DEF 14A 1 a2012proxystatement.htm DEFINITIVE PROXY STATEMENT 2012 Proxy Statement


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
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AutoNation, Inc.
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AutoNation, Inc.
AutoNation Headquarters
200 SW 1st Ave
Fort Lauderdale, FL 33301
NOTICE OF THE 2012 ANNUAL MEETING OF STOCKHOLDERS
To Stockholders of AutoNation, Inc.:
The 2012 Annual Meeting of Stockholders of AutoNation, Inc. will be held on the 15th Floor of the AutoNation Headquarters, located at 200 SW 1st Ave, Fort Lauderdale, Florida 33301, on Wednesday, May 9, 2012, at 8:00 a.m. Eastern Time for the following purposes as more fully described in the proxy statement:
(1)
To elect the 10 director nominees named in the proxy statement, each for a term expiring at the next Annual Meeting of Stockholders or until their successors are duly elected and qualified;
(2)
To ratify the selection of KPMG LLP as our independent registered public accounting firm for 2012;
(3)
To approve the AutoNation, Inc. Senior Executive Incentive Bonus Plan;
(4)
To consider three stockholder proposals, if properly presented at the Annual Meeting; and
(5)
To transact such other business as may properly come before the Annual Meeting or any adjournments or postponements of the Annual Meeting.
Only stockholders of record as of 5:00 p.m. Eastern Time on March 15, 2012, the record date, are entitled to receive notice of the Annual Meeting and to vote at the Annual Meeting or any adjournments or postponements of the Annual Meeting.
We cordially invite you to attend the Annual Meeting in person. Even if you plan to attend the Annual Meeting, we ask that you please cast your vote as soon as possible. You may revoke your proxy and reclaim your right to vote at any time prior to its use. The proxy statement includes information on what you will need to attend the Annual Meeting.
By Order of the Board of Directors,
Jonathan P. Ferrando
Executive Vice President,
General Counsel and Secretary
March 26, 2012





TABLE OF CONTENTS
 
Page




INTERNET AVAILABILITY OF PROXY MATERIALS
In accordance with the rules of the Securities and Exchange Commission (“SEC”), we are furnishing our proxy materials, including this proxy statement and our annual report, to our stockholders primarily via the Internet. On March 26, 2012, we began mailing to most of our stockholders a Notice of Internet Availability of Proxy Materials (the “Notice”) that contains instructions on how to access our proxy materials on the Internet. The Notice also contains instructions on how to vote via the Internet or by telephone. Other stockholders, in accordance with their prior requests, received an email with instructions on how to access our proxy materials and vote via the Internet, or have been mailed paper copies of our proxy materials and a proxy card or voting form. Stockholders may request to receive all future proxy materials in printed form by mail or electronically by email by following the instructions contained in the Notice.

Important Notice Regarding the Availability of Proxy Materials
for the Stockholder Meeting to be Held on May 9, 2012

Our 2011 Annual Report and this proxy statement are available at www.edocumentview.com/an.


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AUTONATION, INC.
AutoNation Headquarters
200 SW 1st Ave
Fort Lauderdale, FL 33301
PROXY STATEMENT
This Proxy Statement contains information relating to the solicitation of proxies by the Board of Directors (the “Board”) of AutoNation, Inc. (“AutoNation” or the “Company”) for use at our 2012 Annual Meeting of Stockholders or any adjournment or postponement thereof. Our Annual Meeting will be held on the 15th Floor of the AutoNation Headquarters, located at 200 SW 1st Ave, Fort Lauderdale, Florida 33301, on Wednesday, May 9, 2012, at 8:00 a.m. Eastern Time.
Only stockholders of record as of 5:00 p.m. Eastern Time on March 15, 2012 (the “record date”) are entitled to receive notice of the Annual Meeting and to vote at the Annual Meeting or any adjournments or postponements of the Annual Meeting. As of the record date, there were 127,103,469 shares of AutoNation common stock issued and outstanding and entitled to vote at the Annual Meeting. We made copies of this proxy statement available to our stockholders beginning on March 26, 2012.
INFORMATION ABOUT THE ANNUAL MEETING
Agenda
To elect the 10 director nominees named in this proxy statement, each for a term expiring at the next Annual Meeting of Stockholders or until their successors are duly elected and qualified
To ratify the selection of KPMG LLP as our independent registered public accounting firm for 2012
To approve the AutoNation, Inc. Senior Executive Incentive Bonus Plan
To consider three stockholder proposals, if properly presented at the Annual Meeting
To transact such other business as may properly come before the Annual Meeting or any adjournments or postponements of the Annual Meeting
Vote Recommendations
Proposal
Matter
Board Vote Recommendation
1
Election of Directors
FOR EACH NOMINEE
2
Ratification of the Selection of KPMG LLP as Independent Auditor for 2012
FOR
3
Approval of the AutoNation, Inc. Senior Executive Incentive Bonus Plan
FOR
4
Stockholder Proposal Regarding Independent Board Chairman
AGAINST
5
Stockholder Proposal Regarding Cumulative Voting
AGAINST
6
Stockholder Proposal Regarding Political Contributions
AGAINST
Voting Matters
Quorum. The holders of at least 63,551,735 shares (a majority of shares outstanding on the record date) must be present in person or represented by proxy to conduct business at the Annual Meeting. Both abstentions and broker non-votes will be counted for the purpose of determining the presence of a quorum.

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Voting by Stockholders of Record. If you are a stockholder of record (your shares are registered directly in your name with our transfer agent), you may vote by proxy via the Internet by following the instructions provided in the Notice of Internet Availability of Proxy Materials. If you receive printed copies of the proxy materials by mail, you may also vote by proxy via the Internet, by telephone, or by mail by following the instructions provided on the proxy card. Stockholders of record who attend the Annual Meeting may vote in person by obtaining a ballot from the inspector of elections.
Voting by Beneficial Owners. If you are a beneficial owner of shares (your shares are held in the name of a brokerage firm, bank, or other nominee), you may vote by proxy by following the instructions provided in the Notice of Internet Availability of Proxy Materials, vote instruction form, or other materials provided to you by the brokerage firm, bank, or other nominee that holds your shares. If you do not provide specific voting instructions to the nominee that holds your shares, such nominee will have the authority to vote your shares only with respect to the ratification of the selection of KPMG LLP as our independent registered accounting firm (such proposal is considered a “routine” matter under NYSE rules), and your shares will not be voted and will be considered “broker non-votes” with respect to the other proposals (such proposals are considered “non-routine” matters under NYSE rules). To vote in person at the Annual Meeting, you must obtain a legal proxy from the brokerage firm, bank, or other nominee that holds your shares.
Changing Your Vote. You may revoke your proxy and change your vote at any time before the final vote at the Annual Meeting. You may vote again on a later date via the Internet or by telephone (only your latest Internet or telephone proxy submitted prior to the meeting will be counted), by signing and returning a new proxy card with a later date, or by attending the Annual Meeting and voting in person. Your attendance at the Annual Meeting will not automatically revoke your proxy unless you vote again at the Annual Meeting or specifically request in writing that your prior proxy be revoked.
Votes Required to Adopt Proposals. Each share of our common stock outstanding on the record date is entitled to one vote on each of the 10 director nominees and one vote on each other matter. To be elected, directors must receive a majority of the votes cast (the number of shares voted “for” a director nominee must exceed the number of votes cast “against” that nominee). Approval of each of the other matters on the agenda requires the affirmative vote of a majority of the shares of common stock present in person or represented by proxy and entitled to vote on the proposal.
Effect of Abstentions and Broker Non-Votes. For the election of directors, broker non-votes (shares held by brokers that do not have discretionary authority to vote on a proposal and have not received voting instructions from their clients) and abstentions will not be counted as having been voted. For Proposals 2, 3, 4, 5, and 6, abstentions will be counted as having been voted and will have the same effect as negative votes. For Proposals 3, 4, 5, and 6, broker non-votes will not be counted as having been voted. Brokers will have discretionary authority to vote on Proposal 2 since it is considered a routine matter under NYSE rules. Since they are not counted as “for” votes, broker non-votes could prevent the election of our directors and/or approval of Proposals 3, 4, 5, and 6, so we urge you to provide voting instructions.
Voting Instructions. If you complete and submit a proxy with voting instructions, the persons named as proxies will follow your instructions. If you are a stockholder of record and submit a proxy without voting instructions, or if your instructions are unclear, the persons named as proxies will vote as the Board recommends on each proposal. With respect to any other matters properly presented at the Annual Meeting, the persons named as proxies will vote as recommended by our Board of Directors, or if no recommendation is given, in their own discretion. If you hold shares through the AutoNation 401(k) Plan and you do not provide clear voting instructions, Wells Fargo will vote the shares in your 401(k) account in the same proportion that it votes shares for which it received valid and timely instructions.
Proxy Solicitation
We will pay for the cost of soliciting proxies. Our directors, officers, and other employees, without additional compensation, may solicit proxies personally or in writing, by telephone, email, or otherwise. As is customary, we will reimburse brokerage firms, banks, and other nominees for forwarding our proxy materials to each beneficial owner of common stock held of record by them.
Attending the Annual Meeting
You are entitled to attend the Annual Meeting only if you were an AutoNation stockholder as of the record date or you hold a valid proxy for the Annual Meeting. You may be asked to present valid photo identification and proof of stock ownership as of the record date to be admitted to the Annual Meeting.

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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Directors
Our Board currently consists of ten members. Each of our current directors was elected by our stockholders at our 2011 Annual Meeting of Stockholders.
Upon the recommendation of the Corporate Governance and Nominating Committee, the Board has nominated each of our current directors to stand for election for a new term expiring at the 2013 Annual Meeting of Stockholders or until their successors are duly elected and qualified. See “Items To Be Voted On - Proposal 1: Election of Directors.”
Our Board consists of a diverse group of leaders. Many of our directors have experience serving as executive officers or on boards and board committees of major companies. Many of our directors also have extensive corporate finance and investment banking experience as well as a broad understanding of capital markets. Our directors have a strong owner orientation - approximately 68% of our common stock is held by our directors or entities or persons related to our directors (as of March 15, 2012).
We have set forth below information regarding each of our directors, including the specific experience, qualifications, attributes, or skills that led the Board to conclude that such person should serve as a director. Our Corporate Governance and Nominating Committee and the Board believe that the experience, qualifications, attributes, and skills of our directors provide the Company with the ability to address the evolving needs of the Company and represent the best interests of our stockholders.  
Nominee
Current Position with AutoNation
Age
Director Since
Mike Jackson
Chairman of the Board and Chief Executive Officer
63
1999
Robert J. Brown
Director
77
2010
Rick L. Burdick
Director
60
1991
William C. Crowley
Director
54
2002
David B. Edelson
Director
52
2008
Robert R. Grusky
Director
54
2006
Michael Larson
Director
52
2010
Michael E. Maroone
Director, President and Chief Operating Officer
58
2005
Carlos A. Migoya
Director
61
2006
Alison H. Rosenthal
Director
35
2011
Mike Jackson has served as our Chairman of the Board since January 2003 and as our Chief Executive Officer and Director since September 1999. From October 1998 until September 1999, Mr. Jackson served as Chief Executive Officer of Mercedes-Benz USA, LLC, a North American operating unit of DaimlerChrysler AG, a multinational automotive manufacturing company. From April 1997 until September 1999, Mr. Jackson also served as President of Mercedes-Benz USA. From July 1990 until March 1997, Mr. Jackson served in various capacities at Mercedes-Benz USA, including as Executive Vice President immediately prior to his appointment as President of Mercedes-Benz USA. Mr. Jackson was also the managing partner from March 1979 to July 1990 of Euro Motorcars of Bethesda, Maryland, a regional group that owned and operated eleven automotive dealership franchises, including Mercedes-Benz and other brands of automobiles. In January 2011, Mr. Jackson was appointed to the Board of Directors of the Federal Reserve Bank of Atlanta’s Miami Branch. Mr. Jackson’s automotive experience, his position as our Chief Executive Officer, and his broad knowledge of our Company and the automotive industry led the Board to conclude that he should serve as one of our directors.
Robert J. Brown has served as one of our directors since February 2010 and also previously served as one of our directors from May 1997 until May 2008. Mr. Brown has served as Chairman and Chief Executive Officer of B&C Associates, Inc., a management consulting, marketing research, and public relations firm, since 1973. Mr. Brown served as a director of Wachovia Corporation, a commercial and retail bank from April 1993 until April 2007, Sonoco Products Company, a manufacturer of industrial and consumer packaging products, from April 1993 until February 2007, and Duke Energy Corporation, an electric power company, from April 1994 until May 2005. Mr. Brown’s experience operating B&C Associates, Inc. and his prior public company board experience led the Board to conclude that he should serve as one of our directors.

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Rick L. Burdick has served as one of our directors since May 1991. Since 1988, Mr. Burdick has been a partner in Akin, Gump, Strauss, Hauer & Feld, L.L.P., a global full service law firm. Mr. Burdick is managing partner (international) and chair of the international corporate transactions practice of the firm. He also serves as Lead Director of CBIZ, Inc. (formerly, Century Business Services, Inc.), a provider of outsourced business services to small and medium-sized companies in the United States. Mr. Burdick’s experience as a senior partner at a large law firm advising large companies on a broad range of corporate transactions and on securities law and corporate governance matters led the Board to conclude that he should serve as one of our directors.
William C. Crowley has served as one of our directors since January 2002. Since January 1999, Mr. Crowley has been President and Chief Operating Officer of ESL Investments, Inc., a private investment firm. He served as Executive Vice President of Sears Holdings Corporation from March 2005 until January 2011 and as Chief Administrative Officer of Sears Holdings Corporation from September 2005 until January 2011. Mr. Crowley also served as the Chief Financial Officer of Sears Holdings Corporation from March 2005 until September 2006 and from January 2007 until October 2007. Mr. Crowley has served as a director of Sears Canada Inc. since March 2005 and as the Chairman of the Board of Sears Canada Inc. since December 2006. From May 2003 until March 2005, Mr. Crowley served as director and Senior Vice President, Finance of Kmart Holding Corporation. Prior to joining ESL Investments in 1999, Mr. Crowley was a Managing Director at Goldman, Sachs & Co., a leading global investment banking and securities firm. Mr. Crowley is a director of AutoZone, Inc. and is director and chairman of Orchard Supply Hardware Stores Corporation, a former subsidiary of Sears Holdings Corporation. He served as a director of Sears Holdings Corporation from March 2005 until May 2010. Mr. Crowley’s experience in corporate finance and investment banking, as well as his experience as a senior executive officer of a Fortune 500 company and his position as the President and Chief Operating Officer of ESL Investments, Inc., led the Board to conclude that he should serve as one of our directors.
David B. Edelson has served as one of our directors since July 2008. Mr. Edelson is Senior Vice President of Loews Corporation, a diversified holding company with subsidiaries in the property-casualty insurance, offshore drilling, natural gas transmission and storage, natural gas exploration and production, and lodging industries. He joined Loews in May 2005. Prior to joining Loews, Mr. Edelson was Executive Vice President & Corporate Treasurer of JPMorgan Chase & Co. He was named Corporate Treasurer in April 2001 and promoted to Executive Vice President in February 2003. Mr. Edelson spent the first 15 years of his career as an investment banker, first with Goldman Sachs & Co. and subsequently with JPMorgan Chase & Co. From February 2007 until June 2011, he served as a director of CNA Surety Corporation, and from January 2009 until June 2011, as Chairman of the Board of CNA Surety Corporation. Mr. Edelson’s experience as a senior executive officer of a large holding company owning a wide range of businesses, as well as his prior experience as an investment banker and corporate treasurer, led the Board to conclude that he should serve as one of our directors.
 
Robert R. Grusky has served as one of our directors since June 2006. In 2000, Mr. Grusky founded Hope Capital Management, LLC, an investment management firm for which he serves as Managing Member. He co-founded New Mountain Capital, LLC, a private equity and public equity investment management firm, in 2000 and was a Principal, Managing Director and Member of New Mountain Capital from 2000 to 2005 and has been a Senior Advisor since then. From 1998 to 2000, Mr. Grusky served as President of RSL Investments Corporation, the primary investment vehicle for the Hon. Ronald S. Lauder. Prior thereto, Mr. Grusky served in a variety of capacities at Goldman, Sachs & Co. in its Mergers & Acquisitions Department and Principal Investment Area. Mr. Grusky is a director of Strayer Education, Inc., an education services company, and AutoZone, Inc. Mr. Grusky’s board experience and experience in investment management, private equity, and investment banking led the Board to conclude that he should serve as one of our directors.
Michael Larson has served as one of our directors since February 2010. Mr. Larson serves as chief investment officer for William H. Gates III, a position he has held since 1994. He is responsible for Mr. Gates’ non-Microsoft investments as well as the investments of the Bill & Melinda Gates Foundation Trust. He serves as a director of Republic Services, Inc., Ecolab Inc., Fomento Mexicano Economico, S.A.B. de C.V., and Grupo Televisa, S.A.B. In addition, he is Chairman of the Board of Trustees for Western Asset/Claymore Inflation-Linked Securities & Income Fund and Western Asset/Claymore Inflation-Linked Opportunities & Income Fund. From November 1999 until December 2010, Mr. Larson served as a director of Pan American Silver Corp. Mr. Larson’s investment and business experience and broad understanding of the capital markets, business cycles, and capital investment and allocation led the Board to conclude that he should serve as one of our directors.

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Michael E. Maroone has served as one of our directors since July 2005 and as our President and Chief Operating Officer since August 1999. Following our acquisition of the Maroone Automotive Group in January 1997, Mr. Maroone served as President of our New Vehicle Dealer Division. In January 1998, Mr. Maroone was named President of our Automotive Retail Group with responsibility for our new and used vehicle operations. Prior to joining AutoNation, Mr. Maroone was President and Chief Executive Officer of the Maroone Automotive Group, one of the country's largest privately-held automotive retail groups prior to its acquisition by us. Mr. Maroone’s position as our President and his broad knowledge of our Company and the automotive retail industry led the Board to conclude that he should serve as one of our directors.
Carlos A. Migoya has served as one of our directors since June 2006. In May 2011, Mr. Migoya was named Chief Executive Officer of Jackson Health System. From February 2010 until December 2010, Mr. Migoya served as City Manager for the City of Miami. He previously served as Regional President - North Carolina of Wachovia Corporation, a Wells Fargo Company, from December 2007 until May 2009. From June 2006 until December 2007, Mr. Migoya served as State CEO for the Atlantic Region of Wachovia Corporation. In this position, Mr. Migoya was responsible for Wachovia’s general banking businesses in New Jersey, Connecticut, and New York. From 1987 until 2006, Mr. Migoya served as Regional President - Dade and Monroe Counties of Wachovia Corporation, with responsibility for Wachovia’s general banking businesses in the region. Mr. Migoya has more than 35 years of experience in banking. Mr. Migoya’s management and banking experience led the Board to conclude that he should serve as one of our directors.
Alison H. Rosenthal has served as one of our directors since March 2011. From February 2006 until January 2011, Ms. Rosenthal led various initiatives in the Business Development Department at Facebook, Inc., where she served as Senior Manager from February 2006 until July 2008 and as Head of the Global Operator Program, Mobile from July 2008 until January 2011. Ms. Rosenthal served as an associate at General Atlantic Partners, LLC, a global private equity fund focused on IT, from February 2001 until June 2003 and as an analyst at Goldman, Sachs & Co., a leading global investment banking and securities firm, from July 1998 until July 2000. In December 2011, Ms. Rosenthal joined Greylock Partners, a leading venture capital firm, as an Executive in Residence. Ms. Rosenthal’s technology experience, including in the areas of mobile applications and social media, and investment and finance experience led the Board to conclude that she should serve as one of our directors.
Corporate Governance Guidelines and Codes of Ethics
Our Board is committed to sound corporate governance principles and practices. Our Board’s core principles of corporate governance are set forth in the AutoNation, Inc. Corporate Governance Guidelines (the “Guidelines”), which were adopted by the Board in March 2003 and most recently amended as of October 20, 2011. The Guidelines serve as a framework within which our Board conducts its operations. The Corporate Governance and Nominating Committee of our Board is charged with reviewing annually, or more frequently as appropriate, the Guidelines and recommending to our Board appropriate changes in light of applicable laws and regulations, the governance standards identified by leading governance authorities, and our Company’s evolving needs.
In order to clearly set forth our commitment to conduct our operations in accordance with our high standards of business ethics and applicable laws and regulations, we have a company-wide Business Ethics Program, which includes a Code of Business Ethics applicable to all of our employees. We also maintain a 24-hour Alert-Line for employees to report any Company policy violations under our Business Ethics Program. In addition, our Board has adopted the Code of Ethics for Senior Officers and the Code of Business Ethics for the Board of Directors. These codes comply with NYSE listing standards.
A copy of the Guidelines and the codes referenced above are available on our corporate website at investors.autonation.com. You also may obtain a printed copy of the Guidelines by sending a written request to: Investor Relations, AutoNation, Inc., 200 SW 1st Ave, Fort Lauderdale, FL 33301.
Role of the Board and Board Structure
Our business and affairs are managed under the direction of our Board, which is the Company’s ultimate decision-making body, except with respect to those matters reserved to our stockholders. Our Board’s mission is to maximize long-term stockholder value. Our Board establishes our overall corporate policies, selects and evaluates our senior management team, who is charged with the conduct of our business, and acts as an advisor and counselor to senior management. Our Board also oversees our business strategy and planning as well as the performance of management in executing our business strategy, assessing and managing risks, and managing our day-to-day operations.

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Our Board’s oversight of our business strategy and planning and management of our day-to-day operations includes a review of risks that could impact our goals, objectives, and financial condition. In addition, our Audit, Corporate Governance and Nominating, and Compensation committees assist the Board in overseeing our management of risk. Our Audit Committee reviews with management significant risks as well as our process for assessing and managing risks. Our Corporate Governance and Nominating Committee oversees our company-wide Business Ethics Program, which includes a Code of Business Ethics applicable to all of our employees. Our Compensation Committee, in certain cases through its Executive Compensation Subcommittee, reviews and approves our executive compensation program and also reviews the general compensation structure for our corporate and key field employees. While our Board oversees our management of risk as outlined above, management is responsible for identifying and managing risks.
The positions of Chairman of the Board and Chief Executive Officer are both currently held by Mike Jackson. The Board believes that this leadership model is currently appropriate for the following reasons:
Our Board has adopted strong and effective corporate governance policies and procedures to promote the effective and independent governance of the Company. See “Corporate Governance Guidelines and Codes of Ethics” above.
Our Board is stockholder-oriented and focused on the best interests of our stockholders - approximately 68% of our common stock is held by our directors or entities or persons related to our directors (as of March 15, 2012), a significant portion of our director’s compensation is equity-based, and the Board has established director stock ownership guidelines.
The combined role enables decisive leadership, ensures clear accountability, and fosters alignment on corporate strategy.
Our independent directors meet in regularly scheduled executive sessions led by a presiding director (rotated among Committee Chairs) without management present.
Our independent directors annually review the performance of our Chairman and Chief Executive Officer.
The Board believes that it functions well with its current leadership structure and with Mr. Jackson as Chairman of the Board.
At our 2009 and 2010 Annual Meetings of Stockholders, stockholder proposals to amend our by-laws to require an independent Board chairman were presented, and 86% and 85% of the votes cast, respectively, voted against such proposals.
In addition, we believe that the current leadership structure of the Board supports its risk oversight functions by providing independent leadership at the committee level, executive sessions of the Board of Directors with rotating presiding directors, and ultimate oversight by the full Board led by our Chairman and Chief Executive Officer.
Our Board of Directors held 14 meetings and took no action by unanimous written consent during 2011. In 2011, each person serving as a director attended at least 75% of the total number of meetings of our Board and any Board committee on which he or she served.
Our independent directors held four executive sessions without management present during 2011. Our Board has not appointed a lead independent director; instead, in accordance with our Guidelines, the presiding director for each executive session is rotated among the Chairs of our Board committees.
Our directors are expected to attend our Annual Meeting of Stockholders. Any director who is unable to attend our Annual Meeting is expected to notify the Chairman of the Board in advance of the Annual Meeting. Each person who was then serving as a director attended the 2011 Annual Meeting of Stockholders.
Board Committees
Our Board has established three separately designated standing committees to assist the Board in discharging its responsibilities: the Audit Committee, the Compensation Committee, and the Corporate Governance and Nominating Committee. In addition, our Board has established the Executive Compensation Subcommittee, which is a subcommittee of the Compensation Committee. The charters for our Board committees are in compliance with SEC rules and NYSE listing standards. These charters are available at investors.autonation.com. You may obtain a printed copy of any of these charters by sending a request to: Investor Relations, AutoNation, Inc., 200 SW 1st Ave, Fort Lauderdale, FL 33301.

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The following table sets forth the current membership of each of our Board’s committees:  
Name
Audit Committee
Compensation Committee
Executive
Compensation
Subcommittee  
Corporate
Governance and
Nominating
Committee
Robert J. Brown
ü
 
 
 
Rick L. Burdick
 
ü
ü
Chair
William C. Crowley
 
Chair
 
ü
David B. Edelson
ü
 
 
 
Robert R. Grusky
Chair
 
 
 
Michael Larson
 
ü
ü
 
Carlos A. Migoya
 
ü
Chair
ü
Alison H. Rosenthal
ü
 
 
 
Audit Committee
The Audit Committee primarily assists our Board in fulfilling its oversight responsibilities by reviewing our financial reporting and audit processes and our systems of internal control over financial reporting and disclosure controls. Among the Committee’s core responsibilities are the following: (i) overseeing the integrity of our financial statements, for which management is responsible, and reviewing and approving the scope of the annual audit; (ii) selecting, retaining, compensating, overseeing, and evaluating our independent registered public accounting firm; (iii) reviewing the Company’s critical accounting policies; (iv) reviewing the Company’s quarterly and annual financial statements prior to the filing of such statements with the SEC; (v) preparing the Audit Committee report for inclusion in our proxy statement; and (vi) reviewing with management significant risks and assessing the steps management has taken to minimize, monitor, and control such risks or exposures. For a complete description of our Audit Committee’s responsibilities, you should refer to the Audit Committee’s charter.
The Audit Committee currently consists of four directors. Our Board has determined that each Audit Committee member has the requisite independence and other qualifications for audit committee membership under SEC rules, NYSE listing standards, the Audit Committee’s charter, and the independence standards set forth in the Guidelines (as discussed below under “Director Independence”). Our Board has also determined that each of Mr. Grusky and Mr. Edelson is an “audit committee financial expert” within the meaning of Item 407(d)(5) of Regulation S-K under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). See “Directors” above for a description of the business experience of each of Mr. Grusky and Mr. Edelson.
The Audit Committee held six meetings and took one action by unanimous written consent during 2011. The Audit Committee Report for fiscal 2011, which contains a description of the Audit Committee’s responsibilities and its recommendation with respect to our audited consolidated financial statements for the year ended December 31, 2011, is set forth below under “Audit Committee Report.”
Compensation Committee
The Compensation Committee primarily assists our Board in fulfilling its compensation and management development and succession planning oversight responsibilities by, among other things: (i) reviewing our director compensation program; (ii) reviewing and approving the compensation of our Chief Executive Officer and other senior executive officers and, except as expressly delegated to the Executive Compensation Subcommittee, setting annual and long-term performance goals for these individuals; (iii) reviewing and approving the compensation of all of our corporate officers; and (iv) reviewing the Company’s program for management development and succession planning.
Please refer to “Executive Compensation Subcommittee” below for a description of the Executive Compensation Subcommittee, which is a subcommittee of the Compensation Committee. Pursuant to the Compensation Committee’s charter, the Committee may form subcommittees and may delegate to such subcommittees any or all power and authority of the Committee as the Committee deems appropriate, provided that no subcommittee may consist of fewer than two members, and provided further that the Committee may not delegate to a subcommittee any power or authority required by any applicable laws, regulations or listing standards to be exercised by the Committee as a whole.

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The Committee reviews executive compensation at its meetings throughout the year and sets executive compensation. The Committee also reviews director compensation annually. As part of its review of executive compensation, the Committee reviews the executive compensation arrangements at other retail companies. The Committee reviews the data at a high level in order to evaluate and confirm whether our executive compensation is within a reasonably competitive range. The Committee, however, does not set executive compensation at a set target percentile based on the data. See “Executive Compensation - Compensation Discussion and Analysis - Setting Compensation Levels of Executive Officers.” The Committee did not engage a compensation consultant to advise the Committee with respect to executive or director compensation for 2011.
Our Board has determined that each Compensation Committee member has the requisite independence for Compensation Committee membership under NYSE listing standards and the independence standards set forth in the Guidelines. The Compensation Committee held four meetings and took five actions by unanimous written consent during 2011. For more information on the responsibilities and activities of the Compensation Committee, including the Committee’s processes for determining executive compensation, see “Executive Compensation” below, as well as the Compensation Committee’s charter.
Executive Compensation Subcommittee
The Executive Compensation Subcommittee is a subcommittee of the Compensation Committee. The Subcommittee assists the Board and the Compensation Committee in fulfilling their compensation oversight responsibilities by performing the following duties: (i) reviewing and approving performance-based compensation of executive officers as contemplated under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), including bonuses and stock-based awards; (ii) administering the AutoNation, Inc. Senior Executive Incentive Bonus Plan, including establishing performance goals and certifying whether such goals are attained as contemplated under Section 162(m) of the Code; and (iii) administering our equity compensation plans, including approving stock-based awards.
Our Board has determined that each member of the Subcommittee qualifies as a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act, and as an “outside director” under Section 162(m) of the Code. The Executive Compensation Subcommittee held four meetings and took three actions by unanimous written consent during 2011. For more information on the responsibilities and activities of the Executive Compensation Subcommittee, please refer to the Executive Compensation Subcommittee’s charter.
Corporate Governance and Nominating Committee
The Corporate Governance and Nominating Committee assists our Board in fulfilling its oversight responsibilities by performing the following duties: (i) reviewing annually, or more frequently as appropriate, the corporate governance principles and practices set forth in the Guidelines, in comparison to the governance standards identified by leading governance authorities and our evolving needs, and making recommendations to the Board with respect to any appropriate amendment to the Guidelines; (ii) considering and advising the Board with respect to other corporate governance issues; (iii) periodically reviewing our codes of ethics and conduct for directors, officers, and employees; (iv) leading annual evaluations of Board and Board committee performance; (v) assessing periodically our Board’s needs in terms of skills and qualifications and recommending to our Board candidates for nomination and election to our Board; (vi) reviewing Board candidates recommended by our stockholders; and (vii) recommending to our Board assignments to committees.
Our Board has determined that each Corporate Governance and Nominating Committee member is independent under NYSE listing standards and the independence standards set forth in the Guidelines. In 2011, the Corporate Governance and Nominating Committee held four meetings and took one action by unanimous written consent.
The Corporate Governance and Nominating Committee has a policy with regard to the consideration of director candidates recommended by stockholders. For information regarding this policy, refer to “Stockholder Communications - Stockholder Director Recommendations” below.

8


Director Independence
The director independence standards set forth in our Guidelines, available at investors.autonation.com, meet and in some areas exceed the listing standards of the NYSE. Our Board has affirmatively determined that all of our directors, except Mr. Jackson, our Chairman and Chief Executive Officer, and Mr. Maroone, our President and Chief Operating Officer, are “independent” under our independence standards and the listing standards of the NYSE.
In addition to our independence standards, the directors who serve on our Audit Committee each satisfy standards established by the SEC providing that to qualify as “independent” for the purposes of membership on that committee, members of audit committees may not (1) accept directly or indirectly any consulting, advisory, or other compensatory fee from the Company other than their director compensation or (2) be an affiliated person of the Company or any of its subsidiaries.
 
In making its independence determinations, the Board considered relationships and transactions since the beginning of 2009 between the Company and its subsidiaries and our non-employee directors, entities associated with those directors, or members of their immediate families, including the relationships and transactions described under “Certain Relationships and Related Transactions” below. The Board determined that none of the relationships and transactions it considered impaired the independence of our non-employee directors or disqualified any of our non-employee directors from serving as independent directors under our independence standards and the listing standards of the NYSE. The Board’s independence determinations included a review of the following relationships and transactions:  
Mr. Crowley is President and Chief Operating Officer of ESL Investments, Inc., and ESL Investments, Inc. together with its investment affiliates (collectively, “ESL”) beneficially owns approximately 53% of our common stock. In addition, Mr. Crowley and ESL have relationships with Sears Holdings Corporation (“Sears”) and AutoZone, Inc. (“AutoZone”), and in the ordinary course of business, we enter into transactions with Sears and AutoZone as a purchaser or supplier of goods or services. See “Certain Relationships and Related Party Transactions” below for more information regarding these relationships and transactions.
Mr. Grusky is a limited partner in ESL Partners, L.P., an investment affiliate of ESL Investments, Inc., and he serves as a director of AutoZone.
Mr. Edelson is Senior Vice President of Loews Corporation (“Loews”), and, in connection with certain of our insurance programs, we have paid premiums to American Casualty Company of Reading, Pennsylvania and to Continental Casualty Company, each a subsidiary of CNA Financial Corporation (“CNA Financial”), which is a 90%-owned subsidiary of Loews. In addition, we may from time to time use hotels owned by Loews Hotel Holdings Corporation, a wholly-owned subsidiary of Loews.
Michael Larson serves as chief investment officer for William H. Gates III, and all shares of our common stock owned by Cascade Investment, L.L.C. (“Cascade”) and the Bill & Melinda Gates Foundation Trust (the “Trust”) may be deemed to be beneficially owned by Mr. Gates. On a combined basis, Cascade and the Trust beneficially own approximately 14% of our common stock. In the ordinary course of business, we enter into transactions, as a purchaser or supplier of goods or services, with Republic Services, Inc. (“Republic”), and Mr. Larson serves as a director of Republic. In addition, Cascade and the Trust on a combined basis beneficially own approximately 17% of Republic’s common stock (based on publicly available data as of March 15, 2012). 
Director Selection Process
The Corporate Governance and Nominating Committee is responsible for identifying, evaluating, and recommending candidates to the Board for nomination and election to the Board. The Committee is also responsible for assessing the appropriate balance of skills and characteristics required of our Board members. The Committee considers candidates suggested by its members and other Board members, as well as management and stockholders. The Committee has retained an executive search firm to identify and review candidates in the past.
 
In accordance with the Guidelines, candidates, including candidates recommended by stockholders, are selected on the basis of, among other things, broad experience, financial expertise, wisdom, integrity, ability to make independent analytical inquiries, understanding of our business environment, the candidate’s ownership interest in the Company, and willingness and ability to devote adequate time to Board duties, all in the context of assessing the needs of our Board at

9


that point in time and with the objective of ensuring diversity in the background, experience, and viewpoints of our Board members. The Guidelines provide that the number of directors should permit diversity of experience without hindering effective discussion, diminishing individual accountability, or exceeding a number that can function efficiently as a body.
The Board periodically reviews the size of the Board to determine the size that will be most effective for the Company. In addition, the Board completes an annual self-evaluation, which includes a self-assessment questionnaire for each Board member. The self-assessment questionnaire addresses topics such as the structure of the Board, the skills and backgrounds of the current directors, the size of the Board, and the Board’s committee structure. Each of the Audit Committee, the Corporate Governance and Nominating Committee, the Compensation Committee, and the Executive Compensation Subcommittee also completes an annual self-evaluation, which includes a self-assessment questionnaire tailored specifically for such committee or subcommittee.
Candidates recommended by our stockholders are considered on the same basis as if such candidates were recommended by one of our Board members or other persons. See “Stockholder Communications - Stockholder Director Recommendations” below.
Board Compensation
Our non-employee director compensation program is designed to:  
ensure alignment with long-term stockholder interests;
ensure we can attract and retain outstanding director candidates who meet the criteria outlined under “Director Selection Process” above; and
recognize the time commitments necessary to oversee the Company.
Summary
In 2011, our non-employee director compensation program consisted of the following:  
annual Board retainer of $50,000 for each non-employee director;
annual committee retainers of $20,000 for the Chairman of the Audit Committee and $10,000 for each other Audit Committee member;
annual committee retainers of $10,000 for the Chairmen of the Compensation Committee and the Corporate Governance and Nominating Committee and $5,000 for the other members of the Compensation Committee and the Corporate Governance and Nominating Committee; and
expense reimbursement in connection with Board and committee meeting attendance.
In addition, the AutoNation, Inc. 2007 Non-Employee Director Option Plan (as amended, the “2007 Plan”) provides for an automatic grant of an option to purchase 5,000 shares of our common stock to each non-employee director on the first trading day of each March, June, September, and December.
The most recent amendment to the 2007 Plan was approved by our Board of Directors on February 1, 2012. Prior to the adoption of that amendment, each option granted under the 2007 Plan was immediately exercisable and expired on the 10th anniversary of the option grant date. The amendment provides that, with respect to grants made under the 2007 Plan after February 1, 2012, (1) each option will become exercisable with respect to 25% of the total number of shares underlying the option on June 1 of the year following the year in which the option is granted (the “initial vesting date”) and with respect to an additional 25% on each of the next three succeeding anniversaries of the initial vesting date, (2) except as set forth in (3) below, in the event an optionee ceases to be a non-employee director, then any options held by such non-employee director will become immediately exercisable until the earlier of (a) 30 days following the date the optionee ceases to be a non-employee director and (b) the expiration of the options, (3) in the event an optionee ceases to be a non-employee director because of retirement, death, or permanent and total disability (each as defined in the 2007 Plan), then any options held by such non-employee director will become immediately exercisable until the earlier of (x) the third anniversary of the date of such retirement, death, or permanent and total disability and (y) the expiration of the options, and (4) each option will expire on the 10th anniversary of the first grant date in the year in which the option was granted.

10


In November 2010, our non-employee directors became eligible to defer all or a portion of their annual and committee retainers under the AutoNation, Inc. Deferred Compensation Plan (the “DCP”). Please refer to “Executive Compensation - Compensation Tables - Non-Qualified Deferred Compensation in Fiscal 2011” for additional information regarding the DCP. 
2011 Director Compensation
The following table sets forth the compensation earned during 2011 by each non-employee director.  
2011 DIRECTOR COMPENSATION
Name
Fees Earned or
Paid in Cash
($)
Option Awards
($)(1)
Total
($)
Robert J. Brown
60,000

305,410

365,410

Rick L. Burdick
65,000
(2)
305,410

370,410

William C. Crowley
65,000
(2)
305,410

370,410

David B. Edelson
60,000

305,410

365,410

Robert R. Grusky
71,667

305,410

377,077

Michael Larson
55,000

305,410

360,410

Carlos A. Migoya
63,333

305,410

368,743

Alison H. Rosenthal(3)
48,333

236,041

284,374

 
(1)
The amounts reported in this column are based on the grant date fair values computed in accordance with FASB ASC Topic 718. For a description of the assumptions used in the calculation of these amounts, see Note 10 of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2011.
In 2011, each of our non-employee directors received an option to purchase 5,000 shares of common stock on each of March 1, June 1, September 1, and December 1, except for Ms. Rosenthal who only received the June 1, September 1, and December 1 option grants since she joined the Board on March 14, 2011. The following table sets forth information regarding each option award granted to our non-employee directors who were serving on the quarterly grant dates in 2011:
Grant Date
Number of Shares Underlying Option Award
Option Exercise Price
($)
Grant Date Fair Value of
Option Award
($)
March 1, 2011
5,000
32.50
69,369
June 1, 2011
5,000
34.51
71,910
September 1, 2011
5,000
40.37
86,693
December 1, 2011
5,000
35.99
77,438
(2)
Deferred under the DCP.
(3)
Ms. Rosenthal joined the Board on March 14, 2011.
The following table sets forth information regarding the number of options held by each of our non-employee directors as of December 31, 2011:
 
Name
Number of Options Held as of December 31, 2011
 
 
Robert J. Brown
10,000

 
Rick L. Burdick
140,000

 
William C. Crowley
180,000

 
David B. Edelson
110,000

 
Robert R. Grusky
103,134

 
Michael Larson
70,000

 
Carlos A. Migoya
60,000

 
Alison H. Rosenthal
15,000


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Director Stock Ownership Guidelines
The Board believes that non-employee directors should be stockholders and have a financial stake in the Company. Toward this end, the Board expects that each non-employee director will invest at least $100,000 in the Company’s common stock within five years of first becoming a non-employee director. Exceptions to this requirement may only be made by the Board under compelling mitigating circumstances.
 
The following table sets forth information regarding investments made by our non-employee directors in our common stock as of March 15, 2012.
DIRECTOR STOCK OWNERSHIP GUIDELINES
Name
Number of Shares 
Owned(1) 
Amount Deemed 
Invested
($)
Progress  
Deadline
Robert J. Brown
2,000

45,060
(2)
45%
February 2015
Rick L. Burdick
7,365

139,935
(3)
Achieved
N/A
William C. Crowley
182,241
(4)
>4,000,000
(5)
Achieved
N/A
David B. Edelson
4,850

100,447
(6)
Achieved
N/A
Robert R. Grusky
6,450

103,915
(7)
Achieved
N/A
Michael Larson
2,000

55,147
(6)
55%
February 2015
Carlos A. Migoya
15,150

392,886
(8)
Achieved
N/A
Alison H. Rosenthal


March 2016
 
(1)
Based on filings with the SEC.
(2)
With respect to 1,000 shares, based on the closing price per share on February 24, 2010, the date he was appointed to the Board; and with respect to 1,000 shares, based on the closing price per share of our common stock on the date the shares were acquired in connection with the exercise of an option.
(3)
Based on the closing price per share of our common stock on the date the shares were acquired in connection with the exercise of an option.
(4)
Includes 83,545 shares held by Tynan, LLC, a limited liability company of which Mr. Crowley is the sole member.
(5)
Estimated value based on the closing price per share on the dates shares were acquired.
(6)
Based on the purchase price paid for the shares, as reported with the SEC.
(7)
With respect to 5,200 shares, based on the purchase price paid for the shares, as reported with the SEC; and with respect to 1,250 shares, based on the closing price per share of our common stock on the date the shares were acquired in connection with the exercise of an option.
(8)
With respect to 1,000 shares that Mr. Migoya held on the date he became a director, based on the closing price per share of our common stock on such date; with respect to 6,000 shares, based on the purchase price paid for the shares, as reported with the SEC; and with respect to 8,150 shares, based on the closing price per share of our common stock on the date the shares were acquired in connection with the exercise of an option.
2012 Option Grants
In accordance with the terms of the 2007 Plan, Messrs. Brown, Burdick, Crowley, Edelson, Grusky, Larson, and Migoya, and Ms. Rosenthal were each automatically granted an option to purchase 5,000 shares of our common stock at an exercise price equal to $34.09 per share, the closing price per share of our common stock on March 1, 2012. Each non-employee director will also receive an option to purchase 5,000 shares of our common stock on the first trading day of each of June, September, and December 2012. Each option grant will have an exercise price equal to the closing price per share of our common stock on the applicable grant date.

12


Compensation Committee Interlocks and Insider Participation
During 2011, Messrs. Burdick, Crowley, Larson, and Migoya served on our Compensation Committee. Please refer to “Certain Relationships and Related Party Transactions” below for a description of certain transactions we entered into since January 1, 2011 in which Mr. Crowley may be deemed to have had an indirect material interest. None of our Compensation Committee members has ever been an officer or employee of AutoNation or any of our subsidiaries, and none of our executive officers has served on the compensation committee (or other committee serving an equivalent function) or board of directors of any company, one of whose executive officers served on our Board or our Compensation Committee.
Certain Relationships and Related Party Transactions
Our Board has adopted a written policy which requires that transactions with related parties must be entered into in good faith on fair and reasonable terms that are no less favorable to us than those that would be available in a comparable transaction in arm’s-length dealings with an unrelated third party. Our Board, by a vote of the disinterested directors, must approve all related party transactions valued over $500,000, while our Audit Committee must approve all related party transactions valued between $100,000 and $500,000 and review with management all other related party transactions.
In accordance with SEC rules, we have set forth below a summary of transactions that occurred since January 1, 2011, in which the amount involved exceeded $120,000, the Company or one of its subsidiaries was a participant, and any related party may be deemed to have had a direct or indirect material interest. Under SEC rules, a related party is any director, executive officer, nominee for director, or 5% stockholder of the Company, and their immediate family members. In each case, the transactions complied with our Board’s policy on related party transactions.
In the ordinary course of business, we enter into transactions with Sears as a purchaser or supplier of goods or services. As of March 15, 2012, ESL, which beneficially owns approximately 53% of our common stock, beneficially owns approximately 62% of Sear’s common stock (based on publicly available data as of March 15, 2012), and Edward S. Lampert, the Chairman, Chief Executive Officer and controlling principal of ESL Investments, Inc., serves as the Chairman of the Board of Sears. In addition, Mr. Crowley who serves as the President and Chief Operating Officer of ESL Investments, Inc., served in various executive positions at Sears from March 2005 until January 2011 and as a director of Sears from March 2005 until May 2010. He also serves as Chairman of the Board of Sears Canada Inc., a subsidiary of Sears. In 2011, we paid Sears approximately $200,000 primarily for automotive parts and accessories, and Sears paid us approximately $250,000 primarily for automotive parts, accessories, and services.
We also enter into transactions with AutoZone, Inc., as a purchaser or supplier of goods or services, in the ordinary course of business. ESL owns approximately 10% of AutoZone’s common stock (based on publicly available data as of March 15, 2012), and Messrs. Crowley and Grusky serve as directors of AutoZone. In 2011, we paid AutoZone approximately $765,000 primarily for automotive parts and accessories, and AutoZone paid us approximately $135,000 primarily for automotive parts and accessories. In addition, in 2011, Lease Plan USA, a fleet leasing company, paid us approximately $6.2 million for certain vehicles that were subsequently leased by Lease Plan USA to AutoZone.
In January 2009, our Board authorized and approved letter agreements with certain automotive manufacturers that, among other things, eliminated certain adverse consequences that would have been triggered under the framework agreements with those manufacturers upon ESL’s acquisition of a 50% or greater ownership interest in our Company. The letter agreements with American Honda Motor Co., Inc. (“Honda”) and Toyota Motor Sales, U.S.A., Inc. (“Toyota”) also contain governance-related and other provisions. ESL is also a party to both the Honda and Toyota agreements. Under the terms of the Honda and Toyota agreements, ESL has agreed to vote all shares of our common stock in excess of 50% of our outstanding shares in the same proportion as all non-ESL-owned shares are voted. For additional information regarding these agreements, please refer to “Agreements with Vehicle Manufacturers - Framework Agreements” in Part I, Item 1 of our Annual Report on Form 10-K for the year ended December 31, 2011.
On November 29, 2011, we entered into an extension and amendment agreement to the Toyota Agreement (the “Extension and Amendment Agreement”) with Toyota and ESL. The Extension and Amendment Agreement grants an additional one-year extension of Toyota’s Consent under the Toyota Agreement and amends the Toyota Agreement to

13


provide that the Toyota Agreement and Toyota’s Consent will terminate in the event that ESL’s ownership of the Company’s outstanding common stock falls to 40% or lower (prior to the amendment, the termination threshold was 50% or lower). Toyota’s Consent under the Toyota Agreement will now terminate on December 31, 2012 (unless it is terminated earlier as provided in the Toyota Agreement) with respect to purchases of the Company’s common stock by ESL after such date, provided that ESL may continue to seek successive annual one-year extensions of Toyota’s Consent, and Toyota may not unreasonably withhold or delay its consent thereto, except that if ESL has owned 50% or less of the Company’s outstanding common stock for two years preceding the date that ESL seeks an extension, then Toyota may withhold such consent in its sole discretion.
Stockholder Communications
Communications with the Company and the Board
Stockholders and interested parties may communicate with the Company through its Investor Relations Department by writing to Investor Relations, AutoNation, Inc., 200 SW 1st Ave, Fort Lauderdale, FL 33301.
Stockholders and interested parties interested in communicating with our Board, any Board committee, any individual director, any group of directors (such as our independent directors), or our presiding director should send written correspondence to Board of Directors c/o Corporate Secretary, AutoNation, Inc., 200 SW 1st Ave, Fort Lauderdale, FL 33301. Additional information is available on our corporate website at investors.autonation.com.
Stockholder Proposals for Next Year’s Annual Meeting
As more specifically provided in our by-laws, no business may be brought before an Annual Meeting unless it is specified in the notice of the Annual Meeting or is otherwise brought before the Annual Meeting by or at the direction of our Board of Directors or by a stockholder entitled to vote who has delivered proper notice to us not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s Annual Meeting. Accordingly, any stockholder proposal to be considered at the 2013 Annual Meeting of Stockholders, including nominations of persons for election to our Board, generally must be properly submitted to us not earlier than January 9, 2013 nor later than February 8, 2013. Detailed information for submitting stockholder proposals or nominations of director candidates will be provided upon written request to the Corporate Secretary of AutoNation, Inc., 200 SW 1st Ave, Fort Lauderdale, FL 33301.
These requirements are separate from the SEC’s requirements that a stockholder must meet in order to have a stockholder proposal included in our Proxy Statement for the 2013 Annual Meeting of Stockholders. Stockholders interested in submitting a proposal for inclusion in our proxy materials for the 2013 Annual Meeting of Stockholders may do so by following the procedures set forth in Rule 14a-8 under the Exchange Act. To be eligible for inclusion in such proxy materials, stockholder proposals must be received by our Secretary not later than November 26, 2012.
Stockholder Director Recommendations
The Corporate Governance and Nominating Committee has established a policy pursuant to which it considers director candidates recommended by our stockholders. All director candidates recommended by our stockholders are considered for selection to the Board on the same basis as if such candidates were recommended by one or more of our directors or other persons. To recommend a director candidate for consideration by our Corporate Governance and Nominating Committee, a stockholder must submit the recommendation in writing to our Corporate Secretary not later than 120 calendar days prior to the anniversary date of our proxy statement distributed to our stockholders in connection with our previous year’s annual meeting of stockholders, and the recommendation must provide the following information: (i) the name of the stockholder making the recommendation; (ii) the name of the candidate; (iii) the candidate’s resume or a listing of his or her qualifications to be a director; (iv) the proposed candidate’s written consent to being named as a nominee and to serving as one of our directors if elected; and (v) a description of all relationships, arrangements, or understandings, if any, between the proposed candidate and the recommending stockholder and between the proposed candidate and us so that the candidate’s independence may be assessed. The stockholder or the director candidate also must provide any additional information requested by our Corporate Governance and Nominating Committee to assist the Committee in appropriately evaluating the candidate.

14


STOCK OWNERSHIP
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information as of March 15, 2012 regarding beneficial owners of more than five percent of the outstanding shares of our common stock.
Name and Address of Beneficial Owner
Number of Shares Beneficially Owned
Percent of
Class(1)
ESL Investments, Inc. and related entities, as a group(2)
200 Greenwich Avenue, Greenwich, CT 06830
67,058,483
(3)
52.7
%
William H. Gates III
One Microsoft Way, Redmond, WA 98052
17,527,380
(4)
13.8
%
Horizon Kinetics LLC
470 Park Avenue South, 4th Floor South, New York, NY 10016
7,326,527
(5)
5.8
%
(1)
Based on 127,103,469 shares outstanding at March 15, 2012.
(2)
The group consists of ESL Partners, L.P. (“Partners”), ESL Institutional Partners, L.P. (“Institutional”), ESL Investors, L.L.C. (“Investors”), ESL Investments, Inc. (“Investments”), CBL Partners, L.P. (“CBL”), Tynan, LLC (“Tynan”), RBS Partners, L.P. (“RBS”), RBS Investment Management, L.L.C. (“RBSIM”), Edward S. Lampert, and William C. Crowley. Partners, Institutional, Investors, Investments, CBL, Tynan, RBS, RBSIM, Mr. Lampert and Mr. Crowley are collectively referred to as the “ESL Group.”
(3)
Based on a Schedule 13D/A filed with the SEC on January 31, 2012 and a subsequent Form 4 filed by Mr. Crowley, the number of AutoNation shares beneficially owned by each member of the ESL Group as of March 15, 2012 consists of 36,630,644 shares held by Partners, 6,526 shares held by Institutional, 6,346,058 shares held in an account established by the investment member of Investors, 5,080,682 shares held by CBL, 83,545 shares held by Tynan, 18,627,332 shares held by Mr. Lampert, 98,696 shares held by Mr. Crowley, and 185,000 shares issuable upon the exercise of director stock options held by Mr. Crowley. Mr. Crowley disclaims beneficial ownership of AutoNation shares beneficially owned by the ESL Group, except for 83,545 shares held by Tynan, 98,696 shares held by Mr. Crowley, and 185,000 shares issuable upon the exercise of director stock options held by Mr. Crowley.
Partners has sole voting and dispositive power with respect to 36,630,644 shares, Institutional has sole voting and dispositive power with respect to 6,526 shares, Investors has sole voting and dispositive power with respect to 6,346,058 shares, Investments has sole voting and dispositive power with respect to 48,063,910 shares, CBL has sole voting and dispositive power with respect to 5,080,682 shares, Tynan has sole voting power with respect to 83,545 shares and sole dispositive power with respect to 60,956 shares, RBS has sole voting and dispositive power with respect to 42,976,702 shares, RBSIM has sole voting and dispositive power with respect to 6,526 shares, Mr. Lampert has sole voting power with respect to 66,691,242 shares and sole dispositive power with respect to 51,456,760 shares, and Mr. Crowley has sole voting power with respect to 367,241 shares and sole dispositive power with respect to 283,579 shares.
On May 20, 2010, we filed with the SEC a Current Report on Form 8-K to disclose that ESL became the beneficial owner of a greater than 50% ownership interest in our common stock. Please refer to the Form 8-K and also to “Agreements with Vehicle Manufacturers - Framework Agreements” in Part I, Item 1 of our Annual Report on Form 10-K for the year ended December 31, 2011, for a description of certain letter agreements by and among the Company, ESL, and certain automotive manufacturers relating to ESL’s ownership of our common stock. See also “Board of Directors and Corporate Governance - Certain Relationships and Related Party Transactions.”
(4)
Based on a Schedule 13D/A filed with the SEC on February 17, 2012 and Form 4s filed by Mr. Gates and Cascade Investment, L.L.C. (“Cascade”) through March 16, 2012, the number of shares beneficially owned by Mr. Gates as of March 15, 2012 includes 15,128,664 shares held by Cascade and 2,398,716 shares held by the Bill & Melinda Gates Foundation Trust (the “Trust”). All shares of our common stock held by Cascade may be deemed to be beneficially owned by Mr. Gates as the sole member of Cascade, and all shares of our common stock beneficially owned by the Trust may be deemed to be beneficially owned by Mr. Gates as a co-trustee of the Trust. Mr. Gates has sole voting power with respect to 15,128,664 shares and shared voting power with respect to 2,398,716 shares. The address of Cascade is 2365 Carillon Point, Kirkland, WA 98033, and the address of the Trust is 500 Fifth Avenue North, Seattle, WA 98119.

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(5)
Based on a Schedule 13G filed with the SEC on January 26, 2012, Horizon Kinetics LLC has sole voting and dispositive power with respect to 7,326,527 shares.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information as of March 15, 2012, unless otherwise indicated, regarding the amount of our common stock beneficially owned by (1) each of our directors, (2) each of our named executive officers, and (3) our directors and executive officers as a group. Beneficial ownership includes shares that may be acquired within 60 days of March 15, 2012 through the exercise of outstanding stock options (including, in the case of each executive officer who is retirement eligible under our equity compensation plans, currently unvested stock options that would accelerate in the event of retirement, and, in the case of each non-employee director, currently unvested stock options that would accelerate in the event of termination of Board service), as well as shares of restricted stock. Unless otherwise indicated, each person listed in the table has sole voting and investment power with respect to the securities listed.
Name of Beneficial Owner
Number of Shares of Common
Stock Owned     
Number of Shares
Acquirable
Within 60 days
Shares of Common Stock
Beneficially Owned
Number  
Percent(1)
Mike Jackson
84,463

1,373,083
(2)
1,457,546

1.1
%
Robert J. Brown
2,000

15,000
(3)
17,000

*

Rick L. Burdick
7,365

145,000
(3)
152,365

*

William C. Crowley
66,873,483

185,000
(3)
67,058,483
(4)
52.7
%
David B. Edelson
4,850

115,000
(3)
119,850

*

Robert R. Grusky
6,450

108,134
(3)
114,584
(5)
*

Michael Larson
2,000

75,000
(3)
77,000

*

Carlos A. Migoya
15,150

65,000
(3)
80,150

*

Alison H. Rosenthal

20,000
(3)
20,000

*

Michael E. Maroone
2,498,159
(6)
1,681,085
(7)
4,179,244

3.2
%
Michael J. Short
1,563

279,075

280,638

*

Jonathan P. Ferrando
34,767
(8)
337,379

372,146

*

David L. Koehler
4,036
(9)

4,036

*

Kevin P. Westfall(10)
8,598

45,949

54,547

*

All directors and executive officers as a group (14 persons)
69,538,322
(11)
4,398,756

73,937,078

56.2
%
*
Less than 1%.
(1)
Based on 127,103,469 shares outstanding at March 15, 2012.
(2)
Includes 709,374 shares that may be acquired upon exercise of currently vested options, and 663,709 shares underlying currently unvested options since Mr. Jackson is eligible for retirement treatment under the Company’s equity compensation plans. All options held by Mr. Jackson are owned by a trust of which he is the sole trustee and beneficiary.
(3)
Includes 5,000 shares that may be acquired upon exercise of currently unvested options that would accelerate in the event of termination of Board service.
(4)
Mr. Crowley is the President and Chief Operating Officer of ESL Investments, Inc., which together with various of its affiliates beneficially owns shares of AutoNation’s common stock as set forth above under “Security Ownership of Certain Beneficial Owners.” Based on a Schedule 13D/A filed with the SEC on January 31, 2012 and a subsequent Form 4 filed by Mr. Crowley, the number of shares beneficially owned by Mr. Crowley consists of 36,630,644 shares held by Partners, 6,526 shares held by Institutional, 6,346,058 shares held in an account established by the investment member of Investors, 5,080,682 shares held by CBL, 83,545 shares held by Tynan,

16


18,627,332 shares held by Mr. Lampert, 98,696 shares held by Mr. Crowley, and 185,000 shares issuable upon the exercise of director stock options held by Mr. Crowley. Mr. Crowley disclaims beneficial ownership of AutoNation shares beneficially owned by the ESL Group, except for 83,545 shares held by Tynan, 98,696 shares held by Mr. Crowley, and 185,000 shares issuable upon the exercise of director stock options held by Mr. Crowley. Mr. Crowley has sole voting power with respect to 367,241 shares and sole dispositive power with respect to 283,579 shares.
(5)
Mr. Grusky is a limited partner in ESL Partners, L.P. (“ESL Partners”), which together with various of its affiliates owns shares of AutoNation’s common stock. As a limited partner, Mr. Grusky is not deemed to have a reportable interest in the AutoNation shares held by ESL Partners, and Mr. Grusky disclaims beneficial ownership of such shares, except to the extent of his pecuniary interest therein.
(6)
Includes 2,496,622 shares beneficially owned by Michael Maroone Family Partnership, a Nevada limited partnership controlled by Mr. Maroone, of which 951,646 shares are pledged as security for a loan, and 1,537 shares held through the AutoNation 401(k) Plan.
(7)
Includes 1,149,891 shares that may be acquired upon exercise of currently vested options, and 531,194 shares underlying currently unvested options since Mr. Maroone is eligible for retirement treatment under the Company’s equity compensation plans.
(8)
Includes 33,000 shares owned by Mr. Ferrando and his wife as tenants by the entirety and 1,767 shares held through the AutoNation 401(k) Plan.
(9)
Represents unvested shares of restricted stock.
(10)
Mr. Westfall resigned from the Company effective November 9, 2011, and the information provided in this table speaks as of such date.
(11)
Includes 8,072 unvested shares of restricted stock and 3,304 shares held through the AutoNation 401(k) Plan. 

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires that our directors, certain of our officers, and persons who beneficially own 10% or more of our stock file with the SEC initial reports of ownership and reports of changes in ownership of our stock and our other equity securities. To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required, during the year ended December 31, 2011, our directors, executive officers, and greater than 10% beneficial owners complied with all such applicable filing requirements, except that two Form 4s involving a total of two transactions were filed late for Michael Stephan. A Form 4 was filed for Mr. Stephan on August 4, 2011 to report the withholding of 273 shares on June 1, 2011 and the withholding of 126 shares on August 1, 2011, in each case to satisfy tax withholding obligations in connection with the vesting of restricted stock.

17


EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE AND
EXECUTIVE COMPENSATION SUBCOMMITTEE REPORT
The following statement made by our Compensation Committee and Executive Compensation Subcommittee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate such statement by reference.
The Compensation Committee and Executive Compensation Subcommittee of the Company have reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K and, based on such review and discussion, the Compensation Committee and Executive Compensation Subcommittee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2011.
Compensation Committee:
William C. Crowley, Chair
Rick L. Burdick
Michael Larson
Carlos A. Migoya
Executive Compensation Subcommittee:
Carlos A. Migoya, Chair
Rick L. Burdick
Michael Larson


18


COMPENSATION DISCUSSION AND ANALYSIS
Overview
Our compensation programs are administered by the Compensation Committee (referred to as the “Committee” in this section) and the Executive Compensation Subcommittee (referred to as the “Subcommittee” in this section) of the Committee. The Committee primarily assists the Board in fulfilling its oversight responsibilities by, among other things: (i) reviewing our director compensation program; (ii) reviewing and approving the compensation of our Chief Executive Officer (“CEO”) and other senior executive officers and, except as expressly delegated to the Subcommittee, setting annual and long-term performance goals for these individuals and reviewing the performance of these individuals; and (iii) reviewing and approving the compensation of all of our corporate officers.
The Subcommittee assists the Board and the Committee in fulfilling their responsibilities by performing the following duties: (i) reviewing and approving performance-based compensation of executive officers as contemplated under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), including bonuses and stock-based awards; (ii) administering the AutoNation, Inc. Senior Executive Incentive Bonus Plan, including establishing performance goals and certifying whether such goals are attained as contemplated under Section 162(m) of the Code; and (iii) administering our equity compensation plans, including approving stock-based awards.
During 2011, the Committee consisted of William C. Crowley (Chair), Rick L. Burdick, Michael Larson, and Carlos A. Migoya, and the Subcommittee consisted of Mr. Migoya (Chair), Mr. Burdick, and Mr. Larson.
This section discusses the Company’s compensation policies and programs as it relates to the following “named executive officers” whose compensation information is presented in the tables that follow:
Mike Jackson
Chairman and Chief Executive Officer
Michael E. Maroone
President and Chief Operating Officer
Michael J. Short
Executive Vice President and Chief Financial Officer
Jonathan P. Ferrando
Executive Vice President, General Counsel and Secretary
David L. Koehler
Senior Vice President, Sales
Kevin P. Westfall
Former Senior Vice President, Sales
Mr. Westfall resigned from the Company effective November 9, 2011. Mr. Koehler, who was hired as a Market President on April 11, 2011, was promoted to the position of Senior Vice President, Sales, an executive officer position, effective November 14, 2011.
Compensation Philosophy and Objectives
The Committee’s fundamental philosophy is to closely link executive compensation with the achievement of performance goals and to create an owner-oriented culture. The Committee’s objectives in administering our compensation program for executive officers are to ensure that we are able to attract and retain highly-skilled executives and to provide a compensation program that incentivizes management to optimize business performance, deploy capital productively, and increase long-term stockholder value. The Committee also believes that overall compensation should be fair for the services rendered and that the compensation structure should be transparent, which is why the key components of executive compensation are limited to a base salary, an annual performance bonus based solely on the achievement of financial targets, and stock-based awards.
Setting Compensation Levels of Executive Officers
The Committee reviews executive compensation at its meetings throughout the year and sets executive compensation based primarily on our financial and operating performance and on executive management’s performance in executing the Company’s business strategy, optimizing the Company’s business performance and productivity of its business operations, and increasing long-term stockholder value. The Committee also considers the scope of an executive’s duties and responsibilities and individual executive performance. Our CEO reviews the performance of other named executive officers and makes recommendations, if any, to the Committee with respect to compensation adjustments for such officers. However, the Committee determines in its sole discretion whether to make any adjustments to the compensation paid to such executive officers.

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As part of its review of executive compensation, the Committee reviews the executive compensation arrangements at peer group companies. Our peer group includes comparable specialty retail companies based on specific financial measures, including, but not limited to, revenue, total assets, market capitalization, and net income. The Committee’s practice has been to make changes to our peer group only when necessary or when, in the Committee’s judgment, comparison to a company is no longer appropriate. There were no changes to our peer group for 2011 as compared to 2010. For 2011, our peer group consisted of the following companies:  
Advance Auto Parts, Inc.
J.C. Penney Company, Inc.
RadioShack Corporation
AutoZone, Inc.
Kohl’s Corporation
Ross Stores, Inc.
BJ’s Wholesale Club, Inc.
Limited Brands, Inc.
Staples, Inc.
CarMax, Inc.
Macy’s Inc.
Tiffany & Co.
Family Dollar Stores, Inc.
Nordstrom, Inc.
The TJX Companies, Inc.
The Gap, Inc.
Office Depot, Inc.
 
The Committee reviews the executive compensation benchmark data at a high level in order to evaluate and confirm whether our executive compensation is within a reasonably competitive range. The Committee, however, does not set executive compensation at a specific target percentile within the peer group. Instead, the Committee focuses on providing compensation that is fair for the services rendered, closely linking executive compensation with the achievement of Company performance goals, and creating an owner-oriented culture, where the interests of our executive officers are aligned with the long-term interests of our stockholders.
The Committee has no pre-established target for the allocation between either cash and non-cash or short-term and long-term incentive compensation. However, a significant portion of each executive officer’s total compensation is allocated to incentive compensation in the form of an annual performance-based bonus and stock-based awards in order to provide incentives to create and maintain long-term stockholder value. The Committee reviews and considers total compensation in setting each element of compensation for our named executive officers.
2011 Executive Compensation Elements
The key elements of our executive compensation program for the year ended December 31, 2011 were:
base salary;
annual incentive bonus; and
stock-based awards.
 Executive officers are also entitled to limited perquisites and other benefits as outlined below. The following is a summary of the considerations underlying each component of compensation paid to our named executive officers for 2011.
Base Salary
We provide our named executive officers and other officers with a base salary to compensate them for services rendered during the fiscal year. The Committee reviews and, as appropriate, adjusts the base salaries for our named executive officers. The factors that the Committee considers in setting salaries include the scope of job responsibilities, individual contributions to our success, company-wide performance, and market compensation. However, the Committee does not as a practice grant annual base salary adjustments for executive officers, and it did not grant any base salary adjustments during 2011 for any of the named executive officers. Upon his promotion to the position of Senior Vice President, Sales, the Committee established a base salary of $485,000 per year for Mr. Koehler.
Annual Incentive Bonus
2011 Incentive Bonus
A core component of our compensation program is the AutoNation Operating Performance bonus plan (the “AOP”), the annual bonus program in which bonus-eligible, corporate-level employees participate. The AOP is designed to incentivize management to continually improve our operating performance and to use capital to maximize returns. In February 2011, the Subcommittee established performance goals under the AOP for 2011 based upon specified levels of adjusted operating income per basic share and adjusted operating income as a percentage of gross margin.

20


The following table sets forth the 2011 bonus metrics under the AOP:
2011 Bonus Metrics
Weight
Threshold
Payout Level
Target
Payout Level
Maximum
Payout Level
Adjusted Operating Income Per Basic Share
75%
$3.29(1)
$3.65
≥ $4.38(2)
Adjusted Operating Income as a Percent of Gross Margin 
25%
22.5%(3)
23.5%
N/A(4)
 (1)
50% of target payout level.
(2)
200% of target payout level.
(3)
81.25% of target payout level.
(4)
There was no maximum for the adjusted operating income as a percentage of gross margin metric under the AOP. Each 0.1 percentage point change in this performance metric represented a plus or minus 1.875% payout versus target.
In calculating the level of our performance under the AOP, certain adjustments are made to operating income for both metrics to ensure that operating performance is measured to incentivize management appropriately (for example, floorplan interest expense is charged against operating income to ensure management manages this expense; on a generally accepted accounting principles basis, floorplan interest expense is not included in operating income). For the adjusted operating income per basic share metric, operating income per basic share is also adjusted to reflect a capital charge for acquisitions and the repurchase of shares of our common stock. The capital charge is designed to encourage more productive uses of capital and to discourage less productive uses of capital. The adjusted operating income as a percentage of gross margin metric is designed to incentivize management to increase variability in our expense structure and to increase the productivity of our operations so that bottom-line profitability and stockholder value are maximized.
Each year, the Subcommittee, in its sole discretion, determines which of our executive officers or other key employees will participate in a separate incentive bonus plan designed to create a direct link between pay and performance for our senior officers and to ensure that annual cash performance bonuses payable to our senior officers are tax-deductible by the Company pursuant to Section 162(m) of the Code. The incentive bonus plan for our senior officers that was approved by the Company’s stockholders in 2007 is titled the “AutoNation, Inc. Senior Executive Incentive Bonus Plan” and is referred to as the “Executive Incentive Plan.” Historically, the Subcommittee has selected only those officers who were likely to receive annual compensation in excess of $1 million. Our executive officers may participate in either the AOP or the incentive bonus plan for our senior officers, but not both. The Subcommittee is also responsible for identifying annual “performance factors” and establishing specific performance targets with respect thereto that must be met in order for annual bonuses to be paid under the incentive bonus plan for our senior officers.
In February 2011, the Subcommittee established an incentive bonus program for 2011 for certain of our named executive officers under the Executive Incentive Plan. For 2011, the Subcommittee selected Messrs. Jackson, Maroone, Short, and Ferrando to participate in the Executive Incentive Plan. Under the terms of the Executive Incentive Plan, the Subcommittee set specific annual performance goals and established an objective formula for calculating the amount of the target awards for participants. The 2011 bonus metrics that the Subcommittee established under the Executive Incentive Plan were the same as those that the Committee established for 2011 under the AOP (set forth above) for all other corporate bonus plan participants, including Mr. Koehler (who participated in the AOP on a pro-rated basis based on the amount of time he served as Senior Vice President, Sales in 2011) and Mr. Westfall. The Subcommittee believes that symmetry between the AOP and the Executive Incentive Plan assures that all participants are appropriately aligned to achieve our objectives.
One hundred percent of the target award for each participant in the AOP and the Executive Incentive Plan was based upon achievement of the predetermined performance goals. Bonus awards under the AOP and the Executive Incentive Plan were payable on a sliding scale based on the Company’s actual achievement relative to the predetermined goals, with the possibility that bonuses earned may exceed or be less than the targeted payout level. The Subcommittee had absolute “negative discretion” to eliminate or reduce the amount of any award under the AOP and the Executive Incentive Plan.

21


The following table sets forth the 2011 threshold and target awards reflected as a percentage of salary for each of the participants under the Executive Incentive Plan and for Messrs. Koehler and Westfall under the AOP.
Participant
2011 Threshold
(% of Salary)
2011 Target
(% of Salary)
2011
Maximum
Mike Jackson
27.08%
133 1 /3%
(1), (2)
Michael E. Maroone
20.31%
100%
(1), (2)
Michael J. Short
15.23%
75%
(1), (2)
Jonathan P. Ferrando
15.23%
75%
(1), (2)
David L. Koehler(3)
9.14%
45%
(1), (4)
Kevin P. Westfall
9.14%
45%
(1), (4)
(1)
The maximum payout level for the adjusted operating income per basic share metric was 200% versus target.
(2)
While there was no maximum for the adjusted operating income as a percentage of gross margin metric, the maximum amount payable to any one participant in any one year is $5,000,000 under the Executive Incentive Plan. Each 0.1 percentage point change in this performance metric represented a plus or minus 1.875% payout.
(3)
Mr. Koehler participated in the AOP on a pro-rated basis based on the amount of time he served as Senior Vice President, Sales in 2011.
(4)
There was no maximum for the adjusted operating income as a percentage of gross margin metric under the AOP. Each 0.1 percentage point change in this performance metric represented a plus or minus 1.875% payout.
 Based on our financial performance against the bonus targets, bonus awards under the AOP and the Executive Incentive Plan were paid at 98.22% of the targeted levels. Performance under the AOP and the Executive Incentive Plan for 2011 was calculated as follows:
2011 Bonus Metrics
Weight
Target
Payout
Level
Attainment
Payout
Weighted
Payout
Adjusted Operating Income Per Basic Share
75%
$3.65
$3.59
92.0%
69.0%
Adjusted Operating Income as a Percent of Gross Margin
25%
23.5%
24.40%
116.88%
29.22%
Total Payout
 
 
 
 
98.22%
Actual payouts to our named executive officers are shown in the table entitled “Summary Compensation Table” below.
Mr. Koehler was hired as a Market President on April 11, 2011 and promoted to the position of Senior Vice President, Sales effective November 14, 2011. Prior to his promotion, Mr. Koehler participated in the quarterly bonus program (the “MPP”) for the Company’s Market Presidents, none of whom are executive officers of the Company. Following his promotion, he participated in the AOP. Mr. Koehler’s payout under the AOP was pro-rated based on the amount of time he served as Senior Vice President, Sales in 2011.
For 2011, Mr. Westfall participated in the AOP only. Mr. Westfall’s payout under the AOP was pro-rated in connection with his retirement on November 9, 2011. See “Separation Agreement with Mr. Westfall” below.
Messrs. Jackson, Maroone, Short, and Ferrando only participated in the Executive Incentive Plan in 2011.
As part of our retention efforts with respect to Mr. Jackson, a portion of the 2011 bonus earned by Mr. Jackson under the Executive Incentive Plan (equal to $376,510) will be paid to him on a deferred basis in 2013 (without interest), subject to certain terms and conditions.

22


Stock-Based Awards
The Subcommittee grants stock-based awards to our named executive officers in order to provide long-term incentives which align the long-term interests of management and our stockholders. The Committee believes that stock-based awards motivate our named executive officers to focus on optimizing our long-term business performance and stockholder value and create an owner-oriented culture. For 2011, the Subcommittee administered our equity compensation plans and approved all stock-based awards under the AutoNation, Inc. 2008 Employee Equity and Incentive Plan (the “2008 Plan”), which was approved by our stockholders at the 2008 Annual Meeting of Stockholders.  
Stock-based awards are approved on an annual basis in amounts determined by the Subcommittee, while carefully considering the cost to us and our stockholders, including common stock dilution. For 2011, the sum of all stock-based awards granted to AutoNation employees represented potential share issuances equal to approximately 0.88% of our outstanding shares of common stock (0.77% relating to stock options and 0.11% relating to restricted stock).
In 2011, the Subcommittee approved two types of stock-based awards: stock options and restricted stock. Consistent with prior practice, Messrs. Jackson, Maroone, Short, and Ferrando received stock options only. Since the Subcommittee approved restricted stock awards that were granted in March 2011 and Mr. Koehler was hired in April 2011, Mr. Koehler also received stock options only. Mr. Westfall received a mix of stock options and restricted stock. Other eligible employees received either a mix of stock options and restricted stock, or restricted stock only.
Since 2009, the Subcommittee’s practice has been to approve an annual stock option award for each eligible employee during the first quarter and to grant the award in four equal increments over the year, subject to continuous employment by the award recipient through each grant date, and, except as otherwise provided by the Subcommittee, subject to the award recipient remaining at the same job grade level. In addition, since 2009, the Subcommittee’s practice has been to approve an annual restricted stock award for each eligible employee and to grant the award on the first trading day in March. In connection with new hires, the Subcommittee has from time to time approved stock-based awards later in the year, as it did for Mr. Koehler as described below.
Stock option and restricted stock grants are made to eligible employees on the same terms, other than the number of options or number of restricted shares granted, which varies primarily by position and based on individual performance.
Stock Options
On February 1, 2011, the Subcommittee approved the 2011 annual stock option awards for eligible employees, including our named executive officers, except for Mr. Koehler who was hired in April 2011. One-fourth of each stock option award that was approved in February 2011 was granted on each of March 1, June 1, September 1, and December 1, 2011.
On May 31, 2011, the Subcommittee approved a stock option award for Mr. Koehler to be granted in one-third increments on each of June 1, September 1, and December 1, 2011. Mr. Koehler received one-third of the stock option award that was approved in May 2011 on each of June 1 and September 1, 2011. As a result of his promotion to the position of Senior Vice President, Sales in November 2011, the stock option award that was approved in May 2011 terminated, and the option grant scheduled for December 1, 2011 was canceled. On November 9, 2011, the Subcommittee approved a new stock option award for Mr. Koehler, which was granted on December 1, 2011.
The 2011 stock option grants (including the option grants to Mr. Koehler) have an exercise price equal to the closing price per share on the grant date, vest in equal annual installments over four years commencing on June 1, 2012, and expire on March 1, 2021.
Detailed information regarding the 2011 stock option grants to our named executive officers is provided in the table entitled “Grants of Plan-Based Awards in Fiscal 2011” below.
Since the Subcommittee approved the 2011 annual stock option awards in February, the exercise price for each of the four grants comprising an annual stock option award was based on the closing price of our common stock on a pre-determined date subsequent to the approval of such award. The Subcommittee believes that this practice is fair and reasonable to the award recipients, the Company, and its stockholders since it minimizes the impact that any particular event could have on the exercise price of stock options, particularly during times of market volatility.

23


Restricted Stock
On February 1, 2011, the same date that it approved the 2011 stock option awards, the Subcommittee approved the 2011 restricted stock awards for eligible employees, including Mr. Westfall, who received 4,440 shares of  restricted stock. None of the other named executive officers received shares of restricted stock. See “Grants of Plan-Based Awards in Fiscal 2011” below. The restricted stock awards that were approved in February 2011 were granted on March 1, 2011 and will vest in equal annual installments over four years commencing on June 1, 2012.
Mr. Westfall’s Retirement
Mr. Westfall resigned from the Company effective November 9, 2011. Since he was retirement eligible under the Company’s equity compensation plans, pursuant to the terms of those plans, all unvested options and unvested shares of restricted stock held by him became immediately vested on November 9, 2011, and all such options and all vested options held by Mr. Westfall will remain exercisable until the earlier of (a) the applicable expiration date or (b) the third anniversary of November 9, 2011.
Perquisites and Other Benefits
Our compensation program for named executive officers also includes limited perquisites and other benefits, including participation in the Company’s life and health insurance and similar benefit programs (including the AutoNation 401(k) Plan and the AutoNation, Inc. Deferred Compensation Plan) on the same general terms as other participants in these programs, participation in Company car programs entitling the executives to a demonstrator vehicle and/or a vehicle allowance, use of an on-site fitness facility and, pursuant to their employment agreements, limited personal use of corporate aircraft for each of Messrs. Jackson and Maroone. The employment agreements with each of Messrs. Jackson and Maroone, respectively, provide for personal use of corporate aircraft of up to 70 hours per year.
Employment Agreements with Executive Officers
On July 20, 2010, we entered into employment agreements with Mike Jackson and Michael E. Maroone, pursuant to which Mr. Jackson will continue to serve as Chairman and Chief Executive Officer until September 24, 2013 and Mr. Maroone will continue to serve as President and Chief Operating Officer until December 31, 2013. See “Employment Agreements” below for a summary of the material terms of these employment agreements. The Committee believes that entering into the employment agreements with Messrs. Jackson and Maroone furthered our efforts to retain such executives.
Severance and Change in Control Policy and Agreements for Post-Termination Payments
We have a policy governing severance and change in control agreements with the Company’s named executive officers, which is set forth in our Corporate Governance Guidelines. Generally, the policy provides that we will not enter into any severance agreements with senior executives that provide specified benefits in an amount exceeding 299% of the sum of such executive’s base salary plus bonus unless such severance agreement has been submitted to a stockholder vote. Further, unless such severance agreement has been submitted to a stockholder vote, we will not enter into a severance agreement that provides for the payment of specified benefits to an executive triggered by (i) a change in control of our Company that is approved by stockholders but not completed, or (ii) a completed change in control of the Company in which the named executive officer remains employed in a substantially similar capacity by the successor entity. We have not entered into any change in control agreements with any of our named executive officers.
We have entered into employment agreements with Messrs. Jackson and Maroone that provide for payments or benefits to such persons at, following, or in connection with, termination under certain circumstances. In addition, our equity compensation plans provide for accelerated vesting in the event of a “change in control” as defined in such plans. These provisions are designed to promote stability and continuity of senior management. A description of the applicable potential payments pursuant to such provisions for the named executive officers is provided under “Potential Payments Upon Termination or Change in Control” below.

24


Separation Agreement with Mr. Westfall
Mr. Westfall resigned from the Company effective November 9, 2011. As disclosed in a Current Report on Form 8-K filed with the SEC on November 14, 2011, in connection with his separation, on November 11, 2011, the Company entered into a Separation Agreement with Mr. Westfall. Pursuant to the terms of the Separation Agreement, in consideration for, among other things, his compliance with non-solicitation, confidentiality and cooperation obligations, as well as his compliance with all other agreements between him and the Company, including non-competition agreements, the Company agreed to pay to Mr. Westfall:
$482,040, his then-current base salary, as follows: a lump sum payment of $241,020, less applicable taxes and withholdings, on November 25, 2011, and the remaining portion, less applicable taxes and withholdings, in 12 equal installments on a consecutive semi-monthly basis beginning on the Company’s first payroll date after May 9, 2012; and
a 2011 performance bonus, pro-rated for 11 months of service, to the extent earned under the AOP, payable at the same time and at the same level as other corporate bonuses are paid.
Consideration of the Companys 2011 Stockholder Vote on Executive Compensation
At our 2011 Annual Meeting of Stockholders, more than 96% of the votes cast voted to approve the advisory resolution on our executive compensation (referred to as the “say-on-pay” vote). The Committee believes that the positive outcome of the say-on-pay vote supports the compensation arrangements established by it for our named executive officers in 2010 as well as in 2011, and accordingly, it did not change its approach. In addition, at the 2011 Annual Meeting of Stockholders, our stockholders voted to approve a triennial holding of the advisory vote on executive compensation. Accordingly, as previously disclosed by the Company, we will hold future, non-binding, advisory votes on executive compensation on a triennial basis until the next required non-binding, advisory vote on the frequency of the advisory vote on executive compensation. The Committee believes that our executive compensation program aligns pay with performance and reflects responsible corporate governance practices regarding executive compensation. The Committee will continue to consider the results of future advisory votes on executive compensation when making future decisions regarding the structure and implementation of our executive compensation program.
2012 Compensation Decisions
2012 Bonus Plan
On February 1, 2012, the Company’s Board of Directors adopted a new incentive bonus plan for senior officers, titled the AutoNation, Inc. Senior Executive Incentive Bonus Plan (the “2012 Bonus Plan”). The 2012 Bonus Plan, which is administered by the Subcommittee, is subject to approval by the Company’s stockholders at the Annual Meeting. The 2012 Bonus Plan, which is substantially identical to and is intended to replace the Executive Incentive Plan approved by the Company’s stockholders in 2007, is designed to create a direct link between pay and performance for our senior officers and to ensure that annual cash performance bonuses payable to our senior officers are tax deductible by the Company pursuant to Section 162(m) of the Code. See “Items To Be Voted On - Proposal 3: Approval of AutoNation, Inc. Senior Executive Incentive Bonus Plan” for more information regarding the 2012 Bonus Plan.
On February 1, 2012, the Subcommittee selected the 2012 participants under the 2012 Bonus Plan, established specific objective annual performance goals for 2012, and set target awards for the 2012 participants in the 2012 Bonus Plan. For 2012, the Subcommittee selected each of the Company’s current executive officers to participate in the 2012 Bonus Plan. The 2012 participants under the 2012 Bonus Plan are set forth below:
Mike Jackson
Chairman and Chief Executive Officer
Michael E. Maroone
President and Chief Operating Officer
Michael J. Short
Executive Vice President and Chief Financial Officer
Jonathan P. Ferrando
Executive Vice President, General Counsel and Secretary
David L. Koehler
Senior Vice President, Sales
Alan J. McLaren
Senior Vice President, Customer Care
Mr. McLaren was hired as Senior Vice President, Customer Care, an executive officer position, effective January 4, 2012.

25


The performance goals that the Subcommittee established for 2012 under the 2012 Bonus Plan are based upon the achievement of specified levels of adjusted operating income per basic share (minus a net charge for capital deployed for acquisitions or share repurchases and subject to an adjustment for certain extraordinary or other items) and adjusted operating income as a percentage of gross margin for the Company during 2012. These performance goals also constitute the performance goals that have been established for bonus-eligible, corporate-level employees of the Company under the AOP to ensure that the corporate management team is fully aligned. Bonus awards under both the AOP and the 2012 Bonus Plan will be payable on a sliding scale based on our actual achievement relative to the predetermined goals, with the possibility that bonuses earned may exceed or be less than the targeted level. The Subcommittee will have absolute “negative discretion” to eliminate or reduce the amount of any award under the AOP and the 2012 Bonus Plan.
The following table sets forth the 2012 threshold and target awards reflected as a percentage of salary for each of the participants under the 2012 Bonus Plan.
Participant
2012 Threshold
(% of Salary)
2012 Target
(% of Salary)
2012
Maximum
Mike Jackson
27.08%  
133 1/3%    
(1)
Michael E. Maroone
20.31%  
    100%    
(1)
Michael J. Short
15.23%  
      75%    
(1)
Jonathan P. Ferrando  
15.23%  
      75%    
(1)
David L. Koehler
  9.14%  
      45%    
(1)
Alan J. McLaren
  9.14%  
      45%    
(1)
(1)
The maximum payout level for the adjusted operating income per basic share metric is 200%. While there is no maximum for the adjusted operating income as a percentage of gross margin metric, the maximum amount payable to any one participant in any one year is $5,000,000 under the 2012 Bonus Plan. Each 0.1 percentage point change in the adjusted operating income as a percentage of gross margin metric represents a plus or minus 1.875% payout.
2012 Stock-Based Awards
On February 1, 2012, the Subcommittee approved the 2012 annual stock-based awards for our executive officers and other eligible employees. The stock-based awards for 2012 that the Subcommittee granted to each of our current executive officers is as follows:
Name
2012 Total Stock
Option Award
2012 Total Restricted
Stock Award
Mike Jackson
201,336


Michael E. Maroone
161,140


Michael J. Short
121,080


Jonathan P. Ferrando
121,080


David L. Koehler
12,108

4,036

Alan J. McLaren
12,108

4,036

One-fourth of each stock option award that was approved on February 1, 2012, was granted on March 1, 2012, and an additional one-fourth of each stock option award will be granted on the first trading day of each of June, September, and December 2012. In accordance with the 2008 Plan, the options granted on March 1, 2012 have an exercise price equal to the closing price per share on such date ($34.09), and each subsequent option grant will have an exercise price equal to the closing price per share on the applicable grant date. The 2012 stock option awards vest in equal annual installments over four years commencing on June 1, 2013 and expire on March 1, 2022.
The 2012 restricted stock awards were granted on March 1, 2012 and will vest in equal annual installments over four years commencing on June 1, 2013.

26


Company Policy on Section 162(m) Limits on Deductibility of Compensation
Section 162(m) of the Code generally disallows a tax deduction to public corporations for compensation over $1,000,000 paid for any fiscal year to the corporation’s chief executive officer and three other most highly compensated executive officers, other than the chief financial officer, as of the end of any fiscal year. However, the statute exempts qualifying performance-based compensation from the deduction limit if certain requirements are met.
The Committee administers the executive compensation program in general, and our incentive bonus plan for senior officers in particular, in a manner that maximizes the tax deductibility of compensation paid to the Company’s executives under Section 162(m) of the Code to the extent practicable. The Committee believes, however, that our priority is to attract and retain highly-skilled executives to manage our Company and, in some cases, the loss of a tax deduction may be necessary to accomplish that goal. Accordingly, the Committee has from time to time approved elements of compensation for certain officers that are not fully deductible, and the Committee reserves the right to do so in the future in appropriate circumstances. For 2011, the compensation of our named executive officers was fully deductible under Section 162(m), except for $150,000 of Mr. Jackson’s base salary and approximately $199,005 of other non-performance-based compensation for Messrs. Jackson and Maroone.
Executive Stock Ownership Guidelines
In order to further align the long-term interests of management and stockholders and to ensure an owner-oriented culture, the Board has set stock ownership guidelines for our Chief Executive Officer, Chief Operating Officer, and each Executive Vice President. The following table sets forth information regarding the number and dollar value of shares held by these officers as of March 15, 2012 and lists the specific ownership requirements under the ownership guidelines. Each of these officers has either satisfied the ownership guidelines or has time remaining to do so. The ownership guidelines provide that the ownership requirements must be met by the later of February 7, 2014 or the date that is five years after the executive was appointed to the position.
EXECUTIVE STOCK OWNERSHIP GUIDELINES
Name
Ownership as of March 15, 2012
Ownership
Requirement  
Number of   
Shares(1)
Dollar Value of    
Shares(2)
Mike Jackson
84,463

$2,943,536
200,000 shares or $4,600,000  
Michael E. Maroone
2,498,159

$87,060,841
175,000 shares or $4,000,000  
Michael J. Short
1,563

$54,471
  50,000 shares or $1,122,000  
Jonathan P. Ferrando
34,767

$1,211,630
  50,000 shares or $1,122,000  
(1)
The number of shares includes common stock beneficially owned by each executive (excluding shares underlying stock options), including shares held through the AutoNation 401(k) Plan.
(2)
The value of the shares is based on the closing price of a share of our common stock on the New York Stock Exchange as of March 15, 2012 ($34.85).
Conclusion
The Committee believes that our compensation programs appropriately reward executive performance and align the interests of our named executive officers and key employees with the long-term interests of our stockholders, while also enabling the Company to attract and retain talented executives. The Committee will continue to evolve and administer our compensation program in a manner that the Committee believes will be in the best interests of our stockholders.


27


COMPENSATION TABLES
Summary Compensation Table
The following table provides information regarding compensation earned by each of our named executive officers for each of the years they were so designated during 2011, 2010, and 2009.
SUMMARY COMPENSATION TABLE
Name and
Principal Position
Year    
Salary
($)
Bonus  
($)  
Stock
Awards
($)(1)
Option
Awards
($)(1)
Non-Equity
Incentive Plan  
Compensation  
($)(2)
Change in
Pension Value
and Non-Qualified
Deferred
Compensation
Earnings  
($)
All Other Compensation
($)(3)
Total
($)
Mike Jackson
Chairman and Chief Executive Officer
2011
1,150,000



3,578,048

1,506,040
(4)

194,273
(5)
6,428,361

2010
1,150,000



2,577,655

2,863,039


174,928

6,765,622

2009
1,150,000



2,087,993

1,705,833


220,053

5,163,879

Michael E. Maroone
President and Chief Operating
Officer 
2011
1,000,000



2,863,653

982,200


180,242
(6)
5,026,095

2010
1,000,000



2,062,981

1,867,200


269,215

5,199,396

2009
1,000,000



1,671,099

1,112,500


199,605

3,983,204

Michael J. Short
Executive Vice President and Chief Financial Officer
2011
561,000



2,151,713

413,261


26,886
(7)
3,152,860

2010
561,000



1,550,127

785,624


28,214

2,924,965

2009
561,000



1,255,651

468,084


25,233

2,309,968

Jonathan P. Ferrando
Executive Vice President, General Counsel and Secretary
2011
561,000



2,151,713

413,261


26,395
(8)
3,152,369

2010
561,000



1,550,127

785,624


20,430

2,917,181

2009
561,000



1,255,651

468,084


23,997

2,308,732

David L. Koehler
Senior Vice President, Sales
2011
295,351

134,701
(9)

94,820

28,190
(10)

6,910
(11)
559,972

2010








2009








Kevin P. Westfall
Former Senior Vice President, Sales
2011
434,567


144,300

160,767



463,344
(12)
1,202,978

2010
482,040


93,038

154,968

405,029


17,767

1,152,842

2009
482,040


52,814

125,508

241,321


20,982

922,665

(1)
The amounts reported reflect the aggregate grant date fair value of each award computed in accordance with FASB ASC Topic 718. For a description of the assumptions used in the calculation of these amounts, see Note 10 of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2011.
(2)
Non-equity incentive plan compensation earned in 2009 was paid on February 25, 2010, non-equity incentive plan compensation earned in 2010 was paid on February 25, 2011, and non-equity incentive plan compensation earned in 2011 was paid on February 24, 2012.
(3)
The amounts reported for personal usage by Messrs. Jackson and Maroone of corporate aircraft are calculated based on the aggregate incremental cost to the Company. The incremental cost to the Company of personal usage of corporate aircraft by our executives is calculated based on the direct operating costs to the Company, including fuel costs, crew fees and travel expenses, trip-related repairs and maintenance, landing fees, and other direct operating costs. The amounts reported for personal usage of cars are based on imputed income attributable to each named executive officer calculated in accordance with Treasury Regulations, which amounts we believe are equal to or greater than our incremental costs of providing such usage. In addition to the perquisites and other benefits identified in the footnotes below, our named executive officers also are eligible to use our on-site fitness facility, and from time to time, use our tickets for sporting and entertainment events for personal purposes, and receive occasional secretarial support with respect to personal matters.
(4)
$376,510 of this amount will be paid to Mr. Jackson on a deferred basis in 2013 (without interest), subject to certain terms and conditions.
(5)
Includes $108,928 for personal usage of corporate aircraft, $65,940 for demonstrator vehicle usage and/or a vehicle allowance, and $19,405 for group term life insurance.

28


(6)
Includes $101,385 for personal usage of corporate aircraft, $64,485 for demonstrator vehicle usage and/or a vehicle allowance, $11,622 for group term life insurance, $2,500 for matching contributions under the DCP (such contributions were credited by the Company as of January 3, 2012), and a nominal service award.
(7)
Includes $21,551 for demonstrator vehicle usage and/or a vehicle allowance, $2,835 for group term life insurance, and $2,500 for matching contributions under the DCP (such contributions were credited by the Company as of January 3, 2012).
(8)
Includes $21,711 for demonstrator vehicle usage and/or a vehicle allowance, $1,934 for group term life insurance, $2,500 for matching contributions under the DCP (such contributions were credited by the Company as of January 3, 2012), and a nominal service award.
(9)
Mr. Koehler was hired as a Market President on April 11, 2001 and promoted to the position of Senior Vice President, Sales effective November 14, 2011. Prior to his promotion, he participated in the MPP, and following his promotion he participated in the AOP. The amount reported in this column reflects the bonus amounts paid to Mr. Koehler under the MPP in 2011.
(10)
The amount reported in this column reflects the bonus amount paid to Mr. Koehler under the AOP (pro-rated from November 14, 2011 through December 31, 2011).
(11)
Includes $6,456 for demonstrator vehicle usage and/or a vehicle allowance and $454 for group term life insurance.
(12)
In connection with Mr. Westfall’s separation from the Company, and pursuant to the terms of the Separation Agreement between the Company and Mr. Westfall described above under “Compensation Discussion and Analysis - Separation Agreement with Mr. Westfall,” Mr. Westfall received a severance payment of $241,020 on November 25, 2011, as well as a bonus severance payment of $195,302 (which amount was based on the level of our performance under the AOP for 2011, pro-rated for 11 months of service) on February 24, 2012. He also received a payment of $9,270 for accrued but unused vacation time on November 25, 2011. The amount reported also includes $14,064 for a vehicle allowance and $3,688 for group term life insurance.
We have employment agreements with Messrs. Jackson and Maroone that establish certain terms relating to their compensation. For information regarding these agreements, refer to “Employment Agreements” below.

29


Grants of Plan-Based Awards in Fiscal 2011
The following table sets forth certain information with respect to (i) the non-equity incentive plan awards granted to Messrs. Jackson, Maroone, Short, and Ferrando under the Executive Incentive Plan, (ii) the non-equity incentive plan awards granted to Messrs. Koehler and Westfall under the AOP, and (iii) the stock-based awards granted to each of our named executive officers under the 2008 Plan.
GRANTS OF PLAN-BASED AWARDS IN 2011
Name
Award   
Type   
Grant   
Date   
Approval   
Date   
Estimated Future Payouts   
Under Non-Equity Incentive   
Plan Awards   
All Other   
Stock   
Awards:   
Number   
of   
Shares   
of Stock   
or Units
(#)
All Other  
Option  
Awards:  
Number  
of  
Securities  
Underlying  
Options  
(#)  
Exercise   
or Base   
Price of   
Option   
Awards   
($/sh)   
Grant
Date
Fair Value
of Stock
and
Option
Awards
($)(2)
Threshold   
($)   
Target   
($)   
Maximum($)(1)
Mike Jackson
Option   
3/1/2011
2/1/2011
 
 
 
 
55,379

32.50

814,470

 
Option   
6/1/2011
2/1/2011
 
 
 
 
55,379

34.51

859,864

 
Option   
9/1/2011
2/1/2011
 
 
 
 
55,379

40.37

1,000,078

 
Option   
12/1/2011
2/1/2011
 
 
 
 
55,379

35.99

903,636

 
Annual Cash   
 
 
311,420

1,533,333

5,000,000

 
 
 
 
Michael E. Maroone
Option   
3/1/2011
2/1/2011
 
 
 
 
44,322

32.50

651,853

 
Option   
6/1/2011
2/1/2011
 
 
 
 
44,322

34.51

688,183

 
Option   
9/1/2011
2/1/2011
 
 
 
 
44,322

40.37

800,402

 
Option   
12/1/2011
2/1/2011
 
 
 
 
44,322

35.99

723,215

 
Annual Cash   
 
 
203,100

1,000,000

5,000,000

 
 
 
 
Michael J. Short
Option   
3/1/2011
2/1/2011
 
 
 
 
33,303

32.50

489,794

 
Option   
6/1/2011
2/1/2011
 
 
 
 
33,303

34.51

517,092

 
Option   
9/1/2011
2/1/2011
 
 
 
 
33,303

40.37

601,412

 
Option   
12/1/2011
2/1/2011
 
 
 
 
33,303

35.99

543,415

 
Annual Cash   
 
 
85,454

420,750

5,000,000

 
 
 
 
Jonathan P. Ferrando    
Option   
3/1/2011
2/1/2011
 
 
 
 
33,303

32.50

489,794

 
Option   
6/1/2011
2/1/2011
 
 
 
 
33,303

34.51

517,092

 
Option   
9/1/2011
2/1/2011
 
 
 
 
33,303

40.37

601,412

 
Option   
12/1/2011
2/1/2011
 
 
 
 
33,303

35.99

543,415

 
Annual Cash   
 
 
85,454

420,750

5,000,000

 
 
 
 
David L. Koehler
Option   
6/1/2011
5/31/2011
 
 
 
 
1,376

34.51

18,356

 
Option   
9/1/2011
5/31/2011
 
 
 
 
1,376

40.37

22,144

 
Option   
12/1/2011
11/9/2011
 
 
 
 
3,329

35.99

54,320

 
Annual Cash(3)
 
 
5,829

28,701

N/A

 
 
 
 
Kevin P. Westfall
Restricted Stock   
3/1/2011
2/1/2011
 
 
 
4,440

 
 
144,300

 
Option   
3/1/2011
2/1/2011
 
 
 
 
3,329

32.50

48,960

 
Option   
6/1/2011
2/1/2011
 
 
 
 
3,329

34.51

51,689

 
Option   
9/1/2011
2/1/2011
 
 
 
 
3,329

40.37

60,118

 
Annual Cash   
 
 
44,058

216,918

N/A

 
 
 
 
(1)
$5,000,000 is the maximum allowable bonus under the Executive Incentive Plan.
(2)
With respect to option awards, the amounts reported in this column are based on the grant date fair values computed in accordance with FASB ASC Topic 718. With respect to the restricted stock award for Mr. Westfall, the amount reported in this column is based on the closing price per share of our common stock on the grant date.
(3)
Mr. Koehler was promoted to the position of Senior Vice President, Sales effective November 14, 2011. The amounts reported in the “Threshold,” “Target,” and “Maximum” columns under “Estimated Future Payouts Under Non-Equity Incentive Plan Awards” reflect the pro-rated threshold, target, and maximum bonus amounts under the AOP (from November 14, 2011 through December 31, 2011).

30


The material terms of the non-equity incentive plan awards granted to our named executive officers in 2011 under the Executive Incentive Plan and the AOP and the material terms of the stock-based awards granted to our named executive officers in 2011 under the 2008 Plan are described above in the sections entitled “Annual Incentive Bonus” and “Stock-Based Awards” under “Executive Compensation - Compensation Discussion and Analysis.”
Outstanding Equity Awards at Fiscal Year-End 2011
The following table provides information concerning unexercised options held by the named executive officers of the Company as of December 31, 2011.
OUTSTANDING EQUITY AWARDS AT END OF FISCAL 2011
 
 
Option Awards(1)
Stock Awards(1)
Name
Grant Date
Number of Securities Underlying Unexercised Options
(#)
Exercisable
Number of Securities Underlying Unexercised Options
(#)
Unexercisable
Option Exercise Price
($)
Option
Expiration
Date
Number of Shares or Units of Stock That Have Not Vested
(#)
Market Value of Shares or Units of Stock That Have Not Vested
($)
Mike Jackson(2)
8/1/2005
292,000


21.59

8/1/2015


 
7/31/2006
254,000


20.08

7/31/2016


 
7/30/2008

67,767

10.17

7/30/2018


 
3/2/2009

33,206

9.92

3/2/2019


 
6/1/2009
33,206

33,206

16.99

3/2/2019


 
9/1/2009
33,206

33,206

18.02

3/2/2019


 
12/1/2009
33,206

33,206

17.70

3/2/2019


 
3/1/2010
15,939

47,817

18.20

3/1/2020


 
6/1/2010
15,939

47,817

19.64

3/1/2020


 
9/1/2010
15,939

47,817

23.21

3/1/2020


 
12/1/2010
15,939

47,817

26.49

3/1/2020


 
3/1/2011

55,379

32.50

3/1/2021


 
6/1/2011

55,379

34.51

3/1/2021


 
9/1/2011

55,379

40.37

3/1/2021


 
12/1/2011

55,379

35.99

3/1/2021


Michael E. Maroone
7/27/2004
172,804


16.77

7/27/2014


 
8/1/2005
233,800


21.59

8/1/2015


 
7/31/2006
203,000


20.08

7/31/2016


 
7/30/2007
220,250


19.21

7/30/2017


 
7/30/2008
162,709

54,237

10.17

7/30/2018


 
3/2/2009
26,576

26,576

9.92

3/2/2019


 
6/1/2009
26,576

26,576

16.99

3/2/2019


 
9/1/2009
26,576

26,576

18.02

3/2/2019


 
12/1/2009
26,576

26,576

17.70

3/2/2019


 
3/1/2010
12,756

38,270

18.20

3/1/2020


 
6/1/2010
12,756

38,270

19.64

3/1/2020


 
9/1/2010
12,756

38,270

23.21

3/1/2020


 
12/1/2010
12,756

38,270

26.49

3/1/2020


 
3/1/2011

44,322

32.50

3/1/2021


 
6/1/2011

44,322

34.51

3/1/2021


 
9/1/2011

44,322

40.37

3/1/2021


 
12/1/2011

44,322

35.99

3/1/2021



31


OUTSTANDING EQUITY AWARDS AT END OF FISCAL 2011
 
 
Option Awards(1)
Stock Awards(1)
Name
Grant Date
Number of Securities Underlying Unexercised Options
(#)
Exercisable
Number of Securities Underlying Unexercised Options
(#)
Unexercisable
Option Exercise Price
($)
Option
Expiration
Date
Number of Shares or Units of Stock That Have Not Vested
(#)
Market Value of Shares or Units of Stock That Have Not Vested
($)
Michael J. Short
7/30/2007
78,500


19.21

7/30/2017


 
7/30/2008
82,359

40,753

10.17

7/30/2018


 
3/2/2009
19,969

19,969

9.92

3/2/2019


 
6/1/2009
19,969

19,969

16.99

3/2/2019


 
9/1/2009
19,969

19,969

18.02

3/2/2019


 
12/1/2009
19,969

19,969

17.70

3/2/2019


 
3/1/2010
9,585

28,756

18.20

3/1/2020


 
6/1/2010
9,585

28,756

19.64

3/1/2020


 
9/1/2010
9,585

28,756

23.21

3/1/2020


 
12/1/2010
9,585

28,756

26.49

3/1/2020


 
3/1/2011

33,303

32.50

3/1/2021


 
6/1/2011

33,303

34.51

3/1/2021


 
9/1/2011

33,303

40.37

3/1/2021


 
12/1/2011

33,303

35.99

3/1/2021


Jonathan P. Ferrando
7/31/2006
22,900


20.08

7/31/2016


 
7/30/2007
165,494


19.21

7/30/2017


 
7/30/2008
40,753

40,753

10.17

7/30/2018


 
3/2/2009
9,985

19,969

9.92

3/2/2019


 
6/1/2009
19,969

19,969

16.99

3/2/2019


 
9/1/2009
19,969

19,969

18.02

3/2/2019


 
12/1/2009
19,969

19,969

17.70

3/2/2019


 
3/1/2010
9,585

28,756

18.20

3/1/2020


 
6/1/2010
9,585

28,756

19.64

3/1/2020


 
9/1/2010
9,585

28,756

23.21

3/1/2020


 
12/1/2010
9,585

28,756

26.49

3/1/2020


 
3/1/2011

33,303

32.50

3/1/2021


 
6/1/2011

33,303

34.51

3/1/2021


 
9/1/2011

33,303

40.37

3/1/2021


 
12/1/2011

33,303

35.99

3/1/2021


David L. Koehler
6/1/2011

1,376

34.51

3/1/2021


 
9/1/2011

1,376

40.37

3/1/2021


 
12/1/2011

3,329

35.99

3/1/2021


Kevin P. Westfall(3)
7/30/2007
12,405


19.21

11/9/2014


 
7/30/2008
4,073


10.17

11/9/2014


 
3/2/2009
1,996


9.92

11/9/2014


 
6/1/2009
1,996


16.99

11/9/2014


 
9/1/2009
1,996


18.02

11/9/2014


 
12/1/2009
1,996


17.70

11/9/2014


 
3/1/2010
2,875


18.20

11/9/2014


 
6/1/2010
2,875


19.64

11/9/2014


 
9/1/2010
2,875


23.21

11/9/2014


 
12/1/2010
2,875


26.49

11/9/2014


 
3/1/2011
3,329


32.50

11/9/2014


 
6/1/2011
3,329


34.51

11/9/2014


 
9/1/2011
3,329


40.37

11/9/2014


(1)
Stock options and shares of restricted stock granted prior to 2009 become exercisable in 25% annual increments on each of the first, second, third, and fourth anniversaries of the applicable grant date. Stock options and shares of restricted stock granted in 2009 and later become exercisable in 25% annual increments on each of the first, second, third, and fourth anniversaries of June 1 of the year in which the options were granted.

32


(2)
All of Mr. Jackson’s options have been transferred other than for value to a personal trust.
(3)
Mr. Westfall resigned from the Company effective November 9, 2011. Since he was retirement eligible under the Company’s equity compensation plans, pursuant to the terms of those plans, all unvested options and unvested shares of restricted stock held by him became immediately vested on November 9, 2011, and all such options and all vested options held by Mr. Westfall will remain exercisable until the earlier of (a) the applicable expiration date or (b) the third anniversary of November 9, 2011.
Option Exercises and Stock Vested in Fiscal 2011
The following table provides information concerning exercises of stock options and vesting of restricted stock held by the named executive officers during 2011.
OPTION EXERCISES AND STOCK VESTED DURING FISCAL 2011
Name
Option Awards
Stock Awards
Number of Shares
Acquired on Exercise
(#)     
Value Realized on
Exercise
($)
Number of Shares
Acquired on Vesting
(#)
Value Realized on
Vesting
($)
Mike Jackson
651,565
12,875,519
Michael E. Maroone
637,996
13,391,808
Michael J. Short
286,994
4,948,635
Jonathan P. Ferrando        
531,100
9,180,097
David L. Koehler
Kevin P. Westfall
214,519
3,189,851
11,513
394,102
Equity Compensation Plans
The following table provides information as of December 31, 2011 regarding our equity compensation plans.  
EQUITY COMPENSATION PLANS
  
(A)
(B)
(C)
Plan Category
Number of Securities to
be Issued Upon Exercise
    of Outstanding Options,      
Warrants and Rights
Weighted-Average
Exercise Price of
    Outstanding Options,     
Warrants and Rights
Number of Securities Remaining
Available for Future Issuance Under
Equity Compensation Plans
(Excluding Securities Reflected in
Column A)
Equity Compensation Plans Approved by Security Holders
6,798,854

$21.03
8,178,129
(1)
Equity Compensation Plans Not Approved by Security Holders



Total
6,798,854

$21.03
8,178,129

(1)
Includes 7,019,897 shares available under the AutoNation, Inc. 2008 Employee Equity and Incentive Plan (the “2008 Plan”) and 1,158,232 shares available under the AutoNation, Inc. 2007 Non-Employee Director Option Plan. As of December 31, 2011, a maximum of 1,416,802 shares may be awarded as awards, other than options or stock appreciation rights, that are settled in shares under the 2008 Plan.
Non-Qualified Deferred Compensation in Fiscal 2011
The AutoNation, Inc. Deferred Compensation Plan (“DCP”) affords the named executive officers and certain other employees the opportunity to defer up to 75% of base salary and 90% of annual bonus and/or commissions on a pre-tax basis. For 2011, we provided matching contributions for both the DCP and the AutoNation 401(k) Plan. Participants eligible for a matching contribution under the DCP were not eligible for the matching contribution in the AutoNation 401(k) Plan. For 2011, we provided eligible participants under the DCP a matching contribution of up to 50% of the first $5,000 deferred. The 2011 matching contributions were credited by the Company as of January 3, 2012. One-third of the 2011 matching contributions vested as of January 3, 2012, and an additional one-third will vest on each of the first and second anniversaries of January 3, 2012.

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Earnings on deferrals are based on “deemed” investments in funds, selected for inclusion in the DCP by us, or investments in equity or debt securities. The DCP provides daily processing of account transactions including participant deemed investment election changes. Additionally, the DCP provides for payment of vested deferrals and earnings upon separation from service, death, and disability as well as upon specified in-service payment dates selected by the participants. Participants may elect to receive payments upon specified in-service dates or upon separation from service in the form of lump sum payments or annual installments up to 10 years. Specified in-service date payments may be paid in a lump sum or in up to five annual installments. The DCP is intended to meet the requirements of Section 409A of the Code and other relevant provisions thereunder and related Treasury regulations.
 
The following table sets forth the non-qualified deferred compensation activity for each named executive officer during 2011.  
NON-QUALIFIED DEFERRED COMPENSATION IN FISCAL 2011
Name
Executive
Contributions in
Last Fiscal Year
($)
AutoNation    
Contributions in    
Last Fiscal Year    
($)    
Aggregate
Earnings (Loss)
in Last Fiscal  Year
($)(1)
Aggregate    
Withdrawals/    
Distributions    
($)    
Aggregate
Balance at Last
Fiscal Year-End
($)
Mike Jackson(2)
376,510
(3)

 

1,092,270
(4)
Michael E. Maroone
172,032
(5)
2,500
(6)
(20,124
)

617,319
(7)
Michael J. Short
25,000
(5)
2,500
(6)
(868
)

30,979
(7)
Jonathan P. Ferrando    
5,000
(5)
2,500
(6)
1,427


18,935
(7)
David L. Koehler(2)


 


Kevin P. Westfall
165,892
(5)

(19,573
)

565,494
(7)
(1)
Amounts not reported in the “Summary Compensation Table.”
(2)
Neither Mr. Jackson nor Mr. Koehler participated in the DCP.
(3)
Amount reflects the portion of the 2011 non-equity incentive plan compensation earned by Mr. Jackson under the Executive Incentive Plan that was deferred and will be paid, without interest, in 2013 (reported in the “Non-Equity Incentive Plan Compensation” column for 2011 in the “Summary Compensation Table”).
(4)
Amount reflects the deferred 2011 non-equity incentive plan compensation (see footnote 3 above) and the portion of the 2010 non-equity incentive plan compensation earned by Mr. Jackson under the Executive Incentive Plan that was deferred and will be paid, without interest, in 2013 (reported in the “Non-Equity Incentive Plan Compensation” column for 2010 in the “Summary Compensation Table”).
(5)
Amounts reported in the “Salary” column for 2011 in the “Summary Compensation Table,” except for the following amounts reported in the “Non-Equity Incentive Plan Compensation” column for 2010 in the “Summary Compensation Table”: $112,032 for Mr. Maroone and $121,509 for Mr. Westfall.
(6)
Amounts represent 2011 matching contributions under the DCP, which were credited by the Company as of January 3, 2012 and therefore are not included in the “Aggregate Balance at Last Fiscal Year-End” column.
(7)
Amounts, other than (1) contributions reported in the “Executive Contributions in Last Fiscal Year” and “AutoNation Contributions in Last Fiscal Year” columns and (2) gains or losses not required to be reported in the “Summary Compensation Table,” have been previously reported as compensation to our named executive officers in the “Summary Compensation Table” included in our prior proxy statements.




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POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
The tables below reflect the amount of compensation that would have been payable to each of our named executive officers, other than Mr. Westfall who resigned in November 2011 as described below, under any contract, agreement, plan, or arrangement with us that provides for any payment to such executive in the event of termination of such executive’s employment or a change in control of the Company, in each case assuming the termination or change in control occurred effective as of December 30, 2011, the last business day of our last completed fiscal year. The amount of compensation payable to each named executive officer, other than Mr. Westfall, upon “termination for cause,” “voluntary termination” (or “voluntary termination for good reason” and “voluntary termination without good reason”), “death or disability,” “retirement,” “involuntary termination without cause,” and “change in control,” as applicable, is shown below. We have prepared the tables based on the assumptions set forth below under “General Assumptions,” and the tables should be considered in conjunction with those assumptions and the disclosures below the tables.
Mr. Westfall resigned from the Company effective November 9, 2011. As disclosed in a Current Report on Form 8-K filed with the SEC on November 14, 2011, in connection with his separation, on November 11, 2011, the Company entered into a Separation Agreement with Mr. Westfall. Pursuant to the terms of the Separation Agreement, in consideration for, among other things, his compliance with non-solicitation, confidentiality and cooperation obligations, as well as his compliance with all other agreements between him and the Company, including non-competition agreements, the Company agreed to pay to Mr. Westfall:
$482,040, his then-current base salary, as follows: a lump sum payment of $241,020, less applicable taxes and withholdings, on November 25, 2011, and the remaining portion, less applicable taxes and withholdings, in 12 equal installments on a consecutive semi-monthly basis beginning on the Company’s first payroll date after May 9, 2012; and
a 2011 performance bonus, pro-rated for 11 months of service, to the extent earned under the AOP, payable at the same time and at the same level as other corporate bonuses are paid.
As set forth in the “Non-Equity Incentive Plan Compensation” column of the “Summary Compensation Table” under “Compensation Tables” above, Mr. Westfall’s pro-rated 2011 performance bonus under the AOP was $195,302, which was paid on February 24, 2012.
Since he was retirement eligible under the Company’s equity compensation plans, pursuant to the terms of those plans, all unvested options and unvested shares of restricted stock held by him became immediately vested on November 9, 2011, and all such options and all vested options held by Mr. Westfall will remain exercisable until the earlier of (a) the applicable expiration date or (b) the third anniversary of November 9, 2011. Based on the closing price per share of our common stock on November 9, 2011, which was $33.83, the total value of Mr. Westfall’s unvested stock options and unvested shares of restricted stock that accelerated upon his retirement, excluding out-of-the-money options, was $674,122.
General Assumptions
Stock-Based Awards
In certain cases upon a termination or change in control, the vesting of unvested stock options and shares of restricted stock is accelerated. To determine the value of each unvested stock option that would accelerate in such cases, we calculated the difference, if positive, between (1) the closing price per share of our common stock on December 30, 2011, which was $36.87, and (2) the exercise price of such stock option, and multiplied such difference by the number of shares underlying such stock option. At December 30, 2011, none of our executive officers held shares of restricted stock, except for Mr. Westfall whose separation from the Company is described above. Since vested stock options are already exercisable upon termination (except in the case of a termination for “cause”), no value is attributable in the tables to the extension of the exercise period for such vested options.
 
Benefits
Messrs. Jackson and Maroone are eligible for health and welfare benefits, including disability and life insurance, in connection with certain termination events, and in such events the tables below reflect our expense based on 2011 premiums in connection with such executive’s elections.

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Change in Control
We have not entered into any “change in control” agreements with any of our named executive officers. However, under our equity compensation plans, in the event of a “change in control” (as defined in our equity compensation plans and related agreements), all outstanding stock options held by a named executive officer shall become immediately exercisable in full and, unless waived in advance of such change in control by our Board, such executive shall have the right to require us to pay, in cancellation of options, an amount equal to the product of (i) the excess of (a) the fair market value per share of the stock over (b) the option price times (ii) the number of shares of stock specified by such executive in a written notice to us. In addition, in the event of a “change in control,” all unvested shares of restricted stock held by a named executive officer shall immediately vest. The following tables disclose the value of unvested stock options that would have accelerated if a “change in control” had taken place on December 30, 2011, the last business day of 2011. To determine such value, we used the formula described above under “Stock-Based Awards.”
Restrictive Covenant Agreements
Our named executive officers have entered into restrictive covenants and other obligations as contained in various stock-based award agreements, confidentiality, non-solicitation/no-hire and non-compete agreements, and other similar agreements with us in connection with employment or the grant of stock-based awards. Generally, these restrictive covenants provide a restriction of one year in which the named executive officer may not perform certain activities within specified geographic regions. The competitive activities include generally (i) participating or owning an interest in an entity engaged in the auto business (as defined in the applicable agreement) or any other business of the type and character engaged in by us, (ii) employing any person that was employed by us within the prior six months or seeking to induce any such person to leave his or her employment, (iii) soliciting any customer to patronize any business in competition with our business, or (iv) requesting or advising our customers or vendors to withdraw, curtail, or cancel their business with us. In certain cases, the receipt of post-termination payments by our named executive officers is conditioned upon their compliance with these restrictive covenants. The following tables assume that each of our named executive officers would have complied with these agreements.
Receipt of Benefits
To the extent required in order to comply with Section 409A of the Code, certain payments that would otherwise be made during the six-month period immediately following the executive’s termination of employment may instead be paid on the first business day after the date that is six months following the executive’s “separation from service” within the meaning of Section 409A.
Description of Triggering Events
Termination for Cause (Employment Agreements)
Under our employment agreements with each of Messrs. Jackson and Maroone, termination for “cause” generally means termination because of (i) the executive’s breach of any of his covenants contained in the applicable employment agreement, (ii) the executive’s failure or refusal to perform the duties and responsibilities required to be performed by the executive under the terms of the applicable employment agreement, (iii) the executive’s willfully engaging in illegal conduct or gross misconduct in the performance of his duties hereunder (provided, that no act or failure to act shall be deemed “willful” if done, or omitted to be done, in good faith and with the reasonable belief that such action or omission was in our best interest), (iv) the executive’s commission of an act of fraud or dishonesty affecting us or the commission of an act constituting a felony, or (v) the executive’s violation of our policies in any material respect.
Termination for Cause (Equity Compensation Plans)
Under our equity compensation plans, termination for “cause” generally means termination because of (i) the executive’s conviction for commission of a felony or other crime, (ii) the commission by the executive of any act against us constituting willful misconduct, dishonesty, fraud, theft, or embezzlement, (iii) the executive’s failure, inability, or refusal to perform any of the material services, duties, or responsibilities required of him by us or to materially comply with the policies or procedures established from time to time by us, for any reason other than his illness or physical or mental incapacity, (iv) the executive’s dependence, as determined in good faith by us, on any addictive substance, including, but not limited to, alcohol or any illegal or narcotic drugs, (v) the destruction of or material damage to our property caused by the executive’s willful or grossly negligent conduct, and (vi) the willful engaging by the executive in any other conduct which is demonstrably injurious to us or our subsidiaries, monetarily or otherwise.

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Termination for Good Reason
Under our employment agreements with each of Messrs. Jackson and Maroone, termination by Messrs. Jackson or Maroone for “good reason” generally means the occurrence of (i) a material change by us in the executive’s duties or responsibilities which would cause the executive’s position to become of materially and substantially less responsibility and importance than those associated with his duties or responsibilities as of the date of the applicable employment agreement, or (ii) a material breach of the applicable employment agreement by us, which breach is not cured within ten days after written notice is received by us.
Retirement
Retirement (as defined in our equity compensation plans) generally means the named executive officer’s termination of employment or other service from us or a subsidiary of ours after attainment of age 55 and completion of at least six years of service with us or a subsidiary of ours (disregarding any service with an entity prior to becoming a subsidiary or after ceasing to be a subsidiary).
Change in Control
Change in Control (as defined in our equity compensation plans) generally means if any person shall (i) acquire direct or indirect beneficial ownership of more than 50% of the total combined voting power with respect to the election of directors of our issued and outstanding stock (except that no change in control shall be deemed to have occurred if the persons who were our stockholders immediately before such acquisition own all or substantially all of the voting stock or other interests of such person immediately after such transaction), or (ii) have the power (whether as a result of stock ownership, revocable or irrevocable proxies, contract or otherwise) or ability to elect or cause the election of directors consisting at the time of such election of a majority of the Board. We have entered into agreements with our named executive officers (and other recipients of stock-based awards, including our non-employee directors) which provide that neither (A) the acquisition by ESL of either (x) direct or indirect beneficial ownership of 50% or more of our common stock or (y) direct or indirect beneficial ownership of more than 50% of total combined voting power with respect to the election of directors of our outstanding common stock nor (B) ESL having the power to (whether as a result of stock ownership, revocable or irrevocable proxies, contract or otherwise) or ability to elect or cause the election of directors consisting at the time of such election of a majority of the Board, shall constitute a Change in Control with respect to any stock-based award under any AutoNation equity compensation plan. 
Mike Jackson
 
Mike Jackson
Termination
for Cause
Voluntary
Termination
for Good
Reason
Voluntary
Termination
Without Good
Reason 
Death or
Disability
Retirement
Involuntary Termination Without
Cause
Change in Control
Cash Severance

$4,013,039



$4,013,039

Deferred Bonus

$1,092,270



$1,092,270

Acceleration of Unvested Stock Options

$7,914,493
$7,914,493
$7,914,493
$7,914,493
$7,914,493
$7,914,493
Post-Separation Health and Welfare Benefits

$16,442



$16,442

Termination for Cause
If we terminate Mr. Jackson’s employment for “cause,” he is not entitled to any payments triggered by the termination, and options held by Mr. Jackson on the date of termination, whether vested or unvested, will be canceled.

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Voluntary Termination for Good Reason
If Mr. Jackson terminates his employment with us for “good reason,” as long as Mr. Jackson is in compliance with the restrictive covenants and confidentiality provision of his employment agreement and signs a reasonable and mutually acceptable severance agreement (including a release and a covenant of reasonable cooperation), he will be entitled to receive an amount equal to: (i) the sum of his then-current annual base salary plus annual bonus awarded to him in the calendar year prior to such termination of his employment, as well as (ii) the pro-rata portion (based on the portion of the calendar year actually served by Mr. Jackson) of his annual bonus to which he would have been entitled had his employment not been terminated, to the extent applicable performance targets are met. Payment of the amount due under clause (i) above would be made by us (by lump sum or otherwise) within 30 days following the termination (or at a later date, to the extent required to comply with Section 409A of the Code), and payment of the amount due under clause (ii) above would be made by us (in lump sum) at the same time as the annual bonuses for the relevant year are paid to our bonus-eligible employees (or at a later date, to the extent required to comply with Section 409A of the Code). Since the assumed date of termination is year-end under our Executive Incentive Plan, payment of the amount due under clause (ii) (which was $1,506,040 for 2011, of which $376,510 would have otherwise been paid to Mr. Jackson on a deferred basis in 2013) is reflected under the “Non-Equity Incentive Plan Compensation” column in the “Summary Compensation Table,” not as “Cash Severance” in the table above. Mr. Jackson and his dependents also will be entitled to continue to participate in our group health and welfare benefit plans for a period of 18 months following the termination at the same cost to Mr. Jackson as provided to him prior to termination (or we will procure and pay for comparable benefits during such time period). Moreover, unless he elects retirement treatment under our equity compensation plans, all vested stock options held by Mr. Jackson will survive and be exercisable for the remainder of their initial ten-year term, and all unvested stock options held by him will immediately vest on such termination and will survive and be exercisable for one year following such termination.
Voluntary Termination Without Good Reason
If Mr. Jackson terminates his employment with us without “good reason,” he is not entitled to any payments triggered by the termination. Since Mr. Jackson is eligible for “retirement” (as defined in our equity compensation plans), he would be entitled to the benefit described in the “Retirement” paragraph below.
 
Termination Due to Death or Disability
If Mr. Jackson’s employment is terminated due to death or disability (as defined in our equity compensation plans), all options held by Mr. Jackson at the time of termination shall become immediately vested and exercisable in full and shall remain exercisable until the earlier of the expiration date of the option or the third anniversary of the date of termination.