Hertz 2008 Annual Report Download - page 75

ITEM 1A. RISK FACTORS (Continued)
our fleet debt facilities significantly restrict the ability of the subsidiaries of Hertz to pay dividends or
otherwise transfer assets to Hertz Holdings. Furthermore, the subsidiaries of Hertz are permitted under
the terms of our Senior Credit Facilities and other indebtedness to incur additional indebtedness that
may severely restrict or prohibit the making of distributions, the payment of dividends or the making of
loans by such subsidiaries to Hertz Holdings. See ‘‘—Risks Relating to Our Substantial Indebtedness—
Restrictive covenants in certain of the agreements and instruments governing our indebtedness may
adversely affect our financial flexibility.’’ In addition, Delaware law may impose requirements that may
restrict our ability to pay dividends to holders of our common stock.
If the ownership of our common stock continues to be highly concentrated, it will prevent other
stockholders from influencing significant corporate decisions.
The concentrated holdings of the funds associated with the Sponsors, certain provisions of the
Stockholders Agreement among the funds and us and the presence of these funds’ nominees on our
board of directors may result in a delay or the deterrence of possible changes in control of our company,
which may reduce the market price of our common stock. The interests of the Sponsors may conflict with
the interests of our other stockholders. See ‘‘—Risks Related to our Business—The Sponsors currently
control us and may have conflicts of interest with us in the future.’’ Our board of directors has adopted
corporate governance guidelines that, among other things, address potential conflicts between a
director’s interests and our interests. In addition, we have adopted a code of business conduct that,
among other things, requires our employees to avoid actions or relationships that might conflict or
appear to conflict with their job responsibilities or the interests of Hertz Holdings, and to disclose their
outside activities, financial interests or relationships that may present a possible conflict of interest or the
appearance of a conflict to management or corporate counsel. These corporate governance guidelines
and code of business ethics will not, by themselves, prohibit transactions with our significant
stockholders.
Our share price may decline due to the large number of shares eligible for future sale.
Sales of substantial amounts of our common stock, or the possibility of such sales, may adversely affect
the price of our common stock and impede our ability to raise capital through the issuance of equity
securities.
There were 322,987,299 shares of our common stock outstanding as of December 31, 2008. Of these
shares, the 88,235,000 shares of common stock sold in the initial public offering and the 51,750,000
shares of common stock sold in the June 2007 registered secondary offering are freely transferable
without restriction or further registration under the Securities Act, unless purchased by our ‘‘affiliates’’ as
that term is defined in Rule 144 under the Securities Act. The remaining shares of common stock
outstanding will be restricted securities within the meaning of Rule 144 under the Securities Act, but will
be eligible for resale subject to applicable volume, manner of sale, holding period and other limitations of
Rule 144 or pursuant to an exemption from registration under Rule 701 under the Securities Act. In
November 2006, we filed a registration statement under the Securities Act to register the shares of
common stock to be issued under our stock incentive plans and employee stock purchase plan and, as
a result, all shares of common stock acquired upon exercise of stock options and other equity-based
awards granted under these plans will also be freely tradable under the Securities Act unless purchased
by our affiliates. As of December 31, 2008, there were 17.4 million shares of our common stock
underlying our stock incentive plans. In addition to the 17.4 million shares underlying outstanding
awards as of December 31, 2008, we had 15.3 million shares of our common stock available for issuance
under the Hertz Global Holdings, Inc. 2008 Omnibus Incentive Plan, or the ‘‘Omnibus Plan.’’
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