Hertz 2014 Annual Report Download - page 243

Table of Contents

 
Accordingly, for 2015 API will be the primary driver of annual cash bonuses. For corporate center participants and participants who are business
unit leaders at Hertz-Rent-A-Car Americas or Hertz Rent-A-Car International their annual cash bonuses will be based solely on the API of our
Company. For leaders at other business units, the API of their respective business unit will be weighted at either 50% or 75% of the API metric in
addition to our Company’s API performance. The maximum payout for financial performance will generally be 160% of target and, while the
Individual Performance Modifier has been retained, it cannot result in payouts higher than 160%, subject to an exception for one executive officer
hired in 2015 whose maximum for 2015 is 200% of target.
The Compensation Committee believes that API is the right structure for 2015. It considers 2015 a transition year and the Compensation
Committee, along with management, will be doing a thorough review to evaluate what the longer term structure of EICP and the overall plan should
be.
Mr. Tague’s employment agreement provides that his bonus for 2015 shall be no less than 60% of target.
‑
Long‑term equity incentive compensation comprises a significant portion of the total compensation paid to our NEOs and in 2014 was awarded
under the 2008 Omnibus Plan. Under the 2008 Omnibus Plan, the Compensation Committee has the flexibility to make equity awards based on the
common stock of Hertz Holdings, including time‑ and performance‑based awards of stock options, stock appreciation rights, restricted stock,
restricted stock units, PSUs and deferred stock units.

The Compensation Committee continued its approach with respect to the structure and use of equity consistent with the approach used by the
Company during 2013. In March 2014, PSUs were granted to certain of our NEOs as part of their annual long‑term equity incentive award. PSUs
represent the right to receive a share of Hertz Holdings’ common stock if certain performance goals are achieved and time periods have passed.
The Compensation Committee determined that awarding long‑term equity incentive awards comprised of 70% PSUs based on Corporate EBITDA
and 30% based on Corporate EBITDA margin was appropriate because PSUs directly encourage our NEOs to improve and enhance our financial
performance, while helping retain their services through the vesting period. In general, earning PSUs requires continued employment.
Messrs. Tague and McDonald were both hired during 2014 after the 2014 performance period was well under way and the terms of their
employment arrangements provided for different long-term incentives, which will be described below under  and
“
Corporate EBITDA PSUs

The Compensation Committee selected Corporate EBITDA as the performance goal for 70% of the PSUs granted in 2014. The Compensation
Committee chose Corporate EBITDA as a performance metric because it is one of the primary metrics we use to facilitate our analysis of
investment decisions, profitability and performance trends. Corporate EBITDA means “EBITDA” as that term is defined under our senior credit
facilities and is further defined and reconciled to its most comparable U.S. GAAP measure in  below.

In 2014, the Compensation Committee reaffirmed its long‑term equity incentive award design by continuing to use performance goals based on
Corporate EBITDA over a multi‑year period. For purposes of the PSUs, management recommended, and the Compensation Committee approved,
two goals. The first goal has baseline business targets for 2014 and combined 2014‑2015 (the “Strategic Plan”). The second goal is a stretch plan
with more difficult business targets for 2014 and combined 2014‑2015 (the “Stretch Plan”) to drive increased performance with a corresponding
higher payout factor.
231
Source: HERTZ GLOBAL HOLDINGS INC, 10-K, July 16, 2015 Powered by Morningstar® Document Research℠
The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,
except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.