AutoZone 2010 Annual Report Download - page 25

annual fees are payable in advance in equal quarterly installments on September 1, December 1, March 1, and
June 1 of each year, at which time each director receives cash and/or shares of common stock in the amount
of one-fourth of the annual fees. The number of shares issued is determined by dividing the amount of the fee
payable in shares by the fair market value of the shares as of the grant date.
If a director defers any portion of the annual fees in the form of Stock Units, then on September 1,
December 1, March 1, and June 1 of each year, AutoZone will credit a unit account maintained for the
director with a number of Stock Units determined by dividing the amount of the fees by the fair market value
of the shares as of the grant date. Upon the director’s termination of service, he or she will receive the number
of shares of common stock with which his or her unit account is credited, either in a lump sum or installments,
as elected by the director under the 2003 Director Compensation Plan.
2003 Director Stock Option Plan. Under the AutoZone, Inc. First Amended and Restated 2003 Director
Stock Option Plan (the “2003 Director Stock Option Plan”), directors who elect to be paid only the Base
Retainer will receive, on January 1 during their first two years of service as a director, an option to purchase
3,000 shares of AutoZone common stock. After the first two years, such directors will receive, on January 1 of
each year, an option to purchase 1,500 shares of common stock, and each such director who owns common
stock or Stock Units worth at least five times the Base Retainer will receive an additional option to purchase
1,500 shares. Directors electing to be paid the Supplemental Retainer will receive, on January 1 during their
first two years of service as a director, an option to purchase 2,000 shares of AutoZone common stock. After
the first two years, such directors will receive, on January 1 of each year, an option to purchase 500 shares of
common stock, and each such director who owns common stock or Stock Units worth at least five times the
Base Retainer will receive an additional option to purchase 1,500 shares. In addition, each new director
receives an option to purchase 3,000 shares upon election to the Board, plus a portion of the base annual
option grant corresponding to the director’s compensation election, prorated for the portion of the year served
in office.
Stock option grants are made at the fair market value of the common stock as of the grant date, defined
in the plan as the average of the highest and lowest prices quoted for the common stock on the New York
Stock Exchange on the business day immediately prior to the grant date. They become fully vested and
exercisable on the third anniversary of the date of grant, or the date on which the director ceases to be a
director of AutoZone, whichever occurs first.
Stock options expire on the first to occur of (a) 10 years after the date of grant, (b) 90 days after the
option holder’s death, (c) 5 years after the date the option holder ceases to be an AutoZone director if he or
she has become ineligible to be reelected as a result of reaching the term limits or mandatory retirement age
specified in AutoZone’s Corporate Governance Principles, (d) 30 days after the date that the option holder
ceases to be an AutoZone director for reasons other than those listed in the foregoing clause (c), or (e) upon
the occurrence of certain corporate transactions affecting AutoZone.
Changes Effective January 1, 2011
The Board of Directors has approved the following changes to AutoZone’s director compensation
structure effective January 1, 2011, subject to the approval by our stockholders of the AutoZone, Inc. 2011
Equity Incentive Award Plan:
Annual Retainer Fees. Non-employee directors will receive an annual retainer fee of $200,000 (the
“Annual Retainer”). The lead director and the chair of the Audit Committee will receive an additional fee of
$20,000 annually, the chairs of the Compensation Committee and the Nominating and Corporate Governance
Committee will each receive an additional fee of $5,000 per year, and the non-chair members of the Audit
Committee will each receive an additional fee of $5,000 per year (such fees, together with the Annual
Retainer, the “Retainer”). There are no meeting fees.
2011 Equity Plan. Under the AutoZone, Inc. 2011 Equity Incentive Award Plan (the “2011 Equity
Plan”), which, if approved by our stockholders, will replace the 2003 Director Compensation Plan and the
2003 Director Stock Option Plan, a non-employee director will receive the Retainer in Restricted Stock Units,
15
Proxy