Exhibit 10.36

 
Advance Auto Parts
2006 Executive Bonus Plan

Purpose
The purpose of the Advance Auto Parts 2006 Executive Bonus Plan (the “Plan”) is
to tie a portion of each participant’s annual compensation to the achievement of
established financial goals as defined in the fiscal year budget of Advance Auto
Parts, Inc. (the “Company”).

Eligibility
Cash awards (“Awards”) may be made under this Plan to certain key employees of
the Company or its subsidiaries who have been designated by the Compensation
Committee of the Company’s Board of Directors (the “Committee”) to participate
in the Plan (“Participants”).

Annual Bonus Target
For each fiscal year for which the Committee determines Awards may be made under
the Plan (the “Performance Period”), the Committee will establish a Bonus Target
for each Participant. Any Award payable under this Plan is calculated by
comparing the actual results with budget goals for each respective performance
measure using full-year, consolidated company financial measures.

Annual Bonus Performance Measures
Each Participant’s Annual Bonus Target includes Annual Performance Measures (as
more fully explained below), with a respective weighting, as follows:
 

  Measure    
Weight
  · 
Consolidated Company Sales
30%
  · 
Consolidated Operating Income
30%
  · 
Consolidated Operating Income compared to
prior year Operating Income
30%    
  · 
Inventory Turns
10%  

 

Consolidated Company Sales  30% of Annual Bonus Target 

 
If the Company achieves its Consolidated Company Sales Goal (“CSG”) as defined
by the Board of Directors in the Company’s annual budget for a Performance
Period, the Participant will receive an Award equal to 30% of his or her Annual
Bonus Target. For example, if the Participant’s Annual Bonus Target is $200,000,
30% of the Annual Bonus Target would equal $60,000. Performance above or below
the CSG, and the related effects on Award payouts are outlined below:

Performance Payout Range
Participants are eligible to receive payouts above and below the Annual Bonus
Target level based on actual CSG performance as compared to the goal. Actual CSG
performance equal to 96% of goal will result in a 25% payout of the CSG target.
CSG performance between 96% and 100% results in an equally incremental pro-rata
Award payout. CSG performance below 96% of goal will result in no Award payout.

Actual CSG performance above goal will increase a Participant’s Award. CSG
performance of 104% of goal results in a maximum Award payout of 200% of the CSG
target. CSG performance between 100% and 104% of goal will result in an equally
incremental pro-rata Award payout.

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Consolidated Operating Income  30% of Annual Bonus Target 

 
If the Company achieves its Consolidated Operating Income Goal (COIG) as defined
by the Board of Directors in the annual budget for a Performance Period, the
Participant will receive an Award equal to 30% of his or her Annual Bonus
Target. For example, if a Participant’s Annual Bonus Target is $200,000, 30% of
the Annual Bonus Target equals $60,000. Performance above or below the COIG, and
the related effects on Awards are outlined below:

Performance Payout Range
Participants are eligible to receive Award payouts above and below the Annual
Bonus Target level based on actual COIG performance compared to the goal. Actual
COIG performance equal to 90% of goal will result in a 25% payout of the COIG
target. COIG performance between 90% and 100% results in an equally incremental
pro-rata payout. COIG performance below 90% of goal will result in no Award
payout.

Actual consolidated sales performance above goal will increase a Participant’s
Award. COIG performance of 110% of goal results in a maximum payout of 200% of
the COIG target. COIG performance between 100% and 110% of goal results in an
equally incremental pro-rata payout.
 
 

Consolidated Operating Income Compared to Prior Year  30% of Annual Bonus
Target 

 
Actual Consolidated Operating Income results are compared with the prior fiscal
year Consolidated Operating Income results as a basis for this measure.
Consolidated Operating Income for the Performance Period must exceed the prior
year’s Consolidated Operating Income by at least 15% for a Participant to
receive an Award equal to 30% of his or her Annual Bonus Target. There is no
Award payout if the Consolidated Operating Income results for the current fiscal
year do not exceed the prior year results by 15%. If Consolidated Operating
Income results are 40% or more above the prior year’s results, a maximum payout
of 200% will be made. COIG performance between 115% and 140% of the prior year
results in an equally incremental pro-rata payout.

 

Inventory Turns  10% of Annual Bonus Target 

 
Inventory Turns are compared with the Inventory Turn (IT) budget defined by the
Board of Directors in the annual budget for the Performance Period in order to
determine the Award payable for this measure. Actual IT equal to the IT budget
will result in an Award equal to 10% of the Participant’s Annual Bonus Target.
For example, if a Participant’s Annual Bonus Target was $200,000, 10% of his or
her Annual Bonus Target would be $20,000. Performance above or below IT budget
levels and the related effects on Awards are outlined below:

Performance Payout Range
Participants are eligible to receive payouts above and below the Annual Bonus
Target based on actual IT performance compared to the budget. Actual IT
performance equal to 90% of budget will result in a 25% payout of the IT target.
IT performance between 90% and 100% results in an equally incremental pro-rata
Award payout. IT performance below 90% of budget will result in no Award payout.

Actual IT performance above budget level will increase the Participant’s Award.
IT performance of 110% of goal would result in a maximum payout of 200% of the
IT target. IT performance between 100% and 110% of goal will result in an
equally incremental pro-rata Award payout.

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Plan Administration

New Hires and Promotions
Team Members who join the Company or its subsidiaries or who are promoted to
occupy a position that is eligible to participate in this Plan as determined by
the Committee will become eligible for a pro-rated Annual Bonus Target based on
the date he or she becomes a Participant.

Award Distributions
Any Award will be paid as soon as practicable after full-year results are
completed, typically during the third accounting period of the fiscal year
following the Performance Period. All Awards under the Plan are subject to
withholding, where applicable, for federal, state and local taxes.

Separation from employment
All Award payments are subject to the terms of any employment agreement that may
be in effect between the Company and the Participant. In the absence of such an
agreement, the Committee, in its sole discretion, may make a pro-rata Award for
the portion of the Performance Period that the Participant was employed to a
Participant who has retired or whose employment terminated after the beginning
of a Performance Period for which an Award is made. In the case of the death of
a Participant during a Performance Period for which an Award is paid, payment of
any full or partial Award shall be made to the beneficiary designated by the
Participant for his or her account in the Company’s 401(k) Plan. If the
Participant has not designated a beneficiary or does not participate in the
Company’s 401(k) Plan, the Award shall be paid to the Participant’s estate.

Plan Interpretation and Administration
The Committee shall have sole discretion to administer and interpret this Plan.
The Board of Directors or the Committee may terminate this Plan in whole or in
part, may suspend the Plan in whole or in part from time to time, or may amend
the Plan from time to time, with or without notice to the Participant. Nothing
in this Plan or any Award granted under the Plan shall be deemed to constitute a
contract of employment or a promise, assurance or representation of continued
employment with the Company or its subsidiaries.

Miscellaneous

Governing Law
The Plan and any Award granted or action taken under the Plan shall be governed
by and construed by and in accordance with the laws of the State of Delaware,
without reference to principles of conflicts of laws thereof.

Effective Date
The Plan shall be effective as of January 1, 2006.