AutoZone 2010 Annual Report Download - page 40

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Pay Element Description Objectives
Stock purchase plans • AutoZone maintains a broad-
based employee stock purchase
plan (ESPP) which is qualified
under Section 423 of the
Internal Revenue Code. The
Employee Stock Purchase Plan
allows AutoZoners to make
quarterly purchases of
AutoZone shares at 85% of the
fair market value on the first or
last day of the calendar quarter,
whichever is lower. The annual
contribution limit under the
ESPP is $15,000.
• The Company has implemented
an Executive Stock Purchase
Plan so that executives may
continue to purchase AutoZone
shares beyond the limit the IRS
and the company set for the
Employee Stock Purchase Plan.
An executive may make
purchases using up to 25% of
his prior fiscal year’s eligible
compensation.
• Allow all AutoZoners to
participate in the growth of
AutoZone’s stock.
• Encourage ownership, and
therefore alignment of
executive and stockholder
interests.
Management stock ownership
requirement
• AutoZone implemented a stock
ownership requirement during
fiscal 2008 for executive
officers.
• Covered executives must meet
specified minimum levels of
ownership, using a multiple of
base salary approach.
• Encourage ownership by
requiring executive officers to
meet specified levels of
ownership.
• Alignment of executive and
stockholder interests.
Retirement plans The Company maintains three
retirement plans:
• Non-qualified deferred
compensation plan (including a
frozen defined benefit
restoration feature)
• Frozen defined benefit pension
plan, and
• 401(k) defined contribution
plan.
• Provide competitive executive
retirement benefits.
• The non-qualified plan enables
executives to defer base and
incentive earnings up to 25% of
the total, independent of the
IRS limitations set for the
qualified 401(k) plan.
• The restoration component of
the non-qualified plan, which
was frozen at the end of 2002,
allowed executives to accrue
benefits that were not capped
by IRS earnings limits.
Health and other benefits Executives are eligible for a
variety of benefits, including:
• Medical, dental and vision
plans; and
• Life and disability insurance
plans.
• Provide competitive benefits.
• Minimize perquisites while
ensuring a competitive overall
rewards package.
Annual cash compensation. Annual cash compensation consists of base salary and annual cash
incentives.
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