EX-10.1






Exhibit 10.1




December 27, 2006



Mr. Michael J. Short



Dear Mike:



We are pleased to extend to you our offer to join AutoNation, Inc. (the “Company”) as
Executive Vice President and Chief Financial Officer. Your appointment is subject to approval by
the Company’s Board of Directors and your compensation package as outlined herein is subject to
approval of our Compensation Committee and Executive Compensation Subcommittee. The following sets
forth the terms of our offer:



	 	 	 
	Position:

	 	Executive Vice President and Chief

Financial Officer, reporting to the

Chief Executive Officer of the

Company
	 
	 	 
	Start Date:

	 	On January 15, 2007 (the “Start

Date”), you will commence employment

with the Company and your

appointment as Executive Vice

President and Chief Financial

Officer will be effective
	 
	 	 
	Salary:

	 	$525,000 annual base salary
	 
	 	 
	Annual Bonus:

	 	You will be eligible to participate

in the Company’s senior executive

incentive bonus program commencing

in 2007. In 2007, your bonus target

will be set at no less than 60% of

your base salary. The Executive

Compensation Subcommittee is

responsible for setting specific

annual performance goals and an

objective formula for calculating

the amount of the target awards for

participants. The senior executive

incentive bonus program is designed

to incentivize management to improve

our operating performance and to use

capital to generate high returns.
	 
	 	 
	Relocation:

	 	The Company will provide you with

relocation assistance in accordance

with the Company’s relocation

policy. You are eligible for Tier 5

benefits. In addition to the

standard relocation benefits, the

Company will provide you with an

extended period of up until July 31,

2007 to complete your relocation

and, during such time period, will

reimburse you for the cost of

temporary housing expenses in Fort

Lauderdale, Florida and for travel

to and from your current home during

weekends and vacation days. All

non-deductible relocation expenses

will be grossed up for tax purposes.

Should you voluntarily terminate

employment, on or before two years

of employment, a pro-rated share of

all relocation reimbursements must

be repaid to the Company pursuant to

the policy.
	 
	 	 
	Stock Option Grant:

	 	Subject to approval of the Executive

Compensation Subcommittee, you will

be entitled to receive an initial

grant of options to acquire 200,000

shares of Company common stock under

the Company’s 1998 Employee Stock

Option Plan (as amended and

restated) (the “1998 Option Plan”).

The options will be subject to the

terms and conditions set forth in

the 1998 Option Plan and an option

agreement to be signed by you and

the Company, and you will be

required to sign certain

non-competition and related

agreements in connection with the

option grant. The grant will be

effective on your Start Date and the

exercise price will be the closing

price of Company common stock on the

last trading day prior to your Start

Date. Subject to earlier

termination in accordance with the

1998 Option Plan and the option

agreement, the stock options will

vest twenty-five percent (25%) per

year commencing with the one-year

anniversary of the option grant. In

2007, you also will be eligible to

participate in the Company’s annual

stock option grant, which is

administered by and at the

discretion of the Executive

Compensation Subcommittee and which

typically occurs at the regularly

scheduled Subcommittee meeting in

late July.
	 
	 	 
	Car Allowance:

	 	$15,600 annual vehicle allowance

pursuant to the Company’s vehicle

allowance program applicable to you
	 
	 	 
	Future Compensation:

	 	Your compensation in future years is

subject to the approval of the

Company’s Compensation Committee and

Executive Compensation Subcommittee
	 
	 	 
	Severance:

	 	At any time during your employment,

the Company has the right to

terminate the employment

relationship and to discharge your

employment for any reason or no

reason at all and you may also

terminate the employment

relationship. Upon termination of

your employment by the Company

within 24 months after your Start

Date other than for Cause (as

defined below), death or disability,

you will be eligible to receive an

amount equivalent to eighteen (18)

months of your annual base salary,

less applicable withholdings. The

severance payment shall be disbursed

in a lump-sum payment within 30 days

of your termination and shall be

contingent upon your execution of a

general waiver and release of all

claims and compliance with

applicable agreements between you

and the Company.
	 
	 	 
	
 
	 	If your employment is terminated for

Cause, death or disability, you will

be paid that portion of the salary

prorated through the date of

termination, and the Company will

have no further obligations. For

purposes of this letter agreement,

termination for “Cause” shall mean a

termination of your employment by

the Company as a result of (i) your

failure or refusal to perform the

material duties and responsibilities

required by the Company to be

performed by you which are

consistent with your position as

Chief Financial Officer of the

Company after having been given

written notice by the Company and a

reasonable time period specified in

such notice to cure such failure or

refusal to perform (to the extent

such failure or refusal to perform

may be cured); (ii) you engaging in

gross negligence or willful

misconduct in the performance of

your duties; (iii) the commission of

an act of fraud or dishonesty

affecting the Company; or (iv) your

violation of Company policies in any

material respect or engaging in

illegal conduct.
	 
	 	 
	Benefits:

	 	You will be eligible to participate

in the Company’s group health and

dental benefit programs effective on

the first day of the month

coincident with or following the

completion of thirty days of

service. The Company will reimburse

you for COBRA payments (and will

gross such amounts up for taxes)

made by you to continue health

coverage with your prior employer

from your Start Date until your

first day of eligibility to

participate in the Company’s health

program.
	 
	 	 
	Background Check and Drug

Screening:

	 	This offer is contingent upon the

successful completion of the

Company’s hair analysis drug

screening process and background

check.
	 
	 	 
	Confidentiality And

Non-Compete Agreement and

Arbitration Agreement:

	 	Employment is contingent upon your

signing the Company’s

Confidentiality and Non-Compete

Agreement and Employee Arbitration

Agreement.
	 
	 	 






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Please confirm your acceptance of this offer by signing in the space provided below and then return
one original signed copy to me as soon as possible.



We look forward to having you join our team.



Sincerely,



 /s/ Mike Jackson



Mike Jackson

Chairman and Chief Executive Officer


AutoNation, Inc.



ACCEPTED:



 /s/ Michael J. Short



Michael J. Short



December 27, 2006


Date




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