<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] 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 Section 240.14a-11(c) or Section 240.14a-12
O'Reilly Automotive, Inc.
- --------------------------------------------------------------------------------
(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
O'REILLY AUTO PARTS
PROFESSIONAL PARTS PEOPLE
April 3, 1997
Dear Shareholder:
You are cordially invited to attend the 1997 Annual Meeting of Shareholders
of O'Reilly Automotive, Inc. to be held at the University Plaza Convention
Center, 333 John Q. Hammons Parkway, Springfield, Missouri on Tuesday, May 6,
1997 at 10:00 a.m.
Details of the business to be conducted at the Annual Meeting are given in
the attached Notice of Annual Meeting and Proxy Statement.
Whether or not you plan to attend in person, please complete, sign, date and
return the enclosed proxy card in the envelope provided at your earliest
convenience. If you choose to attend the meeting, you may, of course, revoke
your proxy and personally cast your vote.
In order to assist us in preparing for the Annual Meeting, please let us know
if you plan to attend by contacting Tricia Headley, our Assistant Corporate
Secretary, at 233 South Patterson, Springfield, Missouri 65802, (417) 862-3333
ext. 161.
We look forward to seeing you at the Annual Meeting.
David E. O'Reilly
President and Chief Executive Officer
<PAGE>
O'REILLY AUTOMOTIVE, INC.
233 South Patterson
Springfield, Missouri 65802
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Springfield, Missouri
April 3, 1997
The Annual Meeting of Shareholders of O'Reilly Automotive, Inc. (the
"Company"), will be held on Tuesday, May 6, 1997, at 10:00 a.m., local time, at
the University Plaza Convention Center, 333 John Q. Hammons Parkway,
Springfield, Missouri 65806, for the purposes of:
1. Electing two Class I Directors, to serve for three years;
2. Transacting such other business as may properly come before the meeting or
any adjournments thereof.
The Board of Directors has fixed the close of business on February 28, 1997 as
the record date for the determination of shareholders entitled to notice of and
to vote at the Annual Meeting. A list of all shareholders entitled to vote at
the Annual Meeting, arranged in alphabetical order and showing the address of
and number of shares held by each shareholder, will be open at the principal
office of the Company at 233 South Patterson, Springfield, Missouri 65802,
during usual business hours, to the examination of any shareholder for any
purpose germane to the Annual Meeting for 10 days prior to the date thereof. The
list will also be available for examination throughout the conduct of the
meeting.
A copy of the Company's Annual Shareholders' Report for fiscal 1996
accompanies this notice.
By Order of the Board of Directors
ANN DRENNAN
Secretary
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING, PLEASE MARK, SIGN,
DATE AND RETURN THE ACCOMPANYING PROXY PROMPTLY. A RETURN ADDRESSED ENVELOPE IS
ENCLOSED FOR YOUR CONVENIENCE.
<PAGE>
O'REILLY AUTOMOTIVE, INC.
233 South Patterson
Springfield, Missouri 65802
PROXY STATEMENT
SOLICITATION OF PROXIES
The enclosed proxy is solicited by the Board of Directors of O'Reilly
Automotive, Inc. (the "Company"), for use at the Annual Meeting of the
Company's shareholders to be held at the University Plaza Convention Center, 333
John Q. Hammons Parkway, Springfield, Missouri 65806, on Tuesday, May 6, 1997,
at 10:00 a.m., local time, and at any adjournments thereof. Whether or not you
expect to attend the meeting in person, please return your executed proxy in the
enclosed envelope and the shares represented thereby will be voted in accordance
with your wishes. This Proxy Statement and the accompanying proxy card are first
being mailed to shareholders on or about April 3, 1997.
REVOCABILITY OF PROXY
If, after sending in your proxy, you decide to vote in person or desire to
revoke your proxy for any other reason, you may do so by notifying the Secretary
of the Company in writing of such revocation at any time prior to the voting of
the proxy.
RECORD DATE
Shareholders of record at the close of business on February 28, 1997 will be
entitled to vote at the Annual Meeting.
ACTION TO BE TAKEN UNDER PROXY
All properly executed proxies received by the Board of Directors pursuant to
this solicitation will be voted in accordance with the shareholder's directions
specified in the proxy. If no such directions have been specified by marking the
appropriate squares in the accompanying proxy card, the shares will be voted by
the persons named in the enclosed proxy card as follows:
(1) FOR the election of Charles H. O'Reilly, Sr. and Charles H. O'Reilly, Jr.
named herein as nominees for Class I Directors of the Company to hold office
until the annual meeting of the Company's shareholders in 2000 and until their
successors have been duly elected and qualified; and
(2) according to their judgment on the transaction of such other business as
may properly come before the meeting or any adjournments thereof.
Neither of the two nominees have indicated that they would be unable or will
decline to serve as a Director. However, should either nominee become unable or
unwilling to serve for any reason, it is intended that the persons named in the
proxy will vote for the election of such other person in their stead as may be
designated by the Board of Directors. The Board of Directors is not aware of any
reason that might cause any nominee to be unavailable to serve as a Director.
<PAGE>
VOTING SECURITIES AND VOTING RIGHTS
On February 28, 1997, there were 10,474,778 shares of common stock, having a
par value of $.01 per share ("Common Stock"), outstanding, which constitute all
of the outstanding shares of the voting capital stock of the Company. Each share
of Common Stock is entitled to one vote on all matters to come before the Annual
Meeting, including the election of Directors.
A majority of the outstanding shares present or represented by proxy will
constitute a quorum at the meeting. The affirmative vote of a majority of the
votes of the shares present in person or represented by proxy at the Annual
Meeting and entitled to vote is required to elect each person nominated for
Director. Shares represented by proxies which are marked "WITHHOLD AUTHORITY"
with respect to the election of any person to serve on the Board of Directors
will be considered in determining whether the requisite number of affirmative
votes are cast on such matters. Accordingly, such proxies will have the same
effect as a vote against the nominee as to which such direction applies. With
regard to any other matter, except for the election of Directors, abstentions
(including proxies which deny discretionary authority on any matters properly
brought before the meeting) will be counted as shares present and entitled to
vote and will have the same effect as a vote against any such matter. Broker
non-votes will not be treated as shares represented at the meeting as to such
matter(s) not voted on and therefore will have no effect.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of February 28, 1997, the beneficial
ownership of each current Director (including the two nominees for Director),
each of the executive officers named in the Summary Compensation Table set forth
herein, the executive officers and Directors as a group, and each shareholder
known to management of the Company to own beneficially more than 5% of the
outstanding Common Stock. Unless otherwise indicated, the Company believes that
the beneficial owners set forth in the table have sole voting and investment
power.
<TABLE>
<CAPTION>
Amount and Nature of Percent
Name and Address Beneficial Ownership of Class
---------------- --------------------- --------
<S> <C> <C>
Charles H. "Chub" O'Reilly, Sr. (a)(b) 31,746 *
Charles H. O'Reilly, Jr. (a)(c) 889,009 8.5%
David E. O'Reilly (a)(d) 1,177,127 11.2%
Lawrence P. O'Reilly (a)(e) 1,142,984 10.9%
Rosalie O'Reilly Wooten (a)(f) 769,327 7.3%
Ted F. Wise (a)(g) 75,364 *
Paul R. Lederer (h) 14,000 *
Joe C. Greene (i) 11,100 *
All Directors and executive officers as
a group (9 persons) (j) 4,110,971 38.4%
Janus Capital Corporation (k) 1,157,025 11.1%
Wasatch Advisors, Inc. (l) 751,793 7.2%
Nicholas Company, Inc. (m) 546,000 5.2%
</TABLE>
- -----
* less than 1%
2
<PAGE>
(a) The address of Messrs. O'Reilly, Wise and Ms. Wooten is O'Reilly
Automotive, Inc., 233 S. Patterson, Springfield, Missouri 65802.
(b) The stated number of shares includes 741 shares held in the O'Reilly
Automotive Employee Stock Purchase Plan and 2,558 shares held in the
O'Reilly Employee Savings Plus Plan with Boatmen's Trust Company as trustee.
The stated number of shares also includes 5,000 shares subject to options
which are currently exercisable.
(c) The stated number of shares includes 343,305 shares controlled by Mr.
O'Reilly as trustee of a trust for the benefit of his children, 31,782
shares held by Mr. O'Reilly as custodian for his minor son, 108,109 shares
controlled by Mr. O'Reilly's wife pursuant to a voting trust, 35,000 shares
controlled by Mr. O'Reilly as a general partner of a family limited
partnership, 739 shares held in the O'Reilly Employee Savings Plus Plan with
Boatmen's Trust Company as trustee and 50,000 shares subject to options
currently exercisable.
(d) The stated number of shares includes 548,534 shares controlled by Mr.
O'Reilly as trustee under two trusts for the benefit of his children,
119,203 shares held by Mr. O'Reilly as custodian for two of his three minor
children, 83,465 shares controlled by Mr. O'Reilly's wife pursuant to a
voting trust, 763 shares held in the O'Reilly Employee Savings Plus Plan
with Boatmen's Trust Company as trustee and 50,000 shares subject to options
currently exercisable.
(e) The stated number of shares includes 557,392 shares controlled by Mr.
O'Reilly as trustee under a trust for the benefit of his children, 48,316
shares held by Mr. O'Reilly as custodian for his minor daughter, 131,447
shares controlled by Mr. O'Reilly's wife pursuant to a voting trust, 763
shares held in the O'Reilly Employee Savings Plus Plan with Boatmen's Trust
Company as trustee and 50,000 shares subject to options currently
exercisable.
(f) The stated number of shares includes 288,293 shares controlled by Ms. Wooten
as trustee of a trust for the benefit of her children, 135,230 shares held
by Ms. Wooten as custodian for her minor children, 89,047 shares controlled
by Ms. Wooten's husband as trustee for the benefit of Ms. Wooten's children
and their descendants, 451 shares held in the O'Reilly Employee Savings Plus
Plan with Boatmen's Trust Company as trustee and 20,000 shares subject to
options currently exercisable.
(g) Includes 29,774 shares held of record by a revocable trust of which Mr.
Wise, as the sole trustee, has sole voting and investing power, 590 shares
held in the O'Reilly Employee Savings Plus Plan with Boatmen's Trust Company
as trustee and 25,000 shares subject to options which are currently
exercisable. Also includes 20,000 shares held of record by a revocable trust
of which Mr. Wise's wife, as the sole trustee, has sole voting and
investment power.
(h) Includes 10,000 shares subject to currently exercisable options. Mr.
Lederer's mailing address is 717 Redwood, Glencoe, Illinois 60022.
(i) Includes 10,000 shares subject to currently exercisable options. Mr.
Greene's mailing address is 1340 East Woodhurst, Springfield, Missouri
65804.
(j) Includes options to purchase a total of 220,000 shares held by such
directors and executive officers which are currently exercisable.
3
<PAGE>
(k) As reflected on such beneficial owner's Schedule 13G dated as of December
31, 1996, provided to the Company in accordance with the Securities Exchange
Act of 1934, as amended. Janus Capital Corporation is a portfolio manager
which is deemed to be the beneficial owner of the 1,157,025 shares reported.
Thomas H. Bailey owns approximately 12.2% of Janus Capital Corporation. Such
ownership enables Mr. Bailey to exercise control over Janus Capital
Corporation. Janus Venture Fund, managed by Janus Capital Corporation,
reported shared voting and dispositive power of 742,500 shares. Such
beneficial owner's mailing address is believed to be 100 Fillmore Street,
Suite 300, Denver, Colorado 80206.
(l) As reflected on such beneficial owner's Schedule 13G dated as of December
31, 1996, provided to the Company in accordance with the Securities Exchange
Act of 1934, as amended. Such beneficial owner's mailing address is believed
to be 68 South Main Street, Suite 400, Salt Lake City, Utah 84101.
(m) As reflected on such beneficial owner's Schedule 13G dated as of December
31, 1996, provided to the Company in accordance with the Securities Exchange
Act of 1934, as amended. Such beneficial owner's mailing address is believed
to be 700 North Water Street, Milwaukee, Wisconsin 53202.
PROPOSAL 1--ELECTION OF CLASS I DIRECTORS
INFORMATION ABOUT THE NOMINEES AND DIRECTORS CONTINUING IN OFFICE
The Company's Amended and Restated By-laws currently provide for three classes
of Directors, each class serving for a three-year term expiring one year after
expiration of the term of the preceding class, so that the term of one class
will expire each year. The terms of the current Class II and Class III Directors
expire in 1998 and 1999, respectively. The Board of Directors has nominated
Charles H. O'Reilly, Sr. and Charles H. O'Reilly, Jr., who are the current Class
I Directors, for a term expiring at the annual shareholders meeting in 2000. The
following table lists the principal occupation for at least the last five years
of each of the nominees and the present directors continuing in office, his or
her present positions and offices with the Company, the year in which he or she
first was elected or appointed a director (each serving continuously since first
elected or appointed), his or her age and his or her directorships in any
company with a class of securities registered pursuant to Sections 12 or 15(d)
of the Securities Exchange Act of 1934 or in any company registered as an
investment company under the Investment Company Act of 1940. Charles H.
O'Reilly, Sr. is the father of Charles H. O'Reilly, Jr., Rosalie O'Reilly
Wooten, Lawrence P. O'Reilly and David E. O'Reilly.
4
<PAGE>
<TABLE>
<CAPTION>
Service as
Director
Name Age Principal Occupation Since
- ---- -- -------------------- ----------
<S> <C> <C> <C>
NOMINEES FOR DIRECTOR--CLASS I
(to be elected to serve a three-year term)
Charles H. O'Reilly, Sr. 84 Chairman Emeritus since March 1993 and a 1957
co-founder of the Company; Chairman of
the Board from 1975 to March 1993
Charles H. O'Reilly, Jr. 57 Chairman of the Board since March 1993; 1966
President and Chief Executive Officer of
the Company from 1975 to March 1993
DIRECTORS CONTINUING IN OFFICE--CLASS II
(terms expiring in 1998)
Rosalie O'Reilly Wooten 55 Executive Vice-President of the 1980
Company since 1980
Lawrence P. O'Reilly 50 President and Chief Operating Officer of 1969
the Company since March 1993;
Vice-President of the Company from 1975
to March 1993
Joe C. Greene 61 Attorney-At-Law and managing partner of 1993
the Springfield, Missouri firm of Greene
& Curtis, LLP; Mr. Greene has been
engaged in the private practice of law
for more than 30 years
DIRECTORS CONTINUING IN OFFICE--CLASS III
(terms expiring in 1999)
David E. O'Reilly 47 President and Chief Executive Officer of 1972
the Company since March 1993; Vice
President of the Company from 1975 to
March 1993
Paul R. Lederer 57 President and Chief Operating Officer, 1993
Fel-Pro, Inc., an automotive parts
manufacturer, from March 1995 to
present; Vice President--Chief Sales and
Marketing Officer, Fel-Pro, Inc. from
November 1994 to March 1995; independent
consultant to Stant, Inc., an automotive
parts manufacturer, in which he had
served as Executive Vice President from
October 1991 to December 1992 and to
Fel-Pro Inc.; Chairman and Chief
Executive Officer of Epicor Industries,
Inc., an automotive parts manufacturer,
from November 1989 to October 1991;
director of Trans-Pro, Inc., an
automotive parts manufacturer
</TABLE>
5
<PAGE>
INFORMATION CONCERNING BOARD OF DIRECTORS
During 1996, four meetings of the Board of Directors were held. During such
year, each Director attended 75% or more of the aggregate of (i) the total
number of meetings of the Board of Directors held during the period for which he
or she has been a Director and (ii) the total number of meetings held by all
committees of the Board of Directors on which he or she served during the period
for which he or she served, with the exception of Charles H. O'Reilly, Sr., who
attended 50% of the aggregate meetings.
The Board of Directors of the Company has a standing Audit Committee
consisting of Messrs. David E. O'Reilly, Lederer and Greene and a standing
Compensation Committee consisting of Messrs. Lederer and Greene. The purpose of
the Audit Committee is to review the results and scope of the audit and services
provided by the Company's independent public accountants. The purpose of the
Compensation Committee is to act on behalf of the Board of Directors with
respect to the establishment and administration of the policies which govern the
annual compensation of the Company's executive officers. The Compensation
Committee also administers the Company's stock option and other benefit plans.
During 1996, one Audit Committee meeting and one Compensation Committee meeting
were held.
The Company has no standing nominating committee or other committee performing
a similar function.
COMPENSATION OF DIRECTORS
The Company pays an annual fee of $10,000 to Directors who are not employees
of the Company. In addition, the Company pays non-employee Directors $500 for
each Board of Directors meeting or committee meeting attended. The Company also
reimburses Directors for out-of-pocket expenses incurred in connection with
their attendance at Board and committee meetings. Directors' fees of $24,000
were paid during 1996.
The Company also maintains a Directors' Stock Option Plan, providing for an
automatic annual grant (on the first business day following an annual
shareholders' meeting) to each director who is not an employee of the Company of
a non-qualified stock option to purchase 2,500 shares of Common Stock at a per
share exercise price equal to the fair market value of the Common Stock on the
date the option is granted. Director stock options expire immediately upon the
date in which the optionee ceases to be a director for any reason or seven
years, whichever first occurs. Each of the Company's two non-employee directors
were granted options in 1996 to purchase 2,500 shares of Common Stock under the
Company's Directors' Stock Option Plan at an exercise price of $36.38 per share.
COMPENSATION COMMITTEE INTERLOCKS
The Compensation Committee consists of Joe C. Greene and Paul R. Lederer.
Joe C. Greene, a Director of the Company, is the Managing Partner of the law
firm of Greene & Curtis, LLP, which has provided legal services to the Company
in prior years and is expected to provide legal services to the Company in the
future.
Paul R. Lederer, a Director of the Company, is President and Chief Executive
Officer of Fel-Pro, Inc.. Since mid 1993, Fel-Pro has been a vendor of products
to the Company. Net purchases from Fel-Pro were $3,035,000 in 1996.
6
<PAGE>
EXECUTIVE COMPENSATION
The following information is given for the fiscal years ended December 31,
1996, 1995, and 1994 concerning annual and long-term compensation for services
rendered to the Company and its subsidiaries for the Company's Chief Executive
Officer and each of the Company's four other most highly compensated executive
officers (other than the Chief Executive Officer) during 1996.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term Compensation
----------------------------------------
Awards Payouts
----------------------------------------
Securities
Annual Compensation Restricted Underlying All Other
Name and Stock Options/ LTIP Compensation
Principal Position Year Salary($)(a) Bonus($) Other($) Awards SARs($) Payouts($) ($)(b)
------------------ ---- ------------ --------- -------- ------ ------- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Charles H. O'Reilly, Jr. 1996 192,000 192,000 - - - - 7,641
Chairman of the Board 1995 186,400 186,400 - - - - 6,947
1994 220,000 220,000 - - 50,000 - 8,197
David E. O'Reilly 1996 240,000 240,000 - - - - 7,116
President and Chief 1995 233,000 233,000 - - - - 6,986
Executive Officer 1994 220,000 220,000 - - 50,000 - 8,749
Lawrence P. O'Reilly 1996 240,000 240,000 - - - - 7,344
President and Chief 1995 233,000 233,000 - - - - 6,986
Operating Officer 1994 220,000 220,000 - - 50,000 - 8,197
Rosalie O'Reilly Wooten 1996 149,000 31,000 - - - - 6,099
Executive Vice President 1995 145,000 30,000 - - - - 4,569
1994 145,000 15,000 - - 20,000 - 3,027
Ted F. Wise 1996 165,000 75,000 - - - - 6,700
Executive Vice President 1995 150,000 50,000 - - - - 5,639
1994 119,610 15,390 - - 20,000 - 5,150
</TABLE>
___
(a) Includes portion of salary deferred at named executive's election under the
Company's Profit Sharing and Savings Plan.
(b) "All Other Compensation" for the year ended December 31, 1996 includes (i)
Company contributions of $6,768, $6,741, $6,768 , $5,523 and $6,352 to its
Profit Sharing and Savings Plan made on behalf of David E. O'Reilly, Charles H.
O'Reilly, Jr., Lawrence P. O'Reilly, Rosalie O'Reilly Wooten and Ted F. Wise,
respectively, and (ii) the benefits inuring to David E. O'Reilly ($348), Charles
H. O'Reilly, Jr. ($900), Lawrence P. O'Reilly ($576), Rosalie O'Reilly Wooten
($576) and Ted F. Wise ($348) from the Company's payment of certain life
insurance premiums.
INFORMATION AS TO STOCK OPTIONS
The following table provides certain information as to options granted to the
persons named in the Summary Compensation Table.
7
<PAGE>
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-The-Money
Options/SARs Options/SARs
at FY-End at FY-End ($)(a)
Shares
Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($) Unexercisable Unexercisable
- ---- --------------- ------------ ------------- ----------------
<S> <C> <C> <C> <C>
Charles H. O'Reilly, Jr. 0 0 50,000/0 287,500/0
David E. O'Reilly 0 0 50,000/0 287,500/0
Lawrence P. O'Reilly 0 0 50,000/0 287,500/0
Rosalie O'Reilly Wooten 0 0 20,000/0 115,000/0
Ted F. Wise 0 0 25,000/0 181,250/0
</TABLE>
_____
(a) Represents the market value of the underlying Common Stock on December 31,
1996, less the aggregate exercise price
Employment Arrangements With Executive Officers
The Company entered into written employment agreements effective January 1,
1993, with David E. O'Reilly, Lawrence P. O'Reilly, Charles H. O'Reilly, Jr. and
Rosalie O'Reilly Wooten. Such agreements, which are in substantially identical
form, provide for each of the foregoing executive officers to be employed by the
Company for a minimum period of three years and automatically renew for each
calendar year thereafter. As compensation for services rendered to the Company,
the agreements provide for each executive officer to receive (i) a base annual
salary of $220,000 for David and Lawrence O'Reilly, $176,000 for Charles
O'Reilly, Jr. and $140,000 for Rosalie O'Reilly Wooten, adjusted annually for
increases in the cost of living as reflected by the Consumer Price Index for All
Urban Consumers as determined by the United States Department of Labor, Bureau
of Labor Statistics, and (ii) a bonus, the amount of which is determined by
reference to such criteria as may be established by the Compensation Committee.
See Summary Compensation Table on page seven.
An executive's employment may be terminated by the Company for cause (as
defined in the agreement) or without cause. If an executive's employment is
terminated for cause or if an executive resigns, such executive's salary and
bonus rights will cease on the date of such termination or resignation. If the
Company terminates an executive without cause, all compensation payments will
continue through the remainder of the agreement's term. Pursuant to his or her
respective agreement, each executive has agreed for so long as he or she is
receiving payments thereunder to refrain from disclosing information
confidential to the Company or engaging, directly or indirectly, in any
automotive parts distribution, manufacturing or sales business in the states of
Missouri, Arkansas, Kansas or Oklahoma, without the prior written consent of the
Company.
REPORT OF THE COMPENSATION COMMITTEE
General
The Compensation Committee of the Board of Directors is responsible for
recommending to the Board of Directors a compensation package and specific
compensation levels for the executive officers of the Company. Additionally, the
Compensation Committee establishes policies and guidelines for other benefit
programs and administers the award of stock options under the Company's 1993
Stock Option Plan. The Compensation Committee is composed of two independent,
non-employee members of the Board of Directors.
8
<PAGE>
Policy
The Compensation Committee's policy with respect to executive compensation is
to provide the executive officers of the Company with a total compensation
package which is competitive and equitable and which encourages and rewards
performance based in part upon the Company's performance in terms of increases
in share value. The key components of the Company's compensation package for its
executive officers are base salary, annual cash bonuses and long-term, stock-
based incentives.
Base Salary
The minimum annual base salary of each of Charles H. O'Reilly, Jr., David E.
O'Reilly, Lawrence P. O'Reilly and Rosalie O'Reilly Wooten is fixed under their
employment agreements with the Company, subject to increases by the Board of
Directors (after considering the recommendations of the Compensation Committee).
The base salary for each of these executive officers was established prior to
the Company's initial public offering in April 1993. The minimum annual base
salary, which was set by the Board of Directors (as then constituted) for
purposes of the employment agreements with each of the aforementioned executive
officers, represented the subjective judgment of the Board as to a fair minimum
compensation level, taking into account the then contemplated initial public
offering and the potential for additional cash compensation in the form of a
bonus for 1993. Any future recommendation by the Compensation Committee for
adjustments to the annual base salary of an executive officer will be for the
purposes of bringing them in line with base compensation then being paid by the
Company's competitors for executive management, based upon the Compensation
Committee's review of, among other things, compensation data for comparable
companies and positions, and, in the case of executive officers other than the
Chief Executive Officer, the Chairman of the Board or the Chief Operating
Officer, reflecting increased responsibilities. The Compensation Committee
believes that the Company's principal competitors for executive management are
not necessarily the same companies that would be included in a peer group
compiled for purposes of comparing shareholder returns. Consequently, the
companies that are reviewed for such compensation purposes may not be the same
as the companies comprising the Standard & Poor's Auto Parts-After Market Stock
Price Index included in this Proxy Statement. The base salaries of the
aforementioned executive officers were increased in 1996 to reflect increases in
the Consumer Price Index from 1995 to 1996.
Bonuses
Prior to its initial public offering, the Company had historically determined
the amount of cash bonuses to be paid to its executive officers on a subjective
basis, taking into account the financial results for the preceding year
generally (such as total sales, comparable store sales, operating income and
return on shareholders' equity) without giving any specific weight to any
specific factor. The Compensation Committee established a new bonus plan in
1993, basing the award of cash bonuses for the Chief Executive Officer, the
Chairman of the Board and the Chief Operating Officer of the Company upon
objective criteria. Under this bonus plan, the Chief Executive Officer, the
Chairman of the Board and the Chief Operating Officer of the Company each will
receive a bonus based upon a percentage of pre-tax earnings (with no minimum
level of pre-tax earnings required), exclusive of extraordinary items, earned by
the Company, subject to a maximum cash bonus equal to such executive officer's
base salary for the year in which such bonus is earned. The bonuses to be
awarded to all other officers of the Company are based upon each such officer's
contribution, responsibility and performance during the year, and are thus
subjective in nature. In formulating its recommendation for the bonuses of such
other officers of the Company, the Compensation Committee considers, among other
things, the evaluation of the Chief Executive Officer of the Company with regard
to the contribution, responsibility and performance of the officer in question
and his views on the appropriate compensation level of such executive officer.
9
<PAGE>
Long-Term Incentives
The only long-term incentive currently offered by the Company is stock option
awards. Stock options may be awarded to the Chief Executive Officer, the other
individual executive officers and upper and middle managers by the Board of
Directors, based upon, in the case of the Chief Executive Officer and other
individual executive officers, the recommendation of the Compensation Committee.
It is the stock option program which links reward to the achievement of long-
term corporate performance. In determining whether and how many options should
be granted, the Compensation Committee may consider the responsibilities and
seniority of each of the executive officers, as well as the financial
performance of the Company and such other factors as it deems appropriate,
consistent with the Company's compensation policies. However, the Compensation
Committee has not established specific target awards governing the receipt,
timing or size of option grants. Thus, determinations by the Compensation
Committee with respect to the granting of stock options are subjective in
nature.
CEO Compensation
The base salary of Mr. David E. O'Reilly, the Chief Executive Officer of the
Company, was established under his employment agreement dated January 1, 1993,
and the criterion to be achieved for his bonus was determined by the
Compensation Committee in February 1996, based upon a percentage of the pre-tax
earnings, exclusive of extraordinary items, earned by the Company in 1995. This
cash bonus, in an amount equal to his base salary for 1996, was paid to the
Chief Executive Officer in equal monthly installments during 1996. The cash
bonus to be paid to the Chief Executive Officer in 1997 will be based upon the
same percentage of pre-tax earnings, exclusive of extraordinary items, earned by
the Company in 1996, not to exceed the Chief Executive Officer's base salary for
1997. No stock options were granted to Mr. O'Reilly in 1996.
Respectfully submitted,
THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OF O'REILLY AUTOMOTIVE,
INC.
Paul R. Lederer, Chairman of the Compensation Committee
Joe C. Greene, Member of the Compensation Committee
TRANSACTIONS WITH INSIDERS AND OTHERS
Thirty of the Company's stores are operated under a written master lease with
O'Reilly Investment Company, a Missouri general partnership in which David E.
O'Reilly, Lawrence P. O'Reilly, Charles H. O'Reilly, Jr., the Company's Chief
Executive Officer, Chief Operating Officer and Chairman of the Board,
respectively, and their spouses are the general partners. Twenty-four of the
Company's stores are operated under a written master lease with O'Reilly Real
Estate Company, a Missouri general partnership, in which David E. O'Reilly,
Lawrence P. O'Reilly, Charles H. O'Reilly, Jr., Rosalie O'Reilly Wooten and
their spouses, are the general partners. The terms of such lease will expire on
December 31, 1998, subject to renewal at the option of the Company for an
additional period of up to six years. During 1996, the Company paid aggregate
rentals to O'Reilly Investment Company of $848,100 and to O'Reilly Real Estate
of $880,590.
10
<PAGE>
The Company believes that the terms and conditions of the transactions with
affiliates described above were no less favorable to the Company than those that
would have been available to the Company in comparable transactions with
unaffiliated parties.
COMPLIANCE WITH SECTION 162(m) OF THE INTERNAL REVENUE CODE
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to public companies for compensation of over $1
million paid to any one of the corporation's chief executive officer and four
other most highly compensated executive officers for any single fiscal year.
Qualifying performance-based compensation is not subject to such limitation if
certain requirements are met. Given the current compensation levels of the
Company's executive officers, the Compensation Committee has not as yet
determined whether or not to structure the performance-based portion of the
compensation of the Company's executive officers in a manner that meets the
requirements of Section 162(m).
PERFORMANCE GRAPH
Set forth below is a line graph comparing the annual percentage change in the
cumulative total shareholder return of a $100 investment on April 22, 1993 (the
date of the Company's initial public offering) in the Company's Common Stock
against the Standard & Poor's 500 Index and the Standard & Poor's Auto Parts -
After Market Stock Price Index, assuming reinvestment of all dividends.
<TABLE>
<CAPTION>
Measurement Period O'Reilly S & P S & P
(Fiscal Year Covered) Automotive, Inc. 500 Index Group Index
--------------------- ---------------- --------- -----------
<S> <C> <C> <C>
04/93 $100 $100 $100
12/93 151 108 111
12/94 129 110 97
12/95 151 151 120
12/96 166 185 135
</TABLE>
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's executive officers and Directors, and persons who own more than 10% of
a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Such individuals are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file. Based on the Company's review of
the copies of such forms furnished to it and written representations with
respect to the timely filing of all reports required to be filed, the Company
believes that such persons complied with all Section 16(a) filing requirements
applicable to them with respect to transactions during fiscal 1996 with the
exception of Charles H. O'Reilly, Jr. A Form 4 filed by Mr. O'Reilly in
connection with two November 1996 transactions was not filed in a timely manner.
11
<PAGE>
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The firm of Ernst & Young LLP served as the Company's independent auditors for
the year ended December 31, 1996. Representatives of Ernst & Young LLP are
expected to be present at the Annual Meeting to respond to appropriate questions
from shareholders, and such representatives will have the opportunity to make
statements if they so desire.
ANNUAL SHAREHOLDERS' REPORT
The Annual Shareholders' Report of the Company for fiscal 1996 containing,
among other things, audited consolidated financial statements of the Company,
accompanies this Proxy Statement.
FUTURE PROPOSALS OF SECURITY HOLDERS
All proposals of security holders intended to be presented at the 1998 annual
meeting of shareholders must be received by the Company not later than December
4, 1997, for inclusion in the Company's 1998 Proxy Statement and form of proxy
relating to such meeting.
OTHER BUSINESS
The Board of Directors knows of no business to be brought before the Annual
Meeting other than as set forth above. If other matters properly come before the
meeting, it is the intention of the persons named in the solicited proxy to vote
the proxy on such matters in accordance with their judgment as to the best
interests of the Company.
MISCELLANEOUS
The Company will pay the cost of soliciting proxies in the accompanying form.
In addition to solicitation by use of the mails, certain officers and regular
employees of the Company may solicit the return of proxies by telephone,
telegram or personal interview and may request brokerage houses and custodians,
nominees and fiduciaries to forward soliciting material to their principals and
will agree to reimburse them for their reasonable out-of-pocket expenses.
Shareholders are urged to mark, sign, date and send in their proxies without
delay.
A Copy Of The Company's Annual Report On Form 10-K For 1996 Filed With The
Securities And Exchange Commission (Excluding Exhibits) Is Available To
Shareholders Without Charge, Upon Written Request To The Secretary, O'Reilly
Automotive, Inc., 233 South Patterson, Springfield, Missouri 65802.
By Order of the Board of Directors
Ann Drennan
Secretary
Springfield, Missouri
April 3, 1997
12
<PAGE>
O'REILLY AUTO PARTS
PROFESSIONAL PARTS PEOPLE
April 3, 1997
Dear Shareholder:
Below is a proxy card to cast your vote for the election of Class I Directors.
Whether or not you plan to attend in person, please complete, sign, date and
return the card below in the envelope provided at your earliest convenience. If
you choose to attend the meeting, you may revoke your proxy and personally cast
your vote.
We hope to see you at the O'Reilly Automotive, Inc. Annual Meeting of
Shareholders. Thank you for your continued support of our Company.
Charles H. O'Reilly, Jr.
Chairman of the Board
D e t a c h H e r e
- --------------------------------------------------------------------------------
PROXY
O'REILLY AUTOMOTIVE, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
1997 ANNUAL SHAREHOLDERS' MEETING
The undersigned shareholder(s) of O'Reilly Automotive, Inc., a Missouri
corporation, hereby appoint(s) Charles H. O'Reilly, Jr. or, if he is unable or
unwilling to act, then David E. O'Reilly or, if he is unable or unwilling to
act, then Lawrence P. O'Reilly as proxies, each with full power to appoint his
substitute, and hereby authorize(s) such person serving as proxy to represent
and to vote, as designated below; all of the shares of voting stock of O'Reilly
Automotive, Inc. held of record by the undersigned on February 28, 1997, at the
Annual Meeting of Shareholders to be held on May 6, 1997 or any adjournments
thereof.
1. ELECTION OF DIRECTORS:
[_] FOR all nominees listed below
(except as marked to the contrary below)
[_] WITHHOLD AUTHORITY (to vote for all
listed below)
(INSTRUCTION: To withhold authority to vote for any individual nominee, strike a
line through the nominee's name in the list below. Failure to follow this
procedure to withhold authority to vote for any individual nominee will result
in the granting of authority to vote for the election of such nominee.)
CLASS I DIRECTORS (three-year term)
Charles H. O'Reilly, Sr.
Charles H. O'Reilly, Jr.
2. In his discretion, the proxy appointed hereunder is authorized to vote upon
such other business as may properly come before the meeting or any
adjournments thereof.
(Continued and to be signed on reverse side)
<PAGE>
O'REILLY AUTO PARTS
PROFESSIONAL PARTS PEOPLE
HIGHLIGHTS OF OUR 39TH YEAR
Net sales rose 28.7% to record $259.2 million
Net Income increased 34.6% to new high of $19.0 million,
or $1.82 per share
Record number of 31 stores opened
Same-store sales rose 14.4%
Remodeled or relocated 32 stores
200th store opened in June
Oklahoma City distribution center opened
D e t a c h H e r e
- --------------------------------------------------------------------------------
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED FOR PROPOSAL 1.
The undersigned hereby acknowledges receipt of copies of the Notice of Annual
Meeting of Shareholders, Proxy Statement and Annual Shareholders' Report of the
Company.
DATED:___________________________, 1997.
---------------------------------------
Signature
---------------------------------------
Signature if held jointly
Please sign exactly as name appears on
this Proxy Card. When shares
are held by joint tenants, both should
sign. When signing as attorney-in-
fact, executor, administrator, personal
representative, trustee, or guardian,
please give full title as such. If a
corporation, please sign in full corpo-
rate name by President or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
