Lkq Corp

This management proposal asks shareholders to cast a non-binding advisory vote approving the design and disclosure of compensation paid to LKQ’s named executive officers for fiscal year 2025, as described in the Proxy Statement (including the Compensation Discussion and Analysis and Summary Compensation Table). Management files this proposal as required by Section 14A of the Exchange Act and to solicit stockholder feedback on pay practices; the Compensation and Human Capital Committee will consider the vote outcome when reviewing compensation policies. The company’s 2025 program emphasizes pay-for-performance: a large portion of CEO and other NEO compensation is incentive-based (the proxy states about 89% for the CEO and ~77% on average for other NEOs), with annual cash bonuses tied to EBITDA, EBITDA margin percentage and free cash flow and long-term PSUs tied to adjusted diluted EPS, parts & services organic revenue growth and ROIC. The program structure shifted in 2025 toward equity (PSU-1s and PSU-2s), eliminated cash-based long‑term incentives, and includes multi-year vesting and performance conditions to align executives with long-term shareholder value. The proposal is advisory only and does not bind the Board, but a strong ‘for’ vote historically (about 95% in 2025) is cited by the Board as evidence of investor support and will inform future design choices. The Compensation Committee notes the use of pre-established adjustments for metric calculations (e.g., currency and transaction adjustments) and retains discretion consistent with governance policies. Management’s rationale for recommending a ‘for’ vote centers on alignment of pay with performance, retention incentives, competitive benchmarking against peers, and governance controls like clawback and stock ownership requirements. Considering the non-binding nature of the vote, investors should evaluate both the disclosed metrics and the implementation details (performance targets, adjustments, and actual payouts) when assessing whether the compensation program effectively aligns management and shareholder interests.

This management proposal seeks shareholder approval to amend the Company’s Restated Certificate of Incorporation to create a stockholder right to request that the Board call a special meeting when one or more holders of record collectively hold at least 25% of the Company’s voting power. Management and the Governance/Nominating Committee framed the proposal as responsive to prior stockholder feedback (including a 2025 advisory vote) and broader corporate governance trends toward providing special meeting rights while protecting against frivolous or minority-driven meetings. If approved, the Board will also adopt bylaws amendments that impose procedural and ownership conditions (e.g., the requesting holders must be stockholders of record at the time of request and continuously for at least one year, deliver a written request specifying the proper matter for stockholder action, and appear at the special meeting to present the matter). The Board’s stated rationale is that a 25% threshold is consistent with market practice and represents an appropriate balance between enhancing stockholder rights and minimizing administrative burdens and management distraction from running the business. The proposal is material to governance because it changes the locus of power to convene extraordinary shareholder action and could affect activism dynamics; however, the one‑year continuous ownership and other procedural safeguards are intended to limit opportunistic use. The Board recommends ‘for’ on the grounds that the threshold ensures only matters of broad stockholder concern would trigger a special meeting, while enabling investors with significant stakes to seek a timely forum outside of the annual meeting cycle. Investors should consider the interaction of this amendment with other governance provisions (e.g., advance notice, proxy access, and majority voting) and evaluate the specific bylaw procedures that the Board will adopt following stockholder approval. Finally, because the amendment also requires filing with the Delaware Secretary of State, its legal effect will be fully realized only upon that filing and the bylaws amendments implementing procedural requirements.