<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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
Genuine Parts Company
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] 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 17, 2000
---------------------
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 17th day of April, 2000, at 10:00 a.m., for the following
purposes:
(1) To elect three Class II directors;
(2) To consider and vote upon a proposal to ratify the selection of
Ernst & Young LLP as independent auditors of the Company for the fiscal
year ending December 31, 2000; and
(3) To act upon such other matters as may properly come before the
meeting or any reconvened meeting following any adjournment thereof.
Only holders of record of Common Stock at the close of business on February
10, 2000 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
Vice President and Corporate Secretary
Atlanta, Georgia
March 1, 2000
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 17, 2000
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 17, 2000, 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, 2000.
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, 1999, is enclosed herewith.
At the close of business on the record date for the Annual Meeting, which
was February 10, 2000, the Company had outstanding and entitled to vote at the
Annual Meeting 176,801,292 shares of Common Stock.
Each shareholder is entitled to one vote on each proposal per share of
Common Stock held as of the record date. A quorum for the purposes of all
matters to be voted on shall consist of shareholders representing, in person or
by proxy, a majority of the outstanding shares of Common Stock entitled to vote
at the Annual Meeting.
The vote required for the election of directors and the selection of
independent auditors is a majority of the shares of Common Stock 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 the proposal for the selection of independent
auditors, abstentions and broker "non-votes" will be counted as present for
purposes of determining the existence of a quorum and as part of the 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 II expire on the date of this Annual
Meeting. The current directors in Class I and Class III will continue in office.
The shareholders are being asked to vote on the election of the three
nominees for director in Class II. The Class II nominees will serve for terms of
three years each and until their successors are duly elected and
<PAGE> 4
qualified or until their 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 three nominees whose names appear below. In the event that any nominee is
unable to serve (which is not anticipated), the persons designated as proxies
will cast votes for the election of the remaining nominees and for the election
of such other persons as they may select.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE ELECTION
OF ALL OF THE NOMINEES. PROXIES RECEIVED BY THE BOARD OF DIRECTORS WILL BE SO
VOTED UNLESS SHAREHOLDERS SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.
The following tables and information below set forth the name of each
nominee and each director continuing in office, their ages, principal
occupations and the year each of them first joined the Board. For information
concerning membership on committees of the Board of Directors, see "Other
Information about the Board and its Committees" below.
NOMINEES FOR DIRECTOR
CLASS II
FOR A THREE-YEAR TERM EXPIRING ON THE DATE OF THE 2003 ANNUAL MEETING
<TABLE>
<CAPTION>
YEAR FIRST
NAME AGE POSITION WITH THE COMPANY ELECTED DIRECTOR
- ---- --- ------------------------- ----------------
<S> <C> <C> <C>
Richard W. Courts, II 64 Director 1998
Larry L. Prince 61 Chairman of the Board, Chief 1979
Executive Officer and Director
James B. Williams 66 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. and RPC, Inc.
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
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 56 Director 1992
Stephen R. Kendall 56 Director 1998
J. Hicks Lanier 59 Director 1995
Alana S. Shepherd 69 Director 1993
</TABLE>
2
<PAGE> 5
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. 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.
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.
CLASS I
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. 69 Director 1990
Robert P. Forrestal 68 Director 1996
Thomas C. Gallagher 52 President, Chief Operating 1990
Officer and Director
Lawrence G. Steiner 61 Director 1972
</TABLE>
Mr. Currey is the retired Chairman of the Board of Directors of Rock-Tenn
Company, a manufacturer and distributor of paperboard and packaging products
located in Norcross, Georgia. He held the position of Chief Executive Officer
from 1989 to 1999 and the position of Chairman of the Board from 1993 to 1999.
Mr. Currey was President of Rock-Tenn Company from 1978 to 1995. Mr. Currey is a
director of Brown & Brown, Inc.
Mr. Forrestal is of counsel in the law firm of Smith, Gambrell & Russell in
Atlanta, Georgia, a position he has held since January 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., ING North
America Company and ING Advisory Council.
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 from 1988 through 1999. 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. Mr. Steiner has been President of Ameripride Services Inc. since 1979, 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.
OTHER INFORMATION ABOUT THE BOARD AND ITS COMMITTEES
During 1999, the Board of Directors held four meetings. All of the
directors attended at least 75% of the aggregate total number of meetings of the
Board of Directors and meetings of Committees of the Board on which they served.
The Board presently has three standing committees. Certain information regarding
the
3
<PAGE> 6
functions of the Board's committees, their present membership and the number of
meetings held by each committee during 1999 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 1999, this committee held
five meetings.
Audit Committee. The Audit Committee annually reviews and recommends
to the Board the firm to be engaged as independent auditors for the Company
for the next fiscal year, reviews with the independent auditors the plan
and results of the 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), Richard W. Courts, II,
Robert P. Forrestal, Alana S. Shepherd and Lawrence G. Steiner. During
1999, the Audit Committee held three 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 1988 Stock Option Plan, 1992
Stock Option and Incentive Plan, 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 1999, the Compensation and Stock Option Committee held
three meetings.
The Company's Board of Directors does not have a nominating committee.
Compensation of Directors. From January through September 1999,
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. From October through December 1999, directors
who were not full-time employees of the Company or its subsidiaries were
paid $7,500 per fiscal quarter plus $1,100 per meeting attended, except the
Chairmen of the Audit Committee and the Compensation and Stock Option
Committee who were paid $8,500 per fiscal quarter plus $1,100 per meeting
attended.
4
<PAGE> 7
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of February 10, 2000, 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(1) OF CLASS
-------------- ------------------- ------------ --------
<S> <C> <C> <C>
Common Stock, Capital Research and Management Company 13,160,800(2) 7.4%
$1.00 par value 333 South Hope Street
Los Angeles, California 90071
Common Stock, Dodge & Cox 9,235,819(3) 5.2%
$1.00 par value One Sansome St., 35th Floor
San Francisco, California 94104
Common Stock, Sanford C. Bernstein & Co., Inc. 12,994,565(4) 7.3%
$1.00 par value 767 Fifth Avenue
New York, New York 10153
Common Stock, SunTrust Banks, Inc., as parent holding 9,910,718(5) 5.6%
$1.00 par value company on behalf of certain
subsidiaries
303 Peachtree Street, Suite 1500
Atlanta, Georgia 30308
</TABLE>
- ---------------
(1) This information is based upon information included in (a) a Schedule 13G,
dated February 10, 2000, filed by Capital Research and Management Company,
(b) a Schedule 13G, dated February 14, 2000, filed by Dodge & Cox, (c) a
Schedule 13G, dated February 8, 2000, filed by Sanford C. Bernstein & Co.,
Inc. ("Sanford Bernstein"), and (d) a Schedule 13G, dated February 10, 2000,
filed by SunTrust Banks, Inc., as parent holding company of certain
subsidiaries.
(2) Capital Research and Management Company, a registered investment adviser, is
deemed to be the beneficial owner of the reported shares as a result of
acting as investment adviser to various registered investment companies.
Capital Research and Management Company disclaims beneficial ownership of
these shares.
(3) Dodge & Cox is a registered investment adviser. The reported shares are
beneficially owned by clients of Dodge & Cox, which client may include
registered investment companies and/or employee benefit plans, pension
funds, endowment funds or other institutional clients.
(4) Sanford Bernstein is a registered investment adviser. The reported shares
are held for the accounts of discretionary clients of Sanford Bernstein, who
have the right to receive dividends from and the proceeds of sale thereof.
(5) SunTrust Banks, Inc. is a parent holding company for a number of banking and
other subsidiaries. The reported shares are held by one or more such
subsidiaries in various fiduciary and agency capacities. SunTrust Banks,
Inc. and such subsidiaries disclaim beneficial interest in any of the
reported shares.
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 10, 2000:
<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, Robert J. Breci 1,209,011(3) *
$1.00 par value Richard W. Courts, II 297,640(4) *
Bradley Currey, Jr. 43,490(5) *
Jean Douville 4,135(6) *
Robert P. Forrestal 1,500(7) *
Thomas C. Gallagher 1,491,407(8) *
George W. Kalafut 2,057,828(9) 1.2%
Stephen R. Kendall 945,483(10) *
J. Hicks Lanier 40,881(11) *
Robert E. McKenna 59,058(12) *
Larry L. Prince 715,010(13) *
Alana S. Shepherd 2,386 *
Lawrence G. Steiner 8,020(14) *
James B. Williams 34,017(15) *
Directors, Nominees and 4,824,613(16) 2.7%
Executive Officers as a Group
</TABLE>
- ---------------
* Less than 1%.
(1) Information relating to the beneficial ownership of Common Stock by
directors, nominees for director and Named Executive Officers is based upon
information furnished by each such individual using "beneficial ownership"
concepts set forth in rules promulgated by the Securities and Exchange
Commission under Section 13(d) of the Securities Exchange Act of 1934.
Except as indicated in other footnotes to this table, directors, nominees
and Named Executive Officers possessed sole voting and investment power
with respect to all shares set forth by their names. The table includes, in
some instances, shares in which members of a director's, nominee's or
executive officer's immediate family have a beneficial interest, and as to
which such shares the director, nominee or executive officer disclaims
beneficial ownership.
(2) Unless indicated in the table, the number of shares included in the table
as beneficially owned by a director, nominee or Named Executive Officer
does not exceed one percent of the outstanding Common Stock of the Company.
(3) Includes 54,847 shares subject to stock options exercisable currently or
within 60 days. Also includes 1,088,532 shares held in a benefit fund for
Company employees, of which Mr. Breci is one of four trustees. Mr. Breci
disclaims beneficial ownership as to all such shares held in trust.
(4) Includes 1,350 shares held by a profit-sharing trust for which Mr. Courts
is sole trustee and 296,065 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).
(5) Includes 3,490 shares of Common Stock equivalents held in Mr. Currey's
stock account under the Directors' Deferred Compensation Plan. See
"Compensation Pursuant to Plans."
(6) Includes 1,885 shares of Common Stock equivalents held in Mr. Douville's
stock account under the Directors' Deferred Compensation Plan. See
"Compensation Pursuant to Plans."
(7) All 1,500 shares are owned jointly by Mr. Forrestal and his wife.
6
<PAGE> 9
(8) Includes 248,029 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.
(9) Includes 69,486 shares subject to stock 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
870,369 shares held in trust for the Company's Pension Plan, of which Mr.
Kalafut is one of three trustees. Including the shares held in such trusts,
Mr. Kalafut's beneficial ownership was 1.2% of the Common Stock outstanding
on February 10, 2000. Mr. Kalafut disclaims beneficial ownership as to all
such shares held in both trusts.
(10) 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 47,500 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 160,744
shares held in the EIS, Inc. Employee Stock Ownership Plan.
(11) 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. Foundation, 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 has sole 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.
(12) Includes 12,292 shares subject to stock options exercisable currently or
within 60 days.
(13) Includes 380,580 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 4,018 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 1,072,454 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, 1992 Stock
Option and Incentive Plan and 1999 Long-Term Incentive Plan, 137,611 shares
contingently issuable pursuant to an acquisition agreement, 1,088,532
shares held in a benefit fund for Company employees, 870,369 shares held in
trust for the Company's Pension Plan, and 9,393 shares held as Common Stock
equivalents under the Directors' Deferred Compensation Plan. The individual
totals 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, 1999, 1998 and 1997, of (i) the Chief Executive Officer as
of December 31, 1999, and (ii) the other four most highly compensated executive
officers of the Company as of December 31, 1999 (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)
- --------------------------- ---- ------- ------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Larry L. Prince 1999 620,000 952,468 527,345(2) 175,000 2,000
Chairman of the Board, 1998 590,000 788,535 552,150(2) -- 2,000
Chief Executive Officer 1997 540,000 658,800 504,375(2) 150,000 1,900
and Director
Thomas C. Gallagher 1999 450,000 652,432 263,672(2) 125,000 2,000
President, Chief Operating 1998 425,000 542,300 276,075(2) -- 2,000
Officer and Director 1997 390,000 452,400 252,188(2) 125,000 1,900
George W. Kalafut 1999 250,000 357,500 -- 30,000 2,000
Executive Vice President 1998 240,000 293,040 -- -- 2,000
1997 225,000 249,750 -- 25,000 1,900
Robert J. Breci 1999 281,000 321,464 -- 30,000 2,000
Executive Vice President 1998 270,000 261,360 -- -- 2,000
1997 248,000 205,840 -- 25,000 1,900
Robert E. McKenna 1999 300,000 216,769 -- 30,000 2,000
President -- U.S. Automotive 1998 250,000 102,500 -- -- 2,000
Parts Group 1997 225,000 45,000 -- 20,000 1,900
</TABLE>
- ---------------
(1) For 1999, 1998 and 1997, 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")).
(2) On March 31, 1994, the Company entered into separate Restricted Stock
Agreements (the "1994 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 achieved certain annual
targets for earnings per share and price per share. The 1994 Agreements
expired in 1999. On February 25, 1999, the Company entered into
substantially similar Restricted Stock Agreements (the "1999 Agreements")
with Mr. Prince and Mr. Gallagher for the grant 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) upon the attainment of specified annual
earnings per share and price per share targets. In each case, once such
awards of restricted stock are granted, dividends on such restricted shares
will be paid to the grantee. Restricted shares granted under the 1994
Agreements will vest on March 31, 2004, and restricted shares granted under
the 1999 Agreements will vest on February 25, 2009, provided that the
grantee remains employed by the Company until those dates (unless the
grantee is terminated prior to such dates 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 the 1994
or 1999 Agreements). For 1997, 1998 and 1999, the amounts specified in
"Restricted Stock Awards" reflect grants under the 1994 and 1999 Agreements
made on (and valued as of) February 13, 1997, May 12, 1997, March 20, 1998,
and July 7, 1999, respectively, in connection with the Company's achievement
of the earnings per share target for 1996 under the 1994
8
<PAGE> 11
Agreements, the second and third price per share targets under the 1994
Agreements, and the first price per share target under the 1999 Agreements.
The value of all restricted stock held by Mr. Prince and Mr. Gallagher as of
December 31, 1999 was $2,456,438 and $1,228,219, respectively (such value is
calculated by multiplying the number of restricted stock shares held by
$24.8125, which was the closing price of the Company's Common Stock on
December 31, 1999).
OPTION GRANTS IN FISCAL YEAR 1999
The following table contains information about option awards made to the
Named Executive Officers on April 19, 1999 under the 1992 Stock Option and
Incentive Plan and 1999 Long-Term Incentive Plan. See "Compensation and Stock
Option Committee Report on Executive Compensation" below.
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS EMPLOYEES IN BASE PRICE PRESENT VALUE
NAME GRANTED(#) FISCAL YEAR ($/SHARE) EXPIRATION DATE ($)(1)
---- ----------- ------------ ----------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Larry L. Prince 175,000(2) 8.5% 32.4375 April 19, 2009 841,750
Thomas C. Gallagher 125,000(2) 6.1% 32.4375 April 19, 2009 601,250
George W. Kalafut 30,000(2) 1.5% 32.0938 April 19, 2009 142,800
Robert J. Breci 30,000(2) 1.5% 32.0938 April 19, 2009 142,800
Robert E. McKenna 30,000(2) 1.5% 32.4375 April 19, 2009 144,300
</TABLE>
- ---------------
(1) Based on the Black-Scholes option pricing model for use in valuing executive
stock options. The Company does not advocate or necessarily agree that the
Black-Scholes model can properly determine the value of an option. The
actual value, if any, a Named Executive Officer may realize will depend on
the excess of the stock price over the exercise price on the date the option
is exercised, so that there is no assurance the value realized by a Named
Executive Officer will be at or near the value estimated by the
Black-Scholes model. The value calculations for the options listed above are
based on the following assumptions: interest rate (based on the ask yield to
maturity on a U.S. Treasury strip with a maturity equal to the term of the
relevant option) of 5.83% for ten year options granted on April 19, 1999;
annual dividend yield of 3.5%, the average annual dividend yield on a share
of Common Stock during the past four fiscal quarters; volatility of 7.4%
based upon annualized standard deviation of monthly returns of the Common
Stock over the 99 months ending March 31, 1999; and a date of exercise no
sooner than the date first exercisable under the terms of the option, and no
later than the expiration date of the option.
(2) Nonqualified stock options which vest completely and may be exercised twelve
months after the date of the grant, but no later than the expiration date.
The exercise price for each nonqualified stock option is the fair market
value on the date granted. These options may be exercised no later than the
expiration date and accelerated by the Compensation and Stock Option
Committee upon certain "changes in control" of the Company as defined in the
Company's 1992 Stock Option and Incentive Plan and 1999 Long-Term Incentive
Plan.
9
<PAGE> 12
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1999
AND FISCAL YEAR-END OPTION VALUES
Shown below is information with respect to options exercised by the Named
Executive Officers during 1999 and the unexercised options to purchase the
Company's Common Stock granted in prior years under the 1988 Stock Option Plan,
the 1992 Stock Option and Incentive Plan and the 1999 Long-Term Incentive Plan
to the Named Executive Officers and held by them as of December 31, 1999.
<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 23,758 438,288 380,580 189,370 255,037 57,781
Thomas C. Gallagher -- -- 248,029 138,521 145,497 36,858
George W. Kalafut 4,000 49,620 69,486 47,364 76,040 32,259
Robert J. Breci 9,894 140,475 54,847 47,427 41,545 34,174
Robert E. McKenna 7,500 40,937 12,292 48,958 -- --
</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, 1999 ($24.8125 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 1999 Annual Meeting of shareholders, is
designed to qualify as "performance-based" and therefore to be fully deductible
by the Company. In addition, the 1999 Long-Term Incentive Plan permits 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.
10
<PAGE> 13
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 17 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 48% 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 57% of total annual compensation, depending upon the
extent and direction of such fluctuations.
Each fiscal year, including 1999, 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) return on average
investment or assets targets (the "Average Investment Goals").
The Company's Goals are determined by aggregating all of the Profit, Sales
and Average Investment Goals established at the lower levels of the Company and
its subsidiaries (the "base goals"). Each base goal is set based upon (i) the
prior year's performance by a particular jobbing store, branch or distribution
center, (ii) the overall economic outlook of the region served by the particular
jobbing store, branch or distribution center setting the base goal, and (iii)
specific market opportunities. The formulation of the base goals is influenced
to a degree by the Company's management which often attempts to set the tone and
emphasis of base goals based on its interpretations of the above factors.
Once the base goals have been compiled into the Company's Goals, the
Committee reviews and ratifies their content, then sets the annual bonus
schedule for the Company's Named Executive Officers based upon the Company's
Goals. The annual bonuses for certain other executive officers of the Company
are based on the aggregate base goals for the division or divisions of the
Company for which they are responsible.
For fiscal year 1999, Larry L. Prince, the Company's Chief Executive
Officer, earned a bonus equal to 61% of his total annual compensation. The
annual bonus awarded in connection with the Profit Goal, Sales Goal and Average
Investment Goal constituted 90%, 5% and 5%, respectively, of Mr. Prince's 1999
bonus.
Stock Options and Restricted Stock
During 1999, the Committee provided long term compensation to the Company's
executive officers in the form of stock options under the 1992 Stock Option and
Incentive Plan (the "1992 Plan") and the 1999 Long-
11
<PAGE> 14
Term Incentive Plan (the "1999 Plan"). The Committee believes that stock option
grants are an effective way for the Company to align the interests of the
Company's executives with its shareholders.
In granting such stock options, the Committee considered (i) the
recipient's level of responsibility; (ii) the recipient's specific function
within the Company's overall organization; (iii) the profitability of the
Company (for top executive officers such as the Chief Executive Officer), or
other subdivision of the Company, as is appropriate in connection with the
recipient's position(s); (iv) the number of options granted to executive
officers by the other companies that are included in the Peer Indices; and (v)
the amount of options currently held by the executive officer. The Committee's
review of the foregoing factors was subjective and the Committee assigned no
fixed value or weight to any of the factors when making its decisions regarding
stock option grants. In 1999, the Committee granted options to purchase an
aggregate of 2,043,000 shares of Common Stock at fair market value on the date
of grant to 283 key employees, including each of the Named Executive Officers.
The grants ranged in size from 2,000 to 175,000 shares, with Larry L. Prince,
the Company's Chief Executive Officer, receiving the largest such grant.
During 1999 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 1999 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 1999 to 2003 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 first Stock
Price Goal in 1999 and, therefore, awarded 15,000 shares of restricted stock to
Mr. Prince and 7,500 to Mr. Gallagher in 1999.
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 1999
J. Hicks Lanier (Chairman)
Bradley Currey, Jr.
James B. Williams
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following non-employee directors served on the Compensation and Stock
Option Committee during 1999: Bradley Currey, Jr., J. Hicks Lanier and James B.
Williams. 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, 1999, the Company had outstanding
indebtedness to SunTrust Bank of approximately $357 million.
12
<PAGE> 15
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, 1999,
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 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 1999, 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
1999) or such other dollar
13
<PAGE> 16
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 -- 41
years; Thomas C. Gallagher -- 29 years; George W. Kalafut -- 16 years; Robert J.
Breci -- 37 years; and Robert E. McKenna -- 30 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%.
1992 STOCK OPTION AND INCENTIVE PLAN AND 1999 LONG-TERM INCENTIVE PLAN
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 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 Company's 1999 Long-Term Incentive Plan (the "1999 Plan") was approved
by the shareholders at the 1999 Annual Meeting held on April 19, 1999. The 1999
Plan provides for the granting of a variety of incentive awards to employees,
officers and directors of the Company and its subsidiaries, including stock
options, restricted stock, performance units and other stock-based awards or
interests relating to stock or cash. The purpose of the 1999 Plan is to promote
the success of the Company by linking the personal interests of such employees,
officers and directors to those of the shareholders, and by providing
participants with an incentive for outstanding performance. Awards under the
1999 Plan may be granted on such terms as the Compensation Committee may
approve. For example, vesting of awards may be based on a period of continuous
employment, or contingent upon the attainment of certain business objectives or
other quantitative or qualitative criteria. There are 9,000,000 shares reserved
for issuance under the 1999 Plan.
14
<PAGE> 17
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"). 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
1999 bonuses (to be received during 2000). 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.
15
<PAGE> 18
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),
the Company entered into identical agreements ("Severance Pay Agreements") with
certain executive officers, including Larry L. Prince, Thomas C. Gallagher,
George W. Kalafut and Robert J. Breci. 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.
16
<PAGE> 19
PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return ("shareholder return") on the Company's
Common Stock against the shareholder return of the S&P's 500 Stock Index and a
Peer Group Composite Index (structured by the Company as set forth below) for
the five year period commencing December 31, 1994 and ended December 31, 1999.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
GENUINE PARTS COMPANY, S&P 500 INDEX & PEER GROUP COMPOSITE INDEX**
PERFORMANCE CHART
<TABLE>
<CAPTION>
GENUINE PARTS COMPANY S&P 500 PEER INDEX
--------------------- ------- ----------
<S> <C> <C> <C>
1994 100.00 100.00 100.00
1995 117.55 137.58 177.59
1996 131.51 169.17 165.41
1997 154.92 225.61 279.24
1998 157.26 290.09 262.35
1999 120.88 351.13 244.02
</TABLE>
Assumes $100 invested on December 31, 1994 in Genuine Parts Company Common
Stock, S&P's 500 Stock Index (the Company is a member of the S&P 500 and its
individual shareholder return went into calculating the S&P 500 results set
forth in this performance graph), and a Peer Group Composite Index constructed
by the Company as set forth below.
- ---------------
* Total return assumes reinvestment of dividends.
** Fiscal year ending December 31.
In constructing the Peer Group Composite Index ("Peer Index") for use in
the performance graph above, the Company used the shareholder returns of various
publicly held companies (weighted in accordance with each such company's stock
market capitalization at December 31, 1994 and including reinvestment of
dividends) that compete with the Company in four industry segments: automotive
parts, industrial parts, office products and electrical/electronic materials
(each group of companies included in the Peer Index as competing with the
Company in a separate industry segment are hereinafter referred to as a "Peer
Group"). Included in the automotive parts Peer Group are those companies making
up the Dow Jones Automotive Parts & Equipment Industry Group (the Company is a
member of such industry group and its individual shareholder return was included
when calculating the Peer Index results set forth in this performance graph).
Included in the industrial parts Peer Group are Applied Industrial Technologies,
Inc. (formerly Bearings, Inc.) and Kaman Corporation, and included in the office
products Peer Group is United Stationers Inc. The
17
<PAGE> 20
Peer Index for 1998 and 1999 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 and 1999 is Avnet, Inc. (formerly Marshall Industries).
In determining the Peer Index, each Peer Group for each industry segment
was weighted to reflect the Company's annual net sales in each industry segment.
Each industry segment of the Company comprised the following percentages of the
Company's net sales for the fiscal years shown:
<TABLE>
<CAPTION>
INDUSTRY SEGMENT 1995 1996 1997 1998 1999
---------------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Automotive Parts 53.29% 52.58% 51.14% 49.33% 51.18%
Industrial Parts 28.69% 29.34% 30.86% 30.37% 27.01%
Office Products 18.02% 18.08% 18.00% 16.97% 15.26%
Electrical/Electronic Materials -- -- -- 3.33% 6.55%
</TABLE>
2. RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected Ernst & Young LLP as auditors for the
Company for the current fiscal year ending December 31, 2000, subject to
ratification by the shareholders. Ernst & Young LLP served as independent
auditors for the Company for the fiscal year ended December 31, 1999, 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.
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, 2000. 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, 1999, the Company had outstanding indebtedness to
SunTrust Bank of approximately $357 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 1999, 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, 1999, all
Section 16(a) filing requirements applicable to directors, executive officers
and greater than ten percent beneficial owners were complied with by such
persons.
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<PAGE> 21
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 2001 Annual Meeting of Shareholders of the Company must be
received by the Company at its principal executive offices on or before November
1, 2000, in order to be included in the Company's proxy statement and form of
proxy relating to the 2001 Annual Meeting of Shareholders. In addition, any
shareholder proposal that is not submitted for inclusion in the proxy statement
and form of proxy relating to the 2001 Annual Meeting of Shareholders, but is
instead sought to be presented directly to the shareholders at the 2001 Annual
Meeting, management will be able to vote proxies in its discretion if the
Company either (i) receives notice of the proposal before the close of business
on January 16, 2001 and advises shareholders in the proxy statement for the 2001
Annual Meeting about the nature of the proposal and how management intends to
vote on the proposal, or (ii) does not receive notice of the proposal before the
close of business on January 16, 2001.
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<PAGE> 22
(GPC & NAPA LOGOS)
<PAGE> 23
PROXY
GENUINE PARTS COMPANY
PROXY SOLICITED BY THE BOARD OF DIRECTORS OF GENUINE PARTS COMPANY FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 17, 2000
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 17, 2000 and at any reconvened Meeting
following any adjournment thereof. Said proxies will vote on the proposals set
forth in the Notice of Annual Meeting and Proxy Statement as specified on this
card, and are authorized to vote in their discretion as to any other matters
that may properly come before the meeting.
(Continued and to be signed on reverse side)
FOLD AND DETACH HERE
<PAGE> 24
Please mark
your votes as / /
indicated in
this example.
1. Election of the following three nominees as Class II directors of Genuine
Parts Company:
FOR all nominees WITHHOLD
listed below AUTHORITY
(except as marked to to vote for all nominees
the contrary) listed below
/ / / /
IF A VOTE IS NOT SPECIFIED, THE PROXIES WILL VOTE "FOR" PROPOSAL 1.
Nominees: Class II - Richard W. Courts, II, Larry L. Prince and James B.
Williams
To withhold authority to vote for any individual nominee, write that nominee's
name on the following line.
_______________________________________
2. Ratification of the selection of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending December 31, 2000.
FOR AGAINST ABSTAIN
/ / / / / /
IF A VOTE IS NOT SPECIFIED, THE PROXIES WILL VOTE "FOR" PROPOSAL 2.
SHARES:
PLEASE VOTE, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Signature(s)_______________________________________ Date: ____________, 2000
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.
FOLD AND DETACH HERE
