<SEC-DOCUMENT>0001140361-20-018902.txt : 20200824
<SEC-HEADER>0001140361-20-018902.hdr.sgml : 20200824
<ACCEPTANCE-DATETIME>20200821204610
ACCESSION NUMBER:		0001140361-20-018902
CONFORMED SUBMISSION TYPE:	DEFA14A
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20200824
DATE AS OF CHANGE:		20200821
EFFECTIVENESS DATE:		20200824

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			MOTORCAR PARTS AMERICA INC
		CENTRAL INDEX KEY:			0000918251
		STANDARD INDUSTRIAL CLASSIFICATION:	MOTOR VEHICLE PARTS & ACCESSORIES [3714]
		IRS NUMBER:				112153962
		STATE OF INCORPORATION:			NY
		FISCAL YEAR END:			0331

	FILING VALUES:
		FORM TYPE:		DEFA14A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-33861
		FILM NUMBER:		201124440

	BUSINESS ADDRESS:	
		STREET 1:		2929 CALIFORNIA STREET
		CITY:			TORRANCE
		STATE:			CA
		ZIP:			90503
		BUSINESS PHONE:		3109724015

	MAIL ADDRESS:	
		STREET 1:		2929 CALIFORNIA STREET
		CITY:			TORRANCE
		STATE:			CA
		ZIP:			90503

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	MOTORCAR PARTS  AMERICA INC
		DATE OF NAME CHANGE:	20040112

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	MOTORCAR PARTS & ACCESSORIES INC
		DATE OF NAME CHANGE:	19940128
</SEC-HEADER>
<DOCUMENT>
<TYPE>DEFA14A
<SEQUENCE>1
<FILENAME>nc10014608x1_defa14a.htm
<DESCRIPTION>DEFA14A
<TEXT>
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      <hr style="border: none; border-bottom: 1px solid black; border-top: 4px solid black; height: 10px; color: #ffffff; background-color: #ffffff; margin-left: auto; margin-right: auto;" align="center"><font style="font-size: 14pt; font-family: 'Times New Roman',Times,serif;">UNITED STATES</font></div>
    <div style="text-align: center; font-family: 'Times New Roman',Times,serif; font-size: 14pt; font-weight: bold;">SECURITIES AND EXCHANGE COMMISSION</div>
    <div style="text-align: center; font-family: 'Times New Roman',Times,serif; font-size: 12pt; font-weight: bold;">WASHINGTON, D.C. 20549</div>
    <div style="font-family: 'Times New Roman',Times,serif;"><br>
    </div>
    <div style="text-align: center; font-family: 'Times New Roman',Times,serif; font-size: 18pt; font-weight: bold;">SCHEDULE 14A INFORMATION</div>
    <div style="text-align: center; font-family: 'Times New Roman', Times, serif; font-weight: bold;">Proxy Statement Pursuant to Section 14(a) of</div>
    <div style="text-align: center; font-family: 'Times New Roman', Times, serif; font-weight: bold;">the Securities Exchange Act of 1934</div>
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    <div style="font-family: 'Times New Roman', Times, serif;">Filed by the Registrant &#9745;</div>
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    </div>
    <div style="font-family: 'Times New Roman', Times, serif;">Filed by a Party other than the Registrant &#8201;&#9744;</div>
    <div style="font-family: 'Times New Roman',Times,serif;"><br>
    </div>
    <div style="font-family: 'Times New Roman', Times, serif;">Check the appropriate box:</div>
    <div style="font-family: 'Times New Roman',Times,serif;"><br>
    </div>
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            <div>&#9744;</div>
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          <td style="width: 95.19%; vertical-align: top; font-family: 'Times New Roman',Times,serif;">
            <div>Preliminary Proxy Statement</div>
          </td>
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            <div>&#9744;</div>
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            <div>Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))</div>
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            <div>&#9744;</div>
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          <td style="width: 95.19%; vertical-align: top; font-family: 'Times New Roman',Times,serif;">
            <div>Definitive Proxy Statement</div>
          </td>
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          <td style="width: 4.81%; vertical-align: top; font-family: 'Times New Roman',Times,serif;">
            <div>&#9745;</div>
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          <td style="width: 95.19%; vertical-align: top; font-family: 'Times New Roman',Times,serif;">
            <div>Definitive Additional Materials</div>
          </td>
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          <td style="width: 4.81%; vertical-align: top; font-family: 'Times New Roman',Times,serif;">
            <div>&#9744;</div>
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          <td style="width: 95.19%; vertical-align: top; font-family: 'Times New Roman',Times,serif;">
            <div>Soliciting Material Pursuant to &#167;240.14a-12</div>
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    </div>
    <div style="text-align: center; font-family: 'Times New Roman',Times,serif; font-size: 24pt; font-weight: bold;"><u>MOTORCAR PARTS OF AMERICA, INC.</u></div>
    <div style="text-align: center; font-family: 'Times New Roman', Times, serif;">(Name of Registrant as Specified In Its Charter)</div>
    <div style="font-family: 'Times New Roman',Times,serif;"><u><br>
      </u></div>
    <div style="text-align: center;"><font style="font-size: 24pt; font-family: 'Times New Roman',Times,serif;"><u><font style="font-weight: bold;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160; &#160;&#160; &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font></u></font><font style="font-family: 'Times New Roman',Times,serif;"><br>
      </font></div>
    <div style="text-align: center; font-family: 'Times New Roman', Times, serif;">(Name of Person(s) Filing Proxy Statement, if other than the Registrant)</div>
    <div style="font-family: 'Times New Roman',Times,serif;"><br>
    </div>
    <div style="font-family: 'Times New Roman', Times, serif;">Payment of Filing Fee (Check the appropriate box):</div>
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            <div>&#9745;</div>
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            <div>No fee required.</div>
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          <td style="width: 3.62%; vertical-align: top; font-family: 'Times New Roman',Times,serif;">&#160;</td>
          <td style="width: 4.21%; vertical-align: bottom; font-family: 'Times New Roman',Times,serif;">&#160;</td>
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            <div>&#9744;</div>
          </td>
          <td colspan="2" style="width: 96.38%; vertical-align: bottom; font-family: 'Times New Roman',Times,serif;">
            <div>Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.</div>
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          <td style="width: 3.62%; vertical-align: top; font-family: 'Times New Roman',Times,serif;">&#160;</td>
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          <td style="width: 4.21%; vertical-align: top; font-family: 'Times New Roman',Times,serif;">
            <div>(1)</div>
          </td>
          <td style="width: 92.17%; vertical-align: middle; font-family: 'Times New Roman',Times,serif;">
            <div>Title of each class of securities to which transaction applies:</div>
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          <td style="width: 4.21%; vertical-align: top; font-family: 'Times New Roman',Times,serif;">
            <div>(2)</div>
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          <td style="width: 92.17%; vertical-align: middle; font-family: 'Times New Roman',Times,serif;">
            <div>Aggregate number of securities to which transaction applies:</div>
          </td>
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          <td style="width: 3.62%; vertical-align: top; font-family: 'Times New Roman',Times,serif;">&#160;</td>
          <td style="width: 4.21%; vertical-align: top; font-family: 'Times New Roman',Times,serif;">&#160;</td>
          <td style="width: 92.17%; vertical-align: middle; font-family: 'Times New Roman',Times,serif;">&#160;</td>
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            <div>(3)</div>
          </td>
          <td style="width: 92.17%; vertical-align: middle; font-family: 'Times New Roman',Times,serif;">
            <div>Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):</div>
          </td>
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          <td style="width: 3.62%; vertical-align: top; font-family: 'Times New Roman',Times,serif;">&#160;</td>
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            <div>(4)</div>
          </td>
          <td style="width: 92.17%; vertical-align: middle; font-family: 'Times New Roman',Times,serif;">
            <div>Proposed maximum aggregate value of transaction:</div>
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            <div>(5)</div>
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            <div>Total fee paid:</div>
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          <td colspan="2" style="width: 96.38%; vertical-align: top; font-family: 'Times New Roman',Times,serif;">&#160;</td>
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            <div>&#9744;</div>
          </td>
          <td colspan="2" style="width: 96.38%; vertical-align: top; font-family: 'Times New Roman',Times,serif;">
            <div>Fee paid previously with preliminary materials.</div>
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          <td style="width: 92.17%; vertical-align: middle; font-family: 'Times New Roman',Times,serif;">&#160;</td>
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          <td style="width: 3.62%; vertical-align: top; font-family: 'Times New Roman',Times,serif;">
            <div>&#9744;</div>
          </td>
          <td colspan="2" style="width: 96.38%; vertical-align: top; font-family: 'Times New Roman',Times,serif;">
            <div>Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by
              registration statement number, or the Form or Schedule and the date of its filing.</div>
          </td>
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          <td style="width: 3.62%; vertical-align: top; font-family: 'Times New Roman',Times,serif;">&#160;</td>
          <td style="width: 4.21%; vertical-align: top; font-family: 'Times New Roman',Times,serif;">&#160;</td>
          <td style="width: 92.17%; vertical-align: middle; font-family: 'Times New Roman',Times,serif;">&#160;</td>
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          <td style="width: 3.62%; vertical-align: top; font-family: 'Times New Roman',Times,serif;">&#160;</td>
          <td style="width: 4.21%; vertical-align: top; font-family: 'Times New Roman',Times,serif;">
            <div>(1)</div>
          </td>
          <td style="width: 92.17%; vertical-align: middle; font-family: 'Times New Roman',Times,serif;">
            <div>Amount Previously Paid:</div>
          </td>
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          <td style="width: 3.62%; vertical-align: top; font-family: 'Times New Roman',Times,serif;">&#160;</td>
          <td style="width: 4.21%; vertical-align: top; font-family: 'Times New Roman',Times,serif;">&#160;</td>
          <td style="width: 92.17%; vertical-align: middle; font-family: 'Times New Roman',Times,serif;">&#160;</td>
        </tr>
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          <td style="width: 3.62%; vertical-align: top; font-family: 'Times New Roman',Times,serif;">&#160;</td>
          <td style="width: 4.21%; vertical-align: top; font-family: 'Times New Roman',Times,serif;">
            <div>(2)</div>
          </td>
          <td style="width: 92.17%; vertical-align: middle; font-family: 'Times New Roman',Times,serif;">
            <div>Form, Schedule or Registration Statement No.:</div>
          </td>
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          <td style="width: 3.62%; vertical-align: top; font-family: 'Times New Roman',Times,serif;">&#160;</td>
          <td style="width: 4.21%; vertical-align: top; font-family: 'Times New Roman',Times,serif;">&#160;</td>
          <td style="width: 92.17%; vertical-align: middle; border-bottom: 2px solid rgb(0, 0, 0); font-family: 'Times New Roman',Times,serif;">&#160;</td>
        </tr>
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          <td style="width: 3.62%; vertical-align: top; font-family: 'Times New Roman',Times,serif;">&#160;</td>
          <td style="width: 4.21%; vertical-align: top; font-family: 'Times New Roman',Times,serif;">&#160;</td>
          <td style="width: 92.17%; vertical-align: middle; font-family: 'Times New Roman',Times,serif;">&#160;</td>
        </tr>
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          <td style="width: 3.62%; vertical-align: top; font-family: 'Times New Roman',Times,serif;">&#160;</td>
          <td style="width: 4.21%; vertical-align: top; font-family: 'Times New Roman',Times,serif;">
            <div>(3)</div>
          </td>
          <td style="width: 92.17%; vertical-align: middle; font-family: 'Times New Roman',Times,serif;">
            <div>Filing Party:</div>
          </td>
        </tr>
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          <td style="width: 3.62%; vertical-align: top; font-family: 'Times New Roman',Times,serif;">&#160;</td>
          <td style="width: 4.21%; vertical-align: top; font-family: 'Times New Roman',Times,serif;">&#160;</td>
          <td style="width: 92.17%; vertical-align: middle; border-bottom: 2px solid rgb(0, 0, 0); font-family: 'Times New Roman',Times,serif;">&#160;</td>
        </tr>
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          <td style="width: 3.62%; vertical-align: top; font-family: 'Times New Roman',Times,serif;">&#160;</td>
          <td style="width: 4.21%; vertical-align: top; font-family: 'Times New Roman',Times,serif;">&#160;</td>
          <td style="width: 92.17%; vertical-align: middle; font-family: 'Times New Roman',Times,serif;">&#160;</td>
        </tr>
        <tr>
          <td style="width: 3.62%; vertical-align: top; font-family: 'Times New Roman',Times,serif;">&#160;</td>
          <td style="width: 4.21%; vertical-align: top; font-family: 'Times New Roman',Times,serif;">
            <div>(4)</div>
          </td>
          <td style="width: 92.17%; vertical-align: middle; font-family: 'Times New Roman',Times,serif;">
            <div>Date Filed:</div>
          </td>
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        <tr>
          <td style="width: 3.62%; vertical-align: top; font-family: 'Times New Roman',Times,serif;">&#160;</td>
          <td style="width: 4.21%; vertical-align: top; font-family: 'Times New Roman',Times,serif;">&#160;</td>
          <td style="width: 92.17%; vertical-align: middle; border-bottom: 2px solid rgb(0, 0, 0); font-family: 'Times New Roman',Times,serif;">&#160;</td>
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    </table>
    <div style="font-family: 'Times New Roman',Times,serif;"><br>
    </div>
    <div>
      <hr style="border: none; border-bottom: 4px solid black; border-top: 1px solid black; height: 10px; color: #ffffff; background-color: #ffffff; text-align: center; margin-left: auto; margin-right: auto;" align="center"></div>
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    <div style="font-family: 'Times New Roman', Times, serif; font-weight: bold;">Supplemental Proxy Information: August 21, 2020</div>
    <div style="font-family: 'Times New Roman',Times,serif;"><br>
    </div>
    <div style="font-family: 'Times New Roman', Times, serif;">A strong commitment to enhancing shareholder value has always been a guiding force throughout Motorcar Parts of America, Inc.&#8217;s history.&#160; The execution of the
      company&#8217;s multi-year strategic growth program and its completion are at the forefront of this goal.</div>
    <div style="font-family: 'Times New Roman',Times,serif;"><br>
    </div>
    <div style="font-family: 'Times New Roman', Times, serif;">Consistent with the overall objective to enhance shareholder value, management consistently strives to communicate the company&#8217;s success in reaching its near-
      and long-term strategic goals. This document is intended to provide additional information to investors regarding the efforts and engagement of the Compensation Committee and the Board to provide a better understanding of the company&#8217;s strategies and
      certain one-time expenditures that may distort short-term performance metrics during the completion of current strategic expansion projects.</div>
    <div style="font-family: 'Times New Roman',Times,serif;"><br>
    </div>
    <div style="font-family: 'Times New Roman', Times, serif;">In consideration of the disappointing outcome of last year&#8217;s Say on Pay vote, the Compensation Committee reached out to shareholders -- representing more than
      60 percent of ownership and receiving feedback from at least 40 percent. The Compensation Committee exchanged perspectives with the shareholders and listened carefully to their concerns.&#160; The dialog focused around incentive compensation based upon
      the company&#8217;s strategic initiatives versus metrics directly tied to short term shareholder returns.</div>
    <div style="font-family: 'Times New Roman',Times,serif;"><br>
    </div>
    <div style="font-family: 'Times New Roman', Times, serif;">As a result of these discussions, the Compensation Committee and management agreed to defer certain incentive equity grants until they restructured the
      incentive targets.&#160; The new incentive targets for the CEO&#8217;s restricted stock grant for the current year, Fiscal Year 2021, include a balance of incentives for timely execution of the strategic initiatives discussed below, and shareholder return
      metrics.&#160; The company portion of the annual cash incentive award will include among others a shareholder return target for pre-tax return on invested capital (ROIC) reflecting the company&#8217;s growth initiatives.&#160; The company also expects shareholder
      return metrics to improve on a year-over-year basis starting in Fiscal 2022.&#160; For Fiscal Year 2022, the Compensation Committee plans to implement incentive based compensation -- based primarily on shareholder return metrics for annual cash incentive
      awards.</div>
    <div style="font-family: 'Times New Roman',Times,serif;"><br>
    </div>
    <div style="font-family: 'Times New Roman', Times, serif;">The Compensation Committee pledges to proactively engage in a regular program of discussions with institutional shareholders, ISS and Glass Lewis throughout
      the year.&#160; The Compensation Committee is committed to the alignment of incentive compensation with increased shareholder value.&#160; The company recognizes the opportunity to benchmark metrics, looking at performance and with a particular focus on
      results expected from the implemented strategic initiatives.</div>
    <div style="font-family: 'Times New Roman',Times,serif;"><br>
    </div>
    <div style="font-family: 'Times New Roman', Times, serif;">The company&#8217;s progress is constantly being monitored, evaluated, and discussed at board meetings, operational meetings, on a daily, weekly, monthly, and
      yearly basis.</div>
    <div style="font-family: 'Times New Roman',Times,serif;"><br>
    </div>
    <div style="font-family: 'Times New Roman', Times, serif;">Consistent with the overall objective to enhance shareholder value, management consistently strives to communicate the company&#8217;s success in reaching its near-
      and long-term strategic goals. This document is intended to provide additional information to investors regarding the efforts and engagement of the Compensation Committee and the Board to provide a better understanding of the company&#8217;s strategies and
      certain one-time expenditures that may distort short-term performance metrics during the completion of current strategic expansion projects.</div>
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    <div style="font-family: 'Times New Roman', Times, serif; font-weight: bold;">Strategic Product Line Expansion Background</div>
    <div style="font-family: 'Times New Roman',Times,serif;"><br>
    </div>
    <div style="font-family: 'Times New Roman', Times, serif;">By 2018, Motorcar Parts of America achieved approximately a 50 percent market share position in the North American rotating electrical category. To further
      expand upon reaching this milestone, the company needed to increase its capacity and productivity.</div>
    <div style="font-family: 'Times New Roman',Times,serif;"><br>
    </div>
    <div style="font-family: 'Times New Roman', Times, serif;">Strategies were carefully analyzed by management and vetted by the board of directors and the company&#8217;s lenders, with the goal of establishing a dynamic
      platform for continued growth to enhance shareholder value. The identified strategies required additional expenditures and included the transition and the ramp up of new product lines. The company&#8217;s footprint in Mexico has now tripled and
      significantly increased in Malaysia.</div>
    <div style="font-family: 'Times New Roman',Times,serif;"><br>
    </div>
    <div style="font-family: 'Times New Roman', Times, serif;">In discussions with shareholders about strategic growth initiatives, management has consistently emphasized the company&#8217;s unique position within the North
      American aftermarket hard parts industry. Given the company&#8217;s significant market share within the rotating electrical category and the success of its wheel hub program and emerging brake-related booster and master cylinder categories, management,
      with the board&#8217;s counsel and support and discussions with key customers, decided to pursue a strategy to further expand its brake-related product offerings with the introduction of brake calipers. This sizable market category, supported by customer
      demand, contributed to the company&#8217;s strategic decision to add to its product line, and invest for the future with a greatly enhanced production footprint in Mexico.&#160; The company believes that these initiatives are the beginning of a new inflection
      point to enhance the company&#8217;s operating model and competitive position in the North American aftermarket, as well as pave the way for significant revenue growth and enhanced shareholder value.</div>
    <div style="font-family: 'Times New Roman',Times,serif;"><br>
    </div>
    <div style="font-family: 'Times New Roman', Times, serif; font-weight: bold;">Performance Metric Considerations</div>
    <div style="font-family: 'Times New Roman',Times,serif;"><br>
    </div>
    <div style="font-family: 'Times New Roman', Times, serif;">The company&#8217;s Compensation Committee recognized the importance of designing the compensation plan to reflect the completion of strategic initiatives by the
      end of Fiscal 2021.&#160; As a result of discussion with a number of shareholders, the Compensation Committee also decided to implement an incentive metric for Fiscal 2021 tied to pre-tax return on invested capital (ROIC) which the company expects to grow
      as the fruits of these investments evolve.</div>
    <div style="font-family: 'Times New Roman',Times,serif;"><br>
    </div>
    <div style="font-family: 'Times New Roman', Times, serif;">The short term compensation incentive initiatives revolve around the following transition items which the company believes will result in significantly
      improved shareholder value:</div>
    <div style="font-family: 'Times New Roman',Times,serif;"><br>
    </div>
    <div style="text-indent: 36pt; font-family: 'Times New Roman', Times, serif;">1) Completion of the relocation of all product lines into the new Mexican distribution center;</div>
    <div style="font-family: 'Times New Roman',Times,serif;"><br>
    </div>
    <div style="text-indent: 36pt; font-family: 'Times New Roman', Times, serif;">2) Completion and ramp up of the new Mexican-based caliper remanufacturing facilities;</div>
    <div style="font-family: 'Times New Roman',Times,serif;"><br>
    </div>
    <div style="text-indent: -13.5pt; margin-left: 49.5pt; font-family: 'Times New Roman', Times, serif;">3) Utilizing the expanded capacity of our Malaysian and Mexican capacity for other product&#160;&#160; categories; and,</div>
    <div style="font-family: 'Times New Roman',Times,serif;"><br>
    </div>
    <div style="text-indent: -18pt; margin-left: 49.5pt; font-family: 'Times New Roman', Times, serif;">&#160;&#160;4) Leveraging these low-cost facilities with the transfer of higher cost domestic production and the relocation of
      certain products to the newly expanded or expanding offshore facilities.</div>
    <div style="font-family: 'Times New Roman',Times,serif;"><br>
    </div>
    <div style="font-family: 'Times New Roman', Times, serif;">The Compensation Committee recognized the impact of the incremental expenses that were required to accomplish the long-term goals and incorporated these
      metrics into the short-term performance targets with regard to EBITDA and ROIC.&#160; These bonus targets were designed to ensure that management was aligned with the long-term initiatives of the company, and the Compensation Committee did not want to
      penalize executives for the expenses incurred while executives were simultaneously pursuing long-term goals to enhance shareholder value.&#160; The company intends to transition its compensation incentive metrics to metrics based on shareholder returns
      when the company&#8217;s transition is substantially completed -- expected by the March 31, 2021 year end.</div>
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    <div style="font-family: 'Times New Roman', Times, serif;">It should be recognized that large non-cash, non-economic expenses of approximately $33.5M negatively affected results for Fiscal 2020, comprised of:</div>
    <div style="font-family: 'Times New Roman',Times,serif;"><br>
    </div>
    <table style="font-family: 'Times New Roman'; font-size: 10pt; width: 100%; text-align: left; color: #000000;" class="DSPFListTable" id="z6e28cc42461e4637846b363da288351d" cellpadding="0" cellspacing="0">

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          <td style="width: 18pt; vertical-align: top; align: right; font-family: 'Times New Roman', Times, serif;">&#8226;</td>
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            <div>mark-to-market currency valuation fluctuations due to accounting for a US dollar lease on the company&#8217;s Mexican subsidiary balance sheet of $11.7 million;</div>
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    </table>
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    <table style="font-family: 'Times New Roman'; font-size: 10pt; width: 100%; text-align: left; color: #000000;" class="DSPFListTable" id="zac194c43507d45fca6d19baa0763bd65" cellpadding="0" cellspacing="0">

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          <td style="width: auto; vertical-align: top; font-family: 'Times New Roman',Times,serif;">
            <div>mark-to-market currency valuation fluctuations due to forward foreign currency contracts of $6.5 million;</div>
          </td>
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    </div>
    <table style="font-family: 'Times New Roman'; font-size: 10pt; width: 100%; text-align: left; color: #000000;" class="DSPFListTable" id="zdee21b90ad374d868576f72cac2eb9a6" cellpadding="0" cellspacing="0">

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          <td style="width: 18pt; vertical-align: top; align: right; font-family: 'Times New Roman', Times, serif;">&#8226;</td>
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            <div>core buyback premium amortization -- reflecting a non-cash impact of $4.5 million; and</div>
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    </div>
    <table style="font-family: 'Times New Roman'; font-size: 10pt; width: 100%; text-align: left; color: #000000;" class="DSPFListTable" id="z263aa2775b8c4e49b64885b252a74d0b" cellpadding="0" cellspacing="0">

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          <td style="width: 18pt; vertical-align: top; align: right; font-family: 'Times New Roman', Times, serif;">&#8226;</td>
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            <div>revaluation of the core portion of finished goods on customers&#8217; shelves at the lower of cost or net realizable value of $10.8 million.</div>
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    </table>
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    <div style="font-family: 'Times New Roman', Times, serif;">While these items do not have actual economic impact, they affect reported financial results and metrics.</div>
    <div style="font-family: 'Times New Roman',Times,serif;"><br>
    </div>
    <div style="font-family: 'Times New Roman', Times, serif;">The redesigned metrics also applied to annual incentive awards for fiscal 2020 for all Named Executive Officers (&#8220;NEOs&#8221;) and other key management.</div>
    <div style="font-family: 'Times New Roman',Times,serif;"><br>
    </div>
    <div style="font-family: 'Times New Roman', Times, serif;">Finally, due to the COVID-19 pandemic, NEOs and all other executives took substantial temporary pay cuts to support cost-cutting measures, which will remain
      in effect until the overall situation improves.</div>
    <div style="font-family: 'Times New Roman',Times,serif;"><br>
    </div>
    <div style="font-family: 'Times New Roman', Times, serif;">In summary, Motorcar Parts of America is unique in the remanufacturing business, with no direct peer comparisons in the public market.&#160; The company&#8217;s results
      can be significantly impacted by non-economic expenses.&#160; Management encourages investors to consider the company&#8217;s market position and the nearing completion of its <font style="font-weight: bold; font-style: italic;">Footprint of
        the Future</font> to support accelerated growth and enhanced shareholder value.&#160; The company expects the transition discussed above once completed will result in excellent shareholder returns.</div>
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