DEF 14A 1 ny20001720x1_def14a.htm DEF 14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐

CHECK THE APPROPRIATE BOX:

☐ Preliminary Proxy Statement			☒ Definitive Proxy Statement
☐ Confidential, for Use of the Commission			☐ Definitive Additional Materials
Only (as permitted by Rule 14a-6(e)(2))			☐ Soliciting Material Pursuant to §240.14a-12

LITHIA MOTORS, INC.
(Exact Name of Registrant as Specified In Its Charter)

PAYMENT OF FILING FEE (CHECK ALL BOXES THAT APPLY):
☒ No fee required.
☐ Fee paid previously with preliminary materials
☐ Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

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Letter from the Chief Executive Officer

Dear Shareholder,

We are pleased to invite you to attend Lithia & Driveway’s (LAD’s) virtual 2022 Annual Meeting of Shareholders on April 27, 2022 at 8:30 a.m., Pacific Daylight Time to share our strategy for profitably consolidating the largest retail sector in North America through creating personal transportation solutions wherever, whenever and however our consumers desire.

Against the backdrop of strong consumer demand and supply chain shortages, we delivered record performance in 2021. The Lithia channel demonstrated its resilience and we saw early contributions from our newest endeavors, GreenCars, Driveway and Driveway Finance. We are well on our way to achieving our 2025 Plan and are excited for the road ahead.

LAD continues to transform into a diversified, omni-channel retailer that maximizes the addressable market and thrives in any environment. Expanding our physical footprint through accretive acquisitions adds to our capital engine and we are in the early innings of overlaying adjacencies to drive further synergies and economies of scale.

Our values guide us beyond producing financial returns to serving our customers and communities, developing our people, reaching our potential and growing our company. Within our entrepreneurial and high-performance culture, we maintain a human capital policy that supports a diverse and energized workforce with career advancement, role mobility opportunities and strong health, safety and wellness initiatives.

We are fortunate to have such a talented group of people who are committed to modernizing the industry and fully activating our approximately 21,150 team members, expansive physical network and the largest and most diverse offering of owned inventory.

Our mission of Growth Powered by People and our values of Customers for Life, Improving Constantly, Taking Personal Ownership, and Have Fun are the driving forces behind our ability to outperform and compete in any environment. We believe this unique strategy and culture positions us to continue to lead our industry’s transformation and will enable us to earn a more meaningful share of the U.S. market.

Thank you very much for being a partner and shareholder in our company.

Bryan B. DeBoer

President and Chief Executive Officer

Lithia Motors, Inc

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NOTICE OF ANNUAL MEETING

OF SHAREHOLDERS

2022 ANNUAL MEETING INFORMATION

Meeting Date Wednesday April 27,2022	Annual Meeting Website www.virtualshareholder meeting.com/LAD2022	Meeting Time 8:30 a.m. (Pacific Daylight Time)	Record Date February 28, 2022
ITEMS OF BUSINESS
1.To elect the seven director nominees named in this proxy statement;
2.To conduct an advisory vote to approve named executive officer compensation; and
3.To ratify the appointment of KPMG LLP as our independent registered public accounting firm for fiscal year ending December 31, 2022.

To the Shareholders of Lithia Motors, Inc.

I am pleased to invite you to the 2022 Annual Meeting of Shareholders of Lithia Motors, Inc. (the “Annual Meeting”), which will be held virtually at 8:30 a.m. Pacific Daylight Time on April 27, 2022. To ensure the health and safety of our employees, directors and shareholders during these uncertain times, the Board of Directors has authorized participation via remote communication for our Annual Meeting. There will be no physical location for shareholders to attend. The Annual Meeting will occur virtually through an audio webcast, accessible at the link provided above. You may notify the Company of your desire to participate in the Annual Meeting by remote communication by logging into the 2022 Annual Meeting Website in advance of the meeting. Log-in will begin at 8:00 a.m. Pacific Daylight Time. To participate in the Annual Meeting, you will need your unique control number included on your proxy card (printed in the box and marked by the arrow) or on the instructions that accompanied your proxy materials.

If you have any questions regarding this information or the proxy materials, please visit our website at www.lithiamotors.com or contact our investor relations department at (541) 776-6591. Our proxy statement and 2021 Annual Report on Form 10-K can be accessed directly at the following Internet address: http://www.proxyvote.com. Just enter the control number located on your proxy card.

We appreciate your continued support of Lithia Motors and look forward to either joining you at the meeting or receiving your proxy.

Very truly yours,

Christopher S. Holzshu, Executive Vice President and Secretary

March 11, 2022

	HOW TO VOTE
				Only holders of record of our common stock at the close of business on February 28, 2022, the record date, will be entitled to notice of and to vote at the meeting and any adjournment thereof. A list of shareholders entitled to vote at the Annual Meeting will be available during the Annual Meeting at the 2022 Annual Meeting Website. You may vote or submit questions during the Annual Meeting by following the instructions available on the 2022 Annual Meeting Website during the Annual Meeting. Further information regarding voting rights and the matters to be voted upon is presented in our proxy statement.

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YOUR VOTE IS IMPORTANT. Whether or not you plan to attend the Annual Meeting, we urge you to vote and submit your proxy via internet, telephone or by completing, signing, dating and returning your proxy card or voting instruction form so that your shares will be represented at the Annual Meeting.

Our proxy statement and 2021 Annual Report on Form 10-K can be accessed directly at the following Internet address:

http://www.proxyvote.com.

Just enter the control number located on your proxy card.

	SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
	This document contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements often use words such as “will”, “anticipate”, “estimate”, “expect”, “should”, “may”, and other words and terms of similar meaning or reference future dates. The Company’s expectations, beliefs and projections are expressed in good faith and are believed to have a reasonable basis; however, each forward-looking statement involves a number of risks and uncertainties, including those set forth in this document, those described in the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q under the heading “Risk Factors”, and those that have been or may be described in other reports filed by the Company, including reports on Form 8-K. The Company cautions that forward-looking statements are inherently less reliable than historical information. The risks and uncertainties that could cause actual results to differ materially from estimated or projected results include, without limitation: Future national and local economic and financial conditions, including as a result of the COVID-19 pandemic, inflation and governmental programs and spending; the market for dealerships, including the availability of stores to us for an acceptable price; changes in customer demand, our relationship with, and the financial and operational stability of, OEMs and other suppliers; changes in the competitive landscape, including through technology and our ability to deliver new products, services and customer experiences and a portfolio of in-demand and available vehicles; risks associated with our indebtedness, including available borrowing capacity, interest rates, compliance with financial covenants and ability to refinance or repay indebtedness on favorable terms; the adequacy of our cash flows and other conditions which may affect our ability to fund capital expenditures, obtain favorable financing and pay our quarterly dividend at planned levels; disruptions to our technology network including computer systems, as well as natural events such as severe weather or man-made or other disruptions of our operating systems, facilities or equipment; Government regulations and legislation; the risks set forth throughout “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in “Part I, Item 1A. Risk Factors” of our most recent Annual Report on Form 10-K, and in “Part II, Item 1A. Risk Factors” of our Quarterly Reports on Form 10-Q, and from time to time in our other filings with the SEC. The Company does not undertake any duty to update any of the forward-looking statements after the date of this document to conform them to actual results or to reflect changes in events, circumstances or its expectations. New factors emerge from time to time and it is not possible for the Company to predict or assess the effects of all such factors or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement.

	OTHER
	All references in this proxy statement to “Lithia”, “Lithia and Driveway”, “LAD”, “Lithia Motors”, the “Company”, “we”, “us”, or “our” refer to Lithia Motors, Inc. and its subsidiaries, except where the context otherwise requires or as otherwise indicated. The content on any website referred to in this Proxy Statement is not incorporated by reference in this Proxy Statement unless expressly noted.

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LITHIA MOTORS, INC. PROXY STATEMENT			7
2021 Achievements and Performance Highlights			7
Our Company Strategy			8
DIRECTORS AND NOMINEES			9
Summary of Director Experience and Qualifications			10
Director Biographies			11
Non-Director Executive Officers			13
CORPORATE GOVERNANCE Board Leadership and Structure			14
Board of Directors			14
2021 Board and Committee Composition			14
Board Committees			14
Director Independence			16
Lead Independent Director and Governance Practices			16
Note from our Lead Independent Director			17
Director Qualifications and Nominations			19
Our Board’s Risk Oversight Role			20
Cybersecurity			20
Code of Business Conduct and Ethics			21
Compensation of Directors			21
Non-Employee Director Compensation			21
2021 Director Compensation			22
Non-Employee Director Compensation Table			22
Deferred Compensation Agreements with Non-Employee Directors			23
Non-Employee Director Stock Ownership Policy; Hedging and Pledging Restrictions			23
CORPORATE SOCIAL RESPONSIBILITY Our Commitment to all Stakeholders			24
Environmental			25
Waste and Recycling			25
Social			26
Diversity and Inclusion			26
EXECUTIVE COMPENSATION Compensation Discussion and Analysis			27
Summary Compensation Table			43
PROPOSAL NO. 1 Election of Directors			51
PROPOSAL NO. 2 Advisory vote to approve the compensation of our named executive officers			52

PROPOSAL NO. 3 Ratify the appointment of KPMG LLP as our Independent Registered Public Accounting Firm for the Year Ending December 31, 2022			53
We Engaged KPMG After a Rigorous Review Process			53
Fees Paid to KPMG LLP Related to Fiscal Years 2021 and 2020			54
Pre-Approval Policies			54
Vote Required			54
Selection of KPMG as our Auditor			55
Audit Committee Actions			55
ADDITIONAL OWNERSHIP INFORMATION			57
GENERAL INFORMATION About the Annual Meeting			58
Online Meeting			58
Mailing Date			58
Matters for Consideration at the Annual Meeting			58
Proxies			59
Voting			59
Who Can Vote			59
Quorum			59
“Shareholder of Record” and “Beneficial Ownership”			59
How to Vote			60
How You Can Revoke Your Proxy or Change Your Vote			60
Attending the Annual Meeting			60
Admission			60
Asking Questions			61
Discretionary Authority			61
Annual Meeting Voting Results			61
Additional Information			61
Solicitation Expenses			61
Electronic Delivery of Proxy Materials			61
Householding of Proxy Materials			61
Annual Report on Form 10-K			62
Other Materials			62
Communications with the Board			62
2023 Shareholder Proposals or Nominations			62
Shareholder Proposals			62
Shareholder Director Recommendations			63
CERTAIN RELATIONSHIPS AND TRANSACTIONS WITH RELATED PERSONS			64

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LITHIA MOTORS, INC.

PROXY STATEMENT

This proxy statement, the accompanying 2021 Annual Report on Form 10-K, the Notice of Annual Meeting and the proxy card are being furnished to the shareholders of Lithia Motors, Inc., an Oregon corporation, in connection with the solicitation of proxies by the Company for use at our 2022 Annual Meeting of Shareholders (the “Annual Meeting”). The Annual Meeting will occur virtually through an audio webcast, accessible at www.virtualshareholdermeeting.com/LAD2022 on Wednesday, April 27, 2022, at 8:30 a.m. Pacific Daylight Time. On or about March 11, 2022, we mailed to our shareholders a Notice of Internet Availability of Proxy Materials (the “Notice”) containing instructions on how to access this proxy statement and our 2021 Annual Report on Form 10-K. The Notice provides instructions on how to vote online or by telephone and includes instructions on how to receive a paper copy of the proxy materials by mail.

2021 Achievements and Performance Highlights

During 2021 we continued to execute on our 2025 Plan and recorded the highest revenue and EPS in our history. Of note, we:

•	Retailed over 530,000 units

•	Exceeded our December transaction volume targets for Driveway, expanding our reach beyond our local markets with an average shipping distance greater than 900 miles

•	Scaled Driveway Finance Corporation, our captive lender, to a $725 million portfolio at year-end and completed an inaugural ABS offering in November, providing significant capital flexibility

•	Acquired businesses expected to contribute $6.9 billion in annualized revenues and entered Canada, our first international market, through our partnership with Pfaff Automotive.

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Our Company Strategy

In July 2020, we announced our plan to transform our company into a diversified, omni-channel retailer with a nationwide physical network by 2025. Eighteen months later, we are pacing to meet or exceed those goals.

The base of our business remains our Lithia channel, a nationwide network offering four diversified business lines - new vehicle sales, used vehicle sales, consumer finance and aftermarket parts and service sales - that are highly profitable, resilient, and provide the capital that fuels our expansion. Our high margin parts and service business enable touchpoints throughout the consumer life cycle, providing efficiencies in advertising compared to our used-only competitors.

Growing our footprint through M&A adds to the capital engine, as acquired locations are cash flow positive on day one, and provide the physical network underlying Driveway, allowing us to reach consumers looking for a transparent, negotiation-free experience. Our M&A strategy targets after-tax returns of 15%, and we have averaged over 25% by the third year of ownership due to our disciplined approach focusing on reasonably priced targets that build out our network. As we shrink the distance between our locations and the consumer, we realize economies of scale in used vehicle procurement, reconditioning and logistics, further driving profitability. As our network expands, we are also able to offer a wider, more diverse selection of inventory.

With our entrepreneurial, decentralized model, the Lithia channel has the flexibility to reach consumers both in-store and digitally in a manner that is responsive to local market conditions. Combined with Driveway, which reaches a consumer desiring a fully online experience, the design underlying our 2025 plan positions us to address the largest proportion of the automotive retail market of any market participant. Collectively, Lithia and Driveway, or LAD, also provides access to adjacent markets to drive further growth. For example, Driveway Finance, one of our more developed adjacent business lines, enables us to earn at least three times the finance income compared to arranging financing through a third party. As we scale that business, the incremental profitability generated will provide further capital for expansion.

Our capital allocation strategy has successfully focused on maximizing shareholder returns, as evidenced by our rank as #3 in 10-year total shareholder return in the 2021 Fortune 500. While we target allocating 65% of our capital towards building out our network through M&A, 25% towards capital expenditures, innovation, and diversification, such as in Driveway and Driveway Finance and 10% to direct shareholder return, via dividends and share repurchases, we are flexible and re-allocate as necessary to maximize shareholder return. In addition, our focus on maintaining a leverage ratio of two to three times adjusted EBITDA provides significant capacity to opportunistically deploy capital, while also providing flexibility for unforeseen changes in the economic environment.

Underlying the design and key to our success is our culture of high performance and personal ownership. We attract, retain and promote individuals who thrive in a high-performing environment, and who welcome the challenge to improve and build aspirational plans to drive success. We also strive to cultivate personal growth in all our employees through new experiences, teamwork, professional development, mentoring, coaching and recognition.

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DIRECTORS AND NOMINEES

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Summary of Director Experience and Qualifications

Skills and Attributes of our Board

Our directors bring a balanced mix of skills, qualifications and experience and we believe their diverse backgrounds contribute to an effective and well-balanced Board. Listed below is a summary of the diverse skills and attributes of our Board of Directors:

Skills and Experience		Description
	Finance	Directors with an understanding of accounting, financial reporting, capital allocation processes and financial markets are essential to ensuring effective oversight of our financial resources, risks and processes, and provide valuable advice and insights with respect to establishing a successful capital strategy critical to our ongoing success.
	Legal and Compliance	Directors with risk management and compliance oversight experience guide our Board and management in executing their responsibilities to identify, evaluate and understand the magnitude of various risks facing the Company, and are key in designing appropriate policies and procedures to effectively mitigate and manage those risks.
	Executive Compensation	Directors who have experience and expertise with tax, legal, securities and accounting issues are integral in setting the compensation of our executive officers and designing and implementing effective incentive plans.
	Risk Management	Directors with experience in risk management guide our risk mitigation strategy beyond mere financial and accounting risk, to encompass cyber, enterprise, compensation, supply chain and ESG risk management.
	International	Directors with international or global markets experience bring valuable knowledge and perspective of global industry dynamics to the Company and its international operations, including exposure to different cultural perspectives and practices and different political and regulatory environments.
	Strategic & Senior Leadership	Directors with senior leadership experience in complex public, private and government organizations, whether as an officer or board member, can effectively oversee the management of the Company and bring a valuable perspective to important operational issues, strategy and initiatives to drive change and growth. These directors are generally highly effective at motivating, managing and inspiring others and have talent, professional development and succession planning skills.
	Board Service & Governance	Directors with corporate governance experience gained from service on company boards provide valuable insight into the dynamics and operations of the Board and the impact that governance and compensation decisions have on the Company and stockholders. Their skills support the Company's goals of strong corporate governance practices through Board and management accountability, transparency, legal and regulatory compliance and protection of stockholder interests.
	Marketing, Advertising & Investor Relations	Directors that have effectively engaged both customers and investors guide us as we seek to solidify an omni-channel customer experience while listening to and protecting the interests of our stockholders.
	Technology, Cybersecurity, & Digital Innovation	As we continue to drive digital innovation in our market and the broader environment, we rely upon Directors with experience in innovating across digital platforms and designing systems to protect our electronic infrastructure, as well as our information and the information of our customers.
	Mergers & Acquisitions	Directors with strategic planning and merger and acquisition experience can provide insight as we identify the best strategic manner in which to expand our business and drive growth either through innovative strategic initiatives or acquisitions and other business ventures. Such individuals can provide valuable guidance on how to develop a strategic plan and oversee the execution of key strategic initiatives and evaluating our progress of those initiatives.
	Human Rights & Community Responsibility	Directors who have experience advocating not just for shareholders, but stakeholders, provide valuable insight into protecting the rights of people, our employees and the communities in which we do business, and are advocates of social justice.
	Diversity & Inclusion	Directors who have experience and expertise in building cultures that are rich in gender and ethnic diversity, inclusion and equal opportunity help us incorporate those same ideals into our human capital management strategy.

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Director Biographies

SIDNEY B. DEBOER

Biography

Sidney B. DeBoer took Lithia Motors public in 1996 and is the Chairman of the Board. Mr. DeBoer served as Chief Executive Officer and Secretary from 1968 through 2011, and then Executive Chairman through the end of 2015. His charitable work on the Southern Oregon University Foundation Board, Oregon Community Foundation and the Oregon Shakespeare Festival has created a vibrant community for our Company’s headquarters. Mr. DeBoer attended Stanford University and the University of Oregon.

Board Qualification

Mr. DeBoer’s founder’s spirit and pioneering work in the public auto retail sector and as an automotive dealer has earned him numerous awards and recognition. His familiarity with our business, executive leadership knowledge and industry experience make him uniquely qualified to serve as our Chair.

BRYAN B. DEBOER

Biography

Prior to becoming Chief Executive Officer (CEO), Bryan B. DeBoer was Senior Vice President of Mergers & Acquisitions/Operations and then Chief Operating Officer driving the growth of Lithia and transforming the Company culture to an entrepreneurial and high-performance model. Upon joining Lithia in 1989, Mr. DeBoer grew through the store positions of Finance Manager, Used Vehicle Manager, General Sales Manager, General Manager and multi-store General Manager. Mr. DeBoer has a B.S. degree, summa cum laude, from Southern Oregon University in Business Administration. He also graduated from the National Automobile Dealers Association Dealer Academy.

Board Qualification

Mr. DeBoer has been CEO and President since 2012 and first became a director in 2008. Mr. DeBoer’s store experience, passion for mergers and acquisitions and demonstrated ability to develop strong manufacturer relationships drive our growth. His enthusiasm for the car business combined with a visionary spirit set the tone for our innovative and entrepreneurial culture.

SUSAN O. CAIN

Biography

Susan O. Cain had a long career at KPMG LLP, joining in 1978, and retiring as a partner in the San Francisco office in 1999. While with KPMG, she specialized in banking institutions and trust tax services. Ms. Cain was a Senior Instructor in accounting at Southern Oregon University, located in Ashland, Oregon since 2004, retiring in 2019. Ms. Cain is involved with various non-profit and charitable organizations including the Ashland Independent Film Festival and the Oregon Shakespeare Festival. Ms. Cain holds a B.A. degree in General Science from Oregon State University and a Master of Science in Taxation from Washington School of Law, Washington Institute of Graduate Studies.

Board Qualification

Ms. Cain joined our Board of Directors in 2009. She maintains her CPA license in California and brings to our Board of Directors a high level of accounting expertise. She serves as the Compensation Committee Chair and is an audit committee financial expert as defined under SEC rules. Ms. Cain was selected to serve on our Board of Directors because of her significant financial and accounting expertise and experience.

SHAUNA F. MCINTYRE

Biography

Shauna F. McIntyre is currently the interim President and CEO of Electric Last Mile Solutions, an electric commercial vehicle provider and has previously served as the CEO of Sense Photonics, a 3D and Lidar company. Ms. McIntyre also served in various roles at Google, including Program Lead of Google’s automotive services program, from October 2016 to April 2020. Previously, she held integral roles at Egon Zehnder International, Achates Power, Inc., Honeywell International, Inc., McKinsey & Company, and Ford Motor Company. Ms. McIntyre serves on the Board of Directors of Electric Last Mile Solutions, and was also a co-founding board member for the North American Council for Freight Efficiency (NACFE). Ms. McIntyre holds a B.S. from the University of California, Los Angeles, a M.S. from the University of California, Berkeley, and an M.B.A. from Harvard.

Board Qualification

Ms. McIntyre joined our Board of Directors in April 2019. Ms. McIntyre brings a wealth of knowledge and expertise to our Board in a wide variety of subjects within the automotive industry, including manufacturing, innovation, E-commerce, finance and operations. Ms. McIntyre was selected to serve on our Board of Directors because of her valuable strategic, industry and leadership experience.

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LOUIS P. MIRAMONTES

Biography

Louis P. Miramontes is an experienced board member and accomplished business executive. He is a strong leader and provides frequent counsel and input to CEOs on operating and strategic matters. Mr. Miramontes is a member of the Board of Directors of Rite Aid Corporation and Oportun Financial Corporation. He had a distinguished 38-year career at KPMG, where he served in many leadership roles, including managing partner of the San Francisco office and Senior Partner for KPMG's Latin America region. As an audit partner, he provided audit services to public and private clients in the retail, financial services and real estate sectors. Louis received his B.S. degree in Business Administration from California State University, East Bay.

Board Qualification

Mr. Miramontes joined our Board of Directors in 2018, he is our Lead Independent Director, Chair of our Audit Committee and a member of our Compensation Committee. Mr. Miramontes has extensive experience in accounting, financial reporting and corporate governance. He is also an audit committee financial expert as defined under SEC rules.

KENNETH E. ROBERTS

Biography

Kenneth E. Roberts was a partner with the law firm of Roberts Kaplan LLP (formerly Foster Pepper LLP) from 1987 until the firm joined with Lane Powell in January 2011. His private law practice focused on corporate finance, mergers and acquisitions. corporate governance, executive compensation and securities, representing public companies and community banks. Mr. Roberts is a graduate of Harvard Law School and Oregon State University with a B.S. in Business and Technology.

Board Qualification

Mr. Roberts joined our Board in 2012 after working many years as a leading outside corporate counsel. Mr. Roberts lends insightful analysis to our mergers and acquisitions strategies and corporate governance matters.

DAVID J. ROBINO

Biography

David J. Robino began his management career at The Maytag Corporation and Pepsi-Cola. He joined AC Nielsen in 1989, culminating as Senior Vice President of Nielsen International, based in Brussels, Belgium. After a successful Vice Presidency at AT&T's Business Markets Division, Mr. Robino left to lead Gateway, Inc. as Executive Vice President and Chief Administrative Officer and later Vice Chairman. Upon retiring from Gateway, Mr. Robino served as a member of the board of directors of Memec, Inc., then the world's leading distributor of specialty semiconductors, and Insight Enterprises, Inc., a global provider of information technology capabilities to enterprises. He has served as an adjunct instructor at Southern Oregon University since 2012. Mr. Robino has an M.S. in Industrial Relations from Iowa State University and B.A. in Social Studies from Graceland College.

Board Qualification

Mr. Robino joined our Board in 2016. Mr. Robino’s human capital, business, executive management and board experience over the course of his career at many large firms, provides us with expertise across a broad range of subjects. Mr. Robino chairs our Nominating and Governance Committee.

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Non-Director Executive Officers

CHRISTOPHER S. HOLZSHU

Biography

Christopher S. Holzshu is our Executive Vice President and Chief Operating Officer (COO), a role he has served in since November 2019. He previously served as Chief Financial Officer and Chief Human Resources Officer. Throughout his career with us he has gained a deep understanding of the operations of our stores and a special talent for relating to individuals at all levels of the organization. Mr. Holzshu joined Lithia in 2003 after working for several years at KPMG LLP, where he specialized in automotive manufacturing, financial services and other retail sectors. He holds a B.S. in Accounting from the University of Alaska.

SCOTT A. HILLIER

Biography

Scott A. Hillier is one of our Senior Vice President of Operations and has served in this role since 2008, overseeing store leadership. Mr. Hillier joined Lithia in 1986, working in our stores in roles including Finance Manager, General Sales Manager, General Manager, and multi-store General Manager. Mr. Hillier quickly developed a reputation for identifying talent and building teams which led to his promotion to Vice President of Human Resources in 2003. In his current role, Mr. Hillier helps foster our value of taking personal ownership for performance by mentoring store leadership including the Lithia Partners Group. Mr. Hillier graduated from Southern Oregon University with a B.S. in Inter-Disciplinary Studies.

GEORGE N. HINES

Biography

George N. Hines is our Senior Vice President, Chief Innovation and Technology Officer and has served in this role since July 2019. Before joining Lithia, Mr. Hines held technology and innovation leadership roles at Massage Envy Franchising and Viad Corp. Early in his career, he worked with Deloitte Consulting and Ernst & Young Management Consulting, where he advised clients in the telecommunications industry. George brings a passion for creating pleasant, frictionless experiences and innovative technologies. Additionally, he brings a global view to his work having lived and worked in Peru, Ecuador, Brazil, Spain, and the United Kingdom. He holds a B.S. in MIS from Millikin University and has most recently completed studies in the Stanford School for Design Thinking and Innovation.

TINA H. MILLER

Biography

Tina H. Miller is our Senior Vice President, Chief Financial Officer (CFO), leading the accounting, tax, corporate finance, financial planning and analysis, risk management and treasury functions, and has served in this role since August 2019. She joined Lithia in 2005, working in internal audit and corporate accounting before being promoted to Corporate Controller in 2015 and Vice President in 2018. Before Lithia, Ms. Miller worked as an auditor at Ernst & Young in their assurance practice. She graduated from Santa Clara University with a B.S. in Accounting and is a licensed CPA in Oregon.

DAVID G. STORK

Biography

David G. Stork is our Senior Vice President and Chief Administrative Officer and began serving in that role in 2021. Mr. Stork previously served as our Chief Legal Officer since December 2018. Before joining Lithia & Driveway, David was General Counsel and Head of Compliance at JELD-WEN. Inc, as well as working as General Counsel and Director of risk management for a large retailer, Krause Gentle Companies. His expertise in innovation, diversification, risk management, compliance, mergers and acquisitions and the enhancement of intellectual property are beneficial as Lithia grows and diversifies. David holds a bachelor's degree in Literature and Economics from Luther College in Literature and Economics and a Juris Doctorate from the University of Minnesota Law School.

MARGUERITE CELESTE

Biography

Marguerite Celeste joined Lithia as our Senior Vice President and Chief Marketing Officer in July 2021. Marguerite is an alum of NBC Universal, Dream Works Animation, and The Walt Disney Company. From 2011 to 2013, Ms. Celeste served as Director of Creative Services at Lithia. Marguerite embodies the insights and innovative acumen necessary to continue to reimagine and catapult Lithia & Driveway brands to reflect needs of the consumer. Her strong background in brand management, voice of customer, operational excellence, and creativity connect a vibrant voice to the company's vision to provide consumers with personal transportation solutions wherever, whenever, and however they desire. Marguerite holds a BA and H.Dip.Ed from University College Cork, Ireland.

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CORPORATE GOVERNANCE

Board Leadership and Structure

Board of Directors

Our Bylaws provide for not fewer than five and not more than nine directors. Our Board of Directors has the discretion to set the size of our board from time to time. Currently, our Board of Directors has set the number of directors at seven.

There is no requirement that directors attend our Annual Meeting of Shareholders, but directors are encouraged to do so. Our Board of Directors held 14 meetings in 2021. Each incumbent director attended at least 90% of all meetings of the Board and of the Board committees on which the director served. All of our incumbent directors attended our 2021 Annual Meeting of Shareholders.

2021 Board and Committee Composition

The Board has three standing committees, each of which operates under a charter that has been approved by the Board. The Chair of each committee reviews and discusses the agendas and materials for meetings with senior management in advance of distribution to the other committee members, and reports to the Board on actions taken at each committee meeting. The following table sets forth the current membership of each committee.

Sidney B. DeBoer

Susan O. Cain

✔

Bryan B. DeBoer

Shauna F. McIntyre

✔

Louis P. Miramontes

✔

Kenneth E. Roberts

✔

David J. Robino

✔

CB = Chairman of the Board I = Independent Director LI = Lead Independent Director C = Committee Chair

Board Committees

Our Board has three standing committees: the Audit Committee, the Compensation Committee, and the Nominating and Governance Committee. Each committee member is an independent director under NYSE listing standards, including, with respect to members of the Audit Committee and the Compensation Committee, under the enhanced independence standards that apply to members of those committees. Each of our Board committees has its own charter. At least one member of each of our Audit Committee and Compensation Committee may not belong to both committees. A written copy of our committee charters, Corporate Governance Guidelines, Code of Business Conduct and Ethics, and Shareholder Communications Policy may be obtained by contacting our Investor Relations Department, Lithia Motors, Inc., 150 N. Bartlett Street, Medford, Oregon 97501. These documents are also available on our website at investors.lithiadriveway.com.

THE AUDIT COMMITTEE

The Audit Committee is responsible for the oversight of the integrity of our financial statements; compliance with legal and regulatory requirements; the qualifications and independence of our independent auditors; the performance of our internal audit function and independent auditors; our systems of internal controls; and financial risk management. The Audit Committee serves as a conduit to promote open communication between the independent auditors, the accounting department and internal auditors, management, and the Board in furtherance of our commitment to accurate financial reporting, sound financial risk practices, and ethical behavior. The

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Audit Committee routinely meets in executive session with representatives from KPMG, our Chief Financial Officer, and our Director of Internal Audit. Our Director of Internal Audit reports directly to the chair of the Audit Committee. The Audit Committee held four meetings during 2021. To ensure that directors are free to give sufficient attention to the duties of our Audit Committee, committee members may not serve on more than two other public company audit committees. In addition to meeting the independence requirement for audit committee members, each current member of the Audit Committee also meets the financial literacy and experience requirements contained in the corporate governance listing standards of the NYSE. Our Board has reviewed the qualifications and experience of the nominees standing for election and has determined that both Ms. Cain and Mr. Miramontes satisfy the requirements of an “audit committee financial expert” as defined by SEC rules.

THE COMPENSATION COMMITTEE

The Compensation Committee is responsible for our executive compensation philosophy. The committee annually reviews the performance of and determines the base salary and variable and long-term compensation for our Chief Executive Officer. The Compensation Committee also reviews and approves the compensation for other executive officers, and reviews and recommends the compensation for non-employee Board members.

The primary purpose of the Compensation Committee is to discharge the responsibilities of the Board relating to the compensation of the Chief Executive Officer and our other executive officers and make recommendations to the Board with respect to compensation of our non-employee directors. The Compensation Committee has overall responsibility for evaluating and, as appropriate, approving or recommending to the Board, compensation plans, policies and programs of the Company as they affect the executive officers. The Committee is also responsible for providing input to the Board regarding executive officer succession and talent development, human capital management, including diversity and inclusion, and providing guidance to the Board and management on these matters.

The Compensation Committee has the authority, in its sole discretion, to select, retain and obtain the advice of a compensation consultant and outside legal counsel as necessary to assist with the execution of its duties and responsibilities. In 2021, the Compensation Committee retained Pay Governance LLC (Pay Governance) to provide advice and counsel. Pay Governance provided compensation advice to the Committee on our Chief Executive Officer, Chief Financial Officer and the next three highest-paid executives. The Compensation Committee administers our 2013 Amended and Restated Stock Incentive Plan, 2009 Employee Stock Purchase Plan, Short-Term Incentive Plan, and Executive Management Non-Qualified Deferred Compensation and Supplemental Executive Retirement Plan. The Compensation Committee certifies and approves payments based on performance measures. The Compensation Committee held nine meetings in 2021. See “Compensation Discussion and Analysis” below for more information on our compensation philosophy and how the Compensation Committee determines the compensation of our executive officers.

The Compensation Committee assessed the independence of Pay Governance pursuant to SEC and NYSE rules and determined that no conflict of interest exists that would prevent Pay Governance from independently representing the Committee. In making this assessment, the Committee considered each of the factors set forth by the SEC and the NYSE with respect to the Pay Governance’s independence, including that Pay Governance provided no services for the Company other than pursuant to its engagement by the Committee. The Committee also determined there were no other factors the Committee should consider in connection with the assessment or that were otherwise relevant to the Committee’s engagement of Pay Governance.

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THE NOMINATING AND GOVERNANCE COMMITTEE

The Nominating and Governance Committee is responsible for assisting our Board in identifying qualified individuals to become Board members; recommending to our Board nominees for each Annual Meeting of the Shareholders; overseeing evaluations of the Board and its committees; developing, periodically reviewing, monitoring, and recommending to the Board effective corporate governance policies and procedures; and developing and enforcing a Code of Business Conduct and Ethics. The Nominating and Governance Committee held four meetings in 2021.

Director Independence

Our Corporate Governance Guidelines require our Board to be comprised of a majority of independent directors. Generally, under NYSE listing standards, a director is not independent if such director has a direct or indirect material relationship with Lithia or its management. In accordance with its charter, the Nominating and Governance Committee annually reviews the independence of all non-employee director nominees and reports its findings to the full Board of Directors, which makes a determination about the independence of each nominee. The Board of Directors and the Nominating and Governance Committee review and discuss all transactions and relationships between each director nominee or any member of such director’s immediate family and Lithia, its consolidated subsidiaries and affiliates, and management, both in the context of the specific independence standards enumerated in the NYSE listing standards, as well as other business and personal relationships that could compromise the independent judgment of a director. Other than the NYSE listing standards, we do not adhere to categorical standards for determining independence; rather, we review and evaluate the specific facts and circumstances of each transaction and relationship to determine whether the director is independent. As a result of this review, our Board of Directors affirmatively determined that each of Mses. Cain and McIntyre and Messrs. Miramontes, Roberts, and Robino is independent under NYSE listing standards.

Lead Independent Director and Governance Practices

Lithia’s governance documents provide our Board with flexibility to select the leadership structure that is best for the Company. If the Chairman of our Board of Directors is not an independent director, our Board of Directors annually selects an independent director to serve as the “Lead Independent Director” responsible for coordinating the activities of the independent directors. If the Chairman of our Board of Directors is an independent director, our Board of Directors may nonetheless select a Lead Independent Director from one of the other independent directors.

Bryan B. DeBoer is our President and Chief Executive Officer, and Sidney B. DeBoer is our Chairman of the Board. At this time, we believe that the separation of the CEO and Chairman positions is beneficial as it allows the CEO to focus his energy and time on operating the Company while simultaneously allowing the Chairman to exercise his leadership strengths. Because Sidney B. DeBoer is not an independent director, our Board of Directors appointed Louis P. Miramontes as Lead Independent Director commencing on April 25, 2019.

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Note from our Lead Independent Director

It is my pleasure to provide you with my Lead Independent Director communication for the 2021 operating year. I want to highlight some of the important ways the Board works together to provide independent oversight of management and stewardship of your interests.

Independent Board Oversight: I work closely with the CEO, the Chairman, and fellow independent directors to facilitate meaningful dialogue among all directors on major business issues, transactions, and opportunities. I assist in setting the agenda for each Board meeting and preside over all executive sessions when the Independent Board members meet.

Board Refreshment and Diversity: Board succession is an important responsibility of the Board. Succession planning and Board refreshment is always on the forefront of our thinking as we continue to seek exceptional candidates with appropriate skills and diverse backgrounds.

Corporate Social Responsibility: Responsible growth is the core of our business philosophy and strategy. As is further discussed in our Corporate Social Responsibility section and in the CD&A below, Lithia’s ESG initiatives are an integral component of how the Board oversees the business. Our commitment to the environment, the communities in which we do business, and the health, safety and equal opportunity for our employees is one of the foundations of our long-term success. You can access the details of this commitment in our Corporate Social Responsibility Report, which can be found at investors.lithiadriveway.com.

Commitment to Strong Governance Standards: We follow and abide by the following best practices:

Independence and Board Composition

•	The Board currently has seven members, five of whom are independent and two of whom are women.

•	There are three standing committees, each made up entirely of independent directors.

•	As the Lead Independent Director, I regularly meet with the other independent directors without management present.

Capitalization

In 2021, we completed debt and equity offerings which continue to keep us well capitalized for growth opportunities or business challenges we may face. Further, in response to comments from our investors and five years ahead of schedule, we completed the conversion of Sidney DeBoer’s Class B common stock into Class A common stock effective February 26, 2021. As a result, we no longer have a dual-class capital structure and all outstanding shares have the same value and voting power.

Board Practices

•	The Board and its standing committees perform self-evaluations on an annual basis.

•	The Board imposes age and term limits on independent directors.

•	Each standing committee operates under a committee charter.

•	The Board oversees risk management practices.

•	The Board manages sound environmental, social and governance practices.

•	The Board regularly receives information concerning, and provides input on, succession planning.

SEC Form DEF 14A filed by Lithia Motors Inc.