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THE HERTZ CORPORATION EXHIBIT 10(iii)(A)(g)
EXECUTIVE INCENTIVE COMPENSATION PLAN
PURPOSE
The Hertz Corporation's Executive Incentive Compensation Plan (hereinafter
referred to as the "EICP") is intended to reward executives and key managers
whose performance can materially influence the annual growth and profitability
of the corporation.
ADMINISTRATION
The EICP will be administered by senior officers of The Hertz Corporation
("Hertz"), in accordance with the terms and conditions of the EICP. The
Chairman of the Board and Chief Executive Officer of Hertz (the "Hertz CEO"),
subject to the review and approval of The Hertz Corporation Compensation
Committee, shall be authorized to interpret the EICP following such rules and
regulations as Hertz may from time to time adopt. Performance criteria, award
opportunities and payments are subject to the review and approval of The Hertz
Corporation Compensation Committee.
PARTICIPATION
Participation, which will be designated by Hertz, is restricted to two employee
groups of Hertz and its operating units: Executive and Key Management.
Designation as a participant in the EICP for any year shall not be construed as
conferring any right to continued employment with Hertz or to continued
participation in the EICP in any subsequent year.
AWARD OPPORTUNITIES
Hertz will approve a target incentive award opportunity for each participant
which shall be expressed as a percentage of the participant's annual salary
during the EICP year. No participant may receive an award payment in any year
which exceeds twice his target award opportunity.
PLAN PROVISIONS
Participants will be measured on either Hertz' results or a combination of
Business Unit and Hertz' results, depending on their area of responsibility.
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Plan Provisions (Cont'd)
The Business Units will be established as follows:
A. Domestic Rent A Car Division
B. Worldwide Rent A Car
C. Hertz Equipment Rental Corporation
D. Hertz Claim Management Corporation
E. Hertz Europe, Ltd.
AWARD DETERMINATIONS
Each year, the senior officers of Hertz will establish measurement criteria for
Hertz and each operating business unit based upon the approved Business Plan.
Note: When a contingency has been approved as part of the Business Plan, the
Pre-Tax Business Plan without the contingency will prevail, up to 100% of the
Target Award. Awards can not exceed 100% of the Target Award unless this is
accomplished using the Business Plan with the contingency included.
At year end, based on actual operating results versus the established
measurement criteria, Hertz will determine the award payment in accordance with
the attached Appendix.
GENERAL FUND
EICP participants may be eligible for an award from the General Fund. The
General Fund shall be made up of an amount up to .25% of the actual pre tax
income of Hertz.
Eligibility for a General Fund Award is limited to EICP participants who have
achieved outstanding accomplishments under difficult or unusual conditions.
The General Fund will not be used to supplement earned formula awards.
Distribution of all, any or none of the General Fund shall be at the discretion
of the Hertz CEO, subject to the review and approval of The Hertz Corporation
Compensation Committee.
AWARD PAYMENTS
All approved EICP Awards will be paid in full in cash, after applicable tax
withholding, no later than March 31st of the following year.
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Rights to Award Payments
To be entitled to EICP award payments with respect to any year, a participant
must have been a full time employee of Hertz, or any of its operating units,
for the entire EICP year, or for such portion of the year which shall remain
following Hertz' notification of participation in the EICP with respect to
such year. To be eligible for an award, a participant must have at least 3
months active service in the EICP during the EICP year. An exception may be
made for employees who transfer into an eligible position from a previously
bonusable position. A participant who retires, dies or becomes disabled during
the EICP year or if a participant's employment is terminated due to a layoff
resulting from a permanent reduction in force, reorganization, realignment,
discontinuance of an operation, sale of an operation to another company, lack
of work or a location closing, prior to the end of the EICP year, the
participant, or his beneficiary or estate, shall receive a prorated EICP
payment at the time of regular award distribution. Participants who resign, or
who are terminated for cause, prior to the distribution of award payment, will
not be eligible for an award.
DEFERRAL OF AWARD PAYMENTS
With Hertz approval, participants will be offered the opportunity of
irrevocably deferring the receipt of award payments they may earn with respect
to any year during which they were an EICP participant. Such elections to
defer receipt of award payments must be made prior to the commencement of
service for the EICP year. All deferred awards will be reflected on Hertz's
books as general and unsecured obligations of Hertz, and no trust in favor of
any participant shall be implied. Hertz shall determine the appropriate rate
of interest which shall be credited annually to deferred awards.
AWARD LIMITATION
The maximum amount that may be awarded to all participants assigned to a
particular business unit, based upon that Business Unit's performance, may not
exceed 3% of the pre-tax income of the Business Unit.
The maximum amount that may be awarded to all participants of Hertz may not
exceed the greater of (a) 6% of the pre-tax income of Hertz or (b) the
aggregate amount of the Business Unit awards.
EFFECTIVE DATE AND TERM
The EICP is effective January 1, 1994 and shall continue until such time as it
shall be amended, suspended or terminated by Hertz.
Hertz reserves the right to modify or suspend in whole or in part, any or all
provisions of the EICP.
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APPENDIX I
THE HERTZ CORPORATION
I. OBJECTIVES
Those participants measured on the results of The Hertz
Corporation are eligible to earn Awards based on the
achievement of the following objectives weighted as indicated.
The Hertz Corporation Pre Tax Income60%
The Hertz Corporation Return on Equity40%
II. AMOUNT OF BONUS AWARD
The Award is based on performance against assigned objectives.
Deviation from the objectives will result in payment of 25% to
200% of the Target Award based on the following scale:
Total % of Total % of Total % of
Award Target Award Target Award Target
Points Award Points Award Points Award
------ ------ ------ ------ ------ ------
Below 70 0 96 90 123 146
70 25 97 92.5 124 148
71 27.5 98 95 125 150
72 30 99 97.5 126 152
73 32.5 100 100 127 154
74 35 101 102 128 156
75 37.5 102 104 129 158
76 40 103 106 130 160
77 42.5 104 108 131 162
78 45 105 110 132 164
79 47.5 106 112 133 166
80 50 107 114 134 168
81 52.5 108 116 135 170
82 55 109 118 136 172
83 57.5 110 120 137 174
84 60 111 122 138 176
85 62.5 112 124 139 178
86 65 113 126 140 180
87 67.5 114 128 141 182
88 70 115 130 142 184
89 72.5 116 132 143 186
90 75 117 134 144 188
91 77.5 118 136 145 190
92 80 119 138 146 192
93 82.5 120 140 147 194
94 85 121 142 148 196
95 87.5 122 144 149 198
150 and above 200
Award points will be rounded to the nearest whole number.
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III. Award Example
Percentage Points
Objective Results Achievement Wtg Achieved
--------- ------- ----------- --- --------
Pre Tax Income 110,000,000 117,150,000 106.50 60% 63.90
Return on Equity 19.5 20.6 105.64 40% 42.26
Total Points 106.16
In the preceding example 106.16 award points results in an award equal to 112%
of the Target Award.
EXAMPLE
-------
Base Salary $45,000
Target Award (5%) 2,250
Actual Award 2,520 (112% of Target)
All calculations for illustrative purposes only.
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APPENDIX II
BUSINESS UNIT
I. OBJECTIVES
Those participants measured on the results of a Business Unit are
eligible to earn separate awards as follows:
BUSINESS UNIT
60% of the Target Award will be based on the achievement of the
following Business Unit objectives:
- Pre Tax Income 60%
- Return on Equity 40%
THE HERTZ CORPORATION PERFORMANCE
40% of the Target Award will be based on the achievement of the
following Hertz Corporation objectives:
- Pre Tax Income 60%
- Return on Equity 40%
II. AMOUNT OF BONUS AWARD
Each award amount is based on performance against assigned objectives.
Deviation from the objectives will result in payment of 25% to 200% of
the Target Award based on the following scale:
Total % of Total % of Total % of
Award Target Award Target Award Target
Points Award Points Award Points Award
------ ------ ------ ------ ------ ------
Below 70 0 96 90 123 146
70 25 97 92.5 124 148
71 27.5 98 95 125 150
72 30 99 97.5 126 152
73 32.5 100 100 127 154
74 35 101 102 128 156
75 37.5 102 104 129 158
76 40 103 106 130 160
77 42.5 104 108 131 162
78 45 105 110 132 164
79 47.5 106 112 133 166
80 50 107 114 134 168
81 52.5 108 116 135 170
82 55 109 118 136 172
83 57.5 110 120 137 174
84 60 111 122 138 176
85 62.5 112 124 139 178
86 65 113 126 140 180
87 67.5 114 128 141 182
88 70 115 130 142 184
89 72.5 116 132 143 186
90 75 117 134 144 188
91 77.5 118 136 145 190
92 80 119 138 146 192
93 82.5 120 140 147 194
94 85 121 142 148 196
95 87.5 122 144 149 198
150 and above 200
Award points will be rounded to the nearest whole number.
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III. AWARD EXAMPLE
A) BUSINESS UNIT
Percentage
Points
Objective Results Achievement Wtg
Achieved --------- ------- ----------- ---
--------
Pre Tax Income 65,000,000 66,924,000 102.96 60%
61.78
Return on Equity 15.10 16.21 107.35 40%
42.94
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Total
104.72
In the preceding example 104.72 award points results in an award
equal to 110% of the Division Target Award.
B) CORPORATE PERFORMANCE
Percentage
Points
Objective Results Achievement Wtg
Achieved --------- ------- ----------- ---
- - --------
Pre Tax Income 110,000,000 117,150,000 106.50 60%
63.90
Return on Equity 19.5 20.6 105.64 40%
42.22
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Total
106.16
In the preceding example 106.16 award points results in an award
equal to 112% of the Target Award.
EXAMPLE
-------
Base Salary $45,000
Target Award (5%) 2,250
Target Award Actual Award
------------ ------------
Rent A Car 1,350 1,485 (110% of Target)
Corporate 900 1,008 (112% of Target)
Total 2,250 2,493
All calculations for illustrative purposes only.
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