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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2.
[ ] Confidential for the Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
HERTZ CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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HERTZ LOGO
The Hertz Corporation 225 Brae Boulevard
Park Ridge, New Jersey 07656
April 13, 2000
TO OUR STOCKHOLDERS:
The 2000 annual meeting will be held on May 19, 2000 at 10:00 a.m., eastern
daylight savings time, at The Park Ridge Marriott, 300 Brae Boulevard, Park
Ridge, New Jersey.
Please read these materials so that you'll know what we plan to do at the
meeting. Also, please sign and return the accompanying proxy card in the
postage-paid envelope. This way, your shares will be voted as you direct even if
you can't attend the meeting. If you would like to attend, please see the
instructions on page 27.
[/s/ F.A. Olson]
FRANK A. OLSON
Chairman of the Board
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE FILL IN,
SIGN, DATE, AND PROMPTLY MAIL THE ACCOMPANYING PROXY CARD IN THE
ENCLOSED ENVELOPE.
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TABLE OF CONTENTS
Notice of Annual Meeting of Stockholders.................... i
Defined Terms............................................... ii
Proxy Statement............................................. 1
Election of Directors....................................... 3
Committees of the Board of Directors........................ 7
Management Stock Ownership.................................. 9
Section 16(a) Beneficial Ownership Reporting Compliance..... 10
Compensation of Directors................................... 11
Certain Relationships and Related Transactions.............. 11
Compensation Committee Report on Executive Compensation..... 14
Compensation of Executive Officers.......................... 17
Stock Options............................................... 18
Long-Term Incentive Plan Awards............................. 20
Employment Agreements....................................... 21
Stock Performance Graphs.................................... 22
Retirement Plans............................................ 23
Proposal Requiring Your Vote................................ 25
Stockholder Proposals for 2001.............................. 26
Annual Report and Other Matters............................. 26
Expenses of Solicitation.................................... 26
How to Attend the Annual Meeting............................ 27
Location of the Annual Meeting.............................. 27
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The annual meeting of stockholders of The Hertz Corporation will be held at The
Park Ridge Marriott, 300 Brae Boulevard, Park Ridge, New Jersey on May 19, 2000,
at 10:00 a.m., eastern daylight savings time. The purpose of the meeting is to
vote on the following proposals:
PROPOSAL 1. The election of directors.
PROPOSAL 2. The approval of PricewaterhouseCoopers LLP as Hertz's independent
public accountants for 2000.
The record date for the annual meeting is March 24, 2000. Only stockholders of
record at the close of business on that date can vote at the meeting.
/s/ HAROLD E. ROLFE
HAROLD E. ROLFE
Secretary
April 13, 2000
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DEFINED TERMS
"CLASS A COMMON STOCK" means Hertz's Class A Common Stock.
"CLASS B COMMON STOCK" means Hertz's Class B Common Stock.
"COMMON STOCK" means Hertz's Class A Common Stock and Class B Common Stock.
"HERTZ" or "WE" or "COMPANY" means The Hertz Corporation.
"EXECUTIVE INCENTIVE COMPENSATION PLAN" means Hertz's Executive Incentive
Compensation Plan.
"FFS" means Ford Financial Services, Inc.
"FMCC" means Ford Motor Credit Company.
"FORD" means Ford Motor Company.
"FORD FSG" means Ford FSG, Inc., a wholly-owned indirect subsidiary of Ford.
"HERC" means Hertz Equipment Rental Corporation, a wholly-owned subsidiary of
Hertz.
"HERTZ AUSTRALIA" means Hertz Australia Pty. Limited, a wholly-owned indirect
subsidiary of Hertz.
"HIL" means Hertz International, Ltd., a wholly-owned subsidiary of Hertz.
"LONG-TERM EQUITY COMPENSATION PLAN" means Hertz's Long-Term Equity Compensation
Plan.
"LONG-TERM INCENTIVE PLAN" means Hertz's Long-Term Incentive Plan.
"NAMED EXECUTIVES" means the executives named in the Summary Compensation Table
on page 17.
"NYSE" means the New York Stock Exchange.
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PROXY STATEMENT
THE HERTZ CORPORATION April 13, 2000
225 BRAE BOULEVARD
PARK RIDGE, NEW JERSEY 07656
The Board of Directors is soliciting proxies to be used at the 2000 annual
meeting. This proxy statement and the form of proxy will be mailed to
stockholders beginning April 13, 2000.
Definitions of some of the terms used in this Proxy Statement appear on the
facing page.
WHO CAN VOTE
Record holders of Class A Common Stock and record holders of Class B Common
Stock at the close of business on March 24, 2000 may vote at the meeting.
On March 24, 2000, 40,412,698 shares of Class A Common Stock and 67,310,167
shares of Class B Common Stock were outstanding. Each stockholder has one vote
for each share of Class A Common Stock and five votes for each share of Class B
Common Stock.
Holders of Class A Common Stock have 10.7% of the general voting power; holders
of Class B Common Stock have the remaining 89.3% of the general voting power.
Holders of Class A Common Stock and holders of Class B Common Stock will vote
together, without regard to class, on the matters to be voted upon at the
meeting.
HOW YOU CAN VOTE
If you return your signed proxy to us before the annual meeting, we will vote
your shares as you direct. You can specify on your proxy whether your shares
should be voted for all, some, or none of the nominees for director. You can
also specify whether you approve, disapprove, or abstain from Proposal 2. The
Proposals will be presented at the meeting by management. Proposal 2 is
described in this proxy statement on page 25.
IF YOU DO NOT SPECIFY ON YOUR PROXY CARD HOW YOU WANT TO VOTE YOUR SHARES, WE
WILL VOTE THEM "FOR" THE ELECTION OF ALL NOMINEES FOR DIRECTOR AS SET FORTH
UNDER "ELECTION OF DIRECTORS" BELOW; AND "FOR" PROPOSAL 2.
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REVOCATION OF PROXIES
You can revoke your proxy at any time before it is exercised in any of three
ways:
(1) by submitting written notice of revocation to the Secretary;
(2) by submitting another proxy that is properly signed and later dated; or
(3) by voting in person at the meeting.
REQUIRED VOTES
A majority of the votes that could be cast on a proposal by stockholders who are
either present in person or represented by proxy at the meeting is required to
elect the nominees for director and to approve Proposal 2. The votes are
computed for each share as described on page 1.
The total number of votes that could be cast at the meeting is the number of
votes actually cast plus the number of abstentions. Abstentions are counted as
"shares present" at the meeting for purposes of determining whether a quorum
exists and have the effect of a vote "against" any matter as to which they are
specified. Proxies submitted by brokers that do not indicate a vote for a
Proposal because they don't have discretionary voting authority and haven't
received instructions as to how to vote on such Proposal (so-called "broker
nonvotes") are not considered "shares present" and will not affect the outcome
of the vote.
OTHER MATTERS TO BE ACTED UPON AT THE MEETING
We do not know of any other matters to be presented or acted upon at the
meeting. No business besides that stated in the meeting notice may be transacted
at this meeting of stockholders. If any other matter is presented at the meeting
on which a vote may properly be taken, the shares represented by proxies in the
accompanying form will be voted in accordance with the judgment of the person or
persons voting those shares.
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ELECTION OF DIRECTORS
(PROPOSAL 1 ON THE PROXY CARD)
Nine directors will be elected at this year's annual meeting. Each director will
serve until the next annual meeting or until he is succeeded by another
qualified director who has been elected.
We will vote your shares as you specify on the enclosed proxy form. If you sign,
date, and return the proxy form but don't specify how you want your shares
voted, we will vote them for the election of all the nominees listed below. If
unforeseen circumstances (such as death or disability) make it necessary for the
Board of Directors to substitute another person for any of the nominees, we will
vote your shares for that other person.
Each of the nominees for director is now a member of the Board of Directors,
which met five times during 1999. The following information about the nominees
was provided by the nominees.
NOMINEES
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FRANK A. OLSON
Age: 67
Director Since: 1974
Principal Occupation: Chairman, The Hertz Corporation
Recent Business Experience: Mr. Olson has been Chairman of the Board of
Directors since June 1980. In addition, he was
Chief Executive Officer from March 1977 through
December 1999. From June 1987 through December
1987, Mr. Olson was also Chairman of the Board,
President and CEO of UAL Corporation.
Other Directorships: Becton, Dickinson and Co.; White Mountains
Insurance Group; Amerada Hess Corporation
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CRAIG R. KOCH
Age: 53
Director Since: 1994
Principal Occupation: President and Chief Executive Officer ("CEO"),
The Hertz Corporation
Recent Business Experience: Mr. Koch has been President and CEO of the Company
since January 2000. From September 1993 through
December 1999, Mr. Koch was President and Chief
Operating Officer of the Company. Prior to that
time, Mr. Koch held a number of senior management
positions within Hertz, including Executive Vice
President and President -- North America Car Rental
Operations; Executive Vice President and General
Manager -- Car Rental Division.
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W. WAYNE BOOKER
Age: 65
Director Since: 1999
Principal Occupation: Vice Chairman, Ford Motor Company
Recent Business Experience: Mr. Booker has been Vice Chairman of Ford Motor
Company since 1996. He served as Ford's interim
Chief Financial Officer during 1999. Mr. Booker
also served as Executive Vice President -- New
Markets & Associations during 1996 and Executive
Vice President -- International Automotive
Operations from 1992-1995. Prior to that time, Mr.
Booker held various executive positions within
Ford, including Vice President -- Asia Pacific
Automotive Operations.
Other Directorships: Visteon Corporation; Koc Holdings A.S.
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LOUIS C. BURNETT
Age: 55
Director Since: 1997
Principal Occupation: Managing Partner, Secura Burnett Company LLC
Recent Business Experience: Mr. Burnett is the Co-Founder and Managing Partner
of Secura Burnett. Prior to entering the consulting
business, Mr. Burnett spent 20 years as a banker
with Wells Fargo Bank and Union Bank.
Other Directorships: A&A Actienbank
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MICHAEL T. MONAHAN
Age: 61
Director Since: 1997
Principal Occupation: President, Monahan Enterprises, LLC
Chairman, Munder Capital Management
Recent Business Experience: Mr. Monahan is the Founder and President of Monahan
Enterprises, LLC since June 1999 and the Chairman
of Munder Capital Management since January 2000.
From October 1999 until January 2000, he was the
Chief Executive Officer of Munder Capital
Management. From 1992 to June 1999, Mr. Monahan was
President of Comerica Bank, and the President of
Comerica Incorporated from July 1993 to June 1999.
Prior to that time, Mr. Monahan was the President
and COO of Manufacturers National Corporation and
Manufacturers Bank, N.A.
Other Directorships: Jacobson Stores, Inc.
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PETER J. PESTILLO
Age: 62
Director Since: 1993
Principal Occupation: Vice Chairman, Ford Motor Company and
Chairman and Chief Executive Officer, Visteon
Corporation
Recent Business Experience: Mr. Pestillo has been Vice Chairman of Ford since
January 1999 and Chairman and CEO of Visteon
Corporation since January 2000. He also was Chief
of Staff of Ford during 1999. From January 1993
through December 1998, Mr. Pestillo was Executive
Vice President -- Corporate Relations of Ford.
Prior to that time, Mr. Pestillo held a number of
senior management positions within Ford, including
Vice President -- Corporate Relations and
Diversified Businesses; Vice President -- Employee
and External Affairs.
Other Directorships: Rouge Industries, Inc.; Visteon Corporation
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JOHN M. RINTAMAKI
Age: 58
Director Since: 1999
Principal Occupation: Group Vice President, Chief of Staff and Secretary,
Ford Motor Company
Recent Business Experience: Mr. Rintamaki has been Group Vice President, Chief
of Staff and Secretary of Ford since January 2000.
He was Vice President -- General Counsel of Ford
during 1999. He became Secretary in July, 1993,
having been Assistant General Counsel since
October, 1991, and Assistant Secretary since
September, 1986. Prior to that time, he has held
various executive positions with Ford.
Other Directorships: Visteon Corporation
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JOHN M. THOMPSON
Age: 57
Director Since: 1997
Principal Occupation: Senior Vice President and Group Executive,
International Business Machines Corporation
Recent Business Experience: Mr. Thompson has been Senior Vice President and
Group Executive of IBM since 1993. Prior to that
time, Mr. Thompson held a number of senior
management positions within IBM, including
President and CEO of IBM Canada, Chairman of IBM
Canada and Global Vice President of Marketing.
Other Directorships: Toronto Dominion Bank; TD Waterhouse Inc.
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JOSEPH A. WALKER
Age: 45
Director Since: 1997
Principal Occupation: Managing Director, J. P. Morgan & Co.
Recent Business Experience: Mr. Walker has been Co-head of Advisory/Mergers and
Acquisitions at J. P. Morgan since 1994. Prior to
that time, Mr. Walker held a number of senior
positions within J. P. Morgan, including Head of
the Basic Industries Group in the Advisory/Merger
and Acquisitions Department and Head of the
Restructuring Advisory Group.
Other Directorships: Roulette Intermedium, Inc.; Meet the Composer;
Pratt Institute
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COMMITTEES OF THE BOARD OF DIRECTORS
AUDIT COMMITTEE
Number of Members: 2
Members: Joseph A. Walker (Chairman)
Louis C. Burnett
Number of Meetings in 1999: 2
Functions: Selects independent public accountants to audit
Hertz's books and records, subject to stockholder
approval.
Consults with these accountants and reviews and
approves the scope of their audit.
Reviews internal controls, accounting practices,
financial structure, and financial reporting.
Reports to the Board of Directors about these
matters.
COMPENSATION COMMITTEE
Number of Members: 2
Members: Michael T. Monahan (Chairman)
John M. Thompson
Number of Meetings in 1999: 2
Functions: Considers and makes recommendations on Hertz's
executive compensation plans.
Establishes base salaries and reviews and
approves any Executive Incentive Compensation
Plan awards for Hertz's executive officers.
Considers and makes grants of stock options,
grants of restricted stock, and Long-Term
Incentive Plan awards.
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NOMINATING COMMITTEE
Number of Members: 5
Members: Frank A. Olson (Chairman)
Louis C. Burnett
Michael T. Monahan
John M. Thompson
Joseph A. Walker
Number of Meetings in 1999: 1
Functions: Considers stockholder suggestions for nominees
for director (other than self-nominations).
Suggestions should be submitted to the Secretary
of the Company, 225 Brae Boulevard, Park Ridge,
New Jersey 07656. Suggestions received by the
Secretary's office before December 31 will be
considered by the Committee at a regular meeting
in the following year, before the proxy materials
are mailed to the stockholders.
SPECIAL FINANCE COMMITTEE
Number of Members: 2
Members: Frank A. Olson
Craig R. Koch
Number of Meetings in 1999: 3
Functions: Approves the issuance of public debt.
SPECIAL COMMITTEE
Number of Members: 3
Members: Louis C. Burnett (Chairman)
Michael T. Monahan
John M. Thompson
Number of Meetings in 1999: 4
Functions: Considered potential acquisition of two vehicle
leasing subsidiaries of Ford.
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MANAGEMENT STOCK OWNERSHIP
The table below shows how much stock of Hertz and Ford each director, nominee
and Named Executive beneficially owned as of March 1, 2000. No director, nominee
or executive officer, including Named Executives, beneficially owned more than
0.7% of Hertz's total outstanding Class A Common Stock or Ford Common Stock.
Present directors and executive officers as a group, including the Named
Executives, beneficially owned 2.1% of Hertz Class A Common Stock and less than
0.02% of Ford Common Stock. In addition, these persons held options exercisable
on or within 60 days after March 1, 2000 to buy 860,765 shares of Hertz Class A
Common Stock and 1,103,442 shares of Ford Common Stock under stock option plans.
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Amount and Nature of Beneficial Ownership
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Hertz Class A Common Stock(1) Ford Common Stock(2)
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Name Unrestricted Restricted(3) Unrestricted Restricted
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Frank A. Olson* 162,056
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Craig R. Koch* 9,435 257,015
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Joseph R. Nothwang 13,516 59,865 902
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Paul J. Siracusa 5,405 29,930
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Brian J. Kennedy 3,248 29,930 100
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W. Wayne Booker* 5,000 125,290
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Louis C. Burnett* 1,000
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Michael T. Monahan* 1,000
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Peter J. Pestillo* 5,000 152,148
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John M. Rintamaki* 500 7,124
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John M. Thompson* 4,000
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Joseph A. Walker* 1,000
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All Directors and Executive Officers
as a group (20 persons) 226,558 466,600 286,564
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* Indicates Directors
NOTES
(1)On March 1, 2000, or within 60 days after that date, the following
individuals have exercisable options to acquire shares of Hertz Class A Common
Stock awarded under the Hertz Long-Term Equity Compensation Plan, as follows:
Mr. Kennedy -- 41,687; Mr. Koch -- 96,822; Mr. Nothwang -- 174,410; Mr.
Olson -- 305,138; and Mr. Siracusa -- 48,444.
On March 1, 2000, or within 60 days after that date, the following individuals
have 495 exercisable options to acquire shares of Hertz Class A Common Stock
awarded under the Hertz Nonemployee Director Stock Option Plan: Mr. Burnett, Mr.
Monahan, Mr. Thompson and Mr. Walker.
Includes shares acquired under the Company's Employee Stock Purchase Plan, as
follows: Mr. Kennedy -- 248 shares; Mr. Koch -- 435 shares; Mr. Nothwang -- 442
shares; Mr. Olson -- 568 shares; and Mr. Siracusa -- 405 shares.
(2)On March 1, 2000, or within 60 days after that date, the following
individuals have exercisable options to acquire shares of Ford Common Stock
awarded under Ford's 1990 or 1998 Long-Term Incentive Plan: Mr.
Booker -- 544,553 shares; Mr. Kennedy -- 1,650 shares; Mr. Koch -- 3,300 shares;
Mr. Nothwang -- 1,650 shares; Mr. Olson -- 6,600 shares; Mr. Pestillo -- 477,543
shares; Mr. Rintamaki -- 63,196 shares; and Mr. Siracusa -- 1,650 shares.
To account for any change in the value of Ford Common Stock resulting from the
spin-off of Ford's interest in Associates First Capital Corporation on April 7,
1998, the Ford stock options held as of April 9, 1998 were adjusted to ensure
that the aggregate value of the Ford stock options before and after the spin-off
would be approximately equal. References to these stock options issued prior to
April 9, 1998 are to the adjusted amounts.
Includes units in the Ford Stock Fund under Ford's Savings and Stock Investment
Plan, credited to the following individuals and representing the following
number of shares: Mr. Booker -- 10,183 shares; Mr. Pestillo -- 2,037 shares; and
Mr. Rintamaki -- 6,471 shares.
(3)Awarded under the Long-Term Equity Compensation Plan and subject to
restrictions as described in Note 3 to the Summary Compensation Table beginning
on page 17 of this proxy statement.
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SECTION 16(A)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on Hertz's records and other information, Hertz believes that all
Securities and Exchange Commission filing requirements applicable to its
directors and officers were complied with for 1999 except that, due to a
clerical oversight by the Company, there was one late report by five days of one
transaction relating to Richard J. Foti, the Company's Controller, and one
amended report relating to Frank A. Olson. Each of these transactions was exempt
under Section 16(b) of the Securities Exchange Act of 1934, as amended.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The table shows the name and address of each person known to Hertz that
beneficially owns in excess of 5% of any class of Hertz voting stock as of March
1, 2000.
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Amount and Nature of Beneficial Ownership
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Shared Voting
Name and Address Sole Voting and and Investment Percent
Title of Class of Stock of Beneficial Owner Investment Power Power of Class
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Class A Common Stock Ford FSG, Inc. 20,245,833 0 50.0 %(1)
The American Road
Dearborn, Michigan
48121-1899
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Class A Common Stock Goldman Sachs 2,226,301 0 5.5 %(2)
Asset Management
1 New York Plaza
New York, New York
10004
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Class B Common Stock Ford Motor Company 67,310,167 0 100 %(1)
The American Road
Dearborn, Michigan
48121-1899
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NOTES
(1)The Class A Common Stock and Class B Common Stock will be voted as a single
class at the Annual Meeting for purposes of the Proposals set forth in this
proxy statement. Because the holder of the Class B Common Stock is entitled to
five votes per share, Ford holds 94.6% of the aggregate voting power of Hertz's
outstanding common stock.
(2)Based on Schedule 13G, dated February 14, 2000, filed with the Securities and
Exchange Commission, which indicates that (a) Goldman Sachs Asset Management is
a separate operating division of Goldman, Sachs & Co., and (b) Goldman Sachs
Asset Management is a registered investment advisor under Section 203 of the
Investment Advisors Act of 1940 and, as a result, is the beneficial owner of
2,226,301 shares of Hertz Class A Common Stock.
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COMPENSATION OF DIRECTORS
FEES. Directors' fees, paid only to directors who are not Hertz employees or
employees of any of its affiliates, are as follows:
Annual Board membership fee $25,000
Attendance fee for each Board meeting or
separate Committee meeting $ 1,000
STOCK OPTION PLAN. In an effort to link director and stockholder interests, each
director who is not an employee of Hertz or any of its affiliates receives an
annual option to purchase 1,500 shares of Class A Common Stock. The exercise
price is the closing price of Class A Common Stock on the date the option is
granted. Vesting terms may vary based on the Board's discretion.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RELATIONSHIP WITH DIRECTORS
Joseph A. Walker, a Managing Director of J. P. Morgan & Co., became a Hertz
director on July 15, 1997. J. P. Morgan & Co. has provided Hertz and Ford with
commercial and investment banking services and is expected to provide similar
services in the future.
RELATIONSHIP WITH FORD
As of March 1, 2000, Ford beneficially owned 50.0% of the outstanding Class A
Common Stock and 100% of the outstanding Class B Common Stock of Hertz (which
Class B Common Stock is entitled to five votes per share on any matter submitted
to a vote of Hertz's stockholders). The common stock beneficially owned by Ford
represents in the aggregate 94.6% of the combined voting power of all of Hertz's
outstanding common stock. Accordingly, Ford is able to exercise control over the
business and affairs of Hertz, including the ability to elect all members of
Hertz's Board of Directors.
Set forth below are descriptions of certain agreements, relationships and
transactions between Hertz and Ford.
CAR SUPPLY AGREEMENT
Hertz and Ford have a Car Supply Agreement with a ten-year term. The agreement
began on September 1, 1997 and ends on August 31, 2007. Under the agreement,
Ford and Hertz have agreed to negotiate annually the supply of cars on terms and
conditions that are competitive with those offered by other car manufacturers to
car rental companies.
JOINT ADVERTISING AGREEMENT
Hertz and Ford have a Joint Advertising Agreement with a ten-year term. The
agreement began on September 1, 1997 and ends on August 31, 2007. Under the
agreement, Ford has agreed to pay one-half of Hertz's advertising costs,
provided, among other things, Hertz purchases up to a certain percentage of cars
from Ford to meet its fleet requirements so long as Ford is competitive. The
advertising must feature Ford vehicles.
CORPORATE AGREEMENT
Hertz and Ford have a Corporate Agreement under which Hertz granted to Ford a
continuing option to purchase additional shares of Class B Common Stock or
shares of nonvoting capital stock of Hertz necessary to maintain its then
existing percentage of voting power, value and ownership. The purchase price of
Class B Common Stock will be the market price of the Class A Common Stock, and
the purchase price of nonvoting capital stock will be the price at which the
stock may be purchased by
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third parties. This stock option expires if Ford reduces its beneficial
ownership of Hertz's Common Stock to less than 20% of the outstanding shares.
The agreement also provides that Hertz will, upon request, register its Common
Stock and nonvoting capital stock beneficially owned by Ford for sale and pay
related costs and expenses.
The agreement also provides that as long as Ford maintains beneficial ownership
of a majority of the shares of Hertz's Common Stock, Hertz may not take any
action detrimental to Ford.
TAX-SHARING AGREEMENT
Hertz is included in Ford's federal consolidated income tax group. Hertz's
federal income tax liability is included in the consolidated federal income tax
liability of Ford and its subsidiaries. Hertz and Ford have a Tax Sharing
Agreement under which the amount of taxes paid by Hertz will be determined as if
Hertz filed separately. Utilization of foreign tax credits will be based upon
the consolidated group results.
Ford is the sole and exclusive agent for Hertz in all matters relating to the
income and franchise taxes and similar liabilities of Hertz. Ford has
responsibility for the preparation and filing of consolidated federal, state and
local income tax returns, and has the power to contest or compromise any tax
adjustment or deficiency and to negotiate any refund claim for Hertz.
In general, Hertz is included in Ford's consolidated group for federal income
tax purposes as long as Ford beneficially owns at least 80% of the total voting
power and value of Hertz's outstanding Common Stock. During the period Hertz is
included in Ford's consolidated group, Hertz could be liable for any federal tax
liability incurred by any other member of Ford's consolidated group.
COMMERCIAL PAPER DEALER AGREEMENTS
Hertz has a Sales Agency Agreement with FFS, a NASD registered broker-dealer and
an indirect, wholly-owned subsidiary of Ford. FFS acts as a dealer for Hertz's
domestic commercial paper program. Hertz pays fees to FFS which range from .035%
to .05% per annum of commercial paper placed depending on the monthly average
dollar value of the notes outstanding. In 1999, Hertz paid FFS $708,000 in fees.
FFS is under no obligation to purchase any notes for its own account. FFS has
been the sole commercial paper dealer for Hertz since October 1994. Hertz,
through its subsidiary, Hertz Australia, has a similar agreement with Ford
Credit Australia Limited, also an indirect, wholly-owned subsidiary of Ford.
CREDIT FACILITY AND LOANS
Ford has extended to Hertz a $500 million credit facility under which Hertz may
borrow, repay and reborrow at rates of interest based on London Interbank
Offered Rates. Hertz pays Ford an annual commitment fee on the undrawn amounts
equal to 0.09% from July 1, 1997 to and including the expiration date of the
facility. The credit agreement ends on June 30, 2001, but is automatically
extended annually for an additional year unless Ford gives notice of
termination. No amounts are currently outstanding under this facility.
LICENSING AND MANAGEMENT AGREEMENTS
Effective January 1, 2000, HIL reached an agreement with FMCC to grant Axus
International, Inc., a wholly-owned subsidiary of FMCC, and its subsidiaries
(together, "Axus"), a five year non-exclusive license (subject to certain
existing license rights and excluding the United States and Canada) to use the
Hertz name in the conduct of Axus' leasing businesses. As part of the
transaction, HIL will also provide Axus with certain management services. HIL
will receive a license fee for use of the Hertz name of 1% of Axus' leasing
revenues and a management fee of between 5% and 7% of Axus' pre-tax earnings,
depending on Axus' operating margins.
12
18
OTHER RELATIONSHIPS AND TRANSACTIONS
Hertz and Ford also have other transactions in the ordinary course of their
respective businesses. These include Hertz providing car rental and equipment
rental services to Ford and providing insurance claim management services to
Ford.
Hertz is named as an additional insured under certain of Ford's insurance
policies and pays its allocated portion of the insurance premiums.
13
19
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
(HOW HERTZ DETERMINES EXECUTIVE COMPENSATION)
COMPENSATION COMMITTEE PHILOSOPHY AND GUIDING PRINCIPLES
The Committee has established the following philosophy and principles as its
operating framework:
- Attract and retain the best people in the industry;
- Emphasize performance-based pay by paying above-average awards for
above-average performance; and
- Focus on the use of equity-based incentives that reward the creation
of stockholder value while recognizing the achievement of key financial
and strategic objectives.
COMPENSATION LEVELS
The Committee relates total compensation levels for Hertz's executive officers
to the total compensation paid to similarly situated executives of several Peer
Groups of companies. The companies comprising the Peer Groups were selected by
Hertz and its compensation consultant to ensure that Hertz remains competitive
with service companies (including car rental and equipment rental companies) and
general industry standards. This group includes companies in the Russell 1000
which is used in the performance graph.
Total compensation is targeted to approximate the median of the average of the
Peer Groups for executive positions. The target moves closer to the 75th
percentile for selected key positions which are critical to the future success
of Hertz and are held by experienced, high-performing incumbents. However,
because of the performance-oriented nature of the incentive programs, total
compensation may exceed market norms when Hertz's targeted performance goals are
exceeded and significant value is created for stockholders. Likewise, total
compensation may lag the market when performance goals are not achieved.
Based on the most recently completed compensation study conducted by the
Company's independent compensation consultant, overall total compensation for
the executive positions in the study approximated the median of the total
compensation of similarly situated positions in the Peer Groups.
ANNUAL COMPENSATION
Eligible management and key employees participate in Hertz's Executive Incentive
Compensation Plan (EICP) which pays annual cash incentive awards if certain
specified objectives are met. Objectives for 1999 were based on pretax income
(weighted at 70%) and return on equity (weighted at 30%). The measurement of
these goals is done at the corporate level for corporate participants and a
combination of corporate and business unit levels for business unit executives.
Individuals are assigned target awards based on Peer Group comparisons. Actual
awards can vary between 0 and 250 percent of target awards based on actual
performance.
Hertz emphasizes increasing levels of profitability in the goal-setting process.
Incentives are provided deep into the organization, including all operating
managers, which has been critical in driving the entire organization to exceed
its goals. Objectives were exceeded for most business units and overall
corporate results exceeded goals. For the Named Executives, actual bonuses based
on 1999 performance ranged from 118 to 126.4 percent of target.
Overall, base salaries for officers are slightly below the 50th percentile, and
the combination of 1999 bonuses and base salaries for officers are at the 50th
percentile of the consultant's survey.
14
20
LONG-TERM COMPENSATION
Hertz emphasizes the link between executives' interests and stockholder
interests through equity and cash-based long-term incentives.
- Stock Options and Restricted Stock. Grants of stock options were made
in 1999 under the Hertz Long-Term Equity Compensation Plan which was
approved by the shareholders in 1998. Grants were made to executive
officers to ensure that their interests are aligned with stockholders.
The grants contain vesting provisions which are intended to help retain
executives in the increasingly competitive marketplace in which Hertz
competes.
In general, stock options are granted on an annual basis. Grants of
restricted stock are used only in special circumstances, primarily as a
retention vehicle for officers or as needed in hiring situations.
Restricted stock has voting and dividend rights during the restriction
period but may not be sold or otherwise disposed of until such
restrictions lapse. The ultimate value of stock-based awards depends on
Hertz's future success as reflected in the value of its stock.
- Long-Term Incentive Plan (LTIP). The LTIP, implemented in 1991,
provides a cash award at the end of each five-year cycle based on
achievement of corporate performance measures relative to preestablished
criteria. The 1999 grant (made in February) established goals for 2002
relative to net income growth and market share as measured against the
prior four-year period. Payouts under the 1999 grant, which can range
from 0 to 200 percent of the target award, will be made in 2003 based on
actual performance. These awards will be paid in cash or, for certain
officers, one half in cash and one half in stock. A payout for 1999 was
made in March 2000 after the 1995-1999 cycle using the criteria of net
income, market share and customer satisfaction. Performance
significantly exceeded performance goals and payouts were 128% of
target.
DEDUCTIBILITY OF COMPENSATION UNDER IRS RULES
Hertz's policy with respect to the deductibility limit of Section 162(m) of the
Internal Revenue Code generally is to assure the federal income tax
deductibility of compensation paid under its compensation plans. For instance,
per individual, there is a 500,000 share limit on stock option grants and a
300,000 share limit on restricted stock grants, and the 1999 grants were below
these limits. However, there may be occasions when the payment of nondeductible
compensation might be appropriate.
CEO COMPENSATION
Mr. Olson participated in the same compensation programs as other executives of
the Company. The Committee established his 1999 compensation by applying the
previously referenced principles consistent with the manner they were applied to
the other executives.
Mr. Olson's total compensation package reflected the Company's overall financial
and strategic performance within the industry and his personal leadership in the
industry over an extensive period of time.
Mr. Olson also received an EICP award in the amount of $1,003,000. This award
represented 118% of his Target Award, based upon the Company's performance
against measurement criteria and the payout formula provided by the EICP. The
Target Award and performance goals were established in November 1998 by the
Committee.
15
21
Mr. Olson received a LTIP award for 1999 in the amount of $768,000. This award
represented 128% of his Target Award of $600,000 based upon pre-established
performance criteria. The Target Award grant and performance goals were
established in 1996 by the Committee.
Mr. Olson received an award of 100,000 nonqualified stock options on February 3,
1999 and 50,000 nonqualified stock options on December 1, 1999 in accordance
with the provisions of the Long-Term Equity Compensation Plan. These awards were
consistent with competitive practices within the industry. The ultimate value of
these awards depends on Hertz's future success and whether that success is
reflected in the value of Class A Common Stock.
The Compensation Committee
Michael T. Monahan, Chairman
John M. Thompson
16
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COMPENSATION OF EXECUTIVE OFFICERS
The table below shows the before-tax compensation for the last three years for
Frank A. Olson, who served as CEO in 1999, and the four next highest paid
executive officers at the end of 1999.
SUMMARY COMPENSATION TABLE
(Dollars in thousands)
- --------------------------------------------------------------------------------------------------------------------------------
Long-Term Compensation
------------------------------
Annual Compensation Awards Payouts
- --------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Restricted Securities
Annual Stock Underlying
Compensation Award(s) Options LTIP All Other
Payouts Compensation
Salary Bonus ($) ($)(3) (#)(4) ($)(5) ($)(6)
($)(1) ($)(2)
Name and Principal Position Year
- ------------------------------
Frank A. Olson 1999 1,000 1,003 -- -- 150,000 768 5
Chairman of the Board 1998 850 1,069 -- -- 150,000 705 5
1997 848 869 -- 5,166 149,460 720 5
- --------------------------------------------------------------------------------------------------------------------------------
Craig R. Koch 1999 600 496 -- -- 100,000 448 5
President and Chief 1998 520 539 -- -- 85,000 423 5
Executive Officer 1997 478 403 -- 3,768 105,210 432 5
- --------------------------------------------------------------------------------------------------------------------------------
Joseph R. Nothwang 1999 310 250 -- -- 75,000 256 5
Executive Vice President 1998 290 248 -- -- 45,000 282 5
1997 263 191 -- 1,437 119,960 288 5
- --------------------------------------------------------------------------------------------------------------------------------
Paul J. Siracusa 1999 296 212 -- -- 50,000 173 5
Executive Vice President 1998 250 204 -- -- 35,000 127 5
and Chief Financial Officer 1997 223 113 -- 718 59,980 22 5
- --------------------------------------------------------------------------------------------------------------------------------
Brian J. Kennedy 1999 281 183 -- -- 25,000 128 5
Executive Vice President 1998 274 212 -- -- 25,000 113 5
1997 273 177 -- 718 59,980 115 5
- --------------------------------------------------------------------------------------------------------------------------------
NOTES
(1)Amounts included consist of salary payments for the respective year and
amounts deferred pursuant to section 401(k) of the Internal Revenue Code of
1986, as amended. Salary amounts for 1999 and 1998 included 26 bi-weekly pay
periods compared to 27 in 1997.
(2)Includes bonuses earned for the respective year and paid in the subsequent
year.
(3)Represents the value of the restricted stock at the date of grant. Listed
below are the total number of shares of restricted stock owned by the Named
Executives as of December 31, 1999, as well as the market values of these shares
(in thousands of dollars) determined by the closing price of the Class A Common
Stock on the New York Stock Exchange on December 31, 1999:
Named Executive Number of Shares Market Value
--------------- ---------------- ------------
Frank A. Olson.............................................. 215,260 $10,790
Craig R. Koch............................................... 157,015 $ 7,870
Joseph R. Nothwang.......................................... 59,865 $ 3,001
Paul J. Siracusa............................................ 29,930 $ 1,500
Brian J. Kennedy............................................ 29,930 $ 1,500
The ultimate worth of the restricted stock depends on the value of Class A
Common Stock when the restrictions lapse. Under the Long-Term Equity
Compensation Plan, the Compensation Committee determines the restriction period
for shares included in each final award.
Mr. Olson's restrictions ended on January 1, 2000, the date of his retirement as
Chief Executive Officer. For all other Named Executives, the restrictions are
scheduled to end as follows: 33% by April 25, 2000, 66% by April 25, 2001, and
in full by April 25, 2002. Subject to the terms of the Long-Term Equity
Compensation Plan, dividends are paid on shares of restricted stock, although
some risk of forfeiture exists.
(4)See pages 18-19.
(5)Includes long-term incentive bonuses earned for the respective year and paid
in the subsequent year.
(6)Represents the amounts contributed by Hertz to the Income Savings Plan for
the respective year.
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STOCK OPTIONS
The Long-Term Equity Compensation Plan allows grants of stock options and other
rights relating to Class A Common Stock. In general, whether exercising stock
options is profitable depends on the relationship between the Class A Common
Stock market price and the options' exercise price, as well as on the grantee's
investment decisions. Options that are "in the money" on a given date can become
"out of the money" if the price changes on the stock market. For these reasons,
we believe that placing a current value on outstanding options is highly
speculative and may not represent the true benefit, if any, that may be realized
by the grantee.
The following two tables give more information on stock options.
OPTION GRANTS IN LAST FISCAL YEAR(1)
- -------------------------------------------------------------------------------------------------------------------
Grant Date
Individual Grants Value(2)
- -------------------------------------------------------------------------------------------------------------------
(a) (c) (d) (e) (f)
(b) % of Total
Number of Options
Securities Granted to Exercise
Underlying Employees or Base Grant Date
Options in Fiscal Price Expiration Present
Name Granted(#) Year ($/Sh) Date Value $
- -------------------------------------------------------------------------------------------------------------------
Frank A. Olson 100,000 8.6 41.38 2/3/09 1,329,000
50,000 4.3 44.88 1/1/05 664,500
- -------------------------------------------------------------------------------------------------------------------
Craig R. Koch 100,000 8.6 41.38 2/3/09 1,329,000
- -------------------------------------------------------------------------------------------------------------------
Joseph R. Nothwang 75,000 6.4 41.38 2/3/09 996,750
- -------------------------------------------------------------------------------------------------------------------
Paul J. Siracusa 50,000 4.3 41.38 2/3/09 664,500
- -------------------------------------------------------------------------------------------------------------------
Brian J. Kennedy 25,000 2.1 41.38 2/3/09 332,250
- -------------------------------------------------------------------------------------------------------------------
NOTES
(1)The 50,000 stock options granted to Mr. Olson on December 1, 1999 can be
exercised six months after the grant date and any unexercised options expire
January 1, 2005. For all other stock options granted, 33% can be exercised one
year after the grant date, 66% after two years and 100% after three years. Any
unexercised options expire after ten years.
If a grantee retires, all options become exercisable and continue to be
exercisable up to five years following retirement or the remaining time left to
expiration of the options, whichever is less. If a grantee dies or terminates
employment due to disability, options continue to be exercisable up to one year
following the termination of employment or the date of death, as the case may
be, or the remaining time left to expiration of the options, whichever is less.
In most other instances of employment termination, all rights end upon
termination.
Options are subject to certain conditions, including not engaging in competitive
activity. Options generally cannot be transferred except through inheritance.
(2)These values were determined using the Black-Scholes methodology and the
assumptions described in Note 7 to Hertz's Notes to Consolidated Financial
Statements contained in its 1999 Annual Report. The ultimate value of the
options, if any, will depend on the future value of the Class A Common Stock and
the grantee's investment decisions, neither of which can be accurately
predicted.
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AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
- ------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Number of Securities Value
Underlying Unexercised of Unexercised
Options at FY-End In-the-Money
(#) Options($)(1)
Shares ---------------------------------------------
Acquired Value Realized Exercisable/ Exercisable/
Name on Exercise(#) $ Unexercisable Unexercisable
- ------------------------------------------------------------------------------------------------------------------------
Frank A. Olson 74,322 2,791,296 73,822/301,316 706,569/2,609,537
- ------------------------------------------------------------------------------------------------------------------------
Craig R. Koch 97,488 3,012,236 0/192,722 0/1,891,409
- ------------------------------------------------------------------------------------------------------------------------
Joseph R. Nothwang 0 0 94,024/145,936 2,089,768/1,765,125
- ------------------------------------------------------------------------------------------------------------------------
Paul J. Siracusa 31,343 906,151 0/93,844 0/1,004,003
- ------------------------------------------------------------------------------------------------------------------------
Brian J. Kennedy 43,043 1,430,611 4,793/62,144 125,217/775,621
- ------------------------------------------------------------------------------------------------------------------------
NOTES
(1)These year-end values represent the difference between the fair market value
of Class A Common Stock subject to options (based on the stock's closing price
of $50.125 on the New York Stock Exchange on December 31, 1999) and the exercise
prices of the options. "In-the-money" means that the fair market value of the
stock is greater than the option's exercise price on the valuation date.
19
25
LONG-TERM INCENTIVE PLAN AWARDS
In 1991, Hertz established a Long-Term Incentive Plan for certain officers and
other key employees. The grant of awards and the size are determined by the
achievement of certain qualitative and quantitative performance targets. A new
five year performance cycle begins on each January 1. Performance for a specific
year generally is measured against performance for the prior four year period
and awards will be made in cash for performance years ending in 2000 and 2001 at
the end of each performance period. The measurement criteria used for the
performance year 1999 included net income of Hertz relative to the net income
average for the Dow 30 Industrials, market share and customer satisfaction.
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
(Dollars in thousands)
- --------------------------------------------------------------------------------------------------------------------------
Estimated Future Payouts
under Non-Stock Price-Based Plans
--------------------------------------------
(a) (c) (d) (e) (f)
(b) Performance
Number of or Other
Shares, Units Period Until
or Other Maturation Threshold Target Maximum
Name Rights(#) or Payout ($) ($) ($)
- ---------------------------------
Frank A. Olson (1) (2) 0 600 1,200
- --------------------------------------------------------------------------------------------------------------------------
Craig R. Koch (1) (2) 0 350 700
- --------------------------------------------------------------------------------------------------------------------------
Joseph R. Nothwang (1) (2) 0 200 400
- --------------------------------------------------------------------------------------------------------------------------
Paul J. Siracusa (1) (2) 0 135 270
- --------------------------------------------------------------------------------------------------------------------------
Brian J. Kennedy (1) (2) 0 100 200
- --------------------------------------------------------------------------------------------------------------------------
NOTES
(1)Not applicable.
(2)Target and maximum award grants in place for performance year 1999 are
included in the above table for the Named Executives. Payouts for performance
year 1999 are included in the Summary Compensation Table on page 17.
Target award grants have also been made for the performance years 2000, 2001 and
2002 versus performance for the previous four year periods, respectively. The
amount of the payments for the performance years subsequent to 1999 can range
from zero to two times the amount of the target. Such target award grants made
for performance years 2000, 2001 and 2002, respectively, to the Named Executives
are as follows (in thousands): Mr. Olson $600, $600 and $600; Mr. Koch $350,
$450 and $450; Mr. Nothwang $200, $200 and $250; Mr. Siracusa $180, $180 and
$180 and Mr. Kennedy $100, $100 and $100. The measurement criteria used for the
target award grants for the performance year 2000 includes net income, market
share and customer satisfaction. The measurement criteria used for the target
award grant for the performance year beginning 2001 and future years includes
net income and market share. Beginning with the performance year 2001, awards
will be paid in cash, or for certain officers, half in cash and half in stock at
the end of each performance period.
20
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EMPLOYMENT AGREEMENTS
Hertz currently has individual employment agreements with five key executives
which are substantially identical except for termination dates.
Mr. Koch serves Hertz under an employment agreement which currently expires on
April 30, 2004. Messrs. Kennedy, Nothwang and Siracusa serve Hertz under
employment agreements which currently expire on February 12, 2001. Gerald
Plescia, President of Hertz Equipment Rental Corporation, serves Hertz under an
employment agreement which also currently expires on February 12, 2001. The
employment agreements do not provide for any compensatory plan or arrangement
upon termination of employment or change in control. The employment agreement of
Mr. Koch is automatically extended one (1) additional year on May 1 of each year
unless not later than December 31st of the preceding year, Hertz or Mr. Koch
shall have given notice not to extend the agreement.
Each employment agreement provides for certain compensation and benefits during
the term of the agreement.
Hertz may terminate such key executive at any time for "cause," whereupon it
will pay accrued annual base salary through the date of termination and all
other obligations of Hertz under the employment agreement will cease.
If a key executive becomes disabled from full-time employment for six
consecutive months he may be terminated. During such period of absence, the key
executive will receive his annual base salary, incentive compensation and
participate in retirement, savings and stock option plans. Thereafter, the key
executive will participate in retirement, savings and stock option plans in
accordance with Hertz's disability insurance plans and policies.
If a key executive dies, all compensation and benefits then accrued shall be
paid to his estate or designated beneficiaries.
Each key executive has also agreed, during and after the term of his employment,
not to disclose any secret or confidential information relating to Hertz, Ford
or any of their respective subsidiaries or affiliates.
21
27
STOCK PERFORMANCE GRAPHS
SEC rules require proxy statements to contain a performance graph comparing,
over a five-year period, the performance of our Class A Common Stock against
Standard & Poor's 500 Stock Index and against either a published industry or
line-of-business index or a group of peer issuers. Hertz chose the Russell 1000
as the industry index for the graph. The graph assumes an initial investment of
$100 and quarterly reinvestment of dividends.
COMPARISON OF CUMULATIVE TOTAL RETURN
HERTZ, S&P 500 AND RUSSELL 1000
The following line graph compares cumulative total stockholder return, assuming
reinvestment of dividends, for: (i) Hertz's Class A Common Stock; (ii) the
Standard & Poor's 500 Stock Index; and (iii) the Russell 1000 Index. The Russell
1000 Index is included because it is comprised of the 1,000 largest publicly
traded issuers and has median total market capitalization of approximately
$3,800,000,000 which is similar to Hertz's total market capitalization. Due to
the small number of publicly-traded companies in Hertz's peer group, Hertz does
not believe it can reasonably identify a group of peer issuers. Because Hertz
did not begin trading on the New York Stock Exchange until April 25, 1997, the
graph compares performance from that date forward through December 31, 1999. The
graph assumes that $100 was invested at the beginning of the period at the
initial public offering price of $24 per share.
(PERFORMANCE RESULTS THROUGH DECEMBER 31, 1999)
HERTZ S & P 500 RUSSELL 1000
----- --------- ------------
04/24/97 100.00 100.00 100.00
06/30/97 150.00 115.00 115.00
09/30/97 157.00 124.00 125.00
12/31/97 168.00 127.00 129.00
03/31/98 192.00 144.00 146.00
06/30/98 186.00 149.00 150.00
09/30/98 176.00 134.00 134.00
12/31/98 192.00 163.00 164.00
03/31/99 225.00 171.00 170.00
06/30/99 261.00 183.00 182.00
09/30/99 185.00 172.00 170.00
12/31/99 211.00 197.00 198.00
The graph above compares the cumulative total shareholder return on Hertz's
Class A Common Stock since its initial public offering with the cumulative total
return of the S&P 500 Stock Index and the Russell 1000 Index. The graph assumes
a $100 investment made at the beginning of the period and reinvestment of all
dividends.
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28
RETIREMENT PLANS
Hertz's retirement plan (the "Hertz Plan") was established on August 30, 1985.
Previously, Hertz participated in the RCA Retirement Plan (the "RCA Plan").
The Hertz Plan is tax-qualified. Contributions were made by the employees and
Hertz up to June 30, 1987. Effective July 1, 1987, Hertz pays the entire cost.
The benefit an employee receives under the Hertz Plan is based on a combination
of the following factors:
- a percentage of final average compensation (using the highest five
consecutive of the last ten years of covered compensation)
- years of credited service up to July 1, 1987
- the accrued value of a cash account after July 1, 1987 which gets
credited each year at a predetermined percentage of compensation
Compensation for these purposes includes salary or wages, bonuses, commissions,
premium rate pay and vacation pay.
Hertz also has non-qualified pension plans for certain of its executives,
including certain Named Executives, which provides benefits in excess of the
qualified plans which include (1) the Benefit Equalization Plan that provides
equalization benefits that cannot be provided under the Hertz Plan due to
limitations imposed by the Internal Revenue Code of 1986, as amended, and (2)
the Supplemental Retirement and Savings Plan ("SERP") and Supplemental Executive
Retirement Plan ("SERP II") that, when combined with the Hertz Plan, provides a
benefit as if the pre-July 1, 1987 benefit formula had remained in effect until
the employee's normal retirement date.
Benefits payable under the plans are not reduced for Social Security or other
offsets.
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29
The following table shows the annual pension benefits payable under the Hertz
Plan, SERP and SERP II including amounts attributable to employee contributions
from the RCA Plan. The table indicates benefits for employees at various rates
of final average compensation and years of service, based on retirement at age
65, and for life annuity.
PENSION PLAN TABLE
YEARS OF PARTICIPATION IN PLAN
- ------------------------------------------------------------------------------------------------------
Final
Average
Compensation 15 Years 20 Years 25 Years 30 Years 35 Years
- ------------------------------------------------------------------------------------------------------
$ 175,000 $ 41,026 $ 54,701 $ 68,376 $ 82,051 $ 95,726
- ------------------------------------------------------------------------------------------------------
225,000 52,996 70,661 88,326 105,991 123,656
- ------------------------------------------------------------------------------------------------------
275,000 64,966 86,621 108,276 129,931 151,586
- ------------------------------------------------------------------------------------------------------
325,000 76,936 102,581 128,226 153,871 179,516
- ------------------------------------------------------------------------------------------------------
375,000 88,906 118,541 148,176 177,811 207,446
- ------------------------------------------------------------------------------------------------------
425,000 100,876 134,501 168,126 201,751 235,376
- ------------------------------------------------------------------------------------------------------
475,000 112,846 150,461 188,076 225,691 263,306
- ------------------------------------------------------------------------------------------------------
525,000 124,816 166,421 208,026 249,631 291,236
- ------------------------------------------------------------------------------------------------------
575,000 136,786 182,380 227,976 273,571 319,167
- ------------------------------------------------------------------------------------------------------
625,000 148,756 198,341 247,927 297,511 347,096
- ------------------------------------------------------------------------------------------------------
675,000 160,726 214,301 267,876 321,452 375,026
- ------------------------------------------------------------------------------------------------------
725,000 172,696 230,261 287,826 345,391 402,956
- ------------------------------------------------------------------------------------------------------
775,000 184,666 246,221 307,776 369,331 430,886
- ------------------------------------------------------------------------------------------------------
825,000 196,636 262,181 327,726 393,271 458,816
- ------------------------------------------------------------------------------------------------------
1,000,000 238,531 318,041 397,551 477,061 556,571
- ------------------------------------------------------------------------------------------------------
1,500,000 358,231 477,641 597,051 716,461 835,871
- ------------------------------------------------------------------------------------------------------
2,000,000 477,931 637,241 796,551 955,861 1,115,171
- ------------------------------------------------------------------------------------------------------
2,500,000 597,631 796,841 996,051 1,195,261 1,394,471
- ------------------------------------------------------------------------------------------------------
As of December 31, 1999, the total credited years of service with Hertz and its
subsidiaries for each of the Named Executives were as follows: Mr. Olson, 33
years; Mr. Koch, 28 years; Mr. Nothwang, 23 years; Mr. Siracusa, 30 years and
Mr. Kennedy, 15 years.
Hertz also maintains a non-qualified plan to provide a Special Supplemental
Executive Pension Benefit for Mr. Olson. This plan ensures that Mr. Olson
receives a total pension benefit from all plans equal to 50% of his final
average compensation. The annual life annuity benefit payable at age 65 to Mr.
Olson was $137,455.
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30
PROPOSAL REQUIRING YOUR VOTE
In addition to voting for directors, the following Proposal will be voted on at
the meeting. Hertz will present the Proposal.
A majority of the votes that could be cast by stockholders who are either
present in person or represented by proxy at the meeting is required to approve
this Proposal. The votes will be computed for each share as described on page 1.
Space is provided in the accompanying proxy form to approve, disapprove, or
abstain from the Proposal.
PROPOSAL 2
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Directors selects and hires independent
public accountants to audit Hertz's books of account and other corporate
records. The Audit Committee's selection for 2000 must be approved by you.
The Audit Committee selected PricewaterhouseCoopers LLP to audit Hertz's books
of account and other corporate records for 2000. This firm's predecessor,
Coopers & Lybrand L.L.P. (which has audited Hertz's books since 1994) and
Price Waterhouse LLP merged July 1, 1998 to form PricewaterhouseCoopers LLP.
PricewaterhouseCoopers LLP is well qualified to continue to audit Hertz's books
of account and other corporate records. A representative of
PricewaterhouseCoopers LLP will be present at the meeting with the opportunity
to make a statement and answer questions.
For 1999, Hertz paid PricewaterhouseCoopers LLP $5.0 million for world-wide
audit and nonaudit services.
Hertz management will present the following resolution at the meeting:
"RESOLVED: That the selection, by the Audit Committee of the Board of Directors,
of PricewaterhouseCoopers LLP as independent public accountants to audit the
books of account and other corporate records of the Corporation for 2000 is
ratified."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2.
25
31
STOCKHOLDER PROPOSALS FOR 2001
Any stockholder proposal intended for inclusion in the proxy material for the
2001 annual meeting must be received no later than December 15, 2000.
ANNUAL REPORT AND OTHER MATTERS
Hertz's 1999 Annual Report, including consolidated financial statements, was
mailed to you with this proxy statement. A list of the stockholders of record
entitled to vote at the annual meeting will be available for review by any
stockholder, for any purpose related to the meeting, between 9:00 a.m. and 5:00
p.m. at The Hertz Corporation Worldwide Headquarters, 225 Brae Boulevard, Park
Ridge, New Jersey, for ten days prior to the meeting.
EXPENSES OF SOLICITATION
The cost of soliciting proxies in the accompanying form will be paid by Hertz.
We do not expect to pay any fees for the solicitation of proxies, but may pay
brokers, nominees, fiduciaries and other custodians their reasonable fees and
expenses for sending proxy materials to beneficial owners and obtaining their
instructions. In addition to solicitation by mail, proxies may be solicited in
person, or by telephone, facsimile transmission or other means of electronic
communication, by directors, officers and other employees of the Company.
[H.E. ROLFE SIGNATURE]
Harold E. Rolfe
Secretary
April 13, 2000
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HOW TO ATTEND THE ANNUAL MEETING
STOCKHOLDERS OF RECORD
When you complete your proxy, please indicate whether or not you plan to attend
the annual meeting by checking the appropriate box. You will be required to
present proper identification at the door for admission.
"STREET NAME" HOLDERS
If you are a stockholder of record and hold shares in street name, you can
attend the meeting and vote if you bring a copy of your most recent brokerage
account statement showing that you own Hertz stock and present proper
identification at the door for admission.
LOCATION OF THE ANNUAL MEETING
The meeting is being held on May 19, 2000 at 10:00 a.m., eastern daylight
savings time, at The Park Ridge Marriott, 300 Brae Boulevard, Park Ridge, New
Jersey. For additional information, you may call Investor Relations at (201)
307-2100.
27
33
NOTICE OF
2000
ANNUAL MEETING
OF STOCKHOLDERS
AND
PROXY STATEMENT
RECYCLED LOGO SOY INK LOGO
This Proxy Statement is printed
entirely on recycled and recyclable
paper. Soy ink, rather than
petroleum-based ink, is used.
Hertz Logo
34
HERTZ(R)
P
THE HERTZ CORPORATION
R
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
O FOR THE ANNUAL MEETING OF STOCKHOLDERS
X
The undersigned hereby appoints W. Wayne Booker and John M. Rintamaki, or
Y either of them, proxies with power of substitution, to vote all the shares
of Common Stock which the undersigned is entitled to vote on all matters,
unless the contrary is indicated on the reverse side hereof, which may
come before The Hertz Corporation's Annual Meeting of Stockholders to be
held at The Park Ridge Marriott, 300 Brae Boulevard, Park Ridge, New
Jersey at 10:00 a.m., eastern daylight savings time, on May 19, 2000, and
any adjournments thereof.
THE PROXIES SHALL VOTE THE SHARES REPRESENTED BY THIS PROXY IN THE MANNER
INDICATED ON THE REVERSE SIDE HEREOF. UNLESS A CONTRARY DIRECTION IS
INDICATED, THE PROXIES SHALL VOTE THE SHARES (a) "FOR" THE ELECTION AS
DIRECTORS OF ALL THE NOMINEES NAMED IN THE PROXY STATEMENT AND LISTED
BELOW OR ANY OTHER PERSON SELECTED BY THE BOARD OF DIRECTORS IN
SUBSTITUTION FOR ANY OF THE NOMINEES AND (b) "FOR" PROPOSAL 2, WHICH IS
SET FORTH IN THE PROXY STATEMENT.
---------------------
Election of Directors, Nominees:
W. Wayne Booker; Louis C. Burnett; Craig R. Koch; Michael T. Monahan;
Frank A. Olson; Peter J. Pestillo; John M. Rintamaki;
John M. Thompson and Joseph A. Walker.
- ---------------------------------
ADDRESS CHANGE: PLEASE NOTE CHANGE
HERE AND MARK BOX ON REVERSE SIDE
- ---------------------------------
(Continued and to be signed on reverse side)
35
Please mark your 1632
/X/ vote as in this
example.
The Board of Directors Recommends a Vote FOR the Election
of all Management Nominees and FOR Proposal 2.
FOR WITHHELD
Proposal 1--Election
of Directors (See / / / /
reverse)
FOR, except vote withheld from the following nominee(s):
FOR AGAINST ABSTAIN
Proposal 2--Ratification of Selection of
Independent Public Accountants / / / / / /
I Plan to Attend the Y N
Annual Meeting E / / O / /
S
I Wish to Discontinue Y N
Duplicate Annual Report E / / O / /
Mailings for this Account S
I Have Written my
New Address on / /
the Reverse Side
SIGNATURES(S) _________________________ DATE _________________
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.