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|
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Ownership of Our Common Stock
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|
|
|
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|
|
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|
Robin Kramer
(12)
|
17,834
|
|
**
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|
|
Thomas Kennedy
(12)
|
118,976
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|
**
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|
|
Tyler Best
(12)
|
68,670
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**
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|
All directors and executive officers as a group
(9)
|
262,528
|
|
**
|
|
**Less than 1%.
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(1)
|
Represents shares held by the following group of entities associated with Mr. Carl C. Icahn: High River Limited Partnership (“High River”), Hopper Investments LLC (“Hopper”), Barberry Corp. (“Barberry”), Icahn Partners Master Fund LP (“Icahn Master”), Icahn Offshore LP (“Icahn Offshore”), Icahn Partners LP (“Icahn Partners”), Icahn Onshore LP (“Icahn Onshore”), Icahn Capital LP (“Icahn Capital”), IPH GP LLC (“IPH”), Icahn Enterprises Holdings L.P. (“Icahn Enterprises Holdings”), Icahn Enterprises G.P. Inc. (“Icahn Enterprises GP”) and Beckton Corp. (“Beckton”). The principal business address of each of (i) High River, Hopper, Barberry, Icahn Offshore, Icahn Partners, Icahn Master, Icahn Onshore, Icahn Capital, IPH, Icahn Enterprises Holdings, Icahn Enterprises GP and Beckton is White Plains Plaza, 445 Hamilton Avenue — Suite 1210, White Plains, NY 10601, and (ii) Carl Icahn is c/o Icahn Associates Holding LLC, 767 Fifth Avenue, 47th Floor, New York, NY 10153. Each of Hopper, Barberry and Carl Icahn, by virtue of their relationships to High River, may be deemed to indirectly beneficially own the shares which High River directly beneficially owns. Each of Hopper, Barberry and Carl Icahn disclaims beneficial ownership of such shares for all other purposes. Each of Icahn Offshore, Icahn Capital, IPH, Icahn Enterprises Holdings, Icahn Enterprises GP, Beckton and Carl Icahn, by virtue of their relationships to Icahn Master, may be deemed to indirectly beneficially own the shares which Icahn Master directly beneficially owns. Each of Icahn Offshore, Icahn Capital, IPH, Icahn Enterprises Holdings, Icahn Enterprises GP, Beckton and Carl Icahn disclaims beneficial ownership of such shares for all other purposes. Each of Icahn Onshore, Icahn Capital, IPH, Icahn Enterprises Holdings, Icahn Enterprises GP, Beckton and Carl Icahn, by virtue of their relationships to Icahn Partners, may be deemed to indirectly beneficially own the Shares which Icahn Partners directly beneficially owns. Each of Icahn Onshore, Icahn Capital, IPH, Icahn Enterprises Holdings, Icahn Enterprises GP, Beckton and Carl Icahn disclaims beneficial ownership of such shares for all other purposes. The immediately preceding information in this footnote is based solely on the Schedule 13D/A filed with the SEC on March 5, 2019 by Carl Icahn and entities associated with Carl Icahn.
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(2)
|
A report on Schedule 13G/A, filed February 8, 2019, disclosed that Dimensional Fund Advisors LP, an investment adviser, was the beneficial owner of 7,114,841 shares of common stock as of December 31, 2018. Dimensional Fund Advisors LP has reported that it has (i) sole power to vote or direct the vote of 6,951,610 shares of common stock, (ii) sole power to dispose of or direct the disposition of 7,114,841 shares of common stock, (iii) shared power to vote or direct the vote of 0 shares of common stock and (iv) shared power to dispose of or to direct the disposition of 0 shares of common stock. The address of Dimensional Fund Advisors LP is Building One, 6300 Bee Cave Road, Austin, Texas 78746. All information regarding Dimensional Fund Advisors LP is based on that entity’s report on Schedule 13G/A, filed with the SEC on February 8, 2019.
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(3)
|
A report on Schedule 13G/A, filed February 14, 2019, disclosed that PAR Investment Partners, L.P., an investment adviser, and its affiliates were the beneficial owner of 5,888,576 shares of common stock as of December 31, 2018. PAR Investment Partners, L.P. has reported that it has (i) sole power to vote or direct the vote of 5,888,576 shares of common stock, (ii) sole power to dispose of or direct the disposition of 5,888,576 shares of common stock, (iii) shared power to vote or direct the vote of 0 shares of common stock and (iv) shared power to dispose of or to direct the disposition of 0 shares of common stock. The address of PAR Investment Partners, L.P. is 200 Clarendon Street, Floor 48, Boston, MA 02116. All information regarding PAR Investment Partners, L.P. is based on that entity’s report on Schedule 13G/A, filed with the SEC on February 14, 2019.
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(4)
|
A report on Schedule 13F filed February 14, 2018, disclosed that GAMCO Investors, Inc., public company listed on the New York Stock Exchange, and its affiliates were the beneficial owner of 5,675,912 shares of common stock as of December 31, 2018. GAMCO Investors, Inc. and certain of its affiliates have indirect power to vote or direct the vote of and sole power to dispose of or direct the disposition of 5,165,012 shares of common stock. The address of GAMCO Investors, Inc. is One Corporate Center, Rye, New York 10580. All information regarding GAMCO Investors, Inc. is based on that entity’s report on Schedule 13D/A filed with the SEC on May 24, 2017 and Schedule 13F filed with the SEC on January 30, 2019.
|
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(5)
|
A report on Schedule 13G/A, filed February 12, 2019, disclosed that The Vanguard Group, an investment adviser, was the beneficial owner of 4,878,269 shares of common stock as of December 31, 2018. The Vanguard Group has reported that it has (i) sole power to vote or direct the vote of 54,004 shares of common stock, (ii) sole power to dispose of or direct the disposition of 4,821,938 shares of common stock, (iii) shared power to vote or direct the vote of 8,466 shares of common stock and (iv) shared power to dispose of or to direct the disposition of 56,331 shares of common stock. The address of The Vanguard Group is 100 Vanguard Boulevard, Malvern, Pennsylvania 19355. All information regarding The Vanguard Group is based on that entity’s report on Schedule 13G, filed with the SEC on February 12, 2019.
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(6)
|
A report on Schedule 13G/A, filed February 14, 2019, disclosed that D.E. Shaw Galvanic Portfolios, LLC, an investment advisor, and its affiliates were the beneficial owner of 4,319,210 shares of common stock as of December 31, 2018. D.E. Shaw Galvanic Portfolios, LLC has reported that it has (i) sole power to vote or direct the vote of 0 shares of common stock, (ii) sole power to dispose of or direct the disposition of 0 shares of common stock, (iii) shared power to vote or direct the vote of 4,319,210 shares of common stock and (iv) shared power to dispose of or to direct the disposition of 4,319,210 shares of common stock. The address of D.E. Shaw Galvanic Portfolios, LLC is 1166 Avenue of the Americas, 9th Floor, New York, NY 10036. All information regarding D.E. Shaw Galvanic Portfolios, LLC is based on that entity’s report on Schedule 13G/A, filed with the SEC on February 14, 2019.
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(7)
|
A report on Schedule 13G, filed February 12, 2019, disclosed that Renaissance Technologies LLC, an investment adviser, and its affiliates were the beneficial owner of 4,248,548 shares of common stock as of December 31, 2018. Renaissance Technologies LLC has reported that it has (i) sole power to vote or direct the vote of 4,165,618 shares of common stock, (ii) sole power to dispose of or direct the disposition of 4,165,618 shares of common stock, (iii) shared power to vote or direct the vote of 0 shares of common stock and (iv) shared power to dispose of or to direct the disposition of 82,930 shares of common stock. The address of Renaissance Technologies LLC is 800 Third Avenue, New York, NY 10022. All information regarding Renaissance Technologies LLC is based on that entity’s report on Schedule 13G, filed with the SEC on February 12, 2019.
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(8)
|
A report on Schedule 13G/A, filed February 14, 2019, disclosed that Glenview Capital Management, LLC, an investment advisor, and its affiliates were the beneficial owner of 4,206,672 shares of common stock as of December 31, 2018. Glenview Capital Management, LLC has reported that it has (i) sole power to vote or direct the vote of 0 shares of common stock, (ii) sole power to dispose of or direct the disposition of 0 shares of common stock, (iii) shared power to vote or direct the vote of 4,206,672 shares of common stock and (iv) shared power to dispose of or to direct the disposition of 4,206,672 shares of common stock. The address of Glenview Capital Management, LLC is 767 Fifth Avenue,
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70
|
Hertz Global Holdings, Inc. 2019 Proxy Statement
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Ownership of Our Common Stock
|
44th Floor, New York, New York 10153. All information regarding Glenview Capital Management, LLC is based on that entity’s report on Schedule 13G/A, filed with the SEC on February 14, 2019.
|
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|
(9)
|
Includes employee and/or director stock options held directly by the beneficial owner that are currently exercisable or that will become exercisable within sixty days; and phantom shares issued under the Director Compensation Policy.
|
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|
(10)
|
Includes the following phantom shares issued under the Director Compensation Policy: (i) 20,707 for Mr. Intrieri; and (ii) 4,680 for Mr. Ninivaggi.
|
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|
|
(11)
|
Mr. Keizer’s shares are jointly held with his wife.
|
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|
(12)
|
The amounts reported for (i) Mr. Taride are as of effective date of separation under the Taride Separation Agreement, March 31, 2019, (ii) Ms. Kramer are as of the last date of her employment, November 16, 2018, (iii) Mr. Kennedy are as of the last date of his employment, August 20, 2018, and (iv) Mr. Best are as of the last date of her employment, April 20, 2018. Includes the following stock options: (i) for Mr. Taride 46,713, (ii) for Ms. Kramer 11,772, (iii) for Mr. Kennedy 63,600 and (iv) for Mr. Best 65,465.
|
Compensation Committee Interlocks and Insider Participation
.
During
2018
, Messrs. Barnes, Cho and Ninivaggi and Mses. Everson and Mukherjee served as members of our Compensation Committee. None of these individuals: (i) served as an officer or employee of the Company during
2018
or (ii) was formerly an officer of the Company.
During the year
2018
: (i) none of our executive officers served as a member of a compensation committee (or other body performing a similar role) of another entity, any of whose executive officers served on our Compensation Committee; (ii) none of our executive officers served as a director of another entity, any of whose executive officers served on our Compensation Committee; and (iii) none of our executive officers served as a member of the compensation committee (or other body performing a similar role) of another entity, any of whose executive officers served as one of our directors.
Section 16(a) Beneficial Ownership Reporting Compliance.
Section 16(a) of the Exchange Act requires that our directors, officers and persons who own more than 10% of our common stock file reports of ownership and changes in ownership with the SEC. These persons are required to provide us with copies of all such filed forms. Based solely on our review of reports filed by the Company’s directors, executive officers and beneficial holders of 10% or more of our outstanding shares, and upon representations from those persons, the Company believes that all reports required to be filed by the Company’s reporting persons during fiscal year
2018
were timely filed, with the exception of late Form 4 filings by each of Jodi Allen (one transaction), Tyler Best (three transactions) and Paul Stone (two transactions). The late filings were due to inadvertent administrative errors by the Company.
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71
|
Hertz Global Holdings, Inc. 2019 Proxy Statement
|
PROXY PROCEDURES AND INFORMATION ABOUT THE ANNUAL MEETING
|
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Stockholders Entitled to Vote at the Annual Meeting
|
Our Board has established the record date for the
2019
Annual Meeting as
April 1, 2019
. Only holders of record of the Company’s common stock at the close of business on the record date are entitled to receive the Notice and vote at the
2019
Annual Meeting. On
April 1, 2019
, the Company had 84,113,036 shares of common stock outstanding.
If you are a stockholder of record, you may vote as set forth in the Notice, or as follows:
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●
|
Voting by Internet:
Follow the instructions on
www.proxyvote.com
.
|
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●
|
Voting by Telephone:
Call 1-800-690-6903 and follow the instructions provided by the recorded message.
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●
|
Voting by Mail:
If you receive a paper copy of the proxy materials, you may vote your shares by completing, signing, dating and returning the proxy card included in the printed proxy materials.
|
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●
|
Voting in Person:
See the procedures for voting in person below.
|
Your vote will be cast in accordance with the instructions authorized by Internet or telephone or included on a properly signed and dated proxy card, as applicable. We must receive your vote, either by Internet, telephone or proxy card, by 11:59 PM (Eastern Time) on Thursday, May 23, 2019, the day before the
2019
Annual Meeting, for your vote to be counted.
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Procedures for Attending and Voting at the 2019 Annual Meeting
|
For those stockholders who wish to attend the
2019
Annual Meeting, you will need the following:
|
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●
|
Admission ticket in your proxy materials;
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●
|
Photo identification; and
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●
|
Proof of stock ownership.
|
Please note that no cameras or recording devices are allowed at the
2019
Annual Meeting. Seating for the
2019
Annual Meeting starts at 10:00 AM (Eastern Time) and the
2019
Annual Meeting will start at 10:30 AM (Eastern Time).
If you hold your shares through a broker or bank, you will need the proxy from your bank or broker in order to vote your shares at the meeting. Please obtain such materials from your broker or bank.
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Notice of Internet Availability of Proxy Materials
|
We are permitted to furnish proxy materials, including this proxy statement and our
2018
Annual Report, to our stockholders by providing access to such documents on the Internet at
www.proxyvote.com
instead of mailing printed copies. Our stockholders will not receive printed copies of the proxy materials unless they are requested.
Instead, the Notice will instruct you as to how you may access and review all of the proxy materials on the Internet. It will also instruct you as to how you may submit your proxy on the Internet. If you would like to receive a paper or e-mail copy of our proxy materials, you should follow the instructions for requesting such materials in the Notice. If you receive more than one Notice, it generally means that some of your shares are registered differently or are in more than one account. Please provide voting instructions for each Notice you receive.
The Board recommends a vote “FOR” proposals 1, 2, 3 and 4. Below is a summary of the vote required for adoption of each proposal and the respective effect of abstentions and broker non-votes. For more detailed information, see each respective proposal.
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72
|
Hertz Global Holdings, Inc. 2019 Proxy Statement
|
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|
Proxy Procedures and Information About the Annual Meeting
|
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Proposal
|
Vote Required for Adoption
|
Effect of
Abstentions
|
Effect of
Broker
Non-Votes
|
|
Election of Directors
|
Majority of shares cast
|
No effect
|
No effect
|
|
Amendment and Restatement of Hertz Global Holdings, Inc. 2016 Omnibus Incentive Plan
|
Majority of shares present
|
Vote "against"
|
No effect
|
|
Ratification of Ernst & Young LLP
|
Majority of shares present
|
Vote “against”
|
N/A
|
|
Advisory Vote on Executive Compensation
|
Majority of shares present
|
Vote “against”
|
No effect
|
The presence, in person or by proxy, of the holders of a majority of the shares entitled to vote at the
2019
Annual Meeting constitutes a quorum. Abstentions and broker non-votes are counted as present and entitled to vote for purposes of determining a quorum. A broker non-vote occurs when a nominee, such as a broker holding shares in “street name” for a beneficial owner, does not vote on a proposal because that nominee does not have discretionary voting power with respect to a proposal and has not received instructions from the beneficial owner.
If you are a holder of shares held in street name, and you would like to instruct your broker how to vote your shares, you should follow the directions provided by your broker. Under NYSE rules, your broker is permitted to vote on Proposal 3 even if it does not receive instructions from you. However, under NYSE rules, your broker does not have discretion to vote on any other proposal if it does not receive instructions from you.
Each share of common stock is entitled to one vote and stockholders do not have the right to cumulate their votes for the election of directors. Unless a stockholder gives instructions to the contrary, proxies will be voted in accordance with the Board’s recommendations.
Even if you voted by telephone or on the Internet, or if you requested paper proxy materials and signed the proxy card, you may revoke your proxy before it is voted at the
2019
Annual Meeting by delivering a signed revocation letter to M. David Galainena, Executive Vice President, General Counsel and Secretary. You may also revoke your proxy by submitting a new proxy dated later than your first proxy, or by a later-dated vote by telephone or on the Internet. If you are attending in person and have previously mailed your proxy card, you may revoke your proxy and vote in person at the
2019
Annual Meeting. Your attendance at the
2019
Annual Meeting will not by itself revoke your proxy. If you are a holder of shares held in street name by your broker and you have previously directed your broker to vote your shares, you should instruct your broker to change or revoke your vote if you wish to do so. If you are a holder of shares held in street name by your broker and wish to cast your vote in person at the
2019
Annual Meeting, you should obtain a proxy to vote your shares from your broker.
Proxies may be solicited on behalf of our Board by mail or telephone, on the Internet or in person, and Hertz will pay the solicitation costs on behalf of the Company. We have retained Alliance Advisors (“Alliance”), 200 Broadacres Drive, 3rd Floor, Bloomfield, NJ 07003, to aid in the solicitation process. For these and related advisory services, we will pay Alliance a fee of approximately $18,000 and reimburse them for certain out-of-pocket disbursements and expenses. The Notice will be supplied to brokers, dealers, banks and voting trustees, or their nominees, for the purpose of soliciting proxies from beneficial owners, and Hertz will reimburse those record holders for their reasonable expenses on behalf of the Company.
Broadridge Financial Solutions, Inc. has been retained by Hertz to facilitate the distribution of proxy materials at a customary fee plus distribution costs and other costs and expenses.
The
2018
Annual Report is filed with the SEC and may also be obtained via a link posted on the “Investor Relations” portion of our website,
www.hertz.com.
Copies of the
2018
Annual Report, or any exhibits thereto, will be sent within a reasonable time without charge upon written request to Hertz Global Holdings, Inc., 8501 Williams Road, Estero, Florida 33928, Attention: Corporate Secretary.
Our Board is not aware of any other matters to be presented at the
2019
Annual Meeting. If any other matter proper for action at the meeting is properly presented, the holders of the accompanying proxy will have discretion to vote the
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73
|
Hertz Global Holdings, Inc. 2019 Proxy Statement
|
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Proxy Procedures and Information About the Annual Meeting
|
shares represented by the proxy on such matter in accordance with their best judgment. If any matter not proper for action at the meeting should be presented, the holders of the proxy will vote against consideration of the matter or the proposed action.
|
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting
|
We have sent or are sending the Notice, which indicates that that our proxy materials and
2018
Annual Report will be made available on the Internet at
www.proxyvote.com
. If you wish to receive paper or e-mail copies of any of these materials, please follow the instructions on your Notice.
|
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|
Proposals for 2020 Annual Meeting of Stockholders
|
The Company will review for inclusion in next year’s proxy statement stockholder proposals received by December 12, 2019. Such proposals must satisfy all applicable requirements of Rule 14a-8 of the Securities Exchange Act and should be sent to M. David Galainena, Executive Vice President, General Counsel and Secretary of the Company at 8501 Williams Road, Estero, Florida 33928.
Stockholder proposals, including nominations for directors, not included in next year’s proxy statement may be brought before the
2020
annual meeting by a stockholder of the Company who is entitled to vote at the meeting, who has given a written notice to the Executive Vice President, General Counsel and Secretary of the Company containing certain information specified in the By-laws and who was a stockholder of record at the time such notice was given. To be timely for our
2020
annual meeting, such notice must be delivered to or mailed and received at the address in the preceding paragraph no earlier than January 25,
2020
, and no later than February 24,
2020
, except that if the
2020
annual meeting is held before April 24,
2020
or after August 2,
2020
, such notice must be delivered at the address in the preceding paragraph no earlier than 120 days prior to the date of such annual meeting and not later than the close of business on the later of (i) the ninetieth day prior to the date of such annual meeting or (ii) the tenth day following the day on which a public announcement of the date of such annual meeting is first made.
Our By-laws require that stockholder recommendations for nominees to the Board must include, among other things, the name of the nominee or nominees, information regarding the nominee or nominees that would be required to be included in a proxy statement for the election of directors and a consent signed by the nominee or nominees evidencing consent to be named in the proxy statement and willingness to serve on the Board, if elected. Stockholders who intend to submit nominations to the Board must comply with all provisions of our By-laws and provide timely written notice thereof.
The
2018
Annual Report is being made available on or about
April 10, 2019
to persons who were stockholders of record as of
April 1, 2019
, the record date for the
2019
Annual Meeting. These materials do not form part of the material for the solicitation of proxies.
By order of the Board,
Executive Vice President,
General Counsel and Secretary
Estero, Florida
April 5, 2019
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74
|
Hertz Global Holdings, Inc. 2019 Proxy Statement
|
ANNEX A - NON-GAAP MEASURES
Definitions of non-GAAP measures used in this proxy statement are set forth below. Also set forth below is a summary of the reasons why management of the Company believes that the presentation of the non-GAAP financial measures included in this proxy statement provide useful information regarding the Company's financial condition and results of operations and additional purposes for which management of the Company utilizes the non-GAAP measures. Non-GAAP measures should not be considered in isolation and should not be considered superior to, or a substitute for, financial measures calculated in accordance with GAAP.
|
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●
|
Adjusted Corporate EBITDA, as presented herein, represents Corporate EBITDA as adjusted for income or loss attributable to noncontrolling interests and certain other miscellaneous or non-recurring items, as described in more detail in the accompanying reconciliation that follows.
|
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|
|
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●
|
Adjusted Corporate EBITDA Margin is calculated as the ratio of Adjusted Corporate EBITDA to total revenues and is used by the Compensation Committee to determine certain executive compensation, primarily in the form of PSUs.
|
|
|
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●
|
Adjusted Pre-tax Income (Loss) is calculated as income (loss) before income taxes plus non-cash acquisition accounting charges, debt-related charges relating to the amortization and write-off of debt financing costs and debt discounts and premiums, goodwill, intangible and tangible asset impairments and write-downs, information technology and finance transformation costs, net income or loss attributable to noncontrolling interests and certain other miscellaneous or non-recurring items. Adjusted Pre-tax Income (Loss) is important to management because it allows management to assess operational performance of the Company's business, exclusive of the items mentioned above. It also allows management to assess the performance of the entire business on the same basis as the segment measure of profitability. Management believes it is important to investors for the same reasons it is important to management and because it allows them to assess the operational performance of the Company on the same basis that management uses internally. When evaluating the Company's operating performance, investors should not consider Adjusted Pre-tax Income (Loss) in isolation of, or as a substitute for, measures of the Company's financial performance, such as net income (loss) or income (loss) before income taxes.
|
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●
|
Adjusted Net Income
(Loss) is calculated as Adjusted Pre-tax Income (Loss) less a provision for income taxes derived utilizing a combined statutory rate. The combined statutory rate is management's estimate of the Company's long-term tax rate. Adjusted Net Income (Loss) is important to management and investors because it represents the Company's operational performance exclusive of the effects of purchase accounting, debt-related charges, net income or loss attributable to noncontrolling interests and certain other miscellaneous or non-recurring items that are not operational in nature or comparable to those of the Company's competitors.
|
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|
|
●
|
Corporate EBITDA, as presented herein, represents Gross EBITDA as adjusted for vehicle debt interest, vehicle depreciation and vehicle debt-related charges.
|
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●
|
Gross EBITDA is defined as net income (loss) before net interest expense, income taxes and depreciation (which includes lease charges on revenue earning vehicles) and amortization.
|
Management uses Gross EBITDA, Corporate EBITDA and Adjusted Corporate EBITDA as operating performance metrics for internal monitoring and planning purposes, including the preparation of the Company's annual operating budget and monthly operating reviews, as well as to facilitate analysis of investment decisions, profitability and performance trends. Further, Gross EBITDA enables management and investors to isolate the effects on profitability of operating metrics such as revenue, direct vehicle and operating expenses and selling, general and administrative expenses, which enables management and investors to evaluate the Company's business segments that are financed differently and have different depreciation characteristics and compare the Company's performance against companies with different capital structures and depreciation policies. We also present Adjusted Corporate EBITDA as a supplemental measure because such information is utilized in the determination of certain executive compensation as set forth in this proxy statement.
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75
|
Hertz Global Holdings, Inc. 2019 Proxy Statement
|
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|
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|
Annex A - Non-GAAP Measures
|
Gross EBITDA, Corporate EBITDA, Adjusted Corporate EBITDA and Adjusted Corporate EBITDA Margin are not recognized measurements under GAAP. When evaluating the Company's operating performance, investors should not consider Gross EBITDA, Corporate EBITDA and Adjusted Corporate EBITDA in isolation of, or as a substitute for, measures of the Company's financial performance as determined in accordance with GAAP, such as net income (loss) or income (loss) before income taxes.
The following table reconciles net income (loss), the most comparable GAAP measure, to Gross EBITDA, Corporate EBITDA, Adjusted Corporate EBITDA, Adjusted Pre-Tax Income (Loss) and Adjusted Net Income (Loss).
Reconciliation of Net Income (Loss) to Gross EBITDA, Corporate EBITDA, Adjusted Corporate EBITDA, Adjusted Pre-Tax Income (Loss) and Adjusted Net Income (Loss)
Unaudited
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Twelve Months Ended December 31, 2018
|
|
Twelve Months Ended December 31, 2017
|
|
(In millions, except per share data)
|
U.S. Rental Car
|
|
Int'l Rental Car
|
|
All Other Operations
|
|
Corporate
|
|
Hertz Global
|
|
U.S. Rental Car
|
|
Int'l Rental Car
|
|
All Other Operations
|
|
Corporate
|
|
Hertz Global
|
|
Net income (loss)
|
|
|
|
|
|
|
|
|
$
|
(227
|
)
|
|
|
|
|
|
|
|
|
|
$
|
327
|
|
|
Income tax provision (benefit)
|
|
|
|
|
|
|
|
|
(30
|
)
|
|
|
|
|
|
|
|
|
|
(902
|
)
|
|
Income (loss) before income taxes
|
$
|
185
|
|
|
$
|
166
|
|
|
$
|
83
|
|
|
$
|
(691
|
)
|
|
$
|
(257
|
)
|
|
$
|
(171
|
)
|
|
$
|
185
|
|
|
$
|
68
|
|
|
$
|
(657
|
)
|
|
$
|
(575
|
)
|
|
Depreciation and amortization
|
1,837
|
|
|
480
|
|
|
574
|
|
|
17
|
|
|
2,908
|
|
|
2,085
|
|
|
449
|
|
|
489
|
|
|
15
|
|
|
3,038
|
|
|
Interest, net of interest income
|
144
|
|
|
113
|
|
|
27
|
|
|
455
|
|
|
739
|
|
|
132
|
|
|
80
|
|
|
19
|
|
|
406
|
|
|
637
|
|
|
Gross EBITDA
|
$
|
2,166
|
|
|
$
|
759
|
|
|
$
|
684
|
|
|
$
|
(219
|
)
|
|
$
|
3,390
|
|
|
$
|
2,046
|
|
|
$
|
714
|
|
|
$
|
576
|
|
|
$
|
(236
|
)
|
|
$
|
3,100
|
|
|
Revenue earning vehicle depreciation and lease charges, net
|
(1,678
|
)
|
|
(448
|
)
|
|
(564
|
)
|
|
—
|
|
|
(2,690
|
)
|
|
(1,904
|
)
|
|
(416
|
)
|
|
(478
|
)
|
|
—
|
|
|
(2,798
|
)
|
|
Vehicle debt interest
|
(291
|
)
|
|
(114
|
)
|
|
(43
|
)
|
|
—
|
|
|
(448
|
)
|
|
(226
|
)
|
|
(75
|
)
|
|
(30
|
)
|
|
—
|
|
|
(331
|
)
|
|
Vehicle debt-related charges
(a)
|
22
|
|
|
10
|
|
|
4
|
|
|
—
|
|
|
36
|
|
|
20
|
|
|
8
|
|
|
4
|
|
|
—
|
|
|
32
|
|
|
Loss on extinguishment of vehicle-related debt
(b)
|
2
|
|
|
20
|
|
|
—
|
|
|
—
|
|
|
22
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Corporate EBITDA
|
$
|
221
|
|
|
$
|
227
|
|
|
$
|
81
|
|
|
$
|
(219
|
)
|
|
$
|
310
|
|
|
$
|
(64
|
)
|
|
$
|
231
|
|
|
$
|
72
|
|
|
$
|
(236
|
)
|
|
$
|
3
|
|
|
Non-cash stock-based compensation charges
(c)(d)
|
—
|
|
|
1
|
|
|
—
|
|
|
13
|
|
|
14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|
19
|
|
|
Restructuring and restructuring related charges
(e)
|
6
|
|
|
4
|
|
|
2
|
|
|
20
|
|
|
32
|
|
|
3
|
|
|
5
|
|
|
—
|
|
|
12
|
|
|
20
|
|
|
Impairment charges and asset write-downs
(f)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
86
|
|
|
—
|
|
|
—
|
|
|
32
|
|
|
118
|
|
|
Information technology and finance transformation costs
(g)
|
—
|
|
|
1
|
|
|
—
|
|
|
97
|
|
|
98
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
67
|
|
|
68
|
|
|
Other items
(h)
|
(1
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|
(17
|
)
|
|
(21
|
)
|
|
24
|
|
|
(1
|
)
|
|
2
|
|
|
14
|
|
|
39
|
|
|
Adjusted Corporate EBITDA
|
$
|
226
|
|
|
$
|
231
|
|
|
$
|
82
|
|
|
$
|
(106
|
)
|
|
$
|
433
|
|
|
$
|
50
|
|
|
$
|
235
|
|
|
$
|
74
|
|
|
$
|
(92
|
)
|
|
$
|
267
|
|
|
Non-vehicle depreciation and amortization
|
(159
|
)
|
|
(32
|
)
|
|
(10
|
)
|
|
(17
|
)
|
|
(218
|
)
|
|
(181
|
)
|
|
(33
|
)
|
|
(11
|
)
|
|
(15
|
)
|
|
(240
|
)
|
|
Non-vehicle debt interest, net of interest income
|
147
|
|
|
1
|
|
|
16
|
|
|
(455
|
)
|
|
(291
|
)
|
|
94
|
|
|
(5
|
)
|
|
11
|
|
|
(406
|
)
|
|
(306
|
)
|
|
Non-vehicle debt-related charges
(a)
|
—
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|
14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|
15
|
|
|
Loss on extinguishment of non-vehicle-related debt
(b)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
13
|
|
|
Non-cash stock-based compensation charges
(c)(d)
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(13
|
)
|
|
(14
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(19
|
)
|
|
(19
|
)
|
|
Acquisition accounting
(i)
|
50
|
|
|
5
|
|
|
6
|
|
|
1
|
|
|
62
|
|
|
50
|
|
|
6
|
|
|
6
|
|
|
—
|
|
|
62
|
|
|
Other
(j)
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
|
Adjusted Pre-tax Income (Loss)
(k)
|
$
|
262
|
|
|
$
|
204
|
|
|
$
|
94
|
|
|
$
|
(579
|
)
|
|
$
|
(19
|
)
|
|
$
|
13
|
|
|
$
|
203
|
|
|
$
|
80
|
|
|
$
|
(506
|
)
|
|
$
|
(210
|
)
|
|
Income tax (provision) benefit on Adjusted Pre-tax Income (Loss)
(l)
|
|
|
|
|
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
78
|
|
|
Adjusted Net Income (Loss)
|
|
|
|
|
|
|
|
|
$
|
(14
|
)
|
|
|
|
|
|
|
|
|
|
$
|
(132
|
)
|
|
|
|
|
(a)
|
Represents debt-related charges relating to the amortization of deferred financing costs and debt discounts and premiums.
|
|
|
|
|
(b)
|
In 2018, primarily comprised of
$20 million
of early redemption premium and write-off of deferred financing costs associated with the redemption of the outstanding
4.375%
European Vehicle
Notes due January 2019
. In 2017, comprised of
$6 million
of early redemption premium and write-off of deferred financing costs associated with the redemption of the outstanding 4.25% Senior Notes due April 2018 and
$7 million
write-off of deferred financing costs associated with the termination of commitments under the Senior RCF.
|
|
|
|
|
(c)
|
Stock-based compensation expense is an adjustment for purposes of calculating Adjusted Corporate EBITDA but not for calculating Adjusted Pre-tax Income (Loss).
|
|
|
|
|
(d)
|
For the twelve months ended December 31, 2017, excludes $2 million of stock-based compensation expenditures included in restructuring and restructuring related charges.
|
|
|
|
|
(e)
|
Represents charges incurred under restructuring actions as defined in U.S. GAAP, excluding impairments and asset write-downs, which are shown separately in the table. Also includes restructuring related charges such as incremental costs incurred directly supporting business transformation initiatives. Such costs include transition costs incurred in connection with business process outsourcing arrangements and incremental costs incurred to facilitate business process re-engineering initiatives that involve significant organization redesign and extensive operational process changes. Also includes consulting costs, legal fees, a net loss contingency of $13.6 million and other expenses related to the previously disclosed accounting review and investigation.
|
|
|
|
|
|
|
|
|
76
|
Hertz Global Holdings, Inc. 2019 Proxy Statement
|
|
|
|
|
|
|
|
Annex A - Non-GAAP Measures
|
|
|
|
|
(f)
|
In 2017, primarily represents an
$86 million
impairment of the Dollar Thrifty tradename and an impairment of
$30 million
related to an equity method investment.
|
|
|
|
|
(g)
|
Represents costs associated with the Company’s information technology and finance transformation programs, both of which are multi-year initiatives to upgrade and modernize the Company’s systems and processes.
|
|
|
|
|
(h)
|
Represents miscellaneous or non-recurring items, and includes amounts attributable to noncontrolling interests. In 2018, also includes a
$20 million
gain on marketable securities and a
$6 million
legal settlement received in the second quarter related to an oil spill in the Gulf of Mexico in 2010. In 2017, also includes net expenses of
$16 million
resulting from hurricanes, partially offset by a
$6 million
gain on the sale of the Company's Brazil Operations and a
$4 million
return of capital from an equity method investment,and charges of
$5 million
relating to PLPD as a result of a terrorist event.
|
|
|
|
|
(i)
|
Represents incremental expense associated with amortization of other intangible assets and depreciation of property and equipment relating to acquisition accounting.
|
|
|
|
|
(j)
|
Comprised of items, other than stock-based compensation, that are adjustments for purposes of calculating Adjusted Corporate EBITDA but not for calculating Adjusted Pre-tax Income (Loss).
|
|
|
|
|
(k)
|
Adjustments by caption to arrive at Adjusted Pre-tax Income (Loss) are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) to expenses
|
|
Twelve Months Ended December 31,
|
|
(In millions)
|
|
2018
|
|
2017
|
|
Direct vehicle and operating
|
|
$
|
(63
|
)
|
|
$
|
(93
|
)
|
|
Selling, general and administrative
|
|
(127
|
)
|
|
(99
|
)
|
|
Interest expense, net:
|
|
|
|
|
|
Vehicle
|
|
(58
|
)
|
|
(32
|
)
|
|
Non-vehicle
|
|
(14
|
)
|
|
(28
|
)
|
|
Total interest expense, net
|
|
(72
|
)
|
|
(60
|
)
|
|
Intangible asset impairments
|
|
—
|
|
|
(86
|
)
|
|
Other income (expense), net
|
|
26
|
|
|
(27
|
)
|
|
Noncontrolling interests
|
|
(2
|
)
|
|
—
|
|
|
Total adjustments
|
|
$
|
(238
|
)
|
|
$
|
(365
|
)
|
|
|
|
|
(l)
|
Derived utilizing a combined statutory rate of 25% and 37% for the annual periods ending December 31, 2018 and 2017, respectively, applied to the respective Adjusted Pre-tax Income (Loss).
|
Reconciliation of International Adjusted EBITDA
Unaudited
International Adjusted EBITDA is calculated as International Rental Car Adjusted Corporate EBITDA less Adjusted Corporate EBITDA for certain entities and adjusted to eliminate the effect of fluctuations in foreign currency exchange rates. The calculation of International Adjusted EBITDA is shown below. See above for the reconciliation of International Rental Car Adjusted Corporate EBITDA to its most comparable GAAP measure.
|
|
|
|
|
|
(In millions)
|
Twelve Months Ended December 31, 2018
|
|
International Rental Car Adjusted Corporate EBITDA
|
$231
|
|
Less Adjusted Corporate EBITDA for certain entities
|
(13)
|
|
Foreign currency adjustment
(1)
|
3
|
|
International Adjusted EBITDA
|
$221
|
(1)
Based on December 31, 2017 foreign currency exchange rates.
|
|
|
|
|
|
|
|
77
|
Hertz Global Holdings, Inc. 2019 Proxy Statement
|
ANNEX B - AMENDED AND RESTATED HERTZ GLOBAL HOLIDNGS, INC. 2016 OMNIBUS INCENTIVE PLAN
HERTZ GLOBAL HOLDINGS, INC.
2016 OMNIBUS INCENTIVE PLAN
(as amended and restated effective as of March 29, 2019, subject to approval of the stockholders on May 24, 2019)
ARTICLE I
ESTABLISHMENT, PURPOSES AND EFFECTIVE DATE
1.1
Establishment
. The Company has established the Plan to provide for the award of Options, Stock Appreciation Rights, Performance Stock, Performance Stock Units, Performance Units, Restricted Stock, Restricted Stock Units, Share Awards and Deferred Stock Units to eligible individuals.
1.2
Effective Date
. Whereas the Plan was approved by Former Parent, as the then sole stockholder of the Company, and by the Board, on May 18, 2016, and then re-approved by the stockholders of the Company on May 31, 2017. The amendment and restatement of the Plan provided herein is subject to approval by the stockholders as of May 24, 2019, the date of the 2019 Annual Meeting of Stockholders. If approved by the stockholders, the Plan, as amended and restated herein, shall be effective as of such date (the “Effective Date”).
1.3
Distribution
. The Company entered into a Separation and Distribution Agreement with Former Parent as of June 30, 2016 (the “Separation Agreement”), which provided for a “Distribution” (as defined in the Separation Agreement), by which Former Parent separated into two separate, publicly traded companies, the Company and Former Parent, as of such date. Until the Distribution, the Company was a wholly owned subsidiary of Former Parent.
1.4
Purpose
.
(a)
Generally. The general purposes of the Plan are to foster and promote the long-term financial success of the Company and the Subsidiaries and materially increase shareholder value by (a) motivating superior performance by Participants, (b) providing Participants with an ownership interest in the Company, and (c) enabling the Company and the Subsidiaries to attract and retain the services of outstanding employees (or other individuals) upon whose judgment, interest and special effort the successful conduct of its operations is largely dependent.
(b)
Distribution Awards. In addition to the general purposes described in Section 1.4(a), this Plan was originally established to issue Awards in partial or full substitution for awards relating to common shares of Former Parent prior to the Distribution, in accordance with the terms of the Employee Matters Agreement.
ARTICLE II
DEFINITIONS
2.1
Certain Definitions
. Capitalized terms used herein without definition shall have the respective meanings set forth below:
"
Affiliate
" means, with respect to any person, any other person controlled by, controlling or under common control with such person.
"
Alternative Award
" has the meaning given in Section 9.1.
"
Award
" means any Option, Stock Appreciation Right, Performance Stock, Performance Stock Unit, Performance Unit, Restricted Stock, Restricted Stock Unit, Share Award or Deferred Stock Unit granted pursuant to the Plan, including an Award combining two or more types in a single grant.
|
|
|
|
|
|
|
|
78
|
Hertz Global Holdings, Inc. 2019 Proxy Statement
|
|
|
|
|
|
|
|
Annex B - Amended and Restated Hertz Global Holdings, Inc. 2016 Omnibus Incentive Plan
|
"
Award Agreement
" means any written agreement, contract, or other instrument or document evidencing any Award granted by the Committee pursuant to the Plan. The terms of any plan or guideline adopted by the Committee and applicable to an Award shall be deemed incorporated in and part of the related Award Agreement. The Committee may provide for the use of electronic, internet-based or other non-paper Award Agreements, and the use of electronic, internet-based or other non-paper means for the Participant’s acceptance of, or actions relating to, an Award Agreement unless otherwise expressly specified herein. In the event of any inconsistency or conflict between the terms of the Plan and an Award Agreement, the terms of the Plan shall govern.
"
Business
" has the meaning given in Section 5.5(a).
"
Board
" means the Board of Directors of the Company.
"
Cause
" means, except as otherwise defined in an Award Agreement or in another written employment or similar agreement between the Participant and the Company that specifically defines “Cause,” with respect to any Participant: (i) his or her failure to, neglect of or refusal to perform the Participant's material duties (unless resulting from Disability) after notice specifying the manner in which the Participant has not performed is delivered to the Participant; (ii) misconduct that has caused financial, reputational or other harm to the Company or any of its Subsidiaries; (iii) gross negligence, fraud or personal dishonesty in connection with the Participant’s employment; (iv) substantial abuse of alcohol, drugs, including prescription medication, or similar substances that impair the Participant's job performance; (v) material violation of any Company Policy or Code, or of any term of any agreement between the Participant and the Company; or (vi) conviction of or plea of guilty or nolo contendere to (a) a misdemeanor charge involving fraud, false statements or misleading omissions, wrongful taking, embezzlement, bribery, forgery, counterfeiting or extortion, or any other kind of moral turpitude or (b) a felony charge or (c) on an equivalent charge to those in clauses (a) and (b) in jurisdictions which do not use those designations. The Committee may retroactively deem a termination of a Participant’s employment to have been for “Cause” if circumstances constituting “Cause” existed prior to the date of termination, but become known to the Committee after the date of termination. A determination of whether “Cause” exists, and of the existence and relevance of any conduct, fact, or circumstance that may serve as the basis for a determination that “Cause” exists, shall be made in the sole discretion of the Committee.
"
Change in Control
" means, unless otherwise provided in an Award Agreement, the happening of any of the following events after the original effective date of the Plan:
(a)
the acquisition by any person, entity or "group" (as defined in Section 13(d) of the Exchange Act), other than the Company, the Subsidiaries, any employee benefit plan of the Company or the Subsidiaries, or any Permitted Holder, of 50% or more of the combined voting power of the Company's then outstanding voting securities; or
(b)
within any 24-month period after the Distribution, the Incumbent Directors shall cease to constitute at least a majority of the Board or the board of directors of any successor to the Company; provided that any director elected to the Board, or nominated for election, by a majority of the Incumbent Directors then still in office shall be deemed to be an Incumbent Director for purposes of this clause (b); or
(c)
the merger or consolidation of the Company as a result of which persons who were owners of the voting securities of the Company immediately prior to such merger or consolidation, together with any Permitted Holder, do not immediately thereafter own, directly or indirectly, more than 50% of the combined voting power entitled to vote generally in the election of directors of the merged or consolidated company; or
(d)
the approval by the Company's shareholders of the liquidation or dissolution of the Company other than a liquidation of the Company into any Subsidiary or a liquidation a result of which persons who were stockholders of the Company immediately prior to such liquidation, together with any Permitted Holder, own, directly or indirectly, more than 50% of the combined voting power entitled to vote generally in the election of directors of the entity that holds substantially all of the assets of the Company following such event; or
(e)
the sale, transfer or other disposition of all or substantially all of the assets of the Company to one or more persons or entities that are not, immediately prior to such sale, transfer or other disposition, Affiliates of the Company or any Permitted Holder.
|
|
|
|
|
|
|
|
79
|
Hertz Global Holdings, Inc. 2019 Proxy Statement
|
|
|
|
|
|
|
|
Annex B - Amended and Restated Hertz Global Holdings, Inc. 2016 Omnibus Incentive Plan
|
Notwithstanding the foregoing, (i) a "Change in Control" shall not be deemed to occur if the Company files for bankruptcy, liquidation or reorganization under the United States Bankruptcy Code, (ii) the Distribution did not constitute a “Change in Control” for the purposes of this Plan, and (iii) with respect to any Award that is subject to Section 409A of the Code, “Change in Control” shall have a meaning consistent with Section 1.409A-3(i)(5) of the U.S. Treasury Regulations.
"
Change in Control Price
" means the price per share on a fully diluted basis offered in conjunction with any transaction resulting in a Change in Control, as determined in good faith by the Committee as constituted before the Change in Control, if any part of the offered price is payable other than in cash.
"
Code
" means the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.
"
Commission
" means the Securities and Exchange Commission or any successor agency.
"
Committee
" means the Compensation Committee of the Board or, if applicable, the delegate of the Compensation Committee of the Board as permitted or required herein.
"
Common Stock
" means the common stock, par value $0.01 per share, of the Company and any other securities into which the Common Stock is changed or for which the Common Stock is exchanged.
"
Company
" means Hertz Global Holdings, Inc., a Delaware corporation, and any successor thereto.
"
Covered Period
" has the meaning given in Section 5.5.
"
Deferred Annual Amount
" has the meaning given in Section 8.1.
"
Deferred Stock Unit
" means a Participant's contractual right to receive a stated number of shares of Common Stock or, if provided by the Committee on or after the grant date, cash equal to the Fair Market Value of such shares of Common Stock or any combination of shares of Common Stock and cash having an aggregate Fair Market Value equal to such stated number of shares of Common Stock, under the Plan at the end of a specified period of time.
"
Disability
" means, unless otherwise provided in an Award Agreement, a physical or mental disability or infirmity that prevents or is reasonably expected to prevent the performance of a Participant's employment-related duties for a period of six months or longer; provided, that (i) for purposes of Section 5.3(a) in respect of ISOs, the term "Disability" shall have the meaning assigned to the term "Permanent and Total Disability" by section 22(e)(3) of the Code (i.e., physical or mental disability or infirmity lasting not less than 12 months), and (ii) with respect to any Award that constitutes deferred compensation subject to section 409A of the Code, "Disability" shall have the meaning set forth in section 409A(a)(2)(c) of the Code. The Committee's reasoned and good faith judgment of Disability shall be final, binding and conclusive, and shall be based on such competent medical evidence as shall be presented to it by such Participant and/or by any physician or group of physicians or other competent medical expert employed by the Participant or the Company to advise the Committee. Notwithstanding the foregoing (but except in the case of ISOs and awards subject to section 409A of the Code), with respect to any Participant who is a party to an employment agreement with the Company or any Subsidiary, "Disability" shall have the meaning, if any, specified in such Participant's employment agreement.
"
Disaffiliation
" means a Subsidiary or Affiliate of the Company ceasing to be a Subsidiary or Affiliate for any reason (including, without limitation, as a result of a public offering, or a spinoff or sale by the Company, of the stock of the Subsidiary or Affiliate) or a sale of a division of the Company and its Affiliates.
"
Distribution Award
" means an Award that was issued under this Plan in accordance with the Employee Matters Agreement, in substitution of, or in accordance with, an outstanding award granted under a Former Parent Plan which was held by a Participant immediately before the Distribution.
"
Distribution Participant
" means, as of the Distribution, a current or former employee, officer or member of the board of directors of Former Parent or any of its subsidiaries, or any other person, who holds a stock option, performance stock unit, restricted stock unit or other award under a Former Parent Plan as of immediately prior to the Distribution.
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Dividend Equivalents
" means an unfunded and unsecured promise to pay an amount equal to all or any portion of dividends and distributions paid by the Company with respect to the number of shares of Common Stock subject to an Award if such shares had been delivered pursuant to an Award.
"
Eligible Individual
" means any non-employee director, officer or employee of, or any natural person who is a consultant to, the Company or any Subsidiary.
"
Employee Matters Agreement
" means the Employee Matters Agreement entered into by and between the Company and Former Parent, as of June 30, 2016 ,setting forth certain rights and obligations of the parties in connection with the Distribution.
"
Exchange Act
" means the Securities Exchange Act of 1934, as amended, and the rules promulgated thereunder.
"
Executive Officer
" means each person who is an officer of the Company or any Subsidiary and who is subject to the reporting requirements under Section 16(a) of the Exchange Act.
"
Fair Market Value
" means, unless otherwise defined in an Award Agreement, as of any date, the closing price of one share of Common Stock on the New York Stock Exchange (or on such other recognized market or quotation system on which the trading prices of Common Stock are traded or quoted at the relevant time) on the date as of which such Fair Market Value is determined. If there are no Common Stock transactions reported on the New York Stock Exchange (or on such other exchange or system as described above) on such date, Fair Market Value shall mean the closing price for a share of Common Stock on the immediately preceding day on which Common Stock transactions were so reported. If there is no regular public trading market for the Common Stock, Fair Market Value shall be the fair market value of the Common Stock as determined in good faith by the Committee.
"
Former Parent
" means Herc Holdings Inc., a Delaware corporation, and any successor thereto.
"
Former Parent Plan
" means (i) the Herc Holdings Inc. 2008 Omnibus Incentive Plan, (ii) the Herc Holdings Inc. Stock Incentive Plan, and (iii) the Herc Holdings Inc. Director Stock Incentive Plan, each as in place as of the Distribution, or any similar or predecessor plan sponsored by Former Parent under which any awards remain outstanding as of the date immediately prior to the Distribution.
"
Incumbent Director
" means, with respect to any period of time specified under the Plan for purposes of determining a Change in Control, the persons who were members of the Board at the beginning of such period.
"
ISOs
" has the meaning given in Section 5.1(a).
"
New Employer
" means, as determined by the Committee in its sole discretion, a Participant’s employer immediately following a Change in Control, the Company, any successor to the Company, or the entity resulting from a spinoff from the Company, or the parent or a subsidiary of any such entities.
"
NSOs
" has the meaning given in Section 5.1(a).
"
Option
" means the right granted to a Participant pursuant to the Plan to purchase a stated number of shares of Common Stock at a stated price for a specified period of time.
"
Option/SAR Financial Gain
" has the meaning given in Section 5.5.
"
Participant
" means any Eligible Individual or prospective Eligible Individual designated by the Committee to receive an Award under the Plan. The term "Participant" shall also include a Distribution Participant; provided that a Distribution Participant who is not otherwise eligible to be a Participant pursuant to Section 3.1 may receive only Distribution Awards.
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"
Performance Period
" means the period, as determined by the Committee, during which the performance of the Company, any Subsidiary, any business unit and any individual is measured to determine whether and the extent to which the applicable performance measures have been achieved.
"
Performance Stock
" means a grant of a stated number of shares of Common Stock to a Participant under the Plan that is forfeitable by the Participant until the attainment of specified performance goals, or until otherwise determined by the Committee or in accordance with the Plan, subject to the continuous employment of the Participant through the completion of the applicable Performance Period (or such portion of the applicable Performance Period as otherwise provided in Article VI or Article IX).
"
Performance Stock Unit
" means a Participant's contractual right to receive a stated number of shares of Common Stock or, if provided by the Committee on or after the grant date, cash equal to the Fair Market Value of such shares of Common Stock or any combination of shares of Common Stock and cash having an aggregate Fair Market Value equal to such stated number of shares of Common Stock, under the Plan at a specified time that is forfeitable by the Participant until the attainment of specified performance goals, or until otherwise determined by the Committee or in accordance with the Plan, subject to the continuous employment of the Participant through the completion of the applicable Performance Period (or such portion of the applicable Performance Period as otherwise provided in Article VI or Article IX).
"
Performance Unit
" means a Participant's contractual right to receive a cash-denominated award, payable in cash or shares of Common Stock or a combination thereof, under the Plan at a specified time that is forfeitable by the Participant until the attainment of specified performance goals, or until otherwise determined by the Committee or in accordance with the Plan, subject to the continuous employment of the Participant through the applicable Performance Period (or such portion of the applicable Performance Period as otherwise provided in Article VI or Article IX).
"
Performance-Based Financial Gain
" has the meaning given in Section 6.7.
"
Permitted Holder
" means the Related Parties and any group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act or any successor provision) of which any of the foregoing are members.
"
Permitted Transferee
" has the meaning given in Section 11.1.
"
Plan
" means this Hertz Global Holdings, Inc. 2016 Omnibus Incentive Plan, as amended and restated herein, and as the same may be interpreted by the Committee and/or be amended from time to time.
"
Principal
" means Carl Icahn.
"
Related Party
" or "
Related Parties
" means (i) the Principal and his siblings, his and their respective spouses and descendants (including stepchildren and adopted children) and the spouses of such descendants (including stepchildren and adopted children) (collectively, the “Family Group”); (ii) any trust, estate, partnership, corporation, company, limited liability company or unincorporated association or organization (each an “Entity” and collectively “Entities”) controlled by (to be interpreted consistent with the definition of “Affiliate”) one or more members of the Family Group; (iii) any Entity over which one or more members of the Family Group, directly or indirectly, have rights that legally enable them to make or veto significant management decisions with respect to such Entity, whether pursuant to the constituent documents of such Entity, by contract, through representation on a board of directors or other governing body of such Entity or in any other manner (such rights hereinafter referred to as “Veto Power”); (iv) the estate of any member of the Family Group; (v) any trust created (in whole or in part) by any one or more members of the Family Group; (vi) any individual or Entity who receives an interest in any estate or trust listed in clauses (iv) or (v), to the extent of such interest; (vii) any trust or estate, substantially all the beneficiaries of which (other than charitable organizations or foundations) consist of one or more members of the Family Group; (viii) any organization described in Section 501(c) of the Code, over which any one or more members of the Family Group and the trusts and estates listed in clauses (iv), (v) and (vii) have direct or indirect Veto Power, or to which they are substantial contributors (as such term is defined in Section 507 of the Code); (ix) any organization described in Section 501(c) of the Code of which a member of the Family Group is an officer, director or trustee; or (x) any Entity, directly or indirectly (a) owned or controlled by (to be interpreted consistent with the definition of “Affiliate”) or (b) a majority of the economic interests
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that are owned by, or are for or accrue to the benefit of, in either case, any Person or Persons identified in clauses (i) through (ix) above.
"
Replacement Award
" means an Award made to current or former employees, officers or directors of companies or businesses acquired by the Company to replace incentive awards and opportunities held by such persons prior to such acquisition.
"
Restricted Stock
" means a grant of a stated number of shares of Common Stock to a Participant under the Plan that is forfeitable by the Participant until the completion of a specified period of future service, or until otherwise determined by the Committee or in accordance with the Plan.
"
Restricted Stock Unit
" means a Participant's contractual right to receive a stated number of shares of Common Stock or, if provided by the Committee on or after the grant date, cash equal to the Fair Market Value of such shares of Common Stock or any combination of shares of Common Stock and cash having an aggregate Fair Market Value equal to such stated number of shares of Common Stock, under the Plan at the end of a specified period of time that is forfeitable by the Participant until the completion of a specified period of future service, or until otherwise determined by the Committee or in accordance with the Plan.
"
Restriction-Based Financial Gain
" has the same meaning given in Section 7.6.
"
Restriction Period
" means (i) with respect to any Performance Stock, Performance Stock Unit Performance Unit, Restricted Stock or Restricted Stock Unit, the Restriction Period specified in the Award Agreement evidencing such Award, and (ii) with respect to any freestanding Deferred Stock Unit as to which the Committee has specified a Restriction Period in accordance with Section 8.4, the Restriction Period so specified.
"
Retained Award
" has the meaning given in Section 6.6(a).
"
Retained Retirement Award
" has the meaning given in Section 6.6(b).
"
Retirement
" means, except as otherwise defined in an Award Agreement, a Participant's retirement from active employment with the Company and any Subsidiary at or after such Participant attains age 65, or after such Participant attains age 55 and has provided, at minimum, ten years of service to the Company or any Subsidiary.
"
Share Award
" means an Award of unrestricted shares of Common Stock pursuant to Section 7.8 of the Plan.
"
Stock Appreciation Right
" means, with respect to shares of Common Stock, the right to receive a payment from the Company in cash and/or shares of Common Stock equal to the product of (i) the excess, if any, of the Fair Market Value of one share of Common Stock on the exercise date over a specified base price fixed by the Committee on the grant date, multiplied by (ii) a stated number of shares of Common Stock.
"
Subsidiary
" means any corporation in which the Company owns, directly or indirectly, stock representing 50% or more of the combined voting power of all classes of stock entitled to vote, and any other business organization, regardless of form, in which the Company possesses, directly or indirectly, 50% or more of the total combined equity interests in such organization.
"
Vesting Date
" means (i) with respect to any Performance Stock, Performance Stock Unit, Performance Unit, Restricted Stock or Restricted Stock Unit, the expiration date of the applicable Restriction Period, and (ii) with respect to any Option or Stock Appreciation Right, the date such Award first becomes exercisable in accordance with the Plan and the Award Agreement evidencing such Award.
"
Wrongful Conduct
" has the meaning given in Section 5.5(c).
"
Wrongful Conduct Period
" has the meaning given in Section 5.5.
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2.2
Gender and Number
. Except when otherwise indicated by the context, words in the masculine gender used in the Plan shall include the feminine gender, the singular shall include the plural, and the plural shall include the singular.
ARTICLE III
POWERS OF THE COMMITTEE
3.1
Eligibility and Participation
. Subject to Section 11.22, Participants in the Plan shall be those Eligible Individuals designated by the Committee (or its delegate) to participate in the Plan.
3.2
Power to Grant and Establish Terms of Awards
. The Committee shall have the authority, subject to the terms of the Plan, to determine the Eligible Individuals to whom Awards shall be granted, the type or types of Awards to be granted and the terms and conditions of any and all Awards including, but not limited to, the number of shares of Common Stock subject to an Award, the time or times at which Awards shall be granted, and the terms and conditions of applicable Award Agreements. The Committee may establish different terms and conditions for different types of Awards, for different Participants receiving the same type of Award, and for the same Participant for each type of Award such Participant may receive, whether or not granted at the same or different times.
3.3
Administration
. The Committee shall be responsible for the administration of the Plan. Any Awards granted by the Committee may be subject to such conditions, not inconsistent with the terms of the Plan, as the Committee shall determine. The Committee shall have authority to prescribe, amend and rescind rules and regulations relating to the Plan, to provide for conditions deemed necessary or advisable to protect the interests of the Company, to interpret the Plan and to make all other determinations necessary or advisable for the administration and interpretation of the Plan and to carry out its provisions and purposes. Any determination, interpretation or other action made or taken (including any failure to make any determination or interpretation, or take any other action) by the Committee pursuant to the provisions of the Plan, shall, to the greatest extent permitted by law, be within its sole and absolute discretion and shall be final, binding and conclusive for all purposes and upon all persons and shall be given deference in any proceeding with respect thereto. The Committee may appoint accountants, actuaries, counsel, advisors and other persons that it deems necessary or desirable in connection with the administration of the Plan. The Committee’s determinations under the Plan need not be uniform and may be made by the Committee selectively among persons who receive, or are eligible to receive, Awards under the Plan, whether or not such persons are similarly situated. To the maximum extent permitted by law, no member of the Committee shall be liable for any action taken or decision made in good faith relating to the Plan or any Award hereunder. Subject to the requirements of applicable law and any applicable stock exchange listing requirements, the Board may take any actions that may be taken by the Committee hereunder.
3.4
Delegation by the Committee
. The Committee may delegate, subject to such terms or conditions or guidelines as it shall determine, to any officer or group of officers, or committee, director or group of directors of the Company (including to a subcommittee of members of the Compensation Committee or any other committee of the Board) or its affiliates any portion of its authority and powers under the Plan with respect to Participants who are not Executive Officers; provided, that any delegation to one or more officers of the Company shall be subject to applicable law. Only the Committee may select, grant, administer or exercise any other discretionary authority under the Plan in respect of Awards granted to such Participants who are Executive Officers. Notwithstanding the foregoing, with respect to any award intended to qualify for the exemption contained in Rule 16b-3 promulgated under the Exchange Act, the Committee (or any applicable committee or subcommittee which was delegated power by the Committee pursuant to this Plan) shall consist solely of two or more "non-employee directors" within the meaning of such Rule, or, in the alternative, of the entire Board.
3.5
Participants Based Outside the United States
. In order to conform with provisions of local laws and regulations in foreign countries in which the Company or its Subsidiaries operate, the Committee may (i) modify the terms and conditions of Awards granted to Participants employed outside the United States, (ii) establish sub-plans with modified exercise procedures and such other modifications as may be necessary or advisable under the circumstances presented by local laws and regulations, and (iii) take any action which it deems advisable to obtain, comply with or otherwise reflect any necessary governmental regulatory procedures, exemptions or approvals with respect to the Plan or any sub-plan established hereunder; provided, however, that the Committee may not make any sub-plan that (a) increases the limitations contained in Section 4.3, or (b) increases the number of shares available
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under the Plan, as set forth in Section 4.1. Subject to the foregoing, the Committee may amend, modify, administer or terminate such sub‑plans, and prescribe, amend and rescind rules and regulations relating to such sub‑plans.
ARTICLE IV
STOCK SUBJECT TO PLAN
4.1
Number
. Subject to the provisions of this Article IV, the maximum number of shares of Common Stock available for Awards under the Plan shall not exceed 6,600,000 shares of Common Stock (all of which may be the subject of ISOs granted under the Plan) plus the number of shares awarded in connection with Distribution Awards made pursuant to Section 11.22; provided, however, that if the Company’s stockholders so approve the Plan at the 2019 Annual Meeting of Stockholders, the maximum number of shares of Common Stock available for Awards under the Plan shall not exceed 9,090,000 shares of Common Stock (the “Total Available Shares”) (all of which may be the subject of ISOs granted under the Plan) plus the number of shares awarded in connection with Distribution Awards made pursuant to Section 11.22. The shares of Common Stock to be delivered under the Plan may consist, in whole or in part, of Common Stock held in treasury or authorized but unissued shares of Common Stock, not reserved for any other purpose.
4.2
Canceled, Terminated or Forfeited Awards, etc
. Shares subject to any Award granted under the Plan (other than Replacement Awards and Distribution Awards) that for any reason are canceled, terminated, forfeited, settled in cash or otherwise settled without the issuance of Common Stock shall be available for grant under the Plan. Replacement Awards and Distribution Awards that for any reason are canceled, terminated, forfeited, settled in cash or otherwise settled without the issuance of Common Stock shall not be available for grant under the Plan. Without limiting the generality of Section 4.1 hereof, shares of Common Stock issued in connection with Awards that are assumed, converted or substituted pursuant to a Corporate Transaction, Adjustment Event or Change in Control (i.e., Alternative Awards), or issued in connection with Replacement Awards, shall not be counted against the maximum limitation specified in Section 4.1. For purposes of determining the number of shares of Common Stock subject to grant under this Section 4.2 or Section 4.1 above, on and after the Effective Date, the following shares of Common Stock shall not be added back to the Plan as shares available for grant under the Plan: (a) shares of Common Stock tendered by a Participant or withheld by the Company to pay the exercise price of any Options, (b) shares of Common Stock tendered by a Participant or withheld by the Company to satisfy any tax withholding obligations pursuant to Section 11.4, or (c) shares subject to Stock Appreciation Rights that are not issued on the stock settlement of the Stock Appreciation Rights. For purposes of this Article IV, if a Stock Appreciation Right is granted in tandem with an Option so that only one may be exercised with the other being surrendered on such exercise in accordance with Section 5.2(b), the number of shares subject to the tandem Option and Stock Appreciation Right award shall only be taken into account once (and not as to both Awards).
4.3
Individual Award Limitations
.
(a)
Generally
. Subject to the provisions of Sections 4.2 and 4.4, the following individual Award limits shall apply to Participants (excepting Participants who are non-employee directors of the Company):
(i)
During any 36-month period, no Participant shall receive Options or Stock Appreciation Rights covering more than 1,000,000 shares of Common Stock;
(ii)
During any 36-month period, no Participant shall receive any awards of Performance Stock or Performance Stock Units covering more than 1,000,000 shares of Common Stock; and
(iii)
During any calendar year, the maximum dollar amount of cash which may be earned in connection with the grant of Performance Units may not exceed $7,500,000.
(b)
Non-Employee Directors
. With respect to Participants who are non-employee directors of the Company, no non-employee director shall receive in excess of $750,000 of compensation in any calendar year, determined by adding (i) all cash compensation paid to such non-employee director in such calendar year and (ii) the fair market value of all Awards granted to such non-employee director in such calendar year, based on the fair market value of such Awards on the grant date (as determined in accordance with ASC 718 or successor provision).
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(c)
Notwithstanding the above, Distribution Awards made pursuant to Section 11.22 shall not count against the individual limits set forth above in Sections 4.3(a) and 4.3(b).
4.4
Adjustment Provisions
.
(a)
In the event of a merger, consolidation, acquisition of property or shares, stock rights offering, liquidation, disposition for consideration of the Company’s direct or indirect ownership of a Subsidiary or Affiliate of the Company (including by reason of a Disaffiliation), or similar event affecting the Company or any of its Subsidiaries (each, a “Corporate Transaction”), the Committee may in its discretion make such substitutions or adjustments as it deems appropriate and equitable to (A) the aggregate number and kind of shares of Common Stock or other securities reserved for issuance and delivery under this Plan, (B) the various maximum limitations set forth in Sections 4.1 and 4.3 upon certain types of Awards and upon the grants to individuals of certain types of Awards, (C) the number and kind of shares of Common Stock or other securities subject to outstanding Awards; and (D) the exercise price of outstanding Awards.
(b)
In the event of a stock dividend, stock split, reverse stock split, reorganization, share combination or recapitalization or similar event affecting the capital structure of the Company, or a Disaffiliation, separation or spinoff, in each case without consideration, or other extraordinary dividend of cash or other property to the Company’s shareholders (each, an “Adjustment Event”), the Committee shall make such substitutions or adjustments as it deems appropriate and equitable to (A) the aggregate number and kind of shares of Common Stock or other securities reserved for issuance and delivery under this Plan, (B) the various maximum limitations set forth in Sections 4.1 and 4.3 upon certain types of Awards and upon the grants to individuals of certain types of Awards, (C) the number and kind of shares of Common Stock or other securities subject to outstanding Awards; and (D) the exercise price of outstanding Awards.
(c)
In the case of Corporate Transactions, and subject to Article IX, such adjustments may include (A) the cancellation of outstanding Awards in exchange for payments of cash, property or a combination thereof having an aggregate value equal to the value of such Awards, as determined by the Committee in its sole discretion (it being understood that in the case of a Corporate Transaction with respect to which shareholders of Common Stock receive consideration other than publicly traded equity securities of the ultimate surviving entity, any such determination by the Committee that the value of an Option or Stock Appreciation Right shall for this purpose be deemed to equal the excess, if any, of the value of the consideration being paid for each share of Common Stock pursuant to such Corporate Transaction over the exercise price of such Option or Stock Appreciation Right shall conclusively be deemed valid); (B) the substitution of other property (including cash or other securities of the Company and securities of entities other than the Company) for the shares of Common Stock subject to outstanding Awards; and (C) in connection with any Disaffiliation, arranging for the assumption of Awards, or replacement of Awards with new awards based on other property or other securities (including other securities of the Company and securities of entities other than the Company), by the affected Subsidiary, Affiliate of the Company, or division or by the entity that controls such Subsidiary, Affiliate or division following such Disaffiliation (as well as any corresponding adjustments to Awards that remain based upon Company securities). The Committee may adjust the performance objectives applicable to any Awards to reflect any items that are unusual in nature or infrequently occurring, impact of charges for restructurings, discontinued operations, and the cumulative effects of accounting or tax changes, each as defined by generally accepted accounting principles or as identified in the Company’s financial statements, notes to the financial statements, management’s discussion and analysis or other the Company’s filings with the Commission.
(d)
Any adjustments made pursuant to this Section 4.4 to Awards that are considered “deferred compensation” within the meaning of section 409A of the Code shall be made in compliance with the requirements of section 409A of the Code; and (ii) any adjustments made pursuant to Section 4.4 to Awards that are not considered “deferred compensation” subject to section 409A of the Code shall be made in such a manner as to ensure that after such adjustments, either (A) the Awards continue not to be subject to section 409A of the Code or (B) there does not result in the imposition of any penalty taxes under section 409A of the Code in respect of such Awards.
(e)
Any adjustment under this Section 4.4 need not be the same for all Participants.
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4.5
Prohibition Against Repricing
. Except to the extent (i) approved in advance by a majority of the shares of the Company entitled to vote generally in the election of directors or (ii) as a result of any Adjustment Event or Corporate Transaction, the Committee shall not have the power or authority to reduce, whether through amendment or otherwise, the exercise price of any outstanding Option or base price of any outstanding Stock Appreciation Right or to grant any new Award, or make any cash payment, in substitution for or upon the cancellation of Options or Stock Appreciation Rights previously granted.
4.6
Awards Subject to Minimum Vesting Period
. Except as otherwise provided under the Plan, any Award granted under this Plan after the Effective Date shall not vest sooner than one year after the date of grant, provided, that up to 5% of the Total Available Shares may be granted under Awards without any minimum vesting requirements; provided, further, that Replacement Awards and Distribution Awards shall not be taken into account when determining the total shares available for issuance under the 5% exception.
ARTICLE V
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
5.1
Options
.
(a)
Grant
. Options may be granted to Participants at such time or times as shall be determined by the Committee. Options pursuant to this Plan may be of two types: (i) "incentive stock options" within the meaning of section 422 of the Code ("ISOs") and (ii) non-statutory stock options ("NSOs"), which are not ISOs. The grant date of an Option under the Plan will be the date on which the Option is awarded by the Committee or such other future date as the Committee shall determine. Each Option shall be evidenced by an Award Agreement that shall specify the type of Option granted, the exercise price, the duration of the Option, the number of shares of Common Stock to which the Option pertains, and such other conditions as the Committee shall determine, including customary representations, warranties and covenants with respect to securities law matters. No Option shall be an ISO unless so designated by the Committee at the time of grant or in the Award Agreement evidencing such Option, and which otherwise meets the requirements of section 422 of the Code.
(b)
Exercise Price
. Each Option granted pursuant to the Plan shall have an exercise price per share of Common Stock determined by the Committee; provided, that except in the case of Replacement Awards and Distribution Awards, such per share exercise price may not be less than the Fair Market Value of one share of Common Stock on the Option grant date.
(c)
Exercisability
. Subject to Section 4.6, each Option awarded to a Participant under the Plan shall become exercisable based on the performance of a minimum period of service or the occurrence of any event or events, including a Change in Control, as the Committee shall determine, either at or after the grant date. No Option shall be exercisable on or after the tenth anniversary of its grant date. Except as otherwise provided in the Plan, the applicable Award Agreement or as determined by the Committee at or after the grant date, after becoming exercisable each installment of an Option shall remain exercisable until expiration, termination or cancellation of the Option and, until such time, may be exercised from time to time in whole or in part, up to the total number of shares of Common Stock with respect to which it is then exercisable.
(d)
Payment
. The Committee shall establish procedures governing the exercise of Options, which procedures shall generally require that written notice of exercise thereof be given and that the exercise price thereof and any applicable withholding tax obligations be paid in full at the time of exercise (i) in cash or cash equivalents, including by personal check, (ii) through delivery of shares of Common Stock (either in full or in part, and including actual delivery or delivery by attestation), including, but not limited to, the election by the Participant to reduce the number of shares of Common Stock that are subject to the portion of the Options being exercised having a Fair Market Value equal to such portion, or (iii) in accordance with such other procedures or in such other forms as the Committee shall from time to time determine, which may include a broker-assisted cashless exercise arrangement.
(e)
Additional Rules for ISOs
. Notwithstanding any other provision of this Plan to the contrary, Options that are intended to qualify as ISOs may be granted only to employees of the Company and its subsidiaries or parent corporation (within the meaning of Section 424(f) of the Code), and no Option that is intended to qualify as an ISO
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may be granted to any employee who, at the time of such grant, owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of any Subsidiary, unless at the time such Option is granted the exercise price is at least 110% of the Fair Market Value of Common Stock and such Option by its terms is not exercisable after the expiration of five years from the date such Option is granted. In addition, at the time such Option is granted the aggregate Fair Market Value of the Common Stock for which such ISO is exercisable for the first time by an optionee during any calendar year under all of the incentive stock option plans of the Company and of any Subsidiary may not exceed $100,000. To the extent an Option that by its terms was intended to be an ISO exceeds this $100,000 limit, the portion of the Option in excess of such limit shall be treated as a NSO.
5.2
Stock Appreciation Rights
.
(a)
Grant
. Stock Appreciation Rights may be granted to Participants at such time or times as shall be determined by the Committee. Stock Appreciation Rights may be granted in tandem with Options which, unless otherwise determined by the Committee at or after the grant date, shall have substantially similar terms and conditions to such Options to the extent applicable, or may granted on a freestanding basis, not related to any Option. The grant date of any Stock Appreciation Right under the Plan will be the date on which the Stock Appreciation Right is awarded by the Committee or such other future date as the Committee shall determine. No Stock Appreciation Right shall be exercisable on or after the tenth anniversary of its grant date. Stock Appreciation Rights shall be evidenced in writing, whether as part of the Award Agreement governing the terms of the Options, if any, to which such Stock Appreciation Right relates or pursuant to a separate Award Agreement with respect to freestanding Stock Appreciation Rights, in each case, containing such conditions as the Committee shall determine, including customary representations, warranties and covenants with respect to securities law matters.
(b)
Exercise
. Subject to Section 4.6, Stock Appreciation Rights awarded to a Participant under the Plan shall become exercisable based on the performance of a minimum period of service or the occurrence of any event or events, including a Change in Control, as the Committee shall determine, either at or after the grant date. Stock Appreciation Rights that are granted in tandem with an Option may only be exercised upon the surrender of the right to exercise such Option for an equivalent number of shares of Common Stock, and may be exercised only with respect to the shares of Common Stock for which the related Option is then exercisable.
(c)
Settlement
. Subject to Section 11.4, upon exercise of a Stock Appreciation Right, the Participant shall be entitled to receive payment in the form, determined by the Committee, of cash or shares of Common Stock having a Fair Market Value equal to such cash amount, or any combination of shares of Common Stock and cash having an aggregate Fair Market Value equal to such cash amount, determined by multiplying:
(i)
any increase in the Fair Market Value of one share of Common Stock on the exercise date over the price fixed by the Committee on the grant date of such Stock Appreciation Right, which may not be less than the Fair Market Value of a share of Common Stock on the grant date of such Stock Appreciation Right (except if awarded in tandem with an Option but after the grant date of such Option, then not less than the exercise price of such Option), by
(ii)
the number of shares of Common Stock with respect to which the Stock Appreciation Right is exercised.
Notwithstanding the foregoing, on the grant date the Committee may establish a maximum amount per share which will be payable upon exercise of a Stock Appreciation Right. To the extent permitted by applicable law (including section 409A of the Code), upon such terms and conditions as the Committee may establish from time to time, a Participant may be permitted to defer the receipt of cash and/or shares of Common Stock otherwise deliverable upon exercise of a Stock Appreciation Right.
5.3
Termination of Employment
.
(a)
Death or Disability
. Unless otherwise determined by the Committee at or after the grant date, if a Participant's employment terminates by reason of such Participant's death or Disability, any Options and Stock Appreciation Rights granted to such Participant, whether or not exercisable on or prior to the date of such termination, shall, subject to Article IX, be exercisable by the Participant (or the Participant's designated beneficiary, as applicable)
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until the earlier of (i) the first anniversary of the Participant's termination of employment or, if later, the first anniversary following expiration of any blackout period in effect with respect to such Options or Stock Appreciation Rights (for the avoidance of doubt, including any period during which the Form S-8 on file with respect to the Plan is not effective), and (ii) the expiration of the term of the Options and Stock Appreciation Rights, and thereafter any Options and Stock Appreciation Rights that have not been exercised shall be forfeited and canceled.
(b)
Retirement
. Unless otherwise determined by the Committee at or after the grant date (subject to Section 4.6), if a Participant's employment terminates as a result of his or her Retirement, then (x) the Participant may exercise any Options and Stock Appreciation Rights that are exercisable on the date of such Retirement until the earlier of (i) the 90th day following the date of such Retirement or, if later, the 90th day following expiration of any blackout period in effect with respect to such Options or Stock Appreciation Rights (for the avoidance of doubt, including any period during which the Form S-8 on file with respect to the Plan is not effective), and (ii) the expiration of the term of such Options or Stock Appreciation Rights, and (y) any Options and Stock Appreciation Rights that are not exercisable upon the Participant’s Retirement shall be forfeited and canceled as of the date of such Retirement.
(c)
For Cause
. If a Participant's employment with the Company or any Subsidiary is terminated for Cause, all Options and Stock Appreciation Rights granted to such Participant which are then outstanding (whether or not exercisable on or prior to the date of such termination) shall be immediately forfeited and canceled.
(d)
Without Cause
. If a Participant's employment with the Company or any Subsidiary is terminated by the Company without Cause, then (x) the Participant may exercise any Options and Stock Appreciation Rights that are exercisable on the date of such termination until the earlier of (i) the 90th day following the date of such termination or, if later, the 90th day following expiration of any blackout period in effect with respect to such Options or Stock Appreciation Rights (for the avoidance of doubt, including any period during which the Form S-8 on file with respect to the Plan is not effective), and (ii) the expiration of the term of such Options or Stock Appreciation Rights, and (y) any Options and Stock Appreciation Rights that are not exercisable upon the Participant’s termination shall be forfeited and canceled as of the date of such termination.
(e)
Any Other Reason
. Unless otherwise determined by the Committee at or after the grant date (subject to Section 4.6), if a Participant's employment is terminated for any reason other than the ones described in Section 5.3(a), (b), (c) or (d) the Participant may exercise any Options and Stock Appreciation Rights that are exercisable on the date of such termination until the earlier of (i) the 30th day following the date of such termination or, if later, the 30th day following expiration of any blackout period in effect with respect to such Options or Stock Appreciation Rights (for the avoidance of doubt, including any period during which the Form S-8 on file with respect to the Plan is not effective), and (ii) the expiration of the term of such Options or Stock Appreciation Rights. Any Options and Stock Appreciation Rights that are not exercisable upon termination of a Participant's employment shall be forfeited and canceled as of the date of such termination.
5.4
Committee Discretion
. Notwithstanding anything to the contrary contained in this Article V, and subject to Section 4.6, the Committee may, at or after the date of grant, accelerate or waive any conditions to the exercisability of any Option or Stock Appreciation Right granted under the Plan, and may permit all or any portion of any such Option or Stock Appreciation Right to be exercised following a Participant's termination of employment for any reason on such terms and subject to such conditions as the Board shall determine for a period up to and including, but not beyond, the expiration of the term of such Options or Stock Appreciation Rights.
5.5
Forfeiture
. Unless otherwise determined by the Committee at or after the grant date, notwithstanding anything contained in this Plan to the contrary, if, during the period commencing with a Participant's employment with the Company or any Subsidiary, and continuing until the first anniversary of the later of (i) the Participant's employment termination and (ii) the expiration of any post-termination exercise period (the "Covered Period"), the Participant, except with the prior written consent of the Committee,
(a)
directly or indirectly, owns any interest in, operates, joins, controls or participates as a partner, director, principal, officer or agent of, enters into the employment of, acts as a consultant to, or performs any services for any entity which has operations that compete with any business of the Company and the Subsidiaries in which the Participant was employed (in any capacity) in any jurisdiction in which such business is engaged, or in which any of the Company and the Subsidiaries have documented plans to become engaged, of which the Participant has knowledge at the time
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of the Participant's termination of employment (the "Business"), except where (x) the Participant's interest or association with such entity is unrelated to the Business, (y) such entity's gross revenue from the Business is less than 10% of such entity's total gross revenue, and (z) the Participant's interest is directly or indirectly less than 2% of the Business;
(b)
directly or indirectly, solicits for employment, employs or otherwise interferes with the relationship of the Company or any of its Affiliates with any natural person throughout the world who is or was employed by or otherwise engaged to perform services for the Company or any of its Affiliates at any time during the Participant's employment with the Company or any Subsidiary (in the case of any such activity during such time) or during the 12-month period preceding such solicitation, employment or interference (in the case of any such activity after the termination of the Participant's employment); or
(c)
directly or indirectly, discloses or misuses any confidential information of the Company or any of its Affiliates (such activities in subsections (a), (b) and (c) hereof to be collectively and individually referred to as "Wrongful Conduct"),
then any Options and Stock Appreciation Rights granted to the Participant hereunder, to the extent they remain unexercised, shall automatically terminate and be canceled effective as of the date on which the Participant first engaged in such Wrongful Conduct and, in such case or in the case of the Participant's termination for Cause, the Participant shall pay to the Company in cash any Option/SAR Financial Gain the Participant realized from exercising all or a portion of the Options and Stock Appreciation Rights granted hereunder within the 12-month period ending on the date of the Participant's violation (or such other period as determined by the Committee) (such period, the "Wrongful Conduct Period"). For purposes of this Section 5.5, "Option/SAR Financial Gain" shall equal, on each date of exercise during the Wrongful Conduct Period, (I) with respect to Options, the excess of (A) the greater of (i) the Fair Market Value on the date of exercise and (ii) the Fair Market Value on the date of sale of the Option shares, over (B) the exercise price, multiplied by the number of shares of Common Stock subject to such Award (without reduction for any shares of Common Stock surrendered or attested to), and (II) with respect to Stock Appreciation Rights, the excess of (A) the Fair Market Value on the date of exercise, over (B) the exercise price, multiplied by the number of shares of Common Stock subject to such Stock Appreciation Right. Unless otherwise determined by the Committee at or after the grant date, each Award Agreement evidencing the grant of Options and/or Stock Appreciation Rights shall provide for the Participant's consent to and authorization of the Company and the Subsidiaries to deduct from any amounts payable by such entities to such Participant any amounts the Participant owes to the Company under this Section 5.5. This right of set-off is in addition to any other remedies the Company may have against the Participant for the Participant's breach of this Section 5.5. For the avoidance of doubt, the Participant's obligations under this Section 5.5 shall be cumulative of any similar obligations the Participant has under this Plan, any Award Agreement, any Company policy, standard or code (including, without limitation, the Company’s Standards of Business Conduct or any clawback plan or policy), or any other agreement with the Company or any Subsidiary, including, without limitation, an individual employment agreement or restrictive covenant agreement.
5.6
Financial Restatements
. In addition to any actions under any applicable clawback policy or compensation recovery policy or such other similar policy of the Company or a Subsidiary in effect from time to time, an Award Agreement may provide that, in the event that a Participant commits misconduct, fraud or gross negligence (whether or not such misconduct, fraud or gross negligence is deemed or could be deemed to be an event constituting Cause) and as a result of, or in connection with, such misconduct, fraud or gross negligence, the Company restates any of its financial statements, the Committee may require any or all of the following:
(a)
that the Participant forfeit some or all of the Options and Stock Appreciation Rights held by such Participant at the time of such restatement;
(b)
that the Participant forfeit (or pay to the Company) some or all of the shares of Common Stock or cash (net of the aggregate exercise paid therefore) held by the Participant at the time of such restatement that had been received in respect of Options and Stock Appreciation Rights, as applicable, that have been exercised during the three-year period prior to the date that the Company is required to prepare a financial restatement; and
(c)
that the Participant pay to the Company in cash all or a portion of the proceeds that the Participant realized from the sale of shares of Common Stock that had been received (net of the aggregate exercise price paid
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therefore) in respect of any Options and Stock Appreciation Rights that had been exercised by the Participant within the three-year period prior to the date that the Company is required to prepare a financial restatement.
Notwithstanding the foregoing, in the event that the Committee determines that the rules and regulations implementing Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act require a longer or different clawback time period than the three-year period contemplated by clauses 5.6(b) and 5.6(c) above, such three-year period shall be deemed extended (but not reduced) to the extent necessary to be consistent with such rules and regulations.
ARTICLE VI
PERFORMANCE STOCK, PERFORMANCE STOCK UNITS
AND PERFORMANCE UNITS
6.1
Grant
. Performance Stock, Performance Stock Units and Performance Units may be granted to Participants at such time or times as shall be determined by the Committee. The grant date of any Performance Stock, Performance Stock Units or Performance Units under the Plan will be the date on which such Performance Stock, Performance Stock Units or Performance Units are awarded by the Committee or on such other future date as the Committee shall determine. Performance Stock, Performance Stock Units and Performance Units shall be evidenced by an Award Agreement that shall specify the number of shares of Performance Stock, the number of Performance Stock Units, or the dollar amount of any Performance Units, as the case may be, to which such Award pertains, the Restriction Period, the Performance Period, and such other conditions as the Committee shall determine, including customary representations, warranties and covenants with respect to securities law matters. No shares of Common Stock will be issued at the time an Award of Performance Stock Units or Performance Units is made, and the Company shall not be required to set aside a fund for the payment of any such Award.
6.2
Vesting
.
(a)
In General
. Subject to Section 4.6, Performance Stock, Performance Stock Units and Performance Units granted to a Participant under the Plan shall be subject to a Restriction Period, which shall lapse upon the attainment of specified performance objectives or the occurrence of any event or events, including a Change in Control, as the Committee shall determine, either at or after the grant date.
(b)
Performance Objectives
. The performance objectives for any grant of Performance Stock, Performance Stock Units, Performance Units or any other Award will be based on such criteria as may be determined by the Committee.
(c)
Special Rules Relating to Performance Objectives
. Without limiting the generality of Section 6.2(b) above, (i) performance objectives may be established on a Company-wide basis or with respect to one or more Company business units or divisions, or Subsidiaries; and either in absolute terms, relative to the performance of one or more similarly situated companies, or relative to the performance of an index covering a peer group of companies, and (ii) when establishing performance objectives for the applicable Performance Period, the Committee may exclude any or all items that are unusual in nature or infrequently occurring as determined under U.S. generally acceptable accounting principles including, without limitation, the charges or costs associated with restructurings of the Company, discontinued operations, and the cumulative effects of accounting changes, and as identified in the Company's financial statements, notes to the Company's financial statements or management's discussion and analysis of financial condition and results of operations contained in the Company's most recent report filed with the Commission pursuant to the Exchange Act.
(d)
Partial Attainment of Performance Objectives
. Without limiting the generality of Section 6.2(b) above, the Committee may provide at the time of grant that if the performance objective or objectives are attained in part, the Restriction Period with respect to a specified portion (which may be zero) of any Award of Performance Stock, Performance Stock Units or Performance Units will lapse and any remaining portion shall be canceled.
(e)
Newly Eligible Participants
. Notwithstanding anything in this Article VI to the contrary, the Committee shall be entitled to make such rules, determinations and adjustments as it deems appropriate with respect to any Participant who becomes eligible to receive an Award of Performance Stock, Performance Stock Units or Performance Units after the commencement of a Performance Period.
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6.3
Additional Provisions Relating to Performance Stock
.
(a)
Restrictions on Transferability
. Except as otherwise provided in Section 6.6(a), no Performance Stock may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated until the lapse of the Restriction Period. Thereafter, Performance Stock may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated in compliance with all applicable securities laws, the Award Agreement and any other agreement to which the Performance Stock is subject. The Committee shall require that any stock certificates evidencing any Performance Stock be held in the custody of the Secretary of the Company until the applicable Restriction Period lapses, and that, as a condition of any grant of Performance Stock, the Participant shall have delivered a stock power, endorsed in blank, relating to the shares of Common Stock covered by such Award. Any attempt by a Participant, directly or indirectly, to offer, transfer, sell, pledge, hypothecate or otherwise dispose of any Performance Stock or any interest therein or any rights relating thereto without complying with the provisions of the Plan, including this Section 6.3, shall be void and of no effect.
(b)
Legend
. Each certificate evidencing shares of Common Stock subject to an Award of Performance Stock shall be registered in the name of the Participant holding such Performance Stock and shall bear the following (or similar) legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS (INCLUDING FORFEITURE) CONTAINED IN THE HERTZ GLOBAL HOLDINGS, INC. 2016 OMNIBUS INCENTIVE PLAN AND THE RELATED AWARD AGREEMENT AND NEITHER THIS CERTIFICATE NOR THE SHARES REPRESENTED BY IT ARE ASSIGNABLE OR OTHERWISE TRANSFERABLE EXCEPT IN ACCORDANCE WITH SUCH PLAN, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY."
(c)
Rights as a Stockholder
. The Committee shall determine whether and to what extent dividends and distributions will be credited to the account of a Participant receiving an Award of Performance Stock. Dividends shall not be paid with respect to an unvested Award of Performance Stock (provided, that dividends may accrue on such unvested Awards and be paid to the extent the Awards vest). The Committee shall determine whether payments in connection with dividends shall be made in cash, in shares of Common Stock or in another form. The Committee may provide that such dividends (if any) shall be deemed to have been reinvested in additional shares of Common Stock. If any such dividends or distributions are paid in shares of Common Stock, the shares of Common Stock will be subject to the same restrictions on transferability and forfeitability as the shares of Common Stock with respect to which they were paid. Unless the Committee determines otherwise, a Participant holding outstanding Performance Stock shall be entitled to exercise full voting rights and other rights as a stockholder with respect to the shares of Common Stock underlying such Award during the period in which such shares remain subject to the Restriction Period.
6.4
Additional Provisions Relating to Performance Stock Units
.
(a)
Restrictions on Transferability
. Except as otherwise provided in Section 6.6(a) or with the consent of the Committee, Performance Stock Units may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated. Any attempt by a Participant, directly or indirectly, to offer, transfer, sell, pledge, hypothecate or otherwise dispose of any Performance Stock Units or any interest therein or any rights relating thereto other than as provided in the Plan shall be void and of no effect.
(b)
Rights as a Stockholder
. The Committee shall determine whether and to what extent Dividend Equivalents will be credited to the account of a Participant receiving an Award of Performance Stock Units. Dividend Equivalents shall not be paid with respect to an unvested Award of Performance Stock Units (provided, that Dividend Equivalents may accrue on such unvested Awards and be paid to the extent the Awards vest). The Committee shall determine whether payments in connection with a Dividend Equivalent shall be made in cash, in shares of Common Stock or in another form. The Committee may provide that such Dividend Equivalents (if any) shall be deemed to have been reinvested in additional shares of Common Stock. Unless and until the Company issues a certificate or certificates to a Participant for shares of Common Stock in respect of his or her Award of Performance Stock Units, or otherwise determined by the Committee at or after the grant date, a Participant holding outstanding Performance Stock Units shall not be entitled to exercise any voting rights and any other rights as a stockholder with respect to the shares of Common Stock underlying such Award.
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(c)
Settlement of Performance Stock Units
. Unless the Committee determines otherwise at or after the grant date, as soon as reasonably practicable after the lapse of the Restriction Period with respect to any Performance Stock Units then held by a Participant, the Company shall issue to the Participant the shares of Common Stock underlying such Performance Stock Units (plus additional shares of Common Stock for each Performance Stock Units credited in respect of dividends or distributions) or, if the Committee so determines in its sole discretion, an amount in cash equal to the Fair Market Value of such shares of Common Stock or any combination of shares of Common Stock and cash having an aggregate Fair Market Value equal to such shares of Common Stock. To the extent permitted by applicable law (including section 409A of the Code), upon such terms and conditions as the Committee may establish from time to time, a Participant may be permitted to defer the receipt of the shares of Common Stock or cash otherwise deliverable upon settlement of Performance Stock Units. Upon issuance of shares of Common Stock underlying Performance Stock Units following lapse of the Restriction Period, such shares may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated in compliance with all applicable securities laws, the Award Agreement and any other agreement to which such shares are subject.
6.5
Additional Provisions Relating to Performance Units
.
(a)
Restrictions on Transferability
. Except as otherwise provided in Section 6.6(a), no Performance Units may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated. Any attempt by a Participant, directly or indirectly, to offer, transfer, sell, pledge, hypothecate or otherwise dispose of any Performance Units or any interest therein or any rights relating thereto shall be void and of no effect.
(b)
Settlement of Performance Units
. Unless the Committee determines otherwise at or after the grant date, as soon as reasonably practicable after the lapse of the Restriction Period with respect to any Performance Units then held by a Participant, the Company shall deliver to the Participant a cash payment equal to the value of such Award or, if the Committee has so determined, a number of shares of Common Stock, which shares shall have a Fair Market Value equal to the value of such Award, or any combination of shares of Common Stock and cash having an aggregate Fair Market Value equal to the value of such Award. To the extent permitted by applicable law (including section 409A of the Code), upon such terms and conditions as the Committee may establish from time to time, a Participant may be permitted to defer the receipt of cash or the shares of Common Stock otherwise deliverable upon settlement of Performance Units. Upon issuance of shares of Common Stock underlying Performance Units following lapse of the Restriction Period, such shares may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated in compliance with all applicable securities laws, the Award Agreement and any other agreement to which such shares are subject.
6.6
Termination of Employment
.
(a)
Death or Disability
. Unless otherwise determined by the Committee at or after the grant date, if a Participant's employment terminates by reason of such Participant's death or Disability, the Participant or, as the case may be, the Participant's estate, shall retain a portion of his or her Performance Stock, Performance Stock Units and Performance Units equal to the number of shares or units underlying each Award multiplied by a fraction, the numerator of which is the number of days elapsed from the commencement of the applicable Performance Period through the date of termination, and the denominator of which is the number of days in such Performance Period (each a "Retained Award"), and the remainder of each Award shall be forfeited and canceled as of the date of such termination. The Restriction Period on a Retained Award shall lapse upon completion of the applicable Performance Period to the extent that applicable performance objectives are attained. Settlement of a Retained Award shall be made at the time and in the manner provided in Sections 6.4(c) and 6.5(b) except that no additional deferrals shall be permitted.
(b)
Retirement
. Unless otherwise determined by the Committee at or after the grant date (subject to Section 4.6), if a Participant's employment terminates as a result of his or her Retirement, any Performance Stock, Performance Stock Units and Performance Units for which the Performance Period has not then lapsed shall be forfeited and canceled as of the date of such termination of employment; provided, that the Committee may authorize that, if the Participant agrees to a release of claims and to be bound by restrictive covenants in such form and having such terms as the Committee shall determine, which may include non-competition, non-solicitation, non-disclosure and non-disparagement covenants, then the Participant shall retain a portion of his or her Performance Stock, Performance Stock Units and Performance Units equal to the number of shares or units underlying each Award multiplied
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by a fraction, the numerator of which is the number of days elapsed from the commencement of the applicable Performance Period through the date of his or her Retirement, and the denominator of which is the number of days in such Performance Period (each a "Retained Retirement Award"), and the remainder of each Award shall be forfeited and canceled as of the date of such Retirement. Subject to the Participant's compliance with such covenants, and, to the extent that applicable performance objectives are attained, the Restriction Period on the Retained Retirement Awards shall lapse upon completion of the applicable Performance Period for such Retained Retirement Award. If the Participant violates any restrictive covenants during the remaining Performance Period, as determined by the Committee in its sole discretion, all Performance Stock, Performance Stock Units and Performance Units for which the Performance Period has not then lapsed shall be immediately forfeited and canceled as of the date of such violation or termination.
(c)
Any Other Reason
. Unless otherwise determined by the Committee at or after the grant date (subject to Section 4.6), if a Participant's employment is terminated for any reason other than one described in Sections 6.6(a) and (b), any then-outstanding Performance Stock, Performance Stock Units and Performance Units granted to such Participant shall be immediately forfeited and canceled as of the date of such termination of employment.
6.7
Forfeiture
. Unless otherwise determined by the Committee at or after the grant date, notwithstanding anything contained in this Plan to the contrary, if, during the Covered Period, the Participant, except with the prior written consent of the Committee, engages in Wrongful Conduct, then any Performance Stock, Performance Stock Units and Performance Units granted to the Participant hereunder, for which the Restriction Period has not then lapsed, shall automatically terminate and be canceled effective as of the date on which the Participant first engaged in such Wrongful Conduct and, in such case or in the case of the Participant's termination for Cause, the Participant shall pay to the Company in cash any Performance-Based Financial Gain the Participant realized from the vesting of all or a portion of the Performance Stock, Performance Stock Units and Performance Units granted hereunder and having a Vesting Date within the Wrongful Conduct Period. For purposes of this Section 6.7, "Performance-Based Financial Gain" shall equal, in the case of each Vesting Date during the Wrongful Conduct Period, (I) the greater of (A) the Fair Market Value of a share of the underlying Common Stock on the Vesting Date of such Award and (B) the per share Fair Market Value on the date of any sale of such underlying Common Stock, multiplied by (II) the number of shares of Common Stock subject to such Award (without reduction for any shares of Common Stock surrendered or attested to). Unless otherwise determined by the Committee at or after the grant date, each Award Agreement evidencing the grant of Performance Stock, Performance Stock Units and Performance Units shall provide for the Participant's consent to and authorization of the Company and the Subsidiaries to deduct from any amounts payable by such entities to such Participant any amounts the Participant owes to the Company under this Section 6.7. This right of set-off is in addition to any other remedies the Company may have against the Participant for the Participant's breach of this Section 6.7. For the avoidance of doubt, the Participant's obligations under this Section 6.7 shall be cumulative of any similar obligations the Participant has under this Plan, any Award Agreement, any Company policy, standard or code (including, without limitation, the Company’s Standards of Business Conduct or any clawback plan or policy), or any other agreement with the Company or any Subsidiary), including, without limitation, an individual employment agreement or restrictive covenant agreement.
6.8
Financial Restatements
. In addition to any actions under any applicable clawback policy or compensation recovery policy, or such other similar policy of the Company or a Subsidiary in effect from time to time, an Award Agreement may provide that if the Company restates any of its financial statements, then the Committee may require any or all of the following:
(a)
that the Participant forfeit (or pay to the Company) some or all of the cash or shares of Common Stock held by the Participant at the time of such restatement that had been received, within the three-year period prior to the date that the Company is required to prepare a financial restatement, in settlement of Performance Stock, Performance Stock Units and Performance Units to the extent that such cash or shares would not have been paid had the applicable financial results been reported accurately; and
(b)
that the Participant pay to the Company in cash all or a portion of the proceeds that the Participant realized from the sale of shares of Common Stock that had been received, within the three-year period prior to the date that the Company is required to prepare a financial restatement, in settlement of any Performance Stock, Performance Stock Units and Performance Units to the extent that such shares would not have been paid had the applicable financial results been reported accurately.
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Notwithstanding the foregoing, in the event that the Committee determines that the rules and regulations implementing Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act require a longer or different clawback time period than the three-year period contemplated by clauses 6.8(a) and 6.8(b) above, such three-year period shall be deemed extended (but not reduced) to the extent necessary to be consistent with such rules and regulations.
ARTICLE VII
RESTRICTED STOCK AND RESTRICTED STOCK UNITS; SHARE AWARDS
7.1
Grant
. Restricted Stock and Restricted Stock Units may be granted to Participants at such time or times as shall be determined by the Committee. The grant date of any Restricted Stock or Restricted Stock Units under the Plan will be the date on which such Restricted Stock or Restricted Stock Units are awarded by the Committee or on such other future date as the Committee shall determine. Restricted Stock and Restricted Stock Units shall be evidenced by an Award Agreement that shall specify the number of shares of Common Stock to which the Restricted Stock and the Restricted Stock Units pertain (and, if applicable, whether such Award may be payable in cash), the Restriction Period, and such terms and conditions as the Committee shall determine, including customary representations, warranties and covenants with respect to securities law matters. No shares of Common Stock will be issued at the time an Award of Restricted Stock Units is made and the Company shall not be required to set aside a fund for the payment of any such Award.
7.2
Vesting
. Subject to Section 4.6, Restricted Stock and Restricted Stock Units granted to a Participant under the Plan shall be subject to a Restriction Period, which shall lapse upon the performance of a minimum period of service, or the occurrence of any event or events, including a Change in Control, as the Committee shall determine, either at or after the grant date. The Restriction Period on any Restricted Stock or Restricted Stock Units shall not fully lapse prior to a Participant's completion of three years of service to the Company or any Subsidiary from the date of the Award grant; provided, that the Committee may provide for a Restriction Period to lapse in pro rata or graded installments over such three-year period. Notwithstanding the previous sentence, the Committee may grant Awards for Restricted Stock and Restricted Stock Units that have a Restriction Period that lapses in full prior to a Participant's completion of three years of service to the Company or any Subsidiary from the date of the Award grant and that the minimum Restriction Period for any such Award granted to a newly eligible individual shall instead be one year, in each case, subject to the limitations of Section 4.6. In addition, subject to the limitations of Section 4.6, the Restriction Period for any such Award to a non-employee director of the Company or its Subsidiaries shall be as determined by the Committee. Replacement Awards shall not be, and the Distribution Awards are not, subject to a minimum Restriction Period nor taken into account when determining the total shares available for issuance under the 5% exception described in Section 4.6.
7.3
Additional Provisions Relating to Restricted Stock
.
(a)
Restrictions on Transferability
. Unless otherwise determined by the Committee, no Restricted Stock may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated until the lapse of the Restriction Period. Thereafter, Restricted Stock may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated in compliance with all applicable securities laws, the Award Agreement, and any other agreement to which the Restricted Stock is subject. The Committee shall require that any stock certificates evidencing any Restricted Stock be held in the custody of the Secretary of the Company until the applicable Restriction Period lapses, and that, as a condition of any grant of Restricted Stock, the Participant shall have delivered a stock power, endorsed in blank, relating to the share covered by such Award. Any attempt by a Participant, directly or indirectly, to offer, transfer, sell, pledge, hypothecate or otherwise dispose of any Restricted Stock or any interest therein or any rights relating thereto without complying with the provisions of the Plan, including this Section 7.3, shall be void and of no effect.
(b)
Legend
. Each certificate evidencing shares of Common Stock subject to an Award of Restricted Stock shall be registered in the name of the Participant holding such Restricted Stock and shall bear the legend (or similar legend) as specified in Section 6.3(b).
(c)
Rights as a Stockholder
. The Committee shall determine whether and to what extent dividends and distributions will be credited to the account of a Participant receiving an Award of Restricted Stock. Dividends shall not be paid with respect to an unvested Award of Restricted Stock (provided, that dividends may accrue on such
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unvested Awards and be paid to the extent the Awards vest). The Committee shall determine whether payments in connection with dividends shall be made in cash, in shares of Common Stock or in another form. The Committee may provide that such dividends (if any) shall be deemed to have been reinvested in additional shares of Common Stock. If any such dividends or distributions are paid in shares of Common Stock, the shares of Common Stock will be subject to the same restrictions on transferability and forfeitability as the shares of Common Stock with respect to which they were paid. Unless otherwise determined by the Committee, a Participant holding outstanding Restricted Stock shall be entitled to exercise full voting rights and other rights as a stockholder with respect to the shares of Common Stock underlying such Award during the period in which such shares remain subject to the Restriction Period.
7.4
Additional Provisions Relating to Restricted Stock Units
.
(a)
Restrictions on Transferability
. No Restricted Stock Units may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated. Any attempt by a Participant, directly or indirectly, to offer, transfer, sell, pledge, hypothecate or otherwise dispose of any Restricted Stock Units or any interest therein or any rights relating thereto without complying with the provisions of the Plan, including this Section 7.4, shall be void and of no effect.
(b)
Rights as a Stockholder
. The Committee shall determine whether and to what extent Dividend Equivalents will be credited to the account of, or will be paid currently to, a Participant receiving an Award of Restricted Stock Units. Dividend Equivalents shall not be paid with respect to an unvested Award of Restricted Stock Units (provided, that Dividend Equivalents may accrue on such unvested Awards and be paid to the extent the Awards vest). The Committee shall determine whether payments in connection with a Dividend Equivalent shall be made in cash, in shares of Common Stock or in another form. The Committee may provide that such Dividend Equivalents (if any) shall be deemed to have been reinvested in additional shares of Common Stock. Unless and until the Company issues a certificate or certificates to a Participant for shares of Common Stock in respect of his or her Award of Restricted Stock Units, or as otherwise determined by the Committee at or after the grant date, a Participant holding outstanding Restricted Stock Units shall not be entitled to exercise any voting rights and any other rights as a stockholder with respect to the shares of Common Stock underlying such Award.
(c)
Settlement of Restricted Stock Units
. Unless the Committee determines otherwise at or after the grant date, as soon as reasonably practicable after the lapse of the Restriction Period with respect to any Restricted Stock Units, the Company shall issue the shares of Common Stock underlying such Restricted Stock Units (plus additional shares of Common Stock for Restricted Stock Units credited in respect of dividends or distributions) or, if the Committee so determines in its sole discretion, an amount in cash equal to the Fair Market Value of such shares of Common Stock or any combination of shares of Common Stock and cash having an aggregate Fair Market Value equal to such shares of Common Stock. To the extent permitted by applicable law (including section 409A of the Code), upon such terms and conditions as the Committee may establish from time to time, a Participant may be permitted to defer the receipt of the shares of Common Stock or cash otherwise deliverable upon settlement of Restricted Stock Units. Upon issuance of shares of Common Stock following lapse of the Restriction Period, such shares may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated in compliance with all applicable securities law, the Award Agreement and any other agreement to which such shares are subject.
7.5
Termination of Employment.
(a)
Death, Disability or Retirement
. Unless otherwise determined by the Committee at or after the grant date, if a Participant's employment terminates by reason of such Participant's death, Disability or Retirement, the Participant or, as the case may be, the Participant's estate, shall retain a portion of his or her Restricted Stock and Restricted Stock Units equal to the number of shares or units underlying each Award multiplied by a fraction, the numerator of which is the number of days elapsed from the commencement of the applicable Restriction Period through the date of termination, and the denominator of which is the number of days in such Restriction Period (each a "Retained Restricted Award"), and the remainder of each Award shall be forfeited and canceled as of the date of such termination. The Restriction Period on a Retained Restricted Award shall lapse (and subject to Section 4.6 in the case of Retirement, unless otherwise determined by the Committee at or after the grant date) upon the Participant’s termination of employment. Settlement of a Retained Restricted Award shall be made at the time and in the manner provided in Sections 7.3 and 7.4 except that no additional deferrals shall be permitted.
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(b)
Any Other Reason
. Unless otherwise determined by the Committee at or after the grant date (subject to Section 4.6), if a Participant's employment is terminated for any reason during the Restriction Period other than as described in Section 7.5(a), any Restricted Stock and Restricted Stock Units granted to such Participant for which the Restriction Period has not then expired shall be forfeited and canceled as of the date of such termination.
7.6
Forfeiture
. Unless otherwise determined by the Committee at or after the grant date, notwithstanding anything contained in this Plan to the contrary, if, during the Covered Period the Participant, except with the prior written consent of the Committee, engages in Wrongful Conduct, then any Restricted Stock and Restricted Stock Units granted to the Participant hereunder, for which the Restriction Period has not lapsed, shall automatically terminate and be canceled effective as of the date on which the Participant first engaged in such Wrongful Conduct and, in such case and in the case of the Participant's termination for Cause, the Participant shall pay to the Company in cash (i) any Restriction-Based Financial Gain the Participant realized from all or a portion of the Restricted Stock and Restricted Stock Units granted hereunder having a Vesting Date within the Wrongful Conduct Period, and (ii) any Share-Based Financial Gain the Participant realized from all or a portion of the Share Awards granted hereunder having a grant date within the Wrongful Conduct Period. For purposes of this Section 7.6, "Restriction-Based Financial Gain" shall equal, on each Vesting Date during the Wrongful Conduct Period, (I) the greater of (A) the Fair Market Value of a share of the underlying Common Stock on the Vesting Date and (B) the per share Fair Market Value on the date of sale of such underlying Common Stock, multiplied by (II) the number of shares of Common Stock subject to such Award (without reduction for any shares of Common Stock surrendered or attested to). For purposes of this Section 7.6, "Share-Based Financial Gain" shall equal, in the case of each grant date during the Wrongful Conduct Period, (I) the greater of (A) the Fair Market Value of a share of the underlying Common Stock on the grant date of such Award and (B) the per share Fair Market Value on the date of any sale of such underlying Common Stock, multiplied by (II) the number of shares of Common Stock subject to such Award (without reduction for any shares of Common Stock surrendered or attested to). Unless otherwise determined by the Committee at or after the grant date, each Award Agreement evidencing the grant of Restricted Stock and/or Restricted Stock Units shall provide for the Participant's consent to and authorization of the Company and the Subsidiaries to deduct from any amounts payable by such entities to such Participant any amounts the Participant owes to the Company under this Section 7.6. This right of set-off is in addition to any other remedies the Company may have against the Participant for the Participant's breach of this Section 7.6. For the avoidance of doubt, the Participant's obligations under this Section 7.6 shall be cumulative of any similar obligations the Participant has under this Plan, any Award Agreement, any Company policy, standard or code (including, without limitation, the Company’s Standards of Business Conduct or any clawback plan or policy), or any other agreement with the Company or any Subsidiary, including, without limitation, an individual employment agreement or restrictive covenant agreement).
7.7
Financial Restatements
. In addition to any actions under any applicable clawback policy or compensation recovery policy or such other similar policy of the Company or a Subsidiary in effect from time to time, an Award Agreement may provide that, in the event that a Participant commits misconduct, fraud or gross negligence (whether or not such misconduct, fraud or gross negligence is deemed or could be deemed to be an event constituting Cause) and as a result of, or in connection with, such misconduct, fraud or gross negligence, the Company restates any of its financial statements, then the Committee may require any or all of the following:
(a)
that the Participant forfeit some or all of the Restricted Stock and Restricted Stock Units held by such Participant at the time of such restatement;
(b)
that the Participant forfeit (or pay to the Company) some or all of the cash or shares of Common Stock held by the Participant at the time of such restatement that had been received, within the three-year period prior to the date that the Company is required to prepare a financial restatement, as Share Awards and/or in settlement of Restricted Stock and Restricted Stock Units; and
(c)
that the Participant pay to the Company in cash all or a portion of the proceeds that the Participant realized from the sale of shares of Common Stock that had been received, within the three-year period prior to the date that the Company is required to prepare a financial restatement, as Share Awards and/or in settlement of any Restricted Stock and Restricted Stock Units.
Notwithstanding the foregoing, in the event that the Committee determines that the rules and regulations implementing Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act require a longer or different clawback
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time period than the three-year period contemplated by clauses 7.7(b) and 7.7(c) above, such three-year period shall be deemed extended (but not reduced) to the extent necessary to be consistent with such rules and regulations.
7.8
Share Awards
. Subject to Section 4.6, Share Awards may be granted to Participants at such time or times as shall be determined by the Committee on such terms and conditions as the Committee may determine in its discretion. Share Awards may be made as additional compensation for services rendered by a Participant to the Company or any Subsidiary or may be in lieu of cash or other compensation to which the Participant may be entitled from the Company or any Subsidiary.
ARTICLE VIII
DEFERRED STOCK UNITS
8.1
In General
. Subject to Section 4.6, freestanding Deferred Stock Units may be granted to Participants at such time or times as shall be determined by the Committee without regard to any election by the Participant to defer receipt of any compensation or bonus amount payable to him. The grant date of any freestanding Deferred Stock Units under the Plan will be the date on which such freestanding Deferred Stock Units are awarded by the Committee or on such other future date as the Committee shall determine. In addition, to the extent permitted by applicable law (including section 409A of the Code), on fixed dates established by the Committee and subject to such terms and conditions as the Committee shall determine, the Committee may permit a Participant to elect to defer receipt of all or a portion of his annual compensation and/or incentive bonus ("Deferred Annual Amount") payable by the Company or a Subsidiary and receive in lieu thereof an Award of elective Deferred Stock Units equal to the greatest whole number which may be obtained by dividing (i) the amount of the Deferred Annual Amount by (ii) the Fair Market Value of one share of Common Stock on the date of payment of such compensation and/or annual bonus. Elective Deferred Stock Units shall not be subject to the limitations of Section 4.6. Deferred Stock Units shall be evidenced by an Award Agreement that shall specify the number of shares of Common Stock to which the Deferred Stock Units pertains, and such terms and conditions as the Committee shall determine, including customary representations, warranties and covenants with respect to securities law matters. Upon the grant of Deferred Stock Units pursuant to the Plan, the Company shall establish a notional account for the Participant and will record in such account the number of shares of Deferred Stock Units awarded to the Participant. No shares of Common Stock will be issued to the Participant at the time an award of Deferred Stock Units is granted.
8.2
Rights as a Stockholder
. The Committee shall determine whether and to what extent Dividend Equivalents will be credited to the account of, or will be paid currently to, a Participant receiving an Award of Deferred Stock Units. Dividend Equivalents shall not be paid with respect to an unvested Award of Deferred Stock Units (provided, that Dividend Equivalents may accrue on such unvested Awards and be paid to the extent the Awards vest). The Committee shall determine whether payments in connection with a Dividend Equivalent shall be made in cash, in shares of Common Stock or in another form. The Committee may provide that such Dividend Equivalents (if any) shall be deemed to have been reinvested in additional shares of Common Stock. A Participant shall not have any rights as a stockholder in respect of Deferred Stock Units awarded pursuant to the Plan (including, but not limited to, the right to vote on any matter submitted to the Company's stockholders) until such time as the shares of Common Stock attributable to such Deferred Stock Units have been issued to such Participant or his beneficiary.
8.3
Restrictions on Transferability
. No Deferred Stock Units may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated. Any attempt by a Participant, directly or indirectly, to offer, transfer, sell, pledge, hypothecate or otherwise dispose of any Deferred Stock Units or any interest therein or any rights relating thereto without complying with the provisions of the Plan shall be void and of no effect.
8.4
Settlement
. Unless the Committee determines otherwise at or after the grant date, the Company shall issue the shares of Common Stock underlying any of a Participant's freestanding Deferred Stock Units (and related Dividend Equivalents) for which the Restriction Period shall have lapsed on or prior to the date of such Participant's termination of employment with the Company and any Subsidiary, other than a termination for Cause, as soon as administratively practicable, but not later than 90 days, following the date of such termination of employment (or on such earlier date as the Committee shall permit or such later date as may be elected by the Participant in accordance with section 409A of the Code and the rules and procedures of the Board or as may be required by applicable law). Unless the Committee determines otherwise at or after the grant date, in the event of the termination of a Participant's
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employment with the Company and the Subsidiaries for Cause, the Participant shall immediately forfeit all rights with respect to any shares of freestanding Deferred Stock Units (and related Dividend Equivalents) credited to his account, whether or not the Restriction Period shall have then lapsed. Subject to Article IX and Article XI, and the last sentence of Section 8.1, unless the Committee determines otherwise at or after the grant date, the Company shall issue the shares of Common Stock underlying any of a Participant's elective Deferred Stock Units (and related Dividend Equivalents) credited to such Participant's account under the Plan as soon as administratively practicable, but not later than 90 days, following the date of such Participant's termination of employment (or such later date as may be elected by the Participant in accordance with the rules and procedures of the Committee or as may be required by applicable law). The Committee may provide in the Award Agreement applicable to any Award of Deferred Stock Units that, in lieu of issuing shares of Common Stock in settlement of any Deferred Stock Units, the Committee may direct the Company to pay to the Participant the Fair Market Value of the shares of Common Stock corresponding to such Deferred Stock Units in cash, or in any combination of shares of Common Stock and cash having an aggregate Fair Market Value equal to such shares of Common Stock.
8.5
Further Deferral Elections
. To the extent permitted by applicable law (including section 409A of the Code), upon such terms and conditions as the Committee may establish from time to time, a Participant may elect to further defer receipt of shares of Common Stock issuable in respect of Deferred Stock Units (or an installment of an Award) for a specified period or until a specified event.
ARTICLE IX
CHANGE IN CONTROL
9.1
Double Trigger for Honored, Assumed & Substituted Awards
. Upon a Change in Control, no cancellation, termination, acceleration of exercisability or vesting, lapse of any Restriction Period or settlement or other payment shall occur with respect to any outstanding Award, if the Committee (as constituted immediately prior to the consummation of the transaction constituting the Change in Control) so determines in its sole discretion prior to the Change in Control that such outstanding Awards shall be honored or assumed, or new rights substituted therefor (such honored, assumed or substituted Award being hereinafter referred to as an "Alternative Award") by the New Employer, provided, that any Alternative Award must:
(a)
be based on shares of common stock that are traded on an established U.S. securities market or another public market determined by the Committee prior to the Change in Control;
(b)
provide the Participant (or each Participant in a class of Participants) with rights and entitlements substantially equivalent to or better than the rights, terms and conditions applicable under such Award, including, but not limited to, an identical or better exercise or vesting schedule and identical or better timing and methods of payment (including liquidity rights with respect to shares of Common Stock received in settlement of such Award);
(c)
have substantially equivalent economic value to such Award (determined at the time of the Change in Control);
(d)
have, unless the Committee (as constituted prior to the consummation of the transaction constituting the Change in Control) determines otherwise at or after the grant date, terms and conditions which provide that in the event that the Participant suffers an involuntary termination without Cause within two years following the Change in Control, any conditions on the Participant's rights under, or any restrictions on transfer or exercisability applicable to, each such Award held by such Participant shall be waived or shall lapse, as the case may be; and
(e)
not result in adverse tax consequences to the Participant under section 409A of the Code.
9.2
Accelerated Vesting and Payment if Awards Not Honored, Assumed or Substituted
.
(a)
If, upon the occurrence of a Change in Control, Alternative Awards are not provided in accordance with Section 9.1, then: (i) all Options and Stock Appreciation Rights shall become immediately exercisable, (ii) the Restriction Period on all Restricted Stock, Restricted Stock Units and freestanding Deferred Stock Units shall lapse immediately prior to such Change in Control, and (iii) shares of Common Stock underlying Awards of Restricted Stock
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Units and Deferred Stock Units shall be issued to each Participant then holding such Award immediately prior to such Change in Control; provided, that, at the discretion of the Committee (as constituted immediately prior to the Change in Control), each such Option, Stock Appreciation Right, Restricted Stock Unit and/or Deferred Stock Unit may be canceled in exchange for an amount equal to the product of (A)(I) in the case of Options and Stock Appreciation Rights, the excess, if any, of the product of the Change in Control Price over the exercise price for such Award, and (II) in the case of other such Awards, the Change in Control Price multiplied by (B) the aggregate number of shares of Common Stock covered by such Award. Notwithstanding the foregoing, the Committee may, in its discretion, instead terminate any outstanding Options or Stock Appreciation Rights if either (x) the Company provides holders of such Options and Stock Appreciation Rights with reasonable advance notice to exercise their outstanding and unexercised Options and Stock Appreciation Rights or (y) the Committee reasonably determines that the Change in Control Price is equal to or less than the exercise price for such Options or Stock Appreciation Rights.
(b)
Performance Award Treatment
. If, upon the occurrence of a Change in Control, Alternative Awards are not provided in accordance with Section 9.1, then outstanding Performance Stock, Performance Stock Units, and Performance Units shall (i) vest based upon the actual level of achievement of all relevant performance goals compared against applicable pro rata performance targets related to the Performance Period, as determined by the Committee, measured as of the date of the Change in Control, (ii) the payout level shall be pro-rated and determined by multiplying the amount vested as set forth in (i) by a fraction, the numerator of which is the number of full completed months in the Performance Period that has elapsed as of the date of the Change in Control and the denominator of which is the total number of months in the Performance Period; provided, however, the Committee may determine, at or after the grant date, to prorate Awards in a different manner, and (iii) the time-vesting restrictions, if any, with respect to the applicable portion of Performance Stock, Performance Stock Units and Performance Units that would become vested as determined in (i) and (ii) above shall lapse immediately prior to such Change in Control. The remainder of such Performance Stock, Performance Stock Unit, and Performance Unit Awards not vesting in accordance with the preceding sentence shall be forfeited and canceled as of the Change in Control.
9.3
Timing of Payments
. Payment of any amounts calculated in accordance with Sections 9.2 shall be made in cash or, if determined by the Committee (as constituted immediately prior to the Change in Control), in shares of the common stock of the New Employer having an aggregate fair market value equal to such amount and shall be payable in full, as soon as reasonably practicable, but in no event later than 30 days, following the Change in Control; provided, that where the Change in Control does not constitute a “change in control event” as defined under section 409A of the Code, the shares to be issued, or the amount to be paid, for each Award that constitutes deferred compensation subject to section 409A of the Code shall be paid at the time or schedule applicable to such Awards (assuming for these payment purposes (but not the lapsing of the Restriction Period or determination of the vesting of Awards) that no such Change in Control had occurred). For purposes hereof, the fair market value of one share of common stock of the New Employer shall be determined by the Committee (as constituted immediately prior to the consummation of the transaction constituting the Change in Control), in good faith.
ARTICLE X
AMENDMENT, MODIFICATION AND TERMINATION OF PLAN
The Plan shall continue in effect, unless sooner terminated pursuant to this Article X, until the tenth anniversary of the date on which it is adopted by the Board (or if applicable, the ten-year anniversary of the date of the latest stockholder approval of the Plan, including, without limitation, any shareholder approval of any amendment to the Plan to increase the share award capacity hereunder). The Board or the Committee may at any time terminate or suspend the Plan, and from time to time may amend or modify the Plan; provided, that without the approval by a majority of the votes cast at a meeting of stockholders at which a quorum representing a majority of the shares of the Company entitled to vote generally in the election of directors is present in person or by proxy, no amendment or modification to the Plan may (i) materially increase the benefits accruing to participants under the Plan, (ii) except as otherwise expressly provided in Section 4.4, materially increase the number of shares of Common Stock subject to the Plan or the individual Award limitations specified in Section 4.3, (iii) modify the restrictions provided in Section 4.5 or (iv) materially modify the requirements for participation in the Plan. No amendment, modification or termination of the Plan shall in any manner adversely affect any Award theretofore granted under the Plan, without the consent of the Participant. Notwithstanding the foregoing, the Board or Committee may take such actions as it deems appropriate to ensure that the Plan and any Awards may comply with any tax, securities or other applicable law. Nothing herein shall restrict the
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Committee’s ability to exercise its discretionary authority as provided in the Plan. Subject to other applicable provisions of the Plan, all Awards made under the Plan prior to such termination of the Plan shall remain in effect until such Awards have been satisfied or terminated in accordance with the Plan and the terms of such Awards. Except as otherwise determined by the Board, termination of the Plan shall not affect the Committee’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination. Following a Change in Control, no action shall be taken under the Plan that will cause any Award that has previously been determined to be (or is determined to be) subject to section 409A of the Code to fail to comply in any respect with section 409A of the Code without the written consent of the Participant.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1
Nontransferability of Awards
. No Award shall be assignable or transferable except by will or the laws of descent and distribution; provided, that the Committee or the Board may, except as otherwise provided in the Plan, permit (on such terms and conditions as it shall establish), in its sole discretion, a Participant to transfer an Award for no consideration to (i) the Participant's child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, including adoptive relationships, any person sharing the Participant's household (other than a tenant or employee), a trust in which these persons have more than 50% of the beneficial interest, a foundation in which these persons (or the Participant) control the management of assets, and any other entity in which these persons (or the Participant) own more than 50% of the voting interests, or to organizations qualifying as charitable organizations within the meaning of Section 501(c)(3) of the Code or (ii) any other person or entity (each of (i) and (ii), upon such permitted transfer, a "Permitted Transferee"). Except to the extent required by law, no Award shall be subject to any lien, obligation or liability of the Participant. All rights with respect to Awards granted to a Participant under the Plan shall be exercisable during the Participant's lifetime only by such Participant or, if applicable, his or her Permitted Transferee(s). The rights of a Permitted Transferee shall be limited to the rights conveyed to such Permitted Transferee, who shall be subject to and bound by the terms of the agreement or agreements between the Participant and the Company.
11.2
Beneficiary Designation
. Each Participant under the Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid or by whom any right under the Plan is to be exercised in case of his or her death. Each designation will revoke all prior designations by the same Participant, shall be in a form prescribed by the Committee, and will be effective only when filed by the Participant in writing with the Committee during his or her lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant's death shall be paid to or exercised by the Participant's surviving spouse, if any, or otherwise to or by his or her estate. In its discretion, the Committee may permit beneficiary designations by a Participant under a Former Parent Plan to be effective for such purposes under this Plan.
11.3
No Guarantee of Employment or Participation
. Nothing in the Plan or any Award Agreement shall interfere with or limit in any way the right of the Company or any Subsidiary to terminate any Participant's employment at any time, nor to confer upon any Participant any right to continue in the employ of the Company or any Subsidiary (regardless of whether such termination results in (1) the failure of any Award to vest; (2) the forfeiture of any unvested or vested portion of any Award; and/or (3) any other adverse effect on the individual’s interests under the Plan). No Eligible Individual shall have a right to be selected as a Participant, or, having been so selected, to receive any future Awards.
11.4
Tax Withholding
. In accordance with procedures established by the Company, the Company shall have the right and power to deduct from all amounts paid to a Participant in cash or shares (whether under this Plan or otherwise) or to require a Participant to remit to the Company promptly upon notification of the amount due, an amount (which may include shares of Common Stock) up to the maximum statutory withholding rate imposed by federal, state, local and/or foreign tax laws with respect to any Award under this Plan. In the case of any Award satisfied in the form of shares of Common Stock, no shares of Common Stock shall be issued unless and until arrangements satisfactory to the Committee shall have been made to satisfy such withholding tax obligations applicable with respect to such Award. The Company may defer payments of cash or issuance or delivery of Common Stock until such requirements are satisfied. Without limiting the generality of the foregoing, the Company shall have the right to retain, or the Committee may, subject to such terms and conditions as it may establish from time to time, permit Participants
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to elect to tender shares of Common Stock (including shares of Common Stock issuable in respect of an Award) to satisfy, in whole or in part, the amount to be withheld.
11.5
Compliance with Legal and Exchange Requirements
. The Plan, the granting and exercising of Awards thereunder, and any obligations of the Company under the Plan, shall be subject to all applicable federal and state laws, rules and regulations, and to such approvals by any regulatory or governmental agency as may be required, and to any rules or regulations of any exchange on which the Common Stock is listed. The Company, in its discretion, may postpone the granting, exercising and settlement of Awards, the issuance or delivery of shares of Common Stock under any Award or any other action permitted under the Plan to permit the Company, with reasonable diligence, to complete such stock exchange listing or registration or qualification of such Shares or other required action under any federal or state law, rule or regulation and may require any Participant to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of shares of Common Stock in compliance with applicable laws, rules and regulations. The Company shall not be obligated by virtue of any provision of the Plan to recognize the exercise or settlement of any Award or to otherwise sell or issue shares of Common Stock in violation of any such laws, rules or regulations, and any postponement of the exercise or settlement of any Award under this provision shall not extend the term of such Awards. Neither the Company nor its directors or officers shall have any obligation or liability to a Participant with respect to any Award (or shares of Common Stock issuable thereunder) that shall lapse because of such postponement.
11.6
Indemnification
. To the maximum extent provided by law and by the Company’s Certificate of Incorporation and/or By-Laws, each person who is or shall have been a member of the Committee or of the Board shall be indemnified and held harmless by the Company against and from any loss, cost, liability or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit or proceeding to which he or she may be made a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Company's approval, or paid by him or her in satisfaction of any judgment in any such action, suit or proceeding against him or her, provided, he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive and shall be independent of any other rights of indemnification to which such persons may be entitled under the Company's Certificate of Incorporation or By-laws, by contract, as a matter of law, or otherwise.
11.7
No Limitation on Compensation
. Nothing in the Plan shall be construed to limit the right of the Company to establish other plans or to pay compensation to its employees, in cash or property, in a manner which is not expressly authorized under the Plan.
11.8
Deferrals
. The Committee may postpone the exercising of Awards, the issuance or delivery of Common Stock under any Award or any action permitted under the Plan to prevent the Company or any Subsidiary from being denied a Federal income tax deduction with respect to any Award other than an ISO or to the extent required or permitted by applicable law.
11.9
409A Compliance
. The Plan is intended to be administered in a manner consistent with the requirements, where applicable, of section 409A of the Code. Where reasonably possible and practicable, the Plan shall be administered in a manner to avoid the imposition on Participants of immediate tax recognition and additional taxes pursuant to such section 409A. Notwithstanding the foregoing, neither the Company nor the Committee shall have any liability to any person in the event such section 409A applies to any such Award in a manner that results in adverse tax consequences for the Participant or any of his beneficiaries or transferees.
Solely for purposes of determining the time and form of payments due under any Award that is considered nonqualified deferred compensation under section 409A of the Code and that is not otherwise exempt from section 409A of the Code, a Participant shall not be deemed to have incurred a termination of employment unless and until he shall incur a “separation from service” within the meaning of section 409A of the Code. Notwithstanding any other provision in this Plan, if as of Participant’s separation from service, the Participant is a “specified employee” as determined by the Company, then to the extent any amount payable under any Award that is considered nonqualified deferred compensation under section 409A of the Code and that is not otherwise exempt from section 409A of the Code, for which payment is triggered by Participant’s separation from service (other than on account of death), and
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that under the terms of the Award would be payable prior to the six-month anniversary of the Participant’s separation from service, such payment shall be delayed until the earlier to occur of (a) the six-month anniversary of such separation from service and (b) the date of the Participant’s death. In no event may a Participant, directly or indirectly, designate the calendar year of any payment to be made under any Award that constitutes nonqualified deferred compensation subject to section 409A of the Code. Each payment under any Award that constitutes nonqualified deferred compensation subject to section 409A of the Code shall be treated as a separate payment for purposes of section 409A of the Code.
11.10
Governing Law
. The Plan shall be construed in accordance with and governed by the laws of the State of Delaware, without reference to principles of conflict of laws which would require application of the law of another jurisdiction, except to the extent that the corporate law of the State of Delaware specifically and mandatorily applies.
11.11
Severability; Blue Pencil
. In the event that any one or more of the provisions of this Plan shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby. If, in the opinion of any court of competent jurisdiction, such covenants are not reasonable in any respect, such court shall have the right, power and authority to excise or modify such provision or provisions of these covenants as to the court shall appear not reasonable and to enforce the remainder of these covenants as so amended.
11.12
No Impact On Benefits
. Except as may otherwise be specifically stated under any employee benefit plan, policy or program, no amount payable in respect of any Award shall be treated as compensation for purposes of calculating a Participant's right under any such plan, policy or program. No amount payable in respect of any Award pursuant to an Award shall be deemed part of a Participant's regular, recurring compensation for purposes of any termination, indemnity or severance pay laws.
11.13
No Constraint on Corporate Action
. Nothing in this Plan shall be construed (i) to limit, impair or otherwise affect the Company's right or power to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, or to merge or consolidate, or dissolve, liquidate, sell or transfer all or any part of its business or assets or (ii) to limit the right or power of the Company, or any Subsidiary to take any action which such entity deems to be necessary or appropriate.
11.14
Headings and Captions
. The headings and captions herein are provided for reference and convenience only, shall not be considered part of this Plan, and shall not be employed in the construction of this Plan.
11.15
No Trust or Fund Created
. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company and a grantee or any other person. To the extent that any grantee or other person acquires a right to receive payments from the Company pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company.
11.16
Fractional Shares
. No fractional shares of Common Stock shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash, other securities or other property shall be paid or transferred in lieu of any fractional shares, or whether such fractional shares or any rights thereto shall be canceled, terminated or otherwise eliminated.
11.17
Code Section 83(b) Elections
. The Company, its Affiliates and the Committee have no responsibility for any Participant's election, attempt to elect or failure to elect to include the value of a Restricted Stock Award or other Award subject to section 83 of the Code in the Participant's gross income for the year of payment pursuant to section 83(b) of the Code. Any Participant who makes an election pursuant to section 83(b) of the Code will promptly provide the Committee with a copy of the election form.
11.18
No Obligation to Exercise Awards; No Right to Notice of Expiration Date
. The grant of an Award of an Option or Stock Appreciation Right will impose no obligation upon the Participant to exercise the Award. The Company, its Affiliates and the Committee have no obligation to inform a Participant of the date on which any Award lapses except in the Award Agreement.
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11.19
Right to Offset
. Notwithstanding any provisions of the Plan to the contrary, and to the extent permitted by applicable law (including section 409A of the Code), the Company may offset any amounts to be paid to a Participant (or, in the event of the Participant’s death, to his beneficiary or estate) under the Plan against any amounts that such Participant may owe to the Company or its Affiliates.
11.20
Compensation Recovery Policy
. Without limiting any other provision of the Plan, any Award granted hereunder shall be subject to any clawback policy or compensation recovery policy or such other similar policy of the Company in effect from time to time.
11.21
Furnishing Information
. A Participant will cooperate with the Committee by furnishing any and all information requested by the Committee and take such other actions as may be requested in order to facilitate the administration of the Plan and the payments of benefits hereunder, including, but not limited to, taking such physical examinations as the Committee may deem necessary when eligibility or entitlement to any compensation or benefit based on Disability is at issue.
11.22
Distribution Awards
. The Company issued Distribution Awards to Participants, including Distribution Participants, in connection with the adjustment and replacement of certain awards previously granted by Former Parent under a Former Parent Plan to such Participants (pursuant to the anti-dilution adjustment provisions of the Former Parent Plan). The Common Stock subject to a Distribution Award and the other terms and conditions of each Distribution Award, including, without limitation, option exercise price and service crediting rules, as applicable, were determined by the Committee, all in accordance with the terms of the Employee Matters Agreement. Subject to the foregoing, all Distribution Awards were generally subject to substantially similar terms and conditions as provided in the grantee’s corresponding awards under the Former Parent Plan. To the extent the terms of the Plan are inconsistent with the terms of an Award Agreement of a Distribution Award, the terms of the Distribution Award shall be governed by the Employee Matters Agreement and the applicable Award Agreement.
11.23
Section 162(m)
. Notwithstanding any other provision of this Plan or any Award Agreement, for any Awards made under the Plan prior to November 2, 2017, intended to qualify as “performance-based compensation” within the meaning of Code Section 162(m)(4)(C) prior to its repeal and which can still so qualify (“162(m) Awards”), each 162(m) Award shall be subject to any additional limitations as the Committee (or applicable sub-committee of the Committee) determines necessary for such 162(m) Award to so qualify, and to the extent any of the provisions of the Plan or any 162(m) Award (or any amendments hereto pursuant to this amendment and restatement of the Plan) would cause any 162(m) Awards to fail to so qualify, any such provisions shall not apply to such 162(m) Awards to the extent necessary to ensure the continued qualification of such 162(m) Awards. Additionally, to the extent determined by the Committee (or applicable sub-committee of the Committee) to ensure the continued qualification of 162(m) Awards as “performance-based compensation," such 162(m) Awards will continue to be governed by the terms of the Plan as in effect prior to the Effective Date.
11.24
Correction of Errors
. Notwithstanding anything in any Award Agreement to the contrary, the Committee may amend an Award Agreement, to take effect retroactively or otherwise, as deemed necessary or advisable for the purpose of correcting errors occurring in connection with the grant or documentation of an Award, including rescinding an Award erroneously granted, including, but not limited to, an Award erroneously granted to an individual who does not qualify as an eligible Participant on the date of grant. By accepting an Award under this Plan, a Participant agrees to any amendment made pursuant to this Section 11.24 to any Award made under the Plan without further consideration or action.
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