<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:
-------------------------------------------------------------------
[_] 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, 1998
Dear Shareholder:
You are cordially invited to attend the 1998 Annual Meeting of Shareholders
of O'Reilly Automotive, Inc. to be held at the University Plaza Convention
Center, Arizona Room, 333 John Q. Hammons Parkway, Springfield, Missouri on
Tuesday, May 5, 1998, 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.
In addition to the specific matters to be acted upon, there will be a
report on the progress of the Company and an opportunity for questions of
general interest to the shareholders.
It is important that your shares be represented at the meeting. 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 attend the meeting, you may vote your shares in person even though you have
previously signed and returned your proxy.
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 Corporate
Secretary, at 233 South Patterson, Springfield, Missouri 65802, (417) 862-2674
ext. 1161.
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
To be held on May 5, 1998
Springfield, Missouri
April 3, 1998
To the Shareholders
of O'Reilly Automotive, Inc.:
The Annual Meeting of Shareholders of O'Reilly Automotive, Inc. (the "Company"),
will be held on Tuesday, May 5, 1998, at 10:00 a.m., local time, at the
University Plaza Convention Center, 333 John Q. Hammons Parkway, Springfield,
Missouri 65806, for the following purposes:
(1) To elect three Class II Directors to the Company's Board of
Directors, to serve for three years;
(2) To consider and vote upon a proposal to amend the Company's 1993
Stock Option Plan;
(3) To consider and vote upon a proposal to amend the Company's
Directors' Stock Option Plan; and
(4) 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 27,
1998, as the record date for the determination of shareholders entitled to
notice of and to vote at the Annual Meeting and any adjournments or
postponements. 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 year 1997
accompanies this notice.
By Order of the Board of Directors
TRICIA HEADLEY
Secretary
- --------------------------------------------------------------------------------
IMPORTANT
Whether or not you intend to be present at the meeting, please mark, sign, date
and return the accompanying proxy promptly. An addressed, postage-paid return
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 5, 1998, 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, 1998.
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 27, 1998 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 Rosalie O'Reilly Wooten, Lawrence P. O'Reilly and
Joe C. Greene named herein as nominees for Class II Directors of the Company to
hold office until the annual meeting of the Company's shareholders in 2001 and
until their successors have been duly elected and qualified;
(2) FOR approval of the Board of Directors' adoption of the amendment to
the Company's 1993 Stock Option Plan to increase the number of shares covered
thereunder from 2,000,000 to 3,000,000;
(3) FOR approval of the Board of Directors' adoption of the amendment to
the Company's Directors' Stock Option Plan to increase the number of shares
covered thereunder from 100,000 to 150,000; and
(4) According to their judgment on the transaction of such other business
as may properly come before the meeting or any postponements or adjournments
thereof.
Neither of the three nominees have indicated that they would be unable or
will decline to serve as a Director. However, should any 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 27, 1998, there were 21,149,429 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 27, 1998, the beneficial
ownership of each current Director (including the three 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) 46,535 *
Charles H. O'Reilly, Jr. (a) (c) 1,690,455 7.8%
David E. O'Reilly (a) (d) 1,858,633 8.6
Lawrence P. O'Reilly (a) (e) 2,298,638 10.6
Rosalie O'Reilly Wooten (a) (f) 1,458,170 6.7
Ted F. Wise (a) (g) 160,981 *
Jay Burchfield (h) 7,000 *
Joe C. Greene (i) 22,200 *
All Directors and executive officers 7,578,603 34.9
as a group (9 persons) (j)
The Northwestern Mutual Life
Insurance Company (k) 1,162,900 5.4
Wasatch Advisors, Inc. (l) 1,409,977 6.5
Nicholas Company, Inc. (m) 1,135,000 5.2
- -----
* less than 1%
</TABLE>
(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 1,725 shares held in the O'Reilly
Automotive Employee Stock Purchase Plan with ChaseMellon Shareholder
Services as trustee and 4,810 shares held in the O'Reilly Employee Savings
Plus Plan with Bankers Trust as trustee.
(c) The stated number of shares includes 656,610 shares controlled by Mr.
O'Reilly as trustee of a trust for the benefit of his children, 63,564
shares held by Mr. O'Reilly as trustee for his son, 203,418 shares
controlled by Mr. O'Reilly's wife pursuant to a voting trust, 60,000 shares
controlled by Mr. O'Reilly as a general partner of a family limited
partnership, 1,715 shares held in the O'Reilly Employee Savings Plus Plan
with Bankers Trust as trustee and 100,000 shares subject to options
currently exercisable.
Page 2
<PAGE>
(d) The stated number of shares includes 1,097,068 shares controlled by Mr.
O'Reilly as trustee under two trusts for the benefit of his children,
238,406 shares held by Mr. O'Reilly as custodian for two of his three
children, 880 shares held in the O'Reilly Employee Savings Plus Plan with
Bankers Trust as trustee and 140,000 shares subject to options currently
exercisable.
(e) The stated number of shares includes 1,114,784 shares controlled by Mr.
O'Reilly as trustee under a trust for the benefit of his children, 96,632
shares held by Mr. O'Reilly as custodian for his daughter, 256,954 shares
controlled by Mr. O'Reilly's wife pursuant to a voting trust, 1,760 shares
held in the O'Reilly Employee Savings Plus Plan with Bankers Trust as
trustee and 140,000 shares subject to options currently exercisable.
(f) The stated number of shares includes 496,586 shares controlled by Ms.
Wooten as trustee of a trust for the benefit of her children, 270,460
shares held by Ms. Wooten as custodian for her children, 177,394 shares
controlled by Ms. Wooten's husband as trustee for the benefit of Ms.
Wooten's children and their descendants, 1,118 shares held in the O'Reilly
Employee Savings Plus Plan with Bankers Trust as trustee and 40,000 shares
subject to options currently exercisable.
(g) Includes 59,548 shares held of record by a revocable trust of which Mr.
Wise, as the sole trustee, has sole voting and investing power, 1,433
shares held in the O'Reilly Employee Savings Plus Plan with Bankers Trust
as trustee and 60,000 shares subject to options which are currently
exercisable. Also includes 40,000 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 5,000 shares subject to currently exercisable options. Mr.
Burchfield's mailing address is 1400 East Briar, Springfield, Missouri
65804.
(i) Includes 20,000 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 440,000 shares held by such
directors and executive officers which are currently exercisable.
(k) As reflected on such beneficial owner's Schedule 13G dated as of December
31, 1997, provided to the Company in accordance with the Securities
Exchange Act of 1934, as amended. The Northwestern Mutual Life Insurance
Company (TNMLIC) is an insurance company as defined in section 3(a)(19) of
the Act. Of the 1,162,900 shares beneficially owned: 517,400 shares are
owned by the Growth Stock Portfolio of Northwestern Mutual Series Fund,
Inc., a wholly owned subsidiary of TNMLIC and a registered investment
company; 121,800 shares are held in The Northwestern Mutual Life Insurance
Group Annuity Separate Account; 4,900 shares are owned by the Asset
Allocation Fund; 26,000 shares are owned by the Aggressive Growth Stock
Fund of Mason Street Funds, Inc., an affiliate of TNMLIC and a registered
investment company; and 33,000 shares are held by a custodian for the
benefit of MGIC Investment Corporation. TNMLIC reported sole voting and
dispositive power of 459,800 shares and shared voting and dispositive power
of 703,100 shares. Such beneficial owner's mailing address is believed to
be 720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202
(l) As reflected on such beneficial owner's Schedule 13G dated as of December
31, 1997, 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, 1997, 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.
Page 3
<PAGE>
PROPOSAL 1--ELECTION OF CLASS II 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 III and Class I
Directors expire in 1999 and 2000, respectively. The Board of Directors has
nominated Rosalie O'Reilly Wooten, Lawrence P. O'Reilly and Joe C. Greene, who
are the current Class II Directors, for a term expiring at the annual
shareholders meeting in 2001. 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.
INFORMATION CONCERNING BOARD OF DIRECTORS
During 1997, 5 meetings of the Board of Directors were held. During such
year, each Director attended 85% 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 40% of the aggregate meetings
The Board of Directors of the Company has a standing Audit Committee
consisting of Messrs. David E. O'Reilly, Jay D. Burchfield and Joe C. Greene and
a standing Compensation Committee consisting of Messrs. Burchfield and Greene.
Mr. Burchfield replaced Mr. Paul Lederer (resigned July 1, 1997) on both the
Audit Committee and the Compensation Committee effective August 20, 1997. 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 1997, 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.
Page 4
<PAGE>
<TABLE>
<CAPTION>
Served
As
Director
Name Age Principal Occupation Since
- ------------------------ ----- ----------------------------------- -------
DIRECTORS CONTINUING IN OFFICE--CLASS I
(TERMS EXPIRING IN 2000)
<S> <C> <C> <C>
Charles H. O'Reilly, Sr. 85 Chairman Emeritus since March 1993 1957
and a co-founder of the Company;
Chairman of the Board from 1975
to March 1993
Charles H. O'Reilly, Jr. 58 Chairman of the Board since 1966
March 1993; President and Chief
Executive Officer of the Company
from 1975 to March 1993
NOMINEES FOR DIRECTOR--CLASS II
(TO BE ELECTED TO SERVE A THREE-YEAR TERM)
Rosalie O'Reilly Wooten 56 Executive Vice-President of the 1980
Company since 1980
Lawrence P. O'Reilly 51 President and Chief Operating 1969
Officer of the Company since
March 1993; Vice-President of
the Company from 1975 to March 1993
Joe C. Greene 62 Attorney-At-Law and managing 1993
partner of 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 48 President and Chief Executive 1972
Officer of the Company since
March 1993; Vice President of
the Company from 1975 to March 1993
Jay Burchfield 52 Chairman of the Board and Director 1997
of City Bancorp in Springfield,
Missouri from January 1997 to
present; Chairman of the Board and
CEO of Boatmen's National Bank of
Oklahoma in Tulsa, Oklahoma from
January 1996 to January 1997;
Chairman, President and CEO of
Boatmen's Bank of Southern Missouri
in Springfield, Missouri from April 1987
to January 1996. Mr. Burchfield's
career has spanned more than 24 years
in the banking industry.
</TABLE>
Page 5
<PAGE>
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 $21,000 were paid during 1997.
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 5,000 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 on which the optionee ceases to be a director for any reason or seven
years after the date on which the option is granted, whichever first occurs.
Each of the Company's three non-employee directors were granted options in 1997
to purchase 5,000 shares of Common Stock under the Company's Directors' Stock
Option Plan at an exercise price of $18.56 per share (Messrs. Lederer and
Greene) and $20.88 per share (Burchfield).
COMPENSATION COMMITTEE INTERLOCKS
The Compensation Committee consists of Joe C. Greene and Jay Burchfield.
Paul Lederer served on the Compensation Committee until his resignation
effective July 1, 1997. Effective August 20, 1997, Mr. Burchfield filled the
vacancy left by Mr. Lederer and will serve as director through the remaining
term ending at the May 1999 Annual Shareholders meeting.
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.
Jay Burchfield, a Director of the Company since August 20, 1997, is the
Chairman of the Board of Directors of City Bancorp in Springfield, Missouri. Mr.
Burchfield's career has spanned 24 years, primarily in banking.
Paul R. Lederer, was a Director of the Company until his resignation in
July 1997. Mr. Lederer is President and Chief Executive Officer of Fel-Pro,
Inc.. Since mid 1993, Fel-Pro has been a vendor of products to the Company. The
Company's net purchases from Fel-Pro were $4,002,973 in 1997.
The terms of transactions with Fel-Pro and the legal services provided by
Mr. Greene are no less favorable to the Company than those that would have been
available to the Company in comparable transactions with unaffiliated parties.
Page 6
<PAGE>
EXECUTIVE COMPENSATION
The following information is given for the fiscal years ended December 31,
1997, 1996 and 1995 concerning annual and long-term compensation for services
rendered to the Company and its subsidiaries for the Company's Chief Executive
Officer and each of the Company's four other most highly compensated executive
officers (other than the Chief Executive Officer) during 1997.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term Compensation
---------------------------------------
Awards Payouts
--------------------------- ----------
Annual Compensation Securities All Other
Name and ------------------------------ Restricted Underlying LTIP Compensation
Principal Position Year Salary($)(a) Bonus($) Other($) Stock Awards Options(c)(#) Payouts($) ($)(b)
- ----------------------- ---- ------------ -------- -------- ------------ ------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Charles H. O'Reilly, Jr. 1997 199,000 199,000 - - 15,000 - 7,631
Chairman of the Board 1996 192,000 192,000 - - - - 7,641
1995 186,400 186,400 - - - - 6,947
David E. O'Reilly 1997 258,500 258,500 - - 70,000 - 7,079
President and Chief 1996 240,000 240,000 - - - - 7,116
Executive Officer 1995 233,000 233,000 - - - - 6,986
Lawrence P. O'Reilly 1997 258,500 258,500 - - 70,000 - 7,307
President and Chief 1996 240,000 240,000 - - - - 7,344
Operating Officer 1995 233,000 233,000 - - - - 6,986
Rosalie O'Reilly Wooten 1997 158,000 - - - 15,000 - 6,437
Executive Vice 1996 149,000 31,000 - - - - 6,099
President 1995 145,000 30,000 - - - - 4,569
Ted F. Wise 1997 173,000 85,000 - - 50,000 - 7,079
Executive Vice 1996 165,000 75,000 - - - - 6,700
President 1995 150,000 50,000 - - - - 5,639
- ---
</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, 1997 includes (i)
Company contributions of $6,731, $6,731, $6,731, $5,537 and $6,731 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
($900) and Ted F. Wise ($348) from the Company's payment of certain life
insurance premiums.
(c) See "Option Grants in Last Fiscal Year Table" and "Aggregated Option
Exercises in Last Fiscal Year and Fiscal Year Option Values" tables for
additional information with respect to these options.
Page 7
<PAGE>
INFORMATION AS TO STOCK OPTIONS
The following table provides certain information concerning grants of
options to purchase Common Stock made during the 1997 fiscal year to the named
executive officers. All stock options were granted pursuant to the Company's
1993 Stock Option Plan.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants Value at Assumed
- --------------------------------------------------------------------------- Annual Rates of
Number of % of Total Stock Price
Securities Options Appreciation For Grant
Underlying Granted to Exercise Option Term Date
Options Employees Price Per Expiration --------------------- Present
Name Granted in 1997 Share Date 5% ($) 10% ($) Value
- ------------------------ -------------- ---------- --------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles H. O'Reilly, Jr. 15,000 (2) 2.0% $24.500 12/01/07 $231,119 $ 585,700 $367,500
David E. O'Reilly 40,000 (1) 5.3% 16.500 02/05/02 182,346 402,937 660,000
David E. O'Reilly 30,000 (2) 4.0% 24.500 12/01/07 462,238 1,171,401 735,000
Lawrence P. O'Reilly 40,000 (1) 5.3% 16.500 02/05/02 182,346 402,937 660,000
Lawrence P. O'Reilly 30,000 (2) 4.0% 24.500 12/01/07 462,238 1,171,401 735,000
Rosalie O'Reilly Wooten 15,000 (2) 2.0% 24.500 12/01/07 231,119 585,700 367,500
Ted F. Wise 20,000 (1) 2.7% 16.313 02/26/02 90,151 199,209 326,300
Ted F. Wise 30,000 (2) 4.0% 24.500 12/01/07 462,238 1,171,401 735,000
- -------
</TABLE>
(1) Stock options become exercisable in full one year after the date of grant.
(2) Such options become exercisable with respect to 25% of the covered shares
one year from the date of grant which was December 1, 1997; 50% exercisable two
years from the date of grant; 75% exercisable three years from the date of grant
and the remainder become exercisable four years from the date of grant.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year Option Values
<TABLE>
<CAPTION>
Number of Number of Value of Unexercised
Securities Unexercised Options In-The-Money
Underlying at FY-End Options
Options Value Exercisable/ at FY-End ($)(1)
Name Exercised (#) Realized ($) Unexercisable Exercisable/Unexercisable
- ------------------------ ------------- ------------ ------------------- -------------------------
<S> <C> <C> <C> <C>
Charles H. O'Reilly, Jr. 0 0 100,000 / 15,000 1,312,500 / 26,250
David E. O'Reilly 0 0 100,000 / 70,000 1,312,500 / 442,500
Lawrence P. O'Reilly 0 0 100,000 / 70,000 1,312,500 / 442,500
Rosalie O'Reilly Wooten 0 0 40,000 / 15,000 525,000 / 26,250
Ted F. Wise 10,000 102,500 40,000 / 50,000 518,750 / 251,200
- -------
</TABLE>
(1) Represents the market value of the underlying Common Stock on December 31,
1997, less the aggregate exercise price
Page 8
<PAGE>
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 5.
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 in
which the Company operates without 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.
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 1997 to reflect increases in
the Consumer Price Index from 1996 to 1997, increases in responsibilities due to
the Company's growth and to align executive compensation with comparable
companies and positions.
Page 9
<PAGE>
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.
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 rewards 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 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 1997, based upon a percentage of the pre-tax
earnings, exclusive of extraordinary items, earned by the Company in 1996. This
cash bonus, in an amount equal to his base salary for 1997, was paid to the
Chief Executive Officer in equal monthly installments during 1997. The cash
bonus to be paid to the Chief Executive Officer in 1998 will be based upon the
same percentage of pre-tax earnings, exclusive of extraordinary items, earned by
the Company in 1997, not to exceed the Chief Executive Officer's base salary for
1998. Mr. O'Reilly was granted options to purchase 70,000 shares of common stock
in 1997.
Respectfully submitted,
THE COMPENSATION COMMITTEE OF
THE BOARD OF DIRECTORS OF O'REILLY AUTOMOTIVE, INC.
Jay Burchfield, Chairman of the Compensation Committee
Joe C. Greene, Member of the Compensation Committee
Page 10
<PAGE>
TRANSACTIONS WITH INSIDERS AND OTHERS
Thirty-three 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-six 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 1997, the Company paid aggregate
rentals to O'Reilly Investment Company of $968,400 and to O'Reilly Real Estate
of $1,022,760.
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 Nasdaq Stock Market Total Return Index and the Nasdaq Retail
Trade Stocks Total Return Index, assuming reinvestment of all dividends.
<TABLE>
<CAPTION>
Measurement
Period
(Fiscal Year O'Reilly Nasdaq Nasdaq
Covered) Automotive, Inc. Stock Market Retail Trade Stocks
- ---------------- ---------------- ------------ -------------------
<S> <C> <C> <C>
04/93 $100 $100 $100
12/93 166 117 118
12/94 141 115 107
12/95 166 162 118
12/96 183 200 141
12/97 300 245 166
</TABLE>
Page 11
<PAGE>
PROPOSAL 2 - AMENDMENT OF THE O'REILLY AUTOMOTIVE, INC.
1993 STOCK OPTION PLAN
General
On February 26, 1993, the Board of Directors adopted and the Company's
shareholders approved the O'Reilly Automotive, Inc. 1993 Stock Option Plan (the
"Plan"), which was designed to provide for the grant of incentive stock options
intended to qualify under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), or nonqualified stock options to certain key employees of
the Company and its subsidiaries. The aggregate number of shares of common
stock, par value $0.01 per share, of the Company (the "Stock") that could be
issued under the Plan was limited to 500,000 shares, subject to certain
adjustments. On February 28, 1995, the Board of Directors amended the Plan in
order to increase the number of shares of Stock available for issuance from
500,000 to 1,000,000 (the "1995 Plan Amendment"). On July 8, 1997, the Board of
Directors declared a two-for-one stock split to be effected in the form of a
100% stock dividend payable to all shareholders of record as of July 31, 1997.
The stock dividend was paid on August 31, 1997. Accordingly, all authorized,
issued and outstanding shares have been reclassified to reflect the retroactive
effect of the stock split; thus, the restated number of shares available for
issuance per the 1995 Plan Amendment is 2,000,000.
On February 5, 1998, the Board of Directors amended the plan in order to
increase the number of shares of Stock available for issuance from 2,000,000 to
3,000,000 (the "1998 Plan Amendment") and directed that the 1998 Plan Amendment
will become effective only if the holders of at least a majority of the issued
and outstanding shares of Stock present at the Annual Meeting in person or by
proxy vote for the approval of the 1998 Plan Amendment.
In addition to linking a portion of executive compensation to the
achievement of long-term corporate performance, the Plan is also designed to
provide a means whereby certain key employees of the Company may develop a sense
of proprietorship and personal involvement in the development and financial
success of the Company and its subsidiaries, to encourage them to remain with
and devote their best efforts to the business of the Company and its
subsidiaries, thereby advancing the interests of the Company and its
shareholders. Options to acquire 1,336,200 shares of Stock are currently
outstanding under the Plan, including options to purchase 170,000 shares to each
of David E. O'Reilly and Lawrence P. O'Reilly; options to purchase 115,000
shares to Charles H. O'Reilly, Jr.; options to purchase 90,000 shares to Ted F.
Wise; and options to purchase 55,000 shares to Rosalie O'Reilly Wooten, each at
an exercise price equal to the market value of the Stock on the date of grant.
(See Executive Compensation.) Because of the number of shares covered by options
previously granted, the Board of Directors believes that the 1998 Plan Amendment
will provide additional flexibility in granting options to the Company's key
employees in 1998 and beyond.
Page 12
<PAGE>
The Plan is administered by the Compensation Committee of the Board of
Directors of the Company (the "Committee"). The Plan authorizes the grant of
incentive stock options and nonqualified stock options to the key employees of
the company, including its officers. The Plan will expire on, and no options may
be granted thereunder after February 25, 2003, subject to the right of the Board
of Directors to terminate the Plan at any time prior thereto. The Board of
Directors may amend the Plan at any time; provided, however, that no change in
any option theretofore granted may be made that would impair the rights of the
optionee without the consent of such optionee.
An option enables the optionee to purchase shares of Stock at the option
price. The option price per share may not be less than the fair market value of
the Stock at the time the option is granted, provided that in the event of the
grant of an incentive stock option to an optionee who is or would be the
beneficial owner of more than 10% of the total combined voting power of all
classes of the Company's stock, the option price may not be less than 110% of
the fair market value of the Stock on the date of grant. To the extent that the
aggregate fair market value (determined at the date of grant) of stock with
respect to which incentive stock options are exercisable for the first time by
any individual during any calendar year exceeds $100,000, such options shall be
treated as nonqualified stock options. Otherwise, there are no limits on the
size of individual option grants under the Plan. In order to obtain the shares,
a participant must pay the full option price to the Company at the time of
exercise of the option. The purchase price may be paid in cash, or with the
consent of the Committee, Stock, including Stock acquired under the same option.
The Plan provides that stock options may be granted with terms of no more
than ten years from the date of grant, provided that with respect to the grant
of an incentive stock option to an optionee who is or would be the beneficial
owner of more than 10% of the total combined voting power of all classes of the
Company's stock, the term of such option may not exceed five years. Options will
survive for a limited period of time after the optionee's death, disability or
normal retirement from the Company. Any shares as to which an option expires,
lapses unexercised or is terminated or canceled shall continue to be available
for other options under the Plan.
Federal Income Tax Consequences
An optionee will not realize any income, nor will the Company be entitled
to a deduction, at the time an incentive stock option is granted. If an optionee
does not dispose of the shares acquired on the exercise of an incentive stock
option within one year after the transfer of such shares to him or within two
years from the date the incentive stock option was granted to him, for federal
income tax purposes: (a) the optionee will not recognize any income at the time
of exercise of his incentive stock option; (b) the amount by which the fair
market value (determined without regard to any restriction other than a
restriction which by its terms will never lapse) of the shares at the time of
exercise exceeds the exercise price is an item of tax preference subject to the
alternative minimum tax on individuals; and (c) the difference between the
incentive stock option price and the amount realized upon sale of the shares of
the optionee will be treated as long-term capital gain or loss. The Company will
not be entitled to a deduction upon the exercise of an incentive stock option.
Except in the case of a disposition following death of an optionee and certain
other limited exceptions, if the Stock acquired pursuant to an incentive stock
option is not held for the minimum periods described above, the excess of the
fair market value of the Stock at the time of exercise over the amount paid for
the Stock generally will be taxed as ordinary income to the optionee in the year
of disposition.
The Company is entitled to a deduction for federal income tax purposes at
the time and in the amount in which income is taxed to the optionee as ordinary
income by reason of the sale of Stock acquired upon exercise of any incentive
stock option.
An optionee will not realize any income at the time a nonqualified stock
option is granted, nor will the Company be entitled to a deduction at that time.
Upon exercise of a nonqualified stock option, the optionee will recognize
ordinary income (whether the nonqualified stock option is paid in cash or by the
surrender of previously owned Stock), in an amount equal to the difference
between the option price and the fair market value of the shares to which the
nonqualified stock option pertains. The Company will be entitled to a tax
deduction in an amount equal to the amount of ordinary income realized by the
optionee.
The last reported sale price of Stock on March 19, 1998, as reported on the
Nasdaq National Market System, was $28.25.
The Board of Directors recommends a vote "FOR" the approval of the 1998
Plan Amendment of the O'Reilly Automotive, Inc. 1993 Stock Option Plan, which is
Item 2 on the Proxy Card.
Page 13
<PAGE>
PROPOSAL 3 - AMENDMENT OF THE O'REILLY AUTOMOTIVE, INC.
DIRECTORS' STOCK OPTION PLAN
General
On February 23, 1993, the Board of Directors adopted and the Company's
shareholders approved the O'Reilly Automotive, Inc. Directors' Stock Option Plan
(the "Directors' Plan"), which was designed to provide for the grant of
nonqualified stock options under Section 83 of the Internal Revenue Code to
non-employee directors of the Company and its subsidiaries. The aggregate number
of shares of common stock, par value $0.01 per share, of the Company (the
"Stock") that could be issued under the Plan was limited to 50,000 shares,
subject to certain adjustments. On July 8, 1997, the Board of Directors declared
a two-for-one stock split to be effected in the form of a 100% stock dividend
payable to all shareholders of record as of July 31, 1997. The stock dividend
was paid on August 31, 1997. Accordingly, all authorized, issued and outstanding
shares have been reclassified to reflect the retroactive effect of the stock
split; thus, the restated number of shares available for issuance per the 1993
Directors' Plan Amendment is 100,000.
On February 5, 1998, the Board of Directors amended the plan in order to
increase the number of shares of Stock available for issuance from 100,000 to
150,000 (the "1998 Directors' Plan Amendment") and directed that the 1998
Directors Plan Amendment will become effective only if the holders of at least a
majority of the issued and outstanding shares of Stock present at the Annual
Meeting in person or by proxy vote for the approval of the 1998 Directors' Plan
Amendment.
The purpose of the Directors' Plan is to provide further inducement to
qualified persons to become and remain non-employee Directors of the Company and
additional incentive by encouraging them to acquire shares of common stock upon
the exercise of options granted in return for services rendered by them to the
Company, thereby increasing non-employee directors' proprietary interest in the
business in the Company and furthering the interest of the Company and its
stockholders.
Options to acquire 30,000 shares of Stock are currently outstanding under
the Directors' Plan, including options to purchase 25,000 shares to Joe C.
Greene and options to purchase 5,000 shares to Jay D. Burchfield, each at an
exercise price equal to the market value of the Stock on the date of grant. (See
Directors Compensation.) Because of the number of shares covered by options
previously granted, the Board of Directors believes that the 1998 Directors Plan
Amendment will provide additional flexibility in granting options to the
Company's non-employee directors in 1998 and beyond.
The Directors Plan is administered by the Chairman of the Board
("Administrator") and is intended to be a "formula award" plan under Rule 16b-3.
The Directors Plan authorizes the Administrator to adopt, amend and rescind
administrative rules or take actions as deemed appropriate to implement or
interpret the provisions of the Directors' Plan or to exercise any authority,
discretion or power implicitly or explicitly granted to the Administrator. The
Directors' Plan will expire on, and no options may be granted thereunder after
February 26, 2003, subject to the right of the Board of Directors to terminate
the Plan at any time prior thereto. The Board of Directors may amend the Plan at
any time; provided, however, that no change in any option theretofore granted
may be made that would impair the rights of the optionee without the consent of
such optionee.
An option enables the optionee to purchase shares of Stock at the option
price. The option price per share shall be 100% of the fair market value of the
Stock at the time the option is granted. In order to obtain the shares, a
participant must pay the full option price to the Company at the time of
exercise of the option. The purchase price may be paid in cash, or with the
consent of the Committee, Stock, including Stock acquired under the same option.
The Directors' Plan provides that stock options may be granted with terms
of no more than seven years from the date of grant. Options granted under the
Directors' Plan are not transferable or assignable nor may they be subject to
seizure or transferability by operation of law. Options will survive for a
limited period of time after the optionee's death, disability or the date on
which the optionee's service on the Board ceases. Any shares as to which an
option expires, lapses unexercised or is terminated or canceled shall continue
to be available for other options.
Page 14
<PAGE>
Federal Income Tax Consequences
An optionee will not realize any income at the time a nonqualified stock
option is granted, nor will the Company be entitled to a deduction at that time.
Upon exercise of a nonqualified stock option, the optionee will recognize
ordinary income (whether the nonqualified stock option is paid in cash or by the
surrender of previously owned Stock), in an amount equal to the difference
between the option price and the fair market value of the shares to which the
nonqualified stock option pertains. The Company will be entitled to a tax
deduction in an amount equal to the amount of ordinary income realized by the
optionee.
The last reported sale price of Stock on March 19, 1998, as reported on the
Nasdaq National Market System, was $28.25.
The Board of Directors recommends a vote "FOR" the approval of the 1998
Plan Amendment of the O'Reilly Automotive, Inc. Directors' Stock Option Plan,
which is Item 3 on the Proxy Card.
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 1997 with the
exception of Charles H. O'Reilly, Jr. A Form 4 for Mr. O'Reilly in connection
with a March 1997 transaction was inadvertently filed after the deadline.
Additionally, in 1997 a Form 4 was filed for incentive stock options granted to
James R. Batten in 1996.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The firm of Ernst & Young LLP served as the Company's independent auditors
for the year ended December 31, 1997. 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 1997 containing,
among other things, audited consolidated financial statements of the Company,
accompanies this Proxy Statement.
FUTURE PROPOSALS OF SHAREHOLDERS
All proposals of security holders intended to be presented at the 1998
annual meeting of shareholders must be received by the Company in writing not
later than December 5, 1998, for inclusion in the Company's 1999 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.
Page 15
<PAGE>
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 1997 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
Tricia Headley
Secretary
Springfield, Missouri
April 3, 1998
Page 16
<PAGE>
O'REILLY AUTO PARTS
PROFESSIONAL PARTS PEOPLE
April 3, 1998
Dear Shareholder:
Below is a proxy card to cast your votes for matters to be voted on at the
Annual Meeting of Shareholders.
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
- --------------------------------------------------------------------------------
1. ELECTION OF DIRECTORS:
[ ] FOR all nominees listed (except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY (to vote for all nominees, 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 II DIRECTORS (three-year term)
Rosalie O'Reilly Wooten Lawrence P. O'Reilly Joe C. Greene
2. Proposal to approve the Board of Directors' adoption of an amendment to
the Company's 1993 Stock Option Plan to increase the number of shares
covered thereunder from 2,000,000 to 3,000,000.
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
3. Proposal to approve the Board of Directors' adoption of an amendment to
the Company's Director Stock Option Plan to increase the number of shares
covered thereunder from 100,000 to 150,000.
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
4. 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.
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 PROPOSALS 1, 2 and 3.
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:___________________________, 1998.
__________________________________________
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 corporate 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.
<PAGE>
PROXY
O'REILLY AUTOMOTIVE, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
1998 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 27, 1998, at the
Annual Meeting of Shareholders to be held on May 5, 1998, or any adjournments
thereof.
(Continued and to be signed on the reverse side.)
D e t a c h H e r e
- --------------------------------------------------------------------------------
HIGHLIGHTS OF OUR 40th YEAR
Net sales rose 22.1% to record $316.4 million
Net income increased 21.6% to new high of $23.1 million, or $1.10 per share
(basic)
Record number of 40 (net) stores opened
Same-store sales rose 6.8%
Remodeled or relocated 28 stores
100% stock dividend paid to all shareholders in August 1997 in the form of a
two-for-one stock split
O'Reilly Automotive, Inc. is now one of the ten largest auto parts chains in the
country following the Hi/LO Auto Supply merger in January 1998.
