Hertz 2012 Annual Report Download - page 59

ITEM 1A. RISK FACTORS (Continued)
Changes in the U.S. legal and regulatory environment that affect our operations, including laws
and regulations relating to taxes, automobile-related liability, insurance rates, insurance products,
consumer privacy, data security, employment matters, cost and fee recovery and the banking and
financing industry could disrupt our business, increase our expenses or otherwise have a material
adverse effect on our results of operations.
We are subject to a wide variety of U.S. laws and regulations and changes in the level of government
regulation of our business have the potential to materially alter our business practices and materially
adversely affect our financial position and results of operations, including our profitability. Those
changes may come about through new laws and regulations or changes in the interpretation of existing
laws and regulations.
Any new, or change in existing, U.S. law and regulation with respect to optional insurance products or
policies could increase our costs of compliance or make it uneconomical to offer such products, which
would lead to a reduction in revenue and profitability. For further discussion regarding how changes in
the regulation of insurance intermediaries may affect us, see the section entitled ‘‘Business—Risk
Management’’ in this Annual Report. If customers decline to purchase supplemental liability insurance
products from us as a result of any changes in these laws or otherwise, our results of operations could be
materially adversely affected.
Changes in the U.S. legal and regulatory environment in the areas of customer privacy, data security and
cross-border data flow could have a material adverse effect on our business, primarily through the
impairment of our marketing and transaction processing activities, and the resulting costs of complying
with such legal and regulatory requirements. It is also possible that we could face significant liability for
failing to comply with any such requirements.
In most places where we operate, we pass through various expenses, including the recovery of vehicle
licensing costs and airport concession fees, to our rental customers as separate charges. We believe
that our expense pass-throughs, where imposed, are properly disclosed and are lawful. However, we
may in the future be subject to potential legislative, regulatory or administrative changes or actions
which could limit, restrict or prohibit our ability to separately state, charge and recover vehicle licensing
costs and airport concession fees, which could result in a material adverse effect on our results of
operations.
Certain new or proposed laws and regulations with respect to the banking and finance industries,
including the Dodd-Frank Wall Street Reform and Consumer Protection Act and amendments to
Regulation AB, could restrict our access to certain financing arrangements and increase our financing
costs, which could have a material adverse effect on our financial position, results of operations, liquidity
and cash flows.
Investment funds associated with or designated by the Sponsors exercise significant control over
our Board of Directors, management, policies and significant transactions, and may have interests
that differ from Hertz Holdings’ other stockholders.
Hertz Holdings is a party to an amended and restated stockholders’ agreement, or the ‘‘Stockholders’
Agreement,’’ among it and investment funds associated with or designated by the Sponsors. Investment
funds associated with or designated by the Sponsors currently beneficially own, in the aggregate,
approximately 26% of the outstanding shares of Hertz Holdings’ common stock. Pursuant to the
Stockholders’ Agreement, each of the funds has agreed to vote in favor of the other funds’ nominees to
our Board of Directors. The Sponsors currently exercise, and will continue to exercise, significant
influence over our Board of Directors, matters requiring stockholder approval and our management,
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