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.     )

 

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Filed by a Party other than the Registrant o

 

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o  Preliminary Proxy Statement

o  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

þ  Definitive Proxy Statement

o  Definitive Additional Materials

o  Soliciting Material Pursuant to §240.14a-12

 

RSC HOLDINGS INC.

(Name of Registrant as Specified In Its Charter)

 

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

 

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6929 East Greenway Parkway

Scottsdale, Arizona 85254

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held On April 28, 2009

 

 

TO THE STOCKHOLDERS OF RSC HOLDINGS INC.:

 

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of RSC Holdings Inc., a Delaware corporation, will be held on Tuesday, April 28, 2009, at 8:00 A.M. local time, at the Westin Kierland Resort, 6902 East Greenway Parkway, Scottsdale, Arizona 85254, for the following purposes:

 

1. To elect four Directors named herein to hold office until the 2012 Annual Meeting of Stockholders;

 

2. To ratify the appointment of KPMG LLP as our independent registered public accounting firm, for our year ending December 31, 2009; and

 

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

 

The foregoing items of business are more fully described in the Proxy Statement accompanying this Notice. The Board of Directors has fixed the close of business on March 6, 2009 as the record date for the determination of stockholders entitled to notice of and to vote on the items listed above at this Annual Meeting of Stockholders and at any adjournment or postponement thereof.

 

By Order of the Board of Directors

 

Kevin J. Groman

Senior Vice President, General Counsel

and Corporate Secretary

 

March 23, 2009

 

YOUR VOTE IS IMPORTANT.  PLEASE FOLLOW THE INSTRUCTIONS ON THE ENCLOSED PROXY CARD FOR VOTING BY INTERNET OR BY TELEPHONE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON; OR, IF YOU PREFER, KINDLY MARK, SIGN, AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE (WHICH IS POSTAGE PREPAID, IF MAILED IN THE UNITED STATES). EVEN IF YOU HAVE GIVEN YOUR PROXY, YOU MAY STILL REVOKE YOUR PROXY AND VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES OF RECORD ARE HELD BY A BROKER, BANK, OR OTHER NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD HOLDER A PROXY ISSUED IN YOUR NAME.

 

 

 

CONTENTS

 

 

6929 East Greenway Parkway
Scottsdale, Arizona 85254

 

 

PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
April 28, 2009

 

 

 

Unless the context otherwise requires, in this Proxy Statement, (i) “RSC Holdings” means RSC Holdings Inc., (ii) “RSC” means RSC Equipment Rental, Inc., our primary operating company and an indirect wholly owned subsidiary of RSC Holdings, (iii) “we,” “us,” “our,” and “the Company” mean RSC Holdings and its consolidated subsidiaries, including RSC, (iv) “our common stock” means the common stock of RSC Holdings and (v) “recapitalization” means the transaction consummated on November 29, 2006, in the form of a Recapitalization Agreement by and among Atlas Copco AB (“ACAB”), Atlas Copco Finance S.à.r.l. (“ACF”), investment funds associated with Ripplewood Holdings L.L.C. (“Ripplewood”) and Oak Hill Capital Management, LLC (“Oak Hill” and together with Ripplewood, the “Sponsors”) and RSC Holdings, pursuant to which the Sponsors acquired approximately 85% of RSC Holdings’ common stock. In May 2007, we completed an initial public offering (“IPO”) of our common stock, which consisted of 20,833,333 shares, 12,500,000 were new shares offered by us and 8,333,333 were shares offered by the Sponsors and ACF.

 

 

QUESTIONS AND ANSWERS
ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING

 

 

PROPOSAL ONE

 

ELECTION OF DIRECTORS

 

Our Restated Certificate of Incorporation, By-Laws, and Stockholders Agreement provide that our Board of Directors be divided into three classes, each class consisting, as nearly as possible, of one-third of the total number of Directors, with each class having a three-year term. Vacancies on our Board of Directors may be filled by persons elected by a majority of the remaining Directors, as further directed in the Stockholders Agreement. For a description of the Stockholders Agreement to which the Sponsors are a party, see “Certain Relationships and Related Party Transactions.” A Director elected by our Board of Directors to fill a vacancy, including a vacancy created by an increase in size of our Board of Directors, will serve for the remainder of the full term of the class of Directors in which the vacancy occurred and until that Director’s successor is elected and qualified. The Board of Directors is presently composed of twelve members, eleven of whom are non-employees. In addition, our Board of Directors has determined three of our twelve Directors to be independent under the applicable rules and regulations governing “independence.” There are currently no vacancies.

 

There are four Directors in the class whose terms of office expire in 2009. Mr. Douglas Kaden, Mr. Erik Olsson, Mr. James H. Ozanne, and Mr. Scott Spielvogel are nominees for re-election. If elected at the Annual Meeting of Stockholders, each of the nominees would serve until the 2012 Annual Meeting of Stockholders and until their successors are elected and qualified, or until the earlier of their death, resignation, or removal.

 

Directors are elected by a plurality of the votes present in person or represented by proxy and entitled to vote at the Annual Meeting of Stockholders. Unless a Proxy Card contains instructions to vote differently, signed, returned proxies will be voted FOR the election of such nominees. If for any reason any nominee cannot or will not serve as a Director, such proxies may be voted for the election of a substitute nominee designated by our Board of Directors. Each person nominated for election has agreed to serve if elected, and we have no reason to believe that any nominee will be unable to serve.

 

Set forth below is biographical information for each nominee for Director for election for a three-year term expiring at the 2012 Annual Meeting of Stockholders:

 

Douglas Kaden, age 37, has served as a Director of RSC Holdings and RSC since November 2006. He is a Partner of Oak Hill Capital Management, LLC and has been with the firm since 1997. Mr. Kaden is responsible for investments in the business and financial services industry group. Prior to joining Oak Hill Capital Management, LLC, he worked at James D. Wolfensohn, Inc., a mergers and acquisitions advisory firm. Mr. Kaden serves as a director of Vertex Data Science, Ltd. and Ability Reinsurance Holdings, Ltd.

 

Erik Olsson, age 46, has served as President and Chief Executive Officer of RSC Holdings and RSC since August 2006. Mr. Olsson joined us in 2001 as Chief Financial Officer and in 2005 became our Chief Operating Officer. From 1988 to 2001, Mr. Olsson held various senior financial management positions at Atlas Copco Group in Sweden, Brazil, and the United States, most recently serving as Chief Financial Officer for Milwaukee Electric Tool Corporation in Milwaukee, Wisconsin, an Atlas Copco Group owned company at that time.

 

James H. Ozanne, age 65, has served as a Director of RSC Holdings and RSC since May 2007. Mr. Ozanne currently serves as a director of Financial Security Assurance Holdings Ltd. and Distributed Energy Systems Corp. Mr. Ozanne is a Principal of Greenrange Partners, having been with the firm since 1996. Mr. Ozanne was Vice Chairman and Director of Fairbanks Capital Corp. from 2001 through 2005 and Director of Acquisitor Holdings from 2000 to 2005. Mr. Ozanne was also Chairman of Source One Mortgage Corporation from 1997 to 1999. Previously, Mr. Ozanne was Chairman and Director of Nations Financial Holdings Corporation, President and Chief Executive Officer of US WEST Capital Corporation, and Executive Vice President of General Electric Capital Corporation.

 

Scott Spielvogel, age 35, has served as a Director of RSC Holdings and RSC since November 2006. Mr. Spielvogel is a Managing Director of Ripplewood Holdings L.L.C., having been with the firm since 2005. From 1998 to 2005, Mr. Spielvogel was a Principal at Windward Capital Partners, a private equity firm focused on leveraged buyouts of middle market companies in a wide variety of industries. From 1995 to 1998, Mr. Spielvogel

was an associate at boutique investment banking firm The Argosy Group LP and its successor, CIBC Oppenheimer. Mr. Spielvogel currently serves as a director of AEG Power Solutions and Interstate Bakeries Corporation, each of which is a privately-held portfolio company of Ripplewood Holdings L.L.C.

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” ALL OF THE NOMINEES

 

Continuing Directors

 

The eight Directors whose terms will continue after the Annual Meeting and will expire at the 2010 Annual Meeting or the 2011 Annual Meeting are listed below.

 

Set forth below is biographical information for each Director whose three-year term will expire at the 2010 Annual Meeting of Stockholders:

 

Timothy Collins, age 52, has served as a Director of RSC Holdings and RSC since November 2006. Mr. Collins founded Ripplewood Holdings L.L.C. in 1995 and has been Chief Executive Officer and Senior Managing Director since its inception. Prior to founding Ripplewood Holdings L.L.C., he managed the New York office of Onex Corporation, a Toronto-based investment company, from 1990 to 1995. Prior to Onex, Mr. Collins was a Vice President at Lazard Frères & Company from 1984 to 1990. Previously, he worked from 1981 to 1984, with the management consulting firm of Booz, Allen & Hamilton, specializing in strategic and operational issues of major industrial and financial firms. Mr. Collins currently serves as a director of Commercial International Bank and RHJ International, each of which is publicly traded. He also serves as a director of The Readers Digest Association, Inc., a privately-held portfolio company of Ripplewood Holdings L.L.C., and Weather Investments S.p.A.

 

Edward Dardani, age 47, has served as a Director of RSC Holdings and RSC since November 2006. He is a Partner of Oak Hill Capital Management, LLC and has been with the firm since 2002. Mr. Dardani is responsible for investments in the business and financial services industry group. Prior to joining Oak Hill Capital Management, LLC in 2002, he worked in private equity at DB Capital Partners from 1999 to 2002, as a management consultant at McKinsey & Company, and in the high-yield and emerging-growth companies groups at Merrill Lynch. Mr. Dardani serves as a director of American Skiing Company, Southern Air Holdings, Inc., ExlService Holdings, Inc., and Jacobson Companies, Inc.

 

Denis J. Nayden, age 55, has served as a Director and Chairman of the Board of RSC Holdings and RSC since November 2006. He has been a Managing Partner of Oak Hill Capital Management, LLC since 2003. Mr. Nayden co-heads the Oak Hill industry groups focused on investments in basic industries and business and financial services. Prior to joining Oak Hill Capital Management, LLC in 2003, Mr. Nayden was Chairman and Chief Executive Officer of GE Capital from 2000 to 2002, and had a 27-year tenure at General Electric Co., during which time he also served as Chief Operating Officer, Executive Vice President, Senior Vice President, and General Manager in the Structured Finance Group, Vice President and General Manager in the Corporate Finance Group, and Marketing Administrator for Air/Rail Financing as well as in various other positions of increasing responsibility. Mr. Nayden serves as a director of Duane Reade, Inc., FR Acquisition Corporation US, Inc., FR Acquisition Corporation (Europe) Ltd., Accretive Healthcare, Genpact Global Holdings, Jacobson Companies, Inc., and Primus International, Inc.

 

Donald Wagner, age 45, has served as a Director of RSC Holdings and RSC since November 2006. Mr. Wagner is a Senior Managing Director of Ripplewood Holdings L.L.C., having been with the firm since 2000. Mr. Wagner is responsible for investments in several areas and heads the industry group focused on investments in basic industries. Previously, Mr. Wagner was a Managing Director of Lazard Frères & Co. LLC and had a 15 year career at that firm and its affiliates in New York and London. He was the firm’s chief credit and capital markets expert in its merger advisory and corporate finance activities and specialized in corporate finance assignments involving leveraged companies. Mr. Wagner was also a member of all of the firm’s Underwriting Committees and sat on the Investment Committees of Lazard Capital Partners and Lazard Technology Partners. Mr. Wagner currently serves as a director of Aircell LLC and AEG Power Solutions, each of which is a portfolio company of Ripplewood Holdings L.L.C.

Set forth below is biographical information for each Director whose three-year term will expire at the 2011 Annual Meeting of Stockholders:

 

Pierre E. Leroy, age 60, has served as a Director of RSC Holdings and RSC since May 2008. Mr. Leroy most recently served as President of the Worldwide Construction & Forestry Division and the Worldwide Parts Division for Deere & Company, retiring after 29 years of service, including 20 years as an officer of the company. While at Deere, he held positions as Treasurer, Chief Financial Officer, and President of the John Deere Power Systems Division. Mr. Leroy currently serves as a director of Capital One Financial Corporation, Fortune Brands, and ACCO Brands.

 

Christopher Minnetian, age 40, has served as a Director of RSC Holdings and RSC since November 2006. Mr. Minnetian is a Managing Director and General Counsel of Ripplewood Holdings L.L.C., having been with the firm since 2001. Previously, Mr. Minnetian was an attorney with the law firm of Piper Rudnick L.L.P. where he was a member of the firm’s Corporate & Securities practice group. Prior to such time, Mr. Minnetian was an Associate with the law firm of Reed Smith LLP. Mr. Minnetian currently serves as a director of Delavau LLC, AEG Power Solutions, AirCell LLC, and Interstate Bakeries Corporation, all privately-held portfolio companies of Ripplewood Holdings L.L.C.

 

John R. Monsky, age 50, has served as a Director of RSC Holdings and RSC since February 2007. Mr. Monsky is a Partner and General Counsel of Oak Hill Capital Management, LLC. He also provides legal advice to Oak Hill Advisors, LP, on a consulting basis. He has served with such firms, and their related entities, since 1993. Previously, Mr. Monsky served as a mergers and acquisitions attorney at Paul, Weiss, Rifkind, Wharton & Garrison LLP, an assistant counsel to a Senate committee on the Iran-Contra affair and a law clerk to the Hon. Thomas P. Griesa of the Southern District of New York. Mr. Monsky serves as a director of Genpact Investment Co. (Bermuda), Ltd.

 

Donald C. Roof, age 57, has been a Director of RSC Holdings and RSC since August 2007. Mr. Roof most recently served as Executive Vice President and Chief Financial Officer of Joy Global Inc. from 2001 to 2007. Prior to joining Joy, Mr. Roof served as President and Chief Executive Officer of Heafner Tire Group, Inc. from 1999 to 2001 and as Chief Financial Officer from 1997 to 1999. Mr. Roof currently serves as a director of Accuride Corporation.

 

Board Governance

 

Our Board of Directors has adopted written corporate governance guidelines, which may be found on the “About Us — Investors — Corporate Governance” portion of our website, www.RSCrental.com, or upon request in writing to RSC Holdings Inc., 6929 East Greenway Parkway, Scottsdale, Arizona 85254, Attention: Corporate Secretary. Those guidelines set forth requirements relating to Director independence, mandatory retirement age, simultaneous service on other boards, and changes in Directors’ principal employment. They establish responsibilities for meeting preparation and participation, the evaluation of our financial performance and strategic planning, and the regular conduct of meetings of non-management Directors outside the presence of management Directors. They also provide for Directors to have direct access to our management and employees, as well as to our outside counsel and independent registered public accounting firm. In addition, as required under NYSE listing standards, our non-management Directors regularly met in executive sessions at which only non-management Directors were present, with Denis Nayden, the Chairman of our Board of Directors, presiding.

 

Code of Business Conduct and Ethics

 

Our Board of Directors has adopted written standards of business conduct applicable to our Board of Directors, chief executive and financial officers, our controller, and all our other officers and employees. Copies of our Code of Business Conduct and Ethics are available without charge on the “About Us — Investors — Corporate Governance” portion of our website, www.RSCrental.com, or upon request in writing to RSC Holdings Inc., 6929 East Greenway Parkway, Scottsdale, Arizona 85254, Attention: Corporate Secretary.

Board Independence

 

Ripplewood, Oak Hill, and ACF collectively own over 50% of our outstanding common stock. Because these stockholders are parties to a voting agreement, they are considered a “group” and we are therefore considered a “controlled company,” within the meaning of NYSE rules. As a result, we rely on exemptions from the requirement to have a majority of independent directors, fully independent compensation and nominating and corporate governance committees, and other requirements prescribed for such committees by the NYSE. For a description of the Stockholders Agreement to which these stockholders are a party, see “Certain Relationships and Related Party Transactions.”

 

Under our Corporate Governance Guidelines, our Board of Directors periodically reviews the relationships between the non-employee Directors and RSC Holdings as part of the assessment of Director independence. No Director will be deemed independent unless our Board affirmatively determines that the Director has no material relationship with us, directly or as an officer, stockholder or partner of an organization that has a relationship with us. Our Board of Directors has determined that all three members of our Audit Committee, Messrs. Ozanne, Leroy, and Roof, are “independent” as defined in the federal securities laws and NYSE rules. In view of our status as a controlled company under NYSE rules, our Board has not made a determination of independence with respect to any of our Directors not serving on our Audit Committee.

 

Board Meetings

 

During 2008, our Board of Directors held five meetings. Our Directors attended at least 75% of the aggregate number of board and committee meetings during the period in which they were members, other than Mr. Collins, who attended two out of the five meetings.

 

Directors are invited and it is anticipated that they will attend the Annual Meeting of Stockholders, in any manner permitted by Delaware General Corporate Law.

 

Board Committees

 

Our Board of Directors has three standing committees: Audit, Compensation, and Executive and Governance. Their composition and roles are discussed below. Our Board has adopted a written charter for each committee and each charter may be found on the “About Us — Investors — Corporate Governance” portion of our website located at www.RSCrental.com. Copies of each charter are available free of charge upon written request by any stockholder to RSC Holdings Inc., 6929 East Greenway Parkway, Scottsdale, Arizona 85254, Attention: Corporate Secretary.

 

 

 

 

The Audit Committee

 

Our Audit Committee consists of Messrs. Ozanne (Chair), Leroy, and Roof, and held seven meetings in 2008. Our Board has designated all three of our independent members of our Audit Committee “audit committee financial experts” and all members have been determined to be “financially literate” under NYSE rules. From January to May 2008, the Audit Committee was comprised of Messrs. Ozanne, Roof, and Wagner. Upon Mr. Leroy’s appointment to the Board of Directors in May 2008, he replaced Mr. Wagner on the Audit Committee.

 

Pursuant to its charter, our Audit Committee assists our Board in fulfilling its oversight responsibilities by overseeing and monitoring:

 

 

In discharging its duties, our Audit Committee has the authority to retain independent legal, accounting, and other advisors.

 

The Compensation Committee

 

In 2008, our Compensation Committee consisted of Messrs. Dardani and Wagner and held four meetings. Effective January 2009, Mr. Leroy was appointed to our Compensation Committee. Pursuant to its charter, our Compensation Committee:

 

 

The Compensation Committee is permitted to delegate its responsibilities to subcommittees as it deems appropriate. In discharging its duties, our Compensation Committee has the authority to retain independent legal, accounting, and other advisors.

The Executive and Governance Committee

 

Our Executive and Governance Committee consists of Messrs. Collins, Dardani, Nayden, Olsson, and Wagner and did not have any official meetings in 2008. Pursuant to its charter, our Executive and Governance Committee:

 

 

Nomination Process — Qualifications

 

The Executive and Governance Committee believes that candidates for Director should have certain minimum qualifications and have the highest personal integrity and ethics. The Executive and Governance Committee also intends to consider such factors as possessing relevant expertise upon which to be able to offer advice and guidance to management, having sufficient time to devote to our affairs, demonstrated excellence in his or her field, having the ability to exercise sound business judgment and having the commitment to rigorously represent the long-term interests of our stockholders. However, the Executive and Governance Committee retains the right to modify these qualifications from time to time. Candidates for Director are reviewed in the context of the current composition of our operating requirements and the long-term interests of stockholders. In conducting this assessment, the Executive and Governance Committee considers diversity, age, skills, and such other factors as it deems appropriate given the current needs of the Board of Directors and RSC Holdings, to maintain a balance of knowledge, experience, and capability. In the case of incumbent Directors whose terms of office are set to expire, the Executive and Governance Committee reviews these Directors’ overall service to RSC Holdings during their terms, including the number of meetings attended, level of participation, quality of performance, and any other relationships and transactions that might impair the Directors’ independence. In the case of new Director candidates, the Executive and Governance Committee also determines whether the nominee is independent for NYSE purposes, which determination is based upon applicable NYSE listing standards and applicable SEC rules and regulations. The Executive and Governance Committee may also use its network of contacts to compile a list of potential candidates, but may also engage, if it deems appropriate, a professional search firm. The Executive and Governance Committee will conduct any appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates after considering the function and needs of the Board.

 

The Executive and Governance Committee will consider Director candidates recommended by stockholders and, to date, other than pursuant to the Stockholders Agreement discussed herein, we have not received a timely Director nominee from a stockholder or stockholders holding more than 5% of our common stock. The Executive and Governance Committee does not intend to alter the manner in which it evaluates candidates, including the minimum criteria set forth herein, based on whether or not the candidate was recommended by a stockholder, except as necessary to fulfill obligations under the Stockholders Agreement described herein. Stockholders who wish to recommend individuals for consideration by the Executive and Governance Committee to be nominees for election to the Board of Directors may do so by delivering a written recommendation to RSC Holdings Inc., 6929 East Greenway Parkway, Scottsdale, Arizona 85254, Attention: Corporate Secretary. All such requests must be received in accordance with the advanced notice procedures described in our By-Laws available on the “About Us — Investors — Corporate Governance” portion of our website located at www.RSCrental.com. Submissions must include the full name of the proposed nominee, a description of the proposed nominee’s business experience for at least the previous five years, complete biographical information, and a description of the proposed nominee’s qualifications as a Director. Any such submission must be accompanied by the written consent of the proposed nominee to be named as a nominee and to serve as a Director if elected.

Stockholders Agreement

 

RSC Holdings is a party to a Stockholders Agreement with Ripplewood, Oak Hill, and ACF, who currently hold the majority of our outstanding common stock. The Stockholders Agreement gives each Sponsor the right to designate four nominees for election to the Board of Directors. Each stockholder that is a party to the Stockholders Agreement is required to take all necessary action to cause the nominees of the other Sponsors to be elected, which actions include recommending the nominees of the other Sponsors to our Board for inclusion in the slate of nominees recommended by the Board to stockholders for election. Please see “Certain Relationships and Related Party Transactions” for more information on the Stockholders Agreement.

 

Stockholder Communication

 

Stockholders and other parties interested in communicating with our Board of Directors, including a particular Director or the non-management Directors as a group, may do so by writing to the Board of Directors, RSC Holdings Inc., 6929 East Greenway Parkway, Scottsdale, Arizona 85254, Attention: Corporate Secretary. Our Corporate Governance Guidelines set forth the process for handling letters received by RSC Holdings and addressed to the Board of Directors. Under that process, the Corporate Secretary of RSC Holdings is responsible for reviewing, summarizing, or sending a copy to the Board, the Chairman of the Board, or Committee Chairman, whichever is applicable, any correspondence that deals with the functions of the Board or committees, ethical issues, or general matters that would be of interest to the Board. Any stockholder correspondence that deals with accounting, internal controls, or auditing matters will be sent immediately to the Chairman of the Board and to the Chair of the Audit Committee. Directors may at any time review a log of all relevant correspondence received by RSC Holdings that is addressed to non-employee members of the Board of Directors and obtain copies of any such correspondence. With respect to other correspondence received by RSC Holdings that is addressed to one or more Directors, the Board has requested that the following items not be distributed to Directors, because they generally fall into the purview of management, rather than the Board: junk mail and mass mailings, product and services complaints, product and services inquiries, resumes and other forms of job inquiries, solicitations for charitable donations, surveys, business solicitations, and advertisements.

 

Board Compensation

 

For 2008, our Directors who were not also employees or appointees of the Sponsors each were eligible to receive a $125,000 annual retainer fee, of which $45,000 is payable in cash and $80,000 is payable in the form of restricted stock units and is subject to the terms and conditions of the RSC Holdings Inc. Amended and Restated Stock Incentive Plan and the applicable Director Restricted Stock Unit Agreement. The number of restricted stock units granted to an independent Director each year is the quotient obtained by dividing (i) $80,000 by (ii) the closing market price of a share of our common stock on the date of grant as reported on the NYSE. For the avoidance of doubt, only whole shares up to $80,000, or the applicable prorated amount, are granted with any nominal cash remaining with us.

The chairman of the Audit Committee was paid an additional annual cash fee of $15,000 and upon the appointment of an independent chairman of the Compensation Committee an additional annual cash fee of $7,500 will be paid. We also reimburse our Directors for reasonable and necessary expenses incurred in the performance of their duties. During 2008, our Directors received the following remuneration:

 

2008 Director Compensation Table

 

 

 

 

Commencing in 2009, Directors who are not also employees or appointees of the Sponsors each will receive a $175,000 annual retainer fee, of which $60,000 is payable in cash and $115,000 is payable in the form of restricted stock units and is subject to the terms and conditions of the RSC Holdings Inc. Amended and Restated Stock Incentive Plan and the applicable Director Restricted Stock Unit Agreement. The number of restricted stock units granted to an independent Director each year is the quotient obtained by dividing (i) $115,000 by (ii) the closing market price of a share of our common stock on the date of grant as reported on the NYSE. For the avoidance of doubt, only whole shares up to $115,000, or the applicable prorated amount, are granted with any nominal cash remaining with us.

 

Members of the Audit Committee will be paid an additional annual cash fee of $15,000 and the chairman of the Audit Committee is paid an additional annual cash fee of $25,000, inclusive of the Audit Committee member fee. Independent members of Compensation Committee will be paid an additional annual cash fee of $5,000 and upon the appointment of an independent chairman of the Compensation Committee an additional annual cash fee of $7,500, inclusive of the Compensation Committee member fee, will be paid. We also reimburse our Directors for reasonable and necessary expenses incurred in the performance of their duties.

Compensation Committee Interlocks and Insider Participation

 

During 2008, Messrs. Dardani and Wagner served on our Compensation Committee. No member of the Compensation Committee is an officer or employee of RSC Holdings. Mr. Dardani is a Partner at Oak Hill and Mr. Wagner is a Senior Managing Director at Ripplewood. For information regarding relationships among RSC Holdings and Ripplewood and Oak Hill and related entities, see “Certain Relationships and Related Party Transactions.”

 

During 2008, none of our executive officers served as a member of a compensation committee (or other body performing a similar role) of another entity, any of whose executive officers served on our Compensation Committee and none of our executive officers served as a director of another entity, any of whose executive officers served on our Board of Directors or Compensation Committee.

 

The Audit Committee has reviewed and discussed with management and KPMG LLP, the independent registered public accounting firm, the audited financial statements of RSC Holdings Inc. for the year ended December 31, 2008.

 

The Audit Committee has discussed with KPMG LLP the matters required to be discussed by Statement on Auditing Standards No. 61, as amended.

 

The Audit Committee has: (i) considered whether non-audit services provided by KPMG LLP are compatible with its independence; (ii) received the written disclosures and the letter from KPMG LLP as required by the applicable requirements of the Public Company Accounting Oversight Board regarding KPMG LLP’s communications with the Audit Committee concerning independence, and (iii) discussed with KPMG LLP its independence.

 

Based on the reviews and discussions described above, the Audit Committee recommended to the Board of Directors of RSC Holdings that the audited financial statements be included in RSC Holdings’ Annual Report on Form 10-K for the year ended December 31, 2008, for filing with the Securities and Exchange Commission.

 

THE AUDIT COMMITTEE

 

James H. Ozanne, Chair

Pierre E. Leroy

Donald C. Roof

 

 

      * The material in this report is not “soliciting material,” is not deemed filed with the SEC, and is not to be incorporated by reference into any of our filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language contained in such filing, unless specifically incorporated therein.

 

Independent Registered Public Accounting Firm Fees

 

Fees for services performed by KPMG LLP, our independent registered public accounting firm, during 2008 and 2007, were:

 

 

 

 

Pre-approval Procedures

 

The Audit Committee has established procedures for the pre-approval of all audit and permitted non-audit related services provided by our independent registered public accounting firm. The procedures include, in part, that: (i) the Audit Committee, on an annual basis, shall pre-approve the independent registered public accounting firm’s engagement letter/annual service plan; (ii) the Audit Committee Chair has been delegated the authority to pre-approve any permitted non-audit services up to $25,000 per individual proposed service; (iii) the Audit Committee must pre-approve any permitted non-audit services that exceed $25,000 per individual proposed service; and (iv) at each regularly scheduled Audit Committee meeting: (a) the Chairman of the Audit Committee will review any services that were pre-approved since the last Audit Committee meeting; and (b) a review will be conducted of the services performed and fees paid since the last Audit Committee meeting. All fees described above incurred after our IPO in May 2007, were pre-approved by the Audit Committee.

PROPOSAL TWO

 

RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM

 

The Audit Committee of the Board of Directors has appointed KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2009. Services provided by KPMG LLP in 2008, are described under “Independent Registered Public Accounting Firm Fees.” Additional information regarding the Audit Committee is provided in the Audit Committee Report on page 14.

 

KPMG LLP has audited our financial statements since 2003. Representatives of KPMG LLP will be present at the Annual Meeting of Stockholders to respond to appropriate questions and to make such statements as they may desire.

 

Stockholder ratification of the selection of KPMG LLP as our independent registered public accounting firm is not required by our By-Laws or otherwise. However, the Board of Directors is submitting the selection of KPMG LLP to the stockholders for ratification as a matter of good corporate governance practice. If our stockholders fail to ratify the selection, the Audit Committee will reconsider whether or not to retain that firm. Even if the selection is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of us and our stockholders.

 

The affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote at the Annual Meeting will be required to ratify the selection of KPMG LLP. Abstentions will be counted toward the tabulation of votes cast on proposals presented to the stockholders and will have the same effect as negative votes. Broker non-votes are counted towards a quorum, but are not counted for any purpose in determining whether this matter has been ratified.

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSAL TWO

 

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management and, based on such review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the RSC Holdings Inc. Annual Report on Form 10-K for the year ended December 31, 2008, and the 2009 Proxy Statement.

 

COMPENSATION COMMITTEE

 

Edward Dardani

Pierre E. Leroy**

Donald Wagner

 

 

* The material in this report is not “soliciting material,” is not deemed filed with the SEC, and is not to be incorporated by reference into any of our filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language contained in such filing, unless specifically incorporated therein.

 

** Effective January 1, 2009, Pierre E. Leroy became a member of the Compensation Committee.

 

Compensation Discussion and Analysis

 

Overview

 

This Compensation Discussion and Analysis is intended to provide information regarding the compensation program of RSC Holdings for our named executive officers as it has been designed by our Compensation Committee. Our named executive officers for 2008 include our Chief Executive Officer, Chief Financial Officer, and next three highest compensated executive officers for the year ended December 31, 2008. It will discuss the structure and philosophy of our compensation program. In addition, it will detail the manner in which it was developed and continues to evolve, including the elements involved in the determination of executive compensation, and the reasons we use those elements in our compensation program.

 

In November 2006, ACAB sold approximately 85% of RSC Holdings to the Sponsors, resulting in the formation of an entirely new Board of Directors and committee structure. As a result, the then newly formed Compensation Committee, which governs our compensation programs, began evaluating our compensation program and instituted certain core elements of our current compensation program, such as an Annual Incentive Plan and an equity-based long-term incentive plan. In connection with our IPO in May 2007, the Compensation Committee reaffirmed the need to continually evaluate the compensation program to ensure its competitiveness and ability to attract and retain executives with the appropriate skill sets to further enhance stockholder value as a public company. The Compensation Committee retained Mercer Human Resources Consulting, or Mercer, as its independent compensation consultant. Throughout 2008, Mercer worked closely with the Compensation Committee and provided recommendations regarding compensation benchmarking, analysis, design, structure, philosophy, and peer group development, to ensure that we have a compensation program, which is both competitive and aligned with the long-term interests of our stockholders. The Compensation Committee then presented to the Board of Directors in October 2008 the process undertaken and its recommendations, and after additional modifications, the Board of Directors approved the compensation structure for the named executive officers.

 

Process

 

Our compensation program is structured by our Compensation Committee. The Compensation Committee continually reviews, refines, and approves all elements of our compensation program for our executive officers. Management and its independent compensation consultant assist the Compensation Committee with the alignment

of strategy through benchmarking, plan design, and administration of our compensation program. In addition, our Chief Executive Officer provides the Compensation Committee with his analysis and recommendations on various elements of the compensation program. The Compensation Committee then makes recommendations on our compensation plans and structure to the full Board of Directors for its approval.

 

Compensation Philosophy

 

Our compensation philosophy is based on our desire to attract, motivate, and retain highly-talented and qualified executives while rewarding the achievement of strategic goals that are aligned with the long-term interest of stockholders. This philosophy supports the need to attract and retain executive talent with specific skill sets, including industry expertise, leadership, team work, long-term strategic vision, a customer-centric focus, and strong results-based orientation. Our compensation philosophy is aligned with our desire for profitable growth in our business and, as a result a significant portion of management’s compensation should be at risk through performance-based incentive awards and equity-based compensation. This compensation program supports our results-driven culture, instilling in management the economic incentives of ownership and encouraging executives to focus on stockholder return.

 

Compensation Elements

 

The four elements of our executive compensation are: (1) annual base salary, (2) annual performance-based incentive, (3) long-term equity incentive compensation, and (4) benefits.

 

We have designed our programs to measure and reward performance based on short and long-term objectives, including profitable growth, cash flow, and value creation. These elements of compensation, along with overall levels of compensation, are evaluated and may be adjusted every year. In 2008, as part of an overall evaluation process of our compensation program, the Compensation Committee engaged Mercer to assist it in comparing the compensation of our senior executives with: (a) a peer group established by the Compensation Committee with the assistance of Mercer; and (b) the compensation of similarly situated executives from the following surveys: Mercer Human Resource Consulting 2007 Mercer Benchmark Database, Watson/Wyatt 2007/2008 Top Management Compensation Survey, and Clark Consulting 2007 CHiPS Executive and Senior Management Total Compensation Survey. The Compensation Committee also included other considerations, such as business and individual performance, retention, market conditions, and good corporate stewardship in developing our annual compensation program. In 2008, the Compensation Committee engaged Mercer to assist it with establishing an appropriate peer group to provide a benchmark to help evaluate the competiveness of our compensation program. The peer group is made up of the following companies:

 

Aaron Rents, Inc.

Accuride Corporation

Cintas Corporation

Dollar Thrifty Automotive Group, Inc.

Fastenal Company

GATX Corporation

H&E Equipment Services, Inc.

Iron Mountain Incorporated

Joy Global Inc.

Paychex, Inc.

Rent-A-Center, Inc.

Republic Services, Inc.

The Brink’s Company

The Manitowoc Company

Trinity Industries, Inc.

United Rentals, Inc.

 

Following are each of the four elements of our compensation program discussed in greater detail:

 

 

Base salary is an essential element to attract, motivate, and retain highly talented and qualified executives and to compensate them for services rendered. The base salaries earned by our named executive officers are set forth in the ‘Summary Compensation Table’. Based upon the 2008 Mercer study, the Board adjusted base salaries to market effective January 1, 2009. However, on February 27, 2009, in connection with the downturn in the economy and our focus to significantly reduce costs, the named executive officers agreed to reduce their base salary in 2009, Mr. Olsson by 20% for the full year, and the remaining named executive officers by 10% commencing on March 2,

2009, for the remainder of 2009, see ‘Employment Agreements’ for additional information. The following chart illustrates the culmination of the multi-year analysis by the Compensation Committee as it pertains to base salary, and the recent reduction in base salary by our named executive officers:

 

 

 

 

 

Our annual performance-based incentive also plays an important role in attracting, motivating, and retaining our highly talented and qualified executives. In addition, our annual performance incentive is intended to align individual efforts with our long-term strategic goals, and driving value for our stockholders. To achieve these goals the Board approved our Annual Incentive Plan in 2007, whereby the Compensation Committee carefully selects performance targets and criteria each year, which are aligned with stockholder interests and hold our executives accountable for profitable and responsible growth. In accordance with the SEC’s rules, what we refer to herein as the annual incentive is reported in the “Summary Compensation Table” under the column “Non-Equity Incentive Plan Compensation.”

 

2008 Fiscal Year

 

For 2008, the Compensation Committee established the annual performance-based incentive criteria to be an EBITDA target of $856.7 million, a net capital expenditure target of $218.9 million, and individual performance measures. EBITDA was defined as consolidated net income before net interest expense, income taxes, and depreciation and amortization. Net capital expenditures was defined as the purchase of rental equipment and purchase of property and equipment (including property and equipment acquired under capitalized lease obligations), less proceeds from sales of rental equipment and proceeds from sale of property and equipment. The Compensation Committee established a minimum performance EBITDA threshold of $830 million, which had to be achieved before there was any payout under either the net capital expenditures goal or specific performance objectives.

 

The Compensation Committee established the following weightings and threshold, target, and maximum payout amounts for the performance goals. Payout amounts are based upon the actual eligible base salary of the executive officer for 2008. For each performance goal: Payout = Base Salary x (Weighting x Percentage Achievement).

 

 

 

 

The Compensation Committee determined that since the minimum performance EBITDA threshold of $830 million was not met for 2008 the named executive officers were not eligible to receive any annual incentive payment for 2008 under the Annual Incentive Plan. Under our Annual Incentive Plan, the Compensation Committee

of the Board of Directors has the authority, in its discretion, to increase or reduce the actual annual incentive paid to our named executive officers. The Compensation Committee may take into account any factors it considers appropriate, including our overall performance and an individual’s contribution to that performance.

 

The Compensation Committee did award a standalone discretionary cash award to the named executive officers for their performance in 2008. The Compensation Committee granted the following discretionary cash awards, based on a percentage of the target award for the named executive officer, for their exceptional performance during a tumultuous 2008, including taking on significant additional responsibilities, outperforming the industry, management of capital expenditures, and performance for specific performance objectives.

 

 

2009 Fiscal Year

 

For 2009, the Compensation Committee again established the annual performance based incentive criteria to be EBITDA, net capital expenditures, and individual performance measures related to cost reduction and control. EBITDA is defined as consolidated net income before net interest expense, income taxes, and depreciation and amortization. Net capital expenditures is defined as the purchase of rental equipment and purchase of property and equipment (including property and equipment acquired under capitalized lease obligations), less proceeds from sales of rental equipment and proceeds from sale of property and equipment. However, due to the economic instability and uncertainty foreseen for 2009, our Compensation Committee determined that it is in the best interest of our stockholders to divide the targets for the annual performance based incentive criteria into two separate six month measurement periods. Specific targets for each of the performance goals were set by the Compensation Committee for the first six months of 2009, and will be established for the second six months of 2009 based on best available market and business trend data available at or about the end of the second quarter of 2009. Any incentives earned for the two independent measurement periods will be totaled and paid per usual practice to eligible executives during the first quarter of 2010. The Compensation Committee, in its sole discretion, may modify this two measurement period approach. Further, the Compensation Committee did not establish a minimum EBITDA threshold for 2009.

 

The performance goals are subject to the following adjustments: (i) any incremental EBITDA impact resulting from acquisitions or extraordinary events during 2009 will be excluded; (ii) any incremental net capital expenditure impact resulting from acquisitions or extraordinary events during 2009 will be excluded; and (iii) specific performance objectives will be determined at the beginning of 2009, and only modified with exceptions, all such discretion of such payout will be at the determination/discretion of the Compensation Committee.

 

The Compensation Committee established the following weightings and threshold, target, and maximum payout percentages for the performance goals. In connection with the evaluation of the competiveness of our compensation program by the Compensation Committee, certain of the target bonuses were modified from 2008, including Mr. Olsson, which was increased from 75% to 100%, and Mr. Groman, which was reduced from 75% to 50%. Payout amounts are based upon the actual eligible base salary of the executive officer for the year ending December 31, 2009. For each performance goal: Payout = Base Salary x (Weighting x Percentage Achievement).

 

 

 

 

 

We provide equity-based compensation to create long-term incentive compensation for our named executive officers. Long-term equity incentive compensation helps to incent the successful execution of our immediate and long-term business plan, to attract and retain key leaders, and to align management with stockholder interests. The program operates through the RSC Holdings Inc. Amended and Restated Stock Incentive Plan, or Stock Plan, which allows for the award of stock options, performance-based awards, stock appreciation rights, restricted stock, restricted stock units, deferred shares, and supplemental units.

 

As stated herein, the Compensation Committee began undertaking a comprehensive review of our compensation program, and as a result, no annual equity awards were granted to our named executive officers in 2008. In January 2008, in connection with Mr. Mathieson’s commencement of employment as our Senior Vice President and Chief Financial Officer, he received an equity award equivalent to $400,000 of equity determined by the Black-Scholes calculation resulting in stock options for 81,067 shares which have a term of ten years and annual vesting of 25% per year, subject to continued employment. In 2007, Mr. Hobson was promoted to SVP, Corporate Operations. However, due to Mr. Hobson’s promotion being prior to the IPO, no options were granted for the promotion at that time. To this end, in February 2008, the Compensation Committee granted Mr. Hobson stock options for 35,000 shares with a 10 year term and annual vesting of 25% per year subject to continued employment.

 

In 2006, while still a private company, we established an equity investment and incentive program for our named executive officers, excluding Mr. Mathieson, and select other officers. Through this program we sought to instill in our officers a true “ownership” culture, where they viewed themselves as equity stakeholders in our business, with a significant personal financial stake in the long-term increase in stockholder value. The main elements of this program involved: (a) each officer making an investment in our shares of common stock in an amount that was, for him, a material personal investment; and (b) the grant of a significant number of options to purchase our common stock that are subject to vesting over a five-year period with one-third of the options vesting based on continued employment, and two-thirds of the options vesting based generally on RSC Holdings’ performance against pre-established financial targets. All options granted in 2006 have a term of ten years from the date of grant. Each year up to 20% of the performance-based options may vest as follows: 10% of the performance-based options will vest if 80% of the pre-determined performance targets are achieved with prorata vesting up to 20% if 100% of the pre-determined performance targets are achieved. Performance targets may be adjusted if we consummate a significant acquisition, disposition of assets, or other transaction that, in the judgment of the Compensation Committee, would impact our consolidated earnings. If performance targets are not achieved during any fiscal year, options that failed to vest as a result may still vest based on the achievement of the combined performance targets for the fiscal year the target was not achieved together with the following two fiscal years.

 

Financial performance targets are established annually by the Compensation Committee of the Board of Directors using a formula taking into account EBITDA and our level of debt. Each year up to 20% of the performance-based options may vest. For 2008, the Compensation Committee established the target goal based on our operating plan for the year. The target equity value of $2,982.7 million was determined by the following formula: EBITDA of $856.7 million, multiplied by 6.5, less target debt of $2,585.9 million. For 2008, we achieved,

as concluded by the Compensation Committee, an actual equity value of $2,437.4 million, or 81.72% of target which correlates to 10.9% of the eligible named executive officers’ performance based options being vested on February 24, 2009.

 

All option grants were non-qualified options with a per-share exercise price no less than the fair market value of one share of RSC Holdings stock on the grant date. Under the terms of the Stock Plan, the Board of Directors or Compensation Committee may accelerate the vesting of an option at any time. The following table describes the post-termination and change of control provisions to which options are generally subject; capitalized terms in the table are defined in the Stock Plan.

 

 

Generally, employees recognize ordinary income upon exercising options equal to the fair market value of the shares acquired on the date of exercise, minus the exercise price, and we will have a corresponding tax deduction at that time.

 

 

We provide health and welfare, life and disability insurance, and 401(k) retirement benefits to our named executive officers and all eligible employees. We do not provide pension arrangements or post retirement health coverage for our executives or employees. We also offer a Nonqualified Deferred Compensation Plan that allows our named executive officers and certain other employees to contribute on a pre-tax basis a portion of their base and

variable compensation. We do not provide any matching contributions to the Nonqualified Deferred Compensation Plan.

 

We believe perquisites for executive officers should be extremely limited in scope and value, yet beneficial in a cost-effective manner to help us attract and retain our senior executives. Accordingly, we provide our Chief Executive Officer and our other named executive officers with an annual limited financial planning allowance of $5,000 and $2,500, respectively, via taxable reimbursements for financial planning services, including financial advice, estate planning, and tax preparation, which are focused on assisting officers in achieving the highest value from their compensation package. In addition, our named executive officers also receive an automobile allowance of up to $14,400 annually. Lastly, we do not provide dwellings for personal use other than for temporary job relocation housing.

 

Impact of Tax and Accounting Considerations on Compensation Design

 

We consider and factor into the design of our compensation programs the tax and accounting aspects of these programs. Principal among the tax considerations will be the potential impact of Section 162(m) of the Internal Revenue Code, which generally disallows an income tax deduction for public companies for compensation in excess of $1 million paid in any year to the Chief Executive Officer and to the three next most highly compensated executive officers (excluding the Chief Financial Officer), unless the amount in excess of $1 million is payable based solely upon the attainment of objective performance criteria. To date we have been operating under a transition exemption from such Section 162(m). In the future, our general approach will be to structure the annual incentive bonuses and stock options payable to our executive officers in a manner that preserves the income tax deductibility of that compensation.

 

Other tax considerations are factored into the design of our compensation programs, including compliance with the requirements of Section 409A of the Internal Revenue Code, which can impose additional taxes on participants in certain arrangements involving deferred compensation, and Sections 280G and 4999 of the Internal Revenue Code, which affect the deductibility of, and impose certain additional excise taxes on, respectively, certain payments that are made upon or in connection with a change of control.

 

Accounting considerations are also factored into the design of the compensation programs made available to our executive officers. Principal among these is SFAS No. 123(R), which addresses the accounting treatment of certain share-based compensation.

Summary Compensation Table

 

The following table shows for the years ended December 31, 2006, 2007, and 2008 compensation awarded to, paid to, or earned by, our Chief Executive Officer, our Chief Financial Officer and our three other most highly compensated executive officers for the year ended December 31, 2008.

 

 

 

 

Grants of Plan-Based Awards

 

The following table summarizes the awards made to the named executive officers under any plan in 2008.

 

Grants of Plan-Based Awards

 

 

 

 

Employment Agreements

 

We have entered into employment agreements with each of our named executive officers. Under the agreements, our named executive officers are entitled to base salary and variable compensation. The executives also participate in RSC Holdings’ employee benefit and equity programs, and receive an annual car allowance (or in

certain circumstances, use of the company car), and an annual tax and financial planning service allowance as more fully described in this Compensation Discussion and Analysis. The employment agreements with the named executive officers will continue in effect until terminated by either party, and provide that if the employment of the executive is terminated without Cause or for Good Reason (as defined in the agreement), the executive will receive continued payment of base salary, a pro-rata bonus, and certain benefits for a three year period for the Chief Executive Officer and two years for the named executive officers. Please see “Potential Payments Upon Termination or Change in Control” for more specifics. The employment agreements also bind each named executive officer to confidentiality requirements and post-termination non-competition and non-solicitation provisions.

 

In February 2009, Erik Olsson and our named executive officers entered into amendments to their respective employment agreements. Under such amendments, Mr. Olsson, as President and Chief Executive Officer, agreed to lower his base salary for 2009 by 20%, retroactive to January 1, 2009, and the remaining named executive officers each agreed to lower their base salary by 10% for the remainder of 2009, effective March 2, 2009. The reduction does not affect certain ancillary benefits, such as severance pay, which if and to the extent any becomes applicable prior to January 1, 2010, would continue to reference the applicable base salary prior to the respective amendments. Effective January 1, 2010, the base salaries of Mr. Olsson and the other named executive officers will return to their pre-reduction levels.

 

Outstanding Equity Awards at December 31, 2008

 

The following table summarizes the number of securities underlying the option awards for each named executive officer as of December 31, 2008.

 

Outstanding Equity Awards at December 31, 2008

 

 

 

 

Option Exercises and Stock Vested

 

During 2008, none of our named executive officers exercised any stock options or vested in any shares subject to stock awards.

 

Pension Benefits

 

We do not sponsor any qualified or nonqualified defined benefit plans.

 

Nonqualified Deferred Compensation

 

We have two deferred compensation plans, one for pre-December 31, 2004 contributions, and one that is for post December 31, 2004 contributions which was approved by the Board of Directors on June 24, 2008, which is a 409A compliant plan for post January 1, 2005, contributions, together these plans are referred to as DCSP. The DCSP allows our eligible employees, including our executive officers, with annual base salary of more than $120,000, to defer a portion of their salary, commission and/or bonus compensation on a pre-tax basis. Because the DCSP is not a tax-qualified plan, the amounts deferred are not subject to the limits imposed by a tax-qualified plan.

 

Under our DCSP, participants may annually elect to defer up to 50% of their salary and commission compensation, and up to 100% of their performance-based compensation, including eligible bonuses. The minimum deferral is 2% of the participant’s base compensation. Elective deferrals of cash compensation are withheld from a participant’s paycheck and credited, as applicable, to a bookkeeping account established in the name of the participant. A participant is always 100% vested in his or her own elective cash deferrals and any earnings thereon. We may also make discretionary contributions to participants’ accounts in the future, although we do not currently plan to do so. Discretionary contributions made by us in the future, if any, will vest according to the same vesting schedule found in our 401(k) plan. Amounts contributed to a participant’s account through elective deferrals, or through our discretionary contributions, are generally not subject to income tax, and we do not receive a deduction, until they are distributed from the accounts.

 

Under our DCSP, we are obligated to deliver on a future date deferred compensation credited to the participant’s account, as adjusted for earnings and losses. A participant’s account is adjusted for any positive or negative investment results from phantom investment alternatives selected by the participant that are available under the DCSP, which track actual market investments and are similar to the investment alternatives offered under our 401(k) plan. A participant may make changes to selected phantom investments on a daily basis in accordance with rules established by the DCSP committee. Contributions made pursuant to the DCSP are our unfunded, unsecured general obligations subject to the claims of our creditors. We do not provide matching contributions to the deferrals an employee makes pursuant to the DCSP.

 

Amounts in a participant’s account will be payable in cash commencing upon the specified distribution date selected by the participant at the time of deferral. However, if a participant’s service with us terminates prior to the selected distribution date or dates, payments will commence as soon as practicable following termination of service. Payments will generally be distributed in the form of a lump sum payment. However, distributions may be made in up to 10 annual installments in the event of the participant’s termination of service due to the participant’s disability, death or termination on or after attaining age 65, or upon attaining any combination of age plus years of service with us that equal 65, depending upon, if applicable, the form of distribution elected by a participant at the time of deferral. Any payments made to our specified employees that commence upon a termination of service will be delayed six months in accordance with the requirements of Section 409A of the Internal Revenue Code. In addition, in the event a participant suffers one or more specified unforeseeable emergencies, the DCSP committee may, in its sole discretion, accelerate the payment of the participant’s account. Payments scheduled to be made under the DCSP may be otherwise delayed or accelerated only upon the occurrence of certain specified events that comply with the requirements of Section 409A of the Internal Revenue Code.

The following table summarizes contributions, earnings, withdrawals and balances, if any, with respect to the DCSP attributable to our named executive officers for 2008.

 

Nonqualified Deferred Compensation

 

 

Potential Payments upon Termination or Change in Control

 

Each of the named executive officers is entitled to receive severance if they are terminated without Cause or for Good Reason. Under the terms of each of the employment agreements “Cause” is defined as: (a) the failure of the executive to implement or adhere to material policies, practices, or directives of RSC Holdings, including the Board of Directors; (b) conduct of a fraudulent or criminal nature; (c) any action of the executive that is outside the scope of his employment duties that results in material financial harm to RSC Holdings; (d) conduct that is in violation of any provision of the Employment Agreement or any other agreement between the company and the executive; or (e) solely for purposes of death or disability. “Good Reason” means any of the following occurrences without the executive’s consent: (a) a material diminution in, or assignment of duties materially inconsistent with the executive’s position (including status, offices, titles, and reporting relationships); (b) a reduction in base salary that is not a part of an across the board reduction; (c) a relocation of the executive’s principal place of business to a location that is greater than 50 miles from its current location; or (d) RSC Holdings’ material breach of the executive’s employment agreement.

 

Under the terms of each of the employment agreements, assuming the employment of our named executive officers were to be terminated without Cause or for Good Reason as of December 31, 2008, each named executive officer would be entitled to the following payments and benefits:

 

 

We are not obligated to make any cash payments to these executives if their employment is terminated by us for Cause or by the executive without Good Reason. No severance benefits are provided for any of the executive officers in the event of death or disability. The severance payments are contingent upon the executive continuing to comply with the confidentiality, non-compete, and non-solicitation covenants. The non-compete and

non-solicitation covenants are for a period of 18 months for the Chief Executive Officer and 12 months for the other named executive officers.

 

The following table details the incremental compensation amounts provided to our named executive officers in the event of termination without Cause or for Good Reason or as a result of a change in control:

 

 

 

 

Security Ownership of Certain Beneficial Owners, Directors, and Officers

 

The following table sets forth information as of February 27, 2009, with respect to the ownership of the common stock of RSC Holdings by:

 

 

The amounts and percentages of shares beneficially owned are reported on the basis of SEC regulations governing the determination of beneficial ownership of securities. Under SEC rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares voting power or investment power, which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities for which that person has a right to acquire beneficial ownership within 60 days. Securities that can be so acquired are deemed to be outstanding for purposes of computing such person’s ownership percentage of outstanding shares, but not for purposes of computing any other person’s ownership percentage. Under these rules, more than one person may be deemed to be a beneficial owner of the same securities and a person may be deemed to be a beneficial owner of securities as to which such person has no economic interest. Subject to the foregoing, the percentage of beneficial ownership is based on 103,412,561 shares of our common stock outstanding as of February 27, 2009.

Except as otherwise indicated in the footnotes to this table, each of the beneficial owners listed has, to our knowledge, sole voting and investment power with respect to the indicated shares of common stock. Unless otherwise indicated, the address for each individual and entity listed below is c/o RSC Holdings Inc., 6929 East Greenway Parkway, Scottsdale, Arizona 85254, Attention: Corporate Secretary.

 

 

 

 

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Based on a review of reports filed by our Directors, executive officers, and beneficial holders of 10% or more of our common stock, and upon representations from those persons, all reports required to be filed by such persons and entities during 2008 were filed on time.

 

Related Party Transaction Approval Policy

 

The Audit Committee is responsible for the review, approval, or ratification of “related-person transactions” between us and our related persons. Under SEC rules, a related person is a director, officer, nominee for director, or 5% stockholder of RSC Holdings since the beginning of the last fiscal year and their immediate family members. Transactions involving related persons are reviewed by RSC Holdings’ Audit Committee. The internal disclosure committee determines whether a related person could have a significant interest in such a transaction, and any such transaction is forwarded to the Audit Committee for review. The Audit Committee determines whether the related person has a material interest in a transaction and may approve, ratify, rescind, or take other action with respect to the transaction in its discretion.

Pursuant to the Code of Business Conduct and Ethics adopted by our Board of Directors, any member of our Board who believes he or she has an actual or potential conflict of interest with us is obligated to notify the Office of the General Counsel and the Executive and Governance Committee as promptly as practicable. That Director should not participate in any decision by our Board, or any committee of our Board, that in any way relates to the matter that gives rise to the conflict or potential conflict of interest until the issue has been resolved to the satisfaction of the Executive and Governance Committee or the Board. The following is a description of certain relationships and transactions that we have entered into with our related persons.

 

Stockholders Agreement

 

In connection with the recapitalization in November 2006, RSC Holdings entered into the Stockholders Agreement with ACF, Ripplewood, and Oak Hill. Upon completion of our IPO, the Stockholders Agreement was amended and restated, among other things, to: (i) reflect an agreement between Ripplewood and Oak Hill to increase the size of our Board to up to 13 Directors; (ii) permit Ripplewood and Oak Hill to designate four Directors each, subject to reduction if their equity ownership in RSC Holdings drops below the thresholds specified in the Stockholders Agreement; (iii) provide for the nomination of an additional three independent Directors; (iv) appoint the Chief Executive Officer to serve as a member of the Board; (v) eliminate ACF’s right to appoint a Director to the Board of Directors; and (vi) remove certain rights of approval, drag-along rights and preemptive rights, and to retain tag-along rights and restrictions on transfers of shares of RSC Holdings, in certain circumstances.

 

The Stockholders Agreement grants to each of Ripplewood, Oak Hill, and ACF, so long as each such entity holds at least 5% of the total shares of common stock outstanding at such time, the right, subject to certain limitations, to cause RSC Holdings, at its own expense, to use its best efforts to register such securities held by such entity for public resale. The exercise of this right is not limited to a certain number of requests. In the event RSC Holdings registers any of its common stock, each stockholder of RSC Holdings has the right to require RSC Holdings to use its best efforts to include shares of common stock of RSC Holdings held by it, subject to certain limitations, including as determined by the underwriters. The Stockholders Agreement also provides for RSC Holdings to indemnify the stockholders party to that agreement and their affiliates in connection with the registration of RSC Holdings’ securities.

 

Transaction and Indemnification Agreements

 

In connection with our IPO, we entered into the Cost Reimbursement Agreement with Ripplewood and Oak Hill, pursuant to which we reimbursed them for expenses incurred in connection with certain advisory and other services. The Cost Reimbursement Agreement does not limit expense amounts subject to reimbursement. In 2008, RSC Holdings reimbursed Ripplewood and Oak Hill for approximately $96,000 of expenses under these agreements.

 

In connection with the recapitalization, RSC Holdings and RSC also entered into an Indemnification Agreement with Ripplewood, Oak Hill, and ACF, pursuant to which RSC Holdings and RSC will indemnify Ripplewood, Oak Hill, and ACF, and their respective affiliates, directors, officers, partners, members, employees, agents, advisors, representatives, and controlling persons, against certain liabilities arising out of the recapitalization or the performance of the Monitoring Agreement and certain other claims and liabilities. In connection with RSC Holdings’ IPO, RSC Holdings entered into indemnification agreements with each of our Directors and its executive officers. The Indemnification Agreement provides the Directors and executive officers with contractual rights for indemnification and expense advancement rights provided under our By-Laws.

 

Agreements and Relationships with ACAB

 

We purchased and rented equipment from affiliates of ACAB of approximately $44.2 million in 2006, $40.2 million in 2007, and $21.9 million in 2008, and certain affiliates of ACAB are participants in the equipment rental industry. The Recapitalization Agreement contains a non-compete provision that expired in November 2008, and, upon its expiration, ACAB and its affiliates are free to compete with us in the rental equipment industry in the United States and Canada. Until May 2008, ACAB and its affiliates were required to sell us any product manufactured for sale or distributed by their portable air and construction tools divisions on certain payment

terms, without credit support, at a reasonably competitive market price that does not reflect sales on extended credit terms.

 

Until November 2008, ACAB and its affiliates were not permitted, with certain exceptions, to hire any employees that were at a level of District Manager or above of RSC or any of its subsidiaries, or knowingly solicit any other employee of RSC or any of its subsidiaries. In addition, until November 2008, we were not permitted directly or indirectly to engage or invest in any business in the United States or Canada in competition with our previously owned Prime Energy division, which was retained by two of ACAB’s affiliates, with respect to the renting of oil-free compressors.

 

Oak Hill Note Purchase

 

In connection with our offering of notes to finance the recapitalization, Oak Hill purchased $20.0 million of the notes for its own account.

 

The Board of Directors is not aware of any other matters to be presented at the Annual Meeting of Stockholders. If any other matter proper for action at the meeting should be presented, the holders of the accompanying proxy will have discretion to vote the shares represented by the proxy on such matter in accordance with their best judgment. If the chairman of the meeting determines that any business was not properly brought before the meeting, the chairman will announce this at the meeting and the business will not be conducted.

 

ANNUAL REPORT FOR 2008

 

Our annual report for 2008, which includes our Annual Report on Form 10-K for the year ended December 31, 2008, is being furnished concurrently with this Proxy Statement. These materials do not form part of the material for the solicitation of proxies. A copy of RSC Holdings’ Annual Report to the SEC on Form 10-K for the year ended December 31, 2008, is available without charge on the “About Us — Investors — SEC Filings” portion of our website located at www.RSCrental.com, or upon request in writing to RSC Holdings Inc., 6929 East Greenway Parkway, Scottsdale, Arizona 85254, Attention: Corporate Secretary.

 

By Order of the Board of Directors

 

Kevin J. Groman

Senior Vice President, General Counsel and

Corporate Secretary

 

Scottsdale, Arizona

March 23, 2009