<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT /X/
FILED BY A PARTY OTHER THAN THE REGISTRANT / /
Check the appropriate box:
/ / PRELIMINARY PROXY STATEMENT
/X/ DEFINITIVE PROXY STATEMENT
/ / DEFINITIVE ADDITIONAL MATERIALS
/ / SOLICITING MATERIAL PURSUANT TO SEC.240.14A-11(C) OR SEC.240.14A-12
GENUINE PARTS COMPANY
- --------------------------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
KEITH O. COWAN
- --------------------------------------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT)
Payment of Filing Fee (Check the appropriate box):
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or
14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
Set forth the amount on which the filing fee is calculated and state how it
was determined.
/x/ Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: $125
(2) Form, Schedule or Registration Statement No.: Preliminary Proxy
Statement
(3) Filing Party: Genuine Parts Company
(4) Date Filed: February 4, 1994
<PAGE> 2
GENUINE PARTS COMPANY
2999 CIRCLE 75 PARKWAY
ATLANTA, GEORGIA 30339
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 18, 1994
---------------------
TO THE SHAREHOLDERS OF GENUINE PARTS COMPANY:
Notice is hereby given that the Annual Meeting of Shareholders of Genuine
Parts Company (the "Company") will be held at 2999 Circle 75 Parkway, Atlanta,
Georgia, on the 18th day of April, 1994, at 10:00 a.m., for the following
purposes:
(1) To elect four Class II directors;
(2) To consider and vote upon a proposal to amend the Company's
Restated Articles of Incorporation to increase the number of authorized
shares of Common Stock from 150,000,000 to 450,000,000 shares;
(3) To consider and vote upon a proposal to ratify the selection of
Ernst & Young as independent auditors of the Company for the fiscal year
ending December 31, 1994; and
(4) To act upon such other matters as may properly come before the
meeting or any reconvened meeting following any adjournment thereof.
Only holders of record of Common Stock at the close of business on February
18, 1994 will be entitled to vote at the meeting. The transfer books will not be
closed. A complete list of the shareholders entitled to vote at the meeting will
be available for inspection by shareholders at the offices of the Company
immediately prior to the meeting.
The Annual Meeting may be adjourned from time to time without notice other
than announcement at the Annual Meeting, and any business for which notice of
the Annual Meeting is hereby given may be transacted at a reconvened meeting
following such adjournment.
By Order of the Board of Directors,
/s/ BRAINARD T. WEBB, JR.
Secretary
Atlanta, Georgia
March 4, 1994
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING IN PERSON, PLEASE
VOTE, SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENCLOSED BUSINESS
REPLY ENVELOPE. IF YOU DO ATTEND THE MEETING, YOU MAY WITHDRAW YOUR PROXY AND
VOTE IN PERSON.
<PAGE> 3
GENUINE PARTS COMPANY
2999 CIRCLE 75 PARKWAY
ATLANTA, GEORGIA 30339
---------------------
PROXY STATEMENT
ANNUAL MEETING -- APRIL 18, 1994
---------------------
This Proxy Statement is being furnished to the shareholders of Genuine
Parts Company (the "Company") in connection with the solicitation of proxies by
the Board of Directors of the Company for use at its Annual Meeting of
Shareholders to be held on April 18, 1994, and at any reconvened meeting
following any adjournment thereof. This proxy statement and the accompanying
proxy are first being mailed to shareholders on or about March 4, 1994.
A shareholder 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 Secretary of the Company, by delivery of
a proxy bearing a later date, or by voting in person at the meeting. The mailing
address of the executive offices of the Company is 2999 Circle 75 Parkway,
Atlanta, Georgia 30339.
An annual report to the shareholders, including financial statements for
the year ended December 31, 1993, is enclosed herewith.
At the close of business on the record date for the Annual Meeting, which
was February 18, 1994, the Company had outstanding and entitled to vote at the
Annual Meeting 124,464,667 shares of Common Stock.
Each shareholder is entitled to one vote on each proposal 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 meeting. In determining whether a quorum exists at the Annual Meeting for
purposes of all matters to be voted on, all votes "for" or "against," as well as
all abstentions, with respect to the proposal receiving the most such votes,
will be counted. Broker non-votes are not counted for the purposes of
determining whether a quorum is present with respect to a specific proposal.
The vote required for the election of directors and the selection of
independent auditors is a majority of the shares of Common Stock represented and
entitled to vote at the Annual Meeting. Consequently, with respect to those two
proposals, abstentions and broker non-votes will be counted as part of the
requisite number of base number of votes to be used in determining if the
proposals have received the requisite number of votes for approval. Thus, both
an abstention and a broker non-vote will have the same effect as a vote
"against" such proposals. The vote required for approval of the amendment of the
Company's Restated Articles of Incorporation is a majority of the shares of
Common Stock issued and outstanding and entitled to vote on the proposal as of
the record date. Consequently, with respect to this proposal, abstensions will
be counted as part of the base number of votes to be used in determining if the
proposal has received the requisite number of votes for approval, but broker
non-votes will not be counted as part of the base number of votes. Thus, an
abstention will have the same effect as a vote "against" such proposal, while a
broker non-vote will have no effect.
1. ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of thirteen
directorships, divided into two classes of four directors each and one class of
five directors, with the terms of office of each class ending in successive
years. The terms of directors in Class II expire on the date of this Annual
Meeting. The directors in Class I and Class III will continue in office.
<PAGE> 4
The shareholders are being asked to vote on the election of the four
nominees for director in Class II. The Class II nominees will serve for terms of
three years each (and until their successors are duly elected and qualified);
however, pursuant to the current Bylaws of the Company, Mr. Ellis will be
required to retire from the Board of Directors as of the date of the Company's
1995 Annual Meeting of Shareholders. All of the nominees are presently
directors. All proxies received by the Company will be voted in accordance with
instructions appearing on such proxies. In the absence of contrary instructions,
the proxy will be voted for the election of the four nominees whose names appear
below. In the event that any nominee is unable to serve (which is not
anticipated), the persons designated as proxies will cast votes for the election
of the remaining nominees and for the election of such other persons as they may
select.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE ELECTION
OF ALL OF THE NOMINEES. PROXIES RECEIVED BY THE BOARD OF DIRECTORS WILL BE SO
VOTED UNLESS SHAREHOLDERS SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.
The following tables and information below set forth the name of each
nominee and each director continuing in office, their ages, principal
occupations and the year each of them first joined the Board. For information
concerning membership on committees of the Board of Directors, see "Other
Information about the Board and its Committees" below.
NOMINEES FOR DIRECTOR
CLASS II
FOR A THREE-YEAR TERM EXPIRING ON THE DATE OF THE 1997 ANNUAL MEETING
<TABLE>
<CAPTION>
YEAR FIRST
NAME AGE POSITION WITH THE COMPANY ELECTED DIRECTOR
- ------------------------------ --- ----------------------------------------- ----------------
<S> <C> <C> <C>
John B. Ellis 69 Director 1987
William A. Parker, Jr. 66 Director 1969
John J. Scalley 63 Executive Vice President and Director 1987
James B. Williams 60 Director 1980
</TABLE>
Mr. Ellis is a private investor and a director of Atlantic Realty Co.,
Flowers Industries, Inc., Hughes Supply, Inc., Intermet Corporation,
Interstate/Johnson Lane, Inc., Oxford Industries, Inc. and UAP Inc.
Mr. Parker is Chairman of the Board of Directors of Cherokee Investment
Company, a private business engaged in investments, a position he has held since
1977. He is also a director of Atlantic Realty Co., First Union Real Estate
Investment Trust, Georgia Power Company, Haverty Furniture Co., Inc.,
Internationale Nederlanden America Life Corporation, Life Insurance Co. of
Georgia, Post Properties, Inc. and The Southern Company.
Mr. Scalley is Executive Vice President of the Company, a position he has
held since 1986.
Mr. Williams is Chairman and Chief Executive Officer of SunTrust Banks,
Inc., positions he has held since 1991 and 1990, respectively. Mr. Williams has
been a member of the Board of Directors of SunTrust Banks, Inc. since 1984. Mr.
Williams served as President of Trust Company of Georgia from 1981 to 1989, as
President of Sun Banks, Inc. from 1986 to 1989, and as President of SunTrust
Banks, Inc. from 1990 to 1991. Mr. Williams is also a director of The Coca-Cola
Company, Georgia-Pacific Corporation, Rollins, Inc., RPC Energy Services, Inc.
and Sonat Inc.
2
<PAGE> 5
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
CLASS I
TERM EXPIRING ON THE DATE OF THE 1996 ANNUAL MEETING
<TABLE>
<CAPTION>
YEAR FIRST
NAME AGE POSITION WITH THE COMPANY ELECTED DIRECTOR
- ------------------------------- --- --------------------------------------- ----------------
<S> <C> <C> <C>
James R. Courim 64 Director 1982
Bradley Currey, Jr. 63 Director 1990
Thomas C. Gallagher 46 President, Chief Operating Officer and 1990
Director, and Chairman of the Board of
Directors and Chief Executive Officer
of S.P. Richards Company, a wholly
owned subsidiary of the Company
Gardner E. Larned 70 Director and Chairman of the Board and 1993
Chief Executive Officer of Berry
Bearing Company and its affiliated
companies, wholly owned subsidiaries of
the Company
Lawrence G. Steiner 55 Director 1972
</TABLE>
Mr. Courim was Chairman of the Board of Directors and Chief Executive
Officer of Standard Unit Parts Corporation, a distributor of automotive
replacement parts and accessories, prior to his retirement in 1982.
Mr. Currey is Chairman of the Board, President and Chief Executive Officer
of Rock-Tenn Company, a manufacturer and distributor of paperboard and packaging
products located in Norcross, Georgia. He has held the position of President
since 1978, the position of Chief Executive Officer since 1988 and the position
of Chairman of the Board since 1993.
Mr. Gallagher is President and Chief Operating Officer of the Company, and
Chairman of the Board of Directors and Chief Executive Officer of S.P. Richards
Company, a wholly owned subsidiary of the Company. Mr. Gallagher has been
President and Chief Operating Officer of the Company since 1990, and Chairman of
the Board of Directors and Chief Executive Officer of S.P. Richards Company
since 1988. Mr. Gallagher was Executive Vice President of the Company from 1988
to 1990. Mr. Gallagher is a director of Oxford Industries, Inc.
Mr. Larned is Chairman of the Board and Chief Executive Officer of Berry
Bearing Company and its affiliated companies, positions he has held since 1985.
Berry Bearing Company and its affiliates, which are headquartered in Chicago and
engaged in the distribution of bearings and related industrial products, were
acquired by the Company on January 29, 1993. As part of the Company's
acquisition of Berry Bearing Company and its affiliates, the Company agreed to
nominate Mr. Larned to a full three-year term as a Director, and in connection
therewith the Board of Directors, on February 15, 1993, amended the Company's
Bylaws to allow Mr. Larned and other nominees named in connection with
acquisitions to serve one complete three year term, even though the Bylaws
otherwise mandate the retirement of Directors at the annual meeting of
shareholders following the January 1st that follows their attainment of age 70.
Mr. Steiner is Chairman of the Board and President of American Linen Supply
Company. Mr. Steiner has been President of American Linen Supply Company since
1979, and Chairman of the Board since 1992. American Linen Supply Company is
headquartered in Minneapolis, Minnesota, and is engaged in the business of linen
and garment rental.
3
<PAGE> 6
CLASS III
TERM EXPIRING ON THE DATE OF THE 1995 ANNUAL MEETING
<TABLE>
<CAPTION>
YEAR FIRST
NAME AGE POSITION WITH THE COMPANY ELECTED DIRECTOR
- --------------------------------- --- --------------------------------- ----------------
<S> <C> <C> <C>
Jean Douville 50 Director 1992
E. Reginald Hancock 69 Director 1980
Larry L. Prince 55 Chairman of the Board, Chief 1979
Executive Officer and Director
Alana S. Shepherd 63 Director 1993
</TABLE>
Mr. Douville has been President and a director of UAP Inc. since 1981, and
Chief Executive Officer of UAP Inc. since 1982. UAP Inc. is a distributor of
automotive replacement parts headquartered in Montreal, Quebec, Canada. Mr.
Douville is a director of Banque Nationale du Canada, MacLean Hunter Limited,
Sodisco/Howden Group Inc. and Unigesco Inc.
Mr. Hancock was a senior partner in the law firm of Smith, Currie & Hancock
in Atlanta, Georgia, prior to his retirement in 1990. Mr. Hancock had been a
partner in that firm since 1958.
Mr. Prince is Chairman of the Board of Directors and Chief Executive
Officer of the Company. Mr. Prince has been Chairman of the Board since 1990,
and Chief Executive Officer since 1989. Mr. Prince was President and Chief
Operating Officer of the Company from 1986 to 1990. He is also a director of
Crawford & Company, Equifax, Inc., John H. Harland Co., Trust Company of Georgia
and UAP Inc.
Ms. Shepherd is Secretary of the Board of Directors of the Shepherd Spinal
Center, a position she has held since 1974. Ms. Shepherd is a director of
Wachovia Bank of Georgia.
OTHER INFORMATION ABOUT THE BOARD AND ITS COMMITTEES
During 1993, the Board of Directors held four meetings. All of the
directors attended at least 75% of the aggregate total number of meetings of the
Board of Directors and meetings of Committees of the Board on which they served,
except for Mr. Courim who attended 66 2/3% of such meetings, and Mr. Larned who
attended 33 1/3% of such meetings. The Board presently has three standing
committees. Certain information regarding the functions of the Board's
committees, their present membership and the number of meetings held by each
committee during 1993 is described below:
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 Larry L. Prince (Chairman), Thomas C. Gallagher,
Bradley Currey, Jr., John J. Scalley and James B. Williams. During 1993,
this committee held five meetings.
Audit Committee. The Audit Committee annually reviews and recommends
to the Board 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 auditing engagement, reviews the scope and results of
the Company's procedures for internal auditing and inquires as to the
adequacy of the Company's internal accounting controls. The current members
of the Audit Committee are James B. Williams (Chairman), James R. Courim,
Alana S. Shepherd and Lawrence G. Steiner. During 1993, the Audit Committee
held two meetings.
Compensation and Stock Option Committee. The Compensation and Stock
Option Committee is authorized to fix the compensation of senior officers
of the Company and to administer the Company's 1988 Stock Option Plan and
1992 Stock Option and Incentive Plan. The current members of the
Compensation and Stock Option Committee are William A. Parker, Jr.
(Chairman), John B. Ellis, E. Reginald Hancock and James B. Williams.
During 1993, the Compensation and Stock Option Committee held three
meetings.
4
<PAGE> 7
The Company's Board of Directors does not have a nominating committee.
Compensation of Directors. During 1993, directors who were not
full-time employees of the Company or its subsidiaries were paid $5,000 per
fiscal quarter plus $750 per meeting attended, except the Chairman of the
Audit Committee, who was paid $5,500 per fiscal quarter plus $750 per
meeting attended.
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of February 18, 1994, on
groups known to the Company to be beneficial owners of more than five percent of
the outstanding Common Stock of the Company.
<TABLE>
<CAPTION>
SHARES
NAME AND ADDRESS BENEFICIALLY PERCENT OF
TITLE OF CLASS OF BENEFICIAL OWNER OWNED CLASS
- ---------------- ------------------------------ ------------ ----------
<S> <C> <C> <C>
Common Stock, Northern Trust Corporation, 9,647,932(1) 7.8%
$1.00 par as parent holding company
value on behalf of certain
subsidiaries
50 South La Salle Street
Chicago, Illinois 60675
</TABLE>
- ---------------
(1) This information is based upon information included in a Schedule 13G filed
with the Securities and Exchange Commission on February 14, 1994. Certain
of these shares are also beneficially owned by Gardner E. Larned, one of
the Company's directors, as set forth in footnote (6) on page 6 of this
Proxy Statement.
COMMON STOCK OWNERSHIP OF MANAGEMENT
Based on available information, the Company believes that set forth in the
table below is information in connection with the beneficial ownership of Common
Stock by the Company's directors, the Named Executive Officers (as defined
herein) and the directors and executive officers of the Company as a group (18
persons) as of February 18, 1994:
<TABLE>
<CAPTION>
SHARES OF COMMON PERCENTAGE OF
NAME OF DIRECTOR OR STOCK BENEFICIALLY COMMON STOCK
TITLE OF CLASS NAMED EXECUTIVE OFFICER OWNED(1) OUTSTANDING(2)
- -------------- -------------------------------------------- --------------------- --------------
<S> <C> <C> <C>
Common Stock, James R. Courim 539,113 *
$1.00 par Bradley Currey, Jr. 20,000 *
value Jean Douville 1,500 *
John B. Ellis 125,250(3) *
Thomas C. Gallagher 99,343(4) *
E. Reginald Hancock 16,000 *
George W. Kalafut 18,766(5) *
Gardner E. Larned 6,740,692(6) 5.4%
William A. Parker, Jr. 1,536,709(7) 1.2%
James T. Prince 65,360(8) *
Larry L. Prince 226,981(9) *
Louis W. Rice, Jr. 30,661(10) *
John J. Scalley 98,130(11) *
Alana S. Shepherd 1,317 *
Lawrence G. Steiner 1,605 *
James B. Williams 20,000 *
Directors and Executive Officers as a Group 10,820,030(12) 8.7%
</TABLE>
- ---------------
* Less than 1%.
5
<PAGE> 8
(1) Information relating to the beneficial ownership of Common Stock by
directors and Named Executive Officers is based upon information furnished
by each such individual using "beneficial ownership" concepts set forth in
rules promulgated by the Securities and Exchange Commission under Section
13(d) of the Securities Exchange Act of 1934. Except as indicated in other
footnotes to this table, directors and Named 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 have a beneficial
interest, and as to which such shares the director or executive officer
disclaims beneficial ownership.
(2) Unless indicated in the table, the number of shares included in the table
as beneficially owned by a director or Named Executive Officer does not
exceed one percent of the outstanding Common Stock of the Company.
(3) Includes 60,750 shares held by a charitable foundation for which Mr. Ellis
is a trustee and thereby has shared voting and investment power for such
shares. Mr. Ellis disclaims beneficial ownership as to such shares held in
trust.
(4) Includes 65,298 shares subject to exercisable stock options and 631 shares
owned jointly by Mr. Gallagher and his wife. In addition, Mr. Gallagher is
one of four trustees for 725,688 shares held in a benefit fund for Company
employees. Mr. Gallagher disclaims beneficial ownership as to all such
shares held in trust.
(5) Includes 11,823 shares subject to exercisable stock options. In addition,
Mr. Kalafut is one of four trustees for 725,688 shares held in a benefit
fund for Company employees, and one of three trustees for 534,997 shares
held in trust for the Company's Pension Plan. Mr. Kalafut disclaims
beneficial ownership as to all such shares held in trust.
(6) Includes 5,591,249 shares held by various trusts for which Mr. Larned's
wife is co-trustee with shared voting and investment power, 740,415 shares
held in trust for the benefit of Mr. Larned's wife and 419,000 shares held
by Mr. Larned's wife as trustee under a declaration of trust.
(7) Includes 272,606 shares owned by Mr. Parker's wife and 822,615 shares held
by trusts for Mr. Parker's children with Mrs. Parker as co-trustee (as to
which shares held by his wife and in trust for his children Mr. Parker
disclaims beneficial ownership). Also includes 83,278 shares representing
Mr. Parker's percentage interest in the Company's Common Stock held by a
private investment company, 69,960 shares held by a trust for which Mr.
Parker is a co-trustee, and 60,750 shares held by a charitable foundation
for which Mr. Parker is a trustee and thereby has shared voting and
investment power (and as to which such shares Mr. Parker disclaims
beneficial ownership).
(8) Includes 28,860 shares held by Mr. Prince's estate, and 36,500 shares
subject to options exercisable by Mr. Prince's estate.
(9) Includes 103,960 shares subject to exercisable stock options, and includes
60,750 shares held by a charitable foundation for which Mr. Prince is a
trustee and thereby has shared voting and investment power for such shares.
Mr. Prince disclaims beneficial ownership as to such shares held in trust.
(10) Includes 12,974 shares subject to exercisable stock options. In addition,
Mr. Rice is one of four trustees for 725,688 shares held in a benefit fund
for Company employees. Mr. Rice disclaims beneficial ownership as to all
such shares held in trust.
(11) Includes 10,300 shares subject to exercisable stock options, and 271 shares
owned by Mr. Scalley's wife, as to which such shares Mr. Scalley disclaims
beneficial ownership. In addition, Mr. Scalley is one of four trustees for
725,688 shares held in a benefit fund for Company employees. Mr. Scalley
disclaims beneficial ownership as to all such shares held in trust.
(12) This figure includes 236,641 shares issuable to certain directors or
executive officers upon the exercise of options that are presently
exercisable under the Company's 1988 Stock Option Plan and 1992 Stock
Option and Incentive Plan, 725,688 shares held in a benefit fund for
Company employees, 534,997 shares held in trust for the Company's Pension
Plan. The individual totals for Mr. Ellis, Mr. Parker and Mr. Prince each
include 60,750 shares held by the same charitable foundation for which each
of the foregoing individuals is a trustee; such shares have been included
only once in calculating this figure.
6
<PAGE> 9
EXECUTIVE COMPENSATION AND OTHER BENEFITS
There is shown below information concerning the annual and long-term
compensation for services in all capacities to the Company for fiscal years
ending December 31, 1993, 1992 and 1991, of (i) the Chief Executive Officer as
of December 31, 1993, (ii) the other four most highly compensated executive
officers of the Company as of December 31, 1993, and (iii) one former executive
officer of the Company (for the purposes of this and the following tables and
discussion concerning executive compensation, such five executive officers and
one former executive officer shall be referred to as the "Named Executive
Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
-------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS(#) COMPENSATION($)
- ---------------------------- ---- --------- -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Larry L. Prince 1993 405,000 461,700 (1) 32,800 1,799(2)
Chairman of the Board, Chief 1992 382,000 351,440 103,300 1,746
Executive Officer and 1991 360,000 304,920 7,200
Director
Thomas C Gallagher 1993 290,000 316,680 (1) 17,900 1,799(2)
President, Chief Operating 1992 268,000 246,560 72,800 1,746
Officer and Director 1991 250,000 211,750 11,250
John J. Scalley 1993 260,000 308,880 (1) 6,000 1,799(2)
Executive Vice President and 1992 247,000 235,762 22,500 1,746
Director 1991 237,000 211,167 6,000
Louis W. Rice, Jr. 1993 180,000 209,520 (1) 4,000 1,799(2)
Senior Vice President -- 1992 172,000 158,240 12,500 1,746
Personnel 1991 165,000 139,755 3,750
George W. Kalafut 1993 170,000 177,480 (1) 6,000 1,799(2)
Executive Vice President -- 1992 154,000 141,680 24,300 1,746
Finance & Administration 1991 140,000 118,580 7,500
James T. Prince 1993 150,000 204,700 (1) -- 1,799(2)
Former Group Vice 1992 190,000 162,500 27,500 1,746
President(3) 1991 182,000 169,533 4,500
</TABLE>
- ---------------
(1) In accordance with the transitional provisions applicable to the revised
rules on executive officer and director compensation disclosure adopted by
the Securities and Exchange Commission, amounts of "Other Annual
Compensation" are excluded for the Company's 1991 fiscal year. For 1993 and
1992, no amounts of "Other Annual Compensation" were paid to each Named
Executive Officer, except for perquisites and other personal benefits,
securities or properties which for each Named Executive Officer did not
exceed the lesser of $50,000 or 10% of such individual's salary plus annual
bonus.
(2) In accordance with the transitional provisions applicable to the revised
rules on executive officer and director compensation disclosure adopted by
the Securities and Exchange Commission, amounts of "All Other Compensation"
are excluded for the Company's 1991 fiscal years. For 1993 and 1992,
amounts of "All Other Compensation" reflect Company matching contributions
pursuant to the Genuine Partnership Plan (a qualified salary deferral plan
under Section 401(k) of the Internal Revenue Code).
(3) Mr. Prince died on August 14, 1993.
7
<PAGE> 10
OPTION GRANTS IN FISCAL YEAR 1993
Shown below is further information on grants of stock options pursuant to
the Company's 1992 Stock Option and Incentive Plan during the fiscal year ended
December 31, 1993 to the Named Executive Officers. Such grants are reflected in
the Summary Compensation Table on page 7.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES IN OR BASE EXPIRATION PRESENT
NAME GRANTED(#) FISCAL YEAR PRICE ($/SH) DATE VALUE ($)(1)
- ----------------------- ------------ ------------ ------------ ---------- ------------
<S> <C> <C> <C> <C> <C>
Larry L. Prince 2,800(2)(4) 1.2% $35.6875 08/13/03 28,868
30,000(3) 12.7% $35.6875 08/13/03 309,300
Thomas C. Gallagher 2,900(2)(5) 1.2% $35.6875 08/13/03 29,899
15,000(3) 6.4% $35.6875 08/13/03 154,650
John J. Scalley 6,000(2)(6) 2.5% $35.6875 08/13/03 61,860
Louis W. Rice, Jr. 4,000(2)(7) 1.7% $35.6875 08/13/98 30,240
George W. Kalafut 6,000(2)(8) 2.5% $35.6875 08/13/03 61,860
James T. Prince 0 -- -- -- --
</TABLE>
(1) Based on the Black-Scholes option pricing model adapted for use in valuing
executive stock options. The Company does not advocate or necessarily agree
that the Black-Scholes model can properly determine the value of an option.
The actual value, if any, a Named Executive Officer may realize will depend
on the excess of the stock price over the exercise price on the date the
option is exercised, so that there is no assurance the value realized by a
Named Executive Officer will be at or near the value estimated by the
Black-Scholes model. The value calculations for the options listed above
are based on the following assumptions: interest rates (based on the ask
yield to maturity on a U.S. Treasury strip with a maturity equal to the
term of the relevant option) of 5.25% for five year options granted on
August 13, 1993, and 5.98% for ten year options granted on August 13, 1993;
annual dividend yield of 2.9%, the average annual dividend yield on a share
of Common Stock during the past four fiscal quarters and volatility of
22.64% based upon annualized standard deviation of quarterly returns of the
Common Stock over the five year period ended June 30, 1993.
(2) Incentive stock options granted at an exercise price equal to the fair
market value of the shares of Common Stock on the date of grant. These
options may be accelerated by the Compensation and Stock Option Committee
upon certain "changes in control" of the Company as defined in the
Company's 1992 Stock Option and Incentive Plan.
(3) Nonqualified stock options which vest completely and may be exercised twelve
months after the date of the grant, but no later than the expiration date.
The exercise price for each nonqualified stock option is the fair market
value on the date granted. These options may be accelerated by the
Compensation and Stock Option Committee upon certain "changes in control"
of the Company as defined in the Company's 1992 Stock Option and Incentive
Plan.
(4) Option becomes exercisable on January 1 of each of the specified years as
follows: 30 shares in 2002; and 2,770 shares in 2003.
(5) Option becomes exercisable on January 1 of each of the specified years as
follows: 129 shares in 2002; and 2,771 shares 2003.
(6) Option becomes exercisable on January 1 of each of the specified years as
follows: 1,200 shares in 2000; 2,802 shares in 2001; and 1,998 shares in
2002.
(7) Option becomes exercisable on January 1 of each of the specified years as
follows: 215 shares in 1996; 2,802 shares in 1997; and 983 shares in 1998.
(8) Option becomes exercisable on January 1 of each of the specified years as
follows: 1,293 shares in 2000; 2,802 shares in 2001; and 1,905 shares in
2002.
8
<PAGE> 11
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1993
AND FISCAL YEAR-END OPTION VALUES
Shown below is information with respect to options exercised by the Named
Executive Officers during 1993 and the unexercised options to purchase the
Company's Common Stock granted in fiscal 1993 and prior years under the 1988
Stock Option Plan and the 1992 Stock Option and Incentive Plan to the Named
Executive Officers and held by them as of December 31, 1993.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR-END (#) AT FISCAL YEAR-END ($)(2)
SHARES ACQUIRED VALUE REALIZED --------------------------- ---------------------------
NAME ON EXERCISE (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------- --------------- --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Larry L. Prince 4,367 66,951 100,000 67,060 731,250 453,818
Thomas C. Gallagher 7,500 88,552 61,578 46,872 500,652 231,180
John J. Scalley 6,000 73,500 7,176 27,324 71,213 157,412
Louis W. Rice, Jr. -0- -- 9,849 13,401 97,378 69,435
George W. Kalafut 3,250 38,391 8,690 30,360 95,949 175,045
James T. Prince -0- -- 36,500 -- 296,500 --
</TABLE>
- ---------------
(1) The Value Realized is ordinary income, before taxes, and represents the
amount equal to the excess of the fair market value of the shares at the
time of exercise over the exercise price.
(2) Represents the fair market value as of December 31, 1993 ($37.625 per share
closing stock price) of the option shares less the exercise price of the
options.
COMPENSATION AND STOCK OPTION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
OVERVIEW
The Compensation and Stock Option Committee of the Company's Board of
Directors (the "Committee") is composed entirely of individuals who are outside
directors. The Committee is responsible for making decisions with respect to the
Company's executive compensation policies. In addition, pursuant to authority
granted by the Board of Directors, the Committee determines on an annual basis
the compensation to be paid to the Chief Executive Officer and each of the other
executive officers of the Company. In making decisions regarding executive
compensation, the Committee has attempted to implement a policy that serves the
financial interests of the Company's shareholders while providing appropriate
incentives to its executive officers. The Committee has not yet adopted a policy
responding to Section 162(m) of the Code, which disallows the deduction for
certain annual compensation in excess of $1,000,000 paid to executive officers
of the Company, since no executive officers are expected to have compensation
which exceeds the applicable cap in fiscal year 1994.
ELEMENTS OF EXECUTIVE COMPENSATION
The Company's executive officers receive compensation comprised of base
salaries, annual incentive bonuses, long-term incentive compensation in the form
of stock options, and various benefits, including medical and pension plans.
Base Salary
The Committee sets base salaries for the Company's executive officers at
levels generally below what it believes to be competitive salary levels in order
to maintain an emphasis on incentive compensation. The Committee sets the base
salary of the Chief Executive Officer based on (i) the Chief Executive Officer's
base salary in the prior year; (ii) increases in the cost of living; (iii)
increased responsibilities; (iv) the levels of Chief Executive Officer
compensation granted by the other companies that are included in the Peer Index
(as defined on page 16 of this Proxy Statement); and (v) the past performance
(including the achievement in the
9
<PAGE> 12
prior fiscal year of certain Goals, as described below) and specific skills of
the Chief Executive Officer as they relate to the needs of the Company. The
Committee's review of the foregoing factors was subjective and the Committee
assigned no fixed value or weight to any of the factors when making its
decisions regarding base salary. The Committee and the Chief Executive Officer
set the base salary of every other executive officer of the Company based upon
the same criteria.
Annual Bonuses
In order to maximize the interests of the Company's shareholders and its
management, the Committee makes extensive use of annual bonuses based on the
performance factors set forth below as a part of each executive's compensation.
The Committee sets annual bonuses such that an executive officer's annual bonus,
assuming the Company achieves certain targets or goals, is approximately 47% of
total annual compensation. However, if the Company's performance fluctuates
markedly from the targets established by the Company, the executive officer may
receive no bonus, or may receive an annual bonus that constitutes as much as 56%
of total annual compensation, depending upon the extent and direction of such
fluctuations.
Each fiscal year, including 1993, the Committee sets the level of annual
bonuses to be awarded to the Chief Executive Officer and other executive
officers, based upon goals (the "Goals") set by the Company. The Goal set by the
Company for projected pre-tax return (expressed as a percentage) on the
Company's shareholders' equity as of the end of its previous fiscal year (the
"Return on Investment Goal") receives the most emphasis in calculating annual
bonuses by the Committee since this Goal most forcefully ties the interests of
the Company's shareholders and its executive officers together. If the Company
meets the Return on Investment Goal, the Company's executive officers are
eligible to receive additional bonuses if the Company also attains certain (i)
sales targets (the "Sales Goal"), and (ii) inventory management targets (the
"Inventory Management Goal").
The Company's Goals are determined by aggregating all of the Return on
Investment, Sales and Inventory Management Goals established at the lower levels
of the Company and its subsidiaries (the "base goals"). Each base goal is set
based upon (i) the prior year's performance by a particular jobbing store,
branch or distribution center, (ii) the overall economic outlook of the region
served by the particular jobbing store, branch or distribution center setting
the base goal, and (iii) specific market opportunities. The formulation of the
base goals is influenced to a degree by the Company's management which often
attempts to set the tone and emphasis of base goals based on its interpretations
of the above factors.
Once the base goals have been compiled into the Company's Goals, the
Committee reviews and ratifies their content, then sets the annual bonus
schedule for the Company's Named Executive Officers based upon the Company's
Goals. The annual bonuses for certain other executive officers of the Company
are based on the aggregate base goals for the division or divisions of the
Company for which they are responsible.
For fiscal year 1993, the Company as a whole exceeded the Return on
Investment Goal and the Sales Goal, and met the Inventory Goal, for which Larry
L. Prince, the Company's Chief Executive Officer, earned a bonus equal to 53% of
his total annual compensation. The annual bonuses awarded in connection with the
Return on Investment, Sales and Inventory Goals constituted 92%, 4% and 4%,
respectively, of Mr. Prince's 1993 bonus.
Stock Options
During 1993, the Committee provided long term compensation to the Company's
executive officers in the form of stock options granted under both the 1988
Stock Option Plan (the "1988 Plan") and the 1992 Stock Option and Incentive Plan
(the "1992 Plan"). The Committee believes that stock option grants are an
effective way for the Company to align the interests of the Company's executives
with its shareholders.
In granting stock options under the 1988 Plan and 1992 Plan, the Committee
considered (i) the recipient's level of responsibility; (ii) the recipient's
specific function within the Company's overall organization; (iii) the
profitability of the Company (for top executive officers such as the Chief
Executive Officer), or other subdivision of the Company, as is appropriate in
connection with the recipient's position(s); (iv) the
10
<PAGE> 13
number of options granted to executive officers by the other companies that are
included in the Peer Index; and (v) the amount of options currently held by the
executive officer. The Committee's review of the foregoing factors was
subjective and the Committee assigned no fixed value or weight to any of the
factors when making its decisions regarding stock option grants. In 1993, the
Committee granted options to purchase an aggregate of 235,700 shares of Common
Stock at fair market value on the date of grant to 71 key employees, including
each of the Named Executive Officers. The grants ranged in size from 1,000 to
32,800 shares, with Larry L. Prince, the Company's Chief Executive Officer,
receiving the largest such grant.
Benefits
The Company provides medical and other similar benefits to its executive
officers that are generally available to the Company's employees.
Members of the Compensation and Stock
Option Committee
William A. Parker, Jr. (Chairman)
John B. Ellis
E. Reginald Hancock
James B. Williams
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following non-employee directors serve on the Compensation and Stock
Option Committee: William A. Parker, Jr., John B. Ellis, E. Reginald Hancock and
James B. Williams. Mr. Parker was the general manager of Beck & Gregg, the
former hardware division of the Company, from 1969 to 1977. Mr. Ellis was the
Company's Senior Vice President-Finance and Treasurer from 1982 to 1985.
11
<PAGE> 14
COMPENSATION PURSUANT TO PLANS
RETIREMENT PLANS
PENSION PLAN TABLE
The following table illustrates the combined (total) benefits payable
annually under the Company's Pension Plan and the Supplemental Retirement Plan
to a participant with certain years of credited service and with certain final
average earnings, assuming (i) retirement at age 65, (ii) the estimated maximum
Social Security benefit payable to a participant retiring on December 31, 1993,
and (iii) the benefit is paid as a single life annuity.
YEARS OF CREDITED SERVICE
<TABLE>
<CAPTION>
FINAL AVERAGE
ANNUAL EARNINGS 15 20 25 30 35 40 45
- --------------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 125,000 $ 43,100 $ 46,200 $ 49,300 $ 52,400 $ 55,600 $ 58,700 $ 61,800
150,000 53,100 56,800 60,600 64,300 68,100 71,800 75,600
175,000 63,100 67,400 71,800 76,200 80,600 85,000 89,300
200,000 73,100 78,100 83,100 88,100 93,100 98,100 103,100
225,000 83,100 88,700 94,300 100,000 105,600 111,200 116,800
250,000 93,100 99,300 105,600 111,800 118,100 124,300 130,600
300,000 113,900 120,600 128,900 135,600 143,900 150,600 158,900
400,000 153,900 163,100 173,900 183,100 193,900 203,100 213,900
450,000 173,100 184,300 195,600 206,800 218,100 229,300 240,600
450,000 193,900 205,600 218,900 230,600 243,900 255,600 268,900
600,000 233,900 248,100 263,900 278,100 293,900 308,100 323,900
700,000 273,900 290,600 308,900 325,600 343,900 360,600 378,900
800,000 313,900 333,100 353,900 373,100 393,900 413,100 433,900
900,000 353,900 375,600 398,900 420,600 443,900 465,600 488,900
1,000,000 392,900 417,900 442,900 467,900 492,900 517,900 542,900
1,100,000 432,900 460,400 487,900 515,400 542,900 570,400 597,900
</TABLE>
The Pension Plan Table above covers retirement benefits payable to the
Named Executive Officers pursuant to (i) a noncontributory tax qualified pension
plan (the "Pension Plan") providing monthly benefits upon retirement to eligible
employees (employees become eligible to participate in the Pension Plan after
attaining age 21 and completing twelve months of service and 1,000 hours of
service during such twelve months), and (ii) a "Supplemental Retirement Plan"
maintained solely for the purpose of providing retirement benefits for certain
key employees in excess of the limitations on Pension Plan benefits imposed by
the Internal Revenue Code (the "Code").
Each year the Company contributes an amount to the Pension Plan that is
actuarially determined. Retirement benefits are based on a participant's years
of service and average monthly pay during the participant's five highest paid
years out of the participant's last ten years of service prior to termination of
employment, and benefits may be reduced by 50% of the participant's Social
Security benefits. Normal retirement age is 65; early retirement can be taken at
age 55 with 15 years of credited service.
The Code limits the amount of the annual benefits that may be payable under
the Pension Plan. For 1993, this limit was $115,641 per year. Such amounts
payable under the Pension Plan would be reduced by any other benefit payable to
a participant under any collectively bargained pension or pension plan to which
the Company has contributed.
The Supplemental Retirement Plan is nonqualified, noncontributory and
unfunded, and is intended to be exempt from the participation, vesting, funding
and fiduciary requirements of the Employee Retirement Income Security Act of
1974. The only persons who may participate in the Supplemental Retirement Plan
are key employees of the Company who are designated as such by the Executive
Committee of the Board of Directors. All of the Named Executive Officers have
been designated as participants in the Supplemental Retirement Plan. The
Supplemental Retirement Plan provides that each participant will receive for the
12
<PAGE> 15
remainder of his or her life an additional payment equal to the difference
between (i) the amount the executive received under the Pension Plan and (ii)
the full retirement income which the executive would have been entitled to
receive under the Pension Plan had such Pension Plan income not been limited by
the Code.
For the Named Executive Officers, the sum of the amounts shown in the
columns of the Summary Compensation Table labeled "Salary" and "Bonus"
approximates the compensation used to calculate combined (total) retirement
benefits under the Pension Plan and the Supplemental Retirement Plan. The Named
Executive Officers have the following number of years of credited service to the
Company for purposes of calculating retirement benefits: Larry L. Prince -- 35
years; Thomas C. Gallagher -- 23 years; John J. Scalley -- 42 years; Louis W.
Rice, Jr. -- 26 years; and George W. Kalafut -- 10 years.
The Supplemental Retirement Plan provides that in the event of a "change of
control" of the Company (as defined therein) (i) any participant whose
employment is terminated without cause during the 24-month period following the
change of control, and who has seven or more years of credited service for
vesting purposes, shall be entitled to receive a lump sum payment equal to the
actuarially determined value of the supplemental retirement income accrued by
the participant as of the date of his or her termination; and (ii) any
participant who has commenced receiving supplemental retirement income under the
Supplemental Retirement Plan at the time of the change of control shall receive
a lump sum payment equal to the actuarially determined value of his or her
remaining supplemental retirement income. For purposes of these provisions, the
Supplemental Retirement Plan states that actuarial equivalents shall be
determined using an interest assumption of 6%.
1988 STOCK OPTION PLAN AND 1992 STOCK OPTION AND INCENTIVE PLAN
The Company's 1988 Stock Option Plan (the "1988 Plan"), was approved by the
shareholders at the 1988 Annual Meeting held on April 18, 1988. The Company's
1992 Stock Option and Incentive Plan (the "1992 Plan"), was approved by the
shareholders at the 1992 Annual Meeting held on April 20, 1992. Both plans
provide for the granting of options to purchase shares of the Company's Common
Stock to key employees of the Company and its subsidiaries. The purchase price
for shares of the Company's Common Stock subject to an option granted under the
1988 Plan or the 1992 Plan may not be less than the fair market value of such
shares on the date of grant of the option.
The 1992 Plan provides for the granting of restricted stock to key
employees of the Company. Restricted stock grants under the 1992 Plan may not be
disposed of by the recipient until restrictions specified in the grant expire.
Such restrictions may be based on a period of continuous employment, or
contingent upon the attainment of certain business objectives or other
quantitative or qualitative criteria. A holder of restricted stock has all of
the rights of a shareholder of the Company, including the right to vote the
restricted shares and the right to receive cash dividends.
GENUINE PARTNERSHIP PLAN
The Company established, effective July 1, 1988, a qualified salary
deferral plan pursuant to Section 401(k) of the Internal Revenue Code (the
"Partnership Plan"). The Partnership Plan is open to all employees, including
executive officers, on the first day of the month coinciding with or following
the date on which the employee attains age 21 and completes twelve months of
service and 1,000 hours of service during such twelve months. Pursuant to the
Partnership Plan, each participating employee is permitted to authorize payroll
deductions of up to 6% of his or her total compensation during the calendar year
(the "Basic Contributions"), and is permitted to make supplemental contributions
of up to 10% of his or her total compensation during the calendar year (the
"Supplemental Contributions"). An employee's aggregate contributions are subject
to limits set by law. The Company makes matching contributions in cash or the
Company's Common Stock equal to 20% of each participant's Basic Contributions.
Participants become vested in the Company's matching contributions after
completing three years service. Participants are always 100% vested in their
Basic and Supplemental Contributions.
13
<PAGE> 16
DEFERRED COMPENSATION AGREEMENTS
The Company has deferred compensation agreements with certain of the
Company's executive officers under which each executive has agreed to reduce his
salary in exchange for annual benefits upon retirement. The Company has
purchased insurance policies out of its general assets to provide sufficient
funds to pay the annual retirement benefits promised under the agreements. The
Company is the owner and sole beneficiary of such policies. Amounts of
compensation deferred pursuant to the deferred compensation agreements are
included in the salaries of the Named Executive Officers disclosed in the
Summary Compensation Table in the year such compensation is earned. Such
compensation will not be included in such individuals' salary in the Summary
Compensation Table in the later year in which he actually receives such
compensation. The Named Executive Officers are entitled to the following amounts
upon retirement under such deferred compensation agreements: Larry L.
Prince -- $35,000 annually with such amount guaranteed for 10 years; Thomas C.
Gallagher -- $40,000 annually with such amount guaranteed for 10 years; John J.
Scalley -- $30,000 annually with such amount guaranteed for 10 years; and Louis
W. Rice, Jr. -- $34,344 annually with such amount guaranteed for 10 years. Mr.
Rice turned 65 in November 1991 and began receiving the amount of deferred
compensation set forth above at that time.
Each of the deferred compensation agreements provide that in the event of a
change of control of the Company (as defined in the agreements), the officer (i)
if he has not yet qualified for early retirement benefits, shall have the right
to demand his withdrawal benefits (which is an amount approximately equal to the
amount of salary deferred under the agreement by the officer) in a single lump
sum payment, or (ii) if he has qualified for early retirement benefits or has
begun receiving a retirement benefit under his deferred compensation agreement,
shall have the right to demand his benefits in a single lump sum payment in an
amount equal to the annual amount to which the officer is entitled times the
number of years remaining in his life expectancy based on the actuarial
assumptions used in connection with the Company's Pension Plan at that time,
reduced to present value using 6% per annum.
TAX DEFERRED SAVINGS PLAN
The Company established, effective as of January 1, 1993, a nonqualified,
unfunded deferred compensation plan known as The Genuine Parts Company
Tax-Deferred Savings Plan (the "Deferred Savings Plan"). The Deferred Savings
Plan is open to all executive officers and certain other key employees. The
Deferred Savings Plan permits participants to defer the receipt of bonuses until
a specified date which must be at least two calendar years following the date
the bonus would ordinarily be paid. Participants may defer up to 50% of their
1993 bonuses (to be received during 1994), and may defer 100% of their bonuses
in subsequent years. Amounts of compensation deferred pursuant to the Deferred
Savings Plan are included in the salaries of the Named Executive Officers
disclosed in the Summary Compensation Table in the year such compensation is
earned.
TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENTS
Effective February 13, 1989, the Company entered into identical agreements
("Severance Pay Agreements") with certain executive officers, including Larry L.
Prince, Thomas C. Gallagher, John J. Scalley, Louis W. Rice, Jr. and George W.
Kalafut. Each Severance Pay Agreement provides that following a change in the
control of the Company (as defined in the agreements), if the executive
officer's employment with the Company terminates, voluntarily) or involuntarily,
for any reason or for no reason, within two years after the change of control
(but prior to the executive officer's reaching age 65), the executive officer
will be entitled to receive the following severance payment:
(1) If the executive officer is younger than age 62 at the time of
termination of his employment, the executive officer shall receive an
amount equal to one dollar less than a sum equal to three times his average
annual compensation for the five full taxable years ending before the date
of the change of control (the "Base Severance Amount"), or
14
<PAGE> 17
(2) If the officer is age 62 or older at the time of termination of
his employment, he shall receive an amount computed by dividing the Base
Severance Amount by 36, and multiplying the result of that division by the
number of whole months between the date of termination of employment and
the date the executive officer reaches age 65.
In addition, if an executive officer incurs a federal excise tax with
respect to any part or all of the amounts received pursuant to his Severance Pay
Agreement, the Company is required to pay the executive officer a sum equal to
such excise tax so incurred by the executive officer plus all excise taxes and
federal, state and local income taxes incurred by the executive officer with
respect to receipt of this additional payment. Furthermore, the Company has
agreed to pay all legal fees and expenses incurred by an executive officer in
the pursuit of the rights and benefits provided by his Severance Pay Agreement.
These Severance Pay Agreements will remain in effect as long as each such
executive officer remains employed by the Company.
PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return ("shareholder return") on the Company's
Common Stock against the shareholder return of the S&P's 500 Stock Index and a
Peer Group Composite Index (structured by the Company as set forth below) for
the five year period commencing December 31, 1988 and ended December 31, 1993.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
GENUINE PARTS COMPANY, S&P 500 INDEX & PEER GROUP COMPOSITE INDEX**
<TABLE>
<CAPTION>
MEASUREMENT PERIOD GENUINE PARTS
(FISCAL YEAR COVERED) COMPANY S&P 500 PEER INDEX
<S> <C> <C> <C>
1988 100.00 100.00 100.00
1989 121.97 131.69 91.32
1990 114.45 127.60 69.77
1991 151.79 166.47 93.32
1992 163.83 179.15 123.75
1993 186.66 197.21 146.16
</TABLE>
Assumes $100 invested on December 31, 1988 in Genuine Parts
Company, S&P's 500 Stock Index (the Company is a member of the S&P 500
and its individual shareholder return went into calculating the S&P 500
results set forth in this performance graph), and a Peer Group Composite
Index constructed by the Company as set forth below.
* Total return assumes reinvestment of dividends.
** Fiscal year ending December 31.
15
<PAGE> 18
In constructing the Peer Group Composite Index ("Peer Index") for use in
the performance graph above, the Company used the shareholder returns of various
publicly held companies (weighted in accordance with each such company's stock
market capitalization at December 31, 1988 and including reinvestment of
dividends) that compete with the Company in its three industry segments:
automotive parts, industrial parts and office products (each group of companies
included in the Peer Index as competing with the Company in a separate industry
segment are hereinafter referred to as a "Peer Group"). Included in the
automotive parts Peer Group are those companies making up the Dow Jones
Automotive Parts & Equipment Industry Group (the Company is a member of such
industry group and its individual shareholder return was included when
calculating the Peer Index results set forth in this performance graph).
Included in the industrial parts Peer Group are Bearings, Inc. and Kaman
Corporation, and included in the office products Peer Group is United Stationers
Inc.
In determining the Peer Index, each Peer Group for each industry segment
was weighted to reflect the Company's annual net sales in each industry segment.
Each industry segment of the Company comprised the following percentages of the
Company's net sales for the fiscal years shown:
<TABLE>
<CAPTION>
INDUSTRY SEGMENT 1989 1990 1991 1992 1993
------------------------------------------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Automotive Parts 57.69% 57.85% 58.15% 57.73% 56.63%
Industrial Parts 27.51% 27.84% 27.13% 26.95% 26.36%
Office Products 14.80% 14.31% 14.72% 15.32% 17.01%
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1993, the Company leased the facility for a jobbing store in
Bloomington, Illinois from a trust in which James R. Courim, a director of the
Company, has a 37.5% beneficiary interest. The annual base rent for such lease
is $24,400 through October 31, 1997. The lease expires October 31, 1997 with one
five year renewal option for the Company. The Company's Audit Committee, with
Mr. Courim abstaining, has reviewed the lease transaction described above and
has reported to the Board of Directors that the terms of the lease are and were
reasonable and in the best interests of the Company.
On January 29, 1993, the Company completed the acquisition of Berry Bearing
Company and certain affiliated companies pursuant to an agreement reached with
the shareholders of the Berry Companies on January 15, 1993. In the transaction,
the Company exchanged approximately 9,500,000 shares of its Common Stock for all
of the issued and outstanding shares of Common Stock of the Berry Companies. In
a related transaction, the Company purchased eleven parcels of real property
previously leased by the Berry Companies, and owned by the shareholders of the
Berry Companies and certain related parties, in exchange for the issuance of
86,558 shares of Common Stock. The wife of Gardner E. Larned, a director of the
Company, as well as the children of Mr. Larned and certain members of his wife's
family, were the direct or beneficial shareholders of the Berry Companies and
the owners of the real property acquired by the Company.
SECTION 16(A) REPORTING
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of
the Company's Common Stock, to file with the Securities and Exchange Commission
(the "SEC") initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Directors, executive
officers and greater than ten percent shareholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) reports they
file. To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1993, all
Section 16(a) filing requirements applicable to directors, executive officers
and greater than ten percent beneficial owners were complied with by such
persons, except that Mr. Larned failed to timely file a Form 4 for the month of
June 1993 in connection with a registered offering of shares by a trust
controlled by his wife.
16
<PAGE> 19
2. AMENDMENT OF THE
RESTATED ARTICLES OF INCORPORATION
The shareholders are being asked to vote on a proposal to amend the
Company's Restated Articles of Incorporation, as previously amended (the
"Restated Articles") to increase the aggregate number of authorized shares of
Common Stock from 150,000,000 shares to 450,000,000 shares. The Board of
Directors unanimously approved this amendment to the Restated Articles on
February 21, 1994, and recommended that the Company's shareholders consider and
adopt the amendment to the Restated Articles at the Annual Meeting of the
Shareholders. If approved by the affirmative vote of the holders of a majority
of the outstanding shares of Common Stock of the Company entitled to vote
thereon, the amendment to the Restated Articles would become effective upon
filing of Articles of Amendment with the Secretary of State of the State of
Georgia.
Article Four of the Restated Articles provides that the Company has the
authority to issue 160,000,000 shares of capital stock, of which 150,000,000
shares have been authorized as Common Stock, and 10,000,000 shares have been
authorized as Preferred Stock. As of February 18, 1994, 124,464,667 shares of
Common Stock were issued and outstanding and 3,520,855 additional shares were
reserved for issuance under the 1988 and 1992 Plans. As of the same date, no
shares of Preferred Stock were outstanding, although 2,000,000 shares were
designated as Series A Junior Participating Preferred Stock and reserved for
issuance pursuant to the Shareholder Protection Rights Agreement dated as of
November 20, 1989 between the Company and Trust Company Bank.
If the proposed amendment to Article Four is approved by the shareholders,
460,000,000 shares of capital stock will be authorized for issuance, of which
450,000,000 shares will be authorized as Common Stock, $1.00 par value. The
additional authorized Common Stock may be issued by the Company without further
action by the shareholders. Shareholders do not have preemptive rights and will
not have a right of first refusal to purchase any of the additional authorized
shares of Common Stock.
The proposed amendment will not change the number of authorized shares of
Preferred Stock. Furthermore, the proposed amendment will not change the rights
of common shareholders with respect to voting, dividends or amounts
distributable upon liquidation of the Company, or otherwise affect, positively
or negatively, the rights of shareholders of the Company.
The purpose of the proposed amendment is to provide additional authorized
shares of Common Stock for possible use in connection with future distributions
to shareholders, pursuant to stock dividends or stock splits, financings of
acquisitions, financings of additional capital for the operations of the
Company, employee benefit and dividend reinvestment plan distributions, or for
other corporate purposes. The Board of Directors considers the proposed increase
in the number of authorized shares of Common Stock desirable because it would
give the Board the necessary flexibility to issue Common Stock in connection
with the foregoing without the expense and delay incidental to obtaining
shareholder approval of an amendment to the Restated Articles to increase the
number of authorized shares at the time of such action. The Company has no plans
or commitments at this time for the issuance of the additional authorized shares
of Common Stock.
Although the amendment to Article Four is being proposed by the Board of
Directors for reasons other than as an "anti-takeover" device, the additional
authorized shares, if issued, could make it more difficult for a person to
acquire the requisite amount of stock needed to control the Company. The
issuance of additional shares could thus have an affect of making it more
difficult to remove incumbent management. The amendment to the Restated Articles
is not being proposed by the Board of Directors in response to any known effort
to acquire control of the Company, and the Board of Directors does not presently
intend to propose additional "anti-takeover" measures in future proxy
solicitations.
The proposed amendment to the Restated Articles must be adopted by the
favorable vote of the majority of the shares of Common Stock outstanding as of
the record date for the Annual Meeting and entitled to vote thereon.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ADOPTION OF THE
AMENDMENT TO THE RESTATED ARTICLES OF INCORPORATION. PROXIES RECEIVED BY THE
BOARD OF DIRECTORS WILL BE SO VOTED UNLESS SHAREHOLDERS SPECIFY IN THEIR PROXIES
A CONTRARY CHOICE.
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<PAGE> 20
3. RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected Ernst & Young as auditors for the
Company for the current fiscal year ending December 31, 1994, subject to
ratification by the shareholders. Ernst & Young served as independent auditors
for the Company for the fiscal year ended December 31, 1993, and representatives
of that firm of independent accountants are expected to be present at the Annual
Meeting of Shareholders. Ernst & Young will have an opportunity to make a
statement if they desire to do so and respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
SELECTION OF ERNST & YOUNG AS AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31,
1994. PROXIES RECEIVED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS
SHAREHOLDERS SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.
SOLICITATION OF PROXIES
The cost of soliciting proxies will be borne by the Company. The Company
has retained Corporate Investor Communications, Inc. to assist in the
solicitation of proxies for a fee of approximately $8,000 and reimbursement of
certain expenses, and officers and regular employees of the Company, at no
additional compensation, may also assist in the solicitation. Solicitation will
be by mail, telephone or personal contact.
OTHER MATTERS
Management does not know of any matters to be brought before the meeting
other than those referred to above. If any matters which are not specifically
set forth in the form of proxy and this proxy statement properly come before the
meeting, the persons designated as proxies will vote thereon in accordance with
their best judgment.
Whether or not you expect to be present at the meeting in person, please
vote, sign, date and return the enclosed proxy promptly in the enclosed business
reply envelope. No postage is necessary if mailed in the United States.
SHAREHOLDER PROPOSALS
Proposals of shareholders of the Company intended to be presented for
consideration at the 1995 Annual Meeting of Shareholders of the Company must be
received by the Company at its principal executive offices on or before November
4, 1994, in order to be included in the Company's proxy statement and form of
proxy relating to the 1995 Annual Meeting of Shareholders.
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<PAGE> 21
GENUINE PARTS COMPANY
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 18, 1994
The undersigned hereby appoints LARRY L. PRINCE and THOMAS C. GALLAGHER, or
either of them, with the individual power of substitution, proxies to vote all
shares of Common Stock of Genuine Parts Company which the undersigned may be
entitled to vote at the Annual Meeting of Shareholders to be held in Atlanta,
Georgia on April 18, 1994, and at any reconvened meeting following any
adjournment thereof. Said proxies will vote on the proposals set forth in the
Notice of Annual Meeting and Proxy Statement as specified on this card, and are
authorized to vote in their discretion as to any other matters that may properly
come before the meeting.
1. Election of the following four nominees as Class II directors of Genuine
Parts Company:
John B. Ellis, William A. Parker, Jr., John J. Scalley and James B. Williams.
IF A VOTE IS NOT SPECIFIED, THE PROXIES WILL VOTE "FOR" PROPOSAL 1.
/ / FOR (except as indicated to the contrary below)
/ / AGAINST / / ABSTAIN
To vote against any individual nominee, write that nominee's name on the
following line.
To abstain from voting for any individual nominee, write that nominee's
name on the following line.
2. Amendment of the Company's Restated Articles of Incorporation to increase the
number of authorized shares of Common Stock from 150,000,000 to 450,000,000
shares.
IF A VOTE IS NOT SPECIFIED, THE PROXIES WILL VOTE "FOR" PROPOSAL 2.
/ / FOR / / AGAINST / / ABSTAIN
3. Ratification of the selection of Ernst & Young as the Company's independent
auditors for the fiscal year ending December 31, 1994.
IF A VOTE IS NOT SPECIFIED, THE PROXIES WILL VOTE "FOR" PROPOSAL 3.
/ / FOR / / AGAINST / / ABSTAIN
IMPORTANT: Please sign this Proxy
exactly as your name or names appear
below. When shares are held by joint
tenants, both should sign. When
signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
SHARES:
PLEASE VOTE, SIGN, DATE AND RETURN THE
PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
DATE: , 1994
Signature of Shareholder
Signature if held jointly
