Hertz 2007 Annual Report Download - page 185

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Other relationships and transactions
We and Ford also engage in other transactions in the ordinary course of our respective businesses.
These transactions include providing car and equipment rental services to Ford and providing insurance
and insurance claim management services to Ford. In addition, Ford subsidiaries are our car rental
licensees in Scandinavia and Finland.
Relationship with Hertz Investors, Inc. and the Sponsors
Stockholders Agreement
In connection with the Acquisition, we entered into a stockholders agreement, or, as amended, the
‘‘Stockholders Agreement,’’ with investment funds associated with or designated by the Sponsors. The
Stockholders Agreement contains agreements that entitle investment funds associated with or
designated by the Sponsors to nominate all of our directors. The director nominees are to include three
nominees of an investment fund associated with CD&R (one of whom shall serve as the chairman or, if
the chief executive officer is the chairman, the lead director), two nominees of investment funds
associated with Carlyle, two nominees of an investment fund associated with MLGPE (collectively, the
‘‘Sponsor Designees’’) and up to six independent directors (subject to unanimous consent of the
Sponsor Designees, for so long as Hertz Holdings remains a ‘‘controlled company’’), subject to
adjustment in the case that the applicable investment fund sells more than a specified amount of its
shareholdings in us. In addition, upon Hertz Holdings ceasing to be a ‘‘controlled company’’ within the
meaning of the New York Stock Exchange rules, if necessary to comply with the New York Stock
Exchange rules, the director nominees of the Sponsors shall be reduced to two nominees of an
investment fund associated with CD&R (one of whom shall serve as the chairman or, if the chief
executive officer is the chairman, the lead director), one nominee of investment funds associated with
Carlyle, and one nominee of an investment fund associated with MLGPE, and additional independent
directors will be elected by the board to fill the resulting director vacancies. The Stockholders Agreement
also provides that our chief executive officer shall be designated as a director, unless otherwise
approved by a majority of the Sponsor Designees. In addition, the Stockholders Agreement provides
that one of the nominees of an investment fund associated with CD&R shall serve as the chairman of the
executive and governance committee and, unless otherwise agreed by this fund, as Chairman of the
Board. On October 12, 2006, our Board elected four independent directors, effective from the date of the
completion of the initial public offering of our common stock. In order to comply with New York Stock
Exchange rules, we will be required to have a majority of independent directors on our board of directors
within one year of our ceasing to be a ‘‘controlled company.’’
The Stockholders Agreement also grants to the investment funds associated with CD&R or to the
majority of the Sponsor Designees the right to remove our chief executive officer. Any replacement chief
executive officer requires the consent of investment funds associated with CD&R as well as investment
funds associated with at least one other Sponsor. It also contains restrictions on the transfer of our
shares, and provides for tag-along and drag-along rights, in certain circumstances. The rights described
above apply only for so long as the investment funds associated with the applicable Sponsor maintain
certain specified minimum levels of shareholdings in us. In addition, the Stockholders Agreement limits
the rights of the investment funds associated with or designated by the Sponsors that have invested in
our common stock and our affiliates, subject to several exceptions, to own, manage, operate or control
any of our competitors (as defined in the Stockholders Agreement). The Stockholders Agreement may
be amended from time to time in the future to eliminate or modify these restrictions without our consent.
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