DEF 14A 1 htz-def14a_053117.htm DEFINITIVE PROXY STATEMENT

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No. )

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HERTZ GLOBAL HOLDINGS, INC.

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Notice of
Annual Meeting
of Stockholders
and Proxy
Statement
May 31, 2017

 

(HERTZ LOGO) 

 

 

 

Hertz Global Holdings, Inc.
8501 Williams Road
Estero, FL 33928

 

April 13, 2017

 

Dear Stockholder:

 

You are cordially invited to attend our annual meeting of stockholders to be held at 10:30 a.m. (Eastern Time) on May 31, 2017, via the Internet at www.virtualshareholdermeeting.com/HTZ2017.

 

We will be using the “Notice and Access” method of providing proxy materials to you via the Internet at www.proxyvote.com, instead of by mail. On or about April 18, 2017, we will mail to our stockholders a Notice of Internet Availability of Proxy Materials (the “Notice”) containing instructions on how to access our proxy statement and annual report to stockholders for 2016 and how to vote. The Notice also contains instructions on how to receive a paper copy of your proxy materials.

 

Your vote is important. Please vote as promptly as possible. Whether you plan to attend the annual meeting via the Internet or not, you may vote by following the instructions set forth in the Notice, this proxy statement or as set forth in the proxy card. If you attend the annual meeting via the Internet, you may vote your shares online. Log-in for the annual meeting will begin at 10:00 a.m. (Eastern Time). In order to vote and participate at the annual meeting, a stockholder must be a stockholder as of the close of business on the record date, April 3, 2017.

 

  Sincerely,
   
  /s/ Henry R. Keizer
  Henry R. Keizer
  Independent Non-Executive Chair

 

(HERTZ LOGO) 

 

 

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OF HERTZ GLOBAL HOLDINGS, INC.

 

Time and Date: 10:30 a.m. (Eastern Time), May 31, 2017.
   
Place: Via the Internet at www.virtualshareholdermeeting.com/HTZ2017.
   
Proposals: 1. Election of the seven nominees identified in the accompanying proxy statement to serve as directors until the next annual meeting of stockholders;
     
  2. Approval, by a non-binding advisory vote, of the named executive officers’ compensation;
     
  3. Approval, by a non-binding advisory vote, on the frequency of future votes on the named executive officers’ compensation;
     
  4. Approval of the Hertz Global Holdings, Inc. 2016 Omnibus Incentive Plan;
     
  5. Approval of the Hertz Global Holdings, Inc. Senior Executive Bonus Plan;
     
  6. Ratification of the selection of PricewaterhouseCoopers LLP as the Company’s independent registered certified public accounting firm for the year 2017; and
     
  7. Transaction of any other business that may properly be brought before the annual meeting.

 

The Board of Directors of the Company recommends a vote FOR each of Proposals 1, 2, 4, 5 and 6 and 1 year on Proposal 3.

 

Who Can Vote: Only holders of record of the Company’s common shares at the close of business on April 3, 2017 will be entitled to vote at the meeting. You may vote with respect to the matters described in the proxy statement by following the instructions set forth in the Notice of Internet Availability of Proxy Materials (the “Notice”) or through the procedures described in this proxy statement.
   
Date of Mailing: This proxy statement and accompanying materials were filed with the Securities and Exchange Commission on April 13, 2017, and we expect to first send the Notice to stockholders on or about April 18, 2017.

 

  /s/ Richard J. Frecker
  Richard J. Frecker
  Executive Vice President, General Counsel and
  Secretary
   
Estero, Florida  
April 13, 2017  

 

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting
to be held May 31, 2017

 

The Notice of the 2017 Annual Meeting and Proxy Statement and the
2016 Annual Report on Form 10-K are available at www.proxyvote.com

 

 

 

Table of Contents

 

Section/Proposal Page
PROXY PROCEDURES AND INFORMATION ABOUT THE ANNUAL MEETING 1
CORPORATE GOVERNANCE 4
ELECTION OF DIRECTORS 10
COMPENSATION DISCUSSION AND ANALYSIS: EXECUTIVE SUMMARY 17
COMPENSATION DISCUSSION AND ANALYSIS 20
COMPENSATION COMMITTEE REPORT 36
SUMMARY COMPENSATION TABLE 37
EXECUTIVE COMPENSATION 39
DIRECTOR COMPENSATION 51
ANNUAL MEETING PROPOSALS: SAY ON PAY 53
ANNUAL MEETING PROPOSALS: SAY ON FREQUENCY 54
ANNUAL MEETING PROPOSALS: APPROVAL OF THE HERTZ GLOBAL HOLDINGS, INC. 2016 OMNIBUS INCENTIVE PLAN 55
ANNUAL MEETING PROPOSALS: APPROVAL OF THE HERTZ GLOBAL HOLDINGS, INC. SENIOR EXECUTIVE BONUS PLAN 63
ANNUAL MEETING PROPOSALS: AUDITOR APPROVAL 66
AUDITOR INFORMATION 67
AUDIT COMMITTEE REPORT 68
BENEFICIAL OWNERSHIP 69
OTHER MATTERS 72
ANNEX A: NON-GAAP MEASURES A-1
ANNEX B: HERTZ GLOBAL HOLDINGS, INC. 2016 OMNIBUS INCENTIVE PLAN B-1
ANNEX C: HERTZ GLOBAL HOLDINGS, INC. SENIOR EXECUTIVE BONUS PLAN C-1

 

 

 

PROXY PROCEDURES AND INFORMATION ABOUT THE ANNUAL MEETING

 

IMPORTANT INFORMATION ABOUT THE ANNUAL

MEETING AND PROXY PROCEDURES

 

The Board of Directors of Hertz Global Holdings, Inc. is soliciting proxies to be used at the annual meeting of stockholders to be held on May 31, 2017, beginning at 10:30 a.m. (Eastern Time) via the Internet at www.virtualshareholdermeeting.com/HTZ2017. This proxy statement and accompanying materials were filed with the Securities and Exchange Commission (the “SEC”) on April 13, 2017, and we expect to first send the Notice of Internet Availability of Proxy Materials (the “Notice”) to stockholders on or about April 18, 2017.

 

Unless the context otherwise requires, in this proxy statement (i) the “Company” means Hertz Global Holdings, Inc., which was formerly known as Hertz Rental Car Holding Company, Inc. until June 30, 2016, (ii) “Hertz” means The Hertz Corporation, our primary operating company, (iii) “we,” “us” and “our” mean the Company and its consolidated subsidiaries, (iv) “our Board” or “the Board” means the Board of Directors of the Company, (v) “our common stock” means the common stock of the Company, (vi) “former Hertz Holdings” means Hertz Global Holdings, Inc., which was renamed Herc Holdings Inc. on June 30, 2016 in connection with the Spin-Off, and (vii) the “Spin-Off” means the separation of former Hertz Holdings’ car rental business from the equipment rental business through a reverse spin-off, which was completed on June 30, 2016.

 

Purpose of the Annual Meeting

 

At the annual meeting, stockholders will act upon the matters set forth in the Notice, including:

 

1.Election of the seven nominees identified in this proxy statement to serve as directors until the next annual meeting of stockholders;

 

2.Approval, by a non-binding advisory vote, of the named executive officers’ compensation;

 

3.Approval, by a non-binding advisory vote, on the frequency of future votes on the named executive officers’ compensation;
4.Approval of the Hertz Global Holdings, Inc. 2016 Omnibus Incentive Plan;

 

5.Approval of the Hertz Global Holdings, Inc. Senior Executive Bonus Plan;

 

6.Ratification of the selection of PricewaterhouseCoopers LLP as the Company’s independent registered certified public accounting firm for the year 2017; and

 

7.Transaction of any other business that may properly be brought before the annual meeting.

 

The Company’s senior management will answer questions submitted in advance from stockholders via the Internet at www.virtualshareholdermeeting.com/HTZ2017.

 

Stockholders Entitled to Vote at the Annual Meeting

 

Our Board has established the record date for the annual meeting as April 3, 2017. Only holders of record of the Company’s common stock at the close of business on the record date are entitled to receive the Notice and vote at the annual meeting. On April 3, 2017, the Company had approximately 83,706,286 shares of common stock outstanding.

 

Voting Procedures

 

If you are a stockholder of record, you may vote as set forth in the Notice, or as follows:

 

Voting by Internet: Follow the instructions on www.proxyvote.com or at www.virtualshareholdermeeting.com/HTZ2017.

 

Voting by Telephone: Call 1-800-690-6903 and follow the instructions provided by the recorded message.

 

Voting by Mail: Complete, sign and date the proxy card included in the printed proxy materials.

 

(HERTZ LOGO) Hertz Global Holdings, Inc. 2017 Proxy Statement     1

 

 

 

 

PROXY PROCEDURES AND INFORMATION ABOUT THE ANNUAL MEETING

 

Notice of Internet Availability of Proxy Materials

 

We are permitted to furnish proxy materials, including this proxy statement and our annual report to stockholders for 2016, to our stockholders by providing access to such documents on the Internet at www.proxyvote.com instead of mailing printed copies. Our stockholders will not receive printed copies of the proxy materials unless they are requested.

 

Instead, the Notice will instruct you as to how you may access and review all of the proxy materials on the Internet. It will also instruct you as to how you may submit your proxy on the Internet. If you would like to receive a paper or e-mail copy of our proxy materials, you should follow the instructions for requesting such materials in the Notice. If you receive more than one Notice, it generally means that some of your shares are registered differently or are in more than one account. Please provide voting instruction for each Notice you receive.



Voting Options; Quorum

 

The Board recommends a vote “for” proposals 1, 2, 4, 5 and 6 and “1 year” on proposal 3. Below is a summary of the vote required for adoption of each proposal and the respective effect of abstentions and broker non-votes. For more detailed information, see each respective proposal.

 

Proposal

Vote Required for Adoption

Effect of

Abstentions

Effect of

Broker

Non-Votes

Election of directors Majority of shares cast No effect No effect
Advisory vote on executive compensation Majority of shares present Vote “against” No effect
Frequency of advisory vote on executive compensation Frequency with the most votes No effect No effect
Approval of the Hertz Global Holdings, Inc. Majority of shares present Vote “against” No effect
2016 Omnibus Incentive Plan      
Approval of the Hertz Global Holdings, Inc.
Senior Executive Bonus Plan
Majority of shares present Vote “against” No effect
Ratification of PricewaterhouseCoopers LLP Majority of shares present Vote “against” No effect

 

The presence, in person or by proxy, of the holders of a majority of the shares entitled to vote at the annual meeting constitutes a quorum. Abstentions and broker non-votes are counted as present and entitled to vote for purposes of determining a quorum. A broker non-vote occurs when a nominee, such as a broker holding shares in “street name” for a beneficial owner, does not vote on a proposal because that nominee does not have discretionary voting power with respect to a proposal and has not received instructions from the beneficial owner.

 

If you are a holder of shares held in street name, and you would like to instruct your broker how to vote your shares, you should follow the directions provided by your broker. Under New York Stock Exchange (“NYSE”) rules, your broker is permitted to vote on proposal 6 even if it does not receive instructions from you. However, under NYSE rules, your broker does not have discretion to vote on any other proposal if it does not receive instructions from you.

 

Each share of common stock is entitled to one vote and stockholders do not have the right to cumulate their votes for the election of directors. Unless a stockholder gives instructions to the contrary, proxies will be voted in accordance with the Board’s recommendations.


 

2     Hertz Global Holdings, Inc. 2017 Proxy Statement (HERTZ LOGO)

 

 

 

 

PROXY PROCEDURES AND INFORMATION ABOUT THE ANNUAL MEETING

 

Attending the Annual Meeting

 

We are pleased this year to conduct the annual meeting solely via the Internet. You are entitled to attend and participate in the virtual annual meeting only if you were a stockholder as of the close of business on April 3, 2017 or if you hold a valid proxy for the annual meeting. If you plan to attend the annual meeting online, please be aware of what you will need to gain admission as described below. If you do not comply with the procedures described here for attending the annual meeting online, you will not be able to access the annual meeting held via the Internet.

 

Stockholders may participate in the annual meeting by visiting www.virtualshareholdermeeting.com/HTZ2017; interested persons who were not stockholders as of the close of business on April 3, 2017 may view, but not participate, in the annual meeting via www.virtualshareholdermeeting.com/HTZ2017. To attend and participate in the annual meeting, stockholders of record will need to use their control number to log into www.virtualshareholdermeeting.com/HTZ2017; beneficial stockholders who do not have a control number may gain access to the meeting by logging into their brokerage firm’s web site and selecting the stockholder communications mailbox to link through to the annual meeting; instructions should also be provided on the voting instruction card provided by their broker, bank, or other nominee. Stockholders who wish to submit a question must do so in advance of the annual meeting through www.virtualshareholdermeeting.com/HTZ2017.

 

Whether you are a stockholder of record or a beneficial stockholder, you may direct how your shares are voted without participating in the annual meeting. We encourage stockholders to vote well before the annual meeting, even if they plan to attend the annual meeting via the Internet, by completing proxies online or by telephone, or by mailing their proxy cards. Stockholders can vote via the Internet in advance of or during the annual meeting. Stockholders who attend the virtual annual meeting should follow the instructions at www.virtualshareholdermeeting.com/HTZ2017. Voting online during the meeting will replace any previous votes, and the online polls will close after the presentation of the last proposal at the annual meeting.

Revocation of Proxies

 

Stockholders of record may revoke their proxy at any time before the electronic polls close by submitting a later-dated vote online during the annual meeting, via the Internet, by telephone, by mail, or by delivering instructions to our Corporate Secretary before the annual meeting. Beneficial stockholders may revoke any prior voting instructions by contacting the broker, bank, or other nominee that holds their shares or by voting online during the annual meeting.

 

Solicitation of Proxies

 

Proxies may be solicited on behalf of our Board by mail or telephone, on the Internet or in person, and Hertz will pay the solicitation costs on behalf of the Company. We have retained D.F. King & Co. (“D.F. King”), 48 Wall Street, New York, New York 10005, to aid in the solicitation process. For these and related advisory services, we will pay D.F. King a fee of approximately $15,000 and reimburse them for certain out-of-pocket disbursements and expenses. The Notice will be supplied to brokers, dealers, banks and voting trustees, or their nominees, for the purpose of soliciting proxies from beneficial owners, and Hertz will reimburse those record holders for their reasonable expenses on behalf of the Company.

 

Broadridge has been retained by Hertz to facilitate the distribution of proxy materials at a customary fee plus distribution costs and other costs and expenses.

 

Additional Information

 

The Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 (“2016 Annual Report”) is filed with the SEC and may also be obtained via a link posted on the “Investor Relations” portion of our website, www.hertz.com. Copies of the 2016 Annual Report, or any exhibits thereto, will be sent within a reasonable time without charge upon written request to Hertz Global Holdings, Inc., 8501 Williams Road, Estero, Florida 33928. Attention: Corporate Secretary.


 

(HERTZ LOGO) Hertz Global Holdings, Inc. 2017 Proxy Statement     3

 

 

 

 

CORPORATE GOVERNANCE

 

CORPORATE GOVERNANCE AND GENERAL INFORMATION CONCERNING

THE BOARD AND ITS COMMITTEES

 

Corporate Governance

 

Our business is managed under the direction of our Board. Our Board is committed to good corporate governance and promoting the long-term interests of our stockholders by adopting structures, policies and practices that we believe promote responsible oversight of management.

 

Board Independence

 

Our Board has determined that Ms. Everson and Messrs. Barnes, Intrieri, Keizer, Merksamer and Ninivaggi are “independent” as defined in the federal securities laws and applicable NYSE rules for service on our Board. The standards for determining director independence are specified in Annex A to our Corporate Governance Guidelines.

 

In recommending to the Board that each of the independent directors be classified as independent, the Nominating and Governance Committee also considered whether there were any facts or circumstances that might impair the independence of each of those directors. In particular, the Nominating and Governance Committee considered that the Company in the ordinary course of business provides products and services to and purchases products and services from companies at which some of our directors serve or are employed. In each case: (i) the relevant products and services were provided on terms and conditions determined on an arm’s-length basis and consistent with those provided by or to similarly situated customers and suppliers and (ii) the aggregate amounts of such purchases and sales were less than 2% of the consolidated gross revenues of (a) each of the Company and the other company in 2016 and (b) each of former Hertz Holdings and the other company in 2015 and 2014.

Board Meetings and Annual Meeting Attendance

 

Our Board held 9 total meetings in 2016 (5 meetings pre Spin-Off and 4 meetings post Spin-Off). Each of our directors attended 75% or more of the total number of meetings our Board held during the period in which he or she was a director and the number of meetings held by all Board committees on which he or she served. We do not have a policy with regard to directors’ attendance at our annual meeting. All of our directors standing for re-election attended the 2016 annual meeting of former Hertz Holdings.

 

Board Committees

 

Our Board has five standing committees — the Audit Committee, the Compensation Committee, the Nominating and Governance Committee, the Financing Committee and the Technology Committee. Each committee has a written charter and each charter is available without charge on the “Investor Relations — About Hertz—Committee Charters” portion of our website, www.hertz.com. Each member of the Audit Committee, Compensation Committee and Nominating and Governance Committee meets the independence and eligibility standards necessary for service on such committee pursuant to relevant securities laws, NYSE rules, our Corporate Governance Guidelines and the respective charter of each committee. Our Board has designated Messrs. Barnes, Intrieri and Keizer as “audit committee financial experts.”


 

4     Hertz Global Holdings, Inc. 2017 Proxy Statement (HERTZ LOGO)

 

 

 

 

CORPORATE GOVERNANCE

 

Membership, Meetings and Roles and Responsibilities of the Board Committees

 

Audit Committee    
     
Members   Roles and Responsibilities of the Audit Committee

Keizer

(Chair)

Barnes

Intrieri

 

Number of
2016 Meetings

 

10

(5 pre Spin-Off and
5 post Spin-Off)

 

●    Oversees our accounting, financial and external reporting policies and practices as well as the integrity of our financial statements.

 

●    Monitors the independence, qualifications and performance of our independent certified registered public accounting firm.

 

●    Oversees the performance of our internal audit function, the management information systems and operational policies and practices that affect our internal controls.

 

●    Monitors our compliance with legal and regulatory requirements.

 

●    Reviews our guidelines and policies as they relate to risk management and the preparation of our Audit Committee’s report included in our proxy statements.

     
Compensation Committee    
     
Members   Roles and Responsibilities of the Compensation Committee

Ninivaggi

(Chair)

Barnes

Everson

 

Number of
2016 Meetings

 

7

(5 pre Spin-Off and
2 post Spin-Off)

 

●    Oversees our compensation and benefit policies, generally.

 

●    Evaluates the performance of our CEO as related to all elements of compensation, as well as the performance of our senior executives.

 

●    Approves and recommends to our Board all compensation plans for our senior executives.

 

●    Approves the short-term compensation and grants to our senior executives under our incentive plans (both subject, in the case of our CEO, if so directed by the Board, to the final approval of a majority of independent directors of our Board).

 

●    Prepares reports on executive compensation required for inclusion in our proxy statements.

 

●    Reviews our management succession plan.

     
Nominating and Governance Committee
 
Members   Roles and Responsibilities of the Nominating and Governance Committee

Everson

(Chair)

 Barnes

Intrieri

 Keizer

Merksamer

Ninivaggi

 

Number of
2016 Meetings

 

3

(2 pre Spin-Off and
1 post Spin-Off)

 

●    Assists our Board in determining the skills, qualities and eligibility of individuals recommended for membership on our Board.

 

●    Reviews the composition of our Board and its committees to determine whether it may be appropriate to add or remove individuals.

 

●    Reviews and evaluates directors for re-nomination and re-appointment to committees.

 

●    Reviews and assesses the adequacy of our Corporate Governance Guidelines, Standards of Business Conduct and Directors’ Code of Conduct.

 

●    Reviews and recommends to the Board the form and amount of compensation paid to directors.

 

(Hertz Logo) Hertz Global Holdings, Inc. 2017 Proxy Statement     5

 

 

 

 

 

CORPORATE GOVERNANCE

 

Financing Committee    
     
Members   Roles and Responsibilities of the Financing Committee

Intrieri

(Chair)

Keizer

Merksamer

 

Number of
2016 Meetings

 

10

(5 pre Spin-Off and
5 post Spin-Off)

 

●    Reviews and approves our capital markets and financing plans, the material terms and conditions of our debt and equity financings, the amount and frequency of dividends and swaps and other derivative transactions.

●    Reviews with management the financial considerations relating to pension and retirement plans.

 

     
Technology Committee    
     
Members   Roles and Responsibilities of the Technology Committee

Barnes

(Chair)

Everson

Ninivaggi

 

Number of
2016 Meetings

 

2

(2 post Spin-Off)

 

 

●    Evaluates technology-related systems architecture for consistency with the Company’s organizational structure, strategy and business objectives.

●    Evaluates the progress of technology projects and systems architecture alternatives.

●    Evaluates the capacity, performance, reliability and competitiveness of the Company’s technology-related systems.

●    Reviews the technology budget for alignment with the Company’s strategy and goals and makes recommendations to the Board for technology-related investments.

●    Evaluates the effectiveness of technology systems relative to customer service capabilities and performance.

●    Monitors the quality and effectiveness of the Company’s cybersecurity initiatives.

●    Technology Committee was officially formed in 2016.

 

Risk Oversight

 

Risk Oversight — Our Board and Committees

 

Our Board oversees an enterprise-wide approach to risk management. This approach is designed to improve our long-term performance and enhance stockholder value. A fundamental part of risk management is understanding the risks we face. Also important is management’s role in addressing those risks and understanding what level of risk is appropriate for us. Our Board’s involvement in setting our business strategy is a key part of its assessment of management’s risk threshold and also helps determine an appropriate level of risk for us. Various committees of the Board also have responsibility for risk management. The Audit Committee focuses on financial risk, including internal controls. The Audit Committee also annually reviews with management

our guidelines and policies and the commitment of internal audit resources as they relate to risk management. The Technology Committee oversees cybersecurity risk and other technology risks. As described below, the Compensation Committee strives to create compensation incentives that encourage a level of risk-taking behavior consistent with the Company’s business strategy.

 

In addition to the committees of the Board, the Company’s management is significantly involved in risk oversight. The Company’s management formed a Risk Management Committee to assist in the identification and assessment of risks. The Risk Management Committee consists of members of management and is not a formal Board committee. The Risk Management Committee provides the Board with added assurance about Hertz’s risk management practices and maintains a lead role



6     Hertz Global Holdings, Inc. 2017 Proxy Statement (Hertz Logo)

 

 

 

 

CORPORATE GOVERNANCE

 

in the implementation, coordination, alignment, and enhancement of the organization’s global Enterprise Risk Management framework. The Board also participates in a bi-annual enterprise risk management assessment, which is led by the Company’s Enterprise Risk Management Office in the Compliance Department. In addition, the Audit Committee annually receives a risk assessment and risk management report from the Enterprise Risk Management Office.

 

Risk Considerations in our Compensation Program

 

In September 2016, the Compensation Committee conducted its annual review of the risk profile of its compensation policies and practices. In connection with this review, the Compensation Committee engaged its independent consultant Frederic W. Cook & Co., Inc. (“FW Cook”), to assist it in analyzing the Company’s compensation policies and practices and associated compensation risks. FW Cook, with the assistance of management, prepared a risk profile assessment of the Company’s executive compensation policies and practices. In addition, FW Cook and management reviewed its compensation plans and practices in 2016 for all employees to determine potential areas of risk.

 

Based in part on such reports, the Compensation Committee determined that, for all employees, the Company’s enterprise-wide compensation policies and practices, in conjunction with the existing processes and controls, do not motivate employees to take unnecessary risks, or pose a material risk to the Company. In making such a determination, the Compensation Committee took into account the following factors:

 

Our use of different types of compensation programs, such as equity- and cash-based plans, that provide a balance of long-and short-term incentives as well as our use of a variety of financial and strategic performance objectives to help encourage behaviors aligned with the long-term interests of stockholders.

 

Our clawback policies, which allow us in certain circumstances in the event of a financial restatement, to seek the recovery of annual incentive awards, long-term

incentive awards, equity-based awards and other performance-based compensation awarded to many of our employees, including all of our senior executives.

 

Our structuring of our compensation programs to mitigate compensation-related risks, including features such as stock ownership guidelines, insider trading policies, caps on payments, exclusion of certain extraordinary items and approval of amounts paid by our independent Compensation Committee or through separate management approvals.

 

Stockholder Communications with the Board

 

Stockholders and other interested parties who wish to contact our directors may send written correspondence to: Hertz Global Holdings, Inc., 8501 Williams Road, Estero, Florida 33928, Attention: Corporate Secretary. Communications addressed to directors that discuss business or other matters relevant to the activities of our Board will be preliminarily reviewed by the office of the Corporate Secretary and then distributed either in summary form or by delivering a copy of the communication to the director, or group of directors, to whom they are addressed.

 

Director Nominations

 

The Nominating and Governance Committee will consider director nominations made by stockholders. To nominate a person to serve on the Board, a stockholder should write to: Hertz Global Holdings, Inc., 8501 Williams Road, Estero, Florida 33928, Attention: Corporate Secretary. Director nominations must be delivered to the Corporate Secretary in accordance with the Company’s By-laws. This generally means the nomination must be delivered not fewer than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting, provided, that if the date of the annual meeting is more than 30 days before or more than 70 days after such anniversary date of the preceding year’s annual meeting, the notice must be delivered not earlier than 120 days prior to the date of such annual meeting and not later than the close of business on the later of the ninetieth day prior to the date of such annual meeting or the tenth day following the day on which public announcement of the date of such meeting is first made by the Company. The



(Hertz Logo) Hertz Global Holdings, Inc. 2017 Proxy Statement     7

 

 

 

  

CORPORATE GOVERNANCE

 

nomination must contain any applicable information set forth in the Company’s By-laws. The Nominating and Governance Committee will consider and evaluate persons nominated by stockholders in the same manner as it considers and evaluates other potential directors. The Nominating and Governance Committee also takes into consideration any written arrangements for director nominations the Company is a party to, including the Confidentiality Agreement we entered into with Carl C. Icahn, described under “Certain Relationships and Related Party Transactions — Agreements with the Icahn Group.”

 

Corporate Governance Guidelines

 

The Board has adopted Corporate Governance Guidelines containing standards for the Nominating and Governance Committee to determine director qualifications. The Corporate Governance Guidelines provide that the Nominating and Governance Committee, in making recommendations about nominees to the Board, will:

 

review candidates’ qualifications for membership on the Board based on the criteria approved by the Board and taking into account the enhanced independence, financial literacy and financial expertise standards that may be required under law or NYSE rules for committee membership purposes;

 

in evaluating current directors for re-nomination to the Board, assess the performance and independence of such directors; and

 

periodically review the composition of the Board in light of the current challenges and needs of the Board and the Company, and determine whether it may be appropriate to add or remove individuals after considering issues of judgment, diversity, age, skills, background, experience and independence.

 

The Corporate Governance Guidelines also contain policies regarding director independence, the mandatory retirement age of directors, simultaneous service on other boards and substantial changes relating to a director’s affiliation or position of principal employment. Among other things, the guidelines establish responsibilities for meeting preparation

and participation, the evaluation of our financial performance and strategic planning. Copies of our Corporate Governance Guidelines, as well as our written Directors’ Code of Business Conduct and Ethics (the “Directors’ Code of Conduct”) applicable to our Board are available without charge on the “Investor Relations — About Hertz—Governance Documents” portion of our website, www.hertz.com.

 

Director Election Standards

 

The Company maintains a “majority” voting standard for uncontested elections. For a nominee to be elected to our Board, the nominee must receive more “for” than “against” votes. In accordance with our By-laws and Corporate Governance Guidelines, each director has submitted, or upon his or her nomination will submit, a contingent resignation to the Chair of the Nominating and Governance Committee. The resignation will become effective only if the director fails to receive a sufficient number of votes for re-election and the Board accepts the resignation. In the event of a contested director election, a plurality standard will apply.

 

Our Board Leadership

 

As indicated in our Corporate Governance Guidelines, the Board believes it is important to retain its flexibility to allocate the responsibilities of the offices of the Chair and CEO in a manner that is in the best interests of our Company. The Board believes that the decision as to who should serve as Chair and CEO, and whether the offices should be combined or separate, should be assessed periodically by the Board, and that the Board should not be constrained by a rigid policy mandating the structure of such positions. The Board currently believes that the most effective and efficient leadership structure for our Company is for Ms. Marinello to serve as CEO while Mr. Keizer serves as our Independent Non-Executive Chair of the Board (“Independent Non-Executive Chair”).

 

The Board believes that the current leadership structure benefits the Company by delineating separate roles of management and oversight over management. Our CEO and her management team provide the overall strategy and day-to-day leadership for our Company, and the Board, along with the Independent Non- Executive Chair, provides oversight and evaluates the performance of management. The Independent Non-



8     Hertz Global Holdings, Inc. 2017 Proxy Statement (Hertz Logo)

 

 

 

 

  

CORPORATE GOVERNANCE

 

Executive Chair, in consultation with the CEO, has responsibility for chairing and determining the length and frequency of Board meetings as well as setting the agenda for such meetings. The Independent Non- Executive Chair also sets the agenda for, and chairs, the Board’s regularly-scheduled executive sessions in which management (other than Ms. Marinello) does not participate. In addition to these regularly-scheduled executive sessions of the Board, our directors held five executive sessions in 2016 where only our independent directors attended, without the presence of our CEO or other members of management. The Independent Non-Executive Chair presided to facilitate the discussion.

 

Policy on Diversity

 

The Corporate Governance Guidelines and the Nominating and Governance Committee charter specify that the Nominating and Governance Committee consider a number of factors, including diversity, when evaluating or conducting searches for directors. The Nominating and Governance Committee interprets diversity broadly to mean a variety of opinions, perspectives, personal and professional experiences and backgrounds, such as international and multicultural experience and understanding, as well as other differentiating characteristics, including race, ethnicity and gender.

 

Implementation and Assessment of Policies Regarding Director Attributes

 

The Nominating and Governance Committee, when making recommendations to the Board regarding director nominations, assesses the overall performance of the Board, and when re-nominating incumbent Board members or nominating new Board members, evaluates the potential candidate’s ability to make a positive contribution to the Board’s overall function. The Nominating and Governance Committee considers the actual performance of incumbent Board members over the previous year, as well as whether the Board has an appropriately diverse membership to support our role as one of the world’s leading car rental companies. The particular experience, qualifications, attributes and skills of the potential candidate are assessed by the Nominating and Governance Committee to determine whether the potential candidate possesses the professional and personal experiences and expertise necessary

to enhance the Board’s mission. After conducting the foregoing analysis the Nominating and Governance Committee makes recommendations to the Board regarding director nominees. In its annual assessment of director nominees, the Nominating and Governance Committee does not take a formulaic approach, but rather considers each prospective nominee’s diversity in perspectives, personal and professional experiences and background and ability. In making director nominations, the Nominating and Governance Committee takes into account the overall diversity of the Board and evaluates the Board in light of, among other things, the attributes discussed in “Policy on Diversity” mentioned above.

 

The Board also evaluates, from time to time, the size of the Board as well as the structure and membership of the committees. In determining the number of directors, committee membership and structure of the committees, the Board takes into account a number of factors, including the attributes and experience of the members of our Board, the oversight responsibilities required for a Company of our size and complexity and the listing standards of the NYSE.



(Hertz Logo) Hertz Global Holdings, Inc. 2017 Proxy Statement     9

 

 

 

 

ELECTION OF DIRECTORS

 

PROPOSAL 1: ELECTION OF DIRECTORS

 

Board Structure

 

In connection with the Spin-Off, the Company adopted an Amended and Restated Certificate of Incorporation which eliminated classes of directors. If elected, the nominees for election as directors will serve until the next annual meeting and until their successors are elected and qualify. If for any reason any nominee cannot or will not serve as a director, proxies may be voted for the election of a substitute nominee designated by our Board. The nominees, listed in alphabetical order by last name, are as follows:

     
David A. Barnes   Mr. Barnes has served as a director of the Company since June 2016 and Hertz since May 2016. Mr. Barnes is 61 years old.
     
Business Experience   Mr. Barnes is the former Senior Vice President, Chief Information and Global Business Services Officer of United Parcel Service, Inc. (“UPS”), a role he served in from 2011 to 2016. From 2005 to 2011, Mr. Barnes served as Senior Vice President and Chief Information Officer at UPS. In his role as Chief Information Officer of UPS, Mr. Barnes was responsible for all aspects of UPS delivery technology used around the world to deliver millions of packages each day. Mr. Barnes also chaired the UPS Information Technology Governance Committee until his retirement, which was responsible for overseeing the direction of UPS technology investments. Prior to being named Chief Information Officer, Barnes was UPS’ Vice President, Application Portfolios, where he oversaw global technology solution development for customer technology, sales and marketing, package delivery operations, and multi-modal transportation. Mr. Barnes joined UPS in 1977, progressing quickly through increasingly important roles in finance and information systems.
     
Directorships and
Other Experience
  Mr. Barnes was a director at Ingram Micro Inc. from June 2014 to December 2016, where he was a member of the Audit Committee and Chair of the Technology Committee.
     
Executive Officer Experience   Mr. Barnes has significant management and leadership skills gained as Chief Information Officer of UPS and a member of the UPS Management Committee.
     
Operations Expertise   Mr. Barnes’ role as former Chief Information Officer of a company with millions of worldwide touchpoints and transactions provides the Board with critical experience regarding our domestic and international operations.
     
Strategy, Cybersecurity and
Technology Experience
  Mr. Barnes brings to our Board valuable insights on how to incorporate technology into our ongoing operations, and utilize technology-based solutions to streamline our business and improve the customer experience. In addition, he brings significant experience managing cybersecurity and information privacy.

 

10     Hertz Global Holdings, Inc. 2017 Proxy Statement (HERTZ LOGO)

 

 

 

 

ELECTION OF DIRECTORS

 

SungHwan Cho   Mr. Cho is a director nominee for the Company. Mr. Cho is 43 years old. Mr. Cho is affiliated with Carl C. Icahn. For our arrangements with Carl C. Icahn, see the information under “Certain Relationships and Related Party Transactions — Agreements with the Icahn Group.”
     
Business Experience   Mr. Cho has served as Chief Financial Officer of Icahn Enterprises L.P., a diversified holding company engaged in a variety of businesses, including investment, automotive, energy, gaming, railcar, food packaging, metals, mining, real estate and home fashion, since March 2012. Prior to that time, he was Senior Vice President and previously Portfolio Company Associate at Icahn Enterprises since October 2006. Mr. Cho received a B.S. in Computer Science from Stanford University and an MBA from New York University, Stern School of Business.
     
Directorships and
Other Experience
  Mr. Cho has been a director of: Ferrous Resources Limited, an iron ore mining company with operations in Brazil, since June 2015; CVR Refining, LP, an independent downstream energy limited partnership, since January 2013; Icahn Enterprises L.P., since September 2012; CVR Energy, Inc., a diversified holding company primarily engaged in the petroleum refining and nitrogen fertilizer manufacturing industries, since May 2012; and American Railcar Industries, Inc., a railcar manufacturing company, since June 2011 (and has been Chairman of the Board of American Railcar Industries since July 2014). In addition, Mr. Cho serves as a director of certain wholly-owned subsidiaries of Icahn Enterprises L.P., including: Federal-Mogul Holdings LLC (formerly known as Federal-Mogul Holdings Corporation), a supplier of automotive powertrain and safety components; Icahn Automotive Group LLC, an automotive parts installer, retailer and distributor; PSC Metals Inc., a metal recycling company; and WestPoint Home LLC, a home textiles manufacturer. Mr. Cho has also been a member of the Executive Committee of American Railcar Leasing LLC, a lessor and seller of specialized railroad tank and covered hopper railcars, since September 2013. Mr. Cho was previously a director of: CVR Partners LP, a nitrogen fertilizer company, from May 2012 to April 2017; Viskase Companies, Inc., a meat casing company, from November 2006 to April 2017; and Take-Two Interactive Software Inc., a publisher of interactive entertainment products, from April 2010 to November 2013. Ferrous Resources Limited, American Railcar Leasing, CVR Refining, Icahn Enterprises, CVR Energy, CVR Partners, Federal-Mogul, Icahn Automotive, American Railcar Industries, WestPoint Home, PSC Metals and Viskase Companies each are indirectly controlled by Carl C. Icahn. Mr. Icahn also previously had a non-controlling interest in Take-Two Interactive Software through the ownership of securities.
     
Finance and Strategic
Experience
  Mr. Cho provides our board with significant financial and strategic experience gained through his multiple directorships.
     
Operating and Corporate
Governance Experience
  Mr. Cho’s service in other director roles provides our Board extensive operating and governance experience as well as providing perspectives on the strategy and direction of our Company.
     
Capital Markets Experience   Mr. Cho’s experience at the Icahn entities provides our Board with important expertise in capital markets and finance matters.

 

(HERTZ LOGO) Hertz Global Holdings, Inc. 2017 Proxy Statement     11

 

 

 

 

ELECTION OF DIRECTORS

 

Carolyn N. Everson   Ms. Everson has served as a director of the Company since June 2016 and Hertz since May 2013. Ms. Everson is 45 years old.
     
Business Experience   Ms. Everson serves as Vice President of Global Marketing Solutions for Facebook, Inc. (“Facebook”), where she leads the company’s relationships with top marketers and agencies. Ms. Everson oversees a team of regional leaders, and the teams focused on global partnerships, global agencies, and Facebook’s Creative Shop. Before Facebook, Ms. Everson served as Corporate Vice President of Global Ad Sales and Strategy of Microsoft Corporation (“Microsoft”) from 2010 to 2011. Previous to Microsoft, Ms. Everson held various advertising management positions at MTV Networks Company (“MTV”) from 2004 to 2010, including serving as Executive Vice President and Chief Operating Officer of Ad Sales from 2008 to 2010. Prior to MTV, she served in roles of increasing responsibility with respect to business development and advertising at Primedia, Inc., Zagat Surveys LLC and Walt Disney Imagineering.
     
Marketing and Strategy
Experience
  Ms. Everson provides the Board with extensive experience and understanding of marketing and innovation strategies in her roles at Microsoft and Facebook, which are key areas for our Company’s growth.
     
Media and Technology
Expertise
  Ms. Everson brings her special expertise in media and technology developed from her roles at two of the world’s largest technology companies to support our continued efforts to develop and communicate our brand and product offerings.
     
International Business and
Leadership Experience
  Ms. Everson’s experience in managing global advertising efforts for technology companies and her leadership experience provide our Board with specialized perspective and knowledge.

 

12     Hertz Global Holdings, Inc. 2017 Proxy Statement (HERTZ LOGO)

 

 

 

 

ELECTION OF DIRECTORS

 

Vincent J. Intrieri   Mr. Intrieri has served as a director of the Company since June 2016 and Hertz since September 2014. Mr. Intrieri is 60 years old. Mr. Intrieri is a director affiliated with Carl C. Icahn. For our arrangements with Carl C. Icahn, see the information under “Certain Relationships and Related Party Transactions — Agreements with the Icahn Group.”
     
Business Experience   Mr. Intrieri is the CEO and founder of VDA Asset Management LLC and was formerly employed by Icahn related entities from October 1998 to December 2016 in various investment related capacities. From January 2008 until December 2016, Mr. Intrieri served as Senior Managing Director of Icahn Capital LP, the entity through which Carl C. Icahn manages private investment funds. In addition, from November 2004 to December 2016, Mr. Intrieri served as a Senior Managing Director of Icahn Onshore LP, the general partner of Icahn Partners LP, and Icahn Offshore LP, the general partner of Icahn Partners Master Fund LP, entities through which Mr. Icahn invests in securities.
     
Directorships and Other
Experience
  Mr. Intrieri has been a director of: Transocean Ltd., a provider of offshore contract drilling services for oil and gas wells, since May 2014; Navistar International Corporation, a truck and engine manufacturer, since October 2012; and Chesapeake Energy Corporation, an oil and gas exploration and production company, since June 2012. Mr. Intrieri was previously: a director of CVR Refining, LP, an independent downstream energy limited partnership, from September 2012 to September 2014; a director of Forest Laboratories, Inc., a supplier of pharmaceutical products, from June 2013 to June 2014; a director of CVR Energy, Inc., a diversified holding company primarily engaged in the petroleum refining and nitrogen fertilizer manufacturing industries, from May 2012 to May 2014; a director of Federal-Mogul Corporation, a supplier of automotive powertrain and safety components, from December 2007 to June 2013; a director of Icahn Enterprises L.P. (a diversified holding company engaged in a variety of businesses, including investment, automotive, energy, gaming, railcar, food packaging, metals, real estate and home fashion) from July 2006 to September 2012, and was Senior Vice President of Icahn Enterprises L.P. from October 2011 to September 2012; a director of Dynegy Inc., a company primarily engaged in the production and sale of electric energy, capacity and ancillary services, from March 2011 to September 2012; chairman of the board and a director of PSC Metals Inc., a metal recycling company, from December 2007 to April 2012; a director of Motorola Solutions, Inc., a provider of communication products and services, from January 2011 to March 2012; a director of XO Holdings, a competitive provider of telecom services, from February 2006 to August 2011; a director of National Energy Group, Inc., a company that was engaged in the business of managing the exploration, production and operations of natural gas and oil properties, from December 2006 to June 2011; a director of American Railcar Industries, Inc., a railcar manufacturing company, from August 2005 until March 2011, and was a Senior Vice President, the Treasurer and the Secretary of American Railcar Industries from March 2005 to December 2005; a director of WestPoint Home LLC, a home textiles manufacturer, from November 2005 to March 2011; chairman of the board and a director of Viskase Companies, Inc., a food packaging company, from April 2003 to March 2011; and a director of WCI Communities, Inc., a homebuilding company, from August 2008 to September 2009. CVR Refining, CVR Energy, Federal-Mogul, Icahn Enterprises, PSC Metals, XO Holdings, National Energy Group, American Railcar Industries, WestPoint Home and Viskase Companies each are or previously were indirectly controlled by Carl C. Icahn. Mr. Icahn also has or previously had a non-controlling interest in Transocean, Forest Laboratories, Navistar, Chesapeake Energy, Dynegy, Motorola Solutions and WCI Communities. Mr. Intrieri graduated in 1984, with Distinction, from The Pennsylvania State University (Erie Campus) with a B.S. in Accounting. Mr. Intrieri was a certified public accountant.
     
Accounting and Finance
Experience
  Mr. Intrieri’s significant financial and accounting experience through his directorships and former employment with the Icahn entities makes him an important advisor to our Board.
     
Corporate Governance
Experience
  Mr. Intrieri’s multiple directorships give Mr. Intrieri a deep understanding of board responsibilities and provides our Board with strategic oversight capabilities.
     
Strategic and Risk
Management Knowledge
  Mr. Intrieri’s experience at the Icahn entities and his multiple directorships provide our Board important strategic experience and knowledge of appropriate risks to execute our business strategies.

 

(HERTZ LOGO) Hertz Global Holdings, Inc. 2017 Proxy Statement     13

 

 

 

 

ELECTION OF DIRECTORS

  

Henry R. Keizer   Mr. Keizer has served as a director of the Company since June 2016 and Hertz since October 2015. Mr. Keizer is 60 years old. He has served as Independent Non-Executive Chair of the Company since January 2017.
     
Business Experience   Mr. Keizer formerly served as Deputy Chairman and Chief Operating Officer of KPMG, the U.S.- based and largest individual member firm of KPMG International (“KPMGI”), a role from which he retired in December 2012. KPMGI is a professional services organization that provides audit, tax and advisory services in 152 countries. Prior to serving as Deputy Chairman and Chief Operating Officer, Mr. Keizer held a number of key leadership positions throughout his 35 years at KPMG, including Global Head of Audit, from 2006 to 2010 and U.S. Vice Chairman of Audit, from 2005 to 2010.
     
Directorships and Other
Experience
  Mr. Keizer currently serves as a trustee and audit committee chair of BlackRock Funds. He is also a member of the Board of Directors and audit committee chair of WABCO, a global innovator and manufacturer of technologies that improve the safety and efficiency of commercial vehicles. He is a member of the Board of Directors of Park Indemnity Ltd., a Bermuda captive insurer affiliated with KPMGI. He previously served as a director and audit committee chair of MUFG Americas Holdings, Inc. and MUFG Union Bank (2014-2016), a financial and bank holding company and of Montpelier Re Holdings, Ltd., a global property and casualty reinsurance company until it merged with Endurance Specialty Holdings Ltd. in July 2015. Mr. Keizer was formerly a director of the American Institute of Certified Public Accountants from 2008 to 2011.
     
Executive Officer and
Leadership Experience
  Mr. Keizer has significant management, operating and leadership skills gained as Deputy Chairman and Chief Operating Officer of KPMG and as a director of multiple public and private companies.
     
Financial Reporting and
General Industry Experience
  Mr. Keizer, a certified public accountant, has extensive knowledge and understanding of financial accounting, internal control over financial reporting and auditing standards from his 35 years of experience and key leadership positions he held with KPMGI. Mr. Keizer also has over three decades of diverse industry perspective gained through advising clients engaged in manufacturing, banking, insurance, consumer products, retail, technology and energy, providing him with perspective on the issues facing major companies and the evolving business environment.
     
Risk Management Expertise   Mr. Keizer’s extensive leadership experience at KPMG provides the Board with expertise in risk management and oversight over our domestic and international operations.

 

14     Hertz Global Holdings, Inc. 2017 Proxy Statement (HERTZ LOGO)

 

 

 

 

ELECTION OF DIRECTORS

 

Kathryn V. Marinello   Ms. Marinello has served as the President and Chief Executive Officer and a director of the Company and Hertz since January 3, 2017. Ms. Marinello is 60 years old. Ms. Marinello’s employment agreement provides that she will serve as a director of the Company and Hertz.
     
Business Experience   Ms. Marinello has served as the President and Chief Executive Officer and a member of the Boards of Directors of the Company and Hertz since January 3, 2017. Ms. Marinello previously served as a Senior Advisor of Ares Management LLC since March 2014. Ms. Marinello served as the Chairman, President and Chief Executive Officer of Stream Global Services, Inc. from 2010 to March 2014. Ms. Marinello served as the Chief Executive Officer and President of Ceridian Corporation from 2006 to 2010. She served in a wide variety of senior roles over 10 years at General Electric, leading global, multi-billion dollar financial and services businesses. She served as the Chief Executive Officer and President of GE Fleet Services at GE Commercial Finance from October 2002 to October 2006 and GE Insurance Solutions from 1999 to 2002. She served as President and Chief Executive Officer of GE Financial Assurance Partnership Marketing Group, a diverse organization that includes GE’s affinity marketing business, Auto & Home Insurance business, and Auto Warranty Service business from December 2000 to October 2002. Prior to this role, Ms. Marinello served as President of GE Capital Consumer Financial Services and also served as an Executive Vice President of GE Card Services, where she began her GE career in 1997. Prior to GE Capital, she served as President of the Electronic Payments Group at First Data Corporation, which provided electronic banking and commerce, debit and commercial processing to the financial services industry. She has also served in senior leadership positions at US Bank, Chemical Bank, Citibank and Barclays.
     
Directorships and Other
Experience
  Ms. Marinello serves as a director of AB Volvo. Ms. Marinello has served as a member of the Supervisory Board at The Nielsen Company B.V. since July 2009. Ms. Marinello has notified The Nielsen Company B.V. that she does not intend to stand for re-election as a director at its annual meeting in May 2017. Ms. Marinello served as a director of General Motors Company from July 2009 to December 2016 and RealPage, Inc. from 2015 to March 2017.
     
Knowledge of the
Automotive Industry
  Ms. Marinello has demonstrated her expertise in the automotive industry through her experience at GE Fleet Services and as a director of AB Volvo and General Motors Company.
     
Leadership and Management
Experience
  Ms. Marinello, through her experiences as our CEO and as a former lead executive of large companies, as well as through her other directorships, has demonstrated excellent leadership abilities, financial and operational expertise, commitment, good judgment and management skills.
     
Executive Officer Experience   Ms. Marinello’s experience as head of several large companies as well as our CEO allows her to add strategic value to the Board.

 

(HERTZ LOGO) Hertz Global Holdings, Inc. 2017 Proxy Statement     15

 

 

 

 

ELECTION OF DIRECTORS

 

Daniel A. Ninivaggi   Mr. Ninivaggi has served as a director of the Company since June 2016 and Hertz since September 2014. Mr. Ninivaggi is 52 years old. Mr. Ninivaggi is a director affiliated with Carl C. Icahn. For our arrangements with Carl C. Icahn, see the information under “Certain Relationships and Related Party Transactions — Agreements with the Icahn Group.”
     
Business Experience   Mr. Ninivaggi serves as Chief Executive Officer of Icahn Automotive Group LLC and as managing director of Icahn Enterprises L.P.’s automotive segment, positions he has held since March 2017. Mr. Ninivaggi served as a director of the Federal-Mogul Holdings Corporation from March 2010 until March 2017, as Co-Chairman from May 2015 until March 2017 and as Co-Chief Executive Officer and Chief Executive Officer of Federal-Mogul’s Motorparts segment from February 2014 to March 2017. Mr. Ninivaggi was President of Icahn Enterprises L.P., a diversified holding company engaged in a variety of businesses, including investment, automotive, energy, gaming, railcar, food packaging, metals, real estate and home fashion, from April 2010 to February 2014, and its Chief Executive Officer from August 2010 to February 2014. From January 2011 to May 2012, Mr. Ninivaggi served as the Interim President and Interim Chief Executive Officer of Tropicana Entertainment Inc., a company that is primarily engaged in the business of owning and operating casinos and resorts. From 2003 until July 2009, Mr. Ninivaggi served in a variety of executive positions at Lear Corporation, a global supplier of automotive seating and electrical power management systems and components, including most recently as Executive Vice President and Chief Administrative Officer from 2006 to 2009. Lear Corporation filed for bankruptcy in July 2009 and emerged in November 2009. Mr. Ninivaggi served as Of Counsel to the law firm of Winston & Strawn LLP from July 2009 to March 2010, where he previously served as a Partner.
     
Directorships and Other
Experience
  Mr. Ninivaggi has been a director of numerous public and private companies, including Icahn Enterprises G.P. Inc., which is the general partner of Icahn Enterprises L.P., a diversified holding company with over $30 billion in assets engaged in a variety of businesses, including investment management, automotive, energy, gaming, railcar, food packaging, metals, real estate and home fashion, that is listed on NASDAQ and majority-owned by investor Carl C. Icahn, from March 2012 until May 2015; CVR Energy, Inc., an independent petroleum refiner and marketer of high value transportation fuels, from May 2012 to February 2014; CVR GP, LLC, the general partner of CVR Partners LP, a nitrogen fertilizer company, from May 2012 to February 2014; Viskase Companies, Inc., a food packaging company, from June 2011 to February 2014; XO Holdings, a competitive provider of telecom services, from August 2010 to February 2014; Motorola Mobility Holdings, Inc., a provider of mobile communication devices, video and data delivery solutions, from December 2010 to May 2012; Tropicana Entertainment Inc., a hotel and casino operator, from January 2011 to December 2015; and CIT Group Inc., a bank holding company, from December 2009 to May 2011.
     
Executive Officer and
Leadership Experience
  Mr. Ninivaggi provides the Board with leadership skills, significant management, strategic and operational experience through his roles of Chief Executive Officer of Icahn Automotive Group LLC, Co-Chief Executive Officer and Co-Chairman of Federal-Mogul Holdings and as a director and officer of multiple public and private companies.
     
Strategic and Risk
Management Knowledge
  Mr. Ninivaggi provides the Board significant experience in the evaluation of strategic opportunities and offers our Board perspectives on risk management with respect to our operations.
     
Extensive Knowledge of
the Company’s Business
and Industry
  Mr. Ninivaggi provides the Board with specialized expertise on matters related to the automotive industry through his roles at Icahn Automotive Group LLC, Federal-Mogul Holdings, Lear Corporation and other directorships.

 

The Board recommends a vote FOR
all of the nominees

  

16     Hertz Global Holdings, Inc. 2017 Proxy Statement (HERTZ LOGO)

 

 

 

 

COMPENSATION DISCUSSION AND ANALYSIS: EXECUTIVE SUMMARY

  

Compensation Discussion and Analysis

 

Executive Summary

 

2016 was a year of transformation and challenge for our Company. During 2016, we implemented far-reaching corporate changes and achieved important operational results, but did not meet our financial performance goals. In response to these financial performance challenges, consistent with our pay-for-performance philosophy, we did not pay annual cash bonuses to our named executive officers (“NEOs”) for 2016. In addition, performance stock units that were eligible to be earned based on 2016 financial performance goals were not earned. Although 2016 posed significant challenges, we believe we are well-positioned to continue to capitalize on our strengths and deliver improved results with our new CEO and operating structure in our first full year as a separate, standalone company in 2017. Successes and challenges in 2016 included:

 

Revenue and Adjusted Corporate EBITDA Measures Declined from 2015: Total revenues for 2016 were $8.8 billion compared to $9.0 billion in 2015, a decrease of 2%. Adjusted Corporate EBITDA for 2016 was $553 million, versus $858 million for 2015.

 

Decrease in Earnings Per Share Due to Operating Environment and Impairments: The Company reported net loss from continuing operations of $474 million, or $5.65 per diluted share, including full-year impairment charges of $285 million, versus net income from continuing operations of $115 million, or $1.26 per diluted share, for 2015.

 

Completed the Spin-Off of Our Equipment Rental Business from Our Car Rental Business: On June 30, 2016, we completed the spin-off of our equipment rental business (Hertz Equipment Rental Corporation) from our ongoing vehicle rental business. This separation has allowed our senior management to better focus their energies on, and develop strategies to deliver results for, our core vehicle rental business.

 

Improved Our Rental Experience Through the Roll Out of New Rental Programs and Technologies: The Company introduced our new Ultimate Choice format for the Hertz brand in 2016 at select airport locations and continues to roll out Ultimate Choice at additional airports in 2017. Ultimate Choice allows our customers to select among any available vehicles in their rental class, providing maximum flexibility to our customers. We also simplified the rental process by introducing electronic rental agreements and returns for our Hertz, Dollar and Thrifty customers.

 

Delivered on Cost Savings: The Company is focused on driving efficiencies within our organization. In 2016, we delivered on cost savings, particularly in the areas of direct vehicle and operating expenses, selling, general and administrative expenses and fleet carrying costs.

 

Launched Technology Transformation Initiatives to Improve Efficiencies: We outsourced legacy technology systems and updated various platforms to help drive cost reductions and improve our back-office capabilities.

 

Management Transition

 

In December 2016, the Board elected a new CEO, Kathryn V. Marinello, who commenced employment on January 3, 2017. The Board has tasked Ms. Marinello with implementing an operating plan focused on our key business drivers, including our fleet, the suite of rental services we offer, our marketing program and customer-focused technology solutions. While the turnaround efforts will take time, we started 2017 with a movement toward a streamlined reporting structure that is designed to drive results throughout the organization.

 

 

 (HERTZ LOGO) Hertz Global Holdings, Inc. 2017 Proxy Statement 17

 

 

 

 

COMPENSATION DISCUSSION AND ANALYSIS: EXECUTIVE SUMMARY

  

Payments under Our Executive Compensation Program

 

The three main elements of compensation we pay to our NEOs are salary, an annual cash bonus and equity awards, the value of which is tied to the performance of our Company.

 

No Salary Increases for our CEO, CRO, and CIO and Increases for our CFO and Group President, Rent A Car International from 2015: The Company did not increase the salaries for our former CEO (John Tague), former Chief Revenue Officer (Jeff Foland) or Chief Information Officer (Tyler Best) in 2016. The Company provided salary increases to only our CFO (Tom Kennedy) and our Group President, Rent A Car International (Michel Taride) in 2016.

 

No Annual Cash Bonus Paid: The Compensation Committee used two financial metrics and one operating metric for the 2016 cash bonus program. 40% of the award was tied to Adjusted Pre-Tax Income, 40% of the award was tied to EBITDA Margin relative to a Company competitor and 20% of the award was tied to a Customer Satisfaction metric. While the Company exceeded the maximum performance goal for the Customer Satisfaction metric, the threshold performance goals for the Adjusted Pre-Tax Income and Relative EBITDA Margin were not met. Despite exceeding the maximum Customer Satisfaction goal, the Compensation Committee used its discretion not to award bonuses for 2016 performance.

 

Long-Term Incentives

 

2016 Performance Stock Units (“PSUs”) Based on Customer Satisfaction Were Earned and PSUs Based on Financial Performance Were Not Earned: The Compensation Committee granted PSUs to each of the NEOs in 2016. For all of the NEOs except for Mr. Taride, approximately 70% of the total equity award opportunity granted in 2016 was comprised of PSUs. In 2016, we made adjustments after the Spin-Off to balance the performance metrics between absolute and relative performance goals. After such adjustments, 40% of the PSUs were tied to Adjusted Corporate EBITDA, 40% were tied to EBITDA Margin relative to a Company competitor and 20% were tied to Customer Satisfaction for a subgroup of our customers. Of the PSUs granted in 2016, only the PSUs tied to Customer Satisfaction were earned. The NEOs will have the opportunity to earn the PSUs not earned in 2016 by achieving financial and operating performance goals during the combined 2016-2017 performance period and the combined 2016-2018 performance period. For a summary of the 2016 PSU structure see “Long-Term Equity Incentives—Summary of 2016 Award Structure.”

 

Options Were Granted to Help Drive the Company’s Share Price: The Compensation Committee granted stock options in the first quarter of 2016 to each NEO other than Mr. Taride in order to motivate increasing the Company’s share price.

 

Restricted Stock Units (“RSUs”) Were Granted to Mr. Taride to Provide an Alternative Incentive Package: The Compensation Committee granted RSUs in 2016 to Mr. Taride in order to provide Mr. Taride an equity incentive in lieu of options.

  

18 Hertz Global Holdings, Inc. 2017 Proxy Statement  (HERTZ LOGO)

 

 

 

  

COMPENSATION DISCUSSION AND ANALYSIS: EXECUTIVE SUMMARY

 

We believe our compensation decisions are consistent with our continuing commitment to best practices in corporate governance and executive compensation design, which can be summarized as follows:  

 

  What We Do and What We Don’t Do
   
We design our compensation program to pay based on our financial and operating performance We don’t use any financial or operational metric that promotes undue risk
       
We evaluate risk in light of our compensation Programs We don’t exclusively grant time-based vesting equity awards
       
We use a variety of metrics important to our business in our incentive compensation plans We don’t provide excessive perquisites to our senior management
       
We cap the amount of our annual cash bonuses at reasonable levels We don’t allow our officers and directors to hedge or pledge our stock
       
We use double-trigger provisions for our change in control agreements We don’t use metrics unrelated to our Company’s operational goals
       
We eliminated tax gross-ups for new hires in our change in control agreements in 2010 We don’t use a peer group composed of companies significantly larger than ours
       
We have a robust stock ownership policy We don’t re-price underwater options
       
We maintain clawback policies We don’t provide high levels of fixed compensation
       
We use an independent compensation consultant We don’t provide for automatic salary increases

  

 (HERTZ LOGO) Hertz Global Holdings, Inc. 2017 Proxy Statement 19

  

 

 

 

Compensation Discussion and Analysis

  

Compensation Discussion and Analysis

 

Introduction—Compensation Structure and Decisions Before and After the Spin-Off

 

On June, 30, 2016, we completed the Spin-Off. Prior to the Spin-Off, the Company was a wholly owned subsidiary of former Hertz Holdings. Due to the structure of the Spin-Off as a reverse spin-off, the management (other than those individuals who were associated with the equipment rental business of former Hertz Holdings) and directors of former Hertz Holdings were appointed as members of management and directors at the Company. As a result, the management and the Compensation Committee that determined the compensation of the executive officers of former Hertz Holdings held the same roles at the Company immediately following the Spin-Off.

 

This Compensation Discussion and Analysis focuses primarily on former Hertz Holdings’ compensation policies and decisions for 2016 and the process for determining 2016 compensation while the Company was part of former Hertz Holdings. It also outlines certain aspects of the Company’s post-Spin-Off executive compensation policies. From and after the Spin-Off, the Company’s Compensation Committee and Board is responsible for the Company’s executive compensation strategy.

 

Introduction—Change in Executive Leadership

 

On January 2, 2017, Mr. John P. Tague resigned from his role as President and Chief Executive Officer of the Company and Hertz. Subsequently, on January 3, 2017, Ms. Kathryn V. Marinello was appointed as President and Chief Executive Officer of the Company and Hertz. In connection with this executive transition, Mr. Tague signed a separation agreement entitling him to certain payments, and Ms. Marinello signed a term sheet and employment agreement outlining her compensation at the Company and Hertz. Mr. Tague’s separation agreement provided benefits that were generally consistent with his entitlements under his employment agreement and the Company’s severance plan, but provided that he would not be eligible for a bonus for fiscal 2016 or fiscal 2017. For additional information, see “Severance Plan, Employment and Separation Arrangements and Change in Control Agreements — Employment and Separation Arrangements with John P. Tague” below. Ms. Marinello’s employment arrangements are summarized below under Severance Plan, Employment and Separation Arrangements and Change in Control Agreements — Employment Arrangements with Kathryn V. Marinello”.

 

In connection with structural changes among the management team, Mr. Jeffrey T. Foland stepped down as Senior Executive Vice President and Chief Revenue Officer of the Company on February 28, 2017. Mr. Foland entered into a separation and general release agreement which is summarized below under “Severance Plan, Employment and Separation Arrangements and Change in Control Agreements — Employment and Separation Arrangements with Jeffrey T. Foland”.

 

Introduction—Named Executive Officers

 

As noted above, due to the structure of the Spin-Off as a reverse spin-off, all of the individuals below were executive officers at former Hertz Holdings until the completion of the Spin-Off, at which time each executive officer listed below was appointed to the same executive officer position at the Company. The following individuals are our “named executive officers” (or “NEOs”) for 2016:

 

John P. Tague, our former President and Chief Executive Officer who resigned on January 2, 2017;

 

Thomas C. Kennedy, our Senior Executive Vice President and Chief Financial Officer;

 

Jeffrey T. Foland, our former Senior Executive Vice President and Chief Revenue Officer who resigned on February 28, 2017;

 

Tyler A. Best, our Executive Vice President and Chief Information Officer; and

 

Michel Taride, our Group President, Rent A Car International.

  

20 Hertz Global Holdings, Inc. 2017 Proxy Statement  (HERTZ LOGO)

 

 

 

 

 

Compensation Discussion and Analysis

 

Determining What We Pay — Compensation Philosophy and the Role of the Compensation Committee

 

The Compensation Committee reviews and establishes the compensation program for our NEOs. Our Compensation Committee is committed to creating incentives for our NEOs that reward them for the performance of our Company. Our Compensation Committee’s philosophies include an emphasis on the following:

 

Our compensation program’s structure should be aligned with the price and market performance of the Company’s common stock: Our Compensation Committee believes that creating goals that are more directly focused on the price and performance of the Company’s common stock will further align the interests of the Company’s stockholders and our NEOs.

 

Our compensation program’s design should be simple, transparent and clearly articulated to our participants and stockholders: Our Compensation Committee is committed to designing our short-term cash compensation program and long-term equity compensation program to focus our NEOs’ attention on business goals and the price and performance of the Company’s common stock.

 

Our compensation program should provide short- and long-term components to drive performance over the long run: Long-term results are important to the Company’s stockholders and our Compensation Committee believes that a compensation program that rewards results both annually and on a year-over-year basis provides the framework for superior long-term performance.

 

Our compensation program should be competitive and market-based to attract and retain our executive officers: Our Compensation Committee believes our compensation program should provide a combination of incentives that will allow us to hire, retain and reward talented individuals at every position.

 

Our compensation program should responsibly balance incentives with prudent risk management: Our Compensation Committee believes that responsible use of different types of incentives will create and foster a culture of growth that is sustainable and appropriate for our Company.

 

Determining What We Pay — Role of the Compensation Consultant

 

The Compensation Committee has the authority to retain outside advisors as it deems appropriate. Since November 2014, the former Hertz Holdings Compensation Committee and current Compensation Committee has engaged Frederic W. Cook & Co., Inc. (“FW Cook”) as its independent compensation consultant. FW Cook’s responsibilities include: 

 

reviewing and advising on total executive compensation, including salaries, short- and long-term incentive programs and relevant performance goals;

 

advising on industry trends, important legislation and best practices in executive compensation;

 

advising on how to best align pay with performance and with our business needs; and

 

assisting the Compensation Committee with any other matters related to executive compensation arrangements, including executive employment agreements and award arrangements.

 

 (HERTZ LOGO) Hertz Global Holdings, Inc. 2017 Proxy Statement 21

 

 

 

 

Compensation Discussion and Analysis

 

The Compensation Committee reviews our compensation programs in light of FW Cook’s recommendations and adjusts compensation as the Compensation Committee sees fit. However, the decisions made by the Compensation Committee are the responsibility of the Compensation Committee, and may reflect factors other than the recommendations and information provided by FW Cook. FW Cook does not perform any services for the Company other than in its role as advisor to the Compensation Committee. Before engaging any compensation consultant, it is the Compensation Committee’s practice to determine the compensation consultant’s independence and whether any conflicts of interest would be raised by the engagement of the compensation consultant. The Compensation Committee believes that the work of FW Cook did not raise any conflicts of interest and FW Cook is independent.

 

Determining What We Pay — Role of the CEO

 

In determining the appropriate levels of our compensation programs, our CEO traditionally provides his or her input to the Compensation Committee on topics that drive business performance. As part of this process, our CEO obtains data from and has discussions with our Chief Human Resources Officer or other appropriate executives. Our CEO reviews and makes observations regarding performance and provides additional data for the Compensation Committee to consider regarding our overall compensation program. In determining Mr. Tague’s compensation for 2016, the Compensation Committee took into account the terms of his employment agreement and other arrangements entered into with him. Although our Compensation Committee may consider our CEO’s input, in all cases, the final determinations over compensation for our NEOs reside with the Compensation Committee or, if directed by the Board, in the case of our CEO, with the independent members of our Board.

 

Determining What We Pay — Elements of our Compensation Programs 

Element Type   How and Why We Pay It
Salary Fixed Cash Provides a stable source of income throughout the year to attract and retain senior executives
    Sets the baseline for bonus programs
Annual Cash Bonus(1) Performance- Based Cash Paid annually in cash to reward performance of the Company, business unit and individual
    Aligns senior executives’ interests with our stockholders’ interests, reinforces key strategic initiatives and encourages superior individual performance
Long-Term Equity Long-Term Equity Granted annually, with vesting occurring over multiple years based on continued employment with our Company to promote retention and, in certain cases, subject to satisfying performance conditions that drive our financial and operating performance
    Aligns senior executives’ interests with our stockholders’ interests
Retirement Benefits and Perquisites Variable Other In addition to the elements above, our NEOs are eligible to participate in retirement savings plans, but do not participate in any defined benefit pension plans (other than Mr. Taride as described under “Pension Benefits” below)
    We also provide limited perquisites for business purposes, including relocation expenses generally designed to attract and retain talent

 

 

 

(1)We also occasionally provide non-recurring cash bonuses to reflect superior individual performance, new responsibilities or to compensate new hires for amounts forfeited from their previous employer.

  

22 Hertz Global Holdings, Inc. 2017 Proxy Statement (HERTZ LOGO) 

 

 

 

 

Compensation Discussion and Analysis

  

Determining What We Pay — Survey Group

 

As part of determining our compensation programs, we compared the compensation for our NEOs to the compensation of comparable positions at a group of companies (the “Survey Group”). The Compensation Committee selected the Survey Group in late 2015 in consultation with FW Cook. Because the number of our direct industry competitors in the global market is limited, we did not limit the Survey Group to our direct competitors, but also included similarly-sized companies which bear substantial similarities to the Company’s business model. The companies in the Survey Group had annual revenues of approximately $2.9 billion to $20.5 billion, as compared to former Hertz Holdings’ 2015 revenue of $10.5 billion. We included a relatively large number (53) of companies in the Survey Group, in part because we believe that doing so helps to reduce the influence of outliers. Of the 53 companies in the Survey Group, 41 were in the prior year’s Survey Group.

 

The following are the companies that comprised our Survey Group in 2016: 

 

Advance Auto Parts Inc. Federal-Mogul Corp. Quad/Graphics, Inc.*
Asbury Automotive Group, Inc.* Gap Inc. PVH Corp.
Altria Group, Inc. General Mills, Inc. R.R. Donnelley & Sons Co.
Avis Budget Group, Inc. Hanesbrands Inc.* Ralph Lauren Corp.
Avon Products Inc. Harman International Industries Inc.* Ross Stores Inc.
Big Lots, Inc.* Hershey Co. Royal Caribbean Cruises
BorgWarner Inc. Hormel Foods Corp. Ryder System, Inc.
CarMax Inc. JetBlue Airways Corp.* Southwest Airlines Co.
Carnival Corp. J.C. Penney Company, Inc. Starbucks Corp.
Colgate-Palmolive Co. J. M. Smucker Co. Starwood Hotels & Resorts Worldwide, Inc.
ConAgra Foods, Inc. Kellogg Co. SUPERVALU Inc.
CST Brands, Inc. Kelly Services, Inc.* V.F. Corp.*
CSX Corp. Lear Corporation Visteon Corp.
Darden Restaurants, Inc. Marriott International, Inc. Waste Management, Inc.
Dean Foods Co. Mattel, Inc. Whole Foods Market, Inc.
Dick’s Sporting Goods, Inc. MGM Resorts International* Wyndham Worldwide Corp.*
Dr Pepper Snapple Group, Inc.* Norfolk Southern Corp. Yum! Brands, Inc.*
Estee Lauder Companies Inc. Office Depot, Inc.  

 

* Denotes companies new to the 2016 Survey Group

 

When making compensation decisions for our senior executives, our management and our Compensation Committee considered the compensation levels of the Survey Group, as well as industry factors, general business developments, corporate, business unit and individual performance, the roles within our organization, their experience in the travel industry, compensation at their previous employers with respect to new hires and our overall compensation philosophy. Our Compensation Committee does not apply Survey Group data in a formulaic manner to determine the compensation of our NEOs. Rather, the Survey Group data represented one of several factors that our Compensation Committee considered in a holistic assessment of compensation decisions. We typically review the salaries, annual bonus levels and long-term equity awards of our NEOs every 12 months, and we periodically (but not on a set schedule) review the other elements of their compensation.

 

Determining What We Pay — Stockholder Input on Our Compensation Programs

 

The Company values the opinions of its stockholders and is committed to considering their opinions in making compensation decisions. Following the Spin-Off, in 2016, the Company engaged with stockholders and discussed relevant aspects of the Company’s compensation program. As part of these discussions, the Company considered their views on the structure and form of our compensation program to improve the alignment of stockholder interests with our management’s interests.

 

 (HERTZ LOGO) Hertz Global Holdings, Inc. 2017 Proxy Statement     23

 

 

 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

Annual Cash Compensation

 

Salary

 

For the NEOs, the Compensation Committee determines salary and any increases after reviewing individual performance, conducting internal compensation comparisons and reviewing compensation in the Survey Group. We also take into account other factors such as an individual’s prior experience, total mix of job responsibilities versus market comparables and internal equity. The Compensation Committee consults with our CEO (except as to the CEO’s own compensation) regarding salary decisions for senior executives and takes into consideration any contractual obligations we have with such senior executives. We review salaries upon promotion or other changes in job responsibility.

 

The annual base salaries for our NEOs were established for 2016 as set forth below.

 

Name   2015 Salary
($)
  2016 Salary
($)
  What We Took Into Consideration in Setting 2016 Salaries
Mr. Tague   1,450,000   1,450,000     The terms of Mr. Tague’s employment agreement signed in November 2014 provide for a base salary of $1,450,000. Mr. Tague did not receive a salary increase for 2016 per the terms of such employment agreement.
Mr. Kennedy   700,000   775,000   The performance of Mr. Kennedy in overseeing our financial performance in 2015 and in accomplishing key steps for the completion of the Spin-Off. Mr. Kennedy received a 10.7% salary increase for 2016.
Mr. Foland   850,000   850,000   Mr. Foland joined former Hertz Holdings in 2015 and was offered a competitive salary in connection with his appointment as Chief Revenue Officer. Mr. Foland did not receive a salary increase for 2016.
Mr. Best   600,000   600,000     Mr. Best joined former Hertz Holdings in 2015 and was offered a competitive salary in connection with his appointment as Chief Information Officer. Mr. Best did not receive a salary increase for 2016.
Mr. Taride(1)   520,454   537,636   The performance of Mr. Taride in overseeing our international operations in light of significant financial headwinds. Mr. Taride received a 3.3% salary increase for 2016.

 

 

 

(1)To facilitate comparison for Mr. Taride, both his 2015 and 2016 base salaries have been converted to U.S. dollars from pounds sterling at the 2016 12-month average rate of 1.34409.

 

Senior Executive Bonus Plan

 

Our NEOs’ compensation design includes eligibility for an annual cash bonus computed pursuant to the terms of the Executive Incentive Compensation Plan (“EICP”), which is described in the next section. In order that eligible bonus payments qualify as deductible under Section 162(m) of the Internal Revenue Code (the “Code”), the actual payments are made under the Hertz Global Holdings, Inc. Senior Executive Bonus Plan (“Senior Executive Bonus Plan”). Payments under the Senior Executive Bonus Plan are intended to qualify as performance-based compensation under Section 162(m) of the Code. Under the terms of the Senior Executive Bonus Plan, the maximum amount of a payment (i) to our CEO is limited to 1% of our Gross EBITDA, as defined in “Non-GAAP Measures” set forth in Annex A to this proxy statement, for a performance period and (ii) to other participants is limited to 0.5% of our Gross EBITDA for a performance period. If our Gross EBITDA is greater than $0, our NEOs will become eligible for an award under the EICP, under which our Compensation Committee exercises its

 

24     Hertz Global Holdings, Inc. 2017 Proxy Statement  (Hertz Logo)

 

 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

discretion to reduce the size of the awards payable under the Senior Executive Bonus Plan. The Compensation Committee may not increase payments under the Senior Executive Bonus Plan beyond the Gross EBITDA limits. The Compensation Committee also may adjust awards established pursuant to the EICP, provided that the awards as so adjusted do not exceed the parameters permitted by the Senior Executive Bonus Plan. For information about the overall structure and its impact on the tax deductibility of our compensation see “Tax and Accounting Considerations” below.

 

Annual Cash Incentive Program (EICP)

 

Structure of the 2016 EICP

 

For 2015, in consultation with management and FW Cook, the Compensation Committee elected to base awards under the EICP entirely on the satisfaction of Adjusted Pre-Tax Income, or “API” goals. The intention was to focus participants on one performance metric that is clear, understandable and drives overall business results. For the definition of “API” and its reconciliation to its most comparable non-GAAP measure, see Annex A to this proxy statement.

 

During late 2015 and into 2016 the Compensation Committee reviewed the EICP and decided to modify the structure for 2016 to reflect concepts important to our business. Accordingly, for 2016, while the Compensation Committee elected to continue to base 40% of the award on API, it selected Relative EBITDA Margin as another central metric on which 40% of the award would be determined and a Customer Satisfaction metric on which the remaining 20% of the award would be determined.

 

The Compensation Committee selected API, Relative EBITDA Margin and Customer Satisfaction because they represent, in the case of API and Relative EBITDA Margin, financial metrics that are important to the overall performance of the Company and influence the Company’s stock price. The Compensation Committee also recognized that operational performance and in particular Customer Satisfaction was an important metric and elected to use it in the EICP.

 

In terms of overall mix, the Compensation Committee elected to weight the financial metrics more heavily (80%) due to their importance in driving external performance. The Compensation Committee selected Relative EBITDA Margin to promote increasing Adjusted Corporate EBITDA while taking into account both industry conditions and the relative performance of the Company’s competition. The Compensation Committee considered the importance of absolute and relative financial performance metrics and believed that they should be equally weighted within the financial performance goals. However, the Compensation Committee designed the EICP so that Customer Satisfaction would have a meaningful impact (20%) on the ultimate bonus structure.

 

Relative EBITDA Margin measures the Company’s ratio of Adjusted Corporate EBITDA to total revenues compared to a competitor’s ratio of adjusted EBITDA to total revenues. For the definition of “Adjusted Corporate EBITDA” and its reconciliation to its most comparable non-GAAP measure see Annex A to this proxy statement.

 

Customer Satisfaction was measured based on Net Promoter Score (“NPS”). NPS is a customer experience metric in which customers are asked how likely they are to recommend the Hertz brand to a friend, colleague or family member. The percent of those likely to recommend less the percent of those unlikely to recommend is “Net Promoter Score” as measured in basis points.

 

(Hertz logo) Hertz Global Holdings, Inc. 2017 Proxy Statement     25

 

 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

The below graphs summarize the structure of the 2015 EICP and the 2016 EICP.

 

(BAR CHART) 

 

How We Determined the 2016 EICP Awards

 

To determine the EICP awards, our Compensation Committee reviewed our performance against the established performance criteria, reviewed individual performance and approved the EICP award payments for the NEOs. To arrive at the annual award, the NEO’s salary was multiplied by a specified target (the “Target Award”), which was further multiplied by modifiers noted in the table below:

 

(FLOW CHART) 

 

Arrangements for Mr. Tague

 

In connection with Mr. Tague’s resignation and execution of a separation agreement with the Company and Hertz, Mr. Tague agreed that he would be ineligible for a bonus for fiscal 2016 or fiscal 2017. Accordingly, Mr. Tague received $0 under our Senior Executive Bonus Plan and EICP and has been omitted from the discussion below and all further references to the NEOs in this section refer to Messrs. Kennedy, Foland, Best and Taride.

 

Target Awards for 2016

 

The target award for each NEO for 2016 was a percentage of the NEO’s 2016 base salary. The Compensation Committee generally considers the experience, responsibilities and historical performance of each particular NEO when determining target awards. In addition, the 2016 bonus targets for Messrs. Foland and Best were based on their term sheets with the Company, which provide for a target bonus opportunity of 135% of base salary for Mr. Foland and 100% of base salary for Mr. Best, and a maximum bonus opportunity of 160% of base salary for Mr. Foland and 150% of base salary for Mr. Best.

 

26     Hertz Global Holdings, Inc. 2017 Proxy Statement  (Hertz Logo)

 

 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

Each NEO’s 2016 award structure is detailed below:

 

Name Salary as of
December 31, 2016
($)
  Target Award
as a % of Salary
(%)
  2016
Target Award
($)
Mr. Kennedy 775,000   135   1,046,250   
Mr. Foland 850,000   135   1,147,500   
Mr. Best 600,000   100   600,000   
Mr. Taride(1) 537,636   120   645,163   

 

 

 

(1)For Mr. Taride, these amounts have been converted to U.S. dollars from pounds sterling at the 2016 12-month average rate of 1.34409.

 

2016 Award Payouts

 

The Compensation Committee set goals for each of API, Relative EBITDA Margin and Customer Satisfaction. The Compensation Committee then measured our performance against each of the goals to determine a modifier for each financial performance element and an overall Corporate Performance Modifier. The target level for each of API, Relative EBITDA Margin or Customer Satisfaction was based upon our business plan. Mr. Taride’s goals were further weighted based on 70% International rent a car performance and 30% Hertz corporate performance.

 

The following were the fiscal 2016 financial performance criteria targets set by the Compensation Committee and our performance as compared to such targets (dollars in millions):

             
2016 Corporate Performance Modifier
    API
(40% Weight)
  Relative
EBITDA
Margin
(40% Weight)
  Customer
Satisfaction
(20%
Weight)
Threshold(1)   $544   – 50 bp   +0.5
Target = 100% Multiplier   $605   +100 bp   +1.5
Maximum Performance Level(2)   $677   +150 bp   +2.7
Actual Results   $  65   –340 bp   +5.6
Payout Results(3)   $  99   –358 bp   +5.6

 

 

 

(1)Any API, Relative EBITDA Margin or Customer Satisfaction results that equal the threshold receive a 50% multiplier. Any API, Relative EBITDA Margin or Customer Satisfaction results that are below the threshold receive a 0% multiplier.

 

(2)Any API, Relative EBITDA Margin or Customer Satisfaction results that equal or exceed the maximum performance level receive a 160% multiplier. However, to exceed the target performance level for the Customer Satisfaction metric, the threshold performance level for either API or Relative EBITDA Margin would have to be achieved.

 

(3)Payout results for API include a $34 million addition to API representing items that impacted the actual results which were not included in the original target. The adjustments were agreed to between the Company’s management and the Compensation Committee. Payout results for Relative EBITDA Margin were determined using the payout results for Adjusted Corporate EBITDA.

 

For performance criteria, linear interpolation was used to determine the multiplier for results that were between the threshold and target and target and maximum performance level.

 

(Hertz logo) Hertz Global Holdings, Inc. 2017 Proxy Statement     27

 

 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

Based on 2016 results, the Company failed to achieve the threshold performance level for API and Relative EBITDA Margin, but exceeded the maximum performance level for the Customer Satisfaction metric. Based on these performance levels, the NEOs would have been eligible to receive 20% of their respective target award. However, in light of the Company’s overall financial performance, the Compensation Committee used its discretion not to award any bonuses under the Senior Executive Bonus Plan to the NEOs.

 

Long-Term Equity Incentives

 

Long-term equity incentive compensation comprises a significant portion of the total compensation awarded to our NEOs and in 2016 was awarded under the Hertz Global Holdings, Inc. 2008 Omnibus Incentive Plan (“2008 Omnibus Plan”), which was converted in connection with the Spin-Off into awards granted under the Hertz Global Holdings, Inc. 2016 Omnibus Incentive Plan (“2016 Omnibus Plan”). Herc Holdings retained the 2008 Omnibus Plan after the Spin-Off. Under the 2016 Omnibus Plan, the Compensation Committee has the flexibility to make equity awards based on the common stock of the Company, including time- and performance-based awards of stock options, stock appreciation rights, restricted stock, RSUs, PSUs and deferred stock units.

 

Summary of 2016 Award Structure

 

During late 2015 and early to mid-2016 the Compensation Committee reviewed the structure of the long-term equity incentive plan and concluded that modifications to the plan were needed to better align equity compensation with our business objectives and the interests of our employees with the interests of stockholders, particularly in light of the planned Spin-Off. The following changes were implemented in 2016:

 

Increased Emphasis on PSUs in 2016: Approximately 70% of the total award in 2016 consisted of PSUs (other than for Mr. Taride), as compared to 50% in 2015. The Compensation Committee elected to allocate more of the total long-term incentive opportunity to PSUs in 2016 to help drive selected business goals over the 2016-2018 timeframe. 60% of Mr. Taride’s 2016 award consisted of PSUs.

 

Mix of Financial and Operational Metrics to Promote Multiple Goals: For our NEOs except for Mr. Taride, PSUs could be earned based on Adjusted Corporate EBITDA, Relative EBITDA Margin and NPS improvement for a select group of our customers. Similar to the structure of our EICP, the Compensation Committee elected to use a combination of financial metrics and operational metrics to promote goals that are important to our Company. The Compensation Committee believed that a significant portion of the PSUs should be earned based on our financial performance (whether absolute or relative) and elected to weight such metrics more heavily as compared to the NPS operational metric. The Compensation Committee believes that this structure should provide the appropriate mix to help achieve our financial performance goals and important operational goals.

 

○ Pre-Spin Weighting of PSUs: Prior to the Spin-Off, the Compensation Committee selected the following weighting of the PSUs:

 

35% of total 2016 equity award based on Adjusted Corporate EBITDA (30% for Mr. Taride).

 

20% of total 2016 equity award based on Relative EBITDA Margin (15% for Mr. Taride).

 

15% of total 2016 equity award based on NPS improvement for a select group of our customers (15% for Mr. Taride).

 

○ Post-Spin Weighting of PSUs: In connection with the Spin-Off and with the conversion of the equity awards to the 2016 Omnibus Plan, the Compensation Committee elected to change the weighting of the PSUs as set forth below, to better align post-spin goals of the Company with the compensation of the executive officers:

 

28% of total 2016 equity award based on Adjusted Corporate EBITDA (22.5% for Mr. Taride).

 

28     Hertz Global Holdings, Inc. 2017 Proxy Statement  (Hertz Logo)

 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

28% of total 2016 equity award based on Relative EBITDA Margin (22.5% for Mr. Taride).

 

14% of total 2016 equity award based on NPS improvement for a select group of our customers (15% for Mr. Taride).

 

Use of Stock Options to Drive the Company’s Stock Performance: Stock options were issued in the first quarter of 2016 in an approximate amount equal to the other 30% of each NEO’s annual long-term equity award (other than Mr. Taride who did not receive options). Options vest on the third anniversary of the date of grant and expire seven years after the date of grant. The use of stock options reflects the Compensation Committee’s view that stockholder interests are best advanced at this time with a stock incentive that only provides value when the price of the Company’s common stock increases and, because the stock options expire seven years after grant, requires that price improvement occur in the short- to medium-time frame. In addition, the three year cliff vesting helps aid in retention of our executive officers.

 

Use of RSUs to Provide an Alternative Incentive Package: 40% of Mr. Taride’s 2016 equity award consisted of RSUs, which are eligible to vest three years following the date of grant.

 

The below charts summarize the mix of equity awards granted in 2016.

 

 (PIE CHART)

 

Continued Use of PSUs with 3-Year Structure: The Compensation Committee elected to modify the 3-year vesting structure compared to the 2015 award structure. In 2015, the Compensation Committee elected to use a structure where 1/3 of the total award could be earned each year based on 2015, 2016 and 2017 performance and the vesting of each 1/3 tranche would occur on an all-or-nothing basis (which was subsequently modified as detailed below). In 2016, the Compensation Committee kept the three year structure, but elected to use features whereby a participant could both earn and “lock in” up to 25% of the target award based on 2016 performance, earn and “lock in” up to 50% of the target award based on combined 2016-2017 performance and earn and “lock in” up to 150% of the target award based on combined 2016-2018 performance. Awards, if earned, will vest at the conclusion of the 3-year performance period.

 

(Hertz logo) Hertz Global Holdings, Inc. 2017 Proxy Statement     29

 

 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

Mechanics of 3-Year Structure:

 

2016 Performance Period: Up to 25% of the target award can be earned for 2016 performance. The Compensation Committee will compare 2016 performance to 2016 goals for each performance metric. Anywhere from 0% to 25% of the 2016 target award can be earned.

 

2016-2017 Combined Performance Period: Up to 50% of the target award can be earned for combined 2016-2017 performance. The Compensation Committee will compare combined 2016- 2017 performance to combined 2016-2017 goals for each performance metric. Anywhere from 0% to 50% of the 2016 target award can be earned for combined 2016-2017 performance. If combined 2016-2017 performance exceeds 2016 performance, then additional PSUs can be earned.

 

2016-2018 Combined Performance Period: Up to 150% of the target award can be earned for combined 2016-2018 performance. The Compensation Committee will compare combined 2016- 2018 performance to combined 2016-2018 goals for each performance metric. Anywhere from 0% to 150% of the 2016 target award can be earned for combined 2016-2018 performance. If combined 2016-2018 performance exceeds 2016 or combined 2016-2017 performance, then additional PSUs can be earned. The only method to earn in excess of the target 2016 award (up to 150%) is through meeting or exceeding the maximum goals set for the combined 2016-2018 performance period.

 

The award structure is summarized below.

 

(BAR CHART) 

 

2016 PSU Performance Elements

 

The Compensation Committee set goals for each of Adjusted Corporate EBITDA, Relative EBITDA Margin and Customer Satisfaction for the PSUs. The Compensation Committee then measured our performance against each of the goals to determine how many of the PSUs were earned for 2016 performance. The target level for each of Adjusted Corporate EBITDA and Customer Satisfaction was based upon our business plan for 2016 and general business considerations for 2017 and 2018.

 

30     Hertz Global Holdings, Inc. 2017 Proxy Statement (Hertz Logo)

 

 

 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

Calculation of the PSUs Earned-Targets and Results

 

The following were the fiscal 2016 financial performance criteria targets set by the Compensation Committee and our performance as compared to such targets (dollars in millions):

 

2016 PSU Performance Elements
    Adjusted
Corporate EBITDA
Relative
EBITDA Margin
Customer
Satisfaction
Threshold(1)   $899 –50 bp +0.5
Target(2)   $1,058 +100 bp +0.8
Actual Results   $553 –340 bp +4.0
Payout Results(3)   $537 –358 bp +4.0
Payout Factor   0% 0% 100%
PSUs Earned   0% 0% 100%

 

 

 

(1)Any Adjusted Corporate EBITDA, Relative EBITDA Margin or Customer Satisfaction results that equal the threshold receive a 50% multiplier. Any Adjusted Corporate EBITDA, Relative EBITDA Margin or Customer Satisfaction results that are below the threshold receive a 0% multiplier.

 

(2)Any Adjusted Corporate EBITDA, Relative EBITDA Margin or Customer Satisfaction results that are equal to or above the target performance level receive a 100% multiplier for 2016.

 

(3)Payout results for Adjusted Corporate EBITDA include a $16 million reduction which represents items that impacted the actual results that were not included in the target. The adjustments were agreed to between the Company’s management and the Compensation Committee. Payout results for Relative EBITDA Margin were determined using the payout results for Adjusted Corporate EBITDA.

 

For performance criteria, linear interpolation was used to determine the multiplier for results that were between the threshold and target performance level.

 

Based on the results for 2016, the NEOs did not earn any of the PSUs based on Adjusted Corporate EBITDA or Relative EBITDA Margin and earned 100% of the Customer Satisfaction PSUs eligible to be earned for 2016. Due to the “lock-in” feature, Messrs. Kennedy and Best locked in 5% of the target award made in 2016 and Mr. Taride locked in 6.25% of the target award made in 2016. The NEOs will have the ability to earn the awards not earned in 2016 through meeting goals for the combined 2016-2017 performance period and combined 2016- 2018 performance period. Both Messrs. Tague and Foland forfeited their 2016 awards in connection with their separation from the Company. The number of awards earned and subject to vesting after the 2016-2018 performance period are as follows, subject to increase as discussed in this section:

 

Name 2016
Adjusted
Corporate
EBITDA
PSUs eligible
to earn
2016
Relative
EBITDA
Margin PSUs
eligible to
earn
2016
Customer
Satisfaction
PSUs
eligible to
earn
2016 Adjusted
Corporate
EBITDA and
Relative
EBITDA Margin
PSUs earned
2016
Customer
Satisfaction
PSUs
earned
Total
2016
PSUs at
Target
2016 PSUs
Earned
as a % of
2016 Target
PSUs
Mr. Kennedy 3,291 3,291 1,645 0 1,645 32,906 5%
Mr. Best 2,401 2,401 1,201 0 1,201 24,012 5%
Mr. Taride 2,287 2,287 1,525 0 1,525 24,393 6.25%

 

(HERTZ LOGO) 

Hertz Global Holdings, Inc. 2017 Proxy Statement     31

  

 

 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

PSUs Granted in 2015—Alignment with 2016 PSU Structure

 

Original Structure of 2015 Awards—Adjusted Corporate EBITDA Design

 

In 2015, the Compensation Committee granted PSUs to the NEOs and, as part of the performance structure, set Adjusted Corporate EBITDA goals for 2015, 2016 and 2017. As originally structured, 1/3 of the award granted in 2015 would be earned based on achievement of 2015 Adjusted Corporate EBITDA goals, 1/3 of the award granted in 2015 would be earned based on achievement of 2016 Adjusted Corporate EBITDA goals and 1/3 of the award granted in 2015 would be earned based on achievement of 2017 Adjusted Corporate EBITDA goals. Each year, the award would be earned on an “all or nothing” basis. The executive officers did not earn any of the PSUs based on 2015 Adjusted Corporate EBITDA performance, but would have the opportunity to earn the remaining awards based on 2016 Adjusted Corporate EBITDA and 2017 Adjusted Corporate EBITDA performance.

 

Revised Structure of 2015 Awards—Aligning Goals with 2016 PSU Design

 

In 2016, in consultation with management and in connection with the Spin-Off, the Compensation Committee elected to modify the performance metrics for the remaining 2/3 of the total PSU award granted in 2015. Instead of the entire award being tied to Adjusted Corporate EBITDA, the Compensation Committee modified the 2016 and 2017 performance goals to match the general structure of PSUs granted in 2016.

 

40% of the remaining PSUs will be earned based on Adjusted Corporate EBITDA (37.5% for Mr. Taride),

 

40% of the remaining PSUs will be earned based on Relative EBITDA Margin (37.5% for Mr. Taride) and

 

20% of the remaining PSUs will be earned based on NPS improvement for a select group of our customers (25% for Mr. Taride).

 

40% of the remaining 2015 PSUs can be locked in based on 2016 performance, and 100% of the remaining 2015 PSUs can be locked in based on 2-year cumulative 2016-2017 performance.

 

To earn PSUs for 2016 performance, the NEOs needed to achieve the same performance goals as outlined above for the 2016 PSUs. Based on the results for 2016, the NEOs did not earn any of the PSUs based on Adjusted Corporate EBITDA or Relative EBITDA Margin and earned 100% of the Customer Satisfaction PSUs eligible to be earned for 2016. Due to the “lock-in” feature, Messrs. Kennedy and Best locked in 8% of the total award and Mr. Taride locked in 10% of the total award. The NEOs will have the ability to earn the awards not earned in the 2016 performance period through meeting goals in the combined 2016-2017 performance period. Both Messrs. Tague and Foland forfeited their 2015 awards in connection with their separation from the Company. Pursuant to the revisions discussed above, we recorded additional compensation expense which is detailed in the 2016 Summary Compensation Table below.

 

Policies on Timing of Equity Awards

 

It is the Company’s general practice to not issue equity awards with a grant date that occurs during regularly scheduled blackout periods. However, we have as a general practice granted equity awards in the first week of each month in connection with new hires, promotions, special recognition or other special circumstances, which may be during blackout periods. It is also the Company’s general practice to not determine the number of equity awards based on market conditions prior to the date on which the equity award is approved. It is also the Company’s policy for the exercise price of stock options to be the closing price of the Company’s stock the day before the date of such grant. We generally grant equity awards to our senior executives in the first quarter of the fiscal year following the release of earnings.

 

32     Hertz Global Holdings, Inc. 2017 Proxy Statement

 (HERTZ LOGO)

 

 

 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

Other Compensation Elements

 

Retirement Benefits

 

We maintain a qualified defined contribution plan (which substantially all of our U.S.-based employees can participate in) and a non-qualified deferred compensation program, both of which our NEOs, other than Mr. Taride, are eligible to participate in, as described under “Pension Benefits” below. We maintain the non-qualified deferred compensation plan for select executives to provide for retirement benefits that cannot be provided under the qualified defined contribution plan due to the Code limitations on compensation that can be taken into account.

 

We also maintain a post-retirement assigned car benefit plan under which we provide certain senior executives who, at the time of retirement, are at least 58 years old and have been an employee of the Company for at least 20 years, with a car from our fleet and insurance on the car for the participant’s benefit. We maintain this benefit to promote retention of executives and in recognition of an executive’s term of service. As of December 31, 2016, only Mr. Taride satisfied the minimum service and minimum age requirement for participation in the plan among the NEOs.

 

Perquisite Policy

 

We provide perquisites and other personal benefits to our NEOs that we and our Compensation Committee believe are reasonable and consistent with our overall compensation program to better enable us to attract and retain superior employees for key positions. We use corporate aircraft for the purpose of encouraging and facilitating business travel by our senior executives (primarily our CEO) and directors, generally for travel in the United States and, less frequently, internationally. In addition, our CEO uses corporate aircraft for personal air travel for efficiency and security purposes.

 

Our Compensation Committee regularly reviews aircraft usage by the NEOs and the expenses associated with such usage. Any attributed costs of these personal benefits for the CEO for the fiscal year ended December 31, 2016 are included in the “All Other Compensation” column of the Summary Compensation Table. The Compensation Committee periodically reviews our perquisite policies as required.

 

Employment and Severance Arrangements

 

The Company has adopted a severance plan (the “Severance Plan for Senior Executives”) and entered into change in control agreements (“Change in Control Agreements”), which cover all NEOs who are currently employed by us. In adopting these arrangements, it was the intention of the Company to provide security to our senior executives in the event of a loss of employment that was generally consistent with the terms of arrangements provided by our peer companies.

 

The Severance Plan for Senior Executives provides payments and benefits to the covered executives in the event of certain other qualifying terminations of their employment (other than in connection with a change in control of the Company) and the Change in Control Agreements provide payments and benefits to the covered executives in the event of certain qualifying terminations of their employment following a change in control of the Company. The terms of the Severance Plan for Senior Executives and the Change in Control Agreements are described in “Severance Plan, Employment and Separation Arrangements and Change in Control Agreements.”

 

Our Policy and Practices for Recovering Bonuses in the Event of a Restatement

 

The Company maintains a clawback policy to promote responsible risk management and to help ensure that the incentives of our management are aligned with those of the Company’s stockholders. The clawback policy applies to all of our employees who are at the director level and above, including our NEOs, and covers:

 

All annual incentives (including awards under the Senior Executive Bonus Plan),

 

Long-term incentives,

 

(HERTZ LOGO) 

Hertz Global Holdings, Inc. 2017 Proxy Statement     33

 

 

 

  

COMPENSATION DISCUSSION AND ANALYSIS

 

Equity-based awards (including awards granted under the 2016 Omnibus Plan), and

 

Other performance-based compensation arrangements.

 

The policy provides that a repayment obligation is triggered if there an employee receives compensation based on financial results and there is a restatement of such financial results during the three year period after which such compensation was paid. If triggered, the employee must repay or forfeit all or any portion of such compensation that would not have been paid had the applicable financial results been reported accurately.

 

In addition, the Company’s equity award agreements contain clawback provisions. The Company’s clawback policy and any related plans or award agreements will be further revised, to the extent necessary, to comply with any rules promulgated by the SEC pursuant to Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

 

Stock Ownership Guidelines and Hedging Policy

 

Stock Ownership Guidelines

 

The Company has stock ownership guidelines for our senior executives and non-employee directors. The guidelines establish the following target ownership levels:

 

Equity equal to five times base salary for our CEO;

 

Equity equal to three times base salary for our CFO, senior executive vice presidents and business unit presidents;

 

Equity equal to two times base salary for our other executive officers (as designated under Section 16 of the Exchange Act); and

 

Equity equal to five times annual cash retainer for non-employee directors.

 

Senior executives and non-employee directors have five years from the date of their employment or election to the Board to reach the target ownership levels. Senior executives subject to the guidelines are permitted to count towards the target ownership levels shares owned outright or in trust, shares owned through the Company’s Employee Stock Purchase Plan, the approximate after-tax value of unvested RSUs (i.e., 50% of unvested RSUs) and the approximate after-tax value of PSUs if the performance criteria has been met, even if the service requirement has not been met (i.e., 50% of PSUs if performance criteria is met). Non-employee directors are permitted to count towards the target ownership levels shares owned outright or in trust and the approximate after-tax value of phantom shares (i.e., 50% of phantom shares).

 

Pledging and Hedging Policy

 

The Company has a policy to prohibit employees and directors from entering into any type of arrangement, contract or transaction which has the effect of pledging shares or hedging the value of the Company’s common stock.

 

34     Hertz Global Holdings, Inc. 2017 Proxy Statement

 (HERTZ LOGO)

 

 

 

  

COMPENSATION DISCUSSION AND ANALYSIS

 

Tax and Accounting Considerations

 

Section 162(m) of the Code disallows public companies from taking a federal tax deduction for compensation in excess of $1 million paid to certain of their executive officers, excluding performance-based compensation that meets the requirements of the statute. Our Compensation Committee reviews and considers the deductibility of executive compensation under Section 162(m) of the Code. The performance-based awards under the 2016 Omnibus Plan and any EICP payments that the executive officers have earned have been paid under the Senior Executive Bonus Plan are generally designed to qualify as tax-deductible under Section 162(m) of the Code. When appropriate, our Compensation Committee intends to preserve deductibility under Section 162(m) of the Code of compensation paid to our NEOs. However, changes in tax laws (and interpretations of those laws), as well as other factors beyond our control, may affect the deductibility of executive compensation. Further, in certain situations, our Compensation Committee may exercise its business judgment to approve compensation that will not meet these requirements in order to achieve specific business objectives, to attract and retain qualified senior executives or to ensure the total compensation for our NEOs is consistent with the policies described above.

 

(HERTZ LOGO) 

Hertz Global Holdings, Inc. 2017 Proxy Statement     35

 

 

 

 

COMPENSATION COMMITTEE REPORT

 

COMPENSATION COMMITTEE REPORT

 

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis included in this proxy statement with members of management. Based on that review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.

 

  THE COMPENSATION COMMITTEE
Daniel A. Ninivaggi, Chair
David A. Barnes
Carolyn N. Everson

 

36     Hertz Global Holdings, Inc. 2017 Proxy Statement

 (HERTZ LOGO)

 

 

 

 

SUMMARY COMPENSATION TABLE

 

2016 SUMMARY COMPENSATION TABLE

 

The following table, or the “Summary Compensation Table,” summarizes the compensation earned in each of the fiscal years noted by our NEOs. Compensation for 2014 and 2015 was paid by former Hertz Holdings while compensation in 2016 was paid by former Hertz Holdings or the Company.

 

Name and Principal Position  Year  Salary
($)
 

Bonus

($)

  Stock Awards(1)(2)
($)
  Option Awards(1)
($)
  Non-Equity Incentive Plan Compensation
($)
  Change in Pension Value and Nonqualified Deferred Compensation Earnings(3)
($)
  All Other Compensation(4)
($)
  Total
($)
John P. Tague  2016   1,450,000      2,099,996   1,256,278          271,077  5,077,351
Former Chief Executive Officer  2015   1,450,000   1,305,000   7,294,000   3,160,500          134,915  13,344,415
  2014   145,000   108,750      3,571,000          51,764  3,876,514
Thomas C. Kennedy  2016   754,808      1,637,934   555,000          18,114  2,965,856
Chief Financial Officer  2015   697,539   945,000   1,959,112   2,000,001          16,505  5,618,157
   2014   660,000   326,835   1,607,239      280,500       537,226  3,411,800
Jeffrey T. Foland  2016   850,000      1,728,481   555,000          32,221  3,165,702
Former Chief Revenue Officer  2015   800,962   2,647,500   9,906,040   2,500,004          171,768  16,026,274
Tyler A. Best  2016   600,000      1,215,193   404,999          82,529  2,302,721
Chief Information Officer  2015   553,846   2,780,000   1,543,625   1,600,002          78,648  6,556,121
Michel Taride(5)  2016   533,341      1,740,023          693,550   92,263  3,059,177
Group President,  2015   591,710      800,007   800,007   319,819       104,764  2,616,307
Rent A Car International  2014   633,322      1,315,004      59,638    663,898   68,809  2,740,671

 

 

 

(1)The value for each of the years in this Summary Compensation Table reflects the full grant date fair value. These amounts were computed pursuant to FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in the note entitled “Stock-Based Compensation” in the notes to our Company’s consolidated financial statements in our 2016 Annual Report. Vesting of the PSUs granted in 2016 were subject to our achievement of certain pre-determined financial performance and operational goals during 2016. The “Stock Awards” column above reflects the grant date fair values of the target number of PSUs that were eligible to vest based on our financial performance goals for 2016–2018, which for accounting purposes is the probable outcome (determined as of the grant date) of the performance-based condition applicable to the grant. Assuming the maximum level of performance achievement (150% of target), the PSU total values for each NEO in 2016 are, respectively: Mr. Tague, $2,925,001, Mr. Kennedy, $1,803,755; Mr. Foland, $1,803,755; Mr. Best, $1,316,251 and Mr. Taride, $1,319,995.
  
(2)The amounts shown for Messrs. Kennedy, Foland, Best and Taride reflect the incremental increase in the fair value of outstanding awards as calculated under FASB ASC Topic 718 due to modification of PSUs awarded in 2015. In addition to the grant date fair value of awards shown in “2016 Grant of Plan-Based Awards” below, Mr. Kennedy’s amount reflects an increase of $342,932, Mr. Foland’s amount reflects an increase of $433,479, Mr. Best’s amount reflects an increase of $270,195 and Mr. Taride’s amount reflects an increase of $140,033.
  
(3)Amounts include annual changes in the actuarial present value of accumulated pension benefits. The present value was determined using the same assumptions applicable for valuing pension benefits for purposes of our Company’s financial statements. See the note entitled “Employee Retirement Benefits” in the notes to our consolidated financial statements in our 2016 Annual Report. Mr. Taride’s pension value did not increase in 2015. The change in his pension value was $(638,750) (translated in accordance with footnote 5 of this table) for 2015.

 

 (Hertz Logo) Hertz Global Holdings, Inc. 2017 Proxy Statement     37

  

 

 

 

SUMMARY COMPENSATION TABLE

 

(4)Includes the following for 2016:

 

Name  Personal Use of Aircraft (a)   Personal Use of Car (b)   Other (c)   Perquisites Subtotal   Life Insurance Premiums   Company Match on Plans(d)   Relocation (e)   Tax Assistance (f)   Other (g)   Total Perquisites and Other Compensation 
Mr. Tague   160,472    28,840        189,312    350    58,000    20,553    2,862        271,077 
Mr. Kennedy   6,851    9,938        16,789    1,325                    18,114 
Mr. Foland       15,580        15,580    807        9,192    6,642        32,221 
Mr. Best       19,604    18,030    37,634    295    44,600                82,529 
Mr. Taride       4,672    1,344    6,016    3,288                82,959    92,263 

 

 

 

(a)Based on the direct costs of aircraft for each hour of personal use, which is based on the incremental cost of fuel, crew expenses, on-board catering and other, small variable costs. We exclude fixed costs which do not change based on usage from this calculation.
  
(b)This amount reflects the cost of depreciation and interest, if applicable for company-provided cars.
  
(c)For Mr. Best, reflects the incremental cost related to lodging and transportation expenses for travel between Mr. Best’s home in Michigan and the Company’s technology operations in Oklahoma City. For Mr. Taride, reflects financial planning assistance.
  
(d)Amounts represents for Mr. Tague, $10,600 Company match on the 401(k) plan and $47,400 match on the deferred compensation plan and for Mr. Best $44,600 match on the deferred compensation plan.
  
(e)Amount represents the incremental costs to the Company for relocation assistance.
  
(f)Amount represents tax assistance for relocation assistance.
  
(g)For Mr. Taride, this reflects $20,791 in medical payments and $40,930 in payments we made to Mr. Taride in lieu of pension contributions not allowed in excess of legal maximums.

 

(5)Amounts for Mr. Taride have been converted from pounds sterling to U.S. dollars at the 12-month average rate of 1.34409 for 2016, 1.52811 for 2015 and 1.64739 for 2014.

 

38     Hertz Global Holdings, Inc. 2017 Proxy Statement (Hertz Logo)

 

 

 

 

EXECUTIVE COMPENSATION

 

2016 Grants of Plan-Based Awards

 

The following table sets forth, for each NEO, possible payouts under all non-equity incentive plan awards granted in 2016, all grants of PSUs, stock options and RSUs in 2016 and the grant date fair value of all such awards. All of the equity awards granted in 2016 were granted under the 2008 Omnibus Plan and in connection with the Spin-Off, were converted to the 2016 Omnibus Plan.

                                   
       

Estimated future payouts

under non-equity

incentive plan awards(1)

   

Estimated future payouts

under equity

incentive plan awards

   

All

Other

Stock

   

All

Other

Option

   

Exercise

Price of

Option

   

Grant Date

Fair Value

of Stock

 
Name 

Grant

Date

   

Threshold

($)

   

Target

($)

   

Max

($)

   

Threshold

(#)

   

Target

(#)

   

Max

(#)

   

Awards

(#)

   

Awards

(#)

   

Awards

($/Sh.)

   

Awards(2)

($)

 
John P. Tague(3)         2,175,000   3,480,000                          
Stock Options(4)  3/3/2016                               314,101    9.93    1,256,278
EBITDA PSUs(5)  3/3/2016               52,870   105,740   158,610               1,049,998 
EBITDA Margin PSUs(5)  3/3/2016               30,212   60,423   90,635               600,000 
NPS PSUs(5)(6)  3/3/2016               22,659   45,317   45,317               449,998 
Thomas C. Kennedy         1,046,250   1,674,000                             
Stock Options(4)  3/3/2016                               138,764   9.93   555,000 
EBITDA PSUs(5)  3/3/2016               32,603   65,206   97,809               647,496 
EBITDA Margin PSUs(5)  3/3/2016               18,631   37,261   55,892               370,002 
NPS PSUs(5)(6)  3/3/2016               13,973   27,946   27,946               277,504 
Jeffrey T. Foland(3)         1,147,500   1,360,000                             
Stock Options(4)  3/3/2016                               138,764   9.93   555,000 
EBITDA PSUs(5)  3/3/2016               32,603   65,206   97,809               647,496 
EBITDA Margin PSUs(5)  3/3/2016               18,631   37,261   55,892               370,002 
NPS PSUs(5)(6)  3/3/2016               13,973   27,946   27,946               277,504 
Tyler A. Best         600,000   900,000                             
Stock Options(4)  3/3/2016                               101,260   9.93   404,999 
EBITDA PSUs(5)  3/3/2016               23,792   47,583   71,375               472,499 
EBITDA Margin PSUs(5)  3/3/2016               13,595   27,190   40,785               269,997 
NPS PSUs(5)(6)  3/3/2016               10,197   20,393   20,393               202,502 
Michel Taride         645,163   1,032,261                             
EBITDA PSUs(5)  3/3/2016               24,169   48,338   72,507               479,996 
EBITDA Margin PSUs(5)  3/3/2016               12,085   24,169   36,254               239,998 
NPS PSUs(5)(6)  3/3/2016               12,085   24,169   24,169               239,998 
RSUs(7)  3/3/2016                           64,451           639,998 

 

 

 

(1)The amounts in these columns include the “Target” amount for each NEO eligible to receive an award under the EICP at 100% of the target award and the “Maximum” amount for the maximum amount payable to each NEO. The EICP payments are based on API, Relative EBITDA Margin and Customer Satisfaction. The Senior Executive Bonus Plan, under which EICP payments are made, limits the maximum cash incentive bonus payout for our CEO and other participants. The limit is 1% of our Gross EBITDA for a performance period for our CEO and 0.5% of our Gross EBITDA for a performance period for other participants. For 2016, 1% of our Gross EBITDA was $30.2 million and 0.5% of our Gross EBITDA was $15.1 million. The Compensation Committee used its negative discretion not to pay bonuses in 2016. We discuss these awards under the heading “Compensation Discussion and Analysis — Annual Cash Compensation — Annual Cash Incentive Program (EICP).”
(2)Represents the aggregate grant date fair value, computed pursuant to FASB ASC Topic 718. Please see the note entitled “Stock-Based Compensation” in the notes to the Company’s consolidated financial statements in our 2016 Annual Report for a discussion of the assumptions underlying these calculations.
(3)In connection with Messrs. Tague’s and Foland’s separation from the Company and Hertz, Messrs. Tague and Foland were not awarded a bonus and all of the equity awards granted in 2016 were not earned and did not vest.
(4)Time-vested stock options were granted to each NEO other than Mr. Taride. The options will vest 100% on the third anniversary of the date of grant, subject to continued employment. The stock options were granted under the 2008 Omnibus Plan and in connection with the Spin-Off were converted to the 2016 Omnibus Plan. As a result of the Spin-Off, the number and strike price for the stock options were adjusted to reflect to the intrinsic value of the awards following the Spin-Off and are summarized below in the “2016 Outstanding Equity Awards at Year-End” Table.
(5)As described in the “Compensation Discussion and Analysis” above, the amount of PSUs eligible for vesting is subject in part to our achievement of financial performance and operational performance goals during the 2016-2018 performance period. Based on 2016 Adjusted Corporate EBITDA, Relative EBITDA Margin and Customer Satisfaction performance, 5% (for Messrs. Kennedy and Best) and 6.25% (for Mr. Taride) of the PSUs granted in 2016 were earned, but will vest, if at all, only at the conclusion of the performance period. Additional PSUs may be earned in 2017 for combined 2016-2017 performance and in 2018 for combined 2016-2018 performance. PSUs were granted under the 2008 Omnibus Plan and in connection with the Spin-Off, were converted to the 2016 Omnibus Plan. As a result of the Spin-Off, the number of PSUs were adjusted to reflect to the intrinsic value of the awards following the Spin-Off and are summarized below in the “2016 Outstanding Equity Awards at Year-End” Table.
(6)In connection with the Spin-Off, the Compensation Committee modified the maximum performance payout for the NPS PSUs. If the NEOs achieve NPS performance goals during the combined 2016-2018 period, they can earn 150% of the target PSUs. No incremental compensation expense was recorded in connection with this change.
(7)RSUs were granted to Mr. Taride. The RSUs will vest 100% on the third anniversary of the date of grant, subject to continued employment. RSUs were granted under the former Hertz Holdings’ 2008 Omnibus Plan and in connection with the Spin-Off, were converted to the 2016 Omnibus Plan. As a result of the Spin-Off, the number of RSUs were adjusted to reflect to the intrinsic value of the awards following the Spin-Off and are summarized below in the “2016 Outstanding Equity Awards at Year-End” Table.

 

 (Hertz Logo) Hertz Global Holdings, Inc. 2017 Proxy Statement     39

  

 

 

 

EXECUTIVE COMPENSATION

 

2016 Outstanding Equity Awards at Year-End

 

The following table sets forth, for each NEO, details of all equity awards outstanding on December 31, 2016. All of the equity awards reported below were originally granted under the 2008 Omnibus Plan and in connection with the Spin-Off were converted to the 2016 Omnibus Plan.

 

   Option Awards   Stock Awards  
Name 

Number of

securities

underlying

unexercised

options

Exercisable

(#)

    

Number of

securities

underlying

unexercised

options

Unexercisable

(#)

  

Number of

 securities

underlying

unexercised

 unearned

options

 (#) 

 

Option

exercise

price

($)

   

Option

expiration

date

  

Number of

shares or

units of

stock that

have not

vested

(#)

   

Market

value of

shares

or units

of stock

that

have

not

vested(1)

($)

   

Number of

unearned

shares,

units or

other

rights

that have

not vested

(#)

    

Market or

payout

value of

unearned

shares,

units or

other rights

that have

not vested(1)

($)

 
John P. Tague  126,168(2)          90.16   12/31/2019                   
        126,168(3)     90.16   6/30/2020                   
        79,529(4)     39.36   3/3/2023                   
                               88,317(5)   1,904,115  
                               32,019(4)(9)   690,330  
Thomas C. Kennedy  17,636    52,908(6)     85.29   1/20/2020                   
        35,015(7)     39.36   3/3/2023                   
                               9,381(8)   202,254  
                               19,744(9)   425,681  
Jeffrey T. Foland  17,594    70,377(6)     84.34   2/28/2020                   
        35,015(7)     39.36   3/3/2023                   
                       44,467(10)   958,709           
                               11,859(8)   255,680  
                               19,744(9)   425,681  
Tyler A. Best  18,970    37,942(6)     86.60   2/25/2020                   
        25,551(7)     39.36   3/3/2023                   
                               7,392(8)   159,372  
                               14,408(9)   310,636  
Michel Taride  8,015           38.45   3/4/2020                   
   10,879           57.86   3/1/2021                   
   6,422    19,267(6)     93.09   2/17/2020                   
                       16,263(11)   350,630           
                               3,990(8)   86,024  
                               15,246(9)   328,704  

 

 

 

(1)Based on the closing market price of the Company’s common stock on December 31, 2016 of $21.56.
(2)These options represent the Transition Options granted to Mr. Tague and vested on December 31, 2015.
(3)These options represent the Performance Options granted to Mr. Tague as in 2015. Under the terms of Mr. Tague’s separation agreement, these Performance Options vested on January 2, 2017.
(4)These options and PSUs were granted in 2016 and were forfeited under the terms of Mr. Tague’s separation agreement on January 2, 2017.
(5)These awards represent the PSUs granted to Mr. Tague as in 2015 and are reported at target. Under the terms of Mr. Tague’s separation agreement, 60,174 of these PSUs vested on January 2, 2017.
(6)These options were awarded in 2015 and vest for Mr. Kennedy 25% on each anniversary of the date of grant, for Mr. Best 33% on each anniversary of the date of grant, and for Mr. Taride 25% on each anniversary of the date of grant subject to continued employment. The first tranche of each award vested in the first quarter of 2016. For Mr. Foland, 35,188 options vested on January 19, 2017 and the remaining unvested options were forfeited when Mr. Foland separated from the Company.
(7)These options were awarded in 2016 and will vest on the third anniversary of the date of grant subject to continued employment. For Mr. Foland, all of the remaining options were forfeited when Mr. Foland separated from the Company.
(8)The awards reported include the grants of PSUs made in 2015. As discussed above under “Long Term Equity Incentives—PSUs Granted in 2015— Alignment with 2016 PSU Structure”, the performance conditions for the remaining 2015 PSUs were changed in 2016 and will be earned and vest, if at all, based on locked in 2016 performance or combined 2016-2017 performance. The remaining grants are reported at target for the NPS PSUs and threshold for the Adjusted Corporate EBITDA PSUs and EBITDA Margin PSUs. Mr. Foland forfeited the PSUs granted in 2015 upon separation from the Company.
(9)The awards reported include the grants of PSUs made in 2016. As discussed above under “Long-Term Equity Incentives—Summary of 2016 Award Structure”, the 2016 PSUs will be earned and vest, if at all, based on locked in 2016 performance, combined 2016-2017 performance or combined 2016- 2018 performance. The grants are reported at target for the NPS PSUs and threshold for the Adjusted Corporate EBITDA PSUs and EBITDA Margin PSUs. Messrs. Tague and Foland forfeited the PSUs granted in 2016 upon separation from the Company.
(10)The awards reported for Mr. Foland include RSUs which were granted in 2015. Under the terms of Mr. Foland’s separation agreement, the RSUs vested on February 28, 2017.
(11)These awards represent RSUs granted to Mr. Taride in 2016. The RSUs will vest on the third anniversary of the date of grant subject to continued employment.
   

40     Hertz Global Holdings, Inc. 2017 Proxy Statement (Hertz Logo)

 

 

 

 

EXECUTIVE COMPENSATION

 

2016 Option Exercises and Stock Vested

 

The following table sets forth, for each NEO, details of any awarded stock options that were exercised and any stock awards that vested in 2016.

 

  Option Awards   Stock Awards
Name Number of
shares
acquired on
exercise
(#)
  Value
realized
on exercise
($)
  Number of
shares
acquired on
vesting
(#)
  Value
realized
on vesting
($)
John P. Tague      
Thomas C. Kennedy     3,467   83,832
Jeffrey T. Foland     44,467   2,245,584
Tyler A. Best      
Michel Taride      

 

Pension Benefits

 

Effective as of December 31, 2014, we stopped providing future benefit accruals under the following plans (the “Previous Plans”):

 

The Hertz Corporation Account Balance Defined Benefit Pension Plan;

 

The Hertz Corporation Benefit Equalization Plan, or “BEP”; and

 

The Hertz Corporation Supplemental Executive Retirement Plan, or “SERP II.”

 

To replace the Previous Plans, we offered our employees, including the NEOs (other than Mr. Taride), participation in a revised defined contribution plan. Beginning January 1, 2015 the Company increased employer contributions under the Company’s qualified 401(k) savings plan (the “401(k) Plan”) to provide that eligible participants under the 401(k) Plan are eligible to receive a matching employer contribution to their 401(k) Plan account equal to (i) 100% of employee contributions (up to 3% of compensation) made by such participant and (ii) 50% of employee contributions (up to the next 2% of compensation), with the total amount of such matching employer contribution to be completely vested, subject to applicable limits under the Code on compensation that may be taken into account. For a transition period, certain eligible participants under the 401(k) Plan received additional employer contribution amounts to their 401(k) Plan account depending on their years of service and age.

 

In connection with the replacement of the Previous Plans and the revision of the 401(k) Plan, we adopted a deferred compensation plan, The Hertz Corporation Supplemental Income Savings Plan (the “Savings Plan”), which provides eligible employees, including the NEOs (other than Mr. Taride), the opportunity to defer part of their compensation. The Savings Plan is a deferred compensation plan that provides benefits that cannot be provided in the 401(k) Plan due to Code limitations on compensation. For any deferral elections, the Company will match an amount generally equal to (i) 100% of employee contributions (up to 3% of the compensation that cannot be taken into account under the 401(k) Plan) made by such participant and (ii) 50% of employee contributions (up to the next 2% of compensation that cannot be taken into account under the 401(k) Plan). For a transition period, certain eligible participants under the Savings Plan received additional employer contribution amounts to their Savings Plan account depending on their years of service and age. The match under the Savings Plan is in addition to the match under the 401(k) Plan. The total match that any participant may receive under the 401(k) Plan and the Savings Plan (other than with respect to transition credits) may not exceed the maximum 4% match.

 

 (HERTZ LOGO) Hertz Global Holdings, Inc. 2017 Proxy Statement 41

 

 

  

EXECUTIVE COMPENSATION

 

Mr. Taride participates in two retirement plans – the Hertz UK 1972 Pension Plan and the Hertz UK Supplementary Unapproved Pension Scheme, or the “Hertz UK Supplementary Plan.” These two plans provide for, in the case of Mr. Taride, 1/30 of his final salary for each year of service in the plans subject to a maximum of two-thirds of his final salary at the time of his retirement. Under these plans, Mr. Taride has a right to retire at age 60. Due to a transition to a U.K. defined contribution plan in 2011, Mr. Taride is still entitled to his accrued benefits under the plans, but we are no longer providing future benefit accruals.

 

2016 Pension Plan Table

 

The following table sets forth, for Michel Taride, the only NEO who participates in a pension plan, the plans in which he participated in 2016, the number of years of credited service in each such plan he had at December 31, 2016, the present value of the accumulated benefit in each such plan at December 31, 2016 and the payments received from such plan during 2016:

 

Name Plan name Number of
years credited
service
(#)
Present value
of accumulated
benefit(1)
($)
Payments
during last
fiscal year
($)
Michel Taride(2) Hertz UK Pension Plan 11 2,040,329
  Hertz UK Supplemental Plan 11 1,842,747

 

 

 

(1)The present value calculations use the same assumptions (except for retirement and pre-retirement decrements) used for financial reporting purposes and reflect current compensation levels. The assumptions used in the calculations are as follows:

 

Discount Rates —

For the Hertz UK Pension Plan and Hertz UK Supplemental Plan: 3.7% as of December 31, 2014, 3.9% as of December 31, 2015 and 2.7% as of December 31, 2016.

 

Mortality Table = SAPS 2(YOB) CMI 2015.

 

Retirement Age = 60 or current age if older (earliest unreduced retirement age).

 

Pre-retirement Decrements = None assumed.

 

Payment Form = Five year certain and life annuity.

 

Please see the note “Employee Retirement Benefits” in the notes to the Company’s consolidated financial statements in our 2016 Annual Report for a discussion of these assumptions.

 

(2)Amounts for Mr. Taride have been converted from pounds sterling to U.S. dollars at the 2016 12-month average rate of 1.34409. Mr. Taride’s number of actual years of service with us is 31.

 

42 Hertz Global Holdings, Inc. 2017 Proxy Statement  (HERTZ LOGO)

 

 

 

EXECUTIVE COMPENSATION

 

2016 Non-Qualified Deferred Compensation Benefits

 

The following table sets forth, for Messrs. Tague and Best, the only NEOs who participated in the Savings Plan in 2016, the executive contributions, the contributions made by the Company, aggregate earnings (none of which were above market or otherwise preferential) and the aggregate balance on such plans as of December 31, 2016:

 

Name Executive
Contributions
in 2016
($)(1)
Registrant
Contributions
in 2016
($)(2)
Aggregate
Earnings in
2016
($)
Aggregate
Withdrawals/
Distributions
in 2016
($)
Aggregate
Balance as of
December 31,
2016
($)
John P. Tague 59,250 47,400 3,274   109,924
Tyler Best 55,750 44,600 5,330   105,680

 

 

 

(1)The amounts reported for Messrs. Tague and Best in this column are reported under the “Salary” column of the 2016 Summary Compensation table above.

 

(2)The amounts in this column are reported as compensation in the “All Other Compensation” table above.

 

Severance Plan, Employment and Separation Arrangements and Change in Control Agreements

 

The Company and its subsidiaries have entered into employment agreements and Change in Control Agreements with certain key employees, including certain of the NEOs, to recruit them to our Company and promote stability and continuity of senior management. Information about such agreements is set forth below. All of the agreements referred to below are listed in the Exhibit Index to the Company’s 2016 Annual Report.

Severance Plan for Senior Executives

 

The Severance Plan for Senior Executives provides benefits to senior executives whose employment is terminated other than terminations of employment that qualify for benefits under the Change in Control Agreements. Messrs. Tague, Kennedy, Foland, Taride and Best and Ms. Marinello were designated as participants in the Severance Plan for Senior Executives and Messrs. Tague and Foland received benefits under the Severance Plan for Senior Executives in connection with their terminations of employment (as discussed below). If any covered executive is terminated for death, “Cause,” or “Permanent Disability” or the covered executive satisfies the conditions for “Retirement” (as those terms are defined in the Severance Plan for Senior Executives) the executive will not be entitled to any benefits under the Severance Plan for Senior Executives. However, if the covered executive is terminated for any other reason, the executive will be or was entitled to the following payments and benefits:

 

a pro rata portion of the annual bonus that would have been payable to the participant, payable at the same time bonuses are paid to other executives;

 

cash payments in the aggregate equal to a multiple (the “severance multiple”), based on the executive’s position, of the executive’s annual base salary in effect immediately prior to the date of termination and the average of the annual bonuses payable to the executive, with respect to the three calendar years preceding the year in which the termination occurs; or, for executives with a one-year or two-year bonus history, by reference to the average annual bonus amounts for such year or years; or, if an executive has not had an opportunity to earn or be awarded one full year’s bonus as of his or her termination of employment, the executive’s target bonus for the year of termination, payable in equal installments over a period of whole and/or partial years equal to the severance multiple. The severance multiple for Mr. Taride is 2.0 and Messrs. Tague, Kennedy, Foland and Best and Ms. Marinello is 1.5;

 

 (HERTZ LOGO) Hertz Global Holdings, Inc. 2017 Proxy Statement 43

 

 

 

EXECUTIVE COMPENSATION

 

continuation of all medical, health and accident plans (other than disability plans) until the earlier of the end of a number of years following the executive’s termination of employment equal to the severance multiple and the date on which the executive becomes eligible to participate in welfare plans of another employer; and

 

within the period of time from the date of executive’s termination through the end of the year following the date of termination, outplacement assistance up to a maximum of $25,000.

 

Executives must execute a general release of claims to receive the foregoing severance payments and benefits. The Severance Plan for Senior Executives also contains a confidentiality covenant that extends for 24 months following the executive’s termination of employment and non-competition and non-solicitation covenants that extend for a period of years following the executive’s termination of employment equal to the severance multiple.

 

If an executive is entitled to severance payments and benefits under the Severance Plan for Senior Executives and a Change in Control Agreement, payments and benefits will be made under the Change in Control Agreement rather than the Severance Plan for Senior Executives.

 

Employment and Separation Arrangements with John P. Tague

 

Under the employment agreement between Mr. Tague and the Company, Mr. Tague served as CEO of the Company and Hertz and was entitled to an annual base salary of $1,450,000 and a target annual bonus opportunity of 150% of base salary. In addition, Mr. Tague’s employment agreement, as modified by a letter agreement dated March 31, 2015 and a letter agreement dated June 30, 2015, also awarded Mr. Tague 1,000,000 stock options, 500,000 of which vested on December 31, 2015 through Mr. Tague’s successful selection of a management team and presentation of a business plan. The remaining 500,000 options were eligible to vest based on the achievement of revenue efficiency metrics. In addition, on December 1, 2015, we issued Mr. Tague 350,000 PSUs, which were eligible to vest between 0% and 150% of target based on the achievement of the same revenue efficiency metrics as the Performance Options listed in the preceding sentence.

 

On December 12, 2016, the Company and Hertz entered into a separation agreement with Mr. Tague, pursuant to which he resigned from all roles at the Company, Hertz and their subsidiaries effective January 2, 2017. The separation constituted a “Good Leaver Termination” under his employment agreement and a “Qualifying Termination” under the Severance Plan for Senior Executives. Accordingly, in exchange for entering into the separation agreement and being bound by certain restrictive covenants contained therein, Mr. Tague became entitled to (i) a severance payment of $3,678,750, payable in equal installments over the 18-month period following his termination of employment, (ii) continued health and welfare insurance benefits for the 18-month period following his termination of employment or the date on which Mr. Tague becomes eligible for comparable health and welfare benefits through a new employer, whichever is earlier, (iii) vesting of 85,963 of the Performance Options and 60,174 of the PSUs referenced in the preceding paragraph, which vesting was prorated based on the portion of the vesting period elapsed as of the date of Mr. Tague’s termination and based on deemed satisfaction of performance goals at the target level, (iv) certain relocation benefits and (v) reimbursement for legal fees associated with the negotiation of the separation agreement. In addition, Mr. Tague agreed to cooperate with us for a period of 18 months with respect to activities that occurred during his tenure at the Company.

 

Mr. Tague’s employment agreement is filed as exhibit 10.1 to the Form 8-K/A former Hertz Holdings filed on December 22, 2014, Mr. Tague’s letter agreement dated March 31, 2015 is filed as exhibit 10.1 to the Form 8-K former Hertz Holdings filed on April 3, 2015 and Mr. Tague’s letter agreement dated June 30, 2015 is filed as exhibit 10.41 to former Hertz Holdings’ 2014 Form 10-K filed on July 16, 2015. Mr. Tague’s separation agreement is filed as exhibit 10.1 to the Form 8-K the Company filed on December 13, 2016.

 

44     Hertz Global Holdings, Inc. 2017 Proxy Statement (HERTZ LOGO)

 

 

 

 

EXECUTIVE COMPENSATION

 

Employment Arrangements with Kathryn V. Marinello

 

On December 12, 2016 and on March 2, 2017, the Company and Ms. Marinello executed Ms. Marinello’s term sheet and employment agreement, respectively, providing for the terms and conditions of her employment as President and Chief Executive Officer of the Company and Hertz. The employment agreement provides for an annual base salary of $1,450,000, a target annual bonus opportunity of 150% of her annual base salary and sign-on equity awards with a grant date fair value of approximately $5,175,000, allocated 60% in the form of performance options, 10% in the form of restricted shares and 30% in the form of performance shares. The sign-on equity awards are scheduled to vest on December 31, 2019, subject to Ms. Marinello’s continued service through such date and the satisfaction of performance goals related to Adjusted Corporate EBITDA (in the case of the performance options and performance shares) or revenue (in the case of the restricted shares). Ms. Marinello’s sign-on equity awards were granted on March 2, 2017. Following 2017, Ms. Marinello will be eligible to receive equity awards on a basis no less favorable than grants made to other senior executives of the Company. Ms. Marinello also will be eligible to participate in the employee benefit plans offered to other senior executives of the Company. In addition, Ms. Marinello will receive a $10,000 allowance to assist her with shipping personal goods to Florida, a $25,000 payment each January to cover traveling expenses and up to $50,000 to cover expenses incurred in connection with the negotiation of her employment arrangements with the Company.

 

Under the employment agreement, if Ms. Marinello’s employment were terminated involuntarily by the Company without cause, by Ms. Marinello for good reason or due to death or disability, she would be entitled to vesting of any unvested portion of her sign-on equity awards, which vesting would be determined based on actual performance at the end of the performance period and prorated based on the portion of the vesting period elapsed as of the date of her termination. In addition, upon a termination of employment involuntarily by the Company without cause or by Ms. Marinello for good reason, Ms. Marinello will be eligible for severance benefits under the Severance Plan for Senior Executives (with a severance multiple of 1.5).

 

The Change in Control Agreement between the Company and Ms. Marinello is substantially consistent with the Change in Control Agreements between the Company and its other executive officers, except it provides for a severance multiple of 2.5 and provides for a reduction in change in control payments to the extent a reduction would place Ms. Marinello in a more favorable after-tax position. In addition to her benefits under the Change in Control Agreement, any sign-on equity awards that remain outstanding following a change in control would be eligible for full vesting (with the payment of severance benefits subject to Ms. Marinello’s execution of a release of claims in favor of the Company and its affiliates). In addition, the employment agreement provides for restrictions on (i) competition and solicitation of employees and customers, clients and distributors of the Company and its affiliates while employed and for two years following termination of employment for any reason; (ii) disclosure of confidential information while employed and perpetually thereafter and (iii) disparaging the Company and its affiliates while employed and perpetually thereafter.

 

Ms. Marinello’s term sheet is filed as exhibit 10.2 to the Form 8-K the Company filed on December 13, 2016, Ms. Marinello’s employment agreement is filed as exhibit 10.1 to the Form 8-K/A the Company filed on March 7, 2017 and Ms. Marinello’s Change in Control Agreement is filed as exhibit 10.2 to the Form 8-K/A the Company filed on March 7, 2017.

 

Other Named Executive Officers

 

Employment Arrangements with Thomas C. Kennedy

 

On January 20, 2015, former Hertz Holdings and Mr. Kennedy entered into an arrangement whereby it was agreed that (i) Mr. Kennedy’s base salary would be set at $700,000 for 2015, (ii) his target bonus would be set at 135% of his base salary, and (iii) he would receive a 2015 equity award with a value of $4 million. The Compensation Committee, after considering the best interests of the Company, elected to grant Mr. Kennedy

 

(HERTZ LOGO) Hertz Global Holdings, Inc. 2017 Proxy Statement     45

 

 

 

 

EXECUTIVE COMPENSATION

 

$1,850,000 in equity awards in 2016 and Mr. Kennedy’s arrangements provide that he will be eligible for annual equity grants of $2 million thereafter.

 

Mr. Kennedy’s compensation letter is filed as exhibit 10.42 to former Hertz Holdings’ 2014 Form 10-K filed on July 16, 2015.

 

Employment and Separation Arrangements with Jeffrey T. Foland

 

Under the offer term sheet among Mr. Foland, the Company and Hertz, Mr. Foland served as Senior Executive Vice President and Chief Revenue Officer of the Company and was entitled to an annual base salary of $850,000 and an annual bonus opportunity of no less than 135% (target) or 160% (maximum) of base salary. In order to hire and retain Mr. Foland, we agreed to award him 352,444 RSUs in order to compensate him for awards he was forfeiting with his prior employer. 50% of the RSUs vested on July 12, 2016 and 50% were scheduled to vest on January 12, 2018.

 

On February 12, 2017, the Company and Hertz entered into a separation agreement with Mr. Foland, pursuant to which he resigned from all roles at the Company, Hertz and their subsidiaries effective February 28, 2017. The separation constituted a “Qualifying Termination” under the Severance Plan for Senior Executives. Accordingly, in exchange for entering into the separation agreement and being bound by certain restrictive covenants contained therein, Mr. Foland became entitled to (i) a severance payment of $2,135,625, payable in equal installments over the 18-month period following his termination of employment, (ii) continued health and welfare insurance benefits for the 18-month period following his termination of employment or the date on which Mr. Foland becomes eligible for comparable health and welfare benefits through a new employer, whichever is earlier, (iii) vesting of 44,467 of the RSUs discussed above, (iv) a pro-rated 2017 bonus based on the number of days Mr. Foland was employed by the Company in 2017 and based on actual performance, (v) up to $25,000 in outplacement benefits and (vi) reimbursement for legal fees associated with the negotiation of the separation agreement. In addition, Mr. Foland agreed to cooperate with us for a period of 18 months with respect to activities that occurred during his tenure at the Company.

 

Mr. Foland’s term sheet is filed as exhibit 10.40 to former Hertz Holdings’ 2015 Form 10-K filed on February 29, 2016. Mr. Foland’s separation agreement is filed as exhibit 10.1 to the Form 8-K the Company filed on February 10, 2017.

 

Employment Arrangements with Tyler A. Best

 

On December 23, 2014, former Hertz Holdings entered into a term sheet with Mr. Best to serve as Executive Vice President and Chief Information Officer of former Hertz Holdings (and later the Company) and Hertz. Mr. Best’s term sheet provided that he would receive for 2015 and thereafter: (i) an annual base salary of $600,000, (ii) a target annual bonus of no less than 100% of base salary and (iii) a maximum annual bonus of 150% of base salary. The Compensation Committee, after considering the best interests of the Company, elected to grant Mr. Best $1,350,000 in equity awards in 2016 and Mr. Best’s arrangements provide that he will be eligible for annual equity grants of $1,600,000 thereafter.

 

Mr. Best’s term sheet is filed as exhibit 10.39 to former Hertz Holdings’ 2015 Form 10-K filed on February 29, 2016.

 

Change in Control Agreements

 

The NEOs and Ms. Marinello have entered into Change in Control Agreements. The Change in Control Agreements will continue to automatically renew for one-year extensions unless we give 15-months’ notice. In the event of a change in control during the term of the Change in Control Agreements, the agreement will remain in effect for two years following the change in control.

 

46     Hertz Global Holdings, Inc. 2017 Proxy Statement (HERTZ LOGO)

 

 

 

 

EXECUTIVE COMPENSATION

 

The Change in Control Agreements are “double trigger” agreements, meaning that any payments and benefits are paid only if (i) there is a change in control of the Company and (ii) the covered executive is terminated by us without “cause” or by the covered executive with “good reason,” in either case within two years following the change in control. If this occurs the covered executive will be entitled to the following payments and benefits:

 

a lump sum cash payment reflecting accrued but unpaid compensation equal to the sum of (i) the executive’s annual base salary earned but not paid through the date of termination, (ii) pro-rated annual bonus at target level calculated through the executive’s date of termination, and (iii) all other amounts to which the executive is entitled under any compensation plan applicable to the executive, payable within 30 days of the executive’s termination;

 

a lump sum cash payment equal to a multiple (the “severance multiple”) of the sum of the executive’s annual base salary in effect immediately prior to the termination and the average actual bonuses paid to the covered executive for the three years prior to the year in which the termination occurs, or, for executives without a three-year bonus history, by reference to target levels. The severance multiples are: for Messrs. Tague and Taride and Ms. Marinello, 2.5, for Mr. Kennedy, 2.0 and for Messrs. Foland and Best, 1.5;

 

continuation of all life, medical, dental and other welfare benefit plans (other than disability plans) until the earlier of the end of a number of years following the executive’s termination of employment equal to the severance multiple and the date on which the executive becomes eligible to participate in welfare plans of another employer; and

 

within the period of time from the date of the executive’s termination through the end of the year following the date of termination, outplacement assistance up to a maximum of $25,000.

 

The foregoing are intended to be in lieu of any other payments and benefits to be made in connection with a covered executive’s termination of employment while the agreements are in effect. Covered executives must execute a general release of claims to receive the foregoing severance payments and benefits. After a change in control, in the event the covered executive’s employment is terminated by reason of death or “Disability,” or the covered executive satisfies the conditions for “Retirement” (as those terms are defined in the Change in Control Agreement) then the executive will not be entitled to any benefits under the Change in Control Agreements and the executive will only be entitled to his or her benefits in accordance with the retirement or benefit plans of the Company in effect. After a change in control, in the event the covered executive’s employment is terminated by reason of “Cause” or by the executive without “Good Reason” (as those terms are defined in the Change in Control Agreement) then the Company shall only pay the executive his or her full base salary at the rate in effect at the time notice of termination was given and shall pay any other amounts according to any other compensation plans or programs in effect.

 

Our Change in Control Agreements that we have entered into with our U.S.-based NEOs do not contain tax gross-up provisions on any golden parachute excise tax and Mr. Taride is not subject to golden parachute excise taxes.

 

Each of the Change in Control Agreements also contains a confidentiality covenant that extends indefinitely following the executive’s termination of employment and non-competition and non-solicitation covenants that extend for 12 months following the executive’s termination of employment. In the event that the executive breaches these covenants, the Company is entitled to stop making payments to the executive and seek injunctive relief in certain circumstances.

 

(HERTZ LOGO) Hertz Global Holdings, Inc. 2017 Proxy Statement     47

 

 

 

 

EXECUTIVE COMPENSATION

 

Treatment of EICP Payments and Equity Compensation upon a Termination or a Change in Control

 

The following chart generally summarizes the treatment of EICP payments and equity compensation for each of our NEOs under the Senior Executive Bonus Plan and the awards outstanding under the 2016 Omnibus Plan as of December 31, 2016.

 

Award Death/Disability Voluntary Retirement With
Cause
Without
Cause
Change In
Control If Not
Assumed/
Substituted(1)
EICP Forfeit(2) Forfeit(2) Forfeit(2) Forfeit(2) Pro-rata(3) Pro-rata
Options Unvested vest Forfeit
unvested
Pro-rata Forfeit all Forfeit
unvested
Unvested vest
PSUs Pro-rata Forfeit
unvested
Pro-rata Forfeit
unvested
Forfeit
unvested
Unvested vest
Other Outstanding Awards Unvested vest Forfeit
unvested
Pro-rata Forfeit
unvested
Forfeit
unvested
Unvested vest

 

 

 

(1)The terms of the 2016 Omnibus Plan contain “double-trigger” provisions in the event of a change in control. If the options or PSUs and RSUs are exchanged for or replaced by a substitute award, then the awards will not automatically vest upon a change in control. However, if a change in control occurs and the awards are not exchanged or replaced, all options shall immediately become exercisable, the restriction period on all restricted stock units shall lapse immediately prior to such change in control, and outstanding PSUs and RSUs issued to our NEOs generally vest.

 

(2)Assumes that employment ends prior to the end of the fiscal year of the Company under the Senior Executive Bonus Plan.

 

(3)Amount is payable under the Severance Plan for Senior Executives.

 

Payments upon Termination or Change in Control

 

The following tables outline the value of payments and benefits that each NEO (other than Messrs. Tague and Foland, who received termination benefits as outlined above) would receive under the various termination scenarios described above based on if (i) the termination occurred on December 31, 2016, (ii) all stock awards were paid out at $21.56, the closing price of the Company’s common stock on December 31, 2016, (iii) for the applicable change in control, the termination occurred following the change in control (“double trigger”) and (iv) the Compensation Committee took no further actions for any given award except as set forth under the applicable plan. In addition, the participant’s 401(k) Plan (if any) amounts are excluded from the below tables, except to the extent that there are any enhancements as a result of the applicable termination event.

 

48     Hertz Global Holdings, Inc. 2017 Proxy Statement (HERTZ LOGO)

 

 

 

 

EXECUTIVE COMPENSATION

 

Thomas C. Kennedy

 

Benefit   Termination
For Cause
($)
  Termination
Without Cause
($)
  Termination
by reason of
Retirement
($)
  Termination
by reason of
Death,
Disability
($)
  Termination
following a
Change in
Control
($)
Severance payment           1,775,250                   2,367,000  
Bonus           0 (1)                 1,046,250  
Continued benefits           12,873                   19,940 (2)
Outplacement           25,000                   25,000  
Life Insurance Payment                       775,000 (3)      
Payment for Outstanding PSUs                       337,586 (4)     1,046,522  
Total           1,813,123             1,112,586       4,504,712  
                                         

 

 

 

(1) Reported as actual bonus paid for 2016.

 

(2) Includes life insurance benefits in addition to healthcare benefits for covered period.

 

(3) Life insurance payment only payable upon death.

 

(4) Represents the incremental vesting value of outstanding awards which vest in the event of death or disability.

 

Tyler A. Best

 

Benefit   Termination
For Cause
($)
  Termination
Without Cause
($)
  Termination
by reason of
Retirement
($)
  Termination
by reason of
Death,
Disability
($)
  Termination
following a
Change in
Control
($)
Severance payment           1,485,000                   1,800,000  
Bonus           0 (1)                 600,000  
Continued benefits           12,648                   13,554 (2)
Outplacement           25,000                   25,000  
Life Insurance Payment                       600,000 (3)      
Payment for Outstanding PSUs                       253,502 (4)     783,275  
Total           1,522,648             853,502       3,221,829  
                                         

 

 

 

(1) Reported as actual bonus paid for 2016.

 

(2) Includes life insurance benefits in addition to healthcare benefits for covered period.

 

(3) Life insurance payment only payable upon death.

 

(4) Represents the incremental vesting value of outstanding awards which vest in the event of death or disability.

 

 (HERTZ LOGO) Hertz Global Holdings, Inc. 2017 Proxy Statement 49

 

 

 

EXECUTIVE COMPENSATION

 

Michel Taride

 

Benefit   Termination
For Cause
($)
Termination
Without Cause
($)
  Termination
by reason of
Retirement
($)
  Termination
by reason of
Death,
Disability
($)
  Termination
following a
Change in
Control
($)
Severance payment           1,178,172                   1,472,716  
Bonus           0 (1)                 586,848  
Continued benefits           50,838                   71,025 (2)
Outplacement           25,000                   25,000  
Life Insurance Payment                       1,956,160 (3)      
Retiree Car Benefit(4)           303,000       303,000       303,000       303,000  
Payment for Outstanding RSUs(5)                 87,658       350,630       350,630  
Payment for Outstanding PSUs(5)                 131,494       178,064       663,552  
Total           1,557,010       522,152       2,787,854       3,472,771  
                                         

 

 

 

(1)Reported as actual bonus paid for 2016.

 

(2)Includes life insurance benefits in addition to healthcare benefits for covered period.

 

(3)Life insurance payment only payable upon death.

 

(4)Value represents maximum amount of retiree car benefits in the event of disability. In the event of death, Mr. Taride’s spouse would be eligible for car privileges at an amount below the maximum amount.

 

(5)Represents the incremental vesting value of outstanding awards which vest in the event of the specified termination event.

 

Note: All amounts shown for Mr. Taride have been converted to U.S. Dollars from pounds sterling at the spot exchange rate of 1.2226.

 

50 Hertz Global Holdings, Inc. 2017 Proxy Statement  (HERTZ LOGO)

 

 

 

DIRECTOR COMPENSATION

 

Director Compensation

 

The Board believes that a significant portion of non-employee director compensation should align director interests with the interests of the Company’s stockholders. As a result, the Company’s Board has approved the Hertz Global Holdings, Inc. Directors Compensation Policy (the “Director Compensation Policy”), pursuant to which our non-employee directors were entitled to the compensation detailed below in respect of 2016. The Director Compensation Policy was originally adopted by the former Hertz Holdings Board and subsequently adopted by the Company’s Board in connection with the Spin-Off. In determining the amounts under the Director Compensation Policy, the Nominating and Governance Committee, with the input of FW Cook, reviewed director compensation at 54 peer companies with annual revenues similar to the Company’s annual revenue. After considering the peer compensation amounts, as well as the Company’s corporate structure and the responsibilities of directors, the Nominating and Governance Committee positioned the total cash and equity compensation at the median of the 54-company peer group.

 

Board/Committee 2016 Non-Employee Director Compensation
Board Annual Cash Retainer: $ 85,000 Restricted Stock Unit Grant: $ 125,000
Audit Annual Chair Fee: $ 35,000 Annual Member Fee: $ 17,500
Compensation Annual Chair Fee: $ 30,000 Annual Member Fee: $ 15,000
Financing Annual Chair Fee: $ 25,000 Annual Member Fee: $ 12,500
Nominating and Governance Annual Chair Fee: $ 25,000 Annual Member Fee: $ 12,500
Technology Annual Chair Fee: $ 25,000 Annual Member Fee: $ 12,500

 

For 2016, our Board determined that in light of Ms. Fayne Levinson’s increased responsibilities as Independent Non-Executive Chair, she was entitled to receive an additional annual fee of $350,000, payable in the form of shares of common stock of the Company. For 2017, our Board decreased the annual fee to be paid to the Independent Non-Executive Chair to $250,000, payable in the form of shares of common stock of the Company. Under the terms of the 2016 Omnibus Plan, no non-employee director shall receive compensation in excess of $750,000 in any calendar year. Under the Director Compensation Policy, if a Lead Director is appointed, then he or she is entitled to receive an additional $100,000 annual cash retainer in addition to the fees listed above. Because the Board has appointed an Independent Non-Executive Chair, the Company has not appointed a Lead Director.

 

Cash fees or fees paid in shares of Company common stock for Board and committee service are payable quarterly in arrears. A director may elect, annually in advance, to receive shares of the Company’s common stock having the same fair market value in lieu of such cash fees. A director may elect to receive shares of phantom stock rather than receiving cash fees if the requirements for such deferral are satisfied under applicable tax law. Any director electing to receive phantom shares would receive actual shares of the Company’s common stock on the earlier of separation from service and a change in control of the Company. Any fee that a director elected to defer would be credited to the director’s stock account and deemed invested in a number of phantom shares equal to the number of shares of common stock that would otherwise have been delivered.

 

The restricted stock units are granted to directors after the Company’s annual stockholder meeting and have an equivalent fair market value to such dollar amount on the date of grant. Provided the director is still serving on our Board, these restricted stock units vest on the business day immediately preceding the Company’s next annual meeting of stockholders. Our non-employee directors are subject to stock ownership requirements as discussed under “Stock Ownership Guidelines and Hedging Policy–Stock Ownership Guidelines” above.

 

 (HERTZ LOGO) Hertz Global Holdings, Inc. 2017 Proxy Statement 51

 

 

 

DIRECTOR COMPENSATION

 

We also reimburse our directors for reasonable and necessary expenses they incur in performing their duties as directors, and our directors are entitled to free worldwide car rentals. Any non-employee director who serves for at least five years will, after retirement from such service as a director, be eligible for Hertz #1 Club Platinum Card status and free worldwide car rentals up to a maximum of 90 days each year for fifteen years after his or her retirement.

 

For services rendered during the year ended December 31, 2016, our non-employee directors received the following compensation:

 

2016 Non-Employee Director Compensation Table

 

Name Fees Earned
or Paid
in Cash(1)
($)
Stock
Awards(2)(3)
($)
Total
($)
David A. Barnes 63,750 125,000 188,750
Carl T. Berquist(4)(5)(6) 114,375 125,000 239,375
Michael J. Durham(5) 128,208 125,000 253,208
Carolyn N. Everson(4)(6) 118,750 125,000 243,750
Vincent J. Intrieri(4)(6) 108,750 125,000 233,750
Henry R. Keizer 126,250 125,000 251,250
Michael F. Koehler(5) 63,750 0 63,750
Linda Fayne Levinson(5) 489,976 125,000 614,976
Samuel J. Merksamer 103,750 125,000 228,750
Daniel A. Ninivaggi 106,250 125,000 231,250

 

 

 

(1) All compensation is for services rendered as directors for service on the former Hertz Holdings Board and the Company’s Board, including annual retainer fees and committee and chair fees (whether payable in cash or in shares of common stock) as set forth above.
   
(2) The value disclosed is the aggregate grant date fair value of 14,934 RSUs of former Hertz Holdings granted to each director. The grant date fair value was computed pursuant to FASB ASC Topic 718 and the awards were issued on May 18, 2016. Assumptions used in the calculation of these amounts are included in the Note on Stock-Based Compensation to the Notes to our consolidated financial statements included in the 2016 Annual Report. The total number of RSUs was adjusted in accordance with the Employee Matters Agreement to 3,768 RSUs of the Company.
   
(3) In addition to the RSUs reported above in footnote 2, Mr. Berquist and Mr. Durham each owned 5,890 options as of December 31, 2016. As of December 31, 2016, Mr. Berquist owned 1,884 phantom shares, Ms. Everson owned 1,846 phantom shares and Mr. Intrieri owned 1,699 phantom shares.
   
(4) Elected to receive fees that would otherwise be payable in cash in the form of phantom shares.
   
(5) Ms. Fayne Levinson and Messrs. Berquist and Durham resigned from the Company’s Board on January 2, 2017. Mr. Koehler did not stand for reelection in 2016.
   
(6) In connection with the Spin-Off, the phantom shares previously issued to Messrs. Berquist and Intrieri and Ms. Everson were settled for shares of the Company’s common stock.
   
52     Hertz Global Holdings, Inc. 2017 Proxy Statement  (Hertz Logo)

 

 

 

 

 Annual Meeting Proposals: Say on Pay

 

PROPOSAL 2: APPROVAL, BY A NON-BINDING ADVISORY VOTE,
OF THE NAMED EXECUTIVE OFFICERS’ COMPENSATION

 

We are offering you a non-binding, advisory vote to approve the compensation of our NEOs, as disclosed in the Compensation Discussion and Analysis and the related narrative and tabular disclosures, also known as a “Say on Pay” vote.

 

As detailed in the Compensation Discussion and Analysis, we have designed our compensation programs, among other things, to: (i) properly incentivize our NEOs to accomplish our short- and long-term objectives, (ii) be in line with similar pay practices and overall compensation levels at other, similarly-situated companies, (iii) reward our NEOs for not only their individual performance, but the performance of their business unit and the Company overall and (iv) hire and retain our NEOs. In addition, as further detailed in the Compensation Discussion and Analysis, we continually revise our pay practices to be in line with market practices and compensation norms.

 

Accordingly, you may cast an advisory vote on the following resolution at the 2017 annual meeting:

 

“RESOLVED, that the compensation awarded to the named executive officers as disclosed in the Compensation Discussion and Analysis, Summary Compensation Table and related tabular and narrative disclosures in this proxy statement is hereby APPROVED.”

 

Effect of Proposal

 

The effect of the Say on Pay vote is advisory only and non-binding. However, the Board and Compensation Committee will consider the results of the vote in determining the compensation of our NEOs and our compensation programs generally. The Board values the opinions of our stockholders and is committed to considering their opinions in making decisions. If any stockholder wishes to communicate with the Board regarding executive compensation, the Board can be contacted using the procedures outlined in “Stockholder Communications with the Board” set forth in this proxy statement.

 

Required Vote to Approve the Proposal

 

A majority of shares present and entitled to vote is required to approve the proposal. Under applicable Delaware law, abstentions are counted as shares entitled to vote at the annual meeting and therefore will have the same effect as a vote “against” this proposal. Broker non-votes will have no effect in determining the outcome of this proposal.

 

The Board recommends a vote FOR approval, by a non-binding advisory
vote, of the named executive officers’ compensation.

 

 (Hertz logo) Hertz Global Holdings, Inc. 2017 Proxy Statement    53

 

 

 

 

 ANNUAL MEETING PROPOSALS: SAY ON FREQUENCY

 

PROPOSAL 3: APPROVAL, BY A NON-BINDING ADVISORY VOTE, ON THE FREQUENCY OF
FUTURE VOTES ON THE NAMED EXECUTIVE OFFICERS’ COMPENSATION

 

As a public company, the Company must offer its stockholders a non-binding, advisory vote, at least once every six years, on the frequency of the Say on Pay vote, also known as “Say on Frequency.” Stockholders can vote for Say on Pay votes to be conducted every year, every two years, every three years or may abstain from voting.

 

After consideration of the various arguments for each frequency, the Board recommends that Say on Pay votes should be held every year as a good governance measure and to afford our stockholders the opportunity to provide feedback about our compensation programs annually.

 

Effect of Proposal

 

The effect of the Say on Frequency vote is advisory and non-binding. The frequency which obtains the most votes, whether one, two or three years, will not obligate the Company or the Board to adopt such frequency. However, the Board will consider the results of the vote in determining the eventual frequency. The Board values the opinions of our stockholders and is committed to considering their opinions in making decisions. If any stockholder wishes to communicate with the Board regarding executive compensation, the Board can be contacted using the procedures outlined in “Stockholder Communications with the Board” set forth in this proxy statement.

 

The Board recommends a vote FOR the option of “1 Year”
for future advisory votes on executive compensation.

 

54     Hertz Global Holdings, Inc. 2017 Proxy Statement  (Hertz Logo)

 

 

 

 

ANNUAL MEETING PROPOSALS: APPROVAL OF 2016 OMNIBUS PLAN

 

PROPOSAL 4: APPROVAL OF THE HERTZ GLOBAL HOLDINGS, INC. 2016
OMNIBUS INCENTIVE PLAN

 

Background on Proposal

 

We are asking our stockholders to approve the 2016 Omnibus Plan in order to approve the specific terms of the 2016 Omnibus Plan and to preserve tax deductibility under Section 162(m) of the Code. Approving the 2016 Omnibus Plan will allow the Compensation Committee to make awards that qualify as performance-based compensation under the terms of Section 162(m).

 

The Company’s sole stockholder originally approved our 2016 Omnibus Plan prior to the Spin-Off, when our Company was a subsidiary of former Hertz Holdings. A description of the material provisions of the 2016 Omnibus Plan is set forth below. The statements made in this Proposal 4 concerning terms and provisions of the 2016 Omnibus Plan are summaries and do not purport to be a complete recitation of the 2016 Omnibus Plan provisions. These statements are qualified in their entirety by express reference to the full text of the 2016 Omnibus Plan, a copy of which is attached to this proxy statement as Annex B and is incorporated by reference herein.

 

If we do not obtain the approval of the 2016 Omnibus Plan, we may continue to grant awards under the 2016 Omnibus Plan in accordance with its current terms, including nondeductible awards that no longer qualify as performance-based compensation under Section 162(m).

 

Highlights of the 2016 Omnibus Plan