def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES
EXCHANGE ACT OF 1934 (Amendment
No. )
Filed by the Registrant
þ
Filed by a Party other than the Registrant
o
Check the appropriate box:
o Preliminary
Proxy Statement
o Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
þ Definitive
Proxy Statement
o Definitive
Additional Materials
o Soliciting
Material Pursuant to §240.14a-12
Sonic Automotive, Inc.
(Name of Registrant as Specified In
Its Charter)
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|
|
þ
|
No fee required.
|
|
o
|
Fee computed on table below per Exchange Act
Rules 14a-6(i)(1)
and 0-11.
|
|
|
|
|
(1)
|
Title of each class of securities to which transaction applies:
|
|
|
|
|
(2)
|
Aggregate number of securities to which transaction applies:
|
|
|
|
|
(3)
|
Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11
(set forth the amount on which the filing fee is calculated and
state how it was determined):
|
|
|
|
|
(4)
|
Proposed maximum aggregate value of transaction:
|
|
|
o
|
Fee paid previously with preliminary materials.
|
o
|
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:
|
|
|
|
|
(2)
|
Form, Schedule or Registration Statement No.:
|
6415
Idlewild Road, Suite 109
Charlotte, North Carolina 28212
March 5,
2010
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders to be held at 10:30 a.m. on Wednesday,
April 21, 2010, at Charlotte Motor Speedway, Smith Tower,
600 Room, U.S. Highway 29 North, Concord, North Carolina.
We look forward to greeting personally those stockholders who
are able to attend.
The accompanying formal Notice of Meeting and Proxy Statement
describe the matters on which action will be taken at the
meeting.
Whether or not you plan to attend the meeting on April 21,
2010, it is important that your shares be represented. To ensure
that your vote will be received and counted, please sign, date
and mail the enclosed proxy at your earliest convenience. Your
vote is important regardless of the number of shares you own.
On behalf of the Board of Directors
Sincerely,
O. BRUTON SMITH
Chairman and Chief Executive Officer
TABLE OF CONTENTS
VOTING
YOUR PROXY IS IMPORTANT
PLEASE SIGN
AND DATE YOUR PROXY
AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE
SONIC
AUTOMOTIVE, INC.
NOTICE OF
MEETING
Charlotte, NC
March 5, 2010
The Annual Meeting of Stockholders of Sonic Automotive, Inc.
(Sonic) will be held at Charlotte Motor Speedway,
Smith Tower, 600 Room, U.S. Highway 29 North, Concord,
North Carolina on Wednesday, April 21, 2010, at
10:30 a.m. (the Annual Meeting), for the
following purposes as described in the accompanying Proxy
Statement.
1. To elect nine directors;
2. To ratify the appointment of
Ernst & Young LLP as Sonics independent public
accountants for the year ending December 31, 2010; and
3. To transact such other business
as may properly come before the meeting.
Only holders of record of Sonics Class A Common Stock
and Class B Common Stock (collectively, the Voting
Stock) at the close of business on February 22, 2010
will be entitled to notice of, and to vote at, the Annual
Meeting.
Whether or not you plan to attend the Annual Meeting, you are
urged to complete, sign, date and return the enclosed proxy
promptly in the envelope provided. Returning your proxy does not
deprive you of your right to attend the Annual Meeting and to
vote your shares in person.
Stephen K. Coss
Senior Vice President, General Counsel and
Secretary
Important Note: To vote shares of Voting Stock
at the Annual Meeting (other than in person at the meeting), a
stockholder must return a proxy. The return envelope enclosed
with the proxy card requires no postage if mailed in the United
States of America.
SONIC
AUTOMOTIVE, INC.
PROXY
STATEMENT
March 5,
2010
GENERAL
Introduction
The Annual Meeting of Stockholders of Sonic Automotive, Inc.
(Sonic or the Company) will be held on
April 21, 2010 at 10:30 a.m., at Charlotte Motor
Speedway, Smith Tower, 600 Room, U.S. Highway 29 North,
Concord, North Carolina (the Annual Meeting), for
the purposes set forth in the accompanying notice. Only holders
of record of Sonics Class A Common Stock (the
Class A Common Stock) and Class B Common
Stock (the Class B Common Stock and, together
with the Class A Common Stock, the Common Stock
or Voting Stock) at the close of business on
February 22, 2010 (the Record Date) will be
entitled to notice of, and to vote at, the Annual Meeting. This
Proxy Statement and form of proxy are furnished to stockholders
in connection with the solicitation by the Board of Directors of
proxies to be used at the Annual Meeting, and at any and all
adjournments thereof, and are first being sent to stockholders
on or about March 15, 2010.
Proxies in the accompanying form, properly executed and duly
returned and not revoked, will be voted at the Annual Meeting,
including adjournments. Where a specification is made by means
of the ballot provided in the proxies regarding any matter
presented at the Annual Meeting, such proxies will be voted in
accordance with the specification. If no specification is made,
proxies will be voted (i) in favor of electing Sonics
nine nominees to the Board of Directors; (ii) in favor of
the proposal to ratify the appointment of Ernst &
Young LLP as the independent accountants of Sonic and its
subsidiaries for the year ending December 31, 2010; and
(iii) in the discretion of the proxy holders on any other
business as may properly come before the Annual Meeting. The
Board of Directors currently knows of no other business that
will be presented for consideration at the Annual Meeting.
Proxies should be sent to American Stock Transfer &
Trust Company, 59 Maiden Lane, New York, New York 10038.
Revoking
Your Proxy
Stockholders who execute proxies may revoke them at any time
before they are exercised by delivering a written notice to
Stephen K. Coss, the Secretary of Sonic, either at the Annual
Meeting or prior to the meeting date at Sonics principal
executive offices at 6415 Idlewild Road, Suite 109,
Charlotte, North Carolina 28212, by executing and delivering a
later-dated proxy, or by attending the Annual Meeting and voting
in person.
Ownership
of Voting Stock
Sonic currently has authorized under its Amended and Restated
Certificate of Incorporation (the Charter)
100,000,000 shares of Class A Common Stock, of which
40,109,558 shares were outstanding as of the Record Date
and are entitled to be voted at the Annual Meeting, and
30,000,000 shares of Class B Common Stock, of which
12,029,375 shares were outstanding as of the Record Date
and are entitled to be voted at the Annual Meeting. At the
Annual Meeting, holders of Class A Common Stock will have
one vote per share, and holders of Class B Common Stock
will have ten votes per share. All outstanding shares of Voting
Stock are entitled to vote as a single class on all proposals
submitted to a vote at the Annual Meeting. A quorum being
present, directors will be elected by a plurality of the votes
cast and each of the other proposals referred to in the
accompanying Notice of Meeting will become effective if a
majority of the votes cast by shares entitled to vote on the
proposal are cast in favor thereof. Under the rules of the New
York Stock Exchange, brokers who are voting shares held in
street name have the discretion to vote shares on routine
matters but not on non-routine matters. Routine matters include
ratification of independent public accountants. Non-routine
matters include the election of directors. Broker non-votes and
abstentions will be counted to determine a quorum. For elections
of directors, withheld votes and broker non-votes will not be
counted toward that nominees achievement of a plurality.
Abstentions and broker non-votes on other matters, including
ratification of independent public accountants, are not
considered to have been voted for or against such proposals and
have the practical effect of reducing the number of affirmative
votes required to achieve a majority by reducing the total
number of shares from which the majority of votes cast is
calculated.
A holder of Voting Stock who signs a proxy card may withhold
votes as to any director-nominee by writing the name of the
nominee in the space provided on the proxy card. A holder of
Voting Stock may not vote for more than nine nominees.
The following table sets forth certain information regarding the
beneficial ownership of Sonics Voting Stock as of
February 22, 2010, by (i) each stockholder known by
Sonic to own beneficially more than five percent of a class of
the outstanding Voting Stock, (ii) each director and
nominee to the Board of Directors of Sonic, (iii) each
named executive officer of Sonic listed in the Summary
Compensation Table, and (iv) all directors and executive
officers of Sonic as a group. Except as otherwise indicated
below, each of the persons named in the table has sole voting
and investment power with respect to the securities beneficially
owned by them as set forth opposite their name, subject to
community property laws where applicable.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Percentage of
|
|
Number of
|
|
Percentage of
|
|
Percentage
|
|
|
Shares of
|
|
Outstanding
|
|
Shares of
|
|
Outstanding
|
|
of All
|
|
|
Class A
|
|
Class A
|
|
Class B
|
|
Class B
|
|
Outstanding
|
|
|
Common
|
|
Common
|
|
Common
|
|
Common
|
|
Voting
|
Beneficial Owner
|
|
Stock(1)
|
|
Stock
|
|
Stock
|
|
Stock
|
|
Stock(2)
|
|
O. Bruton Smith (3)
|
|
|
751,852
|
|
|
|
1.8
|
%
|
|
|
11,052,500
|
(4)
|
|
|
91.9
|
%
|
|
|
22.3
|
%
|
Sonic Financial Corporation (3)
|
|
|
|
|
|
|
|
|
|
|
8,881,250
|
(4)
|
|
|
73.8
|
%
|
|
|
17.0
|
%
|
B. Scott Smith (3)(5)
|
|
|
624,416
|
|
|
|
1.5
|
%
|
|
|
976,875
|
(6)
|
|
|
8.1
|
%
|
|
|
3.0
|
%
|
David P. Cosper (7)
|
|
|
171,085
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
David B. Smith (5)(8)
|
|
|
196,133
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Jeff Dyke (9)
|
|
|
217,535
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
William R. Brooks (10)
|
|
|
96,733
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
William I. Belk (10)(11)
|
|
|
56,023
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Victor H. Doolan (10)
|
|
|
20,278
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Robert Heller (10)(12)
|
|
|
89,023
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Robert L. Rewey (10)
|
|
|
53,023
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
David C. Vorhoff (10)
|
|
|
18,097
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
All directors and executive officers as a group
(11 persons) (5)
|
|
|
2,224,512
|
|
|
|
5.3
|
%
|
|
|
12,029,375
|
|
|
|
100.0
|
%
|
|
|
26.5
|
%
|
BlackRock, Inc. (13)
|
|
|
2,921,370
|
|
|
|
7.3
|
%
|
|
|
|
|
|
|
|
|
|
|
5.6
|
%
|
FMR LLC (and related persons) (14)
|
|
|
5,913,398
|
|
|
|
14.3
|
%
|
|
|
|
|
|
|
|
|
|
|
11.1
|
%
|
Loomis, Sayles & Co., L.P. (15)
|
|
|
2,069,583
|
|
|
|
5.2
|
%
|
|
|
|
|
|
|
|
|
|
|
4.0
|
%
|
Paul P. Rusnak (16)
|
|
|
4,300,000
|
|
|
|
10.7
|
%
|
|
|
|
|
|
|
|
|
|
|
8.2
|
%
|
|
|
|
(1) |
|
Includes those shares of Class A Common Stock shown below
as to which the following persons currently have a right, or
will have the right within 60 days after February 22,
2010, to acquire beneficial ownership through the exercise of
stock options or the vesting of restricted stock units:
(i) Messrs. Bruton Smith, 725,211 shares; Scott
Smith, 509,058 shares; Cosper, 58,889 shares; David
Smith, 100,219 shares; Dyke, 105,217 shares; Brooks,
65,000 shares; Belk, 20,000 shares; Heller,
40,000 shares; and Rewey, 30,000 shares; and
(ii) all directors and executive officers as a group,
1,653,594 shares. |
|
(2) |
|
The percentage of total voting power of Sonic is as follows:
(i) O. Bruton Smith, 69.1%; Sonic Financial Corporation,
55.4%; B. Scott Smith, 6.5%; BlackRock, Inc., 1.8%; FMR LLC (and
related persons), 3.7%; Loomis, Sayles & Co., L.P.,
1.3%; Paul P. Rusnak, 2.7%; and less than 1% for all other
stockholders shown, and (ii) all directors and executive
officers as a group, 75.6%. |
|
(3) |
|
The address for O. Bruton Smith, B. Scott Smith and Sonic
Financial Corporation (SFC) is 5401 East
Independence Boulevard, Charlotte, North Carolina 28212. |
|
(4) |
|
The amount of Class B Common Stock shown for O. Bruton
Smith consists of 2,171,250 shares owned directly by
Mr. Smith and 8,881,250 shares owned directly by SFC,
of which 5,474,593 shares are pledged as security for
loans. Mr. Smith owns the majority of SFCs
outstanding capital stock and, accordingly, is deemed to have
sole voting and investment power with respect to the
Class B Common Stock held by SFC. |
2
|
|
|
(5) |
|
Includes 69,686 shares of Class A Common Stock held by
SMDA Development 1, LLC, in which Messrs. B. Scott and
David Smith are members. Each of Messrs. B. Scott and David
Smith disclaims beneficial ownership of such shares, except to
the extent of his pecuniary interest, if any, therein. |
|
(6) |
|
Approximately 778,890 shares of Class B Common Stock
are pledged to secure loans and 20,875 shares of
Class A Common Stock are held in a margin account. |
|
(7) |
|
Includes 64,550 restricted shares of Class A Common Stock,
which will vest on March 19, 2010. |
|
(8) |
|
Includes 5,246 restricted shares of Class A Common Stock,
which will vest on April 18, 2010. |
|
(9) |
|
Includes 35,000 and 7,321 restricted shares of Class A
Common Stock, which will vest on March 13, 2010 and
April 18, 2010, respectively. |
|
(10) |
|
Includes 13,100 restricted shares of Class A Common Stock
for each of Messrs. Brooks, Belk, Doolan, Heller, Rewey and
Vorhoff, which will vest on April 20, 2010. |
|
(11) |
|
Includes 6,000 shares held by Mr. Belks
children. Mr. Belk disclaims beneficial ownership of all
securities held by his children. |
|
(12) |
|
Approximately 26,000 shares are held in a margin account.
Mr. Heller shares voting and dispositive power over
26,000 shares with his wife. |
|
(13) |
|
The address of this entity is 40 East
52nd
Street, New York, New York 10022. The Schedule 13G filed by
BlackRock, Inc. on or about January 29, 2010 indicates that
BlackRock, Inc. has sole voting power and sole dispositive power
as to all of the 2,921,370 shares shown. |
|
(14) |
|
The address of this entity is 82 Devonshire Street, Boston,
Massachusetts 02109. The information provided is based on a
Schedule 13G filed by FMR LLC (and related persons) on or
about February 16, 2010. That filing indicates that FMR LLC
has sole voting power as to 1,691,444 of the shares shown. That
filing also indicates that FMR LLC and Edward C. Johnson 3d have
sole dispositive power as to all of the 5,913,398 shares
shown. That filing further indicates that Fidelity Management
and Research Company, as investment advisor to various
investment companies and a wholly-owned subsidiary of FMR LLC,
is the beneficial owner of 4,117,494 of the shares, including
327,294 shares which those investment companies would have
the right to acquire beneficial ownership of assuming the
conversion of Sonics 5% Convertible Senior Notes due
2029 (5% Convertible Notes) and Fidelity Low
Priced Stock Fund, an investment company, beneficially owns
2,800,000 of the shares, but that neither Mr. Edward C.
Johnson 3d nor FMR LLC has sole voting power with respect to
such shares, which voting power resides with the Board of
Trustees of the various Fidelity Funds that beneficially own the
shares. The filing also indicates that Pyramis Global Advisors,
LLC (PGA), as investment advisor to various entities
and a wholly-owned subsidiary of FMR LLC, is the beneficial
owner of 674,389 shares which those entities would have the
right to acquire beneficial ownership of assuming the conversion
of Sonics 5% Convertible Notes, with Mr. Edward
C. Johnson 3d and FMR LLC each having sole dispositive power and
sole voting power over these shares, and Pyramis Global Advisors
Trust Company (PGATC), as investment manager, a
bank and a wholly-owned subsidiary of FMR LLC, is the beneficial
owner of 1,212,515 shares, including 302,635 shares
which PGATC as investment manager of various accounts would have
the right to acquire beneficial ownership of assuming the
conversion of Sonics 5% Convertible Notes, with
Mr. Edward C. Johnson 3d and FMR LLC each having sole
dispositive power over 1,121,515 of these shares and sole voting
power over 1,017,055 of these shares. The address for PGA and
PGATC is 900 Salem Street, Smithfield, Rhode Island 02917. |
|
(15) |
|
The address of this entity is One Financial Center, Boston,
Massachusetts 02111. The information provided is based on a
Schedule 13G filed by Loomis, Sayles & Co., L.P.
on or about February 16, 2010. That filing indicates that
Loomis, Sayles & Co., L.P. has sole voting power with
respect to 1,724,226 of the shares shown and sole dispositive
power as to all of the 2,069,583 shares shown. Loomis,
Sayles & Co., L.P. disclaims any beneficial interest
in any of the shares. |
|
(16) |
|
The address of this owner is 325 W. Colorado
Boulevard, PO Box 70489, Pasadena, California
91117-7489.
The information provided is based on a Schedule 13D filed
by Paul P. Rusnak on or about April 17, 2009. That filing
indicates that Paul P. Rusnak has sole voting power and sole
dispositive power as to all of the 4,300,000 shares shown. |
3
ELECTION
OF DIRECTORS
Nominees
for Election as Directors of Sonic
Nine directors currently serve on Sonics Board of
Directors. Under our Bylaws, the director nominees chosen to
succeed those directors whose terms expire at an annual meeting
of stockholders are elected by the stockholders for a one-year
term expiring at the next annual meeting of stockholders. Any
director appointed by the Board of Directors as a result of a
newly created directorship or to fill a vacancy on the Board of
Directors will hold office until the next annual meeting of
stockholders. All directors terms expire and their
successors will be elected at the Annual Meeting and each annual
meeting of stockholders thereafter.
At the Annual Meeting, we intend to vote the proxies in the
accompanying form for the election of O. Bruton Smith,
B. Scott Smith, David B. Smith, William I. Belk,
William R. Brooks, Victor H. Doolan, Robert Heller,
Robert L. Rewey and David C. Vorhoff to the Board of
Directors. All of these individuals have consented to serve, if
elected, for a one-year term until the 2011 annual meeting of
stockholders or until his successor is elected and qualified,
except as otherwise provided in our Charter and Bylaws. All of
the nominees are presently directors of Sonic and are standing
for re-election. Due to the passing of long-time director,
William P. Benton, in February 2009, and the prior resignation
of another director, two seats on the Board of Directors will be
vacant following the Annual Meeting. Because the Nominating and
Corporate Governance Committee (the NCG Committee)
of our Board of Directors has not selected a qualified candidate
or candidates, the Board of Directors has elected not to fill
these vacancies at the Annual Meeting. If for any reason any
nominee named above is not a candidate when the election occurs,
we intend to vote proxies in the accompanying form for the
election of the other nominees named above and may vote them for
any substitute nominee or, in lieu thereof, our Board of
Directors may reduce the number of directors in accordance with
our Charter and Bylaws.
Directors
O. Bruton Smith, 83, is the Founder of Sonic. He is also
the Chairman, Chief Executive Officer and a director of Sonic
and has served as such since Sonics organization in
January 1997, and he currently is a director and executive
officer of many of Sonics subsidiaries. Mr. Smith has
worked in the retail automobile industry since 1966.
Mr. Smith is also the Chairman and Chief Executive Officer,
a director and controlling stockholder of Speedway Motorsports,
Inc. (SMI). SMI is a public company whose shares are
traded on the New York Stock Exchange (the NYSE).
Among other things, SMI owns and operates the following NASCAR
racetracks: Atlanta Motor Speedway, Bristol Motor Speedway,
Charlotte Motor Speedway, Infineon Raceway, Las Vegas Motor
Speedway, New Hampshire Motor Speedway, Texas Motor Speedway and
Kentucky Speedway. He is also an executive officer or a director
of most of SMIs operating subsidiaries.
B. Scott Smith, 42, is the Co-Founder of Sonic. He is also
President, Chief Strategic Officer and a director of Sonic.
Prior to his appointment as President in March 2007,
Mr. Smith served as Sonics Vice Chairman and Chief
Strategic Officer since October 2002. Mr. Smith was
President and Chief Operating Officer of Sonic from April 1997
until October 2002. Mr. Smith has been a Sonic director
since its organization in January 1997. Mr. Smith also
serves as a director and executive officer of many of
Sonics subsidiaries. Mr. Smith, who is the son of O.
Bruton Smith and the brother of David B. Smith, has been an
executive officer of Town & Country Ford since 1993,
and was a minority owner of both Town & Country Ford
and Fort Mill Ford before Sonics acquisition of those
dealerships in 1997. Mr. Smith became the General Manager
of Town & Country Ford in November 1992 where he
remained until his appointment as President and Chief Operating
Officer of Sonic in April 1997. Mr. Smith has over
20 years experience in the automobile dealership industry.
David B. Smith, 35, is our Executive Vice President and a
director since October 2008 and has served in Sonics
organization since October 2000. Prior to being named a director
and Executive Vice President of Sonic, Mr. Smith, also a
son of O. Bruton Smith and the brother of B. Scott Smith, served
as Sonics Senior Vice President of Corporate Development
since March 2007. Prior to that appointment, Mr. Smith
served as Sonics Vice President of Corporate Strategy from
October 2005 to March 2007, and also served prior to that time
as Dealer Operator of Sonics Arnold Palmer Cadillac
dealership from January 2004 to October 2005, Sonics
Fort Mill Ford dealership from January 2003 to January 2004
and Sonics Town and Country Ford dealership from October
2000 to December 2002.
4
William I. Belk, 60, has been a director of Sonic since March
1998. Mr. Belk is currently affiliated with Southeast
Investments, NC, Inc., a FINRA member firm headquartered in
Charlotte, NC. Mr. Belks past professional experience
includes serving as a North Carolina District Court Judge,
serving as a partner in the investment banking firm Carolina
Financial Group, Inc., and serving in the positions of Chairman
and director for certain Belk stores, a retail department store
chain. Mr. Belk has also previously served as a director of
Monroe Hardware Co., Inc., a wholesaler of hardware materials.
Mr. Belk is an attorney with an LLMTaxation.
William R. Brooks, 60, has been a director of Sonic since its
organization in January 1997. Mr. Brooks also served as
Sonics initial Treasurer, Vice President and Secretary
from January 1997 to April 1997. Since December 1994,
Mr. Brooks has been the Vice President, Treasurer, Chief
Financial Officer and a director of SMI, became Executive Vice
President of SMI in February 2004 and became Vice Chairman in
2008. Mr. Brooks also serves as an executive officer and a
director for various operating subsidiaries of SMI. Before the
formation of SMI in December 1994, Mr. Brooks was the Vice
President of Charlotte Motor Speedway (formerly Lowes
Motor Speedway) and a Vice President and director of Atlanta
Motor Speedway.
Victor H. Doolan, 69, has been a director of Sonic since July
2005. Prior to being appointed as a director of Sonic,
Mr. Doolan served for approximately three years as
president of Volvo Cars North America until his retirement in
March 2005. Prior to joining Volvo, Mr. Doolan served as
the Executive Director of the Premier Automotive Group, the
luxury division of Ford Motor Company from July 1999 to June
2002. Mr. Doolan also enjoyed a
23-year
career with BMW, culminating with his service as President of
BMW of North America from September 1993 to July 1999.
Mr. Doolan has worked in the automotive industry for
approximately 36 years. Mr. Doolan currently serves as
a director of BlueFire Ethanol Fuels, Inc.
Robert Heller, 70, has been a director of Sonic since January
2000. Mr. Heller served as a director of FirstAmerica
Automotive, Inc. from January 1999 until its acquisition by
Sonic in December 1999. Mr. Heller was a director and
Executive Vice President of Fair, Isaac and Company from 1994
until 2001, where he was responsible for strategic relationships
and marketing. From 1991 to 1993, Mr. Heller was President
and Chief Executive Officer of Visa U.S.A. Mr. Heller is a
former Governor of the Federal Reserve System, and has had an
extensive career in banking, international finance, government
service and education. Mr. Heller currently serves as
director of Bank of Marin and Chairman of the Board of Marin
General Hospital.
Robert L. Rewey, 71, has been a director of Sonic since December
2001. Mr. Rewey served as the Group Vice President of Ford
Motor Companys North American Operations and Global Sales,
Marketing and Customer Services from January 2000 until his
retirement in April 2001. During his career with Ford,
Mr. Rewey also served as President of Lincoln Mercury
Division and then Ford Division and Group Vice President of
North American sales, marketing and customer service. He has
served on the board of directors for Volvo Cars and Mazda
Corporation. In his prior positions, Mr. Rewey was
responsible for initiating Fords global brand, motorsports
and marketing executive development strategies. He also
implemented innovations in Six Sigma for sales and marketing and
developed short term vehicle leasing. Mr. Rewey has served
as a member of the Board of Visitors, Fuqua School, Duke
University and the Deans Council, Fisher School of
Business, Ohio State University. Mr. Rewey currently serves
as a director of SMI and of LoJack Corporation, a public company
traded on the Nasdaq.
David C. Vorhoff, 54, has been a director of Sonic since April
2007. Mr. Vorhoff is a co-founding Partner of McColl
Partners, LLC, and has served as a Managing Director of the firm
since its founding in 2001. Headquartered in Charlotte, North
Carolina, McColl Partners provides investment banking services
to middle-market companies and financial institutions, and
advises clients in three primary areas: mergers and
acquisitions; raising private capital; and strategic advisory
and valuation assignment. Prior to 2001, Mr. Vorhoff was a
Managing Director of Banc of America Securities Health
Care Group and of NationsBanc Montgomery Securities Health Care
Group in New York, and of NationsBank Capital Markets
mergers and acquisitions group in Charlotte. Mr. Vorhoff
also served as a director of Star Scientific, a public company
traded on the Nasdaq, from October 2005 to September 2007.
Board and
Committee Member Independence
Because Mr. Bruton Smith holds more than 50% of the voting
power of Sonics Common Stock, Sonic qualifies as a
controlled company for purposes of the NYSEs
listing standards and is, therefore, not required to comply with
all of the requirements of those listing standards, including
the requirement that a listed company have
5
a majority of independent directors. Nevertheless, Sonic is
committed to having its board membership in favor of independent
directors as evidenced by Sonics Corporate Governance
Guidelines.
Our Board of Directors has determined that currently a majority
of Sonics directors, including Messrs. Belk, Doolan,
Heller, Rewey and Vorhoff, and all of the members of
Sonics board committees, are independent
within the meaning of the NYSEs current listing standards
and the rules and regulations of the SEC. The Boards
determination was based on its assessment of each
directors relationship with Sonic and the materiality of
that relationship in light of all relevant facts and
circumstances, not only from the standpoint of the director in
his or her individual capacity, but also from the standpoint of
the persons to which the director is related and organizations
with which the director is affiliated. The Board of Directors
applied Categorical Standards for Determination of Director
Independence, which the Board adopted to assist it in evaluating
the independence of each of its directors, and also considered
the following transactions, relationships or arrangements. For
Mr. Doolan, the Board of Directors considered his former
affiliation with an automobile manufacturer. For Mr. Rewey,
the Board of Directors considered his position as director of
SMI and any transactions between Sonic and its subsidiaries and
SMI and its subsidiaries. The Board of Directors also considered
Mr. Reweys position as a director of LoJack and any
transactions between LoJack and Sonic and its subsidiaries and
as a director of Dealer Tire, LLC and any relationships between
Dealer Tire, LLC and Sonic and its subsidiaries or its executive
officers. The Board of Directors determined that none of these
transactions, relationships or arrangements impaired any of
these individuals independence and that each of the
independent directors met the Categorical Standards for
Determination of Director Independence.
Board
Meetings and Committees of the Board
Attendance at Board and Committee
Meetings. Our Board of Directors held twelve
meetings during 2009. Each of the directors attended 75% or more
of the aggregate number of meetings of the Board and committees
of the Board on which the director served.
Executive Sessions of the Board of
Directors. The non-management directors meet in
executive session without members of management present prior to
or after each board meeting. Mr. Belk, as lead independent
director, presides over these executive sessions of
non-management directors.
Attendance at Annual Meetings of
Stockholders. Pursuant to the Board of
Directors policy, all directors are strongly encouraged to
attend our annual stockholders meetings. All of our directors
attended last years annual stockholders meeting.
Board Leadership Structure and Role in Risk
Oversight. Sonics principal executive
officer, Mr. O. Bruton Smith, also serves as the chairman
of Sonics board. Because of Mr. O. Bruton
Smiths extensive business experience (and in particular
the automotive industry), his founding of Sonic and his
significant equity ownership in Sonic, and in light of the
majority of independent directors on Sonics board, Sonic
has determined it is appropriate that Mr. Smith serve in
both roles. Sonics lead independent director,
Mr. William I. Belk, presides over executive sessions of
non-management directors without the presence of management, and
coordinates feedback to the Chief Executive Officer on behalf of
the non-employee directors regarding business issues and Board
management.
It is managements responsibility to manage risk and bring
to the Board of Directors attention the most material
risks to Sonic. Sonics Board of Directors, including
through Board Committees comprised solely of independent
directors, regularly reviews various areas of significant risk
to Sonic, and advises and directs management on the scope and
implementation of policies, strategic initiatives and other
actions designed to mitigate various types of risks. Specific
examples of risks primarily overseen by the full Board of
Directors include competition risks, industry risks, economic
risks, liquidity risks, business operations risks and risks
related to acquisitions and dispositions. Sonics Audit
Committee regularly reviews with management and the independent
auditors significant financial risk exposures and the processes
management has implemented to monitor, control and report such
exposures. Specific examples of risks primarily overseen by the
Audit Committee include risks related to the preparation of
Sonics financial statements, disclosure controls and
procedures, internal controls and procedures required by the
Sarbanes-Oxley Act, accounting, financial and auditing risks,
treasury risks (insurance, credit and debt), matters reported to
the Audit Committee through the Internal Audit Department and
through anonymous reporting procedures, risks posed by
significant litigation matters, and compliance with applicable
laws
6
and regulations. Sonics NCG Committee monitors compliance
with Sonics Code of Business Conduct and Ethics, evaluates
proposed affiliate transactions for compliance with Sonics
Charter and applicable contracts, and reviews compliance with
applicable laws and regulations related to corporate governance.
Sonics Compensation Committee reviews and evaluates
potential risks related to the attraction and retention of
talent, and risks related to the design of compensation programs
established by the Compensation Committee for Sonics
executive officers.
Committees of the Board of Directors and their
Charters. The Board of Directors of Sonic has
three standing committees: the Audit Committee, the Compensation
Committee, and the NCG Committee. Each of these committees acts
pursuant to a written charter, which was adopted by the Board of
Directors and most recently amended in February 2006 for the
Audit Committee and NCG Committee and December 2007 for the
Compensation Committee.
The Audit Committee currently consists of Messrs. Heller
(chairman), Belk, Doolan and Vorhoff. The Compensation Committee
currently consists of Messrs. Rewey (chairman), Belk,
Doolan and Heller. The NCG Committee currently consists of
Messrs. Vorhoff (chairman), Doolan and Rewey. Set forth
below is a summary of the principal functions of each committee.
Audit Committee. The Audit Committee appoints
Sonics independent accountants, reviews and approves the
scope and results of audits performed by them and the
Companys internal auditors, and reviews and approves the
independent accountants fees for audit and non-audit
services. It also reviews certain corporate compliance matters
and reviews the adequacy and effectiveness of the Companys
internal accounting and financial controls, its significant
accounting policies, and its financial statements and related
disclosures. A more detailed description of the Audit
Committees duties and responsibilities can be found in its
charter. Our Board of Directors has determined that each of
Messrs. Heller, Belk, Doolan and Vorhoff qualifies as an
audit committee financial expert as defined by the
current rules of the SEC, is financially literate as
that term is defined by the rules of the NYSE, has accounting or
related financial management expertise and is
independent under the rules and regulations of the
SEC, including as defined in
Rule 10A-3(b)(1),
and the current listing standards of the NYSE. The Audit
Committee met twelve times during 2009.
Audit
Committee Report
The Audit Committee is appointed by the Board of Directors to
assist the board in fulfilling its oversight responsibilities
relating to Sonics accounting policies, reporting
policies, internal controls, compliance with legal and
regulatory requirements, and the integrity of Sonics
financial reports. The Audit Committee manages Sonics
relationship with Sonics independent accountants, who are
ultimately accountable to the Audit Committee. The Board of
Directors has determined that each member of the Audit Committee
is financially literate as such term is defined by
the rules of the New York Stock Exchange (NYSE) and
independent as such term is defined by the current
rules of the NYSE and the Securities and Exchange Commission.
The Audit Committee reviewed and discussed the audited financial
statements of Sonic as of and for the year ended
December 31, 2009 with management and Ernst &
Young LLP, Sonics independent accountants. Management has
the responsibility for preparing the financial statements,
certifying that Sonics financial statements are complete,
accurate, and prepared in accordance with generally accepted
accounting principles, and implementing and maintaining internal
controls and attesting to internal control over financial
reporting. The independent accountants have the responsibility
for performing an independent audit of the financial statements
in accordance with generally accepted auditing standards and
expressing an opinion on the effectiveness of internal control
over financial reporting. The Audit Committee also discussed and
reviewed with the independent accountants all matters required
by generally accepted auditing standards, including those
described in SAS No. 61, as amended (AICPA, Professional
Standards, Vol. 1 AU section 380), as adopted by the Public
Company Accounting Oversight Board (PCAOB) in
Rule 3200T. With and without management present, the Audit
Committee discussed and reviewed the results of the independent
accountants audit of the financial statements.
During 2009, the Audit Committee met twelve times, including
meetings to discuss the interim financial information contained
in each quarterly earnings announcement for the quarters ended
December 31, 2008,
7
March 31, 2009, June 30, 2009 and September 30,
2009 with the chief financial officer and the independent
accountants prior to public release. In addition, the Audit
Committee regularly monitored the progress of management and the
independent accountants in assessing Sonics compliance
with Section 404 of the Sarbanes-Oxley Act, including their
findings, required resources and progress throughout the year.
In discharging its oversight responsibility as to the audit
process, the Audit Committee received from the independent
accountants the written disclosures and the letter from the
independent accountants required by applicable requirements of
the PCAOB regarding the independent accountants
communications with the Audit Committee concerning independence
and has discussed with the independent accountant the
independent accountants independence. The Audit Committee
met separately with management, internal auditors and the
independent accountants to discuss, among other things, the
adequacy and effectiveness of Sonics internal accounting
and financial controls, the internal audit functions
organization, responsibilities, budget and staffing and reviewed
with both the independent accountants and the internal auditors
their audit plans, audit scope, and identification of audit
risks.
Based on these reviews and discussions with management and the
independent accountants, the Audit Committee recommended to the
Board and the Board approved that Sonics audited financial
statements be included in its Annual Report on
Form 10-K
for the year ended December 31, 2009 for filing with the
Securities and Exchange Commission. The Committee also
recommended the appointment of the independent accountants,
Ernst & Young LLP, as Sonics independent
accountants for the year ended December 31, 2010 and the
Board concurred in such recommendation.
Robert Heller, Chairman
William I. Belk
Victor H. Doolan
David C. Vorhoff
Compensation Committee. The Compensation
Committee administers certain compensation and employee benefit
plans of Sonic and annually reviews and determines compensation
of all executive officers of Sonic. The Compensation Committee
administers the Sonic Automotive, Inc. 1997 Stock Option Plan
(the Stock Option Plan), the Sonic Automotive, Inc.
Employee Stock Purchase Plan, the Sonic Automotive, Inc. Amended
and Restated Incentive Compensation Plan (the Incentive
Compensation Plan), the Sonic Automotive, Inc. 2004 Stock
Incentive Plan (the Stock Incentive Plan) and
certain other employee stock plans, approves individual grants
of equity-based compensation under the plans it administers and
periodically reviews Sonics executive compensation
programs and takes action to modify programs that yield payments
or benefits not closely related to Sonics or its
executives performance. The Compensation Committee also
periodically reviews compensation of non-management directors
and makes recommendations to the full Board, who determines the
amount of such compensation. In formulating its recommendation
to the full board, the Compensation Committee considers the
recommendations of management. The Board of Directors has
determined that all committee members are
independent as defined in the current listing
standards of the NYSE and the rules and regulations of the SEC.
The Compensation Committee met six times during 2009.
Nominating and Corporate Governance
Committee. The NCG Committee is responsible for
identifying individuals who are qualified to serve as directors
of Sonic and for recommending qualified nominees to the Board of
Directors for election or re-election as directors of Sonic. The
NCG Committee will consider director nominees submitted by
stockholders in accordance with the provisions of Sonics
Bylaws. The NCG Committee is also responsible for recommending
committee members and chairpersons of committees of our Board of
Directors and for establishing a system for, and monitoring the
process of, performance reviews of the Board of Directors and
its committees. Finally, the NCG Committee is responsible for
developing and recommending to the Board of Directors a set of
corporate governance principles applicable to Sonic and for
monitoring compliance with Sonics Code of Business Conduct
and Ethics. The Board of Directors has determined that all
committee members are independent as defined in the
current listing standards of the NYSE and the rules and
regulations of the SEC. The NCG Committee met four times during
2009.
The NCG Committee has a process of identifying and evaluating
potential nominees for election as members of the Board of
Directors, which includes considering recommendations by
directors and management
8
and may include engaging third party search firms to assist the
NCG Committee in identifying and evaluating potential nominees.
The NCG Committee has adopted a policy that stockholder nominees
for director will be treated the same as nominees submitted by
other directors or management.
As set forth in Sonics Bylaws, Sonics Corporate
Governance Guidelines and the charter of Sonics Nominating
and Corporate Governance Committee, the NCG Committee considers
potential nominees for directors from all sources, develops
information from many sources concerning the potential nominee,
and makes a decision whether to recommend any potential nominee
for consideration for election as a member of the Board of
Directors. Sonics qualification standards for directors
are set forth in its Corporate Governance Guidelines. These
standards include the directors or nominees:
|
|
|
|
|
independent judgment;
|
|
|
|
ability to qualify as an independent director (as
defined under applicable SEC rules and regulations and NYSE
listing standards);
|
|
|
|
ability to broadly represent the interests of all stockholders
and other constituencies;
|
|
|
|
maturity and experience in policy making decisions;
|
|
|
|
time commitments, including service on other boards of directors;
|
|
|
|
business skills, background and relevant expertise that are
useful to Sonic and its future needs;
|
|
|
|
willingness and ability to serve on committees of the board of
directors; and
|
|
|
|
other factors relevant to the NCG Committees determination.
|
As stated in Sonics Corporate Governance Guidelines, the
Board of Directors should be composed ideally of persons having
a diversity of skills, background and expertise that are useful
to Sonic and its future and ongoing needs. With this goal in
mind, when considering potential nominees for the Board of
Directors, the NCG Committee considers the standards above and
each potential nominees individual qualifications in light
of the composition and needs of the Board of Directors at such
time and its anticipated composition and needs in the future,
but a director nominee should not be chosen nor excluded based
on race, color, gender, national origin or sexual orientation.
Based on this process, the NCG Committee identified and
recommended that Messrs. O. Bruton Smith, B. Scott Smith,
David B. Smith, William I. Belk, William R. Brooks, Victor H.
Doolan, Robert Heller, Robert L. Rewey and David C. Vorhoff be
nominated for re-election to the Board of Directors. In
determining each nomination was appropriate and that each is
qualified to serve on the Board of Directors, the NCG Committee
considered the following:
Mr. William I. Belk: Mr. Belk has extensive
consumer retail experience, serving in many positions of
responsibility over a lengthy previous career in Belk Stores, a
retail department store chain in the Southeastern
U.S. controlled by the Belk family; has served on
Sonics Board of Directors, Audit Committee and
Compensation Committee for almost 12 years; and has further
served as Sonics Lead Independent Director since August
2002.
Mr. William R. Brooks: Mr. Brooks has
significant accounting and financial management expertise,
having served as Chief Financial Officer of SMI, a publicly
traded corporation, for approximately 16 years;
Mr. Brooks has further served on Sonics Board of
Directors since the companys inception in 1997; and
Mr. Brooks further serves as an officer and director of
SFC, which is the largest stockholder of Sonic.
Mr. Victor H. Doolan: Mr. Doolan has
significant expertise in the automotive industry, and
particularly in manufacturing, sales and marketing, serving
previously as President of Volvo Cars North America, as
Executive Director of the Premier Automotive Group (the luxury
division of Ford Motor Company during his tenure), and a
23-year
career with BMW culminating with his service as President of BMW
of North America; and has served on Sonics Board of
Directors, Audit Committee and Nominating and Corporate
Governance Committee since July 2005.
Mr. Robert Heller: Mr. Heller has
significant expertise in economics, business, banking and
consumer finance, having served previously as a Governor of the
Federal Reserve System, President and Chief Executive Officer of
Visa U.S.A., and as a director and Executive Vice President of
Fair, Isaac and Company; and has served on Sonics Board of
Directors, Audit Committee and Compensation Committee for more
than 10 years.
9
Mr. Robert L. Rewey: Mr. Rewey has
significant expertise in the automotive industry, and
particularly in manufacturing, sales and marketing; during a
lengthy and distinguished career with Ford Motor Company,
Mr. Rewey held numerous positions of authority, including
Group Vice President of Ford Motor Companys North American
Operations and Global Sales, Marketing and Customer Services,
President of the Ford Division, President of the Lincoln Mercury
Division; he is a director of SMI and LoJack Corporation; and
has served on Sonics Board of Directors, Compensation
Committee and Nominating and Corporate Governance Committee for
more than 8 years.
Mr. B. Scott Smith: Mr. Smith is the
Co-Founder of Sonic; has served as an executive officer and
director of Sonic since the companys inception in 1997;
has over 20 years of experience working in the automobile
dealership industry; is the son of Mr. O. Bruton Smith, the
Chairman, CEO and controlling stockholder; and owns, directly
and indirectly, a substantial percentage of Sonics
outstanding common stock that provides him with a significant
level of voting power of Sonic.
Mr. David B. Smith: Mr. Smith has over
10 years of experience working in the automobile dealership
industry; has served in several key roles as a manager and
officer of Sonic over his almost 10 years of employment
with the company; and is the son of Mr. O. Bruton Smith,
the Chairman, CEO and controlling stockholder of Sonic.
Mr. O. Bruton Smith: Mr. Smith is the
Founder of Sonic; has served as Chairman and Chief Executive
Officer of Sonic since the companys inception in 1997;
owns, directly and indirectly, a significant percentage of
Sonics outstanding common stock that provides him with
majority voting power of Sonic; and has extensive expertise in
the automotive dealership industry, having worked in the
industry since 1966.
Mr. David C. Vorhoff: Mr. Vorhoff has
significant expertise in investment banking and mergers and
acquisitions. Mr. Vorhoff is a co-founding Partner of
McColl Partners, LLC, an investment banking firm headquartered
in Charlotte, NC, and has served as a Managing Director of the
firm since its founding in 2001; prior investment banking
experience as a Managing Director of Banc of America
Securities Health Care Group and of NationsBanc Montgomery
Securities Health Care Group in NewYork, and of
NationsBank Capital Markets mergers and acquisitions group
in Charlotte; and has served on Sonics Board of Directors,
Audit Committee and Nominating and Corporate Governance
Committee since April 2007.
How to Communicate with the Board of Directors and
Non-Management Directors. Stockholders or
interested parties wishing to communicate with our Board of
Directors, or any of our individual directors, including the
lead independent director presiding over non-management
executive sessions, may do so by sending a written communication
addressed to the respective director(s), or in the case of
communications to the entire Board of Directors addressed to the
attention of Sonics Corporate Secretary, in care of Sonic
Automotive, Inc., 6415 Idlewild Road, Suite 109, Charlotte,
North Carolina 28212. Stockholders or interested parties wishing
to communicate with our non-management directors as a group may
do so by sending a written communication to William I. Belk, as
lead independent director, at this address. Any communication
addressed to any director that is received at Sonics
principal office will be delivered or forwarded to the
respective director(s) as soon as practicable. Any communication
addressed to the Board of Directors, in general, will be
promptly delivered or forwarded to each director.
Stockholder
Nominations of Directors
Stockholders may recommend a director candidate for
consideration by the NCG Committee by submitting the
candidates name in accordance with provisions of our
Bylaws that require advance notice to Sonic and certain other
information. In general, under the Bylaws, the written notice
must be received by Sonics Corporate Secretary not less
than sixty (60) and not more than ninety (90) days
prior to the annual meeting. The notice must contain, among
other things, the nominees name, date of birth, business
and residential addresses and the information that would be
required to be disclosed about the nominee pursuant to the
SECs rules in a proxy statement and, with respect to the
stockholder submitting the nomination and anyone acting in
concert with that stockholder, the name and business addresses
of the stockholder and the person acting in concert with the
stockholder, a representation that the stockholder is a record
holder of Voting Stock, a description of all arrangements,
understandings or relationships between or among the
stockholder, any person acting in concert with the stockholder
and the nominee and the class and number of shares of Voting
Stock beneficially owned by the stockholder and any person
acting in concert with that stockholder. A stockholder who is
interested in
10
recommending a director candidate should request a copy of
Sonics Bylaw provisions by writing to Stephen K. Coss,
Senior Vice President, General Counsel and Secretary, at
Sonics principal executive offices.
SELECTION
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has selected Ernst & Young LLP to
serve as the principal independent registered public accounting
firm of Sonic for the fiscal year ending December 31, 2010.
Ernst & Young LLP has acted in such capacity for Sonic
since the Audit Committee approved the engagement of
Ernst & Young LLP and the dismissal of
Deloitte & Touche LLP as Sonics principal
independent registered public accounting firm on June 9,
2008.
Ernst & Young LLPs reports on the financial
statements for each of the fiscal years ended December 31,
2008 and 2009 did not contain an adverse opinion or disclaimer
of opinion, and were not qualified or modified as to
uncertainty, audit scope or accounting principles. However, in
connection with Ernst & Young LLPs reports on
the financial statements issued in connection with their audit
for the year ended December 31, 2008, Ernst &
Young LLP included an explanatory paragraph stating that at that
time there was uncertainty related to Sonics ability to
remain in compliance with certain debt covenants through 2009
and that this conditions impact on Sonics liquidity
raised substantial doubt about Sonics ability to continue
as a going concern at the end of fiscal year 2008. During the
two fiscal years and any subsequent period preceding the date of
the dismissal of Deloitte & Touche LLP, there were no
disagreements with Deloitte & Touche LLP on any matter
of accounting principles or practices, financial statement
disclosure or auditing scope or procedures, which, if not
resolved to the satisfaction of Deloitte & Touche LLP
would have caused it to make reference to the subject matter of
the disagreements in connection with its report. During the same
periods, there were no reportable events as defined in
Item 304(a)(1)(v) of
Regulation S-K.
During the fiscal years ended December 31, 2008 and
December 31, 2009 and during any subsequent period through
the date of engagement, neither Sonic nor any person on its
behalf consulted with Ernst & Young LLP regarding any
matters or events set forth in Item 302(a)(2)(i) or
(ii) of
Regulation S-K.
Representatives of Ernst & Young LLP are expected to
be present at the Annual Meeting. They will have an opportunity
to make a statement if they so desire and are expected to be
available to respond to appropriate questions.
Stockholder ratification of the Audit Committees selection
of Ernst & Young LLP as our independent registered
public accounting firm is not required by our Bylaws or
otherwise. Nevertheless, the Board is submitting the selection
of Ernst & Young LLP to the stockholders for
ratification as a matter of good corporate practice and will
reconsider whether to retain Ernst & Young LLP if the
stockholders fail to ratify the Audit Committees
selection. In addition, even if the stockholders ratify the
selection of Ernst & Young LLP, the Audit Committee
may in its discretion appoint a different independent registered
public accounting firm at any time during the year if the Audit
Committee determines that a change is in the best interests of
Sonic.
Fees and
Services
For the fiscal years ended December 31, 2008 and 2009, fees
for services provided by Deloitte & Touche LLP and
Ernst & Young LLP were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deloitte &
|
|
Ernst &
|
|
Deloitte &
|
|
Ernst &
|
|
|
Touche LLP
|
|
Young LLP
|
|
Touche LLP
|
|
Young LLP
|
|
|
2008
|
|
2008
|
|
2009
|
|
2009
|
|
Audit Fees (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recurring Audit and Quarterly Reviews
|
|
$
|
71,560
|
|
|
$
|
1,228,500
|
|
|
|
$
|
|
|
$
|
1,098,500
|
|
Registration Statements and Related Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
190,505
|
|
Audit-Related Fees (2)
|
|
|
|
|
|
|
|
|
|
|
264,660
|
|
|
|
621,746
|
|
Tax Fees (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax Compliance Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax Planning and Advice
|
|
|
|
|
|
|
120,669
|
|
|
|
19,939
|
|
|
|
77,339
|
|
All Other Fees (4)
|
|
|
|
|
|
|
1,500
|
|
|
|
|
|
|
|
1,500
|
|
|
|
|
(1) |
|
Audit fees consist of fees billed for professional services
rendered in connection with or related to the audit of our
consolidated annual financial statements, for the review of
interim consolidated financial statements in |
11
|
|
|
|
|
Form 10-Qs,
for services normally provided in connection with statutory and
regulatory filings or engagements, including registration
statements, and for services related to compliance with
Section 404 of the Sarbanes-Oxley Act. Certain of
Ernst & Young LLPs fees will be billed in 2010
as services are rendered in connection with the audit of
Sonics financial statements for the fiscal year ended
December 31, 2009. |
|
(2) |
|
Audit-related fees consist of fees billed in the respective year
for assurance and related services reasonably related to the
performance of the audit or review of our audited or interim
consolidated financial statements and are not reported under the
heading Audit Fees. |
|
(3) |
|
Tax fees consist of fees billed in the respective year for
professional services rendered for tax compliance, tax advice
and tax planning. |
|
(4) |
|
All other fees consist of fees billed in the respective year for
products and services other than the services reported in other
categories. Other fees consist of an on-line accounting
literature service. |
The Audit Committee considers the provision of these non-audit
services to be compatible with maintaining Ernst &
Young LLPs independence.
Pre-approval
of Audit and Non-Audit Services of Independent Registered Public
Accounting Firm
The Audit Committee is responsible for pre-approving all
services provided by Sonics independent registered public
accounting firm and pre-approved all of the services provided in
2009. These services may include audit services, audit-related
services, tax services and other services. The Audit Committee
has delegated its pre-approval authority to its chairman. The
chairman in turn reports to the Audit Committee at least
quarterly on audit and non-audit services he pre-approved since
his last report.
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
2009
Executive Officer Compensation Program
The policy of the Compensation Committee is to:
|
|
|
|
|
link executive compensation to Sonics business strategy
and performance to attract, retain and reward key executive
officers;
|
|
|
|
provide performance incentives and equity-based compensation to
align the long-term interests of executive officers with those
of Sonics stockholders; and
|
|
|
|
offer salaries, incentive performance pay opportunities and
perquisites that are competitive in the marketplace.
|
Sonics executive compensation program is comprised
primarily of two components: annual cash compensation, paid in
the form of annual salary and performance-based bonuses, and
long-term compensation, paid principally in the form of
performance-based restricted shares of, and options to purchase,
Sonics Class A Common Stock. This compensation
program is designed to place emphasis on performance-based
compensation. The Compensation Committee typically reviews and
adjusts base salaries and awards of cash bonuses and
equity-based compensation in the first quarter of each year
based on several factors, including managements
recommendations approved by the Chief Executive Officer.
Managements recommendations are developed under the
supervision of the Chief Executive Officer through a
collaborative process involving members of Sonics senior
management team. The President and the Chief Financial Officer
presented managements written recommendations, reports and
proposals on 2009 compensation to the Compensation Committee.
These recommendations and proposals addressed topics such as
base salaries, overall structure, target levels and payout
levels for the annual cash bonus program under Sonics
Incentive Compensation Plan, equity awards to executive officers
and a Supplemental Executive Retirement Plan, and
managements rationale for these recommendations. The
Compensation Committee considered these recommendations before
determining compensation.
12
Annual
Cash Compensation
Annual cash compensation for Sonics executive officers
consists of a base salary and the potential for an annual
performance-based cash bonus. The annual cash compensation paid
by Sonic to its executive officers during 2009 was targeted to
be competitive principally in relation to other automotive
retailing companies (such as those included in the Peer Group
Index in the performance graph appearing in our annual report to
stockholders). While the Compensation Committee analyzes the
competitiveness of annual cash compensation paid by Sonic to its
executives in comparison to data from comparable companies, the
Compensation Committee has not adopted any specific benchmarks
for compensation of Sonics executives in comparison to
other companies. In December 2007, the Compensation Committee
engaged the Hay Group, an independent consulting firm that
specializes in executive compensation, to provide an analysis of
the competitiveness of annual cash compensation paid by Sonic to
its executives and to advise on 2008 executive officer
compensation based on two peer groups selected by the Hay Group,
one consisting of the auto retail sector and the second a
broader group consisting of the auto retail sector plus several
other companies identified by Hay Group as comparable to Sonic.
In its report, Hay Group provided a comparison of financial and
operating metrics; a comparison of base salary, total cash
compensation and total direct compensation of each executive
officer; a performance analysis of total shareholder return for
one year and three years, sales growth, compounded EBIT and
return on investment and a competitive analysis of the
compensation structure of Sonics Chief Executive Officer,
President and Chief Financial Officer. The Compensation
Committee referred to this report when determining executive
compensation for 2008 and also in 2009. The Compensation
Committee also considered the compensation of executives of some
retail companies not included in the Peer Group Index, including
Advance Auto Parts, Inc., AutoZone, Inc., Circuit City Stores,
Inc., Dollar Tree Stores, Inc., Family Dollar Stores, Inc.,
Genuine Parts Co., Hertz Global Holding, Inc., IKON Office
Solutions and Office Depot, Inc. In preparation for determining
executive compensation for 2010, the Compensation Committee
again engaged Hay Group in July 2009 to provide an analysis of
the competitiveness of base salaries, total cash compensation
(base salary plus cash bonus) and total direct compensation
(total cash compensation plus the value of long-term
incentives), as well as a review of perquisites and executive
benefits, paid by Sonic to its executive officers in comparison
to Sonics publicly traded automotive retail peer companies
(Asbury Automotive Group, Inc., AutoNation, Inc., CarMax, Inc.,
Group 1 Automotive, Inc., Lithia Motors, Inc., and Penske
Automotive Group, Inc.) and certain other companies recommended
by Hay Group as appropriate for comparison (Advance Auto Parts,
Inc., AutoZone, Inc., Avis-Budget Group, Inc., Dollar Tree
Stores, Inc., Family Dollar Stores, Inc., Genuine Parts Co.,
Hertz Global Holdings, Inc. and The Pep Boys Manny,
Moe & Jack).
Annual
Salary
The base salaries of Sonics executive officers and
adjustments to executive officers base salaries are
generally based upon a subjective evaluation of the
executives performance by the Compensation Committee,
executive compensation of comparable companies and
managements recommendations. The Compensation
Committees evaluation is based upon non-quantitative
factors such as the current responsibilities of each executive
officer, the compensation of similarly situated executive
officers of comparable companies, the performance of each
executive officer during the prior calendar year (including
subjective and objective evaluations of the performance of
business units and functions under the particular
executives supervision), and competitive factors and
retention purposes. In February 2009, the Compensation Committee
approved an increase in the annual base salary of Mr. David
Smith to $605,000 retroactive to January 1, 2009, in
consideration of his recent promotion by Sonics Board of
Directors to the position of Executive Vice President, his
current responsibilities in that executive officer position, and
the compensation of similarly situated officers of Sonic. The
Compensation Committee did not adjust the base salaries of any
other executive officer for fiscal 2009.
Performance-Based
Cash Bonuses
During 2009, Messrs. Bruton Smith, Scott Smith, Cosper,
Dyke and David Smith participated in the Sonic Automotive, Inc.
Incentive Compensation Plan (the Incentive Compensation
Plan). Compensation under the Incentive Compensation Plan
is intended to provide highly-qualified executives and other key
employees with an incentive to devote their best efforts to
Sonic and enhance the value of Sonic for the benefit of
stockholders. After consideration of managements
recommendations, in March 2009, the Compensation Committee
established
13
objective, performance-based goals and potential bonus award
amounts for Messrs. Bruton Smith, Scott Smith, Cosper, Dyke
and David Smith for the performance period beginning
January 1, 2009 and ending December 31, 2009, with
annual cash bonuses (if any) to be paid as soon as
administratively practicable following the Compensation
Committees determination of the extent to which the
specified performance goals were achieved. The amount of
potential performance-based cash bonus for these individuals was
based on a percentage of their respective annual base salary at
the time the performance criteria were established. The
Compensation Committee established two categories of performance
goals for each of the executive officers: defined earnings per
share (EPS) levels and customer satisfaction
performance for Sonics dealerships in specified major
brands.
EPS was selected as the primary performance goal with the
objective to closely align the executive officers cash
bonuses with profitability delivered to Sonics
stockholders during 2009. For purposes of the Incentive
Compensation Plan performance goals in 2009, EPS was defined as
(A) Sonics net income determined in accordance with
U.S. generally accepted accounting principles
(GAAP), adjusted to fix the income tax rate on
continuing and discontinued operations at 40.0% and to take into
account the timing of the disposition of dealerships during 2009
such that the budget and actual performance of dealerships
disposed of during 2009 shall be included in the calculation
only for the period up to the date of such disposition, and
excluding the effects of (i) any gain or loss recognized by
Sonic on the disposition of dealerships (including asset or
lease impairment charges related to a decision to sell a
particular dealership), (ii) asset write-downs and
impairment charges, (iii) any adjustments to the estimated
goodwill impairment charge recorded in the fourth quarter of
2008, (iv) debt restructuring charges and costs and
(v) the cumulative effect of any changes in GAAP during
2009, divided by (B) a diluted weighted average share count
of 40,000,000 shares. Giving consideration to the severely
negative economic conditions, credit market conditions and auto
retail industry conditions prevailing in late 2008 and early
2009, and the difficulty in forecasting the timing and extent of
a future recovery in the U.S. economy and vehicle sales,
the Committee determined that for the 2009 cash bonus program,
the EPS minimum, target and maximum objectives would be
determined by reference to the actual volume of industry-wide
new vehicles sold in the United States during the 2009 calendar
year as reported by Autodata Corporation (the 2009
Industry Volume Level). The performance objectives
established for defined EPS levels applicable to each of
Messrs. Bruton Smith, Scott Smith, Cosper, Dyke and David
Smith were established by the Compensation Committee on
March 30, 2009 as follows: for a 2009 Industry Volume Level
of 9.0 million, the target EPS objective was $0.00, the
maximum EPS objective was $0.02 and there would be no EPS bonus
payable for less than the target EPS objective; for a 2009
Industry Volume Level of 10.0 million, the minimum EPS
objective was $0.06, the target EPS objective was $0.07 and the
maximum EPS objective was $0.08; and for a 2009 Industry Volume
Level of 11.0 million, the minimum EPS objective was $0.32,
the target EPS objective was $0.40 and the maximum objective was
$0.44. The EPS-Based bonus payable was computed as a percentage
of the respective executive officers annual base salary,
with no bonus paid for performance below the minimum objective
for defined EPS (and at a 2009 Industry Volume Level of
9.0 million, no EPS bonus paid below the target EPS
objective); a bonus of 35% of annual base salary for achieving
the minimum objective for defined EPS; a bonus of 95% of annual
base salary for achieving the target objective for defined EPS;
and a maximum bonus of 130% of annual base salary for achieving
the maximum objective for defined EPS. For performance achieved
that fell between two defined objectives, the Compensation
Committee determined that the bonus payable would equal a pro
rata amount of the bonus level between the two applicable
defined objectives. The bonus payable would not exceed 130% of
annual base salary for performance achieved above the maximum
objective. In addition, if Sonics achieved defined EPS for
2009 was less than the break-even level of $0.00, or a loss, no
EPS bonus would be paid pursuant to the Incentive Compensation
Plan, regardless of the 2009 Industry Volume Level. The target
objective for defined EPS established by the Committee at
specified 2009 Industry Volume Levels were selected to align
closely with the mid-point of the range of managements
internal forecast at such time for net income from continuing
operations for 2009 at the specified 2009 Industry Volume
Levels, giving effect to managements internal forecast at
such time for anticipated loss from discontinued operations for
2009, other anticipated relevant information, and fixing the
share count at managements forecast at such time for
diluted weighted average share count for 2009. After
establishing the target objectives for the specified 2009
Industry Volume Levels, the minimum objectives for defined EPS
at the specified 2009 Industry Volume Levels were established at
80% of the target objective at such specified 2009 Industry
Volume Level, and the maximum objectives for defined EPS at the
specified 2009 Industry Volume Levels were established at 110%
of the target
14
objective at such specified 2009 Industry Volume Level. In
establishing these bonus award amounts and performance goals,
the Compensation Committee expressly reserved the right to
reduce bonus awards in the event that the Compensation Committee
determined that subjective or other factors warranted a
reduction.
Customer satisfaction (CSI) performance in specified
major brands was selected as the other performance goal in order
to align the executive officers cash bonuses with two
other important company goals: meeting the expectations of our
dealership customers and meeting the expectations of our
manufacturers. The CSI performance objective was based on the
percentage of Sonics dealerships in specified major
brands, as reported by the applicable manufacturer, which met or
exceeded their applicable manufacturers objective CSI
standard for approval of dealership acquisitions for the
performance period ending as of December 31, 2009. Only
dealerships owned by Sonic for the entire 2009 calendar year
were to be included in determining achievement of the CSI
performance goals. The performance objectives established for
CSI performance applicable to each of Messrs. Bruton Smith,
Scott Smith, Cosper, Dyke and David Smith were established by
the Compensation Committee on March 30, 2009 as follows: no
bonus paid for performance below the minimum objective of 65% of
such dealerships achieving the requisite CSI performance; a
bonus of 10% of annual base salary for achieving the minimum
objective of 65% of such dealerships achieving the requisite CSI
performance; a bonus of 20% of annual base salary for achieving
the target objective of 70% of such dealerships achieving the
requisite CSI performance; and a maximum bonus of 30% of annual
base salary for achieving the maximum objective of 75% of such
dealerships achieving the requisite CSI performance. For
performance achieved that fell between two defined objectives,
the Compensation Committee determined that the bonus payable
would equal a pro rata amount of the bonus level between the two
applicable defined objectives. For performance achieved above
the maximum objective, the bonus payable for the CSI component
would be capped out at 30% of annual base salary. In
establishing these bonus award amounts and performance goals,
the Compensation Committee expressly reserved the right to
reduce bonus awards in the event that the Compensation Committee
determined that subjective or other factors warranted a
reduction. In establishing the potential bonus awards for each
executive officer, the Compensation Committee chose to more
heavily weight the EPS component to more closely tie the
executives bonus to the profitability the stockholders
receive. Consistent with the terms of the Incentive Compensation
Plan in effect at such time, the Compensation Committee also
capped the aggregate cash bonus payable to any executive officer
at a $3 million maximum amount.
On February 26, 2010, based on managements report
regarding Sonics performance against the performance-based
goals, the Compensation Committee certified that the objective,
performance-based criteria for the defined EPS component had
been met at the maximum objective level because Sonic achieved a
defined EPS of $0.70 for a 2009 Industry Volume Level of
10.4 million and the CSI component had been met at the
maximum objective level because 82.0% of the applicable
dealerships had met or exceeded the requisite CSI performance.
This resulted in bonuses for each criterion as follows: 130% of
annual base salary for the defined EPS component and 30% of
annual base salary for the CSI component. As a result, the
Compensation Committee authorized award amounts for each of the
executive officers for the specified levels of achievement
within those performance categories in the following amounts:
$1,760,000 for Bruton Smith; $1,520,000 for Scott Smith,
$1,120,000 for David Cosper, $1,200,000 for Jeff Dyke and
$968,000 for David Smith. The Compensation Committee approved
payment of these award amounts on or promptly after
February 26, 2010.
Long-term
Equity Compensation
The Compensation Committee believes that equity-based
compensation is an effective means of aligning the long-term
interests of Sonics key officers and employees with those
of its stockholders and provides incentives to attract and
retain and to encourage equity ownership by key officers and
employees providing service to Sonic and its subsidiaries upon
whose efforts Sonics success and future growth depends.
Sonics long-term compensation program is based principally
upon awards of performance-based restricted shares of and
options to purchase Sonics Class A Common Stock under
the Sonic Automotive, Inc. 1997 Stock Option Plan (the
Stock Option Plan) and the Sonic Automotive, Inc.
2004 Stock Incentive Plan (the Stock Incentive
Plan). Awards of stock options or restricted stock are
based upon a subjective evaluation of the executives
performance by the Compensation Committee and managements
recommendations submitted to the Compensation Committee. The
Compensation Committees evaluation considers a number of
non-quantitative factors, including the responsibilities of the
15
individual officers for and contribution to Sonics
operating results (in relation to other recipients of Sonic
equity awards), and their expected future contributions, as well
as prior awards to the particular executive officer.
In March 2009, giving consideration to the very difficult
economic environment for the automobile retail industry, the
difficulty in forecasting anticipated EPS during the 2009
calendar year for purposes of performance-based restricted stock
and restricted stock unit grants, and the potential dilutive
impact of restricted stock and restricted stock unit grants
consistent in dollar value to historical grants to Sonics
executive officers at the low market stock price for Sonic at
the time (closing price of $1.81 per share on March 30,
2009), the Compensation Committee determined it was in the best
interests of Sonics stockholders to grant stock options to
executive officers of Sonic for the 2009 calendar year rather
than performance-based restricted stock and restricted stock
units. On March 30, 2009, the Compensation Committee
awarded stock options to purchase shares of Class A common
stock in the following amounts: Mr. O. Bruton Smith,
183,333; Mr. B. Scott Smith, 158,333; Mr. David
Cosper, 116,667; Mr. Jeff Dyke, 125,000; and Mr. David
Smith, 100,833. The stock options have an exercise price equal
to the closing stock price on the date of grant ($1.81) and vest
in three equal annual installments beginning on the first
anniversary of the date of grant. In December 2009, the
Compensation Committee again evaluated the form of equity
compensation grants to executive officers, and, after giving
consideration to the more stabilized economic conditions,
automotive industry conditions and market valuation of
Sonics stock, has determined to return to awards of
performance-based restricted stock and restricted stock units to
the executive officers during 2010.
For additional details concerning the options and restricted
stock granted to and held by the executive officers during the
2009 calendar year, see Compensation of Executive
Officers, Grants of Plan-Based Awards During
2009, Outstanding Equity Awards at Fiscal
2009 Year-End and Option Exercises and
Stock Vested During 2009.
Deferred
Compensation Plan and Other Benefits
Executive officers of Sonic (including the Chief Executive
Officer) were also eligible to participate in the Sonic
Automotive, Inc. Deferred Compensation Plan (the Deferred
Plan) during the 2009 calendar year. For 2009, executive
officers could elect to defer a portion of their annual cash
compensation, up to 75% of base salary and up to 100% of
eligible incentive bonus amounts. During 2009, Sonic made cash
matching contributions of 20% of the amount deferred by the
employee, not to exceed $10,000 per year in matching
contributions, but Sonic has since suspended such cash matching
contributions effective January 1, 2010. Sonic may also
make supplemental contributions for eligible employees to make
up for the additional matching contributions the employees would
have received under Sonics 401(k) plan in the absence of
legal limitations on the amount of compensation that could be
considered under the 401(k) plan (e.g., $245,000 for 2009).
Sonics contributions generally vest based on an
employees full years of Deferred Plan participation with
20% vesting for each year so that an employee is fully vested
after five years of participation. Participation in the Deferred
Plan is offered annually to a select group of our management and
highly compensated employees. Contributions by participants in
the Deferred Plan, including the executive officers, are
credited with a rate of return (positive or negative) based on
deemed investments selected by a participant from among several
different investment funds offered by the third-party
administrator of the Deferred Plan, with such deemed earnings
determined by the actual market performance of the investment
funds selected by the participant. Messrs. Scott Smith and
Cosper were participants in the Deferred Plan during 2009, and
Mr. Cosper received Company contributions, the amount of
which is reflected in the All Other Compensation
column for the particular executive officer in
Compensation of Executive OfficersSummary
Compensation Table. Please see the discussion under
Nonqualified Deferred Compensation Plans for
2009 for further information about the Deferred Plan.
Each of the executive officers of Sonic was also afforded the
use of company demonstrator vehicles for personal use during
2009. Personal use of company vehicles is a common competitive
perquisite afforded to executives in the automobile dealership
industry with both publicly-held and privately-owned dealership
companies. During 2009, each of Messrs. Bruton Smith, Scott
Smith, Cosper, David Smith and Dyke was afforded the use of
Company vehicles for personal use, the imputed value of which
was $87,378 for Mr. Bruton Smith and $35,427 for
Mr. Scott Smith, and the imputed value for such other
executive officers is reflected in the All Other
Compensation column for the particular executive officer
in Compensation of Executive OfficersSummary
Compensation Table.
16
Executive officers of Sonic (including the Chief Executive
Officer) were also eligible in 2009 to participate in various
benefit plans on similar terms to those provided to other
employees of Sonic. These benefit plans provided to employees of
Sonic, including the executive officers, are intended to provide
a safety net of coverage against various events, such as death,
disability and retirement.
Supplemental
Executive Retirement Plan
On December 7, 2009, the Compensation Committee approved
and adopted the Sonic Automotive, Inc. Supplemental Executive
Retirement Plan (the SERP) to be effective as of
January 1, 2010. In connection with the adoption of the
SERP, the Compensation Committee authorized the establishment of
an irrevocable grantor trust known as a rabbi trust
for the purpose of accumulating assets from which SERP
liabilities may be paid.
The SERP is a nonqualified deferred compensation plan that will
be unfunded for federal tax purposes. The SERP is intended to be
a top hat plan available only to a select group of
management or highly compensated employees. The SERP is subject
to Section 409A of the Internal Revenue Code (the
Code). The purpose of the SERP is to attract and
retain key employees by providing a retirement benefit in
addition to the benefits provided by Sonics tax-qualified
and other nonqualified deferred compensation plans. The
Compensation Committee designates the employees who will become
SERP participants and may require that such employees execute a
participation agreement as a condition of participation. On
December 7, 2009, the Compensation Committee designated
David P. Cosper, Vice Chairman and Chief Financial Officer, and
Jeff Dyke, Executive Vice President of Operations, as
Tier 1 participants in the SERP effective as of
January 1, 2010, but in each case subject to his execution
of a participation agreement. The Compensation Committee also
administers the SERP and has the discretionary authority to
make, amend, interpret and enforce appropriate rules for the
administration of the SERP and to utilize its discretion to
decide all questions and interpretations that may arise in
connection with the SERP.
Upon a participants normal retirement, the
SERP generally provides an accrued benefit in the form of an
annual payment equal to a specified percentage of the
participants final average salary for a period
of 15 years. Final average salary generally means the
average of the participants highest three annual base
salaries during the last five plan years prior to the
participants separation from service with Sonic. A
participant is generally eligible for the normal retirement
benefit upon retirement after reaching age 65 or
age 55 with at least 10 years of employment with
Sonic. When the Compensation Committee designates an employee as
a SERP participant, it also designates the employee as a
Tier 1 participant, Tier 2 participant or Tier 3
participant. The annual payments to a Tier 1 participant
are 50% of final average salary. The annual payments to a
Tier 2 participant are 40% of final average salary. The
annual payments to a Tier 3 participant are 35% of final
average salary.
Participants are subject to a vesting schedule for their SERP
benefits based on their Years of Plan Service (i.e.,
a 365-day
period of employment beginning on the effective date of
participation and each anniversary thereof). Unless otherwise
specified by the Compensation Committee, participants vest in
their SERP benefits as follows:
|
|
|
Years of Plan Service
|
|
Percent Vested
|
|
Less than 1
|
|
0%
|
At least 1 but less than 2
|
|
20%
|
At least 2 but less than 3
|
|
40%
|
At least 3 but less than 4
|
|
60%
|
At least 4 but less than 5
|
|
80%
|
5 or more
|
|
100%
|
17
However, Mr. Cosper will vest in his SERP benefits as
follows:
|
|
|
Years of Plan Service
|
|
Percent Vested
|
|
Less than 2
|
|
0%
|
At least 2 but less than 4
|
|
20%
|
At least 4 but less than 6
|
|
50%
|
At least 6 but less than 8
|
|
75%
|
8 or more
|
|
100%
|
Participants also become 100% vested upon normal retirement,
death while employed with Sonic, disability (as defined in the
SERP) while employed with Sonic or a change in control (as
defined in the SERP) while employed with Sonic.
If a participant leaves Sonic before qualifying for normal
retirement, the participants accrued benefit generally is
reduced for early retirement (in addition to application of the
vesting schedule). The benefit is reduced by 10% for each year
the participants payment commencement date precedes the
earliest date the participant would have been eligible for
normal retirement. The reduction for early retirement does not
apply to Mr. Cosper.
Generally, payment of benefits begins the first of the month
following the month in which normal retirement or early
retirement occurs. If the participant is a specified
employee under Section 409A of the Code, the first
payment following normal or early retirement generally must be
postponed for six months following termination. Subsequent
annual payments will be paid on the anniversary of the date the
initial installment otherwise would have been made.
If a participant terminates employment with Sonic within
2 years after a change in control, the participant will
receive his normal retirement benefit or reduced early
retirement benefit, as applicable, in a lump sum payment based
on the present value of his unpaid, vested accrued benefit.
If a participant dies during the
15-year
payment period, payments continue to the participants
surviving spouse (if any). If a participant dies before
terminating employment with Sonic, the lump sum value of his
accrued benefit (calculated as if the date of death were the
date of normal retirement) will be paid to his designated
beneficiary. If a participant becomes disabled while employed
with Sonic, the participant will be entitled to a regular SERP
benefit payable for 15 years (calculated as if the date of
disability were the date of normal retirement).
If a participant is terminated for cause or it is
discovered after termination that the participant could have
been terminated for certain reasons constituting
cause, the participant will forfeit all benefits
under the SERP, including any remaining unpaid benefits if
already in pay status. If already in pay status, the SERP also
provides that the participant must repay Sonic all benefit
amounts previously received. Under the SERP, reasons
constituting cause include material breach of the
participants obligations in any employment agreement which
is not timely remedied, the participants breach of any
applicable restrictive covenants, conviction of a felony,
actions involving moral turpitude, willful failure to comply
with reasonable and lawful directives of Sonics Board of
Directors or the participants superiors, chronic
absenteeism, willful or material misconduct, illegal use of
controlled substances, and if applicable, the final and
non-appealable determination by a court of competent
jurisdiction that the participant willfully and knowingly filed
a fraudulent certification under Section 302 of the
Sarbanes-Oxley
Act.
In addition, the SERP provides that benefits are forfeited if a
participant fails to comply with certain restrictive covenants
related to Sonic and its business, including any remaining
unpaid benefits if already in pay status. If already in pay
status, the SERP also provides that the participant must repay
Sonic all benefit amounts previously received. Subject to
limited exceptions, these restrictive covenants generally
prohibit (i) disclosing or using in any unauthorized manner
any of Sonics confidential or proprietary information,
(ii) employing or soliciting employees of Sonic, its
affiliates or subsidiaries, (iii) interfering with
Sonics relationships with its vendors, (iv) competing
with Sonic within any Standard Metropolitan Statistical Area or
county in which Sonic or any of its subsidiaries has a place of
business, and (v) disparaging Sonic, its subsidiaries,
affiliates, officers, directors, business or products. These
restrictive covenants generally apply while a participant in the
SERP, and if later, during the two-year period following
separation from service with Sonic (except that the
confidentiality and non-disparagement restrictions do not
expire).
18
If a rabbi trust exists at the time of a change in control of
Sonic, the SERP requires that Sonic contribute, at the time of
the change in control and then on each anniversary thereof, cash
or liquid securities sufficient so that the value of assets in
the rabbi trust at least equals the total value of all accrued
benefits under the SERP.
The Compensation Committee retains the discretion to amend or
terminate the SERP at any time (provided that an amendment
generally cannot reduce a participants vested accrued
benefits as of the date of the amendment). The SERP can be
terminated and liquidated as permitted by Section 409A of
the Code.
Federal
Income Tax Considerations
As noted above, the compensation paid to Sonics executive
officers is based primarily on the performance of Sonic.
Section 162(m) of the Internal Revenue Code of 1986, as
amended (the Code) generally limits Sonics
annual federal income tax deduction for compensation paid to
certain covered employees (generally, the Chief Executive
Officer and certain other executive officers subject to
Section 162(m) of the Code) to $1 million with respect
to each such executive officer, unless the compensation
qualifies as performance-based. Executive officer
compensation attributable to the exercise of stock options
granted under the Stock Option Plan and Stock Incentive Plan,
awards of performance-based restricted stock or
performance-based restricted stock units pursuant to the Stock
Incentive Plan and annual cash bonuses paid under the Incentive
Compensation Plan generally are intended to qualify as fully
deductible performance-based compensation. The Compensation
Committee intends to continue to manage Sonics executive
compensation program in a manner that will preserve federal
income tax deductions. However, the Compensation Committee also
must approach executive compensation in a manner which will
attract, motivate and retain key personnel whose performance
increases the value of Sonic. Accordingly, the Compensation
Committee may from time to time exercise its discretion to award
compensation that may not be deductible under
Section 162(m) of the Code when in its judgment such award
would be in the interests of Sonic.
Compensation
Committee Report
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis required by
Item 402(b) of SEC
Regulation S-K
with management and, based on such review and discussions,
recommended to the Board of Directors that the Compensation
Discussion and Analysis be included in Sonics Annual
Report on
Form 10-K
for the fiscal year ended December 31, 2009 and this Proxy
Statement.
Robert L. Rewey, Chairman
William I. Belk
Victor H. Doolan
Robert Heller
19
Compensation
of Executive Officers
The following table sets forth compensation paid by or on behalf
of Sonic to the principal executive officer and principal
financial officer of Sonic and to Sonics other named
executive officers for services rendered during Sonics
fiscal years ended December 31, 2007, December 31,
2008 and December 31, 2009:
Summary
Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Plan
|
|
Compensation
|
|
All Other
|
|
|
|
|
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Earnings
|
|
Compensation
|
|
Total
|
Name and Principal Position(s)
|
|
Year
|
|
($)
|
|
($)
|
|
($)(1)
|
|
($)(1)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
O. Bruton Smith
|
|
|
2009
|
|
|
$
|
1,100,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
181,500
|
|
|
$
|
1,760,000
|
|
|
$
|
|
|
|
$
|
87,378
|
(4)
|
|
$
|
3,128,878
|
|
Chairman, Chief Executive
|
|
|
2008
|
|
|
|
1,100,000
|
|
|
|
|
|
|
|
855,450
|
(2)
|
|
|
|
|
|
|
330,000
|
|
|
|
|
|
|
|
93,042
|
|
|
|
2,378,492
|
|
Officer and Director
|
|
|
2007
|
|
|
|
1,100,000
|
|
|
|
|
|
|
|
580,800
|
(3)
|
|
|
393,300
|
|
|
|
1,117,935
|
|
|
|
|
|
|
|
108,811
|
|
|
|
3,300,846
|
|
(principal executive officer)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B. Scott Smith
|
|
|
2009
|
|
|
$
|
950,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
156,750
|
|
|
$
|
1,520,000
|
|
|
$
|
|
|
|
$
|
35,427
|
(5)
|
|
$
|
2,662,177
|
|
President, Chief Strategic
|
|
|
2008
|
|
|
|
950,000
|
|
|
|
|
|
|
|
684,360
|
(2)
|
|
|
|
|
|
|
285,000
|
|
|
|
|
|
|
|
43,034
|
|
|
|
1,962,394
|
|
Officer and Director
|
|
|
2007
|
|
|
|
950,000
|
|
|
|
|
|
|
|
464,640
|
(3)
|
|
|
314,640
|
|
|
|
965,489
|
|
|
|
|
|
|
|
101,136
|
|
|
|
2,795,905
|
|
(Vice Chairman, Chief Strategic Officer and Director through
March 13, 2007)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David P. Cosper
|
|
|
2009
|
|
|
$
|
700,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
115,500
|
|
|
$
|
1,120,000
|
|
|
$
|
|
|
|
$
|
36,573
|
(6)
|
|
$
|
1,972,074
|
|
Vice Chairman and Chief
|
|
|
2008
|
|
|
|
700,000
|
|
|
|
|
|
|
|
427,725
|
(2)
|
|
|
|
|
|
|
210,000
|
|
|
|
|
|
|
|
36,286
|
|
|
|
1,374,011
|
|
Financial Officer
|
|
|
2007
|
|
|
|
600,000
|
|
|
|
|
|
|
|
1,258,400
|
(3)
|
|
|
174,800
|
|
|
|
609,783
|
|
|
|
|
|
|
|
32,180
|
|
|
|
2,675,163
|
|
(Executive Vice President, Chief Financial Officer and Treasurer
through March 13, 2007)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(principal financial officer)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David B. Smith
|
|
|
2009
|
|
|
$
|
605,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
99,825
|
|
|
$
|
968,000
|
|
|
$
|
|
|
|
$
|
25,337
|
(7)
|
|
$
|
1,698,162
|
|
Executive Vice President (beginning
|
|
|
2008
|
|
|
|
400,000
|
|
|
|
|
|
|
|
154,209
|
(2)
|
|
|
|
|
|
|
120,000
|
|
|
|
|
|
|
|
20,274
|
|
|
|
694,483
|
|
October 2008) and Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeff Dyke
|
|
|
2009
|
|
|
$
|
750,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
123,750
|
|
|
$
|
1,200,000
|
|
|
$
|
|
|
|
$
|
13,500
|
(8)
|
|
$
|
2,087,250
|
|
Executive Vice President of
|
|
|
2008
|
|
|
|
656,250
|
|
|
|
225,000
|
|
|
|
285,150
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,820
|
|
|
|
1,184,220
|
|
Operations (beginning October 2008)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Both Stock and Option Awards are valued based on the grant date
fair value as calculated under the provisions of Stock
Compensation, in the Accounting Standards Codification.
The Stock and Option Awards vest in various increments over a
three-year period. See Note 10 to Sonics Consolidated
Financial Statements included in its Annual Report on
Form 10-K
for the year ending December 31, 2009 for the valuation
assumptions used in determining the fair value of the awards. |
|
(2) |
|
Represents the grant date fair value of the maximum grant, which
was believed at the time of grant to be probable. These Stock
Awards were forfeited in their entirety based on final
certification of performance targets for 2008. |
|
(3) |
|
Represents the grant date fair value of the maximum grant, which
was believed at the time of grant to be probable. These Stock
Awards were reduced based on final certification of performance
targets for 2007 to the following amounts: O. Bruton Smith to
$563,376; B. Scott Smith to $450,701; and David P. Cosper to
$1,249,688. |
|
(4) |
|
The perquisites for O. Bruton Smith include the imputed value of
demo vehicles provided by the Company. The imputed value of the
demo vehicles was $87,378. The value assigned to the demo
vehicles was calculated under rules established by the Internal
Revenue Service. The incremental cost of demo vehicles is not
calculable because those vehicles are provided to the executive
by our dealership subsidiaries. |
|
(5) |
|
The perquisites for B. Scott Smith include the imputed value of
Company-provided demo vehicles. The imputed value of the demo
vehicles was $35,427. The value assigned to the demo vehicles
was calculated under rules established by the Internal Revenue
Service. The incremental cost of demo vehicles is not calculable
because those vehicles are provided to the executive by our
dealership subsidiaries. |
20
|
|
|
(6) |
|
The perquisites for David P. Cosper include the imputed value of
demo vehicles provided by the Company and Company matching and
supplemental contributions under the Nonqualified Deferred
Compensation Plan. The incremental cost of demo vehicles is not
calculable because those vehicles are provided to the executive
by our dealership subsidiaries. |
|
(7) |
|
The perquisites for David B. Smith include the imputed value of
demo vehicles provided by the Company. The incremental cost of
demo vehicles is not calculable because those vehicles are
provided to the executive by our dealership subsidiaries. |
|
(8) |
|
The perquisites for Jeff Dyke include the imputed value of demo
vehicles provided by the Company. The incremental cost of demo
vehicles is not calculable because those vehicles are provided
to the executive by our dealership subsidiaries. |
Grants of
Plan-Based Awards During 2009
The following table sets forth information regarding all grants
of awards made to the named executive officers during 2009 under
any plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Exercise
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Awards:
|
|
or Base
|
|
Closing
|
|
Date Fair
|
|
|
|
|
Estimated Future Payouts Under
|
|
Estimated Future Payouts Under
|
|
Number of
|
|
Number of
|
|
Price of
|
|
Market
|
|
Value of
|
|
|
|
|
Non-Equity Incentive Plan Awards(1)
|
|
Equity Incentive Plan Awards
|
|
Shares of
|
|
Securities
|
|
Option
|
|
Price on
|
|
Stock and
|
|
|
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Stock or
|
|
Underlying
|
|
Awards
|
|
Grant
|
|
Option
|
Name
|
|
Grant Date
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
Units (#)
|
|
Options (#)
|
|
($/Sh)
|
|
Date
|
|
Awards
|
|
O. Bruton Smith
|
|
|
3/30/2009
|
(2)
|
|
$
|
495,000
|
|
|
$
|
1,265,000
|
|
|
$
|
1,760,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/30/2009
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
183,333
|
|
|
$
|
1.81
|
|
|
$
|
1.81
|
|
|
$
|
181,500
|
(4)
|
B. Scott Smith
|
|
|
3/30/2009
|
(2)
|
|
$
|
427,500
|
|
|
$
|
1,092,500
|
|
|
$
|
1,520,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/30/2009
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
158,333
|
|
|
$
|
1.81
|
|
|
$
|
1.81
|
|
|
$
|
156,750
|
(4)
|
David P. Cosper
|
|
|
3/30/2009
|
(2)
|
|
$
|
315,000
|
|
|
$
|
805,000
|
|
|
$
|
1,120,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/30/2009
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
116,667
|
|
|
$
|
1.81
|
|
|
$
|
1.81
|
|
|
$
|
115,500
|
(4)
|
David B. Smith
|
|
|
3/30/2009
|
(2)
|
|
$
|
272,250
|
|
|
$
|
695,750
|
|
|
$
|
968,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/30/2009
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,833
|
|
|
$
|
1.81
|
|
|
$
|
1.81
|
|
|
$
|
99,825
|
(4)
|
Jeff Dyke
|
|
|
3/30/2009
|
(2)
|
|
$
|
337,500
|
|
|
$
|
862,500
|
|
|
$
|
1,200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/30/2009
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
125,000
|
|
|
$
|
1.81
|
|
|
$
|
1.81
|
|
|
$
|
123,750
|
(4)
|
|
|
|
(1) |
|
Amounts earned for 2009 are set forth in the Summary
Compensation Table. |
|
(2) |
|
Grants issued pursuant to the Incentive Compensation Plan. |
|
(3) |
|
Grants issued pursuant to the Stock Incentive Plan. |
|
(4) |
|
Option Awards are valued based on the grant date fair value as
calculated under the provisions of Stock
Compensation, in the Accounting Standards Codification.
The Option Awards vest in equal annual installments over a
three-year period. See Note 10 to Sonics Consolidated
Financial Statements included in its Annual Report on
Form 10-K
for the year ending December 31, 2009 for the valuation
assumptions used in determining the fair value of the awards. |
For a description of additional terms of the compensation and
grants disclosed in the tables above, see
Compensation Discussion and Analysis.
Employment
Agreements
Sonic has an employment agreement (the Employment
Agreement) with Mr. Cosper. Under the Employment
Agreement, Sonic agreed to employ Mr. Cosper through
March 2, 2009, subject to automatic extension for
successive one-year periods. The Employment Agreement sets forth
the basic terms of employment for Mr. Cosper, including
provisions for annual base salary, annual performance-based cash
bonus and eligibility to participate in Sonics equity
compensation plans and benefit programs.
The Employment Agreement contains restrictive covenants that
prohibit, during periods defined in the Employment Agreement and
subject to certain limited exceptions, Mr. Cosper from
(i) competing with Sonic, (ii) employing or soliciting
Sonics employees, (iii) interfering with Sonics
relationships with its customers or vendors and
(iv) disclosing or using in an unauthorized manner any of
Sonics confidential or proprietary
21
information. Sonic will not be obligated to pay Mr. Cosper
any applicable severance if he violates the
non-competition
provisions of his Employment Agreement. These restrictive
covenants generally apply for a period of two years following
the later of the expiration or termination of employment under
the Employment Agreement. The restrictive covenants limit
Mr. Cospers competitive activities within any
Standard Metropolitan Statistical Area or county in which Sonic
has a place of business on the date of expiration or termination
of the Employment Agreement.
For a description of additional terms of the Employment
Agreements, see Potential Payments Upon Termination
or
Change-in-Control.
Outstanding
Equity Awards at Fiscal 2009 Year-End
The following table sets forth information concerning
outstanding equity awards for each executive officer as of
December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding Equity Awards at Fiscal Year-End
|
|
|
|
|
Option Awards(1)
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
Awards:
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
Market or
|
|
|
|
|
|
|
|
|
Incentive Plan
|
|
|
|
|
|
|
|
Market
|
|
Number of
|
|
Payout Value
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
Number of
|
|
Value of
|
|
Unearned
|
|
of Unearned
|
|
|
|
|
Number of
|
|
Number of
|
|
Number of
|
|
|
|
|
|
Shares or
|
|
Shares or
|
|
Shares,
|
|
Shares,
|
|
|
|
|
Securities
|
|
Securities
|
|
Securities
|
|
|
|
|
|
Units of
|
|
Units of
|
|
Units or
|
|
Units or
|
|
|
|
|
Underlying
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
Stock
|
|
Stock
|
|
Other Rights
|
|
Other Rights
|
|
|
Award
|
|
Unexercised
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
Option
|
|
That Have
|
|
That Have
|
|
That Have
|
|
That Have
|
|
|
Grant
|
|
Options (#)
|
|
Options (#)
|
|
Unearned
|
|
Exercise
|
|
Expiration
|
|
Not Vested
|
|
Not Vested
|
|
Not Vested
|
|
Not Vested
|
Name
|
|
Date
|
|
Exercisable
|
|
Unexercisable
|
|
Options (#)
|
|
Price ($)
|
|
Date
|
|
(#)
|
|
($)(2)
|
|
(#)
|
|
($)(2)
|
|
O. Bruton Smith
|
|
|
10/5/2000
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
$
|
7.94
|
|
|
|
10/5/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/11/2001
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
$
|
16.51
|
|
|
|
10/11/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/23/2002
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
$
|
16.20
|
|
|
|
10/23/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/19/2004
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
$
|
23.78
|
|
|
|
2/19/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/21/2005
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
$
|
19.23
|
|
|
|
4/21/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/2006
|
|
|
|
90,000
|
|
|
|
|
|
|
|
|
$
|
23.94
|
|
|
|
2/9/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/19/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,100
|
(3)
|
|
$
|
302,349
|
|
|
|
|
|
|
|
|
3/19/2007
|
|
|
|
45,000
|
|
|
|
|
|
|
|
|
$
|
28.04
|
|
|
|
3/19/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/30/2009
|
|
|
|
|
|
|
|
183,333
|
|
|
|
|
$
|
1.81
|
|
|
|
3/30/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B. Scott Smith
|
|
|
4/28/2000
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
$
|
11.19
|
|
|
|
4/28/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/5/2000
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
$
|
7.94
|
|
|
|
10/5/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/11/2001
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
$
|
16.51
|
|
|
|
10/11/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/23/2002
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
$
|
16.20
|
|
|
|
10/23/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/19/2004
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
$
|
23.78
|
|
|
|
2/19/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/21/2005
|
|
|
|
75,000
|
|
|
|
|
|
|
|
|
$
|
19.23
|
|
|
|
4/21/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/2006
|
|
|
|
72,000
|
|
|
|
|
|
|
|
|
$
|
23.94
|
|
|
|
2/9/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/19/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,280
|
(3)
|
|
$
|
241,879
|
|
|
|
|
|
|
|
|
3/19/2007
|
|
|
|
36,000
|
|
|
|
|
|
|
|
|
$
|
28.04
|
|
|
|
3/19/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/30/2009
|
|
|
|
|
|
|
|
158,333
|
|
|
|
|
$
|
1.81
|
|
|
|
3/30/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David P. Cosper
|
|
|
3/19/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,550
|
(3)
|
|
$
|
151,175
|
|
|
|
|
|
|
|
|
3/19/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
(3)
|
|
$
|
519,500
|
|
|
|
|
|
|
|
|
3/19/2007
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
$
|
28.04
|
|
|
|
3/19/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/30/2009
|
|
|
|
|
|
|
|
116,667
|
|
|
|
|
$
|
1.81
|
|
|
|
3/30/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David B. Smith
|
|
|
10/23/2002
|
|
|
|
3,000
|
|
|
|
|
|
|
|
|
$
|
16.20
|
|
|
|
10/23/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/21/2003
|
|
|
|
2,000
|
|
|
|
|
|
|
|
|
$
|
15.90
|
|
|
|
4/21/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/23/2003
|
|
|
|
2,000
|
|
|
|
|
|
|
|
|
$
|
26.36
|
|
|
|
10/23/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/21/2004
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
$
|
23.42
|
|
|
|
4/21/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/21/2005
|
|
|
|
8,000
|
|
|
|
|
|
|
|
|
$
|
19.23
|
|
|
|
4/21/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/19/2005
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
$
|
21.23
|
|
|
|
10/19/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/19/2006
|
|
|
|
14,405
|
|
|
|
|
|
|
|
|
$
|
26.42
|
|
|
|
4/19/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/18/2007
|
|
|
|
7,203
|
|
|
|
|
|
|
|
|
$
|
30.07
|
|
|
|
4/18/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/18/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,246
|
(3)
|
|
$
|
54,506
|
|
|
|
|
|
|
|
|
3/30/2009
|
|
|
|
|
|
|
|
100,833
|
|
|
|
|
$
|
1.81
|
|
|
|
3/30/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeff Dyke
|
|
|
10/19/2005
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
$
|
21.23
|
|
|
|
10/19/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/19/2006
|
|
|
|
33,500
|
|
|
|
|
|
|
|
|
$
|
26.42
|
|
|
|
4/19/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/13/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,000
|
(4)
|
|
$
|
363,650
|
|
|
|
|
|
|
|
|
4/18/2007
|
|
|
|
10,050
|
|
|
|
|
|
|
|
|
$
|
30.07
|
|
|
|
4/17/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/18/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,321
|
(3)
|
|
$
|
76,065
|
|
|
|
|
|
|
|
|
3/30/2009
|
|
|
|
|
|
|
|
125,000
|
|
|
|
|
$
|
1.81
|
|
|
|
3/30/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22
|
|
|
(1) |
|
Options granted on October 5, 2000 and October 11,
2001 cliff vest six months from the date of grant. Options
granted on April 28, 2000, October 23, 2002 (for
Mr. David Smith), April 21, 2003, October 23,
2003, April 21, 2004, April 21, 2005, October 19,
2005 and March 30, 2009 vest in three equal annual
installments beginning on the first anniversary of the date of
grant. Options granted on October 23, 2002 (for
Messrs. O. Bruton and B. Scott Smith) and April 18,
2007 cliff vest on the first anniversary of the date of grant.
Options granted on February 19, 2004 vest 1/3 on the first
anniversary of the date of grant and the remaining 2/3 on
December 22, 2005. Options granted on February 9, 2006
and April 19, 2006 vest in two equal annual installments
beginning on the first anniversary of the date of grant. Options
granted on March 19, 2007 vest on March 19, 2008. |
|
(2) |
|
Market value based on the December 31, 2009 closing market
price of our Class A Common Stock of $10.39 per share. |
|
(3) |
|
The unvested equity incentive plan award shares or units granted
to Mr. O. Bruton Smith, Mr. B. Scott Smith and
Mr. Cosper cliff vest on March 19, 2010. The unvested
equity incentive plan award shares granted to Mr. David
Smith and Mr. Jeff Dyke cliff vest on April 18, 2010. |
|
(4) |
|
The unvested equity incentive plan award shares or units granted
to Mr. Jeff Dyke cliff vest on March 13, 2010. |
Option
Exercises and Stock Vested During 2009
The following table sets forth information concerning each
exercise of stock options and each vesting of restricted stock
and restricted stock units during 2009 for each of the named
executive officers on an aggregated basis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of Shares
|
|
|
|
Number of Shares
|
|
|
|
|
Acquired on
|
|
Value Realized
|
|
Acquired on
|
|
Value Realized
|
|
|
Exercise (#)
|
|
on Exercise ($)
|
|
Vesting (#)
|
|
on Vesting ($)(1)
|
|
O. Bruton Smith
|
|
|
|
|
|
$
|
|
|
|
|
13,650
|
|
|
$
|
27,300
|
|
B. Scott Smith
|
|
|
|
|
|
$
|
|
|
|
|
10,920
|
|
|
$
|
21,840
|
|
David P. Cosper
|
|
|
|
|
|
$
|
|
|
|
|
31,850
|
|
|
$
|
45,546
|
|
David B. Smith
|
|
|
|
|
|
$
|
|
|
|
|
2,461
|
|
|
|
$ 7,728
|
|
Jeff Dyke
|
|
|
|
|
|
$
|
|
|
|
|
5,723
|
|
|
$
|
17,970
|
|
|
|
|
(1) |
|
Represents aggregate dollar amount realized upon vesting based
on the closing price of the Class A Common Stock on the
date of vesting of restricted stock units or restricted stock as
follows: for Messrs. O. Bruton Smith and B. Scott Smith on
March 23, 2009 at a closing price of $2.00 per share,
Mr. Cosper on February 28, 2009 at a closing price of
$1.43 per share and Messrs. David Smith and Jeff Dyke on
April 19, 2009 at a closing price of $3.14 per share. |
Pension
Benefits
Under the SERP, whose terms are described above in
Compensation Discussion and AnalysisSupplemental
Executive Retirement Plan, no executive officers were
entitled to participate as of and for the year ended
December 31, 2009.
23
Nonqualified
Deferred Compensation Plans for 2009
The following table sets forth information concerning
contributions and other activity for each named executive
officer under the Sonic Automotive, Inc. Deferred Compensation
Plan (the Deferred Plan) during 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
Registrant
|
|
Aggregate
|
|
Aggregate
|
|
Aggregate
|
|
|
Contributions
|
|
Contributions
|
|
Earnings in
|
|
Withdrawals/
|
|
Balance at
|
|
|
in Last FY
|
|
in Last FY
|
|
Last FY
|
|
Distributions
|
|
Last FYE
|
|
|
($)(1)
|
|
($)(1)
|
|
($)(2)
|
|
($)
|
|
($)
|
|
O. Bruton Smith
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
B. Scott Smith
|
|
$
|
|
|
|
$
|
|
|
|
$
|
(16,706
|
)
|
|
$
|
(178,850
|
)
|
|
$
|
|
|
David P. Cosper
|
|
$
|
87,500
|
|
|
$
|
13,150
|
(3)
|
|
$
|
(4,604
|
)
|
|
$
|
(214,342
|
)
|
|
$
|
73,721
|
(4)
|
David B. Smith
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Jeff Dyke
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
(1) |
|
Executive contributions and employer contributions are included
in the salary amounts reported on the Summary Compensation Table. |
|
(2) |
|
Earnings on plan balances are not included in the salary amounts
reported on the Summary Compensation Table. |
|
(3) |
|
Amount includes Company matching contributions of $10,000 made
during 2009 and Company supplemental contributions of $3,150
made in 2009 but attributable to matching contributions
Mr. Cosper would have received under the Companys
401(k) Plan for 2008 in the absence of legal limitations on
compensation considered for 401(k) Plan purposes. |
|
(4) |
|
Mr. Cosper has elected to receive his account balance under
the Deferred Plan in three substantially equal annual
installments following his separation from service with the
Company. |
The Company offers its executive officers and other key
employees the opportunity to participate in the Deferred Plan.
We believe the Deferred Plan is an important tool for recruiting
key employees and assists in employee retention. The Deferred
Plan was amended and restated in 2008 in connection with
requirements under Section 409A of the Internal Revenue
Code (Section 409A). Beginning in 2009, our
non-employee directors also became eligible to participate in
the Deferred Plan. The following is a brief description of
certain material terms of the Deferred Plan.
Under the Deferred Plan, executive officers can elect to defer
receipt of salary and certain bonus payments. For 2009, eligible
employees could elect to defer up to 75% of base salary and up
to 100% of eligible incentive bonus amounts, without a maximum
dollar limit on the amount of compensation that could be
deferred. Beginning in 2009, non-employee directors also can
elect to defer up to 100% of their annual retainer and meeting
fees payable for their service on our Board of Directors and the
applicable committees of our Board of Directors. Deferral
elections generally are required to be made prior to the
beginning of each year in accordance with Section 409A.
Participants are always 100% vested in their own deferrals.
During 2009, the Company made matching contributions of 20% of
the amount deferred by each employee, not to exceed $10,000 per
year in matching contributions, but Sonic has since suspended
such cash matching contributions effective January 1, 2010.
The Company may also contribute supplemental amounts for
eligible employees to make up for the additional matching
contributions the employees would have received under the
Companys 401(k) plan in the absence of legal limitations
on the amount of compensation that could be considered under the
401(k) plan (e.g., $245,000 for 2009). The matching and
supplemental contributions (and related deemed earnings)
generally vest based on an employees full years of
participation under the Deferred Plan, with 20% vesting after
one full year of participation and increasing an additional 20%
each year thereafter with 100% vesting after five full years of
participation. Participants also become 100% vested in the event
of qualifying retirement, disability, death, a change in control
of the Company or termination of the Deferred Plan. The Company
also has the discretion to make additional contributions to the
Deferred Plan and to set the vesting schedule for any such
amounts. Non-employee directors do not receive Company
contributions.
24
Contributions by participants in the Deferred Plan, including
the executive officers and non-employee directors, are credited
with a rate of return (positive or negative) based on deemed
investments selected by a participant from among a number of
investment funds, with such deemed earnings determined by the
actual market performance of the investment funds selected by
the participant. Participants generally may change their deemed
investment selections on a daily basis. The Company is not
required to make actual investments that correspond to the
investment crediting options selected by participants. The
following table lists each deemed investment choice available
under the Deferred Plan and its annual return for the calendar
year ending December 31, 2009:
|
|
|
|
|
|
|
2009 Annual
|
|
|
Rate of
|
Fund
|
|
Return
|
|
NVIT Money Market 1
|
|
|
0.04
|
%
|
PIMCO VIT Real Return Admin
|
|
|
18.35
|
%
|
PIMCO VIT Total Return Admin
|
|
|
14.03
|
%
|
AllianceBernstein VPS International Value A
|
|
|
34.68
|
%
|
Dreyfus Stock Index Initial
|
|
|
26.33
|
%
|
Oppenheimer VA Capital Appreciation NS
|
|
|
44.52
|
%
|
Nationwide NVIT Mid Cap Index 1
|
|
|
36.76
|
%
|
Royce Capital Small Cap
|
|
|
35.20
|
%
|
Ivy VIP Small Cap Growth
|
|
|
34.72
|
%
|
Oppenheimer VA Global Securities NS
|
|
|
39.77
|
%
|
T. Rowe Price Equity Income II
|
|
|
25.25
|
%
|
At the time a participant makes an election to defer
compensation under the Deferred Plan, the participant also must
select the time and form of distribution for such deferred
amount. A participant can elect to defer compensation for a
specified period of time or until retirement or other
termination of service. If a participant defers compensation to
a specified future date, he or she can elect payment in a lump
sum or in two to five annual installments. Compensation that is
deferred until retirement or other termination of service can be
paid in a lump sum or in up to ten annual installments. Account
balances less than a designated threshold may be distributed in
a lump sum. For certain specified employees subject
to special rules under Section 409A (including the named
executive officers), deferred compensation payments that are
triggered by termination of service must be delayed for at least
six months following termination. Participants will
automatically receive their account balances in a lump sum
distribution if service is terminated within two years after a
change of control. Hardship withdrawals also may be available in
the event of an unforeseen financial emergency beyond the
participants control. For compensation that was deferred
and vested before 2005 (and, therefore, not subject to
Section 409A), a participant can request a withdrawal at
any time (for a minimum of $5,000), subject to forfeiture of 10%
of the withdrawal amount and suspension from participation in
the Deferred Plan for the next calendar year. Participants can
change their prior distribution elections only in limited
circumstances, and in the case of amounts subject to
Section 409A, only in accordance with the restrictions
under Section 409A (including an opportunity provided in
2008 to change prior distribution elections pursuant to
transition rules under Section 409A). All distributions are
made in cash.
Amounts deferred under the Deferred Plan and related earnings
are held in a rabbi trust that has been established
by the Company to hold assets separate from other Company assets
for the purpose of paying future benefits. However, in order to
maintain the tax-deferred status of the Deferred Plan, the
assets of the rabbi trust are available to general creditors of
the Company in the event of the Companys insolvency.
Participants do not have an ownership interest in rabbi trust
assets or in any other specific assets of the Company with
respect to their Deferred Plan benefits. Participants are
unsecured general creditors of the Company with respect to
payment of their benefits under the Deferred Compensation Plan.
Potential
Payments Upon Termination or
Change-in-Control
The Employment Agreement provides for certain benefits upon
termination of Mr. Cospers employment. In each of
these instances, any of Sonics obligations to make cash
payments to Mr. Cosper following the
25
termination of his employment is contingent upon him complying
with the restrictive covenants contained in his Employment
Agreement. These restrictive covenants prohibit, during periods
defined in the Employment Agreement and subject to certain
limited exceptions, (i) competing with Sonic,
(ii) employing or soliciting Sonics employees,
(iii) interfering with Sonics relationships with its
customers or vendors and (iv) disclosing or using in an
unauthorized manner any of Sonics confidential or
proprietary information. These restrictive covenants generally
limit Mr. Cospers competitive activities within any
Standard Metropolitan Statistical Area or county in which Sonic
has a place of business on the date of expiration or termination
of the Employment Agreement and apply for a period of two years
following the later of the expiration or termination of
employment under the Employment Agreement.
In the event Mr. Cospers employment is terminated by
Sonic for cause, Sonic is only obligated to pay him
his salary and provide him with fringe benefits through the date
of termination.
The Employment Agreement also provides for severance
arrangements in the event of a termination of
Mr. Cospers employment by Sonic without cause or if
Sonic elects to not renew Mr. Cospers employment. If
Mr. Cospers employment were terminated without cause,
the Employment Agreement provides that he would be entitled to
receive his annual salary as of the date of termination for one
year and an amount equal to the average annual bonuses he
previously received and that shares of restricted stock granted
pursuant to the Employment Agreement vest upon the termination.
Under the terms of Mr. Cospers employment agreement,
cash amounts payable to Mr. Cosper would be paid:
(i) one-half on the last business day of the seventh full
month following the date of termination and (ii) the
remainder in six equal monthly installments commencing at the
end of the eighth full month following the date of termination.
Finally, the Employment Agreement provides that
Mr. Cospers options to purchase Sonics
Class A Common Stock, if any, that immediately vest upon
termination of the Employment Agreement are subject to
forfeiture and Sonics obligation to provide fringe
benefits under the Employment Agreement terminates, if he
violates the restrictive covenants in the Employment Agreement.
In the event Mr. Cospers employment is terminated for
any other reason not addressed above, he will be entitled to his
salary and fringe benefits through the date of termination. For
a description of additional terms of the Employment Agreements,
see Employment Agreements.
Payments
upon Termination
Based on the foregoing and the terms of the 2004 Stock Incentive
Plan, the estimated present value of the payments the named
executive officers could have received upon termination without
cause as of December 31, 2009 are as follows.
|
|
|
|
|
|
|
|
|
|
|
Salary and
|
|
Stock
|
|
|
Bonus
|
|
Awards(1)(2)
|
|
O. Bruton Smith
|
|
$
|
|
|
|
$
|
302,349
|
|
B. Scott Smith
|
|
|
|
|
|
|
241,879
|
|
David P. Cosper
|
|
|
1,820,000
|
|
|
|
670,675
|
|
David B. Smith
|
|
|
|
|
|
|
54,506
|
|
Jeff Dyke
|
|
|
|
|
|
|
439,715
|
|
|
|
|
(1) |
|
Represents the value of restricted stock units and restricted
stock awards, as applicable, that would have vested upon
termination without cause based on the closing market price of
Sonics Class A Common stock on December 31, 2009
of $10.39. |
|
(2) |
|
If termination occurs due to death or disability, the value of
the stock awards that would have vested upon such termination
would have been as follows: Mr. O. Bruton Smith, $277,153;
Mr. B. Scott Smith, $221,723, Mr. Cosper, $614,785,
Mr. David B. Smith, $48,450 and Mr. Jeff Dyke,
$400,959. |
A participant in the Deferred Plan who terminates employment due
to death, disability or retirement after reaching age 65
(or after reaching age 55 with 10 years of continuous
service) becomes fully vested in the portion of his account that
is attributable to unvested Company contributions. In addition,
if separation from the Company is due to death, the
participants remaining account balance is automatically
paid in a lump sum. Mr. Cosper was the
26
only named executive officer who had an account balance under
the Deferred Plan as of December 31, 2009. The amount in
his account attributable to unvested Company contributions as of
December 31, 2009 was $22,375. See Nonqualified
Deferred Compensation Plans for 2009.
Payments
upon a Change of Control
Sonic does not have special arrangements with its named
executive officers that provide those named executive officers
with any rights upon a change of control. Options to purchase
our Class A Common Stock under the 1997 Stock Option Plan,
including those held by our named executive officers, and stock
options and stock awards under the 2004 Stock Incentive Plan
held by our named executive officers would immediately vest and
become exercisable upon a change of control. The estimated
present value of the stock options and awards in the event of a
change in control in 2009 is as follows.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
Value of
|
|
|
|
|
Options(1)
|
|
Stock Awards(2)
|
|
O. Bruton Smith
|
|
|
|
|
|
$
|
1,572,997
|
|
|
$
|
302,349
|
|
B. Scott Smith
|
|
|
|
|
|
|
1,358,497
|
|
|
|
241,879
|
|
David P. Cosper
|
|
|
|
|
|
|
1,001,003
|
|
|
|
670,675
|
|
David B. Smith
|
|
|
|
|
|
|
865,147
|
|
|
|
54,506
|
|
Jeff Dyke
|
|
|
|
|
|
|
1,072,500
|
|
|
|
439,715
|
|
|
|
|
(1) |
|
Represents
in-the-money
value options to purchase Class A Common Stock that would
have vested upon a change of control based on the closing market
price of Sonics Class A Common Stock on
December 31, 2009 of $10.39. |
|
(2) |
|
Represents the value of restricted stock units and restricted
stock awards, as applicable, that would have vested upon a
change of control based on the closing market price of
Sonics Class A Common stock on December 31, 2009
of $10.39. |
In the event of a change in control, a participant in the
Deferred Plan becomes fully vested in the portion of his account
that is attributable to unvested Company contributions. In
addition, if a participant separates from service with the
Company within twenty-four months following a change in control,
the unpaid balance of the participants account is
automatically paid in a lump sum. Mr. Cosper was the only
named executive officer who had an account balance under the
Deferred Plan as of December 31, 2009. The amount in his
account attributable to unvested Company contributions as of
December 31, 2009 was $22,375. See Nonqualified
Deferred Compensation Plans for 2009.
EQUITY
COMPENSATION PLAN INFORMATION
The following table sets forth information concerning shares of
our Class A Common Stock that may be issued under our
equity compensation plans as of December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c)
|
|
|
|
(a)
|
|
|
(b)
|
|
|
Number of securities remaining
|
|
|
|
Number of securities to
|
|
|
Weighted-average
|
|
|
available for future issuance
|
|
|
|
be issued upon exercise
|
|
|
exercise price of
|
|
|
under equity compensation
|
|
|
|
of outstanding options,
|
|
|
outstanding options,
|
|
|
plans (excluding securities
|
|
Plan Category
|
|
warrants and rights
|
|
|
warrants and rights
|
|
|
reflected in column (a))
|
|
|
Equity compensation plans approved by security holders(1)
|
|
|
4,013,500
|
(2)
|
|
$
|
24.43
|
(3)
|
|
|
3,498,265
|
(2)
|
Equity compensation plans not approved by security holders(4)
|
|
|
|
|
|
|
|
|
|
|
210,364
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,013,500
|
|
|
$
|
24.43
|
(3)(5)
|
|
|
3,708,628
|
(2)
|
|
|
|
(1) |
|
Includes the Stock Option Plan, the Stock Incentive Plan, the
Sonic Automotive, Inc. Formula Stock Option Plan for Independent
Directors (the Directors Plan), the Sonic
Automotive, Inc. 2005 Formula Restricted Stock Plan for
Non-Employee Directors (the 2005 Formula Plan) and
the Employee Stock Purchase Plan (the Employee
Plan). Grants under the Employee Plan were suspended for
2009. |
27
|
|
|
(2) |
|
Includes 200,000 shares to be issued upon the exercise of
outstanding options, warrants and rights under the Directors
Plan that was terminated following stockholder approval of the
2005 Formula Plan at the 2005 annual stockholders meeting.
Because the Directors Plan was terminated, no options remain
available for issuance under that plan. Includes
1,882,516 shares to be issued upon the exercise of
outstanding options under the Stock Option Plan that terminated
in 2007. Because the Stock Option Plan terminated, no options
remain available for issuance under that plan. |
|
(3) |
|
Does not include the exercise price of options under the
Employee Plan because no such options are outstanding. |
|
(4) |
|
Includes the Nonqualified Employee Stock Purchase Plan (the
Nonqualified ESPP). Grants under the Nonqualified
ESPP were suspended for 2009. |
|
(5) |
|
Does not include the exercise price of options under the
Nonqualified ESPP because no such options are outstanding. |
Nonqualified
Employee Stock Purchase Plan
The Nonqualified Employee Stock Purchase Plan (the
Nonqualified ESPP) was adopted by the Board of
Directors of Sonic on December 11, 1998. The Nonqualified
ESPP has not been approved by Sonics stockholders. The
purpose of the Nonqualified ESPP is to provide employees of
certain subsidiaries that are not able to participate in
Sonics Employee Plan with a similar opportunity to acquire
an ownership interest in Sonic. Both the Nonqualified ESPP and
the Employee Plan permit eligible employees to purchase shares
of Class A Common Stock at a discount from the market
price. The terms of the Nonqualified ESPP are substantially
similar to the terms of the Employee Plan, which has been
approved by Sonics stockholders.
The total number of shares of Class A Common Stock that
were reserved for issuance under the Nonqualified ESPP is
300,000. Approximately 210,364 additional shares remain
available for future option grants under the Nonqualified ESPP.
Employees of participating subsidiaries generally are eligible
for the Nonqualified ESPP if they work for Sonic and its
subsidiaries on a full-time or part-time basis, are regularly
scheduled to work more than twenty hours per week, are
customarily employed more than five months in a calendar year
and have completed one year of continuous service. Employees who
are officers or directors of Sonic or any participating employer
are not eligible to participate in the Nonqualified ESPP. In
addition, employees who own or hold options to purchase (or who
are treated under certain tax rules as owning or holding options
to purchase) 5% or more of the total combined voting power or
value of all classes of stock of Sonic or any subsidiary also
are not eligible to participate in the Nonqualified ESPP.
Options generally are granted under the Nonqualified ESPP as of
each January 1 to all eligible employees who elect to
participate. However, grants under the Nonqualified ESPP have
been suspended and no grants have been made since
January 1, 2005. The Compensation Committee designates the
number of shares of Class A Common Stock that can be
purchased under each option, which number will be the same for
each option granted on the same date and which also will be the
same number of shares available under an option granted on the
same date pursuant to the Employee Plan. The options have an
exercise price per share equal to the lesser of (i) 85% of
the fair market value per share of the Class A Common Stock
on the date of grant or (ii) 85% of such fair market value
on the date of exercise. No option can be granted which would
permit a participant to purchase more than $25,000 worth of
stock under the Nonqualified ESPP during the calendar year.
A participant can make contributions to the Nonqualified ESPP by
after-tax payroll deduction or direct payment. To the extent
that a participant has made contributions to the Nonqualified
ESPP, his or her option will be exercised automatically to
purchase Class A Common Stock on each exercise date during
the calendar year in which the option is granted. The exercise
dates generally are the last business day of March, June,
September and December on which the NYSE is open for trading.
The participants accumulated contributions as of each
exercise date will be used to purchase whole shares of
Class A Common Stock at the applicable option price,
limited to the number of shares available for purchase under the
option. The exercisability of options may accelerate in the
event of a change in control of Sonic.
28
Options granted under the Nonqualified ESPP expire on the last
exercise date of the calendar year in which granted. However, if
a participant withdraws from the Nonqualified ESPP or terminates
employment, the option may expire earlier.
In the event of certain changes in the capital stock of Sonic
due to a reorganization, stock split, stock dividend, merger or
other similar event, appropriate adjustments generally will be
made to the shares of Class A Common Stock available for
issuance under the Nonqualified ESPP, the shares of Class A
Common Stock covered by outstanding options and the exercise
price per share.
The Board of Directors of Sonic generally can amend, suspend or
terminate the Nonqualified ESPP at any time. However, no
amendment, suspension or termination may adversely affect the
rights of the participant under an outstanding option without
the participants consent. The Board of Directors suspended
the Nonqualified ESPP effective December 31, 2005.
DIRECTOR
COMPENSATION FOR 2009
The following table sets forth the compensation of Sonics
non-employee directors for services rendered in 2009. Directors
who are also employees of Sonic do not receive compensation
(other than their compensation as employees of Sonic) for their
service on the Board of Directors.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
Fees Earned
|
|
|
|
|
|
Non-Equity
|
|
Deferred
|
|
|
|
|
|
|
or Paid
|
|
Stock
|
|
Option
|
|
Incentive Plan
|
|
Compensation
|
|
All Other
|
|
|
|
|
in Cash
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Earnings
|
|
Compensation
|
|
Total
|
Name
|
|
($)
|
|
($)(1)(2)
|
|
($)(1)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
William I. Belk
|
|
$
|
94,852
|
|
|
$
|
94,844
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
189,696
|
|
William P. Benton(3)
|
|
$
|
15,977
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
15,977
|
|
William R. Brooks
|
|
$
|
52,352
|
|
|
$
|
94,844
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
147,196
|
|
Victor H. Doolan
|
|
$
|
82,352
|
|
|
$
|
94,844
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
177,196
|
|
Robert Heller
|
|
$
|
96,852
|
|
|
$
|
94,844
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
191,696
|
|
Robert L. Rewey
|
|
$
|
75,352
|
|
|
$
|
94,844
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
170,196
|
|
David C. Vorhoff
|
|
$
|
87,977
|
|
|
$
|
94,844
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
182,821
|
|
|
|
|
(1) |
|
The non-employee directors have the following stock and option
awards outstanding as of December 31, 2009. |
|
|
|
|
|
|
|
|
|
|
|
Outstanding
|
|
Outstanding
|
Director
|
|
Option Awards
|
|
Stock Awards
|
|
William I. Belk
|
|
|
20,000
|
|
|
|
13,100
|
|
William P. Benton
|
|
|
0
|
|
|
|
0
|
|
William R. Brooks
|
|
|
65,000
|
|
|
|
13,100
|
|
Victor H. Doolan
|
|
|
0
|
|
|
|
13,100
|
|
Robert Heller
|
|
|
40,000
|
|
|
|
13,100
|
|
Robert L. Rewey
|
|
|
30,000
|
|
|
|
13,100
|
|
David C. Vorhoff
|
|
|
0
|
|
|
|
13,100
|
|
|
|
|
(2) |
|
Both Stock and Option Awards are valued based on the grant date
fair value as calculated under the provisions of Stock
Compensation, in the Accounting Standards Codification.
See Note 10 to Sonics Consolidated Financial
Statements included in its Annual Report on Form
10-K for the
year ending December 31, 2009 for the valuation assumptions
used in determining the fair value of the awards. |
|
(3) |
|
Mr. Benton passed away in February 2009. |
Each non-employee director receives a $35,000 annual cash
retainer payable in quarterly installments. Sonics lead
independent director and the chairperson of the audit committee
receive an additional annual cash
29
retainer of $12,500. The chairperson of the compensation
committee receives an additional annual cash retainer of
$10,000, and the chairperson of the nominating and corporate
governance committee receives an additional annual cash retainer
of $7,500. Each non-employee director also receives $2,000 for
each board meeting attended in person and $1,000 for each board
meeting attended telephonically. In addition, committee members
receive the following fees for attending meetings of a committee
on which they serve: $2,000 for each audit committee meeting
attended in person or telephonically; and $1,500 for each other
committee meeting attended in person and $1,000 for each other
committee meeting attended telephonically. Beginning in 2009,
non-employee directors became eligible to participate in the
Deferred Plan and can elect to defer up to 100% of their annual
cash retainer and meeting fees under the Deferred Plan. No
non-employee directors elected to participate in the Deferred
Plan for 2009. Please see the discussion under
Nonqualified Deferred Compensation Plans for
2009 for further information about the Deferred Plan.
Non-employee directors also receive automatic grants of
restricted stock during each year of service under the 2005
Formula Plan. The annual grant of restricted stock is made to
each eligible non-employee director on the first business day
following each annual meeting of Sonics stockholders. The
number of restricted shares of Class A Common Stock granted
to an eligible non-employee director each year generally will
equal $60,000 divided by the average closing sale price of the
Class A Common Stock on the NYSE for the twenty trading
days immediately prior to the grant date (rounded up to the
nearest whole share). However, the 2005 Formula Plan was amended
with stockholder approval at the annual stockholders
meeting in 2009 to limit the number of shares that could be
granted to a non-employee director during 2009 to
15,000 shares. Subject to the directors continued
service on Sonics Board, the restricted stock will vest in
full on the first anniversary of the grant date or, if earlier,
the day before the next annual meeting of Sonics
stockholders following the grant date. If a non-employee
director initially becomes a member of Sonics Board of
Directors during any calendar year, but after the meeting of
Sonics stockholders for that year, the non-employee
director will receive a restricted stock grant upon his or her
appointment to the Board with the number of shares determined as
described above. Subject to the directors continued
service on Sonics Board, the restricted stock will vest in
full on the first anniversary of the grant date.
Shares of restricted stock may not be sold, assigned, pledged or
otherwise transferred to the extent they remain unvested. A
director holding restricted stock will have the right to vote
his or her shares of restricted stock and receive dividends (if
any), although dividends paid in shares will be considered
restricted stock. If a directors service on the Board
terminates for any reason, all shares of restricted stock not
vested at the time of such termination are forfeited. Upon
either the consummation of a tender or exchange offer that
constitutes a change in control (as defined in the
2005 Formula Plan) of Sonic or the third business day prior to
the effective date of any other change in control of
Sonic, all outstanding restricted stock generally will become
fully vested.
CERTAIN
TRANSACTIONS
The SFC
Pledge
On February 17, 2006, Sonic entered into secured syndicated
credit facility (the Old Facility) that provided up
to $1.2 billion in borrowing availability for Sonic for new
vehicle inventory floor plan financing, used vehicle inventory
floor plan financing and for working capital and general
corporate purposes, including acquisitions and capital
expenditures. During 2009, Sonic entered into several amendments
to the Old Facility that, among other things, reduced the amount
available for borrowing under the Old Facility and limited the
use of proceeds from those borrowings. During the term of the
Old Facility, the amount available for borrowing was subject to
a borrowing base calculation that based on the value of the
collateral pledged to secure the Old Facility, including the
value of 5,000,000 shares of SMIs common stock
pledged to secure the Old Facility by SFC, an entity owned and
controlled by Mr. O. Bruton Smith and his family members.
On January 15, 2010, Sonic entered into amended and
restated syndicated credit agreement dated January 15, 2010
with Bank of America, N.A., as administrative agent and Bank of
America, N.A., DCFS USA LLC, BMW Financial Services NA, LLC,
Toyota Motor Credit Corporation, JPMorgan Chase Bank, N.A.,
Wachovia Bank, National Association, Comerica Bank and World
Omni Financial Corp., as Lenders and Wells Fargo Bank National
Association, as LC issuer (the Revolving Facility).
The Revolving Facility has a borrowing
30
limit of $150 million, which may be expanded up to
$215 million in total credit availability upon satisfaction
of certain conditions. The Revolving Facility is available for
acquisitions, capital expenditures, working capital and general
corporate purposes. The amount available for borrowing under the
Revolving Facility is reduced on a
dollar-for-dollar
basis by the aggregate face amount of any outstanding letters of
credit under the Revolving Facility and is subject to compliance
with a borrowing base. The borrowing base is calculated based on
the value of eligible accounts, eligible inventory, eligible
equipment and 5,000,000 shares of common stock of SMI
pledged as collateral by SFC. Although Sonic does not pay SFC a
fee for this pledge of SMI common stock, Mr. O. Bruton
Smith, B. Scott Smith and David B. Smith may be considered to
have a material interest in this pledge and its terms.
Other
Transactions
|
|
|
|
|
Sonic leases office space in Charlotte from a subsidiary of SFC
for a majority of its headquarters personnel. Annual aggregate
rent under this lease was approximately $633,990 in 2009.
Because Mr. O. Bruton Smith and his family own 100% of SFC,
under applicable SEC regulations, the amount of Mr. O.
Bruton Smiths, Mr. B. Scott Smiths and
Mr. David B. Smiths interest in this transaction may
be deemed to be $633,990.
|
|
|
|
Sonic rents various aircraft owned by SFC, subject to their
availability, primarily for business-related travel by Sonic
executives. Sonic incurred costs in an aggregate amount of
approximately $271,771 for the use of these aircraft during
2009. Because Mr. O. Bruton Smith and his family own 100%
of SFC, under applicable SEC regulations, the amount of
Mr. O. Bruton Smiths, Mr. B. Scott Smiths
and Mr. David B. Smiths interest in this transaction
may be deemed to be $271,771.
|
|
|
|
Certain of Sonics dealerships purchase the Z-Max oil
additive product from Oil Chem Research Company, a subsidiary of
SMI, for resale to service customers of the dealerships in the
ordinary course of business. Total purchases by Sonic
dealerships either directly through Oil Chem or indirectly
through an Oil Chem distributor totaled approximately $1,490,549
in 2009. Because Mr. O. Bruton Smith and SFC own
collectively approximately 68.4% of SMI, under applicable SEC
regulations, the amount of Mr. O. Bruton Smiths,
Mr. B. Scott Smiths and Mr. David B.
Smiths interest in this transaction may be deemed to be
approximately $1,019,535.
|
Policies
and Procedures for Review, Approval or Ratification of
Transactions with Affiliates
Pursuant to its written charter, the NGC Committee reviews and
evaluates all transactions between Sonic and its affiliates and
considers issues of possible conflicts of interest if such
issues arise. In addition, transactions between Sonic and its
affiliates are reviewed by its full Board of Directors
and/or its
independent directors in accordance with the terms of
Sonics Charter, its senior credit facilities and the
indentures governing its outstanding senior subordinated notes.
These documents require, subject to certain exceptions, that a
transaction between Sonic and an affiliate:
|
|
|
|
|
be made in good faith and in writing and be on terms no less
favorable to Sonic than those obtainable in arms-length
transaction between Sonic and an unrelated third party;
|
|
|
|
involving aggregate payments in excess of $500,000, be
(i) approved by a majority of the members of Sonics
Board of Directors and a majority of Sonics independent
directors or (ii) Sonic must receive an opinion as to the
financial fairness of the transaction from an investment banking
or appraisal firm of national standing; and
|
|
|
|
involving aggregate value in excess of:
|
$2.0 million, be approved by a majority
of Sonics disinterested directors; and
|
|
|
|
|
$5.0 million, must be approved by the majority of
Sonics disinterested directors of Sonics Board of
Directors or Sonic must obtain a written opinion as to the
financial fairness of the transaction from an investment banking
firm of national standing or other recognized independent expert
with experience appraising the terms and conditions of the type
of such transaction.
|
31
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires Sonics directors, certain officers and
persons who own more than 10% of Sonics Voting Stock to
file reports on ownership and changes in ownership with the SEC.
Additionally, SEC regulations require that Sonic identify in its
proxy statements any individuals for whom one of the referenced
reports was not filed on a timely basis during the most recent
fiscal year or prior fiscal years. To Sonics knowledge,
based solely on review of reports furnished to it, all
Section 16(a) filing requirements applicable to its
directors, officers and more than 10% beneficial owners were
complied with on a timely basis, except for the following late
filings: one Form 4 filing for Mr. Cosper reporting a
sale transaction by his daughter over which Mr. Cosper
could have been deemed to have indirect beneficial ownership,
one Form 4 filing by each of Messrs. O. Bruton Smith
and B. Scott Smith reporting the delivery of shares to Sonic to
satisfy withholding tax obligations due upon vesting of
restricted stock units and the Form 3 (initial statement of
ownership of securities) and one Form 4 reporting three
purchases by Mr. Paul P. Rusnak.
ADDITIONAL
CORPORATE GOVERNANCE AND OTHER INFORMATION
Corporate
Governance Guidelines, Code of Business Conduct and Ethics and
Committee Charters
Our Board of Directors has adopted a Code of Business Conduct
and Ethics applicable to our officers, directors and employees,
including our principal executive officer, principal financial
officer, principal accounting officer or controller, or persons
performing similar functions. This Code of Business Conduct and
Ethics, along with our Corporate Governance Guidelines, our
Categorical Standards for Determination of Director Independence
and each of our committee charters are available on our website
at www.sonicautomotive.com. Copies of these documents are also
available without charge upon written request to Sonic
Automotive, Inc., Attn: Corporate Secretary, 6415 Idlewild Road,
Suite 109, Charlotte, North Carolina 28212.
We will disclose information pertaining to amendments or waivers
to provisions of our Code of Business Conduct and Ethics that
apply to our principal executive officer, principal financial
officer, principal accounting officer or controller or persons
performing similar functions and that relate to the elements of
our Code of Business Conduct and Ethics enumerated in the
SECs rules and regulations by posting this information on
our website at www.sonicautomotive.com. The information on our
website is not a part of this proxy statement.
Other
Matters that May Be Considered at the Annual Meeting
In the event that any matters other than those referred to in
the accompanying Notice of Meeting should properly come before
and be considered at the Annual Meeting, it is intended that
proxies in the accompanying form will be voted thereon in
accordance with the judgment of the person or persons voting
such proxies.
Expenses
of Solicitation
Sonic will pay the cost of solicitation of proxies, including
the cost of assembling and mailing this Proxy Statement and the
enclosed materials. In addition to the use of the mails, proxies
may be solicited personally or by telephone or email by
corporate officers and employees of Sonic without additional
compensation. Sonic intends to request brokers and banks holding
stock in their names or in the names of nominees to solicit
proxies from their customers who own our stock, where
applicable, and will reimburse them for their reasonable
expenses of mailing proxy materials to their customers.
Stockholder
Proposals for 2011 Annual Stockholders Meeting
The deadline for submission of stockholder proposals to be
considered for inclusion in the proxy materials relating to the
2011 annual stockholders meeting is November 15, 2010. Any
such proposal received after this date will be considered
untimely and may be excluded from the proxy materials.
The deadline for submission of stockholder proposals to be
presented at the 2011 annual stockholders meeting, but for which
we may not be required to include in the proxy materials
relating to such meeting, is
32
February 20, 2011. Any such proposal received after this
date will be considered untimely and will be excluded from such
meeting.
Proposals should be addressed to the attention of the Secretary
of Sonic at our principal executive offices.
Delivery
of Proxy Statements and Annual Reports
As permitted by the 1934 Act, only one copy of this Proxy
Statement and the annual report is being delivered to
stockholders residing at the same address, unless such
stockholders have notified Sonic of their desire to receive
multiple copies of the Proxy Statement or annual report.
Sonic will promptly deliver, upon oral or written request, a
separate copy of the Proxy Statement or annual report to any
stockholder residing at a shared address to which only one copy
was mailed. Requests for additional copies of this years
Proxy Statement or annual report, requests to receive multiple
copies of future proxy statements or annual reports and requests
to receive only one copy of future proxy statements or annual
reports should be directed to Stephen K. Coss, Senior Vice
President, General Counsel and Secretary, at Sonics
principal executive offices, 6415 Idlewild Road, Suite 109,
Charlotte, North Carolina 28212 or by phone at
(704) 566-2400.
Directions to attend the Annual Meeting, where you may vote in
person, can be found at the following weblink:
http://www.charlottemotorspeedway.com/fans/directions/.
Information on that website or available by such weblink is not
incorporated into or a part of this proxy statement or any of
our filings with the SEC.
Important Notice Regarding the Availability of Proxy
Materials for the Stockholder Meeting to Be Held on
April 21, 2010:
The Companys Proxy Statement on Schedule 14A, form
of proxy card, 2009 Annual Report on
Form 10-K
and 2009 Annual Report are available at:
www.proxydocs.com/SAH
33
APPENDIX A
SONIC
AUTOMOTIVE, INC.
P R O X
Y
Charlotte,
North Carolina
THIS
PROXY IS BEING SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF SONIC AUTOMOTIVE, INC.
The undersigned hereby appoints Mr. David P. Cosper and
Mr. Stephen K. Coss as proxies, each with the power to
appoint his Substitute, and hereby authorizes them to represent
and vote, as designated on the reverse side, all shares of the
Voting Stock of Sonic Automotive, Inc. held of record by the
undersigned on February 22, 2010, at the Annual Meeting of
Stockholders to be held on April 21, 2010 at
10:30 a.m., at Charlotte Motor Speedway, Smith Tower, 600
Room, U.S. Highway 29 North, Concord, North Carolina, or
any adjournment thereof.
The Board of Directors recommends a vote FOR ALL
NOMINEES in Item 1 and FOR Item 2.
This appointment of proxy, when properly executed, will be voted
in the manner directed by the undersigned stockholder(s). If no
direction is given, this proxy will be voted FOR ALL
NOMINEES in Item 1 and FOR in Item 2.
Nominees: O. Bruton Smith, B. Scott Smith, David B. Smith,
William I. Belk, William R. Brooks, Victor H. Doolan, Robert
Heller, Robert L. Rewey and David C. Vorhoff (Mark only one of
the following boxes.)
|
|
|
o VOTE
FOR ALL nominees listed above, except vote withheld as to the
following nominee(s) (if
any):
|
|
o VOTE
WITHHELD as to all nominees
|
|
|
2.
|
RATIFICATION
OF APPOINTMENT OF ERNST & YOUNG LLP AS SONICS
INDEPENDENT ACCOUNTANTS
|
o FOR o AGAINST o ABSTAIN
In their discretion, the Proxies are authorized to vote upon
such other business as may properly come before the meeting.
PLEASE
MARK, SIGN BELOW, DATE AND RETURN THIS
PROXY PROMPTLY IN THE ENVELOPE FURNISHED.
Please sign exactly as name appears on this Proxy.
When shares are held jointly, each holder should sign. When
signing as executor, administrator, attorney, trustee or
guardian, please give full title as such. If the signer is a
corporation, please sign full corporate name by duly authorized
officer, giving full title as such. If signer is a partnership,
please sign in partnership name by authorized person.
|
|
|
Class A Common Stock Shares:
|
|
|
|
|
|
Class B Common Stock Shares:
|
|
|
|
|
|
Signature, if held jointly:
|
|
|
o Please
check the box if you plan to attend the Annual Meeting of
Stockholders. Directions to attend the Annual Meeting, where you
may vote in person, can be found at the following weblink:
http://www.charlottemotorspeedway.com/fans/directions/.
Information on that website or available by such weblink is not
incorporated into or a part of the proxy statement or this proxy
card or any of our filings with the SEC.
Important Notice Regarding the Availability of Proxy
Materials for the Stockholder Meeting to Be Held on
April 21, 2010:
The Companys Proxy Statement on Schedule 14A, form
of proxy card, 2009 Annual Report on
Form 10-K
and 2009 Annual Report are available at:
www.proxydocs.com/SAH
A-1