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.

(Name of Registrant as Specified In Its Charter)
 
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
 
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Notice of
Annual Meeting
of Stockholders
and Proxy
Statement
October 15, 2015

 

 

 

 
 

 

Hertz Global Holdings, Inc.
999 Vanderbilt Beach Road
Naples, FL 34108

 

August 24, 2015

 

Dear Stockholder:

 

You are cordially invited to attend our annual meeting of stockholders to be held at 10:00 a.m. (local time) on October 15, 2015, at the Hyatt Regency Coconut Point Resort and Spa, 5001 Coconut Road, Bonita Springs, Florida, 34134.

 

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 September 1, 2015, 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 2014 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 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, you may vote in person.

 

Registration and seating will begin at 9:30 a.m. (local time). In order to be admitted to the annual meeting, a stockholder must present proof of stock ownership as of the close of business on the record date, August 24, 2015, which can be the Notice, a proxy card or a brokerage statement reflecting stock ownership as of August 24, 2015. Stockholders will be asked to sign an admittance card and must also present a form of photo identification such as a driver’s license. Cameras and recording devices will not be permitted at the annual meeting.

 

  Sincerely,
   
  /s/ Linda Fayne Levinson
  Linda Fayne Levinson
  Independent Non-Executive Chair

 

 

 

 
 

 

     
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OF HERTZ GLOBAL HOLDINGS, INC.
     
Time and Date: 10:00 a.m. (local time), October 15, 2015.
   
Place: Hyatt Regency Coconut Point Resort and Spa, 5001 Coconut Road, Bonita Springs, Florida, 34134.
   
Proposals: 1. Election of the five 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. Re-approval of the material terms of the performance objectives under the Company’s 2008 Omnibus Plan;
     
  4. Ratification of the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the year 2015;
     
  5. To consider a shareholder proposal on a policy regarding accelerated vesting of equity awards of senior executives upon a change in control, if presented at the meeting; and
     
  6. 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 1-4 and recommends
a vote AGAINST Proposal 5.
 

   
Who Can Vote: Only holders of record of the Company’s common shares at the close of business on August 24, 2015 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”).
   
Date of Mailing: This proxy statement and accompanying materials were filed with the Securities and Exchange Commission on August 24, 2015, and we expect to first send the Notice to stockholders on or about September 1, 2015.

 

  /s/ Thomas J. Sabatino, Jr.
  Thomas J. Sabatino, Jr.
  Senior Executive Vice President, Chief Administrative Officer
  and General Counsel

 

Naples, Florida
August 24, 2015

 

 

 

 
 

 

Table of Contents

 

Section/Proposal   Page
Proxy Procedures and Information about the Annual Meeting    
Important Information about Annual Meeting and Proxy Procedures   1
     
Corporate Governance    
Corporate Governance and General Information Concerning the Board and Its Committees   4
     
Director Compensation    
Director Compensation   10
2014 Non-Employee Director Compensation Table   11
     
Election of Directors    
Proposal 1: Election of Directors   12
Continuing Directors   17
     
Compensation Discussion and Analysis    
Executive Summary   21
Compensation Discussion and Analysis   24
Compensation Committee Report   43
     
Summary Compensation Table and Executive Compensation    
2014 Summary Compensation Table   44
     
Annual Meeting Proposals:    
Proposal 2: Approval, By a Non-Binding Advisory Vote, of the Named Executive Officers’ Compensation   70
Proposal 3: Re-Approval of the Material Terms of the Performance Objectives Under the Company’s 2008 Omnibus Plan   71
Proposal 4: Ratification of the Selection of PricewaterhouseCoopers LLP as the Company’s Independent Registered Public Accounting Firm for the Year 2015   78
     
Auditor Information    
Independent Registered Public Accounting Firm Fees   79
Audit Committee Report   80
     
Shareholder Proposal    
Proposal 5: Shareholder Proposal on a Policy Regarding Accelerated Vesting of Equity Awards of Senior Executives upon a Change in Control   81
     
Other Matters    
Security Ownership of Certain Beneficial Owners, Directors and Officers   84
Compensation Committee Interlocks and Insider Participation   86
Section 16(a) Beneficial Ownership Reporting Compliance   86
Certain Relationships and Related Party Transactions   86
Other Business   89

 

 
 

 

PROXY PROCEDURES AND INFORMATION ABOUT THE ANNUAL MEETING

 

IMPORTANT INFORMATION ABOUT 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 October 15, 2015, beginning at 10:00 a.m. (local time) at the Hyatt Regency Coconut Point Resort and Spa, 5001 Coconut Road, Bonita Springs, Florida, 34134. This proxy statement and accompanying materials were filed with the Securities and Exchange Commission (the “SEC”) on August 24, 2015, and we expect to first send the Notice of Internet Availability of Proxy Materials (the “Notice”) to stockholders on or about September 1, 2015.

 

Unless the context otherwise requires, in this proxy statement (i) the “Company” means Hertz Global Holdings, Inc., (ii) ”Hertz” means The Hertz Corporation, our primary operating company and a direct wholly-owned subsidiary of Hertz Investors, Inc., which is wholly owned by the 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 and (v) ”our common stock” means the common stock of the Company.

 

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 five 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. Re-approval of the material terms of the performance objectives under the Company’s 2008 Omnibus Plan;
     
  4. Ratification of the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the year 2015;
  5. To consider a shareholder proposal on a policy regarding accelerated vesting of equity awards of senior executives upon a change in control, if presented at the meeting; and
     
  6. Transaction of any other business that may properly be brought before the annual meeting.

 

The Company’s senior management will also present information about the Company’s performance during 2014 and will answer questions from stockholders.

 

Stockholders Entitled to Vote at the Annual Meeting

 

Our Board has established the record date for the annual meeting as August 24, 2015. 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 August 24, 2015, the Company had approximately 456,486,882 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.
     
  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.
     
  Voting in Person: See the procedures for voting in person below.


 (HERTZ LOGO) Hertz Global Holdings, Inc. 2015 Proxy Statement 1

 

 
 

 

PROXY PROCEDURES AND INFORMATION ABOUT THE ANNUAL MEETING

 

Procedures for Attending and Voting at the Annual Meeting

 

For those stockholders who wish to attend the annual meeting, you will need the following:

     
  admission ticket in your proxy materials;
     
  photo identification; and

  proof of stock ownership

  

Please note that no cameras or recording devices are allowed at the annual meeting. Seating for the annual meeting starts at 9:30 a.m. (local time) and the annual meeting will start at 10:00 a.m. (local time).

 



Voting Options; Quorum

 

The Board recommends a vote “for” proposals 1-4 below and “against” proposal 5. 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.

             
            Effect of
        Effect of   Broker
Proposal   Vote Required for Adoption   Abstentions   Non-Votes
             
Election of directors   Majority of shares cast   No effect   No effect
Advisory vote on executive   Majority of shares present   Vote “against”   No effect
compensation            
Re-approval of the   Majority of shares present   Vote “against”   No effect
2008 Omnibus Plan            
Ratification of   Majority of shares present   Vote “against”   No effect
PricewaterhouseCoopers LLP            
Shareholder proposal   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 4 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.

 

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 2014, 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



2 Hertz Global Holdings, Inc. 2015 Proxy Statement (HERTZ LOGO)

 
 

  

PROXY PROCEDURES AND INFORMATION ABOUT THE ANNUAL MEETING

 

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 instructions for each Notice you receive.

 

Revocation of Proxies

 

Even if you voted by telephone or on the Internet, or if you requested paper proxy materials and signed the proxy card, you may revoke your proxy before it is voted at the annual meeting by delivering a signed revocation letter to Thomas J. Sabatino, Jr., Senior Executive Vice President, Chief Administrative Officer and General Counsel. You may also revoke your proxy by submitting a new proxy, dated later than your first proxy, or by a later-dated vote by telephone or on the Internet. If you are attending in person and have previously mailed your proxy card, you may revoke your proxy and vote in person at the annual meeting. Your attendance at the annual meeting will not by itself revoke your proxy. If you are a holder of shares held in street name by your broker and you have previously directed your broker to vote your shares, you should instruct your broker to change or revoke your vote if you wish to do so. If you are a holder of shares held in street name by your broker and wish to cast your vote in person at the annual meeting, you should obtain a proxy to vote your shares from your broker.

 

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. 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, 2014 (“2014 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 2014 Annual Report, or any exhibits thereto, will be sent within a reasonable time without charge upon written request to Hertz Global Holdings, Inc., 999 Vanderbilt Beach Road, Naples, Florida, 34108. Attention: Corporate Secretary.



 (HERTZ LOGO) Hertz Global Holdings, Inc. 2015 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 which we believe promote responsible oversight of management.

 

Board Independence

 

Our Board has determined that Mses. Fayne Levinson, Everson, Kelly-Ennis and Messrs. Berquist, Durham, Intrieri, Keizer, Koehler, 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. 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; (ii) the relevant director did not initiate or negotiate the relevant transaction, each of which was in the ordinary course of business of both companies; and (iii) the aggregate amounts of such purchases and sales were less than 2% of the consolidated gross revenues of each of the Company and the other company in each of the years 2014, 2013 and 2012.

Board Meetings and Annual Meeting Attendance

 

Our Board held 14 meetings in 2014. Each of our directors attended 75% or more of the total number of meetings of 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 2014 annual meeting.

 

Board Committees

 

Our Board has four standing committees—the Audit Committee, the Compensation Committee, the Nominating and Governance Committee and the Financing Committee. The Executive and Finance Committee was dissolved in connection with the Company’s entry into the Nomination and Standstill Agreement on September 15, 2014 described under “Certain Relationships and Related Party Transactions—Agreements with Carl C. Icahn.” The Board established the Financing Committee on October 16, 2014. The Executive and Finance Committee was responsible for several of the functions now carried out by the Financing Committee.



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CORPORATE GOVERNANCE

 

Each committee has a written charter and each charter is available without charge on the “Investor Relations—Committee Charters” portion of our website, www.hertz.com. Each member of the Audit Committee, Compensation Committee, Nominating and Governance Committee and Financing 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. Berquist, Durham, Intrieri and Koehler as “audit committee financial experts”.

 

Membership, Meetings and Roles and Responsibilities of the Board Committees

       
Audit Committee      
 
Members   Roles and Responsibilities of the Audit Committee
Berquist (Chair)
Durham
 

 

Oversees our accounting, financial and external reporting policies and practices as well as the integrity of our financial statements.
Intrieri
Kelly-Ennis
Koehler
 


Monitors the independence, qualifications and performance of our independent registered public accounting firm.
Oversees the performance of our internal audit function, the management information system and operational policies and practices that affect our internal controls.
    Monitors our compliance with legal and regulatory requirements.
Number of 2014
Meetings
    Reviews our guidelines and policies and the commitment of internal audit resources, in each case as they relate to risk management and the preparation of our Audit Committee’s report included in our proxy statements.
  11     

 
Compensation Committee
 
Members   Roles and Responsibilities of the Compensation Committee
Fayne Levinson   Oversees our compensation and benefit policies generally.
(Chair)
Durham
  Evaluates the performance of our CEO as related to all elements of compensation, as well as the performance of our senior executives.
Everson
Ninivaggi
 


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).
Number of 2014
Meetings
   

• 

Prepares reports on executive compensation required for inclusion in our proxy statements.
Reviews our management succession plan.
 

8

 

 

 (HERTZ LOGO) Hertz Global Holdings, Inc. 2015 Proxy Statement 5

 

 
 

  

CORPORATE GOVERNANCE  

 

Nominating and Governance Committee

       
Members   Roles and Responsibilities of the Nominating and Governance Committee
Koehler (Chair)
Everson
 

• 

 

Assists our Board in determining the skills, qualities and eligibility of individuals recommended for membership on our Board.
Fayne Levinson
Kelly-Ennis
 

Reviews the composition of our Board and its committees to determine whether it may be appropriate to add or remove individuals.
Merksamer   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.
Number of 2014
Meetings
 

Reviews and recommends to the Board the form and amount of compensation paid to directors.
4  

 
Financing Committee 
 
Members   Roles and Responsibilities of the Financing Committee
Durham (Chair)
Berquist
Intrieri
Merksamer
 




Reviews and makes recommendations to the Board (or if approval authority is delegated, approves) the Company’s and its subsidiaries capital markets and financing plans and the material terms and conditions of our debt and equity financings.

Reviews the Company’s dividend policy and make recommendations to the Board regarding the amount and frequency of dividends.
  Number of 2014
Meetings
       
3      

 

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. The Board participates in an annual enterprise risk management assessment, which is led by the Company’s Internal Audit Department. The Board assesses enterprise risk management with the input of the report of the Compensation Committee and advisors and members of management.

Various committees of the Board also have responsibility for risk management. The Audit Committee focuses on financial risk, including internal controls, and annually receives a risk assessment and risk management report from the Company’s Internal Audit Department. 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. 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.

 

Risk Considerations in our Compensation Program

 

In 2014, our Compensation Committee conducted its annual review of the risk profile of the Company’s compensation policies and practices. In connection with this review, the Compensation Committee engaged its independent consultant at the time, Semler Brossy Consulting Group, LLC (“Semler Brossy”), to assist it in analyzing the



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CORPORATE GOVERNANCE

 

Company’s compensation policies and practices and associated compensation risks. Semler Brossy, with the assistance of management, prepared a risk profile assessment of the Company’s executive compensation policies and practices for executive officers. After its review of these assessments, the Compensation Committee presented the results to the Board in connection with the Board’s annual enterprise risk assessment. In addition, the Company’s management reviewed its compensation plans and practices in 2014 for all employees and presented the findings to the Compensation Committee. 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 Company’s existing processes and controls, do not incentivize employees to take unnecessary risks, or pose a material risk to the Company, particularly in light of 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;
     
  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 use of a variety of financial and strategic performance objectives to help ensure that the Company’s overall business strategy is properly promoted;
     
  our structuring of our compensation programs to include features such as caps on payments, exclusion of certain extraordinary items and institutional approval of amounts paid; and
     
  our Company’s various policies and procedures and Internal Audit Department, all of which provide checks and balances that help us monitor risk and identify when an individual is taking excessive or inappropriate risks.

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., 999 Vanderbilt Beach Road, Naples, Florida 34108 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. With respect to other correspondence received by the Company that is addressed to one or more directors, the Board has requested that the following items not be distributed to directors, because they generally fall into the purview of management, rather than the Board: junk mail and mass mailings, product and services complaints, product and services inquiries, résumés and other forms of job inquiries, solicitations for charitable donations, surveys, business solicitations and advertisements.

 

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., 999 Vanderbilt Beach Road, Naples, Florida 34108, 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. The 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 Nomination and Standstill



(HERTZ LOGO) Hertz Global Holdings, Inc. 2015 Proxy Statement 7

 

 
 

 

CORPORATE GOVERNANCE

 

Agreement we entered into with Carl C. Icahn, described under “Certain Relationships and Related Party Transactions—Agreements with Carl C. Icahn.”

 

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—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 Chairman 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 Chairman 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 Mr. Tague to serve as CEO while Ms. Fayne Levinson 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 roles of management and oversight over management. Our CEO and his 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-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 Mr. Tague) does



8 Hertz Global Holdings, Inc. 2015 Proxy Statement (HERTZ LOGO)

 

 
 

 

CORPORATE GOVERNANCE

 

not participate. In addition to the regularly-scheduled executive sessions of the Board that are held once per fiscal quarter without the presence of management (other than Mr. Tague), our directors held six executive sessions in 2014 where only our independent directors attended. The Independent Non-Executive Chair or Independent Lead Director at the time presided to facilitate the discussion. In addition, the Independent Non-Executive Chair, as the current Chair of the Compensation Committee, also significantly assists in evaluating and in setting the compensation of our CEO by conferring with other independent members of the Board regarding our CEO’s performance, providing perspective and facilitating our CEO’s self-assessment.

 

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 and equipment 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.



(HERTZ LOGO) Hertz Global Holdings, Inc. 2015 Proxy Statement 9

 

 
 

 

DIRECTOR COMPENSATION

 

Director Compensation

 

The Board believes that a significant portion of non-employee director compensation should align director interests with the interests of Hertz Holdings’ stockholders. As a result, Hertz Holdings’ 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 following compensation: 

                     
Board/Committee   2014 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
Nominating and Governance   Annual Chair Fee:   $25,000   Annual Member Fee:   $12,500
Executive and Finance(1)   Annual Chair Fee:   $17,500   Annual Member Fee:   $17,500
     
(1) The Executive and Finance Committee was dissolved in connection with Hertz Holdings’ entry into the Nomination and Standstill Agreement on September 15, 2014. The Board established the Financing Committee on October 16, 2014. Directors are not compensated for serving as members of the Financing Committee.
   
Under the Director Compensation Policy, the Lead Director is entitled to receive a $100,000 annual cash retainer. However, our Board has determined that in light of Ms. Fayne Levinson’s increased responsibilities as Independent Non-Executive Chair, she instead shall receive an annual fee of $350,000, payable in the form of shares of common stock of Hertz Holdings, except that if Hertz Holdings is unable to issue registered shares under an effective Form S-8 at the time quarterly cash payments are to be made, any amount otherwise payable in shares is paid in cash for purposes of the relevant quarter. Hertz Holdings does not pay additional fees to directors for attending Board or committee meetings.
   
Cash fees for Board and committee service are payable quarterly in arrears. A director may elect, annually in advance, to receive shares of Hertz Holdings’ 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 will receive actual shares of Hertz Holdings’ common stock on the earlier of when the director no longer serves on our Board or a change in control of Hertz Holdings. Any fee that a director elected to defer is credited to the director’s stock account and is deemed to be 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 Hertz Holdings’ 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 Hertz Holdings’ next annual meeting of stockholders.
   
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.

  

10 Hertz Global Holdings, Inc. 2015 Proxy Statement (HERTZ LOGO)

 

 
 

 

DIRECTOR COMPENSATION

 

For services rendered during the year ended December 31, 2014, our non-employee directors received the following compensation:

 

2014 Non-Employee Director Compensation Table 

                           
Name   Fees
Earned or
Paid in
Cash(1)
($)
  Stock
Awards(2)(3)
($)
  All other
compensation(4)
($)
  Total
($)
 
                   
Barry H. Beracha     110,417     125,004         235,421  
Carl T. Berquist(5)     135,000     125,004         260,004  
Michael J. Durham     115,000     125,004         240,004  
Carolyn N. Everson(5)     103,125     125,004         228,129  
Debra J. Kelly-Ennis(5)     97,500     125,004         222,504  
Vincent J. Intrieri     17,118             17,118  
Michael F. Koehler     115,000     125,004         240,004  
Philippe P. Laffont(5)     85,417     125,004         210,421  
Linda Fayne Levinson     195,699     125,004         320,703  
Samuel Merksamer     16,283             16,283  
Daniel A. Ninivaggi     16,700             16,700  
George W. Tamke(6)     163,125         13,026     176,151  
Henry C. Wolf     100,000     125,004         225,004  
     
(1) All compensation is for services rendered as directors, including annual retainer fees and committee and chair fees as set forth above. For those directors who joined our Board or resigned from our Board in 2014, the cash retainer fees were pro-rated for their service.
   
(2) The value disclosed is the aggregate grant date fair value of 4,351 restricted stock units granted to each director, except for Messrs. Intrieri, Merksamer and Ninivaggi, based on a grant date of May 14, 2014 and computed pursuant to FASB ASC Topic 718. 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 2014 Annual Report. Due to his resignation from our Board in 2014, Mr. Tamke forfeited his grant of restricted stock units made in 2014. The grants of restricted stock units to Messrs. Laffont, Beracha and Wolf vested upon their resignation.
   
(3) In addition to the restricted stock units reported above in footnote 2, Messrs. Berquist and Durham each own 23,350 options. As of December 31, 2014, Mr. Berquist owned 54,696 phantom shares, Ms. Everson owned 6,033 phantom shares, Ms. Kelly-Ennis owned 5,742 phantom shares, Mr. Intrieri owned 789 phantom shares and Mr. Laffont owned 2,738 phantom shares.
   
(4) Perquisites and other personal benefits, or property, unless the aggregate amount of such compensation is less than $10,000.
   
(5) Elected to receive fees that would otherwise be payable in cash in the form of phantom shares.
   
(6) Elected to receive fees that would otherwise be payable in cash in the form of shares of common stock.

  

(HERTZ LOGO) Hertz Global Holdings, Inc. 2015 Proxy Statement 11

 

 
 

 

ELECTION OF DIRECTORS

 

PROPOSAL 1: ELECTION OF DIRECTORS

 

Board Structure

 

The Company currently has ten directors divided into three classes: three in Class I, two in Class II and five in Class III. The terms of office of the five Class III directors expire at the 2015 annual meeting of stockholders. The directors whose terms will continue after the 2015 annual meeting and will expire at the 2016 annual meeting (Class I) and 2017 annual meeting (Class II) are listed after the Class III directors. Ms. Kelly-Ennis has decided not to stand for re-election after the end of her current term. Her experience in the automotive industry and managing international operations as well as her extensive board experience have been valuable to the Company. She is a talented business leader and board member and the Board truly wishes to thank her for her service.

 

Class III Election

 

The five nominees for election as Class III directors are listed below. If elected, the nominees for election as Class III 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 Class III Nominees are as follows: 

     
Carl T. Berquist
(Class III)
  Mr. Berquist has served as a director of the Company and Hertz since November 2006. Mr. Berquist is 64 years old.
     
Business Experience   Mr. Berquist joined Marriott International, Inc. (“Marriott”) in December 2002 as Executive Vice President, Financial Information and Enterprise Risk Management and served as Chief Accounting Officer of Marriott. In 2009, Mr. Berquist became Executive Vice President and Chief Financial Officer of Marriott. Prior to joining Marriott, Mr. Berquist was a partner at Arthur Andersen LLP. During his 28-year career with Arthur Andersen LLP, Mr. Berquist held numerous leadership positions, including managing partner of the worldwide real estate and hospitality practice. His last position was managing partner of the mid-Atlantic region which included five offices from Philadelphia, Pennsylvania to Richmond, Virginia.
     
Directorships and Other Experience   Mr. Berquist is a member of the Board of Advisors of both the Business School and the School of Hospitality Management at Penn State University. He is also a member of the Board of Advisors of Eberle Communications, a private direct mail company.
     
Financial Oversight and Risk Management Experience   Mr. Berquist’s years of leadership in management and operational positions as a chief financial officer, enterprise risk management executive and major audit company partner provides our Board with in-depth knowledge in financial, accounting and risk management issues.
     
Travel Industry Knowledge   Mr. Berquist’s knowledge of the travel industry gained while at Marriott also makes him an important asset to the Board in recognizing hospitality and overseeing strategic trends.
     
International Financial Expertise   Mr. Berquist’s experiences in managing the worldwide expansion of one of the most recognized hotel brands offers our Board specialized expertise in a variety of areas.

  

12 Hertz Global Holdings, Inc. 2015 Proxy Statement (HERTZ LOGO)

 

 
 

 

ELECTION OF DIRECTORS
     
Henry R. Keizer
(Class III)
  Mr. Keizer is a nominee to serve as a director of the Company and Hertz. Mr. Keizer is 58 years old.
     
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 which provides audit, tax and advisory services in 152 countries. Prior to serving as Deputy Chairman and Chief Operating Officer of KPMG, Mr. Keizer held a number of key leadership positions throughout his 35 years at KPMGI, including Global Head of Audit, KPMGI from 2006 to 2010 and U.S. Vice Chairman of Audit, KPMG from 2005 to 2010.
     
Directorships and Other Experience   Mr. Keizer is also a director of MUFG Americas Holdings Corporation, a financial and bank holding company with assets of $115 billion, of WABCO, a $3 billion global innovator and manufacturer of technologies that improve the safety and efficiency of commercial vehicles, and of Park Indemnity Limited, a Bermuda captive insurer affiliated with KPMGI. He previously served as a director of Montpelier Re Holdings, Ltd., a global property and casualty reinsurance company until it merged with Endurance Specialty Holdings Ltd. in July 2015 and was a director on the Board of the American Institute of Certified Public Accountants.
     
Executive Officer Experience   Mr. Keizer has significant management, operating and leadership skills gained as Deputy Chairman and Chief Operating Officer of KPMG.
     
Financial Reporting and General Industry Experience   Mr. Keizer has extensive knowledge and understanding of financial accounting, 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 leadership experience at KPMG provides the Board with expertise in risk management and oversight over our domestic and international operations.

 

(HERTZ LOGO) Hertz Global Holdings, Inc. 2015 Proxy Statement 13

 

 
 

 

ELECTION OF DIRECTORS
     
Michael F. Koehler
(Class III)
  Mr. Koehler has served as a director of the Company and Hertz since March 2012. Mr. Koehler is 62 years old.
     
Business Experience   Mr. Koehler is Chief Executive Officer and a member of the Board of Directors of Teradata Corporation (“Teradata”), a publicly-traded provider of enterprise data warehousing and integrated marketing software, where he also serves on the Executive Committee. Prior to the separation of Teradata from NCR Corporation (“NCR”), Mr. Koehler served as Senior Vice President of the Teradata Division of NCR from 2003 to 2007. From September 2002 to March 2003, he was the Interim Leader of the Teradata Division. From 1999 to 2002, Mr. Koehler was Vice President, Global Field Operations of the Teradata Division and he held management positions of increasingly greater responsibility at NCR prior to that time.
     
Directorships and Other Experience   Mr. Koehler is a director at Teradata.
     
Executive Officer Experience   Mr. Koehler has significant management and leadership skills gained as Chief Executive Officer of Teradata, a global information technology provider.
     
International Oversight Expertise   Mr. Koehler’s role as Chief Executive Officer of a information technology provider with global operations provides the Board with critical experience regarding our domestic and international operations.
     
Strategy and Technology Experience   Mr. Koehler brings to our Board a deep knowledge of strategic operations and business development as well as valuable insights on how to incorporate technology into our ongoing operations.

 

14 Hertz Global Holdings, Inc. 2015 Proxy Statement (HERTZ LOGO)

 

 
 

 

ELECTION OF DIRECTORS
     
Linda Fayne Levinson
(Class III)
  Ms. Fayne Levinson has served as a director of the Company and Hertz since March 2012. Ms. Fayne Levinson is 73 years old. She has served as Lead Independent Director since August 14, 2014 and Independent Non-Executive Chair since September 7, 2014.
     
Business Experience   Ms. Fayne Levinson was a partner at GRP Partners, a venture capital investment fund investing in start-up and early-stage retail and electronic commerce companies, from 1997 to December 2004. Prior to that, she was a partner in Wings Partners, a private equity firm that took Northwest Airlines private, an executive at American Express running its leisure travel and tour business and a partner at McKinsey & Co.
     
Directorships and Other Experience   Ms. Fayne Levinson is also a director of Jacobs Engineering Group Inc., Ingram Micro Inc., The Western Union Company and NCR, where she has served as a director since 1997 and Lead Independent Director from 2007 to 2013. Ms. Fayne Levinson was formerly a director at DemandTec, Inc. from 2005 to 2012 until IBM acquired that company. Ms. Levinson has extensive corporate governance and executive compensation experience having chaired multiple Compensation and Nominating and Governance Committees.
     
Risk Management and Oversight   Ms. Fayne Levinson has demonstrated her expertise in risk management and oversight as a director of several public companies, including her experience as Lead Independent Director of NCR.
     
Travel Industry Knowledge   Ms. Fayne Levinson’s experience at Wings Partners and American Express provide her with extensive knowledge about the operating and financial issues that face the travel and transportation industry.
     
Leadership and Operating Experience   Ms. Fayne Levinson gained general management experience at American Express, strategic experience at McKinsey & Co. and investment experience at GRP Partners and Wings Partners. In addition, the Board believes that Ms. Fayne Levinson’s extensive management and leadership experience, her in-depth knowledge of corporate governance issues and her diversity of perspective provide us with valuable insight with regard to our global operations.

 

(HERTZ LOGO) Hertz Global Holdings, Inc. 2015 Proxy Statement 15

 

 
 

 

ELECTION OF DIRECTORS
     
John P. Tague
(Class III)
  Mr. Tague has served as the Chief Executive Officer and director of the Company and Hertz since November 21, 2014. Mr. Tague is 53 years old. Mr. Tague’s employment agreement provides that he will serve as a member of the Board.
     
Business Experience   Mr. Tague has served as the President and Chief Executive Officer and a member of the Boards of Directors of Hertz Holdings and Hertz since November 2014. Mr. Tague previously spent eight years at United Airlines, Inc. and UAL Corporation, where he served in a number of leadership roles, including President and Chief Operating Officer. Mr. Tague joined United Airlines and UAL Corporation in 2003 as Executive Vice President of Customers. He served as President from 2009 until 2010; Executive Vice President and Chief Operating Officer from 2008 to 2009; Executive Vice President and Chief Revenue Officer from 2006 to 2008; and Executive Vice President of Marketing, Sales, and Revenue from 2004 to 2006. Just prior to joining Hertz, Mr. Tague served as Chairman and Chief Executive Officer of Cardinal Logistics Holdings. Cardinal Logistics Holdings was created by the merger between Cardinal Logistics Management, Inc. and Greatwide Logistics Services, LLC, where Mr. Tague had served as Chief Executive Officer since 2011.
     
Directorships and Other Experience   Mr. Tague serves as a director of Choice Hotels International, Inc., one of the world’s largest hotel franchisors, where he serves on the Compensation Committee. Mr. Tague previously served on the Board of Directors for Reddy Ice Inc., Pacer International, Inc., Orbitz, ATA and United Airlines.
     
Extensive Knowledge of the Travel Industry   As the former President of United Airlines, Mr. Tague has specialized knowledge and experience in the travel industry.
     
Leadership and Management Experience   Mr. Tague, through his experiences as our CEO and as a former lead executive of large companies, as well as through his other directorships, has demonstrated excellent leadership abilities, financial and operational expertise, commitment, good judgment and management skills.
     
Executive Officer Experience   Mr. Tague’s experience as a President of United Airlines, as well as our CEO, allows him to add strategic value to the Board.

 

The Board recommends a vote FOR
all of the Class III nominees

 

16 Hertz Global Holdings, Inc. 2015 Proxy Statement (HERTZ LOGO)

 

 
 

 

CONTINUING DIRECTORS

 

Continuing Directors 

     
Carolyn N. Everson
(Class I)
  Ms. Everson has served as a director of the Company and Hertz since May 2013. Ms. Everson is 43 years old.
     
Business Experience   Ms. Everson serves as Vice President of Global Marketing Solutions for Facebook, Inc. (“Facebook”), where she manages the global marketing solutions team focused on expanding advertising revenue and managing significant, strategic accounts. 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.
     
     
Samuel Merksamer
(Class I)
  Mr. Merksamer has served as a director of the Company and Hertz since September 2014. Mr. Merksamer is 35 years old. Mr. Merksamer is a director designated by Carl C. Icahn pursuant to the Nominating and Standstill Agreement we entered into with Mr. Icahn described under “Certain Relationships and Related Party Transactions—Agreements with Carl C. Icahn.”
     
Business Experience   Mr. Merksamer is a Managing Director of Icahn Capital LP, a subsidiary 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), where he has been employed since May 2008. Mr. Merksamer is responsible for identifying, analyzing and monitoring investment opportunities and portfolio companies for Icahn Capital. From 2003 until 2008, Mr. Merksamer was an analyst at Airlie Opportunity Capital Management, a hedge fund management company, where he focused on high yield and distressed investments. Mr. Merksamer received an A.B. in Economics from Cornell University in 2002.
     
Directorships and Other Experience   Mr. Merksamer has been a director of: Cheniere Energy, Inc., a liquefied natural gas company, since August 2015; Transocean Partners LLC, a holding company with subsidiaries that own and operate ultra-deepwater drilling rigs, since November 2014; Hologic, Inc., a supplier of diagnostic, medical imaging and surgical products, since December 2013; Transocean Ltd., a provider of offshore contract drilling services for oil and gas wells, since May 2013; Navistar International Corporation, a truck and engine manufacturer, since December 2012; and Ferrous Resources Limited, an iron ore mining company with operations in Brazil, since November 2012. Mr. Merksamer was previously a director of: Talisman Energy Inc., an independent oil and gas exploration and production company, from December 2013 to May 2015; CVR Energy, Inc., a diversified holding company primarily engaged in the petroleum refining and nitrogen fertilizer manufacturing industries, from May 2012 to September 2014; CVR Refining, LP, an independent downstream energy limited partnership, from September 2012 to May 2014; Federal-Mogul Corporation, a supplier of automotive powertrain and safety components, from September 2010 to January 2014; American Railcar Industries, Inc., a railcar manufacturing company, from June 2011 to June 2013; Viskase Companies, Inc., a food packaging company, from January 2010 to April 2013; PSC Metals Inc., a metal recycling company, from March 2009 to October 2012; and Dynegy Inc., a company primarily engaged in the production and sale of electric energy, capacity and ancillary services, from March 2011 to September 2012. CVR Refining, CVR Energy, Federal-Mogul, American Railcar Industries, Viskase Companies and PSC Metals are each indirectly controlled by Carl C. Icahn. Mr. Icahn also has or previously had non-controlling interests in Hertz Holdings, Talisman, Transocean, Navistar, Ferrous Resources and Dynegy Inc. through the ownership of securities.

  

(HERTZ LOGO) Hertz Global Holdings, Inc. 2015 Proxy Statement 17

 

 
 

 

CONTINUING DIRECTORS
     
Finance and Strategic Experience   Mr. Merksamer provides our board with significant financial and strategic experience gained through his multiple directorships.
     
Operating and Corporate Governance Experience   Mr. Merksamer’s service in other director roles provides our Board extensive operating and governance experience as well as providing perspectives on strategy and direction of our Company.
     
Capital Markets Experience   Mr. Merksamer’s experience at the Icahn entities and as a former analyst provide our Board with important expertise in capital markets and finance matters.
     
     
Daniel A. Ninivaggi
(Class I)
  Mr. Ninivaggi has served as a director of the Company and Hertz since September 2014. Mr. Ninivaggi is 51 years old. Mr. Ninivaggi is a director designated by Carl C. Icahn pursuant to the Nominating and Standstill Agreement we entered into with Mr. Icahn described under “Certain Relationships and Related Party Transactions—Agreements with Carl C. Icahn.”
     
Business Experience   Mr. Ninivaggi has served as a director of Federal-Mogul Holdings Corporation (“Federal-Mogul Holdings”) and, prior to its holding company reorganization, Federal-Mogul Corporation since March 2010 and as Co-Chief Executive Officer of Federal-Mogul Holdings and Chief Executive Officer of Federal-Mogul Motorparts since February 2014. Mr. Ninivaggi has also served as Co-Chairman of Federal-Mogul Holdings since May 2015. 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, 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.
     
Directorships and Other Experience   In addition to serving as a director of Federal-Mogul Holdings, Mr. Ninivaggi has been a director of: Icahn Enterprises, from March 2012 through May 2015; and Tropicana Entertainment Inc., since January 2011. Mr. Ninivaggi was previously a director of: CVR Refining, LP, an independent downstream energy limited partnership, from January 2013 to September 2014; American Railcar Industries, Inc., a railcar manufacturing company, from June 2013 to February 2014; CVR Energy, Inc., a diversified holding company primarily engaged in the petroleum refining and nitrogen fertilizer manufacturing industries, from May 2012 to February 2014; CVR Partners LP, a nitrogen fertilizer company, from May 2012 to February 2014; PSC Metals Inc., a metal recycling company, from April 2012 to February 2014; WestPoint Home LLC, a home textiles manufacturer, from February 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; and CIT Group, Inc., a bank holding company, from December 2009 to May 2011. Mr. Ninivaggi received a B.A. in History from Columbia University in 1986, a Masters of Business Administration from the University of Chicago in 1988 and a J.D. from Stanford Law School in 1991.
     
Executive Officer and Leadership Experience   Mr. Ninivaggi provides the Board with leadership skills, significant management, strategic and operational experience through his roles of 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 role at Federal-Mogul Holdings, Lear Corporation and other directorships.

 

18 Hertz Global Holdings, Inc. 2015 Proxy Statement (HERTZ LOGO)

 

 
 

 

CONTINUING DIRECTORS
     
Michael J. Durham
(Class II)
  Mr. Durham has served as a director of the Company and Hertz since November 2006. Mr. Durham is 64 years old.
     
Business Experience   Mr. Durham served as Director, President and Chief Executive Officer of Sabre, Inc. (“Sabre”), then a NYSE-listed company providing information technology services to the travel industry, from October 1996, the date of Sabre’s initial public offering, to October 1999. From March 1995 to July 1996, when Sabre was a subsidiary of AMR Corporation, he served as Sabre’s President. Prior to joining Sabre, Mr. Durham spent 16 years with American Airlines, serving as the Senior Vice President and Treasurer of AMR Corporation and Senior Vice President of Finance and Chief Financial Officer of American Airlines from October 1989 until he assumed the position of President of Sabre in March 1995.
     
Directorships and Other Experience   Mr. Durham also serves as a member of the Boards of Directors of Travelport Worldwide Ltd. and Cambridge Capital Acquisition Corp. During the preceding five years, Mr. Durham has served on the Boards of Directors of Asbury Automotive Group, Inc., Acxiom Corporation, both publicly listed companies, and Travora Media and Culligan International, both privately held companies.
     
Broad Industry Experience   Mr. Durham has extensive business experience in the automotive, travel and transportation industries, which provides our Board with leadership skills and a breadth of knowledge about the challenges and issues facing companies such as ours.
     
Public Company and Executive Officer Experience   Mr. Durham’s tenure both as Chief Executive Officer and Chief Financial Officer of large, multinational public companies allows him to add strategic value and management experience to the Board.
     
Corporate Governance and Financial Expertise   Mr. Durham’s experience as a director, and frequently a member of the audit committee, on a number of different company boards also gives him a valuable perspective to share with the Company.

  

(HERTZ LOGO) Hertz Global Holdings, Inc. 2015 Proxy Statement 19

 

 
 

 

CONTINUING DIRECTORS
     
Vincent J. Intrieri
(Class II)
  Mr. Intrieri has served as a director of the Company and Hertz since September 2014. Mr. Intrieri is 58 years old. Mr. Intrieri is a director designated by Carl C. Icahn pursuant to the Nominating and Standstill Agreement we entered into with Mr. Icahn described under “Certain Relationships and Related Party Transactions—Agreements with Carl C. Icahn.”
     
Business Experience   Mr. Intrieri has been employed by Icahn related entities since October 1998 in various investment related capacities. Since January 2008, Mr. Intrieri has served as Senior Managing Director of Icahn Capital LP, the entity through which Carl C. Icahn manages private investment funds. In addition, since November 2004, Mr. Intrieri has been 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 Hertz Holdings, 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 employment with the Icahn entities makes him an important advisor to our Board.
     
Corporate Governance Experience   Mr. Intrieri’s multiple directorships gives Mr. Intrieri a deep understanding of our 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.

 

20 Hertz Global Holdings, Inc. 2015 Proxy Statement (HERTZ LOGO)

 

 
 

 

COMPENSATION DISCUSSION AND ANALYSIS: EXECUTIVE SUMMARY

 

Compensation Discussion and Analysis  

 

     
  Executive Summary  
     
  Our Company’s financial and operating performance during 2014 was very disappointing. With respect to all of the financial measures used to measure success under our Company’s annual and long-term incentive plans, results were below target expectations and, in four out of five cases, below threshold. In addition, a review of our Company’s accounting controls resulted in the conclusion that there were accounting misstatements, which required the restatement of financial results for 2011 through 2013 and delayed filing the financial statements for 2014. The Explanatory Note to the Company’s 2014 Annual Report and Note 2, “Restatement” to the Notes to our consolidated financial statements under the caption Item 8, “Financial Statements and Supplementary Data” to the Company’s 2014 Annual Report provide further details about these events. These events were reflected in Hertz Holdings’ stock price, which declined 13% from January 1, 2014 to December 31, 2014.  
     
  These poor results had major consequences on our executive compensation program.  
     

 

           
  Payments under the executive compensation program  
         
  The three main elements of compensation we pay to our NEOs are salary, an annual cash bonus under Hertz Holdings’ Senior Executive Bonus Plan and equity awards based on the performance of our Company.  
         
    Salaries Remained the Same as in 2013 or Were Only Modestly Increased: We either did not increase salaries (including the salaries for our former CEO, Mark Frissora and our current CFO, Thomas Kennedy (who was hired in December 2013), and our former Group President, Rent-A-Car Americas, Scott Sider), or provided modest, market-based increases (ranging from 2% to 3%) for our other NEOs.  
         
    Annual Cash Bonus Earned Significantly Below Target: Due to our operating and financial performance in 2014 being well below established targets, the annual cash bonuses were a very small percentage of target- the highest percentage was approximately 11% of target for the NEOs, with the exceptions (described below) of Messrs. Tague and MacDonald, who had contractually negotiated higher amounts, and our CFO, Mr. Kennedy whose higher bonus reflected his extraordinary efforts in reviewing and evaluating the financial statements and internal audit function of the Company.  
         
    Long-Term Incentives  
           
      2014-2015 Corporate EBITDA Performance Stock Units (“PSUs”) Were Not Earned: Because our Corporate EBITDA (as defined in “Non-GAAP Measures” below) did not exceed the threshold performance level necessary to earn PSUs for 2014, our NEOs earned none of the PSUs based on Corporate EBITDA granted in 2014. While PSUs can potentially be earned based on 2014-2015 performance, it is also expected that 2014-2015 performance will not result in any PSUs being earned.  
           
      2014 Corporate EBITDA Margin PSUs Were Not Earned: Because our 2014 Corporate EBITDA margin (as defined and calculated in “Non-GAAP Measures” below) was below the established Corporate EBITDA margin target, our NEOs earned none of the 2014 Corporate EBITDA margin PSUs.  
           

 

 (HERTZ LOGO) Hertz Global Holdings, Inc. 2015 Proxy Statement 21

 

 
 

 

COMPENSATION DISCUSSION AND ANALYSIS: EXECUTIVE SUMMARY

 

       
  2012-2013 and 2013-2014 Corporate EBITDA PSUs Were Adjusted Downward Based on Restated Financials. As a result of our restated 2012 and 2013 financials, the Compensation Committee reduced the number of PSUs which were eligible to vest to correspond with actual Corporate EBITDA performance in 2012 and 2013. Restated 2012-2013 Corporate EBITDA performance reduced the number of PSUs earned from 98.4% to 82.8% of target and restated Corporate EBITDA performance for 2013 and 2013-2014 reduced the number of PSUs earned from 66.0% to 60.0% of target.  
       

 

     
  Changes in Our Executive Team  
     
  We made very extensive changes to our senior management team in 2014 and 2015, and we believe these changes have better positioned our Company for future success. Among our NEOs these changes involved the departure of our Chief Executive Officer, our Chief Executive Officer of Hertz Equipment Rental Corporation, our Group President, Rent-A-Car Americas, our Executive Vice President, General Counsel and Secretary, and our Executive Vice President Corporate Affairs and Communications. These changes occurred under circumstances that entitled the departing executives to benefits under their employment agreements or Hertz Holdings’ Severance Plan for Senior Executives.  
     

 

           
  Changes in the 2015 Compensation Program  
         
  The Compensation Committee, in consultation with its new independent compensation consultant Frederic W. Cook & Co., Inc. (“Frederic Cook”), and with input from new management, engaged in a complete review of our Company’s executive compensation program and overall compensation philosophy. Based on this review, the Compensation Committee has made and is continuing to make major changes to the overall structure of our 2015 compensation program and believes these changes will be beneficial to our continued efforts to recruit and retain the individuals who will drive the future of our Company.  
         
    Changes to our annual cash compensation program  
           
      Use of adjusted pre-tax income as the main performance modifier: Instead of the three financial metrics (adjusted pre-tax income (“API”), return on total capital, and revenue) used in 2014 to measure corporate financial performance under Hertz Holdings’ Senior Executive Bonus Plan, the 2015 plan will use just one metric-API. While the other metrics continue to be important, the Compensation Committee believes that API is the most important metric at this time and using one metric best focuses our NEOs on this critical component of financial success. Consistent with the emphasis on simplification and growing API, the Compensation Committee modified the component of the award based on business unit performance by removing multiple performance and operating goals for business unit performance. Instead, API measured at the business unit level will be a portion of the award for certain business unit executives.  
           
      Effective cap on overall payouts: Instead of potential payouts that could equal 300% of target for specified levels of high performance under the 2014 plan and in certain circumstances be even higher, maximum payouts under Hertz Holdings’ Senior Executive Bonus Plan have been generally reduced to 160% of target for participants.  
           

 

22 Hertz Global Holdings, Inc. 2015 Proxy Statement  (HERTZ LOGO)

 

 
 

 

COMPENSATION DISCUSSION AND ANALYSIS: EXECUTIVE SUMMARY

 

         
  Changes to our long-term incentive plan  
         
    Corporate EBITDA PSUs based on three-year rather than two-year performance period: PSUs based on Corporate EBITDA will comprise 50% (instead of the previous 70%) of each NEO’s long-term equity award. The Corporate EBITDA targets that have been established for 2015, 2016, and 2017 are significantly higher than 2014 Corporate EBITDA and increase each year. 1/3 of the PSUs will be earned each year, depending on whether that year’s target is met and, if not met, no PSUs will be earned for that year. Earned PSUs will vest as a single tranche at the end of three years after the certification of results for the last performance period covered by the award.  
         
    Elimination of Corporate EBITDA margin awards: PSUs based on Corporate EBITDA margin, which were earned if Corporate EBITDA margin equaled 75% of the prior year’s margin, have been eliminated.  
         
    Use of stock options: 50% of each NEO’s long-term equity incentive award will consist of stock options, reflecting the Compensation Committee’s view that shareholder interests are best advanced at this time with a stock incentive that only provides value when the price of Hertz Holdings’ common stock increases.  
         
    Focused CEO compensation arrangements: Pursuant to Mr. Tague’s employment agreement (as will be further described below), while the CEO’s long-term incentives have also been awarded in the form of PSUs and stock options, (1) 50% of his options vest based on his meeting goals with respect to developing a business plan and assembling a management team, and (2) the remaining awards vest based on our Company achieving certain revenue efficiency measures for the 2015-2017 time period.  
         

 

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  
             
   (GRAPHIC) We pay for our Company’s financial and operating performance    (GRAPHIC) We don’t have a high percentage of fixed compensation  
   (GRAPHIC) We evaluate risk in light of our compensation programs    (GRAPHIC) We don’t exclusively grant time-vested awards  
   (GRAPHIC) We cap the amount of our annual cash bonuses at reasonable levels    (GRAPHIC) We don’t allow our officers and directors to hedge or pledge our stock  
   (GRAPHIC) We use double-trigger provisions for our change in control agreements    (GRAPHIC) We don’t use the same performance metrics for short-term and long-term compensation  
   (GRAPHIC) We use an independent compensation consultant    (GRAPHIC) We don’t use a peer group composed of companies significantly larger than ours  
   (GRAPHIC) We have a robust stock ownership policy    (GRAPHIC) We don’t re-price underwater options  
   (GRAPHIC) We maintain clawback policies    (GRAPHIC) We don’t use short-term vesting for stock awards  
   (GRAPHIC) We revised our change in control agreement to eliminate tax gross-ups for new hires    (GRAPHIC) We don’t provide for automatic salary increases  
             

 

 (HERTZ LOGO) Hertz Global Holdings, Inc. 2015 Proxy Statement 23

 

 

 
 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

Compensation Discussion and Analysis

 

Named Executive Officers

 

We refer to the following individuals as our “named executive officers” (or “NEOs”):

     
  John P. Tague, who became our Chief Executive Officer on November 21, 2014;
  Thomas C. Kennedy, our Chief Financial Officer and Senior Executive Vice President;
  Brian P. MacDonald, who became Chief Executive Officer of Hertz Equipment Rental Corporation (“HERC”) on June 2, 2014 and served in that role until his resignation on May 20, 2015, and served as our interim CEO from September 7, 2014 to November 20, 2014;
  Michel Taride, who is our Group President, Rent-A-Car International;
  Robert J. Stuart, who is our Executive Vice President, Sales and Marketing;
  Richard D. Broome, who served as our Executive Vice President, Corporate Affairs and Communications until his resignation on July 1, 2015;
  Mark P. Frissora, who served as our CEO until his resignation on September 7, 2014;
  Scott P. Sider, who served as Group President, Rent-A-Car Americas until his retirement on August 18, 2014; and
  J. Jeffrey Zimmerman, who served as Executive Vice President, General Counsel and Secretary until his resignation on December 1, 2014.

 

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 Hertz Holdings’ common stock: Our Compensation Committee believes that creating goals which are more directly focused on the price and performance of Hertz Holdings’ common stock will further align the interests of Hertz Holdings’ stockholders and our NEOs.
  Our compensation design should be simple, transparent and clearly articulated to our participants and stockholders: Our Compensation Committee is committed to simplifying 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 Hertz Holdings’ 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 Hertz Holdings’ 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 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.

 

24 Hertz Global Holdings, Inc. 2015 Proxy Statement  (HERTZ LOGO)

 

 
 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

Determining What We Pay - Role of Compensation Consultants

 

The Compensation Committee has the authority to retain outside advisors as it deems appropriate. From July 2008 to November 2014, the Compensation Committee engaged Semler Brossy Consulting Group LLC (“Semler Brossy”) as its compensation consultant to provide advice and information. In November 2014, the Compensation Committee, after review of the services provided by Semler Brossy and relevant independence considerations, transitioned from Semler Brossy and engaged Frederic Cook as its compensation consultant. Frederic 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 senior executive employment agreements.

 

The Compensation Committee reviews our compensation programs in light of Frederic 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 Frederic Cook. Frederic Cook does not perform any services for the Company other than 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 the compensation consultants did not raise any conflicts of interest and the compensation consultants engaged by the Compensation Committee are independent.

 

Determining What We Pay - Role of the CEO

 

In determining the appropriate levels of our compensation programs, our CEO traditionally provides his input to the Compensation Committee on topics that he believes are important. 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’s reviews and observations regarding performance provide additional data for the Compensation Committee to consider regarding our overall compensation program. In addition, the Independent Non-Executive Chair, who is the Chair of the Compensation Committee, has an integral role in the determination of our CEO’s compensation through her independent review and discussions with various parties. Because our Independent Non-Executive Chair is the Chair of the Compensation Committee, the Board believes that this provides the requisite focus on evaluating the CEO and setting his compensation relative to his performance. Although our Compensation Committee may give weight to our CEO’s input, in all cases, the final determinations over compensation reside with the Compensation Committee or, if directed by the Board, in the case of our CEO, with the independent members of our Board.

 

 (HERTZ LOGO) Hertz Global Holdings, Inc. 2015 Proxy Statement 25

 

 
 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

Determining What We Pay - Elements of our Compensation Programs

           
Element   Type   How and Why We Pay It
         
Salary   Fixed Cash   Paid throughout the year to attract and retain senior executives
        Sets the baseline for bonus and retirement 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 Hertz Holdings’ stockholders’ interests, reinforces key strategic initiatives and encourages superior individual performance
Long-Term Equity   Long-Term Equity   Granted annually, with vesting occurring in subsequent years based on satisfying performance conditions
        Aligns senior executives’ interests with Hertz Holdings’ stockholders’ interests and drives key performance goals
Retirement Benefits and Perquisites   Variable Other   Paid at retirement based on senior executives’ salary, bonus and years of service to the Company
    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.

 

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 2013 in consultation with Semler Brossy. 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 that are in the consumer discretionary (excluding media companies), consumer staples and industrials (excluding capital goods companies) sectors. These industries were selected because successful companies within these industries frequently bear substantial similarities to the Company’s business model, insofar as they (i) are asset-intensive, (ii) require frequent customer contact at multiple locations and (iii) involve the need to maintain favorable brand recognition. The companies in the Survey Group had annual revenues of approximately $5 to $22 billion, as compared to the Company’s 2014 revenue of $11 billion. We included a relatively large number (49) of companies in the Survey Group, in part because we believe that doing so helps to reduce the influence of outliers. Of the 49 companies in the Survey Group, 37 were in the prior Survey Group.

 

26 Hertz Global Holdings, Inc. 2015 Proxy Statement  (HERTZ LOGO)

 

 
 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

The following are the companies that comprised our Survey Group in 2014:

     
Advance Auto Parts Inc. General Mills, Inc. R.R. Donnelley & Sons Co.
Avis Budget Group, Inc. Hershey Co. Ralph Lauren Corp.
Avon Products Inc. Hormel Foods Corp. Ross Stores Inc.
Big Lots, Inc. J.C. Penney Company, Inc. Ryder System, Inc.
BorgWarner Inc. J. M. Smucker Co. Southwest Airlines Co.
CarMax Inc. Kellogg Co. Starbucks Corp.
Carnival Corp. Kelly Services, Inc. Starwood Hotels & Resorts Worldwide, Inc.
Coach Inc. Kohl’s Corp. SUPERVALU Inc.
Colgate-Palmolive Co. L Brands, Inc. TRW Automotive Holdings Corp.
ConAgra Foods, Inc. Marriott International, Inc. V. F. Corp.
CSX Corp. Mattel, Inc. Visteon Corp.
Darden Restaurants, Inc. Newell Rubbermaid Inc. Waste Management, Inc.
Dean Foods Co. Nordstrom, Inc. Whirlpool Corp.
Dr. Pepper Snapple Group Inc. Norfolk Southern Corp. Whole Foods Market, Inc.
Estee Lauder Companies Inc. Office Depot, Inc. YUM! Brands, Inc.
Federal-Mogul Corp. Penske Automotive Group Inc.  
Gap Inc. PVH Corp.  

 

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 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 - Response to Advisory Vote on Executive Compensation

 

In 2014, Hertz Holdings’ advisory vote on executive compensation was approved by the following vote:

       
For Against Abstain Broker Non-Votes
       
342,971,299 10,216,316 2,049,239 37,536,408

 

This represented a 96% level of approval. Although the effect of the advisory vote on executive compensation is non-binding, the Board and Compensation Committee considered the results of the 2014 vote and will continue to consider the results of future votes in determining the compensation of our NEOs and our compensation programs generally. Hertz Holdings values the opinions of its stockholders and is committed to considering their opinions in making compensation decisions.

 

 (HERTZ LOGO) Hertz Global Holdings, Inc. 2015 Proxy Statement 27

 

 
 

 

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 his own compensation) regarding salary decisions for NEOs. We review salaries upon promotion or other changes in job responsibility.

 

As the result of our regular, cyclical review of salaries, the annual base salaries for our NEOs were established for 2014 as set forth below. The 2014 increases for NEOs who were employed throughout 2013 ranged from 0% to approximately 3%, and averaged approximately 1%.

               
    2014 Salary   2013 Salary      
Name   ($)   ($)   What We Took Into Consideration in Setting 2014 Salaries
             
Mr. Tague(1)   1,450,000   N/A   Offering a competitive salary in connection with Mr. Tague’s appointment as Chief Executive Officer of our Company in November 2014
Mr. Kennedy   660,000   660,000   Offering a competitive salary in connection with Mr. Kennedy’s appointment as Chief Financial Officer in December 2013
Mr. MacDonald(1)   1,100,000   N/A   Offering a competitive salary in connection with Mr. MacDonald’s appointment as Chief Executive Officer of HERC in June 2014(2)
Mr. Taride(3)   637,897   624,166   The overall performance of our Rent-A-Car International business unit in 2013
            Mr. Taride’s performance in managing our worldwide expansion of our new and existing brands
Mr. Stuart   505,000   495,000   Mr. Stuart’s performance in managing and expanding our marketing efforts for all of our brands
            Mr. Stuart’s role in preserving and expanding our relationships with key customers
Mr. Broome   394,500   383,000   Mr. Broome’s performance in managing our corporate communications strategies and stockholder outreach
Mr. Frissora   1,450,000   1,450,000   Mr. Frissora’s performance in managing our Company’s operations in 2013
Mr. Sider   660,000   660,000   The overall performance and growth of our Rent-A-Car Americas business unit in 2013
Mr. Zimmerman   536,000   520,000   Mr. Zimmerman’s leadership in expanding and managing our legal department in 2013
            Mr. Zimmerman’s performance in handling special legal projects related to our Company and HERC

     
(1) The base salaries actually paid to Messrs. Tague and MacDonald were pro-rated to their respective start dates of November 21, 2014 and June 21, 2014.
   
(2) Mr. MacDonald served as Chief Executive Officer of HERC from June 2014 through May 2015.
   
(3) For Mr. Taride, these amounts have been converted to U.S. dollars from pounds sterling at the 12-month average rate of 1.64739.

 

28 Hertz Global Holdings, Inc. 2015 Proxy Statement  (HERTZ LOGO)

 

 
 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

Senior Executive Bonus Plan

 

Our NEOs’ compensation includes an annual cash bonus computed pursuant to the terms of the Executive Incentive Compensation Plan (“EICP”), which will be described in the next section. In order that bonus payments qualify as deductible under Section 162(m) of the Internal Revenue Code (the “Code”), the actual payments are made through the Hertz Global Holdings, Inc. Senior Executive Bonus Plan (“Senior Executive Bonus Plan”), which was approved by Hertz Holdings’ stockholders at its 2010 annual meeting. 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 (1) to our CEO is limited to 1% of our EBITDA, as defined in “Non-GAAP Measures” below, for a performance period and (2) to our other participants is limited to 0.5% of our EBITDA for a performance period. If our EBITDA is greater than $0, our NEOs will become eligible for an award under the EICP, the subplan under which our Compensation Committee exercises its discretion to reduce the size of the awards payable under the Senior Executive Bonus Plan. Although our Compensation Committee exercises discretion to reduce annual incentives under the Senior Executive Bonus Plan, it may not increase the payments.

 

As will be described below, different cash bonus arrangements applied to Messrs. Tague and MacDonald because they were hired in 2014 after the performance period was well under way. See “Cash Bonus for John P. Tague” and “Cash Payments to Brian P. MacDonald” for descriptions of their arrangements.

 

Annual Cash Incentive Program (EICP)

 

How We Determined the 2014 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:

 

    Corporate   Business Unit   Individual   Annual Incentive
Target Award X Performance X Modifier(2) X Performance = Payout
    Modifier(1)       Modifier(3)    
        (75% to 125%)   (0% to 150%)   (EICP Award)

 

 

(1) The Corporate Performance Modifier is designed to reward our Company’s overall financial performance and is based on the weighted average of our Company’s API, return on total capital and revenue.
   
(2) The Business Unit Modifier is designed to reward the performance of individual business units and, for corporate employees, the weighted average of each individual business unit’s performance.
   
(3) The Individual Performance Modifier is designed to reward the individual performance of our NEOs.

 

Target Awards for 2014

 

The Target Award for 2014 was a percentage of the NEO’s 2014 base salary. In general, the Compensation Committee considered the experience, responsibilities, title and historical performance of each particular NEO when determining Target Awards.

 

 (HERTZ LOGO) Hertz Global Holdings, Inc. 2015 Proxy Statement 29

 

 
 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

Each NEO’s 2014 Target Award as a percentage of base salary as of December 31, 2014 was as follows: 

          
   Target Award as a  Salary as of   
   % of Salary  December 31, 2014  Target Award
Named Executive Officer  (%)  ($)  ($)
          
Mr. Kennedy   85    660,000    561,000 
Mr. Taride(1)   85    637,897    542,213 
Mr. Stuart   75    505,000    378,750 
Mr. Broome   70    394,500    276,150 
Mr. Frissora   170    1,450,000    2,465,000 
Mr. Sider   85    660,000    561,000 
Mr. Zimmerman   80    536,000    428,800 

 

 

(1) For Mr. Taride, these amounts have been converted to U.S. dollars from pounds sterling at the 12-month average rate of 1.64739.

 

Corporate Performance Modifier for 2014

 

The chart below summarizes the financial performance elements of the 2014 Corporate Performance Modifier. In early 2014, the Compensation Committee reviewed each element of the 2014 Corporate Performance Modifier. From this review, the Compensation Committee elected to continue using API and revenue as Corporate Performance Modifiers and replaced economic value added, or EVA® (a registered trademark of Stern Stewart and Co.) with return on total capital. Like EVA®, return on total capital provides a relative measure of our profitability compared to our invested capital, however we believe that return on total capital is the measure more commonly used by analysts who follow Hertz Holdings. The financial performance elements contained the same weights as those used in the 2013 Corporate Performance Modifier, with the exception of return on total capital, which entirely replaced the 40%-weighted EVA® metric.

 

           
Corporate Performance Modifier-Financial Performance Element Summary
      U.S.    
Criteria Weight   GAAP? What It Is Why We Use It
Adjusted Pre-Tax Income (“API”) 40%   No Equal to our income before acquisition accounting charges, non-cash interest items, income taxes, minority interest, restructuring expenses, significant one-time items and non-cash “mark-to-market” income and expense API allows management to assess the operational performance of our business, exclusive of the items previously mentioned that do not reflect our operating performance
Return on Total Capital 40%   No Equal to API plus our gross interest expense and the expense for equity awards divided by the average total capital balance for each of the four relevant quarters. Total capital balance is defined as average assets, including goodwill, other intangibles and other acquisition accounting related balances, minus average non-interest bearing liabilities Return on total capital measures our profitability relative to our capital structure
Revenue 20%   Yes Our Company’s revenue Revenue is a strong indicator of how our Company is performing overall

 

30 Hertz Global Holdings, Inc. 2015 Proxy Statement  (HERTZ LOGO)

 

 
 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

The Compensation Committee set goals for each of API, return on total capital and revenue. 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, revenue and return on total capital was based upon our business plan.

 

Calculation of the Corporate Performance Modifier-Targets and Results

 

The following were the fiscal 2014 financial performance criteria targets set by the Compensation Committee and our actual performance as compared to such targets (dollars in millions): 

                
2014 Corporate Performance Modifier
             Return on
   API   Revenue   Total Capital
   (40% Weight)   (20% Weight)   (40% Weight)
            
Threshold(1)  $1,196.3   $10,971.6    12.11%
Target = 100% Multiplier  $1,329.2   $11,549.1    13.46%
High Performance Level(2)  $1,528.6   $12,415.3    15.48%
Actual Results  $417.9   $11,017.6    5.99%
Payout Factor   0.0%   63.2%   0.0%
Corporate Performance Modifier        12.6%     

 

 

(1) Any API, revenue or return on total capital results that equal the threshold receive a 60% multiplier. Any API, revenue or return on total capital results that are below the threshold receive a 0% multiplier.
   
(2) Any API, revenue or return on total capital results that equal the high performance level receive a 160% multiplier.

 

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

 

We disclosed our actual API, as well as detailed reconciliations of this Non-GAAP measure, in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s 2014 Annual Report under the caption “Footnotes to the Results of Operations and Selected Operating Data by Segment Tables.”

 

We calculate return on total capital as (1) net operating profit before taxes divided by (2) total capital. We calculate net operating profit before taxes as API plus our gross interest expense and the expense for equity awards. Total capital for any particular quarter is calculated as average assets, including goodwill, other intangibles and other acquisition accounting related balances, minus average non-interest bearing liabilities. In order to determine an annual amount for total capital, we take the sum of the total capital balance for each of the four relevant quarters and divide by 4.

 

Business Unit Modifier for 2014

 

Based upon management’s recommendation, our Compensation Committee determined that it was important to provide incentives to our NEOs to achieve strategic initiatives for our Hertz Rent-A-Car Americas, Hertz Rent-A-Car International and Hertz Equipment Rental business units for 2014. The business units used in the EICP differ slightly from the reporting segments the Company uses for its financial statements because the Compensation Committee desires to use business units which reflect the overall geographic and functional roles for which the relevant executive officers are responsible, notwithstanding the accounting guidance used for segment reporting purposes. NEOs responsible for to a specific business unit are eligible to have their EICP awards adjusted by the Business Unit Modifier relating to that business unit. NEOs in our corporate centers had

 

 (HERTZ LOGO) Hertz Global Holdings, Inc. 2015 Proxy Statement 31

 

 
 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

their EICP awards adjusted by weighting Hertz Rent-A-Car Americas: 50%, Hertz Rent-A-Car International 25%, and Hertz Equipment Rental 25%. For 2014, the Compensation Committee determined a target for each strategic objective and then measured the 2014 results against the target to determine an overall performance figure. The Business Unit Modifier can range from 75% to 125%.

 

For the Hertz Rent-A-Car Americas business unit, the strategic goal approved by our Compensation Committee was achievement of a specified level of cost synergies, weighted at 100% of the overall score. Since the result was less than 75% of the target, the total Business Unit Modifier was set at the minimum, 75%. 

       
Hertz Rent-A-Car Americas
  Target Result Total Modifier
Strategic Goal ($ in millions) ($ in millions) (%)
       
Cost Synergies 249 37.3 75.0

 

For the Hertz Rent-A-Car International business unit, the strategic goals approved by our Compensation Committee were: spread value per unit, net promoter score and cost synergies. Each strategic goal was weighted at 33⅓% of the overall score. 

         
Hertz Rent-A-Car International
      Total Modifier
Strategic Goal Target Result (%)
       
Spread Value Per Unit(1) $766.8 $767.60 103.1  
Net Promoter Score(2) 52.0% 50.4% 75.0  
Cost Synergies $100 million $83.7 million 83.7  
Total Modifier     87.3  

  

     
(1) Spread value per unit was measured as revenue per unit less vehicle depreciation per unit.
   
(2) Net Promoter Score is a customer satisfaction metric.

 

For the Hertz Equipment Rental business unit, the strategic goals approved by our Compensation Committee were: dollar utilization, fleet efficiencies and employee satisfaction. Each strategic goal was weighted at 33⅓% of the overall score. For 2014, the Compensation Committee determined that the Business Unit Modifier for Hertz Equipment Rental was as follows: 

             
Hertz Equipment Rental
  Target Result Modifier
Strategic Goal (%) (%) (%)
       
Dollar Utilization(1) 37.8   36.17   75.0  
Fleet Efficiencies(2) 5.0   2.8   78.0  
Employee Satisfaction(3) +0.00   +0.04   108.0  
Total Modifier         87.0  

 

     
(1) Dollar utilization was measured as our annualized rental revenue divided by the original equipment cost of our equipment rental fleet relative to our business plan.
   
(2) Fleet efficiencies was measured as the improvement in fleet unavailable for rent, which is determined by comparing the fleet that cannot be rented due to factors under our general control to our total equipment fleet. This metric is improved by reducing the amount of time that our fleet is unavailable for rent.
   
(3) Employee satisfaction was measured through an employee pulse survey score.

  

32 Hertz Global Holdings, Inc. 2015 Proxy Statement  (HERTZ LOGO)

 

 
 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

The Corporate-weighted Business Unit Modifier used for our NEOs who do not report to a specific business unit was determined using the weighting described above, and equaled 81.1%.

 

Below is a chart that indicates, for each NEO listed, (i) the specific business unit to which each NEO reports, or in the case of the corporate center executives, the Corporate weighted-average of all of the business units, and (ii) the Business Unit Modifier for the business unit or Corporate-weighted average as set forth above. 

       
    Business  
    Unit Modifier  
Named Executive Officer Business Unit (%)  
       
Mr. Kennedy Corporate-weighted average of business units 81.1  
Mr. Taride Hertz Rent-A-Car International 87.3  
Mr. Stuart Corporate-weighted average of business units 81.1  
Mr. Broome Corporate-weighted average of business units 81.1  
Mr. Frissora Corporate-weighted average of business units 81.1  
Mr. Sider Hertz Rent-A-Car Americas 75.0  
Mr. Zimmerman Corporate-weighted average of business units 81.1  

 

Individual Performance Modifier for 2014

 

Annually, our CEO assesses the individual performance of the NEOs (excluding himself), taking into account multiple factors beyond the specific metrics outlined above. In early 2015, after taking into consideration Mr. Tague’s recommendations, the Compensation Committee set the Individual Performance Modifier at 100% for Messrs. Taride, Stuart and Broome. Each of Messrs. Frissora, Sider and Zimmerman received an Individual Performance Modifier of 100% based on the terms of their respective separation agreement.

 

2014 Senior Executive Bonus Plan Payouts

 

The chart below shows how each NEO’s 2014 Senior Executive Bonus Plan award was calculated under the EICP: 

                       
        Corporate       Individual      
        Performance   Business Unit   Performance      
    Target Award   Modifier   Modifier   Modifier   Payout  
Named Executive Officer   ($) X (%) X (%) X (%) = ($)  
                       
Mr. Kennedy(1)   561,000   12.6   81.1   100   280,500  
Mr. Taride(2)   542,213   12.6   87.3   100   59,638  
Mr. Stuart   378,750   12.6   81.1   100   38,703  
Mr. Broome   276,150   12.6   81.1   100   28,219  
Mr. Frissora(3)   2,465,000   12.6   81.1   100   178,047  
Mr. Sider(3)   561,000   12.6   75.0   100   33,406  
Mr. Zimmerman(3)   428,800   12.6   81.1   100   40,696  

 

     
(1) For Mr. Kennedy, the Compensation Committee took into account Mr. Kennedy’s performance in managing the Company’s accounting functions in 2014 in light of (i) the ongoing restatement of periods before Mr. Kennedy joined the Company and (ii) Mr. Kennedy’s extraordinary efforts in reviewing and evaluating the financial statements and internal audit function of the Company, and used its discretion to award Mr. Kennedy 50% of his target award ($280,500) instead of the $57,326 payout contemplated by the terms of the EICP.

 

 (HERTZ LOGO) Hertz Global Holdings, Inc. 2015 Proxy Statement 33

 

 
 

 

COMPENSATION DISCUSSION AND ANALYSIS

  

(2) For Mr. Taride, these amounts have been converted to U.S. dollars from pounds sterling at the 12-month average rate of 1.64739.
   
(3) For Messrs. Frissora, Sider and Zimmerman, these amounts were pro-rated pursuant to each executive’s separation agreement, which provided for Mr. Frissora to receive 71%, Mr. Sider to receive 63% and Mr. Zimmerman to receive 93% of the EICP bonus earned by each respective executive for 2014.

 

Cash Bonus for John P. Tague

 

In connection with the hiring of John P. Tague as CEO, Hertz Holdings entered into a term sheet and later an employment agreement with Mr. Tague setting forth his annual bonus for 2014. Pursuant to his term sheet and employment agreement, Mr. Tague received a guaranteed bonus of $108,750. Mr. Tague’s bonus was calculated as follows: 

                       
    Target Award as a   Salary as of   Minimum Factor   Pro-rated for      
    % of Salary   December 31, 2014   Per Term Sheet   2014 Year      
Named Executive Officer   (%)  X ($)   X (%)  X Service =  Bonus Award($)  
                       
Mr. Tague   150%   1,450,000   60   1/12   108,750  

 

Mr. Tague did not participate in the Senior Executive Bonus Plan in 2014, but will be a participant in 2015.

 

Cash Payments to Brian P. MacDonald

 

In connection with the hiring of Mr. MacDonald in June 2014, Hertz Holdings entered into an employment agreement with Mr. MacDonald. The terms of the employment agreement provided that Mr. MacDonald would be entitled, at minimum, to his target award (target was 130% of base salary) as pro-rated for his June 2, 2014 start date. In light of the performance of the Company under the Senior Executive Bonus Plan and the EICP, Mr. MacDonald was awarded a total of $834,493, the minimum amount as set forth under his employment agreement.

 

The Board elected to pay Mr. MacDonald an additional cash bonus, retroactive to the date Mr. MacDonald was appointed as interim CEO of our Company, equal to a proportionate amount of a $500,000 annual bonus, in recognition of his increased responsibilities as interim CEO, which amount was in addition to any amounts he would be entitled to receive under the Senior Executive Bonus Plan or his employment agreement. The amount of that bonus paid to Mr. MacDonald for his service as interim CEO during 2014 was $125,000.

 

Cash Bonus for Thomas C. Kennedy

 

In March 2014, the Compensation Committee, upon recommendation of our former CEO, Mr. Frissora, elected to pay Mr. Kennedy an additional cash bonus of $251,835 in recognition of his superior performance. The bonus was a one-time bonus and did not recur during the first quarter of 2015. Mr. Kennedy was also paid a sign-on bonus of $75,000 in 2014 in connection with his hire in December of 2013.

 

Special Award Agreement with Robert J. Stuart

 

As discussed under “Determining What We Pay - Compensation Philosophy and the Role of the Compensation Committee” above, our Compensation Committee wants to ensure we retain key individuals. Accordingly, on July 1, 2014, we entered into an agreement with Mr. Stuart to retain him and reward him for his valuable services to our Company. Mr. Stuart was eligible for, and was paid, $500,000 if he remained an employee of our Company on July 1, 2015. Mr. Stuart is eligible for an additional payment of $500,000 if he remains an employee of our Company on July 1, 2016. In the event Mr. Stuart is terminated without cause before July 1, 2016, Mr. Stuart will

 

34 Hertz Global Holdings, Inc. 2015 Proxy Statement  (HERTZ LOGO)

 

 
 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

be eligible to be paid $500,000. In the event of Mr. Stuart’s death or disability before July 1, 2016, Mr. Stuart will be eligible to receive a pro-rated amount of his award based on the number of months he served as an employee before his death or disability. If Mr. Stuart’s employment is terminated for any other reason before July 1, 2016, he will be ineligible for any bonuses remaining under the agreement.

 

Modification of EICP for 2015

 

During late 2014 and early 2015 the Compensation Committee did an intensive review of the EICP and decided to simplify its structure to focus participants on one performance metric that is clear, understandable and drives overall business results. While a number of metrics were considered, the Compensation Committee chose the earnings metric of API to be used at both the corporate and business unit level. API is familiar to participants, it is easily understandable and it aligns incentives for all participants.

 

Accordingly, for 2015 API will be the primary driver of annual cash bonuses. For corporate center participants and participants who are business unit leaders at Hertz-Rent-A-Car Americas or Hertz Rent-A-Car International their annual cash bonuses will be based solely on the API of our Company. For leaders at other business units, the API of their respective business unit will be weighted at either 50% or 75% of the API metric in addition to our Company’s API performance. The maximum payout for financial performance will generally be 160% of target and, while the Individual Performance Modifier has been retained, it cannot result in payouts higher than 160%, subject to an exception for one executive officer hired in 2015 whose maximum for 2015 is 200% of target.

 

The Compensation Committee believes that API is the right structure for 2015. It considers 2015 a transition year and the Compensation Committee, along with management, will be doing a thorough review to evaluate what the longer term structure of EICP and the overall plan should be.

 

Mr. Tague’s employment agreement provides that his bonus for 2015 shall be no less than 60% of target.

 

Long-Term Equity Incentives

 

Long-term equity incentive compensation comprises a significant portion of the total compensation paid to our NEOs and in 2014 was awarded under the 2008 Omnibus Plan. Under the 2008 Omnibus Plan, the Compensation Committee has the flexibility to make equity awards based on the common stock of Hertz Holdings, including time- and performance-based awards of stock options, stock appreciation rights, restricted stock, restricted stock units, PSUs and deferred stock units.

 

Summary of 2014 Award Structure

 

The Compensation Committee continued its approach with respect to the structure and use of equity consistent with the approach used by the Company during 2013. In March 2014, PSUs were granted to certain of our NEOs as part of their annual long-term equity incentive award. PSUs represent the right to receive a share of Hertz Holdings’ common stock if certain performance goals are achieved and time periods have passed. The Compensation Committee determined that awarding long-term equity incentive awards comprised of 70% PSUs based on Corporate EBITDA and 30% based on Corporate EBITDA margin was appropriate because PSUs directly encourage our NEOs to improve and enhance our financial performance, while helping retain their services through the vesting period. In general, earning PSUs requires continued employment.

 

Messrs. Tague and McDonald were both hired during 2014 after the 2014 performance period was well under way and the terms of their employment arrangements provided for different long-term incentives, which will be described below under “Award Structure for John P. Tague” and “Award Structure for Brian P. McDonald.”

 

 (HERTZ LOGO) Hertz Global Holdings, Inc. 2015 Proxy Statement 35

  

 
 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

Corporate EBITDA PSUs

 

Performance Goal

 

The Compensation Committee selected Corporate EBITDA as the performance goal for 70% of the PSUs granted in 2014. The Compensation Committee chose Corporate EBITDA as a performance metric because it is one of the primary metrics we use to facilitate our analysis of investment decisions, profitability and performance trends. Corporate EBITDA means “EBITDA” as that term is defined under our senior credit facilities and is further defined and reconciled to its most comparable U.S. GAAP measure in “Non-GAAP Measures” below.

 

Corporate EBITDA PSUs

 

In 2014, the Compensation Committee reaffirmed its long-term equity incentive award design by continuing to use performance goals based on Corporate EBITDA over a multi-year period. For purposes of the PSUs, management recommended, and the Compensation Committee approved, two goals. The first goal has baseline business targets for 2014 and combined 2014-2015 (the “Strategic Plan”). The second goal is a stretch plan with more difficult business targets for 2014 and combined 2014-2015 (the “Stretch Plan”) to drive increased performance with a corresponding higher payout factor.

 

2014 Performance Period-Heightened Goals with Lock-In Feature: To earn target (100%) or higher awards for 2014 (the maximum award was 150% of target), corporate performance had to meet Corporate EBITDA targets that exceeded the 2014 Strategic Plan. Achieving 100% of the Strategic Plan would only result in an 80% payout. Based on 2014 results, the NEOs could earn, or “lock-in” the 2014 payout factor, but would have a chance to improve upon their payout factor through meeting 2014-2015 Corporate EBITDA performance goals.

 

2014-2015 Performance Period-Driving Two-Year Performance: To account for the heightened difficulty in achieving the 2014 targets, the plan uses combined 2014-2015 Corporate EBITDA goals to encourage our NEOs to increase our financial performance. For 2014-2015, to earn target (100%) awards, corporate performance must achieve 100% of the Corporate EBITDA target in the combined 2014-2015 Strategic Plan. To earn the maximum awards, the NEOs must achieve 100% of the Corporate EBITDA target in the combined 2014-2015 Stretch Plan.

 

The amount of PSUs eligible to vest varies based upon actual performance as follows: 

       
Performance vs. Payout Matrix-PSUs
  2014 2014-2015  
  Corporate EBITDA Corporate EBITDA Payout
  ($ in millions) ($ in millions) (%)
       
Threshold 2,037.0 4,335.6 50% payout
      (no payout below threshold)
Intermediate 2,263.3 4,624.6 80% payout
Target 2,379.5 4,817.3 100% payout
Maximum 2,829.1 5,064.6 150% payout

 

Straight line interpolation was used to determine the payout for Corporate EBITDA results that were between the various levels.

 

36 Hertz Global Holdings, Inc. 2015 Proxy Statement  (HERTZ LOGO)

  

 
 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

Actual Corporate EBITDA for 2014 was $1,331 million. This amount was below the threshold, resulting in the NEOs earning none of the PSUs eligible to be earned for 2014. While the NEOs can potentially earn PSUs in 2015 for combined 2014-2015 Corporate EBITDA performance, it is not expected that Corporate EBITDA performance in combined 2014-2015 will exceed the threshold performance level of $4,335.6 million, so the NEOs will likely earn none of the PSUs granted in 2014. If earned for the 2014-2015 combined performance period, the PSUs would vest 66⅔% in 2016 and 33⅓% in 2017.

 

Corporate EBITDA Margin PSUs

 

Performance Goal

 

In 2014, the Compensation Committee continued its practice of granting 30% of the total PSUs with Corporate EBITDA margin as the performance metric. The Compensation Committee believed that (i) awarding 30% of the total PSUs based on Corporate EBITDA margin provided appropriate incentives to promote our Company’s performance and enhance retention of our NEOs and (ii) the use of Corporate EBITDA margin would motivate our NEOs to increase our Company’s Corporate EBITDA (which forms the other 70% portion of our Company’s equity awards) in a responsible and sustainable way.

 

To earn Corporate EBITDA margin PSUs, the NEOs needed to achieve a Corporate EBITDA margin level of at least 75% of the Corporate EBITDA margin level in 2013 of 19.0%, or 14.25%. The Compensation Committee selected this goal in order to preserve a minimum level of financial performance while encouraging the overall increase in Corporate EBITDA. If the Corporate EBITDA margin for 2014 equaled or exceeded 14.25%, then the NEOs were eligible to earn the entire award. If the Corporate EBITDA margin for 2014 did not equal or exceed 14.25%, then the NEOs would not earn any of the award. The Compensation Committee believed that this “all or nothing” framework reinforced our compensation philosophy and provided appropriate incentives in light of the form and amount of the other equity awards granted in 2014.

 

In March of 2014, the Compensation Committee granted Corporate EBITDA margin PSUs. The performance conditions and vesting schedule is further summarized in the table below. 

     
Corporate EBITDA Margin PSU Payout Matrix-3-Year Awards
Corporate EBITDA Margin Percentage of Award Earned Vesting Schedule
14.25% or More 100% of Award 33⅓% in 2015, 2016 and 2017
Less than 14.25% 0% of Award N/A

 

Corporate EBITDA Margin Results

 

Actual Corporate EBITDA margin for 2014 was 12%, resulting in the NEOs forfeiting the entire amount of Corporate EBITDA margin PSUs.

 

Award Structure for John P. Tague

 

In accordance with the terms of Mr. Tague’s employment agreement, as supplemented by a letter agreement dated March 31, 2015 and a letter agreement dated June 30, 2015, he did not receive PSUs based on Corporate EBITDA or Corporate EBITDA margin, as discussed in detail under “Employment Agreements, Change in Control Agreements and Separation Agreements-Employment Agreement with John P. Tague” below. Instead, it was agreed that he would be granted a combination of (1) stock options and (2) performance stock options and PSUs measured by a different metric, payable in Hertz Holdings common stock.

 

 (HERTZ LOGO) Hertz Global Holdings, Inc. 2015 Proxy Statement 37

 

 
 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

Mr. Tague was awarded 1,000,000 stock option awards on November 21, 2014. The stock options awards consisted of 500,000 Transition Options and 500,000 Performance Options, with the following features: 

     
  Transition Options: 500,000 options will vest on December 31, 2015 if Mr. Tague has (i) developed and presented to the Board a business plan by December 31, 2015, that is subsequently approved by the Board and (ii) assembled a management team that is reasonably acceptable to the Board by June 30, 2015. The Transition Options shall expire December 31, 2019 or, in the event of termination prior to that date, on such earlier date as applies under Hertz Holdings’ standard form of option agreement, provided that, if Mr. Tague remains employed through December 31, 2017, any vested options shall remain outstanding through December 31, 2019 unless Mr. Tague is terminated for cause.
     
  Performance Options: Up to 500,000 options will vest on December 31, 2017 subject to the achievement of certain revenue efficiency measures for the 2015-2017 period, measured by revenue per available car day. The Performance Options shall expire June 30, 2020, or, in the event of termination prior to that date, on such earlier date as applies under Hertz Holdings’ standard form of option agreement, provided that, if Mr. Tague remains employed through December 31, 2017, any vested options shall remain outstanding through June 30, 2020, unless Mr. Tague is terminated for cause. The targets for the vesting of the Performance Options is as follows:
     
  * If the 2015-2017 revenue efficiency measure is achieved at less than 85% of target, then no options will vest;
  * If the 2015-2017 revenue efficiency measure is achieved at 85% of target, then 50% of the options will vest;
  * If the 2015-2017 revenue efficiency measure is achieved at 100% of target or above, then 100% of the options will vest; or
  * Any results between 85% and 100% of the target will result in straight line interpolation between 50% and 100%.

 

The Compensation Committee has concluded that disclosure of the specific revenue efficiency target numbers at this time would result in competitive harm to our Company. The Compensation Committee believes that the targets are challenging and will require significant performance improvement over previous levels. The Compensation Committee approved the revenue efficiency metrics in early 2015.

 

We also agreed to award Mr. Tague 350,000 PSUs, which we expect to issue prior to December 31, 2015. The performance measures for the PSUs will be the same as the Performance Options, except that if the goal is satisfied over target, then up to an additional 50% of the target number of awards shall vest based on straight line interpolation between 100% and 115% of target.

 

Based on applicable SEC and accounting rules, the 500,000 Transition Options were recognized as granted in 2014. However, the Performance Options and PSUs were not recognized as granted in 2014 because our Compensation Committee did not establish revenue efficiency targets for the awards until 2015. As a result, only the Transition Options will be reported in Mr. Tague’s compensation in 2014. The Board and the Compensation Committee do not intend to grant Mr. Tague any additional equity awards for 2015. For more information about Mr. Tague’s equity awards and the compensation we reported for such equity awards see “2014 Summary Compensation Table” and “2014 Grants of Plan Based Awards” below.

 

Award Structure for Brian P. MacDonald

 

Pursuant to the terms of Mr. MacDonald’s employment arrangements, he did not receive the PSUs described above. As detailed below, under “Employment Agreements, Change-in-Control Agreements and Separation Agreements - Other Named Executive Officers - Employment Arrangements with Brian P. MacDonald,” we agreed to issue Mr. MacDonald PSUs based on different EBITDA metrics (including the EBITDA of HERC), as well as certain additional equity awards if HERC became a separate publicly traded company. Mr. MacDonald separated from employment prior to vesting in any of his awards and accordingly, they were all forfeited, with a cash payment made to Mr. MacDonald in lieu of such awards pursuant to his letter agreement.

 

38 Hertz Global Holdings, Inc. 2015 Proxy Statement  (HERTZ LOGO)

  

 
 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

Structure of 2015 Long-Term Equity Incentives

 

Changes to our Long-Term Incentive Plan

 

During late 2014 and early 2015 the Compensation Committee reviewed the structure of the long-term incentive plan and concluded that significant changes to the plan were needed to create the right incentives and strongly align employee and Hertz Holdings’ stockholder interests. The following changes were implemented in 2015:

 

Corporate EBITDA PSUs will now be paid out based on a three-year (instead of the current two-year) performance period and will comprise 50% (instead of the previous 70%) of each NEO’s long-term equity award. EBITDA targets have been established for 2015, 2016, and 2017, and these targets are both significantly higher than 2014 EBITDA and increase each year (the 2016 target is 11% higher than 2015 and the 2017 target is 10% higher than 2016). 1/3 of the PSUs will be earned each year on an all-or-nothing basis, depending on whether that year’s target is met. Assuming continued employment, earned PSUs will vest as a single tranche at the end of three years after the certification of results for the last performance period covered by the award. The PSUs were generally granted in April 2015, except, due to SEC rules, PSUs will not be granted to executive officers, including the NEOs, until Hertz Holdings files an effective registration statement on Form S-8. Hertz Holdings expects to grant such awards prior to December 31, 2015.

 

Corporate EBITDA Margin PSUs have been eliminated.

 

Stock options were issued in February of 2015 in an amount equal to the other 50% of each NEO’s intended equity award. Options vest 25% each year on the anniversary of grant and expire five 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 Hertz Holdings’ common stock increases and, because the stock options expire after five years, requires that price improvement occur in the short- to medium- time frame.

 

Corporate EBITDA PSUs Granted in 2012 and 2013

 

We granted Corporate EBITDA PSUs in both 2012 and 2013, which had the same structure as the 2014 Corporate EBITDA PSUs. PSUs could be earned by the greater of (i) Corporate EBITDA performance in the first year or (ii) Corporate EDITBA performance for the combined first two years. In the spring of 2014, the Compensation Committee certified actual Corporate EBITDA for 2012-2013 of $3,670.2 million, resulting in the NEOs earning 98.4% of the target amount of 2012 PSUs. In the spring of 2014, the Compensation Committee certified actual Corporate EBITDA for 2013 of $2,043.7 million, resulting in the NEOs earning 66.0% of the target amount of 2013 PSUs eligible to be earned for 2013.

 

Two of the three tranches of the 2012 PSUs have vested based on 98.4% performance, but the vesting of the third tranche, which would normally have been paid in early 2015 to participants who satisfied the service requirement, was delayed pending restatement of the Company’s financials. The first tranche of the 2013 PSUs vested based on 66.0% performance in 2014, but the payment of the second tranche, which would normally have been paid in early 2015 to participants who satisfied the service requirement, was also delayed pending restatement of the Company’s financials.

 

In 2015, after taking into account the change in our Corporate EBITDA for 2012 and 2013 as a result of restated financials, the Compensation Committee certified that the correct payout percentage for the 2012 grant was 82.8%, not 98.4%. This payout percentage was based on the Compensation Committee’s determination that actual Corporate EBITDA for 2012, as restated, was $1,554 million, and that actual Corporate EBITDA for

 

 (HERTZ LOGO) Hertz Global Holdings, Inc. 2015 Proxy Statement 39

  

 
 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

2013, as restated, was $2,001 million, which resulted in 2012-2013 EBITDA of $3,555 million. These restated performance figures resulted in a payout percentage for 2012 performance of 78.9% and a payout percentage for combined 2012-2013 performance of 82.8%.

 

In 2015, after taking into account the change in our Corporate EBITDA for 2013 as a result of restated financials, and our 2014 Corporate EBITDA, the Compensation Committee certified that the correct payout percentage for the 2013 grant was 60.0%, not 66.0%. This payout percentage was based on the Compensation Committee’s determination that actual Corporate EBITDA for 2013, as restated, was $2,001 million and that Corporate EBITDA for 2014 was $1,331 million, which resulted in 2013-2014 Corporate EBITDA of $3,332 million. These performance figures resulted in a payout percentage for 2013 performance of 60.0% and no change to the payout percentage for combined 2013-2014 performance.

 

The Compensation Committee reviewed the Company’s alternatives and, after receiving legal advice and extensive input from senior management, determined that, for all recipients of 2012 and 2013 PSUs, including all the NEOs, any remaining payouts due under the 2012 and 2013 PSUs would be reduced to reflect the restated financials. Accordingly, the final payout under the 2012-2013 PSUs and the second payout under the 2013-2014 PSUs will be reduced in an amount that results in senior executives receiving total payouts based on the restated numbers. Specifically, (1) the third tranche of the 2012 PSUs will be reduced to 51.6% of target, so that combined payouts equal 82.8% of target, and (2) the second tranche of the 2013 PSUs will be reduced to 54.0% and the third tranche will be 60.0%, resulting in an aggregate payout of 60.0%.

 

Policies on Timing of Equity Awards

 

It is Hertz Holdings’ general practice not to issue equity awards with a grant date that occurs during regularly scheduled blackout periods. It is also Hertz Holdings’ policy not to determine the exercise price or the number of equity awards to be granted based on market conditions prior to the date on which such equity awards were granted.

 

Other Compensation Elements

 

Retirement Benefits

 

In 2014, we made significant changes to the retirement and savings plans for our employees. Historically, we maintained three non-qualified, unfunded pension plans for certain of our U.S.-based senior executives, including our NEOs. These three plans were The Hertz Corporation Supplemental Retirement and Savings Plan, or “SERP” (in which no NEO participated), The Hertz Corporation Benefit Equalization Plan, or “BEP,” and The Hertz Corporation Supplemental Executive Retirement Plan, or “SERP II.” Effective December 31, 2014, the Company permanently discontinued future benefit accruals participation under the BEP and SERP II. Service will continue to be recognized for vesting and retirement eligibility. The material terms of these plans are summarized below under “- Pension Benefits.”

 

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. The assigned car benefit is available for 15 years post-retirement or until the participant reaches the age of 80, whichever occurs last. As of June 30, 2015, Mr. Taride has satisfied both the minimum service and the minimum age requirement and Messrs. Tague, Kennedy and Stuart had satisfied neither the minimum service nor the minimum age requirement. Messrs. Broome, Frissora, MacDonald, Sider, and Zimmerman did not qualify for this benefit at the time of their respective separation.

 

40 Hertz Global Holdings, Inc. 2015 Proxy Statement  (HERTZ LOGO)

  

 
 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

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. The NEOs are generally provided use of company cars, financial planning and tax preparation assistance and annual physicals. In addition, our CEO uses corporate aircraft for personal and business related air travel. Attributed costs of these personal benefits for the NEOs for the fiscal year ended December 31, 2014 are included in the “All Other Compensation” column of the Summary Compensation Table. The Compensation Committee periodically reviews our perquisite policies as required.

 

We also maintain a relocation policy that provides for the payment of relocation expenses in certain instances, including the relocation of our new hires and senior executives to our corporate headquarters in Florida.

 

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. Our Compensation Committee regularly reviews aircraft usage by the NEOs and the expenses associated with such usage.

 

Employment and Severance Arrangements

 

Hertz Holdings has entered into change in control agreements (“Change in Control Agreements”) covering all NEOs and a severance plan (the “Severance Plan for Senior Executives”) covering all of our NEOs who are currently employed by us, other than Mr. Tague, whose employment arrangement covers severance outside of a change in control. In adopting these arrangements, it was the intention of Hertz Holdings to provide our senior executives with severance arrangements that they would view as appropriate in light of their existing arrangements, while at the same time considering the terms of arrangements provided by our peer companies.

 

The purpose of the individual Change in Control Agreements is to provide payments and benefits to the covered executives in the event of certain qualifying terminations of their employment following a change in control of Hertz Holdings, and the purpose of the Severance Plan for Senior Executives is to provide payments and benefits to the covered executives in the event of certain other qualifying terminations of their employment. The terms of the Change in Control Agreements and Severance Plan for Senior Executives are described in “Employment Agreements, Change in Control Agreements and Separation Agreements.”

 

Five of our NEOs (Messrs. Sider, Frissora, Zimmerman, MacDonald and Broome) separated from service during 2014 or during 2015. In each case the circumstances of the separation qualified them for severance benefits, either under the terms of their employment agreements (Messrs. Frissora and MacDonald) or the Severance Plan for Senior Executives. Payments under each of their Separation Agreements are described below under “Employment Agreements, Change in Control Agreements and Separation Agreements.”

 

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

 

Hertz Holdings maintains a clawback policy to promote responsible risk management and to help ensure that the incentives of our management are aligned with those of Hertz Holdings’ 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. 2015 Proxy Statement 41

 

 
 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

     
  Equity-based awards (including awards granted under the 2008 Omnibus Plan), and
     
  Other performance-based compensation arrangements.

 

The policy provides that a repayment obligation is triggered if the Compensation Committee determines that the employee’s gross negligence, fraud or willful misconduct caused or contributed to the need for a restatement of Hertz Holdings’ financial statements within three years of the issuance of such financial statements.

 

In addition, Hertz Holdings adopted new forms of equity award agreements in 2015 with enhanced clawback provisions. Hertz Holdings’ 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

 

Hertz Holdings 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 and business unit heads;
     
  Equity equal to one times base salary for our other senior executives; and
     
  Equity equal to three times annual cash retainer for non-employee directors.

 

Senior executives and non-employee directors have five years 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 Hertz Holdings’ Employee Stock Purchase Plan, the approximate after-tax value of unvested restricted stock units (i.e., 50% of unvested restricted stock units) 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 subject to the guidelines 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

 

In February of 2013, Hertz Holdings’ modified its policy regarding trading in Hertz Holdings’ securities 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 Hertz Holdings’ common stock.

 

42 Hertz Global Holdings, Inc. 2015 Proxy Statement  (HERTZ LOGO)

  

 
 

 

COMPENSATION DISCUSSION AND ANALYSIS AND COMPENSATION COMMITTEE REPORT

 

Tax and Accounting Considerations

 

Section 162(m) of the Code operates to disallow public companies from taking a federal tax deduction for compensation in excess of $1 million paid to certain of its executive officers, excluding performance-based compensation that meets requirements mandated by the statute. As part of its role, our Compensation Committee reviews and considers the deductibility of executive compensation under Section 162(m) of the Code. Hertz Holdings’ stockholders approved the 2008 Omnibus Plan so that awards granted under the plan may qualify as performance-based compensation. In addition, EICP payments for 2014 were generally paid to executive officers under the Senior Executive Bonus Plan, which was approved by Hertz Holdings’ stockholders at its 2010 annual meeting and is 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 approve compensation that will not meet these requirements in order to ensure the total compensation for our NEOs is consistent with the policies described above.

 

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
  Linda Fayne Levinson, Chair
  Michael J. Durham
  Carolyn N. Everson
  Daniel A. Ninivaggi

 

 (HERTZ LOGO) Hertz Global Holdings, Inc. 2015 Proxy Statement 43

 

 
 

 

SUMMARY COMPENSATION TABLE

 

2014 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. 

                                                       
Name and Principal Position   Year   Salary
($)
  Bonus
($)
  Stock
Awards(1)
($)
  Option
Awards(1)
($)
  Non-Equity
Incentive Plan
Compensation(2)
($)
  Change in
Pension
Value(3)
($)
  All Other
Compensation(4)
($)
  Total
($)
 
                                       
John P. Tague   2014     145,000     108,750         3,571,000             51,764     3,876,514  
Chief Executive Officer                                                      
Thomas C. Kennedy   2014     660,000     326,835     1,607,239         280,500         537,226     3,411,800  
Chief Financial Officer   2013     38,077         341,576         48,165             427,818  
Brian P. MacDonald   2014     634,616     125,000     3,015,370 (5)       834,493         157,154     4,766,633  
Interim Chief Executive Officer                                                      
and Former CEO, HERC                                                      
Michel Taride(6)   2014     633,322         1,315,004         59,638     663,898     68,809     2,740,671  
Group President,   2013     587,735         1,266,586         498,200     210,381     89,940     2,652,842  
Rent-A-Car International   2012     579,431         1,058,954         498,873     323,591     360,253     2,821,102  
Robert J. Stuart   2014     502,308         1,168,887         38,703     267,200     41,683     2,018,781  
Executive VP,                                                      
Sales and Marketing                                                      
Richard D. Broome   2014     391,404         535,738         28,219     164,100     73,181     1,192,642  
Former Executive VP,                                                      
Corporate Affairs and                                                      
Communications                                                      
Mark P. Frissora   2014     1,037,308         6,769,870         178,047     52,700     10,815,109     18,853,034  
Former Chief Executive Officer   2013     1,423,750         8,174,233         2,748,734     2,835,800     1,156,042     16,338,559  
    2012     1,308,750         6,452,426         4,211,096     1,952,200     592,796     14,517,268  
Scott P. Sider   2014     431,539         3,250,070 (7)       33,406     37,800     2,785,116     6,537,931  
Former Group President,   2013     645,000         2,200,844         437,861     1,414,200     184,373     4,882,278  
Rent-A-Car Americas   2012     587,500         1,576,449         775,609     1,754,900     24,904     4,719,362  
J. Jeffrey Zimmerman   2014     511,077         2,253,006 (7)       40,696     181,000     1,732,759     4,718,538  
Former General Counsel   2013     515,000         1,308,461         462,072     314,500     611,632     3,211,665  
and Secretary   2012     487,625         939,158         643,096     359,600     22,486     2,451,965  

  

     
(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 2014 Annual Report. Vesting of the Corporate EBITDA PSUs granted in 2014 were subject to our achievement of certain pre-determined financial performance goals during 2014 and subject to upward adjustment based on financial performance goals for combined 2014-2015. 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 2014, which for accounting purposes is the probable outcome (determined as of the grant date) of the performance-based condition applicable to the grant. This column also reflects the grant date fair value of the Corporate EBITDA margin-based PSUs also granted in 2014. The following table below presents the aggregate grant date fair value of the Corporate EBITDA PSUs grants assuming that (i) the actual outcome occurred, a 0% payout, and the awards were not subject to increase based on combined 2014-2015 financial performance and (ii) the highest level of performance condition would be achieved, resulting in a 150% payout.

 

                 
    2014 Performance Stock Unit Awards Based on
Corporate EBITDA
 
Name   Aggregate Grant Date
Fair Value
(Based on
Actual Outcome)
($)
  Aggregate Grant Date
Fair Value
(Based on
Maximum Performance)
($)
 
           
Kennedy       1,687,621    
Taride       1,380,766    
Stuart       1,227,339    
Broome       562,540    
Frissora       7,108,348    
Sider       1,717,253    
Zimmerman       1,304,053    

 

44 Hertz Global Holdings, Inc. 2015 Proxy Statement  (HERTZ LOGO)

 

 
 

 

SUMMARY COMPENSATION TABLE

  

(2) 2014 amounts reflect amounts under the Senior Executive Bonus Plan for 2014 performance that were paid in 2015.
   
(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 2014 Annual Report.
   
(4) Includes the following for 2014:
                                               
Name   Personal
Use of
Aircraft
(a)
  Personal
Use of
Car and
Driver
(b)
  Financial
Planning
Assistance
  Housing
and Other
  Perquisites
Subtotal
  Life
Insurance
Premiums
  Company
Match on
401(k)
Plan
  Relocation
(c)
  Tax
Assistance
(d)
  Severance
and Other
(e)
  Total
Perquisites
and Other
Compensation
 
                                               
Tague   31,450         31,450       11,975   8,339     51,764  
Kennedy     10,988       10,988   428     305,233   220,577     537,226  
MacDonald     7,478       7,478   303     87,641   61,732     157,154  
Taride(f)     5,291   11,728     17,019   5,468         46,322   68,809  
Stuart     12,526   3,250     15,776   880   7,800   10,000   7,227     41,683  
Broome     20,909   4,000     24,909   1,190   7,800   22,803   16,479     73,181  
Frissora   109,911   73,897     2,917   186,725   3,118   7,800       10,617,466   10,815,109  
Sider     10,600   2,725     13,325   734   7,650   10,000   7,227   2,746,180   2,785,116  
Zimmerman     12,802   1,300     14,102   1,335   7,800   10,000   7,227   1,692,295   1,732,759  
       
  (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) For Mr. Frissora, this amount includes the incremental cost of the driver’s time and costs related to Company-provided cars. For other executives, none of whom is provided with a driver, this amount reflects the cost of depreciation and interest, if applicable.
     
  (c) Amount represents the incremental costs to the Company for relocation assistance.
     
  (d) Amount represents tax assistance for relocation assistance.
     
  (e) For Messrs. Frissora, Sider and Zimmerman, this amount is the amount accrued or paid for severance arrangements pursuant to their respective Separation Agreement. For Mr. Taride, this represents medical expenses and other miscellaneous expenses.
     
  (f) Amounts for Mr. Taride have been translated from pounds sterling to U.S. dollars at the 12-month average rate of 1.64739.
     
(5) The amount shown for Mr. MacDonald includes the grant date fair value of the PSUs calculated under FASB ASC Topic 718. Although the PSUs were not issued to Mr. MacDonald because Hertz Holdings did not have an effective Form S-8 registration statement on file at the date of grant, for compensation disclosure and accounting purposes they were considered granted because Hertz Holdings and Mr. MacDonald had a mutual understanding as to the key terms and conditions of the PSUs. These awards were forfeited when Mr. MacDonald separated from our Company in 2015.
   
(6) Amounts for Mr. Taride have been translated from pounds sterling to U.S. dollars at the 12-month average rate of 1.64739 for 2014, 1.56323 for 2013 and 1.58942 for 2012.
   
(7) The amounts shown for Messrs. Sider and Zimmerman reflect the incremental increase in the fair value of outstanding awards as calculated under FASB ASC Topic 718 due to additional vesting of outstanding equity awards pursuant to each NEO’s respective separation agreement. In addition to the grant date fair value of awards shown in “2014 Grant of Plan-Based Awards” below, Mr. Sider’s amount reflects an increase of $1,614,587 and Mr. Zimmerman’s reflects an increase of $1,011,047. For more information about Mr. Sider’s separation agreement, see “Employment Agreements, Change in Control Agreements and Separation Agreements-Other Named Executive Officers-Separation Agreement with Scott P. Sider” and for more information about Mr. Zimmerman’s separation agreement, see “Employment Agreements, Change in Control Agreements and Separation Agreements-Other Named Executive Officers-Separation Agreement with J. Jeffrey Zimmerman” below.

  

 (HERTZ LOGO) Hertz Global Holdings, Inc. 2015 Proxy Statement 45

 

 
 

  

EXECUTIVE COMPENSATION


 

2014 Grants of Plan-Based Awards

 

The following table sets forth, for each NEO, possible payouts under all non-equity incentive plan awards granted in 2014, all grants of PSUs and stock options in 2014 and the grant date fair value of all such awards. 

                                               
    Estimated
future payouts
under non-equity
incentive plan
awards(1)
  Estimated
future payouts
under equity
incentive plan
awards
                 
Name   Grant
Date
  Threshold
($)
  Target
($)
  Max
($)
  Threshold
(#)
  Target
(#)
  Max
(#)
  All Other
Stock
Awards
(#)
  All Other
Option
Awards
(#)
  Exercise
Price of
Option
Awards
($/Sh.)
  Grant
Date
Fair Value
of Stock
Awards(2)
($)
 
                                               
John P. Tague(3)                                              
Stock Options(4)   11/21/2014                 500,000   22.75   3,571,000  
Thomas C. Kennedy         561,000                  
PSUs(5)   3/25/2014         21,471   42,942   64,413         1,125,080  
PSUs(6)   3/25/2014           18,403   18,403         482,159  
Brian P. MacDonald(7)       834,493   834,493                  
PSUs   11/10/2014               114,000       2,509,140  
PSUs   11/10/2014               23,000       506,230  
Michel Taride         542,213                  
PSUs(5)   3/25/2014         17,567   35,134   52,701         920,511  
PSUs(6)   3/25/2014           15,057   15,057         394,493  
Robert J. Stuart         378,750                  
PSUs(5)   3/25/2014         15,615   31,230   46,845         818,226  
PSUs(6)   3/25/2014           13,384   13,384         350,661  
Richard D. Broome         276,150                  
PSUs(5)   3/25/2014         7,157   14,314   21,471         375,027  
PSUs(6)   3/25/2014           6,134   6,134         160,711  
Mark P. Frissora         2,465,000                  
PSUs(5)   3/25/2014         90,437   180,874   271,311         4,738,899  
PSUs(6)   3/25/2014           77,518   77,518         2,030,972  
Scott P. Sider         561,000                  
PSUs(5)   3/25/2014         21,848   43,696   65,544         1,144,835  
PSUs(6)   3/25/2014           18,727   18,727         490,647  
J. Jeffrey Zimmerman         428,800                  
PSUs(5)   3/25/2014         16,591   33,182   49,773         869,368  
PSUs(6)   3/25/2014           14,221   14,221         372,590  
     
(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. The EICP payments are based on adjusted pre-tax income, revenue and total return on total capital goals for the Company. 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 EBITDA for a performance period for our CEO and 0.5% of our EBITDA for a performance period for other participants. For 2014, 1% of our EBITDA was $40.4 million and 0.5% of our EBITDA was $20.2 million. The Compensation Committee uses its negative discretion to make actual EICP awards using the performance metrics more specifically described in our Compensation Discussion and Analysis as a guide. Actual amounts were determined and paid in 2015 and are included in the Summary Compensation Table above. 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 2014 Annual Report for a discussion of the assumptions underlying these calculations.
   
(3) Pursuant to the terms of Mr. Tague’s employment agreement, he did not receive an award under the Senior Executive Bonus Plan or grants of PSUs based on Corporate EBITDA or Corporate EDITDA margin in 2014. As described in “Employment Agreements, Change in Control Agreements and Separation Agreements-Other Named Executive Officers-Employment Agreement with John P. Tague” below, the performance goals for the Performance Options and PSUs to be awarded under his employment agreement were not finalized until 2015. As a result, such awards are not reported in this table.
   
(4) Options were granted to Mr. Tague under Hertz Holdings’ 2008 Omnibus Plan. As described in the “Compensation Discussion and Analysis” above, these options will vest based on Mr. Tague’s performance in meeting specified business goals during 2015.

 

46 Hertz Global Holdings, Inc. 2015 Proxy Statement  (HERTZ LOGO)

 

 
 

 

EXECUTIVE COMPENSATION

  

(5) Corporate EBITDA PSUs were granted to each NEO (other than Messrs. Tague and MacDonald) under Hertz Holdings’ 2008 Omnibus Plan. 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 goals during 2014 and/or combined 2014-2015. Based on 2014 Corporate EBITDA performance, none of the PSUs were earned. However, as set forth in “Compensation Discussion and Analysis-Long Term Equity Incentives-Corporate EBITDA PSUs” above, if combined 2014-2015 Corporate EBITDA performance exceeds at least the threshold level of Corporate EBITDA performance, then PSUs will be earned and vest in 2016 and 2017 to reflect the achievement of such performance.
   
(6) Corporate EBITDA margin PSUs were granted to each NEO (other than Messrs. Tague and MacDonald) under Hertz Holdings’ 2008 Omnibus Plan. As described in the “Compensation Discussion and Analysis” above, the amount of PSUs eligible for vesting is subject in part to our achievement of Corporate EBITDA margin during 2014. Because the 2014 Corporate EBITDA margin target was not achieved, the entire award was forfeited.
   
(7) Pursuant to the terms of Mr. MacDonald’s employment agreement, he was eligible to participate in the Senior Executive Bonus Plan for 2014. The terms of the employment agreement provided that Mr. MacDonald would be entitled, at minimum, to his target award as pro-rated for his June 2, 2014 start date. As described in “Employment Agreements, Change in Control Agreements and Separation Agreements-Other Named Executive Officers-Employment Arrangements with Brian P. MacDonald” below, Mr. MacDonald was awarded, but not issued, PSUs in 2014 that could be earned based on the performance of HERC and the Company. Although the PSUs were not issued to Mr. MacDonald because Hertz Holdings did not have an effective Form S-8 registration statement on file at the date of grant, for compensation disclosure and accounting purposes they were considered granted because Hertz Holdings and Mr. MacDonald had a mutual understanding as to the key terms and conditions of the PSUs. These awards were forfeited when Mr. MacDonald separated from our Company in 2015.

  

 (HERTZ LOGO) Hertz Global Holdings, Inc. 2015 Proxy Statement 47

 

 
 

 

EXECUTIVE COMPENSATION

 

2014 Outstanding Equity Awards at Year-End

 

The following table sets forth, for each NEO, details of all equity awards outstanding on December 31, 2014.

                                         
    Option Awards   Stock Awards  
Name   Number of
securities
underlying
unexercised
options
Exercisable
(#)
  Number of
securities
underlying
unexercised
options
Unexercisable
(#)
  Option
exercise
price
($)
  Option
expiration
date
  Number of
shares or
units of
stock that
have not
vested
(#)
  Market
value of
shares
or units
of stock
that have
not vested(1)
($)
  Equity incentive
plan awards:
number of
unearned shares,
units or
other rights
that have
not vested
(#)
  Equity incentive
plan awards:
market or payout
value of unearned
shares, units or
other rights
that have
not vested(1)
($)
 
                                         
John P. Tague(2)     500,000 (3)   22.75   12/31/2019              
Thomas C. Kennedy             13,740 (4)   342,676        
                    61,345 (5)   1,529,944  
Brian P. MacDonald                   137,000 (6)   3,416,780  
Michel Taride   200,000       4.56   2/28/2018              
    31,766       9.7   3/4/2020              
    21,558   21,559 (7)   14.6   3/1/2021              
              15,060 (8)   375,596        
              19,556 (9)   487,726        
              12,698 (10)   316,688        
                    90,605 (11)   2,259,689  
Robert J. Stuart   16,654       9.7   3/4/2020              
    11,570   11,571 (7)   14.6   3/1/2021              
              11,381 (8)   283,842        
              14,220 (9)   354,647        
              9,235 (10)   230,321        
                    75,153 (11)   1,874,316  
Richard D. Broome   89,552       12.97   2/28/2018              
    30,513       9.7   3/4/2020              
    27,888   9,296 (7)   14.6   3/1/2021              
              6,405 (8)   159,729        
              7,918 (9)   197,475        
              5,143 (10)   128,266        
              1,584 (12)   39,505        
                    37,638 (11)   938,692  
Mark P. Frissora   400,000       9.56   8/15/2016              
    400,000       14.56   8/15/2016              
    200,000       6.56   8/15/2016              
    600,000       6.56   8/15/2016              
    400,000       23.06   8/14/2017              
    827,985       12.97   2/28/2018              
    740,174       9.7   3/4/2020              
    373,813       14.6   3/1/2021              
Scott P. Sider   78,362       9.7   8/18/2016              
    110,759       14.6   8/18/2016              
              22,420 (8)   559,167        
              15,959 (13)   398,017        
              10,363 (14)   258,453        
              3,345 (15)   83,424        
                    30,081 (16)   750,220  
                    20,807 (17)   518,927  
J. Jeffrey Zimmerman   60,000       12.74   2/25/2018              
    149,254       12.97   2/28/2018              
    117,441       9.7   3/4/2020              
    56,961   18,988 (7)   14.6   3/1/2021              
              13,357 (8)   333,123        
              8,686 (13)   216,629        
              5,640 (14)   140,662        
              4,591 (15)   114,500        
                    17,921 (16)   446,950  
                    15,801 (17)   394,077  
                                         

 

48 Hertz Global Holdings, Inc. 2015 Proxy Statement (HERTZ LOGO)

  

 
 

 

EXECUTIVE COMPENSATION

 

   
(1)Based on the closing market price of Hertz Holdings’ common stock on December 31, 2014 of $24.94.

 

(2)The Performance Options and PSUs provided under Mr. Tague’s employment agreement were not granted as of December 31, 2014 and are not reported in this table.

 

(3)These options represent the Transition Options granted to Mr. Tague as detailed in “Compensation Discussion and Analysis” above.

 

(4)This award granted to Mr. Kennedy in connection with his hire as our Chief Financial Officer in December 2013 will vest on December 9, 2016 if Mr. Kennedy continues to remain employed with us and retains at least 41,000 shares of our common stock through such date.

 

(5)The awards reported include the (i) grants of PSUs based on Corporate EBITDA made in 2014 and (ii) grants of PSUs based on Corporate EBITDA margin made in 2014. All grants are reported at target.

 

(6)The awards reported include the awards made to Mr. MacDonald in 2014 as described under “Employment Agreements, Change in Control Agreements and Separation Agreements-Other Named Executive Officers-Employment Arrangements with Brian P. MacDonald” below.

 

(7)The unvested options vested on March 1, 2015.

 

(8)These PSUs were granted in 2012. The first tranche of the PSUs awarded (33⅓% of the total award) vested on March 6, 2013 based on Corporate EBITDA performance of 95.1% of target for 2012. The second tranche of the PSUs awarded (33⅓% of the total award) vested on March 6, 2014 based on Corporate EBITDA performance of 98.4% of target for combined 2012-2013. The third tranche of the PSUs awarded, which would normally have been paid in early 2015, was delayed pending restatement of the Company’s financials. In 2015, after taking into account the change in our Corporate EBITDA for 2012 and 2013, the correct payout was certified as 82.8% of target. The third tranche above is reported at 98.4% of target, but was paid out in July 2015 at 51.6% of target so that the total payout of the PSUs awarded in 2012 is 82.8% of target. For more information about the adjustments our Compensation Committee made to outstanding PSUs, see “Compensation Discussion and Analysis-Long-Term Equity Incentives-Corporate EBITDA PSUs Granted in 2012 and 2013” above.

 

(9)These PSUs were granted in 2013. The first tranche of the PSUs awarded (33⅓% of the total award) vested on March 25, 2014 based on Corporate EBITDA performance of 66.0% of target for 2013. As described in “Compensation Discussion and Analysis-Long-Term Equity Incentives-Corporate EBITDA PSUs Granted in 2012 and 2013”, to the extent that 2013-2014 Corporate EBITDA performance exceeded 2013 Corporate EBITDA performance, additional PSUs could have been earned. However, 2013-2014 Corporate EBITDA performance did not exceed 2013 Corporate EBITDA performance, so no additional PSUs were earned. In addition, the second tranche of the PSUs awarded (33⅓% of the total award), which would normally have been paid in early 2015, was delayed pending restatement of the Company’s financials. In 2015, after taking into account the change in our Corporate EBITDA for 2013 and performance during 2014, the correct payout was certified as 60.0% of target. The combined second tranche and third tranche (scheduled to vest in 2016) above is reported at 66.0% of target. The second tranche was paid out in July 2015 at 54.0% of target so that the total payout of the PSUs awarded in 2013 is 60.0% of target. For more information about the adjustments our Compensation Committee made to outstanding PSUs, see “Compensation Discussion and Analysis-Long-Term Equity Incentives-Corporate EBITDA PSUs Granted in 2012 and 2013” above.

 

(10)The unvested PSUs were granted in 2013 and earned based on 2013 Corporate EBITDA margin. The first tranche (33⅓%) of the award vested on March 25, 2014. The second tranche (33⅓%) vested on February 28, 2015 and the third tranche (33⅓%) will vest on February 28, 2016 contingent on the recipient’s continued employment.

 

(11)The awards reported include the (i) price-vested stock units granted in 2012, (ii) grants of PSUs based on Corporate EBITDA made in 2014 and (iii) grants of PSUs based on Corporate EBITDA margin made in 2014. All grants are reported at target.

 

(12)The unvested PSUs were granted in 2013 and earned based on 2013 Corporate EBITDA margin. The first tranche (50%) of the award vested on March 25, 2014. The remaining tranche (50%) vested on February 28, 2015.

 

(13)The awards reported in this row consist of PSUs granted in 2013 to Messrs. Sider and Zimmerman that were based on Corporate EBITDA for the 2013 and 2013-2014 combined performance period. As of December 31, 2014, this award represents the second tranche of PSUs scheduled to vest in 2015 based on Corporate EBITDA performance of 66.0%. Under the terms of the separation agreements of Messrs. Sider and Zimmerman, they are entitled to the PSUs granted in 2013 that would have otherwise vested by March 31, 2015 and such PSUs reported in this row were subject to additional vesting based on combined 2013-2014 Corporate EBITDA performance. No additional PSUs were earned for combined 2013-2014 performance. The PSUs are reported above at 66.0% of target, but were earned at 51.6% of target due to the restatement of our financial results for 2013 and performance in 2014. The third tranche of the PSUs scheduled to vest in 2016 were forfeited.

 

(14)The awards reported in this row consist of PSUs granted in 2013 to Messrs. Sider and Zimmerman that were based on Corporate EBITDA margin for 2013. As of December 31, 2014, this award represents the second tranche of PSUs scheduled to vest in 2015. Under the terms of the separation agreements of Messrs. Sider and Zimmerman, they are entitled to the PSUs granted in 2013 that would have otherwise vested by March 31, 2015. The third tranche of the PSUs scheduled to vest in 2016 were forfeited.

 

(15)The awards reported in this row consist of PSUs granted in 2013 to Messrs. Sider and Zimmerman that were based on Corporate EBITDA margin for 2013. As of December 31, 2014, this award represents the second tranche of PSUs scheduled to vest in 2015. Under the terms of the separation agreements of Messrs. Sider and Zimmerman, they are entitled to the PSUs granted in 2013 that would have otherwise vested by March 31, 2015.

 

 (HERTZ LOGO) Hertz Global Holdings, Inc. 2015 Proxy Statement 49

 

 
 

 

EXECUTIVE COMPENSATION

 

(16)The awards reported in this row consist of price-vested stock units granted in 2012 to Messrs. Sider and Zimmerman. The number of PSUs earned was based on the performance of our common stock in 2015. Under the terms of the Separation agreements of Messrs. Sider and Zimmerman, they are entitled to the price-vested stock units that would have otherwise vested by March 31, 2015. As a result, the awards reported in this row consist of the target award granted in 2012. The price-vested stock units granted in 2012 which are to be earned based on the trading price of our common stock in 2016 were forfeited.

 

(17)The awards reported in this row consist of PSUs granted in 2014 to Messrs. Sider and Zimmerman that were based on Corporate EBITDA for the 2014 and 2014-2015 combined performance period and the PSUs based on 2014 Corporate EBITDA margin, subject to the terms of the separation agreements, which provides that they are entitled to the PSUs that would have otherwise vested by March 31, 2015. As a result, the awards reported in this row consist of the first tranche of each of the awards reported above in “2014 Grants of Plan-Based Awards” at target.

 

50 Hertz Global Holdings, Inc. 2015 Proxy Statement (HERTZ LOGO)

 

 
 

 

EXECUTIVE COMPENSATION

 

2014 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 were vested in 2014.

                         
    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                
Brian P. MacDonald                
Michel Taride   100,000     2,315,140     9,777 (1)   256,157 (2)
    100,000     2,315,140     6,348 (1)   166,318 (2)
    200,000     3,630,280     15,565 (1)   407,803 (2)
            24,434 (3)   684,396 (4)
Robert J. Stuart   26,901     437,860     7,110 (1)   186,282 (2)
    70,896     1,137,647     4,617 (1)   120,965 (2)
    49,962     965,101     11,762 (1)   308,164 (2)
    23,141     333,617     13,114 (3)   367,323 (4)
    35,499     572,073          
Richard D. Broome           3,959 (1)   103,726 (2)
            2,570 (1)   67,334 (2)
            1,584 (1)   41,501 (2)
            6,621 (1)   173,470 (2)
            10,536 (3)   295,113 (4)
Mark P. Frissora           54,404 (1)   1,425,385 (2)
            35,327 (1)   925,567 (2)
            28,228 (1)   739,574 (2)
            94,839 (1)   2,484,782 (2)
            141,221 (1)   3,955,600 (2)
            193,798 (3)   5,428,282 (4)
Scott P. Sider           3,345 (1)   87,639 (2)
            15,958 (1)   418,100 (2)
            10,362 (1)   271,484 (2)
            23,171 (1)   607,080 (2)
            31,383 (3)   879,038 (4)
J. Jeffrey Zimmerman           8,686 (1)   227,573 (2)
            5,640 (1)   147,768 (2)
            4,591 (1)   120,284 (2)
            13,804 (1)   361,665 (2)
            21,520 (3)   602,775 (4)
                         

 

   
(1)Represents the number of shares of common stock received upon vesting of PSUs that had previously been granted. The PSUs vested on March 25, 2014.

 

 (HERTZ LOGO) Hertz Global Holdings, Inc. 2015 Proxy Statement 51

 

 
 

 

EXECUTIVE COMPENSATION

 

(2)Value realized upon vesting based on $26.20 per share, the closing price of Hertz Holdings’ common stock on March 25, 2014.

 

(3)Represents the number of shares of common stock received upon vesting of PSUs that had been previously granted. The PSUs vested on March 1, 2014.

 

(4)Value realized upon vesting based on $28.01 per share, the closing price of Hertz Holdings’ common stock on March 1, 2014.

 

2014 Pension Plan Table

 

The following table sets forth, for each NEO, the plans in which he participated in 2014, the number of years of credited service in each such plan he had at December 31, 2014, the present value of the accumulated benefit in each such plan at December 31, 2014 and the payments received from such plan during 2014:

                   
Name   Plan name   Number of
years
credited
service
(#)
  Present
value of
accumulated
benefit(1)
($)
  Payments
during last
fiscal year
($)
                   
John P. Tague   The Hertz Corporation Account Balance Defined Benefit Pension Plan (the “Hertz Retirement Plan”)   N/A     N/A  
    The Hertz Corporation Benefit Equalization Plan (the “BEP”)   N/A     N/A  
    The Hertz Corporation Supplemental Executive Retirement Plan (the “SERP II”)   N/A     N/A  
Thomas C. Kennedy   Hertz Retirement Plan   N/A     N/A  
    BEP   N/A     N/A  
    SERP II   N/A     N/A  
Brian P. MacDonald   Hertz Retirement Plan   N/A     N/A  
    BEP   N/A     N/A  
    SERP II   N/A     N/A  
Michel Taride(2)   Hertz UK Pension Plan   11     1,871,435  
    Hertz UK Supplemental Plan   11     2,726,430  
Robert J. Stuart   Hertz Retirement Plan   7     58,000  
    BEP   7     129,600  
    SERP II   7     997,400  
Richard D. Broome   Hertz Retirement Plan   14     182,000  
    BEP   14     219,100  
    SERP II   14     1,800,000  
Mark P. Frissora   Hertz Retirement Plan   8      
    BEP   8     1,069,700  
    SERP II   8     6,859,800  
Scott P. Sider   Hertz Retirement Plan   27     409,200  
    BEP   19     409,300  
    SERP II   27     4,627,900