UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.     )

 

 

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☐		Soliciting Material Pursuant to § 240.14a-12

Genuine Parts Company

(Name of Registrant as Specified in Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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Dear Genuine Parts Company Shareholder:

The Board of Directors have been actively engaged with managing the unique challenges faced throughout these unprecedented times, while remaining focused on both strong corporate governance and long-term value creation for our shareholders.

In 2020, the Company surpassed our enterprise cost savings target and furthered initiatives that will optimize our operations, drive sustained savings, and enable value creation for years to come. Additionally, the Board continued to evaluate the Company’s portfolio and implement a disciplined approach to capital allocation that prioritizes reinvesting in the business, maintaining a strong balance sheet and returning cash to shareholders through dividends. In 2020, we increased the dividend by 4% and divested our Business Products segment in order to focus our efforts on our faster growing and higher margin global automotive and industrial businesses.

As the global pandemic continues to unfold, we remain fully dedicated to protecting the health and safety of our associates and their families so we can fulfill our mission of being the employer of choice, being a supplier of choice to our customers, being a valued customer to our suppliers, being a good corporate citizen, and being an investment of choice for our shareholders. During 2020, we implemented numerous safety and cleaning measures in all of our locations, and put the safety and health of our associates, customers, and communities first. Our Board continues to be engaged to oversee and support our COVID-19 response, and we thank our associates for their hard work and dedication to taking care of our customers and each other.

Following the social unrest experienced in the U.S. throughout 2020, the management team increased our efforts to address the issues of racial equity and social justice. We remain deeply committed to fostering a culture that values diverse perspectives and provides an inclusive environment for all of our associates across the globe. The Company formed a Diversity and Inclusion Committee led by our Chief Human Resources Officer and senior leaders throughout the Company to identify and discuss diversity and inclusion barriers, opportunities, and successes. In 2020, over 400 members of the corporate leadership teams participated in diversity and inclusion training, and we intend to roll-out diversity and inclusion training to an additional 2,000 managers throughout the organization in 2021. Building and maintaining a strong corporate culture has been, and remains, an important priority for the Board.

In addition, the Board continues to support our strong governance by refreshing Board membership. In 2020 we added two new directors and in February of 2021 added another to further diversify our expertise and perspectives. Our most recent addition, Juliette Pryor, joins with extensive experience as the General Counsel and Corporate Secretary in the grocery retail industry. Ms. Pryor brings an extraordinary combination of skills and experience that will serve the Board, Genuine Parts Company, and our stakeholders well. These recent additions will bring the total number of directors to 13, 11 of whom are independent, 4 of whom are women, and almost half are diverse.

In January of 2021, the Board appointed William P. Stengel (“Will”) to the position of President of Genuine Parts Company, the 8^th President in the history of the Company. This promotion was the result of extensive and thoughtful succession planning by the Compensation, Nominating, and Governance Committee of the Board, and we look forward to Will’s contributions. As President, Mr. Stengel will continue to lead our transformation efforts and work alongside us to further develop and advance our strategic roadmap and execute our growth initiatives.

In response to our 2020 shareholder proposal regarding human capital management, the Company undertook significant outreach, as discussed in the ‘‘Shareholder Engagement’’ section of the proxy. This engagement included key discussions on human capital management at Genuine Parts Company as well as other ESG matters our shareholders were most interested in discussing. Through these engagement meetings with institutional investors and others, we identified the issues that our investors and stakeholders consider important, which enabled us to provide more information in response. Through our Corporate Sustainability Report issued in September of 2020, as well as additional disclosures that can be found on the Company’s website, we have

provided greater transparency regarding our business and other matters including human capital management disclosure, our policies and procedures on human rights, our environmental sustainability programs, and our diversity and inclusion initiatives, among others.

During 2020, we demonstrated our adaptability in the face of unprecedented change. Going forward, our Board, our management team, and our employees are well-positioned to build upon our focused growth and operational momentum. We are pleased to invite you to attend our 2021 Annual Meeting of Shareholders on Thursday, April 29, 2021 at 10:00 a.m. Eastern Time to hear more about our accomplishments in 2020 and our plans and strategic initiatives for 2021. In response to continued public health and safety concerns regarding in-person gatherings due to the global pandemic, the meeting will be held virtually. We have designed the format of the Annual Meeting to ensure that you are afforded the same rights and opportunities to participate as you would at an in-person meeting.

The Notice of the 2020 Annual Meeting of Shareholders and the following proxy statement describe the items of business for the meeting. Your vote is very important. Whether or not you plan to attend the 2021 Annual Meeting of Shareholders, we urge you to vote by submitting your proxy over the Internet, by telephone, or by mail.

On behalf of our Board, we thank you for your ownership and interest in Genuine Parts Company.

 

Paul D. Donahue		John D. Johns
Chairman and CEO		Presiding Independent Director

GENUINE PARTS COMPANY

2999 Wildwood Parkway

Atlanta, Georgia 30339

 

TO THE SHAREHOLDERS OF GENUINE PARTS COMPANY:

The 2021 Annual Meeting of Shareholders of Genuine Parts Company, a Georgia corporation, will be held virtually on Thursday, the 29th day of April 2021, at 10:00 a.m. eastern time, for the following purposes:

 

		Board Recommends		See  Page
Management Proposals
Election of 13 Directors		FOR each nominee			4
Advisory Vote to Approve Named Executive Officer Compensation (“say-on-pay vote”)		FOR			52
Ratification of the Selection of Ernst & Young LLP as Our Independent Auditor for Fiscal Year 2021		FOR			54

Information relevant to these matters is set forth in the attached proxy statement. Only holders of record of the Company’s common stock at the close of business on February 22, 2021 will be entitled to vote at the meeting. The live audio webcast of the Annual Meeting will begin promptly at 10:00 a.m. eastern time. Online access to the audio webcast will open 15 minutes prior to the start of the Annual Meeting. We encourage you to access the meeting in advance of the designated start time.

Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be held on April 29, 2021.

We are pleased to announce that we are delivering your proxy materials for the 2021 Annual Meeting of Shareholders via the Internet. Because we are delivering proxy materials via the Internet, the Securities and Exchange Commission requires us to mail a letter to our shareholders notifying them that these materials are available on the Internet and how these materials may be accessed. This letter, which we refer to as our “Notice and Access Letter,” will be mailed to our shareholders on or about March 2, 2021.

Our Notice and Access Letter will instruct you on how to access and review our proxy statement for the 2021 Annual Meeting of Shareholders and our annual report for the fiscal year ended December 31, 2020. It will instruct you on how you may vote your proxy via the Internet, or how you can request a full set of printed proxy materials, including a proxy card to return by mail. If you would like to receive printed proxy materials, you should follow the instructions contained in our Notice and Access Letter. Unless requested, you will not receive printed proxy materials by mail.

To Attend, Vote, and Participate during the virtual Annual Meeting:

To attend and vote your shares during the virtual Annual Meeting, you will need to log-in to www.meetingcenter.io/268804803 (Password: GPC2021) using: (i) for record holders, the 15-digit control number on your proxy card or (ii) for holders who own shares in street name through brokers, the control number issued to you by Computershare pursuant to the registration process described in the following paragraph. If you do not have a control number, you may log-in as a Guest. For holders who own shares in street

name through brokers, to attend and participate and vote during the virtual Annual Meeting, you will need a new control number issued to you by Computershare pursuant to the following registration process. If you hold your shares in street name, you may only vote during the meeting if you properly register and request and receive a legal proxy in your name from the broker, bank, or other nominee that holds your shares. To register you must submit proof of your proxy power (legal proxy) reflecting your holdings of GPC stock, along with your name and email address to Computershare. Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m., Eastern time, on April 26, 2021. You will receive a confirmation email from Computershare of your registration and a new control number that you can use to participate in the virtual Annual Meeting. If you do not have the control number that you received directly from Computershare, you may attend as a guest (non-stockholder) but will not have the option to vote or ask questions during the virtual Annual Meeting. Requests for registration should be directed to Computershare by email. Forward the email from your broker, or attach an image of your legal proxy, to legalproxy@computershare.com.

The Proxy Statement and the 2020 Annual Report to Shareholders are available at: http://www.proxydocs.com/gpc

 

		By Order of the Board of Directors,
Atlanta, Georgia March 2, 2021
		JENNIFER L. ELLIS
		Vice President - Compliance &
		Corporate Secretary

YOUR VOTE IS IMPORTANT!

 

HOW TO VOTE

 

 

ANNUAL MEETING — APRIL 29, 2021			1
VOTING			1
PROPOSAL 1 — ELECTION OF DIRECTORS			4
CORPORATE GOVERNANCE			13
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS			21
SECURITY OWNERSHIP OF MANAGEMENT			22
EXECUTIVE COMPENSATION			24
COMPENSATION DISCUSSION AND ANALYSIS			24
2020 In Brief			24
Consideration of Last Year’s Advisory Shareholder Vote on Executive Compensation			26
Compensation Philosophy and Objectives			26
Overview of Executive Compensation Components			26
Change in Control Arrangements			32
Factors Considered in Decisions to Materially Increase or Decrease Compensation			32
2020 Variable versus Fixed Compensation			32
2020 Short-Term versus Long-Term Incentive Compensation			33
Stock Ownership Guidelines			33
Clawback Provisions			33
Impact of Accounting and Tax Treatments of Compensation			33
Role of Executive Officers in Determining Compensation			34
ADDITIONAL INFORMATION REGARDING EXECUTIVE COMPENSATION			35
COMPENSATION, NOMINATING AND GOVERNANCE COMMITTEE REPORT			48
COMPENSATION, NOMINATING AND GOVERNANCE COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION			49
COMPENSATION OF DIRECTORS			50
TRANSACTIONS WITH RELATED PERSONS			51
PROPOSAL 2 — ADVISORY VOTE ON EXECUTIVE COMPENSATION			52
PROPOSAL 3 — RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS			54
AUDIT COMMITTEE REPORT			56
SOLICITATION OF PROXIES			57
HOUSEHOLDING OF ANNUAL MEETING MATERIALS			57
OTHER MATTERS			58
SHAREHOLDER PROPOSALS FOR 2022 ANNUAL MEETING			58

ANNUAL MEETING — APRIL 29, 2021

This proxy statement is being furnished to the shareholders of Genuine Parts Company in connection with the solicitation of proxies by the Board of Directors of the Company for use at the Company’s 2021 Annual Meeting of Shareholders to be held on Thursday, April 29, 2021, at 10:00 a.m. eastern time and at any reconvened meeting following any adjournment thereof. In response to continued public health concerns regarding in-person gatherings due to the global pandemic and to support the health and well-being of our employees, shareholders, and all our stakeholders, the Annual Meeting will be held virtually. To access the virtual meeting, go to www.meetingcenter.io/268804803 (Password: GPC2021), you must enter a valid control number found on your proxy card, notice of internet availability, or an email previously received from Computershare. If you do not have a control number, you may access the meeting as a Guest.

The live audio webcast of the Annual Meeting will begin promptly at 10:00 a.m. eastern time. Online access to the audio webcast will open 15 minutes prior to the start of the Annual Meeting. We encourage you to access the meeting in advance of the designated start time.

We have designed the format of the Annual Meeting to ensure that our shareholders are afforded the same rights and opportunities to participate as they would at an in-person meeting. After the business portion of the Annual Meeting concludes and the meeting is adjourned, we will hold a Q&A session during which we intend to answer questions submitted during the meeting that are pertinent to the Company, as time permits, and in accordance with our Ground Rules for Conduct of the Shareholder Meeting. On the day of and during the Annual Meeting, you can view our Ground Rules for Conduct of the Shareholder Meeting and submit any questions on www.meetingcenter.io/268804803 (Password: GPC2021). Answers to any questions not addressed during the meeting will be posted following the meeting on the investor page of our website. Questions and answers will be grouped by topic, and substantially similar questions will be answered only once. To promote fairness, efficiently use the Company’s resources, and ensure all shareholder questions are able to be addressed, we will respond to no more than three questions from any single shareholder.

Beginning 15 minutes prior to and during the Annual Meeting, we will have support available to assist shareholders with any technical difficulties they may have accessing or hearing the virtual meeting. If you encounter any difficulty accessing, or during, the virtual meeting, please go to https://support.vevent.com for assistance.

We anticipate that our Notice and Access Letter will first be mailed, and that this proxy statement and the Company’s 2020 annual report to the shareholders, including consolidated financial statements for the year ended December 31, 2020 will first be made available to our shareholders, on or about March 2, 2021.

VOTING

Shareholders of record can simplify their voting and reduce the Company’s costs by voting their shares via telephone or the Internet. Instructions for voting via telephone or the Internet are set forth on the enclosed proxy card. The telephone and Internet voting procedures are designed to authenticate votes cast by use of a personal identification number. These procedures enable shareholders to appoint a proxy to vote their shares and to confirm that their instructions have been properly recorded. If your shares are held in the name of a bank or broker (in “street name”), the availability of telephone and Internet voting will depend on the voting processes of the applicable bank or broker; therefore, it is recommended that you follow the voting instructions on the form you receive from your bank or broker. If you do not choose to vote by telephone or the Internet, please mark your choices on the enclosed proxy card and then date, sign and return the proxy card at your earliest opportunity.

All proxies properly voted by telephone or the Internet and all properly executed written proxy cards that are delivered to the Company (and not later revoked) will be voted in accordance with instructions given in the proxy. When voting on the election of directors, you may (1) vote FOR all nominees listed in this proxy statement, (2) WITHHOLD AUTHORITY to vote for all nominees, or (3) WITHHOLD AUTHORITY to vote for one or more nominees but vote FOR the other nominees. When voting on the approval of the compensation of the Company’s named executive officers and the ratification of the selection of independent auditors, you may vote FOR or AGAINST the proposal or you may ABSTAIN from voting.

 

		2021 Proxy Statement			1

Voting

 

To vote your shares during the virtual Annual Meeting, you will need to log-in to www.meetingcenter.io/268804803 (Password: GPC2021) using: (i) for record holders, the 15-digit control number on your proxy card or (ii) for holders who own shares in street name through brokers, the control number issued to you by Computershare pursuant to the registration process described in the following paragraph. If you do not have a control number, you may log-in as a Guest. For holders who own shares in street name through brokers, to attend and participate and vote during the virtual Annual Meeting, you will need a new control number issued to you by Computershare pursuant to the following registration process. If you hold your shares in street name, you may only vote during the meeting if you properly register and request and receive a legal proxy in your name from the broker, bank, or other nominee that holds your shares. To register you must submit proof of your proxy power (legal proxy) reflecting your holdings of GPC stock, along with your name and email address to Computershare. Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m., Eastern time, on April 26, 2021. You will receive a confirmation email from Computershare of your registration and a new control number that you can use to participate in the virtual Annual Meeting. If you do not have the control number that you received directly from Computershare, you may attend as a guest (non-stockholder) but will not have the option to vote or ask questions during the virtual Annual Meeting. Requests for registration should be directed to Computershare by email. Forward the email from your broker, or attach an image of your legal proxy, to legalproxy@computershare.com.

If a signed proxy card is received which does not specify a vote or an abstention, the shares represented by that proxy card will be voted FOR all nominees to the Board of Directors listed in this proxy statement, FOR the proposal to approve the compensation of the Company’s named executive officers, and FOR the ratification of the selection of independent auditors for the fiscal year ending December 31, 2021. The Company is not aware, as of the date hereof, of any matters to be voted upon at the Annual Meeting other than those stated in this proxy statement and the accompanying Notice of 2021 Annual Meeting of Shareholders. If any other matters are properly brought before the Annual Meeting, the enclosed proxy card gives discretionary authority to the persons named as proxies to vote the shares represented thereby in their discretion.

If you hold your shares in street name and you do not instruct your bank or brokerage firm in accordance with their directions how to vote your shares prior to the date of the Annual Meeting, your bank or brokerage firm cannot vote your shares (referred to as “broker non-votes”) on the following proposals: “Proposal 1 — Election of Directors” and “Proposal 2 — Advisory Vote on Executive Compensation, and such shares and will not affect the outcome of these votes. However, your bank or brokerage firm may vote your shares in its discretion on “Proposal 3 — Ratification of Selection of Independent Auditors” if you do not provide voting instructions.

A shareholder of record who submits a proxy pursuant to this solicitation may revoke it at any time prior to its exercise at the Annual Meeting. Such revocation may be by delivery of written notice to the Corporate Secretary of the Company at the Company’s address shown above, by delivery of a proxy bearing a later date (including a later vote by telephone or the Internet), or by voting in person at the Annual Meeting. Street name holders may revoke their proxies prior to the Annual Meeting by following the procedures specified by their bank or brokerage firm.

Only holders of record of the Company’s common stock at the close of business on the record date for the Annual Meeting, which is February 22, 2021, are entitled to vote at the Annual Meeting. Persons who hold shares of common stock in street name as of the record date may vote at the Annual Meeting only if they hold a valid proxy from their bank or brokerage firm. At the close of business on February 22, 2021, the Company had 144,405,288 shares of common stock outstanding and entitled to vote at the Annual Meeting.

On each proposal presented for a vote at the Annual Meeting, each shareholder is entitled to one vote per share of common stock held as of the record date. A quorum for the purposes of all matters to be voted on shall consist of shareholders representing, in person or by proxy, a majority of the outstanding shares of common stock entitled to vote at the Annual Meeting. Shares represented at the Annual Meeting that are abstained or withheld from voting and broker non-votes will be considered present for purposes of determining a quorum at the Annual Meeting. If less than a majority of the outstanding shares of common stock are represented at the Annual Meeting, a majority of the shares so represented may adjourn the Annual Meeting to another date, time or place to allow for the solicitation of additional proxies or other measures to obtain a quorum.

The vote required for (1) the election of directors, (2) the advisory vote on executive compensation, and (3) the ratification of the selection of independent auditors is the affirmative vote of a majority of the shares of common

 

2				2021 Proxy Statement

Voting

 

stock outstanding and entitled to vote on such proposal which are represented at the Annual Meeting. Because votes withheld and abstentions will be considered as present and entitled to vote at the Annual Meeting but will not be voted “for” these proposals, they will have the same effect as votes “against” these proposals.

Although the advisory vote on executive compensation is non-binding as provided by law, the Company’s Board of Directors will review the results of the vote and take it into consideration when making future determinations concerning executive compensation.

 

		2021 Proxy Statement			3

PROPOSAL 1

ELECTION OF DIRECTORS

The Board of Directors of the Company currently consists of thirteen directors. The Board has approved the recommendation of its Compensation, Nominating and Governance Committee to nominate the thirteen nominees named below, each of whom will serve as directors until the 2021 Annual Meeting and the election and qualification of their successors.

In the event that any nominee is unable to serve (which is not anticipated), the Board of Directors may:

 

•

designate a substitute nominee, in which case the persons designated as proxies will cast votes for the election of such substitute nominee;

 

•

allow the vacancy to remain open until a suitable candidate is located and nominated; or

 

•

adopt a resolution to decrease the size of the Board.

If any incumbent director nominee in an uncontested election should fail to receive the required affirmative vote of the holders of a majority of the shares entitled to vote which are represented at the Annual Meeting, under Georgia law, the director remains in office as a “holdover” director until his or her successor is elected and qualified or until his or her earlier resignation, retirement, disqualification, removal from office or death. In the event of a holdover director, the Board of Directors in its discretion may request the director to resign from the Board. If the director resigns, the Board of Directors may:

 

•

immediately fill the resulting vacancy;

 

•

allow the vacancy to remain open until a suitable candidate is located and appointed; or

 

•

adopt a resolution to decrease the size of the Board.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE ELECTION OF ALL OF THE NOMINEES.

Set forth below is certain information about each of the thirteen nominees for director, including the experience, qualifications, attributes and skills that our Board believes makes them well qualified to serve as directors. Information about our director independence requirements, our director nominating process, our board leadership structure, a Board Matrix, and other corporate governance matters can be found in the “Corporate Governance” section.

 

4				2021 Proxy Statement

Proposal 1    Election of Directors

 

NOMINEES FOR DIRECTOR

 

Elizabeth W. Camp •   Director Since 2015 •   Independent Director •   Audit Committee •   Financial Expert •   Age 69		Background Elizabeth W. Camp is President and Chief Executive Officer of DF Management, Inc., a private investment and commercial real estate management company, a position she has held since 2000. Previously, Ms. Camp served in various capacities, including President and Chief Executive Officer of Camp Oil Company for 16 years. Ms. Camp serves as lead director of Synovus Financial Corp. and is Chair of its Compensation Committee and former Chair of its Audit Committee.   Qualifications Ms. Camp has over 30 years of leadership experience in various executive roles, most recently as President and Chief Executive Officer of an investment and commercial real estate management company. Ms. Camp also currently serves as lead independent director at Synovus Financial Corp. where she has chaired its Audit Committee and is current Chair of its Compensation Committee. While Chair of the Synovus Audit Committee, Ms. Camp was responsible for ensuring the bank was in compliance with all of the various banking regulations that had recently been enacted in response to the 2008 recession. Her leadership and experience in this complex area was paramount to Synovus’s success at such a crucial time for the banking industry. Her previous experience as a tax attorney at large accounting and law firms in the Washington D.C. area also benefits the Company in the financial, accounting, tax, and legal areas. Ms. Camp’s background as an executive officer and director and her expertise in accounting, tax and legal matters have provided expertise in management, governance, and auditing, as well as leadership skills to our Board and Audit Committee.
Richard Cox, Jr. •   Director Since 2020 •   Independent Director •   Audit Committee •   Age 52		Background Mr. Cox is Chief Information Officer for Cox Enterprises and has been in this role since 2019. Mr. Cox joined Cox Automotive, a subsidiary of Cox Enterprises, in 2013, where he held several leadership positions including Vice President of Client Performance and Vice President of Business Operations and Customer Care. In 2018, the Mayor of Atlanta requested Cox Enterprises to allow Mr. Cox to serve as the city’s Chief Operating Officer as an executive on-loan. For 15 months, Mr. Cox provided executive oversight and directed internal operations for the city’s departments and agencies. Prior to joining Cox Automotive, Mr. Cox was CEO and President of Jones International University and prior to that, he served as Vice President of Customer Experience at Orbitz Worldwide, a leading online travel company. Mr. Cox began his career at Worldspan, a travel technology and content provider, and held several positions during his 11-year tenure at Worldspan.   Qualifications Mr. Cox has over two decades of experience in technology and business operations. His experience at Cox Automotive, Orbitz, and Worldspan in a variety of leadership roles are highly valuable to the Company. During Mr. Cox’s tenure as the city of Atlanta’s COO, he led the city through the largest cyber attack of a U.S. municipality and successfully implemented the largest- ever citywide shift to the cloud. Mr. Cox’s understanding of cyber and IT risk as well as data privacy is instrumental as a member of the Audit Committee. His significant experience in information technology, the automotive business, and his expertise in strategy, operations, analytics, business intelligence, security and technical services makes him a valuable asset to our board.

 

		2021 Proxy Statement			5

Proposal 1    Election of Directors

 

Paul D. Donahue — Chairman •   Director Since 2012 •   Executive Committee •   Age 64		Background Paul D. Donahue is Chairman and Chief Executive Officer of the Company. In April of 2019 the Board of Directors appointed him as Chairman and in May of 2016, he was named Chief Executive Officer. From January of 2012 until May of 2016 he served as President of the Company. He served as President of the Company’s U.S. Automotive Parts Group from July, 2009 to February 1, 2016. Mr. Donahue served as Executive Vice President of the Company from August 2007 until his appointment as President. In addition, between 2004 and 2007, Mr. Donahue served as President and Chief Operating Officer of S. P. Richards Company, a former wholly-owned subsidiary of the Company. Mr. Donahue is a Director of Truist Financial Corporation and serves as a member of the Truist Compensation and Human Capital Committees.   Qualifications Mr. Donahue has eighteen years of successful operating and management experience with the Company, which has included extensive involvement with numerous operating divisions within the Company. Prior to joining the Company, Mr. Donahue spent 24 years with a publicly traded consumer products manufacturer. While there, he successfully held a number of sales, marketing, operations and executive positions. Mr. Donahue’s proven leadership and experience have contributed to the success of the Company and are beneficial to our Board. His experience and knowledge gained from his service on the Truist Board and Committees also brings great value to our Board.
Gary P. Fayard •   Director Since 2014 •   Independent Director •   Audit Committee •   Financial Expert •   Age 68		Background Gary P. Fayard was Executive Vice President and Chief Financial Officer of the Coca-Cola Company from 2003 until his retirement in May, 2014. Mr. Fayard joined the Coca-Cola Company in 1994 as Vice President and Controller. He was promoted to the role of Senior Vice President and Chief Financial Officer in 1999. He has served as a director on numerous for-profit and not-for-profit boards, including service on the Coca-Cola Enterprises, Inc. board from 2001 until 2009, service on the Coca-Cola FEMSA board from 2003 to 2016, and currently serves on the board of directors of Monster Beverage Corporation and is a member of its Audit Committee.   Qualifications Mr. Fayard brings to the Board a wealth of financial, accounting, and auditing knowledge as the former CFO of one of America’s largest corporations. Additionally, as a Director and Audit Committee member on numerous for-profit and not-for-profit boards, he has had direct exposure to a wide variety of businesses and industries. He is also a former partner at a major public accounting firm. Mr. Fayard’s financial background and broad business exposure make him a significant contributor to our Board and Audit Committee.

 

6				2021 Proxy Statement

Proposal 1    Election of Directors

 

P. Russell Hardin •   Director Since 2017 •   Independent Director •   Compensation, Nominating and Governance Committee •   Age 64		Background P. Russell Hardin is President of the Robert W. Woodruff Foundation, the Joseph B. Whitehead Foundation, the Lettie Pate Evans Foundation and the Lettie Pate Whitehead Foundation. These foundations manage approximately $11 billion in assets and distribute approximately $400 million in grants each year, which support Georgia’s institutions in the areas of education, health, human welfare, the environment, community and economic development, philanthropy and volunteerism, and the arts. Mr. Hardin joined the Foundation’s staff in 1988 and was named President in 2006. Prior to his work at the Foundation, Mr. Hardin practiced law with the Atlanta firm of King & Spalding.   Qualifications Mr. Hardin offers the Board extensive experience in the areas of finance, philanthropy, governance, and law. Mr. Hardin’s leadership at the Robert W. Woodruff Foundation and other related foundations, as well as his service as trustee of Northwestern Mutual Life Insurance and a director on the Truist Bank Atlanta Advisory Council bring financial, governance and management expertise that contribute to both the Board and the Compensation, Nominating, and Governance Committee.
John R. Holder •   Director Since 2011 •   Independent Director •   Compensation, Nominating and Governance Committee •   Age 66		Background John R. Holder is Chairman and Chief Executive Officer of Holder Properties, a commercial and residential real estate development, leasing, and management company based in Atlanta. Mr. Holder has held the position of Chairman since 1989 and Chief Executive Officer since 1980. He is also a director of Oxford Industries, Inc. and is a member of its Audit Committee.   Qualifications Mr. Holder brings to the Board his strategic leadership in the growth of Holder Properties, which has been involved in the development of over 100 commercial buildings valued in excess of $2.5 billion, as well as his extensive involvement in the areas of financial and marketing management. His service as the Chairman and CEO of Holder Properties, together with various board affiliations, including as director and Audit Committee member of publicly traded Oxford, Industries, Inc., an apparel company, have given him leadership experience, business acumen and financial literacy that is beneficial to our Board and Compensation, Nominating and Governance Committee.

 

		2021 Proxy Statement			7

Proposal 1    Election of Directors

 

Donna W. Hyland •   Director Since 2015 •   Independent Director •   Audit Committee •   Financial Expert •   Age 60		Background Donna W. Hyland is President and Chief Executive Officer of Children’s Healthcare of Atlanta and has served in that role since June 2008. Prior to that role, she was the Chief Operating Officer of Children’s Healthcare of Atlanta from January 2003 to May 2008 and the Chief Financial Officer from February 1998 to December 2002. She serves as a director of Cousins Properties, Inc. and serves as Chair of its Audit Committee and as a member of its Compensation, Succession, Nominating, and Governance Committee.   Qualifications Ms. Hyland offers our board extensive knowledge of the health care industry as President and Chief Executive Officer of Children’s Healthcare of Atlanta. Her previous experience as COO and CFO of Children’s, as well as her experience on many non-profit boards brings a wide range of business and accounting experience to our board. Ms. Hyland also serves as a director at Cousins Properties, Inc., a publicly traded real estate company, and additionally serves as Chair and a financial expert on the Cousins’ Audit Committee and as a member of its Compensation, Succession, Nominating, and Governance Committee. Ms. Hyland’s service as a financial expert on a public company audit committee provides a wealth of experience that she has brought to our Board and Audit Committee.
John D. Johns •   Director Since 2002 •   Independent Director (Presiding) •   Executive Committee •   Compensation, Nominating and Governance Committee (Chair) •   Age 69		Background John D. Johns was Chairman of DLI North America Inc., the North American regional headquarters for Dai-ichi Life Holdings until his retirement in 2020. Dai-ichi Life is a global life insurance group headquartered in Tokyo, Japan. Its principal U.S. operation is Protective Life Corporation, Birmingham, AL. He served as CEO of Protective from 2002 to 2017 and as Executive Chairman through 2019. Prior to joining Protective in 1993, Mr. Johns was General Counsel of Sonat Inc. (a diversified energy company) and a partner at the law firm, Maynard, Cooper and Gale.   Qualifications Mr. Johns brings experience in running every aspect of a large life insurance company, including his positions as Chairman and CEO as well as previous experience as COO, CFO, and also as a lawyer in private practice and General Counsel of a large publicly-traded energy company. Mr. Johns also serves as a director of The Southern Company, a utility holding company, and is Chairman of its Compensation and Management Succession Committee. Mr. Johns is also on the board of Regions Financial Corporation, a bank holding company, where he serves as Chair of its Risk Committee. He brings a wealth of diverse experience to our Board as its Presiding Independent Director, and as a member of the Executive Committee, as well as Chair of our Compensation, Nominating, and Governance Committee.

 

8				2021 Proxy Statement

Proposal 1    Election of Directors

 

Jean-Jacques Lafont •   Director Since 2020 •   Age 61		Background Jean-Jacques Lafont is the Co-Founder and Executive Chairman of Alliance Automotive Group, an entity that was acquired by the Company in 2017. Prior to his current role as Executive Chairman, Mr. Lafont was Chief Executive Officer of Alliance Automotive Group. Mr. Lafont co-founded Alliance Automotive Group in 1991 and spent 30 years building that business from the ground up. Prior to founding Alliance Automotive Group, Mr. Lafont spent six years working for Hewlett Packard Europe in various management roles.   Qualifications Mr. Lafont is an industry veteran having spent over thirty years in the automotive aftermarket industry. Mr. Lafont has a deep understanding of the sales, operations, finance, strategic planning, and global sourcing aspects of the automotive aftermarket landscape in Europe and is highly beneficial to the strategic planning function of the Board, especially as it relates to the global automotive business. Mr. Lafont is also Non-Executive Chairman of the Supervisory Board of BME, a leading European building materials, sanitary and plumbing products distributor recently acquired by Blackstone.
Robert C. “Robin” Loudermilk, Jr. •   Director Since 2010 •   Independent Director •   Audit Committee •   Age 61		Background Robert C. “Robin” Loudermilk, Jr. is President and Chief Executive Officer of The Loudermilk Companies, LLC, a real estate management company, a position he has held since January 1, 2012. Previously he served as President of Aaron’s Inc., a furniture, electronics and home appliance retailer from 1997 through November 2011 and as Chief Executive Officer of Aaron’s Inc. from 2008 through November 2011. He also served in various other positions at Aaron’s Inc., including service as the Chief Operating Officer from 1997 until 2008. Mr. Loudermilk also previously served as a director of Aaron’s Inc.   Qualifications Mr. Loudermilk offers extensive knowledge of the real estate industry, as founder and CEO of a real estate management company in Atlanta. He also has over 25 years of experience working with a public company in various positions, including CEO, and over 10 years as an experienced senior executive. Mr. Loudermilk’s operational, financial and management expertise and expansive knowledge of a multi-store retail business are a significant contribution to the Board and Audit Committee.
Wendy B. Needham •   Director Since 2003 •   Independent Director •   Executive Committee •   Audit Committee (Chair) •   Financial Expert •   Age 68		Background Wendy B. Needham was Managing Director, Global Automotive Research for Credit Suisse First Boston, an investment banking firm, from August 2000 to June 2003, and a Principal, Automotive Research, for Donaldson, Lufkin and Jenrette from 1994 to 2000. Ms. Needham previously served as a director of Asahi Tec.   Qualifications Ms. Needham offers extensive knowledge and understanding of the U.S. and international auto industries as a former managing director of global automotive research at a world-wide financial services company. Throughout her career she has analyzed the financial performance and strategies of public companies in the global auto industry and brings this experience to bear as the Chair of the Company’s Audit Committee and member of the Executive Committee.

 

		2021 Proxy Statement			9

Proposal 1    Election of Directors

 

Juliette W. Pryor •   Director Since February 2021 •   Independent Director •   Audit Committee (April 2021) •   Age 56		Background Juliette W. Pryor is General Counsel and Corporate Secretary of Albertsons Companies, a Fortune 100 grocery retailer, which operates over 2,000 stores and includes a network of 22 distribution centers and 20 manufacturing facilities in its operations. Ms. Pryor began in this role in June of 2020 and is responsible for the company’s legal, compliance, and government affairs functions. From 2016 to June 2020, Ms. Pryor served as General Counsel and Corporate Secretary for Cox Enterprises, a $20 billion family-owned conglomerate that operates in the communications, media and automotive sectors. Ms. Pryor previously worked at US Foods, Inc., where from 2005-2016 she led the legal, compliance, enterprise risk management, workforce safety, food safety, governance, government affairs and public policy functions. At different points during her tenure at US Foods, Ms. Pryor also held interim lead responsibility for human resources, diversity and inclusion and corporate communications. Before US Foods, Ms. Pryor served as General Counsel for telecom start up e.spire Communications and began her career in private practice with Skadden Arps, advising global clients on complex, international commercial transactions, in the energy, media, and telecom sectors.   Qualifications Ms. Pryor is a skilled public and private company c-suite executive with 25+ years of business experience. Ms. Pryor has deep experience in the board room of multiple corporations, providing key leadership in IPOs, multi-billion-dollar divestitures and acquisitions, corporate restructurings, and entity transformations. Her knowledge and experience in the legal, compliance, regulatory, audit, human resources, public policy, diversity and inclusion, and corporate governance areas combined with her wealth of expertise in retail, distribution and automotive services make her a valuable addition to our board.

 

10				2021 Proxy Statement

Proposal 1    Election of Directors

 

E. Jenner Wood, III •   Director Since 2014 •   Independent Director •   Compensation, Nominating and Governance Committee •   Age 69		Background E. Jenner Wood, III was Corporate Executive Vice President of SunTrust Banks, Inc. until his retirement in December of 2016. He was Chairman, President and Chief Executive Officer of the Atlanta Division of SunTrust Bank from April 2014 to October 2015 and served as a Corporate Executive Vice President of SunTrust Banks, Inc. from 2005 through his retirement in December of 2016. Mr. Wood served as Chairman, President and Chief Executive Officer of the Georgia/North Florida Division of SunTrust Bank from 2013 through March 2014 and as Chairman, President and Chief Executive Officer of the Atlanta/Georgia Division of SunTrust Bank from 2010 to 2013. Mr. Wood previously served as President, Chairman and Chief Executive Officer of SunTrust Bank Group from 2002 to 2010. Mr. Wood is a member of the Board of Directors and Audit Committee of The Southern Company and also serves as lead independent director of Oxford Industries and also is a member of its Nominating, Compensation, and Governance Committee. Mr. Wood also serves as the Chairman of the Robert W. Woodruff Foundation, the Joseph B. Whitehead Foundation, the Lettie Pate Evans Foundation and the Jesse Parker Williams Foundation, and also serves as a Trustee of the Sartain Lanier Family Foundation and Emory University.   Qualifications Mr. Wood’s professional career includes over 20 years in executive management positions with SunTrust Banks, Inc. and its various affiliates and 40 years of experience in the areas of banking and investment management generally. Mr. Wood has served as a director on the Board of Southern Company since 2012, currently serves on its Audit Committee, and serves as the lead independent director at Oxford Industries, Inc. and also sits on its Nominating, Compensation, and Governance Committee. Mr. Wood’s insights with respect to financial issues and the financial services industry, including the retail and business aspects of banking operations, together with his extensive experience on the boards of directors and committees of public and private companies, make him a valuable asset to our Board and our Compensation, Nominating, and Governance Committee.

 

		2021 Proxy Statement			11

Proposal 1    Election of Directors

 

Board Matrix

EXPERIENCE

Finance/Accounting

●

●

●

●

●

●

Distribution/Supply Chain

●

●

●

●

Automotive

●

●

●

●

Government/Regulatory

●

●

●

●

●

●

●

Legal

●

●

●

●

CEO/Leadership

●

●

●

●

●

●

●

●

●

●

●

Technology

●

International

●

●

●

●

Public Co. Board(s)

●

●

●

●

●

●

●

Independent

●

●

●

●

●

●

●

●

●

●

●

TENURE/AGE/GENDER/DIVERSITY

Years on the Board

6

1

9

7

4

10

6

19

1

11

18

0

7

Age

68

52

63

68

63

65

59

68

60

60

67

56

68

Gender

F

M

M

M

M

M

F

M

M

M

F

F

M

Gender/Race/Ethnicity/Nationality

●

●

●

●

●

●

 

 

 

12				2021 Proxy Statement

CORPORATE GOVERNANCE

Independent Directors

The Company’s common stock is listed on the New York Stock Exchange under the symbol “GPC.” The NYSE requires that a majority of the directors, and all of the members of certain committees of the board of directors be “independent directors,” as defined in the NYSE corporate governance standards. Generally, a director does not qualify as an independent director if the director (or in some cases, members of the director’s immediate family) has, or in the past three years has had, certain material relationships or affiliations with the Company, its external or internal auditors, or other companies that do business with the Company. The Board has affirmatively determined that eleven of the thirteen director nominees have no direct or indirect material relationships with the Company that would impair their indpendence and therefore are independent directors according to the NYSE rules and the Company’s Corporate Governance Guidelines and an analysis of all facts specific to each director.

The independent directors and nominees are: Elizabeth W. Camp, Richard Cox, Jr., Gary P. Fayard, P. Russell Hardin, John R. Holder, Donna W. Hyland, John D. Johns, Robert C. “Robin” Loudermilk, Wendy B. Needham, Juliette W. Pryor, and E. Jenner Wood.

Corporate Governance Guidelines and Committee Charters

The Board of Directors has adopted Corporate Governance Guidelines that give effect to the NYSE’s requirements related to corporate governance and various other corporate governance matters. The Company’s Corporate Governance Guidelines, as well as the charters of the Compensation, Nominating and Governance Committee and the Audit Committee, are available on the Company’s website at www.genpt.com.

Non-Management Director Meetings and Presiding Independent Director

Pursuant to the Company’s Corporate Governance Guidelines, the Company’s non-management directors meet separately from the other directors in scheduled executive sessions at least four times annually and at such other times as may be scheduled by the Chairman of the Board or by the Presiding Independent Director or as may be requested by any non-management director.

The independent directors serving on the Company’s Board of Directors appointed John D. Johns to serve as the Board’s Presiding Independent Director in April of 2020, and he has served in this role since April of 2017. As the Presiding Independent Director, Mr. Johns presides at all meetings of non-management and independent directors and serves as a liaison between the Chief Executive Officer and the non-management and independent directors. During 2020, the independent directors held six meetings without management present. Mr. Johns presided over all of these meetings.

Board Leadership Structure

The Company’s Corporate Governance Guidelines allow the independent directors flexibility to split up or combine the roles of Chairman and CEO. The directors annually review the Board’s leadership structure to determine the structure that is in the best interests of the Company and its shareholders. In April of 2019, the Board appointed Mr. Donahue, the Company’s Chief Executive Officer to serve as Chairman of the Board. In his position as CEO, Mr. Donahue has primary responsibility for the day-to-day operations of the Company and provides consistent leadership on the Company’s key strategic objectives. In his role as Chairman of the Board, he sets the strategic priorities for the Board (with input from the Presiding Independent Director), presides over its meetings and communicates its strategic findings and guidance to management. The Board believes that the combination of these two roles provides more consistent communication and coordination throughout the organization, which results in a more effective and efficient implementation of corporate strategy. The Board believes that this leadership structure — a combined Chairman of the Board and Chief Executive Officer — is the most effective structure for the Company at this time and is instrumental in unifying the Company’s strategy behind a single vision. In addition, the deep involvement of the CEO in every aspect of the business allows him the opportunity to identify risks the Company may be facing and, in his role as Chairman, is able to facilitate the Board’s oversight of such risks. The Board believes that this leadership structure is currently the most effective structure for the Company and is in the best interests of its shareholders.

 

		2021 Proxy Statement			13

Corporate Governance

 

As noted earlier, the independent directors have appointed a Presiding Independent Director, which provides balance to the Board’s structure. With a supermajority of independent directors, an Audit Committee and a Compensation, Nominating and Governance Committee each composed entirely of independent directors, and a Presiding Independent Director to oversee all meetings of the non-management directors, the Company’s Board of Directors is comfortable that its current leadership structure provides for an appropriate balance that best serves the Company and its shareholders. The Board of Directors periodically reviews its leadership structure to ensure that it remains the optimal structure for the Company.

Director Nominating Process

Shareholders may recommend a director nominee by writing to the Corporate Secretary specifying the nominee’s name and the other required information as set forth in the Company’s By-laws. The By-laws require, among other things, that the shareholder making the nomination: (1) notify us in writing no later than the close of business on the 90^th day and no earlier than the close of business on the 120^th day prior to the first anniversary of the date of the Company’s notice of annual meeting sent to shareholders in connection with the previous year’s annual meeting; (2) include certain information about the nominee, including his or her name, occupation and Company share ownership; (3) include certain information about the shareholder proponent and the beneficial owner, if any on whose behalf the nomination is made, including such person or entity’s name, address, Company share ownership and certain other information regarding the relationship between the shareholder and beneficial owner, if applicable, and any derivative or hedging positions in Company securities; and (4) update the required information as of the record date and after any subsequent change. The notice must comply with all requirements of the By-laws and, if the nomination is to be included in next year’s proxy statement, the requirements of Exchange Act Rule 14a-18 and must be timely received by the Corporate Secretary at Genuine Parts Company, 2999 Wildwood Parkway, Atlanta, Georgia 30339.

The Company’s By-laws provide that whenever the Board of Directors solicits proxies with respect to the election of directors at an annual meeting of shareholders, subject to certain requirements, a shareholder, or a group of up to 20 shareholders, owning 3% or more of the Company’s outstanding common stock continuously for at least three years can require the Company to include in its proxy materials for such annual meeting director nominations for up to the greater of (i) 20% of the number of directors up for election, rounding down to nearest whole number, or (ii) two directors. Shareholder requests to include shareholder nominees in the Company’s proxy materials for the 2022 annual meeting of shareholders must be received by the Corporate Secretary no earlier than October 3, 2021 and no later than November 2, 2021 and must satisfy the requirements specified in the Company’s By-laws.

The Company’s Board of Directors has established the following process for the identification and selection of candidates for director. The Compensation, Nominating and Governance Committee, in consultation with the Chairman of the Board, annually reviews the appropriate experience, skills, background and characteristics required of Board members in the context of the current membership of the Board to determine whether the Board would better be enhanced by the addition of one or more directors. This review includes, among other relevant factors in the context of the perceived needs of the Board at that time, issues of experience, reputation, background, judgment, diversity and skills. With regard to diversity, the Board and the Compensation, Nominating and Governance Committee believe that sound governance of the Company in an increasingly complex international marketplace requires a wide range of viewpoints. As a result, to ensure the Board benefits from diverse perspectives, in any formal search for board candidates the Board shall consider candidates who reflect diverse backgrounds, including diversity of gender and race and/or ethnicity, and in cases where a search firm is retained by the Committee, the Committee will direct the search firm to include in its initial slate of candidates qualified candidates who reflect diverse backgrounds, including diversity of gender and race and/or ethnicity.

If the Compensation, Nominating and Governance Committee determines that adding a new director is advisable, the Committee initiates a search, working with other directors, management and, if it deems appropriate or necessary, a search firm retained to assist in the search. If a search firm is retained, the Committee will require that the slate of candidates presented must include gender and racially/ethnically diverse candidates. The Compensation, Nominating and Governance Committee considers all appropriate candidates proposed by management, directors and shareholders. Information regarding potential candidates is presented to the Compensation, Nominating and Governance Committee, and the Committee evaluates the candidates based

 

14				2021 Proxy Statement

Corporate Governance

 

on the needs of the Board at that time. Potential candidates are evaluated according to the same criteria, regardless of whether the candidate was recommended by shareholders, the Compensation, Nominating and Governance Committee, another director, Company management, a search firm or another third party. The Compensation, Nominating and Governance Committee then submits any recommended candidate(s) to the full Board of Directors for approval and recommendation to the shareholders for approval at the Company’s annual meeting of shareholders.

On February 15, 2021, the Board increased the number of directorships of the full Board to thirteen and appointed Juliette W. Pryor to fill the newly-created directorship. Ms. Pryor was recommended to the Board and the Compensation, Nominating and Governance Committee as a director candidate by a search firm that was engaged by the Board to help identify qualified candidates. Ms. Pryor’s candidacy to serve as a director was thoroughly reviewed in accordance with the process described above for evaluating candidates to serve on the Company’s Board of Directors. Based on, among other factors, Ms. Pryor’s background and qualifications as discussed above, the Compensation, Nominating and Governance Committee and the Board believe she would be a great value-add to the Board.

The Company’s Board of Directors is composed of individuals with diverse experience at policy-making levels in a variety of businesses, as well as in non-profit organizations, in areas that are relevant to the Company’s activities. The Board views diversity broadly to include, among other things, differences in backgrounds, qualifications, experiences, viewpoint, geographic location, education, skills and expertise, professional and industry experience, and personal characteristics, including age, gender identity, ethnicity, nationality, race, and sexual orientation. The Board believes that a variety and balance of perspectives on the Board results in more thoughtful and robust deliberations, and ultimately, better decisions. Each director was nominated on the basis of the unique experience, background, qualifications, attributes and skills that he or she brings to the Board, as well as how those factors blend with those of the others on the Board as a whole.

Talent Development and Succession Planning

Developing our people and sustaining our culture are important priorities for our Company. We promote a diverse, inclusive, and innovative culture that encourages and embraces change, diverse ideas, and perspectives. To support these priorities, training, talent development and succession planning is discussed regularly by management and the Compensation, Nominating, and Governance Committee. This Committee oversees the development and implementation of succession plans for the senior management team. The process includes the CEO, President, and Executive Vice President and Chief Human Resources Officer undertaking a full review of performance and development of senior leaders across the organization, and they then present and discuss with the Compensation, Nominating, and Governance Committee their evaluations and recommendations for senior management development and succession on a regular basis. The Compensation, Nominating and Governance Committee also assists the Board with oversight of CEO succession planning. The CEO, President, and the Executive Vice President and Chief Human Resources Officer regularly update the Compensation, Nominating, and Governance Committee on plans for CEO succession, and the topic is discussed regularly during the executive session of Compensation, Nominating, and Governance Committee meetings. While internal candidates are always being trained and developed for potential succession into the CEO role, it is the Company and the Board’s policy, that if an external search firm is ever used for assistance with CEO succession planning, the Committee and/or Board will instruct the search firm to include in its initial slate of candidates qualified people who reflect diverse backgrounds, including diversity of gender and race and/or ethnicity.

Communications with the Board

The Company’s Corporate Governance Guidelines provide for a process by which shareholders or other interested parties may communicate with the Board, a Board committee, the presiding independent director, the non-management directors as a group, or individual directors. Shareholders or other interested parties who wish to communicate with the Board, a Board committee or any such other individual director or directors may do so by sending written communications addressed to the Board of Directors, a Board committee or such individual director or directors, c/o Corporate Secretary, Genuine Parts Company, 2999 Wildwood Parkway, Atlanta, Georgia 30339. This information is also available on the Company’s website at www.genpt.com. All communications will be compiled by the Secretary of the Company and forwarded to the members of the Board

 

		2021 Proxy Statement			15

Corporate Governance

 

to whom the communication is directed or, if the communication is not directed to any particular member(s) of the Board, the communication shall be forwarded to all members of the Board of Directors.

Annual Performance Evaluations

The Board recognizes that a robust and constructive evaluation process is an essential part of good corporate governance and Board effectiveness. The Company’s Corporate Governance Guidelines provide that the Board of Directors shall conduct an annual evaluation to determine, among other matters, whether the Board and the Committees are functioning effectively. The Compensation, Nominating and Governance Committee is responsible for overseeing this self-evaluation process. The Audit Committee and the Compensation, Nominating and Governance Committee are also required to each conduct an annual self-evaluation. Through the performance evaluations, directors review the Board’s and Committees’ performances, including areas where the Board and Committees feel they function effectively, and importantly, areas where the Board and Committees believe they can improve. Evaluation results requiring additional consideration are addressed at subsequent Board and Committee meetings.

The Board, Audit Committee, and Compensation, Nominating and Governance Committee each conducted an annual self-evaluation process during 2020, and feedback from the process was reported to and discussed by the Board. Changes to processes and procedures of the Board and Committees based on such feedback are continuously being implemented and are monitored in future evaluations.

Board Oversight of Risk

The Company’s Board of Directors recognizes that, although risk management is primarily the responsibility of the Company’s management team, the Board plays a critical role in the oversight of risk. The Board believes that an important part of its responsibilities is to assess the major risks the Company faces and review the Company’s options for monitoring and controlling these risks. The Board assumes responsibility for the Company’s overall risk assessment.

The Board as a whole examines specific business risks in its regular reviews of the individual business units and also on a Company-wide basis as part of its regular strategic reviews. In addition to periodic reports from two committees (discussed below) about risks, the Board receives presentations throughout the year from various business units and management that include discussion of significant risks specific to such business unit as necessary. Periodically, at Board meetings, management discusses matters of particular importance or concern, including any significant areas of risk requiring Board attention.

The Audit Committee has specific responsibility for oversight of risks associated with financial accounting and audits, internal control over financial reporting, and information technology/cyber security risk. The Audit Committee monitors and reviews applicable enterprise risks identified as part of the Company’s enterprise risk management program, including the Company’s risk assessment and management policies, the Company’s major financial risk exposure and cyber and information security exposure and the steps taken by management to monitor and mitigate such exposure. The Audit Committee receives updates at every Committee meeting specific to the Company’s cyber security program and IT security risk, including descriptions of mititgation and incident response plans and overviews of awareness and training programs. The Board receives periodic updates from the Audit Committee Chair on cyber security and IT security risk and mitigation strategies and also receives periodic updates directly from the Chief Information Officer and Chief Information Security Officer.

The Compensation, Nominating and Governance Committee oversees the risks relating to the Company’s compensation policies and practices as well as management development and leadership succession in the Company’s various business units.

The Compensation, Nominating and Governance Committee annually reviews with management the design and operation of the Company’s incentive compensation arrangements for all employees, including executive officers, for the purpose of determining whether such programs might encourage inappropriate risk-taking that could have a material adverse effect on the Company. In advance of such review, the Company identifies internal and external factors that comprise the Company’s primary business risks, and management compiles an inventory of incentive compensation arrangements, which are then summarized for the Compensation, Nominating and Governance Committee and reviewed for the purpose of identifying any aspects of such programs that might encourage behaviors that could exacerbate the identified business risks.

 

16				2021 Proxy Statement

Corporate Governance

 

In conducting this assessment for 2020, the Compensation, Nominating and Governance Committee considered the performance objectives and target levels used in connection with these incentive awards and also the features of the Company’s compensation program that are designed to mitigate compensation-related risk. Based on such assessment, the Compensation, Nominating and Governance Committee concluded that the Company’s compensation policies and practices for its employees are not reasonably likely to have a material adverse effect on the Company.

Code of Conduct and Ethics

The Board of Directors has adopted a Code of Conduct for Employees, Contract and/or Temporary Workers, and Directors and a Code of Conduct for Senior Financial Officers, both of which are available on the Company’s website at www.genpt.com. These Codes of Conduct comply with NYSE and Securities and Exchange Commission (the “SEC”) requirements, including procedures for the confidential, anonymous submission by employees or others of any complaints or concerns about the Company or its accounting, internal accounting controls or auditing matters. The Company will post any amendments to or waivers from the Code of Conduct (to the extent applicable to the Company’s executive officers and directors) on its website.

Anti-Hedging Policy

Pursuant to our Insider Trading Policy, our directors, officers and employees are prohibited from purchasing financial instruments, or otherwise engaging in transactions, that hedge or offset, or are designed to hedge or offset, any decrease in the market value of Company common stock, such as prepaid variable forward contracts, equity swaps, collars, forward sale contracts and exchange funds.

Environmental & Social Responsibility

The Company is committed to operating all aspects of its business with integrity, contributing to our local communities in a multitude of ways, promoting a culture of diversity and inclusion, and using our natural resources thoughtfully and responsibly. These and other environmental, social and governance (“ESG”) matters are core to how we run our business and align closely with our corporate values. The Compensation, Nominating, and Governance Committee has primary responsibility for oversight of ESG matters. This oversight includes reviewing and making recommendations to the Board regarding our environmental, social and governance practices and policies. The CNG Committee receives regular reports from management on ESG engagements with shareholders and related investor feedback, as well as information on recent developments with respect to ESG matters. As appropriate, the full Board receives a report on our sustainability strategy and activities, including a discussion of our ESG communications and disclosures as well as our annual Sustainability Report. Our Sustainability Report, most recently published on September 30, 2020 on the investor page of our website, genpt.com/investors, describes key corporate social responsibility and sustainability issues relevant to the Company, our initiatives related to those issues, and our progress with respect to those initiatives. In 2020, in response to feedback from investors and other stakeholders, the Company made several enhancements to our Sustainability Report, including specifically addressing key human capital management disclosures and incorporating information from the relevant standard from the Sustainability Accounting Standards Board into all of our sustainability disclosures. In 2020 we also published our Human Rights Policy on genpt.com. The policy communicates our commitment to upholding human rights in every way and in every location we do business. We invite you to review these recent publications on genpt.com/investors.

Shareholder Engagement

We approach shareholder engagement as an integrated, year-round process. We actively solicit shareholder feedback on all aspects of our business and incorporate shareholder perspectives into our discussions and decision-making.

Our response to substantial support for a shareholder proposal last year is reflective of our approach to shareholder engagement. In response to the overwhelming support for a shareholder proposal seeking additional disclosure concerning the Company’s human capital risks and opportunities, we reached out to our top 25 shareholders to get their feedback on guidance on how to respond. We ultimately engaged with holders of over 30% of our outstanding shares to get their detailed feedback on what types of human capital management

 

		2021 Proxy Statement			17

Corporate Governance

 

disclosure would be most valuable to them. In response to the shareholder proposal and subsequent engagements, we have enhanced our disclosures in this area. For example, our 2020 Sustainability Report, available at www.genpt.com, utilizes the Sustainability Accounting Standards Board Framework for Multiline and Specialty Retailers and Distributors. That report also offers extensive discussion of a number of important human capital management topics raised during shareholder engagements, including talent management, training and development, employee engagement, employee safety, and diversity and inclusion. In the coming year, we expect to engage with our shareholders on this topic further, to get their feedback on our existing disclosure and identify other opportunities to enhance our disclosures on human capital management topics.

We also used our discussions with shareholders to address other topics of interest, particularly other ESG-specific issues in which these holders are interested. Feedback on corporate governance, executive compensation, and environmental and social responsibility practices has been an important input into Board discussions, and influenced many discussions and decisions in the past year.

Our Board values the input and feedback we receive from our shareholders through all channels, including engagements with members of our Board and/or leadership team, and we expect even more engagement with our shareholders on these and other ESG topics in the future.

Board Attendance

The Company’s Corporate Governance Guidelines provide that all directors are expected to attend all meetings of the Board and committees on which they serve and are also expected to attend the Annual Meeting of Shareholders. During 2020, the Board of Directors held nine meetings. Two directors missed one meeting each; otherwise, all of the directors attended all of the Board of Director meetings. All committee members attended all of the committee meetings on which they served. All of the Company’s directors attended the Company’s 2020 Annual Meeting.

Board Committees

The Board presently has three standing committees. Information regarding the functions of the Board’s committees, their present membership and the number of meetings held by each committee during 2020 is set forth below:

Audit Committee.    The Audit Committee’s main role is to assist the Board of Directors with oversight of (1) the integrity of the Company’s financial statements, (2) the Company’s compliance with legal and regulatory requirements, (3) the independent auditor’s qualifications and independence and (4) the performance of the Company’s internal audit function and independent auditors. As part of its duties, the Audit Committee assists in the oversight of (a) management’s assessment of, and reporting on, the effectiveness of internal control over financial reporting, (b) the independent auditor’s integrated audit, which includes expressing an opinion on the conformity of the Company’s audited financial statements with United States generally accepted accounting principles, (c) the independent auditor’s audit of the Company’s internal control over financial reporting which includes expressing an opinion on the effectiveness of the Company’s internal control over financial reporting, (d) the Company’s risk assessment and risk management, and (e) the Company’s cyber security program. (See “Board Oversight of Risk” above.) The Audit Committee oversees the Company’s accounting and financial reporting process and has the authority and responsibility for the appointment, retention and oversight of the Company’s independent auditors, including pre-approval of all audit and non-audit services to be performed by the independent auditors. The Audit Committee annually reviews and approves the firm to be engaged as independent auditors for the Company for the next fiscal year, reviews with the independent auditors the plan and results of the audit engagement, reviews the scope and results of the Company’s procedures for internal auditing and monitors the design and maintenance of the Company’s internal accounting controls. Additionally, as noted above, the Audit Committee oversees the Company’s cyber security program and receives updates on IT/cyber risk and mitigation initiatives including incident response plans and awareness and training at every Audit Committee meeting. The Audit Committee Report appears later in this proxy statement. The charter of the Audit Committee is available on the Company’s website at www.genpt.com.

The current members of the Audit Committee are Wendy B. Needham (Chair), Elizabeth W. Camp, Richard Cox, Jr., Gary P. Fayard, Donna W. Hyland, and Robert C. Loudermilk, Jr. All members of the Audit Committee are independent of the Company and management, as required by the NYSE listing standards and SEC requirements.

 

18				2021 Proxy Statement

Corporate Governance

 

The Board has determined that all members of the Audit Committee meet the financial literacy requirements of the NYSE corporate governance listing standards. During 2020, the Audit Committee held six meetings.

The Board of Directors has determined that Ms. Camp, Mr. Fayard, Ms. Hyland, and Ms. Needham meet the requirements adopted by the SEC for qualification as an “audit committee financial expert.” Ms. Camp currently oversees all aspects of business as President and CEO of a private investment and commercial real estate management company. She also has previous experience in accounting, tax, and legal matters as a tax attorney as well as extensive finance and accounting experience as a director for over 10 years of Synovus, serving as former chair of its Audit Committee. Mr. Fayard retired in 2014 as CFO of The Coca-Cola Company, where he held various financial leadership positions since joining the company in 1994. Previous to his role at Coca-Cola, he was a partner at a major public accounting firm. Mr. Fayard brings a wealth of financial, accounting, and auditing knowledge from his finance roles at Coca-Cola. Mr. Fayard also has served as director and audit committee member on numerous for-profit and not-for-profit boards, giving him direct exposure to the finance and accounting of a wide variety of businesses and industries. Ms. Hyland currently acts as the President and CEO of Children’s Healthcare of Atlanta and oversees all functions of the hospital, including its finances. As former CFO of the organization, Ms. Hyland gained significant experience with the details of the finance and accounting areas of the business. Her professional experience as well as her directorship at Cousins Properties and chair of Cousins’ Audit Committee, as well as memberships on many non-profit boards exposed her to a broad spectrum of finance and accounting issues in a variety of businesses and industries. Ms. Needham was formerly Managing Director, Global Automotive Research for Credit Suisse First Boston from August 2000 to June 2003. Prior to that, Ms. Needham was a Principal, Automotive Research for Donaldson, Lufkin & Jenrette for six years. In both of these positions, Ms. Needham actively reviewed financial statements and prepared various financial analyses and evaluations of such financial statements and related business operations.

Compensation, Nominating and Governance Committee.    The Compensation, Nominating and Governance Committee is responsible for (1) determining and evaluating the compensation of the Chief Executive Officer and other executive officers and key employees and approving and monitoring our executive compensation plans, policies, and programs, (2) identifying and evaluating potential nominees for election to the Board and recommending candidates for consideration by the Board and shareholders, (3) developing and recommending to the Board a set of Corporate Governance Guidelines, as well as periodically reevaluating those Corporate Governance Guidelines, (4) overseeing and guiding the strategy of the Company’s environmental, social, and governance initiatives, including oversight of the corporate culture and the Company’s diversity and inclusion initiatives, (5) overseeing the evaluation of the Board of Directors and management, and (6) developing and advising on succession planning for key executive roles within the Company, including the CEO role. The Committee also periodically reviews and evaluates the risk involved in the Company’s compensation policies and practices and the relationship of such policies and practices to the Company’s overall risk and management of that risk. The Committee has and may exercise the authority of the Board of Directors as specified by the Board and to the extent permitted under the Georgia Business Corporation Code, and the Committee has the authority to delegate its duties and responsibilities to subcommittees as it deems necessary and advisable. A brief description of the Committee’s policy regarding director candidates nominated by shareholders appears in “Director Nominating Process” above, and a full version can be found in the Company’s By-Laws.

For 2020, the Committee independently retained a compensation consultant, Meridian Compensation Partners, LLC, to assist it in its review of executive compensation practices, including the competitiveness of pay levels, design issues, market trends and technical considerations.

During the year, Meridian assisted the Committee with the development of competitive market data for executives and a related assessment of the Company’s executive compensation levels, a risk assessment of the Company’s incentive compensation, and also provided legislative and regulatory updates and guidance regarding reporting of executive compensation under the SEC’s proxy disclosure rules. Meridian also assisted the Committee in adjusting its compensation program to account for the uncertainty of COVID-19. Our Chief Executive Officer, with input from our Executive Vice President and Chief Human Resources Officer and Meridian, recommended to the Committee base salary, target bonus levels, actual bonus payouts and long-term incentive grants for our senior executives. The Committee considered, discussed, modified as appropriate, and took action on such proposals. The Committee has agreed that Meridian will play a similar role for 2021.

 

		2021 Proxy Statement			19

Corporate Governance

 

The Compensation, Nominating and Governance Committee annually considers whether the work of any compensation consultant raised any conflict of interest. For 2020, the Committee considered various factors, including the six factors mandated by SEC rules, and determined that with respect to executive and director compensation-related matters, no conflict of interest was raised by the work of Meridian. The Committee also considers the six independence factors mandated by SEC rules before engaging any other compensation advisers.

The current members of the Compensation, Nominating and Governance Committee are John D. Johns (Chair), P. Russell Hardin, John R. Holder, and E. Jenner Wood. All members of the Compensation, Nominating and Governance Committee are independent of the Company and management, as required by the NYSE listing standards and the SEC. During 2020, the Compensation, Nominating and Governance Committee held six meetings. The charter of the Compensation, Nominating and Governance Committee is available on the Company’s website at www.genpt.com.

Executive Committee.    The Executive Committee is authorized, to the extent permitted by law, to act on behalf of the Board of Directors on all matters that may arise between regular meetings of the Board upon which the Board of Directors would be authorized to act. The current members of the Executive Committee are Paul D. Donahue (Chair), John D. Johns and Wendy B. Needham. During 2020, this committee held four meetings.

 

20				2021 Proxy Statement

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following table sets forth information as of February 22, 2021, as to all persons or groups known to the Company to be beneficial owners of more than five percent of the outstanding common stock of the Company.

 

Title of Class		Name and Address of Beneficial Owner		Shares Beneficially Owned				Percent of Class
Common Stock, $1.00 par value		The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355		16,465,371(1)				11.9%
Common Stock, $1.00 par value		Blackrock, Inc. 55 East 52nd Street New York, NY 10055		12,452,550(2)				8.6%
Common Stock, $1.00 par value		State Street Corporation State Street Financial Center One Lincoln Street Boston, MA 02111		8,043,539(3)				5.6%

 

(1)

This information is based upon information included in a Schedule 13G/A filed on February 10, 2021 by The Vanguard Group. The Vanguard Group reports shared voting power with respect to 242,073 shares, sole dispositive power with respect to 15,821,567 shares and shared dispositive power with respect to 643,084 shares.

 

(2)

This information is based upon information included in a Schedule 13G/A filed on January 29, 2021 by Blackrock, Inc. Blackrock, Inc. reports sole voting power with respect to 11,023,557 shares and sole dispositive power with respect to all 12,452,550 shares. According to the filing, the reported shares are held by Blackrock, Inc. through subsidiaries.

 

(3)

This information is based upon information included in a Schedule 13G filed on February 10, 2021 by State Street Corporation. State Street Corporation reports shared voting power with respect to 7,380,377 and shared dispositive power with respect to 8,033,470 shares. According to the filing, the reported shares are held by State Street Corporation through subsidiaries.

 

		2021 Proxy Statement			21

SECURITY OWNERSHIP OF MANAGEMENT

Based on information provided to the Company by the named persons, set forth in the table below is information regarding the beneficial ownership of common stock of the Company held by the Company’s directors and nominees for director, the named executive officers (as defined in “Executive Compensation” below) and all directors, nominees for director and executive officers of the Company as a group as of February 22, 2021:

 

Director/Nominee/Executive Officer		Shares of Common Stock Beneficially Owned(1)					Percentage of     Common Stock     Outstanding
Randy P. Breaux				9,972	(2)				*
Elizabeth W. Camp				11,701	(3)				*
Richard Cox, Jr.				3,657	(4)				*
Paul D. Donahue				147,584	(5)				*
Gary P. Fayard				21,070	(6)				*
P. Russell Hardin				9,992	(7)				*
Kevin E. Herron				26,478	(8)				*
John R. Holder				32,871	(9)				*
Donna W. Hyland				16,122	(10)				*
John D. Johns				51,142	(11)				*
Jean-Jacques Lafont				9,953	(12)				*
Robin C. Loudermilk				44,322	(13)				*
Wendy B. Needham				23,906	(14)				*
James R. Neill				3,127,432	(15)				2.2	%
Juliette W. Pryor				0	(16)				*
E. Jenner Wood				16,872	(17)				*
Carol B. Yancey				3,174,202	(18)				2.2	%
Directors, Nominees, and Executive Officers as a Group (17 persons)				3,621,813	(19)				2.5	%

 

*	Less than 1%

 

(1)

Information relating to the beneficial ownership of Common Stock by directors and executive officers is based upon information furnished by each such individual using “beneficial ownership” concepts set forth in rules promulgated by the SEC. Except as indicated in other footnotes to this table, directors and executive officers possessed sole voting and investment power with respect to all shares set forth by their names. The table includes, in some instances, shares in which members of a director’s or executive officer’s immediate family or trusts or foundations established by them have a beneficial interest and as to which the director or executive officer disclaims beneficial ownership.

 

(2)

Includes 7,182 shares subject to stock appreciation rights that are currently exercisable. Does not include 15,501 restricted stock units that each represent a right to receive one share of Common Stock on the vesting date, subject to earlier settlement in certain events outside the control of Mr. Breaux.

 

(3)	Includes 11,201 restricted stock units that each represent a right to receive one share of Common Stock on the vesting date, subject to earlier settlement in certain events, including a termination of service as a director by reason of retirement.

 

(4)

Includes 2,547 restricted stock units that each represent a right to receive one share of Common Stock on the vesting date, subject to earlier settlement in certain events, including a termination of service as a director by reason of retirement, and (ii) 1,110 shares of Common Stock equivalents held in Mr. Cox’s stock account under the Directors’ Deferred Compensation Plan.

 

(5)

Includes 62,510 shares subject to stock appreciation rights that are currently exercisable and 82,951 shares held in a family trust. Does not include 102,155 restricted stock units that each represent a right to receive one share of Common Stock on the vesting date, subject to earlier settlement in certain events outside the control of Mr. Donahue.

 

(6)

Includes (i) 11,230 restricted stock units that each represent a right to receive one share of Common Stock on the vesting date, subject to earlier settlement in certain events, including a termination of service as a director by reason of retirement, and (ii) 6,389 shares of Common Stock equivalents held in Mr. Fayard’s stock account under the Directors’ Deferred Compensation Plan.

 

(7)

Includes (i) 6,635 restricted stock units that each represent a right to receive one share of Common Stock on the vesting date, subject to earlier settlement in certain events, including a termination of service as a director by reason of retirement, and (ii) 3,357 shares of Common Stock equivalents held in Mr. Hardin’s stock account under the Directors’ Deferred Compensation Plan.

 

22				2021 Proxy Statement

Security Ownership of Management

 

(8)

Includes 14,195 shares subject to stock appreciation rights that are currently exercisable. Does not include 16,342 restricted stock units that each represent a right to receive one share of Common Stock on the vesting date, subject to earlier settlement in certain events outside the control of Mr. Herron.

 

(9)

Includes (i) 11,231 restricted stock units that each represent a right to receive one share of Common Stock on the vesting date, subject to earlier settlement in certain events, including a termination of service as a director by reason of retirement, and (ii) 7,852 shares of Common Stock equivalents held in Mr. Holder’s stock account under the Directors’ Deferred Compensation Plan.

 

(10)

Includes (i) 11,201 restricted stock units that each represent a right to receive one share of Common Stock on the vesting date, subject to earlier settlement in certain events, including a termination of service as a director by reason of retirement, and (ii) 4,921 shares of Common Stock equivalents held in Ms. Hyland’s stock account under the Directors’ Deferred Compensation Plan.

 

(11)

Includes (i) 11,231 restricted stock units that each represent a right to receive one share of Common Stock on the vesting date, subject to earlier settlement in certain events, including a termination of service as a director by reason of retirement, (ii) 25,801 shares of Common Stock equivalents held in Mr. Johns’ stock account under the Directors’ Deferred Compensation Plan, and (iii) 2,053 shares owned by Mr. Johns’ spouse, as to which Mr. Johns disclaims beneficial ownership.

 

(12)	Includes 9,953 restricted stock units that each represent a right to receive one share of Common Stock on the vesting date, subject to earlier settlement in certain events, including a termination of service as a director by reason of retirement.

 

(13)

Includes (i) 11,231 restricted stock units that each represent a right to receive one share of Common Stock on the vesting date, subject to earlier settlement in certain events, including a termination of service as a director by reason of retirement, and (ii) 10,833 shares of Common Stock equivalents held in Mr. Loudermilk’s stock account under the Directors’ Deferred Compensation Plan.

 

(14)	Includes (i) 11,231 restricted stock units that each represent a right to receive one share of Common Stock on the vesting date, subject to earlier settlement in certain events, including a termination of service as a director by reason of retirement.

 

(15)

Includes 12,880 shares subject to stock appreciation rights that are currently exercisable. Does not include 14,230 restricted stock units that each represent a right to receive one share of Common Stock on the vesting date, subject to earlier settlement in certain events outside the control of Mr. Neill. Also includes 2,016,931 shares held in trust for Company employees under the Company’s Pension Plan for which Mr. Neill is one of six trustees and 1,088,532 shares held in a benefit fund for Company employees of which Mr. Neill is one of four trustees.

 

(16)	Ms. Pryor joined the board on February 15, 2021.

 

(17)

Includes (i) 11,230 restricted stock units that each represent a right to receive one share of Common Stock on the vesting date, subject to earlier settlement in certain events, including a termination of service as a director by reason of retirement, (ii) 2,385 shares of Common Stock equivalents held in Mr. Wood’s stock account under the Directors’ Deferred Compensation Plan, and (iii) 100 shares held in trust for one of Mr. Wood’s children to which Mr. Wood disclaims beneficial ownership.

 

(18)

Includes 21,965 shares subject to stock appreciation rights that are currently exercisable. Does not include 37,177 restricted stock units that each represent a right to receive one share of Common Stock on the vesting date, subject to earlier settlement in certain events outside the control of Ms. Yancey. Also includes 2,016,931 shares held in trust for Company employees under the Company’s Pension Plan for which Ms. Yancey is one of six trustees and 1,088,532 shares held in a benefit fund for Company employees of which Ms. Yancey is one of four trustees.

 

(19)

Includes (i) 118,732 shares or rights issuable to certain executive officers upon the exercise of stock appreciation rights, (ii) 2,016,931 shares held in trust for Company’s employees under the Company’s Pension Plan, (iii) 1,088,532 shares held in a benefit fund for Company employees, and (iv) 62,648 shares held as Common Stock equivalents in directors’ stock accounts under the Directors’ Deferred Compensation Plan.

 

		2021 Proxy Statement			23

EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

In this section, an overview and analysis is provided of our executive compensation programs and policies, the material compensation decisions we have made under those programs and policies, and the material factors that we considered in making those decisions. Later in this proxy statement under the heading “Additional Information Regarding Executive Compensation” you will find a series of tables containing specific information about the compensation earned or paid in 2020 to the following individuals, who are referred to as our named executive officers:

 

•

Paul D. Donahue, Chairman & Chief Executive Officer

 

•

Carol B. Yancey, Executive Vice President & Chief Financial Officer

 

•

James R. Neill, Executive Vice President & Chief Human Resources Officer

 

•

Kevin E. Herron, President — U.S. Automotive Parts Group

 

•

Randall P. Breaux, President — Motion Industries

The discussion below is intended to explain the information provided in the detailed compensation tables at the end of this section in order to put that information into context within the Company’s overall compensation program.

2020 In Brief

During 2020, the Compensation, Nominating and Governance Committee actions and our pay-for-performance program operated such that actual compensation earned by executives reflected the performance of the Company. Highlights for 2020 are as follows:

Performance

We entered 2020 with plans to execute on our strategic growth initiatives and continue the positive transformation of the Company. By mid-March, circumstances across the globe had changed drastically due to the COVID-19 pandemic. In response, our team moved swiftly to address the health and safety concerns of our employees, customers, suppliers and communities in which we operate. This required effective measures to maintain a safe work environment, among other initiatives, and through the commitment and sacrifice of our 50,000 GPC associates, we operated through the crisis with an unwavering focus on excellent customer service and the utmost level of care and concern for all our stakeholders.

While COVID-19 significantly pressured economic activity and restricted consumer mobility during the year, the Company acted on a number of initiatives to reduce costs and minimize the net impact of the slower sales environment resulting from the pandemic. We are extremely proud of our team for their many accomplishments in a difficult year, highlights of which include:

 

•

Sales excluding divestitures of $16.5 billion, down 5.6% from prior year, or down 2.3% excluding divested operations, and 93% of our target.

 

•

Adjusted pre-tax income of $ 1.0 billion which was 93% of our target.

 

•

Working capital performance improved and was a source of operating cash flow, and was achieved at 150% of our target.

 

•

Total shareholder return was down 2.2% for 2020 and the Company’s ten year shareholder return was 10.2%, which is in line with the Company’s long term shareholder return target of 10-13% but reflects COVID-19-related challenges that impacted the Company’s 2020 performance.

Plan Payouts

As a result of the above and other performance results, 2020 bonus payouts were generally below target. We did not make any adjustments in our incentive plan or to our performance goals as a result of the pandemic.

 

24				2021 Proxy Statement

Compensation Discussion and Analysis

 

•

Payouts of 2020 annual incentive awards for Messrs. Donahue and Neill and Ms. Yancey were 97% of the total target amount, based on the Company’s 2020 adjusted pre-tax profit of $1,038,717,000 or 93% of the target amount, and working capital improvement was 150% of the target amount.

 

•

Payout of Mr. Herron’s 2020 annual incentive award was 70% of the total target amount. This award was earned based on the Automotive Part’s Group’s achievement of 91% pre-tax profit performance, 150% of working capital performance, and the sales goal was not met.

 

•

Payout of Mr. Breaux’s 2020 annual incentive award was 60% of the total target amount. This award was earned based on the Industrial Product Group’s achievement of 95% pre-tax profit performance, 150% of working capital performance and the sales and inventory goals were not met.

2020 Pay Opportunities

Due to the impact and uncertainty of the COVID-19 pandemic, base salary increases, which are typically effective annually on April 1, were indefinitely postponed except for a base salary increase approved by the Committee for Mr. Neill to recognize his February 15, 2020 promotion to Executive Vice President & Chief Human Resources Officer. Further, in an effort to minimize the impact of COVID-19 on our business and operations, the Committee approved reducing base salaries of our NEOs by 20% for a period of ninety (90) days from April 16, 2020 through July 16, 2020. Following the many actions taken to reduce costs across GPC during the height of the pandemic and the results achieved, the Compensation, Nominating and Governance Committee approved 3%-5% base salary increases effective October 1, 2020 for each of our NEOs.

The Committee typically approves long-term incentive awards to executive officers in March each year, with grants provided in the form of performance-based restricted stock units (PRSUs) and time-based restricted stock units (RSUs). In 2020, the Committee’s evaluation of long-term incentive awards occurred at a time of significant uncertainty regarding the potential impact of COVID-19 on the Company, our business results, and our employees. The Committee considered the difficulty of establishing performance goals in the uncertain environment as well as its desire to encourage retention and stability through the pandemic, and as a result approved long-term incentive awards to our executive officers and other participants solely in the form of RSUs, without any performance criteria. The 2020 award values were granted at relatively the same values as the 2019 awards.The RSUs deliver value to executive officers after a three year vesting period. The Committee anticipates granting both PRSUs and RSUs to executive officers in 2021.

Best Practices

Our compensation programs reflect a “best practices” approach to pay and governance:

 

		We have no employment contracts or guaranteed severance arrangements with named executive officers other than our “double-trigger” change in control agreements.
		We have minimum three year vesting for our long-term incentives (PRSUs and RSUs).
		Our change-in-control severance agreements with the named executive officers do not provide for any excise tax gross ups.
		Grants of long-term incentives are subject to “double-trigger” vesting upon a change in control.
		We evaluate the competitiveness of target pay opportunities for base salary, target bonus and long-term incentives as a group relative to the size-adjusted 50th percentile of the market data.
		A high percentage of our CEO and NEO’s compensation is performance-based and/or tied to stock price.
		Our robust stock ownership guidelines result in our executives being long-term holders of our stock.
		Our Annual Incentive and Long-Term Incentive programs contain clawback provisions.
		We have no tax gross-ups for perquisites or benefits other than relocation.
		We have never re-priced long term incentive awards.

 

		2021 Proxy Statement			25

Compensation Discussion and Analysis

 

		We pay dividend equivalents on performance-based restricted stock units only to the extent such units are earned through performance.
		Our insider trading policy prohibits employees, including the named executive officers, from engaging in certain transactions with respect to Company common stock, including short sales, publicly-traded options and hedging transactions (such as prepaid variable forward contracts, equity swaps, collars, forward sale contracts, and exchange funds).

Consideration of Last Year’s Advisory Shareholder Vote on Executive Compensation

At the 2020 Annual Meeting of Shareholders, approximately 95% of the shares present and entitled to vote were cast in support of the compensation of the Company’s named executive officers, as discussed and disclosed in the 2020 Proxy Statement.

The Board and the Committee considered the strong shareholder support of the compensation paid to our named executive officers evidenced by the results of this advisory vote, and as a result, did not make any specific changes to our executive compensation program for 2021 in response. Future advisory votes on executive compensation will serve as an additional tool to guide the Board and the Committee in evaluating the alignment of the Company’s executive compensation program with the interests of the Company and its shareholders.

Compensation Philosophy and Objectives

Our overall goal in compensating executive officers is to attract, retain and motivate key executives of superior ability who are critical to our future success. We believe that short-term and long-term incentive compensation opportunities provided to executive officers should be directly aligned with our performance, and our compensation is structured to ensure that a significant portion of executives’ compensation opportunities is directly related to achievement of financial and operational goals and other factors that increase shareholder value.

Our compensation decisions with respect to executive officer salaries, annual incentives, and long-term incentive compensation opportunities are influenced by (a) the executive’s level of responsibility and function within the Company, (b) the overall performance and profitability of the Company, (c) our assessment of the competitive marketplace, including other peer companies, and (d) the economic environment. Our philosophy is to focus on total direct compensation opportunities through a mix of base salary, annual cash bonus and long-term incentives, including stock-based awards.

We also believe that the best way to directly align the interests of our executives with the interests of our shareholders is to make sure that our executives acquire and retain a significant level of stock ownership throughout their tenure with the Company. Our compensation program pursues this objective in two ways: through our equity-based long-term incentive awards and our stock ownership guidelines for our senior executives, as described in more detail below.

Overview of Executive Compensation Components

The Company’s executive compensation program consists of several compensation elements, as described in the table below.

 

Pay Element		What the Pay Element is Designed to Reward		Objective of the Pay Element		Why We Choose to Pay Each Element
Base Salary		Core competence in the executive role relative to skills, experience and contributions to the Company		Provide fixed compensation based on competitive market practice		Provide a standard element of competitive market pay

 

26				2021 Proxy Statement

Compensation Discussion and Analysis

 

Pay Element		What the Pay Element is Designed to Reward		Objective of the Pay Element		Why We Choose to Pay Each Element
Annual Cash Incentive		Contributions toward the Company’s achievement of specified pre-tax profit and asset management goals, as well as achievement of revenue goals for certain NEOs		•  Provide focus on meeting critical annual goals that lead to our long-term success   •  Provide annual performance-based cash incentive compensation		Motivate achievement of critical annual performance goals
Long-Term Incentives		Performance Restricted Stock Units* (PRSUs):   •  Sustained pre-tax profitability (determines the number of PRSUs that are earned)   •  Focus on the Company’s stock price performance   •  Continued employment with the Company during an additional two-year vesting period (three years including the performance year)   Restricted Stock Units (RSUs):   •  Focus on the Company’s stock price performance   •  Continued employment with the Company during a three year vesting period                   *  As noted above, the Committee determined not to grant PRSUs in 2020 due to the COVID-19 pandemic.		The combination of RSUs and PRSUs provides a blended long-term focus on:   •  Sustained stock price performance   •  Achievement of pre-tax profitability targets   •  Executive ownership of our stock   •  Executive retention in a challenging business environment and competitive labor market		Align executives’ interests with those of shareholders and enhance their retention
Retirement Benefits Plans are described in detail later in this proxy statement under the heading “Additional Information Regarding Executive Compensation”		Executives are eligible to participate in employee benefit plans available to all employees as well as:   •  Tax Deferred Savings Plan: Rewards saving for retirement   •  Supplemental Retirement Plan (SRP): Provides executive retirement benefits and rewards executives for continued employment		•  Tax Deferred Savings Plan: Provide a voluntary tax-deferred retirement savings vehicle for our executive officers   •  SRP: Provide additional non-qualified retirement benefits for our executive officers based on a formula rewarding tenure with the Company		Provide an opportunity for executives to receive additional non-qualified retirement benefits without the impact of limitations on compensation and contributions applicable to qualified retirement plans under the IRS Code

 

		2021 Proxy Statement			27

Compensation Discussion and Analysis

 

Pay Element		What the Pay Element is Designed to Reward		Objective of the Pay Element		Why We Choose to Pay Each Element
Welfare Benefits		•  Executives participate in medical, health, life insurance and disability plans generally available to our employees   •  Continuation of welfare benefits may occur as part of severance upon certain terminations of employment		Provide health and welfare benefits to our employees that are competitive within the marketplace		These benefits are part of our broad-based total compensation program
Additional Benefits and Perquisites		•  CEO: Corporate aircraft usage for business and personal travel   •  CEO: Selected club membership   Neither item has a tax reimbursement provision		Corporate aircraft use: Accommodate health, security, availability and efficiency concerns   Club membership: Facilitate the CEO’s role as a Company representative in the community
Change in Control and Termination Benefits		Continued employment in the event of an actual or threatened change in control. Provides severance benefits if an officer’s employment is terminated within two years after a change in control. No excise tax gross-ups are provided		Retain executives and provide continuity of management in the event of an actual or threatened change in control		Maintain a stable executive organization in the face of the uncertainty of an actual or threatened change in control

The use of these programs enables us to reinforce our pay for performance philosophy, as well as strengthen our ability to attract and retain highly qualified executives. We believe that this combination of programs provides an appropriate mix of fixed and variable pay, balances short-term operational performance with long-term shareholder value and encourages executive recruitment and retention.

2020 Compensation

Pay Philosophy and Competitive Standing

In general, we evaluate the competitiveness of compensation for our executive officers relative to the size-adjusted 50^th percentile of market data.

We also design our incentive plans to pay more or less than the target amount when performance is above or below target performance levels. Thus, our plans are designed to result in payouts that are commensurate with the Company’s performance for that year or period.

For 2020, with the assistance of the Committee’s compensation consultant, Meridian, we reviewed and analyzed competitive market data to be used as background for 2020 pay decisions and to obtain a general understanding of current compensation practices. This data was referenced when targeting the positioning for compensation discussed above. Data sources included public company proxy statements, broad-based, published compensation surveys and a private total compensation database maintained by Aon.

We compared compensation opportunities for our named executive officers with pay opportunities available to executive officers in comparable positions at similar companies (our “Comparison Group”). During 2020 the Comparison Group included companies from industry segments in which we compete: automotive parts,

 

28				2021 Proxy Statement

Compensation Discussion and Analysis

 

industrial parts, specialty retail and office products. The Comparison Group companies used in 2020 are shown below. While the companies are either larger or smaller than us, Meridian used various statistical techniques to size-adjust the data to our revenue size. The list of companies below is reevaluated annually to take into account changes in our own operations, our size and our industry. In late 2019 Meridian performed an in-depth review of our Comparison Group, including a review of the industries included and the revenues and margins of potential companies. Following this review, there were no changes to the group for 2020 other than the removal of Essendant Inc. as the result of it being acquired.

 

Tech Data Corporation		Henry Schein, Inc.
Arrow Electronics, Inc.		AutoZone, Inc.
US Foods Holding Corp.		W.W. Grainger, Inc.
Cummins Inc.		Office Depot, Inc.
Dollar General Corporation		LKQ Corporation
Dollar Tree, Inc.		Advance Auto Parts, Inc.
Eaton Corporation plc		O’Reilly Automotive, Inc.
Lear Corporation		Tenneco Inc.
SYNNEX Corporation		Parker-Hannifin Corporation
Avnet, Inc.		MSC Industrial Direct Co., Inc.
Adient plc		Applied Industrial Technologies, Inc.
CDW Corporation		Kaman Corporation

2020 Base Salary

Our base salary levels reflect a combination of factors, including the pay posture discussed above, the executive’s experience and tenure, our overall annual budget for both pay increases and pre-tax profit, the executive’s individual performance and changes in responsibility. We review salary levels annually to recognize these factors.

As noted above, due to the impact and uncertainty of the COVID-19 pandemic, base salary increases, which are typically effective annually on April 1, were indefinitely postponed except for a base salary increase approved by the Committee for Mr. Neill to recognize his February 15, 2020 promotion to Executive Vice President & Chief Human Resources Officer.

In an effort to minimize the impact of COVID-19 on our business and operations, the Committee approved reducing base salaries of our NEOs by 20% for a period of ninety (90) days from April 16, 2020 through July 16, 2020. As a result of the many actions taken to reduce costs across GPC during the height of the pandemic and the results achieved, the Compensation, Nominating and Governance Committee approved 3% – 5% base salary increases effective October 1, 2020 for each of our NEOs.

The following aggregate base pay increases became effective during 2020:

 

Executive		2020 Base Salary Increase
Donahue		3.0%
Yancey		5.0%
Neill		13.3%
Herron		3.0%
Breaux		5.0%

Mr. Donahue, Ms. Yancey, Mr. Herron and Mr. Breaux’s base salaries were increased to align them more closely with market data. Mr. Neill’s base salary was increased in February 2020 due to his promotion to Executive Vice President and Chief Human Resources Officer and then again in October to more closely align with market data.

2020 Annual Incentive Plan

Our annual incentive plan (the “Annual Incentive Plan”) provides our executive officers with an opportunity to earn annual cash bonuses based on our achievement of certain pre-established performance goals. The

 

		2021 Proxy Statement			29

Compensation Discussion and Analysis

 

Compensation, Nominating and Governance Committee sets target bonus opportunities for each named executive officer to be earned based on achievement of such goals. Similar to the process for setting base salaries, we consider a combination of factors in establishing the annual target bonus opportunities for our named executive officers. Target bonus opportunities for 2020 were set as a percentage of each named executive officer’s base salary, as follows: Mr. Donahue, 130%; Ms. Yancey, 90%; Mr. Neill, 60%; Mr. Breaux, 85%; and Mr. Herron, 85%.

For 2020, we utilized generally the same performance metrics as in 2019, with an emphasis on adjusted pre-tax profit, together with working capital improvements and, with respect to our named executive officers with specific operational responsibilities, sales and inventory turnover metrics. We set the profit goals for 2020 bonus opportunities at levels that are intended to be challenging yet achievable, and reflect better than average growth within our competitive industry.

The performance goals on which each executive officer’s 2020 bonus opportunity is determined vary depending on the individual’s role in the Company. Performance criteria and relative weights for 2020 are shown below for each executive. The combination of goals for each executive is intended to have a strong correlation with shareholder value. Goals for Corporate, Automotive and Industrial Products are each set based upon (i) prior year performance by store, branch, and/or distribution center; (ii) the overall economic outlook of the region served by a particular store, branch, and/or distribution center; and (iii) specific market conditions.

 

Performance Goal		2020 Weight of Goal by Executive
		Donahue Yancey Neill(1)		Breaux(2)		Herron(3)
Adjusted Pre-tax profit		80%		50%			50%
Sales				30%			30%
Working capital improvement		20%		10%			20%
Inventory Turnover				10%
Total		100%		100%			100%

 

(1)	For Messrs. Donahue, Neill and Ms. Yancey, the performance goals related to the overall Company.

 

(2)	For Mr. Breaux, the performance goals related to the Industrial Products Group, which consists of Motion Industries, Inc., a wholly owned subsidiary of the Company.

 

(3)	For Mr. Herron, the performance goals related to the U.S. Automotive Parts Group.

The ranges of bonus payout possibilities for the various adjusted pre-tax profit goals and the U.S. Automotive and Industrial Products sales goals are shown below. Straight-line interpolation is used between data points. The 2020 Corporate adjusted pre-tax profit goal was $1,119,230,000, which included the Business Products Group from January 1, 2020 – June 30, 2020.

 

Adjusted Pre-Tax Profit (Corporate, U.S. Automotive, or Industrial Products) as a % of Performance Goal		% of Target Bonus Earned		Sales as a % of Performance Goal		% of                   Target                    Bonus                    Earned
Below 75%		—%		Below 95%		—%
75%		45%		95%		15%
100%		100%		100%		100%
110% or above		175%		105% or above		150%

Each of the named executive officers was also provided a bonus opportunity based on attainment of a working capital improvement goal, with a goal of various levels of improvement versus the prior year. Bonus opportunity for working capital improvement goals was from 50% of target to 150% of target based on the achievement of various levels of improvement. In addition, for Mr. Breaux, a bonus opportunity was provided for attainment of various levels of an inventory turnover improvement goal.

 

30				2021 Proxy Statement

Compensation Discussion and Analysis

 

The 2020 Corporate adjusted pre-tax profit goal was $1,119,230,000 and the Company’s actual adjusted 2020 pre-tax profit was $1,038,717,000, representing 93% of the target level set for executive officer incentive bonuses. Corporate working capital improvement performance was improved 17%, representing 150% of the target level set for the executive officer incentive bonuses, resulting in bonus payments equal to 97% of the total target bonus opportunity for Mr. Donahue, Ms. Yancey, and Mr. Neill.

Mr. Herron’s 2020 program produced a bonus payment equal to 70% of target based on U.S. Automotive Parts Group performance. The bonus was earned based on the Automotive Parts Group’s adjusted pre-tax profit performance, which was 91% of target and sales performance, which was 91% of target. The working capital goal was exceeded.

Mr. Breaux’s 2020 program produced a bonus payment equal to 60% of target based on the Industrial Products Group performance. The bonus was partly earned based on the Industrial Products Group’s adjusted pre-tax profit performance, which was 95% of target. Mr. Breaux’s bonus was also based on the Industrial Products Group’s sales which was 93% of target. The inventory goal was not met, but the working capital goal was exceeded.

When calculating the payout figures, formulas were applied strictly. The Committee did not exercise discretion to increase or decrease 2020 bonus payments for the named executive officers.

For additional information about the Annual Incentive Plan, please refer to the “Grants of Plan-Based Awards” table, which shows the threshold, target and maximum bonus amounts payable under the plan for 2020, and the Summary Compensation Table, which shows the actual amount of bonuses paid under the plan to our named executive officers for 2020.

2020 Long-Term Incentives

During 2020, the Compensation, Nominating and Governance Committee granted long-term equity-based incentive compensation to our executive officers in the form of Restricted Stock Units (“RSUs”). RSUs represent the right to receive a number of shares of our common stock after a three year vesting schedule. Dividends declared are accrued and converted into additional shares of stock at the end of the vesting period. These grants align executive performance and achievement with shareholder interests. Typically, the Committee approves long-term incentive awards in the form of performance-based restricted stock units (PRSUs) and time-based restricted stock units (RSUs). However, in 2020 due to significant uncertainty regarding the potential impact of COVID-19 on the Company, our business results, and our employees, the Committee decided not to award PRSUs due to the difficulty of establishing performance goals in the uncertain environment. However, it was important to the Committee to encourage retention and stability through the pandemic; therefore, RSU awards were approved to be granted to our executive officers and other participants, without any performance criteria. The 2020 award values were granted at relatively the same values as the 2019 awards. As noted above, the Committee anticipates granting both PRSUs and RSUs to executive officers in 2021.

The sizes of grants to individual named executive officers were subjectively determined by considering the following factors:

 

•

Competitive market data, defined by the competitive award levels summarized in the annual executive compensation study;

 

•

The officer’s responsibility level;

 

•

The officer’s specific function within the overall organizational structure;

 

•

The Company’s profitability, including consideration of the compensation cost associated with the awards; and

 

•

The number and amount of awards currently held by the executive officer (we continue to review this as part of our administration of stock ownership guidelines discussed below).

Comparison to market data suggests that the value of the 2020 RSUs awarded to our named executive officers was below the median relative to our Comparison Group.

Please refer to the “Grants of Plan-Based Awards” and “Outstanding Equity Awards at Fiscal Year-End” tables and the related footnotes for additional information about long-term stock awards.

 

		2021 Proxy Statement			31

Compensation Discussion and Analysis

 

Change in Control Arrangements

Severance protections, particularly in the context of a change in control transaction, can play a valuable role in attracting and retaining key executive officers. Accordingly, the Company has entered into change in control agreements with each of the named executive officers. Information regarding these agreements and the benefits they provide is included in the Post Termination Payments and Benefits section of this Proxy Statement.

The Compensation, Nominating and Governance Committee evaluates the level of severance benefits to each officer on a case-by-case basis, and in general, we consider these severance protections to be an important part of our executives’ compensation and consistent with competitive practices.

The potential occurrence of a change in control transaction would create uncertainty regarding the continued employment of our executive officers. This uncertainty results from the fact that many change in control transactions result in significant organizational changes, particularly at the senior executive level. In order to encourage our senior executive officers to remain employed with the Company during an important time when their prospects for continued employment are often uncertain, we provide our executive officers with severance benefits if the executive’s employment is terminated by the Company without “cause” or by the executive for “good reason” in connection with a change in control. Because a termination by the executive for good reason may be conceptually the same as a termination by the Company without cause, and because in the context of a change in control, potential acquirers would otherwise have an incentive to constructively terminate the executive’s employment to avoid paying severance, it is appropriate to provide severance benefits in these circumstances.

The change in control agreements do not provide for any tax gross-ups with respect to excise taxes under Internal Revenue Code Section 4999 that may be due on such payments.

Factors Considered in Decisions to Materially Increase or Decrease Compensation

Market data, individual performance, retention needs and internal pay equity have been the primary factors considered in decisions to adjust compensation materially. We do not target any particular weight for base salary, annual bonus and long-term incentive as a percent of total direct compensation. We tend to follow market practice in allocating between the various forms of compensation, but with greater emphasis on performance-based incentive bonus opportunities because doing so results in pay opportunity that is heavily performance-based, as shown below, and results in compensation that is directly aligned with Company performance, is market-competitive and allows us to attract and retain competent executives.

2020 Variable versus Fixed Compensation:

The following charts show the allocation of the CEO and NEOs base salary and short-term and long-term incentive compensation opportunities between fixed and performance-based compensation (at the target levels).

 

 

 

32				2021 Proxy Statement

Compensation Discussion and Analysis

 

2020 Short-Term versus Long-Term Incentive Compensation:

The following table shows the allocation between each Executive’s target short-term and long-term incentive compensation opportunities (each at the target level) as a percentage of each Executive’s base salary.

 

Name		Short-Term Incentive Opportunity					Long-Term   Incentive   Opportunity
Donahue		130%					248%
Yancey		90%					136%
Neill		60%					82%
Herron		85%					100%
Breaux		85%					95%

Stock Ownership Guidelines

We have adopted stock ownership guidelines for the named executive officers identified above and for other key executives designated by the Compensation, Nominating and Governance Committee. The ownership guidelines are reviewed at least annually by the Compensation, Nominating and Governance Committee, which also has the authority to evaluate whether exceptions should be made for any executive on whom the guidelines would impose a financial hardship. The current guidelines as determined by the Committee include: (i) CEO — ownership equal to seven times prior year’s salary; (ii) Named Executive Officers — ownership equal to three times prior year’s salary; and (iii) Corporate Senior Vice Presidents and Subsidiary Presidents — ownership equal to one times the prior year’s salary.

The covered executives have a period of five years in which to satisfy the guidelines from the date of appointment to a qualifying position. Shares counted toward this requirement will be based on shares beneficially owned by such executive (as beneficial ownership is defined by the SEC’s rules and regulations) including PRSUs, but excluding unexercised options and measured against the average year-end stock price for the preceding three fiscal years. The guidelines also call for the covered executive to retain 50% of the net shares obtained through the exercise of options or when a restricted stock award vests for at least six months. The covered executives are encouraged to retain stock ownership per the guidelines for a period of six months following the date of retirement.

Clawback Provisions

The Company has clawback provisions in its Annual Incentive Plan and its Long Term Incentive program. If at any time after payment of an executive’s bonus or after performance units are earned, the Company and its auditors determine that it was calculated on financial results that subsequently were restated or were otherwise based on incorrect data, the executive may be required to repay or relinquish the unearned portion to the Company upon notice from the Company. Outside of the U.S., clawback provisions are subject to local law.

Impact of Accounting and Tax Treatments of Compensation

The accounting and tax treatment of compensation generally has not been a material factor in determining the amounts of compensation for our executive officers. However, the Committee and management have considered the accounting and tax impact of various program designs to balance the potential cost to the Company with the benefit/value to the executive.

Code 162(m) places a limit of $1 million on the amount of compensation that a company may deduct in any year with respect to certain executive officers. It is the Committee’s intent to maximize deductibility of executive compensation while retaining discretion needed to compensate executives in a manner commensurate with performance and the competitive landscape for executive talent. The 2015 Incentive Plan was approved by shareholders and permits the award of stock options, SARs and other performance-based equity awards that were intended to be fully deductible as “performance based” compensation under Code Section 162(m). The exemption from Code Section 162(m)‘s deduction limit for performance-based compensation, however, was repealed, effective for taxable years beginning after December 31, 2017, such that compensation paid to our

 

		2021 Proxy Statement			33

Compensation Discussion and Analysis

 

covered executive officers in excess of $1 million will not be deductible unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017.

Role of Executive Officers in Determining Compensation

Our Chief Executive Officer, with input from our Executive Vice President and Chief Human Resources Officer, and President recommend to the Compensation, Nominating, and Governance Committee base salary, target bonus levels, actual bonus payouts and long-term incentive grants for our senior officer group (other than themselves). Mr. Donahue makes these recommendations to the Committee based on data and analysis provided by our independent compensation consultant and qualitative judgments regarding individual performance. Mr. Donahue is not involved with any aspect of determining his own compensation.

 

34				2021 Proxy Statement

ADDITIONAL INFORMATION REGARDING EXECUTIVE COMPENSATION

2020 SUMMARY COMPENSATION TABLE

 

Name and Principal Position		Year				Salary ($)				Stock Awards ($)(1)				Non-Equity Incentive Plan Compensation ($)(2)		Change in Pension Value and Non- Qualified Deferred Compensation Earnings ($)(3)		All Other Compensation ($)(4)		Total ($)
Paul D. Donahue			2020				1,125,000				2,999,937			1,531,095		2,710,577		156,999			8,523,608
Chairman & Chief			2019				1,162,375				2,999,939			1,549,740		2,365,498		92,396			8,169,948
Executive Officer			2018				1,083,750				1,800,204			1,512,597		830,499		73,279			5,300,329
Carol B. Yancey			2020				673,750				999,955			643,878		1,182,439		14,250			3,514,272
Executive Vice President &			2019				681,950				999,980			639,173		1,133,627		14,000			3,468,730
Chief Financial Officer			2018				562,500				784,375			661,100		124,139		13,750			2,145,864
James R. Neill			2020				443,360				399,996			285,292		423,499		14,250			1,566,397
Executive Vice President &			2019				424,150				359,109			262,568		432,367		14,000			1,492,194
Chief Human Resources Officer			2018				345,125				299,295			313,414		103,600		13,750			1,075,184
Kevin E. Herron			2020				491,250				514,975			307,563		788,017		14,250			2,116,055
President — U.S. Automotive			2019				500,000				500,241			457,712		621,006		14,000			2,092,959
Parts Group
Randall P. Breaux			2020				448,125				449,987			239,012		514,123		14,250			1,665,497
President — Motion Industries			2019				450,000				450,016			390,939		389,314		14,000			1,694,269

 

(1)

Represents the aggregate grant date fair value of awards determined in accordance with FASB ASC Topic 718. Grant date fair value for restricted stock units (“RSUs”) reflected in the Stock Awards column is based on the grant date fair value of the underlying shares. Grant date fair value for performance-based restricted stock units (“PRSUs”) reflected in the Stock Awards column is based on the grant date fair value of the underlying shares and the probable outcome of performance-based vesting conditions, excluding the effect of estimated forfeitures.

 

(2)	Reflects the value of cash incentive bonuses earned under our Annual Incentive Plan.

 

(3)	Reflects the increase during 2020 in actuarial present values of each executive officer’s accumulated benefits under our Pension Plan and our Supplemental Retirement Plan.

 

(4)

Amounts reflected in this column for 2020 include 401(k) matching contributions in the amount of $14,250 for each named executive officer. The amount shown for Mr. Donahue also includes his personal use of the company aircraft ($134,469) and club membership dues ($8,280). The incremental cost to the Company of the personal use of company aircraft is calculated based on the average variable operating costs to the Company. Variable operating costs include fuel costs, mileage, maintenance, crew travel expenses, catering and other miscellaneous variable costs. The total annual variable costs are divided by the annual number of miles the Company aircraft flew to derive an average variable cost per mile. This average variable cost per mile is then multiplied by the miles flown for personal use to derive the incremental cost. The fixed costs that do not change based on usage, such as pilot salaries, the lease costs of the company aircraft, hangar expense for the home hangar, and general taxes and insurance are excluded from the incremental cost calculation. When Company aircraft is being used for mixed business and personal use, only the incremental cost of the personal use is included, such as on-board catering or other charges attributable to an extra passenger traveling for personal reasons on an aircraft being primarily used for a business trip.

2020 CEO PAY RATIO

As required by item 402(u) of Regulation S-K, the Compensation, Nominating, and Governance Committee reviewed a comparison of our CEO’s annual total compensation in fiscal year 2020 to that of our median employee. We identified our median employee in 2020 by examining 2020 Box 1 W-2 and foreign equivalent taxable income amounts for all individuals, excluding our CEO, who were employed by us on December 31, 2020 whether on a full-time, part-time, or seasonal basis. As permitted by disclosure rules, we omitted approximately 600 employees that were added to the Company through acquisitions during 2020. We did not annualize the compensation for any full-time employees that were not employed by us for all of 2020. We applied a foreign currency to U.S. dollar exchange rate to the compensation paid in foreign currency. After identifying the median employee, we calculated annual total compensation for such employee using the same methodology we use for our named executive officers as set forth in the Summary Compensation Table above.

 

		2021 Proxy Statement			35

Additional Information Regarding Executive Compensation

 

For fiscal year 2020, the annual total compensation for our CEO was $8,523,608 as noted in the table above and for our median employee it was $33,733. The resulting ratio of our CEO’s pay to the pay of our median employee for fiscal year 2020 is 253 to 1. When change in pension value and non-qualified deferred compensation earnings is excluded from the calculation, the ratio is 172 to 1.

2020 GRANTS OF PLAN-BASED AWARDS

 

Name		Approval Date				Grant Date				Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)												All Other Stock Awards: Number of Shares of Stock or Units (#)(2)				Grant Date Fair Value of Stock Awards ($)(3)
										Threshold ($)				Target ($)				Maximum ($)
Paul D. Donahue											723,580				1,573,000				2,674,100
			3/26/2020				5/1/2020																41,407				2,999,937
Carol B. Yancey											304,290				661,500				1,124,550
			3/26/2020				5/1/2020																13,802				999,955
James R. Neill											134,826				293,100				498,270
			3/26/2020				5/1/2020																5,521				399,996
Kevin E. Herron											161,986				437,800				711,425
			3/26/2020				5/1/2020																7,108				514,975
Randall P. Breaux											148,592				401,600				652,600
			3/26/2020				5/1/2020																6,211				449,987

 

(1)

Represents threshold, target and maximum payout levels under the Annual Incentive Plan for 2020 performance. The actual amount of incentive bonus earned by each named executive officer is reported under the Non-Equity Incentive Plan Compensation column in the Summary Compensation Table. Additional information regarding the design of the Annual Incentive Plan is included in the Compensation Discussion and Analysis section of this Proxy Statement.

 

(2)

Reflects RSUs that represent a contingent right to receive one share of Company common stock in the future. The RSUs will vest and be settled in shares of common stock on May 1, 2023 (or earlier upon a change in control of the Company) provided the executive is still employed by the Company, subject to earlier vesting in the event of (i) the executive’s retirement from the Company or (ii) the executive’s employment with the Company is terminated due to death or disability. Dividends paid on the Company’s common stock will accrue and will convert into additional shares of stock at the end of the vesting period. Additional information regarding the RSUs and the Company’s long-term incentive program is included in the Compensation Discussion and Analysis section of this Proxy Statement.

 

(3)	Represents the grant date fair value of the award determined in accordance with FASB ASC Topic 718. Grant date fair value for the RSUs is based on the grant date fair value of the underlying shares.

 

36				2021 Proxy Statement

Additional Information Regarding Executive Compensation

 

2020 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

 

		Option Awards								Stock Awards
Name		Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable		Option Exercise Price ($)		Option Expiration Date		Number of Shares or Units of Stock That Have Not Vested (#)		Market Value of Shares or Units of Stock That Have Not Vested ($)(5)
Paul D. Donahue
										42,127(1)		4,230,815
		27,000		—		90.34		4/3/2027
										28,916(2)		2,904,034
		19,730		—		99.72		4/1/2026
										19,958(3)		2,004,382
		15,780		—		91.75		4/1/2025
										10,342(4)		1,038,647
		15,700		—		86.80		4/1/2024
Carol B. Yancey
										14,042(1)		1,410,238
		11,765		—		90.34		4/3/2027
										9,638(2)		967,944
		10,985		—		99.72		4/1/2026
										8,696(3)		873,339
		10,980		—		91.75		4/1/2025
										4,505(4)		452,437
James R. Neill
										5,617(1)		564,115
		4,490		—		90.34		4/3/2027
										3,462(2)		347,689
		4,195		—		99.72		4/1/2026
										3,319(3)		333,327
		4,195		—		91.75		4/1/2025
										1,719(4)		172,639
Kevin E. Herron
										7,232(1)		726,310
		4,950		—		90.34		4/3/2027
										4,822(2)		484,273
		4,625		—		99.72		4/1/2026
										4,159(3)		417,688
		4,620		—		91.75		4/1/2025
		4,200		—		86.80		4/1/2024
Randall P. Breaux
										6,319(1)		634,617
		3,265		—		90.34		4/3/2027
										4,338(2)		435,665
		3,055		—		99.72		4/1/2026
										2,772(3)		278,392
		862		—		91.75		4/1/2025
										1,949(4)		195,738

 

(1)

Includes RSUs (and accrued dividends) that were granted on May 1, 2020, and vest on the third anniversary of the grant date, or earlier upon (i) a change in control of the Company, if the awards are not assumed or otherwise equitable converted in the change in control, or (ii) the termination of executive’s employment with the Company due to death, disability or retirement. The awards will convert into shares of stock on the earlier of (i) the third anniversary of the grant date, or (ii) a change in control of the Company, unless the awards are assumed or otherwise equitable converted in the change in control.

 

(2)

Includes PRSUs and RSUs (and accrued dividends) that were granted on May 1, 2019, and vest on the third anniversary of the grant date, or earlier upon (i) a change in control of the Company, if the awards are not assumed or otherwise equitable converted in the change in control, or (ii) the termination of executive’s employment with the Company due to death, disability or retirement. The awards will convert to shares of stock on the earlier of (i) the third anniversary of the grant date, or (ii) a change in control of the Company, unless the awards are assumed or otherwise equitable converted in the change in control.

 

		2021 Proxy Statement			37