Stockholders of
Advance Auto Parts, Inc. (the "Company")

Logistics
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DATE AND TIMEPLACERECORD DATE
Wednesday, May 26, 2021
at 8:30 a.m. Eastern Time
www.virtualshareholdermeeting.com/AAP2021
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 29, 2021, are entitled to vote at our Annual Meeting.
Voting Items
Board Recommendation
1Election of the nine nominees named in the Proxy Statement to the Board of Directors ("Board") to serve until the 2022 annual meeting of stockholders
FOR
each director nominee
2Advisory vote to approve the compensation of the Company’s named executive officersFOR
3Ratification of the appointment by the Audit Committee of Deloitte & Touche LLP ("Deloitte") as the Company’s independent registered public accounting firm for 2021FOR
4Advisory vote on a stockholder proposal, if presented at our Annual Meeting, regarding amending our proxy access rights to remove the shareholder aggregation limitAGAINST
5Action 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 25, 2021, 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 join 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. 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 26, 2021:
The Notice of 2021 Annual Stockholders' Meeting and Proxy Statement and the 2020 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, 2021.

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
March 31, 2021



Proxy Statement Summary
Voting Roadmap
Proposal 1Board 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 2022 annual meeting of stockholders
The Board recommends a vote FOR each director nominee
See page 1
Director Nominees
Name and Age
Director
Since
OccupationCurrent Committees
Other Current Public
Company Boards
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Carla J. Bailo, 60
Independent
2020President and Chief Executive Officer of The Center for Automotive ResearchNominating & Corporate GovernanceSM Energy Company
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John F. Ferraro, 65
Independent
2015Past Global Chief Operating Officer, Ernst & Young
Nominating & Corporate Governance (Chair)
Audit
International Flavors & Fragrances Inc.
ManpowerGroup, Inc.
tomgrecosuit2bwa031.jpg
Thomas R. Greco, 62
2016President and Chief Executive Officer, Advance Auto Parts, Inc.Tapestry, Inc.
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Jeffrey J. Jones II, 53
Independent
2019President, Chief Executive Officer, H&R Block, Inc.Nominating & Corporate Governance CompensationH&R Block, Inc.
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Eugene I. Lee, Jr., 59
Independent Chair of the Board
2015Chairman and Chief Executive Officer, Darden Restaurants, Inc.Darden Restaurants, Inc.
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Sharon L. McCollam, 58
Independent
2019Retired Chief Administrative and Chief Financial Officer of Best Buy Co., Inc. AuditChewy, Inc.
Signet Jewelers, Ltd.
Stitch Fix, Inc.
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Douglas A. Pertz, 66
  Independent
2018President and Chief Executive Officer, The Brink's CompanyCompensationThe Brink's Company
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Nigel Travis, 71
Independent
2018Retired Chief Executive Officer and Former Chairman of the Board, Dunkin' Brands Group, Inc. Nominating & Corporate GovernanceAbercrombie & Fitch Co.
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Arthur L. Valdez Jr., 50
Independent
2020Executive Vice President, Chief Supply Chain & Logistics Officer of Target CorporationAudit

i


Director Skills, Core Competencies and Characteristics
In 2020, the Nominating and Corporate Governance Committee reviewed the core competencies that it believes should be represented on our Board. The Committee regularly evaluates the composition and diversity of the Board with respect to qualifications and skill sets that are important in consideration of the Company's long term strategic plan and with respect to providing effective leadership and diverse viewpoints on matters considered by the Board. The following shows certain key skills, competencies and characteristics of our director nominees.
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*A-Asian; B-Black or African American; H-Hispanic or Latino; W-White; O-Other

ii


Stockholder Engagement
Outreach
We value dialogue with our stockholders and regularly conduct stockholder governance outreach. Feedback from stockholders is shared with the Board and applicable Committees periodically.
Participants
Outreach discussions with our stockholders generally include our Chief Executive Officer (“CEO”) and management representatives from Investor Relations, Human Resources/Compensation and the office of the General Counsel and Corporate Secretary.
Topics discussed
This year, discussions with stockholders primarily focused on Environmental, Social and Governance (“ESG”) issues and actions, including publication of our Corporate Sustainability and Social Report and advancements in our ESG disclosures, diversity, equity and inclusion and environmental sustainability, the impact of the global pandemic on our business and our response to it, executive compensation matters and Board composition.

Corporate Governance Highlights
ü
Annual election of all directors
ü
Strong Guidelines on Significant Governance Issues
ü
Directors elected by majority voting
ü
Annual evaluation of the Board, Committees and individual directors
ü
Independent Chair of the Board
ü
New director searches focused on key skills for the Company's long term strategic plan and diversity characteristics
ü
Nearly 90 percent of our director nominees 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
üRegular executive sessions of independent directorsüRobust stock ownership guidelines for directors and Executive Officers
ü
Proxy Access right for up to 20 person groups of stockholders owning 3% of our stock for 3 years to nominate up to 20% of our Board
üDirect oversight by the Nominating and Corporate Governance Committee of ESG matters
üRight for stockholders of 10% or more of the Company's stock to call a special meetingüAverage tenure of 3.1 years for our director nominees

Proposal 2Board 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 16
Executive Compensation Highlights
The Company’s compensation programs continue to center on a pay for performance philosophy. Compensation actions in 2020 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 2020:

iii


ElementPurposeMetrics
Base Salary
Fixed annual cash compensation to attract and retain executivesEstablished 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 CompensationPerformance 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 e-commerce in 2020 relative to the revenue generated by stores, branches and e-commerce in 2019, 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.

Pay For Performance Alignment
The following chart illustrates the mix of 2020 target compensation for our CEO and our other NEOs.
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2020 Performance Plan Payouts
2020 Annual Incentive Plan Payout
ThresholdTargetMaximum
Enterprise Adjusted Operating Incomea93.4%
Enterprise Comparable Store Salesa
Free Cash Flowa


iv


2018-2020 Long Term Incentive Plan Payout
ThresholdTargetMaximum
ROICa85.7%
Relative TSRx
Average Annual Comparable Store Sales Growtha
For additional information about 2020 results achieved and corresponding plan payouts, please see the discussion beginning on page 22 in CD&A.
Strong Compensation Governance
STOCKHOLDER FRIENDLY PRACTICES WE EMPLOYSTOCKHOLDER 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 16.

Proposal 3Board Recommendation
image411.jpg
Ratification of the appointment by the Audit Committee of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for 2021
The Board recommends a vote FOR this Proposal
See page 44

Proposal 4Board Recommendation
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Advisory vote on stockholder proposal, if presented at the Annual Meeting, regarding amending our proxy access rights to remove the shareholder aggregation limit
The Board recommends a vote AGAINST this Proposal
See page 46


v


Table of Contents
Proposal No. 1 Election of Directors1 Compensation Committee Report27 
Nominees for Election to Our BoardCompensation Program Risk Assessment28 
Corporate Governance7 Additional Information Regarding Executive Compensation29 
OverviewSummary Compensation Table29 
Board Composition and RefreshmentGrants of Plan-Based Awards in 202031 
Nominations for DirectorsOutstanding Equity Awards at 2020 Fiscal Year End32 
Board Independence and StructureOption Exercises and Stock Vested in 202034 
Board's Role in Risk Oversight10 Non-Qualified Deferred Compensation for 202034 
Board Evaluation10 Potential Payments Upon Termination of Employment or Change in Control35 
Stockholder and Interested Party Communications with our Board10 CEO Pay Ratio37 
Code of Ethics and Business Conduct11 Information Concerning our Executive Officers38 
Code of Ethics for Finance Professionals11 Security Ownership of Certain Beneficial Owners and Management40 
Related Party Transactions11 Stock Ownership Guidelines for Directors and Executive Officers42 
Succession Planning12 Delinquent Section 16(a) Reports43 
Director Compensation13 Equity Compensation Plan Information43 
2020 Director Summary Compensation13 Proposal No. 3 Ratification of Appointment of Deloitte & Touche LLP as our Independent Registered Public Accounting Firm for 202144 
Directors' Outstanding Equity Awards at 2020 Fiscal-Year End14 2020 and 2019 Audit Fees44 
Proposal No. 2 Stockholder Advisory Vote to Approve the Compensation of the Company's Named Executive Officers16 Audit Committee Report45 
Compensation Discussion and Analysis16 Proposal No. 4 Stockholder Proposal Entitled "Proxy Access"46 
Executive Summary16 Board of Directors' Statement in Opposition to Proposal No. 447 
Compensation Governance18 Other Matters49 
Framework for Executive Compensation21 
Other Compensation and Benefit Programs25 

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 2020 Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on February 22, 2021.



Proposal No. 1
Election of Directors
At the 2021 annual meeting of stockholders (the "Annual Meeting"), you will vote to elect as directors the nine nominees listed below to serve until our 2022 annual meeting of stockholders or until their respective successors are elected and qualified. Our Board has nominated Carla J. Bailo, John F. Ferraro, Thomas R. Greco, Jeffrey J. Jones II, Eugene I. Lee, Jr., Sharon L. McCollam, Douglas A. Pertz, Nigel Travis and Arthur L. Valdez Jr. 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 John F. Bergstrom nor Brad W. Buss, 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 an additional diverse director candidate.
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.


1


Nominees for Election to Our Board
The following information is provided about our nominees for director effective as of the record date, March 29, 2021 (the "Record Date").
CARLA J. BAILO Independent
President and Chief Executive Officer, The Center for Automotive Research
carlabailo_bw1a.jpg Age: 60
Director Since:
August 2020
Committee:
Nominating and Corporate Governance
Other Current Public Company Boards:
SM Energy Company
Key Experience and Skills
With an accomplished career in the automotive industry, including several leadership roles in both corporate and academic settings, Ms. Bailo brings a unique and valuable point of view to our Board. She also has significant experience in the environmental sustainability space and brings a differentiated perspective on ESG matters to our Board.

Professional Experience
Ms. Bailo is currently the President and Chief Executive Officer of The Center for Automotive Research, an independent, non-profit research organization that engages with leaders in the global automotive industry to support technology advancements and improve the competitiveness of the U.S. automotive industry, a position she has held since October 2017. Ms. Bailo has also been President and Chief Executive Officer of ECOS Consulting, LLC, an energy efficiency solutions provider, since 2014. Previously, Ms. Bailo served as Assistant Vice President, Mobility Research and Business Development of The Ohio State University, a public research university, from 2015 to October 2017. Prior to 2015, Ms. Bailo held various leadership roles with Nissan Motor Co. Ltd., a multinational automobile manufacturer, and began her career with General Motors Company, a multinational vehicle and financial services corporation. Ms. Bailo has served on the board of directors for SM Energy Company, a company engaged in hydrocarbon exploration, since October 2018.
JOHN F. FERRARO Independent
Past Global Chief Operating Officer, Ernst & Young
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Age: 65
Director Since:
February 2015
Committee:
Nominating and Corporate Governance (Chair); Audit
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. He has been designated by the Board as an audit committee financial expert consistent with SEC regulations.

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: 62
Director Since:
April 2016
Committee:
None
Other Current Public Company Boards:
Tapestry, Inc.
Key Experience and Skills
Mr. Greco has served as our President and Chief Executive Officer and a member of our Board since 2016. 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. He has served as a director of Tapestry, Inc., an American multinational luxury fashion holding company, since December 2020 and formerly 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: 53
Director Since:
February 2019
Committees:
Nominating and Corporate Governance; Compensation
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 (Chair of the Board)
Chairman and Chief Executive Officer, Darden Restaurants, Inc.
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Age: 59
Director Since:
November 2015
Committee:
None
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 Chairman 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 January 2021. Previously, Mr. Lee served as Darden’s President and Chief Executive Officer from February 2015 to January 2021, 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.
sharonmccollambwa011a.jpg
Age: 58
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 Chewy, Inc., an online pets and pet parents retailer, since June 2019, of Signet Jewelers, Limited, an omni-channel diamond jewelry retailer, since March 2018, and of Stitch Fix, Inc., an online apparel specialty retailer, since November 2016. 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
image321.jpg
Age: 66
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
Former Chairman of the Board and Retired Chief Executive Officer, Dunkin' Brands Group, Inc.
ntravisbwa011a.jpg
Age: 71
Director Since:
August 2018
Committee:
Nominating and Corporate Governance
Other Current Public Company Boards:
Abercrombie & Fitch Co.
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 Company's continued transformation. 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 until December 2020. Previously, he served as Chief Executive Officer of Dunkin’ Brands from January 2009 to July 2018, where he 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 has served as a director of Abercrombie & Fitch Co., a global multi-brand specialty retailer, since January 2019 and formerly served as a director of Office Depot, Inc., an office supply company, from March 2012 to May 2020.




5


ARTHUR L. VALDEZ JR. Independent
Executive Vice President, Chief Supply Chain & Logistics Officer of Target Corporation
arthurvaldez_bw1a.jpg
Age: 50
Director Since:
August 2020
Committee:
Audit
Other Current Public Company Boards:
None
Key Experience and Skills
Mr. Valdez's executive experience, focusing on supply chain and logistics, at two leading global retailers provides the Board with valuable insights in a key component of the Company's continued transformation. Additionally, the Board believes that being of Hispanic ethnicity and having not previously served as a public company director contribute important diversity of thought and experience and enhance the differentiated perspective that Mr. Valdez brings to the Board.

Professional Experience
Mr. Valdez is currently Executive Vice President, Chief Supply Chain & Logistics Officer of Target Corporation, a retail corporation, a position he has held since March 2016, where he leads all functions of Target’s global supply chain and logistics network. Mr. Valdez has spent his career building supply chain and fulfillment networks across Asia, Europe and North and South America. Prior to his time at Target Corporation, Mr. Valdez spent 17 years in a variety of leadership roles with Amazon.com Inc., an online retailer, including Vice President, Operations, International Expansion, Vice President, Worldwide Transportation, and Vice President, Operations, Amazon.co.uk Ltd.


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

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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." 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 risk oversight, stockholder and interested party communications with the Board, transactions with related persons, executive officer succession planning and other matters. For additional information about corporate governance highlights, please see "Proxy Summary - Corporate Governance Highlights."

Board Composition and Refreshment
Of the nine director nominees that compose our Board:
8 of 9
are independent
3 of 9
are diverse with respect to gender or race/ethnicity
Our directors possess a breadth of skills and depth of experience relevant to being able to provide effective oversight for the execution of the Company's transformation agenda and creation of long term value. For additional information about the skills, experiences and characteristics of our Board, please see "Proxy Summary - Director Skills, Core Competencies and Characteristics."
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 the Board's size and the diversity, skills and experience of our directors, to ensure continued alignment with the strategic direction of the Company.
As part of this evaluation in 2020, the Nominating and Corporate Governance Committee identified automotive industry expertise, supply chain experience and gender and racial/ethnic diversity as areas it would like to augment on the Board. Using a third party search firm, the Committee identified and evaluated several excellent candidates, ultimately recommending to the Board the appointment of Ms. Bailo and Mr. Valdez. While the Board does not currently have any vacancies, the Board has commenced a search for an additional diverse director candidate.
6 new directors
have joined our Board in the past 3 years
3.1 years
average tenure of our director nominees
Nominations for Directors
Identifying Director Candidates
The Nominating and Corporate Governance Committee is responsible for leading the search for and evaluating qualified individuals, including those of diverse backgrounds, to become nominees for election as directors. The Committee is authorized to retain a search firm to assist in identifying, screening and attracting director candidates. 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, diversity 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. Although the Board has not adopted a formal policy with regard to diversity (including, but not limited to, with respect to gender, race, ethnicity, sexual orientation, disability and age) in the composition of the Board, the Committee is committed to considering candidates of diverse backgrounds in every director search it leads and strives to compose a Board that reflects diverse viewpoints that will actively and constructively contribute to the Board’s discourse and deliberations.
Stockholder Recommendations for Director Candidates and Proxy Access
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

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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."

Additionally, our by-laws provide 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.
Board Independence and Structure
Independence
Our Board reviews each director's independence at least annually with the assistance of the Nominating and Corporate Governance Committee and has determined that each of our directors other than Mr. Greco is “independent” 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.
The Board determined that Mr. Greco is not independent because he is employed as our President and Chief Executive Officer.
In the independence determination, 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. 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.
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. Lee currently serves as the independent Chair of the Board. Although the Board believes this structure is appropriate under the present circumstances, the Board has also not adopted a policy on whether the roles of Chairman and Chief Executive Officer should be separated or combined because the Board believes that there is no single best blueprint for structuring board leadership and that, as circumstances change, the optimal leadership structure may change.

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 director's 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 among the Chair, the Chief Executive Officer and the full Board.
Committees and Meetings

Our Board met eight times during 2020. 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. Our Guidelines on Significant Governance Issues provide that our directors should attend annual meetings of stockholders, and all of our current directors who were serving at the time attended our 2020 annual meeting of stockholders and were available for questions from our stockholders. In accordance with applicable NYSE listing requirements, our independent directors hold regular executive sessions at which

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management, including the Chief Executive Officer, is not present. During 2020, these meetings were presided over by Jeffrey C. Smith, our former independent Chair of the Board, or Mr. Lee, our current independent Chair of the Board.

We currently have an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee, each of which consists of entirely of independent directors in accordance with the listing standards of the NYSE and whose members satisfy the board committee qualification requirements of the NYSE and SEC. The following table sets forth the names of each current committee member, the number of times each committee met in 2020 and the primary responsibilities of each committee.
AUDIT COMMITTEE
Members:
     
Primary Responsibilities
Brad W. Buss (Chair)
John F. Ferraro
Sharon L. McCollam
Arthur L. Valdez Jr.

Meetings in 2020: 7
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.
COMPENSATION COMMITTEE
Members:
     
Primary Responsibilities
John F. Bergstrom (Chair)
Jeffrey J. Jones II.
Douglas A. Pertz

Meetings in 2020: 4
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)
Carla J. Bailo
Jeffrey J. Jones II
Nigel Travis

Meetings in 2020: 7
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.

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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."

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. As further described below, the Board, directly and through its committees, regularly engages in risk dialogue with management.
Our management retains primary responsibility for identifying risks and risk controls related to significant business activities and mapping those risks to our long term strategy. On an annual basis, our management executes a comprehensive risk identification and analysis process and reports and discusses its findings with the Board. In addition to the comprehensive annual review, management provides regular updates to the Audit Committee, or as appropriate, the full Board, on risk exposure and mitigation efforts, as well as discusses any recommendations with respect to risk management.
Each committee of the Board is responsible for oversight of areas of risk related to its delegated responsibilities as follows, and each of the committees regularly reports on its discussions and activities to the Board:
Audit Committee: financial reporting; capital structure and financial policies; independent audit; enterprise risk management process and assessment; Internal Audit; internal controls and compliance (including ethics hotline reporting); cyber security and data privacy
Compensation Committee: compensation programs, policies and practices, including with respect to confirmation that they do not encourage unnecessary or excessive risk taking and the relationship between them and the relationship among our risk management policies and practices
Nominating and Corporate Governance Committee: corporate governance; director candidate selection; Board and CEO succession; Board evaluation; ESG programs; related party transactions and potential conflicts of interest; insider trading; political and charitable contributions

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
The Nominating and Corporate Governance Committee coordinates each Committee's annual evaluation of its performance and reporting of the results to the Board.
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2020 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 Board.
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Topics Addressed in 2020
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

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East Millbrook Road, Raleigh, North Carolina 27604, Attention: General Counsel. The general counsel will not open a communication that is conspicuously marked "Confidential" and 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. Such communications will not be disclosed to the non-independent members of our Board or management unless so instructed by the independent or non-management directors.

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. Our Code of Ethics and Business Conduct includes 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 the Nominating and Corporate Governance Committee) any interest that he or she has in any contract or transaction that is being considered by the Board 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 questionnaire that requires identification of Related Persons as defined by the Company's Related Persons Policy and 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 questionnaire is prepared and distributed by our general counsel’s office, and each director or executive officer returns the completed questionnaire 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.

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Since the outset of 2020, car dealerships owned by Bergstrom Corporation, where Mr. Bergstrom is the Chairman and Chief Executive Officer, paid us a total of approximately $260,920 to purchase automotive parts, and we paid them a total of approximately $136,527 to purchase auto parts. Such purchases were made in the ordinary course of business upon terms available to our similarly situated Professional customers and suppliers.

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.


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Director Compensation
Under our director compensation program, each non-management director receives annual compensation consisting 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 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 $150,000 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, 2020, each non-management director serving at the time received 1,230 DSUs valued at $155,000 on the date of grant. On August 24, 2020, each of Ms. Bailo and Mr. Valdez received 740 DSUs valued at $116,250 on the date of grant.

2020 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
Carla J. Bailo (c)
$42,500 $116,250 $158,750 
John F. Bergstrom100,000 155,000 255,000 
Brad W. Buss105,000 155,000 260,000 
John F. Ferraro95,000 155,000 250,000 
Jeffrey J. Jones II 85,000 155,000 240,000 
Adriana Karaboutis (c)
42,500 — 42,500 
Eugene I. Lee, Jr  197,500 155,000 352,500 
Sharon L. McCollam 85,000 155,000 240,000 
Douglas A. Pertz85,000 155,000 240,000 
Jeffrey C. Smith (c)
92,500 — 92,500 
Nigel Travis85,000 155,000 240,000 
Arthur L. Valdez Jr. (c)
42,500 116,250 158,750 

(a)Includes earned or deferred board retainers and chair retainers during 2020, which were paid in quarterly installments.
(b)Represents the grant date fair value of DSUs granted during 2020. 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 2020 Form 10-K filed with the SEC on February 22, 2021. These amounts reflect the aggregate grant date fair value.
(c)Mr. Smith and Ms. Karaboutis ceased serving on our Board immediately following our 2020 annual meeting, and Ms. Bailo and Mr.                                                                                                                                                                                         Valdez joined the Board in August 2020. Accordingly, each of them earned only a pro-rated portion of the cash retainer paid to non-management directors during 2020. Mr. Smith's pro-rated cash retainer included service as Chair of the Board. Because the annual equity grants of DSUs are awarded following our annual stockholder meeting, neither Mr. Smith nor Ms. Karaboutis received an equity grant.

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Directors’ Outstanding Equity Awards at 2020 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:
NameOutstanding Deferred
Stock Units (#)
Carla J. Bailo741 
John F. Bergstrom15,579 
Brad W. Buss5,448 
John F. Ferraro8,942 
Jeffrey J. Jones II2,479 
Eugene I. Lee, Jr  7,544 
Sharon L. McCollam2,479 
Douglas A. Pertz3,497 
Nigel Travis2,884 
Arthur L. Valdez Jr.741 



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Proposal No. 2
Stockholder Advisory Vote to Approve the Compensation
of the Company's Named Executive Officers
 
At the 2020 Annual Meeting of Stockholders, 98 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 2022 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."
 

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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.



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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 January 2, 2021. 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
Former 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

While 2020 brought unprecedented challenges and required us to evaluate and modify how we are executing certain initiatives within our transformation agenda, our mission, Passion for Customers…Passion for Yes!, did not change. Through the dedication and perseverance of our team members, as well as our independent Carquest partners, we delivered record net sales in 2020 while helping to keep America moving during a time of great need for the world.

Since the beginning of the COVID-19 pandemic, we have remained focused on three overarching priorities: the health, safety and well-being of our team members and customers, protecting the financial position of Advance during the crisis and positioning ourselves to be stronger following the pandemic. In support of the first priority, we made significant investments to help keep our team members and customers safe in our stores, such as enhanced cleaning and sanitization, plexiglass shields, face masks and new operating procedures and training. We also accelerated certain initiatives to adjust our operations for how customers wanted to shop, including the rapid deployment of our Advance Same Day™ suite of services for our DIY omnichannel customers. For our professional customers, we introduced a robust platform of virtual, interactive training programs as well as modified contactless delivery options. We continued to invest in our supply chain and information technology projects, including our eCommerce platform and the launch of our mobile app. In addition, following our acquisition in 2019, we successfully launched DieHard® batteries in our stores and online.

In line with our other two principal areas of focus, we added $1 billion in liquidity to our balance sheet early in the year and temporarily suspended our share repurchase program to preserve cash. Importantly, we took several actions that improved our long-term debt maturity profile and reduced our annual interest cost. We reprioritized initiatives, updated goals, improved collaboration and increased the agility of our leadership team to make timely decisions. The challenges of the pandemic have resulted in an intensification of our emphasis on communication, innovation and training. Our rapid response ensured we were able to run the business throughout the pandemic while helping to create a stronger foundation for Advance.

In addition to the resources dedicated to health and safety related to the pandemic, we also continued to advance environmental, health and safety initiatives throughout 2020. This progress delivered our most recent CDP score of an A- and a Sustainability Report published in 2021 that includes SASB metrics to improve the transparency and comparability of our disclosure. In addition, we made significant improvements to our safety performance again in 2020 and reduced both our Total Reportable Incident Rate and our Lost Time Incident Rate, which represent our most serious injuries. We continue to differentiate ourselves by investing in our team members through increased training and development opportunities as well as unique stock award programs, such as Fuel the Frontline and Be An Owner, which reward team members for meeting or exceeding performance objectives. We also remain focused on leveraging the diverse talents of our team members while investing in attracting, retaining and promoting top talent throughout our organization. In addition, to further the progress we have made over the past several years against our diversity, equity and inclusion goals, in 2020 we appointed our first Chief Diversity, Equity and Inclusion Officer, reporting directly to our CEO. Building increased team member engagement and opportunity remains an integral part of our culture and an important enabler of our long-term sustainable success.


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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 $268 million in capital projects across our business in 2020 primarily focused on important information technology and supply chain projects. Through disciplined cash management, we also continue to return value to our stockholders through our share repurchase program and quarterly cash dividends, which combined resulted in the return of cash to shareholders of $515 million in 2020. We believe the work we accomplished in 2020 further strengthened our Customer Value Proposition and has positioned us to deliver additional top-line growth, margin expansion and improvement in total shareholder returns in 2021.

Our long term incentive plan for the 2018 through 2020 performance period ("2018-2020 LTIP") and our 2020 annual incentive plan ("2020 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:

2020 AIP
93.4% Payout

NEOs received a payout under the 2020 AIP because our performance exceeded the threshold for all three metrics under the plan: Free Cash Flow, Comparable Store Sales and Adjusted Operating Income. See "--Framework for Executive Compensation--Annual Incentive Plan."
2018-2020 LTIP
85.7% Payout

Each of our NEOs received a payout under the 2018-2020 LTIP because our performance for the Return on Invested Capital and Comparable Store Sales metrics exceeded the targets. Performance for the other metric, Relative Total Shareholder Return, did not reach the threshold level.

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 2020, 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, 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 2020 annual meeting of stockholders, our stockholders demonstrated an overwhelming level of support for our executive compensation programs, with 98 percent of shares voted cast in favor of our executive compensation program.

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2020 Executive Officer Compensation Program Highlights
Our compensation programs continue to center on a pay for performance philosophy. The compensation actions we took in 2020 are directly aligned with this belief to help ensure our management’s interests are aligned with those of our stockholders.
Compensation Element     Purpose     2020 Actions
Base Salary
Fixed annual cash compensation to attract and retain executives
In 2020, we increased base compensation for Mr. Shepherd to bring his base pay closer to the median of the Company's peer group. We did not increase base salaries for any of our other NEOs.
2020 AIP Cash Incentive Plan
Performance based variable pay that delivers cash incentives when executives meet or exceed key financial resultsFor 2020, each NEO received a payout of 93.4% of their bonus target. See "--Framework for Executive Compensation--Annual Incentive Plan."
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 2020, we increased LTI awards for each of Messrs. Cushing, Shepherd and Slone to bring target compensation closer to the median of the Company's peer group and help ensure retention of top performing leaders. In March 2020, NEOs were granted annual LTI awards that consisted of 70% performance based RSUs (covering a 2020-2022 performance period) and 30% time based RSUs.

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 DOHOW 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.


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WE DO NOTHOW 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 benefitsOur 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.

Compensation CommitteeFW CookCEO 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 2019, the Compensation Committee, with the assistance of FW Cook, reviewed our executive compensation peer group based on these principles and recommended making no changes to the peer group at that time. The following companies comprised our executive compensation peer group for 2019, which was used in competitive analyses to inform the Compensation Committee’s decisions on setting 2020 target pay opportunities for our NEOs:


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

In August 2020, 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.


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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-8efbcd38d03c4c17a941a.jpgchart-5ec63102613a4ba3af11a.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 2020 base salaries compared to 2019 as of the end of the year. The Committee determined that, other than for Mr. Shepherd, salaries were in line with the targeted ranges for their roles, and accordingly did not increase them. Mr. Shepherd received a base salary increase, principally to bring his base pay closer to the median of the Company's peer group.

NEOs     2019 Salary     2020 Salary     % Change
Mr. Greco$1,100,000$1,100,000%
Mr. Shepherd$575,000$600,0004.3 %
Mr. Cushing$600,000$600,000%
Mr. Broderick$500,000$500,000%
Mr. Slone$625,000$625,000%


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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.
NEOsBase SalaryAIP Target (%)AIP Target ($)
Mr. Greco$1,100,000135 %$1,485,000
Mr. Shepherd$600,00085 %$510,000
Mr. Cushing$600,00085 %$510,000
Mr. Broderick$500,00085 %$425,000
Mr. Slone$625,00085 %$531,250
2020 Annual Incentive Plan Design

In 2020, the Committee reviewed the design of the AIP and decided to maintain the AIP metrics and weightings from 2019, as they continued to be consistent with our annual operating plan goals and objectives. 2020 was the fourth 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 2020 AIP was centered on alignment with our annual operating plan. For Comparable Store Sales Growth, the threshold payout level was set slightly below 2019 results to establish a reasonable attainment outcome, and for each of Free Cash Flow and Adjusted Operating Income, threshold payout levels were set above 2019 results such that executives would only receive payout upon improvement from the prior year's performance. Maximum payout levels were set as significant stretch goals for each metric.

2020 Annual Incentive Plan Performance Results

The following table shows performance results for 2020, as well as the goals that would have resulted in threshold, target and maximum level payouts for 2020. 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. When evaluating AIP performance results for 2020, the Compensation Committee excluded the direct impact on Adjusted Operating Income and Free Cash Flow of approximately $60 million of unexpected, incremental Covid-19 expenses incurred by the Company during the performance period. These expenses comprise costs for masks, cleaners, hand sanitizer, plexiglass and other physical barriers, thermometers, signage, store cleanings, extended sick pay benefits for Team Members and other similar expenses. The Committee believed that these were extraordinary, unanticipated investments in the health, safety and wellness of the Company's Team Members and customers that enabled operational performance. Accordingly, the Committee believed that excluding these expenses from the calculations yielded results that appropriately reflected operational achievement of the previously determined performance metrics.
Actual vs. Potential Payout Results
Metric
Performance
Weight
35% of Target (Threshold)100% of Target200% of Target
(Maximum)
Final Payout
Enterprise Adjusted Operating Income
($ in million)(1)
1/384.0%
$894.0
 
$824.4$916.0$1,007.0
Enterprise Comparable
Store Sales (%)
1/382.9%
2.4%
 
1.0%2.9%5.0%
Free Cash Flow
($ in millions)(1)
1/3113.0%
$746.0
  
$610.3$718.0$933.4
93.4%
(1) Results exclude the impact of approximately $60 million of Covid-19 related expenses.

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2021 Annual Incentive Plan Design
In February 2021, the Committee reviewed the design of the AIP. The Committee again decided to retain the metrics and weightings of the AIP. We believe the consistency in our plan structure has been important in building a pay for performance culture at the Company. We also 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.

While we retained the metrics and weightings from previous plan designs, for the 2021 AIP, we introduced a modifier for Company performance applicable to Team Members at the Vice President level and above, including our named executive officers, based on individual performance against diversity, equity and inclusion (“DEI”) goals. “Champion Inclusion” is one of our cultural beliefs, and we believe that tying a portion of our officers’ incentive compensation to performance against these goals will help ensure focus on our non-financial priorities that we believe are important to creation of long term value. Each executive officer has DEI goals included in their 2021 business objectives, including with respect to diversity representation within their functions and involvement of their Team Members in our internal Team Member networks, which are designed to promote connectivity and inclusivity among our Team members. Each executive officer will receive a 2021 AIP payout equal to what is payable based on Company performance against the three metrics described above, plus or minus up to ten percent depending on the Committee’s assessment of performance against his or her DEI goals.
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 2020 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 2020, making 2020 the fourth consecutive year that our annual LTI grants had these metrics and weightings. We believe 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.

2020 Annual Long Term LTI Grant Summary Table
The table below summarizes the annual LTI grants that were made to our NEOs in March 2020:
NEOsAnnual Grant LTI Target% Performance Based% Time Based
Mr. Greco$5,500,00070%30%
Mr. Shepherd$900,00070%30%
Mr. Cushing$1,000,00070%30%
Mr. Broderick$850,00070%30%
Mr. Slone$900,00070%30%

Our analysis of peer group data in late 2019 indicated that long term incentive award levels were low for several of our executive officers. Accordingly, we increased annual LTI grants for 2020 for Messrs. Shepherd, Cushing and Slone 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 2020 through 2022 as compared to the performance targets established by the Compensation Committee in 2020. The payout ultimately earned can range from zero to 200% of the target number of shares 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.
MetricWeightingHow will we measure
ROIC34 %Results vs. Target
Relative TSR33 %Relative performance to Peer Group
Average Comparable Store Sales Growth33 %Results vs. Target


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Historical Performance Based LTI Awards
In March 2018, annual LTI grants were made in the form of performance based RSUs for the 2018 to 2020 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%).

2018 through 2020 LTI Performance Vesting Table
The following table shows the actual performance results for 2018 to 2020, as well as the threshold, target and maximum performance levels for the annual LTI grant for the 2018 to 2020 performance period.
Actual Payout Results
Metric
Performance
Weight
25% of Target (Threshold)100% of Target200% of Target
(Maximum)
Final Payout % by Metric
Return on Invested Capital
(%)
34%117.0%
14.5%
13.5%14.2%15.5%
Relative Total Shareholder Return (%)
33%0.0%
29.0%
 
35.0%55.0%80.0%
Average Annual Comparable
Store Sales Growth (%)
33%140.0%
1.9%
1.0%1.5%2.5%
85.7%

Each of our NEOs received an annual grant of performance based RSUs for the 2018-2020 performance period. The performance based RSUs granted for the 2018-2020 performance period paid out at 85.7% percent of target, because Average Annual Comparable Store Sales Growth and ROIC performance exceeded target levels over the three-year period, but Relative TSR did not exceed the threshold performance 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 2021, all NEOs are either meeting or on track to meet the required holdings based on the ownership levels required. 
RoleOwnership Guideline
CEO6 times base salary
CFO and/or President3 times base salary
Executive Vice President/Senior Vice President2 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.

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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 2020" table contained in this Proxy Statement.
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 35. 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, 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, our executive officers other than Mr. Greco will be entitled to a lump sum severance payment in an amount 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

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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 grant, 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 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.

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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 2020 Annual Report on Form 10-K.

THE COMPENSATION COMMITTEE
John F. Bergstrom (Chair)
Jeffrey J. Jones II
Douglas A. Pertz


27


Compensation Program Risk Assessment
We assess our executive and broad-based compensation and benefits programs to determine whether the programs' provisions and operation create undesired or unintentional material risk. The risk assessment process includes a review of our compensation program policies and practices, such as our performance-based executive compensation programs and stock ownership guidelines, to ensure that the interests of our executives are aligned with those of our stockholders by encouraging long-term superior performance without encouraging excessive or unnecessary risk-taking. We take into consideration compensation terms and practices, such as performance-based vesting of a substantial portion of our executives' long-term incentive compensation, to drive long-term decision making and mitigate adverse risk-taking that may occur due to year-over-year performance measurements, and rewards growth over the long term. We regularly review and audit our bonus plans to ensure short-term incentives are appropriately linked to business outcomes, and such reviews are shared with the Compensation Committee.
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.

28


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.
BonusStock Awards Non-Equity
 Incentive Plan
Compensation
All Other
Compensation
Name and
Principal Position
 Salary (b) (c)(d)(e)Total
Year($)($)($)($)($)($)
Thomas R. Greco2020$1,100,008 $— $5,559,210 $1,386,990 $10,246 $8,056,454 
President and
Chief Executive Officer
20191,100,008 — 5,547,466 1,033,560 10,479 7,691,513 
20181,100,008 — 5,210,628 2,497,770 47,729 8,856,135 
Jeffrey W. Shepherd2020595,890 — 909,756 476,340 4,945 1,986,931 
Executive Vice President, Chief Financial Officer2019566,646 — 857,333 340,170 3,896 1,768,045 
2018450,752 — 758,483 750,611 5,658 1,965,504 
Robert B. Cushing2020600,000 — 1,010,831 476,340 11,832 2,099,003 
Executive Vice President, Professional2019587,468 — 1,008,674 354,960 11,571 1,962,673 
2018515,491 — 625,344 750,611 554 1,892,000 
Michael T. Broderick2020500,000 — 859,209 396,950 11,579 1,767,738 
Former Executive Vice President, Merchandising and Store Operations Support2019491,645 — 857,333 295,800 4,247.53 1,649,026 
2018449,199 — 625,344 643,376 8,457 1,726,376 
Reuben E. Slone(a)
2020624,998 — 909,756 496,188 15,440 2,046,382 
Executive Vice President, Supply Chain2019624,998 — 857,333 369,749 5,368.99 1,857,449 
2018156,250 — 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 2020 Form 10-K filed with the SEC on February 22, 2021. See the "2020 Grants of Plan-Based Awards Table" and "Outstanding Equity Awards at 2020 Fiscal Year-End Table" in this Proxy Statement for information on stock awards granted in 2020 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.

29


NameYearPerformance Based RSUs
Maximum Grant Date Fair Value
($)
Mr. Greco2020$7,699,855 
20197,794,834 
20187,421,226 
Mr. Shepherd20201,259,947 
20191,204,536 
2018506,683 
Mr. Cushing20201,400,119 
20191,417,274 
2018890,638 
Mr. Broderick20201,189,995 
20191,204,536 
2018890,638 
Mr. Slone20201,259,947 
20191,204,536 
2018747,105 

(d)    For 2020, represents amounts paid to our NEOs in March 2021 under our 2020 AIP. See the "Annual Incentive Plan" section of this Proxy Statement for additional information regarding our 2020 AIP.
(e)    For 2020, 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, $3,981 for Mr. Shepherd, $11,200 for Mr. Cushing, and $10,769 for Mr. Broderick; (ii) life insurance premiums paid by the Company for each executive as follows: $1,784 for Mr. Greco; $964 for Mr. Shepherd; $632 for Mr. Cushing; $810 for Mr. Broderick; and $1,012 for Mr. Slone; and (iii) for Mr. Slone includes relocation and temporary living expenses in the amount of $1,788 and $1,440 for related tax reimbursement payments.


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Grants of Plan-Based Awards in 2020
The following table sets forth information concerning grants of cash and stock based awards made under our annual and long term incentive plans during 2020. 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
($) (d)
NameGrant DateApproval DateThreshold
($)
Target
($)
Maximum
($)
Threshold
(#)
Target
(#)
Maximum
(#)
Mr. Greco$371,250 $1,485,000 $2,970,000 — — — — $— 
3/2/20202/11/2020— — — 4,825 19,300 38,600 — 2,509,579 
3/2/20202/11/2020— — — — — — 12,408 1,650,140 
3/2/20202/11/2020— — — 2,414 9,649 19,298 — 1,399,491 
Mr. Shepherd127,500 510,000 1,020,000 — — — — — 
3/2/20202/11/2020— — — 790 3,158 6,316 — 410,635 
3/2/20202/11/2020— — — — — — 2,031 270,103 
3/2/20202/11/2020— — — 395 1,579 3,158 — 229,018 
Mr. Cushing127,500 510,000 1,020,000 — — — — — 
3/2/20202/11/2020— — — 878 3,510 7,020 — 456,405 
3/2/20202/11/2020— — — — — — 2,256 300,025 
3/2/20202/11/2020— — — 439 1,754 3,508 — 254,400 
Mr. Broderick106,250 425,000 850,000 — — — — — 
3/2/20202/11/2020— — — 746 2,983 5,966 — 387,879 
3/2/20202/11/2020— — — — — — 1,918 255,075 
3/2/20202/11/2020— — — 373 1,491 2,982 — 216,255 
Mr. Slone132,812 531,249 1,062,497 — — — — — 
3/2/20202/11/2020— — — 790 3,158 6,316 — 410,635 
3/2/20202/11/2020— — — — — — 2,031 270,103 
3/2/20202/11/2020— — — 395 1,579 3,158 — 229,018 
(a)Amounts shown represent possible cash payouts under our 2020 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 2020 and related to the 2020 through 2022 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 2020. 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 2020 Form 10-K filed with the SEC on February 22, 2021. 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 2020. Accordingly, the grant date fair value was calculated at target level for these awards.

The time vested portions of the RSU awards granted in 2020 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 $0.25 per share in 2020.

31


Outstanding Equity Awards at 2020 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:
NameGrant DateNumber 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 ($)Option Expiration DateNumber of Shares or Units of Stock That Have Not Vested (#)Market Value of Shares or Units of Stock That Have Not Vested ($)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. Greco3/1/2020 (c)— — — $— — $— 9,649 $1,519,814 
3/1/2020 (c)— — — — 12,408 1,954,384 — — 
3/1/2020 (c)— — — — — — 19,300 3,039,943 
3/1/2019 — — — — — — 8,024 1,263,860 
3/1/2019— — — — 6,849 1,078,786 — — 
3/1/2019— — — — — — 16,049 2,527,878 
3/1/2018 — — — — — — 10,523 1,657,478 
3/1/2018— — — — 4,255 670,205 — — 
3/1/2018— — — — — — 19,974 3,146,105 
4/14/201645,830 22,915 — 160.94 4/14/2023— — — — 
Mr. Shepherd3/1/2020 (c) — — — — — — 1,579 248,708 
3/1/2020 (c)— — — — 2,031 319,903 — — 
3/1/2020 (c)— — — — — — 3,158 497,417 
3/1/2019 — — — — — — 1,240 195,312 
3/1/2019— — — — 1,059 166,803 — — 
3/1/2019— — — — — — 2,480 390,625 
5/29/2018— — — — 673 106,004 — — 
3/1/2018— — — — — — 695 109,469 
3/1/2018— — — — 724 114,037 — — 
3/1/2018— — — — — — 1,390 218,939 
Mr. Cushing3/1/2020 (c)— — — — — — 1,754 276,273 
3/1/2020 (c)— — — — 2,256 355,343 — — 
3/1/2020 (c)— — — — — — 3,510 552,860 
3/1/2019— — — — — — 1,459 229,807 
3/1/2019 — — — — 1,246 196,257 — — 
3/1/2019— — — — — — 2,918 459,614 
3/1/2018— — — — — — 1,263 198,935 
3/1/2018— — — — 511 80,488 — — 
3/1/2018— — — — — — 2,397 377,551 
Mr. Broderick3/1/2020 (c) — — — — — — 1,491 234,847 
3/1/2020 (c)— — — — 1,918 302,104 — — 
3/1/2020 (c)— — — — — — 2,983 469,852 
3/1/2019 — — — — — — 1,240 195,312 
3/1/2019— — — — 1,059 166,803 — — 
3/1/2019— — — — — — 2,480 390,625 
3/1/2018 — — — — — — 1,263 198,935 
3/1/2018— — — — 511 80,488 — — 
3/1/2018— — — — — — 2,397 377,551 
Mr. Slone3/1/2020 (c) — — — — — — 1,579 248,708 
3/1/2020 (c)— — — — 2,031 319,903 — — 
3/1/2020 (c)— — — — — — 3,158 497,417 
3/1/2019 — — — — — — 1,240 195,312 
3/1/2019 — — — — 1,059 166,803 — — 
3/1/2019 — — — — — — 2,480 390,625 
11/19/2018— — — — 938 147,744 — — 
11/19/2018— — — — — — 2,813 443,076 


32



(a)The April 2016 grant of 68,745 SARs to Mr. Greco represent time based awards that vest in three equal portions on the third, fourth and fifth anniversary of the grant date.
(b)Includes awards of RSUs. Generally, awards of time-based RSUs vest in three approximately equal annual installments commencing on the first anniversary date of the grant. The market value of the stock awards is reflective of the closing price of our common stock as of December 31, 2020 ($157.51), the last day that our common stock was traded during 2020. All amounts shown for performance RSUs are shown at target level, representing a 100 percent payout of the performance RSUs.
(c)See the "Grants of Plan-Based Awards in 2020" table in this Proxy Statement for more information on awards granted to our executive officers in 2020.



33


Option Exercises and Stock Vested in 2020
 
The following table sets forth information with respect to our NEOs who vested in stock awards during 2020. None of our NEOs exercised stock options or SARs in 2020.
 
 Stock Awards
NameNumber of
Shares Acquired
on Vesting (#)
Value
Realized on
Vesting ($)(a)
Mr. Greco18,109 2,327,977 
Mr. Shepherd3,933 527,271 
Mr. Cushing3,589 517,766 
Mr. Broderick1,700 230,209 
Mr. Slone1,467 207,369 

(a) The value realized on vesting is based on the closing price of our common stock on the NYSE on the vesting date. If a vesting date occurs on a day on which the NYSE is closed, the value realized is based on the closing price on the last trading day prior to the vesting date.

Non-Qualified Deferred Compensation for 2020

The following table sets forth information with respect to our NEOs concerning executive contributions to non-qualified deferred compensation plans during 2020.  We do not make any contributions to these deferred compensation plans. Aggregate earnings information includes changes in market value of the investments plus any dividends received by the executive for their DSUs. 

NameExecutive
Contributions ($)(a)
Aggregate
Earnings ($)(b)
Aggregate
Withdrawals/
Distributions ($)
Aggregate
Balance at
January 2, 2021 ($)
Mr. Greco$— $— $— $— 
Mr. Shepherd— — — — 
Mr. Cushing— — — — 
Mr. Broderick98,950 54,427 — 416,261 
Mr. Slone92,437 42,898 — 392,699 
 
(a)Additional information is provided under "Other Compensation and Benefit Programs" in the CD&A section of this Proxy Statement. Any amounts reported as Executive Contributions are also reported in the Salary column of the "Summary Compensation Table" of this Proxy Statement.
(b)Represents realized and unrealized gains or losses on market-based investments selected and dividends earned by executives for their deferred compensation balances.

34


Potential Payments Upon Termination of Employment or Change in Control
The following table provides an estimate of the inherent value of the severance payments, stock incentives and benefits provided for in each NEO’s employment agreement or other compensation arrangements described above, assuming termination of employment or change in control occurred on January 2, 2021, the last day of our 2020 year.
ExecutiveVoluntary
Termination without Good Reason or
Involuntary
Termination for Due
Cause (a)
RetirementDisabilityDeathInvoluntary Termination
without Due Cause or
Voluntary Termination
for Good Reason not related to a Change in
Control (b)
Involuntary
Termination without
Due Cause or Voluntary
Termination for Good Reason related to a
Change in Control (c)
Mr. Greco      
Cash Severance (d)$— $— $1,815,000 $2,585,000 $5,093,174 $5,170,000 
Stock Incentives (e) (f)— — 14,827,204 14,827,204 11,123,829 20,467,794 
Other Benefits (g)— — 660,000 1,100,000 24,948 24,948 
 $— $— $17,302,204 $18,512,204 $16,241,951 $25,662,742 
Mr. Shepherd      
Cash Severance (d)$— $— $661,250 $1,063,750 $938,594 $2,127,500 
Stock Incentives (e) (f)— — 1,536,195 1,536,195 729,114 2,367,218 
Other Benefits (g)— — 345,000 575,000 25,605 25,605 
 $— $— $2,542,445 $3,174,945 $1,693,313 $4,520,323 
Mr. Cushing      
Cash Severance (d)$— $— $690,000 $1,110,000 $968,524 $2,220,000 
Stock Incentives (e) (f)— 1,138,010 1,770,097 1,770,097 1,138,010 2,727,128 
Other Benefits (g)— — 360,000 600,000 25,219 25,219 
 $— $1,138,010 $2,820,097 $3,480,097 $2,131,753 $4,972,347 
Mr. Broderick      
Cash Severance (d)$— $— $575,000 $925,000 $813,059 $1,850,000 
Stock Incentives (e) (f)— — 1,595,891 1,595,891 518,050 2,416,518 
Other Benefits (g)— — 300,000 500,000 22,228 22,228 
 $— $— $2,470,891 $3,020,891 $1,353,337 $4,288,746 
Mr. Slone      
Cash Severance (d)$— $— $718,750 $1,156,250 $851,693 $2,312,500 
Stock Incentives (e) (f)— — 1,393,648 1,393,648 759,198 2,409,588 
Other Benefits (g)— — 375,000 625,000 22,228 22,228 
 $— $— $2,487,398 $3,174,898 $1,633,119 $4,744,316 



35



(a)Voluntary termination without Good Reason or termination for Due Cause makes an executive ineligible for any employment agreement benefits other than any rights the executive may have under the normal terms of other benefit plans and receipt of accrued but unpaid base salary. Executives must exercise vested long term incentives within 90 days after the date of termination. The term "Due Cause" is defined in the agreements as (i) a material breach of the executive’s obligations under the agreement or a material violation of any code or standard of conduct applicable to our officers that has not been cured following notice if applicable; (ii) a material violation of the loyalty obligations as provided in the agreement; (iii) the executive’s willful engagement in bad faith conduct that is demonstrably and materially injurious to us; (iv) the commission or indictment of a crime of moral turpitude or a felony involving fraud, breach of trust, or misappropriation; or (v) a determination that the executive is in violation of our Substance Abuse Policy.
(b)The employment agreements of our NEOs provide that the executive’s employment is deemed to be terminated by us without Due Cause if the executive elects to terminate his employment for Good Reason. The term "Good Reason" is defined in the agreements as: (i) a material diminution in the executive’s base salary or target bonus amount for Mr. Greco and total direct compensation, as defined in the employment agreements, for other executives; (ii) a material diminution in the executive’s authority, duties or responsibilities or for executives other than Mr. Greco, those of the executive’s supervisors; (iii) for Mr. Greco, if he no longer reports directly to the Board; (iv) except for Mr. Greco, the termination of the Executive Incentive Plan without a replacement plan or the material reduction of the executive’s benefits without a similar reduction for other executives; (v) requiring the executive to be based more than 60 miles from our office at which the executive was principally employed immediately prior to the date of the relocation; or (vi) for Mr. Greco, any other material breach of the Agreement including failure of the Nominating and Corporate Governance Committee to re-nominate him to the Board. Except for Mr. Greco, upon termination of employment by us other than for Due Cause or by the executive for Good Reason the executive is entitled to receive a cash "termination payment" which equals the sum of the executive’s annual base salary and an amount equal to the average annual bonus payment over the past three years (or shorter period of employment as applicable). Mr. Greco is entitled to an amount equal to one and one half times his annual base salary and an amount equal to one and one half times his average annual bonus payment over the past three years, in addition to a pro-rated annual bonus for the year in which his employment is terminated. The value of the bonus amount included for each executive in the cash severance payment is the average bonus paid for 2017, 2018 and 2019 (or shorter period of employment as applicable). In addition, the executive will receive outplacement services and certain medical benefits coverage as described in note (g) below.
(c)If, within 12 months of a Change in Control (as defined in the employment agreements), the executive’s employment is terminated by us other than for Due Cause or by the executive for Good Reason, the executive will be entitled to a Change in Control Termination Payment equal to (i) two times the executive’s base salary plus (ii) two times the amount equal to the executive’s target bonus. The cash severance amount would be subject to a downward adjustment pursuant to the “net best” provisions of his employment agreement, and the benefits also apply to involuntary termination or termination with Good Reason within three months prior to a Change in Control in contemplation of the Change in Control.
(d)In the case of voluntary termination without Good Reason or termination for Due Cause, the executive would be ineligible to receive a cash severance payment. In accordance with the employment agreements, if the executive’s employment is terminated on account of death, the executive’s beneficiary or estate is entitled to receive a lump sum payment equivalent to the executive’s annual base salary and target bonus amount. In the event that the executive is terminated on account of disability, the employment agreements provide that the executive is entitled to receive a cash severance amount equivalent to 30 percent of the executive’s annual base salary and an amount equal to the executive’s annual target bonus severance payments are contingent upon execution and non-revocation of a release as provided in the agreements.
(e)Amounts shown here are calculated as the differences between the exercise price, if any, of the outstanding stock-based incentives and the closing price of our stock on the last day our stock was traded during 2020.
(f)The terms of the executives’ restricted stock unit agreements provide that in the event of termination of employment due to death or disability, any remaining previously unvested time based RSUs will vest immediately. Mr. Greco's April 2016 Inducement SARs will vest on a pro rata basis commensurate with the time employed prior to death or disability during the vesting period. Performance based RSUs will vest based on our performance at the end of the applicable performance period on a pro-rata basis commensurate with the time employed prior to death or disability during the performance period. In the event of retirement, which requires 10 years of service and a minimum age of 55 years, awards of time based shares granted prior to March 1, 2018, will continue to vest commensurate with the vesting period of the award. Subsequent grants of time based shares will forfeit. Performance based RSUs vest based on our performance at the end of the applicable performance period on a pro rata basis commensurate with the time employed prior to retirement during the performance period, subject to certain noncompete restrictions. In the event of involuntary termination without Due Cause, or voluntary termination for Good Reason, a pro rata portion of the performance based RSUs will vest immediately as of the date of the executive's termination of employment based on the amount of time employed during the performance period, except in the case of Mr. Greco's April 2016 Inducement SARs. In the event of such termination following a Change in Control, all time based RSUs will vest and become exercisable if the acquiring entity does not assume, convert or replace the LTI grants or upon termination of employment without Due Cause within 24 months following the Change in Control event. Performance based RSUs will vest at the same time on a pro rata basis based on the amount of time employed during the performance period and our actual performance as of the most recent termination date.
(g)For Disability, Other Benefits consist of the amount the executives would receive under our qualified plan. For Death, Other Benefits represent life insurance benefits. For Involuntary Termination, Other Benefits include $12,000 in outplacement costs and the cost of providing one year of health care coverage (18 months in the case of Mr. Greco) to the executive at the same cost as active employees.
    

36


CEO Pay Ratio
As a result of certain regulations adopted under the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are providing the following disclosure of the ratio of our CEO’s compensation to that of our median employee.
Our CEO to median employee pay ratio is calculated in accordance with the guidelines established by the SEC. We identified our median employee using total annual cash compensation of all Team Members employed with us on December 31, 2020. We included all U.S. Team Members in our analysis of the median employee, including part time, full time, and seasonal Team Members.
After identifying our median employee, we then calculated annual total compensation in accordance with the same methodology as used to calculate total compensation for our CEO in the Summary Compensation table.
Annual Total Compensation for the CEO as described in the Summary Compensation table was $8,056,454 for 2020 and the median Team Member compensation was $24,960. The result of this analysis is a ratio of 323:1.

The Compensation Committee continuously reviews both the compensation of our CEO, our NEOs and our pay practices for all Team Members to ensure internal equity is appropriate. A significant portion of our CEO’s compensation is performance based and thus the ratio may vary each year consistent with the Company’s ultimate performance outcomes and how those outcomes connect to our performance-based compensation programs.


37


Information Concerning our Executive Officers

The following table provides information about our executive officers as of March 29, 2021.
NameAgePosition
Thomas R. Greco62President and Chief Executive Officer
Michael C. Creedon, Jr.45Executive Vice President, U.S. Stores
Robert B. Cushing67Executive Vice President, Professional
Tammy M. Finley54Executive Vice President, General Counsel and Corporate Secretary
Jason B. McDonell47Executive Vice President, Merchandising, Marketing and e-commerce
Andrew E. Page51Senior Vice President, Controller and Chief Accounting Officer
Natalie S. Schechtman50Executive Vice President, Human Resources
Jeffrey W. Shepherd48Executive Vice President, Chief Financial Officer
Reuben E. Slone58Executive Vice President, Supply Chain
  
Our executive officers are elected by and serve at the discretion of our Board. There are no family relationships among any of our executive officers. Set forth below is a brief description of the business experience of our executive officers other than Mr. Greco, who is also a director and whose business experience is set forth in the “Nominees for Election to Our Board” section of this Proxy Statement.

Mr. Creedon
Executive Vice President, U.S. Stores
Mr. Creedon joined us in December 2013 as President of our wholly owned subsidiary, Autopart International. He was promoted to President, North Division of Advance in February 2017 and President, U.S. Stores in May 2020 and has served in his current role since March 2021. Previously, he served as GM and Vice President, Retail Sales & Operations for Tyco Integrated Security, a provider of retail security and store performance solutions, from September 2010 to November 2013 and in a variety of finance and operations roles at ADT Security Services, Inc. and Tyco International Inc., providers of alarm and security services.

Mr. Cushing
Executive Vice President, Professional
Mr. Cushing joined us in January 2014 via the acquisition of General Parts International, Inc. ("GPI"), which included its wholly owned subsidiary Worldpac, Inc. ("Worldpac"), and has held his current position since August 2016. Mr. Cushing is responsible for the operations of our Professional sales team in addition to Worldpac, CARQUEST CANADA LTD. and wholly owned subsidiary Autopart International, Inc. Mr. Cushing joined Worldpac via its acquisition of Metrix Parts Warehouse, Inc. in 1999 and was named Worldpac's President and CEO in January 2008. Prior to serving as President and CEO, Mr. Cushing served as Executive Vice President, Sales and Operations for the U.S. and Canada from 1999 to 2007. Prior to joining Worldpac, Mr. Cushing held executive-level sales, marketing and operations positions with Metrix Parts Warehouse, Inc., Interco Parts Corporation and Robert Bosch Corporation.

Ms. Finley
Executive Vice President, General Counsel and Corporate Secretary
Ms. Finley joined us in 1998 and has held her current position since May 2016. From January 2015 to May 2016, she served as Executive Vice President, Human Resources, General Counsel and Corporate Secretary. From March 2013 to January 2015, she served as Senior Vice President, Human Resources. From March 2010 to March 2013, she served as Vice President, Employment Counsel and Government Affairs. From September 2007 to March 2010, she served as Vice President, Employment Counsel. From January 2003 to September 2007, she served as Vice President, Staffing and Team Member Relations. From March 1998 to January 2003, she served as Assistant Vice President, Human Resources. Prior to joining Advance, Ms. Finley worked as a labor and employment attorney with The Center for Employment Law, PC, and as a Staff Attorney with the Virginia Supreme Court. Ms. Finley has also served on the board of directors of American National Bankshares Inc., a publicly traded bank holding company, since September 2017.

Mr. McDonell
Executive Vice President, Merchandising, Marketing and e-commerce
Mr. McDonell joined us in July 2019 as Executive Vice President, Chief Marketing Officer. Prior to joining Advance, Mr. McDonell served at PepsiCo Foods, a unit of PepsiCo Inc., a global food and beverage company, in a variety of sales and marketing leadership positions. He most recently served as President and General Manager of Pepsico Foods from July 2015 to July 2019, where he had general management responsibility for all functions of Canada’s Frito Lay and Quaker business. He began his career with the Proctor & Gamble Company, a consumer packaged goods company.

38



Mr. Page
Senior Vice President, Controller and Chief Accounting Officer
Mr. Page joined us in his current role in May 2019. Prior to joining Advance, Mr. Page served as Senior Vice President and Chief Accounting Officer for Under Armour, Inc., a manufacturer of footwear, sportswear and casual apparel, since March 2019. Mr. Page had served at Under Armour in increasingly senior accounting roles, as Assistant Controller from 2011 to 2016, Corporate Controller from 2016 to 2017 and Vice President, Corporate Controller from 2017 through March 2019. Previously, Mr. Page served in Assistant Controller roles for FTI Consulting, Inc., AES Corporation, Inc., and General Electric. Earlier in his career, Mr. Page served in Controller positions for Discovery Communications, Inc., and Proxicom and was an Audit Manager for PricewaterhouseCoopers.

Ms. Schechtman
Executive Vice President, Human Resources
Ms. Schechtman joined us in May 2016 as Senior Vice President, Human Resources and has held her current position since February 2018. Prior to joining Advance, Ms. Schechtman served in human resources leadership roles at PepsiCo for almost 10 years, including Senior Director, Human Resources for Global Foodservice, a division of PepsiCo. She was responsible for the Foodservice division’s talent strategy, recruitment, training and development, organizational health, and employee relations. She also held human resources leadership roles in PepsiCo’s Retail Beverages, Pepsi-Cola North America and PepsiCo’s Corporate division. She also worked as an employment attorney with the law firm Brown Raysman in New York from 2003 to 2006, handling corporate labor and employment legal issues for a variety of clients, including several large international corporations, and has maintained her licenses to practice in New York and New Jersey. Prior to Brown Raysman, she served in recruiting and talent management roles from 1995 - 2003 with The Estee Lauder Companies, FreeRide.com, LLC and Gundersen Partners, LLC.

Mr. Shepherd
Executive Vice President, Chief Financial Officer
Mr. Shepherd joined us in March 2017 as Senior Vice President, Controller and Chief Accounting Officer and assumed the additional role of Interim Chief Financial Officer in April 2018. He has held his current position since August 2018. Prior to joining Advance, Mr. Shepherd was employed by General Motors Company from September 2010 to February 2017 in various accounting and finance roles, including Controller - General Motors Europe from July 2015 to February 2017, Director - Consolidation and SEC Reporting from June 2013 to July 2015, and Director - Analysis and Reporting from September 2010 to June 2013. Prior to joining General Motors, Mr. Shepherd worked for Ernst & Young, a public accounting firm, from October 1994 to September 2010. Mr. Shepherd is a certified public accountant.

Mr. Slone
Executive Vice President, Supply Chain
Mr. Slone joined us in his current role in October 2018. He served as a member of our Board of Directors from February 2015 until October 2018. Prior to joining Advance as an executive officer, Mr. Slone served as Senior Vice President, Supply Chain Management at Walgreen Co., one of the nation’s largest drugstore chains and part of the Retail Pharmacy USA Division of Walgreens Boots Alliance, Inc., from May 2012. Prior to joining Walgreens, Mr. Slone served as Executive Vice President, Supply Chain and General Manager of Services for OfficeMax, Inc. from 2004 to 2012. Prior to OfficeMax, Mr. Slone held various supply chain leadership positions with Whirlpool Corporation, General Motors Company, and Federal-Mogul Holdings Corporation. He also held prior consulting positions with Electronic Data Systems Corporation and Ernst & Young. Mr. Slone is a NACD Board Leadership Fellow. Mr. Slone also serves on the board of directors of Tuesday Morning Corporation, an American discount, off-price retailer specializing in domestic and international, designer and name-brand closeout merchandise.


39



Security Ownership of Certain Beneficial Owners and Management

The following table sets forth information known to us regarding the ownership of our common stock as of March 29, 2021 by:

each person or entity that beneficially owns more than 5 percent of our common stock;
each member of our Board;
each of our executive officers named in the "Summary Compensation Table" included in the Executive Compensation section of this Proxy Statement; and
all directors and executive officers as a group.

Beneficial ownership is determined in accordance with the rules of the SEC. In computing the number of shares beneficially owned by a person and the percentage of ownership held by that person, shares of common stock subject to options and warrants held by that person that are currently exercisable or will become exercisable within 60 days after March 29, 2021 are deemed outstanding, while these shares are not deemed outstanding for computing percentage ownership of any other person.  The address of each beneficial owner for which an address is not otherwise indicated is: c/o Advance Auto Parts, Inc., 2635 East Millbrook Road, Raleigh, North Carolina 27604.  Unless otherwise indicated in the footnotes to the table, the persons and entities named in the table have sole voting and investment power with respect to all shares beneficially owned, subject to community property laws where applicable.  We know of no agreements among our stockholders which relate to voting or investment power over our common stock or any arrangement that may at a subsequent date result in a change in control of the Company.

The percentages of common stock beneficially owned are based on 65,431,834 shares of our common stock outstanding at the Record Date, plus shares that may be issued or acquired within 60 days of March 29, 2021 through the exercise of vested stock awards.


40


 Shares beneficially owned
Name of Beneficial OwnerNumberPercentage
The Vanguard Group(a)
7,101,263 10.8 %
100 Vanguard Blvd.
Malvern, PA 19355
BlackRock, Inc.(b)
4,286,683 6.5 %
55 East 52nd Street
New York, NY 10022
Clearbridge Investments LLC(c)
4,059,434 6.2 %
620 8th Avenue
New York, NY 10018
Melvin Capital Management LP(d)
4,014,230 6.1 %
535 Madison Avenue, 22nd Floor
New York, NY 10022
Barrow, Hanley, Mewhinney & Strauss, LLC(e)
3,575,547 5.5 %
2200 Ross Avenue, 31st Floor
Dallas, TX 75201
Executive Officers, Directors and Others(f)
Carla J. Bailo742 *
John F. Bergstrom20,769 *
Brad W. Buss6,656 *
John F. Ferraro9,456 *
Thomas R. Greco176,645 *
Jeffrey J. Jones II2,483 *
Eugene I. Lee, Jr.10,681 *
Sharon L. McCollam2,483 *
Douglas A. Pertz4,703 *
Nigel Travis4,138 *
Arthur L. Valdez Jr.742 *
Michael T. Broderick5,780 *
Robert C. Cushing14,555 *
Jeffrey W. Shepherd8,375 *
Reuben E. Slone7,708 *
All executive officers and directors as a group (19 persons)291,959 0.4 %

*    Less than 1%
(a)Based solely on a Schedule 13G/A filed with the SEC on February 10, 2021 by The Vanguard Group, The Vanguard Group is the beneficial owner of 7,101,263 shares and has sole dispositive power of 6,803,533 shares, shared dispositive power of 297,730 and shared voting power of 111,877.
(b)Based solely on a Schedule 13G/A filed with the SEC on January 29, 2021 by BlackRock, Inc., BlackRock, Inc. is the beneficial owner of 4,286,683 shares and has sole dispositive power of 4,286,683 shares and sole voting power of 3,634,320 shares.
(c)Based solely on a Schedule 13G filed with the SEC on February 9, 2021 by Clearbridge Investments LLC, Clearbridge Investments LLC is the beneficial owner of 4,059,434 shares and has sole dispositive power of 4,059,434 and sole voting power of 3,975,995.
(d)Based solely on a Schedule 13G filed with the SEC on January 14, 2020 by Melvin Capital Management LP, Melvin Capital Management LP is the beneficial owner of 4,014,230 shares, of which Melvin Capital Management LP has shared dispositive and voting power.
(e)Based solely on a Schedule 13G filed with the SEC on February 11, 2021 by Barrow, Hanley, Mewhinney & Strauss, LLC, Barrow, Hanley, Mewhinney & Strauss, LLC is the beneficial owner of 3,575,547 shares and has sole dispositive power of 3,575,547 shares, sole voting power of 2,587,023 shares and shared voting power of 988,524 shares.
(f)The following table provides further detail regarding the shares beneficially owned by our directors and executive officers:

41


 Shares beneficially owned
 Shares of our common stock issuable with respect to
Name of Beneficial OwnerDSUsRSUs to lapse
within 60 days of March 29, 2021
SARs exercisable
within 60 days of
March 29, 2021
Carla J. Bailo742 — — 
John F. Bergstrom15,604 — — 
Brad W. Buss5,456 — — 
John F. Ferraro8,956 — — 
Thomas R. Greco— — 45,830