SEC Form DEF 14A filed by Copart Inc. (DE)

NOTICE OF 2024 ANNUAL MEETING OF STOCKHOLDERS

Forward-Looking Statements

This proxy statement, including the section entitled “Compensation Discussion and Analysis” set forth below, contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements are based on our current expectations and involve risks and uncertainties that may cause our actual results to differ materially from those anticipated by these forward-looking statements. These forward-looking statements may include statements regarding actions to be taken by us in the future. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise. Forward-looking statements should be evaluated together with the many uncertainties that affect our business, particularly those mentioned in the section on forward-looking statements and in the risk factors in Part I, Item 1A of our annual report on Form 10-K for the fiscal year ended July 31, 2024, and in our periodic reports on Form 10-Q and current reports on Form 8-K as filed with the SEC.

2024 Annual Meeting of Stockholders

Agenda and Voting Recommendations

At this year’s annual meeting, our stockholders will be asked to vote on the following agenda items:

Fiscal 2024 Performance Summary — Another Record Setting Year

Director Nominees

Executive Compensation Highlights

Set forth below is the fiscal 2024 compensation for each NEO (as defined in the “Compensation Discussion and Analysis” section of this proxy statement) as determined under U.S. Securities and Exchange Commission (“SEC”) rules. See the Fiscal 2024 Summary Compensation Table and the accompanying notes to the table beginning on page 46 for more information.

“ESG” Strategy and Highlights

Since our inception in 1982, Copart has played a critical role in the automotive circular economy as a key intermediary enabling the recycling and reuse of automobiles and automotive parts, while facilitating access to transportation around the world. The very nature of our business is aligned with the reduction of carbon emissions. The process of manufacturing a new vehicle generates approximately 2 metric tons of carbon dioxide equivalents, according to the U.S. Department of Energy. By matching millions of vehicles each year with buyers who will repurpose vehicles, Copart helps the world avoid millions of tons of carbon dioxide equivalents.

We are proud that our business, by its nature, enhances the habitability of our planet. We facilitate the re-use and recycling of millions of vehicles each year, while accelerating access to affordable transportation and the attendant benefits of social, educational, and economic mobility around the world. To learn more about Copart’s ESG efforts, please review our 2023 sustainability report, which is available on our website at www.copart.com under Investor Relations.

Copart’s ESG strategy is rooted in our company’s core values and prioritizes four focus areas:

Questions and Answers and Other Information

Please see “Other Matters” beginning on page 68 and “Questions and Answers about the Proxy Materials and Annual Meeting” beginning on page 60 for important information about the proxy materials, voting, the annual meeting, company documents, communications and the deadlines to submit stockholder proposals and director nominees for the 2024 annual meeting of stockholders. Additional questions may be directed by phone by calling us at (972) 391-5000.

In accordance with SEC guidelines, all numbers representing shares of Copart, Inc. common stock, including equity incentive awards relating to Copart, Inc. common stock, have been adjusted to reflect the 2-1 forward stock split in the form of a stock dividend that was effective on August 21, 2023. These adjustments include all stock price, exercise price, restricted stock unit, and per share or per restricted stock unit information.

Learn More About Our Company

You can learn more about our company, view our governance materials and much more by visiting our website at www.copart.com under Investor Relations.

Please also visit www.edocumentview.com/CPRT to access our notice of annual meeting of stockholders, proxy statement and 2024 annual report on Form 10-K.

CORPORATE GOVERNANCE AND BOARD OF DIRECTORS

CORPORATE GOVERNANCE AND BOARD OF DIRECTORS

Board Composition

Our Board is currently comprised of twelve members. Our bylaws permit our board to establish the authorized number of directors within a range of five to twelve members, and twelve directors are currently authorized. The Board is nominating twelve nominees for election.

All directors elected at an annual meeting are elected to serve from the time of election and qualification until the earlier of the next annual meeting of stockholders following such election, or their resignation or removal. At each annual meeting of stockholders, the terms of each of our incumbent directors expire and twelve members of our Board are standing for re-election as directors.

Our bylaws provide for a majority voting standard in the election of directors, except in the event of a contested election, in which case we will revert to a plurality voting standard, the default standard under Delaware law. For a description of our majority voting standard, please refer to the section captioned “Proposal 1-Election of Directors.”

Board Skills and Diversity Matrices

The directors serving on our Board come from diverse backgrounds that align with our business requirements, help us to address the risks to which our business is subject, and foster sound business judgment.

When conducting its review of the appropriate skills and qualifications desired of directors, the Nominating and Governance Committee particularly considers the skills, experiences, and expertise that are critical to the Board’s ability to provide effective oversight of the Company and are directly relevant to Copart’s business, strategy, and operations. These are as follows:

CORPORATE GOVERNANCE AND BOARD OF DIRECTORS

CORPORATE GOVERNANCE AND BOARD OF DIRECTORS

Board Diversity Matrix

Our Nominating and Governance Committee considers all aspects of diversity, including racial and gender diversity, in evaluating board candidates, in addition to relevant skills and experience. The following table sets forth further diversity statistics as self-reported by the twelve (12) directors on our board as of July 31, 2024:

Fiscal 2024 Board Meetings

During fiscal 2024, our Board held eight meetings and took action four times by unanimous written consent. Each of our directors attended or participated in 75% or more of the total number of meetings of our Board held during the period of their service. Each of the directors also attended or participated in 75% or more of the meetings held by the standing committees of our Board on which they served during the past fiscal year.

Board Leadership Structure

Chairman of the Board

Our Board believes that it is important to retain its flexibility to allocate the responsibilities of the positions of the chairman of our Board and chief executive officer in a way that it believes is in our best interests. Currently, the roles of chairman of our Board and chief executive officer have been separated by our Board. Willis J. Johnson is our Chairman of the Board, and Jeffrey Liaw is our chief executive officer. Our Board believes that the separation of the offices of chairman and chief executive officer is appropriate at this time because it allows our chief executive officer to focus primarily on our business strategy, operations, and corporate vision, while the chairman provides guidance

CORPORATE GOVERNANCE AND BOARD OF DIRECTORS

to the chief executive officer, sets the agenda for Board meetings, and presides over meetings of the full Board. Our Board’s administration of risk oversight has not affected its leadership structure.

Lead Independent Director

Our Board has also appointed Daniel J. Englander as our lead independent director. In this role, Mr. Englander serves as the formal liaison between the Board and the chief executive officer, reviews and approves the proposed Board agendas, and leads the executive session portion of our regular Board meetings at which only independent directors are present.

Director Independence

As a company listed on the Nasdaq Global Select Market (“Nasdaq”), we are required under the Nasdaq listing requirements to maintain a board comprised of a majority of “independent directors,” as determined affirmatively by our Board. In addition, the Nasdaq rules require that, subject to specified exceptions, each member of our audit, compensation, and nominating and governance committees be independent. In September 2024, our Board undertook a review of the independence of our directors and considered whether any director has a material relationship with us that could compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities. As a result of this review, our Board determined that a majority of our directors are “independent directors” as defined under applicable Nasdaq rules. Of our incumbent directors, Matt Blunt, Steven D. Cohan, Daniel J. Englander, Stephen Fisher, Cherylyn Harley LeBon, James E. Meeks, Diane M. Morefield, Carl D. Sparks, and Thomas N. Tryforos have each been determined by our Board to be an “independent director” as that term is defined under the rules of Nasdaq.

In making its independence determinations, our Board considered transactions between us and entities associated with the directors or members of their immediate family. All identified transactions that appear to relate to us and a person or entity with a known connection to a director are presented to our Board for consideration. In making its determination that certain directors are independent, our Board considered the transactions in the context of the Nasdaq rules, and the standards established by the SEC for members of audit committees, compensation committees, and nominating and governance committees.

Oversight of Risk Management

The role of our Board in our risk oversight process includes receiving regular reports from members of senior management on areas of material risk to us, including operational, financial, legal and regulatory, and strategic and reputational risks.

Our Board’s role in risk oversight is consistent with our Board’s leadership structure, with the chief executive officer and other members of senior management having responsibility for assessing and managing our risk exposure, and our Board and committees providing oversight in connection with those efforts. While our Board has the ultimate oversight responsibility for our risk management policies and processes, the committees of our Board also have responsibility for risk oversight with respect to certain matters.

Our Audit Committee oversees management of financial risk exposures, including the integrity of our accounting and financial reporting processes and controls. As part of this responsibility, our Audit Committee meets periodically with our independent auditors, our internal auditors, and our financial and accounting personnel to discuss significant financial risk exposures and the steps management has taken to monitor, control, and report these exposures. Additionally, our Audit Committee reviews significant findings prepared by our independent auditors together with management’s responses as well as significant findings of our internal auditors. Our Audit Committee also oversees risk associated with related party transactions, business conduct, regulatory compliance, and cybersecurity and privacy compliance.

CORPORATE GOVERNANCE AND BOARD OF DIRECTORS

Our Compensation Committee considers the risks associated with our compensation policies and practices with respect to both executive compensation and employee compensation generally. Our management has reviewed with our Compensation Committee the compensation plans and programs that could have a material impact on us. The management review considered whether any of these plans or programs may encourage inappropriate risk-taking, whether any plan may give rise to risks that are reasonably likely to have a material adverse effect on us, and whether our management would recommend any changes to the plans. Our management also reviewed with our Compensation Committee risk-mitigating controls such as the degree of Compensation Committee and senior management oversight of each program and the level and design of internal controls over such programs. Based upon this review, we believe that the mix and design of the elements of our compensation policies and practices do not encourage our employees to assume excessive risks and, accordingly, are not reasonably likely to have a material adverse effect on us.

Our Nominating and Governance Committee oversees risks associated with our overall governance practices and the leadership structure of our board. Our Board is kept informed of each committee’s risk oversight and other activities via regular reports of the committee chairs to the full board. As part of its oversight of our overall governance practices, the Nominating and Governance Committee has adopted our enterprise policy development and governance framework. To the extent that an ESG aspect is not covered by the full Board in its oversight of our corporate strategy or specifically assigned to another committee, the Nominating and Governance Committee also oversees our general activities in ESG areas.

Board Committees

Our Board maintains three standing committees: an audit committee, a compensation committee, and a nominating and governance committee. Each committee has a written charter, which is reviewed and approved annually by our Board, outlining the principal responsibilities of the committee. Copies of the current committee charters are available in the Corporate Governance section of the Investor Relations page on our website at www.copart.com.

Only directors deemed to be “independent” (see below) serve on the Audit, Compensation, or Nominating and Governance Committees. However, our Board may create special committees from time to time and our current employee directors or those deemed not to be independent under applicable rules and guidelines may be appointed to serve on those special committees, as our Board may determine.

CORPORATE GOVERNANCE AND BOARD OF DIRECTORS

Compensation Committee Interlocks and Insider Participation

Our Compensation Committee consists of Daniel J. Englander, Matt Blunt, Steven D. Cohan, Cherylyn Harley LeBon, and Thomas N. Tryforos. No member of our Compensation Committee was, at any time during fiscal 2024, an officer nor employee of Copart or any of our subsidiaries. Mr. Cohan was previously an officer of Copart from 1992-1996. In addition, no member of our Compensation Committee had any relationship requiring disclosure under Item 404 of Regulation S-K promulgated by the SEC at the time such committee member served as a board member and committee member.

No interlocking relationship, as described by the SEC, currently exists or existed during fiscal 2024 between any member of our Compensation Committee and any member of any other company’s board of directors or compensation committee.

Considerations in Identifying and Evaluating Director Nominees

To the extent our Nominating and Governance Committee believes it appropriate to identify and evaluate new director candidates, our Nominating and Governance Committee generally requests our board members and others provide recommendations, meets from time to time to evaluate biographical information and background material relating to potential candidates, and interviews potential director candidates.

Our Nominating and Governance Committee consists of Diane M. Morefield, Daniel J. Englander, Cherylyn Harley LeBon, Carl D. Sparks, and Thomas N. Tryforos and has established policies and procedures relating to the consideration of any individual recommended as a prospective director nominee from stockholders. Please see the section entitled “Director Nomination Process” below. The Nominating and Governance Committee will consider candidates recommended by stockholders in the same manner as candidates recommended to the committee from other sources.

CORPORATE GOVERNANCE AND BOARD OF DIRECTORS

In its evaluation of director candidates, including the members of the Board eligible for re-election, our Nominating and Governance Committee will consider the following:

Our Nominating and Governance Committee evaluates these factors, among others, and does not assign any particular weighting or priority to any of these factors.

Any nominee for a position on the Board must satisfy the following minimum qualifications:

The Nominating and Governance Committee considers diversity as one of many factors in identifying nominees for director, including personal characteristics such as race and gender, as well as diversity in the experience and skills that contribute to the board’s performance of its responsibilities in the oversight of a complex and highly-competitive global business. The Nominating and Governance Committee does not assign specific weights to particular criteria and no particular criterion is necessarily applicable to all prospective nominees.

If our Nominating and Governance Committee determines that an additional or replacement director is required, the Nominating and Governance Committee may take such measures as it considers appropriate in connection with its evaluation of a director candidate, including candidate interviews, inquiry of the person or persons making the recommendation or nomination, engagement of an outside search firm to gather additional information, or reliance on the knowledge of the members of the Nominating and Governance Committee, Board, or management.

Director Nomination Process

Our Nominating and Governance Committee is responsible for, among other things, determining the criteria for membership to our Board and recommending candidates for election to the Board. It is the policy of our Nominating and Governance Committee to consider recommendations for candidates to the Board from stockholders holding not less than 1% of the outstanding shares of our common stock continuously for at least twelve months prior to the date of submission of the recommendation or nomination. Stockholder recommendations for candidates to the Board must be directed in writing to Copart, Inc., Copart Tower, 14185 Dallas Parkway, Suite 300, Dallas, Texas 75254, Attention: Chief Legal Officer, and must include the candidate’s name, home and business contact information, detailed biographical data, relevant qualifications, a signed letter from the candidate confirming willingness to serve, information regarding any relationships between the candidate and Copart, and evidence of the recommending stockholder’s ownership of our stock. Such recommendations must also include a statement from the recommending stockholder in support of the candidate, particularly within the context of the criteria for board membership, including issues of character, integrity, judgment, independence, area of expertise, corporate experience, length of service, personal characteristics (including gender, race, LGBTQ+ status and diversity of experience), potential conflicts of interest, and other commitments, and personal references. For details regarding the process to nominate a director directly for election to the Board at an annual meeting of the stockholders, please see the section entitled “Questions and Answers About the Proxy Materials and Annual Meeting — What is the deadline to propose actions for consideration at next year’s annual meeting of stockholders or to nominate individuals to serve as directors? — Nomination of Director Candidates.”

CORPORATE GOVERNANCE AND BOARD OF DIRECTORS

Director Attendance at Annual Meetings

Although we do not have a formal policy regarding attendance at stockholder meetings, our directors are encouraged to attend the annual meeting of stockholders. Messrs. Adair and Liaw attended and delivered remarks at our 2023 Annual Meeting.

No Hedging Policy

Our insider trading policy precludes our officers, directors, employees, consultants, agents and contractors from engaging in transactions in publicly-traded options, such as puts and calls, and other derivative securities with respect to our securities. This prohibition extends to any hedging or similar transaction designed to decrease the risks associated with holding our securities.

Corporate Governance Principles and Code of Business Conduct

Our Board has adopted Corporate Governance Principles. Our Corporate Governance Principles address, among other items, the qualifications and responsibilities of our directors, the structure and composition of our Board and corporate governance policies and standards applicable to us in general. In addition, our Board has adopted our Code of Business Conduct, applicable to all of our employees, executive officers and directors. The full text of our corporate governance principles and Code of Business Conduct are available on our website at https://www.copart.com/content/us/en/investor-relations/investor-relations. The Nominating and Governance Committee of our Board is responsible for overseeing the Code of Business Conduct, including regularly reviewing and updating our Code of Conduct for regulatory and best practices updates. Any amendments to the Code of Business Conduct, or any waivers of its requirements, will be disclosed on our website.

Annual Board Self-Evaluations

Each year, the Nominating and Governance Committee leads the Board through self-evaluations to assess whether the Board, its committees, and its members are functioning effectively and to identify areas where improvement can be made. This process also includes an evaluation of all directors, including the Chairman of the Board, Lead Director and committee chairs. The Chair of the Nominating and Governance Committee compiled and anonymized the results of the self-evaluation and presented summaries that identified common themes, issues and suggestions to the committees and the Board. The Board and its committees reviewed and discussed the summaries during committee and Board executive sessions, and then, as appropriate, enhanced policies and practices based on the results. We believe this approach, in addition to ongoing feedback, supports the Board’s effectiveness and continuous improvement.

External Director Equity Ownership Policy

In September 2020, our Board adopted a new external director equity ownership policy. Taken together with the equity compensation element of our external director compensation program, the policy is designed to encourage our directors to build and maintain a meaningful equity ownership position in our stock, in order to better align the interests of our Board with the interests of our stockholders. The external director equity ownership policy prohibits our external directors from selling any shares of our stock that they beneficially own unless both before and after the proposed sale the director holds shares — including vested options that can be exercised for shares — with a fair market value as of the proposed transaction date greater than or equal to three times the cash portion of their annual director compensation. We are in full compliance with our External Director Equity Ownership Policy.

Stockholder Communications with our Board

Our Board recommends that stockholders who wish to communicate directly with our Board should do so in writing. Our Board has approved the following procedure for stockholders to communicate with our directors. Mail can be addressed to directors in care of Copart, Inc., Attention: Chief Legal Officer, Copart Tower, 14185 Dallas Parkway, Suite 300, Dallas, Texas 75254. All mail received will be opened and screened for security purposes. All mail, other

CORPORATE GOVERNANCE AND BOARD OF DIRECTORS

than trivial or obscene items, will be forwarded to our directors. Trivial items will be delivered to our directors at the next scheduled Board meeting. Mail addressed to a particular director will be forwarded or delivered to that director. Mail addressed to “Outside Directors” or “Non-Management Directors” will be forwarded or delivered to the chairman of our Nominating and Governance Committee. Mail addressed to the “Board of Directors” will be forwarded or delivered to the Chairman of our Board. Our chief legal officer may decide in the exercise of his judgment whether a response to any stockholder communication is necessary.

This procedure does not apply to stockholder proposals submitted pursuant to our bylaws and Rule 14a-8 of the Exchange Act, as discussed in this proxy statement under the caption “What is the deadline to propose actions for consideration at next year’s annual meeting of stockholders or to nominate individuals to serve as directors? — Nomination of Director Candidates.”

Environmental, Social, and Governance

Through its governance and oversight of our business, our Board is responsible for setting our strategic corporate goals. Our goals are to generate sustainable profits for our stockholders while providing environmental and social benefits for the world around us.

We believe that our business model should be aligned with recognized environmental, sustainability, and governance standards, with a broad awareness of the social, environmental, and human context in which we operate. Our Nominating and Governance Committee is responsible for overseeing our business activities in this area.

In December 2023, we published our second annual ESG report on our investor relations website that provides detailed disclosures regarding our ESG objectives based on the UN SDGs, the SASB standards, and the GRI reporting framework. Although these disclosures are not incorporated by reference into this proxy statement, we believe the 2023 ESG report offers valuable insights into the ways our business aligns favorably with important goals in these areas.

Data Protection and Cybersecurity

We are committed to protecting the data that we use in our business operations, including personal data that may identify individuals. We have a chief information security officer who leads our cybersecurity efforts, and we have implemented an information security management system. We have also made substantial investments in both the number of our cybersecurity professionals and the technologies we use to protect the data that we use in our business.

Furthermore, our Audit Committee is responsible for oversight of our data protection and cybersecurity activities. To enhance the Board’s oversight of cybersecurity matters, Stephen Fisher was added to our Board and the Audit Committee. He is a technologist who currently serves as the executive vice president for Next Generation CRM and Unified Data Services, and as President, Salesforce Platform at Salesforce.com, and who previously served as the chief technology officer of eBay, Inc.

COMPENSATION OF DIRECTORS AND CHAIRMAN OF THE BOARD

COMPENSATION OF DIRECTORS AND CHAIRMAN OF THE BOARD

Our directors play a critical role in guiding our strategic direction and overseeing our management. Our directors consider maximizing long-term stockholder value for our investors to be their principal responsibility. Based on that long-held philosophy, our levels of cash compensation for non-employee directors and our Chairman of the Board have tended to fall below our peer group median, while levels of director equity compensation have exceeded our peer group median when measured using the equity valuation methodologies required by SEC rules.

Consistent with our compensation philosophy that director compensation should be directly linked to realized stockholder appreciation, our equity compensation programs for non-employee directors and our Chairman of the Board have focused on stock options granted on the date of each annual meeting with an exercise price equal to the closing price of our common stock on Nasdaq on the date of grant. Under that mechanism, if stockholders realize gains from the date of that meeting, our directors realize them as well (and proportionately to the gains realized by stockholders). If our stock price falls and stockholders do not realize gains, neither do our directors, as an option with an exercise price greater than then-prevailing market prices has no then-current value.

Outside Director Compensation Program

In September 2023, our Board approved our amended outside director compensation program. Under our amended outside director compensation program, eligible directors (consisting of our Chairman of the Board and our non-employee directors) each receive an annual retainer of $57,500. Additionally, each eligible director receives an additional $10,000 cash retainer for each committee on which they serve, unless the eligible director serves as the chair of one or more standing committees, consisting of the Audit Committee, the Compensation Committee, and the Nominating and Governance Committee, in which case the eligible director receives an additional $20,000 cash retainer for their service as the chair of such committee. These cash retainers are payable in quarterly installments in arrears on a prorated basis.

Each person who first becomes an eligible director will receive, on the date on which the person first becomes an eligible director, an initial award of an option to purchase a number of shares of our common stock that results in such option having a “value” of $250,000, rounded down to the nearest whole share. Each initial award will vest as to 1/12th of the underlying shares on each month following the date the applicable eligible director’s service as an eligible director commenced, in each case subject to the eligible director’s continued service as a director through the relevant vesting date. If an individual commences service as an eligible director on the date an annual award (discussed below) would be granted, then the individual will not be granted an initial award, but instead will be granted only an annual award. If an individual commences service as an eligible director on any other date, then that individual will not be eligible to receive an annual award until the second annual meeting of stockholders where directors are elected following the individual’s initial date of service as an eligible director.

Except as described above, on the date of each of our annual stockholder meetings following the effective date of our amended outside director compensation program, each eligible director automatically will be granted an annual award of an option to purchase a number of shares of our common stock that results in such option having a “value” of $250,000, rounded down to the nearest whole share. Each annual award will vest as to 1/12th of the underlying shares on each month following the date of grant, in each case subject to the applicable eligible director’s continued service as a director through the relevant vesting date.

Each initial award or annual award will have a term of seven years and will have an exercise price per share equal to the fair market value of a share of our common stock on the date of grant.

In the event of a change in control of our company, all initial awards and annual awards will fully vest, in each case subject to the applicable eligible director’s continued service as a director through the date of the change in control.

The directors are also eligible for reimbursement of reasonable and necessary expenses incurred in connection with their attendance at Board meetings.

COMPENSATION OF DIRECTORS AND CHAIRMAN OF THE BOARD

For purposes of determining the number of shares covered by an initial award or annual award and the limitations described in the previous paragraph, “value” means the fair market value of the shares subject to the equity award, as determined using the Black-Scholes option valuation formula.

Our founder and Chairman of the Board, Willis J. Johnson, participates in the outside director compensation program on the same terms as non-employee directors. However, under our amended outside director compensation program, Mr. Johnson continues to receive the same perquisites and benefits he was provided under the previous stockholder-approved compensation program as described in the table below.

Fiscal 2024 Director Compensation

The following table presents information relating to total compensation paid or accrued for services rendered to us in all capacities by our Chairman of the Board and our non-employee directors for the fiscal year ended July 31, 2024. The table excludes A. Jayson Adair and Jeffrey Liaw, each of whom are named executive officers and do not receive any additional compensation for services provided as a director. See the section below entitled “Executive Compensation” for information about the compensation of Messrs. Adair and Liaw.

COMPENSATION OF DIRECTORS AND CHAIRMAN OF THE BOARD

As of July 31, 2024, the end of our 2024 fiscal year, the aggregate number of stock options outstanding for our Chairman of the Board and each of our non-employee directors was as follows:

Fiscal 2024 Director Equity Incentive Awards (2023 Annual Meeting)

At the 2023 annual meeting of stockholders, our Chairman of the Board and each non-employee member of our Board (other than newly-appointed non-employee directors) received an option grant under our 2007 Equity Incentive Plan, consistent with the outside director compensation program described above, on the terms described above. Each stock option expires seven years from the date of grant (unless earlier terminated in accordance with the terms of the equity plan and related stock option agreement). Each of the 2023 annual meeting options bore an exercise price of $47.39 per share, which was the closing price of our common stock on Nasdaq on December 8, 2023, the date of our 2023 annual meeting and the date of grant.

PROPOSAL 1: ELECTION OF DIRECTORS

PROPOSAL 1: ELECTION OF DIRECTORS

One of the purposes of our annual meeting is to elect directors to hold office until the 2025 annual meeting of stockholders or until their respective successors are elected and have been qualified. At each annual meeting of stockholders, the terms of each of our incumbent directors expires and all members of our Board are elected. Our bylaws permit our Board to establish the authorized number of directors within a range from five to twelve members. We currently have twelve authorized directors serving on our Board, of which nine are “independent” as defined under the Nasdaq listing standards.

Nominees

Our Nominating and Governance Committee has approved and nominated the twelve individuals listed below for election as directors. Each person nominated for election has agreed to serve if elected, and we have no reason to believe that any nominee will be unavailable to serve. Unless otherwise instructed, the proxy holders will vote all submitted proxies FOR each of the twelve nominees named below.

Each of the following nominees is currently one of our directors. Please see “Biographical Information” below for information concerning each of the following directors standing for election. Please note that all ages set forth below are as of October 24, 2024.

If any nominee does not receive a majority of the votes cast at the annual meeting, the Nominating and Governance Committee will make a recommendation to the Board on whether to accept or reject such director’s resignation, or whether other action should be taken. The Board will act on the Nominating and Governance Committee’s recommendation and publicly disclose its decision and the rationale behind it within 90 days from the date of the certification of the election results.

PROPOSAL 1: ELECTION OF DIRECTORS

Biographical Information

Willis J. Johnson

A. Jayson Adair

Matt Blunt

PROPOSAL 1: ELECTION OF DIRECTORS

Steven D. Cohan

Daniel J. Englander

Stephen Fisher

PROPOSAL 1: ELECTION OF DIRECTORS

Cherylyn Harley LeBon

Jeffrey Liaw

PROPOSAL 1: ELECTION OF DIRECTORS

James E. Meeks

Diane M. Morefield

PROPOSAL 1: ELECTION OF DIRECTORS

Carl D. Sparks

Thomas N. Tryforos

Family Relationships

There are no family relationships among any of our directors or executive officers, except that A. Jayson Adair is the son-in-law of Willis J. Johnson.

Required Vote

Each nominee requires the affirmative vote of a majority of the votes cast at the annual meeting to be elected. You may vote “FOR”, “AGAINST” or “ABSTAIN” for each nominee. Abstentions and broker non-votes are not counted as votes “FOR” or “AGAINST” and will not affect the outcome of the election of directors.

Recommendation of our Board

PROPOSAL 2: ADVISORY VOTE ON APPROVAL OF EXECUTIVE COMPENSATION

PROPOSAL 2: ADVISORY VOTE ON APPROVAL OF EXECUTIVE COMPENSATION

We are asking our stockholders to cast a non-binding advisory vote to approve the compensation of our named executive officers identified in the “Executive Compensation” section of this proxy statement as required by Section 14A of the Exchange Act. Section 14A was added to the Exchange Act by Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). The advisory vote on the approval of executive compensation is a non-binding vote on the compensation of our named executive officers, as described in the “Executive Compensation” section (including the “Compensation Discussion and Analysis” section, the tabular disclosure regarding such compensation, and the accompanying narrative disclosure) in this proxy statement. The Dodd-Frank Act requires us to hold the advisory vote on the approval of executive compensation at least once every three years.

Our compensation for our named executive officers has been supported by a majority of the votes cast by our stockholders since proxy voting on named executive officer compensation began in 2011. At our 2023 annual meeting, Approximately 80% of the votes cast by our stockholders approved of our fiscal 2023 executive compensation program.

Compensation Program and Philosophy

Our executive compensation program is designed to:

Under this program, our named executive officers are rewarded for the achievement of specific short-term and long-term goals that enhance stockholder value. Stockholders are urged to read the “Compensation Discussion and Analysis” section of this proxy statement, which describes our executive compensation program and contains information about the fiscal 2024 compensation of our named executive officers. Our Compensation Committee and our Board believe that our compensation design and practices are effective in implementing our executive compensation goals.

We are asking our stockholders to indicate their support for the compensation of our named executive officers as described in this proxy statement by voting in favor of the following resolution:

“RESOLVED, that the stockholders approve, on an advisory basis in a non-binding vote, the compensation of Copart, Inc.’s named executive officers as disclosed pursuant to Item 402 of Securities and Exchange Commission Regulation S-K, including the Compensation Discussion and Analysis, the compensation tables and narrative disclosures set forth in the proxy statement relating to Copart’s 2024 annual meeting of stockholders.”

Required Vote

The votes cast “FOR” must exceed the votes cast “AGAINST” to approve, on an advisory basis, the compensation awarded to our named executive officers for the fiscal year ended July 31, 2024. You may vote “FOR”, “AGAINST”, or “ABSTAIN” on this proposal. Abstentions and broker non-votes are not counted as votes “FOR” or “AGAINST” and will not affect the outcome of this proposal.

Even though this say-on-pay vote is advisory and, therefore, will not be binding on us, our Compensation Committee and our Board value the opinions of our stockholders. Accordingly, to the extent there is a significant vote against the compensation of our named executive officers, we will consider our stockholders’ concerns, and our Compensation Committee will evaluate what actions may be necessary or appropriate to address those concerns.

Recommendation of our Board

PROPOSAL 3: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

PROPOSAL 3: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Our Audit Committee has appointed Ernst & Young LLP as our independent registered public accounting firm to audit our consolidated financial statements for the current fiscal year ending July 31, 2025. A representative of Ernst & Young LLP is expected to be present at the annual meeting, will have the opportunity to make a statement if he or she desires to do so, and will be available to respond to appropriate questions. Stockholder ratification of the appointment of Ernst & Young LLP is not required by our bylaws or otherwise. Our Audit Committee is submitting the appointment of Ernst & Young LLP to the stockholders for ratification as a matter of good corporate practice.

In the event our stockholders fail to ratify the appointment of Ernst & Young LLP, our Audit Committee will reconsider its selection. Even if the selection of the independent registered public accounting firm is ratified by our stockholders, our Audit Committee may, in its discretion, direct the appointment of a different independent registered public accounting firm at any time during the year if it feels that such a change would be in the best interests of the company and our stockholders.

Required Vote

The votes cast “FOR” must exceed the votes cast “AGAINST” to ratify the appointment by the Audit Committee of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending July 31, 2025. You may vote “FOR”, “AGAINST”, or “ABSTAIN” on this proposal. Abstentions are not counted as votes “FOR” or “AGAINST” and will not affect the outcome of this proposal.

Recommendation of our Board

Auditor Fees and Services

The following table sets forth the aggregate fees for professional services rendered for the audit of our consolidated annual financial statements by our independent registered public accounting firm, Ernst & Young LLP, for fiscal years ended July 31, 2024 and 2023. The table also includes fees billed for audit services, audit-related services, tax services, and all other services rendered by Ernst & Young LLP for fiscal years ended July 31, 2024 and 2023:

PROPOSAL 3: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm

Our Audit Committee’s policy is to pre-approve all audit and permissible non-audit services provided by the independent registered public accounting firm (or subsequently approving audit and permitted non-audit services in those circumstances where a subsequent approval is necessary and permissible). These services may include audit services, audit-related services, tax services, and other services. Pre-approval is generally provided for up to one year. Our independent registered public accounting firm and management are required to periodically report to our Audit Committee regarding the extent of services provided by our independent registered public accounting firm in accordance with this pre-approval. Our Audit Committee may also pre-approve particular services on a case-by-case basis. In addition, the charter of our Audit Committee provides that our Audit Committee may delegate to one or more designated members the authority to pre-approve audit and permissible non-audit services, provided such pre-approval decision is presented to our Audit Committee at its scheduled meetings.

All of the services of Ernst & Young LLP for fiscal years 2024 and 2023 described above were pre-approved by the Audit Committee.

Report of the Audit Committee

The Audit Committee of our Board consists of Messrs. Cohan, Blunt, Fisher, and Sparks and Ms. Morefield. The Audit Committee has reviewed and discussed with management and Ernst & Young LLP our audited consolidated financial statements and financial reporting processes. Our management has the primary responsibility for our financial statements and financial reporting processes, including the system of internal controls. Ernst & Young LLP, our current independent registered public accounting firm, is responsible for performing an independent audit of our consolidated financial statements and for expressing an opinion on the conformity of those financial statements with generally accepted accounting principles. The Audit Committee reviews and monitors these processes and receives reports from Ernst & Young LLP and management. The Audit Committee also discusses with Ernst & Young LLP the overall scope and plans of their audits, their evaluation of our internal controls, and the overall quality of our financial reporting processes.

The Audit Committee has discussed with management and the independent registered public accounting firm the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (PCAOB) and the Securities and Exchange Commission. These discussions included the clarity of the disclosures made therein, the underlying estimates and assumptions used in the financial reporting, and the reasonableness of the significant judgments and management decisions made in developing the financial statements. In addition, the Audit Committee has discussed with the independent registered public accounting firm their independence from us and our management and the independent registered public accounting firm provided the written disclosures and the letter required by the applicable requirements of the PCAOB, and considered the compatibility of non-audit services with the independent registered public accounting firm’s independence.

On an annual basis, the Audit Committee obtains from the independent registered public accounting firm a written communication delineating all their relationships and professional services as required by the applicable requirements of the PCAOB. In addition, the Audit Committee reviewed with the independent registered public accounting firm the nature and scope of any disclosed relationships or professional services and took, or recommended that our Board take, appropriate action to ensure the continuing independence of the independent registered public accounting firm.

Based upon the reviews, discussions and considerations referenced above, the Audit Committee has recommended to the Board that our audited consolidated financial statements be included in our annual report on Form 10-K for

PROPOSAL 3: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the fiscal year ended July 31, 2024, and that Ernst & Young LLP be appointed as our independent registered public accounting firm for the fiscal year ending July 31, 2025.

Respectfully submitted by:

The Audit Committee of the Board

Steven D. Cohan (Audit Committee Chairman)

Matt Blunt

Stephen Fisher

Diane M. Morefield

Carl D. Sparks

The preceding report of the Audit Committee shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C (17 CFR 240.14a-1 through 240.14b-2 or 240.14c-1 through 240.14c-101), other than as provided in Item 407(d) of Regulation S-K, or to the liabilities of section 18 of the Exchange Act (15 U.S.C. 78r), except to the extent we specifically request that the information be treated as soliciting material or specifically incorporate it by reference into a document filed under the Securities Act or the Exchange Act. Such information will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate it by reference.

EXECUTIVE OFFICERS AND EXECUTIVE COMPENSATION

EXECUTIVE OFFICERS AND EXECUTIVE COMPENSATION

Executive Officers

Our executive officers and their ages as of October 24, 2024 were as follows:

A. Jayson Adair

Executive Chairman and Director

A. Jayson Adair, 55, has served as our executive chairman since April 2024, as our co-chief executive officer from February 2010 to April 2024, and our chief executive officer from February 2010 to April 2022. From November 1996 to February 2010, Mr. Adair served as our president. From 1995 until 1996, Mr. Adair served as our executive vice president. From 1990 until 1995, Mr. Adair served as our vice president of sales and operations, and from 1989 to 1990, Mr. Adair served as our manager of operations.

Jeffrey Liaw

Chief Executive Officer and Director

Jeffrey Liaw, 47, has served as our chief executive officer since April 2024, as our co-chief executive officer from April 2022 to April 2024, as our president and CEO North America from February 2021 until April 2022, as our president from September 2019 to January 2021, and as our chief financial officer from September 2016 until October 2020. Before joining Copart in 2016, Mr. Liaw served as the chief financial officer of FleetPride, Inc., a privately held company that distributes truck and trailer parts nationwide, since January 2013. From August 2005 to December 2012, Mr. Liaw was a principal of TPG Capital Management, L.P., a private equity firm. Mr. Liaw earned his B.A. and B.B.A. from the University of Texas in 1999, and he earned his M.B.A. from Harvard University in 2005.

Leah C. Stearns

Senior Vice President and Chief Financial Officer

Leah C. Stearns, 44, has served as our senior vice president and chief financial officer since December 2022. Since 2020, Ms. Stearns has served on the board of directors of EdgeConnex, a global datacenter provider, where she also serves as Chair of the Audit Committee. From May 2019 to December 2021, Ms. Stearns served as a senior executive at CBRE Group, Inc., (NYSE: CBRE), a global leader in commercial real estate services and investments, including as its chief financial officer. Prior to joining CBRE Group, Inc., Ms. Stearns served for 17 years in a variety of leadership roles with American Tower Corporation, (NYSE: AMT), a leading independent owner, operator, and developer of multitenant communications real estate, where she most recently served as senior vice president and chief financial officer of its U.S. division. Ms. Stearns earned her B.S. in Finance from Boston University in 2002, and her M.B.A. from Boston College in 2010.

EXECUTIVE OFFICERS AND EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

This Compensation Discussion and Analysis provides an overview of our executive compensation philosophy, our executive compensation programs for our named executive officers (“NEOs”), the material decisions we have made with respect to each element of those executive compensation programs, and the material factors we considered when making those decisions. Following this Compensation Discussion and Analysis, you will find further information in the executive compensation tables about the compensation earned by or paid to each of our NEOs, including details of the fiscal 2024 compensation of our named executive officers in the Fiscal Year 2024 Summary Compensation Table.

For fiscal 2024, our NEOs were:

Executive Summary

Founded in 1982, Copart specializes in the resale and remarketing of used vehicles for a variety of sellers, including insurance companies, dealers, rental car companies, government agencies, financial institutions and charities. Copart’s extensive inventory is housed on more than 19,000 acres of real estate and includes an array of vehicles including cars, trucks, trailers, vans, classic and exotic cars, commercial vehicles, and construction and industrial equipment. Each year, Copart sells more than 4 million vehicles, drawing widespread participation in its auctions by dealers, rebuilders, dismantlers, hobbyists, collectors, and consumers.

Copart’s innovative technology and online auction platform link buyers and sellers around the world. Headquartered in Dallas, Texas, Copart currently operates in more than 275 locations in 11 countries and has approximately 265,000 vehicles listed for auction every day.

Fiscal 2024 Business Highlights

Fiscal 2024 was a very successful year for Copart with revenue increasing 9.5% to $4.2 billion, operating income increasing 5.7% to $1.57 billion, and net income increasing 10.1% to $1.36 billion year-over-year. Fully diluted earnings per share for fiscal 2024 was $1.40 compared to $1.28 in fiscal 2023, an increase of 9.4%. In addition, our stock reached an all-time high of $58.58 per share during fiscal 2024. Over our past 15 fiscal years, our stock has increased approximately 2,271%, as compared to an approximately 637% return for the S&P 500 over the same time period.

Fiscal 2024 Executive Compensation Highlights

Mr. Adair again refused all forms of compensation, other than a $1.00 per year salary and participating in our employee benefit plans and in certain perquisite programs approved by the Compensation Committee.

EXECUTIVE OFFICERS AND EXECUTIVE COMPENSATION

With respect to our other NEOs, the Compensation Committee approved:

Results of our 2023 Say-On-Pay Proposal and Subsequent Stockholder Engagement

At our 2023 annual meeting of stockholders, our say-on-pay advisory proposal passed with approximately 80% of our stockholders voting in favor, which was up from 62% in 2022. Our stockholders will recall that the 2022 say-on-pay result prompted us to engage, beginning in mid-2023, in a concerted stockholder engagement process with our 25 largest stockholders. This process, which involved participation of members of our compensation committee along with members of our management team, was intended to elicit feedback from stockholders regarding our executive compensation program and how we can help our stockholders better understand our approach to executive compensation. Our stockholder engagement program provided valuable feedback in relation to how we think about structuring our executive compensation program to ensure our approach aligns with creating long-term value for our stockholders.

Thematically, while many of our stockholders did not voice any concerns regarding our executive compensation program, we also welcomed and responded to feedback regarding where our approach and disclosures could be improved. Specifically, our discussions with stockholders enabled us to more clearly explain our approach to executive compensation and to enhance our compensation-related disclosures, particularly in relation to our annual cash incentive program. We believe these conversations, and how we responded, ultimately facilitated a more fulsome evaluation of our compensation program by our stockholders. As a result, we believe that the year-over-year increase in the percentage of stockholders voting to approve our non-binding say-on-pay proposal demonstrates that our stockholders not only better understand our approach to executive compensation, but also valued how seriously we take stockholder engagement and undertaking adjustments when our stockholders request more or clearer information.

For purposes of our 2024 say-on-pay proposal, based on the demonstrable improvement in our year-over-year vote approving our say-on-pay proposal, we did not tailor our stockholder engagement program to focus specifically on compensation issues. Rather, during 2024, we continued to engage with our most significant stockholders on an array of topics, including executive compensation, and we remain committed to pursuing a robust program of stockholder engagement going forward.

EXECUTIVE OFFICERS AND EXECUTIVE COMPENSATION

Our Philosophy on Executive Compensation

The primary objective of our executive compensation program is to incentivize our NEOs to think and behave like long-term owners of our business.

The Compensation Committee implements this objective primarily through the grant of long-term equity awards, which vary based on the NEO. Because our executive chairman A. Jayson Adair is one of the founders of our business and beneficially owns 3.17% of our common stock as of October 11, 2024. Mr. Adair is currently primarily compensated through driving appreciation in the price of our common stock. By contrast, our chief executive officer Jeffrey Liaw is the first non-founder to serve as our chief executive officer, and his compensation has been designed to align his interests with the long-term interests of our stockholders primarily through large, front-end loaded, multi-year stock option awards. The compensation structure for Ms. Stearns, our chief financial officer, closely resembles the design we used for Mr. Liaw.

Although Mr. Adair has not been granted new equity compensation since June 2020, and is not expected to receive any new equity compensation in his new role as executive chairman, it is important to recognize that we have a long history of compensating Mr. Adair through large, front-end loaded, multi-year stock option awards. We first adopted a compensation program for Mr. Adair based almost exclusively on stock options in 2009 and have successfully continued that program for more than a decade. Over the succeeding 15 years, our stockholder returns have substantially exceeded those of the S&P 500 as shown in the following chart:

EXECUTIVE OFFICERS AND EXECUTIVE COMPENSATION

Based on our 2,271% total shareholder return over our past 15 fiscal years, we believe our historical executive compensation arrangements for Mr. Adair have been extraordinarily effective and resulted in an outstanding degree of stockholder alignment. We have attempted to continue this successful approach for our non-founder executive officers, but with traditional salary and cash bonuses as well since they have shorter tenures with us and have not accumulated the level of stock ownership in Copart as Mr. Adair.

We believe that substantial front-end loaded, multi-year equity incentive awards promote executive leadership stability and retention and a long-term ownership mindset.

A significant benefit of compensation arrangements that are heavily weighted to substantial, front-end loaded multi-year equity incentive awards is that we can settle our executive compensation arrangements for several years at a time. Our Compensation Committee finds that avoiding frequent executive compensation negotiations with our executive officers helps promote leadership stability and a long-term ownership mindset. Mr. Adair received his first multi-year stock option award in 2009, which covered five consecutive years of compensation, and his second multi-year stock option award in 2014, which also covered a five-year period. Mr. Adair’s most recent stock option award in 2020 provided him with compensation for fiscal years 2019, 2020, and 2021. Since June 2021, Mr. Adair has been working only for his $1 annual salary, along with certain perquisites approved by our Compensation Committee.

We continued our pattern of multi-year compensation with the executive compensation package we awarded to Mr. Liaw upon his promotion to co-chief executive officer in March 2022. Although Mr. Liaw receives a competitive annual salary and participates in our executive bonus plan, along with certain perquisites approved by our Compensation Committee, he is not eligible for any new equity incentive awards until April 2026.

Our Compensation Committee believes that equity incentive awards with time-based vesting is a powerful and effective tool for NEO retention. We use time-based vesting for all NEO equity incentive awards, and since June 2020, our standard vesting schedule for executive officer equity incentive awards has been 20% vesting on the first anniversary of the date of grant, with monthly vesting thereafter at a rate of 1/60 per month, such that the equity incentive award is fully vested on the fifth anniversary of the grant date.

We believe that stock options directly link realized equity compensation to stockholder returns and expect our long-term equity awards to continue to focus on stock options.

As a general principle, our Compensation Committee believes that our NEOs should realize actual compensation only if, when, and to the extent that stockholders realize gains. Our historical approach to Mr. Adair’s executive compensation best reflects the application of this principle. Other than the limited perquisites described in more detail below, Mr. Adair receives no meaningful cash compensation in the form of base salary or annual cash incentives. Instead, he has received only stock options granted with an exercise price equal to the closing sales price of Copart’s common stock on the date of grant, which by its nature results in realized value only if and to the extent the value of Copart’s stock increases. If the stock price does not increase, Mr. Adair realizes nothing. If the stock price appreciates only modestly, Mr. Adair realizes only modest compensation. On the other hand, outsized gains in stock price appreciation for the benefit of all our stockholders will accrue as well to Mr. Adair.

We named Jeffrey Liaw as our chief executive officer in April 2024, and as our co-chief executive officer in April 2022. Mr. Liaw’s executive compensation package, which has not materially changed since 2022, was designed similar to the approach we have historically taken with Mr. Adair because his compensation was heavily weighted to stock option awards, which represented approximately 74% of his executive compensation package value in fiscal 2022. Our Compensation Committee took a similar approach in its design of the onboarding executive compensation package for our chief financial officer, Ms. Stearns, with stock options representing approximately 53% of her total onboarding compensation package value in December 2022, and 76% of her total compensation for fiscal 2024. Consistent with our historical compensation structure and philosophy for Mr. Adair, we believe the heavy weighting of stock option awards in the compensation packages for Mr. Liaw and Ms. Stearns create a high degree of stockholder alignment and focus on long-term value creation.

EXECUTIVE OFFICERS AND EXECUTIVE COMPENSATION

Although we believe restricted stock units lack the incentive and stockholder alignment power of stock options, for our non-founder NEOs, we believe including restricted stock units in the total mix of compensation elements lessens the impact of short-term stock price fluctuations, aids in executive retention and promotes a long-term ownership mindset.

For our non-founder NEOs who lack Mr. Adair’s tenure and significant Copart stock ownership position, our Compensation Committee determined that adding restricted stock units to the mix of total compensation was an appropriate way of providing these NEOs with a degree of personal financial security to weather any short-term price fluctuations in our stock price, so that they can remain focused on long-term value creation. Our Compensation Committee also believes that including restricted stock units in the mix of total executive compensation helps to temper any incentives our non-founders may otherwise have for excessive risk-taking and also helps to deter any potential bias for near-term results at the expense of long-term value creation.

Based on these considerations, our Compensation Committee designed Mr. Liaw’s compensation package in March 2022 so that restricted stock units represented approximately 20% of his total compensation package. The Compensation Committee took a similar approach in designing Ms. Stearns’ onboarding compensation package in December 2022, with restricted stock units representing approximately 41% of her total onboarding compensation package.

We believe that equity incentive awards should be significantly performance-based.

Our Compensation Committee recognizes that some corporate governance standards don’t view stock options subject to ordinary time-based vesting as sufficiently “performance based”. To address this concern, for each of the equity incentive awards we have made to NEOs since June 2020, we have implemented a premium price hurdle that applies to at least 50% of the total value of the particular equity incentive award.

Our Compensation Committee worked closely with Compensia, Inc., our external compensation consultant, to design Mr. Adair’s June 2020 stock option award for 4,000,000 shares, on a split-adjusted basis. Consistent with our historical practice at the time, our Compensation Committee determined that 100% of the stock option award would be subject to time-based vesting, with 20% of the award vesting on the first anniversary of the date of grant and the remainder vesting monthly over the succeeding 48 months. However, after reviewing the applicable published proxy voting guidelines of our largest stockholders and the major proxy advisory firms, our Compensation Committee further determined that in addition to ordinary time-based vesting, Mr. Adair’s stock option award would be subject to a special performance-based condition, such that Mr. Adair would not be able to exercise any portion of the stock option award unless our stock price was at least 125% of the option exercise price for twenty consecutive trading days. Following feedback from investors ahead of our 2020 annual meeting of stockholders, we amended Mr. Adair’s stock option award so that Mr. Adair would not be able to exercise any portion of his vested stock option award unless our stock price was at 125% of the option exercise price both (1) at the time of any exercise, and (2) at the close of trading of the trailing twenty consecutive trading days prior to any exercise.

Following Mr. Adair’s 2020 stock option award, we have maintained the special performance-based condition in our subsequent equity incentive awards to NEOs, in addition to ordinary time-based vesting. For Mr. Liaw’s 2022 compensation package, we calculated the total value of the stock options and restricted stock units, and then applied the same special performance-based condition we used for Mr. Adair to a number of the stock options with a value representing approximately 54% of the total value of the equity incentive awards. Our Compensation Committee took the same approach with Ms. Stearns’ equity compensation award, and applied the same special performance-based condition to a number of her stock options with a value representing 48.3% of the total value of her onboarding equity incentive awards. Our Compensation Committee used the same approach for Ms. Stearns’ stock option awards in November 2023, and applied the same special performance-based condition to a number of stock options with a value representing 54% of the total value of her fiscal 2024 equity incentive awards. Our Compensation Committee believes that applying the special performance-based condition to a target of approximately 50% of the total value of any particular equity incentive award to an executive officer is appropriate and reasonable, and informed by applicable published proxy voting guidelines of our largest investors and also the major proxy advisory firms.

EXECUTIVE OFFICERS AND EXECUTIVE COMPENSATION

Annual cash incentive programs should be performance-based, with more than 50% based on performance against one or more corporate financial metrics that drive stockholder value.

Historically, we have determined annual cash bonus awards based largely on performance relative to board-approved internal operating plans. Starting in fiscal 2022, the annual cash bonus awards for our eligible NEOs have been provided under a written performance-based executive bonus plan approved by our Compensation Committee. In fiscal 2024, the NEO’s annual bonuses were measured 60% based on achievement of an operating income performance metric and 40% based on achievement of their respective personal performance goals. The Compensation Committee believes that using these performance metrics aligns the NEOs’ bonus opportunities with the priorities of the Company and ultimately long-term value creation for our stockholders.

A significant portion of our eligible NEOs’ target total direct compensation should be at-risk.

Our Compensation Committee believes that a significant portion of our eligible NEOs’ target total direct compensation should be at risk, with particular focus on our CEO Jeffrey Liaw considering that our executive chairman A. Jayson Adair receives only $1.00 in annual salary, plus certain employee benefits and approved perquisites. As shown in the chart below, a significant portion of the target total direct compensation for Mr. Liaw constitutes performance-based compensation.

EXECUTIVE OFFICERS AND EXECUTIVE COMPENSATION

We maintain good executive compensation practices.

We maintain the following practices with respect to the compensation of our named executive officers:

Role of Our Compensation Committee

The Compensation Committee of our Board administers our executive compensation programs. The Compensation Committee seeks to ensure that the total compensation paid to our executive officers is fair and reasonable and that it serves the best interests of Copart and our stockholders. In fulfilling its responsibilities, our Compensation Committee:

For executive officers other than Mr. Adair, our Compensation Committee traditionally makes its determinations concerning base salary, cash bonuses, and additional equity incentives annually after the end of each fiscal year based on a review of our financial performance against the Board-approved operating plan. In making those decisions, the Compensation Committee has placed substantial weight on its own quantitative assessment of our operating performance metrics and has generally not taken a formulaic approach to setting executive compensation.

EXECUTIVE OFFICERS AND EXECUTIVE COMPENSATION

Role of the Compensation Consultant

Our Compensation Committee has the authority under its charter to engage the services of outside advisors to assist it in evaluating executive compensation programs. In February 2022, our Compensation Committee engaged Compensia to conduct a compensation review to inform our Compensation Committee’s decisions with respect to Mr. Liaw’s compensation in his new position as our co-chief executive officer, and Compensia provided peer group data that our Compensation Committee considered when evaluating the individual elements of Mr. Liaw’s proposed compensation. Our Compensation Committee subsequently used this peer group data to assist it in determining Mr. Stearns’ compensation for fiscal 2023.

In fiscal 2023, our Compensation Committee engaged Compensia to assist it with updating our peer group, and this peer group data was used to evaluate Ms. Stearns’ compensation for fiscal 2024, including with respect to the equity incentive awards that Ms. Stearns received in November 2023.

In fiscal 2024, our Compensation Committee engaged Compensia to assist it with updating our peer group, which will be used to help our Compensation Committee determine our NEOs’ compensation beginning in fiscal 2025.

In fiscal 2024, Compensia did not provide any services to us other than in its capacity as a consultant to our Compensation Committee, and Compensia did not receive any payments from us other than for such services. After considering the factors specified in the rules of the SEC and the Nasdaq Stock Market, our Compensation Committee believes that Compensia’s work on behalf of the Compensation Committee and its relationship with the Compensation Committee has not raised any conflicts of interest.

Use of a Peer Group

As part of its deliberations on Ms. Stearns’ compensation as our chief financial officer in fiscal 2024, our Compensation Committee developed an updated peer group in September 2023 in collaboration with Compensia. The peer group was generally chosen based on the following selection criteria as of September 19, 2023:

The peer group consisted of the following companies (which, as of September 19, 2023, had (i) a median four-quarters trailing revenue of $3.72 billion (as compared to Copart’s $3.76 billion), and (ii) a median 30-day average market capitalization of $23.89 billion (as compared to Copart’s $42.1 billion)):

As noted above, Compensia provided data on the compensation provided by this peer group, which was subsequently used to help our Compensation Committee determine the executive compensation for Ms. Stearns in fiscal 2024.

EXECUTIVE OFFICERS AND EXECUTIVE COMPENSATION

Fiscal 2024 Executive Compensation Program Components

Since April 2009, we have compensated Mr. Adair under an all-equity compensation program that seeks to align the interests of Mr. Adair with the long-term interests of our stockholders, with the most recent stock option grant occurring in June 2020. Other than participating in our employee benefit plans and in certain perquisite programs approved by the Compensation Committee and a $1.00 per year salary, Mr. Adair has refused all other forms of compensation since June 2020.

Our CEO Mr. Liaw and the other NEOs receive a mix of short-term and long-term compensation consisting of base salary, annual cash incentive bonus, equity awards and other compensation, including employee benefits plans and certain perquisites. The sections below discuss our fiscal 2024 compensation decisions for our NEOs, other than Mr. Adair.

Base Salary

We provide base salaries to our NEOs (other than Mr. Adair) to compensate them for services rendered during the fiscal year and for retention purposes.

Each NEO’s initial base salary is determined through arm’s-length negotiation. Our Compensation Committee subsequently reviews and evaluates adjustments to our NEOs’ base salaries annually based on the considerations described in the “Compensation-Setting Process” section above. In September 2023, our Compensation Committee approved a 3% merit increase in Ms. Stearns’ fiscal 2024 base salary, based on the recommendation of Messrs. Adair and Liaw.

The following table shows the annual base salaries of our NEOs for fiscal 2024 as compared to fiscal 2023.

Annual Performance-Based Cash Bonus Incentive Program

We provide our NEOs (other than Mr. Adair) with annual cash incentives under our executive bonus plan, which links cash incentive awards to achieving pre-established performance goals. For fiscal year 2024, the Compensation Committee set the performance metrics used to determine cash incentive awards to a combination of operating income and individual performance goals. The Compensation Committee believes that using these performance metrics aligns the NEOs’ bonus opportunities with the priorities of the Company and ultimately long-term value creation for our stockholders.

Financial performance targets are approved by the Compensation Committee in our first fiscal quarter and include payouts for threshold, target and maximum performance. For fiscal year 2024, the Compensation Committee set the following operating income performance thresholds and payout amounts:

EXECUTIVE OFFICERS AND EXECUTIVE COMPENSATION

No payout would occur if our fiscal 2024 operating income was less than $1.215 billion. Each $75 million of operating income above or below the $1.715 billion target amount would increase or decrease the payout by 1%.

In September 2023, the Compensation Committee approved fiscal 2024 target bonuses of $1.1 million for Mr. Liaw and $453,200 for Ms. Stearns. 

For Mr. Liaw and Ms. Stearns, their fiscal 2024 annual bonuses were measured 60% based on achievement of the operating income performance metric and 40% based on achievement of their respective personal performance goals.

Mr. Liaw had two personal performance goals for fiscal 2024. The first personal performance goal was to effectively onboard new members of the Company’s senior leadership team, and the second involved the Company’s development and deployment of products and services that differentiate Copart and provide value to its customers. Our Compensation Committee considered objective evidence of his personal performance goal attainment in determining that Mr. Liaw attained 100% of his personal performance goals.

Ms. Stearns also had two personal performance goals. The first goal related to the expansion of strategic financial analysis capabilities within the Company’s finance department, and the second goal related to the identification, targeting, and pursuit of meaningful opportunities to allocate capital through capital investments and corporate development activities. Our Compensation Committee reviewed detailed evidence of goal attainment in its determination that Ms. Stearns attained 100% of her personal performance goals.

In fiscal 2024, we achieved operating income of $1.57 billion, which resulted in a 99% payout under the operating income metric. Based on our financial performance and their levels of attainment of their qualitative goals, Mr. Liaw and Ms. Stearns received the bonus payment under our executive bonus plan for fiscal 2024 as follows: