<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:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Genuine Parts Company
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
GENUINE PARTS COMPANY
2999 CIRCLE 75 PARKWAY
ATLANTA, GEORGIA 30339
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 15, 1996
---------------------
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 15th day of April, 1996, at 10:00 a.m., for the following
purposes:
(1) To elect four Class I directors;
(2) To consider and vote upon a proposal to ratify the selection of
Ernst & Young LLP as independent auditors of the Company for the fiscal
year ending December 31, 1996; and
(3) 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
9, 1996 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/ Carol B. Yancey
-----------------------------
CAROL B. YANCEY
Corporate Secretary
Atlanta, Georgia
March 1, 1996
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 15, 1996
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 the Company's Annual Meeting of
Shareholders to be held on April 15, 1996, at 10:00 a.m. local time, 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
1, 1996.
All proxies received by the Company will be voted in accordance with
instructions appearing on such proxies. 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
Corporate 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, 1995, is enclosed herewith.
At the close of business on the record date for the Annual Meeting, which
was February 9, 1996, the Company had outstanding and entitled to vote at the
Annual Meeting 121,869,968 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 Annual Meeting.
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 the
election of directors, withholding authority to vote with respect to one or more
nominees and broker "non-votes" will be counted as present for purposes of
determining the existence of a quorum and as part of the requisite number of
base number of votes to be used in determining if the proposal has received the
requisite number of votes for approval, and will have the same effect as a vote
"against" such proposal. With respect to the selection of independent auditors,
abstentions and broker "non-votes" will be counted as present for purposes of
determining the existence of a quorum and as part of the requisite number of
base number of votes to be used in determining if the proposal has received the
requisite number of votes for approval, and will have the same effect as a vote
"against" such proposal. A broker "non-vote" occurs when a nominee holding
shares for a beneficial owner votes on one proposal, but does not vote on
another proposal because the nominee does not have discretionary voting power
and has not received instructions from the beneficial owner.
1. ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of eleven
directorships, divided into two classes of four directors each and one class of
three directors, with the terms of office of each class ending in successive
years. The terms of directors in Class I expire on the date of this Annual
Meeting. The directors in Class II and Class III will continue in office.
The shareholders are being asked to vote on the election of the four
nominees for director in Class I. The Class I nominees will serve for terms of
three years each (and until their successors are duly elected and qualified).
All of the nominees are presently directors, except for Robert P. Forrestal. Mr.
Forrestal will
<PAGE> 4
replace Gardner E. Larned as a Class I director. Mr. Larned is retiring on the
date of this Annual Meeting pursuant to the current Bylaws of the Company. 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 I
FOR A THREE-YEAR TERM EXPIRING ON THE DATE OF THE 1999 ANNUAL MEETING
<TABLE>
<CAPTION>
YEAR FIRST
NAME AGE POSITION WITH THE COMPANY ELECTED DIRECTOR
- -------------------------------- --- -------------------------------- ----------------------
<S> <C> <C> <C>
Bradley Currey, Jr. 65 Director 1990
Robert P. Forrestal 64 Director (First-time nominee)
Thomas C. Gallagher 48 President, Chief Operating 1990
Officer and Director, and
Chairman of the Board of
Directors and Chief Executive
Officer of S.P. Richards
Company, a wholly owned
subsidiary of the Company
Lawrence G. Steiner 57 Director 1972
</TABLE>
Mr. Currey is Chairman of the Board of Directors 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
Chief Executive Officer since 1988 and the position of Chairman of the Board
since 1993. Mr. Currey was President of Rock-Tenn Company from 1978 to 1995. Mr.
Currey is a director of Poe & Brown, Inc.
Mr. Forrestal is a partner in the law firm of Smith, Gambrell & Russell in
Atlanta, Georgia, a position he has held since early 1996. Mr. Forrestal was
President and Chief Executive Officer of the Federal Reserve Bank of Atlanta
from 1983 to 1995.
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 is a director of Oxford Industries, Inc.
2
<PAGE> 5
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.
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
CLASS II
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>
William A. Parker, Jr. 68 Director 1969
John J. Scalley 65 Executive Vice President and 1987
Director
James B. Williams 62 Director 1980
</TABLE>
Mr. Parker is Chairman of the Board of Seminole Investment Co., L.L.C., a
private business engaged in investments headquartered in Atlanta, Georgia, a
position he has held since 1994. From 1977 to 1994, Mr. Parker was Chairman of
the Board of Directors of Cherokee Investment Company, a private business
engaged in investments. He is also a director of Atlantic Investment Co.,
Georgia Power Company, Haverty Furniture Companies, 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 of the Board 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 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.
CLASS III
TERM EXPIRING ON THE DATE OF THE 1998 ANNUAL MEETING
<TABLE>
<CAPTION>
YEAR FIRST
NAME AGE POSITION WITH THE COMPANY ELECTED DIRECTOR
- ----------------------------------- ---- ----------------------------------- -----------------
<S> <C> <C> <C>
Jean Douville 52 Director 1992
J. Hicks Lanier 55 Director 1995
Larry L. Prince 57 Chairman of the Board, Chief 1979
Executive Officer and Director
Alana S. Shepherd 65 Director 1993
</TABLE>
Mr. Douville has been President and a director of UAP Inc. since 1981,
Chief Executive Officer of UAP Inc. since 1982, and Chairman of the Board of UAP
Inc. since 1995. UAP Inc. is a distributor of automotive replacement parts
headquartered in Montreal, Quebec, Canada. The Company, through a wholly owned
subsidiary, has an approximately 23% ownership interest in UAP Inc. Mr. Douville
is a director of Banque Nationale du Canada and Sodisco/Howden Group Inc.
Mr. Lanier has been President of Oxford Industries, Inc. since 1977, Chief
Executive Officer and Chairman of the Board of Oxford Industries, Inc. since
1981 and a director of Oxford Industries, Inc. since 1969. Oxford Industries,
Inc. is an apparel manufacturer headquartered in Atlanta, Georgia. Mr. Lanier is
also a director of Crawford & Company, Shaw Industries, Inc. and SunTrust Banks
of Georgia, Inc. (formerly Trust Company of Georgia).
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. He is also a
3
<PAGE> 6
director of Crawford & Company, Equifax, Inc., John H. Harland Co., SunTrust
Banks of Georgia, Inc. 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 1995, 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. Parker who attended 60% 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 1995 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 1995,
this committee held six 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 audit 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), Alana S. Shepherd and
Lawrence G. Steiner. During 1995, 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), J. Hicks Lanier and James B. Williams. During 1995, the
Compensation and Stock Option Committee held one meeting.
The Company's Board of Directors does not have a nominating committee.
Compensation of Directors. During 1995, directors who were not
full-time employees of the Company or its subsidiaries were paid $5,500 per
fiscal quarter plus $825 per meeting attended, except the Chairmen of the
Audit Committee and the Compensation and Stock Option Committee who were
paid $6,250 per fiscal quarter plus $825 per meeting attended.
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of February 9, 1996, 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
TITLE OF CLASS OF BENEFICIAL OWNER OWNED OF CLASS
- ------------------ --------------------------------------------- ------------ --------
<S> <C> <C> <C>
Common Stock, Northern Trust Corporation, 7,160,472 5.9%
$1.00 par value as parent holding company
on behalf of certain subsidiaries
50 South La Salle Street
Chicago, Illinois 60675
</TABLE>
- ---------------
(1) This information is based upon information included in an amendment to
Northern Trust Corporation's Schedule 13G received by the Company on
February 21, 1996. Certain of these shares are also beneficially owned by
Gardner E. Larned, who is retiring as a director as of the date of this
Annual Meeting, as set forth in footnote 7 on page 6 of this Proxy
Statement.
4
<PAGE> 7
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 of the Company by the Company's directors, Mr. Forrestal as a first-time
nominee for director, the Named Executive Officers (as defined herein) and the
directors, nominee for director and executive officers of the Company as a group
(17 persons) as of February 9, 1996:
<TABLE>
<CAPTION>
PERCENTAGE
OF
NAME OF DIRECTOR, NOMINEE SHARES OF COMMON STOCK COMMON STOCK
TITLE OF CLASS OR NAMED EXECUTIVE OFFICER BENEFICIALLY OWNED(1) OUTSTANDING(2)
- --------------- ------------------------------- ---------------------- ------------
<S> <C> <C> <C>
Common Stock, Bradley Currey, Jr. 20,000 *
$1.00 par value Jean Douville 1,500 *
Robert P. Forrestal 500(3) *
Thomas C. Gallagher 191,106(4) *
George W. Kalafut 43,824(5) *
J. Hicks Lanier 6,800(6) *
Gardner E. Larned 6,130,408(7) 5.0%
William A. Parker, Jr. 1,541,141(8) 1.3%
Larry L. Prince 403,834(9) *
Louis W. Rice, Jr. 32,210(10) *
John J. Scalley 113,354(11) *
Alana S. Shepherd 1,404 *
Lawrence G. Steiner 3,347(12) *
James B. Williams 20,000 *
Directors, Nominee and 9,815,818(13) 8.0%
Executive Officers as a Group
</TABLE>
- ---------------
* Less than 1%.
(1) Information relating to the beneficial ownership of Common Stock by
directors, nominees for director 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, nominees
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, nominee's or
executive officer's immediate family have a beneficial interest, and as to
which such shares the director, nominee 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, nominee or Named Executive Officer
does not exceed one percent of the outstanding Common Stock of the Company.
(3) All 500 shares are owned jointly by Mr. Forrestal and his wife.
(4) Includes 137,439 shares subject to exercisable stock options and 48,176
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. Does not include 4,000 shares issued
February 15, 1996 pursuant to a restricted stock award. See "Executive
Compensation and Other Benefits."
(5) Includes 32,282 shares subject to exercisable 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 both trusts.
(6) Includes 1,600 shares held by a trust for the benefit of Mr. Lanier as to
which Mr. Lanier has sole voting power and has the ability to veto
investment decisions made by the trustee. Also includes 1,200 shares held
by a charitable foundation for which Mr. Lanier is one of six trustees and
thereby has shared voting
5
<PAGE> 8
and investment power for such shares (as to which shares Mr. Lanier
disclaims beneficial ownership). Also includes 3,000 shares held in four
trusts for the benefit of Mr. Lanier's siblings for which Mr. Lanier has
sole voting power and has the ability to veto investment decisions made by
the trustees. Mr. Lanier disclaims beneficial ownership as to these 3,000
shares.
(7) Includes 4,980,965 shares held by various trusts for which Mr. Larned's
wife is co-trustee or other fiduciary with shared voting and investment
power, 740,415 shares held in trust for the benefit of Mr. Larned's wife
and 409,000 shares held by Mr. Larned's wife as trustee under a declaration
of trust.
(8) Includes 271,763 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 69,960 shares held by a
trust for which Mr. Parker is a co-trustee, and 68,250 shares held by
certain charitable foundations for which Mr. Parker is a trustee and
thereby has shared voting and investment power (Mr. Parker disclaims
beneficial ownership as to the shares held by such trust and foundations).
(9) Includes 253,960 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.
Does not include 8,000 shares issued February 15, 1996 pursuant to a
restricted stock award. See "Executive Compensation and Other Benefits."
(10) Includes 11,491 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 and one of three trustees for 534,997 shares held in
trust for the Company's Pension Plan. Mr. Rice disclaims beneficial
ownership as to all such shares held in both trusts.
(11) Includes 19,820 shares subject to exercisable stock options and 290 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) Includes 742 shares owned by Mr. Steiner's wife as to which such shares Mr.
Steiner disclaims beneficial ownership.
(13) This figure includes 501,078 shares issuable to certain 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, and 534,997
shares held in trust for the Company's Pension Plan. The individual totals
for 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.
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, 1995, 1994 and 1993, of (i) the Chief Executive Officer as
of December 31, 1995, and (ii) the other four most highly compensated executive
officers of the Company as of December 31, 1995 (for the purposes of this and
the following tables and discussion
6
<PAGE> 9
concerning executive compensation, such five executive officers shall be
referred to as the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION -------------------------
--------------------------------- RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARD(S) OPTIONS COMPENSATION
POSITION YEAR ($) ($) ($)(1) ($) (#) ($)(2)
- ------------------------- ----- ------- ------- ------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Larry L. Prince 1995 465,000 546,950 357,000(3) 60,000 1,848
Chairman of the 1994 430,000 531,480 -- 390,625(3) 60,000 1,848
Board, Chief Executive 1993 405,000 461,700 -- -- 32,800 1,799
Officer and Director
Thomas C. Gallagher 1995 335,000 375,870 178,500(3) 30,000 1,848
President, Chief 1994 310,000 364,560 -- 195,313(3) 30,000 1,848
Operating Officer and 1993 290,000 316,680 -- -- 17,900 1,799
Director
John J. Scalley 1995 290,000 371,250 10,000 1,848
Executive Vice 1994 275,000 356,400 -- -- 10,000 1,848
President and Director 1993 260,000 308,880 -- -- 6,000 1,799
Louis W. Rice, Jr. 1995 200,000 252,084 5,000 1,848
Senior Vice 1994 190,000 241,680 -- -- 5,000 1,848
President -- Personnel 1993 180,000 209,520 -- -- 4,000 1,799
George W. Kalafut 1995 200,000 211,750 15,000 1,848
Executive Vice 1994 185,000 206,460 -- -- 10,000 1,848
President -- 1993 170,000 177,480 -- -- 6,000 1,799
Finance &
Administrative
</TABLE>
- ---------------
(1) For 1995, 1994 and 1993, 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
during any such year did not exceed the lesser of $50,000 or 10% of such
individual's salary plus annual bonus.
(2) For 1995, 1994 and 1993, 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) On March 31, 1994, the Company entered into separate Restricted Stock
Agreements with Mr. Prince and Mr. Gallagher whereby the Company agreed to
make certain grants of restricted stock to such Named Executive Officers
(up to an aggregate maximum of 100,000 shares for Mr. Prince and 50,000
shares for Mr. Gallagher) if the Company achieves certain annual earnings
per share and certain price per share targets. Once such awards of
restricted stock are granted, dividends on such restricted shares will be
paid to the grantee and such restricted shares will vest on March 31, 2004
provided that the Named Executive Officer remains employed by the Company
until that date (unless the Named Executive Officer is terminated prior to
March 31, 2004 by reason of a change in control, death or disability, or
the Compensation and Stock Option Committee accelerates the vesting of
restricted stock granted under these Restricted Stock Agreements). For 1994
and 1995, the amounts specified in "Restricted Stock Awards" reflect grants
under the Restricted Stock Agreements discussed above made on (and valued
as of) February 16, 1995 and February 15, 1996, respectively, in connection
with the Company's achievement of the earnings per share target for 1994
and 1995 as set forth in the agreements. Had all such shares been held by
Mr. Prince and Mr. Gallagher as of December 31, 1995, the value of such
holdings would have been $738,000 and $369,000, respectively (such value is
calculated by multiplying the number of restricted stock shares held by a
Named Executive Officer by $41.00, which was the closing price of the
Company's common stock on December 31, 1995).
7
<PAGE> 10
OPTION GRANTS IN FISCAL YEAR 1995
Shown below is further information on grants of stock options pursuant to
the Company's 1992 Stock Option and Incentive Plan during the fiscal year ended
December 31, 1995 to the Named Executive Officers. Such grants are reflected in
the Summary Compensation Table on page 7.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES IN OR BASE EXPIRATION PRESENT
NAME GRANTED (#) FISCAL YEAR PRICE ($/SH) DATE VALUE ($)(1)
- ----------------------------- ----------- ------------ ------------ ---------- ------------
<S> <C> <C> <C> <C> <C>
Larry L. Prince 60,000(2) 12.0 39.5625 03/20/05 644,400
Thomas C. Gallagher 30,000(2) 6.0 39.5625 03/20/05 322,200
John J. Scalley 10,000(2) 2.0 39.5625 03/20/05 107,400
Louis W. Rice, Jr. 5,000(2) 1.0 39.5625 03/20/05 53,700
George W. Kalafut 15,000(2) 3.0 39.5625 03/20/05 161,100
</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 7.17% for ten year options granted on March
20, 1995; annual dividend yield of 2.9%, the average annual dividend yield
on a share of Common Stock during the past four fiscal quarters; volatility
of 14% based upon annualized standard deviation of quarterly returns of the
Common Stock over the five year period ended March 31, 1995; and a date of
exercise no sooner than the date first exercisable under the terms of the
option, and no later than the expiration date of the option.
(2) 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 exercised no later than the
expiration date and 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.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1995
AND FISCAL YEAR-END OPTION VALUES
Shown below is information with respect to options exercised by the Named
Executive Officers during 1995 and the unexercised options to purchase the
Company's Common Stock granted in fiscal 1995 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, 1995.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING OPTIONS IN-THE-MONEY OPTIONS AT
AT FISCAL YEAR-END (#) FISCAL YEAR-END ($) (2)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE (#) REALIZED ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------- ---------------- --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Larry L. Prince 3,960 53,708 190,000 89,139 1,625,625 482,264
Thomas C. Gallagher 3,000 35,250 104,318 54,632 939,045 255,932
John J. Scalley 4,300 39,327 6,576 37,624 51,374 250,506
Louis W. Rice, Jr. -- -- 3,246 17,030 32,645 93,946
George W. Kalafut 3,750 49,094 14,166 42,884 122,252 266,942
</TABLE>
- ---------------
(1) The Value Realized 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, 1995 ($41.00 per share
closing stock price) of the option shares less the exercise price of the
options.
8
<PAGE> 11
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's policy responding to
Section 162(m) of the Internal Revenue Code, which disallows the deduction for
certain annual compensation in excess of $1,000,000 paid to certain executive
officers of the Company, was to submit the Genuine Parts Company's annual bonus
program for its executive officers to the Company's shareholders for approval at
the 1995 annual meeting of shareholders. As a result of the adoption of the
Company's annual bonus program by its shareholders, none of the Company's
executive officers will have compensation in excess of $1,000,000 for purposes
of Section 162(m) through 1999.
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 restricted stock, 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 15 of this Proxy Statement); and (v) the past performance
(including the achievement in the 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.
Pursuant to the Company's Annual Incentive Bonus Plan (the "Plan"), the
Committee sets annual bonuses such that an executive officer's annual bonus,
assuming the Company achieves certain targets or goals, is approximately 51% 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 59%
of total annual compensation, depending upon the extent and direction of such
fluctuations.
Each fiscal year, including 1995, the Committee sets the level of annual
bonuses to be awarded to the Chief Executive Officer and other executive
officers under the Plan, based upon goals (the "Goals") set by the Company. The
Goals set by the Company for projected pre-tax return (expressed as a
percentage) on the Company's shareholders' equity as of the beginning of the
fiscal year (the "Profit Goals") receive the most emphasis in calculating annual
bonuses by the Committee since these Goals most forcefully tie the interests of
9
<PAGE> 12
the Company's shareholders and its executive officers together. If the Company
meets a specified Profit Goal, the Company's executive officers are eligible to
receive additional bonuses if the Company also attains certain (i) sales targets
(the "Sales Goals"), and (ii) inventory management targets (the "Inventory
Management Goals").
The Company's Goals are determined by aggregating all of the Profit, 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 1995, the Company as a whole exceeded the Profit Goal, for
which Larry L. Prince, the Company's Chief Executive Officer, earned a bonus
equal to 54% of his total annual compensation. The annual bonuses awarded in
connection with the Profit Goal constituted 100% of Mr. Prince's 1995 bonus.
Stock Options and Restricted Stock
During 1995, the Committee provided long term compensation to the Company's
executive officers in the form of stock options under 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 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 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 1995, the Committee granted options to purchase an
aggregate of 500,500 shares of Common Stock at fair market value on the date of
grant to 138 key employees, including each of the Named Executive Officers. The
grants ranged in size from 1,000 to 60,000 shares, with Larry L. Prince, the
Company's Chief Executive Officer, receiving the largest such grant.
During 1994 the Committee provided long term compensation to Mr. Prince and
Thomas C. Gallagher, the Company's President and Chief Operating Officer, in the
form of restricted stock agreements under the 1992 Plan. Such agreements commit
the Company to make future grants of restricted stock awards (up to a certain
maximum number of shares) based upon (i) increases in the Company's common stock
price to certain levels specified in the agreements (the "Stock Price Goals"),
and (ii) the Company's achievement of certain earnings per share targets for
each year from 1994 to 1998 as set forth in the agreements (the "Earnings
Goals"). In determining whether to enter into a restricted stock agreement with
a particular executive officer, the Committee reviewed the same criteria it
considered when making stock option grants as set forth above. Such agreements
committed the Company to make awards of up to a maximum of 100,000 shares of
restricted stock to Mr. Prince and awards of up to a maximum of 50,000 shares to
Mr. Gallagher. The Company met the Earnings Goal for 1995, and, therefore, on
February 15, 1996 awarded 8,000 shares of restricted stock to Mr. Prince and
4,000 to Mr. Gallagher. In 1995, the Company did not meet any of the Stock Price
Goals in any restricted stock agreement.
10
<PAGE> 13
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)
J. Hicks Lanier
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., J. Hicks Lanier 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. Lanier is Chief Executive Officer,
Chairman of the Board and President of Oxford Industries, Inc., one of whose
directors is the Company's President and Chief Operating Officer, Thomas C.
Gallagher.
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, 1995,
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
500,000 193,900 205,600 218,900 230,600 243,900 255,600 268,900
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
1,200,000 472,900 502,900 532,900 562,900 592,900 622,900 652,900
</TABLE>
11
<PAGE> 14
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 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 1995, this limit was $120,000 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. Only persons whose annual, regular earnings are expected to be equal to or
greater than the compensation limitation of Code Section 401(a)(17) ($150,000 in
1995) or such other dollar limitations as may be imposed by the Compensation and
Stock Option Committee of the Company's Board of Directors may participate in
the Supplemental Retirement Plan. The Compensation and Stock Option Committee
reserves the right, however, to exclude an otherwise eligible employee from
participating in the Supplemental Retirement Plan. All of the Named Executive
Officers are participants in the Supplemental Retirement Plan. The Supplemental
Retirement Plan provides that each participant will receive for the 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 -- 37
years; Thomas C. Gallagher -- 25 years; John J. Scalley -- 44 years; Louis W.
Rice, Jr. -- 28 years; and George W. Kalafut -- 12 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
12
<PAGE> 15
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.
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 or attaining age 65 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. Messrs. Rice and Scalley turned 65 in November 1991 and August
1995, respectively, and began receiving the amount of deferred compensation set
forth above at such times.
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.
13
<PAGE> 16
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 100% of their
1995 bonuses (to be received during 1996). Amounts of compensation deferred
pursuant to the Deferred Savings Plan are included in the amounts 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
(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.
14
<PAGE> 17
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, 1990 and ended December 31, 1995.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
GENUINE PARTS COMPANY, S&P 500 INDEX & PEER GROUP COMPOSITE INDEX**
[GRAPH]
<TABLE>
<CAPTION>
MEASUREMENT PERIOD GENUINE PARTS
(FISCAL YEAR COVERED) COMPANY S&P 500 PEER INDEX
<S> <C> <C> <C>
1990 100.00 100.00 100.00
1991 132.71 130.48 131.38
1992 143.18 140.46 179.20
1993 163.12 154.62 209.11
1994 161.18 156.66 192.70
1995 189.48 215.54 262.84
</TABLE>
Assumes $100 invested on December 31, 1990 in Genuine Parts Company common
stock, 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.
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, 1990 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
15
<PAGE> 18
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 1991 1992 1993 1994 1995
------------------------------------------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Automotive Parts 58.15% 57.73% 56.63% 55.45% 53.29%
Industrial Parts 27.13% 26.95% 26.36% 27.12% 28.69%
Office Products 14.72% 15.32% 17.01% 17.43% 18.02%
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During January of 1996, the Company acquired 100,000 shares of its Common
Stock from a trust for which the wife of Gardner E. Larned (a director of the
Company who is retiring on the date of this Annual Meeting) is a fiduciary. The
Company acquired such shares at a purchase price per share of $40.625 (which was
the fair market value of such shares on the date of purchase).
2. RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected Ernst & Young LLP as auditors for the
Company for the current fiscal year ending December 31, 1996, subject to
ratification by the shareholders. Ernst & Young LLP served as independent
auditors for the Company for the fiscal year ended December 31, 1995, and
representatives of that firm of independent accountants are expected to be
present at the Annual Meeting of Shareholders. Ernst & Young LLP 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 LLP AS AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER
31, 1996. 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 1997 Annual Meeting of Shareholders of the Company must be
received by the Company at its principal executive offices on or before November
1, 1996, in order to be included in the Company's proxy statement and form of
proxy relating to the 1997 Annual Meeting of Shareholders.
16
<PAGE> 19
[GPC + NAPA LOGO]
<PAGE> 20
APPENDIX
GENUINE PARTS COMPANY
PROXY SOLICITED BY THE BOARD OF DIRECTORS OF GENUINE PARTS COMPANY FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 15, 1996
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 15, 1996 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.
(Continued and to be signed on reverse side)
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<PAGE> 21
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Please mark
<S> <C> your votes /X/
as indicated
1. Election of the following four nominees as Class I in this example
directors of Genuine Parts Company: IF A VOTE IS NOT
SPECIFIED, THE PROXIES WILL VOTE "FOR" PROPOSAL 1:
FOR all nominees WITHHOLD Nominees: Bradley Currey, Jr., Robert P. Forrestal, Thomas
listed to the right AUTHORITY C. Gallagher and Lawrence G. Steiner. To withhold authority
(except as marked to to vote for all nominees to vote for any individual nominee, write that nominee's
contrary) listed to the right name on the following line.
/ / / /
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2. Ratification of the selection of Ernst & Young LLP as the Company's independent auditors for the fiscal year ending
December, 31, 1996. IF A VOTE IS NOT SPECIFIED, THE PROXIES WILL VOTE "FOR" PROPOSAL 2.
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:
------------------------------------------------, 1996
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Signature
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Signature if held jointly
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