<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
Genuine Parts Company
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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 19, 1999
---------------------
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 19th day of April, 1999, at 10:00 a.m., for the following
purposes:
(1) To elect four Class I directors and one Class III director;
(2) To consider and vote upon a proposal to adopt the Genuine Parts
Company 1999 Long-Term Incentive Plan;
(3) To consider and vote upon a proposal to adopt the Genuine Parts
Company 1999 Annual Incentive Bonus Plan;
(4) 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, 1999; and
(5) 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
11, 1999 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, 1999
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 19, 1999
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 19, 1999, 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, 1999.
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 Annual 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, 1998, is enclosed herewith.
At the close of business on the record date for the Annual Meeting, which
was February 11, 1999, the Company had outstanding and entitled to vote at the
Annual Meeting 179,536,256 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, the adoption of the 1999
Long-Term Incentive Plan, the adoption of the 1999 Annual Incentive Bonus Plan,
and the selection of independent auditors is a majority of the shares of Common
Stock present or represented by proxy 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 will be counted as
present for purposes of determining the existence of a quorum and 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, and will have the same effect as a vote
"against" such proposal. With respect to each other proposal, abstentions and
broker "non-votes" will be counted as present for purposes of determining the
existence of a quorum and 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, 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
does not vote on a particular proposal because the nominee does not have
discretionary voting power with respect to that proposal 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 current directors in Class II and Class III will continue in
office. Stephen R. Kendall was appointed to the Board on August 17, 1998 to fill
the vacancy that was created when the directors increased the size of the Board
from ten to eleven. Pursuant to the Articles of Incorporation of the Company,
Mr. Kendall was appointed as a
<PAGE> 4
director-at-large (not designated to any particular Class) to serve until the
next election of directors by the Company's shareholders. Mr. Kendall has been
nominated by the Board as a candidate for election to Class III of the Board.
The shareholders are being asked to vote on the election of the four
nominees for director in Class I and one nominee for director in Class III. The
Class I nominees will serve for terms of three years each and until their
successors are duly elected and qualified or until their earlier resignation,
retirement, disqualification, removal from office or death. The Class III
nominee (Mr. Kendall) will serve for a term expiring on the date of the 2001
Annual Meeting and until his successor is duly elected and qualified or until
his earlier resignation, retirement, disqualification, removal from office or
death. All of the nominees are presently directors. In the absence of contrary
instructions, the proxy will be voted for the election of the five 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 2002 ANNUAL MEETING
<TABLE>
<CAPTION>
YEAR FIRST
NAME AGE POSITION WITH THE COMPANY ELECTED DIRECTOR
- ---- --- ------------------------- ----------------
<S> <C> <C> <C>
Bradley Currey, Jr. 68 Director 1990
Robert P. Forrestal 67 Director 1996
Thomas C. Gallagher 51 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 60 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 1989 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 of counsel 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. Forrestal is a director of Equifax Inc. and ING North
America 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. and National Service Industries, Inc.
Mr. Steiner is Chairman of the Board and President of Ameripride Services
Inc. (formerly known as American Linen Supply Company). Mr. Steiner has been
President of Ameripride Services Inc. since 1979,
2
<PAGE> 5
and Chairman of the Board since 1992. Ameripride Services Inc. is headquartered
in Minneapolis, Minnesota, and is engaged in the business of linen and garment
rental.
CLASS III
FOR A TWO-YEAR TERM EXPIRING ON THE DATE OF THE 2001 ANNUAL MEETING
<TABLE>
<CAPTION>
YEAR FIRST
NAME AGE POSITION WITH THE COMPANY ELECTED DIRECTOR
- ---- --- ------------------------- ----------------
<S> <C> <C> <C>
Stephen R. Kendall 55 Director 1998
</TABLE>
Mr. Kendall was appointed as a director of the Company by the Board of
Directors on August 17, 1998. Mr. Kendall has been President and a director of
EIS, Inc. since 1990. EIS, Inc., a wholly-owned subsidiary of the Company, is a
distributor of materials for the manufacture of electronic and electrical
apparatus, headquartered in Atlanta, Georgia.
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
CLASS II
TERM EXPIRING ON THE DATE OF THE 2000 ANNUAL MEETING
<TABLE>
<CAPTION>
YEAR FIRST
NAME AGE POSITION WITH THE COMPANY ELECTED DIRECTOR
- ---- --- ------------------------- ----------------
<S> <C> <C> <C>
Richard W. Courts, II 63 Director 1998
Larry L. Prince 60 Chairman of the Board, Chief 1979
Executive Officer and Director
James B. Williams 65 Director 1980
</TABLE>
Mr. Courts is Chairman of the Board of Directors of Atlantic Investment
Company, a position he has held since 1992, following his service as President
since 1970. Atlantic Investment Company is headquartered in Atlanta, Georgia and
is engaged in the business of real estate and capital investments. Mr. Courts is
also a director of SunTrust Banks of Georgia, Inc., SunTrust Bank, Atlanta,
Southern Mills, Inc. and Cousins Properties, Inc.
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 director of Crawford &
Company, Equifax Inc., John H. Harland Co., Southern Mills, Inc., and SunTrust
Banks, Inc.
Mr. Williams is Chairman of the Executive Committee of SunTrust Banks,
Inc., a position he has held since 1998. Mr. Williams was Chairman of the Board
and Chief Executive Officer of SunTrust Banks, Inc. from 1991 to 1998. Mr.
Williams has been a member of the Board of Directors of SunTrust Banks, Inc.
since 1984. He 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, Inc. and Sonat Inc.
CLASS III
TERM EXPIRING ON THE DATE OF THE 2001 ANNUAL MEETING
<TABLE>
<CAPTION>
YEAR FIRST
NAME AGE POSITION WITH THE COMPANY ELECTED DIRECTOR
- ---- --- ------------------------- ----------------
<S> <C> <C> <C>
Jean Douville 55 Director 1992
J. Hicks Lanier 58 Director 1995
Alana S. Shepherd 68 Director 1993
</TABLE>
3
<PAGE> 6
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 1994. UAP Inc., a wholly-owned subsidiary of the Company, is a
distributor of automotive replacement parts headquartered in Montreal, Quebec,
Canada. Mr. Douville is a director of A.L. Van Houtte Ltd. and Banque Nationale
du Canada.
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.
Ms. Shepherd is Secretary of the Board of Directors of The Shepherd Center,
a position she has held since 1974. Ms. Shepherd is a director emeritus of
Wachovia Bank of Georgia.
OTHER INFORMATION ABOUT THE BOARD AND ITS COMMITTEES
During 1998, the Board of Directors held five 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.
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 1998 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. and James B. Williams. During 1998, this committee held
seven 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), Robert P. Forrestal,
Alana S. Shepherd and Lawrence G. Steiner. During 1998, 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, to administer the Company's Annual Incentive Bonus Plan,
1988 Stock Option Plan, 1992 Stock Option and Incentive Plan and, if
approved by the shareholders at the Annual Meeting, the 1999 Long-Term
Incentive Plan and 1999 Annual Incentive Bonus Plan, and to amend certain
other benefit plans of the Company. The current members of the Compensation
and Stock Option Committee are J. Hicks Lanier (Chairman), Bradley Currey,
Jr. and James B. Williams. During 1998, 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 1998, directors who were not
full-time employees of the Company or its subsidiaries were paid $6,250 per
fiscal quarter plus $925 per meeting attended, except the Chairmen of the
Audit Committee and the Compensation and Stock Option Committee who were
paid $7,000 per fiscal quarter plus $925 per meeting attended.
4
<PAGE> 7
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of February 11, 1999, as to
persons or 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, The Capital Group Companies, Inc., as 12,830,000(2) 7.1%
$1.00 par value parent holding company on behalf of
certain subsidiaries, including Capital
Research and Management Company
333 South Hope Street
Los Angeles, California 90071
Common Stock, Merrill Lynch, Pierce, Fenner & Smith 9,697,838(3) 5.4%
$1.00 par value Incorporated
World Financial Center, North Tower
250 Vesey Street
New York, New York 10281
</TABLE>
- ---------------
(1) This information is based upon information included in a Schedule 13G
jointly filed by The Capital Group Companies, Inc. and Capital Research and
Management Company, and a Schedule 13G filed by Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("Merrill Lynch"), each of which was received by
the Company on February 12, 1999.
(2) Includes 12,830,000 shares beneficially owned by Capital Research and
Management Company. The Capital Group Companies, Inc. disclaims beneficial
ownership of these shares.
(3) Merrill Lynch is a sponsor of various unit investment trusts which invest in
equity securities of the Company and have the right to receive, or the power
to direct the receipt of, dividends from, or the proceeds from the sale of,
such securities. Merrill Lynch disclaims beneficial ownership of the
reported shares, other than certain securities held in Merrill Lynch
proprietary accounts.
5
<PAGE> 8
COMMON STOCK OWNERSHIP OF MANAGEMENT
Based on information provided to the Company, set forth in the table below
is information regarding the beneficial ownership of Common Stock of the Company
by the Company's directors, the Named Executive Officers (as defined herein) and
the directors, nominees for director and executive officers of the Company as a
group (18 persons) as of February 11, 1999:
<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, Keith A. Bealmear 55,307(3) *
$1.00 par value Robert J. Breci 1,209,950(4) *
Richard W. Courts, II 197,640(5) *
Bradley Currey, Jr. 32,185(6) *
Jean Douville 4,086(7) *
Robert P. Forrestal 1,500(8) *
Thomas C. Gallagher 1,479,228(9) *
George W. Kalafut 2,047,869(10) 1.1%
Stephen R. Kendall 945,482(11) *
J. Hicks Lanier 40,881(12) *
Larry L. Prince 705,670(13) *
Alana S. Shepherd 2,283 *
Lawrence G. Steiner 6,520(14) *
James B. Williams 32,490(15) *
Directors, Nominees and
Executive Officers as a Group 4,667,757(16) 2.6%
</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) Includes 33,439 shares subject to stock options exercisable currently or
within 60 days.
(4) Includes 59,794 shares subject to stock options exercisable currently or
within 60 days. In addition, Mr. Breci is one of four trustees for
1,088,532 shares held in a benefit fund for Company employees.
(5) Includes 1,350 shares held by a profit-sharing trust for which Mr. Courts
is sole trustee and 196,065 shares held by certain charitable foundations
for which Mr. Courts is a trustee and thereby has shared voting and
investment power. (Mr. Courts disclaims beneficial ownership as to the
shares held by such trust and foundations.) Also includes 225 shares owned
by Mr. Courts' wife (as to which shares he disclaims beneficial ownership).
(6) Includes 2,185 shares of Common Stock equivalents held in Mr. Currey's
stock account under the Directors' Deferred Compensation Plan. See
"Compensation Pursuant to Plans."
(7) Includes 1,836 shares of Common Stock equivalents held in Mr. Douville's
stock account under the Directors' Deferred Compensation Plan. See
"Compensation Pursuant to Plans."
(8) All 1,500 shares are owned jointly by Mr. Forrestal and his wife.
6
<PAGE> 9
(9) Includes 243,343 shares subject to stock options exercisable currently or
within 60 days and 946 shares owned jointly by Mr. Gallagher and his wife.
Also includes 1,088,532 shares held in a benefit fund for Company
employees, of which Mr. Gallagher is one of four trustees. Mr. Gallagher
disclaims beneficial ownership as to all such shares held in trust.
(10) Includes 68,539 shares subject to options exercisable currently or within
60 days. Also includes 1,088,532 shares held in a benefit fund for Company
employees, of which Mr. Kalafut is one of four trustees, and 863,982 shares
held in trust for the Company's Pension Plan, of which Mr. Kalafut is one
of four trustees. Including the shares held in such trusts, Mr. Kalafut's
beneficial ownership was 1.1% of the Common Stock outstanding on February
11, 1999. Mr. Kalafut disclaims beneficial ownership as to all such shares
held in both trusts.
(11) Includes 201,650 shares subject to stock options exercisable currently or
within 60 days and 85,930 contingency shares in Mr. Kendall's name. Also
includes 30,000 shares held in Kendall Charitable Trust for which Mr.
Kendall has sole investment power for such shares. Also includes 208,608
shares and 51,681 contingency shares held in Kendall Financial Partners,
Ltd. (for which Mr. Kendall disclaims beneficial ownership) and 160,743
shares held in the EIS, Inc. Employee Stock Ownership Plan.
(12) Includes 2,400 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 2,250 shares owned
by Oxford Industries, Inc., as to which Mr. Lanier has shared voting and
investment power (as to which shares Mr. Lanier disclaims beneficial
ownership). Also includes 24,831 shares held by a charitable foundation for
which Mr. Lanier is one of six trustees and thereby has shared voting and
shared investment power for such shares (as to which shares Mr. Lanier
disclaims beneficial ownership). Also includes 9,900 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 9,900
shares.
(13) Includes 398,758 shares subject to stock options exercisable currently or
within 60 days, and includes 91,125 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.
(14) Includes 1,113 shares owned by Mr. Steiner's wife (as to which such shares
Mr. Steiner disclaims beneficial ownership), and 2,407 shares held in trust
in nominee's name for the benefit of Mr. Steiner.
(15) Includes 2,491 shares of Common Stock equivalents held in Mr. Williams'
stock account under the Directors' Deferred Compensation Plan. See
"Compensation Pursuant to Plans."
(16) This figure includes 1,143,134 shares issuable to certain executive
officers upon the exercise of options that are exercisable currently or
within 60 days under the Company's 1988 Stock Option Plan and 1992 Stock
Option and Incentive Plan, 1,088,532 shares held in a benefit fund for
Company employees, 863,982 shares held in trust for the Company's Pension
Plan, and 6,512 shares held as Common Stock equivalents under the
Directors' Deferred Compensation Plan. The individual total for Mr. Courts
and Mr. Prince includes 91,125 shares held by the John Bulow Campbell
Foundation of which each of the foregoing individuals is a trustee; such
shares have been included only once in calculating this figure. The
individual totals for Messrs. Breci, Gallagher and Kalafut each include the
1,088,532 shares mentioned above as held in a benefit fund for Company
employees of which each of the foregoing individuals is a trustee; such
shares have been included only once in calculating this figure.
7
<PAGE> 10
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, 1998, 1997 and 1996, of (i) the Chief Executive Officer as
of December 31, 1998, and (ii) the other four most highly compensated executive
officers of the Company as of December 31, 1998 (for the purposes of this and
the following tables and discussion 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 ALL
------------------------ STOCK UNDERLYING OTHER
SALARY BONUS AWARD(S) OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#)(1) ($)(2)
- --------------------------- ---- ------- ------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Larry L. Prince 1998 590,000 788,535 552,150(3) -- 2,000
Chairman of the 1997 540,000 658,800 504,375(3) 150,000 1,900
Board, Chief Executive 1996 500,000 621,000 791,900(3) -- 1,900
Officer and Director
Thomas C. Gallagher 1998 425,000 542,300 276,075(3) -- 2,000
President, Chief 1997 390,000 452,400 252,188(3) 125,000 1,900
Operating Officer and 1996 360,000 426,420 395,950(3) -- 1,900
Director
George W. Kalafut 1998 240,000 293,040 -- -- 2,000
Executive Vice 1997 225,000 249,750 -- 25,000 1,900
President -- 1996 214,000 241,178 -- -- 1,900
Finance &
Administration
Robert J. Breci 1998 270,000 261,360 -- 2,000
Executive Vice 1997 248,000 205,840 -- 25,000 1,900
President 1996 237,000 196,236 -- -- 1,900
Keith A. Bealmear 1998 240,000 218,800 -- -- 2,000
Group Vice President 1997 228,000 -- -- 25,000 1,900
1996 212,000 151,156 -- -- 1,900
</TABLE>
- ---------------
(1) Share amounts prior to 1997 have been restated to reflect the three-for-two
stock split effected in the form of 50% stock dividend on April 14, 1997.
(2) For 1998, 1997 and 1996, 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 of
1986, as amended (the "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 officers (up to an aggregate
maximum of 150,000 shares for Mr. Prince and 75,000 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 grantee
remains employed by the Company until that date (unless the grantee is
terminated prior to March 31, 2004 by reason of a change in control, death,
disability or retirement, or the Compensation and Stock Option Committee
accelerates the vesting of restricted stock granted under these Restricted
Stock Agreements). For 1996, 1997 and 1998, the amounts specified in
"Restricted Stock Awards" reflect grants under the Restricted Stock
Agreements discussed above made on (and valued as of) February 15, 1996 and
February 13, 1997, and January 29, 1996, May 12, 1997, and March 20, 1998,
respectively, in connection with the Company's achievement of the earnings
per share target for 1995 and 1996 and the first, second and third price per
share targets as set forth in the agreements. The value of all restricted
stock held by Mr. Prince and Mr. Gallagher as of December 31, 1998 was
$2,808,750 and $1,404,375, respectively (such value is calculated by
multiplying the number of restricted stock shares held by $33.4375, which
was the closing price of the Company's Common Stock on December 31, 1998).
8
<PAGE> 11
OPTION GRANTS IN FISCAL YEAR 1998
No options were granted during 1998 to the Named Executive Officers.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1998
AND FISCAL YEAR-END OPTION VALUES
Shown below is information with respect to options exercised by the Named
Executive Officers during 1998 and the unexercised options to purchase the
Company's Common Stock granted in prior years under the 1988 Stock Option Plan
and the 1992 Stock Option and Incentive Plan to the Named Executive Officers and
held by them as of December 31, 1998.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR-END(#) AT FISCAL YEAR-END($)(2)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE(#) REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Larry L. Prince -- -- 398,758 19,950 2,411,041 268,328
Thomas C. Gallagher 13,000 198,297 243,343 18,207 1,079,329 210,458
George W. Kalafut 3,150 46,555 68,539 22,311 412,047 247,468
Robert J. Breci -- -- 59,794 22,374 340,983 249,927
Keith A. Bealmear 6,000 79,531 33,439 21,561 88,785 174,964
</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, 1998 ($33.4375 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.
POLICY RELATIVE TO CODE SECTION 162(M)
The Omnibus Budget Reconciliation Act of 1993 (OBRA) disallows the
deduction for certain annual compensation in excess of $1,000,000 paid to
certain executive officers of the Company, unless the compensation qualifies as
"performance-based" under Code Section 162(m). Compensation payable under the
Company's annual bonus program for its executive officers, which was approved by
the Company's shareholders at the 1995 Annual Meeting of shareholders and is
again being submitted for shareholder approval at the Annual Meeting under
Proposal 3 in this Proxy Statement, is designed to qualify as
"performance-based" and therefore to be fully deductible by the Company. In
addition, the 1999 Long-Term Incentive Plan being submitted to shareholders for
approval at the Annual Meeting under Proposal 2 of this
9
<PAGE> 12
Proxy Statement will permit the grant of stock options and other awards that are
fully deductible under Code Section 162(m). It is the Committee's intent to
maximize the deductibility of executive compensation while retaining the
discretion necessary to compensate executive officers in a manner commensurate
with performance and the competitive market of executive talent.
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 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 "Annual Incentive
Plan"), 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 55% of total annual compensation, depending upon the
extent and direction of such fluctuations.
Each fiscal year, including 1998, the Committee sets the level of annual
bonuses to be awarded to the Chief Executive Officer and other executive
officers under the Annual Incentive 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 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
10
<PAGE> 13
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 1998, Larry L. Prince, the Company's Chief Executive
Officer, earned a bonus equal to 57% of his total annual compensation. The
annual bonus awarded in connection with the Profit Goal constituted 100% of Mr.
Prince's 1998 bonus.
The current Annual Incentive Plan will expire on December 31, 1999. The
shareholders are being asked to consider and vote upon a proposal to adopt as a
replacement plan the Company's 1999 Annual Incentive Bonus Plan, as described
under Proposal 3. The new plan will operate similarly to the current Annual
Incentive Plan, except that the Committee will have greater flexibility to
select from among several shareholder-approved business criteria in establishing
the annual performance goals.
Stock Options and Restricted Stock
No stock options were granted to the Company's executive officers in 1998.
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 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).
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. Such agreements committed the Company to make awards of up to a
maximum of 150,000 shares of restricted stock to Mr. Prince and awards of up to
a maximum of 75,000 shares to Mr. Gallagher. The Company met the third Stock
Price Goal in 1998 and, therefore, awarded 15,000 shares of restricted stock to
Mr. Prince and 7,500 to Mr. Gallagher in 1998.
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 in 1998
J. Hicks Lanier (Chairman)
Bradley Currey, Jr.
James B. Williams
William A. Parker, Jr. (Retired in
April 1998)
11
<PAGE> 14
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following non-employee directors served on the Compensation and Stock
Option Committee during 1998: William A. Parker, Jr., Bradley Currey, Jr., J.
Hicks Lanier and James B. Williams. Mr. Parker retired as a director of the
Company on the date of the 1998 Annual Meeting. He 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. Mr. Williams is Chairman of the
Executive Committee of SunTrust Banks, Inc., one of whose directors, Larry L.
Prince, is the Chairman of the Board and Chief Executive Officer of the Company.
As of December 31, 1998, the Company had outstanding indebtedness to SunTrust
Bank of approximately $547.3 million.
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, 1998,
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>
$ 400,000 $152,200 $162,200 $172,200 $182,200 $192,200 $202,200 $212,200
450,000 172,200 183,500 194,700 206,000 217,200 228,500 239,700
500,000 192,200 204,700 217,200 229,700 242,200 254,700 267,200
600,000 232,200 247,200 262,200 277,200 292,200 307,200 322,200
700,000 272,200 289,700 307,200 324,700 342,200 359,700 377,200
800,000 312,200 332,200 352,200 372,200 392,200 412,200 432,200
900,000 352,200 374,700 397,200 419,700 442,200 464,700 487,200
1,000,000 392,200 417,200 442,200 467,200 492,200 517,200 542,200
1,100,000 432,200 459,700 487,200 514,700 542,200 569,700 597,200
1,200,000 472,200 502,200 532,200 562,200 592,200 622,200 652,200
1,300,000 512,200 544,700 577,200 609,700 642,200 674,700 707,200
1,400,000 552,200 587,200 622,200 657,200 692,200 727,200 762,200
1,500,000 592,200 629,700 667,200 704,700 742,200 779,700 817,200
1,600,000 632,200 672,200 712,200 752,200 792,200 832,200 872,200
1,700,000 672,200 714,700 757,200 799,700 842,200 884,700 927,200
</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 key
employees in excess of the limitations on Pension Plan benefits imposed by 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
12
<PAGE> 15
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 1998, this limit was $130,000 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) ($160,000 in
1998) 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 -- 40
years; Thomas C. Gallagher -- 28 years; George W. Kalafut -- 15 years; Robert J.
Breci -- 36 years; and Keith A. Bealmear -- 24 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 and expired by
its terms on May 1, 1998. Upon expiration of the 1988 Plan, no further awards
may be granted thereunder. 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. The 1992 Plan provides 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 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
13
<PAGE> 16
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.
The shareholders of the Company will be asked to consider and vote at the
Annual Meeting on the adoption of the Genuine Parts Company 1999 Long-Term
Incentive Plan, which provides for the granting of stock options, restricted
stock and other types of incentive awards, as described more fully under
Proposal 2.
GENUINE PARTNERSHIP PLAN
The Company established, effective July 1, 1988, a qualified salary
deferral plan pursuant to Code Section 401(k) (the "Partnership Plan"). The
Partnership Plan is open to all employees, including executive officers.
Employees who are normally scheduled to work 24 or more hours per week may
participate in the 401(k) payroll deduction portion of the Partnership Plan on
the first day of the month after the eligible employee completes three months of
employment and attain age 18. Employees who are normally scheduled to work fewer
than 24 hours per week may participate after attaining age 18 and completing
twelve months of service and 1,000 hours of service during such twelve months
("Year of Service"). All Employees must complete a Year of Service and attain
age 18 before becoming eligible for a Company matching contribution. 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 of service. Participants are always
100% vested in their Basic and Supplemental Contributions.
EXECUTIVE 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; and Robert J. Breci -- $40,000 annually with such amount guaranteed for
10 years.
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").
14
<PAGE> 17
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 1998 bonuses (to be received during 1999). 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.
DIRECTORS' DEFERRED COMPENSATION PLAN
The Company established, effective as of November 1, 1996, a nonqualified,
unfunded deferred compensation plan known as the Genuine Parts Company
Directors' Deferred Compensation Plan (the "Directors' Deferred Compensation
Plan"). The Directors' Deferred Compensation Plan is open to all non-employee
directors of the Company and permits participants to defer the receipt of all of
their director fees and/or meeting fees until a specified date, which must be at
least two calendar years following the date of the election to defer.
Participants may elect to have the deferred amounts allocated to an interest
bearing account or an account that is credited with Common Stock equivalents.
Each participant may elect to receive payment of the deferred amounts in cash or
shares of Common Stock.
TERMINATION OF EMPLOYMENT
AND CHANGE OF CONTROL ARRANGEMENTS
Effective February 13, 1989 (August 22, 1991 with respect to Mr. Kalafut
and April 17, 1995 with respect to Mr. Bealmear), the Company entered into
identical agreements ("Severance Pay Agreements") with certain executive
officers, including Larry L. Prince, Thomas C. Gallagher, George W. Kalafut,
Robert J. Breci and Keith A. Bealmear. 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.
15
<PAGE> 18
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 two
Peer Group Composite Indices (structured by the Company as set forth below) for
the five year period commencing December 31, 1993 and ended December 31, 1998.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
GENUINE PARTS COMPANY, S&P 500 INDEX & TWO PEER GROUP COMPOSITE INDICES**
<TABLE>
<CAPTION>
GENUINE
MEASUREMENT PERIOD PARTS OLD PEER NEW PEER
(FISCAL YEAR COVERED) COMPANY S&P 500 INDEX INDEX
<S> <C> <C> <C> <C>
1993 100.00 100.00 100.00 100.00
1994 98.81 101.32 94.62 94.62
1995 116.16 139.40 165.88 165.88
1996 129.95 171.41 155.52 155.52
1997 153.08 228.59 261.76 261.76
1998 155.39 293.92 246.15 241.24
</TABLE>
Assumes $100 invested on December 31, 1993 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 two Peer Group Composite Indices
constructed by the Company as set forth below.
- ---------------
* Total return assumes reinvestment of dividends.
** Fiscal year ending December 31.
In constructing the Old Peer Group Composite Index ("Old 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, 1993 and including reinvestment of
dividends) that compete with the Company in 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
16
<PAGE> 19
industrial parts Peer Group are Applied Industrial Technologies, Inc. (formerly
Bearings, Inc.) and Kaman Corporation, and included in the office products Peer
Group is United Stationers Inc. The New Peer Group Composite Index (the "New
Peer Index") is identical to the Old Peer Index for years 1993 through 1997. The
New Peer Index reflects the addition of electrical/electronic materials as a
fourth industry segment, with the Company's acquisition of EIS, Inc. on July 1,
1998. Included in the electrical/electronic materials Peer Group for 1998 is
Marshall Industries.
In determining the Peer Indices, 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 1994 1995 1996 1997 1998
---------------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Automotive Parts 55.45% 53.29% 52.58% 51.14% 49.33%
Industrial Parts 27.12% 28.69% 29.34% 30.86% 30.37%
Office Products 17.43% 18.02% 18.08% 18.00% 16.97%
Electrical/Electronic Materials -- -- -- -- 3.33%
</TABLE>
2. APPROVAL OF THE
1999 LONG-TERM INCENTIVE PLAN
The Company currently maintains the Genuine Parts Company 1992 Stock Option
and Incentive Plan (the "1992 Plan"). The 1992 Plan provides for the granting of
restricted stock and options to purchase shares of the Company's Common Stock to
key employees of the Company and its subsidiaries. As of December 31, 1998,
there were 1,726,474 shares of Common Stock remaining available for the grant of
awards under the 1992 Plan.
On February 15, 1999, the Board of Directors adopted the Genuine Parts
Company 1999 Long-Term Incentive Plan (the "1999 Plan"), subject to approval of
the 1999 Plan by the shareholders at the Annual Meeting. The 1999 Plan will be
effective as of its approval by the shareholders at the Annual Meeting, and no
awards will be made under the 1999 Plan prior to such approval. The Company has
reserved 9,000,000 shares of the authorized but unissued shares of Common Stock
for issuance upon the grant or exercise of awards pursuant to the 1999 Plan.
Whether or not the shareholders approve the 1999 Plan, the Company may continue
to grant options or other awards under the 1992 Plan until the shares authorized
thereunder are depleted or until the 1992 Plan expires on April 19, 2002.
SUMMARY OF THE 1999 PLAN
A summary of the 1999 Plan is set forth below. The summary is qualified in
its entirety by reference to the full text of the 1999 Plan, a copy of which
will be furnished without charge to any shareholder of the Company upon written
request made to the Secretary of the Company.
General
The purpose of the 1999 Plan is to promote the success, and enhance the
value, of the Company by linking the personal interests of employees, officers
and directors to those of the shareholders, and by providing such employees,
officers and directors with an incentive for outstanding performance. As of
February 11, 1999, there were approximately 400 employees (including all current
executive officers) and directors eligible to participate in the 1999 Plan.
The 1999 Plan authorizes the granting of awards to employees, officers and
directors of the Company or its subsidiaries in the following forms: (i) options
to purchase shares of Common Stock, which may be incentive stock options or
nonqualified stock options, (ii) performance units; (iii) restricted stock; or
(iv) any other right or interest relating to Common Stock or cash. Not more than
10% of the 9,000,000 shares authorized under the 1999 Plan may be granted as
awards of restricted or unrestricted stock. The maximum number of shares of
Common Stock with respect to one or more options that may be granted during any
one
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calendar year under the 1999 Plan to any one participant is 500,000. The maximum
fair market value of any awards (other than options) that may be received by a
participant (less any consideration paid by the participant for such award)
during any one calendar year under the 1999 Plan is $7,500,000. The number of
shares available under the 1999 Plan is subject to adjustment by the Committee
to prevent dilution in the event of a stock split, combination of shares, stock
dividend or certain other events. To the extent that an award is canceled,
terminates, expires or lapses for any reason, or is settled in cash, any shares
of Common Stock subject to the award will again be available for the grant of an
award under the 1999 Plan.
Pursuant to Section 162(m) of the Code, the Company may not deduct
compensation in excess of $1 million paid to the Chief Executive Officer and the
four next most highly compensated executive officers of the Company. The 1999
Plan is designed to comply with Code Section 162(m) so that the grant of options
under the 1999 Plan, and other awards, such as performance units, that are
conditioned on the performance goals described in Section 13.12 of the 1999
Plan, will be excluded from the calculation of annual compensation for purposes
of Code Section 162(m) and will be fully deductible by the Company. The Board
has approved the 1999 Plan for submission to the shareholders in order to permit
the grant of awards thereunder that will constitute deductible performance-based
compensation for purposes of Code Section 162(m).
Administration
The 1999 Plan will be administered by the Compensation and Stock Option
Committee of the Board of Directors of the Company (the "Committee"). The
Committee has the power, authority and discretion to designate participants;
determine the type or types of awards to be granted to each participant and the
number, terms and conditions thereof; establish, adopt or revise any rules and
regulations as it may deem necessary or advisable to administer the 1999 Plan;
and make all other decisions and determinations that may be required under, or
as the Committee deems necessary or advisable to administer, the 1999 Plan.
Awards
Stock Options. The Committee is authorized to grant options under the 1999
Plan, which may be incentive stock options or nonqualified stock options. All
options will be evidenced by a written award agreement between the Company and
the participant, which will include such provisions as may be specified by the
Committee; provided, however that the exercise price may not be less than the
fair market value of a share of Common Stock on the date the option is granted.
The terms of an incentive stock option must meet the requirements of Section 422
of the Code.
Upon exercise of any option, payment for shares of Common Stock as to which
the option is exercised shall be made in such manner and at such time or times
as shall be provided in the option agreement, including cash, shares of Common
Stock previously acquired by the optionee, or any combination thereof. If all or
part of the exercise price is paid in shares of Common Stock, the value of such
shares will be equal to the fair market value of such shares as of the date of
exercise.
Performance Units. The Committee may grant performance units to
participants on such terms and conditions as may be selected by the Committee.
The Committee will have the complete discretion to determine the number of
performance units granted to each participant and to set performance goals and
other terms or conditions to payment of the performance units in its discretion
which, depending on the extent to which they are met, will determine the number
and value of performance units that will be paid to the participant.
Restricted Stock Awards. The Committee may make awards of restricted stock
to participants, which will be subject to such restrictions on transferability
and other restrictions as the Committee may impose (including, without
limitation, limitations on the right to vote the restricted stock or the right
to receive dividends, if any, on the restricted stock).
Other Stock-Based Awards. The Committee may, subject to limitations under
applicable law, grant to participants such other awards that are payable in,
valued in whole or in part by reference to, or otherwise
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based on or related to shares of Common Stock, as deemed by the Committee to be
consistent with the purposes of the 1999 Plan, including without limitation
shares of Common Stock awarded purely as a "bonus" and not subject to any
restrictions or conditions, convertible or exchangeable debt securities, other
rights convertible or exchangeable into shares of Common Stock, and awards
valued by reference to book value of shares of Common Stock or the value of
securities of or the performance of specified Parents or Subsidiaries of the
Company. The Committee will determine the terms and conditions of any such
awards.
Performance Goals. The Committee may determine that any award will be
determined solely on the basis of (a) the achievement by the Company (or one or
more subsidiaries or divisions of the Company) of a specified target return, or
target growth in return, on equity or assets, (b) the Company's stock price, (c)
the achievement by the Company (or one or more subsidiaries or divisions of the
Company) of a specified target, or target growth in, revenues, net income (which
may be on a pre-tax or after-tax basis) or earnings per share, (d) the
achievement of objectively determinable goals with respect to service or product
delivery, service or product quality, sales, inventory management, customer
satisfaction, meeting budgets and/or retention of employees, or (e) any
combination of the goals set forth in (a) through (d) above. Furthermore, the
Committee reserves the right for any reason to reduce (but not increase) any
such award, notwithstanding the achievement of a specified goal. If an award is
made on such basis, the Committee must establish goals not later than ninety
(90) days after the beginning of the period for which such performance goal
relates (or such other date as may be permitted or required under Code Section
162(m)). Any payment of an award granted with performance goals will be
conditioned on the written certification of the Committee in each case that the
performance goals and any other material conditions were satisfied.
Limitations on Transfer; Beneficiaries. No award will be assignable or
transferable by a participant other than by will or the laws of descent and
distribution or, except in the case of an incentive stock option, pursuant to a
qualified domestic relations order; provided, however, that the Committee may
(but need not) permit other transfers where the Committee concludes that such
transferability (i) does not cause any option intended to be an incentive stock
option to fail to be described in Code Section 422(b), and (ii) is otherwise
appropriate and desirable, taking into account any factors deemed relevant,
including without limitation, any state or federal tax or securities laws or
regulations applicable to transferable awards. A participant may, in the manner
determined by the Committee, designate a beneficiary to exercise the rights of
the participant and to receive any distribution with respect to any award upon
the participant's death.
Acceleration Upon Certain Events. In the event of a Change in Control of
the Company (as defined in the 1999 Plan), all outstanding options and other
awards in the nature of rights that may be exercised will become fully vested
and all restrictions on all outstanding awards will lapse; provided, however
that such acceleration will not occur if, in the opinion of the Company's
accountants, such acceleration would preclude the use of "pooling of interest"
accounting treatment for a Change in Control transaction that would otherwise
qualify for such accounting treatment and is contingent upon qualifying for such
accounting treatment. Regardless of whether an event described above shall have
occurred, the Committee may in its sole discretion declare all outstanding
options and other awards in the nature of rights that may be exercised to become
fully vested, and/or all restrictions on all outstanding awards to lapse, in
each case as of such date as the Committee may, in its sole discretion, declare.
The Committee may discriminate among participants or among awards in exercising
such discretion.
Termination and Amendment
The Board or the Committee may, at any time and from time to time,
terminate, amend or modify the 1999 Plan without shareholder approval; provided,
however, that the Committee may condition any amendment on the approval of
shareholders of the Company if such approval is necessary or deemed advisable
with respect to tax, securities or other applicable laws, policies or
regulations. The Committee may amend any outstanding award, but such amendment
shall not, without the participant's consent, reduce or diminish the value of
such award determined as if it had been exercised, vested, cashed in or
otherwise settled on the date of such amendment, and provided further that,
except as otherwise permitted in the 1999 Plan, the exercise price of any option
may not be reduced and the original term of any option may not be extended. No
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termination, amendment, or modification of the 1999 Plan may adversely affect
any award previously granted under the 1999 Plan, without the written consent of
the participant.
CERTAIN FEDERAL INCOME TAX EFFECTS
Nonqualified Stock Options. Under present federal income tax regulations,
there will be no federal income tax consequences to either the Company or the
participant upon the grant of a non-discounted nonqualified stock option.
However, the participant will realize ordinary income at the time of exercise of
the nonqualified stock option in an amount equal to the excess of the fair
market value of the Common Stock acquired upon the exercise of such option over
the exercise price, and the Company will be entitled to a corresponding
deduction (subject to Code Section 162(m) limitations). The gain, if any,
realized upon the subsequent disposition by the participant of the Common Stock
will constitute short-term or long-term capital gain, depending on the
participant's holding period.
Incentive Stock Options. Under present federal income tax regulations,
there will be no federal income tax consequences to either the Company or the
participant upon the grant of an incentive stock option. Although the
participant will not realize ordinary income upon his exercise of an incentive
stock option, the difference between the exercise price and the fair market
value of the shares at the time of exercise of the incentive stock option will
be treated as an item of tax preference for alternative minimum tax purposes. If
the participant holds the shares of Common Stock for the greater of two years
after the date the incentive stock option was granted or one year after the
acquisition of such shares of Common Stock (the "required holding period"), the
difference between the aggregate exercise price and the amount realized upon
disposition of the shares of Common Stock will constitute long-term capital gain
or loss, and the Company will not be entitled to a federal income tax deduction.
If the shares of Common Stock are disposed of in a sale, exchange or other
"disqualifying disposition" during the required holding period, the participant
will realize taxable ordinary income in an amount equal to the lesser of (i) the
gain realized by the participant upon such disposition, or (ii) the excess of
the fair market value of the Common Stock purchased at the time of exercise over
the aggregate exercise price, and the Company will be entitled to a federal
income tax deduction equal to such amount (subject to Code Section 162(m)
limitations). The gain in excess of such amount realized by the participant as
ordinary income would be taxed as a capital gain (subject to the holding period
requirements for long-term or short-term capital gain treatment).
Performance Units. Under present federal income tax regulations, a
participant receiving performance units will not recognize income and the
Company will not be allowed a tax deduction at the time the award is granted.
When a participant receives payment of performance units, the amount of cash and
the fair market value of any shares of Common Stock received will be ordinary
income to the participant and will be allowed as a deduction for federal income
tax purposes to the Company (subject to Code Section 162(m) limitations).
Restricted Stock. Under present federal income tax regulations, and unless
the participant makes an election to accelerate recognition of the income to the
date of grant, a participant receiving a restricted stock award will not
recognize income, and the Company will not be allowed a tax deduction, at the
time the award is granted. When the restrictions lapse, the participant will
recognize ordinary income equal to the fair market value of the Common Stock
less any amount paid by the participant for such stock, and the Company will be
entitled to a corresponding tax deduction at that time (subject to Code Section
162(m) limitations). A participant will recognize ordinary income on any
dividends paid on the shares of restricted stock when such dividends are
received, and the Company will have a corresponding deduction (unless the
participant elected to recognize income upon grant of the restricted stock, in
which event such dividends would not be deductible by the Company).
BENEFITS TO NAMED EXECUTIVE OFFICERS AND OTHERS
No awards will be granted or approved for grant under the 1999 Plan prior
to the Annual Meeting. Any awards under the 1999 Plan will be made at the
discretion of the Committee. Consequently, it is not presently possible to
determine, with respect to (i) the executive officers named in the Summary
Compensation Table, (ii) all current executive officers as a group, (iii) all
non-executive directors, as a group, (iv) any director
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nominee, or (v) all eligible participants, including all current officers who
are not executive officers, as a group, either the benefits or amounts that will
be received by such persons or groups pursuant to the 1999 Plan or the benefits
or amounts that would have been received by such persons or groups under the
1999 Plan if it had been in effect during the last fiscal year.
ADDITIONAL INFORMATION
The closing price of the Common Stock, as reported on the New York Stock
Exchange on February 11, 1999, was $31.0625.
Assuming the presence of a quorum at the Annual Meeting, the affirmative
vote of the holders of a majority of the shares of Common Stock present or
represented by proxy and entitled to vote at the Annual Meeting on this proposal
will constitute approval of the 1999 Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE 1999
PLAN. PROXIES RECEIVED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS
SHAREHOLDERS SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.
3. APPROVAL OF THE
GENUINE PARTS COMPANY 1999 ANNUAL INCENTIVE BONUS PLAN
On February 15, 1999, the Board of Directors adopted, subject to
shareholder approval at the Annual Meeting, the Genuine Parts Company 1999
Annual Incentive Bonus Plan (the "Bonus Plan"), as a replacement for the
existing Genuine Parts Company Annual Incentive Bonus Plan (the "Predecessor
Plan"), which is scheduled to expire on December 31, 1999. The Board of
Directors directed that the Bonus Plan be submitted to the shareholders at the
Annual Meeting. If the Bonus Plan is approved by the shareholders at the Annual
Meeting, it will become effective as of January 1, 1999 and the Predecessor Plan
will be terminated as of December 31, 1998. If the Bonus Plan is not approved by
the shareholders at the Annual Meeting, no payments will be made under the Bonus
Plan.
The Bonus Plan provides for the payment of annual monetary awards to each
participant equal to a percentage of such participant's base salary based upon
the achievement by the Company of certain "Performance Goals" as discussed
below. The Bonus Plan is intended to preserve the Company's federal income tax
deduction for annual bonus payments under the Bonus Plan to "covered employees"
(as defined below) during the years 1999 to 2003 by meeting the requirements for
performance-based compensation under Section 162(m) of the Code. The Bonus Plan
will be effective as of January 1, 1999 and has a term of five (5) years,
subject to earlier termination by the Board of Directors. The following is a
summary of the Bonus Plan. The summary is qualified in its entirety by reference
to the full text of the Bonus Plan, a copy of which will be furnished without
charge to any shareholder of the Company upon written request made to the
Secretary of the Company.
Eligibility. Participation in the Bonus Plan is limited to the executive
officers of the Company and any other employee(s) of the Company or its
subsidiaries which the Committee, at the time it sets Performance Goals for a
particular year, reasonably believes may be deemed to be a "covered employee"
for such year under Code Section 162(m), as the same may be amended from time to
time. Under Code Section 162(m), a covered employee currently is defined as any
individual who, on the last day of the taxable year, is (i) the chief executive
officer of the Company or acting in that capacity, or (ii) one of the four
highest compensated officers of the Company (other than the chief executive
officer) determined pursuant to the executive compensation rules under the
Securities Exchange Act of 1934. During 1998, the covered employees would have
been the five Named Executive Officers.
Performance Goals. Each participant in the Bonus Plan shall be eligible to
receive bonuses in connection with a particular fiscal year during the term of
the Bonus Plan if the Company (or, for certain executive officers, one or more
subsidiaries or divisions of the Company) meets or exceeds certain performance
goals ("Performance Goals") set every year by the Committee. Not later than
ninety (90) days after the commencement of any fiscal year during the term of
the Bonus Plan (or such other date as may be
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permitted or required by the Code), the Committee will set in writing
Performance Goals based upon (a) the achievement by the Company (or one or more
subsidiaries or divisions of the Company) of a specified target return, or
target growth in return, on equity or assets, (b) the Company's stock price, (c)
the achievement by the Company (or one or more subsidiaries or divisions of the
Company) of a specified target, or target growth in, revenues, net income (which
may be on a pre-tax or after-tax basis) or earnings per share, (d) the
achievement of objectively determinable goals with respect to service or product
delivery, service or product quality, sales, inventory management, customer
satisfaction, meeting budgets and/or retention of employees, or (e) any
combination of the goals set forth in (a) through (d) above. At the time the
Committee sets the Performance Goals for a particular fiscal year, it also sets
in writing the percentages of each participant's salary which will be awarded to
such participant if the Company (or one or more subsidiaries or divisions of the
Company, as applicable) achieves the various Performance Goals.
Limitation of Benefits. In no event shall any participant receive bonus
payments under the Bonus Plan in connection with any one fiscal year which
exceed $2,000,000.
Plan Administration. The Bonus Plan will be administered by the Committee.
The Committee is empowered to set the Performance Goals in connection with each
fiscal year during the term of the Bonus Plan. The Committee may amend the Bonus
Plan at any time, provided that no such amendment may, without the approval of
the shareholders of the Company, change the material terms of a Performance Goal
or effect such other change that would cause the loss of any tax deduction to
the Company under Code Section 162(m) absent shareholder approval. Payments
under the Bonus Plan will be made promptly after the Committee certifies in
writing that the relevant Performance Goals and other terms of the Bonus Plan
were satisfied in connection with such payments. Notwithstanding the above, the
Committee may, in its discretion, reduce the amount of compensation otherwise
payable to participants under the Bonus Plan.
Benefits to Executive Officers. Only executive officers of the Company are
currently eligible to participate in the Bonus Plan. It is not currently
possible to determine with respect to the Named Executive Officers or the
executive officers as a group the benefits or amounts that will be received by
such persons under the Bonus Plan. The Bonus Plan is based on the annual bonus
program described in the "Compensation and Stock Option Committee Report on
Executive Compensation." For 1998, each of the Named Executive Officers received
the amounts specified in the "Bonus" column of the Summary Compensation Table
contained in this Proxy Statement pursuant to the Predecessor Plan, and the
executive officers of the Company as a group received an aggregate of $2,601,865
pursuant to the Predecessor Plan.
Federal Income Tax Consequences. It is the intent of the Company that
payments under the Bonus Plan, if approved by the shareholders, will not count
toward the $1,000,000 annual deduction limit under Code Section 162(m).
ADDITIONAL INFORMATION
Assuming the presence of a quorum at the Annual Meeting, the affirmative
vote of the holders of a majority of the shares of Common Stock present or
represented by proxy and entitled to vote at the Annual Meeting on this proposal
will constitute approval of the Bonus Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE BONUS
PLAN. PROXIES RECEIVED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS
SHAREHOLDERS SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.
4. 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, 1999, subject to
ratification by the shareholders. Ernst & Young LLP served as independent
auditors for the Company for the fiscal year ended December 31, 1998, 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.
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Assuming the presence of a quorum at the Annual Meeting, the affirmative
vote of the holders of a majority of the shares of Common Stock present or
represented by proxy and entitled to vote at the Annual Meeting on this proposal
will constitute ratification of the selection of auditors.
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, 1999. PROXIES RECEIVED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS
SHAREHOLDERS SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of December 31, 1998, the Company had outstanding indebtedness to
SunTrust Bank of approximately $547.3 million, which exceeded 5% of the
Company's total consolidated assets at that date. Mr. Williams, who was an
executive officer of SunTrust Banks, Inc. during 1998, is a director of the
Company and serves on the Company's Compensation and Stock Option Committee.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 the copies of all Section 16(a) reports they
file. To the Company's knowledge, based solely on a 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, 1998, 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 Edward Van Stedum was late in filing a Form 4 with respect
to one purchase transaction.
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 2000 Annual Meeting of Shareholders of the Company must be
received by the Company at its principal executive offices on or before November
2, 1999, in order to be included in the Company's proxy statement and form of
proxy relating to the 2000 Annual Meeting of Shareholders. In addition, in
accordance with Rule 14a-4(c) of the Securities and Exchange Commission, the
Company's proxy statement and form of proxy relating to the 2000 Annual Meeting
of Shareholders will confer discretionary authority to vote on any nominations
and other proposals of shareholders that are submitted to the Company after
January 16, 2000.
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(GPC logo)
<PAGE> 27
GENUINE PARTS COMPANY
PROXY SOLICITED BY THE BOARD OF DIRECTORS OF GENUINE PARTS COMPANY FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 19, 1999
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 19, 1999 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.
(Continue and to be signed on reverse side)
FOLD AND DETACH HERE
<PAGE> 28
Please mark
your votes as
indicated in [X]
this example.
<TABLE>
<CAPTION>
FOR all WITHHOLD
nominees AUTHORITY
listed to to vote for
below all nominees
(except as listed
marked to below
the contrary
<S> <C> <C> <C> <C> <C> <C>
FOR AGAINST ABSTAIN
1. Election of the following four 2. Ratification of the Genuine Parts [ ] [ ] [ ]
nominees as Class I directors and one [ ] [ ] Company 1999 Long-Term Incentive
nominee as a Class III director of Plan.
Genuine Parts Company:
IF A VOTE IS NOT SPECIFIED, THE PROXIES
WILL VOTE "FOR" PROPOSAL 2.
IF A VOTE IS NOT SPECIFIED, THE PROXIES
WILL VOTE "FOR" PROPOSAL 1. 3. Ratification of the Genuine Parts [ ] [ ] [ ]
Company 1999 Annual Incentive Bonus
Nominees: Class I - Bradley Currey, Jr., Plan.
Robert P. Forrestal, Thomas C.
Gallagher and Lawrence G. IF A VOTE IS NOT SPECIFIED, THE PROXIES
Steiner, WILL VOTE "FOR" PROPOSAL 3.
Class III - Stephen R. Kendall
4. Ratification of the selection of [ ] [ ] [ ]
To withhold authority to vote for any individual nominee, Ernst & Young LLP as the Company's
write that nominee's name on the following line. independent auditors for the fiscal
year ending December 31, 1999.
IF A VOTE IS NOT SPECIFIED, THE PROXIES
WILL VOTE "FOR" PROPOSAL 4.
- ---------------------------------------------------------------------
SHARES:
PLEASE VOTE, SIGN, DATE AND RETURN THE
PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Signature(s)________________________________________Date:_________________, 1999
IMPORTANT: Please sign this Proxy exactly as your name or names appear above.
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.
</TABLE>
FOLD AND DETACH HERE
