Company: KMX
Filing Date: 2025-05-08
Form Type: DEF 14A
Source: 0001170010-25-000073
Chunk: 27

Company: CARMAX INC
Filing Date: 2025-05-08
Form: DEF 14A
Chunk 27
---
10 million. However, in fiscal 2025, the Committee limited the maximum performance adjustment factor to 200%, ensuring that Mr. Nash’s bonus could not exceed $4,311,216.

#### LONG-TERM EQUITY AWARDS
We grant long-term equity awards to tie our executives’ long-term compensation directly to CarMax’s stock price and to drive the achievement of our strategic goals. We also believe that long-term equity awards are an important retention tool. These awards are made consistent with our Employee Equity Grant Policy, which is available under the “Governance” link at investors.carmax.com.

In fiscal 2025, we granted our named executive officers two forms of long-term equity awards: stock options and PSUs. Options accounted for 50% and PSUs accounted for 50% of the fair value awarded (with target performance achievement assumed for PSUs). All of our long-term equity grants were made pursuant to the CarMax, Inc. 2002 Stock Incentive Plan, as amended and restated (“Stock Incentive Plan”).

#### 33

#### Stock Options
Each option represents the right to purchase one share of our common stock at the exercise, or “strike,” price. The strike price is equal to the closing price of our common stock on the grant date. Our option awards generally vest in 25% increments over four years; that is, one quarter of the options granted vests on the first anniversary of the grant, another quarter vests on the second anniversary, and so forth. The awards expire on the seventh anniversary of the grant date.

We believe that granting stock options supports our pay-for-performance philosophy by aligning management and shareholder interests. If our stock price does not rise, the options have no value. In addition to promoting alignment of management and shareholder interests, the four-year vesting schedule and seven-year exercise term of our options ensures that our executives are appropriately focused on CarMax’s long-term strategic goals. This vesting schedule also serves as a retention tool.

#### Performance Stock Units
PSUs are designed to link compensation to the Company’s performance over a three-year period. In fiscal 2025, we returned to a three-year PSU performance measurement period, establishing three-year performance goals at the start of the performance measurement period. The PSUs granted in fiscal 2025 have a three-year term (meaning that they will not vest until the third anniversary of the awards), with the Committee establishing a three-year performance goal for cumulative pre-tax income at the beginning of the three