SEC Form DEF 14A filed by Avis Budget Group Inc.

1.

To elect as directors the six nominees named in the accompanying proxy statement for a one-year term expiring in 2025 and until his or her successor is duly elected and qualified or until his or her earlier resignation or removal.

2.

To ratify the appointment of Deloitte & Touche LLP as the independent registered public accounting firm for fiscal year 2024.

3.

To provide advisory approval of the compensation of our named executive officers.

4.

To transact such other business as may properly come before the Meeting or any adjournment or postponement thereof.

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5 of 6 (83%) of our directors are diverse by gender, ethnicity or race

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Our Executive Chairman is currently the only management director. Following the Annual Meeting, we expect to have no management directors

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All members of our Compensation, Corporate Governance and Audit Committees are independent

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Annual election of all directors

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Majority voting (of votes cast) with a director resignation policy for directors in uncontested elections

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Robust executive and director stock ownership guidelines

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Each director nominee who served on the Board in 2023 attended at least 75% of Board and Committee meetings held in 2023

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Policy requiring annual performance evaluation of the Board

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vote again (including by phone or Internet by the applicable deadline); or

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complete, sign, date and return a new proxy card or voting instruction form with a later date; or

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give timely written notice of such revocation to our Corporate Secretary at 379 Interpace Parkway, Parsippany, N.J. 07054; or

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vote during the virtual Meeting while the polls remain open.

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“FOR ALL” of the nominees recommended by the Board (Proposal No. 1);

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“FOR” the ratification of the appointment of auditors (Proposal No. 2); and

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“FOR” the proposal regarding advisory approval of the compensation of our named executive officers (Proposal No. 3).

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Chief Executive Officer experience

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Public company board experience

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International experience

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Diverse personal background

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Financial and investment expertise

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Advisory experience in business strategy and growth

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Broad international experience and understanding of the technology sector

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Diverse personal background

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Advisory experience in business strategy and growth

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Investment and technology experience

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Diverse personal background

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Significant legal, governance, licensing, technology and regulatory expertise

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International experience

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Executive management experience and financial expertise

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Diverse personal background

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Public company board experience

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Chief Executive Officer experience

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Technology, operations, strategy, and business development experience

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Public company board experience

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Experience in the technology sector

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Financial and investment expertise

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Experience providing strategic and operational advice

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Diverse personal background

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Executive Chairman of the Board: Bernardo Hees;

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Vice Chairman of the Board: Jagdeep Pahwa;

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Lead Independent Director: Lynn Krominga; and

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Fully independent Compensation, Corporate Governance and Audit Committees.

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Serving as liaison between the Chairman and the independent directors;

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Approving the type of information sent to the Board, and consulting with directors as to their information needs;

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Approving meeting agendas and schedules for the Board to assure sufficient time for discussion of all agenda items;

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Having the authority to call meetings of the independent directors, as needed in the Lead Independent Director’s discretion; and

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If requested by major shareholders, being available for consultation and direct engagement as appropriate.

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the integrity of the Company’s consolidated financial statements;

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the Company’s independent auditors’ qualifications and independence;

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the performance of the Company’s independent auditors and the Company’s internal audit function;

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the Company’s compliance with legal and regulatory requirements;

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the Company’s systems of disclosure controls and procedures, and internal controls over financial reporting;

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the Company’s major financial risk exposures and the steps management has undertaken to control such risks; and

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the Company’s risks associated with information technology and cybersecurity.

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reviewing and approving corporate goals and objectives relevant to the compensation of the Chief Executive Officer and determining and approving the Chief Executive Officer’s compensation;

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reviewing and approving individual elements of total compensation for our other executive officers;

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reviewing and approving our annual and long-term incentive compensation programs and plans;

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reviewing and approving all stock option and other equity awards;

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assessing the results of the Company’s most recent advisory vote on executive compensation; and

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evaluating whether compensation arrangements for executive officers incentivize unnecessary risk-taking.

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review and discuss emerging best practices, trends and key issues related to ESG matters; and

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oversee the Company’s strategy and governance of ESG matters and to advise the Board on such matters.

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the Company (including any of its subsidiaries) was, is or will be a participant; and

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any related person (i.e., a director, executive officer, director nominee, or any greater than 5% beneficial owner, or any immediate family member of the foregoing, or any entity in which any of the foregoing persons is employed, or is a partner, principal or in a similar position, or has any greater than 5% beneficial interest) had, has or will have a direct or indirect interest.

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The transaction will be submitted for review to the Audit Committee, or, under certain circumstances, to the Chairman of the Audit Committee.

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The Audit Committee or its Chairman will then consider all relevant facts and circumstances available.

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The Audit Committee or its Chairman will approve only those transactions, determined in good faith to be in, or not inconsistent with, the best interests of the Company and its shareholders.

(a)

Includes awards granted under the Amended and Restated Equity and Incentive Plan, which plan was approved by shareholders.

(b)

Represents 3,904,836 shares available for issuance under the Amended and Restated Equity and Incentive Plan.

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Amount represents less than 1% of outstanding Common Stock.

**

Information is based upon the assumption that there was no change in the beneficial ownership of such shares of Common Stock from the publicly filed information through March 14, 2024.

(1)

Shares beneficially owned include (i) direct and indirect ownership of shares, (ii) restricted stock units held by executive officers that may vest within 60 days of March 14, 2024, and (iii) restricted stock units held by directors that may be settled within 60 days of March 14, 2024.

(2)

Based on 35,647,164 shares of Common Stock outstanding on March 14, 2024.

(3)

Includes (i) restricted stock units held by executive officers that may vest within 60 days of March 14, 2024 and (ii) restricted stock units held by directors that may be settled within 60 days of March 14, 2024.

(4)

Reflects beneficial ownership of 17,430,882 shares of Common Stock by SRS and Karthik R. Sarma (the “Reporting Persons”), as derived solely from information reported on Schedule 13D/A under the Exchange Act, as filed with the SEC on August 25, 2023. Such Schedule 13D/A indicates that SRS and Mr. Sarma share voting and dispositive power over the shares of Common Stock. SRS serves as investment manager to certain investment funds (the “Funds”) and has investment discretion with respect to the shares of Common Stock held by the Funds. SRS Investment Management, LP (“SRS IM”) is the managing member of SRS. SRS Investment Management GP, LLC (“SRS IM GP”) is the general partner of SRS IM. Mr. Sarma is the managing member and principal of SRS IM GP. In such capacities, Mr. Sarma and SRS may be deemed to have voting and dispositive power with respect to the shares of Common Stock held for the Funds. The shares of Common Stock beneficially owned by the Reporting Persons include 3,400,000 shares of Common Stock that are subject to a pledge arrangement. See “Executive Compensation—Compensation, Discussion and Analysis—Setting CEO and other NEO Compensation—Anti-Hedging Policy” below for more information on the pledge arrangement. The Reporting Persons have economic exposure to, and may be deemed to beneficially own, an additional 2,862,283 notional shares of Common Stock pursuant to cash-settled equity swaps, as derived solely from information reported on the Schedule 13D. Such notional shares represent approximately 8.0% of the shares of Common Stock outstanding on March 14, 2024. Such Schedule 13D indicates that the Reporting Persons do not have voting power or dispositive power with respect to the shares referenced in such swaps, and disclaim beneficial ownership of the shares underlying such swaps.

(5)

Reflects beneficial ownership of 4,247,300 shares of Common Stock by FMR LLC (“FMR”) and Abigail P. Johnson, a director and the Chairman and Chief Executive Officer of FMR, as derived solely from information in a Schedule 13G/A under the Exchange Act, filed with the SEC on February 9, 2024. Such Schedule 13G/A indicates that FMR has sole voting power over 4,244,455 shares of Common Stock and sole dispositive power over 4,247,300 shares of Common Stock, and that Ms. Johnson has sole dispositive power over 4,247,300 shares of Common Stock.

(6)

Reflects beneficial ownership of 1,920,052 shares of Common Stock by BlackRock, Inc. (“BlackRock”), as derived solely from information in a Schedule 13G/A under the Exchange Act, filed with the SEC on October 6, 2023. Such Schedule 13G/A indicates that BlackRock has sole voting power over 1,847,480 shares of Common Stock and sole dispositive power over 1,920,052 shares of Common Stock.

(7)

Reflects beneficial ownership of 1,822,750 shares of Common Stock by The Vanguard Group, Inc., as derived solely from information reported in a Schedule 13G/A under the Exchange Act, filed with the SEC on February 13, 2024. Such Schedule 13G/A indicates that The Vanguard Group, Inc. has shared voting power over 7,840 shares of Common Stock, sole dispositive power over 1,793,733 shares of Common Stock, and shared dispositive power over 29,017 shares of Common Stock.

(8)

Reflects shared beneficial ownership of 17,430,882 shares of Common Stock by SRS and Mr. Sarma, as described above in footnote (4). All of these shares are included in the 18,522,059 shares of Common Stock deemed to be beneficially owned by all directors, nominees and executive officers as a group.

(9)

Represents 32,655 restricted stock units held by non-employee directors and 1,607 restricted stock units held by Mr. Hees that may be settled within 60 days of March 14, 2024.

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executive stock ownership guidelines with significant share ownership requirements;

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an executive compensation recoupment (or “clawback”) policy;

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a policy prohibiting executives from entering into speculative (or hedging) transactions in our securities;

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no excise tax gross-up or single-trigger change-in-control provisions; and

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no tax gross-ups on executive perquisites except for relocation-related expenses and expatriate benefits per the Company’s standard practices.

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Bernardo Hees – who is currently our Executive Chairman of the Board (our “Executive Chairman”).

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Joseph A. Ferraro – our President and Chief Executive Officer (our “CEO”).

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Brian J. Choi – who served as our Chief Financial Officer (“CFO”) for all of 2023, and, as of January 1, 2024, is our Chief Transformation Officer (“CTO”).

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Izilda “Izzy” P. Martins – who served as our Executive Vice President, Americas (“EVP, Americas”) for all of 2023, and, as of January 1, 2024, is now our Chief Financial Officer.

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Ravi Simhambhatla – our Executive Vice President and Chief Digital and Innovation Officer (our “CDIO”).

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reasonable comparability with the Peer Group and Survey Data (as described under “Consideration of Peer Groups and Survey Data”);

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individual and Company performance; and

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each NEO’s responsibilities, capabilities and skills, leadership and drive to add value.

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in recognition of its wide acceptance and understanding as a metric within the Company;

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because Adjusted EBITDA is a key measure of operational and financial performance, driven by our annual business plan; and

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given the fact that Adjusted EBITDA has been strongly correlated to the Company’s long-term stock price performance.

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Straight-line interpolation used to determine payout between specified achievement levels.

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Includes unallocated corporate expenses.

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Based on Global Adjusted EBITDA achievement for our CEO, CFO and CDIO, and Americas Adjusted EBITDA for our EVP, Americas. Adjusted EBITDA calculations for payout purposes under the 2023 AIP reflect a foreign exchange adjustment of $20 million for Global and ($500,000) for Americas in accordance with the terms of the 2023 AIP.

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Reflects that each NEO met his or her fixed cost goal other than our CDIO for which a 30% reduction in payout percentage was applied based on his fixed cost goal attainment.

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Primarily consists of gains or losses related to our equity investment in a former subsidiary, offset by fleet related and certain administrative services provided to the same former subsidiary.

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align incentives with shareholders’ focus on profitability and financial performance;

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reflect the relevant decision-making impact of the individual and the impact of those decisions on the Company; and

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incentivize retention of key employees over the long term.

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RSUs are scheduled to vest, subject to continued service, in approximately equal installments on the first three anniversaries of the date of grant, except that our Executive Chairman’s RSUs vest in June 2024;

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PSUs are scheduled to vest on the three-year anniversary of the date of grant, subject to satisfaction of performance goals and continued service;

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Three-year cumulative Adjusted EBITDA was selected as a performance metric with a 75% weight for the PSUs based on several factors, including the following:

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To drive operational excellence and resilience over the long-term consistent with the Company’s strategy, a variable cost performance metric was also selected with a 25% weight for the PSUs.

*

Straight-line interpolation is used to determine payout between specified achievement levels.

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the industry for peer group companies, which the Committee believes should operate within hotel/resort, travel, trucking, automotive retail and rental retail industries; and

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market capitalization and revenue for peer group companies, with primary emphasis on market capitalization.

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engaging in hedging and monetization transactions that permit any Covered Person to continue to own the Company’s equity securities without the full risks and rewards of ownership, including through the use of financial instruments such as prepaid variable forwards, equity swaps, collars and exchange funds;

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holding the Company’s equity securities in a margin account or otherwise pledging the Company’s equity securities as collateral for a loan;

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participating in transactions involving options in relation to the Company’s securities, such as puts, calls or other derivative securities on an exchange or in any other organized market; and

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engaging in short sales of the Company’s equity securities.

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Reflects the individual’s position during all of 2023. As of January 2024, Mr. Choi is our Chief Transformation Officer, and Ms. Martins is our Chief Financial Officer.

(a)

Salary includes amounts deferred under the Company’s Deferred Compensation Plan or 401(k) Plan. For Mr. Simhambhatla, 2022 salary is prorated to reflect when his employment with the Company commenced in July 2022.

(b)

For 2021, for Mr. Hees, represents an annual bonus paid in July 2021 based on performance during the initial 12-month period following his start date; for Ms. Martins, represents a long-term cash bonus awarded in 2019 and paid in 2021.

(c)

Represents the aggregate grant date fair value computed by multiplying the number of shares (in the case of PSUs, based on target level as the probable outcome) by the closing price on the grant date, in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, Compensation Stock—Compensation. The grant date value of the 2023 stock awards assuming achievement of the highest level of performance conditions are: for Mr. Ferraro, $6,500,145; Mr. Choi, $2,250,251; Mr. Hees, $5,000,256; Ms. Martins, $1,125,230; and Mr. Simhambhatla, $1,125,230. The 2023 stock awards are further discussed in the Compensation Discussion and Analysis (the “CD&A”).

(d)

For 2023, amounts reflected were earned based on the terms of the 2023 AIP as further discussed in the CD&A and include amounts deferred under the Company's Deferred Compensation Plan.

(e)

For 2023, while no value is shown for Mr. Ferraro, his pension value decreased by $3,220. Avis froze this qualified defined benefit pension plan to new participation and future benefit accruals as of December 31, 1998. Please see the “Pension Benefits Table” for further information regarding this plan.

(f)

All Other Compensation is comprised of the compensation described in the following tables.

(a)

Amounts represent Company matching contributions under the Company’s Executive Deferred Compensation Plan or 401(k) Plan. Under the terms of the Deferred Compensation Plan and 401(k) Plan participants may receive Company matching contributions up to a maximum cap of 6%.

(b)

Represents the perquisites presented in the “Perquisites Table” set forth below.

(c)

Represents unvested dividend equivalent stock units credited to outstanding stock awards in connection with the Company's special one-time cash dividend payment to stockholders in December 2023. The amount reported here reflects the aggregate grant date fair value (as described above). The dividend equivalent stock units remain subject to the same time-based and, if applicable, performance-based vesting conditions as the underlying stock awards so that dividend equivalent stock units will vest only to the extent the corresponding RSUs or PSUs become vested and, for PSUs, earned based on performance.

(d)

Amounts include the value of insurance premiums paid by the Company for a broad-based life insurance benefit.

(a)

Under our aircraft policy, our CEO has reasonable non-business access to the Company's leased jet services, subject to prevailing market practices. For our other NEOs, non-business access is subject to approval by our CEO. The incremental cost of personal use of the leased jet services is calculated based on the contracted per hour cost, which includes flight-specific direct operating costs such as standard fuel, maintenance, repairs, catering and miscellaneous fees such as variable fuel surcharge as applicable, and international fees for travel outside the United States. Since the aircraft is leased primarily for business travel, fixed costs are not included. If there are personal use flights for which an NEO does not personally pay the Company’s incremental cost, then the amount paid by the Company is reflected above. For 2022, and 2021, there was no such incremental cost to the Company related to personal use of the leased jet. Spouses of NEOs are occasionally additional passengers on business flights provided by our leased jet services. In such cases, if there is no incremental cost to the Company, no amount is reflected in the table. No tax gross-ups are provided on personal use of the leased jet.

(b)

For Mr. Ferraro, includes actual costs the Company incurred for financial services provided by Ayco, including tax return preparation, financial planning and estate planning. For Mr. Choi, includes amount paid directly by the Executive for financial services with a third-party provider, with qualified amounts reimbursed by the Company. Amounts in 2021 also include Company-paid premiums in connection with a group excess liability umbrella insurance policy, which for 2021 did not exceed $3,398 for any NEO. In October 2021, the group excess liability umbrella insurance perquisite was eliminated.

(c)

Represents the annual lease value of a Company-provided car. For Mr. Simhambatla, represents the annual lease value of a Company-provided car in connection with commuting expenses paid by the Company as described below. NEOs are eligible to participate in the Company’s employee auto insurance program and employee car lease program; however, no amounts are included for these programs as the Company does not incur any associated incremental cost.

(d)

Mr. Simhamhatla was eligible for relocation benefits (which include tax reimbursements) under the Company's standard policies for executives for twelve months following his commencement of employment in July 2022. Because he did not relocate during the 12-month period covered by Company policy, the Company agreed to pay continued commuting expenses (air and ground travel, temporary housing and the car lease referenced in (c) above) but does not provide tax reimbursements on these expenses. For 2022, amounts consisted of temporary housing ($29,924) and related tax reimbursement ($15,278). In addition, for 2022 he received commuting expenses (including air and ground travel) paid or reimbursed by the Company in the amount of $50,440. For 2023, amounts represent temporary housing ($75,377) and, during the period he was covered by the Company’s relocation policy, related tax reimbursement for six months ($32,473), and commuting expenses (air and ground travel) paid by the Company in the amount of $64,695.

(e)

For Messrs. Choi and Hees, amount includes payments for annual physical examination (annual costs did not exceed $5,110).

(a)

Reflects pay opportunity under the 2023 AIP, which is discussed in the CD&A. Amounts actually earned and paid for 2023 performance are reflected in the Summary Compensation Table.

(b)

Represents awards of PSUs which are scheduled to vest in March 2026, subject to both continued service through the vesting date and attainment of performance goals as described in the CD&A under “2023 Long-Term Incentive Awards.”

(c)

For Messrs. Ferraro, Choi, Simhambhatla and Ms. Martins, RSUs awarded March 9, 2023 are scheduled to vest in equal installments on each of the first three anniversaries of the date of grant, subject to continued service through each vesting date. For Mr. Hees, the RSU award of 9,577 vests on June 30, 2024, subject to continued service.

(d)

Represents the aggregate grant date fair value computed by multiplying the number of shares (in the case of PSUs, based on target level as the probable outcome) by the closing price on the grant date.

(a)

Stock awards reflect RSUs and PSUs, together with the dividend equivalent stock units that accrued on such awards as a result of the special one-time cash dividend paid to stockholders in December 2023 that remain subject to the same vesting conditions as the underlying stock awards. Values are based on the closing price of our Common Stock on December 29, 2023 of $177.26. For PSUs (including dividend equivalent units) where performance levels have been achieved but remained unvested as of December 31, 2023, the number of shares shown as outstanding reflect the actual achievement. Notes (b)-(I) are set forth below.