EXHIBIT 10.1

 

EXECUTION COPY

 

November 8, 2014

 

Mr. Brian MacDonald

c/o Hertz Global Holdings, Inc.

999 Vanderbilt Beach Road

Naples, FL 34108

 

Dear Brian:

 

In connection with your recent appointment, effective September 7, 2014 (the
“Appointment Date”), as interim Chief Executive Officer (“Interim CEO”) of Hertz
Global Holdings, Inc. (“Holdings”) and The Hertz Corporation (“Hertz” and,
together with Holdings, the  “Companies”), I am pleased to confirm the following
additional compensation that will be provided to you during your tenure as
Interim CEO, in recognition of the additional duties and responsibilities that
you have assumed as Interim CEO:

 

1.                                    Term; Current Employment Agreement.

 

(a)       Term. The terms of this letter became effective as of the Appointment
Date, and shall expire on the date that you cease to be Interim CEO, if you are
replaced by a new Chief Executive Officer of the Companies, unless otherwise
agreed by you and the Board of Directors of the Companies (the “Boards”) or your
employment with the Companies is otherwise terminated. The period during which
you are employed by Holdings pursuant to this letter agreement as provided in
the preceding sentence is referred to herein as the “Interim Term”.

 

(b)      Current Employment Agreement.  You and the Companies acknowledge that
Holdings and you have previously entered into an Employment Agreement, dated
June 2, 2014 (the “HERC Agreement”), covering the terms of your employment with
Holdings in your capacity as Chief Executive Officer of Hertz Equipment Rental
Corporation (“HERC”).  Any capitalized terms used in this letter agreement but
not defined in this letter agreement will have the meaning proscribed in the
HERC Agreement.  You and Holdings agree that, during the Interim Term, to the
extent not expressly incorporated into this letter agreement, the provisions
contained in the HERC Agreement will be tolled.  Subject to the provisions of
Section 8 of this letter agreement, upon the expiration of the Interim Term, you
will be reappointed as Chief Executive Officer of HERC and continue to be
employed with Holdings pursuant to the terms of the HERC Agreement, with any
modifications to such agreement to be made to reflect the passage of time or
other facts as may be applicable (but which for the avoidance of doubt shall not
result in such terms being less favorable to you than in effect on the date you
commenced employment thereunder).

 

2.                                    Position.  During the Interim Term, you
will serve as Interim CEO of the Companies.  In that capacity, you will report
directly to the Board of Directors of Holdings (the “Holdings Board”) and have
the customary authority, duties and responsibilities that accompany this
position.   During the Interim Term, the Holdings Board can remove you as
Interim CEO at any time, with or without prior notice.

 

--------------------------------------------------------------------------------

 

3.                                    Location.  During the Interim Term, you
will perform your duties at Holdings’ headquarters in Naples, Florida (and
travel to other locations as business requires).

 

4.                                    Annual Base Salary; Special Cash
Incentive.  You and Holdings acknowledge that your current annual base salary
under the HERC Agreement is, and will remain so long as you are Interim CEO,
$1,100,000 (your “Annual Base Salary”), payable at the times consistent with the
Companies’ general policies regarding compensation of senior executives.  During
the Interim Term, you will also be paid, on an annualized basis retroactive to
your Appointment Date, $500,000 (your “Special Cash Incentive”).  On the payroll
date following as soon as practicable following the execution of this letter
agreement, you will receive a lump sum payment equal to the amount you would
have received if the Special Cash Incentive had commenced being paid to you
immediately following the Appointment Date, and thereafter the balance of the
Special Cash Incentive will be paid to you in substantially equal installments
on at least a monthly basis at the times consistent with the Companies’ general
policies regarding compensation of senior executives.

 

5.                                    Annual Bonus Opportunity.  You and
Holdings acknowledge that, during the Interim Term, you will continue to be
eligible to participate in Holdings’ Executive Incentive Plan, with a target
annual incentive bonus of 130% of your Annual Base Salary (your “Target Annual
Bonus”), with the actual annual bonus amount to be awarded to you based on such
performance results as determined by the Compensation Committee of the Holdings
Board (the “Committee”) and the terms of the Holdings’ Executive Incentive Plan
as in effect from time to time; provided that your actual bonus for the calendar
year 2014 under the Holdings Executive Incentive Plan will be no less than the
Target Annual Bonus, prorated for the portion of the calendar year during which
you were employed by the Companies.

 

6.                                    Annual Equity Opportunity.  If, at the
time that grants of equity-based awards are made under the Holdings 2008 Omnibus
Incentive Plan (the “Omnibus Plan”) to senior executives of the Companies in
respect of the 2015 fiscal year (the “2015 Equity Grants”), you remain Interim
CEO, you will also receive equity-based awards under the Omnibus Plan in the
same form as such senior executives receive such grants; however, the level of
such grants will be commensurate with the level you would have received if you
had been employed as Chief Executive Officer of HERC pursuant to the HERC
Agreement.  In addition, if, at the time the 2015 Equity Grants are made, you
have been reappointed as Chief Executive Officer of HERC due to expiration of
the Interim Term, and the Spin-off has not yet been consummated, you will
receive equity-based awards under the Omnibus Plan in the same form as the
senior executives of the Companies receive such grants, at a level commensurate
with your position as Chief Executive Officer of HERC.

 

7.                                    Determination of Initial Equity Grant;
Special Equity Incentive Award.

 

(a)       Determination of Initial Equity Grant. Notwithstanding the provisions
of Section 3(c)(i) of the HERC Agreement, Holdings and you agree that the number
of shares of Holdings common stock that will be subject to the Initial Equity
Grant, at such time as such award may be granted pursuant to the terms of the
HERC Agreement, will be equal to 114,000.

 

 

2

--------------------------------------------------------------------------------

 

(b)      As a special inducement to perform your services as Interim CEO, within
5 days after the Companies have filed all required reports under Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 (including, for the
avoidance of doubt, amendment #2 to Holdings’ annual report on Form 10-K for the
year ended December 31, 2013) (all such filing requirements, the “periodic
reporting requirements”), Holdings will grant you 23,000 restricted stock units
under the Omnibus Plan (the “Special Equity Award”). The Special Equity Award
will vest, subject to achievement of a performance goal based on EBITDA of the
Companies and their consolidated subsidiaries exceeding $20,000,000 during the
one-year period beginning on the first day of the quarter containing the grant
date of the Special Equity Award (with EBITDA of the Companies and their
consolidated subsidiaries generally referring to Corporate EBITDA as disclosed
by the Companies, subject to equitable adjustment in the event of material
acquisitions or dispositions by the Companies during the performance period), in
full in one installment on September 8, 2015, assuming your continued employment
with the Companies (whether as Interim CEO or otherwise) and subject to such
other customary terms and conditions as may be set forth in the applicable
performance stock unit award agreement to be used to make such award, which will
be in substantially the form used to make grants to other senior executive
officers of Holdings as previously filed by Holdings with the Securities and
Exchange Commission.  In addition, upon expiration of the Interim Term and your
continued employment under the HERC Agreement, the Special Equity Award will, to
the extent you are employed with the Companies on the date of the consummation
of the Spin-off, be converted into a replacement grant in the same manner as the
Initial Equity Award is converted into a Replacement Grant under
Section 3(c)(i) of the HERC Agreement.

 

8.                                    Severance Provisions.

 

(a)       Application of Section 8 of HERC Agreement.  During the Interim Term,
Section 8 of the HERC Agreement will continue to apply, except that, solely
during the Interim Term, all references to your position as “Chief Executive
Officer of HERC” contained in Section 8(d) of the HERC Agreement will instead
refer to your position as “interim Chief Executive Officer of Holdings”.

 

(b)      Treatment of Certain Equity Awards.  Notwithstanding anything contained
in the HERC Agreement, the Omnibus Plan or any award agreement granted
thereunder, if, during the Interim Term, Holdings terminates your employment
without Cause under Section 8(c) of the HERC Agreement or you terminate your
employment for Good Reason (as modified by Section 8(a) above) under
Section 8(d) of the HERC Agreement, then, upon your satisfaction of the same
terms and conditions of Section 8(c) of the HERC Agreement, and in addition to
the severance payments and benefits to which you are entitled under
Section 8(c) of the HERC Agreement: (i) if, on or prior to your Date of
Termination, you have received the Special Equity Award and the Initial Equity
Award, you will become vested in any unvested portion of each such award; but if
(ii) the Companies have not yet satisfied their periodic reporting requirements
such that you have not yet received the Special Equity Award and the Initial
Equity Award, you will instead receive a lump sum cash payment equal to
$3,000,000, payable on the same date you would otherwise receive the amount set
forth in Section 8(e)(iii)(A) of the HERC Agreement.

 

 

3

--------------------------------------------------------------------------------

 

(c)       Notwithstanding the foregoing and for the avoidance of doubt, you
agree that upon the expiration of the Interim Term, if you are removed as
Interim CEO by the Holdings Board but simultaneously reappointed as Chief
Executive Officer of HERC, such removal as Interim CEO and simultaneous
reappointment as Chief Executive Officer of HERC (the date of such events, the
“Transition Date”) will not be deemed a termination without Cause by the
Companies, nor an event of Good Reason under Section 8(d) of the HERC Agreement,
either under this letter agreement or the HERC Agreement, and thereafter you
will continue to be covered by the provisions of Section 8 of the HERC Agreement
as if Section 8(a) of this letter agreement had never been effective; provided,
however, that on and after the Transition  Date, the provisions of
Section 8(b) of this letter agreement shall be incorporated and made a part of
Section 8 of the HERC Agreement and will continue to apply, to the extent any
portion of the Special Equity Award and/or the Initial Equity Award remain
outstanding and unvested as of the Date of Termination thereunder.

 

9.                                    Employee Benefits.  During the Interim
Term, you will continue to be entitled to employee benefit, welfare and other
plans, policies and programs generally applicable to similarly situated senior
executives of Holdings.

 

10.                            Company Policies; Regulatory and Licensing
Requirement.  You will continue to be subject to all policies of Holdings,
including, without limitation, any stock ownership guidelines and incentive
compensation clawback policy applicable to senior executives of Holdings, as
each policy is adopted or amended from time to time.  By signing this letter you
agree that your continued employment is contingent upon compliance with
applicable regulatory, registration and licensing requirements, if any, now or
in the future required of your position, including passing the appropriate exams
or transferring existing license(s), if any, or completing any registration
requirements, within any reasonable time limits imposed by Holdings, and your
compliance with applicable regulatory, registration and licensing.

 

11.                            Restrictive Covenants.   For the avoidance of
doubt, you will continue to be subject to the restrictive covenants contained in
Sections 11, 12, 13 14 and 15 of your HERC Employment Agreement, during
employment with the Companies under this letter agreement or otherwise, and
after, in accordance with the provisions thereof.

 

12.                            Miscellaneous.

 

·                 Entire Agreement; Amendment.  Except as otherwise provided in
this letter agreement, this letter agreement shall supersede and toll any other
agreement or understanding, written or oral, with respect to the matters covered
herein, including the HERC Agreement.  This letter may not be amended or
modified otherwise than in writing signed by the parties hereto; provided,
however, that, notwithstanding the foregoing, Holdings may amend or modify this
letter if it determines it is necessary to do so in order to comply with
applicable legal and/or regulatory requirements or guidance or any changes in
applicable law, rules or regulations or in the formal and conclusive
interpretation thereof by any regulator or agency of competent jurisdiction.  In
the event such modification has a material adverse impact upon the employment
benefits you received under this letter agreement, Holdings and you will
cooperate diligently and in good faith to amend the terms of this letter to
preserve your employment benefits under this letter.

 

 

4

--------------------------------------------------------------------------------

 

·                 Reimbursement of Fees.  The Company will pay your reasonable
costs of legal counsel incurred in connection with the negotiation and
preparation of this letter in an amount not to exceed $10,000.

 

·                 Severability.  The invalidity or unenforceability of any
provision of this letter will not affect the validity or enforceability of any
other provision of this letter, and this letter will be construed as if such
invalid or unenforceable provision was omitted (but only to the extent that such
provision cannot be appropriately reformed or modified).

 

·                 Tax Matters.  The Company may withhold from any amounts
payable to you such Federal, state, local or foreign taxes as shall be required
to be withheld pursuant to any applicable law or regulation.  It is intended
that the payments and benefits provided under this letter shall comply with the
provisions of Section 409A of the Internal Revenue Code of 1986, as amended
(“Section 409A”) and the regulations relating thereto, or an exemption to
Section 409A, and this letter shall be interpreted accordingly.  Any payments or
benefits that qualify for the “short-term deferral” exception or another
exception under Section 409A shall be paid under the applicable exception.  Each
payment under this letter will be treated as a separate payment for purposes of
Section 409A.  If you become entitled to a payment of nonqualified deferred
compensation as a result of your termination of employment and at such time you
are a “specified employee” (within the meaning of Section 409A and as determined
in accordance with the methodology established by Holdings as in effect on your
date of termination), such payment will be postponed to the extent necessary to
satisfy Section 409A, and any amounts so postponed will be paid in a lump sum on
the first business day that is six months and one day after your separation from
service (or any earlier date of your death).  If the compensation and benefits
provided under this letter would subject you to taxes or penalties under
Section 409A, Holdings and you will cooperate diligently to amend the terms of
this letter to avoid such taxes and penalties, to the extent possible under
applicable law; provided that, in no event shall Holdings be responsible for any
Section 409A taxes or penalties that arise in connection with any amounts
payable or benefits provided under this letter or otherwise.

 

·                 Governing Law, Dispute Resolution.   The governing law,
consent to waiver of jury trial and all other dispute resolution provisions
contained in Section 20 of the HERC Agreement are incorporated by referenced and
made a part of this letter agreement.

 

·                 Successors.  This letter is personal to you and without the
prior written consent of Holdings will not be assignable by you.  This letter
and any rights and benefits hereunder will inure to the benefit of and be
enforceable by your legal representatives, heirs or legatees.  This letter and
any rights and benefits hereunder will inure to the benefit of and be binding
upon Holdings and its successors and assigns.

 

·                 Headings.  The headings in this letter are for convenience of
reference only and do not affect the interpretation of this letter.

 

·                 Counterparts.  This letter may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same.

 

 

5

--------------------------------------------------------------------------------

 

If this letter correctly sets forth our agreement, please return a signed copy
of this letter to Holdings.

 

Brian, we thank you for your leadership.

 

 

 

Sincerely,

 

 

 

Hertz Global Holdings, Inc.

 

 

 

 

 

By:

/s/ Linda Fayne Levinson

 

 

Name: Linda Fayne Levinson

 

 

Title: Independent Non-Executive Chair of

 

 

the Board of Directors

 

 

 

Accepted and agreed to this 10th day of November, 2014.

 

 

 

/s/ Brian MacDonald

 

Brian MacDonald

 

 

 

[Signature page to Brian MacDonald letter agreement]

 

--------------------------------------------------------------------------------