AutoZone 2010 Annual Report Download - page 30
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Other Incentive Awards. Other incentive awards are awards other than those enumerated in this
summary that are denominated in, linked to or derived from shares of our common stock or value metrics
related to our shares, and may remain forfeitable unless and until specified conditions are met.
What are performance awards?
Performance awards include any of the awards above that are granted subject to vesting and/or payment
based on the attainment of specified performance goals. The Administrator will determine whether perfor-
mance awards are intended to constitute “qualified performance-based compensation” (“QPBC”) within the
meaning of Section 162(m) of the Code, in which case the applicable performance criteria will be selected
from the list below in accordance with the requirements of Section 162(m) of the Code.
Section 162(m) of the Code imposes a $1,000,000 cap on the compensation deduction that we may take
in respect of compensation paid to our “covered employees”, but excludes from the calculation of amounts
subject to this limitation any amounts that constitute QPBC. However, QPBC performance criteria may be
used with respect to performance awards that are not intended to constitute QPBC.
In order to constitute QPBC under Section 162(m) of the Code, in addition to certain other requirements,
the relevant amounts must be payable only upon the attainment of pre-established, objective performance goals
set by our Compensation Committee and linked to stockholder-approved performance criteria. For purposes of
the Plan, one or more of the following performance criteria will be used in setting performance goals
applicable to QPBC, and may be used in setting performance goals applicable to other performance awards:
(i) earnings or net earnings (either before or after one or more of the following: (A) interest,
(B) taxes, (C) depreciation, (D) amortization and (E) non-cash equity-based compensation expense);
(ii) gross or net sales or revenue;
(iii) net income (either before or after taxes);
(iv) adjusted net income;
(v) operating earnings, profit or pre-tax profit or margin;
(vi) cash flow (including, but not limited to, operating or net cash flow and free cash flow);
(vii) return on assets;
(viii) return on capital (including return on invested capital);
(ix) return on stockholders’ equity;
(x) total stockholder return;
(xi) return on sales;
(xii) gross or net profit, operating margin or gross profit margin;
(xiii) costs;
(xiv) funds from operations;
(xv) expenses;
(xvi) working capital;
(xvii) earnings per share;
(xviii) diluted or adjusted earnings per share;
(xix) price per share of common stock;
(xx) implementation or completion of critical projects;
(xxi) market share;
20
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