GENUINE PARTS COMPANY
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant þ
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Soliciting Material Pursuant to § 240.14a-12 |
Genuine Parts Company
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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GENUINE
PARTS COMPANY
2999 Circle 75 Parkway
Atlanta, Georgia 30339
NOTICE OF 2007 ANNUAL MEETING OF SHAREHOLDERS
April 23, 2007
TO THE SHAREHOLDERS OF GENUINE PARTS COMPANY:
The 2007 Annual Meeting of Shareholders of Genuine Parts
Company, a Georgia corporation, will be held at the
Companys headquarters, 2999 Circle 75 Parkway, Atlanta,
Georgia, on Monday, the 23rd day of April, 2007, at
10:00 a.m., for the following purposes:
(1) To elect all of the members of the Board of Directors;
(2) To amend the Amended and Restated Articles of
Incorporation to eliminate all shareholder supermajority vote
provisions;
(3) To ratify the selection of Ernst & Young LLP
as the Companys independent auditors for the fiscal year
ending December 31, 2007;
(4) To act upon such other matters as may properly come
before the meeting or any reconvened meeting following any
adjournment thereof.
Information relevant to these matters is set forth in the
attached proxy statement. Only holders of record of Common Stock
at the close of business on February 16, 2007 will be
entitled to vote at the meeting.
By Order of the Board of Directors,
CAROL B. YANCEY
Senior Vice President Finance
and Corporate Secretary
Atlanta, Georgia
March 2, 2007
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING IN
PERSON, PLEASE VOTE, SIGN, DATE AND RETURN THE ENCLOSED PROXY
PROMPTLY IN THE ENCLOSED BUSINESS REPLY ENVELOPE, OR YOU CAN
VOTE BY TELEPHONE OR INTERNET PURSUANT TO THE
INSTRUCTIONS ON THE ENCLOSED PROXY CARD. IF YOU DO ATTEND
THE MEETING, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON.
TABLE
OF CONTENTS
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GENUINE
PARTS COMPANY
2999 Circle 75 Parkway
Atlanta, Georgia 30339
PROXY
STATEMENT
ANNUAL
MEETING APRIL 23, 2007
This Proxy Statement is being furnished to the shareholders of
Genuine Parts Company in connection with the solicitation of
proxies by the Board of Directors of the Company for use at the
Companys 2007 Annual Meeting of Shareholders to be held on
Monday, April 23, 2007, at 10:00 a.m. local time and
at any reconvened meeting following any adjournment thereof. The
Annual Meeting will be held at the Companys headquarters,
2999 Circle 75 Parkway, Atlanta, Georgia.
This proxy statement and the accompanying proxy card are first
being mailed to shareholders on or about March 2, 2007. The
Companys 2006 annual report to the shareholders, including
consolidated financial statements for the year ended
December 31, 2006, is enclosed herewith.
VOTING
Shareholders of record can simplify their voting and reduce the
Companys costs by voting their shares via telephone or the
Internet. Instructions for voting via telephone or the Internet
are set forth on the enclosed proxy card. The telephone and
Internet voting procedures are designed to authenticate votes
cast by use of a personal identification number. These
procedures enable shareholders to appoint a proxy to vote their
shares and to confirm that their instructions have been properly
recorded. If your shares are held in the name of a bank or
broker, the availability of telephone and Internet voting will
depend on the voting processes of the applicable bank or broker;
therefore, it is recommended that you follow the voting
instructions on the form you receive. If you do not choose to
vote by telephone or the Internet, please mark your choices on
the enclosed proxy card and then date, sign and return the proxy
card at your earliest opportunity.
All proxies properly voted by telephone or the Internet and all
properly executed written proxy cards that are delivered to the
Company (and not later revoked) will be voted in accordance with
instructions given in the proxy. When voting for director
nominees, you may (1) vote FOR all nominees,
(2) WITHHOLD AUTHORITY to vote for all nominees, or
(3) WITHHOLD AUTHORITY to vote for one or more nominees but
vote FOR the other nominees. With regard to the proposals
to amend the Amended and Restated Articles of Incorporation and
ratify the selection of independent auditors, you may
vote FOR or AGAINST the proposal or you may ABSTAIN from
voting.
A shareholder who submits a proxy pursuant to this solicitation
may revoke it at any time prior to its exercise at the Annual
Meeting. Such revocation may be by delivery of written notice to
the Corporate Secretary of the Company at the Companys
address shown above, by delivery of a proxy bearing a later
date, or by voting in person at the Annual Meeting.
If you hold your shares in street name through a
brokerage firm and you do not vote your shares, your brokerage
firm can vote your shares in its discretion on any of the
matters scheduled to come before the Annual Meeting.
At the close of business on the record date for the Annual
Meeting, which was February 16, 2007, the Company had
outstanding and entitled to vote at the Annual Meeting
170,490,987 shares of Common Stock. On each proposal
presented for a vote at the Annual Meeting, each shareholder is
entitled to one vote per share of Common Stock held as of the
record date. A quorum for the purposes of all matters to be
voted on shall consist of shareholders representing, in person
or by proxy, a majority of the outstanding shares of Common
Stock entitled to vote at the Annual Meeting. Shares represented
at the Annual Meeting that are abstained or withheld from voting
will be considered present for purposes of determining a quorum
at the Annual Meeting. If less than a majority of the
outstanding shares of Common Stock are represented at the Annual
Meeting, a majority of the shares so represented may adjourn the
Annual Meeting to another date, time or place.
The vote required for the election of directors and the
ratification of the selection of independent auditors is a
majority of the shares of Common Stock present or represented by
proxy and entitled to vote at the Annual Meeting. The amendment
of the Amended and Restated Articles of Incorporation must be
approved by the holders of not less than two-thirds of the
outstanding shares of the Company. Because votes withheld and
abstentions will be considered as present and entitled to vote
at the Annual Meeting, they will have the same effect as votes
against all three proposals.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of
thirteen directorships, divided into three classes of four
directors each and one recently appointed director at-large.
Previously, the directors in each class served three year terms,
with the term of office of one class expiring at each annual
meeting of shareholders. However, at the 2006 annual meeting,
the shareholders approved the recommendation of the Board of
Directors to declassify the Board and provide for the
implementation of the annual election of directors at the 2007
annual meeting of shareholders. Consequently, the Board of
Directors, based on the recommendation of its Compensation,
Nominating and Governance Committee, has nominated the current
thirteen directors to serve for one year terms, expiring on the
date of the 2008 Annual Meeting and until their successors are
duly elected and qualified or until their earlier resignation,
retirement, disqualification, removal from office or death.
In the absence of contrary instructions, all valid proxies will
be voted for the election of each of the thirteen nominees whose
names appear below. In the event that any nominee is unable to
serve (which is not anticipated), the Board of Directors may:
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designate a substitute nominee, in which case the persons
designated as proxies will cast votes for the election of such
substitute nominee;
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allow the vacancy to remain open until a suitable candidate is
located and nominated; or
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adopt a resolution to decrease the authorized number of
directors.
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THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE
FOR THE ELECTION OF ALL OF THE NOMINEES. ALL
VALID PROXIES RECEIVED WILL BE SO VOTED UNLESS SHAREHOLDERS
SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.
Set forth below are the names of the nominees, their principal
occupations, certain other directorships, their ages as of the
date of this proxy statement and the year each of them first
joined the Board. For information concerning the nominees who
are independent directors of the Company within the
meaning of the New York Stock Exchanges corporate
governance standards and concerning membership of the nominees
on committees of the Board of Directors, see Corporate
Governance Independent Directors and
Board Committees below.
NOMINEES
FOR DIRECTOR
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Director
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Name, Principal
Occupation, Certain Other Directorships and Age
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Since
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Dr. Mary B. Bullock
is President Emerita of
Agnes Scott College in Atlanta, Georgia. Dr. Bullock
retired in August of 2006 as President of Agnes Scott College, a
position she held since 1995. Dr. Bullock is 62.
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2002
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Richard W. Courts, II
is Chairman of the
Board of Directors of Atlantic Investment Company, a position he
has held since 1992, following his service as President from
1970 to 1992. Atlantic Investment Company is headquartered in
Atlanta, Georgia and is engaged in the business of real estate
and capital investments. Mr. Courts is also a director of
Cousins Properties, Inc. Mr. Courts is 71.
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1998
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2
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Director
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Name, Principal
Occupation, Certain Other Directorships and Age
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Since
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Jean Douville
is the Chairman of the
Board of Directors of our wholly-owned subsidiary, UAP Inc.,
having been a director since 1981 and Chairman since 1992. He
served as President of UAP Inc. from 1981 through 2000 and as
Chief Executive Officer from 1982 through 2000. UAP Inc. is a
distributor of automotive replacement parts headquartered in
Montreal, Quebec, Canada. Mr. Douville is Chairman of the
Board of Banque Nationale du Canada and a director of Richelieu
Hardware Ltd. Mr. Douville is 63.
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1992
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Thomas C. Gallagher
has been President of
the Company since 1990, Chief Executive Officer since August
2004 and Chairman of the Board since February 2005.
Mr. Gallagher served as Chief Operating Officer of the
Company from 1990 until August 2004. Mr. Gallagher served
as a director of Oxford Industries, Inc. until January 8,
2007. Mr. Gallagher is 59.
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1990
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George C. Jack
Guynn was appointed as
a director of the Company by the Board of Directors on
November 20, 2006. Mr. Guynn was identified as a
potential director and recommended to the Board by the
Compensation, Nominating and Governance Committee.
Mr. Guynn retired in October 2006 as President and CEO of
the Federal Reserve Bank of Atlanta, where he worked his entire
career. Mr. Guynn is a director of Oxford Industries, Inc.
Mr. Guynn is 64.
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2006
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John D. Johns
is Chairman, President
and Chief Executive Officer of Protective Life Corporation in
Birmingham, Alabama and serves as a director of Protective Life
and Annuity Insurance Company and Protective Life Insurance
Company, two of Protective Life Corporations subsidiaries.
Mr. Johns has served as President and Chief Executive
Officer of Protective Life Corporation since January 2002 and
became Chairman in January 2003. He served as President and
Chief Operating Officer of Protective Life from August 1996
through December 2001, and from October 1993 through August 1996
he served as Executive Vice President and Chief Financial
Officer. Mr. Johns is also a director of Alabama National
BanCorporation and John H. Harland Company. Mr. Johns is 55.
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2002
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Michael M.E.
Johns, M.D. has
served since June 1996 as Executive Vice President for Health
Affairs, Emory University; Chief Executive Officer of the Robert
W. Woodruff Health Sciences Center; and Chairman of Emory
Healthcare, Emory University. From 1990 to June 1996,
Dr. Johns served as Dean of the School of Medicine, Johns
Hopkins University. Dr. Johns is also a director of
Johnson & Johnson. Dr. Johns is 65.
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2000
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J. Hicks Lanier
has served as Chief
Executive Officer and Chairman of the Board of Oxford
Industries, Inc. since 1981 and as a director of Oxford
Industries, Inc. since 1969. Mr. Lanier served as President
of Oxford Industries, Inc. from 1977 to 2003. Oxford Industries,
Inc. is an apparel manufacturer headquartered in Atlanta,
Georgia. Mr. Lanier is also a director of
Crawford & Company and SunTrust Banks, Inc.
Mr. Lanier is 66.
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1995
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Wendy B. Needham
was Managing Director,
Global Automotive Research for Credit Suisse First Boston from
August 2000 to June 2003, and a Principal, Automotive Research,
for Donaldson, Lufkin and Jenrette from 1994 to 2000.
Ms. Needham is also a director of Asahi Tec Corporation
following its acquisition of Metaldyne Corporation, for whom
Ms. Needham served as a director prior to the acquisition.
Ms. Needham is 54.
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2003
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Jerry W. Nix
has been the Vice
Chairman of the Board of Directors since November 2005. He is
Executive Vice President-Finance and Chief Financial Officer of
the Company, a position he has held since 2000. Previously,
Mr. Nix held the position of Senior Vice President-Finance
from 1990 until February 2000. Mr. Nix is 61.
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2005
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3
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Director
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Name, Principal
Occupation, Certain Other Directorships and Age
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Since
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Larry L. Prince
is Chairman of the
Executive Committee of the Board of Directors of the Company.
Mr. Prince served as Chairman of the Board of the Company
from 1990 through February 2005 and as Chief Executive Officer
from 1989 through August 2004. He is also a director of
Crawford & Company, Equifax Inc., John H. Harland
Company and SunTrust Banks, Inc. Mr. Prince is 68.
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1978
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Gary W. Rollins
has served as President
and Chief Operating Officer since 1984 and Chief Executive
Officer since 2001 of Rollins, Inc., a national provider of
consumer services headquartered in Atlanta, Georgia.
Mr. Rollins is a director of Rollins, Inc. and two of its
related companies, RPC, Inc. and Marine Products Corporation.
Mr. Rollins is 62.
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2005
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Lawrence G. Steiner
retired in 2003 as
Chairman of the Board and Chief Executive Officer of Ameripride
Services Inc. Mr. Steiner became Chief Executive Officer of
Ameripride Services Inc. in 2001 and served as President of
Ameripride Services Inc. from 1979 through 2000.
Mr. Steiner served as Chairman of the Board of Ameripride
Services Inc. from 1992 until 2003. Mr. Steiner continues
to serve as a director and consultant for Ameripride Services
Inc. Ameripride Services Inc. is headquartered in Minneapolis,
Minnesota and is engaged in the business of linen and garment
rental. Mr. Steiner is 68.
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1972
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PROPOSAL 2
AMENDMENT OF THE AMENDED AND RESTATED ARTICLES OF
INCORPORATION
TO ELIMINATE SHAREHOLDER SUPERMAJORITY VOTE PROVISIONS
In its continuing review of corporate governance matters, the
Board of Directors, after careful consideration and in
accordance with the recommendation of the Compensation,
Nominating and Governance Committee of the Board, has concluded
that it is advisable and in the best interests of the Company
and its shareholders to remove the shareholder supermajority
vote provisions from the Companys Amended and Restated
Articles of Incorporation. Articles Six and Nine of our
Amended and Restated Articles of Incorporation contain
provisions for certain actions that would require approval of
the holders of not less than two-thirds of the outstanding
shares of the voting stock of the Company
(supermajority voting provisions). These actions
include:
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In Article Six: Approving certain
business combinations with greater-than-10% shareholders
(Related Persons), unless (i) the transaction
was approved by the Board prior to the date that such Related
Person became a greater than 10% shareholder or after such date,
if approved by at least two-thirds of all directors and at least
two-thirds of the directors who are not affiliated with a
Related Person and who were directors prior to the time the
Related Person became a Related Person, or (ii) the
shareholders receive a fair price (as defined in
Article Six) and other procedural requirements are met;
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In Article Nine: Removing the entire
Board of Directors or any individual director for cause; and
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Amending or repealing the provisions of either Article Six or
Article Nine.
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The Boards proposal, if adopted, would reduce the
shareholder approval thresholds from two-thirds to a majority of
the Companys outstanding shares, as more fully described
below.
In reaching their decision, the Committee and the Board
considered the benefits of the supermajority voting requirements
that were intended to encourage potential acquirers to negotiate
with the Board before attempting to buy a controlling interest
in the Company and to make it more difficult for an acquirer who
has bought such a controlling interest to take actions that
might not be beneficial to all shareholders.
The Board continues to believe that these shareholder
supermajority vote requirements encourage persons making
unsolicited bids for the Company to negotiate with the Board and
that they provide some protection against self-interested
actions by one or a few large shareholders. Although these
measures can be beneficial, the Board recognizes that the
requirement of a supermajority vote can limit the ability of a
majority of the shareholders at any
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particular time to effect change because a supermajority vote
requirement essentially provides a veto to a large minority
shareholder or group of shareholders. The Board also recognizes
that a lower voting threshold can increase shareholders
ability to participate effectively in corporate governance and
that many shareholders now view supermajority provisions as
inconsistent with principles of good corporate governance.
In recognition of this change in outlook and in support of
providing our shareholders with the opportunity for meaningful
participation, the Board of Directors has determined that the
shareholder supermajority vote requirements should now be
eliminated. The Board therefore recommends that the shareholders
approve this proposal to eliminate the shareholder supermajority
voting requirements in the Companys Amended and Restated
Articles of Incorporation. The applicable provisions of the
Amended and Restated Articles of Incorporation and the proposed
amendments are as follows:
The initial paragraph of Section 6.1 currently reads as
follows:
6.1 Notwithstanding any other provisions of these
Restated Articles of Incorporation or any provision of law which
might otherwise permit a lesser vote or no vote and in addition
to any affirmative vote required of the holders of any
particular class or series of Voting Stock (as
hereinafter defined) by law, these Restated Articles of
Incorporation or any Preferred Stock Designation (as hereinafter
defined), the affirmative vote of the holders of not less
than two-thirds (2/3) of the outstanding shares of Voting
Stock of the Corporation, which shall include the affirmative
vote of at least fifty percent (50%) of the outstanding
shares of Voting Stock held by shareholders other than the
Related Person (as hereinafter defined), shall be
required for the approval or authorization of any Business
Combination; provided, however, that the two-thirds (2/3) and
fifty percent (50%) voting requirements shall not be
required, and such Business Combination shall require only such
affirmative vote as is required by law and any other provision
of these Restated Articles of Incorporation
if: . . . .
If the proposal is approved, Section 6.1 would be amended
to read as follows:
6.1 Notwithstanding any other provisions of these
Restated Articles of Incorporation or any provision of law which
might otherwise permit a lesser vote or no vote and in addition
to any affirmative vote required of the holders of any
particular class or series of Voting Stock (as
hereinafter defined) by law, these Restated Articles of
Incorporation or any Preferred Stock Designation (as hereinafter
defined), the affirmative vote of the holders of a majority
of the outstanding shares of Voting Stock of the
Corporation, which shall include the affirmative vote of a
majority of the outstanding shares of Voting Stock held by
shareholders other than the Related Person (as
hereinafter defined) that is a party to such Business
Combination, shall be required for the approval or
authorization of any Business Combination; provided, however,
that the affirmative vote of a majority of the outstanding
shares of Voting Stock held by shareholders other than such
Related Person shall not be required, and such Business
Combination shall require only such affirmative vote as is
required by law and any other provision of these Restated
Articles of Incorporation if: . . . .
Section 6.3 currently reads as follows:
6.3 Notwithstanding any other provisions of these
Restated Articles of Incorporation or the Bylaws of the
Corporation or any provision of law which might otherwise permit
a lesser vote or no vote, but in addition to any affirmative
vote of the holders of any particular class or series or Voting
Stock required by law, these Restated Articles of Incorporation
or any Preferred Stock Designation, the provisions set forth in
this Article Six may not be repealed or amended in any
respect unless such action is approved by the affirmative vote
of the holders of not less than two-thirds (2/3) of the
outstanding shares of the Voting Stock of the Corporation;
provided, however, that if there is a Related Person on the
record date for the meeting at which such action is submitted to
the shareholders for their consideration, such two-thirds
(2/3) vote must include the affirmative vote of at least
fifty percent (50%) of the outstanding shares of Voting
Stock held by shareholders other than the Related Person.
If the proposal is approved, Section 6.3 would read as
follows:
6.3 Notwithstanding any other provisions of these
Restated Articles of Incorporation or the Bylaws of the
Corporation or any provision of law which might otherwise permit
a lesser vote or no vote, but in addition to
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any affirmative vote of the holders of any particular class or
series or Voting Stock required by law, these Restated Articles
of Incorporation or any Preferred Stock Designation, the
provisions set forth in this Article Six may not be
repealed or amended in any respect unless such action is
approved by the affirmative vote of the holders of a majority
of the outstanding shares of the Voting Stock of the
Corporation; provided, however, that if there is a Related
Person on the record date for the meeting at which such action
is submitted to the shareholders for their consideration, such
majority vote must include the affirmative vote of a
majority of the outstanding shares of Voting Stock held by
shareholders other than such Related Person.
Section 9.3 currently reads as follows:
9.3. Removal. The entire Board of
Directors or any individual director may be removed from office
only for cause and by the affirmative vote of the holders of
at least two-thirds (2/3) of the outstanding shares of
Voting Stock (as defined in Article Six), excluding from
the number of shares deemed to be outstanding at the time of
such vote and from such vote on the removal action, all
outstanding shares of Voting Stock held by a Related Person
(as defined in Article Six) on the record date for the
meeting at which such action is submitted to the shareholders
for their approval.
If the proposal is approved, Section 9.3 would read as
follows:
9.3. Removal. The entire Board of
Directors or any individual director may be removed from office
only for cause and by the affirmative vote of the holders of
a majority of the outstanding shares of Voting Stock (as
defined in Article Six); provided, however, that if
there is a Related Person (as defined in Article Six)
on the record date for the meeting at which such action is
submitted to the shareholders for their approval, such
majority vote must include the affirmative vote of a majority of
the outstanding shares of Voting Stock held by shareholders
other than such Related Person.
Section 9.6 currently reads as follows:
9.6 Amendment or
Repeal. Notwithstanding any other provisions of
these Restated Articles of Incorporation or the Bylaws of the
Corporation or any provision of any law which might otherwise
permit a lesser vote or no vote, but in addition to any
affirmative vote of the holders of any particular class or
series or Voting Stock required by law, these Restated Articles
of Incorporation or any Preferred Stock Designation, the
provisions set forth in this Article Nine may not be
repealed or amended in any respect unless such action is
approved by the affirmative vote of the holders of not less
than two-thirds (2/3) of the outstanding shares of the
Voting Stock of the Corporation, excluding shares held by
a Related Person on the record date for the meeting at which
such action is submitted to the shareholders for their
consideration.
If the proposal is approved, Section 9.6 would read as
follows:
9.6 Amendment or
Repeal. Notwithstanding any other provisions of
these Restated Articles of Incorporation or the Bylaws of the
Corporation or any provision of any law which might otherwise
permit a lesser vote or no vote, but in addition to any
affirmative vote of the holders of any particular class or
series or Voting Stock required by law, these Restated Articles
of Incorporation or any Preferred Stock Designation, the
provisions set forth in this Article Nine may not be
repealed or amended in any respect unless such action is
approved by the affirmative vote of the holders of a majority
of the outstanding shares of the Voting Stock of the
Corporation; provided, however, that if there is a
Related Person on the record date for the meeting at which such
action is submitted to the shareholders for their consideration,
such majority vote must include the affirmative vote of a
majority of the Voting Stock held by shareholders other than
such Related Person.
If this proposal is approved, it will be effective upon the
filing of the Amended and Restated Articles of Incorporation
with the Secretary of State of the State of Georgia promptly
after the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE AMENDMENT OF THE AMENDED AND RESTATED ARTICLES OF
INCORPORATION TO ELIMINATE THE SHAREHOLDER SUPERMAJORITY VOTE
PROVISIONS. ALL VALID PROXIES RECEIVED WILL BE SO VOTED UNLESS
SHAREHOLDERS SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.
6
CORPORATE
GOVERNANCE
Independent
Directors
The Companys Common Stock is listed on the New York Stock
Exchange. The NYSE requires that a majority of the directors be
independent directors, as defined in the NYSE
corporate governance standards. Generally, a director does not
qualify as an independent director if the director (or in some
cases, members of the directors immediate family) has, or
in the past three years has had, certain material relationships
or affiliations with the Company, its external or internal
auditors, or other companies that do business with the Company.
The Board has affirmatively determined that nine of the
Companys thirteen current directors have no other direct
or indirect relationships with the Company and therefore are
independent directors on the basis of the NYSE corporate
governance standards and an analysis of all facts specific to
each director. The independent directors are Mary B. Bullock,
Richard W. Courts, II, George C. Jack Guynn, John D.
Johns, Michael M. E. Johns, M.D., J. Hicks Lanier, Wendy B.
Needham, Gary W. Rollins and Lawrence G. Steiner.
Corporate
Governance Guidelines
The Board of Directors has adopted Corporate Governance
Guidelines that give effect to the NYSEs requirements
related to corporate governance and various other corporate
governance matters. On November 20, 2006, the Board of
Directors amended the Companys Corporate Governance
Guidelines to include stock ownership provisions for
non-employee directors and certain key executive officers and to
require that directors tender an offer of resignation as a
director in the event of a change of employment. The
Companys Corporate Governance Guidelines, as well as the
charters of the Compensation, Nominating and Governance
Committee and the Audit Committee, are available on the
Companys website at www.genpt.com and are
available in print by contacting the Corporate Secretary by mail
at Genuine Parts Company, 2999 Circle 75 Parkway, Atlanta,
Georgia, or by telephone at
(770) 953-1700.
Non-Management
Director Meetings and Presiding Independent Director
Pursuant to the Companys Corporate Governance Guidelines,
the Companys non-management directors meet separately from
the other directors in regularly scheduled executive sessions at
least annually and at such other times as may be scheduled by
the Chairman of the Board or by the presiding independent
director or as may be requested by any non-management director.
The independent directors serving on the Companys Board of
Directors have appointed J. Hicks Lanier to serve as the
Boards presiding independent director. During 2006, the
independent directors held four meetings without management.
Mr. Lanier presided over all of these meetings. Interested
parties who wish to communicate with the presiding independent
director or the non-management directors as a group should
follow the procedures found under Corporate
Governance Shareholder Communications.
Director
Nominating Process
Shareholders may recommend a director nominee by writing to the
Corporate Secretary specifying the nominees name and the
other required information set forth in the Companys
Corporate Governance Guidelines, which are available on the
Companys website at www.genpt.com. All
recommendations should include the written consent of the
nominee to be nominated for election to the Companys Board
of Directors. To be considered, recommendations must be received
by the Company at least 120 calendar days prior to the date of
the Companys proxy statement for the prior years
Annual Meeting of Shareholders and include all required
information to be considered. In the case of the 2008 Annual
Meeting of Shareholders, this deadline is November 3, 2007.
All recommendations will be brought to the attention of the
Compensation, Nominating and Governance Committee.
The Compensation, Nominating and Governance Committee annually
reviews the appropriate experience, skills and characteristics
required of Board members in the context of the current
membership of the Board. This assessment includes among other
relevant factors, in the context of the perceived needs of the
Board at that time, issues of experience, reputation, judgment,
diversity and skills.
7
The Companys Board of Directors has established the
following process for the identification and selection of
candidates for director. The Compensation, Nominating and
Governance Committee, in consultation with the Chairman of the
Board, shall periodically examine the composition of the Board
and determine whether the Board would better serve its purposes
with the addition of one or more directors. If the Compensation,
Nominating and Governance Committee determines that adding a new
director is advisable, the Committee shall initiate the search,
working with other directors, management and, if it deems
appropriate or necessary, a search firm retained to assist in
the search. The Compensation, Nominating and Governance
Committee will consider all appropriate candidates proposed by
management, directors and shareholders. Information regarding
potential candidates shall be presented to the Compensation,
Nominating and Governance Committee, and the Committee shall
evaluate the candidates based on the needs of the Board at that
time and issues of experience, reputation, judgment, diversity
and skills, as set forth in the Companys Corporate
Governance Guidelines. Potential candidates will be evaluated
according to the same criteria, regardless of whether the
candidate was recommended by shareholders, the Compensation,
Nominating and Governance Committee, another director, Company
management, a search firm or another third party. The
Compensation, Nominating and Governance Committee shall submit
any recommended candidate(s) to the full Board of Directors for
approval and recommendation to the shareholders.
Shareholder
Communications
The Companys Corporate Governance Guidelines provide for a
process by which shareholders may communicate with the Board, a
Board committee, the presiding independent director, the
non-management directors as a group, or individual directors.
Shareholders who wish to communicate with the Board, a Board
committee or any such other individual director or directors may
do so by sending written communications addressed to the Board
of Directors, a Board committee or such individual director or
directors, c/o Corporate Secretary, Genuine Parts Company,
2999 Circle 75 Parkway, Atlanta, Georgia 30339. This information
is also contained on the Companys website at
www.genpt.com. All communications will be compiled
by the Secretary of the Company and forwarded to the members of
the Board to whom the communication is directed or, if the
communication is not directed to any particular member(s) of the
Board, the communication shall be forwarded to all members of
the Board of Directors.
Annual
Performance Evaluations
The Companys Corporate Governance Guidelines provide that
the Board of Directors shall conduct an annual evaluation to
determine, among other matters, whether the Board and the
Committees are functioning effectively. The Audit Committee and
the Compensation, Nominating and Governance Committee are also
required to each conduct an annual self-evaluation. The
Compensation, Nominating and Governance Committee is responsible
for overseeing this self-evaluation process. The Board, Audit
Committee and Compensation, Nominating and Governance Committee
each conducted an annual self-evaluation process during 2006.
Code of
Conduct and Ethics
The Board of Directors has adopted a Code of Conduct and Ethics
and a Code of Conduct and Ethics for Senior Financial Officers,
both of which are available on the Companys website at
www.genpt.com. These Codes of Conduct and Ethics
comply with NYSE and Securities and Exchange Commission (the
SEC) requirements, including procedures for the
confidential, anonymous submission by employees or others of any
complaints or concerns about the Company or its accounting,
internal accounting controls or auditing matters. The Company
will also mail these materials to any shareholder who requests a
copy. Requests may be made by contacting the Corporate Secretary
as described above under Corporate Governance
Guidelines.
Board
Attendance
The Companys Corporate Governance Guidelines provide that
all directors are expected to attend all meetings of the Board
and committees on which they serve and are also expected to
attend the Annual Meeting of Shareholders. During 2006, the
Board of Directors held four meetings. All of the directors
attended at least 75% of the aggregate number of meetings of the
Board of Directors and meetings of committees of the Board on
which they served. All of the Companys directors were in
attendance at the Companys 2006 Annual Meeting.
8
Board
Committees
The Board presently has three standing committees. Information
regarding the functions of the Boards committees, their
present membership and the number of meetings held by each
committee during 2006 is set forth below:
Executive Committee. The Executive Committee
is authorized, to the extent permitted by law, to act on behalf
of the Board of Directors on all matters that may arise between
regular meetings of the Board upon which the Board of Directors
would be authorized to act. The current members of the Executive
Committee are Larry L. Prince (Chairman), Richard W.
Courts, II, Thomas C. Gallagher and J. Hicks Lanier. During
2006, this committee held five meetings.
Audit Committee. The Audit Committees
main role is to assist the Board of Directors with oversight of
(1) the integrity of the Companys financial
statements, (2) the Companys compliance with legal
and regulatory requirements, (3) the independent
auditors qualifications and independence and (4) the
performance of the Companys internal audit function and
independent auditors. As part of its duties, the Audit Committee
assists in the oversight of (a) managements
assessment of, and reporting on, the effectiveness of internal
control over financial reporting, (b) the independent
auditors integrated audit, which includes expressing an
opinion on the conformity of the Companys audited
financial statements with United States generally accepted
accounting principles and (c) the independent
auditors audit of the Companys internal control over
financial reporting, which includes expressing an opinion on
managements assessment of the effectiveness of the
internal control over financial reporting and on the
effectiveness of the Companys internal control over
financial reporting. The Audit Committee oversees the
Companys accounting and financial reporting process and
has the authority and responsibility for the appointment,
retention and oversight of the Companys independent
auditors, including pre-approval of all audit and non-audit
services to be performed by the independent auditors. The Audit
Committee annually reviews and approves the firm to be engaged
as independent auditors for the Company for the next fiscal
year, reviews with the independent auditors the plan and results
of the audit engagement, reviews the scope and results of the
Companys procedures for internal auditing and monitors the
design and maintenance of the Companys internal accounting
controls. The Audit Committee Report appears on page 39 of
this proxy statement. A current copy of the written charter of
the Audit Committee is available on the Companys website
at www.genpt.com.
The current members of the Audit Committee are Lawrence G.
Steiner (Chairman), Michael M.E. Johns, M.D., Wendy B.
Needham, and Mary B. Bullock. All members of the Audit Committee
are independent of the Company and management, as defined in
Sections 303A.02 and 303A.06 of the New York Stock Exchange
listing standards and SEC
Rule 10A-3.
The Board has determined that all members of the Audit Committee
meet the financial literacy requirements of the NYSE corporate
governance listing standards. During 2006, the Audit Committee
held five meetings.
The Board of Directors has determined that Ms. Needham and
Mr. Steiner meet the requirements adopted by the SEC for
qualification as an audit committee financial
expert. Ms. Needham was formerly Managing Director,
Global Automotive Research for Credit Suisse First Boston from
August 2000 to June 2003. Prior to that, Ms. Needham was a
Principal, Automotive Research for Donaldson, Lufkin &
Jenrette for six years. In both of these positions,
Ms. Needham actively reviewed financial statements and
prepared various financial analyses and evaluations of such
financial statements and related business operations.
Mr. Steiner retired in 2003 as Chairman and Chief Executive
Officer of Ameripride Services Inc., having served as CEO since
2001 and Chairman since 1992. In such capacity, Mr. Steiner
has experience actively supervising a principal financial
officer, principal accounting officer, controller, public
accountant, auditor or person performing similar functions and
other relevant experience.
Compensation, Nominating and Governance
Committee. The Compensation, Nominating and
Governance Committee is responsible for (a) determining and
evaluating the compensation of the Chief Executive Officer and
other executive officers and key employees and approving and
monitoring our executive compensation plans, policies, and
programs; (b) identifying and evaluating potential nominees
for election to the Board and recommending candidates for
consideration by the Board and shareholders; and
(c) developing and recommending to the Board a set of
Corporate Governance Guidelines, as well as periodically
9
reevaluating those Corporate Governance Guidelines and
overseeing the evaluation of the Board of Directors and
management. The Committee has and may exercise the authority of
the Board of Directors as specified by the Board and to the
extent permitted under the Georgia Business Corporation Code,
and the Committee has the authority to delegate its duties and
responsibilities to subcommittees as it deems necessary and
advisable. A description of the Committees policy
regarding director candidates nominated by shareholders appears
in Director Nominating Process above.
The Committee independently retains a compensation consultant,
Hewitt Associates, to assist the Committee in its deliberations
regarding executive compensation. The mandate of the consultant
is to serve the Company and work for the Committee in its review
of executive compensation practices, including the
competitiveness of pay levels, design issues, market trends, and
technical considerations. Hewitt Associates has assisted the
Committee with the development of competitive market data and a
related assessment of the Companys executive compensation
levels, design of long-term incentive grants and reporting of
executive compensation under the new proxy disclosure rules. Our
Chairman, President and Chief Executive Officer, with input from
our Senior Vice President Human Resources and Hewitt
Associates, recommends to the Committee base salary, target
bonus levels, actual bonus payouts and long-term incentive
grants for our senior executives. The Committee considers,
discusses, modifies as appropriate, and takes action on such
proposals.
The current members of the Compensation, Nominating and
Governance Committee are J. Hicks Lanier (Chairman), John D.
Johns, Richard W. Courts, II and Gary W. Rollins. All
members of the Compensation, Nominating and Governance Committee
are independent of the Company and management, as defined in
Section 303A.02 of the NYSE listing standards. During 2006,
the Compensation, Nominating and Governance Committee held four
meetings. A current copy of the written charter of the
Compensation, Nominating and Governance Committee is available
on the Companys website at www.genpt.com.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of
February 16, 2007, as to all persons or groups known to the
Company to be beneficial owners of more than five percent of the
outstanding Common Stock of the Company.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
|
|
Title
|
|
|
|
Beneficially
|
|
|
Percent
|
|
of Class
|
|
Name and Address of Beneficial Owner
|
|
Owned
|
|
|
of Class
|
|
|
Common Stock,
$1.00 par value
|
|
Dodge & Cox
555 California Street, 40th Floor
San Francisco, CA 94104
|
|
|
18,950,181(1
|
)
|
|
|
11.1
|
%
|
|
|
|
(1) |
|
This information is based upon information included in a
Schedule 13G/A filed by Dodge & Cox on
February 13, 2007. Dodge & Cox is a registered
investment adviser. The reported shares are beneficially owned
by clients of Dodge & Cox, which clients may include
registered investment companies
and/or
employee benefit plans, pension funds, endowment funds or other
institutional clients. Dodge & Cox shares voting power
with regard to 222,000 of the shares shown. |
10
SECURITY
OWNERSHIP OF MANAGEMENT
Based on information provided to the Company, set forth in the
table below is information regarding the beneficial ownership of
Common Stock of the Company held by the Companys
directors, the named executive officers (as defined in
Executive Compensation below) and all directors,
nominees for director and executive officers of the Company as a
group as of February 16, 2007:
|
|
|
|
|
|
|
|
|
|
|
Shares of Common
|
|
|
|
|
|
|
Stock
|
|
|
Percentage of Common
|
|
Name
|
|
Beneficially
Owned (1)
|
|
|
Stock Outstanding
|
|
|
Mary B. Bullock
|
|
|
6,890 (2)
|
|
|
|
*
|
|
R. Bruce Clayton
|
|
|
3,141,233 (3)
|
|
|
|
1.8
|
%
|
Richard W. Courts, II
|
|
|
219,819 (4)
|
|
|
|
*
|
|
Jean Douville
|
|
|
24,673 (5)
|
|
|
|
*
|
|
Thomas C. Gallagher
|
|
|
780,813 (6)
|
|
|
|
*
|
|
George C. Jack Guynn
|
|
|
1,000
|
|
|
|
*
|
|
John D. Johns
|
|
|
11,352 (7)
|
|
|
|
*
|
|
Michael M. E.
Johns, M.D.
|
|
|
16,857 (8)
|
|
|
|
*
|
|
J. Hicks Lanier
|
|
|
48,381 (9)
|
|
|
|
*
|
|
Wendy B. Needham
|
|
|
5,500 (10)
|
|
|
|
*
|
|
Jerry W. Nix
|
|
|
3,258,765 (11)
|
|
|
|
1.9
|
%
|
Larry L. Prince
|
|
|
539,806 (12)
|
|
|
|
*
|
|
Gary W. Rollins
|
|
|
36,530 (13)
|
|
|
|
*
|
|
Larry R. Samuelson
|
|
|
125,625 (14)
|
|
|
|
*
|
|
Lawrence G. Steiner
|
|
|
20,370 (15)
|
|
|
|
*
|
|
Robert J. Susor
|
|
|
1,221,736 (16)
|
|
|
|
*
|
|
Directors, Nominees and Executive
Officers as a Group (16 persons)
|
|
|
5,265,354 (17)
|
|
|
|
3.1
|
%
|
|
|
|
* |
|
Less than 1%. |
|
(1) |
|
Information relating to the beneficial ownership of Common Stock
by directors, nominees for director and executive officers is
based upon information furnished by each such individual using
beneficial ownership concepts set forth in rules
promulgated by the SEC. Except as indicated in other footnotes
to this table, directors, nominees and executive officers
possessed sole voting and investment power with respect to all
shares set forth by their names. The table includes, in some
instances, shares in which members of a directors,
nominees or executive officers immediate family or
trusts or foundations established by them have a beneficial
interest and as to which such shares the director, nominee or
executive officer disclaims beneficial ownership. |
|
(2) |
|
Includes (i) 4,500 restricted stock units that each
represent a right to receive one share of Common Stock on the
five-year anniversary of their original grant date, subject to
earlier settlement in certain events, including a termination of
service as a director by reason of retirement and
(ii) 2,390 shares of Common Stock equivalents held in
Ms. Bullocks stock account under the Directors
Deferred Compensation Plan. See Compensation of
Directors. |
|
(3) |
|
Includes 29,470 shares subject to stock options exercisable
currently or within 60 days after February 16, 2007.
Also includes 2,016,932 shares held in trust for Company
employees under the Companys Pension Plan for which
Mr. Clayton is one of four trustees and
1,088,532 shares held in a benefit fund for Company
employees for which Mr. Clayton is one of four trustees.
Mr. Clayton disclaims beneficial ownership as to all such
shares held in both trusts. Does not include 4,000 restricted
stock units that each represent a right to receive one share of
Common Stock on the five-year anniversary of their original
grant date, subject to earlier settlement in certain events
outside the control of Mr. Clayton. |
11
|
|
|
(4) |
|
Includes (i) 3,000 shares subject to stock options
exercisable currently or within 60 days after
February 16, 2007, (ii) 4,500 restricted stock units
that each represent a right to receive one share of Common Stock
on the five-year anniversary of their original grant date,
subject to earlier settlement in certain events, including a
termination of service as a director by reason of retirement,
and (iii) 8,744 shares of Common Stock equivalents
held in Mr. Courts stock account under the
Directors Deferred Compensation Plan. Also includes
225 shares owned by Mr. Courts wife,
1,350 shares held by a trust for which Mr. Courts is a
trustee, 110,000 shares held by a charitable foundation of
which Mr. Courts is the President and 92,000 shares
held by certain charitable foundations for which Mr. Courts
is a trustee and thereby has shared voting and investment power.
Mr. Courts disclaims beneficial ownership as to the shares
held by his wife and such trusts and foundations. |
|
(5) |
|
Includes (i) 20,000 shares subject to stock options
exercisable currently or within 60 days after
February 16, 2007 and (ii) 2,423 shares of Common
Stock equivalents held in Mr. Douvilles stock account
under the Directors Deferred Compensation Plan. |
|
(6) |
|
Includes (i) 544,348 shares subject to stock options
exercisable currently or within 60 days after
February 16, 2007, and (ii) 946 shares owned
jointly by Mr. Gallagher and his wife. Does not include
29,100 restricted stock units that each represent a right to
receive one share of Common Stock on the five-year anniversary
of their original grant date, subject to earlier settlement in
certain events outside the control of Mr. Gallagher. |
|
(7) |
|
Includes (i) 4,500 restricted stock units that each
represent a right to receive one share of Common Stock on the
five-year anniversary of their original grant date, subject to
earlier settlement in certain events, including a termination of
service as a director by reason of retirement,
(ii) 4,799 shares of Common Stock equivalents held in
Mr. Johns stock account under the Directors
Deferred Compensation Plan and (iii) 2,053 shares
owned by Mr. Johns wife, as to which such shares
Mr. Johns disclaims beneficial ownership. |
|
(8) |
|
Includes (i) 3,000 shares subject to stock options
exercisable currently or within 60 days after
February 16, 2007, (ii) 4,500 restricted stock units
that each represent a right to receive one share of Common Stock
on the five-year anniversary of their original grant date,
subject to earlier settlement in certain events, including a
termination of service as a director by reason of retirement,
and (iii) 8,477 shares of Common Stock equivalents
held in Dr. Johns stock account under the
Directors Deferred Compensation Plan. |
|
(9) |
|
Includes (i) 3,000 shares subject to stock options
exercisable currently or within 60 days after
February 16, 2007, (ii) 4,500 restricted stock units
that each represent a right to receive one share of Common Stock
on the five-year anniversary of their original grant date,
subject to earlier settlement in certain events, including a
termination of service as a director by reason of retirement,
and (iii) 2,400 shares held by a trust for the benefit
of Mr. Lanier as to which Mr. Lanier has sole voting
power and the ability to veto investment decisions made by the
trustee. Also includes 9,900 shares held in four trusts for
the benefit of Mr. Laniers siblings for which
Mr. Lanier has sole voting power and the ability to veto
investment decisions made by the trustees, 2,250 shares
owned by Oxford Industries Foundation as to which
Mr. Lanier has shared voting and investment power, and
24,831 shares held by a charitable foundation for which
Mr. Lanier is one of six trustees and thereby has sole
voting and shared investment power. Mr. Lanier disclaims
beneficial ownership as to the shares held in such trusts and
foundations. |
|
(10) |
|
Includes (i) 4,500 restricted stock units that each
represent a right to receive one share of Common Stock on the
five-year anniversary of their original grant date, subject to
earlier settlement in certain events, including a termination of
service as a director by reason of retirement and
(ii) 1,000 shares held jointly by Ms. Needham and
her husband. |
|
(11) |
|
Includes 100,315 shares subject to stock options
exercisable currently or within 60 days after
February 16, 2007. Also includes 2,016,932 shares held
in trust for Company employees under the Companys Pension
Plan for which Mr. Nix is one of four trustees and
1,088,532 shares held in a benefit fund for Company
employees of which Mr. Nix is one of four trustees.
Mr. Nix disclaims beneficial ownership as to all such
shares held in both trusts. Does not include 10,850 restricted
stock units that each represent a right to receive one share of
Common Stock on the five-year anniversary of their original
grant date, subject to earlier settlement in certain events
outside the control of Mr. Nix. |
|
(12) |
|
Includes (i) 1,500 restricted stock units that each
represent a right to receive one share of Common Stock on the
five-year anniversary of their original grant date, subject to
earlier settlement in certain events, including a |
12
|
|
|
|
|
termination of service as a director by means of retirement,
(ii) 25,000 shares held by Mr. Princes wife
and (iii) 171,125 shares held by a charitable
foundation for which Mr. Prince is a trustee and thereby
has shared voting and investment power for such shares.
Mr. Prince disclaims beneficial ownership as to all such
shares held by his wife and in trust. Does not include 35,000
restricted stock units that each represent a right to receive
one share of Common Stock on December 31, 2008, subject to
earlier settlement in certain events outside the control of
Mr. Prince. |
|
|
|
(13) |
|
Includes (i) 1,500 restricted stock units that each
represent a right to receive one share of Common Stock on the
five-year anniversary of their original grant date, subject to
earlier settlement in certain events, including a termination of
service as a director by reason of retirement,
(ii) 500 shares held by Mr. Rollins wife
and (iii) 34,030 shares held in a charitable
foundation for which Mr. Rollins is a trustee and thereby
has shared voting and investment power. Mr. Rollins
disclaims beneficial ownership as to all such shares held by his
wife and in trust. |
|
(14) |
|
Includes 105,426 shares subject to stock options
exercisable currently or within 60 days after
February 16, 2007. Does not include 9,750 restricted stock
units that each represent a right to receive one share of Common
Stock on the five-year anniversary of their original grant date,
subject to earlier settlement in certain events outside the
control of Mr. Samuelson. |
|
|
|
(15) |
|
Includes (i) 3,000 shares subject to stock options
exercisable currently or within 60 days after
February 16, 2007, (ii) 4,500 restricted stock units
that each represent a right to receive one share of Common Stock
on the five-year anniversary of their original grant date,
subject to earlier settlement in certain events, including a
termination of service as a director by reason of retirement,
and (iii) 2,407 shares held in trust for the benefit
of Mr. Steiner, for which Mr. Steiner has sole voting
and investment power. Also includes 4,463 shares owned by
Mr. Steiners wife as to which such shares
Mr. Steiner disclaims beneficial ownership. |
|
|
|
(16) |
|
Includes (i) 93,565 shares subject to stock options
exercisable currently or within 60 days after
February 16, 2007 and (ii) 688 shares owned
jointly by Mr. Susor and his wife. Also includes
1,088,532 shares held in a benefit fund for Company
employees of which Mr. Susor is one of four trustees.
Mr. Susor disclaims beneficial ownership as to all such
shares held in trust. Does not include 9,300 restricted stock
units that each represent a right to receive one share of Common
Stock on the five-year anniversary of their original grant date,
subject to earlier settlement in certain events outside the
control of Mr. Susor. Mr. Susor has pledged
7,500 shares of common stock to secure payment on a
personal note. |
|
(17) |
|
Includes (i) 873,124 shares or rights issuable to
certain executive officers and directors upon the exercise of
options or restricted stock units that are exercisable currently
or within 60 days after February 16, 2007;
(ii) 2,016,932 shares held in trust for Companys
employees under the Companys Pension Plan;
(iii) 1,088,532 shares held in a benefit fund for
Company employees; and (iv) 26,833 shares held as
Common Stock equivalents in directors stock accounts under
the Directors Deferred Compensation Plan. |
13
EXECUTIVE
COMPENSATION
COMPENSATION
DISCUSSION AND ANALYSIS
In this section, we will give an overview and analysis of our
compensation program and policies, the material compensation
decisions we have made under those programs and policies, and
the material factors that we considered in making those
decisions. Later in this proxy statement under the heading
Additional Information Regarding Executive
Compensation you will find a series of tables containing
specific information about the compensation earned or paid in
2006 to the following individuals, whom we refer to as our named
executive officers:
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Thomas C. Gallagher, Chairman, President and Chief Executive
Officer
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Jerry W. Nix, Vice Chairman and Chief Financial Officer
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Larry R. Samuelson, President U.S. Automotive
Parts Group
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Robert J. Susor, Executive Vice President
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R. Bruce Clayton, Senior Vice President Human
Resources
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The discussion below is intended to help you understand the
detailed information provided in those tables and put that
information into context within our overall compensation program.
Compensation
Philosophy and Objectives
Our overall goal in compensating executive officers is to
attract, retain and motivate key executives of superior ability
who are critical to our future success. We believe that both
short-term and long-term incentive compensation paid to
executive officers should be directly aligned with our
performance, and that compensation should be structured to
ensure that a significant portion of executives
compensation opportunities is directly related to achievement of
financial and operational goals and other factors that impact
shareholder value.
Our compensation decisions with respect to executive officer
salaries, annual incentives, and long-term incentive
compensation opportunities are influenced by (a) the
executives level of responsibility and function within the
Company, (b) the overall performance and profitability of
the Company, and (c) our assessment of the competitive
marketplace, including other peer companies. Our philosophy is
to focus on total direct compensation opportunities through a
mix of base salary, annual cash bonus, and long-term incentives,
including stock-based awards.
We also believe that the best way to directly align the
interests of our executives with the interests of our
shareholders is to make sure that our executives acquire and
retain a significant level of stock ownership throughout their
tenure with us. Our compensation program pursues this objective
in two ways: through our equity-based long-term incentive awards
and our stock ownership guidelines for our senior executives, as
described in more detail below.
14
Overview
of Executive Compensation Components
The Companys executive compensation program consists of
several compensation elements, as illustrated in the table below.
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Pay
Element
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What the Pay Element
Rewards
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Purpose of the Pay
Element
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Base Salary
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Core competence in the executive
role relative to skills, experience and contributions to the
Company
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Provide fixed compensation based on
competitive market practice
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Annual Cash Incentive
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Contributions toward the
Companys achievement of specified pre-tax profit
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Provides focus on
meeting annual goals that lead to our long-term success
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Provides annual
performance-based cash incentive compensation
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Motivates achievement
of critical annual performance metrics
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Long-Term Incentives
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Stock Appreciation Rights
(SARs):
Sustained
stock price appreciation, thereby aligning executives
interests with those of shareholders
Continued employment with the Company during a
3-year
vesting period
Performance Restricted Stock Units (PRSUs):
Sustained pre-tax profitability
Focus on our stock price performance
Continued employment with the Company during a four
year vesting period (five years including the performance year)
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The combination of SARs and PRSUs
provides a blended focus on
Stock price performance
Pre-tax profitability
Executive ownership of our stock
Retention in a challenging business environment and
competitive labor market
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Retirement Benefits
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Our executive officers
are eligible to participate in employee benefit plans available
to our eligible employees, including both tax-qualified and
nonqualified retirement plans.
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The Tax Deferred
Savings Plan is a nonqualified voluntary deferral program that
allows the named executive officers to defer a portion of their
annual bonus. Deferred amounts and earnings are unfunded.
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Provides a tax-deferred
retirement savings alternative for amounts exceeding IRS
limitations on qualified programs. The Tax Deferred Savings Plan
is described in more detail on page 28 of this proxy
statement.
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The Supplemental
Retirement Plan (SRP) is a nonqualified, noncontributory and
unfunded restoration program. The SRP applies only
to persons whose annual earnings are expected to be equal to or
greater than the IRS Code limitations, and is intended to make
those employees whole on amounts the executive would
have been entitled to receive under the regular pension plan had
that plan not been limited by the IRS Code.
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The SRP makes total
retirement benefits for the named executive officers
commensurate with those available to our other employees as a
percentage of pay. The SRP is described in more detail on
page 27 of this proxy statement.
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15
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Pay
Element
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What the Pay Element
Rewards
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Purpose of the Pay Element
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Welfare Benefits
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Executives participate
in employee benefit plans generally available to our employees,
including medical, health, life insurance and disability plans.
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These benefits are part of our
broad-based total compensation program
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Continuation of welfare
benefits may occur as part of severance upon certain
terminations of employment.
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Additional Benefits and
Perquisites
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CEO only: Board-mandated requirement that the corporate aircraft be used for personal travel. CEO only: Selected club memberships
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The Board requires that our CEO use
the corporate aircraft for personal travel to accommodate
security, availability and efficiency concerns.
Club memberships facilitate the CEOs role as a Company
representative in the community.
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Change in Control and
Termination Benefits
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We have change in control
agreements with certain officers, including our named executive
officers. The agreements provide severance benefits if an
officers employment is terminated within two years after a
change in control.
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Change in control arrangements are
designed to retain executives and provide continuity of
management in the event of an actual or threatened change in
control. The change in control agreements are described in more
detail on page 28 of this proxy statement.
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The use of these programs enables us to reinforce our pay for
performance philosophy, as well as strengthen our ability to
attract and retain highly qualified executives. We believe that
this combination of programs provides an appropriate mix of
fixed and variable pay, balances short-term operational
performance with long-term shareholder value, and encourages
executive recruitment and retention.
Determination
of Appropriate Pay Levels
Pay
Philosophy and Competitive Standing
In general, we seek to provide competitive pay by targeting the
50th percentile relative to a peer group for total direct
compensation opportunities, including salary, target annual
bonus, and long-term incentives. To achieve the
50th percentile positioning for the annual cash
compensation component, we provide somewhat conservative base
salaries and
higher-than-average
target bonus opportunities, to focus less on fixed pay and more
on performance-based opportunities. Targeted annual cash bonus
opportunities are based on our budgeted annual pre-tax profit
goals, and may fluctuate from
year-to-year.
With the assistance of an independent compensation consultant,
Hewitt Associates, we collect and analyze competitive market
data every year. Data sources include public company proxy
statements, published compensation surveys, and a private total
compensation database maintained by Hewitt Associates. We
compare compensation paid to our named executive officers with
compensation paid to executive officers in comparable positions
at similar companies (our Comparison Group). The
Comparison Group includes companies from three industry segments
in which we compete: automotive parts, industrial parts and
office products. The study group includes companies that make up
the Dow Jones Auto Parts and Equipment Index (with respect to
the automotive parts segment), Applied Industrial Technologies,
Inc. and Kaman Corporation (with respect to the industrial parts
segment), and United Stationers Inc. (with respect to the office
products segment). Competitive data is adjusted using regression
analysis to account for our specific revenue scope to allow for
more accurate comparisons to be made. In addition, Hewitt also
provides us with competitive pay information for a separate
reference group of companies consisting of both local and
industry competitors (either at the corporate or subsidiary
level). This information is used to determine our competitive
position among similar companies in the marketplace, and to
assist us in setting our targeted pay at the desired range
relative to our peers.
16
2006
Base Salary
Our base salary levels reflect a combination of factors,
including competitive pay levels relative to peer groups
discussed above, the executives experience and tenure, our
overall annual budget for both merit increases and pre-tax
profit, the executives individual performance, and changes
in responsibility. We review salary levels annually to recognize
these factors. We do not target base salary at any particular
percent of total compensation.
As noted above, our compensation philosophy targets base
salaries that are somewhat below market for comparable
positions. The base salaries of our named executive officers
compared to competitive benchmarking reflect our conservative
philosophy. Base salary increases are consistent with
marketplace data and practice, and consistent with pay increase
budgets provided to our subsidiaries for 2006. Base pay
increases granted to Messrs. Samuelson, Susor and Clayton
for 2006 ranged from 4.0 to 5.1 percent and were
established after considering job performance, internal pay
alignment and equity, and marketplace competitiveness.
Mr. Gallaghers base pay for 2006 was increased by
6.7% after taking into account the above factors plus the fact
that his base salary in 2005 was considerably below base
salaries paid to peers at similar size companies.
Mr. Nixs base pay for 2006 was increased 22.7% after
taking into account the above factors and to recognize his
election to the Board and being named Vice Chairman.
2006
Annual Incentive Plan
Our Annual Incentive Plan (the Annual Incentive
Plan) provides our executive officers with an opportunity
to earn annual cash bonuses based on our achievement of certain
pre-established performance goals. As in setting base salaries,
we consider a combination of factors in establishing the annual
target bonus opportunities for our named executive officers.
Budgeted pre-tax profit is a primary factor, as target bonus
opportunities are adjusted annually when we set our pre-tax
profit goals for the year. We do not target annual bonus
opportunities at any particular percentage of total compensation.
As mentioned above, we set higher than average target bonus
opportunities so that, when combined with conservative salary
levels, the targeted annual cash compensation of our executive
officers is near the 50th percentile relative to our peer
group based on competitive benchmarking by Hewitt Associates.
Actual cash compensation levels may exceed the
50th percentile to the extent actual performance exceeds
our annual performance goals.
For Messrs. Gallagher, Nix, Susor and Clayton, we set
annual bonus opportunities for 2006 based on achievement of
performance goals relating to pre-tax profits of the Company,
which we believe has a strong correlation with shareholder
value. The profit goals for the Company are determined by
aggregating profit goals for the Companys subsidiaries,
which are each set based upon prior year performance by store,
branch, or distribution center; the overall economic outlook of
the region served by a particular store, branch, or distribution
center; and specific market conditions. We set the profit goals
for 2006 bonus opportunities at levels that are intended to
reflect improvements in performance over the prior fiscal year
and better than average growth within our competitive industry.
Mr. Samuelsons annual bonus opportunity for 2006 was
based on profit, sales, and inventory turnover goals relating to
our Automotive Parts Group (APG) and UAP Inc. (UAP), weighted
50% for profit, 30% for sales, and 20% for inventory turnover.
While our other named executive officers have duties and
responsibilities relating to the overall company,
Mr. Samuelsons efforts are more focused as President
of APG and Vice Chairman and Chief Executive Officer of UAP, and
therefore we believe it is appropriate to base his bonus
opportunities on performance goals relating to the results of
APG and UAP.
Once performance goals have been set and approved, the
Compensation, Nominating and Governance Committee then sets a
range of bonus opportunities for each named executive officer
based on achievement of such goals. Target bonus opportunities
for 2006 were set as a percentage of each named executive
officers base salary, as follows: Mr. Gallagher,
154%; Mr. Nix, 104%; Mr. Samuelson, 110%;
Mr. Susor, 90%; and Mr. Clayton, 63%.
Actual bonus amounts for 2006 were determined based on relative
achievement of the performance goals. Messrs. Gallagher,
Nix, Susor and Clayton were eligible to earn from 40% of their
target bonus amount (if the Company achieved 85% of its pre-tax
profits goal) to 150% of their target bonus amount (if the
Company achieved
17
110% of its pre-tax profits goal). No bonus is earned if
performance falls below 85% of the pre-tax profit goal. For
Mr. Samuelson, the performance range varies based on the
performance measure. The performance range for APG and UAP
profit vs. quota was 85% to 120%, the range for APG and UAP
sales vs. quota was 90% to 105%, and the range for APG and UAP
inventory turnover vs. quota was 85% to 114%. The corresponding
bonus opportunity as a percentage of target ranged from 15% to
150% for each performance measure, depending on the achievement
level. No bonus is earned if performance falls below the minimum
requirement for any performance measure.
The bonus formulas under the Annual Incentive Plan are applied
strictly. The Committee does not exercise discretion with regard
to bonus payments for the named executive officers (although it
could exercise discretion to reduce the actual bonus amounts).
For 2006, the Companys pre-tax profit was above the target
level set for executive officer incentive bonuses, resulting in
bonus payments equal to 106.2% of the target bonus opportunity
for Messrs. Gallagher, Nix, Susor and Clayton. APG and UAP
achieved profit, sales and inventory turnover results below the
target levels set for Mr. Samuelsons incentive bonus,
resulting in a bonus payment equal to 75.4% of
Mr. Samuelsons target bonus opportunity.
For additional information about the Annual Incentive Plan,
please refer to the Grants of Plan-Based Awards
table, which shows the threshold, target and maximum bonus
amounts payable under the plan for 2006, and the Summary
Compensation Table, which shows the actual amount of bonuses
paid under the plan to our named executive officers for 2006.
2006
Long-Term Incentives
During 2006, the Compensation, Nominating and Governance
Committee approved long-term equity-based incentive compensation
to our executive officers in the form of Stock Appreciation
Rights (SARs) and Performance Restricted Stock Units
(PRSUs). We believe these grants are effective for
aligning executive performance and achievement with shareholder
interests.
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SARs: Each SAR represents the right to receive
upon exercise an amount, payable in shares of common stock,
equal to the excess, if any, of the fair market value of our
common stock over the base value of the grant. The SARs were
granted with a base value equal to the closing stock price on
the date the Committee approved the award. The SARs vest in
equal annual installments on the first three anniversaries
following the grant date and have a ten-year exercise period.
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PRSUs: The PRSUs represent the right to earn
and receive a number of shares of our common stock in the
future, based on the level of the Companys 2006 pre-tax
profit performance. If the Company achieves 100% or greater of
its 2006 pre-tax profit goal, 100% of the PRSUs will be earned.
If the Company achieves at least 95% of its 2006 pre-tax profit
goal, 50% of the PRSUs will be earned. If the Company achieves
less than 95% of its 2006 pre-tax profit goal, then no PRSUs
will be earned. To the extent the PRSUs are earned, they are
subject to a mandatory four-year vesting schedule (e.g., for
PRSUs granted in 2006, shares of restricted stock will be earned
in 2007 based on 2006 performance and will vest on
December 31, 2010). Dividends declared after the restricted
shares are earned are accrued and converted into additional
shares of stock at the end of the vesting period.
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In general, the number of SARs and PRSUs awarded to our named
executive officers is determined by targeting a value that is
below the median value of long-term incentive compensation
provided by our Comparison Group, based on competitive market
data provided by Hewitt Associates. Adjustments may be made to
reflect job performance and internal pay equity. Determining
long-term incentive awards in this manner assists us in
achieving our target total compensation objectives and is
consistent with our total compensation philosophy.
Grants in 2006 to our named executive officers were determined
by considering the following factors:
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Competitive market data, defined by the competitive award levels
summarized in Hewitts annual executive compensation study;
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The officers responsibility level;
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18
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The officers specific function within the overall
organizational structure;
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The Companys profitability, including the impact of
FAS 123R accounting on the cost of the programs; and
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The number and amount of awards currently held by the executive
officer (we continue to review this as part of our
administration of stock ownership guidelines discussed below).
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For 2006, the Committee targeted a long-term incentive mix of
60% SAR value and 40% PRSU value. This approach is in line with
the market practice of using more than one type of award to
provide long-term incentives. The main objectives of the
programs are to:
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Provide
pay-for-performance
opportunities and reinforce a high performance culture;
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Align interests of our executives with our shareholders;
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Establish goals and standards that motivate our executive
officers to enhance shareholder value; and
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Be simple, straightforward, and transparent.
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The number of SARs and PRSUs granted to our named executive
officers in 2006 was the same as the number of awards granted in
2005, with the exception of Mr. Nix who received an
increased number of awards in recognition of his promotion. The
Committee engages Hewitt Associates annually to review
competitive long-term incentive grant levels, and we intend to
continue to closely monitor our competitive position, program
alternatives, and the financial implications to the Company.
Please refer to the Grants of Plan-Based Awards and
Outstanding Equity Awards at Fiscal Year-End tables
and the related footnotes for additional information about
long-term stock awards.
Factors
Considered in Decisions to Increase or Decrease Compensation
Materially
Market data, individual performance, retention needs and
internal pay equity have been the primary factors considered in
decisions to adjust compensation materially. We do not target
any particular weight for base salary, annual bonus and
long-term incentive as a percent of total direct compensation.
We tend to follow market practice in allocating between the
various forms of compensation, but with greater emphasis on
performance-based incentive bonus opportunities. We use an
approximate 60/40 mix with regard to SAR and PRSU grant value,
to balance retention and performance.
Timing of
Compensation
Base salary adjustments, annual incentive plan payments, and
SAR/PRSU grants were made at the March 27, 2006 meeting of
the Compensation, Nominating and Governance Committee. We do not
coordinate the timing of equity award grants with the release of
material non-public information. The exercise price for SARs is
established at the fair market value of the closing price of our
stock on the date the Committee approves the grant.
Stock
Ownership Requirements
We have adopted stock ownership guidelines for the named
executive officers identified above and for other key executives
designated by the Compensation, Nominating and Governance
Committee. The ownership guidelines are reviewed at least
annually by the Compensation, Nominating and Governance
Committee, which also has the authority to evaluate whether
exceptions should be made for any executive on whom the
guidelines would impose a financial hardship. The current
guidelines as determined by the Committee include:
(i) CEO ownership equal to seven times prior
years salary; and (ii) other covered
executives ownership equal to one to three times
prior years salary.
The covered executives have a period of five years in which to
satisfy the guidelines, either from the date of adoption of the
policy in November 2006, or the date of appointment to a
qualifying position, whichever is later. Shares counted toward
this requirement will be based on shares beneficially owned by
such executive (as beneficial ownership is defined by the
SECs rules and regulations) including PRSUs, but excluding
unexercised options and measured against the average year-end
stock price for the preceding three fiscal years. The guidelines
also call for the covered executive to retain 50% of the net
shares obtained through the exercise of options or when a
restricted
19
stock award vests for at least six months. The covered
executives are encouraged to retain stock ownership per the
guidelines for a period of six months following the date of
retirement.
Impact of
Accounting and Tax Treatments of Compensation
The accounting and tax treatment of compensation generally has
not been a factor in determining the amounts of compensation for
our executive officers. However, the Committee and management
have considered the accounting and tax impact of various program
designs to balance the potential cost to the Company with the
benefit/value to the executive.
With regard to Code Section 162(m), it is the
Committees intent to maximize deductibility of executive
compensation while retaining some discretion needed to
compensate executives in a manner commensurate with performance
and the competitive landscape for executive talent. The Annual
Incentive Plan has been approved by shareholders and is designed
to qualify as performance-based to be fully
deductible by the Company. The 2006 Long-Term Incentive Plan is
approved by shareholders and permits the award of stock options,
SARs and other performance-based equity awards that are fully
deductible under Code Section 162(m).
With the adoption of FAS 123R, we do not expect accounting
treatment of differing forms of equity awards to vary
significantly and, therefore, accounting treatment is not
expected to have a material effect on the selection of forms of
equity compensation in the future.
Role of
Executive Officers in Determining Compensation
Our Chairman, President and Chief Executive Officer, with input
from our Senior Vice President Human Resources,
recommends to the Committee base salary, target bonus levels,
actual bonus payouts and long-term incentive grants for our
senior officer group (other than himself). Mr. Gallagher
makes these recommendations to the Committee based on data and
analysis provided by our independent compensation consultant and
qualitative judgments regarding individual performance.
Mr. Gallagher is not involved with any aspect of
determining his own pay.
20
ADDITIONAL
INFORMATION REGARDING EXECUTIVE COMPENSATION
2006
Summary Compensation Table
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Change in
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Pension
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Value and
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Non-
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Non-
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Qualified
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Equity
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Deferred
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Incentive
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Compensa-
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Stock
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Option
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Plan
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tion
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All Other
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Name and Principal
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Salary
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Awards
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Awards
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Compensa-
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Earnings
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Compensa-
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Total
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Position
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Year
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($)
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($)(1)
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($)(1)
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tion ($)(2)
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($)(3)
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tion ($)(4)
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($)
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Thomas C. Gallagher
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2006
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800,000
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233,605
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594,904
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1,308,661
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783,980
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116,198
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3,837,348
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Chairman, President, and
Chief Executive Officer
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Jerry W. Nix
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2006
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460,000
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85,422
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230,599
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509,868
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396,436
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2,640
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1,684,965
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Vice Chairman and Chief Financial
Officer
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry R. Samuelson
|
|
|
|
2006
|
|
|
|
|
415,000
|
|
|
|
|
93,857
|
|
|
|
|
246,802
|
|
|
|
|
343,445
|
|
|
|
|
343,630
|
|
|
|
|
2,640
|
|
|
|
|
1,445,374
|
|
President
U.S. Automotive Parts Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert J. Susor
|
|
|
|
2006
|
|
|
|
|
390,000
|
|
|
|
|
74,604
|
|
|
|
|
199,941
|
|
|
|
|
371,779
|
|
|
|
|
364,347
|
|
|
|
|
2,640
|
|
|
|
|
1,403,311
|
|
Executive Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Bruce Clayton
|
|
|
|
2006
|
|
|
|
|
286,000
|
|
|
|
|
32,125
|
|
|
|
|
69,551
|
|
|
|
|
190,138
|
|
|
|
|
154,213
|
|
|
|
|
2,640
|
|
|
|
|
734,667
|
|
Senior Vice President
Human Resources
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Represents the proportionate amount of the total fair value of
stock and option awards recognized by the Company as an expense
in 2006 for financial accounting purposes, disregarding for this
purpose the estimate of forfeitures related to service-based
vesting conditions. The fair values of these awards and the
amounts expensed in 2006 were determined in accordance with
Financial Accounting Standards Board Statement of Financial
Accounting Standards No. 123 (revised
2004) Share-Based Payment (FAS 123R). The
awards for which expense is shown in this table include the
awards described in the Grants of Plan-Based Awards table
beginning on page 22 of this Proxy Statement, as well as
awards granted in 2004 and 2005 for which we continued to
recognize expense in 2006. The assumptions used in determining
the grant date fair values of these awards are set forth in the
notes to the Companys consolidated financial statements,
which are included in our Annual Report on
Form 10-K
for the year ended December 31, 2006 filed with the SEC. |
|
|
|
(2) |
|
Reflects the value of cash incentive bonuses earned under our
Annual Incentive Plan. |
|
(3) |
|
Reflects the increase during 2006 in actuarial present values of
each executive officers accumulated benefits under our
Pension Plan and our Supplemental Retirement Plan, and with
respect to Mr. Gallagher, our Original Deferred
Compensation Plan. |
|
(4) |
|
Amounts reflected in this column include 401(k) matching
contributions in the amount of $2,640 for each named executive
officer. The amount shown for Mr. Gallagher also includes
his personal use of company aircraft ($74,114), club membership
dues ($8,102) and tax
gross-ups on
his personal aircraft use ($31,342). The incremental cost to the
Company of the personal use of company aircraft is calculated
based on the average variable operating costs to the Company.
Variable operating costs include fuel costs, mileage,
maintenance, crew travel expenses, catering and other
miscellaneous variable costs. The total annual variable costs
are divided by the annual number of miles the Company aircraft
flew to derive an average variable cost per mile. This average
variable cost per mile is then multiplied by the miles flown for
personal use to derive the incremental cost. The fixed costs
that do not change based on usage, such as pilot salaries, the
lease costs of the |
21
|
|
|
|
|
company aircraft, hangar expense for the home hangar, and
general taxes and insurance are excluded from the incremental
cost calculation. The Board of Directors mandates that the
Companys Chief Executive Officer use corporate aircraft
for personal travel to accommodate security, availability and
efficiency concerns. |
2006
Grants of Plan-Based Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
|
|
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
Estimated Future Payouts
|
|
|
|
Estimated Future Payouts
|
|
|
|
Awards:
|
|
|
|
Exercise
|
|
|
|
Date Fair
|
|
|
|
|
|
|
|
|
Under Non-Equity Incentive
|
|
|
|
Under Equity Incentive
|
|
|
|
Number of
|
|
|
|
or Base
|
|
|
|
Value of
|
|
|
|
|
|
|
|
|
Plan Awards (1)
|
|
|
|
Plan Awards (2)
|
|
|
|
Securities
|
|
|
|
Price of
|
|
|
|
Stock and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying
|
|
|
|
Option
|
|
|
|
Option
|
|
|
|
|
Grant
|
|
|
|
Threshold
|
|
|
|
Target
|
|
|
|
Maximum
|
|
|
|
Threshold
|
|
|
|
Target
|
|
|
|
Maximum
|
|
|
|
Options
|
|
|
|
Awards
|
|
|
|
Awards
|
|
Name
|
|
|
Date
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
(#)
|
|
|
|
(#)
|
|
|
|
(#)
|
|
|
|
(#)(3)
|
|
|
|
($/Sh)
|
|
|
|
($)(4)
|
|
Thomas C. Gallagher
|
|
|
|
|
|
|
|
|
492,800
|
|
|
|
|
1,232,000
|
|
|
|
|
1,848,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/27/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
|
10,000
|
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
442,000
|
|
|
|
|
|
3/27/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
78,000
|
|
|
|
|
44.20
|
|
|
|
|
781,459
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jerry W. Nix
|
|
|
|
|
|
|
|
|
192,000
|
|
|
|
|
480,000
|
|
|
|
|
720,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/27/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,325
|
|
|
|
|
4,650
|
|
|
|
|
4,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
205,530
|
|
|
|
|
|
3/27/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,000
|
|
|
|
|
44.20
|
|
|
|
|
360,673
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry R. Samuelson
|
|
|
|
|
|
|
|
|
68,250
|
|
|
|
|
455,000
|
|
|
|
|
682,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/27/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,950
|
|
|
|
|
3,900
|
|
|
|
|
3,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
172,380
|
|
|
|
|
|
3/27/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
|
44.20
|
|
|
|
|
300,561
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert J. Susor
|
|
|
|
|
|
|
|
|
140,000
|
|
|
|
|
350,000
|
|
|
|
|
525,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/27/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,550
|
|
|
|
|
3,100
|
|
|
|
|
3,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
137,020
|
|
|
|
|
|
3/27/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,000
|
|
|
|
|
44.20
|
|
|
|
|
240,449
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Bruce Clayton
|
|
|
|
|
|
|
|
|
71,600
|
|
|
|
|
179,000
|
|
|
|
|
268,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/27/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
700
|
|
|
|
|
1,400
|
|
|
|
|
1,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61,880
|
|
|
|
|
|
3/27/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,000
|
|
|
|
|
44.20
|
|
|
|
|
90,168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Represents threshold, target and maximum payout levels under the
Annual Incentive Plan for 2006 performance. The actual amount of
incentive bonus earned by each named executive officer in 2006
is reported under the Non-Equity Incentive Plan Compensation
column in the Summary Compensation Table. Additional information
regarding the design of the Annual Incentive Plan is included in
the Compensation Discussion and Analysis beginning on
page 14. |
|
|
|
(2) |
|
Represents threshold, target and maximum number of
performance-based restricted stock units (PRSUs) to
be earned on December 31, 2006 based on the Companys
achievement of pre-tax profit goals. If the Company achieves
100% or greater of its 2006 pre-tax profit goal, 100% of the
PRSUs will be earned. If the Company achieves at least 95% of
its 2006 pre-tax profit goal, 50% of the PRSUs will be earned.
If the Company achieves less than 95% of its 2006 pre-tax profit
goal, then no PRSUs will be earned. Each earned PRSU represents
a contingent right to receive one share of Company Common Stock
in the future. Earned PRSUs will vest and be settled in shares
of Common Stock on December 31, 2010 (or earlier upon a
change in control of the Company) provided the executive is
still employed by the Company, subject to earlier vesting in the
event of (i) the executives retirement from the
Company or (ii) the executives employment with the
Company is terminated due to death or disability. Dividends paid
on the Companys Common Stock after the PRSUs are earned
will accrue with respect to the PRSUs and will convert into
additional shares of stock at the end of the vesting period.
Additional information regarding the PRSUs and the
Companys long-term incentive program is included in the
Compensation Discussion and Analysis beginning on page 14. |
22
|
|
|
(3)
|
|
Each stock appreciation right
(SAR) represents the right to receive from the
Company upon exercise an amount, payable in shares of Common
Stock, equal to the excess, if any, of the fair market value of
one share of Common Stock on the date of exercise over the base
value per share. The SARs were granted with a base value equal
to the fair market value of the Companys Common Stock on
the date of grant. The SARs vest in equal annual installments on
each of the first three anniversaries of the grant date, subject
to accelerated vesting upon a termination of employment due to
death, disability or retirement more than one year after the
date of grant of the SAR or upon a change in control of the
Company. The SARs will expire on March 27, 2016 or earlier
upon termination of employment. Additional information regarding
the SARs and the Companys long-term incentive program is
included in the Compensation Discussion and Analysis beginning
on page 14.
|
|
|
|
(4)
|
|
Represents the grant date fair
value of the award determined in accordance with FAS 123R.
Grant date fair value for the PRSUs is based on the grant date
fair value of the underlying shares. Grant date fair value for
SARs is based on the Black-Scholes option pricing model for use
in valuing executive stock options. The actual value, if any,
that a named executive officer may realize upon exercise of SARs
will depend on the excess of the stock price over the base value
on the date of exercise, so there is no assurance that the value
realized by a named executive officer will be at or near the
value estimated by the Black-Scholes model. The assumptions used
in determining the grant date fair values of these awards are
set forth in the notes to the Companys consolidated
financial statements, which are included in our Annual Report on
Form 10-K
for the year ended December 31, 2006 filed with the SEC.
|
2006
Outstanding Equity Awards at Fiscal Year-End
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
Shares or
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
|
|
|
Units of
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
Option
|
|
|
|
|
|
Units of
|
|
|
|
|
|
Stock That
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
|
|
|
Exercise
|
|
|
Option
|
|
|
Stock That
|
|
|
|
|
|
Have Not
|
|
|
|
Options (#)
|
|
|
Options (#)
|
|
|
|
|
|
Price
|
|
|
Expiration
|
|
|
Have Not
|
|
|
|
|
|
Vested ($)
|
Name
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
|
|
|
($)
|
|
|
Date
|
|
|
Vested (#)
|
|
|
|
|
|
(11)
|
Thomas C. Gallagher
|
|
|
|
|
|
|
|
|
78,000
|
|
|
|
(1)
|
|
|
|
44.20
|
|
|
|
|
3/27/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
(7)
|
|
|
|
474,300
|
|
|
|
|
|
26,000
|
|
|
|
|
52,000
|
|
|
|
(2)
|
|
|
|
43.93
|
|
|
|
|
3/14/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
(8)
|
|
|
|
474,300
|
|
|
|
|
|
46,000
|
|
|
|
|
23,000
|
|
|
|
(3)
|
|
|
|
36.58
|
|
|
|
|
4/19/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,100
|
|
|
|
(9)
|
|
|
|
431,613
|
|
|
|
|
|
150,000
|
|
|
|
|
|
|
|
|
|
|
|
|
32.04
|
|
|
|
|
8/19/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90,000
|
|
|
|
|
|
|
|
|
|
|
|
|
21.375
|
|
|
|
|
6/20/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
106,475
|
|
|
|
|
|
|
|
|
|
|
|
|
32.4375
|
|
|
|
|
4/19/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,246
|
|
|
|
(4)
|
|
|
|
32.4375
|
|
|
|
|
4/19/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,791
|
|
|
|
|
|
|
|
|
|
|
|
|
34.6875
|
|
|
|
|
6/26/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
(10)
|
|
|
|
355,725
|
|
Jerry W. Nix
|
|
|
|
|
|
|
|
|
36,000
|
|
|
|
(1)
|
|
|
|
44.20
|
|
|
|
|
3/27/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,650
|
|
|
|
(7)
|
|
|
|
220,550
|
|
|
|
|
|
8,000
|
|
|
|
|
16,000
|
|
|
|
(2)
|
|
|
|
43.93
|
|
|
|
|
3/14/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,100
|
|
|
|
(8)
|
|
|
|
147,033
|
|
|
|
|
|
16,000
|
|
|
|
|
8,000
|
|
|
|
(3)
|
|
|
|
36.58
|
|
|
|
|
4/19/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,100
|
|
|
|
(9)
|
|
|
|
147,033
|
|
|
|
|
|
42,750
|
|
|
|
|
|
|
|
|
|
|
|
|
32.04
|
|
|
|
|
8/19/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,862
|
|
|
|
(5)
|
|
|
|
21.4063
|
|
|
|
|
6/20/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,450
|
|
|
|
|
4,550
|
|
|
|
(6)
|
|
|
|
32.0938
|
|
|
|
|
4/19/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
|
34.6875
|
|
|
|
|
6/26/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry R. Samuelson
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
(1)
|
|
|
|
44.20
|
|
|
|
|
3/27/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,198
|
|
|
|
(7)
|
|
|
|
104,251
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
Shares or
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
|
|
|
Units of
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
Option
|
|
|
|
|
|
Units of
|
|
|
|
|
|
Stock That
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
|
|
|
Exercise
|
|
|
Option
|
|
|
Stock That
|
|
|
|
|
|
Have Not
|
|
|
|
Options (#)
|
|
|
Options (#)
|
|
|
|
|
|
Price
|
|
|
Expiration
|
|
|
Have Not
|
|
|
|
|
|
Vested ($)
|
Name
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
|
|
|
($)
|
|
|
Date
|
|
|
Vested (#)
|
|
|
|
|
|
(11)
|
|
|
|
|
10,000
|
|
|
|
|
20,000
|
|
|
|
(2)
|
|
|
|
43.93
|
|
|
|
|
3/14/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,900
|
|
|
|
(8)
|
|
|
|
184,977
|
|
|
|
|
|
20,000
|
|
|
|
|
10,000
|
|
|
|
(3)
|
|
|
|
36.58
|
|
|
|
|
4/19/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,900
|
|
|
|
(9)
|
|
|
|
184,977
|
|
|
|
|
|
40,000
|
|
|
|
|
|
|
|
|
|
|
|
|
32.04
|
|
|
|
|
8/19/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,172
|
|
|
|
(5)
|
|
|
|
21.375
|
|
|
|
|
6/20/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,311
|
|
|
|
|
3,689
|
|
|
|
(6)
|
|
|
|
32.0938
|
|
|
|
|
4/19/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert J. Susor
|
|
|
|
|
|
|
|
|
24,000
|
|
|
|
(1)
|
|
|
|
44.20
|
|
|
|
|
3/27/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,100
|
|
|
|
(7)
|
|
|
|
147,033
|
|
|
|
|
|
8,000
|
|
|
|
|
16,000
|
|
|
|
(2)
|
|
|
|
43.93
|
|
|
|
|
3/14/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,100
|
|
|
|
(8)
|
|
|
|
147,033
|
|
|
|
|
|
16,000
|
|
|
|
|
8,000
|
|
|
|
(3)
|
|
|
|
36.58
|
|
|
|
|
4/19/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,100
|
|
|
|
(9)
|
|
|
|
147,033
|
|
|
|
|
|
35,000
|
|
|
|
|
|
|
|
|
|
|
|
|
32.04
|
|
|
|
|
8/19/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,862
|
|
|
|
(5)
|
|
|
|
21.4063
|
|
|
|
|
6/20/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,450
|
|
|
|
|
4,550
|
|
|
|
(6)
|
|
|
|
32.0938
|
|
|
|
|
4/19/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
|
34.6875
|
|
|
|
|
6/26/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Bruce Clayton
|
|
|
|
|
|
|
|
|
9,000
|
|
|
|
(1)
|
|
|
|
44.20
|
|
|
|
|
3/27/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,400
|
|
|
|
(7)
|
|
|
|
66,402
|
|
|
|
|
|
3,000
|
|
|
|
|
6,000
|
|
|
|
(2)
|
|
|
|
43.93
|
|
|
|
|
3/14/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,400
|
|
|
|
(8)
|
|
|
|
66,402
|
|
|
|
|
|
6,000
|
|
|
|
|
3,000
|
|
|
|
(3)
|
|
|
|
36.58
|
|
|
|
|
4/19/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,200
|
|
|
|
(9)
|
|
|
|
56,916
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
|
32.04
|
|
|
|
|
8/19/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The SARs were granted on March 27, 2006 and vest in
one-third increments on each of the first three anniversaries of
the grant date. |
|
(2) |
|
The SARs were granted on March 14, 2005 and vest in
one-third increments on each of the first three anniversaries of
the grant date. |
|
(3) |
|
The SARs were granted on April 19, 2004 and vest in
one-third increments on each of the first three anniversaries of
the grant date. |
|
(4) |
|
The stock options were granted on April 19, 1999 and vest
in one-third increments on each of January 1, 2007,
January 1, 2008, and January 1, 2009. |
|
(5) |
|
The stock options were granted on June 20, 2000. For
Messrs. Nix and Susor, the options vest with respect to
2,520 shares on January 1, 2008 and 4,671 shares
on each of January 1, 2009 and January 1, 2010. For
Mr. Samuelson, the options vest with respect to
3,816 shares on January 1, 2008 and 4,678 shares
on each of January 1, 2009 and January 1, 2010. |
24
|
|
|
(6) |
|
The stock options were granted on April 19, 1999. For
Messrs. Nix and Susor, the options vest with respect to
3,115 shares on January 1, 2007 and 1,435 shares
on January 1, 2008. For Mr. Samuelson, the options
vest with respect to 3,115 shares on January 1, 2007
and 574 shares on January 1, 2008. |
|
(7) |
|
The PRSUs were granted on March 27, 2006 and vest on
December 31, 2010, or earlier upon a change in control of
the Company or in the event of (i) the executives
retirement from the Company or (ii) the executives
employment with the Company is terminated due to death or
disability. |
|
(8) |
|
The PRSUs were granted on March 14, 2005 and vest on
December 31, 2009, or earlier upon a change in control of
the Company or in the event of (i) the executives
retirement from the Company or (ii) the executives
employment with the Company is terminated due to death or
disability. |
|
(9) |
|
The PRSUs were granted on April 19, 2004 and vest on
December 31, 2008, or earlier upon a change in control of
the Company or in the event of (i) the executives
retirement from the Company or (ii) the executives
employment with the Company is terminated due to death or
disability. |
|
(10) |
|
Shares of restricted stock were granted on February 25,
1999 and will vest on February 25, 2009, or earlier upon a
change in control of the Company or in the event of (i) the
executives retirement from the Company or (ii) the
executives employment with the Company is terminated due
to death or disability. |
|
(11) |
|
Reflects the value as calculated based on the closing price of
the Companys Common Stock on December 29, 2006 of
$47.43 per share. |
2006
OPTION EXERCISES AND STOCK VESTED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
|
|
Acquired
|
|
|
Value Realized on
|
Name
|
|
|
on Exercise (#)
|
|
|
Exercise
($)(1)
|
Thomas C. Gallagher
|
|
|
|
5,000
|
|
|
|
|
49,163
|
|
|
|
|
|
3,082
|
|
|
|
|
37,238
|
|
|
|
|
|
49,209
|
|
|
|
|
630,736
|
|
|
|
|
|
|
|
|
|
|
|
|
Jerry W. Nix
|
|
|
|
2,250
|
|
|
|
|
21,488
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry R. Samuelson
|
|
|
|
4,000
|
|
|
|
|
47,125
|
|
|
|
|
|
20,000
|
|
|
|
|
181,850
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert J. Susor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Bruce Clayton
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Value realized represents the excess of the fair market value of
the shares at the time of exercise over the exercise price of
the options. |
25
2006
Pension Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Present Value
|
|
|
|
|
|
|
|
|
|
Years
|
|
|
of
|
|
|
|
|
|
|
|
|
|
Credited
|
|
|
Accumulated
|
|
|
Payments During
|
Name
|
|
|
Plan Name
|
|
|
Service (#)
|
|
|
Benefit ($)
|
|
|
Last Fiscal Year
($)
|
Thomas C. Gallagher
|
|
|
Pension Plan
|
|
|
|
36.50
|
|
|
|
|
649,721
|
|
|
|
|
|
|
|
|
|
Supplemental
Retirement
Plan
|
|
|
|
36.50
|
|
|
|
|
4,166,902
|
|
|
|
|
|
|
|
|
|
Original
Deferred
Compensation
Plan
|
|
|
|
28.00
|
|
|
|
|
286,977
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jerry W. Nix
|
|
|
Pension Plan
|
|
|
|
28.33
|
|
|
|
|
645,630
|
|
|
|
|
|
|
|
|
|
Supplemental
Retirement
Plan
|
|
|
|
28.33
|
|
|
|
|
1,409,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry R. Samuelson
|
|
|
Pension Plan
|
|
|
|
32.25
|
|
|
|
|
641,012
|
|
|
|
|
|
|
|
|
|
Supplemental
Retirement
Plan
|
|
|
|
32.25
|
|
|
|
|
1,603,643
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert J. Susor
|
|
|
Pension Plan
|
|
|
|
38.67
|
|
|
|
|
746,397
|
|
|
|
|
|
|
|
|
|
Supplemental
Retirement
Plan
|
|
|
|
38.67
|
|
|
|
|
1,372,879
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Bruce Clayton
|
|
|
Pension Plan
|
|
|
|
10.75
|
|
|
|
|
361,352
|
|
|
|
|
|
|
|
|
|
Supplemental
Retirement
Plan
|
|
|
|
10.75
|
|
|
|
|
293,593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Pension Benefits table provides information regarding the
number of years of credited service, the present value of
accumulated benefits, and any payments made during the last
fiscal year with respect to The Genuine Parts Company Pension
Plan (the Pension Plan), the Supplemental Retirement
Plan (the SRP), and The Genuine Parts Company
Original Deferred Compensation Plan (the ODCP).
The Pension Plan is a broad based, tax-qualified defined benefit
pension plan, which provides a benefit upon retirement to
eligible employees of the Company. In general, all employees
except leased employees, independent contractors, and certain
collectively-bargained employees are eligible to participate.
Benefits are based upon years of service with the Company and
the average of the highest five years of earnings out of the
last ten years. Earnings are generally based on total pay, but
do not include amounts that have been deferred. The service
amounts shown in the table above represent actual years of
service with the Company. No additional years of credited
service have been granted to the named executive officers under
the Pension Plan.
26
Several forms of benefit payments are available under the
Pension Plan. The Pension Plan offers a life annuity option,
50%, 75%, and 100% joint and survivor options, and a
10-year
certain and life annuity option. Minimum lump sum distributions
of benefits are available if less than or equal to $5,000. The
payout option must be elected by the participant before benefit
payments begin. Each option available under the Pension Plan is
actuarially equivalent.
The pension benefit payable under the Pension Plan is the
greater of two benefits. The first benefit is a percentage of
the participants average earnings on his normal retirement
date less 50% of his monthly Social Security benefit. The
applicable percentage is based on years of credited service at
normal retirement and increases by 0.5% per year of
credited service from 40% at 15 years of service to 55% at
45 or more years of service. The second benefit is 30% of the
participants average earnings. Only the second benefit is
available to participants with less than 15 years of
credited service at normal retirement. For such individuals, 30%
of the participants average earnings are multiplied by a
fraction with the numerator equal to credited service at normal
retirement (not to exceed 180 months) and the denominator
equal to 180.
Early retirement benefit payments are available under the
Pension Plan to participants upon attainment of age 55 and
completion of 15 years of credited service. As of
December 31, 2006, Messrs. Gallagher, Nix, Samuelson
and Susor were eligible for early retirement benefits. A
participants full benefit under the Pension Plan is
payable at age 65 with at least five years of participation
service, which is considered normal retirement. Benefits are
reduced by 6.0% for each year of payment before normal
retirement for participants who earned at least 15 years of
credited service under the Pension Plan. Termination benefits
are calculated in the same manner as normal retirement benefits,
except that the benefit is reduced by the ratio of credited
service at termination to credited service at normal retirement
date, determined as if the participant had continued in
employment until his or her normal retirement. Participants are
fully vested in benefits after seven years of service, with
partial vesting after three years of service. Participants may
earn up to two years of additional benefit service while
disabled and receiving long term disability benefits from The
Genuine Parts Company Long Term Disability Plan. An actuarially
equivalent 50% joint and survivor annuity is payable to a
participants spouse upon death prior to retirement. A
surviving spouse may waive the 50% joint and survivor death
benefit and elect instead to receive a benefit from The Genuine
Parts Company Death Benefit Plan.
The SRP is a nonqualified defined benefit pension plan which
covers pay and benefits above the qualified limits in the
Pension Plan. In addition, pension benefits that would have been
earned under the Pension Plan had compensation not been deferred
are provided by the SRP. Otherwise, the provisions of the SRP
are generally the same as those of the Pension Plan, except
benefits are payable only for retirement, death or change in
control. Benefits earned under the SRP are paid from Company
assets, and are
grossed-up
for any FICA taxes due. Executives sign a joinder agreement to
become participants in the SRP. The participant irrevocably
elects his optional form of benefit payment upon joining this
plan.
Amounts reported above as the actuarial present value of
accumulated benefits under the Pension Plan and the SRP are
computed using the interest and mortality assumptions that the
Company applies to amounts reported in its financial statement
disclosures, and are assumed to be payable at age 65. The
interest rate assumption is 6.00% for both plans. The mortality
table assumption for the Pension Plan is the RP 2000 Mortality
Table, with a blue collar adjustment, and with mortality
improvements projected to 2006 using Scale AA. The mortality
table assumption for the SRP is the same except that no blue
collar adjustment is applied. SRP benefits have been adjusted by
1.45% to account for estimated FICA tax
gross-ups.
The ODCP is a nonqualified plan that provides an annuity
benefit, funded partially by executive salary deferrals.
Mr. Gallagher is the only named executive officer in this
plan, and his annual salary deferrals total $9,441 for these
benefits. The retirement benefit is derived by converting the
account balance at the retirement date to an annuity, using
insurance company annuity tables applicable to individuals of
similar age and risk categories. The annuity is then doubled to
arrive at the retirement benefit amount. The retirement benefit
is payable as a
10-year
certain and life annuity at age 65 for normal retirement,
or at age 55 with 15 years of service for early
retirement. Mr. Gallagher is currently eligible for early
retirement benefits under the ODCP. There is a minimum benefit
guarantee of $40,000 per year for normal retirement, and
also a specified death and disability benefit of $3,333 per
month. These benefits are payable from Company assets. The
service amount shown in the table represents the
27
period during which Mr. Gallagher has been making salary
deferrals for benefits provided by the ODCP. Amounts reported as
the actuarial present value of accumulated benefits under the
ODCP are computed based on insurance company estimates of
benefit amounts payable at age 65 and the interest and
mortality assumptions the Company uses for purposes of financial
statement disclosures of the SRP referred to above.
2006
Nonqualified Deferred Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
Company
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
|
Contributions in
|
|
|
Contributions in
|
|
|
Earnings in
|
|
|
Withdrawals/
|
|
|
Balance at Last
|
Name
|
|
|
Last FY ($)(1)
|
|
|
Last FY ($)
|
|
|
Last FY ($)
|
|
|
Distributions ($)
|
|
|
FYE ($)(1)
|
Thomas C. Gallagher
|
|
|
115,603
|
|
|
|
|
|
|
|
|
119,713
|
|
|
|
|
|
|
|
|
|
1,066,410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jerry W. Nix
|
|
|
50,000
|
|
|
|
|
|
|
|
|
35,478
|
|
|
|
|
|
|
|
|
|
267,683
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry R. Samuelson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert J. Susor
|
|
|
64,026
|
|
|
|
|
|
|
|
|
70,980
|
|
|
|
|
|
|
|
|
|
495,306
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Bruce Clayton
|
|
|
|
|
|
|
|
|
|
|
|
3,580
|
|
|
|
|
|
|
|
|
|
27,016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Reflects deferrals under the Companys Tax-Deferred Savings
Plan of incentive bonuses earned for 2005 and paid to the named
executive officers in 2006. These amounts are not reported as
2006 compensation in the Summary Compensation Table. |
The Genuine Parts Company Tax Deferred Savings Plan is a
nonqualified deferred compensation plan pursuant to which the
named executive officers may elect to defer up to 100% of their
annual incentive bonus. Deferral elections are due by
June 30 of each year, and are irrevocable. These deferral
elections are for the bonus earned during that year, which would
otherwise be payable in February of the following year.
Deferrals are held for each participant in separate individual
accounts in an irrevocable rabbi trust. Deferred amounts are
credited with earnings or losses based on the rate of return of
mutual funds selected by the executive, which the executive may
change at any time. A deferral period and payment date must be
irrevocably specified at election for each separate annual
deferral. This deferral period must be at least two years in
length, and the payment date can be any date on or after that
point. Alternately, the payment can be tied to termination of
employment, including retirement. The executive must also make
an irrevocable election regarding payment terms, which may be
either a lump sum, or installments of five (5), ten (10), or
fifteen (15) years. Hardship withdrawals are available for
unforeseeable emergency financial hardship situations, such as
for an unexpected illness, accident, or property loss. If a
participant dies before receiving the full value of the deferral
account balances, the designated beneficiary would receive the
remainder of that benefit in the same payment form as originally
specified (i.e., lump sum or installments). All accounts would
be immediately distributed upon a change in control of the
Company.
POST
TERMINATION PAYMENTS AND BENEFITS
Benefits to Named Executive Officers in the Event of a
Change in Control. The Company does not have
employment agreements with any of its executive officers. The
Company has entered into change in control agreements with
certain executive officers, including the named executive
officers. These agreements provide severance payments and
benefits to the executive if his employment is terminated within
two years after a change in control of the Company, if the
change in control occurs during the term of the agreement. The
change in control agreements have a three year term with
automatic annual extensions unless either party gives notice of
non-renewal.
28
Under each of the change in control agreements, if the executive
is terminated by the Company without cause or the executive
resigns for good reason (as such terms are defined in the
agreement), he will receive a pro rata bonus for the year of
termination, plus a lump sum severance payment equal to a
multiple (three in the case of Messrs. Gallagher, Nix and
Susor, and two in the case of Messrs. Samuelson and
Clayton) of the executives then-current annual salary and
the average of the annual bonuses he received in the three years
prior to the year of termination. In addition, the Company will
continue to provide the executive with group health coverage for
a period of 24 months.
If the executives employment is terminated by the Company
for cause or he resigns without good reason, the agreement will
terminate without further obligation of the Company other than
the payment of any accrued but unpaid salary or benefits. In the
case of death, disability or retirement, the executive, or his
estate, would be entitled to payment of any accrued but unpaid
salary or benefits, plus a pro rata bonus for the year in which
the termination occurred.
The change in control agreements provide for a
gross-up of
applicable excise tax imposed under Section 4999 of the
Internal Revenue Code, provided that amounts determined to be
parachute payments exceed 110% of the amount that could be paid
without triggering the excise tax. If the parachute payments are
less than that threshold amount, the payments will be limited to
the maximum amount that could be paid without triggering the
excise tax.
Summary of Termination Payments and
Benefits. The following tables summarize the
value of the termination payments and benefits that our named
executive officers would receive if they had terminated
employment on December 31, 2006 under the circumstances
shown. The tables exclude (i) amounts accrued through
December 31, 2006 that would be paid in the normal course
of continued employment, such as accrued but unpaid salary and
earned annual bonus for 2006, and (ii) vested account
balances under our Partnership Plan, which is a 401(k) plan that
is generally available to all of our salaried employees.
29
Thomas C.
Gallagher
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company or
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Other
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
Than Retirement,
|
|
|
Following a
|
|
|
|
|
|
|
|
|
|
|
|
|
Death or
|
|
|
Change in
|
Benefit
|
|
|
Retirement ($)
|
|
|
Death ($)
|
|
|
Disability ($)
|
|
|
Disability ($)
|
|
|
Control ($)
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,034,707(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of Equity Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options and SARs(2)
|
|
|
|
|
|
|
|
|
431,550
|
|
|
|
|
431,550
|
|
|
|
|
|
|
|
|
822,111
|
Restricted Stock and PRSUs(3)
|
|
|
|
|
|
|
|
|
1,380,213
|
|
|
|
|
1,380,213
|
|
|
|
|
|
|
|
|
1,380,213
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Plan(4)
|
|
|
|
57,026
|
|
|
|
|
28,513
|
|
|
|
|
90,811
|
|
|
|
|
57,026
|
|
|
|
57,026(5)
|
Supplemental Retirement Plan(6)
|
|
|
|
335,057
|
|
|
|
|
335,057
|
|
|
|
|
335,057
|
|
|
|
|
335,057
|
|
|
|
5,701,974(7)
|
Original Def Comp Plan(8)
|
|
|
|
24,942
|
|
|
|
|
40,000
|
|
|
|
|
40,000
|
|
|
|
|
24,942
|
|
|
|
581,649(9)
|
Tax-Deferred Savings Plan(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health & Welfare Coverage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,011(11)
|
Estimated 280G Tax
Gross-Ups
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,772,382(12)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Severance payment payable in lump sum pursuant to the change in
control agreement described above. |
|
(2) |
|
Reflects the excess of the fair market value of the underlying
shares as of December 31, 2006 over the exercise or base
price of all unvested options and SARs the vesting of which
accelerates in connection with the specified event. |
|
(3) |
|
Reflects the fair market value as of December 31, 2006 of
restricted stock and shares underlying PRSUs the vesting of
which accelerates in connection with the specified event. |
|
(4) |
|
Pension Plan benefits shown for all termination scenarios are
annual annuities assuming a 50% joint and survivor annuity
option and are assumed to be payable at December 31, 2006
or at the participants earliest eligibility age, if later.
The surviving spouse may elect to waive the death benefit from
the Pension Plan and elect instead to receive a benefit from The
Genuine Parts Company Death Benefit Plan. The disability
benefits under the Pension Plan assumes two extra years of
credited service are earned while on disability and that the
benefits are payable at age 65. |
|
(5) |
|
Mr. Gallagher may elect to receive his pension benefit in
the form of a lump sum payment in the event of termination
following a change in control. A lump sum option is not
otherwise available under the plan. The lump sum present value
of the annual benefit shown in the table is $895,893. |
|
(6) |
|
The Supplemental Retirement Plan assumes payment under a 100%
joint and survivor annuity option, which was elected by
Mr. Gallagher when he signed a joinder agreement to
participate in the plan. Disability benefits under the
Supplemental Retirement Plan are assumed to be equal to early
retirement benefits and are payable at December 31, 2006 or
at the participants earliest eligibility age if later. The
Supplemental Retirement Plan annuity benefits shown in the table
do not reflect estimated FICA tax
gross-ups
paid by the Company. The estimated FICA tax
gross-up,
based on 1.45% of the lump sum value of the Supplemental
Retirement Plan benefit calculated on the FICA tax basis for the
plan, is $67,486. |
|
(7) |
|
An immediate lump sum distribution of benefits is required in
the event of termination following a change in control. The lump
sum value of the benefit calculated includes an estimated FICA
tax gross-up
amount of $81,497. |
|
(8) |
|
Original Deferred Compensation Plan benefits are payable as a
10-year
certain and life annuity. |
|
(9) |
|
Amount reflects a lump sum distribution of benefits as required
under the plan in the event of termination following a change in
control. |
30
|
|
|
(10)
|
|
Benefits payable under the Tax
Deferred Savings Plan are described and quantified in the
Nonqualified Deferred Compensation table on page 28 of this
proxy statement.
|
|
|
|
(11)
|
|
Reflects the cost of 24 months
of continued group health coverage pursuant to the change in
control agreement described above.
|
|
|
|
(12)
|
|
The calculation of the estimated
280G gross-up payment is based upon a 280G excise tax rate of
20%, a 35% federal income tax rate, a 1.45% medicare tax rate
and a 6% state income tax rate.
|
Jerry W.
Nix
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company or
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Other
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
Than Retirement,
|
|
|
Following a
|
|
|
|
|
|
|
|
|
|
|
|
|
Death or
|
|
|
Change in
|
Benefit
|
|
|
Retirement ($)
|
|
|
Death ($)
|
|
|
Disability ($)
|
|
|
Disability ($)
|
|
|
Control ($)
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,252,132(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of Equity Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options and SARs(2)
|
|
|
|
|
|
|
|
|
142,800
|
|
|
|
|
142,800
|
|
|
|
|
|
|
|
|
637,553
|
Restricted Stock and PRSUs(3)
|
|
|
|
|
|
|
|
|
514,616
|
|
|
|
|
514,616
|
|
|
|
|
|
|
|
|
514,616
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Plan(4)
|
|
|
|
58,323
|
|
|
|
|
29,162
|
|
|
|
|
77,534
|
|
|
|
|
58,323
|
|
|
|
58,323(5)
|
Supplemental Retirement Plan(6)
|
|
|
|
123,809
|
|
|
|
|
61,905
|
|
|
|
|
123,809
|
|
|
|
|
123,809
|
|
|
|
1,897,940(7)
|
Tax-Deferred Savings Plan(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health & Welfare
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,134(9)
|
Estimated 280G Tax
Gross-Ups
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,210,618(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Severance payment payable in lump sum pursuant to the change in
control agreement described above. |
|
(2) |
|
Reflects the excess of the fair market value of the underlying
shares as of December 31, 2006 over the exercise or base
price of all unvested options and SARs the vesting of which
accelerates in connection with the specified event. |
|
(3) |
|
Reflects the fair market value as of December 31, 2006 of
restricted stock and shares underlying PRSUs the vesting of
which accelerates in connection with the specified event. |
|
(4) |
|
Pension Plan benefits shown for all termination scenarios are
annual annuities assuming a 50% joint and survivor annuity
option and are assumed to be payable at December 31, 2006
or at the participants earliest eligibility age, if later.
The surviving spouse may elect to waive the death benefit from
the Pension Plan and elect instead to receive a benefit from The
Genuine Parts Company Death Benefit Plan. The disability
benefits under the Pension Plan assumes two extra years of
credited service are earned while on disability and that the
benefits are payable at age 65. |
|
(5) |
|
Mr. Nix may elect to receive his pension benefit in the
form of a lump sum payment in the event of termination following
a change in control. A lump sum option is not otherwise
available under the plan. The lump sum present value of the
annual benefit shown in the table is $860,279. |
|
(6) |
|
The Supplemental Retirement Plan assumes payment under a 50%
joint and survivor annuity option, which was elected by
Mr. Nix when he signed a joinder agreement to participate
in the plan. Disability benefits under the |
31
|
|
|
|
|
Supplemental Retirement Plan are assumed to be equal to early
retirement benefits and are payable at December 31, 2006 or
at the participants earliest eligibility age if later. The
Supplemental Retirement Plan annuity benefits shown in the table
do not reflect estimated FICA tax
gross-ups
paid by the Company. The estimated FICA tax
gross-up,
based on 1.45% of the lump sum value of the Supplemental
Retirement Plan benefit calculated on the FICA tax basis for the
plan, is $22,827. |
|
|
|
(7) |
|
An immediate lump sum distribution of benefits is required in
the event of termination following a change in control. The lump
sum value of the benefit calculated includes an estimated FICA
tax gross-up
amount of $27,127. |
|
|
|
(8) |
|
Benefits payable under the Tax Deferred Savings Plan are
described and quantified in the Nonqualified Deferred
Compensation table on page 28 of this proxy statement. |
|
|
|
(9) |
|
Reflects the cost of 24 months of continued group health
coverage pursuant to the change in control agreement described
above. |
|
|
|
(10) |
|
The calculation of the estimated 280G gross-up payment is based
upon a 280G excise tax rate of 20%, a 35% federal income tax
rate, a 1.45% medicare tax rate and a 6% state income tax rate. |
Larry R.
Samuelson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company or
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Other
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
Than Retirement,
|
|
|
Following a
|
|
|
|
|
|
|
|
|
|
|
|
|
Death or
|
|
|
Change in
|
Benefit
|
|
|
Retirement ($)
|
|
|
Death ($)
|
|
|
Disability ($)
|
|
|
Disability ($)
|
|
|
Control ($)
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,547,488(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of Equity Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options and SARs(2)
|
|
|
|
|
|
|
|
|
178,500
|
|
|
|
|
178,500
|
|
|
|
|
|
|
|
|
|
618,596
|
|
Restricted Stock and PRSUs(3)
|
|
|
|
|
|
|
|
|
474,205
|
|
|
|
|
474,205
|
|
|
|
|
|
|
|
|
|
474,205
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Plan(4)
|
|
|
|
57,323
|
|
|
|
|
28,661
|
|
|
|
|
80,814
|
|
|
|
|
57,323
|
|
|
|
|
57,323(5)
|
|
Supplemental Retirement Plan(6)
|
|
|
|
134,336
|
|
|
|
|
100,752
|
|
|
|
|
134,336
|
|
|
|
|
134,336
|
|
|
|
|
2,183,125(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health & Welfare
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,011(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Severance payment payable in lump sum pursuant to the change in
control agreement described above. |
|
(2) |
|
Reflects the excess of the fair market value of the underlying
shares as of December 31, 2006 over the exercise or base
price of all unvested options and SARs the vesting of which
accelerates in connection with the specified event. |
|
(3) |
|
Reflects the fair market value as of December 31, 2006 of
restricted stock and shares underlying PRSUs the vesting of
which accelerates in connection with the specified event. |
|
(4) |
|
Pension Plan benefits shown for all termination scenarios are
annual annuities assuming a 50% joint and survivor annuity
option and are assumed to be payable at December 31, 2006
or at the participants earliest eligibility age, if later.
The surviving spouse may elect to waive the death benefit from
the Pension Plan and elect instead to receive a benefit from The
Genuine Parts Company Death Benefit Plan. The disability
benefits under the Pension Plan assumes two extra years of
credited service are earned while on disability and that the
benefits are payable at age 65. |
32
|
|
|
(5) |
|
Mr. Samuelson may elect to receive his pension benefit in
the form of a lump sum payment in the event of termination
following a change in control. A lump sum option is not
otherwise available under the plan. The lump sum present value
of the annual benefit shown in the table is $866,914. |
|
(6) |
|
The Supplemental Retirement Plan assumes payment under a 75%
joint and survivor annuity option, which was elected by
Mr. Samuelson when he signed a joinder agreement to
participate in the plan. Disability benefits under the
Supplemental Retirement Plan are assumed to be equal to early
retirement benefits and are payable at December 31, 2006 or
at the participants earliest eligibility age if later. The
Supplemental Retirement Plan annuity benefits shown in the table
do not reflect estimated FICA tax
gross-ups
paid by the Company. The estimated FICA tax
gross-up,
based on 1.45% of the lump sum value of the Supplemental
Retirement Plan benefit calculated on the FICA tax basis for the
plan, is $26,018. |
|
(7) |
|
An immediate lump sum distribution of benefits is required in
the event of termination following a change in control. The lump
sum value of the benefit calculated includes an estimated FICA
tax gross-up
amount of $31,203. |
|
(8) |
|
Reflects the cost of 24 months of continued group health
coverage pursuant to the change in control agreement described
above. |
Robert J.
Susor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company or
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Other
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
Than Retirement,
|
|
|
Following a
|
|
|
|
|
|
|
|
|
|
|
|
|
Death or
|
|
|
Change in
|
Benefit
|
|
|
Retirement ($)
|
|
|
Death ($)
|
|
|
Disability ($)
|
|
|
Disability ($)
|
|
|
Control ($)
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,914,853(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of Equity Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options and SARs(2)
|
|
|
|
|
|
|
|
|
142,800
|
|
|
|
|
142,800
|
|
|
|
|
|
|
|
|
|
598,793
|
|
Restricted Stock and PRSUs(3)
|
|
|
|
|
|
|
|
|
441,099
|
|
|
|
|
441,099
|
|
|
|
|
|
|
|
|
|
441,099
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Plan(4)
|
|
|
|
67,166
|
|
|
|
|
33,583
|
|
|
|
|
86,046
|
|
|
|
|
67,166
|
|
|
|
|
67,166(5)
|
|
Supplemental Retirement Plan(6)
|
|
|
|
118,776
|
|
|
|
|
59,388
|
|
|
|
|
118,776
|
|
|
|
|
118,776
|
|
|
|
|
1,827,146(7)
|
|
Tax-Deferred Savings Plan(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health & Welfare
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,983(9)
|
|
Estimated 280G Tax
Gross-Ups
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1,101,417(10)
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(1) |
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Severance payment payable in lump sum pursuant to the change in
control agreement described above. |
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(2) |
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Reflects the excess of the fair market value of the underlying
shares as of December 31, 2006 over the exercise or base
price of all unvested options and SARs the vesting of which
accelerates in connection with the specified event. |
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(3) |
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Reflects the fair market value as of December 31, 2006 of
restricted stock and shares underlying PRSUs the vesting of
which accelerates in connection with the specified event. |
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(4) |
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Pension Plan benefits shown for all termination scenarios are
annual annuities assuming a 50% joint and survivor annuity
option and are assumed to be payable at December 31, 2006
or at the participants earliest eligibility age, if later.
The surviving spouse may elect to waive the death benefit from
the Pension Plan and elect instead to receive a benefit from The
Genuine Parts Company Death Benefit Plan. The disability
benefits under the Pension Plan assumes two extra years of
credited service are earned while on disability and that the
benefits are payable at age 65. |
33
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(5) |
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Mr. Susor may elect to receive his pension benefit in the
form of a lump sum payment in the event of termination following
a change in control. A lump sum option is not otherwise
available under the plan. The lump sum present value of the
annual benefit shown in the table is $986,753. |
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(6) |
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The Supplemental Retirement Plan assumes payment under a 50%
joint and survivor annuity option, which was elected by
Mr. Susor when he signed a joinder agreement to participate
in the plan. Disability benefits under the Supplemental
Retirement Plan are assumed to be equal to early retirement
benefits and are payable at December 31, 2006 or at the
participants earliest eligibility age if later. The
Supplemental Retirement Plan annuity benefits shown in the table
do not reflect estimated FICA tax
gross-ups
paid by the Company. The estimated FICA tax
gross-up,
based on 1.45% of the lump sum value of the Supplemental
Retirement Plan benefit calculated on the FICA tax basis for the
plan, is $21,947. |
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(7) |
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An immediate lump sum distribution of benefits is required in
the event of termination following a change in control. The lump
sum value of the benefit calculated includes an estimated FICA
tax gross-up
amount of $26,115. |
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(8) |
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Benefits payable under the Tax Deferred Savings Plan are
described and quantified in the Nonqualified Deferred
Compensation table on page 28 of this proxy statement. |
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(9) |
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Reflects the cost of 24 months of continued group health
coverage pursuant to the change in control agreement described
above. |
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(10) |
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The calculation of the estimated 280G gross-up payment is based
upon a 280G excise tax rate of 20%, a 35% federal income tax
rate, a 1.45% medicare tax rate and a 6% state income tax rate. |
R. Bruce
Clayton
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Termination by
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Company or
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Involuntary
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Executive Other
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Termination
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Than Retirement,
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Following a
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Death or
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Change in
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Benefit
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Retirement ($)
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Death ($)
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Disability ($)
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Disability ($)
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Control ($)
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Cash Severance
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803,392(1)
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Acceleration of Equity Awards
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Stock Options and SARs(2)
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53,550
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53,550
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82,620
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Restricted Stock and PRSUs(3)
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189,720
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189,720
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189,720
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Retirement Benefits
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Pension Plan(4)
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43,791
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21,896
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51,928
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43,791
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43,791
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Supplemental Retirement Plan
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Tax-Deferred Savings Plan(5)
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Other Benefits
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Health & Welfare
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13,819(6)
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(1) |
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Severance payment payable in lump sum pursuant to the change in
control agreement described above. |
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(2) |
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Reflects the excess of the fair market value of the underlying
shares as of December 31, 2006 over the exercise or base
price of all unvested options and SARs the vesting of which
accelerates in connection with the specified event. |
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(3) |
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Reflects the fair market value as of December 31, 2006 of
restricted stock and shares underlying PRSUs the vesting of
which accelerates in connection with the specified event. |
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(4) |
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Pension Plan benefits shown for all termination scenarios annual
annuities assuming a 50% joint and survivor annuity option and
are assumed to be payable at December 31, 2006 or at the
participants earliest eligibility age, if later. The
surviving spouse may elect to waive the death benefit from the
Pension Plan and elect instead |
34
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to receive a benefit from The Genuine Parts Company Death
Benefit Plan. The disability benefits under the Pension Plan
assumes two extra years of credited service are earned while on
disability and that the benefits are payable at age 65. |
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(5) |
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Benefits payable under the Tax Deferred Savings Plan are
described and quantified in the Nonqualified Deferred
Compensation table on page 28 of this proxy statement. |
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(6) |
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Reflects the cost of 24 months of continued group health
coverage pursuant to the change in control agreement described
above. |
COMPENSATION,
NOMINATING AND GOVERNANCE COMMITTEE REPORT
The Compensation, Nominating and Governance Committee of the
Board of Directors of Genuine Parts Company oversees the
compensation programs of Genuine Parts Company on behalf of the
Board. In fulfilling its oversight responsibilities, the
Committee reviewed and discussed with management of the Company
the Compensation Discussion and Analysis included in this proxy
statement.
In reliance on the review and discussions referred to above, the
Committee recommended to the Board of Directors that the
Compensation Discussion and Analysis be included in the
Companys Annual Report on
Form 10-K
for the year ended December 31, 2006 and in this proxy
statement, each of which has been filed with the SEC.
Members of the Compensation, Nominating and
Governance Committee:
J. Hicks Lanier (Chairman)
John D. Johns
Richard W. Courts, II
Gary W. Rollins
This report shall not be deemed to be incorporated by
reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as
amended, and shall not otherwise be deemed filed under such
acts.
COMPENSATION,
NOMINATING AND GOVERNANCE COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
The following directors served on the Compensation, Nominating
and Governance Committee during 2006: Richard W.
Courts, II, John D. Johns, J. Hicks Lanier and James B.
Williams (through April 17, 2006) and Gary W. Rollins
(from April 18, 2006 to present). None of such persons was
an officer or employee of the Company during 2006 or at any time
in the past. Mr. Lanier is Chief Executive Officer and
Chairman of the Board of Oxford Industries, Inc., one of whose
previous directors (through January 8, 2007) is the
Companys Chairman of the Board, President and Chief
Executive Officer, Thomas C. Gallagher.
35
COMPENSATION
OF DIRECTORS
2006 Director
Compensation
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Fees
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Earned or
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Stock
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All Other
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Paid in
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Awards
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Compensation
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NAME
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Cash ($)
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($)(3)
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($)
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Total ($)
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Mary B. Bullock
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46,250
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66,300
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112,550
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Richard W. Courts, II
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50,000
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