SEC Comment Letter for ADVANCE AUTO PARTS INC (AAP) (CIK 0001158449) (AAP) — May 24, 2010
ADVANCE AUTO PARTS INC (AAP) (CIK 0001158449)
Date: May 24, 2010 · CIK: 0001158449 · Accession: 0000000000-10-028535
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File numbers found in text: 001-16797
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Mail Stop 3561 May 24, 2010 Michael A. Norona Executive Vice President & Chief Financial Officer Advance Auto Parts, Inc. 5008 Airport Road Roanoke, Virginia 24012 Re: Advance Auto Parts, Inc. Form 10-K for the Fiscal Year Ended January 2, 2010 Filed March 2, 2010 Definitive Proxy Statement on Schedule 14A Filed April 9, 2010 File No. 001-16797 Dear Mr. Norona: We have reviewed your filings and ha ve the following comments. You should comply with the comments in all future filings, if applicable. Please confirm in writing that you will do so and also explain to us in sufficient detail how you intend to comply by providing us with your proposed revisions. If you disagree, we will consider your explanation as to why our comments are inappl icable or a revision is unnecessary. Please be as detailed as necessary in your explanat ion. In some of our comments, we may ask you to provide us with information so we may better understand your disclosure. After reviewing this information, we may raise additional comments. Please understand that the purpose of our re view process is to assist you in your compliance with the applicable disclosure requirements and to enhance the overall disclosure in your filings. We look forward to working with you in these respects. We welcome any questions you may have about our comments or on any other aspect of our review. Feel free to call us at the telephone numbers listed at the end of this letter. Form 10-K for the Fiscal Year Ended January 2, 2010 Exhibit Index 1. We note that you have filed several agreem ents as material contracts under Item 601(b)(10) of Regulation S-K, however, it does not appear that you have filed complete copies of such agreements, including all exhibits, schedules and attachments. Specifically, it does not appe ar that you have filed complete copies of your Credit Agreement dated as of Oc tober 5, 2006 or your Term Loan Credit Michael A. Norona Advance Auto Parts, Inc. May 24, 2010 Page 2 Agreement dated as of December 4, 2007. With your next current or periodic report, please file complete copies of these agreements, including all exhibits, appendixes, attachments and schedules to these agreements or advise why you are not required to file these documents. Also, please note that it appears that the footnote (11) you reference with respect to the Credit Agreement dated as of October 5, 2006 should be revised to refer to footnote (10). Definitive Proxy Statement on Schedule 14A Related Party Transactions, page 12 2. Please expand your disclosure to descri be your policies and procedures for review, approval, or ratification of re lated party transactions. We note your discussion on page 12 that your direct ors and officers fill out an annual questionnaire and are required to report related party transact ions, but you do not describe how those questionnaires and/ or reports are reviewed, approved or ratified or how you otherwise go about consid ering such transactions for approval. Refer to Item 404(b) of Regulation S-K. Compensation Discussion and Analysis, page 16 Annual Incentive Plan, page 19 3. We note your indication on page 19 that “our chief executive officer had an incentive target of 200 percent of base salary and other named executive officers had incentive targets of 75, 80 or 90 percent of base salary.” Please revise to disclose the specific incentive target assigned to each named executive officer. 4. We note your statement on page 21 that “[ t]he Committee decided to exercise its discretion to adjust the earned incenti ve awards downward from the maximum 200 percent of target…” and that the a nnual incentive plan payouts “ranged from 128 percent to 141 percent….” Please e xpand to specifically describe how each executive officer’s adjusted award was de termined. We note your statement that “[i]n determining actual bonuses, the Committee also took into account each executive officer’s individual performa nce…” but this does not clarify the specific individual performance factors c onsidered in adjust ing the amounts. Long-Term Incentive Compensation, page 21 5. In the second paragraph of this disc ussion, you state that EPA performance will be assessed for the 2010 through 2012 fiscal years relative to a defined peer group but the following paragraph indicates that such performance will be assessed during fiscal 2009 through 2011. These stat ements appear to conflict. Please revise or advise. We may have fu rther comment assuming 2009 was the first fiscal year that EPA pe rformance was assessed. Michael A. Norona Advance Auto Parts, Inc. May 24, 2010 Page 3 Alignment with Stockhol der Interests, page 25 6. We note your disclosure in response to Item 402(s) of Regulation S-K where you indicate that none of your compensation programs “would be r easonably likely to have a materially adverse effect on the Company.” Please de scribe the process you undertook to reach this conclusion. Summary Compensation Table, page 26 7. We note that the total comp ensation paid to each of your named executive officers in 2009 significantly decreased from 2008 as a result of a signif icant reduction in the grant date fair value of the stock awards granted in the respective years. It does not appear that you a ddress the factors behind this reduction in your long- term incentive disclosure or otherwise. Please provide us with revised disclosure addressing this reduction. Refer to It em 402(b)(2)(ix) of Regulation S-K. * * * Please respond to these comments within 10 business days or tell us when you will provide us with a response. Please furnish a letter that keys your responses to our comments and provides any requested information. Detailed letters greatly facilitate our review. Please understand that we may have additional comments after reviewing your responses to our comments. We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filings to be certain that the filings include all information required under the Securities Exchange Act of 1934 and that they have provided all information investors require for an informed invest ment decision. Since the company and its management are in possession of all facts re lating to a company’s disclosure, they are responsible for the adequacy and accuracy of the disc losures they have made. In connection with responding to our comments, please provide, in writing, a statement from the company acknowledging that: • the company is responsible for the adequacy and accuracy of the disclosure in the filing; • staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking a ny action with respect to the filing; and Michael A. Norona Advance Auto Parts, Inc. May 24, 2010 Page 4 • the company may not assert staff comme nts as a defense in any proceeding initiated by the Commission or any pers on under the federal s ecurities laws of the United States. In addition, please be advise d that the Division of Enfo rcement has access to all information you provide to the staff of the Divi sion of Corporation Fi nance in our review of your filings or in response to our comments on your filings. Please contact Chris Chase, Staff Atto rney, at (202) 551-3485, Mara Ransom, Legal Branch Chief, at (202) 551-3264 or me at (202) 551-3720 with any questions. Sincerely, H. Christopher Owings Assistant Director