Advance Auto Parts, Inc. (NYSE:AAP) announced that its Board of Directors (“Board”) has appointed Thomas Okray to become the Company’s Chief Financial Officer, effective October 31, 2016. As announced by the Company on May 19, 2016, Michael A. Norona, the Company’s current Executive Vice President, Chief Financial Officer, will step down from the role of Chief Financial Officer effective October 31, 2016 and will remain available through December 31, 2016, to assist with the transition of his responsibilities for a period of time.
Prior to joining the Company, Mr. Okray, 53, served as Vice President, Finance, Global Customer Fulfillment of Amazon.com, Inc. (“Amazon”), an Internet retailer, from January 2016 to October 2016, and as Vice President, Finance Operations of Amazon, from June 2015 to January 2016. Prior to joining Amazon, Mr. Okray was employed by General Motors Company, a global automotive company, from July 1989 to June 2015, in a variety of finance and supply chain related roles, culminating in his position as CFO, Global Product Development, Purchasing & Supply Chain, from January 2010 to June 2015.
In connection with his appointment, Mr. Okray and the Company have entered into an employment agreement dated as of October 3, 2016 which has been approved by the Compensation Committee of the Company’s Board (“Committee”). Mr. Okray’s employment agreement provides for a one year employment term with automatic renewals on each anniversary date for successive one-year periods unless either party provides the other party with 90 days’ prior notice of non-renewal.
Under the terms of his employment agreement, Mr. Okray’s annual base salary is $500,000, and he is eligible to participate in the Company’s annual incentive bonus plan with a bonus target of 90 percent of base salary (“Target Bonus Amount”) and a maximum bonus opportunity of 200 percent of the Target Bonus Amount, based on the Company’s performance as measured against the same bonus criteria applied to other senior executives of the Company. Mr. Okray will not be eligible for an annual incentive bonus for fiscal year 2016; however, for fiscal year 2017, he will be entitled to receive a minimum annual bonus equal to the amount of his Target Bonus Amount.
Pursuant to the terms of his employment agreement, Mr. Okray will receive an annual equity grant under the Company’s 2014 Long-Term Incentive Plan (the “2014 LTIP”) for each fiscal year that ends during his employment term in an amount and with a grant-type mix determined by the Committee. The grant-date fair value of Mr. Okray’s annual equity grant for the 2017-2019 performance cycle shall be $1,050,000, with a grant-type mix determined by the Committee and will be granted at the same time that annual grants for the same cycle are made to other executives.
Mr. Okray will receive a $380,000 cash Signing Bonus to replace compensation payable to him from his prior employment which will be forfeited upon acceptance of his position with us. The Signing Bonus is subject to a 100 percent claw back if Mr. Okray resigns without Good Reason (as defined in his employment agreement) prior to the one-year anniversary of the commencement date of his employment. In addition, as soon as practicable following his appointment, Mr. Okray will receive a one-time grant of time-based restricted stock units (“Sign-On RSUs”) with a grant-date fair value of $2 million, of which 70 percent will vest on the first anniversary of the grant date and the remaining 30 percent will vest on the second anniversary of the grant date, subject to his continued employment with the Company through the applicable vesting date. The Sign-on RSUs will fully vest upon Mr. Okray’s termination of employment by the Company other than for Due Cause, Death or Disability (as those terms are defined in the employment agreement).
Mr. Okray will be entitled to receive relocation benefits consistent with Company policy, subject to adjustment as approved by the Compensation Committee. In addition, Mr. Okray will be entitled to reimbursement of legal expenses associated with the negotiation of his employment agreement up to a maximum of $15,000.