DEF 14A of Hertz Global Holdings, Inc
Filed Apr 9, 2024 · FY20230001104659-24-044996
Proposal 1: Election of Three Director Nominees
Proposal 1: Election of Three Director Nominees Our business is managed under the direction of the Board of Directors (the “Board”) of Hertz Global Holdings, Inc. Currently, our Board is comprised of nine directors. Our directors are divided into three classes, with one class of directors elected each year and each class serving a three-year term. The terms of our Class III directors expire at the 2024 Annual Meeting. Each of our Class I directors has a term that expires at the 2025 annual meeting of stockholders, and each of our Class II directors has a term that expires at the 2026 annual meeting of stockholders. The structure of our Board was implemented in connection with our successful emergence, on June 30, 2021, from a voluntary Chapter 11 restructuring plan (the “Emergence”) that we undertook in the wake of the COVID-19 pandemic. Our Chapter 11 plan of reorganization was sponsored by a group (the “Sponsors”) comprised of, among others, funds associated with Knighthead Capital Management, LLC (“Knighthead”), Certares Management LLC (“Certares Management”) and Certares Opportunities LLC (“Certares Opportunities” and together with Certares Management and their affiliates, “Certares”). As part of the transactions undertaken pursuant to our plan of reorganization, CK Amarillo LP, which is an entity for which Knighthead and Certares Opportunities serve as investment managers, received approximately 41% of Hertz’s newly issued shares of common stock as of the Emergence date. In addition, as of June 30, 2021, four Sponsor affiliated individuals became directors on our Board: two directors identified by Knighthead (Thomas Wagner and Andrew Shannahan) and two directors identified by Certares Opportunities (M. Gregory O’Hara and Colin Farmer). Directors Wagner and O’Hara were subsequently nominated and elected by our stockholders to serve as Class I directors at the 2022 annual meeting of stockholders, and directors Shannahan and Farmer are being nominated for election by our stockholders to serve as Class III directors at the 2024 Annual Meeting. In January 2023, Mr. O’Hara resigned from the Board due to competing professional responsibilities. The Board filled the vacancy created by Mr. O’Hara’s resignation by appointing Mr. Jeffrey Nedelman (who at the time was Senior Managing Director of Certares Management). Mr. Nedelman served on our Board until January 2024, at which time he resigned from the Board in connection with a change in his professional affiliation. Mr. O’Hara was re-appointed to the Board in January 2024 to fill the ensuing vacancy. According to filings made with the Securities and Exchange Commission, or SEC, based on shares issued and outstanding as of March 25, 2024, and excluding the dilutive impact of our outstanding publicly traded warrants (Nasdaq: HTZWW), which are exercisable for shares of our common stock, CK Amarillo’s ownership percentage was approximately 59% of the company’s common stock. Nothing in the company’s constituent documents provides Knighthead, Certares or their affiliates, including CK Amarillo, with the right to appoint or nominate individuals to the Board. Upon the recommendation of its Governance Committee, the Board has considered and nominated the following slate of Class III director nominees for a three-year term expiring at our 2027 annual meeting of stockholders: Colin Farmer, Wayne “Gil” West and Andrew Shannahan. The following biographies detail the age and principal occupations during at least the past five years for each director nominee, as well as for each other individual serving on our Board as of the date of this Proxy Statement. We have no reason to believe that any of the director nominees will be unable to serve if elected.
Proposal 1: Election of Three Director Nominees
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Director Nominees for Election at the 2024 Annual Meeting (Class III)
Director Nominees for Election at the 2024 Annual Meeting (Class III)
Colin Farmer
Colin Farmer Mr. Farmer (50) has served as a director of the company since June 2021. He served as the Board’s Lead Director from August 2022 to April 2024 and has served as the Board’s Chair since April 2024. Mr. Farmer has served as Senior Managing Director and Head of the Management Committee of Certares Management, an investment services firm, since 2014, and also serves on its Investment Committees. Mr. Farmer also serves on the boards of several private companies, including Internova Travel Group, AmaWaterways, Guardian Alarm, Mystic Invest, Avoya Travel and Certares Holdings. Prior to joining Certares, Mr. Farmer was Managing Director of One Equity Partners and, prior to that, a Principal at Harvest Partners. Mr. Farmer began his career as an analyst at Robertson Stephens & Company. We believe that Mr. Farmer is qualified to serve on our Board in light of his expertise in capital markets and financial matters, as well as his governance experience achieved through service on other company boards. Mr. Farmer is Chair of Hertz’s Compensation Committee and a member of its Governance Committee.
Andrew Shannahan
Andrew Shannahan Mr. Shannahan (43) has served as a director of the company since June 2021. Mr. Shannahan is Head of Research and a Partner at Knighthead, an event-driven and deep value focused SEC registered investment advisor founded in 2008 that specializes in investing in companies that need financial and operational restructuring since 2008, and serves as a member of the Investment Committee of certain funds managed by Knighthead. Prior to joining Knighthead, Mr. Shannahan served as a research analyst at Litespeed Partners, an event-driven hedge fund. Mr. Shannahan has served as a director of ATI Physical Therapy, Inc. since 2023. In addition to this public company directorship, Mr. Shannahan also has served on the board of private companies Homer City Generating since 2019, Bowhunter Holdings, LLC since 2022, Knighthead Holdings Ltd. and its subsidiaries since 2023, and Birmingham City Football Club since 2023. We believe that Mr. Shannahan is qualified to serve on our Board because of his expertise in complex investment opportunities, finance and capital markets matters, as well as his governance experience achieved through service on other company boards. Mr. Shannahan is Chair of Hertz’s Governance Committee and a member of its Compensation Committee.
Michael Gregory O’Hara
Michael Gregory O’Hara Mr. O’Hara (58) has served as a director of the company since January 2024 after previously serving on the Board from June 2021 to January 2023. Mr. O’Hara was originally appointed to the Board in connection with the Emergence, resigned from the Board due to his professional obligations, and rejoined the Board to fill a vacancy created upon the resignation of another director in January 2024. Mr. O’Hara is Founder and Senior Managing Director of Certares Management, a firm that invests in the travel, tourism and hospitality sectors founded in 2012, and also serves as a member of its Management Committee. Mr. O’Hara co-founded GO Acquisition Corp., a special purpose acquisition company, and served as its Co-Chief Executive Officer and a member of its board of directors from 2020 to 2022. Prior to forming Certares, Mr. O’Hara served as Chief Investment Officer of JPMorgan Chase’s Special Investments Group and Managing Director of One Equity Partners, the private equity arm of JPMorgan. Before that, he served as an executive and a director at Worldspan Corporation, a privately held provider of travel technology and content. Mr. O’Hara has served as a director of TripAdvisor, Inc. since March 2020 and served as its Vice Chairman from 2020 to 2023. He has also served as the Chairman of American Express Global Business Travel since 2014. In addition to his public company directorships, Mr. O’Hara has served as director of the World Travel & Tourism Council since 2019 and has been its Chair since 2023. He also serves on the board of Certares Holdings, where he is the Head of its Investment Committee and a member of its Management Committee. He is also a member of the Investment Committee and Management Committee of CK Opportunities Fund and Certares Real Estate Holdings. We believe that Mr. O’Hara is qualified to serve on our Board because of his in-depth knowledge of the travel industry, his extensive background in investment analysis and management and his governance experience achieved through service with other companies.
Vincent J. Intrieri
Vincent J. Intrieri Mr. Intrieri (67) has served as a director of the company since June 2016. Mr. Intrieri is Chief Executive Officer and founder of VDA Capital Management LLC, a private investment fund founded in 2017. Mr. Intrieri was previously employed by entities associated with Carl Icahn from 1998 to 2016 in various investment-related capacities, including most recently as Senior Managing Director of Icahn Capital LP from 2008 to 2016, and as Senior Managing Director of Icahn Offshore LP from 2004 to 2016. Prior to that, Mr. Intrieri was a partner at Arthur Andersen LLP. Mr. Intrieri has served as a director of Transocean Ltd. since 2014. Mr. Intrieri also served as a director of Navistar International Corporation from 2012 to 2021. Mr. Intrieri served as a director of numerous other publicly traded companies prior to 2019, including Energen Corporation, Conduent Incorporated, Chesapeake Energy Corporation, CVR Refining, LP, Forest Laboratories, Inc., CVR Energy, Inc. and Federal-Mogul Corporation, among others. We believe that Mr. Intrieri is qualified to serve on our Board because of his expertise in finance and accounting matters, as well as international operations, strategy and public company governance. Mr. Intrieri is Chair of Hertz’s Audit Committee.
Vincent J. Intrieri
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DIRECTOR COMPENSATION
DIRECTOR COMPENSATION The Compensation Committee recommends the non-employee director compensation program to the Board for approval annually. In setting director compensation, the Compensation Committee receives input from Frederic W. Cook & Co., Inc. (“FW Cook”), its independent compensation consultant, on factors to consider when recommending director compensation to the Board, including the time commitment and skill level required to serve on the Board, as well as broader market practices. The Compensation Committee aims to set director compensation levels at or near the market median relative to directors at companies in the same peer group that is used for purposes of determining our executive compensation. This peer group includes our direct public competitor and companies that bear substantial similarities to our business model, with which we compete for talent, and which are comparable to us based on revenues, market capitalization, size, industry and/or scope of operations. Providing a competitive compensation package enables us to attract and retain highly qualified directors.
2023 Director Compensation Table
2023 Director Compensation Table The table below summarizes the compensation paid to our non-employee directors for fiscal year 2023.
2023 Director Compensation Table
| Name | Fees Earned or Paid in Cash(1) ($) | Stock Awards(2)(3) ($) | All Other Compensation(4) ($) | Total ($) | | Fran Bermanzohn(5) | 95,556 | 227,899 | — | 323,455 | | Colin Farmer | 1 | — | 7,883 | 7,884 | | Jennifer Feikin | 100,000 | 174,994 | 1,885 | 276,879 | | Mark Fields | 100,000 | 174,994 | 6,526 | 281,520 | | Vincent J. Intrieri | 150,000 | 174,994 | 3,456 | 328,450 | | Jeffrey Nedelman(5) | 1 | — | 4,417 | 4,418 | | M. Gregory O’Hara | 1 | — | 27,657 | 27,658 | | Andrew Shannahan | 1 | — | 272 | 273 | | Evangeline Vougessis | 100,000 | 174,994 | 4,711 | 279,705 | | Thomas Wagner | 1 | — | 3,689 | 3,690 |
2023 Director Compensation Table
(1) All compensation is for services rendered as directors for service on our Board, including annual retainer fees and committee chair fees (whether payable in cash or in shares of common stock) as set forth above. Ms. Bermanzohn, Mr. Fields and Mr. Intrieri received 100% of fees payable in cash. Ms. Feikin and Ms. Vougessis elected to receive 100% of fees that would otherwise be payable in cash in the form of phantom shares. For the year ended December 31, 2023, Ms. Feikin and Ms. Vougessis were each issued 7,343 phantom shares. (2) For Ms. Feikin, Mr. Fields, Mr. Intrieri and Ms. Vougessis, reflects the aggregate grant date fair value of 10,703 RSUs granted on May 17, 2023. The number of RSUs granted was determined by dividing $175,000 by the closing market price of our common stock on the date of grant. For Ms. Bermanzohn, reflects the aggregate grant date fair value of 10,703 RSUs granted on May 17, 2023, as well as 3,151 RSUs granted on January 17, 2023, for her service from such date until May 16, 2023. The number of RSUs granted to Ms. Bermanzohn on January 17, 2023, was determined by dividing $52,893 by the closing market price of our common stock on the date of grant. For each grant included in this column, the grant date fair value was computed pursuant to FASB ASC Topic 718 as of the date of grant. Assumptions used in the calculation of these amounts are included in Note 8 entitled “Stock-Based Compensation” in the notes to our consolidated financial statements included in the Annual Report on Form 10-K filed with the SEC on February 12, 2024 (the “2023 Annual Report”). The RSUs granted to each director on May 17, 2023 generally vest in full on the earlier of the business day immediately preceding our 2024 Annual Meeting and the date on which the director ceases to serve on our Board, subject to any deferral as described above. The RSUs granted to Ms. Bermanzohn on January 17, 2023 vested on May 16, 2023. The following table provides a summary, as of December 31, 2023, of the aggregate number of unvested RSUs outstanding and vested deferred awards for each of our non-employee directors.
2023 Director Compensation Table
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2023 Director Compensation Table
| Name | Unvested RSUs Outstanding (#) | Vested Deferred Awards (#) | | Fran Bermanzohn | 10,703 | — | | Colin Farmer | — | — | | Jennifer Feikin | 10,703 | 27,918 | | Mark Fields | 10,703 | 10,031 | | Vincent J. Intrieri | 10,703 | 18,684 | | Jeffrey Nedelman | — | — | | M. Gregory O’Hara | — | — | | Andrew Shannahan | — | — | | Evangeline Vougessis | 10,703 | 31,050 | | Thomas Wagner | — | — |
2023 Director Compensation Table
Each amount reflects the value of free car rentals under the company’s Director Car Rental Program. Ms. Bermanzohn resigned from the Board effective March 19, 2024 and Mr. Nedelman resigned from the Board effective January 19, 2024.
2023 Director Compensation Table
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2023 Program Summary
| Element | | Description | Objective | Factors Influencing Amount | | Base Salary | | Fixed compensation delivered in cash; reviewed annually and adjusted if appropriate | Provides base amount of market competitive pay | Experience, market data, individual role and responsibilities, retention considerations and individual performance | | Annual Incentive Award | | Variable cash compensation based on company, business unit and/or individual performance | Motivates and rewards achievement of key strategic initiatives and financial results, and encourages individual performance | Intended target value is set based on market data, individual role and responsibilities; payout based on company and individual performance | | Long-Term Incentive Awards | Performance Stock Units (PSUs) | Variable compensation with payout in shares of common stock based on company performance and continued employment | Aligns NEO interests with those of stockholders by linking payouts to performance against financial metrics that are of importance to investors; promotes retention | Intended target value is set based on market data, individual role and responsibilities; payout based on company performance and time worked | | | Restricted Stock Units (RSUs) | Variable compensation with payout in shares of common stock based on continued employment | Aligns interests of executives with long-term stockholder value creation and promotes retention | |
2023 Program Summary
| We evaluate risk in light of our overall compensation program We use metrics in our incentive compensation plans that are aligned to the metrics management uses to assess the business day-to-day We cap payouts in our incentive programs We use double-trigger vesting provisions in change of control scenarios We believe a substantial portion of our NEOs’ compensation should be subject to satisfaction of performance objectives We use a variety of equity award structures to incent both performance and retention We have a robust stock ownership policy for executives and the Board We maintain a robust compensation recovery policy beyond that which is required by law We use an independent compensation consultant We utilize a representative and relevant peer group |
Impact on 2023 Compensation Decisions
Impact on 2023 Compensation Decisions As more fully described in this CD&A, the Compensation Committee and our Board considered our organization’s progress against critical business initiatives during 2023, as well as financial outcomes, in determining final payouts under our incentive programs with performance periods ending in 2023. • Our former CEO and other continuing NEOs earned payouts equal to 50% of their targeted incentive amount under our short-term incentive program in 2023. Neither Mr. Cheung nor Mr. Stone received any payment in relation to the 2023 short-term incentive program. • Our Adjusted Corporate EBITDA performance resulted in no earned amounts for our NEOs for PSUs associated with fiscal year 2023 and granted under the long-term incentive plan for the 2022 – 2024 performance period or the long-term incentive plan for the 2023 – 2025 performance period. • Mr. Scherr received sign-on equity awards in 2022 in lieu of participation in our long-term incentive plan for both the 2022 – 2024 performance period and the 2023 – 2025 performance period. During 2023, 1,121,036 shares underlying his sign-on equity awards vested due to his tenure and our stock price performance during 2022. Our stock price performance in 2023 failed to reach milestones necessary for incremental vesting of these awards. • Our NEOs other than Mr. Scherr experienced vesting, in the ordinary course, of RSUs with 2023 vesting dates, to the extent that they were employed with the company on such vesting dates. A more detailed analysis of the 2023 compensation program for our NEOs, as well as actual 2023 payouts under the programs, follows.
NEO Total Target Direct Compensation Opportunity
| Name | Annualized Base Salary | Target Annual Incentive | Target Long-Term Incentive | Target Pay | | Stephen Scherr | $1,500,000 | $2,400,000 | See Discussion of CEO Sign-On Compensation(1) | | | Alexandra Brooks(2) | $600,000 | $480,000 | $1,000,000 | $2,080,000 | | Colleen Batcheler | $600,000 | $600,000 | $1,800,000 | $3,000,000 | | Justin Keppy(3) | $1,250,000 | $1,250,000 | $2,500,000 | $5,000,000 | | Eric Leef | $500,000 | $400,000 | $850,000 | $1,750,000 | | Others Required to Be Discussed | | | | | | Kenny Cheung(4) | $700,000 | $700,000 | $1,600,000 | $3,000,000 | | Paul Stone(4) | $1,000,000 | $1,400,000 | $2,500,000 | $4,900,000 |
NEO Total Target Direct Compensation Opportunity
(1) As discussed below, Mr. Scherr received sign-on equity grants in 2022 when he joined the company. These equity grants were designed to incentivize his performance over the period that would otherwise be covered by our long-term incentive programs. As such, he was not a participant in the company’s long-term equity program in 2022 or 2023, nor was he made a participant in the 2024 program. Mr. Scherr resigned from the company effective March 31, 2024. (2) Ms. Brooks commenced her role as CFO effective July 25, 2023 in connection with an internal promotion. Amounts shown reflect her total target direct compensation for 2023 assuming she was promoted January 1, 2023. Prior to her promotion, her annualized base salary was $450,000, her target annual incentive was $360,000 and her target long-term incentive was $500,000. (3) Mr. Keppy commenced his role effective November 15, 2023. Amounts shown reflect Mr. Keppy’s total target direct compensation opportunity for 2023 assuming he commenced employment on January 1, 2023. Mr. Cheung served in his role until April 14, 2023 and Mr. Stone served in his role until October 31, 2023. Mr. Cheung and Mr. Stone did not earn bonuses for 2023 and forfeited their 2023 equity awards as a result of their resignations during the year.
Component Weighting: Pay for Performance
Component Weighting: Pay for Performance The Compensation Committee designed the 2023 executive compensation program to help ensure that within the core program components, our NEOs received the majority of their total target direct compensation opportunity in the form of variable pay (in other words, incentives). Total target direct compensation for a year, or “Target Pay,” for the CEO is calculated by combining the value of the CEO’s base salary and target annual incentive award. Target Pay for the other NEOs is calculated by combining the value of base salary, target annual incentive award, and target annual long-term incentive equity award. The Compensation Committee previously determined in 2022 that in light of the enterprise-wide scope of the CEO’s role, his individual compensation opportunities should be greatest among the NEOs and should be the most heavily weighted toward variable compensation. In lieu of participating in the annual long-term incentive program, Mr. Scherr received significant sign-on equity grants in February 2022. These grants had the potential to vest over a longer timeline than our core long-term incentive program and were, in large part, conditioned on our achievement of stock price milestones. Mr. Scherr’s long-term incentives are described later in this CD&A. See “— Agreements with NEOs — Agreement with Mr. Scherr.”
Market Competitive Compensation
Market Competitive Compensation Each NEO’s 2023 Target Pay was set at a level that the Compensation Committee and the Board believe to be appropriate based on a variety of factors, including compensation levels for executives in similar positions at a group of peer companies (our “peer group”) that our Compensation Committee believes reflects a relevant market for sourcing executive talent. See “— Summary of the Compensation Decision-Making Process” below for more information on our peer group. In making pay determinations for each NEO, our Compensation Committee also generally considered the following factors: • Scope of responsibility; • Tenure in the role at Hertz; • Internal pay comparisons; • Requirements of any employment arrangements; • Each NEO’s individual performance in 2022; and • The NEO’s expected future impact on our organization.
2023 Annual Incentive Awards
2023 Annual Incentive Awards In February 2023, our Compensation Committee and Board adopted the 2023 Executive Incentive Compensation Plan (“EICP”) to deliver annual incentive opportunities to employees around the globe, including our NEOs. The EICP was designed to reward results that the Compensation Committee and the Board believe to be aligned with stockholder value creation. The Compensation Committee and the Board approved the following metrics and weightings for use in the plan applicable to our NEOs: • Adjusted Corporate EBITDA (weighted 40%) — a measure of profitability • Revenue Per Unit (“RPU”) (weighted at 15%) — a measure of fleet productivity • Net Promoter Score for the Hertz Brand (“NPS”) (weighted at 20%) — a measure of customer satisfaction whereby the percentage of survey-responding customers who view their experience favorably (“promoters”) is compared to the percentage of survey-responding customers who view their experience negatively (“detractors”). (NPS = % of promoters less % of detractors) • Board Discretion (weighted at 25%) — to enable consideration of the qualitative and strategic aspects of our business results Plan funding was not dependent on achievement of the goals associated with any specific metric; achievement of goals under any of the four metrics could fund awards. See Annex A — Non-GAAP Measures to this Proxy Statement for definitions of Adjusted Corporate EBITDA and RPU. Adjusted Corporate EBITDA, RPU and NPS were core elements of our program in 2023 as well as 2022, given their importance in measuring our financial performance, asset efficiency and ability to serve our customers.
2023 Annual Incentive Awards
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2023 Annual Incentive Awards
After the conclusion of 2023, our Compensation Committee and Board determined that we performed at a level that resulted in plan funding of 50% of target award amounts. The 2023 EICP goals and actual results that led to this funding were as follows:
2023 Annual Incentive Awards
| 2023 EICP for Continuing NEOs(1) | | | | | | | | | | Adjusted Corporate EBITDA (in millions) | Adjusted Corporate EBITDA Payout (% of Target) | RPU | RPU Payout (% of Target) | NPS | NPS Payout (% of Target) | Board Discretion (% of Target) | | Threshold | $1,367.71 | 80% | $1,502.50 | 25% | 39 | 25% | 0% | | Target | $1,709.63 | 100% | $1,581.57 | 100% | 42 | 100% | 100% | | Maximum | $2,051.56 | 250% | $1,660.65 | 200% | 47 | 200% | 200% | | EICP Results | $560.53 | 0% | $1,479.03 | 0% | 34 | 0% | 200% |
2023 Annual Incentive Awards
(1) Straight-line interpolation between points determines payout levels once threshold is reached. In determining the payout under the Board Discretion metric, the Compensation Committee and the Board considered, on a subjective, qualitative basis, management’s performance against key strategic initiatives in a complex operating environment, as well as the importance of retention. Specifically, the material factors considered were the significant work being undertaken to return the company to profitable growth, management’s work during the year to mitigate the headwinds created by the company’s strategic investment in electric vehicles and the desire to drive employee engagement and retention at a critical time for the business. The earned payout percentage for each metric was weighted as set forth in the EICP and then added together to determine the final funding level.
2023 Annual Incentive Awards
| Adjusted Corporate EBITDA | RPU | NPS | Board Discretion | | 0% of Target x Weighting of 40% = No Funding | 0% of Target x Weighting of 15% = No Funding | 0% of Target x Weighting of 20% = No Funding | 200% of Target x Weighting of 25% = 50 Points of Funding | | 50% of Target Payout | | | |
2023 Annual Incentive Awards
Each NEO’s individual annual incentive award for 2023 was calculated by multiplying (A) his or her base salary actually earned during the year by (B) his or her target EICP opportunity and then by (C) the funded level of 50% of target. Awards were paid in cash. Because they were not employed with the company at the time awards were paid, neither Mr. Cheung nor Mr. Stone was entitled to an award opportunity under the EICP for 2023. The Compensation Committee and the Board determined each NEO’s target EICP opportunity based on the same factors described above in relation to base salaries. The Compensation Committee and the Board chose not to further differentiate performance among the NEOs, and instead chose to compensate the cohort as a team. No portion of any EICP award was guaranteed for any NEO. There were no increases from 2022 in the target EICP opportunity for NEOs, as a percentage of base salary, other than for Ms. Brooks in connection with her promotion.
2023 Annual Incentive Awards
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2023 Annual Incentive Awards
| Name | Column (A) | Column (B) | Column (C) | | | 2023 Target EICP Opportunity as a % of Salary | 2023 Target Award (Column A x Base Salary Received) | 2023 Actual Award (Column B x 50%)(1) | | Stephen Scherr | 160% | $2,400,000 | $1,200,000 | | Alexandra Brooks | 80% | $412,603 | $206,301 | | Colleen Batcheler | 100% | $600,000 | $300,000 | | Justin Keppy | 100% | $160,959 | $80,479 | | Eric Leef | 80% | $400,000 | $200,000 |
2023 Annual Incentive Awards
Ms. Brooks commenced her role effective July 25, 2023. Her 2023 Actual Award reflects proration based on her length of service in each role held with the company during the year. Mr. Keppy commenced his role effective November 15, 2023. His 2023 Actual Award reflects proration based on his length of service as our COO during the year.
2023 Long-Term Incentive Awards
2023 Long-Term Incentive Awards The Compensation Committee and the Board believe in aligning the interests of our senior leaders with those of our stockholders. The significant extent to which equity is included in our NEOs’ compensation opportunity evidences this belief. As discussed above, Mr. Scherr received sign-on equity grants when he joined the company. These grants were in lieu of his participation in our 2022 and 2023 long-term incentive programs. Similarly, Mr. Scherr was not provided participation in the company’s 2024 long-term incentive program. See “— Agreements with NEOs — Agreement with Mr. Scherr” below for further discussion of Mr. Scherr’s prior equity grants. For our other NEOs, the Compensation Committee chose to use a mix of service-based RSUs and performance-based PSUs in the 2023 – 2025 cycle of the long-term incentive program (the “2023 LTIP”). RSUs are settled in shares of our common stock and designed to attract and retain the NEOs, reward performance and align our executives’ interests with our stockholders by encouraging stock ownership. PSUs, if earned, are settled in shares of our common stock, and designed to reward the NEOs based on Hertz’s performance through the achievement of financial metrics, thereby providing both retention and incentive tools for our executives. To determine the amount of the target award to grant to each NEO participating in the 2023 LTIP, the Compensation Committee considered the factors discussed above for base salaries and set target award opportunities for each eligible NEO. The Committee uses a value-based approach to setting target opportunities and expresses the target opportunity in dollar terms. The target opportunities for our NEOs under the 2023 LTIP were as follows:
2023 Long-Term Incentive Awards
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2023 Long-Term Incentive Awards
| Name | 2023 Total Target Award Values | | Stephen Scherr | See Discussion of CEO Sign-On Compensation | | Alexandra Brooks(1) | $1,000,000 | | Colleen Batcheler | $1,800,000 | | Justin Keppy(2) | — | | Eric Leef | $850,000 | | Others Required to Be Discussed(3) | | | Kenny Cheung | $1,600,000 | | Paul Stone | $2,500,000 |
2023 Long-Term Incentive Awards
Ms. Brooks commenced her role as CFO effective July 25, 2023. She received a grant with a total target value equal to $500,000 when grants under the 2023 LTIP were originally made. She received an incremental grant under the 2023 LTIP, with a target value of $219,178, after her promotion. The incremental grant was prorated to reflect the actual time she was expected to serve as CFO for 2023. (2) Mr. Keppy commenced his role effective November 15, 2023. The Compensation Committee provided Mr. Keppy participation in the 2023 LTIP with a target total value of $2.5 million, prorated for time worked. However, in accordance with the company’s equity grant practices, the grants of RSUs and PSUs to Mr. Keppy under the 2023 LTIP were not made until the first trading day of the quarter after his commencement of employment (i.e., January 2, 2024). (3) Mr. Cheung and Mr. Stone forfeited their 2023 LTIP awards upon their separations from the company. Considering its pay for performance philosophy, the Compensation Committee set the award mix for NEOs in the 2023 LTIP at 60% PSUs and 40% RSUs, which is the same mix as that used in 2022. Target PSU and RSU values are translated to grant numbers by dividing the dollar value of the target award by the closing price of our common stock on the Nasdaq on the date of grant.
2023 Long-Term Incentive Awards
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2023 Long-Term Incentive Awards
The following table summarizes the mix of equity awards granted to our NEOs under the 2023 LTIP.
2023 Long-Term Incentive Awards
| Name | 2023 PSUs Granted (#) | 2023 RSUs Granted (#) | | Stephen Scherr | N/A | N/A | | Alexandra Brooks(1) | 27,233 | 18,155 | | Colleen Batcheler | 57,539 | 38,359 | | Justin Keppy(2) | — | — | | Eric Leef | 27,171 | 18,114 | | Others Required to Be Discussed(3) | | | | Kenny Cheung | 51,145 | 34,097 | | Paul Stone | 79,915 | 53,277 |
2023 Long-Term Incentive Awards
(1) Ms. Brooks commenced her role effective July 25, 2023. Her 2023 LTIP award reflects proration based on her service in different roles during the year. (2) Mr. Keppy commenced his role effective November 15, 2023. The Compensation Committee provided Mr. Keppy participation in the 2023 LTIP with a target total value of $2.5 million, prorated for time worked during the performance period. However, in accordance with the company’s equity grant practices, the grants of RSUs and PSUs to Mr. Keppy under the 2023 LTIP were not made until the first trading day of the quarter after his commencement of employment (i.e., January 2, 2024). (3) Mr. Cheung and Mr. Stone forfeited their 2023 LTIP awards upon their separations from the company. Mr. Keppy also received sign-on equity grants in 2023 in connection with his hiring. See “— Agreements with NEOs — Agreement with Mr. Keppy” for further discussion of Mr. Keppy’s sign-on equity grants.
2023 RSUs
2023 RSUs RSUs represent the right to receive a defined number of shares of our common stock after completing a period of service established at the grant date. RSUs encourage retention and long-term commitment to the company. Additionally, because RSUs are paid in shares of our common stock, we believe that these awards align the interests of our executives with those of our stockholders, as they encourage stock ownership and will increase in value as the trading price of our common stock increases. RSUs granted in the 2023 LTIP generally vest ratably over three years, subject to the NEOs continued employment with the company.
2022 and 2023 PSUs
2022 and 2023 PSUs PSUs represent an opportunity to earn a defined number of shares of our common stock if we achieve pre-set performance goals over time. In general, the PSUs fully vest following the third anniversary of the date of grant. Payouts, in shares of common stock, can range from 0% to 200% of the target award. The three-year nature of the LTIP grant means that, in future years, an NEO may have up to three outstanding PSU grants in one year.
2022 and 2023 PSUs
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2022 and 2023 PSUs
Goal Setting in the PSU Program. Considering the amount of change underway at the company following Emergence, the Compensation Committee has, to date, used a staged approach to goal setting in the PSU program. This approach means that PSUs granted under the 2022 long-term incentive plan (the “2022 LTIP”) and 2023 LTIP are conditionally earned, if at all, based on our performance against a series of three one-year goals. Any PSUs earned with respect to achievement of a one-year performance goal are “banked” and generally require continued employment through the third anniversary of the date of grant to fully vest. In addition, the program caps payouts at 100% of the targeted amount if our absolute total shareholder return (“TSR”) is negative over the three-year grant cycle. The TSR cap applies even if the performance goals are otherwise exceeded and would have resulted in more than 100% of the target grant amount of shares being earned. The Compensation Committee determined that this cap was an appropriate mechanism to ensure that our executives do not receive an above target payout if our stockholders have not experienced positive TSR over the corresponding performance period. The Compensation Committee intends to continue to review the appropriate time to move the PSU program to cumulative, multi-year goals. At the start of 2023, the Compensation Committee approved Adjusted Corporate EBITDA as the performance metric for both the second third of the total PSUs granted under the 2022 LTIP and the first third of the PSUs granted under the 2023 LTIP. The Compensation Committee also set the threshold, target and maximum goals for each of these tranches of PSUs. The calculation of Adjusted Corporate EBITDA for both awards is the same as that for the 2023 EICP applicable to our NEOs. Each PSU grant provides for straight line interpolation to calculate payouts between performance metrics. The Compensation Committee chose to use Adjusted Corporate EBITDA in the PSU program, acknowledging its use in the EICP as well, because of the metric’s importance to the company and its stockholders. Based on the company’s performance in 2023, no PSUs were earned in 2023 for the one-third of the 2022 LTIP PSUs attributable to 2023 performance, or for the one-third of the 2023 LTIP PSUs attributable to 2023 performance.
2022 and 2023 PSUs
| 2023 Tranche of 2022 – 2024 PSUs | | | | Performance | Adjusted Corporate EBITDA (millions) | Percentage Earned | | Threshold | $1,367.71 | 80% | | Target | $1,709.63 | 100% | | Maximum | $1,966.08 | 200% | | 2023 Results | $560.53 | 0% |
2022 and 2023 PSUs
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2022 and 2023 PSUs
| 2023 Tranche of 2023 – 2025 PSUs | | | | Performance | Adjusted Corporate EBITDA (millions) | Percentage Earned | | Threshold | $1,367.71 | 80% | | Target | $1,709.63 | 100% | | Maximum | $1,966.08 | 200% | | 2023 Results | $560.53 | 0% |
2022 and 2023 PSUs
As noted above, Mr. Scherr did not participate in the 2022 LTIP or 2023 LTIP. However, during 2023, a portion of his sign-on equity awards vested due to our stock price performance and his tenure. The following table sets forth the number of shares of underlying the sign-on equity awards granted to Mr. Scherr, the number of shares underlying the awards that vested as of December 31, 2023, and the value of those shares that vested as of December 31, 2023.
2022 and 2023 PSUs
| CEO Sign-On Equity Awards That Vested During 2023 | | | | | Type of Equity | Shares Underlying Awards Granted (#) | Number Vested as of December 31, 2023 (#) | Value Vested as of December 31, 2023(1) | | Time-based RSUs | 2,802,590 | 560,518 | $5,823,782 | | Performance-Based RSUs – Stock Price | 6,539,378 | 560,518 | $5,823,782 | | Performance-Based RSUs – Stock Price and Transaction | 3,113,989 | None | None |
2022 and 2023 PSUs
Based on the closing price ($10.39) of our common stock on the Nasdaq on December 29, 2023, the final trading day prior to the vesting date. The value of these sign-on equity grants as shown in the Summary Compensation Table included later in this Proxy Statement differs from the Value Vested as of December 31, 2023. Under SEC rules, the Summary Compensation Table requires disclosure of the fair value of each award, in full, as of the grant date, even though the awards will be earned over several years, generally require Mr. Scherr’s continued employment over time, and, in the case of the performance-based awards, will only be earned if the performance metrics have been achieved. The information in this column reflects the shares actually earned in 2023, and the year-end stock price. See “— Agreements with NEOs — Agreement with Mr. Scherr” for further discussion of the performance metrics and achievement related to Mr. Scherr’s sign-on equity grants.
2022 and 2023 PSUs
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Severance Plan for Senior Executives
Severance Plan for Senior Executives In August 2021, the Board adopted the 2021 Hertz Global Holdings, Inc. Severance Plan for Senior Executives, as may be amended from time to time (the “Severance Plan”). The Severance Plan provides for senior executives to be eligible to receive severance benefits if the participant’s employment is terminated for a reason other than “cause,” death or disability. Mr. Stone forfeited his right to participate in the Severance Plan in connection with his receipt of a transition retention bonus discussed below under “— Agreements with NEOs — Agreement with Mr. Stone.” The Severance Plan provides that in the event of a qualifying termination, the participant will be eligible for severance equal to (a) 1.5 times their base salary and target annual cash incentive, (b) payment of a pro-rata annual cash incentive for the year of termination based on actual achievement of performance metrics, (c) continued medical and continued health benefits for 18 months following termination, and (d) executive outplacement services of up to $25,000. The participants must execute (and not revoke) a release of claims within 60 days following termination to be eligible for these benefits. The plan requires compliance with customary covenants regarding confidential information, non-competition, non-solicitation and non-disparagement. For Mr. Scherr, in addition to eligibility for benefits under the Severance Plan, his Employment Agreement provided rights to severance if he terminated his employment for “good reason,” as defined in the agreement.
Severance Plan for Senior Executives
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Severance Plan for Senior Executives
See “— Agreements with NEOs — Agreement with Mr. Scherr” below. Mr. Keppy’s offer letter provides a similar severance benefit if he terminates his employment for “good reason,” as defined in the agreement, during the first three years of his employment. See “— Agreements with NEOs — Agreement with Mr. Keppy” below. Mr. Scherr’s Employment Agreement also requires compliance with post-employment restrictive covenant provisions that are more extensive and generally longer in duration than those applicable under the Severance Plan.
Agreement with Mr. Scherr
Agreement with Mr. Scherr Mr. Scherr’s Employment Agreement, entered into on February 3, 2022 (the “Employment Agreement”), provided for an initial term ending on December 31, 2026, unless earlier terminated by Mr. Scherr or the company. On March 12, 2024, Mr. Scherr provided the company with notice of his intent to voluntarily resign from the company and his resignation became effective on March 31, 2024. During his tenure with the company, the Employment Agreement provided Mr. Scherr with an annual base salary of $1.5 million and the right to participate in the company’s annual incentive program in effect from time to time, with a target annual incentive amount equal to 160% of his base salary. In lieu of participation in the company’s long-term incentive program, Mr. Scherr received three equity grants upon his hiring that, in aggregate, provided him with the opportunity to earn a total number of shares representing 2% of the company’s fully diluted shares as of the Emergence. These awards were designed by the Compensation Committee with the support of its independent compensation consultant, FW Cook, to closely align Mr. Scherr’s compensation with the value that management creates for stockholders, particularly for the performance-based awards that directly linked earning of the awards with stock price improvement. In making these awards, our Compensation Committee was focused on successfully recruiting a leader who the Board believed had the requisite experience and leadership qualities to successfully grow our business and position the company to succeed in the context of the future of mobility. Specifically, our Board sought leadership to undertake a transformation of the company. In that pursuit, our Compensation Committee created what it believed to be an appropriate compensation structure to incentivize Mr. Scherr in a manner aligned with the interests of our stockholders while inducing Mr. Scherr to join the company relative to other opportunities available to him at the time. The awards can be summarized as follows: 1. Time-Based RSUs: In order to provide for retention of Mr. Scherr and to allow him to earn compensation based on our stock price over a four-year period, our Compensation Committee awarded 2,802,590 time-based RSUs (representing 0.45% of fully diluted shares of company common stock as of Emergence) that vested with respect to 40% of the time-based RSUs on December 31, 2022 and 20% on December 31, 2023. Had Mr. Scherr’s employment with the company continued (except as set forth below), an additional 20% of the time-based RSUs would have vested on each of December 31, 2024 and 2025. Performance-Based RSUs — Stock Price: At the heart of Mr. Scherr’s sign on package and representing more than 50% of Mr. Scherr’s total sign-on awards, were 6,539,378 performance-based restricted stock units (representing 1.05% of fully diluted shares of the company’s common stock as of Emergence) (the “Stock Price RSUs”). The Stock Price RSUs were designed to be earned solely based on the company’s achievement of the following share price targets, and, if earned based on stock price, would vest annually in 20% increments from December 31, 2022 through December 31, 2026, and in any case no later than December 31, 2026.
Agreement with Mr. Scherr
| Performance-Based RSUs – Stock Price (#) | Required 90-Day VWAP | | 1,401,295 | $15.00 | | 1,401,295 | $20.00 | | 1,401,295 | $25.00 | | 1,401,296 | $30.00 | | 934,197 | $35.00 |
Agreement with Mr. Scherr
Our Compensation Committee determined these awards should comprise the largest portion of Mr. Scherr’s sign-on equity grants to align his compensation with sustained levels of share price performance. Importantly, the share price performance metrics referenced in the table above would be achieved only when the 90-day weighted average closing price (“VWAP”) of our common stock equaled or exceeded the applicable price. Sustained share price performance was thus required, further aligning Mr. Scherr’s compensation to stockholder interests. Once earned based on the stock price, the award would be paid out subject to a time-based vesting schedule that approximated 20% increments over five years, recognizing that “catch-up” vesting might have been needed to ensure all earned shares were paid by December 31, 2026. Based on our stock price performance during 2022, Mr. Scherr earned the shares associated with the $15.00 and $20.00 VWAPs during 2022. 20% of those shares vested on each of December 31, 2022 and December 31, 2023. The balance of those earned shares would have vested ratably across December 31, 2024, 2025 and 2026 had Mr. Scherr remained employed through each such date. No additional Stock Price RSUs were earned in 2023 as we did not achieve a 90-day VWAP at the $25, $30 or $35 level during 2023. Upon Mr. Scherr’s departure from the company on March 31, 2024, he ceased to be eligible to earn any further RSUs. 3. Performance-Based RSUs — Stock Price and Transaction: As the final part of Mr. Scherr’s sign-on equity award, he was granted 3,113,989 performance-based RSUs (representing 0.50% of fully diluted shares of the company’s common stock as of Emergence) (the “Transaction RSUs”) that would be earned if specified share price targets were satisfied and there was (a) a change in control of the company or (b) a transaction following which the shareholdings of Certares, Knighthead and their affiliates were together reduced below one-third of their levels as of February 3, 2022 (the “Transaction Condition”). If a share price trigger for this award was timely attained, the earned shares would pay out upon the 12-month anniversary of the date of the Transaction Condition (except as set forth below). Our Compensation Committee tied the vesting of this award to the achievement of share price performance and the occurrence of such a transaction to provide Mr. Scherr with protection in the event of such a transaction, but only if such a transaction occurred after there had been significant share price appreciation. The stock price metrics were as follows:
Agreement with Mr. Scherr
If Mr. Scherr’s employment had terminated without “cause” or if he had resigned for “good reason” (in each case as defined in his Employment Agreement) outside of the context of a change in control, his sign-on equity awards would have been treated as follows (subject to his execution and non-revocation of a release):
Agreement with Mr. Scherr
| Time-Based RSUs | Vesting through December 31st of the year in which the termination occurred | | Performance-Based RSUs – Stock Price | Vesting through December 31st of the year in which the termination occurred, to the extent that a required 90-day VWAP had been achieved prior to the date of his separation | | Performance-Based RSUs – Stock Price and Transaction | Accelerated vesting of any fully earned portion of the award with payment at termination rather than 12 months after the change in control |
Agreement with Mr. Scherr
Because Mr. Scherr terminated his employment with the company without “good reason,” as defined in his Employment Agreement, all of Mr. Scherr’s unvested sign-on equity awards were forfeited in full as of March 31, 2024. During his employment, Mr. Scherr was also entitled to participate in all employee and senior executive benefits in accordance with the programs then available to the company’s senior executives. Similarly, during his employment, Mr. Scherr was entitled to participate in any retirement, deferred compensation or similar plan available to senior executives and in effect from time to time. Mr. Scherr was entitled to receive perquisites under the Employment Agreement, including any such perquisites available from time to time to senior executives of the company. Mr. Scherr was entitled to an annual physical at the company’s expense and access to private aircraft for limited personal use, including between our headquarters in Florida and his home in New York. Mr. Scherr received company-paid housing for six months as he began his employment with us, and up to $30,000 in reimbursement for legal expenses incurred in negotiating the Employment Agreement. Mr. Scherr was entitled to severance and change in control benefits, which are summarized under “Potential Payments Upon Termination or Change in Control” below, but these terminated upon his separation from the company on March 31, 2024, without having had effect. The Employment Agreement prohibits Mr. Scherr from competing with the company or soliciting our employees or clients for two years following the termination of his employment for any reason.
Agreement with Ms. Brooks
was increased from $450,000 to $600,000, and her target opportunity under the company’s annual incentive plan remained at 80% of her annual base salary. Ms. Brooks’ long-term incentive plan participation amount was also increased in connection with her promotion, resulting in her total target equity award amount being increased from $500,000 to $1,000,000. She received incremental grants under the 2023 LTIP of 7,500 RSUs and 11,250 PSUs on October 2, 2023, to reflect this increase. Ms. Brooks’ promotion and these new compensation opportunities were memorialized in a standard offer letter dated July 25, 2023.
Agreement with Mr. Stone
Agreement with Mr. Stone Mr. Stone served as our Chief Executive Officer from May 16, 2020 to October 5, 2021, and accepted a role as our President and Chief Operating Officer in October 2021, following our Emergence. In connection with this change in role, in October 2021, Mr. Stone and the company entered into a Second Amended and Restated Offer Letter, Confidentiality and Non-Competition Agreement. The Compensation Committee provided certain benefits to Mr. Stone to retain his leadership of our global operations during the search for a new CEO. The agreement provided for Mr. Stone to receive a base salary of $1.0 million and targeted opportunity under the annual incentive plan at 140% of base salary. Also under the agreement, Mr. Stone waived all rights to future severance benefits from the company in exchange for a transition retention bonus with a value equal to $2 million plus the value of 24 months of employer paid group health insurance premiums (i.e., what his severance benefit would otherwise have been worth under the Severance Plan in effect upon Emergence). The transition retention bonus was paid on March 1, 2022 in accordance with its terms. The agreement prohibits Mr. Stone from competing with the company or soliciting our employees for 18 months following the termination of his employment for any reason. Also, in February 2022, when the company hired Mr. Scherr as CEO, stock options and RSUs granted to Mr. Stone in November 2021 in connection with Emergence (the “Emergence Awards”) were amended such that (x) subject to his continued employment through December 31, 2022, any then-unvested Emergence Awards would accelerate and become fully vested as of such date, and (y) if, prior to December 31, 2022, Mr. Stone was terminated by the company without “cause” (as defined in the Severance Plan), any then unvested Emergence Awards would accelerate and become fully vested as of his termination date, subject to execution of a release. These awards vested on December 31, 2022 in accordance with their terms. Mr. Stone terminated his employment with the company effective October 31, 2023.
Compensation Consultant and Market Data
Compensation Consultant and Market Data The Compensation Committee has the authority to retain outside advisors as it deems appropriate. For 2023, the Compensation Committee retained FW Cook as its independent compensation consultant with respect to the 2023 executive compensation program. FW Cook does not perform any services for the company other than in its role as independent advisor to the Compensation Committee and the Compensation Committee has assessed FW Cook’s independence. The Compensation Committee has also considered and assessed all relevant factors that could give rise to a potential conflict of interest with respect to FW Cook in 2023. Based on this review, the Compensation Committee did not identify any conflict of interest. The responsibilities of our compensation consultant include: • Reviewing and advising on total executive compensation, including salaries, short-term and long-term incentive programs and relevant performance goals; • Advising on industry trends and best practices in executive compensation; • Advising on effectively aligning pay with performance and with our business needs; and • Assisting the Compensation Committee with any other matters related to executive compensation arrangements, including executive employment and award arrangements. The compensation consultant also provides internal and external pay comparison data to the Compensation Committee. The Compensation Committee uses this data as one element in its compensation decisions and does not mandate target ranges for our NEO salaries, annual incentive opportunities or long-term incentives as compared to the market data. To determine the appropriate market data for use in its compensation decisions, the Compensation Committee selected a peer group based on the recommendations of FW Cook. FW Cook prepared a list of potential peer companies (with a particular focus on travel companies). Because the number of our direct industry competitors is limited, we do not limit the peer group to our direct competitors. FW Cook proposed companies that have substantial similarities to our business model, are comparable to us based on revenues and market capitalization, and with which we compete with for talent. We prefer to have a consistent peer group year-to-year, and the Compensation Committee chose to keep the peer group used for 2022 as the peer group for 2023. At the time the Committee selected the peer group
Compensation Consultant and Market Data
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Compensation Consultant and Market Data
for 2023, we were at the 36th percentile in revenue and the 60th percentile in market capitalization within the group. In the fourth quarter of 2023 the Compensation Committee again reviewed our peer group for use in setting 2024 compensation and determined no changes were necessary for 2024. The following companies comprised our peer group for purposes of evaluating our executive compensation for 2023:
Compensation Consultant and Market Data
| Alaska Air Group, Inc. | Lithia Motors, Inc. | | AutoNation, Inc. | Norwegian Cruise Line Holdings Ltd. | | Avis Budget Group, Inc. | Penske Automotive Group, Inc. | | CarMax, Inc. | Royal Caribbean Cruises Ltd. | | Carvana Co. | Ryder Systems, Inc. | | Element Fleet Management Corp. | Sonic Automotive, Inc. | | Group 1 Automotive, Inc. | Southwest Airlines Co. | | Hilton Worldwide Holdings, Inc. | United Rentals, Inc. | | JetBlue Airways Corporation | Travel + Leisure Co. |
2023 SUMMARY COMPENSATION TABLE
2023 SUMMARY COMPENSATION TABLE The following table presents compensation information for the individuals who served as our Chief Executive Officer and Chief Financial Officer during 2023, for each of the other three most highly compensated individuals who were serving as executive officers at the end of 2023, and for one individual who would have been a named executive officer had he been in his role at fiscal year-end. See “Compensation Discussion and Analysis — Agreements with NEOs” for additional information.
2023 SUMMARY COMPENSATION TABLE
| Name and Principal Position | Year | Salary(1) ($) | Bonus(2) ($) | Stock Awards(3) ($) | Option Awards ($) | Non-Equity Incentive Plan Compen- sation(4) ($) | All Other Compen- sation(5) ($) | Total ($) | | Stephen Scherr Former Chair and CEO | 2023 | 1,500,000 | — | — | — | 1,200,000 | 200,417 | 2,900,417 | | | 2022 | 1,269,231 | — | 178,319,484 | — | 2,119,562 | 427,860 | 182,136,137(6) | | Alexandra Brooks EVP and Chief Financial Officer | 2023 | 515,769 | — | 505,485 | — | 206,301 | 43,662 | 1,271,218 | | Colleen Batcheler EVP, General Counsel and Secretary | 2023 | 600,000 | — | 1,416,096 | — | 300,000 | 20,379 | 2,336,475 | | | 2022 | 371,539 | 1,075,000 | 4,528,717 | — | 390,082 | 187,196 | 6,552,534 | | Justin Keppy EVP and Chief Operating Officer | 2023 | 158,654 | 750,000 | 15,000,003 | — | 80,479 | 172,512 | 16,161,648 | | Eric Leef EVP and Chief Human Resources Officer | 2023 | 500,000 | — | 635,764 | — | 200,000 | 44,482 | 1,382,793 | | | 2022 | 492,500 | — | 510,013 | — | 315,000 | 26,394 | 1,343,907 | | Others | | | | | | | | | | Kenny Cheung Former EVP and Chief Financial Officer | 2023 | 201,923 | — | 1,181,933 | — | — | 15,408 | 1,403,760 | | | 2022 | 600,000 | — | 900,001 | — | 504,000 | 24,606 | 2,028,607 | | | 2021 | 600,000 | 660,000 | 1,570,200 | 3,081,600 | 846,891 | 27,537 | 6,786,228 | | Paul Stone Former President and Chief Operating Officer | 2023 | 846,154 | — | 1,869,902 | — | — | 49,104 | 2,772,653 | | | 2022 | 1,000,000 | 2,031,638 | 1,499,995 | — | 1,470,000 | 37,198 | 6,038,831 | | | 2021 | 1,000,000 | 1,400,000 | 2,617,000 | 5,136,000 | 2,470,099 | 30,070 | 12,653,169 |
2023 SUMMARY COMPENSATION TABLE
(1) Mr. Keppy joined the company on November 15, 2023. Mr. Scherr’s employment with the company concluded on March 31, 2024, Mr. Cheung’s employment with the company concluded on April 14, 2023, and Mr. Stone’s employment with the company concluded on October 31, 2023. (2) For 2023, for Mr. Keppy, includes a sign-on cash bonus paid to him in connection with his hiring. (3) The amounts reported represent the aggregate grant date fair value of applicable equity awards and were computed in accordance with FASB Topic 718. Assumptions used in the calculations of these amounts are included in “Note 8 — Stock-Based Compensation” in the notes to our consolidated financial statements in our 2023 Annual Report. For fiscal 2023, the “Stock Awards” column reflects the grant date fair values of the following: for all NEOs other than Mr. Scherr, one-third of the 2022 PSUs granted under the 2022 LTIP, which are as described under “Compensation Discussion and Analysis — Long-Term Incentives.” For the 2022 PSUs, because we have used a staged approach to goal setting, with one-third of the total 2022 PSU grant conditionally earned based on performance against a series of three one-year goals, and the goals for each tranche set at the beginning of each performance
2023 SUMMARY COMPENSATION TABLE
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2023 SUMMARY COMPENSATION TABLE
year, only the second tranche of the 2022 PSUs is considered granted in 2023 under FASB Topic 718 and included in this table. The following is the aggregate grant date fair value of the 2022 PSUs if we had assumed the maximum amount (200%) of the second tranche would have been earned: Ms. Brooks, $147,957; Ms. Batcheler, $672,191; Mr. Leef, $251,528; Mr. Cheung, $443,870; Mr. Stone, $739,783. No awards were actually earned. Mr. Keppy is not a participant in the 2022 LTIP. Mr. Cheung’s and Mr. Stone’s 2022 PSUs granted under the 2022 LTIP were forfeited in connection with their separations from the company. for all NEOs other than Mr. Scherr, one-third of the 2023 PSUs and all the 2023 RSUs granted under the 2023 LTIP, which are as described under “Compensation Discussion and Analysis — Long-Term Incentives.” For the 2023 PSUs, because we have used a staged approach to goal setting, with one-third of the total 2023 PSU grant conditionally earned based on performance against a series of three one-year goals, and the goals for each tranche set at the beginning of each performance year, only the first tranche of the 2023 PSUs is considered granted in 2023 under FASB Topic 718 and included in this table. The following is the aggregate grant date fair value of the 2023 PSUs if we had assumed the maximum amount (200%) of the first tranche would have been earned: Ms. Brooks, $287,676; Ms. Batcheler, $720,005; Mr. Leef, $340,000; Mr. Cheung, $639,994; Mr. Stone, $1,000,003. No awards were actually earned. Mr. Keppy’s 2023 LTIP awards were not granted until January 2024. Mr. Cheung’s and Mr. Stone’s 2023 PSUs and 2023 RSUs granted under the 2023 LTIP were forfeited in connection with their separations from the company. (4) Reflects amounts paid under the 2023 EICP, as described in the “Compensation Discussion and Analysis — Annual Incentive Awards.” (5) Includes the following for 2023:
2023 SUMMARY COMPENSATION TABLE
| Name | Perquisites and Personal Benefits(a) | | | | | | | Tax Gross Ups ($) | Company Contributions to Qualified 401(k) Plan(b) ($) | | | Personal Use of Aircraft ($) | Personal Use of Vehicle ($) | Financial Planning Assistance ($) | Reimburse- ment of Legal Fees ($) | Relocation Related Benefits ($) | Executive Physical ($) | Life Insurance Premiums ($) | | | | Mr. Scherr | 167,016 | 17,587 | 13,888 | — | — | — | 1,926 | — | — | | Ms. Brooks | — | 17,925 | 11,767 | — | — | — | 770 | — | 13,200 | | Ms. Batcheler | — | 6,408 | — | — | — | — | 770 | — | 13,200 | | Mr. Keppy | — | — | — | 7,364 | 100,000 | — | 268 | 64,880 | — | | Mr. Leef | — | 19,782 | 10,858 | — | — | — | 642 | — | 13,200 | | Others | | | | | | | | | | | Mr. Cheung | — | 1,951 | — | — | — | — | 257 | — | 13,200 | | Mr. Stone | — | 23,076 | 9,545 | — | — | 2,227 | 1,056 | — | 13,200 |
2023 SUMMARY COMPENSATION TABLE
(a) Amounts shown are valued at the incremental cost to us of providing the benefit or, for Personal Use of Vehicle, the annual lease value of company-provided vehicles. For Personal Use of Aircraft, incremental cost includes our cost of the actual fuel burned per flight (at the per gallon cost of the immediately preceding fuel purchase(s)), together with costs such as landing fees, parking/hangar fees, catering expense, lavatory cleaning, garbage removal and similar variable expenses associated with a flight, as well as crew travel expenses incurred because of the personal use. Incremental cost of personal flights also includes the incremental cost of any repositioning flights necessary to accommodate the personal use. We exclude fixed costs such as hangar rent, insurance, maintenance and crew salaries. (b) Reflects company matching contributions to the 401(k) Plan. This amount reflects Mr. Scherr’s total compensation calculated in accordance with SEC rules and does not reflect the actual taxable compensation he received for 2022. For reference, Mr. Scherr’s wages for 2022, calculated for purposes of his Form W-2 issued by the company, were $27,181,395.
2023 SUMMARY COMPENSATION TABLE
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2023 GRANTS OF PLAN-BASED AWARDS
2023 GRANTS OF PLAN-BASED AWARDS The following table sets forth, for each NEO, information about grants of plan-based awards during 2023 (equity and non-equity). All equity grants were made under the Hertz Global Holdings, Inc. 2021 Omnibus Incentive Plan.
2023 GRANTS OF PLAN-BASED AWARDS
| Name | Type of Award | Grant Date | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | | All Other Stock Awards: Number of Shares of Stock or Units(3) (#) | Grant Date Fair Value of Stock and Option Awards(4) ($) | | | | | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | Stephen Scherr | | | | | | | | | | | | Annual Cash Incentive | | | 90,000 | 2,400,000 | 5,280,000 | — | — | — | — | — | | Alexandra Brooks | | | | | | | | | | | | Annual Cash Incentive | | | 15,473 | 412,603 | 907,726 | — | — | — | — | — | | 2023 Tranche of 2022 PSUs | | 3/31/2023 | — | — | — | 3,633 | 4,541 | 9,083 | — | 73,978 | | 2023 Tranche of 2023 PSUs | | 3/3/2023 | — | — | — | 4,262 | 5,328 | 10,655 | — | 100,000 | | 2023 Tranche of 2023 PSUs | | 10/2/23 | — | — | — | 3,000 | 3,750 | 7,500 | — | 43,838 | | RSUs | | 3/3/2023 | — | — | — | — | — | — | 10,655 | 199,994 | | RSUs | | 10/2/23 | — | — | — | — | — | — | 7,500 | 87,675 | | Colleen Batcheler | | | | | | | | | | | | Annual Cash Incentive | | | 22,500 | 600,000 | 1,320,000 | — | — | — | — | — | | 2023 Tranche of 2022 PSUs | | 3/31/2023 | — | — | — | 16,506 | 20,632 | 41,264 | — | 336,095 | | 2023 Tranche of 2023 PSUs | | 3/3/2023 | — | — | — | 15,344 | 19,180 | 38,359 | — | 360,002 | | RSUs | | 3/3/2023 | — | — | — | — | — | — | 38,359 | 719,998 | | Justin Keppy | | | | | | | | | | | | Annual Cash Incentive | | | 6,036 | 160,959 | 354,110 | — | — | — | — | — | | RSUs | | 11/15/2023 | — | — | — | — | — | — | 1,137,657 | 10,000,005 | | RSUs | | 11/15/2023 | — | — | — | — | — | — | 568,828 | 4,999,998 | | Eric Leef | | | | | | | | | | | | Annual Cash Incentive | | | 15,000 | 400,000 | 880,000 | — | — | — | — | — | | 2023 Tranche of 2022 PSUs | | 3/31/2023 | — | — | — | 6,176 | 7,720 | 15,441 | — | 125,764 | | 2023 Tranche of 2023 PSUs | | 3/3/2023 | — | — | — | 7,246 | 9,057 | 18,114 | — | 170,000 | | RSUs | | 3/3/2023 | — | — | — | — | — | — | 18,114 | 340,000 | | Others | | | | | | | | | | | | Kenny Cheung | | | | | | | | | | | | Annual Cash Incentive | | | 7,479 | 199,452 | 438,795 | — | — | — | — | — | | 2023 Tranche of 2022 PSUs | | 3/31/2023 | — | — | — | 10,899 | 13,624 | 27,248 | — | 221,935 |
2023 GRANTS OF PLAN-BASED AWARDS
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2023 GRANTS OF PLAN-BASED AWARDS
| Name | Type of Award | Grant Date | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | | All Other Stock Awards: Number of Shares of Stock or Units(3) (#) | Grant Date Fair Value of Stock and Option Awards(4) ($) | | | | | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | 2023 Tranche of 2023 PSUs | | 3/3/2023 | — | — | — | 13,639 | 17,048 | 34,097 | — | 319,997 | | RSUs | | 3/3/2023 | — | — | — | — | — | — | 34,097 | 640,001 | | Paul Stone | | | | | | | | | | | | Annual Cash Incentive | | | 43,726 | 1,166,027 | 2,565,260 | — | — | — | — | — | | 2023 Tranche of 2022 PSUs | | 3/31/2023 | — | — | — | 18,165 | 22,707 | 45,413 | — | 369,892 | | 2023 Tranche of 2023 PSUs | | 3/3/2023 | — | — | — | 21,311 | 26,638 | 53,277 | — | 500,002 | | RSUs | | 3/3/2023 | — | — | — | — | — | — | 53,277 | 1,000,009 |
2023 GRANTS OF PLAN-BASED AWARDS
The amounts in these columns include the “Target” amount for each NEO eligible to receive an award under the EICP at 100% of the target award, the “Threshold” amount for each eligible NEO at 3.75% of the “Target” amount (which assumes only the RPU metric funded, and did so at a threshold level of performance) and the “Maximum” amount for the maximum amount payable to each NEO at 220% of the “Target,” in each case prorated for their time in the indicated role during 2023. The EICP is discussed in our “Compensation Discussion and Analysis — Program Components — Annual Incentive Awards.” Actual payouts earned under the program for 2023 for Mr. Scherr, Ms. Brooks, Ms. Batcheler, Mr. Keppy and Mr. Leef were 50% of “Target,” prorated for time worked, and can be found under the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table. Mr. Cheung and Mr. Stone forfeited their awards in connection with their separation of employment. (2) For Ms. Brooks, Ms. Batcheler, Mr. Leef, Mr. Cheung and Mr. Stone, represents the second tranche of PSUs granted under the 2022 LTIP with respect to 2023 performance and the first tranche of PSUs granted under the 2023 LTIP with respect to 2023 performance. For Ms. Brooks, the PSU grant on October 2, 2023 was made in connection with her promotion to CFO. We discuss Ms. Brooks’ promotion grant under the heading “Compensation Discussion and Analysis — Agreements with NEOs — Ms. Brooks”. All PSUs will be earned based on our financial performance. We discuss these awards under the heading “Compensation Discussion and Analysis — Program Components — Long-Term Incentives.” The amounts disclosed in the “Estimated Future Payouts Under Equity Incentive Plan Awards” columns represent the number of shares issuable assuming achievement of the specific Threshold, Target or Maximum levels of performance established by the Compensation Committee for these PSUs over the 2023 performance period. As disclosed in the Compensation Discussion and Analysis, based on our Adjusted Corporate EBITDA for 2023, no PSUs were earned for 2023. Mr. Keppy’s 2023 LTIP awards were not granted until January 2024. Mr. Cheung’s and Mr. Stone’s 2023 PSUs and 2023 RSUs granted under the 2023 LTIP were forfeited in connection with their separations from the company. (3) For Ms. Brooks, Ms. Batcheler, Mr. Leef, Mr. Cheung and Mr. Stone, the RSUs granted on March 3, 2023 vest ratably over three years, subject to each NEO’s continued employment. We discuss these awards under the heading “Compensation Discussion and Analysis — Program Components — Long-Term Incentives.” Mr. Cheung and Mr. Stone forfeited these RSUs in connection with their subsequent resignations from the company and as a result these RSUs do not appear in the table “Outstanding Equity Awards at Fiscal-Year End 2023.” For Ms. Brooks, the RSU grant on October 2, 2023 was made in connection with her promotion to CFO. We discuss Ms. Brooks’ promotion grant under the heading “Compensation Discussion and Analysis — Agreements with NEOs — Ms. Brooks”. For Mr. Keppy, the grants are special one-time sign-on equity awards of 1,137,657 and 568,828 RSUs, respectively. We discuss Mr. Keppy’s sign-on grants under the heading “Compensation Discussion and Analysis — Agreements with NEOs — Mr. Keppy”. Mr. Keppy’s RSUs under the 2023 LTIP were not granted until January 2024. Represents the aggregate grant date fair value, computed pursuant to FASB Topic 718. The fair market value of RSUs and PSUs is the closing price of our common shares on the date of grant multiplied by the number of shares granted (or, for PSUs, the “target” number of shares granted, which represents the probable outcome of the applicable performance conditions as of the grant date). These amounts are included in the “Stock Awards” column of the Summary Compensation Table.
2023 GRANTS OF PLAN-BASED AWARDS
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OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END The following table sets forth, for each NEO, details of equity awards outstanding on December 31, 2023.
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END
| Name | Grant Date | Option Awards | | | | Stock Awards | | | | | | | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable(2) (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested(3) (#) | Market Value of Shares or Units of Stock That Have Not Vested(4) ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(5) (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(4) ($) | | Stephen Scherr(1) | | | | | | | | | | | | 2/28/2022 | — | — | — | — | 1,121,036 | 11,647,564 | — | — | | | 2/28/2022 | — | — | — | — | 1,681,554 | 17,471,346 | — | — | | | 2/28/2022 | — | — | — | — | — | — | 3,736,788 | 38,825,227 | | | 2/28/2022 | — | — | — | — | — | — | 3,113,989 | 32,354,346 | | Alexandra Brooks | | | | | | | | | | | | 11/9/2021 | | | | | 6,667 | 69,270 | — | — | | | 11/9/2021 | 40,000 | 20,000 | 26.17 | 11/9/2031 | — | — | — | — | | | 3/30/2022 | — | — | — | — | 6,056 | 62,922 | — | — | | | 3/30/2022 | — | — | — | — | — | — | 4,541 | 47,184 | | | 3/3/2023 | — | — | — | — | 10,655 | 110,705 | — | — | | | 3/3/2023 | — | — | — | — | — | — | 5,328 | 55,354 | | | 3/31/2023 | — | — | — | — | — | — | 4,541 | 47,184 | | | 10/2/2023 | — | — | — | — | 7,500 | 77,925 | — | — | | | 10/2/2023 | — | — | — | — | — | — | 3,750 | 38,963 | | Colleen Batcheler | | | | | | | | | | | | 7/1/2022 | — | — | — | — | 27,510 | 285,829 | — | — | | | 7/1/2022 | — | — | — | — | 63,177 | 656,409 | — | — | | | 7/1/2022 | — | — | — | — | — | — | 20,632 | 214,366 | | | 3/3/2023 | — | — | — | — | 38,359 | 398,550 | — | — | | | 3/3/2023 | — | — | — | — | — | — | 19,180 | 199,277 | | | 3/31/2023 | — | — | — | — | — | — | 20,632 | 214,366 | | Justin Keppy | | | | | | | | | | | | 11/15/2023 | — | — | — | — | 1,137,657 | 11,820,256 | — | — | | | 11/15/2023 | — | — | — | — | 568,828 | 5,910,123 | — | — |
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END
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OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END
| Name | Grant Date | Option Awards | | | | Stock Awards | | | | | | | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable(2) (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested(3) (#) | Market Value of Shares or Units of Stock That Have Not Vested(4) ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(5) (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(4) ($) | | Eric Leef | | | | | | | | | | | | 11/9/2021 | — | — | — | — | 10,667 | 110,830 | — | — | | | 11/9/2021 | 64,000 | 32,000 | 26.17 | 11/9/2031 | — | — | — | — | | | 3/30/2022 | — | — | — | — | 10,295 | 106,965 | — | — | | | 3/30/2022 | — | — | — | — | — | — | 7,720 | 80,214 | | | 3/3/2023 | — | — | — | — | 18,114 | 188,204 | — | — | | | 3/3/2023 | — | — | — | — | — | — | 9,057 | 94,102 | | | 3/31/2023 | — | — | — | — | — | — | 7,720 | 80,214 | | Others(1) | | | | | | | | | | | Kenny Cheung | | | | | | | | | | | | — | — | — | — | — | — | — | — | — | | Paul Stone | | | | | | | | | | | | — | — | — | — | — | — | — | — | — |
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END
For Mr. Scherr, all awards were forfeited as of March 31, 2024. For Mr. Cheung and Mr. Stone, all awards were forfeited as of their separation from the company during 2023. (2) The stock options granted on November 9, 2021 to Ms. Brooks and Mr. Leef vest ratably on the first three anniversaries of the date of grant. The remaining one-third vests on November 2, 2024. (3) For Mr. Scherr, (a) 1,121,036 unvested service based RSUs vest ratably on December 31, 2024 and 2025 and (b) 1,681,554 unvested performance based RSUs for which the share price condition was met in 2022 vest ratably on December 31, 2024, 2025 and 2026. Service-based RSUs granted on November 9, 2021 to Ms. Brooks and Mr. Leef vest ratably on the first three anniversaries of November 2, 2021. This remaining one-third vests on November 2, 2024. Service-based RSUs under the 2022 LTIP granted to Ms. Brooks (on March 30, 2022), Ms. Batcheler (on July 1, 2022) and Mr. Leef (on March 30, 2022) vest ratably over three years on the first, second and third anniversaries of March 30, 2022. For Ms. Batcheler, 70% of the service-based RSUs granted on July 1, 2022 in connection with her hiring vested on July 1, 2023 and the remaining 30% vest on July 1, 2024. Service-based RSUs under the 2023 LTIP granted to Ms. Brooks (on March 3, 2023 and, subsequent to her promotion, on October 2, 2023), Ms. Batcheler and Mr. Leef vest ratably over three years on the first, second and third anniversaries of March 3, 2023. For Mr. Keppy, 1,137,657 service-based RSUs granted on November 15, 2023 in conjunction with his hiring vest ratably over three years on the first, second and third anniversaries of the date of grant and 568,828 service-based RSUs granted in connection with his hiring cliff vest on November 15, 2027. (4) The market value is calculated using $10.39, which was the closing price of our common stock on the Nasdaq on the last trading day of 2023. For Mr. Scherr, reflects (a) 3,736,788 performance-based RSUs that are earned upon the achievement of share price targets that had not been achieved as of December 31, 2023, and (b) 3,113,989 Transaction RSUs that are earned upon the achievement of share price targets and occurrence of a specified transaction, and vesting one year after the transaction
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END
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OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END
condition is met. For Ms. Brooks (on March 30, 2022), Ms. Batcheler (on July 1, 2022) and Mr. Leef (on March 30, 2022), the amounts reflect the first tranche of the PSUs granted under the 2022 LTIP that vest once earned on the third anniversary of the grant date, subject to the named executive officer’s continued employment and a cap if the company’s TSR is negative over the three-year performance period. As discussed in the company’s proxy statement last year, 64.4% of the first tranche of these awards were banked based on our 2022 Adjusted Corporate EBITDA. We have treated the first tranche as unearned for purposes of the table because the final number of shares that may be issued will not be determined until the end of the three-year performance period given the TSR cap. As discussed under “Compensation Discussion and Analysis — Long-Term Incentive,” no shares were banked for 2023 based on our 2023 Adjusted Corporate EBITDA. Neither Mr. Scherr nor Mr. Keppy is a participant in the 2022 LTIP. For Ms. Brooks, Ms. Batcheler and Mr. Leef, the amounts granted on March 3, 2023 and, for Ms. Brooks, subsequent to her promotion, on October 2, 2023, reflect the first tranche of the PSUs granted under the 2023 LTIP and the amounts granted to Ms. Brooks, Ms. Batcheler and Mr. Leef on March 31, 2023 reflect the second tranche of the PSUs granted under the 2022 LTIP. In each case, these PSUs vest once earned on the third anniversary of the grant date, subject to the named executive officer’s continued employment and a cap if the company’s TSR is negative over the three-year performance period. As discussed under “Compensation Discussion and Analysis — Long-Term Incentive,” no shares were banked for 2023 under either the 2023 LTIP or 2022 LTIP based on our 2023 Adjusted Corporate EBITDA. Mr. Scherr is not a participant in the 2023 LTIP. Mr. Keppy’s grants under the 2023 LTIP were not made until 2024.
2023 OPTION EXERCISES AND STOCK VESTED
2023 OPTION EXERCISES AND STOCK VESTED The following table summarizes the stock awards that vested for the NEOs in 2023. No stock options were exercised by any NEO in 2023.
2023 OPTION EXERCISES AND STOCK VESTED
| Name | Stock Awards | | | | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | | Stephen Scherr | 1,121,036 | $11,647,564 | | Alexandra Brooks | 9,694 | $108,769 | | Colleen Batcheler | 161,167 | $2,927,963 | | Justin Keppy | — | — | | Eric Leef | 15,813 | $178,807 | | Others | | | | Kenny Cheung | 9,082 | $143,314 | | Paul Stone | 15,137 | $238,862 |
2023 OPTION EXERCISES AND STOCK VESTED
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POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL Our NEOs’ employment may end under several possible scenarios. In some of these scenarios, our plans and agreements would provide severance benefits in varying amounts to the executive. Severance and other benefits that are payable upon a termination of employment whether or not in connection with a change of control are described below. In the event of an actual triggering event under any of the applicable plans or agreements, all benefits would be paid to the continuing executive officer in accordance with, and at times permitted by, Section 409A of the Internal Revenue Code. Mr. Cheung and Mr. Stone departed the company during 2023, and Mr. Scherr departed the company on March 31, 2024, and therefore the following scenarios and descriptions of potentially payable severance or other benefits no longer apply to them.
Potential Payments
Potential Payments The following table assumes that the named NEO’s termination of employment occurred on December 29, 2023, that the per share price of our common stock was $10.39 (the closing price of our common stock on the Nasdaq on the last business day of fiscal 2023), that awards under the EICP for fiscal 2023 were earned at 50% of target, that no PSUs were earned for awards with performance tied to 2023 results, and
Potential Payments
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Potential Payments
that, for purposes of Mr. Scherr’s Stock Price RSUs and Transaction RSUs, the company’s stock price did not achieve the levels required for additional awards to be earned. For the change in control scenarios, the table assumes that both a change in control and the NEO’s termination of employment occurred on December 29, 2023. Although the EICP provides for the payment of a prorate award upon an NEO’s “retirement” no NEO would have been eligible for such treatment as of December 29, 2023 and therefore a separate column for a retirement scenario is omitted.
Potential Payments
| Name | Involuntary Termination Without “Cause”(1) ($) | Death or Disability(2) ($) | Voluntary Termination for “Good Reason”(3) ($) | Involuntary Termination Without “Cause” in Connection with a Change in Control(4) ($) | Voluntary Termination for “Good Reason” in Connection with a Change in Control(4)(5) ($) | | Stephen Scherr | | | | | | | Cash Severance | 5,850,000 | — | 5,850,000 | 7,800,000 | 7,800,000 | | Annual Incentive Award | 1,200,000 | 1,200,000 | 1,200,000 | 1,200,000 | 1,200,000 | | Acceleration of Equity Awards | 11,647,564 | 11,647,564 | 11,647,564 | 17,741,346 | 23,295,128 | | Value of Continuing Benefits | 32,697 | — | 32,697 | 32,697 | 32,697 | | Outplacement Services | 25,000 | — | 25,000 | 25,000 | 25,000 | | Alexandra Brooks | | | | | | | Cash Severance | 1,620,000 | — | — | 1,620,000 | — | | Annual Incentive Award | 206,301 | 206,301 | — | 206,301 | — | | Acceleration of Equity Awards | 69,270 | 175,009 | — | 351,213 | — | | Value of Continuing Benefits | 31,496 | — | — | 31,496 | — | | Outplacement Services | 25,000 | — | — | 25,000 | — | | Colleen Batcheler | | | | | | | Cash Severance | 1,800,000 | — | — | 1,800,000 | — | | Annual Incentive Award | 300,000 | 300,000 | — | 300,000 | — | | Acceleration of Equity Awards | — | 896,480 | — | 1,478,840 | — | | Value of Continuing Benefits | 31,496 | — | — | 31,496 | — | | Outplacement Services | 25,000 | — | — | 25,000 | — | | Justin Keppy | | | | | | | Cash Severance | 3,750,000 | — | 3,750,000 | 3,750,000 | 3,750,000 | | Annual Incentive Award | 80,479 | 80,479 | 80,479 | 80,479 | 80,479 | | Acceleration of Equity Awards | 11,820,256 | 682,187 | 11,820,256 | 17,730,379 | 11,820,256 | | Value of Continuing Benefits | — | — | — | — | — | | Outplacement Services | 25,000 | — | 25,000 | 25,000 | 25,000 | | Eric Leef | | | | | | | Cash Severance | 1,350,000 | — | — | 1,350,000 | — | | Annual Incentive Award | 200,000 | 200,000 | — | 200,000 | — | | Acceleration of Equity Awards | 110,830 | 277,079 | — | 457,659 | — | | Value of Continuing Benefits | 32,697 | — | — | 32,697 | — | | Outplacement Services | 25,000 | — | — | 25,000 | — |
Potential Payments
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Potential Payments
For all NEOs, Cash Severance, Annual Incentive Award, Value of Continuing Benefits and Outplacement Services amounts included in these columns represent amounts payable upon a termination by the company without cause pursuant to the Severance Plan. Acceleration of Equity Awards represents the value of the following equity awards, at $10.39 per share: (a) for Mr. Scherr, 560,518 Time-Based RSUs that would have vested on December 31, 2023 and 560,518 Performance-Based RSUs (Stock Price) that were previously earned for the company’s achievement of certain VWAP milestones; (b) for Ms. Brooks and Mr. Leef, RSUs granted in connection with the Emergence that would have vested on November 2, 2024; and (c) for Mr. Keppy, the RSUs granted to him as sign-on compensation that included protection in the event of an involuntary termination without cause. (2) No Severance Plan benefits are payable to any NEO in connection with a termination due to death or disability. The amounts shown in this column for Annual Incentive Award represent amounts payable upon a termination due to death or disability under the 2023 EICP. Acceleration of Equity Awards represents the value of the following equity awards at $10.39 per share: (a) for Mr. Scherr, 560,518 Time-Based RSUs that would have vested on December 31, 2023 and 560,518 Performance-Based RSUs (Stock Price) that were previously earned for the company’s achievement of certain VWAP milestones; (b) for Ms. Brooks and Mr. Leef, RSUs granted in connection with the Emergence that would have vested on November 2, 2024; (c) for Ms. Brooks, Ms. Batcheler and Mr. Leef, a prorata portion of unvested RSUs granted under the 2022 LTIP, 2023 LTIP and, for Ms. Batcheler, as sign-on compensation; (d) for Ms. Brooks, Ms. Batcheler and Mr. Leef, the earned but unvested PSUs banked for the 2022 tranche of the 2022 LTIP; and (e) for Mr. Keppy, a prorata portion of unvested RSUs granted to him as sign-on compensation. No amounts are included for stock options granted in connection with the Emergence, which would also vest, as the exercise price for all stock options exceeded the market price of the company’s common stock on December 29, 2023. (3) Benefits payable to Mr. Scherr and Mr. Keppy upon their termination for good reason are provided pursuant to their specific agreements with the company, which entitle them to Severance Plan benefits and accelerated vesting of certain equity awards upon such a termination. Acceleration of Equity Awards represents the value of the following equity awards at $10.39 per share: (a) for Mr. Scherr, 560,518 Time-Based RSUs that would have vested on December 31, 2023 and 560,518 Performance-Based RSUs (Stock Price) that were previously earned for the company’s achievement of certain VWAP milestones; and (b) for Mr. Keppy, the RSUs granted to him as sign-on compensation that included protection in the event of a voluntary termination with good reason. (4) NEO severance benefits generally do not change with the occurrence of change in control. For all NEOs other than Mr. Scherr, Cash Severance, Annual Incentive Award, Value of Continuing Benefits and Outplacement Services amounts included in these columns represent amounts payable upon a termination by the company without cause pursuant to the Severance Plan. Cash Severance for Mr. Scherr, however, reflects enhanced amounts payable upon a termination by the company without cause or by Mr. Scherr for good reason within six months prior to and until 24 months following a change in control, which amounts would be paid in a lump sum. This enhanced Cash Severance is provided for in Mr. Scherr’s employment agreement. Acceleration of Equity Awards represents the value of the following equity awards, at $10.39 per share: (a) for Mr. Scherr, the remaining unvested Time-Based RSUs and the remaining unvested Performance-Based RSUs (Stock Price) that were previously earned for the company’s achievement of certain VWAP milestones; (b) for Ms. Brooks and Mr. Leef, RSUs granted in connection with the Emergence that would have vested on November 2, 2024; (c) for Ms. Brooks, Ms. Batcheler and Mr. Leef, all unvested RSUs granted under the 2022 LTIP, 2023 LTIP and, for Ms. Batcheler, as sign-on compensation; (d) for Ms. Brooks, Ms. Batcheler and Mr. Leef, the earned but unvested PSUs banked for the 2022 tranche of the 2022 LTIP; and (e) for Mr. Keppy, the RSUs granted to him as sign-on compensation that included protection in the event of an involuntary termination without cause. No amounts are included for stock options granted in connection with the Emergence, which would also vest, as the exercise price for all stock options exceeded the market price of the company’s common stock on December 29, 2023. Benefits to Mr. Scherr and Mr. Keppy upon their termination for good reason are pursuant to their specific agreements with the company, which entitle them to Severance Plan benefits and accelerated vesting of certain equity awards upon such a termination. Acceleration of Equity Awards represents the value of the following equity awards at $10.39 per share: (a) for Mr. Scherr, the remaining unvested Time-Based RSUs and the remaining unvested Performance-Based RSUs (Stock Price) that were previously earned for the company’s achievement of certain VWAP milestones; and (b) for Mr. Keppy, the RSUs granted to him as sign-on compensation that included protection in the event of a voluntary termination with good reason.
Potential Payments
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CEO PAY RATIO
CEO PAY RATIO To determine the median 2023 annual total compensation of all of our employees other than our CEO (the “Median 2023 Employee Compensation”), we used a median employee with substantially similar compensation as the median employee used for purposes of our 2021 pay ratio, as we believe there was no change in our employee population or employee compensation arrangements that we believe would significantly impact our pay ratio disclosure. To identify our median employee, we had used our global employee population as of December 31, 2021, and annual base salary as our consistently applied compensation measure and identified those employees at the same median compensation level. We then calculated the annual taxable income for those employees and identified the median employee from this group (the “Median Employee”). Mr. Scherr served as our CEO on December 31, 2023, the anniversary of the determination date of the Median Employee. Because Mr. Scherr served as our CEO for the entirety of 2023, we used his total 2023 compensation as set forth in the “Summary Compensation Table” above to determine 2023 CEO Compensation. Accordingly, the 2023 CEO Compensation was $2,900,417. We calculated the Median 2023 Employee Compensation on the same basis as the 2023 CEO Compensation. Based on these calculations, the Median 2023 Employee Compensation was $37,442 and the ratio of 2023 CEO Compensation to Median 2023 Employee Compensation is 77 to 1. The pay ratio disclosure presented above is a reasonable estimate calculated in a manner consistent with SEC rules. Because the SEC rules for identifying the median employee and calculating the pay ratio allow companies to use different methodologies, exclusions, estimates and assumptions that reflect their employee populations and compensation practices, the pay ratio disclosure of other companies may not be comparable to the pay ratio reported by us.
CEO PAY RATIO
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PAY VERSUS PERFORMANCE DISCLOSURE
PAY VERSUS PERFORMANCE DISCLOSURE The following table sets forth information regarding our performance and the “compensation actually paid” to our CEO (referred in the table below as the PEO, or principal executive officer) and our other NEOs for each year, as calculated in accordance with SEC disclosure rules. The Compensation Committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the years shown. For discussion of how the Compensation Committee seeks to align pay and performance when making compensation decisions, please review our “Compensation Discussion and Analysis,” beginning on page 28.
PAY VERSUS PERFORMANCE DISCLOSURE
| Year | Summary Compensation Table Total for PEO(1) | | Compensation Actually Paid To PEO(2)(3) | | Average Summary Compensation Table Total for Non-PEO NEOs(1) $ | Average Compensation Actually Paid for Non-PEO NEOs(2)(3) $ | Value of Initial $100 Investment Based On:(4) | | GAAP Net Income (Millions) $ | Adjusted Corporate EBITDA(5) (Millions) $ | | | PEO-1 $ | PEO-2 $ | PEO-1 $ | PEO-2 $ | | | Company TSR $ | Peer Group TSR(4) $ | | | | 2023 | 2,900,417 | — | (41,754,186) | — | 4,118,654 | 3,728,824 | 32 | 103 | 616 | 561 | | 2022 | 182,136,137 | 886,581 | 132,128,569 | (809,312) | 3,609,798 | 1,477,433 | 47 | 79 | 2,059 | 2,305 | | 2021 | 14,216,577 | 12,653,169 | 13,614,741 | 11,923,378 | 5,327,918 | 4,998,545 | 77 | 91 | 365 | 2,130 | | 2020 | 2,580,049 | 5,675,222 | 749,676 | (6,831,215) | 1,693,188 | (155,528) | n/a | n/a | (1,723) | (995) |
PAY VERSUS PERFORMANCE DISCLOSURE
(1) For 2023, PEO-1 is Mr. Scherr and there is no PEO-2; and non-PEO NEOs are Ms. Brooks, Ms. Batcheler, Mr. Keppy, Mr. Leef, Mr. Cheung and Mr. Stone. For 2022, PEO-1 is Mr. Scherr and PEO-2 is Mr. Mark Fields; and non-PEO NEOs are Mr. Cheung, Ms. Batcheler, Mr. Leef, Mr. Stone, Ms. Angela Brav and Mr. M. David Galainena. For 2021, PEO-1 is Mr. Mark Fields and PEO-2 is Mr. Stone; and non-PEO NEOs are Mr. Cheung, Mr. Darren Arrington, Ms. Brav and Mr. Galainena. For 2020, PEO-1 is Paul Stone and PEO-2 is Ms. Kathryn Marinello; and non-PEO NEOs are Mr. Cheung, Ms. Brav, Mr. Galainena, Ms. Opal Perry, Mr. Jamere Jackson and Mr. Richard Eric Esper. (2) The amounts shown for Compensation Actually Paid have been calculated in accordance with Item 402(v) of Regulation S-K and do not reflect compensation actually earned, realized, or received by the company’s NEOs. These amounts reflect the Summary Compensation Table Total with certain adjustments as described in footnote 3 below. (3) Compensation Actually Paid reflects the exclusions and inclusions of certain amounts for the PEO and the Non-PEO NEOs (including, for 2023, as set forth below). Amounts in the Deductions from Summary Compensation Table Total column are the total from the Stock Awards column set forth in the Summary Compensation Table. While similar adjustment information was provided in our 2023 Proxy Statement for years 2020, 2021 and 2022, under applicable SEC guidance, repeating such adjustment information is not required in this Proxy Statement because it is not material to our stockholders’ understanding of the information reported in the table above for 2023 or the relationships disclosures provided below.
PAY VERSUS PERFORMANCE DISCLOSURE
| Fiscal Year | Summary Compensation Table Total $ | Deductions from Summary Compensation Table Total(a) $ | Additions to Summary Compensation Table Total(b) $ | Compensation Actually Paid $ | | PEO-1 | | | | | | 2023 | 2,900,417 | 0 | (44,654,603) | (41,754,186) | | Avg. Non-PEO NEOs | | | | | | 2023 | 4,118,654 | (3,246,920) | 2,857,090 | 3,728,824 |
PAY VERSUS PERFORMANCE DISCLOSURE
Represents the grant date fair value of equity awards reported in the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table for 2023.
PAY VERSUS PERFORMANCE DISCLOSURE
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PAY VERSUS PERFORMANCE DISCLOSURE
Reflects the value of equity calculated in accordance with the SEC methodology for determining compensation actually paid under Item 402(v) of Regulation S-K for each year shown. The amounts deducted or added in calculating the equity values included in Compensation Actually Paid are as follows:
PAY VERSUS PERFORMANCE DISCLOSURE
| Year | Covered Year End Fair Value of Outstanding Equity Awards Granted in the Covered Year $ | Change in Fair Value (Prior Year End to Covered Year End) of Outstanding Equity Awards Granted Prior to Covered Year $ | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Covered Year $ | Change in Fair Value (Prior Year End to Covered Year End) of Equity Awards Granted in Prior Years that Vested in the Covered Year $ | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Covered Year $ | Equity Value Included in Compensation Actually Paid $ | | | (a) | (b) | (c) | (d) | (e) | (f) = (a) + (b) + (c) + (d) + (e) | | PEO-1 | | | | | | | | 2023 | 0 | (39,049,423) | 0 | (5,605,180) | 0 | (44,654,603) | | Avg. Non-PEO NEOs | | | | | | | | 2023 | 3,102,119 | (154,699) | 0 | 45,572 | (135,901) | 2,857,090 |
PAY VERSUS PERFORMANCE DISCLOSURE
(4) The Peer Group TSR set forth in this table utilizes the Morningstar Rental & Leasing Services Industry Group (“Peer Index”) which we also utilize in the stock performance graph required by Item 201(e) of Regulation S-K included in our Annual Report for the year ended December 31, 2023. The comparison assumes $100 was invested for the period starting November 9, 2021 (the first day of trading on Nasdaq following our Emergence and re-listing on the Nasdaq), through the end of the listed year in the company and Peer Index, respectively. Historical stock price performance is not necessarily indicative of future stock price performance. (5) We determined Adjusted Corporate EBITDA (a non-GAAP financial metric) to be the most important financial performance measure used to link company performance to Compensation Actually Paid to our PEO and Non-PEO NEOs for 2023 because this is a key primary financial performance metric in our annual incentive program and long-term incentive program. We may determine a different financial performance measure to be the most important financial performance measure in future years. Adjusted Corporate EBITDA is defined in Annex A to this Proxy Statement.
Relationship Between Compensation Actually Paid and Our Performance
Relationship Between Compensation Actually Paid and Our Performance The relationships between (a) Compensation Actually Paid to our PEO and other NEOs to (i) GAAP Net Income, (ii) Adjusted Corporate EBITDA and (iii) company TSR and (b) the TSR of the company to our Peer Index TSR are as follows: • GAAP Net Income: We did not use GAAP Net Income as a performance measure in our compensation program in the periods presented, nor was it directly considered when making compensation decisions for our PEO or other NEOs. As a result, there has not been a direct relationship between GAAP Net Income and compensation actually paid to these individuals for the periods presented. However, to the extent our GAAP Net Income is correlated with our Adjusted Corporate EBITDA, which is a key measure in our compensation program, there has been a directional relationship. • Adjusted Corporate EBITDA: We have used Adjusted Corporate EBITDA in our annual and long-term incentive programs during the periods presented and, as a result, it has had a direct impact on the compensation actually paid to our NEOs. Company and Peer Index TSR: The majority of our NEOs’ target compensation for the periods presented was delivered as equity compensation, and for our NEOs other than Mr. Scherr, the PSUs in the program are capped at 100% of target if our TSR is negative during the performance period. As a result, compensation actually paid in connection with the PSUs will be directly related to our TSR. Peer
Relationship Between Compensation Actually Paid and Our Performance
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Relationship Between Compensation Actually Paid and Our Performance
Index TSR has not been a direct component of our compensation program and therefore has not had a direct relationship with compensation actually paid to our NEOs.