UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934 (Amendment No.    )

Filed by the Registrant  ☒                             Filed by a party other than the Registrant  ☐

Check the appropriate box:

Herc Holdings Inc.

(Name of Registrant as Specified In Its Charter)

N/A

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

Herc Holdings Inc.

27500 Riverview Center Blvd.

Bonita Springs, Florida 34134

April 1, 2019

Dear Stockholder:

You are cordially invited to attend our annual meeting of stockholders to be held at 9:00 a.m. (local time) on May 16, 2019, at our principal executive office located at 27500 Riverview Center Blvd., Bonita Springs, Florida 34134.

We will be using the “Notice and Access” method of providing proxy materials to you via the Internet at www.proxyvote.com, instead of by mail. On or about April 1, 2019, we will begin mailing to our stockholders a Notice of Internet Availability of Proxy Materials (the “Notice”) containing instructions on how to access our proxy statement and annual report to stockholders for 2018 and how to vote online. The Notice also contains instructions on how to receive a paper copy of our proxy materials.

Your vote is important. Each share of our common stock that you own represents one vote. If you do not vote your shares, you will not have a say on the important issues to be voted on at the annual meeting. Whether or not you plan to attend the annual meeting, please vote as promptly as possible. You may vote online or by telephone by following the instructions set forth in the Notice and the proxy statement. If you requested a paper copy of our proxy materials, you may also vote by completing, signing, dating and returning the proxy card. If you attend the annual meeting, you may vote in person.

Registration and seating will begin at 8:30 a.m. (local time). In order to be admitted to the annual meeting, a stockholder must present proof of stock ownership as of the close of business on the record date, March 18, 2019, which can be the Notice, the proxy card accompanying our proxy statement if you requested a paper copy of our proxy materials or a brokerage statement reflecting stock ownership as of March 18, 2019. Stockholders will be asked to sign an admittance card and must also present a form of photo identification such as a driver’s license.    

Sincerely,

NOTICE OF 2019 ANNUAL MEETING OF STOCKHOLDERS

OF HERC HOLDINGS INC.

The Board of Directors of the Company unanimously recommends a vote FOR each director nominee

and FOR Proposals 2 and 3.

April 1, 2019

Bonita Springs, Florida

TABLE OF CONTENTS

IMPORTANT INFORMATION ABOUT THE ANNUAL MEETING AND VOTING

The Board of Directors of Herc Holdings Inc. is soliciting proxies to be used at the annual meeting of stockholders to be held on May 16, 2019, beginning at 9:00 a.m. (local time) at our principal executive office located at 27500 Riverview Center Blvd., Bonita Springs, Florida 34134. This proxy statement was filed with the Securities and Exchange Commission (the “SEC”) on April 1, 2019, and we expect to first send the Notice of Internet Availability of Proxy Materials (the “Notice”) to stockholders on or about April 1, 2019.

Purpose of the Annual Meeting

At the annual meeting, stockholders will act upon the following matters:

The Company’s senior management will be available to answer questions from stockholders.    

Stockholders Entitled to Vote at the Annual Meeting

Our Board has established the record date for the annual meeting as March 18, 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 attend and vote at the annual meeting. On March 18, 2019, 28,624,541 shares of our common stock were outstanding.    

Voting Procedures

If you are a stockholder of record, you may vote as follows:

If you hold your shares beneficially in “street name” through a broker or other nominee, you must follow the instructions provided by your broker or nominee to vote your shares.

Procedures for Attending the Annual Meeting

For those stockholders who wish to attend the annual meeting, you will need the following:

Please note that no cameras or recording devices are allowed at the annual meeting. Seating for the annual meeting starts at 8:30 a.m. (local time) and the annual meeting will start at 9:00 a.m. (local time).

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If you hold your shares beneficially in “street name” through a broker or other nominee and you intend to vote your shares at the meeting, you will need a proxy from your bank or nominee. Please contact your bank or nominee if you hold your shares in “street name” and wish to vote your shares at the meeting.

Voting Options; Quorum

The Board unanimously recommends a vote “FOR” each director nominee and “FOR” each of Proposals 2 and 3. 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.

The presence, in person or by proxy, of the holders of a majority of the shares entitled to vote at the 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 hold your shares beneficially in “street name” through a broker or other nominee, and you would like to instruct your broker or nominee how to vote your shares, you should follow the directions provided by your broker or nominee. Under New York Stock Exchange (“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. We will vote your shares as you specify when providing your proxy. If you do not specify how you want your shares voted when you provide your proxy, we will vote them in accordance with the Board’s recommendation with respect to the matters set forth in this proxy statement. In their discretion, the proxies are authorized to vote upon such other matters as may properly come before the annual meeting.

Notice of Internet Availability of Proxy Materials

We are permitted to furnish proxy materials, including this proxy statement and our annual report to stockholders for 2018, 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 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.

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Revocation of Proxies

Even if you voted by telephone or on the Internet, or if you requested paper proxy materials and signed and returned the proxy card, you may revoke your proxy before it is voted at the annual meeting by submitting a new proxy, dated later than your first proxy, or by a later-dated vote by telephone or on the Internet. You may also revoke your proxy by delivering a signed revocation letter to Maryann Waryjas, Senior Vice President, Chief Legal Officer and Secretary of the Company. If you are attending the annual meeting in person, you may revoke your proxy by voting in person at the annual meeting. Your attendance at the annual meeting will not by itself revoke your proxy. If you hold your shares beneficially in “street name” through a broker or other nominee and you have previously directed your broker or nominee to vote your shares, you should instruct your broker or nominee to change or revoke your vote if you wish to do so. If you hold your shares beneficially in “street name” through a broker or other nominee and wish to cast your vote in person at the annual meeting, you should obtain a proxy to vote your shares from your broker or nominee.

Solicitation of Proxies

Proxies may be solicited on behalf of our Board by mail or telephone, on the Internet or in person, and we will pay the solicitation costs on behalf of the Company. 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 we will reimburse those record holders for their reasonable expenses on behalf of the Company.

Householding Rules

The SEC’s proxy rules permit companies and intermediaries, such as brokers and banks, to satisfy delivery requirements for proxy materials with respect to two or more stockholders sharing an address by delivering a single set of proxy materials. This procedure reduces the amount of duplicate information that stockholders receive and lowers printing and mailing costs for companies.

Therefore, only one copy of the Notice and/or this proxy statement may have been delivered to multiple stockholders sharing a single address. If you wish to opt out of this procedure and receive a separate Notice and/or set of proxy materials in the future, or if you are receiving multiple copies and would like to receive only one, you should contact your broker or other nominee, or the Company or its agent at the address and telephone number below.

A separate copy of the Notice and this proxy statement will be promptly delivered upon request to either the Company’s agent by telephone at 1-800-579-1639 or by email to sendmaterial@proxyvote.com, or to the Company’s Investor Relations Department by telephone at 1-239-301-1024, by email to investor@hercrentals.com, or by written request to Herc Holdings Inc., 27500 Riverview Center Blvd., Bonita Springs, Florida 34134, Attention: Corporate Secretary.

Additional Information

The Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 (“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, http://ir.hercrentals.com. Copies of the 2018 Annual Report, or any exhibits thereto, will be sent within a reasonable time without charge upon written request to Herc Holdings Inc., 27500 Riverview Center Blvd., Bonita Springs, Florida 34134, Attention: Corporate Secretary.

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CORPORATE GOVERNANCE; BOARD AND COMMITTEE MATTERS

Corporate Governance

Our business is managed with the oversight of our Board. Our Board is committed to good corporate governance and promoting the long-term interests of our stockholders by adopting structures, policies and practices that we believe promote responsible oversight of management.    

Board Independence

Our Board has determined that Messrs. Browning, Campbell, Graziano, Henkel, Katz, Kelly, Mather and Pastor and Mses. Salomone and Holley are “independent” as defined in the federal securities laws and applicable NYSE rules for service on our Board. The standards for determining director independence are specified in Annex A to our Corporate Governance Guidelines.

In recommending to the Board that each of those directors be classified as independent, the Nominating and Governance Committee considered whether there were any facts or circumstances that might impair the independence of each of those persons including, with respect to Messrs. Graziano, Mather and Pastor, the agreements described in “Certain Relationships and Related Person Transactions –– Agreements with Carl C. Icahn.”

Board Meetings and Annual Meeting Attendance

Our Board met seven times in 2018. In 2018, each of our directors then in office attended at least 90% of the meetings of the Board and committees on which he or she served during the period of his or her service. Director attendance at annual meetings of stockholders is encouraged. All directors then in office attended the 2018 annual meeting of stockholders.

Board Committees

Our Board has four standing committees – the Audit Committee, the Compensation Committee, the Finance Committee and the Nominating and Governance Committee. Each committee has a written charter and each charter is available without charge on the “Investor Relations” portion of our website, http://ir.hercrentals.com. Each member of the Audit Committee, Compensation Committee and Nominating and Governance Committee meets the independence and eligibility standards necessary for service on such committee pursuant to relevant securities laws, NYSE rules, our Corporate Governance Guidelines and the respective charter of each committee. Similarly, each member of the Finance Committee meets the director independence standards established by the NYSE rules. Our Board has designated Messrs. Browning, Campbell and Katz as “audit committee financial experts.”

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Membership, Meetings and Roles and Responsibilities of the Board Committees

Audit Committee

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Finance Committee

Risk Oversight

Risk Oversight - Our Board and Committees

Our Board is involved in risk oversight in a number of ways. Our Board’s involvement in overseeing our business strategy is a key part of its assessment of management’s risk threshold and also helps determine an appropriate level of risk for us. In addition, regularly throughout the year, management presents information to either the Board or its committees on areas and topics related to risks faced by the Company. The Board or its committees receives regular reports on the Company’s significant legal matters as well as updates on matters that may impact the Company, operations reviews and treasury-related updates.    

Various committees of the Board also have responsibility for risk management. The Audit Committee focuses on financial risk, including internal controls, and annually receives a risk assessment and risk management report from the Company’s Internal Audit Department. The Audit Committee also reviews and discusses with the Vice President of Internal Audit the results of the annual risk assessment, our annual internal audit plan and the commitment of internal audit resources as they relate to risk management. The Company’s Vice President of Internal Audit reports directly to our Audit Committee. In addition to receiving regular reports from Internal Audit, the Audit Committee regularly meets in private session with our Vice President of Internal Audit and, separately, with our external auditors, which provides the opportunity for confidential discussion. The Audit Committee also receives a quarterly report on the status of the Company’s significant legal matters and ethics helpline activity.    

Within the Company, risk responsibilities are aligned to functional expertise and shared among the senior executives with overall responsibility for risk management residing with our Chief Executive Officer.    

Management performs an annual risk assessment with the Compensation Committee regarding the Company’s overall compensation program, which is discussed in further detail below.    

In addition to the foregoing, management performs semi-annual overall risk assessments and engages in an enterprise-wide risk management (“ERM”) process, including quarterly ERM committee meetings where key risks relevant to the Company, including risks related to operations, financial performance, cybersecurity and compliance, are identified, mitigated, monitored and reported to senior management, the Audit Committee and the Board.

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Risk Considerations in our Compensation Program

In 2018, the Company conducted a review of the risk profile of our compensation policies and practices. Meridian Compensation Partners, LLC (“Meridian”), as independent compensation advisor to the Compensation Committee, with the assistance of management, prepared a risk profile assessment of the Company’s compensation policies and practices. In addition, management, with the assistance of Deloitte Consulting LLP (“Deloitte”) and Meridian, reviewed the Company’s compensation plans, policies and practices in 2018 for all employees and presented the findings to the Compensation Committee. Based in part on such report, the Compensation Committee determined that, for all employees, the Company’s enterprise-wide compensation policies and practices, in conjunction with the Company’s existing processes and controls, do not motivate employees to take unnecessary risks, or pose a material risk to the Company, particularly in light of the following factors:

Stockholder Communications with the Board

Stockholders and other interested parties who wish to contact any of our directors or any group of directors may send written correspondence to: Herc Holdings Inc., 27500 Riverview Center Blvd., Bonita Springs, Florida 34134, Attention: Corporate Secretary.

Communications addressed to directors that discuss business or other matters relevant to the activities of our Board will be preliminarily reviewed by the office of the Corporate Secretary and then distributed either in summary form or by delivering a copy of the communication to the director, or group of directors, to whom it is addressed.

Director Nominations

Stockholders may nominate directors for election at an annual meeting. The procedures for director nominations are set forth in our By-laws and are summarized in the section titled “Stockholder Proposals for 2020 Annual Meeting” below. To recommend a person to serve on the Board, a stockholder should write to: Herc Holdings Inc., 27500 Riverview Center Blvd., Bonita Springs, Florida 34134, Attention: Corporate Secretary. The Nominating and Governance Committee will consider and evaluate persons recommended by stockholders in the same manner as it considers and evaluates other potential directors. The Nominating and Governance Committee also takes into consideration any written arrangements for director nominations to which the Company is a party, including the Nomination and Standstill Agreement we entered into with Carl C. Icahn, described under “Certain Relationships and Related Person Transactions –– Agreements with Carl C. Icahn.”    

Corporate Governance Guidelines; Code of Ethics

The Board has adopted Corporate Governance Guidelines containing standards for the Nominating and Governance Committee to determine director qualifications. The Corporate Governance Guidelines provide that the Nominating and Governance Committee, in making recommendations about nominees to the Board, will:

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The Corporate Governance Guidelines also contain policies regarding director independence, the retirement age of directors, simultaneous service on other boards and committees of others boards, continuing education of directors and substantial changes relating to a director’s affiliation, position of principal employment or other board membership. Among other things, the Corporate Governance Guidelines establish responsibilities for meeting preparation and participation, and the evaluation of our financial performance and strategic planning. A copy of our Corporate Governance Guidelines, as well as our Code of Ethics and our Directors’ Code of Business Conduct and Ethics, are available without charge on the “Investor Relations” portion of the Company’s website, http://ir.hercrentals.com. We intend to include on our website information about any amendments to, or waivers from, a provision of the Code of Ethics that apply to our principal executive officer, principal financial officer, principal accounting officer or controller in accordance with SEC rules.

Director Stock Ownership Guidelines

Our independent directors are required to meet certain stock ownership guidelines. We believe this further aligns their interests with those of our stockholders. Under these guidelines, the independent directors are expected, over a period of five years from the date they are elected as an independent director or are otherwise determined to be independent, to acquire and hold a number of shares of our common stock equivalent to five times their base annual cash retainer, currently $350,000.

Our Board Leadership

The Board believes it is important to retain its flexibility to allocate the responsibilities of the offices of the Chair of the Board and Chief Executive Office (“CEO”) in a manner that is in the best interests of our Company, including the flexibility to determine whether these offices should be combined or separate. The Board believes that the decision as to who should serve as Chair and CEO, and whether the offices should be combined or separate, should be assessed periodically by the Board, and that the Board should not be constrained by a rigid policy mandating the structure of such positions. The Board currently believes that the most effective and efficient leadership structure for our Company is for Lawrence H. Silber to serve as CEO while Herbert L. Henkel serves as our independent non-executive Chair of the Board (“Independent Non-Executive Chair”).

The Board believes that the current leadership structure benefits the Company by delineating roles of management and oversight over management. Our CEO and his management team provide the overall strategy and day-to-day leadership for our Company, and the Board, along with the Independent Non-Executive Chair, provides oversight and evaluates the performance of management. The Independent Non-Executive Chair, in consultation with the CEO, has responsibility for chairing and determining the length and frequency of Board meetings as well as setting the agenda for such meetings. The Independent Non-Executive Chair also sets the agenda for, and chairs, the Board’s regularly-scheduled executive sessions in which management (other than Mr. Silber) does not participate. In addition to the regularly-scheduled executive sessions of the Board that are held once per fiscal quarter without the presence of management (other than Mr. Silber), our directors hold regular executive sessions where only our independent directors attend. The Independent Non-Executive Chair (or, in his absence, another independent director selected by the independent directors present at such executive session) presides over the executive sessions to facilitate the discussion. In addition, the Independent Non-Executive Chair, as a member of the Compensation Committee, also significantly assists in evaluating and in setting the compensation of our CEO by conferring with other independent members of the Board regarding our CEO’s performance.

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Policy on Diversity

The Corporate Governance Guidelines and the Nominating and Governance Committee charter specify that the Nominating and Governance Committee consider a number of factors, including diversity, when evaluating or conducting searches for directors. The Nominating and Governance Committee interprets diversity broadly to mean a variety of opinions, perspectives, personal and professional experiences and backgrounds, such as international and multicultural experience and understanding, as well as other differentiating characteristics, including race, ethnicity and gender.

Implementation and Assessment of Policies Regarding Director Attributes

The Nominating and Governance Committee, when making recommendations to the Board regarding director nominations, assesses the overall performance of the Board, and when re-nominating incumbent Board members or nominating new Board members, evaluates the potential candidate’s ability to make a positive contribution to the Board’s overall function. The Nominating and Governance Committee considers the actual performance of incumbent Board members over the previous year, as well as whether the Board has an appropriately diverse membership. The particular experience, qualifications, attributes and skills of the potential candidate are assessed by the Nominating and Governance Committee to determine whether the potential candidate possesses the professional and personal experiences and expertise necessary to enhance the Board. After conducting the foregoing analysis the Nominating and Governance Committee makes recommendations to the Board regarding director nominees. In its assessment of director nominees, the Nominating and Governance Committee does not take a formulaic approach, but rather considers each prospective nominee’s diversity in perspectives, personal and professional experiences and background and ability. In making director nominations, the Nominating and Governance Committee takes into account the overall diversity of the Board and evaluates the Board in light of, among other things, the attributes discussed in the section titled “Policy on Diversity” above.

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PROPOSAL 1: ELECTION OF DIRECTORS

Board Structure

The term of office for each of the Company’s current directors expires at the 2019 annual meeting of stockholders and the term of each of the directors elected at the 2019 annual meeting of stockholders will expire at the 2020 annual meeting of stockholders.    

Nominees for Election to the Board

Each of the director nominees listed below currently is a director of the Company and was elected at the 2018 annual meeting of stockholders. The Board has determined that each nominee, other than our Chief Executive Officer Lawrence H. Silber, is independent.    

Next to the name of each director nominee, a short biography that describes the nominee’s business experience has been provided by each of the nominees. Following the description of each nominee’s business experience, the Company has provided a summary of each nominee’s qualifications for the Board.

Each elected director is expected to serve for a one-year term expiring at the 2020 annual meeting of stockholders. Each of the nominees listed below is expected to be available for election as a director, but in the event that one or more of the nominees is not available for election due to unforeseen circumstances, the proxy will be voted for the Board’s substitute nominee or nominees.

Director Election Standards

The Company maintains a “majority” voting standard for uncontested elections of directors. For a nominee to be elected to our Board, the nominee must receive more “for” than “against” votes. In accordance with our By-laws and Corporate Governance Guidelines, each director has submitted, or upon his or her nomination will submit, a contingent resignation to the Chair of the Nominating and Governance Committee. The resignation will become effective only if the director fails to receive a sufficient number of votes for election or re-election and the Board accepts the resignation. In the event of a contested director election, a plurality voting standard will apply.

The Board unanimously recommends a vote FOR the following nominees for election as directors:

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A LETTER FROM THE COMPENSATION COMMITTEE

Dear Stockholder:

The Board is holding its third say on pay advisory vote (as a standalone public company) regarding our named executive officer compensation program. We appreciate the strong stockholder support we have received in our first two years and hope you will similarly support our named executive officer compensation program this year. We are providing this letter and the accompanying compensation discussion and analysis (“CD&A”) to explain how the Compensation Committee and the Board have assessed the performance of the Company, the CEO and other senior executives in 2018, and the basis on which we reached various compensation decisions for each of our named executive officers.

Approach to compensation

The Company’s vision – to be the supplier, employer and investment of choice in our industry, and our strategic initiatives to achieve that vision (develop our people and culture, expand and diversify revenues, improve operating effectiveness, enhance customer experience and disciplined capital management) have remained constant since our June 2016 separation from New Hertz. In general, our compensation program is designed to be aligned with these strategic initiatives, serve the long-term interests of our stockholders and be highly performance based.    

In 2018, the executive compensation program remained largely unchanged from 2017, with only minor changes as fully described in the CD&A. The Compensation Committee believes that as the Company continues to advance its long-term strategy, it is important to have stable compensation programs which can be clearly understood and fully transparent to the participants and stockholders. Our independent advisor, Meridian Compensation Partners, confirmed that our program continues to align well with market practices within our compensation peer group and provides a strong link between performance achieved and compensation delivered.

2018 performance and compensation

Our short-term incentive plan is driven by financial performance, achievement of critical strategic goals and by individual performance.

Early in 2018, the Board approved targets for the short-term incentive program on a basis that required significant improvement year over year. The financial metrics chosen for the Executive Incentive Compensation Plan (“EICP”), consistent with 2017, were Adjusted EBITDA, Return on Revenue Earning Equipment and Equipment Revenue Growth. These continue to be viewed by the Compensation Committee and the Board as core drivers of the Company’s performance and long-term stockholder value creation.

In addition, the Compensation Committee approved five non-financial objectives (“NFOs”) that were deemed critical for the achievement of our strategic initiatives. These NFOs each had specific measurable goals and were related to safety, remediation of material weaknesses, improving free cash flow, completing separation of our Oracle based financial IT system from Hertz and eliminating all the remaining services performed for the Company by New Hertz under the transition services agreement entered into at the time of the Spin-Off (“TSA”), as well as building a learning/education culture to support talent management and employee engagement.    

The long-term incentive program continues to be more heavily weighted (70%) to performance share units (“PSUs”) than our executive compensation peer group, with only 30% of the long-term incentive awards in the form of time-based restricted share units (“RSUs”). In 2018, we continued to use Average ROIC as the performance measure for PSUs because it is one of the primary metrics used to analyze investment decisions, measuring both profitability and capital efficiency. The Average ROIC goal was set for a three-year period.

After year-end, we reviewed the accomplishments relative to these goals and carefully assessed the impact of each of these components to determine the appropriate level of annual incentive compensation for executives. We also evaluated annual base pay for market competitiveness at this time.

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The Company had very strong financial performance in 2018. Adjusted EBITDA of $684.8 million reflects growth of 17% from 2017 results and performance well in excess of the Company’s original guidance for 2018, which was $620 million to $655 million.* Return on Revenue Earning Equipment was 17.9% as compared to 16.0% achieved in 2017.** Equipment Revenue Growth of 10.6% was very strong, continuing the strong growth seen in 2017. The achievement of these combined levels of performance resulted in an earned payout of 143.2% of target under the EICP.

As important as the strong financial results from 2018, the Company’s achievement of the NFOs was very impressive and important for the long-term growth and stability of the Company. The remediation of all remaining material weaknesses and significant deficiencies from our 2016 Spin-off was a very important milestone for the Company. Equally important and closely related to this remediation was the successful separation of our Oracle based financial IT system from New Hertz and elimination of all remaining services from New Hertz under the TSA. This provides the Company with a financial IT system that is fully independent of Hertz. The separation was achieved with little impact to the operations of the Company as a result of excellent planning and preparation. The Company improved its free cash flow position relative to the annual plan by $95 million.*** The Company’s safety results were mixed, with some goals not achieved, but there was year-over-year improvement in the total recordable incident rate as compared to 2017. The foundation of strong safety performance continued to be implemented through training, leadership and culture. And finally, the Company implemented many initiatives aimed at building a learning/education culture. The success of these initiatives was measured (in part) through reductions in turnover, internal promotion rates and employee engagement scores. The aggregate score for the NFOs was 110% based on the level of achievement of all the NFOs. This resulted in a final “Corporate Performance Modifier” of 157.52% of target (i.e., 143.2% multiplied by 110%).

A personal performance modifier for each employee could reduce this payout to 0% or amplify it by up to 150% (although in no case can the total payout exceed 200% of target).

While an excellent year for financial and strategic performance, the Company, along with the other companies in our sector, ended the year with weak share price performance. Our long-term, at-risk equity-based compensation, which represents between 30% and 57% of compensation for our continuing named executive officers, is fully aligned with the stockholder experience. If the share price decreases so will the value of the equity award realized compared to the original grant value. When the stock price increases, the stockholder is rewarded, and the value of the long-term grant reflects the higher stock price. We believe that providing a significant portion of compensation in the form of equity-settled long-term incentive awards ensures alignment between pay and share price performance.

Conclusion

2018 was a pivotal year for the Company and its journey in advancing its long-term strategy as an independent public company. The Company made substantial progress on all of its strategic initiatives. We believe the Company’s strong financial performance, along with achievement of critical milestones, position the Company for continued growth in the future.

* Adjusted EBITDA is a non-GAAP financial measure. For information regarding non-GAAP financial measures, and a reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP measure, see the Appendix.

** Return on Revenue Earning Equipment is a non-GAAP financial measure. For information regarding non-GAAP financial measures, see the Appendix.

*** Free cash flow is a non-GAAP financial measure. For information regarding non-GAAP financial measures and a reconciliation of free cash flow to net cash provided by operating activities, the most directly comparable GAAP measure, see the Appendix.

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The Board is keenly aware of our responsibility to ensure that our approach to executive compensation supports our strategy and aligns with the interests of our stockholders. The Board and Compensation Committee are also aware that our decisions must be logical and understandable to our employees, stockholders and other stakeholders. To this end, significant detail regarding the Company’s named executive officer compensation program is contained in the CD&A section of this proxy statement starting on the next page. We intend to continue to revisit our approach to setting executive compensation in order to assess alignment with our business objectives and the long-term interests of our stockholders.    

We thank you for your continued confidence in our Company.

Sincerely,

Mary Pat Salomone                

Chair, Compensation Committee

Herbert L. Henkel

Member, Compensation Committee

Michael A. Kelly

Member, Compensation Committee

Louis J. Pastor

Member, Compensation Committee

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COMPENSATION DISCUSSION AND ANALYSIS

Introduction and Overview

Each year, we assess the Company’s compensation philosophy and executive compensation program to determine whether they continue to be properly aligned with our business strategy and objectives and, importantly, stockholder interests. For 2018, the Compensation Committee and our Chief Executive Officer remained committed to the general structure of our existing executive compensation program, which is designed to be aligned with our business strategy and objectives, serve the long-term interests of our stockholders and be highly performance based. We believe that our pay-for-performance driven executive compensation program links our executive officer compensation with delivering results that support the Company’s business strategy and objectives. Please see the summary below of certain recent modifications to our executive compensation program.

Our “named executive officers” (or “NEOs”) consist of our Chief Executive Officer (“CEO”) and President, our Chief Financial Officer (“CFO”), our three other most highly compensated executive officers, our former interim CFO, and our former CFO. For 2018, our NEOs were:

Under SEC executive compensation disclosure rules, Mr. Humphrey and Ms. Brasier are each considered NEOs due to their service as our principal financial officer during a portion of 2018. Because of their limited tenure as CFOs during 2018 and their unique compensation arrangements for 2018, we have included a discussion of Mr. Humphrey’s and Ms. Brasier’s 2018 compensation arrangements in the section entitled “Compensation Arrangements for Former CFOs” later in this Compensation Discussion and Analysis rather than throughout the Compensation Discussion and Analysis.    

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Executive Compensation Practices

The Compensation Committee reviews on an ongoing basis the Company’s executive compensation program to evaluate whether it supports the Company’s executive compensation philosophy and objectives and is aligned with stockholder interests. The Company’s executive compensation practices include the following, each of which the Compensation Committee believes reinforces the Company’s executive compensation objectives:

Executive Compensation Program – Decision-Making Process

Compensation Philosophy and the Role of the Compensation Committee

The Compensation Committee reviews and establishes the executive compensation program for our senior executives, including the NEOs. The Compensation Committee is committed to creating incentives for our senior executives that reward them for the Company’s, as well as their individual, performance. The executive compensation philosophy has the following guiding principles:    

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Role of the Compensation Consultant

Meridian Compensation Partners, LLC (“Meridian”) provides executive compensation consulting services to the Compensation Committee. Meridian is retained by and reports directly to the Compensation Committee. Under the terms of Meridian’s engagement, Meridian is prohibited from performing any services for management outside of services needed in connection with advising the Compensation Committee. The Compensation Committee has assessed Meridian’s independence and concluded that Meridian’s work for the Compensation Committee does not raise any conflict of interest.

During 2018, the Company also retained the services of Deloitte Consulting, Inc. (“Deloitte”) to provide advice with respect to executive compensation matters. Deloitte’s responsibilities for 2018 included (i) providing input regarding market data on, and governance matters related to, executive compensation practices, and (ii) analysis of the positions of proxy advisory firms and institutional investors. The Compensation Committee has assessed the independence of Deloitte pursuant to the NYSE rules, and the Company concluded that Deloitte’s work did not raise any conflict of interest that impaired Deloitte’s ability to render services to the Compensation Committee or the Company.

Role of the CEO

Our CEO provides input to the Compensation Committee on topics related to business and executive officer performance. As part of this process, our CEO reviews and makes observations regarding performance and provides additional data and detail for the Compensation Committee to consider regarding the overall compensation program and with respect to executive compensation decisions. While our CEO provides a perspective on the Company’s performance as well as the performance of the Company’s other senior executives, the final determinations over compensation reside with the Compensation Committee.

Competitive Market Review

As noted above, one of the key objectives of our executive compensation program is to provide competitive and market-based compensation to attract and retain executive officers. For 2018, the Compensation Committee considered market pay practices when setting executive compensation, but did not target the specific compensation elements or total compensation against the market data. Instead, the Compensation Committee used market data to assess the overall competitiveness and reasonableness of the Company’s executive compensation program. The Compensation Committee believes that compensation decisions are complex and require a deliberate review of Company and individual performance, the executive’s experience, the scope of the role, criticality of the role to the Company, internal equity, peer compensation levels and compensation received from prior employers.

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The Compensation Committee believes that the Company’s peer group should reflect the markets in which the Company competes for business and executive talent. Accordingly, the Company’s peer group includes equipment rental and leasing companies and distributors whose primary market is North America and whose revenue ranges from approximately $500 million to $7.9 billion. The median revenue, market capitalization and total assets of this peer group, as reported by Meridian, was $2.5 billion, $3.0 billion and $2.7 billion, respectively. The peer group used for evaluating 2018 compensation decisions consisted of the companies below, which is the same peer group that was used for evaluating 2017 compensation decisions except for the removal of Neff Corporation, which was acquired in late 2017 by United Rentals, Inc.

Response to Advisory Vote on Executive Compensation

In 2018, the Company’s stockholders were given an opportunity to cast an advisory vote on the compensation of the Company’s NEOs, as reported in the Company’s 2018 proxy statement. Approximately 99.5% of the votes cast for that “say on pay” vote at the Company’s 2018 Annual Meeting of Stockholders were voted in favor of the “say on pay” proposal. In light of this high level of support, the Compensation Committee did not make any substantive changes to the Company’s executive compensation program in 2018.    

Elements of Executive Compensation Program

Principal Elements of the 2018 Executive Compensation Program

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Annual Cash Compensation

Salary

For the Company’s senior executives, the Compensation Committee determines salary and any increases after reviewing individual performance, conducting internal compensation comparisons and reviewing competitive compensation information. The Company also takes into account other factors such as an individual’s experience, total mix and scope of job responsibilities versus market comparables, internal equity and time elapsed since last increase. The Compensation Committee authorized salary increases for Mr. Silber, Mr. Dressel, and Ms. Waryjas in 2018 to reflect their strong performance and after reviewing competitive market data. The Compensation Committee also consults with the CEO regarding salary decisions for senior executives (except as to the CEO’s own compensation) and takes into consideration any contractual obligations we have with such senior executives. The following table sets forth the 2018 and, for comparative purposes and where applicable, the 2017 year-end salary levels for each of our continuing NEOs:

2018 Annual Cash Incentive Award Program

The Company’s annual cash incentive award program, the Executive Incentive Compensation Plan (the “EICP”), is a Compensation Committee-administered plan that is designed to motivate and reward executive officers for achieving short-term performance objectives. The EICP provides participants, including the NEOs, with annual cash incentive award opportunities for the achievement of pre-established performance goals that were deemed by the Compensation Committee to support long-term stockholder value creation. The EICP provides target payout opportunities that are expressed as a percentage of a participant’s fiscal year base salary, with potential payouts for 2018 ranging from 0% to 200% of target for various levels of performance.

The target award for each NEO is a percentage of the NEO’s 2018 base salary. The Compensation Committee generally considered the experience, responsibilities, internal pay equity, competitive market data and historical performance of each NEO when determining target awards. Each continuing NEO’s 2018 target award, as a percentage of base salary as of December 31, 2018, is set forth in the table below. The target opportunities, as a percentage of base salary, for Mr. Dressel and Ms. Waryjas were increased by 10% each as compared to 2017 based on performance and to further align their compensation with the competitive market data.

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The annual incentive plan operates as follows:

The NEO’s target award (the NEO’s salary multiplied by the percentage specified in the table above) was first multiplied by a “Corporate Performance Modifier,” which was calculated based on the Company’s achievement of a combination of financial metrics and non-financial objectives (“NFOs”) selected by the Compensation Committee in February 2018.    

The financial metrics and their 2018 weightings were Adjusted EBITDA (50%), Return on Revenue Earning Equipment (30%) and Equipment Rental Revenue Growth (20%). The Compensation Committee selected these measures as they were viewed as core drivers of the Company’s performance and long-term stockholder value creation. The financial performance goals were determined based on the Company’s financial plan at the time.    

Under the 2018 design of the EICP, the NFOs could reduce the financial score by 75% or amplify the score by up to 125%. The NFOs selected by the Compensation Committee for 2018 were (i) achievement of safety goals, including (a) that the total recordable incident rate (“TRIR”) and days away, restricted or transferred (“DART”) rate would improve as compared to (1) the prior year’s performance and (2) the industry average, and (b) improvement in overall safety performance through the implementation of additional safety programs, training and initiatives; (ii) maintenance of a strong compliance program and internal controls, including resolving remaining material weaknesses; (iii) improve cash flow generation through various initiatives, including accounts receivable collection, used-equipment proceeds and refinements to inventory management; (iv) elimination of services performed for the Company by New Hertz under the transition services agreement entered into at the time of the Spin-Off, including the completion of the migration of Oracle from New Hertz to the Company; and (v) the expansion and enhancement of training programs and the educational culture within the Company.

Under the 2018 EICP design, the Compensation Committee could exercise discretion to remove an NFO in assessing performance. The Compensation Committee did not exercise such discretion for 2018.    

The Compensation Committee has discretion to modify the calculated award payout based on individual performance and other subjective factors considered by the Compensation Committee (“Personal Performance Modifier”), which could reduce the payout to 0% or amplify it by up to 150%.    

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For purposes of the EICP, Adjusted EBITDA is calculated as the sum of net income (loss), provision for income taxes, interest expense, net, depreciation of revenue earning equipment and non-rental depreciation and amortization, plus the sum of merger and acquisition related costs, restructuring and restructuring-related charges, spin-off costs, non-cash stock-based compensation charges, loss on extinguishment of debt (which is included in interest expense, net), impairment charges, gain on the disposal of a business, and certain other items as used for external reporting purposes. Return on Revenue Earning Equipment is Adjusted EBITDA, divided by the average original equipment cost of revenue earning equipment (based on American Rental Association guidelines, which is calculated as the cost of the asset at the time it was first purchased plus additional capitalized refurbishment costs, with the basis of refurbished assets reset at the refurbishment date). Equipment Rental Revenue Growth is the increase in equipment rental revenue during the 2018 Plan Year (as defined in the EICP) compared to the 2017 Plan Year, divided by equipment rental revenue in the 2017 Plan Year.

The following table shows the Adjusted EBITDA, Return on Revenue Earning Equipment and Equipment Rental Revenue Growth performance goals that were used to determine 2018 payouts under the EICP:

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The Compensation Committee reviewed the Company’s performance against the established performance criteria and determined that (i) the Company’s achievement of the 2018 financial metrics yielded a score of 143.2% toward the Corporate Performance Modifier, and (ii) the Compensation Committee assessed the Company’s and management’s overall achievement of the NFOs and approved an aggregate score of 110% based on the combined level of achievement of all the NFOs, which increased the financial result score to 157.52%. In determining the payouts, the Compensation Committee considered the Company’s and management’s outstanding performance against the pre-established financial and NFO goals as well as the Company’s overall performance notwithstanding market conditions, including the year-over-year decline in the Company’s stock price at December 31, 2018, and determined that payouts should be determined based on the application of the Corporate Performance Modifier score of 157.52%. In making this determination, the Compensation Committee considered, in particular, that the 2018 performance goals selected for the EICP were designed to support long-term stockholder value creation and the Compensation Committee intended to motivate performance and actions that were supportive of the long-term performance of the Company.

The Compensation Committee may make a positive, negative, or no adjustment to each NEO’s performance-based variable compensation based on its evaluation of the Personal Performance Modifier applicable to such NEO. In evaluating the appropriate Personal Performance Modifier, the Compensation Committee considered various qualitative factors, such as the NEO’s:

The Compensation Committee did not find it practical, nor did it attempt, to assign relative weights to any individual factors or subject them to pre-defined, rigid formulas, or set financial or other objective goals related to personal performance, and the importance and relevance of specific factors varied for each NEO. Based on its assessment of individual performance and taking into account the recommendations of the Chief Executive Officer for each of the other NEOs, the Compensation Committee approved Personal Performance Modifiers ranging from 100% to 125%. Each NEO’s 2018 EICP award is reflected as “Non-Equity Incentive Plan Compensation” in the 2018 Summary Compensation Table.

Long-Term Equity Incentives

Long-term equity incentive compensation composes a significant portion of the total compensation paid to our senior executives and is deemed by the Compensation Committee to be critical to aligning our NEO’s compensation with long-term shareholder value creation.

In March 2018, long-term equity incentive compensation was awarded under the Herc Holdings Inc. 2008 Omnibus Incentive Plan (as amended to date, the “2008 Omnibus Plan”). Under the 2008 Omnibus Plan, the Compensation Committee had the flexibility to make equity awards based on our common stock, including time- and performance-based awards of RSUs, PSUs, stock options, stock appreciation rights, restricted stock and deferred stock units. The 2008 Omnibus Plan has since been superseded by the Herc Holdings, Inc. 2018 Omnibus Incentive Plan (the “2018 Omnibus Plan”), which was adopted by our stockholders at the 2018 Annual Meeting of Stockholders.

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Summary of 2018 Annual Award Structure

For 2018, the Compensation Committee reviewed the structure of the long-term equity incentive plan and concluded that the annual equity awards for employees would be delivered in the form of 70% PSUs vesting based on three-year average return on invested capital (“Average ROIC”) performance and 30% service-based RSUs. In determining the 2018 long-term equity incentive grant values to be awarded to the Company’s continuing NEOs, the Compensation Committee considered the competitive pay practices at companies within the peer group and individual performance and, in the case of Ms. Waryjas, increased her long-term equity incentive grant to bring her compensation further in line with the market median. In determining Mr. Silber’s compensation for 2018, the Compensation Committee deferred decisions on adjusting his compensation levels until August 2018 and, accordingly, at that time Mr. Silber received an additional PSU and RSU award for 2018 in order to further align his compensation with the competitive market. Mr. Irion’s grant levels were determined at the time he joined the Company in June 2018 based on the Company’s review of the competitive market, compensation received by Mr. Irion at his prior employer and compensation previously granted to individuals serving as CFO of the Company. For more information about the 2018 PSU and RSU awards, see the “2018 Grants of Plan-Based Awards” table below.

2018 Average ROIC PSUs

During 2018, our continuing NEOs received PSUs as 70% of their 2018 equity awards. Under the terms of the 2018 PSUs, the vesting of the PSUs will depend on Average ROIC performance over the January 1, 2018 through December 31, 2020 performance period. Given the economic and market conditions at the time the Average ROIC targets were set, the target vesting level was designed to be achievable with significant effort and strong Company performance, while vesting at the maximum level was designed to be difficult to achieve.

The Compensation Committee chose Average ROIC as a performance metric because it is one of the primary metrics used to analyze investment decisions, measuring both profitability and capital efficiency. For purposes of the 2018 PSU awards, Average ROIC is defined as the average return on invested capital for the performance period; provided, however, in the event of any (i) material acquisitions or dispositions, (ii) currency fluctuations, (iii) changes in law or accounting standards or (iv) other nonrecurring or infrequently occurring events or items reflected in the Company’s audited financial statements or notes thereto, which occur during the performance period, the Compensation Committee shall make appropriate adjustments to the performance incentive threshold, target and maximum criteria and/or the determination of Average ROIC, in accordance with any applicable provisions of the Plan.

The Compensation Committee approved a multi-year design for earning the PSUs in order to drive the Company’s Average ROIC performance over a multi-year period.

2018 RSUs

During 2018, our continuing NEOs received service-based RSUs as the remaining 30% of their 2018 equity awards. For annual RSU grants prior to 2018, the RSU awards were structured to cliff vest on the third anniversary of the grant date. After considering market data and the input of Meridian, the Compensation Committee approved an installment vesting schedule for the 2018 RSU awards in order to further align the Company’s executive compensation program with market practices. Accordingly, the 2018 RSU awards will vest in one-third annual installments, subject to the NEO’s continued employment through the applicable vesting date. In addition, in connection with the commencement of his employment with the Company, Mr. Irion received a special equity award in the form of RSUs valued at approximately $1,000,000 in consideration of the equity compensation he forfeited with his former employer by joining the Company. These RSUs will vest ratably over three years.

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2016 Adjusted EBITDA PSUs

Prior to the Spin-Off, our then-serving NEOs received PSUs granted by the Compensation Committee of the Board of Directors of Hertz Holdings, the consolidated enterprise that the Company was a part of (the “Hertz Holdings Compensation Committee”). At the beginning of 2016, the Hertz Holdings Compensation Committee set Adjusted EBITDA goals for 2016, 2017 and 2018. In anticipation of the Spin-Off, the Hertz Holdings Compensation Committee reviewed certain information, estimates and assumptions relating to the performance of the equipment rental division rather than relating to the consolidated Hertz Holdings enterprise (the “Pre-Spin-Off Assumptions”), and approved performance goals for individuals continuing with the Company following the Spin-Off that were limited to the equipment rental division rather than the consolidated Hertz Holdings enterprise. Accordingly, under the original terms of the 2016 PSU awards, performance for purposes of determining payouts and vesting was intended to be determined based solely on our performance, based on the Pre-Spin-Off Assumptions. Following the Spin-Off, the Compensation Committee reviewed updated information not included in the Pre-Spin-Off Assumptions and, in its subjective discretion, approved revised financial targets, which took into account, among other things, stand-alone public company costs and the impact of the Company’s exposure to the oil and gas markets.

Under the terms of the 2016 PSUs, the vesting of the PSUs depends on three years of cumulative Adjusted EBITDA performance, with the ability to lock-in up to 25% or 50% of the total award based on one-year and two-year cumulative performance, respectively. To be eligible to earn the target number of PSUs based on the third tranche of the award, the Company needed to achieve cumulative 2016–2018 Adjusted EBITDA performance of $1,810 million.

For cumulative 2016–2018 performance, Adjusted EBITDA was $1,808.0 million, resulting in participants earning 99.5% of target. These shares vested on the third anniversary of the date of grant, subject to the participant’s continued service through the vesting date. The following table shows the target PSUs granted and the portion of such PSUs earned based on cumulative 2016–2018 performance:

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Other Compensation Elements

Retirement Programs

We maintain a qualified defined contribution plan in which our NEOs are eligible to participate on the same basis as other eligible employees. In addition, in connection with the Spin-Off, we established non-qualified retirement plans similar to those that were in place prior to the Spin-Off. The liabilities (and where applicable, the related assets) of The Hertz Corporation non-qualified plans attributable to Herc Holdings’ employees and former employees whose last place of employment was with the equipment rental business were transferred to our non-qualified plans. As of December 31, 2018, certain of our NEOs participated in Herc Rentals Supplemental Income Savings Plan, a non-qualified deferred compensation plan that we adopted in connection with the Spin-Off, and none of our NEOs participated in any defined benefit plan of the Company.

Perquisite Policy

We provide perquisites and other personal benefits to our senior management that the Compensation Committee believes are reasonable and consistent with our overall compensation program to better enable us to attract and retain superior employees for key positions. These perquisites consist of a Company-provided vehicle, tax and financial planning with a value of up to $7,500 annually and executive medical benefits providing for a comprehensive physical examination and related services with value of up to $6,000 annually. In addition, in connection with Mr. Irion’s relocation to join the Company, the Compensation Committee approved a cash payment of $40,000 in lieu of relocation benefits that would otherwise have been available to him.

We use leased corporate aircraft for the purpose of encouraging and facilitating business travel by our CEO, other senior executives authorized by our CEO, and directors, generally for travel in the United States and, less frequently, Canada. In addition, the Compensation Committee has authorized our CEO to use our leased corporate aircraft for personal air travel, up to a maximum annual value of $100,000. For 2018, the amount included in the “All Other Compensation” column of the Summary Compensation Table for personal use by our CEO of our leased corporate aircraft was $56,247. The Compensation Committee periodically reviews our perquisite policies.

Severance and Change in Control Policy

Our severance and change in control policy (the “Severance Policy”) provides senior executives of the Company, including the NEOs, with the following severance and change in control benefits: (i) for an involuntary termination of employment, the CEO will be entitled to severance calculated as two times the CEO’s base salary and target bonus, and each of our other NEOs will be entitled to severance equal to the NEO’s base salary and target bonus, and (ii) upon a change in control and a qualifying termination of employment (a “double trigger” provision), the CEO will be entitled to severance calculated as two-and-one-half times the CEO’s base salary and target bonus, and each of our other NEOs will be entitled to severance calculated as two times the NEO’s base salary and target bonus. Health and welfare benefits will be provided for the number of years equivalent to the multiples indicated, on the same basis as active employees.

In adopting the Severance Policy, it was the intention of the Compensation Committee to provide senior executives with severance arrangements that they would view as appropriate in light of their existing arrangements, while at the same time considering the terms of arrangements provided by peer companies. The Severance Policy and the treatment of equity awards upon a termination of employment or a change in control are described below under “Potential Payments Upon a Termination or a Change in Control.”

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Compensation Arrangements for Former CFOs

In March 2018, we announced the retirement of Ms. Brasier, our then-serving CFO, effective April 30, 2018. In connection with her retirement, Ms. Brasier received cash separation benefits and pro rata vesting of her outstanding equity awards in exchange for her execution and non-revocation of a release of claims and her agreement to remain subject to customary non-compete and non-solicitation covenants for 12 months following her retirement. The level of cash separation benefits provided to Ms. Brasier is generally consistent with the benefits Ms. Brasier would have received under the terms of our Severance Policy for a termination without cause and the pro rata vesting of her equity awards is consistent with the retirement treatment under the Company’s equity award agreements. Please see the “Potential Payments Upon a Termination or a Change in Control” section for a quantification of the benefits received by Ms. Brasier in connection with her retirement from the Company.

Effective upon Ms. Brasier’s retirement, Mr. Humphrey, who has served as the Company’s Controller and Chief Accounting Officer since April 2017, assumed the position of interim CFO. In recognition of his increased responsibilities, Mr. Humphrey received an additional $30,000 in stipends for his service as interim CFO (in addition to his existing $305,000 base salary), and his target annual performance bonus was increased from 50% of his base salary to 70% of his base salary plus stipends received for his service as interim CFO. Mr. Humphrey’s compensation levels reverted to the levels prior to his appointment as interim CFO upon the appointment of Mr. Irion as the Company’s CFO, effective June 25, 2018. In addition, as part of the annual compensation review process, Mr. Humphrey received an annual equity grant at the same time and in the same form of grants (RSUs and PSUs) as the Company’s other executive officers. Mr. Humphrey’s long-term incentive grant value was not adjusted in connection with his service as interim CFO.

Policies and Practices for Recovering Bonuses in the Event of a Restatement

We maintain a clawback policy to promote responsible risk management and to help ensure that the incentives of management are aligned with those of our stockholders. The clawback policy applies to all of our employees who are at the director level and above, including the NEOs, and covers:

The policy provides that a repayment obligation is triggered if the Compensation Committee determines that the employee’s gross negligence, fraud or willful misconduct caused or contributed to the need for a restatement of our financial statements within three years of the issuance of such financial statements.

In addition, our equity award agreements include clawback provisions. Our clawback policy and any related plans or award agreements will be further revised, to the extent necessary, to comply with any rules promulgated by the SEC pursuant to Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Stock Ownership Guidelines and Hedging Policy

Stock Ownership Guidelines

The Company has stock ownership guidelines for senior executives and non-employee directors. The guidelines establish the following target ownership levels:

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Senior executives and non-employee directors have five years to reach the target ownership levels. Senior executives subject to the guidelines are permitted to count toward the target ownership levels shares owned outright, the value of unvested RSUs and the value of unvested PSUs (at target), even if the service requirement has not been met. Non-employee directors subject to the guidelines are permitted to count towards the target ownership levels shares owned outright and the value of phantom shares. Shares owned indirectly by a trust or family members also count toward target ownership levels. As of the Record Date, each continuing NEO and non-employee director has met (or is expected to meet within the five-year transition period) his or her respective ownership guideline.

Pledging and Hedging Policy

The Company’s policy regarding trading in Company securities prohibits employees and directors from entering into any type of arrangement, contract or transaction that has the effect of hedging the value of our common stock. Under the policy, directors and officers subject to Section 16 of the Exchange Act are also prohibited from pledging the shares they hold in the Company, and other employees are strongly discouraged from doing so.

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COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis set forth in this proxy statement and, based on such review and discussion, recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference into the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

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EXECUTIVE COMPENSATION

2018 SUMMARY COMPENSATION TABLE

The following table provides information concerning compensation earned by our CEO, each individual who served as our CFO during 2018, and our three other most highly compensated executive officers (collectively, the “Named Executive Officers” or “NEOs”) for fiscal year 2018 and, to the extent required by SEC executive compensation disclosure rules, fiscal years 2017 and 2016.

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2018 GRANTS OF PLAN-BASED AWARDS

The following table sets forth, for each NEO, possible payouts under all non-equity incentive plan awards granted in 2018, all grants of PSUs and RSUs in 2018 and the grant date fair value of all such awards. With respect to Ms. Brasier, the following table sets forth the number of shares that were impacted by the modification of Ms. Brasier’s outstanding equity awards in connection with her retirement to provide for pro-rated vesting.

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2018 OUTSTANDING EQUITY AWARDS AT YEAR-END