AutoNation (AN)

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

2010 Incentive Plan and AOP Plan Targets

On February 4, 2010, the Executive Compensation Subcommittee (the “Subcommittee”) of the Compensation Committee of the Board of Directors (the “Board”) of AutoNation, Inc. (the “Company”) (i) selected the 2010 participants under the AutoNation, Inc. Senior Executive Incentive Bonus Plan (the “Incentive Plan”) and the AutoNation Operating Performance Plan (the “AOP Plan”), (ii) established specific objective annual performance goals for 2010 under the Incentive Plan and the AOP Plan, and (iii) set target awards for the 2010 participants under the Incentive Plan and the AOP Plan.

The Subcommittee selected the following senior executive officers to participate in the Incentive Plan for 2010, each of whom will be identified as a named executive officer in the Company’s 2010 annual meeting proxy statement: Mike Jackson, Chairman and Chief Executive Officer; Michael E. Maroone, President and Chief Operating Officer; Michael J. Short, Executive Vice President and Chief Financial Officer; and Jonathan P. Ferrando, Executive Vice President, General Counsel & Secretary (collectively, the “Senior Executive Officers”).

The 2010 performance goals established by the Subcommittee under the Incentive Plan are based upon the achievement of specified levels of adjusted operating income per share (minus a net charge for capital deployed for acquisitions or share repurchases) and adjusted operating income as a percentage of gross profit for the Company during 2010. The target awards under the Incentive Plan are expressed as a percentage of base salary for each Senior Executive Officer that ranges from 75% to 133 1/3%.

The 2010 performance goals established under the Incentive Plan also constitute the performance goals that the Subcommittee established under the AOP Plan for other bonus-eligible, corporate-level employees, including Kevin P. Westfall, Senior Vice President, Sales, who will also be identified as a named executive officer in the Company’s 2010 annual meeting proxy statement. The target awards under the AOP Plan are also expressed as a percentage of base salary, and Mr. Westfall’s target award for 2010 is 45% of his base salary. The Senior Executive Officers do not participate in the AOP Plan.

Bonus awards under both the Incentive Plan and the AOP Plan will be payable on a sliding scale based on the Company’s actual achievement relative to the predetermined goals, with the possibility that bonuses earned may exceed or be less than the targeted level. The Subcommittee has absolute “negative discretion” to eliminate or reduce the amount of any award under the Incentive Plan or the AOP Plan.

2010 Annual Stock Option and Restricted Stock Awards

On February 4, 2010, the Subcommittee also approved annual stock option and restricted stock awards to all of our equity grant-eligible employees under the AutoNation, Inc. 2008 Employee Equity and Incentive Plan (the “2008 Plan”). The annual awards included stock option awards to our Senior Executive Officers and Kevin P. Westfall, specifically, Mike Jackson – 255,024 options, Michael E. Maroone – 204,104 options, Michael J. Short – 153,364 options, Jonathan P. Ferrando – 153,364 options, and Kevin P. Westfall – 15,332 options. Additionally, the annual awards included a restricted stock award to Mr. Westfall, who will receive 5,112 shares of restricted stock. The Senior Executive Officers did not receive restricted stock awards.

One-fourth (1/4) of each stock option award approved by the Subcommittee will be granted on the first trading day of each of March, June, September and December 2010, with an exercise price equal to the closing price of our common stock on each such grant date, subject to continuous employment through each such grant date. Each of the four option grants comprising an annual award will vest annually in equal installments over four years commencing on June 1, 2011 and will expire on March 1, 2020 (subject to earlier termination in accordance with the terms of the 2008 Plan and applicable award agreements). The restricted stock awards approved by the Subcommittee will be granted on the first trading day of March 2010 and will vest annually in equal installments over four years commencing on June 1, 2011.

Copies of each of our form of stock option agreement and form of restricted stock agreement to be entered into in connection with the grants described above are filed as Exhibits 10.1 and 10.2 hereto and are incorporated herein by reference.

(c) Exhibits

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

As previously announced on a Current Report on Form 8-K filed with the Securities and Exchange Commission on January 29, 2009 (the “January 2009 8-K”) by AutoNation, Inc. (the “Company”), the Board of Directors of the Company approved a letter agreement with Toyota Motor Sales, U.S.A., Inc. (“Toyota,” and such agreement, the “Toyota Agreement”) in order to, among other things, eliminate any potential adverse consequences under Toyota’s framework agreement with the Company in the event that ESL Investments, Inc. and certain investment affiliates of ESL Investments, Inc. (together, “ESL”) acquires more than fifty percent (50%) of the Company’s common stock. Pursuant to the Toyota Agreement, Toyota’s consent (the “Consent”) to ESL acquiring more than fifty percent (50%) of the Company’s common stock terminates on December 31, 2009, solely with respect to ESL purchases of the Company’s common stock after such date unless extended by Toyota at ESL’s request. The Toyota Agreement also contains governance-related and other provisions as described in the January 2009 8-K.

At ESL’s request, Toyota has granted a one-year extension of its Consent under the Toyota Agreement (such extension, the “Extension Agreement”), and the Company signed an acknowledgement to the Extension Agreement, which is dated November 23, 2009. Toyota’s Consent under the Toyota Agreement will now terminate on December 31, 2010, with respect to purchases of the Company’s common stock by ESL after such date, provided that ESL may continue to seek successive annual one-year extensions of Toyota’s Consent, and Toyota shall not unreasonably withhold or delay its consent thereto. All other terms and conditions of the Toyota Agreement were unchanged. ESL currently owns approximately forty-six percent (46%) of the Company’s common stock.

As discussed in the January 2009 8-K, the Company and ESL are also parties to: (i) a letter agreement with American Honda Motor Co., Inc. (“Honda,” and such agreement the “Honda Agreement”), in which, among other things, Honda has agreed not to assert its right to purchase the Company’s Honda and Acura franchises and/or similar remedies under Honda’s framework agreement with the Company in the event that ESL acquires fifty percent (50%) or more of the Company’s common stock; and (ii) an agreement (the “ESL Agreement”) in which ESL has agreed to vote shares of the Company’s common stock owned by ESL in excess of forty-five percent (45%) in the same proportion as all non-ESL-owned shares are voted. The Honda Agreement also contains governance-related and other provisions as described in the January 2009 8-K. The ESL Agreement expires on January 28, 2010, unless extended by mutual agreement by all parties.

The foregoing summaries of the Toyota Agreement, the Extension Agreement, the Honda Agreement and the ESL Agreement are qualified in their entirety by reference to such agreements. The Toyota Agreement, the Honda Agreement and the ESL Agreement were filed as exhibits to the January 2009 8-K and are incorporated by reference herein. The Extension Agreement is filed as Exhibit 10.2 to this Form 8-K and is also incorporated by reference herein.

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):