AutoZone 2013 Annual Report Download - page 32

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Proxy
Description Objectives
Stock options and other
equity compensation
• Senior executives receive non-
qualified stock options (NQSOs).
• Historically, incentive stock options
(ISOs) have been granted as well;
however, the company stopped
granting ISOs beginning in fiscal 2013.
• All stock options are granted at fair
market value on the grant date
(discounted options are prohibited).
• AutoZone’s equity compensation plan
prohibits repricing of stock options and
does not include a “reload” program.
• AutoZone may occasionally grant
awards of performance-restricted stock
units, as well as awards of restricted
stock with time-based vesting.
• Align long-term compensation with
stockholder results. Opportunities for
significant wealth accumulation by
executives are tightly linked to
stockholder returns.
• ISOs provide an incentive to hold
shares after exercise, thus increasing
ownership and further reinforcing the
tie to stockholder results.
• Provide retention incentives to ensure
business continuity, and facilitate
succession planning and executive
knowledge transfer.
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 their 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.
22