AutoZone 2010 Annual Report Download - page 18

is an employee of the Company and Messrs. Hyde and Rhodes are not independent because they serve on the
boards of not-for-profit organizations which receive more than one percent (1%) of their revenues from the
Company.
Board Leadership Structure
Our Board believes that having a combined Chairman/CEO, independent members and chairs for each of
our Board committees and a Lead Director currently provides the best board leadership structure for
AutoZone. This structure, together with our other corporate governance practices, provides strong independent
oversight of management while ensuring clear strategic alignment throughout the Company. Our Lead Director
is a non-employee director who is elected by the Board. Earl G. Graves, Jr., a director since 2002, currently
serves as our Lead Director.
Our Lead Director:
• Chairs Board meetings when the Chairman is not present, including presiding at all executive sessions
of the Board (without management present) at every regularly scheduled Board meeting;
• Works with management to determine the information and materials provided to Board members;
• Approves Board meeting agendas, schedules and other information provided to the Board;
• Consults with the Chairman on such other matters as are pertinent to the Board and the Company;
• Has the authority to call meetings of the independent directors;
• Is available for direct communication and consultation with major shareholders upon request; and
• Serves as liaison between the Chairman and the independent directors.
Board Risk Oversight
Oversight of risk management is a responsibility of the Board of Directors and is an integral part of the
Board’s oversight of AutoZone’s business. AutoZone’s management takes a variety of calculated risks in order
to enhance Company performance and shareholder value. The primary responsibility for the identification,
assessment and management of the various risks resides with AutoZone’s management. The Board of Directors
is primarily responsible for ensuring that management has established and adequately resourced processes for
identifying and preparing the Company to manage risks effectively. Additionally, the Board reviews the
Company’s principal strategic and operating risks as part of its regular discussion and consideration of
AutoZone’s strategy and operating results. The Board also reviews periodically with the General Counsel legal
matters that may have a material adverse impact on the Company’s financial statements, the Company’s
compliance with laws and any material reports received from regulatory agencies.
The Audit Committee is involved in the Board’s oversight of risk management. At each of its regular
meetings, the Audit Committee reviews the Company’s major financial exposures and the steps management
has taken to identify, assess, monitor, control, remediate and report such exposures. The Audit Committee,
along with management, also evaluates the effectiveness of the risk avoidance and mitigation processes in
place. Such risk-related information is then summarized, reported and discussed at each quarterly Board of
Directors meeting.
To assist with risk management and oversight, AutoZone has adopted the concept of enterprise risk
assessment (“ERM”) using the framework issued in 2004 by the Committee of Sponsoring Organizations of
the Treadway Commission. The Company’s Director of Internal Audit, who reports directly to the Audit
Committee, has been charged with leading the implementation of the Company’s ERM processes with the
assistance of Company management. The Director of Internal Audit presents to the Audit Committee a
comprehensive review of the Company’s ERM processes annually. This presentation includes an overview of
all significant risks that have been identified and assessed and the strategies developed by management for
managing such risks. The Director of Internal Audit leads open discussions with the Audit Committee
members to analyze the significance of the risks identified and to verify that the list is all-inclusive. Company
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