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This excerpt taken from the AN DEF 14A filed Apr 28, 2006. Substantial
Majority of Independent Directors
The Board shall be comprised of a substantial majority of
Directors who qualify as “independent” directors (the
“Independent Directors”) under the
listing standards of The New York Stock Exchange (the
“NYSE”). However the Board is willing to
have one or two members of management serve as Directors of the
Company. To be considered independent under the NYSE listing
standards, the Board must determine that a Director has no
material relationship with the Company. The determinations will
be made by the Board, with the assistance of the Nominating
Subcommittee, annually and disclosed in the Company’s
annual proxy statement. To assist the Board in determining
whether a Director is independent, the Board has established the
following independence standards:
(a) A Director is not independent if the Director is, or
has been within the last three years, an employee of the
Company, or an immediate family member (as defined by NYSE
rules) is, or has been within the last three years, an executive
officer of the Company (provided, that prior service as
an interim executive Chairman or Chief Executive Officer or
other executive officer of the Company shall not be deemed to be
employment for these purposes).
(b) A Director is not independent if the Director has
received, or has an immediate family member who has received,
during any twelve-month period within the last three years, more
than $100,000 in direct compensation from the Company, other
than director and committee fees and pension or other forms of
deferred compensation for prior service, provided such
compensation is not contingent in any way on continued service
(provided, that the following compensation shall not be
considered for these purposes: (i) compensation received by
a Director for former service as an interim Chairman or Chief
Executive Officer or other executive officer of the Company and
(ii) compensation received by a Director’s immediate
family member for service to the Company as an employee of the
Company, other than an executive officer).
(c) A Director is not independent if (i) the Director
or an immediate family member of the Director is a current
partner of a firm that is the Company’s internal or
external auditor (the “Independent
Auditor”); (ii) the Director is a current
employee of the Independent Auditor; (iii) the Director has
an immediate family member who is a current employee of the
Independent Auditor and who participates in the Independent
Auditor’s audit, assurance or tax compliance (but not tax
planning) practice; or (iv) the Director or an immediate
family member of the Director was within the last three years
(but is no longer) a partner or employee of the Independent
Auditor and personally worked on the Company’s audit within
that time.
(d) A Director is not independent if the Director or an
immediate family member of the Director is, or has been within
the last three years, employed as an executive officer of
another company where any of the Company’s present
executive officers at the same time serves or served on that
company’s compensation committee.
(e) The following relationships (including commercial,
industrial, banking, consulting, legal, and other business
relationships and charitable relationships) will not be
considered to be material relationships that would impair a
Director’s independence: (i) if a Director is
presently affiliated with (including by serving as a director,
general partner or executive officer of, or holding a greater
than 10% equity ownership) or employed by, or whose immediate
family member is presently an executive officer of, a company or
entity that made payments to, or received payments from, the
Company for property or services in an amount which, in each of
the prior three single fiscal years, was less than the greater
of $1,000,000 and two percent (2%) of the consolidated annual
gross revenue of the company or entity; (ii) if a Director
is presently affiliated with (including by serving as a
director, general partner or executive officer of, or holding a
greater than 10% equity ownership) or employed by,
AutoNation, Inc.
Corporate
Governance Guidelines
Table of Contents
or whose immediate family member is presently an executive
officer of, a bank or other company or entity that is indebted
to the Company, or to which the Company is indebted, and the
total amount of the debt is less than two percent (2%) of the
total consolidated assets of such bank, company or entity; and
(iii) if a Director is presently affiliated with (including
by serving as a director, officer or trustee of) or employed by,
or whose immediate family member is presently an officer,
director or trustee of, a tax exempt organization to which the
Company made charitable contributions which, in each of the
prior three single fiscal years, were less than the greater of
$1,000,000 and two percent (2%) of such tax exempt
organization’s consolidated gross revenue. For purposes of
clarification, the look-back periods in this subsection do not
apply to payments made to or received by a company or entity
with which a Director or a Director’s immediate family
member is no longer affiliated.
(f) For relationships not covered by or meeting the
standards set forth in subsection (e) above, the
determination of whether the relationship is material or not,
and therefore whether the Director is independent or not, shall
be made by the Board, with the assistance of the Nominating
Subcommittee, based on the relevant facts and circumstances.
This could include a determination that, based on the relevant
facts and circumstances, a director relationship exceeding the
thresholds set forth in subsection (e) above is not
material (provided, that such relationship does not conflict
with the NYSE’s listing standards). If such a determination
is made, it will be disclosed in the Company’s annual proxy
statement.
(g) The Company will not make any personal loans to
Directors or executive officers.
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