AutoZone, Inc. (AZO) Earnings Call Transcript & Summary

Good morning, and thank you for joining us for AutoZone's 2024 Annual Meeting of Stockholders. I am Phil Daniele, President and CEO of Customer Satisfaction, and I will be presiding over this meeting. Of course, it would not be an official AutoZone meeting if we didn't start our meeting with the cheer and pledge. William Capooth, a 28 -- almost 28-year AutoZoner, who will soon be retiring, will be leading us in our cheer and pledge. [Presentation]

Thank you. Does anyone have an Extra Miler for us?

I have one, Phil. This Extra Miler Story comes from Store 2447 East Carolina region. On 12/2/24, [ Burton Moore ] went above and bond his normal Zoner description. [ Mr. Moore ] was dealing with a customer who had received the wrong part. The customer returned the part, and the AutoZoner put the money towards the correct part. [ Mark ] was located at our AutoZone in Clayton, North Carolina. The AutoZoner went to the AutoZone in Clayton on his lunch break, picked the part up and delivered the part to the customer himself. This act of self-driven initiative shows that AutoZone does the right thing by their customer, and I'm sure the company has gained a customer for a lifetime.

Thank you, [ Andie ], for that great story. Now I will turn the meeting over to Jenna Bedsole, our Senior Vice President, General Counsel and Secretary.

Thank you, Phil. Ms. Cassandra Shedd from Computershare is serving as our independent inspector of election. A complete list of the holders of record of the company's common stock on October 21, 2024, which holders are entitled to vote at this meeting, is available here for inspection. Also, I've received an affidavit of mailing from Computershare stating that notice of the meeting was duly given to stockholders of record as of the close of business on October 21, 2024. Finally, a tabulation of the proxies received from stockholders indicates that more than a majority of the outstanding shares entitled to vote are represented at this meeting and a quorum is present.

Thanks, Jenna. I hereby call this meeting to order. As a reminder, it is not necessary for stockholders to vote at this meeting if they have already voted. If you have not yet voted and would like to -- or would like change your vote, please raise your hand, and a ballot will be provided to you. Before we proceed to the first order of business, I'd like to recognize our senior management team, the AutoZone Executive Committee, all of whom are here today. Thank you for your leadership in delivering another great year for our customers, AutoZoners, communities and stockholders. I would also like to take a moment to recognize Enderson Guimaraes and Bryan Jordan, who are not standing for reelection after more than a decade of outstanding service to our Board of Directors. The Board, management team and I want to thank Enderson and Bryan for their leadership and invaluable contributions. We wish them both the very best in their future endeavors. Also with us today, my fellow director nominees, whom I will introduce shortly, and [ Mike Walsh ] from Ernst & Young LLP, our independent auditor. With that, let's proceed to the 5 matters brought before the meeting today. Our first order of business is the election of directors to serve until the next Annual Meeting of Stockholders in 2025. The following directors have been nominated for reelection to the Board, all of whom are current directors and present at this meeting: myself, Phil Daniele; Mike George; Linda Goodspeed; Butch Graves; Brian Hannasch; Gale King; George Mrkonic; Bill Rhodes; and Jill Soltau. The second order of business is the ratification of the appointment of Ernst & Young LLP as the company's independent registered public accounting firm for fiscal year 2025. The third order of business is a nonbinding advisory vote to approve the compensation of our named executive officers. The fourth order of business is a vote on reducing the ownership threshold necessary to call a special meeting of stockholders. The Board of Directors unanimously recommends that stockholders vote for each of the director nominees, for Ernst & Young, for the advisory vote on executive compensation and for reducing the ownership threshold necessary to call a special meeting. Our fifth and final order of business is a shareholder proposal submitted by John Chevedden. I would like to ask [ Shelley Pan ], a representative for Mr. Chevedden to come up to the stage and present the proposal. She will have an opportunity to speak for 3 minutes.

This is proposal #5, special shareholder meeting improvement. Shareholders ask the AutoZone Board of Directors to take the steps necessary to amend the appropriate company governing documents to give the owners of a combined 10% of the outstanding common stock the power to call a special shareholder meeting or the owners of the lowest percentage of shareholders, as governed by state law, the power to call a special shareholder meeting. Currently, it requires over 50% of all shares outstanding to call for a special shareholder meeting at AutoZone. A more reasonable shareholder right to call for a special shareholder meeting, as called for in this proposal, can help make shareholder engagement meaningful. A more reasonable shareholder right to call for a special shareholder meeting in AutoZone bylaws will help ensure that management engages with shareholders in good faith because shareholders will have a viable Plan B by calling for a special shareholder meeting. With the widespread use of online shareholder meetings, it is much easier for AutoZone to conduct a special shareholder meeting, and AutoZone bylaws thus need to be updated accordingly. Thank you. It says, "Please vote yes."

Thank you. The Board recommends a vote against this proposal as explained in the proxy statement. If there are no other matters to properly come before the meeting, we will now proceed with the vote. For the stockholders voting at this meeting, please complete your vote now, and we will collect your ballot. [Voting]

I now declare that the polls for the 2024 Annual Meeting of Stockholders are closed. Jenna, has the inspector of elections presented the results?

Yes, the inspector of elections has presented her preliminary report. There are, present this meeting in person or by proxy, 15,157,676 shares of the company's common stock, representing 89.67% of the approximate 16,904,289 million shares deemed to be outstanding as of October 21, 2024. Based upon this report, all 9 directors have been reelected. The appointment of Ernst & Young LLP for fiscal year '25 has been ratified. The nonbinding advisory vote on executive compensation has been approved. The advisory vote on reducing the ownership threshold necessary to call a special meeting from 50.1% to 25% has received a majority of the votes cast. And the stockholder proposal on reducing the ownership threshold necessary to call a special meeting from 50.1% to 10% has not received a majority of the votes cast. The final vote results will be filed on a current report on Form 8-K.

Thanks, Jenna. Since there is no further business, the official business of this meeting is hereby adjourned. At this time, I'll open up the floor for any questions. As I see no questions, I'll move to the next point. I'd like to thank our shareholders for their continued confidence in our mission, and I'd like to thank the AutoZoners across the globe for their commitment. So living the pledge. Now let's deliver a great 2025 by focusing on our great people providing great service. I'd like to close the meeting with an AZ.

Thank you very much. That does conclude today's conference. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.