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2021 Proxy Statement

Annual Meeting of Stockholders

to be held on May 12, 2021 Penske Automotive Group, Inc.

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letter

Dear Fellow Stockholder:

2020 was a year like no other. We, like you, faced unprecedented challenges. The COVID-19 pandemic required us to adapt and adjust many of our business practices this past year. I am proud of the innovation of our employees to adjust to changing business conditions. As an essential business, we continued to deliver new and pre-owned vehicles and heavy-duty trucks despite showroom closures in many areas, and our service operations remained largely open. Most importantly, we made safety protocols our top priority, including keeping our customers, employees and our communities safe.

Overall, despite the pandemic, I am very pleased with our performance last year. The diversification provided by our investments across the transportation sector, coupled with the innovation and adjustments made by our team, drove outstanding results for our business in 2020. Some highlights from the past year include:

As we look toward the future, we will focus on continued innovation and transformational opportunities. We will aim to enhance our Company’s diversity, continue supporting vehicle electrification, and drive further sustainability initiatives across our business. Further, we will implement new tools to adapt to the shift in consumer buying patterns to online engagement.

We will once again hold our annual meeting exclusively by remote means this year. We encourage you to participate virtually in the annual meeting, following the instructions within this proxy statement. We ask that you cast your vote as soon as possible to assure your shares are represented at the meeting.

Our success is driven by the unwavering dedication and commitment of our 23,700 employees, our most important asset. They focus relentlessly on driving repeat and referral business by exceeding the expectations of our customers through best-in-class customer service and the highest level of integrity.

We appreciate your continued support, and we hope that you will stay safe and healthy.

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Penske Automotive Group, Inc.

Notice of 2021 Annual Meeting of Stockholders

INTERNET AVAILABILITY OF PROXY MATERIALS

Your vote is very important. Whether or not you plan to attend the Annual Meeting virtually, please vote at your earliest convenience by following the instructions in the Notice of Internet Availability of Proxy Materials, the proxy card or voting instruction form you received in the mail. You may revoke your proxy at any time before it is voted. Please refer to the “Questions about the Meeting” section of the proxy statement for additional information. On March 19, 2021, we expect to release the proxy materials to our stockholders and to send to these stockholders (other than those stockholders who previously requested electronic or paper delivery) a Notice of Internet Availability of Proxy Materials containing instructions on how to access our proxy materials, including our proxy statement and our fiscal year 2020 Annual Report, and how to vote through the Internet or by telephone.

Our proxy statement, proxy card and fiscal year 2020 Annual Report are available at: https://www.penskeautomotive.com/about/Investors/default.aspx

By order of the Board of Directors:

Shane M. Spradlin

Executive Vice President, General Counsel and Secretary

2555 Telegraph Road

Bloomfield Hills, Michigan 48302

March 19, 2021

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Proxy summary

This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information you should consider, and you should read the entire Proxy Statement carefully before voting.

Annual Meeting of Stockholders

Meeting agenda

Voting Matters and Vote Recommendation

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Our Director Nominees

The following table provides summary information about each director nominee. Each director is elected annually by a majority of votes cast.

Auditors

As a matter of good corporate governance, we ask that our stockholders ratify the selection of Deloitte & Touche LLP as our independent auditor for 2021. Set forth below is summary information with respect to 2020 auditor fees paid to Deloitte & Touche LLP.

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Environmental, Social and Governance (ESG)

We recognize we are accountable to key stakeholders and the communities in which we do business. We focus our environmental, social and governance efforts where we can have the most positive impact on our business and society, including issues related to community investment, environmental sustainability, human capital, and investor outreach.

Central to our mission are the core values of integrity, professionalism, teamwork and exceeding the expectations of our customers and employees. Our commitment to corporate social responsibility is driven by these core values as we aim to conduct our business in ways that enrich the communities where we work and live, focus on the environment and provide a workplace that is safe, inclusive and diverse while providing value to our stakeholders. We are committed to responsible business practices and continuous improvement of our operations and our relationships with our employees and the communities in which we live and work.

Executive Compensation

We ask that our stockholders annually approve on an advisory basis our named executive officer compensation. The Board of Directors recommends a FOR vote because it believes that our compensation policies and practices are effective in achieving the Company’s goals of rewarding sustained financial and operating performance and leadership excellence, aligning the executives’ long-term interest with those of our stockholders and motivating our executives to remain with the Company for long and productive careers. In 2020, over 99% of the votes cast by our stockholders approved our 2019 executive compensation.

Compensation and Corporate Governance Highlights

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2020 Compensation Summary

Set forth below is the 2020 compensation for each named executive officer as determined under Securities and Exchange Commission rules.

Please see the footnote references beginning on page 27 for further information regarding our named executive officer compensation.

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Proposal 1 – Election of Directors

The first proposal to be voted on at the annual meeting will be the election of thirteen director nominees. Our Nominating and Corporate Governance Committee and Board of Directors recommend approval of each of the nominees outlined below. If elected, each will serve until the next annual meeting of stockholders and until their successor has been elected and qualified or until their earlier death, resignation or removal. Pursuant to a stockholders agreement, certain of our stockholders affiliated with Roger S. Penske and Mitsui & Co., Ltd. have agreed to vote together to elect members of our Board of Directors. See “Related Party Transactions” for a description of this stockholders agreement.

Penske Corporation recommended Greg Penske (Roger S. Penske’s son) to our Nominating and Corporate Governance Committee as a candidate for election to our Board of Directors at the 2021 annual meeting and intends to recommend Greg Penske as a candidate for election at the 2022 annual meeting. Penske Corporation has informed us that it does not intend to recommend Greg Penske for re-election to our Board at the 2023 annual meeting. Beginning in 2023, in lieu of Greg Penske, Penske Corporation presently intends to recommend one of Mr. Penske’s other sons, Roger Penske, Jr., to the Nominating and Corporate Governance Committee for nomination as a candidate for election to our Board at the 2023, 2024 and 2025 annual meetings. It is expected that Roger S. Penske, Jr. will serve as an advisory committee member of Penske Transportation Solutions (PTS) for 2021 and 2022 and it is expected that Greg Penske will step down from our Board at the 2023 annual meeting and will serve as an advisory committee member of PTS beginning in 2023.

Director Nominees. Our Nominating and Corporate Governance Committee has established minimum qualifications for director nominees, including integrity, judgment, and personal accomplishment within their field. Experience in at least one of the following is also desired: high level of leadership experience in business or administration, breadth of knowledge concerning issues affecting our Company, willingness to contribute special competence to board activities, accomplishments within the director’s respective field, and experience reading and understanding financial statements.

The Nominating and Corporate Governance Committee and Board of Directors reviewed the qualities of the Board members as a group, including the diversity of the Board’s career experiences, viewpoints, company affiliations, expertise with respect to the various facets of our business operations, and business experiences. The Board did not employ any particular benchmarks with respect to these qualities, but was mindful of achieving an appropriate balance of these qualities with respect to the Board of Directors as a whole. Moreover, the Board of Directors and Nominating and Corporate Governance Committee considered each nominee’s overall service to our Company during the previous term, each nominee’s personal integrity and adherence to the standards noted above, as well as the individual experience of each director noted within their biographies below. The Board believes that the qualities and skills listed for each of the nominees, qualifies each such nominee for service as a director of our Company.

Our Board of Directors Recommends a Vote “FOR” Each of the Following Nominees:

John D. Barr – Retired Chairman, Papa Murphy’s Holdings, Inc.

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Lisa Davis – Former Chief Executive Officer Gas and Power and Managing Board Member, Siemens AG

Wolfgang Dürheimer – Retired Chairman and CEO Bentley Motors Ltd.

Michael R. Eisenson – Founding Partner Charlesbank Capital Partners LLC

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Robert H. Kurnick, Jr. – President of Penske Automotive Group

Kimberly J. McWaters – President and CEO of Fresh Start Women’s Foundation

Greg Penske – Chairman and CEO of Penske Motor Group

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Roger S. Penske – Chair of the Board and CEO of Penske Automotive Group

Sandra E. Pierce – Senior Executive Vice President and Chair, Huntington Michigan

Greg C. Smith – Principal, Greg C. Smith LLC and former Vice Chairman, Ford Motor Company

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Ronald G. Steinhart – Retired Chairman and CEO, Commercial Banking Group, Bank One Corporation

H. Brian Thompson – Executive Chairman of GTT Communications, Inc.

Masashi Yamanaka – Executive Vice President, Strategic Relationship Management, Penske Automotive Group

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Our Corporate Governance

C Chair   M Member   F Financial expert

Board Committees

Our Board of Directors has four standing committees: the Audit Committee, the Compensation and Management Development Committee, the Nominating and Corporate Governance Committee and the Executive Committee. Charters for the Audit, Compensation and Management Development, and Nominating and Corporate Governance committees are available on our website, www.penskeautomotive.com, under the sub-heading “Governance” within the “Investors” section. The principal responsibilities of each committee are described below. Collectively, our directors attended 99% of our board and committee meetings in 2020, and each director attended at least 94% of their meetings. All of our directors are encouraged to attend the annual meeting of stockholders and all directors serving at that time attended the annual meeting in 2020.

Committee Member Qualifications. Each of the members of our Audit, Compensation and Management Development, and Nominating and Corporate Governance Committees are independent under New York Stock Exchange guidelines and our guidelines for director independence. The Board of Directors has determined that all members of the Audit Committee are “independent” and “financially literate” under New York Stock Exchange rules and applicable law, and each of the four are “audit committee financial experts,” as that term is defined in Securities and Exchange Commission rules.

The Audit Committee assists the Board of Directors in fulfilling its oversight responsibility relating to the:

The Compensation and Management Development Committee assists the Board of Directors in discharging its responsibility relating to:

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The Nominating and Corporate Governance Committee:

Executive Committee. Our Executive Committee’s primary function is to act upon matters when the Board of Directors is not in session. The Executive Committee has the full power and authority of the Board of Directors, except to the extent limited by law or our certificate of incorporation or bylaws or other governance documents.

Board Structure and Lead Director. Roger S. Penske is the Chair of our Board of Directors and our Chief Executive Officer. We believe the combination of these two offices represents the most appropriate approach for our Company due to Mr. Penske’s significant ownership position through Penske Corporation, his extensive industry experience, his relationships with our key suppliers and other partners and his experience as an executive and a director of some of the world’s leading companies. In light of the combination of these positions, one of our governance principles is to have an independent “Lead Director.” Our Lead Director is responsible for:

Our Lead Director is H. Brian Thompson. You may communicate with the Lead Director by writing to us, c/o Corporate Secretary and General Counsel, 2555 Telegraph Road, Bloomfield Hills, MI 48302. All correspondence will be reviewed by our Corporate Secretary’s office and all (other than frivolous correspondence) will be forwarded to the Lead Director. Any written communications to the independent directors as a group or the entire Board of Directors may be sent care of the Corporate Secretary as well. These communications (other than frivolous correspondence) will also be forwarded to the Lead Director.

Director Independence. A majority of our Board of Directors is independent and each of the members of our audit, compensation and nominating committees is independent. The Board of Directors has determined that Mss. Davis and McWaters and Messrs. Barr, Dürheimer, Smith, Steinhart and Thompson are each independent in accordance with the listing requirements of the New York Stock Exchange and our guidelines for independent directors which can be found in our corporate governance guidelines on our website www.penskeautomotive.com under the sub-heading “Governance” within the “Investors” section, and as set forth below. As required by New York Stock Exchange rules, our Board of Directors determined that no material relationship exists which would interfere with the exercise of independent judgment in carrying out the responsibilities of the independent directors.

For a director to be considered independent under our corporate governance guidelines, the Board of Directors must determine that the director does not have any direct or indirect material relationship with us. In addition to applying these guidelines, the Board of Directors considers relevant facts and circumstances in making the determination of independence, and not merely from the standpoint of the director, but also from that of persons or organizations with which the director has an affiliation. The Board considers the transactions, relationships and arrangements between the Company, and its affiliates such as Penske Corporation, Penske Racing, Penske Entertainment and Penske Transportation Solutions and affiliates of the director, including those described under “Related Party Transactions” and elsewhere in the proxy statement, in its independence determination. The Board also considers ownership of our or our affiliates’ securities by the directors and their affiliates, ownership by our management team of any securities of affiliates of directors, and sponsorships of Penske Racing or other Penske affiliated racing entities by any of our or our directors’ affiliates.

Under our guidelines, which are more stringent than the New York Stock Exchange guidelines, a director will not be independent if:

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ESG Oversight. Our Board of Directors has delegated oversight of our ESG practices and reporting to our Nominating and Corporate Governance Committee; provided that certain aspects of our ESG practices are managed by other committees of the Board. For example, our Compensation and Management Development Committee is responsible for oversight of our efforts to promote equity, diversity and inclusion and reduce employee turnover. Our Nominating and Corporate Governance Committee reviews our ESG disclosures and discusses with management at least annually our ESG initiatives, which include our environmental sustainability efforts and charitable contributions. Management is responsible for the implementation and execution of our ESG practices and reporting.

Risk Management. We have designed and implemented processes to manage risk in our operations. The role of the Board of Directors in risk management is primarily one of oversight. Management is responsible for the implementation and execution of our risk management initiatives. Our Board of Directors executes its oversight role directly and also through its various committees as set forth below.

Audit Committee

Nominating and Corporate Governance Committee

Compensation and Management Development Committee

Full Board of Directors

As part of its review of operational risk, the Board of Directors reviews cybersecurity risks facing our Company, including the potential for breach of our key information technology systems and the potential for a breach of our systems and processes relating to the protection of customer and employee confidential information. The Board meets periodically with our Chief Information Officer and our Audit Committee reviews key risks, including these risks, at its regular meetings and reviews any significant cybersecurity incidents.

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Director Advisor Program. The Board has adopted a policy in its Corporate Governance Guidelines for the designation of certain former directors as “Director Advisors” which allows us to retain the benefits of continuing guidance from our long-tenured directors. This program is designed to encourage director renewal while retaining access to former long-tenured directors’ valuable experience and institutional knowledge. Director Advisors are expected typically to be invited to attend two Board meetings per year and be available for continuing consultation. A Director Advisor is not entitled to attend any Board meeting, may not vote on any business coming before the Board nor is he or she counted as a member of the Board for the purpose of determining a quorum or for any other purpose. A Director Advisor is not a member of the Board or a “director” as that term is used in our bylaws, this proxy statement or otherwise.

Director Advisors are entitled to cash compensation of $40,000 per year payable in cash or Company stock at the director’s election, a charitable match opportunity and use of a Company vehicle or a $20,000 stipend, as well as reimbursement of Company expenses and travel to our meetings. In 2020, William Lovejoy, a member of our Board from 2004 to 2018, and Lucio Noto, a member of our Board from 2001 to 2018, served as Director Advisors. We have not designated any Director Advisors for 2021.

No Hedging or Short Selling. Our securities trading policy applies to all of our directors, officers and employees and restricts trading in our securities while in possession of material nonpublic information. The policy prohibits our directors, officers, employees and their designees from engaging in hedging, short sales and other trading techniques that offset any decrease in market value of our equity securities without the approval of our General Counsel. No such approvals were granted in 2020, but we retain this flexibility in the event of a hardship need for a non-executive employee.

Stock Ownership Guidelines/Pledging. Our stock ownership guidelines, discussed in the CD&A below, require threshold levels of our stock to be held by executive officers, other senior officers and directors. These guidelines exclude any shares that are pledged by our directors and officers.

Controlled Company. Under the New York Stock Exchange rules, if a company is “controlled” it need not have a majority of independent directors or solely independent compensation or nominating committees. We are a “controlled company” because more than 50% of the voting power for the election of directors is held by Penske Corporation through its voting agreement with Mitsui & Co. and their affiliates. These entities are considered a group due to the provisions of the stockholders agreement between these parties described under “Related Party Transactions.” Even though we are a “controlled company,” we are fully compliant with the New York Stock Exchange rules for non-controlled companies.

Director Candidates. When considering new candidates for our Board of Directors, the Nominating and Corporate Governance Committee uses the network of contacts of the Board of Directors to compile potential candidates, but may also engage, if it deems appropriate, a professional search firm. The committee considers whether the nominee would be independent and considers the candidate’s diversity important in relation to the then existing Board, potentially including age, gender, ethnicity, geography, business experience or expertise or other factors. The Nominating and Corporate Governance Committee will consider director candidates recommended by stockholders pursuant to procedures outlined below. Stockholder proposals for nominees should be addressed to our Corporate Secretary, Penske Automotive Group, 2555 Telegraph Road, Bloomfield Hills, MI 48302. The committee’s evaluation of stockholder-proposed candidates will be the same as for any other candidates.

Director candidate submissions are to include:

Location of Corporate Governance Documents. Our corporate governance guidelines and the other documents referenced in this section are posted on our website, www.penskeautomotive.com, under the sub-heading “Governance” within the “Investors” section. We have also adopted a Code of Business Conduct and Ethics that applies to all of our

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employees and directors. We intend to disclose waivers, if any, for our executive officers or directors from the code, and changes to the code, on our website.

Stockholder Director Nominations and Proposals for 2022. We must receive any proposals submitted pursuant to Rule 14(a)- 8 of the SEC proxy rules intended to be presented to stockholders at our 2022 annual meeting of stockholders at our principal executive offices at 2555 Telegraph Road, Bloomfield Hills, Michigan 48302 for inclusion in the proxy statement by November 19, 2021. These proposals must also meet other requirements of the rules of the SEC relating to stockholder proposals. Any stockholder who wishes to make a director nomination or introduce an item of business, other than as described above, must comply with the procedures set forth in our bylaws, including delivering proper notice to us not less than 120 days nor more than 150 days prior to the first anniversary of the preceding year’s Annual Meeting, which means not earlier than December 13, 2021 nor later than January 12, 2022.

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Environmental, Social and Governance (ESG)

We recognize we are accountable to key stakeholders, our employees and the communities in which we do business. We focus our environmental, social and governance efforts where we can have the most positive impact on our business and society, including issues related to community participation, environmental sustainability, culture, human capital and investor outreach.

Central to our mission are the core values of integrity, transparency, professionalism, teamwork and exceeding the expectations of our customers and employees. Our commitment to Corporate Social Responsibility is driven by these core values as we aim to conduct our business in ways that enrich the communities where we work and live, focus on the environment and provide a workplace that is safe, inclusive and diverse while providing value to our stakeholders. We are committed to responsible business practices and continuous improvement of our operations and our relationships with our employees and the communities in which we live and work.

Community

We believe community participation and charitable giving enrich the neighborhoods where we work, live and play. We are proud of these efforts and we encourage participation by all dealerships and employees. Several examples of our commitment to giving back include:

Environmental and Safety

Electric Vehicles

Our dealerships sell and service vehicles that are engineered and manufactured by over 35 of the world’s automotive OEMs. As such, our new car dealerships sell the full suite of vehicles offered by our manufacturer partners, including pure electric vehicles (“EVs”). EVs can reduce the emissions that contribute to climate change and smog, improving public health and reducing ecological damage.

We are committed to encouraging the sale and use of EVs and, as part of that commitment, are actively placing charging stations across our network to facilitate a reliable infrastructure for their use. To date, our network of EV charging stations across the U.S. and the U.K. totals over 580, including a combination of Level 1 (standard), Level 2 (240V), and Level 3 capabilities. We expect to install additional charging stations to support EVs as our manufacturer partners introduce more of these products to the marketplace. We estimate that approximately 11.2% of our new vehicles sold in 2020 in the U.S. and U.K. combined were either electric or hybrid electric vehicles.

Environmental Monitoring

We have partnered with environmental and safety consulting firms to assist in compliance with specific local and federal laws and regulations relating to environmental and safety issues. The consulting firms, along with corporate employees, make periodic visits to both our dealerships and our collision centers to conduct on-site assessments, provide training, and to aid in compliance with laws, regulations, and safety issues and environmental requirements. The consultants may also provide safety training, hazardous waste management, hazard communication plans, emergency response and injury prevention plans, and respiratory protection. Quarterly audits are regularly performed by corporate employees to assure and maintain compliance.

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Recycling Efforts

We are committed to reducing our environmental impact. Penske Automotive participates in a closed-loop recycling program for its U.S.-based dealerships. During 2020, the recycling under this program avoided over 13,700 metric tons of greenhouse gas emissions. Further, our collision and repair centers use water-based paints and solvents which are better for the environment and healthier for our employees and customers. We also use water reclamation systems in our vehicle carwashes. We estimate these systems recycle approximately 85% of the water used. In the U.S., we use a third party to manage, collect and process the recycling many of the materials that go through our service departments. These products include mercury bulbs, used oil, oil filters, brake and parts waste, used antifreeze, parts solvent and drain waste. In 2020, we collected and recycled nearly 17.5 million pounds of oil, brake cleaner, glycols and other solvents through this program. In the U.K., all of our hazardous waste is collected and processed by a fully licensed waste management company, holding ISO accreditation. Approximately 96% of our hazardous waste including such items as engine oil, oil filters, antifreeze, lead acid batteries, etc., are recycled. The other 4% is properly disposed of by the waste management company.

We strive to introduce or implement new technologies and processes that are friendly to the environment. Our Hardware E- Cycle Policy requires that electronic equipment be disposed of through a specific certified electronics recycler which maintains a zero landfill, zero export policy of unprocessed equipment to non-OECD Countries. Following disposal of equipment, our vendor provides a “Certificate of Recycling” for each piece of disposed equipment, assuring us the equipment was properly recycled or refurbished.

Environmentally Friendly Facilities

In the U.S., our new facilities are constructed to be environmentally friendly. For lighting, we use LED fixtures to the extent possible, including smart photocells on exterior lights and occupancy sensors inside the facility to automatically turn lights on/off. We frequently employ Low-E high efficiency glass and low flow/flush toilets with automatic sensors to control water flow as well as sinks with motion sensors to turn water on/off and control water flow as well. All HVAC equipment is high efficiency and used in conjunction with programmable thermostats. Where possible, building materials such as flooring, ceilings, paint, wallcoverings are LEED certified as environmentally friendly. We have retrofitted some of our dealerships and collision centers with exterior and interior LED lighting. In the U.S., we have completed LED lighting upgrades at approximately 60% of our U.S. dealerships and collision centers. Working with our lighting partner, we receive a five-year warranty on all of our LED lighting retrofits, including parts and labor, effectively eliminating lighting maintenance expense where the retrofits are installed.

We are also piloting an energy savings program at one of our dealership campuses in conjunction with Shell Energy Solutions (SES) designed to enhance our energy efficiency while also reducing our operating costs. The program includes a fixed monthly payment to SES in exchange for necessary HVAC repairs, maintenance and monitoring to optimize our energy efficiency goals. The program should reduce energy usage across the campus through centralized HVAC control over 70 roof top units and identification of underperforming assets to replace them as necessary. We and SES also will upgrade and then monitor our parking lot, interior and exterior lighting fixtures with LED fixtures for energy optimization.

Digital Solutions which Foster Paper Reduction

We are committed to expanding digital solutions, where possible. For example, our U.S. dealerships each have installed docuPAD®, which is an interactive tool used in our Finance & Insurance offices. Instead of using paper, customers review and sign documents on a high definition screen and then all documents are stored electronically, thereby reducing the reliance on paper.

We also use an Applicant Tracking System in our employee recruitment which helps eliminate nearly all paper from our hiring processes. We also eliminated paper forms used at later stages in the hiring process (offer letters, background checks, etc.) in favor of digital solutions. In 2018, we received more than 20,000 five-page applications, digitally avoiding over 100,000 pieces of paper. Similarly, we have also transitioned from paper employee handbooks to an online platform. Considering both newly hired employees and current employees receiving policy updates, in 2018, we digitally circulated over 12,000 handbooks, each containing over 200 pages. Furthermore, we switched from paper to online forms for our Annual Employee Opinion Survey. In 2019, more than 11,400 employees shared their feedback digitally, including comments.

Finally, over the past two years we have eliminated most of the printed materials from our annual benefits enrollment process, opting instead to share plan information digitally. The creation of a new benefits website, and informational video content, has allowed us to more effectively communicate the equivalent of 50 printed pages of plan materials to over 10,000 full-time U.S. employees. Annually, we expect these changes will yield a reduction of nearly 2.5 million fewer pages of paper.

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Human Capital/Privacy

We believe that our employees are our greatest asset. We understand that exceptional customer service can only be consistently delivered by attracting, motivating, training, and retaining the very best team members. With this in mind, we put our employees at the heart of everything that we do by developing their talent and enabling them to build long-term careers.

Equity, Diversity and Inclusion

We are committed to building a diverse and skilled workforce while providing a work environment that promotes equity and is free from any form of discrimination on the basis of race, color, creed, religion, sex (including breast feeding and related medical conditions), pregnancy, sexual orientation, gender identity and expression, marital status, national origin, ancestry, citizenship status, uniform service member and veteran status, age, genetic information, protected medical condition, disability, or any other protected status in accordance with all applicable federal, state, and local laws. Our focus on inclusion and diversity at our U.S. automotive dealerships has resulted in over 65% of our workforce being diverse either by race, ethnicity or gender, with our gender diversity higher than the National Automobile Dealer Association (“NADA”) average. Additionally, our U.S. automotive dealerships have a management diversity rate of approximately 49%.

Annual Employee Survey

In the U.S., we work with a third-party vendor to conduct an Annual Employee Opinion Survey for all U.S. dealership employees. In 2019, over 97% of our employees participated in the survey. The results of such surveys are shared with our local, area, regional and executive management teams and a summary is reviewed with our Board of Directors.

Employee Benefits

We foster and support the wellness and well-being of our employees to create a healthier company, improve workplace satisfaction and provide a sustainable value to our shareholders. Under our U.S. health care plans, employees are encouraged to take an annual physical exam, and over 80% of our U.S. employees did so in 2019. Employees that take a physical exam receive a reduction in their health care cost. Annual physicals promote the early resolution of complex health problems which protects our employees and provides savings to our annual health care spending. In the U.S., employees are eligible to receive annual company contributions to a health savings account from the Company based on the type of coverage selected. We also offer access to free telemedicine and free smoking cessation programs to promote employee wellness.

We actively encourage the use of our U.S. 401(k) program to promote retirement income to our employees. We default new employees into our program, placing their contributions in a balanced age-appropriate investment option unless they choose otherwise. We also match employee contributions, providing an annual, recurring benefit to our employees who choose to save for their retirement. Through these measures, over 90% of our U.S. employees participate in our 401(k) plan.

Employee Training and Recognition

Annually, we sponsor a program through the National Automobile Dealers Association designed to train high-potential employees. Potential candidates are recommended by their managers and evaluated for participation in the program. This program helps prepare our employees for leadership roles within our Company. Since the inception of the program, we have graduated over 350 individuals, many of which now hold management positions with our Company.

We also sponsor a “Penske Elite Technician” program in the U.S. and the U.K. As the transportation landscape continues to change at a rapid pace, we recognize the need to attract, nurture and retain technician expertise. The annual Elite Technician Program recognizes and rewards our top performing technicians for their outstanding credentials, skills and contributions within their field. To be eligible, technicians must be nominated by management and meet specific program requirements. The program includes multiple phases, including a challenging technical exam. In 2020, 130 technicians were recognized as “Elite” through this program.

Commitment to Veterans

We are committed to hiring veterans as we believe veterans have what it takes to be outstanding employees, including a strong, goal-oriented work ethic, ability to work as a team and – in many cases – expertise working with sophisticated equipment. Since 2015, our dealerships have hired more than 600 individuals through support of the Hiring Our Heroes program in the United States. As noted above, our dealerships have supported The Paralyzed Veterans of America to help serve the needs of veterans with a spinal cord injury, with contributions from customers, employees and matching contributions of our Company.

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Company Recognition

In the U.S., many of our dealerships have been named Best to Work For by Automotive News. In 2019, the last year in which we participated in this program, thirty-three of our dealerships received this prestigious award, more than any other dealership group. Additionally Fortune Magazine has recognized Penske Automotive Group as a World’s Most Admired Company. In the U.K., we were named ‘Dealer Group of the Year’ by both Automotive Management and Motor Trader Magazines, consolidating our position as the UK’s largest dealer group. Further, our Atlanta area dealerships were named a 2020 Top Workplace by the Atlanta Journal-Constitution, while in the U.K., we have been named by Glassdoor as the 14th best place to work. We were not only the highest ranked business in the Automotive Sector, but Sytner Group was also the top-rated retailer ahead of other large national businesses.

Human Trafficking

Our businesses have a zero-tolerance approach with respect to slavery and human trafficking in our operations. We support the California Transparency in Supply Chains Act of 2010 and the United Kingdom’s Modern Slavery Act of 2015 and their intent to prevent and eliminate slavery and human trafficking from global supply chains by increasing transparency.

Privacy

In our increasingly information-based society, individual information must be adequately protected. We are committed to protecting personal information that we collect from our customers and employees. Each employee must take care to protect sensitive personal information from inappropriate or unauthorized use or disclosure, and we have implemented fair and responsible privacy and information protection procedures and data breach response plans that comply with applicable laws. All employees are expected to be familiar with our privacy procedures and to adequately protect consumer and employee information.

We are committed to the full exercise by our employees and customers of their rights to their data. In the U.K., we fully comply with the General Data Protection Regime which allows employees and customers the right to see, and in some cases, delete, their data. We also fully comply with the California Consumer Privacy Act which allows similar rights for our California customers.

Data Security

We are committed to maintaining data security awareness for all employees. Starting with on-boarding, we introduce information security and security awareness as part of everyone’s job. Training includes education regarding phishing, physical security and protecting sensitive information, among other topics. This initial training is reinforced with monthly and quarterly communications and follow-up training. Further, October is Security Awareness month, where we instruct employees regarding encryption, best practices and precaution regarding all emails received from outside the organization. We also annually audit our data security efforts through mock attacks on our digital infrastructure. Despite our efforts, we experience occasional low-level data breaches which are immaterial to the Company and have involved immaterial expenses (and no penalties). We review these incidents with senior management and our Board of Directors at least annually. We mitigate our data security risks with information security risk insurance, as we do with other aspects of our business.

Investor Outreach

We have an investor outreach program that aims to engage prospective and current shareholders throughout the year. Engagement activities includes participation in industry conferences and events, sell-side research conferences, one-on-one meetings with current and potential investors, quarterly financial results conference calls, and visits to our locations.

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Proposal 2 – Ratification of the Selection of our Independent Auditor

Our Audit Committee has selected Deloitte & Touche LLP, the member firm of Deloitte Touche Tohmatsu Limited, and their respective affiliates (collectively referred to as “Deloitte”) as our principal independent auditing firm for 2021. We have determined to submit the selection of auditors to stockholder ratification, even though it is not required by our governing documents or Delaware law. If the selection of Deloitte as our independent auditor is not ratified by our stockholders, our Audit Committee will re-evaluate its selection, taking into consideration the stockholder vote on the ratification and the advisability of selecting new auditors prior to completion of the 2021 audit.

Our Audit Committee is solely responsible for selecting, engaging and terminating our independent auditing firm, and may do so at any time at its discretion. It is anticipated that a representative of Deloitte will be present at the annual meeting with the opportunity to make a statement and to answer appropriate questions.

OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” RATIFICATION OF DELOITTE & TOUCHE LLP AS OUR INDEPENDENT AUDITOR

AUDIT COMMITTEE REPORT

The Audit Committee of the Board of Directors is responsible for providing independent, objective oversight of our accounting functions and internal controls as more fully discussed above under “Our Corporate Governance.” The Audit Committee has the sole authority to retain and terminate our independent auditing firm, and is responsible for recommending to the Board of Directors that our financial statements be included in our annual report on Form 10-K.

The Audit Committee took a number of steps in making this recommendation for our 2020 annual report. The Audit Committee discussed with our independent auditing firm those matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC, including information regarding their independence and the scope and results of their audit. These communications and discussions were intended to assist the Audit Committee in overseeing the financial reporting and disclosure process. The Audit Committee also discussed the independent auditing firm’s independence and received the letters and written disclosures from the independent auditing firm required by the PCAOB. Finally, the Audit Committee reviewed and discussed the annual audited financial statements with our management and the independent auditing firm in advance of the public release of operating results, and before the filing of our annual and quarterly reports with the SEC.

Based on the foregoing, and such other matters deemed relevant and appropriate by the Audit Committee, the Audit Committee recommended to the Board of Directors that our audited financial statements be included in our 2020 annual report on Form 10- K as filed with the SEC on February 19, 2021.

The Audit Committee of the Board of Directors

INDEPENDENT AUDITING FIRM FEES

Deloitte & Touche LLP is our principal independent registered public accounting firm. We paid Deloitte & Touche LLP the fees described below in 2020 and 2019, all of which services were approved by our Audit Committee:

Audit Services:

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Audit Related Services:

Tax Fees:

The Audit Committee has considered the nature of the above-listed services provided by Deloitte and determined that they are compatible with their provision of independent audit services under relevant guidance. The Audit Committee has discussed these services with Deloitte and management and determined that they are permitted under the Code of Professional Conduct of the American Institute of Certified Public Accountants, the auditor independence requirements of the Public Company Accounting Oversight Board, and the laws and regulations administered by the Securities and Exchange Commission.

Pre-approval Policy. The Audit Committee has adopted a policy requiring pre-approval of all audit and non-audit services provided by Deloitte. The primary purpose of this policy is to ensure that we engage our public accountants with a view toward maintaining independence. The Audit Committee is required to pre-approve all services relating to work performed for us by Deloitte and related fees. The Audit Committee must also approve fees incurred for pre-approved services that are in excess of the approved amount. Pre-approval of audit and non-audit services and fees may be given at any time up to a year before commencement of the specified service. The Chair of the Audit Committee may independently approve fees and services as long as they are reviewed and ratified by the Audit Committee at its next regularly scheduled meeting. All of the services and related fees set forth above were approved by the Audit Committee in accordance with this policy.

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Proposal 3 – Advisory Vote on Executive Compensation

We annually seek a non-binding advisory vote on our executive compensation. Because your vote is advisory, it will not be binding upon the Compensation and Management Development Committee, however, the committee will take the outcome of the vote into account when making future executive compensation decisions. Last year, our stockholders approved the compensation of our named executive officers as described under “Compensation Discussion and Analysis” and “Executive Compensation” with over 99% of the votes cast by our stockholders voting in favor. As we evaluated our compensation programs and practices, we were mindful of this strong shareholder support in deciding to maintain the overall framework of our compensation program and the majority of our compensation practices unchanged from last year.

Our compensation program is designed to motivate our executive officers to enhance long-term stockholder value and to attract and retain the highest quality executive and key employee talent available. We believe our executive compensation is aligned with increasing the value of our common stock and promoting our key strategies, values and long term financial and operational objectives. In this regard, we note that:

THE BOARD OF DIRECTORS BELIEVES THAT THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS IS APPROPRIATE AND RECOMMENDS A VOTE FOR THE FOLLOWING ADVISORY RESOLUTION:

“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S- K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion is hereby APPROVED.

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Executive Officers

Our named executive officers, whose compensation we describe below, are Messrs. Penske, Kurnick, Carlson, Denker, and Spradlin. Each of these executive officers were elected by the Board of Directors and will hold office until their successors have been duly elected and qualified or until their earlier resignation or removal from office. Biographies of Messrs. Kurnick and Penske are set forth above. Biographies of our other named executive officers are provided below:

J.D. Carlson, 51, has served as our Executive Vice President and Chief Financial Officer since June 2015 and prior to that served as our Senior Vice President and Corporate Controller since May 2011. He previously served as our Vice President and Controller since joining our Company in April 2006. Prior to joining us, Mr. Carlson was Corporate Controller for Tecumseh Products. He was previously a Senior Manager for PricewaterhouseCoopers, an accounting and financial advisory services firm, which he joined in 1995.

Bud Denker, 62, has served as our Executive Vice President – Human Resources since July 1, 2015. Since September 2017, he also has served as President of Penske Corporation, and he serves as Executive Vice President, Marketing and Communications of Penske Corporation as well as Executive Vice President of Penske Racing. Mr. Denker served as our Executive Vice President – Marketing from July 2005 to June 2015. Prior to joining us, Mr. Denker served as Vice President, Brand and Market Development for Eastman Kodak Company from 2001-2005.

Shane M. Spradlin, 51, has served as our Executive Vice President since February 2010, our General Counsel since December 2007, and our Corporate Secretary since March 2004. Mr. Spradlin joined our Company in March 2003. From 1999 to 2003, he served as Corporate Counsel to Nextel Communications in Reston, Virginia. From 1995 through 1999, Mr. Spradlin was an associate with the New York and Washington, D.C. offices of Latham & Watkins, specializing in corporate finance and mergers and acquisitions.

Additional corporate officers include:

George Brochick, 71, has served as Executive Vice President of Strategic Development since July 1, 2012. Prior to this, he served as Executive Vice President of our Western Region since December 2002. He joined PAG in 1996 upon the sale of the former Sun Automotive Group to Penske Automotive. In addition to his current executive functions, Mr. Brochick has held numerous dealership general manager positions throughout his automotive career. From 1977 to 1984, prior to entering the automobile business, Mr. Brochick served as Vice President, Operations, for Southwest Kenworth, Inc. Mr. Brochick also held the position of Director, Marketing Services, for Euclid, Inc., a division of Daimler-Benz, A.G., with worldwide responsibilities for market research and technical field studies. Mr. Brochick has previously served as a Board Member of the American International Automobile Dealers Association and is currently serving as a Board Member for Universal Technical Institute (UTI), Inc. and the Duke University Board of Visitors.

Tracy Cassidy, 48, has served as our Executive Vice President, Marketing since August 1, 2020. She previously served as our Senior Vice President, Corporate Marketing since February 2020, Vice President since 2015, and Director since 2011. Prior to joining us, Ms. Cassady held various global marketing and communication positions at Federal-Mogul Corporation.

Richard A. Hook, 46, has served as our Executive Vice President and Chief Information Officer since February 13, 2019. Prior to that, he served as our Senior Vice President and Chief Information Officer since May 1, 2015, as well as Vice President, IT Infrastructure since July 2009. Before joining us in 2009, Mr. Hook held various positions at Arthur Andersen LLP, H&R Block Financial Advisors and Federal-Mogul Corporation.

Anthony R. Pordon, 56, has served as Executive Vice President since May 2011. Prior to that, Mr. Pordon served as Senior Vice President since January 2006 and Vice President since July 2001. Mr. Pordon’s primary responsibilities include Investor Relations, Corporate Communications, and Corporate Development, including the responsibility for establishing, directing and maintaining our communication strategies and representation on Wall Street with the buy-side and sell-side analyst community. Prior to joining us, Mr. Pordon served in various capacities at Detroit Diesel Corporation, a manufacturer of heavy-duty diesel engines. Prior to Detroit Diesel, Mr. Pordon was an auditor at Deloitte & Touche LLP.

Shelley Hulgrave, 42, has served as our Senior Vice President since February 2020 and our Corporate Controller since June 2015. She has also served as our Corporate Accounting Manager beginning in October 2006 coordinating the Company’s accounting teams in the United States, Europe and Australia. Prior to joining us, Ms. Hulgrave held various positions for DaimlerChrysler Financial and Ernst & Young.

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Aaron Michael, 45, has served as our Senior Vice President, Financial Services since 2014 and has been our Treasurer since 2006. In his role as Treasurer, he manages our capital structure and real estate portfolio. From 2001 through 2006, Mr. Michael was employed by Penske Corporation in various finance and treasury roles. Prior to working with Penske, Mr. Michael was a commercial lender for Comerica Bank in its Detroit, MI office.

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Compensation Committee Report

The Compensation and Management Development Committee of the Board of Directors has reviewed and discussed the Compensation Discussion and Analysis set forth below with management. Based on this review and these discussions with management, the committee has recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.

The Compensation & Management Development Committee of the Board of Directors

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Compensation Discussion and Analysis

Compensation Philosophy. Other than with respect to Messrs. Kurnick and Penske, the majority of our executive and employee compensation is payable in cash in the short-term, and is comprised principally of salary and cash bonuses. We use cash compensation as the majority of our compensation because we believe it provides the most flexibility for our employees and is less dilutive to existing stockholders than equity compensation. The compensation committee also recognizes that stock prices may reflect factors other than long-term performance, such as general economic conditions and varying attitudes among investors toward the stock market in general and toward automotive retail companies specifically. However, we also provide long-term compensation in the form of restricted stock awards for senior employees, including each of our named executive officers. Our restricted stock program awards typically vest over four years, with 70% of any award vesting in the third and fourth years. We believe this long term compensation helps to align management’s goals with those of our other stockholders and provides a long-term retention inducement for our key employees, as discussed below under the heading “Long Term Incentive Plans.”

Outside Advisors and Consultants. Our compensation committee has full access to any of our employees and has the authority to hire outside consultants and advisors at its discretion, though it did not do so in 2020. All named executive officer compensation determinations are made by the committee, using its independent judgment and analysis.

Role of Executive Officers. The compensation committee relies on our senior management to assist in fulfilling many of its duties, in particular our Executive Vice President – Human Resources and Chief Executive Officer, each of whom attends part of most committee meetings. These executives make recommendations concerning our compensation policies generally, certain specific elements of compensation for senior management (such as equity awards and bonuses), and report to the committee as to company personnel and developments. Our executives do not participate in determining their own compensation.

Addressing Risk. Our compensation committee recognizes that any incentive based compensation arrangement induces an inherent element of risk taking by senior management. We incent management through annual discretionary bonuses, restricted stock grants and, in some cases, performance based bonuses. The committee assesses the risk related to our compensation policies for the named executive officers and for the employees generally, and has determined that our compensation arrangements do not lend themselves to unnecessary or excessive risk taking. The committee believes that any inherent risk is mitigated by the following factors:

The responsibilities of the compensation committee and committee member independence are described under “Our Corporate Governance” beginning on page 6.

Compensation Recovery (“Clawback”) Policy. We have a policy regarding the recovery of unfairly earned compensation. Under the policy, if our Board determines that a member of management earned performance based compensation or incentive compensation within the last three years due to fraud, negligence or intentional misconduct, and such conduct was a significant contributing factor to our restating our financial statements or the reporting of material inaccuracies relating to financial reporting or other performance metrics used in those awards, our Board has the discretion to cause that employee to repay and/or forfeit all compensation that was expressly conditioned upon the achievement of the misreported financial results.

Equity Award Approval Policy. We have an equity award approval policy which requires that all equity awards be approved by the committee and that the grant date of all awards except those discussed below shall be the date of the approval by the committee. As part of that policy, the compensation committee delegated to our Chief Executive Officer the authority to grant or accelerate the vesting of awards with respect to 50,000 shares of our common stock per year, other than awards to executive officers, provided the grant or vesting of the awards are reported to the committee at its next meeting. Our Chief Executive Officer approved the grant or vesting of awards with respect to 11,751 shares under that authority in 2020, which awards were ratified by the committee.

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Stock Ownership Guidelines. Our stock ownership guidelines are designed to align our management and Board members’ interests with our stockholders. The guidelines require that officers and directors own the following levels of common stock, expressed as a multiple of base salary.

Non-employee board members are required to own common stock equal to ten times our annual retainer (currently, $40,000 x 10 = $400,000). Directors and officers have five years from appointment to reach the minimum ownership level, though our policy allows extensions at the discretion of the Chair and Lead Director. These guidelines exclude any shares that are pledged by any of our directors and officers, and also include any shares of restricted stock held by the officer or director.

Determination of Compensation Amounts. The compensation committee determines all aspects of compensation for our named executive officers. In making decisions regarding non-CEO compensation, the committee receives input from our Chief Executive Officer. The committee believes that solely using annual quantitative performance measurements does not create the appropriate balance of incentives to build long-term value. Thus, the committee evaluates a broad range of qualitative factors, including reliability, a track record of integrity, good judgment, foresight and the ability to lead others.

The committee reviews salary adjustments with a view to maintaining external compensation competitiveness. We annually benchmark competitiveness of our total compensation against a group of publicly traded automotive retailers (Asbury Automotive Group, AutoNation, CarMax, Group 1 Automotive, Lithia Motors and Sonic Automotive). While we benchmark our compensation, we do not target a specific quartile of pay for our named executive officers as compared to our peers.

In addition to the above mentioned factors, the level of compensation that we pay to Messrs. Denker and Kurnick reflect that each devotes a percentage of his time to affiliated companies for which they receive additional compensation from Penske Corporation. Specifically, Mr. Kurnick serves as Penske Corporation’s Vice Chair and Mr. Denker serves as the President of Penske Corporation. Our committee does not track the exact percentage of time spent on Penske Automotive versus affiliated matters, recognizing that the amount varies from year to year, but it is generally expected that each will spend approximately 75% of his time on Penske Automotive matters. We were reimbursed approximately five percent of Mr. Spradlin’s base salary by Penske Corporation to reflect his efforts on behalf of Penske Corporation. The full amount of Mr. Spradlin’s base salary is shown in the table below.

Our Compensation Program. Our compensation program primarily consists of four elements:

Base Salary. The salaries of our named executive officers are determined by scope of job responsibility, experience, individual performance, historical salary levels and the benchmarking information discussed above. The evaluation of the individual’s performance is based upon the committee’s perception of that individual’s performance, based in large part on input from our Chief Executive Officer with respect to each of the other named executive officers, and the factors noted above under “Determination of Compensation Amounts.”

The committee also considers our Company-wide performance in the prior year and general economic factors when setting base salary levels for each of the named executive officers. The items of corporate performance that are considered for our named executive officers are the same as those with respect to the award detailed below under “Long-Term Incentive Plans.” Our compensation committee uses these factors in a subjective evaluation to gauge Company performance, keeping in mind the impact of the general performance of the automotive retail industry. Beginning January 2020, Messrs. Carlson, Denker and Spradlin’s salaries were each increased $25,000 resulting from the Committee’s review of these factors. See below under “Compensation Adjustments in light of COVID-19” for a discussion of changes to executive salaries in 2020.

Annual Bonus Payments. Our senior management is eligible to receive annual discretionary cash bonus payments. Our Chief Executive Officer and President have not received any discretionary bonus payments, and instead receive only the

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restricted stock grants resulting from their achievement of performance goals, as described below under “Long-Term Incentive Plans.” We pay annual cash bonuses to our other named executive officers to provide an incentive for future performance and as a reward for performance during the prior year. These discretionary bonus payments are determined in varying degrees based on three criteria:

The items of Company-wide performance that are considered for our named executive officers are the same as those detailed below under “Long-Term Incentive Plans.” Our compensation committee uses these factors to evaluate Company performance, keeping in mind the impact of the overall performance of the business sectors in which we compete. The evaluation of the individual’s performance and the performance of the individual’s business unit is based on the committee’s perception of that performance, based in part on input from our Chief Executive Officer and the factors noted above under “Determination of Compensation Amounts.” The amount of cash bonuses paid to Messrs. Carlson, Denker and Spradlin are set forth in the “Bonus” column of the Summary Compensation Table below.

Restricted Stock Awards. Each member of senior management, including each of the named executive officers, is eligible to receive a restricted stock award because we believe these awards effectively align management’s goals with those of our other stockholders. Restricted stock grants for management typically vest over four years at a rate of 15%, 15%, 20% and 50% per year, and are subject to forfeiture in the event the employee departs from the Company before vesting. We believe these awards provide a longer-term incentive for management because the majority of the award vests in the third and fourth year. We employ this form of compensation in part because many of our initiatives may take several years to yield benefits. We also believe that weighted vesting of these awards provides an additional incentive to retain our valuable employees due to the unvested value that may be created over time. Our restricted stock awards mirror our other outstanding stock, including the right to vote with our other stockholders and receive dividends.

In 2020 and 2021, each of our named executive officers also received restricted stock awards resulting from achievement of the long term incentive plan awards discussed below. In total in 2020, the committee approved the grant of approximately 304,234 equity incentive awards under our equity plans (representing approximately 0.4% of our current outstanding equity), including all of the awards to our named executive officers. Awards granted before May 13, 2020 (the date shareholders approved our new 2020 Equity Incentive Plan) were granted under our 2015 Equity Incentive Plan, and all awards after such date were made under our 2020 Equity Incentive Plan. Our 2020 Equity Incentive Plan provides up to five million shares for equity awards.

Other Compensation. We may also provide our named executive officers, and certain other employees, with selected other benefits or perquisites in order to attract and retain them. With respect to health and welfare benefits, the committee believes that our employees should receive a meaningful benefit package commensurate with those of other automotive retailers, recognizing the increasing cost of those benefits in recent years. We also provide our U.S. employees with company matching under our 401(k) plan. The amounts received by the named executive offers in this regard are set forth in the “All Other Compensation” column of the “Summary Compensation” table below.

Our named executive officers, as well as other eligible employees, may defer up to 50% of their base salary and up to 95% of their bonus compensation pursuant to the Penske Automotive Group, Inc. Amended and Restated Deferred Compensation Plan (the “DCP”). The DCP is an unfunded, non-qualified deferred compensation plan which provides the opportunity to accumulate additional savings for retirement on a tax deferred basis. The Company does not match funds deferred through this plan. Additional details regarding our DCP can be found below in the “Nonqualified Deferred Compensation” table.

Our named executive officers and directors are also provided with an automobile allowance or the use of a Company vehicle. From time to time, we may provide other benefits to certain members of our senior management. We have valued these benefits in the “All Other Compensation” column of the “Summary Compensation” table below based on our cost. We review these benefits on a case-by-case basis and believe, if limited in scope, such benefits can provide an incentive to long term performance and help retain our valuable employees.

No Employment Agreements or Pre-arranged Severance Compensation. None of our current executive officers have been provided an employment agreement, nor are they entitled to any pre-arranged severance compensation. We believe our mix of short-term and long-term compensation provides a retention incentive that makes an employment contract unnecessary, while providing us flexibility with respect to managing the departure of an executive officer. Our lack of pre-arranged severance compensation is consistent with our performance based compensation philosophy, and provides us

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the flexibility to enter into post-employment arrangements based on circumstances existing upon departure. We have historically entered into varying types of severance arrangements with departing members of our senior management, which have included vesting of restricted stock and consulting agreements, as we believe it may be important to have continuing access to these individuals’ knowledge base and guidance. With respect to a change in control, none of our current executive officers have been guaranteed any change of control payments, however, our restricted stock grants vest in the event of a change of control.

Compensation Adjustments in Light of COVID-19. Due to the COVID-19 pandemic, our priority in 2020 was to ensure we met customer needs while keeping our customers, employees and our communities safe. We enhanced our cleaning procedures, both for facilities and vehicles, and instructed employees who feel ill to stay home, among other measures. During the key shutdown months of April and May, we furloughed 15,050 employees, though we returned most of those employees to work during the course of the year. We maintained vigilance over all of our operations to assure that our employees and customers were kept safe.

We also took several compensation related actions in response to COVID-19. Beginning April 1, 2020, our Chief Executive Officer and President took 100% salary reductions and our other named executive officers took 25% salary reductions. Our board of directors also waived its board service fees starting April 1, 2020. We suspended our quarterly stockholder cash dividend, suspended matching of employee contributions under our U.S. 401(k) plan and took additional measures to conserve cash. For our President, Chief Executive Officer and Board of Directors, we reinstated their salary/board service fees on October 1, 2020. For our other named executive officers, we reinstated their full salaries in two phases, with 50% of the reduction restored on July 1 and the remainder on September 1. We also reinstated our 401(k) plan matching effective October 1, 2020 and announced a reinstatement of our quarterly stockholder cash dividend in October 2020.

Long Term Incentive Plans Our compensation committee established 2020 performance targets for a performance based award for each of named executive officers in February 2020. The payouts are set forth in the table below and were paid in shares of restricted stock in February 2021 as set forth below. The amount of restricted stock noted below granted in February 2021 and vesting over a four year period was calculated by dividing the total award achieved by our average closing stock price for each trading day in 2020 ($45.3475). Messrs. Kurnick and Penske did not receive an annual cash bonus because they each received this restricted stock grant.

2020 Long Term Incentive Award Amounts

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2020 Long Term Incentive Award Objectives

The specific 2020 performance objectives for our named executive officers and results were as follows:

2021 Long Term Incentive Award Amounts

In February 2021, the committee established similar performance based awards for our named executive officers in the amounts specified below to be paid in shares of restricted stock to be granted in 2022 calculated by dividing the resulting total award achieved by the average PAG closing stock price for each trading day in 2021.

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The performance objectives for these awards are as follows:

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Executive Compensation

The following table contains information concerning 2020 annual and long-term compensation for our Chief Executive Officer, Chief Financial Officer and each of our three other most highly compensated named executive officers, collectively referred to as the “named executive officers.” For a discussion of our methodology in valuing the items set forth under “All Other Compensation,” see “CD&A – Other Compensation.” For a discussion of changes to 2020 compensation in light of the COVID- 19 pandemic, please see above “Compensation Adjustments in Light of COVID-19.”

2020 Summary Compensation Table

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2020 Long Term Incentive Award Amounts

Grants of Plan-Based Awards in 2020

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Outstanding Equity Awards at 2020 Year-End

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Option Exercises and Stock Vested During 2020

Nonqualified Deferred Compensation

The Penske Automotive Group, Inc. Amended and Restated Deferred Compensation Plan (“DCP”) allows qualifying individuals, including our named executive officers, to defer on a pre-tax basis up to 50% of their base salary and/or up to 95% of their annual bonus for a specified period of time, and/or until their retirement or separation from the Company. The deferred assets are held in a rabbi trust and are invested notionally on behalf of the participants. In the event of termination of employment, all balances would be paid in either a lump sum or up to ten annual installments, according to the participant’s prior election. We do not provide any matching contributions and we do not guarantee a minimum return on these amounts. We believe the DCP is an important tool for recruiting key employees and assists in employee retention. The table below reflects the contributions, earnings, withdrawals, distributions during 2020, and account balances as of December 31, 2020 for each named executive officer.