David Bruton Smith
About David Bruton Smith
David Bruton Smith (50) is Chairman of the Board (since July 2022) and Chief Executive Officer (since September 2018) of Sonic Automotive, Inc., and has served in the organization since 1998; he has been a director since October 2008 . Under his leadership, Sonic’s most recent “pay versus performance” disclosures report 2024 net income of $216.0 million and Adjusted EPS of $6.56, with Sonic’s 5-year TSR implying a $223.68 value of a $100 initial investment (company methodology) . Sonic operates as a “controlled company” under NYSE rules due to the Smith family’s voting control, with David serving in dual roles as CEO and Chairman and substantial share ownership through family entities .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Sonic Automotive | Chairman of the Board | Jul 2022–present | Board leadership; dual role with CEO |
| Sonic Automotive | Chief Executive Officer | Sep 2018–present | Company leadership; performance linked to Adjusted EPS, CSI |
| Sonic Automotive | Executive Vice Chairman & Chief Strategic Officer | Mar 2018–Sep 2018 | Corporate strategy |
| Sonic Automotive | Vice Chairman | Mar 2013–Mar 2018 | Senior leadership |
| Sonic Automotive | Executive Vice President | Oct 2008–Mar 2013 | Executive management; director since Oct 2008 |
| Sonic Automotive | Senior VP, Corporate Development | Mar 2007–Oct 2008 | Corporate development |
| Sonic Automotive | VP, Corporate Strategy | Oct 2005–Mar 2007 | Corporate strategy |
| Sonic dealerships | Dealer Operator and General Manager | pre-2005 | Dealership operations experience |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Speedway Motorsports, LLC | Co-owner and Director | Ongoing | Family-controlled affiliate; related-party activity disclosed |
| Sonic Financial Corporation (SFC) | Co-owner, Officer and Director | Ongoing | Largest stockholder of Sonic; aircraft transactions with SFC disclosed |
Fixed Compensation
| Year | Base salary ($) | All other compensation ($) | Detail notes |
|---|---|---|---|
| 2024 | 1,336,366 | 448,034 | Includes imputed demonstrator vehicle $353,356 and personal aircraft usage $92,746; plus group life imputed income |
Performance Compensation
| Component | Metric/terms | Target/thresholds | 2024 actual | Payout |
|---|---|---|---|---|
| Annual cash bonus | Adjusted EPS (primary) | Min $4.10 = 50%; Target $5.12 = 100%; Max ≥$6.14 = 300% of base salary (pro-rated between levels) | $6.56 (exceeded max) | EPS component paid at 300% |
| Annual cash bonus | CSI (franchised dealerships) | Min 70% = 5%; Target 75% = 15%; Max ≥80% = 25% of base salary | 93.3% achieving CSI standard | CSI component paid at 25% |
| Annual cash bonus | Cash paid (total) | — | — | $4,343,190 |
| Long-term equity | RSUs granted 2/7/2024 | 71,126 units; grant-date fair value $3,795,995 | Performance condition: 2024 Adjusted EPS; achieved at 128% of target, no forfeiture | Scheduled vest: 25% on 3/31/2025; 30% on 2/7/2026; 45% on 2/7/2027 |
Equity Ownership & Alignment
| Item | Detail | As of | Value/percent |
|---|---|---|---|
| Class A beneficial ownership | 1,314,795 shares | Feb 28, 2025 | 6.0% of Class A |
| Class B beneficial ownership | 12,029,375 shares | Feb 28, 2025 | 100.0% of Class B |
| % of all outstanding voting stock | Combined voting stock percentage | Feb 28, 2025 | 39.4% |
| % of total voting power | Including 10 votes/share for Class B | Feb 28, 2025 | 85.6% |
| RSUs vesting within 60 days | 17,782 units vest 3/31/2025 | — | Included in beneficial ownership |
| Outstanding non-vested RSUs | 33,376 (2/9/2022 grant) | 12/31/2024 | $2,114,338 market value at $63.35 |
| Outstanding non-vested RSUs | 47,486 (2/8/2023 grant) | 12/31/2024 | $3,008,206 market value at $63.35 |
| Outstanding unearned RSUs | 71,126 (2/7/2024 equity incentive) | 12/31/2024 | $4,505,832 market value at $63.35 |
| Ownership guideline | CEO must hold ≥3x base salary; status | — | In compliance |
| Hedging/pledging | Hedging/short selling prohibited; RSUs may not be pledged; no pledging disclosed for David; family pledges by B. Scott and Marcus disclosed | — | Policy prohibition; pledges: 385,274 (B. Scott), 87,938 (Marcus) Class A pledged |
Employment Terms
| Topic | Terms |
|---|---|
| Employment agreements | No CEO employment agreement disclosed; the Employment Agreement section covers only Mr. Byrd |
| Severance | No formal severance for CEO; equity acceleration on termination without cause valued at $9,628,376 at 12/31/2024 (RSUs at $63.35) |
| Change in control | Immediate vesting of outstanding stock awards; estimated accelerated value $9,628,376 at 12/31/2024 (RSUs at $63.35) |
| SERP | CEO not a participant in SERP |
| Clawback | Board adopted clawback policy in 2023 for certain executive compensation upon restatements |
| Insider trading | Company Insider Trading Policy applies; anti-hedging and short selling restrictions |
Board Governance
- Dual role: David serves as Chairman and CEO; Board determined this is appropriate given his industry knowledge and significant equity ownership, with flexibility to separate roles in the future .
- Controlled company: The Smith family controls >50% of voting power; Sonic relies on the NYSE “controlled company” exemption and has three independent directors and six non-independent directors .
- Lead Independent Director: William I. Belk reappointed; presides over executive sessions of independent directors held before/after each regular Board meeting .
- Committee roles: David is not a member of the Audit, Compensation, or NCG Committees; current committee chairs—Audit: Belk; Compensation: Taylor; NCG: Kaiser .
- Board attendance: Each incumbent director attended ≥75% of Board and committee meetings in fiscal 2024; all nine directors attended the 2024 annual meeting .
- Director compensation: Employee directors (David, Jeff Dyke) do not receive director fees; non-employee director retainers and annual RSU grants detailed separately .
Performance Compensation: Detailed Mechanics
| Metric | Weighting potential | Target definition | 2024 actual | Result |
|---|---|---|---|---|
| Adjusted EPS | Up to 300% of base salary | Adjusted GAAP net income with specified exclusions; fixed tax rate at 26%; dealership disposition timing; diluted share count per GAAP | $6.56 | Above max objective; EPS component paid at 300% |
| CSI | Up to 25% of base salary | % of franchised dealerships meeting manufacturer’s CSI standards (sales/service weighted) | 93.3% | Above max objective; CSI component paid at 25% |
| RSU forfeiture scale | Performance-based | 75% of target EPS → 81.82% remains; 100% target → 90.91%; 105% target → 100%; pro rata between levels | 128% of target EPS | No forfeiture; full 71,126 RSUs remain outstanding |
Compensation Peer Group and Say-on-Pay
- Peer group used for 2024 executive compensation and TSR comparison: Asbury Automotive Group, AutoNation, CarMax, Carvana, Group 1 Automotive, Lithia Motors, Penske Automotive Group, Rush Enterprises .
- Say-on-Pay support: 2022—~94%; 2023—~96%; 2024—>99% approval .
Related Party Transactions (Governance Risk Review)
| Counterparty | Transaction | 2024 amount |
|---|---|---|
| Oil-Chem (Speedway Motorsports subsidiary) | zMAX micro-lubricant purchases | ~$0.4 million |
| SMISC Holdings (Speedway Motorsports subsidiary) | Merchandise/apparel purchases | ~$0.8 million |
| Speedway Motorsports subsidiaries | Vehicle sales | ~$0.2 million |
| SMISC/GLOBE (Speedway Motorsports subsidiaries) | EchoPark NASCAR event sponsorship fees | $2.5 million in 2024; new agreement for $2.75m (2025), $2.8m (2026), $2.85m (2027) |
| SFC (family entity) | Aircraft-related transactions (travel, storage, maintenance) | ~$4.6 million aggregate (paid $4.3m; received $0.3m) |
- Compensation committee interlocks: David served on boards of Speedway Motorsports and SFC that perform functions equivalent to compensation committees; executives from those entities serve as Sonic directors, disclosed under Item 402 interlocks .
Pay Versus Performance Snapshot
| Year | CEO CAP ($) | Avg NEO CAP ($) | Sonic TSR (Value of $100) | Peer TSR (Value of $100) | Net Income ($mm) | Adjusted EPS |
|---|---|---|---|---|---|---|
| 2024 | 10,882,316 | 9,679,259 | 223.68 | 230.49 | 216.0 | 6.56 |
| 2023 | 8,222,968 | 7,403,142 | 194.21 | 147.04 | 178.2 | 6.49 |
| 2022 | 7,233,206 | 4,975,779 | 166.46 | 89.86 | 88.5 | 8.92 |
| 2021 | 10,031,514 | 8,877,971 | 163.32 | 199.97 | 348.9 | 8.05 |
| 2020 | 9,483,387 | 6,518,071 | 126.19 | 168.68 | (51.4) | 3.76 |
Board Service History and Committee Roles
- Board tenure: Director since October 2008; Chairman since July 2022 .
- Committee membership: None; committees comprised solely of independent directors (Audit, Compensation, NCG) .
- Independence and dual-role implications: Sonic is a controlled company and not required to have a majority independent board; David’s dual role is offset by a Lead Independent Director and independent-only committees, but control may limit traditional independence safeguards .
Risk Indicators & Red Flags
- Controlled company governance: Reliance on NYSE controlled company exemption; family voting control .
- Related-party transactions: Ongoing transactions with Speedway Motorsports subsidiaries and SFC (aircraft, sponsorships) .
- Pledging: Significant pledging by B. Scott Smith (approx. 385,274 Class A shares) and Marcus G. Smith (approx. 87,938 Class A shares); no pledging disclosed for David .
- Material weakness (historical): 2022 revenue recognition weakness at an acquired dealership remediated as of December 31, 2022 .
- Anti-hedging: Policy prohibits hedging and short selling for directors/officers .
Investment Implications
- Alignment: CEO’s substantial ownership—including 100% of Class B shares held via family entities—creates strong economic alignment and voting control; CEO is in compliance with a 3× salary ownership guideline . Incentive design is highly performance-centric, with EPS driving up to 300% of salary and CSI up to 25%, and RSUs explicitly tied to Adjusted EPS outcomes with multi-year vesting .
- Near-term selling pressure: RSU vesting on March 31, 2025 (17,782 units) and additional scheduled vesting could lead to tax-related withholding/sales, though Section 16 filings show timely compliance and hedging is prohibited .
- Governance risk: Controlled company status, family interlocks, and recurring related-party transactions (sponsorships, aircraft) warrant a governance discount and monitoring for potential conflicts; independent-only committees and a lead independent director partially mitigate .
- Retention and change-in-control: No CEO severance agreement; equity accelerates on termination without cause and change-in-control ($9.63m at 12/31/2024), reinforcing retention via equity rather than guaranteed severance; clawback policy adds downside accountability . Strong say-on-pay approvals (>99% in 2024) indicate shareholder acceptance of pay-for-performance alignment .