O'REILLY AUTO PARTS
PROFESSIONAL PARTS PEOPLE
April 3, 2002
Dear Shareholder:
You are cordially invited to attend the 2002 Annual Meeting of Shareholders
of O'Reilly Automotive, Inc. to be held at the University Plaza Convention
Center, Arizona Room, 333 John Q. Hammons Parkway, Springfield, Missouri on
Tuesday, May 7, 2002, at 10:00 a.m. local time.
Details of the business to be conducted at the Annual Meeting are given in
the attached Notice of Annual Meeting and Proxy Statement.
In addition to the specific matters to be acted upon, there will be a
report on the progress of the Company and an opportunity for questions of
general interest to the shareholders.
It is important that your shares be represented at the meeting. Whether or
not you plan to attend in person, please complete, sign, date and return the
enclosed proxy card in the envelope provided at your earliest convenience or
vote via telephone or Internet using the instructions on the proxy card. If you
attend the meeting, you may vote your shares in person even though you have
previously signed and returned your proxy.
In order to assist us in preparing for the Annual Meeting, please let us
know if you plan to attend by contacting Tricia Headley, our Corporate
Secretary, at 233 South Patterson, Springfield, Missouri 65802, (417) 862-2674
ext. 1161.
We look forward to seeing you at the Annual Meeting.
David E. O'Reilly Larry P. O'Reilly
Co-Chairman of the Board and Co-Chairman of the Board and
Chief Executive Officer Chief Operating Officer
O'REILLY AUTOMOTIVE, INC.
233 South Patterson
Springfield, Missouri 65802
--------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on May 7, 2002
--------------------------------
Springfield, Missouri
April 3, 2002
To the Shareholders of O'Reilly Automotive, Inc.:
The Annual Meeting of Shareholders of O'Reilly Automotive, Inc. (the
"Company"), will be held on Tuesday, May 7, 2002, at 10:00 a.m., local time, at
the University Plaza Convention Center, 333 John Q. Hammons Parkway,
Springfield, Missouri 65806, for the following purposes:
(1) To elect three Class III Directors to the Company's Board of Directors, to
serve for three years; and
(2) To transact such other business as may properly come before the meeting or
any adjournments thereof.
The Board of Directors has fixed the close of business on February 28,
2002, as the record date for the determination of shareholders entitled to
notice of and to vote at the Annual Meeting and any adjournments or
postponements. A list of all shareholders entitled to vote at the Annual
Meeting, arranged in alphabetical order and showing the address of and number of
shares held by each shareholder, will be available during usual business hours
at the principal office of the Company at 233 South Patterson, Springfield,
Missouri 65802, to be examined by any shareholder for any purpose reasonably
related to the Annual Meeting for 10 days prior to the date thereof. The list
will also be available for examination throughout the conduct of the meeting.
A copy of the Company's Annual Shareholders' Report for fiscal year 2001
accompanies this notice.
By Order of the Board of Directors
TRICIA HEADLEY
Secretary
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IMPORTANT
Please VOTE by proxy card, telephone or Internet whether or not you intend to
attend the meeting.
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O'REILLY AUTOMOTIVE, INC.
233 South Patterson
Springfield, Missouri 65802
-----------------
PROXY STATEMENT
-----------------
The enclosed proxy is solicited by the Board of Directors of O'Reilly
Automotive, Inc. (the "Company"), for use at the Annual Meeting of the Company's
shareholders to be held at the University Plaza Convention Center, 333 John Q.
Hammons Parkway, Springfield, Missouri 65806, on Tuesday, May 7, 2002, at 10:00
a.m., local time, and at any adjournments thereof. Whether or not you expect to
attend the meeting in person, please return your executed proxy in the enclosed
envelope or vote via telephone or Internet using the instructions on the proxy
and the shares represented thereby will be voted in accordance with your wishes.
This Proxy Statement and the accompanying proxy card are first being mailed to
shareholders on or about April 3, 2002.
REVOCABILITY OF PROXY
If, after sending in your proxy, you decide to vote in person or desire to
revoke your proxy for any other reason, you may do so by notifying the Secretary
of the Company in writing of such revocation at any time prior to the voting of
the proxy.
RECORD DATE
Shareholders of record at the close of business on February 28, 2002, will
be entitled to vote at the Annual Meeting.
ACTION TO BE TAKEN UNDER PROXY
All properly executed proxies received by the Board of Directors pursuant
to this solicitation will be voted in accordance with the shareholders'
directions specified in the proxy. If no such directions have been specified by
marking the appropriate squares in the accompanying proxy card, the shares will
be voted by the persons named in the enclosed proxy card as follows:
(1) FOR the election of David E. O'Reilly, Jay D. Burchfield and Paul R.
Lederer, named herein as nominees for Class III Directors of the Company,
to hold office until the annual meeting of the Company's shareholders in
2005 and until their successors have been duly elected and qualified; and
(2) According to their judgment on the transaction of such other business as
may properly come before the meeting or any postponements or adjournments
thereof.
None of the three nominees have indicated that they would be unable or will
decline to serve as a Director. However, should any nominee become unable or
unwilling to serve for any reason, it is intended that the persons named in the
proxy will vote for the election of such other person in their stead as may be
designated by the Board of Directors. The Board of Directors is not aware of any
reason that might cause any nominee to be unavailable to serve as a Director.
VOTING SECURITIES AND VOTING RIGHTS
On February 28, 2002, there were 52,857,496 shares of Common Stock
outstanding, which constitute all of the outstanding shares of the voting
capital stock of the Company. Each share of Common Stock is entitled to one vote
on all matters to come before the Annual Meeting, including the election of
Directors.
A majority of the outstanding shares present or represented by proxy will
constitute a quorum at the meeting. The affirmative vote of a majority of the
votes of the shares present in person or represented by proxy at the Annual
Meeting and entitled to vote is required to elect each person nominated for
Director. Shares present at the meeting but which abstain or are represented by
proxies which are marked "WITHHOLD AUTHORITY'' with respect to the election of
any person to serve on the Board of Directors will be considered in determining
whether the requisite number of affirmative votes are cast on such matter.
Accordingly, such proxies will have the same effect as a vote against the
nominee as to which such abstention or direction applies. Shares not present at
the meeting will not affect the election of directors. Broker non-votes will not
be treated as shares represented at the meeting with respect to the election of
directors, and therefore will have no effect.
The vote required for any other matter properly brought before the meeting
will be the affirmative vote of the majority of the shares of Common Stock
present in person or represented by proxy at the Annual Meeting and entitled to
vote on the proposal unless Missouri law or the Company's Restated Articles of
Incorporation or By-laws require a greater vote. Shares present at the meeting
which abstain (including proxies which deny discretionary authority on any
matters properly brought before the meeting) will be counted as shares present
and entitled to vote and will have the same effect as a vote against any such
matter. Broker non-votes will not be treated as shares represented at the
meeting as to such matter(s) voted on and therefore will have no effect.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of February 28, 2002, with
respect to each person (other than management) known to us to be the beneficial
owner of more than five percent (5%) of our outstanding shares of Common Stock.
Unless otherwise indicated, the Company believes that the beneficial owners set
forth in the table have sole voting and investment power.
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership Of Class
T. Rowe Price Associates, Inc. 4,905,800 (1) 9.3%
100 E. Pratt Street
Baltimore, Maryland 21202
(1) As reflected on such beneficial owner's Schedule 13G dated February 14,
2002, provided to the Company in accordance with the Securities Exchange
Act of 1934, as amended. These securities are owned by various individual
and institutional investors, to whom T. Rowe Price Associates, Inc. (Price
Associates) serves as investment adviser with power to direct investments
and/or sole power to vote the securities. For purposes of the reporting
requirements of the Securities Exchange Act of 1934, Price Associates is
deemed to be a beneficial owner of such securities; however, Price
Associates expressly disclaims that it is, in fact, the beneficial owner of
such securities. Of the 4,905,800 shares reported, Price Associates claimed
sole voting power of 751,200 shares, no shared voting power, sole
dispositive power of 4,905,800 shares and no shared dispositive power.
2
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of February 28, 2002, the beneficial
ownership of each current Director (including the three nominees for Director),
each of the executive officers named in the Summary Compensation Table set forth
herein, and the executive officers and Directors as a group, of the outstanding
Common Stock. Unless otherwise indicated, the Company believes that the
beneficial owners set forth in the table have sole voting and investment power.
Amount and Nature of Percent
Name Beneficial Ownership(a) of Class
---- ----------------------- --------
Charles H. "Chub" O'Reilly, Sr. (b)....... 87,224 *
Charles H. O'Reilly, Jr. (c).............. 1,226,232 2.3%
David E. O'Reilly (d)..................... 2,613,696 5.0%
Lawrence P. O'Reilly (e).................. 1,653,659 3.1%
Rosalie O'Reilly-Wooten (f)............... 2,205,517 4.2%
Ted F. Wise (g)........................... 213,766 *
Greg Henslee (h).......................... 38,331 *
Jay D. Burchfield (i)..................... 24,000 *
Joe C. Greene (j)......................... 28,400 *
Paul R. Lederer (k)....................... 30,000 *
All Directors and executive
officers as a grouP (11 person) (1).... 8,131,520 15.4%
*less than 1%
(a) Reflects the number of shares outstanding on February 28, 2002, and, with
respect to each person, assumes the exercise of all stock options held by
such person that are exercisable currently or within 60 days of February
28, 2002 (such options being referred to hereinafter as "currently
exercisable options").
(b) The stated number of shares includes 71,000 shares held through the Charles
H. O'Reilly, Sr. Rev. Trust, 4,969 shares held in the O'Reilly Automotive
Employee Stock Purchase Plan with UMB Bank, N.A. as trustee, 3,000 shares
held by Mr. O'Reilly's wife and 8,255 shares held in the O'Reilly Employee
Savings Plus Plan with SunTrust Bank as trustee.
(c) The stated number of shares includes 745,661 shares held through the
Charles H. O'Reilly, Jr. Rev. Trust, 475,936 shares controlled by Mr.
O'Reilly as trustee of a trust for the benefit of his children, 4,635
shares held in the O'Reilly Employee Savings Plus Plan with SunTrust Bank
as trustee and no shares subject to options exercisable within 60 days of
February 28, 2002.
(d) The stated number of shares includes 617,354 shares held through the David
E. O'Reilly Rev. Trust, 1,908,174 shares controlled by Mr. O'Reilly as
trustee of a trust for the benefit of his children, 3,168 shares held in
the O'Reilly Employee Savings Plus Plan with SunTrust Bank as trustee and
85,000 shares subject to options exercisable within 60 days of February 28,
2002.
(e) The stated number of shares includes 1,068,277 shares held through the
Lawrence P. O'Reilly Rev. Trust, 495,460 shares controlled by Mr. O'Reilly
as trustee of a trust for the benefit of his children, 4,922 shares held in
the O'Reilly Employee Savings Plus Plan with SunTrust Bank as trustee and
85,000 shares subject to options exercisable within 60 days of February 28,
2002.
(f) The stated number of shares includes 828,460 shares held through Rosalie
O'Reilly-Wooten, Rev. Trust, 993,172 shares controlled by Ms. Wooten as
trustee of a trust for the benefit of her children, 350,788 shares
controlled by Ms. Wooten's husband as trustee for the benefit of Ms.
Wooten's children and their descendants, 3,097 shares held in the O'Reilly
Automotive Savings Plus Plan with SunTrust Bank as trustee and 30,000
shares subject to options exercisable within 60 days of February 28, 2002.
(g) Includes 104,726 shares held of record by a revocable trust of which Mr.
Wise, as the sole trustee, has sole voting and investing power, 4,040
shares held in the O'Reilly Employee Savings Plus Plan with SunTrust Bank
as trustee and 25,000 shares subject to options exercisable within 60 days
of February 28, 2002. Also includes 80,000 shares held of record by a
revocable trust of which Mr. Wise's wife, as the sole trustee, has sole
voting and investment power.
(h) The stated number of shares includes 9,651 shares jointly owned by Mr.
Henslee and his wife, 1,589 shares held in the O'Reilly Employee Savings
Plus Plan with SunTrust Bank as Trustee, 259 shares awarded by the
Company's Performance Incentive Plan and 3,082 shares held in the O'Reilly
Automotive Stock Purchase Plan with UMB Bank, N.A. as trustee. Also
includes 23,750 shares subject to options exercisable within 60 days of
February 28, 2002.
(i) Includes 20,000 shares subject to options exercisable within 60 days of
February 28, 2002, and 4,000 shares directly owned.
(j) Includes 20,000 shares subject to options exercisable within 60 days of
February 28, 2002, and 8,400 shares directly owned.
(k) Includes 10,000 shares subject to options exercisable within 60 days of
February 28, 2002, and 20,000 shares directly owned.
(l) Includes options to purchase a total of 306,250 shares held by the
Company's Directors and executive officers as a group which are exercisable
within 60 days of February 28, 2002.
PROPOSAL 1-ELECTION OF CLASS III DIRECTORS
Information About The Nominees And Directors Continuing in Office
The Company's Amended and Restated By-laws and Restated Articles of
Incorporation, currently provide for three classes of Directors, each class
serving for a three-year term expiring one year after expiration of the term of
the preceding class, so that the term of one class will expire each year. The
terms of the current Class I and Class II Directors expire in 2003 and 2004,
respectively. The Board of Directors has nominated David E. O'Reilly, Jay D.
Burchfield and Paul R. Lederer who are the current Class III Directors, for a
term expiring at the Company's annual shareholders meeting in 2005.
The following table lists the principal occupation for at least the last
five years of each of the nominees and the present Directors continuing in
office, his or her present positions and offices with the Company, the year in
which he or she first was elected or appointed a Director (each serving
continuously since first elected or appointed unless otherwise stated), his or
her age and his or her directorships in any company with a class of securities
registered pursuant to Sections 12 or 15(d) of the Securities Exchange Act of
1934 or in any company registered as an investment company under the Investment
Company Act of 1940 (as specifically noted). Charles H. O'Reilly, Sr. is the
father of Charles H. O'Reilly, Jr., Rosalie O'Reilly-Wooten, Lawrence P.
O'Reilly and David E. O'Reilly.
Director
Name Age Principal Occupation Since
---- --- -------------------- ----------
Nominees for Director-Class III
(To Be Elected to Serve a Three-Year Term Expiring in 2005)
David E. O'Reilly............ 52 Co-Chairman of the Board since August 1999; Chief Executive 1972
Officer since March 1993; President from March 1993 to August
1999; Vice-President of the Company from 1975 to March 1993.
Jay D. Burchfield............ 55 President of Oklahoma City Bakery, Inc. in Springfield, Missouri 1997
from January 1999 to present; Chairman of the Board and Director
of Trust Company of the Ozarks in Springfield, Missouri from
April 1998 to present; Director of Quest Capital Alliance,
Springfield, Missouri from January 2002 to Present; Director of
The Primary Care Network in Springfield, Missouri from January
1998 to present; Chairman of the Board and Director of City
Bancorp in Springfield, Missouri from January 1997 to present;
Chairman of the Board and CEO of Boatmen's National Bank of
Oklahoma in Tulsa, Oklahoma from January 1996 to January 1997;
Chairman, President and CEO of Boatmen's Bank of Southern
Missouri in Springfield, Missouri from April 1987 to January
1996. Mr. Burchfield's career has spanned more than 25 years in
the banking industry.
Paul R. Lederer.............. 62 Retired October 1998; Executive Vice President of Worldwide 2001
Aftermarket of Federal-Mogul Corporation February 1998 to October
1998; President and Chief Operating Officer of Fel-Pro from
November 1994 to February 1998, when it was acquired by
Federal-Mogul Corporation; presently a Director of the following
companies: R & B, Inc., FPM, Inc., Icarz.com and Trans-Pro,
Inc. Serves as a member of the advisory boards of the following
companies: Richco, Inc., Turtle Wax, Inc., Ampere Products and
The Wine Discount Center. Mr. Lederer had been a Director of the
Company from April 1993 to July 1997 and was appointed again as a
Director in 2001.
Directors Continuing in Office-Class I
(Terms Expiring in 2003)
Charles H. O'Reilly, Sr...... 89 Chairman Emeritus since March 1993 and co-founder of 1957
the Company; Chairman of the Board from 1975 to March 1993.
Charles H. O'Reilly, Jr...... 62 Continues as Vice-Chairman of the Board since August 1999. 1966
Retired from active company management, February, 2002. Chairman
of the Board from March 1993 to August 1999; President and Chief
Executive Officer of the company from 1975 to March 1993.
Directors Continuing in Office-Class II
(Terms Expiring in 2004)
Lawrence P. O'Reilly......... 55 Co-Chairman of the Board since August 1999; Chief Operating 1969
Officer since March 1993; President from March 1993 to August
1999; Vice President of the Company from 1975 to March 1993.
Rosalie O'Reilly-Wooten...... 60 Continues as a Director. Retired from active company management, 1980
February, 2002.
Joe C. Greene................ 66 Attorney-At-Law, managing partner of the Springfield, Missouri 1993
firm of Greene & Curtis, LLP, Director of Bass Pro, Inc.,
Director of Ozarks Coca-Cola Bottling Co., Chairman of Missouri
Sports Hall of Fame, Executive Secretary of Missouri Golf
Association and Director of Commerce Bank, N.A. in Springfield,
Missouri; Mr. Greene has been engaged in the private practice of
law for more than 30 years.
The Board of Directors recommends a vote "FOR" each of the Class III nominees.
Information Concerning Board of Directors
During fiscal year 2001, four meetings of the Board of Directors were held.
During such year, each Director attended 75% or more of the aggregate of (i) the
total number of meetings of the Board of Directors held during the period for
which he or she has been a Director and (ii) the total number of meetings held
by all committees of the Board of Directors on which he or she served during the
period for which he or she served, with the exception of Charles H. O'Reilly,
Sr., who attended 50% of the aggregate of such meetings.
The Board of Directors has two standing committees, the Audit Committee and
the Compensation Committee. The Company has no standing nominating committee or
other committee performing a similar function.
The Audit Committee currently consists of Messrs. Burchfield, Greene and
Lederer, each of whom are "independent" pursuant to the standards imposed by the
Nasdaq Stock Market. The Audit Committee recommends the engagement of
independent accountants, confers with internal and external auditors regarding
the adequacy of our financial control and fiscal policy, and directs changes to
financial policies or procedures as suggested by the auditors. The Audit
Committee functions pursuant to a written charter, a copy of which was attached
as an appendix to the Company's 2001 proxy statement. During fiscal year 2001,
two Audit Committee meetings were held.
The Compensation Committee consists of Messrs. Burchfield, Greene and
Lederer. The purpose of the Compensation Committee is to act on behalf of the
Board of Directors with respect to the establishment and administration of the
policies which govern the annual compensation of the Company's executive
officers. The Compensation Committee also administers the Company's stock option
and other benefit plans. During fiscal year 2001, two Compensation Committee
meetings were held.
Compensation of Directors
The Company pays an annual fee of $10,000 to Directors who are not
employees of the Company. In addition, the Company pays non-employee Directors
$500 for each Board of Directors meeting or committee meeting attended. The
Company also reimburses Directors for out-of-pocket expenses incurred in
connection with their attendance at Board and committee meetings. Directors'
fees of $32,500 were paid during 2001.
The Company also maintains a Directors' Stock Option Plan, providing for an
automatic annual grant (on April 22 or the first business day thereafter) to
each director who is not an employee of the Company of a non-qualified stock
option to purchase 10,000 shares of Common Stock at a per share exercise price
equal to the fair market value of the Common Stock on the date the option is
granted. Director stock options expire immediately upon the date on which the
optionee ceases to be a director for any reason or seven years after the date on
which the option is granted, whichever first occurs. Each of the Company's three
non-employee directors in 2001 were granted options during the year to purchase
10,000 shares of Common Stock under the Company's Directors' Stock Option Plan
at an exercise price of $20.65 per share.
EXECUTIVE COMPENSATION
The following information is given for the fiscal years ended December 31,
2001, 2000 and 1999, concerning annual and long-term compensation for services
rendered to the Company and its subsidiaries for the Company's Chief Executive
Officer and each of the Company's four other most highly compensated executive
officers (other than the Chief Executive Officer) during fiscal year 2001.
Summary Compensation Table
Long Term Compensation
Annual Compensation Awards
-------------------------- -------------------------
Restricted
Stock Securities All Other
Name and Salary Bonus Other Awards Underlying Compen-
Principal Position Year ($)(a) ($) ($)(b) ($)(c) Options(d)(#) sation($)(e)
------------------ ---- -------- ------- --------- ----------- ------------- ------------
David E. O'Reilly 2001 330,000 330,000 - - 30,000 4,835
Co-Chairman of the 2000 312,000 312,000 - - - 13,107
Board and Chief 1999 300,000 300,000 - - 50,000 15,538
Executive Officer
Charles H. O'Reilly, Jr. 2001 87,500 87,500 - - 15,000 5,118
Vice-Chairman of the 2000 142,500 142,500 - - - 10,400
Board 1999 167,500 167,500 - - - 14,206
Lawrence P. O'Reilly 2001 264,000 264,000 - - 25,000 4,929
Co-Chairman of the 2000 275,000 275,000 - - - 12,945
Board and Chief 1999 300,000 300,000 - - 50,000 15,538
Operating Officer
Ted F. Wise 2001 247,500 122,500 - - 30,000 5,833
Co-President 2000 235,000 115,000 - - - 13,002
1999 215,000 105,000 - - 50,000 14,985
Greg Henslee 2001 207,500 102,500 - - 30,000 6,044
Co-President 2000 167,500 82,500 20,007 9,992 - 15,727
1999 175,000 - 19,660 9,824 50,000 13,067
(a) Includes portion of salary deferred at named executive's election under the
Company's Profit Sharing and Savings Plan.
(b) Cash awarded under the Company's Performance Incentive Plan ("PIP").
(c) Shares awarded to Mr. Henslee under the Company's Performance Incentive
Plan ("PIP") include (i) 778 shares in fiscal year 2000, having a per share
fair market value of $12.84375 on the day awarded, for an aggregate value
of $9,992 and (ii) 428 shares in fiscal year 1999, having a per share fair
market value of $22.95325 on the day of the awarded, for an aggregate value
of $9,824. As of December 31, 2001, Mr. Henslee owned in the aggregate, 660
number of such shares having an aggregate value of $24,070. All shares
awarded under the PIP vest in equal installments over a three year period
commencing on the first anniversary of the award and are based on the
achievement of certain performance goals for the year preceding the year in
which the awards are made. No dividends are paid on shares of restricted
stock.
(d) See "Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End
Option Values" tables for additional information with respect to these
options.
(e) "All Other Compensation" for the year ended December 31, 2001, includes (i)
Company contributions of $4,326, $4,559, $4,413, $5,557 and $5,924 to its
Profit Sharing and Savings Plan made on behalf of Charles H. O'Reilly, Jr.,
David E. O'Reilly, Lawrence P. O'Reilly, Ted F. Wise and Greg Henslee,
respectively, and (ii) the benefits inuring to Charles H. O'Reilly, Jr.
($792), David E. O'Reilly ($276), Lawrence P. O'Reilly ($516), Ted F. Wise
($276), and Greg Henslee ($120) from the Company's payment of certain life
and health insurance premiums, vehicle expenses, memberships and services.
Information as to Stock Options
The following table provides certain information concerning grants of
options to purchase Common Stock made during the 2001 fiscal year to the named
executive officers. All stock options were granted pursuant to the Company's
1993 Stock Option Plan.
Option Grants in Last Fiscal Year
Potential Realizable
Value at Assumed Annual
Rates of Stock Price
Appreciation For Option
Individual Grants Term
------------------------------------------------- --------------------------
Number of % of Total
Securities Options Exercise
Underlying Granted to Price Grant Date
Options Employees Per Expiration Present
Name Granted(#) in 2001 Share($) Date 5% ($) 10%($) Value($)
---- ---------- ---------- -------- ---------- ---------- --------- --------
David E. O'Reilly 30,000 (1) 2.6% 26.51 06/14/11 1,295,496 2,062,803 795,300
Charles H. O'Reilly, Jr. 15,000 (1) 1.3% 26.51 06/14/11 647,730 1,031,402 397,650
Lawrence P. O'Reilly 25,000 (1) 2.1% 26.51 06/14/11 1,079,550 1,719,003 662,750
Rosalie O'Reilly-Wooten 15,000 (1) 1.3% 26.51 06/14/11 647,730 1,031,402 397,650
Ted F. Wise 30,000 (1) 2.6% 26.51 06/14/11 1,295,496 2,062,803 795,300
Greg Henslee 30,000 (1) 2.6% 26.51 06/14/11 1,296,496 2,062,803 795,300
(1) Stock options become exercisable with respect to 25% of the covered shares
one year from the date of grant; 50% exercisable two years from the date of
grant; 75% exercisable three years from the date of grant and the remainder
become exercisable four years from the date of grant.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
Value
Number of of Unexercised
Unexercised In-The-Money
Number of Options Options at
Securities At FY-End(#) FY-End ($)(1)
Underlying Options Value Exercisable/ Exercisable/
Name Exercised (#) Realized ($) Unexercisable Unexercisable
---- ------------------ ------------ ------------- -----------------
David E. O'Reilly 80,000 1,424,002 85,000/55,000 1,832,137/677,738
Charles H. O'Reilly, Jr. 32,000 662,200 0/15,000 0/149,400
Lawrence P. O'Reilly 80,000 2,123,306 85,000/50,000 1,832,137/627,938
Rosalie O'Reilly-Wooten - - 30,000/15,000 726,600/149,400
Ted F. Wise 100,000 1,503,060 25,000/55,000 378,938/677,738
Greg Henslee 42,500 428,719 23,750/58,750 437,569/744,188
(1) Represents the market value of the underlying Common Stock on December 31,
2001, less the aggregate exercise price.
Employment Arrangements with Executive Officers
The Company entered into written employment agreements effective January 1,
1993, with David E. O'Reilly, Lawrence P. O'Reilly and Charles H. O'Reilly, Jr.
Such agreements, which are in substantially identical form, provide for each of
the foregoing executive officers to be employed by the Company for a minimum
period of three years and automatically renew for each calendar year thereafter.
As compensation for services rendered to the Company, the agreements provide for
each executive officer to receive (i) a base annual salary of $220,000 for David
and Lawrence O'Reilly and $176,000 for Charles O'Reilly, Jr., adjusted annually
for increases in the cost of living as reflected by the Consumer Price Index for
All Urban Consumers as determined by the United States Department of Labor,
Bureau of Labor Statistics, and (ii) a bonus, the amount of which is determined
by reference to such criteria as may be established by the Compensation
Committee.
The Company has also entered into written retirement agreements with David
E. O'Reilly, Lawrence P. O'Reilly, Charles H. O'Reilly, Jr. and Rosalie
O'Reilly-Wooten. Such agreements, as amended and which are in substantially
identical form, provide for each of the foregoing executive officers to be
employed as a consultant upon retirement, for a period of ten years at a yearly
salary of $125,000, adjusted annually three percent for inflation and payable in
equal monthly payments. The agreements also provide for each officer to receive
medical benefits, death and disability benefits, as well as the use of a car.
An executive officer's employment may be terminated by the Company for
cause (as defined in the agreement) or without cause. If an executive officer's
employment is terminated for cause or if an executive officer resigns, such
executive officer's salary and bonus rights will cease on the date of such
termination or resignation. If the Company terminates an executive officer
without cause, all compensation payments will continue through the remainder of
the agreement's term. Pursuant to his or her respective agreement, each
executive officer has agreed for so long as he or she is receiving payments
thereunder to refrain from disclosing information confidential to the Company or
engaging, directly or indirectly, in any automotive parts distribution,
manufacturing or sales business in the states in which the Company operates
without prior written consent of the Company.
Compensation Committee Interlocks and Insider Participation
Joe C. Greene, a Director of the Company and member of the Compensation
Committee, is the Managing Partner of the law firm of Greene & Curtis, LLP,
which has provided legal services to the Company in prior years and is expected
to provide legal services to the Company in the future. The Company believes
that the terms of the legal services provided by Mr. Greene are no less
favorable to the Company than those that would have been available to the
Company in comparable transactions with unaffiliated parties. Mr. Greene is also
a Director of Commerce Bank, N.A. in Springfield, Missouri which has loaned $5
million to the Company under a promissory note.
Compensation Committee Report
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might be incorporated by reference in
future filings, including this proxy statement, in whole or in part, the
following Compensation Committee Report shall not be incorporated into any such
filings.
General
The Compensation Committee of the Board of Directors is responsible for
recommending to the Board of Directors a compensation package and specific
compensation levels for the executive officers of the Company. Additionally, the
Compensation Committee establishes policies and guidelines for other benefit
programs and administers the award of stock options under the Company's 1993
Stock Option Plan. The Compensation Committee is composed of three non-employee
members of the Board of Directors.
Policy
The Compensation Committee's policy with respect to executive compensation
is to provide the executive officers of the Company with a total compensation
package which is competitive and equitable and which encourages and rewards
performance based in part upon the Company's performance in terms of increases
in share value. The key components of the Company's compensation package for its
executive officers are base salary, annual cash bonuses and long-term,
stock-based incentives.
Base Salary
The minimum annual base salary of each of Charles H. O'Reilly, Jr., David
E. O'Reilly and Lawrence P. O'Reilly is fixed under their employment agreements
with the Company, subject to increases by the Board of Directors (after
considering the recommendations of the Compensation Committee). The base salary
for each of these executive officers was established prior to the Company's
initial public offering in April 1993. The minimum annual base salary, which was
set by the Board of Directors (as then constituted) for purposes of the
employment agreements with each of the aforementioned executive officers,
represented the subjective judgment of the Board as to a fair minimum
compensation level, taking into account the then contemplated initial public
offering and the potential for additional cash compensation in the form of a
bonus for 1993. Any future recommendation by the Compensation Committee for
adjustments to the annual base salary of an executive officer will be for the
purposes of bringing them in line with base compensation then being paid by the
Company's competitors for executive management, based upon the Compensation
Committee's review of, among other things, compensation data for comparable
companies and positions, and, in the case of executive officers other than the
Chief Executive Officer, the Chairman of the Board or the Chief Operating
Officer, reflecting increased responsibilities. The Compensation Committee
believes that the Company's principal competitors for executive management are
not necessarily the same companies that would be included in a peer group
compiled for purposes of comparing shareholder returns. Consequently, the
companies that are reviewed for such compensation purposes may not be the same
as the companies comprising the Nasdaq-Amex Retail Trade Stock Price Index
included in this Proxy Statement. The base salaries of the aforementioned
executive officers were increased in 2001 to reflect increases in the Consumer
Price Index from 2000 to 2001, increases in responsibilities due to the
Company's growth and to align executive compensation with comparable companies
and positions.
Bonuses
The Compensation Committee has established a bonus plan for the Chief
Executive Officer, the Chairman of the Board and the Chief Operating Officer of
the Company based upon objective criteria. Under this bonus plan, the Chief
Executive Officer, the Chairman of the Board and the Chief Operating Officer of
the Company each will receive a bonus based upon a percentage of pre-tax
earnings (with no minimum level of pre-tax earnings required), exclusive of
extraordinary items, earned by the Company, subject to a maximum cash bonus
equal to such executive officer's base salary for the year in which such bonus
is earned. The bonuses to be awarded to all other officers of the Company are
based upon each such officer's contribution, responsibility and performance
during the year, and are thus subjective in nature. In formulating its
recommendation for the bonuses of such other officers of the Company, the
Compensation Committee considers, among other things, the evaluation of the
Chief Executive Officer of the Company with regard to the contribution,
responsibility and performance of the officer in question and his views on the
appropriate compensation level of such executive officer.
Long-Term Incentives
The only long-term incentive currently offered for senior executives by the
Company is stock option awards. Stock options may be awarded to the Chief
Executive Officer, the other individual executive officers and upper and middle
managers by the Board of Directors, based upon, in the case of the Chief
Executive Officer and other individual executive officers, the recommendation of
the Compensation Committee.
It is the stock option program which links rewards to the achievement of
long-term corporate performance. In determining whether and how many options
should be granted, the Compensation Committee may consider the responsibilities
and seniority of each of the executive officers, as well as the financial
performance of the Company and such other factors as it deems appropriate,
consistent with the Company's compensation policies. However, the Compensation
Committee has not established specific target awards governing the receipt,
timing or size of option grants. Thus, determinations with respect to the
granting of stock options are subjective in nature.
CEO Compensation
The base salary of Mr. David E. O'Reilly, the Chief Executive Officer of
the Company, was established under his employment agreement dated January 1,
1993, and the criterion to be achieved for his bonus was determined by the
Compensation Committee in February 2001, based upon a percentage of the pre-tax
earnings, exclusive of extraordinary items, earned by the Company in 2000. This
cash bonus, in an amount equal to his base salary for 2001, was paid to the
Chief Executive Officer in equal monthly installments during 2001. The cash
bonus to be paid to the Chief Executive Officer in 2002 will be based upon the
same percentage of pre-tax earnings, exclusive of extraordinary items, earned by
the Company in 2001, not to exceed the Chief Executive Officer's base salary for
2002.
Respectfully submitted,
THE COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS OF
O'REILLY AUTOMOTIVE, INC.
Jay D. Burchfield
Chairman of the Compensation Committee
Joe C. Greene
Member of the Compensation Committee
Paul. R Lederer
Member of the Compensation Committee
Audit Committee Report
In connection with the December 31, 2001 financial statements, the Audit
Committee has:
o reviewed and discussed with management the Company's audited financial
statements as of and for the fiscal year ended December 31, 2001;
o discussed with the Company's independent auditors the matters required to
be discussed by Statement on Auditing Standards No. 61, Communication with
Audit Committees, as amended, by the Auditing Standards Board of American
Institute of Certified Public Accountants; and
o received and reviewed the written disclosures and the letter from the
Company's independent auditors required by Independence Standard No. 1,
Independence Discussions with Audit Committees, as amended, by the
Independence Standards Board, and have discussed with the auditors the
auditors' independence.
Based on the reviews and discussions referred to above, the Audit Committee
has recommended to the Board of Directors that the audited financial statements
referred to above be included in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2001.
THE AUDIT COMMITTEE OF THE
BOARD OF DIRECTORS OF
O'REILLY AUTOMOTIVE, INC.
Jay D. Burchfield
Chairman of the Audit Committee
Joe C. Greene
Member of the Audit Committee
Paul R. Lederer
Member of the Audit Committee
Transactions with Insiders and Others
Sixty-nine of the Company's stores were leased from one of two real estate
investment partnerships and a limited liability corporation formed by the
O'Reilly family. David E. O'Reilly, Lawrence P. O'Reilly, Charles H. O'Reilly,
Jr. and Rosalie O'Reilly-Wooten, their spouses, children and grandchildren each
hold a beneficial interest in such partnerships or the limited liability
company. Leases with affiliated parties generally provide for payment of a fixed
base rent, payment of certain tax, insurance and maintenance expenses, and an
original term of six years, subject to one or more renewals at the Company's
option. The Company has entered into separate master lease agreements with each
of the affiliated real estate investment partnerships and the limited liability
company for the occupancy of the stores covered thereby. The master lease
agreements with the real estate investment partnerships expired on December 31,
1998, and were renewed through December 2004. The term of the master lease with
the limited liability company expires on December 31, 2013. The total aggregate
rent payments paid by the Company to the partnerships and the limited liability
company was $2,894,000 in fiscal 2001. The Company believes that the terms and
conditions of the transactions with affiliates described above were no less
favorable to the Company than those that would have been available to the
Company in comparable transactions with unaffiliated parties.
Joe C. Greene, a Director of the Company, is the Managing Partner of the
law firm of Greene & Curtis, LLP, which has provided legal services to the
Company in prior years and is expected to provide legal services to the Company
in the future. The Company believes that the terms of the legal services
provided by Mr. Greene are no less favorable to the Company than those that
would have been available to the Company in comparable transactions with
unaffiliated parties. Mr. Greene is also a Director of Commerce Bank, N.A. in
Springfield, Missouri, which has loaned $5 million to the Company under a
promissory note.
Performance Graph
Set forth below is a line graph comparing the annual percentage change in
the cumulative total shareholder return of a $100 investment on December 31,
1996, in the Company's Common Stock against the Nasdaq-Amex Stock Market Total
Return Index and the Nasdaq-Amex Retail Trade Stocks Total Return Index,
assuming reinvestment of all dividends.
December 31,
Measurement Period O'Reilly Nasdaq U.S. Nasdaq Retail
(Fiscal Year Covered) Automotive, Inc. Stock Market Trade Stocks
--------------------- ----------------- -------------- --------------
12/96 100 100 100
12/97 164 122 117
12/98 295 173 143
12/99 269 321 125
12/00 334 193 77
12/01 456 153 106
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers and Directors, and persons who own more than
10% of a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Such individuals are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file. Based on the Company's review of
the copies of such forms furnished to it and written representations with
respect to the timely filing of all reports required to be filed, the Company
believes that such persons complied with all Section 16(a) filing requirements
applicable to them with respect to transactions during fiscal 2001.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Ernst & Young LLP served as the Company's independent auditors
for the fiscal year ended December 31, 2001, and the Board of Directors has
selected this firm to serve as independent auditors for the fiscal year ending
December 31, 2002. Representatives of Ernst & Young LLP are expected to attend
the annual meeting and will have the opportunity to make statements and respond
to appropriate questions from shareholders.
Fees Billed By Independent Public Accountants
The following table sets forth the amount of audit fees, financial
information systems design and implementation fees, and all other fees billed or
expected to be billed by Ernst & Young LLP, the Company's principal accountant,
for the year ended December 31, 2001:
Amount
-------------
Audit Fees(1) $ 197,500.00
Financial Information Systems Design
and Implementation Fees(2) -0-
All Other Fees(3) 63,000.00
-------------
Total Fees $ 260,500.00
(1) Includes annual financial statement audit and limited quarterly review
services.
(2) No such services were provided by Ernst & Young LLP for the most recent
fiscal year.
(3) Primarily represents audit related fees, including audits of the Company's
benefit plans, SEC registration statements, consents and consultations on
accounting standards and transactions, as well as certain tax consulting
services.
The Audit Committee of the Board of Directors of the Company has considered
whether the provision of financial information systems design and implementation
and other non-audit services is compatible with maintaining Ernst & Young LLP's
independence.
ANNUAL SHAREHOLDERS' REPORT
The Annual Shareholders' Report of the Company for fiscal 2001 containing,
among other things, audited consolidated financial statements of the Company,
accompanies this Proxy Statement.
FUTURE PROPOSALS OF SHAREHOLDERS
Shareholder proposals intended to be presented at the year 2003 Annual
Meeting and included in the Company's proxy statement and form of proxy relating
to that meeting pursuant to Rule 14a-8 under the Exchange Act must be received
by the Company at the Company's principal executive offices by December 4, 2002.
In order for shareholder proposals made outside of Rule 14a-8 under the Exchange
Act to be considered "timely" within the meaning of Rule 14a-4(c) under the
Exchange Act, such proposals must be received by the Company at the Company's
principal executive offices by February 17, 2003. The Company's Amended Bylaws
require that proposals of shareholders made outside of Rule 14a-8 under the
Exchange Act must be submitted, in accordance with the requirements of the
By-Laws, not later than February 21, 2003, and not earlier than January 20,
2003.
OTHER BUSINESS
The Board of Directors knows of no business to be brought before the Annual
Meeting other than as set forth above. If other matters properly come before the
meeting, it is the intention of the persons named in the solicited proxy to vote
the proxy on such matters in accordance with their judgment as to the best
interests of the Company.
MISCELLANEOUS
The Company will pay the cost of soliciting proxies in the accompanying
form. In addition to solicitation by use of the mails, certain officers and
regular employees of the Company may solicit the return of proxies by telephone,
telegram or personal interview and may request brokerage houses and custodians,
nominees and fiduciaries to forward soliciting material to their principals and
will agree to reimburse them for their reasonable out-of-pocket expenses.
Shareholders are urged to mark, sign, date and send in their proxies
without delay or vote via telephone or Internet using the instructions on the
proxy card.
HOUSEHOLDING OF MATERIALS
In some instances, only one copy of this proxy statement or annual report
is being delivered to multiple shareholders, sharing an address, unless the
Company has received instructions from one or more of the shareholders to
continue to deliver multiple copies. We will deliver promptly upon oral or
written request a separate copy of the proxy statement or annual report, as
applicable, to any shareholder at your address. If you wish to receive a
separate copy of the proxy statement or annual report, you may call us at (417)
862-6708, or send a written request to O'Reilly Automotive, Inc., 233 South
Patterson, Springfield, Missouri 65802, Attention: Secretary. Alternatively,
shareholders sharing an address who now receive multiple copies of the proxy
statement or annual report may request delivery of a single copy, also by
calling us at the number or writing to us at the address listed above.
ADDITIONAL INFORMATION
Additional information regarding the Company can be found in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2001, filed by
the Company with the Securities and Exchange Commission.
A copy of the Company's Annual Report on Form 10-K for fiscal year (as
filed with the Securities and Exchange Commission), including financial
statements and financial statement schedules (excluding exhibits), is available
to shareholders without charge, upon written request to O'Reilly Automotive,
Inc., 233 South Patterson, Springfield, Missouri 65802, Attention: Secretary.
By Order of the Board of Directors
Tricia Headley
Secretary
Springfield, Missouri
April 3, 2002
A-1
APPENDIX A
O'Reilly Automotive, Inc.
Form of Proxy (Proxy Card)
PROXY
O'REILLY AUTOMOTIVE, INC.
Annual Meeting of Shareholders - Tuesday 7, 2001
(THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS)
The undersigned hereby appoints David E. O'Reilly, Lawrence P. O'Reilly and
Charles H. O'Reilly, Jr., and each of them, as proxies, with full power of
substitiution, and hereby authorizes them to represent and vote as the
undersigned designates, all shares of Common Stock of O'Reilly Automotive, Inc.,
a Missouri corporation (the "Company"), held by the undersigned on February 28,
2002 at the Annual Meeting of Shareholders (the "Annual Meeting") to be held on
May 7, 2002, at 10:00 a.m. Central Time in Springfield, Missouri or at any
adjournment or postponement thereof, upon the matters set forth on the reverse
side of this card, all in accordance with and as molre fully described in the
accompanying Notice of Annual Meeting of Shareholders and Proxy Statement,
receipt of which is hereby acknowledged.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL
BE VOTED "FOR" THE ACTION OR PROPOSAL.
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
O'REILLY AUTOMOTIVE, INC.
The Board of Directors recommends a vote FOR the following actions or proposals
(as described in the accompanying Proxy Statement).
Election of Directors For Withhold For All To withhold authority to
All All Except vote, mark "For All
Except" and write the
nominee's number on the
line below
__ __ __ _____________________
1. Proposal to elect Class III Directors (three-year term).
01) David E. O'Reilly
02) Jay D. Burchfield
03) Paul R. Lederer
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the Annual Meeting.
Please sign exactly as name(s) appear heron. When shares are held by joint
tenants, both should sign. When signing as an attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
parnership, please sign in partnership name by authorized person.
--------------------------------- ------------
Signature [PLEASE SIGN WITHIN BOX] Date
--------------------------------- -----------
Signature (Joint Owners) Date