Business Context and Reporting Period
This Form 8-K Current Report was filed by Advance Auto Parts, Inc. on May 19, 2009. The report details a corporate governance action taken by the Compensation Committee of the Board of Directors regarding executive compensation for the last three quarters of the 2009 fiscal year.
Key Financial Metrics
The filing does not provide standard financial performance metrics such as revenue, profit, cash flow, margins, debt, or liquidity. The document focuses exclusively on the structure and potential payout values of an executive incentive compensation program.
Material Changes
The primary material change reported is the approval of a new incentive compensation program effective April 26, 2009. Key changes include:
- New Performance Metric: Introduction of a "market share" metric to reward achievement of increased market share in the automotive aftermarket industry.
- Bonus Cap Restriction: To receive a bonus exceeding 100% of the target level, the Company must demonstrate growth in market share relative to competitors. Without positive market share growth, the maximum bonus is capped at 100% of the target.
- Traditional Metrics: Bonuses also reward growth in sales and operating income for the relevant portion of 2009 compared to 2008.
Guidance, Outlook, and Management Commentary
Management commentary is limited to the rationale for the new compensation structure. The Committee intends to make downward adjustments as needed to avoid duplicate awards related to sales and operating income goals. The filing does not contain forward-looking financial guidance, risk factors, or contingencies beyond the conditions required to earn the executive bonuses.
Executive Bonus Structure
| Position | Bonus Target (% of Salary) | Target Value | Maximum Value |
|---|---|---|---|
| Chief Executive Officer | 200% | $1,400,000 | $2,800,000 |
| President | 90% | $405,000 | $810,000 |
| Chief Operating Officer | 90% | $405,000 | $810,000 |
| Chief Financial Officer | 80% | $360,000 | $720,000 |
Investor Verification Checklist
- Verify the independent third-party survey source used to measure market share growth.
- Review the Company's 2009 Proxy Statement for a full description of the bonus plan features and measures.
- Confirm the specific sales and operating income goals established for the relevant portion of 2009 versus 2008.
- Monitor future filings for actual market share data and resulting bonus payouts.