UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Soliciting Material Pursuant to
[_] Confidential, For Use of the SS.240.14a-11(c) or SS.240.14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
O'REILLY AUTOMOTIVE, 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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[X] No fee required.
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1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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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.
1) Amount previously paid:
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4) Date Filed:
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O'REILLY AUTO PARTS
PROFESSIONAL PARTS PEOPLE
April 6, 2001
Dear Shareholder:
You are cordially invited to attend the 2001 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 8, 2001, 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 8, 2001
Springfield, Missouri
April 6, 2001
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 8, 2001, 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 II Directors to the Company's Board of Directors,
to serve for three years;
(2) To consider and approve a proposal to amend the Company's Restated
Articles of Incorporation to eliminate certain director liability to
the extent permitted by Missouri law; and
(3) 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,
2001, 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
2000 accompanies this notice.
By Order of the Board of Directors
TRICIA HEADLEY
Secretary
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IMPORTANT
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Please VOTE by proxy card, telephone or Internet whether or not you intend to
attend the meeting.
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 8, 2001, 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 6, 2001.
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, 2001,
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 Lawrence P. O'Reilly, Rosalie O'Reilly Wooten
and Joe C. Greene, named herein as nominees for Class II
Directors of the Company, to hold office until the annual meeting
of the Company's shareholders in 2004 and until their successors
have been duly elected and qualified;
(2) FOR the adoption of the proposal to amend the Company's
Restated Articles of Incorporation to eliminate certain
director liability to the extent permitted by Missouri law;
(3) 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, 2001, there were 51,571,313 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.
1
The vote required for the approval of Proposal 2 - Amendment to
Restated Articles of Incorporation, is the affirmative vote of the holders of a
majority of the shares of the Company's Common Stock entitled to notice of such
vote at the Annual Meeting. Shares present at the Annual Meeting but which
abstain with respect to the amendment (including proxies that deny discretionary
authority with respect to the amendment) as well as broker non-votes will have
the same effect as votes against the amendment.
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 of 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, 2001 with
respect to each person 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(1) Of Class
---------------- ----------------------- --------
David E. O'Reilly 3,211,507(2) 6.2%
233 S. Patterson
Springfield, Missouri 65802
Wasatch Advisors, Inc. 3,361,099(3) 6.4%
150 Social Hall Avenue
Salt Lake City, Utah 84111
FMR Corp. 4,542,880(4) 8.7%
82 Devonshire Street
Boston, Massachusetts 02109
T. Rowe Price Associates, Inc. 5,088,900(5) 9.8%
100 E. Pratt Street
Baltimore, Maryland 21202
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(1) Reflects the number of shares outstanding on February 28, 2001, 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 the date of
this proxy statement (such options being referred to hereinafter as
"currently exercisable options").
(2) The stated number of shares includes 760,158 shares held through the David
O'Reilly, Rev. Trust, 2,144,136 shares controlled by Mr. O'Reilly as
trustee of two trusts for the benefit of his children, 166,582 shares held
by Mr. O'Reilly as custodian for two of his three children, 3,131 shares
held in the O'Reilly Employee Savings Plus Plan with SunTrust Bank as
trustee and 137,500 shares subject to options exercisable within 60 days of
February 28, 2001.
(3) As reflected on such beneficial owner's Schedule 13G dated February 14,
2001, provided to the Company in accordance with the Securities Exchange
Act of 1934, as amended. According to such filing, Wasatch Advisors, Inc.
possesses sole voting and dispositive power over the 3,361,099 shares it
beneficially owns.
(4) As reflected on such beneficial owner's Schedule 13G dated February 14,
2001, provided to the Company in accordance with the Securities Exchange
Act of 1934, as amended. According to such filing, of the 4,542,880 shares
it is deemed to beneficially own, FMR Corp. claimed sole voting power of
493,910 shares, no shared voting power, sole dispositive power of 4,542,880
shares and no shared dispositive power.
(5) As reflected on such beneficial owner's Schedule 13G dated February 8,
2001, 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 investment
and or sole power to vote securities. Price Associates has expressly
disclaimed that it is, in fact, the beneficial owner of such securities. Of
the 5,088,900 shares reported, Price Associates claimed sole voting power
of 820,600 shares, no shared voting power, sole dispositive power of
5,088,900 shares and no shared dispositive power.
2
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of February 28, 2001, 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) 87,280 *
Charles H. O'Reilly, Jr. (c) 1,758,561 3.4%
David E. O'Reilly (d) 3,211,507 6.2%
Lawrence P. O'Reilly (e) 2,446,343 4.7%
Rosalie O'Reilly Wooten (f) 2,261,188 4.3%
Ted F. Wise (g) 286,188 *
Greg Henslee (h) 59,362 *
Jay D. Burchfield (i) 44,000 *
Joe C. Greene (j) 58,400 *
Paul R. Lederer 20,000 *
All Directors and executive officers as a group
(11 persons) (k) 10,286,958 19.7%
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*less than 1%
(a) Reflects the number of shares outstanding on February 28, 2001, 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 the date
of this proxy statement (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, 4,088 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 9,192 shares held in the
O'Reilly Employee Savings Plus Plan with SunTrust Bank as trustee.
(c) The stated number of shares includes 1,166,926 shares held through the
Charles H. O'Reilly, Jr. Rev. Trust, 504,590 shares controlled by Mr.
O'Reilly as trustee of a trust for the benefit of his children, 60,000
shares controlled by Mr. O'Reilly as a general partner of a family
limited partnership, 4,545 shares held in the O'Reilly Employee Savings
Plus Plan with SunTrust Bank as trustee and 22,500 shares subject to
options exercisable within 60 days of February 28, 2001.
(d) See Note (2) to the table under "Security Ownership of Certain Bene-
ficial Owners."
(e) The stated number of shares includes 1,313,041 shares held through the
Lawrence P. O'Reilly Rev. Trust, 990,918 shares controlled by Mr.
O'Reilly as trustee of a trust for the benefit of his children, 4,884
shares held in the O'Reilly Employee Savings Plus Plan with SunTrust Bank
as trustee and 137,500 shares subject to options exercisable within 60
days of February 28, 2001.
(f) The stated number of shares includes 891,705 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, 3,023 shares held in the
O'Reilly Automotive Savings Plus Plan with Sun Trust Bank as trustee and
22,500 shares subject to options exercisable within 60 days of February
28, 2001.
(g) Includes 104,726 shares held of record by a revocable trust of which Mr.
Wise, as the sole trustee, has sole voting and investing power, 3,962
shares held in the O'Reilly Employee Savings Plus Plan with SunTrust Bank
as trustee and 97,500 shares subject to options exercisable within 60
days of February 28 2001. 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.
3
(h) The stated number of shares includes 8,690 shares jointly owned by Mr.
Henslee and his wife, 4,486 shares held in the O'Reilly Employee Savings
Plus Plan with SunTrust Bank as Trustee, 1,220 shares awarded by the
Company's Performance Incentive Plan and 2,466 shares held in the
O'Reilly Automotive Stock Purchase Plan with UMB Bank, N.A. as trustee.
Also includes 42,500 shares subject to options exercisable within 60 days
of February 28, 2001.
(i) Includes 40,000 shares subject to options exercisable within 60 days
of February 28, 2001, and 4,000 shares directly owned.
(j) Includes 50,000 shares subject to options exercisable within 60 days of
February 28, 2001, and 8,400 shares directly owned.
(k) Includes options to purchase a total of 600,000 shares held by the
Company's directors and executive officers as a group which are
exercisable within 60 days of February 28, 2001.
PROPOSAL 1-ELECTION OF CLASS II DIRECTORS
Information About The Nominees And Directors Continuing in Office
The Company's Amended and Restated By-laws currently provide for three
classes of Directors, each class serving for a three-year term expiring one year
after expiration of the term of the preceding class, so that the term of one
class will expire each year. The terms of the current Class I and Class III
Directors expire in 2003 and 2002, respectively. The Board of Directors has
nominated Lawrence P. O'Reilly, Rosalie O'Reilly Wooten and Joe C. Greene who
are the current Class II Directors, for a term expiring at the Company's annual
shareholders meeting in 2004.
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. 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.
Service as
Director
Name Age Principal Occupation Since
---- --- -------------------- -----
Nominees for Director--Class II
(To Be Elected to Serve a Three-Year Term Expiring in 2004)
Lawrence P. O'Reilly 54 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 58 Executive Vice-President of the Company since 1980. 1980
Joe C. Greene 65 Attorney-At-Law, managing partner of the Springfield, Missouri 1993
firm of Greene & Curtis, LLP and Director of Commerce Bank, N.A.
in Springfield, Missouri; Mr. Greene has been engaged in the
private practice of law for more than 30 years.
Directors Continuing in Office--Class I
(Terms Expiring in 2003)
Charles H. O'Reilly, Sr. 88 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. 61 Vice-Chairman of the Board since August 1999; Chairman of the 1966
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 III
(Terms Expiring in 2002)
David E. O'Reilly 51 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.
4
Jay D. Burchfield 54 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 The Primary Care Network in
Springfield, Missouri from January 1998 to present; Chairman of
the Board and Director of City Bancorp in Springfield, Missouri
from January 1997 to present; Chairman of the Board and CEO of
Boatmen's National Bank of Oklahoma in Tulsa, Oklahoma from
January 1996 to January 1997; Chairman, President and CEO of
Boatmens' 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 61 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., Woods Equipment Co., 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.
The Board of Directors recommends a vote "FOR" each of the Class II
nominees.
Information Concerning Board of Directors
During fiscal year 2000, 4 meetings of the Board of Directors were
held. During such year, each Director attended 75% or more of the aggregate of
(i) the total number of meetings of the Board of Directors held during the
period for which he or she has been a Director and (ii) the total number of
meetings held by all committees of the Board of Directors on which he or she
served during the period for which he or she served, with the exception of
Charles H. O'Reilly, Sr., who attended 50% of the aggregate meetings and Charles
H. O'Reilly, Jr., who attended 50% of the aggregate 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 is attached
hereto as Appendix A. During fiscal year 2000, four Audit Committee meetings
were held.
The Compensation Committee consists of Messrs. Burchfield and Greene.
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 2000, one Compensation Committee meeting was
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 $24,000 were paid during 2000.
The Company also maintains a Directors' Stock Option Plan, providing
for an automatic annual grant (on April 22 or the first business day thereafter)
to each director who is not an employee of the Company of a non-qualified stock
option to purchase 10,000 shares of Common Stock at a per share exercise price
equal to the fair market value of the Common Stock on the date the option is
granted. Director stock options expire immediately upon the date on which the
optionee ceases to be a director for any reason or seven years after the date on
which the option is granted, whichever first occurs. Each of the Company's two
non-employee directors in 2000 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 $12.4375 per share.
5
Executive Compensation
The following information is given for the fiscal years ended December
31, 2000, 1999 and 1998, concerning annual and long-term compensation for
services rendered to the Company and its subsidiaries for the Company's Chief
Executive Officer and each of the Company's four other most highly compensated
executive officers (other than the Chief Executive Officer) during fiscal year
2000.
Summary Compensation Table
Long Term Compensation
Awards
----------------------------
Annual Compensation
Restricted
Stock Securities All Other
Name and Salary Bonus Other Awards Underlying Compen-
Principal Position Year ($)(a) ($) ($)(b) ($)(c) Options(d)(#) sation($)(e)
------------------ ---- ------- --- ------ ---------- ------------- ------------
David E. O'Reilly 2000 312,000 312,000 - - - 13,107
Co-Chairman of the 1999 300,000 300,000 - - 50,000 15,538
Board and Chief 1998 277,000 277,000 - - - 7,691
Executive Officer
Charles H. O'Reilly, Jr. 2000 142,500 142,500 - - - 10,400
Vice-Chairman of the 1999 167,500 167,500 - - - 14,206
Board 1998 198,500 198,500 - - - 7,956
Lawrence P. O'Reilly 2000 275,000 275,000 - - - 12,945
Co-Chairman of the 1999 300,000 300,000 - - 50,000 15,538
Board and Chief 1998 277,000 277,000 - - - 7,919
Operating Officer
Ted F. Wise 2000 235,000 115,000 - - - 13,002
Co-President 1999 215,000 105,000 - - 50,000 14,985
1998 190,000 95,000 - - - 6,854
Greg Henslee 2000 167,500 82,500 20,007 9,992 - 15,727
Co-President 1999 175,000 - 19,660 9,824 50,000 13,067
1998 108,000 - 13,136 6,564 15,000 9,374
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(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 awared 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, (ii) 428 shares in fiscal year 1999, having a per share fair market
value of $22.95325 on the day awarded, for an aggregate value of $9,824,
and (iii) 472 shares in fiscal year 1998, having a per share fair market
value of $6,564 on the day awarded, for an aggregate value of $26,380. 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, 2000, includes (i)
Company contributions of $9,500, $12,207, $12,045, $12,207 and $15,507 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.
($900), David E. O'Reilly ($900), Lawrence P. O'Reilly ($900), Ted F. Wise
($795), and Greg Henslee ($220) from the Company's payment of certain life
insurance premiums.
6
Information as to Stock Options
During fiscal year 2000, no grants of options to purchase Common Stock
were made to the executive officers.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
Number of Value of Unexercised
Number of Unexercised In-The-Money
Securities Options Options at
Underlying At FY-End FY-End ($)(1)
Options Value Exercisable/ Exercisable/
Name Exercised (#) Realized($) Unexercisable Unexercisable
---- ------------- ----------- ------------- -------------
David E. O'Reilly 0 0 137,500 / 52,500 2,200,469 / 421,406
Charles H. O'Reilly, Jr. 0 0 22,500 / 7,500 326,250 / 108,750
Lawrence P. O'Reilly 0 0 137,500 / 52,500 2,200,469 / 421,406
Rosalie O'Reilly Wooten 0 0 22,500 / 7,500 326,250 / 108,750
Ted F. Wise 0 0 97,500 / 52,500 1,464,219 / 421,406
Greg Henslee 60,000 425,333 42,500 / 52,500 454,219 / 372,656
----------
(1) Represents the market value of the underlying Common Stock on December 31,
2000, 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 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 as a consultant upon retirement, for
a period of ten years at a yearly salary of $100,000. The agreements also
provide for each officer to receive medical benefits, death and disability
benefits, as well as the use of a car and the Company plane.
An executive officer's employment may be terminated by the Company for
cause (as defined in the agreement) or without cause. If an executive officer's
employment is terminated for cause or if an executive officer resigns, such
executive officer's salary and bonus rights will cease on the date of such
termination or resignation. If the Company terminates an executive officer
without cause, all compensation payments will continue through the remainder of
the agreement's term. Pursuant to his or her respective agreement, each
executive officer has agreed for so long as he or she is receiving payments
thereunder to refrain from disclosing information confidential to the Company or
engaging, directly or indirectly, in any automotive parts distribution,
manufacturing or sales business in the states in which the Company operates
without prior written consent of the Company.
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. 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. 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.
7
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 two non-employee
members of the Board of Directors.
Policy
The Compensation Committee's policy with respect to executive
compensation is to provide the executive officers of the Company with a total
compensation package which is competitive and equitable and which encourages and
rewards performance based in part upon the Company's performance in terms of
increases in share value. The key components of the Company's compensation
package for its executive officers are base salary, annual cash bonuses and
long-term, stock-based incentives.
Base Salary
The minimum annual base salary of each of Charles H. O'Reilly, Jr.,
David E. O'Reilly 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 2000 to reflect increases in the Consumer
Price Index from 1999 to 2000, increases in responsibilities due to the
Company's growth and to align executive compensation with comparable companies
and positions.
8
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 2000, based upon a percentage of the pre-tax
earnings, exclusive of extraordinary items, earned by the Company in 1999. This
cash bonus, in an amount equal to his base salary for 2000, was paid to the
Chief Executive Officer in equal monthly installments during 2000. The cash
bonus to be paid to the Chief Executive Officer in 2001 will be based upon the
same percentage of pre-tax earnings, exclusive of extraordinary items, earned by
the Company in 2000, not to exceed the Chief Executive Officer's base salary for
2001.
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
9
Audit Committee Report
In connection with the December 31, 2000 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, 2000;
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, 2000.
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
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, 2000:
Amount
------
Audit Fees(1) $ 214,000.00
Financial Information Systems Design
and Implementation Fees(2) -0-
All Other Fees(3) 81,000.00
---------------
Total Fees $ 295,000.00
----------
(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.
10
Transactions with Insiders and Others
Sixty-two of the Company's stores were leased from one of two real
estate investment partnerships and a limited liability corporation formed by the
O'Reilly family. David O'Reilly, Larry 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 corporation.
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 6 years, subject to one or more renewals at the Company's
option. The Company has entered into separate master lease agreements with each
of the affiliated real estate investment partnerships and the limited liability
corporation for the occupancy of the stores covered thereby. The master lease
agreements with the real estate investment partnerships expired on December 31,
1998 and were renewed through December 2004. The term of the master lease with
the limited liability corporation expires on December 31, 2013. The total
aggregate rent payments paid by the Company to the partnerships and the limited
liability corporation was $2,671,000 in fiscal 2000. 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. 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. 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.
Compliance with Section 162(m) of the Internal Revenue Code
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to public companies for compensation of over $1
million paid to any one of the corporation's chief executive officer and four
other most highly compensated executive officers for any single fiscal year.
Qualifying performance-based compensation is not subject to such limitation if
certain requirements are met. Because the Company's 1993 Stock Option Plan may
not satisfy the requirements of Section 162(m) with respect to the options more
recently granted thereunder, the Compensation Committee may take action in the
future to comply with these requirements. Given the current levels of cash
compensation paid to the Company's executive officers, the Compensation
Committee is not expected to take any action with respect to the cash elements
of the Company's executive compensation program at this time, but will evaluate
possible action, to the extent consistent with other objectives of the Company's
compensation program, if the cash compensation of any executive officer
approaches the $1 million level in the future.
11
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,
1995, 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.
(THE FOLLOWING TABLE WAS REPRESENTED AS A LINE CHART IN THE PRINTED MATERIAL.)
Measurement Period O'Reilly Nasdaq U.S. Nasdaq Retail
(Fiscal Year Covered) Automotive, Inc. Stock Market Trade Stocks
--------------------- ---------------- ------------ ------------
12/95 100 100 100
12/96 110 123 119
12/97 181 151 140
12/98 326 213 171
12/99 297 395 150
12/00 369 238 92
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 2000.
PROPOSAL 2 - AMENDMENT TO RESTATED ARTICLES OF INCORPORATION
Background
The Company is incorporated under the General and Business Corporation
Law of Missouri (the "Missouri Law"). The law of Missouri provides that the
board of directors has the ultimate responsibility for managing the business and
affairs of a corporation. In discharging this function, the law holds directors
to fiduciary duties of care and loyalty to the corporation and its shareholders.
The Missouri Law has long permitted a corporation to indemnify its
directors (and officers) against expenses, judgments, settlement payments and
other costs incurred in connection with litigation or similar proceedings,
subject to certain limitations. The Restated Articles of Incorporation and
Bylaws of the Company provide for indemnification of directors to the fullest
extent legally permissible under the Missouri Law. In addition, the Missouri Law
permits a corporation to purchase and maintain, on behalf of its directors (and
officers), insurance against liability incurred in their capacities as such,
regardless of whether the corporation would have the power to indemnify against
such liability under the Missouri Law. As discussed more fully below, the
Company currently maintains such directors' liability insurance.
Missouri Law Amendments
The Missouri legislature recently enacted amendments (the "Act") to the
Missouri Law that, among other things, permit a Missouri corporation to provide
additional protection for directors by including in its articles of
incorporation or bylaws a provision eliminating or limiting the personal
liability of a director to the corporation or its shareholders for monetary
damages for certain breaches of fiduciary duty as a director.
The Act authorizes a Missouri corporation to include in its articles of
incorporation or bylaws a provision that eliminates or limits the ability of the
corporation and its shareholders to recover monetary damages from a director for
breach of fiduciary duty as a director; but the Act does not permit the
elimination or limitation of the liability of a director for (i) any breach of
duty of loyalty, (ii) acts or omissions not in subjective good faith or which
involve intentional misconduct or a knowing violation of law, (iii) paying a
dividend that is illegal under certain provisions of the Missouri Law, or (iv)
any transaction from which the director derived an improper personal benefit.
The Act does not change a director's duty of care, but it does
authorize a corporation to eliminate monetary liability for violations of that
duty. In addition, the Act does not affect the availability of equitable
remedies, such as an action to enjoin or rescind a transaction involving a
breach of fiduciary duty of care. In some circumstances, however, equitable
remedies may not be available as a practical matter.
12
Proposed New Article XI
Although the Company has not experienced an inability to attract or
retain directors in the past, the Board of Directors has determined that the
ability of the Company to continue to attract and retain highly qualified
directors will be enhanced by amending the Company's Restated Articles of
Incorporation to eliminate the personal liability of its directors to the full
extent permitted by the Act. The Company's Board of Directors has therefore
approved, and recommends to the shareholders for their approval and adoption, an
amendment to the Company's Restated Articles of Incorporation that would add a
new Article XI ("Article XI") to read in its entirety as follows:
ARTICLE XI
"No director of the corporation shall be personally liable to
the corporation or its shareholders for monetary damages for breach of
fiduciary duty by such director as a director; provided, however, that
this Article XI shall not eliminate or limit the liability of a
director to the extent provided by applicable law (i) for any breach of
the director's duty of loyalty to the corporation or its shareholders,
(ii) for acts or omissions not in subjective good faith or which
involve intentional misconduct or a knowing violation of law, (iii)
under section 351.345 of the General Corporation Law of Missouri, or
(iv) for any transaction from which the director derived an improper
personal benefit. No amendment to or repeal of this Article XI shall
apply to or have any effect on the liability or alleged liability of
any director of the corporation for or with respect to any acts or
omissions of such director prior to such amendment or repeal."
Section 351.345 of the Missouri Law provides that directors shall,
under certain circumstances, be jointly and severally liable for knowing
violations of certain requirements with respect to the payment of dividends.
Certain Effects of Article XI
Article XI would eliminate personal liability of directors (while in
office and thereafter) in their capacity as directors (but not officers or
directors in their capacity as officers) of the Company to the Company or its
shareholders to the full extent permitted by the Act. As a result, even if the
Company's directors were to fail to satisfy their duty of care, they would not
be liable for monetary damages. Article XI would not, however, limit or
eliminate the liability of a director for any act or omission occurring prior to
the date when Article XI becomes effective, or in any respect not permitted by
the Act, such as for any violation of the duty of loyalty or for a knowing
violation of the law. Article XI would in no way affect a director's liability
under the Federal securities laws.
Adoption of Article XI may have the effect of reducing the likelihood
of derivative litigation against directors, and may also discourage or deter
shareholders or management from bringing a lawsuit against directors for breach
of their duty of care, even though such an action, if successful, might
otherwise have benefited the Company and its shareholders. Article XI provides
that no amendment or repeal of Article XI would apply or have any effect on the
liability of a director for any acts or omissions occurring prior to such
amendment or repeal.
Adoption of Article XI, therefore, would result in shareholders giving
up the right to pursue causes of action for monetary damages against directors
for breaches of their duty of care, including actions for damages arising from
the conduct of directors in connection with take over proposals for the Company,
even if such conduct involves negligent business decisions. The members of the
Board of Directors, therefore, have a personal interest in proposing that
Article XI be adopted at the potential expense of shareholders.
13
There is no litigation pending currently or previously instituted
against the Board of Directors or its members that might have been affected by
Article XI had it been in effect at the time of any such litigation.
Adoption of the amendment adding Article XI to the Company's Restated
Articles of Incorporation requires the affirmative vote of the holders of a
majority of the shares of the Company's Common Stock entitled to notice of and
vote at the Annual Meeting.
If approved by the shareholders, Article XI would become effective upon
the filing with the Secretary of State of Missouri of a Certificate of Amendment
to the Company's Restated Articles of Incorporation, which filing would take
place shortly after the Annual Meeting.
The Board of Directors recommends a vote "FOR" the amendment to the
Company's Restated Articles of Incorporation adding Article XI, which eliminates
certain director liability to the extent permitted by Missouri Law.
ANNUAL SHAREHOLDERS' REPORT
The Annual Shareholders' Report of the Company for fiscal 2000
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 2002 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 7, 2001.
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 20, 2002. 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 20, 2002 and not earlier than January 21, 2002.
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.
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,
2000, 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 6, 2001
14
APPENDIX A
O'Reilly Automotive, Inc.
Audit Committee Charter
Organization
This charter governs the operations of the audit committee. The committee shall
review and reassess the charter at least annually and obtain the approval of the
board of directors. The committee shall be appointed by the board of directors
and shall comprise at least three directors, each of whom are independent of
management and the Company. Members of the committee shall be considered
independent if they have no relationship that may interfere with the exercise of
their independence from management and the Company. All committee members shall
be financially literate, (or shall become financially literate within a
reasonable period of time after appointment to the committee,) and at least one
member shall have accounting or related financial management expertise.
Statement of Policy
The audit committee shall provide assistance to the board of directors in
fulfilling their oversight responsibility to the shareholders, potential
shareholders, the investment community, and others relating to the Company's
financial statements and the financial reporting process, the systems of
internal accounting and financial controls, the internal audit function, the
annual independent audit of the Company's financial statements, and the legal
compliance and ethics programs as established by management and the board. In so
doing, it is the responsibility of the committee to maintain free and open
communication between the committee, independent auditors and management of the
Company. In discharging its oversight role, the committee is empowered to
investigate any matter brought to its attention with full access to all books,
records, facilities, and personnel of the Company and the power to retain
outside counsel, or other experts for this purpose.
Responsibilities and Processes
The primary responsibility of the audit committee is to oversee the Company's
financial reporting process on behalf of the board and report the results of
their activities to the board. Management is responsible for preparing the
Company's financial statements, and the independent auditors are responsible for
auditing those financial statements. The committee in carrying out its
responsibilities believes its policies and procedures should remain flexible, in
order to best react to changing conditions and circumstances. The committee
should take the appropriate actions to set the overall corporate "tone" for
quality financial reporting, sound business risk practices, and ethical
behavior.
The following shall be the principal recurring processes of the audit committee
in carrying out its oversight responsibilities. The processes are set forth as a
guide with the understanding that the committee may supplement them as
appropriate.
The committee shall have a clear understanding with management and the
independent auditors that the independent auditors are ultimately accountable to
the board and the audit committee, as representatives of the Company's
shareholders. The committee shall have the ultimate authority and responsibility
to evaluate and, where appropriate, replace the independent auditors. The
committee shall discuss with the auditors their independence from management and
the Company and the matters included in the written disclosures required by the
Independence Standards Board. Annually, the committee shall review and recommend
to the board the selection of the Company's independent auditors, subject to
shareholders' approval.
The committee shall discuss with the independent auditors the overall scope and
plans for their respective audits including the adequacy of staffing and
compensation. Also, the committee shall discuss with management and the
independent auditors the adequacy and effectiveness of the accounting and
financial controls, including the Company's system to monitor and manage
business risk, and legal and ethical compliance programs. Further, the committee
shall meet separately with the independent auditors, with and without management
present, to discuss the results of their examinations.
The committee shall review the interim financial statements with management and
the independent auditors prior to the filing of the Company's Quarterly Report
on Form10-Q. Also, the committee shall discuss the results of the quarterly
review and any other matters required to be communicated to the committee by the
independent auditors under generally accepted auditing standards. The chair of
the committee may represent the entire committee for the purpose of this review.
The committee shall review with management and the independent auditors the
financial statements to be included in the Company's Annual Report on Form 10-K
(or the annual report to shareholders if distributed prior to the filing of Form
10-K), including their judgment about the quality, not just acceptability, of
accounting principles, the reasonableness of significant judgements, and the
clarity of the disclosures in the financial statements. Also, the committee
shall discuss the results of the annual audit and any other matters required to
be communicated to the committee by the independent auditors under generally
accepted auditing standards.
A-1
APPENDIX B
O'Reilly Automotive, Inc.
Form of Proxy (Proxy Card)
PROXY
O'REILLY AUTOMOTIVE, INC.
Annual Meeting of Shareholders - Tuesday, May 8, 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
substitution, 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,
2001 at the Annual Meeting of Shareholders (the "Annual Meeting") to be held on
May 8, 2001, 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 more 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 ACTIONS OR PROPOSALS.
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
All All Except to vote, mark "For
All Except" and write
the nominee's number
on the line below.
--- --- --- ---------------------
1. Proposal to elect Class II Directors (three-year term).
01) Joe C. Greene
02) Lawrence P. O'Reilly
03) Rosalie O'Reilly Wooten
Vote on Proposal
2. Proposal to amend The Restated Articles of Incorporation.
For Withhold Abstain
--- --- ---
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 hereon. 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
partnership, please sign in partnership name by authorized person.
---------------------------------- ----------
Signature [PLEASE SIGN WITHIN BOX] Date
---------------------------------- ----------
Signature (Joint Owners) Date
A-2