AutoNation (AN)

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.