Changes
in Management Employment Arrangements
On
December 22, 2005, the Compensation Committee of Advance Auto Parts,
Inc. (“the
Company”) approved base salaries and annual bonus opportunities, effective
on
January 1, 2006, for the Company’s chief executive officer and five other named
executive officers. For 2006, base salaries for the executive officers
expected
to appear as named executive officers in the Company’s proxy statement are as
follows:
Executive
Officer |
Position |
2006 Base
Salary($)
|
Michael N. Coppola |
President and Chief Executive
Officer |
$
|
750,000 |
|
|
|
|
Jimmie L. Wade |
Executive Vice President,
Business
Development |
|
468,750 |
|
|
|
|
Michael O. Moore |
Executive Vice President and
Chief Financial
Officer |
|
375,000 |
|
|
|
|
Elwyn G. Murray |
Executive Vice President,
Administration |
|
375,000 |
|
|
|
|
David B. Mueller |
Executive Vice President,
Merchandising and
Marketing |
|
322,500 |
|
|
|
|
Paul W. Klasing |
Executive Vice President,
Stores |
|
347,500 |
The
annual incentive bonus target for Mr. Coppola will remain unchanged
at 100% of
base salary. Bonus targets for other executive officers will be 60%
of base
salary under the new plan. The 2006 annual bonus plan provides a maximum
bonus opportunity of up to 200% of bonus target.
The
2006
annual bonus plan for all named executive officers, including the
chief
executive officer, will use Company financial performance measures
approved by
the Company’s Compensation Committee for the fiscal year. Sales and operating
income will continue as measures, and an operating income measure
which compares
results versus the prior fiscal year will be added to further promote
our growth
strategy. Additionally, the inventory measure currently used in the annual
bonus plan will be modified to reward inventory turns rather than
the control of
absolute inventory levels as it has in the 2005 annual bonus plan.
These
measures are weighted to reflect the significance of the key performance
indicators in driving stockholder value.
The
chief
executive officer’s annual bonus has been based on full fiscal year results for
2005 and will continue to be based on full-fiscal year results in
2006.
Other named executive officers who currently receive quarterly bonus
payments
will instead receive annual bonus payments based on full-fiscal year
results
commencing in fiscal year 2006. The first potential payout under the
revised 2006 annual bonus plan for the named executive officers will
be in the
first half of 2007.
The
Compensation Committee also approved a new allowance plan available
to Company
executives, including the Company’s named executive officers. For 2006, the
chief executive officer will be eligible to receive up to $14,000,
and other
named executive officers will be eligible to receive up to $9,000
for
reimbursement of specified expenses, including financial planning,
tax
preparation, supplemental insurance, etc. These allowance amounts
will be
taxable to the individual executive.
All
other
terms of employment for these executive officers remain the same.