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
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Genuine Parts Company
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GENUINE
PARTS COMPANY
2999 Circle 75 Parkway
Atlanta, Georgia 30339
NOTICE OF 2008 ANNUAL MEETING OF SHAREHOLDERS
April 21, 2008
TO THE SHAREHOLDERS OF GENUINE PARTS COMPANY:
The 2008 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 21st day of April, 2008, at
10:00 a.m., for the following purposes:
(1) To elect all of the members of the Board of Directors;
(2) To ratify the selection of Ernst & Young LLP
as the Companys independent auditors for the fiscal year
ending December 31, 2008;
(3) 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 15, 2008 will be
entitled to vote at the meeting.
Important
Notice Regarding the Availability of Proxy Materials for the
Shareholder Meeting to be held on April 21, 2008.
The Proxy Statement and the 2007 Annual Report to
Shareholders are available at
www.proxydocs.com/gpc
By Order of the Board of Directors,
CAROL B. YANCEY
Senior Vice President Finance
and Corporate Secretary
Atlanta, Georgia
February 29, 2008
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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ANNUAL MEETING APRIL 21, 2008
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1
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VOTING
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1
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PROPOSAL 1 ELECTION OF DIRECTORS
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2
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CORPORATE GOVERNANCE
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4
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
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8
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SECURITY OWNERSHIP OF MANAGEMENT
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9
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EXECUTIVE COMPENSATION
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11
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COMPENSATION DISCUSSION AND ANALYSIS
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11
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ADDITIONAL INFORMATION REGARDING EXECUTIVE COMPENSATION
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20
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COMPENSATION, NOMINATING AND GOVERNANCE COMMITTEE REPORT
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34
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COMPENSATION, NOMINATING AND GOVERNANCE COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
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34
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COMPENSATION OF DIRECTORS
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34
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TRANSACTIONS WITH RELATED PERSONS
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35
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PROPOSAL 2 RATIFICATION OF SELECTION OF
INDEPENDENT AUDITORS
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36
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AUDIT COMMITTEE REPORT
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37
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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38
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SOLICITATION OF PROXIES
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38
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HOUSEHOLDING OF ANNUAL MEETING MATERIALS
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38
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OTHER MATTERS
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39
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SHAREHOLDER PROPOSALS FOR 2009 ANNUAL MEETING
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39
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GENUINE
PARTS COMPANY
2999 Circle 75 Parkway
Atlanta, Georgia 30339
PROXY
STATEMENT
ANNUAL
MEETING APRIL 21, 2008
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 2008 Annual Meeting of Shareholders to be held on
Monday, April 21, 2008, 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 February 29, 2008.
The Companys 2007 annual report to the shareholders,
including consolidated financial statements for the year ended
December 31, 2007, 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. To 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 15, 2008, the Company had
outstanding and entitled to vote at the Annual Meeting
165,305,021 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 outstanding and entitled
to vote which are represented at the Annual Meeting. 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 both proposals.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of
thirteen directorships. 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 2009 Annual
Meeting and until their successors are duly elected and
qualified.
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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If any incumbent for director in an uncontested election should
fail to receive the required affirmative vote of the holders of
a majority of the shares present or represented at the Annual
Meeting, under Georgia law, the director remains in office as a
holdover director until his or her successor is
elected and qualified or until his or her earlier resignation,
retirement, disqualification, removal from office or death. In
the event of a holdover director, the Board of Directors in its
discretion may request the director to resign from the Board. If
the director resigns, the Board of Directors may:
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immediately fill the resulting vacancy;
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allow the vacancy to remain open until a suitable candidate is
located and appointed; 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 63.
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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 72.
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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 64.
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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 60.
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1990
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George C. Jack 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 65.
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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. Mr. Johns is 56.
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2002
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Michael M.E. Johns, M.D. is Chancellor, Emory
University, a position he has held since October 2007. From June
1996 to October 2007, Dr. Johns served 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
66.
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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 67.
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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. Ms. Needham is 55.
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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 62.
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2005
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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., and SunTrust Banks, Inc. Mr. Prince is 69.
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1978
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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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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 63.
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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
69.
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1972
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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. 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 2007, 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.
4
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 2009 Annual
Meeting of Shareholders, this deadline is November 1, 2008.
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.
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 available 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 2007.
5
Code of
Conduct and Ethics
The Board of Directors has adopted a Code of Conduct and Ethics
for Employees, Contract
and/or
Temporary Workers, Officers and Directors 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 2007, 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 2007 Annual Meeting.
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 2007 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
2007, 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 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 37 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), George C. Guynn, 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 2007, the Audit Committee
held five meetings.
6
The Board of Directors has determined that Mr. Guynn,
Ms. Needham and Mr. Steiner meet the requirements
adopted by the SEC for qualification as an audit committee
financial expert. Mr. Guynn retired in 2006 as
President and CEO of the Federal Reserve Bank of Atlanta, where
he worked his entire career. In such capacity, Mr. Guynn
has experience actively supervising a principal financial
officer, principal accounting officer, controller, public
accountant, auditor or person performing similar functions and
other relevant experience. 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
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 SECs 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 2007,
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.
7
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of
February 15, 2008, 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
|
|
|
|
|
|
|
|
|
Beneficially
|
|
|
Percent
|
|
Title 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
|
|
|
14,947,077
|
(1)
|
|
|
8.9%
|
|
Common Stock,
$1.00 par
value
|
|
Barclays Global Investors, N.A
45 Fremont Street
San Francisco, CA 94105
|
|
|
12,741,329
|
(2)
|
|
|
7.6%
|
|
|
|
|
(1) |
|
This information is based upon information included in a
Schedule 13G/A filed by Dodge & Cox on
February 13, 2008. 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 reported that it has sole voting power
with respect to 14,136,740 shares, shared voting power with
respect to 29,000 shares, and sole dispositive power with
respect to all 14,947,077 shares. |
|
(2) |
|
This information is based upon information included in a
Schedule 13G filed on February 5, 2008 by Barclays
Global Investors, N.A., Barclays Global Fund Advisors,
Barclays Global Investors, LTD, Barclays Global Investors Japan
Trust and Banking Company Limited, Barclays Global Investors
Japan Limited, Barclays Global Investors Canada Limited,
Barclays Global Investors Australia Limited and Barclays Global
Investors (Deutschland) AG, each of which does not affirm the
existence of a group. The reporting entities, taken as a whole,
report sole voting power with respect to 11,265,291 shares
and sole dispositive power with respect to all
12,741,329 shares. According to the filing, the reported
shares are held by the reporting entities in trust accounts for
the economic benefit of the beneficiaries of those accounts. |
8
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
and nominees for director, 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 15, 2008:
|
|
|
|
|
|
|
|
|
|
|
Shares of
|
|
Percentage of
|
|
|
Common Stock
|
|
Common Stock
|
Name
|
|
Beneficially Owned(1)
|
|
Outstanding
|
|
Mary B. Bullock
|
|
|
9,425
|
(2)
|
|
|
*
|
|
Richard W. Courts, II
|
|
|
210,653
|
(3)
|
|
|
*
|
|
Paul D. Donahue
|
|
|
71,819
|
(4)
|
|
|
*
|
|
Jean Douville
|
|
|
24,744
|
(5)
|
|
|
*
|
|
Thomas C. Gallagher
|
|
|
826,298
|
(6)
|
|
|
*
|
|
George C. Jack Guynn
|
|
|
2,500
|
(7)
|
|
|
*
|
|
John D. Johns
|
|
|
13,965
|
(8)
|
|
|
*
|
|
Michael M. E. Johns, M.D.
|
|
|
19,577
|
(9)
|
|
|
*
|
|
J. Hicks Lanier
|
|
|
49,881
|
(10)
|
|
|
*
|
|
Wendy B. Needham
|
|
|
7,000
|
(11)
|
|
|
*
|
|
Jerry W. Nix
|
|
|
3,294,114
|
(12)
|
|
|
2.0
|
%
|
Larry L. Prince
|
|
|
370,182
|
(13)
|
|
|
*
|
|
Gary W. Rollins
|
|
|
38,030
|
(14)
|
|
|
*
|
|
Larry R. Samuelson
|
|
|
89,304
|
(15)
|
|
|
*
|
|
Lawrence G. Steiner
|
|
|
21,870
|
(16)
|
|
|
*
|
|
Robert J. Susor
|
|
|
1,257,829
|
(17)
|
|
|
*
|
|
Directors, Nominees and Executive Officers as a Group
(17 persons)
|
|
|
5,266,520
|
(18)
|
|
|
3.2
|
%
|
|
|
|
* |
|
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 the director, nominee or executive
officer disclaims beneficial ownership. |
|
(2) |
|
Includes (i) 6,000 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, including a termination of
service as a director by reason of retirement and
(ii) 3,425 shares of Common Stock equivalents held in
Ms. Bullocks stock account under the Directors
Deferred Compensation Plan. See Compensation of
Directors. |
|
(3) |
|
Includes (i) 3,000 shares subject to stock options
exercisable currently or within 60 days after
February 15, 2008, (ii) 6,000 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, including a
termination of service as a director by reason of retirement,
and (iii) 10,078 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 80,000 shares
held by certain charitable foundations for which Mr. Courts
is a trustee and thereby has shared voting and investment |
9
|
|
|
|
|
power. Mr. Courts disclaims beneficial ownership as to the
shares held by his wife and such trusts and foundations. |
|
(4) |
|
Includes (i) 71,000 shares subject to stock options
exercisable currently or within 60 days after
February 15, 2008. Does not include 9,418 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. Donahue. |
|
(5) |
|
Includes (i) 20,000 shares subject to stock options
and stock appreciation rights that are exercisable currently or
within 60 days after February 15, 2008 and
(ii) 2,494 shares of Common Stock equivalents held in
Mr. Douvilles stock account under the Directors
Deferred Compensation Plan. |
|
(6) |
|
Includes (i) 505,139 shares subject to stock options
and stock appreciation rights that are exercisable currently or
within 60 days after February 15, 2008, and
(ii) 946 shares owned jointly by Mr. Gallagher
and his wife. Does not include 37,182 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) 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. |
|
(8) |
|
Includes (i) 6,000 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, including a termination of
service as a director by reason of retirement,
(ii) 5,912 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 Mr. Johns
disclaims beneficial ownership. |
|
(9) |
|
Includes (i) 3,000 shares subject to stock options
exercisable currently or within 60 days after
February 15, 2008, (ii) 6,000 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, including a
termination of service as a director by reason of retirement and
(iii) 9,671 shares of Common Stock equivalents held in
Dr. Johns stock account under the Directors
Deferred Compensation Plan. |
|
(10) |
|
Includes (i) 3,000 shares subject to stock options
exercisable currently or within 60 days after
February 15, 2008, (ii) 6,000 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, 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. |
|
(11) |
|
Includes (i) 6,000 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, 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. |
|
(12) |
|
Includes 130,705 shares subject to stock options and stock
appreciation rights that are exercisable currently or within
60 days after February 15, 2008. 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 14,608
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. |
10
|
|
|
(13) |
|
Includes (i) 3,000 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, including a termination of
service as a director by means of retirement and
(ii) 25,000 shares held by Mr. Princes
wife. Mr. Prince disclaims beneficial ownership as to all
such shares held by his wife. 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. |
|
(14) |
|
Includes (i) 3,000 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, 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. |
|
(15) |
|
Includes 63,390 shares subject to stock options and stock
appreciation rights that are exercisable currently or within
60 days after February 15, 2008. Does not include
9,998 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. |
|
(16) |
|
Includes (i) 3,000 shares subject to stock options
exercisable currently or within 60 days after
February 15, 2008, (ii) 6,000 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, 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. |
|
(17) |
|
Includes (i) 129,520 shares subject to stock options
and stock appreciation rights that are exercisable currently or
within 60 days after February 15, 2008 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 11,805
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 6,000 shares of common stock to secure payment on a
personal loan. |
|
(18) |
|
Includes (i) 1,022,724 shares or rights issuable to
certain executive officers and directors upon the exercise of
options, stock appreciation rights and restricted stock units
that are exercisable currently or within 60 days after
February 15, 2008; (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) 31,580 shares
held as Common Stock equivalents in directors stock
accounts under the Directors Deferred Compensation Plan. |
EXECUTIVE
COMPENSATION
COMPENSATION
DISCUSSION AND ANALYSIS
In this section, we will give an overview and analysis of our
executive 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
2007 to the following individuals, whom we refer to as our named
executive officers:
|
|
|
|
|
Thomas C. Gallagher, Chairman, President and Chief Executive
Officer
|
|
|
|
Jerry W. Nix, Vice Chairman and Chief Financial Officer
|
|
|
|
Larry R. Samuelson, President U.S. Automotive
Parts Group
|
|
|
|
Robert J. Susor, Executive Vice President
|
|
|
|
Paul D. Donahue, Executive Vice President
|
11
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.
Overview
of Executive Compensation Components
The Companys executive compensation program consists of
several compensation elements, as described in the table below.
|
|
|
|
|
|
|
Pay Element
|
|
|
What the Pay Element
Rewards
|
|
|
Purpose of the Pay
Element
|
Base Salary
|
|
|
Core competence in the executive role relative to skills,
experience and contributions to the Company
|
|
|
Provide fixed compensation based on competitive market practice
|
|
Annual Cash Incentive
|
|
|
Contributions toward the Companys achievement of specified
pre-tax profit
|
|
|
Provides focus on meeting annual goals
that lead to our long-term success
Provides annual performance-based cash
incentive compensation
Motivates achievement of critical annual
performance metrics
|
|
12
|
|
|
|
|
|
|
Pay Element
|
|
|
What the Pay Element
Rewards
|
|
|
Purpose of the Pay Element
|
Long-Term Incentives
|
|
|
Stock Appreciation Rights (SARs):
Sustained stock price appreciation, thereby aligning executives interests with those of shareholders
Continued employment with the Company during a three-year vesting period
|
|
|
The combination of SARs and PRSUs provides a blended long-term focus on:
Sustained stock price performance
Achievement of pre-tax profitability targets
Executive ownership of our stock
Executive retention in a challenging business environment and competitive labor market
|
|
|
|
Performance Restricted Stock Units (PRSUs):
|
|
|
|
|
|
|
Sustained pre-tax profitability
(determines the number of PRSUs that are earned)
|
|
|
|
|
|
|
Focus on our stock price performance
|
|
|
|
|
|
|
Continued employment with the Company
during a four-year vesting period (five years including the
performance year)
|
|
|
|
|
Retirement Benefits
|
|
|
Our executive officers are eligible to
participate in employee benefit plans available to our eligible
employees, including both tax-qualified and nonqualified
retirement plans.
The Tax Deferred Savings Plan is a
nonqualified voluntary deferral program that allows our
executive officers to defer and invest a portion of their annual
bonus.
The Supplemental Retirement Plan (SRP)
is a nonqualified, noncontributory 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.
|
|
|
The Tax Deferred Savings Plan provides a
voluntary tax-deferred retirement savings vehicle for our
executive officers. The Tax Deferred Savings Plan is described
in more detail on page 27 of this proxy statement.
The SRP provides a tax-deferred
retirement savings alternative for amounts exceeding IRS
limitations on qualified programs, and makes total retirement
benefits for our executive officers commensurate with those
available to our other employees as a percentage of pay. The SRP
is described in more detail on page 26 of this proxy statement.
|
|
Welfare
Benefits
|
|
|
Executives participate in employee
benefit plans generally available to our employees, including
medical, health, life insurance and disability plans.
Continuation of welfare benefits may
occur as part of severance upon certain terminations of
employment.
|
|
|
These benefits are part of our broad-based total compensation
program.
|
|
13
|
|
|
|
|
|
|
Pay Element
|
|
|
What the Pay Element
Rewards
|
|
|
Purpose of the Pay Element
|
Additional Benefits and Perquisites
|
|
|
CEO only: Board-mandated requirement
that the corporate aircraft be used for personal travel.
CEO only: Selected club memberships
|
|
|
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.
|
|
Change in Control and Termination Benefits
|
|
|
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.
|
|
|
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 27 of this proxy
statement.
|
|
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. This data is referenced when targeting the
50th percentile positioning for annual cash compensation
discussed above. 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 based on the
Companys
and/or
relevant business units revenue size using regression
analysis. This adjustment allows for more accurate comparisons
to be made. In addition, Hewitt Associates 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). While this
information is helpful in assessing our competitive position
among similar companies in the marketplace, we do not use this
information to benchmark our targeted pay at the desired range
relative to our peers.
Hewitt Associates provides competitive data that allows the
Company to make decisions regarding the setting of total
compensation opportunities for each named executive. The Company
has not routinely called upon Hewitt Associates to assist in
determining actual compensation amounts for executives, but
believes that its relationship with Hewitt Associates enables
the Company and its Compensation, Nominating and Governance
Committee to make appropriate decisions regarding the setting of
compensation amounts.
14
2007
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 for 2007 are consistent with
marketplace data and practice, and consistent with pay increase
budgets provided to our subsidiaries for 2007. Base salary
increases granted to Messrs. Nix, Samuelson and Susor for
2007 ranged from 3.6 to 4.3 percent and were established
after considering job performance, internal pay alignment and
equity, and marketplace competitiveness. To ensure appropriate
pay alignment with his peers and recognize the increased
responsibilities of his new assignment, Mr. Donahues
base salary was increased by 6.1 percent as the result of
his promotion to Executive Vice President at our Corporate
office effective June 2007, after previously serving as
President and Chief Operating Officer of our office products
subsidiary S.P. Richards. Mr. Donahues base pay had
previously been increased by 4.1 percent on January 1,
2007. Mr. Gallaghers base pay for 2007 was increased
by 4.4 percent after taking into account the above factors
plus the fact that his base salary in 2006 was considerably
below base salaries paid to peers at similar size companies.
2007
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 the 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 relative to our Comparison Group 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 Comparison 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 and Susor, we set annual bonus
opportunities for 2007 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
(i) prior year performance by store, branch, or
distribution center; (ii) the overall economic outlook of
the region served by a particular store, branch, or distribution
center; and (iii) specific market conditions. We set the
profit goals for 2007 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. Donahues annual bonus opportunity for 2007 was
based upon a minimum guarantee of $425,000 due to his promotion
to Executive Vice President effective June 2007, after
previously serving as President and Chief Operating Officer of
S.P. Richards. The bonus amount was determined by considering
Mr. Donahues bonus opportunity in his previous
position compared to the duties and responsibilities of his new
position, along with appropriate pay alignment with other
executives in the Company.
Mr. Samuelsons annual bonus opportunity for 2007 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.
Therefore, we believe it is appropriate to base his bonus
opportunities on performance goals relating to the results of
APG and UAP.
15
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 2007 were set as a percentage of each named executive
officers base salary, as follows: Mr. Gallagher,
172.81%; Mr. Nix, 116.67%; Mr. Samuelson, 95%; and
Mr. Susor, 101.23%. Mr. Donahues guarantee was
106.25% of base salary. These targets reflect the Companys
philosophy of providing higher-than-average bonus opportunities
relative to our Comparison Group.
The performance goals set for each executive officer, along with
the base salary increase granted, allow the calculation of
target bonus opportunities to occur. After the Companys
profit goals are determined, total cash compensation targets are
set to establish a correlation with the Companys profit
and performance goals. Base salaries are then determined with
increase amounts generally commensurate with increases granted
to employees throughout the Company, as well as marketplace pay
increase percentages. The executives resultant base salary
is then compared to their target total cash compensation. The
difference between base salary and target total cash
compensation is typically established as the executives
target bonus opportunity. This methodology directly reinforces
the Companys pay-for-performance philosophy.
Actual bonus amounts for 2007 were determined based on relative
achievement of the performance goals. Messrs. Gallagher,
Nix and Susor 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 110% of its pre-tax profits goal). No bonus is earned
if performance falls below 85% of the pre-tax profit goal. See
the table below.
|
|
|
|
|
Pre-Tax Profit as a% of Profit Goal
|
|
% of Target Bonus
|
|
Below 85%
|
|
|
0
|
%
|
85%
|
|
|
40
|
%
|
100%
|
|
|
100
|
%
|
110%
|
|
|
150
|
%
|
Above 110%
|
|
|
150
|
%
|
Straight-line interpolation is used between data points.
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 115%. 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. See the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
% of Target
|
|
|
|
|
|
|
|
% of Target
|
Pre-Tax Profit
|
|
Bonus x 50%
|
|
|
|
% of Target
|
|
Inventory
|
|
Bonus x 20%
|
as a % of
|
|
(Pre-Tax
|
|
Sales as a%
|
|
Bonus x 30%
|
|
Turnover as a
|
|
(Inventory
|
Quota
|
|
Profit)
|
|
of Quota
|
|
(Sales)
|
|
% of Quota
|
|
Turnover)
|
|
Below 85%
|
|
0%
|
|
Below 90.0%
|
|
0.0%
|
|
Below 85%
|
|
0%
|
85%
|
|
15%
|
|
90.0%
|
|
15.0%
|
|
85%
|
|
15%
|
100%
|
|
100%
|
|
100.0%
|
|
100.0%
|
|
100%
|
|
100%
|
120%
|
|
150%
|
|
105.0%
|
|
150.0%
|
|
115%
|
|
150%
|
Above 120%
|
|
150%
|
|
Above 105.0%
|
|
150.0%
|
|
Above 115%
|
|
150%
|
Straight-line interpolation is used between data points.
The bonus formulas under the Annual Incentive Plan are applied
strictly. The Committee does not exercise discretion to increase
bonus payments for the named executive officers (although it
could exercise discretion to reduce the actual bonus amounts).
For 2007, the Companys pre-tax profit was below the target
level set for executive officer incentive bonuses, resulting in
bonus payments equal to 92% of the target bonus opportunity for
Messrs. Gallagher, Nix and Susor. APG and UAP achieved
profit, sales and inventory turnover results below the target
levels set for Mr. Samuelsons
16
incentive bonus, resulting in a bonus payment equal to 50% of
Mr. Samuelsons target bonus opportunity.
Mr. Donauhues guarantee, as previously mentioned,
resulted in a bonus payment equal to 100% of the target
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 2007, and the Summary
Compensation Table, which shows the actual amount of bonuses
paid under the plan to our named executive officers for 2007.
2007
Long-Term Incentives
During 2007, 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.
|
|
|
|
|
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 on the date
of exercise 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.
|
|
|
|
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 2007 pre-tax profit performance. If
the Company achieves 100% or greater of its 2007 pre-tax profit
goal, 100% of the PRSUs will be earned. If the Company achieves
at least 95% of its 2007 pre-tax profit goal, 50% of the PRSUs
will be earned. If the Company achieves less than 95% of its
2007 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 2007,
shares of restricted stock will be earned in 2008 based on 2007
performance and will vest on December 31, 2011). Dividends
declared after the restricted shares are earned are accrued and
converted into additional shares of stock at the end of the
vesting period.
|
The Committee continues to target 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:
|
|
|
|
|
Provide pay-for-performance opportunities and reinforce a high
performance culture;
|
|
|
|
Align interests of our executives with our shareholders;
|
|
|
|
Establish goals and standards that motivate our executive
officers to enhance shareholder value; and
|
|
|
|
Be simple, straightforward, and transparent.
|
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 based
on competitive market data provided by Hewitt Associates.
Adjustments may be made to reflect job performance and address
any internal equity issues that may exist. 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 to our named executive officers have historically been
determined by considering the following factors:
|
|
|
|
|
Competitive market data, defined by the competitive award levels
summarized in Hewitts annual executive compensation study;
|
|
|
|
The officers responsibility level;
|
|
|
|
The officers specific function within the overall
organizational structure;
|
|
|
|
The Companys profitability, including the impact of
FAS 123R accounting on the cost of the programs; and
|
17
|
|
|
|
|
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).
|
The number of SARs and PRSUs granted to our named executive
officers in 2007 was the same as the number of awards granted in
2006, with the exception of Mr. Donahue, who received an
increased number of both SARs and PRSUs in recognition of his
promotion and Mr. Samuelson, who received 10% fewer SARs
based upon overall APG and UAP performance in 2006. 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.
Change in
Control Arrangements
The Company believes that severance protections, particularly in
the context of a change in control transaction, can play a
valuable role in attracting and retaining key executive
officers. Accordingly, the Company has entered into change in
control agreements with each of the named executive officers.
Information regarding these agreements and the benefits they
provide is included in the Post Termination Payments and
Benefits section beginning on page 27 of this Proxy
Statement.
The Compensation Committee evaluates the level of severance
benefits to each such officer on a
case-by-case
basis, and in general, we consider these severance protections
an important part of our executives compensation and
consistent with competitive practices.
We believe that the potential occurrence of a change in control
transaction would create uncertainty regarding the continued
employment of our executive officers. This uncertainty results
from the fact that many change in control transactions result in
significant organizational changes, particularly at the senior
executive level. In order to encourage our senior executive
officers to remain employed with the Company during an important
time when their prospects for continued employment are often
uncertain, we provide our executive officers with severance
benefits if the executives employment is terminated by the
Company without cause or by the executive for good
reason in connection with a change in control. Because we
believe that a termination by the executive for good reason may
be conceptually the same as a termination by the Company without
cause, and because we believe that in the context of a change in
control, potential acquirors would otherwise have an incentive
to constructively terminate the executives employment to
avoid paying severance, we believe it is appropriate to provide
severance benefits in these circumstances.
Factors
Considered in Decisions to Materially Increase or Decrease
Compensation
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, 2007 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 Guidelines
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
18
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 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 compensation.
19
ADDITIONAL
INFORMATION REGARDING EXECUTIVE COMPENSATION
2007
SUMMARY COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
Compensation
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
Salary
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Earnings
|
|
|
Compensation
|
|
|
|
|
Name and Principal Position
|
|
Year
|
|
|
($)
|
|
|
($)(1)
|
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)(3)
|
|
|
($)(4)
|
|
|
Total ($)
|
|
|
Thomas C. Gallagher
|
|
|
2007
|
|
|
|
835,000
|
|
|
|
334,489
|
|
|
|
796,194
|
|
|
|
1,332,340
|
|
|
|
1,568,728
|
|
|
|
163,189
|
|
|
|
5,029,940
|
|
Chairman, President, and
|
|
|
2006
|
|
|
|
800,000
|
|
|
|
233,605
|
|
|
|
594,904
|
|
|
|
1,308,661
|
|
|
|
783,980
|
|
|
|
116,198
|
|
|
|
3,837,348
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jerry W. Nix
|
|
|
2007
|
|
|
|
480,000
|
|
|
|
132,333
|
|
|
|
324,866
|
|
|
|
517,055
|
|
|
|
848,979
|
|
|
|
2,700
|
|
|
|
2,305,933
|
|
Vice Chairman and Chief
|
|
|
2006
|
|
|
|
460,000
|
|
|
|
85,422
|
|
|
|
230,599
|
|
|
|
509,868
|
|
|
|
396,436
|
|
|
|
2,640
|
|
|
|
1,684,965
|
|
Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry R. Samuelson
|
|
|
2007
|
|
|
|
430,000
|
|
|
|
133,202
|
|
|
|
299,913
|
|
|
|
203,476
|
|
|
|
461,306
|
|
|
|
2,700
|
|
|
|
1,530,597
|
|
President U.S.
|
|
|
2006
|
|
|
|
415,000
|
|
|
|
93,857
|
|
|
|
246,802
|
|
|
|
343,445
|
|
|
|
343,630
|
|
|
|
2,640
|
|
|
|
1,445,374
|
|
Automotive Parts Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert J. Susor
|
|
|
2007
|
|
|
|
405,000
|
|
|
|
105,879
|
|
|
|
246,800
|
|
|
|
378,558
|
|
|
|
599,191
|
|
|
|
2,700
|
|
|
|
1,738,128
|
|
Executive Vice President
|
|
|
2006
|
|
|
|
390,000
|
|
|
|
74,604
|
|
|
|
199,941
|
|
|
|
371,779
|
|
|
|
364,347
|
|
|
|
2,640
|
|
|
|
1,403,311
|
|
Paul D. Donahue(5)
|
|
|
2007
|
|
|
|
390,421
|
|
|
|
24,063
|
|
|
|
142,451
|
|
|
|
425,000
|
|
|
|
75,839
|
|
|
|
2,700
|
|
|
|
1,060,474
|
|
Executive Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Represents the proportionate amount of the total fair value of
stock and option awards recognized by the Company as an expense
in 2007 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 2007 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 21 of this Proxy Statement, as well as
awards granted in 2004, 2005 and 2006 for which we continued to
recognize expense in 2007. The assumptions used in determining
the grant date fair values of the option 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, 2007 (with respect to
option awards granted in 2007, 2006 and 2005) and in our
Annual Report on
Form 10-K
for the year ended December 31, 2006 (with respect to
option awards granted in 2004) each filed with the SEC. |
|
(2) |
|
Reflects the value of cash incentive bonuses earned under our
Annual Incentive Plan. |
|
(3) |
|
Reflects the increase during 2007 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 $2,700 for each named executive
officer. The amount shown for Mr. Gallagher also includes
his personal use of company aircraft ($112,273), club membership
dues ($8,526) and tax
gross-ups on
his personal aircraft use ($39,690). 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 company aircraft, hangar expense for the home
hangar, and general taxes and insurance are excluded from the
incremental cost calculation. When Company aircraft is being
used for mixed business and personal use, only the incremental
cost of the personal use is included, such as on-board catering
or other charges attributable to an extra passenger traveling
for personal reasons on an aircraft being primarily used for a
business trip. The Board of Directors mandates that the
Companys Chief Executive Officer use corporate aircraft
for personal travel to accommodate security, availability and
efficiency concerns. |
20
|
|
|
(5) |
|
On August 20, 2007, Mr. Donahue was named Executive
Vice President by the Board of Directors. Previously,
Mr. Donahue served as President and Chief Operating Officer
of the Companys office products subsidiary, S.P. Richards. |
2007
GRANTS OF PLAN-BASED AWARDS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
|
Exercise
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
or
|
|
|
Date Fair
|
|
|
|
|
|
|
Estimated Future Payouts
|
|
|
Estimated Future Payouts
|
|
|
Number of
|
|
|
Base
|
|
|
Value of
|
|
|
|
|
|
|
Under Non-Equity Incentive
|
|
|
Under Equity Incentive Plan
|
|
|
Securities
|
|
|
Price of
|
|
|
Stock and
|
|
|
|
|
|
|
Plan Awards(1)
|
|
|
Awards(2)
|
|
|
Underlying
|
|
|
Option
|
|
|
Option
|
|
|
|
Grant
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Options
|
|
|
Awards
|
|
|
Awards $
|
|
Name
|
|
Date
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)(3)
|
|
|
($/Sh)
|
|
|
(4)
|
|
|
Thomas C. Gallagher
|
|
|
|
|
|
|
577,200
|
|
|
|
1,443,000
|
|
|
|
2,164,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/27/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
491,600
|
|
|
|
|
3/27/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
78,000
|
|
|
|
49.16
|
|
|
|
818,633
|
|
Jerry W. Nix
|
|
|
|
|
|
|
224,000
|
|
|
|
560,000
|
|
|
|
840,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/27/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,325
|
|
|
|
4,650
|
|
|
|
4,650
|
|
|
|
|
|
|
|
|
|
|
|
228,594
|
|
|
|
|
3/27/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,000
|
|
|
|
49.16
|
|
|
|
377,831
|
|
Larry R. Samuelson
|
|
|
|
|
|
|
61,276
|
|
|
|
408,500
|
|
|
|
612,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/27/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,950
|
|
|
|
3,900
|
|
|
|
3,900
|
|
|
|
|
|
|
|
|
|
|
|
191,724
|
|
|
|
|
3/27/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,000
|
|
|
|
49.16
|
|
|
|
283,373
|
|
Robert J. Susor
|
|
|
|
|
|
|
164,000
|
|
|
|
410,000
|
|
|
|
615,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/27/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,550
|
|
|
|
3,100
|
|
|
|
3,100
|
|
|
|
|
|
|
|
|
|
|
|
152,396
|
|
|
|
|
3/27/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,000
|
|
|
|
49.16
|
|
|
|
251,887
|
|
Paul D. Donahue
|
|
|
|
|
|
|
425,000
|
|
|
|
425,000
|
|
|
|
637,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/27/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,550
|
|
|
|
3,100
|
|
|
|
3,100
|
|
|
|
|
|
|
|
|
|
|
|
152,396
|
|
|
|
|
3/27/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,000
|
|
|
|
49.16
|
|
|
|
251,887
|
|
|
|
|
(1) |
|
Represents threshold, target and maximum payout levels under the
Annual Incentive Plan for 2007 performance. The actual amount of
incentive bonus earned by each named executive officer in 2006
and 2007 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 11. |
|
(2) |
|
Represents threshold, target and maximum number of
performance-based restricted stock units (PRSUs) to
be earned on December 31, 2007 based on the Companys
achievement of pre-tax profit goals. If the Company achieves
100% or greater of its 2007 pre-tax profit goal, 100% of the
PRSUs will be earned. If the Company achieves at least 95% of
its 2007 pre-tax profit goal, 50% of the PRSUs will be earned.
If the Company achieves less than 95% of its 2007 pre-tax profit
goal, then no PRSUs will be earned. Each PRSU that is earned
represents a contingent right to receive one share of Company
Common Stock in the future. PRSUs earned for the 2007 fiscal
year will vest and be settled in shares of Common Stock on
December 31, 2011 (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 11. |
|
(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 granted on
March 27, 2007 will expire on March 27, 2017 or
earlier upon termination of employment. Additional information
regarding the SARs and the |
21
|
|
|
|
|
Companys long-term incentive program is included in the
Compensation Discussion and Analysis beginning on page 11. |
|
|
|
(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, 2007 filed with the SEC. |
2007
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
|
|
|
|
|
|
|
|
|
|
|
|
Units of
|
|
|
|
|
|
Stock That
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
|
|
|
Option
|
|
|
Option
|
|
|
Stock That
|
|
|
|
|
|
Have Not
|
|
|
|
Options (#)
|
|
|
Options (#)
|
|
|
|
|
|
Exercise
|
|
|
Expiration
|
|
|
Have Not
|
|
|
|
|
|
Vested ($)
|
Name
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
|
|
|
Price ($)
|
|
|
Date
|
|
|
Vested (#)
|
|
|
|
|
|
(12)
|
Thomas C. Gallagher
|
|
|
|
|
|
|
|
|
78,000
|
|
|
|
(1)
|
|
|
|
49.16
|
|
|
|
|
3/27/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,082
|
|
|
|
(7)
|
|
|
|
374,197
|
|
|
|
|
|
|
26,000
|
|
|
|
|
52,000
|
|
|
|
(2)
|
|
|
|
44.20
|
|
|
|
|
3/27/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
(8)
|
|
|
|
463,000
|
|
|
|
|
|
|
52,000
|
|
|
|
|
26,000
|
|
|
|
(3)
|
|
|
|
43.93
|
|
|
|
|
3/14/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
(9)
|
|
|
|
463,000
|
|
|
|
|
|
|
69,000
|
|
|
|
|
|
|
|
|
|
|
|
|
36.58
|
|
|
|
|
4/19/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,100
|
|
|
|
(10)
|
|
|
|
421,330
|
|
|
|
|
|
|
150,000
|
|
|
|
|
|
|
|
|
|
|
|
|
32.04
|
|
|
|
|
8/19/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
|
|
|
|
|
|
|
|
|
21.375
|
|
|
|
|
6/20/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
106,475
|
|
|
|
|
|
|
|
|
|
|
|
|
32.4375
|
|
|
|
|
4/19/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,082
|
|
|
|
|
6,164
|
|
|
|
(4)
|
|
|
|
32.4375
|
|
|
|
|
4/19/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
(11)
|
|
|
|
347,250
|
|
|
Jerry W. Nix
|
|
|
|
|
|
|
|
|
36,000
|
|
|
|
(1)
|
|
|
|
49.16
|
|
|
|
|
3/27/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,758
|
|
|
|
(7)
|
|
|
|
173,995
|
|
|
|
|
|
|
12,000
|
|
|
|
|
24,000
|
|
|
|
(2)
|
|
|
|
44.20
|
|
|
|
|
3/27/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,650
|
|
|
|
(8)
|
|
|
|
215,295
|
|
|
|
|
|
|
16,000
|
|
|
|
|
8,000
|
|
|
|
(3)
|
|
|
|
43.93
|
|
|
|
|
3/14/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,100
|
|
|
|
(9)
|
|
|
|
143,530
|
|
|
|
|
|
|
24,000
|
|
|
|
|
|
|
|
|
|
|
|
|
36.58
|
|
|
|
|
4/19/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,100
|
|
|
|
(10)
|
|
|
|
143,530
|
|
|
|
|
|
|
42,750
|
|
|
|
|
|
|
|
|
|
|
|
|
32.04
|
|
|
|
|
8/19/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,862
|
|
|
|
(5)
|
|
|
|
21.4063
|
|
|
|
|
6/20/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,435
|
|
|
|
(6)
|
|
|
|
32.0938
|
|
|
|
|
4/19/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry R. Samuelson
|
|
|
|
|
|
|
|
|
27,000
|
|
|
|
(1)
|
|
|
|
49.16
|
|
|
|
|
3/27/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
|
20,000
|
|
|
|
(2)
|
|
|
|
44.20
|
|
|
|
|
3/27/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,198
|
|
|
|
(8)
|
|
|
|
101,767
|
|
|
|
|
|
|
20,000
|
|
|
|
|
10,000
|
|
|
|
(3)
|
|
|
|
43.93
|
|
|
|
|
3/14/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,900
|
|
|
|
(9)
|
|
|
|
180,570
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,900
|
|
|
|
(10)
|
|
|
|
180,570
|
|
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
Shares or
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
|
|
|
Units of
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
|
|
Units of
|
|
|
|
|
|
Stock That
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
|
|
|
Option
|
|
|
Option
|
|
|
Stock That
|
|
|
|
|
|
Have Not
|
|
|
|
Options (#)
|
|
|
Options (#)
|
|
|
|
|
|
Exercise
|
|
|
Expiration
|
|
|
Have Not
|
|
|
|
|
|
Vested ($)
|
Name
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
|
|
|
Price ($)
|
|
|
Date
|
|
|
Vested (#)
|
|
|
|
|
|
(12)
|
|
|
|
|
|
|
|
|
|
13,172
|
|
|
|
(5)
|
|
|
|
21.375
|
|
|
|
|
6/20/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
574
|
|
|
|
(6)
|
|
|
|
32.0938
|
|
|
|
|
4/19/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert J. Susor
|
|
|
|
|
|
|
|
|
24,000
|
|
|
|
(1)
|
|
|
|
49.16
|
|
|
|
|
3/27/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,505
|
|
|
|
(7)
|
|
|
|
115,982
|
|
|
|
|
|
|
8,000
|
|
|
|
|
16,000
|
|
|
|
(2)
|
|
|
|
44.20
|
|
|
|
|
3/27/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,100
|
|
|
|
(8)
|
|
|
|
143,530
|
|
|
|
|
|
|
16,000
|
|
|
|
|
8,000
|
|
|
|
(3)
|
|
|
|
43.93
|
|
|
|
|
3/14/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,100
|
|
|
|
(9)
|
|
|
|
143,530
|
|
|
|
|
|
|
24,000
|
|
|
|
|
|
|
|
|
|
|
|
|
36.58
|
|
|
|
|
4/19/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,100
|
|
|
|
(10)
|
|
|
|
143,530
|
|
|
|
|
|
|
35,000
|
|
|
|
|
|
|
|
|
|
|
|
|
32.04
|
|
|
|
|
8/19/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,862
|
|
|
|
(5)
|
|
|
|
21.4063
|
|
|
|
|
6/20/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,565
|
|
|
|
|
1,435
|
|
|
|
(6)
|
|
|
|
32.0938
|
|
|
|
|
4/19/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul D. Donahue
|
|
|
|
|
|
|
|
|
24,000
|
|
|
|
(1)
|
|
|
|
49.16
|
|
|
|
|
3/27/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,505
|
|
|
|
(7)
|
|
|
|
115,982
|
|
|
|
|
|
|
6,000
|
|
|
|
|
12,000
|
|
|
|
(2)
|
|
|
|
44.20
|
|
|
|
|
3/27/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,400
|
|
|
|
(8)
|
|
|
|
111,120
|
|
|
|
|
|
|
12,000
|
|
|
|
|
6,000
|
|
|
|
(3)
|
|
|
|
43.93
|
|
|
|
|
3/27/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,113
|
|
|
|
(9)
|
|
|
|
97,832
|
|
|
|
|
|
|
18,000
|
|
|
|
|
|
|
|
|
|
|
|
|
36.58
|
|
|
|
|
4/19/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,400
|
|
|
|
(10)
|
|
|
|
111,120
|
|
|
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
|
|
|
32.05
|
|
|
|
|
10/1/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The SARs were granted on March 27, 2007 and vest in
one-third increments on each of the first three anniversaries of
the grant date. |
|
(2) |
|
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. |
|
(3) |
|
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. |
|
(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. |
|
(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, 2007 and vest on
December 31, 2011, 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. |
23
|
|
|
(8) |
|
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. |
|
(9) |
|
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. |
|
(10) |
|
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. |
|
(11) |
|
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. |
|
(12) |
|
Reflects the value as calculated based on the closing price of
the Companys Common Stock on December 31, 2007 of
$46.30 per share. |
2007
OPTION EXERCISES AND STOCK VESTED
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Number of Shares
|
|
|
|
|
Acquired on Exercise
|
|
Value Realized on
|
Name
|
|
(#)
|
|
Exercise ($)(1)
|
|
Thomas C. Gallagher
|
|
|
70,791
|
|
|
|
1,029,832
|
|
|
|
|
60,000
|
|
|
|
1,704,300
|
|
|
|
|
|
|
|
|
|
|
Jerry W. Nix
|
|
|
20,000
|
|
|
|
274,050
|
|
|
|
|
13,565
|
|
|
|
239,371
|
|
|
|
|
|
|
|
|
|
|
Larry R. Samuelson
|
|
|
15,426
|
|
|
|
277,841
|
|
|
|
|
40,000
|
|
|
|
722,600
|
|
|
|
|
30,000
|
|
|
|
405,750
|
|
|
|
|
|
|
|
|
|
|
Robert J. Susor
|
|
|
20,000
|
|
|
|
274,050
|
|
|
|
|
|
|
|
|
|
|
Paul D. Donahue
|
|
|
|
|
|
|
|
|
|
|
|
(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. |
24
2007
PENSION BENEFITS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Present
|
|
|
|
|
|
|
Years
|
|
Value of
|
|
|
|
|
|
|
Credited
|
|
Accumulated
|
|
Payments During
|
Name
|
|
Plan Name
|
|
Service (#)
|
|
Benefit ($)
|
|
Last Fiscal Year ($)
|
|
Thomas C. Gallagher
|
|
Pension Plan
|
|
|
37.50
|
|
|
|
698,220
|
|
|
|
|
|
|
|
Supplemental
Retirement
Plan
|
|
|
37.50
|
|
|
|
5,628,191
|
|
|
|
|
|
|
|
Original
Deferred
Compensation
Plan
|
|
|
29.00
|
|
|
|
345,917
|
|
|
|
|
|
Jerry W. Nix
|
|
Pension Plan
|
|
|
29.33
|
|
|
|
702,750
|
|
|
|
|
|
|
|
Supplemental
Retirement
Plan
|
|
|
29.33
|
|
|
|
2,201,779
|
|
|
|
|
|
Larry R. Samuelson
|
|
Pension Plan
|
|
|
33.25
|
|
|
|
698,989
|
|
|
|
|
|
|
|
Supplemental
Retirement
Plan
|
|
|
33.25
|
|
|
|
2,006,972
|
|
|
|
|
|
Robert J. Susor
|
|
Pension Plan
|
|
|
39.67
|
|
|
|
809,838
|
|
|
|
|
|
|
|
Supplemental
Retirement
Plan
|
|
|
39.67
|
|
|
|
1,908,629
|
|
|
|
|
|
Paul D. Donahue
|
|
Pension Plan
|
|
|
4.83
|
|
|
|
83,898
|
|
|
|
|
|
|
|
Supplemental
Retirement
Plan
|
|
|
4.83
|
|
|
|
190,206
|
|
|
|
|
|
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
(generally
W-2
compensation plus pre-tax salary deferrals), but do not include
amounts of deferred compensation. The service amounts shown in
the table above for the Pension Plan and the SRP 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.
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 (which is considered to be age 65 with at least five
years of participation service), 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
25
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, 2007, 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. For participants with
less than 15 years of credited service, 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. A 50% 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. A participant who is eligible for early retirement
under the Pension Plan and terminates employment due to a change
in control will receive and immediate lump sum payment of any
benefits due from the SRP. 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 for 2007 is 6.50% for the Pension Plan
and 6.25% for the SRP. 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 $3,333 per month.
These benefits are payable from Company assets. The service
amount shown in the table represents the period during which
Mr. Gallagher has been making salary deferrals for benefits
provided by the ODCP. Amounts reported as the actuarial present
value of accumulated benefits under the ODCP are computed based
on insurance company estimates of benefit amounts payable at
age 65 and the interest and mortality assumptions the
Company uses for purposes of financial statement disclosures of
the SRP referred to above.
26
2007
NONQUALIFIED DEFERRED COMPENSATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate
|
|
|
|
|
Executive
|
|
Company
|
|
Aggregate
|
|
Withdrawals/
|
|
Aggregate
|
|
|
Contributions in
|
|
Contributions
|
|
Earnings in
|
|
Distributions
|
|
Balance at Last
|
Name
|
|
Last FY ($)(1)
|
|
in Last FY ($)
|
|
Last FY ($)
|
|
($)
|
|
FYE ($)(2)
|
|
Thomas C. Gallagher
|
|
|
100,000
|
|
|
|
|
|
|
|
86,000
|
|
|
|
|
|
|
|
1,252,410
|
|
Jerry W. Nix
|
|
|
254,934
|
|
|
|
|
|
|
|
29,676
|
|
|
|
|
|
|
|
552,292
|
|
Larry R. Samuelson
|
|
|
-0-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert J. Susor
|
|
|
74,356
|
|
|
|
|
|
|
|
45,934
|
|
|
|
|
|
|
|
615,596
|
|
Paul D. Donahue
|
|
|
84,723
|
|
|
|
|
|
|
|
1,695
|
|
|
|
|
|
|
|
86,418
|
|
|
|
|
(1) |
|
Reflects deferrals under the Companys Tax Deferred Savings
Plan of incentive bonuses earned for 2006 and paid to the named
executive officers in 2007. These amounts are not reported as
2007 compensation in the Summary Compensation Table. |
|
(2) |
|
Includes the following amounts of contributions to the Tax
Deferred Savings Plan by the named executive officers that were
previously reported as compensation to the named executive
officers in the Companys Summary Compensation Table for
previous years: Mr. Gallagher, $100,000; Mr. Nix,
$254,934; Mr. Samuelson, $0; Mr. Susor, $74,356;
Mr. Donahue, $84,723. |
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. Payment begins on the first day of the seventh month
following the executives termination of service. 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. 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.
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. Donahue and
Samuelson) 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
27
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, 2007 under the circumstances
shown. The tables exclude (i) amounts accrued through
December 31, 2007 that would be paid in the normal course
of continued employment, such as accrued but unpaid salary and
earned annual bonus for 2007 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.
Thomas C.
Gallagher
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
by Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or Executive
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Than
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement,
|
|
|
Following a
|
|
|
|
|
|
|
|
|
|
|
|
|
Death or
|
|
|
Change in
|
|
Benefit
|
|
Retirement ($)
|
|
|
Death ($)
|
|
|
Disability ($)
|
|
|
Disability ($)
|
|
|
Control ($)
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,020,446
|
(1)
|
Acceleration of Equity Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options and SARs(2)
|
|
|
|
|
|
|
256,268
|
|
|
|
256,268
|
|
|
|
|
|
|
|
256,268
|
|
Restricted Stock and PRSUs(3)
|
|
|
|
|
|
|
1,721,527
|
|
|
|
1,721,527
|
|
|
|
|
|
|
|
1,721,527
|
|
Retirement Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Plan(4)
|
|
|
63,217
|
|
|
|
31,608
|
|
|
|
91,267
|
|
|
|
63,217
|
|
|
|
63,217
|
(5)
|
Supplemental Retirement Plan(6)
|
|
|
441,480
|
|
|
|
441,480
|
|
|
|
441,480
|
|
|
|
441,480
|
|
|
|
6,903,109
|
(7)
|
Original Def Comp Plan(8)
|
|
|
28,323
|
|
|
|
40,000
|
|
|
|
40,000
|
|
|
|
28,323
|
|
|
|
607,330
|
(9)
|
Tax-Deferred Savings Plan(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health & Welfare Coverage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,709
|
(11)
|
Estimated 280G Tax
Gross-Ups
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,115,290
|
(12)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
533,020
|
|
|
|
2,490,883
|
|
|
|
2,550,542
|
|
|
|
533,020
|
|
|
|
18,701,896
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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, 2007 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, 2007 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
reflect a single payment of an annual annuity stream, assuming a
50% joint and survivor annuity option payable at
December 31, 2007 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. |
28
|
|
|
(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 $879,177. |
|
(6) |
|
Supplemental Retirement Plan benefits shown for all termination
scenarios (except involuntary termination following a change in
control) reflect a single payment of an annual annuity stream,
assuming 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,
2007 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 $85,688. |
|
(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 $98,664. |
|
(8) |
|
Original Deferred Compensation Plan benefits are payable as a
10-year
certain and life annuity. |
|
(9) |
|
Amount reflects a lump sum distribution of benefits as required
under the plan in the event of termination following a change in
control. |
|
(10) |
|
Benefits payable under the Tax Deferred Savings Plan are
described and quantified in the Nonqualified Deferred
Compensation table on page 27 of this proxy statement. |
|
(11) |
|
Reflects the cost of 24 months of continued group health
coverage pursuant to the change in control agreement described
above. In order to comply with Internal Revenue Code
section 409A, during the last 6 months of this
continued coverage period, the Company will satisfy its
obligation to provide group health coverage by making
6 monthly installment payments to the executive in an
amount equal to the monthly cost of providing such coverage,
based upon the applicable premium under COBRA. |
|
(12) |
|
The calculation of the estimated 280G
gross-up
payment is based upon a 280G excise tax rate of 20%, a 35%
federal income tax rate, a 1.45% Medicare tax rate and a 6%
state income tax rate. |
Jerry W.
Nix
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
by Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or Executive
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Than
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement,
|
|
|
Following a
|
|
|
|
|
|
|
|
|
|
|
|
|
Death or
|
|
|
Change in
|
|
Benefit
|
|
Retirement ($)
|
|
|
Death ($)
|
|
|
Disability ($)
|
|
|
Disability ($)
|
|
|
Control ($)
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,659,072
|
(1)
|
Acceleration of Equity Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options and SARs(2)
|
|
|
|
|
|
|
69,360
|
|
|
|
69,360
|
|
|
|
|
|
|
|
385,035
|
|
Restricted Stock and PRSUs(3)
|
|
|
|
|
|
|
676,350
|
|
|
|
676,350
|
|
|
|
|
|
|
|
676,350
|
|
Retirement Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Plan(4)
|
|
|
64,905
|
|
|
|
32,453
|
|
|
|
80,237
|
|
|
|
64,905
|
|
|
|
64,905
|
(5)
|
Supplemental Retirement Plan(6)
|
|
|
190,091
|
|
|
|
95,046
|
|
|
|
190,091
|
|
|
|
190,091
|
|
|
|
2,674,496
|
(7)
|
Tax-Deferred Savings Plan(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health & Welfare
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,022
|
(9)
|
Estimated 280G Tax
Gross-Ups
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,440,660
|
(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
254,996
|
|
|
|
873,209
|
|
|
|
1,016,038
|
|
|
|
254,996
|
|
|
|
7,913,540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Severance payment payable in lump sum pursuant to the change in
control agreement described above. |
29
|
|
|
(2) |
|
Reflects the excess of the fair market value of the underlying
shares as of December 31, 2007 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, 2007 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
reflect a single payment of an annual annuity stream, assuming a
50% joint and survivor annuity option payable at
December 31, 2007 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 $870,174. |
|
(6) |
|
Supplemental Retirement Plan benefits shown for all termination
scenarios (except involuntary termination following a change in
control) reflect a single payment of an annual annuity stream,
assuming payment under a 100% 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 Supplemental Retirement Plan are assumed to be equal to
early retirement benefits and are payable at December 31,
2007 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 $33,609. |
|
(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 $38,226. |
|
(8) |
|
Benefits payable under the Tax Deferred Savings Plan are
described and quantified in the Nonqualified Deferred
Compensation table on page 27 of this proxy statement. |
|
(9) |
|
Reflects the cost of 24 months of continued group health
coverage pursuant to the change in control agreement described
above. In order to comply with Internal Revenue Code
section 409A, during the last 6 months of this
continued coverage period, the Company will satisfy its
obligation to provide group health coverage by making
6 monthly installment payments to the executive in an
amount equal to the monthly cost of providing such coverage,
based upon the applicable premium under COBRA. |
|
(10) |
|
The calculation of the estimated 280G
gross-up
payment is based upon a 280G excise tax rate of 20%, a 35%
federal income tax rate, a 1.45% Medicare tax rate and a 6%
state income tax rate. |
30
Larry R.
Samuelson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
by Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or Executive
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Than
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement,
|
|
|
Following a
|
|
|
|
|
|
|
|
|
|
|
|
|
Death or
|
|
|
Change in
|
|
Benefit
|
|
Retirement ($)
|
|
|
Death ($)
|
|
|
Disability ($)
|
|
|
Disability ($)
|
|
|
Control ($)
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,626,033
|
(1)
|
Acceleration of Equity Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options and SARs(2)
|
|
|
|
|
|
|
65,700
|
|
|
|
65,700
|
|
|
|
|
|
|
|
402,166
|
|
Restricted Stock and PRSUs(3)
|
|
|
|
|
|
|
462,907
|
|
|
|
462,907
|
|
|
|
|
|
|
|
462,907
|
|
Retirement Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Plan(4)
|
|
|
64,109
|
|
|
|
32,055
|
|
|
|
83,590
|
|
|
|
64,109
|
|
|
|
64,109
|
(5)
|
Supplemental Retirement Plan(6)
|
|
|
164,738
|
|
|
|
123,553
|
|
|
|
164,738
|
|
|
|
164,738
|
|
|
|
2,463,075
|
(7)
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health & Welfare
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,709
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
228,847
|
|
|
|
684,315
|
|
|
|
776,935
|
|
|
|
228,847
|
|
|
|
5,032,999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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, 2007 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, 2007 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
reflect a single payment of an annual annuity stream, assuming a
50% joint and survivor annuity option payable at
December 31, 2007 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. 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 $871,412. |
|
(6) |
|
Supplemental Retirement Plan benefits shown for all termination
scenarios (except involuntary termination following a change in
control) reflect a single payment of an annual annuity stream,
assuming payment under a 100% 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,
2007 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 $30,732. |
|
(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 $35,204. |
|
(8) |
|
Reflects the cost of 24 months of continued group health
coverage pursuant to the change in control agreement described
above. In order to comply with Internal Revenue Code
section 409A, during the last 6 months of this
continued coverage period, the Company will satisfy its
obligation to provide group health coverage by making
6 monthly installment payments to the executive in an
amount equal to the monthly cost of providing such coverage,
based upon the applicable premium under COBRA. |
31
Robert J.
Susor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
by Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or Executive
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Than
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement,
|
|
|
Following a
|
|
|
|
|
|
|
|
|
|
|
|
|
Death or
|
|
|
Change in
|
|
Benefit
|
|
Retirement ($)
|
|
|
Death ($)
|
|
|
Disability ($)
|
|
|
Disability ($)
|
|
|
Control ($)
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,204,537
|
(1)
|
Acceleration of Equity Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options and SARs(2)
|
|
|
|
|
|
|
52,560
|
|
|
|
52,560
|
|
|
|
|
|
|
|
368,235
|
|
Restricted Stock and PRSUs(3)
|
|
|
|
|
|
|
546,572
|
|
|
|
546,572
|
|
|
|
|
|
|
|
546,572
|
|
Retirement Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Plan(4)
|
|
|
74,460
|
|
|
|
37,230
|
|
|
|
88,937
|
|
|
|
74,460
|
|
|
|
74,460
|
(5)
|
Supplemental Retirement Plan(6)
|
|
|
163,374
|
|
|
|
81,687
|
|
|
|
163,374
|
|
|
|
163,374
|
|
|
|
2,310,774
|
(7)
|
Tax-Deferred Savings Plan(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health & Welfare
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,709
|
(9)
|
Estimated 280G Tax
Gross-Ups
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,138,786
|
(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
237,834
|
|
|
|
718,049
|
|
|
|
851,493
|
|
|
|
237,834
|
|
|
|
6,658,073
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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, 2007 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, 2007 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
reflect a single payment of an annual annuity stream, assuming a
50% joint and survivor annuity option payable at
December 31, 2007 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. 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 $999,293. |
|
(6) |
|
Supplemental Retirement Plan benefits shown for all termination
scenarios (except involuntary termination following a change in
control) reflect a single payment of an annual annuity stream,
assuming payment under a 100% 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,
2007 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 $29,007. |
|
(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 $33,027. |
|
(8) |
|
Benefits payable under the Tax Deferred Savings Plan are
described and quantified in the Nonqualified Deferred
Compensation table on page 27 of this proxy statement. |
32
|
|
|
(9) |
|
Reflects the cost of 24 months of continued group health
coverage pursuant to the change in control agreement described
above. In order to comply with Internal Revenue Code
section 409A, during the last 6 months of this
continued coverage period, the Company will satisfy its
obligation to provide group health coverage by making
6 monthly installment payments to the executive in an
amount equal to the monthly cost of providing such coverage,
based upon the applicable premium under COBRA. |
|
(10) |
|
The calculation of the estimated 280G
gross-up
payment is based upon a 280G excise tax rate of 20%, a 35%
federal income tax rate, a 1.45% Medicare tax rate and a 6%
state income tax rate. |
Paul D.
Donahue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
by Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or Executive
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Than
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement,
|
|
|
Following a
|
|
|
|
|
|
|
|
|
|
|
|
|
Death or
|
|
|
Change in
|
|
Benefit
|
|
Retirement ($)
|
|
|
Death ($)
|
|
|
Disability ($)
|
|
|
Disability ($)
|
|
|
Control ($)
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,395,908
|
(1)
|
Acceleration of Equity Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options and SARs(2)
|
|
|
|
|
|
|
39,420
|
|
|
|
39,420
|
|
|
|
|
|
|
|
39,420
|
|
Restricted Stock and PRSUs(3)
|
|
|
|
|
|
|
436,053
|
|
|
|
436,053
|
|
|
|
|
|
|
|
436,053
|
|
Retirement Benefits(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Plan
|
|
|
5,993
|
|
|
|
2,996
|
|
|
|
20,399
|
|
|
|
5,993
|
|
|
|
5,993
|
|
Supplemental Retirement Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax-Deferred Savings Plan(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health & Welfare
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,352
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
5,993
|
|
|
|
478,469
|
|
|
|
495,872
|
|
|
|
5,993
|
|
|
|
1,897,726
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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, 2007 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, 2007 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
reflect a single payment of an annual annuity stream, assuming a
50% joint and survivor annuity option payable at
December 31, 2007 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. All
benefits reflect the application of Mr. Donahues
partially vested percentage. |
|
(5) |
|
Benefits payable under the Tax Deferred Savings Plan are
described and quantified in the Nonqualified Deferred
Compensation table on page 27 of this proxy statement. |
|
(6) |
|
Reflects the cost of 24 months of continued group health
coverage pursuant to the change in control agreement described
above. In order to comply with Internal Revenue Code
section 409A, during the last 6 months of this
continued coverage period, the Company will satisfy its
obligation to provide group health coverage by making
6 monthly installment payments to the executive in an
amount equal to the monthly cost of providing such coverage,
based upon the applicable premium under COBRA. |
33
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, 2007 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 2007: Richard W.
Courts, II, John D. Johns, J. Hicks Lanier and Gary W.
Rollins. None of such persons was an officer or employee of the
Company during 2007 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.
COMPENSATION
OF DIRECTORS
2007 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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Year
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Cash ($)
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($)(1)
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($)
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Total ($)
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Mary B. Bullock
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2007
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46,250
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73,740
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119,990
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Richard W. Courts, II
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2007
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51,250
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73,740
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124,990
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Jean Douville
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2007
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129,051
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(2)
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129,051
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George C. Guynn
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2007
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43,750
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73,740
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117,490
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John D. Johns
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2007
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46,250
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73,740
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119,990
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Michael M. E. Johns, M.D.
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2007
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45,000
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73,740
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118,740
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J. Hicks Lanier
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2007
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56,250
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73,740
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129,990
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Wendy B. Needham
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2007
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46,250
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73,740
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119,990
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Larry L. Prince
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2007
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45,000
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73,740
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43,047
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(3)
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161,787
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Gary W. Rollins
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2007
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46,250
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73,740
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119,990
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Lawrence G. Steiner
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2007
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51,250
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73,740
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124,990
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(1) |
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Represents the total fair value of stock awards recognized by
the Company as an expense in 2007 for financial accounting
purposes. The fair values of these awards and the amounts
expensed in 2007 were determined in |
34
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accordance with FAS 123R. The awards for which expense is
shown in this table include an award of 1,500 RSUs granted to
each non-employee director on March 27, 2007, the grant
date fair value of which was $73,740 (based on the closing price
of the Companys common stock on the grant date). The
aggregate number of RSUs and stock options held by each director
as of December 31, 2007 was as follows: |
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Director
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Number of RSUs
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Number of Options
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Mary B. Bullock
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6,000
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Richard W. Courts, II
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6,000
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3,000
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Jean Douville
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20,000
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George C. Guynn
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1,500
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John D. Johns
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6,000
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Michael M. E. Johns, M.D.
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6,000
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3,000
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J. Hicks Lanier
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6,000
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3,000
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Wendy B. Needham
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6,000
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Larry L. Prince
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3,000
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Gary W. Rollins
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3,000
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Lawrence G. Steiner
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6,000
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3,000
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(2) |
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Mr. Douville is an employee of our wholly-owned subsidiary,
UAP Inc., a distributor of automotive replacement parts
headquartered in Montreal, Quebec, Canada. For 2007,
Mr. Douville received a base salary equal to $70,148, plus
$58,903 in other benefits, including a car allowance, flexible
spending account and other miscellaneous perquisites. |
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(3) |
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Represents the incremental cost to the Company of the following
benefits and perquisites that were approved as post-retirement
benefits for Mr. Prince in connection with his retirement
as an executive officer of the Company on March 31, 2005:
use of office space and executive assistant for non company
business ($33,022), medical and dental insurance coverage
($7,821), club membership dues ($2,204). |
Compensation payable to the Companys non-employee
directors is evaluated and determined by the Companys full
Board of Directors. Non-employee directors of the Company are
paid $8,750 per quarter in compensation for service as director,
plus $1,250 per board and committee meeting attended, except
that the Chairmen of the Audit Committee and the Compensation,
Nominating and Governance Committee are paid $10,000 per quarter
and $1,250 per board and committee meeting attended.
Non-employee directors may elect to defer the receipt of meeting
and/or
director fees in accordance with the terms of the Companys
Directors Deferred Compensation Plan. In addition,
non-employee directors may from time to time be granted
restricted stock units pursuant to the provisions of the Genuine
Parts Company 1999 Long Term Incentive Plan and the Genuine
Parts Company 2006 Long Term Incentive Plan. On March 27,
2007, each non-employee director serving on such date was
granted 1,500 RSUs. Each RSU represents a fully vested right to
receive one share of our common stock on March 27, 2012, or
earlier upon a termination of service as a director by reason of
death, disability or retirement, or upon a change in control of
the Company.
TRANSACTIONS
WITH RELATED PERSONS
The Company recognizes that transactions between the Company and
any of its directors or executives can present potential or
actual conflicts of interest and create the appearance that
Company decisions are based on considerations other than the
best interests of the Company and its shareholders. Therefore,
as a general matter and in accordance with the (1) the Code
of Conduct and Ethics for Employees, Officers, Contract
and/or
Temporary Workers and Directors of Genuine Parts Company and
(2) the Companys Code of Conduct and Ethics for
Senior Financial Officers, it is the Companys preference
to avoid such transactions. Nevertheless, the Company recognizes
that there are situations where such transactions may be in, or
may not be inconsistent with, the best interests of the Company.
Therefore, the Company has adopted a formal policy which
requires the Companys Compensation, Nominating and
Governance Committee to review and, if appropriate, to approve
or ratify any such transactions. Pursuant to the policy, the
Committee will review any transaction in which the Company is or
will be a
35
participant and the amount involved exceeds $120,000, and in
which any of the Companys directors or executives had, has
or will have a direct or indirect material interest. After its
review the Committee will only approve or ratify those
transactions that are in, or are not inconsistent with, the best
interests of the Company and its shareholders, as the Committee
determines in good faith.
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Audit Committee of the Board of Directors has selected
Ernst & Young LLP as the Companys independent
auditors for the current fiscal year ending December 31,
2008. The Audit Committee has also pre-approved the engagement
of Ernst & Young LLP to provide federal, state and
international tax return preparation, advisory and related
services to the Company during 2008. Although ratification by
the shareholders of the selection of Ernst & Young LLP
as the Companys independent auditors is not required by
law or by the Bylaws of the Company, the Audit Committee
believes it is appropriate to seek shareholder ratification of
this appointment in light of the critical role played by the
independent auditors in auditing the Companys financial
statements and the effectiveness of internal control over
financial reporting. If this selection is not ratified at the
Annual Meeting, the Audit Committee intends to reconsider its
selection of independent auditors for the fiscal year ending
December 31, 2008.
Ernst & Young LLP served as the Companys
independent auditors for the fiscal year ended December 31,
2007. Representatives of that firm are expected to be present at
the Annual Meeting and will have an opportunity to make a
statement if they desire to do so and to respond to appropriate
questions.
Audit and
Non-Audit Fees
Audit Fees. The aggregate fees billed by
Ernst & Young LLP for professional services rendered
for the audit of the Companys financial statements for
2006 and 2007, the auditors report on the effectiveness of
internal control over financial reporting as of
December 31, 2006 and 2007 and for the reviews of the
Companys financial statements included in the
Companys quarterly reports on
Form 10-Q
filed with the SEC during 2006 and 2007 were approximately
$4.6 million and $4.3 million, respectively.
Audit Related Fees. The aggregate fees billed
by Ernst & Young LLP for 2006 and 2007 for assurance
and related services that are reasonably related to the
performance of the audit or review of the Companys
financial statements and are not reported above under the
caption Audit Fees were approximately $72,000 and
$140,000, respectively. These services primarily related to the
Companys benefit plans and audit consultations.
Tax Fees. The aggregate fees billed by
Ernst & Young LLP for 2006 and 2007 for professional
services rendered for tax compliance and tax advice for the
Company were $1.7 million and $2.4 million,
respectively.
All Other Fees. No fees were billed by
Ernst & Young LLP for professional services rendered
during 2006 and 2007 other than as stated above under the
captions Audit Fees, Audit Related Fees
and Tax Fees.
Audit
Committee Pre-Approval Policy
Under the Audit Committees Charter and Pre-Approval
Policy, the Audit Committee is required to approve in advance
the terms of all audit services as well as all permissible audit
related and non-audit services to be provided by the independent
auditors. Unless a service to be provided by the independent
auditors has received approval under the Pre-Approval Policy, it
will require specific pre-approval by the Audit Committee. The
Pre-Approval Policy is detailed as to the particular services to
be provided, and the Audit Committee is to be informed about
each service provided. Non-audit services may be approved by the
Chairman of the Committee and reported to the full Audit
Committee at its next meeting but may not be approved by the
Companys management. The term of any pre-approval is
twelve months unless the Audit Committee specifically provides
for a different period.
The Audit Committee will approve the annual audit engagement
terms and fees prior to the commencement of any audit work other
than that necessary for the independent auditor to prepare the
proposed audit approach, scope and fee estimates. The Audit
Committee also will approve changes in terms, conditions and
fees resulting from
36
changes in audit scope, Company structure or other items, if
any. In the event audit related or non-audit services that are
pre-approved under the Pre-Approval Policy have an estimated
cost in excess of certain dollar thresholds, these services
require specific pre-approval by the Audit Committee or by the
Chairman of the Audit Committee.
In determining the approval of services by the independent
auditors, the Audit Committee or its Chairman evaluates each
service to determine whether the performance of such service
would (a) impair the auditors independence;
(b) create a mutual or conflicting interest between the
auditor and the Company; (c) place the auditor in the
position of auditing its own work; (d) result in the
auditor acting as management or an employee of the Company; or
(e) place the auditor in a position of being an advocate
for the Company.
All of the services described above under the captions
Audit Fees, Audit Related Fees and
Tax Fees were approved by the Companys Audit
Committee pursuant to legal requirements and the Companys
Audit Committee Charter and Pre-Approval Policy.
Audit
Committee Review
The Audit Committee has reviewed the services rendered by
Ernst & Young LLP during 2007 and has determined that
the services rendered are compatible with maintaining the
independence of Ernst & Young LLP as the
Companys independent auditors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP
AS INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31,
2008. PROXIES RECEIVED BY THE BOARD OF DIRECTORS WILL BE SO
VOTED UNLESS SHAREHOLDERS SPECIFY IN THEIR PROXIES A CONTRARY
CHOICE.
AUDIT
COMMITTEE REPORT
The Audit Committee of the Board of Directors is comprised of
five directors who are independent directors as defined under
the NYSE corporate governance listing standards. The Audit
Committee operates under a written charter adopted by the Board
of Directors.
The Audit Committee oversees the Companys financial
reporting process on behalf of the Board of Directors.
Management is responsible for the Companys financial
statements and the financial reporting process, including
implementing and maintaining effective internal control over
financial reporting and for the assessment of, and reporting on,
the effectiveness of internal control over financial reporting.
The independent auditors are responsible for expressing an
opinion on the conformity of those audited financial statements
with accounting principles generally accepted in the United
States and the effectiveness of the Companys internal
control over financial reporting. In fulfilling its oversight
responsibilities, the Audit Committee has reviewed and discussed
with management and the independent auditors the Companys
audited financial statements for the year ended
December 31, 2007 and reports on the effectiveness of
internal controls over financial reporting as of
December 31, 2007 contained in the Companys Annual
Report on
Form 10-K
for the year ended December 31, 2007, including a
discussion of the reasonableness of significant judgments and
the clarity of disclosures in the financial statements. The
Audit Committee also reviewed and discussed with management and
the independent auditors the disclosures made in
Managements Discussion and Analysis of Financial
Conditions and Results of Operations included in the
Companys 2007 Annual Report to Shareholders and its Annual
Report on
Form 10-K
for the year ended December 31, 2007.
The Audit Committee has discussed with the independent auditors
the matters required to be discussed by Statement on Auditing
Standards No. 61, Communication with Audit
Committees, as amended. In addition, the Audit Committee has
discussed with the independent auditors the auditors
independence from the Company and its management, including the
matters in the written disclosures and the letter provided by
the independent auditors to the Audit Committee as required by
Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees, and has
considered the compatibility of non-audit services with the
auditors independence.
The Committee discussed with the Companys independent
auditors the overall scope and plans for their integrated audit.
The Committee meets with the independent auditors, with and
without management present, to
37
discuss the results of their examinations, their evaluations of
the Companys internal controls and the overall quality of
the Companys financial reporting.
Based on the reviews and discussions referred to above, the
Audit Committee recommended to the Board of Directors, and the
Board has approved, that the audited financial statements be
included in the Companys Annual Report on
Form 10-K
for the year ended December 31, 2007 for filing with the
SEC. The Audit Committee and the Board of Directors have also
approved the selection of Ernst & Young LLP as the
Companys independent auditors for the fiscal year ending
December 31, 2008.
Members of the Audit Committee
Lawrence G. Steiner (Chairman)
George C. Guynn
Mary B. Bullock
Michael M.E. Johns, M.D.
Wendy B. Needham
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.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires the Companys directors and executive officers and
persons who own more than ten percent of the Companys
Common Stock to file with the SEC initial reports of ownership
and reports of changes in ownership of Common Stock and other
equity securities of the Company. Directors, executive officers
and greater than ten percent shareholders are required by SEC
regulation to furnish the Company copies of all
Section 16(a) reports they file. To the Companys
knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations
that no other reports were required, during 2007, all
Section 16(a) filing requirements applicable to directors,
executive officers and greater than ten percent beneficial
owners were complied with by such persons.
SOLICITATION
OF PROXIES
The cost of soliciting proxies will be borne by the Company. The
Company has retained Georgeson Shareholder to assist in the
solicitation of proxies for a fee of approximately $9,000 and
reimbursement of certain expenses. Officers and regular
employees of the Company, at no additional compensation, may
also assist in the solicitation. Solicitation may be by mail,
telephone, Internet or personal contact.
HOUSEHOLDING
OF ANNUAL MEETING MATERIALS
The SECs rules permit us, with your permission, to send a
single set of proxy statements and annual reports to any
household at which two or more shareholders reside if we believe
that they are members of the same family. Each shareholder will
continue to receive a separate proxy card. This procedure, known
as householding, reduces the volume of duplicate information you
receive and helps to reduce our expenses. In order to take
advantage of this opportunity, we have delivered only one proxy
statement and annual report to multiple shareholders who share
an address, unless we received contrary instructions from the
affected shareholders prior to the mailing date. We will deliver
a separate copy of the proxy statement or annual report, as
requested, to any shareholder at a shared address to which a
single copy of those documents was delivered. If you prefer to
receive separate copies of a proxy statement or annual report,
either now or in the future, you can request a separate copy of
the proxy statement or annual report by calling us at
(770) 953-1700
or by writing to us at any time at the following address:
Investor Relations, Genuine Parts Company, 2999 Circle 75
Parkway, Atlanta, Georgia 30339.
A majority of brokerage firms have instituted householding. If
your family has multiple holdings in the Company, you may have
received householding notification directly from your broker.
Please contact your broker
38
directly if you have any questions, if you require additional
copies of the proxy statement or annual report, if you are
currently receiving multiple copies of the proxy statement and
annual report and wish to receive only a single copy or if you
wish to revoke your decision to household and thereby receive
multiple statements and reports. These options are available to
you at any time.
OTHER
MATTERS
Management does not know of any matters to be brought before the
Annual Meeting other than those referred to above. If any
matters which are not specifically set forth in the form of
proxy and this proxy statement properly come before the Annual
Meeting, the persons designated as proxies will vote thereon as
recommended by the Board of Directors or, if the Board of
Directors makes no recommendation, in accordance with their best
judgment.
Whether or not you expect to be present at the Annual Meeting in
person, please vote, sign, date and return the enclosed proxy
card promptly in the enclosed business reply envelope. No
postage is necessary if mailed in the United States. If you
prefer, you can vote by telephone or Internet voting by
following the instructions on the enclosed proxy card.
SHAREHOLDER
PROPOSALS FOR 2009 ANNUAL MEETING
Proposals of shareholders of the Company intended to be
presented for consideration at the 2008 Annual Meeting of
Shareholders of the Company must be received by the Company at
its principal executive offices on or before November 1,
2008 in order to be included in the Companys proxy
statement and form of proxy relating to the 2008 Annual Meeting
of Shareholders. In addition, with respect to any shareholder
proposal that is not submitted for inclusion in the proxy
statement and form of proxy relating to the 2009 Annual Meeting
of Shareholders but is instead sought to be presented directly
to the shareholders at the 2009 Annual Meeting, management will
be able to vote proxies in its discretion if either (i) the
Company does not receive notice of the proposal before the close
of business on January 15, 2009, or (ii) the Company
receives notice of the proposal before the close of business on
January 15, 2009 and advises shareholders in the proxy
statement for the 2009 Annual Meeting about the nature of the
proposal and how management intends to vote on the proposal,
unless the shareholder notifies the Company by January 15,
2009 that it intends to deliver a proxy statement with respect
to such proposal and thereafter takes the necessary steps to do
so.
39
. NNNNNNNNNNNN [Graphic Appears Here] NNNNNNNNN [Graphic Appears Here] Election of Directors:
- Dr. Mary B. Bullock Thomas C. Gallagher Michael M. E. Johns, MD Jerry W. Nix Lawrence G.
Steiner [Graphic Appears Here] Ratification of the selection of Ernst & Young LLP as the Companys
independent auditors for the fiscal year ending December 31, 2008. B Authorized Signatures This
section must be completed for your vote to be counted. Date and Sign Below Please sign exactly
as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor,
administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date
(mm/dd/yyyy) Please print date below. Signature 1 Please keep signature within the box.
Signature 2 Please keep signature within the box. [Graphic Appears Here] [Graphic Appears Here]
1 U P X 0 1 6 3 7 1 2 + <STOCK#> 00U4NA . 3 PLEASE
|
FOLD ALONG THE PERFORATION, DETACH ANDRETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. 3 [Graphic Appears Here] Proxy Genuine Parts
Company Proxy Solicited by Board of Directors of Genuine Parts Company for the Annual Meeting of
Shareholders to be held April 21, 2008 The undersigned hereby appoints THOMAS C. GALLAGHER and
JERRY W. NIX, or either of them, with the individual power of substitution, proxies to vote all
shares of Common Stock of Genuine Parts Company that the undersigned may be entitled to vote at the
Annual Meeting of Shareholders to be held in Atlanta, Georgia on April 21, 2008 and at any
reconvened Meeting following any adjournment thereof. Said proxies will vote on the proposals set
forth in the Notice of Annual Meeting and Proxy Statement as specified on this card, and are
authorized to vote in their discretion as to any other matters that may properly come before the
meeting. Your shares will be voted in accordance with your instructions. IF A VOTE IS NOT
SPECIFIED, THE PROXIES WILL VOTE FOR PROPOSALS 1 AND 2. YOUR VOTE IS IMPORTANT Please vote, sign,
date and return the proxy card promptly using the enclosed envelope. (Continued, and to be signed,
on the reverse side) |
. NNNNNNNNNNNN [Graphic Appears Here] NNNNNNNNN [Graphic Appears Here]
Election of Directors: Dr. Mary B. Bullock Thomas C. Gallagher
Michael M. E. Johns, MD Jerry W. Nix Lawrence G. Steiner [Graphic
Appears Here] Ratification of the selection of Ernst & Young LLP as the Companys independent
auditors for the fiscal year ending December 31, 2008. B Authorized Signatures This
section must be completed for your vote to be counted. Date and Sign Below Please sign
exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney,
executor, administrator, corporate officer, trustee, guardian, or custodian, please give full
title. Date (mm/dd/yyyy) Please print date below. Signature 1 Please keep signature within
the box. Signature 2 Please keep signature within the box. [Graphic Appears Here] [Graphic
Appears Here] 1 U P X 0 1 6 3 7 1 2 + <STOCK#> 00U4NA . 3 |
PLEASE FOLD
ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. 3
[Graphic Appears Here] Proxy Genuine Parts Company Proxy Solicited by Board of
Directors of Genuine Parts Company for the Annual Meeting of Shareholders to be held April 21, 2008
The undersigned hereby appoints THOMAS C. GALLAGHER and JERRY W. NIX, or either of them, with
the individual power of substitution, proxies to vote all shares of Common Stock of Genuine Parts
Company that the undersigned may be entitled to vote at the Annual Meeting of Shareholders to be
held in Atlanta, Georgia on April 21, 2008 and at any reconvened Meeting following any adjournment
thereof. Said proxies will vote on the proposals set forth in the Notice of Annual Meeting and
Proxy Statement as specified on this card, and are authorized to vote in their discretion as to any
other matters that may properly come before the meeting. Your shares will be voted in accordance
with your instructions. IF A VOTE IS NOT SPECIFIED, THE PROXIES WILL VOTE FOR PROPOSALS 1 AND 2.
YOUR VOTE IS IMPORTANT Please vote, sign, date and return the proxy card promptly using the
enclosed envelope. (Continued, and to be signed, on the reverse side) |