Sector: Consumer Discretionary
ADVANCE AUTO PARTS INC · Meeting: May 20, 2026
Directors FOR
6
Directors AGAINST
4
Say on Pay
FOR
Auditor
AGAINST
Election of the ten nominees named in the Proxy Statement to the Board of Directors to serve until the 2027 annual meeting of stockholders
Against Analysis
Ms. Bailo has served since August 2020, giving her full tenure overlap with the severe 3-year underperformance period in which AAP's stock fell 52.2% while the disclosed peer group median rose 46.5% — a gap of 98.7 percentage points, far exceeding the 20-point trigger threshold for companies with negative absolute 3-year returns; the 5-year check does not mitigate because AAP's 5-year return of -67.4% vs. peer median of +113.3% is a gap of -180.7pp, well above the 20pp threshold, confirming sustained rather than transient underperformance.
Mr. Ferraro has served since February 2015 and thus bears full accountability for the period of severe underperformance; AAP's stock declined 52.2% over 3 years while peers gained 46.5% on median, a 98.7-percentage-point gap that far exceeds the 20-point trigger, and the 5-year record (-67.4% vs. peer median +113.3%, gap of -180.7pp) confirms the underperformance is sustained and not a recent blip.
Ms. Hilson joined in March 2022, more than 24 months before the measurement date, so the new-director exemption does not apply; her tenure fully overlaps the severe underperformance period (98.7pp gap vs. peers, well above the 20pp trigger), and the 5-year check is not available as a mitigant because the sustained 5-year underperformance gap of -180.7pp also exceeds the threshold.
Mr. Lee has served since November 2015 and bears full accountability for the sustained underperformance; the 98.7-percentage-point gap between AAP's -52.2% 3-year return and the peer median of +46.5% far exceeds the 20pp trigger threshold, and the 5-year gap of -180.7pp confirms this is not a transient shortfall.
For Analysis
Ms. Jamison joined the Board in March 2026, which is within 24 months of the measurement date, so she is exempt from the TSR underperformance trigger under the new-director exemption; she brings extensive public company governance and CFO experience relevant to overseeing a retail turnaround.
Mr. Johnson joined the Board in January 2026, which is within 24 months of the measurement date, making him exempt from the TSR underperformance trigger; he brings over 30 years of retail and merchandising experience that is directly relevant to AAP's recovery strategy.
Mr. O'Kelly joined as CEO and director in September 2023, within 24 months of the measurement date, so he is exempt from the TSR underperformance trigger under the new-director exemption; this vote determination is independent of the Say on Pay assessment.
Mr. Seboldt joined in March 2024, which is within 24 months of the measurement date, making him exempt from the TSR underperformance trigger; he brings deep automotive aftermarket industry expertise that is directly relevant to AAP's core business.
Mr. Smith joined in March 2024, within 24 months of the measurement date, so he is exempt from the TSR underperformance trigger; his extensive supply chain leadership experience is highly relevant to one of AAP's key strategic focus areas.
Mr. Windom joined in March 2024, within 24 months of the measurement date, making him exempt from the TSR underperformance trigger; his decades of automotive aftermarket executive experience provide directly relevant oversight capability.
We vote AGAINST four directors — Bailo, Ferraro, Hilson, and Lee (the independent Chair) — whose tenures meaningfully overlap with AAP's severe and sustained underperformance: AAP's stock fell 52.2% over three years while the company's own disclosed peer group rose 46.5% on median, a gap of 98.7 percentage points that far exceeds the 20-point trigger threshold for companies with negative absolute returns; the 5-year record (-67.4% vs. peer median +113.3%) confirms this is not a temporary dip. The six remaining nominees — Jamison, Johnson, O'Kelly, Seboldt, Smith, and Windom — all joined within the past 24 months and are exempt from the TSR trigger under the new-director rule, reflecting significant recent board refreshment that is a positive governance development.
CEO
Shane M. O'Kelly
Total Comp
$9,121,929
Prior Support
82.2%%
CEO Shane O'Kelly received total compensation of approximately $9.1 million in 2025, which is reasonable for a CEO leading a $3.2 billion market cap consumer retail turnaround, and the pay structure is heavily performance-linked: roughly 85% of his total compensation is variable (long-term equity awards plus annual cash incentive), well above the 50-60% minimum threshold. Critically, the pay-for-performance alignment holds up under scrutiny: performance stock awards for the 2023-2025 period paid out at 0% for the third consecutive year because AAP's relative total shareholder return ranked below threshold versus peers, meaning executives did not profit from the poor stock performance that has hurt shareholders. The prior year Say on Pay vote received 82.2% support (above the 70% concern threshold), the company engages proactively with shareholders, a meaningful clawback policy is in place, and the 2025 short-term incentive payout of approximately 97% of target reflected genuine operational progress (return to profitability, comparable store sales improvement), making the overall compensation program structure approvable despite the company's difficult recent performance history.
Auditor
Deloitte & Touche LLP
Tenure
24 yrs
Audit Fees
$5,461,000
Non-Audit Fees
$907,000
Deloitte has served as AAP's auditor since 2002, meaning tenure is approximately 24 years — one year short of the formal 25-year trigger that would require a No vote, so the tenure trigger does not fire; the non-audit fee ratio (audit-related fees of $275k plus tax fees of $22k plus consulting/other fees of $610k totaling $907k, divided by audit fees of $5,461k) equals approximately 16.6%, which is well below the 50% threshold; the $610k in 'All Other' consulting fees related to a technology assessment is a one-time engagement but does not push the ratio over the threshold; no material restatements are disclosed; accordingly, no policy trigger is met and the vote is FOR, though shareholders should note that tenure is approaching the 25-year mark where heightened scrutiny applies.
The 2026 AAP annual meeting ballot presents a mixed picture: we vote FOR on Say on Pay because the pay structure is genuinely performance-linked (zero long-term incentive payouts for three straight years) and CEO pay is reasonable for the role, and FOR on auditor ratification because fee ratios and tenure are within policy limits. However, we vote AGAINST four of the ten director nominees — Bailo, Ferraro, Hilson, and Lee — because their tenures fully overlap with AAP's catastrophic 3-year stock performance (-52.2% versus a peer median of +46.5%, a 98.7-percentage-point gap that is nearly five times the policy trigger threshold), while the six newer directors who joined within the past 24 months are appropriately exempt and receive FOR votes, reflecting the board's meaningful recent refreshment effort.
17 companies disclosed in 2026 proxy filing
