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Item 9A. Controls and Procedures

2023-02-23 compared with 2022-02-25 · 40 added, 67 removed, 249 unchanged (30% of the section changed)

14 unchanged sentences

Management reviewed the results of its assessment with the Audit Committee of the Company's Board of Directors.

LKQ CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Based on this assessment, management determined that, as of December 31, 2022, the Company maintained effective internal control over financial reporting.

1 unchanged sentence

Changes in Internal Control over Financial Reporting

We are implementing a new ERP system across our European business units using a phased approach.

As a result of this implementation, certain internal controls over financial reporting have been automated, modified, or implemented to address the new control environment associated with this ERP.

While we believe this new system will strengthen our internal controls, there are inherent risks in implementing any new system, and we will continue to evaluate these control changes as part of our assessment of internal control over financial reporting.

There was no change in the Company’s internal control over financial reporting that occurred during the Company’s most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

OTHER INFORMATION

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

5 unchanged sentences

Dominick Zarcone 64 President, Chief Executive Officer and Director

Varun Laroyia 50 Executive Vice President and Chief Financial Officer

Arnd Franz 56 Chief Executive Officer, LKQ Europe

Rick Galloway 44 Senior Vice President and Chief Financial Officer

Varun Laroyia 51 Chief Executive Officer and Managing Director, LKQ Europe

Hanley 56 Senior Vice President - Development

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Zarcone is a member of the Board of Directors of Generac Power Systems, Inc., a designer and manufacturer of power generation equipment and engine-powered products.

Varun Laroyia joined us as Executive Vice President and Chief Financial Officer in October 2017.

Rick Galloway became our Senior Vice President and Chief Financial Officer in September 2022.

Galloway served as Chief Financial Officer of our Wholesale - North America and Self Service Segments from July 2019 to September 2022.

Prior to joining our company, Mr.

Galloway held various positions at Alcoa Corporation from 2010 to 2019, including Chief Financial Officer of Alcoa’s Engineered Products and Solutions division, a business that consisted of 97 manufacturing facilities across the globe.

Galloway began his career in public accounting with Grant Thornton as an auditor with clients in various industries, including manufacturing, oil and gas, non-profit, and government.

Varun Laroyia became our Chief Executive Officer and Managing Director of LKQ Europe in September 2022.

Previously, Mr.

Laroyia was our Executive Vice President and Chief Financial Officer from October 2017 to September 2022.

Prior to joining us, he was the Chief Financial Officer of CBRE’s Global Workplace Solutions (GWS) business since 2015, following CBRE’s acquisition of the GWS business from Johnson Controls Inc.

1 unchanged sentence

From 2006 to 2013, Mr.

Laroyia held various positions at JCI including Global Group Controller of its Building Efficiency segment, Group Vice President of Global Audit and Vice President of Finance and Administration for its Building Efficiency business across Europe and Africa.

Previously, he held various leadership positions at Gateway, Inc., including Vice President and Controller for the Professional and Consumer segments.

Prior to Gateway, he was with General Electric in the US, and then GE Capital in London.

Laroyia started his career at KPMG in London and is a UK-qualified Chartered Accountant.

Laroyia held various positions of increasing responsibility at JCI including Group Vice President of Global Audit and Vice President of Finance and Administration for its Building Efficiency business across Europe and Africa.

From 2000 to 2006, Mr.

Laroyia held various positions at Gateway, Inc., including Vice President and Controller based in the U.S.

and Finance Director for the United Kingdom and Ireland.

Prior to Gateway, he was with General Electric in the U.S.

and then GE Capital in London, U.K..

Laroyia started his career at KPMG in London.

Laroyia is a member of the Board of Directors of Univar Solutions, Inc., a global distributor of chemical products and related services.

Arnd Franz became our Chief Executive Officer, LKQ Europe in October 2019.

Prior to joining us in April 2019 as Chief Operating Officer of LKQ Europe, Mr.

Franz was Corporate Executive Vice President of Automotive Sales, Application Engineering and Aftermarket of the MAHLE Group, an automotive parts manufacturer headquartered in Stuttgart, Germany, from 2013.

From 2006 until 2013, he was Executive Vice President and General Manager for MAHLE Aftermarket.

Franz also served as a member of the Board of Management of the MAHLE group from 2013 to March 2019.

Hanley joined us in December 2002 as our Vice President of Development, Associate General Counsel and Assistant Secretary.

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Information appearing under the caption "Other Information—Principal Stockholders" in the Proxy Statement is incorporated herein by reference.

The following table provides information about our common stock that may be issued under our equity compensation plans as of December 31, 2021:

The following table provides information about our common stock that may be issued under our equity compensation plans as of December 31, 2022 (in millions):

Equity Compensation Plan Information

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(a)(2) Financial Statement Schedules

Other than as set forth below, all schedules for which provision is made in the applicable accounting regulations of the SEC have been omitted because they are not required under the related instructions, are not applicable, or the information has been provided in the Consolidated Financial Statements or the notes thereto.

Schedule II—Valuation and Qualifying Accounts and Reserves

(in thousands)

Description Balance at Beginning of Period Additions Charged to Costs and Expenses Deductions Acquisitions and Other Balance at End of Period

ALLOWANCE FOR DOUBTFUL ACCOUNTS:

Year ended December 31, 2019 $ 57,207 $ 12,088 $ ( 18,308 ) $ 1,698 $ 52,685

(1) The 2020 and 2021 information is omitted from the table above as the information has been provided in "Allowance for Credit Losses" in Note 3, "Summary of Significant Accounting Policies," to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.

All schedules for which provision is made in the applicable accounting regulations of the SEC have been omitted because they are not required under the related instructions, are not applicable, or the information has been provided in the Consolidated Financial Statements or the notes thereto.

(a)(3) Exhibits

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Hanley dated as of July 24, 2014.

Change of Control Agreement between LKQ Corporation and Victor M.

Casini dated as of July 24, 2014.

Change of Control Agreement between LKQ Corporation and Michael S.

7 unchanged sentences

Change of Control Agreement between LKQ Corporation and Varun Laroyia dated as of October 1, 2017.

Change of Control Agreement between LKQ Corporation and Arnd Franz dated as of October 1, 2019.

Change of Control Agreement between LKQ Corporation and Michael T.

2 unchanged sentences

Dombrowski dated as of March 22, 2021.

Change of Control Agreement between LKQ Corporation and Rick Galloway dated as of September 15, 2022.

LKQ Severance Policy for Key Executives.

3 unchanged sentences

Holsten to Dominick P.

Offer letter to Varun Laroyia dated September 5, 2017.

Offer Letter to Arnd Franz dated September 27, 2018.

Services Agreement dated as of November 27, 2018 between LKQ Corporation and Arnd Franz.

Services Agreement dated as of June 1, 2020 between LKQ Europe GmbH, an indirect wholly-owned subsidiary of LKQ Corporation, and Arnd Franz.

Offer Letter dated as of September 14, 2022 from Dominick Zarcone to Varun Laroyia.

Memorandum dated as of September 14, 2022 from Dominick Zarcone to Rick Galloway.

LKQ Corporation Nonqualified Deferred Compensation Plan for Non-Employee Directors

Exhibit Number Description

3 unchanged sentences

333-107417 filed with the SEC on September 12, 2003).

Amendment and Restatement Agreement dated as of January 29, 2016 by and among LKQ Corporation, LKQ Delaware LLP, and certain additional subsidiaries of LKQ Corporation, as borrowers, certain financial institutions, as lenders, and Wells Fargo Bank, National Association, as administrative agent (incorporated herein by reference to Exhibit 4.1 to the Company's report on Form 8-K filed with the SEC on February 2, 2016).

Amendment No.

1 dated as of December 14, 2016 to the Fourth Amended and Restated Credit Agreement, which is Exhibit A to the Amendment and Restatement Agreement dated as of January 29, 2016 by and among LKQ Corporation, LKQ Delaware LLP, and certain additional subsidiaries of LKQ Corporation, as borrowers, certain financial institutions, as lenders, and Wells Fargo Bank, National Association, as administrative agent (incorporated herein by reference to Exhibit 4.3 to the Company's report on Form 10-K filed with the SEC on February 27, 2017).

Amendment No.

2 dated as of December 1, 2017 to the Fourth Amended and Restated Credit Agreement, which is Exhibit A to the Amendment and Restatement Agreement dated as of January 29, 2016 by and among LKQ Corporation, LKQ Delaware LLP, and certain additional subsidiaries of LKQ Corporation, as borrowers, certain financial institutions, as lenders, and Wells Fargo Bank, National Association, as administrative agent.

(incorporated herein by reference to Exhibit 4.4 to the Company's report on Form 10-K filed with the SEC on February 28, 2018).

Amendment No.

3 dated as of November 20, 2018 to the Fourth Amended and Restated Credit Agreement, which is Exhibit A to the Amendment and Restatement Agreement dated as of January 29, 2016 by and among LKQ Corporation, LKQ Delaware LLP, and certain additional subsidiaries of LKQ Corporation, as borrowers, certain financial institutions, as lenders, and Wells Fargo Bank, National Association, as administrative agent (incorporated herein by reference to Exhibit 4.5 to the Company's report on Form 10-K filed with the SEC on March 1, 2019).

Amendment No.

4 dated as of June 11, 2020 to the Fourth Amended and Restated Credit Agreement, which is Exhibit A to the Amendment and Restatement Agreement dated as of January 29, 2016 by and among LKQ Corporation, LKQ Delaware LLP, and certain additional subsidiaries of LKQ Corporation, as borrowers, certain financial institutions, as lenders, and Wells Fargo Bank, National Association, as administrative agent (incorporated herein by reference to Exhibit 4.1 to the Company's report on Form 8-K filed with the SEC on June 16, 2020).

Amendment No.

5 dated as of December 14, 2020 to the Fourth Amended and Restated Credit Agreement, which is Exhibit A to the Amendment and Restatement Agreement dated as of January 29, 2016 by and among LKQ Corporation and certain additional subsidiaries of LKQ Corporation, as borrowers, certain financial institutions, as lenders, and Wells Fargo Bank, National Association, as administrative agent (incorporated by reference to Exhibit 4.1 to the Company’s report on Form 10-Q filed with the SEC on May 5, 2021).

Amendment No.

6 dated as of November 23, 2021 to the Fourth Amended and Restated Credit Agreement, which is Exhibit A to the Amendment and Restatement Agreement dated as of January 29, 2016 by and among LKQ Corporation and certain additional subsidiaries of LKQ Corporation, as borrowers, certain financial institutions, as lenders, and Wells Fargo Bank, National Association, as administrative agent (incorporated by reference to Exhibit 4.1 to the Company’s report on Form 8-K filed with the SEC on November 30, 2021).

Credit Agreement, dated as of January 5, 2023, by and among LKQ Corporation and certain additional subsidiaries of LKQ Corporation, as borrowers, certain financial institutions, as lenders, and Wells Fargo Bank, National Association, as administrative agent (incorporated herein by reference to Exhibit 4.1 to the Company’s report on Form 8-K filed with the SEC on January 6, 2023).

Indenture dated as of April 14, 2016 among LKQ Italia Bondco S.p.A., as Issuer, LKQ Corporation, certain subsidiaries of LKQ Corporation, the Trustee, and the Paying Agent, Transfer Agent and Registrar (incorporated herein by reference to Exhibit 4.1 to the Company’s report on Form 8-K filed with the SEC on April 18, 2016).

6 unchanged sentences

and the Trustee (incorporated herein by reference to Exhibit 4.4 to the Company’s report on Form 10-Q filed with the SEC on August 2, 2016).

Exhibit Number Description

Supplemental Indenture dated as of June 13, 2016 among Bertolotti S.p.A., LKQ Corporation, LKQ Italia Bondco S.p.A.

8 unchanged sentences

Supplemental Indenture dated as of July 16, 2018 among LKQ European Holdings B.V., as Issuer, LKQ Corporation, certain subsidiaries of LKQ Corporation, as Guarantors, and BNP Paribas Trust Corporation UK Limited, as Trustee (incorporated herein by reference to Exhibit 4.6 to the Company's report on Form 10-Q filed with the SEC on August 6, 2018).

Exhibit Number Description

Supplemental Indenture dated as of June 21, 2019 among LKQ European Holdings B.V., as Issuer, LKQ Corporation, certain subsidiaries of LKQ Corporation, as Guarantors, and BNP Paribas Trust Corporation UK Limited, as Trustee (incorporated herein by reference to Exhibit 4.2 to the Company's report on Form 10-Q filed with the SEC on August 2, 2019).

9 unchanged sentences

Form of LKQ Corporation Restricted Stock Unit Agreement for Non-Employee Directors (incorporated herein by reference to Exhibit 10.6 to the Company's report on Form 10-K filed with the SEC on February 26, 2021).

Form of LKQ Corporation Restricted Stock Unit Agreement for Employees.

Form of LKQ Corporation Restricted Stock Unit Agreement for Employees (incorporated herein by reference to Exhibit 10.7 to the Company’s report on Form 10-K filed with the SEC on February 25, 2022).

Form of LKQ Corporation Performance-Based Restricted Stock Unit Agreement (PSU 1 Award) (incorporated herein by reference to Exhibit 10.7 to the Company's report on Form 10-K filed with the SEC on February 27, 2020).

Exhibit Number Description

Form of LKQ Corporation Performance-Based Restricted Stock Unit Agreement (PSU 2 Award) (incorporated herein by reference to Exhibit 10.8 to the Company's report on Form 10-K filed with the SEC on February 27, 2020).

7 unchanged sentences

Hanley dated as of July 24, 2014 (incorporated herein by reference to Exhibit 10.4 to the Company’s report on Form 8-K filed with the SEC on July 28, 2014).

Change of Control Agreement between LKQ Corporation and Victor M.

Casini dated as of July 24, 2014 (incorporated herein by reference to Exhibit 10.5 to the Company’s report on Form 8-K filed with the SEC on July 28, 2014).

Change of Control Agreement between LKQ Corporation and Michael S.

6 unchanged sentences

McKay dated as of June 1, 2016 (incorporated herein by reference to Exhibit 10.34 to the Company's report on Form 10-K filed with the SEC on February 27, 2017).

Exhibit Number Description

Change of Control Agreement between LKQ Corporation and Varun Laroyia dated as of October 1, 2017 (incorporated herein by reference to Exhibit 10.26 to the Company's report on Form 10-K filed with the SEC on February 28, 2018).

Change of Control Agreement between LKQ Corporation and Arnd Franz dated as of October 1, 2019 (incorporated herein by reference to Exhibit 10.25 to the Company's report on Form 10-K filed with the SEC on February 27, 2020).

Change of Control Agreement between LKQ Corporation and Michael T.

1 unchanged sentence

Change of Control Agreement between LKQ Corporation and Genevieve L.

Dombrowski dated as of March 22, 2021.

Dombrowski dated as of March 22, 2021 (incorporated herein by reference to Exhibit 10.24 to the Company's report on Form 10-K filed with the SEC on February 25, 2022).

Change of Control Agreement between LKQ Corporation and Rick Galloway dated as of September 15, 2022.

(incorporated herein by reference to exhibit 10.4 of the Company's report on Form 10-Q filed with the SEC on November 1, 2022)

LKQ Severance Policy for Key Executives (incorporated herein by reference to Exhibit 10.1 to the Company’s report on Form 8-K filed with the SEC on July 28, 2014).

Receivables Sale Agreement dated as of September 28, 2012 among Keystone Automotive Industries, Inc., as an Originator, Greenleaf Auto Recyclers, LLC, as an Originator, and LKQ Receivables Finance Company, LLC, as Buyer (incorporated herein by reference to Exhibit 10.1 to the Company’s report on Form 8-K filed with the SEC on October 4, 2012).

Receivables Purchase Agreement dated as of September 28, 2012 among LKQ Receivables Finance Company, LLC, as Seller, LKQ Corporation, as Servicer, Victory Receivables Corporation, as a Conduit and The Bank of Tokyo-Mitsubishi UFJ, Ltd., as a Financial Institution, as Administrative Agent and as a Managing Agent (incorporated herein by reference to Exhibit 10.2 to the Company’s report on Form 8-K filed with the SEC on October 4, 2012).

Exhibit Number Description

Amendment No.

1 to Receivables Purchase Agreement dated as of September 29, 2014 among LKQ Receivables Finance Company, LLC, as Seller, LKQ Corporation, as Servicer, Victory Receivables Corporation, as a Conduit and The Bank of Tokyo-Mitsubishi UFJ, Ltd., as a Financial Institution, as Administrative Agent and as a Managing Agent (incorporated herein by reference to Exhibit 10.1 to the Company’s report on Form 8-K filed with the SEC on October 3, 2014).

Performance Undertaking, dated as of September 28, 2012 by LKQ Corporation in favor of LKQ Receivables Finance Company, LLC (incorporated herein by reference to Exhibit 10.3 to the Company’s report on Form 8-K filed with the SEC on October 4, 2012).

Amendment No.

2 to Receivables Purchase Agreement dated as of November 29, 2016 among LKQ Receivables Finance Company, LLC, as Seller, LKQ Corporation, as Servicer, Victory Receivables Corporation, as a Conduit, and The Bank of Tokyo-Mitsubishi UFJ, Ltd., a Financial Institution, as Administrative Agent and as a Managing Agent (incorporated herein by reference to Exhibit 10.40 to the Company's report on Form 10-K filed with the SEC on February 27, 2017).

Amendment No.

3 to Receivables Purchase Agreement dated as of December 20, 2018 among LKQ Receivables Finance Company, LLC, as Seller, LKQ Corporation, as Servicer, Victory Receivables Corporation, as a Conduit, MUFG Bank, a Financial Institution as Administrative Agent and as a Managing Agent (incorporated herein by reference to Exhibit 10.31 to the Company's report on Form 10-K filed with the SEC on March 1, 2019).

Offer Letter to Dominick P.

3 unchanged sentences

Zarcone (incorporated herein by reference to Exhibit 10.1 to the Company's report on Form 8-K filed with the SEC on June 5, 2017).

Offer letter to Varun Laroyia dated September 5, 2017 (incorporated herein by reference to Exhibit 10.1 to the Company's report on Form 8-K filed with the SEC on September 6, 2017).

Offer Letter to Arnd Franz dated September 27, 2018 (incorporated herein by reference to Exhibit 10.1 to the Company's report on Form 10-Q filed with the SEC on May 7, 2020).

Services Agreement dated as of November 27, 2018 between LKQ Corporation and Arnd Franz (incorporated herein by reference to Exhibit 10.2 to the Company's report on Form 10-Q filed with the SEC on May 7, 2020).

Services Agreement dated as of June 1, 2020 between LKQ Europe GmbH, an indirect wholly-owned subsidiary of LKQ Corporation, and Arnd Franz (incorporated herein by reference to Exhibit 10.1 to the Company's report on Form 10-Q filed with the SEC on August 4, 2020).

Offer Letter dated as of September 14, 2022 from Dominick Zarcone to Varun Laroyia (incorporated herein by reference to Exhibit 10.1 to the Company's report on Form 8-K filed with the SEC on September 20, 2022).

Memorandum dated as of September 14, 2022 from Dominick Zarcone to Rick Galloway (incorporated herein by reference to Exhibit 10.2 to the Company's report on Form 8-K filed with the SEC on September 20, 2022).

LKQ Corporation Nonqualified Deferred Compensation Plan for Non-Employee Directors

List of subsidiaries, jurisdictions and assumed names.

24 unchanged sentences

(Principal Executive Officer)

/s/ VARUN LAROYIA Executive Vice President and Chief Financial Officer

Varun Laroyia

/s/ RICK GALLOWAY Senior Vice President and Chief Financial Officer

Rick Galloway

(Principal Financial Officer)

20 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures