AutoZone 2010 Annual Report Download - page 17

How does AutoZone determine whether a director is independent?
In accordance with AutoZone’s Corporate Governance Principles, a director is considered independent if
the director:
• has not been employed by AutoZone within the last five years;
• has not been employed by AutoZone’s independent auditor in the last five years;
• is not, and is not affiliated with a company that is, an adviser, or consultant to AutoZone or a member
of AutoZone’s senior management;
• is not affiliated with a significant customer or supplier of AutoZone;
• has no personal services contract with AutoZone or with any member of AutoZone’s senior
management;
• is not affiliated with a not-for-profit entity that receives significant contributions from AutoZone;
• within the last three years, has not had any business relationship with AutoZone for which AutoZone
has been or will be required to make disclosure under Rule 404(a) or (b) of Regulation S-K of the
Securities and Exchange Commission as currently in effect;
• receives no compensation from AutoZone other than compensation as a director;
• is not employed by a public company at which an executive officer of AutoZone serves as a director;
• has not had any of the relationships described above with any affiliate of AutoZone; and
• is not a member of the immediate family of any person with any relationships described above.
The term “affiliate” as used above is defined as any parent or subsidiary entity included in AutoZone’s
consolidated group for financial reporting purposes.
In determining whether any business or charity affiliated with one of our directors did a significant
amount of business with AutoZone, our Board has established that any payments from either party to the other
exceeding 1% of either party’s revenues would disqualify a director from being independent.
In determining the independence of our directors, the Board considers relationships involving directors
and their immediate family members that are relevant under applicable laws and regulations, the listing
standards of the New York Stock Exchange, and the standards contained in our Corporate Governance
Principles (listed above). The Board relies on information from Company records and questionnaires
completed annually by each director.
As part of its most recent independence determinations, the Board noted that AutoZone does not have,
and did not have during fiscal 2010, significant commercial relationships with companies at which Board
members served as officers or directors, or in which Board members or their immediate family members held
an aggregate of 10% or more direct or indirect interest. The Board considered the fact that Mr. Crowley is an
officer of Sears Holdings Corporation and is also Chief Operating Officer of ESL Investments, Inc., which
beneficially owns 34.7% of AutoZone’s outstanding stock. ESL Investments, Inc., with its affiliates, is a
substantial stockholder of Sears Holdings Corporation. During fiscal 2010, Sears Holdings Corporation did
business with AutoZone in arm’s length transactions which were not, individually or cumulatively, material to
either AutoZone or Sears Holding Corporation.
The Board also reviewed donations made by the Company to not-for-profit organizations with which
Board members or their immediate family members were affiliated by membership or service or as directors
or trustees.
Based on its review of the above matters, the Board determined that none of Messrs. Crowley, Graves,
Grusky, McKenna, Mrkonic, Nieto or Ullyot or Ms. Gove has a material relationship with the Company and
that all of them are independent within the meaning of the AutoZone Corporate Governance Principles and
applicable law and listing standards. The Board also determined that Mr. Rhodes is not independent since he
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