Notice of 2020 Annual Meeting of Shareholders and Proxy Statement
Thursday, April 23, 2020 at 8:30 a.m. Pacific Daylight Time
150 N. Bartlett St., Medford, Oregon 97501
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To elect the seven director nominees named in this proxy statement;
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To conduct an advisory vote to approve named executive officer compensation; and
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To ratify the appointment of our independent auditor for 2020.
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What is the purpose of the Annual Meeting?
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The Annual Meeting will be held for the following purposes:
• To elect the seven director nominees named in this proxy statement;
• To conduct an advisory vote to approve named executive officer compensation; and
• To ratify the appointment of our independent auditor for 2020.
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Will any other matters be voted on?
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We are not aware of any other matters on which you will be asked to vote at the Annual Meeting. If other matters are properly brought before the Annual Meeting, the proxy holders may use their discretion to vote on these matters.
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Who is entitled to vote at the Annual Meeting?
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Only holders of record of our common stock at the close of business on February 28, 2020, the record date, will be entitled to notice of and to vote at the meeting and any adjournment thereof. As of the record date, there were 22,752,032 shares of Class A common stock and 600,000 shares of Class B common stock outstanding and entitled to vote. Each share of Class A common stock outstanding is entitled to one vote, and each share of Class B common stock outstanding is entitled to ten votes. Our executive officers and directors hold or control 1.4% (322,000 shares) of the Class A common stock and 100% (600,000 shares) of the Class B common stock outstanding representing approximately 22% of the votes available to be cast at the Annual Meeting. All shares will vote together as a single voting group on all matters submitted to a vote of the shareholders, except as otherwise required by law.
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How do I vote?
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There are four ways to vote:
• by Internet at http://www.proxyvote.com; just enter the control number found on your proxy card (we encourage you to vote this way as it is the most cost-effective method);
• by toll-free telephone at 1-800-690-6903;
• by completing and mailing your proxy card; or
• by written ballot at the Annual Meeting.
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May I change my vote?
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Yes. You may change your vote or revoke your proxy any time before the Annual Meeting by:
• entering a new vote by Internet or phone;
• returning a later-dated proxy card;
• notifying Christopher S. Holzshu, our Secretary, in writing, at 150 N. Bartlett Street, Medford, Oregon 97501; or
• completing a written ballot at the Annual Meeting.
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What vote is required to approve each proposal?
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Assuming a quorum is present at the Annual Meeting, the required vote for approval varies depending on the proposal.
Proposal 1: To be elected, the number of votes cast "for" a director's election must exceed the number cast "against" that director.
Proposal 2: The votes that shareholders cast “for” must exceed the votes shareholders cast “against” to approve, on an advisory basis, the compensation of our named executive officers.
Proposal 3: The votes that shareholders cast “for” must exceed the votes that shareholders cast “against” to ratify the appointment of our independent auditor for 2020.
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How is a quorum determined?
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For a quorum to exist at the Annual Meeting, there must be represented, in person or by proxy, shares representing a majority of the votes entitled to be cast at the meeting. Proxies that expressly abstain from voting on a particular proposal and broker non-votes will be counted for purposes of determining whether a quorum exists at the Annual Meeting.
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How do we count votes?
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The proxy holders will vote your shares as you instruct. Abstentions will not count as votes cast "for" or "against" any of the proposals. Broker non-votes will not cast as votes “for” or “against” a “non-routine” matter submitted to a vote of shareholders. A broker non-vote occurs when a broker or other holder of record, such as a bank, submits a proxy representing shares that another person beneficially owns, and that person has not given voting instructions to the broker or other nominee. A broker may only vote shares on a non-routine matter if the beneficial owner gives the broker voting instructions. Only the ratification of the appointment of our independent auditor for 2020 is considered a routine matter on which a broker or nominee that holds shares in its name may vote without instruction from the person that owns the shares beneficially.
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How are proxies solicited for the Annual Meeting?
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The Company is soliciting proxies for the Annual Meeting. All expenses associated with this solicitation, including the cost of preparing, assembling and mailing the Notice, Proxy Statement, 2019 Annual Report to Shareholders, and form of proxy will be borne by us. We will reimburse brokers or other nominees for reasonable expenses that they incur in sending these proxy materials to you if a broker or other nominee holds your shares.
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How is my proxy voted?
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The Board of Directors has designated Tina Miller, Senior Vice President and Chief Financial Officer, and Kelly Porter, Corporate Controller as the proxy holders for the Annual Meeting. All properly executed proxies will be voted (except to the extent that authority to vote has been withheld) as specified by the shareholder. Proxies submitted without specification will be:
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Voted FOR the seven director nominees listed in this proxy statement;
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Voted FOR the approval of our compensation of the named executive officers, as disclosed pursuant to Item 402 of Regulation S-K; and
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Voted FOR the ratification of the appointment of KPMG as our independent registered public accounting firm for 2020.
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Why did I receive a notice regarding the availability of proxy materials on the Internet instead of a full set of proxy materials?
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In accordance with the Securities and Exchange Commission (“SEC”) rules, we are furnishing our proxy materials, including this proxy statement and our Annual Report on Form 10-K, to our shareholders primarily via the Internet. On or about March 11, 2020, we mailed to our shareholders a Notice that contains instructions on how to access our proxy materials on the Internet, how to vote at the meeting and how to request printed copies of the proxy materials and Annual Report on Form 10-K. Shareholders may request to receive all future proxy materials in printed form by mail or electronically by email by following the instructions contained in the Notice.
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I have previously indicated I want to receive my proxy materials electronically. Will I still receive my materials via email as I have in the past?
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Yes. If you have already signed up to receive the materials by email or other electronic transmission, you will continue to receive them in that manner.
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In Pittsburgh, our incubator market for innovation, we activated a convenient sell-from-home customer experience powered by our proprietary technology.
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Additionally, we launched a buy-from-home technology in the same market as part of our multifaceted expansion of digital conveniences.
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We acquired nine stores, de-dualed three stores, and entered two new states, West Virginia and Florida.
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Optimizing and balancing our network, we divested five stores and generated $47 million in cash.
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Increasing our reach and convenience for customers, we expanded our national network coverage from 82% to 92%.
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Key Performance Metrics
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2019
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2018
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2017
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Diluted net income per share
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$
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11.60
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$
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10.86
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$
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9.75
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Adjusted diluted net income per share
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11.76
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9.98
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8.39
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EBITDA
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591.2
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531.2
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478.9
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Adjusted EBITDA
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517.8
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456.7
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434.0
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Debt to adjusted EBITDA
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1.93 x
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2.23 x
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1.87 x
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5-year compounded annual growth rate for revenue
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18.6
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%
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24.2
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%
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24.9
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%
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5-year compounded annual growth rate for adjusted diluted net income per share
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18.1
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%
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20.1
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%
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23.2
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%
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Key Operational Metrics
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2019
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2018
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2017
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Same store revenue growth
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New vehicles
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1.5
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%
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(1.8
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)%
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1.2
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%
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Used vehicle retail
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13.7
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%
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6.7
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%
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3.9
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%
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Finance and insurance
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13.2
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%
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4.8
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%
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5.8
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%
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Service, body and parts
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7.4
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%
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3.6
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%
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5.2
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%
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Total revenues
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6.1
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%
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1.3
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%
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2.2
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%
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Same store gross profit growth
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New vehicles
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(1.3
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)%
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(4.6
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)%
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1.2
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%
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Used vehicle retail
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12.4
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%
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3.0
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%
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3.9
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%
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Finance and insurance
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13.2
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%
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4.8
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%
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5.8
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%
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Service, body and parts
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10.0
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%
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5.5
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%
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4.8
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%
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Total gross profit
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8.7
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%
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2.6
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%
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3.7
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%
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2019
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2018
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2017
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Diluted net income per share, as reported
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$
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11.60
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$
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10.86
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$
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9.75
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Adjustments, net of tax
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Disposal gain on sale of stores
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(0.30
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)
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(0.47
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)
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(0.10
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)
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Asset impairments
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0.08
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0.04
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—
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Insurance reserves
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0.30
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0.05
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0.14
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Acquisition expense
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0.08
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0.10
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0.14
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OEM Settlements
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—
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—
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(0.23
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)
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Tax attribute
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—
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(0.60
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)
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(1.31
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)
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Adjusted diluted net income per share
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$
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11.76
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$
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9.98
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$
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8.39
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2019
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2018
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2017
|
||||||
EBITDA and Adjusted EBITDA
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|
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||||||
Net income
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$
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271.5
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$
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265.7
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$
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245.2
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Flooring interest expense
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72.8
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62.3
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39.3
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Other interest expense
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60.6
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56.0
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34.8
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Income tax expense
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103.9
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71.8
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101.9
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Depreciation and amortization
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82.4
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75.4
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57.7
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EBITDA
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|
$
|
591.2
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$
|
531.2
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$
|
478.9
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||||||
Other adjustments:
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||||||
Less: flooring interest expense
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$
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(72.8
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)
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$
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(62.3
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)
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$
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(39.3
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)
|
Less: used vehicle line of credit interest expense
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(5.5
|
)
|
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(2.9
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)
|
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(2.7
|
)
|
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Add: acquisition expenses
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|
2.5
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|
3.3
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|
|
5.7
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Less: gain on divestitures
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(9.7
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)
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(15.4
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)
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(5.1
|
)
|
|||
Add: insurance reserve
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|
9.5
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|
|
1.5
|
|
|
5.6
|
|
|||
Add: asset impairment
|
|
2.6
|
|
|
1.3
|
|
|
—
|
|
|||
Adjusted EBITDA
|
|
$
|
517.8
|
|
|
$
|
456.7
|
|
|
$
|
434.0
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net Debt to Adjusted EBITDA
|
|
|
|
|
|
|
||||||
Floor plan notes payable: non-trade
|
|
$
|
1,642.4
|
|
|
$
|
1,733.3
|
|
|
$
|
1,802.3
|
|
Floor plan notes payable
|
|
425.2
|
|
|
324.4
|
|
|
116.8
|
|
|||
Used and service loaner vehicle inventory financing facility
|
|
149.0
|
|
|
332.0
|
|
|
177.2
|
|
|||
Revolving lines of credit
|
|
—
|
|
|
131.6
|
|
|
94.6
|
|
|||
Real estate mortgages
|
|
597.7
|
|
|
592.3
|
|
|
470.0
|
|
|||
5.250% Senior notes due 2025
|
|
300.0
|
|
|
300.0
|
|
|
300.0
|
|
|||
4.625% Senior notes due 2027
|
|
400.0
|
|
|
—
|
|
|
—
|
|
|||
Other debt
|
|
33.6
|
|
|
34.2
|
|
|
12.5
|
|
|||
Unamortized debt issuance costs
|
|
(10.4
|
)
|
|
(6.1
|
)
|
|
(6.9
|
)
|
|||
Total debt
|
|
$
|
3,537.5
|
|
|
$
|
3,441.7
|
|
|
$
|
2,966.5
|
|
|
|
|
|
|
|
|
||||||
Less: Floor plan related debt
|
|
$
|
(2,216.6
|
)
|
|
$
|
(2,389.7
|
)
|
|
$
|
(2,096.3
|
)
|
Less: Cash and cash equivalents
|
|
(84.0
|
)
|
|
(31.6
|
)
|
|
(57.3
|
)
|
|||
Less: Availability on used vehicle and service loaner LOC's
|
|
(239.8
|
)
|
|
—
|
|
|
—
|
|
|||
Net Debt
|
|
$
|
997.1
|
|
|
$
|
1,020.4
|
|
|
$
|
812.9
|
|
|
|
|
|
|
|
|
||||||
TTM Adjusted EBITDA
|
|
$
|
517.8
|
|
|
$
|
456.7
|
|
|
$
|
434.0
|
|
|
|
|
|
|
|
|
||||||
Net debt to Adjusted EBITDA
|
|
1.93 x
|
|
|
2.23 x
|
|
|
1.87 x
|
|
|
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SIDNEY B. DEBOER
Sidney B. DeBoer took Lithia Motors public in 1996 and is the Chairman of the Board. Mr. DeBoer served as Chief Executive Officer and Secretary from 1968 through 2011, and then Executive Chairman through the end of 2015. Mr. DeBoer’s pioneering work in the public auto retailer sector and as an automotive dealer has earned him numerous awards and recognition. His charitable work on the Southern Oregon University Foundation Board, Oregon Community Foundation and the Oregon Shakespeare Festival has created a vibrant community for our Company’s headquarters. Mr. DeBoer attended Stanford University and the University of Oregon. His familiarity with our business, executive leadership knowledge and industry experience make him uniquely qualified to serve as our Chairman.
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BRYAN B. DEBOER
Bryan B. DeBoer has been our Chief Executive Officer (CEO) and President since 2012 and first became a director in 2008. Prior to becoming CEO, Mr. DeBoer was Senior Vice President of Mergers & Acquisitions/Operations and then Chief Operating Officer driving the growth of Lithia and transforming the Company culture to an entrepreneurial and high performance model. Upon joining Lithia in 1989, Mr. DeBoer grew through the store positions of Finance Manager, Used Vehicle Manager, General Sales Manager, General Manager and multi-store General Manager. Mr. DeBoer has a B.S. degree from Southern Oregon University in Business Administration. He also graduated from the National Automobile Dealers Association Dealer Academy. Mr. DeBoer’s store experience, passion for mergers and acquisitions and demonstrated ability to develop strong manufacturer relationships drive our growth. His enthusiasm for the car business combined with a competitive spirit set the tone for our culture.
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SUSAN O. CAIN
Susan O. Cain joined our Board of Directors in 2009. Ms. Cain was a Senior Instructor in Accounting at Southern Oregon University, located in Ashland, Oregon since 2004. Ms. Cain joined KPMG LLP in 1978, retiring as a partner in the San Francisco office in 1999. While with KPMG, she specialized in banking institutions and trust tax services. Ms. Cain is involved with various non-profit and charitable organizations including the Ashland Independent Film Festival and the Oregon Shakespeare Festival. She maintains her CPA license in California and brings to our Board of Directors a high level of accounting expertise. Ms. Cain holds a B.A. degree in General Science from Oregon State University and a Master of Science in Taxation from Washington School of Law, Washington Institute of Graduate Studies. She serves as the Audit Committee Chair and is an audit committee financial expert as defined under SEC rules. Ms. Cain was selected to serve on our Board of Directors because of her significant financial and accounting expertise and experience. |
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SHAUNA F. MCINTYRE
Shauna F. McIntyre joined our Board of Directors in April 2019. Currently, she works as the Program Lead for Google Automotive Services and has been with Alphabet, Inc. since 2016. Previously, she held integral roles at Egon Zehnder International, Achates Power, Inc., Honeywell International, Inc. and Ford Motor Company. Ms. McIntyre brings a wealth of knowledge and expertise to our board in a wide variety of subjects within the automotive industry, including manufacturing, finance and operations. Ms. McIntyre serves on the Board of Directors for the Los Altos Educational Foundation and was also a co-founding board member for the North American Council for Freight Efficiency. Ms. McIntyre holds a B.S. from the University of California, Los Angeles, a M.S. from the University of California, Berkeley, and an M.B.A. from Harvard. Ms. McIntyre was selected to serve on our Board of Directors because of her valuable strategic, industry and leadership experience. |
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LOUIS P. MIRAMONTES
Louis P. Miramontes joined our Board of Directors in 2018. Mr. Miramontes currently serves as the Audit Committee Chair of the Board of Directors for both Rite Aid Corporation and Oportun Financial Corporation. He provides advisory services to a real estate development company. Mr. Miramontes worked at KPMG from 1976 to 2014, where he served as managing partner for the San Francisco office and provided audit services to public and private companies. He has extensive experience in accounting, financial reporting and corporate governance. Mr. Miramontes holds a B.S. degree in Business Administration from California State University, East Bay. He is also an audit committee financial expert as defined under SEC rules. Mr. Miramontes was selected to serve on our Board of Directors because of his professional experience and deep audit and financial reporting expertise.
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|
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KENNETH E. ROBERTS
Kenneth E. Roberts joined our Board in 2012 after working as “of counsel” with Lane Powell, PC, a Pacific Northwest law firm. Mr. Roberts was a partner with the law firm of Roberts Kaplan LLP (formerly Foster Pepper LLP) from 1987 until the firm joined with Lane Powell in January 2011. His private law practice focused on corporate finance, mergers and acquisitions, corporate governance, executive compensation and securities, representing public companies, and community banks. Mr. Roberts is a graduate of Harvard Law School and Oregon State University with a B.S. in Business and Technology. Mr. Roberts chairs our Nominating and Governance Committee and lends insightful analysis to our mergers and acquisitions strategies.
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|
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DAVID J. ROBINO
David J. Robino joined our board in 2016. He began his management career at The Maytag Corporation and Pepsi-Cola. He joined AC Nielsen in 1989, culminating as Senior Vice President of Nielsen International, based in Brussels, Belgium. After a successful Vice Presidency at AT&T's Business Markets Division, Mr. Robino left to lead Gateway, Inc. as Executive Vice President and Chief Administrative Officer and later Vice Chairman. Upon retiring from Gateway, Mr. Robino served as a member of the board of directors of Memec, Inc., then the world's leading distributor of specialty semiconductors, and Insight Enterprises, Inc., a global provider of information technology capabilities to enterprises. He has served as an adjunct instructor at Southern Oregon University since 2012. Mr. Robino has a M.S. in Industrial Relations from Iowa State University and B.A. in Social Studies from Graceland College. Mr. Robino’s executive management and board experience over the course of his career at many large firms, provides us with expertise across a broad range of subjects. Mr. Robino chairs our Compensation Committee.
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CHRISTOPHER S. HOLZSHU
Christopher S. Holzshu is our Executive Vice President and Chief Operating Officer (COO), a role he has served in since November 2019. He previously served as Chief Financial Officer and Chief Human Resources Officer. Throughout his career with Lithia he has gained a deep understanding of the operations of our stores and a special talent for relating to individuals at all levels of the organization. Mr. Holzshu joined Lithia in 2003 as Director of Accounting after working on our external audit team at KPMG LLP as a CPA, where he specialized in automotive manufacturing and retail sectors. He holds a B.S. in Accounting from the University of Alaska.
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|
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SCOTT A. HILLIER
Scott A. Hillier is our Senior Vice President of Operations and has served in this role since 2008, overseeing store leadership. Mr. Hillier joined Lithia in 1986, working in our stores in roles including Finance Manager, General Sales Manager, General Manager and multi-store General Manager. Mr. Hillier quickly developed a reputation for identifying talent and building teams which led to his promotion to Vice President of Human Resources in 2003. In his current role, Mr. Hillier helps foster our value of taking personal ownership for performance by mentoring store leadership including the Lithia Partners Group. Mr. Hillier graduated from Southern Oregon University with a B.S. in Inter-Disciplinary Studies. |
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BRYAN L. OSTERHOUT
Bryan L. Osterhout is a Senior Vice President leading a substantial group of stores throughout the Northwest U.S. and Alaska, and has served in this role since 2017. He joined Lithia over 20 years ago as the General Manager of Eugene Chrysler Dodge Jeep Ram. Mr. Osterhout exhibited his entrepreneurial spirit early, borrowing money from his family to start a used car dealership when he was only 21 years old. Now, he inspires that same passion for operational performance and leadership throughout many of our stores. Mr. Osterhout studied economics and marketing for four years at the University of Oregon.
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|
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TINA H. MILLER
Tina H. Miller is our Senior Vice President, Chief Financial Officer (CFO), leading the accounting, tax, corporate finance, financial planning & analysis, risk management and treasury functions, and has served in this role since August 2019. She joined Lithia in 2005 working in internal audit and corporate accounting before being promoted to Corporate Controller in 2015 and Vice President in 2018. Before Lithia, Ms. Miller worked as an auditor at Ernst & Young in their assurance practice. She graduated from Santa Clara University with a B.S. in Accounting and is a licensed CPA in Oregon.
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THOMAS M. DOBRY
Thomas M. Dobry is our Senior Vice President and Chief Marketing Officer and has served in this role since 2018. He leads our internal marketing team and partners with external agencies that serve our stores. Mr. Dobry first joined Lithia in 2007 and then again in 2013. He took a brief hiatus from Lithia in 2010 to build a team in Detroit, Michigan guiding Chevrolet’s advertising. Before joining Lithia, Mr. Dobry led regional marketing efforts for the Saturn and Dodge brands at Goodby Silverstein & Partners and BBDO advertising agencies, respectively. Mr. Dobry has a B.A. in Advertising from Michigan State University and a M.B.A. from the University of Oregon.
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|
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GEORGE N. HINES
George N. Hines is our Senior Vice President, Chief Innovation and Technology Officer and has served in this role since July 2019. Before joining Lithia, Mr. Hines held technology and innovation leadership roles at Massage Envy Franchising and Viad Corp. Early in his career, he worked with Deloitte Consulting and Ernst & Young Management Consulting, where he advised clients in the telecommunications industry. George brings a great deal of talent and passion for the creation of pleasant, frictionless experiences and innovative technologies. Additionally, he brings a global view to his work having lived and worked in Peru, Ecuador, Brazil, Spain and the United Kingdom. He holds a B.S. in MIS from Millikin University and has most recently completed studies in the Stanford School for Design Thinking and Innovation.
|
Director
|
Key
|
Compensation
|
Audit
|
Nominating & Governance
|
Sidney B. DeBoer
|
CB
|
|
|
|
Susan O. Cain
|
I
|
P
|
C
|
P
|
Bryan B. DeBoer
|
|
|
|
|
Shauna F. McIntyre
|
I
|
|
P
|
P
|
Louis P. Miramontes
|
LI
|
P
|
P
|
|
Kenneth E. Roberts
|
I
|
P
|
|
C
|
David J. Robino
|
I
|
C
|
P
|
P
|
•
|
As described below under “Certain Relationships and Transactions with Related Persons,” Sidney B. DeBoer has entered into a Class B Conversion Agreement under which he has agreed to cause all of the remaining shares of Class B common stock to be converted into Class A common stock by December 31, 2025;
|
•
|
We maintain a Board comprised of a majority of independent directors, and the Audit Committee, Compensation Committee and Nominating and Governance Committee are composed solely of independent directors;
|
•
|
At least once each quarter, with the Lead Independent Director presiding, the independent directors meet privately in executive session;
|
•
|
Annually, an independent third party conducts a 360 degree review of our Chief Executive Officer with the other Board members and the officers reporting directly to the Chief Executive Officer. The results of that review are shared with the independent directors;
|
•
|
An independent third party also annually conducts a review of the performance of each director, each Board committee and the Board as a whole;
|
•
|
Each committee chair sets the agenda for his or her committee meeting and all directors are permitted to propose items for consideration by any committee or the full Board;
|
•
|
Each committee is given the right in its charter to retain outside advisors (including legal counsel) in its discretion; and
|
•
|
We have adopted Corporate Governance Guidelines and a Code of Business Conduct and Ethics (each of which is available on our website at www.lithiamotors.com).
|
Nominee Name
|
Age
|
Has Been a Director Since/(During)
|
Independent
|
Sidney B. DeBoer
|
76
|
1968
|
|
Susan O. Cain
|
65
|
2009
|
Yes
|
Bryan B. DeBoer
|
53
|
2008
|
|
Shauna F. McIntyre
|
48
|
2019
|
Yes
|
Louis P. Miramontes
|
65
|
2018
|
Yes
|
Kenneth E. Roberts
|
75
|
2012
|
Yes
|
David J. Robino
|
60
|
2016
|
Yes
|
Term
|
|
If elected, each nominee will hold office until the next annual meeting or until his or her successor is elected and qualified.
|
Election by Majority Vote
|
|
To be elected, the number of votes case “for” a director’s election must exceed the number of votes cast “against” that director. We have no reason to believe that any of the nominees will be unable or unwilling to serve if elected. However, if any nominee should become unable or unwilling to serve, proxies may be voted for another person nominated by our Board of Directors.
|
Biographical Information on our Nominees
|
|
Our Board of Directors believes that the combination of the qualifications, skills and experiences of the nominees will contribute to an effective and well-functioning Board. Our Board of Directors and the Nominating and Governance Committee believe that individually, and as a group, the nominees possess the necessary qualifications to provide for future oversight of our business consistent with their fiduciary duties to shareholders. Included in each director nominee’s biography, above, is a description of the experience, skills and attributes of each nominee.
|
Name
|
Fees Earned
or Paid in
Cash ($) (5)
|
|
Stock
Awards
($)(2)
|
All Other
Compensation
($)
|
|
Total ($)
|
|||||
Sidney B. DeBoer
|
106,667
|
|
|
159,320
|
|
7,785
|
|
(3), (4)
|
$
|
273,772
|
|
Thomas R. Becker (1)
|
33,333
|
|
|
0
|
|
2,477
|
|
|
$
|
35,810
|
|
Susan O. Cain
|
106,667
|
|
|
159,320
|
|
4,060
|
|
(3)
|
$
|
270,047
|
|
Shauna F. McIntyre
|
63,333
|
|
|
159,320
|
|
—
|
|
|
$
|
222,653
|
|
Louis P. Miramontes
|
101,667
|
|
|
159,320
|
|
—
|
|
|
$
|
260,987
|
|
Kenneth E. Roberts
|
106,667
|
|
|
159,320
|
|
8,194
|
|
(3)
|
$
|
274,181
|
|
David J. Robino
|
106,667
|
|
|
159,320
|
|
—
|
|
|
$
|
265,987
|
|
Name
|
|
Age
|
|
Current Position(s)
|
|
With Company Since
|
Bryan B. DeBoer
|
|
53
|
|
President and Chief Executive Officer
|
|
1989
|
Tina H. Miller
|
|
39
|
|
Senior Vice President and Chief Financial Officer
|
|
2005
|
Christopher S. Holzshu
|
|
46
|
|
Executive Vice President and Chief Operating Officer
|
|
2003
|
Scott A. Hillier
|
|
56
|
|
Senior Vice President of Operations
|
|
1986
|
Thomas M. Dobry
|
|
54
|
|
Senior Vice President and Chief Marketing Officer
|
|
2013
|
John F. North III (1)
|
|
42
|
|
Senior Vice President and Chief Financial Officer
|
|
2002
|
•
|
reviewing the Company’s strategic goals and objectives relevant to executive compensation;
|
•
|
approving performance criteria and compensation plans for the CEO and executive officers;
|
•
|
evaluating the CEO’s performance considering the strategic goals and objectives of the Company; and
|
•
|
reviewing and recommending to the Board of Directors the compensation of independent Board members.
|
•
|
Stock Ownership Policy: NEOs and Non‐NEO Vice Presidents are expected to acquire, and hold shares of our Class A common stock with a market value equal to a multiple of their base salary, as indicated in the table below, within (7) seven years of service in their position. Our stock ownership policy more closely aligns the interests of our NEOs with the interests of our shareholders and exposes our NEOs to downside equity performance risk. A Stock Ownership Compliance review is performed quarterly, and a policy reminder is sent to employees on an annual basis.
|
•
|
Insider Trading Policy: The policy provided to all directors and employees prohibits insider trading when the person is aware of material nonpublic information and restricts directors and executive officers and certain other employees determined to have potential access to insider information from trading in Company stock during predetermined closed periods. In addition, Section 16 employees and directors are required to pre-clear any trades.
|
•
|
Clawbacks: Compensation paid based on performance, including annual performance bonuses and equity compensation, is subject to a “clawback” policy.
|
•
|
Hedging and Pledging: Our insider trading policy for all employees and our stock ownership policy for executive officers specify that they may not (1) engage in hedging or monetization transactions, including through the use of financial instruments such as prepaid variable forwards, equity swaps, collars and exchange funds or (2) hold Company securities in a margin account or otherwise pledge Company securities as collateral for a loan, except if approved by the Board of Directors under limited circumstances. Securities pledged as of March 15, 2013, however, may continue to be pledged under existing or replacement arrangements.
|
•
|
we limit the amount of fixed compensation in the form of base salary based on data from our market survey;
|
•
|
the primary criteria we use for performance compensation components are “bottom line” measures such as pre‐]tax profit and adjusted earnings per share, which we believe are less susceptible to manipulation for short‐]term gain than are “top line” measures;
|
•
|
cash bonuses are capped;
|
•
|
the incentive plans for executive management have the flexibility to put weight on Company‐]wide or divisional performance measures;
|
•
|
our cash bonus plan preserves discretion to permit the Committee to elect not to pay otherwise achieved bonus amounts for any reason;
|
•
|
a meaningful component of compensation is equity grants with extended vesting periods designed to ensure that our executives value and focus on the Company’s long‐term performance; and
|
•
|
NEOs have equity positions in Lithia and are subject to stock ownership policies, which we believe increases their focus on long‐term shareholder value.
|
What We Do
|
|
What We Do Not Do
|
||
|
Rigorous, objective EPS performance goals
|
|
|
No “golden parachute” gross-ups
|
|
Limited perquisites
|
|
|
No hedging/pledging/short sales of company stock
|
|
Competitive stock ownership guidelines
|
|
|
No dividends paid on unvested shares
|
|
Clawback policy covering cash incentives and stock awards
|
|
|
No options/SARs granted below FMV
|
|
Double-trigger change in control provisions
|
|
|
No repricing of options without shareholder approval
|
|
Independent compensation consultant and Board
|
|
|
No excessive severance
|
|
Compensation Committee
|
|
|
No guaranteed salary increases, bonuses, or long-term
|
|
Annual risk assessment of compensation policies
|
|
|
incentive awards
|
|
and programs
|
|
|
|
•
|
We engaged with our institutional investors representing the majority of our outstanding shares, and they did not suggest any changes to our executive compensation program. Based on our commitment to good governance and the comments of our shareholder advisors, we eliminated the vehicle allowance and the ability to make exceptions to our no pledging policy.
|
•
|
2019 Say-on-Pay vote, 98% of the votes cast in favor.
|
Peer Group Symbol
|
Peer Group Name
|
RUSHA
|
Rush Enterprises, Inc.
|
KMX
|
CarMax Inc.
|
MUSA
|
Murphy USA Inc
|
ODP
|
Office Depot, Inc.
|
AN
|
AutoNation, Inc.
|
ABG
|
Asbury Automotive Group Inc.
|
MNRO
|
Monro Muffler Brake, Inc.
|
PAG
|
Penske Automotive Group, Inc.
|
GPI
|
Group 1 Automotive, Inc.
|
HOG
|
Harley-Davidson, Inc.
|
SAH
|
Sonic Automotive, Inc.
|
ORLY
|
O'Reilly Automotive Inc.
|
AZO
|
AutoZone, Inc.
|
AAP
|
Advance Auto Parts Inc.
|
DKS
|
Dick's Sporting Goods Inc.
|
•
|
base salaries;
|
•
|
performance bonuses; and
|
•
|
the amount and mix of long-term, equity-based incentive awards.
|
•
|
Base Salary: A competitive market salary that sufficiently covers a fixed income component the employee can rely on. The fixed salary is set at a level that provides the ability to attract talent and promote long‐term retention. Lithia believes that as an employee moves into higher level positions in the Company, base pay should become a smaller component of overall TDC.
|
•
|
Performance Bonus: The bonus plans are tied to both quantitative performance objectives and strategic direction determined annually by management and the Board of Directors. Bonus compensation is intended to reward employee contribution for attaining both short‐term and long-term objectives. Bonus objectives promote continual focus on high performance while balancing the Company’s long‐term strategic plan. Bonus objectives are set to support growth in profitability, maximize our capital deployment strategies and increase share value. Lithia uses short and mid‐term earnings forecasts, analyst estimates, and strategic planning needs to set the profit objectives. Due to their proprietary nature, the strategic initiative details will not be memorialized anywhere; however, it may be discussed with the Board upon request. We believe using metrics that promote high performance and profitable growth are critical.
|
•
|
Equity Awards: A compensation tool that leverages Lithia’s public company status to reward employees for achieving quantitative financial performance objectives set annually by management and the Board of Directors. The use of metrics that promote high performance and profitable growth is critical. Performance targets are determined by utilizing forecasted EPS and analyst estimates. EPS, in conjunction with other qualitative factors, are useful measurements of our overall profitability and strongly correlates with changes in our stock price. Equity award compensation ensures retention of key executives by using longer-term vesting periods and helps maximize our return to shareholders. Equity awards include a retirement clause that allows continued vesting if the recipient is at least 55 years of age and the sum of the recipients attained age and completed years of service at the time of retirement equals or exceeds 70 years, subject to compliance with our restrictive covenants. After completion of the performance year and attainment level has been determined, the equity awards will vest over a three year period.
|
•
|
Non-Qualified Deferred Compensation and Supplemental Executive Retirement Plan (SERP): A non-qualified deferred compensation plan with annual discretionary contributions that provide key employees secured funds for retirement and supports succession planning. SERP contributions serve as a retention function by using longer-term vesting periods. Participants may choose to defer up to 50% of their base salary and 100% of bonus compensation.
|
•
|
Other Benefits: Additional benefits that are industry‐standard or enhance the competitiveness of compensation for key employees include short-term disability insurance, long-term care assistance insurance, long-term disability insurance, life insurance and accidental death and dismemberment insurance.
|
Name
|
Annualized Base Salary $
|
Performance Bonus
|
Equity Awards
|
|||||||||||
|
|
|
(Target as % of Base Salary)
|
(Target as % of Base Salary)
|
||||||||||
|
2018
|
2019
|
2018
|
2019
|
2018
|
2019
|
||||||||
Bryan B. DeBoer
|
$
|
1,020,000
|
|
$
|
1,106,000
|
|
150
|
%
|
135
|
%
|
294
|
%
|
321
|
%
|
Christopher S. Holzshu
|
$
|
600,000
|
|
$
|
693,000
|
|
100
|
%
|
90
|
%
|
170
|
%
|
159
|
%
|
Tina H. Miller
|
|
|
$
|
360,000
|
|
|
|
40
|
%
|
|
|
90
|
%
|
|
Scott A. Hillier
|
$
|
468,000
|
|
$
|
490,000
|
|
80
|
%
|
79
|
%
|
136
|
%
|
133
|
%
|
Thomas M. Dobry
|
|
|
$
|
390,000
|
|
|
|
72
|
%
|
|
|
113
|
%
|
|
John F. North III
|
$
|
420,000
|
|
$
|
465,000
|
|
95
|
%
|
86
|
%
|
183
|
%
|
183
|
%
|
Base Salary
|
The Compensation Committee established the 2019 base salary for our CEO based on competitive market factors, the CEO’s duties and responsibilities, comparison of relative CEO pay within the peer groups mentioned above, our performance and the relative pay of our senior management team. The base salaries of all other NEOs are approved by the Compensation Committee and are based on both financial and non-financial criteria, the executives’ respective responsibilities, the relative internal pay equity among the senior executives and current market conditions, including relative pay within the industry.
|
Performance Bonus
|
In 2019, our performance bonus plan compensated executives for achieving annual performance goals. Each NEO had a maximum cash bonus potential based on a percentage of base salary ranging from 80% to 271%. The Compensation Committee set this range based on its view that the pay we offer to our NEOs for exceptional performance should be at least equal to, and for some NEOs it should be greater than, the NEO’s base salary. We calculated bonus payments by multiplying the executive’s maximum bonus level by the executive’s salary and the performance criteria achievement level. For example, if an executive’s maximum bonus level were 150% and the performance goals attained were 50% of potential, the executive’s bonus would equal 75% of the executive’s base salary (i.e., base salary multiplied by 150% then multiplied by 50%).
|
|
|
Year Ended December 31, 2019
|
||
Diluted net income per share, as reported
|
|
$
|
11.60
|
|
Adjustments, net of tax
|
|
|
||
Disposal gain on sale of stores
|
|
(0.30
|
)
|
|
Asset impairments
|
|
0.08
|
|
|
Insurance reserves
|
|
0.30
|
|
|
Acquisition expense
|
|
0.08
|
|
|
Adjusted diluted net income per share
|
|
$
|
11.76
|
|
|
|
|
||
See 10-K for more detailed information.
|
|
|
EPS Threshold
|
% of Earned RSU's
|
$11.60 (highest)
|
150%
|
$9.80 - $10.50
|
100%
|
$7.60
|
75%
|
$0.01 - $7.59
|
50%
|
$0 or negative
|
—%
|
Name and
Principal Position
|
Year
|
Salary
|
Stock
Awards(1)
|
Non-Equity Incentive Plan Compensation
|
Change in Pension Value and Nonqualified Deferred Compensation Earnings(2)
|
All Other
Compensation(4)
|
Total
|
Bryan B. DeBoer
|
2019
|
$1,106,000
|
$3,295,024
|
$2,846,200
|
$54,251
|
$9,341
|
$7,310,816
|
President and Chief
|
2018
|
1,020,000
|
2,844,474
|
1,530,000
|
22,350
|
47,570
|
5,464,394
|
Executive Officer
|
2017
|
1,000,000
|
2,441,014
|
2,055,000
|
50,048
|
332,569
|
5,878,631
|
|
|
|
|
|
|
|
|
Tina H. Miller (3)
|
2019
|
287,500
|
484,846
|
273,500
|
2,002
|
13,367
|
1,061,215
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher S. Holzshu
|
2019
|
693,000
|
1,021,011
|
1,187,500
|
21,887
|
8,388
|
2,931,786
|
Chief Operating Officer
|
2018
|
600,000
|
967,107
|
600,000
|
9,017
|
30,752
|
2,206,876
|
|
2017
|
510,000
|
976,425
|
698,700
|
20,441
|
148,137
|
2,353,703
|
|
|
|
|
|
|
|
|
Scott A. Hillier
|
2019
|
490,000
|
603,366
|
750,750
|
22,210
|
9,786
|
1,876,112
|
Senior Vice President
|
2018
|
468,000
|
603,991
|
332,691
|
9,150
|
26,510
|
1,440,342
|
of Operations
|
2017
|
468,000
|
566,353
|
319,700
|
20,405
|
142,503
|
1,516,961
|
|
|
|
|
|
|
|
|
Thomas M. Dobry
|
2019
|
390,000
|
408,448
|
532,000
|
5,611
|
10,404
|
1,346,463
|
Chief Marketing Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John F. North III (3)
|
2019
|
80,481
|
788,948
|
—
|
5,236
|
1,143
|
875,809
|
Former Chief
|
2018
|
420,000
|
730,061
|
400,000
|
3,593
|
22,347
|
1,576,001
|
Financial Officer
|
2017
|
360,000
|
488,257
|
493,200
|
9,249
|
92,014
|
1,442,720
|
(1)
|
These amounts reflect the grant date fair value for performance and time-vesting RSUs granted in the year, computed in accordance with FASB ASC Topic 718 and excluding any estimated forfeitures. These amounts are not paid to or realized by the executive. If the maximum level of performance were to achieved for the awards granted in 2019, the grant date value for those awards would be $4,942,536 for Mr. DeBoer, $519,478 for Ms. Miller, $1,531,517 for Mr. Holzshu, $905,049 for Mr. Hillier, $612,672 for Mr. Dobry and $1,183,422 for Mr. North. Mr. North’s award was forfeited upon his termination of employment. For each type of RSU award, the attainment levels used in the calculation of the grant date fair value was based on the probable outcomes at the time of grant. For a more detailed discussion of the assumptions used to determine the grant date fair values and other related information, see Notes 1 and 10 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2019. .
|
(2)
|
These amounts are the above-market interest earned in the applicable year on contributions to our Executive Management Non-Qualified Deferred Compensation and SERP.
|
(3)
|
Ms. Miller was promoted to CFO on August 1, 2019. Mr. North resigned from the company on March 2, 2019.
|
Name
|
|
Vehicle Allowance (a)
|
|
401(k) Match
|
|
Insurance Premiums (b)
|
|
Contributions to Long-Term Incentive Plan
|
|
Other (c)
|
Total
|
||||||||||||
Bryan B. DeBoer
|
|
$
|
—
|
|
|
$
|
1,375
|
|
|
$
|
5,466
|
|
|
$
|
—
|
|
|
$
|
2,500
|
|
$
|
9,341
|
|
John F. North III
|
|
—
|
|
|
—
|
|
|
1,143
|
|
|
—
|
|
|
—
|
|
1,143
|
|
||||||
Tina H. Miller
|
|
7,976
|
|
|
1,375
|
|
|
4,016
|
|
|
—
|
|
|
—
|
|
13,367
|
|
||||||
Christopher S. Holzshu
|
|
—
|
|
|
1,375
|
|
|
4,513
|
|
|
—
|
|
|
2,500
|
|
8,388
|
|
||||||
Scott A. Hillier
|
|
—
|
|
|
1,375
|
|
|
5,911
|
|
|
—
|
|
|
2,500
|
|
9,786
|
|
||||||
Thomas M. Dobry
|
|
1,396
|
|
|
1,375
|
|
|
5,133
|
|
|
—
|
|
|
2,500
|
|
10,404
|
|
(a)
|
The car allowances for Ms. Miller and Mr. Dobry were prior to the elimination of their vehicle allowances.
|
(b)
|
Insurance premiums include amounts paid by us on behalf of the executive for short-term disability insurance, long-term disability insurance, long term care insurance and life insurance policies.
|
(c)
|
Amounts shown are for fair market values of a Company-sponsored trip in 2019.
|
|
|
|
Estimated Future Payouts Under Non-Equity Incentive Plan Awards
|
|
Estimated Future Payouts Under Equity Incentive Plan Awards (# of shares) (4)
|
All Other Stock Awards: (# of shares)
(6)
|
Grant Date Fair Value of Stock and Option Awards ($)
(5)
|
||||||||||||
Name
|
Grant Date (1)
|
Compensation Committee Action Date
|
Threshold ($)
|
Target ($) (2)
|
Maximum ($)
|
|
Threshold (#)
|
Target (#)
|
Maximum (#)
|
||||||||||
Bryan B. DeBoer
|
1/1/2019
|
12/19/2018
|
374,500
|
|
1,498,000
|
|
2,996,000
|
|
|
22,576
|
|
45,152
|
|
67,728
|
|
|
3,295,024
|
|
|
Tina H. Miller
|
8/1/2019
|
9/19/2019
|
36,000
|
|
144,000
|
|
288,000
|
|
|
1,343
|
|
2,686
|
|
4,029
|
|
1,272
|
|
577,672
|
|
Christopher S. Holzshu
|
1/1/2019
|
12/19/2018
|
156,250
|
|
625,000
|
|
1,250,000
|
|
|
6,996
|
|
13,991
|
|
20,987
|
|
|
1,021,011
|
|
|
Scott A. Hillier
|
1/1/2019
|
12/19/2018
|
96,250
|
|
385,000
|
|
770,000
|
|
|
4,134
|
|
8,268
|
|
12,402
|
|
|
603,366
|
|
|
Thomas M. Dobry
|
1/1/2019
|
12/19/2018
|
70,000
|
|
280,000
|
|
560,000
|
|
|
2,799
|
|
5,597
|
|
8,396
|
|
|
408,448
|
|
|
John F. North III (3)
|
1/1/2019
|
12/19/2018
|
100,000
|
|
400,000
|
|
800,000
|
|
|
5,406
|
|
10,811
|
|
16,217
|
|
|
788,948
|
|
(1)
|
The Compensation Committee establishes the performance criteria and applicable achievement percentages. (See the discussion under “Performance Bonus” above).
|
(2)
|
See paragraph below for discussion related to Target amounts.
|
(3)
|
Because of his resignation from the company in March 2019, Mr. North did not receive the 2019 annual incentive award payout and his equity awards granted in 2019 were forfeited.
|
(4)
|
Performance and time-vesting RSU award, which includes a performance condition and a continuing service condition.
|
(5)
|
These amounts reflect the grant date fair value for awards granted under the 2013 Amended and Restated Stock Incentive Plan. The attainment level used to calculate the grant date fair value for the performance and time-vesting grants was 100 % based on the probable outcome at the time of grant. For a more detailed discussion of the assumptions used to determine the grant date fair value and other related information, see Notes 1 and 10 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2019.
|
(6)
|
These shares were granted on January 1, 2019 and approved by the Board on December 19, 2018.
|
Name
|
Grant Date
|
Number of Shares or Units of Stock That Have Not Vested (#)(1)
|
|
Market Value of Shares or Units of Stock That Have Not Vested ($)(2)
|
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(3)
|
|
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2)
|
||||||
Bryan B. DeBoer
|
2/4/2016
|
3,043
|
|
(4)
|
$
|
447,321
|
|
—
|
|
|
$
|
—
|
|
|
1/12/2017
|
18,198
|
|
(5)
|
2,675,106
|
|
—
|
|
|
—
|
|
||
|
1/1/2018
|
25,751
|
|
(6)
|
3,785,397
|
|
—
|
|
|
—
|
|
||
|
1/1/2019
|
67,728
|
|
(7)
|
9,956,016
|
|
—
|
|
|
—
|
|
||
Tina H. Miller
|
1/4/2016
|
70
|
|
(4)
|
10,290
|
|
—
|
|
|
—
|
|
||
|
1/12/2017
|
291
|
|
(5)
|
42,777
|
|
—
|
|
|
—
|
|
||
|
10/1/2017
|
47
|
|
(5)
|
6,909
|
|
—
|
|
|
—
|
|
||
|
1/24/2018
|
585
|
|
(6)
|
85,995
|
|
—
|
|
|
—
|
|
||
|
1/1/2019
|
1,272
|
|
(7)
|
186,984
|
|
—
|
|
|
—
|
|
||
|
8/1/2019
|
4,029
|
|
(7)
|
592,263
|
|
—
|
|
|
—
|
|
||
Christopher S. Holzshu
|
2/4/2016
|
1,295
|
|
(4)
|
190,365
|
|
—
|
|
|
—
|
|
||
|
1/12/2017
|
7,279
|
|
(5)
|
1,070,013
|
|
—
|
|
|
—
|
|
||
|
1/1/2018
|
8,755
|
|
(6)
|
1,286,985
|
|
—
|
|
|
—
|
|
||
|
1/1/2019
|
20,987
|
|
(7)
|
3,085,089
|
|
—
|
|
|
—
|
|
||
Scott A. Hillier
|
2/4/2016
|
741
|
|
(4)
|
108,927
|
|
—
|
|
|
—
|
|
||
|
1/12/2017
|
4,222
|
|
(5)
|
620,634
|
|
—
|
|
|
—
|
|
||
|
1/1/2018
|
5,468
|
|
(6)
|
803,796
|
|
—
|
|
|
—
|
|
||
|
1/1/2019
|
12,402
|
|
(7)
|
1,823,094
|
|
—
|
|
|
—
|
|
||
Thomas M. Dobry
|
2/4/2016
|
387
|
|
(4)
|
56,889
|
|
—
|
|
|
—
|
|
||
|
1/12/2017
|
2,438
|
|
(5)
|
358,386
|
|
—
|
|
|
—
|
|
||
|
1/1/2018
|
3,433
|
|
(6)
|
504,651
|
|
—
|
|
|
—
|
|
||
|
1/1/2019
|
8,396
|
|
(7)
|
1,234,212
|
|
—
|
|
|
—
|
|
||
John F. North III (8)
|
2/4/2016
|
—
|
|
(4)
|
—
|
|
—
|
|
|
—
|
|
||
|
1/12/2017
|
—
|
|
(5)
|
—
|
|
—
|
|
|
—
|
|
||
|
1/1/2018
|
—
|
|
(6)
|
—
|
|
—
|
|
|
—
|
|
||
|
1/1/2019
|
—
|
|
(7)
|
—
|
|
—
|
|
|
—
|
|
(1
|
)
|
All shares are related to restricted stock units subject to time-vesting restrictions.
|
||||||||
(2
|
)
|
Assumes a stock price of $147.00, the closing price of our common stock on December 31, 2019.
|
||||||||
(3
|
)
|
All shares are related to restricted stock units subject to performance conditions and time-vesting restrictions.
|
||||||||
(4
|
)
|
Vests 100% on January 1st of 2020.
|
||||||||
(5
|
)
|
Vests 49% on January 1st of 2020 and 51% on January 1st of 2021.
|
||||||||
(6
|
)
|
Vests 33% on January 1st of each year 2020, 2021 and 34% on January 1, 2022.
|
||||||||
(7
|
)
|
Vests 33% on January 1st of each year 2021, 2022 and 34% on January 1, 2023.
|
||||||||
(8
|
)
|
Mr. North had no outstanding equity as of December 31, 2019.
|
||||||||
|
|
|
Stock Awards
|
|||||
Name
|
|
Number of Shares Acquired on Vesting (#)
|
|
Value Realized on Vesting ($) (1)
|
|||
Bryan B. DeBoer
|
|
27,420
|
|
|
$
|
2,183,048
|
|
Tina H. Miller
|
|
325
|
|
|
$
|
24,807
|
|
Christopher S. Holzshu
|
|
11,211
|
|
|
$
|
892,538
|
|
Scott A. Hillier
|
|
6,606
|
|
|
$
|
526,193
|
|
Thomas M. Dobry
|
|
3,812
|
|
|
$
|
305,312
|
|
John F. North III
|
|
4,964
|
|
|
$
|
393,244
|
|
Name
|
Executive Contributions in Last FY
|
Registrant Contributions in Last FY
|
Aggregate Earnings in Last FY (1)
|
Aggregate Withdrawals/ Distributions
|
Aggregate Balance at Last FYE (3)
|
||||||||||
Bryan B. DeBoer
|
$
|
398,841
|
|
$
|
—
|
|
$
|
174,769
|
|
$
|
—
|
|
$
|
3,989,270
|
|
Tina H. Miller
|
—
|
|
—
|
|
3,784
|
|
—
|
|
77,741
|
|
|||||
Christopher S. Holzshu
|
—
|
|
—
|
|
41,366
|
|
—
|
|
849,811
|
|
|||||
Scott A. Hillier
|
—
|
|
—
|
|
41,976
|
|
—
|
|
862,342
|
|
|||||
Thomas M. Dobry
|
—
|
|
—
|
|
10,605
|
|
—
|
|
217,872
|
|
|||||
John F. North III (2)
|
—
|
|
—
|
|
(106,437
|
)
|
—
|
|
203,312
|
|
(1)
|
A portion of these amounts are related to above-market earnings on compensation that is deferred and is reported in Change in Pension Value and Nonqualified Deferred Compensation Earnings in the Summary Compensation Table above.
|
(2)
|
John North's aggregate earnings is offset by forfeited balance at termination.
|
(3)
|
The amounts related to Executive Contributions, Registrant Contributions and above-market earnings on compensation that is deferred was reported as compensation in the Summary Compensation Table in 2017 are as follows (no contributions were made in 2018 or 2019):
|
Name
|
|
Reported for 2017 ($)
|
||
Bryan B. DeBoer
|
|
$
|
285,000
|
|
Tina H. Miller
|
|
|
||
Christopher S. Holzshu
|
|
120,000
|
|
|
Scott A. Hillier
|
|
115,000
|
|
|
Thomas M. Dobry
|
|
|
||
John F. North III
|
|
70,000
|
|
Name
|
Death
|
|
Disability
|
|
Retirement
|
||||||
Bryan B. DeBoer
|
$
|
3,722,475
|
|
|
$
|
16,863,840
|
|
|
$
|
3,722,475
|
|
Tina H. Miller
|
74,338
|
|
|
925,218
|
|
|
74,338
|
|
|||
Christopher S. Holzshu
|
1,389,859
|
|
|
5,632,452
|
|
|
1,389,859
|
|
|||
Scott A. Hillier
|
832,269
|
|
|
3,356,451
|
|
|
832,269
|
|
|||
Thomas M Dobry
|
494,985
|
|
|
2,154,138
|
|
|
494,985
|
|
Employee
|
Title
|
Salary
|
Bonus
|
Time Vested RSU
|
1-Year Performance RSU's
|
Long-Term Performance RSU
|
Bryan B. DeBoer
|
President and
Chief Executive Officer
|
24 months
|
2 years
|
Accelerated vesting
|
Accelerated vesting based on previous 3 years average
|
Accelerated vesting at highest level
|
Tina H. Miller
|
Senior Vice President and Chief Financial Officer
|
24 months
|
2 years
|
Accelerated vesting
|
Accelerated vesting based on previous 3 years average
|
Accelerated vesting at highest level
|
Christopher S. Holzshu
|
Executive Vice President and Chief Operating Officer
|
24 months
|
2 years
|
Accelerated vesting
|
Accelerated vesting based on previous 3 years average
|
Accelerated vesting at highest level
|
Scott A. Hillier
|
Senior Vice President of Operations
|
24 months
|
2 years
|
Accelerated vesting
|
Accelerated vesting based on previous 3 years average
|
Accelerated vesting at highest level
|
Thomas M Dobry
|
Senior Vice President and Chief Marketing Officer
|
24 months
|
2 years
|
Accelerated vesting
|
Accelerated vesting based on previous 3 years average
|
Accelerated vesting at highest level
|
Continuing Change in Control Benefits
|
|
Continuing long-term care insurance premiums for 24 months after the separation date; and continuing health insurance benefits until the earlier of (a) 18 months after the separation date, (b) the full COBRA period required by law or (c) when the executive becomes eligible for employer-sponsored health insurance from a subsequent employer.
|
•
|
voting power of the stock of the Company (excluding such a change through the transfer of the Company’s outstanding stock or interests in Lithia Holding to the Sidney B. DeBoer Trust or the election of the Sidney B. DeBoer Family Trust as the manager of Lithia Holding); or (D) a majority of the members of the Company’s Board of Directors are removed from office by a vote of the Company’s shareholders over the recommendation of our Board or replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s Board of Directors before the date of the appointment or election;
|
•
|
“Cause” for termination of employment means any one or more of the following: (A) willful misfeasance, gross negligence or conduct involving dishonesty in the performance of the executive’s duties, as determined by our Board of Directors; (B) conviction of a crime in connection with the executive’s duties or any felony; (C) conduct significantly harmful to the Company, as reasonably determined by our Board of Directors, including but not limited to intentional violation of law or of any significant policy or procedure of the Company; (D) refusal or failure to act in accordance with a stipulation, requirement or directive of our Board of Directors (provided such directive is lawful); or (E) failure to faithfully or diligently perform any of the duties of the executive’s employment which are specified in the Change in Control Agreement, articulated by our Board of Directors, or are usual and customary duties of the executive’s employment if the executive has not corrected the problem or formulated a plan for its correction with our Board (if such failure is not susceptible to immediate correction) within 30 days after notice to the executive; and
|
•
|
“Good Reason” for an executive’s resignation means (A) any one or more of the following occurs without the executive’s consent: (1) a material diminution of the executive’s base compensation (unless consistent with an across-the-board pay reduction for all senior management and not in excess of 20%); (2) a material change in the geographic location at which the executive must perform services for the Company; (3) a material diminution in the executive’s authority, duties or responsibilities, or (4) any action or inaction by the Company that constitutes a material breach of the Change in Control Agreement; (B) the executive provides notice to the Company of the existence of the condition within 90 days of the initial existence of the condition; (C) the Company has 30 days following receipt of such notice to remedy the condition and fails to do so; and (D) the executive resigns within twelve months of such event occurring. For purposes of clause (A)(3) of the previous sentence, whether a material diminution in the executive’s authority has occurred shall be determined in part by comparing the authority and positions of the persons to whom the executive directly reports immediately prior to the Change in Control or the announcement of the Change in Control with the authority and positions of the persons to whom the executive directly reports immediately after the claimed diminution in the executive’s authority. For example, if the executive was the CEO of the Company before the Company was acquired by a competing business, a material diminution in the CEO’s authority would include, but not be limited to, the CEO not serving as the CEO of the consolidated competing business after its acquisition of the Company.
|
Name
|
|
Severance Payments (1)
|
|
Severance Related Benefits (2)
|
|
Value of Stock Awards That Would Vest (3)
|
|
Value of Long-Term Incentive Benefits that Would Vest (4)
|
|
Additional Payment under Cash Incentive Plan for 2019 (5)
|
|
Total
|
||||||||||||
Bryan B. DeBoer
|
|
$
|
2,212,000
|
|
|
$
|
21,505
|
|
|
$
|
16,863,840
|
|
|
$
|
743,374
|
|
|
$
|
4,494,000
|
|
|
$
|
24,334,719
|
|
Tina H. Miller
|
|
720,000
|
|
|
15,175
|
|
|
925,218
|
|
|
31,738
|
|
|
432,000
|
|
|
2,124,131
|
|
||||||
Christopher S. Holzshu
|
|
1,386,000
|
|
|
23,424
|
|
|
5,632,452
|
|
|
405,844
|
|
|
1,875,000
|
|
|
9,322,720
|
|
||||||
Scott A. Hillier
|
|
980,000
|
|
|
17,580
|
|
|
3,356,451
|
|
|
301,856
|
|
|
1,155,000
|
|
|
5,810,887
|
|
||||||
Thomas M. Dobry
|
|
780,000
|
|
|
14,516
|
|
|
2,154,138
|
|
|
112,766
|
|
|
840,000
|
|
|
3,901,420
|
|
(1)
|
Payable in 24 monthly installments.
|
(2)
|
Based on current cost of providing 18 months (the full COBRA period) of COBRA benefits for our NEOs.
|
(3)
|
Payable by delivery of shares of Lithia stock immediately following a change in control.
|
(4)
|
Payable in equal annual installments over 10 years. The value of the long-term incentive is based on the unvested value of those benefits, calculated as of December 31, 2019 and would be payable even if the NEO’s employment was not terminated.
|
(5)
|
Payable in a lump sum immediately following a change in control. Amounts are in addition to amounts reported in the Summary Compensation Table under “Non-equity Incentive Plan.”
|
•
|
the annual total compensation of the employee identified at median of our company (other than the CEO), was $42,905;
|
•
|
and the annual total compensation of the CEO was $7,963,900;
|
•
|
for this ratio, both employee compensation (other than our CEO) and CEO compensation were calculated using 2019 paid wages, annualized for full-time and part-time employees who did not work a full year.
|
|
2019
|
2018
|
Audit Fees
|
$1,804,000
|
$1,964,000
|
Audit-Related Fees
|
$136,600
|
—
|
Tax Fees
|
$22,535
|
$40,000
|
All Other Fees
|
$1,780
|
$1,780
|
|
$1,964,915
|
$2,005,780
|
Beneficial Owner
|
Class A Shares Beneficially Owned (1)
|
Class B Shares Beneficially Owned (1)
|
||||||||
Blackrock, Inc (2)
|
3,497,413
|
|
|
15.4
|
%
|
|
|
|
||
55 East 52nd Street; New York, NY 10055
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
||||
The Vanguard Group (3)
|
2,501,122
|
|
|
11.0
|
%
|
|
|
|
||
100 Vanguard Blvd; Malvern, PA 19355
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
||||
Abrams Capital Management, LP (4)
|
2,226,068
|
|
|
9.8
|
%
|
|
|
|
||
222 Berkeley St, 21st Floor; Boston, MA 02116
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
||||
Dimensional Fund Advisors, LP (5)
|
1,302,667
|
|
|
5.7
|
%
|
|
|
|
||
Building One; 6300 Bee Cave Rd
|
|
|
|
|
|
|
||||
Austin, TX 78746
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
||||
Lithia Holding Company, LLC (6)
|
—
|
|
|
—
|
|
600,000
|
|
(7)
|
100
|
%
|
Sidney B. DeBoer
|
—
|
|
|
*
|
600,000
|
|
(6)
|
100
|
%
|
|
Bryan B. DeBoer
|
111,068
|
|
|
*
|
—
|
|
|
—
|
%
|
|
Tina H. Miller
|
1,654
|
|
|
*
|
—
|
|
|
—
|
%
|
|
Christopher S. Holzshu
|
35,931
|
|
|
*
|
—
|
|
|
—
|
%
|
|
Scott A. Hillier
|
49,434
|
|
|
*
|
—
|
|
|
—
|
%
|
|
Thomas M. Dobry
|
7,249
|
|
|
|
|
|
|
|||
Susan O. Cain
|
11,307
|
|
|
*
|
—
|
|
|
—
|
%
|
|
Shauna F. McIntyre
|
1,413
|
|
|
*
|
—
|
|
|
—
|
%
|
|
Louis P. Miramontes
|
2,364
|
|
|
*
|
—
|
|
|
—
|
%
|
|
Kenneth E. Roberts
|
96,042
|
|
(8)
|
*
|
—
|
|
|
—
|
%
|
|
David J. Robino
|
5,815
|
|
|
*
|
—
|
|
|
—
|
%
|
|
All current executive officers and directors as a Group (11 persons)
|
322,277
|
|
|
—
|
|
600,000
|
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(6)
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100
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%
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(1)
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The Class A common stock is entitled to one vote per share and the Class B common stock is entitled to 10 votes per share and is convertible into Class A common stock on a one-for-one basis at the option of the holder thereof or under certain other circumstances. For purposes of this table, Class A shares beneficially owned do not include Class A shares issuable upon conversion of Class B shares.
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(2)
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Beneficial ownership as of December 31, 2019 as reported by BlackRock Inc. in a Schedule 13G/A filed on February 4, 2020. The Schedule 13G/A reports sole voting power with respect to 3,429,430 shares and sole dispositive power with respect to 3,497,413 shares.
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(3)
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Beneficial ownership as of December 31, 2019 as reported by The Vanguard Group in a Schedule 13G/A filed on February 12, 2020. The Schedule 13G/A reports sole voting power with respect to 37,379 shares, shared voting power with respect to 5,599 shares, sole dispositive power with respect to 2,461,033 shares and shared dispositive power with respect to 40,089 shares.
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(4)
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Beneficial ownership as of December 31, 2019 as reported by Abrams Capital Management, L.P., Abrams Capital Partners II, L.P., Abrams Capital, LLC, Abrams Capital Management, LLC, and David Abrams in a Schedule 13G/A filed on February 13, 2020. The Schedule 13G/A reports shared voting and dispositive power with respect to 2,226,068 shares by Abrams Capital Management, L.P., Abrams Capital Management, LLC, and David Abrams, with respect to 2,189,102 shares by Abrams Capital, LLC, and with respect to 1,941,198 shares by Abrams Capital Partners II, L.P.
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(5)
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Beneficial ownership as of December 31, 2019 as reported by Dimensional Fund Advisors LP in a Schedule 13G filed on February 12, 2020. The Schedule 13G reports sole voting power with respect to 1,258,532 shares and sole dispositive power with respect to 1,302,667 shares.
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(6)
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Sidney B. DeBoer is the manager of Lithia Holding and he has the sole voting and investment power with respect to all of the Class B common stock. Accordingly, all shares held by Lithia Holding are deemed beneficially owned by him. The following table gives tabular information regarding the ownership of Lithia Holding:
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Unit Holder
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Units Owned
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Percent
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DeBoer Family LLC
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36,264
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55.8%
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Heimann Family LLC
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27,394
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42.2%
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Bryan B. DeBoer
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1,307
|
2.0%
|
|
64,965
|
100.0%
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(7)
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All of the 600,000 shares of Class B common stock are pledged by Lithia Holding to secure a loan. If the creditors foreclose on those shares of Class B Common Stock, we could experience a change of control. In March 2013, we adopted changes to our insider trading policy and our stock ownership guidelines to prohibit future pledging and hedging transactions. Existing pledges, including the pledge by Lithia Holding, and pledges under replacement financial arrangements, were grandfathered. (See “Stock Ownership Policy; Hedging and Pledging Restrictions” above).
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(8)
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Kenneth E. Roberts has a line of credit that is secured by the securities held in one of his brokerage accounts, including 59,775 shares of Class A common stock of Lithia; no amounts were drawn on the line of credit as of February 28, 2020.
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(9)
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Includes RSUs vesting within 60 days of February 28, 2020, shares held in 401(k) accounts (shares held by spouses or other household members are included in the below table for informational purposes only):
|
Name
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Stock Awards Vesting within 60 days
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Shares held by spouse or other household members
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Shares held in 401(k) account
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Sidney B. DeBoer
|
382
|
0
|
0
|
Bryan B. DeBoer
|
0
|
2,559
|
0
|
Tina H. Miller
|
0
|
0
|
0
|
Christopher S. Holzshu
|
0
|
0
|
2,767
|
Scott A. Hillier
|
0
|
0
|
0
|
Thomas M. Dobry
|
0
|
0
|
0
|
Susan O. Cain
|
382
|
0
|
0
|
Shauna F. McIntyre
|
382
|
0
|
0
|
Louis P. Miramontes
|
382
|
|
0
|
Kenneth E. Roberts
|
382
|
0
|
0
|
David J. Robino
|
382
|
0
|
0
|
All current executive officers and directors as a group
|
2,292
|
2,559
|
2,767
|
Communications with the Company and our Board
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Our Board of Directors has adopted a Shareholder Communication Policy to promote efficient shareholder and interested party communications with our Board of Directors and management. Our Investor Relations Department is responsible for receiving and routing all shareholder and interested party communications. Corporate governance issues are the responsibility of the Nominating and Governance Committee. Our Audit Committee handles concerns or allegations regarding possible violations of accounting or financial reporting matters. Management is the more appropriate group for handling all other matters and we encourage you to contact them accordingly.
All correspondence with our Board of Directors or its members must be in writing, directed to the attention of either our Board of Directors or an individual director and delivered to: Investor Relations Department, Lithia Motors, Inc., 150 N. Bartlett Street, Medford, Oregon 97501. The Investor Relations Department will review communications to our Board or individual directors and direct the communication to the named Board member if the communication relates to important Company policies, or to management, if the matter is better addressed by management. The Investor Relations Department copies the Lead Independent Director and our General Counsel on all communications. A complete copy of our Shareholder Communication Policy is available on our website at www.lithiainvestorrelations.com and interested persons may obtain a written copy from the Investor Relations Department.
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Shareholder Proposals
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SEC rules require that any shareholder proposal to be included in our proxy materials for consideration at next year’s annual meeting be received by us at our principal executive office no later than November 11, 2020 (120 days prior to the anniversary of the mailing of the prior year’s Notice of Internet Availability). Shareholders who wish to nominate one or more director candidates for election to the Board to be included in our proxy materials for consideration at next year’s annual meeting must do so in accordance with our Bylaws, which require that notice of such a nomination be delivered to our Secretary at our principal executive offices no earlier than October 12, 2020 and no later than November 11, 2020 (at least 150 days and no later than 120 days prior to the anniversary of the mailing of the prior year’s proxy materials), and must include the information required by our Bylaws. Shareholders who otherwise wish to present proposals for action at next year’s annual meeting must do so in accordance with our Bylaws, which require shareholders to give us advance written notice of a director nomination or other business to be conducted at any meeting of shareholders. To be timely, the written notice for next year’s annual meeting must be received by our Secretary between December 24, 2020 and January 23, 2021 (at least 90 days, and no earlier than 120 days, before the first anniversary of our preceding year’s annual meeting) and must include the information required by our Bylaws. Our mailing address is 150 N. Bartlett Street, Medford, Oregon 97501.
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Shareholder Director Recommendations
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The Nominating and Governance Committee will consider potential director nominees recommended by any record or beneficial shareholder. Shareholders may recommend individuals to the Nominating and Governance Committee for consideration as potential director nominees by submitting a written recommendation to the Chairman of the Nominating and Governance Committee in accordance with our Shareholder Communication Policy. To be considered for nomination to the following year’s Board of Directors, the written recommendation must be received at our principal executive office at 150 N. Bartlett Street, Medford, Oregon 97501.
The written recommendation must include the candidate’s name, appropriate biographical information, including information about the candidate’s qualifications and background materials, a statement that the person submitting the recommendation is a shareholder entitled to vote in the election of directors and a consent to serve as director signed by the recommended individual. If the necessary information is received in a timely manner, the Nominating and Governance Committee will evaluate the shareholder-recommended candidate using substantially the same process, and applying substantially the same criteria, as it uses to evaluate all other candidates. For information regarding minimum qualifications for directors and specific qualities and skills that the Nominating and Governance Committee believes are necessary for our directors to possess, see “Director Qualifications and Nominations” above. Recommended candidates are submitted to our Board to be considered as director nominees. If our Board determines to nominate a shareholder-recommended candidate, the candidate’s name will be included in our proxy and on the ballot at our annual meeting of shareholders.
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