Proposals to Be Voted on at Meeting
Proposal No. 1
Election of Directors
The
Board of Directors (the “Board”) has nominated Brian Choi, Bernardo Hees, Lynn Krominga, Glenn Lurie, Jagdeep
Pahwa, Karthik Sarma and Carl Sparks to be elected at the 2020 Annual Meeting of Shareholders (the “Meeting”)
to serve as directors for a one-year term ending at the 2021 annual meeting of shareholders and
until his or her successor is duly elected and qualified or until his or her earlier resignation or removal. In approving
such nomination, a majority of the Board voted in favor of such nomination while Leonard S. Coleman, Mary C. Choksi, F.
Robert Salerno, Francis J. Shammo, and Jeffrey H. Fox voted against such nomination with Mr. Fox stating he believed the
slate of nominees did not include an adequate number of independent nominees. For certain information regarding each nominee,
see “Board of Directors—Biographical Information for Nominees” below.
Third Amended and Restated Cooperation Agreement
On February 23, 2020, the Company entered into a Third Amended and Restated Cooperation Agreement (the “Third A&R Cooperation Agreement”) with SRS Investment Management, LLC and certain of its affiliates (collectively, “SRS”), the Company’s largest shareholder, regarding the membership and composition of the Board and related matters. Pursuant to the Third A&R Cooperation Agreement, SRS is entitled to designate three persons to serve as members of the Board, and the Company agreed to nominate (i) Messrs. Choi, Pahwa and Sarma (collectively, the “Applicable Directors”), and (ii) Messrs. Hees, Lurie and Sparks, and Ms. Krominga for election to the Board at the Meeting.
The Third A&R Cooperation Agreement further provides that (i) the Board will appoint an additional independent director who is not a former or current employee of, or advisor or consultant to, SRS or an affiliate of SRS, no later than 90 days after the Meeting and (ii) upon the selection by the Board of a Chief Executive Officer on a non-interim basis, the Chief Executive Officer will also be appointed to the Board; provided, that if the Chief Executive Officer is already a director of the Company, the Board will appoint another independent director who is not a former or current employee of, or advisor or consultant to, SRS or an affiliate of SRS, no later than 90 days after the selection of the Chief Executive Officer.
Under the terms of the Third A&R Cooperation Agreement, the size of each of the Corporate Governance Committee and the Compensation Committee will be set at three members, all of whom must qualify as independent pursuant to the applicable stock exchange listing requirements (unless otherwise permitted by such stock exchange requirements). The Third A&R Cooperation Agreement also provides that (i) SRS will be entitled to appoint one Applicable Director to each of the Corporate Governance Committee and the Compensation Committee, (ii) the Applicable Director appointed by SRS to the Compensation Committee will serve as the Chair of such committee, and (iii) SRS will be entitled to designate an Applicable Director to serve as the Vice Chairman of the Board. The parties have further agreed that (x) Mr. Choi will serve as the Chair of the Compensation Committee and as a member of the Corporate Governance Committee and (y) Mr. Pahwa will serve as the Vice Chairman of the Board.
For a further description of the terms of the Third A&R Cooperation Agreement, including a copy of the Third A&R Cooperation Agreement, please see our Current Report on From 8-K filed by the Company with the SEC on February 24, 2020.
Biographical Information for Nominees
The following material contains information concerning the Board’s nominees, including their period of service as a director, their recent employment, other directorships, including those held during the past five years with a public company or registered investment company, and age as of the Meeting.
BERNARDO HEES
Standing Board Committees: Executive (Chair)
Mr. Hees, age 50, has been a director since February 2020. Previously, Mr. Hees served as Chief Executive Officer of The Kraft Heinz Company from 2015 to June 2019. He served as Chief Executive Officer of H.J. Heinz Holding Corporation since 2013. From 2010 to 2013 Mr. Hees served as Chief Executive Officer of Burger King Worldwide Holdings, Inc., a global fast food restaurant chain. From 2005 to 2010 he was Chief Executive Officer of América Latina Logística, a Brazilian logistics company. Mr. Hees was also a partner at 3G Capital from 2010 to 2019. Mr. Hees is also a director of Bunge Limited, which files reports pursuant to the Exchange Act.
Specific Qualifications, Attributes, Skills and Experience:
• Chief Executive Officer experience
• Public company board experience
• International experience
• Diverse personal background
BRIAN J. CHOI
Standing Board Committees: Compensation (Chair), Corporate Governance
Mr. Choi, age 37, has been a director since January 2016. Mr. Choi is a partner at SRS Investment Management, LLC and certain of its affiliates and has served in various roles at SRS since October 2008. Previously, Mr. Choi worked at Metalmark Capital from 2007 to 2008 and he also served as an analyst in the Leveraged Finance Group at Lehman Brothers from 2005 to 2007. Mr. Choi was initially appointed to the Board pursuant to the terms of a cooperation agreement between the Company and SRS Investment Management, LLC and certain of its affiliates.
Specific Qualifications, Attributes, Skills and Experience:
• Financial expertise
• Industry expertise
• Diverse personal background
LYNN KROMINGA
Standing Board Committees: Audit (Interim Chair), Corporate Governance (Chair)
Ms. Krominga, age 69, has been a director since October 2006. Ms. Krominga is an attorney, management consultant and former senior executive of global businesses. Ms. Krominga has served on the boards of directors of public, private and not-for-profit companies, as well as advisory boards of start-up and early stage technology and personal care businesses in the U.S. and abroad. Since 1999, she has been a consultant to private equity, venture capital, hedge funds and angel investors, in which capacity she served in a number of operating and board roles, including Chief Executive Officer of Fashion Wire Daily, Inc.; director and audit committee member of AHAVA Dead Sea Laboratories, Ltd. (a global cosmeceuticals business); advisor to London-based Apax Partners for acquisitions in Israel and the United States; director of StructuredWeb, Inc; board of advisors of Makeover Studios, Inc.; General Manager-North America of Electric Fuel, Inc. (an early stage fuel cell-based technology business); and Internet Consultant for private websites in the U.S. and Europe. From 2007 until January 2013, Ms. Krominga served as a director of Sunrise Senior Living, Inc., one of the world’s largest assisted living companies, with operations in the U.S., Canada, the U.K. and Germany. From March through November 2008, she served as Chairman of the Board of Sunrise Senior Living and as Lead Director thereafter until January 2013 (when the company was sold). She also served as Chairman of the Compensation Committee (2008-2011), and as a member of the Audit, Compensation and Governance Committees from 2007-2013. Ms. Krominga is the former President of the Revlon and Coleman Worldwide Licensing Divisions, and previously served as General Counsel and International Counsel for Revlon’s global operations. Prior to joining Revlon, she was Senior Counsel at American Express Company and an associate at Cleary, Gottlieb, Steen & Hamilton.
Specific Qualifications, Attributes, Skills and Experience:
• Significant legal, governance, licensing, technology and regulatory expertise
• International experience
• Executive management experience and financial expertise
• Diverse personal background
Standing Board Committees: Audit
Mr. Lurie, age 54, has been a director since May 2018. Mr. Lurie has been President and Chief Executive Officer of Synchronoss Technologies, Inc. since November 2017. Prior to joining Synchronoss, Mr. Lurie was employed by AT&T for 27 years and was President and Chief Executive Officer of AT&T Mobility and Consumer Operations when he retired in September of 2017. Mr. Lurie helped usher in the smartphone era by leading negotiations for AT&T with Apple for the first iPhone and then for the first iPad. He built three groundbreaking businesses at AT&T: IoT (Internet of Things) business – bringing wireless connectivity to tablets, cars, connected cities and consumer electronics; Digital Life – AT&T’s home automation and security business; and the launch of Aio Wireless – now Cricket Wireless, the company’s industry-leading prepaid flanker brand. At AT&T, Mr. Lurie served in a variety of leadership roles, including as President and Chief Executive Officer of Mobility and Consumer Operations from 2016 to 2017, President and Chief Executive Officer of AT&T Mobility from 2014 to 2016, President of Emerging Enterprises and Partnerships Organization from 2011 to 2014 and President of Emerging Devices Organization (now IoT Organization) from 2008 to 2011. Mr. Lurie is also a director of Synchronoss, which files reports pursuant to the Exchange Act. Mr. Lurie also serves as a director of Pivotal Commware, Inc., which develops communications platforms, systems and applications.
Specific Qualifications, Attributes, Skills and Experience:
• Chief Executive Officer experience
• Technology, operations, strategy, and business development experience
• Public company board experience
JAGDEEP PAHWA
Vice Chairman of the Board
Standing Board Committees: Executive
Mr. Pahwa, age 46, has been a director since April 2018. Mr. Pahwa has been the President of SRS Investment Management, LLC since 2017 and has led SRS’s private equity business since 2006. Previously, Mr. Pahwa worked at McKinsey & Company in the U.S. and India, where he led client engagements in the telecom, technology and real estate sectors. Prior thereto, Mr. Pahwa worked in the Mergers & Acquisitions group of Lehman Brothers in New York. Mr. Pahwa was initially appointed to the Board pursuant to the terms of a cooperation agreement between the Company and SRS Investment Management, LLC and certain of its affiliates.
Specific Qualifications, Attributes, Skills and Experience:
• Financial and investment expertise
• Advisory experience in business strategy and growth
• Broad international experience and understanding of the technology sector
• Diverse personal background
KARTHIK SARMA
Mr. Sarma, age 45, is the Portfolio Manager at SRS Investment Management, LLC, which he founded in 2006. Prior to founding SRS, Mr. Sarma was a Managing Director at Tiger Global Management, LLC, which he joined within a few months of its launch in 2001. Prior to joining Tiger Global, Mr. Sarma worked as a consultant at McKinsey & Company in its New York office. Mr. Sarma is being nominated to the Board pursuant to the terms of a cooperation agreement between the Company and SRS Investment Management, LLC and certain of its affiliates.
Security Ownership of Certain Beneficial Owners
The following table sets forth information regarding beneficial ownership of shares of Common Stock as of March 4, 2020, by (i) each person who is known by us to beneficially own more than 5% of the outstanding shares of Common Stock, (ii) each of the Company’s directors and each of its named executive officers, and (iii) all of the Company’s directors, nominees and current executive officers, as a group.
Name of Beneficial Owner
|
|
Total Amount of Shares
Beneficially Owned(1)
|
|
Percent of
Common Stock
Owned(2)
|
|
Of the Total Number of Shares
Beneficially Owned, Shares
which May be Acquired within
60 Days(3)
|
Principal Shareholders:**
|
|
|
|
|
|
|
SRS Investment Management, LLC(4)
1 Bryant Park, 39th Floor
New York, NY 10036
|
|
16,189,300
|
|
21.8%
|
|
—
|
Glenview Capital Management, LLC(5)
767 Fifth Avenue, 44th Floor
New York, NY 10153
|
|
7,199,319
|
|
9.7%
|
|
—
|
BlackRock, Inc.(6)
55 East 52nd Street
New York, NY 10055
|
|
7,173,351
|
|
9.7%
|
|
—
|
Vanguard Group, Inc.(7)
100 Vanguard Blvd.
Malvern, PA 19355
|
|
5,845,083
|
|
7.9%
|
|
—
|
Pzena Investment Management, LLC(8)
320 Park Avenue, 8th Floor
New York, NY 10022
|
|
4,428,321
|
|
6.0%
|
|
—
|
Directors, Nominees and Named Executive Officers:(9)
|
|
|
|
|
|
|
Brian J. Choi
|
|
—
|
|
*
|
|
—
|
Mary C. Choksi
|
|
46,203
|
|
*
|
|
37,103
|
Leonard S. Coleman
|
|
35,966
|
|
*
|
|
23,986
|
Jeffrey H. Fox
|
|
28,232
|
|
*
|
|
18,232
|
Bernardo Hees
|
|
430,169
|
|
*
|
|
—
|
Lynn Krominga
|
|
24,508
|
|
*
|
|
15,967
|
Glenn Lurie
|
|
5,531
|
|
*
|
|
5,531
|
Jagdeep Pahwa
|
|
—
|
|
*
|
|
—
|
F. Robert Salerno
|
|
45,949
|
|
*
|
|
26,232
|
Karthik Sarma(10)
|
|
16,189,300
|
|
21.8%
|
|
—
|
Francis J. Shammo
|
|
6,139
|
|
*
|
|
6,139
|
Carl Sparks
|
|
5,801
|
|
*
|
|
5,801
|
Sanoke Viswanathan
|
|
11,521
|
|
*
|
|
11,521
|
Joseph A. Ferraro
|
|
109,296
|
|
*
|
|
11,284
|
John F. North, III
|
|
21,174
|
|
*
|
|
21,174
|
Keith Rankin
|
|
—
|
|
*
|
|
—
|
Edward P. Linnen
|
|
49,653
|
|
*
|
|
6,080
|
Larry D. De Shon
|
|
183,120
|
|
*
|
|
—
|
Martyn Smith
|
|
—
|
|
*
|
|
—
|
Mark J. Servodidio
|
|
—
|
|
*
|
|
—
|
All Directors, Nominees and Executive Officers as a group (23 persons)
|
|
17,278,716(11)
|
|
23.2%
|
|
198,697(12)
|
17
|
|
Director
|
|
Director
Shares
|
|
Director
Deferred
Shares
|
|
Director
|
|
Director
Shares
|
|
Director
Deferred
Shares
|
Mr. Choi
|
|
—
|
|
—
|
|
Mr. Pahwa
|
|
—
|
|
—
|
Ms. Choksi
|
|
37,103
|
|
35,584
|
|
Mr. Salerno
|
|
26,232
|
|
—
|
Mr. Coleman
|
|
23,986
|
|
45,301
|
|
Mr. Sarma
|
|
—
|
|
—
|
Mr. Fox
|
|
18,232
|
|
—
|
|
Mr. Shammo
|
|
6,139
|
|
—
|
Mr. Hees
|
|
—
|
|
—
|
|
Mr. Sparks
|
|
5,801
|
|
—
|
Ms. Krominga
|
|
15,967
|
|
37,939
|
|
Mr. Viswanathan
|
|
11,521
|
|
—
|
Mr. Lurie
|
|
5,531
|
|
—
|
|
|
|
|
|
|
18
Executive Officers
Executive officers of the Company are set forth below. Each executive officer is appointed to hold office at the discretion of the Board of Directors and may be removed at any time by the Board of Directors with or without cause.
Name
|
|
Offices or Positions To be Held
|
Joseph A. Ferraro
|
|
Interim President and Chief Executive Officer
|
John F. North, III
|
|
Executive Vice President and Chief Financial Officer
|
Izilda P. Martins
|
|
Interim President, Americas
|
Edward P. Linnen
|
|
Executive Vice President, Chief Human Resources Officer
|
Keith Rankin
|
|
President, International
|
Jean M. Sera
|
|
Senior Vice President, General Counsel and Corporate Secretary
|
Cathleen DeGenova
|
|
Vice President and Chief Accounting Officer
|
Biographical information for our executive officers is set forth below.
Name
|
|
Biographical Information
|
Joseph A. Ferraro
|
|
Mr. Ferraro, age 63, was appointed Interim President and Chief Executive Officer effective January 1, 2020. Previously, Mr. Ferraro held various roles with the Company, including President, Americas from January 2015 through December 2019 and Senior Vice President, North America Operations from October 2011 to December 2014. Mr. Ferraro joined the Company in 1979, and served in various positions of increasing responsibility in the Company’s North American operations.
|
John F. North, III
|
|
Mr. North, age 42, has been Executive Vice President and Chief Financial Officer since March 2019. Prior to joining the Company, Mr. North served in leadership roles in finance at Lithia Motors, Inc. beginning in 2002, including as Chief Financial Officer from January 2017 to March 2019, as Chief Accounting Officer from January 2015 to December 2016 and as Vice President, Finance and Corporate Controller from January 2010 to December 2014. Mr. North is a Certified Public Accountant and a CFA® charterholder.
|
Izilda P. Martins
|
|
Ms. Martins, age 48, was appointed Interim President, Americas effective January 1, 2020. Previously, Ms. Martins held various strategic and financial roles with the Company, including Senior Vice President and Chief Financial Officer, Americas from May 2014 through December 2019, Senior Vice President and Acting Chief Accounting Officer from November 2010 through May 2014, and Vice President of Tax from August 2006 through November 2010. Ms. Martins was Director of Tax Planning and Mergers & Acquisitions of Cendant Corporation (as the Company was formerly known) from November 2004 through August 2006. Prior to joining the Company, Ms. Martins was associated with Deloitte & Touche LLP for seven years.
|
Edward P. Linnen
|
|
Mr. Linnen, age 50, has been Executive Vice President, Chief Human Resources Officer since January 2015. Previously, Mr. Linnen held the title of Senior Vice President, Chief Human Resources Officer from February 2013 until January 2015, and Senior Vice President, Human Resources for North America from October 2011 to February 2013. Mr. Linnen joined the Company in 2001, and served in several positions in the Company’s human resources function, including as Vice President, Labor Relations & International Human Resources, Vice President, Domestic Human Resources, and Field Human Resources Director. Prior to joining the Company, Mr. Linnen served in various positions within human resources at Kraft Foods Inc. and Nabisco, Inc.
|
Keith Rankin
|
|
Mr. Rankin, 50, has been President of International since June 2019. Prior to joining the Company, Mr. Rankin held the position of Chief Executive Officer for the automotive division of Barloworld in South Africa from March 2015. Barloworld is a distributor of leading global brands, providing integrated rental, fleet management, product support and logistics solutions, and a licensee partner of Avis Budget Group. Mr. Rankin began his career with Avis in South Africa in 1998 and was appointed Chief Executive of Avis Car Rental Southern Africa in 2004. In 2007, he was appointed Chief Executive Officer of car rental, part of Barloworld’s automotive division that included Barloworld’s southern Africa and Scandinavian car rental operations.
|
19
Jean M. Sera
|
|
Ms. Sera, age 50, has been appointed Senior Vice President, General Counsel and Corporate Secretary, effective March 27, 2020. Ms. Sera has held the title of Senior Vice President & Corporate Secretary since August 2006. Previously, Ms. Sera was a Vice President in the Legal Department of Cendant Corporation (as the Company was formerly known) from January 2002 to August 2006. Prior to joining the Company, Ms. Sera was an associate with the law firm of Shearman & Sterling.
|
Cathleen DeGenova
|
|
Ms. DeGenova, age 58, has been Vice President and Chief Accounting Officer since August 2019. Previously, Ms. DeGenova held the title of Vice President of the Company overseeing External Reporting and Technical Accounting since April 2018. Ms. DeGenova previously held the title of Director of External Reporting & Technical Accounting from June 2013, when she joined the Company. Prior to joining the Company, Ms. DeGenova held similar roles at Zipcar, Inc., which the Company acquired in 2013, Charles River Labs and Millipore, and was an accountant with Ernst & Young. Ms. DeGenova is a Certified Public Accountant.
|
The Company has announced the resignation of Michael K. Tucker, effective March 27, 2020. Mr. Tucker, age 62, held the position of Executive Vice President, General Counsel and Chief Compliance Officer of the Company from April 2010.
20
Executive Compensation
Compensation Discussion and Analysis
We refer you to our Annual Report on Form 10-K for the year ended December 31, 2019 (our “2019 Form 10-K”) for additional information regarding our financial results discussed below. In this Proxy Statement, we refer to Adjusted EBITDA, which we define as income from continuing operations before non-vehicle related depreciation and amortization, any impairment charges, restructuring and other related charges, early extinguishment of debt costs, non-vehicle related interest, transaction-related costs, net charges for unprecedented personal-injury legal matters, non-operational charges related to shareholder activist activity, gain on sale of equity method investment in China and income taxes. This non-GAAP measure is a performance metric in our incentive programs and a reconciliation is provided under “Analysis of 2019 Pay Decisions.” When we refer to “the Committee” in this “Executive Compensation” section, we are referring to the Compensation Committee.
Executive Summary
Company Performance
We had a successful 2019, achieving revenue of $9.2 billion, an increase of 1% compared to 2018. Our net income was $302 million, and our Adjusted EBITDA was $788 million, also an increase of 1% compared to 2018. Our financial results reflect Adjusted EBITDA growth for the Americas region of 17%, and an Adjusted EBITDA decline of 29% for the International region, in each case as compared to 2018. In 2019, we again returned capital to our shareholders through the repurchase of 2.25 million shares, and our closing stock price on December 31, 2019 of $32.24 reflected an increase of 43% compared to our closing stock price on December 31, 2018.
Strategic Accomplishments
In 2019, we continued to execute on our strategy by leveraging our global brands, and implementing our innovation and efficiency initiatives, including through:
• Technology: modernizing legacy infrastructure; and improving the Avis app, which in 2019 received the J.D. Power award for best mobile rental car application;
• Connected Car: connecting over 200,000 vehicles, which provides benefits such as fuel optimization, enhanced operations, and improvements in vehicle recovery;
• Strategic Partnerships: developing strategic business alliances with companies such as Uber and Via;
• Fleet: increasing vehicle dispositions through alternative channels, including through our approximately 15 direct-to-consumer retail locations; and
• Operational Efficiencies: improving workforce planning and rationalization, shuttling efficiency, shared services, and global procurement.
Compensation for our Named Executive Officers
2019 Named Executive Officers
The Company experienced a number of executive management changes in 2019:
• In March, the Company appointed John North, as its Chief Financial Officer (“CFO”), replacing Martyn Smith, the Company’s former Interim Chief Financial Officer (“Former Interim CFO”). In addition to deep financial expertise, Mr. North also has experience in retail vehicle sales, which is a strategic initiative for the Company. As discussed below, our Former Interim CFO agreed to provide advisory services for six months following the appointment of the new CFO in order to facilitate a smooth transition.
• In June, the Company appointed Keith Rankin as its new President, International to replace Mark Servodidio in the same position (“Former President, International”), who resigned from the Company, effective June 14, 2019. Mr. Rankin has deep expertise in the vehicle rental industry, having had a long career with our licensee partner, Barloworld, in South Africa, where he was the Chief Executive Officer of Barloworld’s automotive division.
21
• Larry De Shon, the Company’s former Chief Executive Officer (“Former CEO”), resigned from the Company and the Board effective December 31, 2019. Joe Ferraro, our President, Americas for 2019, assumed the role of Interim Chief Executive Officer (“Interim CEO”) on January 1, 2020. The role of Interim President, Americas was assumed by Izzy Martins, as described under “Executive Officers” above, effective January 1, 2020.
A discussion of pay decisions related to these changes can be found under “Pay Decisions Related to 2019 Management Changes.”
Setting 2019 Regular Compensation and Performance Metrics
For 2019, the Committee considered 2018 financial performance, market conditions and other factors, and approved base salaries and annual and long-term incentive target opportunities for the Company’s Named Executive Officers (“NEOs”) who were employed for full year 2019, reflecting increases generally aligned with past practice. Consistent with prior years, more than 50% of CEO pay opportunity, at target, was performance-based, excluding amounts contained in the Summary Compensation Table under “All Other Compensation.” In 2019, the Committee approved performance metrics for the annual and long-term incentive programs, consistent with the 2018 programs, given that changes had been made to both programs in 2018.
Alignment of Incentive Compensation with Performance
Our history of pay-for-performance alignment was evident in the compensation paid to our NEOs for 2019. Based on 2019 financial and individual performance, the annual incentive program indicated payouts ranging from 40% of target for our President, International to 141% of target for our President, Americas. Our President, International elected to forfeit his payment under the program and therefore actual annual incentive payments ranged from 0% to 141%. As a result of our three-year cumulative financial results, performance-based restricted stock unit awards (“PSUs”) granted in 2016 did not vest in 2019 and were forfeited without payout. The PSUs granted in 2017 to our then-NEOs also did not vest in 2020 and were also forfeited without payout.
To illustrate the alignment of our incentive compensation with our Company’s performance, granted pay compared to realizable pay for our Former CEO (excluding forfeitures or payments resulting from his separation from the Company on December 31, 2019) is set forth below for the three-year period ended December 31, 2019 together with total shareholder returns (“TSR”) for the same period.
22
Compensation Practices
We believe that our compensation programs reflect sound practices, such as:
• executive stock ownership guidelines with significant share ownership requirements and a requirement that an amount equal to 50% of net shares that vest must also be held for twelve months;
• an executive compensation recoupment (or “clawback”) policy with respect to incentive compensation;
• a policy prohibiting executives from entering into speculative (or hedging) transactions in our securities;
• no excise tax gross-up or single-trigger change-in-control provisions; and
• no tax gross-ups on executive perquisites except with respect to relocation and expatriate benefits per the Company’s standard practices.
Our Named Executive Officers
This discussion addresses executive compensation in 2019 for our named executive officers, who are:
• Joseph A. Ferraro, our President, Americas for 2019 and our current Interim Chief Executive Officer;
• John F. North, III, our CFO;
• Patrick “Keith” Rankin, our President, International;
• Edward P. Linnen, our Executive Vice President and Chief Human Resources Officer (our “CHRO”);
• Larry D. De Shon, our Former CEO;
• Martyn Smith, our Former Interim CFO; and
• Mark J. Servodidio, our Former President, International.
Mr. Ferraro and Mr. Rankin are sometimes referred to herein collectively as the “Regional Presidents.”
Compensation for our NEOs is typically comprised of the following components:
Component
|
|
Function and Objective
|
Base Salary
|
|
Base salaries are paid in the form of cash and provide a fixed and competitive form of annual compensation for the performance of primary responsibilities at a level consistent with each executive’s experience and role. Base salaries are designed to provide competitive compensation to attract and retain exceptional executive talent.
|
Annual Incentive Awards
|
|
Annual incentives are comprised of annual cash incentive opportunities that are pre-dominantly performance-based, and reward our executives upon achieving or exceeding specific annual Company and individual goals using performance metrics approved by the Committee and that the Company believes are appropriate measures of operational and financial performance.
|
Long-Term Incentive Awards
|
|
Long-term incentive awards are designed to attract and retain a highly qualified executive team, align executive rewards with shareholder interests, provide an incentive for our executives to achieve appropriately challenging long-range performance goals, and allow our executives to share in the value created for the Company’s shareholders.
|
Other Compensation
|
|
We provide certain health, life insurance, disability and retirement benefits, which are all part of our broad-based employee benefits program. Retirement benefits for our NEOs (other than our President, Americas and our Former Interim CFO) are limited to (i) deferrals under the Company’s deferred compensation plan for executives, which the Company matches up to a maximum of 6% of base salary and annual incentive, and/or (ii) participation in our 401(k) plan or our U.K. Defined Contribution Plan. Other executive benefits and perquisites include auto use and financial planning services. Our Former CEO was also provided with agreed-upon limited personal use of Company-leased aircraft services.
|
23
Analysis of 2019 Pay Decisions
Philosophy, Components and Mix of Executive Compensation
In 2019, “pay-for-performance” continued to be a fundamental tenet of our compensation philosophy, which includes the core principles of rewarding the attainment of appropriately challenging performance goals and aligning our executives’ objectives with our shareholders’ interests. The Committee also believes that executive compensation should be designed to attract and retain a high-caliber leadership team and take into consideration competitive practices and the overall market for executive talent.
Base Salaries for our Named Executive Officers
Salaries for our NEOs are typically determined based on factors such as our past practice, reasonable comparability with Peer Group pay data and Survey Data (as described under “Consideration of Peer Groups and Survey Data”) and each NEO’s responsibilities, capabilities and skills, commitment to our business, leadership and drive to add value. For the CEO and CFO roles, the Committee also considers the size and complexity of our balance sheet and capital structure.
For 2019, base salaries for our CFO and President, International were determined in connection with the new hire process discussed under “Pay Decisions Related to 2019 Management Changes.” For NEOs employed for full year 2019, based on the Committee’s consideration of the factors described above, the Company’s 2018 financial performance, and the fact that no salary increases had been approved for 2018, the Committee approved base salaries for our NEOs in the beginning of 2019, as follows:
|
|
Executive
|
|
2018 Salary
|
|
2019 Salary
|
|
Percentage Increase
|
|
|
Former CEO
|
|
$
|
1,100,000
|
|
$
|
1,200,000
|
|
9%
|
|
President, Americas
|
|
$
|
650,000
|
|
$
|
700,000
|
|
8%
|
|
CHRO
|
|
$
|
475,000
|
|
$
|
500,000
|
|
5%
|
|
Base salary for our President, Americas was increased to $750,000 later in the year as discussed under “Pay Decisions Related to 2019 Management Changes.” No base salary increases were approved for our Former Interim CFO and our Former President, International.
Annual Incentive Awards
For 2019, the Committee approved an annual incentive program (the “2019 AIP”) consistent with the annual incentive program for 2018. With the exception of our Former President, International, each NEO participated in the 2019 AIP, prorated as applicable for the number of months each NEO held his role in 2019.
The 2019 AIP included the following performance metrics: Adjusted EBITDA, Adjusted Free Cash Flow and individual performance, with weightings as described below. Following program changes implemented in 2018, the Committee determined that consistency was important in order to understand the efficacy of the revised program. Accordingly, the Committee decided to keep the 2019 program consistent with the 2018 program.
Adjusted EBITDA was included in the program in recognition of the wide acceptance and understanding of the metric within the Company, and because it is a key measure of operational and financial performance, driven by achieving profitable revenues and our annual business plan. Adjusted EBITDA is also highly correlated to the Company’s stock price performance. The program also included Adjusted Free Cash Flow given the focus on this metric by shareholders, and an individual component intended to reward the contribution and value an executive brings to the organization. The Committee believes that the inclusion of an individual component is motivating and allows for differentiation furthering our alignment of pay with performance. Target payout opportunity as a percentage remained consistent with 2018 levels for each NEO role, ranging from 75% to 150% of base salary, with payout opportunity ranging from 25% to 200% of target.
24
Financial Goals
The
financial performance goals included in the 2019 AIP, presented below, were set based on the Company’s 2019 business
plan and within the estimated range as disclosed in the Company’s press release on February 20,
2019. At target, the global Adjusted EBITDA goal represented an increase of approximately 2.4% compared to 2018 Adjusted
EBITDA, as reported. The target Adjusted Free Cash Flow goal for 2019 was lower than 2018 reported results due to timing of
cash inflows and outflows at the end of 2018, which resulted in significant overachievement of the 2018 goal. The 2018
results were adjusted downward to exclude the impact of this timing for 2018 annual incentive payout calculations, and 2019
goals were set lower than 2018 goals also as a result of this timing.
ADJUSTED EBITDA GOALS
|
|
|
|
|
|
Goals
(Dollars in Millions)
|
|
|
Achievement Level
|
|
Opportunity
(% of Target)*
|
|
Global**
|
|
Americas
|
|
International
|
Maximum
|
|
200%
|
|
$960
|
|
$685
|
|
$355
|
Target
|
|
100%
|
|
$800
|
|
$571
|
|
$296
|
Threshold
|
|
25%
|
|
$720
|
|
$514
|
|
$266
|
ADJUSTED FREE CASH FLOW GOALS
Achievement Level
|
|
Opportunity
(% of Target)*
|
|
Goals
(Dollars in Millions)
|
Maximum
|
|
200%
|
|
$353
|
Target
|
|
100%
|
|
$294
|
Threshold
|
|
25%
|
|
$250
|
Individual Performance Goals
Individual performance goals were established for each NEO based on key objectives in support of the Company’s strategic goals, as described in the “Executive Summary” section above. For our Former CEO, objectives were reviewed and approved by the Committee. For our other NEOs, objectives were reviewed and approved by our Former CEO and also approved by the Committee.
Weightings
The weighting for each component of the 2019 AIP is set forth below:
|
|
NEO
|
|
Component
|
|
Weighting
|
|
|
All (Other than Regional Presidents)
|
|
Global Adjusted EBITDA
|
|
50%
|
|
Regional Presidents
|
|
Global/Regional Adjusted EBITDA
|
|
20%/30%
|
|
All
|
|
Global Adjusted Free Cash Flow
|
|
25%
|
|
All
|
|
Individual Performance
|
|
25%
|
|
Results and Payouts
The global payout under the Adjusted EBITDA component of the 2019 AIP was 100% of target, reflecting the Company’s attainment of reported Adjusted EBITDA of $788 million, increased to $800 million based on a $12 million currency adjustment pursuant to the terms of the program. The payout under the Adjusted Free Cash Flow component was 80% of target, reflecting the Company’s attainment of reported Adjusted Free Cash Flow of $277 million. Payouts for the individual component for each NEO who was eligible to participate in the 2019 AIP were based on an assessment of each executive’s performance relative to his objectives. Objectives for each NEO were related to the key duties for his respective position.
25
Accordingly, actual payouts under the 2019 AIP, as a percentage of target for each NEO, were as follows:
|
|
Total Actual
|
|
Individual
Performance
|
|
Adjusted Free
Cash Flow
|
|
|
|
Adjusted EBITDA
|
NEO
|
|
Payout %
|
|
Payout %
|
|
Payout %
|
|
Global
Payout %
|
|
Americas
Payout %
|
|
International
Payout
|
Former CEO
CFO
Former Interim CFO
President, Americas
President, International
CHRO
|
|
95%
101%
95%
141%
0%
106%
|
|
100%
125%
100%
200%
0%
145%
|
|
80%
80%
80%
80%
80%
80%
|
|
100%
100%
100%
100%
100%
100%
|
|
—
—
—
170%
—
—
|
|
—
—
—
—
0%
—
|
While under the terms of the program, our President, International would have been entitled to a payout of 40% of target based on goal achievement for the global Adjusted EBITDA and Adjusted Free Cash Flow components of the program, Mr. Rankin elected to forfeit the payout given that the financial performance of the International region indicated a zero payout on the regional Adjusted EBITDA component. In approving a 200% payout under the individual component of the 2019 AIP for our President, Americas, the Committee considered that all key objectives had been met or exceeded and that the financial performance of the Americas region, which helped to offset financial results for the International region, enabled the Company to achieve its overall financial goals for 2019.
A reconciliation of our reported global net income to our reported global Adjusted EBITDA is set forth below (dollars are in millions):
|
|
Net income (loss)
|
|
$
|
302
|
|
|
|
Provision for (benefit from) income taxes
|
|
|
(15
|
)
|
|
Income before income taxes
|
|
|
287
|
|
|
Add: Non-vehicle related depreciation and amortization
|
|
|
263
|
|
|
Interest expense related to corporate debt, net
|
|
|
178
|
|
|
Restructuring and other related charges
|
|
|
80
|
|
|
Transaction-related costs, net
|
|
|
10
|
|
|
Early extinguishment of corporate debt
|
|
|
12
|
|
|
Non-operational charges related to shareholder activist activity
|
|
|
2
|
|
|
Gain on sale of equity method investment in China
|
|
|
(44
|
)
|
|
Adjusted EBITDA
|
|
$
|
788
|
|
|
We believe Adjusted EBITDA is useful as a supplemental measure in evaluating the performance of our operating businesses and in comparing our results from period to period. We also believe Adjusted EBITDA is useful to investors because it allows them to assess our results of operations and financial condition on the same basis that management uses internally. Adjusted EBITDA is a non-GAAP measure and should not be considered in isolation or as a substitute for net income or other income statement data prepared in accordance with U.S. GAAP. Our presentation of Adjusted EBITDA may not be comparable to similarly titled measures used by other companies.
A reconciliation of our global income before taxes to Adjusted Free Cash Flow is set forth below (dollars are in millions):
|
|
Income before taxes
|
|
$
|
287
|
|
|
|
Add-back of non-vehicle related depreciation and amortization
|
|
|
263
|
|
|
Add-back of restructuring and other related costs
|
|
|
80
|
|
|
Add-back of debt extinguishment costs
|
|
|
12
|
|
|
Add-back of transaction-related costs
|
|
|
10
|
|
|
Add-back of non-operational charges related to shareholder activist activity
|
|
|
2
|
|
|
Working capital and other
|
|
|
66
|
|
|
Capital expenditures
|
|
|
(250
|
)
|
|
Tax payments, net of refunds
|
|
|
(89
|
)
|
|
Vehicle programs and related*
|
|
|
(104
|
)
|
|
Adjusted Free Cash Flow
|
|
$
|
277
|
|
|
*Includes vehicle-backed borrowings (repayments) that are incremental to amounts required to fund incremental (reduced) vehicle and vehicle-related assets.
|
|
|
26
Adjusted Free Cash Flow represents Net Cash Provided by Operating Activities adjusted to reflect the cash inflows and outflows relating to capital expenditures, the investing and financing activities of our vehicle programs, asset sales, if any, and to exclude debt extinguishment costs, transaction-related costs, restructuring and other related charges, and non-operational charges related to shareholder activist activity. We believe that Adjusted Free Cash Flow is useful to management and investors in measuring the cash generated that is available to be used to repay debt obligations, repurchase stock, pay dividends and invest in further growth through new business development activities or acquisitions. Adjusted Free Cash Flow should not be construed as a substitute in measuring operating results or liquidity, and our presentation of Adjusted Free Cash Flow may not be comparable to similarly-titled measures used by other companies.
2019 Long-Term Incentive Awards
2019 Long-Term Incentive Awards
For 2019, the Committee approved a long-term incentive program (the “2019 LTIP”) consistent with the long-term incentive program for 2018. NEO participation in this program was limited to our Former CEO, our President, Americas, our CFO and our CHRO. Grant date values for awards issued under this program to officers employed for full year 2019 reflected increases approved following a market review of long-term incentive values of peer companies, which ranged from 10 to 25%.
The following factors were reviewed to determine the appropriate type of equity to be granted: perceived value to award recipients to effect retention and incentive goals, peer practices, the degree of alignment with shareholder interests, potential dilution and projected expense balanced with the value delivered to award recipients. Based on an analysis of these factors, the Committee determined that (a) for our Former CEO, a mix of 60% PSUs and 40% time-based restricted stock units (“RSUs”); (b) for each of our CFO and our President, Americas, an equal mix of PSUs and RSUs; and (c) for our CHRO, a mix of 30% PSUs and 70% RSUs would:
• align incentives with shareholders’ focus on profitability and financial performance;
• reflect the relevant decision-making impact of the individual and the impact of those decisions on the Company; and
• incentivize retention of key employees over the longer term.
Consistent with the 2018 program, RSUs granted in 2019 under the 2019 LTIP are scheduled to vest on the first three anniversaries of the date of grant, subject to continued employment, and PSUs granted in 2019 are scheduled to vest on the three-year anniversary of the date of grant, subject to satisfaction of performance goals. Three-year cumulative Adjusted EBITDA is the performance metric for the PSUs granted under the 2019 LTIP based on, including but not limited to, the following factors:
• the Company’s Adjusted EBITDA and stock price performance are highly correlated with the execution of the Company’s strategic goals; and
• Adjusted EBITDA is a key measure of operational and financial performance driven by profitable revenue and operational efficiencies and widely understood within the Company and by the Company’s shareholders.
Three-year cumulative Adjusted EBITDA goals for the 2019 LTIP are as follows, and the target goal represents a 3.1% compounded annual growth rate over the three-year performance period:
|
|
Achievement Level
|
|
Payout Opportunity
(as a % of target units awarded)
|
|
Cumulative Three-Year
Adjusted EBITDA Goal
(Dollars in millions)
|
|
|
Maximum
|
|
200%
|
|
$2,853
|
|
Target
|
|
100%
|
|
$2,481
|
|
Threshold
|
|
50%
|
|
$2,109
|
|
*Straight-line interpolation is generally used to determine achievement between specified goals.
|
|
Pay Decisions Related to 2019 Management Changes
Pay decisions related to management changes that occurred in 2019 are described below. The changes included the appointment of new executives into the roles of CFO and President, International. In order to attract top-level executive talent, including from other companies, compensation for these executives was determined following a review of current market custom and practice, and available compensation data for comparable roles at other companies. The Committee also took into consideration factors such as each new executive’s background, relevant experience, and expected
27
responsibilities. Compensation for each new executive in 2019 included sign-on cash and equity awards designed to both offset compensation opportunities that were forfeited by joining our Company, and to incentivize each executive to join our Company. Cash sign-on payments are required to be returned if the recipient voluntarily leaves the Company or is terminated for cause within 12 months of the date of hire. The Company also provided relocation benefits to each new executive as each role required relocation to New Jersey or England.
CFO and Former Interim CFO
In connection with the appointment of our CFO in March 2019, the Board approved his base salary in the amount of $600,000, an annual incentive target of 100% of base salary and a target 2019 LTIP award as described above. In addition, our CFO was awarded a sign-on RSU award, with a grant date value of $1.5 million, with vesting scheduled on each of the three anniversaries of the date of grant, subject to continued employment, and a sign-on cash payment of $500,000.
In early 2019, our Former Interim CFO agreed to provide transition and advisory services for six months following the effectiveness of the appointment of a new CFO at an annual rate of his current base salary of $575,000, together with a final cash payment of $912,500 in consideration for his release of claims in favor of the Company and compliance with certain post-termination restrictive covenants. In approving the final payment, the Committee recognized Mr. Smith’s 16-year career with the Company and that the interim assignment of approximately 18 months was longer than originally anticipated. The Committee was also focused on retaining Mr. Smith to ensure a smooth transition to the new CFO, and considered that the payment was less than customary cash severance paid to executive officers of 200% of the sum of base salary and annual target incentive.
President, International and Former President, International
In connection with the appointment of our President, International in June 2019, the Board approved his base salary in the amount of £400,000 (approximately $530,000), and an annual incentive target of 100% of base salary. Our President, International will be eligible to receive an award under the Company’s regular long-term incentive program for 2020. In addition, our President, International was awarded a sign-on long term-incentive award with a grant date value of $1.5 million, split equally between RSUs and PSUs (on the same terms as the 2019 LTIP) and a sign-on cash payment of £200,000.
Pursuant to the terms of the severance agreement with our Former President, International in effect at the time of his separation, the Former President, International received a lump-sum cash payment of $2.5 million and accelerated vesting of 22,893 RSUs. While 17,437 target PSUs, granted in 2017, remained eligible to vest, such PSUs have since been forfeited based on actual achievement of the applicable performance goals. An additional 12,315 PSUs granted in 2018 remain eligible to vest based on actual achievement of the applicable performance goals.
Former CEO
Our Former CEO’s departure from the Company, which was announced in May 2019 and became effective on December 31, 2019, was considered to be a “without cause termination” under the terms of the employment agreement between the Company and our Former CEO in effect at the time we announced his departure in May 2019. The employment agreement, in the event of a without cause termination, provided for (i) a lump sum payment equal to 200% of the sum of base salary and target annual incentive, (ii) the immediate vesting of RSU awards scheduled to vest by the two-year anniversary of termination of employment, and (iii) the vesting (or forfeiture) of PSU awards scheduled to vest by the same two-year anniversary based on the achievement of the applicable performance goals.
In accordance with the terms of the employment agreement, our Former CEO received cash severance in the amount of $6,000,000 and accelerated vesting of 98,132 RSUs. Also, in accordance with the employment agreement, our Former CEO forfeited 105,112 PSUs granted in 2019. The 95,902 PSUs granted in 2017 and the 67,734 PSUs granted in 2018 remained eligible to vest based on actual achievement of the applicable performance goals. The 95,902 PSUs granted in 2017 have since been forfeited based on actual achievement of the applicable performance goals.
In order to incentivize strong performance through December 31, 2019 and ensure a smooth transition to the current CEO, the Committee agreed to an additional $1.5 million cash severance payment and to accelerate 23,359 RSUs granted in 2019 and scheduled to vest in 2022. In approving the additional cash severance and vesting, the Committee recognized our Former CEO’s thirteen-year career with the Company and his many contributions, including his leadership as chief executive for four years and as President of the EMEA, and later International, region, starting with the Company’s acquisition of Avis Europe in 2011 and continuing through 2015.
28
Our Former CEO has also agreed to provide post-employment consulting for 2020 and will be paid aggregate consulting fees of $1.0 million. Under the consulting provisions of the separation agreement we entered into with our Former CEO, he has agreed to provide counsel and advice to the Company and its chief executive as may be reasonably requested from time to time for a one-year term ending on December 31, 2020. In making the determination to include the consulting provisions in the separation agreement, the Committee considered the benefits to the Company of having access to our Former CEO’s insights to assist with the transition to a successor chief executive.
Incremental Compensation
Following the announced departure of our Former CEO, the Committee undertook a further market and peer review of the compensation of our CFO and Regional Presidents in light of 2018 pay disclosures to ensure that these officers were provided with compensation that was in line with market practice as the Company would be undergoing a significant change in leadership. During this period of change, it was considered important to retain the Company’s top three executive officers, each of whom has deep experience and expertise in his area of responsibility, and in the case of the Regional Presidents, extensive industry experience and history with the Company.
Following this review, the Committee granted RSU awards incremental to the awards described above with grant date values of $1.5 million, $1.0 million and $500,000, for our President, Americas, CFO and President, International, respectively. The awards are scheduled to vest on the two-year anniversary of the grant date, subject to continued employment through such vesting date. In addition, the base salary of our President, Americas was increased by 7% to $750,000.
Setting CEO and Other NEO Compensation
Our Board has assigned to the Committee the responsibility to approve compensation for all NEOs, including our CEO. The roles and duties of participants in the decision-making process for our executive program are summarized below.
Role of the Independent Compensation Consultant
Consistent with its charter, the Committee continued its engagement of Pay Governance LLC, a compensation consulting firm, to work with the Committee and the Company as an adviser on executive compensation matters in 2019. The compensation consultant reports to, and is directed by, the Committee, which has the authority to retain or terminate compensation advisers. In early 2019, the Committee reviewed information regarding the independence and potential conflicts of interest of Pay Governance, taking into account, among other things, the factors set forth in the NASDAQ listing standards.
Based on this review, the Committee concluded that the engagement of Pay Governance did not raise any conflict of interest. Outside of services provided for the Committee and advice to the Corporate Governance Committee related to compensation of non-employee directors, the compensation consultant did not provide additional services to the Company in 2019.
Compensation Decisions
In the case of NEOs other than the CEO, our Human Resources staff develops recommendations as to the level of compensation for each pay component generally based on position scope (defined as the executive’s relative responsibilities compared to others within the Company and the individual’s potential impact on Company operations), and the individual’s experience level and performance in addition to the factors discussed under “Analysis of 2019 Pay Decisions” above. Performance criteria and goals are recommended by our Human Resources staff based on the Company’s business plan and goals, with input from the CFO and his staff. Recommendations related to the elements generally reflect a review of practices of our Peer Group and Survey Data (as defined below), and are typically designed to take into consideration past practice and our strategy to tie a greater portion of total target compensation to variable versus fixed compensation.
Each recommendation is then discussed with our CEO for feedback and to determine final recommendations. Final recommendations are reviewed with the compensation consultant and the Chair of the Committee to ensure that they are consistent with the Committee’s expectations and the Company’s compensation philosophy, and ultimately submitted to the Committee for consideration. The Committee has the ultimate right and authority to revise and/or approve recommendations of management.
Our CEO’s compensation is determined by the Committee, working directly with the compensation consultant. The Committee determines each component of our CEO’s compensation, taking into consideration our CEO’s performance as well as market and Peer Group data and other factors such as level of experience and responsibilities, leadership, skill, contributions to the Company and the size and complexity of the Company’s balance sheet and operations.
29
Risk Assessment
In approving annual and long-term incentive awards for our NEOs, the Committee assesses the risks associated with the adoption of these awards, including the performance measures and goals for the awards, and has concluded that the Company’s incentive awards would not be likely to encourage excessive risk-taking. Management also annually reviews the Company’s compensation policies and practices for employees generally with the Committee and the Company’s compensation consultant to determine whether these programs create incentives that might motivate inappropriate or excessive risk-taking. For additional information, please see “Functions and Meetings of the Board of Directors-Risk Management and Risk Assessment.”
Consideration of Peer Groups and Survey Data
Given that there is just one other U.S.-based publicly traded car rental company, peer companies are selected to supplement that company with additional companies from industry sectors that are viewed as most relevant to our business based on the following criteria: company size based on revenue as the primary factor, headcount, market capitalization, enterprise value, and debt and assets. Given our capital structure, we place a greater emphasis on enterprise value than market capitalization when developing the peer group. The Company’s peer group consists of the following 16 companies (the “Peer Group”):
|
|
AutoNation Inc.
|
|
MGM Resorts International
|
Carmax, Inc.
|
|
Norfolk Southern Corporation
|
Carnival Corporation
|
|
Office Depot, Inc.
|
Cintas Corporation
|
|
Pitney Bowes Inc.
|
Hertz Global Holdings, Inc.
|
|
RR Donnelley & Sons Company
|
Hilton Worldwide Holdings, Inc.
|
|
Royal Caribbean Cruises Ltd.
|
J.B. Hunt Transport Services, Inc.
|
|
Ryder System, Inc.
|
Marriott International, Inc.
|
|
Waste Management, Inc.
|
The Peer Group was initially approved in 2011 and reviewed in subsequent years. For 2019, the Committee made certain changes based on its annual review as further described below, including removing Wyndham Worldwide given Wyndham’s recent spin-off into two separate companies. The Committee reviewed pay data of the Peer Group, as previously discussed to ensure reasonable comparability of the pay packages of our NEOs. The Committee does not specifically target any percentile within the Peer Group when setting overall compensation, any individual element of compensation or the relative pay mix among different elements of compensation. The Committee generally reviews the Peer Group each year in order to ensure that the component companies continue to meet the criteria for which they were selected, as well as to identify other companies that may become appropriate for inclusion. The Committee recognizes that our executives have opportunities available to them in a range of industries and that any peer group for the Company will have some inherent limitations given the absence of a large sample of public companies in the vehicle rental business. In order to compare ourselves to a broad set of general industry market data available, the Committee also reviews widely-used survey data from consulting firms such as Aon Hewitt and Willis Towers Watson for companies that have revenue comparable to ours (the “Survey Data”) as another data point. The Survey Data1 represents data from over 1,000 companies sized according to revenue, assets and number of employees.
In 2019, the Committee considered the Survey Data for each element of the 2019 compensation and benefits package as a general check and to ensure reasonable comparability. Consideration of the Peer Group and the Survey Data represented just two factors considered in setting executive compensation for 2019. Please refer to “Analysis of 2019 Pay Decisions” for the other factors considered in setting executive compensation for 2019.
____________
1 While the Survey Data include a general list of participating companies, each survey provides information on a “no-names” basis-i.e., for each position comparison, it does not identify by name which companies comparable in revenue size to our Company produced results for each position matched, and thus we are unable to list the comparable companies that are included in the Survey Data utilized.
30
Committee Consideration of the Company’s 2019 Shareholder Vote on Executive Compensation
The Committee reviewed the results of the Company’s shareholder advisory vote on executive compensation (“Say on Pay”) in 2019. At the 2019 annual meeting of shareholders, 98% of the votes cast were in support of the Company’s Say on Pay proposal. Based on the 2019 Say on Pay results and feedback from shareholders, the Committee concluded that the Company’s overall compensation program as it relates to its NEOs enjoys the support of the Company’s shareholders and does not require revision to address any broad shareholder concerns.
Policy Related to Equity Awards
Our practice has been to grant long-term incentive awards at pre-established meetings of the Committee. Annual long-term incentive awards, which typically include the awards granted to all of the NEOs, are usually approved in the first quarter. However, the Committee retains the ability to determine, and has in the past determined, that another grant date may be appropriate in certain circumstances. Awards may also be approved at other Committee meetings typically for executives hired or promoted since the prior meeting. In connection with valuing the grants of stock-based awards, it is our policy generally to use, as the grant or strike price for any stock-based compensation vehicle, the closing price of our Common Stock on the date determined by the Committee as the grant date, which is typically the date the Committee approves the award. The Committee typically approves a dollar amount for each restricted unit award, which is then divided by the closing price of our Common Stock on the date of grant to arrive at the number of restricted units to be granted.
Executive Stock Ownership and Retention Guidelines
Our executive stock ownership guidelines require senior officers to acquire and hold designated levels of Avis Budget Common Stock. Under these guidelines, our CEO is required to retain 100%, and other NEOs are required to retain a minimum of 50% of the net shares (net of taxes) obtained upon the vesting of restricted stock awards and of vested stock options (if applicable), until reaching the following specified ownership thresholds:
Officer role(s)
|
|
Threshold
|
CEO
|
|
Five times base salary
|
CFO, Regional Presidents
|
|
Three times base salary
|
CHRO
|
|
Two times base salary
|
Given the mandatory hold provision until thresholds are obtained, there is no specified deadline for achieving designated thresholds. For purposes of the executive stock ownership guidelines, stock ownership is defined to include stock owned by the executive directly, stock owned indirectly through the Company’s savings plan, and the “in-the-money” portion of vested stock options. Our Interim CEO and CHRO have exceeded the applicable ownership thresholds. Our CFO and President, International have not yet attained these thresholds due to their recent appointments.
Following attainment of ownership thresholds, our NEOs are required, for a period of one year, to hold an amount equal to 50% of the net shares obtained upon the vesting of any equity award and 50% of all stock options that vest.
Employment and Change of Control Agreements; Severance Arrangements
To foster the retention of our key management team and in accordance with past practice, we have agreements with our NEOs under which the Company seeks to provide appropriate protections consistent with prevailing market practices. A more detailed description of the Company’s current agreements with our NEOs is set forth below under the heading “Employment Agreements and Other Arrangements,” and the benefits that would be received by our NEOs in the event of termination without cause or a change in control are set forth below under the heading “Termination, Severance and Change of Control Arrangements.”
Perquisites and Benefits
We seek to provide perquisites to our executives that are consistent with those provided by the general market and Peer Group companies. Our perquisites currently consist primarily of financial planning services, auto use or allowance, discounted auto insurance, auto leasing through the employee lease program and limited personal use of Company-leased aircraft services. In 2019, Mr. Servodidio, who was based in the United Kingdom, was also provided with expatriate benefits associated with a Company-requested long-term assignment to the United Kingdom, and Mr. Smith was also provided with some expatriate benefits associated with his temporary relocation to the United States from the United Kingdom. The Company does not provide tax reimbursements on perquisites for any of our NEOs other than relocation and expatriate benefits in accordance with the Company’s standard policies.
31
Employees, including our NEOs, may also receive tickets for professional baseball games held at Yankee Stadium, which are part of the Company’s season ticket subscription, and do not result in an associated incremental cost to our Company. Our ticket allocation policy is generally seniority-based, with a valid business purpose superseding any personal use. We will continue to review our compensation and benefit programs to ensure that we remain competitive with comparable companies and are able to attract and retain highly qualified senior executives.
Anti-Hedging Policy
The Company’s insider trading policy prohibits directors, executive officers and other employees required to pre-clear trades in Company securities, along with members of their families and others living in their households and investment partnerships and other entities over which they have or share voting or investment control (collectively, the “Covered Persons”) from:
• engaging in hedging and monetization transactions that permit any Covered Person to continue to own the Company’s equity securities without the full risks and rewards of ownership, including through the use of financial instruments such as prepaid variable forwards, equity swaps, collars and exchange funds;
• holding the Company’s equity securities in a margin account or otherwise pledging the Company’s equity securities as collateral for a loan;
• participating in transactions involving options in relation to the Company’s securities, such as puts, calls or other derivative securities on an exchange or in any other organized market; and
• engaging in short sales of the Company’s equity securities.
For purposes of the above, the Company’s equity securities include securities acquired by a Covered Person as part of his or her compensation or otherwise. The Third A&R Cooperation Agreement provides an exception for Mr. Sarma, a nominee under Proposal No. 1. In his capacity as an advisor, director, general partner or manager of SRS or any affiliated fund, Mr. Sarma is not prohibited from pledging or making purchases on margin of, or entering into derivative or hedging arrangements (including options) with respect to, the securities of the Company, which transactions are otherwise in compliance with applicable law and the Third A&R Cooperation Agreement.
Recoupment (Clawback) Policy
Our Board of Directors has adopted a policy that provides that if the Board learns of any intentional misconduct by an “executive officer” (as defined under Section 16 of the Exchange Act) that resulted in an increase to incentive income awarded to that officer, the Board will, to the full extent permitted by applicable law, in all appropriate cases, require reimbursement of the increased portion of incentive income awarded to that officer. We intend to amend our clawback policy, if necessary, to comply with any rules adopted by the SEC.
Compensation Committee Report
The Avis Budget Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on this review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.
THE COMPENSATION COMMITTEE
Brian J. Choi (Chair)
Mary Choksi
Jeffrey H. Fox
32
Summary Compensation Table
Name and
Principal Position
|
|
Year
|
|
Salary
($)(a)
|
|
Bonus
($)(b)
|
|
Stock
Awards
($)(c)
|
|
Option
Awards
($)
|
|
Non-Equity
Incentive Plan
Compensation
($)(d)
|
|
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)(e)
|
|
All
Other
Comp
($)(f)
|
|
Total
($)
|
Ferraro, Joseph A.
Interim CEO
|
|
2019
2018
2017
|
|
725,000
650,000
648,767
|
|
—
—
—
|
|
2,999,991
1,199,974
2,900,000
|
|
—
—
—
|
|
1,022,250
902,525
0
|
|
44,988
—
31,450
|
|
136,777
52,895
38,540
|
|
4,929,006
2,805,394
3,618,757
|
North, John F.
EVP and CFO
|
|
2019
|
|
461,538
|
|
500,000
|
|
3,999,968
|
|
—
|
|
481,007
|
|
—
|
|
279,637
|
|
5,722,150
|
Rankin, Keith
President, International
|
|
2019
|
|
294,346
|
|
253,549
|
|
2,000,031
|
|
—
|
|
0
|
|
—
|
|
166,610
|
|
2,714,536
|
Linnen, Edward P.
EVP, CHRO
|
|
2019
|
|
500,481
|
|
—
|
|
550,017
|
|
—
|
|
398,438
|
|
—
|
|
58,789
|
|
1,507,725
|
De Shon, Larry D.
Former CEO
|
|
2019
2018
2017
|
|
1,201,923
1,100,000
1,095,068
|
|
—
—
—
|
|
6,100,012
5,500,000
5,499,991
|
|
—
—
—
|
|
1,710,000
1,699,500
0
|
|
—
—
—
|
|
7,730,447
127,666
339,018
|
|
16,742,382
8,427,166
6,934,077
|
Smith, Martyn
Former Interim CFO
|
|
2019
2018
2017
|
|
500,834
575,000
386,132
|
|
—
—
—
|
|
—
—
—
|
|
—
—
—
|
|
117,654
473,800
0
|
|
31,022
3,271
—
|
|
986,241
174,654
88,731
|
|
1,635,751
1,226,725
474,863
|
Servodidio, Mark J.
Former President, International
|
|
2019
2018
2017
|
|
300,481
625,000
623,767
|
|
—
—
—
|
|
—
1,199,974
1,850,008
|
|
—
—
—
|
|
0
288,750
302,950
|
|
—
—
—
|
|
3,985,318
1,851,334
1,020,757
|
|
4,285,799
3,965,058
3,797,482
|
33
All Other Compensation Table
Name
|
|
Year
|
|
Company
Contributions
To Deferred
Compensation
Plans
($)(a)
|
|
Perquisites
($)(b)
|
|
Expatriate,
Relocation
and Other
Benefits
($)(c)
|
|
Tax
Equalization
and
Reimbursement
($)(d)
|
|
Total All Other
Compensation
($)
|
Mr. Ferraro
|
|
2019
2018
2017
|
|
96,959
11,500
—
|
|
39,081
40,658
37,831
|
|
737
737
709
|
|
—
—
—
|
|
136,777
52,895
38,540
|
Mr. North
|
|
2019
|
|
23,539
|
|
29,206
|
|
226,892
|
|
—
|
|
279,637
|
Mr. Rankin
|
|
2019
|
|
4,407
|
|
11,038
|
|
151,165
|
|
—
|
|
166,610
|
Mr. Linnen
|
|
2019
|
|
29,769
|
|
28,481
|
|
539
|
|
—
|
|
58,789
|
Mr. De Shon
|
|
2019
2018
2017
|
|
173,047
66,000
104,769
|
|
50,700
57,392
43,977
|
|
7,500,756
756
756
|
|
5,944
3,518
189,516
|
|
7,730,447
127,666
339,018
|
Mr. Smith
|
|
2019
2018
2017
|
|
—
—
—
|
|
3,932
12,843
13,853
|
|
982,309
161,811
74,878
|
|
—
—
—
|
|
986,241
174,654
88,731
|
Mr. Servodidio
|
|
2019
2018
2017
|
|
35,354
55,677
60,246
|
|
12,737
24,203
27,640
|
|
2,644,255
267,657
273,772
|
|
1,292,972
1,503,797
659,099
|
|
3,985,318
1,851,334
1,020,757
|
|
|
Mr. Smith ($)*
|
|
|
Year
|
|
Company Paid Housing
|
|
Relocation Benefits***
|
|
Other Allowances**
|
|
Total
|
|
2019
|
|
18,050
|
|
3,867
|
|
47,892
|
|
69,809
|
|
2018
|
|
68,020
|
|
—
|
|
93,139
|
|
161,159
|
|
2017
|
|
37,212
|
|
3,225
|
|
34,014
|
|
74,451
|
|
|
|
Mr. Servodidio ($)*
|
|
|
Year
|
|
Housing Allowance
|
|
Relocation Benefits
|
|
Other Allowances**
|
|
Total
|
|
2019
|
|
77,482
|
|
3,069
|
|
62,995
|
|
143,546
|
|
2018
|
|
175,097
|
|
—
|
|
91,851
|
|
266,948
|
|
2017
|
|
166,588
|
|
—
|
|
106,504
|
|
273,092
|
|
*Reflects an average monthly £/$ exchange rate as of the date paid, received or allocated.
**For Mr. Servodidio, amounts include allowances for home leave, utilities, and a goods and services differential to make up for the difference in prices between home and host locations in addition to reasonable car rental costs for his accompanying spouse while on assignment. For Mr. Smith, amount includes reimbursements for home leave to the United Kingdom.
***For Mr. Smith, amounts include destination services related to his relocation from United States to the United Kingdom. For Mr. Servodidio, amounts include destination services related to his relocation from the United Kingdom to the United States
34
Perquisites Table
Name
|
|
Year
|
|
Personal
Use of
Company
Aircraft
($)(a)
|
|
Financial
Services
($)(b)
|
|
Car
($)(c)
|
|
Total
Perquisites
($)(d)
|
Mr. Ferraro
|
|
2019
2018
2017
|
|
—
2,461
2,334
|
|
13,461
12,953
15,155
|
|
21,770
21,394
20,342
|
|
39,081
40,658
37,831
|
Mr. North
|
|
2019
|
|
—
|
|
13,255
|
|
12,101
|
|
29,206
|
Mr. Rankin
|
|
2019
|
|
—
|
|
—
|
|
11,038
|
|
11,038
|
Mr. Linnen
|
|
2019
|
|
2,642
|
|
8,759
|
|
13,230
|
|
28,481
|
Mr. De Shon
|
|
2019
2018
2017
|
|
22,798
23,926
8,694
|
|
14,302
13,703
13,226
|
|
9,750
15,913
18,207
|
|
50,700
57,392
43,977
|
Mr. Smith
|
|
2019
2018
2017
|
|
—
—
—
|
|
365
1,593
833
|
|
3,567
11,250
13,020
|
|
3,932
12,843
13,853
|
Mr. Servodidio
|
|
2019
2018
2017
|
|
—
—
—
|
|
7,112
12,953
12,540
|
|
5,625
11,250
11,250
|
|
12,737
24,203
27,640
|
CEO Pay Ratio
Based on a review of our internal records, we believe that there has not been a change in our employee population or compensation arrangements that would significantly change our pay ratio disclosure as compared to last year. Therefore, for 2019, we relied on the same median employee identified for 2017 and 2018 (the “Median Employee”) to calculate this year’s pay ratio and calculated the total annual compensation for the Median Employee applying the same methodology used for our named executive officers, as set forth in the Summary Compensation Table above. Total compensation for 2019 for our Former CEO was $16,742,382. Our Median Employee’s total compensation for 2019 was $31,083. The ratio of our CEO’s pay to the pay of our Median Employee for 2019 is 538 to 1.
Supplemental Pay Ratio Calculation Excluding Severance Payments to our Former CEO
The Summary Compensation Table includes one-time severance payments that were made to our Former CEO in addition to his salary, incentive awards and other compensation. Accordingly, we have prepared a supplemental calculation demonstrating the comparison of the compensation and ratio in which severance payments made to our Former CEO are excluded. We feel this calculation more accurately reflects the ratio of compensation of our Former CEO to the Median Employee. Total compensation for 2019 (excluding severance) for our Former CEO was $9,242,382. Based on the alternative calculation that excludes severance payments made to our Former CEO, the ratio of the annual total compensation of CEO pay to the pay of our Median Employee for 2019 is 297 to 1.
35
2019 Grants of Plan-Based Awards Table
Name
|
|
Award Type
|
|
Grant/
Approval
Date
|
|
Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards (a)
|
|
Estimated Future Payouts
Under Equity Incentive
Plan Awards (b)
|
|
All
Other
Stock
Awards
Number
of Shares
of Stock
or Units
(#)(c)
|
|
All Other
Option
Awards
Number of
Securities
Underlying
Options
(#)
|
|
Exercise
or Base
Price of
Options
Awards
($ per
share)
|
|
Grant
Date
Fair
Value of
Stock
and
Option
Awards
($)(d)
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
Threshold
(#)
|
|
Target
(#)
|
|
Maximum
(#)
|
|
Mr. Ferraro
|
|
Annual Incentive
RSU
PSU
RSU
|
|
—
3/15/2019
3/15/2019
8/7/2019
|
|
181,250
|
|
725,000
|
|
1,450,000
|
|
10,770
|
|
21,539
|
|
43,078
|
|
21,539
48,062
|
|
—
—
|
|
—
—
|
|
749,988
749,988
1,500,015
|
Mr. North
|
|
Annual Incentive
RSU
RSU
PSU
RSU
|
|
—
4/17/2019
4/17/2019
4/17/2019
8/7/2019
|
|
118,767
|
|
475,069
|
|
950,138
|
|
10,587
|
|
21,174
|
|
42,348
|
|
42,349
21,174
32,041
|
|
—
—
—
|
|
—
—
—
|
|
1,500,002
749,983
749,983
1,000,000
|
Mr. Rankin
|
|
Annual Incentive
RSU
RSU
PSU
|
|
—
8/7/2019
8/7/2019
8/7/2019
|
|
77,335
|
|
309,338
|
|
618,676
|
|
12,016
|
|
24,031
|
|
48,062
|
|
16,021
24,031
|
|
—
—
|
|
—
—
|
|
500,015
750,008
750,008
|
Mr. Linnen
|
|
Annual Incentive
RSU
PSU
|
|
—
3/15/2019
3/15/2019
|
|
93,750
|
|
375,000
|
|
750,000
|
|
2,370
|
|
4,739
|
|
9,478
|
|
11,057
|
|
—
|
|
—
|
|
385,005
165,012
|
Mr. De Shon
|
|
Annual Incentive
RSU
PSU
|
|
—
3/15/2019
3/15/2019
|
|
450,000
|
|
1,800,000
|
|
3,600,000
|
|
52,556
|
|
105,112
|
|
210,224
|
|
70,075
|
|
—
|
|
—
|
|
2,440,012
3,660,000
|
Mr. Smith
|
|
Annual Incentive
|
|
—
|
|
38,072
|
|
154,808
|
|
309,616
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36
Outstanding Equity Awards at Fiscal Year-End Table
|
|
|
|
Option Awards
|
|
Stock Awards(a)
|
Name
|
|
Grant
Date
|
|
Number of
Securities
Underlying
Unexercised
Options
(#) Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options
(#) Unexercisable
|
|
Equity
Incentive Plan
Awards:
Number of
Securities
Underlying
Unexercisable
Unearned
Options
(#)
|
|
Options
Exercise
Price
($)
|
|
Options
Expiration
Date
|
|
Number
of
Shares
or Units
of Stock
That Have
Not
Vested
(#)
|
|
Market
Value of
Shares or
Units of
Stock
That Have
Not
Vested
($)
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#)
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That Have
Not Vested
($)
|
Mr. Ferraro
|
|
8/7/2019
3/15/2019
3/15/2018
3/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
48,062 (b)
21,539 (c)
8,210 (d)
5,813 (e)
|
|
1,549,519
694,417
264,690
187,411
|
|
21,539 (h)
12,315 (i)
17,437 (j)
|
|
694,417
397,036
526,169
|
Mr. North
|
|
8/7/2019
4/17/2019
|
|
|
|
|
|
|
|
|
|
|
|
32,041 (b)
63,523 (f)
|
|
1,033,002
2,047,982
|
|
21,174 (l)
|
|
682,650
|
Mr. Rankin
|
|
8/7/2019
|
|
|
|
|
|
|
|
|
|
|
|
40,052 (b)
|
|
1,291,276
|
|
24,031 (m)
|
|
774,759
|
Mr. Linnen
|
|
3/15/2019
3/15/2018
3/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
11,057 (c)
4,790 (d)
3,391 (e)
|
|
356,478
154,430
109,326
|
|
4,739 (h)
3,079 (i)
4,359 (k)
|
|
152,785
99,267
140,534
|
Mr. De Shon
|
|
3/15/2019
3/15/2018
3/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
70,075 (c)
30,104 (d)
21,312 (e)
|
|
2,259,218
970,553
687,099
|
|
67,734 (i)
95,902 (j)
|
|
2,183,744
3,091,880
|
Mr. Servodidio
|
|
3/15/2018
3/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,315 (i)
17,437 (j)
|
|
397,036
562,169
|
|
|
Award
|
|
Scheduled Vesting
|
(b)
|
|
RSUs
|
|
August 7, 2021. For Mr. Rankin, 16,021 units will vest on August 7, 2021 and 24,031 units will vest in three equal installments on August 7, 2020, 2021 and 2022.
|
(c)
|
|
RSUs
|
|
Three equal installments on March 15, 2020, 2021 and 2022. For Mr. De Shon, the units were accelerated in January 2020.
|
(d)
|
|
RSUs
|
|
Two equal installments on March 15, 2020 and 2021. For Mr. De Shon, units were accelerated in January 2020.
|
(e)
|
|
RSUs
|
|
March 1, 2020.
|
(f)
|
|
RSUs
|
|
Three equal installments on April 17, 2020, 2021 and 2022.
|
(g)
|
|
|
|
Intentionally left blank
|
(h)
|
|
PSUs
|
|
March 15, 2022 based on three-year cumulative Adjusted EBITDA performance.
|
(i)
|
|
PSUs
|
|
March 15, 2021 based on three-year cumulative Adjusted EBITDA performance.
|
(j)
|
|
PSUs
|
|
March 1, 2020 based on Adjusted EBITDA Margin performance during the three-year performance period. These awards were forfeited as performance goals were not met.
|
(k)
|
|
PSUs
|
|
March 1, 2020 based on three-year cumulative Adjusted EBITDA performance.
|
(l)
|
|
PSUs
|
|
April 17, 2022 based on three-year cumulative Adjusted EBITDA performance.
|
(m)
|
|
PSUs
|
|
August 7, 2022 based on three-year cumulative Adjusted EBITDA performance.
|
37
2019 Option Exercises and Stock Vested Table
|
|
Option Awards
|
|
Stock Awards
|
Name
|
|
Number of
Shares
Acquired on
Exercise
(#)
|
|
Value
Realized
on Exercise
($)
|
|
Number of
Shares
Acquired on
Vesting
(#)(a)
|
|
Value
Realized
on Vesting
($)
|
Mr. Ferraro
|
|
—
|
|
—
|
|
33,116
|
|
1,206,997
|
Mr. Linnen
|
|
—
|
|
—
|
|
17,293
|
|
530,967
|
Mr. De Shon
|
|
—
|
|
—
|
|
47,956
|
|
1,600,789
|
Mr. Servodidio
|
|
—
|
|
—
|
|
31,040
|
|
1,032,923
|
Pension Benefits Table
Name
|
|
Plan Name (a)
|
|
Number of Years of
Credited Service
(#)(a)
|
|
Present Value
of Accumulated
Benefit
($)(a)
|
|
Payments
During Last
Fiscal Year
($)
|
Mr. Ferraro
|
|
Avis Rent A Car System, LLC Pension Plan
|
|
21 years, 1 month
|
|
420,690
|
|
—
|
Mr. Smith
|
|
Avis UK Pension Plan (b)
|
|
3 years, 6 months
|
|
220,457
|
|
7,928
|
Non-qualified Deferred Compensation Table
Name
|
|
Executive
Contributions
in Last FY
($)(a)
|
|
Registrant
Contributions
in Last FY
($)(b)
|
|
Aggregate
Earnings
in Last FY
($)(c)
|
|
Aggregate
Withdrawals/
Distributions
($)(d)
|
|
Aggregate
Balance at
Last FYE
($)(e)
|
Mr. Ferraro
|
|
96,959
|
|
96,959
|
|
28,240
|
|
—
|
|
222,158
|
Mr. De Shon
|
|
173,047
|
|
173,047
|
|
471,924
|
|
—
|
|
3,496,770
|
Mr. Servodidio
|
|
35,354
|
|
35,354
|
|
163,894
|
|
—
|
|
748,575
|
Mr. Linnen
|
|
49,615
|
|
29,769
|
|
31,552
|
|
—
|
|
181,058
|
Mr. North
|
|
23,539
|
|
23,539
|
|
4,250
|
|
—
|
|
51,327
|
38
Employment Agreements and Other Arrangements
Each NEO has a written agreement with the Company, as summarized below and discussed under “Employment and Change of Control Agreements; Severance Arrangements.”
Former CEO
In May 2019, Mr. De Shon entered into a Separation and Consulting Agreement with the Company. Pursuant to the terms of Mr. De Shon’s employment agreement with the Company, the Separation Agreement provides for cash severance in the amount of $6,000,000 and that stock-based awards scheduled to vest by the two-year anniversary of the separation date will immediately vest following the separation date; provided that any such awards that vest based on the achievement of specific objective performance goals will not vest in full, but will remain outstanding and become vested or forfeited as provided in accordance with the terms and conditions of the applicable award agreement. The Separation Agreement also provides continuation of certain specified perquisites for two years as well as certain health benefits and tax services related to Mr. De Shon’s assignment in the United Kingdom from 2011 to 2015. Under the terms of the Separation Agreement, Mr. De Shon received an additional cash severance payment of $1,500,000, an additional 23,359 RSUs, granted in 2019, were accelerated following separation, and Mr. De Shon entered into certain post-termination restrictive covenants, including non-disparagement. The Separation Agreement also provides for a one-year post-employment consulting arrangement with aggregate consulting fees of $1.0 million. Mr. De Shon’s consulting fees will be paid in full if the consulting arrangement is terminated by the Company for any reason other than for “cause” or due to death or disability.
Former President, International
In March 2019, the Company entered into a Separation Agreement with Mr. Servodidio in connection with his separation from the Company, which became effective on June 14, 2019. Previously, Mr. Servodidio was party to a severance agreement on substantially the same terms as described below for other NEOs (the “Prior Agreement”). The Separation Agreement generally provides for severance in accordance with the Prior Agreement, subject to a release condition and continuation of restricted covenants for 24 months post-separation, including non-competition and non-solicitation.
Former Interim CFO
In June 2017, the Company entered into a letter agreement with Mr. Smith in connection with his appointment as Interim CFO. In addition to providing for a minimum base salary of $575,000 and benefits generally available to our executive officers, including expatriate benefits, Mr. Smith’s agreement provides for an annual incentive award with a target amount equal to 80% of his base salary for any portion of any year in which he holds the Interim CFO role, subject to attainment of performance goals. In February 2019, Mr. Smith’s agreement was amended to provide that for a period of six months following Mr. Smith’s resignation from the Interim CFO role, Mr. Smith will provide transition and advisory services and will continue to be paid his current base salary. At the end of his period of employment, Mr. Smith was also entitled to
39
a cash payment of $912,500, upon execution of a release of claims to include post-termination restrictive covenants. In September 2019, Mr. Smith’s agreement was further amended through January 2020 so that Mr. Smith could continue to provide advisory services at a rate that was 50% of the base salary provided in the agreement.
Other NEOs
Each of our other NEOs currently employed by the Company is party to a severance agreement with the Company, which provides that if the executive’s employment is terminated by us other than for “Cause” (as described below), disability or death, he will receive a lump-sum severance payout equal to 200% of the sum of base salary plus target incentive bonus, and perquisites to include, if applicable, car usage and financial planning for a period of up to 24 months. In addition, for our NEOs (other than our CHRO) in connection with such termination, each agreement also generally provides for accelerated vesting on termination of the stock-based awards which would have vested in accordance with their original vesting schedule by the two-year anniversary of termination of employment. However, awards that vest based on the achievement of specified objective performance goals will remain outstanding following such termination and become vested or be forfeited based on actual achievement of the applicable performance goals during the two-year period following such termination. Severance is contingent upon execution of a separation agreement containing a release of claims against the Company and non-competition covenants.
Mr. Rankin is also party to an employment agreement under English law, which provides customary terms and conditions for employment in the United Kingdom, including non-competition and confidentiality provisions. In addition, Mr. North received an offer letter in connection with his commencement of employment, which set out his compensation described in the CD&A under “Pay Decisions Related to 2019 Management Changes,” as well as perquisites as set forth in the Summary Compensation Table.
As noted above, no NEO is entitled to any tax gross-up or other payments for any “golden parachute” excise taxes, interest or penalties.
Definition of Cause
For all our NEOs, “cause” is defined in the agreement for each NEO and generally includes the willful failure to substantially perform duties, any act of fraud, embezzlement or similar conduct and conviction of a felony.
Discussion of Change-in-Control Provisions
Equity Awards
The Company’s Amended and Restated Equity and Incentive Plan (the “Equity Plan”) generally provides that equity awards accelerate following a Change in Control (as defined in the Equity Plan) of the Company only if a participant is also terminated without cause or experiences a Constructive Discharge (as defined in the Equity Plan) within two years following a Change in Control. Under the Equity Plan:
“Change in Control” is generally defined as (a) any person or entity is or becomes the “beneficial owner” of 50% or more of the combined voting power of the Company’s then outstanding voting securities; (b) a change in the majority of the members of the Board unless approved or recommended by a vote of at least a majority of the directors then still in office; (c) there is a merger or consolidation of the Company (other than when 50% or more of the voting power remains the same or a recapitalization where no person owns more than 50% of the voting power); or (d) shareholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is a sale or disposition by the Company, of all or substantially all of the Company’s assets; and
“Constructive Discharge” is generally defined as set forth in a grantee’s employment agreement, or if no agreement or definition exists it is defined as: (a) a material reduction in base compensation, (b) a material adverse change in the nature or status of duties or responsibilities, or (c) a relocation of more than 30 miles from the principal place of employment.
Severance
Potential severance payments are described above, none of which are payable solely due to a Change in Control (as defined above).
40
Termination, Severance and Change of Control Arrangements
The table and narrative below describes the potential severance payments for each NEO, as of December 31, 2019.
Name and Triggering Event(a)
|
|
Lump-Sum
Severance
Payment
($)(b)
|
|
Accelerated
Vesting of
Stock-based
Awards
($)(c)
|
|
Continuation
of Benefits
and
Perquisites
($)(d)
|
|
Total
($)
|
Mr. Ferraro
|
|
|
|
|
|
|
|
|
Resignation or Termination by Company for Cause
|
|
—
|
|
—
|
|
—
|
|
—
|
Termination due to Death or Disability
|
|
1,022,250
|
|
4,349,660
|
|
|
|
5,371,910
|
Termination by Company without Cause
|
|
3,000,000
|
|
3,423,759
|
|
93,269
|
|
6,517,028
|
Change of Control Transaction and Termination by Company without Cause or due to a Constructive Discharge
|
|
3,000,000
|
|
4,349,660
|
|
93,269
|
|
7,442,929
|
Change of Control Transaction without Termination
|
|
—
|
|
—
|
|
—
|
|
—
|
Mr. North
|
|
|
|
|
|
|
|
|
Resignation or Termination by Company for Cause
|
|
—
|
|
—
|
|
—
|
|
—
|
Termination due to Death or Disability
|
|
481,007
|
|
3,763,633
|
|
—
|
|
4,244,640
|
Termination by Company without Cause
|
|
2,400,000
|
|
2,398,301
|
|
46,594
|
|
4,844,895
|
Change of Control Transaction and Termination by Company without Cause or due to Constructive Discharge
|
|
2,400,000
|
|
3,763,633
|
|
46,594
|
|
6,210,227
|
Change of Control Transaction without Termination
|
|
—
|
|
—
|
|
—
|
|
—
|
Mr. Rankin
|
|
|
|
|
|
|
|
|
Resignation or Termination by Company for Cause
|
|
—
|
|
—
|
|
—
|
|
—
|
Termination due to Death or Disability
|
|
—
|
|
2,066,036
|
|
—
|
|
2,066,036
|
Termination by Company without Cause
|
|
2,121,172
|
|
1,033,002
|
|
58,718
|
|
3,212,892
|
Change of Control Transaction and Termination by Company without Cause or due to a Constructive Discharge
|
|
2,121,172
|
|
2,066,036
|
|
58,718
|
|
4,245,926
|
Change of Control Transaction without Termination
|
|
—
|
|
—
|
|
—
|
|
—
|
Mr. Linnen
|
|
|
|
|
|
|
|
|
Resignation or Termination by Company for Cause
|
|
—
|
|
—
|
|
—
|
|
—
|
Termination due to Death or Disability
|
|
398,438
|
|
1,012,820
|
|
—
|
|
1,411,258
|
Termination by Company without Cause
|
|
1,750,000
|
|
—
|
|
39,660
|
|
1,789,660
|
Change of Control Transaction and Termination by Company without Cause or due to a Constructive Discharge
|
|
1,750,000
|
|
1,012,820
|
|
39,660
|
|
2,802,480
|
Change of Control Transaction without Termination
|
|
—
|
|
—
|
|
—
|
|
—
|
Mr. De Shon
|
|
|
|
|
|
|
|
|
Resignation or Termination by Company for Cause
|
|
—
|
|
—
|
|
—
|
|
|
Termination due to Death or Disability
|
|
1,800,000
|
|
9,192,494
|
|
29,263
|
|
11,021,757
|
Termination by Company without Cause or due to Constructive Discharge
|
|
7,500,000
|
|
9,192,494
|
|
70,272
|
|
16,762,766
|
Change of Control Transaction and Termination by Company without Cause or due to Constructive Discharge
|
|
7,500,000
|
|
9,192,494
|
|
70,272
|
|
16,762,766
|
Change of Control Transaction without Termination
|
|
—
|
|
—
|
|
—
|
|
|
41
42
Director Compensation
Non-employee directors are compensated for their service on the Board as described below.
Annual Compensation
For 2019, our directors received an annual director retainer of $225,000. To reflect their additional responsibilities, the Chairman of the Board and the chairs and members of the Audit, Compensation, Corporate Governance and Executive Committees received additional annual retainers. The current rates of these retainers are set forth below.
|
|
Annual Retainers
($)
|
|
|
Chairman of the Board
|
|
125,000
|
|
|
Audit Committee Chair
|
|
25,000
|
|
|
Audit Committee Member
|
|
12,500
|
|
|
Compensation Committee Chair
|
|
25,000
|
|
|
Compensation Committee Member
|
|
12,500
|
|
|
Corporate Governance Committee Chair
|
|
18,000
|
|
|
Corporate Governance Committee Member
|
|
9,000
|
|
|
Executive Committee Member
|
|
9,000
|
|
|
In
2019, the Board established an ad hoc Strategy Committee to assist the Board with oversight of the Company’s long-term
strategy. Chair and member retainers for the Strategy Committee are the same as for the Corporate Governance Committee. For
2019, Strategy Committee members who received such retainers included Mr. Sparks (Chair),
Mr. Lurie and Mr. Salerno.
In 2019, the annual retainers, committee chair stipends and committee membership stipends (collectively, “Director Fees”) were paid 50% in cash and 50% in equity, subject to a cap of 30,000 shares. Cash payments are paid quarterly and the equity portion is awarded annually and generally vests on the one-year anniversary of the date of grant. Under the Company’s deferred compensation plan applicable to non-employee directors (the “NED Plan”), Directors may elect to defer all or a portion of their Director Fees. Directors who elect to defer Director Fees payable in cash may choose from various investment choices similar to those available to the NEOs under our executive deferred compensation plan or may elect to receive an increased equity award in lieu of some or all of such cash fees.
Under the NED Plan, the equity portion of director compensation is automatically deferred into the form of deferred stock units. Such units convert on a one-on-one basis into the Company’s Common Stock upon termination of service, a change in control, or at a different time based on a director’s election. In lieu of automatic deferral, directors may elect to receive the equity portion of their compensation in the form of the Company’s Common Stock.
Directors do not receive any meeting fees or any benefits such as life or medical insurance. Any member of the Board who is also an officer or employee of our Company does not receive compensation for serving as a director, other than reimbursement of travel-related expenses for meetings held outside the Company’s headquarters. Directors are eligible for limited matching of charitable contributions through the Avis Budget Group Charitable Foundation. Directors are also eligible to purchase vehicles through the auto lease program we make available to our employees; however, such purchases do not result in an associated incremental cost to the Company.
43
Stock Ownership Guidelines
Minimum stock ownership guidelines require each non-employee director to acquire and hold designated levels of our Company’s Common Stock. Under these guidelines, our non-employee directors are required to retain a minimum of 50% of the net shares (net of taxes) awarded in connection with their director compensation, until reaching an ownership threshold of five times the annual cash retainer. Given the mandatory hold provision until the threshold is obtained, there is no specified deadline for achieving designated thresholds. Under these guidelines, stock ownership is defined to include stock owned by the director directly, stock owned indirectly through the NED Plan, and the “in-the-money” portion of vested stock options, if any. As of December 31, 2019, all current directors with more than five years of Board service who receive compensation for Board service had exceeded such minimum ownership threshold. Mr. Choi and Mr. Pahwa have each elected not to receive compensation for Board service. In addition, SRS’s policies do not allow either Mr. Choi or Mr. Pahwa to own any shares of the Company’s Common Stock, and they are therefore not subject to the Company’s stock ownership guidelines.
2019 Director Compensation Table
Name of Director
|
|
Fees Earned
or
Paid In Cash ($)(a)
|
|
Stock Awards
($)(b)
|
|
Change in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)
|
|
All Other
Compensation
($)(c)
|
|
Total
($)
|
Choi, Brian J. (d)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Choksi, Mary C.
|
|
125,000
|
|
124,998
|
|
—
|
|
5,000
|
|
254,998
|
Coleman, Leonard S.
|
|
190,250
|
|
190,252
|
|
—
|
|
5,000
|
|
385,502
|
Fox, Jeffrey H.
|
|
118,750
|
|
118,744
|
|
—
|
|
5,000
|
|
242,494
|
Krominga, Lynn
|
|
127,750
|
|
127,753
|
|
—
|
|
5,000
|
|
260,503
|
Lurie, Glenn
|
|
123,250
|
|
123,266
|
|
—
|
|
5,000
|
|
251,516
|
Mestre, Eduardo G. (e)
|
|
—
|
|
90,374
|
|
—
|
|
5,000
|
|
95,374
|
Pahwa, Jagdeep (d)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Salerno, F. Robert (f)
|
|
133,242
|
|
127,753
|
|
—
|
|
5,000
|
|
265,995
|
Shammo, Francis J.
|
|
125,000
|
|
124,998
|
|
—
|
|
5,000
|
|
254,998
|
Sparks, Carl
|
|
127,750
|
|
127,753
|
|
—
|
|
5,000
|
|
260,503
|
Viswanathan, Sanoke
|
|
112,500
|
|
112,491
|
|
—
|
|
5,000
|
|
229,991
|
44
|
|
Avis Rent A Car System, LLC Pension Plan
|
|
$
|
40,597
|
Avis Rent A Car System, LLC Retirement Equalization Benefit Plan
|
|
$
|
59,075
|
Compensation Committee Interlocks and Insider Participation
Our Compensation Committee is comprised entirely of independent directors and administers the Company’s executive compensation policies and programs. Brian J. Choi and Jeffrey H. Fox were appointed to the Compensation Committee in January 2016 and Mary Choksi was appointed to the Compensation Committee in May 2018. None of these Directors were officers or employees of the Company or any of the Company’s subsidiaries or had any relationship requiring disclosure by the Company under Item 404 of the SEC’s Regulation S-K during 2019 or before.
45
Report of Audit Committee
Management has the primary responsibility for the financial statements and the reporting process, including the system of internal controls. The independent auditors are responsible for performing an independent audit of the Company’s consolidated financial statements and opining on the effectiveness of the Company’s controls in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”) and issuing their reports thereon.
In performing its oversight function, the Audit Committee reviewed and discussed the consolidated financial statements with management and the independent auditors. The Audit Committee also discussed with the independent auditors the matters required to be discussed under the rules adopted by the PCAOB and the SEC.
In addition, the Audit Committee discussed with the independent auditors the auditors’ independence from the Company and its management, and the independent auditors provided to the Audit Committee the written disclosures and letter required from the independent auditors by applicable requirements of the PCAOB.
The Audit Committee discussed with the Company’s internal and independent auditors the overall scope and plans for their respective audits. The Audit Committee met with the internal and independent auditors, with and without management present, to discuss the results of their examinations and the evaluations of the Company’s internal controls.
Based on the reviews and discussions referred to above and subject to the limitations on the roles and responsibilities of the Audit Committee referred to above and in its Charter, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 for filing with the SEC. The Audit Committee also has recommended the selection of the Company’s independent registered public accounting firm for fiscal year 2020.
THE AUDIT COMMITTEE
Lynn Krominga, Interim Chair
Glenn Lurie
F. Robert Salerno
Carl Sparks
46
Proposal No. 2
Ratification of Appointment of Auditors
The Audit Committee’s Charter provides that the Audit Committee is responsible for:
• appointing, compensating and overseeing the work performed by our independent auditors related to the audit of our annual consolidated financial statements and internal controls over financial reporting; and
• evaluating the qualifications, performance and independence of our independent auditors with the assistance of management.
The Audit Committee has appointed Deloitte & Touche LLP (“Deloitte”) as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020. Deloitte has served as our independent registered public accounting firm since 1997. Prior to appointing Deloitte for 2020, the Audit Committee considered Deloitte’s tenure, technical expertise, capabilities as independent auditors, industry knowledge and communication with the Audit Committee, and also considered the impact on the Company of changing independent auditors.
The lead engagement partner from Deloitte is required to be rotated every five years. The process for selecting a new lead engagement partner includes a meeting between the Chair of the Audit Committee and the candidate for this role, as well as discussion by the full Audit Committee and with senior management.
A representative of Deloitte is expected to be present at the Meeting and will have the opportunity to make a statement if he or she desires to do so and will be available to respond to appropriate questions of shareholders.
Principal Accounting Firm Fees. Fees billed to the Company by Deloitte, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates (collectively, the “Deloitte Entities”) for the years ended December 31, 2019 and 2018 were as follows:
|
|
Fee
(in thousands)
|
Type of Fees
|
|
2019
|
|
2018
|
Audit Fees
|
|
$
|
7,822
|
|
$
|
8,203
|
Audit-Related Fees
|
|
$
|
173
|
|
$
|
393
|
Tax Fees
|
|
$
|
3,033
|
|
$
|
3,316
|
All Other Fees
|
|
$
|
—
|
|
$
|
—
|
Audit Fees. The aggregate audit fees primarily relate to the audit of the Company’s annual consolidated financial statements for the fiscal years ended December 31, 2019 and 2018 and for the reviews of the consolidated condensed financial statements included in the Company’s Quarterly Reports on Form 10-Q and for other attest services, including services related to regulatory and statutory filings and financings.
Audit-Related Fees. The aggregate audit-related fees for 2019 and 2018 primarily relate to services in connection with potential transactions or investments and audits of employee benefit plans.
Tax Fees. The aggregate fees billed for tax services for the fiscal years ended December 31, 2019 and 2018 relate to tax compliance, tax advice and tax planning. For the fiscal year ended December 31, 2019, approximately $1.6 million of such fees related to tax compliance and approximately $1.4 million related to tax advice and tax planning. For the fiscal year ended December 31, 2018, approximately $1.6 million of such fees related to tax compliance and approximately $1.7 million related to tax advice and tax planning.
All Other Fees. There were no other fees for the fiscal year ended December 31, 2019 or December 31, 2018.
The Audit Committee considered the non-audit services provided by the Deloitte Entities and determined that the provision of such services was compatible with maintaining the Deloitte Entities’ independence. The Audit Committee has also adopted a policy prohibiting the Company from hiring the Deloitte Entities’ personnel who have been directly involved in performing auditing procedures or providing accounting advice to the Company within a specified period of time in any role in which such person would be in a position to influence the contents of the Company’s consolidated financial statements.
47
The Audit Committee has established a policy for the pre-approval of all audit and permissible non-audit services to be provided by the independent registered public accounting firm, as described below.
All services performed by the independent registered public accounting firm in 2019 were pre-approved in accordance with the pre-approval policy and procedures adopted by the Audit Committee. This policy describes the permitted audit, audit-related, tax and other services (collectively, the “Disclosure Categories”) that the independent registered public accounting firm may perform. Prior to the beginning of each fiscal year, a description of the services (the “Service List”) anticipated to be performed by the independent registered public accounting firm in each of the Disclosure Categories in the ensuing fiscal year is presented to the Audit Committee for approval.
Any requests for audit, audit-related, tax and other services not contemplated by the Service List must be submitted to the Audit Committee for specific pre-approval, except for de minimis amounts under certain circumstances as described below, and cannot commence until such approval has been granted. Normally, pre-approval is provided at regularly scheduled meetings of the Audit Committee. However, the authority to grant specific pre-approval between meetings, as necessary, has been delegated to the Chairman of the Audit Committee. The Chairman will update the full Audit Committee no later than the next regularly scheduled meeting for any interim approvals granted.
On a quarterly basis, the Audit Committee reviews the status of services and fees incurred year-to-date as compared to the original Service List and the forecast of remaining services for the fiscal year.
The policy contains a de minimis provision that operates to provide retroactive approval for permissible non-audit services under certain circumstances.
Although not required by the Company’s By-laws or otherwise, the Board of Directors is submitting for shareholder ratification the selection of Deloitte as the Company’s independent registered public accounting firm. If the selection is not ratified, the Audit Committee will consider whether it is appropriate to select another independent registered public accounting firm.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE “FOR” THE RATIFICATION OF DELOITTE & TOUCHE LLP
AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR THE FISCAL
YEAR ENDING DECEMBER 31, 2020.
48
Proposal No. 3
Advisory Approval Of Executive Compensation
As required by Section 14A of the Exchange Act, the Company is asking its shareholders to approve an advisory resolution to approve the compensation of our named executive officers as follows:
“RESOLVED, that the compensation paid to the Company’s named executive officers as disclosed pursuant to the compensation rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables and any related material disclosed in this Proxy Statement, is hereby APPROVED.”
This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers, as described in this Proxy Statement.
This vote is advisory and, therefore, will not be binding on the Company, the Compensation Committee or our Board of Directors, nor will it overrule any prior decision or require the Board or the Compensation Committee to take any action. However, the Compensation Committee and our Board of Directors value the opinions of our shareholders, and to the extent there is any significant vote against the named executive officer compensation as disclosed in this Proxy Statement, the Compensation Committee and our Board of Directors will consider shareholders’ concerns and the Compensation Committee will evaluate whether any actions are necessary to address those concerns.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR”
THE APPROVAL OF THE RESOLUTION SET FORTH ABOVE.
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Shareholder Proposals for 2021 Annual Meeting
Proposals received from shareholders are given careful consideration by the Company. Shareholder proposals submitted in accordance with Rule 14a-8 under the Exchange Act are eligible for consideration for inclusion in the Company’s proxy statement for the 2021 annual meeting of shareholders if they are received by the Company on or before November 26, 2020. Any proposal should be directed to the attention of the Corporate Secretary, Avis Budget Group, Inc., 6 Sylvan Way, Parsippany, N.J. 07054. In order for a shareholder proposal submitted outside of Rule 14a-8 to be considered at the 2021 annual meeting of shareholders, such proposal must be received by the Company not later than the last date for submission of shareholder proposals under the By-laws). In order for a proposal (other than nominations of directors) to be timely under the By-laws, it must be received not less than sixty days (i.e., March 8, 2021) nor more than ninety days (i.e., February 6, 2021) before the anniversary date of the immediately preceding annual meeting of shareholders. In order for a director nomination to be timely under the By-laws, it must be received not less than ninety days (i.e., February 6, 2021) before the anniversary date of the immediately preceding annual meeting of shareholders. However, in the event that the annual meeting of shareholders is called for a date that is not within twenty-five days before or after the anniversary date of the immediately preceding annual meeting of shareholders, notice of a shareholder proposal in order to be timely must be received not later than the close of business on the tenth day following the day on which notice of the date of the annual meeting of shareholders was mailed or public disclosure of the date of the annual meeting of shareholders was made, whichever occurs first.
Additional Information
Additional Copies. If you share an address with other shareholders of the Company, you may receive a single copy of the proxy materials (including a copy of the Proxy Statement and the 2019 Annual Report), unless your bank, broker or other intermediary that provides the notification receives contrary instructions from the affected shareholders. This practice, permitted under SEC rules and commonly referred to as “householding,” is designed to provide extra convenience for shareholders and potential cost savings for companies.
If, at any time, you no longer wish to participate in householding and would prefer to receive a separate set of proxy materials, please notify your broker if your shares of Common Stock are held in a brokerage account or the Company if you hold registered shares of Common Stock. We will promptly deliver a separate copy of the proxy materials upon request. You can notify the Company by sending a written request to Avis Budget Group, Inc., 6 Sylvan Way, Parsippany, N.J. 07054, Attention: Corporate Secretary or by calling (973) 496-4700 and selecting the “Investor Relations” option.
Solicitation of Proxies. The accompanying form of proxy is being solicited on behalf of the Board of Directors of the Company. The expenses of solicitation of proxies for the Meeting will be paid by the Company. In addition to the mailing of the proxy materials, such solicitation may be made in person or by telephone by directors, officers and employees of the Company, who will receive no additional compensation therefor. Upon request, the Company will reimburse brokers, dealers, banks and trustees, or their nominees, for reasonable expenses incurred by them in forwarding material to beneficial owners of Common Stock. The Company has hired Innisfree M&A Incorporated to aid in the solicitation of proxies. It is estimated that the fee for Innisfree M&A Incorporated will receive a fee of up to $15,000 plus the reimbursement of reasonable out-of-pocket costs and expenses. Such fee will be paid by the Company.
By Order of the Board of Directors
JEAN M. SERA
Corporate Secretary
Dated: March 26, 2020
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