AutoNation (AN)

9. SHAREHOLDERS’ EQUITY

A summary of yearly repurchase activity follows:

(In millions, except per share data)

In October 2009, our Board of Directors authorized an additional $250 million under our existing share repurchase program. As of December 31, 2009, $256.9 million remained available for share repurchases under the existing repurchase program approved by our Board of Directors. Future share repurchases are subject to limitations contained in the indenture relating to our senior unsecured notes.

Our Board of Directors authorized the retirement of 30 million shares of our treasury stock in 2007, which assumed the status of authorized but unissued shares. These retirements had the effect of reducing treasury stock and issued common stock, which includes treasury stock. Our common stock, additional paid-in capital, and treasury stock accounts have been adjusted accordingly. There was no impact to shareholders’ equity or outstanding common stock.

We have 5.0 million authorized shares of preferred stock, par value $.01 per share, none of which are issued or outstanding. The Board of Directors has the authority to issue the preferred stock in one or more series and to establish the rights, preferences, and dividends.

We issued 2.4 million shares of common stock in connection with the exercise of stock options during 2009, 0.1 million shares during 2008, and 6.8 million shares during 2007. Proceeds from the exercise of stock options were $24.8 million (average exercise price of $10.41) in 2009, $1.0 million (average exercise price of $10.71) in 2008, and $96.6 million (average exercise price of $14.12) in 2007.

We granted 0.2 million shares of restricted stock during 2009 and 0.2 million shares during 2008 in connection with our annual restricted stock award grant. During 2009, 18,648 shares were surrendered to AutoNation to satisfy tax withholding obligations in connection with the vesting of restricted stock, as compared to 5,734 shares during 2008.