Item
5.02 Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
On
January 23, 2008, Advance Auto Parts, Inc. (“Company”) announced that its Board
of Directors had appointed Michael A. Norona as the Company’s Executive Vice
President, Chief Financial Officer and Secretary, to be effective during
February 2008.
Mr.
Norona and the Company have agreed upon the terms of Mr. Norona’s employment
arrangement, which are effective upon the commencement of his employment on
February 12, 2008, and have been approved by the Compensation Committee of the
Company’s Board of Directors. Under the terms of his employment
arrangement, Mr. Norona is entitled to receive an annual salary of $415,000 and
is eligible to participate in the Company’s annual incentive bonus plan with a
bonus target of 60% of base salary for fiscal year 2008, and an opportunity to
earn up to 120% of base salary (assuming all financial and other performance
targets as specified in the bonus plan are exceeded), the metrics of which bonus
plan will be determined consistent with the metrics applied to other senior
officers. In addition, the Company will pay Mr. Norona a one-time
payment equal to the bonus for 2007 he would have earned under his former
employer’s executive bonus plan and expected to be in the range of $150,000 to
$180,000, to be paid on or about May 1, 2008. Mr. Norona
and his eligible dependents will be eligible to participate in all of the
Company’s applicable benefit plans and programs pursuant to the terms of such
programs.
Effective
on or about February 19, 2008, Mr. Norona will receive equity grants under the
Company’s 2004 Long-Term Incentive Plan (“2004 LTIP”) valued at $750,000 on date
of grant consisting of (a) 25% of the value issued in the form of restricted
stock that will cliff vest on the third anniversary of the effective date of the
grant and (b) 75% of the value issued in the form of stock appreciation rights
(“SARs”) that will vest equally in one-third increments on the first, second and
third anniversaries of the grant date. The exercise price of the
stock appreciation rights to be awarded to Mr. Norona will be the closing price
of the Company’s common stock on date of grant. Future equity grants
will depend on job performance and the business performance of the
Company.
In
addition, Mr. Norona received a special grant of 50,000 shares of restricted
stock that will vest equally in one-third increments on the first, second and
third anniversaries of the grant date and a special grant of 50,000 SARs. The
exercise price of the SARs is $33.66,
which was the closing price of the Company’s common stock on the date of
grant. One fourth of the SARs will be vested immediately with a
one-year holding period before they may be exercised, and the remaining three
fourths of the SARs will vest equally on the first, second and third
anniversaries of the grant date. The special grants are made pursuant
to the 2004 LTIP. The grant date for the special grants is February
15, 2008, which was the third day following the first day of Mr. Norona’s
employment.
Mr.
Norona will also be entitled to participate in the Company’s Executive Choice
Program, which provides an annual allowance of $11,000, paid quarterly, to be
used for certain specified types of expenses, such as financial planning, tax
preparation, supplemental insurance, health club memberships, and automobile
operation.
As
a member of the Company’s Executive Committee, Mr. Norona will be offered, and
he accepted the Company’s offer of employment subject to the execution of, an
employment agreement, which is expected to provide that Mr. Norona will receive
one year’s base pay if his employment is terminated by the Company without
“Cause” (to be defined in the agreement) during the term of the
agreement. The remaining terms of the agreement are still under
consideration by the Company’s Compensation Committee.
Item
5.03 Amendments to Articles of
Incorporation or Bylaws; Change in Fiscal Year.
Amendments to
By-Laws
On
February 13, 2008, the Company’s Board of Directors approved an
amendment to the Company’s by-laws by revising the first sentence of
Section 3.02 to read as follows:
“The
number of directors constituting the Board of Directors shall be fixed from time
to time by resolution of the Board of Directors, but shall be not less than
eight (8) nor more than twelve (12).”
Previously
Section 3.02 provided that the number of directors shall be not less than nine
(9) nor more than fourteen (14). The Company’s by-laws
otherwise remain unchanged.
This
description is qualified in its entirety by reference to the text of the amended
by-laws attached as Exhibit 3.2.
Item
9.01 Financial Statements and
Exhibits.