AutoZone 2010 Annual Report Download - page 68

2.35 “Performance Criteria” shall mean the criteria (and adjustments) that the Committee selects for an
Award for purposes of establishing the Performance Goal or Performance Goals for a Performance Period,
determined as follows:
(a) The Performance Criteria that shall be used to establish Performance Goals are limited to the
following: (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; (xxii) economic value goals (including economic value added); (xxiii) cus-
tomer retention; (xiv) sales or sales-related goals (including sales per square foot and comparable store
sales); (xxv) earnings before interest and taxes margin; and (xxvi) return on inventory, any of which may
be measured either in absolute terms for the Company or any operating unit of the Company or as
compared to any incremental increase or decrease or as compared to results of a peer group or to market
performance indicators or indices.
(b) The Administrator may, in its sole discretion, provide that one or more objectively determinable
adjustments shall be made to one or more of the Performance Goals. Such adjustments may include, but
are not limited to, one or more of the following: (i) items related to a change in accounting principle;
(ii) items relating to financing activities; (iii) expenses for restructuring or productivity initiatives;
(iv) other non-operating items; (v) items related to acquisitions; (vi) items attributable to the business
operations of any entity acquired by the Company during the Performance Period; (vii) items related to
the disposal of a business or segment of a business; (viii) items related to discontinued operations that do
not qualify as a segment of a business under Applicable Accounting Standards; (ix) items attributable to
any stock dividend, stock split, combination or exchange of stock occurring during the Performance
Period; (x) any other items of significant income or expense which are determined to be appropriate
adjustments; (xi) items relating to unusual or extraordinary corporate transactions, events or develop-
ments, (xii) items related to amortization of acquired intangible assets; (xiii) items that are outside the
scope of the Company’s core, on-going business activities; (xiv) items related to acquired in-process
research and development; (xv) items relating to changes in tax laws; (xvi) items relating to major
licensing or partnership arrangements; (xvii) items relating to asset impairment charges; (xviii) items
relating to gains or losses for litigation, arbitration and contractual settlements; or (xix) items relating to
any other unusual or nonrecurring events or changes in applicable laws, accounting principles or business
conditions. For all Awards intended to qualify as Performance-Based Compensation, such determinations
shall be made within the time prescribed by, and otherwise in compliance with, Section 162(m) of the
Code.
2.36 “Performance Goals” shall mean, for a Performance Period, one or more goals established in
writing by the Administrator for the Performance Period based upon one or more Performance Criteria.
Depending on the Performance Criteria used to establish such Performance Goals, the Performance Goals may
be expressed in terms of overall Company performance or the performance of an Affiliate, division, business
unit, or an individual. The achievement of each Performance Goal shall be determined in accordance with
Applicable Accounting Standards.
2.37 “Performance Period” shall mean one or more periods of time, which may be of varying and
overlapping durations, as the Administrator may select, over which the attainment of one or more Performance
Goals will be measured for the purpose of determining a Participant’s right to, and the payment of, an Award
intended to qualify as Performance-Based Compensation.
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