Hertz 2008 Annual Report Download - page 206

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Indemnification Agreements
On the Closing Date, Hertz entered into customary indemnification agreements with us, the Sponsors
and our stockholders affiliated with the Sponsors, pursuant to which Hertz Holdings and Hertz will
indemnify the Sponsors, our stockholders affiliated with the Sponsors and their respective affiliates,
directors, officers, partners, members, employees, agents, representatives and controlling persons,
against certain liabilities arising out of the performance of a consulting agreement with Hertz Holdings
and each of the Sponsors and certain other claims and liabilities, including liabilities arising out of
financing arrangements or securities offerings.
We have entered into indemnification agreements with each of our directors in connection with our initial
public offering in November 2006. The indemnification agreements provide the directors with
contractual rights to the indemnification and expense advancement rights provided under our by-laws,
as well as contractual rights to additional indemnification as provided in the indemnification agreements.
We have not recorded any liability relating to these indemnification agreements because these liabilities
are not considered to be material.
Director Compensation Policy
On October 12, 2006, our Board of Directors approved our Director Compensation Policy. Pursuant to
the policy our directors who are not also our employees each receive a $150,000 annual retainer fee, of
which 40% (i.e., $60,000) is payable in cash and 60% (i.e., $90,000) is payable in the form of stock
options having a Black-Scholes value equal to such dollar amount.
The chairperson of our Audit Committee is paid an additional annual cash fee of $25,000 and each other
member of our Audit Committee is paid an additional annual cash fee of $10,000. The chairperson of our
Compensation Committee is paid an additional annual cash fee of $15,000 and each other member of
our Compensation Committee receives an additional annual cash fee of $10,000.
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 Hertz car rentals upon completion of
evaluation forms. In the case of a member of our Board who is also one of our employees, no additional
compensation is paid for serving as a director. Each of our directors who is employed by or affiliated with
one of our Sponsors may assign all or any portion of the compensation the director receives for his
services as a director to that Sponsor or its affiliates.
Stock options are granted annually in arrears, and cash fees are payable quarterly in arrears, although a
director may generally elect to receive all or a portion of fees that would otherwise be payable in cash in
the form of shares of our common stock having a fair market value at such time equal to the amount of
such fees. Any such shares are paid to the director when cash fees would otherwise be payable,
although, if a director so chooses, these shares may be payable on a tax-deferred basis in phantom
shares if the requirements regarding such deferral are met in accordance with applicable tax law, in
which case the actual shares of our common stock are paid to the director promptly following the date
on which he or she ceases to serve as a director (or, if earlier, upon a change in control as defined in the
Director Plan or the Omnibus Plan).
Options granted under the Director Compensation Policy must be granted at an exercise price no less
than fair market value of such shares on the date of grant. Options granted as part of a director’s annual
retainer fee will be fully vested at the time of grant and will generally have a 10-year term.
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