AutoZone 2013 Annual Report Download - page 39

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Proxy
Holding Requirements • Individuals who have not achieved the ownership
requirement within the specified period will be
required to hold 50% of net after-tax shares upon
exercise of any stock option, and may not sell any
shares of AZO.
• Guidelines will no longer apply after an executive
reaches age 62, in order to facilitate appropriate
financial planning as retirement approaches. The
Compensation Committee may waive the guidelines
for any other executive at its discretion.
Ownership Definition • Shares of stock directly owned;
• Unvested Shares acquired via the Executive Stock
Purchase Plan; and
• Vested stock options acquired via the AutoZone
Stock Option Plan (based on the “in-the-money”
value).
Under AutoZone’s insider trading policies, all transactions involving put or call options on the stock of
AutoZone are prohibited at all times. Officers and directors and their respective family members may not
directly or indirectly participate in transactions involving trading activities which by their aggressive or
speculative nature may give rise to an appearance of impropriety.
What roles do the Chief Executive Officer and other executive officers play in the determination of
executive compensation?
The Chief Executive Officer attends most meetings of the Compensation Committee and participates in the
process by answering Compensation Committee questions about pay philosophy and by ensuring that the
Compensation Committee’s requests for information are fulfilled. He also assists the Compensation Committee
in determining the compensation of the executive officers by providing recommendations and input about such
matters as individual performance, tenure, and size, scope and complexity of their positions. The Chief
Executive Officer makes specific recommendations to the Compensation Committee concerning the
compensation of his direct reports and other senior executives, including the executive officers. These
recommendations usually relate to base salary increases, changes to annual incentive targets and stock option
grants. The Chief Executive Officer also recommends pay packages for newly hired executives. Management
provides the Compensation Committee with data, analyses and perspectives on market trends and annually
prepares information to assist the Compensation Committee in its consideration of such recommendations.
Annual incentive awards are based on achievement of business objectives set by the Compensation Committee,
but the Compensation Committee may exercise negative discretion, and if it does so, it is typically in reliance on
the Chief Executive Officer’s assessment of an individual’s performance.
The Chief Executive Officer does not make recommendations to the Compensation Committee regarding
his own compensation. The Senior Vice President, Human Resources has direct discussions with the
Compensation Committee Chair regarding the Compensation Committee’s recommendations on the Chief
Executive Officer’s compensation; however, Compensation Committee discussions of specific pay actions
related to the Chief Executive Officer are held outside his presence.
Does AutoZone use compensation consultants?
Neither AutoZone management nor the Compensation Committee hired executive compensation
consultants during fiscal 2013. Although historically we have hired consultants to provide services from time to
time, it is not our usual practice, and as discussed previously, AutoZone does not regularly engage consultants as
part of our annual review and determination of executive compensation. The Compensation Committee has
29