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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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CarMax, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which the transaction applies:
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Aggregate number of securities to which the transaction applies:
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(3)
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Per unit price or other underlying value of the transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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(4)
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Proposed maximum aggregate value of the transaction:
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(5)
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Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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Date Filed:
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When:
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Tuesday, June 23, 2020, at 1:00 p.m. Eastern Time
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Where:
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This year’s meeting is a virtual annual shareholders meeting held at: www.virtualshareholdermeeting.com/KMX2020
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Items of Business:
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(1)
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To elect the twelve directors named in the proxy statement to our Board of Directors.
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(2)
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To ratify the appointment of KPMG LLP as our independent registered public accounting firm.
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(3)
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To vote on an advisory resolution to approve the compensation of our named executive officers.
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(4)
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To approve the CarMax, Inc. 2002 Stock Incentive Plan, as amended and restated.
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(5)
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To transact any other business that may properly come before the annual shareholders meeting or any postponements or adjournments thereof.
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Who May Vote:
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You may vote if you owned CarMax common stock at the close of business on April 17, 2020.
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TABLE OF CONTENTS
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Corporate Responsibility and Sustainability
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PROXY SUMMARY
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•
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Visit www.virtualshareholdermeeting.com/KMX2020
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•
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Enter the 16-digit control number listed on your Notice of Internet Availability of Proxy Materials, proxy card, or voting instruction form.
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Putting People First
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Caring for Our Communities
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Protecting the Environment
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Ensuring Responsible Governance & Ethics
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We are proud to provide an award-winning workplace where we help all associates progress on their career journey and achieve their career goals. Our associates are the key to our success. We provide an exceptional workplace full of opportunities to learn and grow, celebrate accomplishments, and take care of each other and our communities.
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Just as we are dedicated to driving what’s possible for our customers and associates, we also recognize that when our communities thrive, so do we. Our values make it clear: We “Put People First,” and that means giving back to help improve the communities where our associates live and work.
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We respect the environment and take a practical approach to conserving energy and minimizing waste from our operations. We actively look for more efficient ways to use resources and reduce our environmental impact.
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CarMax is committed to sound corporate governance. Our Board of Directors and management have adopted governance standards and practices that seek to properly balance stakeholder interests while providing a framework to guide optimal decision-making.
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l Annual election of all directors
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l Majority voting for directors
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l 10 of 12 director nominees are independent
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l Proxy access adopted
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l 6 new independent directors since 2017
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l Annual “say on pay” vote
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l Responsibility Report issued December 2019
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l Board oversight of risk management program
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When
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Tuesday, June 23, 2020, at 1:00 p.m., Eastern Time
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Where
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This year’s meeting is a virtual-only annual shareholders meeting. There will be no in person meeting location.
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Who May Attend the Virtual Meeting
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All shareholders as of the record date may attend the meeting.
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Record Date
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April 17, 2020
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Virtual Meeting Website
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www.virtualshareholdermeeting.com/KMX2020
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Agenda Item
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Board Recommendation
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Page of Proxy Statement
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1.
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Election of Twelve Directors
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FOR each Director nominee
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7
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2.
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Ratification of Auditors
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FOR
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23
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3.
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Advisory Approval of Executive Compensation
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FOR
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26
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4.
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Approval of Amended and Restated Stock Incentive Plan
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FOR
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60
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Nominee
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Age
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Director
Since |
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Independent
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Principal Occupation
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Expected Committee Membership
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Peter J. Bensen
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57
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2018
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Yes
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Retired Chief Administrative Officer and Corporate Executive Vice President and Chief Financial Officer of McDonald's Corporation, a global restaurateur and franchisor
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Audit
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Ronald E. Blaylock
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60
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2007
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Yes
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Founder and Managing Partner of GenNx360 Capital Partners, a private-equity buyout fund
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Compensation and Personnel
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Sona Chawla
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52
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2017
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Yes
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Chief Growth and Innovation Officer at CDW Corporation, a leading technology solutions provider
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Compensation and Personnel
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Thomas J. Folliard
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55
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2006
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No
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Non-Executive Chair of the Board, CarMax, Inc. and Retired President and Chief Executive Officer of CarMax, Inc.
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N/A
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Shira Goodman
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59
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2007
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Yes
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Retired Chief Executive Officer of Staples, Inc., an office supply retailer
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Nominating and Governance
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Robert J. Hombach
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54
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2018
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Yes
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Retired Executive Vice President, Chief Financial Officer and Chief Operations Officer of Baxalta Incorporated, a biopharmaceutical company
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Audit
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David W. McCreight
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57
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2018
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Yes
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Retired President of Urban Outfitters, Inc., an international consumer products retailer and wholesaler, and Chief Executive Officer of its Anthropologie Group
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Audit
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William D. Nash
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51
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2016
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No
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President and Chief Executive Officer of CarMax, Inc.
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N/A
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Mark F. O'Neil
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61
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2019
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Yes
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Retired Chief Operating Officer of Cox Automotive, Inc., a leading provider of automotive solutions and owner of Manheim, an automobile auction company
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Audit
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Pietro Satriano
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57
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2018
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Yes
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Chief Executive Officer of US Foods Holding Corp., a publicly held foodservice distributor
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Nominating and Governance
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Marcella Shinder
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53
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2015
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Yes
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Retired Global Head of Partnerships at WeWork Companies Inc., a technologically driven global provider of shared working spaces
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Nominating and Governance
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Mitchell D. Steenrod
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53
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2011
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Yes
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Retired Senior Vice President and Chief Financial Officer of Pilot Travel Centers LLC, the nation’s largest operator of travel centers and truck stops
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Compensation and Personnel
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Audit Fees
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Audit-Related Fees
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Tax Fees
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Total Fees
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Fiscal 2019
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$2,245,500
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$558,000
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$75,772
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$2,879,272
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Fiscal 2020
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$2,428,374
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$563,000
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$107,991
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$3,099,365
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PROPOSAL ONE: ELECTION OF DIRECTORS
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Each nominee must receive a majority of the votes cast.
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CarMax uses a majority vote standard for the election of directors. This means that to be elected in uncontested elections, each nominee must be approved by the affirmative vote of a majority of the votes cast.
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PETER J. BENSEN
Mr. Bensen retired from McDonald’s Corporation, following a 20-year career, in 2016. He served as Chief Administrative Officer of McDonald’s from 2015 to 2016. Before that he served as Corporate Executive Vice President and Chief Financial Officer of McDonald’s from 2008 to 2014, when he was promoted to Corporate Senior Executive Vice President and Chief Financial Officer, a position he held until 2015. Before joining McDonald’s in 1996, Mr. Bensen was a senior manager at Ernst & Young LLP.
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Director since: 2018
Age: 57
Independent
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Other Current Directorships
Lamb Weston Holdings, Inc.
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Other Directorships within Past 5 Years
Catamaran Corporation (2011-2015)
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Qualifications
Mr. Bensen’s long-standing service as the chief financial officer, and in other administrative, financial, and accounting roles, at a global, iconic company qualify him to serve on our Board. He brings to our Board extensive management experience and financial expertise, as well as his background as a key executive helping to shape McDonald’s strategic response to a changing market environment.
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RONALD E. BLAYLOCK
Mr. Blaylock is the founder and Managing Partner of GenNx360 Capital Partners, a private-equity buyout fund focused on industrial business-to-business companies. Prior to founding GenNx360 in 2006, Mr. Blaylock was Chief Executive Officer of Blaylock & Company, a full-service investment banking firm that he founded in 1993. Previously, Mr. Blaylock held senior management positions with PaineWebber and Citigroup.
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Director since: 2007
Age: 60
Independent
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Other Current Directorships
Pfizer Inc.
W. R. Berkley Corporation
Conyers Park II Acquisition Corp.
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Other Directorships within Past 5 Years
Urban One, Inc. (2002-2019)
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Qualifications
Mr. Blaylock’s experience managing two successful investment enterprises, as well as his considerable finance experience, qualify him to serve on our Board. Mr. Blaylock’s years of relevant experience growing companies and serving on other public company boards enable him to provide additional insight to our Board.
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SONA CHAWLA
Ms. Chawla has served as the Chief Growth and Innovation Officer at CDW Corporation, a leading technology solutions provider to business, government, education and healthcare customers, since January 2020. Prior to joining CDW, she was President of Kohl's Corporation from May 2018 to October 2019. Ms. Chawla joined Kohl’s in November 2015, serving as Chief Operating Officer until September 2017 and as President-Elect from September 2017 to May 2018. Before joining Kohl’s, Ms. Chawla served at Walgreens as its President of Digital and Chief Marketing Officer from February 2014 to November 2015 and as its President, E-commerce from January 2011 to February 2014. Ms. Chawla has 19 years of experience in digital and retail.
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Director since: 2017
Age: 52
Independent
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Other Current Directorships
None.
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Other Directorships within Past 5 Years
Express, Inc. (2012-2015)
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Qualifications
Ms. Chawla’s executive, strategic, operational, and digital expertise qualify her to serve on our Board. Her background and operating experience in retail, including e-commerce, omni-channel strategy, store operations, logistics, and information and digital technology strengthen the business and strategic insight of our Board.
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THOMAS J. FOLLIARD
Mr. Folliard has been the Non-Executive Chair of the Board of CarMax since August 2016. He joined CarMax in 1993 as senior buyer and became Director of Purchasing in 1994. He was promoted to Vice President of Merchandising in 1996, Senior Vice President of Store Operations in 2000 and Executive Vice President of Store Operations in 2001. Mr. Folliard served as President and Chief Executive Officer of CarMax from 2006 to February 2016 and retired as Chief Executive Officer in August 2016.
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Director since: 2006
Age: 55
Non-Executive Chair of
the Board
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Other Current Directorships
PulteGroup, Inc.
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Other Directorships within Past 5 Years
DAVIDsTEA, Inc. (2014-2017)
|
|
Qualifications
During his ten years as CEO, Mr. Folliard successfully led CarMax through the company’s establishment as a national brand and a time of significant growth, during which its store base and total revenues more than doubled and its net income quadrupled. With his long tenure at CarMax, Mr. Folliard brings to the board significant executive experience and in-depth knowledge of our company and the auto retail industry.
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SHIRA GOODMAN
Ms. Goodman was the Chief Executive Officer of Staples, Inc. Ms. Goodman joined Staples in 1992 and held a variety of positions of increasing responsibility in general management, marketing and human resources, including serving as Executive Vice President, Marketing from 2001 to 2009, Executive Vice President, Human Resources from 2009 to 2012, Executive Vice President, Global Growth from 2012 to 2014, President, North American Commercial from 2014 to 2016, President, North American Operations from February to June 2016, Interim Chief Executive Officer from June to September 2016, and Chief Executive Officer from September 2016 to January 2018. From 1986 to 1992, Ms. Goodman worked at Bain & Company in project design, client relationships, and case team management and helped develop the initial business plan for the Staples B2B delivery service. Ms. Goodman joined Charlesbank Capital Partners, a mid-market private equity firm, in 2019 as an Advisory Director.
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Director since: 2007
Age: 59
Independent
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Other Current Directorships
CBRE Group, Inc.
Henry Schein, Inc.
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Other Directorships within Past 5 Years
Staples, Inc. (2016-2017)
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|
Qualifications
Ms. Goodman has proven business acumen, having served as the chief executive and in various other leadership positions at an internationally renowned retailer. Ms. Goodman’s experiences in operations, retail marketing, workforce management, human resources, and business growth at Staples all qualify her to serve on our Board.
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ROBERT J. HOMBACH
Mr. Hombach is the retired Executive Vice President, Chief Financial Officer and Chief Operations Officer of Baxalta, a biopharmaceutical company, a position he held from 2015 until the acquisition of Baxalta by Shire PLC in 2016. Baxalta was spun off from its parent, Baxter, in 2015, where Mr. Hombach served as Vice President and Chief Financial Officer from 2010 until the Baxalta spin off. Mr. Hombach began his career at Baxter, a global healthcare company, in 1989 and served in a number of roles there, including as Vice President of Finance EMEA from 2004 to 2007 and Treasurer from 2007 to 2010.
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Director since: 2018
Age: 54
Independent
|
Other Current Directorships
BioMarin Pharmaceutical Inc.
Aptinyx Inc.
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Other Directorships within Past 5 Years
None.
|
|
Qualifications
Mr. Hombach’s considerable executive and financial experience qualify him to serve on our Board. His background as an executive at large, multi-national corporations undertaking complex strategic and transactional transitions, in addition to his operational and financial expertise, strengthen the business and strategic insight of our Board.
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|
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DAVID W. MCCREIGHT
Mr. McCreight is the retired President of Urban Outfitters, Inc., an international consumer products retailer and wholesaler, and Chief Executive Officer of its Anthropologie Group. Mr. McCreight served as Chief Executive Officer of Anthropologie from 2011 to 2018 and as President of Urban Outfitters, Inc. from 2016 to 2018. Previously, Mr. McCreight served as President of Under Armour from 2008 until 2010; and he was President, from 2005 to 2008, and Senior Vice President, from 2003 to 2005, of Lands’ End.
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Director since: 2018
Age: 57
Independent
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Other Current Directorships
Wolverine World Wide, Inc.
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Other Directorships within Past 5 Years
DAVIDsTEA, Inc. (2014-2018)
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Qualifications
Mr. McCreight’s extensive experience as a retail executive qualifies him to serve on our Board. His background as a leader at high profile retail brands executing omni-channel strategies in a fast-evolving market environment will enable him to contribute key strategic insights to our Board.
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WILLIAM D. NASH
Mr. Nash has been the President and Chief Executive Officer of CarMax since September 2016. He was promoted to President in February 2016. In 2012, he assumed the role of Executive Vice President, Human Resources and Administrative Services, where he oversaw human resources, information technology, procurement, loss prevention, employee health & safety, and construction & facilities. In 2011, Mr. Nash was promoted to Senior Vice President, Human Resources and Administrative Services. Previously, he served as Vice President and Senior Vice President of Merchandising, after serving as Vice President of Auction Services. Mr. Nash joined CarMax in 1997 as auction manager.
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Director since: 2016
Age: 51
President and Chief
Executive Officer
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Other Current Directorships
None.
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Other Directorships within Past 5 Years
None.
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Qualifications
As the chief executive officer of CarMax, Mr. Nash leads the Company’s day-to-day operations and is responsible for establishing and executing the Company’s strategic plans. His significant experience in the auto retail industry, his tenure with CarMax and his motivational leadership of more than 25,000 CarMax associates qualify him to serve on our Board.
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PIETRO SATRIANO
Mr. Satriano has been the Chief Executive Officer and a director of US Foods Holding Corp., a publicly held foodservice distributor, since July 2015 and Chairman of the US Foods board since December 2017. Prior to that, Mr. Satriano served as Chief Merchandising Officer of US Foods from February 2011 until July 2015. Before joining US Foods, Mr. Satriano was President of LoyaltyOne Co. from 2009 to 2011 and served in a number of leadership positions at Loblaw Companies Limited, including Executive Vice President, Loblaw Brands, and Executive Vice President, Food Segment, from 2002 to 2008. Mr. Satriano began his career in strategy consulting, first in Toronto, Canada with The Boston Consulting Group, and then in Milan, Italy with the Monitor Company.
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Director since: 2018
Age: 57
Independent
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Other Current Directorships
US Foods Holding Corp.
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Other Directorships within Past 5 Years
None.
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Qualifications
Mr. Satriano’s chief executive experience at US Foods, as well as his extensive executive experience at consumer-facing companies, qualify him to serve on our Board. He is able to provide our Board with important strategic perspectives due to his current executive role and his history of leadership at companies operating in highly competitive and quickly evolving markets.
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MARCELLA SHINDER
Ms. Shinder served as Global Head of Partnerships at WeWork Companies, Inc. a technologically driven global provider of shared working spaces, from April 2019 to November 2019. Ms. Shinder joined WeWork in March 2018, serving as Global Head of Marketing until April 2019. Prior to joining WeWork, Ms. Shinder was Chief Marketing Officer at WorkMarket, a leading provider of advanced labor automation technology, from May 2016 until March 2018. Before that, Ms. Shinder was Chief Marketing Officer of Nielsen Holdings plc, the world’s leading consumer data and information company from 2011 to 2016. Prior to joining Nielsen, Ms. Shinder was with American Express, serving in a variety of executive roles spanning general management and marketing including, most recently, as General Manager of the American Express OPEN charge card portfolio.
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Director since: 2015
Age: 53
Independent
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Other Current Directorships
None.
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Other Directorships within Past 5 Years
None.
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Qualifications
Ms. Shinder’s experiences as the lead marketing officer of innovative venture capital backed technology companies, as a senior executive at a leading information management company, and at a large consumer financial services organization focused on consumer lending, qualify her to serve on our Board. Further, Ms. Shinder’s deep experience with big data and analytics, machine learning and advanced technologies, cybersecurity, social media, digital marketing, and branding enable her to provide additional insight to our Board and its committees.
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MITCHELL D. STEENROD
Mr. Steenrod is the retired Senior Vice President and Chief Financial Officer of Pilot Travel Centers LLC, the nation’s largest operator of travel centers and truck stops. Mr. Steenrod joined Pilot Travel Centers in 2001 as controller and treasurer. In 2004, he was promoted to Senior Vice President and Chief Financial Officer and held this position until his retirement in 2018. Previously, he spent 12 years with Marathon Oil Company and Marathon Ashland Petroleum LLC in a variety of positions of increasing responsibility in accounting, general management and marketing.
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Director since: 2011
Age: 53
Lead Independent
Director
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Other Current Directorships
None.
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Other Directorships within Past 5 Years
None.
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Qualifications
Mr. Steenrod’s extensive retail industry and operational experience as well as his experience implementing successful growth strategies, including growing Pilot Travel Centers from more than 200 travel centers to over 650 branded locations over a span of 17 years, qualify him to serve on our Board. Additionally, Mr. Steenrod’s extensive financial and accounting experience, including his years of experience as a chief financial officer, strengthens our Board through his understanding of accounting principles, financial reporting rules and regulations, and internal controls.
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CORPORATE GOVERNANCE
|
•
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approved a majority vote standard for the election of directors,
|
•
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allowed CarMax’s shareholder rights plan to expire without renewal,
|
•
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established annual elections for all directors,
|
•
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adopted a mandatory director retirement policy providing that directors, with limited exceptions, may not stand for reelection after reaching age 76, and
|
•
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adopted a proxy access right for eligible CarMax shareholders.
|
Bylaws
|
Our bylaws regulate the corporate affairs of CarMax. They include provisions relating to shareholder meetings, voting, the nomination of directors and the proxy access right.
|
Corporate Governance Guidelines
|
Our corporate governance guidelines set forth the Board’s practices with respect to its responsibilities, qualifications, performance, access to management and independent advisors, compensation, continuing education, and management evaluation and succession. The guidelines also include director stock ownership requirements.
|
Code of Business Conduct
|
Our code of business conduct is the cornerstone of our compliance and ethics program. It applies to all CarMax associates and Board members. It includes provisions relating to honest and ethical conduct, compliance with laws, the handling of confidential information and diversity. It explains how to use our associate help line and related website, both of which allow associates to report misconduct anonymously. It also describes our zero-tolerance policy on retaliation for making such reports.
Any amendment to, or waiver from, a provision of this code for our directors or executive officers will be promptly disclosed under the “Corporate Governance” link at investors.carmax.com.
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▪
|
Ms. Chawla joined CDW Corporation as an executive officer in January 2020. CarMax purchased technology solutions from CDW in the ordinary course of business in fiscal 2020. In addition, CDW acts as a value-added reseller of Microsoft products to CarMax. While CarMax does not make payments to CDW for this service, CDW does receive compensation from Microsoft in connection with products purchased under this arrangement. The payments from CarMax or in connection with sales to CarMax in each of the last three fiscal years did not exceed the greater of $1 million or 2% of the total net sales of CDW in each year.
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▪
|
Through a broker, CarMax chartered an aircraft in which Mr. O’Neil has a one-third ownership interest. Neither CarMax management nor Mr. O’Neil was aware of this relationship prior to his election to the Board. Mr. O’Neil was not personally involved with the charter transactions and he did not set the price or any other terms of the charter. As soon as CarMax learned of this relationship, we ceased all use of this aircraft.
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Each committee is composed solely of independent directors.
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In addition, all members of the Compensation and Personnel Committee qualify as “outside directors” within the meaning of Section 162(m) of the Internal Revenue Code and “non-employee directors” as defined by Rule 16b-3 under the Securities Exchange Act of 1934. Each committee has a charter that describes the committee’s responsibilities. These charters are available under the “Corporate Governance” link at investors.carmax.com or upon written request to our Corporate
|
Director
|
Board
|
|
Audit
|
|
Compensation
and Personnel |
|
Nominating
and Governance |
Peter J. Bensen(a)
|
5
|
|
11*
|
|
—
|
|
—
|
Ronald E. Blaylock
|
5
|
|
—
|
|
6*
|
|
—
|
Sona Chawla
|
5
|
|
—
|
|
6
|
|
—
|
Thomas J. Folliard
|
4*
|
|
—
|
|
—
|
|
—
|
Shira Goodman
|
4
|
|
—
|
|
—
|
|
4*
|
Robert J. Hombach
|
5
|
|
12
|
|
—
|
|
—
|
David W. McCreight
|
5
|
|
12
|
|
—
|
|
—
|
William D. Nash
|
5
|
|
—
|
|
—
|
|
—
|
Mark F. O'Neil(b)
|
3
|
|
4
|
|
—
|
|
—
|
Pietro Satriano
|
4
|
|
—
|
|
—
|
|
4
|
Marcella Shinder
|
5
|
|
—
|
|
—
|
|
4
|
Mitchell D. Steenrod(c)
|
5
|
|
4*
|
|
3
|
|
—
|
William R. Tiefel(d)
|
1
|
|
—
|
|
2
|
|
—
|
TOTAL MEETINGS
|
5
|
|
12
|
|
6
|
|
4
|
(a)
|
Mr. Bensen was named chair of the Audit Committee on June 25, 2019 replacing Mr. Steenrod.
|
(b)
|
Mr. O’Neil was elected to the Board and appointed to the Audit Committee on October 7, 2019.
|
(c)
|
Mr. Steenrod is lead independent director of the Board. Mr. Steenrod was appointed to the Compensation and Personnel Committee on June 25, 2019 and concurrently stepped down from the Audit Committee.
|
(d)
|
Mr. Tiefel did not stand for re-election at our 2019 annual shareholders meeting.
|
We believe our Board should include directors with diverse backgrounds, including ethnic and gender diversity.
|
The Committee takes into account a number of additional factors in assessing director nominees, including the current size of the Board, the particular challenges facing CarMax, the Board’s need for specific skills or perspectives, and the nominee’s character, reputation, experience, independence from management and ability to devote the requisite time.
|
▪
|
identify critical risks;
|
▪
|
allocate responsibilities for overseeing those risks to the Board and its committees; and
|
▪
|
evaluate the Company’s risk management processes.
|
Assignment of Risk Categories
to Board and its Committees
|
The Board has assigned oversight of certain key risk categories to either the full Board or one of its committees. For each category, management reports regularly to the Board or the assigned committee, as appropriate, describing CarMax’s strategies for monitoring, managing and mitigating risks that fall within that category.
Examples of the risk categories assigned to each committee and the full Board are described below. This list is not comprehensive and is subject to change:
|
|
|
§
|
Audit Committee: oversees risks related to financial reporting, compliance and ethics, information technology and cybersecurity, and legal and regulatory issues.
|
|
§
|
Compensation and Personnel Committee: oversees risks related to human resources and compensation practices.
|
|
§
|
Nominating and Governance Committee: oversees risks related to government affairs and CarMax’s reputation.
|
|
§
|
Board: oversees risks related to the economy, competition, finance and strategy.
|
Enterprise Risk Management
|
Risk Committee: We have a management-level Risk Committee, which is chaired by Enrique Mayor-Mora, our Senior Vice President and Chief Financial Officer (“CFO”), and includes as members more than fifteen other associates from across CarMax. The Risk Committee meets periodically to identify and discuss the risks facing CarMax.
|
|
|
Board Reporting: The Risk Committee delivers biannual reports to the Board identifying the most significant risks facing the Company.
|
|
|
Board Oversight: On an annual basis, Mr. Mayor-Mora, on behalf of the Risk Committee, discusses our procedures for identifying significant risks with the Audit Committee.
|
|
Other Processes that Support
Risk Oversight and Management |
The Board oversees other processes that are not intended primarily to support enterprise risk management, but that assist the Company in identifying and controlling risk. These processes include our compliance and ethics program, our internal audit function, pre-filing review of SEC filings by our management-level disclosure committee, and the work of our independent auditors.
|
•
|
CarMax or one of its affiliates is a participant;
|
•
|
the amount involved exceeds $120,000; and
|
•
|
the related person involved in the transaction (whether a director, executive officer, owner of more than 5% of our common stock, or an immediate family member of any such person) has a direct or indirect material interest.
|
We did not have any related person transactions in fiscal 2020.
|
A copy of our policy is available under the “Corporate Governance” link at investors.carmax.com. The Audit Committee is responsible for overseeing the Company’s policy and reviewing any related person transaction that is required to be disclosed pursuant to SEC rules.
|
•
|
the related person’s relationship to CarMax;
|
•
|
the facts and circumstances of the proposed transaction;
|
•
|
the aggregate dollar amount involved in the transaction;
|
•
|
the related person’s interest in the transaction, including his or her position or relationship with, or ownership in, an entity that is a party to, or has an interest in, the transaction; and
|
•
|
the benefits to CarMax of the proposed transaction and, if applicable, the terms and availability of comparable products and services from unrelated third parties.
|
PROPOSAL TWO: RATIFICATION OF THE APPOINTMENT OF
THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
AUDIT COMMITTEE REPORT
|
AUDITOR FEES
AND PRE-APPROVAL POLICY
|
|
Years Ended February 28 and 29
|
||||||
Type of Fee
|
2019
|
|
2020
|
||||
Audit Fees(a)
|
$
|
2,245,500
|
|
|
$
|
2,428,374
|
|
Audit-Related Fees(b)
|
558,000
|
|
|
563,000
|
|
||
Tax Fees(c)
|
75,772
|
|
|
107,991
|
|
||
TOTAL FEES
|
$
|
2,879,272
|
|
|
$
|
3,099,365
|
|
(a)
|
This category includes fees associated with the annual audit of CarMax’s consolidated financial statements and the audit of CarMax’s internal control over financial reporting. It also includes fees associated with quarterly reviews of CarMax’s unaudited consolidated financial statements.
|
(b)
|
This category includes fees associated with agreed-upon procedures and attestation services related to our financing and securitization program.
|
(c)
|
This category includes fees associated with tax compliance, consultation and planning services.
|
PROPOSAL THREE: ADVISORY RESOLUTION TO
APPROVE EXECUTIVE COMPENSATION
|
COMPENSATION DISCUSSION AND ANALYSIS
|
William D. Nash
|
President and Chief Executive Officer. Mr. Nash joined CarMax in 1997 and was promoted to his current position in 2016. Mr. Nash is also a member of our Board.
|
Enrique N. Mayor-Mora
|
Senior Vice President and Chief Financial Officer. Mr. Mayor-Mora joined CarMax in 2011 and was promoted to his current position in October 2019.
|
Thomas W. Reedy
|
Executive Vice President, Finance. Mr. Reedy joined CarMax in 2003 and served as Chief Financial Officer from 2010 until he was named to his current position in October 2019.
|
Edwin J. Hill
|
Executive Vice President and Chief Operating Officer. Mr. Hill joined CarMax in 1995 and was promoted to his current position in August 2018.
|
Eric M. Margolin
|
Executive Vice President, General Counsel and Corporate Secretary. Mr. Margolin joined CarMax in 2007 and was promoted to his current position in 2016.
|
James Lyski
|
Executive Vice President and Chief Marketing Officer. Mr. Lyski joined CarMax in 2014 and was promoted to his current position in 2017.
|
•
|
Base salary of $500,000
|
•
|
Target annual incentive bonus equal to 60% of his base salary; and
|
•
|
A one-time promotion award of stock options valued at $147,219 and MSUs valued at $49,073.
|
▪
|
Align the interests of executive officers with the financial interests of our shareholders.
|
▪
|
Encourage the achievement of our key strategic, operational and financial goals.
|
▪
|
Link incentive compensation to Company and stock price performance, which the Committee believes promotes a unified vision for senior management and creates common motivation among our executives.
|
▪
|
Attract, retain and motivate executives with the talent necessary to drive our long-term success.
|
▪
|
Provide the Committee the flexibility to respond to the continually changing environment in which we operate.
|
The Committee has retained an independent compensation consultant.
|
Committee members have direct access to the compensation consultant without going through management. SBCG did not provide any services to CarMax other than those it provided to the Committee.
The Committee assesses its compensation consultant’s independence annually. It assessed SBCG’s independence in April 2019 and 2020, under SEC and NYSE standards and concluded that SBCG was independent.
|
▪
|
whether the consultant provided other services to CarMax;
|
▪
|
the amount of fees paid by CarMax to the consultant as a percentage of the consultant’s total revenue;
|
▪
|
the consultant’s policies and procedures designed to prevent conflicts of interest;
|
▪
|
any business or personal relationship between the individuals advising the Committee and any Committee member;
|
▪
|
any CarMax stock owned by the individuals advising the Committee; and
|
▪
|
any business or personal relationship between the individuals advising the Committee, or the consultant itself, and an executive officer of CarMax.
|
Advance Auto Parts, Inc.
|
Kohl’s Corporation
|
AutoNation, Inc.
|
L Brands, Inc.
|
AutoZone, Inc.
|
Lowe’s Companies, Inc.
|
Best Buy Co., Inc.
|
Macy’s, Inc.
|
Dick’s Sporting Goods, Inc.
|
Ross Stores, Inc.
|
Dollar General Corporation
|
The Sherwin-Williams Company
|
Dollar Tree, Inc.
|
Southwest Airlines Co.
|
eBay Inc.
|
The TJX Companies, Inc.
|
The Gap, Inc.
|
Tractor Supply Company
|
Genuine Parts Company
|
|
Base Salary
|
+
|
Annual Incentive
Bonus
|
+
|
Long-Term Equity Awards
|
=
|
Total Direct Compensation
|
Name
|
Prior Base Salary
($) |
|
Fiscal 2020 Base Salary
($) |
|
Percentage Increase
(%) |
|||
William D. Nash
|
1,063,475
|
|
|
1,095,379
|
|
|
3.00
|
|
Thomas W. Reedy
|
744,433
|
|
|
766,766
|
|
|
3.00
|
|
Edwin J. Hill
|
700,000
|
|
|
735,000
|
|
|
5.00
|
|
Eric M. Margolin
|
611,499
|
|
|
629,844
|
|
|
3.00
|
|
James Lyski
|
515,000
|
|
|
540,750
|
|
|
5.00
|
|
Name
|
Fiscal 2020 Base Salary as Treasurer
($) |
|
Fiscal 2020 Base Salary as CFO
($) |
|
Percentage Increase
(%) |
|||
Enrique N. Mayor-Mora
|
377,933
|
|
|
500,000
|
|
|
32.3
|
%
|
Base Salary
|
x
|
Target Percentage of
Base Salary
|
x
|
Performance Adjustment
Factor
|
=
|
Annual Incentive Bonus
|
Name
|
Base Salary ($)
|
|
Incentive Target Percentage (%)
|
|
Target Incentive Amount ($)
|
|
Actual Fiscal 2020 Incentive Bonus
|
|
Maximum Incentive Amount ($)
|
|||||
William D. Nash
|
1,095,379
|
|
|
150
|
|
|
1,643,069
|
|
|
2,078,482
|
|
|
3,286,137
|
|
Enrique N. Mayor-Mora(a)
|
377,933/500,000
|
|
|
45/60
|
|
|
215,510
|
|
|
272,620
|
|
|
431,020
|
|
Thomas W. Reedy
|
766,766
|
|
|
75
|
|
|
575,075
|
|
|
727,469
|
|
|
1,150,149
|
|
Edwin J. Hill
|
735,000
|
|
|
75
|
|
|
551,250
|
|
|
697,331
|
|
|
1,102,500
|
|
Eric M. Margolin
|
629,844
|
|
|
75
|
|
|
472,383
|
|
|
597,564
|
|
|
944,766
|
|
James Lyski
|
540,750
|
|
|
75
|
|
|
405,563
|
|
|
513,037
|
|
|
811,125
|
|
(a)
|
For the first eight months of fiscal 2020, Mr. Mayor-Mora was eligible to receive a bonus calculated using a base salary of $377,933 and incentive target percentage of 45%. For the portion of his incentive bonus attributable to the remainder of fiscal 2020, he was eligible to receive a bonus using his new base salary of $500,000 and an incentive target percentage of 60%. The remaining amounts in his row are pro-rated accordingly.
|
|
Options and MSUs Granted in Fiscal 2019
|
|
Options, PSUs, and MSUs Granted in Fiscal 2020
|
||||||||||||||
Name
|
Grant Date Fair Value of
Stock Options ($)(a)(b) |
|
Grant Date Fair Value of
MSUs ($)(b) |
|
Total
Grant Date Fair Value ($) |
|
Grant Date Fair Value of
Stock Options ($)(a)(b) |
|
Grant Date Fair Value of
PSUs and MSUs ($)(b) |
|
Total
Grant Date Fair Value ($) |
||||||
William D. Nash
|
4,499,998
|
|
|
1,500,022
|
|
|
6,000,020
|
|
|
5,250,006
|
|
|
1,750,016
|
|
|
7,000,022
|
|
Enrique N. Mayor-Mora(c)
|
440,302
|
|
|
146,793
|
|
|
587,095
|
|
|
600,745
|
|
|
200,273
|
|
|
801,018
|
|
Thomas W. Reedy
|
1,455,919
|
|
|
485,325
|
|
|
1,941,244
|
|
|
1,605,923
|
|
|
535,334
|
|
|
2,141,257
|
|
Edwin J. Hill
|
1,455,919
|
|
|
485,325
|
|
|
1,941,244
|
|
|
1,605,923
|
|
|
535,334
|
|
|
2,141,257
|
|
Eric M. Margolin
|
1,305,921
|
|
|
435,303
|
|
|
1,741,224
|
|
|
1,305,922
|
|
|
435,342
|
|
|
1,741,264
|
|
James Lyski
|
1,084,918
|
|
|
361,620
|
|
|
1,446,538
|
|
|
1,084,923
|
|
|
361,606
|
|
|
1,446,529
|
|
(a)
|
We grant limited stock appreciation rights (“SARs”) in tandem with each option. The SARs may be exercised only in the event of a change-in-control of the Company. Upon the exercise of the SAR and the surrender of the related option, the officer is entitled to receive an amount equal to the difference between the value of our common stock on the date of exercise and the exercise price of the underlying stock option. No free-standing SARs have been granted.
|
(b)
|
Option and MSU amounts represent the fair value at grant calculated using valuation models performed as of the date of grant by an independent third party. PSU amounts are calculated using the volume weighted average price of our common stock on the date of grant.
|
(c)
|
Mr. Mayor-Mora’s fiscal 2020 awards include both his annual equity award, made in May 2019, and his award on promotion to CFO in October 2019. In both instances he received options and MSUs.
|
|
Threshold
|
Target
|
Actual
|
Maximum
|
|||
FY18-FY20 Diluted Earnings Per Share, as Adjusted(a)
|
$17.11
|
$18.66
|
$18.97
|
$20.30
|
|||
Performance Multiplier
|
25
|
%
|
100
|
%
|
119
|
%
|
200%
|
(a)
|
Adjusted diluted earnings per share is equal to diluted earnings per share less the per share amount attributable to the provision for income tax expense. For fiscal 2018 through fiscal 2020, in the aggregate, $19.06 in adjusted diluted earnings per share represented $13.72 in diluted earnings per share plus $5.34 per share attributable to income tax expense. The Committee exercised its discretion to exclude $0.09 per share from the adjusted diluted earnings per share calculation, certifying a $18.97 goal achievement in April 2020, which yields a performance multiplier of 119%. The exclusion removed the impact of unrealized gains on equity investments in private companies.
|
|
Threshold
|
Target
|
Actual
|
Maximum
|
|||
FY20 Diluted Earnings Per Share, as Adjusted(a)
|
$6.61
|
$6.76
|
$6.90
|
$7.57
|
|||
Performance Multiplier
|
25
|
%
|
100
|
%
|
117
|
%
|
200%
|
(a)
|
Adjusted diluted earnings per share is equal to diluted earnings per share less the per share amounts attributable to the provision for income tax expense and to unrealized gains on equity investments in private companies. For fiscal 2020, $6.90 in adjusted diluted earnings per share represented $5.33 in diluted earnings per share increased by $1.63 per share attributable to income tax and reduced by $0.06 per share attributable to unrealized gains on equity investments in private companies.
|
|
Percentage of Target Total Direct
Compensation |
|
Percentage of Target Performance-Based Compensation
|
||||
|
Performance-
Based |
|
Fixed
|
|
Annual
|
|
Long-
Term |
William D. Nash
|
89%
|
|
11%
|
|
19%
|
|
81%
|
Enrique N. Mayor-Mora
|
71%
|
|
29%
|
|
21%
|
|
79%
|
Thomas W. Reedy
|
78%
|
|
22%
|
|
21%
|
|
79%
|
Edwin J. Hill
|
79%
|
|
21%
|
|
20%
|
|
80%
|
Eric M. Margolin
|
78%
|
|
22%
|
|
21%
|
|
79%
|
James Lyski
|
77%
|
|
23%
|
|
22%
|
|
78%
|
Our severance agreements do not provide for a guaranteed term of employment or tax gross-ups.
|
The agreements provide for severance payments under certain circumstances, which are discussed in more detail under “Potential Payments Upon Termination or Change-in-Control” beginning on page 52. In 2014, the Committee reduced the scope of the potential payments and benefits for any newly named executive officers. Accordingly, the potential payments and benefits provided to Messrs. Mayor-Mora and Lyski, who each became an executive officer after this change, differ from those that would potentially be provided to the other named executive officers.
|
▪
|
Annual Incentive Bonuses: payments made to senior management are: (i) subject to a clawback provision; (ii) capped at 200% of the target incentive bonus amount or at the $10 million plan maximum, whichever is lower; and (iii) only paid when CarMax satisfies the objective metrics determined at the beginning of the year by an independent committee of non-employee directors.
|
▪
|
Long-Term Equity Awards: equity awards: (i) are approved by an independent committee of non-employee directors; (ii) contain three and four-year vesting provisions; and (iii) for senior management, must be held in compliance with CarMax’s executive stock ownership guidelines.
|
▪
|
Sales Bonuses: sales bonuses are monitored to ensure that associates are not overpaid based on inflated sales figures. Monitoring tools include: (i) centralized assignment of sales targets; (ii) centralized and non-negotiable vehicle pricing; (iii) electronic reporting of sales from each store to the home office; and (iv) performance of a daily vehicle inventory at each store.
|
▪
|
Hourly Pay: hourly pay is tracked and managed through a centralized time management and reporting system.
|
Subject Officers
|
Required to Own the Lesser of:
|
Chief Executive Officer
|
6 x Base Salary or 300,000 shares
|
Executive Vice President
|
3 x Base Salary or 100,000 shares
|
Senior Vice President
|
2 x Base Salary or 50,000 shares
|
COMPENSATION AND PERSONNEL COMMITTEE REPORT
|
COMPENSATION TABLES
|
Name and Principal
Position |
Fiscal
Year |
|
Salary
($) |
|
Bonus(a)
($) |
|
Stock
Awards(b)
($)
|
|
Option
Awards(b)
($)
|
|
Non-Equity
Incentive Plan Comp- ensation(c)
($)
|
|
Change in
Pension Value and Nonqualified Deferred Comp- ensation Earnings(d)
($)
|
|
All Other
Compen- sation(e)
($)
|
|
Total
($) |
William D. Nash
|
2020
|
|
1,095,175
|
|
—
|
|
583,286
|
|
5,250,006
|
|
2,078,482
|
|
131,106
|
|
262,611
|
|
9,400,666
|
President and Chief Executive Officer
|
2019
|
|
1,063,157
|
|
—
|
|
1,500,022
|
|
4,499,998
|
|
1,595,213
|
|
5,075
|
|
288,082
|
|
8,951,547
|
2018
|
|
1,031,721
|
|
96,239
|
|
1,249,974
|
|
3,750,005
|
|
1,472,448
|
|
24,797
|
|
190,068
|
|
7,815,252
|
|
Enrique N. Mayor-Mora Senior VP and Chief Financial Officer
|
2020
|
|
420,586
|
|
—
|
|
200,273
|
|
600,745
|
|
272,620
|
|
—
|
|
56,490
|
|
1,550,714
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas W. Reedy
|
2020
|
|
766,622
|
|
—
|
|
178,445
|
|
1,605,923
|
|
727,469
|
|
100,226
|
|
143,240
|
|
3,521,925
|
Executive VP, Finance
|
2019
|
|
744,210
|
|
—
|
|
485,325
|
|
1,455,919
|
|
558,325
|
|
6,543
|
|
147,501
|
|
3,397,823
|
2018
|
|
722,205
|
|
38,866
|
|
485,313
|
|
1,455,925
|
|
594,643
|
|
22,219
|
|
132,390
|
|
3,451,561
|
|
Edwin J. Hill
|
2020
|
|
732,981
|
|
—
|
|
178,445
|
|
1,605,923
|
|
697,331
|
|
163,278
|
|
149,392
|
|
3,527,350
|
Executive VP and Chief Operating Officer
|
2019
|
|
691,237
|
|
—
|
|
485,325
|
|
1,455,919
|
|
525,000
|
|
17,461
|
|
124,740
|
|
3,299,682
|
2018
|
|
619,033
|
|
33,314
|
|
435,281
|
|
1,305,925
|
|
509,694
|
|
44,019
|
|
98,719
|
|
3,045,985
|
|
Eric M. Margolin
|
2020
|
|
629,726
|
|
—
|
|
145,114
|
|
1,305,922
|
|
597,564
|
|
14,097
|
|
104,146
|
|
2,796,569
|
Executive VP, General Counsel and Corporate Secretary
|
2019
|
|
611,316
|
|
—
|
|
435,303
|
|
1,305,921
|
|
458,624
|
|
5,014
|
|
94,088
|
|
2,910,266
|
2018
|
|
590,240
|
|
31,926
|
|
435,281
|
|
1,305,925
|
|
488,457
|
|
3,511
|
|
77,436
|
|
2,932,776
|
|
James Lyski
|
2020
|
|
539,265
|
|
—
|
|
120,509
|
|
1,084,923
|
|
513,037
|
|
—
|
|
85,236
|
|
2,342,970
|
Executive VP, Chief Marketing Officer
|
2019
|
|
514,846
|
|
—
|
|
361,620
|
|
1,084,918
|
|
386,250
|
|
—
|
|
68,195
|
|
2,415,829
|
(a)
|
Discretionary bonus paid for fiscal 2018 to all employees in the CarMax annual bonus program.
|
(b)
|
Represents the aggregate grant date fair value of the awards made in each fiscal year as computed in accordance with ASC Topic 718. These amounts do not correspond to the actual value that may be realized by each NEO. Because, under ASC Topic 718 the grant date for a PSU occurs when objectively determinable performance goals are approved, and we approved performance goals for only the first one-third of the PSUs issued in fiscal 2020, the amounts disclosed under the Stock Awards column above only include amounts attributable to one-third of the PSUs issued in fiscal 2020. PSU values in the Stock Awards column are based on performance achieved at target levels. The grant date fair value of the NEO’s fiscal 2020 PSUs if earned at maximum levels was $1,166,572, $356,889, $356,889, $290,228 and $241,018 for Messrs. Nash, Reedy, Hill, Margolin, and Lyski, respectively. For Mr. Mayor-Mora, the grant date fair value of his MSUs if earned at maximum levels was $400,546. Additional information regarding outstanding awards, including exercise prices, vesting schedules, and expiration dates, can be found in the “Outstanding Equity Awards at Fiscal 2020 Year End” table on pages 47 and 48. The assumptions used in determining the grant date fair values of the awards are disclosed in Note 12 to our consolidated financial statements, which are included in our Annual Report on Form 10-K for the fiscal year ended February 29, 2020.
|
(c)
|
Represents the annual incentive bonus earned under our Bonus Plan.
|
(d)
|
Represents the aggregate increase in the actuarial value of accumulated benefits under our frozen Pension Plan and frozen Benefit Restoration Plan accrued during the relevant fiscal year. The “Pension Benefits in Fiscal 2020” table and its accompanying narrative on pages 49 and 50 contain additional details with respect to these amounts.
|
(e)
|
Further details are included in the “All Other Compensation in Fiscal 2020” table below.
|
Name
|
Personal Use
of Company Plane(a)
($)
|
|
Personal Use
of Company Automobile(b)
($)
|
|
Retirement
Savings Plan Contribution(c)
($)
|
|
Deferred
Compensation Account Contributions(d)
($)
|
|
Other(e)
($)
|
|
Total
($) |
William D. Nash
|
74,123
|
|
—
|
|
19,622
|
|
143,973
|
|
24,893
|
|
262,611
|
Enrique N. Mayor-Mora
|
—
|
|
—
|
|
19,182
|
|
16,568
|
|
20,740
|
|
56,490
|
Thomas W. Reedy
|
12,160
|
|
—
|
|
23,037
|
|
82,989
|
|
25,054
|
|
143,240
|
Edwin J. Hill
|
24,935
|
|
7,426
|
|
24,419
|
|
77,431
|
|
15,181
|
|
149,392
|
Eric M. Margolin
|
—
|
|
2,542
|
|
18,423
|
|
48,127
|
|
35,054
|
|
104,146
|
James Lyski
|
—
|
|
29
|
|
18,286
|
|
38,285
|
|
28,636
|
|
85,236
|
(a)
|
The compensation associated with the personal use of the Company plane is based on the aggregate incremental cost to CarMax of operating the plane. The cost is calculated based on the average variable costs of operating the plane, which include fuel, maintenance, travel expenses for the flight crews and other miscellaneous expenses. We divided the total annual variable costs by the total number of miles our plane flew in fiscal 2020 to determine an average variable cost per mile. The average variable cost per mile is multiplied by the miles flown for personal use to derive the incremental cost. This methodology excludes fixed costs that do not change based on usage, such as salaries and benefits for the flight crews, monthly service contracts, hangar rental fees, taxes, rent, depreciation and insurance. The costs associated with deadhead flights (i.e., flights that travel to a destination with no passengers as a result of an executive’s personal use) and incremental plane charters (i.e., plane charters, if any, that we pay for because our plane was not available for business use due to an executive’s personal use) are included in the incremental cost calculations for each executive. The personal use of the Company plane is treated as income to the executive. The related income taxes are calculated using Standard Industry Fare Level rates and are paid by the executive.
|
(b)
|
The value of the personal use of a Company automobile is determined based on the annual lease value method and excludes any expenses such as maintenance and insurance.
|
(c)
|
Includes the Company matching portion of each executive’s Retirement Savings Plan (“RSP”) contributions. Also includes a Company-funded contribution to those executives who met certain age and service requirements as of December 31, 2008, the date that our Pension Plan was frozen. These RSP benefits are offered on the same terms to all CarMax associates.
|
(d)
|
Includes the Company matching portion of each executive’s Retirement Restoration Plan (“RRP”) and Executive Deferred Compensation Plan (“EDCP”) contributions. Also includes a Company-funded contribution to those executives who met certain age and service requirements as of December 31, 2008, the date that our Pension Plan was frozen. These RRP benefits are offered on the same terms to all CarMax associates whose salary exceeds the compensation limits imposed by Section 401(a)(17) of the Internal Revenue Code ($285,000 in 2020). Also includes a restorative contribution designed to compensate executives for any loss of Company contributions under the RSP and RRP due to a reduction in the executive’s eligible compensation under the RSP and RRP resulting from deferrals into the EDCP.
|
(e)
|
Represents the total amount of other personal benefits provided. None of the benefits individually exceeded the greater of $25,000 or 10% of the total amount of these personal benefits for the named executive officer. These other benefits include tax and financial planning services, which are described on page 39, and matching charitable gifts made by The CarMax Foundation as part of its matching gifts program (which is available to all CarMax associates). Additionally, Mr. Lyski received reimbursement for relocation expenses and Mr. Mayor-Mora received reimbursement under our Executive Physicals program. Reimbursement under the Executive Physicals program is not available to our executive officers and was made to Mr. Mayor-Mora when he was vice president and treasurer of the Company, prior to his promotion to CFO.
|
|
|
|
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (a)
|
Estimated Future Payouts Under Equity Incentive Plan Awards (b)
|
All Other Option Awards: Number of Securities Underlying
Options(c) (#) |
Exercise or Base Price of Option
Awards(d)($/Sh) |
Grant Date Closing
Price ($/Sh) |
Grant Date Fair Value of Stock and Option
Awards(e)
($)
|
||||||||
Name
|
Approval
Date |
Grant
Date |
Threshold
($) |
|
Target
($) |
|
Maximum
($) |
Threshold
(#) |
|
Target
(#) |
|
Maximum
(#) |
||||
William D. Nash
|
|
|
410,767
|
|
1,643,069
|
|
3,286,137
|
|
|
|
|
|
|
|
|
|
3/25/2019
|
5/1/2019
|
|
|
|
|
|
1,855
|
|
7,420
|
|
14,840
|
|
|
|
583,286
|
|
|
3/25/2019
|
5/1/2019
|
|
|
|
|
|
|
|
|
|
|
237,772
|
78.61
|
78.35
|
5,250,006
|
Enrique N. Mayor-Mora
|
|
|
53,878
|
|
215,510
|
|
431,020
|
|
|
|
|
|
|
|
|
|
3/25/2019
|
5/1/2019
|
|
|
|
|
|
—
|
|
1,536
|
|
3,072
|
|
|
|
151,188
|
|
|
3/25/2019
|
5/1/2019
|
|
|
|
|
|
|
|
|
|
|
20,540
|
78.61
|
78.35
|
453,523
|
|
10/22/2019
|
12/26/2019
|
|
|
|
|
|
—
|
|
447
|
|
894
|
|
|
|
49,085
|
|
10/22/2019
|
12/26/2019
|
|
|
|
|
|
|
|
|
|
|
6,178
|
88.54
|
89.03
|
147,222
|
Thomas W. Reedy
|
|
|
143,769
|
|
575,075
|
|
1,150,149
|
|
|
|
|
|
|
|
|
|
3/25/2019
|
5/1/2019
|
|
|
|
|
|
568
|
|
2,270
|
|
4,540
|
|
|
|
178,445
|
|
|
3/25/2019
|
5/1/2019
|
|
|
|
|
|
|
|
|
|
|
72,732
|
78.61
|
78.35
|
1,605,923
|
Edwin J. Hill
|
|
|
137,813
|
|
551,250
|
|
1,102,500
|
|
|
|
|
|
|
|
|
|
3/25/2019
|
5/1/2019
|
|
|
|
|
|
568
|
|
2,270
|
|
4,540
|
|
|
|
178,445
|
|
|
3/25/2019
|
5/1/2019
|
|
|
|
|
|
|
|
|
|
|
72,732
|
78.61
|
78.35
|
1,605,923
|
Eric M. Margolin
|
|
|
118,096
|
|
472,383
|
|
944,766
|
|
|
|
|
|
|
|
|
|
3/25/2019
|
5/1/2019
|
|
|
|
|
—
|
462
|
|
1,846
|
|
3,692
|
|
|
|
145,114
|
|
|
3/25/2019
|
5/1/2019
|
|
|
|
|
|
|
|
|
|
|
59,145
|
78.61
|
78.35
|
1,305,922
|
James Lyski
|
|
|
101,391
|
|
405,563
|
|
811,125
|
|
|
|
|
|
|
|
|
|
|
3/25/2019
|
5/1/2019
|
|
|
|
|
|
383
|
|
1,533
|
|
3,066
|
|
|
|
120,509
|
|
3/25/2019
|
5/1/2019
|
|
|
|
|
|
|
|
|
|
|
49,136
|
78.61
|
78.35
|
1,084,923
|
(a)
|
Represents threshold, target and maximum payout levels under our Bonus Plan for fiscal 2020 performance. The actual amount of each named executive officer’s annual incentive bonus in fiscal 2020 is reported under the “Non-Equity Incentive Plan Compensation” column in the “Summary Compensation Table” on page 43. Additional information regarding the design of our Bonus Plan is included on pages 32 to 34.
|
(b)
|
For each of our named executive officers except Mr. Mayor-Mora, represents stock-settled performance stock units, which we refer to as “performance stock units” or “PSUs,” granted under our Stock Incentive Plan. PSUs generally vest on the third anniversary of the grant date. Because, under ASC Topic 718, the grant date for a PSU occurs only when objectively determinable PSU performance goals are approved, the reported number of units is calculated for the one-third portion of the PSUs for which performance goals were set in fiscal 2020. Additional information regarding PSUs, including the formula used to convert PSUs to shares of our common stock upon vesting and settlement, is included on pages 34 and 35. For Mr. Mayor-Mora, represents stock-settled restricted stock units, which we refer to as “market stock units” or “MSUs.” MSUs generally vest on the third anniversary of the grant date. Additional information regarding MSUs, including the formula used to convert MSUs to shares of our common stock upon vesting and settlement, is included on page 35.
|
(c)
|
Option awards generally vest in 25% increments annually over a four-year period. Additional information regarding stock options is included on page 34. We granted limited stock appreciation rights, or “SARs,” in tandem with each option award. The SARs may be exercised only in the event of a change-in-control. To the extent a SAR is exercised, the related option must be surrendered. Upon the exercise of the SAR and the surrender of the related option, the officer is entitled to receive an amount equal to the difference between the value of our common stock on the date of exercise and the exercise price of the underlying stock option, multiplied by the number of shares of common stock underlying such SAR.
|
(d)
|
All fiscal 2020 stock options were issued with an exercise price equal to the volume-weighted average price of our common stock on the grant date. Additional information regarding our use of the volume-weighted average price is included on page 34.
|
(e)
|
Represents the grant date fair value of the award as determined in accordance with ASC Topic 718.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
Option Awards (a)
|
|
Stock Awards (b)(c)
|
|||||||||||||
Name
|
Grant
Date |
|
Number of
Securities Underlying Unexercised Options (#) Exercisable |
|
Number of
Securities Underlying Unexercised Options (#) Unexercisable |
|
Option
Exercise Price ($/Sh) |
|
Option
Expiration Date |
|
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested
(#) |
|
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested
($) |
|||||
William D.
|
4/12/2016
|
|
19,006
|
|
|
39,668
|
|
|
51.63
|
|
|
4/12/2023
|
|
|
|
|
|
|
Nash
|
9/26/2016
|
|
105,485
|
|
|
35,161
|
|
|
53.62
|
|
|
9/26/2023
|
|
|
|
|
|
|
|
5/1/2017
|
|
116,388
|
|
|
116,387
|
|
|
58.38
|
|
|
5/1/2024
|
|
|
|
|
|
|
|
5/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
21,411
|
|
|
3,738,789
|
|
|
5/1/2018
|
|
60,129
|
|
|
180,384
|
|
|
63.04
|
|
|
5/1/2025
|
|
|
|
|
|
|
|
5/1/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
18,322
|
|
|
2,215,566
|
|
|
5/1/2019
|
|
—
|
|
|
237,772
|
|
|
78.61
|
|
|
5/1/2026
|
|
|
|
|
|
|
|
5/1/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
22,262
|
|
|
2,591,535
|
|
Enrique N.
|
4/8/2015
|
|
19,203
|
|
|
—
|
|
|
73.76
|
|
|
4/8/2022
|
|
|
|
|
|
|
Mayor-Mora
|
4/12/2016
|
|
14,598
|
|
|
7,299
|
|
|
51.63
|
|
|
4/12/2023
|
|
|
|
|
|
|
|
5/1/2017
|
|
13,268
|
|
|
13,267
|
|
|
58.38
|
|
|
5/1/2024
|
|
|
|
|
|
|
|
5/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
1,937
|
|
|
252,926
|
|
|
5/1/2018
|
|
5,884
|
|
|
17,649
|
|
|
63.04
|
|
|
5/1/2025
|
|
|
|
|
|
|
|
5/1/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
1,793
|
|
|
216,816
|
|
|
5/1/2019
|
|
—
|
|
|
20,540
|
|
|
78.61
|
|
|
5/1/2026
|
|
|
|
|
|
|
|
5/1/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
1,536
|
|
|
148,950
|
|
|
12/26/2019
|
|
—
|
|
|
6,178
|
|
|
88.54
|
|
|
12/26/2026
|
|
|
|
|
|
|
|
12/26/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
447
|
|
|
38,485
|
|
Thomas W.
|
4/8/2015
|
|
70,641
|
|
|
—
|
|
|
73.76
|
|
|
4/8/2022
|
|
|
|
|
|
|
Reedy
|
4/12/2016
|
|
6
|
|
|
25,668
|
|
|
51.63
|
|
|
4/12/2023
|
|
|
|
|
|
|
|
5/1/2017
|
|
—
|
|
|
45,186
|
|
|
58.38
|
|
|
5/1/2024
|
|
|
|
|
|
|
|
5/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
8,313
|
|
|
1,451,616
|
|
|
5/1/2018
|
|
19,454
|
|
|
58,361
|
|
|
63.04
|
|
|
5/1/2025
|
|
|
|
|
|
|
|
5/1/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
5,928
|
|
|
716,836
|
|
|
5/1/2019
|
|
—
|
|
|
72,732
|
|
|
78.61
|
|
|
5/1/2026
|
|
|
|
|
|
|
|
5/1/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
6,810
|
|
|
792,775
|
|
Edwin J.
|
4/8/2015
|
|
52,532
|
|
|
—
|
|
|
73.76
|
|
|
4/8/2022
|
|
|
|
|
|
|
Hill
|
4/12/2016
|
|
69,072
|
|
|
23,024
|
|
|
51.63
|
|
|
4/12/2023
|
|
|
|
|
|
|
|
5/1/2017
|
|
40,532
|
|
|
40,531
|
|
|
58.38
|
|
|
5/1/2024
|
|
|
|
|
|
|
|
5/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
7,456
|
|
|
1,301,967
|
|
|
5/1/2018
|
|
19,454
|
|
|
58,361
|
|
|
63.04
|
|
|
5/1/2025
|
|
|
|
|
|
|
|
5/1/2018
|
|
|
|
|
|
|
|
|
|
5,928
|
|
|
716,836
|
|
|||
|
5/1/2019
|
|
—
|
|
|
72,732
|
|
|
78.61
|
|
|
5/1/2026
|
|
|
|
|
|
|
|
5/1/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
6,810
|
|
|
792,775
|
|
Eric M.
|
4/8/2015
|
|
52,532
|
|
|
—
|
|
|
73.76
|
|
|
4/8/2022
|
|
|
|
|
|
|
Margolin
|
4/12/2016
|
|
—
|
|
|
19,088
|
|
|
51.63
|
|
|
4/12/2023
|
|
|
|
|
|
|
|
4/27/2016
|
|
—
|
|
|
4,899
|
|
|
55.19
|
|
|
4/27/2023
|
|
|
|
|
|
|
|
5/1/2017
|
|
40,532
|
|
|
40,531
|
|
|
58.38
|
|
|
5/1/2024
|
|
|
|
|
|
|
|
5/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
7,456
|
|
|
1,301,967
|
|
|
5/1/2018
|
|
17,450
|
|
|
52,348
|
|
|
63.04
|
|
|
5/1/2025
|
|
|
|
|
|
|
|
5/1/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
5,317
|
|
|
642,952
|
|
|
5/1/2019
|
|
—
|
|
|
59,145
|
|
|
78.61
|
|
|
5/1/2026
|
|
|
|
|
|
|
|
5/1/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
5,538
|
|
|
644,697
|
|
James
|
9/26/2014
|
|
29,801
|
|
|
—
|
|
|
47.47
|
|
|
9/26/2021
|
|
|
|
|
|
|
Lyski
|
4/8/2015
|
|
43,434
|
|
|
—
|
|
|
73.76
|
|
|
4/8/2022
|
|
|
|
|
|
|
|
4/12/2016
|
|
47,347
|
|
|
15,782
|
|
|
51.63
|
|
|
4/12/2023
|
|
|
|
|
|
|
|
5/1/2017
|
|
33,673
|
|
|
33,672
|
|
|
58.38
|
|
|
5/1/2024
|
|
|
|
|
|
|
|
5/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
6,195
|
|
|
1,081,771
|
|
|
5/1/2018
|
|
14,497
|
|
|
43,489
|
|
|
63.04
|
|
|
5/1/2025
|
|
|
|
|
|
|
|
5/1/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
4,417
|
|
|
534,120
|
|
|
5/1/2019
|
|
—
|
|
|
49,136
|
|
|
78.61
|
|
|
5/1/2026
|
|
|
|
|
|
|
|
5/1/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
4,600
|
|
|
535,472
|
|
(a)
|
Option awards vest in 25% increments annually over a four-year period. Additional information regarding stock options is included on page 34. We granted limited stock appreciation rights, or “SARs,” in tandem with each option award. Additional information regarding SARs is included on page 35 and under the chart titled “Grants of Plan-Based Awards in Fiscal 2020” on page 45.
|
(b)
|
All of the fiscal 2019 stock awards granted to our named executive officers were stock-settled restricted stock units, which we refer to as “market stock units” or “MSUs.” Additionally, all of Mr. Mayor-Mora’s outstanding stock awards are MSUs. MSUs vest on the third anniversary of the grant date. The number of shares awarded for each MSU award is calculated by dividing the average closing price of our common stock during the final 40 trading days of the vesting period by the volume weighted average of our stock price on the date of grant. The resulting quotient is capped at two. The quotient is multiplied by the number of MSUs granted to yield the number of shares of stock awarded. To calculate the market value of the unvested MSUs in the table above, we assumed that the average closing price of our stock during the final 40 trading days of the three-year period was equal to the closing price of our stock on February 28, 2020, the last trading day of our fiscal year (which was $87.31).
|
(c)
|
The fiscal 2018 and 2020 stock awards were stock-settled performance stock units, which we refer to as “performance stock units” or “PSUs.” If earned, PSUs vest on the third anniversary of the grant date, which was May 1, 2020 for fiscal 2018 awards and will be May 1, 2022 for fiscal 2020 awards, respectively. To calculate the number of shares awarded at vesting, each PSU is multiplied by a percentage that represents the Company’s success in meeting the performance goals set by the Committee. If the threshold performance goal is met, each PSU is multiplied by 25%. The target multiplier is 100% and the maximum multiplier is 200%. The multiplier is determined using straight-line interpolation for performance that falls between the threshold and the target or between the target and the maximum. If the threshold performance goal is not achieved, no shares will be paid. To calculate the market value of the unvested PSUs in the table above, based on performance to target at February 29, 2020, we assumed that the multiplier was 200% for the fiscal 2018 award because performance exceeded the target. For the fiscal 2020 award, performance exceeded the target for the performance goal set for year one of its term. At that time no performance goal had been set for years two and three. So we assumed a multiplier of 200% for the one-third of the PSUs covered by the year one performance goal and a 100% multiplier for the remaining two-thirds of the awards. The value of each resulting share was equal to the closing price of our stock on February 28, 2020, the last trading day of our fiscal year (which was $87.31).
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
||||
Name
|
Number of Shares
Acquired on Exercise(a)
(#)
|
|
Value Realized on
Exercise(b)
($)
|
|
Number of Shares
Acquired on Vesting(c)
(#)
|
|
Value Realized
on Vesting(d)
($)
|
William D. Nash
|
269,499
|
|
9,644,789
|
|
5,375
|
|
400,868
|
Enrique N. Mayor-Mora
|
36,245
|
|
1,382,614
|
|
2,680
|
|
199,874
|
Thomas W. Reedy
|
122,188
|
|
4,152,069
|
|
3,478
|
|
259,389
|
Edwin J. Hill
|
81,959
|
|
3,211,154
|
|
3,119
|
|
232,615
|
Eric M. Margolin
|
71,963
|
|
2,225,381
|
|
2,586
|
|
192,864
|
James Lyski
|
—
|
|
—
|
|
2,138
|
|
159,452
|
(a)
|
Represents the number of shares of common stock underlying stock options exercised during fiscal 2020.
|
(b)
|
Amounts were calculated based on difference between (i) the closing price of the Company’s common stock on the exercise date and (ii) the exercise price of the stock options.
|
(c)
|
Represents the number of shares of common stock acquired on vesting of the underlying PSUs during fiscal 2020.
|
(d)
|
Amounts were calculated by multiplying the closing price of the Company’s common stock on the vesting date by the number of shares acquired on vesting.
|
Name
|
Plan Name
|
|
Number of
Years Credited Service (a) (#) |
|
Present Value of
Accumulated Benefit (b) ($) |
|
Payments
During Last Fiscal Year ($) |
William D. Nash
|
Pension Plan
|
|
15
|
|
387,459
|
|
—
|
|
Benefit Restoration Plan
|
|
15
|
|
71,723
|
|
—
|
Enrique N. Mayor-Mora
|
Pension Plan
|
|
—
|
|
—
|
|
—
|
|
Benefit Restoration Plan
|
|
—
|
|
—
|
|
—
|
Thomas W. Reedy
|
Pension Plan
|
|
6
|
|
188,555
|
|
—
|
|
Benefit Restoration Plan
|
|
6
|
|
235,943
|
|
—
|
Edwin J. Hill
|
Pension Plan
|
|
14
|
|
503,298
|
|
—
|
|
Benefit Restoration Plan
|
|
14
|
|
370,785
|
|
—
|
Eric M. Margolin
|
Pension Plan
|
|
1
|
|
51,719
|
|
—
|
|
Benefit Restoration Plan
|
|
1
|
|
31,670
|
|
—
|
James Lyski
|
Pension Plan
|
|
—
|
|
—
|
|
—
|
|
Benefit Restoration Plan
|
|
—
|
|
—
|
|
—
|
(a)
|
We have not granted any of our named executive officers extra years of service under either the Pension Plan or the Benefit Restoration Plan.
|
(b)
|
Determined assuming retirement at age 65. The discount rate (2.85%) and mortality assumptions used in calculating the present value of the accumulated benefit shown above were consistent with those used for our financial reporting purposes. Additional information regarding our assumptions including the pension plan measurement date is set forth in Note 10 to our consolidated financial statements, which are included in our Annual Report on Form 10-K for the fiscal year ended February 29, 2020.
|
Name
|
Plan
Name |
|
Executive
Contributions in Last Fiscal Year (a)($) |
|
Registrant
Contributions in Last Fiscal Year (b)($) |
|
Aggregate
Earnings in Last Fiscal Year (c)($) |
|
Aggregate
Withdrawals/ Distributions ($) |
|
Aggregate
Balance at Last Fiscal Year End (d) ($) |
William D. Nash
|
RRP
|
|
143,973
|
|
143,973
|
|
61,747
|
|
—
|
|
1,218,103
|
|
EDCP
|
|
—
|
|
—
|
|
45,438
|
|
—
|
|
778,346
|
Enrique N. Mayor-Mora
|
RRP
|
|
16,569
|
|
16,568
|
|
13,435
|
|
—
|
|
238,918
|
|
EDCP
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Thomas W. Reedy
|
RRP
|
|
62,242
|
|
82,989
|
|
74,874
|
|
—
|
|
1,158,561
|
|
EDCP
|
|
—
|
|
—
|
|
13,346
|
|
71,454
|
|
183,132
|
Edwin J. Hill
|
RRP
|
|
45,473
|
|
60,631
|
|
31,238
|
|
—
|
|
706,877
|
|
EDCP
|
|
210,000
|
|
16,800
|
|
77,865
|
|
—
|
|
1,097,950
|
Eric M. Margolin
|
RRP
|
|
56,148
|
|
48,127
|
|
31,209
|
|
—
|
|
788,507
|
|
EDCP
|
|
—
|
|
—
|
|
84,355
|
|
—
|
|
1,303,957
|
James Lyski
|
RRP
|
|
32,492
|
|
32,491
|
|
17,016
|
|
—
|
|
266,609
|
|
EDCP
|
|
96,563
|
|
5,794
|
|
12,452
|
|
—
|
|
299,462
|
(a)
|
These amounts represent payroll deductions and are therefore included in the “Salary” and “Non-Equity Incentive Plan Compensation” columns of the “Summary Compensation Table” on page 43.
|
(b)
|
Company contributions are included in the “All Other Compensation” column of the “Summary Compensation Table” on page 43 and were credited to each executive’s account after the close of the fiscal year.
|
(c)
|
We do not pay above-market interest or preferential dividends on investments in the RRP or the EDCP. Earnings are determined by the performance of the mutual funds or other investment vehicles selected by each executive.
|
(d)
|
For each of Messrs. Nash, Mayor-Mora, Reedy, Hill, Margolin, and Lyski the following amounts were reported as compensation to each person in the “Summary Compensation Table” for the fiscal 2018 and fiscal 2019 years, respectively: $424,791; $0; $246,661; $481,764; $283,483; and $183,760.
|
▪
|
During his employment and for two years following his termination, the NEO must comply with the provisions of a covenant not to compete.
|
▪
|
During his employment and for two years following his termination, the NEO may not solicit or induce our associates to leave us or hire any of our associates.
|
▪
|
During his employment and at all times subsequent to the last day of his employment, the NEO must hold in strict confidence and safeguard any and all protected information, including our trade secrets.
|
▪
|
The NEO must return our property and must execute an agreement releasing us from any claims.
|
Category
|
Specific Event
|
Requirements
|
Retirement
|
Early Retirement
|
Termination due to early retirement occurs when an NEO voluntarily terminates his employment at a time when he is eligible for “early retirement” as this term is defined in our Pension Plan (generally, an NEO is eligible for early retirement after age 55 with at least ten years of service or after age 62 with at least seven years of service). The effective date of termination due to early retirement is the date set forth in a notice from the NEO to us. Mr. Reedy and Mr. Hill are currently our only NEOs eligible for early retirement.
|
Normal Retirement
|
Termination due to normal retirement occurs when an NEO voluntarily terminates his employment at a time when he is eligible for “normal retirement” as this term is defined in our Pension Plan (generally, an NEO is eligible for normal retirement after age 65 with at least five years of service). The effective date of termination is the date set forth in a notice from the NEO to us. Mr. Margolin is currently our only NEO eligible for normal retirement.
|
|
Death or Disability
|
Death
|
The effective date of termination is the date of death.
|
Disability
|
Termination due to disability occurs when we notify the NEO that we have decided to terminate him because he has a physical or mental illness that causes him: (i) to be considered “disabled” for the purpose of eligibility to receive benefits under our long-term disability plan if he is a participant; or (ii) if he does not participate in this plan, to be unable to substantially perform the duties of his position for a total of 180 days during any period of 12 consecutive months and a physician selected by us has furnished to us a certification that the return of the NEO to his normal duties is impossible or improbable. The effective date of termination is the date set forth in a notice from us to the NEO.
|
|
|
|
|
TYPE OF TERMINATION EVENT
|
|||||||||||||
Name
|
Type of
Payment |
|
|
Termination
Without Cause ($) |
|
Resignation
for Good Reason ($) |
|
Early or
Normal Retirement ($) |
|
Death or
Disability ($) |
|
CIC
Followed by Term. Without Cause or Resignation for Good Reason ($) |
|||||
William D. Nash
|
Severance Payment(a)
|
|
5,381,183
|
|
|
5,381,183
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Annual Incentive Bonus(b)
|
|
2,078,482
|
|
|
—
|
|
|
—
|
|
|
1,643,069
|
|
|
1,643,069
|
|
||
Long-Term Equity Award(c)
|
|
3,231,048
|
|
|
3,231,048
|
|
|
—
|
|
|
18,442,196
|
|
|
1,984,785
|
|
||
Other Payments:
|
Good Reason(d)
|
|
—
|
|
|
1,643,069
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
CIC(e)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,489,843
|
|
||
Other Benefits:
|
Health(f)
|
|
17,849
|
|
|
17,849
|
|
|
—
|
|
|
—
|
|
|
17,849
|
|
|
Financial Services(g)
|
|
14,400
|
|
|
14,400
|
|
|
—
|
|
|
14,400
|
|
|
14,400
|
|
||
Outplacement(h)
|
|
50,000
|
|
|
50,000
|
|
|
—
|
|
|
—
|
|
|
50,000
|
|
||
TOTAL
|
|
|
10,772,962
|
|
|
10,337,549
|
|
|
—
|
|
|
20,099,665
|
|
|
13,199,946
|
|
|
Enrique N. Mayor-Mora
|
Severance Payment(a)
|
|
750,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Annual Incentive Bonus(b)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Long-Term Equity Award(c)
|
|
240,889
|
|
|
240,889
|
|
|
—
|
|
|
1,908,460
|
|
|
240,889
|
|
||
Other Payments:
|
Good Reason(d)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
CIC(e)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
750,000
|
|
||
Other Benefits:
|
Health(f)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Financial Services(g)
|
|
14,400
|
|
|
14,400
|
|
|
—
|
|
|
14,400
|
|
|
14,400
|
|
||
Outplacement(h)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
TOTAL
|
|
|
1,005,289
|
|
|
255,289
|
|
|
—
|
|
|
1,922,860
|
|
|
1,005,289
|
|
|
Thomas W. Reedy
|
Severance Payment(a)
|
|
2,650,182
|
|
|
2,650,182
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Annual Incentive Bonus(b)
|
|
727,469
|
|
|
—
|
|
|
727,469
|
|
|
575,075
|
|
|
575,075
|
|
||
Long-Term Equity Award(c)
|
|
5,478,945
|
|
|
5,478,945
|
|
|
7,233,482
|
|
|
6,309,480
|
|
|
4,995,073
|
|
||
Other Payments:
|
Good Reason(d)
|
|
—
|
|
|
575,075
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
CIC(e)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,467,763
|
|
||
Other Benefits:
|
Health(f)
|
|
16,043
|
|
|
16,043
|
|
|
—
|
|
|
—
|
|
|
16,043
|
|
|
Financial Services(g)
|
|
14,400
|
|
|
14,400
|
|
|
14,400
|
|
|
14,400
|
|
|
14,400
|
|
||
Outplacement(h)
|
|
25,000
|
|
|
25,000
|
|
|
—
|
|
|
—
|
|
|
25,000
|
|
||
TOTAL
|
|
|
8,912,039
|
|
|
8,759,645
|
|
|
7,975,351
|
|
|
6,898,955
|
|
|
10,093,354
|
|
|
|
|
|
TYPE OF TERMINATION EVENT
|
|||||||||||||
Name
|
Type of
Payment
|
|
|
Termination
Without
Cause
($)
|
|
Resignation
for Good
Reason
($)
|
|
Early or
Normal
Retirement
($)
|
|
Death or
Disability
($)
|
|
CIC
Followed by
Term.
Without
Cause or
Resignation
for Good
Reason
($)
|
|||||
Edwin J. Hill
|
Severance Payment(a)
|
|
2,520,000
|
|
|
2,520,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Annual Incentive Bonus(b)
|
|
697,331
|
|
|
—
|
|
|
697,331
|
|
|
551,250
|
|
|
551,250
|
|
||
Long-Term Equity Award(c)
|
|
5,150,171
|
|
|
5,150,171
|
|
|
6,854,826
|
|
|
6,005,649
|
|
|
4,716,182
|
|
||
Other Payments:
|
Good Reason(d)
|
|
—
|
|
|
551,250
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
CIC(e)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,282,670
|
|
||
Other Benefits:
|
Health(f)
|
|
16,049
|
|
|
16,049
|
|
|
—
|
|
|
—
|
|
|
16,049
|
|
|
Financial Services(g)
|
|
14,400
|
|
|
14,400
|
|
|
14,400
|
|
|
14,400
|
|
|
14,400
|
|
||
Outplacement(h)
|
|
25,000
|
|
|
25,000
|
|
|
—
|
|
|
—
|
|
|
25,000
|
|
||
TOTAL
|
|
|
8,422,951
|
|
|
8,276,870
|
|
|
7,566,557
|
|
|
6,571,299
|
|
|
9,605,551
|
|
|
Eric M. Margolin
|
Severance Payment(a)
|
|
2,176,937
|
|
|
2,176,937
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Annual Incentive Bonus(b)
|
|
597,564
|
|
|
—
|
|
|
597,564
|
|
|
472,383
|
|
|
472,383
|
|
||
Long-Term Equity Award(c)
|
|
4,878,320
|
|
|
4,878,320
|
|
|
6,385,641
|
|
|
5,573,483
|
|
|
4,444,331
|
|
||
Other Payments:
|
Good Reason(d)
|
|
—
|
|
|
472,383
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
CIC(e)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,669,951
|
|
||
Other Benefits:
|
Health(f)
|
|
17,849
|
|
|
17,849
|
|
|
—
|
|
|
—
|
|
|
17,849
|
|
|
Financial Services(g)
|
|
14,400
|
|
|
14,400
|
|
|
14,400
|
|
|
14,400
|
|
|
14,400
|
|
||
Outplacement(h)
|
|
25,000
|
|
|
25,000
|
|
|
—
|
|
|
—
|
|
|
25,000
|
|
||
TOTAL
|
|
|
7,710,070
|
|
|
7,584,889
|
|
|
6,997,605
|
|
|
6,060,266
|
|
|
8,643,914
|
|
|
James Lyski
|
Severance Payment(a)
|
|
811,125
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Annual Incentive Bonus(b)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Long-Term Equity Award(c)
|
|
899,221
|
|
|
899,221
|
|
|
—
|
|
|
4,496,826
|
|
|
538,630
|
|
||
Other Payments:
|
Good Reason(d)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
CIC(e)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
811,125
|
|
||
Other Benefits:
|
Health(f)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Financial Services(g)
|
|
14,400
|
|
|
14,400
|
|
|
—
|
|
|
14,400
|
|
|
14,400
|
|
||
Outplacement(h)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
TOTAL
|
|
|
1,724,746
|
|
|
913,621
|
|
|
—
|
|
|
4,511,226
|
|
|
1,364,155
|
|
(a)
|
For Messrs. Nash, Reedy, Hill, and Margolin, we calculate severance payments using the following formula: 2 x (Base Salary + (Last Annual Bonus as determined by the Compensation and Personnel Committee)). This amount is paid in equal monthly installments over the 24-month period following the date of termination. As of February 29, 2020, the last annual bonus as determined by the Compensation and Personnel Committee was the fiscal 2019 bonus, which is set forth for the applicable NEOs in the “Summary Compensation Table” on page 43. For Messrs. Mayor-Mora and Lyski, the severance payment is equal to their then-current bi-weekly salary amount, to be paid for and over the course of 39 bi-weekly periods.
|
(b)
|
The Annual Incentive Bonus is the bonus paid pursuant to our Bonus Plan. With the exception of Messrs. Mayor-Mora and Lyski, the NEO severance agreements provide for a bonus payment, calculated in one of two ways, in certain termination scenarios. If an NEO is terminated without cause or retires, we pay a pro rata actual bonus, which is the pro rata share of the NEO’s annual bonus based on actual performance for the fiscal year in which the termination occurs. The pro rata actual bonus
|
(c)
|
Following the designated termination events, all or a portion of the equity awards made to the NEO during the course of his employment will vest and become exercisable in accordance with the terms and conditions of our Stock Incentive Plan and the individual award agreement. For additional information regarding each NEO’s outstanding equity awards, see the “Outstanding Equity Awards at Fiscal 2020 Year End” table on pages 47 and 48. The value of the vested but unexercised portion of each option has not been included in the amounts reported above because their receipt is not accelerated by termination events.
|
(d)
|
The NEO severance agreements for Messrs. Nash, Reedy, Hill, and Margolin provide for a Good Reason Payment, which is a one-time payment made to the NEO following his termination for Good Reason. It is equal to the NEO’s base salary on the date of termination multiplied by a certain percentage, which percentage is generally the same as the NEO’s target bonus percentage. The Good Reason Payment is paid in a lump sum cash payment within ten days after the date of termination. The severance agreements with Messrs. Mayor-Mora and Lyski do not provide for a Good Reason payment (unless it occurs following a CIC).
|
(e)
|
The Change-in-Control Payment is equal to 2.99 times the NEO’s final compensation, which consists of the sum of the NEO’s base salary at the date of termination and the higher of the annual bonus paid or earned but not yet paid to the NEO for the two most recently completed fiscal years. As of February 29, 2020, the higher annual bonus was the fiscal 2020 bonus for each of our NEOs. The Change-in-Control Payment will be paid to the NEO in equal monthly installments over the 24-month period following the date of termination, unless the payment is related to an Internal Revenue Code Section 409A CIC event, as that term is defined in each NEO’s agreement, in which case the Change-in-Control Payment will be paid in a lump sum cash payment on the forty-fifth day after the date of termination. The severance agreements with Messrs. Mayor-Mora and Lyski only provide for a payment in connection with a CIC if the NEO terminates his employment following the CIC for Good Reason (as defined in his agreement). The payment would be equal to the NEO’s then-current bi-weekly salary amount, to be paid for and over the course of 39 bi-weekly periods.
|
(f)
|
If the NEO elects to continue coverage under our health, dental or vision plans following the date of termination pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the NEO will be responsible for remitting to us the appropriate COBRA premium. We will reimburse the NEO for a portion of the COBRA premium equal to the sum of: (i) the amount that we would have otherwise paid for the coverage if he had remained an active associate; and (ii) the COBRA administration fee. This partial COBRA reimbursement will be paid in equal monthly installments for up to an 18-month period. For purposes of the table on pages 54 and 55, we have assumed that each officer elected to continue his coverage on February 29, 2020, for the full 18-month period. The severance agreements with Messrs. Mayor-Mora and Lyski do not provide for this benefit.
|
(g)
|
We provide a tax and financial planning benefit to our NEOs for the one-year period following early or normal retirement, termination without cause (including death, disability or a termination for good reason) and a CIC. The annual cost of this service is $14,400.
|
(h)
|
Outplacement services are available to each NEO in an amount not to exceed $50,000 for Mr. Nash and $25,000 for the other NEOs, except for Messrs. Mayor-Mora and Lyski. The table on pages 54 and 55 assumes that the maximum outplacement benefit is paid to each NEO. The severance agreements with Messrs. Mayor-Mora and Lyski do not provide for this benefit.
|
DIRECTOR COMPENSATION
|
Compensation Element
|
Director Compensation Program(a)
|
Annual Cash Retainer
|
$85,000
|
Annual Equity Retainer
|
$175,000(b)
|
Board Chair Fee
|
$190,000(c)
|
Lead Independent Director Fee
|
$50,000(d)
|
Committee Chair Fee
|
$30,000 for the Audit Committee
$15,000 for the Compensation and Personnel Committee $15,000 for the Nominating and Governance Committee |
Audit Committee Fee
|
$5,000
|
Board Meeting Fee
|
None(e)
|
Committee Meeting Fee
|
$1,500 per in-person meeting and $750 per telephonic meeting
|
(a)
|
In addition to the compensation elements disclosed above, we reimburse our directors for travel and other necessary business expenses incurred in the performance of their services to us. Each non-employee director whose term in office began before June 2014 is eligible for coverage under our health, dental and vision plans at the same rates at which coverage is offered to our associates. Non-employee directors may not use our plane for personal travel.
|
(b)
|
The annual equity retainer consists of restricted stock units vesting on the one-year anniversary of the grant date. Restricted stock units granted to non-employee directors in fiscal 2020 will vest on June 28, 2020, while also permitting the deferral of the receipt of the vested shares until a later date.
|
(c)
|
The Board Chair fee increased from $100,000 in fiscal 2019.
|
(d)
|
The Lead Independent Director fee decreased from $100,000 in fiscal 2019.
|
(e)
|
We do not pay directors a fee for attending a board meeting unless there are more than eight board meetings during a fiscal year. Generally, we do not hold more than eight board meetings during a fiscal year. If there were more than eight meetings we would pay, for each additional meeting, directors fees of $1,500 per in-person meeting and $750 per telephonic meeting.
|
Name
|
Fees Earned
or Paid in Cash(a)
($)
|
|
Stock
Awards(b)(c)
($)
|
|
All Other
Compensation(d)
($)
|
|
Total
($) |
||||
Peter J. Bensen
|
123,750
|
|
|
174,972
|
|
|
10,000
|
|
|
308,722
|
|
Ronald E. Blaylock
|
106,750
|
|
|
174,972
|
|
|
10,160
|
|
|
291,883
|
|
Sona Chawla
|
91,750
|
|
|
174,972
|
|
|
—
|
|
|
266,722
|
|
Thomas J. Folliard
|
245,000
|
|
|
174,972
|
|
|
16,407
|
|
|
436,379
|
|
Shira D. Goodman
|
106,000
|
|
|
174,972
|
|
|
—
|
|
|
280,972
|
|
Robert J. Hombach
|
102,000
|
|
|
174,972
|
|
|
10,000
|
|
|
286,972
|
|
David W. McCreight
|
102,000
|
|
|
174,972
|
|
|
—
|
|
|
276,972
|
|
Mark F. O’Neil(e)
|
41,167
|
|
|
87,478
|
|
|
—
|
|
|
128,645
|
|
Pietro Satriano
|
91,000
|
|
|
174,972
|
|
|
—
|
|
|
265,972
|
|
Marcella Shinder
|
91,000
|
|
|
174,972
|
|
|
—
|
|
|
265,972
|
|
Mitchell D. Steenrod
|
137,833
|
|
|
174,972
|
|
|
10,000
|
|
|
322,806
|
|
William R. Tiefel(f)
|
63,917
|
|
|
199,469
|
|
|
10,000
|
|
|
273,386
|
|
(a)
|
Represents the cash compensation earned in fiscal 2020 for Board, Committee, and Board and Committee chair service.
|
(b)
|
Represents the aggregate grant date fair value of the restricted stock unit awards made in fiscal 2020 as determined in accordance with ASC Topic 718. In June 2019, we granted 2,020 shares of restricted stock units to each non-employee director then in office.
|
(c)
|
The following table provides information on the number of shares of unvested restricted stock units, the number of shares of vested restricted stock units for which payment has been deferred, and the aggregate option awards held by each of our non-employee directors as of February 29, 2020. All options held by our non-employee directors were fully vested as of February 29, 2020 except for those held by Mr. Folliard, of which 393,571 were vested and 46,280 were unvested.
|
(d)
|
Represents matching charitable gifts made by The CarMax Foundation as part of its matching gifts program; the cost to CarMax for participation in its health, dental and vision plans (both the matching gifts program and the plans are broadly available to all CarMax associates); and director spouse travel and event expenses in connection with a Board meeting. None of the benefits individually exceeded the greater of $25,000 or 10% of the total amount of these benefits for the non-executive director.
|
(e)
|
Mr. O’Neil was elected to the Board on October 7, 2019. His stock award was prorated for his partial service year on the Board.
|
(f)
|
Mr. Tiefel did not stand for re-election at our 2019 annual shareholders meeting. Effective June 25, 2019, the Compensation and Personnel Committee approved the acceleration of the vesting for the restricted stock units granted to Mr. Tiefel in consideration for his 2018-2019 board service. The amount in the stock awards column was determined in accordance with ASC Topic 718 and reflects the incremental fair value associated with the acceleration of these awards.
|
PROPOSAL FOUR: APPROVAL OF AMENDED AND RESTATED CARMAX, INC. 2002 STOCK INCENTIVE PLAN
|
|
|
Shares
|
A.
|
Total shares authorized under the Stock Incentive Plan
|
58,350,000
|
B.
|
Total shares awarded from Stock Incentive Plan through February 29, 2020
|
55,829,150
|
C.
|
Shares added back to share reserve from Stock Incentive Plan through February 29, 2020 due to cancellations and forfeitures of awards, or in satisfaction of exercise price or tax withholding obligations
|
5,451,893
|
D.
|
Shares available to be granted under the Stock Incentive Plan as of February 29, 2020 (A-B+C)
|
7,972,743
|
E.
|
New shares available for grant under the Revised Stock Incentive Plan
|
1,500,000
|
F.
|
Total shares available for grant under Revised Stock Incentive Plan if approved (D+E)
|
9,472,743
|
G.
|
Shares Outstanding as of February 29, 2020
|
163,081,376
|
(a)
|
This table does not include the annual equity awards granted on May 1, 2020 as described in “Additional Information Regarding Outstanding Equity Awards” on page 67.
|
|
Fiscal 2020
(%)
|
Fiscal 2019
(%)
|
Fiscal 2018
(%)
|
Three Year Average (Fiscal 2018-2020)
|
Percentage of Equity-Based Awards Granted to Named Executive Officers
|
23.74%
|
21.64%
|
21.97%
|
22.45%
|
Dilution
|
1.07%
|
0.95%
|
1.18%
|
1.07%
|
Burn rate
|
1.12%
|
1.18%
|
1.24%
|
1.18%
|
Overhang
|
9.58%
|
8.42%
|
8.63%
|
8.88%
|
Name and Position
|
Number of Options Granted
|
Named Executive Officers
|
|
William D. Nash(a)
President and Chief Executive Officer
|
1,990,374
|
Enrique Mayor-Mora
Senior VP and Chief Financial Officer
|
271,890
|
Thomas W. Reedy
Executive VP, Finance
|
1,238,174
|
Edwin J. Hill
Executive VP and Chief Operating Officer
|
1,102,732
|
Eric M. Margolin
Executive VP, General Counsel and Corporate Secretary
|
953,125
|
James Lyski
Executive VP, Chief Marketing Officer
|
358,815
|
All current executive officers as a group
|
7,597,717
|
All non-employee directors as a group
|
3,339,849(b)
|
Director Nominees
|
|
Peter J. Bensen
|
—
|
Ronald E. Blaylock
|
—
|
Sona Chawla
|
—
|
Thomas J. Folliard
|
3,339,849(b)
|
Shira Goodman
|
—
|
Robert J. Hombach
|
—
|
David W. McCreight
|
—
|
Mark F. O’Neil
|
—
|
Pietro Satriano
|
—
|
Marcella Shinder
|
—
|
Mitchell D. Steenrod
|
—
|
All other employees, including all current officers who are not executive officers, as a group
|
31,735,055
|
(a)
|
Mr. Nash is also a director nominee.
|
(b)
|
Mr. Folliard retired as our Chief Executive Officer in 2016. All of the options granted to Mr. Folliard under the Stock Incentive Plan were awarded in his capacity as an employee of CarMax.
|
Plan Category
|
Number of Securities
To Be Issued Upon Exercise of Outstanding Options, Warrants and Rights |
|
Weighted
Average Exercise Price of Outstanding Options, Warrants and Rights |
|
Number of Securities
Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in the First Column) |
|||
Equity compensation plans approved by security holders:
|
|
|
|
|
|
|
|
|
Stock Incentive Plan
|
6,991,381
|
|
|
$64.86
|
|
7,972,743(a)
|
|
|
Non-Employee Directors Stock Incentive Plan
|
2,870(b)
|
|
|
$46.65
|
|
–(c)
|
|
|
Employee Stock Purchase Plan
|
—
|
|
|
—
|
|
|
2,628,021(d)
|
|
Equity compensation plans not approved by security holders
|
—
|
|
|
—
|
|
|
–
|
|
Total
|
6,994,251
|
|
|
$64.85
|
|
10,600,764
|
|
(c)
|
The Non-Employee Directors Stock Incentive Plan terminated on June 24, 2018.
|
(d)
|
The ESPP authorizes the issuance of 8,000,000 shares of common stock. As of February 29, 2020, 5,371,979 shares have been purchased on the open market and 2,628,021 shares remain available for issuance. Under the ESPP, full- and part-time associates who have been employed for one year or more are eligible to participate. Executive officers may not participate in the ESPP. A participating associate may authorize payroll deductions between 2% and 10% of compensation, up to an annual maximum of $10,000. Each month, the payroll deductions are used to purchase CarMax common stock. Shares are purchased on the open market and the purchase price is the average cost of all shares purchased for a particular month. To encourage participation in the ESPP, we match 15% of the associate’s contribution. An eligible associate may change, cease or restart contributions for any payroll period without penalty. We pay all administrative costs of the ESPP. There are no outstanding options, warrants, or rights under the ESPP.
|
CARMAX SHARE OWNERSHIP
|
▪
|
Our CEO and the other named executive officers.
|
▪
|
Each director or nominee for director.
|
▪
|
All of our directors and executive officers as a group.
|
Named Executive Officers
|
CarMax Shares
that May Be Acquired Within 60 Days after March 31, 2020 |
|
Shares of CarMax
Common Stock Beneficially Owned as of March 31, 2020(a) |
|
Percent of Class
|
William D. Nash(b)
|
543,920
|
|
641,852
|
|
*
|
Enrique Mayor-Mora
|
79,690
|
|
80,022
|
|
*
|
Thomas W. Reedy
|
301,940
|
|
333,910
|
|
*
|
Edwin J. Hill
|
385,111
|
|
388,889
|
|
*
|
Eric M. Margolin
|
295,398
|
|
311,865
|
|
*
|
James Lyski
|
235,523
|
|
237,019
|
|
*
|
Directors/Director Nominees
|
|
|
|
|
|
Peter J. Bensen
|
2,390
|
|
7,390
|
|
*
|
Ronald E. Blaylock
|
—
|
|
23,205
|
|
*
|
Sona Chawla
|
2,020
|
|
4,426
|
|
*
|
Thomas J. Folliard
|
444,261
|
|
649,786
|
|
*
|
Shira Goodman
|
—
|
|
22,869
|
|
*
|
Robert J. Hombach
|
4,410
|
|
4,437
|
|
*
|
David W. McCreight
|
—
|
|
—
|
|
*
|
Mark F. O’Neil(c)
|
988
|
|
14,183
|
|
*
|
Pietro Satriano
|
—
|
|
—
|
|
*
|
Marcella Shinder
|
4,410
|
|
11,533
|
|
*
|
Mitchell D. Steenrod
|
4,410
|
|
22,144
|
|
*
|
All directors and executive officers as a group (22 persons)
|
2,777,788
|
|
3,239,681
|
|
1.99%
|
(a)
|
In addition to shares of CarMax common stock beneficially owned on March 31, 2020, includes (i) shares of CarMax common stock that could be acquired through the exercise of stock options within 60 days after March 31, 2020, (ii) shares of CarMax common stock that will be acquired upon the May 1, 2020 settlement of the MSUs granted to certain officers on May 1, 2017, (iii) shares of CarMax common stock that will be acquired upon the May 1, 2020 settlement of the PSUs granted to certain officers on May 1, 2017, and (iv) shares of CarMax common stock that could be acquired by certain directors upon the settlement of restricted stock units for which settlement has been deferred until retirement from the CarMax board. Each of the MSUs has been converted to shares of CarMax common stock based upon the applicable conversion formula and our assumption that the average closing price of our stock during the final 40 trading days of the MSU’s three-year vesting period was equal to the closing price of our stock on March 31, 2020 (which was $53.83). Each of the PSUs has been converted to shares of CarMax common stock using the Compensation and Personnel Committee’s
|
(b)
|
Mr. Nash is also a director of CarMax.
|
(c)
|
13,195 shares held indirectly by Mr. O’Neil’s spouse in the revocable Monique Cannella O'Neil Trust.
|
Name and Address of
Beneficial Owner(s) |
Number of Shares Owned
|
|
Percent of Class
|
The Vanguard Group, Inc.(a)
100 Vanguard Boulevard
Malvern, PA 19355 |
18,163,924
|
|
11.08%
|
PRIMECAP Management Company(b)
177 E. Colorado Blvd., 11th Floor
Pasadena, CA 91105 |
10,848,923
|
|
6.62%
|
BlackRock, Inc.(c)
55 East 52nd Street
New York, NY 10055 |
10,726,869
|
|
6.60%
|
(a)
|
Information concerning the CarMax common stock beneficially owned as of December 31, 2019, was obtained from a Schedule 13G/A filed February 12, 2020. According to the Schedule 13G/A, The Vanguard Group, Inc. has the sole power to vote 247,332 shares, the sole power to dispose of 17,879,367 shares, the shared power to vote 48,975 shares and the shared power to dispose of 284,557 shares of CarMax common stock.
|
(b)
|
Information concerning the CarMax common stock beneficially owned as of December 31, 2019, was obtained from a Schedule 13G/A filed February 12, 2020. According to the Schedule 13G/A, PRIMECAP Management Company has the sole power to vote 10,050,663 shares and the sole power to dispose of 10,848,923 shares.
|
(c)
|
Information concerning the CarMax common stock beneficially owned as of December 31, 2019, was obtained from a Schedule 13G/A filed February 5, 2020. According to the Schedule 13G/A, BlackRock, Inc. has the sole power to vote 9,338,006 shares and the sole power to dispose of 10,726,869 shares.
|
GENERAL INFORMATION
|
Attending the Virtual Annual Meeting
|
|
How to Attend
|
This year our annual shareholders meeting will be held virtually and there will be no in-person meeting location. The annual shareholders meeting is open to all holders of CarMax common stock as of April 17, 2020. Shareholders will be able to attend and participate in the virtual meeting, including voting their shares and asking questions. To attend and participate in our annual meeting, visit www.virtualshareholdermeeting.com/KMX2020 and enter the 16-digit control number listed on your Notice of Internet Availability of Proxy Materials, proxy card, or voting instruction form.
Our annual meeting will begin promptly at 1:00 p.m., Eastern Time, on June 23, 2020. We encourage you to access the virtual platform prior to the start time to familiarize yourself with the virtual platform and ensure that you can hear the streaming audio. You may begin to log into the virtual platform beginning at 12:45 p.m., Eastern Time, on June 23, 2020.
The virtual meeting is supported across different online browsers and devices (desktops, laptops, tablets and cell phones). Please be certain you have the most updated version of the applicable software and plugins. Also, you should ensure that you have a strong internet connection from wherever you intend to participate in the annual meeting.
|
Submitting Questions at the Meeting
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If shareholders attending the annual meeting wish to submit a question during the meeting, click on the “messages” icon in the upper right. Pertinent questions will be answered during the meeting, subject to time constraints.
If you are unable to attend our annual meeting, a replay of the annual meeting will be posted to our website at investors.carmax.com after the meeting.
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Deadline for Voting (Before the Virtual Meeting)
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For both shareholders of record and beneficial owners of shares held in street name (other than ESPP participants), online and telephone voting is available through 11:59 p.m. ET on Monday, June 22, 2020.
For shares held by ESPP participants in an ESPP account, online and telephone voting is available through 11:59 p.m. ET on Thursday, June 18, 2020. |
Changing Your Vote
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You may revoke your proxy at any time before it is exercised by submitting a subsequent vote using any of the methods described above.
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Effect of Not Voting
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Shareholders of Record. If you are a shareholder of record and you:
● Do not vote via the internet before the virtual meeting, by telephone or by mail, your shares will not be voted unless you attend the annual meeting to vote your shares.
● Sign and return a proxy card without giving specific voting instructions, then your shares will be voted in the manner recommended by the Board on all matters presented in this proxy statement and as the proxy holders may determine in their discretion on any other matters properly presented for a vote.
Beneficial Owners of Shares Held in Street Name or Participants in the ESPP. If you are a beneficial owner of shares held in street name or a participant in the ESPP and you do not provide the organization that holds your shares with specific voting instructions, under the rules of various national and regional securities exchanges, the organization that holds your shares generally may vote your shares on routine matters but cannot vote your shares on non-routine matters. If the organization that holds your shares does not receive instructions from you on how to vote your shares on a non-routine matter, the organization will not have the authority to vote your shares on this matter. This is generally referred to as a “broker non-vote.”
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Voting Standards
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Proposals One (election of directors), Two (ratification of KPMG), Three (advisory vote on executive compensation), and Four (approval of amended and restated stock incentive plan) must be approved by the affirmative vote of a majority of the votes cast. Abstentions and broker non-votes will not be counted in determining the number of votes cast on Proposals One, Two, and Three. Abstentions, but not broker-non-votes, will be counted in determining the number of votes cast on Proposal Four.
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Routine and
Non-Routine Proposals |
Routine Proposals. Proposal Two (ratification of KPMG) is considered a routine matter. A broker or other nominee generally may vote on routine matters, and therefore we expect no broker non-votes in connection with Proposal Two.
Non-routine Proposals. Proposals One (election of directors), Three (advisory vote on executive compensation) and Four (approval of amended and restated stock incentive plan) are considered non-routine matters. A broker or other nominee cannot vote without instructions on non-routine matters, and therefore there may be broker non-votes on these proposals. |
Counting the Votes
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A representative of American Election Services, LLC will tabulate the votes and act as inspector of election at the annual shareholders meeting.
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Proxy Information
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Electronic Access to
Proxy Materials and
Annual Report
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We are providing access to our proxy materials primarily over the internet rather than mailing paper copies of those materials to each shareholder. On or about May 8, 2020, we will mail the Notice to our shareholders. This Notice will provide website and other information for the purpose of accessing proxy materials. The Notice tells you how to:
● View our proxy materials for the annual shareholders meeting on the internet.
● Instruct us to send proxy materials to you by mail or email.
Choosing to receive proxy materials by email will save us the cost of printing and mailing documents and will reduce the impact of our annual shareholders meeting on the environment. If you choose to receive future proxy materials by email, you will receive an email message next year with instructions containing a link to those materials and a link to the proxy voting website. Your election to receive proxy materials by email will remain in effect unless and until you rescind it.
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Proxy Solicitation
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CarMax pays the cost of soliciting proxies. We will solicit proxies from our shareholders, and, after the initial solicitation, some of our associates or agents may contact shareholders by telephone, by email or in person. We have retained Georgeson, Inc. to solicit proxies for a fee of $8,500 plus reasonable expenses. We will also reimburse banks, brokerage firms and other custodians, nominees and fiduciaries for their reasonable expenses in sending proxy materials to the beneficial owners of our common stock.
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Website Addresses in the Proxy Statement
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Website addresses in this proxy statement are inactive textual references. The information on, or accessible through, these websites is not incorporated by reference into, and is not a part of, this proxy statement.
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Other Matters
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Other Matters
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We are not aware of any matters that may come before the annual shareholders meeting other than the four proposals disclosed in this proxy statement. If other matters do come before the annual shareholders meeting, the named proxies will vote in accordance with their best judgment.
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Next Year’s Meeting
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We plan to hold our 2021 annual shareholders meeting on or about June 29, 2021.
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Shareholder Proposal Information
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Advance Notice of Director Nominations, Shareholder Proposals
and Other Items of Business
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Director Nominations.
● Our proxy access right permits an eligible shareholder, or a group of up to 20 shareholders, to nominate and include in CarMax’s proxy materials directors constituting up to 20% of the Board of Directors. To be eligible, the shareholder or shareholder group must have owned 3% or more of our outstanding capital stock continuously for at least three years and satisfy certain notice and other requirements set forth in Sections 2.3 and 2.3A of our bylaws. Notice of proxy access director nominees must be received no earlier than December 9, 2020, and no later than January 8, 2021.
● Director nominations that a shareholder intends to present at the 2021 annual shareholders meeting, but does not intend to have included in CarMax’s proxy materials, must be received no earlier than December 9, 2020, and no later than January 8, 2021. The notice must satisfy the requirements set forth in Section 2.3 of our bylaws.
Shareholder Proposals and Other Items of Business. A shareholder proposal will be acted upon at the 2021 annual shareholders meeting only if it is included in our proxy statement or submitted under Section 1.3 of our bylaws.
To be considered for inclusion in our 2021 proxy statement, a shareholder proposal must be received by our Corporate Secretary no later than January 8, 2021, and must comply with Rule 14a-8 under the Securities Exchange Act of 1934.
To bring a matter for consideration before the 2021 annual shareholders meeting that is not included in the 2021 proxy statement, you must notify our Corporate Secretary no earlier than the close of business on December 9, 2020, and no later than the close of business on January 8, 2021, and must comply with Section 1.3 of our bylaws.
All director nominations and proposals must be submitted in writing to our Corporate Secretary at CarMax, Inc., 12800 Tuckahoe Creek Parkway, Richmond, Virginia 23238.
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APPENDIX A: AMENDED AND RESTATED CARMAX, INC. 2002 STOCK INCENTIVE PLAN
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(a)
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“Act” means the Securities Exchange Act of 1934, as amended.
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(b)
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“Applicable Withholding Taxes” means the minimum aggregate amount of federal, state and local income and payroll taxes that the Company is required by applicable law to withhold in connection with any Incentive Award.
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(c)
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“Board” means the Board of Directors of the Company.
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(d)
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“Change of Control” means the occurrence of either of the following events: (i) any individual, entity or group (as defined in Section 13(d)(3) of the Act) becomes, or obtains the right to become, the beneficial owner (as defined in Rule 13(d)(3) under the Act) of Company securities having 20% or more of the combined voting power of the then outstanding securities of the Company that may be cast for the election of directors to the Board of the Company (other than as a result of an issuance of securities initiated by the Company in the ordinary course of business); or (ii) as the result of, or in connection with, any cash tender or exchange offer, merger or other business combination, sale of assets or contested election, or any combination of the foregoing transactions, the persons who were directors of the Company before such transactions shall cease to constitute a majority of the Board or of the board of directors of any successor to the Company.
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(e)
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“Code” means the Internal Revenue Code of 1986, as amended. A reference to any provision of the Code shall include reference to any successor or replacement provision of the Code.
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(f)
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“Committee” means the committee appointed by the Board as described under Section 15.
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(g)
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“Company” means CarMax, Inc., a Virginia corporation.
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(h)
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“Company Stock” means the common stock of the Company. In the event of a change in the capital structure of the Company, the shares resulting from such a change shall be deemed to be Company Stock within the meaning of the Plan.
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(i)
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“Company Stock Award” means an award of Company stock made without any restrictions.
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(j)
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“Date of Grant” means the date on which an Incentive Award is granted by the Committee.
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(k)
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“Disability” or “Disabled” means, as to an Incentive Stock Option, a disability within the meaning of Code Section 22(e)(3), and, as to a Restricted Stock Unit, a disability within the meaning of Code Section 409A(a)(2)(C). As to all other forms of Incentive Awards, the Committee shall determine whether a disability exists and such determination shall be conclusive.
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(l)
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“Fair Market Value” means, for any given date, the fair market value of the Company Stock as of such date, as determined by the Committee on a basis consistently applied based on actual transactions in Company Stock on the exchange on which it generally has the greatest trading volume.
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(m)
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“Incentive Award” means, collectively, the award of an Option, Stock Appreciation Right, Company Stock Award, Restricted Award or Performance Compensation Award under the Plan.
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(n)
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“Incentive Stock Option” means an Option intended to meet the requirements of, and qualify for favorable federal income tax treatment under, Code Section 422.
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(o)
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“Maturity Date” means, with respect to a Restricted Stock Unit, the date upon which all restrictions set forth in Section 6(b) with respect to such Restricted Stock Unit have lapsed or been removed pursuant to Section 6(g) or Section 6(h).
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(p)
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“Nonstatutory Stock Option” means an Option that does not meet the requirements of Code Section 422 or, even if meeting the requirements of Code Section 422, is not intended to be an Incentive Stock Option and is so designated.
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(q)
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“Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Act.
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(r)
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“Option” means a right to purchase Company Stock granted under Section 7 of the Plan, at a price determined in accordance with the Plan.
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(s)
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“Parent” means, with respect to any corporation, a parent of that corporation within the meaning of Code Section 424(e).
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(t)
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“Participant” means any employee or director who receives an Incentive Award under the Plan.
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(u)
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“Performance Compensation Award” means any Incentive Award designated by the Committee as a Performance Compensation Award pursuant to Section 10 of the Plan.
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(v)
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“Performance Criteria” means the criterion or criteria that the Committee shall select for purposes of establishing the Performance Goal(s) for a Performance Period with respect to any Performance Compensation Award under the Plan. The Performance Criteria that may be used to establish the Performance Goal(s) may be based on the attainment of specific levels of performance of the Company and may include but shall not be limited to the following: pre-tax income; net income; basic or diluted earnings per share; net revenues; comparable store unit sales (new and/or used); total vehicle unit sales (new and/or used); market share; gross profit; profit margin; cash flow; expense ratios; return on assets; return on invested capital; return on equity; stock price; market capitalization; and total shareholder return, each as determined in accordance with generally accepted accounting principles, where applicable, as consistently applied by the Company and adjusted in the discretion of the Committee, including to omit the effects of extraordinary items, the gain or loss on the disposal of a business segment, unusual or infrequently occurring events and transactions, accruals for Incentive Awards under the Plan and cumulative effects of changes in accounting principles or such other adjustments as may be determined by the Committee. The foregoing criteria may relate to the Company, one or more of its Subsidiaries or one or more of its or their divisions or units, or any combination of the foregoing, and may be applied on an absolute basis and/or be relative to one or more peer group companies or indices, or any combination thereof, all as the Committee shall determine.
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(w)
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“Performance Formula” means, for a Performance Period, the one or more objective formulas applied against the relevant Performance Goal to determine, with regard to the Performance Compensation Award of a particular Participant, whether all, some portion but less than all, or none of the Performance Compensation Award has been earned for the Performance Period.
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(x)
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“Performance Goals” means, for a Performance Period, the one or more goals established by the Committee for the Performance Period based upon the Performance Criteria. The Committee is authorized in its sole discretion, to adjust or modify the calculation of a Performance Goal for such Performance Period.
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(y)
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“Performance Period” means the one or more periods of time, as the Committee may select, over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant’s right to and the payment of a Performance Compensation Award.
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(z)
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“Prior Plan” means the Plan, as in effect prior to the amendment and restatement of the Plan dated June 25, 2019.
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(aa)
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“Prior Section 162(m)” shall mean Section 162(m) of the Code as in effect prior to its amendment by the Tax Cuts and Jobs Act, P.L. 115-97, including the regulations and guidance promulgated in respect of Section 162(m) of the Code as in effect prior to such amendment.
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(ab)
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“Restricted Award” means, collectively, the award of Restricted Stock or Restricted Stock Units.
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(ac)
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“Restricted Stock” means Company Stock awarded upon the terms and subject to the restrictions set forth in Section 6.
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(ad)
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“Restricted Stock Unit” means an award granted upon the terms and subject to the restrictions and limitations set forth in Section 6 that entitles the holder to receive a payment equal to the Fair Market Value of a share of Company Stock on the Maturity Date.
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(ae)
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“Rule 16b-3” means Rule 16b-3 adopted pursuant to Section 16(b) of the Act. A reference in the Plan to Rule 16b-3 shall include a reference to any corresponding rule (or number redesignation) of any amendments to Rule 16b-3 adopted after the effective date of the Plan’s adoption.
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(af)
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“Section 162(m) Grandfathering” shall mean the regulations or other guidance promulgated in respect of transition rules under Section 162(m) of the Code, as Section 162(m) of the Code is in effect from time to time on or after the amendment and restatement of the Plan dated June 25, 2019, extending the deductibility of Incentive Awards intended to be “qualified performance-based compensation” under Prior Section 162(m).
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(ag)
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“Stock Appreciation Right” means a right to receive amounts from the Company awarded upon the terms and subject to the restrictions set forth in Section 8.
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(ah)
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“Subsidiary” means any business entity (including, but not limited to, a corporation, partnership or limited liability company) of which a company directly or indirectly owns one hundred percent (100%) of the voting interests of the entity unless the Committee determines that the entity should not be considered a Subsidiary for purposes of the Plan. If a company owns less than one hundred percent (100%) of the voting interests of the entity, the entity will be considered a Subsidiary for purposes of the Plan only if the Committee determines that the entity should be so considered. For purposes of Incentive Stock Options, Subsidiary shall be limited to a subsidiary within the meaning of Code Section 424(f).
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(ai)
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“Substitute Awards” means Incentive Awards granted or shares of Company Stock issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, in each case, by a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines.
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(aj)
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“10% Shareholder” means a person who owns, directly or indirectly, stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary of the Company. Indirect ownership of stock shall be determined in accordance with Code Section 424(d).
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CARMAX, INC.
By: ______________________
Enrique N. Mayor-Mora
Senior Vice President &
Chief Financial Officer
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