O'REILLY AUTO PARTS
PROFESSIONAL PARTS PEOPLE
(LOGO)
April 4, 2000
Dear Shareholder:
You are cordially invited to attend the 2000 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
Friday, May 5, 2000, at 10:00 a.m, local time.
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 Larry P. O'Reilly
Co-Chairman of the Board and Co-Chairman of the Board and
Chief Executive Officer Chief Operating Officer
<PAGE>
O'REILLY AUTOMOTIVE, INC.
233 South Patterson
Springfield, Missouri 65802
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on May 5, 2000
Springfield, Missouri
April 4, 2000
To the Shareholders of O'Reilly Automotive, Inc.:
The Annual Meeting of Shareholders of O'Reilly Automotive, Inc. (the
"Company"), will be held on Friday, May 5, 2000, 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 two Class I Directors to the Company's Board of Directors, to
serve for three years;
(2) To transact 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 29,
2000, 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 available during usual business hours
at the principal office of the Company at 233 South Patterson, Springfield,
Missouri 65802, to be examined by any shareholder for any purpose reasonably
related 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 1999
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
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 Friday, May 5, 2000, 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 4, 2000.
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 29, 2000, 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 shareholders'
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 2003 and until
their successors have been duly elected and qualified;
(2) 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 two 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 29, 2000, there were 50,838,036 shares of 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 present at the meeting but which abstain or are 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 matter.
Accordingly, such proxies will have the same effect as a vote against the
nominee as to which such abstention or direction applies. Shares not present at
the meeting will not affect the election of directors. 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.
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 2001 and 2002, 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 2003. 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.
<TABLE>
<CAPTION>
Served
as
Director
Name Age Principal Occupation Since
- ----------------------- ---- ---------------------------------------- -------
Nominees for Director-Class I
(To Be Elected to Serve a Three-Year Term Expiring in 2003)
<S> <C> <C> <C>
Charles H. O'Reilly, Sr. 87 Chairman Emeritus since March 1993 1957
and co-founder of the Company;
Chairman of the Board from 1975
to March 1993
Charles H. O'Reilly, Jr. 60 Vice-Chairman of the Board since 1966
August 1999; Chairman of the Board
from March 1993 to August 1999;
President and Chief Executive Officer
of the Company from 1975 to March 1993
Directors Continuing in Office-Class II
(Terms Expiring in 2001)
Rosalie O'Reilly Wooten 57 Executive Vice-President of the 1980
Company since 1980
Lawrence P. O'Reilly 53 Co-Chairman of the Board since August 1969
1999; Chief Operating Officer since
March 1993; President from March 1993
to August 1999; Vice President of the
Company from 1975 to March 1993
Joe C. Greene 64 Attorney-At-Law, managing partner of the 1993
Springfield, Missouri firm of
Greene & Curtis, LLP and Director of
Commerce Bank, N.A.in Springfield,
Missouri; 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 2002)
David E. O'Reilly 50 Co-Chairman of the Board since August 1972
1999; Chief Executive Officer since
March 1993; President from March 1993
to August 1999; Vice-President of the
Company from 1975 to March 1993
Jay D. Burchfield 53 President of Oklahoma City Bakery, Inc. 1997
in Springfield, Missouri from January
1999 to present; Chairman of the Board
and Director of Trust Company of the
Ozarks in Springfield, Missouri from
April 1998 to present; Director of
The Primary Care Network in Springfield,
Missouri from January 1998 to present;
Chairman of the Board and Director 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 Boatmens's Bank of
Southern Missouri in Springfield, Missouri
from April 1987 to January 1996.
Mr. Burchfield's career has spanned
more than 25 years in the banking industry.
</TABLE>
The Board of Directors recommends a vote "FOR" each of the nominees
Information Concerning Board of Directors
During 1999, 4 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, Jay D. Burchfield and Joe C. Greene,
and a standing Compensation Committee consisting of Messrs. Burchfield 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 1999, two Audit Committee meetings 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 $23,500 were paid during 1999.
The Company also maintains a Directors' Stock Option Plan, providing for an
automatic annual grant (on April 22 or the first business day thereafter) to
each director who is not an employee of the Company of a non-qualified stock
option to purchase 10,000 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 two
non-employee directors were granted options in 1999 to purchase 10,000 shares of
Common Stock under the Company's Directors' Stock Option Plan at an exercise
price of $23.91 per share.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee consists of Joe C. Greene and Jay D. Burchfield.
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. Mr. Greene is also a Director of Commerce Bank, N.A. in
Springfield, Missouri which has loaned $5 million to the Company under a
promissory note.
Jay D. Burchfield, a Director of the Company since August 20, 1997, is the
Chairman of the Board of Directors of City Bancorp, President of Oklahoma City
Bakery, Inc., Chairman of the Board and Director of Trust Company of the Ozarks
and Director of The Primary Care Network, all in Springfield, Missouri. Mr.
Burchfield's career has spanned more than 25 years, primarily in banking.
The Company believes that the terms of the legal services provided by Mr.
Greene are no less favorable to the Company than those that would have been
available to the Company in comparable transactions with unaffiliated parties.
Executive Compensation
The following information is given for the fiscal years ended December 31,
1999, 1998 and 1997 concerning annual and long-term compensation for services
rendered to the Company and its subsidiaries for the Company's Chief Executive
Officer and each of the Company's five other most highly compensated executive
officers (other than the Chief Executive Officer) during 1999.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-term Compensation
---------------------------------------
Awards Payouts
-------------------------- -----------
Annual Compensation Securities All Other
Name and ------------------------------ Restricted Underlying LTIP Compensation
Principal Position Year Salary($)(a) Bonus($) Other($) Stock Awards Options(c)(#) Payouts($) ($)(b)
- ------------------------ ---- ------------ -------- -------- ------------ ------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Charles H. O'Reilly, Jr. 1999 167,500 167,500 - - - - 14,206
Vice-Chairman of the 1998 198,500 198,500 - - - - 7,956
Board 1997 199,000 199,000 - - 15,000 - 7,631
David E. O'Reilly 1999 300,000 300,000 - - 50,000 - 15,538
Co-Chairman of the 1998 277,000 277,000 - - - - 7,691
Board and Chief 1997 258,500 258,500 - - 70,000 - 7,079
Executive Officer
Lawrence P. O'Reilly 1999 300,000 300,000 - - 50,000 - 15,538
Co-Chairman of the 1998 277,000 277,000 - - - - 7,919
Board and Chief 1997 258,500 258,500 - - 70,000 - 7,307
Operating Officer
Rosalie O'Reilly Wooten 1999 160,000 - - - - - 16,005
Execitove Vice 1998 159,000 - - - - - 6,688
President 1997 158,000 - - - 15,000 - 6,437
Ted F. Wise 1999 215,000 105,000 - - 50,000 - 14,985
President 1998 190,000 95,000 - - - - 6,854
1997 173,000 85,000 - - 50,000 - 7,079
Greg Henslee 1999 175,000 - 19,660 214 50,000 - 13,067
President
- ---
</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, 1999 includes (i)
Company contributions of $13,306, $14,638, $14,638, $15,438, $14,499 and $12,932
to its Profit Sharing and Savings Plan made on behalf of Charles H. O'Reilly,
Jr., David E. O'Reilly, Lawrence P. O'Reilly, Rosalie O'Reilly Wooten, Ted F.
Wise and Greg Henslee, respectively, and (ii) the benefits inuring to Charles H.
O'Reilly, Jr. ($900), David E. O'Reilly ($900), Lawrence P. O'Reilly ($900),
Rosalie O'Reilly Wooten ($568), Ted F. Wise ($486) and Greg Henslee ($135) from
the Company's payment of certain life insurance premiums.
(c) See "Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-
End Option Values" tables for additional information with respect to these
options.
<PAGE>
Information as to Stock Options
The following table provides certain information concerning grants of
options to purchase Common Stock made during the 1999 fiscal year to the named
executive officers. All stock options were granted pursuant to the Company's
1993 Stock Option Plan.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed Annual
Rates of Stock Price
Appreciation For Option
Individual Grants Term
- ------------------------------------------------------------------------- -------------------------------
Number of % of Total
Securities Options Exercise Grant
Underlying Granted to Price Date
Options Employees Per Expiration Present
Name Granted in 1999 Share($) Date 5% ($) 10%($) Value
- ----------------------- ----------- ------------ --------- ----------- --------------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
David E. O'Reilly 50,000 (1) 4.4% 21.313 08/05/09 1,735,791 2,763,957 1,065,650
Lawrence P. O'Reilly 50,000 (1) 4.4% 21.313 08/05/09 1,735,791 2,763,957 1,065,650
Ted F. Wise 50,000 (1) 4.4% 21.313 08/05/09 1,735,791 2,763,957 1,065,650
Greg Henslee 50,000 (1) 4.4% 21.313 08/05/09 1,735,791 2,763,957 1,065,650
- ------
</TABLE>
(1) Stock options become exercisable with respect to 25% of the covered shares
one year from the date of grant; 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-End 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. 100,000 2,412,500 15,000 / 15,000 183,750 / 183,750
David E. O'Reilly 100,000 2,412,500 110,000 / 80,000 1,337,500 / 286,850
Lawrence P. O'Reilly 100,000 2,412,500 110,000 / 80,000 1,337,500 / 286,850
Rosalie O'Reilly Wooten 40,000 965,000 15,000 / 15,000 183,750 / 183,750
Ted F. Wise 40,000 1,210,625 70,000 / 80,000 811,180 / 286,850
Greg Henslee 0 0 78,750 / 76,250 979,703 / 179,038
- -----
</TABLE>
(1) Represents the market value of the underlying Common Stock on December 31,
1999, less the aggregate exercise price.
<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 OReilly 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.
The Company has also entered into written retirement agreements 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 as a consultant upon
retirement, for a period of ten years at a yearly salary of $100,000. The
agreements also provide for each officer to receive medical benefits, death and
disability benefits, as well as the use of a car and the Company plane.
An executive officer's employment may be terminated by the Company for
cause (as defined in the agreement) or without cause. If an executive officer's
employment is terminated for cause or if an executive officer resigns, such
executive officer's salary and bonus rights will cease on the date of such
termination or resignation. If the Company terminates an executive officer
without cause, all compensation payments will continue through the remainder of
the agreement's term. Pursuant to his or her respective agreement, each
executive officer 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 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 Nasdaq-Amex Retail Trade Stock Price Index
included in this Proxy Statement. The base salaries of the aforementioned
executive officers were increased in 1999 to reflect increases in the Consumer
Price Index from 1998 to 1999, increases in responsibilities due to the
Company's growth and to align executive compensation with comparable companies
and positions.
Bonuses
The Compensation Committee has established a bonus plan for the Chief
Executive Officer, the Chairman of the Board and the Chief Operating Officer of
the Company based 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 1999, based upon a percentage of the pre-tax
earnings, exclusive of extraordinary items, earned by the Company in 1998. This
cash bonus, in an amount equal to his base salary for 1999, was paid to the
Chief Executive Officer in equal monthly installments during 1999. The cash
bonus to be paid to the Chief Executive Officer in 2000 will be based upon the
same percentage of pre-tax earnings, exclusive of extraordinary items, earned by
the Company in 1999, not to exceed the Chief Executive Officer's base salary for
2000.
Respectfully submitted,
THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OF O'REILLY AUTOMOTIVE,
INC.
Jay D. Burchfield, Chairman of the Compensation Committee
Joe C. Greene, Member of the Compensation Committee
<PAGE>
Transactions with Insiders and Others
Sixty-two of the Company's stores were leased from one of two real estate
investment partnerships and a limited liability corporation formed by the
O'Reilly family. Leases with unaffiliated parties generally provide for payment
of a fixed base rent, payment of certain tax, insurance and maintenance
expenses, and an original term of 5 years, subject to one or more renewals at
the Company's option. The Company has entered into separate master lease
agreements with each of the affiliated real estate investment partnerships and
the limited liability corporation for the occupancy of the stores covered
thereby. The master lease agreements with the real estate investment
partnerships expired on December 31, 1998 and were renewed through December
2004. The term of the master lease with the limited liability corporation
expires on December 31, 2013. 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. Because the Company's 1993 Stock Option Plan may
not satisfy the requirements of Section 162(m) with respect to the options more
recently granted thereunder, the Compensation Committee may take action in the
future to comply with these requirements. Given the current levels of cash
compensation paid to the Company's executive officers, the Compensation
Committee is not expected to take any action with respect to the cash elements
of the Company's executive compensation program at this time, but will evaluate
possible action, to the extent consistent with other objectives of the Company's
compensation program, if the cash compensation of any executive officer
approaches the $1 million level in the future.
<PAGE>
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 December 31,
1994, in the Company's Common Stock against the Nasdaq-Amex Stock Market Total
Return Index and the Nasdaq-Amex Retail Trade Stocks Total Return Index,
assuming reinvestment of all dividends.
<TABLE>
<CAPTION>
Measurement Period O'Reilly Nasdaq-Amex Nasdaq-Amex
(Fiscal Year Covered) Automotive, Inc. Stock Market Retail Trade Stocks
- --------------------- ------------------ --------------- --------------------
<S> <C> <C> <C>
12/94 100 100 100
12/95 117 141 110
12/96 129 174 131
12/97 212 213 154
12/98 382 300 188
12/99 347 542 182
</TABLE>
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of February 29, 2000, 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 Beneficial Percent
Name and Address Ownership of Class(%)
- -------------------------------------- ------------------------- -------------
<S> <C> <C>
Charles H. "Chub" O'Reilly, Sr. (a)(b) 88,094 *
Charles H. O'Reilly, Jr. (a)(c) 2,816,688 5.5
David E. O'Reilly (a)(d) 3,464,347 6.7
Lawrence P. O'Reilly (a)(e) 3,705,533 7.2
Rosalie O'Reilly Wooten (a)(f) 2,267,189 4.4
Ted F. Wise (a)(g) 338,397 *
Greg Henslee (a)(h) 170,867 *
Jay Burchfield (i) 34,000 *
Joe C. Greene (j) 64,400 *
All Directors and executive officers
as a group (10 persons)(k) 13,023,444 25.2
T. Rowe Price Associates, Inc. (l) 4,711,600 9.2
- -----
</TABLE>
*less than 1%
(a) The address of Messrs. O'Reilly, Wise, Henslee and Ms. Wooten is O'Reilly
Automotive, Inc., 233 S. Patterson, Springfield, Missouri 65802.
(b) The stated number of shares includes 72,000 shares held through the Charles
H. O'Reilly, Sr. Rev. Trust, 4,088 shares held in the O'Reilly
Automotive Employee Stock Purchase Plan with UMB Bank, N.A. as trustee, 2,000
shares held by Mr. O'Reilly's wife and 10,006 shares held in the O'Reilly
Employee Savings Plus Plan with SunTrust Bank as trustee.
(c) The stated number of shares includes 1,169,896 shares held through the
Charles H. O'Reilly, Jr. Rev. Trust, 1,030,530 shares controlled by Mr. O'Reilly
as trustee of a trust for the benefit of his children, 127,128 shares held by
Mr. O'Reilly as custodian for his son, 384,836 shares controlled by Mr.
O'Reilly's wife pursuant to a voting trust, 70,000 shares controlled by Mr.
O'Reilly as a general partner of a family limited partnership, 4,298 shares held
in the O'Reilly Employee Savings Plus Plan with SunTrust Bank as trustee and
15,000 shares subject to options exercisable within 60 days of February 29,
2000.
(d) The stated number of shares includes 760,558 shares held through the
David O'Reilly, Rev. Trust, 2,144,136 shares controlled by Mr. O'Reilly as
trustee of two trusts for the benefit of his children, 366,812 shares held by
Mr. O'Reilly as custodian for two of his three children, 2,841 shares held in
the O'Reilly Employee Savings Plus Plan with SunTrust Bank as trustee and
110,000 shares subject to options exercisable within 60 days of February 29,
2000.
(e) The stated number of shares includes 1,338,956 shares held through the
Lawrence P. O'Reilly Rev. Trust, 1,466,378 shares controlled by Mr. O'Reilly as
trustee of a trust for the benefit of his children, 174,173 shares held by Mr.
O'Reilly as custodian for his daughter, 507,788 shares controlled by Mr.
O'Reilly's wife pursuant to a voting trust, 4,602 shares held in the O'Reilly
Employee Savings Plus Plan with SunTrust Bank as trustee and 110,000 shares
subject to options exercisable within 60 days of February 29, 2000.
(f) The stated number of shares includes 891,424 shares held through the
Rosalie O'Reilly Wooten, Rev. Trust, 993,172 shares controlled by Ms. Wooten as
trustee of a trust for the benefit of her children, 349,788 shares controlled by
Ms. Wooten's husband as trustee for the benefit of Ms. Wooten's children and
their descendants, 2,805 shares held in the O'Reilly Employee Savings Plus Plan
with SunTrust Bank as trustee and 15,000 shares subject to options exercisable
within 60 days of February 29, 2000.
(g) Includes 104,726 shares held of record by a revocable trust of which
Mr. Wise, as the sole trustee, has sole voting and investing power, 3,671 shares
held in the O'Reilly Employee Savings Plus Plan with SunTrust Bank as trustee
and 70,000 shares subject to options exercisable within 60 days of February 29,
2000. Also includes 80,000 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) The stated number of shares includes 9,534 shares jointly owned by Mr.
Henslee and his wife, 3,861 shares held in the O'Reilly Employee Savings Plus
Plan with SunTrust Bank as Trustee, 918 shares awarded by the Company's
Performance Incentive Plan and 1,554 shares held in the O'Reilly Automotive
Stock Purchase Plan with UMB Bank, N.A. as trustee. Also includes 78,750 shares
subject to options exercisable within 60 days of February 29, 2000.
(i) Includes 30,000 shares subject to options exercisable within 60 days of
February 29, 2000. Mr. Burchfield's mailing address is 3742 East Eaglescliffe
Dr., Springfield, Missouri 65809.
(j) Includes 60,000 shares subject to options exercisable within 60 days of
February 29, 2000. Mr. Greene's mailing address is 1340 East Woodhurst,
Springfield, Missouri 65804.
(k) Includes options to purchase a total of 906,000 shares held by such
directors and executive officers which are exercisable within 60 days of
February 29, 2000.
(l) As reflected on such beneficial owner's Schedule 13G filed on February
8, 2000, provided to the Company in accordance with the Securities Exchange Act
of 1934, as amended. These securities are owned by various individual and
institutional investors, to whom T. Rowe Price Associates, Inc. (Price
Associates) serves as investment adviser with power to direct investments and/or
sole power to vote the securities. Price Associates has expressly disclaimed
that it is, in fact, the beneficial owner of such securities. Of the 4,711,600
shares reported, Price Associates claimed sole voting power of 752,000 shares,
no shared voting power, sole dispositive power of 4,711,600 shares and no shared
dispositive power. Such beneficial owner's mailing address is believed to be 100
E. Pratt Street, Baltimore, Maryland 21202.
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 1999.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The firm of Ernst & Young LLP served as the Company's independent auditors
for the year ended December 31, 1999. 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 1999 containing,
among other things, audited consolidated financial statements of the Company,
accompanies this Proxy Statement.
<PAGE>
FUTURE PROPOSALS OF SHAREHOLDERS FUTURE PROPOSALS OF SHAREHOLDERS
Shareholder proposals intended to be presented at the year 2001 Annual
Meeting and included in the Company's proxy statement and form of proxy relating
to that meeting pursuant to Rule 14a-8 under the Exchange Act must be received
by the Company at the Company's principal executive offices by December 5, 2000.
In order for shareholder proposals made outside of Rule 14a-8 under the Exchange
Act to be considered "timely" within the meaning of Rule 14a-4(c) under the
Exchange Act, such proposals must be received by the Company at the Company's
principal executive offices by February 19, 2001. The Company's Amended Bylaws
require that proposals of shareholders made outside of Rule 14a-8 under the
Exchange Act must be submitted, in accordance with the requirements of the
By-Laws, not later than February 19, 2001 and not earlier than January 20, 2001.
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.
ADDITIONAL INFORMATION
Additional information regarding the Company can be found in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1999, filed by
the Company with the Securities and Exchange Commission. A copy of the Company's
Annual Report (excluding exhibits) is available to shareholders without charge,
upon written request to O'Reilly Automotive, Inc., 233 South Patterson,
Springfield, Missouri 65802, Attention: Secretary.
By Order of the Board of Directors
Tricia Headley
Secretary
Springfield, Missouri
April 4, 2000
