Hertz 2014 Annual Report Download - page 231

Table of Contents

 
•      : 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.
•
•         : 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.
•       : 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.
  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.

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.

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.
•
•          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
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Source: HERTZ GLOBAL HOLDINGS INC, 10-K, July 16, 2015 Powered by Morningstar® Document Research℠
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