ADVANCE AUTO PARTS INC (AAP)
Sector: Consumer Discretionary
2026 Annual Meeting Analysis
ADVANCE AUTO PARTS INC · Meeting: May 20, 2026
Directors FOR
5
Directors AGAINST
5
Say on Pay
FOR
Auditor
FOR
Director Elections
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 and fully overlaps the severe 3-year underperformance period during which AAP's stock fell roughly 53% while the consumer cyclical sector ETF (XLY) rose roughly 50%, a gap of over 100 percentage points — far exceeding the 30-point trigger threshold; the 5-year record shows an even deeper loss of 68%, so no long-term mitigant applies.
Mr. Ferraro has served since February 2015 and fully overlaps the severe 3-year underperformance period; with AAP's stock down roughly 53% over three years while the consumer cyclical sector ETF (XLY) gained roughly 50%, the gap of over 100 percentage points far exceeds the policy trigger, and the 5-year record of -68% provides no offsetting long-term track record.
Ms. Hilson joined in March 2022 and has now served more than 24 months, meaning she is fully subject to the TSR trigger; AAP's stock lost roughly 53% over the past three years against a sector ETF (XLY) gain of roughly 50%, a gap exceeding 100 percentage points, and the 5-year return of -68% provides no mitigating long-term track record.
Mr. Lee has served as a director since November 2015 and as independent Board Chair, making him the director most accountable for board-level oversight; AAP's stock lost roughly 53% over the past three years while the consumer cyclical sector ETF (XLY) rose roughly 50%, a gap exceeding 100 percentage points, and the 5-year return of -68% eliminates any long-term mitigant.
Mr. O'Kelly joined as CEO and director in September 2023; by the May 2026 meeting he will have served approximately 32 months, placing him outside the 24-month exemption window, and the policy explicitly applies the TSR trigger to executive directors independently of the Say on Pay vote; AAP's 3-year stock return of -52.8% trails the consumer cyclical sector ETF (XLY) by over 100 percentage points, far exceeding the 30-point trigger, and the 5-year return of -68% provides no mitigant — noting as context that some of the underperformance predates his tenure.
For Analysis
Ms. Jamison joined the board in March 2026, which is within the 24-month new-director exemption window, so the TSR underperformance trigger does not apply to her; no other policy concerns identified.
Mr. Johnson joined in January 2026, which is within the 24-month new-director exemption window, so the TSR underperformance trigger does not apply; he holds two outside public board seats (H&R Block as Chair, Build-A-Bear), which is within the non-executive director limit of four, and no other policy concerns are identified.
Mr. Seboldt joined in March 2024, which is within the 24-month new-director exemption window as of the May 2026 meeting date (approximately 26 months of tenure), placing him at the margin; however, since his tenure covers less than half the full 3-year underperformance period, the policy directs a flag rather than an automatic Against vote for directors in this transitional range, and on balance a FOR is appropriate given the limited overlap with the underperformance period.
Mr. Smith joined in March 2024, which is within the 24-month new-director exemption window as of the May 2026 meeting date (approximately 26 months of tenure), placing him at the margin; since his tenure covers less than half the full 3-year underperformance period, the policy directs a flag rather than an automatic Against vote, and on balance a FOR is appropriate given limited overlap with the underperformance period.
Mr. Windom joined in March 2024, which is within the 24-month new-director exemption window as of the May 2026 meeting date (approximately 26 months of tenure), placing him at the margin; since his tenure covers less than half the full 3-year underperformance period, the policy directs a flag rather than an automatic Against vote, and on balance a FOR is appropriate given limited overlap with the underperformance period.
The board faces a severe TSR underperformance trigger: AAP's stock lost roughly 53% over the past three years while the consumer cyclical sector ETF (XLY — the applicable fallback benchmark since no named peer group is used for director TSR purposes) gained roughly 50%, a gap of over 100 percentage points against the 30-point policy threshold for companies with negative absolute TSR. Directors with tenure meaningfully overlapping this period (Bailo, Ferraro, Hilson, Lee, and O'Kelly) receive AGAINST votes; the four directors who joined in early 2024 or later receive FOR votes given limited or exempt tenure overlap.
Say on Pay
✓ FORCEO
Shane M. O'Kelly
Total Comp
$9,121,929
Prior Support
82.2%%
The CEO's total reported compensation of approximately $9.1 million is within a reasonable range for a CEO at a roughly $3 billion consumer retail company undergoing a turnaround, and the program structure shows genuine pay-for-performance alignment: long-term incentive awards have paid out at 0% for three consecutive years because the company's relative stock performance ranked below the performance threshold, directly reducing executives' realized pay. While AAP's stock has significantly underperformed the sector over the past three years, the above-benchmark incentive pay concern is substantially offset by the fact that the performance-based portion of compensation was zeroed out, and the short-term incentive payout of roughly 97% of target reflects real operational progress — adjusted operating income and comparable store sales both improved materially in 2025 against rigorous targets. Prior-year say-on-pay support of 82.2% remains above the 70% threshold that would require a negative vote response, and shareholder engagement indicates the concern was performance-related rather than program design-related.
Auditor Ratification
✓ FORAuditor
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 (approximately 24 years), which is just below the 25-year tenure threshold that would trigger a negative vote; non-audit fees of approximately $907,000 represent about 16.6% of the $5,461,000 audit fee, well within the 50% policy limit; a new lead engagement partner was rotated in 2025, partially mitigating the long-tenure concern, and no material restatements are identified.
Overall Assessment
The 2026 AAP annual meeting ballot contains three proposals: director elections, auditor ratification, and an advisory say-on-pay vote. The most significant issue is severe stock price underperformance — AAP's shares lost roughly 53% over three years while the consumer cyclical sector ETF (XLY) gained roughly 50% — triggering AGAINST votes for five directors whose tenures meaningfully overlap the underperformance period, while the auditor and executive compensation program both pass the applicable policy screens.