Summary
United Rentals, Inc. (URI) filed an 8-K on June 29, 2007, to report a material definitive agreement. The company's compensation committee approved an amendment to the existing Service Agreement with Chairman Bradley S. Jacobs. This amendment addresses changes in the company's cost structure, specifically its decision to sell all company aircraft fractional ownership interests. The primary impact for investors is the modification of Mr. Jacobs' benefits related to company aircraft usage. The amendment significantly alters the terms concerning aircraft usage for Mr. Jacobs. His entitlement to personal use of company aircraft, both during and after his term of service, has been eliminated. In exchange for this concession and an extended non-compete period from 12 to 18 months, the company will pay Mr. Jacobs a total of $6.1 million, which includes a tax gross-up. The company anticipates this will result in a 2007 charge of approximately three cents per diluted share.
Key Highlights
- 1Amendment to Service Agreement with Chairman Bradley S. Jacobs approved on June 26, 2007.
- 2Company is selling all aircraft fractional ownership interests as part of a cost structure review.
- 3Mr. Jacobs' entitlement to personal use of company aircraft is eliminated, both during and after the term of the agreement.
- 4Mr. Jacobs' non-compete period is extended from 12 months to 18 months following the end of the term.
- 5United Rentals will pay Mr. Jacobs $6.1 million in consideration for these changes, including tax gross-up.
- 6A 2007 charge of approximately three cents per diluted share is expected due to this agreement.
- 7The term of the Service Agreement will now end on the earlier of December 15, 2007, or a change in control of the company.