AutoZone 2008 Annual Report Download

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2008 annual report
notice of annual meeting of stockholders
and proxy statement

Table of contents

  • Page 1
    notice of annual meeting of stockholders and proxy statement 2008 annual report

  • Page 2
    Corporate Profile AutoZone is the leading retailer and a leading distributor of automotive replacement parts and accessories in the United States. The Company also operates stores in Puerto Rico and Mexico. Each store carries an extensive product line for cars, sport utility vehicles, vans and ...

  • Page 3
    ...our customers. We have expanded our importing efforts, where appropriate, to reduce our product acquisition cost. One recent example is our exclusive line of Duralast Gold Cmax ceramic brake pads. This is a highly differentiated high quality brake pad program and it is only available at AutoZone! We...

  • Page 4
    ... companies talk about providing customer service that exceeds expectations, we live it. We understand what well trained, highly motivated AutoZoners can mean to both our customers and the financial health of our business. At the end of the day, people buy parts and products from people-not stores...

  • Page 5
    ... 2008, we completed a reorganization of our field sales organization that enabled us to deploy 40% more AutoZoners into roles with direct contact with our customers. Additionally, we developed and implemented professional sales training that equipped these AutoZoners with more sales tools than...

  • Page 6
    ...optimize returns. At our Annual Meeting of Stockholders in December, two of our directors will be retiring from our Board. On behalf of all of our AutoZoners and stockholders, I would like to take this opportunity to thank Dr. Gerry House and Charles Elson for their service to our great company over...

  • Page 7
    notice of annual meeting of stockholders and proxy statement

  • Page 8

  • Page 9
    ... Time J. R. Hyde III Store Support Center 123 South Front Street Memphis, Tennessee • Election of ten directors • Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the 2009 fiscal year • The transaction of other business that may be...

  • Page 10
    ...Grants of Plan-Based Awards...Outstanding Equity Awards at Fiscal Year-End ...Option Exercises and Stock Vested ...Pension Benefits ...Nonqualified Deferred Compensation ...Potential Payments upon Termination or Change in Control ...Related Party Transactions ...Equity Compensation Plans ...Section...

  • Page 11
    ...we," and "the Company" mean AutoZone, Inc., and • "Annual Meeting" or "Meeting" means the Annual Meeting of Stockholders to be held on December 17, 2008, at 8:30 a.m. CST at the J. R. Hyde III Store Support Center, 123 South Front Street, Memphis, Tennessee. AutoZone will pay all expenses incurred...

  • Page 12
    ... have shares in an account under the AutoZone Employee Stock Purchase Plan, you have the right to vote the shares in your account. To do this you must sign and timely return the proxy card you received with this Proxy Statement, or grant your proxy by telephone or over the Internet by following the...

  • Page 13
    ...director at the 2007 annual meeting. Charles M. Elson and N. Gerry House are not standing for reelection to the Board. Nominees The nominees are: William C. Crowley, 51, was appointed as a director in August 2008. He has served as Executive Vice President and a director of Sears Holdings Corporation...

  • Page 14
    ... the same company in various capacities since 1988. Robert R. Grusky, 51, was appointed as a director in August 2008. Mr. Grusky founded Hope Capital Management, LLC, an investment firm for which he serves as Managing Member, in 2000. He cofounded New Mountain Capital, LLC, a private equity firm, in...

  • Page 15
    ... under applicable laws and regulations, the listing standards of the New York Stock Exchange, and the standards contained in our Corporate Governance Principles (listed above). The Board relies on information from Company records and questionnaires completed annually by each director. As part of...

  • Page 16
    ... Governance Committees; a Code of Business Conduct & Ethics for directors, officers and employees of AutoZone; and a Code of Ethical Conduct for Financial Executives. Each of these documents is available on our corporate website at www.autozoneinc.com and is also available, free of charge, in print...

  • Page 17
    ... on its charter and the AutoZone Corporate Governance Principles, to: • review and approve AutoZone's compensation objectives; • review and approve the compensation programs, plans and awards for executive officers, including recommending equity-based plans for stockholder approval; 7 Proxy

  • Page 18
    ... are independent directors under the standards of AutoZone's Corporate Governance Principals and the listing standards of the New York Stock Exchange. How many times did the Compensation Committee meet during the last fiscal year? During the 2008 fiscal year, the Compensation Committee held three...

  • Page 19
    ..., and the listing standards requirements of the New York Stock Exchange. The Nominating and Corporate Governance Committee uses a variety of methods for identifying potential nominees for director. Candidates may come to the attention of the Committee through current Board members, stockholders or...

  • Page 20
    ..., President and Chief Executive Officer, serves on the Board but does not receive any compensation for his service as a director. His compensation as an employee of the Company is shown in the Summary Compensation Table on page 28. (2) Under the AutoZone, Inc. 2003 Director Compensation Plan, non...

  • Page 21
    ...awarded under the AutoZone, Inc. 2003 Director Stock Option Plan and its predecessor, the 1998 Director Stock Option Plan. It includes amounts from awards granted in and prior to fiscal 2008. See Note B, Share-Based Compensation, to our consolidated financial statements in our 2008 Annual Report for...

  • Page 22
    ...Based Compensation, to our consolidated financial statements in our 2008 Annual Report for a discussion of our accounting for share-based awards and the assumptions used. Grant Date Fair Value of Stock Awards ($) Grant Date Fair Value of Option Awards ($) Proxy Name Grant Date William C. Crowley...

  • Page 23
    ...March 1, and June 1 of each year, AutoZone will credit a unit account maintained for the director with a number of Stock Units determined by dividing the amount of the fees by the fair market value of the shares as of the grant date. Upon the director's termination of service, he or she will receive...

  • Page 24
    ... for non-employee directors. Within three years of joining the Board, each director must personally invest at least $150,000 in AutoZone stock. Shares and Stock Units issued under the Director Compensation Plan count toward this requirement. PROPOSAL 2 - Ratification of Independent Registered Public...

  • Page 25
    ...statements in the annual report for the fiscal year ended August 30, 2008, on Form 10-K for filing with the Securities and Exchange Commission. While the Audit Committee has the responsibilities and powers set forth in its charter, the Audit Committee does not have the duty to plan or conduct audits...

  • Page 26
    ... three most highly compensated executive officers, and all current directors and executive officers as a group. Unless stated otherwise in the notes to the table, each person named below has sole authority to vote and invest the shares shown. Beneficial Ownership As of October 20, 2008 Ownership...

  • Page 27
    ...in RBS Partners, L.P. ("RBS Partners"), which together with various of its affiliates owns AutoZone common stock as shown in the "Security Ownership of Certain Beneficial Owners" on page 17. Mr. Ullyot was Executive Vice President and General Counsel of ESL Investments, Inc. until April 2008 and may...

  • Page 28
    ... with each element of our compensation program. What are the Company's key compensation principles? Pay for performance. The primary emphasis of AutoZone's compensation program is linking executive pay to business results and stockholder value. Base salary levels are intended to be competitive...

  • Page 29
    ...stock option grant): Position Base Salary Annual Incentive Stock Options Proxy Chairman, President & CEO All Other Named Executive Officers ("NEOs") 20% 23% 20% 14% 60% 63% Who participates in AutoZone's executive compensation programs? The Chief Executive Officer and the other named executive...

  • Page 30
    ...not include a "reload" program. • AutoZone maintains a broadbased employee stock purchase plan 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...

  • Page 31
    ... named executive officers, including the Principal Executive Officer, are part of the structure applicable to thousands of AutoZone's employees. AutoZone positions are each assigned to a salary grade. This is generally accomplished at the creation of a position, using the Hay job evaluation method...

  • Page 32
    ... amounts for the named executive officers for fiscal 2008 are shown in the table below. Principal Position Percentage of Base Salary Threshold Target Proxy Chairman, President & CEO All Other NEOs 50% 30% 100% 60% Annual cash incentives for executive officers are paid pursuant to the AutoZone...

  • Page 33
    ... to the Compensation Committee by the Chief Executive Officer, based on individual performance and the size and scope of the position held. Newly promoted or hired officers may receive a grant shortly after their hire or promotion. As a general rule, new hire or promotional stock options are...

  • Page 34
    ...Employee Stock Purchase Plan, in that it allows executives to defer after-tax base or bonus compensation (after making annual elections as required under Section 409A of the Internal Revenue Code) for use in making quarterly purchases of AutoZone common stock. Options are granted under the Executive...

  • Page 35
    ... non-management directors, taking into account all forms of compensation, including base salary, annual cash incentive, stock option awards, and the value of other benefits received. Other Executive Officers. The Compensation Committee reviews and establishes base salaries for AutoZone's executive...

  • Page 36
    ... usually relate to base salary increases 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...

  • Page 37
    ... BED BATH & BEYOND INC BEST BUY CO INC BORDERS GROUP INC CIRCUIT CITY STORES INC GAP INC GENUINE PARTS CO HOME DEPOT INC LIMITED BRANDS INC LOWE'S COMPANIES INC O'REILLY AUTOMOTIVE INC OFFICE DEPOT INC PEP BOYS MANNY MOE & JACK PETSMART INC RADIOSHACK CORP ROSS STORES INC SHERWIN WILLIAMS CO STAPLES...

  • Page 38
    ... highly paid executive officers (the "Named Executive Officers"). Change in Pension Value & Non-Qualified Deferred Non-Equity All Other Option Incentive Plan Compensation Stock Compensation Earnings Salary Bonus Awards Awards Compensation ($)(6) ($)(5) ($)(4) Year ($) ($)(1) ($)(2)(3) ($)(3) Name...

  • Page 39
    ... Perquisites and personal benefits for all Named Executive Officers include Company-provided home security system and/or monitoring services, airline club memberships and status upgrades, Companypaid executive physicals, Company-paid long-term disability insurance premiums, and matching charitable...

  • Page 40
    ... The following table sets forth information regarding plan-based awards granted to the Company's Named Executive Officers during the 2008 fiscal year. All Other Closing Price Option Awards: All Other Estimated Future Payments Stock Awards: Grant Date on Date Number of Under Nonequity Incentive Fair...

  • Page 41
    ...value added • Return on inventory • Gross profit margin • Sales per square foot • Comparable store sales Proxy The EICP provides that the goal may be different for different executives. The goals can change annually to support our business objectives. After the end of each fiscal year, the...

  • Page 42
    ... the Executive Stock Purchase Plan for the Company's Named Executive Officers as of August 30, 2008: Proxy Name Option Awards Number of Securities Underlying Unexercised Options(1) Grant Date Exercisable Unexercisable Option Exercise Price Option Expiration Date Stock Awards Market Number Value...

  • Page 43
    ...shares acquired pursuant to unvested share options granted under the Executive Stock Purchase Plan. Such shares vest on the first anniversary of the date the option was exercised under the plan, and will vest immediately upon a participant's termination of employment without cause or the participant...

  • Page 44
    ... about this plan. (2) Based on the closing price of AutoZone common stock on the vesting date. PENSION BENEFITS The following table sets forth information regarding pension benefits for the Company's Named Executive Officers as of August 30, 2008: Number of Years of Credited Service Present Value...

  • Page 45
    ...least 21 years old and had completed one year of service with the Company. The benefits under the Pension Plan were based on years of service and the employee's highest consecutive five-year average compensation. Compensation included total annual earnings shown on Form W-2 plus any amounts directed...

  • Page 46
    ... of vice president or higher are eligible to participate in the EDCP after their first year of employment with the Company. The EDCP is a nonqualified plan that allows officers who participate in AutoZone's 401(k) plan to make a pretax deferral of base salary and bonus compensation. Officers may...

  • Page 47
    ... consisting of an amount equal to 2.99 times his then-current base salary, a lump sum prorated share of any unpaid annual bonus incentive for periods during which he was employed, and AutoZone will pay the cost of COBRA premiums to continue his medical, dental and vision insurance benefits for up to...

  • Page 48
    ... Insurance AutoZone provides all salaried employees in active full-time employment in the United States a company-paid life insurance benefit in the amount of two times annual earnings. "Annual earnings" exclude stock options but include salary and bonuses received. Additionally, salaried employees...

  • Page 49
    ... amounts that the Named Executive Officers would have received if their employment had been involuntarily terminated on August 30, 2008. This table does not include amounts related to the Named Executive Officers' vested benefits under our deferred compensation and pension plans or pursuant to stock...

  • Page 50
    ... specified in our Code of Ethics and Business Conduct and Corporate Governance Principles described below. The Policy also requires disclosure of all Related Person Transactions that are required to be disclosed in AutoZone's filings with the Securities and Exchange Commission, in accordance...

  • Page 51
    ...Stock Option Plan, the Employee Stock Purchase Plan, the Executive Stock Purchase Plan, the Director Compensation Plan and the Director Stock Option Plan. Equity Compensation Plans Not Approved by Stockholders The AutoZone, Inc. Second Amended and Restated Director Compensation Plan and the AutoZone...

  • Page 52
    ... Reporting Compliance Securities laws require our executive officers, directors, and beneficial owners of more than ten percent of our common stock to file insider trading reports (Forms 3, 4, and 5) with the Securities and Exchange Commission and the New York Stock Exchange relating to the number...

  • Page 53
    form 10-K

  • Page 54

  • Page 55
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    corporate information

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    ... W. Lagges President, ALLDATA Mitchell C. Major Store Operations Grant E. McGee Store Operations Ann A. Morgan Human Resources J. Scott Murphy Strategic Planning and Business Development Jeffrey H. Nix Information Technology Raymond A. Pohlman Goverment and Community Relations Elizabeth S. Rabun...

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    ...III Store Support Center, 123 South Front Street, Memphis, Tennessee AutoZone Web Sites Investor Relations: www.autozoneinc.com Company Web site: www.autozone.com Stock Exchange Listing New York Stock Exchange Ticker Symbol: AZO Auditors Ernst & Young, LLP Memphis, Tennessee Code of Ethical Conduct...

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    123 South Front Street Memphis, Tennessee 38103-3607 (901) 495-6500 www.autozone.com