Hertz 2014 Annual Report Download - page 239

Table of Contents

 


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
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

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
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
Adjusted
Pre‑Tax
Income ("API")
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40%
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No
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Equal to our income before acquisition accounting charges,
non‑cash interest items, income taxes, minority interest,
restructuring expenses, significant one‑time items and non‑cash
“mark‑to‑market” income and expense

API allows management to assess the
operational performance of our business,
exclusive of the items previously mentioned
that do not reflect our operating performance
Return on
Total Capital
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40%

No

Equal to API plus our gross interest expense and the expense
for equity awards divided by the average total capital balance for
each of the four relevant quarters. Total capital balance is
defined as average assets, including goodwill, other intangibles
and other acquisition accounting related balances, minus
average non-interest bearing liabilities

Return on total capital measures our
profitability relative to our capital structure
Revenue
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20%
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Yes
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Our Company’s revenue

Revenue is a strong indicator of how our
Company is performing overall
The Compensation Committee set goals for each of API, return on total capital and revenue. The Compensation Committee then measured our
performance against each of the goals to determine a modifier for each financial performance element and an overall Corporate Performance
Modifier. The target level for each of API, revenue and return on total capital was based upon our business plan.

The following were the fiscal 2014 financial performance criteria targets set by the Compensation Committee and our actual performance as
compared to such targets (dollars in millions):
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
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



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

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

Threshold(1)
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$1,196.3
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$10,971.6
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12.11%
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Target = 100% Multiplier
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$1,329.2
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$11,549.1
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13.46%
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High Performance Level(2)
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$1,528.6
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$12,415.3
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15.48%
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Actual Results
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$417.9
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$11,017.6
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
5.99%
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Payout Factor
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0.0%

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63.2%
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0.0%
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Corporate Performance Modifier
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12.6%
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(1)Any API, revenue or return on total capital results that equal the threshold receive a 60% multiplier. Any API, revenue or return on total capital results that are below
the threshold receive a 0% multiplier.
(2)Any API, revenue or return on total capital results that equal the high performance level receive a 160% multiplier.
For financial performance criteria, linear interpolation was used to determine the multiplier for results that were between the threshold and target
and target and high performance level.
We disclosed our actual API, as well as detailed reconciliations of this Non‑GAAP measure, in Part II, Item 7 “
 of this Annual Report on Form 10-K under the caption 
.
We calculate return on total capital as (1) net operating profit before taxes divided by (2) total capital. We calculate net operating profit before taxes
as API plus our gross interest expense and the expense for equity awards. Total capital for any particular quarter is calculated as average assets,
including goodwill, other intangibles and other acquisition accounting related balances, minus average non-interest bearing liabilities. In order to
determine an annual amount for total capital, we take the sum of the total capital balance for each of the four relevant quarters and divide by 4.
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Source: HERTZ GLOBAL HOLDINGS INC, 10-K, July 16, 2015 Powered by Morningstar® Document Research℠
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